Morning Reads
- India’s Population Overtakes China
- Entrepreneurs Flee China’s Heavy Hand: ‘You Don’t Have to Stay There’
- China’s Property Bust Compounds Economic Pain
- BOJ Fails to Crush Big Short as UBS, Schroders See Capitulation
- European Central Bank Member Says Market i
- Global Bond Sales Off to Record Start of Nearly $600 Billion
- America Set to Hit Its Borrowing Limit Today, Raising Economic Fears
- Treasury to Begin Special Measures
- How to Invest as a Debt Ceiling Crisis Looms
- JPMorgan’s Dimon Says US Shouldn’t ‘Play Games’ on Debt Ceiling
- Microsoft to Lay Off 10,000 Workers
- Musk Has ‘More to Lose’ If He Tries to Skip Twitter Debt Payment
- Fake Meat Was Supposed to Save the World
- Could Air Someday Power Your Flight? Airlines Are Betting on It.
- The Disney Executive Who Made $119,505 a Day
- The U.S. Will Be the Biggest Loser
- Party City Files for Chapter 11 Bankruptcy With Plans to Cut Debt
- Crypto Platform Bitzlato Charged
Todays Open Interest Change
PREMIUM
PREPPER
The U.S. today will reach its statutory debt limit of $31.4T, prompting a series of extraordinary measures to avoid a default on government debt. Looking to conserve capital at the federal level, the Treasury will start withholding investments from retirement funds for some government employees, while other measures will take weeks or months to kick in. "Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans and global financial stability," Treasury Secretary Janet Yellen declared. "I respectfully urge Congress to act promptly to protect the full faith and credit of the United States."
SA commentary: "The Treasury could just ignore Congress and issue notes and bonds with coupons well above current yields," wrote SA contributor James Baker, referencing a novel solution to the debt crisis. "There is a big mess taking place behind the scenes," noted Mark Grant, saying there might be drastic impacts on the financial condition of the Fed. "Reducing the deficit is not the same as reducing the debt," added Ronald Surz, cautioning that "U.S. debt continues to climb into the stratosphere."
While there will be discussions over the next few months, things are not likely to get serious until after the tax season deadline in mid-April, when the Treasury will know how much receipts and revenue have come in. That will reveal exactly how much time will be left on the clock until the government runs out of cash, though its obligations are likely to be funded until at least June. While raising the debt ceiling has turned into a bitter partisan issue over the years - even prompting a credit rating downgrade of U.S. government debt in 2011 - both parties have always reached a late deal to avoid the country going into default.
Game of chicken: Tensions are definitely on display this time around due to the razor-thin margins in Congress. Republicans are looking for big budget cuts, while Democrats and the Biden administration are threatening to play hardball with a clean vote and no conditions. Only a handful of rejections could derail any deal, and concessions may be a lot harder to come by, especially with extreme flanks enveloping both sides of the debt limit debate. (23 comments)
With Microsoft (MSFT) investing billions of dollars into ChatGPT, and set to integrate the technology into its Azure cloud service, the world of artificial intelligence stands on the brink of a widespread breakthrough. That's the opinion of Oppenheimer analyst Timothy Horan, who said that Microsoft pairing up with ChatGPT developer OpenAI has created an "iPhone Moment" for artificial intelligence, and that "things will now move fast" for AI at a speed that until now wasn't possible. He calls ChatGPT's breakthrough "epochal" and that, finally, "the AI Age has arrived." SA Marketplace authors, Robert & Sam Kovacs, also flag four dividend stocks to profit from the ChatGPT AI revolution. (60 comments)
Economists are seeing more red flags for the U.S. economy following the latest batch of reports on Wednesday. Retail sales dropped 1.1% in December, a sharper decline than was predicted (see the winners and losers here), while a separate report showed the third consecutive month of contraction in industrial activity. Looking to nail a soft landing, the Fed is likely to respond to the data by easing its foot off the accelerator, with markets fully pricing in a softer quarter-point interest rate hike at the end of the month. According to newly released stats from the National Retail Federation, retail sales during the holiday shopping season also lagged industry expectations. (16 comments)
The holiday meltdown at Southwest Airlines (NYSE:LUV) in December was not an anomaly, and many airlines will not be able to handle all the flights they plan to operate this year (let alone the anticipated growth). That was the message from United (NASDAQ:UAL) CEO Scott Kirby, who touted a dire view of the industry's capacity following the company's Q4 earnings results. Critical investments in tools, infrastructure and people are necessary amid a shortage of pilots and airline workers, outdated technology and strains on the FAA (remember the system outage a week ago?).
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Today's Markets
In Asia, Japan -1.4%. Hong Kong -0.1%. China +0.5%. India -0.3%.
In Europe, at midday, London -1%. Paris -1.3%. Frankfurt -1.3%.
Futures at 6:30, Dow -0.6%. S&P -0.7%. Nasdaq -0.8%. Crude -0.9% to $79.10. Gold +0.2% to $1911.20. Bitcoin -2.3% to $20,728.
Ten-year Treasury Yield +2 bps to 3.39%
Today's Economic Calendar
8:30 Housing Starts and Permits
8:30 Initial Jobless Claims
8:30 Philly Fed Business Outlook
10:30 EIA Natural Gas Inventory
11:00 EIA Petroleum Inventories
1:15 PM Fed's Brainard Speech
4:30 PM Fed Balance Sheet
6:35 PM Fed's Williams Speech
Companies reporting earnings today »
What else is happening...
Microsoft (MSFT) confirms 10,000 layoffs, will take $1.2B charge.
Slowest quarterly revenue growth? Netflix (NFLX) set to report earnings.
New Zealand's Jacinda Ardern to resign as prime minister.
Shiba Inu (SHIB-USD) jumps higher amid upcoming Shibarium launch.
Oral herpes drug developer Squarex Pharmaceutical (SQRX) files for IPO.
Johnson & Johnson (JNJ) scraps HIV vaccine program after Phase 3 setback.
Crypto lender Genesis Global likely to file for bankruptcy this week.
... and crypto news site CoinDesk said to tap Lazard to explore sale.
Apple (AAPL) unveils new $299 HomePod, continuing product launch blitz.
Renault (OTCPK:RNLSY), Nissan (OTCPK:NSANY) near deal for alliance reset.