Reads
- New World of Trade Diplomacy, Free Trade and Tariffs Take a Back Seat
- Standard Chartered CEO Says Big U.S. Recession Unlikely
- Powell’s Bet Against Recession Looks Good — Minus the Credit Crunch and a DC Standoff
- Why On Earth Would You Fight ‘Inflation’ With Higher Interest Rates?
- Yellen Says No Good Alternative to Congress Lifting Debt Cap
- Investors Flock to Safety Plays, but Stock ‘FOMO’ Lingers
- Chinese Bank Stocks Soar, Adding $166 Billion in Trading Frenzy
- PacWest Leads Rally in Regional Banks After Slashing Dividend
- Bank Turmoil Is Paving the Way for Even Bigger ‘Shadow Banks’
- Bain Capital Seeks to Raise $4 Billion for New Global Special Situations Fund
- Binance Restarts Withdrawals of Bitcoin After Second Halt
- U.S. Sanctions Drive Chinese Firms to Advance AI Without Latest Chips
- Occidental Drops After Buffett Said Not Seeking Full Control
- Buffett and Munger on Success, Toxicity and Elon Musk
- Tech Workers Aren’t as Rich as They Used to Be
- Why Airfares, Hotels and Cars are Getting So Expensive for Americans
- Biden to Propose Airline Rule to Compensate Passengers for Delays, Cancellations
- Corporate Giants Buy Up Primary Care Practices at Rapid Pace
- US Hedge Fund Manager Wagner to Acquire Birmingham City Stake
- Liz Holmes Wants You to Forget About Elizabeth
- Pick-Me-Up. Is the Coronation Enough?
- The King’s Billions: a Tour of UK’s £17 Billion Royal Empire
- China Takes the Yuan Global in Bid to Repel a Weaponized Dollar
- Even as China Reopens, Security Visits Spook Foreign Businesses
- Why China’s Censors Are Deleting Videos About Poverty
- Born in Asia but Based in Britain, HSBC Fights to Stay in One Piece
- U.S. Businessman Ajay Banga Approved to Lead World Bank
- TD Bank, First Horizon Agree to Terminate $13 Billion Merger
- PacWest Bank Says Considering ‘All Options’ After Its Shares Plunge More Than 50%
- Nearly Half of Americans Worry Their Bank Deposits Aren’t Safe
- Restaurants, Food Companies Pursue Budget-Minded Consumers as Inflation Persists
- Federal Reserve Raises Rates, Signals Potential Pause
- Pushback Against Powell’s Prognosis Comes Almost Immediately
- Treasury Yields May Fall to 2% as Gundlach, Banks Eye Recession
- Apple’s Revenue Woes Put Market-Leading Rally at Risk
- J&J’s Kenvue Raises $3.8 Billion in Year’s Biggest IPO
- FTC Proposes Barring Meta From Monetizing Young Users’ Data
- Lina Khan: We Must Regulate A.I. Here’s How.
- The US Shale Oil Capital Won’t Invest in Itself
- Shell Reports $9.6 Billion Profit, Despite Falling Oil Prices
Todays Open Interest Change
PREMIUM
Prepper
The clock is ticking for a divided U.S. Congress to raise the federal government's debt ceiling, which currently stands at $31.4T, but risks running out of cash as soon as June 1. Razor-thin margins in Congress are complicating the matter, as only a handful of rejections could derail any deal, and concessions are a lot harder to come by, with extreme flanks enveloping both sides of the debt limit debate. While President Biden has invited House Speaker Kevin McCarthy to a meeting on Tuesday, things can quickly spiral in the danger zone, and is one of three make-or-break crises now impacting the U.S., according to SA contributor ING.
Quote: "It's simply unacceptable for Congress to threaten economic calamity for American households and the global financial system as the cost of raising the debt ceiling and getting agreement on budget priorities," Treasury Secretary Janet Yellen told ABC's This Week. "Even as we get very close to this date, if Congress doesn't act, we're likely to see financial market consequences. There is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills."
As the U.S. gets closer to the brink of a default, talk has even circulated about possible emergency options that could be used to circumvent a disaster. Some ideas that have surfaced include invoking the 14th Amendment, as well as the trillion-dollar coin and issuing debt with coupons above current yields. While President Biden on Friday said he's "not gotten there yet" regarding using an option like the 14th Amendment, Janet Yellen was slightly more forthcoming about what would happen if an agreement failed to materialize on Capitol Hill.
Go deeper: "We should not get to the point that we would need to consider whether the President can go on issuing debt - this would be a constitutional crisis," she declared. "If they fail to do it, we will have an economic and financial catastrophe that will be of our own making, and there is no action that President Biden and the U.S. Treasury can take to prevent that catastrophe." When pressed to answer whether there is a "break glass" alternative, Yellen didn't appear to rule anything out, but said she didn't want to consider emergency procedures as there were "simply no good options." (180 comments)
Should the U.S. use an emergency procedure like invoking the 14th Amendment, the trillion-dollar coin, or issuing debt with coupons above current yields to avoid a catastrophic default?
· Yes (Desperate times call for desperate measures)
· No (It's a legislative mechanism to check spending)
· Not sure (Let's see how the negotiations play out)
Take the survey and see the results here
Thousands of Berkshire Hathaway (BRK.A, BRK.B) shareholders and other investors flocked to Omaha, Nebraska, this weekend to hear Warren Buffett and Charlie Munger speak at an event known as the "Woodstock for Capitalists." The annual meeting came on the heels of an impressive set of earnings from the conglomerate, which owns and invests in a wide range of businesses from insurance to industrials. The discussion spanned a wide range of topics, including the economy, AI, Bitcoin, and CEO succession, while Buffett opened up about several stock positions, including his comment that Berkshire does not plan to acquire control of Occidental Petroleum (OXY). See other key takeaways from SA contributor Fishtown Capital. (52 comments)
California's reparations task force, which first convened nearly two years ago, has given the final approval to a list of recommendations on how the state may compensate and apologize to Black residents for historical discrimination. "Reparations are not only morally justifiable, but they have the potential to address long-standing racial disparities and inequalities," Representative Barbara Lee (D-CA) declared. The proposals now go to state lawmakers to consider reparations legislation and a final sum, which some economists estimate could cost the state upwards of $800B, or almost 3x the state's annual budget. To be initially eligible, applicants must be a descendant of Black people who were in the country by the end of the 19th century, though there are not yet details on how the payments would be funded. Age, state residence, and other factors will also play a role in determining compensation. (29 comments)
The market has priced in a much-anticipated pause in the Fed tightening cycle, which many hope will give the green light to equities, though some caution that cuts aren't really bullish for stocks based on historical patterns. Fed funds futures predict a 90% chance that the Fed keeps rates at 5% to 5.25% at the June meeting and more than a 70% chance that cuts begin in September. The discussion follows the strong April jobs report, which confirmed that the economy remains resilient, according to SA Investing Group Leader Dan Victor, while contributor Jeremy LaKosh cites signs of normalization but cautions that the constrained supply side of the labor market remains inflationary. With the non-farm payrolls report out of the way, investors are now paying close attention to CPI numbers due out Wednesday. (7 comments)
Today's Markets
In Asia, Japan -0.7%. Hong Kong +1.2%. China +1.8%. India +1.2%.
In Europe, at midday, London closed. Paris +0.2%. Frankfurt +0.1%.
Futures at 6:30, Dow +0.2%. S&P +0.2%. Nasdaq flat. Crude +2.3% to $72.95. Gold +0.3% to $2031.70. Bitcoin -3.3% to $27,913.
Ten-year Treasury Yield +1 bps to 3.46%
Today's Economic Calendar
10:00 Wholesale Inventories (Preliminary)
12:30 PM Investor Movement Index
Companies reporting earnings today »
What else is happening...
Regional banks revived Friday after a brutal week. What's next?
Spending on weight loss drugs to rise exponentially through 2027.
Coke (KO) vs. Pepsi (PEP): Which is the better buy for dividends?
Travel & leisure hiring may stay hot despite recessionary risks.
Activist Nelson Peltz said to be targeting Estee Lauder (EL).
Was selling overdone? AI fears hit these stocks this earnings season.
Tucker Carlson said to be prepping for war against Fox News (FOX).
U.S. pipeline regulator aims to toughen rules for detecting methane leaks.
After impressive Q4, what's in store for Palantir's (PLTR) earnings?
Generative AI is all the rage. Tim Cook is asking for caution.
Concerns raised over OTC use of Perrigo's (PRGO) birth control pill.
The winners: Best investment idea for a potential recession competition.