{"id":9065,"date":"2023-05-15T17:02:26","date_gmt":"2023-05-15T21:02:26","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/stocks-are-stuck-amid-debt-limit-crisis-but-these-investments-may-be-best-amid-the-turbulence\/"},"modified":"2023-05-15T17:02:27","modified_gmt":"2023-05-15T21:02:27","slug":"stocks-are-stuck-amid-debt-limit-crisis-but-these-investments-may-be-best-amid-the-turbulence","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=9065","title":{"rendered":"Stocks Are \u2018Stuck\u2019 Amid Debt Limit Crisis \u2014 But These Investments May Be Best Amid The Turbulence"},"content":{"rendered":"
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Topline<\/h2>\n

Stocks may be in line for notable swings over the next few weeks amid the simmering standoff in Washington as the U.S. nears the first default in its history, according to several experts \u2013 though there are several investments that may prove wise during the turbulence.<\/p>\n

Key Facts<\/h2>\n
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\u201cWe expect the debt showdown to stoke market volatility,\u201d a Jean Bolvin-led group of BlackRock strategists wrote in a Monday note, warning investors to remain \u201ccautious\u201d as the U.S. is on the brink of becoming unable to make debt payments as it hovers at its $31.3 trillion ceiling.<\/p>\n<\/p><\/div>\n

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There\u2019s no \u201ccushion\u201d for the U.S. to fall back on thanks to elevated inflation and interest rates, explained the BlackRock group, as the federal government and Federal Reserve are largely handcuffed in their monetary policy responses while the economy already flirts with a recession thanks partially to the Fed’s tightening campaign.<\/p>\n<\/p><\/div>\n

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The BlackRock note named one top pick for patient investors to earn \u201cattractive income\u201d amid the standoff: Short-term U.S. Treasury notes which tend to pay higher yields in times of increased instability in Washington and would likely rise should credit agencies downgrade the U.S.<\/p>\n

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Bank of America credit strategist Yuli Seliger identified Yankee bonds \u2013 debt holdings issued in the U.S. by foreign entities \u2013 as the top \u201chedge against the worst-case scenario\u201d should the debt crisis rage on past expectations.<\/p>\n<\/p><\/div>\n

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Morgan Stanley\u2019s top U.S. strategist Michael Wilson wrote to clients Monday that though the debt ceiling fiasco is \u201can important part of the market mosaic,\u201d asset performance during prior standoffs in 1996, 2011 and 2013 offer limited patterns, though on average technology, healthcare and consumer staples stocks performed the best in the months following a resolution to debt negotiations.<\/p>\n<\/p><\/div>\n

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Crucially, Wilson identified a lifting of the debt limit, the likely eventual solution to the crisis, as a far from a happy case for long investors, saying it could \u201ctip\u201d the S&P 500 toward his bank\u2019s bearish case for the index of 3,500, a 15% crash from the S&P\u2019s Monday level of about 4,130.<\/p>\n<\/p><\/div>\n<\/div>\n

Crucial Quote<\/h2>\n

\u201cThe stock market is stuck until we reach a debt ceiling resolution,\u201d UBS financial advisor Brad Bernstein wrote in emailed comments. The Dow Jones Industrial Average has moved by less than 0.2% during five of the last six trading sessions; the index gained or lost less than that benchmark in less than 20% of the prior days this year when the market was open. Major indexes were little-changed Monday, with the Dow and the S&P gaining 0.1% and 0.2%, respectively.<\/p>\n

Big Number<\/h2>\n

45%. That\u2019s how much President Joe Biden\u2019s top economic policy advisors said the stock market will decline in the third quarter of 2023 should the U.S. fail to meet its debt payment requirements, according to a May 3 blog post (the methodology for this brash claim was not stated).<\/p>\n

Chief Critic<\/h2>\n

House Speaker Kevin McCarthy (R-Calif.) accused Biden and his Democratic allies of seeming \u201cmore like they want a default than a deal\u201d after failing to gain traction during talks over the weekend. The McCarthy-led Republican lawmaker coalition has sought to tie any agreement on raising the debt limit to passing more austere government spending measures.<\/p>\n

<\/h2>\n

Wall Street is strangely calm about the possibility of the US defaulting on its bills (CNN)<\/p>\n

Here\u2019s Why The Debt Limit Matters\u2014And How An Accidental Default Could Spark A Recession (Forbes<\/em>)<\/p>\n

McCarthy: Biden Wants A Default\u2014Not A Deal\u2014On Debt Ceiling (Forbes<\/em>)<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Topline Stocks may be in line for notable swings over the next few weeks amid the simmering standoff in Washington as the U.S. nears the first default in its history, according to several experts \u2013 though there are several investments that may prove wise during the turbulence. Key Facts \u201cWe expect the debt showdown to […]<\/p>\n","protected":false},"author":1,"featured_media":9066,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-9065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nStocks Are \u2018Stuck\u2019 Amid Debt Limit Crisis \u2014 But These Investments May Be Best Amid The Turbulence | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Topline Stocks may be in line for notable swings over the next few weeks amid the simmering standoff in Washington as the U.S. nears the first default in\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=9065\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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