Discussing some hot topics in the news like the debt ceiling and U.S. stock market
May 24, 2023
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this week. My name is Jake Sanders, and I am a partner at Wealth E&P and operate as a Wealth Advisor and Certified Financial Planner. I hope you're having a great week so far.
You've probably heard a lot of conversation about the debt ceiling lately, and in particular, whether or not Congress and the White House can get their act together and figure out a compromise in order to stave off potential default and certain government obligations. Now, if this sounds familiar, it is. Since 1960, according to the Treasury's own website, Congress has had to address this very issue 78 times. If you're doing the math, that's more than once a year, so this is not new territory.
I would start by saying that, even today, the probability of a default happening is still very low. In fact, depending on who you pay attention to, most oddsmakers are putting it in between 3% and 10%; that's pretty low odds, considering. That being said, even if the debt ceiling is not raised, there is still enough government revenue to fund a lot of obligations, including bond payments. In spite of what you've been hearing on the news about entitlement cuts and things like that, I think the reality is that the government will just have to be more responsible and take care of the priorities in terms of the debt and the budget.
What about the stock market? What will happen there? Well, if the last 78 times are a guide, and I think they should be, we can expect more short-term volatility in the intermediary. Over the long run, in spite of the investor uncertainty and probably a lot of anxiety around it, this issue has not caused long-term impact on the markets as a whole in and of itself.
If you have questions about how we approach this and how this might impact your portfolios, we’d love to chat with you about it. If you have any other questions about the stock market or the economy in general, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our next Market Minute! We appreciate you, and we hope you all have a great week.
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