Hello. After weeks of wrangling, the White House and Republican negotiators have finally reached a deal to avert a potentially catastrophic default, though that’s only half the battle won.
The big sigh of relief: While the precise text of the agreement is still being hashed out, President Joe Biden and House Speaker Kevin McCarthy on Saturday reached a compromise to suspend the debt limit through January 2025 and keep non-defense spending roughly flat next year, with a 1% increase in 2025. The breakthrough should provide much relief to markets, which have been on edge over the likelihood of a default, when they reopen after the Memorial Day holiday.
Still, sealing a US debt-limit deal is one thing. Getting the legislation passed before a June 5 default deadline is another challenge altogether. With just over a week until the US risks running out of cash to pay its bills, a catastrophe that would send borrowing costs soaring and batter the global economy, leaders now must convince enough members of their parties that the agreement is better than a default. McCarthy and Biden are scheduled to speak again Sunday, before an expected vote Wednesday.
The big stat: With the prospects of a historic default now less likely, investors can turn their focus back to the economy. Government figures are projected to show on Friday employers are gradually dialing back the pace of hiring and hourly earnings are moderating, offering Federal Reserve policymakers some solace as they attempt to wrangle still-elevated inflation.
The big hedge. One of the best hedges against inflation may actually be a hedge, or more specifically what the hedge surrounds: farmland.
The big earnings: If you’re looking to put your money to work in something a bit more high tech, pay attention to earnings from Salesforce, C3.ai and Box due over the next few days. The software companies could offer more insight into how they’re capitalizing on the artificial intelligence frenzy that has driven tech stocks higher in recent weeks.
ICYM our Big Take: Carl Icahn made his fame and fortune targeting mismanaged public companies but he’s now coming under fire himself. Still, despite losing 11-figures from his net worth, the billionaire lone Wolf of Wall Street is staying defiant, telling Tom Maloney and Amanda L Gordon he doesn’t care what people think.
And finally, here’s another controversial personality brought low. Texas Attorney General Ken Paxton was impeached on Saturday in an extraordinary vote by the state’s House of Representatives, which charged him with bribery, obstruction of justice and 18 other offenses. Read David Yaffe-Bellany’s 2021 in-depth profile of Paxton, America’s Trumpiest lawyer.
Have a crisis-free week ahead.