Talk about confusing...

With the debt limit rapidly approaching on June 1st as US Treasury Secretary Janet Yellen has stated repeatedly, it is time for Congress and the White house to get serious. It kind of seems like that is happening but markets were more interested in artificial intelligence and Nvidia’s earning report and future forecasts. 

 At least the S & P 500 and the Nasdaq paid attention to those earnings. The Dow not so much. The Dow was more concerned about the debt limit being raised. Per usual, if the Republicans in Congress are successful in achieving spending reductions this could be a problem for the stock and bond markets.  The economy is slowing as inflation heads lower. When the economy slows the appropriate reaction would be to increase spending by the government, not reduce spending. History tells us so. 

The last debt limit crisis happened as the economy was slowing and the stock market fell 16%.  Even after an agreement is reached the US Treasury will have to issue debt to make up for any missed payments and replenish the Treasury balance sheet. This could cause interest rates to rise further slowing the economy even more because of tightening and on top of the banking crisis this is not good.  

Interest rates continue to rise as economic indicators still are confusing. According to the Federal Reserve Minutes, more members feel like it might be time to halt interest rate increases because in this quarter we will see the results of bank failures and lending institutions will tighten their belts.  Be careful what we wish for!

Anyone with an IRA will be receiving Form 5498 from TD Ameritrade for the 2022 Tax year. This form is for your records, that is sent both to you and the IRS as 

Documentation for contributions, required minimum distributions (RMDs), Roth IRA conversions, rollovers, and the fair market value (FMV) of the IRA account.

If you have further questions, contact your advisor.

Weekly Catch-Up - News Articles That Caught Our Eye

• He Diagnosed America’s Trust Problem. Here’s Why He’s Hopeful Now. - POLITICO
• The Best Debt Relief Companies of May 2023 (cnbc.com)
• What Everyone—Except the U.S.—Has Learned About Immigration - WSJ
• Retiring in Paradise Has Its Financial Problems. Make These Moves First. - WSJ

This website is informational only and does not constitute investment advice or a solicitation. Investments and investment strategies recommended in this blog may not be suitable for all investors. SAS Financial Advisors, LLC and its members may hold positions in the securities mentioned within this newsletter. SAS Financial Advisors, LLC is not responsible for any third-party content referenced.

The SAS Newsletters are posted on the SAS Blog weekly: https://www.sasadvisors.com/blog