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US President Joe Biden walks on the South Lawn of the White House before boarding Marine One in Washington, DC, US, on Wednesday, May 17, 2023.
Al Drago | Bloomberg | Getty Images
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The good news: Biden will meet McCarthy in person later today to discuss the debt ceiling, after a pause in negotiations over the weekend. The bad: There’s no telling how the talks will proceed.
What you need to know today
- U.S. President Joe Biden and House Speaker Kevin McCarthy will meet at the White House Monday to resume negotiations over the debt ceiling, NBC News reported. Over the weekend, discussions halted, with McCarthy telling reporters talks couldn’t resume until Biden returned from the Group of Seven summit in Japan.
- The G-7 summit wrapped up Sunday. During the three-day event, the group announced new sanctions on Russia, outlined a shared approach toward China and called for peace in the Taiwan Strait.
- Morgan Stanley CEO James Gorman said he plans to resign from his position by the end of the year. Taking over his role as CEO will be one of three internal candidates. Still, investors were disappointed: The bank’s shares dropped 2.66%.
- PRO Analysts think stocks can rise even higher in the second half of the year — if three conditions are met. Economic data coming out this week, including May’s PMI Composite, minutes of the Fed meeting and GDP figures, will make it clearer if markets can rally.
The bottom line
The Writers Guild of America may be on strike now, but we don’t lack gripping drama — in the form of the U.S. debt ceiling negotiations.
It’s a good thing markets were closed over the weekend, or they’d probably have fallen on McCarthy’s comments that talks couldn’t resume until Biden returns to the country. Investors were already spooked on Friday after their optimism evaporated when Republican negotiators walked out of the discussion. The S&P 500 slid 0.14%, the Dow Jones Industrial Average lost 0.33% and the Nasdaq Composite fell 0.24%.
To be sure, those weren’t big drops, suggesting investors thought Washington would eventually reach a deal — as it always has in the past. Fed Chair Powell’s comments that rates might not need to be high also cheered investors. The CBOE Volatility Index, which measures investors’ expectations of where the S&P will move in the next 30 days, traded at 16.8 Friday. That’s pretty near its 52-week low, indicating stability and calm.
Indeed, the major indexes had a good week. The S&P added 1.65% and the Nasdaq rose 3% for the week — their best performance since March.
Still, that was before McCarthy cranked up the rhetoric on debt ceiling negotiations. The good news is that Biden will meet McCarthy in person later today. The bad: There’s no telling how talks will proceed.
Detours and divisiveness are perhaps inevitable when it comes to White House negotiations across the political spectrum. We can only have faith that the U.S. won’t plunge its own economy, and the financial world, into chaos. That’s a scenario that belongs on television, not the real world.
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