They face "considerable uncertainty" if Congress does not raise the $31.4 trillion debt ceiling. Yellen said new investments into Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund will be suspended until June. Treasury Secretary Janet Yellen last week.
The take comes after the Treasury Department started taking extraordinary measures to pay the country's bills after the U.S. A debt ceiling crisis will not immediately be a big bang, in our view it would be a slow burn that builds to a bigger problem," Rajadhyaksha continued. "If the debt limit is not raised in time, how will the economy and financial markets react? The answer is not intuitive. But in this piece, we consider the 'what-if' scenario," Ajay Rajadhyaksha wrote in a Tuesday note. "Our implicit assumption is that this will not turn out to be a material economic event for the country. The eventual stock market bottom might not even come until well into 2024, the 84-year-old Grantham said, since the usual stock market low after a colossal bubble - not simply an "ordinary" bull market - comes roughly one year after the start of a subsequent recession.Īs market participants worry over a potential debt ceiling crisis, Barclays says it would not expect an immediate hit to the economy. I believe therefore that a continued market decline of at least substantial proportions, while not the near certainty it was a year ago, is much more likely than not," Grantham wrote in the report, dated Tuesday. I believe they could easily turn out to be unexpectedly dire. But because of the sheer length of the list of important negatives, I believe continued economic and financial problems are likely. Otherwise, Grantham retains his long-held bearishness, arguing the S&P 500 could easily end 2023 at 3200 "and spend at least some time below it this year or next." "The pricking of the supreme overconfidence bubble is behind us, and stocks are now cheaper.
"We are now in this sweet spot, which once again is up nicely so far.this positive influence may help to support the market for a few more months," Grantham wrote. Going back to 1932, Grantham says stock market returns during those seven months equal the entire return of the other 41 months combined.
Grantham, the GMO chairman, bases his benign view for the next three months on the third year of the so-called presidential cycle in 2023 and, specifically, on how stocks have historically performed during the seven months from October 1st of year 2 to April 30 of year 3. stocks, but admits in his latest investment commentary for Grantham, Mayo, & van Otterloo, the firm he helped co-found, that the next few months should be okay and prices could move higher. Jeremy Grantham is far from abandoning his long-term pessimism over the likely future return on U.S. Some investors hope these findings will prompt a pivot from the Federal Reserve when it convenes at its policy meeting next week.Ĭorrection: An earlier version of this story misstated the Dow's move for the session. The gains have come despite an underwhelming start to earnings season and more signs that the U.S. The S&P 500 and Dow added 1.19% and 0.76%, respectively. On Monday, the Nasdaq Composite led with a gain of 2.01%. Tuesday's market moves come after a solid start to the week, with all the major averages coming off of back-to-back gains. "But, the earnings that we saw yesterday and this morning are really mixed."įernandez expects stocks to trade in a tight range as the market absorbs the latest commentary on margins, inflation and the macro environment. "We've had two really strong days in the market in anticipation that the Fed's going to pause as we get into a busy week of earnings," said Victoria Fernandez, chief market strategist at Crossmark Global Investments. The unofficial start to big-tech results kicks off with Microsoft reporting after the bell. 3M dropped 6.2% on disappointing guidance, while Union Pacific dipped 3.3% after the railroad company's results fell short of analysts' estimates. The S&P 500 dipped 0.07% to settle at 4,016.95, while the Nasdaq Composite dropped 0.27% to end at 11,334.27.Įarnings season continued Tuesday with mixed results. This marked the third day of gains for the 30-stock index. The Dow Jones Industrial Average finished higher Tuesday as investors parsed through the latest batch of corporate earnings reports for insight into the state of the economy. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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