Bill to Raise Debt Ceiling Surprisingly Passes
Must be a valid email address.
Password must be 8-64 characters.
Must be a valid phone number.
Recession incoming? Here’s how you can prepare.
Daily Capital
Home>Daily Capital>Investing & Markets>Bill to Raise Debt Ceiling Surprisingly Passes

Bill to Raise Debt Ceiling Surprisingly Passes

Devastating natural disasters and jitters over North Korea pushed the market down to start the week after the Labor Day holiday. Stocks tried, but were unable to recover fully over the remainder of the week. Stanley Fischer, the Fed’s number two official, stepped down – a move some investors interpreted as meaning the Fed will stay more accommodative longer. Bond yields and the dollar fell. In a surprise move, President Trump sided with Democrats in passing a bill to raise the debt ceiling, extend government funding for three months, and approve $15 billion in disaster relief for Hurricane Harvey.

Weekly Returns:
S&P 500: 2,461 (-0.4%)
FTSE All-World ex-US: (+0.6%)
US 10 Year Treasury Yield: 2.05% (-0.09%)
Gold: $1,346 (+1.6%)
EUR/USD: $1.203 (+1.4%)

Major Events:

  • Tuesday – US equity markets moved to a T+2 settlement cycle, reducing by one the number of days investors have to wait to access funds when selling stock.
  • Wednesday – Brazil’s central bank cut its benchmark lending rate by 1% to 8.25%.
  • Wednesday – Fat Brands, parent of Fatburger, filed to raise $24 million in an IPO.
  • Wednesday – Toys R Us retained legal counsel to help restructure $400 million of debt due next year.
  • Thursday – Amazon announced it will begin a search for a second US headquarters location, spending up to $5 billion to build and operate it.
  • Thursday – Eli Lilly said it would cut up to 8% of its workforce and invest more in new drugs.
  • Friday – Credit reporting company Equifax said hackers had compromised personal data on up to 143 million US consumers.
  • Friday – Hundreds of thousands of people evacuated in Florida as the state braces for Hurricane Irma.

Our Takeaway

The dollar passed above $1.20 to the euro for the first time since the very end of 2014. US currency is down 9.1% against a basket of 16 others so far in 2017. Declines have come as investors have lost confidence President Trump will be able to push through much of his pro-growth agenda and as the Fed has taken a more dovish tone in the face of low inflation.

The resignation of Stanley Fischer means President Trump will have even greater control over the future of who runs the Fed. Most likely those appointed by him will be hesitant to raise rates aggressively and risk slowing the economy in the second half of his term. Hurricanes Harvey and Irma may also make it more difficult politically for the Fed to raise rates.

All of this is a major reason why international stocks are significantly outpacing US stocks so far this year when measured in dollar terms. It could be that the pendulum has finally swung, but it is important to keep perspective. Just a few years ago the dollar was at $1.40 to the euro and the last 7 years have been absolutely dominated by US stocks in terms of asset class returns.

We prefer to keep a strategic, long term mix between the US and international stocks and bonds and rebalance periodically rather than guess year by year. On the currency front, the current levels actually feel about right and are more balanced on a purchasing parity basis than we’ve generally seen in recent years. It could be that the dollar overshot a little on the way up and is now in a more stable place.

Our thoughts are with all of those impacted by the storms in Texas and Florida.

Schedule a Consultation with a Financial Advisor

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
Icon Close

To learn what personal information Personal Capital collects, please see our privacy policy for details.

Let us know…

This year, my top financial priority is:

Building my emergency fund
Paying off high-interest debt
Budgeting better
Saving for a short-term goal, like a vacation or new car
Increasing my investment contributions
Maintaining status quo - I’ve got this under control

Make moves toward your money goals with Personal Capital’s free financial tools.