Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
It's unlikely that we're damaging the earth in a manner where the earth will not return to it's recent, (in geological terms), ice age cycle of glacial and interglacial periods once we've worn out our welcome, which we appear to be doing quite quickly now. The most recent interglacial began roughly 12,000 years ago and the melting ice stabilized about 7,000 years ago. Our ancestors moved to the sea shore, learned to fish, farm and life was good.
Were it not for 8MM humans burning fossil fuels, a new glacial period would be starting about now as this recent ice age has 100,000 year cycles where only about 10,000 years are interglacial. Earth, as it's land mass is currently configured, is not as hospitable as we like to imagine.
So a little extra CO2 in the atmosphere isn't necessarily a bad thing. Unfortunately we're using millions of years of stored energy over decades and hoping we'll find an alternative before our economies can no longer count on fossil fuels to grow. That will happen in decades. It doesn't mean we'll run out of fossil fuels, we'll just be fighting over it unless we've collectively figured out another way to massively generate energy. Good times.
That's good news for CA. The great news for the folks living below the dam is that in February 2017 there was a mini-version of the rainfall this year. When they opened the emergency spillway to release excess water it began to crumble. Thankfully dam operators were able to shut down the spillway before it disintegrated and emptied the dam. In 2018 they rebuilt the spillway to handle much larger waterflow. Very fortunate timing.
Oroville Dam floodgates opening as storms fill massive reservoir
Dam operators seek to reduce flood risk as California’s second-largest reservoir steadily rises
In another sign that the drought is ending across much of California, state water officials planned to open the floodgates at Oroville Dam on Friday, (March 10), to let water out of the state’s second-largest reservoir to reduce the risk of flooding to downstream communities.
“After three years of drought and low lake elevations, it’s really good to see the lake rising,” said Ted Craddock, deputy director of the state Department of Water Resources.
On Friday, Oroville reservoir was 75% full — or 115% of its historical average for early March. It has risen 180 feet since Dec. 1, and continued to expand steadily with millions of gallons of water pouring in from recent storms.
Devastating storms in February 2017 caused the spillway at Oroville, whose 770-foot tall dam is the tallest in the United States, to crumble, which prompted emergency officials who feared a potential dam collapse to evacuate 188,000 people downstream.
Investigators later found that the spillway, built in 1967, had corroded rebar and a failed drainage system. Construction crews overseen by a national team of independent dam safety engineers rebuilt the spillway in a $1 billion project by 2018. Friday’s event will mark the second time the new spillway has been used since then. It was used once before, in April 2019.
The new spillway is a colossal chute more than 3,000 feet long and as wide as 15 lanes of freeway. Its concrete is 7 feet thick, and contains 13 million pounds of reinforcing steel.
Craddock said Friday that dam safety engineers were on site for the scheduled noon opening of the gates atop the spillway, and have been performing regular inspections. The new spillway also has instruments to measure pressure, drainage and other factors. Craddock said it performed well in the 2019 release and he expected it to perform well again.
“It’s a very robust structure,” he said.
Lake Oroville, built on the Feather River about 70 miles north of Sacramento by former Gov. Pat Brown in the 1960s, is the linchpin of the State Water Project, a system of dams, canals and pumps that provide water to 27 million Californians from the Bay Area to Los Angeles. The purpose of the dam is not only to store water, but also to provide flood protection to communities in the Sacramento Valley.
In wet years, dam operators draw down the reservoir in winter when its level gets too high. The purpose is to create enough space in the lake so that it can capture huge inflows of water in atmospheric river storms, or in heat waves that might melt the Sierra snowpack. That extra capacity reduces the risk that deluges will hit an already full reservoir, sending water uncontrollably downstream and leading to major flood damage to homes, farms and businesses.
As the weeks pass and spring nears with less and less likelihood of major storms, dam operators allow reservoirs to fill to the top to maximize water storage.
Craddock said Friday that with the huge Sierra Nevada snowpack this winter — the largest in 30 years — the water being let out now will be replaced.
“We expect to see a full lake when we get out of the rainy season,” he said. “A full reservoir will mean we’ll have additional water supply — more than we’ve had in the last few years of the drought.”
Releases from Oroville were at 1,000 cubic feet per second a week ago. They have been increased to 3,500 in recent days, then 7,000 Wednesday, and on Friday were planned to hit 15,000 cfs. The spillway is built to handle nearly 20 times as much water, 270,000 cfs.
State and federal dam operators have begun similar releases for flood safety at other large reservoirs, including Folsom, northeast of Sacramento and Millerton, near Fresno.
“In California, we’re used to the swings between dry weather and wet weather,” Craddock said. “What we’ve been seeing in the last couple of decades is more extreme swings between drought conditions and very wet conditions.”
That makes things more challenging for dam operators who are trying to fill reservoirs, but also reduce flood risk.
“It’s new reality that we’re dealing with,” Craddock said.
There may be trouble in the Canadian banking business this year.
I read that article this morning and it begs the question; which non-banks are they talking about?
Interesting. I've looked at some of their electric and hybrid options; nice cars. Is it possible that Americans are realizing their next car will need to be an electric or hybrid electric vehicle and many are saying: Not yet. I know that's the case for all of us in my family.
I did not see them in the group I published earlier.
Thanks Elroy. I should have said SIPC which regulates the brokerage side, instead of FDIC. Cash carried in a brokerage or IRA account is also only insured up to $250k per individual.
Since this appears to be nothing but good news Thursday, BBBY's vendors no longer want to extend credit. Tick, tick, tick...
Bed Bath & Beyond Adds Vendor Consignment Plan to Avoid Bankruptcy
Bed Bath & Beyond (BBBY) announced it signed a vendor consignment agreement to get merchandise on its store shelves as it fights to stave off bankruptcy.
The struggling retailer explained that the deal is with ReStore Capital, a unit of diversified financial services firm Hilco Global, which says it provides “creative financing solutions” to businesses.
Bed Bath & Beyond indicated that ReStore Capital will buy up to $120 million of pre-arranged merchandise from the company’s key suppliers “on a revolving basis at any given time.” It added the idea is to supplement inventory levels already sold at its namesake and buybuy BABY stores.
CEO Sue Gove said the move is part of the company’s effort to execute plans to help it “overcome near-term operational and financial challenges.” She indicated that the vendor consignment program will enable Bed Bath & Beyond to “increase our inventory position in top items that customers are buying and improve the customer experience.”
Gove also argued that the company is “doing what we must to sustain our business immediately and unlock our true value over the long-term, for all stakeholders.” Bed Bath & Beyond warned in January and again last month that it may have to seek bankruptcy protection unless it can raise more cash to keep it afloat.
Today’s news didn’t help the stock, as shares tumbled 5% to an all-time low.
Schwab is in trouble. Of the 12 preferred stocks that I purchased at the beginning of the year, the poorest performing is the Schwab preferred. I came across this chart on Seeking Alpha this morning and it clearly explains why investments in Schwab are not doing well. As you can see, only Silicon Valley Bank had greater exposure to a run on uninsured deposits. Some things to note:
* Investments made through Schwab will not be effected if Schwab becomes insolvent.
* At this point it would be foolish to keep cash in a Schwab account over the FDIC insurance level.
* It's likely that Schwab is in a better position today as they can pledge some or all of their under performing securities to the Fed at par.
* Schwab stock, (SCHW), is not an investment I'd make.
This is an important point for any non-professional investing in stocks. As the saying goes; time in the market is more important than timing the market. As for taxes, anyone managing their own accounts should be managing their taxable income as closely as their investments. It's not that difficult it just takes time and a layman's understanding of tax law. One personal rule that will trigger a sell is when any investment exceeds 5% of my taxable account. It's my sleep well at night rule.
Unless investing is your primary business and your primary source of income and you have a track record of success, you should use other people's companies as a way to preserve assets and make small gains over time. Like Las Vegas the stock market is not how the average person in the US gets rich it's how the successful person preserves assets without having to manage it every day.
Maybe I'll put my SPX 4,100 hat away for a while. We should notice that the SPX had moved up through the upper Bollinger Band on both Thursday and Friday. Bollinger Bands are not a primary indicator unless one is short term trading, (my opinion only), but they do advise caution when breaching the upper band. When I was trading regularly I used a 3X BB instead of the standard 2X shown here for trading purposes when I subscribed to DeMark's Symbolik software. I could scan a thousand companies in 2-3 minutes and usually get under five results. These were often positive or negative earnings bounces that would moderate over the next couple of days. I've been much too busy over the last year or so to trade effectively but after we move I'll set aside an account for trading. As Nick can tell you, it's a full time job++ if you really want to make money.
To answer this question we have to be able to scale the earplug lawsuit damages. If those damage claims come to about 20% as much as JNJ will be paying, then they're likely OK. If they equal the JNJ settlement that's about 18 months of net profit wiped out. JNJ nets about $26B a year and MMM nets about $5.5B. Can they really cut the number of actual damage cases by 90%? Does the average person get $100,000? That's about $2.5B and a manageable settlement. For me there are still too many questions.
I think that's right. They're staying open for an additional week this year. We're normally lucky if we get 100" of snow on the mountain but this year 230".
Good find, thanks. I checked four or five different sites that had zero information. I also looked for an annual report. No matter what Mr. Mitchell does with the Pine Flat Dam water, this isn't going to be a good decade for any farms in the Tulare Lake basin.
New Yorkers treated her to a real New York welcome, blowing whistles every time she started speaking on her bullhorn. You really couldn't hear her and she gave up after a couple of minutes. She really should lay off the steroids, they make you so angry.
From two weeks ago: The head of the Deer Creek Storm Water District, Jack Mitchell got a call from the Boswell company:
While he's not as infamous as TFG, (the former guy) and his alleged 34 felony charges, SBF of FTX infamy has managed to rack up a 13th charge, this one for bribery. They'll add that on to his possible 155 years in prison. What's funny is that some of his charges are for campaign finance violations. We'll have to wait a couple of hours to know what TFG is charged with.
Roughly half way between Los Angeles and San Francisco lies Tulare Lake. It's been dry for most of the last 100 years and is currently covered with some of the best farmland in the world along with homes, businesses and highways. A good portion of that area will flood this summer as California's exceptional snowfall melts. Estimates are that 200 square miles of farmland will flood. Story below from the NYT:
Tulare Lake Was Drained Off the Map. Nature Would Like a Word
A barrage of storms has resurrected what was once the largest body of fresh water west of the Mississippi River, setting the stage for a disaster this spring.
CORCORAN, Calif. — It is no secret to locals that the heart of California’s Central Valley was once the largest body of fresh water west of the Mississippi River, dammed and drained into an empire of farms by the mid-20th century.
Still, even longtime residents have been staggered this year by the brute swiftness with which Tulare Lake has resurfaced: In less than three weeks, a parched expanse of 30 square miles has been transformed by furious storms into a vast and rising sea.
The lake’s rebirth has become a slow-motion disaster for farmers and residents in Kings County, home to 152,000 residents and a $2 billion agricultural industry that sends cotton, tomatoes, safflower, pistachios, milk and more around the planet. The wider and deeper Tulare Lake gets, the greater the risk that entire harvests will be lost, homes will be submerged and businesses will go under.
Across the region, the surprise barrage of atmospheric rivers that swept through California over the past three months already has saturated the ground, overflowed canals and burst through levees. The fear now is that record walls of snow in the southern Sierra Nevada will liquefy in the intensifying spring heat into a downhill torrent that will inundate the Central Valley.
And the resurrected Tulare Lake (pronounced too-LAIR-ee), already more vast than all but one of California’s reservoirs, could remain for two years or longer, causing billions of dollars in economic damage and displacing thousands of farmworkers while transforming the area into the giant natural habitat it had been before it was conquered by farmers. “The Big Melt,” unsettled meteorologists have begun to call it.
“This could be the mother of all floods,” said Phil Hansen, 56, a fifth-generation farmer who has already lost more than a third of his 18,000 acres to a breached levee. “This could be the biggest flood we’ve ever seen.”
Already, several communities have been evacuated, and hundreds of homes and farm buildings have been destroyed or damaged. Sandbags are being helicoptered in. Dairy cattle have been hustled to higher ground by the tens of thousands. The authorities said last month that a local poultry facility surrounded by water was weighing whether to move or slaughter a million chickens. And farmers are sparring over whose land should get flooded first, knowing that inundation likely will be a question of when, not if.
In the lake’s revival, scientists, historians and growers see an epic rematch gathering between nature and humans. For now, nature seems determined to win in an era of climate change with extended dry periods followed by storms that deliver more water than anyone knows what to do with. The runoff has no natural place to drain, and experts say there is no easy way to send this water to other areas of the state that could use it for irrigation or residential purposes, even as the state remains desperate for long-term drought solutions.
Around the farm and prison town of Corcoran, gray-blue waves now whoosh surreally to the horizon. Snowy white cranes soar over dirt levees that, so far, are shielding some 22,000 residents and inmates. Submerged fields lie bereft of the tomatoes and Pima cotton that would ordinarily fill them, an agricultural Atlantis larger than Manhattan.
The lake bed is essentially a 790-square-mile bathtub — the size of four Lake Tahoes — that dates back to the Ice Age. Mammoths once sipped at Tulare Lake’s shores, and tule elk ranged in its marshlands.
Now the landscape is among the most heavily engineered in the nation. Great dams, run by the federal government and underwritten over the years by large growers, manage the water released into it from the Kings, Tule, Kaweah and Kern Rivers. Downstream, farmers and cities have erected hundreds of miles of levees and canals.
High in the southern Sierra Nevada, a record snowpack, triple the historical average, will strain the water managers who are already running that plumbing system like never before as the days lengthen and the spring skies heat.
The load of water waiting to course downhill dwarfs what is there already. It is so immense that officials project that in addition to expanding Tulare Lake, it will fill the area’s four largest reservoirs two or three times over. If the snow melts too fast, it could overwhelm flood protections, wiping out crops and inundating already-saturated farm towns. Veterans of past floods say that, even with all the fortifications in place, the lake could spread to 200 square miles or more.
“We have no control over nature, and we have no control over the water flows that are coming around us,” said Greg Gatzka, the city manager of Corcoran, where county authorities have repeatedly expressed concern about the height of the levees.
In 1983, when a long-lasting snowmelt submerged about 130 square miles of the lake bed, the damage just in Kings County cost nearly $300 million in today’s dollars, and the water took two years to clear, according to John T. Austin, the author of “Floods and Droughts in the Tulare Lake Basin,” a book about the region. That summer, two men kayaked through the floodwaters from the banks of the Kern River just outside downtown Bakersfield to the San Francisco Bay, a meandering 450-mile journey across what would typically be sun-baked land.
Since then, the population has roughly doubled, both in Kings County and in the surrounding San Joaquin Valley that includes Fresno and Merced, a region that is now home to about three million people.
Mark Grewal, an agricultural consultant and former executive at the dominant J.G. Boswell Company, one of the largest privately owned farms in the nation, said that the long-term, regionwide economic impact could be exponentially higher than in 1983 because the commodities that are now grown — high-end crops such as nuts, tomatoes and Pima cotton — are much costlier and are spiking in value with inflation. The region is so crucial to the world’s supply that sustained substantial flooding could lead to higher prices for consumers.
Emergency officials have sought to drive home the enormous catastrophe that could develop as the thaw comes.
David Robinson, the sheriff of Kings County, recalled that he was 12 years old when the 1983 flood hit, and he never imagined he would see such a spectacle twice in his lifetime. In an interview, his assistant sheriff, Robert Thayer, said aerial footage was not reassuring. Both men described the potential for flooding as “biblical.”
“This will impact the world, if people can just grasp that,” Sheriff Robinson said at a news conference after asking the public to stop using the lake for boating. “We’re going to have a million acre-foot of water covering up an area that feeds the world.”
In Corcoran, city officials are struggling to keep the roads open and waiting for the state to decide whether to evacuate 8,000 inmates from two prisons. Brian Ferguson, a spokesman for the California Governor’s Office of Emergency Services, said that local power plants, oil wells and derricks are also an intense concern. Gov. Gavin Newsom issued an executive order on Friday that was intended to accelerate flood preparations in the Tulare Lake basin, and a team from the California Department of Forestry and Fire Prevention arrived last month in neighboring Tulare County to prepare for a potential disaster.
But coordination on the ground has been fraught.
At tense emergency meetings last month, farmers claimed that rogue actors were secretly cutting holes in levees, violating longstanding traditions about the order in which farms were supposed to be flooded in wet years.
At one session, a public works official in Corcoran reported that the city had posted an armed guard at the levees protecting it. At another, county authorities thanked farmers for refraining from engaging in fistfights. Kings County has twice ordered the Boswell Company to release some floodwater onto its own land.
In smaller towns, residents worry that the protection of their homes will be at the mercy of powerful growers.
“All around, if you drive in your car, it’s just water everywhere,” said Cecilia Leal, 27, who lives across the county line in nearby Alpaugh, where evacuations were ordered last month after a levee breach. “You turn, there’s water.”
She and her parents stayed behind for Cesi’s Cafe, the family restaurant they operate from the front of their house on a country road. But only one route into town is open, and she said she feared the town’s only gas station would run out of fuel.
A video of desperate pistachio growers launching two dirt-filled pickup trucks into a local levee breach has gone viral. At the Lake Bottom Brewery and Distillery in Corcoran — which finally was compelled to end its $3-a-pint drought-related “Pray for Rain” special — Fred Figueroa joked that he and his sons, who own the bar, were considering naming their latest beer “Two Chevys in a Levee.”
Nature’s ascendance is not all bad news. Birds that once wintered at Tulare Lake — ibises, blackbirds and American coots — are returning in increasing numbers. On a recent sunny afternoon, a row of pelicans glided over drowned furrows, and long-legged herons rested on the muddy banks of a drainage canal near Alpaugh. A tiny bird with tall, skinny legs and a black ring around its neck scuttled across the road.
Navigating his white pickup truck last week across a tilled landscape that might soon be underwater, Mr. Grewal, 66, the consultant, said there was no way these flatlands, stretching for miles under wide blue skies, would avoid inundation. He said the melting snow would have far worse impacts than the flooding that had already occurred.
“A heavy snowmelt in May is going to be a disaster,” Mr. Grewal said. “This lake could cover hundreds of square miles here by the time everything comes down.”
Another good day in the market today. SPX is up 8% since mid March.
Even for JNJ that's a damaging amount of money.
Did I read this correctly? Ten years ago Florida decided to let Florida Man sue his insurance company and no matter the outcome the insurance company has to pay attorney fees? As if there weren't enough ambulance chasers in Florida.
How do you get a lawyer out of a tree? Cut the rope.
And the MSM is set to make millions in ad revenue from the Donald Trump show arriving in New York tomorrow. Maybe CNN will have a camera on his empty limo while he's inside getting his mug shot.
Thanks Court. I check in on them every month or so and keep them on my watch list. I'll do some more research this spring and see if the numbers make sense for me.
Any idea why BYDDY stock price has flatlined over the last couple of years? Is it just catching up from all the 2020 exuberance? I sold my shares in the high 70s over a year ago when Xi began sabre rattling against Chinese companies.
From Maggie Haberman at the NYT. This is similar to what I was saying last week when it was announced. There may be 30 charges but it's all business related and will likely end up in fines.
Agree with that. Energy cost is always the underlying cause of inflation. Attached below is a chart of the 10-year treasury bond. It's been in a downward channel since the peak last October which of course was also the market bottom. Unless the direction of energy cost and inflation changes we shouldn't see 4% again on the 10-year bond. I also expect mortgage costs to fall.
It's not 2008 but I think I'll leave this signature on for a while. There's more fallout coming.
Lots of outstanding commercial debt is coming due over the next few years. After a decade or so of very cheap debt financing commercial buildings are not looking like excellent customers for banks and other lending facilities. The post pandemic period has not been kind to commercial office space. It's a good time to review REIT holdings to understand their holdings and their debt profile. Basically, is there exposure to commercial office space, debt to equity ratio and when will that debt roll over. There will be significant financial pain over the next couple of years. In locations like New York and San Francisco, (silicon valley), values could drop 50% if rates remain elevated.
Quick note regarding the SPX. Although the 1st trading day of the month is often an up day as money flows into the market, we finished the day today above the upper Bollinger Band. This will often indicate that the market could take a breather or a negative move.
No but 3,900 is totally worn out..have a good weekend.
I need an SPX 4,100 hat..:).
February PCE, (personal consumption expenditures), was lower than expected at .3% or extrapolated yearly, 3.6%.
If we look at the recent past, Republicans have done an excellent job of causing problems, (Trump's tax plan for billionaires as an example), then blaming Dems for the outcome. Dems are generally too ineffective to stop hitting themselves. Since Dems are the Rodney King of American politics, I'm sure they'll accept reasonable compromises to get this done. The problem is that Republicans vote as a block even if they disagree with a position. This means that if the zero compromise Freedom Caucus can maintain control, there's very likely no way five Republicans will break away. McCarthy may allow four to breakaway so they can tell their constituents they tried, but Trump and the Freedom Caucus will destroy the careers of any group large enough to make them lose control. See the 2018, 2020 and 2022 elections to understand how many good, middle-of-the-road Republicans have been run out of the party.
Here's one example. When Donald Trump allegedly led a seditious conspiracy on January 6 2020, 10 Republicans voted for impeachment. This was allowed by leadership because the 10 additional votes were meaningless. Non-the-less, here's the outcome for those Congress folks. Two out of ten are terrible odds.
1. Liz Cheney - Primaried by Trump and disgraced within her party. Lost.
2. Adam Kinzinger - Retired, works for CNN.
3. Tom Rice - Primaried by Trump, lost.
4. Dan Newhouse - Primared by Trump but won re-election, (Washington state).
5. John Katko - Retired.
6. Jaime Herrera Beutler - Primaried by Trump, lost.
7. Peter Meijer, Primaried by Trump, lost.
8. Fred Upton - Retired.
9. David Valadao - Not primaried at the request of McCarthy.
10. Anthony Gonzalez - Retired.
While the MSM is busy buying eyes and ears with the only mildly important New York charges against Trump I see the real story as the nearly universal scorched earth mindset of the Republican party. Party members appear prepared to go to war with Dems, not over Trump but over the budget. This is a more subtle story so not one the MSM cares to feature. I think investors should be watching this closely and modifying investment strategies to a much more conservative position if this problem is not resolved before summer. Prior to the Trumpification of the Republicans, destroying the credit worthiness of the US would have been unthinkable but I believe now they will do anything to regain power in 2024 and I don't think Dems are smart enough to negotiate a solution if the Republicans give no ground. It's possible there will be some sanity from about 10% of Congress on both sides so we can resolve this issue but I don't see it now. The power grab of the Supreme Court worked well for them and the 2020 power grab of the Administration almost worked, it just needed more planning and better messaging. We should all keep our eyes on this issue and prepare accordingly.
‘It’s not zero.’ Wall Street is pricing in a small but growing risk of a disastrous US default
A US default would have such devastating economic and financial consequences that many observers dismiss the possibility out of hand. But investors are not ruling out such a nightmare scenario.
Even though a default could wipe out millions of jobs and wreak havoc on Wall Street, the White House and Republican leaders in Washington are nowhere near a deal to avert disaster that could strike as soon as July.
As politicians sleepwalk toward a potential debt ceiling crisis, financial markets have begun pricing in a small — but growing — chance of a disastrous default.
The implied probability of a US government default has increased to approximately 2%, according to modeling by research provider MSCI shared exclusively with CNN. That calculation is based on the cost to insure US debt in the market for credit default swaps.
Although the probability of default is tiny, it has increased roughly fivefold since January 2, MSCI said.
Since then, chaos in Congress, underlined by the historic dysfunction leading up to the election of House Speaker Kevin McCarthy, have raised concerns about how lawmakers will reach a compromise on much thornier issues such as the debt ceiling.
“The probability of default has gone up noticeably,” Andy Sparks, head of portfolio management research at MSCI, told CNN in an interview. “It is small, but it’s not zero. And it has gone up in a very significant way.”
An actual default would be terrible — for both Wall Street and Main Street. Moody’s Analytics chief economist Mark Zandi has described a default as “financial Armageddon.”
“I don’t think anyone should be complacent about this,” said Sparks. “Turmoil in the banking system shows how things can change very quickly.”
The federal government hit the $31.4 trillion debt ceiling in January, forcing Treasury Secretary Janet Yellen to take accounting moves known as “extraordinary measures” to avoid default.
Yellen has used unusually strong language for a former central banker to warn Congress against messing with the debt ceiling. On Thursday, Yellen said a breach of the debt ceiling could spark a “prolonged downturn and a global financial crisis.”
“It could upend the lives of millions of Americans and those around the world,” Yellen said in a speech.
Goldman Sachs chief economist Jan Hatzius told CNN in January that even a near-default could cause a recession as well as turmoil in financial markets. Moody’s estimates that even a brief breach of the debt limit would kill almost a million jobs.
All of this explains why many believe Washington will get a deal done before disaster strikes, as it has in the past.
Even though leaders in Washington are not seriously negotiating on a debt ceiling deal, there is still time.
The Congressional Budget Office has estimated that even without addressing the debt ceiling, the government will have enough cash to avoid a default until sometime between July and September. The exact timing for the so-called X-date will depend in large part on 2022 tax collections in April.
Tom Barkin, president of the Federal Reserve Bank of Richmond, told CNN last week that it’s “hard to imagine” the government would breach the debt ceiling.
Still, Barkin conceded if it happened the Fed would be forced to react, much like it did after the Sept. 11 terror attacks.
Others are more pessimistic about the debt ceiling.
Greg Valliere, chief US policy strategist at AGF Investments, only sees a 60% chance that Congress reaches a deal to address the debt ceiling.
“I think we’ll come right up to the precipice,” Valliere, who is based in Washington, told CNN. “Most people in this city feel it’s inconceivable we could default on our debt. I agree it’s unlikely but it’ll be much closer than people thought.”
He pointed to the more radical makeup of the Republican caucus and the reluctance among some lawmakers to vote for a debt ceiling hike.
Even McCarthy, the Republican House Speaker, told CNBC this week there has been “no progress” in negotiations. “Time is ticking. Now I’m very concerned about where we are,” McCarthy said.
“I worry there are just enough House radicals who might not accept anything. And it doesn’t take many of them to make this a crisis,” Valliere said.
Asked about MSCI’s estimate of a 2% implied probability of a default, Valliere said that number is low.
“The markets are too sanguine,” he said. “The market has felt for months that this is like the little boy who cries wolf. But this is not a typical debt ceiling debate.”
There are some early indicators of concern popping up in the bond market.
Morgan Stanley wrote in a report on Thursday that “kinks” have emerged in the Treasury bill market around bonds that mature around the X-date.
“Market attention could swing back to this issue soon” Morgan Stanley advised clients.
Or maybe not.
McCarthy and his top lieutenants say they are prepared to push ahead with a fallback plan: A party-line bill to raise the debt ceiling, CNN’s Manu Raju reports.
But such a move could be risky. Republicans can only afford to lose four of their own members in any party-line vote.
There is also a possibility that Congress punts, reaching a short-term agreement to delay the issue by a few months.
Eurasia Group analyst Jon Lieber said in a report Thursday there is a growing chance that lawmakers put off a debt ceiling solution until the end of the year.
“A short-term punt would merely delay and not eliminate the disruption risks of the debt limit,” Lieber said.
The New York charges should be unsealed next week. It appears that all charges are a bit ho-hum, business related. As for treason, or any other charges at that level, that will be up to Milquetoast Merrick. My understanding is that Trump's January 6 attack on the transfer of power is sedition and not treason. Treason requires giving aid and comfort to enemies of the US. What Trump appears to have engaged in was seditious conspiracy. This quoted from 18 USC Chapter 115:
From CNN: Trump indicted in New York. He's to be arrested and charged next week.
Not making payments for years while interest rates are held to 0% is idiotic unless, of course your major in Sanskrit calligraphy and the store on Etsy isn't paying off yet...fully understandable and you should just follow your dreams..:).
As the SPX moves up toward the upper part of its long term range a cautionary note from Barron's. The good news is that we opened April 2022 at SPX 4,550 and we're currently 11% below that at 4,050 so much of this bad news is already built into the market price.
The Quarter Is Ending, and Earnings Season Will Start Soon. Why It Could Break the Market
The first quarter is ending, and that means earnings season is just around the corner. It’s one that will help the market decide if it wants to head higher—or retest its 2022 lows.
Analysts predict that S&P 500 earnings per share will decline 4.6% in the first quarter of 2023 compared with a year earlier, according to Refinitiv. That would follow a 3.2% year-over-year decline in the fourth quarter.
The estimates have been coming down fast, with many of the cuts prompted by cautious guidance from management teams early this year. On Jan. 1, the consensus estimate was for 1.4% EPS growth for the first quarter. Six months earlier it had been for 9.9% growth.
Revenue is forecast to continue growing—by 1.7% as of the latest consensus estimate from Refinitiv—but high inflation and a tight labor market are pushing costs up faster than firms can raise prices.
As is often the case, it’s the implications for the future that will really matter. Forecasts for later in 2023 stand to be cut should first-quarter earnings season resemble the fourth quarter of 2022’s, when the percentage of S&P 500 companies that beat profit estimates was the lowest since the depths of the Covid-19 pandemic. That could be a problem because the current consensus calls for 10.6% year-over-year EPS growth in the fourth quarter of 2023, down only slightly from the 10.8% growth forecast on Jan. 1.
That’s in stark contrast to economists’ forecasts for a second-half downturn. Simply put, stock analysts appear too optimistic about the end of the year.
The longer those estimates remain high, the bigger an issue they will become for investors, who are waiting for the next shoe to drop. “The sooner estimates get in line with the macro backdrop, the sooner, and more likely, the market can re-establish an uptrend,” wrote Ed Clissold, chief U.S. strategist at Ned Davis Research. “If analysts kick the can down the road, it increases the likelihood of negative surprises in the second half.”
The market’s rich valuation doesn’t leave much room for error. The S&P 500 trades for about 17.5 times 2023’s consensus $221.40 in EPS, which would be up about 1.5% from 2022’s total. That’s still a pricey multiple, one that could be at risk if estimates come down.
Then again, investors may not care. The market is always looking ahead to what comes next, and looking further ahead to 2024, the picture is rosier. Analysts’ consensus estimate is for a record-high $247 in S&P 500 EPS next year, which would be up 14% from 2022.
As the year plays out, the focus will increasingly shift to that forecast, and investors could look past a 2023 dip in earnings to better times ahead—unless analysts have 2024 wrong too.
There is one group of stocks that will have a lot riding on their first-quarter reports, probably more than others. That would be the big banks that kick off the earnings season, as usual, starting with JPMorgan Chase JPM +0.29% (ticker: JPM), Wells Fargo WFC +0.68% (WFC), and Citigroup C +0.81% (C) on April 14.
The scale of banks’ provisions for loan losses will be the key to watch there. Those are noncash charges but nonetheless weigh on reported earnings, and they will send a signal about how banks expect the economy to hold up in the months ahead. Investors will also want to hear from management teams on the impact of the recent banking drama—and whether the problems it created it will linger through the year.