Tue 05 Sep 2023 - 15:00 BST / 10:00 EST
Summary
During the ACG Analytics call, various topics related to the current U.S. political and fiscal landscape were discussed. Larry provided historical context by mentioning past Republican austerity measures and their economic impact, contrasting them with the Democrats' expansive fiscal policies to prevent austerity. David discussed divisions within the Republican party, including concerns about government spending, investigations into the Trump administration, and potential disagreements. He also raised the possibility of a government shutdown. John shared insights into upcoming Senate elections, emphasizing the uncertainty and lack of consensus on spending cuts among Republicans and Democrats. Chris focused on potential implications for the upcoming presidential election, citing the negative impact of a government shutdown and economic uncertainty on President Biden's approval ratings. He also mentioned China's economic challenges. The call delved into concerns about foreign ownership of U.S. treasuries and the potential need for another round of quantitative easing (QE). Discussions included the U.S. dollar's status as a safe haven and its strategic implications. The potential impact of a Trump victory in 2024, especially regarding Ukraine, was considered. Concerns about a government shutdown's fiscal impact and a 1% spending cut's significance in the bond market were raised. John noted Senate efforts to prevent the spending cut. The call covered various economic and political topics, highlighting fiscal policy concerns, treasuries ownership, and geopolitical implications.
Topics
Absent a spending agreement, the government will shut down on October 1st.
Short Fall legislative calendar (11 legislative days) makes passing legislation difficult.
House Republicans want deep spending cuts, while the Senate wants to adhere to top-line spending level laid out under summer debt ceiling agreement.
Not clear Speaker McCarthy has votes for stopgap measure (continuing resolution ‘CR’) and not much time to pursue other options.
Unlikely but possible that Democrats would help Speaker McCarthy, but this would jeopardize his Speakership.
Situation still developing, but potential for serious market disruption at the end of September or in December if Congress manages to pass a CR.
