Welcome to the Weekly Update, where we bring you the latest news and analysis on the markets, the economy, and your finances.
It has been another eventful week for the US economy, with several noteworthy developments. Reports indicate that the US national debt ceiling is rapidly approaching, and the country could potentially default as early as June 1st. On Tuesday, President Biden and House leader McCarthy met to discuss raising the debt limit, but little progress was made. However, both leaders expressed their commitment to ongoing discussions, leading to the cancellation of a scheduled follow-up meeting on Friday to allow more time for their staff to make progress.
Debt ceiling talks
The White House has consistently maintained that President Biden would only accept a “clean” bill, meaning a debt limit increase with no additional conditions attached. However, most Republicans strongly disagree with this stance and are pushing for significant spending cuts to be tied to raising the debt limit. This impasse sets the stage for a potential showdown, with less than two weeks remaining before the US could begin to default on its loans. The upcoming week will be crucial in determining whether both parties can compromise.
Inflation
In other news, this week, the Consumer Price Index (CPI) was released, indicating a slight decrease in inflation to 4.9%. The CPI is a measure used to track changes in the average price level of goods and services consumed by households over time. It examines the price changes of a basket of commonly purchased items and indicates inflation. The positive trend of decreasing inflation provides some much-needed optimism for the economy. The Federal Reserve will likely closely analyze these developments as they consider the need for further interest rate hikes.
Company news
Elon Musk made a significant announcement this week, revealing that he has hired Linda Yaccarino, the current head of NBCUniversal’s advertising department, as the new CEO of Twitter. While Musk will retain the chairman and chief technology officer roles, Yaccarino’s appointment is expected to bring a fresh perspective to the company. This news is undoubtedly positive for investors of both Twitter and Tesla (TSLA), as it may alleviate concerns that Musk’s involvement with Twitter was distracting from Tesla’s operations. It will be interesting to observe where Musk directs his efforts now that a new CEO is at the helm of Twitter.
Disney shares (DIS) experienced a decline this week after the company announced a loss of over four million subscribers for its streaming network, Disney+. The significant decrease in subscribers was primarily attributed to the loss of streaming rights for Indian cricket matches in India. Within the US, Disney+ also lost approximately 300,000 subscribers. The ongoing streaming wars among platforms like Netflix, Disney+, Hulu, and Apple TV, combined with rising subscription costs, have made it challenging for customers to choose the most suitable streaming network for their preferences.
Title 42
Another notable event this week was the expiration of Title 42, a public health order that allowed the US government to expel migrants at the border without permitting them to seek asylum. The order was initially implemented in response to the COVID-19 pandemic but expired Thursday night.
The Biden administration argues that Title 42 is no longer necessary since the COVID-19 pandemic is no longer a public health emergency. However, some experts have expressed concerns about the potential indirect financial costs of ending Title 42. One primary concern is the potential strain on border resources such as housing, food, and medical care if there is an increase in the number of migrants seeking asylum. Additionally, ending Title 42 could lead to more migrants being released into the US interior, placing further strain on social services in communities that are already struggling.
The Biden administration has expressed its preparedness to manage a potential rise in migrant numbers at the border, although the exact cost remains uncertain. According to some experts, ending Title 42 could potentially result in billions of dollars in expenses for the federal government. The indirect financial implications of ending Title 42 are still unclear, but they could be substantial. As events unfold in the upcoming weeks, Congress may find it necessary to seek additional funding support should a significant influx occur at the southern border. This situation adds an interesting dynamic to the ongoing debt ceiling limit discussions.