2023-05-02 06:59:30 ET
Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify U.S. government could run out of money, measures by June 1, Yellen tells McCarthy. Struggling to find a buyer , Vice ( VICEM ) is preparing to file for bankruptcy. Morgan Stanley ( MS ) to slash 5% of jobs as dealmaking suffers - reports. Learn more about these stocks with Seeking Alpha Premium .
This is an abridged transcript of the podcast
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A warning about the debt ceiling. Treasury Secretary Janet Yellen says the U.S. could run out of extraordinary measures as early as June 1st, sooner than expected
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The Federal Open Market Committee gets together for their two-day meeting starting today. *audio from Chaim Siegel* Chaim Siegel is the Investing Group Leader of Fed Trader. He says he believes the fed and the market should work together.
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Vice Media is in trouble. The media company is struggling to find a buyer and reports say it could file for bankruptcy within the next several days.
OUR TOP STORY
The Treasury Department could run out of extraordinary measures to pay the government's bills as early as June 1, if the government's debt limit is not raised or suspended.
That’s the message from Treasury Secretary Janet Yellen in a letter to House Speaker Kevin McCarthy and Congressional leadership on Monday.
That contrasts with her update in January that estimated it was unlikely to run out of cash and extraordinary measures before early June. The latest estimate was calculated after the Treasury Department reviewed recent federal tax receipts.
In the letter, Yellen said, "Given the current projections, it is imperative that Congress act as soon as possible to increase or suspend the debt limit in a way that provides longer-term certainty that the government will continue to make its payments," she emphasized.
She once again reminded Congressional lawmakers the importance of dealing with the debt limit before it's too late saying, "waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence” and failing to increase the debt limit, "would cause severe hardship on American families."
Last month, McCarthy introduced a bill that proposed raising the $31.4T debt ceiling by $1.5T along with limiting federal spending.
We’ve also learned, according to reports, that President Biden has scheduled a meeting with top congressional leaders on the debt ceiling. That meeting is scheduled for a week from today on May 9.
Meanwhile, this is all happening as the economy deals with three bank failures in the past seven weeks.
The Federal Deposit Insurance Corporation released on Monday an overview of the deposit insurance system and suggested three options for reform to address financial stability concerns.
As it stands now, the FDIC caps deposit insurance at $250K per depositor, per bank, regardless of whether that account is for an individual or a business.
In one option, the regulator suggested targeted coverage that would offer different deposit insurance limits across account types; business payment accounts would have significantly higher coverage than other accounts.
It also suggested maintaining the current deposit insurance framework that provides insurance to depositors up to a specified limit, possibly higher than the current $250K limit. Another option would be to extend unlimited deposit insurance coverage to all depositors, it said.
While the proposed options would require Congressional action, some aspects of the report "lie within the scope of the FDIC's rulemaking authority," it said.
While the FDIC seized First Republic Bank (NYSE: FRC ) over the weekend, the resolution and sale of assets to JPMorgan Chase (NYSE: JPM ) protected all deposits, including uninsured ones, and didn't require a systemic risk exception.
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Today is day one of the Federal Open Market Committee’s two day meeting.
The fed has received a lot of criticism about its attempt to rein in inflation.
The central bank is widely expected to raise rates another 25 basis points. Market watchers will keep a keen eye on the Fed's commentary as well, looking for signs about what it plans to do with rates in the near term.
Chaim Siegel is the Investing Group Leader for Fed Trader on Seeking Alpha…
He’s getting real about what he thinks of the current fed…
*audio from Chaim Siegel*
That was a snippet of an interview from the Investing Experts Podcast on Seeking Alpha .
I’ll leave a link to the episode in show notes.
Tomorrow here on Wall Street Breakfast for stock of the week Wednesday, we’ll hear from Chaim about what he says is the most important stock and why.
If you can’t wait to find out. I understand. He talks about it in the episode of the Investing Experts podcast I’m linking in show notes.
NOW MORE ON THE MARKET
Ahead of crucial news due out later in the week, Wall Street largely moved sideways on Monday.
The Nasdaq ( COMP.IND ) closed -0.1%, the S&P 500 ( SP500 ) finished fractionally lower and the Dow ( DJI ) ended -0.1%.
Six of the 11 S&P sectors ended lower, led by greater-than-1% drops in Consumer Discretionary and Energy. Meanwhile, Health Care, Industrials and Utilities posted modest gains.
Otherwise, investors looked ahead to key news likely to drive trading later in the week. This includes the Federal Reserve, which is scheduled to announce its latest interest rate decision on Wednesday.
Ahan Vashi is a market expert. He tells Seeking Alpha, " Last week, the S&P-500 ( SPX ) managed to close right above the 4,100 to 4,150 resistance zone, and the fact that we are holding above those levels shows the market's resilience." He went on to say that "with the Fed's FOMC outcome announcement on Wednesday and Apple's ( AAPL ) report on Thursday, we will likely get more market swings and higher volatility."
Vashi added: "Investors would be wise to err on the side of caution and maintain a defensive portfolio positioning until we get a clear breakout above February highs."
Meanwhile, the bond market was dominated by selling, sending yields higher. The 10-year yield ( US10Y ) climbed 15 basis points to 3.60% and the 2-year yield ( US2Y ) rose 8 basis points to 4.15%.
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MORE OF OUR TOP STORIES
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Banking giant Morgan Stanley (NYSE: MS ) seems to be prepping for more layoffs with almost 3,000 employees globally losing their jobs, according to reports.
The number would represent 5% of total staff, not including financial advisers and support personnel of the company's wealth management division.
Previously, Morgan Stanley also announced a 2% workforce reduction in December.
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Hollywood writers voted Monday night to go on strike just after midnight Pacific Time.
This is the first strike in the entertainment industry since the strike of 2007.
The Writers Guild of America West and Writers Guild of America East voted unanimously to authorize the strike and begin picketing Tuesday afternoon.
"The decision was made following six weeks of negotiating with Netflix (NASDAQ: NFLX ), Amazon (NASDAQ: AMZN ), Apple (NASDAQ: AAPL ), Disney (NYSE: DIS ), Warner Bros. Discovery ( WBD ), NBCUniversal ( CMCSA ), Paramount+ ( PARA ) ( PARAA ) and Sony ( SONY ) under the umbrella of the [Alliance of Motion Picture and Television Producers]," the WGA West said.
While network shows will see their pipelines start to empty, immediate effects will be felt on late-night talk shows,
Deadline noted that the late-night shows are set to go dark and replace their new programming with reruns starting Tuesday.
What’s the difference between 2007 and 2023? Streaming and AI.
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Vice Media ( VICEM ), whose assets include Vice News, Vice TV, Refinery29 and Motherboard, is reportedly preparing to file for bankruptcy within the next several days.
While more than five companies have expressed interest in acquiring the company, according to The New York Times, chances of that are growing increasingly slim.
It's a major turn in fortunes for a media startup that was valued at $5.7B at its peak in 2017, but was battling for a valuation of just $1.5B in December 2022.
In terms of ownership, private equity firm TPG Inc. (NASDAQ: TPG ) owns 44% of Vice Media. Disney (NYSE: DIS ) is also a significant shareholder of the company, with a 16% direct stake and another 10% via its holdings in A&E Networks.
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By the way you can always find an abridged version of the transcript for the podcast on Seeking Alpha.com . There’s a link in show notes that says Wall Street Breakfast. Just click on the podcast for today and that’s where you’ll find the transcript.
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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is down 0.1%. The S&P 500 is down 0.1% and the Nasdaq is up 0.1%. Crude oil is down 0.5% at more than $75 a barrel. Bitcoin is down 2% at less than $28,000.
In the world markets, Shanghai is closed for a holiday. The FTSE 100 is down 0.1% and the DAX is down 0.1%.
On today’s economic calendar, the two day FOMC meeting begins today.
For further details see:
Wall Street Breakfast Podcast: Yellen Warns U.S. Could Default On Debt Soon