After being away from the markets for a week, I’m still in the stage of catching up on the latest events. Nevertheless, I do have several chart setups that I am either monitoring or participating at the moment.
To recap recent events, there are two major ones. The first is what I like the dub the “North Korean missile crises” and the second is the Federal debt ceiling limits.
It really shouldn’t come as a surprise that North Korea will simply stand down at when confronted as they threatened Guam. Naturally, they’re at it again supposedly developing a hydrogen bomb. Despite President Trump weighs in on all possible options to address this issue including sanctions, I still believe North Korea will temporarily back down before restarting their missile testing once again. Given that North Korea has been under U.N. sanctions since 2006, we do not see a completely stop in their ballistic missile and nuclear programs. For the time being, safe haven currencies such as the Swiss franc and Japanese yen should expect to continue performing relatively well.
The second event, which I hope to learn more about as time goes by is the debt ceiling limits. As we are approaching the deadline (September 30th) to raise this limit, it could spell trouble when it comes to debt repayment and how much money the government could borrow. Despite the last government shutdown in 2013, I highly doubt the proposal to raise the debt ceiling will be met with much resistance. From what I read off NPR:
Not passing a debt limit hike in time would have an even greater impact on financial markets because when we did this in the past you had a Democrat in the White House and Republicans controlling Congress and people could basically understand the political aspects of what was going on. There was a mating dance and a conclusion.
This time it’s Republican versus Republican. I don’t know how anyone can interpret that. Is this some kind of mating dance again? Or is it some more critical failure of government? I don’t know how to answer that. There is a potential for more volatility this time around than there might have been in the past.
Although last minute, I do believe the debt ceiling will be raised. The federal flood insurance program is also due to expire next month and Harvey is a reminder of the funding necessary. Congress should take this into consideration when looking at the much needed spending in the Federal budget.
So far, this is what I make of the current North Korea situation and debt ceiling limits. I hope to stay tuned to the news for the remaining of the month to see how this pans out. Stay tuned for the next post capturing the non-farm payrolls release.