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Negotiating Away Debt Dependency

January 22, 2013

Only a few weeks remain until the debt ceiling and sequester become hot topics again, making the
current period feel much like ongoing rehabilitation than a quick resolution.
-Jason Pride, director of investment strategy, Glenmede


Negotiating Away Debt Dependency

- Only a few weeks remain until the debt ceiling and sequester become hot topics again, making the
current period feel much like ongoing rehabilitation than a quick resolution.

- The change to government spending enacted by the American Taxpayer Relief Act (ATRA) will be a
fiscal drag this year. The current deal creates a 0.5%-to-1.0% headwind, but this could move closer to
1.5% or more if negotiations break down and the automatic sequester is permitted to begin. Further,
negotiations run the risk of leading to a temporary government shut down and an associated shock to
investor confidence and the economy.

- Moderate economic growth continues as positive/mixed economic statistics continue to be released.
This week brings more US leading indicators with the Richmond Fed and Markitís Flash PMI.

- Housing remains a bright spot, with starts and prices continuing to rise. An ongoing updraft in housing conditions provides a tailwind to growth.

Also:

  • Europe: Painkillers, Anyone?
  • Central Banks: "Everyone is Doing It"

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