October Fund Thought Leadership Insights – Top Five Discussions of the Debt Ceiling

by on Oct 28, 2013

All eyes were on Washington this October. The federal government shuttered its doors and the nation’s “leaders” brought the United States debt-ceilingperilously close to a default on national debt. Financial thought leaders turned their attention to the manufactured crisis. While the issue is now resolved for the time being, this month we examine how top asset management firms responded to the crisis:

1.   OppenheimerFunds: Debt Ceiling What if the Worst Doesn’t Happen – Chief Economist Dr. Jerry Webman weighed in on the shutdown gridlock. Dr. Webman opined that it might be possible for Congress to reach a deal that could help spur future growth. The article recommends that investors remember that positive outcomes can happen.

OppenheimerFunds Blogs on the Debt Showdown
OppenheimerFunds Blogs on the Debt Showdown
2.   J.P. Morgan: Investing Through the Washington Mess – J.P. Morgan’s Dr. David Kelly recommends that investors remain focused on their investing goals rather than allow their political views to influence rash decisions. To that end, Kelly suggests looking at data released before the shutdown and try to guess what this means for the markets once the government reopens.

 

3.   Invesco: The U.S. Government Shutdown and the Debt Ceiling – Invesco’s John Greenwood explains that the October 17 debt ceiling deadline represented a likely date for the crisis to reach its end. Greenwood notes that the shutdown reduced the GDP by about $160 million per day due to furloughed workers not receiving pay. The article explains that in 2011, Treasuries performed well following the shutdown due to their “safe-haven” appeal outweighing credit concerns.

 

Invesco’s John Greenwood Examines the Debt Ceiling
Invesco’s John Greenwood Examines the Debt Ceiling
4.   Federated: Orlando’s Outlook: Washington’s Leadership Vacuum – Federated’s Phil Orlando weighs in on the situation in Washington. Orlando explains that the shutdown prevented the employment report from being published. The piece predicts a correction until the end of the shutdown, at which point a stock rally was expected.

 

5.   Allianz: Making Sense of a Senseless Shutdown – Allianz’s Peter Lefkin and Kristina Hooper provide their own insights on the shutdown. The authors note that the shutdown contributed to a sense of disgust among the public for Congressional leaders, particularly those in the Republican Tea Party. Lefkin and Hooper predict that one result of the shutdown will be an extension of QE.