May 20, 2022
This weekend, the politicians are suppose to reach a Sunday compromise, in order to once again raise the debt limit from the current level of $32 Trillion Dollars, and avoid the U.S. Government defaulting on its debt obligations.
The two sides seem to be very far apart, so my guess they will come up with some kind of band aide and give themselves a few more weeks to try to find a balance that is acceptable to both extreme groups.
Meanwhile, the big cap names have surged to almost record highs, while the broader market continues to show signs of weakness.
For what it is worth, I continue to see signs of an economy in trouble. Driving down the main shopping corridor in North Bethesda, Maryland and out as far as Gaithersburg, Maryland, I see increasing signs of landlords looking for tenants. I see more and more “For Lease” signs.
Also, the problem of empty office buildings in major cities, like San Francisco, Chicago and New York, suggests that more and more major developers, like BX will walk away from their loans causing another major problems for mid sized banks which do not have the capital to take these financial hits.
Certainly, if the politicians work out something over the weekend we could have a sharp short covering rally. Although this is not investment advice, I continue to think the prudent investment theme would be to use rallies to build cash.
Are we heading into a replay of 2008?
Your thoughts would be appreciated.