The vitriol surrounding the debt ceiling may soon become apocalyptic.  Like most on Wall Street, I believe there will be an 11th hour resolution as been the case with the 22 other times.  The ramifications of a default will be cataclysmic and to suggest otherwise is nothing other than complete naivety.

Speaking of utter foolishness, some are advocating a trillion-dollar coin.  As everyone knows from their seventh-grade civics class, spending bills must start and end the House.  If the Treasury can circumvent Congress, any time the Treasury needs money all it has to do is mint a coin.  Talk about a massive currency debasement, a debasement or devaluation that would make all devaluations look like child play.

The US dollar—which is the world’s only reserve currency—would be crushed.  Treasury yields would surge.  Equities would crater.

I rank a trillion-dollar coin up there with Dogecoin, the mythical cyber currency hyped by Elon Musk.  Oh wait a second, last quarter Dogecoin is/was 4% of Robinhood’s revenues.   There is a quote from P.T. Barnum that is perhaps appropriate here.

Radically changing topics, the ADP Private Sector Employment Survey was stronger than expected, perhaps suggesting workers are returning to the work force following the expiry of enhanced unemployment benefits. Will this strength translate into tomorrow’s BLS Employment report?

Equities were volatile yesterday, trading considerably lower on inflation fears.  A midafternoon headline stating a possible debt extension reversed declines to end moderately higher. Bloomberg reports it was the biggest reversal since June 2020.  Is the grand finale of the “buy on dip” strategy, a strategy some pundits declared as dead before Wednesday’s opening?

What will happen today?

Last night the foreign markets were up.  London was up 1.12%, Paris up 1.52% and Frankfurt up 1.28%.  China was up 0.90%, Japan up 0.54% and Hang Seng up 3.07%.

The Dow should open nominally higher on progress on the debt ceiling talks and kick the proverbial can down the road into December and Russia’s offer to ease Europe’s energy crunch.  The 10-year is off 1/32 to yield 1.53%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.