The U.S. Faces Debt Ceiling Drama

Author

Euan Marshall
May 16, 2023

Good Morning,

Strategists are warning about market turmoil and economic disaster if politicians don’t agree to raise the U.S. government’s debt ceiling, the New Zealand Government has included $1 billion in this week’s budget to pay for the rebuild after Cyclone Gabrielle, olive oil is set to get more expensive after a poor season in the Mediterranean and China aims to improve their country’s falling birth rate through a number of pilot projects.

Let's jump in.

Before The Bell

Markets

  • Falling bond yields, fear over the US debt ceiling and an end to the US Federal Reserve’s interest rate tightening cycle have created a “near enough perfect backdrop” for the gold price to forge a record high, according to analysts at Macquarie (AFR)

  • US shares moved broadly higher as investors looked for progress in Washington debt-ceiling talks (BBG)

  • National Australia Bank has lifted its expectation that the cash rate could rise two more times to repel still-high inflation as the US debt ceiling stand-off added to worries about the prospect of a recession (AFR)

  • The futures market is betting whole milk powder prices will rise at the Global Dairy Trade auction this week (Stuff)

  • Olive oil is set to get more expensive after a poor season in the Mediterranean lead to the highest global prices in 26 years (Stuff)

  • China’s central bank rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Monday, as expected (RT)

  • Synlait Milk hit a record low of $1.38 during intraday trading, and closed down 2.1% at $1.41 after warning investors late last month that it may report a loss in the year to the end of July (Stuff)

Earnings and Data

  • ScamWatch reveals that Australians have already lost an astounding $88.7 million AUD to investment scams this year (AFR)

News Summary

  • A powerful cyclone has hit the coastlines of Bangladesh and Myanmar after intensifying into the equivalent of a category-five storm (BBC)

  • This week’s Budget includes a billion dollars’ worth of spending to pay for the rebuild after Cyclone Gabrielle but it does not appear to include any new funding to help businesses recover from the damage the cyclone wrought (NBR)

  • The former heads of two failed banks in the United States look set to be grilled this week, as politicians assess the collapses of Silicon Valley Bank and Signature Bank (NBR)

  • Three days before the Budget, the Act Party has released its alternative budget laying out a programme of tax cuts and cuts to the public service, but with an almost doubling of spending on defence and more money for GPs (NBR)

  • China will launch pilot projects in more than 20 cities to create a “new-era” marriage and childbearing culture to foster a friendly child bearing environment (RT)

  • Apple has begun testing speedy new M3 chips as it pursues a Mac comeback (BBG)

  • China has sentenced a 78-year-old American passport holder to life in prison on spying charges, as the world’s No. 2 economy prioritises eliminating national security risks (BBG)

Deal Flow

Investments / M&A

  • Newcrest Mining’s board said it plans to accept Newmont Mining’s $26.2 billion takeover bid, with junior gold miner Genesis Mining also sweetening its bid for St Barabara’s Gwalia mine in Western Australia (AFR)

  • Two of Australia’s leading food and restaurant technology start-ups are looking at merging, with Melbourne-based Mr Yum and Sydney’s me&u engaged in negotiations about creating one company (AFR)

  • TPG Capital has returned with an improved A$1.9 billion bid for InvoCare, Australia’s largest funeral provider (AFR)

Equity Raises

  • Cuscal Limited, the end-to-end payments outfit owned by MasterCard, Bendigo and Adelaide Bank and most of the big credit unions, is eyeing an ASX float which would value the business at up to A$500 million (AFR)

Daily Picks

  • Learn more about BioEye, a Sydney-based medical technology company with aims to reduce concussions in sports in this article by AFR

Job Board

New Zealand

  • ASB rural banking graduate - Apply here

  • Waterman Capital investment analyst - Apply here

Australia

  • Citadel Securities graduate and intern roles - Apply here

  • Goldman Sachs Investment Banking Intern - Apply here

  • IMC graduate and intern roles - Apply here

  • Jarden

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  • Macquarie graduate roles - Apply here

  • Optiver

    • Graduate role - Apply here

    • Internships - Apply here

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