The last week of September could keep investors on their toes. Already on Monday, the Senate will hold a vote on suspending the debt ceiling until 2022. Can President Joe Biden’s administration raise the debt ceiling to borrow even more money?
If the U.S. government’s overly critical plan fails, they would have to find other ways for the government to continue to operate. The Republicans now have it in their hands to block the move.
The Democrats, of course, will try anything to prevent that. They had announced earlier that if the bill fails to pass the Senate, lawmakers plan to find other ways to suspend the debt ceiling.
Other concerns for investors at the moment come from China. China’s second-largest real estate developer Evergrande (HK: 3333) missed yet another bond payment due last week. Financial markets are more than concerned about Evergrande’s situation. Could this be the beginning of a new financial crisis since the 2008 subprime mortgage crisis?
Financial experts are split on the question. What is certain is that some of the largest financial institutions are involved in Evergrande, such as Blackrock. ECB staffer Lagard has already tried to downplay the danger, saying that the eurozone has only limited involvement with Evergrande.
Investors should also keep an eye on the PMI manufacturing numbers that will be released at the end of the week.
It’s safe to say that this September is a month with a lot for investors to consider.
Those who follow history will notice that October will probably not bring any improvement. October is usually the month when the markets tend to move down.
Wall Street calls this period the “October effect”, the “tragic month of the stock market”.