Debt Ceiling Crisis Averted!

The debt ceiling talks have continued, and have been far from ideal. Markets were pricing in a technical default from the United States on its debt but it appears as though a provisinoal deal has been met between the two sides ensuring that this will not happen.

We also saw a major event faked with AI that shook markets, and we best believe that regulatory authorities are paying close attention, ready to jump in and try to prevent anything so severe from happening in the future. The only question is “will they be successful?”

Finally I’ll also be introducing you all to my personal favourite newsletter (other than Stoic Markets of course) later on in the email…

The Debt Ceiling Isn’t Going To be Hit (Probably…)

We’re all aware of what’s going on in the US as we speak, a political war over the American Debt Ceiling, and how much it should be raised by. For anyone who has remained even loosely interested in politics in recent decades this will all be very familiar.

What’s worth talking about today, is that a provisional deal has been made between both sides that should ensure the US will not default on its debt. This is certainly good news in the short term, as a crisis in this sense could prove catastrophic, but what it also means is that the US’ massive deficit and stupidly large spending is going to continue for another 2 years at a minimum.

This on the whole is good news for financial markets, but will help to ensure inflation levels remain high into the future, as a massive degree of buying pressure comes from extensive government support, and this “in principle” deal ensures that is not going to stop any time soon.

As a rather sinister silver lining, this deal does at least ensure federal spending isn’t about to increase drastically as Biden had wanted.

Bond markets and stock markets had been negatively impacted by this whole ordeal over recent weeks, and so most investors are expecting a solid rebound to come next, though nothing spectacular seems to be on the table.

While this crisis has been averted it seems, Core-inflation remains far higher than is acceptable, the Fed is likely to reverse their halt on interest rate hikes and continue within a couple months, and student debt repayments are set to restart shortly which threatens to siphon away $400 every single month from almost 50 million Americans.

AI Generated Attack On The Pentagon

A few days ago on the 22nd, an AI generated photograph showing an explosion near the Pentagon went viral on social media. The photo first started circulating on Facebook but it soon spread to Twitter accounts with large followings.

This of course resulted in widespread panic as the photo was posted by “reliable news outlets'' on Twitter like ZeroHedge and even RT.

The fake news briefly shocked the stock market which was evident in the rapid 0.3% decline in the S&P 500 (the top 500 companies listed on exchanges in America) as soon as the false image gained traction.

This decline in the S&P 500 was very brief and only lasted for a few moments until it was confirmed the photo was generated by an AI and entirely fake. So what should we take away from this?

Don’t always believe the media! - ZeroHedge has pushed plenty of outright false stories in the past, and they make no attempt to verify or fact check their claims, as evident in this case.

RT equally has a vested interest in seeing problems in America, and in persuading others that the US is in a bad position, so they jump on any opportunity like this to spread their agenda.

These sites are also well aware that some people will see their initial reporting and take it as gospel, only to not see or notice the subsequent retractions or other news pieces debunking their claims.

In this specific circumstance, the total impact was rather minor, a 0.3% almost instant drop in the S&P 500 which was subsequently reversed just as quickly, but we must be wary of what might come in the future.

Deepfake videos are created by AI to make it truly look and sound like someone we know, usually a politician is saying something, and thanks to the incredible advancement of AI in recent years it can be incredibly difficult to tell these apart.

I’ve personally seen videos of Joe Biden and Donald Trump that turned out to be deepfakes that even fooled me. The only saving grace was the thing they were saying was so ludicrous and outlandish it clearly wasn’t legitimate.

The Curiosity Chronicle

I’ve spent 10+ hours every week for the last four months building my email newsletter Stoic Markets out to it’s current state of 30,000 subscribers!

And in doing so I’ve grown a newfound respect for others building out their newsletters, so I thought it’d be nice if I take one brilliant newsletter and introduce you all to it each week, and help them grow as well.

Today’s pick is the Curiosity Chronicle, enjoyed by myself for the last 2 months. Just click this link below to sign up instantly for free!