Debt Ceiling Deal Hopes

By TradeSmith Editorial Staff

Listen to this post
When U.S. stocks took a big hit on Tuesday — snapping a four-day winning streak — analysts cited a litany of possible causes.

But when the big indexes bounced back Wednesday, those same analysts cited only one cause: an upbeat development in the debt-ceiling crisis.

That upbeat news was delivered by U.S. House Speaker Kevin McCarthy, who said a deal to raise the country’s $31 trillion debt ceiling could be settled by “the end of the week.”

With U.S. Treasury Secretary Janet Yellen warning that the United States could default on its debt by June 1, hope for a resolution can’t come any sooner.

For folks who want to dismiss this as just the latest Washington hullabaloo, think again. A debt-ceiling showdown back in 2011 frenzied the financial markets, brought the country to the brink of default, and ended with the United States losing its top-tier AAA credit rating from Standard & Poor’s.

This latest controversy has created an “uncertainty overhang,” as a default affects the entire economy. And that includes consumer-focused benefits such as social security and military salaries.

Because debt-ceiling crises aren’t an annual occurrence, there’s not a ton of data on how stocks perform when one strikes. But our in-house income and option expert John Jagerson has studied the situation and recently shared his analysis with the members of Constant Cash Flow.

In less than six minutes, you’ll learn what all this means for generating income from both short-term and long-term positions:

For those who are already members of Constant Cash Flow, you can expect more insights like this each Thursday in the exclusive feature “Three-Thought Thursday.”