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Coffee With Greta: Debt Ceiling Drama


DJIA Futures: +37 (+0.1%)

SPX Futures: +4 (+0.1%)

NASDAQ Futures: +5 (+0.04%)

Good morning friends!

Futures are flat as traders remain on edge over debt ceiling negotiations. 

Let’s get right to it!

Debt Ceiling Talks To Continue

President Biden and House Speaker Kevin McCarthy are set to meet at the White House today to resume negotiations for a debt ceiling deal. 

The meeting comes after McCarthy said he had a “productive” phone call with Biden on Sunday. 

Staff reportedly restarted talks Sunday evening. 

Republicans are demanding spending cuts in exchange for a debt limit increase. 

But Biden said, “It’s time for Republicans to accept that there is no bipartisan deal to be made solely, solely, on their partisan terms.”

Treasury Secretary Janet Yellen reaffirmed the June 1 deadline to come to an agreement. 

She said, “There can be no acceptable outcomes if the debt ceiling isn’t raised, regardless of what decisions we make.

Fed’s Kashkari: June Pause Doesn’t Mean Rate Hikes Are Over

Minneapolis Fed President Neel Kashkari is cautioning Americans against reading too much into a pause at the next Fed meeting. 

Kashkari told CNBC this morning that he’s open to a pause in June but that would not indicate the Fed is done hiking rates. 

He said, “If we did, if we were to skip in June, that does not mean we’re done with our tightening cycle. It means to me we’re getting more information.”

CME Group’s FedWatch Tool shows 82.5% of traders expecting no rate hike on June 14.

But Kashkari threw cold water on the market’s expectations of cuts later this year. 

He said, “Do we then start raising again in July? Potentially, and so that’s the most important thing to me is that we’re not taking it off the table.”

The Fed has vowed to remain data-dependent for future rate decisions after the last 25bps hike in May.

PacWest Sells Off Construction Loans

PacWest Bancorp (PACW) shares are jumping 8.4% ahead of the open after the regional bank announced it has agreed to sell some real estate construction loans to Kennedy-Wilson Holdings (KW).

KW shares are also up 2.9% in premarket trade.

PacWest sold 74 loans with an outstanding balance of $2.6 billion to Kennedy-Wilson. 

The bank also plans to sell six more construction loans with a total balance of $363 million to the company. 

The transaction between PacWest and Kennedy-Wilson is expected to close in multiple deals during this current quarter and early Q3.

JPMorgan Hikes Key Revenue Target 

JPMorgan Chase (JPM) shares are up 0.4% ahead of the opening bell after the bank hiked its full-year revenue target. 

Slides for an investor presentation today show the largest bank in the U.S. now expects to generate $84 billion in net interest income this year.

That’s an increase of $3 billion from the guidance given in its Q1 earnings report, which was already an increase of $7 billion from the previous outlook.

The higher forecast comes after JPMorgan’s takeover of First Republic Bank from regulators. 

But the bank did warn “sources of uncertainty” around deposits and the economy could impact its outlook. 

CEO Jamie Dimon is expected to speak in a Q&A session during today’s investor event. 

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