The Debt Ceiling Showdown | Investor Beat - 10/7/13 | The Motley Fool

TL;DR

Wall Street starts the week on a down note as concerns about the federal shutdown and debt ceiling increase.

Transcript

I don't care how long this Federal shutdown goes we are not coming up with theme music and new graphics this is not cable news investor beat Starts Now thanks for watching I'm Chris Hill Wall Street starting the week on a down note the Darwin S P 500 both in the Lost column just one day before earnings season officially kicks off joining me in stud... Read More

Key Insights

• 🇼🇫 Concerns about the federal shutdown and debt ceiling are affecting Wall Street's performance.
• 🤨 Not raising the debt ceiling could have negative consequences, including a potential downgrade of the U.S. credit rating.
• 🙃 There is no upside to not increasing the debt ceiling, and concerns are increasing as the deadline approaches.
• ❓ Congress is likely to reach a solution before the debt ceiling deadline, but some politicians may prolong the standoff for publicity.
• ⚾ Apple's stock received an analyst upgrade based on positive reports from Chinese suppliers and expectations of gross margin expansion.
• 🤝 Cooper Tire's acquisition by Apollo Tires is in jeopardy due to a lawsuit and disagreement over the deal's price.
• 👋 The government shutdown is affecting Liquidity Services, an online marketplace for surplus goods, as they rely on contracts with the Department of Defense.
• 😮 Potbelly's stock is rising, but some question if it is overpriced. The company faces potential supply and demand issues.

Questions & Answers

Q: What are the risks of not raising the debt ceiling?

Not raising the debt ceiling could result in losing the status of the world's strongest currency, becoming a laughing stock globally. There is no upside to not increasing the debt ceiling.

Q: Are experts worried about a potential downgrade of the U.S. credit rating?

While some individuals, including Ray McDaniel, CEO of Moody's, are not worried yet, there is growing concern as the deadline approaches. Market behavior and headlines will likely lead to more people being concerned.

Q: Will Congress reach a solution before the debt ceiling deadline?

It is likely that Congress will reach a solution before the deadline, as there is no upside to letting the situation go on. However, some politicians may try to gain publicity by prolonging the standoff.

Q: How is Apple's stock performing?

Apple's stock received an analyst upgrade from Jeffries, with a price target of $600. The upgrade was based on positive reports from Chinese suppliers and the expectation of gross margin expansion in the coming years.

Summary & Key Takeaways

• The federal government shutdown enters week two, with investors starting to worry about the debt ceiling deadline on October 17th.

• There is no upside to not increasing the debt ceiling, and concerns are rising as the deadline approaches.

• The debt ceiling standoff may continue for another week, as some politicians are interested in gaining publicity from the situation.