3 weeks Here is a Market Recap for today Friday, September 24, 2021 Reddit      

PsychoMarket Recap – Friday, September 24, 2021

Despite opening the day in the red, the three major modestly extended gains after the best day since July. The S&P 500 (SPY) rose 0.16%, the Nasdaq (QQQ) rose 0.09%, and the Dow Jones (DIA) rose 0.09%. Despite all the volatility this week and the risks that are present, the SPY remarkably managed to close the week 2.13% higher after one of its worst weeks all year. The Russell 2000 (IWM), which tracks the performance of small-caps, fell a modest 0.48% today but closed the week out 2.66% higher. Honestly, I’m pretty surprised how well the market held up this week despite all the news. Next week will be interesting.

There’s a lot to unpack today. Two big news out of China today. First is the ongoing Evergrande situation which has been discussed in previous recaps. The company did not make its $83.5 million interest payment owed to bondholders and Chinese authorities have instructed the local government to prepare for the potential downfall if Evergrande fails. We’ll see what happens,.

Fed Chair Jerome Powell played down concerns of a contagion spreading to the US, saying “The Evergrande situation seems very particular to China, which has very high debt for an emerging economy”. He also added, “In terms of the implications for us, there's not a lot of direct United States exposure. The big Chinese banks are not tremendously exposed, but you would worry it would affect global financial conditions through global confidence channels and that kind of thing. But I wouldn't draw a parallel to the United States corporate sector."

https://www.wsj.com/articles/china-makes-preparations-for-evergrandes-demise-11632391852?mod=article_inline

In other news, the People's Bank of China (PBOC), the country’s central bank, announced it was banning the transaction and mining of … sending prices of those assets falling. Here is the link to the announcement by the PBOC. Google translate worked for me. http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4348556/index.html

In other news, the US government is close to reaching its “debt limit” if Congress doesn’t finally agree to either raise or temporarily suspend it. Unfortunately, something that is fairly routine (the debt ceiling has been raised 80 times 1960 and three times under President Trump, with the latest suspension in 2019) has become a headline with Senate Minority Leader Mitch McConnell stating that he would oppose raising the debt ceiling. Put simply, if Congress doesn’t get their act together it would be catastrophic for the US economy. Despite their refusal, Republicans agree that a default must be avoided. On Wednesday, McConnell said, “America must never default — we never have and we never will”, as he then voiced his opposition to a bipartisan increase.

Here is a very informative article by the Associated Press: https://apnews.com/article/debt-limit-explained-8c9cbcd3d0c4a8fe989a0110f5159f7c

Earlier in the week, Fed officials said that by the end of the year, the economy will have likely hit the “substantial further progress” milestone indicated last December needed for the central bank to begin slowing the pace of those purchases.

The Fed signaled in their September monthly monetary policy meeting, “Participants generally view that as long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate”.

Here is the full transcript: https://www.federalreserve.gov/monetarypolicy/files/monetary20210922a1.pdf

Rick Rieder, BlackRock's chief investment officer of global fixed income said, "Though markets have been nervously eyeing the start to tapering for months, it is ultimately "…likely to have minimal market impact at this stage. This is partly because the Fed has done a decent job of telegraphing when tapering is likely to begin (most market participants believe the announcement will come this year). But more importantly it’s because the asset purchase reductions are likely to be trivial when seen in the context of how large the fixed income markets are today, and how overwhelming the demand for income has become."

You have power over your mind — not outside events. Realize this, and you will find strength.―Marcus Aurelius

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