Economy

WASHINGTON (Reuters) – The U.S. Treasury Department may need to take “extraordinary measures” by as early as Jan. 14 to prevent the United States from defaulting on its debt, Treasury Secretary Janet Yellen told lawmakers in a letter on Friday.Yellen urged lawmakers in the U.S. Congress to act “to protect the full faith and credit of the United States.”U.S. debt is expected to decrease by about $54 billion on Jan. 2 “due to a scheduled redemption of nonmarketable securities held by a federal trust fund associated with Medicare payments,” she added.She said: “Treasury currently expects to reach the new limit between January 14 and January 23, at which time it will be necessary for Treasury to start taking extraordinary measures.”Under a 2023 budget deal, Congress suspended the debt ceiling until Jan. 1, 2025. The U.S. Treasury will be able to pay its bills for several more months, but Congress will have to address the issue at some point next year.Failure to act could prevent the Treasury from paying its debts. A U.S. debt default would likely have severe economic consequences.A debt limit is a cap set by Congress on how much money the U.S. government can borrow. Because the government spends more money than it collects in tax revenue, lawmakers need to periodically tackle the issue — a politically difficult task, as many are reluctant to vote for more debt.Congress set the first debt limit of $45 billion in 1939, and has had to raise that limit 103 times since, as spending has consistently outrun tax revenue. Publicly held debt was 98% of U.S. gross domestic product as of October, compared with 32% in October 2001. More

-Hackers have compromised several different companies’ Chrome browser extensions in a series of intrusions dating back to mid-December, according to one of the victims and experts who have examined the campaign.Among the victims was the California-based Cyberhaven, a data protection company that confirmed the breach in a statement to Reuters on Friday.”Cyberhaven can confirm that a malicious cyberattack occurred on Christmas Eve, affecting our Chrome extension,” the statement said. It cited public comments from cybersecurity experts. These comments, said Cyberhaven, suggested that the attack was “part of a wider campaign to target Chrome extension developers across a wide range of companies.” Cyberhaven added: “We are actively cooperating with federal law enforcement.”The geographical extent of the hacks was not immediately clear.Browser extensions are typically used by internet users to customize their Web-browsing experiences, for example by automatically applying coupons to shopping websites. In Cyberhaven’s case, the Chrome extension was used to help the company monitor and secure client data flowing across Web-based applications.Jaime Blasco, cofounder of Austin, Texas-based Nudge Security, said he had spotted several other Chrome extensions that had been subverted in the same way as Cyberhaven’s. At least one appeared to have been hit in mid-December. Blasco said the other affected extensions included ones related to artificial intelligence and virtual private networks. He said that suggested an opportunistic effort to vacuum up sensitive data using as many compromised extensions as possible.”I’m almost certain this is not targeted to Cyberhaven,” Blasco said. “If I had to guess, this was just random.”The U.S. cyber watchdog CISA referred questions to the companies involved. A message seeking comment from Alphabet (NASDAQ:GOOGL), which makes the Chrome browser, was not immediately returned. More

OTTAWA (Reuters) – A Canadian parliamentary committee led by an opposition Conservative Party lawmaker will hold meetings during legislative recess in hopes of expediting the defeat of Prime Minister Justin Trudeau’s government, the lawmaker said on FridayThe House of Commons Public Accounts Committee will begin meetings on Jan. 7 to consider and vote on a motion of non-confidence in the Liberal government, committee Chair John Williamson said in a letter to panel members. The motion would have to ultimately pass in the House of Commons to defeat the government.Parliament will reconvene on Jan. 27.Trudeau, in power since 2015, has been under increasing pressure to quit since his former Finance Minister Chrystia Freeland resigned on Dec. 16.Williamson, a Conservative lawmaker, said he was prepared to hold meetings throughout January with the goal of holding a non-confidence vote as early as Jan. 30. That would be weeks earlier than it would otherwise take an opposition party to propose such a motion.Trudeau’s options have narrowed since New Democratic Party leader Jagmeet Singh, who has been helping keep the Liberals in power, said last week he would move to bring down the minority Liberal government and trigger an election.”It is now clear that the Liberal Government does not have the confidence of Parliament. Conservative, Bloc Quebecois and NDP members — representing a majority of MPs – have all announced they will vote non-confidence in the Liberal Government,” Williamson said in a copy of the letter he posted on social media.Trudeau, however, could prorogue parliament, which would formally end the current session and prevent opposition lawmakers from voting on a non-confidence motion. Singh has said he would present a motion of non-confidence after the House of Commons elected chamber returns from the winter break but he did not say how his party would vote on motions introduced by other parties. All opposition parties would need to back a single motion to bring down the government.The Williamson-led panel has five Liberal MPs, four Conservative MPs, and one each from the NDP and the Bloc Quebecois. Canadian governments must show they have the confidence of the House of Commons elected chamber. Votes on budgets and other spending are considered confidence measures and if a government loses one, it falls. In virtually all cases, an election campaign starts immediately. More

The Dow Jones Industrial Average fell 0.95%, the S&P 500 was down 1.33% and the Nasdaq Composite briefly was down 1.72%. COMMENTS:SAM STOVALL, MARKET STRATEGIST, CFRA, ALLENTOWN, PA:“Investors had been saying, oh, I’ll take profits in the new year, and then I can wait to pay taxes on them until 2026; now some of them are wondering how much of those profits will still be around, so they’re just grabbing them now. And there are just more profits to take when it comes to the Nasdaq, which is up more than 30%. There’s a lot of uncertainty about how we’ll do in the first weeks or so of the new year. If the market is indeed worried about inflation, then as we head into 2025, those are likely to be some readings that aren’t so good. But the expectations for earnings growth are still strong, thanks to increased productivity and higher profit margins. The flip side? Valuations are at a 40% premium to the 20-year average for S&P 500 stocks.”JEFF SCHULZE, HEAD OF ECONOMIC & MARKET STRATEGY, CLEARBRIDGE INVESTMENTS, NEW YORK CITY:“The Santa Claus rally came a bit earlier this year, and I think this is profit taking ahead of another holiday-shortened week next week. That’s another reason I think this isn’t causing more apprehension heading into a weekend: it’s not uncommon for the market to hit air pockets when the volumes are light, and it’s been a slow week. Any volatility we witness should be a good buying opportunity.”“There is selling in Magnificent 7 stocks because they’ve accounted for 100% of all the profits in the S&P 500 so far this month and have outperformed the equal-weighted index, which is down. But the megacap leadership this time felt more like it was the result of a short squeeze; that investors who had been relatively underweight bringing their holdings back to benchmark levels. I think those exaggerated moves higher mean we could see the Mag 7 continue to lag over the next week or two.” ADAM TURNQUIST, CHIEF TECHNICAL STRATEGIST FOR LPL FINANCIAL:“Big tech is taking a much-deserved holiday break after doing most of the heavy lifting for the broader market since Election Day (the Magnificent Seven has contributed to around 85% of the S&P 500’s +4% gain since November 5). However, selling pressure today has expanded beyond just the mega caps as over 90% of S&P 500 constituents are trading in the red. And while it is hard to put a lot of weight in a thinly-traded holiday-shortened week, the latest relief rally has lost momentum and bulls are faced with another test at the 50-day moving average into the weekend. A failure to hold this level (5,940) would point to a likely retest of the November price gap near 5,860. Damaged market breadth and the lack of momentum indicators with bullish signals point to elevated near-term downside risk. The macro backdrop also has become more challenging for a sustained recovery, especially with 10-year Treasury yields and the dollar breaking out above key resistance levels last week.”ALEX MORRIS, PRESIDENT & CIO, F/m INVESTMENTS, WASHINGTON, D.C.“Over the past decade, and more so since the COVID melt-up, equity markets have increasingly become liquidity dependent. Slow days, like now, lack the enthusiastic investor plowing in or moving around large cash piles, and tend to lag. It seems there are no low-volume ‘green’ days any more. Add in tax-loss harvesting, which is still an option beyond the ten largest stocks in broad market indexes, and today’s ‘red’ looks less scary. The lesson is: this market thrives on liquidity – and it may just be dependent on it.”STEVE SOSNICK, CHIEF MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT”I’ve heard anecdotes that pension funds are rebalancing ahead of year-end, selling stocks and buying bonds. Unfortunately, I can’t verify that, but it would explain the sudden sell-off on no news. And of course, if large funds are selling stocks en masse, the megacap tech stocks would bear the brunt because of their heavy weighting in major indices.” “If nothing else, today is a reminder that just because a ‘Santa Claus’ rally is a statistical likelihood, it is far from guaranteed.”“We’ve seen an attempt at a buy-the-dips rally smacked back, which seems to confirm that this is some selling or rebalancing underway by a big investor.”JAY WOODS, CHIEF GLOBAL STRATEGIST, FREEDOM CAPITAL MARKETS, NEW YORK”What people are doing is they’re raising some cash. They’re taking some profits right now as we go into the end of the year and getting ready for an opportunity if it presents itself in the beginning of next year. Tech, which has had a tremendous run, is starting to pull back. I think this is the beginning of a healthy correction that will get focused over the next four to eight weeks as we switch administrations.”ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT“Any kind of selling pressure sort of spirals a little bit out of control when you have a thinly traded market. And I think the selling pressure is really just people looking for direction.”“It’s not a lot of institutions. I think a lot of non-professionals are looking seeing the market’s direction and they just go with the flow. There’s concerns that maybe the first part of this year can involve some repositioning and reallocation of funds and those that are trading today and next week are probably just trying to get a little bit ahead of that.”“There’s uncertainty about the direction of interest rates and inflation, and the fact of all this is sort of coming together at one time. What is the Federal Reserve going to do in the first part of next year?”“And then there’s a new administration coming in with new policies and (there are uncertainties as to) what those policies will actually be, which policies will actually be implemented. There’s a lot of talk about new and many changes, but what’s really going to happen?”“And because of the big run that you’ve had in 2024, portfolios are not exactly positioned correctly for 2025 and I think a lot of people are expecting a lot of changes in the early part of the year.”“You’re seeing some of that today and that will lead to more selling pressure because people just want to capture the gains before they go on into 2025.”PETER TUZ, PRESIDENT, CHASE INVESTMENT COUNSEL, CHARLOTTESVILLE, VIRGINIA“This is end of year stuff going on people have had a pretty good year, and it’s typical year-end selling pressure caused by people taking profits, not a lot of buyers out there and not a lot of volume.““(There’s) no reason to jump in and buy these things at these valuations, and tax planning is on peoples’ minds this week and will be on Monday and Tuesday. I don’t attribute it to, you know, any changing outlook in anything right now.”“The Santa Claus rally is one of those historic statistics that bears watching, but because of the change in administration and the potential change in policy you’re probably seeing more action now than you would ordinarily. There’s the potential for a lot of disruption in 2025.”BRYCE DOTY, SENIOR PORTFOLIO MANAGER, SIT FIXED INCOME ADVISORS, MINNEAPOLIS”Today the market has really been reacting to the implications of taxes coming up. Tax positioning is overwhelming the other factors. But the more the Fed looks out of touch (with economic realities), the worse it is for equities…Tax trading will continue for the rest of the year.” More

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Carvallo stated in an interview that he is not dismissing the possibility of either increasing or decreasing rates if necessary to achieve the new 3.5% inflation target. The Central Bank projects a 3.7% price increase next year, slightly above this year’s rate.Carvallo believes that the current monetary policy rate is at a level that will guide inflation towards the Central Bank’s new target. He has maintained borrowing costs constant since April, with inflation recording 20 consecutive months around the previous 4% target.Despite no immediate policy changes, analysts surveyed by the central bank this month predict that board members will reduce rates by half a percentage point next year to 5.5%. The Paraguayan government has committed to reducing its fiscal deficit from an estimated 2.6% of GDP this year to 1.5% in 2026. The central bank predicts a slight decrease in growth to 3.8% next year, down from an estimated 4% in 2024. Carvallo stated that this forecast takes into account the negative impact on trade with Brazil due to the depreciation of the real and the anticipated recovery of Argentina’s economy in 2025.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More