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Today's Top Stories From the Breitbart News DeskYesterday we explained that the big run-up in the stock market in the first nine months of this year implied a choppy path ahead. Over the very long term, stocks gain about eight percent a year on average. So when the market is running up at a considerably faster pace, there's likely a bear waiting somewhere ahead. The problem is, of course, no one knows when it will strike. Today's market action indicates that investors are getting nervous about the next few months. As the third and final revision of second-quarter GDP showed, the economy has fallen very short of the expectations for a strong rebound. Instead of the 8.3 percent growth analysts were predicting as late as the end of July, the economy grew at just a 6.7 percent rate. At the same time, inflation ran much hotter than expected. Typically, higher than expected inflation is thought to be an indication of an economy "overheating." But can we be overheating if we're growing slower than expected? Perhaps we can if the speed limit of the economy is lower than was widely appreciated. All of the shortages being reported in the global economy are another indication that we may have hit up against maximum growth. Supply has been unable to rise to meet demand, and there are increasing signs that shortages are going to last until next year...at least. Investors are also starting to get worried about events in Washington. Although Congress passed a funding bill that authorizes operations to keep going through December, the debt limit still looms. After several near collisions with the debt ceiling, investors may have grown a bit complacent about it. We've had these showdowns before, and Congress always wound up suspending or raising the ceiling. Typically, however, that was because Republicans compromised and voted to allow more debt for fear they'd be blamed if the U.S. Treasury started missing debt payments. This time GOP lawmakers seem convinced that Democrats would get the blame, which could make Republicans less eager to go along with a plan to allow more debt. So the past may not be a solid guide to the coming weeks. We still think it is likely that the debt ceiling gets raised, but Democrats may have to find a way of doing so—perhaps by suspending the filibuster—without any Republican votes. – Alex Marlow & John Carney |
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