Is the US government going to shut down next week? This risk is underpriced in the markets, according to Danielle DiMartino Booth.

Another US government shutdown deadline looms at the end of next week, according to Danielle DiMartino Booth, CEO and Chief Strategist at QI Research, and markets are currently ignoring this danger.

As of Tuesday, the Republican majority in the United States House of Representatives had not reached an agreement on a strategy to keep federal agencies running, despite the November 17th deadline to avoid a government shutdown. The Senate, which has a slim Democratic majority of 51-49, is likewise deadlocked, fueling calls for a brief “continuing resolution” to avert a government shutdown.

The United States Congress, according to DiMartino Booth, is dysfunctional. “There haven’t been any of the concessions that those on the far right have been demanding,” DiMartino Booth said on the sidelines of the New Orleans Investment Conference to Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News. “All these months later, after the debt ceiling was resolved, they’re still not getting what they want.”

Congress must pass 12 appropriation bills to fund the government for the entire fiscal year.

DiMartino Booth stated that, despite the current political climate, there is a fresh political development that gives her hope for this election cycle. That may be seen in the video above.

The recession has already begun, and bankruptcies are on the rise.

Bankruptcies, which are already beginning to build up, are exacerbating the macro scenario, according to DiMartino Booth.

“I don’t think we have a deep enough appreciation for how damaging the current holiday shopping season can be, and that’s why we’re seeing bankruptcies one after another,” she went on to say.

WeWork Inc. declared bankruptcy this week, the most recent market development. The corporation, which had a $47 billion valuation at one point, cited $19 billion in liabilities and $15 billion in assets in its bankruptcy filing filed in New Jersey on Monday.

“November has arrived. This is the time of year when businesses close down. Companies are aware that they will not be able to make it through the holidays,” DiMartino Booth stated.

According to DiMartino Booth, the US economy is already in a recession, and the rise in the jobless rate is an indication of a serious economic slowdown.

“You can tell there’s a lot of stress here.” The unemployment rate has risen by half a percentage point. “Historically, you’re already in a recession,” she explained. “The damage has already been done. You can observe the disparity between where corporations originally funded their commercial real estate and the equity required to refinance it. The chasm is simply too wide. They are leaving. And that’s a narrative for 2023.”

The October jobs report fell short of forecasts, indicating that employment growth in the United States is slowing, with only 150,000 positions gained last month. In October, the unemployment rate climbed to 3.9%, the highest level since January 2022.

This narrative will bleed into corporate bonds next year, as the bankruptcy cycle accelerates, according to DiMartino Booth.

“Companies understand that they won’t be able to go from a 2% bond to a 5% bond.” “They know they’ll have to declare bankruptcy instead,” she explained. “And we’re seeing the lag effects since March of 2022, when this tightening campaign started, kick in.”

DiMartino Booth spoke to the banking industry, pinpointing the next “real pain point.” Watch the video above for more information on what’s ahead for banks.

DiMartino Booth also updated her equity holdings, showing that she now owns one stock. Watch the video above for additional information.

Presidential Elections 2024

However, DiMartino Booth believes that with the right leadership in Washington, the American economy and national spirit can be infused with optimism and confidence. In the video above, she discusses who she believes should be the winner of the 2024 Presidential Election.

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