Earlier this year, the U.S. federal debt surpassed the established debt ceiling of $31.4 trillion. Congress is now tasked with raising the ceiling to ensure the government can fulfill its financial obligations. The political challenges surrounding this issue have caused widespread concern and headline risk in the media. However, it is crucial to clarify some misconceptions. Contrary to popular belief, a default on U.S. debt would not be a historic first; it has happened four times in the past (The Hill). While there may be a partial government shutdown and potential credit rating downgrade (similar to the U.S. S&P credit downgrade in 2011, Reuters) if the debt limit increase is not passed promptly, the impact is expected to be negative but not catastrophic (CNBC).
We recognize that the growing U.S. debt burden could potentially weigh on economic growth. Managing this debt will require a combination of lower spending or increased taxes, the latter more likely as it aligns with President Biden’s campaign promises (Tax Foundation). However, we remain confident in the resilience of the U.S. economy. The United States continues to play a central role in the global economy, housing innovative companies that have weathered numerous economic storms throughout history.
We are currently not in a bull market, in our view.
Despite a recent bounce from the major decline in 2022, we caution against false hope for a sustainable recovery. Our assessment considers factors such as a challenging economic landscape, geopolitical polarization, inflation concerns, tight economic policies, and concurrent banking crises. Consequently, we believe there is still much risk in equity markets at present. Our focus remains on preserving principal and seizing opportunities in short-term U.S. treasuries, offering safety, income, and attractive yields.
With the main opportunity lying in short-term treasuries, our strategy involves rolling over cash and maturing proceeds into 1-18 month ladders. We maintain a minor allocation to equities retaining exposure to sectors and individual companies that we believe in. Specifically, we prioritize our competitive edge companies that we anticipate will emerge stronger from the challenges ahead.
Looking ahead, our strategic view involves prioritizing sectors and companies poised to benefit from domestic infrastructure investments and growth, as well as those at the forefront of AI, metaverse, 3D printing, and blockchain technologies.
We remain dedicated to managing your investments with prudence and adaptability. Should you have any questions or require further information, please do not hesitate to reach out to us. Thank you for your continued trust.
As always, we remain nimble and proactive in managing your life savings.
Best,
Joseph Feinberg, Tamara Stein, and Mark Zhuravlev
The Feinberg Stein Group is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC (member FINRA and SIPC). Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.
This is not an offer to buy or sell securities, nor should anything contained herein be construed as a recommendation or advice of any kind. Consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. No investment process is free of risk, and there is no guarantee that any investment process or investment opportunities will be profitable or suitable for all investors. Past performance is neither indicative nor a guarantee of future results. You cannot invest directly in an index.
These materials were created for informational purposes only; the opinions and positions stated are those of the author(s) and are not necessarily the official opinion or position of Hightower Advisors, LLC or its affiliates (“Hightower”). Any examples used are for illustrative purposes only and based on generic assumptions. All data or other information referenced is from sources believed to be reliable but not independently verified. Information provided is as of the date referenced and is subject to change without notice. Hightower assumes no liability for any action made or taken in reliance on or relating in any way to this information. Hightower makes no representations or warranties, express or implied, as to the accuracy or completeness of the information, for statements or errors or omissions, or results obtained from the use of this information. References to any person, organization, or the inclusion of external hyperlinks does not constitute endorsement (or guarantee of accuracy or safety) by Hightower of any such person, organization or linked website or the information, products or services contained therein.
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Hightower Advisors, LLC is a SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Some investment professionals may also be registered with Hightower Securities, LLC and offer securities through Hightower Securities, LLC, member FINRA/SIPC. You can check the background of our firm and investment professionals on brokercheck.finra.org. Unless otherwise indicated relative to a specific award or ranking, Hightower Advisors, LLC does not pay a fee to be considered for any ranking or recognition, but may have paid to publicize rankings obtained and disseminated prior to 11.4.2022. All awards / rankings / ratings obtained and distributed on or after 11.4.2022 will be accompanied by specific disclosure as applicable.
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