Following a volatile week that saw the Dow Jones drop over 3 percent and the S&P 500 fall 2.6 percent, investors will be paying close attention in the final week of January to a fresh wave of corporate earnings along with a Federal Reserve meeting that is expected to provide fresh insights about how the central bank plans to unwind their pivotal monetary stimulus program that helped to push stocks to record highs in 2013.
On Wednesday, the Federal Reserve will conclude their two day meeting and communicate their plans to unwind their $85 billion monthly quantitative easing program.
Last month, the Federal Reserve announced that they would moderate their monthly quantitative easing bond purchases by $ 10 billion.
Most economists are still expecting the Fed to stay on course with that plan despite a weak December employment report that fell well below consensus estimates at the peak of the retail season while the labor force participation rate declined to 62.8 percent, the lowest number since March 1978.
U.S. Fiscal Policy In View
President Obama will be making his annual State of the Union speech to Congress on Tuesday evening when he will share his vision for helping the middle class by lowering the unemployment rate and addressing income inequality through raising the minimum wage.
With approval ratings near record lows following the shaky introduction of Obamacare in late 2013, President Obama will have limited time to push his agenda through Congress in a mid-term election year with many political seats up for grabs and heavy weight presidential candidates quietly jockeying for position behind the scenes.
President Obama will address a divided Congress that stood its ground in 2013 and shut down the federal government for 16 days in October led by Tea-party Republican Senator Ted Cruz (R-Texas) who threatened the implementation of Obamacare.
President Obama is not expected to dwell on Obamacare and instead speak about the importance of immigration reform and the need for Congress to work in a bi-partisan way to raise the U.S. debt ceiling before its fast approaching deadline of February 7th when the government will run out of money.
Yesterday Texas Senator Ted Cruz (R-Texas) was asked on CBS’s Face the Nation if he will agree to raise the debt ceiling or else demand something in return.
“Look of course we should do something, we shouldn’t just write a blank check. Five years ago, the national debt was $10 trillion dollars. That took 43 presidents over 200 years to build up $10 trillion dollars in debt” Senator Cruz said.
“Today its over $ 17 trillion dollars and it’s grown nearly 70 percent with one president in five years” Senator Cruz explained.
“If you ask any American outside of Washington, ‘Should we just keep raising the debt ceiling while doing nothing to have fundamental structural controls on spending to get Washington’s spending problem under control?’ It doesn’t matter if you’re talking to a Republican, a Democrat, an independent, a libertarian. Anyone outside of Washington says, ‘Of course,'” Cruz added.
Senator Charles Schumer (D-N.Y) said yesterday on CBS’s Face The Nation that he believes Republican leaders on Capitol Hill won’t follow the Senator Cruz (R-Tx) over the fiscal cliff and the debate over the issues can occur at a different time and place.
“I do not believe that Republican leaders will follow Ted Cruz over the cliff once again. I believe we will pass a clean debt ceiling that makes sense” Senator Schumer said.
“We don’t want to risk the full faith and credit. We can debate all these other issues at a different time and place. But I think they learned their lesson with the government shutdown” he continued.
“Not only did Tea-party ratings plummet, but so did Republican Party ratings” Senator Schumer concluded.