Budget deficit is at 3.2% of GDP
The budget deficit in the United States (SQQQ) (SDS) stands at $587 billion for 2016, a rise of 35.0% from last year, according to the U.S. Department of the Treasury. It stands at 3.2% of GDP for 2016, the biggest deficit in three years. In 2015, the deficit was 2.5% of GDP. In 2014, it was 2.8% of GDP.
According to the Committee for a Responsible Federal Budget (or CRFB), over the short term, Republican nominee Donald Trump’s plan for tax cuts seems positive for growth in the US economy (SPY) (IWM) (QQQ). Over the longer term, however, the CRFB believes his plan could weigh down economic growth and lead to a rise in the national debt and deepen the fiscal deficit.
On the other hand, the CRFB believes Democratic nominee Hillary Clinton’s near term plan to raise taxes could support the US economy’s fiscal budget. Her plan related to spending, however, could be a drag on the fiscal budget over a longer term, according to the CRFB.
A big drag on fiscal spending, when it comes to either candidate’s victory on November 8, is entitlements.
Entitlements, the biggest driver of US debt
One of the biggest drivers raising public debt in the United States is entitlements. Entitlements, which include Social Security and Medicare, make up about 60.0% of federal spending.
Here’s what the CRFB believes:
• Medicare will run out of money by the 2020s.
• Social Security will run out of money by the 2030s.
To deal with the issue of funds for entitlements, Trump plans to repeal the Affordable Care Act, commonly known as Obamacare. Clinton plans to tax the wealthy. “I will not cut benefits,” she promised.
Republican candidate Donald Trump wants to renegotiate NAFTA. Since 1994, NAFTA has created a common trading market between the United States, Mexico, and Canada.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.