💣 Is US Debt A Ticking Time Bomb?

Good morning. US stock futures fell in Thursday morning trading as investors monitor fresh jobless claims data to gauge the health of the labor market.

💳 US debt is about to get a lot more expensive…

📝 Our report: The Congressional Budget Office (CBO) just dropped a bombshell: servicing the US government's ballooning debt will hit a record high next year, and it's not stopping there. Net interest payments will climb to 3.1% of gross domestic product in 2025, the highest level in records going back to 1940, and then go on to hit 3.9% in 2034, the CBO said in its latest outlook for the federal budget.  

 🔑 Key points:

• “Net interest costs are a major contributor to the deficit, and their growth is equal to about three-quarters of the increase in the deficit from 2024 to 2034,” CBO Director Phillip Swagel said in a statement.

• Treasury Secretary Janet Yellen, when pressed in a House hearing about whether she’s concerned about the country’s borrowing capacity, said the Biden administration is preparing a budget for the next fiscal year that “will contain proposals to make sure we are in a fiscally sustainable path.”

• The CBO’s forecasts show the budget deficit reaching $1.58 trillion this year — down from $1.68 trillion in 2023 — but swelling over time to $2.56 trillion by 2034.

💡 So what: It is critical for the United States to address its fiscal debt for several reasons. High levels of debt can destabilize the economy by increasing interest payments, crowding out essential spending, and raising borrowing costs. Addressing fiscal debt requires a balanced approach, including controlling spending, increasing revenue, and implementing prudent fiscal policies to safeguard the country's economic stability and prosperity.

Thursday - Richmond Fed President Tom Barkin Speaks

Friday - Dallas Fed President Lorie Logan Speaks

💰 Investing legend Jim Rogers shares these 6 investing tips!

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⚰️ Is the EU killing business opportunities?

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🤝🏽 Mexico surpasses China as US top supplier

WHAT: Mexico strutted its stuff last year and outshone China as the top source of goods imported to the United States, marking the first time in over two decades. Figures released by the U.S. Commerce Department show that the value of goods imported to the United States from Mexico rose nearly 5% from 2022 to 2023, to more than $475 billion. At the same time, the value of Chinese imports imports tumbled 20% to $427 billion.

WHY: Mexico has been among the beneficiaries of the growing shift away from reliance on Chinese factories. Economic relations between the United States and China have severely deteriorated in recent years as Beijing has fought aggressively on trade and made ominous military gestures in the Far East.

🏀 NBA in hot water over crypto alliances

WHAT: The NBA just got served with a lawsuit hot off the legal court! Investors are pointing fingers, blaming the association's marketing ties with the crypto exchange Voyager Digital Holdings for a whopping $4.2 billion in losses. The NBA was “grossly negligent” in agreeing to a marketing deal between Voyager and Mark Cuban, the former owner of the NBA’s Dallas Mavericks, the investors alleged in a suit filed in Miami.

WHY: Several NBA teams had marketing deals with crypto firms, including the failed FTX exchange, whose founder Sam Bankman-Fried was convicted of fraud. Voyager filed for Chapter 11 protection from creditors in 2022 and a judge authorized the firm to liquidate assets to repay customers a portion of their crypto that’s been held on its platform.

🫸🏽 Meta fights back against EU fee

WHAT: Meta Platforms is giving EU regulators a run for their money by challenging a supervisory fee equivalent to 0.05% of its annual worldwide net income. The supervisory fee is aimed at covering EU regulators' costs of monitoring compliance with new European Union rules requiring it to do more to police content. The European Commission has said the Digital Services Act (DSA) levy applies to 20 very large online platforms, including Meta, Google, Apple and TikTok and two very large online search engines.

WHY: The size of the annual fee is related to the number of average monthly active users for each company and whether it posts a profit or loss in the preceding financial year. Meta said it disagreed with the methodology used to calculate the fees.

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