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<ul class="summary-list"><li>Sean Manahan was named Morgan Stanley's head of firmwide innovation in April.</li><li>He outlines his job and how his innovation lab interacts with the rest of the bank.</li></ul>When Morgan Stanley and OpenAI announced their blockbuster partnership at the beginning of 2023, it signaled a competitive advantage for the Wall Street bank.Morgan Stanley, since then, has <a target="_blank" href="https://www.businessinsider.com/everything-we-know-about-how-banks-using-ai-2024-8#morgan-stanley-3">co-developed</a> a handful of generative AI tools with the AI powerhouse for its lucrative wealth-management business. Morgan Stanley is far from the only financial firm using OpenAI. However, the strategic partnership <a target="_blank" href="https://www.morganstanley.com/press-releases/key-milestone-in-innovation-journey-with-openai">has afforded the bank</a> early access to OpenAI's new products and the ability to test and customize them in the bank's innovation lab, which spans some 18,000 square feet in the bank's 1 New York Plaza office in Manhattan.The spark for the partnership can be <a target="_blank" href="https://www.businessinsider.com/morgan-stanley-head-of-tech-partnerships-outlines-approach-2023-7">traced back to 2021</a> when a team at Morgan Stanley responsible for scouting tech vendors met with an up-and-coming research nonprofit to evaluate its applicability in the financial services industry."We were trying to figure out, how is this technology or capability going to support our business?" Sean Manahan, whose team took that meeting, told Business Insider. Reporting their findings back to then-wealth management leaders Andy Saperstein and Jeff McMillan, "We were able to show them, 'Here's something that's emerging that we've been monitoring and researching,' and they got it, and it clicked, and it took that next-level jump in terms of, this is something we realize is going to be important to us."Now, Manahan is looking to replicate that success as he settles into his new role as Morgan Stanley's head of firmwide innovation after a week meeting with technology leaders and the bank's top executives.In his new role, Manahan oversees the bank's innovation council, which launched at the beginning of the year. The council is dedicated to identifying the bank's technology focuses. These days, those areas include managing and governing data consistently across businesses rather than individually, AI and the impact of AI-driven agents, and the future of software engineering. This is to ensure Morgan Stanley can take advantage of external innovations, just as it did <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://x.com/MorganStanley/status/1136335503542968321">with Zoom</a> before the pandemic and OpenAI ahead of <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/wall-street-goldman-jpmorgan-bridgewater-using-ai-2023-12">Wall Street's generative AI push</a>."We understand how innovation occurs, we understand how market innovation happens, and we understand how to meet that moment and then mentor companies and help them grow," Manahan told BI in his first interview since his appointment in April.<h2 id="9f8e90b1-1fa5-4a28-be62-7692b085eb37">A week in Silicon Valley</h2>In September, Manahan and a slew of other Morgan Stanley execs touched down in Silicon Valley for Tech Week — from each business division, the innovation council, the firmwide AI team, cybersecurity, legal, compliance, and risk, to name a few.Morgan Stanley hosts the event to meet with tech companies of all sizes, from early-stage startups to established and growing companies and Big Tech giants, as well as people in the venture capital community. More than just learning about new advances in data governance, AI, and the future of engineering, Morgan Stanley execs are expected to align internally and with third parties about their priorities and desired outcomes."Coming out of three intense days inside the Valley and meeting with all these interesting companies and thought leaders like VCs, they now come back to Morgan Stanley with a whole new set of different ideas and outcomes that they want to drive as they think about 25, 26, 27," Manahan said of the event and its impact on the company's road map over the next three years.<div type="image" title="A man wearing a blue checkered shirt smiles into the camera." height="5464" width="8192" msid="114887040" hostid="261" sizebytes="1572518"></div><h2 id="fce6610b-931b-445f-ad0e-568d42600dd2">Getting down to business</h2>Upon returning to New York, Manahan now has to figure out how to ready the bank for emerging technology trends. He and his 50-or-so reports aim to bring alignment between the innovation council, the work in the lab, and the businesses and set a blueprint for how the bank will execute its technology initiatives.This also helps focus the work they do with the roughly 250 projects that go through Morgan Stanley's innovation lab, which are each tied to a business objective and sponsored by the business, Manahan said. Companies are identified through organic discovery and inbound referrals from other groups within the firm."We work with the business on experimenting, evaluating them, and then it's up to them, the business, to make a decision on how to take it forward," Manahan said.One theme he is keeping a close eye on is the evolution of generative AI."What we're starting to see a shift towards executive functions, that these tools can plan, they can create tasks themselves, they can interact with the humans to say: 'I've planned this, does this look right to you? I'm thinking about doing this next, is that right to you?' And then they execute based on this human guidance," Manahan said of AI agents.AI agents, which can execute task-based workflows that are human-approved, could be the next step after AI co-pilots, which are more like somebody helping you, sitting next to you, and assisting you, Manahan said.To be clear, AI agents aren't something the bank is currently adopting, Manahan said, "but it's where the market is evolving towards and where we see the next leap forward for this technology."

Morgan Stanley has a new innovation chief. Expect more OpenAI-like partnerships.

<ul class="summary-list"><li>Investors worried about a market correction should adjust their portfolios, David Rosenberg says.</li><li>The top economist has warned stocks are in a bubble and at risk of a major decline.</li></ul>A number of Wall Street forecasters have been warning of a stock bubble as the market climbs to a series of fresh highs in 2024 — and investors worried about such a scenario should be putting their money in a handful of assets to protect themselves from the eventual bursting.That's according to David Rosenberg, a top economist and the founder of Rosenberg Research, who's been warning of a <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-outlook-prediction-strategy-to-invest-david-rosenberg-2024-3">potential craash in stocks</a> for months. In the past, he's warned of a <a target="_blank" class="" href="https://www.businessinsider.com/stock-market-crash-outlook-prediction-strategy-to-invest-david-rosenberg-2024-3">39% correction to stocks</a>, among the more extreme predictions on Wall Street, where most investors are feeling optimistic about a soft landing amid a robust economy and easing interest rates. "Watching the market these days is like watching a clown blowing up a balloon (or Chuck Prince dancing the ballroom), knowing the inevitable," Rosenberg said in a note to clients on Friday. "When this mega-bubble pops, it will be spectacular."Investors need to exercise caution and avoid following the "herd mentality," Rosenberg said, pointing to the fervor for mega-cap tech stocks. Instead, he said, investors should focus on stocks with strong business models, strong growth, and good prices, and add some "insurance" to their portfolios.Below are his top investment ideas for to prepare for the potential bursting of a market bubble. Healthcare and consumer staplesInvestors should gear their investments towards what people will always need in the future. In particular, Rosenberg recommended that investors pay attention to options in the healtcare and consumer staples sectors."Focus on where people are going to focus on what they need, not what they want," Rosenberg wrote. "Anything related to e- commerce, cloud services, and wiring up your home to become your new office has been in a budding secular growth phase."Utilities<a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/ai-stocks-to-invest-artificial-intelligence-data-center-energy-companies-2024-6">Utility stocks</a> also look promising. Other forecasters have predicted <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/energy-stocks-to-buy-utility-artificial-intelligence-data-center-bofa-2024-9">huge upside for utility firms</a>, due to the growing need for power and data centers stemming from the AI boom."Utilities, as we have been saying for a long time, are as close to a 'no brainer' as there is, given their yield attributes and their being re-rated for 'defensive growth' owing to enhanced earnings visibility through the strong and secular outlook for US power needs," Rosenberg said.Aerospace, DefenseAerospace and defense stocks could also be a buy, he added, given rising geopolitical tensions around the world."Aerospace/defense has been a long-standing bull call for us for several years, and the best hedge against an increasingly troubled world where military budgets are expanding everywhere — and not at all sensitive to who comes to power on November 5th."Big techWhile some areas of tech are exhibiting bubble characteristics, investors could still seize on opportunities in some large-cap tech names, given the prevalence of work-from-home, cloud services, and remote work, Rosenberg said. Still, investors should wait to scoop up tech names at better prices, he said."I'd prefer to pick these plays up at better prices than we have today because this last melt-up has eaten enough into future expected returns to keep us cautious for now. But we would be an avid buyer on any significant pullback."Safe betsInvestors should look to put a "dose of insurance" in their portfolios. That means gold — the "truest store of value," Rosenberg says, — as well as government bonds."The beautiful thing about gold is that it is not a liability that a central bank can simply have forgiven or a currency that can simply be printed by government fiat," he said of the precious metal. "I also favor the Treasury market because it commands just about the highest yield of any major industrial country – and with the great liquidity attributes."Real estate investment trusts could also be good ways to hedge risk, Rosenberg said. That particularly applies to REITs tied to the industrial and healthcare sectors. "In any event, we all have to become increasingly thematic and thoughtful in our decision-making and more selective than normal because the stock market, and financial assets in general, have become nothing more than a momentum casino," he added.Most forecasters on Wall Street still expect a strong performance from equities into year-end and 2025. Goldman Sachs, UBS, BMO, and Deutsche Bank have <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-sp500-targets-bull-market-goldman-ubs-bmo-2024-10">raised their year-end price targets</a> for the S&amp;P 500 in recent weeks, with new forecasts ranging from 5,750 to 6,400.

Here's where investors worried about a stock market bubble should put their money, according to a top economist

<ul><li>The <keyword id="10735716" type="General" weightage="80" keywordseo="himalayan-450" source="Orion">Himalayan 450</keyword> promises more power to riders for long tours, as was widely sought.</li><li>The tank size, instrument panel and tyres will also see changes to balance ADV and touring needs.</li><li>Biking enthusiasts await the new <keyword id="6426894" type="General" weightage="100" keywordseo="himalayan" source="Orion">Himalayan</keyword> as it tries to bridge the gap between itself and the KTM 390 Adventure.</li></ul> Royal Enfield began updating itself as a modern bike manufacturer around a decade back but stuck to their core design philosophy of producing easy-to-ride retro bikes. Thus, it was a surprise for many in 2016 that after acquiring the reputed chassis making brand, Harris Performance a year earlier, the 1901-born bike major decided to go with a completely modern looking Himalayan 411. The biking community, however, wasn't complaining as the bike was an adventure touring dual sport motorcycle, a gap that needed filling up. Fast forward eight years and Siddharth Lal’s team is getting ready for major upgrades to enhance performance and live up better to its touring description while having a global ambition. Such is the fandom of the Himalayan 411’s looks amongst the bike driving community that a section is slightly worried about “too much look change”. Says Abhishek Roy, an avid biker who has done a round trip to Leh-Ladakh from Hyderabad, “Looks will definitely matter. But, if the bike has everything that I’ve picked from the leaked information available, then looks might become secondary.” So, what are these changes that the biking world is excited about? To understand that we need to look at the Himalayan 411 with which RE won its biggest war in placing itself as a more-than-just-retro manufacturer. The Himalayan 411: What was amiss? The Himalayan 411 and its sister, the Scram 411, which was launched in 2022, offered Indian riders who wanted to go off-roading a viable option. The engine, however, has its limitations, as it is air-cooled and, thus, the bike sometimes lacks the required torque needed on long haul rides. Says Nishant Shukla, a biker who has explored the Western coastal line as well as Rajasthan’s desert terrains on bike, “Since I am not a big off roader, I would also see the highway worthiness of the new Himalayan. If it has ample power/torque. Moreover, the current Himalayan lacks the fancy adventure bike aids such as ride by wire, quickshifters etc.” The competition has heated up in the ADV (adventure) segment, with the launch of the Yezdi Adventure and Triumph Scrambler 400 X. In the lower rung of this segment, the Hero’s XPulse 200 has done well but the main competition for the new Himalayan will still be the KTM 390 Duke Adventure. The current 411-cc, single-cylinder engine pushes out only 24.3 horsepower, which translates to approximately 110 kmph cruising speed. Compare this to the KTM 390 Adventure which has 43 horsepower at its disposal. Moreover, after the 110 kmph speed, acceleration is found lacking unlike the RE’s 650 twin-cylinder offerings – the Interceptor, the Continental GT and the Super Meteor 650. <cmsannotation type="cmsannotation" annotationid="What the market expects from the new Himalayan 450" text="What the market expects from the new Himalayan 450">What the market expects from the new Himalayan 450</cmsannotation> The new Himalayan, as per media reports, will try and resolve the above issues. Business Insider took a deep dive into this new offering by Royal Enfield: A liquid-cooled engine The new Himalayan, is expected to come with a liquid cooled engine, unlike its predecessor. This should translate to longer riding time at a higher torque. It is estimated to produce around 40 BHP and 40 Nm and will be paired with a six-speed gearbox, as per a <a href="https://www.team-bhp.com/news/royal-enfield-himalayan-450-leaked-ahead-launch">Team-BHP report</a>. Multiple riding modes Auto tracking websites suggest that the new bike will come with three riding modes, which was missing in the previous edition and has riders excited. The bike should be enabled by a first-time ride-by-wire system. Says Roy who is waiting for the bike launch before making up his mind on the adventure bike to buy, “I’m really waiting to test the different drive modes and the ride by wire.” The modes on offer should support rain riding, off road riding and cruising (normal). The off-road mode when enabled will switch off the ABS (anti-locking braking system) at the real wheel to support deliberate rear sliding. A bigger tank? The tank on the new bike, as per leaked images <a href="https://www.autocarindia.com/bike-news/royal-enfield-himalayan-450-leaked-ahead-of-november-launch-429182">reported by Autocar</a>, looks to be bigger and reports say that it could be as large as a 15-20 litre unit offering longer run time. Expected launch Royal Enfield is targeting an <a href="https://www.bikewale.com/royalenfield-bikes/himalayan-450/">early November launch</a> of the bike as per multiple reports. It is noteworthy that the bike manufacturer holds its annual biking event – the Rider Mania – in Goa each year around the same time and the buzz on the street says that the new Himalayan might be unveiled between November 24-26 for the public in full glory. The global ambition The top end of the new Himalayan 450, as per reports, will be launched later next year and is codenamed K1X. The buzz on the street is that Royal Enfield has rallying aspirations and might be targeting the coveted <keyword id="76133" type="General" weightage="40" keywordseo="dakar-rally" source="Orion">Dakar Rally</keyword> in years to come. The event is open to amateur and professional entries but the latter make up about 80% of the participants. In fact, one of India’s top offroaders, <a href="https://www.instagram.com/reel/CuHUIjVhFeC/?utm_source=ig_embed&amp;ig_rid=b7715b60-a33a-47bc-95d1-a8e5d547dff8">CS Santosh</a> released a teaser on Instagram of the bike a few months earlier showcasing its agility. That the company has ambitions to play in the European and American markets is no secret. The company’s 650-cc bikes have been a favourite of sorts for the British market already as they offer decent power with acceleration at a cheaper rate than the Suzuki, Harley, Triumph and Kawasakis. In 2020, UK’s Motorcycle Industry Association showed that the Interceptor 650 sales were second only to the highly popular Honda PCX 125 scooter. Tyre changes? The new Himalayan is likely to stick to CEAT tyres but media reports suggest that unlike its predecessor it will be made from a special compound to support both off-roading as well as highway cruising. To put it in context, the company currently says that the present Himalayan’s tyres are designed 70% for roads and 30% for off-roading.

Explained: Why the motorcycling world is kicked about the Himalayan 450 that’s set for launch this November

<ul class="summary-list"><li><a target="_blank" href="https://www.businessinsider.com/wayfair-is-struggling-to-sell-furniture-after-a-pandemic-bump-2022-6">Wayfair</a> is back to being profitable, CEO Niraj Shah wrote in an email obtained by Business Insider.</li><li>Shah also told employees to be frugal and open to working long hours.</li></ul><a target="_blank" href="https://www.businessinsider.com/this-guys-company-brought-in-500-million-last-year-and-now-its-breaking-free-from-google-2012-1">Wayfair</a> is profitable once again and "back to winning," its CEO and cofounder Niraj Shah told employees in an email obtained by Business Insider.But employees should expect to work long hours and "think of any company money you spend as your own," Shah wrote.While the company is back in the green and repeat customers are up, Shah cautioned employees that "winning takes hard work" and that they should be frugal about spending and open to working long hours."Working long hours, being responsive, blending work and life, is not anything to shy away from," he wrote. "There is not a lot of history of laziness being rewarded with success."To emphasize the point, Shah said he was concerned to have heard of some outdated or inaccurate "Nirajisms," or phrases that begin with "Niraj said.""The one I would reference here that I heard was 'Niraj said that he does not think that we should work late'. I would suggest that this is laughably false," the CEO wrote. "Hard work is essential for success, and a key part of getting things done. Everyone deserves to have a great personal life — everyone manages that in their own way — ambitious people find ways to blend and balance the two."Employees should treat company spending as their own and negotiate costs to get the best deal possible, Shah wrote.To underline how important it was to negotiate every price, Shah shared a story about how much the company had initially been quoted to run some Ethernet wires."One cost we were discussing yesterday was the cost to run ethernet wires. In this example it started at $1,600 a drop. At 12 drops that would be $19,200. To run them would take two people maybe 8 hours or so. I would be happy to spend a Saturday doing this with you and splitting $19,200. Basically that price is highway robbery. Why did we get robbed? Because no one worried about the cost," the CEO wrote. "That $1,600 became $800 and then $300 as some questions were asked and negotiations ensued."The company's profitability milestone came after the home-furnishing company engaged in cost-cutting measures, including <a target="_blank" href="https://www.businessinsider.com/layoffs-sweeping-the-us-these-are-the-companies-making-cuts-2023">layoffs</a>, following recent losses after first turning a profit in early 2020. That profit came during the furniture boom of the pandemic. During its most recent company earnings, posted November 1, Wayfair reported a loss of $163 million in the third quarter, which had significantly narrowed year-over-year from a $283 million loss in Q3 2022.The company's stock was up nearly 10% on Wednesday — and is up nearly 74% so far this year. Still, over five years, it's down 45% when compared to the broader stock market, which is up 81% over the same timeframe."We are incredibly proud of our world-class team and culture of open communication," a Wayfair spokesperson told BI in a statement. "In his note, Niraj was reinforcing some of the values that have contributed to Wayfair's success, including questioning the status quo, being cost-efficient and working hard together to drive results."Read the full text of Niraj Shah's email to Wayfair employees below:Hi everyone,I thought I would take a minute to share some thoughts that I have had recently.As we work our way through the holiday season it is really encouraging to see that we are back to winning. Winning feels good - and is a great reward for all of our efforts. Our market share is growing nicely, our repeat is increasing, our suppliers are leaning in, and we are profitable. This is something to be very proud of.That said, while we have worked hard to get back to the execution oriented, hard working, frugal, customer oriented culture that we had for most of our history we still have some work to do to make sure that we get fully back. And this is what I want us all to push on in the weeks and months to come.One point I think is important to make is that winning requires hard work. I believe that most of us, being ambitious individuals, find fulfillment in the joy of seeing our efforts materialize into tangible results. Working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded with success. Hard work is an essential ingredient in any recipe for success. I embrace this, and the most successful people I know do as well.You may know of Nirajisms, these are phrases that start with 'Niraj said'. What disappoints me is that the majority I hear are either not true, are old and no longer applicable, or are taken out of context. The one I would reference here that I heard was 'Niraj said that he does not think that we should work late'. I would suggest that this is laughably false. Hard work is essential for success, and a key part of getting things done. Everyone deserves to have a great personal life - everyone manages that in their own way - ambitious people find ways to blend and balance the two. I think that is what we all should do.I heard another Nirajism yesterday which was 'Niraj said that we cannot recruit from Google Amazon or Walmart'. I am not even sure where that could come from since so many of our senior leaders are from these places. Again false.I would encourage you to run any Nirajism that sounds odd by me. I am happy to clarify anything. And I am sure there are some that in fact I would support and say we should stick with. Ultimately I want us to be aggressive, pragmatic, frugal, agile, customer oriented, and smart. Use those as filters and I think things can become clearer.I would also encourage you to think of any company money you spend as your own. Would you spend money on that, would you spend that much money for that thing, does that price seem reasonable, and lastly - have you negotiated the price? Everything is negotiable and so if you haven't then you should start there. One cost we were discussing yesterday was the cost to run ethernet wires. In this example it started at $1,600 a drop. At 12 drops that would be $19,200. To run them would take two people maybe 8 hours or so. I would be happy to spend a Saturday doing this with you and splitting $19,200. Basically that price is highway robbery. Why did we get robbed? Because no one worried about the cost. That $1,600 became $800 and then $300 as some questions were asked and negotiations ensued. We have this this type of problem in many places - we need to root them out. And we need everyone who is at Wayfair to care. If you see wasted spend that you do not know how to fix just let me know and I will help. This is a great way to strengthen the culture.And lastly I want to encourage us all to be smart. You will encounter some things that do not make sense. Question them. And then escalate it if you encounter bureaucracy and believe that you are right. We have a lot of policies or practices that need to refreshed, leaned out, or eliminated. Less is more - lets find policies and procedures that do not add value and eliminate them. Lets find policies that do not make sense and adjust them. And just approach everything with first principles. You are smart - bet on that and use your judgment. And feel free to ask me or other leaders for advice when you have a question. This will help us all win.Together we can win much faster than we are winning now if we all row in this direction together. Let's be aggressive, pragmatic, frugal, agile, customer oriented, and smart.Thanks for being on the team!Niraj

Wayfair CEO tells employees the company is profitable once again &mdash; but to expect long hours and 'blending work and life'

<ul class="summary-list"><li><keyword id="192956" type="PERSON" weightage="60" keywordseo="Mohamed-El-Erian">Mohamed El-Erian</keyword> said there is a fundamental misunderstanding of <keyword id="22195" type="COMPANY" weightage="60" keywordseo="Inflation">inflation</keyword> because few people have lived through it.</li><li>"I always laugh when people say, oh, it's isolated, it's transitory," El-Erian told CNBC on Monday.</li><li>He also disagreed with the Federal Reserve's view that inflation is transitory.</li></ul>Economist Mohamed El-Erian in an interview Monday took aim at assessments of inflation that describe rising prices as "transitory," stating that there is a fundamental misunderstanding of what inflation is and how it is already spreading throughout the <keyword id="34412" type="ORGANIZATION" weightage="60" keywordseo="economy">economy</keyword>. "I always laugh when people say, oh, it's isolated, it's transitory," Allianz's chief economic adviser told <a href="https://www.cnbc.com/video/2021/07/26/inflation-will-run-higher-than-fed-expects-el-erian.html">CNBC</a>. "I think there's a fundamental misunderstanding about inflation today because ... most people haven't lived through it for a long time and certainly most traders on Wall Street haven't traded through it."El-Erian pointed to the surge in <a href="https://www.businessinsider.com/used-car-prices-saw-their-biggest-monthly-price-increase-ubs-2021-5">used cars</a> prices to their highest in more than 60 years, which has been followed by an increase in prices of new cars, and a rise in the price of rental cars. This, he said, shows inflation is not contained. "There is a logic to these inflation chains. They take time, and most people, unfortunately, haven't seen them," El-Erian told <a href="https://www.cnbc.com/video/2021/07/26/inflation-will-run-higher-than-fed-expects-el-erian.html">CNBC</a>. "So they think everything's isolated. Actually, it's not. It's interconnected." El-Erian, who is also the president of Queens' College, Cambridge University, countered the longstanding narrative of the Federal Reserve that inflationary pressures are temporary.The central bank slashed rates to historic lows at the start of the pandemic to stimulate economic activity and has signaled its intention of keeping interest rates unchanged until <a href="https://www.businessinsider.com/federal-reserve-interest-rate-projections-fomc-june-inflation-monetary-policy-2021-6">2023</a>.Read more: <a href="https://www.businessinsider.com/stock-picks-buy-jim-osman-upside-edge-group-inflation-protection-2021-7" target="_blank" rel="noopener">200-plus money managers pay thousands to see which stocks are on Jim Osman's buy list. Here are 3 stocks he says are set to soar 'at least 50%' despite the fully valued market environment</a>Fed Chair Jerome Powell has repeatedly said that inflation will pass as the economy settles into a new normal. However, updated <a href="https://www.businessinsider.com/federal-reserve-interest-rate-projections-fomc-june-inflation-monetary-policy-2021-6">rate-hike projections</a> six weeks ago signal that the central bank could see inflation posing a larger risk than initially thought. Powell is expected to issue a new statement this week, on July 28 at 2 p.m. ET."I don't expect fireworks, El-Erian said. "The Fed has adopted a new framework that is backward-looking. They're no longer forecast-based; they're outcome-based."El-Erian also maintained that inflation will continue to run higher."The big question for me is not whether inflation will be higher than what the Fed expects," he told <a href="https://www.cnbc.com/video/2021/07/26/inflation-will-run-higher-than-fed-expects-el-erian.html">CNBC</a>. "It is whether the system is wired loosely enough to adjust to that - and that's what we going to learn."The Consumer Price Index <a href="https://www.businessinsider.com/consumer-price-index-inflation-june-2021-7">rose 0.9%</a> between May and June, much more than the consensus estimate of 0.5%.

There is a fundamental misunderstanding of inflation and its spread throughout sectors of the economy proves it is not isolated or transitory, Mohamed El-Erian says

<ul class="summary-list"><li>Global <keyword id="6354298" type="DEFINITION" weightage="60" keywordseo="Stocks">stocks</keyword> rose on Wednesday, after US Treasury Secretary Steve Mnuchin proposed a new $916 billion <keyword id="45304" type="COMPANY" weightage="60" keywordseo="Stimulus">stimulus</keyword> bill, $8 billion more than the bipartan measure currently being drafted.</li><li>Mncuhin's presentation of the bill was the Trump Administration's first engagement with Congress on a stimulus deal since the November presidential election.</li><li>In the UK, <keyword id="6355333" type="UNKNOWN" weightage="60" keywordseo="Brexit">Brexit</keyword> negotiations are down to a meeting between Prime Minister <keyword id="6380867" type="PERSON" weightage="60" keywordseo="boris-johnson">Boris Johnson</keyword> and European Commission President Ursula von der Leyen on Wednesday evening.</li><li>A deal is unlikely to stem from the meeting because von der Leyen is expected to relay the discussion at the EU summit on Thursday for approval.</li></ul>Global stocks rose on Wednesday after the White House offered Democrats a <a href="https://www.businessinsider.com/white-house-proposes-new-coronavirus-package-with-600-stimulus-checks-2020-12">new stimulus proposal of $916 billion</a>, higher than the $908 billion measure currently being drafted by a bipartisan group of lawmakers. Futures tied to the <a href="https://markets.businessinsider.com/index/dow_jones">Dow Jones</a>, <a href="https://markets.businessinsider.com/index/s&amp;p_500_500">S&amp;P 500</a>, and <a href="https://markets.businessinsider.com/index/nasdaq_100">Nasdaq</a> rose 0.3%, suggesting the major indices may open at record highs later in the day.House Speaker Nancy Pelosi and Senate Minority Chuck Schumer noted the new proposal would cut unemployment insurance benefits from a proposed $180 billion to $40 billion, calling it "unacceptable."But this was Treasury Secretary Steve Mnuchin's first significant engagement with Congress on a stimulus deal since the election, possibly underlining why stock futures rose ahead of the market open. In Europe, British prime minister Boris Johnson is due to meet European Commission president Ursula von der Leyen in Brussels on Wednesday evening. Both leaders are expected to unfreeze Brexit trade negotiations ahead of an EU summit in the Belgian capital on Thursday.But chances of a deal have been described as <a href="https://www.theguardian.com/politics/2020/dec/08/chances-of-brexit-deal-hang-on-boris-johnson-and-ursula-von-de-leyen-dinner">"very slim"</a> by the EU's chief Brexit negotiator Michel Barnier. If any headway is made, von der Leyen is expected to relay the discussion to the EU summit to gauge approval.Read More: <a href="https://www.businessinsider.com/investing-strategy-world-changing-thematic-trends-lazard-money-manager-stocks-2020-12">A Lazard fund manager overseeing $2 billion lays out the 6 world-changing trends shaping his latest fund - and explains how he plans to capitalize on each</a>The meeting "looks like a last-ditch attempt to avoid the unpleasantries associated with high-stakes divorce Brexit style," said Stephen Innes, chief market analyst at Axi.The <a href="https://markets.businessinsider.com/index/ftse_100">FTSE 100</a> rose 0.5%, the <a href="https://markets.businessinsider.com/index/euro_stoxx_50">Euro Stoxx 50</a> rose 0.5%, and <a href="https://markets.businessinsider.com/index/dax">Germany's DAX</a> rose 1%.A Brexit deal could trigger a rally for UK shares, said Adrian Lowcock, head of personal investing at Willis Owen."Valuations have lagged other developed <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> - such as the US - thanks in particular to Brexit, creating attractive valuations versus other markets, and a resolution to that in the form of some deal could ignite the traditional Santa rally for the UK," he said.European markets were further buoyed by news of the vaccine under development by AstraZeneca and the University of Oxford <a href="https://globalnews.ca/news/7508383/astrazeneca-oxford-coronavirus-vaccine-study/">being 70% effective</a>. Britain began <a href="https://www.businessinsider.com/photos-depict-united-kingdom-first-covid-19-vaccinations-2020-12#the-country-said-care-home-residents-and-their-carers-would-get-first-access-to-the-vaccine-the-country-started-giving-doses-tuesday-2">vaccinating senior citizens</a> on Tuesday with Pfizer and BioNTech's approved product, a landmark moment for the population in the developed world. Britain has the highest <keyword id="8763838" type="UNKNOWN" weightage="60" keywordseo="covid-19">COVID-19</keyword> death rate in Europe and the fifth highest in the world, with over 60,000 fatalities and 1.75 million infections, according to data from Johns Hopkins University.In Asia, Japan's <a href="https://markets.businessinsider.com/index/nikkei_225">Nikkei</a> rose 1.3%, Hong Kong's <a href="https://markets.businessinsider.com/index/hang_seng">Hang Seng</a> rose 0.7%, but China's <a href="https://markets.businessinsider.com/index/shanghai_composite">Shanghai Composite</a> slid 1%.Read More: <a href="https://www.businessinsider.com/stock-market-investing-strategy-after-covid-vaccine-franklin-templeton-outlook-2020-12">The equities chief at $1.4 trillion Franklin Templeton says stocks are 'priced for perfection' - but investors still shouldn't wait to get in. He tells us 9 ways they can get the market-beating returns.</a>

Global stocks rise on higher White House stimulus proposal of $916 billion, while Brexit talks go down to the wire

<ul><li>The US debt ceiling showdown in Congress is fast approaching a potential early June deadline.</li><li>Republicans and Democrats appear to be at an impasse with no progress made towards a deal.</li><li>These are the four scenarios and their potential impact on the US economy, according to Ned David Research.</li></ul>The latest debt ceiling showdown appears to be extraordinary as no party is in full control of Congress, and that could lead to disastrous outcome for the US economy, according to a Wednesday note from <a href="https://www.ndr.com/" target="_blank" rel="noopener">Ned Davis Research.</a>While <a href="https://www.businessinsider.com/debt-ceiling-still-no-solution-biden-mccarthy-meeting-default-june-2023-5">the ongoing US debt ceiling showdown in Congress</a> is nothing new for investors, as the debt limit has been raised year after year with a typical show of political theater, it could have grave implications if the crisis isn't ultimately solved this time around. "Market participants have been conditioned over the years to expect that any debt ceiling impasse would be resolved in time to avoid a default, even if it comes down to the wire. It runs on the trust that politicians understand that the potential consequences of a default are too dire, including wreaking havoc on the global financial system and causing a recession in the US and possibly the global economy," NDR explained.The note referenced <a href="https://www.businessinsider.com/why-the-debt-ceiling-fight-was-really-bad-news-for-the-economy-2011-8">what happened in 2011 as a barometer</a> for what's possible this time around, in which the <a href="https://markets.businessinsider.com/index/s&amp;p_500?_gl=1*1ftdjrc*_ga*MTc1OTYzMjQ2Mi4xNjYxOTYxNTUx*_ga_E21CV80ZCZ*MTY4MzczNzk1OS4xMDcuMS4xNjgzNzM4MDM5LjQ1LjAuMA..">S&amp;P 500</a> sank nearly 20% over a period of a few months because the <a href="https://www.businessinsider.com/the-story-behind-sps-downgrade-2011-8">US lost its AAA rating from Standard and Poor's</a> due to the political brinkmanship that was sparked by a debt ceiling crisis."While we expect that the debt limit will be adjusted again, we see a significant risk of financial market volatility between now and <a href="https://www.businessinsider.com/janet-yellen-debt-ceiling-government-run-out-money-june-1-2023-5">the X-date of June 1,"</a> NDR said.These are the four potential outcomes of the current US debt ceiling showdown in Congress, according to the note.<h3>1. Standoff continues past the X-date - 5% odds.</h3>In this most dire scenario, the US government would partially default on its debt due to political brinkmanship between Democrats and Republicans. The government would miss payments to retirees, veterans, military personnel, and contractors, but it would continue to make bond payments. Because of a partial default, US debt would be downgraded by credit agencies, which would lead to investors demanding a higher risk premium. There would be a decline in confidence and spending among consumers, and the US economy would fall into a recession. This is the worst possible scenario for the stock market.<h3>2. Clean debt ceiling increase - 10% odds.</h3>In this scenario, a debt default would be fully averted thanks to the Republicans giving up on its spending cut demands at the last minute. In this scenario, there would be no change to the outlook for economic growth in 2023.<h3>3. Biden caves to some Republican demands - 20% odds.</h3>In this scenario, a US debt default would be averted because Biden would give into some spending cut demands from Republicans. Government spending cuts would go into effect for 2023 and 2024. This would lead to rising uncertainty among investors and businesses, as spending approved by one Congress could be undone by the next, especially with the likelihood that the next debt ceiling deadline down the road could be leveraged by the minority political party. This scenario would lead to slower economic growth in 2023 and 2024.<h3>4. Debt ceiling suspended - 65% odds.</h3>In this scenario, Congress suspends the debt ceiling limit, creating time for extended negotiations. This scenario would avert a debt default, though some government spending cuts would be likely. If Congress kicks the can down the road for a few months into Fall 2023, the same issues today would resurface then and it would add the risk of a potential government shutdown. This scenario would lead to slower economic growth in 2023 and 2024. "We favor the outcome of a temporary debt ceiling suspension either for a brief period of time or until September when Congress will be debating the budget for the next fiscal year. The government has done this repeatedly, including seven times between 2013 and 2019," NDR said.

Here's how the economy and the stock market could react to the 4 possible outcomes of the debt ceiling standoff

<ul class="summary-list"><li>Real estate professionals say they've seen a surge in housing fraud over the past year.</li><li>It's a consequence of tight conditions sparking desperation from both buyers and sellers.</li></ul>When fraud victims contact Mark Berman, an attorney at Ganfer Shore that frequently deals with cases of real estate fraud, they're often distraught. Many of them were close to closing on a property when they received a legitimate-looking email or text asking them to wire a chunk of money to wrap up the deal.It becomes clear later that the request was sent by a fraudster, part of a wave of similar scams looking to take advantage of frustrated homebuyers and sellers clamoring to transact in a tough market. Berman and other industry professionals told Insider that real estate fraud has surged, a trend that's being driven by tight market conditions. With high interest rates and anemic transaction volume, homebuyers, sellers, and brokers are often trying to close deals as fast as possible, experts say, and this can make it easy to miss a scammer. Analytics firm <a href="https://www.corelogic.com/wp-content/uploads/sites/4/2022/09/2022-Mortgage-Fraud-Report.pdf" target="_blank" rel="noopener">CoreLogic</a> found that the risk for property fraud in which a seller misrepresents information about a house on the market, increased 23% in the second quarter of 2022 from the prior year.Wire fraud — when a fraudster siphons money from the buyer at some point in the transaction — and title fraud — in which a scammer transfers a the title of a property to an illicit third party — have also spiked.Transactions where wire and title fraud were a risk factor notched an all-time-high in the fourth quarter of 2022, according to data from <a href="https://www.fundingshield.com/fundingshield-q4-2022-wire-title-fraud-analytics/" target="_blank" rel="noopener">FundingShield</a>, with a little over <a href="https://www.fundingshield.com/fundingshield-q4-2022-wire-title-fraud-analytics/" target="_blank" rel="noopener">half of all transactions</a> bearing potential signs of wire and title fraud risk. That's nearly double the risk of this kind of fraud seen in 2021, FundingShield told Insider.Though Berman said it was difficult to estimate an exact number, he says that real estate fraud cases have gone up "exponentially" in recent years, with his clients often including home buyers, brokers, and real estate lawyers. Though some of his clients are industry professionals, they also fall into traps set by fraudsters simply because of how clever some of the scams have become."Some scams are so damn good," Berman said. "Scams are getting very sophisticated and real estate agents, brokers, they're not keeping up."<h3>Why is this happening?</h3>The spike in fraud comes at time of shifting dynamics in the US housing market. Rates on the <a href="https://markets.businessinsider.com/news/commodities/lumber-prices-seven-percent-mortgage-rates-housing-market-slowdown-2022-10">30-year fixed mortgage soared from pandemic lows to touch 7%</a> in late 2022 and have hovered near that level since. Meanwhile, <a href="https://markets.businessinsider.com/news/stocks/home-prices-housing-crash-fall-jeremy-siegel-paul-krugman-bubble-2022-10?utm_medium=ingest&amp;utm_source=markets">home sales, housing starts, and new home listings</a> have all cratered, leading some experts over the last year to warn of a housing market crash that could bring on a steep correction in home prices.But while some prospective buyers have been sidelined, those who are in the market are increasingly desperate to close, experts say, leading to a rise in questionable deal-making. According to CoreLogic's principal of industry solutions, Bridget Berg, it's becoming harder for people to sell homes as the cost of borrowing stays near a record high. That's helped drive higher instances of property fraud.Wire fraud has increased for similar reasons, according to FundingShield CEO Ike Suri. Higher interest rates and sluggish housing activity create more pressure for real estate professionals to close on a deal, which can mean they're not properly verifying if an email or a text is from a legitimate sender."Chaos creates a perfect time for cyber criminals to take advantage of these, especially in the housing industry," he said, adding that each transaction between parties is an opportunity for a fraudster to strike."They end up being exposed to phishing, hacking, spoofing, to name the different schemes out there."Berg told Insider that she expected to see an uptick in mortgage fraud in coming years, with CoreLogic's National Mortgage Application Fraud Index having increased 30% from its low during the pandemic. The index is a predictive tool, currently suggesting 30% higher risk of fraud in mortgage applications. Kip Medrygal, a partner at Locke Lorde who also frequently encounters real estate fraud cases, told Insider he too is expecting an increase in scams, though it's also contingent on housing demand and other market conditions.He speculates that fraud could increase as much as 20%-25% over the next few years if the market remains tight. The shifting market dynamics have experts divided over where US housing goes from here. The Fed is expected to pull back on high interest rates later this year, which could influence a decline in mortgage rates.Nadia Evangelou, chief economist at the National Association of Realtors, previously told Insider that she believed easing interest rate expectations would <a href="https://markets.businessinsider.com/news/stocks/housing-rebound-home-prices-2024-forecast-supply-real-estate-economist-2023-3?utm_medium=ingest&amp;utm_source=markets" rel="">help the market avoid a crash</a>. She said that housing sales likely bottomed out in early 2023, with the year overall set to be a "turning point" for the market.

As the housing market remains tight, experts say real estate fraud has spiked in the US

<ul><li><keyword id="11969440" type="UNKNOWN" weightage="60" keywordseo="bill-hwang" source="Orion">Bill Hwang</keyword> of <keyword id="12273823" type="UNKNOWN" weightage="60" keywordseo="archegos-capital" source="Orion">Archegos Capital</keyword> was arrested on Wednesday and charged with <keyword id="12307744" type="UNKNOWN" weightage="60" keywordseo="securities-fraud" source="Orion">securities fraud</keyword>.</li><li>The investment manager had increased his fund's leverage to $160 billion by relying on various counterparties.</li><li>A cascade of margin calls in March 2021 led to the ultimate collapse of Archegos and cost banks more than $10 billion in losses.</li></ul>Archegos Capital Management founder Bill Hwang was arrested on Wednesday and charged by the Justice Department with securities fraud, wire fraud, and racketeering conspiracy.He is alleged to have made false statements and manipulated stock prices through the use of extreme leverage that ultimately led to the family office's demise as <a href="https://markets.businessinsider.com/news/stocks/bill-hwang-lost-20-billion-2-days-archegos-collapse-report-2021-4-1030288757">a cascade of margin calls blew up the fund</a> in March 2021. The implosion of Archegos Capital Management <a href="https://markets.businessinsider.com/news/stocks/credit-suisse-hedge-fund-limits-billions-loss-archegos-capital-hwang-2021-4-1030289900">led to more than $10 billion in losses</a> for various banks that offered derivative products to Hwang, including <a href="https://markets.businessinsider.com/stocks/cs-stock">Credit Suisse</a>, Nomura, and <a href="https://markets.businessinsider.com/stocks/ms-stock">Morgan Stanley</a>, among others. The CFO of Archegos, Patrick Halligan, was also arrested along with Hwang. Both are expected to appear in Manhattan federal court later today. Bill Hwang's lawyer Lawrence Lustberg told Insider, "We are extremely disappointed that the U.S. Attorney's Office has seen fit to indict a case that has absolutely no factual or legal basis; a prosecution of this type, for open-market transactions, is unprecedented and threatens all investors. As you will see when the facts unfold, Bill Hwang is entirely innocent of any wrongdoing; there is no evidence whatsoever that he committed any kind of crime, let alone the overblown allegations that pervade this indictment."Patrick Halligan's lawyer Mary Mulligan told Insider, "Pat Halligan is innocent and will be exonerated."According to charging documents, Hwang was able to increase the leverage of Archegos to $160 billion from $10 billion by deceiving various banks. That increase in leverage ultimately boosted Archego's underlying portfolio value to $35 billion from $1.5 billion in a single year."The defendants and their co-conspirators used Archegos, a family office that invested Hwang's personal fortune, as an instrument of market manipulation and fraud, with far-reaching consequences for other participants in the United States securities <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword>, companies whose stock prices they manipulated, innocent employees of Archegos whose savings they gambled, and the financial institutions left holding billions of dollars in losses," prosecutors said, according to the charging documents.The Justice Department <a href="https://markets.businessinsider.com/news/stocks/doj-opens-probe-archegos-meltdown-led-big-losses-banks-2021-5-1030472431">opened its probe into Archegos in May,</a> and the Securities and Exchange Commission <a href="https://markets.businessinsider.com/news/stocks/sec-investigating-bill-hwang-archegos-capital-for-market-manipulation-2021-10">opened an investigation</a> into the firm for stock price manipulation in October.Some stocks that were held by Hwang and saw extreme volatility once margin calls started to roll-in included <a href="https://markets.businessinsider.com/stocks/wbd-stock">Discovery</a> and <a href="https://markets.businessinsider.com/stocks/para-stock">Viacom</a>. Prosecutors allege that in some cases he owned a bigger stake in certain companies than their publicly listed holders, without disclosing that exposure. Hwang allegedly used total return swaps to increase his exposure to the company without having to disclose his stake once it breached 5%.

Archegos chief Bill Hwang has been arrested a part of an alleged securities-fraud scheme that helped his doomed fund boost leverage to $160 billion

<ul class="summary-list"><li>UK Prime Minister Liz Truss' tax plan sparked immediate market backlash and, eventually, her resignation.</li><li>The US's electoral system and government checks and balances protect against such blunders.</li></ul>The resignation of the UK's prime minister caps a frenzied month in which an unpopular tax plan tanked financial markets, forced emergency intervention from the Bank of England, and sowed immense disapproval among the British public. Those looking on from across the pond don't need to be too concerned. While the economic outlook in the US isn't pretty, such a chaotic battle between markets and the government isn't likely to emerge any time soon. The Federal Reserve has been raising interest rates at the fastest pace since the 1980s to crush inflation. The snail's pace at which legislation moves through Congress puts the odds of any near-term policy close to zero.As such, Biden has had an easy choice to make: let the Fed do its job, and hope the strength of the US economy can keep it out of a 2023 downturn.Truss, meanwhile, was forced to pick between boosting short-term economic growth and ramping up the fight against inflation. The weeks since have shown how damaging the wrong choice can be.<h2>How Liz Truss became the shortest-serving PM in UK history</h2>Things went south fast for the UK's new Conservative government late last month. Prime Minister Liz Truss, just 22 days into her leadership role, unveiled a mini-budget that proposed tax cuts that primarily benefited the wealthy. The aim, according to now-ousted Chancellor Kwasi Kwarteng, was to supercharge economic growth and lessen the odds of a near-term recession.Investors didn't see it that way. The British pound <a href="https://markets.businessinsider.com/news/currencies/pound-dollar-tax-cuts-inflation-recession-stagflation-interest-rates-hikes-2022-9">plummeted to a record low against the US dollar</a> while gilts — the UK's government bonds — similarly sank. Economists balked at the proposal, arguing it would drive the government's deficit sharply higher and exacerbate inflation that was already among the worst in the world. The Bank of England intervened with <a href="https://markets.businessinsider.com/news/bonds/bank-of-england-bond-buying-pound-yields-qe-markets-economy-2022-9">unlimited bond purchases</a> in order to avoid a full-blown financial crisis.Truss reversed course days later, but most of the damage was done by then. Gilt yields sat substantially higher, reflecting increased concern about the government's financial health. The central bank's action directly undermined its own plans to start selling bonds and continue tightening financial conditions. And the weakened pound threatened to make importing — which the UK relies heavily on — much more expensive.The prime minister <a href="https://www.businessinsider.com/liz-truss-resigns-as-uk-prime-minister-2022-10">announced her resignation on Thursda</a>y, just 45 days after taking office. The market carnage offered a stark warning to officials that, should the government even propose such misguided economic policy, the rebuke will be swift and severe. Truss is poised to go down as the shortest-serving PM, and her mini-budget is the foremost reason.The prime minister was dealt a less-than-ideal hand when she entered office. Sky-high energy prices were already crippling the UK economy, and growth was expected to slow dramatically in 2023. Yet inflation remained historically high, and the Bank of England had been raising interest rates to quickly slow the economy and rein in price growth.By proposing her mini-budget, Truss prioritized concerns around the economic slowdown over stifling inflation. The public reaction signals it was the worse of the two battles to fight. <h2>The US's checks and balances protect a Truss-esque blunder</h2>So much of the UK market carnage seen in the first weeks of fall stemmed from the way its government is structured. With the Conservative Party holding a healthy majority in the House of Commons, there were few obstacles for Truss to enact her tax proposals. Until she reversed her stance and took the tax hikes off the table, markets were left unsure whether the prime minister would push the package through the legislative body or cave to outside pressure.Truss came into power in the wake of former Prime Minister Boris Johnson's summer exit, securing the role in a contest between members of the Conservative Party. As such, she didn't face the same pressures from the British populace that a publicly elected leader typically would.The checks and balances throughout the US government also stand in the way of such rapid-fire economic policy. Congress has been criticized for its sluggish pace of policymaking for decades, yet the same factors slowing lawmakers keep deeply unpopular proposals from becoming law. The Senate filibuster currently stands in the way of Democrats' most ambitious legislative plans, just as it held up Republicans' efforts throughout the Trump presidency. Had Biden or Trump proposed an economic plan as intensely opposed as Truss', the package would almost surely die in Congress.That Truss could've easily pushed her mini-budget through Parliament exacerbated the market reaction. Without effective checks delaying or stopping the proposal outright, investors rushed for the exit amid sudden fear that the plans would worsen inflation and drive the UK government into an entirely new crisis.Investors trade on the outlook of US economic policy, too, but the lengthy and unpredictable process needed to pass laws dulls market volatility. By the time a stimulus package is approved or tax cuts are finalized, traders have typically had weeks — if not months — to price in the policies and their economic impacts.<h2>Such disastrous policy reactions could still slam the US </h2>The US may be more insulated from such a political and financial blunder, but it's not invulnerable.For one, the president can easily spook markets with questionable policy choices. Trump's trade-war threats repeatedly drove stocks lower and boosted market volatility. Yet the moves usually normalized soon after as economists weighed in and the former president's ultimatums led to little immediate change.More recently, clashes over the federal debt ceiling have brought Congress within hours of a market cataclysm. The threshold limits how much the government can borrow to cover its bills for previous spending, and lawmakers have routinely punted the issue down the road by lifting the limit to a fresh high. More recently, debt-ceiling deadlines sparked passionate debates between Democrats and Republicans over which party should be held responsible for the government's multi-trillion dollar dues. Biden <a href="https://www.businessinsider.com/debt-ceiling-house-democrats-default-deadline-economic-risk-government-borrowing-2021-12">approved a $2.5 trillion increase</a> to the debt ceiling on December 16, 2021, just one day before government debt was set to hit the limit. Yet concerns over whether such a hike could be achieved fueled serious concerns on Wall Street. Failure to lift the limit would destroy global confidence in the US dollar, as the currency rests on the assurance that the government always has — and always will — repay its debt.Had Congress not reached an agreement in September 2021 to raise the ceiling, the ensuing economic damage <a href="https://www.businessinsider.com/debt-ceiling-cost-americans-trillions-borrowing-limit-democrats-republicans-moodys-2021-9">would have cost households $15 trillion</a> in investment losses and put nearly 6 million Americans out of work, Moody's Analytics said last year.So far, that threat has been enough to spur bipartisan action. Yet lawmakers have gotten increasingly close to the deadline in recent episodes, leading markets to grow more fearful that the ceiling could soon be breached.The $2.5 trillion increase pushes the next debt-ceiling squabble to 2023, when Republicans are expected to hold control of the House. That'll likely make the next debate even more down-to-the-wire than the last. Should policymakers lose sight of the potential consequences, the US could be in for an economic catastrophe akin to the UK's tumultuous September.

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