The number one buzz word over the past few months (years?) has undoubtedly been ‘debt’.  Sovereign debt, consumer debt, debt to GDP, etc.  However, the most common term in recent weeks has been debt ceiling, which needs to be increased in order for the US to service their existing debt and ongoing operating obligations (such as military, Medicaid, Social Security, etc.).  With the growing concern over the apparent August 2nd deadline to raise the US debt ceiling (or risk default), we wanted to help ease any distress and provide you with some clear facts surrounding this mystical date. 

One of our preferred portfolio managers, Fidelity Investments - one of the largest private investment managers in the world, has put together a great piece that covers off four key questions surrounding the debt ceiling debate in the US: 

• What do investors need to know about the debt-ceiling situation?

• What does the August 2 deadline really mean?

• How might lawmakers and the President resolve this situation?

• What should investors do with their investment portfolios as the deadline approaches if no agreement is yet in place?

Please follow the link below to access this page on Fidelity’s website. 

https://www.fidelity.ca/cs/Satellite/en/public/news_markets/viewpoints/debt_ceiling_viewpoint

In typical media fashion, the August 2^nd deadline has been greatly overhyped as the US will not automatically default that day if a deal is not reached.  Though it is not an ideal scenario, there is still time for the Congress, Senate and Presidential Office to work out a solution after August 2^nd passes and we firmly believe that a deal will be reached before the ramifications become too severe.  In the meantime, there may be short term market volatility but we anticipate the markets will bounce back quickly once an agreement has been completed.