Market expert warns of 'Liberation Day selloff 2.0' if this happens

About this Video

• Video Title: Market expert warns of 'Liberation Day selloff 2.0' if this happens
• Channel: Fox Business
• Speakers: Kenny Polcari, Congresswoman Kat Cammack, Jackie DeAngelis, Dagen McDowell
• Duration: 00:10:52

Introduction

This Fox Business video discusses the potential consequences if the US Congress fails to reach an agreement on a debt ceiling deal before the Memorial Day recess. The main focus is on the disagreements surrounding tax cuts, SALT deductions, and Medicaid work requirements, and the potential market reaction if a deal isn't reached.

Key Takeaways

• Disagreement on Debt Ceiling Deal: Congress is divided on key issues including Medicaid work requirements, SALT deductions, and overall spending levels. Speaker Mike Johnson aims to pass a bill before the Memorial Day recess.
• Potential Tax Impacts: The proposed plan could result in double-digit tax cuts for some Americans, but also a tax hike if the 2017 Trump tax cuts aren't extended.
• SALT Deduction Debate: A significant sticking point is the SALT (State and Local Taxes) deduction. There's debate about whether to offer a $30,000 deduction with no phaseout, which benefits high-tax states disproportionately. Donald Trump has publicly criticized those against a higher SALT deduction.
• Medicaid Work Requirements: Disagreements exist on Medicaid work requirements, particularly concerning able-bodied adult men. Congressman Chip Roy advocates for changes to the Medicaid expansion formula to make it less generous.
• Market Reaction: Experts warn of a potential "Liberation Day selloff 2.0" if a deal isn't reached, citing concerns about the deficit and the market's response to higher deficits. Investors are already pushing back by selling bonds and increasing yields.