Market View: US debt ceiling deal, Rolls-Royce, JP Morgan Chase, Mapletree S-REITs, Dasin Retail Trust, Temasek Holdings, Marvell earnings results, Nvidia and AI stock bubble

**SPEAKER_1** (0:01)
MoneyFM 89.3, the best of your money. Market View on MoneyFM 89.3 Good morning, folks.

**Dan Koh** (0:12)
It's me, Dan Koh, keeping you company on Your Money right here on MoneyFM 89.3. I'll be stepping in for Michelle Martin as she's going to be on a short break for the next few days. Now, I hope you've had a restful weekend, and just in case you don't already know, it's going to be a short work week, so that means that the long weekend is just around the corner, so hang in there. And as always, joining us to analyze the latest market actions is Ryan Huang. Good morning, Ryan. How was your weekend?

**Ryan Huang** (0:36)
Yeah, doing awesome, Dan. How was your weekend?

**Dan Koh** (0:40)
My weekend was quite restful because I've been away for about two weeks, but I must say, it's been funny to be... It's good to be back on air with you.

**Ryan Huang** (0:49)
Restful and reservist, not two words. I know me here.

**Dan Koh** (0:53)
Yeah, I think it's quite questionable. But anyways, let's jump right into today's version of Market View. And good news over the weekend, we've got President Joe Biden saying that he and House Speaker, Kevin McCarthy, have reached a final agreement to avert a historic US default after the two spoke again last this Sunday afternoon. And Biden and McCarthy, they sealed their bargain during the 90-minute phone call, and they cleared the way for a push to shepherd the deal through Congress over the objections of hardliners in both parties before the US government runs out of borrowing capacity in about a week. Ryan, can you walk us through the key takeaways from the debt limit deal?

**Ryan Huang** (1:32)
Yeah, so a couple of things stand up for me. And again, this is the $31.4 trillion debt ceiling. So this was in pretty much the news for the past week, past month, and everyone's been expecting some deal to be done. And here we have it, of some form. And bear in mind, this is an in-principle agreement, and the terms are starting to emerge as we get the reports out. So a couple of things stand out here is that the can is kicked down the road. So it's an extension for another two years until 2025 So this will be suspended until January 2025
And this, of course, is good news for Joe Biden, because next year is the US presidential election. That does away with one huge distraction. And this is going to be very important for his campaign. And the other part about it is, they have agreed to some caps on spending. So that's what Republicans have been calling for. And the other part about it is increased defense spending that is in line with Biden's budget spending proposal. So that's an 11% increase to around $885 billion. There is an agreement to claw back funds, unused funds, for COVID-19 as part of the budget deal. So this will include funding that have been set aside for vaccine research, disaster relief. And that could come up to the tune of around $50 to $70 billion. So that will in some fashion replenish the coffers. So that's the overall look to the deal. We of course have to bear in mind it is tentative in the sense that we still need to see this go through Congress. And in Congress, already Republicans and Democrats are pushing back because they are not totally on board with all the terms reached.

**Dan Koh** (3:32)
Yes, very interesting. And in fact, you know, it raises the importance of having to address this issue before because the debt ceiling crisis, you know, it's still unfolding and if the agreement isn't reached before early June, the United States could run out of money and it has never really happened before so we don't really know how bad it would be. But it would be safe to say that its range somewhere between, you know, pretty awful to catastrophic as well. And Biden has in fact stepped up this, you know, called the deal an important step forward that reduces spending while protecting critical programs for working people and the growing economy for everyone. In fact, he also offered a preview of the White House's argument for House Democrats reluctant to support a deal or bill that appears on its face to be a Republican victory. In short, like I've mentioned before, it could have been a lot worse. But right, despite the optimism, some have even stepped up to say that while the tentative deal avoids the worst-case scenario of payments default triggering financial collapse, some have said also that it adds to the risks of a downturn in the world's largest economy. So what potential risks are we looking at here? And is this anything more than a short-term relief for markets, Ryan?