European Midday Briefing : Debt Ceiling and -2-

A booming luxury sector has been the standout in European markets this year so far. High-end retailers such as LVMH have taken on comparable importance for the region as technology companies like Apple have in the U.S.

So a drop on Tuesday wiping billions off the valuations of some of the biggest luxury companies sends a worrying signal for European markets as a whole.

Wagner Chief's Feud With Russian Military Cracks Putin's Image of Control

The owner of Russia's Wagner paramilitary organization, Yevgeny Prigozhin, stood amid the ruins of the conquered Ukrainian city of Bakhmut on May 20 and unleashed a tirade against his foes.

Their names: Sergei Shoigu, Russia's minister of defense, and Valeriy Gerasimov, Russia's top general.

GLOBAL NEWS

For Banks, Debt-Ceiling Drama Doesn't End With a Deal

Even once the debt ceiling is resolved, there may be more plot twists for American companies-especially deposit-hungry banks.

Ending the standoff will enable the U.S. Treasury to raise cash to pay its bills. Normally that is a dull part of the financial system's plumbing, but these aren't normal times for many banks. And since the Treasury also must refill a huge hole that the multimonth drama has forced it to dig, the refunding process could add to the competition for the cash of savers and investors. That would exacerbate worries about banks' funding.

Freeze or Cut? Spending Fight Is Main Event in Debt-Ceiling Talks

WASHINGTON-Reining in government spending has become the central focus of negotiations over raising the debt ceiling, with House Speaker Kevin McCarthy (R., Calif.) under pressure from conservatives to secure deep cuts, while Democrats have offered a spending freeze.

GOP negotiators have insisted that any deal with the White House must result in lower discretionary spending next year than this year, calling it a critical step in starting to address the country's growing debt, which now stands at $31.4 trillion.

A debt-ceiling deal will spark a new worry: Who will buy the deluge of Treasury bills?

When the U.S. debt-ceiling fight finally is resolved, the Treasury is expected to unleash a flood of bill issuance to help refill its coffers run low by the protracted standoff in Washington, D.C., over the government's borrowing limit.

The question is, who will buy them and at what price?

Share Buybacks Continue at Torrid Pace While Investors Sit on Sidelines

U.S. companies have remained stalwart buyers of their own shares even as institutional and individual investors alike have become skittish and trimmed their exposure to equities.

Companies in the Russell 3000 have unveiled plans to buy back more than $600 billion in shares this year, in line with last year's record pace, according to data from research firm Birinyi Associates. In all, they announced $1.27 trillion of share repurchases and completed $1.05 trillion in buybacks in 2022, both all-time highs, according to Birinyi.

Bank Stocks Are Now Meme Stocks

This is the year that bank stocks became meme stocks.

Shares of banks such as PacWest have seesawed wildly since March. Bad news, including lost deposits, has sent them spiraling. Good news, like hints of greater government support, has sent them soaring.

U.S. and China See Fragile Opportunity to Repair Ties

After months of recrimination, U.S.-China relations are entering a new phase likely to determine whether the two powers are able to restore high-level exchanges derailed by a Chinese balloon earlier this year.

A first barometer of the chance for success is a dinner planned for Thursday in Washington, where Commerce Secretary Gina Raimondo will sit down with her Chinese counterpart, Wang Wentao. It will be the first cabinet-level meeting in Washington between the two countries during the Biden administration.

Debt-Ceiling Fight Sends Investors Hunting for New Havens

Traders worried about a potential U.S. default are swapping their go-to safe haven for the bonds of America's top-rated companies.

Just days or weeks before the government faces a possible funding shortfall, investors are shunning U.S. Treasury bills that will mature over the next several months while paying a premium to buy debt issued by Microsoft and Johnson & Johnson, two of the highest-rated U.S. companies.

Biden Tries to Close Debt-Ceiling Deal Democrats Sought to Avoid

WASHINGTON-President Biden and Democratic leaders in Congress approached this year's debt-ceiling drama with a consistent mantra: They would absolutely never, ever, under any circumstances, negotiate over raising the country's borrowing level.

But now they are very much negotiating on the debt limit, just about a week before the June 1 date when the Treasury Department estimates the U.S. could run out of measures to avoid default. Talks are under way about how to find a package of spending cuts and other measures acceptable to enough Republicans and Democrats to clear Congress, with House Speaker Kevin McCarthy (R., Calif.) and Biden meeting Monday and planning further talks to craft a deal framework in coming days.

Hunter Biden Probe Tensions Mounted, IRS Agent Alleges

WASHINGTON-In a charged meeting last year, federal prosecutors were informed of investigators' "longstanding concerns" about what they described as irregularities in the handling of the Justice Department's criminal investigation into President Biden's son, Hunter Biden, a lawyer for an IRS supervisory agent said in a letter.

The letter to the Office of Special Counsel, an independent investigative body that handles federal government personnel matters, refers to a meeting in October 2022 and comes days before the supervisory agent is set to give closed-door testimony on Capitol Hill.

Trump Hush-Money Case to Go to Trial in March 2024

A New York judge on Tuesday scheduled a March 25, 2024, trial date for former President Donald Trump on criminal charges related to his alleged role in paying hush money to a porn star.

The date, which the judge said wouldn't be moved, means the case will be starting as Trump, who is running for the 2024 Republican presidential nomination, is in the middle of the GOP primary campaign.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-24-23 0551ET