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Washington, D.C. kicked the can on the debt ceiling, but what matters more for investors is earnings. This week on the latest LPL Market Signals podcast, LPL Financial Strategists Jeff Buchbinder and Ryan Detrick discuss how worried investors should or shouldn’t be about Washington, D.C. drama and recommend focusing more on the upcoming earnings season (which could have trouble matching previous quarters). Lastly, they discuss some mixed economic data and what it all means for the economy going forward.

Kick the can

Congress arrived at a bipartisan deal last week to raise the debt ceiling to cover government debt obligations until December 3, kicking the can down the road as expected. Ryan and Jeff discuss why this is actually perfectly normal—this is the 79th time Congress postponed addressing government obligations since 1960. The bottom line is—the delay was necessary to stave off a default and we likely will see number 80 sometime soon.

Earnings season is here

It is time for third-quarter earnings season—which Jeff thinks there is potential for more than 30% earnings growth. After a record 90% growth last quarter, 30% would still be a very solid number. But the upside surprises will likely be smaller and more in-line with history. The truth is—supply chain and labor issues could make things much harder on corporate America this time around.

Jobs missed big

The September jobs report came in at only 194,000 jobs versus expectations of close to 500,000. Ryan points out that August was revised upwards of 131,000, which helped the overall picture. Still, this was a disappointment all around. Jeff states that he still expects a big jump in jobs before the end of the year. The other thing that caught their attention was the 10-Year Yield didn’t sell off on this news. If it was a true risk-off scenario, they’d expect more move to defensive areas, but that wasn’t the case. Recent manufacturing and services data remain strong, with various risk-on indicators still flashing confidence in the economy.

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth in the podcast may not develop as predicted and are subject to change. 

References to markets, asset classes, and sectors are generally regarding the corresponding market index. All indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

All index data is from FactSet.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This Research material was prepared by LPL Financial, LLC. 


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