The debt limit was reached last week. While a possible default will be discussed if there is no agreement to raise the debt ceiling as extraordinary measures are exhausted, a default is virtually certain not to happen. History would suggest being prepared for stock and bond volatility, though.

Headline earnings deteriorated last week and remained below estimates. Outside of earnings season, stocks were depressed by worse-than-expected December retail sales last week. Forward guidance from companies will remain crucial while the threat of a 2023 recession looms.