US Default: fearing the fearlessness

Posted: October 10, 2013 in Uncategorized
Tags: , ,

The market analyst in general are very blase’ about the potential of a technical default of the US (technical means that you are defaulting as you do not want to pay, not because you do not have money – as the US can print it!).

Everyone is very calm and convinced of a very last minute “as usual” deal. It is just a feeling born from over 13 years of market experience that when everyone agrees the market does completely the opposite of what is supposed to do.

It also is how the Congress work….now there is no pressure from the Tea Party support base onto their senators to make a deal as they are not suffering any economic pain.

Also the Volatility Index is still hovering around 20 (the last crisis, August 11, was double that number).

Logically there are word of dissent. Fidelity, one of the largest US investment manager, sold all of its US Treasury position due in October/November.

 

I think the most realistic view is the one of Potomac Research (one of the more politically conscious US Research House), after talking with the Tea Party senators. it estimates the chances of a US Default at 20%. If you think what is a US Default it is not such a low number.

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