Once Debt Ceiling is Lifted SPY Will...

SPY -2.2%, VIX +13%, VXX +8%

Looks like the focus of the worries is shifting towards possible US Credit rating downgrade. This is silly. Sure, a US credit agency could downgrade US (but it will do its best to avoid this). So, the way things are done: behind the curtains the credit agencies are talking with Washington to make sure that the debt ceiling deal that is signed is sufficient to guarantee AAA status.

 

I have written in other threads these three things:

1. There appears to be a disconnect between earnings and pricing. I did not see why AAPL should go above 405. So far so good.

2. My suspicion of AMZN seems to also be correct. The margins are too low, and heading lower. I did not see why AZMN should go above 225. So far it is correct.

3. I thought the dollar would go up. Today it did that, but I have not yet seen a fundamental explanation. I have my explanation, but would like to see other explanations other than Jim's explanation of sentiment. Before it did today, experts (including past finance minister of Japan) on bloomberg were saying it is going down.


In relation to 1. and 2., I am wondering if there are any other areas of Nasdaq-100 that replace any possible slack from apple and ama.

 

Make up your mind between 1 and 2., european piker.

 

There will be no default, regardless of a deal. The UST will continue to pay out on coupons. The mkts are reacting to an inevitable AA rating and the resulting contraction in the economy and the ripple effect on state economies.

 

WASHINGTON – A top official from one of the country’s largest credit rating agencies told a House panel on Wednesday that the United States is unlikely to default on its debt obligations, but he warned that its credit rating could be lowered if it doesn’t come up with an adequate plan to address its soaring budget deficit.

A downgrade of the government's debt rating to AA from the current AAA rating would still mean that Treasuries are “very high quality securities,” said David Wilson, senior deputy comptroller and chief national bank examiner in the Office of the Comptroller of the Currency.

The president of Standard & Poor’s Corp. also said that deficit-reduction plans currently being considered in Congress could be sufficient to allow the United States to keep its triple-A credit rating. <<

whom is he kidding? of course they are sufficient, he must have told this to Washington otherwise these particular plans would not be circulating.

 

i am precious metal Short, VXX Short. Both are too early. still hope to bail out with small profits.

 

You seem to be shorting one thing which may be one of the (two?) parts of the other thing.

Maybe the parts of the other thing could have been broken into singles, if the environment is conducive for them to move in opposite directions.

Just had the thought today.

 

i am assuming that i am shorting excessive fear related to debt limit decision. VXX is more or less the pure trade here.

i am short SLV because i attribute its runup to the same debt limit uncertainty. so i expect it to also revert once the uncertainty is lifted. i assume that SLV is Up because of some specific fear(s) as opposed to VXX (a more generic type of fear) .

not sure what you mean by 2 things. i could imagine that SLV = VIX_type_Fear + Inflation_Fear.

 

Your interpretation is correct. What did you think of the inflation fear (as of night of Tuesday to Wednesday), and what do you think of it going forward?

 

sadly, i am totally clueless.

but if i was forced to speculate on that i would exclude the rampant inflation scenario.