I have posted numerous articles about the debt ceiling over the last couple of months and all I can repeat is that they will raise the debt ceiling before August 2nd, they actually have until July 22nd to raise it, they have been saying so that it could go through in time for August 2nd, so be prepared for the debt ceiling to be raised by July 22nd 2011.... After that is aside which should easily be good for a 3-5% rally and earnings are in full effect this should push the DOW to 13k by the end of July and probably even push it to historical highs by Sept-November 2011.
None of you guys are bothered by the banks still being overleveraged with their balance sheets full of worthless assets, TBTF banks have gotten even bigger, unemployment isn't budging, home prices continue to fall, etc.? My charts are telling me "buy," but I can't help but think we are only one event away from an even bigger crash. The debt ceiling being raised or not raised might be one of those events, but even if this government gets its head out of its @ss, I can't convince myself it's clear sailing from here. I mean for day trading, OK. For a longer term investment? I can't talk myself into pulling the trigger. What is making you guys optimistic?
I thought that the OP's question is different than what the majority of the answers have so far focused on. My understanding is that the OP wants to know the best ways to play the scenario of a delay in reaching a decision on debt limit, even if at the end they increase it? In other words, assuming there would delays how to trade it? OP: if my understanding is incorrect, could you please clarify?
Thank you, all. I figured that by the 3rd week of July if nothing has happened or if the 8/2 deadline gets passed, markets might react. So wanted to find a leveraged play to the downside such as front-month calls on TYP. But just heard that the government gets enough cash in so that they can continue to pay interest on the debt without having to shut down, as well as some of the debt could be rolled over so perhaps even a delay may not create a revolt. I envisioned a scenario with markets revolting of which now I am unsure of.
Another day and more worthless talks on the debt ceiling, but have absolutely no worries as in the next 5-10 days a deal will be made, they will not let August 2nd come and go without raising the debt ceiling, its a done deal. They continue to play this game until the last minute, when the last minute is done a deal will be struck raising the debt ceiling once again. The day they announce an agreement the markets will soar erasing all loses that occur from here on in, so lets say the markets drop another 4% from now until the time the deal is made, after the deal is finally through the markets will gain back 4% and even more as everyone celebrates more foolish spending. So what I am saying is just buy the sell offs leading into the next 2-3 weeks so that when the August 2nd comes and everything is peaches and cream you can make some very good money buying equities as they sell off. They will raise the debt ceiling, THEY WILL RAISE IT BY AUGUST 2nd. The media and the talking heads should just shut the fuck up and ignore this game because that's all it is.
I completely agree with S2007S. This is an entirely trivial, manufactured "crisis" all about political gamesmanship, a very sad commentary on our utterly dysfunctional government. A much bigger, real problem is the world banking crisis, which still has not been dealt with in a meaningful way, like restoring Glass-Steagall. Greece's insolvency got put off, hoping things would magically get better. When the economies of Greece, Italy, Portugal, Spain, etc., collapse, all of the other dominoes will fall and at some point it will become painfully obvious that the answer to every problem isn't to print more money. Nor is it to obsess over the government debt. The first thing we need to do is to stop allowing the banks to conceal their insolvency, so at least we know what we're dealing with. If anybody believed what their financial statements said, bank stocks would be back at 2008 levels. Before anything can get really better, the truth is going to need to be revealed and dealt with. Otherwise we'll continue to manufacture this false "recovery."