The countdown to default is down to three days. Little progress was made over the weekend in the debt ceiling negotiations. The only noticeable difference was a slight calming of the rhetoric as leaders retreated to their back offices, presumably in hopes of striking at least a short-term deal. If no compromise is reached the U.S. is set to breach its $16.7 trillion debt ceiling on Thursday, thereby losing its borrowing authority.
The pressure is mounting not just from voters but abroad. On Friday World Bank president Jim Yong Kim implored the U.S. to strike a deal saying foreign economies were already showing signs of disruption, often at the expense of the poor. "We urge policymakers here in Washington to come to a resolution as quickly as possible to avoid what could be catastrophic impacts from a default," he said. "Uncertainty and volatility make it more difficult for developing countries to access needed finance, and this would both slow investment and negatively impact growth. And the poor and vulnerable would suffer the most."
David Lutz, Head of ETF trading and strategy for Stifel Nicolaus, says investors are getting nervous as the October 17th debt ceiling deadline nears. With the rhetoric getting heated, active market participants are more comfortable missing a potential rally than putting new money to work.
Lutz understands the concerns but hiding out isn't a productive way to go about investing. In the attached clip Lutz walks through some of the investing headwinds to take some of the emotion out of the money management process and hopefully get one step ahead of the herd.
Concern 1: The Government Shutdown
Now entering its third week, the government shutdown is almost becoming old hat. As a negotiating point the shutdown has become part of the debt ceiling debate. There have been suggestions that some sort of temporary deal could be struck but the damage is largely done economically.Read More »from Default Countdown: Don’t Let Fear Control Your Money, Says Lutz