Debt default in United States? - Page 10
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Thread: Debt default in United States?

  1. #1
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    Debt default in United States?

    Hi traders!

    You know me as price action trader, normally I’m careless about news, but this time things can be different.

    Let’s talk a bit about possible default in United States. How it will affect markets and real sector?

    First of all, I think that default scenario doesn’t absolutely make sense to politicians, either democrats or republicans. Every serious politician knows that he will do political suicide if US will go bankrupt. I should mention that market probably is not too serious about default in US. Otherwise, Gold futures would rally and trade somewhere near 1500 USD per ounce.

    Is Gold rising?

    Look at the Gold futures chart (GC) with expiration in December 2013, we see that market obviously has no interest in Gold. As you know, during financial crisis demand for gold is very high. It seems that broad market doesn’t bet on this scenario

    Attachment 1874



    Why is this happening?

    It started not yesterday or even not 2-3 years ago. In 2001 (!), when USA had positive trade balance, they were unable to cover a single penny of their debt. So, not surprisingly they can’t do it today. Their economic model is designed to consistently raise debt ceiling. If years before that it was considered as necessary but optional, now they simply can’t stop. So, I think, they will not allow United States to go bankrupt – dollar is the only valuable commodity for export in this country.



    If it happens, what to expect?


    First of all, don’t panic. Remember – markets will tend to act «flight-to-safety» scenario. But in this case, I would play against the crowd. We might see temporary decline of US dollar, and it would give good price to invest some cash in dollar buying cheap (of course, I’m talking about keeping ones money in currency, not about speculating and trading).
    Psychological reaction of decline is expectable, but don’t be with the crowd – step aside! In longer term perspective demand for US dollar will increase because QE program will be terminated after the default – termination of QE will bring deficit of dollars and increased demand.


    Bottom line:

    I don’t believe in default, but keep an eye on markets and be very careful if flight-to-safety scenario will start happening. No short term techniques will be reliable in this case – no levels will be working, volatility can become tremendous. Just keep an eye and be aware.

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  2. #91
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    I have seen a few of your posts already pajero and it seems to me you are totally a technical trader. If you go to world class traders room, it will be hard for you to adapt since all they are talking is inverted yield curve, pe ratio, gdp and not the charts at all. They are calculating the fair value from all of those data and trade in the end. Before you got deeper to the wrong side, try to learn about the truth faster. I know several wallstreet traders and they told me technical analysis is a knowledge created to create false sense of security in trading.

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  3. #92
    Trader jamey's Avatar
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    I agree with some financial experts that it is impossible to define such a big country because the dollar is the main currency worldwide. This is just a rumor and drama made by Republicans. If this is true, we can see that Lehman Brother's bankruptcy in 2008 after bankruptcy is going to fall. It causes US economic collapse against all major currencies, and we can say that it is an Armageddon for the United States. Most stock and forex traders are still waiting to confirm this news and rumors that it has already spread everywhere. This is 50:50 that may or may not be the default.

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  4. #93
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    I want to appreciate you for this valuable information so that we keep watch over this.From my own perspective this might affect US currency negatively and the best suggestion is to keep off the currency for now and move with other ones while US struggles to get their balance back.

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