The direction of markets this week will be determined by the politics of debt, both in Brussels and Washington We are expecting some decent volatility as the markets begin to price the negative scenarios. Given the unpredictability of politics, we’re not making big directional bets, however. Could the Congress really choose the nuclear option and not raise the debt ceiling? Logic says no. Are politicians logical? Place your bets.
After Google’s huge rally on the back of its earnings beat, we are watching Apple very closely. A beat and similar rally would signal, at least to us, the safe haven trade is now in strong balance sheet/decent growth private sector companies, both their debt and equity. The times they are a changin’! And, yes, don’t forget gold.
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