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Is US Going to Default on Its Debt?

Andrew AzizAndrew AzizMay 10, 2023
Is US Going to Default on Its Debt?

 

Hello Traders,

I am writing to you from Camp 1 of Mount Everest! My plan is to go back up to Camp 2, and then Camp 3, for another round of climatization today. This year's weather has been particularly uncooperative, resulting in a delay in placing the fixed rope necessary for the Mount Everest summit. In fact, no one has progressed beyond Camp 4.

This going up and down is the last rotation and after that we will rest until the weather is ready for our push to the summit. That will probably take place around May 15 to 20. A lot of people are wondering how I am writing these daily newsletters. Surprisingly, base camp has fantastic internet access and I have been able to follow the market and run Bear Bull Traders remotely.

 

Camp 3

 

Paras did a fantastic trade on AAPL this morning. Make sure to watch his recap along with Brian here.

On the market, volume has dropped off recently, and one thing on everyone’s mind is the debt ceiling. If Congress fails to successfully raise the debt limit, US will default on its debt, VIX will probably go to between 65 and 70, and market could fall by 5 to 10%. How likely is a default?

Well, according to the bond market, it is likely. Bonds maturing after the debt ceiling decision are trading 1% higher than bonds maturing in May (before the debt ceiling decision). This means that investors are demanding a 1% higher return for taking on the debt ceiling debt.

 

Treasury Yields

 

If you are interested in learning how to hedge your downside risk and how to protect your portfolio, please ensure you join Ardi for a FREE webinar he is putting on for the MoneyShow.

In this 30-minute presentation, Ardi will talk about collar, protective puts, and other ways to hedge your portfolio against potential systematic risks such as the US defaulting on its debt.

This FREE webinar will be held on Thursday, May 18th, from 10:45am to 11:15am ET. Make sure to sign up here.

 

MoeyShow Virtual Event

 

I hope all of you are having a great trading week so far. I cannot wait to be back, and celebrate my Mount Everest expedition with all of you at our next Meetup!

To your success,
Andrew

 

PS: I love to stay connected with everyone on social media and each platform is of course different:
Follow me on Instagram for the travelling trader lifestyle!
Connect with me on LinkedIn for professional content.
Follow me on Twitter for trade recaps and some memes!
Subscribe to my YouTube channel for hot content from BBT team.

 

Andrew AzizAndrew Aziz

Andrew Aziz (Ph.D.) is a Canadian trader, investor, proprietary fund manager, official Forbes business Council member, investor, and #1 best-selling author.

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