Republicans Could Trigger December Stock Market Crash
Red-Alert: Even if the Federal Reserve and Treasury Secretary Janet Yellen can push the December 3, 2021 deadline to raise the U.S. Debt Ceiling to December 15, investors should expect Senate Minority Leader Mitch McConnell (R-KY) to keep his promise to let the deadline pass, forcing the U.S. to default on its debt for the first time in history.
Twice impeached and disgraced former President Donald Trump has repeatedly ordered Republican members of Congress not to provide the essential votes to even temporarily raise the U.S. Debt and to use this as blackmail to derail President Biden’s agenda.
The last time the deadline was extended, Senate Minority Leader Mitch McConnell insisted that in December, when the new deadline arrives, he and the other Republican members of the Senate would not provide the votes to raise the debt ceiling again, even temporarily.
With the debt ceiling deadline little more than two weeks away, there’s no way the Democrats in the Senate will pass the reconciliation bill, including the debt ceiling boost in time. This means there are only two alternatives.
The first would be to shut down the U.S. government and, by doing so, extend the deadline. If this happens, the stock market as measured by the Dow Jones could nose-dive 3000 to 5000 points. Throw in the growing fear of the new Covid-19 variant Omicron that is suspected to be so much more contagious than the Delta variant; a government shutdown could be catastrophic.
The second option would require Senator Manchin (D-WV) to agree to a filibuster carve-out, which would allow democrats the ability to raise, suspend or forever end the need to raise the debt ceiling with 51 votes. Given Manchin’s resistance to changing the filibuster - the United States could default on its debt.
A default would like to lead to a 7,000 to 10,000 nose-dive in the Dow Jones and comparatively painful down moves in the S&P, NASDAQ, and even the Russell.
Democratic members of Congress and the Biden Administration refuse to believe that the Trump-controlled Republicans in Congress would ever allow the country to default on its debt. It could be the biggest miscalculation in history since Hitler’s invasion of the former Soviet Union.
Investors should consider the possibility of a government shutdown very likely. Trump and the Republicans did this in December of 2018, and the shutdown lasted until January 2019. According to the Congressional Budget Office, the shutdown cost the American economy at least $11 billion.
The Antideficiency Act prohibits federal departments or agencies from conducting non-essential operations without appropriations legislation in place. As a result, nine executive departments with around 800,000 employees had to shut down partially or entirely, affecting about one-fourth of government activities and causing employees to be furloughed or required to work without being paid.
We urge investors to follow the risk of both a government shutdown and debt default seriously and very closely.
In our sister investment newsletter publications Strategic Investment and World Opportunity Investor, we may recommend PUT options on the S&P and or Dow Jones in the next 12 days if it appears a shutdown is likely and if debt default seems to be possible. Please make no mistake about it. Former President Trump would like nothing better than to inflict a shutdown and default on his country. Trump is insane enough to believe a shutdown that weakened him and GOP in 2018 will strengthen his “Big Lie” somehow this time around. He also believes that “the country is finished,” so allowing a default will also strengthen his chances of re-election in 2024.
For the rest of investors and us, a shutdown followed by a debt default would be catastrophic, especially if the Omicron variant turns out to be the horror that it’s feared to be, the stock market crash that could be triggered by Trump Republican insanity could be the opportunity of a lifetime to make some serious money on the misery and chaos that may lay ahead in the next three weeks.
This is a red alert every investor needs to pay attention to!
Republicans oppose debt limit hike after supporting increases under Trump