Potential US Debt Default Could Crush Crypto and Stock Markets, Warns Bloomberg Strategist
Bloomberg Intelligence’s senior commodities analyst Mike McGlone believes that risk assets will be worse off if the US defaults on its debt.
McGlone says in a new Wolf of All Streets roundtable discussion that he is bearish on crypto assets and stocks while bullish on gold amid negotiations to raise the US debt ceiling before the June 1st deadline.
“The thing I’m concerned about is the statements I was listening to when doing my research this weekend and you hear the Treasury Secretary [Janet] Yellen saying the word ‘default’…
It keeps me very bullish on things like gold, very, very bearish things like the stock market and broad cryptos because I don’t think this is going to come to an agreement until markets make that.
And it’s just what happened in 2011, they dropped the stock market down hard. They will agree because they realize, ‘we are going to crash the global economy, we will meet in the middle’.”
According to the Bloomberg strategist, risk assets are likely to rally once an agreement on raising the US debt ceiling is reached.
“What’s the best case is we wake up one morning, they have an agreement. In the morning of an agreement, what do you have? A risk asset rally.
Everything will pop up, Bitcoin probably the most.”
McGlone says that the most likely outcome is that the market’s reaction to a potential US debt default will force the debt ceiling to be raised.
“I think the more likely scenario is the markets make them come to an agreement.”
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