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How to trade a US shutdown
Saxo's Steen Jakobsen is in no doubt; there will be a shutdown in Washington and it could cost the US economy dear. The bank's CIO says political posturing between Republicans and Democrats could lead to a rise in the unemployment rate and a few percentage points knocked off growth.
Jakobsen says September and October are traditionally the worst performing months in a calendar year and any shutdown would put pressure on companies such as Caterpillar, Fedex and Walmart which have already lowered their expectations. The uncertainty will lead, he says, to increased volatility, notably in equity markets. However they should bounce back once a solution is found.
The more negative story for Jakobsen is the dollar. He expects it to fall further should the shutdown last for more than jut a few days. Against the euro, a target of 1.40 is easily on the cards.
02:12 minutes
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