Mike McGlone, senior commodities analyst at Bloomberg Intelligence, believes that risky assets will be worse off if the US defaults on its debt.
McGlone say in a new Wolf of All Streets roundtable discussion that he is bearish on crypto assets and stocks, while he is bullish on gold amid negotiations to raise the US debt ceiling ahead of the June 1 deadline.
“What worries me is the statements I listened to when I did my research this weekend and you hear the Treasury Secretary [Janet] Scream as you say 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 that will come to an agreement until the markets have.
And it’s exactly what happened in 2011, they crashed the stock market hard. They will agree because they realize ‘we are going to crash the world economy, we will meet halfway’.
According to the Bloomberg strategist, risky assets are likely to recover once an agreement is reached on raising the US debt ceiling.
“The best thing is that when we wake up one morning, they have an agreement. What do you have on the morning of an agreement? A rally of risk assets.
Everything will pop up, Bitcoin probably the most.
McGlone says the most likely outcome is that the market’s reaction to a possible US debt default will lead to the debt ceiling being raised.
“I think the most likely scenario is for the markets to get them to come to an agreement.”
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