Shutdown Deal Won’t Change Market Outlook: Plavnik

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Oct. 15 (Bloomberg) -- Michael Plavnik, head of Stirt desk at Citigroup, discusses the impact of the U.S. government shutdown on markets, why a short-term deal won’t really change anything and how it will affect Fed tapering. He speaks on Bloomberg Television’s “On The Move.”

A bit of nervousness and treasuries.

You are in trading.

Is like watching paint dry.

Is played out over a long time.

It does not matter about the deal in the center.

It matters in the house.

What they agree, interest cannot take the three months.

-- it does not matter about the deal, it is in the senate.

The republicans did not get the move in the polls.

Why aren't the markets reacting?

Why don't we see more from the markets if we are to the days out?

This is not even a deal.

Even if he gets struck, there is no change in outlook for the market will stop and any of the long-term paths of entitlement.

People extrapolate going forward.

People of already made their decision about cap x. it has been week.

--n weaker.

It is not going to get much weaker.

It will not pick up.

You will see in a title deal was struck a receipt pickup.

Given the low trajectory it does not make sense.

-- you'll see entitled deals struck and it would pick up.

You would be pretty satisfied with that?

You will probably get a three month can kick.

It is status quo.

We have been with many deadline deals in the u.s. since 2011. i think the impact will be on the dollar actually.

At some point investors will say , why am i holding this?

You'll probably see less faith in the dollar and other currencies appreciate.

If you look at the last two weeks.

Assuming they get a deal.

How has it delayed the taper?

If you assume it will have a negative effect on gdp, what are your expectations when the taper starts?

There has been no economic data.

The bigger impact is we are not going to get the october data at all.

That is gone.

Will not see the september data.

The first real read will be november.

Then he will head into the semper.

You would not get a real clear read on the economy for at least five months.

Taper and the gets delayed.

We had a janet yellen appointment.

Whenever we have a fed chairman is a historic event.

With greenspan, he faced a crisis very early on.

Bernanke faced a house in the market while oil will skyrocket.

Now janet yellen will be faced with something else.

Even the hand over of the chairman will be delayed.

Llamas gave an argument for tapering in q2. you almost gave an argument for tapering and q2. it doesn't become really dangerous -- does it become really dangerous?

It is less debated today.

In hindsight it looks accurate in delaying the tapering because of this.

Or is less pressure on the fed to do it at the economy is struggling.

Do we get to pick up and delay the taper?

It will become more dangerous.

The danger is the trap of qe forever.

The market price and qe forever.

Not that we do it forever but people extrapolate this the policy going forward and we know it is not true.

You have a number severe commercials.

Is it a reckless earned -- is it a real concern?

The only experience we have seen will try to exit and that has been japan.

Our only data point is the only country was done and is not been able to exit.

It is not 100% forever.

Probably 30% extrapolated.

One of the things were talked about yesterday was we talked a lot about the fact that the market is not putting pressure on politician get something done.

At the imf meeting, there was no real pressure from counterparts.

If you are japan and i was the finance minister, i probably would've put stronger words.

You saw some strong words from christine lagarde.

The problem, you have to look at your audiences.

The last i checked house republicans and not look to christine lagarde for putting on pressure.

They do look to some extent to markets but not to the extent -- the difference between the house and the senate.

Multi-major cities and suburban core.

A lot of house republicans come from the role districts -- rural districts a do not feel the pressure of big banks and big business like senators.

If you look at a map of where lawmakers come from, there are different constituencies.

If we're not with the pressure from politicians, probably the wrong crowd, not pressure from the markets.

You see qe tapering possibly in the second quarter of next year.

What is your favorite place for the next quarter?

The dollar is going to the t-2

This text has been automatically generated. It may not be 100% accurate.


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