Tags: Bove Dont Buy One Stock Until Debt Ceiling Resolved

Bove: Don't Buy One Stock Until Debt Ceiling Resolved

Thursday, 28 Jul 2011 09:26 AM

Investors should stay on the sidelines and not even buy one stock until the debt ceiling issue is resolved, says Dick Bove, an analyst at Rochdale Securities.

The government has hit its $14.3 trillion debt ceiling and in order to avoid default by an Aug. 2 deadline, Congress must vote to lift it.

Lawmakers have refused due to odds with the White House over the role spending cuts and tax hikes should play in exchange for lifting the ceiling.

Dick-Bove-3-thumb-200.jpg
Dick Bove
(Rochdale file photo)
"It now makes sense to test the unthinkable," Bove says, according to CNBC.

"Thus, for the moment I would suggest suspending investing since all stocks are likely to fall."

The stalemate is prompting investors to look for a new safe haven to replace Treasury and other U.S. investments, which could take a beating should the government default.

Gold often serves as a hedge to dollar issues but it is too illiquid, and the Swiss franc won't work since the government will take measures to prevent massive inflows to protect its economy should the world suddenly demand the currency, Bove says.

"Many options are likely to be experimented with until the new global financial configuration is arrived at," Bove adds.

"Investors must be attuned to how this new financial era will be shaped and invest accordingly. Right now, however, they must protect themselves by remaining liquid."

Other remain on alert as well.

"If the U.S. defaults, there would be massive consequences," says Mohamed El-Erian, CEO of Pimco, the world's largest bond fund, according to Bloomberg.

"People are concerned, but they sort of think it’s a very, very low probability, and we would agree."

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Investors should stay on the sidelines and not even buy one stock until the debt ceiling issue is resolved, says Dick Bove, an analyst at Rochdale Securities. The government has hit its $14.3 trillion debt ceiling and in order to avoid default by an Aug. 2 deadline,...
Bove Dont Buy One Stock Until Debt Ceiling Resolved
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2011-26-28
Thursday, 28 Jul 2011 09:26 AM
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