The economic elites are turning against austerity. Europe is failing and the UK press is repeatedly questioning Cameron’s spending cuts.
With US 10-year borrowing costs at a record low and growth floundering, now isn’t the right time to look for savings.
…or at least that’s the argument we will be hearing after the US election.
The bottom line is that the US has never done austerity and the political system isn’t capable of it. The politicians will do what they always do — kick the can down the road.
The day of reckoning will come one day and it will be a bloody mess but that day won’t be in 2013 or 2014.
The trade will be to bet on North American growth leading next year. Canada will benefit most from US spending and the Canadian government has already hinted that it’s prepared to do its own round of economic stimulus.
The thing is, thinking two steps ahead in markets doesn’t pay if you want to make money today. Betting against US austerity is a trade for October or November. For now, the trade is to bet against growth as Europe unravels and the US slumps.
