November 14th – not October 17th – is the key date for Doomsday watchers to circle on their calendars. For 66 years, Goldman Sachs notes, the Bulletin of the Atomic Scientists has published a Doomsday Clock showing how close the world is to global catastrophe. First set in 1947 at 7 minutes until midnight, the clock has ranged from as short as 2 minutes (1950s) to as long as 17 minutes (early 1990s). It now stands at 5 minutes before midnight. On November 14th the committee will vote again whether to adjust the minute hand on the proverbial clock face.
However, Goldman confirms, most market participants characterize October 17th as the fiscal Doomsday when the federal government hits its debt ceiling.
Surprisingly, Goldman Sachs points out that not one client meeting during the past two weeks has focused on the stalemate in Washington, DC. Mutual funds, hedge funds, and even sovereign wealth funds that have traveled to our offices have expressly wanted to look beyond the partial government shutdown and the rapidly approaching debt ceiling.
Simply put, the roadblock on Pennsylvania Avenue was completely ignored. Goldman adds, perhaps more concerningly in the case of the DC Debacle, that everyone assumes a deal will be reached to avert disaster just as nuclear Armageddon has been avoided since 1947... and US equity market action, until this evening’s futures open, was/is consistent with the view of most investors.
Source: Goldman Sachs
So the question is – with the “global Catastrophe” Doomsday clock at 5 minutes to midnight, where is the “global financial chaos” clock? And which of these two “disasters” would wreak the most damage (and to whom)?