On Monday both the S&P and Dow closed sharply lower with chatter on the Street all about the controversial S&P downgrade.
As you may know, the ratings agency downgraded the outlook for the United States to negative from stable, "Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear."
Although many market experts have shrugged off the downgrade, in a live interview on CNBC’s Fast Money strategic investor Dennis Gartman suggests shrugging it off could be a mistake.
In fact, if Gartman is right, it could generate a serious ripple that has a significant market impact.
That’s because he thinks the S&P downgrade could put pressure on Congress and the White House to do something about the growing national debt. “I'm not naive but maybe the Congress will do something,” he says.
In other words he thinks the stealth ripple is that the downgrade could give politicians a bully pulpit. "Finally someone will say even S&P is telling us how bad things are,” explains Gartman. "It gives Congress a reason to act. Everyone needs an impetus to act and I think (the downgrade) is that impetus."
And it's not just Gartman; top hedge fund manager Anthony Scaramucci says much the same. ”It could give political air cover to the Congress. It gives the politicians cover to dig in and become more fiscally prudent,” Scaramucci says.
So why does the ripple potentially have significant market impact, as we mentioned at the top?
“There’s been huge short interest in the dollar and it could now unwind,” says Gartman.
If the next big move in the dollar is higher, then market dynamics may change. "I think the dollar is way oversold. If anything, this helps the dollar," trader Tim Seymour says. "And we know what that does to commodities and commodity-related stocks."
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Trader disclosure: On April 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AA); Seymour owns (BX); Seymour owns (F); Seymour owns (POT); Finerman and Finerman's firm own (AAPL); Finerman and Finerman's firm own (BP); Finerman and Finerman's firm own (CVS); Finerman owns (C); Finerman's firm is long (IBM); Finerman's firm owns (JPM), is long (JPM) leaps; Finerman owns (JPM); FInerman and Finerman's firm own (MSFT); Finerman's firm is long (TGT); Finerman owns (UNG); Finerman owns (USO); Finerman's firm is long (WMT); Finerman's firm is short (IWM); FInerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IJR); Finermna's firm is long S&P 500 puts; Finerman's firm is long Russell 2000 puts; Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NUE); Adami owns (NG); Adami owns (BTU); Jon Najarian owns (MA) is short (MA) calls; Jon Najarian owns (AXP) is short (AXP) calls; Jon Najarian owns (CBOE) is short (CBOE) calls; Jon Najarian owns (CME) is short (CME) calls; Jon Najarian owns (NYX) is short (NYX) calls; Jon Najarian owns (TYC) is short (TYC) calls; Jon Najarian owns (SLV) is short (SLV) calls; Jon Najarian owns (SLW) is short (SLW) calls
For Brian Kelly
Accounts Managed By Brian Kelly Capital are long (EBAY)
Accounts Managed By Brian Kelly Capital are long (GLD)
Accounts Managed By Brian Kelly Capital are long (MCP) calls
Accounts Managed By Brian Kelly Capital are long (SLV)
Accounts Managed By Brian Kelly Capital are long (SPY) puts
Accounts Managed By Brian Kelly Capital are short (XLF)
Accounts Managed By Brian Kelly Capital are long VIX calls
Accounts Managed By Brian Kelly Capital are long (FXY) puts
Accounts Managed By Brian Kelly Capital are long gold futures
Accounts Managed By Brian Kelly Capital are long silver futures
Accounts Managed By Brian Kelly Capital are long natural gas futures
For Dennis Gartman
Funds Managed by dennis Gartman are short 10 yr U.S. Treasuries
Funds managed by Dennis Gartman are short euros
Funds managed by Dennis Gartman are long gold
Funds managed by Dennis Gartman are long July Silver futures contracts
Funds managed by Dennis Gartman are short WTI crude
Funds Managed by Dennis Gartman are long Brent Crude
Funds Managed by Dennis Gartman are long soybeans
Funds managed by Dennis Gartman are long corn
Funds managed by Dennis Gartman are long Canadian Dollars, Australian Dollars, Swiss Francs
Funds Managed by Dennis Gartman are long sugar
Funds managed by Dennis Gartman are long nat gas
Funds Managed by Dennis Gartman are short pounds
Funds Managed by dennis Gartman are short 10 yr Canadian bonds
For Tim Seymour
Seygem Asset Management owns (MTL)
For Brian Stutland
Stutland Owns (INTC), Is Short (INTC) Calls
For Mike Khouw
Cantor Fitzgerald is a market maker in (AAPL)
Cantor Fitzgerald is a market maker in (IWM)
For Craig Berger
FBR Capital Markets Is A Market Maker Or Liquidity Provider For (INTC)
For Anthony Scaramucci
SkyBridge Is A Fund Of Funds Manager
Funds Held May Or May Not Own The Recommended Securities
For Tavis McCourt
Morgan Keegan & Co., Inc. expects to receive or intends to seek compensation for investment banking services from (GLUU), (KNOL), and (PGI) in the next 3 months
Morgan Keegan & Co., Inc. has received compensation for investment banking services from (PGI) in the past 12 months
An affiliate of Morgan Keegan & Company, Inc. received compensation for products or services other than investment banking from (KNOL) in the past 12 months
Morgan Keegan does not allow its analysts or their immediate family members to hold a position of any kind in the securities of the companies they follow
For Carter Worth
***No Disclosures
Sean Egan
**No Disclosures
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