How to Trade the Super Committee Stalemate
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The deficit super committee discussions may be tortured, but your trading strategy can be simple, says this strategist.
The Congressional deficit super committee has to reach a deal by tonight if it is to happen, and so far things aren't looking good. Andrew Busch, global currency and public policy strategist for BMO Capital. lays it out in three scenarios. "We're looking at a nice, easy playbook on this," he told CNBC's Melissa Lee.
Busch calls his first outcome "go big or go home" — a bipartisan deal for more than $2 trillion. His second scenario is completion of a $1.2 trillion deal, and his third is no deal, with automatic cuts to follow.
That last possibility is what Busch is trading on: He wants to sell the New Zealand dollar against the dollar, on the theory that no deal would make investors risk averse. "It's a risk-off trade, and kiwi is one of the poster children for risk off," he says.
Busch wants to sell the kiwi against the dollar at 0.7575, with a stop at 0.7650 and a target of 0.7175.
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