How the smart money is playing the crisis

Jes Staley
Adam Jeffery | CNBC

The smart money doesn't think the U.S. will default on its debt.

Despite continued dire warnings from top officials like Treasury Secretary Jack Lew, many hedge funds and other large money managers aren't significantly trimming their portfolios—and some are even increasing their market exposure.

"Going into today we're short volatility and long risk as our view was there was little chance this would ever amount to a default," said the manager of a $1.5 billion macro hedge fund that is betting on the appreciation of stocks in the U.S., Europe and Japan.