It’s Friday. August 2nd is four days away.
For investors, “contingency plans are in place, positions established and cash sidelined,” Dealbook reports as Wall Street prepares for the possibility that come Tuesday, the United States will default for the first time in its history.
While many in the financial sector believe a downgrade won’t be catastrophic, and the debt ceiling will be raised, there are many investors who feel like 2008 was only yesterday.
According to Dealbook,
Some hedge funds are going to cash, parking money on the sidelines in case things go haywire. At least one hedge fund is stockpiling cash in a series of F.D.I.C.-insured accounts.
Others are keeping cash with their prime brokers or have chosen alternative vehicles — typically ones that avoid Treasuries — just in case equities tank. Some investors, meanwhile, are switching around their portfolios to bet against the market, according to industry investors.
One portfolio manager said he’s reducing exposure though he’s confident Congress will come to an agreement, for this reason: “I have 2008 fresh enough in my mind that I’m taking it down anyways.”
The trading floor has been unusually full for this time of year, with traders and executives postponing vacations.
Meanwhile, banks have sent representatives to Washington to get better clarity from Capitol Hill, according to Dealbook. Here in New York, “Wall Street executives and traders will spend the weekend holding their breath as the debt impasse continues to suck all the oxygen from the room… Now it’s a matter of wait-and-see.”