JAMAICA won't be severely impacted by the US Government shutdown reckons Gregory Fisher, primarily because it doesn't hold significant amounts in treasury bills.
What's more, the head of Institutional Emerging Markets Fixed Income Sales at Oppenheimer figures that the main concern for Jamaica — tourism — already took its hit with the global recession.
"US consumers have been quite frugal ever since the 2007 recession and have tightened their belts ever since," he said. "I think tourism numbers will remain consistent as Jamaica is so close to America compared to islands that are farther away."
The shutdown was caused by Congress's failure to pass a spending bill to fund government operations by October 1 — to open the government and agree to raise its debt limit of $16.7 trillion — without which Washington could default.
A default could damage confidence and drive up the cost of borrowing for Americans, and create a chaotic situation on the international market for debt.
Those set to feel the effect most are more developed countries such as China.
The current debt limit of $16.7 trillion was reached in May. Since then the US Treasury has been using what are called extraordinary measures to keep paying the bills, reported the BBC.
The shutdown began in, part after the Democratic-led Senate rejected a House Republican effort to negotiate a solution to a dispute over the health care overhaul otherwise known as Obamacare. The suggestion was to delay Obamacare for a year to free temporary funding of the federal government.
"For the first time I can say that I'm actually ashamed of the political leaders in my own country, this isn't about being a Republican or Democrat, it's the fact that our leaders have turned democracy in nothing more than a state of chaos," Fisher told guests at Sterling Asset Management's investors briefing on Monday.
But the debt ceiling is more dangerous in a contentious way than this shutdown, if you look at it from an economic standpoint, he said.
Fisher figures that the duration of the shutdown is going to be historical and could last up until the debt ceiling limit of October 17.
Should this happen, the markets are going to take heed in a negative way.
"I don't think the rating agencies are about to do anything now, however if there isn't a signed agreement on the 17th , I think they will act and it will cause social unrest," he said.
But the American remained quite optimistic about the US economy.
"I am more negative about the government's current actions than I am about the economy," he said. "The US economy is coming back, it is now getting better..."
America's global sales continue to trend higher, housing sales continue to improve, businesses are picking up and growth is picking up, though slowly, he said.
So where should one position its assets in this current global economic landscape?
Fisher advises that investors should look to securities that have a strong cash flow and pay dividends.
Moreover, emerging markets, though risky, should be positioned in portfolios.
These markets act as insulation and they have done quite well since the financial meltdown, he said. But one important feature of them is they fully understand the notion of austerity, he continued.
"If you look at the more developed markets meaning the UK , Germany or America we are virgins of austerity, it has been 50 years since we have even used that word," said Fisher.
He also advised that investors have cash on the sidelines.
"At some point given all the shenanigans in the US that we have seen, stocks and bonds will have a better buying opportunity by the time the dust is settled," he said.