Thursday, July 21, 2011
Wall Street Expects Big Selloff If Debt Deal Isn't Reached
The stock market is likely to plunge if Congress fails to raise the debt ceiling by Aug. 2, but there is only limited upside if a deal gets done in time, according to the latest CNBC Fed Survey. Nearly two-thirds of the 78 economists and Wall Street strategists and money managers who responded to the survey see a selloff of 3 percent or more if the debt ceiling is not raised. But a majority sees a debt deal as either neutral for stocks or spurring a rally of around 1 percent.
“Washington is populated by elected fools in both political parties,’’ wrote money manager David Kotok of Cumberland Advisors.
Tom Porcelli at RBC believes the Treasury can extend the deadline to Aug. 15. But if there is no deal by then, he said, “we would expect an extreme reaction and not necessarily just from a market perspective. The worst possible outcome from this would be recession, period…..”
Read more at http://www.cnbc.com/id/43840113