Liz Ann Sonders on the Effect of US Debt Downgrade on Markets

By on January 6, 2013

Liz ann sonders - charles schwabCharles Schwab Chief Investment Strategist Liz Ann Sonders was with Neil Cavuto of Fox Business speculating on the outcome of the debt ceiling debate. Sonders said the rating agencies were less likely to downgrade the U. S. had we gone over the cliff which would have set in motion forced spending cuts.

Sonders expects a fight over the ceiling in a couple of months, but doubts it will have as calamitous impact on the market as it did in August 2011.

Sonders said the tax deal eliminated some of the uncertainty and may bring back some pent-up demand, but we’re not finished in terms of the long-term debt reduction.

Sonders said it would be interesting over the next couple of weeks to see the effect on consumer confidence of the reinstatement of the payroll tax from 4.2% to 6.2% (a 50% increase).

Back in April, Sonders was upbeat on the stock market’s prospects as she said the corporate earnings story was alive [link].

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