There’s a lot at stake this fall when Washington is expected to address the looming fiscal cliff–especially for bank investors.
Even under the best case scenario where the fiscal cliff is avoided the mere debate over the matter will be harmful to the economy and financial stocks. Why? KBW says Congress likely won’t address the issue until after Thanksgiving. A December resolution is bad for three reasons:
All
sorts of doomsday scenarios are expected if Congress fails to do enough
to at least soften the blow. KBW analysts, for instance, predicts the
U.S. will enter another recession in the first half of 2013 with
negative GDP growth and the unemployment rate to reach 9.1%.
That’s bad news for everyone including investors who have been at the
mercy of a wild stock market that is shaken with every fiscal update
from the U.S. and Europe. For investors riding on financial stocks the
fiscal cliff could be even more painful.Even under the best case scenario where the fiscal cliff is avoided the mere debate over the matter will be harmful to the economy and financial stocks. Why? KBW says Congress likely won’t address the issue until after Thanksgiving. A December resolution is bad for three reasons:
- December has the highest monthly level of discretionary consumer spending in the U.S., and
the contentious debate over the fiscal cliff in that month is likely to damage consumer confidence.
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