Markets Just Have To Muddle Through Debt-Ceiling Negotiations, Then Are Likely To Go Up

The markets already know the US can survive a credit downgrade. The markets realize a default is not likely and the 2011 experience means the market reaction should be calmer this time around.
Sonders also notes that equities are reasonably valued and could go higher due to low inflation.
Rosenberg expects interest rates to pick up very little if at all and predicts fixed income investments will return single digits in 2013.
Even high yield fixed income will return only 5% to 8%, less than half the 16% returns of 2012.
Rosenberg named municipal bonds one of the greatest beneficiaries of the fiscal cliff deal with tax receipts rising from the recovery of the housing market and the diminished chances of meaningful tax reform.
Ezrati says if the markets are already priced for ugly events, all they have to do is muddle through the event to then go up.
He says Washington won’t solve the nation’s fiscal problems but it will avoid some of the great fears.

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