Upcoming Headline Risk: Another U.S. Credit Downgrade

by Thomas Kee, Seeking Alpha:

All eyes are fixated on Europe right now, and the market swings with each headline that comes across the wires. Uncertainty abounds as investors try to determine the credibility of these headlines, and try to predict the outcome for Greece … and then Spain, and then Portugal, and then Italy.

But, the old saying goes, “Those who live in a glass house can’t throw stones.” On Tuesday, May 22, the Congressional Budget Office released a report indicating that if the Bush Tax Cuts are allowed to expire, as is currently planned, and if the agreed upon budget cuts are put forth next year, the economy will slip into a recession in early 2013. This got much less press than the drama coming out of Europe, but I find this to be a much more significant risk to the market this summer.

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