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Super Committee and Europe are Volatile Combination for Markets (More turmoil ahead)
CNBC ^ | 11/18/2011 | By: Patti Domm

Posted on 11/18/2011 7:57:43 AM PST by SeekAndFind

Brace yourself for yet another day of financial markets vertigo.

Stock traders Friday will be watching headlines from Europe, and increasingly they will be turning to Washington for any signs of movement by the Congressional "super committee." It is also a day for options expirations, another source of volatility.

The bi-partisan super committee has until Wednesday to agree to $1.5 trillion in deficit reductions over 10 years. But the committee still appears far apart and is likely to continue negotiations over the weekend. It is seemingly still split along party lines on the topics of taxes and entitlement programs.

Investor expectations for the committee are low, after the summer's acrimonious battle over the debt ceiling debate, which resulted in Standard and Poor's cutting the U.S. triple A credit rating by one notch.

If the 12-member committee fails to act, $1.2 trillion in across-the-board reductions will kick in starting in 2013. These spending cuts would would come half from the defense budget and half from other federal agencies.

In an interview with CNBC's Larry Kudlow Thursday, Sen. Pat Toomey, R-Pa. said discussions are continuing and they hope to reach an agreement. "In the very unfortunate event, should our committee not be successful, and I still hope we will , but if not, then I think we would have a very concerted effort to reconfigure the sequestration," he said, noting that the defense cuts are too high.

Some strategists have been concerned that if the committee cannot agree on reductions then the U.S. would be at risk of another credit downgrade.

Europe is bound to provide more ups and downs for markets, ahead of the weekend. European Central Bank President Mario Draghi speaks at the Frankfurt European Banking Congress, his first major address since becoming ECB president.

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TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: debt; eu; supercommittee

1 posted on 11/18/2011 7:57:46 AM PST by SeekAndFind
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