This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Next Year Will Get Even Uglier for U.S. Investors

(Adds the Federal Reserve's outlook on the economy and the jobless rate.)

BOSTON ( TheStreet) -- Individual investors will be up against political gridlock as the economy grows slowly next year, prospects that may damp stock-market gains even if Congress pushes through a trillion-dollar budget cut.

A "relatively toxic political environment" next year will "get uglier," said Liz Ann Sonders, chief investment strategist at Charles Schwab, during the Schwab Impact 2011 investment advisor conference in San Francisco late Tuesday. "Maybe it'll get prettier. But the first hurdle is the Super Committee."

The so-called Super Committee is the bipartisan congressional group whose goal is to find $1.2 trillion in budget cuts by Thanksgiving. The committee was formed in August following the debt-ceiling debate that eventually led to Standard & Poor's cutting the coveted triple-A rating on U.S. debt.

If the Super Committee doesn't come to an agreement and vote before the Thanksgiving holiday, $1.2 trillion in automatic reductions will be triggered.

"We have to start hearing some semblance of a plan by the first week of November so the Congressional Budget Office can score it in order for a vote to happen on the 23rd," Sonders said. "I continue to think, not because of some inside scoop I have, there is a decent chance for something bigger than $1.2 trillion."

Sonders argues that the bipartisan committee would have an easier time coming to an agreement if it attempts to go big rather than tinker around the fringes.

"That's where the infighting starts," she said. "Both sides have come to the table ... understanding that you can't just tackle on the spending side and the math doesn't work purely on the tax side. You need growth but you need these other pillars as well. And yes, you have to address entitlements at some point."

Bill Gross, the founder and co-chief investment officer at Pimco, shared the stage Tuesday with Sonders. He wasn't optimistic that the committee would meaningfully address entitlements.

"I think both parties are clueless in terms of how to get out of this," Gross said. "Entitlements are a long-term problem. Jobs are the near-term problem and we can't pay for entitlements until we put the country back to work again."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,678.70 +6.10 0.03%
S&P 500 2,057.09 +5.27 0.26%
NASDAQ 4,771.7630 +13.8840 0.29%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs