Ex-Treasury Official Altman: US Markets Facing Increasing Uncertainty

Wednesday, 25 Apr 2012 07:25 AM

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The U.S. economy and markets enjoyed a reasonably sunny first quarter but clouds are building on the horizon, as questions remain how the country will deal with Europe, uneven recovery and debates over tax cuts, says Roger Altman, chairman at Evercore Partners and former Deputy Treasury Secretary.

Only weeks ago, yields were climbing on the Treasury bonds, a sign investors wanted out of the safety of U.S. government debt and to higher-yielding stocks and other assets.

"It seems to me that a series of old and big question marks have returned, and I would particularly note Europe, basic weakness in the recovery, and growing talk and uncertainty about the so-called fiscal cliff at the end of this year and the degree to which it will cause market volatility well in advance of that," Altman tells CNBC.

Editor's Note: Did Obama Betray America? Video Reveals Truth

Yields on Treasurys have fallen, which means prices are up, suggesting investors are getting more cautious.

"I find that to be a proxy, really, for risk-off or the fear factor, whatever your favorite phrase is, and a fundamentally bearish signal."

Europe remains mired in uncertainty as the debt crisis there has spread to the larger Spain from Greece, while the U.S. jobs report sharply disappointed in March, when the economy added a net 120,000 nonfarm payrolls.

Meanwhile the Bush tax cuts are set to expire by Dec. 31, just after the country goes to the polls in November to elect a new president and members of Congress.

Yet with no clear sign as to who will be running the government, extending the tax cuts remains in doubt.

Furthermore, automatic spending cuts are designed to kick in around the same time, and the combination of hiking taxes and cutting spending could suck billions out of the economy.

"If policymakers do nothing, early 2013 will be recession-like," says Moody's Analytics Chief Economist Mark Zandi, according to USA Today.

Editor's Note: Did Obama Betray America? Video Reveals Truth



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