Quick chart for the AM:
Notice the upward trend established in 2009? As investors’ worries move away from the fiscal cliff and onto the debt ceiling (which many believe is more critical since it can impact the US’s credit rating) watch this trend line.
A break of the trend will be a clear indication that investors are losing confidence in the market and are beginning to allocate their portfolios away from equities.
Investors should look back at the 2011 debt ceiling debate to get an idea of what the implications may be for various asset classes.
Below is a 2011 report from Neuberger Berman that gives some insight to various scenarios: