Bloomberg Hedge Fund Summit 2012 next panel discussion consists of a discussion on fiscal cliff, between two people with opposing views. Speakers are Steve Bell, Senior Director, Economic Policy Project, Bipartisan Policy Center, Gregory J. Fleming, President, Morgan Stanley Wealth Management; President, Morgan Stanley Investment Management. Moderator is Robert Friedman, Editor-at-Large, Bloomberg News.
9:33AM: Steve Bell says two main items being fought over is, how to calculate CPI and revenue. These issues are now off the table, so he is pessimistic.
9:36AM: Gregory J. Fleming says Wall Streeet is looking for a real credible deal. Both sides have something to loss if we go over the fiscal cliff, since taxes will go up for many middle class people, in states which voted for Barack Obama. There is room for optimism because both sides have something very big to lose. It will reduce confidence in the US economy, if we do not get a deal done. The magnitude of those negatives are so high, that leaders from both sides will come together.
9:37: The market would like to see both sides come together and compromise, and come together with a real deficit deal.
9:38: Spending on entitlements will go to unreasonable levels unless something is done soon.
9:40: Steve Bell says that some Republicans who promised to do what their constituents not to do, did it and won re-election. It is hard for him to vote for the similar unpopular issues again.
9:41: The savings in entitlements that are being proposed are far down the road, and none are upfront. That is not encouraging.
9:43: Steve continues and says Boehner needs something to bring back to the table.
9:45: Gregory J. Fleming in the near term the market has been cautious and it has not gone down much since the election. However, if there is no deal there will be much concern. Not only because of no deal itself, but because investors will be scared about debt deal negotiations. It is not only corporations, it also will impact consumer spending, corporations and all parts of the economy.
9:46: Gregory talks about the big Citigroup Inc. (NYSE:C) job cuts. He thinks that the job cuts are an ongoing issue, and the financial industry will continue to shrink.
9:47: Steve says he warned that there could be a US debt downgrade. But the warning was ignored. They think now that with yields so low it makes no difference.
9:49: Steve says the best news would be that there is silence, because that would mean lawmakers are likely close to a fiscal cliff deal.