Delta Trust Investments SVP Bob Williams says that the S&P downgrade of U.S. debt was not unexpected and he suggested that the financial markets will see plenty of drama in the next few days.
"I think it’s a function of the dysfunctionality of Congress," Williams said. "S&P had been threatening to do this if there weren’t $4 trillion in budget cuts as part of the deal that was cut."
Williams said that the S&P downgrade had as much – if not more – to do with political commentary as it did an economic reality. Saying he hopes "Congress gets it," Williams says that federal officials have to rein in government expenses, including entitlement programs.
Still, he’s bullish on the financial markets through this ordeal and in the long-run.
"I think there’s going to be some increased volatility – and that’s a pretty strong statement given the volatility we’ve seen in the markets thus far. But I think most investors really aren’t going to see this trickle down other than maybe drops in their portfolios as the market fluctuates," said Williams.
"Long term, strong companies with good balance sheets and clean profits are still going to be great places to invest. This (downgrade of U.S. debt) has nothing to do with companies in the United States’ ability to make money and continue to grow," he added.
Williams has looked at how other countries and investment markets have responded to government debt downgrades. He concludes that the U.S. financial markets will survive accordingly.
"In studying other countries historically and what’s happened to them after they’ve had their credit downgrades, traditionally their interest rates haven’t moved up by more than half a point and generally their stock markets have been higher a year later," Williams noted.
You can watch his full interview in the video below.
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