The latest CNBC Fed Survey of economists, strategists and money managers paints a less than optimistic forecast for the U.S. stock market.  Two-thirds of the 78 respondents said they expect a selloff of 3% or more if the debt ceiling isn't raised before 8/2/11, while a majority sees a debt deal as either neutral for stocks or spurring a rally of around 1%.  The following quote basically says it all:

“Washington is populated by elected fools in both political parties.’’  -- David Kotok of Cumberland Advisors.

The survey also showed that, despite Fed Chairman Bernanke's hints about additional quantitative easing ("QE" or easing), Wall Street isn't holding its breath.  Sixty-eight percent of respondents don't expect additional easing over the next 12 months.  Another 19% think there will be an easing in fed policy and they expect it to be larger than what they had expected in May, when CNBC conducted its last survey.  They further believe the Fed will purchase an additional $376 billion of assets, up from May's consensus figure of $141bn.

Further Statistics.   The survey indicates much uncertainty as to when the Fed might begin to raise interest rates or when the Fed might start reducing its $2.6 trillion balance sheet.

Overall, respondents see stocks being up 3% by year's end and up 7% in 12 months, with the S&P rising to 1,420.  They also have adjusted their forecast for GDP by about a 0.3% third to 2.7 percent for 2011.

For further details, go to:    [CNBC, 7/21/11]