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Investing Amid US Debt Talks Uncertainty: Analysts

Monday, 25 Jul 2011 | 6:04 PM ET

With the slight dip in the markets attributed to the stalled talks to raise the U.S. debt ceiling and the possibility of a default after the Aug. 2 deadline, analysts were split on whether the U.S. will default and how to play the market if it does, they told CNBC Monday.

Protecting Your Investments
With earnings pouring in, another downgrade in Europe and the indecision in Washington about America's debt limit, what is an investor to do? Insight with Jamie Cox, Harris Financial Group; Brian Battle, Performance Trust Capital Partners; Arthur Cashin, UBS Financial Services; CNBC's Brian Sullivan & Eamon Javers.

Jamie Cox, managing partner at Harris Financial Group, said as long as earnings continue to hold up, the markets will hold up: "We were supposed to have economic Armageddon today and it hasn't happened yet."

Art Cashin, director of floor operations at UBS Financial Services, says the market isn't scared yet because it knows the stalls in the debt talks are a lot of "political posturing."

Cox thinks there will be a deal to raise the debt ceiling before the Aug. 2 deadline.

Brian Battle, director of Performance Trust Capital Partners, believes that even if the U.S. does default on its debt, the U.S. will make its Treasury bill bond payments. He said that the real concern should be over a potential downgrade. Battle said since Treasurys are often used as collateral, this will ignite a "collateral call."

"It's the monster in the room and all we can do is wait," said Battle.

In the event of a major sell-off in the market, Cox said it would be "the buying opportunity of the century... you want to buy when everyone else is running away."

Battle disagreed, saying "it'd be very difficult to stick your neck out now," citing a six-month high in the unemployment rate of 9.2 percent, a "huge housing overhang," and the uncertainty of the U.S.'s creditworthiness as ratings agencies have warned the U.S. of a potential downgrade of its AAA rating.

"You might have to wait until this tactical thing is over," said Battle. "Then you can start making some fundamental invesments."

Among the stocks Cox likes are McDonald's, Merck, Eli Lilly, AT&T, Verizon, Deutsche Telecom, and China Mobile.

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Disclosures:

Disclosure information was not available for the analysts mentioned or their companies.

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