Market Update – The Fiscal Cliff and Beyond

Market Update – The Fiscal Cliff and Beyond
Dear Catherine,Catherine Head Shot

 

     We were left hanging by our fingernails for a while but finally, at the very last second it seemed, the fiscal cliff was averted.
     What does this mean for you?  Read on to find out. 
Warm regards,
 Signature
Catherine Maniscalco Avery
The backbone of CAIM is to employ a classic long term investment strategy including dividend paying stocks. CAIM is an independent, women owned investment management firm specializing in managing investment portfolios for women and baby boomers.

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January 15, 2013|  Issue No. 38
In This Issue
Market Update – Fiscal Cliff
Holiday Gifting 2012
CAIM 2012 Survey Results

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Market Update – The Fiscal Cliff and Beyond
 
CAIM’s 2013 Outlook  
2013 is likely to be as difficult to predict as 2012. It will be hard to discern the magnitude the impact of these changes will have on the economy and the consumer. The economy has already been moving at a slow pace and is vulnerable to a recession. While many consumers will not see their taxes rise in 2013, all consumers will be impacted by the payroll tax. This will mean fewer dollars in their paycheck and ultimately less money to spend.  This paints a fairly negative picture, but on the bright side, interest rates will continue to remain low, many high quality companies remain profitable and cash, for both individual investors and corporations, remains at historical highs. This is key for a continuation of a favorably rising dividend environment.

 

Forbes View on the Fiscal Cliff Deal     
     I encourage you to take a look at this link from Forbes www.forbes.com    The article lays out plainly and clearly what the bill passed by the Senate actually means for people, with the caveat that: “the battle is far from over as it remains to be seen whether the House of Representatives will approve the bi-partisan agreement or, for that matter, whether the bill will be permitted to even come to the House floor for a vote.”
  
Schwab Weighs In 
     Liz Ann Sonders, Senior VP at Charles Schwab, notes three key points in her most recent newsletter:
1)   There was no ‘grand bargain’ but Congress got a deal done at the 13th hour to avert the fiscal cliff.
2)   The next two months will bring more DC infighting and the resultant market angst but the 2013 outlook for the economy and market has brightened.
3)   The ‘wall of worry’ is alive and well.
     Specifically she notes that while the economy is slowly winding down from the impact of the huge 2009 stimulus package, there are predictions for 2013 US GDP growth from many respected sources. She sees no recession signaled by leading indicators.
     If weak business confidence receives a boost from the averted cliff and once we get past the debt ceiling deadline, the pent up demand that could be unleashed might make the second half of 2013 quite a bit brighter, she argues.
     Massive monetary policy easing in the form of stimulative global policy initiatives as global central banks flood the world with liquidity and low interest rates mean this year could see some increased interest in stocks relative to bonds. Because investors have been pouring trillions into bond mutual funds since 2007, they’ve missed out on the more than doubling of the market since 2009.
     The S&P 500 returns in 2012 were very strong at 16%, according to Sonders, and she notes that: “…this has been one of the most unloved bull markets I’ve witnessed in the nearly 27 years I’ve been in this business. If there was ever an example of how markets “climb a wall of worry” the past four years are testament to that!” As an example she points out that Greece’s stock market was up an astonishing 33% in 2012 – making it the best among the Eurozone nations!
     A potential derailment to all this positive news, says Sonders, could be brought about by a protracted battle over the debt ceiling and/or spending cuts. Another risk is inflation. All in all, however, she predicts a brighter 2013 in store!

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Holiday Gifting 2012 

T’is the season for giving! CAIM has always advocated gifts that keep on giving. In that regard high quality companies that consistently pay and..Read more >>

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CAIM 2012 Survey Results

The results of last month’s CAIM Newsletter survey are in!   The answers we received were extremely positive and we are taking notes of what our readers have to say! The majority of respondents…Read more >>
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©Copyright 2013, CAIM LLC

Disclaimer: NO CONTENT PUBLISHED AS PART OF THE CAIM LLC NEWSLETTER CONSTITUTES A RECOMMENDATION THAT ANY PARTICULAR INVESTMENT, SECURITY, PORTFOLIO OF SECURITIES, TRANSACTION OR INVESTMENT STRATEGY IS SUITABLE FOR ANY SPECIFIC PERSON.  TO THE EXTENT ANY OF THE CONTENT PUBLISHED AS PART OF THE BLOG MAY BE DEEMED TO BE INVESTMENT ADVICE, SUCH INFORMATION IS IMPERSONAL AND MAY NOT NECESSARILY MEET THE OBJECTIVES OR NEEDS OF ANY SPECIFIC INDIVIDUAL OR ACCOUNT, OR BE SUITABLE ADVICE FOR ANY PARTICULAR READER.  EACH READER AGREES AND ACKNOWLEDGES THAT ANY SPECIFIC ADVICE OR INVESTMENT DISCUSSED IN THE BLOG MUST BE INDEPENDENTLY EVALUATED BY THE READER AND HIS OR HER ADVISER IN VIEW OF THE READER’S INVESTMENT NEEDS AND OBJECTIVES.

 

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