Salient to Investors:
Brian Jones at Societe Generale said many things are going the right way – more people working means more people spending, which to some extent neutralizes higher taxes.
Dean Maki at Barclays expects GDP will rise at a 2 percent annual average pace in half2 from a 1.5 percent rate in half1 2013, saying the economy can now handle fiscal tightening without screeching to a halt.
JPMorgan Chase expect growth to pick up in half2 2013 as the fallout from the budget cuts dissipates, paving the way for even stronger spending by businesses and consumers.
Joe Carson at AllianceBernstein predicts household net worth will climb to a record this quarter.
Allen Sinai at Decision Economics said further market gains are likely, and S&P500 at 1,600 later in 2013 is possible, while households and companies are in better shape to ride out the sequestration – businesses have fortress balance sheets.
UBS Securities said one reason purchases are likely to hold up in the face of higher taxes is that affluent consumers – a disproportionately large share of spending – tend to trim savings rather than consumption when faced with such constraints. UBS estimates the top 1 percent of income earners put 51 cents of each dollar toward savings, allowing plenty of leeway to keep spending.
Drew Matus at UBS said manufacturers rebuilding inventories, and farms stockpiling after last year’s drought, will add 0.6 percent to half1 economic growth – people are ignoring the positives and never count out the U.S. consumer.
In January, incomes dropped by the most in 20 years, pushing the saving rate to a 5-yr low.
S&P 500 earnings will exceed $120 a share in 2014 versus $100.75 a share in 2012 and $60.43 in 2008.
Warren Buffett said he will almost certainly set still another record for capital expenditures in 2013 as opportunities abound in America.
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