Salient to Investors:

David Rosenberg at Gluskin Sheff said:

  • the economy is stuck in the mud and it will be a wageless recovery – the fiscal cliff would trigger a recession. Housing is bottoming out. and banking is on the mend and banks are more willing to lend money.
  • likes gold-mining stocks and utilities, dividend-paying healthcare, utility and consumer-staples stocks.
  • likes the secular renaissance of US manufacturing and surge in American energy production.

David Levy at the Jerome Levy Forecasting Center said:

  • the fiscal cliff would trigger a recession.
  • be defensive
  • T-yields will fall further.
  • the private sector is in the middle of a prolonged period of cleaning up its balance sheet after decades in which debt grew faster than income.
  • at best it might take just under a decade – expect a recession in the next few years.
  • America has made more progress than Europe and Japan in dealing with its debts, and will do better than much of the rest of the world, because the risks are higher and the problems are bigger in many places overseas
  • China faces decisions on how, and whether, to curb state enterprises, boost access to credit for private companies and raise consumption.
  • America will benefit from a secular improvement in its trade balance, driven by the manufacturing revival, boom in domestic energy output, and increased demand for US agricultural exports.
  • Future business investment will eventually surge, boosting productivity and profits.

Mohamed El-Erian at Pimco says:

  • the downside risks to the economy are bigger than the upside – the fiscal cliff would trigger a recession.
  • investors should look for economies growing faster than the US, and invest in companies and nations with strong balance sheets, including Brazil’s and Mexico’s local bonds.
  • US GDP will grow 1.5 percent to 2 percent during the next year as Washington strikes a mini-bargain to avoid the fiscal cliff and moderately reduce the budget deficit.
  • there’s tremendous cash on the sidelines
  • technological breakthroughs, including digitization, could give the US a productivity-driven boost, but the potential for pleasant surprises isn’t meaningfully better than before. meanwhile the downside dangers are greater: including the fiscal cliff, the European debt crisis, China’s reconstruction challenge, and continued instability in the Middle East.

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