https://www.fidelity.com/viewpoints/market-and-economic-insights/january-market-update-podcast?ccsource=email_weekly
In this update from Fidelity Investments, a brokerage and asset management firm, Dirk Hofschire, Senior Vice-President of Fidelity's Asset Allocation Research department, discusses what macroeconomic events he expects to occur in 2013 and how investors can prepare for these events. Mr. Hofschire starts off his discussion by highlighting the reasons why the markets achieved great returns in 2012. Among these reasons are that the major macroeconomic fears at the time, a collapse of the Eurozone or a U.S. default, did not happen. The alleviation of these fears combined with the "accommodating" monetary policy employed by the Federal Reserve led to the positive market sentiment that caused the large returns enjoyed by most sectors of the economy. Looking into 2013, the slow economic growth the U.S. has been experiencing is expected to continue as there is still considerable "fiscal drag" from the the budget debates that are expected to resume in March. Looking internationally, Mr. Hofschire believes there is considerably more reason to be optimistic about the global economy in 2013 than compared to 2012. Mr. Hofschire believes this is primarily due to China which has seen a re-acceleration in growth due to a serge in credit and liquidity being directed at real-estate and infrastructure in the country. However, other countries as well are improving if at a slower pace as even distressed areas like Japan and the Eurozone are stabilizing. In conclusion, Mr. Hofschire believes there is considerable reason to be optimistic heading into 2013.
2 comments:
He mentions how the US economy has avoided most of the dangers of the fiscal cliff but will still have many struggles in 2013 as they try and get the economy back to some consistent growth. We are suffering from some fiscal drag and the consumers will be experiencing some increased taxes which could slow the economy. Also, with the business investment tapered out we may not see a lot of growth until they become more confident. But, with the global economy improving and China growing rapidly we may see some significant improvement in business investment.
Although there has been new agreements in the United States government concerning the cliff, many believe that some of these issues were not fully tackled and will remain to be problems that the government has to face. Also, many of the bailouts in the Eurozone are only putting off the problem. Many citizens in countries facing austerity, particular Greece, are revolting and not accepting the reality of what their government is enforcing. Although it is very difficult for these citizens to swallow the cuts and changes in their lives, they must face the facts and understand they were living way above their means. So, regarding the Eurozone, I believe there is still some concern and could be problems in the near future.
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