CHICAGO, Dec 10 (Reuters) – Let’s assume, for a moment, that
the “fiscal cliff” bears are wrong.
Underlying pending tax increases and more debt-ceiling
battles is some fairly positive economic news. Job growth
surprisingly soared last month and U.S. home prices in October
posted their biggest increase in six years, according to
CoreLogic. Factory orders also rose unexpectedly during the
month. And the Federal Reserve’s stimulus policy is keeping
mortgage rates low.
That all bodes well for a low-growth, sustainable recovery
in which basic materials, industrials, emerging markets and even
utilities regain favor. The upswing in employment and personal
income will translate into a substantial consumer wealth effect,
and more people will be spending money on homes, autos,
appliances and consumer goods. Overseas, the rising U.S. tide
will lift emerging markets. Renewed confidence combined with
secular economic growth represents “a likely catalyst for the
next multi-year bull market,” notes the BMO Private Bank 2013
outlook for financial markets.
A good-news approach sounds oddly like a contrarian view
when Washington produces nothing but sour headlines, but it’s
the logical outcome of the fiscal cliff issues being worked out.
While a sustained bull market may be a tall order in the
face of U.S. growth consensus predictions remaining under 3
percent, it’s not out of the question if consumer demand,
employment and housing continue on an upward trend. Here are
some positions you should consider: