Keith Fitz-Gerald, my special guest during our Post-Election Outlook webcast next Monday, posted a special “election day” commentary for Money Morning readers. In it, he questions whether the U.S. presidential election was “more about lost dreams or a new promise.” Here is an excerpt from his commentary, reminding us that this year’s election “Is Just One Stop on a Troubled Road.”
“…there are a whole slew of things which could keep the markets from making a meaningful break in either direction, not the least of which is earnings.
“Right now, earnings are decelerating around the world and that means investors would be prudent to continue playing defense. My favorite choices remain large global dividend payers with fortress-like balance sheets and a solid record of rewarding shareholders.
“And don’t forget about the 11 states voting for governors today. One hundred percent of them have budget problems that will make national news in the months ahead. That speaks to even more bailouts and conceivably some sort of national policy response, depending on how debt markets adjust.
“Generally speaking, this is not good for equities and okay for bonds; though to be fair, we’re probably a lot closer to a bond market reversal than we are to a further rally.
“Meanwhile, the euro is off again as fear renews over a Eurozone breakup on news that Greece is thrashing about like a hooked fish because both its payment and austerity measures are at risk. I’ve said before that I expect the euro to achieve parity with the dollar before this is over and I see nothing that changes my view at this point.
“Then there’s China. The 18th National Party Congress gets underway Thursday and the world will bear witness to a once-in-a-decade power transition at a time when the Red Dragon is plagued by economic challenges and corruption on a scale that has boggled even the most jaded of insiders.
“Still, the nation is growing and American companies are betting big there. Some, like Yum! Brands (NYSE: YUM), Coca-Cola (NYSE: KO), and McDonalds (NYSE: MCD) are obvious.
“But some like MSD and Best Buy (NYSE: BBY) aren’t. The former, which you may know better as Merck (NYSE: MRK) in the United States, expects 30 percent growth in China over the next 12 months alone and triple that in the next five years. That’s why the company is hiring reps and building a $1.5 billion research facility in Beijing despite slash-and-burn expense reductions in the United States and Europe.
“Despite well-publicized turnaround problems in the United States and a former CEO under investigation for questionable personal conduct, Best Buy has been purchasing profitable Five Star locations in mainland China since 2008, where 1.3 billion potential consumers represent growth, even as the broader nation struggles. Yet, I was just in one of their stores yesterday and I have a hard time imagining they’ll succeed here even if they get growth there.”
Read his entire commentary here.
Post-Election Outlook: I’m looking forward to Monday’s discussion with Keith. During the webcast, we’ll be talking about the “fiscal cliff,” energy prices and what the next presidential term means for your portfolio.
Join us next Monday at 3 p.m. Eastern Time.
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