Yay, Certainty in the U.S.! … and Chaos Abroad

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Americans were off doing their civic duty by voting today, and hopefully by this time on Wednesday we will know for sure who the president will be come Jan. 20, 2013.

That makes one dark cloud of uncertainty down … and only about a dozen or so left to go.

For those of you expecting Election Day 2012 to provide some “certainty” to things, consider this list:

  1. Fiscal cliff. By every estimate I’ve read, Congress will remain divided, with the Republicans holding the House and Democrats retaining the Senate. You think a divided Congress in lame-duck session will easily hammer out all the details to avoid the fiscal cliff of “sequester” cuts to defense spending and higher tax rates? And if the presidential contest is as close as some expect and we have a repeat of the litigious 2000 voting result, the divisiveness will be even harder to get past.
  2. Greece. This nation is doomed to a sixth straight year of recession in 2013. We have gone from riots to massive strikes in protest of austerity. Anyone who thinks this nation is under control hasn’t been paying attention to its 25% unemployment rate, civil unrest and an insolvent government that could still upend the entire eurozone.
  3. Spain and the rest of Europe. Oh yeah, Spain has unemployment north of 25%, too. And Italy’s economy, the third largest in the EU behind France and Germany, is set to contract to the tune of 2.3% this year and another 0.5% next year. In case you haven’t noticed those European problems either.
  4. Middle East unrest. Libya is a mess in the wake of the Benghazi consulate attack. And the nation is reportedly bankrolling rebels in Syria. Meanwhile there is still saber rattling from all parties with a stake in a prospective conflict involving Iran. Makes Europe almost look like a picnic.
  5. Ugly earnings. Oh yeah, what about that “earnings recession” that we are in the middle of, with declining top- and bottom-line results from major companies? Tech behemoth Google (NASDAQ:GOOG) saw profits slip 20%. Shipping bellwether FedEx (NYSE:FDX) saw its first earnings drop since 2009. Carmaker General Motors (NYSE:GM) saw profits down 12%. Soft-drink giant Coca-Cola (NYSE:KO) saw both earnings and sales decline. I could go on, but hopefully I don’t have to.

There remain other big issues at play that are stickier to quantify — the challenges in China, for instance, or the threat of persistently high unemployment rates at home in the U.S. But honestly, the list above should give anyone enough to worry about.

The good news is that we will have (theoretically) resolved one big uncertainty by getting the next president and the makeup of Congress out of the way.

The bad news is that there are still many unanswered questions, and investors are going to have to be patient if they expect the dark clouds of uncertainty to part anytime soon.

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Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, https://investorplace.com/2012/11/yay-certainty-in-the-u-s-and-chaos-abroad/.

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