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David Rosenberg, the top strategist from Gluskin Sheff, unveiled his expectations for the markets in 2013.Here are some key takeaways
- stocks will be flat, and investors should focus on dividend growth, defensive stocks, and gold miners
- interest rates are going nowhere, but long-term interest rates will likely go down
- corporate bond prices could go up because credit spreads are still wide
- gold looks attractive
- oil looks attractive long-term
- copper looks good if you think China is coming back
Here’s an excerpt from this morning’s Breakfast With Dave note:
MY TAKE ON THINGS…
On markets in general
I think it will be a flat year for the broad equity markets in 2013 but what worked in 2012 should work in 2013, namely “safey and income at a reasonable price” or SIRP. One thing is for sure… interest rates are goind nowhere… likely down at the longer end of the curve. My sense is that earnings and the economy will limit the upside and ongoing Fed liquidity support will provide a cushion.
I like corporate bonds for the most party. Credit spreads, as an aside, are still wide enough to present an opportunity given low and relatively stable default rates. Cross-over credit strategies. Long-short strategies in the income space too — which is called credit arbitrage. I still like gold/gold minerss. I am a long-term bull on oil. Within the equity market, to me it is again goin to be about screening for dividend growth, yield and coverage in sectors with defensive characteristics. If China is indeed coming back from its lull, industrial commodities (like copper) could be a sleeper … and a nice barbell (hedge) to the bond exposure.
I do believe that the third leg of the deleveraging cycle which involves the federal government is going to be a dominant headwind for growth. I also am concerned over the thin supply-demand balance for oil and geopolitical risks. Europe will also continue to make the headlines.
The conservative investor should maintain a defensive posture. An emphasis on fixed income and bond proxies within the stock market. Accumulation of cash flows is key, as it was this year. But there will be opportunities, as there is every year, to take advantage of under-priced securities. Rest assured we are watching and ready.
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