Advocacy Investing® Portfolio Strategies, Issue 42


• President Obama wins reelection, but faces a mixed economic picture, with significant medium-term challenges. A first task to handle is the fiscal cliff

• Super-storm Sandy causes major short-term disruptions, but long-term economic impact should be minimal

• Labor markets deliver a string positive surprises

• The eurozone quiets down…for the time being

• 3Q12 data underscore weak growth at a 2% trend

• The housing market continues to mend

• The consumer remains optimistic and manufacturing seems to be bottoming out

• No acceleration of growth expected until mid-2013

• Risk-on markets tread water in the face of weak earnings and policy uncertainty

The Economy Inches Along: The first reading of third quarter GDP growth reflect a weak economy growing at trend. (Keep in mind that these numbers are the first 3Q12 growth estimate and that they are subject to two revisions.) Output rose at an anemic 2%, slightly better than market expectation of 1.9%, and up from 1.5% in 2Q12. The economy continued to show sharp divergences. On one hand, the biggest contributions to growth came from the consumer side, residential investment and government (the latter mostly from a sharp jump in defense spending). On the other, net exports, fixed business investment, inventories and state and local government all shrank.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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