June 26, 2012
--- The looming fiscal cliff has investors scurrying for safe harbor, Prudential’s investment strategists said at their Midyear Global Markets and Economic Outlook. ---
“In the first quarter, the U.S. economy was starting to show
some traction, but we can’t make that case anymore,” said Edward Keon, managing
director and portfolio manager of Quantitative Management Associates at
Prudential.
Prudential aims to keep portfolios broadly diversified, keep
a hand in stocks and make sure there is cash available for any opportunities that
come along.
“Earnings forecasts have not gone down so much,” Keon
offered in the way of positive news. “I’m Tigger, not Eeyore,” he said—and stocks
could offer high single-digit returns over the next decade, but the returns on bonds
are likely to remain poor.
The slowdown is global, he noted, and according to Michael
Lillard, managing director and chief investment officer of Prudential
Fixed-Income management, slow growth and high unemployment have pushed people
toward a “muddle-through outlook.”
The two themes to focus on, global markets and the global
economy, are likely to remain under the shadow of the eurozone, said John
Praveen, managing director and chief investment strategist, Prudential
International Investments Advisers.