Ignis' Ewing: our best US investment ideas

As concern about the US fiscal cliff grows, Ignis US equity head Terry Ewing discusses the best way to exploit the investment opportunities in the world's biggest economy.

In an article for Wealth Manager, he discusses whether the fundamentals are sufficient to propel the market higher after two excpetional years.

Ewing writes:

Supportive economic backdrop?

US headlines continue to be dominated by the threat of the ‘fiscal cliff’; reduced spending and higher tax proposals due to come into effect in 2013 in an attempt to cut the US budget deficit. We believe investors should not obsess with the ‘fiscal cliff’ and that an orderly solution will be found.

While implementation of the proposals will hold markets back, we still envisage a 2% to 2.5% growth rate in 2013 with a notable improvement in the second half of the year.

This remains ahead of forecasts for the UK and Europe and means the US has a better chance of growing its way out of fiscal debt problems. This outlook comes with the caveat that events in Europe could be detrimental and that the Chinese economy needs to be managed correctly or risk hitting profits of US-listed companies.

US macroeconomic data has recently demonstrated improving economic momentum. The Federal Reserve’s policy of guaranteeing a low Federal Funds rate through mid-2015 seems to be fulfilling its aim of reducing unemployment.

Data shows manufacturing activity is improving, and retail and auto sales trends are encouraging. Vital housing market statistics have also been positive with prices and transaction volumes following an improving trend.

Corporate strength