Jan Hatzius, Goldman’s Chief Economist, says the risk of recession in the USA has come down, but “wouldn’t go so far as to say we’ve dodged a bullet”. His expectations for 2012 are for 1.5%-2% GDP growing in 2012 with a slower H1 at 1% and a risk to the upside if Congress passes the payroll tax cut and employment benefits.
He maintains that Europe remains an enormous risk as debt rollovers create a substantial hurdle in early 2012. Ultimately, Hatzius says the ECB will have to be more involved in the European markets.
As for the markets, he says the risk reward is not that great given the likelihood for flat EPS – “We think earnings per share will be roughly flat in 2012, in line with the relatively muted economic environment…So the risk-reward tradeoff isn’t that great.”
See the full interview below:
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.