From the Fed to Italy: What Will You Be Watching in 2013?

What Might Investors and Traders Focus on in 2013

By Jack N., Communications Analyst and Blog Contributor

Everyone likes lists and predictions. Me, I’m partial to music (think best rock songs of the 1960s through 2010s) and any “best” lists, but especially those related to restaurants. For those of you who like financial and economic forecasts, I offer my list of what I think investors and traders will be watching in 2013. Stayed tuned to financial news in 2013 to keep track of how these turn out.

Which Way for the U.S. Economy?
Housing and jobs both saw modest improvements in 2012. Consumer confidence rose along with consumer spending. So what could happen in 2013? Here are a few predictions:

  • The National Association of Realtors projects a 50 percent increase in new home sales, and a 9 percent increase in existing home sales.
  • The National Association of Colleges and Employers projects that employers will hire 13 percent more graduates next year than in 2012.
  • The Federal Reserve says GDP growth will be between 2.3-3 percent.
  • Fitch Ratings projects retail sales growth in 2013 of 3-4 percent.

Watching Corporate Profits

Many companies slashed their projected revenues and earnings for 2013, Barron’s says, in part over confusion about the impact of the fiscal cliff. Will those projections turn out to be accurate, or will an improving economy lead to plenty of upside earning surprises and revenue for publicly-traded companies? For now, analysts expect earnings of S&P 500 companies to grow by 10 percent in 2013 , according to USA Today.

Fed Watching
Federal Reserve Chairman Ben Bernanke could leave his post after 2013 , which begs two questions. 1) Will he try to use his last year to solidify his legacy as Fed chairman? 2) When a successor is named, presumably in 2013, how will that affect Fed policy?

And speaking of the Fed, will QE3, which involves the Fed buying $40 billion in mortgage-backed securities each month, have the desired results: more lending by banks and a more robust housing market? Or will all of that money printing (to buy bonds) lead to economy-sucking inflation?

Next Possible European Sore Spot: Italy
Greece and Spain both received Eurozone bailouts in 2012. Is Italy next in line? Its unemployment rate stands at about 11 percent today, compared to more than 25 percent for the other two countries, according to the U.S. Department of Labor . Its real estate has held up well in recent years, a positive for Italian banks, Bloomberg reported. But the country’s debt load is high, and its economy contracted throughout 2012. Is it too big to fail? Maybe, if things deteriorate. On the other hand , European stocks markets, in general, did well in the last half of 2012. Will that continue into 2013?

As China Goes …
Given less than even moderate transparency, it can be incredibly difficult figuring out how China’s economy will be managed in 2013. But it’s critical. Considering that scores and scores of U.S. companies, from retailers to large manufacturers and tiny tech companies, rely heavily on the Chinese market for profits. One of the Chinese government’s economic think tanks projects 8.2 percent GDP growth in 2013, Reuters reported, up from an expected 7.7 percent in 2012. The government has acknowledged that growth has slowed for seven consecutive quarters, so it remains to be seen where the world’s second largest economy will land in 2013.

Here Come Mini Options
The Securities & Exchange Commission approved a proposal to sell options contracts that control 10 shares of a stock, rather than 100 shares. In the beginning, minis will be available for only five high-priced, highly liquid securities: Apple Inc. (AAPL), Google Inc. (GOOG), Inc. (AMZN), SPDR Gold Shares exchange-traded fund (GLD) and SPDR S&P 500 ETF (SPY). While approval came last fall, it’s likely that minis won’t start trading until early to mid 2013. But they’re coming, so stay tuned.

If you could script 2013, what would happen to help your portfolio?

Jack N. is a communications analyst at Scottrade. He works to demystify the markets and the economy for all types of investors and traders.

Also of Interest:

Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the Scottrade Options Application and Agreement,Brokerage Account Agreement, and by downloading the Characteristics and Risks of Standardized Options and Supplements (PDF) from The Options Clearing Corporation, or by requesting a copy from a Scottrade branch office. Supporting documentation for any claims will be supplied upon request.

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December 27, 2012 3:33 PM

I am wondering if there are others who are just beginning to trade or are there some who are experienced and would like to help some one who is a novice trader?

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