12 Days of Christmas: A Wealth Management Wish List for 2012

12 Days of Christmas: A Wealth Management Wish List for 2012 12 Days of Christmas: A Wealth Management Wish List for 2012
First Day: One grand compromise between Republicans and Democrats. First Day: One grand compromise between Republicans and Democrats.

Hopefully, a comprehensive deal can be reached that at least includes the extension of the payroll tax cut for 2012.

Second Day: Two additional doves on the Federal Reserve Board. Second Day: Two additional doves on the Federal Reserve Board.

A pair to join Chairman Bernanke, Yellen and Dudley to assure that any substantial softness in the economy would be met by aggressive non-traditional monetary policy (e.g. QE3).

Third Day: Wisdom comes to the “troika.” Third Day: Wisdom comes to the “troika.”

Here’s hoping the European Union, European Central Bank and IMF devise a comprehensive plan to resolve the European debt crisis and restore confidence in the longevity of the European Union.

Fourth Day: Four consecutive positive quarterly U.S. GDP reports. Fourth Day: Four consecutive positive quarterly U.S. GDP reports.

In order to maintain the growth momentum of the world's largest economy.

Fifth Day: Five golden rings. Fifth Day: Five golden rings.

Twelve would have been better given gold at $1,750/ounce, but we don't want to be greedy. It would also be "golden" if the Italian 10-year sovereign bond yield (currently 6.6%) traded below 5%, signaling the healing of the Eurozone crisis.

Sixth Day: China cutting interest rates to below 6%. Sixth Day: China cutting interest rates to below 6%.

Even though they’re currently at 6.56% as inflationary pressures fade to generate 7%+ economic growth in Asia ex-Japan. No "hard" landing in Asia would continue to buoy global growth and be supportive of risky assets.

Seventh Day: 7% price return of the S&P 500. Seventh Day: 7% price return of the S&P 500.

That is our current year-end target (1305) to our 2012 year-end target (~1375 to 1400). Plus 2% in dividend yield makes for total return of 9% – not too bad.

Eighth Day: An 8% unemployment rate by the end of 2012 ( down from 8.6% currently). Eighth Day: An 8% unemployment rate by the end of 2012 ( down from 8.6% currently).

May be wishful thinking given the structural issues with employment, but President Obama will need a dramatic improvement to maximize his chances of winning re-election.

Ninth Day: High-yield bond yields remaining below 9%. Ninth Day: High-yield bond yields remaining below 9%.

Which would be supportive of robust returns for this fixed-income sector – one of our favorites!

Tenth Day: All 10 S&P 500 sectors ending the year in positive territory. Tenth Day: All 10 S&P 500 sectors ending the year in positive territory.

Asset price inflation would be alive and well!

Eleventh Day: A strong jolt to the stock market. Eleventh Day: A strong jolt to the stock market.

With S&P 500 earnings growth set to decelerate to single digits, double-digit P/E expansion (e.g. 11%) will lift equities.

Twelfth Day: Another year of 12 consecutive months of positive monthly increases in retail sales. Twelfth Day: Another year of 12 consecutive months of positive monthly increases in retail sales.

Shop ‘til you drop America!