November 13. 2012 9:00AM - Last modified: November 13. 2012 9:52AM

Northern Trust gives financial outlook

Kate Nixon, chief investment officer for personal financial services at Northern Trust Bank, visited Milwaukee Thursday to provide post-election financial insight at a breakfast for clients.
Kate Nixon

There is still a lot of uncertainty about taxes, politics and the economy, so Nixon has been trying to help clients think more strategically for the long term.

The popular vote in last week’s presidential election was so close, there is no clear mandate for President Barack Obama, Nixon said.

“Without a clear mandate, it makes it really difficult to govern,” she said. “It’s very uncertain right now and I don’t think the election solved anything.”

While the remainder of 2012 is likely to be volatile, Nixon does not expect Congress will allow the country to go over the “fiscal cliff.” But that doesn’t mean there will be a grand bargain achieved in a divided Congress.

Nixon is optimistic about incremental progress, with a possible short-term solution to kick the can down the road.

With Obama’s re-election, Federal Reserve policy will likely remain very easy for the foreseeable future under Ben Bernanke.
“All bets are off if the U.S. goes into a recession next year,” but that’s not likely, she said.

Nixon recommended investing in equities, particularly U.S. equities, since they have become very lean and mean in the economic downturn and have cash on the sidelines to invest and spend. Also, emerging markets are a good bet since China has avoided a hard landing.

Fixed income is challenged right now, since conventional fixed income is not providing a return at the moment, especially with inflation. For clients with a certain level of wealth, she recommended private equity, which has very compelling valuations and returns.