I am confident that the US is going to plunge over the fiscal cliff. I can't see any way round it. Both sides are claiming a mandate from the recent election, and both are driven by ideology, not pragmatism. Even worse, both seem to think the other side will be blamed for any fall-out if they do take the plunge.
And then of course we have the debt ceiling limit coming up probably in February - no doubt that will be another fiasco.
Both should be big sell indicators for the US economy.
BUT - on the buy side we have a shale gas revolution which is giving US indusrty a huge energy price advantage over the rest of the world. At the same time wage inflation in China and India, and a US Dollar being aggressively weakened by an activist Fed mean more and more companies are bringing production back to the US from overseas. The US could be on the cusp of an industrial boom.
My feeling is at some point in the next 6 months it will be time to go long US equities. I think there will be a fiscal cliff / debt ceiling sell-off which will provide a good buying opportunity. Then hold for the long run. There will be rocky moments but once the politicians have got out of the way I think the US will be back as an industrial powerhouse.
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