Institutional investment managers are divided on whether first-quarter corporate earnings will rise or fall, according to the latest quarterly survey of Northern Trust Multi-Manager Investments.
Almost one-third (32%) of the approximately 100 institutional investment managers polled mid-December think corporate earnings will grow in the first quarter of 2013, while the same percentage believes earnings will decline.
This is the first time since the surveys inception that managers have been split on their outlook for earnings, Kelly Finegan, vice president of Northern Trust Multi-Manager Investments said in a statement. The economic uncertainty has resulted in an equal number of managers believing corporate earnings will grow and decline in the next quarter.
Investment managers expectations for U.S. economic growth were also mixed. One-third expect U.S. GDP growth to accelerate over the next six months, while 21% think it will decelerate, up from 25% and 14%, respectively, in the previous quarter. Almost half (46%) expect stable GDP growth, down from 62% in the third quarter of 2012.
Investment managers, however, were uniformly bullish on the housing market and job growth. More than four in five (82%) expect U.S. housing prices to increase over the next six months, the highest level of optimism over housing since the survey began in the third quarter of 2008. As to the outlook for employment, a large majority expects job growth will remain stable or accelerate over the next six months, according to the survey.
Investment managers were also confident that Congress will raise the debt ceiling as needed this year, with 89% saying they anticipate Congress to act accordingly. That said, 54% see risk for additional downgrades to the U.S. credit rating as occurred in 2011 when Congress and the President last faced off over a debt ceiling increase.