What lies ahead for the rest of 2012? Find out what our capital market strategists believe is in store for the economy, the equities market, and the bond market. Also see their asset allocation recommendations, designed for investors looking to make adjustments to their portfolios based on current market conditions, as well as their strategic positioning recommendations for investors with a time horizon of three years or more.

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2012 mid-year outlook: Looking past the cliff
By Brian Jacobsen, Chief Portfolio Strategist; John Manley, Chief Equity Strategist;
and James Kochan, Chief Fixed-Income Strategist

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Overview

If you watched the news during the first half of the year, it didn't take long for the topic to turn to Europe. We wonder if news reporters ever felt like they were stuck in a rut—no matter what they wanted to write about or report on, the topic always circled back to Europe. The economy and markets also seemed to be stuck in a rut. Investors' bleak expectations and their intolerance of any action or inaction that would encourage deflationary conditions were obvious in the equity markets' performance in the first half of 2012. Stocks gave us quite a ride: strong and persistent gains in the first quarter, stalling momentum and rotation in April, sharp declines in May, and improbable rebounds in June. Turmoil in Europe, slow U.S. growth, and a cautious Federal Reserve (Fed) all suggest that interest rates and bond yields will not be increasing significantly during the next 12 months.

Overview | The economy | Equities | Fixed income | Asset allocation | The bottom line

 

The views expressed are as of 7-1-12 and are those of Chief Portfolio Strategist Brian Jacobsen; Chief Equity Strategist John Manley; Chief Fixed-Income Strategist James Kochan; and Wells Fargo Funds Management, LLC. The information and statistics in this report have been obtained from sources we believe to be reliable but are not guaranteed by us to be accurate or complete. Any and all earnings, projections, and estimates assume certain conditions and industry developments, which are subject to change. The opinions stated are those of the authors and are not intended to be used as investment advice. The views and any forward-looking statements are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund. Wells Fargo Funds Management, LLC, disclaims any obligation to publicly update or revise any views expressed or forward-looking statements.