Fiscal cliff drag on corp America: Ghriskey

Tim Ghriskey, CIO, Solaris Asset Management explains that the dilly-dallying among politicians on the resolution of the fiscal cliff is weighing down on the US corporate sector and the GDP. He forecasts that the uncertainty and negative impact to the GDP to continue into the last quarter of FY13.

Below is an edited transcript of the interview on CNBC-TV18. Q: The US market is not moving much, mostly sideways. And will the fiscal cliff to keep the markets this way all the way to the end of the month?
A: Until there is a solution. And we are nowhere near a solution. But we think it is not a question of ‘if there is a solution’, but simply 'when there is a solution'. Knowing politicians, they are going to leave it to the last minute, which is how we ended up in this mess to begin with. And that 12th hour could be actually when a new Congress is installed at the end of January. So it could be a while before we see a final solution to this fiscal cliff issue for the US, but it will happen. Q: What is the worst case scenario you expect?
A: The worst case scenario, of course, is that it drags out into January, then there is no 'final solution' and Congress simply puts it off again, once again delaying an ultimate decision on how to deal with both the revenue and the spending of the government.
As Brian Moynihan, CEO, Bank of America suggested, the uncertainty on corporate America is significant and currently there is certainly a drag on the economy not only from storm Sandy in November but also just from the uncertainty of the fiscal cliff.
It is very hard for corporate managements to plan in this kind of environment. There are too many uncertainties and that is and will be a drag on gross domestic product (GDP) in Q4 and possibly in Q1.