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Sandy Will Spur Timber Stocks

If we examine Indonesian per capita income, it is expected to maintain strong growth in the short to mid-term, while income and chicken consumption per capita have been growing in tandem. Indonesian per capita income is expected to reach USD $7,000 by 2017. Chicken consumption per capita, is expected to rise substantially over the next 5 years and poultry is the most affordable animal protein.

What stocks or sector would your sell or avoid right now?

Underhill: European bank stocks due to the negative GDP figures and weakness in the Euro zone region. In Europe, the starting point for the recovery is weaker, which combined with the depth and duration of the recession leaves fundamentals more exposed and us more cautious. The risk overhang from the European sovereign situation remains elevated.

What is your outlook for 2013?

Underhill: We see continued slow GDP growth with slight acceleration in productivity and slight reduced unemployment, continued high volatility. The 2012 US presidential election will have a greater impact on economic policy than most other elections in recent history. Market participants are quite focused on the effect of the election outcome on the fiscal cliff and economists believe that congress is more likely to reach an agreement if Governor Romney wins.

Nonetheless, under either scenario, we agree with the base-case assumption that Congress will barely avoid the fiscal cliff at the end of the year. We do, however, expect fiscal restraint will take hold in 2013 as some provisions like the payroll tax cut are allowed to lapse. I heard longtime political strategist David Gergen say the other day that no matter who gets elected we won't go over the cliff because people in Washington can be seen as dumb, but they're not crazy. I tend to agree with him on that.

-- Written by Gregg Greenberg in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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