Market strategists assess poll results As polls closed and Barack Obama emerged as winner of the 2012 presidential election, markets reacted - US equities headed south, Treasuries jumped and gold prices rose. Here, market strategists give their opinions on the impact of the election results. They almost unanimously see the threat of the fiscal cliff - $600bn of tax hikes and spending cuts that kick in at the start of 2013 - as the most important issue facing markets in the near term. Quincy Krosby, market strategist, Prudential Financial The results, when all is said and done, had been anticipated by polling statistics and odds makers. Indeed, gold's move on Tuesday underscored traders" bets on who would win. The president will not be enjoying the traditional honeymoon as discussions regarding taxes and budget cuts, also known as fiscal cliff, must begin immediately as market participants ascertain how much economic growth can be projected. There is simply not enough economic growth to offset the full effects of the fiscal cliff, and this could push the US into recession and markets will sell off accordingly. We have seen it already during the past two earnings seasons, when revenues weakened, as economic downturn in China and Europe has been transmitted into corporate profits. Allowing fiscal cliff to take hold completely would be a final push into recession. Markets are on notice and sensitive towards any signs of recession. Oliver Pursche, Co-Portfolio Manager GMG Defensive Beta Fund (MPDAX) With less than 40 trading days left in the year, investors must now determine what this status quo result means to their portfolios. Although presidential elections have historically had little impact on market direction or volatility, I expect investors" fears of potentially higher taxes on capital gains, dividends, and investment income to trigger a short-term sell-off in equities. In this scenario, high-beta sectors such as financials and technology shares are likely to sell-off the most, while consumer discretionary, industrial and telecom shares should outperform the broader market through the end of the year. On the interest rate side, market participants seem to have concluded that President Obama's re-election increases the risk of the US going off the fiscal-cliff. Arguing that emboldened Democrats will insist on higher taxes for the wealthy, something a stronger Republican House of Representatives will not easily or quickly agree to. The partisan debate and resulting increased risk of falling off the fiscal cliff will likely result in the 10-year treasury yield falling below 1.5 per cent. After the initial volatility passes, expect markets to focus their attention on corporate earnings growth rates and the overall fiscal direction of the country and the world. I expect earnings forecasts for 2013 to be revised lower and expect investors to place greater emphasis on revenue growth than EPS growth. Above average revenue growth is likely to come from the technology, industrial, energy and materials sectors. US centric companies that have less or no exposure to Europe are likely to outperform multinationals in the coming months. Alan Ruskin, head of G10 FX strategy, Deutsche Bank "From a markets" standpoint the most important issue is the fiscal cliff and the question for investors is does a win for President Obama amount to a fresh mandate and the possibility of a more co-operative spirit in Washington." Liz Ann Sonders, chief investment strategist, Schwab We were not surprised by the Obama win, because polls accurately showed the president had an edge in swing states. There is of course a lot of disappointment among Republican supporters, but not much surprise. After so much money spent, so much political heat, all we have is status quo. While markets anticipated the Obama win, there was this notion that a change in leadership would be better for resolving the fiscal cliff problem. But we are back to square one. While the presidential election is over, it was only a small component of a larger uncertainty, and the threat of the fiscal cliff remains. Congress is divided and the negotiations will not begin until after Thanksgiving. So, businesses will hold back decisions just as they were holding back before the election. David Ader, head of government-bond strategy, CRT Capital LLC Treasury yields have dropped sharply on the prospect of the fiscal cliff battle assuming centre stage. The angst that accompanies that debate won't be reassuring to the markets generally, risk specifically, and we're still worried about the direct impact in the first quarter of restoration of the payroll tax and unresolved issues over other measures, like automatic sequestration. James Paulsen, chief investment strategist, Wells Capital Management Don't worry the fiscal cliff. Stay focused on the broadening and accelerating economic momentum in the US economy, the recent success in calming eurozone fears and impending evidence of a revival among emerging world economies. As government stays hopelessly ineffective, the private sector can accelerate the drive forward and investors can participate at the remarkable sales price of only about 14 times earnings. David Bianco, head of US Equity Strategy, Deutsche Bank The negotiations over the fiscal cliff are a big concern to equity investors in terms of the balance between tax hikes and spending cuts. Elections do have consequences and if we see taxes on dividends rise well above that of capital gains, it is a significant threat to high dividend paying sectors including telecoms, utilities and pharmaceuticals, which are richly valued. Dividends are the tangible connection between the price earnings multiple and low interest rates. If companies can keep raising dividends we can get more P/E expansion. Much higher taxes on dividends are a worry. Jack Ablin, chief investment officer of Harris Private Bank in Chicago There has to be some reconciliation and compromise in Washington. A second term for President Obama will keep financials and healthcare sectors under pressure, while technology may be a winner as government regulation is less of a factor. Gold will derive a boost while the dollar comes under pressure as the Federal Reserve retains its easing bias. Colin Fenton, chief commodities strategist, JPMorgan. Conventional wisdom expects the president's re-election to frustrate development of US energy assets. Yet, gargantuan economic forces calling on those latent supplies will likely prevail. Looming is the "exhaustion" of the Social Security Disability Insurance trust fund by 2016 or before, according to the fund's trustees, which include three members of Mr Obama's cabinet. Nearly 11m Americans rely on this programme. Minimum replenishment requirements exceed $194bn and may come from new payroll taxes on the middle class or diversion of assets from the larger, retirement-oriented trust fund. This challenge could hit oil demand expectations by first half of 2013. JJ Kinahan, chief derivatives strategist at TD Ameritrade The election results keep us in a situation of having a Democratic President with a Republican House. This result means one thing and that is, these factions need to learn to compromise. I believe there are two assumptions built in to the market going in to the upcoming Congressional Session and that is, the primary goal is going to be to compromise enough to "kick the can" on fiscal cliff reform and that tax rates are going up or reductions are going to be reduced or more likely a combination of the two. In terms of sectors, I believe the financial stocks will suffer until game plan is known and healthcare insurers will be in the same boat. The coal industry, already suffering, will continue to have a difficult time and with that, railroad stocks will suffer in the short term, but if other areas of the economy grow they can recover. There are positives in this economy, that being the "green" stocks or alternative energy stocks seem to be in a good spot. Just as the health insurers may suffer the hospital stocks should find support. The primary beneficiary of the potential slowdown in coal should be any company involved with natural gas which is so much more plentiful and more importantly burns "cleaner." The tech sector is in a fine spot domestically, the issue there is much less about election and more about Asian slowdown. The bottom line is if we can get compromise in Congress and the White House, agree on tax, entitlement and health policies and stick to them, the economy can grow. We see signs of recovery now, the real hope of the economy is set a plan and stay out of the way, you will be amazed at how positive the results can be to our country.