“At the very minute the president is probably important to the economy. But these are extraordinary times. Bernanke’s ability to print money is much more important to the US economy,” says Mr Mennis.
The outcome of the US election was still unclear as this article was written, but there was a view that a repeat of the 2000 US election fiasco would have dire consequences for the markets.
Twelve years ago, there was uncertainty over the winner of the US election for one week because of contested ballot papers in Florida.
But Mr Mennis argues that the importance of the election for the economy and the markets has been overblown, even though it could have a significant bearing on the looming fiscal deficit negotiations.
There are over $600bn of tax increases and spending cuts scheduled for January unless the White House and the Congress can reach a compromise on the US debt ceiling.
Mr Mennis says that even though these negotiations are important for the future of the US economy, the sense of panic that has gripped the US and Europe over the past few years has gone.
The US Federal Reserve will be able to cushion against the brinkmanship that will accompany the deb
The most important factor in the US is that the banks have been well capitalised and this is underpinning a nascent recovery.
Moreover, the crisis phase of the eurozone debt problem has passed.
“What we now face is an incredibly hard grind over the next five years of getting European banks recapitalised.
“If you look at the US, the banking system is much further down the road to recovery.
“The [US] banks are well capitalised and they are lending again and that is getting the economy moving. In Europe we still have to deal with this problem.”
There is very little upside left in government bonds, although they are likely to trade at these levels for the foreseeable future, says Mr Mennis.
But equities are historically undervalued and with the strength of corporate balance sheets, investors are likely to turn to this asset class for more attractive yields over the near to medium term, he said.
In a research paper issued yesterday, Davy Stockbrokers’ investment strategist Brian O’Reilly recommends that investors look at corporate bonds, commercial real estate and equities in the “search for yield.”
Equities that pay yields of above 4% will be particularly attractive, he says.