Markets driven more by Europe than by US elections

The financial markets were driven more by headlines from Europe than by the U.S. elections, portfolio managers said at the Bloomberg Portfolio Manager Conference held here Thursday. James L. Dailey, chief investment officer of TEAM Financial Managers, said he did not make any investment adjustment after the elections. The broad market declines starting from the first post-election day had certainly something to do with the elections, such as re-emerged \"fiscal cliff\" fears, he said. \"But the election and fiscal cliff are important as far as they all reflect investors psychology in the short term. The fundamentals will really drive markets in the long term,\" he added. Dailey\'s opinion was echoed by Michael A. Gayed, chief investment strategist of Pension Partners, LLC. \"I don\'t think the market is that worried about fiscal cliff relative to the new fear about Europe,\" he said. He argued that even though markets fell down after President Barack Obama\'s reelection victory, the declines got sharper when European Central Bank President Mario Draghi said the debt crisis is starting to hurt Germany. The euro\'s falling, the protests in Greece and Spain\'s debt problems were all main drivers for the financial markets, said Gayed. Neither Dailey nor Gayed expected the fiscal cliff to happen soon. Dailey said that despite the disagreement between two parties, the Republicans and the Democrats could reach a short-term deal to kick the ball down the road and avoid fiscal cliff on Jan. 1. Most portfolio managers attending the conference projected a short-term fall in riskier assets and an increase in bond and the dollar as the world economy tends to slow down further.