The expiration of payroll tax reductions — and the possibility that nothing will be resolved in Washington this year around these and other fiscal issues — could be a drag on growth, says Mark Luschini, chief investment strategist for Janney Montgomery Scott.

“While we still favor stocks over bonds and cash, watching another bout of foolish Washington gridlock later this year would not be a welcome event for the equity markets. In fact, the force of fiscal contraction could instead be best to rally the bond market,” Luschini writes in research excerpted on Financial Planning’s Research Roundup page. To read Luschini’s analysis, click here.