So we elected a new President yesterday......Now What ?
First, I think this is a GREAT country to live in. Forget about Barack Obama being the first black President of the United States, that is a real step forward for our country. To me the biggest and greatest thing about America is that after an election we move forward. I think it is great and the number one reason that we are leaders of the free world.
OK, now on to the markets.
Barack Obama is going to have a big advantage going into his first term as President,
1. The country is in such terrible shape economically and "emotionally" that I find it hard to believe that he cannot get a big boost in consumer confidence in the first few months of his administration.
2.Also he should be able to get through a few important initiatives in the first 100 days as he will have full (almost) support of the House and Senate.
His job will not be easy as this economy is in terrible shape. The ADP employment report was -147k today pointing toward a another very poor employment number on Friday. The economy will not change overnight but I think that confidence numbers should move higher in the coming months. Obama won decisively. The American people got the guy they wanted and as such at least initially should be happy. I can see Stocks doing better in the months to come (yes I did see the -500 points yesterday) and I maintain that stock prices are a huge factor in how much money people spend. If your 401k is growing you are happier spending money then if it is shrinking.
Longer term I think there are still some real problems ahead. The budget deficit should grow. Tax revenues will be down, even with increased taxes on the wealthy (I happen to feel that taxes would have been raised no matter who was elected...remember George H.W.Bush) as with less people working and spending money, less taxes will be collected. Remember we still have the $700 billion bailout package to pay for and the Iraq war is still going on. This large fiscal deficit should add to the structural negatives for the dollar which will require further capital inflows from overseas investors. As such although I think near term the dollar might continue to see support, over the medium to longer term I think we are in for another round of dollar bashing.
As I have said before I think that the office of the President forces the person in that position to move to the center. The enormous pressure being the most powerful man in the world requires it to happen. I certainly feel that Barack Obama's policy's so far have been very left leaning, but I think that once you are representing the entire United States of America it becomes a different story. He cannot lead from that far left. I think one of his biggest challanges will be "controlling" (for lack of a better word) Nancy Pelosi and Harry Reid(not to mention Howard Dean). They are way to the left and will try to pass legislation to promote that agenda.
Just my thoughts.....would like to hear yours.
Good Luck and Good Currency Trading.
Labels: Markets, Rambling's