Global Markets, Meet President Obama. Now What? 51 comments
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Well, history has been made. Barack Obama has taken a staggering 338 electoral votes, and has won the Presidency by what, in political metrics, is an all-out landslide. Just because I’m not 100% sure I’d already revealed my hand, I will say that I fully believe we’ve elected the right man for the most important job in the world.
The Appetizer Cake Is Already Baked In…
Markets have likely priced in the majority of Tuesday’s result; the Democrats now control at least 55 seats in the Senate as well as the White House. All the fast tracks and H.O.V. lanes will soon be opened for whatever programs and legislation our government leaders wish to enact.
The devil’s advocate in me (a welcome voice for any investor) says that fewer checks and balances (under a Democratic legislature and Administration) is not a good thing. However, a bigger, more visceral part of me remains utterly frustrated by the actions (or lack thereof), since the original incarnation of the Paulson Plan met the world’s largest dog and pony show, six weeks ago.
Ahead is the Only Direction that Matters
Ready or not, the Obama train is heading out of the station, so it’s time to start analyzing the changes within sectors, industries, and the broad
Industries at risk for higher taxes, growth limitations
- Integrated Oil companies: These are probably safe in the short term and at risk in the medium-term for windfall taxes, because of fewer tax breaks. Offshore production plans in the
- Energy E&P companies: There will be offshore drilling risks, and increased funding for alternative energy production.
- Big Pharma, Biotech: There will be tougher negotiations for lower drug prices via Medicare, and possible competition with lower-priced drugs from
- Airlines: They will experience higher labor costs.
- Leisure and other labor-intensive industries: There will be higher labor costs and an easier path to collective-bargaining agreements for workers.
- Media: Obama has expressed a desire to open up local markets and restrict the “cornering” of local markets by big media conglomerates. We can also expect fewer mergers as antitrust policies will be tougher under Obama.
Industries that could see tailwinds
- Autos: Obama has promised to “fast-track” money to the Big Autos - $25 billion was appropriated in late September but it still hasn't been distributed. In previous statements, Obama has expressed desire to allocate $150 billion over 10 years to fund alternative energy and hybrid cars.
- Alternative Energy: Solar, Wind and Natural Gas should all see growth via tax credits and other incentives, as well as increased levels of private and government funding. The possible institution of a carbon cap and trade system would really catapult this group, but don’t expect to see anything for a couple of years.
- Industrial equipment and service providers: Obama will likely allocate capital towards infrastructure improvement projects like roads and bridges. Caterpillar (CAT) was mentioned in the Bloomberg article as a particular beneficiary.
- Technology: Obama generally wants to promote higher R&D funding, net-neutrality. A recent survey of tech executives found that over 60% felt Obama would be better choice for technology development.
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This article has 51 comments:
I am a retired person along with tens of millions of others living of savings and investments and pensions which are now worth half what they were six months ago. In the ten years will take markets to recover most of us will be too late to enjoy any upside.
Heaven help us.
1) Close Guantanamo -- Very bad PR for USA
2) Orderly withdraw Iraq -- American army not wanted there
3) Replace FED Chairman -- Very urgent, limit the damage NOW
4) Assemble an Economic Team, headed by Paul Vockler / Ron Paul / Ken Denninger / other thinking heads
5) Work on regulations for Finance -- URGENT
6) Cancel WS 700 bn bailout -- Before they throw away more money.
Good luck, Obama.
step 9) learn how to watch Springer and cash checks from govt
step 10) build nuclear bunker
On Nov 05 10:05 AM Thinker771 wrote:
> Short List for initial Obama's actions at the Office:
> 1) Close Guantanamo -- Very bad PR for USA
> 2) Orderly withdraw Iraq -- American army not wanted there
> 3) Replace FED Chairman -- Very urgent, limit the damage NOW
> 4) Assemble an Economic Team, headed by Paul Vockler / Ron Paul /
> Ken Denninger / other thinking heads
> 5) Work on regulations for Finance -- URGENT
> 6) Cancel WS 700 bn bailout -- Before they throw away more money.
>
>
> Good luck, Obama.
Credo quia absurdum.
Neo cons have destroyed the Republican Party, hopefully this will be a wake up call.
1) I don't disagree with the author's educated guesses.
2) What positives or benefit is mentioned by the author? It all sounds like downside if you own a business in almost any sector besides natural gas. I am sure the index investors will overcrowd the space quickly and the consumer will lose through higher energy costs.
3) The Democrats had better be damned careful on big pharma. Henry Waxman never got over Speaker Dennis Hastert's 2000 victory and subsequent growth of physician marketing. Since I am in this space as a direct to consumer marketer choice is offered the consumer and our model is performance (cost-per-sale basis). We'll do OK I am sure but my bigger concern is that big pharma will accelerate outsourcing, like they did with clinical trial business. The cause was heavy handedness by the Democrats in 2006-2008 of "discount or else'. Yeah, that worked, the clinical trial business in America is DEAD. That is tens of thousands of skilled US workers without a job. How is giving the Chinese and Indians these jobs better? Democrats do this to big pharma again and the job losses will be in the hundreds of thousands. Big pharma can go anywhere in the world for a friendlier environment. Negotiate is fine, but negotiations means there is a benefit for all sides, the American consumer, Washington and big pharma.
There is but one political party in America. The Corporate Party. GOP-DEM are rather like Sunni and Shia. Warring factions. Nothing more.
Obama hasn't gotten to where he is without making large promises to large donors. Period. Business as usual.
As for preachers who snarl GD America from the pulpit, the first amendment is in place to protect UNPOPULAR speech. Popular speech, by its very nature does not need protection. Get over it!
I remain amazed at how many Americans thanked me for my service in the very act of condemning and demanding I remove my BUCK FUSH hat. Sad. Very sad.
The one thing about Obama that may put him in better stead is the rest of the world may now be more willing to not work so hard against American interests. Perhaps.
While the Decider is making all the right noises, he has yet to relinquish his office. If W is unable to pardon himself and his minions for the myriad war crimes they committed I rather doubt he'll go willingly.
I'd love to see W in the dock at The Hague. Right before he's hung by the neck until dead for his crimes against humanity. But, I digress....
Tax and spend socialist meets looming financial disaster from tax and spend socialism.
Wait! That looks like Europe and Japan. :-)
Pull up a seat and grab the popcorn. I'm hoping for a classic hero tale with a happy ending but I suspect it will be a comedy (of errors) or a tragedy. Remember, this is a guy doing on the job training, no executive experience at all. And his supporting cast all are guided by the same nonsense that created this mess.
Too bad that now that we've all had our American Idol moment, we can't go back and run a real election between two someones qualified to lead.
Stick a fork in, we're done.
Obama, prove me wrong! Please.
That's ACTUALLY what many people believe.
Wake up call in order.
It will take long time to cleanup the mess. But at least, we can say we are on the right track now, hopefully.
Talented and successful Americans will move to other countries and direct their labor and capital towards the better opportunities offered elsewhere. The dregs of American society will enjoy the socialist welfare state created by Obama, but will not be tempted to go anywhere they'd be required to be productive.
That belief is founded. The reason why is that hopefull and inspired people who believe in the American dream tend to work harder and take more risks. Hard work and creative risk taking tends to produce profits in the long term. The world is wealthier than it was yesterday - we just don't know it yet.
Earnings will certainly fall over the near term, and technical momentum is likely to continue to drag the equities markets down for a time. Americans had hope during the civil rights era, even as they were beaten by police, sprayed with fire hoses, just for demanding the right to drink at a water fountain, to vote, or to ride a bus. It turns out we weren't nearly as optimistic back then as we should have been. We underestimated the potential of America.
There may be a lesson in that for investors. We might want to start thinking about the big, big picture as we adjust our portfolio allocations.
On Nov 05 01:21 PM DoubleM wrote:
> Personally, I would have voted for a qualified presidential candidate
> of any ancestry who offered credible and realistic proposals that
> would keep our country strong in every respect. To me, Obama offered
> a fairly polished yet stammering choice who usually spoke the right
> words, but has no governing experience and a questionable background.
> Foremost, our country faces many foes, as well as challenges, and
> we need a very strong leader who will defend our shores, as well
> as curtail leftist stupidity. My fear is that a mesmerized populace
> has been sold a bottle of snake oil.
McCain has not really had governing experience as well. However, look to the management and governing experience shown during the second time he ran for president. Hardly inspiring. His experience was not founded in the type that was needed for a new direction. As for "maverick" you really don't want this type personality running things. Think of undisciplined people taking over a military platoon, running a large organization, etc. Don't confuse "maverickism" with creativity or inspired thinking. They are different. In thinking about "maverick" I think of a spoiled child. Enough said.
On Nov 05 01:54 PM Techzone12 wrote:
> Obama will have an ugly inheritance. He is going to inherit all the
> huge problems that Bush and Co. have created over years. It is going
> to be very hard to dig ourselves out from this deep hole. The economy
> is on the verge of collapse. Bush has destroyed Iraq, only to help
> unleash Iran (which is the real threat). America's image has been
> tarnished, thanks to Guantanamo and such, and the list goes on..
>
> It will take long time to cleanup the mess. But at least, we can
> say we are on the right track now, hopefully.
Obama has brains and is pragmatic. He will dent the horrible Bush legacy. The question will be the time needed and if the response rate will be fast enough to stem the bleeding caused by in incompetent President and administration.
This one's easy ... DOWN!
I will never support anyone who voted to pass the $700 T bailout of the sub-slime robber barons adding insult to injury. When will Americans ever learn? There is no difference between a Democrat and a Republican. The two party system is the biggest con game in town.
Politicians from both parties are cheap whores who will do tricks for the rich and powerful in exchange for campaign contributions. Regardless of party, they will send our kids to war without sacrificing their own. They will unashamedly spend the hard earned money of others for their own personal glorification. They will greedily hoard power unto themselves, only to use it to benefit those who allow them to keep it. They mesmerize the unwitting with their great oratories while deftly sliding a hand into the back pockets of their fellow citizens. They have bankrupted our great nation. It sickens me.
I was saddened as I watched the post election celebrations knowing that once again we are being hoodwinked and that all this political hoopla is diverting our attention from the most trying of times that we will face.
God help us.
Bravo to you! I didn't vote for the two 'republicrat' party candidates either, but did vote for the independent candidate. The fact that we don't have an independent minded american public is the precise reason why your comments are so true in my view.
I watched ,for as long as I could, those fools waving flags and acting like
drunks at a new years eve celebration! Now I know why Adolph Hitler
was quoted as saying "it's such a wonderful thing for governments that
the people don't think!"
EDT
Chicago, Illinois
On Nov 06 03:40 AM edt wrote:
> Dear xsuddensam,
>
> Bravo to you! I didn't vote for the two 'republicrat' party candidates
> either, but did vote for the independent candidate. The fact that
> we don't have an independent minded american public is the precise
> reason why your comments are so true in my view.
>
> I watched ,for as long as I could, those fools waving flags and acting
> like
> drunks at a new years eve celebration! Now I know why Adolph Hitler
>
> was quoted as saying "it's such a wonderful thing for governments
> that
> the people don't think!"
>
> EDT
> Chicago, Illinois
The Republicans are lucky that any of their ilk were elected to anything higher than Road Kill Cleanup Engineer. That is more than they deserve.
Now is not the time for the same old broken approaches, but for a leader who will try to move the country in a new direction - FORWARD.
Maybe Obama doesn't have the experience, ability or capacity for this. But at least he will try. That is more than you would have gotten out of McCain.
Good on ya!
You cannot help small men by tearing down big men.
You cannot help the poor by destroying the rich.
You cannot lift the wage earner by pulling down the wage payer.
You cannot keep out of trouble by spending more than your income.
You cannot further the brotherhood of man by inciting class hatreds.
You cannot establish security on borrowed money.
You cannot build character and courage by taking away a man's initiative and independence.
You cannot help men permanently by doing for them what they could and should do for themselves.
On Nov 05 10:11 AM Gary Noffke wrote:
> Appears most readers of these financial columns and big Wall Street
> players lost the election yesterday. There will be a new spread of
> wealth that benefits the country for a change, instead of those who
> believe the wealthier they are, the better off everyone else is.
You give massive fuel to the fire by creating a housing market that is overstated, and thus requires a correction. The fraud is in the guys that created the fuel. Wall street did what they were supposed to do with the fuel - burn it. They did not look into the risk of Fan and Fred in context with the bubble, so they are culpable as well. My money is Frank and Dodd will continue to throw Wall Street and the real estate industry under the bus, all the while continuing to promote a house for all - no matter the risk.
It just makes me sick that this is going greatly unnoticed. Bush & co tried multiple times to wrest regulatory power away, yet the cons in the senate and house would have nothing of it. They claimed nothing was wrong, stop the witch hunt.
So blame the source of the problem, else accept it for what it is. An immediate solution for Social Security funding - because we all have to continue to work!!!!
On Nov 05 08:16 AM johnbee wrote:
> As I see it (and most people outside the US who are its friends)
> hope) this is a victory for intelligence, unity, fairness and decency,
> and not the aggression, nationalism, militarism and greed that has
> lost the US its place as a leader in the world. The first thing Obama
> should do is to back moves to take action against the perpetrators
> of the gigantic fraud that has been comitted on the world's savers
> by the former Wall Street "heroes" and negligent banks and reclaim
> their ill gotten gains for the public good.
> I am a retired person along with tens of millions of others living
> of savings and investments and pensions which are now worth half
> what they were six months ago. In the ten years will take markets
> to recover most of us will be too late to enjoy any upside.
Just ask the millions that were oppressed under Sadaam. Yup, they were fat dumb and happy?
The fact is, they freedoms the Iraqis have today are worlds better. And talk with soldiers that have been there - not the smile for the camera politicians or the nothing good happening here press. Let them tell you what is really happening. Let them tell you they are far better off than before. Let them describe the horror of living under Sadaam. Freedom ain't free. And freedom costs lives. As soon as you are not willing to lose life for freedom, you will lose your freedom.
Just sit at home and let the media tell you what they want you to know.
On Nov 05 01:54 PM Techzone12 wrote:
> Obama will have an ugly inheritance. He is going to inherit all the
> huge problems that Bush and Co. have created over years. It is going
> to be very hard to dig ourselves out from this deep hole. The economy
> is on the verge of collapse. Bush has destroyed Iraq, only to help
> unleash Iran (which is the real threat). America's image has been
> tarnished, thanks to Guantanamo and such, and the list goes on..
>
> It will take long time to cleanup the mess. But at least, we can
> say we are on the right track now, hopefully.
Obama picked "Rahm Emanuel" for the "Cheif of Staff" job!. Oh, great!. When I read about Emanuel, I know that Barak is not intending to make real changes. It is pay back time, if you know what I mean. We are back to business as usual again. The euphoria that surrounded Obama's victory is quickly evaporating!!
On Nov 07 04:03 PM RedAZ wrote:
> "Bush has destroyed Iraq"
>
> Just ask the millions that were oppressed under Sadaam. Yup, they
> were fat dumb and happy?
>
> The fact is, they freedoms the Iraqis have today are worlds better.
> And talk with soldiers that have been there - not the smile for the
> camera politicians or the nothing good happening here press. Let
> them tell you what is really happening. Let them tell you they are
> far better off than before. Let them describe the horror of living
> under Sadaam. Freedom ain't free. And freedom costs lives. As soon
> as you are not willing to lose life for freedom, you will lose your
> freedom.
>
> Just sit at home and let the media tell you what they want you to
> know.
You are all correct . edp , I remember reading where Hitler had said "It's a great thing for governments that people don 't think " .the americans as a whole are dumb sheeple . They all voted for Bush in 2000+2008 .They watch " american idle " + Jerry Springer , yet now they are crying " none of us saw this coming . All I can say " is that you didn't want to know or look for the truth ". the mess the US is now in + placed the entire world in is far too huge for Obama to fix . US citizens don't want to hear about hard work for rightful pay . They want high wages for useless jobs ie nail salons , tanning salons , financial planners + lots of cheap credit . Guess what , It's gone , The US is on the verge of collapse . The future is not bright . The powers at be will simply slow the pace of the decline , which up to now has been rapid , bu in the end , it only prolongs a dire situation . The Great Depression was 10 years or longer +it's causes were precisely the same as this The Greater Depression.
Equally, the complaints of the tech and media industry about insufficient broadband penetration and services: if you allow third party calculated open access and restrict the profitmaking opportunities for the telcos you should not be surprised by their noninvestment.
On Nov 05 10:25 AM iThinkBig wrote:
> I'll comment on the article:
>
> 1) I don't disagree with the author's educated guesses.
> 2) What positives or benefit is mentioned by the author? It all sounds
> like downside if you own a business in almost any sector besides
> natural gas. I am sure the index investors will overcrowd the space
> quickly and the consumer will lose through higher energy costs.
>
> 3) The Democrats had better be damned careful on big pharma. Henry
> Waxman never got over Speaker Dennis Hastert's 2000 victory and subsequent
> growth of physician marketing. Since I am in this space as a direct
> to consumer marketer choice is offered the consumer and our model
> is performance (cost-per-sale basis). We'll do OK I am sure but my
> bigger concern is that big pharma will accelerate outsourcing, like
> they did with clinical trial business. The cause was heavy handedness
> by the Democrats in 2006-2008 of "discount or else'. Yeah, that worked,
> the clinical trial business in America is DEAD. That is tens of thousands
> of skilled US workers without a job. How is giving the Chinese and
> Indians these jobs better? Democrats do this to big pharma again
> and the job losses will be in the hundreds of thousands. Big pharma
> can go anywhere in the world for a friendlier environment. Negotiate
> is fine, but negotiations means there is a benefit for all sides,
> the American consumer, Washington and big pharma.
On Nov 05 10:23 AM Ernie Montague wrote:
> While I voted for Obama, to avoid a McCain who has become a werewolf
> and his zombie barbie doll vice president, I do hope that folks realize
> nothing substantive is going to change in the next four years. We
> are still dealing with the execrable policies and decisions of the
> Bush administration, and will be paying for them for decades. <br/>
>
> Neo cons have destroyed the Republican Party, hopefully this will
> be a wake up call.
As we weaken the US domestic product of the US, it creates tough times, so we react by taking from industrialists and technologists thinking all we be right. But this causes the economy to suffer and create more need for wealth redistribution. In a never ending downward spiral.
The solution my friends is to create a market place where people can become very rich. Some will and some won't. But the millions trying, create tens of millions of jobs. When people not longer think they can make it big, you have sapped their drive to try and build something new, special and novel.
The libs must think that innovation and drive to succeed is a bottomless well and can give forever, even in the face of punitive tax and labor policies.
If you want jobs, but American. Cut taxes on companies(like Ireland) and see the job creators return to the US.
So many uninformed people believe Obama's change to be fooled by his Energy Policy without having the facts straight. He hyped on technologies that have not developed fully, and it takes years to make ecomomical feasible. Even though the renewable energy only contributes 2.0% of needed fuels ( you can not fly air plane with wind or solar???). If oil companies get higher taxes, and offshore drilling is off ( the only way to find oil now is deep sea drilling), you bet to open your checkbook to pay higher price of electricity and fuels.
A unilateral government, imbalanced by checks and balances, extremely motivated by leftist ideology spells a prolonged period of low growth, if any, and implementation of broader non-discretionary entitlement expenditures that will no doubt push our country's already precarious fiscal position to the limits. How, then, is this the "right man for the job?"
This year's financial disaster was a consequence of over-leverage throughout all elements of society, from individuals, city, county, and state governments all the way through the federal government. We have gone through many decades of legislative forcing functions that imbalanced market realities, shielding legitimate feedback information from the public. To think that instituting larger government manipulation of the economy, and a desperate combination of fiscal and monetary stimulus (i.e. flooding the country with new money to spend) is going to herald "change" for the better, is nuts.
Reality always has a way of catching up, and at some point - sooner rather than later - Americans will find that we desperately need to de-leverage, cut back on the borrow-spend disease. People must suffer as the economy contracts and asset prices drop. Companies, and entire industries, that have invested in too much capacity must shed it, along with the jobs created along the way. There is no way around this reality and attempts to obscure the truth through manipulative government policy can lead to disaster. Every force introduced to every market has consequences, all of which are measurable and predictable. We are not the first country or the last to attempt to debase our currency to alleviate short-term pain at the expense of long run prosperity.