Ten Predictions for After the Upcoming Mid-Term Elections

After the US mid-term election in November, the following things will change:
(where appropriate I've tried include how I am playing, or might play these themes)

1. Oil/energy rices will go back up. (COP, OXY, CVX, STO, BP)

2. Inflation will start to be in the news again. (GLD, NEM, GG, GFI)

3. Fears of foreigners leaving the US treasury market will start up again. Long term treasuries yields will rise again.

4. US fears of China will increase as that country takes over the leading role in containing North Korea. Asian currencies and shares rally after an initial panic. (VPL)

5. Holiday retail sales will start to take the business headlines. Interest in retail and online advertising shares will increase. (AMZN, YHOO, GOOG, EBAY, IACI)

6. The Bush administration will start to push for an exit strategy in Iraq.

7. If the conventional wisdom going into election day is that the Democrats take the house, the market will go down into that news then rally days after as people start to talk about how good a split government is for the economy.

8. Wall Street bonuses will be huge mainly in the investment banking, Mergers and Acquisitions and Private Equity areas (holding Manhattan real estate).

9. There will be some kind of cold weather. Natural Gas and fuel oil prices will rise again based on the surprise that winter is back.

10. The interest in outlawing online gambling in the US will wane as congress or states figure out a way to tax and regulate it.

Disclosure: I own Yahoo (YHOO) and Walmart (WMT) as part of a buy/write. I own IAC Interactive (IACI). I own oil companies COP, OXY, CVX, STO and BP. I continue to bet on rising long term interest rates in the US through a short futures positions (and options positions that benefit from an increase in rates) on US Treasuries 10-year and long (30-year) maturities. I am long Japanese Yen. (vs. USD). I own VPL, GLD, NEM, GG and GFI.

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Comments

[kkin365:]

re (1) how about oil service companies such as SLB, and alternative energy companies such as PEIX?
re (2) if tax benefits to the rich are rolled back, the reverse might be the case.
re (4) China would be damned if she does not cooperate, and be damned if she does. Which course of action does USA prefer?
re (7) I like to repeat questions I raised in (1) above - What would be Democrats's posture re oil exploration and alternative energy? It seems to me that money are beginning to move into these sectors already. A detailed exposition on this point would be welcome
omooc

2006 Oct 16 08:55 PM

[David Neubert:]

1. SLB and Haliburton and other oil drillers/explorers would be a good way to play an increase in the price of oil. But the integrated oil companies are just so cheap, that even if oil drops I am getting good value. That's why I own those over the drillers.
2. I don't understand how changing the tax code would slow inflation. The US is spending like crazy to finance a huge government and war effort. Huge government spending usually results in inflation.
4. My comment is about US xenophobia not really about Chinese government policy. At least this time around economic ties are so strong that (unlike previous times in history when a new country threatens the dominance of another) the two dominant countries will be forced to work out a non-military solution to fear.
7. My point about the Democrats taking the hosue is that the market would fear economic upheval and a reversal in all the subsidies given to giant corporations. Later, everyone would realize that a gridlocked congress would not do much and things would stay status quo. That's when the market would go back up.

2006 Oct 17 12:16 PM