Obama is the new President, now what?

By: ispeculatornew
Date posted: 11.05.2008 (4:00 am) | Write a Comment  (3 Comments)

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As had been written last week, IntelligentSpeculator believed it was in the interest of the US economy to move to a democrat government and as we write this, it is exactly what has happened as Governer Barack Obama won a decisive victory to become the first ever African-American President.

But all is not decided yet as we currently do not know if the Democrats will provide them a Filibuster-proof Senate. This would have a major impact as it would give the Democrats the possibility of moving important legislation through without needing support from the Republicans.

It will be interesting to see how the stock market reacts tomorrow as by most standards, the win by Barack Obama had been discounted and major movements had been made (for example, stocks related to the defence industry should suffer a bit as Obama moves out of Iraq, etc). But we can still expect a bit of a rally as one of the ennemies of the stock market, uncertainty, fades away. But then again, with the possibility of a McCain win being estimated at around 2% today by some, it is possible that today’s rally was about just that, the Obama win.

Now it will be interesting to see the impacts on the markets of some of Barack Obama’s economic policies, especially if they get that Senate strong position. The more major changes in policy concern the tax modifications as Obama wishes to increase capital tax gains on those making over 250K per year. He would also increase income tax for those. As well, Obama has commited to renegotiate free trade agreements such as NAFTA (North American Free Trade agreement). As well, he has announced intentions to set important health care reform.

All of these changes will have important impacts on the stock market that we will be loooking over in coming weeks and months, as some stocks will benefit from these measures and others will suffer. A good example of a stock that might suffer is Halliburton (HAL). Halliburton was not only benefiting from the Iraq war but also from its important links to the Bush administration (vice-president Dick Chenney is a former-CEO of the company, still has important interests in the companie’s success, etc and not so surprisingly, Halliburton has been getting important contracts in the past 8 years odf the Bush administration). So no doubt about it, some important changes will occur in the US economy because of today’s changes..!

By the way, as we write this, the US dollar has been gaining ground against the Euro while Asian stocks have also been doing very well.

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3 Comments

  1. […] your money by betting on John McCain on the prior day. But generally, we agree with the view of Intelligent Speculator that over the medium run, the diminished uncertainty will be good for the […]

  2. Comment by Dave — November 7, 2008 @ 12:43 pm

    Interesting analysis. Since there has been a day or so, do you have any thoughts on why the stock market has continued a downward trending? Since it looks forward by 6-9 months, might it be reacting negatively to the Obama win, based on some of the above mentioned changes (i.e., cap gains tax increases, income tax increases, etc.)?

  3. Comment by admin — November 9, 2008 @ 5:30 pm

    I really think that it’s more to do with short term economic data coming out and the prospect of the economy because really, the Obama presidency was pretty much expected by the market as they gave McCain less than a 5% chance of winning 1 day out, I found an interesting article about it was at:

    http://www.thefinancialblogger.com/markets-plunge-following-election/

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