Just did my last hit for the night on the election show, that’s it for me, I’m heading home. I’ll leave you with this last bit of news: Harry Reid has apparently kept his seat.
Archive for November 2nd, 2010
This isn’t the time for a divided government, and I don’t necessarily mean Democrats controlling one branch and Republicans another. I mean this isn’t the time to have the two parties that ostensibly run this nation squabbling like a bunch of children out in the schoolyard, while the school’s on fire. But it seems like that’s what we’re gonna get.
While the GOP is pretty clearly going to take the House, creating the much ballyhooed gridlock, the Senate seems a long shot. The conventional wisdom on Wall Street is that this is a good thing; if Washington is locked in its own box, it can’t get in the way of private enterprise. But, as Miller Tabak’s chief economic strategist Dan Greenhaus pointed out to me a little while ago, “gridlock” is a benefit for the stock market and businesses in a fully functioning economy. Needless to say, that is something we do not have right now.
Further complicating matters: Greenhaus says he went back 100 years, and couldn’t find a single example of a situation where the President had a split Congress. Usually, he said, both houses turn together. What this could mean, obviously all the returns aren’t in yet, is that Obama may have less to fear from Congress than, say, Bill Clinton did in 1994, since nothing that comes out of the House will get past the Senate, Greenhaus said. So this idea that Obama may have to tack to the center just may not come to fruition this time around.
“These guys can’t come close to repealing healthcare,” Greenhaus said of the tea partiers, “but they’re gonna give it a try.” So the GOP, out of some ideological zeal, is going to waste as much time trying to repeal the healthcare bill as the Obama administration did trying to get it passed. Meanwhile, precious time will be wasted (remember, this is not a fully functioning economy.)
And all the big questions and problems, tax cuts, financial reform, government spending, won’t be solved with a hopelessly divided government, he said.
He pegged the over/under on GOP advances in the House at 50; less than that would rob the Republicans of a clear victory, and a larger mandate. But more than how many seats change hands, he said, is how the divergent views of the new Republican Congressmen play out. The rowdy tea partiers who are making the big splash tonight may not hold much sway with the GOP leadership. Their policies sound good, he said, but they don’t poll so well. That dynamic will be more important that how many seats are won or lost tonight, Greenhaus said.
Barry Ritholtz nails the problem with the Obama administration:
The great irony is that the man who ran on the campaign slogan of Change failed to deliver it in any meaningful way — at least, where the public wanted it — in getting the reckless runaway banks under control, and in stimulating the moribund, post-credit crisis economy.
Read the whole post. It’s a better take on the same topic I wrote about yesterday, that Obama wasted a chance to do something big, something lasting, something important. Instead, he went for healthcare.
I’m starting to think, too, for whatever it’s worth, that the Democratic calculus at some point became, who cares if we lose the midterms, that’s a historical fight we’re not going to win anyway, let’s do the healthcare bill. Which stinks, frankly. They should’ve gone big on the economy, as big as possible. They should’ve forced some real accounting from the financial industry, instead of that milquetoast reform bill and those white-wash stress tests.
But, think about this: the electorate has rejected the GOP, in 2006 and 2008. They’re rejecting the Democrats tonight. They’re angry. They’ll probably still be angry after two more years of what promises to be rabidly partisan politics. Who are they going to reject in 2012?
God, I hope it’s both parties. I think it’s too much to hope for, but I’m hoping for it all the same.
By the way, I’ll be on WSJ.com’s live election show tonight at 9:25 p.m. with MarketWatch’s David Calloway discussing the market implications of gridlock returning to Washington.
Now, the stock market generally like gridlock, because if Washington’s not getting anything done, in general it clears the deck for Wall Street to do what it does so well.
Jeffrey Kleintop, chief market strategist at LPL Financial, lays out the general idea:
Historically, the stock market has performed better under periods of gridlock, but this record is far from consistent. Not surprisingly, other factors appear to bear more weight than politics. On the other hand, the bond market clearly has performed much better during periods of gridlock, most likely because investors assign a lower probability to the passage of new spending initiatives that would increase the debt supply.
But there’s good reason to doubt the conventional wisdom. Nick Godt over at MarketWatch says gridlock actually isn’t good for stocks, citing S&P data going back to 1900.
Standard & Poor’s cranked up its database and found that since 1900, the market performed worst in the two years after midterm elections that yielded total gridlock, with a split Congress, and best under total unity, with a unified Congress and an administration of the same party.
Looks like the first tea-party victory’s been won, as a number of media outlets, including CNN, Fox News and ABC are declaring Rand Paul the winner in the Kentucky Senate race, defeating the state attorney general, Jack Conway. Paul will replace the retiring Jim Bunning, and will join his father, Ron Paul of Texas, in Congress.
Elsewhere, Republican Jim DeMint in South Carolina and Democrat Pat Leahy in Vermont appear to have won reelection.
Dow Jones Industrials, Economy, Federal Reserve, Markets, S&P 500 / Comments Off
US stocks post steady gains on hopes that the midterm elections will yield a change in leadership and the Fed tomorrow will announce a sufficient amount of quantitative easing.
DJIA closes up 64 (0.6%) to 11189, led by Home Depot, American Express and Microsoft. The blue-chip index rose for third-straight day and registered its biggest gain since Oct. 20. But, as Newswires’ Tomi Kilgore reported, the Dow failed yet again to close above 11200. From Kilgore:
The DJIA made it’s fourth intraday foray above 11200 in two weeks but once again failed to close above it. The DJIA hit an intraday high of 12220 but closed at 11189. The DJIA had hit intraday highs of 11214 on Oct. 21, 11248 on Oct. 25 and 11244 yesterday, only to close those days at 11147, 11164 and 11125, respectively. The last time the DJIA closed above 11200 was April 26 (11205).
S&P 500 climbs 9 (0.8%) to 1194, fueled by utilities, energy and consumer discretionary sectors. Nasdaq Comp rises 29 (1.1%) to 2534.
ADP’s monthly private payroll forecast, ISM non-manufacturing data and September factory orders on tap for tomorrow. But the spotlight will remain on the Fed (as its arguably been for the last few months) and its highly-anticipated QE2 announcement, expected tomorrow afternoon.
Yves Smith over at naked capitalism raises a great point: our electoral process leaves a few things to be desired. In a word, my word not hers, it stinks. Smith reflects on the process in Australia, where she lived for a few years, and notes how the policies there produced a better informed, more engaged electorate:
One of their strong points was politicking and voting. Australia didn’t, and I hope still does not, permit paid TV ads. Each party (or was it candidate? I never was clear on the mechanics) who scored above a very low threshold got a certain amount of free air time. This took the big reason for fundraising out of the picture. And the result, a limit on how much TV advertising their was in total, seemed to have the effect that people got proportionately more of their information about politics via print, which allows for longer form discussion.
Another interesting feature was that voting is a duty not a right. I was surprised at about month three in my apartment there to get a sternly-worded official notice, which wanted to know who the hell I was and why hadn’t I voted. If you don’t vote, you get fined.
The net effect of these policies, in combination with native Australian skepticism, was an informed and engaged electorate.
When’s the last time you heard a politician here talking about changing how we vote? That’s not a rhetorical question; I’m serious. If you have an example, email it to me. Nobody talks about reforming the electoral process, despite the fact that barely half the voting population turns out to actually vote, meaning that essentially one quarter of the population is electing the representatives.
There is, of course, a very good reason why nobody running for office wants to change the process of getting elected. It’s easier when fewer people vote. Want to know when you’ve got a candidate on your hands who really wants to rock the vote? When you have someone who wants to change how we vote.
Economy, Federal Reserve, Markets, Washington / Comments Off
It’s another session of Market Talk taking over the Markets Hub, as John, Steve and I gather together to discuss the midterms, the dollar and the Fed.
Markets / Comments Off
This election is about more than witches and Satanic alters, the Civil Rights Act of 1964 and whether prisons make suitable habitats for poor people. It’s about the heads-we-win, tails-you-lose mentality that pervades far too much of Washington, in the form of “special interests” that fatten our elected politicians like foie-gras ducks with “contributions,” as they call them. Sadly, this isn’t about to get any better.
Barry Ritholtz makes the point over at The Big Picture:
Banks and investment houses spent the last 30 years pouring money into congressional elections, influencing regulations and oversight of their industry. They managed to exempt derivatives from any and all oversight, increase leverage from 12-to-1 to unlimited, repeal Glass-Steagall limits that kept Wall Street and Main Street Banks separated, create a new “Lend-to-securitize unregulated banks.
The most recent decade saw the rise on the Shadow banking system — it existed outside of any supervision or government regulations.
The end result of this: A Financial collapse, frozen credit, and the worst recession since the Great Depression.
Fast forward to the mid-term elections:
While most of the electorate is focused on tax cuts, deficit spending, the tea party, and who might have practiced witchcraft, my biggest concern is none of the above. The threat to long term economic health will be the attempted roll back of the re-regulation of the financial markets.
Milquetoast as financial reform was, I fully expect a run at overturning the recent FIn Reg reforms. As hard as it is to believe, 1980s era deregulation-speak is already coming out of the not-yet elected, bank-backed candidates and their deep pocketed corporate sponsors.
Internet / Comments Off
I remember the first time I saw “Star Wars” like it was yesterday, even though it was the summer of 1977. Every kid who saw the movie that summer does. There’d never been anything like it before. It even blew away Star Trek reruns. Everybody I knew wanted to be Han Solo or Luke Skywalker and every girl wanted to be Princess Leia. Maybe some real contrarians wanted to be Darth Vader, but nobody wanted to be one of those nameless Imperial soldiers in those vaguely Nazi-like uniforms.
According to Josh Brown, though, that’s exactly what we are.
Brown, over at the Reformed Broker, aligns the financial blogosphere into the Star Wars universe in his now-annual rundown. Seeing as who employs us, we were put into the “Death Star” group, along with Floyd Norris, MarketBeat, Alphaville and the Curious Capitalist. It’s all the mainstream media players, basically. Okay, I get it. But that makes us the bad guys.
We should be happy just to have made the list. We didn’t make last year’s version. And I’m certainly not going to quit my job just to be with the cool kids in the Rebel Alliance group, where Brown, ahem!, puts himself. But I never imagined myself as the kind of guy who’d sneer “you rebel scum.”
But, hey, if I only knew the power of the Dark Side.