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.
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.
Washington / Comments Off
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.
Economic Indicators, Economy, Markets, Washington / Comments Off
It’s Election Day here in America, which means one thing: About a quarter of the population, maybe even less, will once again hand the reigns of power over to some new group of politicians promising change who will quickly drown in the fetid swamp upon which Capitol City was built.
Sound cynical? Perhaps, but hey, maybe I’m wrong. Maybe a re-energized GOP will force “change” in Washington, maybe the left and right will join hands and work together to craft legislation for the betterment of the nation. If “Jersey Shore” can get renewed, anything’s possible. But when anger is apparently a winning campaign platform, it’s hard to feel very optimistic.
On a programming note, I’ll be working today and tonight on the elections, as part of WSJ.com’s live show tonight (8 p.m.-2 a.m.) Since I’m going to be here anyway, I’ll also be keeping things lively here and on our Twitter stream.
Kent Engelke, over at Capital Securities, has this take on the election:
Perhaps the only certainty to write about today’s election is that the winners might be the next losers. In my view society is angry and tired. It is now demanding accountability and common sense approach to policy, perhaps demanding the end of the entitlement era. If the environment does not change by 2012, I believe there can be yet another change.
John hit on something very important this morning in his post on hardship. The fact is we suffered a deep wound, and millions of Americans suffered from it. But the political reaction, no matter what the politicians say, wasn’t to bailout the citizenry, or even “the system,” it was to bail out the politically connected players, and those were almost exclusively big corporations. That the “solutions” offered didn’t seem to actually solve much of anything makes that point all the more clear.
That’s what this election is all about. It’s probably what the next election will be all about as well.
Dow Jones Industrials, Economy, Federal Reserve, Markets, S&P 500 / Comments Off
The stock market’s precipitous rise over the last few months has been based on two main events: the midterm elections and the Fed engaging another round of quantitative easing. Now that those events are scheduled to happen tomorrow and Wednesday, respectively, Wall Street’s spooked that there aren’t any major market-moving events on the horizon. Today’s “Technically Speaking” column highlights several catalysts that TrimTabs points out which could move the market through its 2010 highs after the elections and Fed meeting are over:
Despite some investor worries, there are catalysts beyond this week’s highly anticipated events that could continue to push stocks higher.
U.S. stocks have surged over the past two months as Wall Street has been focused on Tuesday’s midterm elections and the Federal Reserve’s bond-buying program expected to be announced Wednesday. Now that the events are finally imminent, some have speculated the market could experience a bit of a hangover.
However, that hasn’t stopped TrimTabs Research from turning optimistic. TrimTabs, an institutional research firm, said it is back to being “cautiously bullish” on U.S. stocks, one week after it turned neutral, because of a jump in net corporate buying, strengthening in labor market demand and continued liquidity injections by the Fed.
TrimTabs noted corporate share buying, which includes new cash buyouts and stock buybacks, rose to an eight-week high of $22.2 billion in the past week, while new corporate offerings remained light at $3.7 billion. In addition, online job postings continue to rise while jobless claims have declined, the firm said.
Furthermore, the Fed’s previous moves to add liquidity as well as its expected bond-buying program on Wednesday should continue to boost the prices of risky assets, including stocks. “The Fed’s money printing is the main reason stocks have rallied so much in the past one-and-a-half years,” TrimTabs said in a recent note.
The main reason TrimTabs didn’t turn “fully bullish” is because it believes the Fed’s latest efforts to stimulate the economy may largely be priced into the market.
If you want more insight into how the Dems totally wasted their golden opportunity and lost not only the electorate but stand on the cusp of losing Congress, check out the interview with Brian Baird, a six-term Representative from Washington who’s getting out while the getting’s good, in the weekend Journal. Baird’s got some rather pointed things to say about his fellow Democrats, and Washington in general.
Stuff like this is always so much valuable when the speaker in question is still in a position to, you know, change things, and one wishes Baird had talked up when he was still a practicing Congressman (which for all I know he actually tried but got nowhere.) Still, it’s amazing that nobody in Washington ever feels the wind blow until they’re on their backsides wondering what the Sam Hill just knocked them over.
It took Democrats in the House of Representatives 40 years to become out-of-touch enough to get thrown out of office in 1994. It took 12 years for the Republicans who replaced them to abandon their principles and be repudiated in 2006. Now it appears that the current Democratic majority has lost voter confidence in only four years.
How did this happen? And what does the increasing speed of voter backlash mean for Republicans who will likely take control next Tuesday?
Yeah, it means something. It means we’ve got such a here today, gone tomorrow culture that the GOP could lose the majority it appears to have today by, like, tomorrow. Like, election day tomorrow.
I meant to highlight this earlier this week, but just got caught up in all manner of other things. Still, this week’s must read is Barry Ritholtz’s post at The Big Picture, “The Left-Right Paradigm is Over: It’s You Vs. Corporations.” Ritholyz says the old left-right split, a clear fault line since the heyday of Abbie Hoffman, has been replaced by a new fault line. If you’re a CEO, you may want to avert your eyes:
We now live in an era defined by increasing corporate influence and authority over the individual. These two “interest groups” – I can barely suppress snorting derisively over that phrase – have been on a headlong collision course for decades, which came to a head with the financial collapse and bailouts. Where there is massive concentrations of wealth and influence, there will be abuse of power. The individual has been supplanted in the political process nearly entirely by corporate money, legislative influence, campaign contributions, even free speech rights.
This may not be a brilliant insight, but it is surely an overlooked one. It is now an individual vs. corporate debate – and the humans are losing.
Everybody plays this left-right split like it’s Monday Night Football. We cheer and root for “our team” to win, win elections, win debates, just win. The right has a rally in Washington. The left has a rally in Washington. All the problems in the world are seen through this prism and the other side is always at fault. It’s an easy, familiar split, something even media pundits can grasp.
But that left-right split is just not the important one anymore. It’s not the fault line that matters.
This isn’t a good time to be headless.
Japanese Prime Minister Yukio Hatoyama, make that former Prime Minister, abruptly resigned Wednesday, mainly over his acquiescence to American demands over the Okinawa military base. But he also was having trouble getting his economic plans in place, and his administration had a little issue with scandals. Lastly, his haberdashery skills were tragic.
Japan’s last four prime ministers have all stepped down in a year or less. That’s extreme political drift.
Hatoyama’s resignation, and the American source of it, leave a question mark over how his successor will handle Japan-American relations. But it doesn’t help the global economy to have such rapid-fire turnover in the leadership of the world’s second-largest economy.
And that’s the real issue.
It’s not just in the Land of the Rising Sun. Look around. Can you name one world leader who seems to have a firm grasp on not only their own state’s problems, but the bigger picture of what’s going on in the world today? Crises are supposed to produce great leaders, a Roosevelt, a Churchill. See anybody like that stalking the world stage? The world is turning into something new before our very eyes, but the people we task with guiding us through that seem to be completely blind to it.
Listen, one way or another, life is going to go on, and our little villages and states and economies are going to become what they are going to become. The problems of one little planet don’t amount to a hill of beans in this universe. But it would be a lot easier is we had somebody competent to navigate the waters.
Dow Jones Industrials, Earnings, Markets, S&P 500 / Comments Off
US stocks rally, led by healthcare stocks, amid a hotly contested fight in Massachusetts for Ted Kennedy’s Senate seat that could upend the political calculus for just about everything.
DJIA jumps 116 (1.1%) to 10725, S&P 500 rises 14 (1.3%) to 1150, Nasdaq Comp gains 32 (1.4%) to 2320. Every sector gains. Citi posts big 4Q loss, but 2009 proves better than 2008, so there’s something.Kraft finally satisfies its chocolate craving.
But it’s healthcare that leads the way, on hopes that GOP will be able to block healthcare reform bill. Apparently, to Wall Street, even if Scott Brown doesn’t actually win the Senate seat, the fact that the GOP’s put such a big scare into the Democrats — and especially Martha Coakley, who’s taken flak for everything from calling Curt Shilling a Yankee fan to have a Kennedy get her name wrong — is enough to upend the political calculus.
And if he does win, and the Democrats try to rush a final bill to President Obama’s desk before Brown can take his seat, well, that just won’t look very kosher, no matter how they characterize it. This is the downside to trying to push through a healthcare bill, even though there were more pressing matters to attend to.
I’ve long thought the Democratic party pushed healthcare because it knew it had a iron-clad majority to get any bill through, something that might not last past the 2010 midterms elections. As it turns out, it might not last past tonight.
(Correction: an earlier version of this post, as noted by Dow Jones colleague and Red Sox fanatic Geoffrey Rogow, misspelled Curt Shilling’s name. It has been corrected. (Good thing we’re not running for higher office in Massachusetts.))