The stock market is due a bounce after the election, regardless of who wins. But after that, the voter’s choice will have a big impact on industry winners and losers. Rick Pendergraft says biotech and alternative energy stocks should get a lift under Obama, while defense and oil will benefit from a McCain victory.
How will the stock markets respond to a new US president? Martin Delholm says the impact will be less than some people expect. But some sectors will benefit from a regime change. With Obama the clear favourite to win, Martin recommends three clean energy stocks likely to gain from new subsidies.
We are not going to see the world’s best businesses this cheap for a long time, says Dan Denning. He says it’s not hard to imagine another round of global rate cuts and a massive stimulus package in the US. And then there is the ‘Obama effect’. In other words, if you don’t want to own these equities now, why bother being in the market at all?
The US consumer confidence index plunged to an all-time low of 38 in October, down sharply from 61.4 in September. Economists surveyed by Bloomberg anticipated a reading of 52.
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The dimming outlook signals consumer spending, which accounts for more than two-thirds of the economy, will deteriorate further, deepening the U.S. slump.
“The economy feels like it is contracting at a rapid pace,” Lewis Alexander, chief economist at Citigroup Global Markets Inc. in New York, said in a Bloomberg Television interview. “It’s clear that consumers have really been affected by the volatility we’ve seen in the last six weeks.”
The report underscores voter discontent with the country’s direction heading into the Nov. 4 presidential election. A majority of voters think Illinois Senator Barack…
Futures traders are betting heavily on an Obama win. His rival, John McCain, has dropped to 35% on Intrade. It’s a new low for the Republican as the economy remains top of the news agenda.
– There really must be a financial crisis. John “the fundamentals of our economy are strong” McCain has suspended his presidential campaign to to return to Washington to work on the proposed $700 billion bailout bill of financial institutions before Congress.
– Meanwhile, McCain’s fellow Republican George W. Bush made a televised appeal for the swift passage the plan. He said the “entire economy is in danger” and warned of a “financial panic” and “a long and painful recession” if Congress didn’t pass the bill soon.
– Billionaire investors Warren Buffett has sent US stock-index futures rallying after his Berkshire Hathaway announced it will buy $5 billion worth of perpetual shares in soon-to-be bank-holding company Goldman Sachs (NYSE:GS). The news sent shares in Goldman up almost 8%. Shares in Morgan Stanley (NYSE:MS), which is also converting into a bank, rose 9.8%.
– December-dated S&P 500 futures rallied 13.10 points, Dow futures were up 101 points, and Nasdaq-100 Index futures rose 18 points on the news. Yesterday, US stocks ended the worst two-day rout since 2002.
Never mind the credit crisis, record energy prices, declines in payrolls, wages, and house prices. John McCain’s economic adviser, Phil Gramm, thinks US economic woes are merely psychological.
The Times said Gramm said he expects a McCain administration would inherit an economy “weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.”
Investors better keep an eye on bonds this week.While the stock market may be more fun to follow, fixed income is often a stronger gauge of investor expectations of the economy, future U.S. Federal Reserve policy, and inflation.
A week that saw the war on taxpayers expand onto to several new fronts also saw US Senate Republicans win a pitched procedural battle to keep gas at the pump grossly inflated.