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Massachusetts Changes Things !!
By Marek W. Stupka | January 21, 2010
This week’s stunning victory by a conservative Republican Scott Brown (elected to the U.S. senate) in the genetically liberal climes of Massachusetts will very likely have a far greater long-term impact on the financial markets than what we may realize today.
Republican Scott Brown won a tough Senate race to succeed the deceased liberal Edward Kennedy, giving Republicans 41 votes in the chamber consisting of 100 members, and depriving Democrats of a “super majority” needed to pass the proposed pieces of legislation. The Republican win means Obama’s plans for healthcare (mainly passing the long-debated healthcare bill), climate change, financial regulatory reform and fighting unemployment could suffer from the new power structure in the Senate.
The stock market is set to reflect the impact of the Democrats’ Debacle in Massachusetts. The Dow is now down more than a 200 points after rising to its peak levels since the recession begun.
However, true meaning of the new Senate lineup is only about to impact the financial world in the coming weeks and months. Apart from initial enthusiasm on Wall Street, caused by the fact that the healthcare sector is likely to record higher profits after Mr. Brown’s victory, the new Senate power structure also means that all consequent Obama’s regulatory reforms will meet strong resistance coming from the opposite political camp.
This will most likely affect Obama’s plans for another targeted governmental financial injections coming on top of the $787 billion stimulus package he signed in February 2009, especially the so much discussed $155 billiion job bill, which is now, after having passed in the House of Representatives, expected to leave the Senate in a new, “republicanized” version.
As many of us following the market fundamentals are very well aware of, the still lingering fears among global investors of another market meltdown were being downplayed till now by pointing to the fact that whenever the US government smells the markets are about to deteriorate again, Obama simply provides for a new bailout money, and the danger just disappears… Well, after Brown’s victory, things are not as pink-’n-bright for Wall Street as they seemed just days ago! Get ready for an inevitable market correction. TO ALL MY STUDENTS: In the FOREX market, get ready to use the ALEXANDER Trading System! We will be able to make juicy profits on the new technical trend that is just developing !! (I’ll publish another post with the technical analysis of the majors anytime soon).
Topics: News From Wall Street |
January 27th, 2010 at 1:54 pm
Hallo
I am new to this blog and I like it so far
good, insightful articles, not too long, covering the main hot topics of the present day
I’d like to ask Marek if he sees another major trend developing in the forex markets after the altered political landscape in the US
especially in connection with Obama’s fading popularity
also Obama should be giving a speech on the state of the economy tonight, what do you think of the real impact this speech will have on the forex markets?
thanks, D
January 27th, 2010 at 2:26 pm
Hallo Dominique,
I wouldn’t necessarily say the price action we are witnessing today in the major financial markets (Dow, S&P, oil, gold, EURUSD, etc.) will result in developing a new major countertrend to the 2009 market boom.
What I think, however, is the markets are correcting in the most apparent way since March 2009 , with many big investors collecting profits after the pretty impressive rally that started in March and ended in December 2009. The reason for this is, without doubt, the new Massachusetts senator chosen from the Republican camp, and the implication his election has had for the US power structure.
Over the short- to mid-term, however, I see a number of great trading opportunities for the major financial markets. At Gepard Investments, Inc., we have a special trading system developed for this kind of market phases, called THE CONFIRMATOR. The system is in its fullness at the disposal to every single one of my students - it can be at your disposal too if you decide to enroll to my course. This also is the system I am referring to in the end of my article.
And I agree , Obama’s popularity is fading. I feel a bit sorry for the guy, unfortunately, this deprivation of glory and fame was inevitable for him - after the “free ride” he has provided for Wall Street for almost the entire year of 2009, now when he is no longer able to guarantee financial aid to flow into the wallets of the Wall Street sharks, he’s being sacrificed by them in order to get more freedom of move and of trade.
In some way, it is very unfair. We should not forget that, apart from the former US Government, it was the Wall Street - and the US banking sector - that caused this recession to boom in the first place. Now, the same guys that caused this mess have been financially helped in a major way by Obama’s new administration. And after the help is no longer coming they turn away from the guy and literally sacrifice him for the sake of another profit maximization.
Well, but like one famous guy once said - The world is not fair. Deal with it!
To stay unbiased, however, I also should mention that truly, a nice sweet portion of the bailouts initiated by Obama’s administration in 2009 was implemented unreasonably, or even wastefully. Had a wiser (and tougher) political persona been elected president, we should be seeing less money spent on bailouts and more saved for the future.
In any case, we investors are not here to present our political likes and dislikes. We are here first and foremost to make money backed by a thorough fundamental and technical analysis of the markets today. So the real question of our current day is> can we make money on Massachusetts? The answer is> WE DEFINITELY CAN. I believe I have already explained how in my lines above.
As for Obama’s speech tonight, I don’t think it will influence the markets in a fundamental way. Sure, he will mention the budget cutting he is about do in the White House, but this, when compared to the already spent billions, is not going to have a great impact - just do the math and you’ll see why. In any way, it might be a good idea to listen to what the guy has to say, for finding some clues on what his thinking is now, in light of the new situation.
P.S. I find very fitting the citation of one republican politician, who said this week that “Obama’s planned budget cutting can be compared to a guy who just won a pie eating contest and is now announcing that he is going on diet”.
Happy trading,
Marek