How will the election affect the markets?

[The Marmot]

What will an Obama win produce? What will a McCain win produce?

[Ragnar Hogbrok]

I'll try to keep from being political by using subjective speculation.  Here we go:

An Obama win will probably mean status quo or more economic downturn.  Here's my reasoning:  Letting the "sun set" on Bush's tax cuts will hurt EVERY American's wallet.  We are already being kicked in the nads enough with the weak dollar, high fuel prices, banks denying to lend, etc, that more money out of everyone's pockets will be a devastating blow.  Couple this with his pledge to bring home the troops immediately.  I've read that an immediate withdraw from Iraq would cost the same amount as keeping troops in Iraq for four years.  The cost of the logistics would be astronomical.  Unless is was a prolonged draw down taking longer than Obama's first term, it would cost a whole lot of money we don't have.

A McCain win would probably mean lower taxes than an Obama win, but would the Bush tax cuts remain?  We don't know.  I haven't heard McCain's specific tax plan, except that he's for some form of lowering taxes.  This would be an immense help.  When we all feel the pain in our pockets, leaving more money in our paychecks can only help.  I also believe that McCain would make a more thought-out withdraw from Iraq costing much less over a longer period of time. 

These are my views, I've been wrong before.

[hawgbawb]

What will an Obama win produce? What will a McCain win produce?

What will an Obama win produce? What will a McCain win produce?

Historically the S & P 500 does notably better under a Democratic administration.  Seeing that it has done miserably under Bush (less than a 1% annualized return over his 7.5 years, adjusted for inflation) I expect that the cycle will turn up early during Obama's term. Having said that, I do think that the economy is in a tough spot, and this has the potential to be a severe recession. But the market is forward-looking by 6-12 months, and thus the bottom will likely be during the depth of the recession, with a bull market leading the way out. 

[The Marmot]

What about specific markets? Will the pharma/health care market go bull with an Obama win in anticipation of a new gov't health care initiative? Will the defense market go bull with a McCain win or go bear with an Obama win? How might the finance market respond to the election?

[cdhogfan]

What will an Obama win produce? What will a McCain win produce?

I'm not sure, but I'm willing to bet that the U.S. is tired of the direction we are going under Bush and that they would expect the same from McCain.  It is a shame that every newborn thes days are inheriting 30,000 of debt the day they are born.

[hog.goblin]

I fear, more than anything else, Obama's proposal to raise social security taxes.

Except for taxes, I think the economy generally heads on it's own course inspite of the influences Congress or the President put in place.

Because it's a double tax, shared by both the employers and employees, I think this will cause a huge increase in unemployment.  Medium to large size businesses will have to lay off many middle class individuals to keep profits where they are today. 

The tax on a mid-level manager making $130K per year just went up by $4,200 (again, to be split by employer/employee).  That's a huge increase, particularly on those businesses that employ a high number of middle income jobs.

It also puts social security in greater jeopardy as benefits are directly correlated to dollars put in...so the government is promising more benefits yet not saving the increase in current revenue.  That spells disaster.

Ultimately it will have a negative impact on the entire market.  Both with capital in greater demand and smaller supply, manufacturers will be hit the hardest...meaning the loss of lower-paying jobs.

[ConwayHog]

Historically the S & P 500 does notably better under a Democratic administration.  Seeing that it has done miserably under Bush (less than a 1% annualized return over his 7.5 years, adjusted for inflation) I expect that the cycle will turn up early during Obama's term.

Could you post a link (if you have one)?

[Throwback1]

I'll try to keep from being political by using subjective speculation.  Here we go:

An Obama win will probably mean status quo or more economic downturn.  Here's my reasoning:  Letting the "sun set" on Bush's tax cuts will hurt EVERY American's wallet.  We are already being kicked in the nads enough with the weak dollar, high fuel prices, banks denying to lend, etc, that more money out of everyone's pockets will be a devastating blow.  Couple this with his pledge to bring home the troops immediately.  I've read that an immediate withdraw from Iraq would cost the same amount as keeping troops in Iraq for four years.  The cost of the logistics would be astronomical.  Unless is was a prolonged draw down taking longer than Obama's first term, it would cost a whole lot of money we don't have.

A McCain win would probably mean lower taxes than an Obama win, but would the Bush tax cuts remain?  We don't know.  I haven't heard McCain's specific tax plan, except that he's for some form of lowering taxes.  This would be an immense help.  When we all feel the pain in our pockets, leaving more money in our paychecks can only help.  I also believe that McCain would make a more thought-out withdraw from Iraq costing much less over a longer period of time. 

These are my views, I've been wrong before.

McCain has said it would be economically foolish to let the Bush tax cuts expire with today's economy.

Markets react to ideology.  If Obama wins, the money people know that taxes are going up, and that the private sector will suffer.  The markets go down immediately.  If McCain wins, they probably get a slight nudge of optimism, but still too many problems to get better fast.  Noted that when the Republican's took control of Congress for the first time in 50 years, the day after the elections in Nov. of '94, the stock markets erupted, which was predicted and predictable.  Generally, taxes bad, tax cuts good.

[RazrRila99]

Tax cuts are great and all, but there needs to be someone come in and balance everything!!!  If you have $100 income you cant have $150 expense, thats the situation we are in right now.  With layoffs, bad economy its only going to get worse.  If a person isnt working, no matter what happens with the tax rates no taxes are being paid.  To be honest, my taxes were never affected with the tax cuts, I did not then and do not today feel the affect of those cuts.  There needs to be a COMPLETE overhaul of the tax code, called a flat tax, no deductions for every dollar you make you pay a percentage in. 

As for Iraq, we are there, a timeline needs to be put in place and adhered to.  We cant just yank all our troops out at once, too much insolvency to do that.  Say a three year stance is taken, if after two years Iraq can not stand on its own or has shown no desire or attempt at this we bring the troops home.  Someone needs to put pressure on them to stand on their own feet or it will be another Vietnam. 

I have NO idea where I am leaning right now.  Its going to be a long 5 months for me deciding, and probably wont until I put the X on the paper.  Yes in Missouri we still use "scan tron" forms. 

[Throwback1]

...then we'll have some fun...can't wait.

[Ragnar Hogbrok]

i'm afraid people are going to think voting for a democrat is going to help the economy turn around and obama will win for that reason.

Well, if that happens, then stocks will be cheap and it will be time to invest before the country comes to its senses and elects someone with sound fiscal understanding.

[Throwback1]

1976 all over again...hmmmmmmm

[ConwayHog]

To be honest, my taxes were never affected with the tax cuts, I did not then and do not today feel the affect of those cuts.   

Do you make less than $7-8K in taxable income?  I believe the tax cuts affected pretty much all tax brackets.  Then again, it's been three years since I've looked at the matter.

[Throwback1]

They only failed to effect familes with incomes of less than $25,000 annually.

[hog.goblin]

They only failed to effect familes with incomes of less than $25,000 annually.

Incorrect...actually it's not a hard number.  Depends on whether you work, how many kids you have, etc.

The child tax credit was increased and refundable.  So if you work, but don't make much, and have young kids, you can get back all income tax withholding, plus the earned income credit, plus part of your social security and Medicare taxes.

Without kids, you had to make at least more than the standard deduction and personal exemption...then the next $6,000 (singles) and $10,000 (marrieds) was at a lower tax rate.

So yes, it helped virtually everybody to some degree except those without income or children.

[SultanofSwine]

A tax code change that moved us from an income/accumulation tax to a consumption tax would more greatly benefit the markets and the taxpayers in this country than about anything I can think of. Doubt it ever happens though.

I really feel like the Obama/McCain race is less important to some extent than the congressional races. If the Dems win big, even if McCain is elected the votes may be there to override veto's on fiscal matters.

This will be my first election where I really feel there is no real viable choice that I have confidence in seeing real/sound fiscal leadership.

[Throwback1]

"I really feel like the Obama/McCain race is less important to some extent than the congressional races. If the Dems win big, even if McCain is elected the votes may be there to override veto's on fiscal matters."

...maybe, but the Congessional outlook is what actually does make the Obama/McCain race even more critical.

[SultanofSwine]

Dont disagree with that at all. It's sorta like going to baskin robbins and the only flavor they have is dingleberry surprise, you can get it in a cup or a cone...the choice is yours.

[HogNuttz]

Question:


Why have we only had one President who was an economist and all the rest are lawyers? 

Ask yourself these two questions:
Has our President ever had to defend our country in a court of law?   

Has our President ever had to help guide our economy?









Doesn't make much sense does it?  If it doesn't make sense, it can't make dollars.