Wednesday, November 12, 2008

Will President Barack Obama Buoy Wall Street Stocks?

I want to make one thing plain. Blaming Barack Obama for Wall Street's woes would be a ridiculous position at this point. That doesn't mean that Barack's ideological and philosophical positions won't have an effect however, nor does it hold blameless the entire public works-big government apparatus that "spreads the wealth" by taxing the well-to-do.

The stock market has been behaving weirdly these days, no doubt. On election day, there was a significant rally in the major averages. That didn't stop pundits from crediting Obama's election as a positive believe-in-the-Democrats force on the Street. But it didn't take long for the news to sink in that Obama brings to bear a whole raft of policy issues that would work against Wall Street profits, including more regulation, or rather, selective regulation.

The latest Pelosi-Reid-Obama concern is to pay back the unions for their financial and political support. The UAW figures significantly in Obama's entreatment of President Bush to support a Big Three bailout. That would certainly help the stocks of the Big Three, but what would the Obama policies do to the others?

For these and other reasons, there seems to be little Wall Street credibility in an Obama future of "change." Already beaten up indexes have sustained almost unrelenting beatings since the election. The Wall Street indexes do not directly respond to any president and are best regarded as a "leading indicator."

That means that financial wizards are looking down the road six months or more and responding to future conditions. There would be less worry over an Obama presidency had the candidate not raised expectations so much by attacking the economic policies of the Bush administration.

There may be hell to pay when the bloom comes off the rose.

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