Let's see, what will it be today? Tuesday it was Warren Buffett bailing out the bond insurers (false), and yesterday it was news that retail sales were much better than expected (false).
Yesterday's retail sales increases were mostly gasoline purchases, and masked were the declines in sales at department stores and building materials.
This Chart is courtesy of Mike Panzner
This morning's economic data showed that jobless claims came in right in line with expectations, and the trade deficit fell more than expected.
The Labor Department reported that the number of workers seeking unemployment claims fell by 9,000 to 348,000 last week, and the Commerce Department said the U.S. trade deficit fell in 2007 for the first time in five years.
This morning, Fed Chairman Bernanke, Treasury Secretary Paulson and SEC Chairman Cox testified before the Senate Banking Committee. Chairman Bernanke said that "tighter credit will restrain growth". He went on to say, "The softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term".
In stock news, UBS took an $18 billion hit on write-downs from the subprime mortgage crisis. This crisis is still unfolding, but as Warren Buffett says, "Only when the tide goes out do you discover who's been swimming naked."
Sticking with this theme, when the tide goes out, the sand dollars appear and are left behind for us to pick up.
2008 Elections: Investment Implications
Government policies over the next several years could have a profound effect on specific industries rather than on the total stock market.
At the beginning of 2008, Intrade, an electronic market that actively takes bets on different outcomes, gives the upper hand to Democrats. Intrade, suggests the Democrats are favored to win the White House (61% probability), the Senate (88%), and House of Representatives (88%).
Wall Street has been trying to sucker you in to buying Healthcare stocks during this period of economic weakness. The sector is being touted as a "safe haven" during these turbulent times.
The reality is Democrats historically have allowed the federal government to negotiate or even set the prices it pays for goods and services under Medicare and other programs. This will have a direct affect on the profitability of pharmaceutical and managed care companies.
In recent years health care inflation has eaten away a large chunk of consumer and business incomes. While consumers vote for candidates who they think will solve their problems, they often are disappointed by the end result.
For example, remember the President's Medicare Part D prescription drug plan? It was reported by ourfuture.com that "the health industry gave $14 million total to the eleven elected officials largely credited with negotiating the bill".
If Hillary Clinton is elected, the US is unlikely to have Universal Healthcare since Mrs. Clinton has received hundreds of thousands of dollars in campaign contributions from doctors, hospitals, drug manufacturers and insurers for her 2008 presidential bid.
Barack Obama on the other hand is seen as a major threat to the Healthcare industry. Obama will find out that passing Universal Healthcare is not as easy as he thinks. He may not be bought and paid for by the healthcare industry, but 2,084 health care lobbyists are slithering through the halls of Capitol Hill everyday passing out money.
Top Industries Supporting Obama
Top Industries Supporting Clinton
Since Lawyers, and or Law Firms, are the top industries supporting both candidates, I think it's safe to say that we all must protect our nest eggs with liability insurance if Clinton or Obama are elected.
Top Industries Supporting McCain
In Summary, each candidate will have a different investment impact for these sectors if they are elected President;
John McCain: Buy Oil, Defense, Pharmaceuticals, and Managed Healthcare stocks. War in Iraq will continue, and I'm raising the odds of more US military involvement in the Middle East.
Barack Obama: Buy Technology, Alternative Energy (Solar, Wind, Renewables). Reduce exposure to Integrated Oils and Energy. Sell, or Short, Managed Healthcare and Pharmaceuticals. War in Iraq will end.
Hillary Clinton: Buy technology, Alternative Energy (Solar, Wind, Renewables) and buy Pharmaceuticals and Managed Healthcare after the initial sell-off. Reduce exposure to Integrated Oils and Energy. War in Iraq will continue much longer than Hillary led you to believe.
Are these three candidates are the best that America can come up with? How sad is this?
