Tuesday, January 19, 2010

Helluva Job, Brownie

The checking and balancing of American electoral politics has occurred in a manner too fanciful for Hollywood. A triathlete, military-trained, former model turned attorney has, only 14 months after Barack Obama's sweeping victory, become the first Republican elected to the Kennedy seat in Massachusetts since 1946.

Small business sentiment will likely improve with the knowledge that at least if the Republican party is unified, then one-party rule in the Senate has ended. The market had a bit of a celebration today and may well do so tomorrow. We should consider the possibility that the 2010 election could be similar to the 1994 election that brought gridlock to Washington and that catalyzed the stock bubble and economic boom of the second half of the 1990s.

The big picture is, however, muddled and schizophrenic. Fannie and Freddie are losing hundreds of billions of dollars, and those losses are income of a sort for the public or corporate America. How are Fannie and Freddie losing this money? By Fed money-printing to buy mortgages.

Large, international companies may well represent good "value" in a generally overvalued market. Domestic companies are chancier. I continue to like dollar stores. (Reluctantly)

The arguments for gold remain unchanged. Gold and other precious metals are in bull markets that are not bubbles by conventional analyses. For gold ETF buyers, the Canadian ETF "GTU" has had enough underperformance lately vs. "GLD" to be, in my humble opinion, a "buy".

In any case, Mr. Brown has relatively single-handed run on opposition to the Obama healthcare "reform" effort. The political and investment worlds have changed. In that one-party rule has been diminished, this represents a return toward normalcy and therefore will be taken well by the investment community.

Copyright (C) Long Lake LLC 2010

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