TUESDAY JANUARY 19, 2010

Stunning Upset...Good for Stocks?

Wow!  Ted Kennedy's Senate seat was won by a Republican!  What a stunning upset.  What a powerful message to Washington.  While the political pundits will argue the hows and whys, I think it comes down to one simple message: It's the spending stupid!  Healthcare, Stimulus I, Stimulus II, Stimulus III, Bank bailouts, tax increases, responsibility "fees".


This election could have significant impact on the markets.  My guess is that the markets will like the result.  The bond market should respond well, as one impact is that spending, on the margin, should be less and therefore the supply of bonds hitting the markets may be reduced.  The stock market will like the result, as the election will likely prevent many of the more draconian, anti-capitalist programs from passing into law.


Historically, the stock market does well when neither party is in control of Washington.  This election puts an end to the super majority in the Senate.  Gridlock is the likely result, and that's a good thing!


 

POSTED AT 1899-12-30 21:32:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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