Wall Street, too, a Sap for ‘Hope and Change’
by Rick Ackerman
Posted originally November 3, 2010
[So much for going out on a limb. Shortly before 1 a.m. Eastern, the rally in index futures has reversed and the market is now flat. It’s possible this reflects a similar flattening of expectations arising from the election. Although the Republicans made spectacular gains in the House, their failure to capture the Senate is likely to impose gridlock on Capitol Hill for the remainder of Mr. Obama’s term. While this is arguably cause for true celebration, it seems unlikely to generate the burst of exuberance on Wall Street that we had expected in predicting a 175-point rally. RA]
The polls don’t close for another three hours, but we’ll go out on a limb with a prediction that the Dow will rally at least 175 points when stocks open on Wednesday morning. The exuberant reaction will be a variation on Barack Obama’s Hope and Change-inspired landslide in the 2008 election. Now as then, revelers will be so worked up about the very prospect of change, any kind of change, that they won’t much care about the details. But they’ll care about them soon enough, and that’s why we’re also predicting a Thursday morning hangover; for at the end of the day, it takes just as many Republicans and Tea Partiers to screw in a light bulb as it does Democrats.
Mind you, even though there isn’t ultimately much difference between the two major parties as far as how they govern, there are differences enough that we’ll be rooting, sight unseen, for anybody-but-the-Democrat in virtually all Congressional races. Running as a Socialist Worker? No Problem-o. Symbionese Liberation Army? You can count on my vote. La Raza? Where can I find your name on the ballot? Tupamaros? Sure, but please don’t forget me when the repeal of Obamacare comes up for a vote.
Considering the stakes, traders showed relative restraint on Wall Street yesterday, presumably because they didn’t want to deplete their reserve of stupidity before the election results are out. They needn’t have worried, however, since no human trait save greed is in more abundant supply on the Street than stupidity. Assuming stocks rally sharply, the pundits will seize on this as implying that the mood of America had changed.
When the rally sputters out shortly thereafter and reverses with a vengeance, however, the talking heads probably won’t know what to say, so we’ll say it for them: The Republican landslide is not going to change much of anything, particularly the irresistible strength of a credit deflation that has gripped the economy like a noose. To those who believe that a Republican majority, even in both Houses, can turn the economy around, we say, Wake us when we can sell our home for its appraisal value.
Written by aurick
03/11/2010 at 1:04 pm