Wednesday, November 5, 2008

No "Hope" in the Stock Market's Reaction

This morning, following the Obama win, the stock market (the "Dow Jones Industrial Average") is down around 300 points and has all but wiped out nearly all of yesterday's rally. Sure, you can point to some bad economic news this morning in the ADP jobs report (See Full Story) for the fall in the Dow but, the stock market tends to deal in the future direction of our economy. Many who are market savvy will tell you that the market looks ahead by 6 to 9 months.

If the election of Barack Obama was truly a 'hope" for better things to come, then, the stock market sure isn't showing it. Certainly, any "hope" would have trumped that poor jobs report. But, it didn't. The stock market is repeating what it has been saying for the last few weeks and that is that Barack Obama's policies are bad for the economy. There is no way that higher taxes on corporations, small businesses, and venture capitalists is going to be beneficial for business growth in America. For sure, foreign companies (our competition; both here and abroad) won't be taxed by Obama. The business community will have to pay for and pass on the increased costs for those taxes, mandated healthcare, and broader unionization. That will just make their prices higher and make them less competitive. Our tax cuts will be short-lived due to high prices that we will pay. That is, only if we buy American. As I said before, there are no free rides!

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