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Stock Ideas Investors Daily Edge International trade: Obama’s protectionist tendencies
Stock Ideas Investors Daily Edge International trade: Obama’s protectionist tendencies 
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by Adam Lass, Market Analyst, WaveStrength Options Weekly Sometimes strange things happen. For example, if the wags at the water cooler tried to tell you back in August that Eli Manning would go deeper into the playoffs than big brother Peyton, you’d have laughed hot coffee out your nose. |
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| International trade: Obama’s protectionist tendencies |
| Thursday, 04 September 2008 | ||||||||
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Isn’t that a shocker? Bill Clinton as Reagan’s spiritual heir! I’m not sure either man would be proud to claim the relationship. But it is true that Reagan paved the way for the welfare reform and fiscal tightening that occurred on Clinton’s watch. No way, no how the idea that welfare could be cut back to near abolishment could ever have reared its head without the Reagan influence paving the way. No way a Democratic president could ever have touched it without Reagan’s “Westernization” of national politics.The name of the Welfare Reform bill—The Personal Responsibility, etc. Act—was an attempt to make a shocking idea sound better to those who balked. But it turns out to be the appropriate name, because personal responsibility is a very Western, very Reagan idea. The Turner Thesis has been around for 111 years. It’s big guns in the field, something akin to Newton posing gravity. Every history student knows it. It’s been in and out of fashion, and I believe it’s mostly in these days. But isn’t this something? Now that the U.S. has no more West for people to escape to for more personal freedom, the thesis is still relevant—the West has spread East. Requiescat in pace Ronald Reagan. Rest in peace. Back to the present. This is the most “Westerners versus Easterners” presidential race we’ve ever had. Illinois and Delaware against Arizona and Alaska. You can see clear differences on several issues. For instance, the League of Conservation Voters gives the Dem team high scorecard numbers on environmental issues. McCain’s scores are extremely low. Labor, as represented by the AFL-CIO gave Obama an A+. McCain was the only congressman to get the grade of “incomplete” because he missed too many votes on the issues in the scorecard.
On guns, McCain might seem to break with the John Wayne mystique of the West. The National Rifle Assoc. gave him a C+ rating. Then again, NRA gave Barack Obama an F. On taxes and government spending, the Cato Institute clearly rates McCain as a stronger advocate for low taxes, while Obama seems more interested in shifting who pays how much. I’m not sure whether you like any of the candidates. But this time if you skip the glib speeches candidates are forced to make to offend the fewest and sidle up to the most people… and if you look at their records, you should be able to spot clear differences. How does this affect investing? I am only going to give you some broad and suggestive outlines because anything further might inadvertently come off as being pro one candidate or the other. That’s not my purpose here. So… Spending priorities: that’s one place to look for what the candidates will mean to your investments. It is possible that military contractors (and the stocks of those companies) would be much happier to see McCain coming. Obama claims to be more interested in domestic infrastructure spending and is clearly more interested in environmental spending, so those sectors and companies could fare better if he won. International trade: Obama is already on record as thinking NAFTA went too far and eliminating tax breaks for American companies that move jobs offshore. McCain appears to be promoting even freer trade at this point. Such sentiments could affect dollar strength, with Obama’s protectionist tendencies more likely to continue the weakness—then again, that would benefit many companies’ earnings as they sell products into strong currency markets. Some effects are indirect and subtle. Obama, to my surprise, continues to have an energizing effect on crowds, which frankly I thought would evaporate by now. That could lead to greater confidence, which is not a bad thing in an economy dominated by consumer spending. But McCain is a known fiscal conservative and his intent to manage the economy more conservatively could be good for the dollar. McCain is also believed to be more pro-business than Obama. We are a ways from hearing complete outlines of the two candidates on identical issues. This will unfold as they move closer to Election day, but the issues are certainly worth our attention this time. Lynn P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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