Four more years, four more years……… will be among the usual chants heard for President Obama, along with promises no doubt of great deeds to come. While the Republicans go back to the drawing board and try to find a presidential candidate who does not come across as a robot, the White House in reality will try to figure out how to get anything done while Congress is certain to remain a gridlock of disagreement. And what will be left in the wake economically for America and the global economy will be of major significance.
The major markets have reacted cautiously this morning. However one thing is for certain investors know in essence what they will be now getting the next few years and that is a Federal Reserve which will likely continue to follow Fed Chairman Ben Bernanke’s monetary philosophy hell or high water. Thus look for equity markets to see more risk taking in the near future based on the conclusion that the faucet of quantitative easing is not going to be turned off anytime soon. However, there is certain to be disagreement far and wide about fiscal and monetary policy and what the ramifications of all things to come will be down the road when the bill is quantified in four years time.
The EUR continues to trade near its weaker boundaries versus the USD for the time being. News from Europe continues to be wildly negative regarding economic data and political worries via Greece. Today German Industrial Production also proved disappointing, along with Retail Sales from the continent. But while the Single Currency has been taken lower in trading thus far Wednesday, most European bourses have been gaining.
Gold is near 1717.00 USD as of this writing which is higher than yesterday’s value and Crude Oil has added a bit of value climbing above 87.00 a barrel for WTI. The U.S. will release Crude Oil Inventories data soon and will have a rather large 10-Y Bond Auction also today.
Traders should expect fast markets and risk taking with the knowledge that the political power base in the United States will essentially remain the same. Short-term this will provide investors with known and perhaps comfortable parameters, but sooner rather than later the current economic philosophy will certainly begin to be examined harshly again and tested as quantified numbers deliver doses of reality.