Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20
AMAZON Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 11th Jan 20
Gold Price Reacting to Global Flash Points - 11th Jan 20
Land Rover Discovery Sport 2020 - What You Need to Know Before Buying - 11th Jan 20
Gold Buying Precarious - 11th Jan 20
The Crazy Stock Market Train to Bull Eternity - 11th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

What a Romney Presidency Would Mean for the Economy and the Markets

ElectionOracle / US Presidential Election 2012 Nov 05, 2012 - 10:05 AM GMT

By: Graham_Summers

ElectionOracle

Best Financial Markets Analysis ArticleYesterday we assessed the impact a second Obama term would have on the US economy and markets. Now let’s assess what impact a Romney Presidency would have on the US economy and financial markets.

For starters, Romney has already stated that he would fire Fed Chairman Ben Bernanke if he wins office. While this doesn’t represent the real shakeup that the Fed needs, it’s definitely a step in the right direction.


With that in mind, if Romney wins and makes good on this promise to fire Bernanke, then we need to consider that any market rally that occurs based on the perception that the US economy would strengthen would be short-lived.

The reason for this is that the primary driver of stock prices over the last four years has been the hope and promise of Fed intervention. So if Bernanke were to be fired (or more likely step down as Fed Chairman) the market would lose one of its biggest props.

What would follow would be a potentially hellacious correction as the markets adjusted to the underlying realities of the US economy. Based on the business cycle, this would put the S&P 500 down near 1,000 or so (and that’s ignoring any other negative items developing).

This was the very problem with the Fed intervening so heavily to begin with: by attempting to prop the markets up, the Fed didn’t let the bad debts clear out of the system. As a result, the big reset has been pushed down the road.

If Romney wins the Presidency, it’s quite possible he would let that reset finally hit. After all, he could easily fire the economists at the BLS who have massaged the data, fire Ben Bernanke, and then blame the subsequent market correction and bad, but realistic economic data on Obama (much as Obama has blamed the bad economy he inherited on Bush).

Another issue to consider is that if Romney wins and does fire Bernanke and cuts back on spending, then the “inflation trade” could take a hit.

Bear in mind, Gold and Silver would continue to see increased demand based on investors fleeing the Euro and from Central Banks buying. However, a Romney win, accompanied by cuts in Government spending, would result in a powerful US Dollar rally, especially when you consider the state of affairs in other major world currencies (the Euro, Yen, and Yuan will all likely collapse before the US Dollar).

I have noted, as I am sure you have, that both Mitt Romney and Paul Ryan have mentioned that if the US does not get its deficit and debt in check, it will end up like “Greece.” The Obama camp has made no such statements and in fact never refers to the European disaster.

I also want to draw your attention to the fact that several EU leaders have stated that the Obama administration has asked for them to keep things calm until after the election.

Troika report on Greece may come after U.S. vote

“The Obama administration doesn’t want anything on a macroeconomic scale that is going to rock the global economy before November 6,” a senior EU official told Reuters, adding that previous troika reports had also slipped.

The European Commission’s representative on the troika, Matthias Mors, denied that the report could be delayed, and an official at Greece’s finance ministry said he had been assured that there would be no slippage.

A U.S. official said the United States had made clear to European officials that it wanted to avoid any “downside” economic surprises because of the fragile U.S. recovery, but denied that it had anything to do with the U.S. election.

Several sources in Germany described those conversations with their U.S. counterparts and said the message had been that the Americans didn’t want surprises before the election.

http://uk.reuters.com/article/2012/09/21/uk-eurozone-greece-report-idUKBRE88K0OQ2012092

This, combined with reports that EU leaders do not like Romney indicates that they perceive Romney as a threat. Given that the EU is only being held together by Central Bank intervention, this threat can only be based on the idea that Romney will not move to help Europe with its financial difficulties (and will be anti-Fed intervention).

So, if Romney wins the election and pulls back from aiding Europe (Europe will collapse at some point no matter who wins, but it’s clear that Obama would be more lenient in terms of providing help) then a Euro collapse would certainly have a negative impact on precious metals.

However, this move would be short-lived as investors would increasingly turn to Gold and Silver once major paper currencies began to fail.

So if Romney wins the election and makes good on his promises to cut spending, rein in the debt, and fire Bernanke we would very likely see another round of deflation.

However, after this period ends, the US stock market and economy would begin to actually put in a sound base from which to grow. At that point we would have a truly extraordinary opportunity to buy many high quality companies at truly insane prices.

So… make a wishlist of companies you’d like to own in case of a Romney victory. Watch and wait for Romney to actually fulfill his promises (if he doesn’t the outcome will be very similar to if Obama wins: more debt, more spending, and more inflation). If he does, the markets will correct sharply. But after the smoke clears, it will be time to buy in a big way.

Now more than ever, investors need to get access to high quality guidance and insights. There sheer magnitude of the issues the global financial system is facing is enormous!

To learn more about Private Wealth Advisory and how it can help you navigate the markets successfully…

Click Here Now!!!

Graham Summers

Chief Market Strategist

Good Investing!

http://gainspainscapital.com

PS. If you’re getting worried about the future of the stock market and have yet to take steps to prepare for the Second Round of the Financial Crisis… I highly suggest you download my FREE Special Report specifying exactly how to prepare for what’s to come.

I call it The Financial Crisis “Round Two” Survival Kit. And its 17 pages contain a wealth of information about portfolio protection, which investments to own and how to take out Catastrophe Insurance on the stock market (this “insurance” paid out triple digit gains in the Autumn of 2008).

Again, this is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com and click on FREE REPORTS.

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and undervalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2012 Copyright Graham Summers - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Graham Summers Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules