Consequences of the Mass. Election

What a beating the Administration took tonight! I think this is a real life example of a Greek Tragedy. What does it mean? I think it could mean a lot.

-I read the election result as being dollar positive. Somewhere inside this vote tonight is a call for fiscal conservatism. We are going to hear rhetoric to that effect in the coming months and we will see legislative steps that at least give lip service to the idea that we aught to tighten our belt a few notches. To the extent that I am right by calling this dollar positive, you have to also think that it is a gold negative development. For those that love the yellow metal and hate the dollar take heart. Any positive impact to dollar will be short lived. The inability to put a second stimulus together will show up in all of our numbers by midyear. At that point it will be more clearly understood that the US is broke and there really aren’t any viable options that don’t entail a lot time and pain.

-Tim Geithner’s ship went down in Massachusetts. I am convinced that he now must go. The Administration will have to make changes after this vote. They have to show that they are being responsive. The beating the WH took tonight was biblical. So will their response be. It will take a month, but changes and heads will roll.

-I am sure that all the stock pundits are going to read this evening’s results good for the broad market averages. I have been skeptical of this for a while. But not any longer. The stock market looks six months ahead. It will soon be sensing the next economic slowdown soon. I would not say the market is a screaming short. It is not, yet. It just got closer however.

-I can see how some health care companies might see a pop in their stocks for a few days. This group I would short. The absence of a health care deal is actually bad for them in my opinion. Give that a week at best.

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