Posted on 08/28/2004 11:53:51 AM PDT by TigerLikesRooster
By Kenneth Barry
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| Workers test audio levels in New York's Madison Square Garden, August 27, 2004 as work continues for the Republican National Convention which starts Augusts 30. (Jeff Christensen/Reuters) |
NEW YORK (Reuters) - Fasten your seatbelts. The Republicans are coming to town. If things go smoothly at the Republican National Convention, the stock market could get a brief boost next week, experts say.
If not, watch out.
Uncertainty about the outcome of the Nov. 2 vote is only one of several big worries facing investors, said Robert Hormats, vice chairman of Goldman Sachs (International).
But if Bush does well at the Republican National Convention, investors could react positively, he said.
"I could see a little bit of a pop in the market," Hormats said.
The convention, which opens on Monday in New York's Madison Square Garden, will give investors a chance to see how well the president and nominee does at the Grand Old Party's fiesta of red, white and blue. Investors will be measuring his performance against that of Democratic nominee Sen. John Kerry (news - web sites) of Massachusetts five weeks ago in Boston.
With security threat levels on "high alert" status, investors also will stay tuned to see if the protests planned by anti-Bush demonstrators turn out to be much larger than expected or become violent.
Trading, already thin due to the last legs of the summer holiday season, may become even weaker if Wall Street traders have trouble getting to work due to the logistics of the four-day convention.
"The biggest event could be: 'Do we get through without terrorism and major violence in the streets?"' said Greg Valliere, chief political strategist at Charles Schwab Corp.'s Washington Research Group.
But more dominant issues include the jump in the price of oil to a record high this month and the threat of sabotage to energy facilities in the Middle East, Goldman Sachs' Hormats said.
Staging the GOP convention in Wall Street's back yard, so to speak, shines the spotlight on the impact that politics can have on the stock market.
Most Wall Street executives would prefer to see Bush win, some analysts say. They cite his promise to try to persuade Congress to approve permanent tax cuts on dividend income and capital gains, which is seen as promoting investment.
Bush also is viewed by some as good for certain sectors, such as traditional energy companies and health-care companies.
Kerry would be beneficial for alternative energy companies, said Andy Laperriere, managing director at ISI Group Inc., a Wall Street brokerage and research firm.
"Sector by sector, there are a lot more winners if Bush wins and a lot more losers if Kerry wins," he said.
Major pharmaceutical companies may have trouble getting high prices for drugs if Kerry wins, one analyst said.
But not all parts of the health-care sector would suffer under a potential President Kerry, said Mark Zandi, chief economist at Economy.com.
Doctors, hospitals and other health-care providers probably would benefit from Kerry's plan to provide health care to 27 million Americans who currently lack medical insurance, Zandi said.
"Increased demand would be very positive," Zandi said. "They would have access to health care for the first time and would use it."
So which political mascot -- the Democrats' donkey or the Republicans' elephant -- is most friendly to the U.S. stock market?
When Democrats have controlled the White House, the economy has performed better, according to economists at JPMorgan Fleming Asset Management.
But the stock market has tended to outperform when Republicans controlled both houses of Congress, according to the study, which examined changes in gross domestic product and the Standard & Poor's 500 Index since 1933.
GDP (news - web sites) grew an average of 5.1 percent per year during Democratic presidential administrations, compared with an average of 2.9 percent per year under Republican presidents.
In the equities market, the S&P 500 has gone up 16.9 percent per year on average when Republicans controlled both houses of Congress versus an average annual increase of 8.2 percent under Democratic control of the legislative branch.
Anthony Chan, managing director and senior economist at JPMorgan Fleming Asset Management, said he thinks it's an issue of perception rather than reality.
"The Republicans put policies in place that help business in the long run, even though the numbers don't bear that out on a concurrent basis," Chan said.
The study showed support for both Democrats and Republicans, he noted.
Hormats, who served in both Democratic and Republican administrations in Washington, said the economy and stocks did well under former Democratic President Bill Clinton (news - web sites).
"If there were to be a Kerry administration, it would follow many of the same policies as under Clinton, and those could be quite good for the economy," Hormats said.
Over the last 36 years we have had Jimmy Carter a real loser for the markets and then Clinton who didn't get the market rolling until the GOP took over congress.
""If there were to be a Kerry administration, it would follow many of the same policies as under Clinton, and those could be quite good for the economy," Hormats said."
Wrong! The tech bubble was the ONLY thing going for the 'Clinton economy'. The Klintoon economy was a fraud, and we have been dealing with the fallout from it ever since.
Does this idiot actually think that having millions of people employed by companies that never turned a profit (or really ever had a product, as they subsisted on investment capital alone) is a good thing? And then they wonder why the employment picture looked pretty bleak for a while, as all those techies found their jobs evaporating with the death of their companies. And he seems to forget that the 'old economy' was derided as outdated, and that the 'new' economy was the wave of the future. As we see, the 'old' is still here. The 'new'? It died with the bubble bursting.
So now the Old Media is saying that if there is no stock rally after the GOP convention, the convention is a failure. LOL!
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