November 4, 2004
OK, OK. I was wrong. Flat busted broke wrong. Kerry did not win in a landslide as I so boldly predicted several months ago. The unheralded swells of discontent that I detected turned out to really be the scent of fear that John Kerry's moral values are the true threat to national security and economic prosperity. Serves me right for so blithely scolding the rest of the country from the comfort of one of the few "blue" states in the nation.
So now what? The market has given four more years of Bush a convincing stamp of approval by bursting forth with many positive signs in the financial markets. Strong up-volume. Strong up-trends. Indices breaking out of the year's downtrend channels. Numerous new 52-week highs. We are truly witnessing "bombs bursting in air!" The main signs of weakness are in many technology names, especially the semiconductors. The Dow is also still within its downtrend channel for the year. The beatings on the drug and insurance stocks are certainly acting as major lead weights around the Dow's neck right now. Regardless, the stampede of the bull is unmistakable. We can question its longevity and its soundness, but for now, it is time to party like it's 1999.
Speaking of 1999, that was one of the last years the country enjoyed budget surpluses, not just a bounty of stock gains. We are now deep in the red as far the eyes can and four more years of Bush promises to be even more expensive than the first four. If we can finally get a resumption of the rally of 2003, we might want to think of saving the money because we will need it. In fact, the President and President-elect wasted no time …
"I earned capital in the campaign, political capital, and now I intend to spend it. It is my style. That's what happened in the -- after the 2000 election, I earned some capital. I've earned capital in this election -- and I'm going to spend it for what I told the people I'd spend it on, which is -- you've heard the agenda: Social Security and tax reform, moving this economy forward, education, fighting and winning the war on terror." - President Holds Press Conference (Office of the Press Secretary, November 4, 2004).
Never mind that this is an odd way to say that you won an election and intend to execute on your promises. It is the image - the metaphor - of spending that raised my eyebrow. Bushie is eager to spend. Last time around, he only earned "some capital" (emphasis mine). This time, he seems to have earned what capital he was missing. It is time to spend away and hopefully we can go bankrupt in style. While we are busy paying for more, bigger, and better government with deeper tax cuts, keep your eye on gold. It has been steadily marching forward, and it now looks poised to resume the business it started in 2003. Funny, so does much of the rest of the market. Let the best dollar win.
Be careful out there!