Impact of Tax Policies on Obama vs Romney Victory!
A lot of folks are betting that President Obama will win a 2nd Term. So, what will the Stock market reaction be to an Obama Victory, will there be a massive rally in Jan 2013?
What will happen to the Budget that is the main concern, in my opinion! If the budget can be passed prior to end of the tax year, perhaps it would not matter whether or not Romney or Obama win, US economy is still the largest world economy and any semblance of economic stability will drive Capital inflow into the US. Consequently, we will see higher valuations in the S & P indices. The US is still the best place to invest with relative stability.
President Obama or Romney, both understand that the USA must encourage the monies from US Corporations sitting in the Foreign banks must come back home to reinvest and reinvigorate our manufacturing capacity, invest in new technologies. Thus, I would be expecting some easing of repatriation of capital held in overseas banks worth trillions of dollars by some experts. Again, this would be a positive force in boosting the stock market in the coming years ahead.
An Obama win, would simply mean more emphasis in fiscal stimulus which in the short term stimulate the stock market. Long term the budget deficits may harm the economy. But, if the Growth rate improves beyond 3%, the deficits would be rapidly reduced. Thus, there may be a positive effect.
A Romney win, would mean that in the short term, the market will be squeezed by a tighter monetary policy, but, long term the market will be significantly higher. The dollar would regain its value, and gold price may decline rapidly. A reduction in the tax rates would stimulate small business investment and spur the economy! But, the deficits would increase prompting the Romney administration to make draconian cuts in Public Spending, which the stock market may love but, there may be severe unemployment.
So, there is my opinion!