Posted by
John Caile on Wednesday, November 19, 2008 6:32:56 PM
The uncertainty over the direction of the impending Obama administration is causing some interesting market responses. Some indicators, like gun and ammunition sales, are showing big up-ticks, while others like housing starts, are way down. And the stock markets have been nothing short of a roller coaster ride.
But rightly or wrongly, the one thing that all of these occurrences have in common is the FOO factor - Fear Of Obama.
Now, I'm not one of those who is going to blame Barak Obama for the housing crisis - that debacle was begun in the Carter Administration, and exacerbated by a whole series of bad policy decisions by both Democrat and Republican politicians. But when builders don't know what is going to happen to capital gains, as well as other taxes, they are not going to commit to new construction.
Ditto the Dow, which peaked just a year ago at 14,000 and was declining before the specter of an Obama presidency. Rising oil prices were at least partially to blame. But markets trade on the future - prices reflect what traders believe is GOING to happen. And markets like CERTAINTY, or at least as much of it as they can get.
And on that score, Obama has some work to do - with the talk of raising taxes being all over the board, investors and business owners are nervous. Just today, the Dow dipped below 8000 for the first time in more than 5 years.
Gun owners, and would-be gun owners, are also concerned about the future of their rights in a country with a Democrat controlled Congress and a Democrat president. With rumors of various gun control schemes being floated by Democrats even before the inauguration, they can't help wondering.
So they are hedging their bets, buying firearms and ammunition at a furious pace - certain guns and types of ammunition are already on back order. I personally received 48 phone calls from people wanting to sign up for Handgun Carry Permit classes - most remarked that they wanted to "get it while I still can."
The legitimacy of these fears is open to discussion - I personally hope that a President Obama adopts a sensible, centrist approach to governance. Some of his cabinet choices may in fact give some credence to this view. Others might not.
But until President-Elect Obama alleviates the fears of many Americans that he intends to pursue a destructively radical agenda, the FOO factor is likely to continue.