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Saturday, 16 December 2017

After his State of the Union, time to go long on Obama

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Anthony Peters, SwissInvest Strategist

Some might say it was kicking the ball into an open goal. Others might think it was a supreme piece of showmanship. Others again might think it was socialism unleashed. Make what you like of President O’Bama’s State of the Union address last night, I for one was pretty impressed.

What struck me first of all was the way in which his unnerving manner of stabbing the listener with every sentence in case it might become a sound-bite seems to have been suppressed and he spoke in a flowing and authoritative fashion. While the Republicans are still, three years after Dubya departed the White House having spent eight years liberally giving away the nation’s treasures, fighting like a pack of dogs over the “correct” conservative vision of the future, the President showed just why it is so difficult to unseat a White House incumbent.

The re-election campaign is under way and he displayed a fairly coherent vision of how he intends to approach a second term. Whether he will be able to deliver or not is a different matter entirely but that is the nature of politics.

He very cleverly book-ended his speech by opening with the fact that he had brought the troops home from Iraq, that the end of the Afghan engagement was in sight, that Osama bin Laden is dead and by closing with the reminder that servicemen bury their individual differences when in the field, pull together as a team and focus on nothing other than the task in hand.

Though more finely phrased, the key themes remain very much the same as they have always been although every attempt he has made to generate cross-party co-operation in facing up to America’s fiscal nightmare has crash landed before it had taken off, not least of all because the other side of the house is so bitterly split.

He has cleverly picked up and run with the Buffett proposal for a more equitable taxation of the rich, the demand for more generous tax treatment of corporations which manufacture and create jobs at home and the need to educate to remain competitive. He drew huge applause from the joint houses by decrying those who see the Unites States as a waning power.

If he remains on this tack for the rest of 2012 and with a bit of help from the economy, the Republicans stand next to no chance of defeating him. However, that is 2012. Although there is much talk of the deficit, the country is effectively still in stimulus mode which looks pretty, but which is still costing significantly more than it is generating.

If he remains on this tack for the rest of 2012 and with a bit of help from the economy, the Republicans stand next to no chance of defeating him

Governor Mitch Daniels responded for the opposition but not, as in the House of Commons in the UK, face to face in front of the same audience but from a TV studio where he criticised the President’s “extremism” and where he accused him of trying to polarise the nation by heaping blame on the few who have achieved and currying favour with those who haven’t.

The fact remains that whoever is living at 1600 Pennsylvania Avenue this time next year will have their work cut out. To what extent the encouraging economic numbers are being driven by stimulus spending and how much is the result of a natural rebound after the sharp retrenchments since the credit boom began to derail in 2007 and the economy fell into the swamp in 2008 is hard for anyone to tell. 2013 will be the year when these issues will rise to the surface and not 2012. The honeymoon will probably prove to have been taking place before the wedding. I would go long O’Bama in the cash market and sell November calls on the GOP candidate, irrespective of who it is. However, I’d also like to buy a few April 2013 Barry puts as well.

Beanos in the snow at Davos

Meanwhile, the great and the good are assembling in Davos for their annual beano in the snow. It has only just dawned on me that it always seems to coincide with the Chinese New Year and that therefore the world’s second-largest economy is going to be hugely underrepresented.

Other than a speed dating fest for movers and shakers and a hypermarket for aristocracy among head-hunting agencies, it brings no lasting benefits other than for Davos hoteliers and journos fishing for a free ski weekend

It is a bit as though a similar Shanghai Global Economic Forum were always to be scheduled during Christmas week. Alas, since greed is no longer good, around the clock TV coverage of the event is not quite as popular as it was and politicians don’t now necessarily want to be filmed rubbing shoulders with investment bankers and sipping champagne with captains of industry.

The past few years have shown that the Davos caucus has had no particularly usable solutions to offer for dealing with the global economic slowdown and that other than a speed dating fest for movers and shakers and a hypermarket for aristocracy among head-hunting agencies, it brings no lasting benefits other than for Davos hoteliers and journos fishing for a free ski weekend. As I don’t fall into any of the critical categories, I remain to be found in a damp, dreary London.        

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