Research (Investicniweb.cz)
Currencies  |  November 05, 2012 20:06:55

Romney would help equities and the dollar, Obama bonds



The next U.S. president has already tied his hands: fiscal cliff, the debt ceiling and the need to grapple with the debt will have to take in the event of his victory in mind Obama and Romney. This is also why, despite the lack of specific information from both camps, predictable, what can the U.S. economy after the election, wait, says in an interview with the London Investment web ING economist James Knightley. It would probably be after the elections should flourish shares.

Question of the day for many investors and economists is: "Romney or Obama?" Who would be your view of the U.S. economy and markets better?

James Knightley (JK): It's very difficult to answer. We do not know what they are really up to. While both offer lots of grand plans and visions, but what should be their everyday politics, just do not know. Moreover, it is not just for Romney or Obama, the president because he must for his plans to get others. It is undoubtedly a need to address the fiscal cliff. Scarecrow consisting of cuts in government spending and taxes, plus a total of $ 650 billion, which could just appear first January 2013. This is a result of the wrangling over the debt ceiling increase in August of 2011, maybe you could say hangover.

How likely is that the new president from the fiscal cliff fall will not stop?

JK: We're talking about the equivalent of 4% of GDP. This is indeed a significant belt-tightening. Be similar to this year They prescribed Spaniards and we all know what it's like. Therefore, most experts agree that if you fall off a fiscal cliff occurs, America will fall into recession. Tools to prevent that, not much - interest rates are at zero, the printer is no longer money spins. Therefore, it is necessary to defend a similar scenario at all costs. Thus, regardless of whoever becomes president must secure agreement and must handle it quickly. The opposite would mean that it would be so bad that it simply can not happen.

It may very well be that Parliament will take over a party other than the president. How great it would be complications?

JK: House of Representatives will most likely be dominated by Republicans, the Senate will say medley. This means that it would probably be easier to agree on what the fiscal cliff, if Romney wins, because the president's party had control of the House and Senate would be mixed up. Things could be pushed through. If Obama wins, we will have a Democrat in the White House, Republicans controlled the House, and again, probably mix in the Senate, because now there is only a limited number of seats. This means that it might be more difficult to arrange something. Even so, but we think that the agreement will see eventually. Everyone is aware of the fact of what would have happened otherwise.

Significant economic turbulence after the election of President therefore do not expect?

JK: It's about as painful for the financial markets and investors will be a transitional period. Let's say that Romney wins. Then I guess that will transition a little easier. Even so, the economy will be strong to fight the counter. According to us, the end will not be austerity measures equal to 4% of GDP, it will be around percent, which will be much more bearable. Even so, although it will mean that the U.S. economy will grow more slowly next year, but do not pass into recession, which would be in the case of full fall off a cliff happened.

Who with the presidential candidates support after James Knightley in Bernanke and will go on quantitative easing, can be found on the web Investment

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