We were told well in advance that Hurricane Sandy would be a once in a lifetime storm, and in a major rarity, forecasters actually underestimated a storm.
Katrina, Part Two
It’s hard to find the words for what we are witnessing, but for me, it sure brings back memories from August 2005. Few were prepared for what we are seeing play out this week, and with electricity still out for more than 3.5 million homes and businesses in just New York and New Jersey, and with two-thirds of all gas stations completely out of gas, trust me on this…this situation is about to go from “incredibly bad” to “unthinkably bad”.
And by the way…we have a Presidential election in just four days (with at least 300 polling places that have no power).
A few observations:
While it remains to be seen who will win this election, I cannot help but think back to the environment in 2008…and to the VRA update I wrote immediately following Obama’s election:
“It’s the Economy…Stupid!
This now famous line was attributed to George H Bush's mishandling of his re-election bid, when Bill Clinton's victory turned Bush into a one term President. The economy was in the dumps in the year leading up to the election and Bush seemed oblivious to the recession that the country was entering.
Just a year ago anyone paying attention would have told you that the big election issue in 2008 would be the war in Iraq. Then, Bear Stearns went under in the Spring, and 90% of all mortgage co's followed. Once Lehman filed for bankruptcy in September, and the stock market dropped 40%, "Its the economy...stupid" became the central theme of this election as well.
It's obvious, from Barack Obama's landslide victory, that Obama and the Democratic Party are the big winners of the recession of 2008.
YES WE CAN!
Our new President-elect delivered one of the most passionate and compelling acceptance speeches in history early Wednesday morning, and the whole world celebrated with him. I cannot remember seeing a sight quite like the global party that his victory brought on, but it’s clear that the theme of his speech, "Yes we can", resonated with hundreds of millions everywhere. Whether or not his Presidency lives up to the hype (and I truly hope that it does), this is a moment in time that we will not soon forget...but at this point all the government can do is make things worse. Seriously, when is the last time you can remember
the government taking action and making great decisions? Maybe Obama will be different...but we're talking months before anything he can act on would begin having an affect.
If this sounds really depressing, just remember that it doesn't have to. The opportunities to prosper, even now, are as great if not greater than they have ever been (especially if you are an entrepreneur). This is why a recession serves such a major purpose. It gives us an opportunity to buy "real assets" at bargain basement prices so that when the economy begins to prosper once again, everything that we bought low...we can eventually sell high."
As I look back on that 2008 VRA update, I believe that “It’s the Economy…Stupid” will remain the theme that rules the day for the 2012 Presidential election. And, even in light of the many polls that show Obama with nearly insurmountable leads in the most important swing states, I will side with our good friend Wayne Allyn Root in predicting a Mitt Romney victory. Wayne is even forecasting that Romney will win in a landslide, and history has proven time and again that it pays to be on Wayne’s side. In addition, Karl Rove…the expert’s expert at politics…makes a very compelling and fact based case for a Romney win (the polls siding with Obama are statistically skewed to match the 2008 heavily Democratic turnout, which will simply not be the case in 2012). In addition, Rick Santelli, who I recently spoke with at the New Orleans Investment Conference, is calling for a Romney win. Rick makes a living (on CNBC) at correctly predicting the markets and economy, and his view is that Romney wins by a comfortable margin…with independent voters picking Romney by a wide margin.
Here’s my bottom line. Just as in 2008, this election is about the economy and which candidate can best revive it. Romney has consistently proven himself as a businessman, and love him or hate him on a personal level, the US economy remains in shambles and requires someone with Romney’s pedigree to turn things around. Regardless of who wins this election, things are going to get worse before they get better, and four more years with Obama could be a fatal economic blow. Case in point as to why Obama is the wrong person to lead us out of this mess; on a recent appearance with Jay Leno, Obama admitted that his math skills never made it past about the 7th grade level. Whether a joke or not, all evidence points to the fact that this is simply not the leader that our country requires…not now…not with the real unemployment rate at somewhere between 15-20%...not with a global depression lurking as a very real possibility…not with the global, sovereign debt implosion that’s already underway.
A Bad Apple
Finally, Apple (AAPL) is telling us that something is not well…with them or with the overall stock market. As I’ve been writing, Apple is breaking down, losing another $20/share today (for a 3% drop), and down more than 17% in just over a month. As THE market leader, this is an incredibly bearish sign, and as of today’s close the stock is now below the all important 200 day moving average. One by one the markets leaders are turning lower, and importantly, are doing so on rapidly increasing trading volumes.
Our sincere thoughts and best wishes go out to everyone being impacted by Hurricane Sandy. This too shall pass….even though it may not feel like it right now. Please do not hesitate to reach out to us here at the VRA and at WMI if we can be of assistance.