Unlocking Real Value Blog

AK in the News: Mutual Funds and the Election

I was asked to comment for an article in today’s Ignites (a Financial Times Service) which indicated (not surprisingly) that people in the mutual funds industry prefer Romney to Obama. (The ignites poll indicated that 58% preferred Romney to 39% for Obama.) The comments were made before we knew the results of the election.

My quote from the article: “Wall Street obviously would prefer a Romney victory because he is perceived as being pro-business. The hope is that business confidence would increase more quickly under a Romney administration which would translate into more hiring. If investor confidence increased, that would also be good for fund flows, as some of the money sitting on the sidelines might flow back into the equity markets.”

Further, “Regardless of who is the next president, a split Congress is likely, which makes earth-shattering legislative changes unlikely, according to Klausner. Regarding regulation, “Romney would push quicker for a reform of Dodd-Frank reform — not no regulation, but less strenuous regulation. Even some Democrats might agree that the legislation needs to be reformed — but again, under either scenario, large changes are unlikely,” he explains. Due to the fiscal cliff — expiring tax cuts, new taxes and automatic spending cuts that start in January if lawmakers can’t reach an agreement by the end of this year — Congress and the president probably will have to make a short-term deal on taxes, Klausner notes.””

So, now that Obama has won the election, businesses will remain jittery until there is some resolution to the fiscal cliff. The lame duck Congress is likely to come-up with a short-term solution to get us through the end of the year. Then – who knows. If the President can show some real leadership – leadership that was lacking in his first term – perhaps a grand deal can be struck next year. If not, the proverbial can will be kicked further down the road.
And on regulation – any changes to Dodd-Frank just became far less likely and the cumbersome nature of the legislation will continue to be a drag on business moving forward.


Leave a Reply