Tags: Forbes | stock | GOP | election

Steve Forbes: Stocks Teeter While Washington Dithers

By    |   Thursday, 16 October 2014 02:52 PM

Forbes Media Chairman and Editor in Chief Steve Forbes can count the reasons why the stock market is wobbling on one hand, but he sees reason for optimism ahead.

Forbes, who sees obvious links between the economy and politics and government, says the upcoming election may be affecting share prices.

"Despite President Obama's abysmal approval ratings on all fronts, Republican capture of the Senate — if some polls are to be believed — is suddenly in doubt," he wrote in Forbes as one of the reason for the equity sell-off.

"A GOP-dominated upper house would severely limit Obama’s ability to do more harm, which would be great for equities."

The nation's central bank also does not escape his gaze. He blames "misbehavior by the Fed" for clogging up credit markets and harming job creation.

In addition, Forbes does not see much clarity in corporate profits, which he believes is a drag on stocks. "Reported profits are, overall, still moving up, but the more realistic measure of earnings — the Bureau of Economic Analysis' national income and product accounts — is gloomy."

Also the fact foreign economies are in turmoil does not offer any solace for U.S. investors in Forbes' view, and he notes world security is worsening.

"Not all is gloom and doom, however" he wrote. "The GOP, in spite of itself, will do well next month. While earnings aren't surging, corporate balance sheets are in excellent shape. Any positive change in business taxes next year — there's a congressional consensus on this — would unleash a torrent of new investment."

"At any rate, trying to time the market is a fool's game. Ride the storm. After 2016 the U.S. will experience a Reaganesque revival. Markets will go up before then in anticipation of a better era ahead."

According to MarketWatch, a litany of "interconnected worries" are driving stock market volatility in recent sessions, including deflation fears, the prospect of a fresh eurozone debt crisis, a spate of bad U.S. economic data and even the Ebola outbreak.

In a posting on his company website, First Trust Chief Economist Brian Wesbury noted that timing the stock market does not work, even if a correction is underway.

Wesbury ticked off some long-term pluses, saying "the Fed is not tight, trade protectionism is not in the wind, tax rates are not headed higher and big government is checked by divided government.

"Profits are still rising, the U.S. economy is accelerating and our models show that equities are still cheap. It may not be the 'mother of all buying opportunities,' but it ain't the end of equities, either," he concluded.

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Forbes Media Chairman and Editor in Chief Steve Forbes can count the reasons why the stock market is wobbling on one hand, but he sees reason for optimism ahead.
Forbes, stock, GOP, election
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2014-52-16
Thursday, 16 October 2014 02:52 PM
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