YEAR SUMMARY: POLITICAL CRAZINESS MOVES MARKETS UP 25%
As I write this blog article, the S&P 500 is up over 25% for the year. Given the political events of 2013, this is absolutely astonishing. Here is a brief summary of some of these events. If, on 1-1-2013, a person had predicted these events—and also projected a bullish stock market—that person would have been viewed as loonie as a nude streaker at the “snowstorm” Eagles-Lions football game.
In any event, here are the political events that the market had to overcome:
**A fiscal cliff “deal” is reached which raises taxes on the wealthy. Also, this deal lets expire the “payroll tax holiday,” thereby increasing taxes on the middle class as well. As a capper, dividend tax rates go up.
**War rages in Syria, threatening Middle East stability.
**Immigration reform—strongly supported by business interests—passes the Senate. But the bill has apparently died in the House without even a vote.
**Edward Snowden reveals intrusive NSA activities. Obama is embarrassed. Everyone is a little scared. Tech companies and the NSA begin to feud.
**Gay marriage gains strength throughout the country, even in the Supreme Court. (Effect on market is unknown, but this event is clearly significant.)
**Ted Cruz energizes the far right. Elizabeth Warren and Bill de Blasio energize the far left. (Shame on you if you don’t know these last 2 names.) These events infer even greater left-right animosity in the future.
**War continues to wage in Syria. Pres. Obama seeks Congressional approval to attack over chemical weapons, but approval is not in the cards. Obama is politically “saved” by Putin who pushes a chemical weapons deal with Syria.
**Republicans in Congress shut down the US government. A large rift emerges between Republican business interests and Tea-publicans. Far right wing Tea partiers challenge many sitting Republican Senators. Republicans get crushed in the polls. (But see next item.)
**ACA rollout is embarrassing and downright incompetent. Millions get insurance cancellation notices. Republicans are “saved” by Obamacare’s totally botched rollout. Democrats get crushed in the polls.
**D’s and R’s apparently reach small, middlin’ budget deal, hopefully preventing a 2nd government shutdown. Everyone is relieved by this incredibly minor achievement.
**All in all, Congress passes less legislation than any of its predecessors. There is NO coherent fiscal policy out of Washington to help the economy. Dysfunction is the rule, not the exception. The Senate changes filibuster rules to address inaction. Even standard, basic legislation flounders (e.g. the Agriculture Bill).
Yet, despite all of the above, the market is up over 25%. Amazing.
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