THE U.S. presidential election has dominated the headlines for the last number of months, but is it really so important to us here in Canada?
Well, despite its struggles throughout the global financial crisis, the U.S. remains one of the largest and most powerful economies in the world. At $15 trillion it's almost nine times larger than Canada's economy. Our economies are
very tightly knit; the U.S. is the biggest importer of Canadian goods so the state of their economy and who's in charge is very important to us.
Despite what many of his critics will say, President Obama has managed to ride through a pretty rough storm considering the poor economic state the country was in when he inherited his title. Since coming into office in 2008, the stock market has almost doubled from its low in 2009, big banks are on the mend and corporate balance sheets are carrying more cash and less debt; in fact they are at record levels. In addition to this, unemployment is down from its peak of 10.2 per cent to 7.9 per cent and the housing market is rising after years of nasty corrections.
But Obama knows he cannot bask in the glory of his victory for too long. He must steer congress towards consensus to avoid going over the Fiscal Cliff and falling into recession. Congress has just seven weeks to come up with a solution. Obama is tasked with the challenge of ensuring both parties reach an agreement in time, while still maintaining his party's ideals. This is not going to be easy. The standoff and negotiating could cause some stock market volatility but I believe they will come to a resolution.
The Obama administration has supported a number of home ownership policies to prevent people from losing their homes in foreclosures. His re-election will signal continued support for these projects and this is likely to increase consumer confidence and boost retail spending in the run up to Christmas. Similarly, as Obamacare is no longer under threat, hospital operators and pharmaceutical companies will do well. Not to mention families and individuals in need of healthcare.
Based on the policies he enacted and the ideals he has expressed in the last four years, Obama's win will prove to be a good thing for many sectors including conventional and alternative energy, technology, research and development, homebuilders and healthcare.
Lori Pinkowski is a portfolio manager and senior vice president, private client group, at Raymond James Ltd.
