Republicans Spur Rally?

brown electionWell, it's hard to imagine that indeed one State Senate election could create enough momentum to move the market as a whole. However, today's election race in Massachusetts is doing just that. As of now, the republican candidate, Scott Brown, is leading in polls and seems to be the majority favorite for the job. Usually, an election like this would not make much difference, however, a change in party could have huge effects in the economy as a whole.

Even though Brown's election would not give control to republicans, it would most likely give them enough votes to block the big health bill, which has been circulating throughout Congress for months now. Many feel that passing the bill will bring several new regulation practices to the health care field, which in turn could end up making a big crater in profits. The health care industry is the most profitable industry on Wall Street, so it is no wonder that many eyes are watching this election closely and why we saw a lot of green in trading today, especially health care.

I had the opportunity to attend a large, national equity conference this past week. The results, were quite alarming, especially for those in the real estate industry. Most of the break out sessions focused on equity in relation to commercial real estate, but the forums were all encompassing, no matter what field you're in.

As of now, the FDIC is and has been poorly prepared for the amount of loans and properties that has been acquired by them. This has led to a poor disposition of distressed properties, which has severly affected real estate companies all across the country. The point is, both the banks and the government do not have the man power to manage the distressed assets that plague their balance sheets. There have been attempts to sell certain propeties, but much of them have been C grade assets that do not have much appeal to legitimate investors.

For many of these hedge funds, they all agree that illiquidity is something that will be present long into 2010 and 2011. Most firms said they were lending on secured assets, with a close to mid and upper teens interest rate! What is amazing is that people are taking those loans. This is my fear if indeed the government decideds to pull the plug on fannie and freddie debt purchasing (which they have said they want to!). It is clear that problems still very much exist and that it is much to early to blow the victory horns. Happy Trading.

2 comments:

  1. QUALITY STOCKS UNDER 4 DOLLARS Says:

    Elections over.

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