A GOP Victory In November Has Now Become An Even Bigger Danger To The Market

Rand Paul

Photo: Greg Skidmore, en.wikipedia.org

Today’s jobs numbers show that a v-shaped recovery is almost certainly not in the cards.For the last month, since May’s weak jobs number, we’ve been fed a pretty steady diet of mediocre economic data, whether it’s on the labour front, or housing, or even actual economic production.

It’s obvious that the stock market would love another dose of stimulus.

Now this isn’t to say that further stimulus is a good idea for the long-term: after all, more stimulus will put us deeper into debt, and it means more of the economy become under the control of our wise central planners

But it’s obvious that the market is addicted to stimulus, or free sugar from Washington DC. After all, what we’re really experiencing now is stimulus hangover (that really apparent in the housing and auto markets).

More stimulus is possible, as long as the Democrats remain in control, but that’s looking less and less likely, and when gridlock comes to DC, some version of American austerity looks to be certain.

You can make a great argument that this is exactly what we need. We have painful adjustments that need to happen, which don’t seem to be occurring in the presence of economic training wheels. And the debt is a legitimate long-term concern. But if you’re looking over the short and medium term in the market, some version of austerity can’t be too exciting to you.

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