Previewing Four More Years Of The Divided States Of America
Do not expect any changes to the trends of polarization and party non-conformists is the message from JPMorgan's CIO Michael Cembalest. As he explains moderates like Blue Dog Democrats and Rockefeller Republicans are now artifacts in the Natural History Museum, having given way to their more ideological offspring (through retirement or after having been beaten in primaries).
If anything, Cembalest believes the House may become even more partisan after apparent losses by moderates in both parties.
After a better than expected night for Democrats given Senate results, the fiscal cliff looms...
With the status quo maintained, a divided government goes back to work to solve the Mutually Assured Fiscal Destruction problem. The President may have picked up some leverage over House Republicans who still have to run again, but we’ll see. The fiscal cliff does not have to get resolved by December 31, since some items can be resolved in the spring and back-dated. Defusing the cliff (see options #1 and #2) would help growth in 2013, and perhaps reignite business capital spending, which has stalled (see chart).
Read more: http://newswalls.blogspot.com/2012/11/previewing-four-more-years-of-divided.html