Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jason Stipp and Jeremy Glaser | 11-09-2012 06:00 AM

5 Election Takeaways for Investors

Morningstar markets editor Jeremy Glaser sizes up the scenarios on the fiscal cliff, health-care reform, Fed policy, bank regulation, and more following this week's election.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five.

Just in case you were going through election news withdrawal, we've got just a little bit more for you here. Morningstar markets editor Jeremy Glaser is joining us with five election takeaways for investors.

Thanks for joining me, Jeremy.

Jeremy Glaser: Thanks, Jason, and don't worry. 2016 is just around the corner.

Stipp: What do you have for The Friday Five this week?

Glaser: Well, we are going to take a look at those five election takeaways. We're going to look at the fiscal cliff, at health care, at the Federal Reserve, at banks, and finally elections outside the U.S.

Stipp: So, if you thought we had some uncertainty before the election with who is going to win, a lot of that uncertainty gone away on that front, but we have even more uncertainty still out there with the fiscal cliff that's going happen in January unless we see some action in Congress. What's the latest there?

Glaser: This is definitely the big story. Before the election, no one really had a huge incentive to negotiate. So, even though we have basically the same people coming back after this election, we think that they will be more likely to come to a deal even if we're not exactly sure of what the contours of that deal are going to look like.

I think that it's likely that something will be more short term in nature than long term in nature. Coming up with a real, long-term so-called grand bargain is not something that's going to be particularly easy. Coming up with those tax reform measures, finding places where you can get some of that new revenue in a way that's going to be palatable the House Republicans and also something that the president and the Senate can sell to their base is not going to happen overnight. Figuring out where to make those spending cuts in the ways that are going to be the least painful, where you can make those entitlement reforms, is not something that you're going snap your fingers and is going to happen.

I think what's more likely is we're going to find a short-term deal to extend many, if not all of the tax cuts, find a way to keep some of those short-term measures in place, make sure that the debt ceiling gets raised so you don't run into some of those issues you had last summer.

Certainly, there is going to be a lot of volatility during this. I think part of the negotiating tactic is going to be to see how far you can push it. If you aren't credibly willing to walk away and just say we're going to let the fiscal cliff happen, certainly that could diminish your bargaining position a little bit.

So, I think we're going to hear a lot of rhetoric until January and possibly even after, and I think the market is going to react to that, but we think there's a good chance that at least some of the fiscal cliff will be ameliorated before it happens, if not all of it.

Stipp: Mitt Romney's rhetoric before the election about repealing health-care reform certainly put another cloud of uncertainty over health care. We thought some of that had cleared up. Now, the election offers little bit more clarity. You talked to some of our health-care analysts. What did they have to say about the results?

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article