It is generally accepted the SOTU can be seen as a an opportunity to pull the country and Congress towards policies that the President believes will help the nation or be seen as a divisive, partisan and small in its scope to inspire action and push Congress away.
Last night’s speech, the President’s sixth SOTU address, was perhaps one of the most defiant on record. The White House is calling this the “fourth quarter” of his presidency. Keeping with the football analogy, is the President attempting a proverbial “Hail Mary?”
In my view many of his proposals fell on deaf years for the simple reason of costs. Secondly there was a group of at least 70 bi partisan legislatures wearing lapel pins that is encouraging compromise, not taking the country further to the left and into “Robin Hood” territory. The President had the opportunity to change taxes not to create division over income but to create unity for growth. He did not.
I think the world is on the verge of anarchy, a major consequence of America abandoning its 70 year unspoken role of the global policeman. The headlines are frightening. ISIS. Ukraine. Iran. Israel. Iraq. Syria. Yemen. Libya. Boko Harem. These issues were not directly addressed and I fear in six months they can be the primary narrative that potentially makes the Administration’s agenda even more feckless.
Yesterday equities came under pressure for the vast majority of the day only to erase the loss during the last hour of trading. The accepted reason was falling energy prices, concerns about global growth even though Chinese GDP surprised on the upside, and several disappointing high profile earning results.
I will add a fourth. The vast majority of the SOTU was leaked. As noted several weeks ago, for the first time since its 1935 inception, Gallup reports America believes the greatest threat to their well-being and their greatest concern is government. In my view, last night’s speech inflamed this attitude.
I will also argue a weak or disabled Executive Branch is dangerous. Did the President further weaken his power by the tone of the Address?
Rarely can questions be declaratively answered. In this case I think I can. If he is able to rally the electorate and Congress to support his agenda, his “Hail Mary” was a great success. If he is unable to pursue his agenda, the President risks being viewed as immaterial, desperately lashing out at Congress in an attempt to obtain any legislative goal. This is the path that he has taken over the last two years and is regarded as major reason as to why his party has lost so many seats in Congress, the most seats in over two generations.
Only history can answer this question.
Last night the foreign markets were mixed. London was up 0.69%, Paris down 0.34% and Frankfurt down 0.28%. Japan was down 0.49% and Hang Seng up 1.68%.
The Dow should open little changed as investors considered earnings reports to gauge equity valuations. The next major event on the calendar is the ECB and then the 1/25 Greek election. The 10-year is off 3/32 to yield 1.60%.
