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Let the Democrats Control the House and Senate...
*** Just Don’t Let Them Control Your Portfolio
*** Inside Today’s Boiler Room…
Dear American Capitalist Reader,
With four weeks to go until Election Day, the latest poll isn’t being very kind to Republicans but should provide some security for investors.
The latest The Washington Post/ABC News poll finds the Democrats with a 54-41% lead among registered voters in the upcoming congressional race. This is the biggest Democratic lead this close to an election in 20 years.
With low approval ratings for President Bush and the nonsense brought on by hypocrite Florida Representative Mark Foley, voters are turning to the Democrats for some sense of credibility to help lead the country for the next couple of years.
I say let the Democrats have their day just as long as the constituents of the great state of Maryland don’t vote for the Democratic nominee to the Governor’s mansion. But that’s a story for another time.
This Democratic Party is a fractious party; it’s not your typical bed-wetting, tree-hugging group. More than half of the Dems in Congress have been sitting in minority since the 1994 GOP sweep and have no appetite for the left-leaning policies that may put them back there again. This fresh crop of politicians is moderately conservative, even with old-timers like Pelosi, Rangel and Dingel.
Moreover, even if the Democrats take both the House and the Senate, they will likely have fewer than 60 Senate seats needed to break a filibuster, and in both branches, will probably not collect the two-thirds needed to override a Presidential veto.
Little Impact for Stocks
If the Dems do in fact, sweep the House and the Senate, the market reaction will be muted. And, leading up to November 7, look for the markets to trend upward as the fear and uncertainty is taken out of the equation as the prospect of a Democratic sweep becomes more and more likely.
Diligent Investor predicted this outcome three weeks ago when it mentioned that this election season would not be filled with the drama of not knowing who was going to win. The feeling is that with an unpopular war and the higher energy prices experienced over the summer, there is little chance of the Republicans remaining in control of both the House and the Senate.
The one negative, though, is that a Democratic sweep will lead to very little productivity on Capitol Hill. Look for a Dem-controlled Congress to focus on lighter issues: social security privatization, Supreme Court appointments, and embryonic cell research. The only question mark for the new Congress will be healthcare, as the government will probably have a little more elbow room to negotiate prices for the new Medicare prescription drug plan.
Another factor will be tax cuts. According to Sunday’s The New York Times, the Democrats are pledging fiscal responsibility and are intent on “rolling back the Bush Administration’s tax cuts for the wealthiest Americans.” Yeah, good luck with that one, though.
Only time will tell, but it seems that the era of Republican leadership may be coming to an end in Washington. However, the outcomes for Main Street and Wall Street should have very little impact on your portfolio.
Until tomorrow,
Todd M. Schoenberger,
Senior Equities Analyst, Diligent Investor
Over to Ian Cooper with more…
Inside the Boiler Room…
News that New River (NRPH) received an approvable FDA letter for its ADHD drug boosted shares by $16 yesterday. But the Street was so wrapped up in NRPH’s news that it failed to pay attention to its connection to a small company trading at just $9.
It turns out that a small company had inked a multi-year agreement to develop this ADHD drug with New River, according to a press release. It’s possible the Street could be suffering from attention deficits and could benefit from the new drug. It wouldn’t be the first time. But we’ll use it to our advantage before the Street realizes that it left behind a real gem yesterday.
Current EVS readers, please read EVS #850 for more.
Speaking of EVS, its position in Rediff.com is rocketing north… and fast. The company now trades on the NASDAQ Global Market.
Is It Time to Buy Housing Stocks? It Could Be.
Toll Brothers and DR Horton were upgraded this morning, and according to Alan Greenspan as reported in Reuters, “the housing market appears to be emerging from its recent travails and the ‘worst may well be over… I suspect that we are coming to the end of this downtrend, as applications for new mortgages, the most important series, have flattened out…”
In fact, according to the Mortgage Bankers Association, total mortgage applications were up 11.9% in the week ending September 29, 2006 to 633.9. That’s the highest showing since January.
Top 5 Stocks
1. AMDL, Inc.
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2. VoclaTec Communications
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3. Epicept Corporation
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5. Interactive Systems
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Top 5 World Markets
1. Poland/Warsaw
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2. Turkey/ISE 100
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3. Hungary/Budapest SE
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5. Thailand/SET
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Earnings Announcements
Alcoa Inc, Audiovox Corporation, Emmis Communications, IDT Corporation, Genentech Inc, Supervalu Inc, and Zila Inc are releasing earnings.
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10/3/06 – Visicu Inc is unlocking 6 million shares.
10/3/06 – Castle Brands Inc is unlocking 3.5 million shares.
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