Notes From Underground: Did Obama’s Labor Day speech give birth to any new ideas?

The markets are very quiet today as the U.S. celebrates Labor Day and Canada has a bank holiday. President Obama was in Milwaukee where he laid out plans for a transportation bill that extends out six years and provides for roads, rail and airport construction. This should have been part of the original stimulus package but its lack of immediacy in job creation raises more questions than answers.

We know that more plans are coming this week and we continue to contemplate just what the Obama administration is going to bring forward. It is now the final drive toward the November elections and we just can’t imagine this White House going quietly as polls forecast the House going Republican and the Senate races resulting in heavy Democratic losses. Unlike the great amount of leaking that took place around the 2009 stimulus, the current plan seems to be on lockdown, which gives rise to rumors and all sorts of conjecture. But the big question is what sort of stimulus will give an immediate boost to the chances of Congressional Democrats? The Congress has carried Obama’s water so can he just leave them high and dry?

Since the weekend has been very quiet, the biggest story has been the earthquake in New Zealand. Fortunately, no deaths were reported and casualities appear relatively minor with property damage estimated to be around $1.5 billion kiwi. Throughout the years we have seen that natural catastrophes can be a short-term boost to a nation’s currency as money flows to the country that needs large rebuilding programs. We put that on the table only as a precaution because recently the KIWI has been weak against the AUSSIE.

We still await news about the AUSSIE election and there are rumors that an announcement is due within the next day or two. It is suggested that the LABOUR party appears to have pasted together a coalition. (NOTE: This is not a certainty so we will tread cautiously until we know.) Later tonight–11:30 CST–we will hear from the RBA and we expect the central bank to keep the overnight rate unchanged. However, the statement alluding to the bank’s outlook will be more important. The RBA has been a very good indicator for its views on the global economy so we will pay particular interest to how they see the global growth story.

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One Response to “Notes From Underground: Did Obama’s Labor Day speech give birth to any new ideas?”

  1. Arthur Global Practice Says:

    Here Comes $50 Billion For Rails, Roads And Runways. Wondering if Buffett knew it when he bought Burlington Northern.

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