Northern, WI  11/8/2012 (BasicsMedia)  —  Banks Get Republican Sell Off: Citigroup (NYSE:C), Wells Fargo (NYSE: WFC) and  PNC Financial (NYSE:PNC) all sold off after the Republicans lost a bid for the White House.  I noticed Tuesday during the election results the overall market was beginning to decline once the Florida tally was concluded by CNN and other voting watchers, these banks added another leg down once Ohio was in the bag and continued through the subsequent trading session.

One prevailing thought is that President Barack Obama’s re-election, in conjunction with banking industry critic Elizabeth Warren winning a U.S. Senate seat, is that tougher regulations on the financial sector are here to stay.  PNC Financial Services Group Inc. Chairman and CEO Jim Rohr didn’t choose sides in the election, but did warn that the country’s mounting debt problems, including the “fiscal cliff,” must be settled.

The focus now has to shift to those impending tax increases and spending cuts the fiscal cliff entails, said a post-election report from Wells Fargo (NYSE:WFC).  “After the first of the year, look for both parties to sit down and work toward a longer-term agreement which will most likely consist of some modest tax increases and some modest spending reductions within a framework for long-term deficit reduction,” the report said.

Investors will flock to safe havens and dump questionable sectors as a knee jerk reaction persists on Wall Street.  Yesterdays repricing in the markets will sort itself out, keep in mind we have this repricing every 4 years on the back of elections, but I believe buying Volatility here is questionable because we have a second term President smoothing Vol.

Historically markets have benefited from Democrats in office regardless of what the consensus is among the current 2 divided sides of Politics..recent Democratic Presidents have helped major indexes have positive quarters and higher share prices across the board…it’s longer term regulation that give the stigma of – helping or – not helping – business.

Small business is the key to any economic strength and low rates and bank liquidity will really determine the direction of markets as we head through Obama’s second term.  The dilemma will be how the US Dollar$ holds up as we print more money.  The other underlying key is the consumers desire to keep spending money on technology versus gasoline..but we have 4 more years to watch this unfold.

 

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