Congratulations Mr. President on enacting health care law which America needed and was in works for last 6 decades ! After setback of Mass senate elections in Jan, everyone had almost given up on health care reforms for few more decades. But Obama took charge of overall game-plan and led from front to get health care reforms done. This week was the the best week in Obama's presidency with following key achievements !
- Health care reforms done - this goal eluded for all previous presidents and Obama would be remembered for this in same way as FDR for enacting Social Security and Lyndon Johnson for enacting Medicare for elderly !
- Major arms reduction treaty with Russia
- Some tough talking to Israel's prime minister about settlements in Jerusalem
- Proposal of using some TARP money to help struggling home-owners
- Financial Reform bill getting momentum and has potential to get it done in next 2-3 months
Lot can be done when Obama leads from front and Congress gets a taste of win ! Hopefully this momentum can continue.
Now that Washington has finally started working, we hope that they pay more attention towards job growth. Economy has started showing quite a bit of momentum but real truth would be in next week's employment report. Economists are expecting job growth of about 150,000. That much of job growth is needed just to maintain unemployment rate of 9.7. We need much higher job growth to bring down unemployment below 9%. This is absolutely important to keep stock market momentum and for democrats to keep control of both houses.
Dow is within spitting distance of 11000. As I predicted few weeks back, it may touch 11000 next week. Where it is headed after that ? Most likely DOW would trade in between 10500 and 11500 till summer end. If companies continue the good results for first two quarters and continue to forecast robust growth in last two quarters, DOW could start its upward journey in Nov/Dec with potential of touching 12000 by end of 2010. With this macro forecast, here are some sectors one should invest:
- Financials: banks, insurance companies (SNV, KEY, RF, FAS, UNG and some European banks like AIB, ING and NBG)
- Real estate - commercial and shopping mall REITs (SFI, GGP, DDR, PLD)
- Energy Sector - look at master limited partnerships (AHD, XTXI, ERX, CHK)
- Private equity sector - finally M&A and IPO activity has picked up. So private equity companies can cash out their past investments (ACAS, FIG, BX)
So once again, Congratulations and Thank you Mr. President on job well done !
Have a great weekend !
/Shyam
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