USA/Global: Dial "L" for Lipstick
1. "It's lipstick, stupid"
Having lived in Africa, America, Germany, the UK, Germany, America, Germany, the UK and now Hong Kong, I have to say that each culture has its pluses and minuses. Only America could have "produced" Obama, and hats off.
Obama will seek to please - and thus, he has to disappoint. That is because he only can manage hope, but not realities. So whom can Obama choose to disappoint? Dial L for Lipstick!
What threw me was his rather jaded statement about pigs and lipstick. I agree with his philosophy, but feel that this reflects his overall approach to his new role. He panders to vested interests (pigs), but seeks to make them look different (lipstick).
So, just as Clinton quipped "It's the economy, stupid", I would re-phrase for Obama and say "It's lipstick, stupid." In other words, do NOT expect "change".
2. Living in "L"
What does lipstick have to do with "L"? Obviously, the first letter. But on a deeper level, we have warned that with global growth now making "the bottom" in sight, it will stay stuck. Reinforcing our point, we created in your minds the picture of a fish flopping around on a hot cement sidewalk as a useful analogy concerning market (and thus money-making) behaviour.
Never forget that all politics - anywhere - are local, so too in America. Obama's objective has to be to get re-elected in 2012, so his agenda must be domestic.
So he, as America's oldest youngster, will want to skip the cycle: he will seek to disallow economic "winter", instead hoping to skip from autumn to spring.
Drive-in, America's "big three" car makers. You know that he will bail them out. So he will keep stuff going that should have been allowed to die-out.
What will happen is that when economic "spring" (excess supply of money/excess demand for goods) does arrive, it will be held back by the icy tentacles of those vested interests seeking to keep the dead industries alive. And Obama will pander to these, as he already has.
3. Uncomfortable investment thinking
In the run-up to his inauguration, expect the markets to rise strongly. So go long the dollar and the US stock market. But then expect the big chill to set in, at least for two reasons:
- He will pander to America's car makers, and
- He will, therefore, have to pander to everyone else. Indeed, already the suppliers of car parts are clamouring, and banks have been for a long time....who's next? You get the picture.
