Should President Barack Obama lose this year's presidential election, expect a "tremendous" lift to the economy, as businesses sitting around in standby mode would push through with job-creating investments, says trader, commodities expert, and index developer Victor Sperandeo.
The Federal Reserve has kept interest rates close to zero and pumped trillions of dollars into the financial system via ultra-loose monetary policies with the aim of kick-starting the economy.
The economy, however, continues to sputter along, largely because companies refuse to invest and hire on uncertainties stemming from Obama's policies.
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Should Obama be voted out of office, expect businesses to take advantage of low interest rates and high liquidity levels and grow again.
"There would be a tremendous confidence lift," Sperandeo tells Newsmax.TV in an exclusive interview.
"Investors and businessmen would start to really become aggressive if Obama lost the next election, and they would start to use that money and borrow more of it instead of saying 'I want to see what's going to happen," said Sperandeo, known as “Trader Vic,” who has worked for George Soros and is now president and CEO of Alpha Financial Technologies.
In the meantime, companies will read the headlines and fret about the direction of the country as opposed to boosting capital spending and hiring.
Nobody knows what Obama's healthcare law will cost them or if the Supreme Court will strike it down.
New regulations are burdening corporations as well, and the fate of the Bush Tax Cuts, which are due to expire at the end of the year, remains up in the air.
"These are unknowns and if he were out and they [Bush Tax Cuts] were to remain intact, and investors and people would know what the future was going to be you'd have a boom. It would be a tremendous boom," if Obama weren't re-elected.
If Obama does win, however, investors need to prepare.
The economy would likely resemble the scenario in 1931, when growth was weak and taxes were raised, says Sperandeo, a professional trader with over 40 years experience in the stock, bond, futures, commodities, and currency markets.
"In '31, which was the last time you had a weak economy and declining GDP growth, and the president raised taxes substantially."
Expect the same with Obama in a second term.
"You would have a very, very deep recession — a double dip — and/or a depression. With that said, you would put your money in things that would help alleviate that, which basically is some cash, preferably in Canada or in Australia because their interest rates are relatively decent — we have zero interest rates here," he said,
"You'd put your money in corporate bonds that yield more than 4-5 percent. You'd put your money in gold, you'd put your money in conservative asset classes. I certainly wouldn't own stocks at that point, and I'd try to be diversified as much as possible in non-correlated asset classes."
Turning to high gasoline prices, expect inflation to ensue.
The Federal Reserve often downplays high gasoline prices when addressing inflationary policies because pricey fuel often does not reflect true fundamental demand.
If housing prices and salaries aren't rising as well, the Fed likely won't rush to raise interest rates if gasoline prices rise at the pump thanks to geopolitical tensions in the Middle East.
Still, those prices can trickle down and send up costs in general.
"It's going to produce inflation, it's going to produce increasing prices on everything, because everything is related to energy," Sperandeo says.
"What can be done? Nothing can be done in the short run if we would sort of make peace with Iran and Iran comes to its senses."
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