Sloan Sessions: Post-election market

Scott Jagow Nov 13, 2006
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Sloan Sessions: Post-election market

Scott Jagow Nov 13, 2006
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TEXT OF INTERVIEW

SCOTT JAGOW: In theory, investors like it when Republicans are in power. There’s less chance of costly regulation on industries such as the pharmaceutical business. But in reality, says Newsweek’s Allan Sloan, what matters is not who’s in control of Congress, but that nothing gets done in Washington.

ALLAN SLOAN: If you talk to what I consider some of the more realistic people, their opinion is if you have gridlock in Washington it means the government won’t mess up the economy so things will be OK. If you talk to people from the drug companies or you know some specific industries or I suppose the defense companies, they’ll tell you it’s the end of life on the planet and it’s going to be terrible and the drug companies are going to get hammered. It depends really on where you sit. And there are a few industries whose stocks may be harmed by this I don’t know, abut I think if you can get some of these guys drunk and promise not to quote them, I think generally, many of them, especially the credit analysts, are relieved.

JAGOW: When people talk about gridlock, I mean usually that’s a criticism of Washington, but here we are talking about Wall Street and Wall Street seems to think that’s the greatest thing since sliced bread. Why is that?

SLOAN: Well it depends, you see, on how you define gridlock. If you think of gridlock as you sit in traffic and it takes you three hours to go a block and you’re honking your horn and going mad, that’s bad. Right? That’s frustrating. But if you say, which is what they’re saying on Wall Street and what I happen to think, that we have in the United States a marvelous economy and probably the greatest collection of talent on the planet, you know economic, industrial, if we’d only let them do their jobs, that if the government doesn’t mess things up, things will go well. And gridlock to me means it’s much harder for the government to mess things up. It’s like in math, a zero is better than a negative.

JAGOW: In terms of how much influence Congress and Washington have on what’s happening on Wall Street anyway, do investors really care that much?

SLOAN: In the long run what happens on Wall Street reflects what happens in the country. I mean Wall Street doesn’t drive the country. It may be a leading indictor, it may do things in anticipation of stuff, but Wall Street doesn’t drive the economy and the country, the economy and the country drive Wall Street. If the economy is better than it would otherwise be, it means down the road, Wall Street is better than it would otherwise be. Politics are really in the end not that important to functioning of the economy. On the margins it means something, but fundamentally it’s a follower not a leader.

JAGOW: Alright Allan, thanks a lot.

SLOAN: You’re welcome, Scott.

JAGOW: Allan Sloan, the Wall Street editor for Newsweek Magazine. In Los Angeles, I’m Scott Jagow. Thanks for listening and enjoy your Monday.

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