On the monetary front, former House Speaker Newt Gingrich waxed on his disaffection toward the Federal Reserve, saying, “Ben Bernanke is a large part of the problem and ought to be fired as rapidly as possible.” Here Gingrich took the lead from Paul, who repeatedly called for an audit, and then an end, to the Federal Reserve’s control of the money supply and interest rates.
The candidates all hammered on federal government regulation, with Rep. Michele Bachmann of Minnesota saying she would like to repeal the Dodd-Frank financial reform bill, while Sen. Rick Santorum of Pennsylvania said he would repeal every regulatory measure the Obama administration has imposed over the past three years. All of the candidates were in agreement that regulations posed a huge obstacle to U.S. economic growth, and all said they would take steps to ratchet down the level of regulation currently pulling vigorously on the reins of American enterprise.
Finally, the night was replete with a discussion of tax policy, with each candidate touting his or her plan to alter the tax code to make it less of a burden on citizens and to make it fairer and more effective. While each candidate has their own vision of what’s likely to work best — Cain’s famous 9-9-9 refrain, Perry’s 20% postcard option and Romney’s 59-point tinkering of the existing tax system — they all basically stuck with the 10,000-foot view of what needs to be done, and how our system will be best served by their respective proposals.
The Investor Takeaway
So, what should investors take away from the CNBC debate? Well, although specifics were in relatively short supply, I think the bigger picture is actually what’s more important to investors. You see, the direction of the market has as much to do with perception and confidence as it is does the details of who, what, when, where and how a specific tax or regulatory policy is going to affect the economy and/or a specific market sector.
What I think was made abundantly clear from this debate is that all of the Republican candidates have views that are in stark contrast to those of President Barack Obama. The president thinks bailouts, stimulus, top-down government jobs’ schemes that rob Peter to pay Paul, and increased taxes on millionaires and billionaires is the way to right our economic ship. Forget about the fact that the scrapheap of history is littered with such low-grade, failed socialist programs. The president and most in his party think they will be the ones to finally outsmart the laws of economics.
Did we hear incredible, tradable specifics from the eight Republicans on stage at Oakland University last week? The answer is no. But did we get a good sense that all of the candidates would approach the economy and markets differently — and in my view much more effectively — than President Obama? I say the answer is a definitive yes.
As investors, I suspect that if any one of the GOP candidates is victorious next November, we could see a huge change-inspired market rally that’s liable to usher in another broad-based bull market. Conversely, if we fail to see a credible challenge mounted to the president, it could be mean more of the same market volatility, economic uncertainty and slow-growth malaise that have plagued the country since Obama took office.
This article originally appeared on Traders Reserve.