What President Obama Has to Say to Wall Street

"There are just so many problems and there's no money," says Kathy Boyle, president of Chapin Hill Advisors in New York. "I wouldn't want this job if you paid me $3 trillion a year."

I'm pretty sure Obama is excited about what lies before him, but he must be careful not to alienate Wall Street because he needs them to get out of the crisis we're in now. He can talk all he wants about health care, tax breaks for the middle class among other things but nothing is as important as dealing with this recession we are in now. Every person in America is being affected by this and people need to be able to trust that they will have income from steady jobs.

Right now the labor market is extremely weak among manufacturing companies. GM is planning to announce more job cuts and an overhaul of their current labor structure on Friday. This sector is heavily unionized compared to the rest of the market and there is concern that union support of Obama may lead to stronger unions in the economy. This goes for manufacturing jobs, steels jobs and union jobs across the country. Unions aren't the most efficient organizations in the economy just look at GM right now. The problem is not the idea of the union but the terms they agree to with their workers are just not competitive. GM pays just as much in health care liabilities as it does for wages which puts the company at a huge competitive disadvantage with Toyota.

So maybe unions are the way to go but jobs still need to be created and Obama plans to do so with the alternative energy sector. Cleaner and more efficient energies are going to be pushed by his administration which is going to favor wind and solar companies over the oil complex. These jobs will come through new research in alternative energy and infrastructure build up. Currently we can't feed the world's energy needs without fossil fuels but we can depend less on it by building new alternative energy facilities. While there will definitely be a shift to alternative do not forget natural gas which is a much cleaner and efficient fossil fuel. The price of nat gas has increased approximately $1 over the last week in anticipation of the new administration energy policy. Chesapeake (CHK) is up over 10% today!

Like alternative energy, the health care sector will benefit from the new administration. Inflation in the sector has forced many would be buyers out of the sector because they rightfully believe that the companies are not going to be able to pass on higher costs to customers. Obama plans to "subsidize" these costs which will make the companies more profitable.

Regulation in the Financial Industry

Democrats now control the executive and legislative branches (well not quite yet...Bush might pull something out of his hat) and this means that certain regulatory legislation will be passed. Barney Frank is going to become a household name for people outside of Massachusetts. This might not be a bad thing it if provides confidence in the market which will help solve the credit crisis. But there is also the concern that legislation right after an popular incident might go to far. Many people believe that Sarbanes Oxley went too far dealing with WorldCom and Enron accounting scandals making U. S. business less competitive because of more stringent accounting rules than the international ones used everywhere else. Mortgage lending will definitely be an area of concern because the predatory lending helped spread this crisis. However they also need to address public education on mortgage and financial issues. Other legislature will come up because everyone wants to make sure that this episode never airs again.

Obama has a lot on his plate but with the right people helping him out we can turn this economy around!