The speech was all about the economy and the new focus on U.S. competitiveness. Investment advisors and stock traders unsure on how to react. Which direction would stocks move after last nights speech was the question on most traders minds. After the State of the Union Address last night Wall Street was unsure. They were looking for more. No specific cuts and a feeling of what do we do now left traders guessing.
He said the worst of this economic crisis is behind us; he issued a rallying cry for the divided nation to get together to outpace rivals like China and India. He said “to win the future we will have to take on the challenges that have been decades in the making.” The second half of the speech was a little lack luster many observers noted. The Presidents usual energetic climactic ending was not there leaving many somewhat disappointed.
The White House has put a lot of effort into reaching out to the business community and we saw many of those themes last night. The need to reduce the deficit was emphasized by the president. Areas including innovation, education and infrastructure rebuilding were in last nights speech. The business community has been giving a clear signal that the key areas are trade and taxes, however the speech was short on specifics.
Hot topics like, raising the retirement age and lowering Social Security benefits were left out but a five year non defense spending freeze saving about $400 Billion over 10 years got an ovation from last nights audience. Other cuts the president is considering was from Defense Secretary Robert Gates which increases the cuts to a not so tiny $500 Billion. The republicans said that these cuts were not enough and inadequate.
“You don’t get rid of the engine” the president said and “across the board cuts is not a strategy”.
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