Markets, Obama Stumble

The Nasdaq is down over 17% since its peak. The S&P 500 is off over 15%. The Dow is off almost 12%. A few more rough days and we'll be treading in a bear market for US equities. As the economy cools due to the housing recession and credit crunch, and as earnings continue their slow it is inevitable that this will be priced in to equities.

The true question is the extent to which you believe that equities are overpriced at their current valuations and just how long and severe this slowdown will be. A secondary level of evaluation needs to be done to determine whether or not you think the US slowdown will be enough to lead to a general recoupling around the world that will slow growth in developed and emerging markets. If you are Nouriel Roubini these are easy questions, but if you aren't, these are questions you should be pondering.

On another note, though it is a little too early to call (13% precincts reporting) it looks as though Hillary Clinton might just mount a stunning rally to take New Hampshire and keep her hopes alive to take the Presidency in 2009. If Hillary had lost New Hampshire she would have been effectively out of the race as many in the Democratic party would have jumped ship. Those hoping for easy sailing for Obama need to take a deep breath. Republicans hoping to face a "beatable" Hillary in the general election just let out a huge sigh of relief.

On the other side of the aisle McCain secured a victory in New Hampshire by a solid 37%-28% margin over Romney. If I were a betting man I would guess that a Romney-Obama general election could be in the works.