Is Obama already a lame duck?

Schwab Impact opened with a positive outlook for the economy, but not so positive for the president

Nov 10, 2013 @ 9:04 pm

By Liz Skinner

WASHINGTON — Democrats are increasingly separating themselves from President Barack Obama, and the damage from the debacle of the health care plan rollout has negated all injury done to the Republicans because of the government shutdown, a political strategist said Sunday at the opening of the Schwab Impact Conference.

"I've never seen a president become a lame duck this early," Greg Valliere, the chief political strategist of Potomac Research Group, told a ballroom full of financial advisers. "The only thing he can get done now is through regulatory policy."

Although Mr. Valliere said the health insurance program could be delayed if its computer systems still aren't working properly in a month, the earliest that Obamacare could possibly be killed is spring 2017, he said.

Check out some of Schwab Impact's can't miss sessions.

As for the economy, forecasters remained generally upbeat.

Stocks appear undervalued when looking at forward earnings, which will give U.S. markets breathing room in the face of slower earnings growth, said Liz Ann Sonders, Charles Schwab's chief investment strategist. Long-term sentiment suggests that "we are not near the euphoria that tends to mark the end of a bull market," she said at the pre-conference session Sunday.

One of her concerns, however, is near-term sentiment, "which is getting a little bit frothy" and could cause a small pullback at any time.

U.S. manufacturing looks increasingly attractive going forward because American wages have remained low, Ms. Sonders said. The U.S. is now fourth in terms of "ease of doing busines," while China is No. 96 and India is No. 134.

"Things like this start to matter more" when U.S. wages are stagnant, she said. "A lot of jobs are coming back from China."

Overall, developed economies are trumping emerging markets and investors should carefully evaluate the fundamentals of specific countries when investing in developing nations, she said.

Mr. Valliere told advisers to "tell your clients not to watch CNBC quite so much," because he said the media is hyping the negative news when in reality "the big themes look just fine."

He predicted the U.S. government will have neither another shutdown nor another debt ceiling crisis, based on talks he's had with Republican and Democratic lawmakers.

"The markets this fall got used to the fact that Washington can cry wolf only so many times," Mr. Valliere said.

The U.S. budget deficit also will continue to fall as tax receipts continue to increase, new spending is blocked by the Republican-controlled House and spending cuts continue, he said.

He doesn't expect any deal on taxes to be approved this year.

Neither speaker is worried about inflation, and both expect Janet Yellen, President Obama's nominee for Federal Reserve chairman, will mostly continue the dovish stance of current chairman Ben S. Bernanke.

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