Nov 7 (Reuters) – Obsess exclusively over the fiscal and
monetary impact of the U.S. election at your peril: the real
news may be coming out of the euro zone.
An election producing a split Congress and a second Barack
Obama term was greeted on Wednesday with a sharp divergence in
financial markets, with stocks falling and Treasuries and the
dollar rallying sharply.
Since most of us in the U.S. have spent nearly every waking
hour in recent weeks being bombarded by news, advertisements,
images, lies, statistics and still more lies it is no wonder
that most analysis of the market is attributing the moves to the
The news out of Europe, where European Central Bank chief
Mario Draghi was decidedly downbeat and where a key Greek vote
over an austerity plan may not pass, could prove the true
To be fair, the election-market links are there. A split
U.S. Congress seems unlikely to reach a growth-friendly grand
bargain on fiscal policy, making it more likely that whatever
half-measures are agreed in the looming lame duck session only
serve to highlight the real economic drag of the spending cuts
and tax rises to come. There is a possibility that a
Republican-controlled House plays hardball, potentially making
the process disorderly as well as dysfunctional.