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If we needed a reminder that partisanship still exists in Washington, we got it yesterday in the House’s vote on the stimulus bill. In the vote, 244 Democrats voted for the bill, 11 Democrats voted against the bill, and 177 Republicans voted against the bill. While the bill passed and is now on to the Senate, the vote was noteworthy in that it was solidly split across party lines.

Ironically, earlier in the week President Obama visited House Republicans in an attempt to sway some votes. Politico provided a summary of the meeting afterwards:
“He promised to make tough spending choices in his first budget blueprint — “everyone will have to take a haircut,” he said. He told them he wouldn’t increase the size of government just to increase the size of government. He even teased House Minority Leader John A. Boehner about his golf swing.”
Other media outlets provided a similar assessment, mainly that the meeting was very cordial and President Obama was earnestly attempting to reach across party lines.

In the aftermath of this meeting, expectations were raised dramatically in terms of President Obama’s ability to garner support for the bill. Some reports suggested that as many as 50 of the more moderate Republicans would vote for the bill. Obviously, these expectations were widely out of touch with reality and imply that despite his resounding electoral victory and high approval ratios, his political capital may have limitations as noted by this inability to even pick off ONE vote.

When President Obama and his advisors consider their inability to rally Republican support on this vote, they may not have to look any further than the assessment from Representative Patrick McHenry, a Republican from North Carolina, who when asked what happened to Obama’s honeymoon responded simply: “Ask Pelosi”. Clearly, President Obama is going to have to do a better job of Captaining his former Democrat colleagues in Congress, who have peeved off their Republican counterparts by failing to reach across party lines in the construction of the stimulus bill.

From an investment perspective, on the margin, this is bullish for the US dollar to the extent that the bill gets reshaped, or renegotiated, in a less Socialist fashion (via more tax cuts primarily) in the Senate where the Republicans yield more power with the ability to filibuster the bill. As you know, Keith has been saying that a stronger US Dollar is bad for stocks and commodities – you are seeing that inverse correlation play out in the market again today.

Daryl G. Jones
Managing Director