It is high time for our political leaders to make some key decisions. And that translates into large uncertainties for investors that have held the market in a range and with low volume.
We do not know whether "Cap and Trade" legislation will pass the Senate and we do not know whether and any healthcare bill will pass through Congress, or what that bill might entail. And these two issues are paramount for the future of America.
As we discussed earlier, cap and trade could cause incremental costs in energy for all of the United States, particularly in all carbon-based generation of electricity. Increasing these costs will make carbon-based energy less competitive with alternative sources, like solar and nuclear. The benefits of this legislation will be less carbon emissions, cleaner air, less dependence on imported oil and the creation of new jobs in the alternative energy sector.
However, this all comes at the expense of jobs in the traditional energy sector, which is currently the backbone of our energy policy. It also means higher job losses in the rest of the economy due to higher energy costs. Remember that the United States is the "Saudi Arabia of coal," given its abundance here.
All of these uncertainties are huge, as are the stakes for a multitude of sectors. I have been surprised by the unpredictable decisions of our legislators many times. In addition, legislative add-ons that tack hundreds of pages onto a bill right before it comes to a vote make prior analysis nearly impossible. Therefore, unless the outcome is almost a foregone conclusion and the details are clearly spelled out well beforehand, making strong bets on their legislative outcomes is just plain gambling.
The unemployment rate rose to 9.5% in June as the economy shed 467,00 jobs.
