Obama’s 2013 State of the Union Address: Summary and Reaction

Key takeaways:

On Deficit Reduction:
-
"Harsh, arbitrary cuts" jeopardize military readiness
-
Attempts to Cuts on Medicare and Social Security benefits "even worse"
- Deficit reduction alone "not an economic plan". US need to create more jobs and equip labor force.

On Economy
- Manufacturing sector key
- Highest oil production in 15 years.
- Renewable energy industry add jobs to economy
- Lower energy costs for both consumers and manufacturers
- Infrastructure reforms needed to attract more jobs
- Bill to allow homeowners to refinance mortgages rates undergoing; help to support housing sector

On Education
- Rewards to schools for partnerships with employers
- Focus on Sciences and Maths for push on Manufacturing Sector

On Social Concerns
- Minimum wages raised to $9.00 an hour - to tie to cost of living
- Incentives for companies to hire Americans
- Reforms on immigration systems
- Vote on gun control to take place in Congress

On War against Terror
- US servicemen to take on "support role" in Afghan
- Higher transparency on war efforts
- Executive order on Cyber-attacks prevention signed

 

Bottomline:
No mention of debt ceiling in the SOTU Address. Obama has previously stated that issue of debt ceiling is non-negotiable, and it looks like he is continuing the stance. Linking the auto sequester to military readiness will certainly hit home close to staunch Republicans who are seeking to hold onto the ceiling.

Economic reforms stated by Obama will take many year to take hold, with the fruits coming in surely after his term is over. We're talking about building better roads, electricity and network cables that will take years on bureaucratic approvals alone. However the drive to produce more workers for the Manufacturing sector and making USA attractive for global manufacturers is an admirable one. If US manage to succeed in carry out the masterplan, we can eventually see stronger fundamentals in both labor and GDP output of the nation.

Gold/USD 5 Minutes Chart

/mserve/XAUUSD_130213M5.PNG

Gold prices were slightly depressed after Obama's speech at 10am SGT (9pm EST). However, the short-term trend remains up, though 1,653.50 is still acting a a strong resistance against further upside. Overall, reaction to Obama's address is muted, as there isn't anything that is of particular short-medium term interest to investors. If one were to forcefully place a slant on the speech, it would be mildly bullish as one may speculate that the Fiscal Cliff and Debt Ceiling are moot points considering Obama intention to bulldoze both issues against the GOP. Long term US outlook is also better, provided that everything goes to plan, and it is unlikely that traders will trade on a grand masterplan that will take years after Obama's departure to take root.

Click here for the full text transcript of SOTU Address

More Links:
Japan Can Do What It Wants According To The G7

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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