By Sreekumar Raghavan
The Wall Street has turned against Obama and a number of international concerns, uncertainties have pulled down equity markets in Asia, Europe and USA last week.However, Bob Doll, Vice Chairman and Chief Investment Officer at BlackRock, an investment management consultancy points out that amidst all this chaos a number of strong corporate earnings went unnoticed and that may be paving the path for a long term market recovery.

Suddenly, US President Barack Obama has become a bad boy for the equities market. Reason: he has announced more stringency in bank regulation to avoid future financial crisis. And that is not the only reason-- he has put forward more than $1 trillion in tax increases over the next 10 years.Considering the fact that US citizens in general pay more taxes than their counterparts elsewhere, market reaction seems justified.

One-time Wall Street supporters of U.S. President Barack Obama are turning against him as he pushes for new regulations, The New York Times reported on Monday.

The newspaper said some of the large firms whose leaders made big contributions to his 2008 presidential election are now making contributions to Republican opponents and are rebuffing pleas from the national Democratic House and Senate campaign committees.



The Times reported the shift is taking place because Wall Street financial firms aren't happy with Obama's proposals for tighter financial regulations to prevent the kind of speculative bubbles -- fueled by the trading arms of Wall Street banks -- that were blamed for the financial crisis.

However, the recent fall in markets are not entirely due to Obama's policies. "The reasons for the recent consolidation include China’s efforts to slow growth, credit issues in Greece, financial bashing in the United States, some mixed economic news and, in terms of earnings, a prevailing attitude of “buy the anticipation, sell the news.” We would argue that uncertainty about economic policies in the United States and abroad is creating downside risk as well, as markets clearly hate uncertainty," according to Bob Doll, Vice Chairman and Chief Investment Officer at BlackRock, an investment consultancy.

However Doll noted that amidst the uncertainties the strong corporate earnings went unnoticed and they are silently paving the path for sustainable recovery."Domestic uncertainties center on tax hikes, increasing stringency around bank regulation, and the cost of healthcare; global fears include policy tightening in Asia and the potential contagion from sovereign credit risks, especially in Europe.Lost in the excitement of all of this has been strong corporate earnings and, importantly, strong revenue growth. Three-quarters of companies reporting so far have announced better-than-expected revenues and earnings. This, in our view, is a path to sustainable recovery, as the cost cutting appears to be running its course," Bob Doll said in his Weekly Commentary.

International concerns continued to roil U.S. stock markets late last week, as markets stumbled in Asia, Europe and in New York. A correction on Wall Street, officially a 10 percent drop in markets, is looking more probable of late with the Standard & Poor's 500 down more than 6 percent in January and falling 0.7 percent last week, despite encouraging news from the U.S. Department of Labor on the job front, which saw some sectors add jobs in January and the unemployment rate drop from 10 percent to 9.7 percent.

During the month, 75,000 construction jobs were lost, but manufacturing added 11,000 positions and retail added 42,000. Even the automotive sector was hiring, adding 23,000 jobs to its depleted ranks last month.

This week, investors will look at U.S. trade balance figures Wednesday in a week with only one other major government report scheduled for release -- a retail sales report due on Thursday.

For some the trade balance is just about everything. University of Maryland economics Professor Peter Morici, a former chief economist at the U.S. International Trade Commission, on a continued rant on the U.S. predicament issued a statement last week titled, "Mr. President: It's the trade deficit stupid!"

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