— This is the script of CNBC's news report for China's CCTV on January 21, Wednesday.
President Barack Obama, facing a new Republican majority in Congress, asked for a broad package of tax and other reforms in his annual address to lawmakers.
Obama trumpeted the success of "middle-class economics," in his Tuesday night speech, but he also pushed for more reform.
Among the many areas President Barack Obama intends to address during his State of the Union on Tuesday, political and financial analysts recommend housing and materials stocks as the best sectors to trade.
Homebuilders "could be big winners," said Larry McDonald, a macro strategist at Societe Generale. FHFA is proposing more aid for homeowners and seeking to have Fannie Mae and Freddie Mac transfer some of their risk to private investors.
[TONY NASH / Vice President, Delta Economics] "The problem with america right now is that there is no investment. this is where i think his infrastrusture plan is a big winner and should be a big winner and im hoping that its constructed in a way where it will. because its fiscal spending is required, thats the next step. QE hasnt done much aside from hold long term interest rates down."
With cheap oil and high domestic production, "I think the White House is going to soften position on exporting oil that could help the sector in the first quarter," said McDonald, highlighting sector exchange-traded funds such as the United States Oil Fund, the United States Brent Oil Fund and the Energy Select Sector SPDR ETF.
One more sector that might benefit from this SOTU is education. We might see a pop in online universities, with Obama calling for a 2-year free community college program for students.
Still, the fact that the president called out the big banks in order to pay for the proposed middle-class tax cut doesn't bode well for the sector, which depends heavily on the regulatory attitude in Washington.
Under the tax proposal, banks with assets of more than $50 billion could come under pressure from the proposed fees, which would total $110 billion for the sector over the next decade. The wealthy, large banks' best customers, would also see a capital-gains tax increase to 28 percent.
[AXEL WEBER / Former President of the German Bundesbank] "I'm not convinced. Larry said in his interview that QE alone will solve European problems. I remember when I was here last year, everyone was saying Europe is back. I said Europe's not back. Some of the headlines have gone, but the problem are still there. And here we are a year later, the problems have come to the fore again. there will be no discussion about is Europe is back this time around. It's just the problems are back."
WEBER BITE 2
"To be honest, the real issue in Europe is still reforms. The best example of how policies need to be intertwined is actually the Japanese programme, which was communicated: fiscal, monetary and structural. In Europe, we see all the talk focussed on the monetary, we see way too little focus on structural and fiscal"
WEBER BITE 4
"The main impact is through the exchange rate. There is a much stronger Swiss franc now. If you look at the euro, the euro will probably continue to slide with monetary easing, probably announced and then implemented, we see across the board the strength of the US dollar. so what is moving at the moment very strongly, look at Japan, and the Japanese yen is policy. We're in a divergent world. And that is a topic that will dominate discussions here. And the divergence is largely driven by policy."
WEBER BITE 5
"This is going to be a very volatile year. The major driver is going to be central banks with diverging monetary policy. But you know, something is going to give in the end. If the US were to continue its policy as currently priced in in the market, the US would decouple from the rest of the world economy. Every time economists talk about decoupling, they're proven wrong within a few days."