If there s going to be a more or less permanently high level of unemployment, persistent deficits, and significantly higher energy (and health care costs)in the US going forward (thanks to Obama), can the stock market do well? That depends. If companies can buy from abroad products that use cheaper labor and cheaper energy, then they can fare okay. There is no need to hire US employees to make something, if you can simply buy it from other countries with more rational economic policies. Because the US chooses by policy to price itself out of certain markets does not mean that their public companies will not necessarily do well.
Europe over the past three decades is instructive. Europe has had double digit unemployment for two generations now because of absurd economic policies (that we seem intent on copying), but their stock market has done every bit as well as our own. Why? It's a global economy for one thing. For another, European companies just substituted against their own domestic labor force. Products that required labor could be purchased from countries that had more reasonable policies. I suspect we will follow the same pattern.
US companies will keep their work forces as lean as they possibly can and try to locate subsidiaries in countries with more rational economic policies than are being enacted in the US. American workers will suffer and the energy sector will likely be a disaster (along with health care), but that doesn't mean companies can't be well run, make profits and sell, if not to Americans, to the thriving countries around the world, who are not as foolish as we are. They are the economies of the future. They don't have Obama leading them to disaster.
Wealthy Americans will find new ways to shelter their income (or they will simply relocate), while the average American will find his/her take home pay drastically reduced (assuming he/she has any take home pay). Unless the government embarks on a wealth tax (and nothing is off the table with these folks), then the only real victims of the Obama plans will be the American middle class who will have a permanently reduced standard of living. They can't hide their income from the increasing tax rates that are on the way and they can't avoid picking up the new, enormous cost of health care, which will come right out of their pay.
It's the average American that loses and loses big in the Obama future. You can tell from the polls they sense the disaster coming, but with heavy Democratic majorities there seems little that can be done about it. Obama, himself, is enjoying the situation. Not burdened with knowledge of economics and totally ignorant of free markets or the private sector, Obama views the coming disaster as a utopia that emanates from his coffee-house dreams and discussions from his Harvard days. Obama himself will never have to experience the enormous burdens that he is in the process of placing on future generations of Americans. He has plenty of wealth (he bought a $ 2 million home six years ago) and he will get plenty more.
But, the average American can't hide. Having destroyed the public schools, the coffee-house crowd now intends to destroy the energy sector, the health care sector, the auto sector, and the financial sector. There won't be much left. As gloomy as this all sounds, stocks may do fine. They see what's coming and can take steps to avoid hiring employees and to move their energy consuming production offshore. Only the average American gets hurt in this deal.
Watch China and India and the economic policies they adopt. They know perfectly well that we are walking the plank. They will be happy to pick up where we leave off.