I want to believe, but … what’s happened lately to make Wall Street believe this election isn’t still a toss-up? Offhand, I can’t think of one statistical model or betting market that has Mitt winning. Is there some concrete indicator that they’re seeing or is this more of a “we’re not actually going to re-elect this tool” gut feeling? Maybe they’re keyed into the fact that O’s hit Romney with the kitchen sink on Bain and basically nothing’s happened to Mitt’s numbers?
This guy is really the political equivalent of a Cramer-esque stock picker. If he says he detects a trend, the trend becomes more likely to happen simply because people are buying and selling based on his advice. If Wall Street analysts start telling America that the economy’s coming back if Romney gets elected (and based on their donation habits, they are), well, that’s a nifty reason to go out and make sure Romney gets elected. Or at least it might have been five years ago, when people still kinda sorta maybe trusted Wall Street.
“At the end of the day, we are not really worried that Europe is going to be ‘solved’ or that its economy will strongly grow. We also don’t think strong corporate profitability relative to expectations will save the day,” [Morgan Stanley strategist Adam Parker] said.
“To us, the biggest bull case for US equities is based on the huge cash balances and the potential belief that they will be more actively and productively deployed. The biggest possibility here would be Romney winning the presidential election.”…
“Many investors I have spoken with believe that if the S&P 500 should rise between July 31 and Oct. 31, it would signal an impending Romney victory,” said Sam Stovall, chief equity strategist at S&P.
“The recovering market would be a sign that the perceived anti-Wall Street policies of the current administration will soon come to an end, as the incumbent would be replaced and that a plurality on the Potomac might even return as a result of the early November outcome,” he added. “Unfortunately for these presumptive prognosticators, history indicates, but does not guarantee, that the opposite has usually been true.”
Supposedly, the July 31-October 31 trend has been accurate 82 percent of the time over the past century.
I wonder if Team O is tempted to make hay of the speculation. The idea of the market rising if your opponent’s elected is, er, difficult to spin, but if there’s one thing Obama HQ is good at, it’s class warfare. A crude ad about bankers placing their bets on Mitt to avert tax hikes on their mansions and dressage horses would be right up their alley. They could use that scarrrry black and white photo of Romney waving around money in his Bain days and everything. Exit question via Ace: Wouldn’t a market rally just before the election actually help … Obama?