OBAMA’S BID FOR A SECOND TERM AND THE MARKETS
with a whimper. So while everyone focuses on Europe (will it ever end?) what will
be the next catalyst for the market? How about a Presidential election?
Although there has been several Presidential elections and stock market cycle theories
written, not one tells the whole story. With varying political and economic circumstances
surrounding each election, no two are really the same. We cannot exactly say that George
Bush propped up the market in 2008 to bolster the Republican campaign. With that
being said, what is the market telling us about the next election?
OBAMA IS A LOCK
Do not be surprised, to hear such a thing from a long term Republican. Do we all
forget the circumstances under which he took the helm? During one of our country’s
biggest financial catastrophes. And a majority of the policies he was forced to follow
were instituted by the Bush Administration on the way out the door. I am not going
to say I agree with everything he has done since, but what the hell, look at the market. Up over
40% since he took the oval office and he is giving long term investors, yet ANOTHER
OPPORTUNITY to get out, lighten up, or at least lock in something.
My biggest concern with Obama was his stance on Israel. At this time, my worst
fear has not come to fruition, so I am trusting that it will not occur during
his second term. The role of the President of the United States in the foreign policy
arena will always be subject to some type of criticism. As far as his domestic polices
are concerned, the jury is still out on Obama-care (something needed to be done)
and I do not foresee unemployment ever approaching the 5% level again. For those
who want to dispute that fact, why not take a peek across the pond for a preview of
what is in store for us.
At this time, the most reliable and liquid Presidential election futures market has Obama
at slightly above a 50% probability of winning the election (http://www.intrade.com/). Are you kidding me? Who is going to beat him, scandalous Newt Gingrich? Please explain to me how the
United States, after veering so far to the left in 2008, is going to do a three sixty and move all
the way back to the extreme right? The Republicans would have a much better chance with
vanilla Mitt Romney, but once again he is somewhat symbolic of corporate America and will not attract enough straying Democrats.
So how could I be wrong? The market goes into a tailspin and cracks the bottom of this
nauseating trading range. But with corporate earnings at their current levels and tons of cash
on the sidelines this is unlikely to happen. On the other hand, if the market rips north,
as every analyst appearing on CNBC is predicting, Americans will stick with the status quo.
In closing, I am a buyer of Obama futures at the 50% probability level and if it falls below that
double your money in 2012.
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