While the opinions generated are far and wide thanks to the nauseating media referencing mostly insignificant poll data, let’s all be reminded that elections are NOT decided by polls. To get a good feel on things I’ve been watching some of the news programs the last couple of days to see where public opinion might be at, and the annoyance quickly reminded me why I don’t watch any of these shows (it was a quick flip back to football). It’s amazing the kind of influence the media has these days (or think they have), but ratings are all that matter. I prefer to form an opinion based on facts not innuendo, propaganda, lies, accusations and insults. This IS politics, but…really? In any case, below I have some of my predictions for the outcomes and what the market might also be considering.
The ‘hope’ play for this election is on Romney, hope for real change and a chance for the economy to get better faster and create more jobs. The races in the swing states are so close and really those on the sidelines are just making up their minds who they will vote for! Therefore, the influence of media and polls may actually play a big role in changing sentiment. President Obama offers more of the same and probably even worse for small business owners, so job creation might be hard to come by if he wins. The economy and jobs are such a big issue right now that it may surprise many how disappointed and follow with their vote. Given the chance to make bold moves the President has failed and the voters will let him know it. I’m predicting a Romney victory by about 30 or so electoral votes, carrying some big swing states to put him over the top. The market will rally hard on this news then probably sell off on the uncertainty (like in 2000). Since it is under distribution it’ll take many days or weeks to turn the downtrend around.
The Senate and Congressional races are interesting, back in 2010 the ‘tea party’ made their presence known and took enough seats in both houses to frustrate the ‘establishment’ in Washington. That risk is not so high this year but races are close this time around that many are being called a toss-up. Republicans need to win a net four for control of the Senate which seems to be a stretch, though I believe they will pick up a few seats, probably ending 52-48 in favor of the Democrats. The Congress seems rather safe in the hands of the Republicans as these races are not enough to turn the tables.
Market sentiment is rather mixed at this juncture with the VIX showing little fear from the election results nor the fiscal cliff situation. With the speed and intensity of turning momentum that could change on a dime, but for now the markets are not really looking at the election as damaging. In other words, it won’t get much worse than it already is. The key of course is coming to an agreement on compromise, and wouldn’t that bring a smile to everyone’s face. Once again, backs are up against the wall – we’ll have to wait (again!) until the eleventh hour to see how things will shake out. One thing for sure, the uncertainty hopefully be removed on Nov 7.
