If Obama wins, we lose? The market, that satanic vehicle of capitalistic prosperity, is slumping in tandem with his rising as a good bet to make president, notes Stephen Moore in WSJ’s Political Diary.
[I]nvestors are forward-looking and the slide in the dollar and the fall in the market (despite decent corporate profits) have accelerated at the same pace as Mr. Obama’s meteoric political rise over the past nine months.
Yikes! And he’s still only a senator!
[S]ome smart analysts . . . find a definite inverse correlation between Mr. Obama’s probability of winning the election (as measured by the Intrade political futures market) and the ups and downs of the stock market. Intrade provides a trading market where investors can bet on who will win the election — such betting markets have a record of performing better than polls in forecasting election outcomes.
How so?
Radio host and fund manager Jerry Bowyer notes on CNBC.com that investors would have good reason for wanting to flee U.S. markets ahead of an Obama victory. Increases in capital gains and dividend taxes alone will “mean very large additional levies on investors.” Mr. Bowyer adds: “Of course, this affects stock prices. It is ludicrous to suggest that adding taxes directly on an asset class would have no effect on its value.”
If this guy and U. Mich. economist Mark Perry, maybe the first to spot the correlation are right,
the lousy market in the last few weeks makes sense. Yes, it’s partly a result of Ben Bernanke’s decision not to raise interest rates. But Senator Obama is now trading as a 34% favorite — that is, bettors believe Mr. Obama is 34% more likely to win in November than Republican John McCain. That implies big tax hikes aimed at the returns on investment in the stock market.
It’s O.’s stock in trade, you might say, as a liberal Dem, what Republicans once called tax-and-spenders. So investors beware.
“If the political winds keep blowing left,” says Dan Clifton of Strategas, an investment advisory firm, “the market is going to tank. In that case, I advise, get out of the market while you still can.”
There’s an answer, of course: McCain can make taxing and spending a major talking point in his campaign and ride it to victory.
Blithe Spirit 
As a guy with a few investments of his own, I hate to hear such talk…my only comfort is that it’s one of the predictable political givens in America — prosperity comes with the Republicans and wars come with the Democrats…clearly the given is more myth than truth…at least here’s hoping so!
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Don’t you remember whenever Clinton annnounced some cockamamy scheme, the market would fall and he would quickly revise his remarks, and the market would then correct?
In those days the market kept that dishonest-to-the-core man “honest.” I’m not sure that the market is fiscally conservative any longer — they look for bailouts regardless of the consequences to the average citizen who must pay for their mistakes.
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The financial upheaval is in keeping with the mentality that prevails today. There is little incentive for businesses to strive for honesty and self-preservation when there exists a government that is only too willing to come to the rescue. This trend toward a “big brother” government is now reaping what it has sown. It’s consequences will continue to bode ill for stocks and financial institution, especially should Obama be elected and with it his programs to control and regulate both people and industry. Capitalism does not exist in a socialistic society.The financial markets are only looking ahead to a kind of dooms day scenaro if, as many think, Obama wins in November.
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