Yesterday’s Politico story puts it this way:
Generally, financial analysts say the stock market likes Republicans more than Democrats. And while predicting market movements is as difficult as predicting the winner of the World Series in August, some experts say the market is already anticipating an Obama win on Nov. 4 and has at least partially accounted for it.
“Potentially, you could see a one or two-day rally on a McCain victory, and not much of a reaction if Obama wins, because that’s what’s expected at this point,” said Justin Fishkin, a partner at The Cypress Group, a financial services company in Washington, D.C. Fishkin, who earlier in his career was a hedge fund manager specializing in political, regulatory, and legislative event-driven investments, said the key issue on Wall Street minds is corporate taxation — which is why the market might prefer McCain and his promised rate cuts over Obama.
In other words, a significant part of the massive sell-offs we’ve already seen were inspired by the belief that Obama would win the White House and start screwing up the economy with socialism.
This adds to the fact that CEOs overwhelmingly (74%) fear that “an Obama presidency would be disasterous for the country,” that Obama would “have a negative impact on business and the economy,” and that “some of his programs would bankrupt the country within three years, if implemented.” Oh, well, what do Chief Executive Officers know about business or the economy, anyway?
Politico isn’t the only major news source reporting on the fear of an Obma presidency by the people who understand money and finance. MSN has an article titled, “Why Wall Street Fears Obama“:
Investors this summer have been placing their bets on an Obama presidency, and for the most part that hasn’t been good for the market.
Without giving him a chance to explain himself in detail on the campaign trail or at the Democratic National Convention, they are voting with their shares by tossing financial, health insurance, manufacturing and high-dividend stocks into the ash can, and are growing skeptical about energy companies as well.
It’s not that major institutional investors don’t like the man — far from it. He has many backers among the financial elite, including multibillionaires George Soros and Ron Burkle. And it’s not that there aren’t many other reasons for investors to sell stocks now, as the global economy tangles with the terrible twin beasts of bank deleveraging and inflation.
It’s just that Obama’s rhetoric on taxes and health care is scaring common wealthy people with large capital gains from investments made over the past decade, and a lot of them don’t want to wait around to see whether it’s just populist fluff that might be set aside once he takes office.
The real question for investors after an Obama win is the extent to which Democrats assume control of the Congress, and the more there are the less they like it:
Joe Lieber, a political analyst at the consulting firm Washington Analysis who scrutinizes elections for his clients at hedge, mutual and pension funds, said an electoral lurch that gave the Democrats 60 seats could prompt a dramatic sell-off on Wall Street.
“We’re getting a lot more questions about the Senate than the presidential [race],” Lieber said, “because there’s almost nobody on Wall Street right now who believes McCain’s going to win.” A filibuster-proof Democratic majority (three-fifths of the chamber, or 60 senators) would not be well received by Wall Street traders, he added. “A lot of investment professionals don’t necessarily want to give one party the keys to the entire city. Free markets like gridlock.”
Ah yes, the thrill of one party domination, with the in-the-tank media determined to tell the Titanic that everything is fine no matter how fast the country plows toward the giant iceberg.
An interesting question is to what extent conservatives and Republicans believe we should try to forestall the disaster we think will occur under the Union of Soviet Socialist AmeriKKKa (because that’s how Barack’s Marxist/anarchist/terrorist pal and his preacher for 23 years spelled ‘America,’ after all) or just stand back and let the meltdown commence.
Tags: CEOs, Congress, Democrats, disasterous, experts, fear, filibuster-proof Senate, financial analysts, investors, McCain, Obama, rate cuts, Republicans, stock market, taxes, Wall Street, win
Start Thinking Right 
October 26, 2008 at 8:09 pm
Let’s hope it doesn’t have to happen! But big money never looses; it’s the small guy and his pension that go first. This is however, a time to watch who buys and sells; however much I agree with the Free Market Principle, there is a need to have some control over reckless manipulation of the small man’s money.
October 27, 2008 at 2:55 pm
big money protects itself. Rather than invest, in high tax environments big money either finds a tax free harbor or invests overseas where the taxes are lower.
Either would be bad for the economy. Big guys don’t make as much money as quickly; little guys lose their jobs and their homes because their jobs go away.