Markets on edge for election day and beyond
Markets could be volatile no matter who wins Tuesday's presidential election. Here's what to expect if Obama wins, if Romney wins or -- worst-case scenario -- if we don't know right away.
The polls -- and the analyses of the polls -- give the nod for a very narrow win to President Barack Obama, especially after a relatively decent jobs report on Friday. Mitt Romney's camp says he's going to be the clear winner.
We'll see. There are some hints from history on what may happen.
If Obama wins relatively clearly -- that is, the results aren't disputed and end up in the courts -- the stock market may well tumble on Wednesday. It did after he was elected in 2008: The Dow Jones industrials ($INDU) were off 7.1% by the end of the week, with the Standard & Poor's 500 Index ($INX) off 7.4% and the Nasdaq Composite Index ($COMPX) down 7.5%.
Yes, those are real numbers, but they may have had less to do with the president-elect than with the ongoing financial crash of 2008.
Obama and Wall Street have an edgy relationship, even though one of the great stock market rallies in history began in March 2009 after he took office. Many on Wall Street have spent millions of dollars trying to push Obama out.
There is a chance for a different outcome. If Obama wins, it means Ben Bernanke will probably stay on as chairman of the Federal Reserve Board until his term expires in 2014. And the Fed's accommodative monetary policy -- the promise of low interest rates into 2015 -- will continue.
Moreover, the odds for a solution to the fiscal cliff -- the combination of tax increases and spending cuts -- will increase. To do nothing won't help Republicans. That will be bullish for stocks.
The first scenario is more likely, but the second is worth thinking about.
If Romney wins the election clearly, the stock market may jump. He himself predicted it would when he made his now-famous comment about 47% of the population seeing themselves as victims.
Our conjecture here is based on the market's reaction to George W. Bush's re-election in 2004. The major indexes jumped about 3% that week.
That return was about all the Dow did for that year; the S&P 500 and Nasdaq ended the year up more than 8%.
Wall Street will be delighted in a Romney win because, the theory goes, regulation will be rolled back and Obamacare will be repealed. And there is the prospect that Romney's vows to fix the tax code will mean lower taxes for the wealthy.
It is possible -- if unlikely -- that a Romney win won't cheer the Street. One issue is Bernanke, who would be pressured by many in Congress to quit and go back to Princeton. Two issues will go through investors' minds: Who will replace Bernanke and when would a new Fed leadership then start raising interest rates? Rising rates are death to stocks.
There's a third issue. Romney is an experienced and successful business executive. But what is not clear is whether he has the political subtlety to convince a tea party-dominated Republican majority in the House of Representatives (and maybe the Senate as well) to trim government spending carefully without tipping the economy into recession. He insists he can lead, but Congress is not a business. There are lots and lots of agendas and scores to be settled publicly and privately.
The tea party scares Wall Street. Look at the reaction in the debt-extension crisis in the summer and fall of 2011. The Dow fell as much as 6.9% before stabilizing in early October; the S&P 500 and Nasdaq were off about 8%.
There is no winner
This assumes that neither Obama nor Romney can come up with 270 electoral votes needed to win. Or results are delayed by the effects of Superstorm Sandy in the Northeast or Ohio.
No one wants this except political talk-show hosts. Least of all investors. When the 2000 Bush-Gore election ended without a clear winner, the Dow fell 3.2% that week, with the S&P 500 off 4.6% and the Nasdaq off 11.3%.
Admittedly, the dot-com bust had broken the 1990s bull market, and the Sept. 11, 2001, terror attacks were ahead.
But a soft economy and a weak stock market do not do well in extreme political uncertainty. Between Election Day 2000 and the market bottom in October 2002, the Dow fell 33%.
All pathetic, psychotic, braindead right wing radical cracked teanut dopes should listen to your leaders. They warned you about the Mexican Mormon Moron tax evading draft dodger during the primaries when they were able to tell he truth about this moron.
Lyin Willardo, the Mexican Mormon Moron tax evader, bankrupter, draft dodger, job outsourcer and Etch A Sketch Champion may have vision of going back home to Mexico.
All braindead pathetic right wing radical cracked teanuts should listen to your leaders.
Rick the Dick Santarium has brainwashed his followers, the evangelicals and the gay rapist, pedophile catholic priests that lyin' Willardo is a member of an evil cult and is the anti-christ. He also told them that lyin Willardo is the worst person in history to ever run for the presidency, can't be trusted and will destroy our country. Groper Nutquist, the boss of the right wing cracked teanuts and Nut Gingerhead, the criminal lobbyist, totally agreed with the last three assessments.
So most of the evangelical sheep will probably stay home on election day or some may even vote for Obama. They are totally scared to death of lyin Willardo, the Mexican Mormon Moron tax evader, bankrupter, job outsourcer, draft dodger and Etch A Sketch champion.
If this repuke draft dodger ever became president, and war broke out in the middle east, he will be putting his dog on the top of his car and fleeing to his birthplace in Tijuana and hide in one of his 4 grandmammy's (pappy's side only) outhouses.
Time to rise up and vote out the radical right wing cracked teapots and their oil, insurance and defense contractor owners. At least the people saw the light and realized how idiotic "Juiced Up" Sharron Angle and The Flying Witch Christine O'Donnell, Joe Smith from Alaska and several others were and did not vote them in. Hopefully, people saw what the real helicopter gunship pilot Sarah Palin is and will never allow her to hold any public office. The idiots who voted for these nutcases did not learn from Bush Bin Lyin and his criminal gang what the republicans are really about. They outed two CIA agents, who wanted to tell the truth that there were no weapons of mass destruction in Iraq. Bush Bin Lyin's bosses the oil companies and defense contractors got wealthy as our society was being brought down. These guys destroyed Iraq and then had to rebuild it using tax payer dollars. At least they got Delay. Scooter Libby was the fall guy for the CIA agents outing. Don't forget the criminal gang's trickle down economics where the money trickled down into their bosses pockets instead of creating jobs. That is why we were losing over 700,000 jobs a month before Obama took over.
Everything lyin Willardo feeds his braindead followers is a myth. I am sure he would be doing better if he told these repuke dopes that he would create 50 million jobs in the next 4 years. They don't need to be told how.
Clueless Lyin Willardo should not even be running for president. But for a lyin moron, talk is cheap. This clueless moron has no idea how to fix anything. This criminal repuke bankupts companies and loses jobs. What a joke. The nuts that follow him actually believe that he is going to create 12 million new jobs and these dopes believe him. He does not have to tell them how, that does not matter.
Clueless Lyin Willardo is known as the slapped axx Mexican Mormon Moron for good reason. This complete dunce made himself look even more ignorant than he already is by stating in a campaign clip that if he ever overpaid his taxes, he does not deserve to be your president. Well this repuke dunce overpaid his 2011 taxes by $3,000 to make it look like he was paying a higher tax rate-which he can recover after the election. He has up to 3 years to refile an amended return. Only a pathetic, psychotic, braindead radical right wing cracked teanut dope will vote for him.
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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Equity indices began the day in negative territory with only the Nasdaq (-0.04%) making a very brief appearance in the green. After sliding through the first hour of action, the major averages reversed and spent the remainder of the session climbing off ... More
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