Skip to main content

Market Overview

Obama versus Romney: Betting on Who Will Win in November

Obama versus Romney: Betting on Who Will Win in November

CNBC's Jeff Cox reported Monday that investors seem to be making bigger bets on which candidate will win the 2012 US presidential election. At that time, Cox discussed that "[o]ne analysis concludes that last week's sharp three-day market surge can only mean that Wall Street is banking on a victory from Republican Mitt Romney."

According to Morgan Stanley chief US equity strategist Adam S. Parker, "[T]here is no other reason now to like stocks than a Romney win."

Citing S&P Capital IQ, Cox wrote, "The conclusion Parker draws is that investors are betting that Romney will unseat President Obama and bring a more business-friendly environment to the White House," In addition, Cox noted, "[h]istorically, moves higher in the market usually mean the incumbent president is likely to win, while sell-offs simply indicate the challenger is favored."

"The markets...go by their own logic," added Cox

Despite Parker's conclusion that Wall Street investors are betting on a Romney win in November, recent polls seem to suggest that President Obama retains the advantage. According to the RealClearPolitics's average of polls, Obama enjoyed a 3 percentage point lead over Romney. Of the nine polls referenced on RealClearPolitics, Romney led against Obama in only two polls: Rasmussen Tracking (Romney +2) and CBS News/NY Times (Romney +1). Of the seven remaining polls on RealClearPolitics, Obama's lead against Romney ranges between two and ten percentage points.

On the predictions market website Intrade, Obama had Friday roughly a 58 percent chance of being re-elected, whereas Romney had only a 40 percent chance of being elected. However, prior to the US Supreme Court's Obamacare decision, Intrade odds of the US Supreme Court's ruling the individual mandate unconstitutional before December 31, 2012 were around 75 percent. After the Supreme Court's ruling, the prospect fell to a 2 percent chance.

In this way, much uncertainty remains with respect to what is to come both politically and economically in the US. Though it is debatable whether Wall Street favors Romney or Obama to win the November election, both recent polling figures and Intrade bets seem to lean toward an Obama victory.

Aside from polling and trading figures, what may be particularly interesting about the upcoming 2012 presidential election is the sense of urgency on the part of some conservatives in defeating Obama. There would appear to be an imbalance of energy and drive between conservatives and liberals in terms of the goals of the 2012 election. Per the opinions of conservative commentators like Sean Hannity and Mark Levin, the 2012 election would appear to be less about electing Romney and more about defeating Obama.

Peggy Noonan commented in the Wall Street Journal in March 2012: "Something's happening to President Obama's relationship with those who are inclined not to like his policies. They are now inclined not to like him." In light of Levin's repeated charge that "Obama must be defeated" and the accompanying sense of emotional imperative, how an Obama re-election victory would be perceived and handled by conservative Americans remains uncertain. Likewise, the prospect of states rejecting Obamacare seems to portend further economic and political uncertainty going forward even after the election. In this way, regardless of who wins the presidential election in November, some sort of change will likely occur.

Whether or not market participants agree with Parker's abovementioned conclusion that "investors are betting that Romney will unseat President Obama," they can likely agree that whoever wins the the 2012 US presidential election ought to bring a more business-friendly environment to the White House. Between stubborn unemployment figures and an American populace weary of socio-economic malaise and rising food and gas prices, political and economic realities may pragmatically demand the fostering of a more business-friendly environment - beyond the sphere of political ideologies.


Related Articles

View Comments and Join the Discussion!

Posted-In: Adam S. Parker CNBC CNBCPolitics Psychology Topics Media General Best of Benzinga