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The Election, the Market, the Fed and the Irish Bookies...
Bill Annett Salem-News.com
(DAYTONA BEACH, FLA) - With the launching of the second week of the Convention Circus, the main question on most people's minds is: "What will the Democrats come up with to offset Clint Eastwood putting bad words in the President's mouth?" And in second and third place, the less important minor questions are "What will the market do in the next two months?" closely followed by "Who will win on November 6?"
Today's sermon is designed to disabuse the reader of any confusion over all three questions, with the help of the authorities subtitled above.
The first one is easy. It's bruited about that Howie Mandel - even though he was born in Montreal and has no birth certificate - has been engaged as a keynoter, accompanied by 26 scantily-clad lovelies carrying brief cases, and that he will challenge Mitch McConnell and John Boehner directly from the podium with a menacing forefinger and the ultimatum: "Deal Or No Deal?"
Second question? What will the stock market do before the election? This one is less precise, but factually solvable. There's an old saw to the effect that ever since William McKinley whipped William Jennings Bryan in 1896, there's been a pre-November bull market every four years (a) because both sides are confident of victory and everybody feels euphoric and expansionary, and besides, (b) both candidates are promising the moon, a chicken in every pot, a Toyota in every garage, except those occupied by innovative geniuses and embryonic rock bands.
The market has been doing just that recently, even though the world is conspiring to prevent it. The Dow was up 2% last week, and 12% or so on the year to date. (Two thirds of the year to date, actually.) That's been accomplished while climbing a wall of worry.
The Wall of Worry (WoW) includes such items as (1) certain minor Euro countries taking turns playing economic Russian Roulette while Merkel and Hollande wring their hands; (2) China turning in a miserable growth number of merely 8% or so, (or about five times our GDP growth) and (3) Ben Bernanke at the Federal Reserve's symposium in Jackson Hole, Wyoming, itching to say something encouraging monetarily, but not wishing to upstage the Federal Open Market Committee (FOMC) at their forthcoming meeting. Ben, if you can't say something nice, as Thumper said to Bambi, don't say anything at all. (The guy in the White House plays the part of Thumper). You know, quantitative easing, buying up Treasuries or worthless mortgages from worthless Wall Street houses, that sort of thing, which is mildly inflationary but good for the mocket. In an election year.
But hey, wall of worry or not, it's all good news. R & R (Romney & Ryan or Rest and Relaxation, take your pick), are going to balance the budget within 30 years, give or take, and Barack Obama has a plan to create jobs, hopefully beginning with those of say 300 Congresspersons and 60 Senators colored Blue. The only thing standing in the way - as in the joint Houses of Congress - are hordes of tea-bag fanciers bearing sandwich boards announcing his Zimbabwe origin.
That leaves Question Three: Will that cute little pup (I think his name is Bo, and out of the Kennedy stables) with the white paws remain in the First Kennel, or will there be a more robust version strapped to the roof of the Presidential Limousine? If every dog must have his day, the dog-whisperers will be working overtime.
Polls aren't all that much help these days. Aggregate them out and it's almost a dead heat. And a lot depends on whether you watch Fox News or MSNBC. A guy on Charlie Rose says it'll either be a squeaker for Obama or a landslide for Romney. The optimists on the right side of the aisle point out that if Romney can convince Ohio, Pennsylvania and Michigan that automotive bankruptcies are a good thing, Mitt will win narrowly in the swing States, otherwise Obama will be swingin' on almost all 50. Still others are confident about Florida's spoiled ballots or perhaps the plurality of free thinkers in California. (Like, West vs. Eastwood.)
I haven't checked in with the actuarial consultants in Las Vegas, but I can give you the official line out of Ireland, where this kind of thing is not only legal but actively addicted to, in the old sod where an American AA candidate is usually accused of drinking too little instead of too much.
The call? Among the real serious money, the Republicans are predicted to prevail in both Congress and the Senate, winning clear majorities in both. The White House is something else - Barack Obama, say the book keepers from Eire, will get his chance at that second term. Given the past four years of scrum, he should be so lucky, when he could relax on Chicago's South Side, do a little street working and write books.
Barron's Weekly quotes two bet-brokers (Intrade and Ladbrokes) as follows: 5 will get you 7 on Obama, or a net 2; 8 pounds bet on Romney will return 15. The probability is close to 58% in favor of the President.
Given that the track record of professional odds-makers in the green isle and Blighty is pretty good on events like our presidential elections, the outlook is that the gridlock in Washington seems to be destined to continue after November 6. Democratic White House, Republican Congress and Senate. The losers? The rest of us.
And that's a prospect that's enough to make any market plummet.
Bill Annett grew up a writing brat; his father, Ross Annett, at a time when Scott Fitzgerald and P.G. Wodehouse were regular contributors, wrote the longest series of short stories in the Saturday Evening Post's history, with the sole exception of the unsinkable Tugboat Annie.
At 18, Bill's first short story was included in the anthology “Canadian Short Stories.” Alarmed, his father enrolled Bill in law school in Manitoba to ensure his going straight. For a time, it worked, although Bill did an arabesque into an English major, followed, logically, by corporation finance, investment banking and business administration at NYU and the Wharton School. He added G.I. education in the Army's CID at Fort Dix, New Jersey during the Korean altercation.
He also contributed to The American Banker and Venture in New York, INC. in Boston, the International Mining Journal in London, Hong Kong Business, Financial Times and Financial Post in Toronto.
Bill has written six books, including a page-turner on mutual funds, a send-up on the securities industry, three corporate histories and a novel, the latter no doubt inspired by his current occupation in Daytona Beach as a law-abiding beach comber.
You can write to Bill Annett at this address: email@example.com