Wall Street’s Professional Pundits Game Out An Obama Victory

[RandySF]

That seems to be a popular opinion in the finance world. Citi’s senior political analyst, Tina Fordham, has been predicting an Obama win for some time in research notes for investors. “Obama has led in the polls all year, and history suggests that incumbent presidents who maintain their lead go on to be re-elected,” she wrote in September. Moody’s Analytics’ Xu Cheng, who uses a state-based economic model, projects an Obama win as well, with the president carrying Virginia and Ohio while losing Florida. And an informal poll of over 200 traders by Business Insider found 65% expected Obama to win, regardless of their own preference.

As Obama’s post-convention lead refuses to dissipate, financial analysts are working to determine the implications for the upcoming fiscal cliff, which could slash defense contracts, squeeze health care providers, spike tax rates, and generally drag down the economy — perhaps even into another recession.

Block considers his proudest moment as an analyst predicting that House Republicans would reject the first bank bailout proposal in the early days of the 2008 financial crisis and bring down the stock market, giving his clients a few hours’ lead time. (“If they listened to me … and put some money behind the call, they may have made money.”) And, like most private sector political pundits, he’s spent months trying to determine the ripest conditions for a similar disaster.

In a report he prepared for JP Morgan in August, Block argued that the most dangerous outcome for investors — and one that looked highly plausible at that time — was one in which Obama defeated Romney, but Democrats lost the Senate. The result would mean Republicans had more motivation to dig in their heels and delay a deal until after their new members take office in January.

One excerpt from his presentation pegged the chances of a worst-case scenario at 15%.


http://2012.talkingpointsmemo.com/2012/10/wall-street-pundits-see-obama-re-election.php

[BlueStreak]

1. That "cliff" is so bogus

Everybody knows basically how it will play out. There are some negotiations at the boundaries, but the main elements are pretty clear.

If Obama wins a solid victory and the Dems hold the Senate, the position will be to let the Bush cuts expire and to replace it with a package of similar cuts that are capped at the 250,000 level. That number might have to be negotiated up and there is a question whether it is permanent or just a 2-year deal, but that's basically the deal.

And on the sequester, that deal is already in law. Obama will be open to a new proposal and if it is better than the plan that is already in the sequester law, then Obama will take that.

If Obama wins in a landslide and the Dems pick up seats in the Senate or even take over the House, then Obama has an opportunity to force jobs and infrastructure spending into the final deal.

But the idea of this going "over a cliff" is just sensationalistic nonsense. Yellow journalism.