- CNN’s survey has them in a dead heat at 49% to 49%.
- Pew Research shows Candidate Romney behind President Obama by a 50% to 47% margin.
- The Politico/George Washington University survey reflects a tie at 48%.
- And the latest NBC/Wall Street Journal numbers show President Obama pulling ahead with 48% compared to Candidate Romney at 47%.
On the other hand, Intrade, which is the world’s leading predictions market, shows a 67.2% probability that Obama will win. What’s interesting about that is that Intrade also shows a 22.5% chance that the winner of the Electoral College will actually lose the popular vote.
Given these mismatches, I can only hope we’re not left counting chads or something equally ridiculous tonight when the polls finally close. The markets really wouldn’t like that.
As it is, all the major averages are on hold. Not literally mind you, but figuratively. Nearly every trader and institutional manager I know is treading lightly at the moment.
Because they know that by Wednesday morning half of them will be wrong. That means they’ll have to adjust both their outlooks and their portfolios.
In the financial scheme of things, though, the election is a sideshow. The far bigger issue when it comes to your money is the fiscal cliff. And I am not alone in my thinking, either.
A recent CNN poll suggests that 60% of market professionals are far more concerned about what’s going to happen when spending cuts and tax increases hit January 1 than they are about who’s in the White House.
I don’t think they’re wrong to be worried, either…
Election 2012 Is Just One Stop on a Troubled Road
No matter who wins, the fiscal cliff is headed our way at breakneck speed. There will be no time for relaxing, no time for back slapping and no time to ease into the White House or even return to it for that matter:
- The so-called Bush tax cuts expire December 31st at midnight. That means we revert to higher, Clinton-era taxes barring any fresh policy decisions.
- $1.2 trillion in automatic budget cuts go into effect January 1 unless Congress can figure out how to bring that much more money into the nation’s piggybank…immediately.
- And America crashes into its debt ceiling (again) in early 2013.
The other thing to consider is that there are a whole slew of things which could keep the markets from making a meaningful break in either direction, not the least of which is earnings.
Right now, earnings are decelerating around the world and that means investors would be prudent to continue playing defense. My favorite choices remain large global dividend payers with fortress-like balance sheets and a solid record of rewarding shareholders.
And don’t forget about the 11 states voting for governors today. One hundred percent of them have budget problems that will make national news in the months ahead. That speaks to even more bailouts and conceivably some sort of national policy response, depending on how debt markets adjust.
Generally speaking, this is not good for equities and okay for bonds; though to be fair, we’re probably a lot closer to a bond market reversal than we are to a further rally.
Meanwhile, the euro is off again as fear renews over a Eurozone breakup on news that Greece is thrashing about like a hooked fish because both its payment and austerity measures are at risk. I’ve said before that I expect the euro to achieve parity with the dollar before this is over and I see nothing that changes my view at this point.
Then there’s China. The 18th National Party Congress gets underway Thursday and the world will bear witness to a once-in-a-decade power transition at a time when the Red Dragon is plagued by economic challenges and corruption on a scale that has boggled even the most jaded of insiders.
But some like MSD and Best Buy (NYSE:BBY) aren’t. The former, which you may know better as Merck (NYSE:MRK) in the United States, expects 30% growth in China over the next 12 months alone and triple that in the next five years. That’s why the company is hiring reps and building a $1.5 billion research facility in Beijing despite slash-and-burn expense reductions in the United States and Europe.
Despite well-publicized turnaround problems in the United States and a former CEO under investigation for questionable personal conduct, Best Buy has been purchasing profitable Five Star locations in mainland China since 2008, where 1.3 billion potential consumers represent growth, even as the broader nation struggles. Yet, I was just in one of their stores yesterday and I have a hard time imagining they’ll succeed here even if they get growth there.
Article printed from InvestorPlace Media, http://investorplace.com/2012/11/is-the-election-about-lost-dreams-or-new-promises-mcd0mrk-yum-ko-bby/.
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