Kevin Spires, CFA, FRM
Obama's reelection odds at www.intrade.com took a slight hit with the announcement of Paul Ryan as the vice-presidential choice for Mitt Romney, but held steady through the Republican convention. The odds stand at 56.7% heading into the Labor Day holiday and the Democratic Convention next week. The election season will take off in earnest next week and the next 60 days should be interesting to say the least.
I believe that this election will have profound effects on financial markets over the next 5-10 years. An Obama reelection will lead to a consolidation of the massive advances that Central Planning has made over the past 10-12 years (Yes, the Bush Administration saw a number of advances for Socialism, including the Medicare Prescription Drug Program, No Child Left Behind, TARP, the creation of Homeland Security and the TSA, and the appointment and reappointment of Ben Bernanke - the most interventionist Fed Chairman in the history of the Federal Reserve).
In the medium term, more government equals less growth. Over the course of a
decade, this will pass through to less corporate profits and lower returns to equities. I would lower my average 10 year real GDP growth rate expections from 2.75% to 2.00% based on a consolidation and continuation of the past decade's growth in the Federal Government.
I believe that this election will have profound effects on financial markets over the next 5-10 years. An Obama reelection will lead to a consolidation of the massive advances that Central Planning has made over the past 10-12 years (Yes, the Bush Administration saw a number of advances for Socialism, including the Medicare Prescription Drug Program, No Child Left Behind, TARP, the creation of Homeland Security and the TSA, and the appointment and reappointment of Ben Bernanke - the most interventionist Fed Chairman in the history of the Federal Reserve).
In the medium term, more government equals less growth. Over the course of a
decade, this will pass through to less corporate profits and lower returns to equities. I would lower my average 10 year real GDP growth rate expections from 2.75% to 2.00% based on a consolidation and continuation of the past decade's growth in the Federal Government.
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