Kass: Time for Change

I am now convinced, based on the above factors (and others) that the U.S. electorate will demand change and that the Democratic Tsunami of 2006 will continue into November 2008. Quite frankly, the alternative (i.e., status quo and inertia) is growing increasingly unacceptable to most.

For some time, I had viewed an Obama victory as a mixed blessing: The middle class' lot will be improved but at the expense of higher corporate and individual tax rates. Accordingly, for much of the past year, I had viewed a Democratic Presidential win and a sweep of the Congress as a potentially depressing market event. With the current inactivity in public sector policy weighing so heavily on share prices, however, I am now changing my tune. At the very least, the rising likelihood of an Obama victory (and the 100-point S&P discount to that victory that I estimated compared to a McCain win) seems to have been speedily reflected in today's valuations, as an Obama win could now be viewed as an agent for economic change that the Republican Party might not be able to deliver.

Indeed, the potential for change, which is seen by voters to be more readily brought forth by the perception of creative and aggressive proposals from the Democratic Party, should now be considered as a P/E neutral to expanding event, particularly from today's share price levels.