This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Doug Kass on The Business of Politics

There is, however, a far stronger correlation between where we are in the domestic economic/profit cycle and future stock prices than the election outcome's impact on the future path of the U.S. stock market.

Currently, the domestic economy is showing about a 2% growth rate in real terms, a trend line growth rate that would probably continue into 2013, were it not for the uncertainty of the fiscal cliff.

The Wild Card Is the Fiscal Cliff

Conditions are always different and, as I wrote earlier, nuanced.

To me, the big difference today (from prior election periods) in terms of gauging the election's impact on stocks is the existence of the fiscal cliff.

It bothers me (and has begun to bother the markets recently) that neither President Obama nor Governor Romney has credible plans for dealing with this threat without risking an economic reversal back into recession.

To me, in the upcoming election, what is more important for the business, economic and stock market outlooks than the possible election outcomes (which party wins the presidency, Senate and House) or where we are in the economic/business cycle is the closeness of the presidential race.

I recognize mine is something of a variant view, but let me explain.

Consider that the closer the election's outcome, the more negative it will be for fiscal cliff compromise and for the markets, as there will likely be intense animosity and partisanship. Even though the consensus view is that a Romney presidential win will be market- and business-friendly, my observation (and more bearish market outlook) applies to either a narrow Obama or a narrow Romney victory.

My baseline election expectation of a relatively comfortable Obama presidential victory coupled with the Democratic Party's retention of Senate control will likely have only a limited market impact (plus or minus 3% in the averages over the balance of 2012), as I believe it has been materially discounted. This outcome will probably be dealt with by kicking the can down the road for several months until the losing Republican Party acquiesces to many of the administration's fiscal policy efforts.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs