This blog post originally appeared on RealMoney Silver on Aug. 28 at 8:09 a.m. EDT.

In the past, I have written about the

implications

of political change on the U.S. stock market.

The

S&P 500

is now down 12.7% year-to-date.

From my perch, the outlook for the remainder of 2008 seems slightly better than I

expressed

in late July. At that time, I suggested that the year-end S&P might end down between 10% and 15%, or about 5% better than the level it stood at on July 28, 2008.

At the current time, I believe that the outlook for equities is somewhat better than I thought a month ago, and I would (slightly) reduce my expectation for the S&P's losses from down between 10% and 15% to down between 6% and 12%. Interestingly, this is almost exactly the same S&P forecast of down between 5% and 10% made back in January in my

surprise list

TheStreet Recommends

for 2008.

In other words, the market holds some upside but, most likely, will still be down on the year.

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The key factors that I feel will influence the course of the market for the balance of the year clearly include politics, credit markets, housing, interest rates, crude oil and other measures of inflation, corporate profits, and geopolitical events.

I will expand on these influences next week but to briefly summarize the impact of these variables:

    Politics. An Obama victory in November seems to have already been incorporated into share prices. My personal view is that the November election will end up being a toss up -- a lot closer than many currently think. Credit. Credit markets remain pressured (and loans are still not readily available), but the curative process of restoring capital to our financial intermediaries is growing more advanced with time. Residential Real Estate. Housing activity and the decline in home prices -- I see another 5% of price degradation over the balance of the year -- seem to be undergoing a bottoming process, but any real recovery will likely be delayed into 2010, reflecting the large inventory of unsold homes, a weakening economy and a tight mortgage market. Interest Rates. Interest rates remain low by historic standards and are not likely to change much in 2008, providing a tailwind to valuation. Crude Oil and Inflation. I remain of the belief that inflationary pressures are abating coincident with a broadening worldwide economic slump. This factor is the primary reason why I believe there is another 5% or so upside to equities through year-end. Corporate Profits. Profit margins are in the process of mean regressing, and expectations for corporate profits still remain too optimistic -- a headwind. Geopolitical. Always an unknown, as we recently learned with the Russia/Georgia confrontation.

Doug Kass writes daily for

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Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.