Is Wall Street taking a break from politics? The markets shrugged off Bob Woodward's new book "Plan of Attack" Monday, despite revelations that could potentially damage President Bush's re-election hopes. Crude futures fell only a fraction despite Woodward's assertion on "60 Minutes" of a pledge by the Saudis to lower oil prices dramatically before Election Day. Equity trading also indicated that politics currently remain a distant second to concerns about Federal Reserve Chairman Alan Greenspan's two-day congressional testimony, beginning Tuesday. The cost of capital -- which is ultimately determined by monetary policy -- is arguably more important to financial markets than whoever resides at 1600 Pennsylvania Ave. Nevertheless, uncertainty about the presidential election remains a crucial variable for traders and will probably assume greater significance in the coming months. "Once you get by the June 30 deadline for the transfer of power in Iraq , I think the market will start to focus more on upcoming elections," said Jeffrey Saut, chief equity strategist at Raymond James. "There's a lot of moving parts, and that's one reason the market has stalled." In assessing the market's relatively sanguine view of political developments on Monday, two major possibilities emerged: One, the market sees that Bush is actually holding up pretty well despite myriad negatives. Two, market participants are largely ignoring the possibility of a victory by presumptive Democratic nominee John Kerry.
Hail to the Chief
"All of us who follow Washington are in agreement: Bush has had awful five to six months," said Greg Valliere, managing director of Schwab's Washington Research Group. Valliere rattled off a string of developments, including setbacks in Iraq, the president's widely panned appearance on "Meet the Press," the "tidal wave" of critical books, and even White House chief economist Gregory Mankiw's "gaffe" on outsourcing. "The markets correctly feel, if Bush can be tied in the polls with this much adversity -- if things improve that bodes well for him," Valliere said.