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.

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