I happened to catch this interview last night on NBC which is definitely worth watching. Aside from the unfortunate phrasing "Latino problem" Mike Murphy strikes me as a pragmatic strategist who is correctly diagnosing the underlying problems for the Republican party. Last night's election proved that Republican party conservatism is anachronistic and will be need to be revamped before 2014 and 2016 if the party wants to remain relevant.
Showing posts with label Presidential Election. Show all posts
Showing posts with label Presidential Election. Show all posts
Wednesday, November 7, 2012
Friday, November 2, 2012
S&P 500 November Return in an Election Year
After today, there are just two trading days until a presidential winner is decided (hopefully). The last time that an election felt as close as this one was in 2000 when Bush and Gore went head to head resulting in recounts, hanging chads and almost a month of uncertainty.
Although it's a long shot that we have a repeat of 2000 next Tuesday, there are plausible (although also low probability) scenarios in which an electoral college tie could happen. Especially given that the fiscal cliff is breathing down congress' neck, let's hope for everyone's sake that it doesn't happen. As a reminder though, below is what happened to the S&P for the month between the election and Gore's concession. Funny how the S&P 500 is basically starting at the exact same spot as it's at today.
Bush v. Gore was obviously a rare occurrence not expected to repeat, so below is a list of how the S&P 500 did in November in other election years since 1952. On average the S&P 500 is up in an election year in November, and slightly more when a one term President is ousted than when re-elected.
Although it's a long shot that we have a repeat of 2000 next Tuesday, there are plausible (although also low probability) scenarios in which an electoral college tie could happen. Especially given that the fiscal cliff is breathing down congress' neck, let's hope for everyone's sake that it doesn't happen. As a reminder though, below is what happened to the S&P for the month between the election and Gore's concession. Funny how the S&P 500 is basically starting at the exact same spot as it's at today.
Bush v. Gore was obviously a rare occurrence not expected to repeat, so below is a list of how the S&P 500 did in November in other election years since 1952. On average the S&P 500 is up in an election year in November, and slightly more when a one term President is ousted than when re-elected. |
| Note: Counted LBJ as one term President |
Thursday, October 25, 2012
Dollar Correlation with Romney Since Debates
Over the last few years, the dollar has had a strong negative correlation to equity and commodity prices. When the dollar has weakened, equity prices have generally risen and when the dollar has strengthened equity prices have usually fallen.
For most of that period, risk on/risk off mentality plus a nice dose of QE 1,2 and 3 have been the major forces affecting the dollar. In recent weeks there has been another factor at play though which has been interesting to watch. Ever since Romney's strong performance at the first presidential debate, the market has started to price in the possibility that he could actually win. This would have big implications for the Federal Reserve, QE and the dollar, because most expect Romney to push for an end to QE. As such, the dollar has started to trade with some correlation to the Romney intrade contract. In the last few weeks, when Romney's odds of winning increase, the dollar (measured by DXY) increases as well.
Importantly, most people seem to think that a Romney presidency would be a positive for equity markets; however, a Romney presidency would likely mean a stronger dollar, which could mean lower equity prices if the correlation holds.
For most of that period, risk on/risk off mentality plus a nice dose of QE 1,2 and 3 have been the major forces affecting the dollar. In recent weeks there has been another factor at play though which has been interesting to watch. Ever since Romney's strong performance at the first presidential debate, the market has started to price in the possibility that he could actually win. This would have big implications for the Federal Reserve, QE and the dollar, because most expect Romney to push for an end to QE. As such, the dollar has started to trade with some correlation to the Romney intrade contract. In the last few weeks, when Romney's odds of winning increase, the dollar (measured by DXY) increases as well.
Importantly, most people seem to think that a Romney presidency would be a positive for equity markets; however, a Romney presidency would likely mean a stronger dollar, which could mean lower equity prices if the correlation holds.
Tuesday, October 23, 2012
Debate Word Count
Below is a frequency analysis of the number of times that nations were mentioned in last night's foreign policy debate. Almost the entire discussion focused on the Middle East, with some references to China. In all, the 10 largest countries in the world plus our 4 largest trading partners not in that category were mentioned 42 times. Without China they would've been mentioned 10. Meanwhile six Middle Eastern countries were mentioned 141 times.
While one might argue that there isn't any reason to talk about regions that aren't top of mind, "Europe" was mentioned once during the debate and last I checked there are some pretty big things going on in that part of the world today that the next POTUS may want to opine on.
Tuesday, September 25, 2012
Intrade Daily Dollar Volume
While some in the blogosphere continue to try to push the idea that google trends could be a good election indicator, Intrade has become a popular supplement to traditional polling to help handicap each candidate's odds of winning. Recently, Obama's odds have surged above 70%.
Many in financial markets are comfortable with Intrade as a prediction market presumably because of the pervasive belief that markets are efficient at predicting future events. Most technicians will argue that you can't trust prices without volume though, and in the volume department Intrade is still a developing marketplace.
Below is an evolution of the daily dollar volume that trades in Intrade's most popular contract, the Obama presidency contract. Volume has risen sharply as the election has gotten closer, but still only averages $1.2m per day in September, which is roughly equivalent to an illiquid microcap stock.
Many in financial markets are comfortable with Intrade as a prediction market presumably because of the pervasive belief that markets are efficient at predicting future events. Most technicians will argue that you can't trust prices without volume though, and in the volume department Intrade is still a developing marketplace.
Below is an evolution of the daily dollar volume that trades in Intrade's most popular contract, the Obama presidency contract. Volume has risen sharply as the election has gotten closer, but still only averages $1.2m per day in September, which is roughly equivalent to an illiquid microcap stock.
Google Trends Election Check-in
A few weeks ago I posted a hypothesis that Google trends may be a good election indicator, because it is a measure of a candidate's mindshare. If that's true, this election may be somewhat closer than many expect, because the most recent trend reading shows Romney with slightly more search volume than Obama. The last two elections didn't have this close of a race in late September.
They also didn't show news references tick sharply lower. Is that an indication that there is weak general interest in this election?
They also didn't show news references tick sharply lower. Is that an indication that there is weak general interest in this election?
Friday, September 7, 2012
Is Google Trends an Election Indicator?
A personal favorite election indicator is the Halloween mask indicator, which holds that whichever presidential candidate sells more Halloween masks is the one that will eventually win the election. The indicator has correctly predicted every presidential election since 1980.
The reason it's my favorite indicator is that it's somewhat counter-intuitive (wouldn't you think that you would buy the mask of the candidate that scares you more--the one you aren't voting for?). It's also a favorite because of what it says about mind share, marketing and elections. Whichever candidate holds the greater mindshare both at the ballot box and at the costume shop is the one that ends up winning.
Thanks to Google trends, measuring mind share is easier than ever. The more that people are searching for a candidate, the more that they are thinking about him. Google trends only goes back to 2004, but in 2004 and 2008, the candidate that was more frequently searched for on Google is the one who ended up winning.
Below are the google search trends for Bush/Kerry, Obama/Mccain and Obama/Romney. Mccain never eclipsed Obama in searches in 2008, but in 2012, Romney has taken a slight lead out of the Republican convention. As the election heats up in coming weeks, this could be an indicator to watch.
Note the scale is slightly different on each chart.
The reason it's my favorite indicator is that it's somewhat counter-intuitive (wouldn't you think that you would buy the mask of the candidate that scares you more--the one you aren't voting for?). It's also a favorite because of what it says about mind share, marketing and elections. Whichever candidate holds the greater mindshare both at the ballot box and at the costume shop is the one that ends up winning.
Thanks to Google trends, measuring mind share is easier than ever. The more that people are searching for a candidate, the more that they are thinking about him. Google trends only goes back to 2004, but in 2004 and 2008, the candidate that was more frequently searched for on Google is the one who ended up winning.
Below are the google search trends for Bush/Kerry, Obama/Mccain and Obama/Romney. Mccain never eclipsed Obama in searches in 2008, but in 2012, Romney has taken a slight lead out of the Republican convention. As the election heats up in coming weeks, this could be an indicator to watch.
Note the scale is slightly different on each chart.
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