Why Mitt Probably Wins
- Joshua M Brown
- June 9th, 2012
Think about this set-up: All Mitt Romney has to do is not fuck an intern or buy a new yacht in the next five months, the rest almost looks like it wants to take care of itself.
One is a Mormon billionaire with a checkered record in Massachusetts and one is a black quasi-socialist, presumed to be both Muslim and Kenyan by church groups across the country. In other words, neither candidate is particularly appealing to the American Heartland. And so all things being equal, they will likely vote with their wallets and the election should hinge upon the state of the economy (and the perception of the state of the economy) between August and October.
Sound silly? John McCain was running steadily ahead of Obama in 2008 – with a message that “the fundamentals of the economy are sound” no less! – until the September meltdown of Lehman Brothers. That event was the trigger that shot Obama ahead of McCain and essentially ended his campaign. Contrary to Hollywood’s take, it wasn’t Palin’s idiocy or McCain’s age or anything else – simply his defending of the Bush Economy in the midst of this hundred year’s storm. He looked ridiculous and out of touch, his optimism juxtaposed with the apocalyptic headlines that had jumped from the business section to the front page. By the time he was “suspending his campaign” to try and fix everything, it was already over.”
And so here are the conditions that the coming election will find itself a reflection of:
1. Growth here in the US is once again slowing, we’re looking at 2% GDP growth and some of the biggest i-banks on The Street are now forecasting more like 1.8%.
2. Unemployment is still over 8% and is once again heading in the wrong direction.
3. The Fiscal Cliff stuff will become the main story this summer (assuming Germany finally gets Spain bailed out and under control). It is virtually guaranteed to cause a confidence-killing reaction among businesses and then consumers if it’s not figured out and compromised on early (it won’t be).
4. Guys like Joe Weisenthal rightly point out that business spending and profits are both heading in the right direction and some of these metrics are nearing record highs – but what they don’t understand is that this is all skewed by a relatively small number of companies (the megalithic multi-nationals). If you talk to a broad swathe of small and mid-sized business owners as I do, you know that they are categorically not hiring (outside of technology and energy) and you also know that they are scared to death about healthcare and tax issues, still. They are not doing anything regardless of what the largest corporations do.
Obama can do little about this stuff right now but his re-election campaign will essentially be a referendum on it; four years of tough economic times, people don’t care about the why, just the who. And the Prez gets the blame no matter what.
And then there’s this…
President Barack Obama, beset by a faltering economic recovery five months before he seeks re-election, said on Friday European leaders must act urgently to resolve the region’s financial crisis and stem the threat of recession.
Obama said decisions about how to solve the euro zone crisis were fundamentally in the hands of Europe’s leaders and their political commitment would be a “strong step.” He was speaking a week after a dismal U.S. jobs report heightened concerns about the impact of Europe’s crisis on U.S. growth.
“They understand the seriousness of the situation and the urgent need to act,” Obama told a news conference.
That quote comes a Reuters story entitlted – I kid you not – ‘Obama Pins Recovery Hopes on Recovery’s Leaders‘. I wouldn’t pin my hopes of having the dry cleaning picked up by Europe’s leaders.
Europe is going to be like a knife in Obama’s back. Because a deepening recession there will be just enough to throw a major monkey wrench into China’s stabilization (Europe is China’s biggest export destination) and this in turn will represent serious challenges for US businesses (and by extension, hiring).
Mitt just has to be cool and not come off like some kind of dollar-eating, heartless Layoffbot 5000 and he can probably win simply by floating in the air, above the fray. This as his opponent sinks into the quicksand.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.