Why Rand Paul's Win Is A Horrible Sign For The Stock Market

Rand Paul

Photo: Greg Skidmore, en.wikipedia.org

Republicans are surely going to spin last night’s primary elections as a huge night for the right, and a big rejection of Obamaism, but it wasn’t that exactly.The Tea Party right did very well with the victory of Rand Paul, but so did the left — the moderate Arkansas Senator Blanche Lincoln is headed to a runoff against her more progressive opponent.

Basically, the night was a big rejection of the status quo, which is great! We need a shakeup, and we’re actually very enthusiastic about Rand Paul, who we feel pretty sure will not be a sellout.

But let’s face it: Right now this economy is addicted to free candy from Washington DC. It may not be sustainable, and an economy addicted to government money is necessarily going to be undynamic, but corporate America has loved the stimulus and its shown up in stocks.

But American austerity is coming. Well, we’re not going to get a true “austerity budget” with massive chunks of spending taken off. But we are going to get a kind of austerity, whereby the here-and-there bailouts (states, teachers, jobs programs, etc.) will be a lot less forthcoming.

If you want a bailout, you better get it in the next few months.

In the past, it’s been a common cliché that DC gridlock is good for stocks. That needs to be thrown out the window. We saw how stocks reacted to the momentary gridlock after Scott Brown, and we’re seeing how markets are reacting to austerity in the UK and Spain (hint: not good).

We’re about to get our own version of that, and it’s a major risk coming for stocks.

North Dakota's Tracy Potter

State Senator Potter is running for the seat long held by another Democrat, Byron Dorgan. Potter has a 0% chance of beating Gov. John Hoevner (R), according to FiveThirtyEight.

Arkansas' Blanche Lincoln

Senator Lincoln has her hands full with a primary challenge from Lt. Governor Bill Halter. Either Democrat has only a 4% chance of beating Republicans lead by Rep. John Boozman, according to FiveThirtyEight.

Delaware's Chris Coons

The County Executive of New Castle County, Chris Coons, declared his candidacy for the seat Joe Biden vacated. Coons has a 10% chance of beating Rep. Mike Castle (R), according to FiveThirtyEight.

Indiana's Brad Ellsworth

Rep. Brad Ellsworth is running for the seat occupied by Democrat Evan Bayh. He has a 16% chance of beating former Sen. Dan Coats (R).

Nevada's Harry Reid

The Senate Majority Leader has a 23% chance of beating Republicans, according to FiveThirtyEight.

Pennsylvania's Arlen Specter

After nearly three decades as a Republican senator, Specter changed parties in 2009 because he thought it would help him get re-elected. It didn't. He lost last night to Joe Sestak in the primary. The odds of the Democrats holding the seat are 29% according to FiveThirtyEight.

Colorado's Michael Bennett

Senator Bennett faces a strong primary challenge from former Rep. Andrew Romanoff. Together, the Democrats have a 43% chance of beating former Lt. Gov Jane Norton (R) or Tea Partier Ken Buck, according to FiveThirtyEight.

Illinois' Alexi Giannoulias

Illinois' state treasurer is running for the seat vacated by Roland Burris (via Rod Blagojevich). Giannoulias has a slim lead (55%) over Republican Rep. Mark Kirk, according to FiveThirtyEight.

California's Barbara Boxer

Senator Boxer has 68% chance of beating Republican challengers, according to statistical analysis by FiveThirtyEight. But recent polls show a near-even race.

Washington's Patty Murray

Patty Murray has an 89% chance of winning, according to statistical analysis by FiveThirtyEight. Once again, polls show a much tighter race. A Rasmussen poll shows a dead heat with former gubernatorial candidate Dino Rossi (R).

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