One of the more interesting aspects of this election cycle is how John McCain has consistently outperformed his party. Despite an unpopular incumbent administration, dismal economic outlook, and huge Democratic advantage in party affiliation, McCain is running almost even with Barack Obama.
Citigroup analysts think that the conventions haven’t changed this, especially given the unbelievable popularity of Sarah Palin. The consequence for markets? Increased volatility as investors keep shifting their positions in anticipation of this or that outcome:
Given an unpopular war, poor Presidential approval ratings and a challenged economy, one would
have expected a stronger lead for the Obama/Biden ticket over the McCain/Palin one. Yet, a tight race could keep equity market investors unsure of the outcome as a few key battleground states will likely decide the election.
Such uncertainty could be negative for the stock market near term. A second “uncertainty” that could perplex the stock market is McCain’s reputation as a maverick, suggesting unpredictable policy outcomes even in the event of a Republican win of the White House
It doesn’t seem likely that either candidate will pull away and give the market the predictability its looking for. Obama pulled ahead briefly towards the end of the Democratic convention, registering 8 point leads in Gallup and Rasumussen tracking polls. But now, thanks to Sarah Palin, that bump has all but disappeared. Obama’s lead in today’s Rasmussen poll has shrunk to two, and a CBS poll released today shows an exact tie between the Obama/Biden and McCain/Palin tickets.
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