This prediction is worth its weight because firms hire analysts to pay close attention to the race and monitor the economic implications of the election outcome.
Party strategists and reporters aren’t the only ones who get paid to evaluate the presidential landscape — firms routinely hire analysts or “political intelligence” firms to predict election outcomes or, more importantly, game out legislative scenarios on Capitol Hill. While partisans may have the luxury of optimism as to whether their candidate might prevail, investors need to keep a clear head if they want to predict whether the health care companies will be transformed by Romney repealing Obamacare or the defense industry pinched by the upcoming sequester.
The finance world has been foreseeing an Obama victory for some time now.
“Obama has led in the polls all year,” Tina Fordham, Citi’s senior political analyst, told Politico. “And history suggests that incumbent presidents who maintain their lead go on to be re-elected.”
She also said there is a reduced risk for an ‘October Surprise’ that would change the election’s outcome because “the two main external threats to the U.S. economy — and thereby Obama’s re-election — have receded.”
An informal Business Insider poll of over 200 financial traders showed that 65 percent of them believe Obama will win the election.
And the Moody’s Analytics presidential election model is also expecting the president to win in November. Based on the economic data, the model predicts that Obama will win 303 electoral votes, more than the 270 needed to win the race.
Investors’ concerns aren’t only with the outcome of the presidential election, though.
In a JP Morgan report, independent analyst Thomas Block says the worst outcome for investors is one in which Obama wins against Romney, but the Democrats lose the Senate, because it would give Republicans more of a reason to delay bank bailout proposals until the new Republican senators take their seats in January.
This outcome seems less likely than it did when Block first made the speculation in August. He says, “If the status quo exists, there’s a greater chance of starting to make progress on the resolution during the lame duck session.”
Follow Ugonna on Twitter at @ugonnaokpalaoka.