The Romney Ryan Ticket Has A Good Week, According To Markets That Is…..
The stock market is a prediction of the future based on the past. This site was one of the first to acknowledge that a possible Romney-Ryan rally was taking place because stocks were rising on no news from Europe and bad news from across the globe – including the U.S. One strategist wasn’t sure about the reasons the stock market was going up and speculated it might be because of Romney’s chances of getting elected but by no means called it a Romney rally.
U.S. equities rising after a period of rangebound trading could be indicative of a Romney Ryan rally with more gains to come. This doesn’t mean that President Barack Obama is going to lose, but it does mean the ‘smart money’ is open to the possibilities. Most investors want a piece of whoever is in the White House and seek to have access to the next President of the United States. The problem the Obama administration is having is that they are losing the funding battle and have spent most of their money early. President Obama was already spending money on Mitt Romney well before he became the presumptive Republican nominee as part of the strategy to politically demonize him before he even had a chance.
This approach had merits when President Obama had more money to spend but looking back, it’s questionable this approach is sensible if Mitt Romney continues winning the funding battle. If President Obama loses another month of funding to Mitt Romney -which we expect, it will signal he isn’t going to have the punches for the later rounds and could be getting rope-a-doped with attacks on Romney so early.
The stock market was receptive to a possible Romney-Ryan Republican ticket and in the first week it was announced, the S&P neared new highs while global markets rose to new levels. This by no means suggests President Obama is out of the game and there is some preliminary evidence that the economy is in the late stages of a turnaround -finally. A portion of the lift in U.S. stocks could be due to the anxiety related to changes in the White House or because some investors can’t hold back on getting in now before the air clears.
A new candidate would hate to pick a VP and the stock market dips that same week and even Bill Gross had to admit that the so-called ‘cult of equity’ could be impacted by the possibility that leadership in the White House could inevitably change. Gross does make some sense because our analysis shows the TLT 20 year bond exchange traded fund is set to decline further.