I can just imagine how Ben Bernanke’s announcement of QE3 went down at Mitt Romney’s campaign headquarters in Massachusetts last week. Doors slammed, heads pounded against walls, and hair was torn out.
You can almost hear the whoosh of resume’s flying down to conservative think tanks on Washington DC’s “K” street as campaign workers scramble to find post-election employment. Dreams of that coveted White House office have now gone up in smoke. Campaign vice-chairman Tim Pawlenty has already decamped for better climes, leaving the rest to wallow in a sea of finger pointing, blame, and recriminations.
The hard truth is that QE3 has thrust a stake through the heart of the Republican campaign that is far more lethal than any Obama could have possibly delivered. Just as the markets were preparing for a swan dive into November, Ben has ridden to the rescue with essentially unlimited liquidity for all risk assets.
The move promises to close the markets at five-year highs right when voters enter the polling booths at levels more than double the 2009 bottom, leaving them in a decidedly upbeat, administration-friendly mood. And Romney gets all this ill treatment from a fellow Republican!
I have been watching the polls all year, and have noted an anomaly early on. While the race was tied in the national polls, Obama has always led in all nine battle ground states. Add the national and state polls together and you get a voter turnout of 110%. So who had the phantom 10%, Romney or Obama?
The recent deterioration of Romney’s position fueled by some poorly-timed comments about the entitled 47% in recent weeks has lifted the veil. The president is now overwhelmingly ahead, and could well surpass the 365 electoral votes that he captured in 2008, a healthy margin over the 270 he needs to win. Obama could lock it up by winning only Florida and any other single state. In the ultimate irony, it is highly unlikely that neither Romney nor running vice presidential running mate, Paul Ryan win their home states of Massachusetts and Wisconsin.
This is why the Republican National Committee has been pulling money out of the Romney campaign and redirecting it into local races where the party has a better chance of success. Romney TV ads have suddenly “gone dark” in several states. Having lost the presidency, the Republicans are fighting tooth and nail to hold on to the House.
At this point, there is only a 50/50 chance that they can pull this off. The winner will have no clear mandate, as the margin will likely only be a handful of seats and vanishingly small. Even Republican strategist and Pac master, Carl Rove, expects to lose a minimum of 25 seats, mostly from the Tea Party wing, reducing the chamber to a dead heat. And whoever wins, good luck herding cats.
Below, see the poll results in the battleground states compiled by the independent website Politico. These compare to the latest national polls that show Obama with a solid 5% lead. To analyze the data directly, please click here. The Intrade betting on an Obama win, where traders can make real cash wagers on the outcome, have rocketed to 73.3% to 26.7% in favor of the president in recent weeks (click here for that link).
Of course, all of this is just speculation. The only poll that really counts is the one held on September 7. Then, we shall see. The bigger question remains of how to trade around all of this. For that answer, please stay tuned to this letter.
Intrade Betting on an Obama Win
2008 Presidential Election Results
2010 House of Representatives Election Results