We were warned:
Neither the Big Money crowd nor the Mr. Market crowd has fully priced in the prospect of a Democratic president and a heavily Democratic Congress. A total electoral blowout could result in (1) healthcare reform that is more heavily tilted toward government control than is currently suggested by the candidates’ proposals, (2) greater than anticipated tax increases, including a doubling of the capital-gains-tax rate and a surcharge on wealthier Americans—in addition to a rollback of the Bush tax cuts.
- James Pethokoukis, February 6, 2008
. . . a new land mine is lurking: “the Obama market.” Political ramifications represent a significant added market risk that should not be ignored,” he says. Initial polling suggests that Senator Obama will be the next president, a view Mr. Allmon shares. An Obama presidency is certain to mean a big tax increase, he says. He also points to the likelihood that the senator will seek to raise the marginal tax rate to 52% from 39.6% and hike the capital gains tax rate to at least 25% from 15%. “He’ll cause more damage to the stock market and even make Jimmy Carter look good,” Mr. Allmon says.
- Charles Allmon, June 30, 2008
Investors this summer have been placing their bets on an Obama presidency, and for the most part that hasn’t been good for the market. . . they are voting with their shares by tossing financial, health insurance, manufacturing and high-dividend stocks into the ash can, and are growing skeptical about energy companies as well. . . Obama’s rhetoric on taxes and health care is scaring common wealthy people with large capital gains from investments made over the past decade, and a lot of them don’t want to wait around to see whether it’s just populist fluff that might be set aside once he takes office.
- Jon Markman, July 14, 2008
I think it would be an absolute cheap shot to blame the falling stock market on Wall Street’s sudden realization that Barack Obama will very likely be the 44th president of the United States. But is fear of a potential Obama presidency playing any role at all in the weakness? [At this point it is not a cheap shot.] How many investors, I wonder, buy into the theory of economist Peter Morici, hardly a conservative mouthpiece, who says, “Obama’s tax and redistribute policies will not resurrect jobs, wages, or the price of stocks in American retirement accounts. Ordinary Americans who have to earn their livings outside the cosseted confines of Wall Street will be not much better off two years from now. In fact, Obama’s policies may make economic conditions worse.” Now, it is an interesting economic experiment that we may be about to undertake: Do exactly the opposite of what we did as a nation the last time America was in deep economic trouble, coming out of the 1970s. It’s like we are going to replay the 1980s, but with Ted Kennedy as president.
- James Pethokoukis, October 7, 2008
. . . while the polls are reflecting Obama’s steady hand, the markets haven’t. In fact, they’re getting worse by the day as Obama’s lead widens. Most investors know the devil is in the details – and the details of Obama’s economic plans are anything but reassuring. The country is headed for recession; the only question is: Just how low can the markets and economy go? It could be a lot lower – it all depends on the policies of the next president. And, as it looks increasingly likely that Obama will be that man, the markets are casting a vote of “no confidence.”
- Charles Gasparino, October 28, 2008