Short Interest and the U.S. Elections

This morning's, Lex column in the Financial Times reported that Barack Obama’s election could supposedly mean higher inflation, while his proposed health care reforms and green credentials are negative sentiment for drug and oil companies. According to Lex, luxury goods share prices should celebrate John McCain's more benign tax stance towards the rich.

Although LeX stipulates that such research has scant investment value, patterns can be found in historic data, and moreover, it will be interesting to see what the short interest says in these sectors by looking at our DESLI (Data Explorers Stock Lending Index) data.

The data we can supply is from early September until October 22:

• In the U.S. Consumer Durables sector, both loan and inventory have decreased within this time period by approximately 17% and 20% respectively.
• For U.S. Energy, the amount on loan in general went up by 40% in mid-October, but with the fall in oil price, this figure has now decreased.
• U.S. Healthcare has made the most dramatic move, going up by nearly 60% since the launch of this product.
• The U.S. Pharmaceutical sector has increased from 122 on October 7 to 329 on October 29.

Interestingly, these figures correspond to the historic data mentioned by the Lex column above.

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Disclosure: None