President Barrack Obama certainly arrives at a party like a rock star. Three silver GM Suburbans flanking an armored black Cadillac limo screech to a halt with lights flashing, and all of the roads in the immediate vicinity closed to traffic. A dozen sunglass bedecked Secret Service agents leap out, immediately scanning the perimeter. The president bounds out and briskly walks to the plush Atherton home, where he enters through the kitchen of former EBay executive and California state controller, Steve Wesley.
For a mere $30,400 donation to the Democratic National Committee, I received a sweaty handshake and an assembly line photo with the once South Chicago community organizer. A Koch brother I am not. The event came on the heels of the President’s 45 minute private audience with the Golden State’s own version of royalty, Apple’s (NASDAQ:AAPL) Steve Jobs.
It was all part of a broad swing through the Western states to rally the faithful, and to top off the DNC’s coffers, which has raised a record $50 million in California this year. Perhaps Obama just wants to be among friends. While his national job approval rating languishes at 47%, it is 55% here, and an eye popping 72% among Democrats.
With a short two weeks until the election, the online betting site, Intrade (click here for their site at http://www.intrade.com/ ), is giving an 89.5% probability that the Republicans will win control of the house. But to me, this is all starting to take on the flavor of a consensus trade that I love to fade. The Democratic Party has become the BP of American politics. Expectations of its imminent demise may be greatly exaggerated, but not for the reasons you expect.
Since the 2008 election, some 4 million “millennials”, “generation Y’s”, or “echo boomers” have gained the right to vote. Have you spoken to your kids lately? The only issues they care about, the environment, global warming, gay rights, and ending the war, are overwhelmingly Democratic ones.
Another 2 million immigrants have also joined the rolls. Thanks to the racist rants by many Tea Party candidates – last week Nevada Senate candidate Sharon Angell said she thought many Mexicans looked like Asians—I would be surprised if any of these voted conservative.
Sure, only 30% of these groups vote at all. But when election results swing on majorities that can be counted in the hundreds –think Florida in 2000, Ohio in 2004, and Minnesota in 2008—they could make a decisive difference.
The Tea Party has already demolished any chance of a conservative win in the Senate by putting candidates the Republican leadership charitably describes as “wingnuts.” Witchcraft practicing masturbation advocate, Christine O’Donnell, took a safe Delaware seat from a 20% lead to a 20% deficit virtually overnight. Sharon Angell converted a campaign unseat the Senate majority leader, Harry Reid, in Nevada from a pushover to a dead heat.
With Sarah Palin’s aid, Alaska’s Senate candidate, Joe Miller, ousted mainstream Republican Lisa Murkowski in the primaries, prompting her to launch an independent write in campaign and a three way split that could throw the election to the Democrats. The net net is that the Tea Party crashing on to the political scene has so far been hugely positive for Democrats.
The polls we see reported daily are only taken of participants with land lines. So they may be undercounting both cell phone addicted, texting millennials, and immigrants. How many of your kids have land lines? My bet would be none. That could be another reason why the final results may differ from what we are being led to believe.
Now, let me throw one big unknown out there. Thanks to the Supreme Court’s Citizens United vs. the Federal Election Commission decision, this is the first election to see unlimited anonymous corporate donations since the sixties. As a result, the number of election ads disclosing donors has fallen from 97% in 2006 to 32% this year.
California’s proposition 23 is a perfect example of what this means. Billed as the “Save California jobs bill,” the measure was placed on the ballot and promoted by $6 million in financing from Texas base energy giant Tesoro Petroleum (TSO). And what is the company’s plan to create California jobs? Suspend the state’s stringent environmental regulations so it can build a new oil refinery in nearby Martinez.
On top of this, you can toss into the mix Obama’s proven, but unquantifiable ability to engineer last minute surges among supporters. The bottom line is that things may not be all they appear to be in this election. Global markets are discounting a Republican win in the House of Representatives that may be much closer than advertised, or may not happen at all.
In every postwar election, the party in power has lost an average 27 House seats in the midterm elections. The Democrats can lose 38 and still keep control. Obama knew this the day he walked into office. That is why the most radical parts of his agenda, like health care, were front end loaded. Expect to hear much about the President’s surprise, Clintonesque move to the middle in 2011, which was in fact, planned two years ago.
If the Republican celebration that has been ongoing since March turns out to be for nothing, expect the shock to be immediate and global. A Democratic win will take all asset prices down, no matter how much QEII Ben Bernanke throws at them.
Yes, I know, I should stick to my day job of calling every turn in the market. But for the next two weeks, that profession and making political prognostications have become one in the same. I can only say thank goodness that my hometown San Francisco Giants are not facing the Chicago White Sox in the World Series this week.
There is more risk in markets today than traders and investors realize.