Change is in the air. The Bush presidency has alienated most of the nation, if one judges by popularity polls, to a degree not seen since the Nixon presidency. For those of us old enough to actually remember it, the national discomfort with the republican party was profound, far surpassing the particular angst about the excesses of Nixon's imperial presidency (for the record we've been republicans since 1964).
We came into this looking for the outside candidate (likely the traditional term dark horse candidate will receive little use anymore). In the 1976 election, Jimmy Carter came seemingly out of nowhere, the obscure governor of Georgia, to take the election as the candidate of change. The nation wanted someone as different from Nixon as they could find. Different, but we're not naive enough to think that these fellows have not all been vetted by the power elites to some extent. Mr. Smith may still go to Washington, but he's got at least one of the boys on his shoulder whispering advice. John Kennedy certainly had this, as a change candidate of profound proportions we hardly even realize today. They don't always have to listen once they get in office.
So now we come to 2008. Of the outside candidates, Obama, Huckabee, and Ron Paul have the greatest appeal as something different. Although the Ron Paul internet phenomenon is amazing, and reassuring, we don't think Ron Paul has enough support to be a viable candidate for any mainstream party, and would like to think he will not run as a third party candidate unless something happens. On that note, Obama reminds us of Robert Kennedy's presidential campaign for change against Lyndon B. Johnson, another imperial president, but of the democratic flavour.
Edwards positions as the change candidate, but is establishment enough to be thought of as a comfortable alternative if Obama cannot be the choice for some reason for the Democrats. He talks change, but is comfortable. If for some reason Obama falters, Edwards can most benefit perhaps. After all, Roosevelt was a patrician who betrayed his class.
Hillary, on the other hand, is the candidate of the status quo. The seeds for our current dilemna were nourished if not sown during the Clinton presidency. She is not the candidate of change. She is the candidate of the machine. She and Rudy are the most divisive candidates, and this is hurting their appeal to an electorate that is tired, and seeking a change.
As for the Republicans, Romney was the annointed, in the spirit of W's pre-primary coronation, but it appears he does not have broad appeal, and is the antithesis of change. Fred Thompson and Rudy Guiliani were brought in as back-ups, but their lack of appeal has been astonishingly predictable. The primary weakness of the power elite is the lack of diversity in their inputs, their disconnect from reality at market turns so to speak.
McCain the maverick has been courting the war wing heavily, but has the reputation as a change agent (and some Republicans might say loose cannon). Ironically, we think Huckabee might be the most like Bush in that he appeals to the evangelicals, but has a fiscal and tax policy tailored by the doyens Wall Street, that has gotten little play so far. Still, he looks like a change at first glance.
This election will be ugly, and it will get uglier in the news, and in the emails that get tagged around this time every four years. We won't be discussing it much, because politics (and religion) are outside of the purview of this blog, and this election will be mixing it up with politics, religion and race. The deomographic polls we have seen show that Obama swept all the groups except for the over 60 crowd. As the last to get it, they will never believe that change can occur until it happens.
But joys of discussing politics, and religion and race aside, the economic and fiscal policies of the candidates are of paramount interest, not only for the economy, but also for the equity markets, and now. Let's take a look at the stock market in the watershed year in which Jimmy Carter was elected.
In looking at chart analogs such as this, its important to remember that we don't put much weight on the actual timeframes or durations. For us its all about price action. Information flows at different speeds, and environmental factors and influences pro and con operate with different strengths. Its the price action that matters most in our method. This distinguishes our approach from most pundits, including the nice folks from whom we obtained this chart. Our take on it would be that as an Obama presidency becomes more likely, and his fiscal change message becomes stronger, the stock markets are going to sell off, and probably significantly. We're probably already seeing some of this profit taking now.
New Hampshire on Tuesday will be important. We don't think Huckabee will do well given the lack of evangelical support, and McCain may do extremely well, positioning him as the other alternative to the annointed Romney. We wonder if Hillary has the machine to win in New Hampshire, or at least make a decent showing so the comeback kid card can be played.
But make no mistake, if the change candidates come out on top, we might see a replay of the year in which Jimmy Carter came to power in the markets, as the boys cash in their chips ahead of the uncertainty of new tax laws driven by a Democratic change president with a Democratic congress behind him.