You don’t need presidential debates – the one graph version

Tonight is the night – Obama vs Romney in the second presidential debate. I am in Europe so I do not plan to stay up all night and watch it. But in fact you don’t need to follow presidential debates to have something clever to say about the outcome on election day. All you need is to look at the US stock market and my forecast is that if S&P500 keeps trending upward until election day then Obama will be re-elected. If we get a major sell-off then Romney will soon move into the White House.

Just see this graph – it is S&P500 and Obama’s reelection likelihood mentioned from InTrade shares on “Barack Obama to be re-elected President in 2012”.

This is the real-time version of James Carville’s famous dictum “It’s the economy stupid”. It is not a forecast on the election outcome – as I have no clue where the stock market is going in the coming weeks, but it is an illustration that TV debates are much less important than how the economy is doing.

Enjoy the debate anyway…

Related posts:
Bernanke, Obama and the political business cycle – and some research ideas
Will Draghi’s LTRO get Obama reelected?

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