Here we go.
While I believed since the beginning of the year that Obama’s chances for reelection would be tied to which way the U.S. economy goes, and therefore deteriorating due to its continued sluggishness, they have fared better than I thought they would when I wrote my mid-year outlook in July. This has been due to a resilient economy even in the face of souring global business conditions. The election is still a barn burner though.
The situation in Europe continues to be delicate with Spanish and Italian 10-yr bond yields still elevated. On the bright side, it has improved with Italian bond yields testing an important support level and a visible downward trend in Spanish yields. If Italian yields can break through support and Spanish ones can remain at their current levels, there could be economic stabilization ahead.
Keep an eye on copper. A triangle, with its base beginning in 2011 is close to resolving. I believe its resolution will be a significant signal to the direction of the global economy.
Frankly, I didn’t watch the debate. I think both candidates are hacks as far as getting the economy back on track. Obama supported a privatize the gains and socialize the losses approach, while Romney is looking for a trade war against China.
BUT….. this isn’t about my pessimistic views…. it’s about first impressions about who won. It looks like Romney was the winner. I may be right after all.
Romney revealed | Stephen M. Walt
Right on cue with my concerns about Romney’s screw ups lately.
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Like all of us, politicians sometimes utter ill-chosen phrases or get surprised by an unexpected question. But given how much uninterrupted time he has had to get ready for this election, the frequency of Romney’s gaffes is revealing. They don’t just expose the ignorance of a man who’s spent his entire adult life protected in the bubble wrap of wealth, privilege, and intellectual conformity. What they reveal is either 1) enormous and inexplicable ignorance, 2) a smug and cynical willingness to say whatever he thinks each audience wants to hear, or 3) the iron grip of a world-view that is impervious to evidence. — Stephen M. Walt
Romney Criticized for Handling of Libya Protests, Death - Bloomberg
The attacks that killed the U.S. ambassador to Libya became a flashpoint in the American presidential race, as Republican nominee Mitt Romney drew criticism from Democrats and Republicans for chastising President Barack Obama and his administration on their response.
The Republican presidential nominee told reporters at a Jacksonville, Florida, news conference today that Obama’s administration set a “terrible course” when the U.S. embassy in Cairo issued a statement Romney called “akin to apology” to Egyptian protesters before the death of U.S. envoy to Libya J. Christopher Stevens. 7
Those comments came after Romney said in a statement issued late last night that the Obama administration’s “first response” had been to “sympathize with those who waged the attacks,” calling it “disgraceful.”
Romney’s reaction referred to a statement by the U.S. embassy in Cairo that was intended to ease tensions over an anti-Muslim film and was released hours before attacks erupted in Egypt and in Libya. The Republican’s response sparked rebukes from Democrats and critical comments from members of his own party. — Bloomberg
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In my latest macro outlook, I stated my belief of the high likelihood that Romney would win the presidency (due to a faltering economy). However, he’s been doing his best to not win by a potentially serious blunder at a very inopportune time.
A weak economy and high unemployment could hurt President Barack Obama re-election chances in November and bolster Republican challenger Mitt Romney’s campaign. Republicans are in Tampa, Florida, this week to formally nominate Romney and have pointed to the dismal growth in making the case to elect their candidate. (via New GDP Numbers Do Obama No Favors — US Business News - CNBC)
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I’ve had a jump on this trend since the beginning of the year:
“While Obama has exercised enormous patience for China’s economic restructuring, political will is clearly decreasing. Mitt Romney looks to be the front-runner for the Republican Party in the presidential elections. It is clear that he has no misgivings on China being a currency manipulator. If the U.S. economy were to go into a double-dip recession, Obama’s chances of reelection would decrease markedly, while Romney’s would increase. The probability of this political outcome can be seen in real time here, here and here (notice the inverse correlation between the final two charts).”
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Here’s my mid year outlook:
“If one’s higher probability scenario calls further economic turbulence, like mine, it would be prudent to begin wondering what life would be like under a Romney presidency in regard to global trade.”
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While it’s not a given that Romney will win, it seems that a worsening economy would doom Obama.
On the other hand, the revision upwards was due to stronger than expected consumer spending:
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“The upward revision to second-quarter growth was largely because consumers spent at a slightly faster pace than first estimated. Consumer spending grew a 1.7 percent rate, better than the 1.5 percent initial estimated. Exports, which add to growth, were also stronger, growing at a 6 percent rate.” — CNBC
Republican speakers toe economic hard line - MarketWatch
TAMPA, Fla. (MarketWatch) — Republican Party A-listers on Tuesday night sought to frame November’s election as a choice about the size and scope of government as they introduced Mitt Romney to a national audience.
Wisconsin Gov. Scott Walker, a GOP hero for taking on labor unions and then beating back a recall effort in June, told assembled delegates and a national TV audience that Romney understands that “people, not government, create jobs.” It was a direct slap at Barack Obama, whose policies Republicans say are to blame for unemployment above 8%. — Marketwatch
Romney and Republican House leader far apart on China currency | Reuters
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I wholeheartedly agree with Mr. Boehner. Patience is warranted.
Obama Advisers Revising Economic Outlook for Greater Job Growth - Bloomberg
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As I covered in my latest macro outlook, as long as the economy is improving, this is Obama’s election to lose.
The president’s political fate lies in which direction the economy takes. So far so good.
Gingrich Erases Romney's National Lead
—(Gallup)
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(RCS): This is unexpected and runs counter to my belief that Romney is a shoe-in as the Republican nominee for the presidential election. Upsets in the South Carolina and Iowa primaries to Gingrich and Santorum respectably have blown the race wide open.
What a difference a week makes!
