The Presidential Race {So Far}

We are three debates down and about three weeks away from the election.  Here are my random thoughts.

1.  Debates still advantage Gov. Romney.  The Governor pulled himself back in the race a few weeks ago with his performance against the President.  Last night was somewhere between a draw to a slight win for the President but Romney did nothing in my opinion to hurt his standing among independent voters.  Romney reintroduced himself to the public with his performance in the first debate and earned the right to continue as a serious contender after last night.  That is nobody scored a knockout blow with their performance.  The President came to play last night though and that likely staunched the bleeding on his end.

2.  The race is tight.  Two areas of concern for the President should be that conventional wisdom holds that undecided voters at this late date tend to break towards the challenger and the huge swing in the polls after the first debate away from the President and towards the Gov. Romney indicate that the President has very soft support amongst a sizable portion of his supporters.  Besides the obvious advantages that the office confers, the President has more ways to win via the Electoral College then Gov. Romney.

3.  It is likely that the race will be decided in a handful of states.  Ohio, Iowa, Florida and Wisconsin are my top picks to decide the whole thing.  If it comes down to who wins Ohio then I think the President will win.  However, it's tight so anything could happen.

4.  Whoever wins is likely to benefit from an improving economy but unlikely to be able to claim any sweeping mandate.  If the President wins I think he is so politically wounded that he is a lame duck the day after his inauguration.  Romney will face at least one  branch of the Congress, likely the Senate, not controlled by the GOP.  The winner either way is going to have to compromise if we are to avoid the "fiscal cliff" set to kick in at the end of the year.

5.  I think the market at these levels discounts that the President wins.  Market has the potential to rally if Romney wins.  The scenario that I believe is not factored in is if either candidate fails to reach the required 270 electoral votes.  This would result in uncertainty which markets hate.  In 2000 when this occurred the market fell about 10% and I think this is a real possibility if we wake up on November 7th and don't have a reasonable idea of who won.  We don't necessarily have to know the day after the election, but the longer doubt over who won continues, the less markets will like it.  For what it's worth an election that makes it to the House of Representatives likely results in a Romney victory.  See CNN here.