Bowyer: Markets Buying Biden?
I think that the prediction markets are treating the Biden choice as generally positive for Obama. Presidential future’s trader’s reacted positively right away, backed off a little, digesting the negatives (he said tough things about Obama during the primary; he has a serious case of hoof in mouth disease; he’s pretty liberal, etc.), and concluded that Biden would, on balance help Obama. He’s already ahead, so he falls on the ball during the last play. Not exactly bold change that we can believe in, but it will probably help him. Yes, Hillary would have been a slam dunk, but traders knew he wasn’t going to choose Hillary.
Biden was the best that Obama buyers could hope for given the fact that he would not countenance a real rival on the ticket. He may have announced in Springfield, Illinois, but Obama didn’t pull a Lincoln. There is no team of rivals.
Most of us knew that, and so we note that Biden adds heft to the ticket, so the future’s market on Intrade gave him a 3 point bump (for more about Intrade, watch this video). The Dow futures went negative over the weekend, and you see what the Dow is doing today. This is probably going to be a good week for the Dems and investors are reacting to that. It’s not just Biden and DNC, but that is most certainly in the mix. How could investors ignore it?
A bold move from McCain could reverse all of that. But does McCain have a bold move in him? If not, Dem week on TV is likely to mean a tough week for investors. Biden offers no hope for pro-growth Democrats. That wing of the party got passed over. The fact that Biden is knowledgeable about finance is cold comfort to supply-siders. If he’s going to be wrong on growth issues, then it doesn’t help us that he’s smart. It just means he’s better at moving things in the wrong direction.
There are better days ahead. The drilling moratorium expires one month before the election, and a fight over that issue could be very good for the GOP.
Jerry Bowyer is chief economist at Benchmark Financial Network, is a member of the Kudlow Caucus, and makes regular appearances on CNBC. He also writes extensively on finance and history for the National Review, The Pittsburgh Post Gazette, Crosswalk.com, and The New York Sun. He can be emailed at email@example.com.