Wall Street Isn't Impressed With Republican Candidates
If Wall Street hates uncertainty, then it must really loathe the Republican presidential contest.
Uncertainty abounds in the race to challenge incumbent Democratic President Barack Obama, with the GOP electorate unsure of who it wants as its standard-bearer and Wall Street kingmakers unconvinced that any of the candidates will make a difference.
"Their ideas for what needs to happen are terrible," says Brian LaRose, analyst at United-ICAP in Jersey City, N.J. "Then go to the Democratic side — their ideas are just as bad. I don't think anybody's swayed from party rhetoric to actually pose a solution, and that's the biggest problem that we have."
The crowded field has been engaged in nearly a dozen debates so far, as population polls have shifted and several candidates have had their shot at front-runner status.
They'll get another chance to square off Wednesday when CNBC welcomes the hopefuls to Oakland University in Rochester, Mich., where all eight candidates will get a chance to state their views on the economy and a slew of other subjects.
A pre-debate survey from NBC News and The Wall Street Journalshowed former Massachusetts Gov. Mitt Romney and former Godfather's pizza CEO Herman Cain in a virtual dead heatfor the lead among GOP aspirants.
Finding a way to gain the confidence of weary investors and a public suffering under 9 percent unemploymentwill be key for the group. Polls consistently show that the electorate would support a challenger to Obama, but might not elect any of the current candidates to take on that role.
Dennis Gartman, who runs a hedge fundand is author of The Gartman Letter, a widely followed investment bulletin, says investors are unimpressed with the current Republicans at the head of the pack.
"The fact the likely nominee almost certainly will be Romney engenders no great enthusiasm," Gartman said in an interview. "For 24 percent of the voting Republicans, he's their No. 1 choice. He's everybody else's third choice. There's no enthusiasm."
For Gartman and others, the time is now for the challengers to articulate a clear message on how they will fix the nation's ailing economy.
"They should be differentiating themselves between what a small government, free market-oriented Republican Party is compared to a large government, less free market-oriented Democratic regime is. And they should stop fighting with each other," he says. "They should focus on jobs and taxes, and shut up when it comes to abortion, immigration, and concerns that cater to very small and vocal minorities within the Republican Party."
Getting lost on social issues is indeed a danger for the hopefuls, and is particularly acute in suburbs such as Bedford, Conn., says Kathy Boyle, a Bedford resident and president of Chapin Hill Advisors, a boutique wealth advisory in New York.
Boyle says Republicans running in local races are encountering problems connecting with average voters, who are more worried about jobs and housing than they are with the types of social concerns that often take focus for the GOP.
"You've got (former Utah Gov. Jon) Huntsman — a lot of people like his views, but he's pro-life," Boyle says. "For the average American who's centrist...you can't help but feel that's a play to the Christian right. That scares people."
The CNBC forum comes at a difficult time in the race for at least one candidate — Cain — who has had as many as five women, one of whom came forward Monday, accuse him of sexual harassment.
That's not his only problem.
The former Kansas City Federal Reserve governor's famed "9-9-9" tax plan, which throws out the old system in favor of a 9 percent levy on income tax, business profits, and sales, is coming under increasing scrutiny.
Lack of a widely accepted tax plan is just one of the issues hampering the candidates.
"Mr. Cain's 9-9-9 tax proposal makes great economic sense but when pressed, he cannot explain why it does or how it would work," Peter Morici, economist at the University of Maryland, wrote in a blog post Monday. "If Mr. Cain indeed has economic advisors, they are either negligently incomplete in their briefings, or he is disinterested in relevant details."
The 9-9-9 plan, despite vaulting Cain to the front of the field, is not universally beloved.
Noted banking analyst Dick Bove at Rochdale Securities recently called the proposal "a massive tax increase" for those at the bottom rung of the economic ladder.
Conversely, though, Bove has issued praise for the candidates in their understanding of the bank industry, at least insofar as their position on the controversial Dodd-Frank reform lawpassed in the wake of the financial crisis.
A vocal critic of the legislation that increases capital requirements and tightens regulation on the banking system, Bove said a recent debate performance showed the candidates, with the exception of former Pennsylvania Sen. Rick Santorum, at least realized that Dodd-Frank is "harming the growth in the United States economy."
"Presumably, this understanding at some point will work to readjust the problems that government has created for the industry and this will benefit the economy," Bove wrote in an commentary for clients. "Investors may be able to go back to evaluating bank stocks based on their economics rather than politics."
Yet the Republicans persist in making it difficult to unseat an unpopular incumbent presiding over one of the worst U.S. economies since the Great Depression.
Real Clear Politics puts the president's aggregate approval rating from the major polls at an anemic 45.8 percent — seemingly easy pickings. Yet in head-to-head matchups, Obama leads every challenger in the field.
"They're so fed up with politicians," Boyle says of voters. "There doesn't seem to be a safe haven anywhere. People are just afraid. They're disillusioned, they feel like we're rudderless."