Wall Street investors and traders largely like Rep. Paul Ryan’spolitics of simplifying the tax code and his overall fiscal discipline, but couldn’t help themselves from worrying about whether this was the choice that will achieve their ultimate goal of unseating President Obama.
The feedback from the investor community following Mitt Romney’s weekend selection of picking Ryan as his running mate was largely positive on the man himself, but a sense of concern that the choice won’t help Romney win key swing states such as Florida and Ohio.
“A very bold move by Romney as it is a focus on conservative politics,” said Stephanie Link, director of research at TheStreet.com. “But the big question to me is, ‘Do people want the fiscal reform that they say they do or will they vote like they usually do?’”
This concern may be one reason why the U.S. stock market is yawning at the pick Monday with the S&P 500 little changed to down. The Romney contract on the Intrade electronic market is getting little, if any, pop following the pick.
More than anything, Wall Street wants a ticket that will not raise taxes on wealthier Americans, especially on capital gains and dividends. A Romney-Ryan win in November surely decreases the odds of those hikes happening. However, the other VP candidates Romney could have chosen may have accomplished the same goal without the Medicare albatross that the Wisconsin congressman seems to have in their eyes.
“Ryan energizes the base, but puts Florida further from reach unless these two can speak clearly on Medicare,” said Josh Brown, money manager and author of The Reformed Broker blog.
Ryan’s hard-hitting budget plan called for limiting spending on Medicare and siphoning more recipients into private plans by the use of what some would call “vouchers.”
“A platform based on balancing the budget and smaller government can't win the key swing states,” said Robert Sinn, a trader and blogger. “The average voter can't relate or understand much of what their platform revolves around.”
Still, many on the Street believe the Ryan pick – and his intellectual leadership on fiscal matters in the Republican Party – steers the election’s focus further toward where they want it to be: a sputtering economy on President Obama’s watch.
“So the decision to choose him was not driven by a swing state mandate,” wrote Dennis Gartman in Monday’s The Gartman Letter. “Rather, Mr. Ryan was chosen for his budget acumen, and this we think quite wise. We can imagine that there will be campaign ad after campaign ad decrying his attacks upon Medicare, Medicaid and other government programs, but his positions may actually resonate with younger voters who now see these programs as assaults upon their own future, fiscal well-being."
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