The CEO of the world's largest advertising company, Sir Martin Sorrell, told CNBC he believes President Barack Obama will be re-elected, even though GOP vice presidential hopeful Paul Ryan is impressive.
“I still think President Obama, who is a superb campaigner, will win the election and I’m not sure it will be quite such a tight margin as people are predicting,” the WPP CEO told CNBC Thursday.
Sorrell said he found Republican candidate Mitt Romney’s choice of Ryan as vice presidential running mate “very interesting” and a very positive one for business.
Ryan seized the spotlight at the Republican National Convention on Wednesday night, telling the party that Romney "will not duck the tough issues" if he wins the election. Ryan said a Republican administration will move forcefully to address the fiscal cliffand signal such a move to the markets.
Cutting government spending and the deficit is the issue that Sorrell says could cost the Republicans the election, even though he believes the GOP is right to propose such cuts.
“Talking about deficit reduction in the way that the Republicans are is not a vote winner, it’s not a vote gatherer,” Sorrel said.
Bush-era tax cuts are scheduled to expire at the end of the year, resulting in huge tax increases in what has become known as the “fiscal cliff.” Obama set up the Simpson-Bowles commission in 2010, which put forward ideas to reduce the deficit by $870 billion by 2020.
Sorrell now sees the two parties fighting over whether to have a new Simpson-Bowles type plan, or whether to have a modified version. This, Sorrell says, is the reason why markets are currently unsettled.
“What we see is general caution, we see companies sitting on what? According to [media] estimates of $2 trillion in cash around the world in U.S. based multinationals,” he said.
“Corporate treasurers, CFOs unwilling to take risks with that. So in that sense there’s more confidence, balance sheets are stronger, but there’s more caution.”
WPP, the British based multinational, reported its second quarter resultson Thursday. Like-for-like revenue was up 3.4 percent but this was below forecasts of 4 percent. The company also lowered its revenue guidance for the year, and the shares fell on the news. The company says clients continue to be cautious and are demanding better value for money.