The verdict is out, the superdelegates are the only way that Hillary Clinton can still win the Democratic Party's nomination. So, why is the media still portraying this as a neck and neck race? Politico.com may have the answer:
One big fact has largely been lost in the recent coverage of the Democratic presidential race: Hillary Rodham Clinton has virtually no chance of winning.
Her own campaign acknowledges there is no way that she will finish ahead in pledged delegates. That means the only way she wins is if Democratic superdelegates are ready to risk a backlash of historic proportions from the party’s most reliable constituency.
Unless Clinton is able to at least win the primary popular vote — which also would take nothing less than an electoral miracle — and use that achievement to pressure superdelegates, she has only one scenario for victory. An African-American opponent and his backers would be told that, even though he won the contest with voters, the prize is going to someone else.
People who think that scenario is even remotely likely are living on another planet.
As it happens, many people inside Clinton’s campaign live right here on Earth. One important Clinton adviser estimated to Politico privately that she has no more than a 10 percent chance of winning her race against Barack Obama, an appraisal that was echoed by other operatives.
In other words: The notion of the Democratic contest being a dramatic cliffhanger is a game of make-believe.
The real question is why so many people are playing. The answer has more to do with media psychology than with practical politics . . .
1. Will Barack punch his ticket on this second version of "Super Tuesday" in which Texas, Ohio, Vermont and Rhode Island hit the polls? Barack and Clinton square off in what should be the deciding battle of the race for the Democratic candidacy.
If Barack Obama defeats Hillary Clinton in Texas or Ohio tomorrow, he will take control of a unified Democratic Party and enter the race against John McCain with an already-established reputation as a political giant- killer.
2. Putin's hand-picked successor Dmitry Medvedev wins the election:
Dmitry Medvedev won Russia's presidential election, giving him a mandate to succeed Vladimir Putin. Russian monitors complained of election-law violations. Medvedev had 70.2 percent of the vote with 98.1 percent of returns counted at 7:30 a.m. in Moscow today, according to the Central Election Commission. The Commission will announce the result at 10 a.m.
Medvedev, 42, became the favorite after Putin named him as his chosen successor on Dec. 10. Putin then enjoyed approval ratings of more than 80 percent. A week later, Putin agreed to serve as Medvedev's prime minister, keeping a pledge to retain influence and setting the stage for a dual leadership that's unprecedented in modern Russian history.
Apple has invited the media to an event Thursday at the company's Cupertino, Calif., headquarters, where it plans to present an "iPhone software roadmap." One of the event's highlights will be a software-development kit that will let independent programmers build iPhone applications, according to Apple's invitation.
4. Labor Market Friday - The first Friday of the month should give us a taste of how many jobs we gained in February. But, thanks to Barry Ritholtz we've learned to not trust these numbers. After all the NFP data did overstate job growth by 14.4% in 2007. The more accurate data point is probably from TrimTabs:
TRIMTABS, which estimates employment growth using data from an online job index and an analysis of income tax withheld versus job creation rates, has been far more accurate than the Bureau of Labor Statistics. For example, in 2006, the government’s initial estimates of employment growth came in at 1.52 million jobs. But the bureau revised that data upward in February 2007, for a total of 2.24 million. By comparison, TrimTabs’ estimates of 2006 employment growth, using real-time data, totaled 2.39 million jobs. The firm reported those figures to clients contemporaneously.
Last week, TrimTabs told clients it estimated that 77,000 jobs would be lost in February; Wall Street economists are calling for a gain of 30,000 for the month.
Since October 2007, TrimTabs estimates, the economy has lost about 175,000 jobs, the first sustained employment drop since early 2003.
A few weeks back a wrote a post on my blog about how people I know are planning to spend their stimulus checks. It turns out Americans may not plan to spend it at all. Here's the latest from Bloomberg:
The stimulus plan Congress approved this month may provide less of a jolt to the U.S. economy than intended, as most Americans plan to save rather than spend their tax rebates, a Bloomberg/Los Angeles Times survey shows.
Only 18 percent of respondents said they will spend their rebate on purchases, while slightly more than three in 10 said they prefer to use the money to pay off debt, and a third said they'll pocket it.
``People in Washington assume that about 40 percent of the money will be spent,'' said Douglas Elmendorf, a senior fellow at the Brookings Institution, a Washington-based research organization. ``Much less would be disappointing.''
We'll have to wait and see just how stimulating this stimulus package actually is. It turns out Americans may not be as Pavlovian as we originally thought.
I think its safe to say that "Super Tuesday" is a little bit more important for our country than "Fat Tuesday", though I'm sure at least a few people down in New Orleans or Rio de Janeiro would contest that arguemnt. Today is the make or break day for the Presidential candidates on both sides of the aisle, as candidates Obama, Clinton, McCain and Romney battle for their parties nomination.
Primaries are taking place today in 24 states: Alaska, Arizona, California, Colorado, Connecticut, Georgia, Idaho democrats, Illinois, Kansas democrats, Massachusetts, Minnesota, Montana republicans, New Jersey, New York and Tennessee. After today we will have a pretty good idea who we will have to choose between in the general election. Going in to today Intrade is predicting a McCain vs. Clinton general election. Here's how it is shaping up:
After starting slow on InTrade McCain is now the consensus favorite to win the Republican nomination with nearly 90% of the Intrade vote: Romney's fall has been almost as stunning as McCain's rise: After briefly giving up the lead to Obama following New Hampshire, Clinton is hanging on to a narrow marging going into Super Tuesday: Obama is definitely still in this race and with a strong showing in a few key states, he could surprise the world and walk away with a nomination: I know I will be glued to the television tonight. By tomorrow I hope to break down what the economic policies of the likely nominees mean for the economy and for the stock market.
I hope this is what the government had in mind when they agreed on the fiscal stimulus package. If you have plans for your stimulus check please let me know in the comments section!
Okay gotta go run and watch Bush's State of the Union Address. I'm sure this will be enlightening . . .
The Nasdaq is down over 17% since its peak. The S&P 500 is off over 15%. The Dow is off almost 12%. A few more rough days and we'll be treading in a bear market for US equities. As the economy cools due to the housing recession and credit crunch, and as earnings continue their slow it is inevitable that this will be priced in to equities.
The true question is the extent to which you believe that equities are overpriced at their current valuations and just how long and severe this slowdown will be. A secondary level of evaluation needs to be done to determine whether or not you think the US slowdown will be enough to lead to a general recoupling around the world that will slow growth in developed and emerging markets. If you are Nouriel Roubini these are easy questions, but if you aren't, these are questions you should be pondering.
On another note, though it is a little too early to call (13% precincts reporting) it looks as though Hillary Clinton might just mount a stunning rally to take New Hampshire and keep her hopes alive to take the Presidency in 2009. If Hillary had lost New Hampshire she would have been effectively out of the race as many in the Democratic party would have jumped ship. Those hoping for easy sailing for Obama need to take a deep breath. Republicans hoping to face a "beatable" Hillary in the general election just let out a huge sigh of relief.
On the other side of the aisle McCain secured a victory in New Hampshire by a solid 37%-28% margin over Romney. If I were a betting man I would guess that a Romney-Obama general election could be in the works.
Barack Obama has had a great start to 2008. He won the Iowa primary and performed well in the New Hampshire debates. To top it off investors have bid up his stock on Intrade. In fact, for the first time in the Presidential race Obama is trading above Hillary Clinton. Going into 2008 Clinton was trading around 70 and Obama around 20. As of right now Obama is trading at 55, and Clinton is around 41 (it looks like Byron Wien is off to a good start):
Obama's strong victory in Iowa surprised a lot of people. One possible explanation for Obama coming out of the gate so strong is the importance of the youth vote. If you visit Facebook's US Politics page you can track which candidates Facebook users support:
The current data does nothing to refute the notion that Barack holds a lot of weight with young voters. Once you break down the data even further it gets really interesting: Keep in mind the Facebook demographic is younger and a full two thirds of all Facebook members who have backed a candidate publicly have backed Democrats. The highest current vote getter is Barack Obama who has 39% of all votes. The second highest vote getter is Ron Paul with 13% of all vote getters. Ron Paul is followed closely by Hillary Clinton with 12% of the vote. Here is a more detailed demographic breakdown for the Democrats:
Barack Obama is strong with the youth crowd and Hillary is strong with the older crowd and with women. Nothing too surprising there.
Here's the breakdown for the Republicans:
Ron Paul is incredibly popular with males and with independents.
And finally Barack will probably fare well in New Hampshire if his sweep of the youth vote continues. Below is his Facebook support in New Hampshire (55% to Hillary's 16%): Momentum means a lot for Presidential candidates, but we've seen in the past that winning early doesn't guarantee anything.
With primary season only a week away (yes, Iowa is on January 3rd!) I have begun doing a little more research on how the candidates are shaping up. I have been surprised with how little people know about the candidates when I bring up the election up in holiday conversation (I know, it is probably a faux pas). It seems that until the field has been whittled down a bit most people don't bother doing their research. So in an effort to kick start that effort, I have a linked to a quiz that helps voters identify the candidates that are the closest aligned to them on the big issues. It only takes 5 minutes and the candidates will probably surprise you! Just click the picture below:
President George W. Bush's approval rating has been under 40% for quite some time now. This is not a good sign for Bush or for the Republican's in the next election. However, if you look at all the Presidents since Truman, each one -- with the notable exception of Dwight Eisenhower -- has spent at least part of their term with a rating near 40%. The one thing that is interesting about W however is the fact that since 9/11 he has been on a very steady downward slide. Thank you to the Wall Street Journal for the interesting analysis. (Hat Tip: Barry Ritholtz) Click the photo to enlarge.So who is lining up to replace W? For the Donkeys Hillary Clinton and Barack Obama are in a dead heat on InTrade, the political futures trading website:
For the Elephants it looks like Rudy Giuliani and late entrant Fred Thompson are racing neck in neck:
Blackstone IPO'd today under the ticker symbol BX and was rewarded with a 13% gain on its first day in the market in spite of market forces heading the opposite direction. Investors seemed to shrug off the new tax proposal announced by Congressional leaders that could double the tax on carried interest. All in all the IPO was a success and Stephen Schwarzmann and Pete Peterson both made out handsomely.
An interesting sidenote to today's action was that Fortress Investment Group (FIG) had a terrible day. After opening 2.5% above yesterday's close the stock sagged in mid-morning trading before closing down 6.3% on the day. FIG is now trading close to the level it was at last week when I recommended it. In my mind nothing has really changed, this might just represent a second buying opportunity for FIG at a great price.
Actor and former Tennessee Senator Fred Thompson hasn't yet announced his campaign for President, but that hasn't stopped him from quickly becoming the early Republican leader in the InTrade prediction markets. In just three months of trading he has passed McCain, Romney and Guiliani in rapid succession:
You can see his rise has been fairly steady and received quite a boost after asking to be released from Law & Order in May and forming an "exploratory committee" in June:
To be perfectly honest I don't know much about Fred's economic policies, though from a quick glance at his blog it looks like he is strong fiscal conservative. All I knew about him before that little bit of research was his stellar performance as Jim Robinson in the "Barbarians at the Gate" made for TV movie . . . but I digress . . .
This morning President Bush announced the nomination of Robert Zoellick for the top spot at the World Bank. Zoellick has an impressive resume, having served as George H.W. Bush's Chief of Staff and as the deputy Secretary of State in 2005-06. Over the past year he has been killing time as an executive at Goldman Sachs. This, of course, should not come as a surprise. In what is becoming quite an impressive trend for Goldman alums, Zoellick is walking the well-trodden ground between 85 Broad Street and the Capital City.
Robert Zoellick follows fellow Goldman Alums Robert Rubin (he is at Citicorp now) , Hank Paulson, Josh Bolten and Jon Corzine into the political fray. However the list of Goldman alums who hold positions of power in Washington goes on and on from there: James Johnson, Kenneth Brody, Stephen Friedman, John Whitehead, Rajat Gupta, Robert Hormats etc. This list is by no means exhaustive, but I think you get the picture. I've written numerous times in the past about Goldman and its battle for human capital. For all intents and purposes it doesn't look like Goldman's ability to capture top talent has waned at all in recent years, now if it could only hold on to its top employees longer before they bolt to Washington . .
The ability of markets to process large volumes of pricing information is indisputable. So while polling is still the method of choice for predicting voter behavior, prediction markets, by letting voters put their money where their mouth is, may be a more efficient and continuous means of predicting our next president. With that in mind I scoured the existing prediction markets that allow real money trading -- Iowa Electronic Markets and InTrade -- as well as those that only use play money -- News Futures and Prediction Xchange (currently offline) -- for information on who our next president will be.
In case you are wondering I feel that InTrade is perhaps the best prediction market site because of its easy navigation and advanced graphing capabilities. I am not endorsing that you engage in betting on any of these sites, and if you want to learn more about the potential legal consequences of doing so you should check out this article from Slate.
The electronic prediction markets pose a question, for example "Will Hillary Clinton be the 2008 Democratic Nominee for President?" If Hillary wins the contract is worth $100, if she loses it is worth $0. So logically the more likely she is to win the more someone will pay for the contract and the higher the contract will be worth. Let's start with the real money sites:
Iowa Electronic Markets (IEM) - IEM is predicting Hillary Clinton will be our next President. More money is riding on a Democratic victory 53.3 over a Republican victory 46. The candidate voting has had an interesting month. On the democratic side Hillary Clinton 40.8 and Barack Obama 40.5 opened the month in a dead heat, with Edwards 7.7 a distant third. The catch all for other candidates was at 12. By the end of April Hillary bumped up to 43.9, Barack fell to 32.4, Edwards is at 9 and the others are at 15. Why is Barack falling and others rising? Is the call for an Al Gore candidacy stealing votes from Obama?
InTrade - InTrade is predicing Hillary Clinton will be our next president. Hillary Clinton has a wide margin over Obama. The current bid price for Hillary is 47 versus 30.5 for Obama. The third candidate is actually Al Gore with 10.5 over John Edwards with 7.2. According to InTrade Al Gore is still a very strong dark horse candidate. This may help us understand the IEM data better. The one weakness of the IEM market is that lack of a separate trade for Al Gore, who is lumped in with all the other Democratic candidates.
NewsFutures - NewsFutures is predicting Barack Obama will be our next president. Currently Barack Obama is the 46% favorite to be the 2008 Democratic Nominee for President. Hillary Clinton is a close second at 43%. Republicans are dogs (44) to the Democrats (56) in the general election.
So what have we learned? All the sites are predicting a Democratic victory and the two that trade real money are predicting a Hillary Clinton general election victory. It is however up to you how realistic you think this is. If you have information that leads you to believe that there has been a mispricing I encourage you to put money on it.
In the meantime those chartists out there can digest this chart for Barack Obama from InTrade. It looks solid to me as Barack is still way out in front of his moving averages but he may have some resistance in the low 30's. Here to is the chart for Rudy Guiliani. You can see that Rudy was up on strong volume in February and March but had trouble breaking 40. He is still the leading Republican candidate.
Barack Obama is a legitimate presidential candidate. If this wasn't clear before, it was certainly clear after he announced he had raised $25 million in campaign contributions, putting him just $1 million behind seasoned fundraiser Hillary Clinton. Having the support of hedge fund legends George Soros and Paul Tudor Jones certainly hasn't hurt either. But, until recently Obama hasn't revealed much about his economic policies. To be perfectly honest his entire domestic policy agenda is largely unknown. Even a thorough analysis of speeches, interviews and his congressional voting record reveals very little substance (some information can be obtained from his website.) I feel the Wall Street Journal described it best when they said he is best known for "his biography, his charisma and his early opposition to the Iraq war."
In his defense, Obama's fundraising ability and charisma has meant that he hasn't had to take strong policy positions thus far, and this will undoubtedly work in his favor as he surveys his opposition and his voter base and develops policies that could place him in the oval office. For now, one of the only ways we can evaluate where Obama will land on the political spectrum is to evaluate the economists he has added to his team. Atop his economic team are star Chicago Economist Austan Goolsbee and two Harvard professors who served on Bill Clinton's economic team, Jeff Liebman and David Cutler. At first blush this is an accomplished and experienced team. Because health care is such an important Democratic issue it is not surprising that Obama will lean heavily on Cutler. Cutler's outstanding research background and his political experience make him a crucial part of a team that will have to come up with a health plan that, as Obama pledged, will "have all individuals covered by the end of his first term." Expect more information on Obama's policies to emerge in the weeks ahead. The first Democratic debate is this Thursday evening.
Below is more detail on the team (click to enlarge):
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The verdict is out, the superdelegates are the only way that Hillary Clinton can still win the Democratic Party's nomination. So, why is the media still portraying this as a neck and neck race? Politico.com may have the answer:
