Political Asylum — September 25, 2012, 3:18 pm

Wall Street Places Its Election Bets

Has Wall Street made up its mind on this election? One analyst, Jeffrey Kleintop, has divined just who the investment class believes will be president by developing one of those magic election-year metrics. (Double the price of a bag of groceries in St. Louis, divide by each candidate’s favorability rating in the Rust Belt, and voilà—the winner!) Kleintop’s Wall Street Election Year Index (.pdf) looks at specific stocks that are enjoying an uptick. The theory goes that a certain basket of stocks traditionally does better under Democratic presidents and a different basket does better under Republican presidents. Check to see which basket is doing better in the run-up to the election, and you know who Wall Street thinks will win.

This year’s mix is revealing. Kleintop believes a good hedge fund, confident in a win for Mitt Romney, would move its portfolios toward major segments of the energy sector. Conversely, since an unrepealed Affordable Care Act promises to bring in millions of new customers to the health care industry, one might expect a rise in stocks specializing in “health care facilities” and “health care services” in anticipation of an Obama win.

Kleintop says he not only looks at the top stocks, but also employs an algorithm that will “strip out and balance out the cyclicality,” as he told CNBC’s Jeff Macke earlier this summer. Checking the top five or ten health care and energy stocks on an anecdotal basis (and thus surrendering to the evils of cyclicality) reveals no demonstrable prediction from Wall Street. But according to Kleintop’s algorithm, another class of investments is also set to grow if Obama wins reelection—the one that encompasses “construction materials,” “homebuilding,” and “construction and farm machinery.” And here, the big portfolio managers seem to have shaken their Magic 8 balls and come up “Obama.”

I googled the top stocks in the category of construction materials, and what I saw was fascinating. Not only does Wall Street seem to be betting its portfolios on Obama, it would appear that its collective realization occurred during the ramp-up to the conventions, sometime in July. At that time, Wall Street started to see a rosy future in the construction sector—a view that seems to be prevailing, with the top stocks there surging from 20 to 50 percent a few weeks ago. Below are charts showing trends for the top ten construction-materials stocks. The jump is unmistakable—you don’t find a loser until you get to the tenth, Clarcor.

pallcorp
donaldson
robbinsmyers
crane
rbc
pentair
middleby
gardner
eastern
clarcor

In Connecticut, where I live, there’s no hiding the fact that while the state at large might prefer Obama, the money—i.e., Fairfield County: Greenwich, Stamford, Cos Cob, suburban Bridgeport—has abandoned him this time around. In 2008, in the part of Bridgeport where the big funders live, Obama raised nearly $4.5 million, compared with $2.8 million for John McCain. This time, Obama has come away with just over $1 million, while Romney has gathered about $4 million.

A friend of mine recounted for me a luncheon for equity-fund managers a few days ago in New York, at which the host asked some 500 of Wall Street’s finest to use a private voting device to answer a few questions. “The MC asked us to vote on who we WANT to win the election,” my friend wrote. “53% of the room said they wanted Romney to win. Obama got 47%.”

Perhaps that vote by itself is news—47 percent of equity-fund managers prefer Obama? But then the MC asked who they thought would actually win. “Over 70% said Obama would,” said my friend.

So, while the leaders of our financial sector are betting their personal funds on Romney, they’re betting their portfolios on Obama. I guess they don’t call it hedging for nothing.

Share
Single Page
undefined

More from Jack Hitt:

Political Asylum November 6, 2012, 2:01 pm

The Electoral Battle Between Corporationism and Empiricism

Obama’s data-driven approach may decide today’s race—and determine the future of the G.O.P.

Get access to 165 years of
Harper’s for only $45.99

United States Canada

CATEGORIES

THE CURRENT ISSUE

June 2016

Trump’s People

= Subscribers only.
Sign in here.
Subscribe here.

The Old Man

= Subscribers only.
Sign in here.
Subscribe here.

The Long Rescue

= Subscribers only.
Sign in here.
Subscribe here.

New Television

= Subscribers only.
Sign in here.
Subscribe here.

The Improbability Party

= Subscribers only.
Sign in here.
Subscribe here.

view Table Content

FEATURED ON HARPERS.ORG

Post
Helen Ouyang on the cost of crowd-sourcing drugs, Paul Wood on Trump's supporters, Walter Kirn on political predictions, Sonia Faleiro on a man's search for his kidnapped children, and Rivka Galchen on The People v. O. J. Simpson.

The new docudrama The People v. O. J. Simpson: American Crime Story (FX) isn’t really about Orenthal James Simpson. It’s about the trials that ran alongside his — those informal, unboundaried, court-of-public-opinion trials in which evidence was heard for and against the murder victims, the defense and the prosecution, the judge, the jury, and the Los Angeles Police Department, to say nothing of white and black America. History has freed us from suspense about Simpson’s verdict, so that the man himself (played here by Cuba Gooding Jr.) is less the tragic hero he seemed in the mid-Nineties than a curiously minor character. He comes to the center of our attention only once, in Episode 2, at the end of the lengthy Ford Bronco chase scene — which in real life was followed by a surreal cavalcade of police cars and media helicopters, as well as an estimated 95 million live viewers — when Simpson repeatedly, and with apparent sincerity, apologizes for taking up so much of so many people’s time. It is an uncannily ordinary moment of social decorum, a sort of could-you-please-pass-the-salt gesture on a sinking Titanic, in which Simpson briefly becomes more than just an archetype.

Photograph (detail) © Eve Arnold/Magnum Photos
Article
Trump’s People·

= Subscribers only.
Sign in here.
Subscribe here.

"All our friends are saying, load up with plenty of ammunition, because after the stores don’t have no food they’re gonna be hitting houses. They’re going to take over America, put their flag on the Capitol.” “Who?” I asked. “ISIS. Oh yeah.”
Photograph by Mark Abramson for Harper's Magazine (detail)
Article
The Long Rescue·

= Subscribers only.
Sign in here.
Subscribe here.

He made them groom and feed the half-dozen horses used to transport the raw bricks to the furnace. Like the horses, the children were beaten with whips.
Photograph (detail) © Narendra Shrestha/EPA/Newscom
Article
The Old Man·

= Subscribers only.
Sign in here.
Subscribe here.

The new docudrama The People v. O. J. Simpson: American Crime Story (FX) isn’t really about Orenthal James Simpson. It’s about the trials that ran alongside his — those informal, unboundaried, court-of-public-opinion trials in which evidence was heard for and against the murder victims, the defense and the prosecution, the judge, the jury, and the Los Angeles Police Department, to say nothing of white and black America. History has freed us from suspense about Simpson’s verdict, so that the man himself (played here by Cuba Gooding Jr.) is less the tragic hero he seemed in the mid-Nineties than a curiously minor character. He comes to the center of our attention only once, in Episode 2, at the end of the lengthy Ford Bronco chase scene — which in real life was followed by a surreal cavalcade of police cars and media helicopters, as well as an estimated 95 million live viewers — when Simpson repeatedly, and with apparent sincerity, apologizes for taking up so much of so many people’s time. It is an uncannily ordinary moment of social decorum, a sort of could-you-please-pass-the-salt gesture on a sinking Titanic, in which Simpson briefly becomes more than just an archetype.

Illustration (detail) by Jen Renninger
Article
New Television·

= Subscribers only.
Sign in here.
Subscribe here.

With its lens shifting from the courtroom to the newsroom to people’s back yards, the series evokes the way in which, for a brief, delusory moment, the O. J. verdict seemed to deliver justice for all black men.
Still from The People vs. OJ Simpson: American Crime Story © FX Networks

Amount an auditor estimated last year that Oregon could save each year by feeding prisoners less food:

$62,000

Kentucky is the saddest state.

An Italian economist was questioned on suspicion of terrorism after a fellow passenger on an American Airlines flight witnessed him writing differential equations on a pad of paper.

Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!

HARPER’S FINEST

Mississippi Drift

By

Matt was happy enough to sustain himself on the detritus of a world he saw as careening toward self-destruction, and equally happy to scam a government he despised. 'I’m glad everyone’s so wasteful,' he told me. 'It supports my lifestyle.'

Subscribe Today