The following is an excerpt from Michael Aneiro | October 29, 2012 | Barrons.com |
Barclays takes a stab at divining post-election market outcomes and offers this simple rule of thumb: an Obama win is good for bonds and a Romney win is good for stocks.
Barclays got to this conclusion by way of a client survey conducted last week that produced 354 respondents, including institutional asset managers, hedge funds, banks, corporations and official institutions. Overall, most believe in a more promising growth outlook under a Romney win, despite concerns about a likely tighter monetary policy stance, and favor long equities and short bond portfolios as the best way to play a Romney win, with 16% even expecting such a post-Romney equity rally to be “deep and sustained.”
Under an Obama win, investors favor bonds and are divided about the direction of equities, but would choose bonds and equities over FX and commodities. From Barclays:
The equity selloff is expected to be small and short-lived if it happens. Obama’s victory would likely be perceived as preserving the status quo (asset market moves are expected to be muted across the board), while a Romney win is more likely to suggest a change of direction to clients by way of a better growth outlook. Implications for growth are central to global markets, according to clients.
Barclays said congressional deadlock and tax/regulatory impediments were the most cited concerns under an Obama victory. North American investors seem substantially more concerned about the potential pitfalls of business-unfriendly policies under an Obama administration relative to European investors, whose main concern under an Obama win is congressional gridlock.
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