Presidential Politics: Wall Street Votes

While fund raising statistics suggest that Barack Obama has strong support in the Wall Street community, the performance of the stock market in relation to Mr. Obama's popularity suggests that investors may have a different view. In the chart below we show the S&P 500 (red line) versus the price of the Intrade futures contract for Barack Obama to become president (blue line).

We have broken the chart into three periods. In the first period, the Obama contract rose from under 20 to near 60 in the first two months of the year. Over that time period, the S&P 500 fell sharply. In early March (beginning of shaded region), Obama's popularity stalled out and the S&P 500 rallied. Beginning in late May, the Barack Obama contract broke out of its range and since then has been steadily rising to new highs. At about the same time, the S&P 500 peaked and has been down hill ever since. While the Presidential election has not been the only issue in the market over the last six months, the trends shown in the chart make it hard to argue that Wall Street is not embracing the odds of an Obama Presidency.