Senior Economist: If the S&P Stays Over 1200 Obama Wins

     Based on what we've seen this morning this should not be a very tall order. The Dow is currently up by 200 points with the S&P at its highest mark since 2008 after over 200,000 private sector jobs were created in August, and news of Draghii and the ECB finally nailing down agreement for a bond buying program.

    http://diaryofarepublicanhater.blogspot.com/2012/09/markets-explode-on-economic-news.html

    "President Obama will hold onto the White House if the S&P 500 remains above 1,200 until Americans go to the polls according to Paul Dales, the senior U.S. economist at Capital Economics."

    “The close relationship between President Obama’s chances of re-election and the level of the S&P 500 appears to suggest that the stock markets favor a Democrat as President,” said Dales in a research note before Obama’s keynote speech at the Democratic convention."

    http://www.cnbc.com/id/48923615

     In the past there's been some debate about the fact that the market has steadily risen during this election season. Some have argued that the market is betting on a Romney victory. Yet, history says otherwise-when the markets rally it's usually a sign the incumbent will win. Another sign the incumbent will win is whether or not the President is primaried by his party. Presidents that are primaried lose; those that aren't win.

    Think about it-it is uncanny. The only President since 1900 to lose while not being primaried was: Herbert Hoover. Prior to 1900 this correlation wasn't there: the 1800s was the age of the one term President.

     Interestingly this senior economist also questions the idea that markets prefer Republicans in general:

     “Obama’s election chances and the S&P 500 are actually both being driven by the incoming news on the health of the economy. Nevertheless, based on that correlation, we would expect Obama to be re-elected as long as the S&P 500 remains above 1,200,” said Dales

     "With futures contracts pointing to a 58 percent chance of Obama being re-elected, Dales said the market may actually be cheering the president on. (Read More: Obama Good For Business: Carmax Car Founder)"

     “In contrast to the conventional wisdom, investors actually seem to prefer having a Democrat as President. The correlation would seem to have a lot more to do with Obama being the incumbent, however, rather than the fact that he is a Democrat.”

    How's that for counter-intuitive: the markets may be cheering the President on. If they do prefer Democrats this would be one point in favor of the idea that the markets are fact based. Cause as the Big Dog pointed out the economy creates more jobs during Democratic Administrations.

    I said fact based-does this mean they are rational a la Scott Sumner? Providing that they do prefer Democrats...

    Who knows. Actually Clinton could also have pointed out that even the S&P does better in Democratic Administrations and this has certainly been the case for Obama.