The Debates Influence on Polls

In an attempt to predict (or influence) the outcome of the presidential election Gallup, CNN, Rasmussen and others are polling the public and putting forth their findings. I believe, there are far more accurate polls than these. Every day in the market investors vote with their money. Those “polled” are required to put their money where their mouth is, and being wrong costs them a bundle of money. One example of the market “speaking” is the movement in the U.S. dollar. When president Obama began his surge in the polls in the aftermath of the lackluster Republican National convention in August, the PowerShares DB U.S. Dollar Index ETF (UUP) broke to a multi-month low. When Mitt Romney delivered his unexpected performance at the first debate, the US Dollar index experienced a rally. It then quickly gave back that rally in the wake of Obama's win in the second debate. It is safe to say that the dollar likes Romney and dislikes the President. Other foreign currencies reaffirmed this analysis; the CurrencyShares Euro Trust (FXE) clearly thinks that Obama is great because it spiked to a one-month high after the debate, the Australian dollar also rallied. Which asset likes the incumbent most of all? Gold. In fact, it hit an eight-month high going into the first debate, and then quickly deflated in response to Romney’s strong showing. Since Obama delivered last Tuesday, gold has been up sharply. These are not just random moves. Traders are exercising logic and responding to how the candidates stated policies will impact the markets. For example: Romney has made clear his antipathy towards the monetary policies of Ben Bernanke. He has indicated that he would fire the Chairman of the Federal Reserve on the first day of his administration. No Ben Bernanke – means no quantitative easing. The dollar likes this scenario, gold does not. Watch these two asset classes on Tuesday for an insight into who the market thinks “won” tonight’s debate. Securities and Investment Advisory services offered through NBC Securities, Inc., Member FINRA and SIPC. Investment products 1) are not FDIC insured, 2) not guaranteed by any bank and 3) may lose value including a possible loss of principal invested. NBC Securities does not provide legal or tax advice. Recipients should consult with their own legal or tax professional prior to making any decision with a legal or tax consequence. This is not an offer to sell or buy any securities products, nor should it be construed as investment advice or investment recommendations.