The stock market loves President Barack Obama. With all its cheating heart, and all its mercenary soul.
More than that, actually — it adores him. The love story of Wall Street and Obama is a bromance like no other, a man-crush for the ages.
The beauty part is that this was not a coincidence, beginner’s luck or a historical fluke.
The administration and the Federal Reserve run by his appointed chairman, Ben Bernanke, have systematically stuffed big banks’ pockets with cash in an unending rescue effort, slashed interest rates to the lowest levels of the past 300 years, diverted senior citizens’ savings to revive the moribund residential construction industry and showered drug makers and insurers with fresh sources of revenue from his health care overhaul.
“In the beginning the organizer's first job is to create the issues or problems.”
Some stock market prognosticators are envisioning a Romney Rally should the former Massachusetts governor pull off a win Tuesday night.
However, a defeat of President Obama would call into question one of the building blocks of Wall Street’s meteoric rise from the 2009 lows: a steady stream of easy money from the accommodative Federal Reserve.
According to a recent survey by Barclays (BCS), 32% of investors polled say tighter central bank policy is chief among their list of policy fears if Romney wins.
“It could have a chilling effect on market behavior,” said Peter Kenny, managing director at Knight Capital Group (KCG).
Romney has made it clear he opposes the easy-money policies of Fed chief Ben Bernanke, who has flooded the financial markets with cheap cash each time the economy and stock market have needed a jolt back to life.
While the Fed still plays an outsized role in the markets, its ability to jack up stock prices and lower already rock-bottom interest rates appears to be waning with each successive program.
After an enthusiastic response to the first round of quantitative easing that totaled $1.75 trillion, the reaction was more muted for the $600 billion QE2 and even quieter for the open-ended QE3 unleashed in September.
You could look it up. The S&P 500 has gained 76% since his inauguration in January 2009, while the Nasdaq 100 is up 128%.
Compare that to the S&P 500’s 13% decline and the Nasdaq 100’s 45% wipeout in the first term of his predecessor, George W. Bush; or the mere 25% gain in the first term of conservative icon Ronald Reagan; or even the 60% gain in the halcyon early 1990s in the first term of Bill Clinton.
In the aftermath of President Barack Obama's successful re-election bid Tuesday, market experts prepared for an accelerated push of easy Federal Reserve monetary policy.
That likely will clash against even more uncertainty in Washington as en election that produced little more than the status quo failed to resolve the burgeoning fiscal issues that threaten the U.S. economy. (Read More: Next Up for Markets? The Fiscal Cliff)
The stock market has climbed about 76 percent over the past four years. Commodities have soared even higher, with gold and silver up more than 100 percent, and even bonds have maintained their value as a safe-haven trade for investors too afraid of market volatility.
Much of the trading over the past four years has been based off Fed policy, which in turn is driven by those economic risk factors that Krosby discussed.
The central bank during Obama's presidency has expanded its balance sheet from about $800 billion to approaching $3 trillion, with even more growth to come as the Fed cranks up the third round of its quantitative easing debt purchasing program.
"With Obama getting re-elected it's sort of the status quo and the QE carries on," said Lee Ferridge, head of macro strategy for North America at State Street Global Markets. "The result is positive for risk generally — negative for the dollar but positive for risk. We know the extremely loose monetary policy we've been used to so far will continue."
"It might be good for Mr. Obama's friends, but it's not good for the world," widely followed investor Jim Rogers complained on CNBC in reference to the cheap-money policies of the past four years.
His strategy: "Today I'm going to short more bonds, more U.S. government bonds. I'm going to buy more commodities, both base metals and precious metals. It looks to me like money printing is going to run amok now, spending is going to run amok."