Mounting friction between Wall Street and the White House has taken on an intriguing new dimension, notably speculation from the investment community that President Obama will be so bruised by 2012 that he won't even try to seek re-election.
That's a far cry from Wall Street 's thinking during the last national election when then presidential candidate Obama managed to captivate a fair share of the Street's fat cats. At the time, a number of them looked upon him as an inspirational breath of political fresh air and backed him with their wallets. But that was yesterday. Today, he has lost most of his allure in the investment community, with many there condemning him.
We've already seen numerous press reports taking note of the disillusionment with the Obama administration by Wall Street powerhouse Goldman Sachs and various hedge fund managers.
You don't need an Einstein IQ to figure out the basis for the disenchantment. The harsh, agonizing facts speak for themselves. In brief:
- The economy is in limbo, with housing and unemployment ongoing horror shows.
- John Q. Public is getting increasingly more jittery about its financial future.
- The stock market, though up since Obama took over the presidency continues to bloody investors, who've been running for cover, largely because of economies worries. Their latest selling outburst--the dumping of a huge $7.6 billion worth of U.S. equity mutual funds in the week ended September 1, the largest since late May--is indicative of such worries.
- The country's financial muscle, reflecting soaring debt, a burgeoning deficit and endless stimulus, is displaying much too much flab. Some rating agencies have even raised the possibility of downgrading U.S. debt.
- By their deeds and actions, some countries, such as China and Iran, are openly telling the United States to go to hell.
It's all prompting swelling Wall Street talk that Obama could be a one term President.
That's also the thinking of San Francisco money manager Gary Wollin, who says "unless the Republicans put up someone who has been practicing canabalism, they can't lose in 2012."
Noting that the president has been on the attack against Wall Street, in effect blaming it for killing Main Street, Wollin sees little Street support for Obama in the future. He also expects the President to lose much of his Jewish support from Wall Street, Hollywood and from far left progressives because of his strong pro-Arab stance.
The Obama legacy, as he sees it, is one of "great expectations, but instead disappointment and plenty of it."
It all adds up to what the polls say will be a Democratic drubbing in the mid-term elections even though, some Wall Streeters argue, the Republicans are exhibiting themselves as political deadbeats. Why so? Because, some Republican critics say, all they do is gripe about Obama, but fail to offer up a concrete set of proposals of their own to arrest the economic drag and get the country's financial house in order.
The belief on Wall Street is that the virtually certain big Republican win in November will reinforce the view that President Obama's reign as America's CEO is on borrowed time.
It's pretty much a repeat of what happens time and again in Corporate America. In brief, a company's bottom line goes to pot, its stock price takes a dive and the CEO is booted out. In Obama's case, the expectation is he will simply be voted out.
Harry S. Dent, Jr., a Florida investment adviser, newsletter writer and author, takes it one step further. Dent, who expects the economy to be in a deep economic downturn by the second quarter of next year, a plight he sees extending into 2012 or 2013, believes Obama's approval rating will be so low when the next national election rolls around that he will be afraid to run again.
"The economy makes or breaks Presidents, not vice versa," he says. "So with our economy failing and many signs indicating it will only get worse," Obama," contends Dent, "is politically dead."
The big economic problems, as he sees them, are the massive debt buildup and the likelihood of a major slowdown in consumption, spurred by a retirement-conscious baby boomer population that will be much more intent on saving than spending.
Since he views the ailing economy as the number one voter issue, Dent sees the Democrats getting hammered in the upcoming elections and possibly losing both the House and Senate.
In his latest commentary to his newsletter subscribers, Dent expressed the view that 2012 could witness an ultimate three-way race for the Presidency, The trio: Hillary Clinton, a far right nominee (Sarah Palin, Mitt Romney or Newt Gingrich) and Michael Bloomberg, who Dent expects to seek the White House as an independent candidate). If that were to happen, Dent says Bloomberg, an accomplished businessman, would be his top choice.
At the same time, Dent thinks it's possible that a more centrist candidate could emerge for the Republicans, say Jeb Bush, that is if he could overcome the legacy of George W. Bush.
Like its stock recommendations, Wall Street's political thoughts -- more of which will soon be on their way, given the impending fall elections -- can often influence people's actions, especially investors who've seen their net worth shrink or are unemployed. So the Street's views on politics should not be taken lightly.
Normally, a very bad economy will result in a landslide win for the party out of power, which would signal a Republican White House in 2012. The predominant thinking in Wall Street is that kind of a scenario is practically a sure thing in the next national election.
Maybe so, but it's worth keeping in mind that another sure thing -- Hillary Clinton's nomination as the Democrats' Presidential nominee in 2008 -- turned out to be a myth as Obama pulled off what many political pundits thought was the impossible. Could he do it again? As of now, Wall Street says no way.
What do you think? E-mail me at Dandordan@aol.com.