During the first presidential debate, a Yahoo Finance poll found that 80% of voters believed Mitt Romney gave a stronger performance than President Obama. Among the praise and critiques of both candidates, one important question has emerged: what will happen to Wall Street if Romney wins in November?
"I think they have pretty much more or less settled on what the regulations are going to be," said Andrei Knight, hedge fund expert, founder, and Senior Currency Strategist at fxKnight.com. "If Obama is re-elected we're going to see more enforcement. Thus far they have kind of just passed the rules and tested the waters, but so far they have not been very aggressive about enforcing it. If Obama wins I think we will definitely see more enforcement of the rules because the election will kind of be the public's confirmation that yes, we are on the right track. That would embolden the regulators and we'd see more enforcement. [But] if Romney wins we would definitely see Dodd-Frank [revisited] and possibly repealing some of it."
No matter what happens, Knight said that he primarily wants Dodd-Frank to be revisited and rewritten in a smarter way. "That's not necessarily an endorsement for Mitt Romney, as much as I want it to be revisited," he said.
Besides, the election is too close to call at this point. After all, it is only one debate.
"I think Romney did a good job," said Mark Robertson, the founder and managing partner at Manifest Investing, a research-based organization centered on education. "I think President Obama did not do a good job. I think everybody is hyperventilating a little bit -- it is one of three [debates]. I think I'd be a little tempered in how I react to it. I think Romney probably did accomplish what he needed to accomplish."
If Romney does win, Robertson -- who said that he is more of a moderate than a Republican or Democrat -- anticipates a positive change. "I think whether right or wrong, and perceptions are all that really matters in some cases, the business climate improves with a Romney election," he told StreetID this afternoon. "I believe you have -- even if it's not comprehensible or coherent -- I believe that some of the stops will be pulled out, and business people will actually begin doing more things. So we'll at least have the perception of less uncertainty in business going forward."
Ultimately, Robertson believes that a Romney victory would be "very bullish."
"I think if Obama wins we continue to be stuck where we're at," he added. "They've been looking at Obama taking office in early 2009, and they point to a stock market that's gone up X%.
"If you put it into the proper perspective, you have to go back to the point in time when Wall Street, which is always gonna be a leading indicator, believed that President Obama had the democratic domination. In that case you're going back to mid-2008."
Robertson said that "amidst all the challenges and problems that happened at that time," Obama's victory did not help the situation. "If you go back to that point in time and measure to now, the stock market has gone absolutely nowhere," he said. "And it's a frightening thing to think about. I would expect that to continue in some form [if Obama is re-elected]."
While economists often say that change takes time, Robertson believes that a Romney victory would inspire immediate improvements. "I think you'd see, basically, people being hired," he said. "I think you'd see a [positive change] in the unemployment rate. It would begin pretty shortly after the election."
Robertson added that there is precedent for this scenario. "If you look back to the mid-term elections in 1994, you can get a similar effect," he said. "That's where I think we're at."
Jeremy Klein, Macro Strategist at FBN Securities, agrees that a Romney victory would jumpstart the market. “A Romney victory would almost assuredly launch an aggressive rally into year end similar to the 8% climb by the S&P 500 after Bush’s reelection in 2004,” he said. “Longer term, few are talking about Romney’s desire to replace Fed Chairman Ben Bernanke with someone more hawkish. There is a lot on the central bank’s balance sheet these days such that his choice of Chairman arguably would generate the biggest effect on Wall Street.”
In August, Mitch Ackles, the President of the Hedge Fund Association and the CEO of Hedge Fund PR, said that while his organization is non-partisan, he is hoping for "smart, efficient regulation that's not overly burdensome."
"What we mean by 'overly burdensome' is you can't cause hedge funds to spend all of their money on lawyers and compliance people because they still need to run a business," he told StreetID. "Contrary to what some mainstream media have said about hedge funds and private equity, they are job creators. They're not only job creators hiring at their firm. Hedge funds create a lot of jobs."
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