Welcome to the handful of new Market Updates readers!

This is NOT a typical Market Update , but a weekend election edition . Update’s usually comes out most weekdays before the market opens at 9:30 AM EST and is divided into three sections – Politics, Stocks, Long Term Outlook on investments.

Today is about polls because so many of you are interested in them and the 2012 elections are only 4 years and 2 days away. (you’ve sent lots of emails in on this -thanks). However, before the Polling #’s there is one concept about economics that is important to share AM

"When Consumers Capitulate"

Last week (Thursday) gov’t data showed a -0.3 GDP growth for the 3rd quarter ending Sept 30th. A -3.1% fall. This report contained one ominous data point that need to be illuminated. Durable goods fell -14.1% in the 3rd quarter. That’s stuff like cars, expensive metal sculpture (me) washing machines etc..

Significance/Context – The last time durable goods fell was in the 1980 recession. The 3rd quarter ended before the October stock market meltdown. We did recover some of the losses in the last week, but ended up @20% down for the month.

You can imagine the impact the stock loss is going to have on the durable goods number for the last quarter of 2008.

Our $50 to $70 trillion of unregulated Credit Default Swaps is certainly going to get impacted as fewer people buy durable goods. CDS’s cover credit cards, insurance, car loans home equity loan and other stuff like infamous sub prime mortgages.

Bottom Line – This is just the start of the recession and its going to get a whole lot worse before it gets better.

Best link for more on this is Nobel Prize winning economist who writes for NYT. Paul Krugman . Krugman like everyone is not always right, but he accurately predicted the rough economic times ahead.


How does crow taste? So far the prediction that polls were going to narrow and McCain was going to gain ground have been wrong.

In fact, Obama has been inching ahead when you consider the handful of groups that do compilations of polls over the last three days. Up from @+6.1% to about @+6.8% is a rough guesstimate.

Perhaps the best compilation site is Pollster.com because they actually have six folks who analysis of the polls. They have McCain making slight gains over the last few days. Similar sites all show a trend in the he other direction to Obama. They have Obama with a @+6.8% lead. Example TalkingPointsMemo.com (scroll down to chart +7.1%)

One fascinating item look at is how the polls looked right before the 2004 Bush/Kerry election. RealClearPolitics.com 2004 graph/compilation chart LINK or the actual poll company number s then and compare them with today’s results .

Bottom Line _ The popular vote does NOT matter and it is the electoral college that counts. Since most of the states have double digit leads in one direction or the other let’s look at the states that matter. Obama has an overall lead most of these states.

There are 5 big states that matter the most – FD,OH,PA,NC and VA. Because Obama in former Bush states actually has big double digit leads – IA and NM, and looks unbeatable in CO and NV, McCain must sweep all 5 to to win. (PA is a state Kerry won)

Not impossible,but unlikely unless there is a seismic shift in poll numbers.

PA and VA are clearly moving in McCain’s direction Obama’s double digit lead at the beginning of the week has evaporated to to@ +5%. OH has remained pretty consistent at @+5 to +6% for Obama. FD compilations of polls are about +2 to +4% for Obama. and NC about +0.5 to 2.0% for Obama. Most of these polls are now a day or two old.

If McCain takes all 5 he has a descent shot at winning since other states that are too close to call ND, MT, IN and GA will probably break his way too.


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