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Investors this summer have been placing their bets on an Obama presidency, and for the most part that hasn't been good for the market.
Without giving him a chance to explain himself in detail on the campaign trail or at the Democratic National Convention, they are voting with their shares by tossing financial, health insurance, manufacturing and high-dividend stocks into the ash can, and are growing skeptical about energy companies as well.
It's not that major institutional investors don't like the man -- far from it. He has many backers among the financial elite, including multibillionaires George Soros and Ron Burkle. And it's not that there aren't many other reasons for investors to sell stocks now, as the global economy tangles with the terrible twin beasts of bank deleveraging and inflation.
It's just that Obama's rhetoric on taxes and health care is scaring common wealthy people with large capital gains from investments made over the past decade, and a lot of them don't want to wait around to see whether it's just populist fluff that might be set aside once he takes office.
Plus, the Democrats who run Congress know that a weaker economy favors their nominee -- and they are loath to pass banking or trade legislation now to improve the nation's industrial standing over fears that it could backfire and give comfort to the Republicans. And finally, there is a well-founded anxiety that one-party rule in Washington for at least the next two years will bring about the sort of abuse of power that has gotten both parties into trouble over the past few decades.
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This may sound cynical, but history shows that Wall Street prefers the political parties to split the White House and Congress because it tends to produce the sort of legislative gridlock that prevents costly, idealistic, social or fiscal experiments.
All politics aside, though, the crux of the investing classes' beef with the Obama worldview is taxes -- or, as critics prefer to call it, "wealth redistribution."
The tax man runneth
Speaking to reporters recently, the Illinois senator complained that the United States has developed a "winner take all" economy in which profits from economic success have largely benefited the wealthy and left the middle class and poor behind. He told The Wall Street Journal that "globalization, technology and automation all weaken the position of workers" and argued that the government needs to make sure the fruits of success are distributed in a more evenhanded manner.That kind of campaign talk is red meat for laid-off autoworkers and construction workers in Midwestern swing states, but they're fightin' words to those whose wealth is targeted for redistribution. And the latter just happen to own most of the nation's stocks.
Video on MSN Money
The Obama bear market?CNBC's Larry Kudlow and a group of panelists discuss what the stock market would look like under an Obama administration.
Of course, it's not just dividend treatment that has investors pushing the sell button. It's also concern that Obama's tax plans would make the federal government even more reliant on relatively few high-income people to pay most U.S. taxes -- and thereby provide less incentive for business owners to augment their wealth by growing their companies.
Strangely enough, government statistics show that the U.S. tax system is already evolving into one in which a majority of Americans pay little or nothing. Between 1999 and 2006, evidence suggests that the number of tax filers who had no income tax liability after taking advantage of credits and deductions grew to nearly 44 million, according to the Tax Foundation, a nonpartisan (but right-leaning) think tank in Washington, D.C., and Duke University law professor Lawrence Zelenak.
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