Editor's letter

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An intolerably slow summer has given investors extra time to turn their attention away from the markets—and, for better or worse, there’s been no lack of attention-grabbing news with which to bide our time. Aside from protests at the gymnastics in Athens and protesters at the RNC in NYC, we have watched as the White House race was hijacked by groups whose political enthusiasm eclipsed substantive policy concerns.

Between Michael Moore, the Swift Boat Veterans for Truth, and the Texans for Truth, one might be lulled into believing that foreign policy, health care, education issues and (need I even mention) economic policies play absolutely no role in the decision of who is going to take over the Oval Office. But throwing a little substance into the mix, Deutsche Bank’s senior US economist, M. Cary Leahey recently released a note on some of the effects the candidates could have on the market. Leahey points out that investors might spark a recession in the event of a Kerry presidency, fearing large tax increases. But Leahey also points out that a Kerry presidency would favor bonds over stocks (and a Bush presidency the opposite), insofar as Kerry intends to raise taxes on dividends and capital gains and to reduce the deficit, which the CBO expects to top $422 billion in five years (assuming the tax cuts of 2001 and 2003 are not extended).

Whoever wins, it’s shaping up to be a close race. And unless a group of bondholders start to exact their pressure on the race by running attack ads (Bondholders for Truth, perhaps?), let’s hope that some of the dirty politicking subsides in the final days before the election.

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