The upcoming election has been a hard one to judge, in particular because of a strong media bias against the incumbent Republican president. Just one month ago, bettors at Tradesports only gave Republicans a 38% chance of holding their House majority in the November election.
Then the Republicans went on a September tear. Just ten days ago, GOP chances had climbed to 58%. Why the turnaround? Pick your factors: falling gas prices; the fifth anniversary of the Sept. 11 attacks; or maybe Hugo Chavez's rant at the United Nations.
How fast things change. Now, it's the Democrats' turn at a miracle comeback. Republican chances have slipped below 50% -- all the way to 46%. What explains the Republican collapse? The Mark Foley factor? Who knows.
Here's the good news: the most likely outcome is gridlock. When that happens, the markets historically have risen the following year by an average of 20%. In other words, if we can find a way to keep the government from doing anything, we are all better off!
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