CNBC Guest: Markets Collapsing Because Traders Thought Romney Would Win

Noah RothmanNov 8th, 2012, 11:42 am

CNBC’s market analysts offered a dark view of how the American has reacted to the reelection of President Barack Obama on Thursday – not since the reelection of Harry Truman in 1948 did the market react so poorly to an incumbent president’s reelection. One CNBC guest said that the market had factored in the election of Mitt Romney and was gaining ground in 2012 only on that assumption.

In an interview with CNBC host Joe Kernen, Barclay Capital’s Barry Knapp said that the market’s response to the reelection of President Obama has been dismal. The only historical parallel he could draw was the reelection of President Truman in 1948, which preceded a significant decline in the American economy and a deep recession.

“Do you think people were still holding out hope that Romney was going to be elected, and there wouldn’t be Obamacare, there wouldn’t be tax increases,” Kernen asked Knapp.

Knapp said that the 2012 election’s only parallels are with 1948 and 1980. “In 1948, going into Truman’s reelection, the market was falling,” Knapp began. “The economy looked identical to today. The housing market was improving, consumer spending was fine, but capital spending was weakening. And then after Truman was reelected, we went into recession. The market went down a lot.”

Knapp said that the 1980 parallel shows how the market reacted to the notion that Reagan was going to win, and when he did the market rallied by 10 percent.

“The Market acted like it was 1980, but it turns out it was 1948,” said Knapp. “I think a lot of the resiliency and performance in the market this year was tied to this idea that Romney was going to win, and the market was above where I thought it belonged on core fundamentals.”

Watch the clip below via CNBC:

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Noah Rothman - Editor

An experienced broadcaster and columnist, Noah Rothman has been providing political opinion and analysis to a variety of media outlets since 2010. His work has appeared in a number of political opinion journals, and he has shared his insights with television and radio personalities across the country.