Archive for November, 2012

Old Spice keeps it weird …

November 15, 2012

Punch line: The agency that made Old Spice famous online is keeping it weird in their search for a new social strategist to work on the brand.

Throwing traditional job interviews out the window, Wieden + Kennedy is asking applicants to compete in weird digital challenges, then create a deck outlining the strategy used to complete them.

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Excerpted from Adweek.com’s, “Wieden + Kennedy Seeks Help on Old Spice in Crazy, Epic Job Listing.”

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 Wieden + Kennedy’s Old Spice campaign is a hallmark for epic weirdness in advertising.

So, it stands to reason that you’d have to complete some kind of weird, epic quest to join the agency’s Old Spice.

Now, we know the exact parameters of that question.

W+K posted a help-wanted ad on its website seeking a social strategist on the Old Spice account.

Beginning today, the posting says, applicants will have a week to complete “one or more of the challenges listed below” and then create a “case study presentation deck outlining what you did and why it was effective.”

Here are the challenges:

  1. Create the best original Pinterest board dedicated to the sport of inline speed skating
  2. Create and post an original piece of content to Reddit that then receives the most upvotes in a single week
  3. Create and upload to SlideShare an original, in-depth competitive analysis of the Ed Hardy social media ecosystem
  4. Get the most people to friend your mother or your father on Facebook in a single week
  5. Create an original Twitter account and then use it to get the most followers in a week using any verbs you like, but only the following nouns: “BLUEFUDGE,” “HAMMERPANTS” and “GREEK YOGURT.”
  6. Create an original YouTube video that then receives the most plays in a single week using this script verbatim:
    #1: “Wait. What are you doing?”
    #2: “Trust me. This will be fine.”
    #1: “Ok. Go ahead.”
  7. Get recommendations on LinkedIn from at least three other people trying to get this job
  8. Create the most reviewed recipe on allrecipes.com in a single week using cottage cheese as an ingredient
  9. Upload the most pictures of your armpit(s) to Instagram during the course of this challenge. The pictures must have your face in them to verify your identity and include the hashtag #mypits
  10. Using Quora, give thought-out, meaningful answers to as many dream catcher-related questions as possible in a single week

As W+K says in the note: “Good luck, cyber warriors.”

Edit by BJP

Unemployment claims and the stock market … interesting !

November 14, 2012

Not to worry, not another rant against the curious BLS reporting.

Business Insider posted an interesting analysis by GSAM Chairman Jim O’Neill, mapping the inverse of initial unemployment claims with the S&P 500.

First, it’s pretty clear that the series track closely.

Moreover, O’Neill observes:

”it’s worth noting the last time there was a severe break between the two lines was [Summer 2011], around the debt ceiling fight, a scenario which the current fiscal cliff debate harkens back to. Then the market freaked out, but mostly the economy kept on rolling.”

In other words, the economy is improving, albeit slowly, and last week’s drop was related to the election … but it’s not “Obama elected, market tanks” … it’s “Will divided government gridlock or avert the Fiscal Cliff?”

So, if the fiscal cliff gets resolved, then following O’Neill’s logic … the market goes up.

 

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Advice to GOP: Let Obama have his tax rates on the wealthy with a couple of twists.

November 14, 2012

I really don’t understand why Obama and the Congress are having such a hard time resolving the “revenue” issue, i.e. raising taxes.

Make no mistake, I’m opposed to raising taxes and then wasting the money … both of which are eventually going to happen.

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That said, here’s what I’d do to break the log jam – a tax plan that protects small businesses (GOP goal) and soaks the rich (Obama’s focus):

1) Separate business income reported on 1040s from all other income … then cap the business income portion at 25% … allow losses to offset ordinary income.

  • Note: The system is already to set-up to handle multiple income streams taxed differently – e.g. ordinary income vs. capital gains.
  • Note: There will be a rash of LPs started to game the system … but, so what? Shouldn’t amount to that much.

2) Then, since Obama is obsessed with raising rates on “millionaires & billionaires” who make more than $250k, I would add some brackets:

  • Bump anything over $250k but less than $500k from 35% to 36%
  • Bump anything over $500k by an additional 2 points to 38%
  • Bump anything over $1 million by still an additional 2 points to 40%
  • Bump anything over $2.5 million by still an additional 2 points to 42%

Bingo … Obama gets his prized punitive rate on millionaires and billionaires making more than $250K without hurting small businesses, and there’s minimal impact on the millionaires (?) making less than $1 million.

It’s as easy as that.

Again, it’s not the way I’d attack the deficit problem, but if Obama’s bound and determined to raise income tax rates, this is how I’d do it.

Note: I must admit that I’m swayed by the inevitability of the GOP losing on this issue … and by an analysis I heard about that said that the vast majority of tax payers would be impacted live in NY, CA, NJ, MD and DC … blue states that overwhelmingly support Obama’s policies … there’s a certain poetic justice to them paying the freight.

Stay tuned for posts re:how I’d really attack the problem.

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Without youth vote, Obama would have lost election … oh, really?

November 14, 2012

Let’s work through this one slowly …

First, everybody knows that “It’s the Economy, Stupid”.

And,  CNBC says Economy Stinks for Many, But It’s Crushing Millennials

More specifically, CNBC reports:

  • While the continued economic slump hobbles many Americans, the downturn is crushing young people.
  • Almost half of millennials —those between 18 and 34 — think they’ll be worse off than their parents.
  • The unemployment rate for 18- to 34-year-olds for October was 10.8 percent, higher than the national unemployment rate of 7.9 percent,
  • More than half (57 percent) of young people would like to be working and earning more.
  • Among millennials, more than half (56 percent) reported annual pretax incomes below $30,000.
  • And, just half (53 percent) are working in their chosen fields.
  • Millennials voted this week with the economy on their minds: They cited unemployment (49 %) and rising prices (37 %) as the most pressing economic issues they face.
  • Voters under 30 also cited taxes and housing as important issues.

So, you might expect millennials to vote for Romney, right?

Not so fast.

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According to US News: Without Youth Vote, Obama Would Have Lost Election

  • At 19%, Young people between the ages of 18 and 29 made up a bigger share of the electorate on Tuesday than they did in past elections.
  • And, President Obama overwhelmingly won that group compared to Mitt Romney.

What?

Are Millennials stupid, or something?

Again, not so fast.

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According to CNN’s exit polls, Obama won 18-29 year old voters by 21 points … 59% to 38%.

But, there’s more to the story.

Romney won a slim majority of white 19 to 24 year olds … 51% to 44%.

But, Obama swamped Romney with young Blacks (91%) and young Latinos (74%).

So, the driver is more Obama’s strength with Blacks and Latinos than his strength with the youth vote.

Maybe, some white Millennials did vote the economy.

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And, tere’s still more to the story.

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What’s up with “Other”?

Note that 4% of the 19 to 24 year olds voted for candidates other than Romney or Obama.

My hunch is that most of those votes went to Libertarian candidate Gary Johnson, not Rosanne Barr.

Doing the math, 4% of the votes … of 18% of voters … equals almost .72% of the total vote.

That’s almost 1% in a 2.5% race …  a big deal, right?

Hmmm.

A pink car that prevents women’s wrinkles … really?

November 14, 2012

Punch line: Honda releases a new car targeted at Japanese women, boasting features that will prevent wrinkles.

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Excerpted from psfk.com’s, “Honda’s Car For Women Prevents Wrinkles”

Honda released a new model designed especially for women, the Honda Fit ‘She’s.’

Available only in Japan, the make targets the nearly 50% of Japanese women who have decided to stay out of the work force.

The car sports a pink exterior, pink stitching on the interior, and shiny pink chrome covers on the dashboard. They have even put a heart in place of the apostrophe in “She’s” to bring the point home.

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The first “designed for women” automobile since 1955′s Dodge  La Femme goes beyond a superficial color treatment.

With a new type of windshield said to block up to 99% of UV rays, women can drive to the grocery store confident that they are not increasing their chances of wrinkles.

With the model’s “Plasmacluster” AC system, women can pick up their children knowing that the specially-treated air is improving their skin quality as they drive.

Whether the claims are substantiated or not, the model will be sure to provoke conversation around the age-old question, “What do women want?” and open more than one can of worms for the Japanese automaker.

Edit by BJP

Gallup: Largest gender gap in recorded history … oh, really?

November 13, 2012

Here we go again …

Gallup’s headline “2012 election had the largest gender gap in recorded history

  • The gender gap in the 2012 presidential election was the largest since Gallup began tracking the metric in 1952.
  • Obama won women by 12 percentage points, while Mitt Romney won men by 8. That’s a 20-point gender gap.
  • 2012 was the fifth straight election to feature a double-digit gender gap.

OK, CNN’s topline numbers do, in fact say that Obama won women by 10 points and that Romney won men by 9 points … a gender gap of 19 points.

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But, digging deeper, Romney may have lost “women” by 10 points, but he won white women by 14 points.

Romney got shellacked with Black and Latino women … but, at a rate that’s comparable to the shellacking that he took with Black and Latino men.

Said differently, it looks to me like the racial divide is driving the numbers, not gender.

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Note also that married women – in aggregate – favored Romney … by 14 points.

Proportionately more white women are married … suggesting again that race may be driving the apparent gender differences.

At least, that’s what the numbers say …

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Taxes: Simpson-Bowles … be careful what you wish for, because you might get it.

November 13, 2012

I often read “Why don’t they just implement Simpson-Bowles?”.

It’s usually stated in a way that it’s a painless gimme.

The convenient compromise.

My hunch: About as many people read the Simpson-Bowles Report as read the  ObamaCare law.

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I expect that S-B will become a template for any “grand bargain” … so I started refreshing my memory

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Taxes

Below is the summary chart from the report.

Most of the buzz centers on the reduction of rates, elimination of the AMT, and capping of some deductions.

Let’s get specific.

Among other things, Simpson-Bowles proposes:

  1. Three brackets with a top tax rate of 28% with no AMT
  2. Capital gains & dividends get taxed at ordinary income tax rates … not 15%, not 20% … 28% at top rates
  3. Muni Bonds: Income on newly issued  municipal bonds gets taxed … i.e. existing bonds are grandfathered as Fed  tax-free.
  4. Employer paid health insurance premiums: Exclusion phased out by 2038 (2038?) via a complicated formula catering to unions … translation: employer paid health insurance premiums would eventually be taxed as ordinary income
  5. Deductions: Eliminate ALL itemized deductions … everybody takes the standard deduction … offset by some capped credits
  6. Mortgage deduction replaced by a 12% non-refundable tax credit … Mortgage capped at $500,000; No credit for interest from second residence and home equity loans
  7. Charitable giving: 12% non-refundable tax credit available above 2% of Adjusted Gross Income (AGI) floor … e.g. if you make $100,000, then no credit for the first $2,000 of charitable giving.
  8. No deduction or exclusion for State & Local Taxes … i.e. state income taxes, state sales taxes, local real estate taxes

Obviously, these changes hit different people in different ways.

Start planning …

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Simpson-Bowles Report

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Even in the era of Moneyball politics, pundits still have a place

November 13, 2012

Punch Line: While political “Sabermetrics” has its value, people still want to indulge their biases and opinions. This ensures that pundits are in no danger of losing their jobs anytime soon.

* * * * *

Excerpted from Forbes’, “Political Junk Food: Why Pundits Will Survive the Moneyball Election”

Moneyball politics

This year’s election already seems to have a name, and that’s the Moneyball election.

While this is true … I don’t agree with the growing notion that this election could mark the beginning of the end for professional political pundit.

Think about it: it’s well-known that people of all political leanings tend to seek out information that reinforces their pre-existing beliefs.

Fox News, MSNBC, Drudge and The Daily Show all know this to their very core, and while some of us try to sustain ourselves on a respectable media diet full of journalistic fiber … only the most disciplined of us doesn’t periodically want to throw in a helping of a political Twinkie.

Just as ten years after the Moneyball revolution all baseball organizations still employ scouts, ten years from now news networks will still have plenty of talking heads.

Edit by JDC

Want to build loyalty? Think economics not just emotions.

November 13, 2012

Punch line: Marketers have long attempted to build relationships by engendering emotional loyalty. However, true loyalty requires better understandings of economics and behaviors.

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Excerpted from Fast Company’s, “What Marketers Are Getting Wrong About Loyalty”

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The biggest mistake brands make with loyalty programs is to model them on human loyalty.

It’s time not to make loyalty more “human,” in the traditional way, but to treat it as a question of economics and behavior.

This requires models that take into account:

  • DECISION-MAKING: One thing to know about human decision-making is that we want to be happy. And we prefer many small repeated gains over anything else. Knowing what mental accounts its customers are using and how they manage them helps a company maximize the impact of its offers.
  • BUSINESS DESIGN: The first thing to know is how a loyalty program will make money. Loyalty programs succeed when they simultaneously contribute to the bottom line and have a high negative churn rate.
  • EXPERIENCE DESIGN: At its simplest, experience design is about the quality of users’ experience with a product or service: ease of use, beauty, convenience, utility, simplicity. Improvements can revolve around adding a “software layer” over a company’s core business (as Target does), combining digital and analog offerings (Tesco Price Check) … or coming up with complimentary offerings (Amex Open Forum).

Instead of one-size-fits all, these new models are designed for diversity and customization … and they turn the entire company experience into customer benefit.

Edit by JDC

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Where’s the stock market heading?

November 12, 2012

Couple of friends have told me that I’m way too pessimistic thinking that the Dow will go to about 8,000 since Obama got re-elected.

Maybe so, but how about an S&P 500 down to 800?

Glance at the below short-run and longer-run charts.

What do you think?

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Pssst: Your taxes are going up on January 1 … even if you’re not a millionaire or billionaire.

November 12, 2012

Just a friendly reminder that the tax man cometh the when the ball drops on Times Square.

There are 2 big ones: elimination of the 2% payroll tax “holiday” … and the ObamaCare tax on “unearned income”

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Payroll Tax

For the past 2 years, payroll taxes – you know, the automatic deductions for Social Security and Medicare – were reduced by 2% to stimulate the economy.

The so-called “2% tax holiday” ends on December 31 and there are no apparent moves to renew it.

According to USA Today:

A temporary reduction in Social Security payroll taxes expires at the end of the year and hardly anyone in Washington is pushing to extend it. Obama hasn’t proposed an extension, and it probably wouldn’t get through Congress anyway, with lawmakers in both parties down on the idea.

Even Republicans who have sworn off tax increases have little appetite to prevent this one .

Bottom line: The expiration will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500.

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ObamaCare Tax

We written about this one before … see The 3.8% solution … here comes the tax pile-on for details.

In essence, one of the tax increases funding ObamaCare is a 3.8% tax on investment income … essentially slapping payroll taxes on so-called “unearned income”.

The “unearned income”  tax applies to:

  • dividends
  • interest, except municipal-bond interest
  • short- and long-term capital gains
  • income from the sale of a principal home (> $500k, not rolled over to another house)
  • a net gain from the sale of a second home
  • passive income from real estate and investments, such as limited partnerships.
  • the taxable portion of annuity payments
  • rents (received by landlords)

Of course, the tax doesn’t apply if you don’t have any of the above income sources.

But, if you do have investment income, the tax applied whether you’re a millionaire or billionaire or not.

A Pyrrhic Victory: We nailed the election’s “Rosetta Stone” … really!

November 12, 2012

My official forecast was wrong, but I did post what was, perhaps, the key decoding ring for the election.

Here’s what I said on November 3 in my post The election’s “Rosetta Stone” … really!

The polls have been bouncing all over the place, and pundits are broadly whining that the reason is difference in “turnout models”.

That is, how many more (or less) Democrats will show up to vote for Obama.

To understand the issue, I framed a related – but inverted — analysis by asking the question: by how much does Dem turnout (in swing states particularly) have to exceed GOP turnout for Obama to win?

The answer: Dem turnout has to be more than about 4 percentage points higher than GOP turnout for Obama to win.

Here’s my summary chart … below it are the assumptions and analytical logic.

From the chart: if Dem turnout is about 8 percentage points more than GOP turnout (as it was in 2008), Obama wins by about 4%; if Dem turnout is less than 4 percentage points greater than the GOP’s, Obama loses.

It’s as simple as that …

But, like many others,I thought that GOP enthusiasm would drive turnout and keep the spread to less than 4%.

Exit polls put the differential at about 6%.

Looking back, the enthusiasm was either overstated, or enthusiasm doesn’t necessarily drive turnout.

Right analysis; wrong core assumption.

The red line is what happened …

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Macy’s targeting millennials … pssst: so is everybody else.

November 12, 2012

Punch line: Macy’s is launching 13 new brands and expanding 10 other existing labels that it believes will resonate with shoppers in the 13-to-30 age group.

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Excerpted from The Washington Post’s, “Macy’s launches new brand strategy to cater to millennials, the 13-to-30 age group”

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Macy’s new fashion offerings, which are being rolled out this fall and next spring, represent the first phase of the retailer’s intensive campaign to attract the highly sought-after … but challenging bunch. The tech-savvy group likes to spend and it likes brands, but shops differently.

In March, Macy’s restructured its merchandise team to focus on those shoppers and plans to make other major changes in the next three years to further rope them in. Those range from infusing tablets and other technology into the shopping experience to changing displays more frequently.

Boston Consulting Group released a study earlier this year based on a survey of about 4,000 millennials.

The research showed millennials trust their Facebook friends more than corporate ads or experts, and tend to favor spending at specialty stores, discount stores, online or outlet stores.

And they put a premium on speed and convenience.

Christine Barton, a partner at the Boston Consulting Group, says the department stores have a big opportunity to grab this customer, but they need to “refreshen their franchise.”

Edit by JDC

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Did the multi-billion dollar Presidential campaigns even matter?

November 11, 2012

Even I recognize that Dick Morris is a partisan blowhard … and, that his election prediction – a Romney landslide — was off the wall.

Still, he sometimes provides some interesting perspective.

He’s now saying: The Campaign Made No Difference

He asserts that:

The months and months of campaigning, the hundreds of millions of TV advertising, the incessant travel schedules of the candidates, and the vigorous efforts of both sides to get their vote out made little or no difference in the outcome of the Election of 2012.

[All that really mattered were events and demographics].

Only two states — North Carolina and Indiana — changed sides.

The change in Obama’s vote share from ’08 to ’12 was pretty much the same whether it was in a swing state or not. The obsessive campaigning in swing states did not seem to have much effect.

Well over 80 percent of the television advertising at the presidential level was directed at key swing states. The candidates visited them over and over, cycling back around every few days. Obama and Romney rarely set foot outside these swing states.

And it didn’t work.

In the swing states, all of which Obama carried in 2008, his vote share dropped by 2.1 percent from ’08 to ’12. In the twenty-one other non-swing states Obama carried — where neither candidate did much campaigning — his vote share drop was almost the same: 2.4 percent.

Among states McCain carried in 2008 (plus Indiana), the drop in Obama’s vote share was more significant: 3.2 percent.

Nor would it have made a difference if Obama’s vote share fell in the swing states by the same 2.4 percent that it fell in the non-swing states that went for Obama (as opposed to the 2.1 percent decline that in fact happened in the swing states). The 0.3 percent change would not have moved a single state to Romney from Obama.

It is astonishing that the almost one billion dollars spent advertising in eight states did very little to move the vote share.

So if ads and candidate campaigning did not move the dial, what did?

Even the vaunted ground games of the two parties didn’t do much.

Voter turnout was eleven million lower than in 2008 — reversing the upward trends of the past four elections — and Obama’s vote share change from ’08 to ’12 was about the same in states where vigorous get out the vote campaigns raged and in those where they did not.

[Two things drove the election: events and demographics.]

Events — the debates, the conventions, the storm coverage, Benghazi, the state of the economy, jobs data — mattered.

And, demographic voting is the new norm in America. You vote based on who you are, not where you live or how well each campaign has articulated its case. 93% of blacks, 70% of Latinos, 60% of those under 30, and 62% of single people, voted for Obama. And white married couples over 30 years of age voted for Romney. Not much else matters.

Our votes are predictable based on our race, ethnicity, age, and marital status well before anybody does any campaigning.

Hmmm.

If Morris is right, maybe all candidates should be required to accept Federal campaign funds, and be restricted to them.

Still wouldn’t have an effect on outcomes … and would save a ton of money.

It’s Sunday … So, how did the religious folks vote?

November 11, 2012

Last Sunday, I posted: It’s Sunday, so forget the ‘war on women’ … the ‘war on religion’ may turn the election.

I argued that religious folks would be out in force to vote against Obama because of his support of same-sex marriage and his mandating that Catholic organizations would have to  provide free birth control to employees – in an apparent violation of religious rights.

I said that Evangelicals would vote for Romney in droves; that a majority of Catholics would vote Romney; that Obama’s Jewish support was less certain than in 2008, and that Mormons would support their favorite son.

Well, what happened?

According to a Pew Poll:

  • Evangelicals did get to the voting booth and voted almost 80% for Romney.
  • Overall, Obama got 50% of the Catholic vote, but that’s a bit deceptive since he only got 40% of the white Catholic vote; his ace-in-the-hole were Hispanic Catholics who voted 3 to 1 for Obama
  • Jewish voters were less enthusiastic for Obama than they were in 2008, but still supported him 2 to 1 despite his lukewarm support for Israel.
  • Mormons gave Romney almost 80% of their votes … (Note: way less than the 93% that blacks gave to Obama.)

Pretty much as expected, except for the Hispanic Catholics who voted Hispanic, not Catholic …  and the 20% of Mormons who didn’t vote for Romney.

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“A majority of Americans agree that we should raise taxes on the wealthy” … oh, really?

November 10, 2012

During his presser on Friday, President Obama said:

A tax increase for wealthier Americans “was a central question during the election — it was debated over and over again, and on Tuesday night, we found out that a majority of Americans agree with my approach,” he declared.

Hmmm.

Either a non sequitor or flat out wrong.

Based on CNN’s exiting polling ….

Overall, 47% said to raise taxes on the wealthy.

Hmmm … that “47%” number sounds familiar, doesn’t it? 

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Not to get picky, but …

47% doesn’t constitute a majority … 48% said to either raise taxes on everybody (13%) or nobody (35%).

Drilling down a bit …

Yes, 70% of Obama voters say to raise taxes on the wealthy.

Why’s that?

Well, about 75% of Obama supporters have incomes less than $100k … so they are essentially saying: tax the other guy in order to preserve my benefits.

Doesn’t surprise me that they like the idea.

  • Math note: 72% X 54% = 39% / 52% (total % vote) = 75%

The majority of folks who would be impacted aren’t quite as keen on the idea.

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Bottom line: I don’t see Obama’s “mandate” for jacking up taxes in the numbers …

Don’t fret about the amount of national debt being passed to the younger generation …

November 9, 2012

Based on this week’s vote totals, they don’t seem concerned.

A clear majority of them voted for Obama.

The way I see it, they’re signing up for their share of the debt.

The generational transfer of government debt is officially off my worry list.

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Side note: Doesn’t look like Seniors were MediScared …

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At least I wasn’t the only person blindsided … Romney was, too.

November 9, 2012

A reliable source tells me that the CBS report  Romney “shellshocked” by loss is pretty much on the money …

The essence of the article:

  • The campaign was highly confident of victory … in part, because of the huge rally crowds in final days
  • Their internal polling showed them leading in key states … largely driven by turnout assumptions
  • They believed intellectually that Obama would not get the kind of turnout he had in 2008.
  • They thought intensity and enthusiasm were on their side this time – poll after poll showed Republicans were more motivated to vote than Democrats
  • Romney didn’t have a prepared concession speech … he was confident
  • At the time, prelim exit polls didn’t signal a problem … looking back, there were some signs, e.g. Northern VA turnouts
  • Shock hit when actual returns started coming in … North Carolina was the canary in the coal mine.

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“Team Romney made three key miscalculations, in part because this race bucked historical trends”:

1. Turnout. They expected it to be between 2004 and 2008 levels, with a plus-2 or plus-3 Democratic electorate, instead of plus-7 as it was in 2008. Their assumptions were wrong on both sides:

  • The president’s base turned out and Romney’s did not.
  • More African-Americans voted in Ohio, Virginia, North Carolina and Florida than in 2008.
  • And fewer Republicans did: Romney got just over 2 million fewer votes than John McCain.

2. Independents. State polls showed Romney winning big among independents.

  • Historically, any candidate polling that well among independents wins.
  • But as it turned out, many of those independents were former Republicans who now self-identify as independents.
  • The state polls weren’t oversampling Democrats and undersampling Republicans – there just weren’t as many Republicans this time because they were calling themselves independents.

3. Undecided voters.  Romney was counting on that trend to continue. Instead, exit polls show Mr. Obama won among people who made up their minds on Election Day and in the few days before the election.

  • The perception is they always break for the challenger, since people know the incumbent and would have decided already if they were backing him.
  • But. maybe Romney, after running for six years, was in the same position as the incumbent.

Election predictions: The favorite-long shot bias …

November 9, 2012

Punch line: For some folks who predicted a Romney win over Obama, it  was simply heart over head.

For others, it may have been the favorite-long shot bias

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In gambling and economics, there’s an observed phenomenon favorite-long shot bias.

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On average, bettors tend to overvalue “long shots” and undervalue favorites.

That is, in a horse race where one horse is given odds of 2-to-1, and another 100-to-1, the true odds might for example be 1.5-to-1 and 300-to-1 respectively.

Betting on the “long shot” is therefore a much worse proposition than betting on the favorite.

Various theories exist to explain why people willingly bet on such losing propositions, such as risk-loving behavior, or simply inaccurate estimation.

Source

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The other election battle: CNN edges Fox (kinda) … MSNBC a distant 3rd.

November 9, 2012

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According to Ad Age

CNN Narrowly Wins Cable News Ratings Race on Election Night

For the time period 7 p.m. until 2 a.m.

  • CNN  … 8.8 million viewers
  • Fox News  … close second with 8.7 million viewers.
  • MSNBC … distant 3rd with 4.6 million .

For prime time 8 p.m. through 11 p.m.

  • Fox won … averaged 11.5 million viewers …  its highest prime-time viewership in history.
  • Fox  …  only cable news network with an increase in viewership from the 2008 election ( 9 million viewers)
  • CNN …  9.3 million prime-time viewers, 25% fewer than in 2008
  • MSNBC …  4.7 million prime-time viewers, down 21% from 2008.

Peak viewership 11 p.m. hour

  • CNN …  10.8 million
  • Fox …10.1 million

Technical point: Fox was triple feeding some parts of the night to Fox Business and Fox Network

Interesting point: Obama cruised, but MSNBC only got about 20% of the CNN-FOX-MSNBC pool of voters.  I would have expected that to be way higher.

What was the most important issue when you cast your vote?

November 9, 2012

According to a CBS exit poll, 60% voters who cast ballots said the economy was the most important issue in their vote.

That make sense.

But, an astounding 42% of the people in the CBS exit poll said Hurricane Sandy was an important factor in their vote and that Obama handled the emergency well.

Say what?

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Demonstrating their conviction, these folks backed Obama by a better than two-to-one margin.

More astounding: 15% said it was the most important factor in Obama’s winning their vote.

This guy – and most others on Staten Island – probably weren’t in in the 15%.

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= = = = =
Ken’s Take:

Great play by Team Obama … a twofer.

Got some votes against Romney and ended Christie’s 2016 presidential bid.

Could be worse … you could be a coalminer.

November 8, 2012

Not only to you make a living busting your butt and breathing coal dust, but the Feds are trying to put you out of business.

Or, you could be a mining company or one of its shareholders.

Overall market was down 2.3% yesterday – the day after the election.

Coal stocks dived 5.5%

Ouch.

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Holy HamBurglar: Mickey D. sales drop … not lovin’ it?

November 8, 2012

McDonald’s is reporting that global sales at restaurants open at least a year fell 1.8 percent for the month.

The last time the figure dropped was in 2003.

The figure is a key metric because it strips out the impact of newly opened and closed locations.

The fast-food chain says the figure fell 2.2 percent in both the U.S. and Europe.

In  Asia, the Middle East and Africa, sales dropped 2.4 percent.

McDonald’s sales slowed recently as the company faces intensifying competition and a weak economy
Source

– – – – –

Note that the company didn’t blame the U.S. drop on Michelle Obama’s war on fast food … and didn’t blame the drop in Mis East sales on a video

Smoking gun: BLS streak comes to an end … coincidence?

November 8, 2012

As Gomer Pyle would say: Suprise, suprise, suprise.

This is absolutely unbelievable …

The BLS streak — understating initial unemployment claims – ended this week.

In all the prior 26 election season weeks, the BLS’s “headline number” under-reported initial unemployment claims … and cast the jobs situation as brighter than it really was.

The election was Tuesday, right?

Well, guess what.

Here’s what the BLS report this morning … read it carefully.

  • In the week ending November 3, the advance figure for seasonally adjusted initial claims was 355,000, a decrease of 8,000 from the previous week’s unrevised figure of 363,000.

English translation: Some how, the BLS was miraculously able to eliminate the reporting bias that had been consistently evident in the run up to the election.

Frankly, I’d expected them to wait a few weeks to create some distance from the election … then “modify” their reporting.

Nope.

Tell me again how the BLS is just a group of apolitical bureaucrats cranking out consistently reported facts.

The good news is that I can finally stop tracking and reporting the streak.

Quick, somebody call Jack Welch…

= = = = =

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>> Latest Posts

Post-election: Government revenues will soar in Q4 … guaranteed.

November 8, 2012

Punch line: The planned (and anticipated) increases in capital gains tax rates will motivate stockholders to sell stocks and pay capital gains taxes at the current 15% rate.  As a result government tax revenues should soar between now and the end of the year  … and the market may dive.

= = = = =
Yesterday was day #1 of a highly likely – and predictable stock sell off.

Why a sell-off?

Well, some folks (i.e. me) expect a sharp market drop.

They’ll be selling —  if they haven’t already – to lock in  gains.

Why?

Because, it’s unlikely that President Obama will suddenly do a turnabout and become business-friendly.

So, despite perpetual quantitative easing, stocks are likely to be pressured.

Even if Obama does become pro-business, there’s the impact of the forthcoming capital gains tax bomb(s).

For openers, ObamaCare’s initial $1 trillion cost projections (which have already doubled) … were funded (on paper, that is) roughly half by cuts to Medicare and half by tax increases.

One of the tax increases is a 3.8% tax on investment income … essentially slapping payroll taxes on so-called “unearned income”.

“Unearned income” is defined as:

  • short- and long-term capital gains
  • dividends
  • interest, except municipal-bond interest
  • income from the sale of a principal home
  • rents
  • royalties
  • the taxable portion of annuity payments
  • a net gain from the sale of a second home
  • passive income from real estate and investments, such as limited partnerships

So, at a minimum, capital gains tax rates will go from 15% to 18.8%.

In addition, Obama is on record pushing for a 5 point increase in the base capital gains tax rate to 20%.

  • Note: Simpson-Bowles recommended a hike to the ordinary income tax rate.

Bottom line: the capital gains tax rate is likely to go from 15% to 23.8%.

One implication of increasing marginal tax rates is that investors have an incentive to sell appreciated stocks, bonds, and other assets before the end of the year … and pay the 15% rate instead of the jacked-up 23.8% rate.

As a result, tax revenues increase … when the capital gains taxes are incurred.

That is exactly what happened following the enactment of the Tax Reform Act of 1986, which increased the top capital gains tax rate from 20 percent to 28 percent.

Capital gains realizations almost doubled in 1986 and then fell back in 1987 as investors rushed to take advantage of the soon-to-expire 20 percent rate.

Similar behavior is likely this year unless investors believe that the threatened tax increases are merely head fakes.

= = = = =

Practical implications

Note: I don’t provide investment advice, but I’m willing to share some research I’ve done …

Question: I like my stocks and want to keep holding them … what to do?

You can sell them, pay the 15% rate on capital gains and buy the same stock back … resetting the cost basis at the buy-back price.

Question: Isn’t that a “wash sale”?

Nope.

Wash sale rules only apply to stocks sold at a loss.

When you sell stocks at a loss, you have to wait 30 days to buy them (or comparable stocks) back.

But, if you sell at a gain, you can rebuy immediately … it’s not a wash sale.

Question: I’m only re-investing 85% of the proceeds since I have to pay 15% capital gains taxes, right?

Remember, you only pay capital gains taxes on, well, the capital gains … not all the proceeds.

Question: But, with the laws of compound interest, I lose a lot by reducing my principle even a little, right ?

Based on my back-of-the-envelop calculations, a stock has to go up at least 70% to offset the benefits of taking advantage of the lower capital gains tax rates.

= = = = =
In summary

I’m expecting a stock sell-off in Q4 – partly from investors locking in gains and partly from folks arbitraging the capital gains tax rates – current and anticipated.

The most likely result: lower stock prices … but higher government tax revenues.

We’ll see ….

>> Latest Posts

What one word describes your reaction to the election results?

November 8, 2012

Pew asked that question …

Predictably:

  • Obama voters said they were “relieved” and “happy.”
  • Romney voters generally said they were “disappointed” or “sad”.

What’s your word?

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General Mills’ Monster Cereals’ limited availability creates continued demand

November 8, 2012

Punch line: General Mills’ Monster Cereals create a buzz for fans with limited availability.

Die hard fans of Boo Berry, Count Chocula and Franken Berry will go to great lengths to purchase the 1970’s classics, and resellers have capitalized on this, selling the boxes for 3X the price on ebay.

* * * * *
Excerpted from the WSJ’s, “Boo Berry is Big at Halloween with Kids, Hoarders and Resellers”

October is the coolest month for Roger Barr. For a few happy weeks, grocery stores stock the object of his desire: Boo Berry.

monster_cereals

That is the berry-flavored cereal that turns milk bluish, delighting generations of American kids—and some adults, too.

The problem is that you can’t eat as much Boo Berry as you might  like.

Not long after Halloween, Boo Berry disappears from stores like an apparition.

The same affliction haunts lovers of Count Chocula and Franken Berry, the other two cereals General Mills produces for the Halloween season.

At first, the three surviving cereals were year-round familiars.

But the cereal maker cut distribution to the period from September to around Halloween in 2010.

General Mills wanted to focus on the pre-Halloween weeks to best capture the holiday excitement and enthusiasm for the products.

he company doesn’t release sales figures and won’t say whether the cereals were selling poorly the rest of the year.

One of the most amazing things about the monster cereals is the passion of the people.

Carol Shelley Thomas, a 45-year-old medical-billing specialist, for the past several years has bought 14 boxes of Franken Berry in October, enough to last until the following Halloween when more of the neon-pink cereal again appears in stores.

A quest for Count Chocula will lead Ron Macedo, a 41-year-old Toronto food distributor, across the border this month to Buffalo, N.Y., in order to buy at least 10 boxes of Chocula for himself and at least 20 boxes of Boo and Franken Berry for friends—to take back to Canada, where General Mills doesn’t market the stuff.

Many fans would love the cereals to be less elusive, but General Mills has no plans to make the three cereals available year-round.

But those who run out can turn to people like Josh Rhodes, who on eBay charges $7 per box from buyers.  Last year, he says, he sold about 300 boxes and expects to sell about 350 this year.  “Sure, I get some funny looks at the register,” says the 35-year-old Orchard Park, N.Y., resident, who buys about 40 boxes at a time for about $2 each.  “It’s worth it,” he says.

“People are willing to pay an arm and a leg for this stuff.”

Edit by BJP

Groundhog Day … get used to the New Normal

November 7, 2012

As Nick Cannon would say on America’s Got Talent; “America has voted”.

Most amazing is that after $2 billion in campaign spending, hundreds of speeches, and much hand wrenching … we’re right back where we started … with a stagnant economy, a government fiscal crisis, and a government that doesn’t work.

Same Obama, same Senate, same House.

Some specific morning after thoughts …

  1. President Obama … big win … but may be one the biggest losers … he’s facing a political & economic mess
  2. Romney …  gave it a good shot … but in the end, he was right: 47% wouldn’t vote for him under any circumstances
  3. Nate Silver nailed it … somehow, averaging a bunch of bad numbers can give you good numbers … gotta admire the guy for sticking to his analytical convictions.
  4. Michael Barone & Peggy Noonan … two of the savviest political observers around – one a quant, one a qual – missed it big … that surprises me.
  5. Chris Christie may be the biggest loser … though I don’t think his wet kissing Obama was determining, it ended any hopes that Christie may have for the Presidency … many in the GOP will blame him and never forget.
  6. Marco Rubio … would have made a difference in Florida … and incrementally with Hispanics … but not nearly enough to change the outcome.
  7. Hillary Clinton … if she survives Benghazigate, she’s odds on favorite in 2016 … especially since Bubba stepped up for Obama
  8. GOP candidates … who in there right mind would run for President? … Romney is a good & decent guy … and he got savaged by the successful politics of personal destruction … we’ll continue to have a Presidential talent drain
  9. Independents …  polls showed them favoring Romney by 10 points … exit polls are saying Obama broke even or won them … how did that happen?
  10. Catholics … apparently broke for Obama … and now, lose their legitimacy to whine when their religious rights get trampled.

My basic prediction was very wrong … I said “Romney wins popular vote 51.5% to 48.5% …. and wins about 285 electoral votes.”

But, I hit one of the  most important nails on the head when I said:

“ I don’t underestimate the “power of free” … the nation may have reached the tipping point … it’s Obama’s ace in the hole.”

I should have listened more carefully to myself.

People like when other people buy them things.

Cut to the chase, and that was the election determinant … keep the government checks coming …  non-contributory entitlements, cushy government jobs and pensions, etc.

As Maggie Thatcher would say, though: “What happens when the other people run out of money?”

Also,  I’m sticking with my prediction: stock market down 30% in the next 12 months … maybe faster … even though many more knowledgeable gurus disagree.

My view: it’s time to play defensively … not much upside to gamble for … and if there were upside, it’s going to get taxed  away any way.

That’s not investment advice … just one man’s  point-of-view,

In the 2016 campaign the issues will be the same: stagnant economy, high energy costs, low full-time employment (lots of temps & part-timers), fiscal cliff, bankrupted entitlements ineffective education system and, oh yeah, high inflation.

That sound you hear is the clanging of the can being kicked down the road

Florida could make it an early night …

November 6, 2012

Surprised to see Florida deadlocklocked with over half the vote in …  Romney has been gaining, and may pull it out … but it shouldn’t be this close.

If Florida goes to Obam, it’s lights out.

= = = = =
On;ine tracking

Real Clear Politics is  the best vote tracker I’ve found  online ..  way better than the TV data flashes and screen crawlers

An electorate mood metric … interest in settling a tie.

November 6, 2012

Have you noticed which Homa Files posts have monopolized the Homa Files “Top Posts” list for the past couple of days?

The list below is automatically calculated, it’s not my sort.

The high interest is in the handling of an electoral tie … reinforcing that most folks think this one is really deadlocked.

If you haven’t already done so, click to see the answer …

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The final polls … for the record.

November 6, 2012

We’ll sort out the bragging rights when the dust settles … but, for the record:

3 polls give the nod to Romney: Rasmussen, Gallup, and NPR.

  • That’s interesting since one leans center-right (Rasmussen), one leans center-left (Gallup), and one leans left (NPR)

6 polls give the nod to Obama: IBD/TIPP, ABC/WashPost, NBC/WSJ, Pew, CBS/NYT, National Journal.

  • IBD leans right, Pew is down the middle, other 4 lean left

4 polls call it a tie: Politico/Battleground, CNN, Monmouth, Fox

  • Politico leans left, CNN leans center-left, Fox leans right, and I have no idea re: Monmouth

= = = = =

Nate Silver is calling it a landslide for Obama: 313 to 225; 50.8 % of popular vote; 90.9% chance of winning.

Intrade & Betfair have Obama a heavy favorite … 73.4 to 26.5.

= = = = =

Michael Barone calls it a landslide for Romney 315 to 223.

= = = = =

Homa Files calls for Romney to win the popular vote 51.5% to 48.5% …. and win about 285 electoral votes.

* * * * * *
Data

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More on how the “war on religion” might turn the election …

November 6, 2012

On Sunday, we posted: Forget the ‘war on women’ … the ‘war on religion’ may turn the election

We argued that Evangelicals, Catholics, and Mormons would be critical in today’s election.

There’s more evidence that Catholics – who voted 54% for Obama in 2008 – are breaking for Romney.

IBD/TIPP Daily Tracking Poll

Catholic voters are breaking for Romney.

He now holds a 17-point lead among this group, up from just 1 point in the Oct. 28 poll.

= = = = =

One religious group I overlooked were the Amish.

From The World :

Getting out the Amish vote: Turnout may prove pivotal in Ohio and Pennsylvania

Ohio and Pennsylvania are nearly tied in hosting the largest populations of Amish in the United States, at around 60,000 each.

The largest single settlement of Amish is centered on Holmes County in central Ohio.

Amish usually align with conservatives, supporting fewer taxes, pro-life values, and traditional marriage.

Their mantra this year: Your country needs you to do more than pray … vote.”

They focus on President Obama’s support for abortion and same-sex “marriage.” “They were just appalled at what Obama had done,” Miller said.

Amish concern for marriage, religious freedom, and the sanctity of life will motivate large numbers to walk or ride a carriage to the polls, or mail in absentee ballots …  giving Republican candidate Mitt Romney the few extra votes he needs to win Ohio.

Tonight,  60,000 may just look like a very big number.

Early report on Ohio turnout … and one VA precinct.

November 6, 2012

From a very reliable source:

“Overall, early vote turnout OH up 2.44% in state.

Down -4.1% in Obama/Kerry counties;

up 14.39% in Bush/McCain counties.”

= = = = =

Virginia

Great Falls probably not projectable, but very, very  long lines at 10:30.

Old timers say “historic” turnout.

Had to implement a supplemental paper ballot track to move people thru.

Romney table outside brought a lifetime supply of Mitt stickers … and went out-of-stock around 11 a.m.

Why the polls are likely to be proven wrong … giving Obama “false positives”

November 6, 2012

I’m going out on a limb today …

I think that the polls have been reporting some false positives for Obama … that is, reporting numbers more favorable than the reality for the President.

Importantly, I’m not suggesting bias by the pollsters.  I give them the benefit of the doubt that they’re trying to do a fair & square job.

But, I think that there’s some systematic respondent bias.  That is, some surveyed people are refusing to respond to polls … and, others are given answers that might not be truthful.

I don’t think the “refusers” are a random sample.

And, I think that some people are giving “comfortable” answers that may not mesh with their true feelings.

First, let me summarize a couple of things that I noticed in the past couple of days.

= = = = =
The Catholic Robo-call

Yesterday, I got a very impactful robo-call from a Catholic Religious Rights group.

Well targeted since I’m Catholic and a proponent of religious rights.

Opening line: “Tomorrow, it will be just you and your conscience in the voting booth.”

I wanted to hang up, but I was hooked.

The message: the ObamaCare contraception mandate was about more than contraception … it’s government over-ruling religious beliefs.

= = = = =
A note to a stiff-necked people

Later yesterday, I noticed a web article by David Mamet from the Jewish Journal.

The essence of the article is that Obama isn’t supportive of Jewish principles – except for social justice – so a Jewish vote for him is unprincipled.

Here’s the full post:

To those Jews planning to vote for Obama:

Are you prepared to explain to your children not the principles upon which your vote is cast, but its probable effects upon them?

Irrespective of your endorsement of liberal sentiments, of fairness and “more equal distribution,” will you explain to your children that top-down economic policies will increasingly limit their ability to find challenging and well-paid work, and that the diminution in employment and income will decrease their opportunity to marry and raise children?

Will you explain (as you have observed) that a large part of their incomes will be used to fund programs that they may find immoral, wasteful and/or indeed absurd? And that the bulk of their taxes go to no programs at all, but merely service the debt you entailed on them?

Will you tell your children that a liberal government will increasingly marginalize, dismiss and weaken the support for and the safety of the Jewish state?

Will you tell them that, in a state-run economy, hard work may still be applauded, but that it will no longer be rewarded?

Will you explain that whatever their personal beliefs, tax-funded institutions will require them to imbibe and repeat the slogans of the left, and that, should they differ, they cannot have a career in education, medicine or television unless they keep their mouths shut

Will you explain to them that it is impossible to make a budget, and that the basic arithmetic we all use at the kitchen table is not practiced at the federal and state level, and to suggest that it should be is “selfishness?”

Most importantly, will you teach them never to question the pronouncements of those in power, for to do so is to risk ostracism?

Are you prepared to sit your children down and talk them through your vote on the future you are choosing for them?

Please remember that we have the secret ballot and, should you, on reflection, vote in secret for a candidate you would not endorse in public, you will not be alone.

Note the last line and its similarity to the Catholic robo-call that I got

= = = = =
Des Moines Register Poll

Karl Rove was asked how he can be confident that Romney will win Iowa since the Des Moines Register’s latest poll has Obama up by 5 points.

His response:

“I think there’s something going on out there and we saw it in the Des Moines Register poll.

The women who runs the Des Moines Register, who knows the state intimately, told me “Obama is ahead by 5 points, but 5% of our sample said “I’ve made a choice but I won’t tell you who it is”.

The Des Moines Register is a very liberal Democratic paper, so I doubt those people are are for Obama.”

Hmmm.

Folks unwilling to tell a pollster the whole truth.

= = = = =
Poll response rates

Over the weekend we posted a Pew analysis that says survey response rates – the percentage of called people willing to take a survey – is down to under 10%.

Pew says there’s no systematic difference between Democrats and Republicans.

MJ, a loyal reader, emailed me asking if I believed that.

My reply: “Those are the numbers, but my gut tells me that response rates are higher among Democrats.”

My answer was subconsciously recalling that past exit poll fiascos have been partially explained by Republicans being less willing to take exit polls … for philosophical reasons … and because they need to rush off to work.

= = = = =
Rasmussen Polls

I mentioned in my final prediction poll that I’ve been intrigued that Rasmussen – an automated phone survey – always seems to score Obama lower than tradition person-to-person phone interviews.

In that post Iasked “wonder why?”

After posing the prediction, I noticed a WSJ piece reprising  the “Bradley Effect” … people saying that they’re voting for a minority candidate – even though they don’t intend to … so that the interviewer wouldn’t think that they’re prejudiced against minorities.

I don’t think the Bradley Effect was evident in 2008 … I think practically all folks were giving pro-Obama responses because they really intended to vote for Obama.

For at least some folks, I’m not so sure that’s the case in 2012.

It’s much easier to “punch 2 if you’re voting for Romney” tnan to tell it to an interviewer who you think may be judging you based on your answer.

= = = = =

Bottom line

My hunch is that some people are ducking surveys –- evidenced by the very low response rates –- to avoid an uncomfortable situation.

Rather than declare that they’re going to vote for Romney, and risk interviewer displeasure, they’d just as soon refuse to be interviewed.

For those who agree to be interviewed, if they plan to vote for Romney, they may falsely report they’re voting for Obama … just to give the interviewer politically correct answers.

Similarly, some folks in groups that are broadly pro-Obama (think Manet’s editorial above) are just staying silent until they get in the voting booth.

I may be totally off base, but the anecdotes above can’t be just coincidences.

We’ll know tonite or tomorrow.

Couple of safe predictions:

(1) If Romney wins big, everyone will ask :”How could the polls be so wrong?”

(2) Every pundit will dance around the issue – highlighting turnout numbers by party – and avoid the above explanation like a plague.

But the people still like him … well, not so much.

November 6, 2012

Buried in the final Battleground Poll

Frequent pundit riff: People might not like his policies, but they still like him as a person.

Not so fast.

Polling says:

  • Mitt ties Obama on strong favorables
  • Obama’s strong unfavorables are 5 points higher than Mitt’s
  • Obama is 2 points upside down
  • Mitt is plus-3 strong favorables over strong unfavorables.

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Nate Silver’s last stand …

November 6, 2012

For the record, here’s NY Times Nate Silver’s last prediction before the polls open.

Well, technically, first prediction since the polls opened in a couple of upper New England villages.

Silver probably has more to win or lose than Obama today.

The self-proclaimed smartest and last honest pollster in the world is calling for an Obama landslide.

If Obama delivers, Silver will be the pollster of all pollsters.

If Obama flames, Silver will be back cranking out baseball statistics.

Part of today’s drama.

Tick, tick, tick,

 

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More re: turnout forecasts …

November 6, 2012

According to HotAir.com

Rasmussen’s national polling of party affiliation now shows the biggest Republican advantage since at least 2004:

  • R = 39.1%
  • D = 33.3%
  • I  = 27.5%

In modern times, the GOP has never had a turnout advantage in a presidential election.

The closest they came was drawing even with Democrats at 37 percent in 2004.

Given Romney’s lead with independents, if GOP stays even with Dem turnout, Romney wins.

If the GOP hits Rasmussen’s numbers, it’s a landslide.

Another Homa Files milestone … Thanks, again!

November 6, 2012

Yesterday, on pre-election Monday, the Homa Files had 25% more visitors than the previous daily high.

Thanks to all of you who are loyal readers and are spreading the word  … you’re why we keep posting.

Final Gallup: Romney by a point, 49-48

November 5, 2012

Romney 49%, Obama 48% in Gallup’s Final Election Survey

Also: Early voting so far breaks 49% for Obama and 48% for Romney

image

 

OK, here’s my official prediction … and my rationale.

November 5, 2012

Romney … wins popular vote, for sure

… wins an electoral college squeaker

…  Wisconsin seals the win; upset in Pennsylvania ; Ohio won’t matter.

= = = = =
More specifically, I see the probabilities:

  • 15% Romney wins electoral college in a landslide & wins popular vote
  • 40% Romney wins electoral college in a squeaker & wins popular vote
  • 25% Obama wins electoral college in a squeaker, but loses popular vote
  • 20% Obama wins electoral college in a squeaker & wins popular vote
  • 0%   Obama wins electoral college in a landslide & wins popular vote

So, to summarize:

  • 55% chance that Romney wins electoral college
  • 80% chance that Romney wins popular vote
  • 45% chance that Obama wind electoral college
  • 20% chance that Obama wins popular vote

Best guess: Romney wins popular vote 51.5% to 48.5% …. and wins about 285 electoral votes.

= = = = =
Critical Factors

  1. The 50% threshold … Romney may be right that 47% won’t vote for him under any circumstances … but, there have been a gazillion polls and, in very few polls, has Obama hit the magic 50%+1 … I buy the conventional wisdom that an incumbent rarely exceeds the last poll ratings … undecideds will break 3 to 1 for Romney.
  2. Independents … Romney’s edge seems solid at about 10 points … and, there seem to be a lot of independents out there … may be the only “clean” polling data
  3. Turnout … the thrill is gone … at worst, turnout will be Dems +4% … I expect GOP to come close to equaling Dem turnout in key swing states
  4. Intensitysurveys say that the GOP has a 10 point lead in enthusiasm & intensity … if true, that’s worth 2% to 3% in the vote.
  5. Religious groupsEvangelicals have lined up behind Romney; a strong minority of Catholics will still support Obama  – but that will be down from the 54% that he got in ‘08; folks are overlooking the Mormon factor – they vote GOP and will bloc vote this election; and, they are industrious, trained missionaries and know how to go door-to-door
  6. Obama defections … still haven’t met anybody who voted McCain and now voting for Obama … Wash Post says 16% are going the other direction … hat’s a big swing.
  7. Hispanics … Obama will win them big, but maybe not big enough … as the Univision guy said: “You didn’t keep your promise.” … that might shave some points and keep some Hispanics home.
  8. Military … Colin Powell & Wesley Clark are Obama supporters, but over 300 retired generals & admirals support Romney … I expect military-related people to overwhelmingly vote for Romney … impacts Virginia (ships) and Ohio (tanks).
  9. Tea Party … has been flying under the radar … almost nothing written about them … in polls, 20 to 25% of folks say they support the Tea Party …. I expect they’ll be a force on election day … ditto for the NRA and Chamber of Commerce
  10. The economy, Benghazi, ObamaCare … all have to be taking a toll on Obama … question is how big a toll?

= = = = =

Soft Stuff

  1. Hurricane Sandy sucked much of the air out of the stretch run … but, positives seem to be dissipating for Obama … good that Christie give Romney a shout out Sunday night
  2. Rasmussen … I’m intrigued that Rasmussen – an automated phone survey system – always scores Obama a couple of points lower than the personal interview surveys … hmmm … wonder why?
  3. I got 6 GOTV calls on Friday and 5 on Saturday … from the NRP, Romney campaign, Allen campaign, Americans for Prosperity, Christian coalition, Catholic Rights Coalition, Gov. McDonnell, Pat Boone … Dem’s GOTV can’t be better than that
  4. Clinton drew under 2,000 at an Ohio rally … Obama drew only 4,000 in Mentor, Ohio … Romney drew over 30,000 in Cincinnati, more  in Philly, event moved to VA Patriot Center today because of crowd size … I’ve seen cherry-picked interviews with folks who say they came to see Springsteen, not Obama …  for sure, nobody’s coming to Mitt rallies just to see Meat Loaf
  5. On the stump: Romney is looking Presidential (tie & positive message) … Obama is open-collared, whining, attacking, looking tired … may just be me, but I see debate #1 being replayed in the closing arguments.
  6. I know I’m biased, but Obama’s closing argument isn’t very compelling: “Yeah, things are bad, but would have been even worse.” … Benghazi neutralized the bin Laden kill … auto bailout is a strong wedge, but largely a non-issue except for NW Ohio and unions
  7. Vote for revenge” handed Romney a final days’ gift … on par with 47%, with worse timing.
  8. At the moment of truth, I think many people at the margin will gamble with Romney rather than signing up for another 4 years of malaise.
  9. But, I don’t underestimate the “power of free” … the nation may have reached the tipping point … it’s Obama’s ace in the hole
  10. Regardless of the outcome, it’s going to get ugly … neither side will be gracious in defeat.

= = = = =
Gut Check

I don’t give investment advice, but …

I think that – in the next 6 months — the stock market will go up 20% if Romney is elected and down 30% (sooner rather than later) if Obama is elected.

From the above, I think the probabilities of winning are 55% for Romney to 45% for Obama.

So, expected values are:

  • Romney = 55% x 20% = 11% upside
  • Obama =   45% x 30% = (13.5%) downside.
  • Net expected value = (2.5%) loss

Bottom line: I sold mucho stocks into the rally a couple of weeks ago.

I figure that if Mitt wins I can buy back in and just miss part of the upside.

If Obama wins, I didn’t want to be caught holding stocks.

= = = = =
OK, I’m on the record!

Let’s see what happens …

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CNN Final: Tied, but Mitt leads with Independents by 22.

November 5, 2012

The CNN headline is “Deadlocked at 49%”

The polls’ internals tell a different story.

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To get the tie, CNN uses a turnout mix that’s Dems +11% … 3 points higher than 2008.

Nobody is predicting that.

Even at Dems  +11 Romney ties … thanks to a 59% to 37% lead with Independents.

Bottom line: Based on the CNN internals, if turnout is the same mix as 2008 (Dems +8%), Romney wins by 2.5%

 

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Are all likely voters likely to vote?

November 5, 2012

Prediction: this will be a year when polls take a beating.

In the stretch run, all the polls shift to “likely voters”.

Each poll has a different method for categorizing a respondent as a likely voter

The two prevalent metrics are (1) did they vote in 2008, and (2) do they say they’re going to vote

I think that both measures may be suspect this year.

First, it’s commonly reported that many of Obama’s 2008 voters will stay home this year.  Think, college students.

Second, self-reporting typically overstates likelihood to vote.  Its a common survey bias – folks don’t want to admit that they’re going to skip their civic duty.

Third, this is an election that will be determined by turnout.

Dems have an info systems advantage and have a strong ground game – largely driven by unions and paid organizations.

GOP has an old school GOTV system – driven by volunteers and church groups … and, the GOP seems to have a significant enthusiasm advantage.

We’ll see what prevails on Tuesday … new school data-driven micro-targeting  and internet social networking or old school grind-it-out person-to-person mobilization.

Whichever prevails, it’ll be a classic case study.

Lightning strike: “Are you willing to take a 5-minute survey?”

November 5, 2012

That’s the question I was asked yesterday.

When I said OK, the surveyor said “Really? Thank you so much.”

Got me thinking about why the polls have been bouncing around so much and why the many polls often seem contradictory.

Maybe the answer is that maybe, just maybe, the polls aren’t as representative as they’d like to believe.

Turns out that Pew did a study of survey responsiveness.

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In the old days, about 1 in 3 people would do surveys.

At the time, that was considered an alarmingly low rate.

These days, the response rate is under 10%.

That means that it’s harder and most costly for survey firms to build their samples.

And, it raises questions about respondents … are they, in fact, representative of the world?

For the record, Pew says that Dems and Republicans have equal propensity to respond to surveys.

= = = = =

Do you own a German Shepard ?

Highlight of the interview was when our dog Captain started barking in the background.

The interviewer asked if I owned a German Shepard.

I asked “Is that one of your classification variables?  Do you find that GS owners are more or less likely to vote for Obama?”

She didn’t think it was funny.

Some bar stool economics

November 5, 2012

A variant of an old tale that’s making the email rounds…

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Suppose that every day, ten men go out for a beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go  something like this:

  • The first four men (the poorest) would pay nothing.
  • The fifth would pay $1.00.
  • The sixth would pay $3.00.
  • The seventh would pay $7.00.
  • The eighth would pay $12.00.
  • The ninth would pay $18.00.
  • The tenth man (the richest) would pay $59.00.

So that’s what they decided to do.

The men drank in the bar every day and seemed quite happy with arrangement, until one day, the owner threw them a curve.

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.00.”

Drinks for the ten men now cost just $80.00!

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected.  They would still drink for free.

But what about the other six men – the paying customers?

How could they divide the $20 windfall so that everyone would pay their “fair share”?

They calculated that $20.00 divided by six is $3.33.

But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being PAID to drink beer.

That didn’t seem right.

The bar owner suggested that it would be fair to reduce each man’s bill by roughly the same percentage.

Under the bar owners plan:

  • The fifth man, like the first four, now paid nothing (100% savings).
  • The sixth now paid $2 instead of $3 (33% savings).
  • The seventh now paid $5 instead of $7 (28% savings).
  • The eighth now paid $9 instead of $12 (25% savings).
  • The ninth now paid $14 instead of $18 (22% savings).
  • The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before!

And the first four continued to drink for free.

But once outside the restaurant, the men began to compare their savings.

“I only got a dollar back out of the $20 savings,” declared the sixth man.

He pointed to the tenth man, “but he got $10!”

“Yeah, that’s right,” shouted the seventh man.  “Why should he get $10 back when I got only $2?  The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison.  “We didn’t get anything at all.  This system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him.

But when it came time to pay the bill, they discovered something important.

They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas,  somewhere the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

David R. Kamerschen, PH. D.
Professor of Economics, University of Georgia

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BTW: Atlas Shrugged Part 2 opens in theaters October 12th
www.atlasshruggedmovie.com

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Media leans left, leans right …

November 5, 2012

Interesting tidbit from Pew

OK, Fox leans right … 46% of its Obama coverage is negative …

… but, 71% of MSNBC’s coverage of Romney is negative.

Pew says that “These skews made MSNBC & Fox unusual among channels or outlets that identified themselves as news organizations.”

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Swing states … deadlocked, except in enthusiasm.

November 4, 2012

According to Gallup and USA Today

Romney & Obama remain deadlocked in the swing states …

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… but, the GOP has a 10 point edge in enthusiasm.

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Pew says Obama @ 50% … but, there’s more to the story.

November 4, 2012

The headline this afternoon was Pew’s final pre-election survey:

Obama 50%, Romney 47%.

Bummer … especially since Obama hits the magic 50%

But, Pew’s raw numbers were 48% to 45% … they then allocated 4 points of undecided voters 50/50. Huh?

So, Obama still below 50%.

Another ray of hope: margin of error 2 points … so it could be Romney 47%, Obama 46%

Key facts:

  • Independents still  Romney 44%, Obama 41%
  • Turnout : D = 36%, R = 32% , I = 29%

Let’s plug those numbers into our simple turnout model:

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= = = = =
Required GOP Turnout

Now, let’s ask the question: how much does the GOP have to shrink the turnout differential to win with Pew’s numbers.

Answer: if the GOP can narrow the turnout differential to less than 1%, Mitt wins.

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The Religious Factor

Romney wins:

  • Protestants 52% to 42%
  • White Catholics 55% to 41%

Obama wins “unaffiliated with religion” 66% to 24%

Per our post earlier today, I think religious groups may swing the election …

My final prediction comes tomorrow.

Fool me once, shame on you … fool me twice, shame on me.

November 4, 2012

That’s what the original Grandma used to say.

I have yet to run into anyone who says they voted for McCain in ‘08 but are voting for Obama in ‘12.

But, I’ve had several folks tell me they voted for Obama in ‘08, but are pulling the lever for Romney next Tuesday.

The Wash Post did an analysis of 16% of Obama’s ‘08 supporters who are jumpin’ ship.

The loyalists are the expected: liberal Democrats, blacks and Hispanics.

The jumpers are also the usual suspects: Conservatives & Republicans who bought the hype; Evangelicals, and men – especially white ones..

Perhaps, the bigger point is that Obama drew 52.9% of the vote in 2008.

If 16% desert him, he’s down to under 45%.

Hmmm.

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It’s Sunday, so forget the ‘war on women’ … the ‘war on religion’ may turn the election.

November 4, 2012

President Obama made two decisions  that may come back to haunt him if he loses the election: (1) supporting same-sex marriage and (2) mandating that Catholic organizations cover contraception, morning after pills, etc.

While those decisions may have popular support … especially with the Democratic base  … they have also riled up religious factions … and not just those on the far right.

Let’s put the morality of those two decisions aside, and just look at the politics.

= = = = =
Same-sex Marriage

First, a Pew poll reported by the Daily Caller suggests that Obama’s support for gay marriage didn’t win Obama many votes in the gay community … largely because he pretty much owned that group even with a wishy-washy position.

  • “President Barack Obama has barely moved the needle among the small percentage of voters who are gay or lesbian, despite his public support for lifting curbs on open homosexuality in the military and revamping marriage to include same-sex couples.”
  • “A  Pew poll … found that only 3.4 percent declare themselves to be sexual minorities … 71% of gays or lesbians who are registered voters  support Obama, 22% say they’ll vote for Romney.  That’s a very small drop from the 2004 and 2008 elections, when three out of four self-identified lesbians or gays voted for the Democratic candidate … In 2004,  Kerry got 77% percent of the vote.

Obama may have gained some votes from non-gays who support the same-sex marriage cause, but those votes are likely to be offset by lost votes among conservative religious groups.

For example, in June, a group of black pastors launched an anti-Obama campaign centered around the gay marriage decision and its potential impact on families.

According to CNN: A group of conservative black pastors are responding to President Barack Obama’s support of same-sex marriage with what they say will be a national campaign aimed at rallying black Americans to rethink their overwhelming support of the President … The Rev. Williams Owens, who is president and founder of the Coalition of African-Americans Pastors and the leader of the campaign, has highlighted opposition to same-sex marriage among African-Americans. He calls this campaign “an effort to save the family” … “The time has come for a broad-based assault against the powers that be that want to change our culture

The effort hasn’t gotten much press lately, and probably hasn’t gotten much traction.

Obama still has near total  support among blacks.

But, lump the same-sex marriage support with the contraception mandate and there may be a bigger blowback among religious groups.

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Evangelicals

The WSJ reports that Romney’s support has surged among evangelicals.

The Southern Baptist Convention has endorsed him, the Faith and Freedom Coalition has been stumping for him, and evangelical Christian leader Rick Warren didn’t hold presidential election interviews like he did with John McCain & Barack “Above my pay grade” Obama.  More generally …

The president of Ohio Christian University, Mark A. Smith, says, “The intensity of voters in the faith community is as high as I’ve seen it in the last 12 years.

The driver of that intensity is religious liberty. We took a direct hit with the Affordable Care Act,” he says.

Evangelicals watched the Obama administration’s big public fight with Catholic hospitals and charities.

What they concluded is that the health-care law was a direct threat to their own private outreach programs.

In the 2008 presidential vote, evangelicals were 31% in Iowa,26% in Wisconsin and 30% of the vote in Ohio.

It’s estimated that in 2008 there were 350,000 evangelicals who didn’t vote in Ohio.

They could be a determining factor this year if evangelicals are, in fact, galvanized and motivated to flock to the polls.

= = = = =
Catholics

And, there’s the Catholic factor.

In 2008, Obama won 54% of the Catholic vote.

But, Pew reports that there’s been a 9-point swing in Catholic voters toward the GOP since 2008.

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Since Catholics are 1/4 of the U.S. population … that’s a 2% swing in the electorate … a shift that could be a big deal.

While Catholics are split – largely balancing social justice with right-to-life – and while a majority of Catholics  reported;y to favor contraception … the contraception insurance mandate was a proverbial stick in the eye to church officials who railed against it as a violation of religious rights.

That view seems to have gained some traction.

According to Pew, Catholics are hearing a lot from the pulpit about abortion and religious liberty.

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Bishops around the country have been having letters read to parishioners, reminding them of Catholic values.

For example, the Bishop of Green Bay recently issued a  pastoral letter saying that “voting for candidates whose positions contradict any so-called “non-negotiables” of Catholic teaching “could put [one’s] soul in jeopardy.”

Apparently the Bishop has had some impact since Obama is making a campaign stop in Green Bay this week … likely to either settle things down a bit or stick the Bishop in the eye.

And, it appears that some Catholic groups are rising up.

Our local church staged a Fortnighi to Freedom rally … reminding parishioners that the Feds are stepping in to dictate actions and restrict religious liberty.

And, some Catholic lay groups have produced slick ads that are starting to go viral.

Here’s one called “Test of Fire”.

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Mormons

Finally, you may have heard that Mitt Romney is a Mormon.

Early on, pundits said that Americans generally and Evangelicals wouldn’t vote for a Mormon President.

That doesn’t seem to be the case … though I still expect some anti-Mormon chatter  in the final days of the campaign.

The bigger point is that, according to Pew,  Mormons are the religious group most skewed towards Republican.

There are over 6 million Mormons in the U.S. … expect them to vote as a bloc and to be out in force to to bolster Romney’s get-out-the-vote efforts.

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Bottom line

When the dust settles, I’m betting that the religious groups – mobilized Evangelicals, “poked” Catholics and zealous Mormons – will largely determine the election outcome.

We’ll see.

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The election’s “Rosetta Stone” … really!

November 3, 2012

The polls have been bouncing all over the place, and pundits are broadly whining that the reason is difference in “turnout models”.

That is, how many more (or less) Democrats will show up to vote for Obama.

To understand the issue, I framed a related – but inverted — analysis by asking the question: by how much does Dem turnout (in swing states particularly) have to exceed GOP turnout for Obama to win?

The answer: Dem turnout has to be more than about 4 percentage points higher than GOP turnout for Obama to win.

Here’s my summary chart … below it are the assumptions and analytical logic.

From the chart: if Dem turnout is about 8 percentage points more than GOP turnout (as it was in 2008), Obama wins by about 4%;  if Dem turnout is less than 4 percentage points greater than the GOP’s, Obama loses.

It’s as simple as that … especially on a swing state by swing state basis.

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= = = = =
Assumptions & Analysis

While there has been a lot of bounce in the numbers, a couple of things appear to be pretty stable.

First, both Romney and Obama capture over 90% of their party’s votes.

Second, independents are generally about 1/3 of the total voting base … and, independents seem to be breaking towards Romney 55% to 45%.

In a nutshell, that means that Obama has to overcome a 3.3% Romney vote advantage with over-performance in Dem turnout.

  • 10 percentage point independent vote differential times 1/3 of the voting population equals 3.3%

Let’s run through a couple of examples:

1) Assume that the turnout is evenly split among Dems, GOP, and independents; that Obama & Romney each get 95% of their party’s votes; and that independents vote Romney 55% to 45%.

Under these assumptions, Dems have no turnout advantage (because that’s what we assumed) … and Obama loses by 3.3%.

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= = = = =

2) Same assumptions as example #1, except assume that the Dem turnout is 8 percentage points greater than the GOP’s … roughly comparable to 2008 voting patterns.

Under these assumptions,  Obama wins by almost 4%.

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= = = = =

3) Same assumptions as example #1, except assume that the Dem turnout is 3.7 percentage points less than the GOP’s.

Under these assumptions, the race is tied … we’ve found the sweet spot … if the Dems turnout advantage is more than 3.7 percentage points, Obama wins; less than that and he loses.

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Final Notes

1) It’s simply math magic that the relationship works out to be linear … as displayed on the summary chart.

2) If you don’t like my assumptions, plug in your own … my conclusion: the numbers are pretty robust to changes in the assumptions

3) Nobody seems to be predicting Dem turnout comparable to 2008 … In fact, some are predicting that GOP will have a turnout advantage,

4) You haven’t seen an analysis like this anywhere else, right?  Only in the Homa Files …

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