The expectation of multipronged rate-hiking by the Federal Reserve is another source of angst for the stock market. The Iowa market sponsors a pay-to-play vote on Fed monetary policy, and the news isn't great. The FRup August contract shows a very high 90 cent price for a Fed rate hike at the next open market meeting, scheduled for Aug. 10. The FRup contract for September shows a high 80 cent price probability for another rate hike at the Fed meeting scheduled for Sept. 21.
Multipronged rate-hiking is not very helpful to George Bush, either. The investor class is a core Bush constituency. If investors are in a bad mood over falling stocks and rising rates, they may not turn out by sufficient margins in November to push Bush over the finish line. Pollster Scott Rasmussen finds only a 3 percentage-point advantage for Bush over Kerry when it comes to likely investor-class voters.
But at this stage of a very tight game, poll watchers take good news where they can get it. After two nights of liberal shenanigans in Boston, Bush had Kerry beat by half a penny. By the Republican convention, he might have well more than a nickel's chance of four more years.
Larry Kudlow
Lawrence Kudlow is host of CNBC’s “The Kudlow Report,” which airs nightly from 7 p.m. to 8 p.m.
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