If the US Presidential election were held today, President Obama would stand a 60.6% chance of winning reelection, according to the Hedgeye Election Indicator (HEI). That level is unchanged from last week, and marks the seventh time in the past eight weeks that President Obama's reelection chances have stood above 60%, according to the HEI. Two factors that can contribute to a decline in the President's reelection chances, a stronger US dollar and a weaker performance in US stocks, were offset by other factors in the HEI model to keep the likelihood of the President's reelection chances the same as last week.
Hedgeye developed the HEI to understand the relationship between key market and economic data and the US Presidential Election. After rigorous back testing, Hedgeye has determined that there are a short list of real time market-based indicators, that move ahead of President Obama’s position in conventional polls or other measures of sentiment.
Based on our analysis, market prices will adjust in real-time ahead of economic conditions, which will ultimately shape voters’ perception of the Obama Presidency, the Republican candidates and influence the probability of an Obama reelection. The model assumes that the Presidential election would be held today against any Republican candidate. Our model is indifferent toward who the Republican candidate is as the sentiment for Obama and for any Republican opponent is imputed in the market prices that determine the HEI. The HEI is based on a scale of 0 – 200, with 100 equating to a 50% probability that President Obama would win or lose if the election were held today.