- Opinion polls suggest that Pres. Obama is heading toward a landslide election victory (with 337 electoral votes to 201 for Romney), which would give the newly re-elected president a very strong mandate — and bargaining power — to negotiate a fiscal settlement closer to his own terms with the “lame-duck” Congress between November 7th this year and January 20th next year. Although a very strong showing in the first presidential debate this Wednesday by Romney could yet narrow the race, our observations from a week-long tour through the US suggests that Pres. Obama is very strongly placed.
- ISM manufacturing new orders rebounded very strongly in September to 52.3 (from 47.1 in August), with September’s level consistent with about 10%YoY growth in Asian exports to the US in March 2013 (given that ISM manufacturing new orders are an excellent 6-month leading indicator of US demand for Asian exports).
- QE3 is serving to further lower mortgage interest rates, providing additional support to the well-entrenched recovery in the US housing market over the past few quarters (the Case-Schiller housing price index is now higher than a year ago, and US residential construction grew 8.5% QoQsaar in 2Q 2012). With a broader-based recovery in the US economy (and the resumption of the manufacturing recovery after a 3-month soft patch), the presidential race is likely to move further in favor of Obama. Foreign policy friction with China is likely to be lower in 2013 if Obama is re-elected, so this factor too is a positive for Asia.
Prasenjit K. Basu
(65) 6432 1821