Welcome to the inaugural post of our Allen West Fact Party series, in which we take claims made by the District 22 Republican and attempt to figure out whether they have a basis in reality.
Today's Fact Party analysis comes to you from the world of finance. Congressman Allen West was on Fox News on Tuesday, discussing the markets and the stock market's recent upswing. The NASDAQ index closed above 3,000 that day -- the first time it's happened 12 years. Republican damage control was necessary -- the market is looking better? And a Democrat is running for president? How could this one be spun...
As it turns out, taking GOP credit for the market is remarkably easy. "I would think maybe the markets are looking five to six months down the road when we have a change in leadership in this country," West said, without batting an eye.
When host Neil Cavuto asked if West was really suggesting that the prospect of Republican power in either the White House or the Senate is causing the market recovery, West said, "It depends on how far the futures are looking down the road... There is a new kind of hope that might be out there."
While it's probably not the best idea to be listening to financial advice from a man with degrees in political science who owns, according to congressional disclosures, two stocks, we thought it best to ask around.
A summary of what's coming up: A New York investment analyst started an email to the Pulp with, "Oh my fucking god that's so ridiculous." But a Florida hedge-fund manager said there could be a kernel of truth in there somewhere, that "coming in the back door, I'd say that he could be right."
The guy from New York
For starters, the "futures" that are looking down the road -- specifically the ones that deal with the presidential elections -- say Barack Obama has a good chance to be reelected. The graphs are free to look at. The magic of the internet.
The analyst wrote in an email yesterday that looking at those futures contracts was beneficial "if you want to know in two seconds whether Wall Street considers it more or less likely that Barack Obama will be re-elected today compared with a month ago."
"You can see from that chart that the cost of a $100 futures contract, payable on Obama's re-election, has increased from about $50 as of Jan. 1 to about $60 as of today," he wrote. "This is as good a barometer of the odds Wall Street puts on that event as any, and it mathematically implies that the 'Street' believes O's odds have ticked up from a coin flip on Jan. 1 to about a 62 percent chance as of today."
That analyst said that he wanted to help but that his name couldn't be used because his company has government contracts and he was not authorized to comment. Still, he commented -- take it for what you will.
"I think Mr. West's views are opportunistic and not supported by fact. The market's strong gains have accompanied encouraging economic data points over the past few months," he said. "Compared to past recoveries, this one has certainly been weak and slow, but... fundamental economic performance has been quite satisfactory."
The guy from Florida
Florida hedge-fund manager Tom Beddows painted it a little differently.
"When [West] is saying futures, I'm not sure he really means futures," Beddows said. "I think the stock market is up because of the perception that interest rates will remain very low for a very long time, as the Fed chairman says."
He said the Federal Reserve's stance on keeping interest rates low helps businesses plan for additional borrowing to grow their businesses. But he said there's something else that helps stock prices -- Republicans.
"If Obama was defeated, I believe there would be a substantial rally in the stock market," he said. "Republicans encourage businesses to spend."
So, while he said "there may be some degree of truth" in West's statement, he added, "I don't know that personally I would be a buyer, that I would increase my stock holdings because I think that the Republicans might take the Senate and things might be better."
More Allen West Fact Party analyses:
And here's West's statement on Fox, with his 2010 financial disclosures beneath that: