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Monday, November 06, 2006


Dallas trip and election predictions

My Dallas trip was fun and reasonably educational, although I only left the hotel once, to play golf. Frankly, this was my third or fourth visit to Dallas and the downtown has been going downhill, not up, in my experience. Besides, there was more than enough to do at the Anatole, even a decent jazz group in the lounge on Saturday night, my only free night anyway. By then, the talk among Texans was strictly NASCAR in anticipation of yesterday's race in Ft. Worth. This country has really become a tale of two worlds - no not Dems and R's, but those who are into NASCAR and those who aren't. I'm not sure which half is bigger, but I think I can guess whose having more fun, and it's those stock car crazies.

Our featured speakers included Mary Matalin and James Carville on Thursday and George Bush #41 on Saturday morning. Mary and James are hilarious together, and they have put together a real good act. George Bush was extremely personable and comfortable speaking, very much unlike his days in office. He seems secure in the knowledge that he did his best in office, as he has continued to do in his charitable efforts (in partnership with former rival President Clinton) and that most of his major decisions were correct tactically and strategically, even if not always communicated adequately from a political standpoint. He was enthusiastically received by the audience, including yours truly.

No matter how it goes, tomorrow should be an interesting evening. There seems absolutely no doubt that Dems will win the House, the only question is by how much. This despite the fact that I think the R's will do a little better than they are polling. There are three reasons why R's will improve in the only poll that counts. One, their turnout is always better, partcularly in off-year elections. Two, though the rule of thumb is that undecideds break against incumbents, I think that may be different this time. Most polled undecideds this time, I believe, are R's of one stripe or another and they are more likely to return to the fold than not, compared with true independents. Even if they don't, they may go the third party route rather than for the enemy. Finally, the lever just counts the vore, it has no way to measure the indifference or enthusiasm of the voter pulling it. So while D's are all keyed up to vote for their guy, and the R's aren't, chances are they will still offset in the booth.

All that having been said, the R's have too many weak incumbents in the House to defend. The Dems should be good for a 20-35 seat gain and they only need 15. The only seats the D's really have to defend are two in Georgia. They are expected to easily retain the rest of their seats. You'll know it's a bad night for the R's if the early returns from Indiana indicate that Hostettler, Sodrel and Chocola are losing their seats. The R's will also lose three in Ohio, most likely, unless Deborah Pryce hangs on to her seat. Then watch Florida and see if the seat vacated by Katherine Harris changes hands. In CT, both Chris Shays and Rob Simmons could be ousted. So those races will give you an idea of whether the shift will be at the high end of the range or not. Later on, upstate NY will provide confirmation, where as many as four R incumbents are imperiled.

The Senate, on the other hand, is unlikely to provide a clear majority party on election night. It now looks like Kyle (AZ) and Corker(TN) will come through. I did not expect Ford to self destruct in TN, since he seemed to have the momentum, but that has been reversed. On the other hand, I did expect Santorum to revive in PA but that now looks like a lost cause. I would say Kean has a chance to flip the NJ seat against the corrupt Sen. Menendez. Also, Steele has come on and has a chance to flip the MD seat. DeWine (OH) is a lost cause, and I would be pleasantly surprised if Burns came through in Montana. So that leaves MO (Talent), RI (Chafee) and VA (Allen), clearly too close to call. Together with MD and NJ, that's 5 races with the potential to go to the absentee ballots and post race procedures/litigation. When you take that into consideration, and any lingering doubt about which party Lieberman (CT) will caucus with, you can see why we will go to bed without a clear conclusion in the Senate. The D's need a net gain of six seats to win the mjority (they need 51, since the VP has the tie breaker), so they have to win MO, MT, OH, PA, RI and VA while holding NJ and MD to gain the majority. A tall order but not quite impossible. My best guess is that the R's flip one D seat, most likely MD, and the D's flip 4, probably MO, MT, OH, and PA for a net gain of three seats, leaving the R's in control 52-48.


On 11/1, I bought 100 SHLM for the taxable account at 24.26, and today, opened up a new position, NEM, buying 50 shares at 46.15 also for the taxable account.

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