The markets this morning are taking their queue from the overnight polls, and pricing in an Obama win, but they're also saying it will be a squeeker.
Of all the differences between Romney and Obama, one of the starkest is over clean energy. While both say they will promote "domestic energy," for Romney this means more drilling for oil and gas and more mining for coal. For Obama, it also means improving our nation's energy efficiency and mass transit infrastructure, and promoting job creating domestic clean energy industry. Obama's administration also has a record of using regulation to clean up emissions from power plants, which has the side effect of making coal burning power plants less economical to run. Romney says he will roll back those regulations.
If we can be certain of anything about how these two men will behave in office, it's pretty clear that Obama an Obama administration will be good for clean energy industries, and a Romney administration will make it harder for clean energy companies to do business. The opposite will likely be true for the coal industry, although to a much lesser extent, since decreasing domestic coal use under Obama has been partially made up by increasing coal exports.
Here's what the ETFs were saying about the election at 11am ET:
Clean Energy for Obama: PowerShares WilderHill Clean Energy (NYSE: PBW) - up 1.8%, with the broad market up only 0.4% - signalling an Obama win. Over the last month, PBW has been down 4.6%, as Romney has reduced Obama's lead in the polls.
Coal Undecided: Market Vectors Coal ETF (NYSE:KOL) - up 0.5%, in line with the market - the market seems undecided. Over the last month, KOL is up 8.5%, signalling Romney's improved prospects.
Solar Stocks for Obama: Guggenheim Solar (NYSE:TAN) - up 1.9% for the day, down 9.6% for the month. Market Vectors Solar Energy ETF (NYSE:KWT) is up 1.3% for the day and down 13.6% for the month. Solar stocks are also signalling an Obama win today, but have fallen as Romney has recently improved his chances.
Wind Stocks whisper Romney: First Trust Global Wind Energy (NYSE:FAN) - up 0.2% and PowerShares Global Wind Energy (NASD: PWND) - flat are lagging the broad market today, which might be a sign of an impending Romney victory. Over the past month, PWND is down 3.4% and FAN is down 3.2%, a weaker indication of Romney's recent strength.
Conclusion
The strongest political signals have been coming from PBW and the Solar ETFs, both of which are pointing to an Obama win tonight, but the weaker signals from coal and wind ETFs are mixed. All these ETFs have been reflecting Romney's improving prospects for the last month, so if the outcome were clear, I'd expect to see that reflected in these ETFs as well.
Wind and Coal ETFs are telling us that Clean Energy and Solar ETFs may have voted too soon.
UPDATE: At the close, FAN and KOL were also pointing towards an Obama victory.
