Nomura believes Obama will win election, Republicans will control House

Nomura's senior political analyst Alastair Newton thinks president Obama will win a second term.

While Republican presidential candidate Mitt Romney seems to have a narrow lead at the national level, when it comes to battleground states, Obama still has a lead in the RealClearPolitics (RCP) average.

And Newton writes that his call for an Obama win is anchored in what he sees as an Obama-win in Ohio:

"We believe the Obama campaign may have the decisive advantage based on his campaign tactics – similar to those he adopted in 2008 to give him Ohio by 262,000 votes (out of about eight million registered voters) – hinging on 131 campaign offices state-wide (compared to Mr Romney’s 40) and nearly one thousand staging areas where volunteers meet to fan out across their neighbourhood.

Mr Romney too has a major campaign presence in Ohio; and he may be encouraged by the fact that George W Bush beat the Democrat challenger John Kerry in Ohio in 2004 (albeit by just 120,000 votes). Furthermore, he has narrowed what was at one time a near- double-digit Obama lead to the point where a poll released on 27 October by a consortium of Ohio newspapers had the two candidates tied.

However, we still see Mr Obama as the better placed to win the ‘ground war’ on the day and secure a potentially decisive victory in Ohio."

Obama will also have to win other battleground states like Iowa, New Hampshire, Nevada or Wisconsin. President Obama has maintained a lead in all four states so far and the consistency of these polls plays into Newton's call that "Mr Obama remains the narrow favourite to win the presidential election".

Newton does warn that these margins could be "a little generous" to Obama for two key reasons. First there has been a large amount of early voting when compared with historical standards, including several swing states. Second, many think this time it could boil down to the "success of the two candidates getting the vote out on the day".

Newton sees some uncertainty in the outcome of the Senate race but expects Republicans to maintain control of the House. Based on this Newton writes in the event of an Obama win, a Democrat majority in the Senate and a Republican majority in the House there is a 50 percent+ chance of some sort of agreement on the fiscal cliff.

This is largely because the Republicans would get the blame if the economy went over the cliff and because post-election corporate lobbyists are expected to go into overdrive pushing Republican policymakers towards signing a deal.

For now though, all we can do is wait and watch if Newton's prediction comes true.

Note: Newton writes that this report does not take into account any impact of Hurricane Sandy.

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