From Matthew Boesler of Business Insider:
Below is perhaps the most powerful chart we've seen showing that the markets are afraid of Mitt Romney.
It shows inflation expectations – a great proxy for risk – and it looks like the market expects more inflation (supportive of risk assets like stocks) if Barack Obama is re-elected as president than if Mitt Romney were to win the election.
The idea that Romney would be bad for markets has been in ascendance in the past few weeks – and at a big investor conference this week, the concept was all the rage.
The thinking goes that Romney would want to put a someone with more hawkish – or conservative – views on monetary policy in the chairman position at the Federal Reserve.
Doing so, the market seems to fear, would be bad for risk assets because of the prospect that the "Bernanke put" would be removed, and the risk that the Fed lets markets fall without providing more stimulus would rise.
With that in mind, the chart below, via Société Générale rates strategist Fidelio Tata, shows the correlation between Obama's re-election odds on Intrade and the market's inflation expectations:
Well hey, we already know that the market prefers Democrats in the White House.