Is it just me or did President Obama decide he didn’t need to prepare for the first presidential debate? I know it’s a busy job being president of the most powerful nation on the planet but what was going on this past week that kept him from rehearsing his responses? Did he think he could just show up and wing it? Did no one tell him there would not be a teleprompter? Did he and Michelle have a fight that afternoon? Did he have some indigestion?

And who invaded Mitt Romney’s body? He actually looked somewhat presidential… the first time I have felt he has appeared presidential. What happened to the embarrassing clown who showed up at all the Republican candidate debates? …the one who tried to get Rick Perry to bet $10,000 on the stage of the Republican debates?

I’m not sure what I was expecting but I would have been less surprised had I heard eloquent rhetoric coming from Obama and desperate anecdotes coming from Romney (ala “Joe the Plumber” by John McCain).

What we got was a President who, from time to time, stuttered and stammered and occasionally appeared to have his eyes frozen in the headlights… when they weren’t looking down at his notes. Meanwhile, Romney looked straight ahead and spouted statistics, one after another, immediately and promptly. (I’m not attesting to the veracity of the statistics spouted by either candidate. There was plenty of embellishment by both but Romney was much better rehearsed at delivering his inaccurate statistics than Obama was at delivering his inaccurate statistics.)

Romney seemed on the attack. Obama seemed on the defensive. Romney seemed poised and confident.  Obama seemed surprised and rattled.

Early on Obama brought up the fact that the oil industry “gets $4 billion a year in corporate welfare,” Romney shot back that the Department of Energy said that tax breaks for oil companies only amount to $2.8 billion a year and that Obama wasted $90 billion in breaks to the green energy world… or about fifty years’ worth of what oil companies receive. (I think if you do the math, it’s more like 32 years’ worth but who’s counting?) Obama never responded to that rebuttal. That kind of set the tone for the night. Later in the debate, Romney pointed out that $90 billion would have hired two million teachers.

Obama tried to hammer home that Romney favors a $5 trillion tax cut and Romney kept denying that his tax cut proposal is a $5 trillion tax cut. He denied it no fewer than 5 times. And poor Jim Lehrer kept trying to move the debate along.

Speaking of Jim Lehrer, it seemed to me that Romney stomped all over him when Romney was told that his speaking time was up. It was almost as if Romney decided that playing by the rules was not going to get him elected president… that getting his message across would get him elected and playing by the rules would have to wait for another day. And he’s probably right. When people walk into the voting booth, they don’t think, “Oh, I remember him as being courteous and respectful. I’ll vote for him.”

Obama did a good job defending Obamacare (displaying just a touch of vanity by admitting he has become fond of the term “Obamacare”) by reminding everyone that Obamacare provides that insurance companies:

  • Can’t “jerk you around.”
  • Can’t impose arbitrary lifetime limits.
  • Must let you keep your kids on your policy until age 26.
  • Will pay us rebates if administrative costs are high relative to the costs of care.

Romney’s rebuttal took the focus off the benefits or drawbacks to Obamacare and put the focus on the legislative process. He stated that when “Romneycare” was passed in Massachusetts, it was because Democrats and Republicans came together and enacted a bipartisan plan. Obamacare, on the other hand, was jammed through the legislative process without one single Republican vote.

The best criticisms Obama delivered didn’t seem to land any hard body blows… even though they were very valid criticisms.  He pointed out that the “plans” proposed by Romney and Ryan are all vague, purposely lacking detail. Romney wants to repeal Obamacare but he’s not specific about how he would replace it. He wants to repeal Dodd-Frank but he’s not clear what regulation would replace it. His tax plan would eliminate loopholes and deductions but he’s not clear about which loopholes and deductions. And he can’t even determine with any degree of accuracy if his tax plan would increase or decrease the deficit since the revenues resulting from such a tax cut are unknown.

One thing Obama altered for the debate was his typical reference to class warfare. Instead of saying “those not paying their fair share,” he said “those who have done very well” or he would say how something would “benefit folks like me and him (Romney),” referring to Romney and himself as in the top 1%.

At the 34th minute of the debate, I sent the following tweet: “34 minutes into the debate and Obama has not yet said ‘corporate jet owners.’ Vegas over/under was 33 minutes.” (You can follow us on Twitter @boyercorporon). Within one minute of sending that tweet, Obama said “Why wouldn’t we eliminate tax breaks for corporate jets?” (In case you were wondering, Las Vegas doesn’t actually set betting odds for Obama’s use of class warfare references.)

If Romney had any zinger during the debate, it was “The President said he’d cut the deficit in half. Unfortunately, he doubled it… The President’s put in place as much public debt—almost as much debt held by the public—as all prior presidents combined.” Just prior to that statement, he took the sanctimonious path by stating that the deficit is a “moral issue”….that it is “not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation…”  I know I felt a slight twinge of guilt when he said that.

And in what is now known as Romney’s “Big Bird Moment,” Romney said that when deciding whether to spend money for anything, it would need to pass a test. The test is: “Is the program so critical it’s worth borrowing money from China to pay for it?”  Then he went on to say that the Public Broadcasting System would be toast since he wouldn’t borrow money from China to subsidize PBS. (I paraphrase)

Needless to say, it’s a bit of hyperbole to imply that we call China for money when we need money to watch Big Bird. What we do when we want more money for anything is issue Treasury Bonds which are available for purchase by any and all investors throughout the world. China just happens to be the largest purchaser of those bonds….but not the ONLY purchaser.

Although I think this debate was a big win for Romney, don’t count Obama out. His intent for the first debate might have been a “rope a dope” strategy. I might be giving him too much credit but it’s possible that Obama didn’t intend to land any big punches in the first debate. He didn’t mention Bain Capital….or Romney’s tax returns… or Romney’s speech about the 47% who don’t pay taxes. Obama may be holding back all his big ammunition for the last debate which is fifteen days before the election. That is the debate voters will remember most when they cast their ballots.

And even if he didn’t intentionally hold back… even if he truly was inept and ill-prepared, you can rest assured that he will be better prepared for the next two debates. There is no way Obama and/or his advisors will let him walk into that forum so unprepared again.

It’s a good thing for Obama that there ARE two more debates… because if this had been a boxing match instead of a debate, the referee would have stopped the fight. When a fighter is getting beat so mercilessly and can’t put up his arms to defend himself, you have to stop the fight.

The next debate is Thursday, October 11th between Vice-Presidential candidates Joe Biden and Paul Ryan. Biden was one of the better speakers at the Democratic National Convention. However, speaking to an audience is different than debating an opponent.  And debating Paul Ryan will be much different than debating Sarah Palin.

Last week, the Labor Department announced that unemployment declined to 7.8% from 8.1%…  great news for the Obama campaign, 32 days before the election. Obama will be able to claim that unemployment has steadily declined the past two years. Romney will be able to claim that this is still the highest rate of unemployment three years AFTER the end of a recession.

And the “feel good” factor should be working in Obama’s favor… that being that the stock market continues its steady climb. The S&P 500 increased 2 ½% in September and 30% in the past year. Americans (who are still employed) have seen their 401Ks climb back close to where they were 4 years ago. If the stock market doesn’t provide one of its patented October crashes and Obama wakes up for the next two debates, the election results could make you stay up late November 6th.

Meanwhile, Ben Bernanke’s plan to keep mortgage rates low is working. The average 30-year fixed rate mortgage is the lowest it has been in my adult life. At Boyer & Corporon Wealth Management, we are not increasing our equity allocation and may decrease it soon. Corporate profits have been impressive for the past couple of years but a lot of that can be attributed to productivity gains (doing the same amount of work with fewer people). Future increased profits will be more dependent on a healthy economic recovery. We have been decreasing our allocation to municipal bonds all year after two years of healthy gains. We continue to find the best relative values are in corporate bonds and non-agency mortgage backed securities.

Look for my summary of the Biden/Ryan debate next week.

This information is provided for general information purposes only and should not be construed as investment, tax, or legal advice. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.