Four things to consider
It's an incredible day for risk trades aside from crude oil. The S&P 500 is at a session high, up 56 points to 3305, with 10-year yields up 7.7 bps and gold down $25.
Most of the focus is on coronavirus but there are four reasons to think that the Iowa caucus is a factor, if not a big factor. Much of the gains in the past year have been built on the idea of Republican control of Congress (initially) or at least the White House and Senate (more recently) and a continuation of that regime looks a bit more likely today.
1) The Democratic party didn't do itself any favors
If you haven't heard a comment like "the Democrats want to run the healthcare system but they can't even run a vote" then you haven't been on the internet today. The thing is, it resonates and even though this episode will eventually be forgotten, it doesn't bode well for the organization of the party.
2) No single candidate appeared to make any kind of a breakthough
The first goal of the primaries is to win them, but in the bigger picture you need to win them and do it with momentum if you want to win the White House -- especially against an incumbent. The Iowa result isn't out but the numbers Sanders and Buttigieg released appear to show a muddled race.
3) Biden is fading
There are already reports of donors cooling on Joe Biden. He just isn't as sharp as he once was and there's little enthusiasm for his campaign despite his profile as the former Vice President. He has too much baggage and even if he can steady his campaign, he looks like Hillary Clinton redux in the general election.
4) Weak enthusiasm overall
This is the big one for me. The numbers out so far show about 172K people showed up for the Iowa caucuses. That's about the same as in 2016 and nowhere near the 240K who showed up in 2008. It's just one state but it reflects badly on a slate of candidates that can't seem to capture anyone's imagination. Where is the passion.
Keep in mind that some of this may change when the results are posted at about 5 pm ET, but it's a poor start in the first real event to choose the Democratic nominee and it shows why people are eyeing the one man who didn't participate in Iowa -- Michael Bloomberg.
