When I regress Obama's closing price on the daily adjusted closing price of the S&P 500 and a time variable, I find Obama's re-election odds and the S&P 500 are positively correlated, and the correlation coefficient is highly significant. You can also see the R-squared is quite high.

regress obamaclose spadjclose time

Source | SS df MS Number of obs = 105

-------------+------------------------------ F( 2, 102) = 165.51

Model | 750.217165 2 375.108582 Prob > F = 0.0000

Residual | 231.172684 102 2.26639886 R-squared = 0.7644

-------------+------------------------------ Adj R-squared = 0.7598

Total | 981.389849 104 9.43644085 Root MSE = 1.5055

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obamaclose | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

spadjclose | .0552766 .0040307 13.71 0.000 .0472816 .0632716

time | .0329881 .0051778 6.37 0.000 .0227178 .0432583

_cons | -18.34905 5.368125 -3.42 0.001 -28.9967 -7.7014

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That's something of a dog bites man result, since it just says voters want a good economy. Now I regress Obama's closing prices on inflation expectations (as measured by 5-year TIPS spreads) and a time variable. The correlation is positive and highly significant. This result is not shocking, but it does suggest that perhaps Obama should favor more expansionary monetary policy.

regress obamaclose inflex time

Source | SS df MS Number of obs = 105

-------------+------------------------------ F( 2, 102) = 151.93

Model | 734.747095 2 367.373548 Prob > F = 0.0000

Residual | 246.642753 102 2.41806621 R-squared = 0.7487

-------------+------------------------------ Adj R-squared = 0.7438

Total | 981.389849 104 9.43644085 Root MSE = 1.555

------------------------------------------------------------------------------

obamaclose | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

inflex | 16.75131 1.285248 13.03 0.000 14.20203 19.30059

time | .0411078 .005171 7.95 0.000 .0308512 .0513643

_cons | 23.92947 2.415287 9.91 0.000 19.13876 28.72018

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Now I regress Obama's re-election odds on the S&P

*and*inflation expectations and a time variable. Both S&P and inflation expectations have positive coefficients and are highly significant. I think this result is interesting, because it says that even controlling for the value of the stock market, monetary expansion helps Obama's re-election chances. The explanation might be that expansionary monetary policy (in our current circumstances) helps the economy more than just by making us wealthier, but it also improves the employment situation, and though those two outcomes are related they are not identical.
regress obamaclose spadjclose inflex time

Source | SS df MS Number of obs = 105

-------------+------------------------------ F( 3, 101) = 123.57

Model | 771.255054 3 257.085018 Prob > F = 0.0000

Residual | 210.134794 101 2.08054252 R-squared = 0.7859

-------------+------------------------------ Adj R-squared = 0.7795

Total | 981.389849 104 9.43644085 Root MSE = 1.4424

------------------------------------------------------------------------------

obamaclose | Coef. Std. Err. t P>|t| [95% Conf. Interval]

-------------+----------------------------------------------------------------

spadjclose | .0332366 .0079343 4.19 0.000 .017497 .0489762

inflex | 7.788602 2.449327 3.18 0.002 2.929797 12.64741

time | .0351098 .0050057 7.01 0.000 .0251799 .0450397

_cons | -3.55992 6.934249 -0.51 0.609 -17.3156 10.19576

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In conclusion, Obama should be listening to the Sumners of the world and seek more expansionary monetary policy.

Here's a scatter plot of Obama's closing prices and inflation expectations:

Here's a scatter plot of Obama's closing prices and inflation expectations:

(Data from Intrade, Yahoo Finance, and Treasury.gov.)

UPDATE: Justin Murphy has a different take on this data.

UPDATE 2: Since this post has gotten some attention, I updated the data a bit. The graph below shows a scatter plot of Obama's closing % on intrade vs. inflation expectations (as measured by 5 year Treasury rates minus 5 year TIPS) for all of 2012 up to and including September 14, 2012. It's the same as the graph in the previous post, but it has about 9 and a half months of data instead of 6 months of data.