Post of The Week

Some posts are worth highlighting and keeping around longer. This is one such post:

The Lemos Favorability Ratio
One of the tools that we use on Wall Street to measure movement is by expressing data as a ratio and then tracking the movement of the basis points. A basis point is a unit that is equal to 1/100th of 1%, and is used to denote the change in any financial instrument. The basis point is commonly used for calculating changes in interest rates, equity indexes and the yield of a fixed-income security. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point. Tracking any movement is possible and movements can be very clearly delineated. I have decided to track both Senator Obama’s Favorable versus Unfavorable ratings as well as Senator McCain’s Favorable versus Unfavorable ratings. I take the the favorable rating and divide by the unfavorable rating to get a ratio which I have named the Lemos Favorability Ratio.

I am using Rasmussen Reports Daily Tracking Poll as my raw data. Rasmussen Reports is putting out a daily tracking poll with the national favorability versus unfavorability percentages. Their data extends back to June 4, 2008 and I have created a weekly Excel spreadsheet tracking the data. Here’s that data broken out by candidate and then a side-by-side comparison of the Lemos Favorability ratio is below the fold along with data from a recent poll in Colorado.

McCain Favourable versus Unfavourable Ratings Nationwide

Date
Favorable Rating
Unfavorable Rating
Lemos Favorability Ratio
Basis Point Change
June 04
53%
44%
1.20
——
June 11
55%
44%
1.25
+05 bp
June 18
55%
43%
1.28
+03 bp
June 25
55%
43%
1.28
No Change
July 02
56%
42%
1.33
+05 bp
July 09
54%
44%
1.23
-10 bp
July 16
55%
42%
1.31
+8 bp
July 23
56%
42%
1.33
+02 bp
July 30
55%
42%
1.31
-02 bp
August 05
55%
41%
1.34
+03 bp
August 12
56%
43%
1.30
-04 bp
August 19
55%
43%
1.28
-02 bp
August 26
57%
42%
1.36
+08 bp
Source: Rasmussen Reports & By The Fault

Takeaway
In terms of the ratio, you want a higher number. The higher the number the greater the spread between your favorable and unfavorable ratings. For McCain, this is good news. As of right now he is enjoying the highest number to date, 1.36 in the Lemos Favorability ratio.

Obama Favourable versus Unfavourable Ratings Nationwide

Date
Favorable Rating
Unfavorable Rating
Lemos Favorability Ratio
Basis Point Change
June 04
55%
43%
1.28
——
June 11
56%
42%
1.33
+05 bp
June 18
55%
43%
1.28
-05 bp
June 25
55%
43%
1.28
No Change
July 02
56%
42%
1.33
+05 bp
July 09
55%
43%
1.28
-05 bp
July 16
55%
43%
1.28
No Change
July 23
54%
43%
1.26
-02 bp
July 30
55%
44%
1.25
-01 bp
August 05
53%
45%
1.18
-07 bp
August 12
55%
43%
1.28
+10 bp
August 19
54%
45%
1.20
-08 bp
August 26
53%
45%
1.18
-02 bp
Source: Rasmussen Reports & By The Fault

Takeaway
Again in terms of the ratio, you want a higher number. The higher the number the greater the spread between your favorable and unfavorable ratings. For Obama, this is represents a challenge. As of right now he is enjoying the lowest number to date, 1.18 in the Lemos Favorability ratio. Obama peaked in late June/early July with a 1.33 Lemos Favorability ratio. He has had a 15 basis point drop since then.

McCain vs Obama, The Lemos Favorability Ratio

Date
McCain Ratio
Obama Ratio
Differential
Net Change
June 04
1.20
1.28
+08 BO
——
June 11
1.25
1.33
+08 BO
No Change
June 18
1.28
1.28
Tied
-08 bp
June 25
1.28
1.28
Tied
No Change
July 02
1.33
1.33
Tied
No Change
July 09
1.23
1.28
+05 BO
+05 bp
July 16
1.31
1.28
+03 JM
+08 bp
July 23
1.33
1.26
+07 JM
-01 bp
July 30
1.31
1.25
+06 JM
-01 bp
August 05
1.34
1.18
+16 JM
+10 bp
August 12
1.30
1.28
+02 JM
-14 bp
August 19
1.28
1.20
+08 JM
+06 bp
August 26
1.36
1.18
+18 JM
+12 bp
Source: By The Fault

Takeaway
The above table tracks and compare the Lemos Favorability Ratio and show the differential between each candidate as well as the week-to-week movement. I have argued long and hard that one of Obama’s biggest mistakes was to hold that campaign rally in Berlin in front of 200,000 foreigners. He’s running for the President of the United States, not United Nations Secretary-General. The data above bears out my assertion that McCain was able to begin to turn the tables in late July as result of that Obama misstep. McCain pounded away with the celebrity ads and then had the added gift of a Russian invasion of Georgia on August 8 that led to a clear and visible difference between the experience of both candidates.

Obama’s Favourable versus Unfavourable Ratings in Colorado

Opinion of Obama
August 24
July 24
June 26
Favourable
48%
51%
53%
Unfavourable
39%
35%
33%
Not Enough Information
10%
11%
12%
Decline to State
2%
3%
2%
Source: Quinnipac University Poll

In June, Obama enjoyed a 20 point differential between his favourable rating and his unfavourbale rating. But notice that as people got to know Senator Obama, his unfavourable rating went up. He now enjoys but a nine point differential between his favourable and unfavourable rating. This is a key metric to watch, that ratio between the favourable and unfavourable ratings. In June, Obama had a 1.61 ratio but by August the ratio was down to just 1.23. That’s a 38 basis point drop!

McCain Favourable versus Unfavourable Ratings in Colorado

Opinion of McCain
August 24
July 24
June 26
Favourable
53%
54%
53%
Unfavourable
34%
30%
32%
Not Enough Information
9%
12%
13%
Decline to State
3%
3%
3%
Source: Quinnipac University Poll

McCain’s favourable and unfavourable ratings, on the other hand, have remained relatively steady. I hold that McCain is casting this election as a referendum on Senator Obama. His ads are on message often ending with the tagline: “BUT IS OBAMA READY TO LEAD?” By placing doubts in the voters’ minds, Senator McCain has succeeded in driving up Obama’s unfavourable numbers.

As for McCain’s favourable to unfavourable ratio, it too has fallen but it started out higher than Obama’s and it hasn’t fallen by as much. In June, McCain had 1.80 ratio and it’s fallen 24 basis points to 1.56 but that’s almost as high as Obama’s ratio was in June and 23 basis points better than Obama’s current ratio.

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