(AP) As President Barack Obama widened his lead over Mitt Romney in polls this month, traders at hedge funds and investment firms began shooting e-mails to clients with a similar theme: It's time to start preparing for an Obama victory.
What many in the market worry about isn't that high earners may pay more in taxes if Obama wins. It's gridlock in Washington come January, when more than $600 billion in spending cuts and tax hikes could kick in just as the country smacks into its borrowing limit again.
In a second term, Obama would likely be pitted against a Republican-controlled House of Representatives. Investors say that's likely to set up a budget battle similar to August of last year, which ended with the country losing its top credit rating and panicked investors fleeing the stock market.
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