In Poll, Obama Survives Furor, but Fall Is the Test

ASHINGTON — A majority of American voters say that the furor over the relationship between Senator Barack Obama and his former pastor has not affected their opinion of Mr. Obama, but a substantial number say that it could influence voters this fall should he be the Democratic presidential nominee, according to the latest New York Times/CBS News Poll.

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Doug Mills/The New York Times

Senator Barack Obama courted voters on Sunday in Fort Wayne, Ind.

At the same time, an overwhelming majority of voters said candidates calling for the suspension of the federal gasoline tax this summer were acting to help themselves politically, rather than to help ordinary Americans. Mr. Obama’s rival for the Democratic nomination, Senator Hillary Rodham Clinton, has made the suspension of the gas tax a centerpiece of her campaign in recent days.

In the survey, taken in the days leading up to the primaries on Tuesday in Indiana and North Carolina, Americans were divided over the merits of the gasoline-tax suspension, which has also been backed by the presumptive Republican nominee, Senator John McCain, and condemned by Mr. Obama as political gimmickry.

Mrs. Clinton and Mr. Obama spent the final Sunday before the two primaries debating the gas-tax holiday and other issues on morning talk shows and in events across Indiana.

The poll, conducted after Mr. Obama held a news conference on Tuesday in which he renounced his former pastor, the Rev. Jeremiah A. Wright Jr., for making incendiary comments, found that most Americans said they approved of the way Mr. Obama had responded to the episode and considered his criticism of Mr. Wright appropriate.

But nearly half of the voters surveyed, and a substantial part of the Democrats, said Mr. Obama had acted mainly because he thought it would help him politically, rather than because he had serious disagreements with his former pastor. The broader effect of the controversy on Mr. Obama’s candidacy among Democratic primary voters was less clear in the poll, but enough of them expressed qualms about Mr. Obama’s relationship with Mr. Wright to suggest it could sway a relatively small but potentially important group of voters in the remaining primaries.

The relatively small number of Democrats surveyed limits the conclusions that can be drawn about the poll’s findings regarding sentiment in the party. Moreover, as a national poll, it does not necessarily reflect the thoughts of voters in Indiana and North Carolina.

Questions involving racially charged episodes have historically proved difficult to poll, particularly when it comes to asking white voters about black candidates.

Still, the survey suggested that Mr. Obama, of Illinois, had lost much or all of the once-commanding lead he had held over Mrs. Clinton, of New York, among Democratic voters on the question of which of them would be the strongest candidate against Mr. McCain, of Arizona.

In February, 59 percent called Mr. Obama the stronger candidate, compared with 28 percent who named Mrs. Clinton. In the latest survey, the two were essentially tied.

The survey of 601 registered voters was conducted between Thursday night and Saturday night. It has a margin of sampling error of plus or minus four percentage points for all voters and six points for voters who said they voted in Democratic primaries or caucuses. Mr. Obama held his news conference on Tuesday after Mr. Wright, in a series of public appearances, reiterated his suggestion that American policies had invited the attack of Sept. 11 and that the United States had created the virus that causes AIDS, and mocked the speaking style of John F. Kennedy.

For all the concern voiced by some Democrats that the party might be suffering damage from the nominating fight as it headed into the fall election, the survey found both Mrs. Clinton and Mr. Obama in a strong position against Mr. McCain in a hypothetical general election match-up. Mr. Obama would defeat Mr. McCain by 51 percent to 40 percent among all voters, the poll found, and Mrs. Clinton would defeat him 53 to 41.

The survey offered evidence of the extent to which the Wright episode had captured the public’s attention. And it turned up signs that Mr. Obama might be moving beyond the issue: 60 percent of voters said they approved of the way he had handled the issue, and a majority said the news media had spent too much time covering the story.

“Reverend Wright is not Barack Obama,” said Heather Fortner, 56, of Florida, who said she voted for Mrs. Clinton in that state’s disputed primary. “Everybody knows a lot of a people and everyone can take advice from a lot of people.”

“It’s just wrong what we’ve been doing to Mr. Obama over this,” she said.

Still, the poll raised some flags of concern for him, particularly should he win his party’s nomination.

While just 24 percent of voters said they thought the Wright issue would matter a lot or some to them in the fall, 44 percent said it would matter a lot or some to “most people you know.” And while just 9 percent of Democrats said the issue would matter a lot to them should Mr. Obama be their party’s nominee, even that small a slice of the electorate could be a problem for Mr. Obama if he won the nomination and the contest against Mr. McCain was close.

Fifty-eight percent of respondents said Mr. Obama was “tough enough to make the hard decisions a president has to make.” Seventy percent said the same of Mrs. Clinton, and 71 percent of Mr. McCain.

“The thing with Wright really did bother me,” Phyllis Julien, a Democrat from Brookline, Mo., said in an interview after she participated in the poll. “I was leaning towards Obama before this because I thought he could be a change for the American people, but now I’m leaning toward Clinton. I would have to see a little more fire in his belly to vote for him, and I just don’t see it.”

“You have to worry about how strong his convictions are when he can’t stand up to someone who’s wronged him,” Ms. Julien said.

The survey found that, notwithstanding Mr. Obama’s efforts to distance himself from Mr. Wright, the man who married him and baptized his children, many Americans consider Mr. Wright to have had at least some influence in his life. Forty-three percent said they thought Mr. Wright had a lot of or some influence on Mr. Obama’s political views.

On the gasoline tax, the survey underlined the risk Mrs. Clinton is taking in embracing a position that most Americans — including a majority of her own supporters — appear to view as political pandering. More than 60 percent of voters in the poll said that Mrs. Clinton said what people wanted to hear, rather than what she believed. Forty-three percent said that about Mr. Obama, and 41 percent about Mr. McCain.

Sixty percent of Democratic primary voters who support Mrs. Clinton favored the temporary elimination of the gasoline tax, and an equal percentage of Mr. Obama’s supporters called the proposal a bad idea. But majorities of both candidates’ supporters called the proposal a political tactic.

“Clinton is supporting the lifting of the gas tax because right now she needs more votes,” said Greg Mitchell, 38, of Blanchard, Okla. “But that’s really only one of the few things I disagree with her on. I voted for her.”

ECB’s Trichet Warns About Global Inflation Risks

The currency market has been rather quiet on Monday due to the lack of major economic releases from the US or Eurozone. The US dollar mainly erased some of last Friday’s gains post-payrolls report which wasn’t as bad as many had predicted. Traders will be looking forward to Thursday when the Bank of England and the European Central Bank are scheduled to meet and announce their rate decision.

Trichet Sounds Alarm On Global Inflation

European Central Bank president Jean-Claude Trichet said at a G10 meeting in Switzerland on Monday that central banks must be alert to inflation risks worldwide. Trichet said that “inflation risks are significant” due to rising commodity prices, which he described as “a very important phenomenon on a global level”. As for the topic of the forex markets, Trichet said that G10 members did not discuss that at the meet as G7 countries have made their position clear. Trichet sounded optimistic about global economic growth, and said, “Thanks to remarkable, confirmed resilience of a great number of emerging economies we see ongoing growth.”

Forex Trading

EUR/USD has been trading a relatively narrow range of 80 pips early today, reaching a session high of 1.5500, more than a 100 pips above Friday’s precarious low of 1.5360. 1.5510-30 will be its nearest resistance. USD/CHF’s move has been even more subdued, moving between 1.0520-70. The US dollar rallied with greater energy versus the British pound, causing GBP/USD to move lower to 1.9660. However, the buck lost footing against the Australian dollar: AUD/USD rose from 0.9340 to 0.9440, ahead of a rate announcement by the Reserve Bank of Australia on Tuesday morning at 0430 GMT. Although most people are expecting the central bank to hold the rate steady at 7.25%, which is a 12-year high, they are hoping for a hawkish post-rate statement highlighting inflation concerns in Australia.

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Who Is Benefiting From High Commodity Prices?

Consumer spending increased 0.4% today, giving the markets cheer, although after taking inflation into account, it is only a 0.1% increase. Credit card companies like Visa (V: 82.75 -2.65 -3.10%) and Mastercard (MA: 285.04 -8.90 -3.03%) already gave us a preview to that, showing how credit card spending in the US had increased in the last quarter. Also, how many of us truly believe inflation is at only 2.6%? If it’s more than that, then inflation-adjusted consumer spending would have declined considerably. This is also what the credit card companies noticed, that spending moved to essentials such as food and gas which would explain why the US manufacturing index shrank for a third straight month.

So who is benefiting from the high commodity prices? Credit card companies definitely are, and gas companies should be. Exxon Mobil (XOM: 89.61 -0.09 -0.10%) reported a 17% increase in Q1 profit on net income of $10.9 billion, or $2.03 per share, from $9.28 billion, or $1.62 per share last Q1. Although this may seem good, it was lagging behind Shell’s 25% and BP’s 63% profit increase and almost 10 cents below what analysts had expected. It seems Exxon was unable to take full advantage of the higher oil prices due to several reasons: its oil wells produced less output, gasoline prices increased slower than crude oil, squeezing its refineries of profit margins, and foreign governments demanded a bigger share of revenue from higher oil prices.

And talking about government intervention in oil prices, it is interesting to note that a gallon of gasoline costs around $0.12 in Venezuela, $0.45 in Saudi Arabia, $3.45 in the US, and around $8 in much of Europe. Many things play a role in that, namely the taxation or subsidy level each government applies to gasoline.

You’d think farmers are also be benefiting from the higher food prices, but many of them say they are suffering from higher fuel prices and the fact that it is harder for them to hedge their food prices on the futures market as the futures price is so much higher than the cash price, and the prices don’t converge close to the futures contract expiry date as they normally would. If that’s the case, it could support arguments that a lot of the rise in food prices is due to speculation.

So yes, spending is up, but people are getting a lot less for their money, and that means “real” inflation is probably a lot higher than the 2.6% estimate. And who is benefiting from the high commodity prices? Mainly foreign governments in the Middle East and other oil producing nations like Venezuela (many who have questionable human rights records), and traders who saw this coming and were generally long commodities.

Fed Lowers Rates

The Federal Reserve Bank recently lowered interest rates for the seventh, and perhaps final, time, bringing its benchmark federal funds rate to 2.0%. Since inflation is still hovering around the 4% mark, the Fed will probably be reluctant to lower rates further. Thus, the markets have been given all of the boost that they are likely to receive, and it is "fate" that will determine whether the economy will find its footing. (GDP growth clocked in at an anemic .6% for the last two quarters). The most recent data (including the just-released jobs data) indicate that the economy may be stabilizing, although consumption and the employment situation are still deteriorating. As a result, the National Bureau of Research has yet to officially declare the current economic downturn a "recession," since the picture remains nuanced. The New York Times reports:

The recession-or-not question is now almost entirely academic, Mr. Bernstein contended, given the steady erosion of American spending power and soaring costs for food and gasoline.

Turkish Lira Set for Decline

21% against the US Dollar. However, in the year-to-date, the currency has returned nearly 10% of this gain, making it the third worst performing currency in the world. Turkey generally, and the Lira specifically, are considered by investors as proxies for emerging markets. The global trend towards risk aversion, as well as skyrocketing inflation, are hurting many such currencies. In Turkey, inflation is so problematic (9.4% at last count) that the Central Bank has raised its benchmark interest rate to 15.25%. Ironically, the more the Lira depreciates, the harder it becomes for the Central Bank to control inflation, causing the Lira to slide further as part of a self-perpetuating free-fall. In addition, the country is beset by political uncertainty, as the courts determine whether the nation's current government can stay in office. Bloomberg News reports:

"The recent political developments are likely to complicate policy-making and the investment climate. The deteriorating political backdrop will in turn undermine the prospects for restoring fiscal discipline and reviving the reform agenda."