Traditionally, the top three finishers in the Iowa caucuses have had the best shot at securing the Republican nomination for president. And while U.S. President Barack Obama has enjoyed a bit of a surge in the polls recently, he's far from a lock to win a second term.
So investors - regardless of their political affiliation - would be smart to closely consider each potential candidate's economic platform, as well as their chances of winning the nomination.
This year the Republican field is as competitive as I've ever seen. You can make a case for multiple candidates winning the caucuses, and any candidate could be boosted into the thick of the race by a strong finish.
Even the participants that are unlikely to win either Iowa or the nomination have significant strengths and policy ideas that could be absorbed by other candidates.
For investors, there are two criteria: First, how well will a candidate's ideas and personality play in the market and in the U.S. economy? And second, how likely is the candidate to beat President Obama in November 2012?
Generally, a Republican victory in 2012, if accompanied by Republican control of Congress, would be good for the market and would cut domestic public spending below that of a renewed Obama administration. It would also keep taxes lower, although a substantial tax increase is probably inevitable in 2013-14.
A Republican president would repeal Obama's healthcare legislation, although it's unlikely that that would save much money or solve healthcare's funding problems.
A Republican president also would probably replace U.S. Federal Reserve Chairman Ben Bernanke, although a President Mitt Romney or President Newt Gingrich would be unlikely to change the overall "loose money" thrust of monetary policy unless forced to do so.
Most likely Republican candidates would also pursue a more aggressive - and expensive - foreign policy than a re-elected Obama. So unless a real budget-cutter is elected, there will be little improvement in the U.S. budgetary position and a likely worsening in inflation over time, leading to another financing crisis well this side of 2016.
That said, let's take a detailed look at each candidate in this field guide to the 2012 Iowa Caucuses.
Jon HuntsmanJr.Jon Huntsman, 51, was President Obama's Ambassador to China after being Governor of Utah. In Utah, he increased spending 33% during his term, not a good sign for his ability to balance the federal budget. He also backed "cap and trade" legislation on global warming and the 2007 immigration amnesty bill.
In an attempt to attract economic conservatives, he has put forward a supply-side tax reform, but he appears blocked by Mitt Romney, another moderate Mormon, in his attempt to gain traction. His best shot is New Hampshire on Jan. 10, but unless Romney fades very fast, he's unlikely to go much further. However, he is media-savvy, which could help. Still, he's not viable as a vice presidential candidate for either Ron Paul or Rick Perry, because the neoconservative lobby (which wants an aggressive foreign policy) does not like his fairly dovish foreign policy views.
If by some fluke he won the nomination, he'd have a good chance against Obama, and if elected, he'd probably be quite a good middle-of-the-road president and good for the market.