My phone has been ringing off the hook this week with calls from my institutional clients. They're not calling about the rally in the dollar. They're not calling about a possible recession in Europe and Japan. They're not calling about the housing crisis or the subprime crisis or the inflation crisis or the energy crisis.

They're calling to talk about a person I'd never even heard of a week ago. They want to talk about Sarah Palin.

Why do hedge-fund managers and mutual-fund managers controlling trillions of dollars want to talk about the governor from Alaska? Because they think she might be the key to the presidential election that's now just two months away. And they think that election might be the key to the stock market and the economy.

I've never concealed the fact that I'm going to vote for Sen. John McCain, the Arizona Republican, because I think he'll be the best president for the market and the economy. My clients who support McCain don't necessarily agree with me. They have their own reasons for supporting McCain, predominantly the belief that he will be stronger on defense. And my clients who support Sen. Barack Obama (D., Ill.) don't necessarily disagree with me. They have their own reasons for supporting Obama, predominantly because they believe he'll restore national unity and trust in government.

So there's not a lot of dispute among these people -- professionals who live and breathe the markets and the economy every day and at the highest level -- that McCain would be better for the markets and the economy. They're trying to figure out how to place their bets. If they can see any possible way that McCain can come from behind and get elected, they think that stocks, which have been pounded so hard over this crisis and that crisis this year, are a huge buy.

If Obama is elected, they're going to have to sell stocks. Under Obama, capital gain taxes are going to go up. Dividend taxes are going to go up. So you definitely want to sell before he takes the oath of office and grabs the reins of power. A lot of people are probably selling now, in anticipation. If McCain wins, though, taxes stay low at least for two more years. People who guess wrong and sold are going to have to buy.

By the way, please don't bother to email me to tell me that "everybody knows" that statistics "prove" that stocks do better under Democratic presidents than under Republican ones. I've run the numbers. Yes, if you don't think too hard about it you can claim that under Democratic presidents stocks have averaged a 15.6% annual return since 1948, while under Republicans it's just 11.1%.

But that's a scam. If you make just one little adjustment -- treat Richard Nixon as a Democrat, since his economic agenda was more like a Democrat than a Republican -- the whole thing falls apart. The numbers completely reverse. Any analysis that's that fragile is just no good.

So my clients want to know if Sarah Palin, the Republican candidate for vice president, could be a game-changer. In an election that seems to be so much about personality, could Palin, as Obama has done for Democrats, become a larger-than-life personality, shining much-needed charisma on the Republican ticket?

The answer is: definitely maybe.

For McCain, picking her was a bold and attention-getting move. A woman. An Alaskan. An unknown. It makes Obama's choice of Sen. Joe Biden (D., Del.) instead of Sen. Hillary Clinton (D., N.Y.) look old-fashioned and timid.

And in just a week, Palin has gone from being an unknown outside of Alaska to being one of the most-watched women in America.

Even the intense controversy about her experience and her family has only added to her celebrity. In some sense she's like Angelina Jolie: The more trouble she seems to be in, the more fascinating she is to people.

Need proof? Consider this. Palin's acceptance speech Wednesday drew a remarkable 37.2 million television viewers. Obama's acceptance speech a week earlier -- surely an historic and widely anticipated event -- drew only 1.1 million more viewers. And Palin's speech was carried on only six networks, while Obama's was carried on 10.

So all of a sudden the fuddy-duddy McCain campaign has some magic. Obama's monopoly on magic is no more.

It's too early to see whether Palin will move the polls or not. We'll know in a day or two. So far she's moved the futures contracts on McCain and Obama traded online at Intrade. Since she emerged on the scene, according to the futures market, Obama's probability of winning has fallen to about 55% from about 62%.

Not a lot. Maybe one of the reasons why stocks have been so leaden this week is that they wanted more. And there's only two months left. Historically, two months is an important point in time.

Political betting markets like Intrade have existed in one form or another since the mid-19th century. They are very reliable; better than polls, actually, which have only been around since the late 1940s.

Historically, whenever the betting markets have given a presidential candidate 60% probability of winning within one month of an election, he has. The lone exception was the Wilson/Hughes contest in 1916.

So here we are, two months before the election. And Obama is below 60%. So is it too close to call? It's definitely too close. And that's got to be a big part of what's making markets so nervous.

A little clarity here would go a long way. A big tip in the odds toward McCain, in my opinion, would be very bullish for deeply oversold stocks. A groundswell of support -- or even just enduring fascination -- for Palin could make it happen. Even a move toward Obama, making the outcome more definitive and predictable, would help by alleviating uncertainty.

Stocks are definitely cheap here. If there's more downside, it won't be much. How much upside is there? That may depend on what shapes up as likely to happen on Nov. 4. And for that, I'm going to be keeping a close eye on Sarah Palin.