This is an interesting take on the sinking poll ratings for Obama, as compared with other Presidents. The backdrop is a revolution in macroeconomic thinking that is underway, towards the Behavioralist View, that social mood and behavior drive the macro world, not the machine-like parameters that make up the myriad of macroeconomic models. Man is not a perfect economic being who responds to Aggregate Demand and Money Supply, but a fairly irascible actor which, en masse, drives the macro world. Just as Einstein never really leapt beyond the Classical View of physics, even though his Nobel came from his Quantum paper (on light as a particle not a wave), so too Keynes and Friedman never really left Classical Economics, constantly seeking Equilibrium in their great works. But how is a market efficient in any macro sense, when on one day in Sept 2008 it can be high and the next day fall precipitously? Or, as it did in 1987, seem to plummet out of the blue? Where is or was the Equilibrium, and where did it suddenly go?
Yves explores whether the same underlying social mood is somehow driving both the equity markets and Presidential polls. Enjoy his analysis.
A President's Approval Rating and Stocks: Are They Linked?
Since Obama started to talk about health care reform his approval has sunk real quickly. It is now up to a point that the consensus prefers no reform at all. I am of the opinion that such a grand task is ill-timed. After the financial fiasco of the credit bubble who’s to say that we are on solid footing. The same talking heads that claimed all was fine are out in force with the same rhetoric. Don’t believe it. A balance sheet recession will take a lot of time to unwind. People on Main Street are perhaps not as gullible the second time around.
Only Bill Clinton in recent presidencies had a lower approval than Obama after seven months in office.
We did push the exercise to compare a president’s approval rating and the stock market to see if we did find any correlation. Under Clinton the general trend of his approval is up and equally so is the stock market. We find that there are periods where credit creation and or destruction will dominate over the popularity of the president. The 1990’s is the period of low rates and the dot-com bubble; however, there is a clear link with an often leading position relative to stocks.
Jimmy
Carter’s rating gives a good example of the linkage between both his popularity
and the stock market. From election the trend is steadily lower from 70% to
about 40% in mid 1978.The stock market from that period moved from about 960 to
750 over the same time frame. sentiment will go down for a while without effect on stocks.
Surely it is always a matter of time and Lyndon B. Johnson’s popularity in the period of 1964 to 1966 is a good example of this. By late 1965 the market dropped big from 1000 to 740 rather quickly.
Nixon is also a very interesting case as well. In a period where the general public loose faith in the chief commander the market is sure to suffer even if it lags the consensus.
We can also compare Nixon with Truman, who got caught in the beginnings of the Cold War and got stuck in the Korean War. Yet, he caught the start of the great bull market run from late 1949 to 1966.
George W. Bush saw a constant erosion of his rating since 2002.The market ultimately reflects the ratings and ended up lower than at the start of his term in 2001.
We can also compare to W's dad:
And then compare Poppy Bush to Ronald Reagan:
President Obama recent tumble in the polls has not been recovered. The drop was precipitous. The more he talks about health care reform the lower the ratings he gets. Can we conclude that lower ratings on the president will ultimately affect your portfolio?
Yves Lamoureux , Investment Advisor, Blackmont Capital inc.
The opinions contained in this report are those of the author and are not necessarily those of Blackmont Capital Inc. nor Yelnick. Every effort has been made to ensure that the contents of this document have been compiled or derived from sources believed to be reliable and contains information and opinions which are accurate and complete. However, neither the author nor BCI makes any representation or warranty, expressed or implied, in respect thereof, or takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. BCI is an independently owned subsidiary of CI Financial. CI Financial is a Canadian owned diversified wealth management firm, publicly traded on the TSX under the symbol CIX. Blackmont Capital Inc. is a member of CIPF and IIROC.Copyright © GALLUP. Reprinted with permission from gallup.com.
Good article. I think as the market and economy start to head off the cliff so will his ratings. I agree on the health care topic. I have no clue why they would even attempt to nationalize it and tax everyone to hell. I think the goal of the government is to make everyone poor so be beg for universal care so they can control who we go to when we get care etc.
Posted by: Mike B | Thursday, August 27, 2009 at 06:48 PM
Presidential Approval Rankings and Stocks...
this would be the worst indicator to make money.
"I think the goal of the government is to make everyone poor"... that ain't true either... look at gs and aig. they still get paid huge bonuses that they do not deserve.
are we running out topics?
Posted by: worst indicator | Thursday, August 27, 2009 at 08:10 PM
Yelnick:
I don't know if anyone uses other TA here like the McClellan Summation/Oscillator. If you look at it back from Feb this year to now, looks like a triangle (wrong word maybe to describe it). A spurt up in the Oscillator would complete the triangle and the result is bearish IMHO. Let me know if anyone sees it?
http://stockcharts.com/charts/indices/McSumNYSE.html
Posted by: swimmy | Friday, August 28, 2009 at 06:22 AM
Yelnick:
Confirm that Prechter went short 100% recommendation this morning? You likely get his emails.
Posted by: swimmy | Friday, August 28, 2009 at 07:26 AM
Yes! Prechter released an "interim report" that stated that the end is nigh and it is time to go short.
He released it a little after 9AM this morning.
Posted by: Brian | Friday, August 28, 2009 at 08:27 AM
the chinese market has fallen 20% in less than a month
Pretty good call by sornette
china market hasn't been this out of sync with us in my memory
Posted by: heinrich von liebensraum, IV, esq | Friday, August 28, 2009 at 10:04 AM
SPX, look for the fib days off the March low til the 25% retrace, the days from the beginning of this rally in July til today and the total days off the March low on the Lucas sequence. This chart is at a crossroads.
Posted by: Mike McQuaid | Friday, August 28, 2009 at 10:53 AM
Prechter has been on fire lately!
Posted by: poopy | Friday, August 28, 2009 at 11:09 AM
Poop has been on fire lately in a brown bag someone stomped out at their doorstep.
Posted by: Prankster! | Friday, August 28, 2009 at 11:22 AM
from alink DG posted somedays back, opinion on Robert Prechter
""Based on our judgment, Robert Prechter's accuracy rate is about 33%, which is very poor. However, especially because of his very long forecasting horizon, the sample is much too small for reliable inference.
In fact, Mr. Prechter's reported forecasting horizon is so long that testing multiple independent forecasts within his or any evaluator's lifetime is problematic.""
if you can sell it well, people will buy almost anything.
Posted by: majestic tiger | Friday, August 28, 2009 at 12:02 PM
Yeah, nobody was buying when your name was just tiger. But add a little majesty and, oh boy, stuff is flying off the shelves.
Prechter was calling the markets when you were bopping cheerleaders. Show a little RESPECT. The man built a hospital for god's sake.
Posted by: Lou | Friday, August 28, 2009 at 12:14 PM
Guys
Did you see the action of today?
Did we witness a decoupling of gold and dollar?
Is this a repeat of 2005 at the exact same day? They started to rally togehter up to begining of december.
Can this be a major signal??
I welcome your comments
Posted by: Miguel | Friday, August 28, 2009 at 01:10 PM
It does appear that he released an interim EWT
http://www.elliottwave.com/freeupdates/archives/2009/08/28/How-IRAs-Can-Tie-Investors--Hands----and-What-To-Do-About-It.aspx
(bottom of page)
Posted by: dom | Friday, August 28, 2009 at 01:19 PM
George from Greece
Year 2009 has been described as Hexagram 29 named 坎 (kǎn) with a very brief one-line description here:
http://schools-wikipedia.org/wp/i/I_Ching.htm
http://www.shambhala.com/html/catalog/items/subject/33.cfm?&startRow=16
whereas my Chinese text has 5 pages description on Kan. Give me some time, I shall find you the more complete version online,hopefully before Sept 19, (when the deepening entrapment/ 2nd abysmals suppose to start)....
YiJing is a book of philosophy and strategies(much as the Sun Tze's Art of War) but the modern men has turn it into a Tarot tool:
http://www.shambhala.com/html/catalog/items/subject/33.cfm?&startRow=16
and here
http://www.bing.com/images?q=I%20Ching&FORM=QBIR#focal=a75c1325ad0d8ee5dc52d95d9b1ce2f5&furl=http%3A%2F%2Fwww.softpicks.net%2Fscreenshots%2FChange7-I-Ching.jpg
Posted by: chuan | Friday, August 28, 2009 at 01:50 PM
Intresting comparision of 1974 with 2009.
Rate of jobless in 1974 and 2009 is very similiar:
http://wojciechbialek.blox.pl/resource/SP500w1974rokuAliczbaOsobNaZasilku.ewg.png
So how SP500 behaved in 1974 and now:
http://wojciechbialek.blox.pl/resource/SPteraziw1975roku.ewg.png
Posted by: forPPP | Friday, August 28, 2009 at 01:59 PM
forPPP
Yep and countless other fractals are showing the same TOP !
Posted by: Hank Wernicki | Friday, August 28, 2009 at 05:54 PM
swimmy, yes he did, with some caveats for traders
Posted by: yelnick | Friday, August 28, 2009 at 08:24 PM
Possible sizeable/tradable correction coming up? Yes, a good possibility.
Start of next leg down, not yet, especially if Prech says so...
Posted by: min | Saturday, August 29, 2009 at 02:29 AM