Friday, November 21, 2008

Stocks Up Looking Forward to Obama Announcement of Treasury Secretary & Econ Team

Whew! No Black Friday. After two disastrous days (and many weeks now), stocks ended up 500 points in a late afternoon surge to close at 8046.42.

The drop was 5.3% for the week due to renewed concerns about the global economic slowdown and the fate of major firms saddled with bad credit bets, such as Citigroup, which lost another 20% of its value.

Many are attributing the optimistic rise to the "leak" that New York Federal Reserve President Timothy Geithner will be named Treasury Secretary on Monday. Additionally, the entire Obama economic team is supposed to be announced, and "plans" for further use of Bailout funds, economic stimuli, unemployment, mortgage issues, housing bubble, etc. etc. etc. are expected to be forthcoming.

This is gives Obamanomics a two-month jump on 1/20/09 start date, much needed in these troubled times IOHO.


Anonymous said...

The following table shows the percentage rise or decline in the
Dow Jones industrial average .DJI, Standard & Poor's 500 index
.SPX and Nasdaq composite index .IXIC on the day after a U.S
presidential election and who won the Election Day vote.
Year Dow S&P Nasdaq President elect
2008 -5.05 -5.27 -5.53 Obama
2004 +1.01 +1.12 +0.98 W. Bush
2000 -0.41 -1.58 -5.39 W. Bush
1996 +1.59 +1.46 +1.34 Clinton
1992 -0.91 -0.67 +0.16 Clinton
1988 -0.43 -0.66 -0.29 Bush
1984 -0.88 -0.73 -0.32 Reagan
1980 +1.70 +1.77 +1.49 Reagan
1976 -0.99 -1.14 -1.12 Carter
1972 -0.11 -0.55 -0.39 Nixon
1968 +0.34 +0.16 --- Nixon
1964 -0.19 -0.05 --- Johnson
1960 +0.77 +0.44 --- Kennedy
1956 -0.85 -1.03 ---Eisenhower
1952 +0.40 +0.28 ---Eisenhower
1948 -3.85 -4.15 --- Truman

Generally a non-event.

Maybe the objective thing to point out is that Obama is a significant part of the cause of the precipitous drop rather than throw out to the blogosphere that he is going to come rescue the market. Everyone I discuss investments with sold part of their portfolio following the election results due to the fact that Obama is on record of stating he will increase dividend and cap gain tax rates. So many sellers...due largely to Obama, and not many buyers. You understand that supply-demand equation, I believe. Please. Cut the Obama will rescue us doo doo.

Did you notice that two times "cut taxes" was mentioned in the NYT article you linked to with your doom-gloom title of Black? Friday? I'm betting my shares of stock on no tax cut coming.

I will stand by my belief that left leaning politics and decisions have lead to the requirement to loan money to ill-qualified people (subprime) thus initiating much of the true cause of the current situation, and my current expectation that tax rates will rise, giving reason to sell now (actually two weeks ago)rather than later. This takes me back again to where I have to say - don't support some suggestion that Obama's policies of higher taxes and bigger "aid" is going to be our saving grace.

Real C'ville - The Bubble Blog said...

We're not suggesting that Obama is going to save the stock market NOR even that there will be tax cuts for ANYBODY. & it will be NO surprise if the markets fall again.

And really, how can there be tax cuts, when the TAXPAYER is now GUARANTEEING the entire federal banking system?

The only "tax cut" is that which doesn't have any impact on the average taxpayer (see link. But be warned: it's lefty).

We're pointing out that there was a rally around 3pm when news of NY Fed Pres Timothy Geithner was announced as new Sec of the Treasury. And the above link gives an opinion that it wasn't even this news that caught the notice of investors.

& fwiw, left-leaning politics may have contributed to loaning money to ill-qualified people, but it was President Bush who had the big idea that we should be a nation of homeowners. And it is Mr. Bush et al, the Right, who have SOCIALIZED this economy. "Privatize the profits, socialize the losses." MISSION ACCOMPLISHED.

Will "Obamanomics" save our economy? Who knows. But we now have a change from the floundering of Comrade Secretary Henry Paulson and Bushisms. Paulson announced he was doing nothing further with the remaining $350B in the "TARP" funds. Timothy Geithner is far more qualified to assess the situation, and he & team will now have a headstart.

As surely you must know, nat'l security and defense positions are typically named first by a President-elect. That the new admin needed to name the Econ team first indicates, again, how dire the situation is.

Anonymous said...

NEW YORK (AP) -- Since the Nov. 4 election, investors have been abandoning stocks in a kind of slow-motion crash that experts say underlines just how anxious they are about what is likely to be a long and deep recession.

Even after a late-day rally on Friday, the benchmark Standard & Poor's 500 index has plunged 20 percent since the election. That more than wiped out the index's 18 percent gain in the six trading days ahead of the balloting as optimism grew that Barack Obama would be elected president.

Analysts aren't blaming Obama specifically for the postelection hangover. Rather, they peg it to growing fears that the Bush Administration and Congress are fumbling the $700 billion bailout plan and the weakened economy's impact on financial stocks -- highlighted by the plunge in shares of Citigroup Inc. to below $4 a share.

Anonymous said...


Real C'ville - The Bubble Blog said...


See today's post.

FWIW, it's all connected. To believe otherwise is to believe the sky is green.