Powerline hits the ball out of the park today with The Sobering voice of Mr. Market:
In the first month of Obama’s presidency, the reality principle has asserted itself most notably in the stock market. The stock market certainly pays close attention to a president’s words, but it doesn’t swoon over a president’s soothing style. Rather, it evaluates the president’s words for their likely impact on a given company’s future earnings.
Meet Mr. Market a tangible piece of reality that is reported on daily:
Since it became apparent that Barack Obama would be elected president at the end of September 2008, the stock market has steadily declined. Two weeks afer Obama’s election, Thomas Lifson first charted “The Obama market.” The decline has continued over the past three months. The stock market has dropped 25 percent since election day, but the Obama effect could be observed before then.
Back on November 20th Doug Ross talked about the wisdom of crowds and intrade. And noted that the stock market started his drop as soon as intrade broke for Obama in September.
By late September it was increasingly clear to Intrade.com bettors that Obama was going to win the election. From 9/28 to 9/29 Obama’s Intrade price went from 57 to 61, which represented a huge jump.
Note what happened to the stock market at nearly the exact same time. Around September 29th the market began its collapse.
His closing line is a stake in the heart:
What happens after Election Day speaks for itself.
Take a look at the charts. I’ll give powerline the last word:
this is certainly a rich text. Most notably, as Bill Kristol observes, “the stock market isn’t gyrating, or bobbing up and down. It’s dropping.”
The sobering voice of Mr. Market is saying that the Obama administration and its allies in Congress have done nothing to brighten the prospects of companies struggling to make a go of it in the private sector. On the contrary, they have dimmed the prospects of these companies. The dimming can be measured in the vast destruction of wealth in the stock market.
Reality is a harsh mistress.