When President Obama was elected last November, many in the press said that the new President would instill a level of confidence not seen since the Administrations of FDR and JFK. However, after his first full month in office, the market hasn't embraced Obama in anything resembling the way it initially embraced FDR, JFK, or even Bill Clinton. As shown below, during the first months of FDR's and JFK's Presidencies, the Dow Jones Industrial Average (DJIA) rose by 4.18% and 3.04%, respectively.
President Obama's first full month in office has been accompanied by a 7.34% decline in the DJIA, which since 1900 is the second worst first month for a President behind the 14.71% decline under Gerald Ford, who came into office following the resignation of Richard Nixon.
Now we realize that just as Gerald Ford wasn’t necessarily to blame for the market’s performance during his first month in office, the declines we are seeing in the market now are not necessarily due to President Obama. However, we would recommend that he take the advice of former President Clinton, who suggested in an interview with ABC News this week that rather than taking every opportunity he can to talk down the economy, the President should begin to show “that he's confident that we are gonna get out of this and he feels good about the long run."
Investors are looking for leadership, not only in the market, but out of Washington. Unfortunately, this week it was lacking. How confident can Speaker Pelosi be about the stimulus bill she spearheaded when she wasn't even in the country when it was signed into law? Also, at a time when the entire banking sector was on the verge of collapse (once again), the Treasury Secretary seems to have gone into hiding.
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