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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If you know things will get worse before getting better, it is best to say so. If you say things will be ok and it doesn't happen in the short attention span of the public, they will lose faith before things turn around and make a recovery somewhat harder. just my opinion.
(sure seems like the 2012 election rhetoric has already begun on TV; attacks form everyone who thinks they are right on every issue, from every political persuasion. I'm thinking of disconnecting my TV permanently)
Posted by: Frank | February 20, 2009 at 08:59 PM
Bespoke folks do not sound all that reasonable. First of all, Obama needs to tell the truth to get support for his stimulus plan. Second, Obama has said many times that America will be a greater nation after the crisis. Third, Pelosi has to move on to her next task which happened to be outside the country. Does she have the luxury to stay home and celebrate her victory? Fourth, remember the market dropped more than 300 points when the Treasury Secretary spoke? Wall Street complained that his bank rescue plan lacks details, but he only meant to provide a framework. Actually, Geither’s plan will be great. The problem is that Wall Street thought he is another Hank Paulson who would get money from Congress and dump it into banks. The market threw a temper tantrum when they did not get it.
Posted by: Mai | February 21, 2009 at 05:21 AM
Welcome to "change". And by the way, Obama does not care about the stock market. In his mind, only "rich" people own stocks
Posted by: zgufi | February 21, 2009 at 10:15 AM
You want happy talk from Obama? Are you in 3rd grade? I guess all websites like this should provide it as well.
Posted by: Mike | February 21, 2009 at 07:49 PM
Mike, you are a little flattering. They sound like babies crying for hope formula, but they deleted that message. I am a little disappointed because I use to these people a lot.
Posted by: Mai | February 22, 2009 at 07:47 AM