Subscribe: RSS Feed | Twitter | Facebook | Email
Home | Contact Us

Posts Tagged ‘why is the market doing better’

Obama’s Lessened Popularity Is Helping the Market

Posted by Larry Doyle on July 30th, 2009 5:12 PM |

What is driving the equity markets higher?

1. an end to the recession?
2. green shoots?
3. better than expected earnings?
4. excess liquidity?
5. all of the above?

How about President Obama’s decline in popularity? In a perverse way, is a lessened approval rating for President Obama, in fact, supporting our markets?

Has the decline been statistically significant? What has caused the decline? Given that we are living in the Sense on Cents designated Uncle Sam Economy, we would be foolhardy to neglect what political polls are saying.

Gallup reports, Obama Approval Slips Three Points in Past Week:

Amidst President Obama’s push in July to revamp the nation’s healthcare system, Gallup finds his average job approval rating registering 56% for the seven-day period ending Sunday, down from 59% the previous week. This three percentage point drop is the largest week-to-week decline seen in Obama’s job approval thus far in his presidency, and punctuates a gradual descent from his 66% rating in early May.

jm0nz_qiakyufax3_9towq

The current week is starting off no better for Obama than the previous one. His job approval score in Gallup Poll Daily tracking, conducted July 25-27, is 54%; this is his lowest individual reading to date. Thirty-seven percent of Americans currently disapprove of the job he is doing and 9% have no opinion. (more…)

Greater Fool Theory: STRONGLY RECOMMENDED READING

Posted by Larry Doyle on June 13th, 2009 8:14 AM |

Investing is often much more an art than a science. What moves markets both up and down often will defy any logical line of reasoning. That fact can and will frustrate many money managers.

While I traded on Wall Street, I was fortunate to experience many different types of markets and the driving forces behind them. Ultimately I learned that over the very long haul, fundamental analysis will carry the day. That said, for protracted periods the mere flow of funds and market psychology embedded in technical analysis can be powerful if not overwhelming.

I addressed this line of reasoning the other day in writing What’s Driving the Market. I find it particularly uncanny that the lead article in today’s Wall Street Journal, Stocks in the Black on Gusher of Cash, navigates this same line of reasoning.

I wholeheartedly agree with the analysis put forth by the WSJ. I want to juxtapose my writing with that of the WSJ to highlight a theory which readers will likely never see or hear from individuals involved in the financial industry. Coming from a family of lawyers, allow me to “make my case.”

In my piece on Thursday, I wrote:

From my perspective, the Fed and Treasury have created nothing short of a flood of liquidity throughout our financial system and economy. While the economic activity is anything but robust, this money is in the system. Banks are not aggressively looking to lend and will not cut interest rates or credit standards. The shadow banking system (securitization process) remains stagnant.

Thus, where does the money/liquidity go? Much like pools of water after a torrential rainstorm, the pools of liquidity in our system are looking to penetrate any available crack and crevice.

The WSJ writes this morning:

governments around the world are pumping money into the economy at a frenetic pace. Because businesses can’t put trillions of new dollars to work in such a short time, the money is finding its way into financial markets. Some investors have begun speaking of a “bailout bubble” being created in certain markets, and about a “melt-up” in demand fueled by the growing supply of money.

“All that money that was printed had to go somewhere,” says Joachim Fels, co-head of global economics at Morgan Stanley.

As anybody involved in finance can appreciate, “follow the money” holds not only for criminal investigations but also for investment purposes. Let’s continue “down the river.” (more…)






Recent Posts


ECONOMIC ALL-STARS


Archives