It’s been in the news every day since Obama’s election, but has not been covered by the main stream media. As of Today, the Dow has dropped 2,400 points since Obama was elected. That’s one third of the total 7,500 points since the stock market peaked during Bush’s term. The Dow has dropped nearly 600 points (25% of the total 2,400 drop) since the day the stimulus was signed. So what is causing the stock market to drop? After all, if the stimulus, omnibus, budget, and other government programs proposed by Obama were sound financial and economic theory, then the stock market should gain ground after at least some of Obama’s announcements.
No, instead the stock market drops.
February 26th was almost a hallmark day for the Obama team. Stocks opened bullish with news that the new administration would inject another $250 Billion into the banks. Additionally, FED chairman Ben Bernanke promised that the administration would not look to nationalize banks. For the first time since taking office, the Dow was up 140 points and it seemed the market would reflect positive gains as a direct response to Obama’s policies and actions. Then Obama released his new budget, which promised to cut subsidies to private health care providers. Instantly, the stock market fell finally closing 88 points lower than the opening.
What does this mean? Well first of all, I had to rewrite this blog post. This post was originally going to commemorate Obama’s first victory with the stock market. More importantly, it shows that the investors in this country and the world do not have faith in our current President. You see the markets don’t reflect people’s feelings of the economy today, but their feelings of the future of the economy. They are betting against Obama. Please keep in mind that Obama needs to stimulate more than consumption if he wants to turn the economy around. More important than consumption, he needs to increase investment. We need to at least pause and take note of this. Who has more knowledge about finance and the economy? All the investors in the world or a lawyer turned politician for a few years before becoming President?
Below are several links about Obama’s stock market failures and almost success. In the meantime, I’m left to wonder when if at all Obama can bring confidence into the stock markets. Today the Dow fell another 119 points as the government became the largest stockholder in Citigroup. Bernanke, I thought we weren’t going to nationalize banks?