Conservatives can point to the stock rally as a leading indicator of investor confidence in the widely predicted rout of Democrats in November, and with it the likelihood that the Bush tax cuts for the rich will remain, new regulations will be thwarted and the (in truth, modest) moves to the center-left by President Obama are over.
Democrats and the smaller base of liberals might claim the stock market’s move is a consequence of Mr. Obama’s success in stabilizing the financial markets and reassuring big business. Maybe not the liberals. The president has hardly taken on the “economic royalists,” as FDR did.
Of course, nobody really knows what moves the market. And using a purely political lens is particularly blinding.
A few things are clear: Fears of a serious double-dip recession have faded. While the economy faces serious problems, it has at least stabilized. The sovereign debt crisis seems to be under control, at least. Among big companies that survived the Great Recession, many are stronger, with piles of cash and lower debt. Unemployment and housing troubles are now background noise for the trillions of dollars worldwide seeking higher returns.
The rally can’t last until more of the fundamentals of the U.S. economy improve, especially jobs and wages. So don’t expect stocks “to return to normal.” Any black swan could scatter the bulls to the tall grass.
Today’s Econ Haiku:
Oh, please dear Santa
A better season this year
Signed, the retail trade