We have repeatedly noted in the past how even though many consider him to be a tough critic of Wall Street, President Obama has presided over one of the strongest stock market rallies in history. In fact, the only other President who saw better returns in his first two years in office was FDR. In spite of the strong stock market returns, President Obama has received little credit.
Back in June we noted that even though he has one of the lowest approval ratings (going back to 1953 when data is available) at this point in his Presidency, no US President has seen better stock market returns at this point in his Presidency. The news got even worse for President Obama this afternoon when the daily Presidential Approval Index from Rasmussen came in at a level of -21, which is within three points of the lowest reading of his Presidency (9/9/10), and a drop of 10 points since Memorial Day.
In the chart below we have compared the performance of the S&P 500 since the start of Obama's Presidency to the Rasmussen Presidential Approval Index (5-day average). As shown, Obama's pain has been the stock market's gain. In fact, the correlation coefficient between the two time series has been -0.76, which indicates a very strong inverse correlation.
In the ongoing discussion over the debt ceiling debate, there has been a near consensus opinion that a default will be averted because failure to reach an agreement would have a 'disastrous' impact on financial markets. With Obama looking at approval ratings near the lowest of his Presidency even as the stock market is near its highest levels of his Presidency, he may be thinking that a stock market decline may not be such a bad thing.
Really silly article. A correlation between the stock market and the president's popularity does not prove, or in my opinion, even suggest, a causation.
Stocks have gradually increased from their lows...as they were bound too, and Obama has gradually lost popularity....there is no reason to believe one CAUSES the other...
Thanks Brian,
Some of this article borders on like the old adage "hemlines" correlation argument.
I agree with you that there is no reason to believe that one CAUSES the other (directly!), however, one could argue that Obama's popularity has declined as he has been supportive of (necessary) measures (QE) that have benefited the Too Big To Fail banking system and Wall Street, at the (enormous) expense to generations of taxpayers, and goes to the heart of the debt ceiling debate..
If anything, its QE that has benefited markets, Wall Street, and private sector banking interests, with a liquidity storm, AND made the White House unpopular for being supportive of it concurrently.
Great to hear from you.
Pierre Daillie, AdvisorAnalyst.com