Many observers refer to the market as a forecasting mechanism. If so, today's 213 point rise could be a signal that investors anticipate an Obama win. I don't think today's reported 3.3% Gross Domestic Product (GDP) growth for the second quarter can explain the rise. Rather I think the market could be happy with the idea of taking a break from the failed tax cut and spend policies of the last eight years -- which have led to a record $490 billion federal deficit, a $9.8 trillion national debt, and the loss of $8 trillion in housing-related value.
Bloomberg News reports that GDP grew 3.3% thanks to a rise in exports to Europe -- still GDP growth was anticipated to hit 2.7% so today's figure -- which could be revised after the November election -- looked more favorable. Nevertheless, Bloomberg does not expect the so-called expansion to continue since the European economy is weakening and consumers burdened with falling home values -- the average home is down 16% -- and a tough job market -- will lead cut back their spending, which accounts for 70% of GDP growth. Bloomberg writes that "the number of Americans collecting unemployment benefits reached a five-year high last week."
Investors watching the Democratic National Convention this week are seeing that the prospect of ending the policies that have produced these economic results is at hand. Obama will cut middle class taxes to get this country moving again while investing in alternative energy so we can stop funding terrorism when we pay $3.70 cents to fill up our tanks. By ending the Iraq war, Obama will also help to reduce the budget deficits that have inflation roaring ahead at
14.4%.
Investors welcome the prospect of a healthier economy and see bargains in stocks. And there's nothing more American than that.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
Reader Comments (Page 1 of 1)
8-28-2008 @ 8:38PM
omics said...
YOU MUST BE AN EDUCATED IDIOT
the aol pole shows Mc Cain leading by 2 to 1 almost 3 to 1 over Obam. Obams socialistic policys scare the taxpayers the markedt is up because Obams is loosing and people are confident we will not have a new round of demo-socialistic giveaway programs as propoesd by Obams!!
how much more money can we give away for other peoples oil when we have our own here it is our oil money that is going to the mid east. China is drilling between the USA and Cuba if yo didnt know. so lets keep our oil money here at home like McCain wants.
8-28-2008 @ 8:50PM
Skris said...
Wait, Peter, you're joking right? right??? I really hope that you're just being facetious. Like Obama or not, you can't possibly believe that this is what moved the market today...
8-28-2008 @ 8:54PM
LimitedGovt said...
You are right on Omics! How absurd to think today's market increase is attributable to the potential of a hater of free markets being elected. If elected, Obama will spell doom to the economy.
8-28-2008 @ 8:57PM
f5alcon said...
yeah an obama presidency will tank the economy.
8-28-2008 @ 9:01PM
brian said...
Wow, this article is just slightly biased. I would guess that the BUSINESSMEN who stand to reap from low taxes and run the businesses whose shares are bought and sold on Wall Street will NOT want your little buddy Balack in the White House. Why not be a real "Journalist" and keep your shitty little assumptions to yourself. The rest of us would like honest news (tough to find on here) so we can make informed decisions. You should try it.
8-28-2008 @ 9:49PM
BoboTheClown said...
Ya, right! Increases in cap gain and dividend tax rates is going to help the stock market. Not! Get a clue and drop the Democratic dogma, Mr Cohan.
8-29-2008 @ 12:53AM
Mike Sanders said...
The AOL poll is quite weak, by professional standards... Anyone can storm the polls, erase their cookies and revote and who knows what else? Sorry, I've been with AOL for 11 years, but PLEASE don't believe in AOL polls, the tooth-fairy, or FREE GAS Cards!
8-29-2008 @ 1:27AM
richard said...
A liberal, teaching our kids management. look at Obama, an elitist liberal that plays on the idea that America's capitalist system is flawed, and that we need to redistribute wealth. Sounds like another in 1930's Germany.
8-29-2008 @ 2:21AM
tb said...
Yeah I plan on keeping my kids far away from Babson College because of disgusting excuses for professors like yourself. America is on to the liberal media who can't get enough of NObama and the Liberal academia who teach nothing more than propoganda. Shame on you, Mr. Cohan.
8-29-2008 @ 3:08AM
Sheldon L said...
Pete...
I think Obama has his good points but this is an unbelievable stretch of the imagination. As one who has not been a supporter of Bush policy, I would still say this post is truly partisan, to the point that you might examine your own objectivity.
8-29-2008 @ 8:04AM
Vinny said...
What makes Republicans think they are adept at defending this country? Surely not by their performance of their so called 'leaders' of the past 8 years. McBush (the clone) can only talk about his time in prison as a reason to elect him. He has 26 years of FAILURE in Washington to back up that claim. All Republicans represent is hatred, fear, and derision of anyone that challenges their profound weaknesses in governing ANYTHING. McBush would probably do OK with a mop and pail working in the lower reaches of the Whitehouse, probably in the toilet area because he's used to shoveling s*** and he's become good at it. Ambition doesn't mean readiness and McBush only has ambition with NOTHING to back it up. He's proven himself to be a Bush clone and the thought of that should make anyone recoil as if from a snake. Four more years....ENOUGH ALREADY.
8-29-2008 @ 8:23AM
Warren said...
It amazes me that people are happy and willing to sign up for 4 more years of what we've already suffered through 8 of.
I really don't have the words, people. Incredibly disappointing.
8-29-2008 @ 8:28AM
Mike Sanders said...
Face it, the "post-New World Order," has arrived! Goodbye, McCain.
8-29-2008 @ 8:31AM
Clay said...
Wow.......the old CHINA is drilling off the coast of Cuba story...that's the problem with "Ditto Heads". Once they hear a incorrect story once it never leaves their "Ditto Head". China IS NOT drilling off the coast of CUBA. Another scare tactic by the ROVIAN CREW!
8-29-2008 @ 8:43AM
Don said...
Mr. Sanders: Are you saying that Democrats would not take advantage of the polls weakness by erasing the cookies? If so, please tell me where I can get my free gas card.
8-29-2008 @ 12:42PM
omabalive said...
WORLD ORDER HAS COME TO ME AS OMABA WHOM IM BLACK AND WHITE BLEND INTO 24K GOLD PRESIDENT OF AMERICA.
I DO LOOK LIKE GOLD MAN.
AMERICA WILL STRIKE GOLD RUSH TIMES WITH ME DURING MY PRESIDENCY AHEAD ON BOTH TERMS.
I WILL PUNISH SAUDIA ARABIA N, FOR THEM TO PAY FOR NEW WORLD TRADE CENTERS, WHOM 16 SAUDIS HIJACKERS AFFLIATE W/ 9/11..
INSTEAD THROWING OUR AMERICAN HARD EARNED MONEY TO IRAQ,
BY BUSH ORDER. ITS RETARDED!
WAY TO GO MYSELF AND NEW WORLD TRADE CENTER SOON!
KING FAHD KNEW IT, BUSHES AND CHENEY KNEW IT, JUST ALL RATED SHOW AS MOVIE. ORCHESTRATED FOR EXTRA OIL MOVEMENT INSTEAD SITTING DUCKS. THEY GOT OIL AND DIRTY MONEY SINCE DAY ONE WITH 9/11.
ILL CONSIDER IRAQ AS 51ST STATE TO RECOVER OUR MONEY! EH..
VOTE FOR ME AS OMABALIVE. THANKS