What’s driving the stock market higher? …. Here’s an analysis you won’t see on CNBC (continued)

A loyal reader replied to my original post “ You’re too focused on Obama’s disapproval ratings”, the market is reacting in a “normal” way to a Democratic president. He referenced a Forbes article by investment guru Ken Fisher.

The Obama Effect. Ken Fisher, 06.03.09
http://www.forbes.com/forbes/2009/0622/wall-street-stocks-obama-portfolio-strategy.html

“Wall Street marks down stocks before a Democrat takes office–before, in fact, he is even elected. After the inauguration there’s a good chance for a rebound.

With Democratic politicians the big fear is about how antibusiness and anticapitalist they will be.

Obama says lots of stupid, scary things. That fear hit markets early in the election cycle (and early after inauguration).

But once  in office the overwhelming motivation of a left-of-center President slowly morphs toward getting reelected.

Achieving that means pandering more to the independent voters and liberal Republicans, less to the Democratic power base.

Obama’s concern now is the recession and the job creators that can take us out of it. That means slowly backing off soak-the-rich, anticorporate talk over time.

The reverse happens with Republicans. They come in riding high expectations for pro-business, pro-growth policies–and inevitably disappoint investors as they drift away from their power base. Optimism fades, depressing stocks.”

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Ken’s Take: Rather than contradicting my original point (market buoyed as O’s disapproval increases), I think Fisher’s observation supports it. 

Though O is in battle mode now to push through Cap & Tax and nationalized healthcare, the market is assuming that the increasing opposition (as indicated in the disapproval numbers) will make him come to his senses and move to the middle, i.e. start to act more like a “normal” Democratic president. 

My prediction stands: if O fends off the opposition now, stays way left, and gets C&T and ObamaCare … the market will tank.  We’ll see.

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Thanks to Mike for the feedback.

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