Watch The Market Tank If Obama's Elected...

http://www.startribune.com/business/33720984.html?elr=KArks:DCiU1OiP:DiiUiacyKUnciaec8O7EyU

Wall Street expected to recover from plunge in 2009 no matter who's elected president
By MADLEN READ , Associated Press

Last update: November 2, 2008 - 4:06 PM

NEW YORK - Wall Street prefers Republicans, McCain supporters argue. But stocks have done better under Democratic presidents, Obama supporters fire back.

When it comes to the stock market — especially this turbulent market — does it really matter who is elected president?

Yes and no. Politicians do influence the economy — and they'll play a big role in how the country emerges from this current crisis. But analysts say neither presidential candidate can be a cure for what's ailing Wall Street.

"The economy is a big, big machine, and the president is one government bureaucrat," said Ron Florance, Wells Fargo Private Bank Director of Asset Allocation.

Moreover, most analysts believe the battered stock market has nowhere to go but up next year, no matter who ends up in the White House — and history will probably give the victor credit even if he actually had little to do with the rally.

"The timing couldn't be better," Florance said.

Still, the stock market is just one part of the economy, and under either Barack Obama or John McCain, the United States needs to recover from a downturn whose severity has not yet been determined. And either candidate will face a budget deficit of around $500 billion when he's sworn into office — a shortfall expected to climb to $1 trillion next year.

Because of the deficit, the financial climate might end up affecting the new president's policies more than his policies will affect the financial climate.

"This whole financial crisis will largely serve as an agenda buster for at least the first year," said John Lynch, chief market analyst at Evergreen Investments.

That's not to say, of course, there aren't differences in the impact McCain or Obama would have on U.S. businesses, and in turn, their stocks. Robert Froehlich, an investment strategist at Deutsche Bank, said it's likely that under Obama, the alternative energy sector would do well, and possibly the paper and steel industries if he enforces trade treaties. And under McCain, Froehlich said, it's likely that big energy companies would do better because he does not support a windfall profits tax, and that financial companies could benefit because of his stance on dividend taxes, long-term capital gains taxes, and estate taxes.

"Don't expect the next president to say, 'I'm strapped with this economic crisis, I'm going to throw all my plans away,'" Froehlich said.

There are historical trends one can draw between presidents and how the stock market performs. The question is how seriously to take them.

The Dow Jones industrial average and the broader Standard & Poor's 500 index have posted larger returns during the terms of Democratic presidents. But this statistic doesn't prove that Democratic policies boost the stock market — the major indexes have also done better under a Republican Congress than a Democratic Congress.

Another pattern to take note of is the stock market's apparent four-year cycle, described by market historian Yale Hirsch in his Presidential Election Cycle Theory. The theory says the stock market does well in a presidential election year, badly in the year after the election and then improves until the next presidential election. This pattern has held up for most of the century, although it's being tested by the two terms of President George W. Bush.

However, the monetary policy of the Federal Reserve, rather than the influence of the president, can explain this pattern better, according to a 2007 study by CFA Institute Education managing director Robert Johnson, University of Wisconsin professor Scott Beyer and Northern Illinois University professor Gerald Jensen. Their study found that the Fed has tended to lower interest rates during the latter half of presidential terms — and lower interest rates encourage borrowing and spending.

At the end of the day, using the returns under previous presidents to predict the market's performance under another president gets to be like reading tea leaves. You'd probably do just as well basing your investments on next year's Super Bowl — Wall Street's infamous "Super Bowl Indicator" postulates that a victory by a team that was part of the original National Football League, before it merged with the American Football League in 1970, will result in better gains for the stock market. It's actually been right most of the time.

The lesson, of course, isn't to base investment choices on a football game. (Anyone who rushed to buy stocks after the New York Giants' win in 2008 probably got pretty burned). Rather, the point is that correlation isn't the same as causation.

And investors shouldn't get too caught up in the market's short-term reaction after the election results. The Dow surged, for example, after President Hoover was elected in 1928 — and the next year the it crashed, ushering in the Great Depression.

saveuplife wrote:

Is there anyone here who'd be willing to bet on this?

define "tank"

saveuplife wrote:

Will be atleast 3% lower by week's end or, perhaps, even the following day.

3% of 9300 is 280 points ... that is HARDLY a "tank" ... I thought you were going to say it would drop below 8,000.

the dow has swung that many points SEVERAL times in the past month based on news ...

there are SO many other factors that could go into a swing like that ... so many announced indicators like jobs or housing numbers, interst rate adjustments or global facotrs ...

while prior to September, that may have been a "tank", with the high volatility right now, that's almost seen a noise in a short term market.

saveuplife wrote:

Rephrase...

the white flag of surrender is waving high and your 401K has taken a shit and, now that Obama's elected, will die. Go Lawyers!

Someone's been listening to Sean Hannity a little too much

saveuplife wrote:

I'm talking about the one that is sitting at roughly 9350 right now and will be much much lower over the course of the next few days.... if Obama wins, which will most likely happen. Watch.

Oh, I see...

The Market I watch has been volatile in recent weeks...you know, big swings up and down...

I have to say, you're taking quite a risk in saying the Market will continue to decline in this current economic environment...

I suppose the continue fallout from the burst housing bubble will not have anything to do with the Market...

saveuplife wrote:

It has been volatile. That's true. Volatilitiy means UPS and DOWNS. Like I said, The market will go down post-election.

That said, it's been on the upswing recently, since hitting a bottom on Oct 27.... up well over 1,000 since then. So, it hasn't been "continuing a decline" at all.

well, you're not alone in you gloomy forecast...it's odd that Obama is not mentioned....

http://biz.yahoo.com/cnnm/081103/110308_nabe_survey.html

Economists predict recession to last through 2009

Economists predict recession to last through 2009
Monday November 3, 3:52 am ET
By David Goldman, CNNMoney.com staff writer

A survey of top economists released Monday shows that the vast majority of them believe the economy has fallen into a recession that will continue throughout all of 2009.

According to the National Association of Business Economists, 90% of the 102 members responding were more pessimistic about the economy than they had been in July.

The economists indicated that a recession is likely to continue at least through the end of next year, with 79% saying the economy will grow less than 1% and 38% saying the economy will shrink next year.

"There has been a sharp decline in current and near-term expectations among economists," said Ken Simonson, a member of the NABE committee that conducted the survey. "This represents a big turnabout in attitude about the economy."

With the economy mired in a prolonged credit crisis, the Federal Reserve has slashed interest rates several times, most recently cutting them by a half-percentage point, to 1%, on October 29.

But just 36% of respondents said the rate cuts and other initiatives by the Fed to unfreeze the credit markets were having a positive impact and 58% said the programs were having little impact. The survey was completed on Oct. 23, before the Fed's last rate cut.

"Economists have a very pessimistic view of the Fed's programs," said Simonson. "The inability to get funding has lowered their near-term expectations for the economy."

Low consumer sentiment and poor economic conditions have sharply reduced demand for goods and services. According to the survey, 35% reported falling demand while just 30% said demand was rising. It was the first time since 2001 in which more respondents reported declining demand than rising demand.

By way of comparison, 44% of respondents reported rising demand in July and only 19% reported falling demand. The NABE said every time since 1982 when economists reported more declines than increases in demand, the economy has later proven to be in a recession.

As demand slumped, respondents said their firms' profit margins sagged as well. Just 15% of economists surveyed said their companies' profit margins were rising, compared to 44% who said margins were falling.

Continued job cuts are also likely, as 23% of respondents said their firms or industries were cutting jobs, compared to 16% who reported that they were hiring.

"Over the next six months, far more firms expect to cut back on employment, which will likely make the recession deeper," Simonson said.

saveuplife wrote:

Ha haa.

You just aren't listening. I'm talking about this week, man.... and markets... a high frequency indicator.

I don't think it would be breaking news to know the economy is going to struggle over the next few months.

so, you're predecting markets will go down....just this week...

wow, you've got a big pair of balls to call that one...

especially since ford recorded a 30% drop in sales, Manufacturing sector contracts to 26-year low as new orders and production slow, and Circuit City is closing 155 stores...

you've got your finger on the pulse of the market...

saveuplife wrote:

hhaa haa.

investors=greedy.... should've been an Obama slogan.

let me be more specific, it's not the 37% of Americans that have some sort of investment in wall street, it's those at the top making unethical decisions. Ones that if the common man made would land them in jail. providing insurance, but changing the name so it's not regulated, and not having the capital to meet that obligation is unethical, and the biggest reason the market crashed. mortgage brokers and banks could have recovered from 4% of mortagages defaulting.