During many administrations regardless of political party, the markets
either rallied higher or sold off when someone important from the
executive branch speaks. Since President Obama’s inauguration he has
normally appeared on the television at least once a day, often two or
three times during trading hours from 9:30 am – 4:00 pm EST. Since
March 2009 the market has rallied higher nearly every time the
President has spoken. Recently since January 2010 a change in this
phenomenon has occurred and the market seems to sell off when he
speaks. If you want to see evidence of this just look at an intra day
chart of the SPDR Trust (NYSE:SPY) today at 10:20 am EST this morning.
The S&P 500 sold off during his speech and rebounded around 20
minutes later. Could this spell bigger problems ahead for the markets
and for the administration?
Prior to the current administration President Bush received a cheerful
market reception when he spoke during market hours throughout his first
term. Then once his approval rating declined during his second term the
market seemed to decline every time he spoke during market hours.
Ironically, the market seemed to always sell off when his second
Treasury Secretary former Goldman Sachs (NYSE:GS) CEO Hank Paulson
spoke during market hours. The current Treasury Secretary and former
New York Federal Reserve Bank President Tim Geithner seems to receive a
mixed reception from the markets when he speaks during market hours.
It is interesting to note that when President Bush’s approval rating
declined so did the stock market. As we all know this decline that was
experienced in 2008 was the worst since the 1930’s ‘Great Depression.’
Currently President Obama’s approval rating seems to be declining at a
rapid rate. Remember the old market adage, “As a president approval
rating goes, so goes the market”. If one looks at the markets under
president Jimmy Carter it is evident how this old statement seems to
hold a lot of water.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com