The Plank

Will A Rebounding Dow Mean A Rebounding Mccain?

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One of the nice things about being a Democrat with a stock portfolio is
that your risks are fairly well hedged. If the market goes up, then you
make money, and if the market goes down, then you're more likely to see
a Democrat elected President.But seriously, folks.Does the stock market rally of the past two days benefit McCain? Maybe a little, but I doubt all that much. For one thing, As I said yesterday,
I'm not sure that Obama's bounce over the past couple of days has all
that much to do with the economy. I think it also has to do with the
electorate looking for an "excuse" to move past McCain's convention
bounce, and also has to do with the faltering perceptions of Sarah
Palin.Moreover,
equity prices are just one small component of the economic picture. So
too are relatively high unemployment, relatively high commodities
prices (particularly for food and fuel), declining home prices (which
won't be going back up any time soon), foreclosures, and difficulties
in borrowing (which has still yet to fully penetrate into the retail
sector). Investors who put money into the Dow a year or so ago have
still lost a lot of money. And I would guess that consumer confidence
is what economists would call "sticky upward" -- it tends to fall in
big chunks when it falls, but recovers more slowly. And all of this is
assuming, of course, that we are through the worst of the financial
crisis, which is very much not a foregone conclusion.Besides,
the collapse of Lehman Brothers and AIG was not so important unto
itself. These are Wall Street companies, not Main Street Companies, and
unless Americans hold their stock or have friends or family who work
for them, their troubles probably did not hit home. But they gave Obama
a reason, an excuse, to talk
about the economy, which given the sluggish performance of other
economic fundamentals, may have been all that he needed.

--Nate SilverĀ 

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