What is it that the market is pricing in?
While partisans try to blame the crash on one or the other candidates, here’s something I have yet to hear any of the TV pundits discuss: Blaming it on the presidency of George W. Bush.
Let’s have a look at how various markets have priced in his 8 years in the White House, and what it might to markets going forward.
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Currency Markets are the world’s vote on US monetary policies
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S&P500 2001-08, weekly
Equities: Which Sell off do you hold the occupant of the White House Responsible for: The One that began prior to his arrival, or the one that began prior to his departure?
Chart courtesy of Fusion IQ, Bloomberg
I do not believe that the 2000-03 crash was a result the markets pricing in a Bush Presidency. However, one could certainly make the case that the past few years market action has been the result of his fiscal, tax, and spending policies.
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Oil Prices Respond to Energy and Military Policies
Two oil men in the White House, two wars, no conservation efforts, and no attempts to develop alternatives to Crude Oil:
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Gold, 2001-08 weekly
The Gold market is a store of value in uncertain times — what is it saying about the Bush policies?
Chart courtesy of Fusion IQ, Bloomberg
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Bonds: 10 Year Treasury, 1980-2008
Chart courtesy of Fusion IQ, Bloomberg
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Longstanding downward trend in rates was in effect since the Volcker Fed broke inflation in 1980 — recent Presidents (W, Clinton, Reagan) have all benefited from this trend
What are the markets really pricing in ? Might it be the W. presidency?
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Previously:
Pricing in a Bush Presidency (July 08, 2008)
http://www.ritholtz.com/blog/2008/07/pricing-in-a-bush-presidency/
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