The Market Is Saying…

I’m always wary of most interpretations of what “The market is saying.” I find that they provide greater insight as to the speaker’s politics than they do at determining what the market is “predicting.”

Here’s a quiz:

Have the stem cell stocks (STEM, GERN) been rallying because of a Kerry victory, or because of California’s $3 billion stem cell research bond issue?

How about the alternative energy stocks (BLDP, FCEL, APCC)?Have they been predicting an incumbent loss, or is this merely speculation?

What about oil itself — it plummeted from $55 to under $50 — was that because traders expect a President Kerry to tap the SPR — or was $55 a double top and an overextended commodity was due for pullback?

Similarly, is the recent rally due an endorsement for a particular candidate — or is it more positioning in favor of what’s looking like a clear-cut victory?

Additional Questions: Why are two sectors that benefit from a Bush win — one many analysts say might be the most directly affected by the election outcome — going in opposite directions? Big coal producers are all down early today, while big pharma are up.

A savvy political geek explained it thusly:

A “President Kerry” will likely be able to put together a clean energy/oil independence bill that both chambers of Congress will be afraid not to sign — tax credits for solar and alternative energy, clean coal, even nuclear power — along with CAFE standards being raised for cars, and the elimination of tax credits for Hummers and the like;

The Kerry health care proposal, however, is more likely to come out of Congress looking significantly different, especially the House version…

Pencils down. How did you score?

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  1. BOPnews commented on Nov 2

    The Market Is Saying . . .

    I’m always wary of most interpretations of what “The market is saying.” I find that they provide greater insight as to the speaker’s politics than they do at determining what the market is “predicting.” Here’s a quiz: Have the stem…

  2. spencer commented on Nov 3

    I suspect a lot of analysis that says a market development is because of the Presidential election confuses cayse and effect.

    Often the basic economic fundamentals are in place and the election does not really matter, but it is given credit.

    My micro economic model have had energy overwighted all year, but have cut my energy exposure over the last couple of months because of economic weakness, not because of the election. But you will no hear that line of thinking on CNBC.

    Much of the sectors that did well 4 years ago was because growth was out and value was in, not because of the election.

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