My Sunday Washington Post Business Section column is out. This morning, we look at the false claims of the pundits about what markets “say” about elections.
The print version had the short headline The markets don’t care how you vote;
The online version has the longer What do the markets have to do with the election? Not much.
Here’s an excerpt from the column:
“Most of the time when an incumbent is doing well in the polls, it is because the economy is doing well enough (or improving fast enough) that it is generating solid corporate earnings, strong hiring and positive consumer spending. That not only drives stocks and markets higher, but also makes voters feel economically secure. This works to the advantage of the sitting president. Note that the opposite is also true: Markets do not do poorly because the challenger is polling well; rather, the conditions that help a presidential challenger obtain victory — weak job availability, unhappiness with the economic conditions, desire for change — are negatives for earnings and the markets.
Don’t expect to hear this straightforward reasoning from the punditry. During the silly season, politicos and cranks push all manner of sophistry and ignorance onto an unsuspecting public. We’ve seen it in the editorial pages, from guests on my pal Larry Kudlow’s show, and all over the intertubes. Too many folks blame every twitch of the market as a reaction to the politician they like or dislike the most.
The shorter-term swings are especially nonsense.”>
I really like what the Post did in the dead tree version of the paper — the layout and art work is great:
click for ginormous version of print edition
What do the markets have to do with the election? Not much.
Washington Post, January 15 2012
Washington Post Sunday, January 15 2012 page G6 (PDF)