Here’s a head-scratcher: The market is in a solid uptrend, and economic indicators are clearly turning, but Obama’s poll ratings keep going down. The chart from Rasmussen makes it pretty clear. Why isn’t Obama building up political capital at all?
According to research from the folks at Ned Davis dating all the way back to 1959, stocks do better when the public thinks the man in the White House is doing worse.
In fact, in weeks when the presidential approval rating sagged below 50 per cent, stocks rose at an annual rate of 9 per cent — versus only 2 ½ per cent when the president in office sported a wildly popular 65 per cent approval rating in the polls.
Americans witnessed this phenomenon firsthand on Inauguration Day; despite the national excitement about an Obama presidency and an approval rating near 70 per cent, the Dow plunged 332 points.
The correlation is stark, and there may be two reasons behind the relationship. First of all, poll numbers are a lagging indicator of voter sentiment.
By the time a president starts to get blamed for a bad economy and high unemployment, the worst may be over, and the stock market begins to sense this.
Furthermore, falling approval ratings can hamstring an ambitious chief executive bent on expanding the role of government — a scenario that Wall Street often applauds and which appears to be happening right now.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.