Awe- no more GW pouring money into worthless outdated weapon systems and fat contracts. PANIC! PANIC!

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Occ can help me out here, but I believe this is normal with a change in the Presidency. Under current conditions, the market has an expectancy with the current Administration's policies. I believe there's always a little bit of a temporary panic mode when a new President wins the election, because the market has not adjusted to his new policies (simply because they do not know those new policies yet).

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curious, i've always heard the other way around... from what i've seen and observed, the economy and the stock market seems to be in better shape when a democrat is in office... as a matter of fact, it is often known that the stock market prefers a republican is nothing more than a farce, especially if you look back on during the reagan and bush sr years...

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last time i checked bloomberg, the dollar was declining because Kerry was ahead in a some exit polls.

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I think that's what happened with the Bush/Cheney ticket back in 2000.. in fact, because of that, we entered a recession!! How good of a theory is that!!

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quote:

Originally posted by MisterOpus1 Occ can help me out here, but I believe this is normal with a change in the Presidency. Under current conditions, the market has an expectancy with the current Administration's policies. I believe there's always a little bit of a temporary panic mode when a new President wins the election, because the market has not adjusted to his new policies (simply because they do not know those new policies yet).

I would hardly place much value in the belief that the stock market would tank with the election of Kerry. There are probably a number of factors at work that investors had been gambling on in the instance of a Bush win. For example, as the reuters article pointed out, many investors probably locked in earnings on defense contractors and pharmaceutical companies. Now that Kerry might win, they’re naturally going to start selling. Similarly, investors have been gambling with oil believing that a Bush reelection would lead to higher oil prices. Surprise surprise, now that Kerry might win, oil has dropped dramatically and is now below $50 …

http://www.reuters.com/newsArticle....42§ion=news

Furthermore, now that Kerry might win, the dollar has been rising in value:

http://www.reuters.com/newsArticle....74§ion=news

And the price of gold is falling:

http://www.reuters.com/newsArticle....37§ion=news

Essentially the dow is down because a close election leads to uncertainty in what investors look upon as arbitrage opportunities. As a result, a general sell off in any speculation occurs. That’s what is likely happening. But hey, if you think that wall street looks poorly upon a democrat in office than think again:

quote:

Surprise: Dems are better for rallies Despite 'market friendly' Republican policies, stocks rise more and volatility dips under Democrats. January 22, 2004: 2:11 PM EST By Alexandra Twin, CNN/Money Staff Writer NEW YORK (CNN/Money) - Plenty of Wall Streeters are Republicans. The party's policies are seen as better for big business and therefore better for the stock market. "Democrats are seen as being pro-regulatory, and more willing to enact laws against Wall Street and laws against CEOs," said Don Luskin, chief investment officer at Trend Macrolytics. But here's Wall Street's strange little irony -- studies show the stock market performs better and tends to be less volatile when Democrats are in power. This discrepancy was explored recently in a study by two finance professors at the University of California at Los Angeles, Pedro Santa-Clara and Rossen Valkanov. According to their paper, entitled, "The Presidential Puzzle: Political Cycles and the Stock Market" and published in the October issue of the Journal of Finance, stock market returns are on average about 5 percent higher when the White House is run by a Democrat than during Republican rule. Looking at the 72-year period between 1927 and 1999, the study shows that a broad stock index, similar to the S&P 500, returned approximately 11 percent more a year on average under a Democratic president versus safer, three-month Treasurys. By comparison, the index only returned 2 percent more a year versus the T-bills when Republicans were in office. The study also looked at how the index responded under both Democrats and Republicans, using two portfolios tracked by the Center for Research in Security Prices, a research outfit affiliated with the University of Chicago's business school. The "value-weighted portfolio" ranks all the stocks in the index according to their total market value, whereas in the "equal-weighted portfolio" the stocks are all ranked the same. On average, value-weighted portfolios returned 9 percent more under Democrats than Republicans during the 72 year period, while equal-weighted portfolios returned 16 percent more under Democrats. "I think plenty on Wall Street would be pretty shocked to hear that," said Barry Ritholtz, a market analyst at Maxim Group. The study examined a variety of reasons that might have caused this discrepancy. One particularly interesting finding was that markets seemed to show more surprise in reaction to economic or stock-related decisions made by Democratic administrations. "It thus seems that the difference in realized returns can be attributed to the market being systematically positively surprised by Democratic policies," the professors wrote. According to their study, the difference in stock returns becomes gradually obvious through the course of a presidency, rather than in the period immediately surrounding an election. Volatility down under Dems, too Critics say that if the Democrats should win the presidential election in November, the almost year-old stock rally could be in trouble, largely because many of the Democratic candidates have vowed to scale back some or all of the $1.3 trillion in tax cuts that President Bush enacted in 2003. In addition, critics fear that a Democratic administration would make markets more volatile. This is because of extensive research showing that gross domestic product growth is slower during Republican presidential mandates and that higher interest rates are more common during Democratic mandates. However, volatility is actually lower during Democratic presidencies, according to both the UCLA study and another recent study by two political science professors -- David Leblang of the University of Colorado and Bumba Mukherjee of Florida State University. The study -- which tracks stock market returns since the first day the Dow Jones industrial average was calculated in 1896 through the fall of 2001 -- shows that market volatility decreases during Democratic administrations. The paper argues that the expectation that inflation rates will rise under left-wing presidential administrations does indeed have an impact on trading, as older studies have suggested, but in a different way than those studies proposed. "Our model predicts that rational expectations for higher interest rates under left-wing administrations decreases demand for stocks among traders," the professors write. "This decrease in demand leads to a decline in stock price volatility not only during the incumbency of left-wing governments, but also when traders expect the left-wing party to win elections." Alternately, the statistics also show that expectations of lower inflation under right wing administrations make the market more volatile. This is because traders increase their inflow of capital and investment into the stock market when they believe the interest-rate environment is more friendly for stocks. More money at work translates into more volatility in the markets. The study showed this trend was consistent regardless of whether a right wing administration was in office or whether traders merely expected the Republican party to win the presidential election.

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I'd say, Occ is right on several counts. Some more fodder... While it is true that a Kerry presidency would not be favorable to pharmaceutical stocks because he is viewed as more likely to go for massive drug reimportation legislation, which would crimp profit margins like a vise, therefore causing a selloff in that sector. Same as his other examples. However, I would say that it is true that the rumors of a Kerry election spooked the markets today. One must also remember that Bush is viewed as much more pro-business than Kerry. Kerry wants to reinstate the double-taxation of dividends among other things. It's natural for the stock markets to fear him more than they fear Bush. But back to today and some of Occriders other examples.

The oil markets have been selling off for the past week while the general market(I use the S&P 500 for an example) has been rallying sharply. Witness below.

OSX (Oil Services Index) over the last 5 days.



Now note this longer term chart for the S&P, and the last week or so circled at the right side of the chart:



Additionally, the price of gold may be falling for other reasons as well, namely technical resistance. Specifically, gold hits heavy resistance around the $430/oz. level, so some natural selling here is somewhat expected, regardless of externalities.



Lastly, I'd show you a picture of what the stock market did specifically today. Remember that at around 2PM or so, the Drudge Report and other news sources discussed here , earlier today, at which point the markets clearly leaned towards a Kerry victory, and thus the market selloff. Look at the timing, it's uncanny! That's some Efficient Market Theory for ya.





Also, back to the pharmaceutical comments earlier--here's the Amex pharmaceutical index for the day. Again, great timing.




So there you have it.

Last edited by Shakka on Nov-03-2004 at 00:24

Nice work Shakka .

I see you have a bloomberg terminal too

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Oil markets are due for a major correction.

Highly leveraged postions have bubbled this market. The air is slowly letting out. Major players are taking profits and exiting.

Fundementals do not support these artifical prices.


Expect oil prices to drop to $40.00 by the end of the year.''


Keep an eye on Gold and Natural Gas as well.

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I thought the markets dropping were normal for changes in presidency, and also if an election is uncertain?

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quote:

Originally posted by Dave Piazza Nice work Shakka . I see you have a bloomberg terminal too

Indeed, and I forgot to throw in the dollar.



The markets tend to shoot first and ask questions later. Today they didn't take too kindly to a Kerry victory. In any event, there's a good chance they'll have a relief rally when the election is final, regardless of the winnder.