Stock values bounced back quite a bit today, in part signaling hope that Congress will still pass some type of rescue package. But I think the bounce signals more: Wall Street is betting that Obama will be President, and the financial sector is expressing pleasure at that.
Today's positive bounce in stock prices was welcome--although the market almost certainly will continue to be turbulent. Bounces often come after a fall, to correct the panic of the previous day. But what made today's bounce so positive? It's hard to believe that the bounce rests entirely on faith in Congress adopting a bailout. Over the last week, Congress has shown its unpredictability in this area.
What else has happened in the last 24 hours? I think Wall Street has decided that Obama will win this election--and investors see that as good news. The performances of McCain and Palin during the last week have been atrocious, capped by McCain's failure to deliver Republican votes on the bailout yesterday. Polls have moved strongly in Obama's direction; based on those numbers, new states are moving daily into his column. So I think Wall Street has increasing confidence that Obama will be President.
Even better, it seems Wall Street likes that prospect. I think that Obama's demeanor during the last two weeks--like his demeanor throughout the campaign--impressed Wall Street. He showed thoughtfulness and an ability to listen to experts. He spoke calmly and worked to reassure voters, while also identifying problems that had to be fixed. Wall Street likes calm leaders who project gravity and build confidence. Financial markets don't do well with impulsive, rash leaders. McCain's zig-zag express will be bad for Wall Street, both in substance and tone--and I think the financial sector sees that clearly now.
I like the poll numbers for Obama, but I like these Wall Street figures even better. These guys vote with their dollars!
I don't think, by the way, that the crisis is over or that stocks will continue moving up. On the contrary, I think the market is in deep trouble for quite a while. More declines seem likely. This diary is a political observation, not investment advice!
But I think today's rebound says something about Wall Street's reaction to Obama--and that's good news for all of us.