Obama Wins, Markets Tumble

[Epee_Pox]

Is there causation here? For the record, I don't think so.

I say the markets had already factored in an Obama win, as his polling numbers were consistently strong leading up to the election. But others whose perspectives I respect think Obama's going to be bad for business and employment, and that the markets waited till he sealed the deal to really react.

So what do you all think?

[erooMynohtnA]

I don't think the markets can be anthropomorphized in such a fashion.

[samster]

Well, some say it's just refocus back to the economic issues now that the election distraction has passed.

Deep paradox: short term economic growth requires continued individual spending, but long term economic health requires individual savings, which is a short term detriment since inventories pile up, cashflow slows and businesses fold. This is obviously more problematic because credit is tight.

Investors (mostly institutional) know this and are worried because doing the right thing across the overall economy will hurt like hell.

Press says "markets think this and markets think that", which is a little naive. Basically, you have a lot of people out there still sitting on big stock positions and all are trying to unwind them to preserve cash (and sometimes to raise cash by liquidating current assets.) So every time there's a run up (panic buying to not miss out on the "recovery") someone out there has a limit sell order to cash in on the run up, thereby dumping excess supply of stock back out on the floor and killing the price again. When this happens across a broader spectrum of industry sectors, the dow/nasdaq/s&p show the effect via an overall drop in index.

So basically, it's people trying to save/make a buck pretty much all at once.

Is it Obama? Maybe to some extent. But mostly it's just people trying to let the air out of their ballooned portfolios. IMO, anyway.

-Sam

[samster]

Boy. I just re-read my post and is it ever convoluted.

Simply put, "great minds think alike" which basically negates the "greatness" of whatever that shared thought might have been.

Yeah. That's it.

[stillchris]

I always find it interesting that people find some kind of logic and reason behind the movements of the stock market. I find it more like the tote board at a racetrack that keeps track of what people think, but has only a second hand basis in reality.

I know some people say that while individual stock movement may not be logical, the market as a whole is. I wouldn't say this, but some may.

While not an expert I did stay at a Holiday Inn Express once.

[MyrddinsPrecint]

I initially actually saw reports that markets went up, including this one...

http://news.bbc.co.uk/2/hi/business/7710106.stm

[noodle]

Is there causation here? For the record, I don't think so.

I say the markets had already factored in an Obama win, as his polling numbers were consistently strong leading up to the election. But others whose perspectives I respect think Obama's going to be bad for business and employment, and that the markets waited till he sealed the deal to really react.

So what do you all think?

the markets went up 5-6% after election day. the day *after* the day after election day, the economy struck back and went back into its normal pattern.

[stillchris]

...clip...the economy struck back and went back into its normal pattern.

And that would be??

[Nolano]

Failing horribly. I'm gonna bet that in the last year the markets have been tumbling more often than not, sooo....;.

[samster]

I can no longer tell if, A) things aren't as bad as they seem, or B) things are worse than they look. Journalists only add to the confusion by focusing their (short) attention (spans) on narrow issues.

However it looks, it doens't feel good. But the overall numbers aren't as catastrophic as they are made out to be.

[noodle]

And that would be??

foreign markets tumbled, some bad earnings reports came out, and the hint of the bad job outlook turned our market down. its coming back up again today.

[Beeblebrox]

I initially actually saw reports that markets went up, including this one...

http://news.bbc.co.uk/2/hi/business/7710106.stm

That's not the US market. Of course the market going down 10% in the US had nothing to do with Obama winning, that would be something negative! It must have been something Bush did. After all, Obama has only brought peace on earth and goodwill to all mankind. I just don't understand how the mindless followers of Obama refuse to accept that anything negative could be associated with their messiah. Anything negative in the world is always the fault of the conservatives, anything positive is always the result of the liberals. I don't mind a difference of opinion, but for Obama's sake, grow a brain.

Of course the US market went down when Obama won on the expectations of tax increases on businesses. It went up just before the election because we were speculating that McCain might actually have a chance. Asian markets increased after the election because higher taxes in the US will drive more production to asia. But why do you even care, Obama won the election and over the long term it won't matter anyway, US companies will ship production to other countries and continue to make profits for the filthy rich.

[Shi no Tenshi]

Asian markets increased after the election because higher taxes in the US will drive more production to asia. But why do you even care, Obama won the election and over the long term it won't matter anyway, US companies will ship production to other countries and continue to make profits for the filthy rich.

On the 5th-6th, some of the Asian markets at least went down. 2nd, do you actually think jobs wouldn't go overseas with less taxes? I mean, they've been going overseas for years, and they have had the loopholes. What makes you think it would be different now? I'm honestly curious.

[lindajdunn]

sarcasm alert

I'm certain it had nothing to do with the new reports released on rising unemployment. GM's report that they were almost at the level of bankruptcy was also immaterial.

Jobs will continue going overseas as long as it's economically beneficial to companies to ship jobs overseas.

[Beeblebrox]

Companies have been moving out of the country due to the high cost of being in the US ... one of the highest tax rates in the world plus the high labor and environmental cost. If we were to adopt a tax plan like the one proposed by Mike Huckabee, the US would be the best location for businesses.

[the ancient one]

Companies have been moving out of the country due to the high cost of being in the US ... one of the highest tax rates in the world plus the high labor and environmental cost. If we were to adopt a tax plan like the one proposed by Mike Huckabee, the US would be the best location for businesses.

Here are some interesting facts:

http://en.wikipedia.org/wiki/Tax_rates_around_the_world

It looks bad for the US, but if you look at tax revenue as a percent of GDP it looks really different:

http://en.wikipedia.org/wiki/List_of...centage_of_GDP

Suddenly we drop to 36 on the list. Do we have loopholes or what?

Payroll is what drives manufacturing overseas. You can get graduate engineers in China for less than $500 US/month.

In Europe lots of work is moving off to places like Romania:

http://www.databasece.com/en/average-gross-earnings-usd

You might cut taxes in the US but I don't think that you can cut wages enough to make the US competitive for certain kinds of industry.

[Hauptman]

Here are some interesting facts:

http://en.wikipedia.org/wiki/Tax_rates_around_the_world

It looks bad for the US, but if you look at tax revenue as a percent of GDP it looks really different:

http://en.wikipedia.org/wiki/List_of...centage_of_GDP

Suddenly we drop to 36 on the list. Do we have loopholes or what?

Payroll is what drives manufacturing overseas. You can get graduate engineers in China for less than $500 US/month.

In Europe lots of work is moving off to places like Romania:

http://www.databasece.com/en/average-gross-earnings-usd

You might cut taxes in the US but the but I don't think that you can cut wages enough to make the US competitive for certain kinds of industry.

I agree. Business moves to countries with low payroll costs until the standard of living rises there and the business moves on.

Japan undercut us in the 1970s and 80s, Korea undercut them in the 90s, now China is undercutting everyone, but the wages there are already on the rise too, so that huge advantage will fade as well.

[piste off]

On the 5th-6th, some of the Asian markets at least went down. 2nd, do you actually think jobs wouldn't go overseas with less taxes? I mean, they've been going overseas for years, and they have had the loopholes. What makes you think it would be different now? I'm honestly curious.

Jobs have continually gone overseas during my lifetime (from the 60s), due to simple economics (e.g. manufacturing, textiles). What is important for developed countries like the US is to replace them with higher-end ones (e.g. tech, pharma, biotech).

We successfully did this during the 80s (e.g. the first tech boom, fueled by things like the PC) and the 90s (eg. the second tech boom, created by the internet).

The tax implication is a very big deal, since it helps propel these initiatives. I had designs to start my own company, which is in a space increasingly seeing competition from India outsourcing, but did not have sufficient capital after Uncle Sam took out his massive chunk on a prior equity deal that I was involved in.

Subsequently, I was offered funding for a start-up from two very large companies - but given the tax consequence it simply was not worth it. At some point you have to cry "Uncle" and decide to live and give up on the dream.

So jobs will still go overseas, but not lowering taxes on the entrepreneurial class will have a negative effect on progress.

R-

[erooMynohtnA]

It went up just before the election because we were speculating that McCain might actually have a chance.

I think you were close to making some good points until you said this. Anyone stupid enough to think McCain had a chance would probably have trouble affording a meal at Burger King, let alone having even a tiny market influence.

[MyrddinsPrecint]

That's not the US market. Of course the market going down 10% in the US had nothing to do with Obama winning, that would be something negative!

Hoooo Boy.

Look at the title of the thread: "Markets". Plural. It was what I found in my history list initially. There were other articles I read about markets going up.

My only point was that it isn't terribly simple. Markets went up and then they went down-- and will go up and down for a while. There's so much economic news going on about now-- companies are releasing data, elections, unemployment on the rise..... To think that it's just because of Obama, or just because of any one thing is silly.