With yesterday’s declines, we now have an “official” Obama bear market, defined as a 20% decline. The S&P 500 index closed at 850 on the last trading day before Obama’s inauguration, and now it’s at 682. And it barely took six weeks.
Don’t let ANYONE tell you that this is Bush’s fault, or that Obama inherited the decline. The stock market by definition is a leading indicator. It predicts the future for corporate earnings, not the present or the past.
The stock market is saying that with Obama in office, the outlook for business is poor. And with his promises of higher taxes and more regulation, Obama is doing his very considerable best to reinforce the negative perception.
Next time you open your 401(k) or mutual fund statement, try not to flinch at the thought that a great big bear with Obama’s face is looking over your shoulder.