In between the depressing bits of commentary on last night’s presidential debate (Obama didn’t invoke Romney’s “47 percent” gaffe because “it just didn’t come up,” the president’s performance was “Ambien-esque”), Dan Amira of New York Magazine points us to what the Wall Street Journal calls “the Romney Rally.” This type of mildly amusing, Beltway-centric explanation for the gyrations of the stock market is the epitome of the much-mocked tendency of politicians to imagine Washington, D.C., as the center of the universe.
With the Dow shooting up 0.6 percent today, some analysts have concluded that Mitt Romney’s debate win must have been the catalyst. “Seems like the marketplace believes Romney is better for stocks and the economy,” Andrew Brenner, the unbiased global head of international fixed income at National Alliance, told TheWall Street Journal. “No question this is a bump from last night’s debate.” Why did the Dow surge by a comparable 0.58 percent on Monday and 0.54 percent a week ago? Probably anticipation of Romney winning the debate, is our guess.
Yeah, there’s no question that investors and stockbrokers worldwide, having tuned in to the debacle in Denver, immediately broke out the Jagermeister and started downing gleeful, triumphant shots in anticipation of Thursday’s opening bell. Mitt Romney as president? Obviously a recipe for global wealth and prosperity.
Of course, there’s also another explanation for the market’s gains — a logical one, though perhaps not as enticing to conservatives. Bloomberg, Reuters and the AP all inform us that healthy predictions for Friday’s jobs report, as well as a dip in private numbers for unemployment claims released on Thursday, sparked the rally. The Motley Fool summarizes:
Better-than-expected jobless claims numbers helped push blue chips up, as well as a report on factory orders that also beat expectations. Across the pond, ECB president Mario Draghi said today that the bank was prepared to step in and buy government bonds once the countries fulfill the conditions, helping reassure nervous investors.
Today’s jobs report was indeed decent, though not spectacular: 114,000 jobs created, and a decrease in the unemployment rate to 7.8 percent, the lowest it’s been since January 2009. The cool heads that gave us the Romney-induced Dow Jones sugar high are now pulling out their John Birch tinfoil hats. Jack Welch, the former GE executive known for doing some book-cooking himself, wrote on Twitter, “Unbelievable jobs numbers. … these Chicago guys will do anything … can’t debate so change numbers.” Conn Carroll, the frequently nonsensical Washington Examiner writer, weighed in with this: “I don’t think BLS cooked numbers. I think a bunch of Dems lied about getting jobs. That would have same effect.” Hate your opponents much lately, Conn?
As much of a Murdoch-hyped exaggeration as the Romney Rally may seem, it’s nothing compared to June’s off-the-wall analysis from conservative CNBC talking head (and National Review correspondent) Larry Kudlow, who inexplicably is allowed to write a column whose title implies expertise in both “Money” and “Politics” (or rather, “Politic$”). All you need to know about Kudlow can be summed up by two of his more amusing Amazon listings — Bullish On Bush: How George Bush’s Ownership Society Will Make America Stronger (with Stephen Moore) and Rising Tide: Why Tax Cuts Are the Key to Prosperity and Freedom — which prove him to be only a slightly worse prognosticator than the guy who wrote “Dow 36,000” mere months before the 2000 dot-com burst. (Naturally, that guy, Kevin Hassett, is now an economic adviser to Mitt Romney.)
Here’s Kudlow after another world-shaking event, Scott Walker’s victory in the recall election for Wisconsin governor:
You didn’t see it in the mainstream financial media Wednesday morning. But stocks loved Governor Scott Walker’s spanking of public-sector unions and Democrats in Wisconsin. The Dow jumped about 165 points right at the opening on Wednesday, and was up over 200 points later in the day. There really was no other news. There was some speculation about central bank stimulus in Europe and the United States. Blah, blah, blah. But there was nothing specific or concrete.
Kudlow attributed the Walker Rally to the fact that “a big Walker win opens the door to a Wisconsin victory for Mitt Romney this fall.” The so-called investor class is, by Kudlow’s logic, pulling for Romney because it knows another term of anti-colonial Kenyan socialism will wreck the global economy. The disintegrating European Union, slowing growth in China, tinderbox tensions in the Middle East — none of this is any match for Mighty Mitt and his supply-side economics. “A union-rollback, low-tax, limited-government, pro-growth message is just what the investor class wants,” Kudlow wrote. “That is a Romney message, not an Obama one.”
At the time, I wrote that “Kudlow dismisses the idea that anything besides a recall election in America’s Dairyland could be behind the bull market.” Commodity traders, pension fund managers, Goldman Sachs bigwigs — all were apparently focused, laser-like, on the 53 percent of Wisconsites who checked their ballots for Scott Walker. Hey, who says statehouse politics are small potatoes?
It’s reminiscent of Mitt Romney’s own prediction that an economic recovery won’t even wait for his January inauguration; a Republican victory on November 6 would so reassure the “job creators” of the world as to immediately kick off a new age of prosperity. At the same Boca fundraiser at which he made his now-famous remarks about the 47 percent of Americans “who are dependent upon government,” the candidate also said this:
If it looks like I’m going to win, the markets will be happy. If it looks like the president’s going to win, the markets should not be terribly happy . . . . If we win on November 6th, there will be a great deal of optimism about the future of this country. We’ll see capital come back and we’ll see—without actually doing anything—we’ll actually get a boost in the economy. If the president gets reelected, I don’t know what will happen.
This is roughly in line with the American Spectator’s more unhinged vision of a Romney economy. In what could be mistaken for an article in The Onion, Peter Ferrara writes with deadly seriousness:
The boom would begin the day after Election Day, if Obama is defeated, and his party returned to minority status in both houses of Congress. Just as on Election Day, 1994, when the Republicans took over the Congress for the first time in 40 years, the stock market would immediately jump, on the expectation that President Romney and his new congressional majorities would reverse the neo-Marxist policies of Obama and his Che Guevara Democrats.
Ah, yes. Those Che Guevara Democrats are the reason the stock market is currently at a four-year high, up 74 percent since the beginning of Obama’s presidency, and corporate America’s balance sheet is healthier than ever. “Not since Dwight Eisenhower’s first term has a president had such a strong run for their first term,” reports Reuters.
But, hey — elect Romney and things will get even better. Behold the power of the confidence fairy. As dubious as “Romney Rally” theory may be, at least it will give Paul Krugman something to laugh about.
. . . So Well Read. . . 