The stock market hasn’t done very well at all, and is down roughly 5% from it’s highs just in the last month with another day in the red shaping up for today (the S&P is trading around 1400, having fallen from roughly 1470 earlier this month).
I think another 4-5% before the election could be devastating to President Obama, and given how quickly we’ve shed the amount we have, a drop of that amount (or close to it) could definitely happen, especially with the way that the market has been trending down. It only takes a few tenths of a percentage points a day to add up to a pretty big drop.
Such a large drop would be roughly a double digit drop and would signify a pretty big warning sign about the economy. Since the stock market is forward looking (meaning the movement is largely centered upon what investors believe is going to happen down the line), this would be a very bad sign.
Plus, people don’t like to lose money and if they’ve just witnessed 10% of their 401(k) and investment savings go down the drain, this could make people pretty cranky. Generally, when people are cranky and go out to vote, they tend to take out some of their crankiness on the incumbents.
I’ll be curious to see what the stock market does between now and the election. So far it hasn’t shown any encouraging signs, and if the bears continue to chip away, I believe it could have an impact on the election. If the president has any aces up his sleeve regarding the economy, he would be wise to play them.
What are your thoughts? Could a bad October translate to a bad November day at the polls for the president?