Well, this is what a bear market rally that can't get traction feels like. Up for five days, then 85% of the total gain wiped out in a single day. I expect this behavior to continue for a bit longer. Pelosi has called an emergency session of Congress to consider another bail out - now that her side has won, there's no reason to hold back. If something passes, there's a good chance that will light off a real rally. Not then end of the bear market, mind you, but a respite from the current gloom and doom.
There really hasn't been any news that would make any of these market moves make any real sense. The economy continues to look like it's sinking into a relatively serious recession, businesses are laying off, but not a tremendous number of people. That will all change overnight if any of the Detroit three declares bankruptcy - that's estimated at about 700,000 jobs per failing auto maker, once the dust has settled. Although the GM / Chrysler merger is on hold right now due to no government backing, it continues to seem likely that a deal will be made soon. Waiting is not good - Chrysler can't survive many more months, and each month that goes by drops their cash position and lowers their value significantly.
The election is over now, supposedly we get to find out over the course of the next ten months or so if Obama is a centrist or a liberal. Personally, I expect all we're going to be sure of 10 months from now is how good he is at treading water - there's no money or slack to be a liberal or a centrist. This is one of those "there are no atheists when the bullets are flying" moments. This is not the time to raise taxes or to bring back 150,000 army guys for the economy to absorb overnight. It may, however, be the time to hire a bunch of unemployed people to work on rebuilding infrastructure.
We do get a chance now to compare actual voting patterns to the various polls. It turns out there was no particular Bradley effect, no particular effect of Democrats polling better than the election. The poll numbers were pretty accurate - if you just believed them, there were few surprises on election day. I expected that the polls would prove to be over-optimistic on Obama by about 3%, which left him with a narrow win. Turns out the polls were accurate, and this was a more compelling win.
It also turns out that the swing states moved from Bush to Obama by rather thin margins, meaning they can move back without too much trouble if the Democrats don't have an effective and reassuring plan to govern. To my eyes, the vote shows this continues to be a centrist nation that just at this moment is looking for a new direction. Below is the table I prepared on 10/25. The poll numbers are updated to 11/02, and a new column is added for the actual vote. Some states matched up better than others, and DC really stands out as a big mistake in polling, but overall the match up is not so bad, especially in the middle states that went 1% to 8% for Obama.
For all the noise about registration and election fraud, and the lawyers both sides had ready to file lawsuits at the drop of a chad, in the end it appears the election was clean, at least to the extent that any suspected fraud was not enough to swing the election.
|State||Electoral Votes||Ahead||Poll 11/02||Actual 11/04|