Bad data may help stocks in November
No one wants to say it out loud, but many investors see a silver lining in all the negative economic stats: changes in Washington.
By Jim Cramer, TheStreet
Has "bad" turned good? Are we now rooting for crummy housing numbers, weaker consumer confidence and, yes, unfathomably horrible employment numbers? Do we now secretly lust for negative numbers?
Maybe that depends on who "we" is. If you are an American business person, no, absolutely not. You're not rooting for negative numbers. You want your business to thrive. Of course you want to make more money. It's what you do.
But if you are an owner of stock, any stock, if you are using the stock market for retirement or for savings to put your kid through school or to augment your paycheck, I think you are now beginning to see the silver lining of the miserable economic news: change in Washington.
In fact, every time we see a downtick in the popularity polls for the administration or Congress, the large stockholders I know secretly cheer. They can't cheer out loud without looking like Scrooge. Or they fear the wrath of President Barack Obama -- which, on Wall Street, by the way, feels like the wrath of Nixon. It is, however, how many of them feel privately.
You know it. I know it. It is just that nobody wants to say it. Nobody wants to even believe it, as it is so downright cynical. And, of course, nobody wants to criticize this president other than the people who are paid to criticize -- the Republicans in Congress and various news entities that cater to the right. You take your public life in your hands the moment you do.
It's dangerous. The national media's warmth toward the president and Congress extends to the business press, so no one wants to draw the line to say, "OK, the data are so bad, we are going to get the GOP in -- so we have to hope the data stay bad." No one wants to say, "Goodie, we may be doing worse than we thought; let's go buy stocks." You will be nailed nine ways to Sunday by the adoring press.
But I have to tell the truth as I hear it as we approach September and get closer to the election. This view is not a GOP view. It is usually the view of people who voted for Obama because they hated Bush's treatment of the economy, among other negatives.
In fact, I would go so far as to say that there is almost a universal belief among all of the large firms -- mutual and hedge and research -- that if this president gets his way and the House and Senate stay Democratic, we are going to decline precipitously. It is so palpable that it overrides any data that could come out, whether it be earnings, inflation, spending or employment itself.
But no one will say it!
It is amazing to me that no one will break ranks and say out loud what they say to me 10 times a day: "This president hates business, hates successful business people and hates the basic way business is done in this country!"
Believe me, not only is it unspoken, but it is vehemently and viscerally mutual. I can't find a business person who, privately, will say a good word about this guy or his team. He is despised. Just not openly. Never will be. Too dangerous. Seditious even.
Funny, I am cowed, too. When I hear the criticism, I simply say that having lived in my car at one time, having been denied health care for lack of money, having been hounded by police for being a vagrant, having helped lead a wildcat strike and having helped support the organizers of nonunionized plants in the south, I get why people love Obama. He would have been my guy 30 years ago! How could he not be? Did I care about stocks? About saving? About making good for myself? I cared about my next meal and my doctor bill -- could anyone be more sympathetic than President Obama? I hated people with money. Could anyone be more simpatico? I wanted to soak the rich and "get some." Isn't that the plan?
I get the appeal.
I understand it.
But as you see one more horrible set of data that comes out today -- and it will all be horrible -- and the market doesn’t go down hard, remember that behind the scenes there is now silent cheering among those who pull the trigger. They will never say it, but they know this team in Washington is hurting the economy so badly, with its mismanagement and squelching of the profit-seeking spirit, that they not only expect the data to be bad but they are now counting on it as a reason to buy stocks. Because change could be in the air once people wake up from the economic nightmare many of them voted for.
Oh, and this nightmare? Unlike President Obama, they don't think it is Bush's. They haven't forgotten how terrible Bush was.
They can simply look around the world and see who is doing better and recognize that everyone else is.
And that's the evidence that the fault belongs to Obama, not the predecessor.
Once again, the important caveat: If I never owned a stock, if I were back in my car, if I had no health insurance and if I were about to lose my job, my only hope would be Obama. I would love Obama. I would be nuts not to love Obama. And there are more disenfranchised people in this country than I can ever recall. They have to be hoping for a Democratic sweep in November. You own no stock, this is your team.
But watch the data: negative data that translate into negatives in the election polls. From now until November, it will be viewed publicly as bad for stocks by both Main Street and Wall Street. But privately, believe me, the cheering has begun.
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After enjoying a smooth rise in stock prices since May, investors are about to be hit with another bout of volatility.
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