November 30, 2017

Ali Velshi’s Arrogant, Ignorant Mid-August Claim About Obama’s Credit for the Stock Market

Filed under: Economy,Taxes & Government — Tom @ 7:08 pm

In mid-August, Ali Velshi of MSNBC, with the help of co-host-Stephanie Ruhle, angrily berated Trump adviser Brad Thomas when Thomas attempted to give the Trump administration some credit for the post-election rise in the stock market.

Here’s the historical record for the Dow Jones Industrial Average, with key data points added by me:

DJIA010108through113017

Several important points must be made here for the historical record to correctly assign credit and blame:

  • Velshi should know that properly attempt to assign credit or blame for stock market performance to president, the relevant data points are election days, not inauguration days. Once the markets know who’s in charge, they react accordingly. A supposedly experienced financial journalist should know that expectations largely drive market valuations.
  • Velshi was incredibly disingenuous in measuring the Obama administration’s performance from March 9, 2009. Just look at the chart for the period Election Day 2008 and March 9, 2009. On November 7, 2008, the Dow Jones Industrial Average was at 8,944, and the effects of the recession were already priced in.
  • During the next four months the DJIA fell by almost 27 percent to 6,547. That’s because investors fully expected, and were unfortunately then proven right, further dampening expectations, that the Obama administration’s Keynesian nonsense would hold sway in Congress, giving rise to a “stimulus plan” which was destined to accomplish nothing meaningful and cause deficits and the national debt to explode. More broadly, it was clear that Obama intended to ramp up the government’s regulatory over-reach, particularly in the financial sector and over environmental matters. Market declines accelerated, and monthly job losses increased, because of Obama’s stated intentions. (The fact that in December 2008, the President-elect sided with the members of a union which illegally took over a bankrupt window company in Chicago [he said, "They're absolutely right"], a situation which led to two banks paying out money to make the union members go away at virtual gunpoint, only added to the climate of fear in the business community.)
  • As seen in the chart, the DJIA went absolutely nowhere from December 26, 2014 until November 1, 2016. That’s a nearly two-year perpendicular line in Velshi’s falsely claimed “straight-line” upward growth — an interruption any reasonable person would consider significant. Why did it occur? Partially because the economy was showing that it was not going to shake out of its post-recession doldrums, especially with the Obamacare premium-hike overhang, while it also became clear that the 2015-2016 Congress wasn’t going to do anything to alter the Obama administration’s business-hostile priorities.
  • Thus, a proper evaluation of the stock market as Donald Trump has affected it would begin on November 8, 2016, when the DJIA closed at 18,333. The day after Donald Trump was elected, the markets shook off their two-year stupor and began heading up again on sustained basis. Since then, in just over a year, the DJIA has gone up by over 32 percent, hitting a record close of 24,272 on Thursday. Even a commentator at the mostly left-leaning Bloomberg News has conceded thatTrump Deserves Some Credit for the Rally in Stocks,” specifically because “Less regulation is one campaign promise made by the president that is coming true.”

The bottom line: President-elect Obama did everything he could to tank the markets in an attempt to get all the credit when they came back. The markets rose during the next five years, but hit a plateau which lasted from late-December 2014 until just before Election Day in 2016. After that the markets have, through November 30, advanced on a sustained basis by 32 percent — an advance for which Obama deserves no credit, and for which Donald Trump deserves some.

Related: ”10 Reasons Why the 2017 Record Stock Market Rally is Due to President Trump’s Actions”

 

 

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1 Comment

  1. [...] have prepared a post at my home blog for those who want a deeper understanding of why Velshi is so wrong on so many levels in giving [...]

    Pingback by BizzyBlog — November 30, 2017 @ 7:37 pm

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