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I'm sure there
are many rational individuals who, like me, have wondered why the stock
market has in recent days remained fairly resilient despite mounting evidence
that the European debt crisis is spiraling out of control and economies in
Europe, China, the U.S. and elsewhere are hitting the skids.
In fact, the
buying that has appeared when the market has been under pressure, seemingly
like magic, has a frantic, almost panicky quality to it, as though those who
are scooping up shares are much less concerned about getting the lowest
prices than they are about making sure the market stops falling.
At first, I
chalked it up to the fact that equity traders have shown, time and again,
that they are very a little slow on the uptake when it comes to
interpreting macroeconomic developments (the events of 2007 immediately come
to mind), and have put their faith in "decoupling" and other bogus
Wall Street theories.
Alternatively,
I figured it might have something to do with investors' maniacal faith,
bordering on psychotic delirium, in never-ending rounds of quantative easing, even though a growing number of
monetary policymakers have indicated that they are not in favor of further
accommodation.
Then I saw this
report at Business Insider:
"CHART: Obama Really Needs
The Stock Market To Hold Up"
Here is a chart
we've seen before. It's Obama's re-election odds against the S&P 500. The
two have been greatly correlated and continue to be so as the election nears.
At that point it hit me. Call me a cynic (and maybe even a conspiracy
theorist), but as Occam's Razor suggests,
maybe the simplest explanation is the one that's best.
Michael J. Panzner
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