Hi Sam. Great post as always. That Bloomberg piece you cited seems odd or ironic to me, only because stocks have been setting records under Biden/Harris and she lost. Is it stock prices AND prices (inflation) that both matter? It seems so, especially for those people who don't own many or any stocks but do need to feed their families. I do agree, though, that a higher market is generally good for politicians.
Also, I appreciate your hard data vs. soft data reference. I wonder if the fact that we've been told that the economy is trash by President Trump during this election (and people believe it), has had an effect on sentiment. I have a feeling that he'll change that narrative now and people will feel more positive about a good economy, which is reflected in the hard data. I'm not saying that is good or bad, just what I believe.
Finally, why do we believe the sentiment indexes at all? They are the equivalent of political polls, and we saw how accurate they were. At this point, I'll take hard data and maybe gambling odds 🙂 to determine how the economy market will perform.
Great questions, Jeff. While I think falling stock prices is a bad look for an administration, higher prices don't mean their party will stay in office. There are of course many more things voters take into consideration when voting. It's possible if stocks were lower or fell, all other things equal Harris would've lost by an even wider margin.
On hard vs soft data, I definitely think that when a person of influence tells you that the economy is bad, you might believe it. Especially if you think your economic situation could be better than it is. And who doesn't believe their economic situation could be better? When in office, Trump will have a lot of incentive to spin economic narrative positively whenever he can. If that helps sentiment, that's probably a good thing.
Regarding the value of sentiment indexes, they clearly have limitations when you're analyzing the hard metrics of the economy and the financial markets. Beyond that, I think they're helpful. Sure, maybe more of us are employed than ever, what value is in that if we're not "happy"? In retrospect, the sentiment indexes for sure signaled to us what the election results could look like.
Our feelings absolutely matter. That said, the stock market is driven by earnings and the prospect for earnings growth. Which is to say that the stock market cares about what we do, not necessarily how we feel.
Hi Sam. Great post as always. That Bloomberg piece you cited seems odd or ironic to me, only because stocks have been setting records under Biden/Harris and she lost. Is it stock prices AND prices (inflation) that both matter? It seems so, especially for those people who don't own many or any stocks but do need to feed their families. I do agree, though, that a higher market is generally good for politicians.
Also, I appreciate your hard data vs. soft data reference. I wonder if the fact that we've been told that the economy is trash by President Trump during this election (and people believe it), has had an effect on sentiment. I have a feeling that he'll change that narrative now and people will feel more positive about a good economy, which is reflected in the hard data. I'm not saying that is good or bad, just what I believe.
Finally, why do we believe the sentiment indexes at all? They are the equivalent of political polls, and we saw how accurate they were. At this point, I'll take hard data and maybe gambling odds 🙂 to determine how the economy market will perform.
Great questions, Jeff. While I think falling stock prices is a bad look for an administration, higher prices don't mean their party will stay in office. There are of course many more things voters take into consideration when voting. It's possible if stocks were lower or fell, all other things equal Harris would've lost by an even wider margin.
On hard vs soft data, I definitely think that when a person of influence tells you that the economy is bad, you might believe it. Especially if you think your economic situation could be better than it is. And who doesn't believe their economic situation could be better? When in office, Trump will have a lot of incentive to spin economic narrative positively whenever he can. If that helps sentiment, that's probably a good thing.
Regarding the value of sentiment indexes, they clearly have limitations when you're analyzing the hard metrics of the economy and the financial markets. Beyond that, I think they're helpful. Sure, maybe more of us are employed than ever, what value is in that if we're not "happy"? In retrospect, the sentiment indexes for sure signaled to us what the election results could look like.
Our feelings absolutely matter. That said, the stock market is driven by earnings and the prospect for earnings growth. Which is to say that the stock market cares about what we do, not necessarily how we feel.