I put on an interesting wheat spread today, nothing really huge, but a nice position. It’s not a nearby spread, and should make me some money over the next couple of months. The S&P keeps going up a little at a time, and I’m happy to be right about that market. As of 11AM, I own no more sugar or options at all. I ended up netting about a grand on the trade, which is still a win. Still, I had all that capital tied up for quite a time period.
I’ve been looking at tracking the S&P vs. Obama’s successes and failures. It’s interesting to note that the all time high on the S&P was at Obama’s lowest polling numbers. The coorelations I’ve found are pretty interesting.
I’m pretty bullish on the dollar, as it looks good right now. The dollar has come off it’s lows, and favorible sentiment is increasing despite the overall bearish consensus. I like to remind my friends that things aren’t so hot in Euroland. I was talking to one of my perennial bearish friends, and he couldn’t understand my argument that the USA is such a great place to invest and will do well over the long term. For one thing, there’s huge liquidity, property rights, laws, low taxes, and people in the USA work very hard. The USA also has a billion different places to park your money. Productivity is really gone up over the past few decades. As for the shrinking middle class….our middle class owns their houses, has plasma TV’s, drives 1.7 cars, eats out three nights a week, and gets two weeks vacation a year. Despite the negative savings rate and huge borrowing, the middle class will continue to improve their lot. As for the poor, government entitlements have helped create much of the cyclic poverty in this country.
Jeff
The correlations make sense… as the stock markets do badly that probably bodes well for the Opposition candidates. Stock markets probably form a pretty good proxy for citizen’s perceptions of the performance of the economy.
I think drawing the conclusion that the S&P is inversely correlated to Democratic favoritism is unfounded as there is compelling evidence that the US economy does on average 1% better per annum under Democratic presidents than Republicans since the Second World War. Independent of one’s individual political outlook the higher integrative complexity and openness to experience does appear to have implications in economic policy outcomes.
Comment by Alex — May 22, 2008 @ 3:44 am
Alex,
I never said that the S&P was inversely correlated to Democratic favoritism. I merely crunched some hard data and found this correlation with Obama’s numbers. I also found a positive correlation with Hillary’s numbers vs. the S&P.
I really don’t like politics, because politicians are full of shit. People believe that Republicans will be good for business and when they don’t do as well as expected, the market underperforms. The Dems are thought of being high tax spenders, and bad for businesss. When they don’t fuck up as bad as the market thinks they should, the market does better….you’re right, this is well studied and documented. Still, that upward average 9% annual drift of the market over the past 125 years provides good impetus to look long term. I’m still long term bullish on stocks, no matter what happens….short of nuclear war.
Jeff
Comment by masteroftheuniverse — May 22, 2008 @ 11:13 pm