Why does Wall Street dislike Obama so much? (strong market, but he hasn't "fixed things".)

[pampango]

A worker bee at a mainline investment bank told me last fall:

Back in 2008 Wall Street was split 40-60 Obama-McCain. Now it is split 10-90 Obama-Romney.

Why? It is not as though Wall Street has done badly under Obama. Stock prices are up and interest rates are down, so leveraged financial institutions long assets--as Wall Street inevitably is--have done very, very well indeed. The standard bargain that the Democrats offer Wall Street has held. It is:

We will try to tax you (and, given the power of your lobbying operation in Congress, probably fail to do so), but we will give you competent economic management in striking contrast to that offered by the ideologically-blinded wingnuts who are the Republicans.

That has been the bargain that the Democrats have offered Wall Street from the days of Hoover to Bush II, and when Wall Street has had a sense of its own long-run interests, it has taken the Democrats up on it. And it has been happy.

But not this time.

Why not? What is going on? What is there about 50% real increases in equity values over less than 3 1/2 years that is not to like?

A big part of it, I think, is that Obama was not just supposed to make things better: he was supposed to fix things--to bring things back to "normal". Things are certainly not back to normal for America's workers (not that that is of any concern to Wall Street). And, while things are pretty much back to their mid-2000s normal for equity investors--an S&P of 1400 compared to 1500 in the summer of 2007--that is definitely not the case for financials.

Investors in Bank of America have lost 75% of their wealth as of the summer of 2007. Investors in Morgan Stanley have lost 70% of their wealth as of the summer of 2007. Investors in Citigroup have lost 93% of their wealth as of the summer of 2007. If you were working for those organizations and had taken your pay in options--well, whatever bonuses you have gotten since the crisis started are almost surely much smaller than the losses you have taken on your options portfolio.

Obama did not fix things: Wall Street bankers today are a lot poorer than they were in mid-2007. And the Wall Street bankers think that Obama disses them. And the Wall Street bankers know that Obama wants to tax them.

This historical record strongly suggests that they will do much, much better if Obama wins a second term than if he loses to Romney. But Wall Street is not listening.

Doug Henwood:

Obama’s stock market: pretty good (if you care about that sort of thing): Republicans and business interests have been relentless in their whining about how B. Hussein Obama has the “job creators” cowering under a reign of terror, what with his socialist policies and hostile rhetoric. But how have the monied been voting their approval or disapproval in one of their favorite venues, the stock market?… Obama’s stock market is the third best, beaten only by Clinton’s second term and Eisenhower’s first…. Since the beginning of Obama’s term in office in January 2009, the S&P 500 is up 60%…. Adjusting for inflation, Obama’s score is three times the average.)… The 40-month average for Democratic presidents is 36%; for Republicans, 24%. Still, Obama’s 60% is nearly twice his party’s average….

(T)he notion that Obama has been “bad for business” is a hard case to make—not that it will stop it from being asserted…

http://delong.typepad.com/sdj/2012/04/why-does-wall-street-dislike-obama-so-much.html

[HughBeaumont]

1. a) Wall Streeters are arch-Reaganites; that's the way they were raised and schooled.

b) B of A, Morgan and Citi's bad fortunes have everything to do with their horrible management, business practices and CEOs. It has nothing to do with the President. At all. I don't even see why anyone's making this argument even superficially; it's a total shortcut to thinking. You would think financial people would be smarter than that.

c) I find the "a lot poorer" comment to be bullshit. "A lot poorer" compared to WHO? Their colleagues? Certainly not "a lot poorer" compared to someone who makes low-to-mid five figures instead of mid to high six figures like they were used to making. The whiskey-throttle, unregulated Bewsh admin was an anomaly. That environment will give you some killer peaks if you're a trader, but be prepared for some hard crashes if you didn't cash out in time (which I'm guessing more than a few of them did . . . don't cry for them).

[pampango]

2. Good points.

a) True. Makes a 40-60 Obama-McCain split in 2008 quite an achievement (or quite a sign of how desperate the times were).

b) It's hard to believe that Wall Street types could think that having McCain or Romney as president is going to somehow totally compensate for horrible management.

c) Hard to shed a single tear for them. I assume that the "a lot poorer" is not relative to any real person (particularly in the middle class) but comparing their present financial lot to what they were accustomed to during the first 6 years or so of the bush admin. They undoubtedly also think they are a lot poorer now than they "should be" based on some inflated sense of entitlement.