A Near Perfect Pair: The Markets and Obama

by: Bespoke Investment Group

There’s no denying the fact that the relationship between President Barack Obama and Wall Street got off to a shaky start, but what may have started off nearly two years ago with a lot of friction has blossomed into quite the romance. In his first two years in office, President Barack Obama has perhaps been labeled “anti-business” more often than any other US President in at least a generation. In fact, the recent mid-term elections were largely seen as a referendum against the policies that Obama’s Administration and the 111th Congress had pursued over the last two years.

While voters may have been unhappy, President Obama has quietly maintained his position as one of the equity market’s most well loved Presidents. As shown in the table below, the 47.6% gain in the DJIA since he took office ranks as the third best first two years for any President since the start of the 21st Century (FDR 90.5% and Coolidge 52.6%).

Whether or not you give the President credit for the market’s performance will undoubtedly depend on your political views, but strictly at face value, the numbers don’t lie. Add to this the apparent tilt towards the business community that the Administration has taken in the last few weeks with the compromise over taxes and the appointment of William Daley (who comes directly from a Chairman title at JP Morgan) as the President’s Chief of Staff, and it is hard to imagine how these two sides never got along!

So how has the DJIA historically performed in the third year of a President's term after rising 35% or more in his first two years?

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