In the last few days, President Obama’s approval rating has touched the lowest levels of his presidency. According to the Rasmussen Daily Tracking Poll, on February 27th, 2010 President Obama was ranked a -21 on the Presidential Approval Index, which is the delta between Strongly Approve and Strongly Disapprove. This tied his prior lowest rating on this poll, which occurred back on December 22, 2009. While the President did see a slight bounce in early February, his approval rating for most of 2010 has been quite dismal.
Based on the Real Clear Politics poll average, the spread between approve and disapprove is +1.7, still demonstrating a positive spread in approval. That said, the approval portion of this rating is 48.2, which is just slightly above the 2/20/10 low of 47.1, and still near the lowest of his presidency. As we get nearer to midterm elections, with no bounce in Presidential approval seeming likely, it becomes more and more clear that the Republicans will take back some serious ground in November and perhaps reclaim both houses.
But, stepping back for a second, what has happened to President Obama? Even we, which in hindsight were dead wrong, compared President Obama to FDR and had high expectations. In the spirit of YouTubing ourselves we wrote back on 1/20/2009:
“Once inaugurated, FDR did not waste his popularity or the political capital that the election had bestowed on him. In his first 100 days, from roughly March 9 to June 16th, 1933, FDR sent an unprecedented number of bills to Congress, which all passed easily. Among the major bills that were passed by Congress during this time period were the bill that created the Federal Emergency Relief Administration, the Civilian Conservative Corps, the Reconstruction Finance Corporation, and the Tennessee Valley Authority. Congress also gave the Federal Trade Commission broad new regulatory powers and provided mortgage relief to millions of farmers and owners . . .
President Obama has followed this advice well. He has formed a solid economic battalion in the way of Summers, Geithner, and Volcker (to name three) and is charging forward with a large and broad based recovery plan. Even the most partisan of Republicans will have a hard time not supporting President Obama over the next 100 days.”
We were wrong on many accounts based on this statement, but most notably President Obama has turned out to be anything but FDR. He has passed limited legislation and has been ineffective at utilizing his well regarded communication skills to maintain his approval ratings. In very quick fashion it appears, also, that he has lost the support of the very independents that elected him.
On our Morning Call today our Healthcare Sector Head, Tom Tobin, suggested he was seeing a shift in momentum for President Obama. A bounce, if you will. Below we have attached a chart of the Rasmussen President Daily Tracking Poll and the Real Clear Politics Presidential Poll Average. If one questions jumps out at us it is this: Where, Mr. Tobin, is this bounce?
The fact is, there is no bounce and the longer that President Obama’s approval numbers remain mired at these low levels, the worst for Democrats in the upcoming midterm elections. Ultimately though, as it usually is, a deadlocked Washington may well be a positive catalyst for the stock market. So as we begin looking towards the November midterms, and it begins to seem more and more likely that the Republicans will take back one house if not both, the impact on the stock market may be positive.
According to the Stock Trader's Almanac, a popular reference book on Wall Street, since 1949, “the Dow has gone up by an annual average of 19.5% when the White House was Democratic and Congress was Republican.” A Democratic President and a Republican Congress is by far the best performing congressional combination for stock market performance based on history. Obviously this is but one factor that will influence stock market performance, but with history as a guide we will certainly be focused on the potential for the midterms to provide a market catalyst.
Daryl G. Jones