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When the trend is not your friend

Posted By Barry Ritholtz On March 18, 2006 @ 9:45 am In Politics,Technical Analysis | Comments Disabled

All polls, Presidential Approval Rating
click for larger graph

Infobushpoll05_1 [1]

When the trend is not your friend: Do not catch a falling knife !


The Wall Street Journal [2] (free) looks at the most recent Presidential polling data:

"President Bush and fellow Republicans approach the fall midterm elections facing one political problem above all others: responding to rising public anxiety about Iraq.

The new Wall Street Journal/NBC News poll charts the toll that Iraq has taken on the Bush presidency. The survey shows the president’s approval rating falling to 37%, a low for Mr. Bush, with disapproval highest for his handling of the war. His party’s advantage on handling Iraq has narrowed amid public pessimism about the conflict, helping Democrats open a double-digit edge in voter preferences for controlling Congress.

"At this point in the administration there’s one thing that counts, and it’s the war in Iraq," says Democrat pollster Peter Hart, who helps conduct the Journal/NBC survey. The war, adds his Republican counterpart Bill McInturff, "is enveloping this presidency." (emphasis added)

Note that both the Republican AND Democratic strategists buy into the War as a catchall blame for the poor polling.

I don’t buy it.

This has yet to become conventional
wisdom, but I suspect much of the upswing in negativity about the
President is in large part traceable to the Katrina debacle; It has
bled over to every other category, from the Iraq war to Homeland
Security to the Economy.

Barron’s [3] comes to a similiar — even broader — conclusion; they do not buy into the Iraq War rationale for the poor polling results:

President Bush’s job approval rating sank to 37% in the latest Wall Street Journal/NBC News poll and has been mired below 40% since last October, the longest stretch of readings that low for a president since the dismal days of the late ‘Seventies.

The obvious reason for this divergence of the stock market and the public’s assessment of Bush is Iraq, which seems only to go from bad to worse. Well, maybe it’s not just Iraq. There’s the flap over the aborted Dubai Ports deal, post-Katrina ineptitude, Dick Cheney’s winging his hunting companion, the furor over wiretapping without warrants, Social Security reform, budget deficits, trade deficits, the unintelligible Medicare drug plan…enough already, you get the picture. 

Indeed, only 29% of Republicans deemed the Bush White House to be "very competent," according to the WSJ/NBC News poll.  (emphasis added)

I think Barron’s is on to something — its more than merely the Wartime Blues impacting the  White House — its  a broad variety of issues.

War_blues [4]


Good news/Bad news: Once a President no longer gets the benefit of the
doubt from the electorate — which Bush enjoyed with regards to 9/11
and Iraq WMD — he becomes a lame duck.

More from Barron’s: [3]

"It makes one shudder to think where Bush’s numbers would be if the
current Goldilocks economy turns out to be a fairy tale. Say, if the
labor market starts to weaken. (Hmmm, initial claims for unemployment
insurance have ticked up the past three weeks.) Or the real-estate
market starts to crack. (Housing starts are slumping along with
mortgage applications, while the supply of unsold homes is building and
mortgage delinquencies are on the rise.) Or if there were a major
corporate bankruptcy. (General Motors says it lost $2 billion in 2005,
more than it previously reported.) If something really bad happened on
the economic front, Dubya’s numbers would be down around the level of
Japanese interest rates."

Well, the good news is that Presidential approval is hardly correlated as a cause of positive market performance . . .


Growing Anxiety About Iraq Threatens Republicans [2]
Bush Approval Rating Hits A Low as War Pessimism Offers Edge for Democrats
WSJ, March 16, 2006; Page A4

Dow and Dubya Diverge [3]
Randall W. Forsyth
Barron’s, MONDAY, MARCH 20, 2006

Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2006/03/when-the-trend-is-not-your-friend/

URLs in this post:

[1] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/infobushpoll05_1.gif

[2] Wall Street Journal: http://online.wsj.com/public/article/SB114246476954299393-OUwI_O7oqAQl0OFN4I3hS6ZFxtU_20070316.html?mod=tff_main_tff_top

[3] Barron’s: http://online.barrons.com/article/SB114263962587301880.html

[4] Image: http://bigpicture.typepad.com/.shared/image.html?/photos/uncategorized/war_blues.gif

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