Are You Listening Mr. Obama?
The old saying in finance is that ‘money talks and . . .’ well everyone knows the rest so no need to vulgarize the Forum. What money has said early in 2013 is that it likes the prospects for the economy under the continuing administration of President Obama. From the Financial Times
Investors put $18bn into equity funds
US equity funds drew in $18.3bn in 2013’s first full week of trading, making it one of the busiest weeks on record as investors took advantage of the positive market conditions in the wake of a compromise deal on the US fiscal cliff.
Thomson Reuters’ Lipper service said the week to January 9 was the fourth largest for net inflows of equity funds since it began calculating weekly flows in 1992.
Of course, this is a continuation of the trend that started soon after Mr. Obama took office, and the stock market since then has been, well it has been great. Those who bet on a strong stock market won. But looking at the new year, with its multiple ‘fiscal cliff’ as Republicans try to overturn the election and force their policies on the country, one had to wonder if investors might turn against the Administration. They have not.
What this says is that those with money to invest like the idea of Mr. Obama standing up to Republicans and continuing a balance between stimulative fiscal policy and higher taxes on the wealthy to help reduce the deficit. Mr. Obama faces several tests on economic policy in the near future. Hopefully he will take heed from what investors are telling him and stand up for rational policy and not cave to Republicans. The markets believe he will do so, the rest of us, it’s a wait and see.