Revisiting: Obama's Stumbles Melt the Market Up

It is worth revisiting the inverse relationship between President Obama's political strength and the stock market. The market has been melting up (over 25%) since July after it consolidated its gains from the bottom in March. I don't think it is a coincidence that this roughly tracks a rather noticeable leg down in Obama's approval ratings starting in June and July. Mind you, approval ratings are one thing and political effectiveness is another, but in this case it appears that the slide pertains to both. On substance, Obama's signature issue - healthcare - is in serious jeopardy and his two other major issues - cap and trade, card check - are dead for now. Other policy goals of his administration are relatively tangential to the economy, but these large initiatives loomed large for the business community and the economy.   Superficially, he has damaged himself considerably with his ham-fisted defense of the non-stimulating stimulus, the patently unserious "jobs summit", petty demogoguing of bankers and his desperate parachuting into Copenhagen where his chance of success was almost nil from the start. Of course these are not shocking developments; this is the process of recognizable, but somehow overlooked, flaws starting to come to the surface.  The market still has alot to contend with, but it seems to be coming to the realization that the severe headwinds that a successfully implemented Obama agenda would pose to the economy will not materialize, and it can go forward knowing that markets will be relatively free to sort out issues as they usually do.  Markets can deal with imbalances and excesses, but but a severe lurch toward bad policy is much tougher to get around.  The stock market seems to saying that the worst of the bad policy scenarios are off the table.