Did Obama re-ignite the markets for good?

 

Markets rally on Obama announcement.

 

President Elect Barack Obama gave the markets exactly what they needed beginning November 20th when he took a decisive move to end a global economic freeze that began with the collapse of the housing bubble. Markets tumbled endlessly from September 15th until Senator Obama announced his new economic staff and confidently stated that he would act “swiftly and boldly” to face the worst economic crisis the United States has seen in a century. Markets responded with an exhilarating 10% two day rally.

 

Will this rally have legs?

 

Historically the markets lead the economy in recovery by nine months to a year. Senator Obama named some very compelling people to his staff, including Fed wunderkind Tim Geithner as Treasury Secretary and former Treasury Secretary Larry Summers to lead his National Economic Council. The market likes the thought of competent, experienced leaders manning the helm as we navigate these troubled economic waters. The Senator also announced a second stimulus package would be ushered in to help create 2.5 million jobs, an attack on the ever growing unemployment rate that has terrified investors. All this, coupled with a bail out of Citi Bank, an assurance to investors that large banks are indeed too big to fail, point to signs that we might be heading in a positive direction. If the markets do lead the economic turnaround, with January just around the corner, perhaps its time to do some long term bargain shopping.

 

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