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Obama's ratings are near their all time lows according to the
Rasmussen Reports.com Presidential Approval Ratings on Sunday. What makes the
numbers most interesting is that this is the first set of numbers that
includes all of the days during which talk of tax hikes has permeated
the news cycle.
According to Rasmussen: "The Rasmussen Reports daily Presidential Tracking
Poll for Sunday shows that 25% of the nation's voters Strongly Approve
of the way that Barack Obama is performing his role as president. Forty-five
percent (45%) Strongly Disapprove, giving Obama a Presidential Approval
Index rating of -20." More interesting is this: "The number who Strongly
Disapprove is just one point below the highest level yet recorded for
this president. Just over half of all men (51%) Strongly Disapprove.
Just 40% of women share that view."
The big picture is clear. The president is starting the important pre-election
season on his heels, according to this poll, which further noted: "overall, 43%
of voters say they at least somewhat approve of the president's performance.
Fifty-six percent (56%) disapprove."
So how important are taxes to voters? According to Rasmussen, they are increasingly
important, although the economy remains the number one issue on voter's minds.
Rasmussen noted that taxes ranked fourth on the list of important issues, preceded
by "economy (85%), government ethics and corruption (72%), and health care (70%)." Rasmuussen
reports that taxes are important to 68% of voters, almost putting them in line
with health care. Still, a ten point jump by one issue is important, especially
if you put in the context of the other three, which are interrelated.
The issue of jobs, government ethics and corruption, and health care, all share
one theme, Congress, which has an 11% approval rating according to Rasmussen.
Congress and the president will get credit for their stimulus package, which
has given the economy little lift, for the scandalous situation revolving around
head tax writer, Congressman Charles Rangel (D-NY), and for a health care "reform" law
which has many in the business community hoarding money due to fear of rising
costs, rather than deploying capital and creating jobs. That's where it all comes
together and where taxes come into the picture.
It's complex for many voters who spend little time worrying about anything but
putting food on the table for their families. But, as the mid-term election nears,
and the talk starts to revolve around higher taxes, the connection will be clearer,
and the outcome more visible, as polling data and consumer and employer behavior
starts to reflect the potential fear brought on by the specter of rising taxes.
Over the weekend, the front pages on the web sites of "The Washington Post" and "The
New York Times" had big stories on the upcoming fight over taxes. Fox News, which
is the key to reaching conservatives, was all over the story. And the fact that
the issue has become number 4 on Rasmussen's list is another sign of its rising
importance.
The White House and the Democrats have made it clear. They would like to raise
taxes on anyone who makes more than $250,000 per year, with the highest tax rate
rising to 39.6% on those who make more than $373,650 per year. But, there is
more, estate taxes will also jump from zero to 56% for estates over one million
dollars, which raises the government's take even higher from the demographic
which owns businesses and provides job. It's that connection, the one between
higher taxes, and low job growth that has yet to be made clear to voters. If
and when it becomes a talking point for those who oppose higher taxes, things
may change even more rapidly.
The argument for higher taxes is that during the Clinton years taxes rose and
the economy blossomed, while the federal deficits were wiped out. And that's
true. What those who support higher taxes fail to mention is that Clinton had
the Internet boom behind them. He could have raised taxes even more and it probably
wouldn't have mattered. Those were magic years where money literally grew on
trees.
There is no magic right now, no Internet boom, and no prospects of any once in
a generation trend to boost the global economy. I-phones are cool, but that's
not enough to do much except make Apple and AT & T lots of money, which they
are hoarding as they wait for the tax fight to run its course.
All there is is a government that won't give in and an economy that's in the
toilet with companies hoarding money out of worry over what the politicians are
going to do next.
Meanwhile the talk of taxes is on the rise. And that means that the stock market
is about to start moving.
Conclusion
The market is many things. But it is a cynical beast that can smell blood in
the water. And right now, the market seems to be smelling trouble for the White
House and the Democrats in Congress, as they continue to hold on to the notion
that higher taxes are the way out of the current economic situation.
But what's clear is that things are not clear for the White House and the Democrats,
whose major issue is taxes, while the country's major issue is the economy, and
more specifically jobs. The administration talks about jobs but is doing little
to create jobs. It hasn't even handed out enough of the stimulus that it put
in place to create public service jobs. That's clear in the number of state and
local jobs that are being lost on a regular basis.
In other words, the administration is speaking of creating jobs, but can't seem
to put enough money into cities and states so that the most basic government
jobs, building highways and bridges, can get at least some part of the economy
moving. Instead, it has turned the debate onto taxes, an issue that is going
to be difficult to win, barring some kind of extreme maneuvering, such as the
same methods they used to pass health care.
That means that the White House and the Congressional Democrats are heading toward
a situation that, even if they win, will likely cost them down the road.
And that's what the cynics and the crowd that smells blood on Wall Street is
getting excited about, a major shift in the political establishment as the incumbents
may be washed away, leaving investors with the opportunity to factor in a whole
new set of possibilities down the line.
That's a good argument for now. And it could be an excuse for a continuation
of the current bounce. But, reality always sets in. And at some point it will
this time as well. It's the kind of reality that sets in that worries us.
We'll be on Twitter
some time today before the market closes with some updated comments.
Know when to sell and how to make money when the market falls. Get
a detailed trading plan in your pocket. Read Dr. Duarte's All
NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for
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With the job market is reported disarray, it's interesting
to see shares of Administaff (NYSE: ASF) break out.
Chart Courtesy of StockCharts.com
A friend told us that he was in San Antonio this
weekend and had to wait in line to get into restaurants,
while it was difficult to get a hotel room. Another
source told us that the hotel she was staying in,
in the Tampa area of Florida, was nearly empty all
week, while the staff was only working a few days
per week.
That's the state of the U.S. economy, regional, spotty, and unpredictable. Which
is why the breakout in Administaff is interesting.
Administaff is a barometer for the health of small businesses. It provides payroll,
benefit, and human resources management services to small businesses. When small
businesses hire workers or expand, they often hire Administaff to run their back
offices.
If the market is buying Administaff shares, there must be some reason for it,
although it's hard to fathom, given the fact that the company's Chairman and
CEO recently sold 18,000 shares in the open market.
This is a tough puzzle to solve. But it is one to keep an eye on.
Follow Dr. Duarte on Twitter
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