Asked And Answered, Your Honor

John Tamny at Forbes asks an obvious question, if Barack Obama's policies are so terrible for business, why is the Dow up over 35% from February? His cynical, smug answer of course is because Obama will never see his policies get out of the Senate, so Wall Street's thrilled.

Perhaps most important is what the lack of major legislation is telling markets. They don't so much want presidents of either party to fail, as gridlock in Washington is generally good for stocks. Last spring it was to some degree felt that Obama's rhetorical gifts would allow him to push all manner of anti-growth legislation through Congress. As noted above, none so far has come to pass, which means we're experiencing a relief rally over Obama's legislative skills not living up to their earlier billing.

Markets also serve us best for pricing in the future, and with pundits suggesting that Republicans will achieve House and Senate gains in the 2010 elections, stocks are likely pricing in future policy moderation out of Washington thanks to more pushback from an emboldened GOP minority. This served President Clinton well after the heavy losses Democrats experienced in the 1994 elections, and hopefully much of the same will occur during Obama's presidency.

Yep, gridlock where neither side is able or willing to execute oversight on Wall Street certainly makes the stock market feel good, and right now it's betting on the old days of 2005-2006 to be back any time now. And it certainly served the Big Dog well after 1994. He was impeached, after all.

Pretty telling, yes?