Obama Plummeting With Investors in Poll as Stocks Make New Highs
Friday, 22 Nov 2013 06:55 AM
Just 38 percent of respondents to a Bloomberg Global Poll view Obama favorably as they anticipate another shutdown and more damage to the U.S. economy next year from political gridlock. That’s the lowest since the question was first asked in July 2009 and down from 50 percent in September.
Opinions of congressional Republicans also fell to a new bottom, with only 19 percent viewing the party positively, down from 28 percent in September 2012. Favorable views of Democrats were little changed, rising to 30 percent from 29 percent in September 2012, according to the Nov. 19 survey of 750 investors, analysts and traders who are Bloomberg subscribers.
“I’m concerned that, unless there’s somebody that can show some leadership in Washington, continuing this dancing with the cliff is not going to help the economy,” says Rick Wayman, 57, a portfolio manager in Columbus, Ohio, with New Albany Capital Partners LLC.
Fifty-two percent of poll respondents say another federal government closure is likely within six months, following a standoff in October that led to a partial shutdown for 16 days and brought the nation to the brink of a debt default. Seventy- one percent say they expect political gridlock in Washington to affect U.S. economic growth next year.
Markets Strong
Reservations over political leadership and budget policy haven’t stopped the flow of money into U.S. financial markets. The benchmark Standard & Poor’s 500 stock index has surged about 26 percent this year, poised for its best yearly gain in a decade. Since the last investor poll was taken on Sept. 10, the market gauge has risen 6.6 percent.
Bond investors also have shown little concern over the events in Washington. Ten-year U.S. Treasury bonds yielded 2.79 percent at 4 p.m. Thursday in New York compared with an average 4.61 percent yield during the past two decades.
U.S. real estate is rebounding, with the median price of an existing home up 12.8 percent in October from a year earlier. In August, median home prices jumped 13.4 percent from a year earlier, the fastest rate since the height of the real estate boom in 2005.
Temporary Deal
Still, the poll shows that concern over a new shutdown lingers because the agreement Obama reached with Republicans to end the deadlock will fund the government only through Jan. 15 while extending the legal debt limit to Feb. 7.
The federal budget deficit for the fiscal year ended Sept. 30 declined to $680 billion from $1.1 trillion the prior year as Congress raised taxes and cut spending.
Even so, investors consider the political stalemate over government finances the gravest danger to the global economy; it is cited as the biggest risk by 35 percent, up from 26 percent in September. Slowing growth in China, which topped the list of risks in the last poll, is cited by 26 percent this time.
Obama’s signature health-care program is weighing on some respondents as it has been marred by flaws in the federal online insurance exchange since it debuted Oct. 1. Cancellation notices that insurance companies sent out to hundreds of thousands of individual policyholders provoked a furor that Obama responded to by urging states to permit renewal of the plans for a year.
Sixty-eight percent of poll respondents say they are pessimistic about the impact Obama’s policies will have on the investment climate in the U.S., up from 52 percent in September.
Overseas Investors
Disclosures of National Security Agency spying continue to dog Obama. Fifty-six percent of poll respondents say revelations that the NSA eavesdropped on phone conversations of world leaders, including Germany’s Angela Merkel, are a “big problem” for U.S. credibility.
Respondents say the disclosures are a “major concern” undermining confidence in the privacy safeguards of U.S.-based technology companies such as Google Inc., Facebook Inc. and Apple Inc.
The decline in the president’s standing is most precipitous among investors outside the U.S., who have consistently viewed him more favorably than have American investors.
Forty-eight percent of poll respondents overseas have a favorable opinion of Obama, down from 64 percent in September; 21 percent of U.S respondents hold a positive view of the president, down from 25 percent in September.
‘Bungled Rollout’
Kenneth Broux, a strategist at Societe Generale in London, says his diminished confidence in Obama is “mainly a reflection of the federal shutdown and bungled rollout of Obamacare.” Foreign policy, he adds, “has been a disaster.”
Respondents don’t expect Washington to make any progress in addressing the nation’s long-term budgetary issues when Republicans and Democrats reach the next deadline as government funding runs out in January. Fewer than a quarter say lawmakers are likely to reach an agreement settling the partisan clash over taxes and spending for even two or three years.
By a margin of 50 percent to 40 percent, poll respondents say the U.S. should pursue more austerity rather than more fiscal stimulus, with the remainder undecided.
The poll was conducted by Selzer & Co. of Des Moines, Iowa. It has a margin of error of plus or minus 3.6 percentage points.
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