"And it was the din of all these hollow-sounding voices that made him halt irresolutely in the pursuit of phantoms. He gave them ear only for a time but he was happy only when he was far from them, beyond their call, alone or in the company of phantasmal comrades."
James Joyce: A Portrait of the Artist as a Young Man
In the game of life, those in the public eye of judgment have found it necessary to affect outcomes by establishing expectations. In that position, it doesn't take long to figure out that the success is not measured by actual results or output, but output versus expectations. Some call it a game and those aren't even the cynics. Unfortunately, this game seems to work when it comes to things like measuring our elected leaders, and judging the stock market and economy.
So, we have to come to expect the worst example of sandbagging on economic goals and achievements from the people we elect. We buy broad promises that offer little detail and more recently it's been good enough to say hope and change would make life better.
How does one measure hope and change? How does the public penalize the politician that comes up short of an unspecified goal or promise?
|
GDP First 5 Years |
Reagan |
Obama |
|
Year 1 |
+2.6 |
-2.8 |
|
Year 2 |
-1.9 |
+2.5 |
|
Year 3 |
+4.6 |
+1.8 |
|
Year 4 |
+7.3 |
+2.8 |
|
Year 5 |
+4.3 |
+1.9 |
|
Average |
+3.4 |
+1.2 |
In many cases, politicians get away with coming up short. The stock market is a little more discerning with respect to retribution when it comes to failure to achieve stated goals. This is why management offers watered-down expectations, and then analysts water them down even further, so the official consensus is typically well below actual potential and true markers of success. Of course there are exceptions to Wall Street expectations, including the superstar CEO and company that seems to always come up short, but still enjoys a strong stock price.
For those companies that do miss watered-down expectations, there has been massive hell to pay.
No Love for Don Juan
Channel surfing the radio on my way home last night, I heard a newsreader say: "and he didn't even use the "L" word." He was referring to Juan Pablo, the star of the 18th season of the 'Bachelor' who came in with huge expectations. The single father, former soccer player and Latin lover ready to warm the hearts of American women, hyped more than any other lead in the show's history. Turns out this dude was a dud. As the show progressed, complaints mounted and led to a new consensus that he was the "worst ever."
Homophobic
Narcissist
Mean
The guy didn't propose at the end of the show, and never uttered the word 'love' despite picking his mate in the finale that saw its ratings down 9% from the year-ago period.
No Longer Swooning
President Obama can relate to Juan Pablo this morning. In the latest Wall Street Journal survey, his approval rating has plummeted to an all-time low of 41% while his disapproval is now at 54%. I'm not surprised with current poll numbers as it was clear the large crowds were getting smaller, and fewer people were swooning in the wake of the president's presence. I think the most alarming part of this survey was the negative rating of 38% among Democrats versus a 35% positive.
ACA
49% think Obamacare is a bad idea
35% think Obamacare is a good idea
Last night, a republican won a special election in a district President Obama carried both times and against an opponent that outspent him 3 to 1. David Jolly won the seat running solely against the new healthcare law.
The Market
Stocks have benefited from several factors, including low expectations. Those expectations remain low but are now unclear. Will the economy grow 3.0% or more this year, and if it's a lot less, can we continue to make excuses? I'm not sure, but there is no doubt when it comes to the expectations game it still favors the market and investors.
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