CNBC's Quintanilla on the Inaugural Stock Drop: 'This Was Brutal Even by Those Standards'
Presidential inaugurations are traditionally bear market days for stock traders, but Jan. 20, 2009 was by far the worst. The Dow Jones Industrial Average (DJIA) lost 332 points (4 percent) and the broader S&P 500 index (S&P) lost nearly 45 points (5 percent).
CNBC “Squawk Box” co-host Carl Quintanilla appeared on the Jan. 20 “NBC Nightly News” to offer an explanation.
“Well, historically stocks don’t respond well to inauguration days at all,” Quintanilla said. “But this was brutal even by those standards – the worst day for stocks on any Inauguration Day in history.”
Quintanilla noted the obstacles the new Obama administration has ahead of it, especially as Treasury Secretary designate Tim Geithner is facing a more difficult than expected confirmation fight in the U.S. Senate. Questions have arisen over why Geithner failed to pay his taxes.
But, even if that hurdle is cleared, Quintanilla declared that if the economy doesn’t respond to the Obama stimulus, it’s much worse than a recession.
“The president’s going to meet with his economic team tomorrow,” Quintanilla said. “We’re going to have these confirmation hearings for Tim Geithner, the Treasury Secretary nominee. Their mission will be convincing investors that this problem can be fixed with enough stimulus. Economies that don’t respond to that are said not to be in recession, but in depression.”
As for the inaugural market plunge, Quintanilla told viewers the new administration could impact the markets eventually, but the real problem is the lack of confidence in the banking system that is plaguing the economy.
“There is all the pageantry and all the hope surrounding the address today is something that might bleed into the markets down the road,” Quintanilla added. “But if you look at some new stocks today – Citi (NYSE:C) below $3,
Although many talking heads have dismissed the notion that Obama’s presidency and the trends in the markets aren’t related, Business & Media Institute advisory board member Don Luskin showed there is a connection to politics on CNBC’s Jan. 20 “The Call.”
“Well, you know – when you say more or less rallying since Obama was elected, I say less rallying,” Luskin said. “The S&P’s off about 18 percent since Election Day – that’s definitely less rallying. It’s not just Obama, but look, let’s face it – we’ve got an anti-business Democratic congress, we’ve got a Democratic president who’s more centrist than that, but who isn’t more centrist than that?”
According to Luskin, the anti-business sentiment in
“We’ve got a real battle going,” Luskin added. “We don’t know whether this administration is going to be able to hold back the populist impulses of this Congress or not. Stocks are scared to death and they should be.”