Wall Street will be looking for a little bit of everything from President Obama's speech to Congress tonight—at least a smattering of detail but a whole lot of enthusiasm that there's hope in sight for the battered economy.
"What I would love to hear is something that sounds a little bit more like his campaign speech in terms of relative optimism," says Diane de Vries Ashley, managing partner of Zenith Capital Partners in Coral Gables, Fla. "I personally feel that it's time for a little bit of a lift."
Photo By: Matthias Kötter
Obama delivers the speech against a backdrop of gloom, underscored by a 13 percent drop in stocks since the president took office more than a month ago—though . At the same time, Obama has come under criticism for being too dour when painting a picture of the nation's economic straits and the prospects for the future.
For Chip Hanlon, Obama is much like a top-shelf stock that has seen some of its luster fade amid the credit crisis.
"Over the last month the expectations of him have come down a lot," says Hanlon, president of Delta Global Advisors in Huntington Beach, Calif. "When he was inaugurated he was probably a lot like a stock that had a big run and wasn't priced for a mistake—it can't afford a blip in its quarterly earnings report. He's been sold off a bit. He has a chance to surprise to the upside."
But few expect the speech, sort of a quasi-State of the Union presentation, to be a big market mover.
A slew of negatives on the economy and the markets, coupled with a growing sense of unease over a lack of specifics in the new government's plan to attack the problems, will necessitate more than a good speech to begin a recovery.
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"I don't think it's a mistake or a coincidence that the market has been selling off since the day he was elected and been selling off even more steeply since the day he was inaugurated," Hanlon says.
"The market rightfully disliked and distrusted the last president, but the market has sensed that we may have jumped out of the Bush frying pan and into the Obama fire."
State of the Union-type speeches are usually long on rhetorical flourishes but lacking in real details, a problematic trend for a White House looking to convince the public that it does have a solid plan towards recovery.
That has led to a bit of hope that the president unveils at least some specifics tonight on what he plans to do to rejuvenate the economy.
"Everybody on Wall Street is looking for details. That's been the real issue with the stimulus package," says Nadav Baum, managing director of investments for BPU Investment Management. "It's just too vague to say, 'we're going to throw "x" amount of dollars at this.' Markets are always looking for a degree of certainty."
