Conservatives do not trust the president in his role as commander in chief. They want more than a shot across the bow, but they’re not hearing clear strategies and intentions.» Read More
Note: This is a somewhat revised edition of Friday's post.
Recessions are part of capitalism. They happen every so often. We’ve had two in the last super-prosperous 25 years. And it looks like we’re entering a third one after Friday’s jobs-loss report.
The unemployment rate went up to 5.1 percent, which is still a low number in historical terms. But the March labor report showed a loss of 80,000 payroll jobs, while payrolls in the prior two months were downwardly revised by 67,000. Non-farm payrolls have fallen for three straight months after peaking last December. Private-sector jobs have dropped four consecutive months.
This is a big warning sign. Within the private-sector report, professional and business services payrolls — one of the biggest gainers over the past 15 years — dropped 35,000, the third straight monthly decline following a December peak. Meanwhile, the household survey that picks up entrepreneurial small-business totals is now down 678,000 jobs since a peak in November.
The recessionary handwriting looks to be on the wall. Other recession indicators used by the National Bureau of Economic Research, such as disposable income and overall business and retail sales, are now several months below their peaks of last fall.
Lest we get too gloomy, there were some positive spots in the employment report. For example, the median duration of unemployment actually fell to a fifteen-month low of 8.1 weeks in March, the lowest level since December 2006. This indicates that about half of the unemployed are finding jobs in about two months. (Hat tip to Prof. Mark Perry of the Carpe Diem blogsite.) Additionally, aggregate hours worked in March actually rose, as did the private and manufacturing work weeks.
So while there is an economic correction at work, it could prove relatively mild. Let’s remember, the U.S. has experienced ten recessions since 1947, averaging ten months in length. But in the more recent high-tech quarter century, in which tax rates and inflation have been historically low, the two recessions of 1990-91 and 2000-01 lasted only eight months.
If the current slump began in November, it could be over by late summer.
And let’s also remember that recessions are therapeutic. They’re even necessary to create the foundations for the next recovery. Economic excesses always occur in free-market capitalist economies, and from time to time they must be cleansed. Just think about the excessive risk-speculation, leverage, and housing prices of the current episode. If anything, recessions make for clean starts.
And think of this: Despite housing woes, credit problems, and the sub-prime virus, banks are still lending to businesses. In other words, we don’t have a genuine, across-the-board credit crunch. This is very good news, and more evidence that an economic contraction will not be drawn out.
That said, there are two related issues that worry me. First is the continued decline in the value of the dollar, which has permitted the global commodities boom (energy and food) to leak into higher U.S. inflation. Bulging commodity costs have depressed the profits of non-financial domestic businesses, where after-tax earnings are down 24 percent from a peak in late 2006.
Profits are the mother’s milk of stocks, businesses, and the economy. And because profits have fallen, some businesses are contracting and laying off workers in order to bring costs back in line with revenues.
If Washington really wants to help the business sector recover, nothing would be better than an across-the-board cut in corporate tax rates. This competitiveness-enhancing action would lower tax costs, boost jobs, and lift worker wages. The growth incentive would reignite the economy. A permanent corporate tax cut would be far better than a temporary consumer rebate.
The other worrisome issue is inflation. The March jobs report showed a continued easing of hourly wage growth. After a 4.3 percent peak in late 2006, average hourly earnings for non-management workers has slowed to 3.6 percent for the twelve months ending in March. Consequently, headline consumer inflation of 4 percent continues to erode average wages. While most all market observers are focused on the sub-prime credit crisis, it’s the pick-up of inflation in recent months that has dampened consumer-spending power and corporate profits.
As lawmakers in Congress contemplate a massive FHA housing bailout package, they would be better advised to look more carefully at the recession-ending benefits of lower business tax rates and a stronger greenback.
In fact, liberal economists should look at a new Rasmussen poll in which 48 percent of voters say the best thing government can do is get out of the way by reducing taxes and regulations. Only 36 percent disagree. What’s more, 59 percent of voters believe it’s more important to create economic growth than to reduce the income gap between rich and poor. Finally, 49 percent say the best government policy is to reduce spending.
Keynesian-style politicians please take notice.
Recessions are part of capitalism. They happen every so often. We’ve had two in the last 25 years. And it looks like we are entering a third one after today’s jobs-loss report.
The unemployment rate went up to 5.1 percent. Non-farm payrolls have fallen for three straight months. Private payrolls have fallen four straight months. And the entrepreneurial small-business-oriented household survey is below its November peak, showing a loss of 678,000 jobs.
These are relatively mild job losses so far. So one can hope this will be a relatively mild recession. But frankly, no one knows for sure.
A lot of Keynesian economists expect the tax rebates will promote recovery. But I doubt it. It’s a demand-side nostrum where only about 20 percent of the checks will be spent. It creates no economic-growth incentives. The 2001 rebates were of little consequence, and it wasn’t until marginal tax rates were cut in 2003 that the economy recovered strong. Even worse, Papa Bush raised taxes in 1991, which retarded recovery.
As a guess, the recession began in November or December. The stock market is basically flat today. And with all the pessimism out there, investors may have already discounted the economic downturn, with the market reaching a low on January 22. It’s up about 4 percent since then, which may mean shareholders are anticipating a new economic rebound in the second half of this year.
Recessions are therapeutic. They cleanse excess from the economy. Think about excessive risk speculation, leverage, and housing. Recessions are curative: They restore balance and create the foundation for the next recovery. Despite the housing and credit problem and the sub-prime virus, banks are still lending to businesses. So we don’t have a genuine credit crunch across the board. That is very good.
On the other hand, domestic corporate profits are down 20 percent from their peaks of late 2006. Since profits are the mother’s milk of stocks, businesses, and the economy, we will need to see profit improvement before the recovery-turn can be called.
How this recession affects the presidential race remains to be seen. Hill-Bama are calling for big-government spending and trade-protection--exactly the wrong medicine. Oh, and did I say tax hikes? Just what the doctor didn’t order. If government wants to play a role, economic policymakers should reduce the corporate tax rate to generate more profits, more jobs, and higher real wages. That would reignite the economy. Home prices and sales should be driven by corrective market forces.
Meanwhile, the U.S. dollar, which some are now calling the U.S. peso, should be appreciated in order to curb inflation. Inflation is the biggest economy-killer of all. Whether Sen. McCain will adopt Reagan-style growth policy to lower taxes and curb inflation remains to be seen.
In a column written just after the Bear Stearns meltdown, I asked whether the venerable old firm was made a sacrificial lamb. Was Washington sending Main Street a signal that a big Wall Street firm could fail?
There’s still a lot here that I don’t know. I don’t know the value of Bear’s collateral, the counter-party story, and so forth. However, if the Fed had changed its discount-window policies earlier, to reflect the post-Glass-Steagall era, Bear Stearns could have accessed short-term Fed loans. This could have made all the difference in the world.
Better yet, had the Fed opened the discount window to the broker-dealers last August, when the credit storm first hit, the economic and financial landscape would look quite different today. Instead of a run on Bear Stearns, and all the other market-related ruptures, we would have had greater stability earlier in the game.
Here’s what a very anguished Bear Stearns CEO Alan Schwartz had to say in his testimony before the Senate Banking committee yesterday:
It’s my strong belief that by every measure that I can think of, that our balance sheet, our capital ratios, our risk profile, lined up well with all of our leading competitors. So I do believe that if as a policy measure the discount window had been open to investment banks for their high-quality collateral, I think it’s highly, highly unlikely in my personal opinion that we’d be in the situation that we find ourselves in today.
Some additional perspective from guests on last night’s Kudlow & Company:
Vince Farrell, managing director of Scotsman Capital: “The discount window should have been opened [to non-commercial banks] ten years ago. You and I agree on that one. Glass-Steagall was repealed. They should have treated investment banks and commercial banks the same … I agree with Al Schwartz that it should have been opened, and Bear Stearns would not have gone out. I personally believe that Bear Stearns was thrown under the wheels of the bus for several reasons. Principally among them, the regulators wanted to show — Treasury Department included — that we’re going to discipline our system … So I think from the regulators’ viewpoint, they’re probably thinking, “Okay, we did it alright; what we had to do was sacrifice Bear Stearns, so be it.”
Mike Ozanian, Forbes magazine senior editor: “I think they should have let Bear go to the discount window earlier. I think it would have saved Bear. That would have been the right thing to do … As a guest on your show a couple of months ago, it was my belief that instead of just bashing down the fed funds rate, the Fed should have been using the discount rate at the beginning. And I think it would have been able to spot and identify problems in the banking sector instead of reflating the entire economy. So not only do I think it would have been better for Bear Stearns — and I agree with your column — but I think it would have been better for the overall economy.
The bottom line in all this is that Bear Stearns should have been given the opportunity to access the discount window earlier in the game.
People are wondering how far home prices have to fall before hitting bottom, or some sustainable level. One way is to look at what a price reversion to trend would entail.
From 1982 to 2001, median existing home prices grew at a 4 percent per year trend rate. We select 2001 as a cut-off, because the Fed dropped the funds rate to 1.75 percent and home sales took off in the subsequent years.
Home prices also surged; until they peaked in 2006, home prices grew at an 8 percent per year pace, double the 1982-2001 trend pace. Home prices have started to correct, with a 2 ½ percent drop in 2007 and 7 percent drop so far this year.
Comparing actual home prices with what the 1982-2001 trend projected, we see that prices in 2006 were almost 40 percent above trend. Current prices are still 16 percent above the trend projection.
If prices are to revert to the trend by next year, they still need to fall another 12 percent from current levels. Reversion to the trend by 2010 would require a 10 percent decline from current levels.
Obviously, prices still have a way to go. However, this also means that homes are becoming more affordable. The home affordability index is now at the highest level since early-2004. (Thanks to Mark Perry at the Carpe Diem blogsite for highlighting this).
Falling home prices aren’t pleasant, but they are part of the market’s self-correction process. It’s also worth noting that even if prices revert to the trend growth rate, a home purchased more than five years ago would still have appreciated in value.
What follows is the transcript of my interview on Kudlow and Company last night with former Republican presidential candidate, Massachusetts Governor Mitt Romney.
Kudlow: A lot of conservatives think that Senator John McCain and Mitt Romney would make a lovely couple. So here to tell us about this relationship is a great friend of this program, former presidential candidate, Governor Mitt Romney of Massachusetts. Welcome back to the show, sir.
Romney: Thanks Larry. Good to be with you.
Kudlow: Let me begin with this. “The Great Mentioner in the Sky” has you very high on the veep candidate list. Before I ask you about that part of it, I want to kind of turn the tables. If you were the presumptive nominee of the GOP, what are the one or two key qualities that you’d be looking for in your vice president?
Romney: Well, I’m not the presumptive nominee. So I haven’t given a lot of thought to that. But I think history says that the most important characteristic that you look for in a VP is someone who could become the president, in the case that were necessary. That’s what people look for. They’re not looking for anything other than that. Could this person lead the country in a critical time? And these are critical times. So I think you’ll find both parties, the candidates of both parties, selecting individuals who they think could be great presidents if necessary. And people who hopefully could add some political clout as well.
Kudlow: Right now, Mr. McCain is really getting all of it his way. Hillary and Obama are just killing each other. Senator McCain is surging in the polls. But as we move down the road, and we get to the conventions, and we get to the fall campaign, aren’t the two key issues going to be Iraq and the economy?
Romney: You know, I think you’re right. I think people will come home to their party. People talk before an election about how divided the parties are by virtue of the primary. But, after each party has selected their nominee, I think what happens is that people focus on the issues and the differences as to where the candidates would take the nation. And in the case of Senator McCain, he’s made it very clear. He’ll do whatever is necessary to protect the American people. And he’ll also strengthen our economy by reining in spending, and by keeping our tax burden low. By helping people get health insurance, but not by adding hundreds of billions of dollars of new costs in Washington. He will restrain government and grow the economy in the private sector. That’ll make the difference.
Kudlow: What would you recommend to deal with the mortgage mess which appears to be pulling down the economy? Fed head Bernanke today suggested the “r” word for the first time—maybe a small contraction in the first half. How would Governor Mitt Romney solve the mortgage mess?
Romney: Well, I think when you look at the economy, you have to consider that there are two long-term trends that you’re concerned about. One is the up and down cycles. And that’s what’s happening in the subprime mortgage crisis. And the other is the long-term trend for the economy. And, on the short-term, the ups and downs of the mortgage crisis, I think what you have to do is first of all, help homeowners who may lose their homes. Help them stay in their homes, if they can meet the, if you will, the most basic payments of their mortgage. And you want them to stay in homes, instead of having more homes fall into foreclosure. It hurts families. Of course it hurts the market as well. And Secretary Paulson has made a number of recommendations to do just that. You also want to make sure there’s enough credit in the market to keep the credit crunch in one area of the economy—mortgages—from affecting the overall economy. And the Fed has taken action in that regard as well. Longer term however, I think you have to say why is it that people are taking their investments out of dollars, out of America? Why are they concerned about our future? And I think it’s because of overspending in Washington. Over-government spending. And that’s something which is going to have to change.
Kudlow: Do you think a stronger dollar becomes a campaign issue at any point? A lot of people believe the weak dollar has created currency risk, along with the credit risk of the mortgage problem. And that’s kind of stopped foreigners from investing here.
Romney: You know, I think as an overall campaign theme, people are not going to get focused on strong dollar—I think most people don’t really give a lot of thought to currency relationships. But I do think that they’re concerned about, “Is America strong”? And, are we going to be a strong and vibrant economy going forward? And, who is the person most capable of keeping America strong economically? And of course, if you want to see strength in our economy, strength in our dollar, you want to see people of the world recognize that the obligations that our government has made, are obligations it can keep. And right now that means we’re going to have to reform entitlements. And we’re going to have to rein in this tendency of Washington to keep on spending, spending, and spending. And when it comes to spending, I don’t think anyone in Washington has a better record than John McCain at restraining unnecessary and pork-barrel spending.
Kudlow: You have a strong investment background. Would you buy the stock market right now? For the long run?
Romney: Well the answer is yes. You know, when things are soft, when people are fleeing, that’s a good time typically to be investing. I believe in the long-term strength of America. I think we’ll make the right choices this November. I think we will continue to lead the world by virtue of being the most innovative economy in the world. And so I think America’s future is bright. But we’re going to have to make some tough decisions in Washington. And instead of promising people things that we can’t possibly deliver, and putting burdens on our kids and on taxpayers, we’re going to have to finally spend what we take in, instead of spending more than we take in.
Kudlow: We’ve got a brief [video] clip. You endorsed Senator McCain back in mid-February. And he made some comments about you. Let’s take a look at this for a moment.
[Text of McCain’s comments: “I look forward to campaigning with Governor Romney. And I look forward to his continued, very important, role of leadership in our party that he has exercised in the past, and will exercise even more so in the future. Governor Romney, I thank you…I am honored, I am very honored, to have Governor Romney and the members of his team at my side.”]
Kudlow: Mr. Romney, you were with [McCain] in Salt Lake City, what a week or ten days ago? What did you guys talk about when you were out there?
Romney: Well, we had some fun. We were in Salt Lake, and in Denver. We were talking to donors and I expressed confidence in the future of the McCain campaign. I’ve asked my donors to be generous in supporting his campaign. I want to make sure we elect John McCain the next President of the United States. And so we spent some time talking about the economy. We talked about the fun of the campaign—some of the humorous experiences we’d had. I spent some time getting to know his campaign team. And it was fun being back on a campaign airplane, seeing members of the press again—some of whom used to follow my campaign.
Kudlow: When you were with him, did you get good vibes from him? How’s your relationship with him?
Romney: You know, we get along very well. Senator McCain was kind enough to campaign for me in ’94, when I ran against Ted Kennedy. He campaigned again for me when I ran in the governor’s race. We’ve been friends on a number of fronts. We worked together on the Olympics. And while we didn’t see everything eye-to-eye, throughout the campaign, we do believe the same things about strengthening our national defense, about strengthening our economy by keeping the scale of government down, and lowering taxes. We care very deeply about America becoming energy independent. We want to see more people have health insurance. So, on major issues of the day, Senator McCain and I are on the same page.
Kudlow: So if he asks you to serve as his veep, would you take it?
Romney: You know, I think, I frankly think any Republican leader in this country would be honored to serve with Senator McCain as his running mate. And he’s got a long list of people he can turn to. I’m not going to conjecture as to who it might be. But I think there’s some terrific people, and he’ll make a choice there. But I’m certainly not holding my breath.
Kudlow: Could you carry Massachusetts?
Romney: I’m not going to make any predictions in that regard.
Kudlow: Do you think Mr. McCain needs a strong governor with executive experience who knows the economy?
Romney: Oh, I’m always partial and in favor of governors. I think governors bring a lot to a national ticket. But there are also some great senators and other leaders in our party who I’m sure he’s considering.
Kudlow: Alright, Governor Mitt Romney. We appreciate it. It’s wonderful to see you again sir. All the best of luck.
Romney: Thanks Larry. Good to be with you.
The market is rallying big on news reports that Bush will support some kind of Frank–Dodd bill to bailout as much as $400 billion in sub-prime mortgages. CNBC is talking about the ISM, but I doubt that’s much of a factor. The economy is basically flat right now. Profits are soft. Exports and foreign earnings are bright spots.
The bigger theme is the Fed’s move to reduce risk through its earlier actions with investment-bank discount-window operations. And now comes the likely FHA move to guarantee refinanced mortgages on a grand, unprecedented scale. It was in the Washington Post over the weekend and it’s front-page IBD this morning. My contacts confirm the White House movement.
Stocks and the dollar are up; Treasury prices and gold are down. There’s a slight improvement in risk-taking. Swap spreads are narrowing. Treasury man Henry Paulson’s regulatory stuff is not a factor, except to highlight that the Fed is operating on its own judgment to backstop the financial system and take bad collateral.
Wall Street wants this government assistance. They want the bailout. I prefer markets to bailouts, but there's no stopping the Frank-Dodd locomotive.
However, the GOP should demand a partial or full repeal of the Community Redevelopment Act (CRA) that was responsible for the substandard subprime loan creation in the first place, going back ten years ago. So far, however, no one wants to touch this hot potato.
The latest Rasmussen poll in Pennsylvania shows that Hillary’s Bosnia gaffe is hurting her much more among voters in the Keystone State than are Obama’s problems with Rev. Jeremiah Wright.
According to Rasmussen, Hillary’s lead has shrunk from 10 points to only 5, and she now is ahead 47 percent to 42 percent. In early March her Pennsylvania tally was 52 percent. Meanwhile Obama has picked up 5 points, moving from 37 to 42.
RealClearPolitics polling averages for Pennsylvania still show Hillary with a 15 point lead, 52 to 37. But while Rasmussen’s sample is dated March 31, RealClear’s three-poll average -- including PPP, Franklin & Marshall, and Quinnipiac -- were sampled during the period ending March 16, two weeks ago.
So the full effect of Hillary’s cognitive dissonance concerning Bosnia airport sniper fire that never existed, along with her implied insult to the military forces guarding the airport, has probably taken a major toll on her standing in a state that has many red counties.
Also, Obama’s endorsement by Pennsylvania Sen. Bob Casey may be having a strong positive effect. Jerry Bowyer, who has operated in Pennsylvania politics for years, believes the Casey name is golden- much like the Kennedy name in Massachusetts.
If Hillary squeaks out a 5 point win in Pennsylvania, she is sunk. That kind of close race would doom her chances for continuing. And we can expect a large number of Democratic graybeards to come out of the woodwork to call for her dropping out.
Treasury man Henry Paulson’s ideas to remodel the regulatory system governing financial markets are dominating the headlines today. But there may be a bigger story coming down the road, one that is of much greater immediate significance to economic policy.
Namely, there are lots of rumors out of Washington that the Bush administration is going to capitulate to the Chris Dodd–Barney Frank FHA bailout of sub-prime mortgage holders.
This could run up to $400 billion of FHA guarantees. And even though lenders would take up to a 15 percent haircut on discounted loan values, and borrowers would have to give back a percentage of their future capital gains if home prices ever rise again, this would be the most sweeping housing-assistance plan in history. It could include as many as 2 million homeowners, and a big chunk would go to rescuing delinquent homeowners now in foreclosure.
Though President Bush told me in an interview a couple of weeks ago that he didn’t like the Dodd–Frank plan, it seems that the Fed/Treasury effort to sell Bear Stearns to JPMorgan and pour a $30 billion backstop loan to cover sub-prime collateral has a lot to do with what is apparently a major shift in White House policy.
In other words, Main Street is up in arms over the appearance of a Wall Street bailout.
The deal is not done yet, but the rumor mills are heavy. It seems like nowadays in Washington nobody is allowed to fail at anything. Of course, as Friedrich Hayek taught us years ago, free-market capitalism is about success and failure. But that view is very unpopular in this election year.
As for Mr. Paulson’s regulatory-reform plan, the Federal Reserve would be the big winner. But nothing’s gonna happen for years as the regulatory bureaucracy fights among itself and its chief lobbyist backers.
One deregulatory measure that is lacking from anybody’s plan is a sharp cutback or outright elimination of the Community Reinvestment Act (CRA), which essentially puts a gun to the head of all lenders unless they issue mortgages to various minority groups, low-income folks, and both legal and illegal immigrants. Lenders out of compliance would be penalized as regulators would disallow any new business plan for mergers, acquisitions, or new products. Community groups like Acorn could rat out lenders by showing data to the regulators who then would step into action.
Along with the Fed’s easy-money housing bubble, CRA is one of the prime movers in the sub-prime housing mess in which we find ourselves today.
But no one wants to touch CRA.
Pollster Frank Newport, a Kudlow & Company regular and editor-in-chief of the Gallup Poll, revealed some very interesting information this morning. These numbers below are a big deal.
As I wrote yesterday , we're not far from the point where John McCain establishes a commanding lead in the run-up to November.
Here's the Gallup headline:
If McCain vs. Obama, 28% of Clinton Backers Go for McCain
PRINCETON, NJ -- A sizable proportion of Democrats would vote for John McCain next November if he is matched against the candidate they do not support for the Democratic nomination. This is particularly true for Hillary Clinton supporters, more than a quarter of whom currently say they would vote for McCain if Barack Obama is the Democratic nominee. . . .
Incidentally, Mac 's foreign policy speech later today indicates a McCain administration will spend diplomatic efforts shoring up our allies. Obama, on the other hand, wants to work with our enemies. Big contrast there. Think Hugo Chavez. Ahmadinejad. Baby Assad. Kim Jong-il. Two totally different foreign policies between Mac and Obama.
Hillary’s fictitious tale of sniper fire in Bosnia might help Obama, but the real winner here is John McCain.
The CBS footage making the rounds clearly refutes the former first lady’s claim that she had to run for cover from sniper fire when she got off the plane in Bosnia. There was no sniper fire. In fact, dignitaries greeted Mrs. Clinton and her daughter Chelsea on the tarmac. She then had a photo-op posing with soldiers. She and Chelsea were mingling, leisurely, with dignitaries and others at the airport ceremony.
A boon to Obama like some media commentators predict? Maybe. But he’s had some delusional episodes of his own. Before changing his tune, Obama claimed that he didn’t hear — in person, inside the church — Reverend Jeremiah Wright’s inflammatory, anti-American, black power sermons. A whopper delusion.
No, the real winner here is John McCain. Mac did come under sniper fire. He came under all manner of wartime fire. His plane was shot down from the sky. Shortly thereafter, he was taken to the Hanoi Hilton as a prisoner-of-war — for five years.
McCain may occasionally misspeak, as he apparently did on the question of Iran arming al Qaeda. (Although many do in fact believe Iran is arming the terrorist group.) But rest assured — John McCain is not a liar. Far from it. He has absolutely no need to bolster his life experience when it comes to warfare, combat, or anything else.
Here’s what’s going on right now: The more the American public sees and hears Hillary and Obama, the more voters are moving to McCain. Democrats and independents are shifting to McCain in droves. McCain commands a strong lead over Hill-Bama in the national match-ups. And his favorables are rising while his unfavorables are falling. It’s just the opposite with Hill-Bama: Unfavorables are up, favorables are down.
This whole faux-military, faux-commander-in-chief Hillary charade reminds me of Sen. McCain’s GOP-debate zinger earlier in the campaign. When asked about Hillary’s ridiculous earmark for the Woodstock museum, McCain replied that he didn’t know much about it. He said he was “tied up at the time.” Voters remember stuff like that. They will remember Hillary’s Bosnian delusion. They will remember Obama’s Reverend Wright controversy, too.
Right now the stock market is heading higher in part because of aggressive Fed actions to pinpoint discount loans and backstop the financial system. This, of course, is mitigating the sub-prime problem. But don’t discount McCain’s role in this, too. His clear emergence as the frontrunner, with an ever-widening lead over Hill-Bama, is also boosting stocks. Why? For the simple reason that tax burdens will not be raised on investors if McCain becomes president. Nor will free trade be cut off.
From my perch, we don’t look far from the point where John McCain establishes a commanding lead in the run-up to November. Incidentally, the stock market bottom was back on January 22. This was right about the time the Arizonan started to surge.
Think of it.