As investors grapple with the worst market since 1996, the President says stocks are a good deal.
Speaking at a press conference on Tuesday, President Barack Obama said “buying stocks is a potentially good deal if you’ve got a long-term perspective on it…”
He also said if lawmakers pay too close attention to Wall Street's "fits and starts" it could lead to bad long-term policy.
Since Obama released his budget last Thursday the S&P 500 has fallen 8.4%.
Is Obama To Blame For Market Turmoil?
Over the past few days there’s been a growing outcry that the budget is the reason for the recent stock market plunge. That it was the budget which sent stocks to a level far below the critical technical level of 740 on the S&P 500 , which many investors including FM trader Jeff Macke really thought would hold.
In his blog, Fast Money producer John Melloy wrote about this phenomenon. He said, in speaking with big investors Dylan Ratigan has learned that the Street is worried about this massive budget for one of two reasons: 1) because of higher taxes and/or 2) because the potentially tremendous increase in the deficit -- will have the effect of lowering the rate of return for investors over the long-term.
Therefore, they are applying an even lower P/E multiple to stocks.
Daniel Clifton, Strategas Research head of policy research, is among the growing number of Obama critics. He tells Fast Money the new spending is inefficient per dollar of debt issued. And we can’t pay for it.
“We’re going to spend about $4 trillion and we only have $2 trillion in revenue. Not only will we have to raise taxes but we’ll probably have to create new taxes.”
Among the first people to point out this phenomenon was CNBC's Larry Kudlow. In a somewhat incendiary post published Friday he said Obama had declared war on investors.
Democrats, however, have expressed confidence that the reforms will work. "We need economic growth and access to credit. That is what we are focused on in the next year or two," White House Budget Director Peter Orszag said before the House of Representatives Budget Committee.
Orszag stressed that Obama's 10-year budget plan will be the engine of economic growth, if Congress embraces it.
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Trader disclosure: On Mar. 3rd, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (MS), (TM), (AAPL), (MOS); Macke Owns (GE) Puts; Seymour Owns (EEM), (BAC), (FXI); Seymour's Firm Owns (BIDU), (COP); Najarian owns (GDX), (PALM), (BX); Najarian Owns (DNA) Calls; Najarian Owns (DOW) Call Spread; Najarian Owns (FCX) Call Spread; Najarian Owns (GE) Put Spread; Najarian Owns (MS) & (MS) Calls; Najarian Owns (MOS) & (MOS) Calls ;Najarian Owns (V) & (V) Calls; Finerman's Firm Owns (PBR), (RIG); Finerman's Firm Owns (DNA) & (DNA) Calls; Finerman's Firm Owns (BAC) Preferred; Finerman's Firm Owns (WFC) Preferred; Finerman Owns (WFC) Preferred; Finerman's Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (USO), (BAC), (BBT), (VNO)
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