Obama Town Hall: Wall Street Still Scared

Pres. Obama is not a popular figure on Wall Street, and unfortunately nothing he said in his CNBC Town Hall is likely to change that perception.

There were two issues in particular where traders were looking for some flexibility: extending the Bush tax cuts for those making over $250,000, and toning down the "class warfare card" that vilifies the financial industry.

On both counts, the President did not change his position or even his tone.

On extending the Bush tax cuts:

1) "I can't give tax cuts to the top 2 percent of Americans, and lower the deficit at the same time. I don't have the math."

2) "We can't give $700 billion away to America's wealthiest people."

On the class warfare card:

1) [responding to objections from Wall Street about the cost of the bailout of GM and the car companies:] "They [Wall Street] didn't mind intervening when it helped them"

2) "Most folks on Main Street feel like THEY got beat up on."

In sum, those on trading desks looking for a more conciliatory tone, or that the President might move more toward a political "center," seemed disappointed.

So why didn't the stock market drop? There was a modest drop as the President made clearly his opposition to extending the tax cuts for the wealthy, but it quickly recovered.

Stocks rallied before the President came on as the S&P 500 passed the 1131 resistance level (this was Friday's intraday high).

Most traders attribute the rise this month to the "hope trade": that traders have little to show for this year, that stock picking has not been a particularly successful strategy for the vast majority, that ducking and hiding hasn't worked out, so it is time to "get in or go away." This type of trading drags in more traders as technical levels are breached, as they were this morning.

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