[Dagny departs from her normal column this week.  Usually she provides the Nasdaq QQQQ chart, noting the concurrence between market shifts and political events during the week.  Here, in addition to her pungent weekly commentary, she analyzes the Nasdaq over the last 33 years and the effect Leftist media frenzies have upon it. 

Dagny D'Anconia's Political Nasdaq is exclusive to To The Point, and is an example of the exclusive benefits of TTP membership.  I'm providing free access to this week's Political Nasdaq as additional encouragement for those considering joining TTP to do so. ---JW]

This week was a short one due to the Easter holiday.  Monday (4/17) was Tax Day, and it was also the day that it became clear that Rumsfeld would not be run out of Washington by a media pack attack.  The Nasdaq dropped.

Oil prices rose to new highs on Tuesday (4/18).  Statements came from Federal Reserve that inflation was in check and interest rate increases would cease soon.  It is ironic and puzzling that new highs in oil would not affect their view of inflation risk.  The market went up nevertheless. 

On Wednesday (4/19) Karl Rove was demoted, to the glee of the media, and the market went up - along with the price of oil.  Thursday (4/20) saw China's "President" Hu humiliated in the Rose Garden ceremony by a shocking exposure to actual free speech.  The media spun it as a major bungle for the Bush Administration.

President Bush's approval numbers dropped and this too was announced on Thursday.  The pressure for the market to go down was building, but the news delayed the significant drop.  The Nasdaq went down just a bit - indicating pent up downward pressure.

American tough talk on Iran subsided this week, even as oil prices spiked, pleasing and enriching the Sunni oil people.  Thus overall the market diverged upward from the down DDI.  The new higher oil prices have to be bad for the economy, yet the market reacted by going up.  This further suggests that the people in the market driver's seats were not patriotic Americans.  The market presence of the newly-more-rich oil Arabs was a decisive factor. 

It is common for the market to go in a contrary way in vacation times when the regular traders are not trading.  Sunni oil money was ruling the roost this week.  When the regulars return from vacation on Monday, I expect them to put things right with a sharp correction downward.

****

Instead of the normal graph, I would like to show you one that provides a longer term perspective on the market.  Enough time has passed that we can now see an overall pattern that makes sense given our political analysis.

Prior to the election of the Clintons in 1992, the Nasdaq was gradually rising following a curve that can be seen on the graph.  Extended to today, we appear to be on the same curve which shows a gradual increase of about 1% per month.  The overall path is apparent and it is clear that the Clinton era introduced a massive disruption from that gradual curve.

After the Clintons were elected, the market deflected upwards, which is what one might expect given that the Left was gleeful at the prospect.  They had gotten elected in spite of a minority position.  The choice of Elder Bush as such a weak and non-conservative candidate spurred the entry of Perot and destroyed the conservatives' chances. 

Thus the Clintons won the election, not because they were the favored ones, but because of the split in the Republican side.  This same candidate folly occurred again in 1996 as the unelectable Viagra Dole was offered up by the Republicans.

As it became clear that the Republicans were helpless to stop the Left, the glee of the media was complete.  They had control of not only the White House, but the media, and the hapless Republicans could do little to stop them.  The manic joy was expressed in high hopes and an insanely soaring Nasdaq.  Manic behavior unrestrained by the media led to the Lewinski affair as well as many other abuses to numerous to list.

If you look at the graph, you can see the rise in the mood of the left, demonstrated as the Nasdaq went crazy.  Meanwhile, the new alternative media steadfastly reported on the carrying on of the criminal Clinton White House, and as the election of 2000 approached, the Leftist glee started to fade.  The brazen behavior of Clinton and his people were gradually exposed and the next election was in doubt.  The drug/sex/money party was coming to an end.  Thus the euphoria faded and the Nasdaq did too.

As W Bush won, the downward slide that had already started continued.  9/11 brought a new American patriotism and with it even less chance for the Left.  The Nasdaq had another dip.  Since then it has recovered and is apparently back on the track it would have been had the Perot/Elder Bush/Clinton/Dole electoral fiascos never happened.

This is sort of a "you are here" moment to see how the market has evolved.  The value of the Nasdaq can be highly perturbed by the politics.  When both the White House and the media are happy and Leftist, there is no feedback which normally regulates the marketplace.  No media to criticize Leftist excesses feeds further Leftist excesses.

Every day we can see the effects of emotional feedback on the market.  Even as the DDI indicates the underlying mood of the time, the more upset the Leftist media is with the situation, the more incentive they have to create anti-Conservative media events and feeding frenzies.  Spikes of hope upward can happen, and are likely to continue to do so.  Thus even when the DDI is down, news happens to perturb the market upward.  The more upset the Left is, the more they try to drive stories to make them feel better.  Thus the market wobbles along.

Before 2000, the Leftist media was not so upset and the DDI was more predictive.  Since then, the Left has been in a life and death struggle for power,  driven to do insane things (like forge memos etc.) and they have treated every news story like it was a live or die contest. 

The DDI indicates where the market goes in the absence of the news.  However, as the Left becomes more desperate, we can predict that there will be more stories manufactured or magnified out of all proportion to assuage their sick Liberal hearts, and in times of a down DDI, this may perturb the market from its intended path over the short term.

Now if the Leftist media would just get so depressed that they give up about politics, or if they were run out of the media business by the new media, the news-induced spikes against the DDI would melt away.  The Leftist feeding frenzies would end.  The DDI would be followed religiously by the market.  In that case we would be making a lot of money - and Rush and Hannity would have a lot less outrages to talk about.  

I would prefer a peaceful market unroiled by upset Leftist newsies - but not if they get in charge again.  It would be profitable, but a terrible price for America and the conservatives to pay again.

Bottom Line:  A loss of 0.95% for the week. The cumulative profit is 4.32% for the year.  The Nasdaq is up 7.09% from the beginning of the year.  The DDI remains down. 

Best Regards,

Dagny

So - here is the Nasdaq chart not for the week, but the last 33 years:

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