Following his announcement of a $450bn growth plan, a plan that was far and away bolder than analysts expected, both European and US markets have reacted with disdain.
Shortly after the market open the Dow Jones was down over 1.6%, which was investors’ way of saying "we don’t believe in you Obama".
Political manoeuvering aside, it seems the White House has got a lot more to do to convince investors that it has a credible plan at hand to boost US growth.
Earlier in the week the Organisation for Economic Cooperation and Development (OECD) detailed weaker full year growth forecasts across the globe.
What’s more, consensus forecast for US growth in 2011 is now lower than the figure forecast before QE2 kicked in.
So it’s clear the second round of stimulus didn’t work, and if a third round is given the go ahead, investors will have little reason to believe it will do what it’s intended to.
Despite this, we are still being assured that US equities are a good bet and that corporates have strong balance sheets, so we shouldn’t worry.
Of course there are always going to be some companies that do well in a bear cycle (traditionally: defence, pharmaceuticals, tobacco) and if US fund managers do what they are supposed to maybe gains can still be made in this low-growth environment.
The stock-pickers among us would certainly like us to believe the wheat can be sorted from the chaff.
But there’s no escaping that there are slimmer pickings out there at the moment, and to see the lack of trust in US equities one only needs to look at the poor performance of the three main indices in recent months.
Trying to divorce companies and their performances from the wider economic picture is always a tricky game.
There’s no doubt that Obama faces an uphill struggle to get both Republicans and the Federal Reserve to back his plans.
It should also be noted that in this globalised age policy in China and Europe will also have just as much impact on the future performance of American companies.
So forgive me if I’m not a bull on the US just yet.
