President Barack Obama is contending with widespread opposition at home and mostly approval abroad among investors in a global poll reflecting divergent perspectives on the business climate from the U.S. to Europe and Asia.
More than three-quarters of U.S. investors view Obama as anti-business and are pessimistic about his policies, while a majority outside the U.S. holds a more favorable view, a Bloomberg survey shows.
Two-thirds of U.S. respondents say investing would be improved if Republicans won control of Congress in the November elections, according to the quarterly poll of investors and analysts who are Bloomberg subscribers conducted Sept. 16- 17. Separately, 50 percent of U.S. respondents say a Republican takeover would improve the economy, 36 percent say it wouldn’t make much difference and 13 percent say it would be harmful.
“The scope of the administration’s agenda is so ambitious and the level of proposed change so big, that uncertainty is the result,” says poll participant David Yucius, 42, president of Aurora Investment Counsel in Atlanta.
Obama, 49, inherited what the National Bureau of Economic Research said this week was the deepest U.S. recession since the Great Depression. Even after an $814 billion stimulus measure enacted last year and other government actions, the U.S. unemployment rate is 9.6 percent.
The president does better with investors outside the U.S., with 53 percent saying he offers about the right balance on business issues. Those outside the U.S. are also less pessimistic about the investment climate his policies have created. Globally, 50 percent of poll participants say they consider him anti-business, up from 42 percent in a January Bloomberg Global Poll. Among U.S. respondents that number is 77 percent, unchanged from January.
Obama’s wider popularity outside the U.S. isn’t surprising, considering that stock indexes in Europe and Asia have done worse this year than those in the U.S.
The Standard & Poor’s 500 Index, the benchmark measure of U.S. shares, has increased 2.2 percent this year. In the same period, Japan’s Nikkei 225 Stock Average has lost 9 percent and the Shanghai Composite Index has plunged 21 percent, while gauges for Italy, Spain, France and Switzerland have all declined. The Dollar Index, which measures the U.S. currency against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, had gained 3.3 percent this year as of yesterday.
Overall, 49 percent of poll respondents say the S&P is likely to be higher six months from now; only 38 percent say the same of the Euro Stoxx 50 Index and 37 percent of the FTSE 100 Index.
The administration has repeatedly defended itself against accusations that it is anti-business, going back to an interview Obama gave to Bloomberg Businessweek in February.
“The irony is, is that on the left we are perceived as being in the pockets of big business; and then on the business side, we are perceived as being anti-business,” Obama said Feb. 9 in the Oval Office interview.
Most U.S. respondents -- 70 percent -- say they aren’t taking any action in anticipation of a potential increase in U.S. capital-gains taxes, which will happen if Congress doesn’t take action by the end of the year. Only about one in four respondents say they already have sold or plan to sell more assets than they normally would to lock in the current 15 percent tax rate.
Those with a higher net worth are more likely to say they have already acted or are planning to, with 35 percent of those with a net worth of more than $1 million saying so, compared with 19 percent with smaller portfolios.
Unless Congress acts, rates for capital gains will increase to 20 percent from 15 percent. Dividends, currently taxed at 15 percent, would be taxed as ordinary income with rates as high as 39.6 percent. Under Obama’s plan, the capital-gains rate would remain at 15 percent for most, while the top rate would rise to 20 percent.
Two-thirds of respondents in the U.S. say they think damage would be done to the economy if Congress approved Obama’s proposal to extend tax-rate reductions enacted under President George W. Bush only for those who earn less than $200,000 per individual, or $250,000 per couple.
Extending Bush Policies
There is division globally on what would be the best tax action for the U.S. economy. Within the U.S., 67 percent say extending the cuts for all would be best. That is more than twice the proportion who hold that view outside the U.S.
“It is a classic tool to stimulate the economy,” said poll participant Chris Klass, 45, a vice president for portfolio strategy at Duncan Williams Inc., in Memphis, Tennessee. “Who has the money to spend, or who is currently spending money? The rich. The middle class is probably over-leveraged and currently saving money in fear they may lose their jobs.”
Political leanings play a role on the views about tax policy. Among U.S. investors who describe their politics as “left of center,” 37 percent say the cuts should be extended to all, compared with 81 percent of those who say they are “right of center.” Among centrists, 60 percent support extending the cuts to everyone.
‘Lost the Centrists’
“President Obama has lost the centrists,” said J. Ann Selzer, president of Des Moines, Iowa-based Selzer & Co., which conducted the poll for Bloomberg. “In our July 2009 survey, almost two in three of U.S. customers who consider themselves to be in the political center were favorable toward Obama. Now, almost that many are unfavorable.”
The quarterly Bloomberg Global Poll of investors, traders and analysts is based on interviews with a random sample of 1,408 Bloomberg subscribers. The poll has a margin of error of plus or minus 2.6 percentage points.
Obama’s 49 percent favorability rating among investors hasn’t changed much since June, although it is down from his peak of 73 percent in July 2009. In the U.S., 74 percent of poll participants have an unfavorable view, up 6 percentage points from June. Almost two-thirds have a favorable view of him outside the U.S.
More than half of respondents polled say they think this year’s passage by Congress of an overhaul of U.S. financial regulations will weaken Wall Street’s profitability for the next few years. Almost a third say it won’t affect profitability, while 10 percent say it will strengthen earnings. Among U.S. investors, 65 percent say it will weaken Wall Street’s profits.
A fifth of subscribers say their own companies have been affected a fair bit or a great deal by the new rules, while 31 percent say just some. Among those who say their employers have been affected at least some, 51 percent say it has been bad for the company’s profitability.
One of the few pieces of good news for Obama in the survey is that global investors view him much more favorably than they do his predecessor, George W. Bush. Only 25 percent give Bush a favorable rating, while 71 percent say they view him unfavorably. The former president does better among U.S. respondents: 45 percent view him favorably and 52 percent unfavorably.