I just had a long phone conversation with Glenn Reynolds (edit: NOT REALLY. This is a literary device known as "making shit up" for the sake of humor). He told me that he is going to post a lengthy correction and apology regarding a post he made on March 2. Here is what he said:

THE DOW-JONES INDUSTRIAL AVERAGE since the passage of the stimulus bill. Looks like a vote of “no confidence” to me.

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In the five months since he decided that the DJIA was a reliable indicator of Presidential and/or policy performance the benchmark index has risen by 37%. 37%! So tomorrow Glenn is going to write about how the Market God has bestowed upon our President the most confident of votes.

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Noting that two things happen at the same time and assuming that causality exists between them is called spurious correlation. It is what stupid people do when they are getting ready to make really bad predictions – not just the bad "I think this is the Cubs' year" kind, the epic-bad JFK "I think it's OK to leave the top off the convertible today" kind – or lose a lot of money in the stock market. The fact that both the stimulus and the Dow Jones Average are related to the same central theme (our macro-economy) creates the reassuring but incorrect sense that correlation does in fact imply causation. False. Anything can be correlated with market movement and causality is always – always – a bad assumption. The market is like secret recipe hobo stew: there are so goddamn many ingredients, many of which the average person does not care to know about, that no one can say with certainty what causes what.

To wit: let's say I shaved my balls on Friday. Note that the market responded positively, only to once again decline as a vote of no confidence when the team of international observers (led by Jimmy Carter, former Canadian PM Brian Mulrooney, and the Dalai Lama) detected the growth of stubble.

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The evidence is beyond dispute. My balls move markets.

Back in January the USA Today noted that the stock market performs significantly better – nearly 25% – in years in which the Steelers win the Super Bowl. And that America-hating prick Larry Fitzgerald almost ruined it all.

The market is not rational regardless of how many business school professors pitched tents over its majesty as an arbiter of every political, social, and economic process. Remember, the market once told us that was worth $45/share. It decided that was worth $97/share (3 months later: a dime). It is not a parliament which issues meaningful votes of confidence and no confidence. Only a long view of market trends can provide useful (and retrospective, mind you) insights. Trying to use its day-to-day and week-to-week fluctuations as evidence of one's preferred version of current events is logical to the same extent that cavemen banging on drums to make the sun rise (and it worked! every day!) made sense.