An unsurprising correlation

Ed Morrissey's post deals with a possible a correlation between the stock market and the prospects for Obama's congressional agenda. Since health care reform and other plans have run into snags, the stock market has trended upward. The idea that government actions may be predictors of market trends is not a new idea. I first ran across the relationship in Jude Wanniski's The Way the World Works. He argued that the stock market in 1929 was keying on the progress of the Smoot-Hawley tariff through Congress, which played a large role in plunging the nation into the Depression. When the legislation appeared to gain support, the market went south and vice versa. Of course Smoot-Hawley passed after the 1929 crash, but Wanniski followed this relationship well before the tariff passed. See also here.