For highly-successful business and financial leaders such as Larry Summers and Steve Ballmer, it must be gallling to see the stockmarket rejoice at your departure from the scene.
But what are the longer-term implications for the market?
The announcement over the weekend that Larry Summers has withdrawn his name from the list of potential candidates to replace Ben Bernanke as the head of the US Federal Reserve caused Asian markets to gain early Monday and European markets to follow suit. The dollar has fallen sharply against the euro and pound.
The former US Secretary of the Treasury is considered a hawk compared to a leading rival for the post, Fed Vice-Chairman Janet Yellen, and therefore more likely to accelerate the tapering of the Fed’s easy money policies.
Similarly, shares in Microsoft leapt 7% on the day that CEO Steve Ballmer resigned late last month, instantly adding $19 billion to the value of the software company.
Ballmer is considered to have done a poor job positioning Microsoft in the mobile market. Since the announcement, however, Microsoft shares have given back two-thirds of those gains. The company’s announcement on Sept. 3 that it would acquire the mobile handset business of Nokia for EUR5.4 billion didn’t help, but the shares had been drifting off the “Ballmer Bounce” for a several days prior.
What does that suggest for the “Summers Surge” in equities markets Monday morning, and the corresponding “Summers Swoon” in the dollar?
Probably that it’ll be short-lived.