It is kind of funny what explanations the press comes up with for the daily gyrations of the stock market. However, sometimes they get it right. Yesterday the stock market was up almost two hundred points because the news came out that new home sales had dropped the most since the 1980's. Good news? Not really, but the stock market interpreted the bad news as good because their benefactor, Ben Bernanke, will now give them more rum to swill in the form of another interest rate cut - thus proving that he assumes that if it worked for Greenspan it will work for him. I suspect that it will not work because conditions are so different from when Greenspan poured on the rum, but with human beings "hope springs eternal."
From the article: The bad news on housing actually gave a lift to Wall Street with investors believing it raised the chances the Fed will cut rates again this week. The Dow Jones industrial average rose 176.72 points Monday to close at 12,383.89.
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