As of today, December 12th, the NY stock market can be described only as confused.
Yesterday, general disappointment overwhelmed the stock market circles after the FED’s announcement. The ‘modest’ actions frustrated everybody and the market literally dropped dramatically to. Everybody expected a significant decrease in the target rate and the stock prices were prepared to shoot up. However, a reasonable person who is not thinking only about stocks is thankful to the Chairman, Mr. Bernanke, and the rest of the board of governors, because they aimed their action at stimulating growth and avoiding inflation. Inflation, as most third-graders should know, is the worst.
Today the stock market shoot up in the morning and then dropped down again in the afternoon. It closed at 0.31% rise – pretty modest having in mind the air of excitement around the meeting of the FED. That marked a second ‘bad’ day for the stock market after the actions of the FED which were anticipated with excitement. The signal cannot be worst than that. If most investors loose their confidence right now, recession would be at hand.
I promised a historical account related to recent events and it will be up soon.
