The Man who Moves Markets
What a strange position to suddenly be promoted to a position where every word, even in a social setting, can have global economic effects. Check out what happened to Ben Bernanke.
Financial markets were blindsided yesterday after CNBC anchor Maria Bartiromo reported that Mr. Bernanke told her investors were wrong in thinking he's done lifting interest rates. Stocks surrendered gains, bonds fell and the U.S. dollar jumped in response to the remarks, which Ms. Bartiromo said were part of a conversation at the White House Correspondents Association dinner last week.
It isn't clear exactly what Mr. Bernanke said, and a Fed spokeswoman declined to comment. What is clear, Fed watchers say, is that Mr. Bernanke underestimated the scrutiny that anything he says, even in a social situation, will receive now that he's chairman.
Goes to show you how fickle the markets are. Are there really any advisors among us who think that what one man says really makes a day to day difference in the long term? It doesn't, but it does teach you why Warren Buffet doesn't even read the business section.
It's pretty amazing stuff socially though. The herd is strong.
Okay, so I can get a 4-star room in NYC for $229 on Hotels.com. But, hell... I'm a frugal guy, I've been saving. What if I really want to splurge? Enter Forbes presentation of the Most Expensive Hotels in America. (I linked to the print ... Read
Got this article from my friend who works at IBM. He's been saying this for a long time. If you have this stock I'd say it's making a run for the toilet sooner rather than later. Read
Let's play word association. If I say "addressing risk", "volume", "manage their portfolios", and "following the trend", what do you think of? Mutual Funds, ETFs, Hedge Funds? How about credit cards? Read
An article in the Realestate Journal quotes Carol Willis, founder of New York's Skyscraper Museum . Her insights might show an interesting metric to gauge how overheated stocks may be. Read
But when that person determines what happens to federal funds rates that affects the contracts that are hedging against changes in those rates. That affects those who are buying or selling bonds especially the speculators and they need to adjust their holdings accordingly and immediately or find themselves on the wrong side of a fast moving trade. And those movements affect people's expectations of borrowing, investment, inflation, etc and those speculating on stocks need to adjust their positions immediately as well.
And in the long term all of those things will affect what happens to the economy. Do any of us know exactly how? No, but those speculating on it need to adjust to every blip in the market. So the reactions are actually quite rational when you consider the players who are making the trades. It isn't the buy and hold, mutual fund, or 401-k investors who take the markets through girations. Its the speculators, and every word that the most powerful financial man in the world says matters to them.
That's true. No doubt we need both sides. While I recommend "regular" investors have discipline and wait it out, I understand that there have to be all types of market investors. Thanks for the comment.
I'm surprised he's surprised, after all fiat currencies are entirely backed by the credibility of those doing the backing. By definition he is the enforcer or decider (Spooner might be in need of an update by the end of the Bush administration) of that credibility.
Welcome to the big leagues, Ben.
I read the Journal everyday (mostly for entertainment) its usually the stories buried in A12, B7, and C10 that start to uncover new trends. The business section of all other domestic papers (IBD is more of a speculator's rag) might be useful to observe trends at their top.
