Friends
There was really nothing the Fed could do or Dr. Bernanke could say that would please all market participants. Some wanted more QE, some wanted less QE -there was just no winning today. They basically straddled the middle, the best that they could, and announced the continuation of operation “twist”, best explained as the extending maturity program where the Fed sells shorter securities to buy longer dated ones in an attempt to keep the longer end of the yield curve down.
The result was expected (especially after the climb we’ve had in June) as the Dow Jones Industrial Average fell 13 points to close at 12,824. The S&P 500 was down 2 points to close at 1355. Gold was down $16 to finish trading at $1607 per ounce. Oil fell a whopping $3.27 to trade at $81.08 per barrel WTI (near the lowest levels since last October). Once again, considering the move that we have seen in stocks for the last couple of weeks, today’s negative response was muted and the bulls can take comfort (at least for a day) in that.
During his press conference, Dr. Bernanke made it clear that further easing is forthcoming should the economy experience more weakness or external shocks such as a blow up in Europe. Once again we are left to ponder, do market participants see bad news as good news, or will there come a time when diminishing returns dictate that only good news is good news?
Have a nice evening everyone.
