(As of 7:28 am PST)
Anxiety reigns on Wall Street
this morning. Comments from Ben
Bernanke, The Federal Reserve Bank Chair, sent markets reeling downward
yesterday afternoon and the fallout has continued into this morning’s session,
with most markets down over 1%. The drop
is happening in spite of some sparkling economic reports out of the US. US home sales were up; the Leading Economic
Indicators showed a small gain and the Philly Fed Index, a key measure of
manufacturing activity soared to its highest level in months. China manufacturing data was weak sparking
concerns of a slowdown in that economy.
It is a definite risk off scenario, with investors flocking to the
safety of US Treasuries and the US dollar is soaring on currency markets. Expect markets to reverse today as fears of
an early Fed exit from QE3 reverse, and solid economic reports prevail. The strengthening dollar and fears of a
withdrawal of stimulus has also caused gold, silver and oil to fall heavily in
the commodities area. Gold was down over
$80 dollars per ounce before recovering a part of its losses. All of this turmoil highlights the tremendous
problem that the Federal Reserve faces as it attempts to wind down economic
stimulus programs. Even as the economy
improves on Main Street, the steroid driven investment markets will face
extreme volatility over the next few years when the Federal Reserve tries to
normalize its monetary operations and exit from stimulus programs.
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