The Market is Clueless About How Washington Works
Posted at 9:30 a.m. on Nov. 20, 2012
The next six weeks of negotiations over the “fiscal cliff” will likely see increased stock volatility as markets react to the ups and downs of the discussions. Stan Collender thinks this is all a reflection of Wall Street’s political cluelessness.
“The Dow Jones Industrials Average was in negative territory on Friday morning when congressional leaders emerged from their first fiscal cliff meeting at the White House. At that point the Dow was down 59 points. But based on the totally innocuous and meaningless statements from the leaders that the meeting had been ‘constructive,’ the Dow rallied significantly. Within an hour, the Dow rose by 104 points from its pre-statement low. It ended up almost 46 points for the day.”
“Then again…this is the same investment community that rallies when the chairman of the Federal Reserve says in congressional testimony that the Fed is prepared to take steps the deal with the economy if they are needed…as if the Fed is ever not prepared to take steps.”