Wednesday, May 22, 2013

The Words That Sent the Stock Market Tumbling

Stocks closed down nearly 1 percent in a volatile session after the minutes from the last Fed policy setting meeting suggested the Fed is divided on when it may start to pull back on its monetary stimulus.

Here are the words in the FOMC minutes that sent the stock market reeling:
"A few members expressed concerns that investor expectations of the cumulative size of the asset purchase program"
One participant said "the Committee should start to shift any asset purchases away from MBS and toward Treasury securities"
"A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting"

The market had moved higher earlier in the session when Fed Chairman Ben Bernanke reiterated that tapering bond purchases will depend on an improvement in the economic data. Specifically, he said near the close of his remarks.
Because only a healthy economy can deliver sustainably high real rates of return to savers and investors, the best way to achieve higher returns in the medium term and beyond is for the Federal Reserve--consistent with its congressional mandate--to provide policy accommodation as needed to foster maximum employment and price stability.
Those comments sent the Dow up early by over 150 points at the session highs. But then during the Q & A, Bernanke said that the Fed could decide to scale back the pace of bond purchases at one of the "next few meetings" if the economic recovery looked set to maintain forward momentum. This wobbled the market, and then the FOMC minutes were released at 2:00 PM EDT.

The Dow Jones Industrial Average then picked up steam on the downside and closed down  80.41 points, or 0.52 percent, to close at 15307.17.

1 comment:

  1. Wednesday May 22, 2013, was a pivotal day in economic and political life.

    With all forms of fiat wealth, Stocks, VT, Commodities, DBC, Major Currencies, DBV, Emerging Market Currencies, CEW, and Credit, AGG, trading lower, on the Congressional testimony of US Federal Reserve Chairman Ben Bernanke signaling a cautious track on bond buying, and mintues of the Fed Meeting providing a blurred picture of Federal Reserve policy, the world fully pivoted from the old economy to a new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of regional governace, totalitarian collectivism, debt servitude and austerity, also known as the ten toed kingdom of regional governance.

    Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and were the legislators of economic life. Under authoritrianism, currency traders, bond vigilantes and nannycrats working in public private partnerships and in regional goverancce, are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

    A see saw destruction of fiat money, that is currencies, credit and stock wealth, has commenced as the world central banks’ monetry policies have crossed the rubicon of sound monetary policy, making “money good” financial assets bad. In the age of Authoritarianism, the only forms of genuine wealth, will be diktat and physical possession of gold, that is gold bullion or bullion in online trading vaults such as Bullion Vault.