All noise events end. It's only ever a question of when.
For the U.S. stock market, the noise event that began on 6 June 2012 came to a sudden end on 21 June 2012, as investors suddenly realized that the window of time in which effective central bank and government-backed actions to bail out out ailing financial institutions and troubled national economies had closed, as signs of a global economic slowdown could no longer be ignored. Even CNBC's Jim Cramer noticed:
Interestingly enough, though, the market didn't fall Wednesday even though Fed Chairman Ben Bernanke said the economy is much slower-than-expected. The stock market seemed to ignore that commentary, Cramer noted. It reacted with the vengeance to every bit of bad news released Thrusday, though, and Cramer said he understands why.
"It's in a sour mood about this country where, despite Ben Bernanke's best efforts, Washington is doing nothing to create jobs, build new buildings, or even give us clarity on taxes for next year," Cramer said. "The mood is justified."
After all, the stock market had been going up on the belief that policymakers would take action to fix the economy. If they aren't doing anything, then Cramer thinks the market is in trouble.
But then, that's not a surprise, is it?
Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.
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