Political  Calculations

See if you can tell from the following chart exactly when Federal Reserve Chairman Ben Bernanke spooked the more timid among Wall Street's professional traders by moving the goalposts closer for ending QE 4.0, the Fed's purchases of up to $45 billion per month in U.S. Treasuries, which it began on 12 December 2012:

S&P 500, 19 June 2013 - Source: Google Finance

For the sake of keeping ourselves interested, we'll present the rest of our analysis in Q&A format....

What time did stock prices start crashing on 19 June 2013?

2:44 PM EDT.

How long does it take investors in the stock market to react to news they weren't expecting?

About two to four minutes.

When then did an unexpected news event occur to which investors negatively reacted?

Sometime between 2:40 PM and 2:42 PM EDT.

What was going on during that time that might have drawn the attention of investors?

Fed Chairman Ben Bernanke's press conference.

What might Bernanke have said within that small window of time to cause such a reaction?

Via the New York Times' live blog of the event:

2:42 P.M. An Unemployment Target Rate

Wow. The Fed now has an unemployment rate target for asset purchases: 7 percent.

Binyamin Appelbaum (@BCAppelbaum) 19 Jun 13

Why did that comment spark such a reaction?


Political Calculations

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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