Tuesday, June 25, 2013

Did The U.S. Federal Reserve Chairman Ben Bernanke Send The Stock Market On A Wild Ride?

Given the 48-hour long global stock sell-off hitherto unseen since the September 2008 global credit crunch, did FED Chairman Bernanke’s announcement to ease off the US economic stimulus caused it?

By: Ringo Bones 

The only thing that’s being proved by the 48-hour over 500-point plunge in the global stock prices is that the global stock market hates uncertainty. Sure, it can handsomely make profits in either wartime or peace, but the rather uncertain announcement of U.S. Federal Reserve Chairman Ben Bernanke back in Wednesday, June 19, 2013 of “taking the foot off the gas” on the U.S. economy’s 85-billion US dollar a month stimulus package if signs show that the U.S. economy shows signs of improvement near the end of 2013 had sent the global stock marketplace in a 48-hour sell-off – a global stock market plunge if you will. Not until did Friday came that the global markets started to stabilize after a two-day freefall. Given the market being spooked by such “economic stimulus ending announcement”, one wonders if our global economy is currently heavily dependent on the Obama administration’s rather liberal economic stimulus program. But doesn’t it, really? 

Every hedge fund manager who had either profited or had drastically minimized their loses during the September 2008 global credit crunch via the use of complex derivatives in hedging their investment portfolios have been since the start of 2013 started to advise their clients to be careful on their stock market investments since it is very likely that the Dow Jones Industrial Average could return to the 10,000 point mark around the end of 2013. Though despite such “scare mongering” the DJIA did manage to cruise well a little above the 15,000 point mark for much of May 2013 before it was sent on a volatile wild ride by June. 

While the June 19 announcement of FED Chairman Bernanke caused a global bond market sell-off that made the S&P 500 the worse it had been since 2011, many experienced and institutional investors had been quite busy snapping up safe haven commodities investments like gold and other precious metals that has since become “cheaper” since the 48-hour wild ride. But given the still high unemployment rates in the United States and the recent economic data showing the recent slowing down of the Mainland Chinese manufacturing sector, may now wonder if the rather artificially high stock market prices are just probably due to the Obama administration’s rather quite liberal 85-billion US dollar a month economic stimulus package / quantitative easing program. 

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