Market fall not a big deal
by Peter Switzer
The fiscal cliff anxiety has been late in coming but today’s sell-off on Wall Street is also connected to the utterances of the Federal Reserve boss Ben Bernanke yesterday.
The Dow was off 74.73 points or 0.56 per cent lower to 13,170.72.
Meanwhile the S&P 500 lost 9.03 points or 0.63 per cent to 1419.45.
Personally I’m sick of all of the prognostications on the cliff negotiations by so-called experts, as they are simply filling up the pages of newspapers and websites based on their best guess.
The latest from Republican Speaker John Boehner is that there are "serious differences" between his party and the President.
He accuses the President of not wanting to cut spending and that’s important for his team to save face.
On the flipside, Barack Obama wants the rich to give up their George Bush tax cuts.
I still bet there will be a solution before the deadline of December 31 even if the details are thrashed out after it.
On Bernanke, he has reiterated his commitment to keeping long-term interest rates down and typically the market has bought on the rumour and sold on the fact. Bernanke said the right thing to keep stocks going up next year and sustaining economic growth in the USA, which will underpin a good stock market.
In other news, S&P downgraded the UK from stable to negative, which unsettled markets.
On the good news front, producer prices fell for the second month in a row but it wasn’t because of deflation fears. It was because energy costs had the biggest drop in three years. This is an enormous plus for US growth in 2013 and it’s good for inflation.
Today’s market slide was overdue but it’s not a big deal.
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Published on: Friday, December 14, 2012
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