What a week. Stock market indices dropped significantly in last 3 trading days of the week, following many events in the week.
1. Scott Brown won MA senate race
No one see this coming until recently. Looking back this is actually easy to understand. A few days before the Tuesday election, I was thinking, if Democrats want to keep the seat of Ted Kennedy, they should pick Vicki Kennedy. Similar outcome happened in 2002 Senate race in the Show-Me state, in which Gene Carnahan (the widow of Mel Carnahan) took the seat won by already deceased Mel. Note Gene was feature in the campaign ads leads to the election. Remember “don’t let fire go out” ad?
2. Bernanke confirmation in jeopardy
I think he should be confirmed. Some populists claims he was the arsonist who comes back to extinguish the fire. There is some truth, except I would add he was the cheerleader when Greenspan (the real arsonist) started the fire (by keeping the interest rate low, caused the US housing bubble). I would give Bernanke a second chance, after all the world and we all would be in a much worst shape if he did not put out the fire.
(Update noon Jan 18) Opps, the Bush rally only last couple hours Seriously, I do welcome this $1,600 per family tax rebate. Maybe a trip to Europe this Spring? Oh well, that won’t help the US economy directly.
(Original) I mean, to the stock market. Yesterday, after Ben spoke in Congress and painted a bleak picture of US economy, and asked for some sorts of stimulus package. The DOW tanked 300 points, S&P and Nasdaq did no better. Today as Bush is unveiling his economy package: good old things like tax rebate for individuals and business, the US market seems took the cue and is up in the morning. Another amazing thing is the Overseas market (Japan, Korea, Hongkong and Shanghai) also reversed course (last night). So when Bush speaks, the world listens
Just kidding. Seriously speaking, I think US president has little to do with the US economy cycle, nor can a Fed chairman. The US is heading to a recession, period. But see, the problem is people (include myself) don’t want to hear the harsh words, facing the reality. A few days ago in Michigan John McCain did his straight talk “some of the jobs lost (in auto industry) is not coming back, we need to re-train our people for new skills”, while his rival Mitt Ronmey says he will do everything to get back auto jobs. It’s so obvious that US auto industry is losing ground in the US market, but people still elected Mitt: the guy who tells white lies.
Healthcare cost for US companies