Wall Street is Insane

[forsyth]

So, retail sales over December were flat at best. (Here's some stats) And credit card debt went up over that same time, which meant people were spending money they didn't have just to stay where they were.

Federal Reserve Chairman Ben Bernanke yesterday said "The outlook for real activity in 2008 has worsened," and "We stand ready to take substantive additional actions as needed to support growth and to provide adequate insurance against downside risks,"

The second translates to interest rate cuts. But basically he's saying the economy is not doing so hot, which most anybody could tell you. o in response? "Stocks in Canada and the U.S. shot up in the hours after Mr. Bernanke speech."

The stock market reacts exactly opposite to how common sense says it should. A company lays people off, its stock goes up. The chief banker of the US says the economy sucks, stocks go up. These people are insane.

Comments

[frustratedpilot]

People don't buy stocks now for now profits, they buy them now for next quarter (or later) profits. That's the main thing people need to understand about Wall Street. So if the economy is bad, people who have the money will buy stocks because they know that everybody will have to WORK harder and so PRODUCTIVITY will also wind up higher too, and that would drive profits.

[forsythferret.livejournal.com]

Half of the speech was about the next quarter and rest of 2008 not looking very rosy at all, though. Which makes the spike in buying counterintuitive.

[frustratedpilot]

Not if the buyers are looking for BARGAINS.

[forsythferret.livejournal.com]

But since all the prices just got jacked up from the buying, they're not bargains any more.