Cause And Effect
If life at the Breaking News desk were like the David Letterman show (and it’s often just as hilarious, although not intentionally), the number one question we get asked is “Why did the markets suddenly soar/tank/etc.?”
If “I don’t know” were considered a good answer, I would be held in very good stead by my colleagues, but since that’s not the case, I try to be as diligent as possible in keeping track of various pieces of news and their effect on the markets.
Today’s challenge, following yesterday’s market meltdown, was a story-within-a-story. What would Fed Chairman Ben Bernanke say about the Tuesday plunge during his testimony to the House Budget Committee?
It wasn’t quite like finding the needle in the haystack, but we knew in advance that his prepared testimony would be similar to his recent semi-annual Congressional appearance. And indeed it was. There was no mention of the Tuesday events in that pre-written speech.
The market-moving statement came during Q&A with lawmakers -- when Bernanke said that no single trigger had caused yesterday’s market meltdown, and that the markets appeared to be working “well and normally.”
Even that cause and effect wasn’t so crystal clear: The major averages had been extremely volatile even before Bernanke started speaking, and the apparent rally that resulted from his statements faded and bounced back several times over. But our market reporters on the floor of the various exchanges say THAT is what traders were talking about.
Maybe “I don’t know” isn’t REALLY such a bad answer!