The whole world is under the greatest economical crisis of this decade. Is it the worst effect of recession? Is it man-made or a trick of economic wizards, pulling the chords of world economy? Will world survive this crisis and come out alive? Who is going to come for the rescue and pull out humanity out of the jaws of economic disaster?
Six reasons that call to listen to Ben Bernanke
Federal Reserve Chairman Ben Bernanke has come out with a message to point out the situation of the present economy.
1) The main point Ben Bernanke stresses is not to expect this stagnant economy to turnaround anytime soon. He acknowledges that stimulus efforts to date have not worked and he is not sure what he is going to do about it. In spite of his message being disturbing, the stocks seem to rally strongly.
2) The stimulus stands to be Bullish. The statistics of S&P500 is up about 25% since the start of the delightfully named Quantitative Easing. There may be no QE3 and the stimulus will still be bullish, as far as the market is concerned. Stimulus stays good for stocks, at least for now and you can go ahead with it.
3) Investors are grown-ups and traders love being spoken to like adults. Bernanke’s predecessor, Alan Greenspan made a career out of complications and giving a wrong picture. But Bernanke has come forward with concrete facts. He points out what affects the actual growth. He states when the economy hits the fan market participants want to get the bad news straight. He does not believe in any magic that is going to bring a sudden change in economy.
4) Bernanke points out stocks are resilient, and not complacent. Gene Peroni of Advisors Asset Management, Philadelphia, says, “Formations technically in many stocks and many sectors look very attractive.” He suggests that stocks are not vulnerable to a single event.
5) Bernanke charges the lawmakers for playing with fire. He blames the US government for its losing confidence of the small business. He points out that only when companies know what their expenses are going to be they can make hiring decisions. He continues to say that traders hate the ongoing debt ceiling debate the way kids hate earaches.
6) The consumer is the main player in the arena of world economy. The consumer stocks decide economy. Although 9.2% of Americans have lost jobs recently, Wall Street is hoping that Americans will still be shopping, at least a little bit. According to Peroni, “Consumer discretionary is one of the best performing groups. The consumer, at least according to the market, is still alive.”