Saturday, February 2, 2013

Dow Jones hits the 14,000 Mark – Richard Quest is Wrong Again

People will believe what they want to believe. After President Obama was re-elected, the Dow Jones fell by 313 points to below 13,000 and a lot of analysts said that whilst ordinary Americans wanted Obama, Wall Street wanted Mitt Romney. Did all of Wall Street want that? Possibly not. 

Some individual in securities and investment had dished out almost $20 million support Romney, while Obama only got a measly $6 million. (Center for Responsive Politics). So they certainly were in a snit. There were dire predictions of the further negative impact of President Obama having the power for the next four years.  Happily, the sensible voice of journalism could still be heard. 

On Nov. 7 2012 Mark Gongloff of The Huffpost pointed out that the Dow rose 1% on news of Obama’s success, and the fall was a response to Europe’s situation. Turns out that Wall Street, apart from the snitty guys, was quite happy with President Obama, because they knew where they stood with him.

The same silly scenario has recently been playing out. I know I’m on a Richard Quest bashing quest, and soon I’ll stop. A couple of days ago, the Dow Jones dropped a few points after having risen significantly for quite a while post to President Obama’s win. Well, Richard Quest and all the doomy gloomies had a field day. Ken Polcari, Financial analyst, speaking to CNN Business correspondent Alison Kosik, on Quest Means Business Jan 30 2013, said:

“Listen, I think -- I don't think we're going to see the Dow hit 14,000 any time soon right now, just because not that we're going to crash, either. I don't expect a crash. But I suspect that we're going to test 1,475 on the S&P, which is down, you know, 25 points from here before we make another move higher. It's going to come back and test that level of support.

So we're going to go low before (inaudible) 2,000. And I got to tell you, with March 1st coming and the discussion of sequestration, I think that's going to keep it capped. So I think we're going to struggle with 14,000 for a while.”

Alison Kosik replied “…We won't be having a 14,000 party, Richard.

Richard Quest’s dramatic, solemn and authoritative closing comment was “One of the fascinating things about markets, just look at the Dow. It gets within 30 or 40 points of the 14,000. But it just can't do it. That's one of the fascinating parts about the markets, the way in which they get so close and yet just cannot get there in the end. And in fact, as Ken Polcari seems to suggest, it is coming back down again.

You'd have thought it was easy, 30 points. Not a bit of it.” (CNN Transcripts)

With that he rang the bell.  

On Friday afternoon, the Dow was up 152 points to 14,013, and it closed on 14,009. The Standard & Poor's 500 rose 15 to 1,513. The Dow has only reached 14,000 15 times in its history, the last time being 5 years ago; it’s been climbing steadily since Richard Quest brought out his traffic lights, allegedly with huge regret, but clearly licking his chops. Longing for the day he could press the Disaster! red light button?

That’s how it looked to me. It never got beyond the amber light, of course, and pretty soon he tucked it away. This is the man supposedly with perhaps the most market information at his fingertips. I used to wonder how much the markets were affected by experts who play up the worst case scenario, but I’m glad to see that they don’t have the influence I feared. 

The US is on the mend whether people like Richard Quest, business correspondents and financial analysts want to acknowledge it or not. Still, I’m sure he and they have some influence. Why would it hurt them to be realistic? It’s clearly the drama that Richard Quest loves. He just doesn’t seem to have realized there’s just as much drama in triumph as there is in disaster. 

Fear-mongering for the sake of drama gets old very quickly.