Unexpectedly Intriguing!
December 15, 2016

14 December 2016 is the day that the Fed finally acted for the second time in the last 10 years to raise short term interest rates. Let's see how the market responded to that news, via the following chart for the S&P 500 on 14 December 2016.

Google Finance: S&P 500 Index Value on 14 December 2016

After having traded within a narrow range for much of the day, the S&P 500 quickly spiked up to its high for the day at the 2:04 PM EST mark as the market's basic initial reaction to the Fed's expected rate hike announcement was effectively pre-programmed.

But that announcement had a surprise in it, which we can see in what happened after that point of time. Since it takes about 2 to 4 minutes for investors to react to news that they weren't previously anticipating, this timing suggests that the specific news that caught the market off guard did so within the context of the Fed's expected rate hike announcement.

Since the rate hike itself was expected, we can use contemporary media reports to identify the specific bit of unexpected news that turned the market south for the day, because that news would have been most likely highlighted in the reports being posted within the same narrow window of time. Fortunately, the Wall Street Journal provided a timeline of its news coverage allows us to identify exactly what that specific bit of previously unexpected news was.

Dec 14, 2016 at 2:02 pm ET - Three Hikes Penciled in for 2017 - The median FOMC forecast for the fed-funds rate at the end of 2017 is now 1.4%, up from 1.1% in September. That means officials are penciling in three quarter-point rate increases next year, up from two in their September projections. - Ben Leubsdorf

So if you're looking to personally blame someone other than the Fed for falling stock prices on 14 December 2016, and can't make a case against the Russians stick, you'll find no better scapegoat than the WSJ's Ben Leubsdorf! We don't know yet if he's the market equivalent of Mike Nelson, Destroyer of Worlds, but he certainly deserves closer scrutiny.

Meanwhile, the WSJ provides a copy of the statement and how it differs from its immediate predecessor from October 2016.

Finally, if you're a real glutton for punishment, check out CBS Marketwatch's live blog and video of Fed Chair Janet Yellen's press conference.

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

Stock Charts and News

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Legal Disclaimer

Materials on this website are published by Political Calculations to provide visitors with free information and insights regarding the incentives created by the laws and policies described. However, this website is not designed for the purpose of providing legal, medical or financial advice to individuals. Visitors should not rely upon information on this website as a substitute for personal legal, medical or financial advice. While we make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have an individual problem, you should seek advice from a licensed professional in your state, i.e., by a competent authority with specialized knowledge who can apply it to the particular circumstances of your case.