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WSJ’s John Hilsenrath, Dent Tactical ETF Manager Rodney Johnson and Eisner LLP’s Tim Speiss on the economic and market factors causing the marketâ...
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This market sell -- throughout the hour and we want to start with our all star panel John Hilton -- is a reporter with the Wall Street Journal in DC.
Rodney Johnson is the manager of the debt tactical ET up in Tampa.
And -- speech is with Eisner LLP welcome all great to have you here.
Very John I want to start with you EO John Wilson -- in Washington.
You know.
We were supposed to get this debt deal under our belts and then there would not be a market sell off what happened here.
Well you know I think the market has gone from one set of fears to another the fear a week ago was that -- -- -- wouldn't be reached.
Wouldn't be raised the government wouldn't be able to pay its bills and that would sink the economy because it would be cutting back on all kinds -- spending overnight.
The fears today -- that the economy is already sinking on its own.
Confidence is down and there's a very serious worries about if the fiscal health of many European countries in addition to that perhaps more importantly.
The health of the banks that are doing so much lending to these countries.
So you know we are in the -- cycle of the that the fear stage of the greed and -- cycle we're moving from one year to another.
Well you know in the Vicks index today -- if you look at that that's -- dead Vicks index measures Wall Street's worried it's fears.
Up and up dramatically today what does that tell you.
Well first off I I think this is all about fear because I would -- starting the day.
And jobless claims in July.
Last week as you -- for a thousand for training at the lowest four week moving average since April.
I think a lot of what's happened today is because of sentiment is not actually because of something that's occurred.
Started the morning with the ECB and trichet.
Basically saying the -- broken ECB was going to do everything you needed to do.
To rescue any country that needed help.
In the year how worried about the economy at all I am worried about the accounting but I don't think it deserve to sell off -- -- today.
Running when you say when you look at these markets here investing all the time and apparently making some pretty smart choices I'm told.
But how did you -- today's sell off what what does the market telling us.
I think it's about time I mean is it sentiment there is -- reality I look back at GDP on Friday I thought the whole debt ceiling debate was idiotic.
It was masking the real numbers which are very very much bad I mean they're they're dramatically lower.
Than people anticipated and you saw the government actually ratchet down previous numbers for GDP.
Which is telling you things are very very slow and that's while the Federal Reserve was printing money so we look at days like today and think finally people are waking up to where we really are.
John in Washington.
You know you look at these numbers and apparently what's going on out there this afternoon.
Wall Street investment banks are marking down their expectations for the jobs numbers we've got that 85000 jobs would have been added in July now it's looking like.
Maybe was only 60000 maybe it was 40000.
Do you think this is just -- surfing the fear too much fear in the market place.
-- -- that would bring the right direction.
We're gonna have an answer that question tomorrow because is the other -- mentioned that the jobless claims numbers which are pretty good indicator.
Of underlying.
Behavior in the job and in the labor market have actually been getting better the last few weeks we you know maybe you'll get a surprise on the upside tomorrow in the market -- come back.
You know it's really hard to say you know -- giving these over -- on the job market -- are very hard to predict the night before.
But you know -- at least there's some signs out there that you know maybe things aren't as as as terrible as the markets and here there today.
Maybe not as terrible here but you've got to wonder about Europe but what's going on there attempt look at the comments coming out of the EU you look at the comments coming out of -- the Italian leadership they are crazy comments about how inflation is the important thing to keep an -- -- Berlusconi saying.
I -- going to be just fine with no major changes what do you make of that.
Life TV ECB is being is being that the foundation -- at all if you have the ECB ready to provide funding and rescue any country that needs help.
Grain and they're still gonna be what is now seen is a contagion.
But at least you have it -- my point is this nothing -- changed fundamentally since last Friday.
And so this isolated days that we saw.
To me is it could be an overreaction could be -- reversion to the mean if that's true you think we're now going to be in a flattening that maybe -- slight recovery.
But today was extremely dramatic and certainly not predicted and certainly if you look at what's happened over the past 56 business days I would say not warranted.
-- at it I think one of the interesting things that happened today is the Bank of New York said.
Hey if you want to park a lot of Dell and by a lot of -- I mean like fifteen million dollars outer banks some place to stash of for a while.
Your going to have to pay us thirteen basis points what does that tell you.
Yep.
It tells me that -- so much fear in the market and they're so much money sloshing around the people don't know what to do we have.
That they can basically charge you to hold money like you said when you see bills actually on a negative return.
And so it tells -- there's a lot of fear running out of other markets you see people running out of the Euro.
Are running out of the yen as you see the Japanese start to intervene a little bit over there -- people don't know what to do with it and so they're looking around kind of figure out what are the real number.
Is GDP real is this you know jobless claim real what is it and I think we're seeing the credit markets tell you there's a lot of fear and has probably warranted.
Yeah are there there's a term that economists use for this call liquidity trap when there's -- central banks -- -- so much money into the economy financial system.
And nobody wants to put it to work because they're so worried about the outlook.
You know that's what Japan's been in for almost got two decades and you know the the thing you've got to worry about.
Is that were in some version of that ourselves well and we could be halfway through it you know to that a long way to go really go in -- -- and I want -- star panel just a hang -- we're gonna come back.
