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Now joining me now John Lonsky chief economist for Moody's.
Capital markets yeah -- -- John it's an interesting market right now it seems to defy -- although -- you have the Fed.
Pumping in all this money -- living in a false reality all the Fed is pumping on all this money and that's giving investors hope hope that things will get better you -- sure auto sales are higher.
And home prices are higher but they're up from what.
They're up from very very low levels.
The a current pace of auto sales actually still trails its average of the ten years ended 2007.
By more than 10% big deal so the expectation is that -- with a -- Engaging QE3 with the ECB doing some of the Bank of Japan do we -- All the thought that soon -- not my government out fiscal stimulus and China all of this will come together will get a nice rejuvenation of global activity and that will lead the market higher.
to muddy yes it benefit -- applicable thinking and let us not forget we got the earnings season coming up -- mining is a real possibility that corporations could -- not only be below estimates that could.
Really be worried -- below.
Corporations have -- just for some time the third quarter earnings are not gonna look pretty these are CE o.s CFOs their expectations.
Sharply lower -- the only areas were doing better and would be areas that are benefiting from these ultra low treasury bond yields corporate bond -- with a home sales are higher because of a record low.
Mortgage -- beyond that I don't see much of any thing.
Taking place positive.
I think is -- -- look at the money flow a lot of money still going into those defensive sectors utilities health -- consumer Staples.
It seems to -- investors not buying the the QE3 -- that's being thrown is still being conservative.
And why should they be worried the fourth -- of an economic recovery so the upside for a number of the cyclical industries is is quite limited compared to what held.
But -- three years ago of course this tells us there's a great deal of stepped.
Scepticism out there as to whether or not first of all all of the stimulus measures will actually take place overseas.
And secondly what whether or not they will work to -- -- Greece so that global spending.
Becomes and why even.
Is do you that I eurozone debt crisis we've known about -- dragged on for years.
It's still not sold but may -- now with the ECB buying unlimited amounts of a government bond.
Is -- the big worry the slowdown and we can never believe any number we get out of China but is clearly slowing down and -- has a big impact that's true but we have to remember it's all tied together one of the reasons why China is slowing down is because Chinese acts where it's.
-- Europe have declined because of the you -- recession in Europe.
Japanese exports to the European Union were down 23%.
From year ago I think the three months ended August that hurts and I'm pretty sure the Chinese are -- are feeling that same sort of -- also -- China slowing down because of an earlier tightening.
Of monetary policy that was -- to contain.
In inflation in China well they'd probably succeeded at containing and what he should but in doing so they also slow domestic spending.
Considerably in the world economy gets operate and where probable to get appealed war of of this problem as we move forward alright.
Obviously a lot of eyes on the jobs number this Friday.
-- -- -- the perhaps is gonna go up from eight point one to eight point 2% what are you expecting on Friday and how the market react not much of anything you know we might see a slight improvement.
-- jobs growth perhaps little move outwards 100000.
From its depressed level.
In the month of August the unemployment rate edges higher but my sense is that we're likely to be disappointed once again.
In the pace of job creation if only because businesses.
Have expressed so many reservations.
About capital spending going forward and if businesses are as it -- To increase capital spending it's quite unlikely.
That the Arab while -- -- hire more workers.
Great stuff global -- will Friday brings but John Lonsky thank you so much for being here thank you appreciate it.
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