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All coming because she said after the sell off yesterday but the kind of big question that's out there for investors is.
Related to the long term outlook for the global economy and headlining this morning's Wall Street Journal was a -- a lot of people are talking about from David Wessels writing.
That -- tectonic plates of the global economy are shifting he says.
That was starting to move away from the standard of the last few years with the global economy relied on.
A few Constance the US would footprint plenty of money keep interest rates low China.
Would provide a lot of demand vacuum of commodities and Japan.
Was largely irrelevant -- was and Saunders is a senior vice president and chief investment officer Charles Schwab joins us now on the case be made is that all three of those things.
Are changing but -- we don't know Liz -- is what that means -- think it means.
Well look I think we're starting to see an impact on volatility from extraordinarily low levels that that's been our view.
There will likely go through at least a short term corrective phase I nothing terribly sinister can do what we saw in the last three years spent.
A bit of a -- back not only because of what we're seeing with monetary policy -- and yields and spreads going -- not just in the US but globally.
But also because sentiment got a little bit stretch with the rally came you know excess optimism that I -- needed to be worked.
Stuff so just refer to that article one more time but a lot of other people made the same point if you look at those three things that we mentioned the top.
At some point the interest rates going up in the US to a quote normalized level at some point Japan showing signs of growth again.
At some point China slowing down but slowing down to a sustained level of growth all those things you could make the case are actually good things there are healthy we can live with them.
It's the -- it's the timing between getting.
You know there from here that people are worry about worried about that you do not seem that concerned why.
We'll look you know all ultimately you know Ben Bernanke and then the US fed would like to see the -- -- that the patient if you wanna call that.
Act normally again but at some point you do have to disconnect the patient from the the -- -- and the machines and and let the patiently at the hospital on.
-- transition may be a little bit bumpy but ultimately I think our economy is better off and as it relates to.
What's going on in China to I think the US economy will be a big beneficiary of some of the dislocations.
And China and fact that one of the reasons why their economy is going through a -- is because of mass sort of pressure on wages we've had -- here in the US and there's this story.
That I think has a lot of legs longer term it's not a train it's a longer term story of this manufacturing Renaissance which I think long term will be to the benefit of the US economy.
From other places besides China but I think China will be a big piece of it.
I think that is an extremely positive story for the US economy down the road even if we have to go through some choppy periods in the -- OK so that's the thing that that's one obviously positive long term trend one of the others like housing or what but what else -- -- you think positives right now for us but you know I think I think housing units is unequivocally positive there's some concern that the backup in rates is going to cause some problems with housing up.
But it's really the real mortgage rate that ultimately drives demand like real GDP is the number we care about because it's an inflation adjusted number.
When somebody goes to buy a house it's not just the mortgage -- that matters but what's happening to the price of the home we're borrowing to -- So the real mortgage rate right now is in negative territory it's about negative 7% because you got a 4% thirty year fixed mortgage rate but an 11% rate of appreciation and homes.
Four minus eleven is negative seven it still makes a tremendous amount of economic sense to purchase a home and I don't think we're at risk of mortgage rates alone causing problems.
In housing in the near determined that -- we've got not just the US fed that still -- very easy monetary policy and Willie even at a point that they taper.
But global central banks across the world are loosening policy to and then we have a in improving deficit and I think Washington.
Is less of a needle -- from a risk perspective but I'm not here to stay at the positive yet for the market right but and probably less risk that we've seen in the last certainly got a huge negative which would be nice would never talk about it as much as those issues as much -- -- -- this is always thank you very much for coming -- -- okay.
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