>>> IT’S BEEN A WILD WEEK IN THE MARKETS.
MARKETS. THE DOW HIT ANOTHER RECORD CLOSE
WEDNESDAY, ALMOST HITTING THE
27,000 MARK AND THEN YESTERDAY
SEEING A MAJOR SELLOFF AND THIS
MORNING WE STARTED IN THE GREEN
BUT LOOK AT WHEN’S GOING ON
PRETTY MUCH ALL DAY SO FAR.
THE DOW OFF ABOUT 285 POINTS.
TAKE A LOOK AT WHAT’S GOING ON.
FIRST OF ALL, INTEREST RATES.
THIS IS WHAT YOU HAVE TO THINK
ABOUT.
ABOUT. IN THE UNITED STATES THEY’RE
CONTINUING TO RISE.
THE 10-YEAR TREASURY, AN
INFLUNTDIN
INFLUNTDIN INFLUENTIAL BOND, AT 3.23%, THE
HIGHEST IN YEARS.
THIS IS BECAUSE OF NEWS THAT THE
ECONOMY IS STEADILY GROWING AND
NEW JOBS ARE BEING CREATED.
WHEN AN ECONOMY STARTS TO FEEL A
LITTLE HOTTER, YOU SEE INTEREST
RATES GO UP.
WE GOT THE NEW JOBS NUMBER THIS
IS MORNING FROM THE LABOR
DEPARTMENT AND INDEED IN
SEPTEMBER THE UNEMPLOYMENT RATE
DROPPED TO 3.7%, THAT’S A NUMBER
WE HAVEN’T SEEN IN NEARLY 50
YEARS AND ANYBODY FOLLOWING ME
FOR A LAST QUARTER CENTURY KNOWS
I SAY PLEASE DON’T PAY ATTENTION
TO THIS NUMBER.
THIS IS THE MOST IMPORTANT
NUMBER.
NUMBER. THE NUMBER OF JOBS ADDED.
134,000.
134,000. NOT BAD BUT NOT CLOSE TO WHAT WE
HAVE BEEN DOING IN PREVIOUS
MONTHS AND HOURLY WAGES CLOSE
2.8%.
2.8%. THE AVERAGE HOURLY WAGE IS
HIGHER THAN IT WAS A YEAR AGO.
STILL THESE ARE ALL GENERALLY
GOOD INDICATORS OF ECONOMIC
GROWTH AND IRONICALLY IS WHAT IS
PUSHING THE SELLOFF THAT WE ARE
SEEING NOW ON WALL STREET.
LET ME SHOW YOU THE SECTORS THAT
SAW THE MOST NEW JOBS LAST
MONTH.
MONTH. HEALTH CARE, WHICH IS JUST A
CONSISTENT GROWER FOR YEARS.
EVEN THROUGH THE RECESSION.
26,000 NEW POSITIONS.
BY THE WAY, DOESN’T ALL MEAN
HIGH-PAID DOCTORS OR NURSES BUT
COULD BE HOME HEALTH CARE AIDS
AND IT’S A GOOD AREA FOR GROWTH.
TRANSPORTATION AND WAREHOUSING,
UP 24,000.
UP 24,000. CONSTRUCTION JOBS UP 23,000.
MANUFACTURING JOBS INCREASED BY
18,000.
18,000. PRESIDENT TRUMP HAS TAKEN CREDIT
FOR DECLINING UNEMPLOYMENT AND A
BOOMING ECONOMY AND HE DESERVES
SOME CREDIT WHERE CREDIT IS DUE.
BUT I ALWAYS LIKE TO REMIND THE
PRESIDENT THIS IS WHEN HE BECAME
PRESIDENT.
PRESIDENT. THIS IS SINCE THE END OF THE
RECESSION.
RECESSION. THIS IS 2009.
MARCH 2009 WHEN THE STOCK MARKET
BOTTOMED AND I THINK -- LIKE TO
THINK OF IT AS THE END OF THE
RECESSION.
RECESSION. THAT’S THE UNEMPLOYMENT RATE.
OKAY?
OKAY? AND IN FACT, IF YOU SEE IT’S
ALMOST FLATTENED OUT A LITTLE
BIT UNDER TRUMP SO MAKE WHAT YOU
WANT OF IT.
I THINK THEY TAKE TOO MUCH
CREDIT AND GET TOO MUCH BLAME.
I JUST NEED YOU TO UNDERSTAND.
I’M GOING TO BLOCK IT OFF HERE.
THEIS THE DONALD TRUMP PART ON
THE LEFT.
THE LEFT. EVERYTHING BEHIND ME, OBAMA
PART.
PART. IN TRUTH, AMERICA’S CURRENT
ECONOMIC EXPANSION IS NINE YEARS
IN THE MAKING.
THAT WELL PROCEEDS THE
PRESIDENT.
PRESIDENT. BRING IN JOHN HARWOOD OF CNBC,
EDITOR AT LARGE.
IT’S A TIRESOME CONVERSATION,
JOHN.
JOHN. I DON’T WANT TO BELABOR IT.
NOT BLAMING THE PRESIDENT.
HE’S CONTINUED THINGS GOING ON A
NICE TEAR.
NICE TEAR. GET BACK TO THE STOCK MARKET.
WHY ARE INTEREST RATES RISING
AND WHY DOES THAT SPOOK THE
MARKETS?
MARKETS? 3.23% FOR A YIELD FOR THE
10-YEAR.
10-YEAR. NOT ALL THAT HIGH.
JUST THE HIGHEST IN MANY YEARS.
>> WELL, THE FED HAS EMBARKED ON
A CAMPAIGN OF RAISING INTEREST
RATES, JAY POWELL SAID WE’RE
STILL NOT AT A NEUTRAL POSITION.
MONETARY POLICY IS EASY.
HE PLANS TO RAISE RATES MORE.
AND THE DANGER IS THAT THE
ECONOMY OVERHEATS AND EVERYTHING
THEN -- WE FLIP INTO A RECESSION
AND PEOPLE ARE -- YOU KNOW, THE
CURRENT EXPANSION FINALLY RUNS
OUT OF GAS.
NOT THAT SURPRISING THAT THE
JOBS NUMBER IS LOWER ON A
MONTHLY AVERAGE UNDER TRUMP THAN
IT WAS AT THE END OF OBAMA
BECAUSE AS YOU SAID IT’S A
NINE-YEAR EXPANSION.
NINE-YEAR EXPANSION. THAT’S VERY LONG.
AND AT POINT IT ENDS AND WHERE
THE SKILL OF THE FEDERAL RESERVE
COMES IN OVER HOW EXACTLY THEY
MANAGE THE RETURN TO STEADY
STATE MONETARY POLICY.
>> LISTEN.
>> LISTEN. IF INTEREST RATES ARE GOING UP
AND THE FED CHAIR SAID WE’RE NOT
THERE YET, IT’S A HUMAN NATURE,
RIGHT?
RIGHT? STOCKS ARE THE ONLY GAME IN
TOWN, WHEN YOU CAN’T GET 1% WITH
THE MONEY IN THE BANK YOU PLAY
THE STOCK MARKET.
WHEN YOU CAN GO TO A BANK FOR 2%
OR 2.5% AND IT GOES UP LIKE
THAT, THERE ARE PEOPLE REGULAR
INVESTORS AND PROFESSIONAL
INVESTORS WHO ARE JUST GOING DO
TAKE THE MONEY OUT OF THE
MARKET.
MARKET. WHAT DO INVESTORS THINK ABOUT
THIS?
THIS? PAIRING DOWN THE INVESTMENTS OR
A REACTION TO A QUICK INCREASE
IN INTEREST RATES?
>> I DO THINK OVER TIME THERE’S
MORE OF AN INCLINATION TO MOVE
MONEY IN THE WAY YOU SUGGESTED
BECAUSE EVERYBODY SEEMS TO
AGREE, THIS IS A HIGHLY VALUED
STOCK MARKET RIGHT NOW.
YOU HAVE TO WONDER IF YOU’RE IN
STOCKS RIGHT NOW, AM I IN THE
BEST POSITION OR GIVEN THE FACT
THAT INTEREST RATES ARE GOING
UP, IS IT A SAFER THING FOR ME
TO MOVE MONEY INTO, YOU KNOW,