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January 25, 2022By Origin Ten LTD9 Minutes

What’s behind the current stock market volatility? By PBS NewsHour

as we’ve reported it was a wild ride for the markets today I’m going to Boz look at what’s behind this volatility and the Market’s recent slump

Judy at one point the Dow Jones was down more than a thousand points and the S&P 500 which is a wider gauge of the stock markets had fallen into correction territory which is about a drop of 10% from its previous High all of the major indexes came back though finishing on a positive note but they are down since the start of the year to understand more about all of this to Dana Pederson to Chief Economist at the conference board that’s a non-partisan business they sang say to Peterson welcome to the NewsHour thanks for being with us I want to ask you about what we saw before that late rally this afternoon which was a continuation of a week-long slides help us understand that what was behind that what we’re watching and worried about sure thing investors are watching you’re worried about a number of things certainly tech stocks have sold off certainly is borrowing costs are set to rise with the FED raising interest rates there’s been a lot of Misses in terms of earnings a given the fact that the Aamir Khan buried really disruptive business

activities many workers said that they were staking they or their quarantine never really expected profits and also there’s a lot of concern about geopolitics and certainly know what’s going on and you’re up and implications for financial markets and uncertainty overseas as a relates to the US waiting on response to Russian aggression in Ukraine is that playing into all of this as well I think so and certainly in Eastern Europe the the standoff if you will the issues between Russia and the Ukraine and NATO and the US are putting upward pressure on gasoline price is not only in that region also globally all feeding into inflationary pressures that we’re feeling right here at home in the US so what about that concerns among investors are gone or fading you can have a lot of volatility from day-to-day and indeed you could have had some good earnings news but I think overall there’s a lot of concern and markets about

how fast the FED is going to go in terms of tightening monetary policy we all know that they are going to finish up the QE taper by March and probably start raising interest rates but but how many interest rate hikes we looking at 345 and Surly instead of talked about reducing the size of its balance sheet and that would probably happen through allowing assets to just kind of expiring mature and roll off but still in all that those are all forms of tightening Market I think you’re getting a little concerned about what that means for them impact on that week’s long slide that we saw because even without lockdown right the big concern was lockdowns would create economic hold up even without the lockdowns we have seen some major economic disruptions both in Supply and in labor when you look in late December and early January something like nine million Americans were looking for work because they were either sick with covid or caring for someone who had covid

as cases of this latest. Could be cresting in parts of the country is there a longer-term cumulative economic toll ahead I’m circling the Delta variant kind of swept through the world and really impacted the US in the third quarter of last year we did see a spell of kind of tepid growth relative to other growth rates we have been seeing during the pandemic around 2% so we’re looking at your two two and a half percent for the first quarter but when we look at a chronic Wiest experience in South Africa was very intense but it was also very short-lived so hopefully by the time we reach the second quarter you will see better activity indeed we asked consumers our last survey was back in December how they were feeling they were still looking forward to buying goods and services and going on vacation 6 months had so that’s really constructed for the second quarter

they gather tomorrow for a couple of days do we have any idea of when they’ll start to raise those interest rates and by how much and are you worried that if this down slide continues they could act more aggressively sure will tomorrow they will begin their two-day meeting and I think it’s pretty anticipated the bed going to get very strong signaling that the taper once it’s finished in around March that the feds going to start race start raising interest rates are probably buy water percentage points 25 basis points potentially every other meeting that we get us a three or four hikes for this year but he is a big concern is as you said what if inflation doesn’t cool off what if we continue to see insulation is notably above 2% towards the end of this year will decide to go more when they go 50 basis points right now what we’re hearing and then we split the federal signal is that we’re looking at a good three to four interest rate hikes for this year

play there’s risk that we could see more for working American families because they see what’s happening in the headlines they are paying more for goods everyday their living through the same uncertainty in the economy and the pandemic what is everything that we’re seeing in the markets this volatility the weeks-long down slide what does that mean for that sure so if you own assets and certainly not in the best few weeks for you so certainly if you own stocks or bonds with the sell-off you’ve lost them some interest in you Blossom capital but certainly if you have a savings account or checking accounts that have interest higher interest rates are good for you but it’s really about sentiment do people even average Americans who made out of any Financial assets if we believe that the stock market is an indicator or harbinger of weaker growth going forward then they may become concerned about their job prospects with so far

many people are working on would you have the great resignation yes people are resigning but they’re going off in finding new jobs and the economy it certainly at the end of last year while the last quarter was still doing quite well and even with the first quarter weakness to two and a half percent growth is actually pretty good for the US economy on but we do anticipate stronger growth in the second quarter so it’s really about how long is the structions last and certainly how ordinary Americans proceed what’s going on stock markets at is Dana Peters and chief Economist of the conference making sense of a wild day on Wall Street for us a thank you so much for joining us thank you