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Late stock swings and some credit melt

A trader looks over computer monitors showing financial data on the floor of the New York Stock Exchange.

TEXT OF INTERVIEW

Kai Ryssdal: Wall Street kicked October out the door today with a relatively mild send off -- a 144-point gain on the Dow. Not much, given how topsy-turvy the blue chips have been over the past 30 days and a happier ending than the rest of the month might actually deserve.

To talk about the week and month that was, we've invited back Diana Henriques of the New York Times and Andy Brooks. He's the chief trader at T. Rowe Price in Baltimore, Md.

Hello to you both.

Diana Henriques: Hi there!

Andy Brooks: Hi there Kai.

Ryssdal: All right Andy, we start with you. You're the trader amongst us and I want to ask you about volatility, about this crazy up and down and insane late hours in the trading day, and what really we should take away from that?

Brooks: Well, it's really unfortunate. Heightened volatility causes just a lot of anxiety for investors and it makes people nervous. This thing that's been happening in the last hour of the trading day for the last couple of weeks, what's that all about? There's something called the VIX, which is a volatility index and, when it was trading at 70, which it was a couple of days ago, it would have expressed the expectation that the markets could move 20 percent within the next 30 days, and that's just a huge number.

Ryssdal: Diana, if volatility is not necessarily a great thing, what are the good signs in the market these days?

Henriques: Well, I think we can all take some comfort from the fact that the money market fund industry, which has been so battered back in September, does seem to be getting it's legs under itself again. If you look at the total amount invested in all kinds of money market funds, it's actually back up above the levels it was at before this great panic hit in mid-September. So I think that's certainly a good sign despite all the volatility.

Ryssdal: What about these things called Libor and the TED Spread, these measures of short-term credit in the economy. Are those getting better?

Henriques: They are getting better and we're actually seeing an increased volume in some of the issuance of short-term notes, which again is an indication that some high-quality businesses are able to go into that short-term market and finance their payroll needs and their needs for short-term cash in larger volumes than they had been able to do just six weeks ago.

Ryssdal: All right, so Andy, when are we going to see some of this credit market easing in the actual equities markets? I mean, it's been a decent couple of days, but when is it going to get serious?

Brooks: Yeah. That's a great question. I do think we're starting to see a period towards more normal behavior. One of the things that's challenging, though, is we're living in a world that expects instant gratification for everything, and this global-coordinated financial rescue package that's going on, it's going to take some time.

Ryssdal: Diana, let me ask you this question: You know, one of the things we say on this broadcast from time to time is that the stock market really is not the economy, because the Dow is 30 lousy companies and all that, what about the fact though that with so many people now in the stock markets and with credit and its crisis spreading now so deep into the economy, maybe now the stock market really is the economy? What do you think?

Henriques: Well that's an interesting theory and I can certainly see some support for it, Kai. If those two entities are being coupled, the link between them is consumer expectations. The shrinkage in home values, the uncertainties about jobs, all of that has to make people less willing to make the kind of, not necessarily leap of faith, but step of confidence. If you look back at the Great Depression, you had a whole generation of people who became so risk averse that it really stifled entrepreneurship in the country for several decades, and it resulted in simply not enough growth in their own assets and earnings to see them into retirement. It would really be terrible if that were to happen again.

Ryssdal: All right, well on that point, let me do a little gut-check before we let you guys go and get you back to the week that was -- the Fed came out and cut interest rates, the GDP number came out the other day and not so great, Diana Henriques, how you feeling?

Henriques: Well, it was a little good news, a little bad news joke there, wasn't it? I think I felt a little more comforted than worried.

Ryssdal: Andy?

Brooks: I'd say I feel better.

Ryssdal: Better, but not maybe, great?

Brooks: Well, I'd love to say that was the bottom, 10 days ago, and I'm all in, but you know, we've been tested and re-tested a few times, and this is a complicated global crisis that we're involved in, so I'm a little bit hesitant to say I'm not still a little nervous. But I think you have to start buying some stocks here and increase your exposure and increase your risk and of profile touch, because stock prices are down a whole bunch.

Ryssdal: All right, well we're going to save this tape and play it back for you in a couple of weeks. Andy Brooks from T. Rowe Price in Baltimore, Diana Henriques at the New York Times in New York City. Thank you both.

Brooks: You bet!

Henriques: You're welcome.

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