Markets suffer post-election slump
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TEXT OF INTERVIEW
Kai Ryssdal: Well, so much for a post-election bounce. Wall Street gave back all of yesterday’s gains today, and then some. We’ll do the numbers in just a bit, but the sneak preview goes a little something like this: The Dow gave up 200 points just in the last hour of trading today. To figure out whether it’s the coming change in administrations or something more tangible that’s got traders uneasy, we’ve called Bernie McSherry. He’s a floor trader with Cuttone and Company in New York. Mr. McSherry, good to have you with us.
Bernie McSherry: Nice to be here.
Ryssdal: When you got to work today, were you expecting a day like this?
McSherry: Actually, I was expecting a bit of a decline, but I thought the volume would be heavier. I thought we’d have a little more activity. But I’ve been surprised before, so why not today.
Ryssdal: What else would surprise you? What’s left out there that could surprise you?
McSherry: Well, I think we’re really focusing on just how bad this recession is going to be. You know, we heard a lot of talk about a Great Depression a few weeks ago, a meltdown of the financial system. And it’s still unclear just how severely that may have crimped consumer spending and business spending.
Ryssdal: What’s the sense on the floor about the Obama administration itself?
McSherry: Well, people are concerned, everything that’s unknown is always a concern for traders. They’re hopeful that President-elect Obama announced his Treasury appointments quickly and perhaps reassure folks that he’s got a good team in place.
Ryssdal: What if you guys don’t like the team he picks, though?
McSherry: Well, you know, if you look at the folks he’s surrounded himself with — Paul Volcker, Warren Buffet and Lawrence Summers — they’re pretty good, pretty smart guys and I think people will be pleased with them.
Ryssdal: Do you think there will be more of an urge to reach out to Wall Street from an Obama administration?
McSherry: Let’s hope so. In this last crisis, we were pleased Hank Paulson was involved. You know, he certainly understands this market as well as anyone, and perhaps some of the earlier picks for Treasury secretary were not as well-versed with some of the intricacies of the market. So, I’d like to see somebody selected who knows Wall Street.
Ryssdal: Granted a president’s power and authority over the markets is limited at best, is there something that could happen that he might do that would really disappoint Wall Street?
McSherry: Well, you know, Wall Street’s always concerned about taxes. I haven’t heard anything coming out that indicates he’s going to be particularly radical in that direction. Modest tax increases and modest increases in the capital gains tax will probably be well received, and I don’t anticipate any real problems going forth.
Ryssdal: What’s your sense of the little bounce the markets have had the past couple of weeks and it being a question of fundamentals getting better or anticipation that the election’s finally going to be over and we can move on.
McSherry: I think part of it was the anticipation that the election was going to resolve some of the uncertainty in the marketplace. And I think the rest of the rally was the fact that we’ve been pricing in a failure of the system, a meltdown of the entire economic system, and that’s pretty severe. So once we avoid that, now we’re just dealing with recessionary fears and inflation and things like that. And I think that the market has stabilized and perhaps rally about those was because of that.
Ryssdal: Bernie McSherry with Cuttone and Company in New York. We reached him on the floor of the Stock Exchange this afternoon. Mr. McSherry, thanks a lot for your time.
McSherry: My pleasure. Thanks a lot for having me.
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