Flummoxed by market reaction? Traders aren’t…
Share Now on:
STEVE CHIOTAKIS: What exactly are investors thinking about today in another big sell-off? A little perspective now
from Ellen Zentner, senior U.S. economist at Nomura Securities. She’s with us live from New York. Good morning.
ELLEN ZENTNER: Hi. Good morning.
CHIOTAKIS: Your initial reaction — I mean another steep drop.
ZENTNER: Well, I like the show’s background music, it’s sort of that New Orleans style funeral music — because that’s how I feel about the stock market, lately. Over the past week and a half, the drop has just been extraordinary. And I think no one’s surprised by this climb today, because of course we have to have some reaction to the S&P downgrade. It’s certainly an unprecedented event. The unthinkable — that the U.S. could lose its AAA rating has happened. Investors have to react, and the only thing they know to do is sell, sell, sell.
CHIOTAKIS: I mean we were down 500 points last Thursday, and probably over the past few months, we’re down 10 percent or more, right?
ZENTNER: Absolutely, we’re down more than 10 percent, that’s just a profound affect on wealth — you look at household wealth and it’s dropped by billions of dollars in a very short period of time and that can have long-term implications for the economy, especially through that wealth effect on spending. Typically we see a knee-jerk reaction in the personal savings rate, which rises.
CHIOTAKIS: Ellen Zentner, senior U.S. economist at Nomura Securities. Thanks.
ZENTNER: Thank you.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.