Episode: Spike In Interest Rates Causes Stocks to Stumble


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Spike In Interest Rates Causes Stocks to Stumble

This week, Scott, John and Greg discuss last week's market movers, with the Dow remaining flat while the S&P 500 ticked downward. Small caps, the FAANG trade, and global markets were hit hard, and money found its way into financial names.

Bond yields spiked last week on the back of strong economic data and positive commentary about the economy's strength. Almost all Fed speakers talked up growth last week, but Scott says that the comments that stood out came from Chairman Jerome Powell.

Powell said that the Fed has a long way to go to achieve its goal of neutral interest rates. Markets didn't like this, as it caused uncertainty as to how the Fed views "neutral."

Greg talks about the problems he has with the Fed, and explains how they might not get the best read on the economy.

Moving on to Italy and the EU, Scott and John discuss how the two are battling it out over Italy's proposed budget. Scott talks about how Italy could leave the EU, and how that would be very problematic for the EU.

John talks about how bad European markets have been recently, especially Germany. John asks Greg if the euro is going to be around in 10 years, and Greg explains why he thinks the euro isn't working and won't last.

Greg talks about how China's spying chips in Apple and Amazon products is "an act of war," and says that he doesn't know how Trump can negotiate with the Chinese, knowing they can't be trusted.

Scott and John discuss a new clause in the revamped NAFTA deal, and how it could mean that China is left on its own. John also says that he doesn't believe that the latest rounds of tariffs is priced into the markets yet, and that could spell trouble when they go into effect in January 2019.

The hosts talk about what it would take to turn around GE, and whether or not GE's dividend will last.

Scott closes the show by talking about earnings, as earnings season gets underway with the big banks on Friday. Scott goes through what to expect, and how analyst expectations could affect the markets.



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