Excerpts from transcript
JUDY WOODRUFF (Newshour): Another feverish day here and abroad means, yes, another attempt to make some sense of what's really happening.
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ANDREW ROSS SORKIN, The New York Times: It is a market that's being fed by emotion. It's being fed by fear. It's being fed by panic. And it's being fed by greed at the moment.
Fundamentals are not what this market is about right now. There is still real worry about what is going on in Europe, probably even more than what's going on in the U.S., except for the fact that there is a view that there could be a contagion, that we could ultimately be infected.
But what is really happening is what they call in the markets headline risks. People wake up in the morning and they see the headlines and they are trading off of the headlines. And what's happening in Europe right now is, there is still a severe worry about what's going to happen to Italy and Spain. Do they have too much debt?
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You add on top of that a real disconnect in the United States about what's happening with good corporate earnings, and yet a view that we're going into our own slowdown, and you can understand how, every single day, one day, it's up, and one day, it's down.
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CATHERINE MANN, Brandeis University International Business School: Basically, I think that's a very good analysis.
The only thing I would add to the market behavior is, I think there is a lot of program trading that is leading to some of the gyrations. It's not just people who are waking up in the morning and say, oh, I see the headline and I should trade, either buy or sell. I think some of it is being driven by stop-loss orders and buy orders when it hits the floor. And that's why it's gyrating so much at ups and downs.
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JUDY WOODRUFF: And, Catherine Mann, how does that affect the ordinary person, the ordinary investor? Or is there such a thing anymore?
CATHERINE MANN: Well, there's a good question. If you are an ordinary investor, I certainly hope that you have kind of had your head in a pillow over the past few days, because, otherwise, you would -- you would be -- it would be a horrible experience.
But I think what these gyrations do for, not just the ordinary investor, but also the person on Main Street, is, it cements their view that the -- of the disconnect between Wall Street, the big companies, whether they're financials or non-financials, the big profits that some companies get by trading on this high frequency and the ups and the downs, and the average person on Main Street.
The disconnect there has been there for a while. It's been worsened because of the lack of credit being extended to Main Street, as -- as -- even though the banks have gotten better, in better shape, they have not extended any credit to Main Street.
And so that disconnect is worse. And they really feel like Wall Street is out to get them. And they're probably right about that.
NOTE: "program trading" = trading done by computers, not people.
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