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I think it's important to keep perspective here. 450 points sounds like a big number, but it's really just a little north of 1.5% for the Dow and we are not that far from all-time highs. So the reasons that are causing this were the pretty poor PMI report that came out yesterday—the lowest we've had since 2009—and some other weaker-than-expected job data. We're clearly late cycle. But there don't appear to be a lot of excesses in the economy, which suggests that the reason that we're seeing the weakness, particularly in the industrial part of the economy, is directly tied to trade Wars. That's actually something we hear from the companies we speak to on a regular basis, that it's really tied to trade wars. So if we get some resolution and clarity on how this is going to look moving forward, this doesn't mean that we have to go into a recession just because we've had some weak PMI data. We have had a couple of these situations this cycle. If you think back to 2016 with the energy weakness, PMI data rolled over pretty hard, and we recovered from that. The other thing that is happening that people aren't talking as much about, that's a positive for the economy, is housing. The low interest rate environment that we've been in here for the last few months, or most of 2019, is starting to stimulate housing. We've seen some very good numbers come out of the housing market recently, and while housing is only about 4% of GDP, the multiplier effect on the economy is much, much larger than that.

Video Details

Duration: 1 minute and 25 seconds
Language: English
License: Dotsub - Standard License
Genre: None
Views: 8
Posted by: mariafog on Oct 3, 2019


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