The Monday Moneybeat

MARY REICHARD, HOST: Today is Monday, October 15th. Thank you for turning to WORLD Radio to help start your day. Good morning. I’m Mary Reichard.

NICK EICHER, HOST: And I’m Nick Eicher.

Coming next on The World and Everything in It, the Monday Moneybeat.

Welp, this week, money took a beating.

The stock market suffered a two-day rout, with the Dow Jones Industrial Average plummeting more than 1,300 points. By Friday, the index bounced back and limited some of the damage. But it wasn’t enough, and the Dow lost in just one week almost half of its gain from the entire third quarter of the year.

The stock index shed 4.2 percent. The Standard and Poor’s 500 index of stocks lost 4.1 percent. The Nasdaq down 3.7. Hardest hit: The Russell 2000 index of smaller-company stocks. It fell 5.2 percent on the week.

This was the worst week for Wall Street in six months.

Wary investors fled stocks for the relatively more attractive yields U.S. government bonds offer.

They also appear concerned about two big economic issues:

First, the pace of interest-rate increases by the Federal Reserve. The Fed has pushed rates up three times this year, and the central bank appears poised to raise the rate one more time before the year’s over.

Interest-rate setting is a monetary tool the Fed uses to try to combat inflation. That can be the unpleasant side-effect of a growing economy. Higher interest rates theoretically keep a hot economy from getting too hot.

The second concern is the trade war with China. Last week, despite President Trump’s punitive tariffs, the so-called trade deficit with China ballooned last month to a new record high: $34.1 billion. Year-over-year, that’s 13 percent higher than last September.

The economic dispute with China won’t be nearly as easily resolved as it was with Canada last month.

The United States is at odds with China over Beijing’s industrial policy and has expressed a long-simmering frustration over intellectual property—that is, technology stolen in China.

These are deep issues that may take a long time to resolve. And that’s said to have traders on Wall Street on edge.

If the White House is worried, it’s not showing.

KUDLOW: Hi, everybody. How are ya? Beautiful day, beautiful day, economy’s booming, life is good… 

EICHER: White House economic adviser Larry Kudlow dismissed the Wall Street correction as just a thing that comes and goes. He added the trade war’s really only, his words, a trade skirmish. But he did proceed to detail the points of contention. Kudlow says he looking forward to a possible meeting next month between President Trump and President Xi Jingping.

KUDLOW: So there are structural issues, technology issues. We’re not gonna give away the family jewels. There’s no reciprocity on trading and tariffs, so there’s a whole menu of things and I hope they get around to talking about it. Perhaps the Chinese will be a little more cooperative.

EICHER: Presidents Trump and Xi might be able to carve out time during the G20 meeting of leading industrial economies. That summit is scheduled in South America after Thanksgiving.

And that’s today’s Monday Moneybeat.

(AP Photo/Richard Drew, File) In this April 5, 2018, file photo a NYSE logo adorns the entrance to the trading floor the New York Stock Exchange. 

WORLD Radio transcripts are created on a rush deadline. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of WORLD Radio programming is the audio record.

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