Greg Ip

speaker

528 appearances 8 recordings 1 series first heard Jan 2018 last heard Sep 2024

Greg Ip’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Dow Pullback: Do Past Corrections Predict the Future? · 13 Feb 2018 podcast

Volatility has gone up. voice-verified

Stocks and bonds started moving together instead of in opposite directions. voice-verified

And as investors who put on very large positions in the stock and bond markets discover that relationships are changing, they need to get out of those positions. voice-verified

And once again, they sell into a falling market. voice-verified

And therefore, it takes on a character of its own. voice-verified

And that is a bit like 1987. voice-verified

Now, the degree of the decline is much, much smaller today. voice-verified

But the similarity is that what you're observing to some extent are market dynamics as opposed to changing perceptions of what's really going on in the economy. voice-verified

Well, Hyman Minsky had said stability can be destabilizing because he had observed that over time, when you have long periods of market calm, it sort of encourages people to believe that risk has gone away and therefore they can take bigger positions. voice-verified

To take one very simple example, if you think there's never going to be a recession, you're willing to pay more for stocks or for houses. voice-verified

And in the last 10 years, we've had a significant disappearance of volatility, and that's largely because central banks voice-verified

I've been so resolute about keeping interest rates low and doing things like buying bonds every time there's a threat to the economy. voice-verified

And what might be changing is that perception that central banks will always, always sort of err on the side of delivering more sort of monetary morphine to the economy. voice-verified

And that might be a sea change right now that people really need to get their heads around. voice-verified

Because if we're in a world now where there is more upside risk to interest rates, if stocks and bonds start moving together more often— voice-verified

volatility returns to just historic levels never mind unusually high levels then that's a collection of sort of changes to our assumptions that need to be priced into markets and it could mean that the stock market needs to be lower and possibly quite a lot lower and none of us are smart enough to know exactly how that's going to shake out or when that's going to shake out but it does suggest that the coming year if this narrative of higher inflation and interest rates takes hold it could continue to be a rocky year as people voice-verified

just to the fact that the stability of the last decade turned out not to be a permanent feature. voice-verified

Thanks for having me. voice-verified

WSJ Your Money Briefing · Should Incoming Fed Chair Powell Prepare for a Bust? · 12 Jan 2018 podcast

Welcome to Your Money Matters.

I'm J.R.

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