Is the Current Market Volatility 'Normal'?
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What headlines open the Money Briefing and set the market context?
With your money briefing, I'm J.R. Whelan at The Wall Street Journal in New York. Ongoing market volatility and all the political noise leading up to November's midterm elections can create some confusion for investors and those wanting to get in the investing game. We'll clear things up in a moment. First, these money and market stories you should know. The number of U.S.
What does recent FDIC research reveal about unbanked and underbanked U.S. households?
households without a bank account fell to 6.5 percent last year. The FDIC says the decline in so-called unbanked American households can be attributed to what it calls improvements in the socioeconomic circumstances. Lower income households and households that are less educated have higher rates of being unbanked or underbanked. A person classified as underbanked has an account at an insured firm but also uses financial services outside the traditional banking system such as payday loans or check cashing services. And the Wall Street Journal Real Estate Bureau reports that shareholder activist William Ackman is in contract to buy a penthouse on New York's Upper West Side for close to its asking price of $22.5 million.
Why is William Ackman's Manhattan real-estate purchase newsworthy right now?
The property was formerly owned by the late author Nancy Friday, who wrote books on female sexuality. She assembled various units in the building, including one from her neighbor, the performer and composer Peter Allen. The journal says the units could be combined into a 13-room, 4,200-square-foot space with a 3,200-square-foot terrace. The room has barrel-vaulted redwood ceilings and a secret room, accessible by pressing on a hidden panel in a decorative column. Ackman, who was the founder of Pershing Square Capital Management, last year bought two units in a nearby building for a combined $22 million.
After several months of nearly straight upward climb by the stock market, October has brought very choppy waters with broad sell-offs coupled with wild swings. What's the best move for investors when Wall Street is so uneasy? We're joined by Kate Warren, investment strategist at Edward Jones. So, Kate, you don't see the current dip in instability on Wall Street as unusual.
How has October's market volatility differed from the prior rally?
No, I actually think this is a return to normal market volatility. It's certainly been a little more of a surprise than I think many investors were expecting, because the day-to-day volatility has been higher. But this is very much in line with what we've seen historically, where there have been 3% or 4% or 5% pullbacks every year, and one correction or 10% pullback on average every year. So think of this as just markets adjusting, getting back to a normal level of equity market volatility.
And because the Dow, for one, has been so high, if you get a larger percentage drop than in previous years or in previous decades, it's not as precipitous a drop.
Well, what we're seeing is multiple hundred points a day. And I think what people don't realize is a 1% move in the Dow is about 300 points.
Why does Edward Jones strategist Kate Warne say current volatility is a 'return to normal'?
So those numbers look really big, but they actually aren't much in terms of how much the market is really moving. And I think that's important to put into perspective.
So you see the constant threat and implementation of tariffs as a wild card. Could that change your outlook in terms of the market going forward?
Well, so far, what we've had is lots of tariffs announced, and not many of them have actually been implemented, even with the $200 billion in tariffs that were implemented a few weeks ago. So I think investors need to put that in perspective and realize that we will see slightly higher prices in the U.S. We will see slightly slower U.S. economic growth as a result. But so far, that's all been something that's pretty small. If we continue to see an escalation of tariffs or a bigger trade war with other countries, especially China, I think we could see a more significant impact. And that's really what we're concerned about. We don't expect it. We do think this is more of a negotiating strategy. But I think investors need to keep in mind that that's a risk out there.
So in terms of the current tariffs landscape, which is more threats than action, you recommend against knee-jerk reactions to that specifically.
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Chapters
7 chapters
1
What headlines open the Money Briefing and set the market context?
0:05–0:24
2
What does recent FDIC research reveal about unbanked and underbanked U.S. households?
0:24–1:08
3
Why is William Ackman's Manhattan real-estate purchase newsworthy right now?
1:08–2:13
4
How has October's market volatility differed from the prior rally?
2:13–3:04
5
Why does Edward Jones strategist Kate Warne say current volatility is a 'return to normal'?
3:04–4:31
6
How could tariffs and rising interest rates affect inflation and investor returns?
4:31–6:20
7
Why should investors avoid letting midterm-election politics drive their investment decisions?
6:20–8:26
Speakers
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