Page 12 - Wealth Effect News Today

Confidence numbers. they were down very dramatically in october, down again in november. part of that was due to the fact you were seeing the government shutdown this fall, the problems with the rollout of obama care. there was this sense that the government is not getting its act together and its a headwind to growth. but i think in another sense, you talk about the stock market being up. you have to remember that the top quarter of americans, the top 20%, 25% of americans, own 75% of the stock...

Going well or fairly well. thats the lowest number since 2012. what you are seeing is kind of these mixed feelings that americans are feeling as we approach the holidays caught somewhere between pessimism and optimism. >> how is it that people are worried about the economy but then you see the stock market going up. you see the housing market getting better. so, what gives? >> because it has been one of these recoveries that we have been in that hasnt been kind of even. it has been a spotty reco...

Issue. what youre seeing from the numbers youre hearing from retailers is that. the luxury guys will do just fine. walmart came out and said -- not that they will struggle but that theres so much margin depression. if youre a consumer margin is a good thing because you might be able to buy goods at cheaper prices. >> what about the wealth effect. new highs in the stock market and yet its not having any impact with the regular person. is that basically the translation that nobody got back into th...

It? >> i dont think that we have had that much of a wealth effect. if you look at the whole funs data, household wealth is back where it was precrisis, but the gains are very heavily secured toward the upper en. the federal reserve bank of st. louis did a study to look to see how evenly the gains from the stock market haves been. the top 7% of households, healthiest howholds, have seen their holdings value go up. the other 93% have seen them go down. the truth is that middle income and upper mid...

Most important issue. those two things. and then look at this fox news poll. 71%, as you point out, think that his recent economic speeches are just, you know, sort of the same old tired stuff that aint working. and its devoid of any new ideas. >> yeah. whats interesting about this gallup poll was that it was taken before the dow took its worst weekly drop in more than a year. it lost 2.2%. >> right. >> so were going to be talking about the wealth effect in the next hour. basically people feel w...

Employment. >> yeah. and if you look at the labor participation rate, which is in the low 60s, the lowest in decades. people are just not participating in the workforce. theyre not able to. and many just, you know, dont even want to try to look for jobs because they havent been able to find one. >> is it true that free market economies will notwithstanding bad policies by bad politicians, will eventually right themselves? >> well, adam smith would say so, but the problem is that we have -- when ...

>> it essentially means that these accommodative policies where the fed is pouring this $85 billion into the economy, thats pushing bond rates low and essentially pushing investors to the best investment in town thats stocks and thats creating the wealth effect in the stock market and keeping interest rates low. it encourages businesses and consumers to borrow money and where businesses are concerned, it encourages them to especially borrow money with the expectation that hopefully they would ex...

The economy. how do you slow down money printing. >> neil: how about if you curb it. $58 billion a month. the idea, you know what. if you cut it down to 57 or 70? >> there is a wealth effect by the market going up. if you want to dampen that wealth effect, that is big thing. >> neil: but its artificial? >> its still money. >> neil: but its propped up? >> it do lead to massive deflation inflation. >> but the hinted next month to put a timetable on this? >> no. what is so bizarre about this. this ...

This is an area thats been doing well month over month, up 37,000 in june. obviously, earlier on this year, we saw these record highs in the stock market. we also saw home prices rise 12% compared to last year. that gives rise to whats known as the wealth effect. so, people feel wealthier, and therefore, they go out and spend. that is certainly helping retail. another area thats doing very well is health care. basically, baby boomers requiring more and more at-home health aides. by the way, one ...

Back. fed chief ben bernanke last week only said he may start to scale back, the markets been freaking out ever since even though nothings actually been done. its really the stimulus program thats been propping up stocks, creating this wealth effect. besides the fed, a lot of the wild moves that stocks made today, a lot of that was also related to china because chinas central bank came out today and told the countrys biggest banks to get it together, stop handing out loans so freely. so now ther...