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[00:01]
Deel Advertiser
Still running global payroll like a relay race. Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.
[00:36]
J.R. Whalen
With your Money briefing. I'm J.R. wayland at the Wall Street Journal in New York. After a sharp decline on Wall street in the fourth quarter, we've seen a sharp uptick so far this year. But does that sharp uptick represent too much optimism that could turn us around for another downturn? We'll have details in a moment. First, these money and market stories you should know Low inflation and rising wages are filling up the pockets of American workers, the Labor Department says. The Consumer Price Index, which gauges what Americans pay for everything from used cars to hummus, rose A seasonally adjusted 0.2% in February from the prior month. Rising gasoline prices, housing costs and grocery bills all contributed to the month over month increase. All told, prices rose 1.5% in February from a year earlier, but that was the slowest pace since September of 2016. And workers hourly earnings increased 1.9% from a year earlier in February. Meanwhile, production and non supervisory employees that's a category that includes blue collar workers saw their real average hourly wages rise even more by 2.2% over the year to February. That was the strongest gain for both measures since late 2015. And the White House is considering a measure that would require colleges and universities to take a financial stake in their students ability to repay government loans. In other words, be responsible for whatever money a student doesn't repay. That's an effort that could squeeze loan availability to students and reduce defaults, the Journal's Michelle Hackman reports. A draft of the order isn't final and the specifics of exactly how a skin in the game provision would work and haven't been laid out. It also isn't clear whether the White House will back an administration proposal or urge Congress to take one up. Proponents argue that if schools were made responsible to partially or fully pay back that money, they would likely offer fewer low quality programs or induce fewer students to attend who couldn't ultimately pay. Colleges and universities argue that should such a measure be implemented, it would harm schools that take on disproportionate numbers of low income students like historically black colleges and universities and for profit schools. The market downturn in the fourth quarter of last year was fast and the recovery that took over Wall street right at the start of the year was fast as well. Should that give us reason to think that the market could snap back into a downturn just as quickly? Let's get some answers from Wall Street Journal Markets reporter James McIntosh. So, James, there were several layers of worries that were weighing on stocks that have lifted for the most part, not the least of which was concern about the Federal Reserve.
[03:20]
James McIntosh
You can identify three big factors that were behind the sell off that really started in October. The first is the Fed. People went from not worrying at all about the Fed to suddenly being very, very concerned about the Fed. In part because it became obvious that the global economy was slowing, in part because sentiment shifted. People stopped feeling so positive and they looked for a reason to worry and the Fed gave them a good reason to worry. And in part because they were also getting increasingly concerned about the Chinese trade dispute and the danger that it would turn into a full blown trade war. All three of those things have lifted to some extent. So I think we can say the Fed from the start of this year acted as the trigger for why there was the rally when the Fed effectively retreated from the idea of hiking rates. This year. The Chinese trade dispute has been slightly slower burn. But there's been a whole series of positive news and people are now assuming there will almost certainly be a deal and that the or possibly an extension, but the tariffs probably won't get raised to the 25% level that was being discussed. On the global economy, the news has not been so good. People were panicking that it was going to be even worse. People were thinking, God, recession's on the way. And now they're saying, well, it's much worse than we thought, but it's not actually a recession. So of course being bad but not as bad as you'd thought is a reason for stocks to go up.
[04:57]
J.R. Whalen
And as you write in your Streetwise column in the Journal, the bulls are currently outnumbering the bears. Sometimes overly done optimism can drive fear that we're in for some sort of a turnaround or in some cases some kind of a correction, that feeling, and that really doesn't exist right now.
[05:15]
James McIntosh
Yeah, I mean, at the moment people are sort of moderately optimistic on there. There's no hard science behind measuring information, investor sentiment, but there's no sense of panic among US Investors. There's most of the indicators that you can measure on this and there are lots of them, but most of them show a sort of moderate optimism. Which is roughly speaking where we were last summer before the sell off began. And the problem is when you get extreme optimism, then it's right to have a sort of contrarian instinct and expect that that will revert back towards the average, that the optimism people don't stay super optimistic for too long. And of course, when they become less optimistic, the market tends to go down. So that can be a warning sign. But these sorts of levels of moderate optimism don't really give you a warning sign on their own. Which is both good news because it means in principle the market could go up a lot from here because people can become a lot more optimistic if the right things happen, but also kind of a, kind of annoying from a market watcher's point of view because it says it's very hard to have a sense of anything other than sort of drift at the moment.
[06:33]
J.R. Whalen
It really is a unique situation with global growth slowing and economic growth in the US expected by some measures to be just 0.2% in the first quarter. And yet investors really have not felt a reason to put their fingers on the sell button.
[06:50]
James McIntosh
Well, we had a bit of selling last week. The market did go down. Nothing really drastic. But the sort of uninterrupted buying that we'd had from the start of the year up to very late February did come to an end. And since then it's sort of been the US Stocks have been bouncing around, but not the rally has clearly broken. So the question now is are we having a pause while people reassess? If we are, well, to be honest, then it could go either way, depending on what happens with the main thing that they're assessing, which is the global economy. And of course, all of this comes with the health warning that other things can happen too. There's always that surprising news, good or bad, that can move the market.
[07:37]
J.R. Whalen
And it's a good reason to keep track of everything going on and the market sentiment. In the Streetwise column in the Wall Street Journal by columnist James McIntosh. James, thanks so much for coming on the show.
[07:48]
James McIntosh
No worries. Thank you.
[07:49]
J.R. Whalen
And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.
[07:54]
Deel Advertiser
Still running global payroll like a relay race deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you Already use Workday, SAP, Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.

Summary4 min read

WSJ Your Money Briefing – Episode Summary

Episode Title: Is There Too Much Optimism on Wall Street?
Air Date: March 13, 2019
Host: J.R. Whalen
Guest: James McIntosh, WSJ Markets Reporter

Episode Overview

In this episode, J.R. Whalen and markets reporter James McIntosh explore a pressing question: After a turbulent end to 2018 and a rapid market rebound at the start of 2019, are investors being overly optimistic on Wall Street? The discussion dives into the reasons behind recent stock market movements, the shifting sentiment among investors, and the underlying risks that could impact future performance.

Key Discussion Points & Insights

1. Recent Market Movements

Sharp Recovery After Decline: The episode opens by noting the rapid rebound in markets following a significant sell-off in the fourth quarter of 2018 (01:00).
Question of Sustainability: Whalen raises concerns about whether this uptick reflects excessive optimism and if a renewed downturn could follow.

2. Factors Behind the 2018 Sell-off

James McIntosh identifies three main triggers:

Federal Reserve Policy Shifts:

“People went from not worrying at all about the Fed to suddenly being very, very concerned about the Fed. … The Fed gave them a good reason to worry.” – James McIntosh [03:23]
Trade Tensions with China:

“They were also getting increasingly concerned about the Chinese trade dispute and the danger that it would turn into a full blown trade war.” – James McIntosh [03:44]
Global Economic Slowdown:

“On the global economy, the news has not been so good. People were panicking that it was going to be even worse… now they’re saying, well, it’s much worse than we thought, but it’s not actually a recession.” – James McIntosh [04:34]
Current Status:
- The Fed has retreated from immediate rate hikes, calming some fears.
- Trade dispute fears are lessened, as markets expect a deal or tariff extension.
- Global economic data is weak but not recessionary.

3. Current Optimism Levels on Wall Street

Investor Sentiment:
- Whalen notes that, based on McIntosh’s “Streetwise” column, current bullish sentiment outnumbers bearish views.
- McIntosh clarifies that optimism is “moderate,” not extreme, which doesn’t serve as a clear warning sign for a correction.
  
  “Most of [the indicators] show a sort of moderate optimism… When you get extreme optimism, then it’s right to have a contrarian instinct… But these sorts of levels of moderate optimism don’t really give you a warning sign on their own.” – James McIntosh [05:14]
Implication:
- The lack of extreme investor optimism means markets could climb further if positive events occur, but it’s difficult for analysts to predict further direction.
  
  “…it’s very hard to have a sense of anything other than sort of drift at the moment.” – James McIntosh [05:58]

4. Economic Backdrop and Market Reactions

Slowing Global Growth: Attempts to assess U.S. growth prospects, with some forecasts at just 0.2% in Q1.

“It really is a unique situation with global growth slowing and economic growth in the US expected by some measures to be just 0.2% in the first quarter.” – J.R. Whalen [06:32]
Investor Behavior: Despite uncertainty, there’s been little panic or mass selling; recent pullback seen as a pause, not a reversal.

“…uninterrupted buying that we’d had from the start of the year up to very late February did come to an end. … The rally has clearly broken. So the question now is are we having a pause while people reassess?” – James McIntosh [06:49]
Uncertainty Remains: Future market moves hinge on new information about the global economy and unexpected events.

“…all of this comes with the health warning that other things can happen too. There’s always that surprising news, good or bad, that can move the market.” – James McIntosh [07:28]

Notable Quotes & Memorable Moments

James McIntosh on the challenge of interpreting investor sentiment:

“There’s no hard science behind measuring investor sentiment, but there’s no sense of panic among US Investors.” [05:18]
On market unpredictability:

“…all of this comes with the health warning that other things can happen too.” – James McIntosh [07:28]

Important Segment Timestamps

02:22 — Market analysis begins: causes of Q4 2018 sell-off
03:20 to 04:54 — Deep dive into Fed, trade tensions, and the global economy
05:14 — Investor sentiment and the risk of optimism
06:32 — Economic backdrop vs. investor behavior
06:49 — Market reaction pauses and future uncertainties

Tone & Style

The episode maintains a measured, analytical tone, grounded in both data and market psychology. Both Whalen and McIntosh avoid alarmism and focus instead on methodically breaking down drivers of market moves and how current levels of optimism should be interpreted by investors.

Summary

This episode provides a clear-headed look at why Wall Street rebounded so fast after Q4’s rout, what’s driving the currently “moderate” optimism, and why neither euphoria nor panic dominates the mood. Investors, the podcast concludes, should remain attentive to evolving news, as the next market move will depend on both expected and surprising developments.

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Transcript11 lines

[00:01]
Deel Advertiser
Still running global payroll like a relay race. Deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.
[00:36]
J.R. Whalen
With your Money briefing. I'm J.R. wayland at the Wall Street Journal in New York. After a sharp decline on Wall street in the fourth quarter, we've seen a sharp uptick so far this year. But does that sharp uptick represent too much optimism that could turn us around for another downturn? We'll have details in a moment. First, these money and market stories you should know Low inflation and rising wages are filling up the pockets of American workers, the Labor Department says. The Consumer Price Index, which gauges what Americans pay for everything from used cars to hummus, rose A seasonally adjusted 0.2% in February from the prior month. Rising gasoline prices, housing costs and grocery bills all contributed to the month over month increase. All told, prices rose 1.5% in February from a year earlier, but that was the slowest pace since September of 2016. And workers hourly earnings increased 1.9% from a year earlier in February. Meanwhile, production and non supervisory employees that's a category that includes blue collar workers saw their real average hourly wages rise even more by 2.2% over the year to February. That was the strongest gain for both measures since late 2015. And the White House is considering a measure that would require colleges and universities to take a financial stake in their students ability to repay government loans. In other words, be responsible for whatever money a student doesn't repay. That's an effort that could squeeze loan availability to students and reduce defaults, the Journal's Michelle Hackman reports. A draft of the order isn't final and the specifics of exactly how a skin in the game provision would work and haven't been laid out. It also isn't clear whether the White House will back an administration proposal or urge Congress to take one up. Proponents argue that if schools were made responsible to partially or fully pay back that money, they would likely offer fewer low quality programs or induce fewer students to attend who couldn't ultimately pay. Colleges and universities argue that should such a measure be implemented, it would harm schools that take on disproportionate numbers of low income students like historically black colleges and universities and for profit schools. The market downturn in the fourth quarter of last year was fast and the recovery that took over Wall street right at the start of the year was fast as well. Should that give us reason to think that the market could snap back into a downturn just as quickly? Let's get some answers from Wall Street Journal Markets reporter James McIntosh. So, James, there were several layers of worries that were weighing on stocks that have lifted for the most part, not the least of which was concern about the Federal Reserve.
[03:20]
James McIntosh
You can identify three big factors that were behind the sell off that really started in October. The first is the Fed. People went from not worrying at all about the Fed to suddenly being very, very concerned about the Fed. In part because it became obvious that the global economy was slowing, in part because sentiment shifted. People stopped feeling so positive and they looked for a reason to worry and the Fed gave them a good reason to worry. And in part because they were also getting increasingly concerned about the Chinese trade dispute and the danger that it would turn into a full blown trade war. All three of those things have lifted to some extent. So I think we can say the Fed from the start of this year acted as the trigger for why there was the rally when the Fed effectively retreated from the idea of hiking rates. This year. The Chinese trade dispute has been slightly slower burn. But there's been a whole series of positive news and people are now assuming there will almost certainly be a deal and that the or possibly an extension, but the tariffs probably won't get raised to the 25% level that was being discussed. On the global economy, the news has not been so good. People were panicking that it was going to be even worse. People were thinking, God, recession's on the way. And now they're saying, well, it's much worse than we thought, but it's not actually a recession. So of course being bad but not as bad as you'd thought is a reason for stocks to go up.
[04:57]
J.R. Whalen
And as you write in your Streetwise column in the Journal, the bulls are currently outnumbering the bears. Sometimes overly done optimism can drive fear that we're in for some sort of a turnaround or in some cases some kind of a correction, that feeling, and that really doesn't exist right now.
[05:15]
James McIntosh
Yeah, I mean, at the moment people are sort of moderately optimistic on there. There's no hard science behind measuring information, investor sentiment, but there's no sense of panic among US Investors. There's most of the indicators that you can measure on this and there are lots of them, but most of them show a sort of moderate optimism. Which is roughly speaking where we were last summer before the sell off began. And the problem is when you get extreme optimism, then it's right to have a sort of contrarian instinct and expect that that will revert back towards the average, that the optimism people don't stay super optimistic for too long. And of course, when they become less optimistic, the market tends to go down. So that can be a warning sign. But these sorts of levels of moderate optimism don't really give you a warning sign on their own. Which is both good news because it means in principle the market could go up a lot from here because people can become a lot more optimistic if the right things happen, but also kind of a, kind of annoying from a market watcher's point of view because it says it's very hard to have a sense of anything other than sort of drift at the moment.
[06:33]
J.R. Whalen
It really is a unique situation with global growth slowing and economic growth in the US expected by some measures to be just 0.2% in the first quarter. And yet investors really have not felt a reason to put their fingers on the sell button.
[06:50]
James McIntosh
Well, we had a bit of selling last week. The market did go down. Nothing really drastic. But the sort of uninterrupted buying that we'd had from the start of the year up to very late February did come to an end. And since then it's sort of been the US Stocks have been bouncing around, but not the rally has clearly broken. So the question now is are we having a pause while people reassess? If we are, well, to be honest, then it could go either way, depending on what happens with the main thing that they're assessing, which is the global economy. And of course, all of this comes with the health warning that other things can happen too. There's always that surprising news, good or bad, that can move the market.
[07:37]
J.R. Whalen
And it's a good reason to keep track of everything going on and the market sentiment. In the Streetwise column in the Wall Street Journal by columnist James McIntosh. James, thanks so much for coming on the show.
[07:48]
James McIntosh
No worries. Thank you.
[07:49]
J.R. Whalen
And that's your money briefing. I'm JR Whalen in New York for the Wall Street Journal.
[07:54]
Deel Advertiser
Still running global payroll like a relay race deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you Already use Workday, SAP, Netsuite operate like a local everywhere. Visit d e l.com WSJ that's d e e l.com WSJ.