Rebound on pause | Apple Card debut | Zero rates coming?

TUE, AUG 20, 2019

EVENING BRIEF

AS OF TUE, AUG 20, 2019 • 04:01 ET

DJIA		25965.77
		-0.65%	-170.02

S&P 500		2900.79
		-0.78%	-22.86

NASDAQ		7948.56
		-0.68%	-54.25

Most Active

DOW
NAME	LAST	CHG	%CHG
AAPL	210.36	+0.01	+0.00%
INTC	46.60	-0.63	-1.33%
MSFT	137.26	-1.15	-0.83%

S&P 500
NAME	LAST	CHG	%CHG
GE	8.38	-0.29	-3.34%
AMD	30.72	-0.76	-2.41%
BAC	26.72	-0.55	-2.02%

NASDAQ
NAME	LAST	CHG	%CHG
AMD	30.72	-0.76	-2.41%
AAPL	210.36	+0.01	+0.00%
INTC	46.60	-0.63	-1.33%

EDITOR'S NOTE

Lower interest rates typically juice the market, but not this time. Recall that stocks were trading near all-time highs in July until the Federal Reserve cut rates for the first time in more than a decade.

"There is a problem with cutting rates because it shows a sense of alarm," Nobel-winning economist Robert Shiller said Tuesday on CNBC's "Squawk Box."

A quarter-point drop in interest rates is a tiny adjustment, but the fact that the Fed is cutting rates at all had the opposite intended effect, sparking fears of recession.

Kyle Bass, founder and chief investment officer at Hayman Capital Management, told CNBC's David Faber that the Fed will follow the rest of the world's central banks to zero.

"You don't want to use the Z word because it scares people," Shiller said.

Many Fed watchers have not only used the Z-word but predict the Fed will lower rates even further than that in the event of a recession.

The market is already giving you a glimpse into this future, with $15 trillion in negative-yielding debt around the world. The U.S. is an outlier with positive rates.

All these ideas leave the market jittery. Stocks ended down for the first time in four trading days, a sign the market could continue down the same path of volatility investors have seen since the last rate cut.

Not everyone expects the worst. J.P. Morgan's global head of macro quantitative and derivatives strategy, Marko Kolanovic, says most of the recent moves in stocks and bond yields have been driven by technical flows, algorithmic selling and poor liquidity, not fundamentals.

He's predicting an enduring comeback.

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