OTR Interviews

Wall Street on Fire? The Real Reasons Behind Thursday's Surge

A breakdown of the real reasons behind the market's high-charged performance on Thursday

 

This is a rush transcript from "On the Record," October 27, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Holy smokes, Wall Street is on fire! No, we're not talking about those protesters. We're talking about the stock market. Did you see what happened today, the Dow shooting up 339 points? Do we dare ask what happened?

Fox Business Network Senior Correspondent Dennis Kneale joins us. What great news, huh, Dennis?

DENNIS KNEALE, FOX BUSINESS NETWORK: Yes. You know, just when you were about to give up hope and you thought it was nothing but a sham and a bunch of shills and a gambling pit, my goodness!

Here's how extraordinary this is. Let's just cut back to the start of August. We're at Dow 12,000. Stocks fall 12 percent in only two months to the start of October. Oh, my gosh! This is the start of even worse. Are we going to have a huge meltdown?

Then in 19 days of trading, stocks roar back 14 percent! Oh, my goodness! You know, in these days of interconnected trading and day traders and the Internet, you know, stocks fall faster, farther, but they come back faster. And that's one of the lessons we know.

So we're at Dow 12,220. We haven't been at 12,000 since that August 1st. So you want to hear my spin on what it means?

VAN SUSTEREN: Yes. I want to know why it happened, too.

KNEALE: OK, so three short-term meanings right away. The first thing we know is it means recession -- hah! The big bogeyman, we feared it. And GDP came out today growing 2.5 percent. It's not great. It would have to be 3 percent to start creating new jobs. But at least it's not terrible. A European meltdown -- contained! The Chinese are going to come in, and they're going to give money. The Japanese -- new reports out just moments ago saying they may get an Occupy Wall Street...

VAN SUSTEREN: (INAUDIBLE) stop one second right there. Let me stop you right there. The Chinese are going to help in the bailout in Europe, right, help the banks?

KNEALE: Yes. They're going to bail out...

VAN SUSTEREN: OK, here's...

KNEALE: ... their own customers.

VAN SUSTEREN: All right...

KNEALE: They need that...

VAN SUSTEREN: All right...

KNEALE: ... economy buying their stuff.

VAN SUSTEREN: But wait a second. This is the best part about it. There's an article I read in The Financial Times late tonight that I brought just for you, in which it says that China could play a role in the EU rescue, but it said that Beijing might also ask European leaders to refrain from criticizing China's currency policy, a frequent source of tension with trade partners.

So basically, they're willing to help out in Europe as long as Europe doesn't trash them for manipulating their currency, like we are and like Congress is now going to battle over a bill (INAUDIBLE) but anyway...

KNEALE: And you can see, Greta, how much our criticism and jawboning has really done to bring those Chinese to heel. It doesn't matter!

VAN SUSTEREN: Well...

(CROSSTALK)

KNEALE: ... they're not going to respond.

VAN SUSTEREN: Oh, no! Oh, but obviously, we got under their skin. The Chinese care enough about it that they obviously are paying attention to us criticizing them here in the United States because they're now -- they wanted to -- in order (INAUDIBLE) leverage in Europe. We're not going to give you money unless you stop talking about us!

KNEALE: Well, but you know what? It would be rude to criticize the benefactor who just bailed you out. I mean, I'm just talking civility.

But we're diverting away from the more important extraordinary thing going on in the market today because it also says for Occupy Wall Street, hey, occupy this. You know, stocks are up since you guys started whining!

But longer-term meaning, Greta, longer term, investors should remember this for the next time around. Number one, it's never as bad as the fraidy cats fear! Number two, today those markets fall faster, but they recover faster, so sit tight. And number three, Greta, don't sell in a slaughter. And if you can muster up the courage, buy in a little bit.

VAN SUSTEREN: You know what...

KNEALE: So those two big bogeymen, Europe and U.S. recession, they seem to be off the table.

VAN SUSTEREN: I don't -- I don't...

KNEALE: And so...

VAN SUSTEREN: I -- I -- you know, you're pretty gloating -- you're gloating pretty much about what happened today. But I don't know. It's, like, I've seen so much gyration in the market in the last 60 days in particular that I'm a little cautious, you know, before I start doing -- you know, doing the dance on the set here. You know, tomorrow night, you know, there could be a lot of moaning and groaning, a lot of whimpering!

KNEALE: Stocks will drop. You know, Asia is trading -- it's morning in Asia. They're already up 2 percent or so. Stocks in the U.S. -- I'll bet you the Dow drops 150 at least tomorrow. If you're a trader and you're up four out of five days or something, you're up so much, do you go in the weekend with your bets on the table? No, you want to take them off and take some profit, and you're a little afraid.

But overall, the economic numbers today on GDP showing we are not going into recession -- that was a surprise. And I think there's room for hope here. I think we could be looking at a rally up through the end of the year here!

VAN SUSTEREN: All right, you say we're not going into a recession...

(CROSSTALK)

KNEALE: We are not.

VAN SUSTEREN: ... wrong way. Well, no, no, because I'll tell you, that's just a definition a bunch of economists -- economists put on -- on sort of the...

KNEALE: No, it's more than that!

VAN SUSTEREN: No, no. You know...

KNEALE: I talked to you about this!

VAN SUSTEREN: You know, can I tell you...

KNEALE: It's so much more.

VAN SUSTEREN: ... Dennis, if you don't know -- Dennis, if you don't have a job...

KNEALE: I know.

VAN SUSTEREN: ... or if you're worried about your mortgage, and a bunch of economists say, Oh, we're not in a recession and yet you can't -- you're worried...

KNEALE: OK...

VAN SUSTEREN: ... about meeting your mortgage or your house is underwater...

KNEALE: But 130...

VAN SUSTEREN: ... I don't think...

KNEALE: I know that!

VAN SUSTEREN: Those -- those are the fancy terms...

KNEALE: But 130 million people...

VAN SUSTEREN: ... economists use!

KNEALE: But 130 million people do have jobs, do spend money. Let's not forget that. And I worry that we could talk ourselves into a recession. Now, look at what the markets did today. Look at what GDP showed today, but look at consumer confidence, which plunged to all-time lows just in the past month, according to new data out yesterday.

VAN SUSTEREN: That's bad!

KNEALE: And I say, Stop being so depressed and take some Prozac! It's going to be OK, guys!

VAN SUSTEREN: Well, OK, we'll see (INAUDIBLE) if the numbers continue to go up, you know -- you know, the trend is in the right direction today. We like today. Anyway, Dennis, thank you.

KNEALE: I'll take it. Thanks.