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Central banks to blame for selloff

Friday, February 12, 2016 - 01:29

Some investors lost confidence after some central banks cut their rates below zero. That slammed bank stocks. Fred Katayama reports.

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The massive market selloff this week sparked fear among some investors. U.S. stocks entered into a "correction," dropping more than 10 percent from their peak. Capital Management's Thomas Mingone: SOUNDBITE: THOMAS MINGONE, MANAGING PARTNER, CAPITAL MANAGEMENT GROUP (ENGLISH) SAYING: "People are really nervous. I think, basically, there's concern over the banking system in Europe; there's certainly concern over the oil prices, and it's going to be a volatile market for awhile." Behind the selloff: Some central banks like Japan's cut interest rates below zero. Lee Ferridge of State Street Global Markets: SOUNDBITE: LEE FERRIDGE, HEAD OF NORTH AMERICAN MACRO STRATEGY, STATE STREET GLOBAL CAPITAL MARKETS (ENGLISH) SAYING: "Part of the problem this week is a lot of investors have looked at it and well, what can central banks do now?" The negative rates, which Fed chair Janet Yellen has not ruled out, slammed shares of banks, which make more money when rates rise. S&P 500 financials, down 18 percent this year, are the worst performing sector in 2016. JPMorgan Chase CEO Jamie Dimon in a show of confidence bought more than $25 million worth of his own bank's stock on Thursday. Next week, watch China's currency, the yuan, as its markets reopen following the Lunar New Year holidays. SOUNDBITE: LEE FERRIDGE, HEAD OF NORTH AMERICAN MACRO STRATEGY, STATE STREET GLOBAL CAPITAL MARKETS (ENGLISH) SAYING: "The fear is that if China devalues that currency or continues to weaken that currency, that's a sign of slowing economic growth in China, it puts pressure on the rest of Asia, and that quickly feeds through into the rest of the market." Key to getting investors back in, Ferridge says, is a turnaround in economic data amid concerns of global growth.

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Central banks to blame for selloff

Friday, February 12, 2016 - 01:29