Reflex Rally on Wall Street; Market Volatility
NEWTON: The markets have been on a bone-rattling roller coaster ride over the last few days. Now the Dow is finally pointing in an upward direction. As you can see, that is not a bad gain at all for today. That's the way it went. And Alison Kosik was viewing it all for us here at the New York Stock Exchange. Alison, I was kind of surprised despite the Citi numbers, those were good, retail sales, unexpectedly strong. What kind of momentum, though? That's quite a bit of momentum the market had on it today. What was going on there?</s>ALISON KOSIK, CNN BUSINESS CORRESPONDENT: And those good numbers were really what the market needed for what some are calling this reflex rally. Those positive retail sales numbers from March, those are good because they show Americans hit the stores more than expected last month. And then, you said it, the other part was upbeat earnings from CitiGroup. Remember, last week's earnings, they were mixed. We had JPMorgan missing and we had Wells Fargo impressing. So, then, we have CitiGroup impressing the Street as well, so those mixed earnings, now, turning the tide toward the positive side. So you saw that sort of positivity playing out in the market today. Paula?</s>NEWTON: Alison, a reflex rally? I don't think I've heard that expression before. I don't know, whoever coined that, hopefully, is making more money. Thanks, Alison, I appreciate that.</s>KOSIK: Sure.</s>NEWTON: Now, to give you a sense of the sort of volatility we've been looking at, this is the Dow over the last four days, just to illustrate the dramatic rises and falls and to tell you not without much rationale, either. Today, it close up six tenths of one percent. The Dow, though, is down nearly 3 percent year-to-date. That is not a good reading wee into the second quarter, here, and we've been warned to expect more of this through the earnings season. Now, Jens Nordvig joins us to kind of drill down on this volatility. Thanks so much for being here, I appreciate it. No one is more shocked than I -- we'll call it a reflex rally -- but that this actually happened today. We were just talking on Wednesday -- I'm mean, sorry, on Friday -- about people saying, look, where does this market have to go? We're not expecting much from earnings. The recovery in the United States remains tepid. What is at play here, in terms of market fundamentals?</s>JENS NORDVIG, HEAD OF FIXED INCOME RESEARCH, NORUMA: Well, I think we've had these serious concerns about whether growth momentum is fading. A lot of weak data during the first quarter. So, I think retail sales is one of the most important data points in the next several weeks, and it came out much stronger than expected. So, I think that's a very, very important reading. We're looking at potentially getting to a 3 percent growth rate pretty soon, and I think that's going to be very comforting for the market, opposed to the alternative.</s>NEWTON: As opposed to the alternative, definitely. And in terms of things like the Fed and what it's doing, we had a lot of jitters with that. Are we really factoring that out here, now? Do you think that a lot of the volatility that people had been predicting is gone now?</s>NORDVIG: I think a lot of people read the minutes from last week, where we got the details of what the Fed is thinking, and they're sort of going a little bit back to basics. There's not going to be anything urgent from the Fed in terms of tightening. That's giving the market comfort. If we can stay in a range, in terms of the bond yield, I think the equity market will do better, unless we have some geopolitical shockwaves around the world or from China.</s>NEWTON: And let's talk about that. Quickly, on Ukraine, something like that, can that really rattle investors in a broad sense, even though if you look at the economics of it, perhaps it doesn't represent a huge swathe of the global economy?</s>NORDVIG: Yes, I think we've seen earlier in the year that obviously the shock effect is very, very unnerving for the market. Now, we've almost gotten used to these terrible pictures from Ukraine from a market perspective. The real important issue is whether sanctions spill over into energy issues for Europe. If there's a question --</s>NEWTON: But they have to. Is there any way that they're not going to?</s>NORDVIG: Well, so I think so far, actually, the sanctions have been on a nature where they've tried to sort of shield the European economy, not really bring those tensions into the fore. So, if they can avoid that, I think the spillover to March will be limited. But as soon as the gas supplies to Europe are in question, we're going to have much more dramatic impact.</s>NEWTON: You've been doing quite a lot of work on emerging markets. I want to talk to you about the volatility there and the risk there. You say that there is, potentially, because of that emerging market debt, a lot of risk there still in those markets.</s>NORDVIG: Well, so, there's certainly a lot of risk in emerging markets. The question is whether it's priced. So, we've been through a year of emerging market volatility, some emerging market currencies have depreciated 30 percent. So the question now is whether it's sort of already in asset prices and we can start to trade valuation. I think if we have that environment I'm describing, with 3 percent US growth, not a lot of tightening signals from the Fed, emerging markets will hold up. But if we have a dramatic tightening signal from the Fed, it's a totally different game.</s>NEWTON: And in terms of spillover effect, though, we've got China GDP coming out on Wednesday. How significant is that number going to be?</s>NORDVIG: That's a very important number because obviously there's a lot of fears, similar to what we had fears about the US growth, there's a lot of fears about dramatic slowdown in China. And if we can avoid that, I think it will calm the market. There's one other data point I want to point to, is their reserves. Their reserves numbers are going to come out this week, and that might signal a huge spike in intervention, because they try to generate a new regime on the currency. Watch that, too.</s>NEWTON: OK, thanks for being here. I do have a little bit of whiplash from all of this, but we'll see where the week goes and how that plays out. Appreciate your time. Thanks. The deadly Ebola virus has spread into Guinea's capital city. 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