The First Look - Adam Shapiro, Fox Business

Holy -- that was some kind of rally we had yesterday the -- -- 286. Point. Got to tighten it came out of nowhere and nothing big surprise to see that rally. Like that you know ideas did not anticipate the sentiment was very vague wasn't it. Great economic news broke and yet people plowed money in the stocks in a way and it looks like -- Marty's continuing this -- jury is Dow futures up right now 62 points S&P 500 up ten NASDAQ at sixteen. Oil is even trading up a dollar seventeen today tenured US treasury down slightly at one point six or seven gold is down 640. And I'm wondering is it. China -- -- can thank or is it the unemployment claims. Well I don't know let's let's go to new York and talked Adam Shapiro from the Fox Business Network may -- he knows why the market rallied so much yesterday and why it's rallying again this morning -- do and -- I'm good approach -- the title the great carnac. Yes let's go to the public I -- but they blame China -- -- state bank China yes they -- that China visited China it's going there. It this morning it is but what about yesterday. It was a China yesterday because yesterday it outward in China it's wonderful right when you're Communist government to dictate your economy. What they did was -- the newspaper the official paper. That Chinese financial sector. And there was an article that that they were looking at dropping interest rates are cutting interest rates spurred economic growth for the Asian markets rallied yesterday we we close to -- out five and yesterday. Asia already enjoyed -- China. And it was based on speculation to that part of what that'll talk to the race -- estate plus. They have Janet Yellen although the Fed is not expected to -- the rate and yet people like Janet Yellen. To the second highest ranking official as saying look we need to do more this US economy. The market liked that. Yeah yeah they do why didn't England and the Bank of England why didn't they lower their interest rates I I fully expected them after the ECB didn't lower rates I figured okay. England's gonna be Smart here and they're gonna take advantage of it try to lower their currency in lower interest rates but they didn't and that was a surprise to me. Big you know it it's despite a lot of people but they remembered to think there's a great article about a year ago about. How we view inflation -- Europeans you'd patient and they suffered horrible or Oakland station after World War II sides someplace is and they remember that. By the -- certainly remember the inflation based effort after world world want you know and so. This central banks -- load that do that and they are they are following the austerity plan. That the EU had in place. But a lot of people. There economy is really contracting. It's contracting and and they have deflation is as we have deflation in certain asset classes here. Right and but he we have the place and some would argue -- the that at -- adamant and strong enough in its cutting interest rates. It's it's it's Arctic buying its. You know people are worried about what happened. They are worried in Europe of turning into Japan -- -- -- car. You know that the whole purpose of cutting it to try to create inflation. And they didn't work in Japan but at all different model and in the old boy network -- the bank. Well they still don't have it their banks are still -- never recapitalize their banks so. Are they able they'd get up to ten years that they went and years into their crisis and that only because there's -- marketing -- -- many years in port. Adam unemployment numbers this morning 377. The number bad number what Hank. Right on line investment. It it's better than we saw last week in last week was. Revised 389 out. But that four week moving average is actually ending up so. In the market doesn't seem to be digesting before we -- expect things is you know futures right now is at the top of the program aren't -- really strong open at 930 and it seemed to be more in line with that 330000. Not a great -- -- and it is still close to 100000. Need to be well below. Do you think people are perhaps taking a common sense approach to this and looking at it you know we haven't talked about this I never I. -- they've never content that when it comes to these units in the stock market. But you -- -- you look at the the IIQ I keep coming back to the yield on the ten year treasury is significantly less than dividend yield on the S&P 500. You know I didn't. Well I just. If it's illogical -- and -- you've got a risk free asset. That's yielding you have to hold for for ten years. In order to make a a fairly taxable one point 65% compared DS and 500 where you make a you might get some share price appreciation -- the next ten years. You might well that's present that you might have people get a great you know people never logic is of people follow and and the return is better on equity. People followed their emotions get very public where -- up yesterday. We may be up at the end of day we may be up tomorrow. I'd here's what's coming at the French elections. On Sunday we have a recollection the following week and -- and get really nervous the other thing we haven't talked about by the way. That's really reinforcing people's. Desire to get back in equities is that they're bailing out Spanish banks haven't announced that the plan is going to be but they're moving in that direction. You expected that we had last week it's been quite as for. Yeah well they have to bail out the Spanish banks it's not it's not like -- thanks again -- -- banks fail right because it's inconsequential. Spanish banks it with the -- he told we're likely aren't the fourth largest economy in the in all of your print. Then the fourth largest army in all of Europe but you know it when I graduate -- banks -- -- No one knows no one really able to take Beckley who all along with Greece. -- exposure to increase in what way you know we've talked about this and that -- credit the credit default swaps and all of this stuff. That may come out tied. US money market on. And intentions. And different investment vehicles to Greece and don't really said exactly what that would be. Well you know I guess we'll we have to wait and see the one thing I will tell you is that I've I've watched it fox business and you have seen very few companies coming out. In saying that they're gonna miss their earnings estimate in the month of July right so I mean we're gonna have. I think you have to assume at least I'm I'm counting on another solid not a blockbuster but just another solid earnings season. Price to earnings ratio on the S&P 500 is about twelve to one I mean that's it. -- you make -- Republican debate book. Report that. You know they're saying that they're still good growth while moderate growth the United States and almost all regions except Philadelphia the only region actually about a bit but still growing. And that -- you know they I think last week we're all thinking that this you know train jumped the track and it had a -- backcourt that. So what do you think is just taken -- continue to be this week growth economy that actually we're gonna live in Ottawa. We've yet we've had people on you know different investors and analysts to said that we're going to be like this also along the reason going to be like this is what you get past the Greek elections on June 17 and we finally have either -- and down for the on the road with the European debt problem we still have the presidential election. And nothing's really gonna take place so investors have a sense of what's next and the next year. Let me ask you daddy because you think you the the Scott Walker victory in Wisconsin had anything to do with the stock market rally yesterday is it -- -- reading now we're even Democrats. Are saying that these public unions are overpaid and they have to have their pensions slashed and they have to pay more. For the health insurance -- seems to be this sentiment towards trying to help balance state and local budgets do you think that's having an impact on the stock market. Well it did yes. And you questioned Jeff Flock are dying in -- Chicago actually covered the outlook stories beginning. That had made a prediction that yet if if walker actually election you'll see -- rally in the stock market which you would think. The opposite of that. Because plan. You know the government is spending more money. Putting money into the system and when money's going into the system that spurs economic growth in so you know if you try to think this one logically. This may be more of a political game. The investors that actual Scott Walker's victory turned into tangible economic well on the ground but there are a lot of people are saying it was also because the extreme awkward it was at. It was a big win this is not a close election -- 53 point six. Right so widespread and and I think what walkers do and is he saying hey we have duke in Wisconsin we have to address entitlement programs state. After that entitlement programs and what the market is with hope is that Washington. These steps and finally addresses you know we've we've had planned to address. Social Security Medicare and Medicaid. The last before year's -- balanced it. The other cowards is not. That I I don't take that I think is that the US congress is the best congress money comply. -- did it. I like I do you mind if I use that again -- or all right Adam thanks for joining us a great weekend you two yet badges and congress is the best our congress is the best eaten by.