Global Stocks Sell Off After Fed Speech

Mike Santoli analyzes the morning business headlines.
6:25 | 06/20/13

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Transcript for Global Stocks Sell Off After Fed Speech
In the bell this morning -- Non profit helped provide hydrogen -- by preventing benefits. And very happy opening bell for this Thursday June 20 hello everyone I'm Tanya Rivero in New York futures down this morning after a global sell -- This coming off the dismal day the markets had here after fed chair Ben Bernanke said the easy money policies will continue. But could -- dropped in 2014. Right now I want to bring in mikes and told me from Yahoo! finance for his reaction to all -- the morning -- Morning so -- the market reacted pretty strongly to Ben Bernanke's statements but now we're more or less today away from the comments of -- some distance what did you take the way well. The first take away is that Bernanke is serious in the market is taking him seriously that he intends to look for that point relatively soon. When the -- -- back away from what it's been doing in trying to. And keep interest rates very low and to help the economy in this is an adjustment that the market has to go through. Psychologically and then also with the actual increase in interest rates it's happening it's not just hypothetical. The actual increases -- -- Absolutely act in fact in a very rapid way the the yield on ten year treasuries. Has gone up from you know one point 7% just a few weeks ago. To 2.4 so even -- still very low that's an incredibly rapid rise for the biggest asset market in the world. The mountain Ben Bernanke generally do what the market likes to see what just kind of keep things as saying that so why -- the market also much yesterday. Well he definitely did emphasize that what ever the Fed does its going to be based on the future data so they're going to be flexible gonna retain all the tools that they thought put aside for themselves. And here's the thing he could have been. Much more gentle. Because there was the opportunity to say inflation remains extremely low and to emphasize the fact that the government is still cutting back on its spending and not helping the recovery. I know that's what the market kind of expected that he was going to look for an excuse to be a little bit more friendly. And basically push off that date when in fact the Fed would do less and in fact we did -- set out more specific. Terms that look relatively plausible. For when the Fed might do something for example 7% unemployment rate which could happen early next year right -- forecast and he might say he said that might be enough. That's certainly caught the global stocks weren't too happy either with the -- -- They -- now here's what's going -- -- it's -- complicated but treasury yields go up interest rates going up here. The US dollar rallies on that because if you hold dollars you get more income from it. And that's really been pressuring. The emerging markets China in particular which is going through its own growth troubles so yes that in the markets didn't like it in typically overseas markets is just the fact. Follow US markets -- -- had a catch up move to the big losses here yesterday and gold prices weren't spared either crack I mean -- now. It not at all I mean who do men really like the triple whammy -- -- rising interest rates are not good for gold it's actually cost you money to hold it. You rising US dollars directly bad for gold prices and an emerging markets they sell. Go right now I'm just wondering here at the markets react negatively to talks tapering. How are they going to react when we actually used her heart -- -- Yes good question now -- thing to keep in mind is that markets typically will anticipate the reality and then. Maybe this adjustment will be pretty much over by the time we actually are finished with with -- with this quantitative easing process but it's it's difficult to know when I think that's what. Investors are adjusting to right now is we just don't know exactly how important the Fed's role has been in keeping interest rates where they are keeping stocks where they are keeping growth -- So what's going to happen. Is basically the actions yesterday are gonna make the market even more sensitive to every little bit of economic data that come -- because that's really gonna tell the whole story. In terms of when and how much we're gonna have to find out. Bob about the Fed's intention apps. They seem to have inserted another element of unknown of uncertainty which of course we know investors don't really -- Now another thing driving a global sell off was falling growth in China what is the outlook there. China's is struggling means is that the big question is is -- going to be kind of this gradual slowdown that's managed by the Chinese authorities or is it going to be a quote hard landing. It's looking a little uncomfortable -- More like the latter -- and it basically. There their export. Growth has has slowed down dramatically they're trying. To do it they can to have the domestic consumers in China. Pick up some of the slack it's not really taking off yet and they have basically a real estate and banking bubble the way we did right and they're banking system has really been struggling. In in recent days. It's it's it's definitely one other element of why the world is not growing all that fast -- why investors are uncomfortable with what with the idea of less Central Bank help just because you don't have a lot of the other pistons fine right now could sign -- poised for the kind of -- we saw just there. You know it's it's possible I I don't know that there are quite teed up for something like that and because it has been kind of a slow bleed -- sometime and by the way top -- still growing very fast 7% or so -- 86%. But the banking system is is very very distorted the way it was here. Right -- right now also new numbers back at home adding a little salt in the wound weekly jobless claims out today. How bad was it. You know they were -- which obviously is not good up modestly by 141000 still. That their claims are basically settled into a range right now in the mid 300 thousands. Almost each week. Which basically tells the same story which is improvement in the job market but not -- are strong improvement so. It was definitely. A light number. Well actually two high. But I don't think it changes the story very much just now but as they said the market's going to be over sensitive to every bit of data right now and claims -- -- a little more importance of that. Indian boy that I can bring up the market take -- the board is down already over a 160 points just as we've been speaking this morning so. What do you think might -- it is going to be another ugly day. You know it could be I think every you have to really keep an -- in the bond market if it starts to look very -- there in the losses pile up there that's what's gonna drive stocks bonds are in charge right now it is not about the stock we'll give our I have gotten my aunt Kelli thank you so much all right thanks.

This transcript has been automatically generated and may not be 100% accurate.

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