China Cuts Benchmark Rate to 5.6% in Surprise Move

Stocks surge across the globe as China attempts to jumpstart growth.
8:15 | 11/21/14

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Transcript for China Cuts Benchmark Rate to 5.6% in Surprise Move
Okay. It's Friday November 21 the markets and air opener big number this morning five point 6%. In a surprise move China cut its benchmark interest rate to five point 6% from 6%. Of course China the world's second largest economy try to jump start its stalling growth and with that move those stocks surged across the globe and the rally. Is on today. On Wall Street. When I'm down Cutler in New York's here with the deet tails and China's move and the reaction from the markets Jill now Andrea from the street each other Friday morning to you. Kind happy Friday the Acadia is so listens so up Friday surprise essentially what prompted this. But Asian markets say they like to do they have Friday night surprise that we saw last week with the surprise Japanese the most package or we're seeing it again. With the China this morning two taking down their interest rates. And the reason why they do this is are seeing a slowdown with their GDP and manufacturing. Anywhere from. Furniture to clothing to all kinds a consumer goods. Another problem over in China is a real state market has really contracted and that has been eight. Big source of growth over the past five to ten years so would be bank taking down interest rates but they're hoping to do is spur lending. With Chinese banks which will in turn help bring some growth back to the economy. So this I mean obviously stocks are really moving because of this thing as well but Europe is also making some moves as well. So I would ECB is doing a knots at their buying asset backed securities they already are buying back secured bonds. Which Rockies looking to do is grow their balance sheet to one trillion Euro. So it's almost the same premise asked why China is looking to do is well where you start spurring some lending and this is exactly what happened when we had our. Quantitative easing program in the United States he had the Fed jumping in. Help spur the economy we've tapered off and we're no longer buying asset backed purchases. But you've seen how that help the economy the data is in pretty great domestically and China and Europe. There are looking to catch up to where we are because these programs have apparently helped. It artificially inflates the market a bit but if that's what it takes to get the economy growing in of course jobs as the underlying to all of that. We need to see the manufacturing come back we need to seeing improvement in real estate the whole there is is that we don't. Create another bubble so it seems is that they have it more under control. And that's good news because it's working out well in the US our economic data's been fantastic to best its been since 2008. Well let me ask out of this a just and a very very very basic explanation is that as an aggressive what's happening in Europe and China is an and an aggressive move is what's happened here in the United States. Given quantitative easing. I say it. It's even a little bit more aggressive I think because we're so prone to US headlines and we are the largest market. That it it's a little bit more extreme but they're doing essentially what we did they they're looking to increase or balance sheets pretty aggressively went trolling Euro that that's a pretty aggressive number. Interest rates of course are not quite as low as we hot here. But it's really where we bar two to three years ago in terms of implementing these programs so I would say it's pretty much so on par but. It's good for US markets are what's happening with the S&P and with the Dow right now. It's certainly we are taking a cue from the Asian and European markets and quite honestly even with out key interest rate and decline in China or the asset backed purchases from the ECB. We really do rolling along pretty nice to since October 15 while. We're out of that crazy busy earning season right now the IPO market since secondary markets are going to start to dwindle down to be in terms of new issues. He kind of see that rushing to Thanksgiving and then really all the focus is gonna be on. Our retell and holiday sales to finish out the year so be crew have someone of a news vacuum and we're really I'm hoping that will function more on supply and demand and what the retell markets. Are telling us about consumer spending trends and expectations are really really good for the consumer. And that's a nice change because they really have not had much of a break. Since pre 2008 so expectations for 2014. In terms of retail across multiple verticals. Are pretty gut. So investors at him pretty good think is a week from now everyone's going to be out there with those shopping list and with their game plan where there. Strategizing exactly what store they're gunning heat get you know that sixty inch big screen TV. Right investors though on the back end of things others saying that there are people gonna come on good in good numbers. One thing with retail regardless if expectations are good or not. That is one sector that is always tell of the tape the house and the have nots for example. Stores like up full locker Nike C have had to get past it quarters get the right product mix there in the middle of the health and fitness craze. Not just for the sports junkies by its eighth fashion forward trend is well. Foot lockers on a great job restructuring since 2009. To take a look at the stock this morning at certain react reacting positive off of the great earnings print. But if you take a look at a gap. Or an herb and they have not been doing well and could certainly see that and the stock price the merchandise the product mix inventory level it's. They're just not if they just don't have the right mix too much inventory not enough product not enough demand retail doesn't typically have. Big margins so it compressed margins sector. That really count you need to be in a sweet spot like a footlocker liking Nike another area take a look at best buy stock this morning. Consumer electronics that is taking up more market share in terms of colony bush list. Think about everybody wants a wearable device like a go pro products are fit it. Which is to keep track under Smartphone new Smartphones tablets again at their number one issue in terms of consumer electronic demand. Flat tops and that's a segment that just continues to rile some story like the best buy is certainly going to benefit from it. And as everyone knows the prices at the pump. Have certainly been helping consumers it's tax free money for them so it's a small pay raise if you will so in addition to consumer discretionary. Restaurants are really picking up new business travel for short cruise lines have been reporting some pretty decent numbers in same thing with airlines as well also. For consumer discretionary as long as you are and the haves and not have not category. It could be a really good 2014 and then I think it'll be and a good boost for the market. Because a consumer really hasn't had much will break since 2008 so expectations are pretty good this year you're. Giving me this really warm Rosie go out of jail I like this on a Friday morning has is that this is not a bad way to go into the that to the crux of the holiday shopping season. Right I think that the one thing I will say though even though the markets have been any significant upturn in the kind of get the cycle each quarter. I do remind investors that some volatility is good sometimes it's okay to have a pull back seat can put money. Into fresh ideas and we could see that potentially next week. Even though the prices the pomp have been beneficial to the consumer the OPEC meeting is on November 27 hour Black Friday. And we want to get some clarity in terms of the oversupply situation she might see a little bit of volatility in the oil market and energy related stocks which we'll certainly impact Aston. But could be good there are still some undervalued assets out there where that pull back to allow fresh money. To be relocated. Among different sectors such a good thing but across the board for the most part. It's been a great year for stocks. Just sit as Texas since October. Fifteenth when you and I spoke that day. It's a former 10% the market so I wouldn't expect asset managers are fund managers to really do you any selling to the end of the year why what today. So I'd I think what it's gonna be propped up for the most part and should there be a pullback I would certainly put some fresh money into it. Who will keep fingers crossed and I think it's not gonna happen aren't till a hundred from the street joke like so much and have a great weekend spanky pink and of course you can keep up with the latest headlines right here on You go watching the big number and then that's their New York.

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

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