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>> A stunning drop in U.S. stocks on Monday. The Dow Jones closed down nearly 1,,200 points falling more than 4.5%. It's the biggest one day point drop ever recorded. It's the steepest percentage slide for Wall Street since August 2011. The dramatic sell-off extends losses that began mounting last week and comes after a tremendous run-up that saw stocks breaking record after record.
Reuters market correspondent Lewis Kroskoff explains what's unnerving investors.>> There are two issues that have been a catalyst for this pullback and they're related. It's rising bond yields and concerns about rising inflation. Rising bond yield is an issue for stocks for a few reasons. Higher borrowing costs for companies.
And if bonds become relatively more attractive, then that could also pull people away from stocks. And if rising inflation starts to get out of control, that's where you could see the federal reserves start to step in. And increase rates perhaps at a faster pace than investors have been bracing for.
>> Fueling those fears of inflation and otherwise welcome development, higher wages. Which U.S. President Donald Trump in Cincinnati on Monday celebrated as a result of the massive tax cuts he signed into law last year.>> Your paychecks are going way up.>>
>> Your taxes are going way down.
>> The tax cuts, estimated at $1.5 trillion over ten years, are already having another effect, creating an immediate need for the U.S. Treasury to borrow more money to make up for the loss in tax dollars flowing to Uncle Sam. That's pushing treasury bond yields up, Monday, hitting their highest levels in four years.
Stocks, at their low for their session on Monday, had lost more than 10% from their record highs, set less than two weeks ago, completely wiping out all the gains for the year so far. All this turbulence greets the new Fed Chair, Jerome Powell. Sworn in Monday, and facing the task of steering the U.S. economy through suddenly turbulent waters.