Transcripts

Recession Worries Still Weigh Heavy on Wall Street

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Scott Gurvey in New York, where it was a rough day on Wall Street. The Obama victory may have settled the biggest question on the nation's collective mind, but it marks the beginning of a new period of uncertainty for the financial markets. Art Cashin of UBS says the markets can't wait for the inauguration to learn the new president's plans.

ARTHUR CASHIN, DIR., NYSE FLOOR OPERATIONS, UBS: We're in a very difficult and strained transition period now. And it's not January 20. It is the next week or so. What the president-elect decides to do and his advisors begin talking about can either soothe the markets greatly or potentially disrupt them and that's why there's some nervousness about in the market.

GURVEY: Rarely has a president taken office in the midst of such financial turmoil with credit markets still frozen. Millions of Americans worried about making mortgage payments and consumer sentiment running at record low levels. Historian Richard Sylla points to the end of the great depression as an example.

RICHARD SYLLA, HISTORIAN & ECONOMIST, NEW YORK UNIVERSITY: When President Roosevelt came in in 1933, somewhat analogous to an unpopular Republican president giving way to a probably more popular Democratic president, the market did very well in 1933 and it went up every year in President Roosevelt's term.

GURVEY: Wall Street knows there will be change. The nation demanded it in voting Democrats into office coast to coast. But market strategist James Awad says the markets are afraid Washington will read the call for change as a demand for retribution.

JAMES AWAD, INVESTMENT STRATEGIST, ZEPHYR MANAGEMENT: If you do it irresponsibly and if we overcompensated for the fact that some on Wall Street were given to excess, if we overcompensate and penalize the whole capital sector because of that, that would be negative change.

GURVEY: Still, Awad says it is possible for change to be good for the system, even if it shifts the balance somewhat from the financial sector to the consumer and labor sectors.

AWAD: If it's positive, forward-thinking change within the construct of a capitalist system and balanced budgets and responsible regulation and reasonable taxation and incentives, all of that I think could be a positive for the economy short, intermediate and long term.

GURVEY: Most analysts say the sooner the president-elect announces his economic team the better. Until his plans are known, investors' nerves are expected to remain on edge. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.