ALEX COHEN, Host:
Welcome to the program, Diane, and tell us about this week. It's the week between Christmas and New Years. It's traditionally known as the Santa Claus Rally. Why is that?
DIANE SWONK: The other issue, of course, is there were no bonuses for Wall Street this year, or where there were, there were certainly contentions about them, and people were asked to give them back when they got them. So the extra cash that often comes through the pipeline to buy also Christmas presents, which was not there this year, was not there to buy stocks, either.
COHEN: So here we are. It's December 30th. There's just a few days left to this week. Any chance that Santa might come in the last few days?
SWONK: Well, unfortunately or fortunately, these are such volatile markets, who knows? I mean, in the last five to ten minutes of the market, we can see an extraordinary turn. It's sort of like watching an NBA game - it's not worth watching it until the very last few minutes to see who wins. We've seen wild fluctuations, but that said, it's not going to be anything to compensate for what's been the worst year since the 1930s.
COHEN: As you mentioned, Diane, in the past, a lot of times, investors would buy stocks at this time of year with their bonuses. Maybe not so many bonuses this year. You've got the added element of the fact that some people are still concerned that they might get laid off in the future. How is that affecting how the markets might close this year?
SWONK: The idea of having extra money around to invest in the market. Although that is a good long-term plan, right now, it may not be in the best short-term interest. If you're afraid you're going to lose a job, you need to have that extra cash in your bank account to pay your bills with rather than put into a stock account that may or may not be able to cash out of quickly at any kind of a major return.
COHEN: Does not sound like there is a whole lot to look forward to coming up in 2009, but do you see any hope in the future going forward in the markets?
SWONK: I wish I could say it was sooner, but at this stage of the game, that would be a little bit premature. We really need to see some more healing go on. The good news is, we're starting to see healing in credit markets. Mortgage rates have come down. Now, if we can just get some of those people who are close to defaulting on their mortgages actually into the banks to renegotiate those mortgages, we'll be in much better shape.
COHEN: Diane Swonk is the chief economist with Mesirow Financial. Thanks, Diane, and happy New Year.
SWONK: Happy New Year to you, too.
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