RACHEL MARTIN, HOST:
It was a doozy of a day on Wall Street. That is probably not the technical term for the massive plunge in the market, but we probably can't repeat the language likely used on the trading floor as the Dow Jones Industrial Average fell 800 points yesterday, making it the worst day for stocks this year.
DAVID GREENE, HOST:
Now, what's kind of weird about this is that this big slide came just a day after the Dow actually rose a lot after the Trump administration announced it would postpone tariffs on some Chinese goods, so why this sudden and really steep turnaround?
MARTIN: Who better to ask than NPR's chief economics correspondent Scott Horsley, who joins us this morning. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: So as David noted, earlier this week, big surge in the Dow. Next day, it tanks. How come?
HORSLEY: You know, if you pull the camera back a bit, Tuesday's up-day in the market after the president announced that he was postponing some of those tariffs actually stands out as kind of the lone bright spot. You know, it followed a 400-point drop on Monday, a string of big losses in the market last week and then yesterday's big plunge, when both the Dow and the S&P 500 dropped around 3%
There's just been a lot of volatility, a lot of nervousness. We got news yesterday that Germany's economy actually contracted in the most recent quarter. We also got some disappointing data about China's factory production. Both Germany and China are big exporters, so that signals a lot of anxiety about softening world trade. And then there was that worrisome signal from the bond market, which the president tweeted about in all caps as the crazy inverted yield curve.
MARTIN: What does that mean? I mean, I will cop to not knowing what the inverted yield curve is about.
HORSLEY: OK, ordinarily, the payoff on long-term government debt is higher than the payoff on short-term debt. Investors get a reward for tying up their money longer. And if you plot that out on a graph, the curve bends upward like a smiley face.
HORSLEY: What's unusual is when the curve turns upside down, and you get a lot of frowny faces on Wall Street. And that's what happened yesterday. The yield, or the payoff, on the 10-year treasury note dropped below that on a two-year note. And this gets a lot of attention because historically, that's often been a harbinger of a looming recession.
Now that doesn't mean it's going to happen tomorrow, but it does signal some concern about the path the economy is on. We still have low unemployment. We still have pretty good consumer spending. But we have seen a drop-off in business investment, and of course, all this trade tension is not helping.
MARTIN: Uh huh. Happy face, smiley face - Scott, you could be an econ teacher in high school. I would have taken your class. So what about the Fed, because this has been a favorite target of President Trump? Yesterday, he directed a personal attack at Fed Chairman Jay Powell, blaming him in particular for some of the economic market jitters we're seeing right now. What point is the president trying to make with that?
HORSLEY: Yeah, the Fed has become the president's favorite whipping boy or scapegoat or distraction from the president's own policies, and yesterday was no exception. He wants the Federal Reserve to act more aggressively to cut interest rates. Now the Fed insists it's driven by economic data and not political pressure, but if the economy continues to soften, the president may get what he wants.
MARTIN: Here's the how-to part of the segment. People are going to look at a bad day in the market, think about their own investments, obviously with their retirement accounts. Should people be worried?
HORSLEY: You know, if you're thinking about retirement savings and retirement is still many years away, all this is probably just a footnote, nothing much to worry about. For the president, though, who likes to use the stock market as a scorecard, his time horizon is shorter than that, you know? President's up for reelection in 15 months. He used to boast about all the people who thought they'd become investing geniuses when their 401ks jumped.
Over the last year, the stock market has pretty much been treading water. And the real challenge now is going to be if that spreads to the wider economy, then it won't just be the bond market where we're seeing all those frowny faces.
MARTIN: NPR's Scott Horsley. Thanks, Scott.
HORSLEY: You're welcome.
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MARTIN: All right, we're going to turn now to Philadelphia because there was this eight-hour police standoff last night that came to an end pretty late in the day.
GREENE: Yeah, so police say they were going to try and serve a drug warrant, and then gunfire erupted. And this confrontation just went from bad to worse.
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UNIDENTIFIED POLICE OFFICER: We got several shot officers. We got an officer down. I need all guidance live.
GREENE: As you can hear there, officer down. The suspected gunman wounded six officers who ended up in the hospital, fortunately with non-life-threatening injuries. This is what Philadelphia Police Commissioner Richard Ross had to say about the shooting.
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RICHARD ROSS: We are very, very lucky. There were six police officers shot in one incident. It is remarkable that, you know, I believe a couple of them have been released already. And so it is nothing short of astounding that, in such a confined space, that we didn't have more of a tragedy than we did.
MARTIN: All right, for more, we're going to turn now to NPR's Jeff Brady, who is in Philadelphia. I guess, Jeff, how did it start? I mean, why were police targeting the house in the first place?
JEFF BRADY, BYLINE: Well, at about 4:30 Wednesday afternoon, officers were serving a narcotics warrant. And police say the situation, it turned dangerous almost immediately. Officers were inside the house. They were headed toward the rear where the kitchen is, and police say that's when gunfire erupted. Officers, of course, they returned fire. They tried to escape. Police Commissioner Richard Ross, he painted this really dramatic picture of officers escaping wherever they could - through windows, through doors. He described it as a barrage of bullets. And they didn't stop. The suspect kept firing for hours afterwards.
As you mentioned, six officers were struck by gunfire, one actually in the head. But none of those injuries was life-threatening. They were taken to two local hospitals that are right there - very nearby - treated and released a few hours later.
MARTIN: Do we know anything at this point about the suspect?
BRADY: He's 36 years old. His name is Maurice Hill. It sounds like officers may have had some idea that he might be dangerous. Hill reportedly has a pretty long criminal history. And the local newspaper the Inquirer says that he had resisted attempts to be arrested in the past.
MARTIN: How did police ultimately get him out of the house?
BRADY: You know, it took more than seven hours. And they talked with the suspect on a phone that was in the house. They said he picked it - or at least they called him on a phone that was in the house. They - early on, they said he picked it up a few times but didn't answer. They used a loudspeaker to try to convince him to come out peacefully. They even told him that police officers who were injured would survive, trying to encourage him to end the standoff peacefully.
They also were worried about what the police chief early on referred to as a potential hostage situation. Two officers and three people they had arrested before the gunfire started were stuck in the house for hours. Eventually, a team was sent in to get them, and those five people got out fine. Then right around midnight, the suspect, Maurice Hill, came out of the house with his hands up, and police say he is in custody.
MARTIN: And have charges been filed?
BRADY: Well, you know, clearly he's going to be facing much more than drug charges now. Police also are thinking about how they serve these types of warrants. They're going to be examining this incident to see if there's anything they can learn to prevent violence from happening in the future.
MARTIN: NPR's Jeff Brady in Philadelphia for us. Jeff, thanks.
BRADY: Thank you.
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MARTIN: One of the hardest things to preserve in any organized movement is unity, keeping everyone together. Disagreements over goals and tactics can, and often do, undermine the cause.
GREENE: Yeah, so let's talk about what's happening in Hong Kong, where protesters have been pushing for more freedoms from China. There are signs now of divisions within this pro-democracy movement. The protests there, let's remember, started over a bill that would have allowed people in Hong Kong to be extradited to China to face criminal charges. In recent days, though, there have been more instances of protester violence, even though the movement has been demonstrating against police brutality.
MARTIN: OK, NPR's Anthony Kuhn is back on the ground in Hong Kong. Anthony, let me first ask about these reports that protesters at the airport have been wearing signs saying I'm sorry. What's that all about?
ANTHONY KUHN, BYLINE: Well, it's mostly about Tuesday night. What happened at the airport then was that protesters grabbed two mainland Chinese men - one of them a journalist, the other a suspected policeman. They mauled them. They beat them. Medics were prevented from getting them in to take them out. And the protesters hassled travelers just trying to get through. They clashed with police. One officer drew his gun, and luckily nobody got shot.
So now protesters realize they blew it. They acted like a mob. Many of the protesters are feeling bad. They're feeling reflective, and some of them apologized. And there are people who think that's a good thing for the movement. They've cleared out of the airport entirely now in - and it's a de-escalation. This was getting really tense. People were afraid that it was going to lead to a government crackdown.
MARTIN: So, I mean, what does that mean for the broader goals, this push for democracy? I mean, the group itself, it's not - there's no organization to it, is it? It's a purely grassroots endeavor. Is it truly unified right now?
KUHN: Well, that's right. It's a movement without leaders and a strategy of no strategy. All we can say for now is that the protests are going to continue, but this is - looks like an inflection point, a turning point. And for the first time, protesters are suggesting that yes, they can beat a tactical retreat, and that's a very important thing. And they're reaffirming that they can do this without injury.
Another thing is that the police have admitted that they had undercover cops working among the protesters. And the protesters can now point in that violence and say hey, maybe it wasn't us. Maybe it was the undercover cops that did it.
MARTIN: I mean, is Carrie Lam talking about these accusations specifically of not just the police brutality, but, you know, the placement of undercover cops within the movement - Carrie Lam being the chief executive of Hong Kong?
KUHN: Yeah, right. Well, it's mostly the police who've been addressing these charges, and they say yes, we did have undercover cops posing as demonstrators. But we - they were not stirring up violence as people have accused them. They didn't do anything illegal. All the charges saying that, you know, they used tear gas improperly, that they fired rubber bullets at close range, they have denied any impropriety. And that makes people very mad. And it's just, you know, it's really interesting now that for the first time, we have protesters who were previously saying we're not going to quit, we're not going to step back, actually stepping back for a minute.
MARTIN: Have you heard from anyone who's against the protests, who now thinks it's time for everyone to go home?
KUHN: There have been those voices all along. And there are also pro-Beijing voices within Hong Kong, but Beijing has been not so effective in mobilizing those.
MARTIN: NPR's Anthony Kuhn in Hong Kong reporting for us on this ongoing story. Thanks, Anthony. We appreciate it.
KUHN: Sure thing, Rachel.
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