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American Morning

America's New War: Andy Serwer of 'Fortune' Talks About What He Expects from Markets

Aired September 17, 2001 - 09:16   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: Right now, Andy Serwer joins us. You folks read "Fortune" magazine. You will see his pieces there. You also have a Web site. You do columns on the Internet, right?

ANDY SERWER, "FORTUNE" MAGAZINE: That's right, yes.

ZAHN: Well, people know who you are. You -- and I talked a little bit earlier on about the federal rate cut, the 1/2 perecent. You've been on the phone talking to traders, talking to brokers. What do they say?

SERWER: Well, I've got to tell you, the anticipation is rising. The anxiety is rising. We're just a few minutes away. Everyone is laying down thier bets, getting ready to go. Lou talked about tech stocks being lower. So did Greg. Airline stocks are down. Northwest in premarket trading is down almost 40 percent.

We have to remember, Paula, where the market was before this happened, and that is a weak market. The market was not doing very well. So the fact that things fall from here should not be that much of a surprise, because we had some weak numbers, some weak economic forecast and indicators as this was happening and before it happened. So if the market goes down, it's not just the fact we had this tragedy. The economy is not in great shape.

ZAHN: Some economist say this morning, some of whom are quoted in the "Wall Street Journal" this morning, you can't stave off a recession. Are they overreacting?

SERWER: I think they're not. It will be difficult to stave off a recession. Let's remember, last quarter the economy grew 0.2 percent, which is to say barely at all. This quarter, even before this episode, the economy was barely growing. And look what happened here, major parts of the economy have simply not been functioning for an entire week. The airlines, Wall Street, just those little incremental bits can move the economy into a negative growth mode. But having said that, I don't think people should be concerned, because we may have been heading there anyway, and I just spoke with Michael Price the big investor, he said it's like Mohammed Ali getting punched in the gut in the first round. He got punched in the gut, but he's going to come back, because it's a long fight, and I think that's the way people look. ZAHN: As we speak, you're going to be competinmg with the image of the facade of the New York Stock Exchange, because we of course are just about nine minutes away from the opening of the Exchange. Yesterday, various adminstrative officials were put out who basically repeated the same message. Get prepared for a war that doesn't last days, doesn't last or weeks, doesn't last months, but last years. If there is any kind of military action that is launched, historically, what will these already-weakened markets end up doing?

SERWER: Obviously, it's not good news. It's so interesting, we're talking about market response to this episode, this horrible attack that just happened. The response to that on Wall Street will be unknown. We're about to find out. Layered on top of that, and people aren't even discussing this, would be a military response. What kind of a military response? We don't even know. Will there be a widespread attack in the Middle East? That would be very bad news for the world economy. We could see oil shocks, and the damage could be much more severe.

ZAHN: Andy Serwer, if you would stand by, I want to catch up with Lou Dobbs who is on the floor.

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