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American Morning
World Markets Plunge Overnight; Investors Have No Reason To Buy Stocks Now
Aired October 10, 2008 - 05:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
KIRAN CHETRY, CNN ANCHOR: All right, welcome. This morning we're starting 30 minutes earlier than we usually do here on AMERICAN MORNING. Literally the news just continues to get worse as it relates to the financial crisis and we're here to bring you some perspective and also the latest on where the markets are this morning.
JOHN ROBERTS, CNN ANCHOR: Yes, we begin this morning with breaking news. Fear and panic, it would appear, have gripped the global financial markets. Asian stocks taking another plunge overnight; in Japan the Nikkei index closed down 9/6 percent; a steep, steep slide in Hong Kong the Hang Sang index losing more than 7 percent. European exchanges sharply lower this morning. London's FTSE is off more than 5 percent, same thing in Germany and France. Trading was suspended on the markets in Thailand and Vienna after stocks fell 10 percent there. All of this after a late sell off sent the Dow over a financial cliff yesterday. It ended in a 679-point loss and a five-year low for the Dow.
Take a look at that line. The red line just plunging off the edge of the screen there.
Meantime Treasury Secretary Henry Paulson is working on several fronts to try to stabilize markets and get credit flowing through banks again. So far nothing has worked though. President Bush will address the nation, again, this morning about the economy in the 10 o'clock hour in the Rose Garden, ahead of his meeting in Washington tomorrow with world finance ministers.
Christine Romans is here "Minding You Business" this morning.
And it's just not stopping.
ROMANS: It's not stopping, John. And it's a grave situation. And the financial markets around the world are starting to come to grips with the fact that much of the boom, much of the economy has been fueled by credit and that credit is hard to get right now. And they're very concerned about the overall health of the banking system. And despite all of the things that federal government has done and that central banks have done there still is fear hop-scotching around the world.
Let's run through those numbers again. The Asian-Pacific stocks tumbled. It was another ugly day for Tokyo. Down 9.6 percent. You know, Tokyo is seen as a leading indicator, sometimes, of global economic health. And so that is telling you that investors - I mean, this is an economy that isn't exposed so much to credit as we are here in the U.S. but it is still down almost 10 percent. Australia down sharply, even though that economy has also been doing well, because of commodities. Hong Kong down 7.2 percent. Shanghai down 3.6 percent.
This all started, really, here yesterday. When the United States had a horrific performance for the Dow Jones industrial average. John said it fell off a cliff, that's exactly right. Down 679 points. Now just below 8,600. The Nasdaq had a horrible day, too; and the S&P 500 as well. This is a 7 percent loss for the Dow, a 7 almost 8 percent loss for the S&P 500. And year-to-date the damage report is not pretty. The Dow down 35 percent so far this year. The Nasdaq down 38 percent this year. The S&P 500 down 38 percent, year.
This is a significant loss. In value, market capitalization, in - a significant loss in retirement, retirement portfolios some $2 trillion, at least, now has been lost in the past year out of retirement portfolios. The question is, what do you do now? And over and over again experts say that there is a good old adage when the market is just in the grips of fear like that. And that is, "Don't just do something, stand there." Because now you're going to make a mistake.
ROBERTS: Sorry, Dow futures down 227 points. Typically, if we, in the past if we've seen a drop in the Dow the Asian and the overseas markets will follow, but this keeps going around in a circle.
ROMANS: That's absolutely right. Feeding on itself and feeding on itself. And one of the things we're going to hear from the president later today. We know that the European central bank has been injecting liquidity into the system as well. They have done so many things to try to restore confidence and restore some oxygen back into that credit market. And we haven't - you know, yesterday the indicators we watch for the credit market were showing that it hadn't thawed at all. So, we're just waiting to see when those first cracks start to develop in the credit market.
CHETRY: I'm not sure if this is inside baseball, or not, but I'm curious as to whether this had an effect yesterday, the SEC had temporarily put a ban on short selling for a number of stocks. That was lifted yesterday afternoon. Is that a reason why we saw that plunge?
ROMANS: I'm not sure. Because that whole time that the SEC had the ban on short selling the Dow lost 1,000 points. So I'm not sure, I'm sure what affect, if any, that had on things, at all.
ROBERTS: There was some thought that maybe lifting the ban would actually decrease the volatility?
ROMANS: Who knows - there are so many different moving parts here I'm not sure that any one moving part is what's going to do it. One thing that a lot of people are talking about, many Americans are waking up and saying, wait, we passed this $700 billion bail out bill. I though this was going to at least stem the bleeding, if not fix things. And remember, all along we have been saying, we hope - the hope is that this is something that is going to prevent some kind of catastrophe. But we just don't know what the impact is going to be.
CHETRY: Well, it's been passed but we haven't seen it in action yet, either. I mean, the Treasury --
ROMANS: That's absolutely right.
Some of these other things. The banks, the business loan bailouts, they haven't actually started yet.
ROBERTS: Yesterday, on "The Situation Room" I was filling for Wolf, we talked with Edward Lazear, who is the chairman of the Council of Economic Advisers, otherwise known as the president's right-hand man on the economy.
ROMANS: Right.
ROBERTS: He said that this is going to take some time. It can't be measured in a period of days, it is probably going to - and it wont' be measured in months, either, until this thing kicks in. But it will be a matter of weeks before they get all the pieces in place. But do we have weeks? Where are we going to be weeks from now by the time this kicks in?
ROMANS: I suppose that is what the president is going to hammer on today, this morning. He's going to say, you know, you have to have some patience. You can't buy patience. And you can't buy patience -
ROBERTS: Markets are not patient.
ROMANS: -- Especially in the markets. Do we have weeks? I don't know. Do we have any other choice? I don't know about that either. One thing that I think that is really interesting is that so much of our life has been built on credit. Both business life, personal life, our country -
ROBERTS: You have to wonder, do we really need to change our behavior?
ROMANS: Are we seeing it unraveling of the way things have been built up over the past 20 years or something? And is there a fundamental change happening? But we're not going to know - I mean, that's going to be for the history books.
CHETRY: They're also meeting at the White House. This is a highly unusual meeting that is happening tomorrow, where financial - foreign ministers, financial ministers from countries around the world are going to be meeting --
ROBERTS: The G7, IMF, everybody is going to be there.
CHETRY: to exchange ideas. I mean this is where we are at right now as we try to figure this out.
ROMANS: We're talking about a global recapitalization of the banking system. I mean, it is just absolutely astonishing to think of, when we're talking about actual injections of capital into banks from governments. That's - this is big stuff.
ROBERTS: Christine, stick around. Lot's to talk about this morning.
ROMANS: Sure.
ROBERTS: Thanks.
CHETRY: Yes, and we're going to find out what it is like across the pond right now. As we mentioned trading on the Vienna exchange suspended after stocks nose-dived at the opening bell, falling 10 percent. CNN's Richard Quest is watching developments on the European markets for us. He's live in London.
Where it is no better than it is here, is it, Richard?
RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: I bring you no good news from this side of the Atlantic, this morning, I'm afraid, Christine, John and Kiran.
Christine is spot on. We're looking at a complete massive recapitalization of the world's banks needed. And so far that hasn't happened. As a result when they arrived and the rang the opening bells across Europe all the major markets were lower: the FTSE in London, down 10 percent, the DAX in Frankfurt down about 10 percent, same for the CAC current. Of Russia, well, you can forget about Russia they're markets are closed because it is all so horrible, the news from there.
Just about now, I was looking at the numbers a second or two ago, Kiran. London has just off about 6.5 percent, similar numbers across the rest of Europe. Substantially, the reason is there is no confidence, no buyers, and everyone is waiting to see who is going to put their toe in the water first.
CHETRY: Richard Quest for us from London. Thank you.
ROBERTS: Let's go now to Hong Kong. Andrew Stevens is on the telephone with us.
What are the indexes doing over there? The Nikkei tumbled more than 9.5 percent. What about the Hang Sang this morning?
ANDREW STEVENS, CNN INT'L. CORRESPONDENT: Another big tumble, John, more than 8 percent. So it was a real, real sell off here in Asia. Right across Asia, too, I hasten to add. You mentioned Japan, there, down 9.6 percent. Remember, two days it was down 9.3 percent. So we're looking at nearly 20 percent in three days. The world's second biggest stock market. So, that gives you and idea of the mood in Japan. And that mood just transmitted pretty across the rest of the region.
And to be clear, as we keep on saying, in Asia, the banks are solid comparatively speaking when you look at what's happening in the U.S. and Europe. But the real fear here is that when the real economies in the U.S. and in Europe start slowing, the consensus is they are going to slow pretty nastily, that is going to have a major knock-on affect to Asia. So people are just bailing out. And it's not just the exports (ph), just getting out of anything until they think there is some sort of bottom in this market. At this stage, no one is saying they can see one.
ROBERTS: Andrew the Nikkei index has dropped 25 percent in just the last week. It is the biggest plunge since 1987. And many of us remember that almost crashed in 1987, when the markets took a huge nosedive. Is there any sense of where the bottom might be?
STEVENS: This is the question. And the answer is, no, there is not, because there is panic selling in Japan. And I've been speaking to a couple of traders in Japan and they say the same thing. It is panic selling, people just want to get out. And the thing about this is this is much more of a slow burn than 1987. That was a short, very sharp shock. This one is going on and on.
And because you have this continued credit crunch around the world, particularly, though where you are and in Europe, banks aren't lending, small businesses aren't being paid, etc cetera, etc cetera, no one knows when that credit market - those credit markets will be freed up, so the economy gets going. While they're not freed up the economy gets progressively weaker and that means the exporters here in Asia, and most other countries, suffer even more.
So, in answer to the question, no, there isn't a feeling that we could be at the bottom. If you look at fair value, and I've asked that question of many people over the last couple of days. They say there are some great companies here which are very, very cheap at the moment, but no one is prepared to step in and buy them yet.
ROBERTS: So the financial experts that you have been talking to throughout this entire crisis, Andrew, what is their sense about this idea of a looming global recession? Do they think that we could easily slide into one, given what we've seen in the last few days?
STEVENS: Yes, if you talk to virtually anyone now. And I was surprised, I saw the International Monetary Fund's latest numbers and they are talking about a 0.1 percent growth in the U.S. next year. Now that is obviously pretty poor, but it is actually growth.
And if you talk to people here, they're saying, we don't see growth in the U.S. next year. We see this going on, this recession, this slow down going on. And they're talking about recession. It could be going on for all of 2009, perhaps into 2010. So, they're pessimistic. And like I said before it is very hard to get a handle on it, because it is ongoing. There is no solution yet. So everyday things get just get that little bit worse.
ROBERTS: All right, Andrew Stevens for us this morning, in Hong Kong, where the Hang Sang index was down a little more than 7 percent. The Nikkei, in Tokyo, down more than 9 percent. Around the world the world it is the same story and the Dow futures down more than 200 now. So it is looking like a bad opening on Wall Street, as well.
Beyond the big headlines, like how far the market fell, there are also smaller snapshots that drive home the scope of this financial crisis. Here is an AM extra now with a few that caught our eye overnight.
General Motors stock price was the big one. It fell to $4.76 (sic) a share on Thursday. That is the lowest price since 1950. General Motors has lost 31 percent of its value. Wow! GM had plenty of company on Wall Street yesterday. The price of 1,754 stocks on the Big Board fell; only 87 saw their values increase.
And the Commerce Department is now reporting a drop in spending on clothes, shoes, casino trips, and sporting events. So this is where it starts to get into a cycle, where people feel like they are less wealthy, they have less disposable income, they reign in their spending. And that affects the companies, it affects stock prices, so - where will this vicious circle end? That's the big question that we're asking this morning.
CHETRY: We have breaking news, as we've been saying. We're on early this morning to take a look at why the world's financial markets are in a nosedive this morning. We're tracking what is behind this fast and furious sell off.
Also, if you are wondering this morning, like many of us are, what do to with your money during this crisis, CNN's Personal Finance Editor Gerri Willis answers your questions. Log on CNN.com/AM, submit your questions and she is going to try to answer many of them on the show this morning.
You are watching the Most News in the Morning.
(COMMERCIAL BREAK)
ROBERTS: Breaking news this morning in the vicious downward spiral in the markets continues. Overseas investors frantically unloading stocks. Japan's Nikkei down more than 9 percent; Hong Kong, the Hang Sang also fell sharply more than 7 percent; in Europe the markets are plummeting. London in strong negative territory as well as - the same thing is happening in Germany, it is happening in France. In Vienna trading was halted.
It comes after Wall Street went into a free fall during the final minutes of trading yesterday, down about 679 points. Closing below the 9,000 mark for the first time in 5 years. Sitting there at about 8,579.
CHETRY: And for more on the global stock market tumble we go to Christine Romans. She joins us this morning. We're up early trying to figure this out. Dow futures, last time I checked, down more than 250 in the pre-market.
ROMANS: Right. No surprise there because this is now all feeding on itself. You know, Asia has a horrible night, then we come in the U.S., there is some measure or some announcement or something that we think might help turn things around, but it doesn't happen and the stocks fall here. And then overnight, and in Asia, or in Europe, the same thing happens again. This has been feeding on itself pretty much all week.
I mean, you are talking about stock averages across the world, that have had the worst weeks in recent memory. In Japan, for example, it has been the worst week, I think, since 1987. And in the U.S., I mean, it has been horrific. It has been 1,000 points just in three days. I mean, it has really been ugly.
Let's run through the Asian stocks again. Tokyo down almost 10 percent. I mean, that's an amazing decline for Tokyo stocks. And it is seen as sort of the leading indicator for - for concerns about a global recession, not just a recession in the United States and Europe, but a global recession.
ROBERTS: And that figure is very significant, because that is not the first 9-point drop we have had in the Nikkei this week.
ROMANS: No, that's right. That is the second by my account. And it has been ugly every other day as well. And then you look at the Dow yesterday down some 7 percent. And you know, it lost like $300 points in a half an hour at some point. You know? Which just shows you that a lot of people were throwing in the towel; 8,579 is the level on the Dow. I mean, that is almost unthinkable.
CHETRY: It was a year ago -
(CROSS TALK)
ROMANS: Exactly a year ago when we were hitting record highs in the Dow. Nasdaq down sharply as well. Year-to-date the Dow is down 35 percent. I mean, think of it. If you are close to retirement, you have a lot of your money in stocks, you are - you know, you are really hurting here.
CHETRY: Are these companies - I mean, their worth -- they're worth less on paper, but are they being fairly assessed right now? Are we just fearful?
ROMANS: Well, we just don't know. I mean, this is all a problem with the banking system. And from the banking system everything else stems. Healthy companies get their loans from banks. If banks aren't healthy then that hurts other healthy companies in different arenas.
I mean, from top to bottom we are assessing what is going to happen here. Anything with exposure to the consumer is probably going to see jobs lost. We've already seen it in department stores sales. You know, we're going to see auto jobs lost. We're going to see department store jobs lost. We're going to see restaurant jobs lost. Anything that has impact on consumer, because the consumer is afraid and retrenching as well.
ROBERTS: You know, you talk about this idea of there being a credit crunch and that the flow of money has dried up and frozen in many areas. But also when you look at something like GM, companies like or GM or Ford, sales forecasts --
ROMANS: Right.
ROBERTS: for automobiles are horrible.
ROMANS: They really are. And there are two things we're looking at. Those are recessionary sales forecasts. But also they have some execution problems in the American auto industry, too. So you are seeing a convergence of events in some things. I mean, it is not just lower consumer demand because of recession. It is also because we're seeing international competition. And just a changing environment in autos.
ROBERTS: So here is the big concern a lot of people have. Everyday they have seen - it's come up basically everyday, the president comes out and he's going to come out again. He says something. Henry Paulson comes out, he says something. We had the president's economic adviser on yesterday, saying, a little bit of patience here. They're throwing all of these tools at it, rate cut, $700-billion bailouts. Nothing is stopping the bleeding?
ROMANS: They are throwing more at it - they are throwing out things that we didn't even know that they could do. You know, I mean, they are doing absolutely everything that they can. But you are right, you can't buy patience. And that is what is needed in this market right now. And you know -
CHETRY: And as you pointed out yesterday, too, there is one problem in terms of the credit market. But there is another problem in terms of just a recession that is happening separately from that and one is not necessarily going to solve the other.
ROMANS: Right. And we thought maybe we were going to have plain, vanilla recession. And now, I mean, they are trying - they are trying everything they can to make sure that it is something that is not more than a plain, vanilla recession. I mean, a plain, vanilla recession, let me be honest, is painful. I mean, millions of people lose their jobs. Consumers retrench, standards of living don't go up. I mean it is not good when something like that happens and they are trying to prevent something far worse.
ROBERTS: All right, Christine, thanks.
Breaking news: A crisis of confidence gripping the markets today. In Europe, right now, investors want out. They want out fast. Stocks down across the board. CNN is live on the ground in Europe. You are watching the Most News in the Morning. Stay with us. We'll be right back.
(COMMERCIAL BREAK)
CHETRY: Welcome, this is a special early edition of AMERICAN MORNING. We are following all of the overnight developments in the global market crisis. We are going to check in now with CNN's Richard Quest. He's been watching the European markets for us. A very, very bad day. He's live in London.
Hi, Richard.
QUEST: Hey, Kiran. The day started badly and it never got any better. Just checked the numbers for you, a few seconds ago. The London FTSE is off roughly about 8 percent. In Frankfurt it is worse, it is down nearly 10 percent, and it is the same for the Paris CAC current market.
Substantially, what has happened is they have seen the falls on Wall Street of yesterday, of Thursday, they watched Tokyo fall out of bed, down 9 percent. And there was just - I mean, what you have, just put this into context. And Christine Romans is absolutely right. Everybody wants a reason to go into the market and pick something up cheap.
But there is just simply no reason out there at the moment for anybody to be hopeful about. And in that scenario you just keep selling. You don't buy, because you fear that products will be cheaper tomorrow. It is just fruit and veg.
CHETRY: The question, though, is you know as we have talked about before, Richard, is that if you stay in it, it is a paper loss. If you actually sell, then you are locking in at that severely devalued rate. So why do it now?
QUEST: Absolutely. And in that one sentence, Kiran, you have summed the catch-22 of today's investor. Do you take your paper loss and actually put it into real money? Do you stay in the market and you know it is going to be at least - if you look historically, and I was looking at the charts this morning, you are looking at between - and historically, three to five years before the markets will be back to where they were at these sort of levels.
So, (INAUDIBLE) got it in one. If it was only so easy to actually decide what to do, versus knowing the predicament that one is in. But what I do tell you is, get deflation, is what people are talking about. Why buy today, it will be cheaper tomorrow. That is the theory.
CHETRY: I got you. Christine wants to ask you a question, as well, Richard.
ROMANS: Richard, I'm just wondering, who is in there selling today? You know, I'm trying to figure out if this is mom & pop investors who have decided to throw in the towel after just a horrific year? Or this is, you know, the big professional investors who are bailing out? I mean, who is bailing out here, right now?
QUEST: Yes, actually, Christine, I suspect there is not - it is the professional investors and more than anything else. But you'll be well familiar. This isn't really selling. What is happening is marking down of stock. Having seen what happened on other markets there is mark downs. The buyers aren't in to give any leverage. And that is why we're not seeing prices push up again.
I suspect in a day or two the so called bottom fishers will come out. We'll see the feeding around the bottom. But who knows! I mean, why would you - Christine, why would you buy today?! When on Monday you might pick up the same stock even cheaper?
ROMANS: That's right. That is why so many people are telling me, "Don't just do something, stand there," Richard.
QUEST: Right.
ROMANS: That is what so many people are saying and you are going to make a mistake. And you are up against people with deeper pockets, probably, who are playing in this market. And this is no time to be playing in a market, obviously. But if you are looking at your 401(k), really, it is really tempting just to be very concerned.
ROBERTS: So what Richard was saying, yesterday we had Susan Lisovicz at the New York Stock Exchange, as this was falling off the edge of a cliff. And she was saying that a lot of traders there just want to - they just want to see a purge. They want to see this happening.
ROMANS: Capitulation, they call it.
ROBERTS: They want to see this happening in a big way, to get it all off the table, start again and rebuild.
ROMANS: It is like when you have the stomach flu. You know?
ROBERTS: This chipping away at things is what is really driving people nuts.
ROMANS: It has been a slow bleed, hasn't it?
CHETRY: Yes.
ROMANS: It has really been a slow bleed that has made it almost harder to take. Because every time there is this little bit more bleeding, and then there is a little bit more news that we think might turn it around, and it doesn't. And that just kind of feeds on the fear and anxiety.
ROBERTS: And the problem with the slow bleed, too, is you start to get used to those lower numbers. If you have a one day capitulation where the circuit breakers kick in, everybody says, wow, we have a real serious problem here. But if it goes down a little bit at a time, a little bit at a time -
(CROSS TALK)
ROBERTS: Before you know it the bank has dropped.
ROMANS: Well, and John, here we are we are, we are numb to a 9.6 percent decline in Tokyo. How much is Tokyo down? Oh, 9.6 percent, it is not the first time this week. I mean, you start to get numb to it.
ROBERTS: We have to run here, apparently, because we have Lakshman Achuthan, he is going to be joining us in a couple of minutes. So stay with us for all of that.
Breaking news: Markets across the globe this morning heading south, not looking back. Our financial experts standing by with what you need to know to protect your money. You are watching the most news in the morning.
(COMMERCIAL BREAK)
ROBERTS: We are following breaking news for you this morning. Asian and European markets tumble on the heels of the Dow's 679 point slide late yesterday. Lakshman Achuthan is economic analyst, managing director of the Economic Cycle Research Institute. He joins us now.
Give us your best estimate of what the heck is going on today?
LAKSHMAN ACHUTHAN, MAN. DIR., ECONOMIC CYCLE RESEARCH INST.: Oh, well, you have the credit crisis, which we have been covering for a while, that has added to the recession, globally, and then you have fund redemptions, on top of that. Where -- ROBERTS: But are people just panicking, saying, I don't want to be in this anymore?
ACHUTHAN: There is some of that. Where it is the recognition that it is a global recession that is not over. So there is some of that, saying, hey, I'm going to take my money off table and I'll come back in six months or a year and put it back in. There are funds that are responding to that, that are forced to sell. Even though what is going on, they are forced to sell.
And you'll see that because they are even selling Treasury bonds, which you never want to sell, because like money in the mattress. But they are having to sell that simply to redeem investors fears. I suspect what is going to happen - there are really two things, right?
You have got a market panic, in the stocks. And you have this credit market freeze up. The credit market freeze up is the thing where ultimately, if there is some really drastic action, the governments can step in. I mean, you could put the full faith and credit of the government --
ROBERTS: But the governments have stepped in. The $700-billion bailout plan hasn't kicked in yet.
ACHUTHAN: Yeah.
ROBERTS: But they have stepped in with rate cuts, they have stepped in saying they might take an equity share in some banks in this country.
ACHUTHAN: Now we're -
ROBERTS: And yet the blood continues to trickle out of the markets.
ACHUTHAN: You are about to test that phrase, "the full faith and credit" of the United States government. That is about what we're going to see applied here, in one way, shape or form. So far they have said we're going to lower rates. We're going to offer you loans. We're going to do this. Pretty soon they are going to step in and say, we're backstopping the entire thing.
ROBERTS: How close do you think they are to that?
ACHUTHAN: I think they're pretty close. I mean, we have already seen the UK go ahead and do that, in essence. Where they have purchased about 30 percent, a third, of the four largest banks in the UK. So, in essence, they are saying, these banks are going to be here, because you are dealing, right now, with the treasury of England.
ROBERTS: The president is meeting with the G7 finance ministers, ministers from the IMF, as well, over the weekend. What do you expect is going to come out of those meetings?
ACHUTHAN: I think here is where you are going to get a - you are going to see the governments of the world alive to this crisis. And they are all going to say we're backstopping the financial system on the credit part. That's not dealing with the stock part, mind you, OK? The stock part is investors - you know, when we are seeing the Dow plunge and so on and so forth, in the other markets. That is investors saying, risk is too high, we're still going to pull back.
ROBERTS: But the Dow, at the moment, the markets are a lagging indicator, are they not?
ACHUTHAN: Yes, well, they are coincident to lagging. I mean, what they are - they are recognizing global recession which is not ending. And that is compounded by the credit crisis. So, the governments can come in on a credit crisis piece. And they will. In one way - I don't know exactly what form it is going to take. But I guarantee you they are not going to let this stand.
ROBERTS: So you think that if they get the credit crunch solved then the markets will come back up again?
ACHUTHAN: I think if they get the credit crunch solved then we are back to a plain ol' vanilla recession.
(LAUGHTER)
ROBERTS: One quick question. For people at home who are looking at their 401(k)s.
ACHUTHAN: Yeah.
ROBERTS: And they are just in shock. How long will it take them to recover do you think?
ACHUTHAN: In terms of the 401(k)s, this could - this is easily a matter of a year or more. Because you are talking about -
ROBERTS: A year or more is not bad, five or 10, might be bad.
ACHUTHAN: Well, what happens is, you are going to have a business cycle trough, and then you are going to have the markets take off.
ROBERTS: Gotcha.
ACHUTHAN: OK? That is going to happen in the next year.
ROBERTS: Lakshman, stick around we have a lot to talk to you about this morning.
ACHUTHAN: All right.
ROBERTS: Thanks. Good to see you.
ACHUTHAN: OK.
ROBERTS: The next hour of AMERICAN MORNING starts right now.
(BEGIN VIDEO CLIP)
ROBERTS (voice over): Breaking news: Overseas markets plunged. Could it cost you even more money today?
And the aftershocks in small town America.
UNIDENTIFIED MALE: Wall Street, which affected Main Street. And we're Main Street.
ROBERTS: And no one saw this coming? The plunge and the politics, on this AMERICAN MORNING.
(END VIDEO CLIP)
