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Quest Means Business
Jay Powell Suggests The Fed Could Step In To Help Calm The Markets; U.S. Markets On Pace For Worst Week Since 2008; European Markets Suffer Worst Week Since 2008 Crisis; White House Downplays Market Fears Over Coronavirus; CDC Confirms 62 Coronavirus Cases In U.S.; Airlines Suffer Disruption As Coronavirus Spreads; Geneva Auto Show Joins Other Events Disrupted Due To Virus. Aired 3-4p ET
Aired February 28, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:13]
ZAIN ASHER, CNN INTERNATIONAL HOST: This is historic. The Dow is down about 700 points or so. We are experiencing the worst week since 2008. The
Dow is down nearly 4,000 points since just Monday. It is the final hour of trading on Wall Street, and let me tell you, it is certainly a grim end to
this bruising trading week on Wall Street, as I mentioned, those are the markets and these are the reasons why.
Further into correction. The Dow follows up its biggest drop in history with another massive plunge.
Jay Powell suggests the Fed could step in to help calm the markets.
And the World Health Organization raises global threat to its highest possible level as the virus spreads to new parts of Europe and Africa.
Coming to you live from the world's financial capital here in New York City, it is Friday, February 28th. I'm Zain Asher, in for my colleague
Richard Quest, and this is QUEST MEANS BUSINESS.
All right, welcome, everybody, I'm Zain Asher. Tonight, the Fed says it is ready to act as appropriate as markets plummet.
In a statement. The Fed Chair, Jay Powell says the coronavirus outbreak poses evolving risks to economic activity.
The Fed's statement has pulled stocks in New York off the lows of the day. They're still on pace to finish their worst week since the financial
crisis.
All 30 stocks in the Dow are in correction or worse. That is defined as 10 percent or more off from recent highs. Every single sector of the market is
in a correction, too. You see all the red arrows there on your screen. Market volatility has actually spiked to its highest level in nearly nine
years.
Stocks around the world have lost around $6 trillion in market value this week.
Wall Street is pricing in the certainty, the Federal Reserve will be forced to cut rates in March according to CME Group. Investors say there is a 35
percent probability of a quarter point cut and a 65 percent probability of a more extreme half point cut.
Compare that to a week ago when Fed Watch Tracker was showing a nearly 90 percent probability of actually no rate cut whatsoever.
Clare Sebastian is following it all. Interesting turnaround by the Fed because you know, we were talking several months ago and everybody thought
that the Fed was going to actually keep interest rates steady this year. Obviously, not the case anymore.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Everything has changed, and Zain, I think your numbers just showed in the past week. You know, just a
week ago, markets were hitting record highs, since then we've seen them basically wipe a year's worth of gains off in seven sessions.
But I think the timing is interesting in terms of the Federal Reserve, clearly, the chatter was mounting around what they might do next. The
market is starting to really price it in.
And Jay Powell has taken the step now, while the market is still open on a Friday afternoon, we know that a lot of trading can happen in the last hour
to come out and say, use that very sort of emotive phrase, act as appropriate to support the economy.
The last time, or the first time he used that was the middle of last year when we saw the trade tensions multiplying. The market was falling, and he
came in and said, look, we're going to act as appropriate to sustain the expansion. Followed that up with three rate cuts.
So I think the question now is, how big is it going to be? Is it going to be a 50 basis point cut? That's half a percentage point. The last time the
Fed did that was during the financial crisis. Will they do a smaller quarter point cut?
ASHER: I'm curious as to how much of an impact or rate cut we can actually have when you think about the fact that what's prompting the fear and the
panic right now is factory closures. Its supply chain disruptions. It's more of that than it is demand.
SEBASTIAN: Well, I think there's a lot of debate around this. I mean, yes, I think a rate cut would calm the market. Certainly, if it's a big one that
would be seen as an emergency measure the Fed is getting ahead of the data, not waiting until things get bad.
They obviously think that in the last year, that they're sort of in the market for these type of insurance rate cuts. But then again, we're looking
at a situation where people are going to, you know, people have been quarantined. There are sort of restrictions on travel. Corporations are
stopping their employees from traveling.
There's a confidence drop that we're starting to see. And I think, a quarter point rate cut or even a half point rate cut, which impacts your
mortgage and your car loans, that not necessarily going to get you to book a plane ticket.
ASHER: And when you think about the fact that we are in already a low rate environment, how much room is there really for the Fed to actually maneuver
this?
SEBASTIAN: Well, they've got a lot more room than some people think.
ASHER: Yes, yes. You're absolutely right.
SEBASTIAN: Eurozone and Japan have negative rates. The Fed has a little bit of room to act, but I think what he is doing first is trying to use
words to do this. Words are very powerful. The Fed Chair has used them in the past over the past year, to try and calm the markets and to great
effect.
He did that first before actually acting when it comes to rates. Powell has been very vocal about how he believes that this kind of forward guidance
can help, you know, as an actual monetary policy tool.
So that, you know, it's certainly part of what's going on here.
[15:05:07]
ASHER: All right, Clare Sebastian, live for us there. Thank you so much
All right, we are less than an hour from the close of trading. Let's go to Alison Kosik. She is joining us live now from the New York Stock Exchange.
Alison, just talk about what today meant for stocks.
At one point, the Dow was down more than a thousand points, but it has swung wildly dependent on various headlines.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It sort of has, I mean, you know, you and Clare, were just talking about the statement from the Fed,
which should calm the market, but I'm watching the Dow drop even more at the moment.
So as much as we'd like to believe the market is watching those headlines, I think, to stop this selloff, they need to see some sort of outside good
news or they need to see an official come out and show confidence over some sort of handle on the coronavirus as far as you know, whether it's a
vaccine or even just to show that there's confidence about being able to be prepared for an outbreak in the U.S.
I think that's what's lacking here and that's really underpinning why we're seeing this seemingly continuous selloff day after day is this uncertainty
and this anxiety, and this lack of confidence in how prepared the U.S. is for an outbreak -- Zain.
ASHER: We are seeing the Dow, as you mentioned, fall significantly today. Just when you compare that to what's happening with gold and the yield on
the 10-year Treasury, just walk us through what all of that says about the level of fear right now.
KOSIK: Well, you know, if we do see the yield rise, of course, we could see stocks go down. Of course, that's how that relationship usually works.
And of course, we're seeing investors flee to those usual safe havens. Gold is up. Oil is down on expectations that demand will fall, and we are sort
of stuck in this downward pattern.
I think that if the Fed does in fact make a move to go ahead and cut a rate or you know what we read in in "The Wall Street Journal" this morning, the
op-ed about the need for a possible global coordinated Central Bank move that could happen over the weekend that could get the markets attention.
But it looks like even the statement from the Fed is just not getting the attention of investors at this point -- Zain.
ASHER: All right, Alison Kosik live for us there. Thank you so much.
All right, it has been a bad week for stocks. That much is clear. That could actually be an understatement. In fact, it has been a historic week
on the S&P 500.
For context, we are going to look back at nearly a hundred years of boom and bust in the United States.
And now, we are left to trade, the S&P will cap off its worst week since the depths of the financial crisis back in September 2008. Stocks plunged
after the U.S. Congress rejected a bank bailout plan that was expected to pass, more than a decade later, we're still living with the fallout from
the Great Recession.
And also, this week stocks fell into correction or a 10 percent drop from recent highs in just seven trading sessions that is faster than any time
since the Great Depression.
In 1933, the S&P fell 13 percent in two days in the midst of the worst financial downturn in modern history.
Just last week, we were actually talking about all-time highs. So what a difference just one week makes here.
Donald Trump's economic adviser, Larry Kudlow does not appear to be too concerned. He spoke alongside Ivanka Trump at the CPAC Conservative
Conference a few moments ago and says investors might actually want to buy stocks right now.
(BEGIN VIDEO CLIP)
LARRY KUDLOW, DIRECTOR, U.S. NATIONAL ECONOMIC COUNCIL: Since I believe and Ivanka believes that the country is in good safe hands right now, you
might think about buying the dip. You might think about buying the dip.
(END VIDEO CLIP)
ASHER: All right, Art Hogan is in Boston. He is a Chief Market Strategist at National Holdings. Art, thank you so much for being with us. So given
what we know about this virus, when you look at what is happening to the Dow, do you think this reaction is proportionate?
ART HOGAN, CHIEF MARKET STRATEGIST, NATIONAL HOLDINGS: Well, I think that's the perfect way to ask that question, given what we know. Yes, I
think that's exactly the problem is we don't know enough.'
Now, it felt like about a week ago when the market was much more buoyant and making all-time highs, that things were starting to slow down in terms
of new case counts in China, and certainly, there were some work getting back online and some manufacturing starting again.
So it felt like we got to a point where the worst was over for this virus, and then all of a sudden, over the weekend, and certainly throughout the
course of this week, we've seen pockets of new cases all over the globe.
So now, you know, to your original point for what we do know, what we do know is this is larger than we thought it was last week. And we don't know
to the extent that it continues to grow before it starts to abate, and therefore, investors are trying to recalibrate how much economic damage
will be done, and that's exactly why we're seeing the market act the way it is this week.
ASHER: How resilient though, is the U.S. economy based on what Larry Kudlow was saying? I mean, do you think that American consumers actually
could drastically alter their buying habits and affects the U.S. economy that way negatively.
[15:10:07]
HOGAN: Well, it certainly can. It's just a -- it's a function you know, how much this spreads into the United States. Right? So let's say we have
350 million people here, and you know, our new case count stays in the, you know, low thousands versus that, you know, this 70,000 or 80,000 that
showed up in China. And then in fact, that's probably something that's containable. That's something we don't know.
If we have to make people stay you know at home from work and our productive capacity goes down. If the schools are closed. These are all
things that we've done now.
We certainly are not going to know how this develops until sometime passes, and you know, the other part of this is, perhaps you know, we're getting
ahead of the curve in how we respond to this.
There's several pharmaceutical companies that are coming up with both vaccines and therapeutics. Another med device company is finding a rapid
test kit, but right now, we're at early stages.
So the market is going to say, we're going to price in worst case scenario in front of this. The market probably hits a bottom before the news gets
better and then we'll start to rebound as we get closer to the end of the bad news on the virus.
But unfortunately, we're not -- we're just at the beginning stages of what we're learning about this COVID-19 outside of China.
ASHER: So Larry Kudlow was just there saying that, you know, this is actually an excellent opportunity for people to buy stocks. But what's it
going to take for investors to really feel reassured enough, safe enough to actually do that?
HOGAN: I think the passage of time, I think that there's, you know, a period of time where we actually get real news, real data out of Europe,
out of Italy, out of Korea, where things start to peak, and then we're not getting that exponential increase in new cases being found.
I think the discovery of a vaccine, a discovery of a therapeutic would certainly help. I certainly think it's a period of time. We are still in
the information gathering phase and we're certainly not -- you know, we don't have enough information to say, hey, this is enough for us to say all
clear and enough damage has been done in the market, and it is time for us to get back in.
ASHER: When you think about companies, how on earth do you think guidance at a time like this?
HOGAN: Well, that's such a good question. You know, you really can't because, you know, everything we have right in front of us is unknown.
We do know that for a good part of the first quarter, China was shut down. And that means their complex supply chains were shut down, which means
we're adversely affected by things that we need to get out of China.
At the same time, China as an end market, demand for our goods and services were shut down. So the first quarter, you know, is a washout. But what we
don't know is, does that extend into the second quarter significantly? Or does production start to ramp up and Chinese demand can start to pick back
up?
So unless and until we have some clearer picture, you know, when China reopens for business, if I'm a company, whether I'm selling into China or
producing in China, I'm pulling my guidance for the first half of this year and waiting to see how much damage is actually done.
ASHER: All right, Art Hogan live for us there. Thank you so much.
HOGAN: Thank you.
ASHER: The coronavirus was the last thing that Italy needed. The country's economy on the brink of recession and that was before this virus even
arrived.
And as businesses and governments try to prevent the spread of the virus, they've had to change their plans for major gatherings. That's next.
(COMMERCIAL BREAK)
[15:15:42]
ASHER: European market suffered that worst week since the financial crisis, as you can see there, all the major European indices here down more
than three percent. Stocks are well into correction territory as the coronavirus continues to spread, economists significantly downgraded their
European economic growth forecasts for 2020.
Let's talk about Italy specifically because more than 800 coronavirus cases have now been confirmed in Italy. The country is the epicenter of the
outbreak in Europe. This, as Italy already had Europe's weakest economic growth in 2019.
The E.U. predicted the same for 2020 before -- before -- the coronavirus arrived. Many economists believe that Italy is teetering on the edge of
recession.
Melissa Bell is live for us in Florence, Italy. So Melissa, when you think about the coronavirus and Italy being the epicenter of this outbreak in
Europe. It really is from an economic perspective, the last thing that Italy needed.
MELISSA BELL, CNN CORRESPONDENT: Absolutely, Zain. It has exposed Italy's weaknesses. We have been looking at this country on the brink of recession
all these last few months with the last quarter of last year looking as though the country were heading that way.
Now, we've just heard in the last few minutes from the Economy Minister, we are expecting here in Italy some sort of recovery plan.
The last thing perhaps economists might have wished for here in Italy is increased public spending. And yet even they say, look, at this stage, this
is what's needed to help it all we can.
Now we're expecting that plan over the next few days. No doubt, we'll be hearing about it more fully. But the Economy Minister has just anticipated
some of those measures, things like tax relief, the suspension of Social Security contributions for businesses in those areas most affected and the
sector that is getting the most help from the government will be the tourism one.
(BEGIN VIDEOTAPE)
BELL (voice over): One of the most beautiful cities in the world. Every year Florence attracts 15 million tourists from all over the world, but it
is far quieter than usual as coronavirus takes an early toll on the Italian economy as well.
Venice, too, visited by more than 35 million tourists every year is unusually calm. St. Mark's Square practically deserted.
As the numbers of coronavirus cases have grown into the hundreds, the fear seems to have spread even faster than the virus itself with one of the
first effects being felt in tourism, an industry that represents 13 percent of Italy's GDP.
Hotel cancellations have varied from 30 to 70 percent, depending on the city according to "The New York Times."
(BEGIN VIDEO CLIP)
CECILIE HOLLBERG, DIRECTOR, ACCADEMIA GALLERY: There is such a panic all around and that makes people be very insecure and they do not -- they are
not sure if they can come and visit places where other people are.
There are not so many visitors as normally.
(END VIDEO CLIP)
BELL (voice over): Italy's luxury sector also feeling the effects with coronavirus hitting both its Asian markets and its Italian suppliers.
According to one economist, a number of Italian luxury and fashion goods makers are reporting cancellations of up to 50 percent on their orders from
China.
One of the problems for authorities is how to strike the right balance between informing the public about the dangers and not sending them into a
panic.
(BEGIN VIDEO CLIP)
CRISTINA GIACHI, VICE MAYOR OF FLORENCE: We are trying to communicate with a balance about all the measures we are taken to avoid the spread of
infection, but also to give instructions on how to behave in this case.
We have already seen an impact directly in the museums, our museums, for example, we had 7,000 visitors less than last year in the same days.
(END VIDEO CLIP)
BELL (voice over): To add to the difficulty of communicating when it comes to coronavirus, Italy hardly speaks with one voice.
Even in times of crisis, the two most affected regions, Lombardi and Veneto are in the hands of the far right lead party led by Matteo Salvini, with a
war of words this last week between his party and the central government over the handling of the outbreak.
(BEGIN VIDEO CLIP)
MATTEO SALVINI, LEADER, LEAGUE PARTY (through translator): Now, we are trying to work together to contain the spread. But it seems to me that
someone underestimated the health emergency.
Now, the emergency becomes the economy. Let me remind you this in Italy, there are at least 30,000 hotels and 300,000 bars and restaurants that's a
suffering.
(END VIDEO CLIP)
[15:20:21]
BELL (on camera): Normally, museums like this one are packed with tourists and already you can really feel the difference.
The fear for authorities here is that as we head into the high season for tourism in Italy, that even masterpieces of Renaissance art like this,
Michelangelo's, David will not be enough to bring the tourists back.
(END VIDEOTAPE)
BELL: So Zain, the government here in Italy, avowing to do what it can. It's announced those measures, especially aimed at tourism, but you're
going to hear more over the coming days.
No surprise, it is those parts of the economy most affected by confidence, really, that have been hardest hit, when you consider that this crisis is
really just over a week old in terms of that massive rise in the number of cases, the uncertainty that that generates, the government grappling to
come to terms with the crisis. That for now, is clearly still not under control.
We saw from yesterday 650 cases, tonight and increase to 821, that those numbers of infections are continuing. The government will continue to try
and contain that, even as it seeks to reassure markets.
But bear in mind that there will be much more to come. Tourism, luxury goods, for instance, but after that, all of the rest of the economy and
that part of Italy that's been so affected, Veneto and Lombardi, a crucial part of a wider European supply chain.
You're going to see a lot more of this in the coming days. No surprise really that tonight and again today, European markets have taken such a
battering.
ASHER: Melissa Bell live for us there. Thank you so much. And speaking of which, let's actually pull up the Dow right now. Because that's what my
next guest is going to be talking about.
Kevin Rudd is the former Prime Minister of Australia and the President of the Asia Society Policy Institute. He joins us live now.
So, Kevin, when you look at market reaction, Dow right now down almost 700 points or so, is that an overreaction? Do you think that's a proportionate
response given the actual risk here?
KEVIN RUDD, FORMER PRIME MINISTER OF AUSTRALIA: Well, having been Prime Minister of Australia during the global financial crisis, I've seen some of
these things before.
Last week, we had what I described as irrational market exuberance and this week, I think we have irrational market panic.
John Maynard Keynes warned us of the animal spirits. Well, the animals have been out to play today and yesterday and the last few days, some of them
need to be put back in the zoo, in my view and behind a very strong enclosure.
Because markets are supposed to be in the business of pricing risk and opportunity. And when I look at the objective set of risks --
ASHER: This is more about uncertainty.
RUDD: That's true, but --
ASHER: So much is unknown.
RUDD: Yes, and uncertainty is the key subset of risky, what do we don't know as opposed to that which we do, but if I go through categories of risk
here, what are they? One is, what do we know about the virus, its transmission rate within China and beyond?
Second is, what's the real objective impact on the number two economy in the world? That's China. And number three, the economic contagion, if you
like, through global supply chains, plus any indigenous problems which arise from a large outbreak within economies like Italy, or economies like
the United States if things were to go wrong here.
Well, I'd say in each of those categories of risk, the data points we have so far is very mixed. These are not all disastrous data points, they are
mixed data points. And hence my overall argument is that the animal spirits have just gone ah.
ASHER: When you think about companies like Apple, companies like Nike talking about supply chain disruptions. Apple saying that they are being
hit twice, not just because of supply chain disruption, and that's significant, but also because they cater to a large Chinese market and
demand within China is also -- they have reopened about half of their stores, but demand within China for them is suffering as well.
Do you think that this will lead to perhaps the rethinking of supply chains, the rethinking of the fact that American companies are so heavily
interlinked to China? And if they do rethink that, what are some of the other countries in Asia that could benefit?
RUDD: Well, then they will do that. And as you know, in the top -- on the basis of the U.S. economic tensions of the last two years, particularly in
the trade war, there is -- and the technology war, there was already the beginnings of both discussion and action in those areas.
But on this coronavirus crisis, let me go back again to these questions of measurable risk. All I would say is to take the example you've just raised.
Within China itself, and how is demand going to go beyond the first quarter which will be a very bad quarter in Chinese growth.
The data that I pick up from Chinese corporates when I pick up the telephone and talk to CEOs is very mixed across the country. In Western
China, in Sichuan Province, China's 100 million people out there, the chap I spoke to today, 100 percent back to work.
[15:25:01]
RUDD: Someone I spoke to in Shenzhen, 20 percent back to work. National average 62 percent back to work. More adversely affecting the services
industry, which is more people intensive. Manufacturing less so depending on where you are in the country.
All I'm saying, this is a very agated risk and not a uniform basically slide into oblivion.
So I think therefore, when companies look at this and policymakers look at this, they need to actually have a more calm approach to see that there are
measurable downsides. There are appreciable emerging upsides in all of this, and therefore a more balanced approach is necessary.
ASHER: You were Prime Minister of Australia, what do you make of the governmental response to this from various governments, Italian government,
U.S. government and Chinese government here?
RUDD: Well, let me not comment on individual government responses, but look, you look at it systemically. Part of the problem with risk as seen
from a market perspective, is shall I say the market's conclusions about the solidity and solidarity of inter-government responses to what is
plainly a global challenge and potentially a global crisis.
So if I happen to be in office today, what would I be doing? I'll be on the phone with the President of the United States as I was multiple times
during the crisis and to the other G-20 heads of government saying, hey, guys and girls, I think it's time, given what markets are saying to us,
that we convene the G-20 Health Ministers, the G-20, Finance Ministers and the G-20 heads of government so that we present clearly in a concerted form
that we are together on this as the world's biggest economies.
Here's our combined health strategies for dealing with it, and by the way, if stimulus is necessary through monetary and fiscal policy intervention,
here is our collective tools in the toolbox.
And that, my recollection in the March G-20 Summit of 2009 is what finally stabilized markets, given the mayhem of the previous six months or so.
So I'd say to colleagues in the political process, it's hard. You're looking back through a glass dimly. There's lots of fog of war here. But I
think that helps stabilize.
ASHER: A coordinated response. All right, Kevin Rudd, thank you so much. Appreciate that.
Okay, turn off your TV. That is the White House Chief of Staff's recommendation for dealing with the coronavirus. The Trump administration
is launching a PR offensive, downplaying the market fears. We will explain after the break.
[15:30:00]
(COMMERCIAL BREAK)
ASHER: Hi, everyone. I'm Zain Asher. There's more QUEST MEANS BUSINESS in just a moment when we'll be looking at how senior members of the Trump
administration have been trying to ease the best of fears amid the worst selloff in a decade.
And British Airways owner IAG becomes the latest airline group to sound the alarm over the coronavirus. Before that though, these are the headlines we
are following for you at this hour.
Police say that a fire at a major train station in Paris is now under control. The Gare de Lyon had been evacuated as huge piles of smoke hung
over the area. Our French affiliates, BFM T.V. reports the fire started on the sidelines of a nearby concert by a Congolese singer, Fally Ipupa.
A Nigerian health official says the African nation is more than capable of dealing with the coronavirus after confirming the first case in Sub-Saharan
Africa. The patient is an Italian who traveled to Lagos. The official says Nigeria manages outbreaks all the time and has a strong team in place.
Iran is taking drastic measures to slow the coronavirus outbreak there. Parliament has closed until further notice. Friday prayers are cancelled
and public spaces are being disinfected, but the virus continues to spread. 34 people are dead and almost 400 people have been infected.
The U.N. Security Council will hold an emergency session on Friday to discuss the escalating violence in Syria, and the Kremlin says the Russian
and Turkish presidents may hold talks in Moscow next week. This, after the Syrian government forces backed by Russia launched an aerial attack in the
rebel-held Idlib province. Turkey says at least 33 of its troops were killed.
A Federal Appeals Court in California has blocked a major immigration policy from the Trump administration. The court refusing to allow the
administration to continue sending asylum seekers to Mexico to wait for the court hearings in the U.S. Critics have said the policy puts migrants in
danger as they wait in makeshift camps.
All right. They are just 30 minutes left until the markets close here in New York. Let's take a look, U.S. stocks are still squarely deeply in the
red, just off the lows of the day. This is the most volatility we've seen in nine years. All Dow 30 stocks are in correction territory. Even though
the Fed says it's ready to support the economy, it hasn't moved the needle for investors just yet. The White House has launched an all-out P.R.
offensive trying to downplay the potential impact of the coronavirus on the economy. Here is Larry Kudlow, again, shrugging off concerns.
(BEGIN VIDEO CLIP)
KUDLOW: We've been through this many, many times before. And I don't think, even though it's a front-page story, and nobody likes to see their asset
values go down, I just don't think at this point is going to have much of an impact. I'll qualify that, it depends how long this last, it depends
how, you know, deep it goes.
(END VIDEO CLIP)
ASHER: That statement from Kudlow was actually a shift in tone for the administration. Mr. Trump considers the Dow gains during his tenure as a
crowning achievement. Take a listen to how officials have spoken about the virus amid one of the worst weeks in stock market history.
(BEGIN VIDEO CLIP)
MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: The threat to the American public remains low of the spread of the coronavirus.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I really think the stock market of something I know a lot about, I think it took a hit maybe for two
reasons. I think they look at the people that you watch debating last night and they say if there's even a possibility that can happen, I think it
really takes a hit because of that. And it certainly took a hit because of this.
MICK MULVANEY, ACTING WHITE HOUSE CHIEF OF STAFF: The reason you're paying -- so there, you're seeing so much attention to it today, is that they
think this is going to be what brings down the President. That's what this is all about. Really, what I might do, they call the markets just tell
people to turn their televisions off for 24 hours.
KUDLOW: Our economy is in good shape. This virus won't last forever. We have contained it.
(END VIDEO CLIP)
ASHER: John Harwood is at the White House for us. So, John, when you think about Trump's legacy and really what matters to him, I mean, it's all about
the economy, it's about the market, and yet, this particular situation is so out of his control. How much is the President -- how much is he got one
eye on the election campaign here?
[15:34:57]
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Oh, he's got more than one eye, Zain, on the election campaign. He's very concerned about the effect
on this. In addition to the market drops, you have the potential that this could deter enough economic activity, consumer spending, business
investment, travel, that it could actually tip the economy into recession this year. Odds of that are around even money right now, according to some
economists that I've spoken to.
So, the challenge for the administration is what can be done about this. We did have the Federal Reserve Chair Jay Powell come out today and said the
Fed will respond as necessary that could provide some confidence, but it's not sure that that's going to affect the actual economic fundamentals as
they are changed by coronavirus if it spreads, as Larry indicated. So far, it hasn't. They're relatively small number of cases here. But if we get a
community spread on a large scale, there's probably not much the administration can actually do to stop the economic fallout. That's big
trouble for the President.
ASHER: And if the President does actually get the handling of this virus right, so to speak, how much will that actually -- or how much that --
could that impact the markets?
HARWOOD: That is probably the single-most important thing, Zain, that the President could do. That is to say if they have consistent, steady, clear,
realistic fact-based messaging from the administration, that is likely to have a calming effect on the markets. What they've done so far, has not
calmed the markets. In fact, we saw when the President had that news conference a couple of days ago that was designed to reassure people, stock
Futures went down while they were talking. So, what they've done so far hasn't been effective.
Again, on the fundamental level, we do not have a large number of cases in the United States. That's good news for people. But I think both markets
and ordinary Americans are looking for reliable information. That's probably the best Economic medicine that the Trump administration could
apply.
ASHER: Mike Pence is spearheading the response here. What is the top of his agenda?
HARWOOD: Well, Mike Pence, this afternoon, has been in Florida heading to a fundraiser for Republican candidates. He did have a meeting with the
Florida Governor this afternoon. But Mike Pence himself does not have a strong record on public health. And I'm not sure how much Mike Pence is
actually going to assist the situation. They did, and I think this was a well-received step yesterday, bringing Deborah Birx, who's the global anti-
AIDS coordinator within the U.S. government and has been across presidencies of both parties. That's somebody who substantively can make an
impact. I'm just not sure Mike Pence himself is -- has much ability just like the President to calm markets on his own.
ASHER: John Harwood live for us there, thank you so much. The World Health Organization has raised its coronavirus threat assessment to its highest
level. More than 83,000 people and at least 56 countries have been infected, and nearly 3,000 have died. New infections outside China are
outpacing those within the country at the center of the outbreak.
Italy remains the epicenter of the virus in Europe. 24 cases in 14 nations can now be traced back to that country. In fact, an Italian citizen who
traveled to Lagos, Nigeria has now been confirmed as the first case in Sub- Saharan Africa.
In the U.S., 8400 people are being monitored in California after traveling to Asia. The CDC confirms the country's cases have grown to 62.
Elizabeth Cohen is joining us live now from Atlanta, Georgia. So, when the WHO says that the global risk of the coronavirus is at a higher level, what
does that actually mean in practical terms?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You know, practically, what it means is that it is no longer contained to China or maybe just a
few other countries. What it means is that there has been real spread around the world. I mean, really to essentially every continent on the face
of the globe. Now, it's an interesting number that you just read, Zain, about the number of cases that have come from Italy. I mean, the first case
in Italy was really, you know, just within the past week or so. So, to have 20 something countries now have cases because of Italy, it just shows you
how quickly this all moves, Zain.
ASHER: And we talked about the fact that there are more than 80,000 people who have been infected with the coronavirus. Obviously, that number is
hugely important, but how much should we be paying attention to the number of people that have actually recovered from it as well?
COHEN: Right. I think that's what's really important for us. So, first of all, it's probably more than 80,000 and I'll tell you why. This is not like
Ebola. When someone had Ebola, it was abundantly clear. I was in Africa in 2014, and I saw those people. It was horrific. They were wretchedly ill.
That is not the case with coronavirus. Some people have no symptoms whatsoever. Some people have a scratchy throat. How many times have you or
I had a scratchy throat? Many times, of course.
[15:39:59]
So, it's important to know it actually probably is more than 80,000. And so, the mortality rate that we've been talking about, and I think this gets
to your question, is let's say it's somewhere around two to three percent, it's probably actually lower than that. And that's because we don't know
the true number of cases out there. It's probably way more than what we've officially counted. As you get more and more cases, that mortality rate
goes down, because the mortality rate is a fraction, of course. The numerator is deaths. The denominator is cases. That denominator is probably
much larger than we think.
ASHER: So, could the coronavirus, like the flu, eventually become part of everyday life?
COHEN: Yes, it absolutely is possible. And I've been speaking with doctors here in the United States, who say, you know what, I think that we have
many more cases of coronavirus than the ones that have been officially counted. You know, when they get counted here, we all write about it and we
market the first case, the second case, the third case, and you know, it could be -- it could already be, you know, to some extent a part of the
fabric of what's going on in the United States.
But as with the flu, you get people who hardly notice it at all. It's just barely an illness. And unfortunately, you get people who die. So, this --
what doctors are telling me, infectious disease experts, is that in the end, this may look something like the flu. Some people get very sick,
others don't get sick at all.
ASHER: All right. Elizabeth Cohen live for us there. Thank you so much.
COHEN: Thank you.
ASHER: New warnings from the travel sector as the coronavirus takes a toll on demand. We'll bring you that, next.
(COMMERCIAL BREAK)
ASHER: Welcome back. The Federal Reserve says that it's ready to act as appropriate in response to the coronavirus outbreak. But those reassuring
words are not doing all that much to calm the markets. The Dow is off nearly 1,000 points. This is the worst week since 2008. We are very, very
close to the lows of the day. The Dow has actually been responding to several headlines including WHO press, where they said that several
vaccinations are close to development. That was earlier in the day. That prompted some buying but we're seeing more selling right now.
We're about around 15 minutes to go until markets close. Volatility is at its highest point since 2011. All 30 stocks in the Dow Industrials are now
close to correction territory or rather incorrection territory or worse a correction is 10 percent or more drop from recent highs.
[15:45:08]
British Airways parent company IAG reporting substantial hits to demand because of the coronavirus. IAG is warning it cannot provide guidance for
2020 because of the virus. EasyJet says, it's canceling a number of flights out of Italy. However, the low-cost carrier also says it's still too soon
for any details on the impact.
Brian Sumers is Senior Aviation Business Editor at Skift. He joins us live now. Brian, thank you so much for being with us. So, what can airlines
really do here to shield themselves from the impact?
BRIAN SUMERS, SENIOR AVIATION BUSINESS EDITOR, SKIFT: Oh, airlines can't do much to shield themselves from the impact. It is not good. I'm talking to
people who say that this is the worst crisis for airlines since at least 2008, and maybe post 9/11. People right now, don't want to travel and it's
a problem. We're seeing big trade shows canceled. We're seeing companies come out and say their people shouldn't fly.
You know, in the short term, airlines have cut flights to Asia, China, especially, now they're cutting some flights to Italy. But you can see how
this is going to go. The virus isn't going to be, you know, staying in Asia or Italy for very long. It's going to go worldwide, and it's just not
looking good for global travel demand. People want to wait and see what happens. And I think very few people are buying plane tickets right now.
ASHER: And so, it's just important to point out that it's not just about travel to Italy, which is the epicenter of the outbreak in Europe. This is
affecting flights to Europe, period.
SUMERS: It's affecting flights worldwide. You wouldn't believe how many companies out there, and frankly, including my own, are coming out there
and telling people, you know what, you probably shouldn't fly for the next three months. Let's come out and see how this goes. Big travel trade show
in Berlin that was canceled. It's going to be coming up in a few weeks. A lot of corporations are just saying, let's be safe rather than sorry. Like
nobody knows, you know, how dangerous this coronavirus is. But a lot of travel is discretionary. For the most part, people don't have to travel
even for business. And so, folks are just saying, you know, I want to stay home right now. And that's very bad news if you're an airline, or you know,
if you own an airline stock.
ASHER: I'm seeing oil prices falling. I mean, ordinarily, that would benefit airlines. Falling fuel costs would benefit airlines, but it's not
really much of a silver lining this time around.
SUMERS: Right. You know, in the very beginning of this crisis, there were some analysts that came out there and said, look, with China demand down,
oil prices are going to fall. This is going to be great news, especially for U.S. airlines, the domestic market is so good. They're going to have
much lower costs. But now, it's becoming apparent that the drop in oil prices is not going to fix the major problem of a drop in demand. You know,
it's hard to say for certain, but I suspect in the United States within a few months, we're going to be seeing a lot of empty airplanes. Stuff people
haven't seen for 10 years or more, not based on anything except a culture of fear that's developing.
ASHER: So, how do airlines issued guidance at a time like this? And obviously a lot of them actually can't. But when you compare this sort of
black swan event to various others we've seen in the past like SARS, for example.
SUMERS: Yes.
ASHER: 9/11 even. How does it compare to those?
SUMERS: You know what, they don't issue guidance. You mentioned IAG earlier, I think last week, United Airlines said it was coming out and
suspending guidance. Nobody knows how this is going to go. A lot of the things in the past have been relatively short-term, right? When you're in
them, when it's the post 9/11 period or 2008, 2009, you don't feel they're short-term because it could be two years or so. But you know, we're not
going to be in a position five years from now where people aren't flying. Every -- you know, the world is -- it's kind of like one world. People want
to fly, they do. They're just waiting for that opportunity to feel like it's safe again.
The good news is that airlines and a lot of areas in the world are much stronger than they were 10 years ago or 20 years ago. And they should be
able to withstand this. Certainly, there's some weak airlines that are going to be in trouble long-term. But if you're talking about the major
U.S. or European airlines, they can withstand something like this. They may have to cut capacity and park some planes for a little bit in a worst-case
scenario, but they're going to be OK.
ASHER: Yes, consolidation has helped a lot of airlines in the industry to be able to weather a storm like this. Brian Sumers live for us there. Thank
you so much.
The auto industry is trying to recover from global sales slowdown. Now, we'll have to do it without one of its key events. We'll explain, next.
(COMMERCIAL BREAK)
[15:50:00]
ASHER: Welcome back, everybody. The Geneva Motor Show has been cancelled due to the coronavirus outbreak. The event was set to begin next week.
Organizers were expecting more than 600,000 visitors. The event is often used to introduce new car models. Coronavirus fears have disrupted many
events around the world.
This is how the spring calendar actually looked just a few weeks ago. Trade shows like (INAUDIBLE) affair, Shanghai Fashion Week, Chinese Grand Prix
concerts, and concerts for British rapper, Stormzy, South Korean boy band, BTS, for example, all of these events, every single event that I've just
mentioned, has now actually been cancelled, postponed, or in some cases, they're held behind closed doors. In just a few hours ago, the major travel
conference, ITB Berlin has also been called off.
Peter Valdes-Dapena is joining us live now. So, Peter, when you think about something like the Geneva Motor Show, for example, you know, the fact that
it's being called off couldn't really come at a worse time because people already beginning to question relevancy of events like that to begin with.
PETER VALDES-DAPENA, CNN SENIOR AUTO WRITER: Yes, I mean, already, many car companies have stopped regularly attending car shows. Many of them now are
more strategic. Go to some and not others. Some of them hardly go to any at all, because you're competing against the internet, where instead of having
to ship cars to a place and build a big show stand, and have all this, people have access to these things all the time. Several other automakers
when General Motors unveiled the Corvette, they had a big event, but they didn't do it at an auto show. They did their own events separately, where
they didn't have to compete against attention being given to other automakers.
So, a lot of car companies are doing that, too. So, shows like this are under pressure right now to show their relevance, to show that there's
still a good place to do this kind of thing. And right now, a lot of people are scrambling. They just canceled the Geneva Motor Show, so a lot of car
companies are scrambling to say, OK, what do we do now? How do we do this?
ASHER: Yes, that was going to be my next question. I mean, when you have an event like that, of that magnitude, of that scale being cancelled, how do
the car companies work to get the word out, get journalists to still write about their cars, and also, you know, reach out to high-income clientele?
DAPENA: Customers, right. Well, the Geneva show, you're right, was one of these shows that they call a shopping show. Many high net worth individuals
would take their private jets to the Geneva show and treat it like a shopping mall for McLarens, Rolls Royces, Ferraris, and go there and sign
deals for cars. But you know, what these car companies are doing now is they're either we're going to have live streamed unveilings at their
headquarters or other places.
[15:55:00]
Maybe around the same time, they might delay it for a few days, but they're finding other ways to do this. And I'm sure they're going to be watching
closely and seeing how many, how many press impressions, how many stories and T.V. hits do we get off of those live streams? And would this have been
a better way to do it? Maybe. Maybe this would have been a better way to do it to begin with. And also, many of these companies know who their best
customers are, and will be reaching out to them to say, Hey, you know, that car we were talking about at the Geneva show, let's talk about how we can
get that car (INAUDIBLE)
ASHER: Yes, there's still going to be ways for them to reach out to their customers. But that doesn't take away the fact that the car sector
certainly suffering right now, especially when you think about just how important Wuhan is to auto supply chains.
DAPENA: Yes.
ASHER: Peter Valdes-Dapena, we'll have to leave it there. Thank you so much. All right. There are moments left to trade on Wall Street. We'll have
the final number, Oh boy, and the closing bell right after this.
(COMMERCIAL BREAK)
ASHER: All right, there are just moments left to trade on Wall Street in its very volatile session. We are down about 500 points of -- 500 points,
550 points right now. We have gained a little bit in the past 10, 15 minutes, gained about 400 points or so. So, we are still off the lows of
the day. The Fed says it's ready to act as appropriate in response to the coronavirus outbreak. Markets, as I mentioned, have come a long way off the
lows of the day in the past few minutes, but we are still off more than two percent. Markets in New York and in Europe are ending their worst week
since that financial crisis. All right. That's it. I'm Zain Asher in New York. You are watching QUEST MEANS BUSINESS.
JAKE TAPPER, CNN HOST: -- level of alert as stocks sink even lower over the coronavirus. THE LEAD starts right now. New signs that the coronavirus may
be ready to spread even faster in the U.S. as sports teams play in an almost empty stadium after a new outbreak. This, as Vice President Pence,
the man President Trump put in charge of the response to the coronavirus, is right now in Florida fundraising, as the President is imagining a
miracle with the virus just disappears. Plus, a tale of two Bernies, why Senator Sanders' comments in 2016 when he was chasing Hillary Clinton,
could come back to haunt him as the frontrunner.
ANNOUNCER: This is CNN Breaking News.
TAPPER: Welcome to THE LEAD. I'm Jake Tapper. And we begin today with breaking news on our "MONEY LEAD" fears over the spread of coronavirus
sparking another drop on Wall Street today. The Dow closing in a moment, down around 400 points today.
END
