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Asia Markets Rebound After Brutal Day on Wall Street; Global Coronavirus Crisis Escalates; Trump Administration Prepared to Handle Pandemic?; Biden and Sanders Focus on Michigan. Aired 12-1a ET
Aired March 10, 2020 - 00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CNN ANCHOR (voice-over): Hello and welcome to our viewers in the United States and around the world. I'm Paula Newton.
Coming up on CNN NEWSROOM, China's president takes a victory lap in Wuhan where the coronavirus out break seems to be easing. But in Italy a different story, a surge in the number of cases and a China-style lockdown. The entire country, more than 60 million people, now being told to stay home.
Asian markets struggle to bounce back, following Wall Street's panic selloff, the Dow ending Monday with its largest point drop ever.
NEWTON: And we begin with new evidence that the coronavirus pandemic may have crested in China, which is now reporting the fewest new cases since mid-January.
Also the World Health Organization says the more than 70 percent of China's confirmed cases have now recovered. This is important but it is in fact a different story in Italy, where the entire country is now on lockdown.
Israel is requiring a 17-day self quarantine for everyone entering that country. That includes Israeli citizens as well and foreign nationals.
And in the United States, the Dow plunged more than 2,000 points, the worst one-day point drop ever. It was prompted by lingering fears over the virus and an oil price war that has stunned markets right around the world.
Now as we told you at the top of the show, Chinese President Xi Jinping is in Wuhan, where the virus was first identified last year. This is the first time he has been in the city since the outbreak began. CNN's Steven Jiang joins us now from Beijing.
Steven, I am assuming this is closely related to what is going on with the cases in Wuhan and the fact that China seems to have had some success here.
STEVEN JIANG, CNN SENIOR PRODUCER, BEIJING BUREAU: That is right, Paula. This is such a major smallest milestone in this country's war against the coronavirus. As you mentioned, this is the first time that Mr. Xi stepped into the city of Wuhan. It shows increasing confidence in how things have been brought under control, including at the epicenter so that they are now confident it can ensure the health and safety of the most powerful leader in China in decades.
This is one of these benchmarks, a lot of people have been looking out for, in terms of how to assess the effectiveness of the Chinese containment strategy and the measures. Obviously, initially when this outbreak hit, Mr. Xi kept a low profile, he was barely visible in state media, which was kind of extraordinary.
Now the fact that he is there in Wuhan, going to visit troops and medical workers and volunteers, as well as residents and patients, it's very much a strong signal to both the domestic audience and the international audience.
As you mentioned, their confidence, the authorities' confidence, back by their own numbers, 19 cases reported on Monday and that was remarkable; 17 of the 19 cases from Wuhan.
That was in stark contrast to a few weeks ago, when the city was still reporting hundreds, sometimes thousands of cases on a daily basis. It's really quite a remarkable turnaround.
That is something the government here and the state media here have been trying to highlight in the past few days, really touting the positive results and their herculean and brutal efforts, as you mentioned, including locking down the city of Wuhan and the surrounding province, trapping millions of people there for over six weeks now, really wreaking havoc to their livelihoods and their lives.
That's why Xi Jinping is now there, sending a strong signal to the domestic and the international audience.
NEWTON: Just to expand upon that a bit, it seems to be a new nationalist narrative for the Chinese leadership in the kinds of messaging that they are getting inside China and outside of it.
JIANG: Very much so. In the past few days they have been pushing out very hard this line about the Chinese efforts and how it has been the most ambitious, aggressive and agile.
JIANG: Sometimes quoting experts from the World Health Organization, which has been praising the Chinese efforts as well. They're in a way comparing their strategy to what has happened or what is happening in the rest of the world, really touting the superiority of their strategy, in some cases and by extension the superiority of their political system.
This, of course, is especially concerning, considering the initial mishandling by local officials of the crisis and what some say is a cover-up attempt at the local level at least. So that's why right now they are very trying to paint a very different picture of China's progress and China's success.
And they have been pushing out this line in terms of this virus, saying that might not even have been originated in Wuhan. But now that it is coming becoming a pandemic, they do not want to be blamed for starting this.
NEWTON: And I use narrative, they're trying to control that narrative at this point in time. As you point out, a key benchmark for the Chinese leader to visit Wuhan.
Now in the United States there are more than 700 cases of coronavirus and 26 deaths so far. The White House says Donald Trump has not been tested for the virus, despite now being in contact with lawmakers who were in close proximity to someone who was infected.
A White House statement reads, "The president has not received COVID- 19 testing, because he neither had prolonged close contact with any known confirmed COVID-19 patients nor does he have any symptoms. President Trump remains in excellent health and his physician will continue to closely monitor him."
Earlier, U.S. vice president Mike Pence said he did not know whether Trump had been tested or not.
(BEGIN VIDEO CLIP)
MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: Let me be sure and get you an answer to that, I honestly don't know the answer to the question. But we'll refer that question and we will get you an answer from the White House physician very quickly.
(END VIDEO CLIP)
NEWTON: The key here: Pence also laid out the U.S. government plans to try and battle the economic impact of the coronavirus. CNN's Boris Sanchez has those details.
BORIS SANCHEZ, CNN CORRESPONDENT: We heard Mike Pence say at the podium he would give some clarity to the press. He struggled to answer the question, ultimately acknowledging that he himself had not been tested. He said that he didn't know what the White House physician's advice was to Trump on that.
We should point out, as you saw the president totally ignored the question, quickly walked out of the room before taking any questions from reporters.
We should know that the president just this weekend, over the last few days, has ignored the advice of top experts when it comes to senior citizens protecting themselves from the coronavirus. He has attended a number of fundraisers, with hundreds of people in
attendance, shaking a lot of hands. The White House have maintained that President Trump is fine, he is healthy; he himself has made it clear that this is not a huge concern for him.
But it seems that the tide is turning, specifically when you watch the Dow Jones drop 2,000 points in a single day. That has gotten the president's attention, especially going into this 2020 reelection campaign.
From what we understand the president met with aides this afternoon, going over a draft of different ideas, opinions of what an economic stimulus package would look like. The White House has repeatedly said that they will look to help the cruise industry, the airline industry, support travel and tourism in that regard.
There's been speculation about a payroll tax. We would also not be surprised if we see some kind of help for the energy sector as well, with this price war over oil going on between Saudi Arabia and Russia. There is less demand for oil; we may see the White House try to boost that.
The big question on the horizon -- and we're still several steps from this but it's an important one to keep in mind -- how will Democrats respond to this?
Are they willing to help the president pass an economic stimulus package that might turn the tide with the way that the White House has handled this coronavirus crisis and help the president boost the economy, avoid a slowdown while we go into November?
NEWTON: Our thanks to Boris there.
President Trump said we will discuss an aid package with aides on Tuesday.
Meanwhile, we go to Italy where the lockdown there is one of the most drastic measures that we have seen yet to try and fight this outbreak. The prime minister says it is needed to protect all Italians, especially those most susceptible to the disease.
(BEGIN VIDEO CLIP)
GIUSEPPE CONTE, ITALIAN PRIME MINISTER (through translator): The right decision today is to say at home. The future of Italy is in our hands. And these hands have to be responsible today more than ever. Everyone has to do their part.
(END VIDEO CLIP)
NEWTON: You remember how this started. It was initially a quarantine for the worst-hit parts of Northern Italy, that red zone there. It is the epicenter of Italy's outbreak. But now all public events are banned nationwide and movement is restricted like we have never seen in modern times.
Lockdown was announced just hours after Italy reported a large surge in that outbreak. At least 97 have died since Sunday. With Italy's death toll now at 460, with almost 9,200 cases, it is now by far, the largest hot spot outside of Mainland China.
Israel meantime now has 50 cases of the coronavirus and, as we mentioned, to keep that number from going out, Benjamin Netanyahu says everyone entering the country must quarantine themselves for two weeks. That includes foreign nationals.
And those foreign nationals who can't self-quarantine will not be allowed in. He says his policy will be in effect for two weeks.
Dr. Carlos Del Rio joins us now, he's a professor of medicine and global health at Emory Center and the director of the Emory Center for AIDS Research.
We see a lot more cases of social distancing throughout the world. Now Italy the latest to just lock down the entire country.
At what point does that look prudent in many different areas of the world?
DR. CARLOS DEL RIO, EMORY UNIVERSITY: It is very hard to say but in this kind of virus, with the transmission of this virus, trying to stop it by trying to closing borders, it's a little bit like trying to stop a hurricane. The wind is hard to stop.
So you need to prepare and you need to be ready. One of the most effective non-pharmacological strategies is social distancing. What that involves is we need to do a couple things.
We need to identify those infected. That's why testing is important because you can make a decision to isolate someone.
We need to create -- we need to be at least actually six feet apart. I need to be careful not to cough on you. If I have a fever or cough, I should stay at home.
And then we should start thinking about avoiding big crowded events. I'm talking about going to a --
NEWTON: OK, but when do we do that?
Where is the dividing line?
DEL RIO: It is different for everybody; it is different for different regions of the world, it is different for different age groups. If I was Italy, I think they're doing the right thing. But if I am Atlanta, I don't think we are ready for that. In Atlanta,
if we had 1,000 cases, then maybe it's time to do that. So different regions of the world will have to implement this at different times.
The second one is age. If I am 50 and healthy, I am probably OK. If I'm 75 and have lung disease, I probably should isolate myself right now.
NEWTON: Why is it so much different than the flu?
I know this has a higher morbidity rate so far yet most people point out --
DEL RIO: Well, actually which flu?
DEL RIO: Because we have something called seasonal flu it and this is -- the transmission is about the same as seasonal flu but the mortality is about 10 to 20 times higher. If we talk about pandemic flu, the last time we had that was back in 2009, the mortality was about the same. So depends on which you compare it to.
So compared to pandemic, it is kind of similar.
NEWTON: The question is though, why is the response so different than what we do annually for the flu?
DEL RIO: For three reasons; number one, seasonal flu we have all a certain amount of immunity. For this virus we have zero immunity.
Number two, we have a vaccine against the flu. We don't have that against this.
Also we don't have medications for this. So the response is different because the tools you have are very different.
NEWTON: Interesting, that is most succinct I've seen it put in a while now.
I'm going to go through a certain area with you and bits of information that we've gotten, that we need to want to have some more clarification.
First thing is this Johns Hopkins University study comes out and now says it really sometimes could be five days, the average is now five days before we start to show symptoms. Even when you're positive with the virus.
DEL RIO: Yes, that seems to be the case. Not everybody but in some individuals, you can have virus present and virus replicating and the possibility of transmission before you develop symptoms, even five days.
And not in everybody but in some individuals. The flu has something similar. I could be here with the flu, get you infected, because I'm talking to you and then tomorrow be deathly ill.
NEWTON: WHO is saying sometimes it takes six weeks to recover. Does that mean you are symptomatic throughout that time?
DEL RIO: Not necessarily. That means that your body has been hurt enough by the virus. It will take some time to recover.
NEWTON: If you get it, can you get it again?
DEL RIO: That's a good question. I've not seen good data. But what we know about this virus is that you probably will develop in immunity. Coronaviruses tends to produce immunity. Some people think the frequent coronavirus infections, different coronavirus but a cousin of this virus that causes the common cold. Frequent colds in children may give them some level of protection.
NEWTON: That leads me to the next question. It does seem that the elderly are the ones at risk here. Children and younger people do seem to have an immunity to this.
DEL RIO: Or at least do not get as sick or do a little better.
Can you give it to your pet or get it from your pet?
DEL RIO: No.
NEWTON: Definitively not.
DEL RIO: And animals have coronavirus but other species of coronavirus.
NEWTON: How long do we know right now that it can last on surfaces?
DEL RIO: A lot of data coming out, some say no longer than a couple of minutes; 30 minutes or so. Some say a couple of hours, three to six hours. I think it depends on the ambient temperature. I think this virus does not like heat.
And I think it also depends on which surface. I would say that a good strategy is hand hygiene frequently, frequent hand washing everywhere.
DEL RIO: And for 20 seconds, sing happy birthday as you are doing it.
But number two, clean services. If I put my hand here, come up and clean it.
NEWTON: Finally but how will this virus end?
What do you think is the most logical way it can end?
DEL RIO: I think will end in several ways. China is showing us that they were able to lock the country and controlled the number of new cases coming down rapidly. I think public health strategies like that are going to make a big difference.
And I think not without any instance, it's not going to be painless. We are seeing pain in the markets, the pain in work and productivity. I think we're going to have to hunker down and do what we need to do to contain it.
Number two, drugs are being developed.
Number three, we may have a vaccine but I don't think a vaccine will be ready for this.
And number four, we are hoping a lot of coronaviruses do not like warm weather, so we are hoping for warm weather to come. But I want to remind you, I want to remind you that when the warm weather in the Northern Hemisphere comes, it gets cold in the Southern Hemisphere. So this virus may migrate south and then come back in the fall and hit us again.
NEWTON: That tells us no time to get complacent.
DEL RIO: And time to stay informed, it's very important.
NEWTON: I'm hoping that's what we did with this time, thanks.
DEL RIO: Delighted to be here.
NEWTON: Records shattered, nerves frayed on Wall Street, the Dow's point drop set a record in the worst day of trading in more than a decade. Plus --
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We are praying like hell that Vice President Biden is the nominee.
NEWTON (voice-over): It's Super Tuesday round two in the United States. Hundreds of delegates again at stake and top Democrats are zeroing in on the largest prize, Michigan. We will see which way voters are leaning -- next.
(END VIDEO CLIP)
NEWTON: OK, another big day ahead in U.S. politics. Six states are voting in what is Super Tuesday round two. The two most viable Democratic candidates are former Vice President Joe Biden and of course, Senator Bernie Sanders. Both want to claim the bulk of pledged delegates from those six voting states.
Now for the last few days, of course, they both have been stumping hard in the Midwest, particularly in the crucial state of Michigan, where there are 125 pledged delegates up for grabs.
For Sanders, Michigan is the linchpin to his entire campaign at this point. He told reporters it is possibly the most important state. Biden has momentum -- they're actually calling it Joementum -- and that is how he leans into Michigan as we lean into Tuesday's contest.
According to Monmouth University, 51 percent of likely Michigan Democratic primary voters are choosing Biden; 36 percent back Sanders. CNN's Vanessa Yurkevich reports from Detroit on a critical voting bloc that Biden has performed well with in the past and one that, of course, Sanders is doggedly trying to get to.
JOHN HATLINE, GM WORKER: Health care is important to all of us.
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT (voice- over): We met John Hatline in this exact spot six months ago, on strike against General Motors in Detroit, fighting to keep his union paid health insurance. On Tuesday, he is voting for the candidate who could take it away.
HATLINE: My vote is going for Bernie here in Michigan. I'm hoping that Bernie Sanders will have as good as health insurance that I have for the whole country.
YURKEVICH (voice-over): The union vote, crucial here in Michigan, nearly 600,000 members strong. Bernie Sanders beat Hillary Clinton in 2016 with their help. But now, Joe Biden is fighting to bring them to his side.
President Trump won Michigan by a razor-thin margin in 2016, with the help of Macomb County, a white working class suburb that voted for President Obama twice and then Trump.
UNIDENTIFIED FEMALE: The fight isn't over.
YURKEVICH (voice-over): At a Sunday brunch, Elizabeth Warren's supporters are now looking for another choice.
UNIDENTIFIED FEMALE: I'm leaning toward Joe Biden right now.
YURKEVICH: Some would say that Bernie Sanders actually aligns more with Elizabeth Warren's platforms.
UNIDENTIFIED FEMALE: Yes, somewhat he does.
YURKEVICH (voice-over): Fellow Warren supporter Rhonda Warner is also voting for Biden. RHONDA WARNER, BIDEN SUPPORTER: I think Joe Biden's experience and
the support from other Democrats that I know he will need to get policy passed makes him the choice for me.
YURKEVICH (voice-over): Bert's Marketplace in downtown Detroit has been a staple in the African American community for decades. A picture of the Obamas hangs inside. For voters here, Tuesday's election is another critical moment.
JAI-LEE DEARING, BERT'S MARKETPLACE: I feel like my life depends on this. We're praying like hell that vice president Biden is the nominee.
YURKEVICH: Is he automatically a shoo-in with the African American community?
UNIDENTIFIED FEMALE: No.
YURKEVICH (voice-over): Letrice Murphy is leaning towards Sanders.
LETRICE MURPHY, SANDERS SUPPORTER: Bernie Sanders was marching beside Martin Luther King, so I feel that he could get the African American vote because he was basically down in the trenches with us.
YURKEVICH (voice-over): But her friend, Jennifer Troy, is still deciding.
JENNIFER TROY, SMALL BUSINESS OWNER: It really boils down to what I am feeling that moment when I enter the polling booth.
YURKEVICH (voice-over): Vanessa Yurkevich, CNN, Detroit, Michigan.
NEWTON: We want to take a closer look at this with Michael Genovese, he's the president of the Global Policy Institute at Loyola Marymount University.
It's good to see you, Michael and I haven't seen you in a while and I can't think of a better time than on the eve of Super Tuesday, too, but we have to dig into Michigan and when we do that literary cliche comes to mind. Rumors of my demise are greatly exaggerated.
I'm sure Bernie Sanders wants that to be true but he is surprised in the state before in 2016. It seems that people have forgotten that.
MICHAEL GENOVESE, POLITICAL ANALYST: We are also surprised that it came down to just two this quickly.
GENOVESE: It seemed that a week ago there were seven or eight and now there is only two. And this Tuesday, tomorrow, hugely important for Bernie Sanders because, as you said, he won Michigan last time.
But surprisingly, to many, Biden is ahead right now. If Biden does well this Tuesday it could be the end of Bernie and I don't want it to be too premature. But I say that because the next week, 17th a whole series of primaries again, Super Tuesday part three.
But these are states that in 2016 Hillary won that Biden should be very strong in. So by the morning of the 18th, you might be able to put a fork in Bernie. He might be done.
NEWTON: Wow, that is dramatic, Michael. But I think you are making a fine point of it and I think likely you are right, especially given all that momentum with Joe Biden.
In terms of this race itself though, when you look at what Bernie has pulled off before, what would it tell you if he is even competitive in Michigan, if it is really close?
GENOVESE: It's going to be a question of turnout. And one of the things that Bernie Sanders has relied on is getting the youth vote out. In Iowa, the youth vote came out at a higher proportion than in 2016. In subsequent races he has not been able to get the high percentage of the youth vote to come out and vote.
If that remains true to form, if Bernie can't get the young voters out, he is going to be in real trouble Tuesday and the following Tuesday.
So the linchpin of his strategy is, can I get young people energized and excited?
The momentum, as you said, it's going against him. And it could be a question of timing, that Biden peaked at the right time and Bernie fell flat at the wrong time.
NEWTON: It's amazing to see that manifests itself in terms of you don't want to peak too early or too late. You talk about the young vote, but this brings into sharp focus something else. If you look at the three possible candidates on who will be the next president, all men in their 70s, two would actually turn 80 while in office.
How much do you believe that this is manifesting itself and the campaign overall right now, whether it is the Democratic campaign or the fall race for president to come, especially given the coronavirus right now?
GENOVESE: Given that they are all in their 70s, it's not going to be a comparison, oh, he's young and this one is old. But we seem to have a gerontocracy in America right now, where senior politicians have eclipsed all the young, new generation of potential candidates who are emerging, who offered themselves up but could not cut it.
So all these three men are vulnerable in terms of vulnerable population. They are in a trade that has a lot of back slapping, hand shaking, being in crowds and talking to people. President Trump comes alive at his rallies.
Bernie Sanders and Joe Biden will go to different meetings, different events, will meet a lot of people in close proximity when, as you know, you need social space if you want to combat this pandemic.
That is the opposite in politics. In politics, you need closeness. Bernie and Biden are trying desperately to get close to these voters. President Trump at his rallies just loves to get in front of the big crowd. That is exactly what the three of them should not be doing, not just for themselves but as a message for the public.
NEWTON: That is a good point and the way that would come out and the optics. Before I let you go, if we look at the 2020 presidential race, do you believe that Trump's reelection will still be very closely co- related to the economy?
Or will leadership really come into sharper focus now that we are facing such a medical emergency around the world?
GENOVESE: President Trump has been fortunate in that; he has not been truly tested by an emergency or a crisis. This is the first one he has had to face. And he has not faced it very well.
He's been a state of denial, he's been trying to downplay it and he's been trying to blame others, blaming the Democrats for the drop in the Dow. This is a time when leaders have to emerge and take command. Donald Trump has not done that. So it's a very big test for him.
If the economy continues to plummet, what do they have to stand on?
The strong economy is his strength, if that collapses at his feet then he is in big trouble. As the great Wayne Gretsky used to say, I don't skate to where the puck was, I go to where the puck is going to be.
Presidents need to do that in a crisis. You need to anticipate. You need to prepare for the next thing, not look over your shoulders at what happened.
And thus far, an administration that, for three years has been denying science and has been not feeling posts that are necessary, that are cutting budgets for pandemic research, all of this is coming back. The chickens are coming home to roost. And the president really needs to turn this around very quickly or he could be in very deep trouble.
PAULA NEWTON, CNN INTERNATIONAL ANCHOR: Yes, and still an opportunity to show that leadership, especially when the country desperately needs it. Really good to see you. Thanks for joining us. Appreciate it.
GENOVESE: Thank you, Paula.
NEWTON: Now, be sure to catch CNN's special live coverage. Senator Bernie Sanders and former Vice President Joe Biden head to head in a series of key U.S. primaries. Tune in for Super Tuesday, round 2, starting at 8 p.m. in London. That's 4 a.m. in Hong Kong Wednesday. That is right here on CNN.
And we will be right back with more news in a moment.
NEWTON: Despite investor panic over the coronavirus and an oil price war, the markets, you know, they're trying really hard to try for a comeback here. Trading in Asia has been up and down Tuesday, but most of the major markets, as you see there, are edging ever so slightly higher.
This comes after Wall Street's worst day since the 2008 financial crisis. The Dow dropped more than 2000 points Monday -- Yes, I read that right -- its largest point drop ever.
The S&P 500, meantime, plunged 7 percent shortly after the often triggering of circuit breakers suspended trading for 15 minutes.
Still, both the S&P and NASDAQ ended down more than 7 percent.
Right now, though, U.S. futures are pointing up after President Trump said he'd push for a payroll tax cut and assistance for hourly workers to ease the economic impact to the virus.
Journalist Kaori Enjoji joins me now from Tokyo. And Asia, of course, is trying to get -- shake off, really, that market carnage. It had a lot of market carnage of its own on Monday. What seems to be driving any sense of optimism this morning?
KAORI ENJOJI, JOURNALIST: Well, I think a little bit of relief from the fact that we're hearing from governments like the U.S. and also later today in Japan about some kind of measures, economic measures to try and support businesses who are really hurting over the last couple of weeks because of this coronavirus fallout.
And I think generally, the fact that the market has fallen so far, I mean, 7 percent losses on 3 major indices in the U.S., and record low levels on the price of oil and on daliyen (ph). And that seems to be that panic that sets in on Monday, seems to be fading a little bit.
But I say a little bit, because we are still deeply into historic levels on many of these indices. The Nikkei 225 has now briefly poked into positive territory, but a half a percent gain is nothing when you consider the market jumped 5 percent in yesterday's trading activity.
Crude is slightly off-load, but very slightly. Yields on the 30-year treasury also and the 10-year moving slightly off lows, but I think, really, the emphasis on slight, because after the monster sell-off in many of these markets on Monday, seems to be a little bit calmer today.
The Japanese widely government expected to announce round 2 of some economic stimulus measures, probably in the form of new loans or additional loans to the ones they announced about 3 weeks ago. So I think the market is waiting for those to come out later today.
NEWTON: Absolutely. All eyes on the U.S. and the Trump administration. Kaori Enjoji from Tokyo, thanks for joining us. Really appreciate it.
Rana Foroohar joins me now. She is CNN's global economic analyst, and the global business columnist and associate editor at "The Financial Times."
I know this is one of those times where you did not want to be right, but for days, you've been telling us to expect something like this. What's interesting is that I have a lot of questions for you, economic questions. And yet, the answers are all medical at this point. As in it is the uncertainty, right, that's really rattling markets.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, you know, it's a few things. Absolutely it's the uncertainty, certainly, about the trajectory of the coronavirus. We've just seen Italy shut down the entire country for containment purposes. We don't know how fast or how far it will spread in the U.S. All of that is a big deal.
But there's also the certainty of how those dominoes in the markets are falling. We have just seen the biggest dip since 2008. We're now seeing a lot of predictions about recession, if things go as we think they might go.
But how will the dominoes fall? We know there's a lot of corporate debt out there. I'm watching, in particular, energy related stocks, because, of course, with the big oil dip, I think that you're going to see companies with a lot of debt in the energy sector, and anything related to energy coming under pressure. That could then in turn put more pressure on the stock market, which could fall farther, which could impact how people feel about consuming.
So this is a snowball effect, and there are lots and lots of points of uncertainty.
NEWTON: You know, with the virus, we have been talking about mitigation. Let's talk about that in this realm, as well. We've already have the Fed and, of course, a concerted effort around the world to get liquidity in. And obviously, the Fed lowering interests rates. What about the other side of the equation or the fiscal policy?
We are hearing the Trump administration talk about a cut in the payroll tax? But really, what's interesting here is they are talking about, as well as helping those people who are sick and perhaps are losing income. How helpful if it works out, do you think this might be?
FOROOHAR: Well, I think shoring up the social safety net across the board is a huge deal, particularly in the U.S., Paula. I mean, you know, the coronavirus and this entire market crisis is kind of pulling back the veil and how fragile our workforce is. You know, so many people in contingent positions without any health care. So many people that, if they don't work, they don't get paid.
So I think that that is a big deal. And I think, you know, you hit the nail on the head. It's got to be fiscal at this stage. You know, I'm seeing estimates. Recently, actually, I saw something in Goldman Sachs that, even if they were to continue cutting rates and to even start buying assets again, that it's going to have a fraction of the effect that it did in the last few years, because they are simply out of ammo. Central bankers really can't do much more at this stage. NEWTON: A question that I get a lot is how much worse can this get?
And I don't want to talk just about the stock market, although that is a component. So in your opinion, and I know you watch this carefully, what other red flags do you see that could exacerbate what is already a financial crisis?
FOROOHAR: Well, we've been talking a lot about the stock dip. We talked a lot about corporate debt. The bond market, of course, is blinking red in a big way.
I mean, we are seeing long-dated U.S. treasuries at record lows. What that says is the markets are worried about long-term growth. You know, you're seeing the U.S. dollar come under pressure. That's something I'm going to watch closely as well. If you start to see foreign creditors beginning to sell off U.S. debt, sell-off dollar-denominated assets, that can put pressure -- more pressure on U.S. stocks, U.S. asset prices. That could again make the markets fall even further faster, so that's the kind of thing that you need to watch for.
NEWTON: Also a question here, and I know most people are focused on the United States and what the United States can do in this situation. But Europe has a real vulnerability here, doesn't it?
FOROOHAR: A hundred percent. And of course, you know, you're dealing with a multitude of countries, each responding differently, each with different policies. There's not a coordinated effort yet.
So absolutely, this is a huge deal. The one thing I would say about Europe is that, in many countries, you do have at least a better universal health care system, and so, you know, you're not going to end up in the situation that you might in the U.S., where people simply don't go to get care. They can't get care.
I think that that's why getting a broad safety net in place in terms of the health care system right now in the U.S. would be a very smart move.
NEWTON: And does it worry you, though, what is going on with Europe and how it could infect, you know, the rest of the financial community here? We've got Italy on lockdown. But yet, even before that, we know how vulnerable their banks were. We have Germany, obviously, always supposed to be the economic engine, is now also faltering.
FOROOHAR: Yes, no, for sure. I mean, Italy was already a major question mark in terms of their debt picture, their sovereign picture. I think I'm going to be watching sovereign spreads in Europe very, very carefully.
You know, I think until you get the sense that the coronavirus has leveled out, we're really not going to know where we are. And I think we're going to be into, probably, early summer before we can say for sure what the effect just of the virus is going to be, let alone all those market dominos. NEWTON: And to that, before we wrap it up here, Rana, do you think
there is a real possibility that the United States will slip into recession? So not just one quarter of negative growth, but two in a row?
FOROOHAR: Oh, I do. I absolutely do.
I mean, if you look out at what the drivers of the global economy have been in the U.S. and abroad in the last few years, it's been a lot about travel and tourism. It has been a lot about services.
You know, we are still vulnerable here in the U.S., as in many rich countries, but particularly so in the U.S. consumer spending is really the anchored economy. That's two-thirds of the economy now.
Sure, people can shift some of their purchases online, but you're not going to go to restaurants online. That's one of the biggest categories of job creation in the last jobs report.
You know, you're not going to be buying luxury brands. There are logistics issues. I mean, there are so many areas here. Travel and tourism, actually, in one way or another, affects one out of 8 jobs in the U.S. So this is a big deal, and I think unless you've got a real fiscal stimulus plan that is well-orchestrated. I could imagine definitely this going more than a quarter or two.
NEWTON: Yes. And with that, all eyes, obviously, on the Trump administration in the coming hours and days to see what that will look like.
Rana, thank you. Thanks so much. Really appreciate it.
FOROOHAR: Thank you.
NEWTON: And thank you for watching CNN NEWSROOM. I'm Paula Newton. WORLD SPORT is up next.