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Astounding Losses in U.S. Futures Market; Oil Prices Plummeting; Oil Prices Down, Airfares Still Up; Senator Stevens Jury Excused
Aired October 24, 2008 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: Bracing for a selloff. Wall Street primed to plummet at the open. Can it recover before the close?
And 11 days until America elects a new commander in chief. What role will race play in your vote?
It's Friday, October 24th, I'm Heidi Collins. You are in the CNN NEWSROOM.
Your investments will likely take a beating this morning. Markets are under siege around the world and on Wall Street. Breathtaking losses in the U.S. futures market. Dow futures plunged 550 points and triggered an emergency safeguard. Trading limited until the market opens just about a half an hour from now.
A sense of panic first registered overseas in Asia. Growing fears of a global recession pushed down Japan's Nikkei more than 9.5 percent.
Markets are also way down in Europe. Not long ago markets in England and Germany down more than 8 percent.
CNN's money team is, of course, all over the world to bring you these latest ripples of the international financial crisis.
Adrian Finighan is in London and Frederik Pleitgen in Berlin. Andrew Stevens with the view from Hong Kong. In New York Christine Romans and Ali Velshi and right here, CNN international business correspondent, Richard Quest.
An awful lot to get to this morning. Let's start on Wall Street. Brutal numbers even ahead of the opening bell. Christine Romans and Ali Velshi begin our coverage.
So, guys, they call it hitting limit down. What does this mean for Dow futures and then, more importantly, for the opening of the trading day, as we said, in just a few minutes?
CHRISTINE ROMANS, CNN CORRESPONDENT: Well, Dow futures and S&P 500 futures last limit down. That means, Heidi, that they fell so much, there was so much selling pressure that they halted the losses.
So you still could trade them, but you could only trade them, I guess, at higher prices.
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: You can only go up.
ROMANS: If they come a bit, they really (INAUDIBLE)...
VELSHI: Yes, you can't go further down. That means that they open in about a half hour, those will be released, and pretty much everybody we've spoken to expect the Dow to open further down than what these limits are. So in other words this is like a bottom stop.
ROMANS: And the Dow is down 550 points when it was locked down. So lock limit down, down 550 points. Now we've seen big moves...
VELSHI: Well, we saw it a few weeks ago we were all together, we saw the Dow down further than that in the first few minutes of trading.
COLLINS: Right.
VELSHI: But remember it came back within half an hour. What we don't know today is when it comes back after that initial open. But we know it's going to be down and it's going to be down sharply.
ROMANS: There's a guy named Art Hogan, who's the chief market strategist at a company called Jeffries & Companies, somebody who has been on the air many, many times. And he said it's across the board global liquidation of stocks.
They are expecting -- to a person, the experts and the market watchers and the economists we talked to, they're expecting big losses when stocks open in just about 28 minutes.
COLLINS: Yes, and so the thing for me is, regardless if you are a financial person, regardless if you are someone who is heavily vested in the stock market, you have been watching the news and you are aware that something is happening, obviously, with the economy.
What makes today different?
ROMANS: Today is different, Heidi, because every one of these days has been, you know, a different mix of international events and causing the selling. What people are saying is that it's a little bit of irrationality.
It's irrational, it's some panic selling overseas, but the number one thing is that the economy of Britain shrank for the first time since the '91 recession. And it shrank more than people thought.
You know when global western economies shrink, that is something that sparks fear of a global recession. The other thing is...
COLLINS: It has an incredible domino effect.
ROMANS: It does. And a lot of these earnings reports around the world, Japan and France and the United States and elsewhere, those earnings reports are showing that this credit crisis and this weak demand from consumers is something that is showing up worse than they expected in these companies books. And so you've got fears feeding on themselves of a global slowdown. They don't know how long it will last, when it started, what it will look like, and that uncertainty is something that -- you know just really feeds into that irrational selling.
COLLINS: So, Ali, should people do anything differently today?
VELSHI: No, you can't. If you hadn't sold off -- you know one of the things that Christine has been looking at is the length of time that these bear markets take and what kind of bear markets they're in.
We're past the average of the smaller bear markets. Christine was studying sort of the "Garden Variety."
ROMANS: The S&P 500 is now 41 percent right now. A "Garden Variety" bear market is down about 21 -- 29 percent.
COLLINS: Look at that.
ROMANS: A "Mega-Meltdown" is down about 57 percent. All bear markets the average is down about 38 percent. So this decline, that decline in the S&P 500 that we've already seen of 41 percent over the past year, that fits in right there into pretty much the average of all bears.
The question is what do you think? Do you think that this is some sort of a "Mega-Meltdown" and there's more to go for the S&P? Already worse than a "Garden Variety" bear market.
We've already seen major, major damage in the stock indices. The question now is this the market that is kind of running its course and running through the rest of that or...
COLLINS: Yes.
ROMANS: ... is this going to be some kind of a "Mega-Meltdown."
(CROSSTALK)
COLLINS: That is a question we may not know by the end of today. But obviously...
ROMANS: We won't know until it's over, to be quite honest.
COLLINS: Well, yes, and we don't know when that's going to be either.
ROMANS: Right.
COLLINS: But we sure do appreciate all of that research that the both of you have been doing. I know you're going to be very, very busy today.
Christine and Ali, thanks so much. We'll check in just a little bit later on. Right now we want to get to the worldwide picture and the market overseas that we've been talking about. Let's get straight to our international coverage now with Adrian Finighan in London this morning.
Adrian, good morning to you.
ADRIAN FINIGHAN, CNN CORRESPONDENT: Morning, Heidi.
Very, very negative sentiment here in London. There, I choose my words very carefully because various people have described what happened in Asia overnight as panic.
Selling people, but today, is it panic selling here in London? No, not yet, however, we are seeing a steady rush towards the exit right throughout the day. More along the lines of perhaps a fire drill than the real thing.
As Christine mentioned, we got GDP figures here in Britain out today. The economy shrank more than people expected to. We were all expecting a quarter of negative growth, the first time in 16 years. That suggests we're headed for a sharper slow down, a deeper slow down than many people had expected.
We're getting a lot of automatic stop loss trades kicking in here which is bringing the share indices down further. They've fallen steadily throughout the day. We saw a very sharp fall after the GDP figures were announced.
Of course, there's a silver lining in the GDP figures here, the growth figures, in Britain in that we could very well be getting a hefty cut in interest rates next month as the government -- the Bank of England moves to shore up the economy, and there are those that say that, well, is this capitulation day?
It could well be. The fact that it's acknowledged now we've got GDP figures to prove while we're not technically in a recession yet, the economy is slowing greatly. If we're here, there's no point in worrying about it any longer. We have now just got to get on and deal with it.
A lot of what's happening, the psychological stuff we have been seeing, the selling, has been due to the fact that people are worrying about the extent of a slow down.
COLLINS: Absolutely.
FINIGHAN: If we're in it, there's no point in worrying about it. We might just as well get on and deal with it.
Twenty minutes until Wall Street opens. I have a feeling we're in for a bumpy end to our day here, Heidi.
COLLINS: All right, Adrian Finighan, sure do appreciate that from London.
We also want to take you to Germany this morning where we have CNN's Frederik Pleitgen standing by from Berlin.
Frederik, give us the picture there.
FREDERIK PLEITGEN, CNN CORRESPONDENT: Well, Heidi, the one thing that the Germans are really worried about is really the economic troubles in other countries, in countries, of course, like Great Britain but also in American and in the Asian countries.
Now many things -- many -- the one thing that many people don't know about the German economy is that this is the world's largest export nation. Has a trade surplus that's larger than that of China. So certainly people here are very concerned about what the American economy is doing and also about what other European economies are doing.
And you can see that reflected on the DAX. You can see the industrial values just totally taking a beating all throughout this week. Daimler, the parent company of Mercedes-Benz, one of the big losers of this week. Other industrial companies also going the same way.
So one thing that the Germans are very concerned about are economic problems in other countries that no doubt will have their effect in this country as well -- Maggie.
COLLINS: So -- and I realize that Angela Merkel actually met with the Chinese president as well to talk about some of these things and what China can do to inject in money into the system, what that could mean for global stabilization as well.
Frederik Pleitgen, we sure do appreciate that.
Want to move on now to Hong Kong where the market plummeted 8 percent, and the news was even worse in much of Asia.
CNN's Andrew Stevens is joining us now live from Hong Kong. Andrew, the picture there?
ANDREW STEVENS, CNN CORRESPONDENT: Unrelentingly gloomy, Heidi. We saw those numbers right across the board here in Asia, sharply down pretty much from the get-go.
A couple of factors to look out for. Japan was down almost 10 percent. This is a big slide. Remember, this is the second biggest stock market in the world, down almost 10 percent, and the trigger there which is feeding into everything -- everyone else has been saying, is about this global recession story.
Sony, that is a bellwether stock, not just to Japan, but really right across the world. It's the indicator of whether people are still prepared to put their hands in their pockets to buy electronic gadgets.
They're cutting their profit forecast back this year by half. And that's a whopping cut back, 50 percent -- 59 percent actually. So that's their take, if you like, on demand in the global economy for Sony goods.
It's not just them, it's Panasonic, the biggest electronic maker in the world. And Samsung in South Korea, it's the same story.
So you're getting these massive selloffs because the manufacturing companies here in Asia now are saying that, look, we are heading for a global recession. Let's not kid ourselves here. The signs are very clear that the demand is just falling out of bed at the moment.
And being the exporting center of the world, if you like, as far as all the countries of Asia, it is going to be pretty ugly here.
South Korea has got additional problems. It's currency is falling sharply. The corporates, they have a lot of dollar debt. So South Korean market down by 10 percent.
And at this stage, really, everybody is looking to see what happens on Wall Street to see whether we can get some sort of floor underneath this.
COLLINS: Sure.
STEVENS: Until we see that on Wall Street, we're going to continue to see these sort of falls in Asia -- Heidi.
COLLINS: That's right. And once again we are getting ready for the opening bell to come up in about 20 minutes or so.
Andrew Stevens, thank you for that.
And who knows what could happen. It could be a long, long day. We have seen it happen before where things are all over the map. So we are going to be watching very, very closely for those numbers.
In the meantime, we want to bring in our international business correspondent, Richard Quest, who is joining me here on the set to talk a little more about this.
And I think maybe the most important thing that we can do is discuss what this really means as far as a global recession. I mean we've talked about it and talked about it for the first 10 minutes of the show.
What is it really and what does it mean to me and -- and my family?
RICHARD QUEST, CNN INTERNATIONAL BUSINESS CORRESPONDENT: A lot of questions there. Let's take them one at a time, as they say.
COLLINS: You got 30 seconds.
QUEST: One at a time. All right. It is very serious. Obviously, you cannot have this sort of loss of wealth in 401(k) plans, in mutual funds, in investment funds. People -- people do not feel wealthy anymore. More than that, they actually feel poor. They stop spending. Recessions come around.
Are we going to have a global recession is what you're dying to ask, aren't you?
COLLINS: Yes. And your answer?
QUEST: Yes.
COLLINS: OK.
QUEST: And it doesn't really matter whether we hit the fundamental definition of a global recession or not. The numbers we are seeing are so bad and the environment is so dodgy that it is going to be downright serious around the world.
You cannot have markets like Japan falling 10 percent a day and the UK falling 5 percent and not eventually have a recession. We know it's coming. The question is whether it is a very deep and nasty one or whether it borders on something more serious.
COLLINS: Sure. And how long it will last. But if I'm sitting at home watching this today...
QUEST: You do nothing.
COLLINS: OK.
QUEST: You do nothing.
COLLINS: You do absolutely nothing.
QUEST: It's too late.
COLLINS: You just have to watch it happen.
QUEST: Game up. It's over in the sense of you don't -- unless you need that money -- Ali Velshi, who always speaks good sense -- Ali Velshi has been going on about this for a long time. You don't sell at this point. You don't take any major moves.
COLLINS: Yes. Why? Why would you do that?
QUEST: Why would you take a loss? As long as it's on paper. Unfortunately, the people I feel sorry for are those people who didn't rebalance mutual funds and IRA accounts and all those sorts of things five years...
COLLINS: When they had a chance, yes.
QUEST: Five years ago, three years ago into bonds and safer instruments. They are the people who are now facing a very bleak future. There is no getting away from it.
What can be done about all of this? Very little. What you are watching is a patient, the global economy, undergoing the most rigorous form of cancer surgery. It's happening, it's deep rooted, it's in all the organs and it's been rooted out as best we can.
COLLINS: All right. Richard Quest, it's nice to have you, I think, after all of that but we certainly do appreciate the straight talk and it's our job...
QUEST: What I mean...
COLLINS: ... to bring that about to everybody.
QUEST: (INAUDIBLE) Why did it happen today? Why on an average Friday in October?
COLLINS: Yes.
QUEST: Why not?
COLLINS: Well, there you go. There's no explaining it at this point. All we can do is continue to watch it.
All right, Richard Quest, nice to have you here, our international business correspondent, today.
Meanwhile, they voted when segregation was still accepted and now these seniors campaigning for Barack Obama say some of their generation's attitudes are hard to change.
(COMMERCIAL BREAK)
COLLINS: Making their mark this week. The presidential candidates. With Election Day just 11 days away now, John McCain and Barack Obama are putting all of their effort into key battleground states. Fighting to win over voters who still haven't made up their minds.
Today McCain is zeroing in on Colorado. Obama scheduled to campaign there on Saturday. Today, though, he is off the trail spending time with his sick grandmother in Hawaii.
He arrived in Honolulu last night, in fact. CNN's Suzanne Malveaux is there and she is joining us right now with the very latest.
Suzanne, good morning to you.
(BEGIN VIDEOTAPE)
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT (voice over): She's called the rock of the family, 85-year-old Madelyn Dunham. This on the night Obama clinched the Democratic nomination.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Thank you to my grandmother who helped raise me and is sitting in Hawaii somewhere right now because she can't travel, but who poured everything she had into me and who helped to make me the man I am today, tonight is for her. MALVEAUX: As a child Obama was abandoned by his father and for long stretches separated from his mother who pursued studies in Indonesia, so Obama's white grandparents largely raised him as a teen in Honolulu.
Obama told me they instilled the values in him he needed to embrace his identity as a biracial child.
OBAMA: They were fundamentally American values and that -- that I could feel comfortable in my own identity and my own skin embracing that side of my family while also embracing the fact of my race.
MALVEAUX: Obama's sister Maya told me Madelyn Dunham didn't care to be called grandmother so they called her Toot, sort for Tutu, the Hawaiian word for grandma.
Toot hasn't been able to travel on the campaign trail because of her osteoporosis, but Maya says she follows it closely on cable TV.
MAYA SOETORO-NG, SEN. BARACK OBAMA'S SISTER: A relative lives in the same apartment that she's been renting for nearly 40 years, 950 square feet. That is our family estate. When he becomes president I hope they put a little, you know, historical plaque up there.
MALVEAUX: Obama calls her a trailblazer, a no nonsense kind of woman who broke barriers.
GEORGIA MCCAULEY, OBAMA FAMILY FRIEND: She rose to be the head of the escrow division of the Bank of Hawaii which was quite a feat.
OBAMA: We're among friends here. We're -- we're family.
MALVEAUX: Obama first spoke of his grandmother at length in El Dorado, Kansas, to highlight his Midwestern roots, but it was his race speech in Philadelphia that captured the nation's attention when he highlighted her as an example of someone who loved him dearly, but also overcame her own racial prejudices.
(END VIDEOTAPE)
MALVEAUX: And Heidi, Barack Obama says that one of his greatest regrets is not seeing his -- mother before she passed unexpectedly of cancer. Barack Obama said just yesterday that he does not want to make that same mistake if, God forbid, his grandmother takes a turn for the worse, but he also said he believes that voters certainly understand taking this time out to visit with his family.
Saturday is when he goes back on the campaign trail -- Heidi?
COLLINS: All right, CNN's Suzanne Malveaux for us this morning in Honolulu, Hawaii.
As we mentioned earlier, John McCain is campaigning hard in Colorado today. Polls there show him trailing Obama by several points. His first rally begins just about three hours from now in Denver. Yesterday he worked the crowds in the battleground state of Florida taking a 300-mile, 11-hour bus tour across the state. In Sarasota he blasted Obama's economic proposals and also had strong words for Democrats in Congress.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: We've already seen a preview of their plans, and it's pretty simple. Tax and spend.
Now the chairman of a powerful committee in the House of Representatives said this week that they, quote, "are going to focus on an immediate increase in spending," and then he went on to say there are, quote, "a lot of very rich people out there whom we can tax."
Really? Is there really? Is there...
(END VIDEO CLIP)
COLLINS: The latest CNN Poll of polls shows McCain trailing Obama in Florida by 3 percentage points.
Outrage over bank bonuses in the middle of a bailout. We'll put the compensation in context.
(COMMERCIAL BREAK)
COLLINS: Waiting for the opening bell now today and bracing, as we have been telling you all morning long, for a pretty ugly start to the trading day. It's just about five or six minutes away from bringing it to you, of course, just as soon as it happens.
In the meantime, want to bring you some sound that's just come into us from Governor Sarah Palin where she is in Pennsylvania today, Pittsburgh, Pennsylvania, giving a speech about special needs children.
Let's listen.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: When I found out that Trig would have special needs, not knowing what to think really, and I was scared, and Todd and I, we had to ask for strength and understanding and we did a lot of praying for that understanding and that strength and to see purpose in all of this.
And what's been confirmed in me, especially since Trig's birth has then absolute confirmation that, yes, every child has something to contribute, and if you give them that chance, there is purpose, there is that contribution to be made and there is that special love that they bring to this world, and that is a love that, I think, especially our country needs more of.
And you know that there are the world's standards of perfection and then there are God's standards of perfection. And these really are the final measure, and every child is beautiful before God and is dear to him for their own sake, and the truest measure of any society is how it treats those who are most vulnerable.
As for our baby boy, Trig, for Todd and for me, he is only more precious because he is vulnerable, and in some ways, I think that we stand to learn more from him than he'll ever learn from us, and when we hold Trig and when we care for him, we don't feel scared anymore.
We truly feel blessed, and, of course, many families, other families, thousands and thousands of us across this country, many know what I'm talking about. You're in the same boat that we are in.
Many other families are much further along in this similar path, also though, including my best friend who happens to be my sister, Heather, and her 13-year-old son, Karcher, who has autism.
Heather and I have worked on this for over a decade, and Heather is an advocate for children with autism in Alaska, and as governor, what I have been able to do to assist our families, children with special needs, is secure additional funding, secure more assistance for our students with special needs.
In fact, by 2011 I will have tripled the funding available to our students and our state school board president has proclaimed what we've done there with special needs students via funding increases as being historic. It's really changed the face of this issue in my own state.
Heather and I have been blessed with a large and strong family network. We have that assistance from our family, and our family helps to make sure that Trig and Karcher have what they need, but I realize -- you realize, especially you advocates who are working with other families, you realize that not everyone is so lucky to have a strong network of support and the experience of those millions of Americans point the way to better policy in the care of children with special needs.
(END VIDEO CLIP)
COLLINS: Governor Sarah Palin there in Pittsburgh, Pennsylvania, with some important words. A speech that she was giving on special needs children.
To Wall Street, an open that really bears watching today. We are going to take you there in just a minute. We are following those markets all day long right here in the CNN NEWSROOM.
(COMMERCIAL BREAK)
COLLINS: All right, everybody. We are waiting for that opening bell. Just a couple of minutes away now. And we've been talking about it already this morning because the Dow futures were down about 550 points.
That set off something called a limit down, and we're going to tell you a little bit more about that and keep our eye very, very closely on what's going to be happening on the floor there today.
We have Carrie Lee, Ali Velshi, and Christine Romans standing by to help us sort it all out today because today is a little bit different than what we have seen over the past few days, which have been equally volatile.
So we're going to tell you the answers to all of that in just a moment.
But Carrie, we want to begin with you, because that bell is going to ring any moment now.
CARRIE LEE, CNN CORRESPONDENT: That's right. About a minute away, Heidi. And I'll tell you right now futures for all three major indexes hit what's called limit down. This means trading was stopped in the premarket on them in all three major market indices to avoid panic selling.
Now Dow futures stopped at 550 points to the down side. So we're expecting a very steep mark -- drop when this market opens. There are limits for trading once the opening bell rings as well.
We would need to see, though, the Dow fall 1100 points for those things to start to take place, and we haven't had a one-day point drop of that magnitude in this recent selloff and in this recent downturn.
Big selloffs, though, in Asia and in Europe are now carrying over into our trading session. Selloffs were fuelled, in part, by weak profit forecasts for a number of Asian electronics makers.
Also European car companies like Volvo and Citroen. And on that note General Motors is expected for a very sharp decline here.
So you can see that opening bell ringing right now. Oil prices also selling off. Gold, copper, other commodities as well. OPEC announced a cut in supply, but smaller than investors were hoping for. So oil below $64 a barrel. That's a 17-month low.
Just keeping an eye on to the Dow now as things get rolling. Big moves in currency trading, also affecting global markets. So more evidence of the whole global nature of this crisis right now. The dollar has now hit a 13-year low against the Japanese Yen, and that strong Yen hurts Japanese exporters. Most important for us though, those Japanese products become more expensive for us to buy.
Now, on the other hand, the dollar, the U.S. dollar, has surged against the Euro and the British Pound. One Euro now worth about $1.25, so more than 25 cents below record highs from over the summer. The pound, by the way, saw its biggest drop against the dollar since 1971 falling to $1.52. So, there's a lot of emotion involved, obviously.
You're seeing nervousness. There some fear playing out in a big way around the world. Checking the numbers now. The Dow down 165 points. The Nasdaq is also lower by 100 points. That's a loss of over 6 percent on the Nasdaq. And, Heidi, we'll keep checking it throughout the day as always. Back to you.
COLLINS: All right, Carrie, before we let you go, quick reminder, you said it would have to be down 1100 points, right?
LEE: Right. That's where these circuit breakers as they're called in trader speak kick in. 1100 points is where it starts. And you know, to this point the biggest one-day point drop we've seen 777 points to the down side. So we haven't even gotten close to that yet, but that's what the limit is.
COLLINS: Yes. And I remember that day very well. I bet everybody else does, too. Carrie, great job. Thanks so much for that.
Let's go straight to two other market experts that we have standing by in New York. Ali Velshi and Christine Romans, part of our CNN Money Team.
All right, guys, I don't know where you want to start. There's so much to talk about. I love what you were saying earlier about this global liquidation of stocks and what it really means to the entire idea of a global recession.
VELSHI: Yes. Well, you know, it's sort of reverse, too. If there is a capitulation or a liquidation of stocks, people are trying to get out of their stocks so they can get cash for it, maybe they need that cash to meet other business needs. So we're not going to be price conscious today. And that's what's happening.
You're seeing such forced selling. Such energetic selling. And people are trying to get out. And that is what caused this limit down on the futures which means the futures were not a good representation of what we're going to see at the opening of the market. And normally, we can tell you to the, you know, very closely what's going to happen at the open. Now, we're seeing this market slowly going down, and that's because there's been pent up demand.
You would have been trading those futures, you would have been seeing them go down but because they were stopped from the down side, you could still trade up. You just couldn't trade down. Now you're going to see how this plays out. How many people are actually trying to sell out of their stocks today.
ROMANS: And one of the things that we're watching is the components of the Dow Jones Industrial Average, and how much they're down. You know, you're looking at banking stocks down sharply. Bank of America down about 8 percent here, and they're changing very, very rapidly. So, it might be that that number we're watching right there is not reflecting sort of some of the things that we're seeing in terms of the components of Dow Jones Industrial Average. But anything that's the closest thing to banking or financial services stocks are getting hammered here right now.
You're also seeing some losses and anything related to retailers, the things that consumers touch, the things that are affected by consumers and that's all feeds into this idea that there will be a slow down that's going to affect what we do with our money.
VELSHI: But there are -- there are -- two of the biggest losers right now, I'm just looking, Chevron and ExxonMobil, because oil prices, as Carrie was telling you, are below $65 a barrel. So that's hurting those companies as well.
COLLINS: Yes. And that's exactly what I wanted to talk to you about, that and the idea of the retail issue because of the holidays coming up. But when we talk about oil, first off here, people have really been enjoying these lower gas prices. I mean, significantly lower gas prices, but when you talk about oil being low, obviously not a good thing all the time.
ROMANS: It's almost like a second stimulus for people when you have the --
VELSHI: Right.
COLLINS: Sure.
ROMANS: -- as it really is. It's billions of dollars into the pockets of consumers when you have oil price that come down so much from $145 or $147 in July, down below 70.
VELSHI: And heating oil. You know, here in the northeast, we use heating oil predominantly to heat our homes. And this was going to be a very, very damaging winter. With gas prices high, that's one thing. But heating oil, you're buying big chunks. That means somebody has to specifically not spend on something else because they were spending on heating oils. So just when gas and oil prices were going up, we called it a tax on people.
ROMANS: Right.
COLLINS: Yes.
VELSHI: This could be the stimulus.
COLLINS: And maybe, as I was mentioning, the things that they are not going to be spending on our holiday gifts. I mean, when we are moving into. There are plenty of people out there trying to shop ahead of time.
VELSHI: Yes.
COLLINS: At least we see that early on every year. Never that -- that person is never me, but...
ROMANS: But you know, Heidi --
(CROSSTALK)
COLLINS: ...they're not going to be spending.
ROMANS: That's right. And some people are starting to talk about lay away again on the front of the K-Mart catalog.
(CROSSTALK)
COLLINS: I saw that ad. Yes.
ROMANS: Lay away, the easy pay to lay away.
VELSHI: Right.
ROMANS: And that shows you that the instant gratification of credit cards might be something that either people can't put anymore money on their credit cards or they realize --
VELSHI: Or they're learning.
ROMANS: Or they're learning and realize it got them in trouble. And so, there's a little more of I would say -- I wouldn't even call it frugality, I would just say some rational behavior among --
VELSHI: Well, what I call it, Heidi, I described people -- I tell people I have been Christine Romanized.
COLLINS: There you go.
VELSHI: Christine Romans for years has been telling me you don't have to, you know, keep up with the Jones' and you don't have to buy these things and you can be a little more frugal. And whether or not you have a concern about your own job or your own credit, the fact is psychologically, the effect of lower home prices, of lower stock market, and layoffs have sort of led people to think, you know what, I might need to take stock of the only thing I can control.
As Gerri Willis always tells us. The only thing you can control is your debt, your spending, and your job and obviously your investments. But that -- you can't even control your investments. You can just make the right investment choices. And I think that's what's happening. Because of all the loss of control about everything that's going on around us, control what you can.
COLLINS: Yes, there's no question about it. And, you know, who cares about the Jones when you have the Romans anyway.
VELSHI: That's right. Exactly. That's all I want to keep up with anyway.
COLLINS: That's right.
VELSHI: The Velshis. You had a lot more fun than I did though.
COLLINS: Hey, guys, before we let you go. Just a quick look now at the Dow Jones Industrial Averages, down about 476 points. So, again, we are watching very closely and bringing you the best explanation that we can for what is going on today. We do that with Ali and Christine as well.
Thanks, guys. We've mentioned the oil prices. Well, they've been falling as you know for weeks now. What will it do to air fares? Travel expert coming up to tell us.
(COMMERCIAL BREAK)
COLLINS: Steep drop on Wall Street in early trading. We are keeping a close watch on those numbers right there. The Dow Jones Industrial Average is down about 381 points. Seven minutes into the trading day. Again, we'll watch it closely.
For now, though, we want to get over to personal finance editor Gerri Willis who is standing by to talk more about -- Gerri, I'm not sure if you've heard a while ago, but Ali was talking about what you always say. As far as your personal finances go in a situation like this, really all you can do is watch your spending and watch your debt.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Yes. You know, I think that people get caught up in the market because it seems like such a dynamic story -- right. It changes all the time. It moves all the time. It seems like a great story. But in reality, the thing you really need to be thinking about right now and the thing the market is worrying about is recession, and a big time recession that will really hurt corporate profits.
What does that mean to you as an individual? Well, it means you could lose your job. So what you want to think about is setting aside money so that you have money available in case the worst happens, you lose your job, you have a hard time paying your mortgage or your rent, putting food on the table. You want to make sure that that job is safe. You want to make sure your boss knows everything you're doing for the company. You want to make sure your profile is high inside the company and you have contacts outside the company just in case your company goes through down sizing.
So the thing to focus on now is not the anxiety coming out of Wall Street. You know, we cover that and you can't help but absorb some of the traders' worry, frantic worry, really, because they are losing many, many jobs on Wall Street, and reflect that to viewers.
But for people at home today, it's more important to be thinking about your own wallet, what you're doing with your own savings, your own debt. It's time to pay off that debt right now. The best return you can get in the marketplace right now is paying off high interest credit card debt. That's the thing that will provide returns to you over the next few years.
COLLINS: Yes. No question about that, and they are very, very high these days as well. All right. CNN personal finance editor Gerri Willis always have some great advice for us.
Meanwhile, we are watching this story all day long. As you can see, the numbers right in front of you. Dow Jones Industrial Average is now down about 428 points. The CNN Money Team is all over it today, and we'll be following it right here in the CNN NEWSROOM. (COMMERCIAL BREAK)
COLLINS: Pretty steep drop on Wall Street at the open. Dow Jones Industrial Average had been open and the trading day has been going on for just 12 minutes and we're down 434 points right now. We will continue to watch those numbers very, very closely today and try and do our best to explain what is happening with your money.
Meanwhile, oil prices plummeting. Oil production, the nations are hoping to stop it in fact. The price of oil opened today at just under $64 a barrel. That is down more than 50 percent from a record high of $147.27 back in July.
And today, OPEC announced it is cutting oil production now by 1.5 million barrels a day. It will begin on November 1st. But for now the falling oil prices mean good news at the pump. According to AAA, the average price for a gallon of regular unleaded gasoline now $2.78 a gallon.
So, even though those prices are dropping, if you fly, you know airfares have not been going down. The airlines are blaming it on the global financial crisis. Let's get some insight now from an industry watcher. Ben Mutzabaugh is an air and travel correspondent at "USA Today." He is joining us now live from Washington.
All right. So, Ben, if you can, make sense of this for us. Because, you know, you would expect if the fuel prices are down, my ticket price is going to be down.
BEN MUTZABAUGH, TRAVEL REPORTER, USA TODAY: Right. It seems like a pretty straightforward equation, right?
COLLINS: Yes.
MUTZABAUGH: But it's not quite that straightforward. Of course, oil is going down. You would think jet fuel and prices go down as well. But let's keep in mind that the airlines are balancing this against two very important countermeasures.
First of all, you might remember from the summer, they cut flights left and right when oil pushed $147 a barrel. They simply were flying some old aircraft that at that oil price made more sense to park than to fly because they used so much fuel. So coming into this winter, airlines have cut 25 percent -- 30 percent of the flights just that they are flying in the summer. So, there will be fewer seats, which of course reduces supply and helps push up demand and fares.
And the other side of this is, what you guys have been talking about all morning. We're headed towards, at least, what looks like to be a weakening economy, if not a recession. And if we head that direction and keep heading that direction, what's going to happen to demand for air travel is it's likely going to fall, and you're going to start to lose some of your high-end business customers, some of your highest fare customers. So, the short and simple is oil is going down and it seems like fare should be down, but the money that the airlines might be saving from cheaper fuel bills could partially be offset because, a, they're going to have less flying passengers, because they're flying fewer planes, and more importantly, if we head into a recession or even a weaker economy, any of those airfare or the fuel savings may be offset from lost revenue.
COLLINS: Absolutely. We're going into the holiday season. We've talked a little bit already with our business correspondents about the retail side of things. Obviously, a lot of people travel for the holiday season. What's it going to look like this year? Any ideas?
MUTZABAUGH: Well, you know, if you haven't booked already, you're too late, so -- you're not too late, but you're too late for a bargain. It doesn't hurt to look now. See what you can find.
COLLINS: Because of exactly what you just said, there are fewer flights, fewer seats available.
MUTZABAUGH: That's right. Some cities have lost service altogether. Some of the smaller cities. But even some big markets, you know, like Harrisburg which is not a small -- like Pennsylvania has lost service on one airline to Chicago. You know, so, it's really touch and go right now for some of these markets. But you're still going to see flights going. You're just going to have to pay a lot more than you did, than we're used, having paid probably any time in the last six or seven years. That said, there are still bargains out there.
COLLINS: OK, yes. Give us the good news because we've been looking for it all morning long today.
MUTZABAUGH: There are still bargains out there, but they are much harder to find. You may be out of luck for the holiday season, but of course, if you have to travel, keep looking and just hope for the best. But if you're traveling next year, the best advice is once you know you're taking a trip, start looking early, check often, maybe every day if you have the time to do so or twice a week. Just keep a survey on what the fares are to where you're going. Eventually you're going to find non-advertised special, and it may not be as good as what you would have gotten three or four years ago, but you have to do it today.
COLLINS: No kidding. And I think maybe people forget sometimes how much those prices fluctuate within hours. I mean, continue to get on there.
MUTZABAUGH: Exactly. Exactly.
COLLINS: It's interesting how that works.
All right. Ben Mutzabaugh, air and travel correspondent from "USA Today." Thank You, Ben.
MUTZABAUGH: My pleasure.
COLLINS: Rob Marciano standing by now in the severe weather center to tell us a little bit more about what is happening. Wow, whenever we see that, I know it's probably completely normal but, I mean, it just looks like planes everywhere.
(WEATHER REPORT)
COLLINS: We want to get to this story now. Just in to the CNN NEWSROOM. A critical hearing this hour in the federal corruption trial of Alaska Senator Ted Stevens. Jury deliberations are on hold. The judge needs to decide what to do now that one juror has left the state to deal with a death in the family. Options include bringing in an alternate or going ahead with just the 11 remaining jurors. Stevens is accused of concealing improper gifts. He is up for re- election come November 4th.
All right. We are watching the numbers. Our CNN Money Team is all over the financial story that is all over the world today. You see right now, Dow Jones Industrial Average is down about 400 points. 20 minutes into the trading day. We'll be bark. We'll keep our eye on it for you.
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COLLINS: 9:52 Eastern Time now. Markets opened about 22 minutes ago. Dow Jones Industrial Averages down 367 or 68 there. We know that the futures had been significantly down, about 550 points. Limit down is the term that we are talking about today. We'll get into that a little further. So, there you have the numbers. Our money team is watching very, very closely throughout the morning. We will keep our eye on it for you.
MTV and CNN are working together to honor veterans from Iraq and Afghanistan. MTV is putting on an all-star concert for our heroes, and that's tonight. And this weekend, a CNN special looks at their lives here on the home front. Now a preview, here's the story of one vet and the help he received from others. Here is Anderson Cooper.
(BEGIN VIDEOTAPE)
ANDERSON COOPER, CNN CORRESPONDENT (voice-over): Matt and Tracy Keil is a story of love interrupted by war. Home from his first tour of duty in Iraq, Matt met Tracy through a friend. It was, he says, love at first sight. Their wedding came during his tour in Iraq.
TRACY KEIL, WIFE: The main reason we got married is because what if something happened.
COOPER: Something did happen just six weeks later. Fighting in Ramadi, Matt was shot by a sniper.
MATT KEIL, TROOPS: I jumped at the tallest part of the roof. She lay (INAUDIBLE) over the stair wall, and that's when I got shot in the right side of the neck. It hit me like a ton of bricks.
T. KEIL: They told us that he had a Christopher Reeves-type injury. And I just collapsed.
COOPER: He was paralyzed from the neck down.
M. KEIL: Realizing that my wife was going to be helping me eat, you know, cleaning me up, you know, doing things like that, you know, it was kind of devastating.
COOPER: Devastating but slowly things did start to look up. Matt regained some use of his left arm. And in August of 2007 while undergoing treatment, Matt heard about homes for our troops, a non- profit organization that build specially adapted houses for disabled veterans.
John Gonsalves started Homes for Our Troops frustrated that not enough was being done for our veterans.
JOHN GONSALVES, HOMES FOR OUR TROOPS: Our sons and daughters, mothers and fathers, are all in a far-away place putting their lives on the line and getting injured, and many of them dying for us, and we're not doing anything. I mean, we have to do something.
COOPER (on camera): So, now you're volunteering for those who volunteered for us.
GONSALVES: That's it.
COOPER (voice-over): John got hundreds of volunteers to help build Matt and Tracy's home for free.
GONSALVES: It's the certificate of occupancy.
COOPER: We were there when it was presented to them.
M. KEIL: Your fingerprints are throughout our entire home now. You will always be a part of our family no matter what. And we love you. Thank you very much.
(APPLAUSE)
UNIDENTIFIED MALE: Welcome home, Matt. Welcome home, Tracy.
This is more than building homes. This is about thank you. You have no idea how much I admire what you've done.
M. KEIL: Thank you very much. People like you that makes America great, John.
COOPER: This is the 33rd free house, Homes for Our Troops has given to our vets. They're currently working on 40 more.
T. KEIL: This gives us security for our life. This is where we can have our kids. And this is it. This is where we'll stay forever.
(END VIDEOTAPE)
COLLINS: The MTV concert for the brave, "A NIGHT FOR VETS" it's on tonight, 8:00 Eastern. It features music from Ludacris, 50 Cent and many others.
And here on CNN, "BACK FROM THE BATTLE." The "AC 360" special, Saturday and Sunday, also at 8:00 p.m. Homes for Our Troops depends on donations and volunteers to build homes across the country. If you would like to help, there's a link on our Web site. Just go to Impact Your World. That page is cnn.com/specials/2007/impact. Go to our Web site, you'll find it there.
Quickly, we want to give you a just in that we are getting here into the NEWSROOM now. And just a few minutes ago, we've been telling you about the Ted Stevens trial, and sort of a dilemma that faces the judge, because one of the jurors is having to deal with a death in the family. So now we have just learned that the judge has excused jurors for the weekend.
Now, that hearing has been scheduled for 6:00 p.m. Sunday night to reassess where things stand with the juror whose father passed away. As you know, the Alaska Senator Ted Stevens is accused of concealing improper gifts. He is up for re-election on November 4th. So, we'll stay on top of that story for you as well.
Meanwhile, we are going back to Wall Street. The market really struggling at the start. No surprise given what we had learned about futures this morning. Our money team on what's behind the latest fall.
(COMMERCIAL BREAK)
COLLINS: Let's look again, shall we? Dow Jones Industrial Averages down about 325 points, 30 minutes into the trading day. We are watching very closely today with our CNN Money Team.
Fearful Friday. In fact, Wall street feeling the weight of the world's recession worries. Our money team also has some tips on what you should do.
And campaign at a crossroads. Eleven days for voters to make up their minds. We're following the candidates.
It is October 24th. I'm Heidi Collins. You are in the CNN NEWSROOM.
