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CNN Live At Daybreak

America's New War: The World is Watching Today's Market Opening

Aired September 17, 2001 - 07:33   ET

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

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: We wanted to give you a preview of what might happen later today when the stock exchange opens. I know you've heard some of what Lou Dobbs had to say.

And joining me right now is Andy Serwer from "Fortune" magazine, who has also a very good idea of what you might expect. Welcome.

ANDY SERWER, "FORTUNE" MAGAZINE: Thanks, Paula.

ZAHN: Good to have you with us.

SERWER: Thank you.

ZAHN: So this clearly is historically one off the most anticipated openings of the market?

SERWER: Absolutely. It's historical. The world is watching. And you have to remember, the global markets have never been connected like they are today. Also, over 50 percent of American households own stock. So the world is watching.

ZAHN: And I think Lou cautioned us all not to panic about what happened in the overseas markets overnight. But when you hear a statistic that the Nikkei, the Tokyo market, hit an 18 year low, that can't make you feel real positive about what your investments may yield you today here in the States.

SERWER: Well, that's right, Paula. And think we shouldn't be surprised if the markets do drop here. It's hard to understand or hard to see a scenario where they don't drop a little bit. It's going to be a crazy day, very high volatility, high volume and no one really knows what's going to happen today.

ZAHN: And yet the bottom line is that you have a network of very powerful heads of financial institutions coming together trying to prevent a sell-off. Describe to us exactly what they're doing to prop up faith in this system.

SERWER: The Securities and Exchange Commission has changed some rules allowing companies to come in and buy stock to shore up their shares, the price of their shares. They're allowing companies to buy stock in the first 30 minutes of trading and the last 30 minutes of trading, something that is usually forbidden. They're letting them do that.

They're letting corporate executives come in and buy. There's also job owning going on with regard to short selling to prevent that from going on a lot today.

On the other hand, if companies and investors and professional investors want to sell, say, airline stocks, which I think will be under pressure today, that's going to happen and investors have to expect that.

ZAHN: Well, you heard those stories over the weekend when, was it Continental, talked about furloughing 20,000 people and we know that these airlines lost anywhere from, what, $150 million a day to $267 million a day since the terrorist attacks last Tuesday.

SERWER: Yes, that's right. I mean airlines, insurance companies, they'll be under pressure. It could be that defense stocks, construction company stocks could be bought up. We really have no idea. And there are shares that are linked to bond trades, to trades overseas, to derivatives. There's so much volume, so much stuff going on today it's going to be very wild.

ZAHN: A very powerful message was sent by Warren Buffett last night at Berkshire Hathaway when he said basically he thinks there are going to be some good buys in the market, suggesting to American consumers they might want to check out some new stocks today.

SERWER: That's right. And of course there have been e-mail campaigns over the past couple of days, be patriotic, buy some shares of stock. That could happen. And it's true what Buffett was saying, that if you enjoyed or liked or thought a business was a good business last week, it still is today.

I think we're going to see some wild trading today. We'll settle over the next couple of days and then we're really going to have to see how things go over the next couple of months as we head towards October and November.

ZAHN: But the bottom line is that people should not panic.

SERWER: Right.

ZAHN: And that's hard to convince folks who are watching how the overseas markets did.

SERWER: Well, that's right. I mean if there's anything to learn in these situations, panic selling never works. I mean you sell this morning you're going to have to figure out a way to get back in and, you know, let the whole thing sort itself out with the institutional investors. A very good day, I think, for retail investors to sit on the sidelines.

ZAHN: Let's get into some of the minutiae of what individual institutions are going to have to deal with today. First of all, a lot of companies can't even return to their buildings. They've transported their workers out to New Jersey, in some cases, into Brooklyn. How will that affect the individual investor? Are you going to have a hard time getting through to your broker?

SERWER: That's why it might be a bad, not a bad idea just to sit on the sidelines. Lehman Brothers not trading in their ordinary building. Salomon Brothers not in their ordinary building. Merrill Lynch, same thing. If you try calling your broker and get a busy signal, don't be surprised. It's really a great idea to just sit back and watch. It's going to be a wild ride today, Paula, and it might be a great idea to just watch it.

ZAHN: One last question for you. There's a great deal of concern, of course, about all the trading records that might have been lost in all this tons and tons of debris. Is there a permanent record anywhere of trades people might have executed last week where the paperwork could have gotten lost in the World Trade Centers?

SERWER: It is possible. I mean you see the tremendous amount of paper that was blown all over the city. It was really tragic. My understanding is from talking to CEOs and prominent people on Wall Street is that 99.9 percent of the stuff was backed up in computers in Colorado, in New Jersey, in Connecticut and so at some point you will be able to get a statement. You're going to be able to figure our where your account is and your trades are OK.

But you do have to be a little bit patient here. Don't try to get the information at 9:30 this morning and expect your broker to get it to you. I mean we're all going to have to bear with things a little bit here.

ZAHN: Andy Serwer of "Fortune" magazine, we look forward to having your expertise with us throughout the morning. Thank you.

SERWER: Thanks, Paula.

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