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CNN Live At Daybreak
America's New War: World Economies Don't Look Good
Aired September 21, 2001 - 07:13 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: Time now to talk markets. If you're investors out there, you don't need me to tell you what a bad day it was yesterday both on the Dow and on the Nasdaq.
Let's turn to Andy Serwer of "Fortune" magazine to go through some of the numbers. The Dow down, what, 4.4 percent from the day before?
ANDY SERWER, "FORTUNE" MAGAZINE: That's right.
ZAHN: The Nasdaq down 3.7 percent?
SERWER: Yes, just really kind of a grim day again. I hate to be the bearer of bad news, Paula, but the markets and the overnight don't look terribly encouraging right now. Asian markets again weak. European trading this morning also weak.
Why don't we take a step back, though, and look at some of the numbers just to sort of get an idea of how far we've fallen this week?
The Dow is down 1,200 points so far this week. That's about 12.8 or 13 percent almost. $1.2 trillion of shareholder wealth has evaporated this week.
ZAHN: Wow.
SERWER: That's almost equivalent to the GDP of France. It's just a remarkable decline here.
We know that traders were listening to Fed Chairman Alan Greenspan yesterday testify before the Senate Banking Committee and the take away there was, the traders I was talking to said that they took notice of when he said the economy nearly ground to a halt last week. Not very encouraging words there. And what people are really looking at here is the speed of this decline and how pervasive it is, not only in the U.S. economy, but around the globe, not like throwing a pebble into a pond, someone told me, but like throwing a boulder into a pond and the ripples are tremendous.
We all know about the airline industry and it's spilling into the hotel industry. Occupancy rates are dropping there. They're now at 33 percent in some places. Leisure and gaming, we know about layoffs in Las Vegas. We're hearing about furloughs at Disney World. There was a market rumor about that yesterday. And then you think about the computer companies trying to sell to these businesses. They're not going to be buying any computers.
And so we're hearing about some problems at companies like EMC, which makes computer memory systems. They announced over 2,000 layoffs last night. That stock is under pressure. In Europe right now, Applied Materials, which makes computer chip making equipment, also announcing layoffs.
So we're seeing things continue to move around in the economy. The futures this morning, Paula, are incredibly weak, over 300 down on the Dow, which is absolutely tremendous.
ZAHN: Well, let me ask you this. The markets traditionally will track the same way the futures track?
SERWER: Well, not necessarily. But when they're down this much it's almost certain there will be a weaker open. One point there, though, this is the triple witching day, which is a phrase on Wall Street denoting when futures and options expire. So we should look for tremendous volatility there. The Friday effect also a lot of times people don't like to hold stocks over the weekend. So not a pretty picture here as we head on to the opening today.
ZAHN: Do you have any good news for us this morning?
SERWER: There may be...
ZAHN: There were some other stocks that were performing OK over the last couple of days.
SERWER: Yes, gold stocks, defensive stocks, defense industry stocks. One positive note, perhaps, is Morgan Stanley's market strategist Barton Biggs, who has been a noted bear, very negative about the markets, particularly during the age of irrational exuberance a couple of, 18 months ago, he was almost ridiculed for his positions, he has been proven right, of course since then. Now he is saying that we may be approaching a selling climax on Wall Street which would signal a market bottom.
ZAHN: Wow. Scary stuff.
Andy Serwer, you're going to be standing by all morning long to watch the markets as they open at 9:30 and keep us posted on what investors out there should be looking at.
Thank you.
SERWER: Thanks, Paula.
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