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Stocks Plunge At Market Open, Trading Halts After Dow Drops 1800 Points | Velshi & Ruhle | MSNBC - YouTube
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breaking news markets just opened and
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down 1700 joining me now to discuss
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Andrew Ross Sorkin co-author of CNBC's
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Squawk Box New York Times columnist and
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author of too big to fail and Gary Cohen
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is here former director of the National
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Economic Council and chief economic
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adviser to President Donald Trump during
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the first two years of his presidency
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and former president of Goldman Sachs
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welcome to you both Andrew we got to
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start with you
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deal book headline this morning markets
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are getting punched in the face explain
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what's going on we're looking at a very
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tough day in the markets and frankly I
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think there's a real question now over
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how much the coronavirus spills into the
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real economy we saw it over the weekend
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crude prices have now dropped 21% which
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means effectively that they're going to
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be some energy companies in the United
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States and elsewhere that affects we
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could go out of business so we're
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talking about a real loss of jobs and I
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think some real questions what took
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place in Italy over the weekend I think
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the market and investors are trying to
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extrapolate out to try to understand is
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that coming here what does that look
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like are 540 45 cases that have have
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been identified is that number real and
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how much larger is that number so I
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think all of this is now getting into
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the marketplace there are questions
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about what are called circuit breakers
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in the stock market today at 7% if
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there's a 7% decline
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there's a 15-minute timeout there's
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another timeout at 13% and another
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timeout of 20% but this is the first
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time people are talking about circuit
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breakers so we're into a new period here
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where investors are trying to understand
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what could happen Morgan Stanley put out
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a note this morning saying that the
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stock market could drop another 10%
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their estimates it could drop further
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and I think we're now into a period of
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demonstrable fear dare I say to be
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responsible about it I don't I don't
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want to suggest that it that is all doom
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and gloom but clearly it is gonna get
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worse before it gets better
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Gary what do you have to say about all
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this well look I agree with what a lot
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of Andrew just said but I think what we
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have to ask ourselves is why are we here
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and how did we get here and think of
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where we were three or four short weeks
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ago we were at all-time record highs
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we had employment numbers Friday that we
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fly
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that where we were last month and where
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we were last month has nothing to do
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with where we are today and I think
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people have to understand that but four
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weeks ago we were not addressing a
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pending public health crisis Stephanie I
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completely agree with that I said where
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we are today so we are now dealing with
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an economy where there's been massive
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demand destruction in the oil market and
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we saw the demand destruction the oil
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market we saw OPEC tried to deal with
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the demand destruction how they were
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gonna deal with each other would they
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all cut back on production there was no
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agreement reached in cutting back on
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production and so the Saudis said look
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if we're not gonna agree on all
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curtailing production will flood the
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market we'll show you will will take
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some of you produces their high cost
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producers and will force you to sell
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every drop of oil you produce at a loss
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and we'll see how long you can do that
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so we're really having somewhat
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irrational behavior as people try and
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protect their own economies right now in
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this area in the equity markets we're
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now seeing people trying to price in
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behavior based on the virus and they're
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trying to price in what is a company
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going to earn next month or the next
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quarter or the quarter after how long is
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this going to be is this economy going
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to be like this are people gonna go out
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and spend again can people go out and
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spend again people that want to work can
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they work can they actually bring home a
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paycheck okay and if they can't bring
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home a paycheck it is going to have a
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direct impact on me then let's talk
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about the policies that are being put in
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place last week when the Fed cut rates
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an emergency rate cut people aren't
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going to go out and start starting a
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business or buy a home and spend when
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all the health professionals and and
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corporate leaders are telling us to
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hunker down and stay home look this is
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not a liquidity crisis this is this is
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not an OE crisis we have plenty of
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liquidity in the crisis what does that
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mean there is no lack of liquidity in
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the financial system banks are awash
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with cash look it there's people just
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trying to invest cash overnight every
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night you know one thing Andrew didn't
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mention is we've got a 10-year interest
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rate in the United State
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stay below 50 basis points we're around
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44 45 basis points and yeah it's that's
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all-time historic lows we're not there
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because people want it there we're there
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because everyone wants to invest their
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money and safety and soundness meaning
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they're willing to take a much lower
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rate of return on their money to make
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sure they get it back so people are
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buying US Treasuries at less than a half
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a percent return because that's where
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they feel safety and soundness is so the
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system that we deal with the economic
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system the market system is flooded with
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cash right now people probably have more
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cash than they've had in a long period
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of time because they're consuming less
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people are choosing not to travel you
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see it in the airport people are
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choosing not to go out to dinner people
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are choosing not the right taxi is not
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the right / is not to go out and do the
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things that they're normally doing in
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the economy so when the Fed cuts
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interest rates it's not gonna spur
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economic growth it's gonna make money
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cheaper money was already cheap and
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available if it had priced it for them
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then Andrew what is this about is this
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about fear and transparency CNBC
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reporting right now that that trading
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run is halting if two weeks ago the
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president would have said let's put a
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pause on the idea of economic growth and
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let's address this public health crisis
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would we be in a different situation
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because the president larry cudlow and
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other members of this administration
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have been talking up the markets and
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talking down the virus and now what are
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we doing hurting both well look first of
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all that the market is now halted this
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is exactly what we just talked about
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literally with minutes ago about the
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idea of a circuit breaker it's now
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happened at that 7% level as to what the
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president could have done or did do I
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think this is much more about testing
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and whether the CDC could have gotten
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ahead of this clearly we're behind it
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and I think part of the fear factor here
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for investors is trying to understand
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the numbers that we do have and how
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accurate or inaccurate they really are
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that's a huge part of this that
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ultimately the investment community does
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not believe those numbers and does not
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believe even if you do believe those
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numbers that we're going to be able to
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get ahead of it
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you know thus far all of the identified
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cases are relatively
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places where the type of workers are
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service workers people can do their job
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over a Gmail and zoom they can work from
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home if if ultimately that turns out to
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be what it is we have not heard about
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cases meaningful cases in places like
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Detroit or for places where we actually
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manufacture things in in real in real
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ways and that's if we have that across
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the country it becomes very difficult
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very very quickly
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I don't again want to be alarmist about
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this but I think part of the issue that
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investors are trying to understand is
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just how long this could go on for and
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what real impact it's going to have both
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on their people's ability to work which
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is a supply story and people's demand
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story which is are they going to go to
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the shopping mall people are clearly
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going to supermarkets to try to get
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everything off the shelf but are they
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gonna do anything else are they gonna
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get on airplanes I had a conversation
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with my great grandmother last night
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about getting on an airplane people are
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not going to be doing that and shouldn't
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be doing that and I think those are the
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questions and whether we're ultimately
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going to I'd be very curious to hear
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from Gary whether we're gonna ultimately
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start talking about bailouts are we
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gonna be talking about bailing out the
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energy industry the airline hey there
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I'm Chris Hayes from MSNBC thanks for
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