Name: Stock markets plunge and lawmakers begin to self-quarantine after coronavirus contact
Uploaded: 2020-03-10T20:28:26.000Z
Duration: 16 min 14 s
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The Dow fell more than 7% the biggest one day selloff since the 2008 financial crisis.

We're doing the best we can to fly this plane.

A weekend dispute over oil prices between Russia and Saudi Arabia sparked the steep drops Russia refusing to roll back production even as demand falls amid the Corona virus outbreak.

In response, Saudi Arabia is ramping up its own output, causing a supply glut that's bringing down the price of oil two superpowers the largest, most powerful commodity going at each other in a tit for tat type fashion. 00:00:56.190 --> 00:01:4.970  That sort of sent everything you know into a spiral kind of like a perfect store, adding to that perfect storm building Corona virus fears. 00:01:5.050 --> 00:01:11.950  Within the first minute of trading, the Dow plummeted more than 1800 points and the S and P dropped more than 7%.

That triggered a 15 minute pause and trading so investors could step back and understand what was going on.

This is a process that we test every single quarter.

So it's not something that we weren't ready for as an industry, and you see the industry come together and just operate market smoothly during times of stress.

There's concern, too, about Corona virus spreading here at the stock exchange.

Now guest for the opening and closing bell aren't allowed down here on the floor with traders.

They have to stay up there in the gallery.

Financial experts expect the volatility will continue, but at Americans should keep their focus on their long term investment goals.

That's how they should be making their decisions, not on tick by tick trades in the market.

S Bonds santo all time lows today, a sign investors expect the economy to struggle. 00:01:57.640 --> 00:02:4.710  Bradley Blackburn, CBS News, New York, Jill Colvin, Natalie Andrews and Gina's smiling Join me Now. 00:02:4.720 --> 00:02:7.380  Jill covers the White House for The Associated Press. 00:02:7.590 --> 00:02:14.110  Natalie covers Congress for The Wall Street Journal, and Gina covers the Federal Reserve and the economy for The New York Times.

Three more lawmakers announced they would be self quarantining today, bringing the total to five.

How much concern is there on Capitol Hill about the spread of the virus there?

There is certainly a lot of concern about the virus spreading, especially after Congressman Bradley announced that she would be self quarantining because her meeting took place in D.

And it was separate than the four who were quarantined, quarantining themselves because of exposure at CPAC.

So there is a knowledge that this is spreading, that we don't know where Congressman Brownlee's meeting Woz.

C. 00:02:51.590 --> 00:03:0.400  But certainly AIDS lawmakers are very worried that there are is an increasing risk of exposure here, and they're preparing for it. 00:03:0.760 --> 00:03:4.470  So Jill is Natalie just mentioned this CPAC conference. 00:03:4.470 --> 00:03:13.450  Both President Trump and Vice President Pence attended CPAC, where representative Gates and Collins were in contact with a person who later tested positive for the virus.

Gates was just on board Air Force One with President Trump, and we also have video of the president shaking hands with Doug Collins on Friday and shaking hands with supporters in Florida today.

We're not only was the president in contact with individuals, were a self quarantining, but actually was on Air Force one with representative gets who just left.

You know that playing a couple of hours ago.

This is a president who has repeatedly tried to downplay the concerns here.

You know, yesterday we saw him earlier today.

We saw him walking into that crowd as he got off of Air Force One in Florida, shaking hands with all of those supporters on the tarmac. 00:03:56.660 --> 00:04:4.680  Despite the advice from public health officials at telling folks not to do that in to limit contact with people really trying to project that everything is okay. 00:04:4.680 --> 00:04:9.100  But as we've seen in the last 24 hours, that's getting closer and closer to the president. 00:04:9.100 --> 00:04:14.330  We also had an incident where the president's campaign was supposed to be running a women for Trump.

A bus tour today in Michigan on Mercedes Schlapp, who is the wife of Matt Schlapp, who runs CPAC, was supposed to be on that bus, as was the president's daughter in law, Lara Trump.

The campaign decided to cancel that as well, claiming scheduling changes.

Um, Natalie, is it possible that given what is emerging here, we could start to see members of Congress work and vote remotely?

Stenny Hoyer this afternoon pointed out that fact.

And members of Congress are really divided here.

There are some members and staffers who point out that members of Congress, a lot of them, are in the at risk population.

They're older, they travel a lot. 00:04:56.030 --> 00:05:4.040  They are nervous about potentially spreading the virus or potentially being exposed and not knowing it and bringing it to the capital. 00:05:4.280 --> 00:05:7.400  There's another group that doesn't want to leave for recess next week. 00:05:7.410 --> 00:05:11.520  They want to make sure they can pass legislation that could help the American people.

There might be people that are also concerned and also don't wantto leave without passing legislation.

But I would say those two, there's a real heightened concern here.

Well, Gina, let me turn to you and let's talk about this stock market drop.

Walk us through why we're seeing these drops now, right?

One thing is that we've really seen growth downgrades across the globe really over the last couple of days and weeks as people get more and more nervous about the Corona virus and what the Corona Viruses spread is going to meet the real economy.

And then the second thing that really took hold today is the plunge in oil prices that has been sort of in the pipeline for a while as Chinese demand falls off. 00:05:58.090 --> 00:06:1.570  But as you guys mentioned earlier in the show, what we've really seen is this. 00:06:1.570 --> 00:06:3.230  Geopolitical tensions flare up. 00:06:3.230 --> 00:06:5.740  Send oil prices just limiting today. 00:06:5.850 --> 00:06:13.200  And that really is going to potentially be quite negative for the real economy, really going away on a lot of cos.

Performances, especially ones that are heavily invested in oil bonds like the banks.

And so those two factors together really served to sort of, you know, work together to take these markets Well, we know that President Trump is meeting with economic adviser Larry Kudlow, Treasury Secretary Steve Mnuchin and others to talk about economic relief options.

Yeah, I mean, there are a whole bunch of options at this point that we've heard are on the table.

Of course, Democrats have their own wish lists of things that they would like this White House Thio be open to things like paid sick leave things like making it easier for people to get food stamps, things that would make it easier for people who are going through this.

So far, things were expecting from this White House. 00:06:55.390 --> 00:07:3.290  It would be a discussion about potentially providing tax breaks for airlines for some of the other businesses that have been impacted by this. 00:07:3.290 --> 00:07:10.900  We know that the White House has been inviting Wall Street's heads to come and meet at the White House to try to discuss other potential options.

And this is being seen by many is really an opportunity for the president to push forward some of the things he's already been trying to push forward.

We've heard a lot of talk about this tax cuts 2.0 package that the White House has been floating trying to push you deeper tax cuts than the ones that were passed earlier in the president's administration as well, see what they decide coming out of this.

But this is a White House that's looking at to project an air of calm, looking to show voters that they're doing something, that they're reacting here to try to minimize the blunt of the impact.

So Natalie Wood Congress be required for these economic relief measures?

They aren't required lane, but they're certainly our members who are supportive of it. 00:07:53.840 --> 00:08:0.910  I talked Thio moderate Democratic aide today, who said that he didn't expect moderate Dems to block the effort. 00:08:0.910 --> 00:08:2.800  Should it not include a way to pay for it. 00:08:2.810 --> 00:08:10.550  He he compared it to a disaster relief or her the bill that was passed to support areas after Hurricane Katrina.

So that is really how lawmakers are approaching this.

If they expire, they don't want to pass tax breaks and just have them extend like new legislation.

Nancy Pelosi said this afternoon she came into the capital that she would want any sort of stimulus or legislation that would help people to be family focused on.

That would include stuff like sick leave or unemployment insurance And so, Gina, what tools does the federal government have to try to stabilize the situation?

And is it clear which steps would actually be the most effective?

I think what we've seen in a really significant way so far is the Federal Reserve actually stepping in and doing a lot of the work toward stabilizing the situation. 00:08:56.390 --> 00:09:5.170  We saw a 50 basis point emergency rate cut last week, so that's, you know, half a percentage point pretty significant in the first emergency cut since 2008. 00:09:5.530 --> 00:09:8.690  Now the Fed has relatively limited room to maneuver. 00:09:8.690 --> 00:09:12.650  Going forward, they could do some of the things they did in 2008 crisis.

But it's not clear how effective those tools would be when the problem you have is quarantined workers and potentially choked off supply chains, you know, real economy, things that aren't necessarily demand side of the economy.

So in those cases, what really matters is the public health response, first and foremost and then secondarily the fiscal policy response.

And so what you're seeing a lot of economists call or some kind of bigger fiscal policy response, some sort of willingness by the government to sort of step in and help households smoothed over their consumption, spending in what could potentially be a trying time ahead.

And so I think those those sort of rallying cries are gonna continue into the days and weeks ahead, right?

You have to wonder where consumer confidence is at this point as the weeks go on and the months go on. 00:09:57.950 --> 00:10:2.740  I mean that thing that the administration itself, this point of Jews, that consumer confidence had been high. 00:10:3.020 --> 00:10:4.510  We'll see what happens with that. 00:10:4.890 --> 00:10:5.170  Jill. 00:10:5.170 --> 00:10:10.860  Let me ask you about whether or not we've seen a disconnect between the White House and the Federal Reserve on how to respond to this week.

I think you've seen a disconnect in many parts of this administration.

You know, you've got the president who is out there on Twitter, you know, at least in his tweets today really seeming to minimize the risk posed here by the Corona virus while you had the health secretary, a czar on Fox News telling people know we're not trying to minimize this and offering, you know, advice.

You've got the president who has long been pressuring the Federal Reserve to reduce interest rates continuing toe lean on them, saying that that's something that is necessary right now.

And Federal Reserve that, of course, has always been concerned about looking as though it's being pressured by the president's. 00:10:50.150 --> 00:11:2.090  And this is an issue that, you know we've at with this White House from really Day one that you've got a president with his Twitter feed with that bully pulpit who often times a sort of out of sync with the message of many other administrations, officials. 00:11:2.090 --> 00:11:6.780  And at a time of crisis like this, everyone's looking at the White House to speak in one unified voice, right? 00:11:6.780 --> 00:11:10.340  And you know, as evidenced by that picture of the president shaking hands.

Even the act advice from the health experts would seem to be contradicted by the president's actions there.

As you know, those health experts say, distance yourself and try and practice that social distancing.

We see the president himself not doing that in that video, But Gina, let me ask you about your article.

Financial System faces Biggest Test since 2008.

As Corona virus spreads, it looks at, the change is made that the regulatory system that could make it vulnerable as the crisis intensifies.

So I think one of the things that we know about the financial system headed into what could be a crisis here is it's there.

It's just a lot of debt outstanding by held by corporations. 00:11:55.090 --> 00:12:0.260  The trip will be debt, for example, which is just one notch above a junk bond. 00:12:0.260 --> 00:12:4.950  Status makes up 52% of the entire investment grade bond universe right now. 00:12:4.950 --> 00:12:17.300  So just this huge amount of sort of risky debt still investment grade, which is fairly so, um, in a lot of it obviously is issued by companies and then held by institutions outside of the traditional banking sector.

So places that aren't necessarily captured within the closely regulated banks.

So that's a concern, in part because the would be regulator of those institutions, the Financial Stability Oversight Council, which was established in the wake of the 7 4009 crisis, has really been sort of gutted in the Trump administration.

The staff is just not where it was before, and the the administration has just not been making the priority of it that the Obama administration did.

Now, on top of that, banks are seeing their capital requirements not necessarily dialed back, but certainly made more certain. 00:12:55.020 --> 00:13:0.460  And what we're seeing is a result, as they have a little bit greater certainty over what's required of them is that they are holding. 00:13:0.460 --> 00:13:2.880  Last month capital planning Thio. 00:13:2.940 --> 00:13:9.070  And so those changes, all taken together could just leave the system a bit more vulnerable than it otherwise would have been on. 00:13:9.070 --> 00:13:26.890  I think this is going to be interesting and important to watch as we see what really could be the first major test of the financial system in the financial system safeguards that we've had since the 2007 to 2009 crisis and Gina today marks 11 years since the current bull market began in 2009.

Are their size that the bull market is coming to an end and if so, is that part of a normal kind of cycle?

I mean, it certainly depends on how you define a bull market, so if you if you sort of describe to the 20% decline over a sustained basis definition, it is certainly possible that we're going to see that I think we have to quit.