tv Boom Bust RT February 27, 2020 8:30pm-9:00pm EST
according to the report of the school these are these are there's a group of those who. want to put. the secret to. another just terrible day on wall street this is the one business show you can't afford to miss i've been sworn and i'm christiane washington. fires continue to pump markets in to panic as the 1st case of unknown origin has been declared in the
u.s. we are the latest to take a look at something college and then i pod and explain whether they're about to order for the 1st time in history was the goal of others is what we don't manufacture enough not just products but critically important medicine we've got a live report so much to get through today so let's get started. and the panic plunge continues thursday as the optimistic dip buyers who stepped in yesterday got smoked global markets around the world are all in correction territory defined as being down 10 percent or more from their recent highs wiping off more than $3.00 trillion dollars from global stock markets given how fast this drop was many economists are pointing to the coronavirus as a true black swan event in a span of just 6 days the u.s. market went from record highs to correction territory with the dow down over a 1000 points today over 3000 points for the week not securities reports said this plunge is the only the 2nd time in history. that this has happened the other time
was in 1928 and that just means that the only other time the dow has entered a correction this fast was just before the start of the great depression now markets don't like uncertainty but this is quite the ultimate uncertainty because there is no clear timeframe of how long how severe this will be and the knock on effect afterwards compounding the disruptions already and in the absence of facts and data traders now have to rely on technicals and right now most world indexes are claiming potentially onto the $200.00 day moving averages the u.s. 10 year treasury yield hit a new record low below one and a quarter percent as investors clamor for safety goldman sachs is projecting 0 percent growth for the u.s. companies this year given the severe decline in chinese economic activity disruption to the supply chain elevated business uncertainty and low demand for u.s. exporters this is a drastic deviation from previous consensus which is still pricing in a 7 percent growth european equities q 3.6 percent lower and officially entered
correction territory with the cac the dax and the flat the all down but let's take a quick look at asia while the west is swimming in a sea of red the shanghai composite the hang thing and the cent and index are all positive china sports have reached a turning point as crane operators customer operators and other key logistic links begin to slot back into place turnaround times are starting to improve as the ports work to clear up the backlog official numbers continue to show a drop in new cases and deaths in the country despite the worsening situation in other parts of the world so again as as the u.s. markets are in this terrible territory again now really 4 consecutive days that as you said about 3000 points for the week so far asia is doing well which almost seems like a misnomer here is that just because the effects that they're feeling getting things back online is positive which means we should follow that shortly i think it is as long as japan and south korea. doesn't worsen because the big fear is that
china is currently starting to put it but if japan and south korea start to drastically decelerate that's going to have bring in a 2nd wave of celebration for china as well because times are allowed to panic korea as major major trading partners the 3 of those nations are responsible for 24 percent of the entire world's growth right now and south korea and japan as you know are very big hubs for technology and everything in the high tech manufacturing sector so what it really comes down to is how is the rest of the world going to respond to this now that we've looked at how the markets are reacting let's talk about what they're reacting to let's begin here in the u.s. where the nation's 1st case of unknown origin for the corona virus has been confirmed and it's in northern california that new case brings the number of infected here in the u.s. to 64 meanwhile president trump has assigned vice president mike pence the job of overseeing u.s. response to control of the coronavirus the president says this is not a coronavirus position but that pins his past experience as governor of indiana
would make him the right person he says to deal with state and local health authorities listen. i look forward. mr president to serving in this role bringing together all the members of the corona task force that you've established. c d h s the department of transportation and state this team has been a your direction mr president meeting every day since it was established my role will be to continue to bring that team together to bring to the president to the best options for action to see to the safety of well being and healthy american people. so what else is going on around the world while in saudi arabia there has been a temporary ban placed on all pilgrims muslim pilgrims religious pilgrims in an attempt to stop the spread of the coronavirus meanwhile pilgrims from dubai in egypt and other surrounding nations they're not going to be allowed in tree into saudi arabia
to prevent the spread of the virus and then christine mentioned japan minute ago and how they're responding in japan the prime minister there he has called for all schools in the country to close from monday until the end of their spring holidays we're talking about elementary junior high senior high and special needs schools nationwide that means some 13000000 students across the country would actually stay home for at least a month japan is dealing with more than $890.00 cases but that includes $705.00 people on that quarantine princess cruise ship meanwhile as of right now plans for the tokyo olympic games those have not changed. what i need to say 1st is are basically thoughts are that if you go ahead we can you limping and paralympic games as scheduled at the time being the situation of coronavirus infection that it needed leigh is difficult to predict but we will take measures such as we'll have a safe and assured olympic and paralympic games this is our basic policy we'll. are
let's go deeper on this issue which is the dean of business school. the university of miami john glad that you're here obviously a lot to talk about but i actually want to start with something here an issue known as pandemic bongs so pandemic bonds were issued by the world bank in 2017 it's a pretty simple idea just to catch a few words here they pay investors a solid return but if a pandemic breaks out the principle is redirected to help low income countries pay for their emergency response these world bank bonds are on the verge of being triggered for the very 1st time now normally these bonds as an asset class they would be kind of correlated with wider markets but in this case they would be very correlated as we watch the market falls so will these bonds be triggered do you think and what would that ultimately mean for markets. first of all the bombs in question there are about $450000000.00 worth of that were issued through the world
bank and 2017 as you indicate when you have a pandemic you have the possibility of these bombs being triggered by literally it's the number of deaths that are attributable to the particular issue in this case the coronavirus if that level of deaths is reached then the ball. diverted the principle is diverted to developing countries so the pressure is not put on government budgets to respond to the crisis in their countries that's the idea behind them but as you point out the emergence of a pandemic is going to cause a triggering that is not going to allow these problems to be a diversification of risk they're actually going to be moving and power level with the decline of the markets and the bones in question have been selling off an
enormously rapid pace and ever increasing discount and of cause the. no time to consider the issuing of newborns no one is going to be particularly interested in picking up new kids sastra for your pandemic bombs when we're actually in the middle of a pandemic now at this point it appears at this record expansion of the us economy that that risk of being seriously halted by the chrono virus markets have been selling off for date for 4 days in a row and a number of companies like airlines are having to resort to shareholders about the losses that they're facing so well while the markets find the bottom or does a solid continue for the rest of this week. ok so the key uncertainties here are the following number one the availability of sufficient reliable test kits number 2 the availability of reliable treatment regimes to reduce the mortality rate and the morbidity rate associated with
contract in the virus. item number 3 number 3 as the availability of a vaccine in sufficient quantities to be able to prevent people contract in the virus all of these 3 are at the moment in the stage of on sunday which means that the market is very skittish because there is no predictability about when the corrective measures are going to be able to be implemented so i think where still in that. zone where the markets are going to be very very nervous and. in a sense fearful of the lack of progress on those fronts and of course as the virus spreads through the fact that you can infect others while not showing any symptoms
yourself while it spreads internationally in a very very rapid way that of course has a knock on effect from one market to the other so perhaps until a week ago we were thinking well china is bearing the brunt of this and we're going to be able to contain it within china that is clearly not proving to be the case and so now china related market drop is spilling over into the entire international economy yeah and incidentally when you mention about the issue of a vaccine i mean it takes time to get a vaccine developed and then whether or not it works as a whole other question but right now this is based upon market fear right it's not necessarily connected to the actual halting of manufacturing or any kind of backlog and yet there's a very real concern here john that just a few months from now we're going to also have the issue of real actual losses for airline energy sectors that bad news when it comes to the actual inability to get
products from china because of the backlog when it comes to the actual loss because of the fact that energy was not consumed is that cause the market to dive even further. so until about a week ago way we essentially were talking about a supply side problem that the shut down of factories in china was essentially disrupting supply chains worldwide now we have talking about a demand side problem that is beyond china but now spilling over to the rest of the world and when i say that i'm on side problem what i'm referring to is consumer of fear and consumer lack of confidence which is going to result in consumers postponing purchases of curable products that it discretionary it's not just the travel industry and the entertainment industry it's automobiles it's
household appliances it's buying a new house when there is this level of fear and uncertainty on the dumond side you're going to see a slowdown without question without question john quelch dean of the university of miami business school thanks so much for your time. thank you. time now for quite a break but hey here because when we return just on the other side of the break we have a breakdown of how markets around the globe are breaking and what may be on the horizon for drug manufacturers in the u.s. and as we go to break here are the.
in the troubled 19 seventies a group of killers rampage through parts of northern ireland that was coordinated loyalists attacks particularly population of tens of thousands are forced to flee their homes and what was striking to put these attacks was that the are you see the police actually took part in the attacks so instead of presenting they were active participants in the earlier full streets in belfast at the take more than a 100 innocent civilians women. as the review consume yours and we found out more i was surprised about the extent of the currents which the pollution was involved in some of those cases the killers would later be named. i think it went to do very very top i think it is. the water
where. you. give the go ahead. the point is should we actually be charging for it because this is when we charge for things is because it's a benefit to the person is. that's the audiology that took over education about 30 or 40 years ago but the perspective of education was originally that education is a benefit for society in general i wouldn't want to live in a society without doctors or engine is what happened without economists and seeing it or being a profit benefit in ignoring the public means that we're ignoring the skill basis we need for a sophisticated society and putting the burden of that school biases on the individuals and what we turn it into is just another churn institution public higher education become a form a version of a real estate scam that is not the basis for a functional society. where
the market breakdown thursday it marks the 27th correction since world war 2 with an average decline of about 13.7 percent the dow ended up $1200.00 points off from yesterday's close so basically now the big question is is this the bottom to help us answer that let's bring in. our analysts that other trade so let's start there no one knows if they're headed for a recession or in the middle of a recession until the aftermath and you're looking back but do you think that in the future we'll look back on this moment and say that the crown of risk was basically the big catalyst that it was the black swan of that pushed us all off the edge into recession. thanks for having me late i think recession is a very scary who had to use but the situation can certainly play under what
circumstances if we start to see the 4th rates rising i think right now the number there which really matters for our 4 economy so for enemies for and this is start looking at the really hard date and the default rate if we start. see these numbers increasing then yes the recession fear could really become that the biggest fear that the market has been waiting for as you describe the black swan an event but right now i'd really do not see that kind of a fear in the market why look at the gold price that is a safe haven just a few days back and ever since we see that price retracing from that particular mark now the price is trading here trading at i think about 1625 or even in around that mark so what does that tell me that tells you that investors aren't really ready to place those biggest safehaven bets and if you look at the vix index yes
the year to date gains a very nice and very strong sitting at 154 percent and the price is trading in around $33.00 but this is the territory when we start seeing the markets actually bouncing back up because remember the major indices as you described the year the are in battle with the with the most important indicator when it comes to technical analysis that is the 200 day moving average if the price suddenly moves back above that average watch the tailwind coming then you know looking at those market moves today we did start the day off or down about $400.00 points and then right at the open and then we saw everything kind of climbing back up it looked like maybe there was going to be a recovery throughout the day in about 2 o'clock in that it right we just nose got a nosedive after that so the question is this are or traders just buying the dip out of habit at this point trying to fish for the bottom or do you think they have
found it is this the bottom or are we going to see another another day of this. i think traders are clearly overreacting there is no reason for the dollar to see this kind of selloff the only reason that i can see is this monster bull rally that we have seen in the market over the last decade i mean literally since. financial crisis the market hasn't seen a major correction now we are and that correction territory the 10 percent territory which we like the dow jones index actually went below the tuna to moving average yesterday and it was only the s. and p. 500 index which was really ticking near the 100 day moving average but now everything is below that from the traders perspective i think this is the buy the opportunity because of but only if we see that the impact of corn or virus isn't going to be for long. that is the indication that we're seeing in the
market because if you see the vix futures curve they can compare the 1st month with the 2nd month you see the inversion coming what does that mean that really entails that really tells us this story that investors are not really looking at q one they are actually looking at the period of uncertainty prolonged beyond the q and until perhaps q 2 but i think what we really need right now is more more support from central banks and that's not really very getting support from our talk a lot about that global central bank they're always prepared to step in to create a softer landing one that something like this occurs but isn't there this other school of thought right now that the effectiveness of just a couple of rate cuts in combat in the outbreak that is now worth using up the ammunition so that they do that now how will they then address the real downturn in the domestic economy in the aftermath. that's really intriguing.
remember the when the when the running tapi who are was pretty pretty much on the brink of collapse mario draghi came and then he just used one phrase what every takes that particular phrase was and after support the euro zone at that particular time. but now we have christine legarde sitting on it and they're not providing that sort of support that the market really need now go to market see a question with a couple of point of interest rate cut. i don't think we need the interest rate cut i think what we need is we need a combination of 2 different policies fiscal and monetary policies coming together and supporting the economy and we've already seen the evidence of that from the people bank of china remember they already reduce the import. reduce the terrace in the u.s. imports and at the same time the bank also. allowed
the other retail banks to run the non-performing loans for later be longer so these are more for monetary policy in a fiscal policy combination that is what we need my fear is that the u.s. is not doing enough and now krone virus spreading to the u.s. and then that these numbers are likely to increase is really going to have a major impact on the markets whatever takes name as i'm chief market analyst of arbitrary thank you so much. was we closely monitor of the spread of the coronavirus and how it's affecting markets we should also note how the virus is affecting the drug supply as well as the technology sectors joining us now with that part or even correspondents there a month as they look up there but you're here and you know maybe one of the most under-reported parts of the story right is how the medical supplies are being affected by manufacturing shutdowns and that includes some of the most important any biopics that are used by hospitals and you would think at the time of a i don't want them because we're not quite there yet but on the verge of
a pandemic those might be the drugs we need the most what's happening with that slowdown well there is indeed possibly a chance for a slowdown in the future the f.d.a. actually identified about 20 drugs that either are partially made or their core components come from china or completely made from china and the the house health and human services secretary of the united states as are commented on that and said what the f.d.a. is doing in case or at least trying to do an attempt to to combat that take a listen. what we're doing now is the f.d.a. is reaching out to all pharmaceutical manufacturers device manufacturers to extend it to make sure we've got visibility the latest fruits of that work showed that there are 20 form of suitable products we are aware of to date at f.d.a. where are the entire product is made in china or there is a critical active ingredient that is sorely sourced within china so those would be obviously the most targeted to could be concerned about to date we are not aware of
any expected shortages and we have aggressively proactively reached out to manufacturers for that information. so they're saying today there's no shortage however there are 2 main manufacturers in who bay province in china that are saying they have an overproduction right now but we're talking right now what about in the future that's what we're trying to worry and see what they're going to do when it comes to that and right now what is this entire status on a potential back scene for the corona virus or any sort of treatment well i know that there are a few right now which is what's kind of helping at least from my derm i think it was one of the companies that were the stock went up because they said they could have some sort of possible treatment of it the united states i obviously i mean you heard some of the headlines were president trying to some people americans may not be able to even afford a vaccine but again what this what the shortages we have to come back and remember that the f.d.a. has admitted themselves that any knowledge that even for them it's hard for them to
to track the exact amount of drugs that are coming from china we heard last year the director of the center for drug about ration and research janet woodcock who told congress quote we cannot determine with any precision of the volume of that a.p.i. that china is actually producing or the volume entering the united states and we know that even before this in 2019 a report talked about and found a shortage of common drugs and even sterile water ib so there was a contribution even before some sort of shortage before the current. virus but this i'm sure will add on to it as a lot of these manufacturers come out of china. viruses show us anything it's really highlighted our dependency on china brazil how to sort or do the correspondent course want to see what is there and thank you. and while the entire world is in an uproar about the coronavirus pakistan has
another plague on its hand the plague of locusts that threatens its crop supplies pakistan has declared an emergency earlier this month saying that its locust numbers were the worst in more than 2 decades the heavy infestation can be attributed to the cycling season of $21000.00 that brought heavy rain and allowed at least 3 generations of unprecedented breeding that went undetected ethiopia kenya and somalia are struggling as well as the super swarms have devoured hundreds of acres of crops already but china is ready to help out with officials on standby to deploy a legion of 100000 or ration stocks to pakistan to help its neighbors fight off the locusts one doc is able to eat more than 200 locusts a day and chinese researchers have described ducks as quote biological weapons being more effective than pesticides ducks also like to stay in groups so they're easier to manage than chickens and they have stronger by taliban forging abilities and resistance to cold which is suitable for survival in the wild a trial is being run in china's western province later on this month and after that
the ducks will be sent off to pakistan's worst affected areas it's pretty incredible isn't it when you look at some of the the simplest ways to deal with this and it's safe for the people who are going to eat those crops eventually the brother dousing them with pesticides what a great method exactly and the other really interesting quote from china was after the ducks are done eating look as then you can eat the ducks and that will revive the entire economy that way it's providing extra food supply and we sure can i'm sure we'll get e-mails about that but. this time you can catch a boom bust on demand on the brand new portable t.v. of him. both the google play and the apple app store by searching. our stream us to your t.v. by dialing a portable t.v. app for apple t.v. on line up by one and by the way a lot of times we're trying to get you good information about the coronavirus you can also find a coronavirus tracker on the portable t.v. app to get the latest news and information about the spread of the virus and of course as always you can check us out at you tube dot com slash boom bust our teeth see back here next time.
people have money in pension account people have money and savings are actually digging into their pockets because their savings rate their pension accounts are now yielding close to 0 or negative they're taking money out of their pockets thanks to the central bankers and they're giving it to a billionaire so he can buy tiffany so he can sell trinkets the more billionaires this is louis the $65.00 only living off the labor of the peasant. is you'll media a reflection of reality. in a world transformed. what will make you feel safe.
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