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Quest Means Business
Dow, NASDAQ More Than Ten Percent Down From Recent Highs; U.S. Vice President Pence Meets With Health Team; U.S. Considering Expanding Airport Health Screenings. Aired 3-4p ET
Aired February 27, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:17]
RICHARD QUEST, CNN HOST: An hour away from the closing bell. The misery continues today. Particularly interesting, the market was 960 points down
at one point, it rallied back up again.
But as we head into this last hour, it does seem to be falling and the triple stack also shows that the other indices are lower as well.
Those are the markets and these are the important reasons why. It is because coronavirus is reaching a turning point in the United States. And
there's now warnings about an outbreak in California. That's what led the markets into correction.
A lost year for U.S. companies. Goldman is warning the virus could wipe out all earnings growth for S&P 500.
And Heathrow's expansion plans, once again, grounded. Officials cite concerns about climate change. The airport's chief executive is on this
program.
We are live in the world's financial capital, New York City, on Thursday. It's February the 27th. I'm Richard Quest, and of course, I mean business.
Good evening, in the final hour, and it is usually dramatic on days like today in the market. The Dow, the S&P and NASDAQ, all technically in a
correction, which as you will well know of course, which describes a fall of 10 percent or more from recent highs, and that was only two weeks ago.
At the same time, Goldman Sachs is warning American companies will likely generate no profit growth this year because of the virus outbreak.
Wall Street now believes the Fed will cut rates at its next meeting.
Oil prices are lower, nearly three percent. Investors are piling into bonds. We're seeing the yield well under 1.2 or 1.2 and change and look at
that, the FTSE down three and a half percent. The DAX down three percent. Milan 2.6.
The misery is everywhere to be seen across Europe as well, but heavy losses across the board.
As we show you, today's drops put the Dow, the S&P and the NASDAQ on track for their worst week since the financial crisis.
The Dow and the NASDAQ are suffering the longest streak of losses since the middle of 2018.
Jonathan Corpina is the Senior Managing Partner at Meridian Equity Partners. I know the market is looking for certainty or looking for some
sort of solid base. It's not there yet. So does the selling continue?
JONATHAN CORPINA, SENIOR MANAGING PARTNER, MERIDIAN EQUITY PARTNERS: Yes, Richard. I think until we get some clarity, until we get some certainty and
what does that mean? That means we need to get some sort of positive headline out of this whole entire topic. A message that says that this is
contained, it's under control, a vaccination will work.
Every headline that we've seen so far is the virus is expanding, and the numbers are increasing. So until we get that, we're continuing -- we're
going to get this continual pressure on our markets.
We have our normal economic data that has shown, you know, some positive headlines that are out there. Other good stories that can, you know,
normally would support this market, but right now, the market and everyone across the globe is focusing on this virus, and that's why we see the
pressure.
QUEST: All right, so it said that China -- there are some who believe China had sort of reached its peak day on February the 15th, and might actually
have contained it. If that's the case, obviously, it is extremely good news.
But I guess you're worried now about a full throttle, full blown community spread in the United States.
CORPINA: Yes. I mean, look at the headlines today. We continue to get numbers coming out of Spain. We get numbers coming out of Italy, South
America. These numbers keep growing.
So yes, maybe that 14-day incubation period is winding down on the calendar basis from China. But it's growing somewhere else. We're seeing headlines
coming out in the United States also.
So that's the fear. The fear is where next? And when is that going to happen?
QUEST: Finally, a question you can't answer, so I'm going to ask it anyway, where do we -- where do we close tonight?
CORPINA: You know, we opened on the lows, got a rally during the day, and we're selling off now and that was kind of expected, right? Nobody wants to
go home long overnight. We're going to continue to see this pressure.
The only thing from a market basis that I think can help us is tomorrow is the last day of the month. We do have a rebalance in one of the larger
indices that's out there and I think that can help flush things out.
[15:05:07]
CORPINA: We have the weekend coming up there. Normally people don't go home long. They don't want to risk over the weekend. So today and tomorrow might
be the last flush out that we see.
QUEST: Jonathan, we will talk about it tomorrow. Thank you, sir. I appreciate you taking time.
CORPINA: Richard, thank you.
QUEST: The issue, of course, was 2020 was meant to be the rebound year from sluggish 2019. Well, Goldman Sachs is giving a stark warning to investors,
saying coronavirus would like to keep U.S. companies from generating any profit growth this year -- whatsoever.
The bank's previous estimate was six percent, and that was a six percent jump for the S&P 500. If the virus is now contained, it says the worst case
scenario is for a 13 percent loss.
Clare Sebastian, between zero, six and minus 13, that's a very wide range.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, six was conservative. Goldman Sachs was already on the conservative side compared to the Street
at seven percent. They say, it is the consensus, zero obviously a big revision from that worst case scenario. That would assume a recession in
the U.S. in a much more severe pandemic.
But even their best case scenario, Richard, is three percent earnings growth this year. So it's all down.
QUEST: Why are they putting out this now when there's so much uncertainty? And they must have realized everybody is going to latch onto it like a
piece of Velcro?
SEBASTIAN: And it's a good question. They've taken a little bit of heat online actually for doing this, especially on a day when the markets are so
volatile.
QUEST: Well, arguably, they caused a lot of this.
SEBASTIAN: That and also the news that we've been getting from some of the companies and the warnings from health officials and things like that.
But they appear to have seen this sort of crystallization of factors here. There's the supply and demand issues that we're getting for companies.
There's the now clear potential for severe decline in Chinese economic activity, and that will spread to the U.S. they say. And elevated
uncertainty, Richard is another factor that can be corrosive.
These are our virus bellwethers here and you can see most of them are down except for Wynn Resorts. By the way, things are coming back to life slowly
in China. The Wynn Resorts reopened its casinos in Macau last week.
We've seen Starbucks now, they told us today that 85 percent of their stores are open. Tim Cook just went on television and said things are
getting under control in China. It's slow, it's slower than many are expecting. But the situation there is not static. It's not at a standstill.
QUEST: Bearing in mind the stark scale of the problem in China, and they've managed, it would appear, to get it under control. It should be relatively,
relatively easy for other individual countries to get it under control because they only -- you're already wincing at my suggestion.
SEBASTIAN: Which is very hard to know, isn't it, how to do this. Obviously, the thinking out there is that the other countries have a head start. That
China was the ground zero, so it came in a slightly delayed fashion in other countries because they've seen how China has done it. They were able
to learn from that and move slightly quicker.
But obviously, if you look at companies and the warnings, they're giving, this is a very uncertain time. Forecasting is very difficult. Microsoft of
course, the second trillion dollar company to do so, came out today and said it's not going to meet its revenue targets for the year only set about
a month ago, Richard. So it's a very fluid situation.
QUEST: As we can see, although three are up. Well, with the airline now, barely, I suppose this is just bottom fishing now, isn't it? It's classic.
And who can blame people because if we take Carnival for example, it was $55.00, now it's $32.00. If look at the Dow, 742 on that so far.
All right. The White House has a new coronavirus -- thank you, Clare. Sorry, forgive me.
The White House has a new Coronavirus Task Force. Though the faces may be familiar, President Trump's economic team is leading the fight. We'll talk
about it in just a moment.
The virus as it spreads, the U.S. is debating how to stop sick passengers from flying.
(COMMERCIAL BREAK)
[15:11:22]
QUEST: The United States Vice President Mike Pence has announced new members to the Coronavirus Task Force. It's apparently President Trump's
economic team.
The Treasury Secretary, Steve Mnuchin; the White House economic adviser, Larry Kudlow have both been added. The Vice President's meeting at the
moment with the Health Department officials. These are live pictures of that meeting.
He also has added a health expert, Deborah Birx to the Task Force. She's the State Department's top AIDS official, and has just been named
Coronavirus Response Coordinator.
John Harwood is live at the White House. John, there is -- there is never a wrong time to do the right thing. But having told us none of this was
necessary, it does rather beg the reason what went wrong?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, I think the President has a hard time, Richard getting his arm around the idea that something bad
might be happening on his watch, and so he tried to talk it up with happy talk.
Even when the markets went down, he said, well, this is a buying opportunity for investors. It's kind of like when his Commerce Secretary,
Wilbur Ross said a month ago that coronavirus might be good for the U.S. economy because it would open up new business opportunities for American
firms because China was being hurt.
Obviously, we have a global economy that is interconnected and what hurts China is ultimately going to hurt us and the very sharp level of attention
of the President to the economy is why you see Steve Mnuchin and Larry Kudlow added to that Task Force.
QUEST: But how much of the President's response is because he sees the market falling, and this is something he can take on board.
HARWOOD: A good part of the President's response. You know, he came back from India after two days of steady market decline, had a third day on
Wednesday, then he had that news conference to try to calm the situation.
But during that news conference, Dow futures turned from positive to negative. Then it had another substantial drop today.
So the President is concerned because if you have knock on effects to consumer confidence, to supply chains worldwide and the economy tips into
recession, that is a dire threat to the President's reelection.
The last U.S. president to seek reelection during a recession was Jimmy Carter in 1980. And, Richard, I think you and I are both old enough to
realize that he lost in a landslide to Ronald Reagan.
QUEST: I think you and I are both old enough to have just about covered that race. Listen, John, so what happens now? Because the White House is --
this is classically a case where politicians are at the whim of events, and will find it very difficult to control.
Have they brought in the right people with the right experience? Joe Biden -- Joe Biden last night in the CNN debate was making a great point, or an
important point as he saw it about how Donald Trump had actually got rid of the department that was supposed to deal with these sorts of things.
HARWOOD: Donald Trump has repeatedly proposed in his budgets to cut the Centers for Disease Control and N.I.H. He in fact, defended those cuts last
night saying, well, when stuff goes bad, we can just hire people. We don't need to lay them around all the time when times are good. That of course is
not how government management works.
There's no indication that Mike Pence, himself has any particular skill here. When he was Governor of Indiana he exacerbated a public health crisis
by delaying needle exchanges, eventually gave in and allowed those exchanges.
I do think that Deborah Birx is a positive addition to the team. She is somebody who has served multiple administrations in both parties as the
State Department's International Coordinator on HIV-AIDS and that has been a success story across multiple administrations.
[15:15:27]
HARWOOD: But we're going to have to see. It's not entirely clear who's in charge. Alex Azar last night was saying, well, I'm still the Chairman of
the Task Force. He was the first one to speak at that meeting that you just showed pictures of a moment ago. He then introduced Mike Pence.
And, you know, really the question at the end of the day is do they heed the advice of professionals like Deborah Birx, Anthony Fauci and others who
have deep experience substantively here.
QUEST: We're grateful for you, sir. Thank you for joining us tonight.
HARWOOD: You bet.
QUEST: U.S. officials are considering expanding health screenings at airports. Currently, there are only screenings for passengers flying in
from China.
Officials said the rapid spread in Italy and South Korea is prompting discussions.
Martin Savidge is at Hartsfield Jackson Atlanta International Airport. Now, the issue here, Martin, is what sorts of screening are we talking about?
Are we talking about those thermometers that as you go through it, we're now seeing it in Asia or something more severe?
MARTIN SAVIDGE, CNN CORRESPONDENT: No, we're talking about just that, the thermometers that you've seen in Asia. The way it works, there are 11 ports
of entry through which people coming from China and it's only China where passengers are being screened currently in the United States. So Atlanta is
one of those 11 airports.
As you pointed out, there are travel restrictions, so if you're a foreign national and you've been in China in the last two weeks and you want to
come to the U.S., you will be denied entry.
If you're an American resident or citizen returning from China, you're allowed in but then the medical screening goes into effect and the way that
works is yes, they take your temperature. They scan you for it. And then on top of that, they'll be looking to see if you exhibit any of the symptoms
of the coronavirus.
If you are not, you're given medical literature and allowed to go on your way.
Depending on where you may have been in China, you could be asked to self- quarantine yourself.
Now here in Atlanta, since this whole program began, they screened about a little under a thousand passengers of which health officials say, of that
1,000, seventeen seemed to exhibit symptoms of some kind of Infectious Disease, but of that 17, only one person was actually taken for testing and
that person tested negative for the coronavirus.
Across the U.S., not a single passenger that has been screened has been found to have the coronavirus, which is leading to some medical speculation
that this may not be the most effective way to screen and look out especially if you think of expanding the sort of medical checklist to all
those nations where coronavirus is now active.
QUEST: Martin, watch this closely please as this continues and come back when there is something from there. Thank you, sir.
Now Heathrow, Europe's busiest hub says it's also considering passenger temperature monitoring, if directed to do so by the health authorities.
I spoke to Heathrow's Chief Executive about what plans the airport intends to put in place.
(BEGIN VIDEOTAPE)
JOHN HOLLAND-KAYE, CEO, HEATHROW AIRPORT: We are following the advice of Public Health England. They are managing the situation on the ground and we
are supporting them. So if they decide it is appropriate to raise the standards here, then we will absolutely support them to do that.
Our first priority is always to keep passengers and colleagues safe and secure when they travel through Heathrow.
QUEST: That's a priority, obviously, it is exceptionally difficult bearing in mind you've got a large number of people coming together from different
parts of the world. What more can you do, do you think?
HOLLAND-KAYE: Well, the measures that should be adopted have to follow the Public Health England guidelines, so we will always support them to do
that.
Of course, we are doing the things any responsible business would do as well. Deep cleaning the airport, where people tend to touch handrails,
providing hand sanitizers across the airport. Those are just sensible things any business would do to both reassure and to make it easy for
people to keep themselves safe. But health and safety will always come first.
QUEST: And finally, on this area, as the airlines cut back, are you going to have to cut costs yourselves? Do you see any retrenchment necessary?
HOLLAND-KAYE: It's too soon to say what the impact of this will be on our business. We're actually quite a resilient business. We have a global
footprint. And we've not seen any material impact on passenger demand as yet, but of course we'll keep a very close eye on that.
(END VIDEOTAPE)
QUEST: A close eye indeed, as oil prices, which we are also keeping a close eye on have hit the lowest levels in more than a year.
Crude, you see the numbers on the screen, down three percent, give or take for both of the main benchmarks. Matt is with me, Matt Egan is following it
all.
So what's -- the reason is not technical, it's fundamental. There is a lower demand for oil.
[15:20:06]
MATT EGAN, CNN BUSINESS SENIOR WRITER: It's all about demand destruction. Anytime that there's economic fears, oil traders will sell first, ask
questions later.
But I think that just the nature of the coronavirus threat here is really sort of magnifying this, right, because you have fewer people working. That
means there's less people on the road, less demand for gasoline. Flights have been canceled. Jet fuel demand has gone down because of that. There's
fewer trucks on the road, diesel demand.
And so if you combine all of that, you have this perfect storm, where unlike all of these other oil markets selloffs, it's not about supply, it's
all about demand.
QUEST: But this just shows you, since the price we're looking at is usually often a future's price anyway, as opposed to the cash price. This shows you
the sensitivity of the oil markets to economic dislocations, which may only last a couple of months.
EGAN: Well, absolutely. It is a real-time barometer on what the thinking is about the economy. Clearly, that has all shifted oil prices. U.S. oil price
is down about 25 percent just since early January while it was on track for its worst week in five years. And this is putting enormous pressure on OPEC
to come to the rescue.
QUEST: What can they do though? Because, I mean, this is really a question for John Defterios who is on assignment, but, you know, what does OPEC do
bearing in mind, they need the money?
EGAN: OPEC does exactly what they wanted to do earlier this month. John Defterios had reported that Saudi Arabia wanted to cut production by
600,000 barrels per day, but it was actually blocked by Russia. Russia wanted -- they wanted to wait and see what happened.
Now, I think they all probably wish they could do that over because clearly, oil prices have only plunged further.
So the market is basically demanding that OPEC and Russia deliver significant cuts to try to ease this panic. If they don't, we're going to
see oil prices fall even further.
QUEST: Okay, but let's have a moment of -- which I am about to talk about in a moment, the recovery and the different types of recovery.
Is it likely that once production gets back to normal, transportation gets back to normal, that price goes up again, or is it a case of it goes down
quicker than it goes up?
EGAN: You know, we don't know it. A lot of it does have to do with the shape of the recovery.
QUEST: Right.
EGAN: But there's just a lot of supply out there. I mean, the United States is pumping so much more oil than it was just a few years ago. I don't think
that we will have to worry about a lack of supply.
QUEST: I promise you, we did not set Matt up to use that phrase, to invite us discuss the question of what the recovery will look like. I promise you,
but that is what we are going to talk about now, the shape of the recovery.
Now, people are talking about recession fears and economists are now trying to predict exactly what the fall and what the recovery could look like.
I understand that not all cases, are we talking about a recovery. You may just be talking about a slow down with a recovery thereafter. But this is
the A-B-C-darian as they say, of economic downturns.
Let us start with what people think is most likely. The V-shaped recovery. Now the V-shape, you can see there's a nice V and for that one, it's in the
1990s. It's the real estate, boom and bust. It's also part dot com boom and bust. And there you have it.
The IMF believes in this case, a V-shape is still highly possible, but more likely, or some would suggest it is the L-shaped -- no sorry, the U-shape,
I beg your pardon.
And here is your U. It's a big you. It's an entirety, and that's in the 1975 with the energy crisis. Here, you have that gradual fall, down on the
bottom and straight out the other side, but it's a long period in the middle, looking more likely.
There's the possibility of the W-shape. Now the W-shape is a double whammy. You've got an example of that in the 1980s. It's extremely volatile and you
see exactly how the whole thing goes.
You've got to look at it in these terms over here. Your W-shaped recovery. Very painful for investors.
But the worst of all -- the worst of all, is the L-shaped recession. This is the nightmare scenario. The example here, you've got of Greece, you go
down, and you stay down. Nobody is predicting this.
Kevin Hassett, who of course, is the former top adviser -- economic adviser -- told me this crisis has a lot more to go before deciding what sort of
recovery there will be.
(BEGIN VIDEO CLIP)
KEVIN HASSETT, FORMER CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISERS: You know, I think that right now markets are worried as they were with SARS,
that this is going to be a much bigger deal and much more widely spread than the professionals think is the base case right now.
But if you go back and look at the SARS episode, and granted, there are a lot of other things going on in the economy at that time, and then run it
forward from when we sort of recognized it was there and compare it to the timeline for this, then equity markets would have about 10 percent more to
go down.
(END VIDEO CLIP)
QUEST: The markets would have 10 percent more to go down, he just said. That's from the other day. So we're off -- we're taking another couple of
percent off here, what's the latest thinking we've seen through. Rana is with me.
Rana Foroohar is the CNN global economic analyst and associate editor at "The Financial Times."
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I think we're going to continue to see a dip, but the Fed is going to step in and act at some point and
then you're going to see a rally off the back of that, but I think we're really not going to know where we are and I loved your graphics there, L,
W, U -- all of this until this summer.
Because I think in the summer, you're going to see where coronavirus is, you're going to have a better sense of underlying corporate earnings and
you're also going to get more information on the political situation in the U.S., which of course the markets were already pricing in before the virus.
QUEST: But you've got the slowdown -- China seems to be recovering -- well, not recovering -- China seems to have arrested its fall to somewhat as we
watch to see how other countries handle it. What's your biggest fear here?
FOROOHAR: You know, my biggest fear, but it is also in some ways the biggest opportunity is decoupling. I have said in a couple of columns in
recent weeks that I think coronavirus is going to be that tailwind that speeds up decoupling.
I think that you're going to see both the U.S. and China building totally separate tech ecosystems. I think Europe is going to be very trickily stuck
in the middle between those two.
Now, this could get contentious. This could create a lot more cost for companies because, look, a lot of production has been switched to places
like Vietnam, Mexico, but those countries can only take a certain amount. They can't pick up all the slack from China.
So at some point companies have to think, are we going to build new factories? Are we going to train new people? That's cost at a time when
margins -- we're already being told by Goldman Sachs, no profits this year.
QUEST: Follow on though from that particular thought, is anybody as best you know, looking at global recession?
FOROOHAR: Oh yes, people are talking about it. It is impossible to know right now because we don't know how long --
QUEST: But we're a long way from that a long way from that at the moment?
FOROOHAR: We are a long way from that, but you know, Richard, I keep coming -- I know I've always been a pessimist and you ding the bell on me, but
don't get too close.
But really the markets have been looking for a reason to correct. You know, we've known this is coming. The question now is how much of the underlying
Main Street recovery -- and I'll put it in quotation marks -- has been linked to what the market is doing, and I think quite a lot.
And Goldman has been saying that for a long time that as much as 30 percent of growth could actually be really about where the market is.
And I think if you start to see that, you know, W or even an L-shaped situation, you may be in for some trouble.
QUEST: Okay. But the recession aspect is still --
FOROOHAR: That's still a question mark.
QUEST: Right. But slower growth is not.
FOROOHAR: slower growth is not and most people are predicting that at this stage.
QUEST: But Goldman, you saw today, zero earnings growth, therefore, zero earnings growth, if we accept as traditionalists like yourself do that a
share price is a factor of a future earnings stream, that those share price cannot be supported by no growth.
FOROOHAR: Right and then the question is, what else is happening in the world? What else is happening in companies that they have to worry about?
You know, labor costs were rising before this. They've been rising in China. I think that decoupling is going to create a lot of unexpected
costs.
I think that we may be in something that feels quite a lot like recession by default, which will be interesting politically.
QUEST: That's for another day.
FOROOHAR: Don't ring that bell.
QUEST: I shall let you do it. I am going to make it next time. She fell for it.
FOROOHAR: You're such a cheat.
QUEST: Charlie Brown.
FOROOHAR: My god. Has he done that before?
QUEST: She fell for it again.
FOROOHAR: I'll get him some day.
QUEST: That's what I'll tell you. Rana, good to see you.
Italy's coronavirus outbreak, okay, it isn't just a health problem, its worst affected region in particular is vital to its economy.
We need to talk about Milan fashion, the sorts of companies that are in Northern Italy after the break.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I'm Richard Quest. We have a lot more QUEST MEANS BUSINESS tonight. We'll tell you, for example, how one coronavirus case in
California is setting the markets on edge for good reason. The phrase to remember is community spread.
Heathrow's chief executive tells me he's confident he still can get a third runway built, even though an appeals court struck down the plan. That's all
still to come after we've told you what the news is because this is CNN. And here on this network, the facts always come first.
The U.S. and South Korea postponed the planned joint military drill as the country's struggles with a rapidly increasing number of coronavirus cases.
South Korea has now reported more than 1700 confirmed cases and at least 12 deaths. Those cases include 25 members of the South Korean military.
California may have crossed a dangerous threshold in the outbreak in the U.S. The Center for Disease Control says a patient in Sacramento could be
the first case of what it's calling community spread. That means he or she had no relevant travel history or exposure to another person who was known
to have the virus.
Fears over the spread of prompted Saudi Arabia to make an unprecedented move. It's temporarily banning foreign pilgrims from visiting Mecca and
Medina. It means Islam's holiest sites will only be open to residents in Saudi nationals. Saudi Arabia has no reported case of the virus.
Investigators still have not released any details on the possible motive for the mass shooting in the U.S. State of Wisconsin. Five people are dead
after the gunman opened fire at the Molson Coors Brewery complex in Milwaukee on Wednesday. The police say the 51-year-old gunman was an active
employee who took his own life after the attack.
And an easy calm has fallen over New Delhi in the wake of this week's violence. Hospital officials had tell us at least 33 people died in
sectarian clashes that began in Monday over a new law that makes it easier for non-Muslims from neighboring countries to gain Indian citizenship.
Just over 26 minutes left of trading and we watch always very closely how the market does well. That was the worst of the day, down 960. This was
down the best of the day, down maybe 200 or 150. And now, adding and starting to slip in the slide, again, perhaps towards the close, down 800
points, three percent on the Dow. And it's all because we're getting more details on this California patient who officials say could be an example of
community spread. That stocks took a downward turn after the authorities gave an update a short time ago, and we are just about at the session lows.
A public health official says the case in California marks a turning point in the battle to contain the virus.
[15:35:09]
CNN's Senior Medical Correspondent Elizabeth Cohen joins me now. All right. So, let's assume that this is -- just for the purposes of this question,
let's assume this is a case of community spread, i.e. the person involved has no direct connection, either with a country or person who that we know
of, that would suggest we will see more cases.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Absolutely, Richard. The experts I'm talking to say exactly that, that if you've seen one, that
means there are others. And again, what -- you explained what community spread is but just to repeat it, it means that this patient at UC Davis did
not travel to a coronavirus hotspot, and also, she didn't have contact with anyone who traveled. She don't -- she doesn't know where she got it. It's
sort of like in the middle of flu season when you catch the flu, you don't necessarily know where you got it. Maybe it was from your husband or wife.
Maybe it was from someone you sat next to on a bus, you don't know. So, we're kind of coronavirus may become kind of like the flu, Richard.
QUEST: But unless it's a Diamond Princess situation, where you say, I was on that ship with several hundred other people who had it, isn't it all --
I mean, we're going to show in a moment just the example of Italy and how there are numbers of spreads, I know all of these things, but isn't it
inevitable that it's always bit of that guessing luck and the chance that you actually pinpoint who the person that in fact who affected them.
COHEN: Right, that's true for something like flu, it's true clearly, for this virus. It wasn't true, for example, in the United States for SARS.
There were SARS patients in the United States, but it never got beyond more than a handful because we were able to contain it, and those people did
know how they got SARS, there wasn't community spread of SARS in the U.S. So, not all viruses do have community spread.
QUEST: Right.
COHEN: This one does.
QUEST: If this does -- if this does get out, so to speak, and we start seeing really large numbers of people who've got it, is there a point upon
which you just simply have to say, well, this is the way it is, some people will have to go to hospital, some people won't even notice they've got it.
some people will die from it, but it is just another case of the flu.
COHEN: You know, the experts I've been talking to, Richard, are saying pretty much that they don't sound quite as despondent as you just sounded,
but they -- but they're saying this could become like the flu. And so, you do all see you can't get a vaccine, unfortunately, for coronavirus, but you
can do things like wash your hands frequently. If you're sick, stay home. If you see someone who's sick, get the heck away from them. So, you can
take those steps, but yes, at a certain point, once there is community spread of a virus, like there is of the flu every year, there is a limit to
what you can do besides staying holed up in your house wearing a mask.
QUEST: Good to have you with your common sense describing exactly the situation and your expertise telling us which way it's like. Thank you for
joining us.
COHEN: Thank you.
QUEST: Thank you. Now, the number of coronavirus cases in Italy is absolutely soaring. There are 650 confirmed cases, and the country, it's
become the epicenter of the European outbreak. Just look at the range of the whole area. Still, an official says it will not close its borders. And
those borders will be to Switzerland across to France. And that's to say nothing about what happens down towards Sicily or you get cross
Mediterranean coverage to Slovenia, Croatia and up to Austria. Other countries north has been the worst affected hit in the economic hub.
Many businesses are shutting, just look at some of the businesses you've got. The city is home to major companies, obviously, besides the fashion
industry, which you know about, but you've got Armani, UniCredit and Prada. The Italian finance minister said the four regions with the most cases make
up 50 percent of the country's GDP.
Ben Wedeman is in Milan, joins me now. So, you -- hopefully, Ben, you are listening to -- or, you heard a little bit of what Elizabeth Cohen was
saying, and knowing this, and how Italy is responding, is the feeling there that they are on top of it?
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: The feeling is that they're doing their best to be on top of it. Italy does have a very good
public health system, but the numbers are astounding. As you said, 650 cases reported this evening, that's up from 400 yesterday. So, the numbers
seem to be increasing. Now, they've set up these so-called "red zones" in which around 50,000 people are living and not allowed to leave those areas.
But the question is, and this is not in the statistics put out by the Italian authorities, is where are these new cases? Are they within the red
zone or outside of the red zone?
[15:39:57]
Now, while we've been in Milan now for three very long days, and I can tell you, we don't see many Italians wearing masks. The people wearing masks are
mostly foreign tourists. Most of them, it appears, from Asia. Now, in terms of economic activity, definitely things have slowed down dramatically here.
We understand the factories are still working but rush hour looks like any other hour of the day, and many workers are being told, if you can do your
work from home, do that.
QUEST: Ben?
WEDEMAN: Yes, Richard?
QUEST: So, looking at the map, which I have on the screen, and knowing the amount of industrial production, I mean the north of Italy is the country's
base for industrial production, how badly are the experts and the government ministers expecting it will hit the economy?
WEDEMAN: Well, the ministers are not trying to talk down this situation. I mean, they're not -- they're not trying to overplay the potential economic
impact of this crisis. And don't forget, we are only seven days into, sort of, the real depth of the coronavirus crisis in Italy. But some statistics
or numbers we're already getting is that the Italian Hotel Association is saying that countrywide there are -- there's a 40 percent cancellation on
hotel rooms. Here in Milan, it's 70 percent. The Tourism Association is saying that they are expecting a drop in revenues by as much as 5 billion
euro as a result of this crisis.
QUEST: Right.
WEDEMAN: So, this is definitely -- as I said, it's just the beginning, Richard.
QUEST: Right.
WEDEMAN: And already these numbers are cause for serious economic concern.
QUEST: You've had three long days there, I'm guessing, batting never mind, you'll have many more long days in Milan covering this. Thank you, Ben
Wedeman, who is in Italy.
Pharmaceutical companies are racing to develop a coronavirus. It's helping the stock prices in the process. We'll look at that after the break.
(COMMERCIAL BREAK)
QUEST: Stocks in pharmaceutical companies have jumped sharply on hopes that they will be the one that will present or discover the coronavirus vaccine.
In the last month, shares of Gilead are up 15 percent, and Moderna is up 12 percent, 50 percent over the last couple of months, both plan to start
testing vaccines in the near future.
[15:45:09]
Brad Loncar is with me, the Chief Executive of Loncar Investments, focus on investments in medicine. You say to me that -- I mean, there's obviously a
race on to find the virus simply on humanitarian grounds.
BRAD LONCAR, CEO, LONCAR INVESTMENTS: Absolutely. The first thing I would say is, science is what's going to get us out of this. You had a great
segment prior where you talked about containment and how important but imperfect it is. I'd like to say that containment is going to do the
blocking, but science is going to do the tackling, and I'm very proud of the way that companies have risen to the occasion to really try to tackle
this.
QUEST: I suppose the uninitiated like myself, in this case, say to -- well, of course they're doing it, they're doing it to make millions. I mean, if
they find a virus that can solve this, they'll be off to the races.
LONCAR: Actually not. There's usually -- that's what you would think, but there's usually not a lot of money in these things. I think companies are
getting into it for the right reason. So, it's important to define our terminology. There are companies that are working on vaccines. So, that's
meant to prevent a disease, of course, and then there's companies that are working on treatments to help people who are stricken with it today.
Vaccines are very difficult business. That's what Moderna is doing, and has been in the news. I just saw their chief medical officer an hour ago, told
them how proud we are of them, but that's going to take a long time to develop, and one won't be ready for likely a year. So, that takes a lot of
time and a lot of money. And let's all hope by the time that comes around that it may not be as big as the problem --
QUEST: But then who would you give it to? Let's assume you get a vaccine, by which time the outbreak has petered away and, you know, everybody's
forgotten all about it. What'd you do with it then? Next flu season, you recommend everybody gets the coronavirus vaccine, you give it to some
people. I mean, what -- if it takes a year to vaccine -- vaccinate, and it's not really a crisis then, what's the point?
LONCAR: Yes. Well, first of all, we don't know if that's going to be the case. This may come back. A lot of experts are warning about that. And the
thing I would say overall in general is there's a lot about this that we don't know today. So, you should race to develop a vaccine like they're
doing. As far as treatments go, that's Gilead Remdesivir and other companies that are developing treatments. When you have an emergency, you
throw at it what you already have. Might not be perfect, but hopefully, it'll make a difference. That's what Gilead and others --
(CROSSTALK)
QUEST: Right, Gilead, of course, is best known for -- I mean, for the amount of work it does on the HIV fields and the number of medications it
has there. I'm guessing you can extrapolate experience from one to the other.
LONCAR: Yes, this drug, Remdesivir, I think there's -- where there's smoke, there's fire. The fact that the WHO, the U.S. government, and the Chinese
government, have all highlighted this one, says a lot. It's worked against other Coronaviruses --
QUEST: Right.
LONCAR: -- like SARS and MERS, and just the structure, the polymerase that it blocks is similar to what's the makeup of this coronavirus, and so I
think it is a very strong candidate and that's why it's being rushed in.
QUEST: And your suggestion there would be -- before any investor plows in, putting a man walked off and goes up fast comes down just as fast?
LONCAR: I think Gilead could make $1 billion or $2 billion -- $1 or $2 billion off of this. For a company like Gilead, that's not a lot.
QUEST: I see. Thank you. A quick look at the markets as we go to break. We're look -- we've been down now by around about 900 points. We are
bouncing around 881. So, the slide is there with 12 minutes to go off trading.
Heathrow Airport has set a roadblock in its runway expansion plans. You'll hear from the chief executive who promises that they still intend to build
that third runway, if they can.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: Welcome back. I do need to just update you because we are now beyond the lows of the day. Yes, there we go. We are 1000 points off on the Dow
Jones Industrials. We're going to stay with this story as we try and look and work out exactly the implications for what this means. Down 3.69
percent.
Clare Sebastian earlier was telling us about the different sectors that are go offshore falling very sharply. The market is down. It's this -- we
always say, you've heard me say a million times on this program, that the first hour of trading and the last hour of trading are the two most
important of the day. During the middle of it, well, not a huge amount happens. And you saw that yesterday, when you saw the market rise very
sharply at the beginning, and then the afternoon drifted away, and we're off just 102 points.
But this is a classic case of its kind. We have this 960.4 here, the market rallies quite considerably back up during the course of the day, and at
this point, we're only down 150 or so. And you'd be tempted to thinking that it's going to be all right, but not a bit of it. Not a bit of it. We
come down very sharply, and we're now down over 1000 points, nearly four percent.
Put this in context, 1000 points at the beginning of the week, Monday, 900 points on Tuesday, and then yesterday, well, we managed to gain down 100 or
so points, and now down another thousand. So, we're well into a correction territory.
And I want you to look closely at the stocks involved. Microsoft, now remember, Microsoft today warned that its guidance -- the guidance, it only
gave just a week or two ago, can no longer be relied upon, because the company of course, is suffering sharply, not only from China sales, but
also from the way in which of course, people just aren't getting to work and not being able to.
The Dow Chemicals, also off sharply. Apple, if this is getting worse, never mind just China and the production bit, which has been so much on our minds
lately, but if California, the headquarters of Apple is getting -- going to get slammed by this, it's not surprising, Apple is down.
As for the rest, you've got oil coming down, we talked about it earlier. Boeing, similarly, you've got that down. One stock to notice, 3M. Why? I
can hear you saying, Richard, why is there one stock that's up today, 3M? That's very simple. 3M makes masks. So, of course, as 3M could make masks,
it improves.
Back to the whole load, I want to show you the markets overall. Milan, epicenter in Europe, down 2.6 percent. FTSE down 3.4 percent, largest
market in Europe. Germany, largest economy in Europe, down three percent. And into the United States, where we -- as we leave you for a second, the
Dow Jones Industrials off four percent, rounding up, but it's close enough. Same for the S&P 500, it's under 3,000 now. Just under 3,000. Know that
this is under 26,000 at the moment, and the NASDAQ four percent. You can see the correlation between the stocks that are down over here and the fall
that is down over here. This is now a full-scale market route. As we leave you, I'll be back in a moment with a "PROFITABLE MOMENT", the Dow is off
more than 1000 points.
[15:55:10]
(COMMERCIAL BREAK)
QUEST: Well, tonight's arguably unprofitable moment for you there as it is, the market just continues to keep falling. Says no reason why it is falling
other than just the uncertainty. We don't actually have many facts upon which to go on. And it would seem arguably that China has actually got a
handle on things, just as countries like Italy seem to be getting worse. And then you've got this example, there's about 60 or cases in the United
States, but warn of community spread in California.
What you're seeing in that chart behind me, where -- by the way the market is continuing to fall, two things to notice. Firstly, people don't want to
be long going into the weekend. And secondly, tomorrow is a rebalancing day for some of the major indices. So, not only do you have some really
worrying market sentiment going on here, there are technical factors, too. Think about it, do you want to be holding stock if you're a trader, as you
go into the weekend? And that's why this market is falling firm, and it's falling fast in the last seconds of trade. Tomorrow, who knows what will
happen, because there's all sorts of other issues going on.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, try to make it profitable. Jake
Tapper with "THE LEAD" is next.
JAKE TAPPER, CNN HOST: 8400 people in California are right now being monitored for the coronavirus. "THE LEAD" starts right now. Coronavirus
continuing to infect the population and the markets despite President Trump's attempt, a culmination with perhaps overly optimistic assessments,
putting Mike Pence in charge. And frankly, adding more confusion by contradicting his own medical experts. No clue where it came from, the CDC
confirms the first confirm case of coronavirus in the U.S. with no links to foreign travel or direct contact with patients, as nations are closing
borders and shutting down schools to try to contain the global outbreak.
END
