JUDY WOODRUFF: The coronavirus outbreak is generating new infections and new commercial
chaos tonight. Fears of a global economic crisis sent Wall Street on another wild ride
today, ending its worst week since October 2008.
The Dow Jones industrial average fell nearly 1,100 points, before a late-day recovery.
It ended up losing 357 points, to close at 25409. The Nasdaq managed to rise one point,
and the S&P 500 fell 24.
But at the White House this morning, economic adviser Larry Kudlow said that he expects
the market to come back fairly quickly.
LARRY KUDLOW, Director, National Economic Council: I acknowledge that the situation
could deteriorate, and I acknowledge the risks.
But given what we know factually, it looks to me like the market has gone too far. I
just think everybody, whether you're an investor or whether you're an ordinary Main Street
person, people shouldn't overreact.
JUDY WOODRUFF: The market frenzy came as more than 3,500 new cases were reported in several
countries today that have the largest outbreaks outside of China. Disruptions to plans and
typical business are growing throughout the globe.
In Geneva, the Swiss government became the latest to ban large public events, scrapping
an international auto show.
ALAIN BERSET, Swiss Interior Minister (through translator): We know this will have a significant
impact on public life, but the move is expected to provide protection to public health.
JUDY WOODRUFF: Reports poured in from around the globe that the coronavirus, COVID-19,
has disrupted events, commerce and travel. As airlines cut flights to a number of Asian
countries, including Japan, Tokyo Disneyland and other theme parks were closed.
In Italy, where cases have steadily increased, officials say jitters over the virus have
affected tourism.
DARIO FRANCESCHINI, Italian Minister of Cultural Heritage (through translator): Bookings have
collapsed all over Italy. Hotels are in a difficult situation. So it's a very complicated
situation that we must face immediately.
JUDY WOODRUFF: One Swiss insurance company even put in place a no-handshaking policy.
In Iran, workers sprayed disinfectant at a Shiite shrine, as Friday prayers in parts
of the country were canceled. In Seoul, South Korea, hundreds flocked to stores to buy masks,
and workers continued to canvas public places, spraying disinfectant.
As fears over coronavirus rise, World Health Organization officials raised their risk assessment
to the highest level.
DR. MICHAEL RYAN, World Health Organization: The health systems around the world are not
ready, and need to be better prepared to absorb the impact of the virus. It's time to prepare.
It's time to get ready. It is time to act. And people need to take a reality check now.
JUDY WOODRUFF: The list of American-based businesses canceling travel, meetings and
events also grew. Amazon told all its employees to defer nonessential travel, even within
the United States.
Yesterday, Facebook said it would cancel its biggest event of the year, an annual conference
known as F8.
At the same time, the politics of the virus intensified. In Washington, White House acting
Chief of Staff Mick Mulvaney accused Democrats and the news media of stoking fears to hurt
President Trump.
MICK MULVANEY, Acting White House Chief of Staff: The reason that you're seeing so much
attention to it today is that they think this is going to be what brings down the president.
That's what this is all about.
JUDY WOODRUFF: On Capitol Hill, Democrats, in turn, blamed the White House for politicizing
the outbreak.
REP. ANDY LEVIN (D-MI): The career professionals say that this community spread is inevitable,
it's going happen, it's a question of when, but not if. But the political people are saying,
oh, this is nothing, it's passing over.
JUDY WOODRUFF: Today, the Centers for Disease Control and Prevention said it aims to have
virus testing kits in every state by the end of next week.
More than $3 trillion of value were wiped out from American stocks this week, just days
after the markets were at record highs. The week was so tumultuous that Federal Reserve
Chairman Jay Powell took the unusual step of issuing a statement about the fundamental
strength of the economy.
But he acknowledged that the coronavirus poses risks, and said that the Fed would act, if
needed, signaling a possible rate cut.
Later, a White House official confirmed to our Yamiche Alcindor that they are considering
pursuing a targeted tax cut package.
It's a lot to discuss with Carl Tannenbaum. He is the executive vice president and chief
economist for Northern Trust.
Carl Tannenbaum, welcome to the "NewsHour."
So the markets didn't end the day as down as they were earlier, but still another wild
ride. How do you interpret the forces at work here?
CARL TANNENBAUM, Executive Vice President and Chief Economist, Northern Trust: I think,
over the last week, Judy, the markets have been undergoing a massive reevaluation of
the consequences of the coronavirus.
The data on the infection certainly is one thing, but I think what the market may be
reacting to in the main is how public health officials in the private sector will react
to all of this. The preventative measures taken by both of those will tend to impede
commerce.
And while they will be quick to implement them, they may be slow to remove them, even
as the coast clears. What this means is an interruption in the global supply chains,
which are used to make many manufactured goods, and also an interruption in services businesses,
like travel, hotel.
And so this is both a supply and a demand shock. In light of all that, perhaps the market
needed to reevaluate its expectations for economic activity and corporate profits.
JUDY WOODRUFF: So what is it that's going on in the economy that most -- and in the
reaction to the coronavirus that is most concerning to people like you, who look at all this?
CARL TANNENBAUM: Well, in heavier industries, if you can't get parts to your plant, you
can't finish products.
And, certainly, the way that things are working in Asia, it's very, very difficult to get
those supplies at the moment. Companies are tied closely into China and other Asian vendors.
And that means their business is very slow. And that means they may ultimately have to
furlough workers for a little while.
For service businesses, certainly those involved in the hospitality industry, Judy, the logistics
industry, the movement of people and parts across the country are very, very slow.
And there's also a psychology developing that will need to be managed carefully. People
without the benefit of clear information often assume the worst. And that can create decisions
for concern and investment that perpetuate a negative cycle.
JUDY WOODRUFF: How did you read the Fed statement today, the statement from Chairman Powell?
CARL TANNENBAUM: I think the statement was entirely appropriate.
The situation is unfolding, but it is clear that this just isn't a market correction,
that there is something fundamental underneath it. And in order for the Fed to continue to
pursue its objectives, it may need to lower interest rates, even though that's not exactly
the right tool for coping with a pandemic.
It will restore some confidence and would also help financial conditions from getting
too tight.
JUDY WOODRUFF: So, if that's not entirely the right tool, what could be the right tool?
And when you hear the White House is considering doing something with tax cuts, what does that
say to you?
CARL TANNENBAUM: Well, like the flu itself, sometimes, the best remedy is just to let
it run its course.
But there are some therapies that can be applied in the interim in order to help buffer the
symptoms. hand in the case of fiscal policy, certainly, some aid to prepare health officials
for dealing with whatever might come our way, as well as some help for industries that might
be particularly impaired, would help them from taking further steps that could be damaging
to our economy.
JUDY WOODRUFF: And what does that say about tax cuts, if that's what the administration
wanted to do? Could that be effective?
CARL TANNENBAUM: I think some fiscal measures would be helpful. It's early days, so I haven't
seen the specifics.
But they should be designed so they hit with the most force over the next three to six
months. Even in a worst-case scenario, it seems likely that global supply chains will
be back on to line within that window. And so what we need help with is the short term.
JUDY WOODRUFF: All right, a lot to digest.
Carl Tannenbaum with Northern Trust, thank you very much.