So what weve got to do is identify the threats that we have its crazy Going Foundation let it be an arms race is on all sides very Dramatic Development only mostly im going to resist i dont see how that strategy will be successful very critical time to sit down and talk. Join me every thursday on the alex so im unsure when ill be speaking to get off of the world of politics sports business im show business ill see that. Global markets plummet amid widespread talan and this time while at the culprit this does boom but the one business show you cant afford to mess im christiane and im bridgeboro in washington coming up the market bloodbath rages on amid infection fears and oil has stalled with prices dropping below 40. 00 a barrel we take a look at the big picture and what the future may have in store. And the World Health Organization says the possibility of the corona virus becoming a pandemic is the very real well break it down and discuss what can be done to control the spread of the virus. The chairwoman a wildfire has stepped down just faded out of a congressional hearing. And what she said was the 5 will break down the shakeup at one of americas largest banks i want to get it on this very busy day so lets get started. On a loss as much as a 3rd of its value monday in its biggest drop since 1900 ones gulf war w. T. F. Fell to 30. 00 to 30. 00 per barrel as saudi arabia launched a price war with russia after the 2 failed to come to an agreement at its vienna meeting russia declined to agree to production cuts that have artificially kept Oil Prices Steady officially russia said it wants to wait and see what the Coronavirus Impact on demand is before agrees to cut an officially russia is angry about u. S. Sanctions of Russian EnergyCompany Rosneft an attempt to stop the north stream to pipeline to germany by flooding the market and sinking prices russia sees an opportunity to crush the us shale industry which is dangerously levered to the hilt russia is also fed up with cutting Production Output time after time while u. S. Shell producers each time up production to fill in the market as a result saudi arabia cut its crude price as much as much as 6. 00 to 7. 00 per barrel and is looking to raise its daily output by as many as 2000000. 00 Barrels Per Day as it too is ready to fight for market share in the u. S. Oil and gas industry is facing attack from 3 sides falling prices from reduced demand a Global Movement to divest from fossil fuel and crushing debt loads the industry has about 86000000000. 00 of rated debt do the next 4 years and as analysts have warned before below 50. 00 per barrel Many Companies will be unable to service their debt obligations this in turn has the Banking Sector as these Companies Start defaulting big banks including j. P. Morgan city Group Wells Fargo and goldman are down between 9 to 13 percent today as the selling pressure intensified across all sectors u. S. Markets triggered a 15 minute halt at the am the dow fell over a 1000 points as investors continue to seek safer assets. The yield on the tenyear dropped below 0. 5 percent for the 1st time ever in the history crude prices have become a bigger problem for the markets than the coronavirus now as it will be virtually impossible for the s. N. P. To bounce when the Energy Sector is down 15 percent interesting way enough gold that defacto safety asset is not spiking instead it is trading flat someone down indicating that people are selling without prejudice this type of broad based sell off is indicative of a cash crunch and that leverage funds are receiving margin calls forcing them to sell out of assets like gold in order to free up cash analysts are now expecting the central bank to cut another 75. 00 bits in its march meeting next week even though Monetary Policy is unlikely to be effective at the moment reuters notes that mondays move has wiped out approximately 2. 00 trillion dollars in value off the global stock market no kristie i mean it is been a crazy day here with markets pretty much all across the board as you just mentioned but why are we really seeing this right now weve seen buyers come in when weve seen these massive selloff weve seen the departures come in and buy it up so it brings it back up so why are we seeing that now are we not going to see that rebound it is because the oil sector is one of the basic cornerstones of the entire u. S. Equity markets right now were seeing a collapse of the entire industry and that in turn has the stomach implications for the entire market we all remember what happened in 2008 when people at the faulted on their Mortgage Loans and that had ripple effects all across banking consumeristic cetera or say the same thing now thats why financials are down so much today because the oil sector is going to hit the entire broad based commodities sector is going to hit the u. S. Financial sector and that in turn will hit start consumers retailers all the way down the line and were going to talk about this at length here in just a minute but i do want to bring something up because as weve talked about whats going on with the Airline Industry especially due to the coronavirus thats whats actually been pushing these oil prices down and now today boeing who is generally fared well even despite their 737 max problems there dont. Percent on monday and theyre not because federal regulators were not actually happy about some of the stuff thats going on with the 737 max they had a bundle of wires that they said oh thats safe dont worry about it and regulators are saying no so theyre even feeling the pain on the on this day of massive massive sell off so well probably say about probably airlines and or that well Energy Sector as well absolutely lets bring in rick rule c. E. O. And president of Sprott Holdings whos joining us out of vancouver so request saying the energy junk bond market absolutely crashing today as Shell Companies now are able to meet their debt and Interest Payment obligations so just like we just said in 2000 when we looked at which banks had the most exposure to bad mortgages lets take a look here at which banks now have the most exposure to a wave of the falls and the sale shell patch. The truth is that the pain will be widespread across American Banking from regional banks as an example texas banks in oklahoma all the way through the biggest banks and nation as you pointed out your header all the big banks are off today the real surprise i think might take place in the e. T. F. Market though you noted that theres an awful lot of non Investment Grade or junk rated debt in Public Markets issued by Oil Companies i read the other day that about 15 percent of non Investment Grade ranked bonds in the market are issued by oil and Gas Companies and a lot of those are held in e. T. F. That are income e. T. S. The difficulty with that is that if Retail Investors begin to sell those. Well the e. T. F. Themselves are quite liquid the bonds that underlie them are less liquid what happens in an e. T. F. In a sell off like this has the has the effect of a bank run so my suspicion is that the very large banks that have access to liquidity from the fed will actually behave better than some of these junk bond e. T. F. Smites might fare well see over the next 2 or 3 weeks or reckoning a certain. Coming and credit markets with regards to energy now or you know can the oil sector actually recover from what were seeing here on monday i mean is the shell salvageable i mean what is the Systemic Risk risk of sub 30. 00 oil for opec the u. S. And russia for that matter and how does this abrupt arrest of the saudi royal family members actually play into whats happening here with oil today. Well theres several questions there lets unpack them the 1st thing about the oil the oil industry is of course it survives gretta not withstanding the world runs on oil the truth is and we said this on your show before the cure for low prices is low prices a period of oil pricing below 40. 00 a barrel reduces sustaining Capital Investment which over a year and a half or so reduces production it also shuts in new investments remember that oil wells deplete every day you pump an oil well your business gets smaller you have to drill a new one to replace it in some period sime so in truth the cure for low prices is low prices the impact on the u. S. Shale industry is very very different thats a capital intensive business it is highly highly highly reliant on low Interest Rates and High Oil Prices because its capital intensive and because the decline ratio is so high the u. S. Oil Services Industry and the shale industry focus sort of on the delta between the cost of capital and near term oil pricing which is a fancy way of saying that shale prices will decline precipitously at this oil quote the interesting thing to me is that the 2 alleged protagonists in this dispute the saudis and the russians both recently announced very very Large Capital programs the russians 150000000000. 00 program in arctic siberia the saudis 100000000000. 00 sale Shale Program pardon me in the gulf this oil price undermines both of those projects remember the 1st comment over time the cure for low prices is low prices to cure for high prices is high prices markets in fact work that shouldnt come to any solace for Oil Investors in the near term however. And now as we see this entire crash happening right now the company mr ition is drafting measures to blunt the entire economic fallout of oil so what measures can they possibly come out with that will have any effect on the market aside from a total bailout of the sector. Im tempted to say thats above my pay grade. Its very difficult to fight something as big as a market my suspicion is youll remember rahm emanuel saying never waste a great crisis my suspicion is that the Political Forces will use this 1 event as an excuse to further artificially lower Interest Rates and make much more credit available my understanding is that the the feds are looking to increase the repo rate that is the overnight. Lending availability so my suspicion is that the only tool the Trump Administration really has a vailable to it is further quantitative easing and further manipulation of already unreasonably low Interest Rates and now rick i mean is this the bottom of what were seeing right now i mean it is monday the bottom of oil markets are going to go lower and really at the end of the day where the reap what the rebound look like. The markets are already disconnected from reality the truth is in the very near term as buffett famously says the market is a voting machine not a weighing machine youre playing on peoples emotions and peoples narrative and when people are panicked and i think people are panicked anything can happen in the near term the International Energy agency suggests that the fully loaded cost to produce a barrel of Oil Worldwide thats the United States in the needs of china russia saudi is about 60. 00 a barrel that means lifting costs discovery cost capital cost also prior year write downs so right now in a very gross since the industry is making the stuff for 50. 00 or 60 dollars a barrel selling it for 35. 00 a barrel losing 15 or 20000000. 95 times a day thats gets rather boring and its clearly unsustainable but in the near term its. Not about arithmetic its about narrative and panic. Holding thank you so much. A pleasure thank you. And the World Health Organization announced monday that the threat of course the corona virus becoming a pandemic is real as the number of cases now exceeds 100000 with cases showing up in more than 100 nations. Its certainly traveling that so many people and countries have been affected so quickly. Now that the motors has a foothold in so many countries. The spirits of the thunder meek has become there he says researchers are now reporting the number of cases outside of Mainland China have tripled in the past week eclipsing 30000 cases as of monday so if it was pointed out that of the 80000 cases in Mainland China 70 percent have already recovered from the virus outside of china south korea italy and iran have been most affected by the virus with at least 70000 cases in each nation now in response to the growing number of cases in italy Prime Minister just seppi kaante actually signed a decree on sunday restricting movement in the northern regions of the country now the restrictions will affect 17000000 people including those in the cities of milan and venice the w. H. O. Director general made note of efforts to control the spread of the virus. The great advantage we have these diet the decisions we only make as governments businesses communities slimy lease and individuals could name flues the tragic to the d. C. If you did. And if for more on this were joined by she chen assistant professor at the Yale University school of Public Health and thank you so much for joining us and i do apologize i 70000 there it is actually 7000 cases in italy iran and south korea respectively there and now were seeing more cases outside of china as we just mentioned there than inside it in fact confirmed cases have tripled outside the country in the past week and the w. H. O. Is touting the ability to limit the spread of the virus as we just heard but did the quarantines inside of china actually make a big difference here and what other actions should be taken worldwide. Those qualities well the inner and also the massive lockdown indeed. The prevention of the spread of the wires to. War at least the by some time for the rest of the International Community by the. Very largest social disruption so i dont think currently in the us. At this stage of doing that to a larger cost on the disrupt everyones life and the politically. Not feasible but i think there are many other efforts taken by china could be learned by the us and also other European Countries and the International Community for example social distancing is very helpful with all to containing the wires if we can cancel necessary trips and conferences social gatherings that were delayed the spreading of the wires and also for those patients who are having some concern about being in fact heathens ill their measures should be taken to have early diagnosis early isolation and early treatment now would be better half or otherwise if we leave them on the community in a family there will be a concert of a class tour of infraction and also i think a house insurance measures should be taken for example in china starting from. The end of her generate the cover the cost and the emission cost of the hospitals but they gradually did that 1st of the coverage only the come from the cases about the seams and many people were not able to become firm so they also covers all suspected cases i think for americans specially important because they are larger lumberyard people under insured are without any insurance so those costs of where the financial burden and also add to the provider level try bastard to reduce the crossing faction rate but eventually i think of the bottom line is. Even if we are not able to reduce the total amount of people being infected but we can get that. Infectious more we solve the capacity of the house here infrastructures and we can treat the People Better and see more lives and currently as china is recovering there are actually deploy all of a lot of medical practitioner out to middle east especially iran in order to help spread how to contain and quarantine and what practices are effective so right now the w. H. O. Is actually just stopping short of saying that the current a virus is a Global Pandemic so what is the significance of actually giving the virus this title. So i believe that service was very important. Theres a global effort to curb that out of the bother of crossing so but this is to be coming last and the last the fact to you we small countries like iran like 100. 00 countries and territories are being in fact it is so its very important to to share the information of the travelers and tracking those. Potential people who are in fact id and also i would to see very important to have. The iranian because without knowing everyones individual risk of being diagnosed and being in fact it is hard to have anyone to have a correctness Risk Assessment to attend those social gatherings so we understanding that information the larger gathering can be very detrimental to the society so like. Yesterday in the west across america so there was some sort of all these was against that but was still ongoing so that was. Something need to really need to be awarded although people can have a larger source or these tests we can otherwise the peop