Stocks Plummet on Trump's Travel Ban. 
JIM SCIUTTO, CNN ANCHOR: Goodness, look at those numbers there, down 7 percent again. 16 -- almost 1700 points. Stocks just plummeting, this after the president announced a travel ban on most of Europe.</s>POPPY HARLOW, CNN ANCHOR: Our Christine Romans, chief business correspondent, is here. Alison Kosik is also down at the Exchange here, at the opening. Good morning to both of you. Romans, just -- look, the president wanted to calm the country and markets last night and that didn't happen.</s>CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: He did not calm the country and markets. You know, a couple of different reasons, the travel ban, a lot of economists this morning have been noting that, you know, the Great Depression started with a trade and travel ban. They don't like that idea. And they don't like the idea that the president also said there would be a trade and cargo ban with Europe before he walked that back. So the fact that there is the ban is the one thing. The fact that they didn't quite get it right in the scripted speech also added to the sense of is there leadership here on this. They wanted to hear more about testing and they wanted to hear more about treatment and a path forward for actually treating people in the United States. They didn't hear that last night. There is also momentum here that is going on in this market. The backdrop as we have been saying is still the same. More cases, industry slowing down, people working from home, schools being closed, until that story changed and you can see beyond that, the path of least resistance in markets is lower.</s>SCIUTTO: OK. Bear market, people have heard the term before, Statistically a bear market is when your market drops 20 percent or more, a fifth. You lose $1 for every $5 you have invested.</s>ROMANS: Yes.</s>SCIUTTO: Compare this to 2008. How quickly we've gotten a bear market in this crisis compared to the financial crisis?</s>ROMANS: Twenty some days -- 20 some days for a bear market in 2020. It took 200 and some days for a bear market in 2008, Jim.</s>SCIUTTO: One tenth of the time.</s>ROMANS: Yes. I mean, this has been quick, it's been fierce, and fast, and ferocious. The selling has been. And that's what really has caught everyone off guard, how quickly this is unraveled.</s>HARLOW: Alison, obviously the market is freaking out because you've cut a lot of money coming into the U.S. when you enact a ban like this. One of the numbers I saw this morning, 850,000 international visitors came to the U.S. from parts of Europe included in this ban in the month of March alone. It brought it $3.4 billion in spending. Is the market reacting to that or is it bigger? Is it the uncertainty that the president displayed last night?</s>ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, it's interesting how you see the futures trade after the president gave his address on the coronavirus. Futures dropped more than 5 percent. So the futures trade actually dropped and there was some concern that when the market opened today, we could see that circuit breaker kick in again. That did not happen. But we saw futures fall that great amount last night because there is disappointment there weren't concrete proposals included in what he was talking about. Meaning fiscal stimulus to try to cushion the blow of the coronavirus impact on the U.S. economy. But the reaction that you're seeing here today is twofold, It is also because of the travel restrictions because of what you said that just in March of 2019 alone last year, visitors from European countries brought in $3.4 billion. So a lot of the anxiety that you're seeing here is really obviously about the impact on businesses, the impact on world economies, which, by the way, no one knows what kind of a hit businesses and world economies will take because of the coronavirus. The anxiety is also over consumer spending because the concern is, is that people are sitting in their homes, they're not getting out there and spending money. And it's really been the consumer that has been driving this bull market for so long.</s>HARLOW: Yes.</s>KOSIK: You know, consumer spending makes up the lion's share of the U.S. economy -- Poppy.</s>HARLOW: OK. Alison, thank you very much.</s>SCIUTTO: Concerned about real economic effects to this. So let's join -- joining us now on the phone, Mohamed El-Erian. He's the chief economic adviser at Allianz. Also used to be the CEO of PIMCO investment powerhouse. You've been following the market for decades. I want to ask you this question. The president spoke to the nation last night, he was speaking to investors, I imagine, as well, and businesses to calm them. Your response to the changes, to the travel ban, and also the clarity of his answers on things like whether it would affect cargo as well as people.</s>MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: So I worried, and I tweeted that out yesterday, that the only thing that markets would focus on is what the travel ban means for economic growth and more generally for people's willingness to interact in the economy. Remember, we have two distinct dynamics in play, both of which are not familiar to advanced economies. One is sudden stops, things just stop.</s>HARLOW: Right.</s>EL-ERIAN: Airline travel just stops, cruise just stops. And the other one is fear. Fear and the travel ban increased concern about both. It doesn't surprise me that the markets are doing what they're doing because people now are pricing in the global recession.</s>HARLOW: Mohamed, White House trade adviser Peter Navarro e-mailed me last night about temporarily eliminating the payroll tax and said, quote, "If enacted fully and promptly, the positive GDP growth impacts of the payroll tax cut has the potential to completely offset negative growth effects of COVID-19." How do we know that? We have no idea, do we, what the lasting economic impact is going to be on growth in this country and around the world?</s>EL-ERIAN: So first, he may be right over time, but it will do nothing in the short-term. And the way to reduce this, Poppy, is simply look at your own behavior. If you get a tax relief, if the Fed gives you a cheap loan, are you going to go on a cruise? Are you going to travel?</s>HARLOW: No.</s>EL-ERIAN: We are being told social distancing, isolation is the way to deal with the health threat. And you've got to put health out of everything else. So I think that the policy response right now has got to be on two things. One, is protecting the most vulnerable people in our population and economic segments, and secondly, ensuring that financial markets function, so that we -- so that finance doesn't contaminate the economy.</s>SCIUTTO: Yes.</s>EL-ERIAN: The other stuff which is increasing our purchasing power, that will have an effect later on, but not now.</s>SCIUTTO: The reason folks, and you might be aware of this as well, Mr. El-Erian, those numbers have frozen on your screen. Nothing wrong with the screen.</s>HARLOW: It's healthy.</s>SCIUTTO: Trading has stopped on the market. That's because it has reached -- for this number you look at the S&P 500, a broader index.</s>HARLOW: Right.</s>SCIUTTO: It means it's dropped more than 7 percent. Our Alison Kosik is on the trading floor at the New York Stock Exchange. Alison, so this holds now for 15 minutes unless it were to drop again 13 percent, and then you'd have another 15-minute trading halt. What's the reaction there on the floor?</s>KOSIK: Yes, I mean, you know what, unfortunately this is sort of becoming normal because this is exactly what happened on Monday as well. Trading stopped for 15 percent when we saw the S&P 500 -- for 15 minutes, rather, after the S&P 500 fell 7 percent. The idea with halting trading is -- it's to reduce panic and ensure orderly markets are functioning. We are seeing the Dow as you said enter a bear market, the S&P 500 now in a bear market, so we can honestly say now that the stock market has entered bear market territory and the historic 11-year bull run has ended. So now we have traders all over the New York Stock Exchange, waiting these 15 minutes out to resume trading because the circuit breaker has been kicked.</s>HARLOW: OK. Alison, we're officially in bear market territory. Christine Romans, tell everyone at home what this means for them.</s>ROMANS: So this means, look, at the end of last year, we had record high balances in our 401(k)s. At the end of last year, right? So now you've got more than a year and a half of those gains have been wiped away. So you're going back to, you know, 2018 levels. So well over half of the gains during the Trump administration in the stock market are gone. If you are close to retirement, you've had everything in the stock market, you shouldn't have, I'm sorry to say, but you have really suffered some risk here, some -- you know, more than 23 percent now in your stock market. But your 401(k) is probably not just full of stocks. As you get closer to retirement, likely you have been pulling back on risk and that's what you're supposed to do. But it hurts in the meantime. And it hurts because it happens so quickly. You know, 20 percent declines in just, you know, 20-some trading days or 20-some days is really, really unusual. This has been a sharp decline from record highs into bear market territory.</s>SCIUTTO: I mean, you said -- you said it took 267 days to get into bear market territory in 2008 during the financial crisis, it has taken now today's drop just 22 days, less than a tenth of that.</s>HARLOW: Yes. Do we still have Mohamed El-Erian on the phone? OK. Mohamed, the question is, the president was unable to assuage the markets, OK. The Fed's ability to do so is limited given how much they have cut when the economy was very strong and the market was doing well. You wrote a whole book about this and the importance of central banks in a moment like this. What now can and should central banks around the world and the U.S. Fed do?</s>EL-ERIAN: They should be laser focused on the functioning of markets. They have to make sure that finance doesn't contaminate the economy. This is not about the banking system, I want to stress. This is not 2008.</s>HARLOW: Right.</s>EL-ERIAN: But it is about credit becoming less available. It is about the disrupted market. Poppy, have a simple image in your head, a beach ball that we have submerged for a very long time deeper and deeper into the ocean.</s>HARLOW: Yes.</s>EL-ERIAN: And suddenly we let go of it, it doesn't stop at the surface, it's going to pop right up and that's what's going to happen to markets. They were artificially supported for too long by central banks. And now an overshoot on the other way up. Things will come back. It is important to stress. Strong balance sheet companies survive this.</s>ROMANS: Mohamed, this is Christine Romans. So glad you're here with us. Quick question, outside of the Fed, what other stimulus is appropriate here? Because we see the Democrats have a package they're trying advance, there is some concerns, though, about what would work and what could get through Congress. I mean, should there be a fiscal approach here that's more aggressive than what we have seen?</s>EL-ERIAN: Yes, you shouldn't turn a short-term problem into a long- term problem. You shouldn't turn a liquidity problem to a solvency problem. So people who are forced to stay home, because they can't get to work for health reasons, we should try and support them. The uninsured should get access to free testing, free treatment. You've got to protect people who otherwise, their own behavior would make things worse. Remember, what makes sense when individual person in this environment doesn't make sense for society. So you as an individual investor, you disengage, you stop spending. But for society as a whole, that is a real problem. So we've got to limit short-term problem becoming longer-term ones and we've got to make sure the most vulnerable are protected. We have the tools. OK. It's just a matter of getting them implemented.</s>SCIUTTO: Mohamed El-Erian, stay there, hold that thought. Christine Romans, Alison Kosik, we're going to take a brief break. We'll be right back.</s>SCIUTTO: Welcome back. Your screen is not frozen. The market is still frozen for 15 minutes because it's dropped 7 percent at the open here this morning once again. Back with Mohamed El-Erian and Ken Rogoff as well, professor of economics and public policy at Harvard, as well as Christine Romans and Alison Kosik. Ken Rogoff, if I could begin with you, there's a lot of discussion now of fiscal stimulus, in other words the government spending money to help dull the blow of all this. You've heard about a payroll tax holiday, there's discussion now of bailouts for the airlines because they're in serious trouble. What would make the biggest difference for folks at home who are watching this, they're not spending the same kind of money they did, they're worried about their jobs, et cetera? Which packs the most punch?</s>KEN ROGOFF, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, HARVARD UNIVERSITY: I don't think it's a matter of one thing. Frankly what I wanted to see last night and perhaps markets did is that there is going to be cooperation between Congress, the president, maybe the president gives Congress, the Democrats, their good ideas, they have a lot of them. Democrats can see some of his and they move forward. I think we have to look forward not just to try to get through the immediate patch, but not to hurt the healthy parts of the economy. We need a massive stimulus. This isn't -- this is clear, this problem, even if it was just a global part of the recession coming from China we'd be in trouble.</s>HARLOW: Except when you look at massive stimulus, Christine Romans, you made this point to me in the break, when there was TARP, right, during the 2008 financial crisis, it failed the first time, the market tumbled. Then they got their act together, they passed something. There was a stimulus plan. This is very segmented. What is the plan?</s>ROMANS: There is no TARP for a better word, it's a terrible acronym, but there isn't -- there's a bunch of different ideas but there isn't one and I think that Ken is right. I think investors wanted to hear last night the president go out and say, here's what we're going to do. We're going to work with Congress, we're going to work with the European allies, we're going to work with other -- we're going to coordinate around the world to do X, Y and Z. We did not hear that. The markets fell out of it.</s>SCIUTTO: Mohamed El-Erian, there've been a lot of talk about how there is not a lot of room to cut interest rates because the Fed has been cutting interest rates through the boom here. Right? I mean, we're down close to 1 percent. Congress has also been spending money through the boom, including enormous tax cut, which has inflated the deficit. Is there fiscal room now for the kind of massive stimulus you hear being talked about to make a difference?</s>EL-ERIAN: I think we have no choice but we have to be smart about it. We have no choice because we don't want to sacrifice growth potential as well as actual growth. We could devastate the economy for years if we're not careful. I want to stress the how is as important as the what. You already heard from Christine and Ken, two elements of the how. First it has to come across as a whole of government approach. Everybody working together. There is a conductor, everybody in the orchestra know what they're doing, and they're coordinated. Second, it has to have an international element. Third, it has to have a clear map. What are you going to do on day one? What are you going to do on day two? Day one is about, I stress, things like free testing, covering uninsured, paid emergency leave, paid medical leave, strengthening unemployment insurance, that sort of stuff. Phase two is about following that up. Once you've built the bridge, the immediate bridge, with well-focused stimulus and critically infrastructure spending that promotes long-term growth. And so you need a map as well. You need a very clear plan. If you have these three things in place, you start putting the bridge, if you like, to a destination that's not as bad as it looks right now.</s>HARLOW: Mohamed, markets are forward looking. They predict how companies are going to do. Companies like Princess Cruise just halted total operations for 60 days. We know the impact on the travel industry, hospitality, it is brutal. The impact on jobs, et cetera. Is there any way to avoid a recession now in your mind?</s>EL-ERIAN: First, I think a global recession is unfortunately very, very likely. And the sadness, the tragedy is --</s>SCIUTTO: Sorry to interrupt, Mr. El-Erian. Just so viewers know what's happening here. The market has reopened after this 15-minute break, which you're well aware of, and as it reopens there, looks to be falling again. Apologies, though. Please go ahead and continue the thought.</s>EL-ERIAN: Yes, I'm just going to say, if you're a company right now, here's what you're looking at. Your revenue is collapsing, and collapsing way beyond anything that's planned. Your CAR side is really complicated. You can't ensure your supply lines, you don't know where your employees are going to go and you don't know how you're 'going to move your inventory. Your cash is being drained, and God forbid, you have maturing debt, the credit markets are closed. So this is going to impact virtually every company. A few are going to do well, but most of them are going to find them being hit on every side of the income and balance sheets.</s>SCIUTTO: Yes. Ken Rogoff, if you're still there now, we're -- gosh, we're 8 percent down. So that market freeze didn't stop the free fall. Ken Rogoff, tariffs have been a big part of the president's approach to China. Are tariffs a target here, something to lower, because that of course imposes heavy costs on businesses and consumers in the midst of a -- and there it is, 2,000 points down.</s>ROGOFF: Absolutely. One of the first steps that should have been taken a month ago, two months ago, is to pull back the tariffs. Call off the tariff war. We fairly don't need a lot of things to block global trade right now. We're in a crisis. And that's the most counterproductive thing we've done to the economy, you can call it that. It's a stop that's also important gesture towards the world, as Mohamed El-Erian was saying. You want to show some international approach, not that you're trying to isolate yourself, form a moat around the United States. That is not going to work.</s>HARLOW: Thank you, Ken, Mohamed, Alison at the exchange. Christine Romans, our chief business correspondent. We couldn't get through all this without you guys. We're going to -- the markets off 2100 points. The Dow, the S&P down just as much. We'll stay on top of this. Thanks to everyone. We have a lot more breaking news. New details from lawmakers on the hill, what they just were briefed on. I will have all of that for you, ahead.</s>HARLOW: Top of the hour. Good morning, everyone. I'm Poppy Harlow.</s>SCIUTTO: And I'm Jim Sciutto. Listen, it's a tough day, it's an unsettling day. We're going to bring you all the information we gave as we have it. This is the latest. We have confirmation now this morning of how far behind the U.S. is on coronavirus testing. A source tells CNN that House lawmakers were told the U.S. public health system were struggling to catch up to other countries. 11,000 tests completed so far across the country. South Korea, for instance, tests 10,000 people per day.</s>HARLOW: Just think about that. The markets reacting this morning. The Dow off about 7.5 percent, down 1700 points. The same for the S&P. All over the confusion caused by the president and his primetime address last night. He announced a travel ban on most countries in Europe but excluded the United Kingdom, and then had to correct what the travel ban actually meant. Meanwhile, the pandemic is reaching every aspect of American life. The latest headline this morning, the NBA Wizards are telling their team to self-quarantine for two weeks after playing the Utah Jazz. A Jazz player tested positive for coronavirus.</s>SCIUTTO: So the NBA has already suspended its season. March Madness, of course, the college basketball tournament, that's going to play out in empty arenas. Also unfolding this morning, Carnival's Princess cruise line says they are suspending all operations around the world for 60 days. States and cities, they're banning large gatherings. Most schools around the country are closing. And listen to this, movie legend Tom Hanks and his wife test positive for the disease. They got that test because they happened to be traveling in Australia at the time.</s>HARLOW: Our team is covering this story all around the world. Let's begin with our Christine Romans here in New York on the markets. The markets were not calmed at all.</s>ROMANS: No.</s>HARLOW: Christine, last night, from the president.</s>ROMANS: You know, they wanted to see a plan. They wanted to know the United States had this under control and what was the plan for combatting this, where was the testing, what is the public health. For example, hospital surge capacity. What we've got was a travel ban that then had to sort of walked back a little bit because the president also said he was going to ban cargo and trade. That really concerned markets. You saw markets last night, as the president was speaking, tumbling around the world. And then when the White House corrected that and said, no, it's not for American citizens, it's only for citizens of these countries in Europe coming to the U.S., markets weren't calmed by that because of the kind of clumsiness of the message.