MATT LAUER, co-host:
But let's begin on a Tuesday morning with Monday's bloodbath here on
Wall Street
.
CNBC
's
Maria Bartiromo
was here amid all the chaos.
Maria
, good morning to you.
MARIA BARTIROMO reporting:
Good morning,
Matt.
Stocks plummeted overnight in
Asia
,
Europe
is following suit this morning as fear dominates
Wall Street
. Now the focus turns to the
Fed.
And investors are hoping for some good news
later today
after suffering the worst day in two years. Investors reacted to the first ever downgrade of US credit fast and furious on what became the worst day on
Wall Street
in two years. Now Tuesday's Fed meeting is critical as pressure mounts for
Ben Bernanke
and his fellow policymakers to consider fresh stimulus for the
economy
or face the threat of another recession.
Mr. ART CASHIN (Director of Floor Operations, UBS):
There's concern that the
S&P
downgrade may do something to consumer confidence and thereby ease us a little closer to the infamous double-dip that everybody's worried about.
BARTIROMO:
Midday
Monday, the president tried to inject confidence into the market.
President BARACK OBAMA:
Our problems are imminently solvable and we know what we have to do to solve them.
BARTIROMO:
But as the president was talking, the
Dow
was tanking, selling off another 400 points after his speech, ending the day down 600 or 5.5 percent.
S&P
president
Deven Sharma
defended the downgrade in an exclusive on
CNBC
. Why downgrade the debt when it's actually about the political process?
Mr. DEVEN SHARMA (Standard Poor's President):
Yes. The political process becomes important because that speaks to how this fiscal and economic and monetary choices are being made. That influences the
credit worthiness
.
BARTIROMO:
Adding to the drama, the
European Central Bank
was trying to avert a further spiral there by buying bonds of
Italy
and
Spain
. With money moving out of stocks, investors shifted into other assets viewed as safe havens such as gold. It closed at a record, above $
1700
an ounce. Investors also flocked to
Treasuries
, focusing on a weak
economy
and the prospect of low rates for some time to come, instead of the downgrade of credit.
Mr. DANIEL GROSS (Economics Editor, Yahoo! Finance):
In theory, when
S&P
downgrades your credit you should dump those bonds. It means you're less likely to get paid back. But the
US government
is exceptional in this way because nobody believes the US is going to default.
BARTIROMO:
And by the close of trading Monday, investors had lost $1 trillion in value, one reason they're hoping for some good news from
Ben Bernanke
and company
later today
,
Matt.
LAUER:
All right,
Maria
, thanks. We're joined now by your colleague
Jim Cramer
, also at
CNBC
.
JIM CRAMER reporting:
Morning, Matt.
LAUER:
Jim
, good morning to you.
CRAMER:
Morning.
LAUER:
I'm going to start with you, I'm not picking on you...
CRAMER:
No problem.
LAUER:
...but yesterday the markets opened, they went down about 230 points.
CRAMER:
Right.
LAUER:
You were on our program live for the
West Coast
.
CRAMER:
Right.
LAUER:
You said you were actually encouraged by that because it seemed somewhat stable, nothing too dramatic.
CRAMER:
Right.
LAUER:
After that it went very south. What happened?
CRAMER:
Well, remember, we got to keep in perspective that panic is not a strategy here. We're only down 6 percent for the year for the
Dow Jones
, much better than everywhere else. And where we're coming from -- I know the point loss is big, but remember we lost 22 percent in one day when we were down 508 points in '87. The point decline wasn't nearly as stark as what the, you know, the percentage decline was not that bad.
LAUER:
Is this panic,
Maria
, or is this investors looking and seeing something fundamentally wrong with the
US economy
?
BARTIROMO:
I think that's what it is,
Matt.
I think people are looking at an
economy
that has worsened. It is no longer a soft patch. The question is are we headed for a double dip? And they're saying 'I'm selling now and thinking later.' I agree with
Jim
. At some point we will find a bottom. They will feel like, 'OK, this is a buying opportunity.'
LAUER:
Are we close to it?
BARTIROMO:
I don't feel like it's out and out panic. And that's what you really want to see in order to expect capitulation.
CRAMER:
Right. And remember, it's overseas that's still the big problem. It's Europe. Obviously the debt ceiling issue and then coupled with the
S&P
is causing a lot of panic. But,
Matt
, again, I have to tell you, unless we have a severe recession it is going to be an opportunity to buy
on the way down
.
LAUER:
And I
'll talk about those opportunities in a second. I was shocked. I'll tell you, I was looking on Monday at what happened to
Bank of America
. That bank's stock...
CRAMER:
Right.
LAUER:
...went down by about 20 percent. I know you want to be very careful about this,
Jim
.
CRAMER:
Yes.
LAUER:
What happened? Why did they take such a hit?
CRAMER:
Bank of America
is at the crux of the mortgage crisis in this country.
One out of five
mortgages directly related to
Bank of America
. I think people feel that as long as housing's going down in value,
Bank of America
has to be hurt. A lot of people feel like it needs more capital. The company says it doesn't.
LAUER:
All right. Stay in the market,
Maria
? I mean,
Jim
's been saying this is not
2008
, there are opportunities here. Where are the opportunities in your opinion?
BARTIROMO:
Well, I agree that long-term this is probably at some point a buying opportunity, but things can get worse before they get better because it is based on real fundamental weakness for the
economy
.
Bank of America
a separate story because of this...
CRAMER:
Right.
BARTIROMO:
...upset over the need for capital. But I think we're still in it and we've got some messiness to come.
LAUER:
A few seconds for each of you to end.
CRAMER:
Right.
LAUER:
I liked your interview yesterday with the president of
Standard & Poor
's. They are obviously on the defensive. People pointing fingers at them for downgrading the
US debt
rating. The president's on them, the Treasury secretary, but now you're starting to hear a lot of people say, 'Wait a minute, they did the right thing.'
New York
's Mayor
Michael Bloomberg
said that. Other people saying, 'We could thank them in the long term for what they've done.' How do you both feel about that?
BARTIROMO:
I think ultimately we should be thanking them because there are real issues.
CRAMER:
Right.
BARTIROMO:
Everybody understands we are spending more money than we are taking in. Something's got to give. If this acts as a wake-up call, more power to
Standard Poor
's.
CRAMER:
Right. We deserved it. I was surprised the president didn't say, 'You know what, we're going to get back that
AAA
,' instead of just saying we're a
AAA
nation. Real facts, real substance, real budget cuts, real revenue increases will meet their demands. I think everyone in the world thinks when is the
United States
going to step up and
do the right thing
?
BARTIROMO:
LAUER:
Bumpy day today here?
CRAMER:
Yeah.
BARTIROMO:
Yeah.
LAUER:
Yeah? More bumps in the road?
BARTIROMO:
Yeah, for sure. Volatility.
LAUER:
All right,
Jim Cramer
,
Maria Bartiromo
. And don't forget, you can check out the markets and follow what's going on all day long on
CNBC
. Thanks, guys, appreciate it.
Let's go
back to
Studio 1A
and
Ann.
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