the 2 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 unofficially russia is angry about u.s. sanctions of russian energy company rosneft an attempt to stop the nordstrom 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 to 7 dollars 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 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 due 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 continued to seek safer assets the yield on the 10 year 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 with. well 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 monday's move has wiped out approximately 2.5 trillion dollars in value off the global stock market no kristie i mean it has 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 we've seen buyers come in when we've seen these massive selloff we've seen the departures come in and buy it up so it brings it back up so why are we seeing that now and 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 we're 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 that's why financials are down so much today because the oil sector is going to hit the entire broad based commodities sector it's going to hit the u.s. financial sector and that in turn will hit start consumers we tell us all the way down the line and we're going to talk about this at length here in just a minute but i do want to bring something up because as we've talked about what's going on with the airline industry especially due to the coronavirus that's what's actually been pushing these oil prices down and now today boeing who is generally fared well even despite their $737.00 max problem they're down 12 percent on monday and they're not because federal regulators were not actually happy about some of the stuff that's going on with the 737 max they had a bundle of wires that they said oh that's safe don't worry about it and regulators were saying no so they're even feeling the pain on this day of massive massive sell off so we'll probably see a bell or probably airlines and or that oil energy sector as well absolutely let's bring in rick rule c.e.o. and president of spring hold a. who's joining us out of

a super cell request saying the energy junk bond market absolutely crashing today as shale companies now are able to meet their debt and interest payment obligations so just like we just said in 2001 we looked at which bank had the most exposure to bad mortgages let's take a look here at which banks now have the most exposure to a wave of defaults 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 in the nation as you pointed out in your head or 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 there's an awful lot of non investment grade or junk rated debt in public markets issued by the 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 e.t.f. so well the e.t.f. themselves are quite liquid the buns 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 we'll see over the next 2 or 3 weeks of reckoning is certainly coming in credit markets with regards to energy and now you know condone oil sector actually recover from what we're seeing here on monday i mean is the shale stuff much of all i mean what is the systemic risk of risk of sub $30.00 oil for opec the u.s. and russia for that matter and how does this abrupt the rest of the saudi royal family members actually play into what's happening here with oil today. well there are

several questions there let's unpack them the 1st thing about the oil the oil industry is of course it survives gretta notwithstanding 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 that's a capital intensive business it is highly highly highly reliant on low interest rates and high oil prices because it's 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 the cure for high prices is high prices markets in fact work that shouldn't come to any solace for oil investors in the near term however. and now as we see this entire crash happening right now the time to mr in is dropping measures to blunt the entire economic fall out of oil so what measures can they possibly come out with that will have any effect on the market side from

a total bailout of the sector. i'm tempted to say that's above my pay grade. it's very difficult to fight something as big as a market my suspicion is you'll 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 we're 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 and truth is in the very near term as buffett famously says the market is a voting machine not a weighing machine you're playing on people's emotions and people's 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 that's the united states in the nation 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 that's gets rather boring and it's clearly unsustainable but in the near term it's not about or. magick it's 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. it's certainly troubling that so many people and countries have been affected so quickly. now that the virus has a foothold is so many countries. the threats 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 become t. 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 duds the decisions we only make as governments businesses communities slimy lease and individuals can even flues the tragic to the of the sea. and for more on this we're joined by she chan assistant professor at the yale university school of public health and figure 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 we're 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 cortines inside of china actually make a big difference here and what other actions should be taken worldwide. yeah that. well the. and also the massive lockdown indeed. prevention of this brad to rest up war at the. at least the buy bought some time for the rest of the international community by the this is of their largest social disruption so i don't think currently in the us. at this stage of doing that to a large cost and the disrupt everyone's life and the politically.

not feasible but i think there are many other evers' taken by china could be learned by the us and also other european countries and the international community for example so should these tenzin is very helpful with all to containing the wires if we can cancel necessary trips and conferences social gatherings where delayed the spreading of the wires and also for those patients who are having some concern about being in fact will there the measures should be taken to have early diagnosis early isolation and early treatment now would be better half or otherwise so if we leave them on the community in a family there will be a concert of a class tour of infection and also i think a house insurance measure 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 scenes and many people were not able to become firm so they also covers all suspected cases i've seen for american specially important because they are larger lumber or people under insured are without any insurance so those costs of where the financial burden and also add to the provider level try a 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 in fact it but we can't get that amount of infections more smooth weaseled heating the capacity of the house here infrastructures and we can. treated people better and see more lives and currently as china is recovering they're actually deploy all 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 clinton 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. there's a global effort to curb that out of the border crossings all but this is to be coming last and the last the fact to you we small countries like iran like $100.00 the countries and the territories are being in fact it is so it's 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 everyone's individual risk of being diagnosed and being in fact it is hard to have anyone to have correct this risk

assessment to attend those social gatherings so we understanding that information the larger gathering can be very detrimental to the society so i like to morrow songs and yesterday and you know 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 do need to be awarded although people can have a larger source or these tense we cannot avoid the people i have in their job unless. absolved of the help of the by the other people around quickly here because we only have about a minute left but i do have a question about travel you know we've seen a lot of travel restrictions and kind of we we've seen this being a business show obviously we've seen in the airline industry just faltering amid all of this happening with the growth of virus we've seen cruise ships off and struck off the coast with the kind of quarantine before they're able to bring them in is it safe to travel right now i mean even domestically but especially internationally. if you are traveling. or or was.

very easy to get impacted by the by people is spreading. others so i'm to say for. sure that like a war they use public transportation like you try to drive instead of taking those public transport. unless it's 3 travels on the gatherings thank you so much each an assistant professor at the school of public university thank you for your time. time now for a quick break but hang here because when we return the chairwoman of. the head of a hearing in which to testify. about one of the america's largest banks and i think got a break here in the red at the club. driven

by banks failing and country and now in lebanon they've got a huge crisis and of course big clients come to the rescue. time after time corporations repeat the same mantra sustainability area of. transition to sustainable transport sustainability. more equitable and sustainable world. they claim their production is completely harmless.

companies want us to feel good about products while the damage is being done far away this is just going to. be. we didn't do any minute. understood the superman in. israel media a reflection of reality. in a world transformed. what will make you feel safe from. high salacious community. are you going the right way or are you being led so. what is truth what is faith. in the world corrupted you need to descend. to join us

in the depths. or a maybe in the shallows. and welcome back twitter c.e.o. jack dorsey will not be removed from his position the company announced monday the social media giant reached a deal with activist investor elliott management which includes a $1000000000.00 investment from california based private equity firms silverlake as part of the deal silverlake coast c.e.o. and managing partner egon durban and elliott partner jesse cohn will take the seats on twitter's board now according to the release the board will create a temporary committee headed by lead independent director patrick pichette a to continue its policy of evaluating the company's leadership structure elliot's initial attempts to oust dorsey as c.e.o.

came after he announced plans to temporarily remove to africa while running both twitter and square dorothy is the only person to lead to public companies valued at more than $5000000000.00 on the news twitter stock fell slightly but is not feeling the effects of overall markets that have been down at least 7 percent on the day. insurance brokerage firm a on has agreed to purchase willis towers watson for $30000000000.00 in an all share deal which that will combine the world's 2nd and 3rd largest companies and the sector the combined company will be headquartered out of london with the name and have a value of roughly $80000000000.00 now this marks the largest acquisition of 2020 m. positions a new company to compete with marsh and mclennan the world's number one insurance brokerage firm on the news well as towers watson stock gets 7 percent on monday slightly more than the trend we're seeing throughout the overall markets ayaan however a plunge by more than 15 percent at times following the details of the merger. and

the chairman of the board of wells fargo has resigned the company said in a statement on monday board chair elizabeth do and fellow board member james quigley both submitted their resignations ahead of testimony and. one of the u.s. house financial services committee this week regarding the bank's 2016 fake account scandal became vice chairman with wells in october of 2016 shortly after the bank disclosed employees had opened millions of fake accounts without customer consent in an effort to meet sales goals and joining us now to cover all of this is molly barrows contributor with america's lawyer always a pleasure to have molly on the show molly now u.s. rep maxine waters who actually chairs the house financial services committee has been critical of these 2 board members in regards to the scandal previously calling for them to actually step down how did these board members play a role in this fake account scandal. i think it's more the lack of role that they're playing right now which is most to be generally oversight and she thinks

they're way too complacent they're simply not doing their jobs you talked about that scathing report when she said they should both resign she gave some examples of why she felt like they weren't doing their jobs for example she said duke has been reluctant to meet with federal regulators she's complained about being included on government correspondence basically being sent to make sure the bank is taking the right steps to be compliant and the meantime she said quickly was also talking to other bank officials about possibly getting an easy pass from the feds when it came to the situation so they're both scheduled to testify before the committee on wednesday if they want to have their say and respond to her criticism but chances are they stepped down before they had to take the hot seat on wednesday even though they will still be in the hot seat they won't be in leadership roles apparently at that point and i just want to clarify that molly so you're saying that they will still in fact testify on wednesday they just won't have any actual official capacity anymore. correct that's exactly the they are still scheduled to testify and wednesday even though they have officially stepped down there is

a replacement for duke but since they have been in this position to oversee so far i feel like lawmakers still want to hear from them as to what steps they took or what they didn't take why they made the decisions that they've made is there a sense of. places the across the board is this the way the bank is handling things in general so i can imagine they would want to still to get some answers from the folks at this point what are lawmakers hoping to get out of these hearings on capitol hill this week. you know with such a big scandal with those fake accounts the bank wells fargo had to agree to a number of fines if you will is also regulatory changes that they need to make both within the company the way they manage their employees as well as how they dealt with their customers so they just want to follow to make sure that they're taking that next right step to make amends and rebuild trust with the american public i mean they are one of the main 4 big banks and didn't i guess from a financial regulatory regulators point of view that they continue to do well as long as they're doing well in a legal way and not profiting off of illegal sales tactics like they were before

which caused a lot of harm financial harm to customers so again they paid several billions in fines and they've agreed to make these changes to ensure that won't happen again and part of this oversight from these lawmakers is to make sure they're doing that and so far it doesn't really seem like they're getting a whole lot of good marks in that category water said that some of these fabulous fabulous federal regulators are basically saying hey we're sending you back your compliance plans wells fargo because what you're sending us doesn't go far enough so it may be that she just wants to get some firmer answers on exactly what are they doing and how far does this complacency go in her opinion but it's interesting because they are still up for what federal regulators may actually do some some more action against the bank federal regulators in 2018 actually capped at the growth saying they couldn't go any further so molly barrows contributor with america's lawyer thank you so much for your time today. thanks friend and. that's never this time you can catch a boom bust on demand on the brand new portable t.v.

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