Swine flu hits health of the economy

Steve Chiotakis Apr 27, 2009
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Swine flu hits health of the economy

Steve Chiotakis Apr 27, 2009
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TEXT OF INTERVIEW

Sam Stovall All right, Sam Stovall, Chief Investment Strategist at S&P Equity Research, joins us this morning on the line from New York. Good morning, Sam.

Sam Stovall: Good morning, Steve.

Chiotakis: Obviously this isn’t just a health issue as Steve Henn just reported — we’re talking travel and trade and all kinds of alerts. What are the broader economic repercussions of all this?

Stovall: Well, certainly if it does end up just being a very short-term situation, there’s really not much of a repercussion at all, not much of a fallout. But if it is something that lasts awhile, that causes consumers to stay at home, well certainly that would have an impact. Just think about everything that you do during the day in terms of using your car, gasoline, going out and purchasing food, leisure products, et cetera. Or even traveling, whether it’s on business or for pleasure. So there could definitely be very much of a ripple effect through the energy, the consumer and other end of the marketplace.

Chiotakis: Yeah, we’re gonna talk about cars, like you mentioned as well, and obviously this has done a number on the numbers . . .

[Read-through of the numbers]

You know, Sam Stovall, the other big story this morning as I mentioned is cars, and GM says it’s cutting 21,000 jobs and getting rid of Pontiac. Is that going to be enough?

Stovall: Well I think certainly, you know, a lot of investors believe that either Chrysler or GM or both will end up having to file for bankruptcy for things are all said and done. Certainly, when 60 percent of the revenues come from Chevrolet and only about 9 [percent] from Pontiac, I think that shuttering one division like that that’s less than 10 percent is not going to be that big of a impact to the company.

Chiotakis: Yeah, sure enough. All right, Sam Stovall, thanks a lot. Appreciate it.

Stovall: Thank you.

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