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Dow Suffers Massive Selloff; France Gives Highest Honor to Three Americans; Prep School Rape Trial. Aired 10:30-11a ET

Aired August 24, 2015 - 10:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:29:48] ALISON KOSIK, CNN BUSINESS CORRESPONDENT: No, no. Not that. I'm saying that part of this could just be an excuse to create a little more volatility. Look, the reality is that you think about who is trading these stocks. Investors kind of like volatility. They don't kind of like it. They love volatility because it's in these dips when they can make a lot of money.

POPPY HARLOW, CNN ANCHOR: Yes, but these are day traders we're talking about. For everyone that it matters a lot for their 401 (k), they don't like that.

KOSIK: -- why there's no rhyme or reason.

RICHARD QUEST, CNN HOST: It's a completely different market than it was five years ago, ten years ago, or certainly 30 years ago when I started in the business. You've got much more volatility. That thousand points you saw at the open that is now sort of evaporating back up again, that's what happens when the computers and the algorithms take control and they're programmed to make a particular -- to take a particular direction.

So you have to have -- I was going to use a crude phrase but I won't, but they have to be of steel is what I'll say if you are going to actually trade this market.

HARLOW: That's true. You have to have intestinal fortitude. You like that one? You do, you do.

QUEST: Intestinal fortitude.

HARLOW: You need it in this market.

Thank you, guys. Stay with me. We have Ken Rogoff on the phone, economics professor from Harvard and particularly of importance is his international experience, former chief economist at the IMF. Ken -- what do you make of this market?

KEN ROGOFF, HARVARD ECONOMICS PROFESSOR: It seems apocalyptic, you know, when you look at it near up. But I think it, in fact, is simply the way markets behave these days as Richard was saying.

There's -- China has just been always solid, nothing ever seems to go wrong. And it's an underpinning for many of the emerging markets in the world. When China goes down, it hurts Brazil, it hurts Indonesia, it hurts Russia. You know, it hurts countries all over the world.

And it's not just the weight of the countries but I think the potential instability that markets probably don't like. Yes, U.S. firms get a lot of profits from overseas markets, but Europe and Japan are really not doing so badly.

I'm not talking about the markets, I'm talking about the economies. The United States, it might not be spectacular, but it was strong enough that at least until a couple days ago the Federal Reserve was thinking of raising interest rates. So I think it's important to have some perspective on this.

What really is going on here is people are worried about a hard landing in China, which they were told by at least the Chinese would never happen. People, you know, said this time is different. China can't have a hard landing, their leaders are just too smart.

Well, it's just not easy to manage an economy that size, and it's at least a possibility at the moment, and I think it has markets spooked.

KAYE: Christine.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Ken, Christine Romans here. It's also a reminder that stocks just don't go straight up. They have almost gone straight up for six years. The U.S. stock market, the last time it had a correction, a true correction was 2011.

Even with this big decline you're looking at stocks that are the lowest ten months, maybe a year. A reminder that American investors have been pretty spoiled by their returns. What should a typical investor do today, someone who doesn't care or understand the intricacies between commodities, currencies, bond yields, and the stock market and the fed, what should the typical investor do?

ROGOFF: The typical investor should do nothing. You are going to lose trying to trade these markets against the pros unless you have some special inside information on your local company.

Yes, we just saw it. Today, the stocks were down a thousand. If you'd rushed out and sold, you would have cost yourself a fortune, and if it turns out as could well be that China comes in with some program that at least satisfies people for a while, suddenly the markets could go way back up.

We're in a volatile situation. It's not straight down. The amateur should not try to beat the professional here.

HARLOW: Sage advice, Ken. Stay with me. Cristina Alesci live on the floor of the New York Stock Exchange -- Cristina.

CRISTINA ALESCI, CNN CORRESPONDENT: Yes. So what we're seeing right now is a lot of panic and fear, Poppy, driving a lot of selling around the world. Investors in the U.S. Really reacting to what was a global blood bath overnight, and they're trying to make sense of it all.

You know, Poppy, we've talked all morning about how U.S. fundamentals are pretty good. You know, in an ironic way it could be hurting us, the fact that the U.S. economy is so strong because we see the dollar really, you know, sort of a stalwart against a lot of the emerging market uncertainty, and that could actually make it more difficult for U.S. businesses to sell their products overseas. That may be playing into it.

At the same time we have this idea that the Fed, you know, the expectation that the Fed would raise rates in September taking some of that stimulus out of the economy at the very same time that the emerging markets are melting down.

[10:34:56] So often times we use the terminology "perfect storm". Well, this looks like a perfect storm, not to mention the fact that August is very -- is a time when a lot of investors and traders are on vacation, so we don't have the kind of stability in trading to really see what this would look like when everybody is in the market, right?

We have very thin trading. In addition to that, we have volatility just going very -- we've seen a lot of volatility today and last week, Poppy.

HARLOW: Absolutely, and then overnight in Asia and right now in the final hours of trading in Europe. Cristina -- thank you very much. We're going to get a quick break in. Much more of this remarkable day on Wall Street that's looking a lot better than it did at the open. Still a huge sell-off, down 491 points.

Back in a moment.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

[10:40:04] HARLOW: You are looking at a live image of the big board from the New York Stock Exchange. The Dow Jones Industrial Average off 350 points. This sell-off improving from the open when the Dow fell more than a thousand points.

Just want to set this in perspective for you. Let's look at these numbers. The Dow has gained 185 percent in the last six years. OK? From the losses we've seen over the past week, it is off about 13 percent from that peak we saw in May of this year. So this is not 2008 again. Where will it go? That is a big question. More team coverage in a moment. I do want to get to other news that we are following very closely.

Three Americans right now, the toast of Paris and the newest heroes of a very grateful nation. Earlier this morning France's president bestowed his country's highest honor on the men and also a British man who helped subdue the gunman on that train bound for Paris this weekend. Together they likely prevented the massacre of fellow travelers. And as authorities track radical Islamic ties to the suspect, his

lawyer says it is all a mistake. She says that her client is dumbfounded by any talk of a potential terrorist attack saying that he wanted, instead, to carry out an armed robbery. Nic Robertson and Jim Bittermann both --

Nic to you first, start off with telling us about what these three American heroes experienced this morning.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Poppy, the French president left everyone in no doubt when he was talking to these three men who are being seen as heroes here. He left everyone in no doubt what could have happened on the train. He said it could have been the ultimate carnage. The gunman had over 300 bullets and two automatic weapons. There were more than 500 people on the train. Painted a picture of an apocalyptic type of situation but for the bravery of these men.

He applauded their actions. He said he wanted to honor them before they went home. He said we should all be inspired by them. It was Spencer Stone, a U.S. Airman, with his arm in a sling who led the three friends, him and his two friends led them into the Presidential palace here this morning.

HARLOW: Remarkable scene after that phone call that they got from President Obama over the weekend. You can only imagine the heroes' welcome they're going to get when they come back here to the United States. Nic, stand by.

Jim, to you. What do you make -- this is first time we're hearing from the attorney for the suspected gunman. And the attorney comes out, first thing they say is, no, this was not terrorism. On what grounds?

JIM BITTERMAN, CNN INTERNATIONAL CORRESPONDENT: Well, I think she's saying what she would be expected to say about her client, but I don't think anybody is buying it. I mean basically she said that he found all those weapons in a park in Brussels. Hard to imagine, but in any case this guy is a guy who was known to authorities both in Spain and in France. He was a subject of what's called here a Fish S (ph) which is an S notice which goes out to the intelligence community that says pay attention to this guy, keep him under close surveillance.

So he was already suspected of having some extremist Islamic ties and because of that, I think the French authorities are not buying that excuse provided by the lawyer. He's being questioned now as we speak about two miles behind me in an intelligence headquarters out in the Paris suburbs. The police have another I would say 24 hours from this point to hear from him before they have to either charge him or let him go.

I suspect we'll probably hear from the prosecutor sometime during the day tomorrow and we're going to see what kind of charges are leveled against him -- Poppy.

HARLOW: So we don't know what charges they're likely to bring then -- Jim?

BITTERMANN: Not at this point, but because the terrorism prosecutor is in charge of this investigation, we're assuming that that means that French authorities believe this is terrorism related -- Poppy.

HARLOW: Right. Jim Bittermann in Paris for us. Thank you very much. Nic Robertson live in Paris as well on that heroes' welcoming that these men have gotten in France for sure. Thank you both.

To politics next we go. Will Joe Biden jump in? The Vice President has meeting with one of his party's most influential members over the weekend. But if he goes for it, will it split President Obama's inner circle? Next.

(COMMERCIAL BREAK)

[10:48:34) HARLOW: Again, you're looking at live pictures of the big board. The Dow Jones Industrial average off just over 2 percent, 353-point loss so far about an hour-plus into the trading day but it was a lot worse at the open when the Dow fell a thousand points. Let's remember, this is part of a six-year bull market. We're seeing some pull back right now but this is not 2008 all over again.

Full coverage go to CNNmoney.com to see the latest. Also want to get to some politics now.

Will he or won't he? That's the question on the minds of political pundits and voters alike as speculation continues to swirl around a possible 2016 bid for Joe Biden. With Biden scheduled to have his first face-to-face meeting with the President today over in their usual Monday lunch. It's been a while since the two of them sat down. Well, there's speculation swirling about whether the vice president will jump into the 2016 contest.

Michelle Kosinski, CNN White House correspondent live from Washington. This started sort of bubbling up, Michelle, a few weeks ago, but it accelerated over the weekend because of a very key meeting that the Vice President had.

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Yes, that was part of it. Meeting with Senator Elizabeth Warren, who, of course, is the hero of many liberal Democrats and progressives out there. You remember this huge ground swell months ago wanting her to run for president. Now that she said multiple times she's not going to do it, so tantalizing to see this last-minute kind of secretive meeting happen on Saturday between Biden and Warren.

[10:49:59] He flew here from home in Delaware just for this meeting that lasted about two hours, then flew right back. What sources have been telling CNN is that he wanted to run this by her, get her thoughts on a potential run, and also state his stance on certain issues, including the economy. Kind of a heart-to-heart discussion there. I think a lot of people are thinking if only to be a fly on that

wall because the overarching question is, how close is he to making this decision and which way is he really leaning? I mean, without an official word, the talk in Washington that has been nearly constant is, you know, what are the signs that he's really going to do this, that this is his time?

And I think that meeting with warren is one of those signals that if he's not leaning toward a run, at least he's looking at it extremely seriously. I mean, he had this week-long vacation, very quietly in South Carolina with just his wife, but he was talking to advisers.

Then he went home to Delaware, met with advisers. So there's been this sort of incremental build up and what we've been able to glean from what Biden is doing, and then you have this Super PAC that has now sprouted up, Draft Biden 2016, and listen to what they're saying.

This is an e-mail that they sent around to Democrats around the country. "While the Vice President thoughtfully considers his potential candidacy, Draft Biden 2016 has already assembled a who's who of staff talent focusing on deft media strategy, aggressive fund- raising, innovative digital outreach and a dynamic field operation that aims to be up and running in all 50 states by September. So they're putting all of this out there. Saying that, you know, not only does he have plenty of time to make the decision, possibly a month. But that now is he's Doesn't mean, of course, everybody thinks that this is a great idea, even some within the White House, but you can see why this is such a big bubble of speculation and such a topic.

I mean how much this would change the race. For him to directly challenge Hillary Clinton and then what does that mean for those who support Bernie Sanders? It would be a shake-up and one that many are eager to see what effect it would have -- Poppy.

HARLOW: Poppy, you know what Michelle, who if this election cycle so far has been anything, it's been anything but normal and expected. So what's another shake-up, right?

ROMANS: Of course. Why not.

HARLOW: Why not. Michelle Kosinski live for us at the White house. Thank you very much.

Still to come, changing gears here, the former prep school student accused of raping a classmate expected to testify in his own defense. We will hear the latest on that trial next.

(COMMERCIAL BREAK)

[10:56:46] We are keeping a very close eye on Wall Street this morning. The Dow right now down 363 points, about just over 2 percent here. Huge sell-off accelerating on what we saw last week after a big sell-off overnight in Asia and in Europe, but things have improved dramatically from the open. I want to point you to CNNmoney.com, full coverage there, the latest on what is driving this sell-off and what it means for you the investor at home.

Also to this story we've been tracking on the program. The former New Hampshire prep school student standing trial for allegedly raping a classmate says he intends to take the stand, and we could hear from him as soon as this week. Owen Labrie has pleaded not guilty to charges including the rape of a 15-year-old student on the campus of St. Paul school last year. The jury listened to emotional testimony from his accuser last week as she broke down under questioning by the defense.

Joining me now for the latest, CNN's Boris Sanchez. You have been following this throughout. What do we know at this point?

BORIS SANCHEZ, CNN CORRESPONDENT: It's been a very uncomfortable, difficult trial to follow because of that emotional testimony we were talking just about from the accuser. Right now there's a friend of Owen Labrie's on the stand testifying about that senior salute and about an encounter they had after the alleged incident. But the next pivotal point as you mention Poppy is going to be Owen Labrie to give his testimony and this may sway the jury. This is why. If you recall, he not only says the counter between them was consensual. He says they never actually even had sex.

Last week two medical experts testified who took the rape kit from the accuser. They say there's no definitive conclusive physical evidence -- as to whether or not they had sex. So there's a bit question mark -- there's a gray area for the jury. And that's where Owen Labrie's testimony may sway them and may guide them in a certain direction and convince him.

HARLOW: There's also something here contextually that's very important. That's something I understand called the senior salute, a tradition at the school?

SANCHEZ: Seemingly, yes. It's something that several witnesses have talked about already, including a friend of his who took the stand. Some were saying the senior salute was a way to score when young men apparently had encounters with young women. They would kind of write it on the wall of a laundry room and kind of take score. Some say it was based on sexual encounters, some say it was just kisses. Here is what his friend said in court.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Senior salute would be towards the end of the school year in the spring term. Seniors would, guys or girls, would send e-mails to usually younger students asking them to usually "hang out" would be the term that I would use, that I was familiar with.

UNIDENTIFIED MALE: And what does that mean to hang out?

UNIDENTIFIED MALE: Usually seniors would try to just like kiss another student. That would be considered like a score is what the term was then. Just to kiss another student.

(END VIDEO CLIP)

SANCHEZ: Labrie is set to take the stand this week. It will be interesting to see how he answers questions about messages that they exchanged after the incident in which he asks her whether or not she took birth control. Questions that seemingly contradict his account that they never had sex.

HARLOW: All right. We'll be watching for that testimony. You'll be on the story. Boris -- thank you as always.

And before I go here, I want to point you again to Wall Street. Take a look at the big board. The Dow off 357 points on what has certainly been a historic day on Wall Street. We're only an hour and a half into the trading session. How will things end? Full coverage on CNNmoney.com. Full coverage here. Team coverage, live from the New York Stock Exchange next.

I'm Poppy Harlow in New York . Thank you so much for being with me. "AT THIS HOUR" with Berman and Bolduan starts right now.