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Dow Bounces Back; Heroes Honored in France; Trump Talks Sell- Off. Aired 2-2:30p ET

Aired August 24, 2015 - 14:00   ET

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

[14:00:17] ANNOUNCER: This is CNN breaking news.

BROOK BALDWIN, CNN ANCHOR: All right. Here we go. Top of the hour. You're watching CNN. I'm Brooke Baldwin. Thank you so much for being with me here.

It has already proven to be quite an active Monday here. We have to talk about what's been happening here on Wall Street. We are two hours away now from the closing bell, really getting into tricky territory, as Richard Quest is about to explain to us in a second.

You know, it's been a teeth-grinding and stomach-churning kind of day with the markets. The Dow, this hour, fighting back after plunging. I mean you talk about such a - this is a precipitous plunge this morning. At one point, within the first few minutes of trading, down more than 1,000 points.

We'll show you the big board shortly after the open this morning. That thousand plus point drop. Wait for it, we'll show it for you. Here you go. Not often, thank goodness, do you see numbers like this for the Dow Jones Industrial average.

Markets here in the United States, they were not the only ones affected. Concerns that China's growth was slowing down had markets worldwide really taking a tumble. Now we'll look at actual numbers at this hour again. Again, down 364 points. But really this is - this is the real money time, the final two hours, as I mentioned, of the trading day. So far, bouncing back on a day that average investors are certainly racing to check, myself included, your 401(k).

So let's begin with our CNN business correspondent - we have Richard Quest here on set to explain this to us, but also Alison Kosik, who joins us live from the floor there of the New York Stock Exchange, where, Alison, you have been covering the sorts of - you know, I believe the front page of CNN Money today was a roller coaster. So you've been covering this for years, but what - what are you expecting - what should we expect in these final two hours of trading?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: These next two hours I'd like to call sort of the witching hours because this is the end of the day. And although we did see stocks take a nice breather, I'd say as little as a half hour ago we saw the Dow made up a lot of - a lot of percentage. It's going back down now, but ever so slightly. We're not seeing the rush that we saw at the opening bell. It's really anyone's guess what will happen at the closing bell. One thing is for sure, these are times that sort of need a neck brace for the whiplash that we got today. You know, I asked one trader, what the heck happened here today? The Dow dropped 1,000 points at the open, it really made up a lot of ground today. What happened here? Simply, he said, an overreaction. And he said this, the selling, he called it, he said was foolish, it was robotic and it was computer driven. Computer driven is key because you have to think about it. A lot of the trading that goes on here is computer driven and that's why it happened just so fast in a snap.

The problem, once again here, at least at the open, was that we saw investors have a knee-jerk reaction to what happened to stocks in China. Not necessarily the economy in China. Yes, there is still fear. There's a lot of concern about China's economy slowing down, but we saw that dramatic and radical drop of a Dow at the beginning of the day, Brooke, because it was an initial knee-jerk reaction to what happened in Chinese stocks overnight.

Brooke.

BALDWIN: OK. So, Richard Quest, let me bring you in.

RICHARD QUEST, CNN BUSINESS CORRESPONDENT: Yes.

BALDWIN: Because, listen, the fact that we've been watching China's economy and the markets, that wasn't news to me.

QUEST: Oh, except China had suggested in its last official pronouncements, the economy was going to grow maybe 7 percent. But then we saw manufacturing numbers from China last week.

BALDWIN: On Friday.

QUEST: Yes. And that suggests much slower. And now you get people saying, actually, it's not going to be 7. It may not be 5. And some people are whispering it might be as low as 2 or 3 percent.

BALDWIN: Oh. Oh.

QUEST: So that's a reason. But what you're seeing with these markets - if you look at the world markets here, 9, 8.5 percent down in Shanghai, Tokyo off four, London off 4.6. What you are looking at with all of these is the equivalent of somebody shouting "fire" in a crowded -

BALDWIN: And everyone's, poof.

QUEST: Exactly.

BALDWIN: Right.

QUEST: And - and you have to really look, where is the smoke? And yes there is smoke in the global economy at the moment.

BALDWIN: But it's been smoking for a while, has it not? QUEST: Yes, but a fire can smell - you can embers from a fire for a

long time and then finally somebody realizes that under the bathroom (ph) there's something nasty going on.

BALDWIN: OK. OK.

QUEST: But what - but - and this is what we saw here, if we take a look at this.

BALDWIN: OK.

QUEST: What you saw here. This very sharp fall right at the open, which, as Alison says, that's knee-jerk, that's computers, that's program trading, that's algorithms. And then the course of the middle of the day, calmer minds come into play. People start to think, well, what's this? Is this justified? And we actually got as low as 99 points down or 98 points lower.

BALDWIN: But these final two hours, you were pointing out -

QUEST: Yes.

BALDWIN: This is the time to really watch?

QUEST: It is because you get book squaring, you get hedges that will now start to take the other side of the position that they've got. You've got lots of people that do not want to go into tonight with an open book. They don't want to have a position that's open. So they'll close it out or they'll hedge against it. And then finally you've got high frequency volume trading.

[14:05:16] Look at the Dow 30 at the moment. Now, a couple of hours ago we had a row of green at the top. Now we've only got Intel which is green.

BALDWIN: One.

QUEST: Apple has given back all the gains that it saw during the course of the day. We've still got the - where's Microsoft? Microsoft is low.

BALDWIN: Right there.

QUEST: Yes, Microsoft was up there. So Microsoft has definitely turned turtle during the course of the last couple of hours. And 3M's come up. But it's fascinating to see what's happening in this market to date.

BALDWIN: OK, let me - may I hit pause with you just for a quick second?

QUEST: OK, I'm sorry.

BALDWIN: No, I appreciate it.

QUEST: Sure. BALDWIN: I appreciate your enthusiasm, as well, as always.

QUEST: Yes.

BALDWIN: But I - now I have Ken Rogoff with me, former chief economist at the IMF.

QUEST: OF course.

BALDWIN: Professor of economics at Harvard.

So, Ken Rogoff, I mean I've been sitting here talking to Richard Quest, who knows this so, so well, as do you. I mean when you look at all of this, and, again, as we're really focusing on these final two hours of this trading day, how do you read this and how should we Americans read this?

KEN ROGOFF, ECONOMICS & PUBLIC POLICY PROFESSOR, HARVARD UNIV.: Well, I think the news is still coming out of China where there's fear that the Chinese slowdown is more dramatic, maybe a hard landing, that's going to ricochet all over emerging markets. You know, Europe, Japan and the United States are not doing badly but it's risky politically. This is a moment, really, that's been coming for 15 years, the big China slowdown. And if it comes, it's going to be really dramatic. I think if it happens, a hard landing in China, we haven't nearly seen the worst of it. But I think the chances are certainly much better than 50/50 that that's not going to happen. It will calm down.

BALDWIN: OK, forgive me for bringing it back to us, but I'm just wondering about Americans, and I understand this is all - this is all interlaced, interconnected 100 percent. But, you know, I keep hearing experts on today and they're saying, OK, this has really been this bullish market and this correction was overdue. What does that mean?

ROGOFF: Well, what it means is nobody has any idea quite what the stock market should be. It's gone up quite dramatically and -

BALDWIN: Professor, I expect you to have all my answers.

ROGOFF: Well, yes, I mean, and so a lot of American firms get profits from abroad. So you see a slowdown in China, you know, it ricochets all over. But I think it also is - means some sense of fear in the market that it could get much worse. The other shoe could drop.

I think even in the worst case, the Americans will be relatively insulated. It will hurt but I don't think this is going to turn into a U.S. recession, but it's not good for companies, certainly not a good thing. And the political instability is not a good thing. But I - you know, I wouldn't confuse the stock market with our economy.

BALDWIN: With the economy, right, not at all the same thing.

Jump in, Quest, and then we've got to go.

QUEST: Can I throw a question to Ken.

Ken, what's the ability of the Chinese to actually stem this?

BALDWIN: That's a great question.

QUEST: Their rather hand-fisted attempts at stemming the market for a few months ago, a few weeks ago failed. Have they got fire power sufficient?

ROGOFF: Well, they have a lot of fire power. They have trillions of dollars in reserves that they can use to bail out the banks, bail out their financial sector. But you have to remember, Richard, they actually want this to happen a bit. They want the economy to normalize. They are actually trying to engineer a slowdown. But it's very hard to do. It's very hard to have a slowdown without a collapse.

But I don't think they're just going to back off. I think they were meaning to slow the economy down, to reorient it. So just like our Federal Reserve isn't necessarily going to immediately change its mind about everything, although they should look at this, I think the Chinese authorities are still having to wait and see attitude themselves. They have a lot of firepower. But, of course, if they wait long enough, it could still get out of hand.

BALDWIN: Yes, and I'm glad you brought up the Fed and I know we have so much more to get through in the next two hours. One of my questions, and we'll get to this a little later is, what about those interest rates? And we know that Janet Yellen had said that they would raise it from, you know, zero, which it had been since '08, will that change now that we're watching what we're watching? We'll stand by for that.

Ken Rogoff, thank you so, so much. Richard Quest, we have a date at the top of the next hour. I need more of you.

QUEST: We do?

BALDWIN: Yes, we do.

QUEST: Of course.

BALDWIN: Am I telling you about this for the first time? We have a date at the top of the next hour. You're the best. Thank you so much.

And, Alison Kosik, my thank to you as much.

ROGOFF: Thank you.

BALDWIN: So we have much more, of course, on the markets. We'll be watching them through the final two hours of the trading day. But coming up next here on CNN, a massacre averted. Three brave Americans honored as heroes today in France and really all around the world, taking down this gunman on a high-speed train bound for Paris. This as we learn more about the intentions of the suspect who had multiple guns, ammunition. How vulnerable are soft targets like trains in an attack like this? We'll talk about that.

[14:10:14] Also, really one of the political questions of the day, the Biden question, if I may, will he run? Speculation mounting after the vice president's secret meeting over the weekend with Senator Elizabeth Warren, secret no more. And late this afternoon, the White House weighing in on a possible presidential endorsement.

Also, a major development in the crisis between North and South Korea. A break in the standoff and what the U.S. military was planning to do if it escalated.

You're watching CNN. Stay right here.

(COMMERCIAL BREAK)

BALDWIN: You're watching CNN. I'm Brooke Baldwin.

Here's a quote, "they saved my life." Those words from a passenger on the Paris-bound train regarding those three American heroes who were just awarded with France's highest honor today for stopping a massacre.

[14:15:05] The gunman identified as a Moroccan national with possible ties to a French ISIS cell is now claiming it was all a robbery, not a terror attack. But police say this man was fully loaded when he emerged from the train's bathroom, shirtless, with an AK-47 assault rifle slung over his shoulder. Within minutes, he was hogtied and unconscious, taken down by a British man and three quick thinking Americans, one a U.S. Air man, another, a member of the U.S. National Guard. The bloody aftermath showing one of the Americans on the ground, injured. And above him here, the gunman, shirtless and restrained with a necktie around his feet and ankles. But the men are humble about the entire ordeal.

(BEGIN VIDEO CLIP)

SPENCER STONE, TACKLED AND DISARMED GUNMAN: I just woke up from the middle of a deep sleep and my friend Anthony - I mean, Alek, was sitting next to me. Anthony was across to my right side. And I turned around and I saw he had a - what looked to be an AK-47 and he looked like it was jammed or it wasn't working and he was trying to charge the weapon. And Alek just hit me on the shoulder and said, let's go. And ran down, tackled him. We hit the ground.

Alek came up and grabbed the gun out of his hand while I put him in a chokehold. It seemed like he just kept pulling more weapons left and right. He pulled out a handgun. Alek took that. He took out a box cutter and started jabbing me with that. We let go. All three of us started punching him while he was in the middle of us. And I was able to grab him again and choke him unconscious while Alek was hitting him in the head with the pistol or rifle. I can't really remember.

ALEK SKARLATOS, SEIZED TRAIN GUNMAN'S RIFLE: It wasn't really a conscious decision. We just kind of acted. There wasn't much thinking going on, at least on my end. I don't know about them.

ANTHONY SADLER, HELPED TIE UP GUNMAN: Hiding or sitting back is not going to accomplish anything. And the gunman would have been successful if my friend Spencer had not gotten up. (END VIDEO CLIP)

BALDWIN: Joining me now, live from Paris, Martin Savidge. Also with me, CNN national security analyst Juliette Kayyem, former assistant secretary of the Department of Homeland Security in Massachusetts.

But first, Martin, to you. I mean it's incredible, first of all, just hearing from these men themselves, these heroes, but also some of the details, including the fact that they were in a train car. They weren't initially supposed to be in but there were wi-fi issues so they got up to move. I mean it's incredible, the details.

MARTIN SAVIDGE, CNN CORRESPONDENT: It is. I mean, you know, this shows you the modern age in which we live and that the reason that these three men ended up putting themselves into harm's way is over what, wi-fi essentially. The signal they had in one train car wasn't too well, so they moved into train car 12, and this is where this all went down. So you could say unfortunately or fortunately that they had to move because that put them in the right place at the right time.

It's Alek Skarlatos, he's the Oregon National Guardsman, just out of Afghanistan, hears that gunshot, instantly recognizes the danger. Spencer Stone, his Air Force buddy, is next to him. Spencer's charging down the aisle, headed towards the gunman. All three pile on. And then they're aided by Chris Norman, who's from Great Britain. And you take out this threat.

And, remember, this is on a high speed train that's doing close to 200 miles an hour. You not only prevent a massacre, but possibly a huge disaster as well. And those three Americans just nonchalantly say, yes, it was part of the day's events. I want them the next time I go into some troubled area, Brooke.

BALDWIN: You're not the only one. And, Juliette, I know your lead line in the opinion piece that you wrote for cnn.com, you names all three of them and you too said, if I ever find myself in trouble, I hope the three of you are close by. You also make the point that in a lot of times in these confined spaces, be it a train or, of course, we all know the hallowed words spoken by Todd Beamer (ph), I'll never forget his name, on Flight 93 on 9/11, you know, "let's roll," right? The - really being a hearo and helping take down those terrorists. But then you have the - the other spaces or an active shooter situation elsewhere where you point out really the best piece of advice is to run.

JULIETTE KAYYEM, CNN NATIONAL SECURITY ANALYST: Yes, so it's going to - you know, all of our reactions are going to be situation dependent. So when you're in a confined space, like a train, what they did was absolutely appropriate, heroic and admittedly lucky given that the - that the terrorist had some problems with the gun jamming, or both guns jamming.

And so - but in active shooting cases, like at colleges and universities and a lot of the training that we do in active shooter cases on sort of campus settings is, get the heck out. In other words, it used to be - if you remember Columbine, that students were told to stay put. Well, that - that leaves them a sitting duck. So it's all going to be situation dependent.

The most important thing in this instance, in terms of security lessons learned is, the train needed to stop and it didn't stop fast enough. In fact, I think if we look back, we'll learn that the train personnel's response was way too slow. If you can get people off of a train by stopping it and getting them out of the compartments, you're going to save a lot of lives if our American heroes had not been able to detain the terrorist.

[14:20:11] BALDWIN: Another point I just - in hearing from - from one of the heroes, Alek Skarlatos, you know, pointing out how obviously this man was the - the assailant had the AK-47, had some other pistol, and according to one of these - according to Alek, he had a box cutter and they saw eight magazines of ammunition. But he also said he clearly had no firearms training whatsoever, but if he knew what he was doing or got lucky and did what he wanted to do, he could have gone through all eight of those rifle magazines.

And I'm just curious because we, you know, see - and, again, we don't know. You know, obviously, we're trying to learn more about this person. Investigations into radical Islamist networks. Spanish and French authorities had him flagged. Apparently we're learning Turkish intelligence, they didn't have him flagged. But if he - if he had all this firepower, but apparently didn't know even how to use it, what does that tell you about this sort of new - I don't know if it's a new age of terrorism or clearly inspired but didn't know how to follow through, how do you read that?

KAYYEM: So, I mean, I think we have to get rid of the word lone wolf now and these are sort of what we call the known wolves, right? These guys are actually appearing on a variety of watch lists throughout Europe or the Middle East or Turkey. But they are not sophisticated in terms of the training that they've gotten. So they are falling in between people who don't get into trouble and those that we know are getting sort of formal training.

And that - there's too many of them. That's the challenge now. So the good news is, they're not very sophisticated. They're not well trained. The bad news is, is there's no system that we can perfectly protect ourselves from this type of terrorism. You cannot - they're - they're going to appear in different places and all you can do is try to minimize the risk, train people to respond and hope that, you know, their lack of sophistication helps save lives.

BALDWIN: Not a lone wolf, a known wolf. Juliette Kayyem, thank you, as always. Martin Savidge, thank you, live in Paris.

Coming up next, Donald Trump wasting no time in jumping in on the market news of the day here saying he is the man America needs when things on Wall Street start to get a little messy. And the polls among Republican voters, you know what, they seem to agree. We have more on that.

Also ahead, will the vice president run a Democratic source with close ties to his inner circle reveal to CNN which way the vice president is leaning? We'll discuss that coming up. (COMMERCIAL BREAK)

[14:26:52] BALDWIN: The morning market selloff and midday bounce back are attracting the attention of the Republican presidential front- runner and there's new talk today about the future political plans for the vice president, Joe Biden.

I have Ryan Lizza joining me. He is the Washington correspondent for "The New Yorker," and John Avlon is the editor-in-chief of "The Daily Beast."

Two of my favorites. I am so lucky today. Gentlemen, welcome. Nice to have you on.

RYAN LIZZA, WASHINGTON CORRESPONDENT, "THE NEW YORKER": Good to be here.

JOHN AVLON, EDITOR-IN-CHIEF, "THE DAILY BEAST": Hey, Brooke.

BALDWIN: Ryan Lizza, to you first. Let's talk Trump and then I want to move to Biden. We know that, you know, Donald Trump has some thoughts on who is to blame for what we are seeing today in the markets. This is what he posted to Instagram earlier today.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I've been telling everybody for a lone time, China is taking our jobs, they're taking our money. Be careful, they'll bring us down. You have to know what you're doing. We have nobody that has a clue.

(END VIDEO CLIP)

BALDWIN: I mean, listen, Ryan Lizza, he's quick to jump on this.

LIZZA: Yes.

BALDWIN: He's a businessman. He's quite successful. Is this going to work for him?

LIZZA: You know, look, he can plausibly claim that what's going on in China is related to the market plunge here. So, you know, like a lot of his statements and policy ideas, there's always some superficial appeal and superficial credibility to what he says. So, look, he's making a case here that ties into some of the arguments he's made previously and we haven't seen very other many candidates out there trying to explain why the market's dropping.

Now, over the long term, what usually happens is Trump talks about some - one of these issues, makes a claim and then on closer inspection it sort of falls apart. And before we seen the market drop -

BALDWIN: Do you think that's going to happen here?

LIZZA: I don't know. I've stopped making predictions about Trump because -

BALDWIN: Smart man.

LIZZA: Every time someone makes a predict - so I think, you know, look, the - the economy - a bad economy is Donald Trump's friend, right? The - what he's talking about when he's talking about immigration, when he's bashing China, when the economy is bad in the United States, those policies and those arguments take off in this country. We've seen it before. So I think if this market - if this market fall continues, that's a good thing politically for Donald Trump.

BALDWIN: OK. OK. And let me just make a side note. You mentioned immigration, which just jogged my mind, just a reminder to viewers, we know we saw Donald Trump on the border just a couple of weeks ago. Jeb Bush will be on the border and will take some of that live next hour, so stay tuned for that.

John Avlon, to you, I really wanted to get to the news about, you know, Joe Biden. We know, of course, he's having here - he's probably already had his weekly lunch with the president. Wouldn't we all love to be a fly on that wall? We know that he met, this is Jeff Zeleny, he's reporting here at CNN, you know, broke the news that he met with Senator Elizabeth Warren over the weekend at his home. So that happened. And, of course, we heard from Josh Earnest just a little while ago, part of the White House daily briefing addressing this. Let's take a listen.

(BEGIN VIDEO CLIP)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The president has indicated his view that the decision that he made I guess seven years ago now to add Joe Biden to the ticket as his running mate was the smartest decision that he had ever made in politics. And I think that should give you some sense of the president's view of Vice President Biden's aptitude for the top job.

[14:30:09] The president does plan to vote in the Illinois primary.