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Legal View with Ashleigh Banfield

Stock Market Snaps Back After 1,000-Point Loss; Dow Fights Back After Massive Drop; White House Addresses Iran Deal. Aired 12:30-1p ET

Aired August 24, 2015 - 12:30   ET

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


(COMMERCIAL BREAK)

[12:31:53] ASHLEIGH BANFIELD, CNN ANCHOR: And back to our breaking news on the turmoil in the global stock market.

If you flip in some what you miss one heck of a story. But the story continues and the way of the numbers on the big board. The Dow was down as much as 1089 points, and now look 168.

I'll keep saying it every second or two because it is -- the volatility is not today. Things are better but they're not great yet, we're expecting White House press conference in any moment now, and wondering really whether the White House is going to weigh in on this. But while we're waiting and the podium's empty, it's a great opportunity for our best minds in the business.

Chief Business Correspondent Christine Romans is back, and also with me Business Correspondent and Host of Quest Means Business and CNN international, Richard Quest.

So Richard I'm going to go you first. Because your energy mirrors what goes on here today. And what continues to go on here today. Walk from the beginning, so I -- let me do a reset with the bottom of the hour, we've got some new viewers, madness.

RICHARD QUEST, CNN BUSINESS CORESSPONDENT: Complete madness and volatility, that's predicated on worries out China, throwing emerging market concerns, low price of oil and a weekend where everybody had time to conjugate over what might happen next.

And you end up with the market that opens down a thousand points, and then everybody forces to see what's the real fundamentals for the U.S. economy and for U.S. corporations.

BANFIELD: So Christine talks about that a lot. You say that while, you know, emerging markets are loony right now. This is the -- I think you said earlier, the cleanest dirty shirts in the laundry to be in the United States, the market is fighting mad.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Right.

BANFIELD: Here in the U.S. and saying and perhaps even proving, no, no this is a great... ROMANS: They turned around here, is what so remarkable. I mean you're looking at a Dow down 156 point, can you look for me at this 30 Dow upon this. Do you have some of them that agree now? This morning the Dow was down 1000 points that happen so rarely to fight back from a 1000 points decline, is equally as rare.

It tells you that there was a lot of hysteria in the market earlier today because of everything was happening overseas also, with the China and how weak to growth is in China. And then there was this real ovation that the U.S. is still growing and that there are still good valuable investment here. That's may go in after six years. There are people now who say "Wait, I have been able to get Apple this cheap in a long time, I think I want some.

QUEST: And don't forget volume -- this is the only game in town where sense for strong yield. You can't leave it in the masters under their bed. The banks giving in extra nothing, bonds OK, fine. But if you are looking at gains, you still going to got a wall of money and pension funds...

ROMANS: Yeah.

QUEST: ... and corporations looking to be invested, and that's why the market is rebelling against self.

BANFIELD: And I love the analogy the mattress on, you know, the money under the mattress because that's where I've had in mind for the very long time, under the mattress waiting for a day like this.

And I wonder how much of this is arcane analysis of the United States economy versus the emerging market -- my best Richard Quest, or how much of it is just people saying those prices are steel and I'm going to load up on them while their low?

ROMANS: I don't know what's going to happen for the rest of the week. I'm afraid to say that there has been written that suddenly all purpose stocks were expensive and now they're cheap. I think you could have some grinding this week and some volatile moves because the Asia story, the crashing commodities, it had been crashed.

[12:35:12] BANFIELD: It's not going away.

ROMANS: The big decline in Asian currencies -- in global currencies, these are still going to be problems as we try to figure out, you know, how do we waited here in the stock market and the bond market.

QUEST: People ask me constantly, what's going to happen, you know, by the end of the close of business, what's going to happen for the rest of the rest of the week? Is this a full scale bad market?

I have got -- I still got the shirt under my back. Because I'm sensibly enough not to know what's likely is happening by next week.

You have to look the big picture, and the big picture is there are some evil winds as I've said that almost definitely blowing in the global economy. The U.S. is not susceptible totally to them at the moment. But it could be and the market's slowly comes back. It's now looking to see this. There's an exogenous event something else that's going to give them more reason to go down again. That market will not go down on its own.

BANFIELD: We're like 800 and 70 points...

ROMANS: If you bought socks this morning -- if you bought socks, you are just like so happy right now. Three things, a regular person can do. Number one, don't panic and change your 401(k), because one, two or three days in market.

Number two, refinance your mortgage, because interest rates, there are still very low, refinance your mortgage. If you want to buy a house, it's a good time to get a mortgage because home prices are rising. And I think...

(CROSSTALK)

ROMANS: And number three you got gas price that it could be, yeah, gas prices are going to be at two bucks by Halloween.

BANFIELD: More than five.

ROMANS: So, you know...

(CROSSTALK)

BANFIELD: ...All five other now, Nike, Microsoft, Disney, Apple, and Intel.

QUEST: But Apple.

BANFIELD: Amazing.

QUEST: Apple which has China exposure on both sides, Intel...

BANFIELD: Microsoft.

QUEST: Microsoft it's fascinating the ones that are being that is rallying back up again.

BANFIELD: Can you say over the break?

ROMANS: Sure.

BANFIELD: All right. Because we -- we're still watching the life picture on the bottom right hand side of your screen. A lot of things going on this train right now, all very important, the big boards important, those individuals structure foreign and that podium is important. That's the White House press briefing room. We're expecting a press security come out and speak about well, hopefully this, perhaps not. The expectations are that there'll be some comments from the White House about this remarkable volatility.

And like is just said, we're in 116 points right now, that was about 880 points, you know, worst.

ROMANS: This doesn't happen.

BANFIELD: In the last several hours. So yeah, this just doesn't happen as Christine said.

Coming back to the story, massive fighting after stocks drop right after this.

QUEST: OK, so what I'm...

(COMMERCIAL BREAK)

[12:41:20] BANFIELD: Welcome back to our breaking news and this is it, the big board out a 117, every time I say the changes and it so volatile but the big story is massive correction on the correction.

Let me explain.

It was about of thousands points down today and everyone was saying this is the correction after six years of stock effectively gaining a lot of positive ground and then Bam within the minutes of the opening bell, the market we've done were thousands points and look at it now, just hours into trading.

It self correcting and to an amazing extent (ph) Christine Romans and Richard Quest are here with me like I'm trying to remember in a very tricky because of the percentages whether we've ever had a one day correction this significant and I can't think of one.

QUEST: Flash, flash.

BANFIELD: Yeah flash, flash yeah.

QUEST: I mean but in our career and we're just young spring chickens. But in our career we've only see and update move like that three or four times maybe in your entire career I mean it. It's very rare...

BANFIELD: I mean look at, we're almost at 1000 pounds -- a thousand point...

ROMANS: But they come back, I mean it's the I'll be damn recovery. I mean it's just like you can't believe that it came, you know, it's just huge bounce back from those loads...

QUEST: Which proves that there's a -- as Christine was saying that there's the momentum for the market is upwards at the moment. It takes a reason for it to suddenly fall out of bed.

Now we had that reason last week and it's still out there, darkly lurking about emerging markets and commodities and oil in China but the U.S market per say still has the win limit sales.

BANFIELD: So when Donald Trump tweet this and this just came out today "Markets are crashing all caused by poor planning and allowing China and Asia to dictate the agenda this could get very massive vote Trump."

He is making a political story out of something you're saying is not something that America can dictate.

QUEST: The U.S is negotiating a trade pack with Asia not China, with Asia to transpacific partnership at the moment. It's also doing the same with Europe and the European Union.

Now both of those pack I suspect Donald Trump doesn't like one little bit.

However the U.S. has to live in the trading environment, it can't dominate it and certainly ...

BANFIELD: It lives within it, it can't dominate.

QUEST: No, of course it's not.

BANFIELD: Just of course for the political out there because a lot of people...

QUEST: The E.U. is as large in market as the United States is. The E.U. does a huge amount trade with China and its own right, China is the second largest economy in the world.

It's fine to seek and say you're going to dictate the terms of trade but what you do in the other side says no.

ROMANS: You're going to see over the next, you know....

QUEST: You said so (inaudible)

(CROSSTALK)

ROMANS: You're going to see over the next few months, next year Ashleigh a lot of prognostication from politicians about what they can do about the economy.

The fact is that the China-U.S. relationship is one of the most important economic relationship in the world and China was overheated. The Chinese economy was overheated and the worry now is it headed for a hard landing that would hurt everybody who does business with China that's the issue with China right now.

And what you're watching is green, these are the Dow 30 stocks to make...

BANFIELD: Explain why this graphic has a big sea of red with just a line of green.

ROMANS: Because this morning that was all red and each of the stocks with down 4, 5, 6, 7, percent. Now, some of them are turning green which means that buyers have return to Intel, Apple, Disney, Nike, (inaudible) technologies and Microsoft to a degree.

There -- these stocks were on sale this morning and there were people who wanted to pick to them up and sale and now they're hire.

So my concern always when I look at a correction like again there's too corrections playing on right now. There's a market correction and then there's the days correction.

QUEST: Think of a market correction over the longer period not over a day or two, a 10 percent correction we're seeing in about five days because of volatility and computers.

[12:45:06] ROMANS: So we hadn't seen it in four years.

QUEST: Right: We haven't seen it in four years. But actually it's like a bad luck. And I don't really mind if the market goes off 20 percent in three days and comes back. Their markets mean sustainable long period. Corrections don't just happen for one or two days. It has to be a sustainable for the period

BANFIELD: OK.

QUEST: Which is why you don't really take too much notice.

BANFIELD: And this whole notion of a few days. I want to just talk about today and then how that it'll affect tomorrow because if I'm not sophisticated investor. But if I am a sophisticated investor I'm seeing all those deals this morning when everything was down the thousand points and I'm thinking this is a great day to get in and then get out.

So, I'm wondering how many people are going to take all of these profit off the table.

ROMANS: Oh I don't know.

BANFIELD: At 3 o'clock.

ROMANS: I don't know. I don't know if the -- with average investors let's get it up to be able to do that I mean there's a lot of money running through big algorithm trades and big block tradings are being professional investors, they might advice into day like this is the normal person should not be messing around the markets on these kinds of day.

BANFIELD: Other than fine, with your brokerage account.

ROMANS: You will get burned, you know, I most people and you -- can you not both know when you make a prediction about the stock market, you get killed...

QUEST: Try take your shirt out.

ROMANS: Yeah, yeah, thank you. You know, I mean if you like a company and you believe that if the prices going higher and you understand this business it's fine by the stock but if you were just trying to get in, get reach clip in stock market, good luck.

QUEST: So day -- remember day traders in the 1990s. BANFIELD: I was one of them.

QUEST: Right, day traders, moving...

BANDFIELD: And making jobs after that one.

QUEST: But have nothing left ...

BANDFIELD: Yeah.

(CROSSTALK)

BANDFIELD: ...remember.

QUEST: Well, margin isn't worrying this market. Margin is a worry which is why it's nice to see the market coming back a little.

BANFIELD: Yeah, but by the way for those who don't remember the 90's that margin that you're talking about was borrowing money so that you could put it into the stock market make money and then send that original borrowing amount back. It's not the best idea ever I would say ever but ...

QUEST: And back in 1929 and ain't going to work in 2015

BANFIELD: All right stand by because we're still looking at the numbers where down 156, 21 right now and change and at the same time the White House say it's getting ready to go live we're watching that as well wondering what White House is going to say about this market position or this market situation today and whether it will have a significant effect on those numbers as we march towards close.

And coming up next, you're not going to believe the advice that NFL Rookies got about getting a fall guy to help cheat them out a jail and send their pillion instead and what shocking is the person who gave the advice, oh what a mess.

It's next.

(COMMERCIAL BREAK)

[12:51:10] BANFIELD: I want to get you live now at to the White House press briefing room where Press Secretary Josh Earnest has began speaking.

He's giving his prepared statement, he's going to open up to questions in a moment and what he's speaking about now as he has said is the support that the president has been able to build for the Iran nuclear deal. Let's listen.

(BEGIN LIVE WHITE HOUSE BRIEFING COVERAGE)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: Senator Debbie Stabenow of Michigan that's indication that we continue to build some important momentum inside the United States senate in support of the agreement. Last week many of you may have seen an op-ed from Brent Scowcroft, who was the national security adviser to President George H. W. Bush lending his full throttle support to this agreement. You heard me refer in the past to the idea that this debate that we're having about the current Iran deal is breaks down a long the similar fault lines that we saw around the debate leading up to the 2003 invasion of Iraq.

And you recall those view who cover that sort of closely, that Mr. Scowcroft made clear by the concerns that he had about the invasion at the time.

And again he is somebody who's indicating his strong support up for the agreement.

Couple of weeks ago we saw a letter from 29 different engineers and sciences here in the United States who indicated that this inspections regime that would be imposed on Iran to verify their compliance with the agreement. Actually could be a model or should be a model for the way that the IAA can talk's inspections of other countries nuclear program. But we saw a letter from assign by a wide variety of retired military leadership flag officers indicating that they believed that there was no better option for preventing Iran from obtaining a nuclear weapon than this diplomatic agreement.

We also saw a letter that was signed by 26 different Jewish leaders all across the country indicating that they believed that this option was what they described as the best available one to prevent Iran from obtaining a nuclear weapon.

But we also saw a letter from -- it was signed by more than 300 Rabbis from across the country indicating their commitment to Rabbi the United States congress and encouraged them to come out in support of the agreement.

But we also saw an interview at the end of last week from Former Mossad Chief Efraim Halevy, who indicated an interview with PBS that he believed that this was a very effective way for the international community to come together and take actions to prevent Iran from developing a nuclear weapon.

And finally, I wanted to call your attention to comments of President Bush's secretary -- Treasury Secretary Henry Paulson, who raised -- obviously the Department of Treasury is responsible for implementing the sanctions that have been so effective in compelling Iran to come to negotiating table and entering to constructive talks with he international community.

And the reason I raise this quote is that many of he critics of the agreement had suggested that what congress should do is actually kill the deal to reject it in the United States Congress and go back to the negotiating table with Iran and negotiate a better deal.