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Markets Sell Off; North, South Korea Reach Agreement; ISIS Destroys Ancient Temple. Aired 3-4p ET.

Aired August 24, 2015 - 15:00:00   ET


[15:00:09] MICHAEL HOLMES, HOST: Hello everyone tonight a rough ride on the markets.


HOLMES: The Dow Jones does bounce back though after a massive loss in early trading as Chinese shares have their worst day since 2007.

Also North and South Korea reach an agreement after marathon negotiations, we are live in Seoul with the latest.

Also a heroes welcome in Paris. France giving its highest honor to four men who intervened to stop an attack on a train.

And ISIS destroys an ancient temple dating back nearly 2,000 years.


HOLMES: Hello, everyone I'm Michael Holmes, live from CNN, Atlanta, thanks for your company. This is The World Right Now.

All right we are just an hour away from the closing bell on Wall Street and even though the losses have been steep it's still an improvement over the

day's earlier route.

Right now blue chips are down, they did fight their way back somewhat after a stunning plunge right out of the gate.


HOLMES: Have a look at the DOW now down four percentage points, 659, a little bit of late selling going on there. At one point 1,089 points down

this morning, the biggest loss ever during a trading day. The meltdown began in Asia, then spread to Europe, hundreds of billions of dollars wiped

off the value of European stocks today. Just have a look at those numbers there. TAC.40 down 5.35 percent. The FTSE in London its worst day in six

years, a steep loss for the DAX as well, that plunged Germany officially into a bear market.

Let's get the very latest now from the New York Stock Exchange. CNN's Cristina Alesci joins us now live.


HOLMES: That's going to be a mercy bell for a lot of people but it could have been worse. Although a little bit of a late sell there. Is that -

was that expected?

CRISTINA ALESCI, CNN MONEY CORRESPONDENT: That's right, just about half an hour ago we were down about 350 points, it looks like the selling has

accelerated so we might have a bumpier close than I was originally anticipating but clearly nothing like this morning. As you mentioned a

thousand point drop; that was the biggest point drop in history, so it is notable.


ALESCI: And that's because U.S. investors woke up this morning and started questioning why - or rather how the emerging market selloff and the selloff

in Europe will eventually impact the U.S.

U.S. companies as you know are concerned about their ability to sell goods and services or receive. It's not just - the United States is not an

island in and of itself, the global economic slowdown will impact the United States. Now investors are trying to sort out just by how much.

In the backdrop we have the possibility of the Federal Reserve raising interest rates which increases uncertainty around this because interest

rates at zero have acted like a stimulus for many years here in the U.S. and now the prospect of rates going up also has investors a bit nervous.

And also if you think about it if this is really driven by the emerging markets, by China, then what levers does the U.S. Government have to pull

to stop any kind of serious downward cycle in the stock market?

You know we've exhausted everything in our arsenal at this point as far as the U.S. Government standpoint goes. So that's what investors here are

nervous about. Why did it happen today, why did we have a thousand point selloff today? Markets, they just - there's this sort of a negative

feedback loop that starts and once it gets triggered it's very hard to stop it.

But one thing is for sure, there is a new dynamic here, it's not going to be a straight shot up that we've seen in the last four years. Of course

we've had like minor blips along the way, but for the most part we've had a major bull market here for four years. A lot of analysts and investors

saying that this correction is somewhat overdue.


HOLMES: All right, Cristina Alesci, thanks so much. I appreciate that there in New York.

Well if today's been a harrowing ride for the average investor imagine what it was like on the trading floor. Well we can help you out with that,

we're joined by Tim Henderson Managing Director at TJM Investments.

Great to see you Tim. You know the first thing - the first thing is this wasn't wholly unexpected. I mean I've heard you know the experts talking

about a possible correction for several weeks now. Was it just the speed that caught everyone off guard?

TIM HENDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: Definitely the speed of the correction in the last three days were down 8%. That is almost

unprecedented. Clearly people have been talking about a potential correction for weeks, actually months, maybe most of the year. And now

we've got something just happening much faster with a lot more velocity than anyone would have anticipated. There's no doubt that events in China

and some other currency volatility around the globe have been a major participating factor.


[15:05:29] HENDERSON: And there is also no doubt that there are major institutional investors around the globe raising cash for either some

redemptions that they may already be seen, or some that they may be anticipating.

HOLMES: Well you know the U.S. I suppose in terms of the market doesn't have all that much exposure to Shanghai, and it sort of brings up that

whole you know, why question, which is fascinating. You know nothing major, and correct me if I'm wrong, nothing major has changed in terms of

you know corporate profits or forecast or economic growth estimates, interest rates. Nothing's changed in a market that last week was 8%


HENDERSON: Well you know I think that the perception is setting in that China's growth rate probably isn't really running at 7%, the way their

numbers have come out the last couple of quarters. It is the second largest economy on the globe, there are a tremendous amount of U.S. based

multi-nationals that has done a lot of business there in the last decade and a half.

And to have their market selloff as sharply as it has off its highs has got to be disconcerting for global growth prospects and for market prospects

around the globe.

HOLMES: Yes, so to that very point, I mean is there a concern in your business about perhaps what the Chinese haven't said, that things could be

a lot worse, that growth might be, heaven forbid 5% and not what they've been saying? Because of course that then has a very direct knock-on to you

know markets like - commodity markets like Australia and New Zealand and some countries in Latin America as well, is that fear.

HENDERSON: Well there is definitely a factor of the unknown that's lurking out there where investors would like to have some more clarity as to what

the state of the economy, and what the state of the growth really is in China.

Also keep in mind that we're now about five weeks from the end of the third quarter. The second quarter earnings season was probably mediocre at best,

maybe even a little disappointing. And you have to think about how the market might react if when earnings start to come out in seven or eight

weeks, we're looking at a second straight quarter of mediocre at best earnings' reports.

You know the market, even with the correction we've seen the last three days, is not cheap. We might be at 17 - at a 17 PE on forward earnings,

and that is OK if you're growing at the rate we were growing for a few years. But it might not be OK for a couple of mediocre quarters of


HOLMES: Right, yes. Tim, thanks so much. Tim Henderson, Managing Director of TJM Investments. Appreciate that.


HOLMES: I want to continue the discussion now and get a little bit more perspective on this plunge in the global market. Ken Rogoff is joining us

from Harvard University, a Professor of Economics and Public Policy there. Has also served as the Chief Economist for the International Monetary Fund,

so he knows his stuff.

When you - when you look at the big picture, you know not just the DOW but there have been some remarkable drops around on the European (inaudible),

what do you see as the driver to this? Is it worries about China's growth?

KEN ROGOFF, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, HARVARD UNIVERSITY: Oh, I think it's worries about a hard landing in China. That's been the

elephant in the room for the last 15 years. And I don't know that it's coming but everybody's worried about it. And if it happens it could get

worse. I think the chances are China will come in and stabilize, it will look a little better, they'll come market (inaudible).

There is a huge fear factor here that the other show is about to drop.


ROGOFF: China's been the sure thing, people didn't think about the fact that of course they too have to have recessions and slowdowns and now

suddenly they're re-pricing everything to brace for it.

HOLMES: You know I suppose, it's always - it's always instructive to bring in the context when it comes to Shanghai, I mean even though it's been

dropping in such a remarkable way lately, it's still up what over 40% from a year ago. So it's still ahead if you invested a year ago.

[15:10:07] Is it - is it a concern in terms of, you know China's hands-on approach to its market in the past, is there a concern that they have not

been able to put a (flaw) in here?


HOLMES: That they don't have the control that perhaps a lot of people are used to seeing.

ROGOFF: Well, you can't control these markets and China's just become too big and too open to be able to do it. China is looking to normalize its

economy. That was what the new President wanted to do when he came in.


ROGOFF: Frankly I think it's why - part of why he's so vigorously consolidated power preparing for a slow-down that's going to come. Because

China was investing too much, they were relying too much on exports, they're trying to move to something else. It's hard to engineer a soft


I think the Chinese were looking to have the economy slow that's very hard to do it in a controlled way. Yes of course this whole aura of

invincibility that people somehow had about the Chinese leaders, who have done a great job but you just can't grow, and grow, and grow, without

occasionally having a correction in your growth, and maybe a financial crisis. Let's hope not.


HOLMES: You're an economist but let me ask you a political question if I may. Could there be a political impact here where hardliners in China are

going to turnaround now and say to those who wanted to normalize the economy, turnaround and say see, look what happens when you try to do that.

ROGOFF: No, I don't think so. I think President Xi, is looking to normalize the economy, they realize. Look they were investing 50% of GDP,

it's ridiculous, you can't keep doing that. And he knows he's going to be in power you know for a ten year term, maybe more, and he would - he would

try to bring these things forward, blame it on the last group.

So no, I don't think so. I think that they're going to sort of you know keep - stay the course. If things get really bad they do have trillions of

dollars in reserves and they will use them to sort of try to clean up. But I don't - I don't think they're going to scale back from reform. I don't -

I don't think that's it at all.

HOLMES: Do you think that - or if you look at the crystal ball as we all like to do, do you think that when it comes to the DOW which so many other

markets seem to follow, where a lot of the sentiment comes from, do you think that this DOW - the DOW is going to settle? That this was just

really a correction that a lot of people thought was going to come anyway?

ROGOFF: I mean that's the overwhelming likelihood when we see these things because the economy in the U.S., Europe, Japan, seems to be O.K. The

emerging markets are very important politically, China's very important for commodity markets. But it's not like this is happening in the United

States. So I tend to think so - I tend to think there's an overshoot here.

But I think the way to look at it is there's a heightened fear that the hard landing could come. It isn't 50/50 though it's got to be less than

that. But I think investors were just too calm about it, they just said it couldn't happen. I can't believe how many people I've talked to over the

last few years who just dismissed it. And now they think well maybe. And you have to price that in because that could be really bad if that happened

it could still get a lot of uglier.

HOLMES: Yes, very quickly yes or no, do you think the Fed's going to leave interest rates where they are?

ROGOFF: Yes, they're going to leave interest rates where they are unless things really turn around. They've got a few weeks, everything could

bounce back but you know if they were on the fence, it's just silly to move in the middle of this. They're going to want to wait.

HOLMES: That's a safe bet. Ken Rogoff, good to see you from Harvard University, great perspective thanks so much.

ROGOFF: Thank you.

HOLMES: Well much more on the global selloff still to come. We're going to take a closer look at the source of China's troubles and we will of

course continue to bring you the latest numbers from Wall Street throughout the hour as the DOW heads towards a close and then settles after then bell.

We're going to bring you all of that.


HOLMES: Meanwhile when we come back on The World Right Now, an agreement has been reached between North and South Korea, that's good news. What

both sides are agreeing to do to end days of spiraling tensions.

This is The World Right Now, and we'll be back.




[15:16:35] HOLMES: A quick update now on our top story, that is today's rather brutal market selloff.


HOLMES: The DOW deep in the red late in the trading day. You can see there down 3.59%, 590 points. The numbers still better than we saw this

morning though. The blue chips plunging more than a thousand points. As a market meltdown, if we can say that, began in China and then spread all

around the world, markets everywhere impacted.


HOLMES: Now, let's turn to a positive step elsewhere. North and South Korea saying they have reached a deal to ease spiraling tensions. The key



HOLMES: Pyongyang has now expressed regret over the two South Korean soldiers being badly injured by landmines early this month. And Seoul is

going to win the propaganda messages that it has been blaring from those speakers on the border, along the demilitarized zone. And those broadcasts

are what lead North Korea to launch sells - shells rather over the DMZ.

A lot to cover here. Let's go to our Kathy Novak who joins us now live from Seoul.


HOLMES: So who blinked and what's the result?

KATHY NOVAK, CNN INTERNATIONAL CORRESPONDENT: Well it depends who you ask doesn't it Michael. I think the result is that both have found a way to be

satisfied to take this back to their populations and say they got what they wanted.


NOVAK: They both had this red line here on the South Korean side we had President Park Guen-hye demanding an apology from the North Koreans

yesterday over this landmine incident. This happened back on August the 4th. Two South Korean soldiers were badly injured when it was announced by

the Defense Ministry here in South Korea that they had the evidence to pin this on the North Koreans planting the landmines. And the United Nations

backed that assessment up.

The South Koreans were under pressure to retaliate, to say they were not going to put up with the North Korean's provoking them in this way. And

then on the same day that they announced that it was North Korea was to blame they restarted this campaign of psychological warfare.

So then they were in a position where they couldn't simply back down from that because North Korea was threatening them. So the condition had to be

that North Korea agreed in some way to apologize for the landmine incident. Now by using this language expressing regret, North Korea, can say to its

citizens the bottom line is we're getting South Korea to stop the broadcasts, and yes we're saying it's regretful that your soldiers were

injured but in a sense they don't have to go so far on paper anyway as to say they're taking responsibility for planting those landmines.

HOLMES: The North of course no stranger to (inaudible) comments and inflammatory language, but on this occasion everybody seemed to be a little

bit more worried than usual. The U.S. you know reportedly changing its plan or re-evaluating having a look at its plans that are in place to

defend South Korea.


HOLMES: And yet those joint drills which always set North Korea off, they're continuing.

NOVAK: They are, and we've been referring to them throughout this escalation of tensions. Because as you know these drills happen every

year, and every year North Korea hates them, and every year North Korea issues some kind of threat.


NOVAK: But what seemed to happen this time around were there were these extra factors of the landmines and these propaganda loud speakers. And

that was adding to this - the tensions and causing all sides involved, North and South Korea, as well as the United States to be taking the

situation very seriously.

[15:20:17] We know that North Korea was on a semi-war state. As part of this agreement it has backed down from that. We know that South Korea had

its military on high alert. And now we're learning that the United States was reviewing its plans on how it would defend South Korea in the event of

a North Korean strike. And we've learned more about the kind of intelligence that the U.S. military was getting on North Korea's movements

including planning to potentially launch stud missiles, and they were reviewing how they would respond to that. Michael.

HOLMES: All right, on the spot for us, Kathy Novak, a long night view, 4am there in Seoul, or just after. Appreciate it, thanks Kathy.


HOLMES: Let's turn to France now where for months the threat of terrorism has continued to puncture the country's peace and safety.

Well on Friday another attack as you know was attempted but this time thwarted. Four men tackling a gunman on a high speed train, tackle him to

the ground, stopping what was a potential massacre.

Now, as Nic Robertson, reports for us, a grateful France thanked them for their bravery.


NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Three Americans, one Brit and France's highest honor.

FRANCOIS HOLLANDE, FRENCH PRESIDENT: (As translated) I felt it was important to give you the highest honor, the Legion of Honor to show how

grateful we are.

ROBERTSON: French President, Francois Hollande personally thanked the four men in a red carpet ceremony at the Presidential palace.

The Americans also childhood spends, Spencer Stone, Anthony Saddler, Alex Skarlatos, and fellow passenger, Chris Norman, a British National living in

France, hailed as heroes to stopping a would be terrorist on board a high speed train bound for Paris.

After gunfire erupted aboard the train the men rush from their seats to subdued Ayoub el Khazzani, a Moroccan national who authorities say was

armed with two guns and a box cutter. Witnesses say the men prevented a possible massacre and no doubt saved lives.

HOLLANDE: (As translated): The whole world was able to admire your courage, your calm, your sense of responsibility. This solidarity which

allowed you without weapons, unarmed, to overpower this individual who was armed to the teeth and you were ready to do anything. Your heroism should

be an example for all.

ROBERTSON: Afterward, Norman said he was honored to have received the medal and happier still just to have survived.

You sound quite emotional today, how do - how do you feel in your heart - in your heart how do you feel?

CHRIS NORMAN: How do I feel? I feel happy to be alive. I mean frankly that was the real thing and I'm happy that nobody got hurt.

ROBERTSON: Four men labeled worldwide as heroes but Norman says they prefer to think of themselves as a team.

A team that President Francois Hollande said were the perfect example of what could be done in a moment of crisis. Important he said as a threat of

terrorism remains real.

Nic Robertson, CNN, Paris.


HOLMES: And let's talk a little bit more about what we've learned about the suspect that those men did tackle. Here's what we know right now.


HOLMES: Ayoub el Khazzani is a 25 year old Moroccan man but his lawyer says he's been living homeless in Belgium's capital Brussels. That's where

El Khazzani apparently stumbled he says on a bag of weapons in a park.

Authorities are insisting the suspect however is a dangerous man with French sources reporting he was already the subject of a notice signaling

that he merited special surveillance.

A senior European counter-terrorism official has told CNN that a trip he made to Turkey this spring is also at the center of the investigation.


HOLMES: Still ahead right here on The World Right Now. ISIS attacks a precious cultural treasure.


HOLMES: Just ahead what the group has reportedly done to a 2,000 year old temple in Syria.




[15:26:09] HOLMES: Right, what is it about half an hour left in the trading day, the DOW sinking once again after nearly recovering at one

stage from what were record losses.


HOLMES: The Blue Chip slid 1089 points this morning and you can now see down 668 after really rebounding. At one point had gotten back to about

100 points down. But a bit of a late selloff there worsening the day. European and Asian markets also took a real beating.


HOLMES: We're going to turn now to Syria where there are reports that ISIS has blown up another ancient treasure, this time in Palmyra.

There are conflicting claims on when the 2,000 year old Baal Shamin temple was detonated.


HOLMES: A London based Syrian monitoring group says it happened a month ago while a government antiquities official says it happened on Sunday.

Palmyra is a UNESCO World Heritage Site and that organization blasting ISIS' destruction of antiquities there and elsewhere for that matter.


Ben Wedeman joins us now from Rome.

Ben, I know you're a bit of a student of all things old like this. How significant was this and why would they have blown it up?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well this temple, the Temple of Baal Shamin which means The Lord of The Heavens dates back to

17AD of the Roman Empire.


WEDEMAN: Hadrian apparently renovated it in 170AD, but it was one of the principle archaeological sites in this massive city that was an important

trading point between the Roman Empire, and Persia, India, and China for several hundred years before the advent of Islam. So it's hugely


And of course we know that this city did fall to ISIS on the 21st of May. And it's important to keep in mind when we're focusing on ancient

antiquities that hundreds of people have in fact been executed by ISIS in Palmyra since the 21st of May. And one of the latest victims was of course

the 82 year old former head of antiquities in Palmyra, Khalid Asaad who served in that position for forty years. And apparently according to some

opposition groups for a month ISIS tortured him trying to find out where perhaps the city's ancient treasures were being hidden.

Although we know from CNN reporting from Damascus that many of the treasures from Palmyra were in fact taken to Damascus before the city fell

to ISIS. So, this is really just the latest in a series of archaeological sites in Syria as well as in Iraq that have been destroyed deliberately by


They say it's because these were sites that were used to worship Idols and therefore they must be destroyed but for many Syrians of course these are

important parts of their history.

But it's also important to keep in mind Michael that for many Syrians these attacks, this vandalism against Syria and Iraq's ancient heritage, although

upsetting is really just a sideshow compared to the nightmare of bloodshed and destruction that's occurred in both those countries now for quite some



HOLMES: Absolutely the human brutality as you rightly point out. I'm curious they say it's for religious reasons but how much of it in your view

is theater rather than ideology? Because you also have this brutal group that is blowing up and destroying things but they're also trying to sell

treasures on the black market, artifacts.

[15:30:04] WEDEMAN: Yes, on the one hand Michael it's important to keep in mind that this is really part of their tactic of sort of shocking awe on

an ISIS style. Not only are they destroying artifacts but of course we've seen time and time again these brutal execution videos.

For instance just last month we saw a video put out from - by ISIS from Palmyra where we saw the ancient amphitheater of the city being used as a

backdrop where 25 teenagers were used to execute 25 Syrian soldiers, there. So really this is to really press their brand to those who might be

sympathetic to their cause.

And yes on the other side there's the materialistic gain that's involved in this activity. I've spoken to many archaeologists and others who say of

course ISIS makes millions and millions of dollars from the sale of antiquities on the black market around the world, Michael?

HOLMES: All right, Ben, as always, thanks for your reporting on this. Ben Wedeman, there in Rome. A real tragedy.

We're going to take a short break on the program but we will be right back. Stay with us.



HOLMES: Welcome back everyone I'm Michael Holmes in for Hala Gorani today. We are just under 30 minutes away from the closing DOW in Wall Street.


HOLMES: As the DOW struggles to recover from a massive selloff at the open. It dropped more than a thousand points after trading began, that is

huge. Investors were reacting to a stock crash in China and other things. Do stay with us, we're going to have all the latest developments on that

for you.


HOLMES: Also, North and South Korea say they have reached a deal to ease tensions on their peninsula.


HOLMES: In the agreement Pyongyang is expressing "regret" that two South Korean soldiers were injured by landmines. And South Korea in turn will

end the retaliatory propaganda broadcast that have been infuriating the North.


HOLMES: The French President awarded four men the country's highest honor for helping stop a possible terrorist attack last Friday.


HOLMES: Francois Hollande gave the Legion of Honor to three Americans and one British man calling them heroes and saying the honor shows how grateful

France is.


HOLMES: ISIS reportedly blowing up a 2,000 year old temple in Syria as we reported before the break.


HOLMES: That temple in Baal Shamin is in Palmyra where the militants have destroyed other cultural artifacts as well.

The news coming a week after the militants killed the archaeologist who looked after the ancient city's antiquities.


[15:35:12] HOLMES: As we said less than half an hour until trading finishes at the New York Stock Exchange. A tough day for investors

worldwide spooked over fears for the Chinese economy and the health thereof.


HOLMES: This is how the country's benchmark Shanghai Composite faired on Monday, you can see it dropped a massive 8.5 percent at the end of trading.

But the sharp fall's not confined to China.

India's Sensex fell almost 6%, that's the biggest drop since 2009. And big drops on all the major European (bourses) as well.

CNN's Richard Quest joining us now live from New York.


HOLMES: It really was across the board for the while there it looked like the DOW was going to bounce back but then late selling. What's your read?

RICHARD QUEST, ANCHOR QUEST MEANS BUSINESS: What you mention the other markets Michael, you talk about India, we can look at any market in the

world, there is absolutely no way that a market, any single market, is going to be able to buck the trend of what is clearly a massive global


The issue of course is whether it peters out over several days or do these evil wins in the global economy actually become more hurricane force and

continue to bear down.


QUEST: Let's look at the DOW and how it did progress. There you have that sharp selloff right at the open. That was to be expected after what we saw

with Shanghai and Europe. But during the course of the session you have a lunchtime period where the market really rallies all the way back up and

it's just off that 90 points at its highest point. And then most worryingly in the last two hours of trade you start to see this selloff


But the market has - what's happening now in this last half hour Michael is so called book squaring. You've got hedge funds that are going to take out

the opposite position. You've got high frequency trading. You've got a huge amount of long and short positions that are squared off at the end of

the day. And most of what you're seeing now is all being driven by computers.

Just as you have the volatility at the morning, then in the afternoon it's the same thing, Michael.

HOLMES: You know as we said before you know Shanghai, you know these huge drops that you've seen there but it's still only down one percent for the

year and up 43% from a year ago. So you need to keep that context.

Now the exposure to Shanghai and the rest of the world not so much - not so great. But when it comes to the economy, yes, and that's where the fear is

isn't it? That maybe growth isn't as good as even the Chinese are saying.

QUEST: Oh the growth probably isn't. The growth - the Chinese say seven, some believe five. Let me show you Shanghai. If you talk about the

Shanghai market at the moment let's look at the one year data so far. Yes the market is quite - it's almost back to where it was year to date, it's

still got some gains, it's given back pretty much everything from the year so far. But over the 12 month period it's still only got a smidgen.

Let's see the DOW 30 and if you look at the DOW 30 stocks themselves and actually see these. This is real time of what's happening in the DOW at

the moment, the 30. Now every one of these stocks pretty much in some shape or form has exposure to China or emerging markets; Boeing selling

aircraft. Apple, it manufactures there, and it sells into there. Same with Microsoft. Exxon Mobile, let's not forget the oil play that's

underway at the moment. Oil down under $40 a barrel for the first time in several years. That's hitting emerging markets like Russia, like Nigeria,

like Venezuela, like Brazil, like Colombia.

Put all this together and you start to see why something as seemingly odd as a manufacturing number. Look at Walmart and GE. Remember just how much

Walmart buys from China. You start to see this could be telling us something more of what's happening in the wider economy.

HOLMES: Yes, and as it sort of moves its economy to more consumer based as well there's going to be knock-on effects to the export commodity.

Countries like Australia, New Zealand and the others that are - that are shipping out iron ore.

QUEST: But I'm coming back to the DOW because if you look at the DOW we've seen frolics like this before. We saw one in last October. We saw one

over Ebola. We saw one over the taper tantrum. It is not out of the question that the market just has a bout of bilious indigestion and turns

itself around in a couple of days.

It'll take some policy decisions by China but it is perfectly possible.

[15:40:01] HOLMES: I, just like you using the bilious. I think that's right up there. I always try to get fettered into a news cast as well. I

haven't managed to do it yet but bilious, my congratulations sir. Richard Quest, good to see you.


HOLMES: We'll see you on CNNi today a little later on with me and (Amra), this is The World Right Now meanwhile.


HOLMES: Coming up seeing police like this isn't all that common at railway stations in Europe but millions of people do use those stations every year.

So is more security needed? We'll find out next.




HOLMES: Welcome back everyone. Now obviously one of our top stories this hour has been the recent attempt at a terror attack in France. It brought

the apparent vulnerability of rail travel back into the spotlight.

Now when we take a plane we're used to going through various security checkpoints and alike but you can walk onto a train pretty much without


CNN's Phil Black reports.


PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: The 2004 terrorist bombings in Madrid brutally exposed the vulnerability of Europe's trains. The blast

killed 191 people. But today in Europe there's still only one rail service that enforces anything like airport style security.

When you ride the Eurostar you and your luggage pass through x-ray screening.

SIMON CALDER, TRAVEL EXPERT: Eurostar is a closed network. Ever since it opened 21 years ago, connecting London with Paris and Brussels it's been

considered that the Channel Tunnel is a target, and therefore you've always had airport style security. And because there's so few stations involved

in the network that's been relatively easy to maintain.

BLACK: But the Eurostar is a tiny part of Europe's rail network. Long sections of high speed track cross national borders weaving through a huge

complex web of intercity and local rail lines. It moves hundreds of millions of people a year with little to no passenger screening.

CALDER: It is the sorts of numbers which simply don't happen in air travel and therefore the air travel solutions do not apply to the trains.

BLACK: Security experts say European countries must strike a difficult balance between risk management and convenience.

RAFFAELLO PANTUCCI, ROYAL UNITED SERVICE INSTITUTE: On the one hand you do have a terrorist threat that occasionally does appear to target public

transport and potentially lead to many deaths.

But on the other hand you've got the economic benefits of having a mobile - a train system across the continent that people can use very easily.

That's the sort of fundamental element within the economy.

BLACK: In the short term experts believe the answer likes in more covert surveillance and more visible armed security.

PANTUCCI: So having more people at major train stations with guns for example will help not only engender sort of public sense of security but

also may potentially deter some people from launching attacks.

[15:45:11] BLACK: There is no fail safe option. So on trains, as with almost every area of modern European life, people are now considering what

money, convenience and freedoms they're prepared to sacrifice to reduce the rare but increasingly persistent threat of terrorism.

Phil Black, CNN, London.


HOLMES: Don't go away, coming up here on the program. As a financial storm hit world markets today, London not spared. We're going to go their

live to see how that city has been affected.



HOLMES: As we've been reporting it has been quite a ride on world markets. In just a few minutes time the closing bell is going to ring at the end of

what has been a tumultuous trading day on the New York Stock Exchange.

It started off the day of course a thousand points down. Came back at one point and was only a hundred points down. But right now I think you can

see there on the screen it is down 353 points. So it's actually come back a little bit from what it was a few minutes ago.

Let's turn to Britain now where the country's Aviation Regulator has announced that it is going to begin enforcing restrictions on some of the

maneuvers that can be performed at air shows. This of course coming after that accident on Saturday that killed at least 11 people.

As CNN's Ian Lee found the local community is in shock.


IAN LEE, CNN INTERNATIONAL CORRESPONDENT: Words are hard to come by for residents of Shoreham-by-Sea, a community reeling after a deadly plane

crash Saturday.

A Cold War-era hawker hunter jet was performing a loop, its first maneuver of the day but failed to pull up crashing into a nearby highway.

UNIDENTIFIED MALE: It flew obviously too low and that was it, it hit the ground and there was a lot of flame and a lot of nasty.

LEE: Veteran pilot, Andy Hill, miraculously survived the crash after being pulled from the wreckage. A day of fun turned to tragedy for hundreds of

spectators including children.

[VIDEO] UNIDENTIFIED MALE: Everyone stay in your places please. We'll be getting the emergency services in soon.

UNIDENTIFIED FEMALE: Then all of a sudden you just see these flames and just a big black of smoke, it's just devastating. It's really hard to

explain really to a child.

LEE: An education too soon for two year old Daniel and six year old Matthew.

Nearby a crane removes what's left of the plane as the search for clues as well as bodies went to a third day. Unsuspecting motorists were the

victims. Among them two local soccer players who were on their way to a match.

UNIDENTIFIED MALE: This has been an enormously traumatic incident and as we have already indicated it is quite possible that we will discover more


LEE: As more families learn about the fate of their loved ones, the more grief will be translated into flowers.

Ian Lee, CNN, Shoreham-by-Sea, England.


HOLMES: Now, let's go back to our top story now that is of course the turmoil on world markets.

Europe hit hard by today's market woes. London's FTSE fell more than 4.6% wiping about $116 billion off its value. While Germany's DAX was also hit

hard falling 4.7%.

[15:50:15] Brenda Kelly is a head analyst at London Capital Group, joins us now live from London. Brenda, thanks for being with us.

So what damage was done and what in your view is why? We've been talking a lot about China and fears about growth but also in the U.S. a lot of people

saying well it was time for a correction, maybe some of the stocks were overvalued. What's the story in Europe?

BRENDA KELLY, HEAD ANALYST, LONDON CAPITAL GROUP: I think it's a combination of all of those factors to be perfectly frank. But I think the

China growth story remains a key factor here and that really is what is affecting commodity prices.

You're seeing oil prices of six and a half year lows, you're seeing copper also tumbling to multi-year lows. All of this is a reflection of the lack

of demand that is perceived by the markets if China does in fact slow much further.

Now China is still growing, it's still growing about 6 to 7% per year but this is a lot lower than where it was about a decade ago.


KELLY: And the fears are that the rest of the world cannot keep up or make up the difference in what China is failing to do. And of course this

coming ahead of a potential Federal Reserve hike of interest rates is also helping to spook the markets' as well.


HOLMES: Right I suppose for a lot of people, particularly you know the mom and pop investors as they're called here in the U.S. for a lot of them it's

like well why now? I mean why now? What's changed in the last week?

We knew that China had some issues with growth, we knew that Shanghai had been a bit dodgy in terms of its roller coaster. But why bang now?

KELLY: I think a lot of it has to do with the fact that over the last number of months we have seen a lot of stimulus measures from The People's

Bank of China including the cutting of rates, the change in margin rules in terms of borrowing in order to invest, and of course you have seen the

Chinese (inaudible) devaluation in the last week or so.

I think many on the basis of what we saw over the last week where it was still at quite a significant route in equity markets was that China would

once again - once again step in in a bid to protect their stock market from further downslide and to stoke the economy.

And the fact that that really failed to materialize besides the fact that there are being new exceptions made for pension funds, I think the markets

are feeling that perhaps central banks are running out of ideas and perhaps tools to support an equity market route that is very much commodity driven

and very much fundamentally driven rather than based on liquidity or solvency concerns.

HOLMES: And with China trying to "normalize" its economy and sort of make some changes it could impact with the slowing of growth as well, impact

other nations that export raw materials and alike. Where do you see this going? Could this get worse before it gets better or is this just a quick

punch in the throat if you like?

KELLY: Well you would need to see a pullback in the supply of some of these basic materials particularly the likes of oil, and copper, and iron

ore if we are to see a bit more positive sentiment in the market.


KELLY: I think that that is really what is driving this market at the moment, the fact that we are probably seeing a certain amount of

disinflation or deflation being exported from China on the back of what's happening here. But we have to bear in mind as I've said that China is

still growing. And unlike something like the Federal Reserve or even the ECB, they still have a fair few tools left in their arsenal if they want to

stimulate their economy and protect their stock market from further downslide. The question now is whether or not they will do it.


KELLY: And while many are waiting and speculating that the Federal Reserve might be at the cost of their next tightening cycle in terms of interest

rates, it's the fact that this is coming ahead of that is just not helping sentiments at the moment. And given the route that we've seen in equities

today, you would question whether or not the Federal Reserve will move next month indeed this year.

HOLMES: Indeed Brenda Kelly, a Head Analyst at London Capital Group, thanks to you as always. I appreciate it.

And a reminder to views that the DOW is going to be closing in about six minutes or so. You will see the bell here on CNN live.


HOLMES: And you'll see there two and a half percent or so down on the day. What a ride; a thousand points down at one point, then only a hundred

points down at another, then 600, now around 400 down on the day.

This has been The World Right Now, thanks for watching everyone, I'm Michael Holmes. Quest Means Business is up next with the closing bell

after this tumultuous day on Wall Street.

Stay with CNN, I'll see you in about an hour.