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Wall Street Surges After Monday's Big Losses; Candidates Lash Out on Market Chaos; Will Obama Blessing Help Joe Biden?; Terror Suspect Escorted to Paris Court; Aired 10-10:30a ET
Aired August 25, 2015 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[10:00:01] POPPY HARLOW, CNN ANCHOR: 10:00 Eastern. I'm Poppy Harlow. Thank you so much for being with me, in for Carol Costello today, and we are just 30 minutes into the trading session on Wall Street, but already investors are making gains, starting to erase some of those deep losses from one of the worst sell-offs in years that we saw yesterday.
So far today, U.S. markets have surged from the Opening Bell. They're now well into positive territory. You see the Dow there up 300-plus points. It is a huge rebound from yesterday when the Dow closed -- well, at one point it was 1,000 points lower. Closed down more than 500 points, down 3.6 percent on the day.
Why this big bounce today? We will break it all down for you. We have full coverage with our team, Alison Kosik on the floor of the New York Stock Exchange, Cristina Alesci, Richard Quest here with me in New York, and in Chicago we find Diane Swonk, she's chief economist at Mesirow Financial.
Thank you all for being here.
Alison, to you on the floor. Look, futures were up 600 points, we're up 278 now. We'll take it but, you know, last three sessions saw a loss of 1500 points.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right. So, yes, we did see futures lose some steam because as those buyers came in when that Opening Bell rang, the sellers also came in, but look, we've got a healthy turnaround here. The Dow up as you say about 300 points. Hey, we'll take it after one of the wildest days that we've seen here on Wall Street in quite a while.
Now part of this is because it's just a natural bounce back. Many say that the market was oversold. Yesterday was just an overreaction. So it's a natural bounce back for the numbers to go into the green.
The other part of it is China. Despite the fact that the Shanghai composite dropped more than 7.5 percent last night, you didn't see the follow through happen with U.S. markets this time around because the Chinese central bank -- China Central Bank stepped in cutting interest rates, pouring billions of dollars into the financial system, essentially giving some confidence here to U.S. investors that maybe China will be able to get control of its situation and its financial markets. We shall see if that's the case. Also, keep in mind that despite the fact that the Dow is up 300
points, it has lost some steam. The big question is, of course, will these gains even hold until the close. We've got a long way to go, Poppy. We'll keep an eye on it for you.
HARLOW: Strap on your seatbelts. One thing we know for sure the volatility is here and likely here to stay.
KOSIK: Yes.
HARLOW: Alison, thank you.
Cristina, to you. You spend the entire day down there yesterday. Were people, were traders looking at this as just a blip?
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: No, the volatility, as you said, is back in the market. That's for sure. No one knows where the market is going to land. It's obviously trying to find an appropriate range, right? That's what's going on here, but one thing is for sure, we are not in the same environment as we were just a couple of weeks ago here in the U.S.
And we've got to keep in mind, everybody is talking about China and the interest rate cut there. China's cut its interest rate --
HARLOW: So many times.
ALESCI: -- five times this year and it has not stopped the slide in the Chinese stock market. So you've got to take all of this with a grain of salt, but one thing is for sure, investors need a stronger stomach because we're going to see these wild swings. Even from this morning we saw futures go really -- you know, really up high, 600 points.
HARLOW: Yes.
ALESCI: And then already, you know, it's erasing some of those gains.
HARLOW: We're not seeing that. Yes.
ALESCI: So this is more than just a story about China, about the Fed, about oil. This is a story about market psychology. This is a story about how people react emotionally and to a certain extent it is a story about technology and how computerized trading is playing into this.
HARLOW: Well, that's why saw -- part of why we saw the thousand point decline right at the open so quickly yesterday.
ALESCI: Exactly.
HARLOW: That is part of that, for people trying to understand how could that happen.
Richard, to you. You have the best sense of the global market. RICHARD QUEST, CNN BUSINESS CORRESPONDENT: There's two things going
on here. The first is the immediate, how is this fire going to be put out, the smoldering embers of wreckage from what we've seen over the last few days. But the bigger issue which is not going to be solved by us before 11:00 is this question of imbalance of economic growth.
HARLOW: Yes.
QUEST: And that's what this is really all about, and that's a long- term issue, which means we are going to see these sorts of -- this sort of dislocation, this sort of volatile.
HARLOW: Right.
QUEST: This sort of -- a complete and utter imbalance. You can't have half the world growing one way with one model of growth.
HARLOW: Right.
QUEST: And half the world having a different model of growth.
HARLOW: And you also -- and to Diane Swonk, to you, for people at home watching trying to understand why that all matters to me, why China matters so much to this market even if we don't have as much exposure to the Chinese market, the imbalance there and the fact that all of these economies are so sort of artificially propped up by central banks around the world and particularly in China when it comes to the government in China doing the host of the spending, the consumer spending there being so much less than it is here in the United States.
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Exactly. The consumer is a really important issue in China, and the idea that everyone is exposed to China because our companies, even if they don't ship to China, they actually may build and sell in China, so I think that's important to remember.
[10:05:05] It's also important to remember that this whole event has -- along with China, has revealed the problems in the global economy, the vulnerabilities out there in emerging markets, and these were the markets that were carrying economic growth. You know, as we saw -- Richard pointed out, you can't have sort of one part of the world growing one way and another part of the world growing another. These have been the engines of economic growth for the world, and we really are shifting to a new paradigm where these economies cannot be the engines they once were.
And although I think we'll survive it and what we know about the U.S. economy is that we are on firmer foundations than we were, there still is -- it's a lot of turbulence and it's still a pretty big storm ahead.
HARLOW: And I understand you can't have these economies sort of under such different management, if you will, and growing in such different ways, but the reality in this interconnected world is that we are more dependent on one another's economy, and, frankly, the Chinese government doesn't handle its economy or report its numbers the same way that the U.S. economy does. So what do you do in that reality?
SWONK: No, they don't. And that's the reality that's coming out is, you know, the trust in the Chinese government hasn't been high on my part, but it's becoming less within China as well, and this is a major issue for the Chinese government. They sort of had an implicit social pact where as long as they grew the middle class, everyone was willing to sort of turn their head, and you wouldn't see the social unrest that led to the Tiananmen Square incident back in 1989.
I think it's very important to understand that we've now rattled the middle class that was a burgeoning middle class in China with what's going on in the stock market, their government said go ahead and buy. We have no way of understanding what the valuations are in China because of their meddling, and we do also get some sense that China hesitated on the Bank of China -- Central Bank of China hesitated by -- in terms of what they were going to do to stimulate because there was internal wrangling over how to handle this.
Could the Chinese government deliver growth on command? Markets' economy are not commanded.
HARLOW: Yes. They certainly are not. That's a sage, sage words to leave us with.
Diane, thank you very much. Alison, thank you. Richard, stay with me. I know you have something to say and you have to wait one moment --
QUEST: Gold.
HARLOW: Gold.
(LAUGHTER)
QUEST: Gold.
HARLOW: What about gold?
QUEST: You'll have to wait and find out. Gold.
HARLOW: All right. We're going to have to wait and find out. Cristina, stay with me as well. Always a great moment with you two because I just want to talk a little bit about the politics of all of this.
A crowded field of presidential candidates were quick, very quick, to pounce on yesterday's stomach-churning freefall on the street. Donald Trump, the most vocal and opinionated of them all.
I want to bring into the conversation MJ Lee, CNN Politics and Financial reporter. What did we hear from Mr. Trump, MJ?
MJ LEE, CNN POLITICS CORRESPONDENT: Well, Poppy, Donald Trump's campaign slogan is "Make America Great Again." And the issue of China actually fits in perfectly with that. Trump's underlying message as a presidential candidate has basically been that the United States is losing to countries like China, countries like Japan, and when the markets went for a free fall yesterday, this gave him another opportunity to emphasize that.
Take a listen to how he spoke about this issue in an interview with FOX News yesterday and the massive debt that the U.S. has to China.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: We owe them $1.4 trillion, and those dollars become strong. You know, the word strong dollar sounds good but it's costing us a lot of money. There's some nice things about having a strong dollar but there are some really bad things, and number one bad thing is we're not exporting anything. We are going to be in big trouble. It's getting worse and worse, and ultimately the balloon is going to pop and it's going to get very ugly and you're starting to see the beginning of that.
(END VIDEO CLIP)
LEE: It's going to get very ugly is exactly the kind of message that Trump knows his supporters will get worked up about.
HARLOW: Yes, they -- yes, it is, and everyone is talking about it and, frankly, he can fall back on a lot of business experience just like Carly Fiorina, so we'll see how long the tale of that is in terms of this election cycle.
MJ, stay with me.
Richard Quest, to you. So you hear president -- you hear Donald Trump saying if I were president, I would handle things. China wouldn't act like this. Can you give us a reality check on whether the U.S. president, whoever it is, has any impact on how China manages its economy or stock market?
QUEST: I -- no. Only in the sense of a negotiation. Remember, the U.S. is negotiating at the moment the Transpacific Trade Partnership.
HARLOW: Right.
QUEST: And China is not part of that. I think Donald Trump raises a very good point and a valid point, that the way trade has been managed so far seems to be skewed in the part of the developing country of China, and that's natural because it's the developing side as opposed to the developed side, so you're clearly going to have them sending more this way than the other way.
But where I think he needs to step up to the plate is what would he do about it? Now you don't want a full-scale protectionist war. You know? He --
HARLOW: It means he would have to lay out any kind of policy, right?
(LAUGHTER)
QUEST: Well -- yes, he is. He'd have to -- you know, what are you going to do when he sits down with President Li? What are you going to say to him? What policies are you going to put in place? And also remember you've got the WTO to bear in mind, you've got the G-20, you've got APEC, you've got ASEAN. I mean, most of them I happen to think are a bunch of waste of time, but what is he going to do besides bellicosity.
[10:10:11] HARLOW: Right. Right.
QUEST: Of saying I'm going --
HARLOW: Well, and he says, I've made all these business deals with China, et cetera. But that's so different.
QUEST: No. No. No.
HARLOW: So different --
(CROSSTALK)
QUEST: No, no, no.
HARLOW: I want Cristina to jump in here on that.
ALESCI: Well, I mean, I think that anyone that says we can turn our backs on China, which some of the other, you know --
HARLOW: Can't. Right.
ALESCI: Potential presidential candidates have said. It's just dead wrong. I mean they should start reading CNNMOney.com because we had a story today about car manufacturers, global car manufacturers.
QUEST: Right.
HARLOW: Right.
ALESCI: Saying, look, we're going to get hit by this. If the Chinese consumer pulls back, it is going to be bad news. Bad news not for just us but for the entire world --
(CROSSTALK)
QUEST: Donald Trump has been a beneficiary of the existing policy of China. He has built his companies because China has had such pro- growth detrimental policies.
HARLOW: Right.
QUEST: And now he says it's been to the disadvantage. Well, if you slow down China or put China in the box, Trump Plaza, Trump this, Trump that, is not going to sell as many $50 million apartment to the Chinese.
HARLOW: That's an important point. $50 million apartment, I can't even --
(CROSSTALK)
HARLOW: Think about that, yes -- no.
Thank you very much, Richard. Cristina, stay with me. MJ, thank you so much for the reporting as always.
We're going to get into quick break here. Of course go to CNNMoney.com for all the latest on this extraordinary market move that we've been seeing. A positive day here at the open.
Next to politics, the president gives his blessing to Joe Biden if his vice president does want to run for the Oval Office. But will Biden jump into this race and if he does, what does it mean for all the other candidates in his party?
(COMMERCIAL BREAK)
[10:16:17] HARLOW: Checking top stories for you this hour. A huge fire burning in Washington state. Now the largest in that state's history. Firefighters from across the west are fighting this blaze, but more than 400 acres have already been scorched. Officials worry that shifting winds could put even more homes in jeopardy.
A 10-year-old boy who was lost in Utah's Ashley National Forest has been reunited with his family. Malachi Bradley wandered away from his family. He was missing for 28 hours but a dog picked up his scent and led search teams to the boy. Look at that reunion.
Tropical storm Erica has formed in the Atlantic, the fifth named storm of the hurricane season this year. Erica has winds of 45 miles an hour. So far the official track could see the storm more near Puerto Rico by Thursday night.
And if you're looking for a new ride, boy, do we have one for you. Harley Davidson unveiled its new line of motorcycles for 2016. The company calls the bikes darker and more powerful. Nine new bikes were unveiled. Harley will start shipping the motorcycles to dealers by the end of the week. If bikes are your thing, I guess you want to check those out.
To politics now and a political blessing that could give Vice President Joe Biden's bid for the White House an extra big boost. Democratic sources telling CNN that President Obama told his number two that he will not stand in his way or counsel against him for a 2016 bid.
Joining me now to talk about it, CNN senior political analyst and former adviser to four presidents, President Nixon, Ford, Reagan and Clinton, David Gergen.
David, thank you for being here.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Hello, Poppy. Good to see you again.
HARLOW: Democratic sources characterize the president's words as a blessing, not an endorsement, but we heard from White House press secretary Josh Earnest touting Biden's aptitude, the word he used for the top job, saying that President Obama feels selecting Vice President Biden as his VP was the, quote, "smartest political decision that he has made."
You've worked closely with a number of presidents. What do you read into that?
GERGEN: I read a couple of things into it. One, I think it's very clear now that Joe Biden wants to run for the presidency. He's just trying to figure out whether he can make it all work and make it seem plausible. That he went to President Obama. They had not seen each other for the last couple of weeks because of vacation schedules, had a chance to talk over what his plans were, and the president gave him a green light, go ahead with it, Joe, if you wish, and I -- you know, I will not oppose you, I will not discourage you.
I think that falls well short of an endorsement. My bet is the president will stay neutral during the primaries. It could be catastrophic for the party if he endorses Biden over Hillary or Hillary over Biden --
HARLOW: Why, why?
GERGEN: So traditionally presidents will stand back at this point. Well, because it divides the party in a serious way, and, you know, if -- he would have to betray one friendship or another friendship in addition, and that is not healthy for him. After all, he's -- just as he praised Joe Biden as being the best choice he's ever made politically, he's praised Hillary Clinton as being a great secretary of state and a very fine prospective president.
HARLOW: Sure.
GERGEN: So I don't think he's caught so much as I think he's now given a green light in effect to his vice president. I think the real significance in the near term is that the president's blessing gives a green light to people who work for President Obama who have worked for him in the past to go to Joe Biden and support him now.
HARLOW: Yes.
GERGEN: And that helps Biden a lot. And this -- all of this is heating up the Biden story, and, Poppy, one of the things we'll see is Biden can now in the near future begin to take polling of his own. It has a more realistic picture of how competitive he is.
[10:20:03] As long as it looked like he was not going to run, you know, people would be vague about what they'd say about this. Now that it looks like he might --
HARLOW: Right.
GERGEN: You know, the polling is apt to be more accurate and he can get a better picture.
HARLOW: You know, I mean, that Quinnipiac poll last week was fascinating. Biden beat Trump in three swing states.
GERGEN: Right. Absolutely.
HARLOW: Florida, Ohio, and Pennsylvania.
GERGEN: Yes.
HARLOW: And Hillary Clinton didn't beat Trump in Florida. You know, he's 72 years old. There is -- he's made two previous bids for the presidency. There has been some speculation that he could potentially come out and say, I'm going to run but I'm only going to run for one term. And that's very attractive to people who believe that the first term of a presidency is often too concerned with getting re-elected. How would that play?
GERGEN: Well, conventional wisdom holds that it's not such a good idea to tie yourself up like that. Happened to Teddy Roosevelt and he always regretted it, but I happen to think that in this environment when you're a Democrat, whether you're Hillary or Joe Biden, you ought to consider that pledge because voters are -- you know, they're looking for change, and if they think they're going to have eight years of Obama and then eight more years of another Democrat, that's not change, but if it's a one term and what you're pledging to do is form a unity government to reach out and get Republicans to go in, try to clean up the mess of Washington and get the heck out of dodge, that could have some appeal, and it does play -- it plays well with the age thing because, you know, Hillary Clinton's late 60s. Joe Biden is 72. They're both in an age where it matters how much energy you have, how much vitality you bring to the job.
HARLOW: So will he run?
(LAUGHTER)
GERGEN: I think the odds are shifting in the favor of running, but he's still got some issues at home. He's got to make sure the family is emotionally ready for this. He's got very big issues, can he raise the money. He's starting to put together what looks like the beginnings of an organization. I think if he can get the pieces in place and, very importantly, Mrs. Clinton has another bad month, then I think the chances go up significantly.
A lot depends on what she does now, how she responds to this -- the chaos in the financial markets. She's put some economic proposals out there. Can she --
HARLOW: Yes.
GERGEN: Can she now be more serious and more -- and fuller in answering how she handles the Pope? How she handles the Iranian debate. Big, big issues. This campaign is entering a more serious phase.
HARLOW: It certainly is, which is a good thing for voters where they can actually hear policy proposals.
David Gergen, thank you, my friend, as always.
Just want to remind you, you do not want to miss --
GERGEN: Thanks -- Poppy, I was just --
HARLOW: The second Republican debate here on CNN. It is September 16th at the Ronald Reagan Library in California. CNN will also host the first of the six Democratic debates October the 13th live from Nevada.
Still to come, a terror suspect rushed to a Paris court today. He is expected to be charged there formally in the foiled train terror plot. The latest from France after this.
(COMMERCIAL BREAK)
[10:27:17] HARLOW: The suspected gunman behind that foiled train attack in France was rushed to a courthouse earlier in a police- escorted motorcade. That is where he's expected to be charged just 30 minutes from now.
Let's go straight to CNN's Martin Savidge. He is live in Paris with the details.
So, Martin, this rush is about this 96-hour rule, that French police only have that long to charge him, right?
MARTIN SAVIDGE, CNN CORRESPONDENT: Right. Initially he was arrested, there were no charges placed against him. When you aren't charged they've got 96 hours to hold a person. Then they've got to come forward and either, well, charge him or let him go. So it's anticipated he'll go before a French judge. He will be charged, it's believed, with charges connected to terrorism. We'll know more as soon as we hear from the prosecutor which will be a short time from now.
And then we also hope to learn more about the investigation. In other words, what have investigators found, any links to terrorist groups. We do know that Belgium authorities overnight conducted searches on a number of apartments, two of them. One of them belonging to the sister of the suspect, the other belonging to a friend of that sister. So there were some objects retrieved but authorities won't say more than that.
So really trying to understand what is the scope of this? Was this truly a lone wolf or is it something more conspiratorial? That's the kind of information we're waiting to hear -- Poppy.
HARLOW: And what about the three American heroes? We've seen them honored in France. They've spoken on the phone with President Obama. What do they come home?
SAVIDGE: Well, it's believed that Anthony Sadler, he's the California University student, he is believed to be on his way home right now as we speak. The two other American servicemen, one in the Air Force, one in the National Guard, are actually in Germany. Remember, it was Spencer Stone, the one who was wounded in taking down or injured taking down that gunman, he's getting more proper medical treatment.
And then I should mention Mark Moogalian. He is the other American hero. 51 years of age, dual nationality, French and American. He comes from North Carolina. He confronted the gunman first. He was shot in the neck, and he is in a hospital in Lille, two hours north of Paris. His condition overnight worsened and many people are asking, look, don't forget about him. They say keep him in your thoughts and prayers -- Poppy.
HARLOW: Absolutely, we will. Amazing, amazing people came forward on that train doing exactly what I think we all wish that we would do in a situation like that.
Marty, thank you.
10:30 a.m. Eastern Time. Good morning, everyone. I'm Poppy Harlow in this Tuesday for my friend Carol Costello. Thank you so much for being with me.
We start on Wall Street where one of the most stomach-churning trading days in years turned into a stunning turnaround this morning.
[10:30:04] The Dow surging after yesterday's panicked selling around the world, and just like yesterday China once again at the center of the drama. As I bring in Jim Awad, the managing director of Plimsoll Mark Capital, let's show you the big board.
