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QUEST MEANS BUSINESS
Mexican Foreign Minister Says El Paso Shooter Targeted Mexicans in Terror Attack; Indian government reduces Kashmir's Autonomy; U.S. Ambassador to Russia Jon Huntsman Resigns. Aired 3-4p ET
Aired August 6, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL HOST: What a difference a day makes, you see U.S. stocks there suddenly in the green, up 244 points after that move by
China to actually stabilize its currency after yesterday we saw them devalued the yuan. Who knows how long this rally is going to last. This
is what is moving the markets.
China backs off in its currency clash with Washington. Now, U.S. stocks, as I mentioned are up more than one percent.
And no end in sight. Goldman Sachs says the trade war is here to stay right through Election Day.
And it's us or them. John Bolton tells companies to forget doing business with the United States if they do deals in Venezuela.
Live from world's financial capital here in New York City, I'm Zain Asher. It is Tuesday, August 6th, and this is QUEST MEANS BUSINESS.
All right, welcome, everybody. Tonight, U.S. markets were bound from their worst trading day of the year. After an unsteady starts to Tuesday's
session, the Dow as you can see there is suddenly higher up 245 points, it is on pace for its best day in seven weeks, while the S&P and the NASDAQ
are set to snap six-day losing streaks.
Investors are reacting to signals from China. Officials there say they don't plan to use their currency as a weapon in the trade war.
Alison Kosik is at the New York Stock Exchange. She joins us live now. So Alison, can we actually breathe a sigh of relief when you see stocks now
compared to what happened yesterday or do investors believe that there is more selling on the way?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I think at least you can see a sigh of relief that we're not seeing more of the same, meaning, what we saw
yesterday happened today.
But I don't think you're seeing investors think that this is -- that what we saw yesterday was the last sell off. I think, you know, China's Central
Bank, those words are kind of calming the market.
You know, the Central Bank indicating it wanted its currency to trade at higher level than expected against the dollar. So yes, that's easing the
tension about China using its currency as a weapon in the trade war.
So, you know, I am seeing investors dip their toes back in the water. But there's still a lot of uncertainty. Nobody knows how the trade war is
going to be resolved. You know how it's going to be resolved, or even when.
It's clear with President Trump's latest announcement to move forward with tariffs on the remaining $300 billion in Chinese goods. And with China
retaliating by allowing its currency to depreciate against the dollar, it really shows that both sides are digging in.
And as investors see it, there's really no resolution in sight. One trader puts it this way to me, yes, we could expect to see continued volatility,
he thinks for at least another two to three weeks, unless -- unless -- we get some kind of real progress on trade, which doesn't really feel like it
at the moment, Zain.
ASHER: And obviously, Alison, we're up today, as you touched on because of China's move to try and stabilize its currency. But it's also because of
people taking the opportunity to buy on the dip as well.
KOSIK: Oh, of course, I mean, this certainly is opportunity, especially when you saw stocks at record highs, but I don't think this is what -- this
is how investors really wanted it to happen necause you know, the trade war revving up the possibility of a currency war. Those are the kinds of
things that can get very dangerous, especially when they're coupled together. And those are the kinds of things that can get out of control.
I think investors would rather a buying opportunity, with less dangerous effects -- Zain.
ASHER: Well said. Alison Kosik, live for us there, thank you so much. Appreciate it. Okay, it's been one of the most dramatic 24 hour periods
for the trade war yet. First, China allowed the yuan to fall below its seven to one ratio with the U.S. dollar. It's the first time in 10 years
that has happened.
Chinese companies also stopped purchases of us agricultural products as well, both of those moves in response to President Trump's announcement of
the new tariffs on $300 billion worth of Chinese goods.
Then came the response, US Treasury labeling China a currency manipulated. The last time the U.S. labeled any country that term was back in 1994.
Chinese officials backed down ever so slightly, they say that they will take steps to keep the yuan from falling too far.
Joining me live now is Patrick Chovanec. He is the Chief Strategist at Silvercrest Asset Management. So Patrick, thank you for being with us.
So, can you sort of see China's perspective on this when it comes to making a move to devalue the yuan because obviously, they have to stay competitive
in this environment, which has obviously been detrimental to their economy and has been so difficult for them given the escalating tensions between
the U.S. and China.
[15:05:07] PATRICK CHOVANEC, CHIEF STRATEGIST, SILVERCREST ASSET MANAGEMENT: This is something that they've actually avoided doing for
quite some time, there's been downward pressure on the yuan, for various reasons. And the Chinese have, from time to time intervened to keep the
yuan from going above seven.
But, you know, when faced with trade sanctions, one way of countering them is with a weaker currency. And so they have last year been willing to
allow the yuan to depreciate. It depreciated by about five percent against the dollar. And this year, they're signaling again that they might
potentially be willing to do that, and even against the threshold like seven.
So it's -- you know, I don't think that the bottom is falling out, in terms of they're just going to be on a depreciation, you know, currency war from
here on out, but they sent the shot across the bow, that it a weapon that they can use to blunt the effect of U.S. tariffs.
ASHER: When you have the Trump administration labeling China as a currency manipulator. The aim there, and I'm asking you the question, is the aim to
justify more tariffs in the future.
CHOVANEC: So there's nothing that inherently results from declaring them a currency manipulator other than an escalation in the rhetoric.
ASHER: Is the IMF likely to get involved here?
CHOVANEC: You know, I doubt it. I mean, you know, the IMF might be consulted, but I don't think that the IMF is going to come in and, you
know, act as referee.
The likely effect is whatever the Trump administration wants to make of it. It could be used as the justification for whatever step they want to take,
whether it be traditionally, the call has been from Congress or from presidential candidates that declaring China a currency manipulator would
be the basis for tariffs against China in order to counter its currency advantage.
That was, by the way, in a day, when China was actually keeping the yuan artificially down, which it's not these days. But you know, whether you
want to pile more tariffs on tariffs is really the strategy here. You know, you have to ask the President.
ASHER: Is there some optimism given that the Chinese delegation is going to be coming to Washington in September? I mean, obviously, these talks
haven't led anywhere concrete in the long term. But is there optimism that that could perhaps be maybe, maybe the end of the trade war?
CHOVANEC: You know, before last week, the optimism was that, look, they were going to come in September, and we'd have real talks, and we wouldn't
see any escalation until then. But obviously, we've seen a lot of escalation in the meantime.
And the real question, I'm not predicting anything, but the real question is, do the Chinese get fed up and say, "We're not coming in September.
There's nothing to talk about." Because that would really be a serious sign of a breakdown in conversation.
It's good, as long as they're talking. Maybe there's the prospect of avoiding the imposition of tariffs in September and maybe progress forward.
ASHER: What's the goal as far as labeling the country a currency manipulator? There's obviously going to be a point -- I mean, I'm not
saying that --
CHOVANEC: It's going to touch a nerve in China.
ASHER: Of course, we haven't reached the point of no return, in terms of U.S.-China relations being irreparable, but it's moving slowly in that
CHOVANEC: So the thing that you've got to worry about is, you know, there's a desire to put pressure on China in various ways to address real
concerns that the U.S. has.
And I think that there's agreement across the board that the U.S. should do that. There's disagreement about whether the President's tariffs have been
effective in that regard.
And there's concern, I think, that you don't want to box China into a corner. You don't want to make them feel like this is all just a pretext
for trying to beat down the Chinese economy. And that no matter what they can see, no matter what they give, we're just going to move on to the next
item on the list.
Because if that's the case, then they're likely to just hunker down and not actually make some of the reforms that we want them to make.
ASHER: That's a good point.
CHOVANEC: Because the real -- you know, while a lot of the things that we want China to do are actually risky for China, they entail, either
financial risk or slowdown in growth. And ultimately, that these are things that China himself has said that they want to do, but they've been
reluctant to do so because they entail risk.
Well, if we make it more risky, if their view is, well, if we even show any vulnerability, the United States is going to take advantage of it. They're
going to go on lockdown, and that's actually the opposite of what we want them to do.
ASHER: Patrick Chovanec, thank you. I understand we're going to be seeing you a little bit later on the show. Can't wait. Thank you so much.
All right. Meantime the markets now believes that the state of trade limbo will persist and continue to drive volatility. Analysts at Goldman Sachs
say that it's unlikely the U.S. and China will strike a trade deal before the U.S. election next year.
Analysts say that's one of the reasons they believe the Fed will cut rates two more times before the end of the year. Joining me now is Mark Grant,
he is the Chief Global Strategist at Fixed Income at B. Riley FBR. Mark, thank you so much for being with us.
MARK GRANT, CHIEF GLOBAL STRATEGIST OF FIXED INCOME, B. RILEY FBR: Good to see you. My pleasure.
ASHER: Good to see you, too. So, if this trade war between the U.S. and China continues to escalate and last at least another year and a half, just
walk us through what the economic consequences will be for the U.S., especially in terms of slowdown in growth.
GRANT: Okay, let's start with some basics here. One, saying a trade war is accurate, but it's far too limited. What this really is, is a game of
thrones between China and the United States for world, not domination, but for power in the world and influence in the world.
Number two, I would say, we see all the time in the press. They say that China is the second largest economy, that's a true statement. But again,
it's too limiting. What the reality is, the United States economy is about $22 trillion; the Chinese economy is about $13 trillion.
Consequently, in my mind, they have -- they're in a much, much weaker position than we are.
Three, one of the issues with China's they came out and they talked about, well, this is it, currency manipulation. Well, baloney. Its currency
Larry Kudlow was out today saying the United States wasn't going to do anything now in terms of the currency, that by labeling them -- if you
think this through, by labeling them currency manipulators that gives us that opportunity later if they think -- if the government thinks it's
appropriate to also intervene in our own currency, and set the table more flatly with the Chinese.
So, I don't think this is going to end anytime soon. I think it's a -- as I said, a game of thrones situation, and then of course, you throw in the
$14.7 trillion of negative yielding debt, and the playing field looks very muddy and messed up at the moment.
ASHER: Okay, so then what happens with the Fed? If Goldman Sachs is right, and this trade war ends up lasting at least a year and a half, what
does the Fed end up doing about it to counteract it? How many more interest rate cuts that we'd like to see do you think?
GRANT: Okay, so the Fed, the beginning of the Federal Reserve Act of 1913, it says the Federal Reserve is the Central Bank of the United States. So
we have the Central Bank in the United States, and then also, the Chairman has a four-year term and the Governors and the Presidents have a 14-year
term. And they're the only major Central Bank in the world with any kind of independence.
All the rest of them, the ECB, Bank of Japan, Swiss National Bank are just arms of their own governments and told what to do by their governments.
Having said that, the Fed has a responsibility, and maybe it's their first responsibility to protect the government of the United States. Trump can
say what he wants -- this is my opinion, which is different than most -- I think the President and Congressman and Senator either side of the aisle,
can say to the Central Bank, "Wait a minute, what are you doing?" Then it's up to the Governors and the Chairman and the President of the Central
Bank to make a decision.
But having said that, the real pressure is, the political pressure on the Fed, the real pressure is what all these other Central Banks are doing,
this tremendous amount of negative yielding debt. I'm looking for $14.7 trillion and negative yielding debt. They had $25 trillion by year end.
And I think the Fed is going to be forced to cut two, three, four, maybe five times by the end of the year.
ASHER: Interesting. All right, Mark Grant live for us there. Thank you so much. Appreciate it.
GRANT: Thank you.
ASHER: You're very welcome. Tencent wants that hotline bling from Universal Media Group. The Chinese tech giant is in talks to buy 10
percent of UMG, the world's biggest music label from France's Vivendi. It would bring the likes of Drake, Taylor Swift, Ariana Grande and Lady Gaga
to Tencent's platforms as long as it's not a bad romance.
Tencents would be able to buy another 10 percent within a year in early stages and either side could still say, "Thank you." Next. I love the way
that was written by the way
PAUL LA MONICA, CNN BUSINESS REPORTER: I didn't get any of the --
ASHER: Yes, you did. Come on. Come on. Okay, so Paul La Monica --
LA MONICA: Googles and YouTube are more my cup of tea for the --
ASHER: I do not believe you for one second so --
LA MONICA: Oh no, good time for Drake, as Toronto Raptors won the NBA championship. Now, this. You know, hey, it's good to be Drake.
ASHER: Right. Good to be Drake. So Tencent, they already own a significant stake in Spotify. They are getting potentially this 10 percent
stake when it comes to Universal. What does that mean for Tencent being able to compete with the likes of Apple Music? And other streaming
LA MONICA: Yes, I think, Zain, this really gives Tencent, if the deal does go through, a significant upper hand over some of its rivals especially
when you throw Spotify into the mix which is not part of the deal per se, but it is interesting because Tencent owns a big stake in Spotify and
Spotify has a stake in Tencent Music, the separately traded company that Tencent has set up for music subscriptions in China.
[15:15:15] LA MONICA: So I think it's a very interesting deal that's going to make Tencent perhaps one of the larger music companies in the world if
the deal goes through.
ASHER: And when it comes to -- I mean, this isn't a state secret, what we're dealing with in terms of the political climate. I mean, for the past
15 minutes of the show, we've been talking about the escalating trade war between the U.S. and China. What does that mean for this deal from a
regulatory perspective and a political perspective, do you think?
LA MONICA: Yes, I would have to think that this deal, if it goes through, would get scrutinized in Europe, because remember, Vivendi obviously is
part of the equation here. And also in the U.S., whether or not the deal will get scuttled or if there would be any conditions attached to it that
might make it less attractive to the parties involved. I think that remains to be seen.
But you really have to think that at this point in time, with this political environment, any deal involving a Chinese company looking to
acquire significant assets of a U.S. company or a Western based company is going to get scrutinized extremely closely.
ASHER: So just in terms of how this deal changes the landscape for the music industry in America, how much of a difference does it make here?
LA MONICA: Yes, I think it remains to be seen just what Tencent would do in the U.S. or if this is really more of a deal where they would try to
bring some of these UMG artists more readily accessible to Chinese consumers that might want to listen to them on either Tencent music or
probably to a lesser extent, Spotify, since a lot of big Western tech companies are still having a difficult time gaining access to the Chinese
ASHER: All right thank you. I was going to say thank you next, but --
LA MONICA: We did that already.
ASHER: You would have it, too, I'm sure. You're a smart person. All right, Paul La Monica, thank you.
Next, Volcker, Greenspan, Bernanke and Yellen -- together they represent the last 40 years of Central Banking in the United States. And now, they
are sending a warning to Donald Trump.
And the U.S. ups the ante against Nicolas Maduro by slapping new sanctions on Venezuela. That story, next.
[15:20:02] ASHER: The U.S. is expanding its sanctions on Venezuela freezing Venezuelan assets in the U.S. and banning transactions with the
government. The U.S. wants the new measures to help out the Maduro government and expects businesses to take note.
(BEGIN VIDEO CLIP)
JOHN BOLTON, U.S. NATIONAL SECURITY ADVISER: So basically, one way to summarize this to a business, for example, is do you want to do business in
Venezuela? Or do you want to do business with the United States? And I think, for any international corporations, whether they are U.S.-based,
European, wherever they may be, to the Boards of Directors and shareholders, they ought to be asking their management, if it's worth
risking for a trickle of income from the illegitimate Maduro government, if it's worth list risking their business in the United States?
(END VIDEO CLIP)
ASHER: Paula Newton joins us live now. So, Paula, the question, is this us versus them approach by John Bolton, is it going to work? Is it going
to have the desired effect of actually forcing Maduro out?
PAULA NEWTON, CNN CORRESPONDENT: Incrementally perhaps, but this is really just an incremental change, really, to the sanctions that are already in
place. I mean, Zain, we've talked about this before, right?
In terms of the foreign money coming into that Maduro government, it's about gold, and it's about oil. They already deal with allies, which the
United States is very upset about Russia and China still do business with Venezuela.
In fact, Venezuela has been busy paying back Russia and China in terms of what they were owed in the first place. Given the current level of
relations between both the United States and China and throw Russia in there as well. It's unclear as to whether or not this will have the
And there's been a lot of discussion back and forth about whether or not this would amount to the blockade or the embargo that Donald Trump wanted
just fall short of that. But it certainly would put Venezuela now in line with regimes like Iran and North Korea.
And what do those two regimes have in common as well? They also have not had a change in government, even though the United States would like to see
some kind of change in both of those countries.
So very, very interesting to see how the fallout from this will come in the weeks and months to come.
ASHER: So even if it doesn't have the desired effect of forcing Maduro from power, can at least help Juan Guaido regain some of the momentum that
he has lost? What are your thoughts on that?
NEWTON: You know, this is really interesting. And one thing that really is the linchpin to all this is Chevron, which is an American company, which
just received a waiver from the Trump administration to continue to produce oil and gas in Venezuela despite these sanctions, and that is seen as
protecting Venezuelan assets that are in the United States, those assets, the United States now belong to who they see as the official leader of
Venezuela, Juan Guaido.
And some of this may go to perhaps bolster him in terms of giving him more of a power position, but really, Zain, the issue here is clear. Remember,
we have parallel negotiations, so-called peace negotiations going on between those who represent Juan Guaido and the Maduro government. They
have gone absolutely nowhere. It seems the United States does not expect them to go anywhere.
And they believe perhaps by doing this, they can apply more pressure to those around Nicolas Maduro to continue to encourage them to turn him in,
if you will, to turn against him, and perhaps not in a full blown coup, but some other way where they will decide to turn against him and instead work
with the opposition.
And again, it has a lot to do with who has the economic power and the economic levers in that country, and perhaps they see this next move, this
escalation of sanctions, as leading to more of a message to those around Nicolas Maduro.
ASHER: And how has the Maduro regime responded to this latest move by the U.S.?
NEWTON: I mean, pretty predictably. Right? The Vice President, Delcy Rodriguez saying the United States has to allow that they do not own the
And again, they are probably slightly nervous besides what the outer appearance is, and of course, they'll call this economic terrorism. And
they continue to point to the people in Venezuela and say that this will hurt the people of Venezuela.
The key thing is, again, what the response will be from those very key allies -- Russia and China and what they will do. Will they continue to
buy any exports from Venezuela? And that will be what the reaction will be from the Venezuelan government in terms of how they will respond.
And so far no indication that Russia and China are in any way shape or form turning away from Venezuela, and that will continue to bolster the Maduro
ASHER: All right, Paula Newton live for us there. Thank you so much. Appreciate it. Okay, so in an apparent rebuke of Donald Trump, all four
living former Chairs of the Federal Reserve are sounding the alarm warning the president at eroding the Fed's independence risks long term damage to
Paul Volcker, Alan Greenspan, Ben Bernanke, and Janet Yellen, writes -- take a look at this, "It is critical to preserve the Federal Reserve's
ability to make decisions based on the best interests of the nation, not on the interests of a small group of politicians."
[15:25:08] ASHER: Matt Egan has been covering this story for us all day. He joins us live now. So, Matt, how real is the fear that the Fed's
independence because of Trump's threats against Jay Powell -- how real is the fear that the Fed's independence is under threat here?
MATT EGAN, CNN BUSINESS LEAD WRITER: I mean, it's real enough that the four living former Chairs of the Federal Reserve felt compelled to write
really what was an extraordinary op-ed in "The Wall Street Journal."
And the message is clearly, "Don't mess with the Fed." That's what they're saying. And they're clearly saying it in response to what they see as this
threat, really against the whole institution of the Fed during the Trump era.
I mean, President Trump has really strongly criticized Jerome Powell's interest rate hikes. He has more recently criticized Powell from not only
lowering rates enough. He has even gone into the weeds and criticized the balance sheet, shrinking of the balance sheet and not ending that shrinking
fast enough. And so he's clearly taken a very tough approach towards the Fed. And this is worrying the former Fed Chiefs.
ASHER: Because certainly, I mean, just in terms of the perception, when you have the U.S. President intervening in an institution that is supposed
to be 100 percent independent, it certainly raises concerns about just from the public perspective, it's not positive, obviously.
EGAN: Right. And so that's exactly the point that they're making, and they pointed to history. They say that, you know, academic research, both
in the United States and outside the United States shows that when Central Banks make decisions based on short term political whims, rather than
economic fundamentals, that's not good. The long term track record is not good, because it can lead to inflation.
And then Central Banks have to then go raise interest rates even faster to tamp down that inflation. That's what we've seen in Turkey, where Erdogan
has been very aggressive in his criticism of the Central Bank and even fired the Central Bank Chief. And so you know, that's the kind of thing
that you don't want.
And you know, President Trump --
ASHER: Yes, the U.S. has one of the most independent Central Banks in the world.
EGAN: Right, and that's for a good reason. It is the most influential, it is the most important Central Bank in the entire world, really, you know,
global financial market stability depends on it.
And that's why it's so interesting and so difficult when President Trump has actually floated the idea of potentially demoting Jerome Powell. The
White House has not ruled that out as something that would happen.
But the four former Fed Chiefs, they said in this "Wall Street Journal" op- ed, they said, "Listen, the Fed needs to be free from short term political influence." And they actually specifically included this threat of
demoting or firing the Fed Chief because you can imagine how that would create some sort of a crisis.
I mean, if Trump tried to demote Powell and Powell didn't go, suddenly, you know, investors wouldn't know who was calling the shots at the most
powerful Central Bank in the world.
ASHER: Right to the point. Matt Egan, live for us. Thank you so much. Appreciate it. Okay, coming up next, pro-democracy protests intensify in
Hong Kong. What has weeks of upheaval meant for residents and business owners. That's next.
[15:30:00] ASHER: Hello everyone, I'm Zain Asher, there's more QUEST MEANS BUSINESS in a moment. When shooting survivors in the United States
are calling on Wal-Mart to stop selling guns after the organizers of the campaign and Barney's empire turns to rubble. The legend of luxury
retailer is going bankrupt. Before that though, these are the headlines we are following for you at this hour.
Mexico's Foreign Minister says the mass shootings in El Paso, Texas, is one of the greatest tragedies his country has ever experienced. He called it a
terrorist attack, saying it's clear that Mexicans are targeted. A gunman opened fire at a Wal-Mart over the weekend killing 22 people including 8
The Indian parliament has passed a bill that changes the status of Kashmir, putting it under greater Indian government control. Tens of thousands of
Indian troops have been deployed to the region in anticipation of unrest. Pakistan's Prime Minister says India is trying to drive Muslims out of the
The U.S. ambassador to Russia is resigning. Jon Huntsman plans to move back home to Utah according to a source, he'll step down in early October.
Huntsman is a former Utah governor and a 2012 presidential candidate. A speculation he'll run for governor again.
And the U.S. is mourning one of its preeminent writers, author Toni Morrison died Monday night, Morrison wrote about the black experience,
winning numerous awards including the Nobel Prize. She's also an ardent proponent of human rights. Morrison was 88 years old.
After weeks of speculations, Zimbabwe's president says the country's former leader Robert Mugabe has been at a hospital in Singapore for the last four
months. It is not known what Mugabe is been treated for. President Emmerson Mnangagwa says the 95-year-old Mugabe's condition is stable and
he's responding very well to treatment.
The Chinese government has warned Hong Kong protesters not to play with fire. Spokesmen for the Chinese government insists the city's police are
fully capable of handling the demonstrations. Though as protests have intensified, residents and shop owners are feeling the economic pain.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): There's been a big impact. Nobody is coming. No cars are coming here. It's like an empty city. Look, no
one is there on the whole street.
UNIDENTIFIED MALE (through translator): Taking shopping as an example, we try to stay at home instead of going outside. It has a significant impact
on the broader economy of Hong Kong.
(END VIDEO CLIP)
ASHER: Patrick Chovanec is back with me. So, Patrick, just explain to us how -- I mean, we've seen two months of this. So, how much is Hong Kong's
status as the preeminent sort of financial hub of Asia under threat in all of this, do you think?
PATRICK CHOVANEC, CHIEF STRATEGIST, SILVERCREST ASSET MANAGEMENT: So, I think first of all, you have to ask, what makes Hong Kong special and then
what's the threat to that? Why is that threatened? Hong Kong, the thing that really makes Hong Kong special is rule of law. That it has a separate
legal system from the rest of China.
China accepts or has accepted or recognized that as one country, two systems. So, you know, putting questions of human rights and free speech
and all of that and democracy aside, just the simple reality of doing business in Hong Kong or keeping your money in Hong Kong, it's not the same
as having your money in China and being subject to the whims --
ASHER: Right --
CHOVANEC: Of the communist party.
[15:35:00] ASHER: But when you see these images on TV, I mean, how much is capital to flight a real risk here?
CHOVANEC: So, part of this is, you know, the unrest that you see in the streets, but what's driving that unrest is a fear that's widespread in Hong
Kong, and it really ties into what Xi Jinping is doing with his corruption crackdown in China.
You know, business people disappear, they're thrown into holes, they -- all their assets are captured by the Chinese government. People in Hong Kong
have been immune from that, they live under a separate system. This extradition law, many of them fear will break down that wall and subject
them to the same kind of whim.
And so, you have people who look at that prospect and think, well, maybe I should put my money elsewhere, maybe it's not safekeeping my fortune here.
ASHER: So, Singapore could easily take advantage.
CHOVANEC: Well, Singapore is quietly actually courting people in Hong Kong saying, yes, Singapore is a safer alternative. And, you know, what drives
Hong Kong -- I mean, you had people there talking about how it's impacting the retail economy and people doing business -- and yes, it has been and
there's a prospect of Hong Kong even going into a recession.
But the real business of Hong Kong is money, and the amount of money in Hong Kong is much greater than the size of the economy. And all it takes -
- you know, there -- in China, there are capital controls and it's hard to get your money out. All it takes is you're hitting the enter key on your
computer to send your money from Hong Kong to Singapore --
ASHER: I see --
CHOVANEC: As part of what makes Hong Kong function, but it also is what makes it potentially unstable if people feel that their money is not safe
ASHER: Of course, and so how is Hong Kong a casualty in the escalating tensions between the U.S. and China with the trade war?
CHOVANEC: Oh, one thing is that Hong Kong has a special status, a special trade status with the United States, and people in Congress have raised the
prospect that if Hong Kong -- if the extradition is passed, if there's some kind of Chinese military intervention in Hong Kong, that maybe Hong Kong
should be treated separately.
That would mean that Hong Kong would be swept up in all the tensions, all the --
ASHER: I see --
CHOVANEC: Trade conflict that exists between the United States and China now, and obviously, that would be very harmful to their economy.
ASHER: Patrick Chovanec, thank you so much, appreciate you being with us. After 22 people were killed in a Wal-Mart in El Paso, Texas, the executive
director of Guns Down America says Wal-Mart has the power to change the conversation around guns in an instant. He'll join me, next.
[15:40:00] (COMMERCIAL BREAK)
ASHER: Wal-Mart is one of the largest sellers of guns and ammunition in the world. After 22 people died in a mass shooting at one of its stores,
there's a campaign calling on Wal-Mart to stop weapons, stop selling weapons. Dick's Sporting Goods pulled assault-styled weapons from its
shelves last year after the Parkland school shootings. CEO Ed Stack told CNN his company's responsibility goes beyond its shareholders.
(BEGIN VIDEO CLIP)
EDWARD STACK, CHIEF EXECUTIVE OFFICER, DICK'S SPORTING GOODS: We have to do what we think is right for the -- you know, not only our shareholders,
our employees, but also, the country as a whole. And when we see what's happening with the assault-styled weapons and the loss of life, we felt it
was the right thing to do.
We called for the ban of the assault-styled rifle, we took them out of our stores, we called for a ban of high capacity magazines. We'll no longer
sell a firearm to anyone under 21 years old and we call for universal background checks.
(END VIDEO CLIP)
ASHER: Igor Volsky is the executive director of Guns Down America. Its petition is asking Wal-Mart to stop selling guns, stop giving money to the
National Rifle Association and invest in gun buy-backs in the United States. Igor joins us live now. So, Igor, do you think Wal-Mart is going
to listen to you?
IGOR VOLSKY, EXECUTIVE DIRECTOR, GUNS DOWN AMERICA: Well, look, Wal-Mart has already moved on this issue. And in 2015, they stopped selling assault
weapons in 2018, they raised the age for gun purchasers, that's all good news. Right now, we're arguing to them that they really have the ability
to do two different things.
One is to break through the political gridlock we've seen by announcing that they're going to stop giving political donations to politicians who
take money from the NRA, that's going to be a big deal. And also, by changing the behavior of the gun industry.
Because, look, as you mentioned, there are a big seller of guns. That means they have a lot of leverage with the industry, and currently,
manufacturers, every single year are producing firearms of increased lethality that are killing more and more people. If Wal-Mart chooses to
act, they can change that.
ASHER: So, you mentioned they've already moved on this issue, but it's one thing to go from selling -- not selling assault-styled weapons any more,
which they did in 2015 to go from completely stopping selling weapons all together. It's a very different conversation for Wal-Mart to have with its
VOLSKY: Well, look, it's a conservation that's necessary. If Wal-Mart is truly committed to keeping its customer safe, to keeping its employee safe,
to keeping the people it serves in its community safe, that's what it has to do. The problem is that in America, the standard for gun ownership is
so incredibly low.
And we're arguing that until we can raise that standard, until Congress actually does something, this is what needs to be done. I mean, lives are
literally on the line.
ASHER: So, Wal-Mart already has background checks, required background checks to be able to buy a gun at their stores. You mentioned that the
standards for owning a gun in this country is incredibly low, but how much of a dent can Wal-Mart not selling guns anymore actually make in that,
given that in America, you can buy guns at numerous outlets, whether it's gun shows, whether it's online, whether it's at Mom and Pop retailers
across the street, I mean, it goes far beyond just Wal-Mart.
VOLSKY: Oh, yes, no, you're absolutely right, but Wal-Mart makes a huge bulk of those sales, and so that's why I'm arguing that it's about putting
pressure on, one, the industry, and two, the politician. Because if corporations start saying, hey, if you take money from the NRA, if you
carry water for the NRA, if you stand in the way of reforms that will keep us all safer, we're no longer doing business with you.
We're no longer contributing to your campaigns. That's what's really significant here, because, look, we've had this log jam for decades, and I
think it's time for one of the biggest players in America, one of the biggest players in the world, Wal-Mart, to take a strong stand and to help
all of us build a safer future with fewer guns.
ASHER: Igor, I want you to help me understand something, because I have lived in America for about 15 years, I was born and raised in London, and
obviously, I don't want to go there, but it's a very different system when it comes to gun ownership in the U.K. However, my question to you is, does
the issue with guns in America go beyond just how many people own guns and how easy it is to buy guns?
[15:45:00] Is not the problem a little bit more cultural because, for example, there are several countries that also have high rates of gun
ownership per capita. Serbia is one of those countries, Iceland is one of those countries, but those countries, even though there's a high number of
people and individuals that own guns in those countries, they have zero mass shootings, zero. So, they have a lot of guns on the ground, but no
So, doesn't the problem go beyond just guns? And isn't there a cultural element of this that also needs to be addressed as well?
VOLSKY: Well, look, I'll say that in those countries, there's a different environment against gun ownership, around gun ownership and gun production.
That it's harder to get a gun, you have to prove to your neighbors and to your community that you can use a gun responsibly, certain kinds of
incredibly dangerous weapons are outlawed.
But in terms of American culture, look, I would argue that going back all the way to the colonial days of the United States, you had all kinds of
different -- of different gun controls. You couldn't fire guns within city limits, if you move into the -- what America would expand west on the
western frontier, you had to actually give your gun to the sheriff before you can move out west.
So, we've had a long history of gun control in this nation, and it has -- it's only been really the last couple of decades, 30, 40 years, that you
saw the rise of a really powerful lobby and a powerful industry come together and undermine any kind of progress. You look at opinion polls
here in the United States, and overwhelming majority of Americans support not just background checks, but also gun licensing and gun registration.
If the problem was really a cultural issue, you wouldn't see those kinds of humongous numbers.
ASHER: You're right that it goes beyond culture, but I think it goes beyond culture, it goes beyond guns. It's something so far deeper and so
much more complicated than we can have in this conversation in terms of us debating it here. Igor Volsky, thank you so much for being with us --
VOLSKY: Thank you --
ASHER: I appreciate it. So, Barney's New York is looking for buyers, not for its clothing, but for its staff. We'll look at how the iconic New York
luxury store went bankrupt, that's next.
[15:50:00] ASHER: In 1923, Barney Pressman pawned his wife's engagement ring and used the funds what would eventually become a New York icon,
Barney's. For decades, Barney's was the quintessential New York luxury store with celebrities roaming the racks and designers jockeying to get
their wears on to its shelves. Today, it's bankrupt, taken down by rising rent and what the CEO calls a challenging retail environment.
Joining me live now is Jane Harli who is the CEO of the investment research firm Jane Harli and Associates. Jane, thank you so much for being with us.
So, for anybody who has been paying close attention --
JANE HARLI, CHIEF EXECUTIVE OFFICER, JANE HARLI & ASSOCIATES: Thank you for having me --
ASHER: Anybody who has been paying close attention to the retail environment in this country, is this announcement really that much of a
HARLI: No, it's not a surprise because we have great luxury websites that customers are drawn to, especially the millennial customer, and that's who
was buying luxury goods today. So, we have revolved another porte, far- fetch where they can carry thousands of units or styles on their website to give the audience a real choice.
And I have to say that Barney's is kind of stuffy in comparison. When you speak about e-commerce sites such as revolve, they have about -- and I
think 2,500 influencers who they work with. Camila Cabello, one of the singers of the millennial age is one of their influencers. So, I think
that they are kind of behind the times.
ASHER: So, why were they so slow to adapt then?
HARLI: That's a good question. Most retailers have been slow to adapt to the e-com and how well they're doing. One of the reasons why the e-com
sites do so well is because they really engage their audience to even look on some websites, you have to fill in information. So, their data drives
their buying, and so you have less returns.
It's not -- it's old world going to a brick and mortar and expecting them to have the assortment that these other e-com sites have.
ASHER: Do we know what kind of buyer Barney's is looking for at this point?
HARLI: I don't think we do. They have private equity, I think they have some other firms working with them, and I don't know who is going to buy
them. I would hope that one of the e-com sites would buy them because they could use some brick and mortar exposure, not too much, but they could use
ASHER: So, what were the main issues for Barney? I mean, asides from Barney's -- asides from obviously issues with competition, from e-commerce
sites and online platforms. It was also a significant amount of issues when it came to rising rents in places like New York and Chicago --
HARLI: Oh, definitely --
ASHER: Just walk us through what just -- what some of the major issues were on that front?
HARLI: They said that the rent at the Madison Avenue store had doubled. I mean, we're talking about -- I had the figure here, we're talking that the
rent went up to $279 million from last year, $162 million, that's exorbitant. So, you have to do a lot of business to make money on that.
ASHER: Right, Jane, thank you so much, appreciate it, Jane Harli live for us there, thank you. In Europe, stocks gave up earlier gains and finished
lower across the board, this came after some heavy selling on Monday. Trade sensitive, German stocks fell the hardest despite some encouraging
German factory data.
EU officials said again on Tuesday, they will not renegotiate the U.K.'s withdrawal agreement, signaling that the EU has accepted that the U.K. may
leave without a deal. One member of the U.K. government, Michael Gove, criticized the position as wrong and sad. Earlier on the "EXPRESS", I
spoke to Berenberg Bank's Senior Economist Kallum Pickering, he told me Prime Minister Johnson is now trying to drum up support at home for a hard
(BEGIN VIDEO CLIP)
KALLUM PICKERING, SENIOR ECONOMIST, BERENBERG BANK: It's just a fight that the current with the withdrawal agreement, the exit agreement between the
U.K. and the EU has failed to pass through parliament three times, so there's really no use bringing it back.
[15:55:00] What Boris is trying to do now is muster up support in and among U.K. voters for a hard Brexit. The conservatives are fast-climbing
in the polls, the reason he needs to do that, he has just one MP in his majority in parliament. So, it just takes two or three MPs to bring down
So, what Boris wants to do is frame the domestic situation in the U.K., so that voters seem to be in support of a hard Brexit. That means that when
MPs, when moderate MPs in the conservative party come back in September, they may think twice about threatening to bring him down if indeed he goes
for a hard Brexit and if he can make credible that threat of a hard Brexit, just maybe the EU will budge and renegotiate the withdrawal agreement,
which may then have a chance to pass through parliament.
ASHER: But really, at this point, I mean, it's unlikely that either side is going to budge to be, you know, to be realistic. So, is there any other
alternative at this point then you can see, Kallum, other than a no-deal Brexit?
PICKERING: Well, I see probably a 40 percent chance of a hard Brexit and probably about a one-in-three chance or 30 percent chance of an orderly
Brexit on October the 31st. Other than that, there's a chance of an extension, but that would be followed by political chaos. So, the
alternatives here are, Boris is brought down by moderates in parliament which would probably lead to an extension.
The EU budges and the U.K. passes and revise withdrawal agreement or the U.K. goes for a hard Brexit. Those are the three options, any prediction
about what may happen is actually speculative at this point because it's not action, it's just words.
(END VIDEO CLIP)
ASHER: All right, there are moments left to trade on Wall Street, we'll have the final numbers and the closing bell right after this.
ASHER: All right, there are moments left to trade on Wall Street. Let's see how the Dow is doing, we are up 315 points, close to the highs of the
day. This has been already -- it's only Tuesday, but already a see-saw week for the Dow after yesterday's losing streak. The Dow actually had its
worst day of the year yesterday, but now, take a look here, it's having its best day in seven weeks.
The S&P and the Nasdaq are set to snap six-day losing streaks, investors right now are reacting to some positive signals from China, officials there
say they don't plan to use their currency as a weapon in the trade war. China has actually moved to stabilize its currency, investors are happy
after hearing that.
We're also seeing some investors basically using the opportunity to buy after yesterday's massive sell-off. Let's look at the Dow components here.
Apple is up after falling more than 5 percent on Monday, Nike is up nearly 3 percent, defensive stocks like Verizon are down.
And that is QUEST MEANS BUSINESS, I am Zain Asher in New York.