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Investors on Edge Amid Global Economic Turmoil; Obama Gives Biden Run His 'Blessing'; Ferguson Judge Orders Sweeping Changes. Aired 7-7:30a ET

Aired August 25, 2015 - 07:00   ET

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

ANNOUNCER: This is NEW DAY, with Chris Cuomo, Alisyn Camerota and Michaela Pereira.

[07:00:04] ALISYN CAMEROTA, CNN ANCHOR: And good morning everyone. Welcome back to your NEW DAY.

Investors hoping Wall Street will show some resiliency today. The Dow looking to bounce back after Monday's big drop, closing nearly 600 points in the red, a relative rebound after tumbling a thousand points at the start of trading.

CHRIS CUOMO, CNN ANCHOR: This morning, we're looking at the futures, and they're up. Why? Asian markets were mostly down, Shanghai with its second straight day of heavy losses, down almost eight percent. Now we hear China's central bank -- this is new information -- that they're going to cut interest rates. Is that the right solution, or is it still more vacillation by them? What is the cause for optimism?

Let's begin our team coverage with chief business correspondent Christine Romans. Christine, paint me a rosy picture.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: I can do that this morning, because futures have turned around, Chris. And when you look at this, you can see a 500-point gain for Dow futures, which suggests a big, big bounce at the open. A bounce from what, you ask? Look at this.

Yesterday, the first ten minutes of trade, I have never seen anything like this. And no one else has either. A thousand points down in ten minutes. And then a comeback. The Dow is only down 102 points. You have a bunch of stocks like Apple who are actually higher on the day. And then finally down 588 points for one of the worst performances -- the worst performance since 2008. You'll remember 2008.

What's happening now? Take a look at Europe. European shares have bounced. They are all higher right now. Shanghai, another eight percent decline for Chinese stocks, but the selling stopped there. Selling stopped in China, and the rest of the world is rebounding.

See the commodities switch around, too. You're seeing money going into the oil market. And we are waiting for the opening bell here to ring, but it looks, Chris, after what was a brutal, crazy, horrific chaotic day yesterday, you're going to see a bounce this morning.

MICHAELA PEREIRA, CNN ANCHOR: All right. We'll be watching with bated breath, I think, Christine.

So with the focus on China, the central bank there finally making that move to cut interest rates this morning, as Chris mentioned. What else might Beijing be doing to reverse this downward trend? We turn to Will Ripley, live in Beijing, for more.

Will, what do we know?

WILL RIPLEY, CNN CORRESPONDENT: Well, Michaela, we just are talking about this in the last hour, and this is just now breaking, that the central bank is taking action. And this is something that investors will be watching.

And of course, the thought is that will the markets respond in a favorable way? That's what we have to watch here tomorrow morning when the markets reopen.

But by cutting the interest rate, what the central bank does is it allows banks to lend more money. It also makes it cheaper for people to borrow money, which of course, may encourage investment.

And that's not all that the central bank is doing. They are also pumping $23 billion into the financial system, and there may be more billions to come, because China has announced that up to 30 percent of their $546 billion pension fund can also be invested in the stock markets.

There could also be infrastructure investment, more physical stimulus, and political fireworks, fighting government waste and corruption. All of these tools and trying this tool kit to try to get investors, restoring their faith in the markets again.

Seventy percent of investors here in China are individuals. These are people who, in many cases, put their life savings into the markets, which saw huge gains in the first six months of the year, only to see much of that money evaporate since July.

Since the June 12 peak, stocks here in China have lost 42 percent of their value, erasing all of the gains that were made this year -- Chris, Alisyn.

CAMEROTA: OK, Will.

Let's talk about all of this. We want to bring in our CNN international business correspondent, Richard Quest, and bring back Christine Romans. Great to see both of you.

So you just heard Christine's big news headline, that it looks like there's going to be a big bounce, maybe 500 points, on the open. Crisis averted?

ROMANS: I wish.

RICHARD QUEST, CNN INTERNATIONAL BUSINESS CORRESPONDENT: After you, ma'am. ROMANS: Too much volatility. This is -- I mean, volatility is one of those wonky words that people in Wall Street throw around. But the bottom line for investors is expect big swings. There's a lot going on in the world to make people nervous. And the hot money, as Chris likes to say, is at work in the markets. It's going to be up and down and a little wild, I think.

QUEST: Right. What the market was looking for yesterday was a policy response. That's how Mohamad El-Erian put it to me. They wanted a policy response from the Chinese. They'd already made it clear, the Chinese, they weren't going to support that stock market by buying shares.

But what we just had in the last hour is that policy response. Proving that they are prepared to do something to keep economic growth going.

CAMEROTA: Like what?

QUEST: Because the interest rate -- well, they're cutting interest rates, and they're reducing the amount of government -- of bank reserves required. You're looking skeptical.

CUOMO: I am. Here's why. There is a feeling, OK, that there is a game within a game here that the regular people don't get to play and the insiders play very well.

When you talk about China, "Oh, we have these revelations about China," we have guys like Brugoff (ph) was coming on the show today, Chanos (ph), big investors have been talking about China since 2009. And they've said that so much of this is already baked in on the institutional side. But that there are other things going on that have nothing to do with China.

Big pension money that has to make that seven, seven and a half percent a year, Christine. And they've so much money they don't know what to do with it. They have to put it back into our markets, and that's why we're seeing the bounce this morning. It's not about China and scaring us, that there's an insider game. And they're going to make their money.

ROMANS: I think if you -- if you buy that argument that there's an insider game and a lot of this is happening for the professionals, the big concern, then, is that China is a black box, no transparency. And they don't know what's coming out of there. And they don't know. And that is...

[07:05:20] CUOMO: How else would you explain that yesterday was so dire?

QUEST: I don't agree -- I don't agree with you on the big -- on this idea that there's some other game being played.

CUOMO: Then within the context of what changed between yesterday and today to have a big bounce-back. Because that's what we're looking at. The market today is going to explode when it opens. QUEST: Well -- no, no, no. You're missing the point here. The point

is that the market -- today's market is not the market that Christine and I started covering 10, 15, whatever many years ago. Today's market is fundamentally different.

CUOMO: How so?

QUEST: Because it has high-frequency trading. It has much more computer trading. It's much more globally driven. The capital flows are much more instantaneous.

ROMANS: Much more globally driven.

QUEST: And with all of those -- so you do get this volatility. In the old days you may get 15 points either way, and we all got a shock and a headache. Today you get these 100, 200, 300-point movements. But it's the same sort of idea of volatility.

CUOMO: Well, what changed in China from yesterday to today?

QUEST: Nothing's changed in China.

CUOMO: Why are we going to have a huge explosion on the positive side today when it went down yesterday?

QUEST: Because it's just volatility. It's just noise. It's just market.

CUOMO: But isn't volatility exactly what the insiders use to make money?

QUEST: No.

CUOMO: Do you see? Do you see what I'm talking about?

QUEST: No, no. And the reason I disagree, if I may. Look at them both. Look at them both. The reason I disagree.

CUOMO: It's going to be my Christmas card.

QUEST: I know.

CAMEROTA: A video Christmas card.

ROMANS: I'm so glad we're laughing and not crying. That's all I have to say, because yesterday was so -- was so terrible.

But I will say, computers -- and I talked to a lot of people on the floor yesterday in the market, and big investors who say the computers are a big part of this. High-frequency trading. You had, I think, $3 billion for sale at the close on Friday. And then you had the weekend.

Usually in the old days, you would see the weekend, and traders would switch their positions or change their positions. All of that money was sitting in the computer book -- on the computers and hit at the opening bell.

Now yesterday you have all this -- all this buying activity that I think is going to hit hard today. And tomorrow, you could have selling again.

QUEST: You're talking about today's market. I'm talking about the larger, wider macroeconomic picture.

If you want to make money today or tomorrow on volatility, fine, go ahead. But that is what the traders are doing. Fine, fair enough. But your 401(K), your college fund -- plan, your savings, my mortgage, that is all predicated on the wider economic issues.

ROMANS: I agree. We do agree on that.

CAMEROTA: Here's where I'm confused. If we are now inextricably tethered to China, and they're volatile and are not handling their sort of financial situation, what are we to do about this?

ROMANS: Well, I mean, I say there's nothing we can do about it other than -- other than watch China. China's got to be ready for prime time. This is an issue.

China, Chinese authorities, I mean, its stock market is trying to manipulate, to prevent its stock market from bursting for the past two weeks, and that's only causing more uncertainty about China's ability to manage -- manage a soft landing there.

I think what we are seeing is an emerging market that is very big, and they're trying to make sure it doesn't hurt the rest of the world. And their policy responses thus far have been confusing and ineffective, in some cases.

QUEST: I, having heard the advice and comments of my noble friend, I have nothing to add, except that -- except ready for prime time and it's clearly still on overnight.

CUOMO: But what I'm saying is that the big names in finance have been onto China as suspect...

CAMEROTA: Look at Donald Trump.

CUOMO: ... for years and year.

CAMEROTA: Look at Donald Trump. He's been saying this throughout his whole campaign.

CUOMO: Well, he's pushing it -- he's pushing it as a political issue. He's saying they keep devaluing their currency to work over the American economy and steal jobs.

QUEST: Donald Trump wants it both ways. Here's a man, a politician who is saying China needs to be -- except he's selling million-dollar apartments to the Chinese, so he's a beneficiary of exactly the policy that he now says is...

CUOMO: And he has his clothing made there.

ROMANS: And he had his name on the ties that were made in China.

No, look, the politics of it, we're going to see -- this stock market volatility, this rout, is a gift to Republicans who needed something to talk about and to hit on against Democrats over the economy. Because the job market was getting better. You know, the 5.3 percent unemployment rate meant that it was a little difficult to take the jobs issue for them over the next 15 months.

If you have a really wild stock market and China is at the core of the blame, it gives the Republicans something to start to differentiate themselves.

CUOMO: It gives the ability to make the debt an issue. Because the debt, which no one ever talks about -- we only talk about the deficit -- is owned, largest part, by China. And they can say, "Look, you've given away our country to the Chinese," and that's the opportunity you're talking about.

CAMEROTA: Richard, Christine, thank you for a lively, spirited discussion. That was a great moment.

CUOMO: Did you see me catch him? Did you see me catch him, Mick? I caught him. It's a good day.

PEREIRA: I support Christine and Richard. I'll be Switzerland in this one.

[07:10:01] Well, you guys set me up ripe for a great conversation now about politics. So we're talking about Vice President Joe Biden, if he is going decide to run in 2016. He is said to now have the blessing of his boss. If Joe Biden does decide to challenge Hillary Clinton for the Democratic nomination, what's the White House to do? Well, let's ask Michelle Kosinski, who's live at the White House.

Hi, Michelle.

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Hi, Michaela.

Well, first of all, as much as the vice president's aides will tell us that no decision has been made yet, every day we're seeing these incremental movements seemingly in that direction to the point that those close to Biden are now telling CNN that it is more likely than not that he goes for it.

And he had this lunch with the president yesterday, at which sources say the president essentially gave him his blessing that it's not as if he's going to counsel Biden against running or anything like that.

He also had a meeting with two former top Obama advisors. And Biden's going to be taking more meetings over the next couple weeks, including with donors, fundraisers and strategists. Listen to this. Listen to what the press secretary said yesterday about Biden possibly running.

(BEGIN VIDEO CLIP) JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The president has indicated his view that the decision that he made, I guess seven years ago now, to add Joe Biden to the ticket as his running mate, was the smartest decision that he has ever made in politics.

(END VIDEO CLIP)

KOSINSKI: The press secretary also said probably Biden is the one percent in America who knows best all that it takes to launch a successful bid.

He said that he's not going to rule out an endorsement by the president, but that's going to happen later in the game. And it's not as if the White House is saying at all negative about Hillary Clinton. Quite the opposite. But I thought it was interesting that they said, you know, that's a decision, a choice that the president could very well make, but it's not going happen any time soon.

CAMEROTA: Got it. That is interesting. All right. Michelle, thanks so much for all that background.

Well, the U.S. and turkey gearing up for what's being called a comprehensive anti-ISIS operation. Turkey's foreign minister telling Reuters that both governments have agreed on a plan for air operations to clear the terror group from a 50-mile-long zone along the Turkey- Syria border. Regional allies, including Saudi Arabia and Jordan, may also take part.

CUOMO: Major changes are coming to the justice system in Ferguson, Missouri, after more than a year of racial tension and violent protests there. Activists say this is going to be a big win for protestors and an olive branch to the community.

Let's get more details from CNN's Sara Sidner. What exactly is going happen there and why?

SARA SIDNER, CNN CORRESPONDENT: Chris, you know, this really is sweeping if you look at what has been happening in that city. Basically, what a judge has decided, and he has just put it in place. He replaced the old judge. Has decided to withdraw all of the warrants that exist in Ferguson at the time being. And that's all warrants. He made that clear with the city.

It also gives you some idea, and there's sort of a list of things that this does. Basically, they're withdrawn, but the cases are not withdrawn. In other words, it's kind of wiping the -- wiping the slate clean, letting people come to court and try to resolve some of these issues.

And one of the big issues is, of course, some of these warrants came from things like traffic fines or unable to show up to court. And so they said, "All right. We're going to wipe these clean. You now come to court and we will either give you a payment plan or maybe community service, if you cannot afford it." And if you're indigent, they may also just get rid of those fines altogether and you start from a completely clean slate. But there is, of course, criticism. Now this is coming after more

than a year of sustained protests. This is coming after the DOJ went after Ferguson, saying that it unfairly arrested and searched black people there for numbers that are just incredibly, incredibly higher than white residents of Ferguson.

And so some people are saying, "Hey, if some of these arrests in the first place were suspect, why did you just wipe it all clean and start from zero?

But the city said, "Look, this is an olive branch. These are sweeping changes. They're important changes. We're making an effort here."

There is also criticism, though, Chris, that this is not governed by another court. In other words, it is a voluntary measure, and if the city decides later on that it isn't working out, they could go back to the way that they were before.

However, for a lot of people and some of the politicians, they say this is a win for those who have been protesting against what they say are very unfair practices in Ferguson -- Michaela.

PEREIRA: Well, maybe at least it's a step in the right direction. I mean, we have to at least consider that possibility. Sara, thank you so much.

We want to show you this. A guy who was already in a whole lot of trouble with the law when he got behind the wheel of a police cruiser and then fled across the southbound lanes on I-77 in Cincinnati. That's the suspect, 25-year-old Zachary Cox. Didn't get far. Police say he was jumping in front of cars, trying to carjack one of them. They were able to track him down to the other side of the highway. They Tased him, and well, he's arrested and facing a whole lot of charges now, so...

[07:15:00] CAMEROTA: So that's not a good strategy, you're saying?

PEREIRA: Hashtag #fail.

CAMEROTA: All right.

Well, he helped three Americans bring down a possible terrorist in France. Next we speak exclusively with Christopher Norman about his incredible experience Friday on board that train. See you soon. We look forward to it.

(COMMERCIAL BREAK)

[07:18:54] PEREIRA: Investors are hoping a rally is in the cards today on Wall Street. Futures are pointing to a big open. The Dow coming off a near-600-point loss. The index is down nearly 11 percent for the year amid global economic concerns. China's central bank now cutting interest rates after another disastrous day for Asian markets. Shanghai Index down nearly 8 percent today and more than 20 percent just the last five trading days. CUOMO: Questions this morning about cooperation between anti-terror officials in the U.S. and Europe. Here's why. The suspect in that foiled attack on a train to Paris was not known to U.S. authorities, even though the Europeans knew he had possible links to terrorism. There are suggestions privacy laws are preventing countries from sharing some real-time information.

Now, in just a moment, we're going to be talking with Christopher Norman. Who is he? He is one of the heroes from that train. You've been hearing about the three Americans, but this is a British national. He's been living in France for 25 years. He has a quote that says it all. He said, "Either you sit down and you die, or you stand up and you die." That's the decision he had to make. And of course, he didn't die. And we'll try and get through to where he was mentally and emotionally that let him be a hero -- Alisyn.

CAMEROTA: I look forward to hearing from him.

Well, a new concern from prison officials: drones flying contraband like drugs and possibly weapons over the walls and into the inmates. Two men in Maryland accused of trying to use a drone to smuggle tobacco, drugs and pornographic DVDs into a maximum-security prison in Cumberland. Authorities say the drone was not powerful enough to carry a gun, but the suspects had one with them when they were caught.

PEREIRA: Always stay a few steps ahead of the bad guys, don't you?

A fraternity at Virginia's Old Dominion University suspended for displaying banners with lewd, sexually-suggestive messages welcoming the female freshman to campus. The bangers [SIC] were hanging -- banners, rather, were hanging outside the Sigma Nu frat house. You can see what they say. Things like "Freshman daughter drop off. Go ahead, drop off Mom too." The suspensions will remain in effect, pending the outcome of a university investigation.

CUOMO: He helped three Americans bring down a possible terrorist in France. We're going to speak exclusively with Christopher Norman about his incredible experience Friday on board that train. What made him do something that so many of us could not?

(COMMERCIAL BREAK)

[07:25:08] PEREIRA: It is time for "Inside Politics" on NEW DAY with Mr. John King. A few things I'm sure you could find to talk about today.

JOHN KING, CNN ANCHOR: We're going to start this morning, Michaela, with a blessing. I think you might know -- you might know a little bit where we're going there. Back to you guys in New York in just a few minutes.

But with me to share their reporting and insights this morning, Ashley Parker for "The New York Times"; Robert Costa of "The Washington Post."

I don't think vice president needed the president's permission or blessing, but it a very interesting, and it's gold for the vice president, I would say, that they both come back from vacation. They have this lunch at the White House yesterday. And word leaks out after they spent a good amount of time talking about the vice president's 2016 deliberations. Should he run; shouldn't he run?

And we're told that the president made clear, "Joe, if you want to do it, do it. And you have my blessing." That's not an endorsement. That's a key distinction. But to a Democratic base that still loves the president, that's a pretty good signal.

ASHLEY PARKER, "THE NEW YORK TIMES": Yes, it sure is. And he -- so he talks to the president. The president says, "You have my endorsement." The president's press secretary comes out and says the best decision Barack Obama ever made was choosing Joe Biden as his vice president, which immediately led to, well, it wasn't choosing Hillary Clinton as his secretary of state?

He just met with Elizabeth Warren over the weekend. He has private meetings scheduled with fundraisers. I mean, he's doing all the right things if he wants to run.

KING: And yet, the conversation among professionals, even some close by friends, Robert, is should he do this? Can he win if he does this? Hillary Clinton has most of the Obama-Biden campaign works for Hillary Clinton. Most of the big donors have committed to Hillary Clinton. She has sort of the infrastructure financially and the boots on the ground.

And yet, as we've seen from the summer of Trump and that history occasionally reminds us, things -- anything can happen. So when you're Joe Biden, what's the one thing you're kind of looking at?

ROBERT COSTA, "THE WASHINGTON POST": Well, if you look at today's "Washington Post," Dan Balz has a great story about the family's concerns. He's still weighing those options and the impact it would have on his relatives.

At the same time, Biden has to find a place in the race. Hillary Clinton remains a formidable contender. She is the frontrunner. Bernie Sanders has generated a lot of enthusiasm on the left.

Would Biden come into the left of Clinton? It's not so sure. He is an heir to Obama, in a sense, an at-top ally of the president, but he's not a favorite of the left or a darling of the establishment.

KING: He's run twice. And forgive me, Mr. Vice President. I'm actually a fan of his enthusiasm. I think he's a great campaigner. And I know from talking to people who he knows that he's told them, "I think I'm the best guy for the job. I thought that when I ran the last two times. But now I've been vice president." But the record as him as a presidential candidate is not a great one.

He does think, his allies say, that he could make the income equality argument, which is a huge issue in the campaign, especially among the Democrats right now and will be a general election issue, better than Hillary Clinton. He's the scrappy kid from Scranton. PARKER: Right.

KING: He has not made a lot of money in his life. However, I don't think see getting into the race and going after her, saying, you know, "I'm Joe Biden. I'm not wealthy. Look at my legacy. And I didn't give speeches to Goldman Sachs for 250 grand." I don't see that.

PARKER: Well, exactly. I mean, I think he sort of naturally is, as you point out, the middle-class kid. He doesn't -- he's not going to have to twist himself up to sort of prove his middle-class street cred, really.

And as Bob pointed out, he doesn't quite have a natural ideological label. He's not quite as progressive as Bernie Sanders, and he's very tied to the administration.

But you mentioned enthusiasm. I think if you're Joe Biden or you're this electorate right now, Donald Trump has showed us anything, it's that there is a craving for authenticity and sort of this unscriptedness and enthusiasm, and that's who Biden is.

I mean, a lot of his gaffes that would have done in other politicians sort of become enduring when they're from him. And...

KING: For better or worse, Joe Biden is authentic. You have that right.

Let's move onto this conversation now that Donald Trump started, and as I like to put it, other Republicans have stepped into the quicksand, of immigration politics in the Republican Party, about anchor babies, meaning if someone comes across the border and you know, they're in the United States, either if they're here legally or on a visa or they come in illegally, but they have a child here, then is that child a citizen? It's a big debate. Donald Trump says it shouldn't be. Jeb Bush says the 14th Amendment says you are. I won't change it.

But he used the term. He got testy when reporters kept asking him, "Why are you using the term?" A lot of Latino groups don't like the term. They think it's off-putting and pushing off the use of (UNINTELLIGIBLE).

So Jeb Bush yesterday is trying to make peace with some of the Latino groups who are mad at him, and here's how he decides to do it.

(BEGIN VIDEO CLIP)

BUSH: This is ludicrous for the Clinton campaign and others to suggest that somehow -- somehow I'm using a derogatory term. What I was talking about was the specific case of fraud being committed where there's organized efforts -- and frankly, it's more relate to Asian people -- coming into our country, having children in that organized effort, taking advantage of a noble concept with this birthright citizenship. I support the 14th Amendment.

(END VIDEO CLIP) KING: Now, if you talk to state officials and national officials but especially in the state of California, they say this is a problem. This -- you know, Asians coming in, tourist visas and the like. But -- but OK, it's an issue. It's a relatively small issue. And it may well be an issue in California. But for Jeb Bush to be stuck in this quicksand, I -- I'm now convinced that Asian -- anchor babies, excuse me.