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Quest Means Business
Volatility Returns, Dow Loses 470 Points; IMF Says China, Commodities, Fed Shaking Markets; Market Volatility; Oil Prices Fall After Big Gains; Iran Could Add to Global Oil Glut; ConocoPhillips to Cut Global Workforce By 10 Percent; Trump Meets With Hispanic Business Leader
Aired September 01, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Turkcell ringing the closing bell on a terrible day on Wall Street, the Dow Jones off more than 400 points. Markets across
the globe were sharply lower.
(GAVEL POUNDS)
QUEST: A firm, but not exciting gavel to bring trading to a close on Tuesday, it's September the 1st.
Fear is back. September starts with the stock markets around the world all taking a nosedive.
There'll be bumpy roads ahead. Christine Lagarde of the IMF warns of more volatility to come.
And as oil prices are sinking, Iran's oil minister tells CNN there's even more cheap crude on the way.
Look at the markets, they are truly awful. I'm Richard Quest, and I mean business.
Good evening. We saw good-bye to awful August, but unfortunately, it's replaced immediately with a stormy September, or at least that's way
seems -- things seem to be moving on the first day trading of the new month.
The global financial markets can't kick the volatility, and once again, it's China and the slowing economy there that's being blamed. Join
me at the super screens as we head towards the Dow. Let's just stop and show you.
All the Asian markets were down sharply, 3.8 percent, 2 and 1 percent. In Europe, the same: the Paris, the Xetra DAX, the FTSE, all down more
than 2 percent. And in the United States, the broader market down the best part of 3, NASDAQ best part of 3, Dow Jones Industrials 2.8.
And look at the chart. You'll see that the market opened lower, never really recovered, and almost at the lowest of the day. It was off 500
points at one stage. The 300 points at the beginning, 500 in the last half hour, and a close of round about 469.
And looking around the world, not a single major market has closed in the black, with London hit with the worst losses, all exposed to
commodities. After a three-day rebound, oil prices tumbled way down again. Look at that: West Texas off $4, Brent down $5.
Joining me now from the New York Stock Exchange, Teddy Weisberg, president of Seaport Securities. Teddy, what happened? I mean, we got rid
of August, and we thought September might be better, so what happened today?
TED WEISBERG, PRESIDENT, SEAPORT SECURITIES: Well, I think we just -- reasserted the negative trend that actually started a couple of weeks ago.
And in fact, if you -- you can go back almost to the last three or four months, we have seen continued weakness in commodities. Certainly in the
energy sector.
But way beyond energy, which basically was signaling slow growth, no growth around the world. And you know, it just -- things just don't happen
in a timely fashion. It took a little time for all the negative things to pile up, and I think today was just reasserting the negative trend --
QUEST: Right.
WEISBERG: -- which began a couple of weeks ago. And I suspect we're going to be on the negative side of the equation for a while, unless
something dramatically changes, which seems unlikely as we speak.
QUEST: As I looked at the market, the US market today, it traded in that range for most of the day. It never really tried to get its legs.
WEISBERG: Never. Never. I would agree. The screens we watched up in the office and on the floor were basically all red all day. Every once
in a while, you'd see a little green, but you could count the green ticks on one hand. And they had them pinned down pretty good.
And it was one of those days where there's simply no place to hide. And unfortunately, the way stocks trade now, because of all the rule
changes, and there's so much --
QUEST: Right.
WEISBERG: -- momentum into the trading that it -- they're kind of throwing --
QUEST: All right.
WEISBERG: -- the baby out with the bath water.
QUEST: Now, let's look at the Dow 30. I mean, I know you prefer, obviously, the broader market, but if we --
(CROSSTALK)
WEISBERG: No, no, Dow's fine, Dow's fine.
QUEST: But if we look at the Dow 30 and the stocks that were in the Dow 30, I was very surprised to see Apple down 4.3 percent. Apple's the
largest loser, seemingly, of the day. I can understand the China relationship to it, but Apple normally is quite resilient.
[16:04:58] WEISBERG: Well -- but I think the issue, it's not about Apple. It goes back to just what we were talking about. It goes back to
the fact that momentum takes over, there's literally no place to hide, and if people want to raise money, there's a tendency to sell the good stocks
and keep the bad ones.
Quite frankly, they should be doing the opposite, they should be selling the bad ones and keeping the good ones, because at some point, as
history has proven, we'll get through this downdraft and get back into positive bias. But unfortunately, they don't ring a bell, and they don't
tell us where that is.
So, why is Apple down percentage-wise more than the market? First of all, the stock is over-owned and if you're nervous and you want to raise
money, what are you going to do? You'll sell your Apple. Or you'll sell whatever it happens to be. General Motors or Ford. And there is just a
tendency when people get nervous and scared --
QUEST: All right.
WEISBERG: -- and I don't know that we're there yet -- they sell the good ones and they keep the bad ones.
QUEST: Teddy, thank you for joining us. Good to hear your analysis. And you even had an audience in front of you as well.
WEISBERG: Yes, I know. Yes.
QUEST: Charge them money for it. Charge them money. Thank you, very much, Teddy Weisberg.
WEISBERG: You were standing right in the shot.
QUEST: That -- believe me, I've known Teddy for years on the Exchange, and Teddy's one man you don't want to get on the wrong side of.
That's the way the markets traded, you've seen that. And one of the events that took place during the course of the day, the IMF's managing
director, Christine Lagarde, has identified three factors triggering the volatility in the global markets. As we go around the world, I'll show you
exactly those three that she talked of.
The first is China. New manufacturing numbers show that this vital section is deteriorating at its fastest rate in six years, the so-called
manufacturing, the PMI, Purchasing Mangers' Index, under 50 we know, but down the best of -- that's the worst performance it's had for some three
years. And Christine Lagarde of the IMF says China's growth is slowing and the fallout is worrying.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: The transition to more market-based economy and the unwinding of risks
built up in recent years is complex and could very well somehow be bumpy.
(END VIDEO CLIP)
QUEST: Bumpy it may be, but if China is the catalyst, now let's get underneath and look at, say, for example, the commodities, and you'll see
what I'm talking about. Because commodities are a huge reason.
Weak demand in China helped oil prices fall as much as 7 percent on Tuesday. And remember, this time yesterday, you and I were talking about
an 8 percent rise in oil prices, and now we're talking about an exact reversal by the same amount.
So much oil sloshing around the world. Lagarde says falling commodity prices are here to stay. And to factor in and complicate it, Iran is now
to join the party. The Iranian oil minister sat down for an exclusive interview with John Defterios, and the minister's promising Iranian oil
will start flowing as soon as possible.
(BEGIN VIDEO CLIP)
BIJAN NAMDAR ZANGENEH, IRANIAN PETROLEUM MINISTER: Can we wait and not produce after lifting the sanctions? Who can accept it in Iran? Do
you believe that the nation of our country will accept it, not to produce to secure the market for others? The first oil producer in the Middle
East, can we lose our share in the market? It's not fair.
(END VIDEO CLIP)
QUEST: So, you've got China, you've got commodities, and let us not forget the United States. Signs of the firming recovery, interest rates
rise could be coming sooner rather than later. Janet Yellen and the Fed have signaled September at the earliest might happen still.
September has begun. The meeting's not until a couple more weeks, and emerging markets are on edge. A rate rise could happen despite the recent
volatility.
All of this we factor in together to talk to Ed Lazear, the former chairman of the White House Council of Economic Advisors under George W.
Bush. Ed joins me from Stanford in California. I don't think I'm being over exaggerating when I say it's a mess.
(LAUGHTER)
ED LAZEAR, FORMER CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: Well, it certainly is a mess, and I wish it were easy as listing three
factors and using those as the explanation. Unfortunately, I don't think that any of them go very far to telling us what's actually going on and why
prices have fallen so rapidly for such a significant amount of time now.
Particularly -- let's go back to China. I think -- let's start with China, because it's the one that everybody talks about. Let me say two
things on China. First of all, while we get a bit of new news every day on China, it's not the kind of news that is compatible with the kinds of
changing that we're seeing in the market.
[16:09:57] But the more important point is this: if you look at economies like the United States -- and I'll turn to Europe in a minute,
let's start with the United States. If you look at an economy like the United States and you say, how much could China contribute to declining GDP
in the United States, the answer is about a half a percentage point of growth.
QUEST: Right.
LAZEAR: So in other words, the slowdown in China, even a very significant slowdown in China, could cost us direct effect and indirect
effects about a half a percentage point of GDP growth. Now, that's not trivial, but it's certainly not something that would explain --
QUEST: All right.
LAZEAR: -- a 7, 8 percent decline in the stock market. So, that just can't be right.
(CROSSTALK)
QUEST: So, what do you --
LAZEAR: It can't -- the arithmetic doesn't add up there.
QUEST: What do you believe, then --
LAZEAR: Go ahead, please.
QUEST: Well, what do you believe is at the core of this? And what needs to happen?
LAZEAR: Well, I wish I could tell you what was at the core. Unfortunately, what I'm going to tell you is what actually is not going on.
And to my mind, I always hate to outguess markets because I'm basically a believer that the market has better information than about anybody out
there. So, I take my cues from the market.
But I will tell you that if you look at the market right now and you say what is the market projecting for the United States, the market data
are telling us that we have now gone from a projection of about 3 percent GDP growth over the next four quarters to about a 1 percent GDP growth over
the next four quarters. So, that's significant.
And you could argue that whatever they're seeing out there is causing the future growth to fall, and that by itself could be the thing that is
causing the stock market to fall.
QUEST: And I -- let's talk about the Fed, because we're getting distinctly --
LAZEAR: Sure.
QUEST: -- mixed messages. Stan Fischer talks about --
LAZEAR: Yes.
QUEST: -- inflation.
LAZEAR: Absolutely.
QUEST: Dudley says there's no compelling reason. Other Fed governors seem to be --
LAZEAR: Yes.
QUEST: So, we've got an employment report on Friday. Do you believe September is still a realistic possibility?
LAZEAR: Well, I think it's a possibility. I personally would be surprised, given the volatility that we're seeing right now, if the Fed
were to add new variables to what's going on. So, if I were guessing, I would think they'd push it to the end of the year.
But again, you can't forecast what people are going to do very accurately. But I think that's probably what they would do.
The reality is, had they done this earlier and had they actually engaged in raising interest rates, say, a year ago or so, they would be in
a very different position right now where they could actually slow things down and perhaps reduce the amount of volatility in the market.
Right now, they don't have a lot of degrees of freedom. There's just not a lot of room to operate because they haven't taken the steps in the
past that perhaps they should.
QUEST: Ed, it's wonderful to see you. Thank you for joining us, giving us perspective. We appreciate it enormously. Thank you, sir.
Now, as the price of crude oil nosedives down 7 percent, up yesterday 8, down 7, we'll have the rest of that exclusive interview with the Iranian
oil minister in a moment. This is QUEST MEANS BUSINESS on a day when the markets, well, were very unhappy.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: This time yesterday, you and I were talking about the 8 percent rise in the price of oil. A barrel of West Texas is up some 30
percent over the last several sessions.
[16:15:01] Well, today, it was a wild day for crude oil. At one point, prices plunged more than 7 percent. Have a look at the map -- not
the map, the graph. This is how it's gone. So, we've seen this nice rise, and then, take a look at how it fell off in US Brent Crude prices.
Just a week ago, Light Sweet Crude hit $38 a barrel, that's WTI. Meanwhile, since prices have started to recover, climbing 30 percent in
three days. Today, the dived once investors caught wind of that weak Chinese manufacturing data.
All this week, we're going to be looking at the global price war surrounding oil. CNN's John Defterios spoke exclusively to Iran's oil
minister, who says Tehran wants to start exporting oil as soon as sanctions allow.
(BEGIN VIDEOTAPE)
ZANGENEH: After one year, the reaction of the market and shale oil producers means and shows us that it has no important effect. And I think
we are going to -- the point, as I said, to decide how to manage the market.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Some are suggesting that Iran's poised to kill the market, though. You're planning to come by the
end of March with another million barrels a day. That would take the oversupply to a 17-year high, and they're pointing the finger at Iran as
spoiling market even worse than we've seen over the last 12 months.
ZANGENEH: Can we wait and not produce after lifting the sanctions? Who can accept it in Iran? Do you believe that the nation of our country
will accept it, not to produce to secure the market for others? The first oil producer in the Middle East, can we lose our share in the market? It's
not fair.
DEFTERIOS: By 2020, the combined production of Iran and Iraq will be about level with Saudi Arabia. This will change the dynamics within OPEC
and the OPEC leadership. How will it change, do you think?
ZANGENEH: We -- with all difficulty that we had, it's the history of OPEC that we should cooperate with each other and to go ahead with each
other. It's very, very important. We should cooperate with each other. It's an organization, it's a signal to the market that we want to be with
each other.
DEFTERIOS: You're producing about 2.8 million barrels a day right now. Your pre-sanctions peak was around 4.2 million barrels a day.
Realistically, how long will it take to get back up to 4.2, 4.3 million barrels?
ZANGENEH: We are trying. Around -- end of the next year, we'll be close to distribution.
DEFTERIOS: By the end of 2016?
ZANGENEH: Yes.
DEFTERIOS: Most people don't think you can add more than 600,000 barrels a day. I've spoken to six different sources, and they said you'll
be lucky to add 600,000 barrels --
ZANGENEH: Yes. Yes, they should wait some month.
DEFTERIOS: You can get up to 4.2 by the end of 2016?
ZANGENEH: I wish.
DEFTERIOS: The German delegation, the French delegation, Italian delegation, British delegation. Is there space for the Americans to come
in? It seems like the Europeans are rushing to get to Iran to get a head start on the Americans.
ZANGENEH: I hope US administration not to put sanctions against them to come to Iran. From the Iranian side, we have no objection, no
difficulty. We are open to receive them, and they are welcome if they want to come to us.
And only US companies lose in that market. Now I hope they don't lose in this new stage of the development of Iranian oil projects.
DEFTERIOS: You share the largest gas field in the world with Qatar. Most of that territory is actually Qatari. Will it create a problem as you
ramp up your gas production? Because Qatar doesn't want to increase production. It wants to last 100 years. Is it a political problem?
ZANGENEH: No. We have no political -- no dispute with Qatar. And also, Qatar has reached to the highest level of production that they can
for -- from many years ago. And we should accelerate our activities to reach to the level that Qatar has produced before.
(END VIDEOTAPE)
QUEST: A short time ago, oil and gas exploration firm ConocoPhillips -- apologies -- announced it's cutting its global workforce by 10 percent.
CNN Money's Paul La Monica is here with me. Well, yesterday up 8 percent, a 30 percent gain over the last week, and now down 7 percent. Is this just
reflecting the same sort of volatility in commodities that we're seeing in equities?
[16:20:01] PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: I think it is, and it's all tied to China. The concern about China's economy
slowing down, that has led to the volatility in the stock market and also with oil prices.
QUEST: But this volatility and this sort of reaction, this isn't suggesting a slowdown, this is almost suggesting a calamity in China. And
we're not seeing -- as far as I'm aware, nobody's suggesting that China is about to go into recession.
LA MONICA: No. China -- the fear may be a hard landing, which is obviously not a recession. But I think right now this is just an
environment where investors are selling first and asking questions later.
If you take the longer-term view, we still have very strong gains going back to when the market bottomed in 2009. A lot of people may be
looking at this as an opportunity to say, you know what? We've got to cash in a little bit. China is a big mountain of uncertainty right now. Until
we have more evidence of whether or not it is just --
(CROSSTALK)
QUEST: Ah, but what sort of evidence is it going to take to get that, do you think?
LA MONICA: I think with China, the hope is that the numbers that come out for the third quarter, obviously the caveat being can we believe them?
Do they show a change in this path of the numbers being worse than expected? Now, that's --
(CROSSTALK)
QUEST: You were telling me about the S&P and the number of stocks.
LA MONICA: Yes, there were no places to hide today. That really shows how nervous investors are. Before the market closed, there are only
two or three stocks that wee actually higher today, which is just stunning.
Usually on days like this, you'll find some safe havens, be it utilities, consumer staples. Everything went down today.
QUEST: Cheerful.
LA MONICA: Very cheerful, unfortunately.
QUEST: Good to see you, sir.
LA MONICA: Thank you.
QUEST: There what you need, Paul La Monica.
Now, after climbing in the opinion polls with his hard stance against illegal Mexican immigration, Donald Trump is holding a private meeting
today with Hispanic leaders. So, what did Mr. Trump say? In a moment.
(COMMERCIAL BREAK)
QUEST: The Republican presidential front-runner Donald Trump has met with the head of the United States Hispanic Chamber of Commerce. Oh, to be
a fly on the wall of that meeting. Well, if you think about it, Trump's presidential campaign has been overshadowed by his remarks about illegal
immigration.
Indeed, when he announced his run for office in June, you'll remember the quote, "When Mexico sends its people, they're not sending the best.
They're sending people that have lots of problems. They're bringing drugs, they're bringing crime, they're rapists. And some, I assume, are good
people."
With friends like that, who needs enemies? Well, the US Hispanic Chamber of Commerce announced a boycott of Trump properties after those
comments. So now, the organization's chief executive, Javier Palomarez joins me in the C Suite.
JAVIER PALOMAREZ, CHIEF EXECUTIVE, US HISPANIC CHAMBER OF COMMERCE: How are you, Richard?
QUEST: Sir, you had a meeting with Donald Trump for an hour today.
PALOMAREZ: An hour and a half.
QUEST: An hour and a half.
PALOMAREZ: Yes.
QUEST: What happened?
PALOMAREZ: Well, first of all, let me begin by saying that this is in no way an endorsement of Donald Trump or support of Donald Trump or his
views, just to be clear. The meeting came about as a request of a couple of his folks, Michael Cohen and --
QUEST: What did he say?
(LAUGHTER)
PALOMAREZ: We discussed a number of issues. We discussed the economy, we discussed national security, we discussed job starts, the
importance of the entrepreneurial community, and of course, immigration.
[16:25:07] QUEST: Right. And on the immigration point, you'll -- your point is basically that your views are wrong and that it's very
damaging and -- to the perception of Mexicans in this country.
PALOMAREZ: So again, we are a business organization. We represent 3.2 million Hispanic-owned firms in this country that collectively
contribute some $486 billion to the American economy. As such, we deserve an opportunity to hear from any candidate, Donald Trump or not, his or her
views on his policies.
(CROSSTALK)
QUEST: Well, no, no, just a minute. Donald Trump's views by your members are offensive, are they not?
PALOMAREZ: They are that.
QUEST: And you told him that today.
PALOMAREZ: I did that.
QUEST: And what did he say?
PALOMAREZ: To hear Donald tell it -- and I must say that the Donald Trump I met today is very different than the Donald Trump I've seen in the
media. This Donald Trump was gracious, he was very hospitable, he never once interrupted me. He listened more than he talked.
QUEST: Was he listening, or was he just present?
PALOMAREZ: He was listening. It was a real discourse, a lot of back- and-forth. We agreed on some things, but we disagreed very vehemently on a variety of things, three predominantly. His notion of a wall, I don't
think that that's feasible and I don't think it's fiscally responsible.
His notion of mass deportation of some 11.5 million people in this country, the reality of it is, it would hurt some industries, such as the
construction industry, the hospitality industry, and the agricultural industry.
QUEST: There'll be some of your members who say you have absolutely no business sitting down with a man whose views are as abhorrent to your
community.
PALOMAREZ: The reality of it is, our organization is a non-partisan organization. We have created a question and answer series that allows any
valid candidate to come address his thoughts and issues and our concerns.
Again, we are American taxpayers, we are American voters. We employ literally tens of millions of Americans, and as such, we deserve to hear
from any candidate, however distasteful or disagreeable his views might be. Our responsibility is to afford him an opportunity to explain himself.
QUEST: Let's put Mr. Trump to one side for a moment. The fact that this issue of illegal immigration is very firmly on the agenda in this
election and, indeed, Mexico seems to be bearing the brunt of it, with maybe some allegations about other countries. But how worried are you that
there is an anti-Mexico, an anti-immigrant, an almost racist chant --
PALOMAREZ: Absolutely.
QUEST: -- backlash happening in America?
PALOMAREZ: I'm very worried about it. I'm very worried about it. And again, at the USHCC, we see immigration reform as an economic issue.
It's an economic imperative for the continued well-being of this nation.
As it relates to Mexico specifically, I'd like to remind the viewer that Mexico to this day is the second or third largest trading partner to
this country, has been for over 100 years, larger than Great Britain, larger than France, larger than Italy, larger than Brazil, larger than
India. And yet, we never hear about that.
(CROSSTALK)
QUEST: But it's a -- but this cause that's now being trumpeted by others is a populist cause, and as you know, sir, you've been in Washington
long enough --
(LAUGHTER)
QUEST: -- populist causes win votes.
PALOMAREZ: Unfortunately, that may be the case. And our job is to ensure that America remembers that we have an important commercial and
economic relationship with Mexico. We are inextricably tied. We have been great trading partners with them as they have been with us, and I think
that warrants discussion.
We should remember as a nation that this is an important trading partner with us, and I believe that Donald Trump understands that after the
conversation today. I'm looking forward to having him as our guest to afford him an opportunity to explain himself.
QUEST: Sir, thank you very much for joining us.
(CROSSTALK)
PALOMAREZ: Thank you, Richard. I appreciate it.
QUEST: Thank you very much, indeed.
Now, proving that on QUEST MEANS BUSINESS we cover the world and we cover the issues as they are today, you've heard about Mexico from the
Hispanic Chamber of Commerce. We're going to talk China and the growth there and the policies with the former US ambassador to China. It's QUEST
MEANS BUSINESS, and good evening to you.
[16:29:26] (COMMERCIAL BREAK)
[16:31:42] QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment when I'll be talking to the former U.S.
ambassador to China and asking if Beijing is really on top of the market turmoil.
Shares in Netflix have been buffered and Apple's threatening to muscle in on the territory.
Before all of that of course, this is CNN and on this network the news comes first.
Clashes between demonstrators and the police are continuing in Beirut after protesters were cleared out of a government building. Activists in
the Lebanese capital are angry over weeks of uncollected garbage and rubbish which they say is emblematic of a dysfunctional and corrupt
government.
Our senior international correspondent Nick Paton Walsh was at the protests.
(BEGIN VIDEOCLIP)
(LOUD PROTESTATIONS)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: A real problem here as the fireworks are thrown, as the rocks are thrown, but
predominantly plastic bottles thrown -- one just there now. It's quite how do you diffuse this?
There's no concession at this stage from the government. The environmental minister keeps his job. He's actually had the trash problem
taken away from his portfolio and given to the agriculture minister.
That's all made the crowd pleased -- they hold him responsible for the mess we're in right now and the failure to fix it. But that younger crowd
there taunting, offering revolution, wanting - the people want the fall of the regime.
(Inaudible) evidence and they continually seeming to end up in violent clashes with the police.
(END VIDEOCLIP)
QUEST: There were scene of - scenes of - anger and frustration at the main train station in Budapest earlier as crowds of migrants were prevented
from traveling west through Europe.
Hungarian officials say many of them don't have the proper documents required to travel to Austria or Germany. The German Chancellor Angela
Merkel says Europe needs a unified approach to the migrant crisis.
(BEGIN VIDEOCLIP)
ANGELA MERKEL, GERMAN CHANCELLOR VIA INTERPRETER: Instead of accusing each other, I think we should now work on a joint asylum policy in Europe,
just like we discussed with Spain.
We must change something. This includes these so-called hot (AUDIO GAP) spots registration centers which need to be set up quickly. They must
be operated by the E.U. overall and this includes the safe (ph) country's origin and the possibility to send people back to make clear that economic
reasons do not count and this includes the fair distribution within the European Union.
(END VIDEOCLIP)
QUEST: Thai police have made a second arrest over last month's deadly bombing at a Hindu shrine. (Inaudible) described the unidentified male
suspect as in their words, "Very important." They say he was caught before he could cross illegally into Cambodia.
Pope Francis announced a major shift on abortion. The Pope says any priest may absolve a woman of sin during the Church's upcoming Year of
Mercy.
Until now, women who had an abortion were automatically excommunicated by the Church and required a bishop's permission to lift the ban.
[16:35:02] The top story in the financial world - the month of September has rolled in with a fresh wave of fear on the global markets.
The Dow's dropped 300 points at the open, it remained lower throughout the course of the day, it crossed the 500 points down about half an hour or
so before the close.
The Dow is down 12.3 percent since the all-time high which was seen on May - of May the 19th.
Let's look at the 30 in the Dow. Just before we talk to Alison Kosik, put it in perspective to see exactly - not one stock gained in the 30 and
some like Apple were very heavily bidded down - down 4.3 percent. Obviously Exxon was down as indeed was Chevron because of the oil price.
Even -- and those companies like PG, Caterpillar, Disney - all heavily down. Alison's at the Exchange for us this evening and the market started
lower and never looked back.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. Those triple- digit moves becoming an everyday occurrence here on Wall Street. So volatility definitely is the name of the game and it began with that
manufacturing report out of China -- the weakest manufacturing report in three years.
Wall Street didn't like it, saw it as yet one more piece of evidence that China's economy is certainly losing steam. And it's making investors
wonder, `hm -- this only what China is telling us, how much worse really is it?' Because we all know that China controls the information flow. So
really Wall Street focusing on the fact that China, its impact on the global economy, could be much worse than first thought, Richard.
QUEST: Alison Kosik at the Stock Exchange with that aspect. Now, talking about China and the issue of China. Joining me now is Gary Locke,
the former U.S. ambassador to China and before that the U.S. secretary of commerce.
Sir, Mr. Secretary/Mr. Ambassador - I'm not sure which one takes precedence, so we'll go with Ambassador. Good to see you, sir, thank you.
First of all, is it your understanding - do you believe that the Chinese actually have a handle on the economy at the moment?
GARY LOCKE, FORMER U.S. AMBASSADOR TO CHINA: Well first of all, Richard, it's great to be on your show. I'm a great a fan of all of your
shows. Obviously as the previous reporter indicated, one can't really rely on the numbers - economic data - coming out of China because the government
controls the data and oftentimes it has overstated how strong the economy is and that various government officials so to speak fudge the numbers.
But clearly there is a slowdown. And we have seen in just the last several weeks given the volatility and the downturn of the Chinese stock
market, how the Chinese government tried to intervene, tried to prop up the stock market and really was not able to.
And I think that's created a bit of concern among even -
QUEST: Right.
LOCKE: -- Chinese investors and worldwide investors. And so clearly there is a downturn in the economy and I think Chinese individuals who
first perhaps were too active in real estate and you saw the bubble bursting on the Chinese real estate market, you're seeing that on the stock
market. And with the global -
QUEST: -- But let me jump -
LOCKE: -- economy being kind of slow, manufacturing in China has slowed down.
QUEST: Let me jump in there - forgive me, sir. The question is have they got a handle on it do you think? Are they losing control? Do they
under - from your experience, do they know what they're doing?
LOCKE: Well I think that for instance when the Chinese government a few weeks ago tried to depreciate the RMB, the currency to really reflect
the slowing economy and to really try to prop up exports, they also tried to allow the market to control the prices and perhaps it sank more than
they wanted to and they tried to prop that back up.
So it's clear that the Chinese government does not have full control of the economy or certainly not the extent that they had hoped for. But as
others have noted, they have a whole host of tools available to prevent a complete collapse of the economy and to send the economy into a complete
tailspin.
So they do have enormous reserves, they still can for instance prop up industries to help them -
QUEST: Right.
LOCKE: -- export more or to support - supply - more to keep those jobs going and to provide jobs for the growing numbers of -
QUEST: All right -
LOCKE: -- college graduates and high school graduates. But their powers are limited.
QUEST: I want you, sir, to listen to this comment from Donald Trump. Because obviously not only has he been bashing Mexico but he's also had a
good go at China as well.
Have a listen to what Mr. Trump said about the relationship between China and the United States.
(BEGIN VIDEOCLIP)
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: Look at what's happening with China. I've been predicting China - I've been saying
China's taking our jobs, our money, our base, our manufacturing. I just told the press.
[16:40:00] And we owe them - think of it - they've taken our money on jobs, our manufacturing - they've taken everything.
It's one of the greatest thefts in the history of the world what they've taken out of our country. They've rebuilt China and we owe them -
think of it - we owe them - they take everything - $1.4 trillion. How do you do that? That's like a magic act. How good are they as negotiators?
(END VIDEOCLIP)
QUEST: So, Mr. Ambassador, did China steal U.S. jobs and money as Donald Trump alleges?
LOCKE: Well they're obviously a great manufacturing center and a lot of manufacturing from the United States, in fact all around the world has
moved to China. But as wages in China have grown - increased - a lot of that manufacturing is now going to other countries.
And so China's now facing the same dilemma that many of the Western countries have faced which is how to grow their economy without low-wage,
low-cost manufacturing. As that manufacturing goes now to place - in other places - of Southeast Asia or to Africa or Latin America. And now they're
really trying to focus on higher wage innovation.
But the reality is that so much of what America sells and produces is now sold to China - whether it's huge Caterpillar -
QUEST: Right. So, so --
LOCKE: -- equipment, to Boeing airplanes, to jet engines, to MRI machines and x-ray machines. We very much want a strong economic China
because it creates a market for made in America U.S. goods and services and the more that American companies produce -
QUEST: Right.
LOCKE: -- that means more jobs for the American people.
QUEST: So finally, is that sort of rhetoric that may be some, -- not just Donald Trump - but maybe some might choose employ in the presidential
campaign. Is that anti-China rhetoric harmful to U.S. business like Caterpillar, like Boeing, like GE, like those companies doing such business
over there?
LOCKE: Well obviously more Americans need to understand how inextricably tied our economy is to the growing economy of China. For
instance, our - we grow so much on our farms and China is our number one -
QUEST: Right.
LOCKE: -- export destination for all that we grow on American farms - from wheat to soybeans, from apples to cherries, you name it. And so
American farmers greatly benefit from trade with China. We do have a lot of issues with China and that's why it's important that the administration
and the members of congress and business leaders be very frank -
QUEST: Right.
LOCKE: -- with the Chinese government and the Chinese businesses over their various practices. But we need to be fully engaged with China and,
quite frankly, the American economy benefits from that trade with China because China is our number one export destination --
QUEST: All right.
LOCKE: -- in so many different areas.
QUEST: Sir, thank you. Lovely to have you on the program. We'll talk more about China as this crisis continues. We're very grateful that
you came to us this evening. Thank you, Ambassador.
Now, the Ambassador talked about the apples and the cherries that are being sent to China. Well we've got another form of Apple for you that may
be headed for the glitz and the glamour of Hollywood and that's rubbing up some of the shine off Netflix.
Is somebody stealing Netflix's cherries? In a moment.
(COMMERCIAL BREAK)
QUEST: Has the darling fallen out of favor? Shares in Netflix are down for the second day in a row after reports that Apple is to muscle in
on its territory.
Now Netflix shares are more than double this year and now they fell 8 percent on a single day. There are rumors swirling Apple may be planning
its own streaming service and it could even copy the Netflix model and start producing its own shows.
This adds to Monday's losses for Netflix when it announced it was losing some films and distribution agreements to its rival Hulu. Brian
Stelter is here.
Now, Netflix - what exactly - I mean, is the fear here? Because Netflix has a long and distinguished history here.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: It sure does. I think the fear would be that there are so many competitors out there all angling
for some of Netflix's turf. For the most part, all these services are complementary.
I have Hulu and Netflix and Amazon for example. But there are some concerns that maybe Hulu and Amazon are getting even more aggressive
challenging Netflix. And then this idea of Apple coming into the business - that could be truly disruptive.
QUEST: Because Apple basically does whatever Apple wants.
STELTER: (LAUGHTER).
QUEST: And when it does it, -- I mean although I have some doubts about the Watch - but when it does it, it usually does it very well.
STELTER: Absolutely right. Beginning with the iTunes store, they're moving to entertainment that way almost a decade ago, and more recently
Apple Music. They've shown an ability to recreate the environment for entertainment and for content.
What could they do now? Well, the (oran) talks with high level folks in Hollywood. Maybe they're headhunting, trying to figure out who to hire
and then what to do with those people.
QUEST: But does it make sense for Apple to do this? I mean, we'll deal with Netflix in a minute. Does it make sense for Apple to be all
things to all people?
I mean, the Googlization in some respects.
STELTER: Yes, well this might be the Netflixification of Apple. If they've decided that the way to differentiate their products and their
services through content, that's the same sort of thing we've seen other companies do - many others in the marketplace.
Maybe Apple's going to do the same thing. But its past, they've not done that. In the past, they've been content to have my iPhone lit up with
other people's programming.
The idea that (inaudible) may be finding their own or finance their own shows, that would be a very, very new strategy.
But it is the same sort of thing we've seen Amazon do and we have seen others.
QUEST: Yes, but how successful are these others doing it?
(CROSS TALK)
STELTER: Some have been nervous, but you know, Microsoft tried this and failed. Microsoft created its own studio and then gave up on it and
walked away. It is hard to be in the business of making quality television and quality film.
Netflix sometimes makes it look easy but it is hard. That said, Apple's been rumored to be working on a like a cable-like service - a
bundle of channels you can buy via the internet. It's talking a long time because the network owners aren't really willing to cooperate unless the
terms are very favorable.
But you could imagine a scenario where Apple wants to sell you Cable via the internet and then have some exclusive programming to make it worth
buying. Otherwise they're just selling a commodity like everybody else.
QUEST: Right. Right. And this is the logic behind Amazon paying I suspect an obscene amount of money for Jeremy Clarkson -
STELTER: And that's right.
QUEST: -- and the whole former "Top Gear" group.
STELTER: Exactly.
QUEST: Does it make sense?
STELTER: Everybody wants to differentiate in their own way. Hulu has picked up some of the movies that Netflix has dropped this month because
Hulu also wants to differentiate. This climate for streaming is getting more and more complicated.
For the consumers, maybe better, better and better, but more and more complicated.
QUEST: You really have all three?
STELTER: I do. And I would probably pay for Apple's also.
QUEST: When do you find time to watch any of this stuff.
STELTER: Oh, isn't that the rub? Once you're paying, you sort of are willing to let it renew every month, right? Isn't that how they catch you?
QUEST: You may be letting it renew but are you watching it.
STELTER: Not enough. I'm watching "Quest Means Business."
QUEST: Go on.
STELTER: Wait.
QUEST: Can't even ring the bell.
(LAUGHTER)
QUEST: Google has started September with a shake. I gave him one bell and he can't even ring the bell! Forget it. Look at Google. This is
how Google has started its own. Remember Google is now Alphabet. Well Google has now unveiled a new look.
The internet firm says the design is meant to be easily recognized even on the tiniest screens. It's not the only logo that went - look at
this. Can you see the difference?
That's the old, and that's the new. Well it's more - it's a different font really, isn't it? It's a different font. But does it really
justify the sort amount of money that they must have paid for it?
Anyway, another one that's just changed - Tokyo's Olympic organizing committee has had to scrap its logo for 2020 Games all together. There
were claims of plagiarism which dogged the design. It bears a striking resemblance to the logo of a theater in Belgium.
[16:50:14] That is the Tokyo 2020, that is the theater in Belgium. I wonder where that came from.
And New Zealand. New Zealand where the Kiwis will vote in two referenda over the county's flags. In the first ballot they get to choose
one of these designs on the right and then it will be a contest between that choice and the current flag.
So, the choice is to -- which of these do you prefer, and then whichever of these do you prefer? Do you prefer it better than the
existing flag?
It's caught a lot of flak. The whole process will cost nearly $17 million over two years. Flags, logos, names.
Climate change could be leading to a transportation revolution. As Arctic ice melts, shipping companies are looking to find the shortest cuts
across the top of the world. It's "Quest Means Business." Stelter couldn't ring the bell. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: President Obama is asking the U.S. Congress to step up construction of Arctic icebreakers as the President is embarking on his
second day of his Alaskan tour.
The polar icebreakers are in high demand as the melting sea and ice make it more accessible to get to the Arctic.
There's everything up there - from energy exploration to tourism, to obviously fisheries. Now, according to the White House, the U.S.
icebreaker fleet amounts to two fully functional ships - two. Russia has 40 icebreakers with 11 more on the way.
It's a development that might seem to contradict the very purpose of the Presidents - for action on climate change. As Arctic ice melts,
countries and companies are adapting and even profiting as Claire Sebastian reports.
(BEGIN VIDEOCLIP)
CLAIRE SEBASTIAN, CNN PRODUCER: In August 2013, the Yong Sheng became the first Chinese cargo ship to travel to Europe through the Arctic's
northern sea route - a route until very recently was completely frozen over.
Melting sea ice in the Arctic is opening up a new tempting prospect for shipping companies and this is why. The Yong Sheng's trip from Dalian
in China to Rotterdam in the Netherlands took 33 days. The same journey via the Suez Canal would take around 48 days.
Yet shipping experts say the risks may still outweigh the saving.
FOSTER FINLEY, MANAGING DIRECTOR, ALIXPARTNERS: There is about 1,000 nautical miles that's saved by being able to transit that.
The problems are really more a matter of the practicality. When you go through the Arctic, you're going through some of the least charted ocean
space that's on the globe of the earth.
SEBASTIAN: It's still early days for this freezing shortcut. Just four ships used the northern sea route in 2010. By 2013 it was 71. Last
year growth slowed slightly to 53.
Routes are haphazard today, yet scientists at the U.S. National Academies of Sciences predict that melting ice will open up many more
shipping opportunities by mid-century.
MCKENZIE FUNK, AUTHOR, "WINDFALL - THE BOOMING BUSINESS OF GLOBAL WARMING": This is 2015 and this one's 2007.
SEBASTIAN: McKenzie Funk traveled all across the Arctic region to research his book - "Windfall - The Booming Business of Global Warming,"
traveling on the same American icebreaker eight years apart, this year on a mission to improve safety infrastructure in the region.
[16:55:12]
FUNK: I think it's till less than 1 percent of the traffic that goes through the Suez Canal is going across the top of the world - mostly
across the top of Russia. And so it's not a huge change really in terms of where goods are going but it's a glimpse of the future.
SEBASTIAN: Freight vessels are not the only ones hoping to get a piece of this future. Cruise line Crystal Cruises is launching its first
arctic voyage through the Northwest passage next summer.
FUNK: This is a moment in history and I think people understandably want to be there and experience it. And it's beautiful.
SEBASTIAN: Beautiful yet still risky for those hoping to capitalize on this changing landscape. Claire Sebastian, CNN New York.
(END VIDEOCLIP)
QUEST: Amazing views of the Arctic. We'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Here we go again - hang on to your hats, seatbelts in the upright and stowed position and keep your
seatbelts firmly fastened.
Down 469 points and once again China seems to be the reason why everybody is so concerned. But you've also got commodities. Look what
happened with oil where the price fell and you've got the Fed. What it's telling us all is that September will be stormy in a way that we always
knew it was likely to be.
The volatility is not going to go away just on the back of one month's notice or a few bit of economic data. The reality is it's here for some
time to come. And whether it's a correction or a full bear market - which many don't believe - there seems to be a clear indication that this is not
a time to make drastic decisions.
And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope
it's profitable. We'll do it all again tomorrow.
END
