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Wall Street Wraps Up Turbulent Trading Year; Dow Ends 2016 with Solid Gains for Year; U.S./Russian Relations Hinge on Trump; New York's Iconic Carnegie Deli Closes; Top Ten Business Stories of 2016; Africa's Energy Surge. Aired 4-4:30p ET

Aired December 30, 2016 - 16:00   ET

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

[16:01:43] ELENI GIOKOS: And trading in New York is finished in what was one of the most turbulent years in memory, and now a new year is about to

begin with many opportunities as well as challenges coming up ahead. I'm Eleni Giokos, here at the New York Stock Exchange, and this is "THE BEST OF

QUEST."

As 2016 comes to an end, let's take a look at how the Dow performed on the final session. And we were down around a quarter of a percent -- a third

of a percent -- down 54 points at just over 19,7000. Not managing to hit that 20,000 milestone. Let's look at how the Dow performed over 2016.

And what a year it was. It was extremely volatile. It started off on a negative foot due to the worries about China's slowing growth, and of

course, the drop in the oil price. We started to see a market recovery coming through in March, and then we started to get worried again. Brexit

panic came to the fore and then a massive recovery coming up once again. And towards the end of the year, the U.S. elections caused more volatility.

But we've ended the year off around 14 percent in the green. So, it's been a positive year. With a new political shock coming up almost every month,

working here at the New York Stock Exchange has not been for the fainthearted. And one could say that trading in 2016 has been an

adventure. Let's take a look.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN ANCHOR: Wherever you look there is geopolitical risk.

UNIDENTIFIED MALE: You know, I just think there's a tremendous amount of uncertainty as to what effect on the global economy a sub $30 oil would

have.

QUEST: British voters have rejected Europe and markets have reacted with extreme fear.

JOHN TAPPER, CNN ANCHOR: Donald Trump himself, who is a wildcard, and has been talking tough on trade. There is a reason that Wall Street supported

Hillary Clinton and much more strongly than they supported Donald Trump.

JOHNATHAN CORPINA, SENIOR MANAGING PARTNER, MERIDIAN EQUITY PARTNERS: I think what happened overtime is investors and overall participants felt

this wasn't terrible, horrible news that everybody was predicting.

DONALD TRUMP, U.S. PRESIDENT-ELECT: And you see what's happening with the stock market and a lot of things. Because they understand. We know what

we're doing. We're not to let this happen.

UNIDENTIFIED MALE: Commercial banks getting the leashes off of them and letting them go back to lend. I think you're going to see spectacular

growth in the economy driven by the banks.

(END VIDEOTAPE)

GIOKOS: All right, this bull market has been running for almost 8 years now. Joining me to discuss what 2017 has in store. I've got Keith Bliss,

senior vice president of Cuttone and Company. As well as, Ted Weisberg. He is the president of Seaport Security. Gentleman, thank you so very much

for joining me today. The question is, does this bull market still have legs?

KEITH BLISS, SVP, DIRECTOR OF SALES AND MARKETING, CUTTONE AND COMPANY: Yes absolutely, it has legs. When you consider the run-up that we had

postelection and what 2017 promises, from regulatory standpoint, from a tax formation, tax reform standpoint. Some of the other things we've seen from

interest rates. Interest rates will be good for a very large segment of our economy, as long as we keep them in the proper range. I think the bull

market still has quite a way to run.

[16:05:00] GIOKOS: And Ted, we've heard that 77 percent of investments made money in 2016, while 70 percent of investors lost money in 2015.

Which part of the spectrum are you? Did you make money this year?

TED WEISBERG, FOUNDER AND PRESIDENT, SEAPORT SECURITIES: I thought it was just the opposite. Is that true?

GIOKOS: Investors made money this year.

WEISBERG: Well, I tell you what, if you look at where we were in January and February, it was pretty dark and we were not happy campers as the year

started, but clearly, we finished on a very positive note. I think the election was clearly a game changer, and a line for least resistance for

the stock market, I think are higher. Clearly nothing goes up in a straight line, but I think any kind of reasonable sell off is going to be a

great buying opportunity. And I would add that not only was the election a game changer for the very near term as we have seen for the last six or

seven weeks, but I think the trend will play out over two to the next four years. So, you have to try not to be too short term in your approach. I

think if you're a little longer term, you're probably make a lot of money.

GIOKOS: So, you're not taking a breather right now? Looking at profits?

WEISBERG: At my age, I never hold my breath, are you kidding? I think anyone that stayed long this year had a good year, and I think that the

bottom line is you want to stay long going into 2017.

GIOKOS: So, Keith, I mean, is the Trump euphoria overdone would you say? Are you worried about and overboard market where fundamentals need to catch

up to expectations?

BLISS: Well, we've actually had the market called overbought shortly after the election. And it took quite a while for it to work off some of that

euphoria, as you say, that enthusiasm. I think you saw that in the last week, it was pretty unusual actually, to pull back a little bit. In this

week, the last week of the year as well as the week of Christmas, we were up for that week but the last couple days. I think we're going to reset

expectations here in the market on a short-term basis and then will continue to rally forward once we get into January. There's going to be a

lot of money that's going to be coming in chasing this market right now. From not only the United States but also around the globe. When you look

at the interest rate picture around the globe, when you take a look at economic growth picture around the globe, when you take a look at what's

happening with the dollar here in the United States, there's going to be a lot of money coming in to invest inside of this market, which will leave

the other markets. I think that is -- those are the drivers for a bull market to continue here in the U.S. are much stronger than the drivers for

the markets to go back.

GIOKOS: And of course, rising interest rates, higher yields, it just makes a lot more sense. But oil prices have also recovered. Oil is up 45

percent. That's going to give a boost to oil majors. Financial stocks have been doing well. What sectors are you most excited about in 2017?

WEISBERG: I think you just named two of them. If you accept the scenario and obviously, Keith and I agree, which is probably scary, which probably

means you should sell everything and not by anything. But assuming that we are in fact, correct, I think you want to be long on the financials, you

want to long in the interest sensitive stocks. You want to be long small caps. You want to belong mid-caps. You want to be long offshore companies

that do business in the U.S., because one of the products of an approving U.S. economy and higher interest rates is a stronger dollar.

So, you want to own companies that can take advantage of a stronger dollar, which would be small caps, mid-caps and big offshore companies. And

lastly, I think you'll want to be long in the energy sector in spite of the fact that we've had a big move. Don't forget we had a big move over

trading lows, not off of trading highs. So, a lot of it has just been recovery and you want to be long energy sector stocks. Because as the

economy improves, the demand for energy will improve along with it.

GIOKOS: Well, you two are sounding quite optimistic. But what can go wrong this year? What if Trump doesn't deliver on his promises? Are you

looking at corporate tax rates being cut as one of the big boosts? What are the things you're banking on this rally continuing?

BLISS: I think it will would naive to think that he's going to wave a magic wand and these things are going to happen on January 21. It will

take some time, but there several things in his favor. Number one, he has a Republican-controlled Congress. So, they'll be able to put forth his

agenda. And all of his agenda, if you listen to whatever policies he was talking about in the primary and then the lead up to the general the

general election was all about pro-growth, pro-business, reduce regulation, frack until we're blue in the face, to produce energy.

So, I think they will force through this agenda. You hear some on the left were disappointed with the election results, but they're businessmen.

They've even said, OK, we lost the election now let's get to making money. And I think we're going to see some of that. The optimism is going to be

there. You're going to have entrepreneurs and other business owners start to take more risk because they believe that they'll be rewarded for taking

that risk. And that's just good for all companies and the equity market.

[16:10:00] GIOKOS: So Ted, I mean, you've been around, you have been here for a few decades at the stock exchange. 2016 was surprising. It was a

tough year. What will surprise you this year? Is there anything that would really shock you that you're worried about?

WEISBERG: I think it's the negative side that really shock us. Because I think the marbles or sort of aligned, the stars are aligned, if you will,

to get pretty positive results, which I think the market will reflect that. But we also know, because we've been doing this for a long time, that

there's nothing rational about stock markets or the pricing of stocks. The surprises are always the unexpected. And clearly there is a lot of

potential of unexpected events out there. It could be geopolitical. It could be political right here at home. A lot of stuff can come off the

rails.

I mean, we haven't talked about interest rates. I think interest rates are going up faster and farther than anybody thinks, because of all the reasons

we have collectively spoke about. And at some point, the market's going to start to recognize that. I think at the moment fiscal policy will trump

anything the Fed does. Meaning that they'll be all simulative and the monetary policy will be on the sideline. But if the Fed is forced to move

more aggressively that could have a negative impact on a market that basically has more than tripled from the trading lows of 2009.

GIOKOS: Keith, very quickly, interest rates this year, are we heading closer to normalization?

BLISS: Well, normalization would be 4 percent on the 10 year. So, I don't think we're going to get there soon. But I do agree with Ted, probably if

the economy heats up, they're going to move a lot faster. So, that's why you stick with small caps, because financials -- the small-cap index, the

Russell 2000, 22 percent of that constituent group is financials and they will benefit from the rising rate environment.

GIOKOS: Keith, Ted, thank you very much for your time. Much appreciated for your insights. And happy new year to you.

Coming up on THE BEST OF QUEST, U.S. relations with Russia on a knife edge. President Putin isn't expelling U.S. diplomats right now. Will look ahead

at what could happen in 2017, coming up next.

(COMMERCIAL BREAK)

GIOKOS: This year ends at a low point with regards to U.S. and Russian relations and the threats are being traded between Kremlin as well as the

White House. And this is as the U.S. expelled 35 Russian diplomats. Now the nature of this fought relationship could be the story of 2017. And

Russia's next move could hinge on what Trump decides to do after January 20.

Join me now to discuss this further we have Jackie Kucinich, from "The Daily Beast". Jackie, what's going to be Trump's next big move come

January 20th. I mean, they're just so much that have's happened, and you know, Obama's move to impose these sanctions is going to make his life very

difficult.

JACKIE KUCINICH, WASHINGTON BUREAU CHIEF, THE DAILY BEAST: Well, right. I mean, as far as predicting anything Trump does. I think that's pretty much

been shown to be a fool's errand in 2016. With that said, he hasn't really said whether he's going to repeal -- he hasn't really said if he'll repeal

the sanctions. So, that still up in the air. He has had a warmer relationship with Russia. He has had a warmer tone toward Russia. Today

he said, Vladimir Putin was smart. But the thing is with the sanctions, he will have a tough time repealing them. He can do that unilaterally. He

can just take his pen and get rid of them. That said, Republicans in Congress, Republicans and Democrats, but especially Republicans, don't

really have the same warm feeling toward Russia. So, he will pay a political price should he decide to do that.

[16:15:00] GIOKOS: Yes, and it's going to be a tough one for Donald Trump, because at the end of the day when you got evidence and Intel coming to the

fore showing a serious breach. It going to be hard for him to reverse on that. But at the same time, he's going to try and ensure that he feels the

relationship that he wants with Russia. How do you think things are going to play out and what it's going to look like over the next four years?

This is going to be one of the biggest topics of conversation in action in the few months to come.

KUCINICH: In terms of the next four years that's really anyone's guess. It's a very long time. But in the next 100 days, this is certainly going

to be a very big topic of conversation. Particularly when Rex Tillerson, Donald Trump's nominee to be Secretary of State, has to sit in front of

that Senate committee for his confirmation hearings. He is someone that has a very close relationship with Vladimir Putin because of his job as

Exxon Mobil CEO. And because of that, the first question he's going to get is how would you deal with the sanctions? How are you going to deal with

Russia? And he's going to have to have a good answer, and good answers.

GIOKOS: Yes, Jackie, I know you've got the issue of Syria, you've got Israel, you got Chin. You know, the question on the economy. What you

think is going to be a major priority?

KUCINICH: For Donald Trump is really not -- if you believe what he said on the campaign trail, foreign policy is not going to be top of mind. It's

going to be jobs. In terms of trade deals that my get into your reining in NATO, reining in TPP is dead on arrival. So, he's going to focus on

creating jobs in the United States. That's what he said over and over again. He's also going to repeal Obamacare. The question is what does he

and the Congress replace it with. There is going to be a lot of action, but if Trump has his way, and as the White House does tend to set the

agenda, were going to be focused on jobs for the next 100 days, not necessarily Syria or Israel.

GIOKOS: All right, thank you very much for that update, Jackie.

KUCINICH: Thank you.

GIOKOS: We're going to a short break and when we come back, as New Yorkers bid farewell to 2016, they're also bidding farewell to one of their

favorite eating spots. Stay with us.

(COMMERCIAL BREAK)

GIOKOS: As New Yorkers bid farewell to 2016, there also bidding farewell to the Carnegie Deli. It is renowned for its enormous sandwiches as well

as its Manhattan attitude. The restaurant is closing down for good. I caught up with the owner and I also got a little bit of a taste of their

famous sandwich. Let's take a look.

(BEGIN VIDEOTAPE)

GIOKOS (voice-over): These people are waiting in line to be part of history. There saying their last goodbyes to a New York dining

institution.

GIOKOS (on camera): What is that?

UNIDENTIFIED FEMALE: Matzo ball soup.

GIOKOS (voice-over): And enjoying one last gut busting meal while they're at it.

GIOKOS (on camera): Two pounds of corned beef and pastrami. It is sandwiches called "The Woody Allen". Now, over the last few decades, one

of the most iconic things you could do in New York City is try and chow down one of these monster sandwiches. The motto of the restaurant has

always been that if you can finish one of these, then we've done something wrong.

GIOKOS (voice-over): People have taken up the Carnegie's challenge since 1937 including a who's who of entertainment and political figures, included

Woody Allen himself, who featured the Carnegie in his 1984 film "Broadway Danny Rose".

Restaurant owner, Marian Harper, says, it's not an easy decision to close down the Carnegie.

MARIAN HARPER, OWNER, CARNEGIE DELI: It is very heartbreaking. It is like a second home, and it meant so much to so many people. They've been

telling me so many stories of how they come here every year. People have met each other here. They told me so many stories of how they come here

every year. People met each

GIOKOS: Harper says, it's simply time to move on. Customers call it an end to an era.

GIOKOS (on camera): Are you said that is closing down?

UNIDENTIFIED MALE: I'm very sad and that's the reason why I'm here. I'm very disappointed. Is the last big very New York City --

[16:20:00] GIOKOS: Do you feel like it is the end of an era?

UNIDENTIFIED FEMALE: Absolutely, but nothing lasts and so were enjoying it.

GIOKOS (voice-over): The Carnegie Deli's name will still live on. You can still buy its food online and at other U.S. locations. In the future,

Harper hopes to make the Carnegie a global brand.

HARPER: There could be a Carnegie near anybody right now. I want to spread the love as much as I can, wherever I can.

GIOKOS: One thing is certain, this small corner of New York City --

GIOKOS (on camera): Are you going to try and finish that?

UNIDENTIFIED FEMALE: Maybe not, because I would like to try the cheesecake as well.

GIOKOS (voice-over): -- will be a lot less delicious.

(END VIDEOTAPE)

GIOKOS: It was a year that investors will never forget, why 2016 was a financial frenzy, that coming up next, stay with us.

(COMMERCIAL BREAK)

GIOKOS: From `s floating phones, to banking blunders, the Brexit panic, as well as the Trump bump, business news garnered a lot of interest this year

in 2016. And of course, we just seen so much coming to the fore in terms of our moments in money. Let's take a look at our top 10.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Bank account faking's, smart phones it exploding.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Markets tanking and then rallying.

QUEST: And a billionaire businessman winning.

ROMANS: Here are the top 10 money stories of 2016.

QUEST: Number 10, the biggest jackpot in history. Powerball mania spread as the prize climbed past the billion-dollar mark. Then on January 13.

UNIDENTIFIED CORRESPONDENT: Three winning tickets and the record $1.6 billion Powerball drawn.

QUEST: That is about $187 million for each winner. Don't forget, after taxes.

ROMANS: Number nine, the Donald Trump stock bounce nobody saw coming. The market gyrations began as Trump's victory looked more certain election

night.

JAKE TAPPER, CNN ANCHOR, THE LEAD: U.S. stock futures are down nearly 500.

ROMANS: Dow futures kept sinking, then Donald Trump gave his acceptance speech, promising to heal wounds. Futures bounced off the lows and by the

end of the day, stocks were rallying. The Dow hit a record high the next day and search more than 1200 points in the month after the election.

QUEST: Number eight, the crash in oil prices. A global supplied glut drove crude to $26 a barrel in February, a 13-year low. By the summer

time, gas was cheapest since 2004. Oil prices eventually found their footing and then surged because of an OPEC deal in late November. The

promises to cut production.

ROMANS: Number seven, Apple versus the FBI. The government ordered Apple to help it break into the phone of one of the San Bernardino shooters.

Apple CEO, Tim Cook refused. Arguing it would compromise security for all iPhone users. A showdown in court loomed until an unnamed third party

helped the Justice Department crack that phone. But it won't be the last clash between tech and the law.

QUEST: number six. The conflict of interest battle, Trump Inc. versus President Trump. With stakes in more than 500 companies, Donald Trump has

more potential business conflicts than anyone ever elected president. But he has promised to address the issue in January. But ethics experts say,

anything short of selling his businesses and putting the proceeds into a true blind trust don't go far enough.

ROMANS: Number five, exploding Samsung phones.

SAMUEL BURKE, CNN CORRESPONDENT: This is absolutely disastrous for Samsung.

ROMANS: The company forced to recall millions of Galaxy Note 7's after some caught fire while charging. The fiasco could cost the company $10

billion in sales. The Samsung pain was Apple's gain. It released the iPhone 7 and even without a headphone jack, demand was brisk.

QUEST: Number four. Donald Trump breaks with a 40-year tradition by refusing to release his tax returns. The GOP nominee blamed an audit by

the IRS for keeping them under wraps. And then after pages of his 1995 tax return was leaked, Mr. Trump seemed to confirm what many had suspected.

[16:25:00] ANDERSON COOPER, CNN ANCHOR, ANDERSON COOPER 360 : Did you use that $916 million loss to avoid paying federal income taxes?

TRUMP: Of course, I do. Of course, I do.

QUEST: Presidents of course, are under no legal obligation to release their tax returns. So, we might still never see them.

ROMANS: Number three. Scandal at Wells Fargo, two million fake accounts. Secretly created by employees facing unrealistic sales targets. The bank

was fined $185 million, fired 5,300 workers, and dropped those sales goals fueling all of that bad behavior. CEO John Stumpf was hauled before

Congress in September for a tongue lashing.

ELIZABETH WARREN, U.S. DEMOCRATIC SENATOR: Your definition of accountable is to push the blame to your low-level employees, is gutless leadership.

ROMANS: A month later, he was out. Now Wells Fargo is trying to repair its shattered reputation, even as it faces a serious of class action

lawsuits and investigations.

QUEST: Number two. Brexit. Investors around the world are in crisis mode after Britain, in June, voted to leave the European Union. The decision

stunned the global markets. The British pound plunged to a 30-year low. The Dow dropped more than 600 points.

TAPPER: And the vote, as you might expect is having immediate impact on markets throughout the world.

UNIDENTIFIED FEMALE CORRESPONDENT: A lot of fear and uncertainty.

QUEST: Stocks stabilized a few days later. But Brexit won't be cheap. Businesses are ready reporting they're cutting investment in the UK. The

country is facing a $31 billion budget shortfall. Questions about just how Britain will leave the world's biggest trading block are still largely

unanswered.

ROMANS: Number one. The deep economic anxiety threatening to end globalization. It powered Donald Trump's victory. Energize Bernie Sanders

on the left. Drove Brexit and is spreading across Europe. But even as the working-class revolts against free trade, there's a disconnect.

UNIDENTIFIED FEMALE CORRESPONDENT: The big headline though I would tell you here is the unemployment rate, 4.6 percent.

ROMANS: Unemployment at a nine-year low. Home prices back at all-time highs. Growth picking up. The middle class even got a pay raise. The

gulf between those doing well and those left behind is widening.

The question in 2017, will populous prescriptions rescue the economically displaced or just deepen the divide.

(END VIDEOTAPE)

GIOKOS: Right, that's it for "THE BEST OF QUEST". Up next is "MAKE, CREATE, INNOVATE ". From here, Eleni Giokos, happy new year.

[16:30:00] (COMMERCIAL BREAK)

END