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Quest Means Business
Dow Plunges 1,000 Points as Sell-Off Resumes; Carney Braces Britain for Faster Rate Hikes; U.S. Congress Spends Big to Avoid Shutdown; U.K. Lawmakers Visit Washington for Fake News Inquiry. Aired 4-5p ET
Aired February 08, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: The closing bell ringing on Wall Street. A truly ugly day in the New York market. Where once again in the
final moments of trade the market has fallen very sharply. Please, sir, put us out of our misery. Oh. Yes, something tells me that that gavel was
entirely appropriate. It is Thursday. It is the 8th of February.
Tonight, the sell-off is back, stocks are suffering from bond market blues. Look at exactly the closing number we are off 1,000 points, 4 percent,
pretty much the same, amount as we lost on Monday. I'll give you chapter and verse and details of these numbers in just a moment.
Primed and ready, Mark Carney says rate hikes are coming sooner rather than later at the Bank of England.
And it's the case of hey, big spender, And the U.S. Congress splashes out to avoid a government shutdown.
I'm Richard Quest tonight live in London where of course, I still mean business.
Good evening. It's worth us just pausing for a second. Tonight, the brief calm on the stock markets has gone. And in New York a thousand-point drop
on the Dow. So, the Dow is now once again in a correction mode. Stocks on both sides of the Atlantic have plunged as fears about inflation and
interest rates take hold.
Let's look at the Dow and let's just work out exactly how the day actually progressed. If you see where the Dow -- we start over here and we are down
right as the open. We are down absolutely at the open, the selling accelerates just around about lunchtime. And then there seems to be almost
a mood that made it's been overdone, so it comes back up again. But it doesn't last long, before long, that afternoon selling from 2:00 right
through until the closing bell pretty much continues. And as we know too often and so frequently from 3:00 in the afternoon it accelerates. We are
now off 1,032, which is a loss of 4 percent.
To put this in perspective, just grabbing the numbers so I can tell you exactly where we stand. We're now off 10 percent, 10 percent since both
the 52-week high and the all-time high. And that means that we've lost over 2,272 points in a week which is 8 percent off just in this week alone.
All right. So, really rather grim news across the markets and we will delve, even further into these. We are under 24,000 now and we are
officially a correction. In Europe the market suffered heavy losses, as well. The Dax in Germany fell 2.6 percent. Its worst performance in 19
months. And in London, the FTSE lost 1.5 percent after Mark Carney warned the Bank of England is likely to raise rates soon and probably further than
most thought.
(BEGIN VIDEO CLIP)
[16:05:00] MARK CARNEY, GOVERNOR, BANK OF ENGLAND: It will be necessary, likely to be necessary to raise interest rates to a limited degree in a
gradual process, but somewhat earlier and to a somewhat greater extent than we had thought in November.
(END VIDEO CLIP)
QUEST: Teddy Weisberg with me from the floor of the New York Stock Exchange. Teddy, as we looked at the half hour, that acceleration, once
again, extremely dramatic, down 500, 600 points and the suddenly much sharper.
TED WEISBERG, FOUNDER, SEAPORT SECURITIES: Right, yes. Well, you know, there was some intraday and some previous S&P areas that the Dow just
simply went through like a knife goes through hot butter. And I think that's one of the reasons why the growth accelerated right towards the end
of the day because, you know, they didn't bounce off of those levels and they simply went through them.
QUEST: Teddy, the S&P and the Dow are both now off roughly 10 percent, 10.1 percent. So, I mean, look, I know it's as long as it's broad as a
piece of string, once in official definition of a correction. But if we take 10 percent is a definition, we are well and truly there. And bearing
I mind the market was unable to shrug off or throw off these pressures, it would seem to suggest it's here for a while.
WEISBERG: Yes, I would say until proven otherwise at the moment you have to be defensive and, you know, everything would indicate that we are going
to trade low. I mean, it would be almost fairy book style if it would just hold here and rally. But you know, a 10 percent correction is what folks
were suggesting we would get as a reversal of the trend. When we get these reversals it's sharp and steep and very painful.
QUEST: Now, on the question of the percentage fall, Monday was off 4.6 percent. Now it was 1175. So, the markets already down, but we've had a
recovery. Pretty much, we've lost similar amount today. We've lost what, 4 percent, 4.1? So, let's want to fall out of friends over half a percent
at these levels. What does one do over the weekend? What does one wait for tomorrow? What should we now look for?
WEISBERG: Well, we certainly wish that the weekend was starting tonight and not tomorrow because I would suspect just based on the close, we're
probably going to see selling overnight in Europe and we'll get the kneejerk reaction into the opening tomorrow. Of course, anything can
happen overnight, things can change. But my guess is just based on the way they close tonight we can expect to see some selling again tomorrow. At
some point, it's going to get overdone on the sell side, just like it gets overdone on the buy side, but we are not there yet.
QUEST: OK, quick, final question. Earlier in the week, Teddy, you told me that in the afternoon the order book did look as if it was quite buy heavy.
I'm guessing today there wasn't much on the buy side in the order book.
WEISBERG: There was some, buyside, but your guess is correct. We saw certainly more sell orders today than buy orders. We had buy orders again,
but the majority of orders yesterday were on the buy side, but today we had bunch of folks who were reversing themselves from what they bought earlier
in the week.
QUEST: Do you think we're in margin territory risk here tomorrow? Eight percent off the market in one week. One wonders whether tomorrow there
will be the margin calls.
WEISBERG: Well, I think it's probably fair to expect that because the margin levels, debt level are at all-time highs. So, one can only conclude
that there will certainly be some margin calls tonight. And that will impact negatively the market tomorrow. Those calls usually go out between
10:00 and 11:00 in the morning, and that selling will come probably before noon if it comes at all.
QUEST: Teddy, good to see you, sir. Thank you.
WEISBERG: My pleasure.
QUEST: Teddy Weisberg giving us some calm and sense on the markets.
And here's what's going on globally. In the United States bond yields did rise to a four-year high. They're closing in on 3 percent. We got to 2.8,
2.8-something on the 10 year. And that raises fears of rising inflation and interest rates -- I mean, the yield is the interest rate, but is on the
back of rising inflation. In Germany, yields are also rising. There's a chance of more spending under the new governing coalition. That would push
up foreign costs. And in the U.K., rates are going up sooner rather than later and probably by more rather than less. Global growth is forcing the
bank's hand. The Bank of England governor, Mark Carney, says volatility though in this environment is not to be feared.
(BEGIN VIDEO CLIP)
CARNEY: One hesitates [16:10:00] to say welcome, but it's -- it's not an entirely surprising development. What's happened in volatility markets is
not entirely surprising development. I think what's incredibly important in this market circumstances is to recognize that we feel quite strongly
that the core of the system is an entirely different place than it was certainly prior to the crisis but stretching back over really a quarter
century.
(END VIDEO CLIP)
QUEST: Christian Schultz is economist and director at Citi. Good to see you, sir.
CHRISTIAN SCHULTZ, ECONOMISTS AND DIRECTOR, CITI: Good evening.
QUEST: What happen, today? What is the market looking for economically that's not there or that's worrying them?
SCHULTZ: Well, for years, we've been waiting for that strong growth that brings unemployment down and eventually brings inflation up and thus gives
central bank the chance to give what we call normalized policy, i.e. raise interest rates. Now, it's finally there and it came much, much later than
everybody expected. And it seems that markets are waking up to the fact that there are suddenly up side risks to inflation.
QUEST: So where are these inflationary risks? We had the wage numbers in the United States. We've had in the U.K., the Bank of England on the
inflation forecast saying they're not prepared to be writing letters to the Chancellor for the foreseeable future. But where's the evidence of
headline inflation going up?
SCHULTZ: It's still a hope, one has to say. The American wage data was one glimmer. We had a big wage deal in Germany this week which many people
interpret a big deal.
QUEST: This is the "egalitalia."
SCHULTZ: 3.5, 4 percent wage increases. That's another data point which perhaps a year ago people would have ignored. But now in a context where
people are looking at extremely strong growth. Many confidence indicators at record levels. Unemployment already extremely low and you look at
evidence of wage risings and it is there. It is getting through.
QUEST: Where do you stand on the asymmetrical argument or the asymmetrical argument on inflation? In other word just -- we have under shot the target
of 2 percent for soon long that we can overshoot for a certain length of time on the other side. Are you a fan of that theory of symmetrical
inflation targeting?
SCHULTZ: Well, as a European economist, I would still say I'd be very glad to be in a position where I talk about inflation overshooting the target.
Inflation in the Eurozone in particular. So, a long way away from target and there is absolutely no sign that it's picking up very quickly.
QUEST: Right, but that's just merely the Europe arguably being three to five years behind the United States.
SCHULTZ: Absolutely.
QUEST: Three years ago, you and I were talking about where is the inflation in the U.S., but it seems to have arrived.
SCHULTZ: Very, very gradually. I think, even in the U.S. we've had a lot of disappointments last year. But growth strong, with the big tax reform,
which I think plays a big role here as well. The U.S. tax reform and you get the sense that when we are already at maximum capacity, unemployment at
record lows, when you push on the pedal at that specific point you do get inflation.
QUEST: So, in the same scenario, two things. How many rate rises do you expect in the U.K. this year? How many are you forecasting and what do you
see base at the end of the year?
SCHULTZ: I would get ahead of myself here right now. Of course, there is a chance that it will happen in May. I still think that August is more
likely that we'll have this nine-month rhythm, November, August and so on. Rather than a six-month rhythm which many people seem to think now in
November, May and then November again. So, I'm still convinced that it's probably going to be August and not in May.
QUEST: What do you think the base rate will be at the end of this year?
SCHULTZ: Well, it would be 75 basis points.
QUEST: So, you think it's only going to be quarter? They'll be no half ones.
SCHULTZ: At the moment, I still think that. I think the U.K. growth isn't as big as the Bank of England believes they are. There are the Brexit
risks. And I don't think that wages will pick up quite as quickly.
QUEST: The next question is how with the ECB, very much now dancing on the edge of the knife. You know, it's given the statement. It's jarred the
market. It's now got to actually decide at what speed to withdraw the monetary accommodation.
SCHULTZ: Indeed, it seems to be this year big question is, when exactly do they end QE. As you say, we're still three to five years behind everybody
else. We're still talking about QE. That will and this year, perhaps in September, perhaps at the end of the year. And then we're getting to the
point where we're talking about the first-rate hike.
QUEST: Good to see you, thank you. Busy days and I appreciate you coming in this evening. Thank you very much, indeed.
Japan has hinted it might pull investment out of Britain if there is no way of making money here. The stock warning on Thursday came from Japan's
ambassador to the United Kingdom. And it paints an economic reality for Theresa May as they discussed Brexit related trade barriers.
Today the European Commission warned about Brexit's impact on various parts of the economy. Speaking on this program in 2016, ambassador Koji Tsuruoka
told me the importance of a good deal.
(BEGIN VIDEO CLIP)
[16:15:00] KOJI TSURUOKA, JAPANESE AMBASSADOR TO THE U.K.: Earlier said is better than later. After the fact it will be something that will not even
be addressed. There are two issues here in relation to how you conduct a successful negotiation of Brexit. Of course, these are all decisions to be
made by U.K., but we would like to be a good partner. And we would like to join the work so that they'll be successful in their endeavor.
(END VIDEO CLIP)
QUEST: Timothy Garton Ash is professor of European studies at Oxford University. He joins me now. I was reading your recent reviews and
articles about the ways in which Brexit, in your view, should and could be reversed.
TIMOTHY GARTON ASH, PROFESSOR EUROPEAN STUDIES, OXFORD UNIVERSITY: Yes.
QUEST: In that sense, and you made the point that it has to be this year, before Parliament gets its hands on it.
ASH: And in fact, this autumn. So, we've got roughly six months. Parliament has a so-called meaningful vote this autumn and that is a moment
and the last moment of which it can be reversed or made into a different kind of Brexit.
QUEST: What sort of Brexit -- assuming you will have a version of Brexit - - do you want? Bearing in mind the idea of a second referendum has pretty much been ruled out.
ASH: The only good Brexit is no Brexit. This is the most gratuitous act of national self-harm --
QUEST: But it's going ahead at the moment.
ASH: Probably. Never say never. Probably. By the way, it could never be reversed in the British tradition by a general election. Which I think is
just as possible as a second referendum. But assuming it goes ahead then we should stay in the customs union and the single market.
QUEST: So, to bring it down to the brass tacks, that's the Norway situation.
ASH: Yes.
QUEST: You would prefer to be in customs and single with the four freedoms --
ASH: Absolutely.
QUEST: -- that go with it, but no voice at the table? No vote.
ASH: I would prefer --
QUEST: No, but if you're going to put forward that idea of being the least worst option.
ASH: Right.
QUEST: That's what you're saying you'll accept.
ASH: That is the least worst option, that's exactly right.
QUEST: The vessel state --
ASH: I mean, tell that to the Norwegians. I mean, we would certainly be a lot better off economically and we would have a chance of going back. And
the alternatives looked at soberly are all worse.
QUEST: Canada, plus, plus?
ASH: Is it on the table? Nobody in Brussels thinks that is on table. And by the way, we are not Canada, right? We are in a different position.
Canada does not have our services, 80 percent of our economy.
QUEST: To those Brexiteers who would say the economics -- the economist predictions have been off at best. Sometimes downright wrong in terms of
the effect. And I know it's the early days, but just go for Brexit if necessary, a hard Brexit and let the economy turn itself around and develop
these new trading relationships. Which long term will be to the country's benefit.
ASH: OK. So, have good friends who are lifelong Brexiteers and they say we want sovereignty and democracy and maybe we'll be worse off, but we'll
be governing ourselves. That's the argument I can respect. What is clearly nonsense -- cloud cuckoo land -- is to say we can have our cake and
eat it. We can have all the advantages of being in the single market and customs union while not while being all the advantages of being out. And
that is what our government absurdly is still telling us.
QUEST: And to finish, you believe time is just about out to reverse this process?
ASH: I do, but just one last word on that which is I'm afraid what will happen is in six months' time we still won't know what Brexit looks like
and the British people will be sold a pup for the second time.
QUEST: Please come back again, sir. Good to have you talking about Brexit. Thank you very much, indeed.
As we continue, the markets down very heavily. What a week. It's QUEST MEANS BUSINESS. We are in London tonight.
[16:20:00] (COMMERCIAL BREAK)
QUEST: OK, this is the Dow 30. The Dow has closed off 1,033 points and all the major indices are down 3 percent or more. The Dow and the S&P are
both defined as a correction. Frankly, the Nasdaq is as well. It's at 9- point-something percent. Every stock on the 30 is down in every sector, 24 of these now would be classed as corrections which is a drop of 10 percent
or more. But just to show brutality of the day, you've got Intel, Caterpillar down 5 percent, Boeing, which of course, has had a phenomenal
run-up in share price, but down 4.5 percent. So, with this all-in mind, there was some movement. Clare Sebastian is at the stock exchange to talk
about what we've been seeing there. What was the mood like in the last ten minutes of trade, Clare?
CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: Well, I can tell you, Richard, we saw a significant spike in volume, the number of shares being traded toward
the close. It was about 700 million half an hour before -- 700,000 rather -- and then it tipped over 1.2 billion just as it was down into the close.
And you saw that reflected in the numbers down over 1,000 points into correction territory. So definitely, I think we saw the fear coming back
into the markets. I did speak to one source down here who said this was a bit more ordinary than we saw on Monday, where perhaps that means there
were more people than machines driving these big losses, but then again, I think it was probably a combination of both.
QUEST: Twitter. Twitter had results or how did Twitter perform? Frankly, I'm not sure that anybody really -- when you have Caterpillar down 4
percent and you've got Ford now down three, four percent. But, go on give is a twitter.
SEBASTIAN: That was a bright spot. They were up 12 percent, the stock today and that's because they made a profit for | the first time ever. It
was a modest profit, Richard, 91 million. But the real reason why people are so excited about this is because they're actually driving ad sales and
that's the key driver of revenue. But there are still major questions about Twitter going forward. Their share price obviously up. It's now
back over, it's the 2013 IPO price. But it's off its all-time high. And I think there are real questions going forward about whether they can grow
their user base. They've still got 330 million users. That's pretty much flat on the last quarter. So, that's going to be what people are watching
going forward.
QUEST: And finally, I guess the fear is tomorrow there's more of same and similar.
SEBASTIAN: Yes, absolutely, I think many people might have thought that after Monday and particularly after we saw the dip into the correction on
Tuesday, that people might come in and take profits and we might see the end of this. That is clearly not the case, Richard, and you can have two
different types of trading market in the space of one day. I think we saw a quiet morning today followed by another wild afternoon. Keep a close
eye, obviously, on the treasury markets. There was a 10-year auction yesterday, a 30-year auction today. That is sparking more turmoil. So,
that is something that we will continue to see battle between bonds and stocks.
QUEST: Do we know how that ten-year finished?
SEBASTIAN: I think it was a little bit off its highs over the last day. It's been 2.88, down about 2.84.
QUEST: 2.84, I'll keep watching those. Clare Sebastian, thank you, in New York.
As we continue, a California company called Plenty is attempting to revolutionize how we grow food. You've heard of crowdsourcing and crowd
funding. Crowd farming could be the next trend. Agriculture is the latest in our "Biz Frontiers."
(BEGIN VIDEOTAPE)
NEIL CURRY, CONNECT WITH THE WORLD (voice-over): It looks more like something from a sci-fi movie than the future of food in the 21st century.
But this is just an ordinary farmer on his way to work in San Francisco. While perhaps make that extraordinary.
UNIDENTIFIED MALE: When you walk into a Plenty farm, you walk in and it's -- people let out this gasp because it's such a sensory overload. You get
this waft of smells. You see plants and we're going from the floor level all the way to 20 feet in the air and so, your kind of surrounded by high-
density plants that are thriving.
CURRY: This is indoor, vertical farming, which Plenty hopes will transform the way the world feeds itself. That journey, it seems, begins with a
simple salad.
UNIDENTIFIED MALE: We are starting with leafy greens like a spring mix that has citrus, and spice and bitterness all wrapped up in one. So, we're
growing things like kale and arugula that has so much pop and flavor that it stuns people. And then the next wave of crops beyond that are crops
like strawberries and tomatoes. And our team in Wyoming is working hard to get those to market as fast as possible.
The light affects the way the food tastes. The nutrients affect the way the food tastes, and the way you water the plants affect the food taste.
The thing that's exciting about inside is that we get to control all of those things. We have a team of people who is trained in sensory to taste
and document every single day what's coming off the farm.
UNIDENTIFIED FEMALE: I want to compare to the standard here. So, the intensity of each of the flavors.
UNIDENTIFIED MALE: So, that when we get to the most delicious carrot or most delicious strawberry or kale, we can replicate that day in and day
out.
UNIDENTIFIED FEMALE: Change of its smell.
You should be getting fresh, cut, green grass.
UNIDENTIFIED MALE: Yes. A little tennis ball.
UNIDENTIFIED FEMALE: A little tennis ball
UNIDENTIFIED MALE: Yes, fresh cut tennis ball. Fresh, fresh.
UNIDENTIFIED FEMALE: When you press the top of the can?
UNIDENTIFIED MALE: Yes.
CURRY: The idea behind Plenty is to grow tastier food fast, more efficiently, keeping prices competitive, but at a lower cost to the
environment.
UNIDENTIFIED MALE: If you look at the way that we grow here at plenty, we're able to in a very small footprint, grow the equivalent of what a very
large farm grows out in the field. So, we use less than one percent of the land. And depending which crops we can grow up to 350 times what the field
grows on the same footprint. So, we're using about 1 percent of water that ag does on the same exact crops. So, we see room in China and around the
world for hundreds and thousands of farms.
CURRY: So, it's a global plan to keep everything local. Neil Curry, CNN.
(END VIDEOTAPE)
QUEST: So, the Dow is once again taking a very sharp fall. The bond market fears have dragged it down while waiting for Washington to vote on a
budget. But in all of the morass and the mess the markets lost 8 percent in value and depending on your definition, but it is a correction.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When the U.S. Congress gives bond yields another reason to
move up as deficits rise, we'll be live in Washington. And British lawmakers are crossing the Atlantic to fight fake news. This is CNN, and
on this network the facts always come first.
Syria is accusing Washington of war crimes after the U.S.-led coalition conducted strikes against Pro regime forces. The coalition statement says
the action was carried out in self-defense. The Syrian government wrote a letter to the U.N. calling it a new, barbaric aggression.
South Korea says President Moon Jae-in will have lunch with the sister of North Korean leader, Kim Jong-un. This unprecedented meeting will happen
on Saturday when President Moon meets North Korea's Olympic delegation. Kim Jong-un is the first member of the Kim dynasty to visit South Korea
since the Korean War.
The Dow fell more than 1,000 points after a volatile day of trading. The index now down more than 4 percent on the day. The concerns that the bond
market sparked another wave of selling. The S&P was off nearly 4 percent, the Nasdaq was flat.
So, this is the way the week went and as you can see, not a particularly pleasant view. 666 points last Friday. Monday, massive fall of some 1175,
that was 4.6 percent. And Tuesday is the only day we got some blue sky, or at least green shoots. And then a very, very weak performance yesterday
off 19. And today, off another 4 percent.
The roller coaster of trading that's been taking place. Bill Baruch is the president of Blue Line Futures. He joins me from the Chicago Mercantile
Exchange. I guess now we look to see the futures and to see where the market now believes or at least the futures market believes the cash is
going. What can you tell us?
BILL BARUCH, PRESIDENT, BLUE LINE FUTURES: Well, it was a very, very weak close today. And that's not something that you want to see to give you
hope into the weekend. I trade the S&P and watched that most closely and the move below 2,600 and making a new intraday low on the week is not a
good signal. I mean, the door and the path lower, at least to see what's down there overnight is open. I would imagine we get weakness in Asia.
Earlier in the week when Europe got going we started to see it turn higher early Tuesday morning. That could be something that we look forward to
trying and get load to the bottom in, yes.
QUEST: Bill, what's driving this now? Is there an element of just Washingtonian politics and nonsense or is there worries about interest
rates? It seems, you know, all right, the bond has gone to 2.8 and three may be on the horizon. But this is a disproportionate effect or reaction
to what is a relatively modest move which was widely expected.
BARUCH: Well, it's not just one thing. I think it was a combination of things that really just start off the list with the move in treasuries.
And everybody's been really saying that it's the treasury market that's going to set things off and really, it may be put the stock market off its
perch. But at the same time the velocity that we saw treasuries move or the last month, I think was key. On top of that you can give a little bit
of credence to the handing of the torch and the Fed. The fact that we are going be seeing rates tighten, the inflation popping its head up. A lot of
this is all part of it. It's all working together.
QUEST: Right. Right. So, let's look at this graph that you can't see, but I can show to our viewer. The relationship between the ten-year and
the market. So, the ten-year auction when we had the last one over the last few days the market falls very sharply. This last one wasn't quite as
bad. Are we getting a relationship? Is there a symmetry between what's happening between the ten-year auction and the market and the equities?
BARUCH: Ultimately, we -- after these auctions, we actually saw a little bit of a pop up in the market. I mean it was weak demand in these auctions
and really, I think that could have translated into some supportiveness to the market. We didn't get that and that, that I think is why we sort of
started to bleed lower.
[16:35:29] I think a lot of cash is ultimately trying to hit the sidelines at the moment. The bigger move is this bleed below certain key support
levels. We are telling our clients at the end of last week and Sunday night, if 2690 and the S&P gets taken out, really, we use the term, all
hell can break loose. Because ultimately it takes out certain levels of the market. People are really giving a lot to this VIX. And it's not just
the VIX but there are strategies out there that try to imitate something similar toward what the VIX is, sell put options. And a lot that, people
need to get out. That's what's forcing this and they're still unwinding this right now.
QUEST: So, what would it take to pour oil on this troubled market? I mean, if it's not going to be economics and if what you're saying is that
there are deep, serious, technical reasons for this route, the VIX, the relationship between the cash and the futures. That is what would it take
to turn this around, if anything? Or is it just going to have to play out?
BARUCH: I think we get a low on Monday. And I look back to August 2015 and I've been trying to kind of compare some of the similarities there.
Because really in August 2015 it was big, key, technical levels that broke it for selling and that's what we're seeing here right now. So, what we
need to see is -- no one's really going to step up on a Friday I don't think. If we had finished and closed today well, then tomorrow could be a
really solid day. That's not the case. We're making new lows. No one is going to step in tomorrow and really make big bets. But Sunday night could
get a little ugly and then on Monday, I think ultimately, that's where we bottom out.
I think that's what we need to see. We need to fish and make an intraday bottom low. And that's what we saw back in August 2015. That we saw that
big low come in the morning on that open, on that Monday morning. And then in February when it bottomed, that happened intraday. We need to see that
intraday.
QUEST: I want to show the viewers the three indices at the moment on where they stand, the Dow, the Nasdaq and the S&P. So, we're at 2,581. What is
the next low to test on the S&P?
BARUCH: The futures traded at 2,529 on Monday night. We have a big -- I use one, two, three and four-star support levels for my clients. And four
star is a very rarely used level. And we have four-star support down at 2,524 and 2,521. I think that level needs to get hit intraday. If that
tested intraday we can use that as a low. It was tested overnight though, on Monday night. A retest intraday is going to be key.
QUEST: Good to see you, sir. Thank you, Bill, appreciate it. The insight that were going to give you.
President Trump regularly touts the stock market. The White House deputy press secretary, Raj Shah, responded to this week's volatility.
(BEGIN VIDEO CLIP)
RAJ SHAH, WHITE HOUSE DEPUTY PRESS SECRETARY: The president, like the rest of the White House is concerned about long-term economic indicators and
factors and the fundamentals in terms of the long term are very strong. Again, unemployment and the labor market is very strong and unemployment is
at 4.1 percent. We saw wages rise on Friday for the first time -- not for the first time, but at a measurable level for the first time in nearly
eight year or nine years. And corpore earnings are high and we believe that these long-term fundamentals demonstrate a healthy economy.
(END VIDEO CLIP)
QUEST: Congress has less than eight hours on the clock to approve a spending bill and avoid another government shutdown. We're waiting for the
Senate to vote and the it goes to the House where Paul Ryan, the House Speaker, says he believes he has the votes. It adds 300 billion in
spending putting more pressure on treasury yields. Ryan Nobles is in Washington for us. Surely, Ryan, surely, they realize that they are now
playing with nitroglycerin and dynamite if they choose to meddle around with the budget deficit with the markets being on such tenterhooks?
RYAN NOBLES, CNN CORRESPONDENT: You'd think, Richard, but the fact is that there are quite a few members of the Congress particularly in the U.S.
Senate right now, who are willing to play hard ball with this budget deal, Rand Paul in particular. You need all 100 senators to agree on a time line
for voting for a measure like this. And Rand Paul right now keeping his thumb on the scale. Keeping the Senate from voting this initial first vote
to get this budget through before I can then get over to the House and the pass there.
And problem with this, Richard, is the longer a big, major piece of legislation especially one that really explodes the American deficit by a
pretty good margin. The longer it hangs around the more opportunities that it has for people to find problems with it. And that's a concern right now
on Capitol Hill that the longer they wait the more difficult time they're going to have keeping all the votes in line. There is still optimism at
the going to get this deal done, but there's definitely some concern on Capitol Hill right now.
[16:40:00] QUEST: Brian, thank you. You have your work cut out for you over the next few hours.
NOBLES: Thank you.
QUEST: Just keep a watch and make sure not too much damage is done.
NOBLES: I'll do my best. Thank you, Richard.
QUEST: As we continue, when we return as QUEST MEANS BUSINESS we're in London. British lawmakers are in Washington. They're asking social media
companies what they're doing to tackle information intended to deceive.
(COMMERCIAL BREAK)
QUEST: British lawmakers have set up shop in Washington to confront social media giants on their home turf. They are frustrated with the lack of
transparency and now they want answers. So, for example, Twitter which has initially denied that there was any evidence of Russian accounts meddling
in Brexit. Today they said they had found -- they did find evidence specifically, 49 accounts traced to the Russian Internet Research Agency.
So, Twitter admitting that something has taken place.
Google's YouTube confirmed it found no evidence of Russian interference in the referendum, but again, it did confirm it was willing to have another
look again. And as for Facebook, the investigation I still ongoing rolling out new initiatives to show which groups are behind the political posts.
Hadas Gold is the hearing in Washington, where CNN international has been also and giving evidence. The evidence that we've heard so far, I mean,
it's unusual for them to -- for the lawmakers to go there. Does it seem like it was worth the trip?
HADAS GOLD, CNNMONEY EUROPEAN POLITICS, MEDIA IN BUSINESS: Depends on who you ask, but is obviously a trip that was also meant to increase the public
pressure on these companies. Obviously, these members of Parliament knew that by coming here, by making the big deal of having the first sort of
select committee hearing of this kind outside of the U.K., that would attract some attention. And they said this is a way to get the big policy
experts at these various social media giants to come out here a testify to them. And there were also some journalists who testified, as well,
including our own head of CNN International, Tony Maddox, who spoke about how social media creates an environment that's ripe for fake news.
(BEGIN VIDEO CLIP)
[16:45:00] TONY MADDOX, EXECUTIVE VP AND MANAGING DIRECTOR, CNN international: Probably the greatest single concern I would have with all
of the big plusses that have been identified with the increase in the availability of news, and the sources of news and the variety of news. It
has enabled people to create their own little media bubble in which they only really get material which is consistent with their beliefs. And that
encourages fake news, frankly, because within that sphere anything that' consistent with, you know, we don't like this guy, so I've read this thing,
or I heard this terrible thing or that terrible thing. And it all gets thrown in there.
My concern is that you don't get to read provocative things. You done get to read things you want to throw across the room. Because you disagree
with them, but you know, you need to be exposed to other things other than what you and all your friends think.
(END VIDEO CLIP)
GOLD: Now, Richard, the social media companies rejected some of the members of Parliament's questions about this idea that they helped
propagate fake news on their websites by not having more controls over it. Twitter specifically said that they didn't want to be the arbiters of
truth. But it was clear that the members of Parliament were frustrated with these answers they were receiving, and they think there needs to be
more controls, more regulations.
And they're asking for more information. Facebook has said that they are going to be submitting a fuller report on Russian meddling by the end of
this month and that they're expecting more information not only from Twitter, but also YouTube. This is going to continue, and the members of
parliament expect to give a full inquiry report around April 1st.
QUEST: Hadas, thank you. Watching the lawmakers in Washington. Now, President's fake news drumbeat about "The New York Times," -- the failing
"New York Times" as he calls it. It hasn't left a mark on the publication. The latest quarterly earnings show the paper subscription revenue passed $1
billion in 2017. Digital subscription monies. The growth is coming mainly from digital subscribers. The chief executive of The New York Times
Company told me people will pay for good journalism.
(BEGIN VIDEOTAPE)
MARK THOMPSON, CEO, THE NEW YORK TIMES COMPANY: We think the future is really great journalism and the big thing about the quarter we just
reported, and it was a quarter with amazing coverage from "The New York Times" of politics from the U.S. and around the world. But also, it was
the quarter when we broke the Harvey Weinstein story and set off a kind of debate about sexual harassment which is echoing to this day. So, our
thesis is investing in great journalism, deliver it to the public an effective and useful and attractive digital package and people will pay and
that's borne out by our results.
QUEST: I'm not alone, but I'm in a dwindling number of people who still look forward when I'm in New York, obviously, to getting my hands dirty on
the hard copy of the paper. But it does raise the question, how much of a dinosaur am I?
THOMPSON: You better look in the mirror if you want the answer to that question, Richard. But I mean, my views are print platform is a beautiful
thing. It's a great product. We have still today, hundreds and hundreds of thousands of very loyal print subscribers. And we want to go on serving
them for as long as it makes economic sense. And I think for "The New York Times" that's going to be many, many years into the future. So, it's a
wonderful thing, long may it last. I have to say though as chief executive my job is to think hard about the future of the "The New York Times" beyond
that point. And what we're planning out is a company which will be really successful and investing in great journalism after print is over.
QUEST: What do you make of the MPs -- The British MPs with their fake news hearings in Washington? No obviously, CNN, we've had our facts first
campaign. You've had your own campaign. "The Washington Post" has had its own campaign. And now MPs are coming out to find out exactly what it is
all about, the question of fake news. Do you feel -- do you feel that the fake news moniker that being put by the President is taking hold?
THOMPSON: So, I think it's a real issue. The MPs by the way, came to "The New York Times" earlier this week and I gave them a cup of English tea and
we sat down and talked about this topic. My view is this, although I don't think we know for sure whether many people in Brexit or many people in the
U.S. election changed their vote because of false news. We do know there is a pretty systematic campaign with all sorts of actors involved and some
politician, Donald Trump is a good example. Some it looks like national interests, the Russians being one good example of that, who want to blur
the difference between news reporting and opinion. And want to blur, in some cases, the difference between rational evidence based reporting and
mad conspiracy theories.
[16:50:00] And I think that kind of leveling so that the public get confused about what to believe or what not to believe is a serious issue.
I want to say that I believe that the leaders of Google, the leaders of Facebook take that issue very seriously. And I welcome the fact that the
British select committee is over here trying to find out more. I think it is a shared issue. I mean, we are in the real news business, we are not in
the fake news business. But it troubles me that there are many people out there who don't believe what we report -- even though we know it's true --
because they've been told not to believe it. So, it's a real issue, I think.
(END VIDEOTAPE)
QUEST: Mark Thompson of "The New York Times." Turbulent times at the crypto exchange. Two investors will be with me after the break trying to
start another brand-new currency. Why?
(COMMERCIAL BREAK)
QUEST: A major crypto exchange certainly host to be back online in a few hours. Binance has been down all day. It said a server upgrade is taking
far longer than expected. But new cryptocurrencies are still minted. Michelle Mone and investor, Doug Barrowman, have launched a new one
especially for venture capitalists. They join me now. All right.
MICHELLE MONE, COFOUNDER, EQUI: Hi, Richard.
QUEST: Just the thing the world need, Doug, another cryptocurrency. What's different this time?
DOUG BARROWMAN, CO-FOUNDER, EQUI: Well, I think aqua is a new cryptocurrency that is launched in the platform that allows everyday
individuals the opportunity to invest in venture capital investments. Traditionally they were preserved for institutions and ultrahigh net
worth's. So, we think this is a game changer within the industry.
QUEST: What makes this a cryptocurrency in that sense?
MONI: Well, a cryptocurrency, Richard, you can do three ways. Number one, you can treat it like any other cryptocurrency. Two you can hold it or
three, you can invest in the business that Doug has put together, this board of highly successful, global entrepreneurs. So being an
entrepreneur, I started my first business when I was 21 and it's a very lonely world. So, now we're going to help these businesses not only in
finance, in the world of tech, biotech and cryptocurrency and we are going to hold their hand and mentor them all the way through.
QUEST: But you know as well as I do, that the old -- the new adage today is put block chain. If I called it Quest Means Block, people would watch
it more than they already do. I mean, what is it that's about this. I mean, you obviously don't want to turn it into another bitcoin in the sense
of up and down. But are you a currency in a sense of being just an asset?
BARROWMAN: Yes, I think their talking has real utility value. It correlates to the investments that make up the platform, so people can
actually gauge value by what they're investing in. So, they can say, yes, you get good investments here in the portfolio. Here the currency can
align itself to the underlying value of their investments.
MONI: And what you need to do is go into EQUI. Capital and read our white paper. We launched in the first of March and it's going to be an
incredibly successful ICU.
[16:55:00] QUEST: Why should it not suffer the fate? I'm being cynical. I know I'm being cynical or even skeptical?
MONI: Because of the group that Doug has put together. These serious global successful entrepreneurs, not just him. He's been involved in
private equity firms for 30 years. I've been involved in business for 21 years.
QUEST: But what does it give us? What does a cryptocurrency investment vehicle that you're putting together, what does it give us that we don't
currently have with the entire range of options?
BARROWMAN: What it does it allows individuals three options. You can trade the currency, they could use the tokens to hold our platform or
invest in the investments. And that's a versatile option for people to use.
QUEST: On a day like today where we see the market -- or a week like this week where we see the market so volatile, do you think it's going to be
difficult to convince their investors to take a risk or particularly once they saw bitcoin going up to 20,000 and now down to 6,000, 7,000.
BARROWMAN: Sure. Well, there's complete transparency on our platform. They can look at what we're showcasing. They can take the long view on
what to invest in. There is no pressure to invest. There are EQUI tokens in any one investment. And they can form their own view. But ultimately
the value of the currency will be underpinned by the value of the perceived value of the investments that we make on the platform.
MONI: That's what's different.
QUEST: If you don't put your name to something without obviously being pretty sure that you like what -- is about this that you like?
MONI: I love it because I was the business start-up czar for the former Prime Minister David Cameron. And I traveled up and down the U.K. looking
at start-ups and looking at tech. and the two biggest issues was funding and maintaining them. Doug's idea is we have a board of very successful
entrepreneurs that are going to help them. But also, EQUI. Capital is our cryptocurrency. And it's one everyone should be looking at.
QUEST: Good to see you.
MONI: Thank you, Richard.
QUEST: Thank you very much.
BARROWMAN: My pleasure.
QUEST: On a day that was quite extraordinary with the markets, we'll have a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's not so Profitable Moment. The two largest points fall in the Dow, both happened this week. Of course, on Monday and now on
Thursday. We shouldn't be surprised. Throughout these entire turbulent times we have been telling you that this is what the story is going to look
like for the foreseeable future. It doesn't mean financial Armageddon is on the horizon nor does it mean that we all need to run for the hills
shouting the skies falling in.
What it means is that the market has now gone on a frolic of its own. And for whatever reason, whether it be higher interest rates, worried about
inflation, wage growth, debt levels, cryptocurrency, it doesn't matter, the debt in Washington. The market has now decided that the over buying of the
past 18 months has to be reversed. It's the right answer, but a very unsafe way in which to do it. And that's what we're witnessing. It's
going to continue, that much I'm pretty certain about. Whether or not it goes up or down a 100 or 200 or 1,000 on any given day, this market is
going to test to see exactly where it believes the correct value should be before deciding it's time to go back up again. And that's QUEST MEANS
BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable.
END
