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Quest Means Business
Dow Swings 1000+ Points to Close Volatile Week; Brexit Transition; Waymo and Uber Settle Trade Secrets Lawsuit; Rand Paul Holds Up Spending Bill over Deficit; White House Denies John Kelly Has Offered to Resign; Historic Handshake at Winter Olympics Opening Ceremony; Historic Week at the New York Stock Exchange. Aired 4-5p ET
Aired February 09, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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ZAIN ASHER, CNN HOST (voice-over): All right, three strikes on that gavel there, book the kids ringing closing bell on Wall Street. Let me tell you,
I think it might be a fool's errand to figure out what is going on the market. You can see so much volatility today.
We started off solidly in the green with the Dow in triple digits and then around 1 o'clock in the afternoon it was down triple digits and then as we
rushed toward the finish line, we saw the market ending the day roughly around 333 points up. Of course, those do need to settle.
We're going to get into what this market is thinking a little bit later on in the show.
My friends, it is Friday, the 9th of February. Tonight, TGIF, thank God it is Friday, one of the wildest weeks in market history has finally come to
an end.
Also ahead Uber's court battle with Google reaches its destination early and plenty of diplomatic fireworks as the Winter Olympics begin in South
Korea.
Hello, my friends, I'm Zain Asher and (INAUDIBLE) is QUEST MEANS BUSINESS.
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ASHER: Hello and welcome everyone, I'm Zain Asher.
Tonight from a 349-point gain to a 500 point loss (INAUDIBLE) and now we are ending the day back up again. Let me tell you, it was extraordinary
end to the week for the market. The Dow closed up more than 331.1 points. It swung through -- get this -- a range of 1,000 points over the course of
a single session.
Friday's performance brings the week's losses to nearly 1,300 points or 5 percent, by the way the worst points fall since back in 2008. But in terms
of percentage points, it's only the worst since the beginning of 2016. So we are talking two years but still, let me tell you, it was certainly a
wild week.
Let's go over to the trading post. I can put all of this in context for all of you. Let's have the green light please. All right. So we ended
the day slightly up, about 300 points or so, the Dow, the S&P and the Nasdaq all up more than 1 percent Friday.
Remember, it was just two weeks ago that all three indices here in the United States were setting record after record and now they're all between
8 percent and 9 percent off their records.
But today's gains certainly take the out of correction territory. Let's take a look at CNNMoney's fear and greed index, still pointing to extreme
fear, down (INAUDIBLE) volatility is down. You're seeing extreme fear but it's still up 67 percent over the past five sessions.
I want to bring in Tim Anderson of TJM Investments.
What a wild week.
(INAUDIBLE) that yesterday we were going to end the day down 1,000 points or so, today we had so many wild swings, Tim, ending the day up 300 points.
So for people who aren't well tuned to the market and are try to make sense of this, what would you tell them?
TIM ANDERSON, TJM INVESTMENTS: Certainly what we've seen this week is the return of volatility and that is not necessarily a bad thing. For a long
time, probably a decade, we had zero interest rates and we had central banks around the globe compressing the price of money, pretty much
everywhere on the yield curve.
A lot of it is coming off right now. There are a lot of products that the street created around low interest rates and very low volatility and much
of those have created havoc with the market this week because they're being unwound.
It looks like we're entering a different paradigm where we're going to have slightly higher interest rates and a little bit more normal volatility
intraday and intra-week.
Probably not to the extent that we saw this week but we're probably not going to have these very, very tightly controlled markets that we had for a
number of years now.
ASHER: But when you look at the volatility just today, when you look at just the wild swings. We went down with about 400 points or so. That
happened around 2 o'clock while I was having my lunch. The market suddenly seemed to take a turn for the worse and then we ended the day up 300.
What explains that different movement we got throughout the day?
ANDERSON: Some of it was technical because last night the Russell 2000 index closed right in its 200-day moving average. It was below it for most
of the morning. At the lows --
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ANDERSON: -- early this afternoon the S&P 500 hit its 200-day moving average right around the 25-30 level and bounced off that and recovered and
actually rallied 100 points. To see both of those indices rally so convincingly off their 200-day moving average will probably give investors
a good feeling going into Monday.
All that being said, it is very possible that there are still a lot of these volatility derivative products that are still out there to be unwound
in the marketplace and it's very undefined, exactly what the size of that is.
ASHER: So going forward, Tim, we all have to get used to the fact -- and even President Trump brought this up -- what is good for the economy isn't
necessarily going to be good for the markets going forward.
ANDERSON: We are definitely in one of those periods right now where the economy and the stock market are two different things. And that is
something that we have seen numerous times in the past.
There is no doubt that the fundamentals of the macroeconomy is going to be grinding higher throughout the year and corporate earnings are probably
going to be coming in strong throughout the year.
Now the market got overheated in January. We have some exotic derivative products that have to be unwound in the market. And a lot of investors,
when they get a sense that the computers are going a little bit wild on the downside and they do not really know the size of the unwind on this
tranche, they're just going to walk away and they're going to see how far the market goes down.
They're going to see how much the computers really drive the market down. They do not have to be -- they're going to say I do not have to be the
first buyer. I'm just going to let this crater until it finds a level. And then I will come in after there is a little bit of stability.
So I would certainly expect some more volatility the next couple weeks. Most likely not to the extent that we saw this week.
ASHER: All right, so a little bit of good news there. Tim Anderson joining us at the very end of a very crazy week. I hope you're having a
relaxing weekend. You get to put your feet up. You deserve it, my friend, all right. Tim Anderson live for us there, thank you so much.
All week on this program the biggest names in market economics have steered us through a week unlike any other.
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UNIDENTIFIED FEMALE: We're always mostly most focused on investor confidence and making sure trading is order so that investors know that
while the markets might now always go up and there will be down days, they're confident in that they're functioning in the way they're supposed
to.
UNIDENTIFIED MALE: Although the point number is very high on a percentage basis it is significant. I don't want to discount that but it is not
something that's going to -- we're not in the crash range.
UNIDENTIFIED MALE: This has been a big, big selloff, no question about it. We've lost 2,000 points on the Dow. But remember we gained something like
6,000 or 7,000 points since Trump was elected.
UNIDENTIFIED MALE: Not only have the markets kind of expected a correction, as it were, but also you have this massive tax cut going into
effect. You have a new chairman of the Federal Reserve Board, Jerome Powell. The stock market's natural fear of uncertainty all conspires here.
UNIDENTIFIED MALE: All right, first and foremost, you don't want to panic. That has always proven to be the wrong move. You want to look at creative
vehicles like those inverse ETFs and the two or three times ETFs (INAUDIBLE) gambling. That's not part of an investment strategy. That is
not what they were made for.
They were made for people to trade hourly or daily, not for the people at home to be using as an investment vehicle.
UNIDENTIFIED FEMALE: This isn't mom and pop. This is people that came in thanking the world was one way; rethinking their entire outlook.
UNIDENTIFIED FEMALE: In for more volatility going forward and niche markets overall, whether they be in the U.S., Asia or Europe, they were
priced to perfection. It did not exist. They were -- we are partying like it is 1999. In reality, is when a 21st century economy that, although
we're a lot further from the financial crisis, we still have deep (INAUDIBLE) in the financial crisis.
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ASHER: All right, so much to talk about here. Joining me now Ashwin Alankar, the head of Global Asset Allocation and Risk Management at
(INAUDIBLE).
Ashwin, thank you so much for being with us. When you think about all the (INAUDIBLE) we've seen so far this week, the advice that everyone gives is
always the same. Listen, stay calm, don't panic, take a deep breath.
But the people who are close to retirement, people who are in United States and in their late 50s, early 60s, can you really -- I know we ended up
today but can you really say the same thing?
ASH ALANKAR, ASSET ALLOCATION: Well volatility is the risk of participating in the markets so it is clearly how much volatility you can
bear is clearly a function of how old you are. If you are young, you can bear that volatility because you have of a lot of labor capital left in
your life. If you are older, you cannot.
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ALANKAR: So I don't think that the key takeaway message and the telltale takeaway message here is to ignore the volatility. It is really important
to manage the volatility of your financial portfolio. It is really important to make sure that you are not overly stretched.
The problem is, greed comes in. You see the low volatility that has persisted over the past many years and that low volatility persisted
because the markets were living in an artificial state of euphoria, a drug- induced state of happiness.
And that drug was the free money that the central banks were providing. And now the central banks have decided to rein in free money and allow
interest rates to rise. And as interest rates rise, what happens, risk has to come back to the system.
And for one reason or not, the hibernating bear woke up this week. He continued not to snore on and what happened were equity markets collapsed,
risk reached levels not seen since the 2011 European crisis.
But the greed got to people where they thought the low volatility regime would last forever. So many of these people are suffering great pain, they
are suffering a great pain because they allowed greed to take over. They allowed themselves to overextend their financial portfolios into riskier
assets.
But at the same time, fear is just as painful as greed. So right now is not the time to panic. What ensued, in our opinion, was a mass exit by the
masses, a stampede for the exit.
And stampedes are not in equilibrium. Stampedes come and go cells.
So the risk that we have seen over the past week, is it sustainable going forward?
Absolutely not.
Is it sustainable for risk levels to return to the low risk levels over the past 6-8 years, absolutely not.
We're going to settle somewhere in between. And it is healthy.
ASHER: So when you think about the 1,000-point drop we saw on Monday and then again on Thursday, a lot of people -- it was a guessing game. A lot
of people talked about bond yields and the fear about interest rate rising faster than previously anticipating.
But it's a fool's errand trying to guess why this market is behaving the way it is.
ALANKAR: I 100 percent agree. A lot of this is noise. A lot of this is not explained by rational thinking. But what is true is this stampede for
the exit, the catalyst was a rational catalyst. And that rational catalyst was, we are returning to a market environment which is more normal.
And more normal just does not mean interest rates rising to a more normal level; it also means risk needs to return to a more normal level. So as we
see interest rates rise, as we see normalization occur in the fixed income markets, it is absolutely necessary for equilibrium conditions and
normalization to also occur in risk levels, namely volatility.
ASHER: Well, this market, investors have been drunk, as you said, on free money and euphoria for a very long time. But this week was as sobering as
any other. Ash Alankar, we have to leave it there. (INAUDIBLE).
I want to go through how European markets did because stocks actually finished the day sharply lower in Europe as well. Let's see, pretty much
red across the board there. The FTSE 100 in the U.K., ending the day down 1 percent or so.
French stocks though were actually hit the hardest, down 1.5 percent and the E.U., speaking of Europe, continues to sound the alarm over Brexit,
warning Britain could actually still crash out of the bloc without a deal to protect trade with Europe. That sent the pound down.
The E.U.'s top negotiator actually told the U.K. not to take anything for granted.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The U.K. wants to enjoy the advantages of the single market without the customs union and common policies. It has therefore to
accept all the rules and the obligations until the end of transition. That is very logical.
It also has to accept the ineluctable (ph) consequences of its decision to leave the European Union, to leave its institutions and its policy. To be
quite frank, if these disagreements persist, the transition is not a given.
(END VIDEO CLIP)
ASHER: Bianca Nobilo is joining us now live from London.
So the E.U. there, Bianca, clearly playing hardball. It obviously makes sense that both sides really want to protect their interests. That makes
sense. It's human nature but can those two sides meet anywhere in the middle?
What are your thoughts?
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BIANCA NOBILO, CNN CORRESPONDENT: At the moment, the key sticking points are these issues that the fact that the E.U. wants to be able to impose
sanctions on the U.K. during the transition period. if the U.K. infringes any E.U. laws. The U.K. have responded that that's not in good faith and
it's quite downright discourteous.
Second of all, we should also, as the U.K. negotiated, have a right to redress, too, during transition. So there needs to be some kind of
mechanism for Britain to object to new E.U. rules that it will have to abide by during transition.
But it is definitely grinding to a halt at the moment, these negotiations and even though it may not seem like it, that was quite fighting talk. It
may be quite eloquent and diplomatic but it's still fighting talk from Michel Bonnier (ph) there.
And David Davis (ph) replied later this afternoon and he just said that he did not understand why Michel Bonnier (ph) didn't get their position. So
these incredibly experienced diplomats saying that they are surprised by one another's positions and they just don't understand, that's the way of
saying that they think their respective positions just don't make sense. Clearly these diplomats to understand what the other one is saying.
But it's their way of saying, we think you need to change your mind, you are being illogical here, just shift your negotiating position.
ASHER: One of the things that also came up is the fact that Michel Bonnier talked about him wanting clear, precise guidelines for making sure there
wasn't a hard border imposed or reintroduced between Northern Ireland and the Republic of Ireland.
Where are we on that front?
NOBILO: That is another seemingly intractable issue because the E.U. clearly stated today that if Britain leaves the customs union and the
single market but a hard danger, border checks will be inevitable and avoidable.
And of course this week Theresa May categorically ruled out Britain remaining and then there are the customs union of any sort with the
European Union. So the nice for the department for exiting the European Union today and they told me that is an absolute, unconditional stance that
the U.K. holds, that there will never be a hard border in Ireland.
So how you resolve those two stances, Zain, I don't know.
Do you -- the U.K. doesn't know and E.U. does not know at the moment. That is for sure. But a big part of the problem here is the fact that the
U.K.'s negotiating position still isn't clear.
Britain was supposed to lay out its vision for the future relationship today but they actually canceled that meeting. That is the first time that
they have canceled one of these scheduled events. That is quite telling. And that is after two really intense meetings of the Brexit cabinet this
week in the U.K., to try and come to an agreement on what they want from the finished relationship with the E.U., at the end of the transition
period.
So it's certainly not looking good as far as the U.K. is concerned this week -- Zain.
ASHER: All right, Bianca Nobilo live for us there in London, thank you so much.
Still to come here on QUEST MEANS BUSINESS, Uber is putting one of its scandals in the rearview mirror. It settled its self-driving trade secrets
lawsuit with Google's self-driving division (INAUDIBLE). That story next.
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ASHER: In a stunning change of events Uber and Google's Waymo announced they've settled their lawsuit in the middle of the trial. Let me walk you
through what happened with this particular lawsuit.
Waymo, a division of Google, actually accused a former engineer that worked for Google of downloading its self-driving trade secrets and then taking
them to Uber. Google ended up winning this lawsuit, sources say that Google Waymo, the division of Google, ended up accepting a deal worth $245
million U.S. and after the settlement, Uber's new CEO offered Waymo an olive branch. They said -- let me read for you here.
"To our friends at Alphabet, we are partners. You are an important investor in Uber and we share a deep belief in the power of technology to
change people's lives for the better."
He went on to say, "While we won't agree on everything going forward, we agree that Uber's acquisition of Otto should have and could have been
handled differently."
I want to bring in Scott Galloway, the marketing professor at NYU. He's also the author of "The Fall: The Hidden DNA of Amazon, Apple, Facebook
and Google," a book that I cannot wait to read. One of our producers has it on her desk. I've been asking here to borrow it.
Scott, thank you so much for being with us. Here's the thing: Google obviously ended up winning this lawsuit but going forward how does this
lawsuit actually change the landscape for tech companies who seem to be in different industries but who somehow end up becoming rivals?
SCOTT GALLOWAY, NYU: Well, there is safety in hatred and that is all the big companies are going after each other. I think it set some boundaries,
if you will, that employees and companies have to be very careful about trade secrets and I.P. and but at the end of the day, this is a win for
both of them. They both get to move on.
This is one of the benefits of having Dara as the new CEO of Uber, is seeking kind of blame the people before him and extend that olive branch, a
quarter of a billion dollars in equity -- I don't think it's a cash settlement. I think it's equity.
It's somewhat of a small -- somewhat of a small price to pay to just put this behind them and move on.
But if you look at the lawsuits between just the big four in tech, they're constantly suing one another. For some reason this got more press just
because of Uber's CEO's aggressive behavior.
ASHER: When you look at this, walk us through, you touched on this briefly, but how you think Uber's brand-new CEO handled it.
Did he handle it well overall, especially when you put it into the context of Uber's upcoming IPO?
GALLOWAY: Oh, yes, this takes a weeping sore. This cauterizes a problem and that is they were constantly -- Uber was going to be in the press for
the wrong reasons and at a time when they do not need any more negative press.
This was another feather in the cap for the new CEO of Uber, who has proven himself to be a breath of fresh air for the -- for the organization. So I
think this is a good outcome for Google. I think it is a great outcome for Uber, a small dilution to put this in the rearview mirror.
Dara comes off as a statesman, apologizing, acknowledging and taking responsibility and they get to move on.
ASHER: When you look at these giant tech companies, whether it's Google, Amazon, these companies have expanded into so many different industries. I
know you've written about Amazon in the past.
They've gone from selling books to selling pretty much everything to creating original content to now delivery systems. The list seems to go on
and on.
How do small companies that specialize in one thing, like Uber -- (INAUDIBLE) expanding but overall like Uber end up surviving in this kind
of environment?
GALLOWAY: Well, unfortunately, I am not sure they do. The rate of business formation -- that is the number of new businesses started -- has
been cut in half in the last 40 years. And I think part of the problem is that you have these behemoths that have so much access to capital and are
so aggressive that the moment they see an emerging category begin to hold any promise, they move in with their overwhelming cheap capital.
So you know, your question is the correct one and I personally think it is time to look at these companies around their ability to put other firms out
of business before they even go into the category. Look at what happened with FedEx and UPS today.
You never hear in a venture capital pitch we're going to compete against Amazon, Apple, Facebook and Google. This is -- in my opinion, it has
become time. We need to have a serious discussion around breaking these companies up because it is very hard to start a small business right now in
tech.
ASHER: They're just too powerful, the big four. You've written a book on this entire topic.
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ASHER: All right, Scott Galloway, live for us there, thank you so much.
India's car industry is focused on sustainability. The government is looking to make all cars electric by the year 2030 in an effort to fight
pollution. Our Nikhil Kumar has more.
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NIKHIL KUMAR, CNN NEW DELHI BUREAU CHIEF (voice-over): On a bad day, the effects of breathing in the air in the Indian capital, Delhi, have been
compared to that of being a heavy smoker.
It's a pattern common to a number of the country's biggest cities. A key contributor to this air pollution is traffic, clogging up the roads for
hours on end with exhaust pumping fumes from countless cars, buses, trucks and (INAUDIBLE), the ubiquitous three-wheeled taxis.
UNIDENTIFIED MALE (voice-over): (INAUDIBLE) happen on a three-wheeler on a daily basis in India. Now that's a huge number and it is the most popular
means of transport within the city and because of its size and compactness, it is able to navigate previous narrow roads that are available in the
city.
The government (ph) have also become extremely sensitive to this issue and they are open for (INAUDIBLE) areas that come up for (INAUDIBLE).
KUMAR (voice-over): India has an ambitious aim to make sure that most if not all the cars on its roads are electric by 2030. The obstacles include
the high cost of batteries and the time it takes to recharge them.
(INAUDIBLE) based vehicle manufacturer (INAUDIBLE) believes it has a solution with its lithium ion battery swapping stations.
UNIDENTIFIED MALE (voice-over): Swapping station is a place where you can go with a depleted battery and come back with a fully charged battery in
less than a minute. So right now we are doing it manually but (INAUDIBLE) we plan to automate this process so that we can cater to (INAUDIBLE)
customers.
(INAUDIBLE) it's just developing so the ecosystem (ph) does not exist for (INAUDIBLE) electric vehicles. For example, if you take Tesla, Tesla had
to build charging stations before they could sell cars.
So the key missing link is basically that infrastructure that is required for fast adoption of electric vehicles.
KUMAR (voice-over): The company is testing the technology on base-to-base (ph) delivery services such as Uber (INAUDIBLE) and (INAUDIBLE). But
electric power joins forces with the marketing power of Bollywood idol Shahrukh Khan (ph), (INAUDIBLE) ambassador to deliver more environmentally
friendly food.
UNIDENTIFIED MALE (voice-over): Now they show us how do you scale it from one (INAUDIBLE) to 2020 (INAUDIBLE) is something that we need to work on.
I think (INAUDIBLE). (INAUDIBLE) among the people regarding the pollution that they are facing. It is not someone else facing the problem, it is us
who is facing the problem, each and every one of us.
KUMAR (voice-over): Nikhil Kumar, CNN, New Delhi.
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ASHER: Hello, everyone. I'm Zain Asher. Coming up on the next half-hour of QUEST MEANS BUSINESS, the Winter Olympics have begun in South Korea.
The man organizing the Paris Games says he has to find a way to make them cheaper.
And if the U.S. government shuts down and then no one awaits to see it, did it really happen? One Republican senator is furious with his own
colleagues. We'll experience why in just a moment. But first these are the top headlines we are following for you at this hour.
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ASHER: Most people in the United States were asleep as the government actually shut down for a second time this year. It was just for a few
hours but early hours in the morning the drama was actually over as Congress actually voted to advance a massive budget deal.
One major sticking point for a lot of people, in terms of lawmakers, has been this huge increase in spending. Even President Trump actually
admitted in a tweet that it wasn't exactly the perfect deal.
He said, quote, "Without more Republicans in Congress, we were forced to increase spending on things we do not like or want in order to finally,
after many years of depletion, take care of our military."
But it was one Republican who was on TV last night who actually held up the bill and actually forced a shutdown. I'm talking about Senator Rand Paul.
This was his objection. It is the $300 billion in extra spending.
As a traditional Republican he had a massive problem with that. That is on top of the $1 trillion tax cuts are projected to add to the deficit.
Now the speech Senator Paul delivered was savaging, literally tearing apart his own party.
Under President Obama Republicans insisted that spending was getting out of control. That was one of their main arguments against President Obama.
But now with President Trump in the White House, those concerns are simply nowhere to be found.
Senator Paul warns they cannot continue.
(BEGIN VIDEO CLIP)
SEN. RAND PAUL (R), KY: We are in a terrible state as a country, $20 trillion in debt is bigger than our entire economy. You wonder why the
stock market is jittery?
Well, one of the reasons is we do not have the capacity to continue to fund a government like this.
(END VIDEO CLIP)
ASHER: Joining me live now is Stephen Moore, a conservative and economist who actually advised the Trump campaign.
Stephen, thank you so much for being with us. I am sure you heard what --
(CROSSTALK)
STEPHEN MOORE, FORMER TRUMP CAMPAIGN ADVISER: Hi, Zain.
ASHER: Hi. I'm sure you heard what Senator Rand Paul had to say last night. We just played the sound bite there. This idea that he is linking
the massive deficit to what is happening in the stock market, does he have a point?
Is there a link?
MOORE: Well, that is a good question. I do think he has a good point that this budget that was passed yesterday was inexcusable. It is true that
Republicans spent eight years criticizing Barack Obama for spending too much money and their first big budget they put together, a bust through the
budget caps, $300 billion of additional extra spending, about half that for the military, half of it for the social programs the Republicans wanted
more military spending. The Democrats wanted more domestic programs. So they gave them both.
It is dispiriting for people who are conservatives and I really applaud Rand Paul for doing what he did --
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MOORE: -- to call Republicans and Democrats out, on our out-of-control budget.
Now whether or not that has influenced the stock market, I kind of doubt it. The stock market started falling a week ago. These were high
theatrics. But I think most of the people knew how this thing was going to end, which was with a lot more spending.
ASHER: When you look at what President Trump's excuse was for this budget deal, he said that he tweeted, listen, this deal is not perfect but
unfortunately in life, sometimes you've got to swallow what you do not want in order to get what you do want, particularly when it comes to spending on
the military.
What you make of that, argument or excuse?
MOORE: It is true in American politics. Sometimes you do have to give up some things you do not want to get what you want and so there is some truth
to that. Once Donald Trump indicated to the Democrats that he wanted a lot more money for defense and bust through the spending caps on the defense
budget, then Democrats said, well, we want to bust through the caps on the domestic spending.
So that the problem is like both parties got to play Santa Claus last night. This is a lot of money, as you heard Rand Paul just say, we have
$20 trillion of debt just at the time the economy starting to pick up steam.
I do think our American economy is very healthy right now. Congress is spending about again -- by the way, Zain, they also got rid of the future
spending caps. So there are no governmentals anymore against these kind of budgets.
ASHER: When you look at it in the broader context, was now really the right time for tax cuts, especially when you consider the economy is doing
relatively well and we're basically at full employment and these tax cuts now add an extra $1 trillion of deficit over the next 10 years.
Is now really the right time for that thing?
MOORE: Zain, I helped write the tax cuts so I guess you know how I feel about it. I think it's a -- I think the reason -- one of the big reasons
the economy is doing so well right now was both the anticipation of this big tax cut and now its passage.
The news that's come out in the six weeks or so that this has passed have been enormously positive. We've got Apple bringing back $300 billion. We
have 4 million workers that have been getting pay raises and bonuses.
We saw last week, the lowest number of new Americans signing up for unemployment benefits. I mean the American economy is really hot right
now. I would argue that the reason we've seen this bump-up in growth is in no small part because of this tax, which makes America much more
competitive place to do business.
ASHER: But in terms of debt and deficit, it's certainly still controversial when you look at it in the broader context. Stephen Moore,
we have to leave it there.
(CROSSTALK)
MOORE: -- grow the economy, then --
ASHER: You believe it's going to pay for itself. (INAUDIBLE). OK. Stephen, we have to leave it there. Thank you so much.
I want to get to some news that just came in to CNN moments ago. The White House is actually denying claims that chief of staff John Kelly has
actually offered his resignation. I want to bring in Jeremy Diamond. He's joining us live now at the White House.
Jeremy, just walk us through what happened here because we know that President Trump doesn't necessarily like it when some of his aides generate
negative headlines.
Can John Kelly actually survive this?
JEREMY DIAMOND, CNN CORRESPONDENT: Yes, well, we've been hearing reports of friction in recent days between the president and his chief of staff,
John Kelly, in the wake of this resignation from Rob Porter, who resigned after these allegations of domestic abuse surfaced publicly for the first
time on Tuesday night.
And there was just recently a report on ABC News saying that chief of staff John Kelly had submitted his resignation. We had heard some of those
rumors beginning to swirl in recent hours.
The White House is firmly denying that report. We just spoke with White House deputy press secretary Hogan Gidley (ph), who told me and my
colleague, Jim Acosta, that, quote, "he has not offered to resign."
General John Kelly has not offered to resign. He was very firm in the face of all questions about any kind of possibility that General Kelly had
suggested he would be willing to resign because of the way that these -- the Rob Porter resignation and the allegations he faced was handled.
But Hogan Gidley (ph), White House spokesman, adamant that chief of staff Kelly did not offer to resign.
ASHER: What does President Trump make of how John Kelly actually handled the whole Rob Porter fallout?
Because initially John Kelly came out and said, gosh, I was outraged by these accusations.
But how could he have been really that outraged if he's known about these abuse allegations since last year?
DIAMOND: We saw today, with the president's own comments, that he himself did not appear to be outraged by these allegations because when he was
asked about them, all he talked about was Rob Porter and how he hoped Rob Porter would have a successful career and how he was sad for Rob Porter.
Nothing really about these women's allegations.
But what does seem to bother the president is the fact that the way that this was handled, you know --
[16:40:00]
DIAMOND: -- was not quiet and it was a very public manner. It took over the news cycle for the last couple of days. So obviously that is
bothersome to the president and that is where there are these questions about John Kelly and other senior White House officials' handling of this.
Separately from all that, there are also these questions of how long John Kelly and other senior White House officials actually knew about these
allegations. We've heard that senior White House officials had actually known for several months now about some, at least, of these allegations of
domestic abuse being leveled against Rob Porter.
And yet we did not see any action from Kelly or any others in the White House until these allegations actually became public and soon thereafter we
saw the resignation of Rob Porter.
Separately, we know that John Kelly this morning in a senior staff meeting was insisting to senior officials that he, as soon as he saw this picture
of a black eye of one of Rob Porter's ex-wives, who alleges that he gave her that black eye, that Kelly says that within 40 minutes, he acted and he
sought to get Rob Porter's resignation.
That conflicts with the public accounts that we have heard over the last several days, that John Kelly in fact did not encourage Rob Porter to
resign; rather he was there, urging him, perhaps, even to stay on and weather the fight.
That is what we are hearing right now but, again, John Kelly trying to do some cleanup here, particularly as it has caused some friction between
himself and the president.
ASHER: And a lot of people are saying, Jeremy, that it should not, it should not have to take a photo, physical evidence, a photo to actually
force his hand (INAUDIBLE). But Jeremy Diamond, appreciate you coming up so quickly on this story. Thank you so much.
All right, sports diplomacy is hard at work. An unlikely handshake set the tone of the Winter Games. Coming up, we'll have a live report for you from
PyeongChang.
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ASHER: The Olympics are never just about the sports. Diplomacy played out on the sidelines of the opening ceremony Friday at the PyeongChang Winter
Games. The South Korean president actually shook the hand of Kim Jong-un's sister and in a show of peace and unity athletes from North and South Korea
walked together under a unified flag.
The seating arrangements in the VIP section was a little bit more hazy because U.S. Vice President Mike Pence was actually left sitting rather
close, shall we say, to Kim Jong-un's sister.
Will Ripley is joining us live now from PyeongChang.
Will, when you look at this in the historical context, it wasn't so long ago that the idea of North Korea participating in these games and forming a
joint team with South Korea would have seemed unbelievable, preposterous to some, but now it actually happened.
Just walk us through the moment that they walked in together.
WILL RIPLEY, CNN CORRESPONDENT: Well, a lot of analysts are saying this really is a --
[16:45:00]
RIPLEY: -- propaganda win for North Korea, Zain, because the fact that you had Kim Jong-un's younger sister, Kim Yo-jong, and the ceremonial head of
state, Kim Jong-nam, sitting just feet away from the U.S. vice president, South Korean President Moon Jae-in, the Japanese prime minister, it gives
North Korea's government the legitimacy on a global stage that they so desire.
And this picture is being spread all around the world. Now the vice president did actually make an attempt to minimize some of that legitimacy.
He switched seats because, otherwise, according to the original seating plan, he actually would have been sitting directly in front of the North
Korean delegation.
He also did not stand up when the unified Korean Olympic team marched into the stadium. He did not shake the hand of either member of the North
Korean delegation, even though South Korea's president, Moon Jae-in, did.
He had a dinner event with Kim Jong-nam this evening and then tomorrow he will be hosting a lunch event, where it is -- it is believed, according to
several diplomatic sources, that Kim Jong-un's sister could deliver a message, possibly from the North Korean leader, directly to President Moon
Jae-in and could even possibly extend an invitation to visit North Korea sometime later this year.
This is clearly a diplomatic effort on the part of the North Koreans to warm up relations with South Korea and, at the same time, a lot of people
are accusing them of trying to drive a wedge between Washington and Seoul because Vice President Pence has been speaking very strongly all day
against the North Korean government.
He met with North Korean defectors. He brought with him the father of Otto Warmbier, the American student who died shortly after being released from
North Korean captivity.
And yet South Korea's president, Moon Jae-in, is clearly at least willing to engage. He said he has possibly -- would even considering visiting
North Korea even though the United States is calling for him to completely disengage after the Olympics and to join the United States in stepping up
the pressure on North Korea to denuclearize.
ASHER: So South Korea and the U.S. still not seeing eye to eye exactly how to deal with North Korea (INAUDIBLE) Moon Jae-in does see this as an
opportunity for diplomacy but a lot of people, as you mentioned, are looking at North Koreans saying that they're seeing this as an opportunity
for political propaganda.
Will Ripley, live for us there, thank you so much.
So with the world watching PyeongChang, The 2024 Games aren't exactly on the radar except for the host city of Paris. It won the bid to actually
hold the games and for the first time the IOC awarded two bids at once: 2024 to Paris and 2028 to Los Angeles.
For Paris, the priority is sustainability and efficiency. Richard was in the French capital to ask the organizing committee CEO if Paris would
indeed be ready.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: At the end of the day, things happen. And if you get all the games, you have all that criticism going forward. Everybody is a
bit worried. But also, everybody is very excited and at the end, it happens. And it's always a fantastic celebration of sport, of Olympism,
and it's a great celebration.
So we're looking forward. We will plan. We have the beautiful city. We have -- we will have best athletes of the world, the best stage to organize
a fantastic celebration of sport.
RICHARD QUEST, CNNMONEY EDITOR AT LARGE: And how much construction -- because when the IOC looked at yourselves and Los Angeles, and then had to
work the last two, the two men to do city standing, and then had to work out which was going to go when and all of that, you see the enormous
expense of the previous ones.
You saw London did it relatively on the cheap. You saw Beijing and you see Rio.
So where do you fit into that of how much you have to do here?
UNIDENTIFIED MALE: I think it was one of the key elements of it. We knew from the start we needed to be sustainable and financially not modest but
at least take the (INAUDIBLE) advantage we have here with all the infrastructure.
And we based our concept on existing venues, existing infrastructure to just limit the things that we need to build to the minimum. We will only
be the one sports venue and the village in the context where we actually need housing in this particular are of France.
QUEST: The Paris Games and then the LA Games, the significance of both of these two cannot be overstated because this is a first games where the IOC
is trying something completely different, isn't it, this idea of more modest, not modest in a (INAUDIBLE) financial sense, in that sense, reuse
of facilities.
They have to be sustainably manageable.
UNIDENTIFIED MALE: Definitely. I think that's one of the key elements. And the fact that we will be able to work with Los Angeles first time this
bid awarded in the same time is actually a key element so we can find turnkey solutions, trying to actually mutualize things and think
differently in the way we deliver the games.
It's very important for the IOC. It's very important for the public. We need to find ways to get those games as magnificent but in a cheaper way.
[16:50:00]
QUEST: Yes. They don't have to be what they have been. They don't have to be throw everything at it and then throw some more.
UNIDENTIFIED MALE: No. And we need to think differently. Now you have technology. You've got the ability to think differently, too, be able to
share things and our audience is made for sharing. We want to involve people. We want to engage. And we want to leave a legacy that is useful
and it is not just about building. It's about something else.
QUEST: What are you most looking forward to?
UNIDENTIFIED MALE: Well, I think obviously the party and the celebration. It will be like the utmost atmosphere that we will have during the Games
will be fantastic. But I think the journey is also going to be very exciting.
How do we engage the youth? How do we engage entrepreneurs? How do we engage big companies? How do we make sure that everybody can actually
profit from this fantastic platform that we have to show the best of France, to welcome the world and basically to embrace the new center.
(END VIDEOTAPE)
ASHER: Still to come on QUEST MEANS BUSINESS, as we mentioned at the top of the show, this has certainly been a volatile week on the markets. One
to remember to say the least as mostly and traders worldwide wonder what on Earth to make of what happened this week. We'll take a closer look at the
drama after the break.
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ASHER: To say that this week on Wall Street was historic, I think we can all agree that it was an understatement. Take a look at how the markets
did today. You're seeing these wild swings, Saturday solidly in the green around lunchtime or so. We were down at one point 500 points.
Then surprisingly we ended up 330 points. But if you look at that in the context of this week, Monday we were down 1,000 points by the time it
closed; same thing on Thursday. Clare Sebastian watched all of it unfold at the New York Stock Exchange.
Clare, just walk us through this week from your perspective. I believe you were on air around the time on Monday, where we had that 1,500-point dip in
the markets. Obviously we've slightly rebounded before the close. Walk us through what it was like for you with a front-row seat for all of the
action.
CLARE SEBASTIAN, CNN CORRESPONDENT: I think if there's one thing we've learned over the course of this week is that never predict what's going to
happen in the last hour of trading.
It was during that last hour on Monday that we saw the Dow lose 800 points in the space of 10 minutes. We literally looked on with disbelief. And I
think it says something for a week where you have not only the biggest points drop in history but also the second biggest points drop in history.
But it was a welcome end to the week. Certainly I spoke to a couple of traders in the last hour or so of trading today. And most of them did say
to me that they think that the market is oversold at this point, at which point people are going to start to come back in and buy.
Volatility could --
[16:55:00]
SEBASTIAN: -- stick around for a little while yet but certainly most people I've spoken to, seem to think that what we saw today was the making
of the bottom of the market.
ASHER: So why do they think that?
Can we all, knowing how unpredictable things can be, you know as anyone else, can we all really breathe a sigh of relief going forward, do you
think?
SEBASTIAN: I think (INAUDIBLE) it might be a little early. Certainly they have the models which show that (INAUDIBLE) technical level on the S&P 500
today and that was things bounced up.
There's been a sensitive market. The mood out there has palpably shifted in the last two weeks since we hit those all-time highs. This was a very
fast decline by historical standards, the correction in the space of just a few days is very unusual.
But then again, look at the climb. We hit 25,000 in early January seven trading days later we hit 26,000. So the climb was almost as fast as the
fall. There are couple of things that could shake the market next week, though. Inflation data from the U.S. and the U.K. is going to come out.
That is something that obviously has been really preoccupying traders this week, worries that inflation will (INAUDIBLE) faster and raise rates. So
there are a couple of things we're going to be watching.
But I think we end the week with more signs of stability than we started at.
ASHER: Yes and a lot of people watching this market, basically scratching their heads because they're thinking if the fundamentals are good, and it
is more or less a strong economy and we are at full employment and we've seen earnings do relatively well, why has there been so much volatility?
But of course there's so much fears about the Fed. We've talked about bond yields earlier this week. But in terms of what the market does next, your
guess is as good as mine. All right, Clare Sebastian, live for us there, thank you so much.
And that is QUEST MEANS BUSINESS. I'm Zain Asher. Have a great weekend.
END
