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Global Stocks Tumble As Delta Variant Surges; Toyota Pulls Olympic Ads In Japan Amid Backlash; England Plans New Restrictions On Day One Of Full Reopening; Biden: U.S. Holding Off On China Sanctions As Investigation Continues; Jeff Bezos Speaks With CNN Ahead Of Blue Origin Blastoff; Dow On Pace For Worst Fail Since October Amid New COVID Fears. Aired 3-4p ET

Aired July 19, 2021 - 15:00:00   ET



ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It's a brutal day for U.S. stocks. The Dow could finish down by a thousand points by the time the day

is done. Those are the markets and these are the main events.

It is a delta disaster for stocks worldwide. Global markets suffer their worst day of the year over surging COVID cases.

Toyota pulls its Olympic ads in Japan after a backlash over staging the Tokyo Games.

And Boris Johnson is already announcing must measures on the day England stops its virus restrictions.

Live from New York, it is Monday, July 19th, I'm Alison Kosik and this is QUEST MEANS BUSINESS.

Good evening. Tonight, markets are heading toward their worst day since late last year before COVID vaccines began to roll out. The Dow is down

almost 900 points or about 2.5 percent. The S&P 500 is also down sharply. They are matching steep losses in Europe. London, Paris and Frankfurt all

closed more than two percent lower.

We are seeing a return to early pandemic trading strategy here. Travel stocks like airlines, hotels, and cruise lines are getting hit the hardest.

Investors are reflecting concerns about the state of the pandemic. Warning signs are flashing all over the world as COVID cases rise and vaccination

rates level off.

England's highly anticipated Freedom Day, it has finally arrived. It is exiting the final stage of lockdown despite a surge in new daily cases.

Prime Minister Boris Johnson is marking the day in isolation, having been pinged by the country's test and trace app.

In Tokyo, we are seeing outbreaks among Olympic athletes and staff. Sixty- one cases are now linked to The Games which begin on Friday.

Indonesia meantime has emerged as the new epicenter of the pandemic. It recorded the deadliest day on Monday. Just six percent of Indonesians are

fully vaccinated.

Finally, cases in the United States have more than doubled over the last two weeks and infections are rising in all 50 states. Los Angeles has

reinstated a local mask mandate.

Matt Egan joins us live now. Matt, great to see you. What a day for Wall Street. What is happening here? Is this just the delta variant or is this

also about fundamentals and Fed policy, too?

MATT EGAN, CNN BUSINESS SENIOR WRITER: Yes, Alison, I think COVID fears are back in charge of Wall Street. The Dow is on track for what would be the

worst day of the Biden era. You actually have to go back to October of 2020 before we had a day like this and that was a long time ago. Remember, I

mean, that's before this successful roll out of vaccines and the reopening of the economy, before the $1.9 trillion American Rescue Plan.

And there are serious concerns about the delta variant and what it will do to the economic recovery. I think these worries have been reinforced by

some of the numbers that we just had on the screen as far as rising infections, some of the COVID issues at The Olympics and the C.D.C.

cautioning Americans not to travel to the United Kingdom.

There is really nowhere to hide in the stock market today. Virtually, all of the sectors are down. But as you mentioned, some of those COVID

sensitive sectors are getting hit the hardest. We've seen airlines, cruise operators, energy, they've all taken big hits. Banks which are really

sensitive to swings in the economy, they are down big.

Investors, they are existing risky stocks and they are piling into ultra- safe government bonds. We've seen the 10-year Treasury yield drop below 1.2 percent for the first time since early this year, that is another sign of

nervousness. But Alison, we do have to put all of this into context.

I mean, it was just a week ago that both the Dow and the S&P 500 finished at record highs. Despite these enormous losses today, the S&P 500 is still

up about 13 percent on the year and it is up 90 percent from the March 2020 lows. And as we know, the market cannot go up forever.

Today, COVID concerns have sent the market tumbling backwards a bit.

KOSIK: Yes, you know, the market can't go up forever, but a swing like this lower is really jaw-dropping. Do you think that it is safe to say at this

point that the market is sort of embarking on a new transition here or a new trend?

EGAN: You know, it is tough to say. We have seen some of these COVID concerns re-emerge in recent weeks and then the market bounced back to all-

time highs. So, I don't know if we could say, you know, whether or not this bullish trend is over.


EGAN: But clearly, the market was due for a pullback. I mean, it has been a really long time since we saw a five percent pullback, let alone a 10

percent correction. And so, in some ways, you know, the market is kind of cooling off here and that can actually be a healthy thing because again it

lets some other buyers who have been waiting on sidelines step in.

But clearly, what is going to happen is the markets are going to be looking very closely at the COVID trends and if these worrying numbers continue,

then, yes, that could continue to be a headwind for the stock market.

KOSIK: Okay, Matt Egan, thank you so much for your perspective.

EGAN: Thank you.

KOSIK: And Alicia Levine is Head of Equities and Capital Market Advisor at BNY Mellon Investment Management, and she joined me live. Alicia, great to

see you.


KOSIK: Doing well. The market doesn't look too great, if you're, you know, not in it for the long-term because, you know, this sort of came as a shock

to many investors especially when you look at what's been happening. A few weeks ago, it was about inflation and the market overheating. Those were

the big fears.

Well, now it seems like growth is in question.

LEVINE: Yes. I think that is a really good point. In addition to the delta concerns, I think there are some issues on the fundamentals here. They are

not terrible for the market, but they're worth watching and that is really, if you look at 2022 earnings, even as earnings estimates are going up for

2021, those 2022 estimates are really still hanging in there and they're not moving up in the same way that earnings estimates for 2021 are moving.

So, I think that is really just reflecting the fact that we're probably at peak growth particularly here in the U.S. It is going to roll over to a

slower rate of growth, not that growth will be down, but that will be slower rate, and we've already seen the rotation in the market.

You know, the truth of the matter is, most sectors already sold off into correction and the only reason the S&P index was up so much was because

those FAANG stocks and those large cap tech stocks were really hanging in there.

Today, they're getting hit and taking the index with it.

KOSIK: And so inflation suddenly went on the back burner. This is after on Friday, the market was laser focused on it after Fed Chair Jay Powell was

on Capitol Hill, and I quote, he said, you know admitting that " ... while inflation feels uncomfortable and feels like it is a bit stickier than some

would like, it is still justice transitory."

That feels like a pivot in his policy here, like he is changing the narrative here. Are we really obviously seeing a reaction to delta? But are

we also seeing a reaction to a possible pivot in strategy from the Fed?

LEVINE: It is very interesting, if you listen to business leaders and you listen to conference calls, every conference call and business leader, if

you speak to them, are worried about inflation. The market is not worried about inflation. Academia, not worried about inflation; and the Fed not

particularly worried about inflation.

So, there is a bit of a dichotomy and there is a dance going on here. I think it is a little bit premature to say that inflation worries are gone

from the market. We do think inflation will be transitory, but it will settle in at a higher rate than the 1.8 percent that we had in the post

global financial crisis era. It is probably going to be closer to 2.5 percent to three percent all in. And yes, it will be stickier longer and

that is something to look out for.

The market is pricing in transitory. It is likely to be the case, but there will be some uncomfortable data coming in the next few months for sure.

KOSIK: Yes. We did see President Biden address inflation today during an appearance on TV, tamping down on inflation fears. He made the case that

these price increases are temporary. But the thing is, he is hoping to push an infrastructure package through Congress, so of course, he is going to

say that it is temporary. He doesn't want to cause any concern.

LEVINE: Yes, look, I mean, the inflation concern is definitely something on the minds of Congress as they look to spend more money. But I think,

ultimately we think that the reconciliation bill will probably go through. Maybe not at $3.5 trillion, something closer to $2.2 trillion. But with

that will come taxes of about $1.5 trillion and that is another thing priced into the market here because 2022 earning will have to be shaved by

about seven percent if the taxes as proposed go through, which is that 25 percent corporate tax rate plus, plus the overseas corporate tax rate,

which doesn't get talked about, but actually raises more money than the statutory rate of 25 percent.

So that is what the market is reacting to. Slowing of growth, still growth, but slowing, and somewhat higher inflation, even if it is temporary.

Mild stagflation, nothing like the 70s, let's be very clear. We are not entering the '70s, but just a little of the euphoria of growth is coming

out of the market. In addition, the labor market clearly has a supply problem and we are going to see higher wages and we will see higher housing

prices. All that will contribute to inflation.


KOSIK: So, you say no worry about stagflation, but what is the 10-year Treasury yield telling us? Its slide is really jaw dropping especially

today. What does the bond market -- what is the bond market telling us about the state of the U.S. economy?

LEVINE: So, the bond market is telling us that growth is slowing; that we're in the middle of peak everything. The second quarter was the peak of

everything -- peak growth, peak spending, and peak fiscal. Let's talk about fiscal, we are spending $1.2 trillion through September 1st in 2021 even as

the economy reopens. We're not getting anything near that, even if we pass a $2 trillion or $3 trillion fiscal plan. That is spread over eight to 10


So, it has a bit of a fiscal cliff here and that is what the bond market is telling you. It just has to slow down. Again, I don't think this is fatal.

In a normal year, the average draw down in the S&P is 14 percent. We're at 3.5 percent from the high. The most we had in 2021 is a drawdown of four

percent. So, we are due, I mean, to what Matt was talking about before me, it is not unusual to see drawdowns of this nature. It is unpleasant if

you're fully invested, it is not a pretty day. But I think the cyclical recovery is still here and I would get out my shopping list in the next few

days because I think it is time to start shopping for stocks.

KOSIK: Yes, and if you're going to do that, you better have a strong stomach. Alicia Levine, thanks so much for coming on the show today.

LEVINE: Thanks, Alison. Really nice to see you.

KOSIK: Good to see you, too.

Toyota says it won't air any Olympics related ads or have its CEO attend the games as infections rise in Tokyo. At least 58 COVID cases have now

been linked to the Olympics. An alternate on the U.S. women's gymnastics team tested positive on Sunday and is now isolating in a hotel. Almost 80

percent of people in Japan say The Games should not go ahead according to a recent survey by Ipsos/Mori.

A spokesman for the Tokyo Games says it is up to each sponsor how they want to continue.


MASA TAKAYA, TOKYO 2020 SPOKESPERSON: There is a mixed public sentiment towards The Games at this moment or even past year. However, The Games --

so in and respect, there must be a decision by each company in terms of how they should be able to disseminate, how they should be able to convey their

messages to the public audiences.


KOSIK: Selina Wang has more from Tokyo.

SELINA WANG, CNN CORRESPONDENT Alison, we're just days away from the opening ceremony and top Olympic sponsor, Toyota said it will not air

Olympic-related commercials during the Tokyo 2020 Games.

Normally, The Olympics are a golden opportunity for brands to boost their corporate image, but this year, Japanese sponsors are more concerned about

brand damage associated with these five rings as there is still intense opposition to these Games here in Japan.

Tokyo right now is still under a state of emergency. COVID-19 cases are surging. The delta variant continuing to spread here, and just 20 percent

of the population has been fully vaccinated. This is, as there are now a growing number of COVID-19 cases linked to the Tokyo 2020 Games with

athletes, officials, and contractors testing positive for COVID-19.

Now, Japanese Olympic sponsors have spent a record $3 billion to support these Games, but many of their plans are falling flat with spectators

almost nearly completely banned from Olympic venues. I've spoken to several sponsors who say they have scaled back or scrapped some of their

promotional events and plans.

Now, Toyota is a top Olympic sponsor. It is the highest tiered level Olympic sponsor and for them to say they are not airing Olympic-related

commercials for these Games, it is a strong signal -- Alison.

KOSIK: Okay, Selina, thank you.

As England reopens, the U.K. is trying to stay ahead of the virus. A new app has already pinged more than half a million Britons, warning them they

are potentially exposed to COVID and subject to 10 days of quarantine. That, as the country tries to get back to business. We'll talk with the

Director General of the British Chambers of Commerce about Freedom Day amid rising COVID cases.



KOSIK: U.S. Health officials are advising American travelers to avoid the U.K. as England drops most of its last COVID restrictions. British Prime

Minister Boris Johnson has spent the country's so-called Freedom Day in isolation. He was in close contact with his Health Secretary who has tested

positive for COVID.

At a virtual news conference, Mr. Johnson said that the country would face tougher choices if it kept restrictions in place. Scott McLean joins us

live from London now. Great to see you, Scott.

So I can only imagine how the sentiment is, these restrictions are lifted, but if you look at the optics, they're not great. The cases there continue

to rise. The Prime Minister is self-isolating. How much of a gamble do you think he is taking?

SCOTT MCLEAN, CNN CORRESPONDENT: Hey, Alison. Yes, I think he would have been taking a much bigger gamble, at least, politically had he have gone

ahead with his original plan which was to take part in a pilot project to avoid having to self-isolate altogether. He faced furious criticism and he

reversed course at a time when he is presenting somewhat contradictory messaging to the British public.

On the one hand, yes, most -- all of the restrictions in this country are going away; on the other hand, he is pleading with people to be cautious,

to be careful. He is also asking people to follow the rules if they are asked by the government after having close contact with someone who tested

positive, to self-isolate themselves because a lot could go wrong on this big experiment that the U.K. is really embarking on.

Yes, hospitalizations and deaths remain pretty low considering the circumstances, but case counts daily are really terrifyingly high, about

50,000 per day. That is approaching the levels that they saw at the all- time peak. So, we are going into record-setting territory likely quickly.

More cases obviously means more people off of work, more people having to self-isolate and so, there is a risk of people actually disrupting the

economy. Not being able to do the essential services to keep the lights on, to keep the trains running, and to make sure that hospitals are not short


And so, the Prime Minister actually announced today that there would be special exemptions for very specific essential workers in very specific set

of circumstances to make sure that does not happen.

The government, Alison, is also quite worried about the emergence of new variants. Just in the last two weeks, government scientific advisers warned

this of the conditions that exist right now, where you have a lot of people who have been vaccinated but also, really, really high daily case counts.

This is the perfect environment for a new variant to emerge that could evade the defenses provided by the vaccine.

That obviously would be a big deal, a big problem for this country, a big problem abroad as well. How likely that is to happen? Well, scientists

don't really know. This is somewhat uncharted territory.


KOSIK: Yes, it really has turned into quite a huge experiment as you said. It is been 20 hours and counting since the lockdown has been lifted. How

are people handling the confusing messaging?

MCLEAN: Yes, I think people have reason to be nervous with these restrictions being lifted and based on their behavior, they are. I'll give

you my commute for instance. I took the London underground in earlier today. The vast majority of people on the trains are still wearing their


I went to the barber, the barber was wearing her mask, but at the coffee shop next door, the employees there were not and they don't have to be. The

government has really left it up to individuals and employers to decide what is best.

Young people, though, some young people decided that the best thing would be to show up at the nightclubs at midnight when they were allowed to

reopen. They are not checking to make sure you were vaccinated, and most young people in this country are not double vaccinated.

The Prime Minister though, he sort of made clear today, he gave a warning to anyone on the fence about getting vaccinated, saying that once everyone

has a chance to get both doses of the shots, that will come at around the end of September, you won't have a choice if you want to go to nightclubs,

if you want to go to large sporting events or if you want to go to the theaters.

A negative test is not going to be good enough. That is bound to be controversial. It may also help get some people off of the fence and

actually get them vaccinated -- Alison.

KOSIK: So, you went to the barbershop, and the hair cut looks good, Scott.

MCLEAN: Thank you, Alison. I appreciate that.

KOSIK: You've got it. All right, thanks for your reporting.

British newspapers are by no means celebrating England's new found freedom. Instead, headlines there are lamenting the start of the so-called ping-


"The Telegraph" called Freedom Day a farce. "The Daily Mail" called for the Prime Minister to see sense on the ping-demic. Both headlines refer to a

National Health Service app for tracking, tracing, and isolating potential COVID carriers. That app has already notified or pinged more than half a

million people in the first week of July. That has forced workers to self- isolate and businesses to temporarily close. Even a public transit line was affected over the weekend

British night life is having a particularly hard time getting restarted. Boris Johnson says people will need to be fully vaccinated with two shots

to get into nightclubs and large venues by the end of September.

Last month, a government survey found that fewer than one in five pubs, bars, and restaurants have high confidence they will survive that long.

In a similar survey taken in April, nearly half of other kinds of businesses said they could survive another three months.

Shevaun Haviland is the Director General of the British Chambers of Commerce and she joins me live.

Grateful for your time today. Good to see you.


KOSIK: So, it is clear, everybody is ecstatic or most people who are sick of lockdown, you know, that COVID restrictions, they have been lifted and

mask mandates have been lifted, yet we are seeing this rise in cases with the delta variant causing all this nervousness. I want to hear from you

what the thinking is from businesses in England.

Are there doubts about fully reopening at this point is just throwing caution to the wind?

HAVILAND: I would say that our businesses, our members are pleased that we've got to this stage of the road map, that restrictions -- all

restrictions have now been lifted. However, of course, the onus has moved on to them in terms of what restrictions they want to keep in place. And of

course, they want to keep their employees and their customers safe, so you will see restrictions in place. Some restrictions still in place for those


That of course will vary depending on the sector. As you pointed out, nightclubs have been entirely closed and now can open and there have been

severe restrictions for things like theaters and cinemas. So, if you're coming to work in a business, and remember, not all people can work from

home, we know that about 75 percent of offices will continue to have some of their staff working from home for probably about the next 12 months.

KOSIK: But there are leading international scientists who describe England's Freedom Day as a threat to the whole world. They call it a

dangerous experiment with 1,200 scientists backing a letter to the British medical journal, "The Lancet" that criticized the government's decision. I

understand the need for businesses to open and some will require masks and maybe check temperatures, but are you concerned about just this sort of

widespread reopening all at once?


HAVILAND: You know, we will follow public health guidance from the government. It is up to our businesses to make sure they've got the right

restrictions in place in their premises that they know that their employees and their customers will be safe, and we really encourage them to do the

health and safety testing as you would normally and to have those conversations with their employees and their customers to make sure they

are putting the right sort of guidance in place.

KOSIK: Talk to me about how difficult it has been for small businesses, particularly hard hit businesses over the past year and a half.

HAVILAND: Yes, I mean it has been incredibly difficult, but business as usual have been pragmatic and entrepreneurial. One of our members was

running a business, fitting office spaces for example, that business disappeared overnight as offices closed. But they pivoted their business,

they got involved with the communities and they helped get out some of the N.H.S. COVID wards and now vaccine centers.

So, it just really shows you that businesses have been incredibly resilient. They've turned their businesses to pivot where they can and

they've really been part of their communities, really helped their communities.

KOSIK: How difficult though will it be for businesses as these COVID cases continue to spike presumably and they may need to close and then reopen.

Are they ready for that possibility?

HAVILAND: It is tricky times at the moment, Alison. It really is. Some of our manufacturing firms have about 20 percent of their staff either out ill

or self-isolating because they have been in contact with someone and that is really not sustainable.

We have been working with the government. We have been asking the government. You know the rules change on August 16th when isolation, where

you don't have to isolate if you have been double jabbed, but between now and August 16th, you know, that is still a few weeks.

So, we've been working with the government to say, can we see the results of the test release pilots that have been running? Can we find another way

between now and then to make sure our businesses do have enough of their staff at work?

KOSIK: How excited are business owners today or have they been today? What have they said to you?

HAVILAND: Yes, I mean, they have. They have been cautiously excited. They, of course, you know, are -- they're citizens, too. They see the cases rise

and they are worried, but they are really, really good at putting the right things in place for their business and their customers.

I think they've seen -- you know, there will really will be able to have that dialogue with their employees and their customers to make sure they do

the right thing.

KOSIK: Okay, Shevaun Haviland, Director General of the British Chambers of Commerce, thanks for your time today.

HAVILAND: Thank you.

KOSIK: And coming up, Jeff Bezos gets his turn in the billionaire space race. We're live in Texas as Bezos prepares for a historic launch aboard

New Shepard.



KOSIK: Returning to our top story tonight, U.S. markets are following Europe into a global sell off over the Delta variant and rising COVID case

counts. The Dow is now holding steady between 850 and 900 points lower at about 2-1/2 percent. It's the biggest loss of the Biden era. Speaking

earlier at the White House, Joe Biden responded to criticism that his economic agenda could accelerate inflation


JOE BIDEN, PRESIDENT OF THE UNITED STATES: There's nobody suggests in his unchecked inflation on the way, no serious economist. That's totally

different. I mean, look, the stock market is higher than it has been in all of history, even went down this month, even down this month. Now, I don't

look at the stock market as a means by which to judge the economy like my predecessor did.

But he'd be very -- he'd be talking to you every day for the last five months about how the stock market is so high. Higher than any time in

history. Still higher than any time in history. So that's not how I judge whether or not we're having economic growth.


KOSIK: Clare Sebastian joins me live now. You know, Clare, listening to him talk about inflation that was so yesterday, meaning Friday. Today, it seems

to really be all about the Delta variant that's really driving today's trade and the trading pattern is familiar. I'm seeing investors sell the

reopening stocks and they're pouring into bonds and stocks that could benefit from a potential lockdown.

CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: Yes, absolutely, Alison. And I think to some extent, investors could stomach the idea of inflation

as long as we were getting these high growth rates that we're seeing.

But now, the issue with the Delta variant and those worries that are playing in is the concern that that could crimp growth at the same time as

we're getting this higher inflation. The Fed chair Jerome Powell says that he thinks it's transitory that all of this will resolve of its own accord

once the initial supply demand issues work themselves out during this reopening.

But a lot of people disagree with him. And the markets are now looking at this sort of tricky combination of potentially, the fact that we might be

at the highest growth rates that we're going to see. The idea of peak growth and the idea of inflation at the same time. Yes, it's hitting the

stocks that are going to -- that are going to be hit the most if there are renewed COVID restrictions. The likes of the airlines, the cruise line.

Boeing is currently the biggest fall on the Dow at the moment, but it's really across the board. All sectors of the S&P 500 are down at the moment.

This is a broad base decline that we're seeing today. And part of that, Alison, is because we've seen a strong run up. The Dow was up from 13

percent for the year before this and I think some will say that it was due for a pullback.

KOSIK: Do you think this is the beginning of a downtrend after we have seen the market run up for so long?

SEBASTIAN: You know, I think that is a really tricky one to say. I think some people will see this as an opportunity to buy. We'll see the decline

in some of the stocks and we'll come back in because as I said, it's not just the reopening stock, some of the high flying tech stocks, pretty much

all of them down today. So it might be seen as an opportunity to buy it will depend. Obviously, there is a flight to safety as well going on.

We're going to see -- we're seeing a lot of people coming out of stocks and into bonds, the 10-year treasury yield is now at its lowest point since the

middle of February. So, that is certainly playing into this as well. And we have seen a rotation as well the last few months out of the sort of fast

growing, high-flying growth stocks into more value stocks. So there's a lot of different forces at the moment but I think it's going to -- it's going

to be based largely on the course of this virus and what happens next there.

KOSIK: Yes. This really has become that familiar trade of when the pandemic was just beginning where the virus really dictated what the trade would be.

Clare Sebastian, great talking with you.


KOSIK: U.S. President Joe Biden says he won't be sanctioning China yet over its alleged hack of Microsoft e-mail servers. The U.S., NATO and the E.U.

have now officially accused China of being behind the massive hack of the Microsoft Exchange servers that affected at least a quarter million

customers globally.

Alex Marquardt has the story in Washington. Alex, great to see you. How -- now that we've seen this alliance sort of band together, what's going to

come with it? Will there be any kind of punishment because of China's actions?

ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, that really is the big question, Alison. The news today really is this

formidable coalition that has come together to condemn Chinese malicious actions in cyberspace. You have the U.S. that was joined by NATO for the

first time in its history in condemning China, the European Union, Australia, New Zealand, Japan, and others.

So that -- it really is an impressive group that has come together to condemn China, in particular and in its attribution of China for that

massive cyberattack against Microsoft Exchange that was revealed back in March that affected tens of thousands of computers and networks around the

world. But this also -- this announcement today also goes farther, saying that as China has continued to carry out its malicious cyber activity,

they've also engaged the services of contract criminal hackers in the service of China's civilian intelligence arm, the Ministry of State

Security, MSS.

And on the side of these attacks that they've been carrying out these hackers, the U.S. has accused these hackers of enriching themselves of

carrying out financial attacks in the form of crypto jacking is one way, other kinds of extortion and ransomware. Ransomware is, you know, obviously

a form of attack that we've been talking about a lot lately, but largely when it comes to Russian and Eastern European hackers.

But Chinese hackers have also been carrying out ransomware attacks, demanding millions of dollars in ransom payments against a large U.S.

company that the Biden administration has declined to name. So this is in the words of a senior administration official, really eye opening and

surprising for us. The goal that appears here, Alison was really to get all of these countries on the same page and calling out China in naming and

shaming them.

And that is not to be underestimated. That is also a powerful tool. But it may just be the first step. Certainly when it comes to the U.S. in terms of

punishing China. You're absolutely right. There is no punishment, per se. But these countries all collectively calling out China for what it -- for

what they're saying is not the actions of a responsible country -- of the kind of country that China claims to be, Allison.

KOSIK: But China has been named and shamed before by countries, by groups of countries and China is just sort of seemingly shrugged its shoulders.

Will doing nothing right now encourage them to continue doing these bad acts or do you think it's hard for this alliance to maybe come to some

agreement on some sort of concrete punishment for China?

MARQUARDT: Well, I think if you talk to experts, they wouldn't say that this is doing nothing. This really is unique. When you see the list of

countries that has come together to do to call out China it is quite impressive if the United States did it by themselves, by their own

admission, the Biden ministration says that nothing would change in the way of Chinese activity.

We should also note that the Department of Justice announced today that they've just unsealed an indictment against four Chinese hackers who are

working at the behest are working for the Ministry of State Security in targeting American universities, government entities and companies.

And in the words of an expert I just spoke with the Chinese hate to be indicted, they hate to be called out their activities are being

highlighted. They certainly don't take this in the same way that the Russians do, who essentially let this, you know, it's like water off a

duck's back. So this is a first step. And we could see some more action down the line. It is very hard to get countries to come together and

sanction at the same time.

And it does seem like the emphasis here was to get international condemnation. See if Chinese behavior changes at all, and then -- and then

figure if it doesn't, then then do more down the line, Alison.

KOSIK: OK. Alex Marquardt, thanks for all of that context and great reporting.

A group of media organizations has uncovered evidence of a massive spying effort targeting journalists, activists, and business leaders. An

investigation published Sunday in the Washington Post, says the spyware at play is called Pegasus and was licensed to governments by a private Israeli

tech firm. The U.N.'s High Commissioner for Human Rights calls the report extremely alarming. Hadas Gold has more.


HADAS GOLD, CNN CORRESPONDENT: Alison, this intensive investigation was conducted by an international alliance of 17 news organizations and human

rights groups. Among them The Washington Post and Amnesty International. It started from a leaked list of 50,000 phone numbers, which the group says

we're possible targets for spying by governments around the world which utilize hacking program called Pegasus, which is developed by the Israeli

cybersecurity company NSO.

Now NSO says they license the software to target terrorists and other criminals. It's so sophisticated that experts say it can essentially give

access to everything on a target phone, even controlling the microphone and camera which led to widespread security concerns when it was first revealed

in 2016.

But this consortium says that among the list of phone numbers, they found numbers in countries like Mexico, Saudi Arabia and the UAE, belonging to

business executives, human rights activists, and journalists, including some CNN reporters.

The group said 37 phones that they were able to examine showed some sort of evidence of having been targeted or breached by this Pegasus software. The

CNN has not independently verified the findings of this report. But it is bringing scrutiny back onto this company NSO and the Israeli government for

even allowing the software to be licensed to governments that may be using it for reasons beyond its advertised purpose.

Now, NSO is pushing back strongly against the report, a senior source telling CNN that the report is flimsy that they haven't seen the list of

50,000 numbers but that it would be impossible for all the members to be targets of their clients because their clients only target about 4000

numbers per year. The senior service also stressed they do not operate the software for their clients and have no visibility into the data.

But they do investigate any claims of misuse and will cut off contracts with clients that misuse the technology. Something they say they've done

five times in the past, Alison?

KOSIK: All right. The final countdown for Blue Origin is almost underway. CNN talks to Jeff Bezos as he prepares to launch into space aboard his own



KOSIK: Fewer than 18 hours to go until Jeff Bezos blasts off into space. The world's richest man will be the second billionaire to head up -- head

up to space following Richard Branson's launch eight days ago. The trip marks the first ever crewed flight for Bezos' company Blue Origin. Bezos

will be one of four passengers along with his brother Mark, Mercury 13, member of Wally funk. And recent high school grad Oliver Damon.


KOSIK: Rachel Crane spoke of Bezos earlier today. And she joins me now live from Van Horn, Texas. So here we go again but this one is different. I

especially like the interview that you did with Jeff Bezos today, where he admits that yes, he's taking a billionaire joy ride into space.

RACHEL CRANE, CNN SPACE AND SCIENCE CORRESPONDENT: Yes. You know, Allison, this is really a dream come true for Bezos and his fellow crew mates. Bezos

told me he's incredibly excited about this upcoming journey, also very curious to know -- to see what the impact will be on him. You know, only

around 500 people have ever traveled to space and all of them come back saying that the experience has fundamentally changed them.

It's called the overview effect, seeing the earth from above without boundary, seeing how vulnerable our planet is that it really has a

philosophical effect on the flight participants. So Bezos very curious to know if he will experience that. But a lot of people have been quite

critical of these sub orbital, you know, joy rides as people have deemed them, of the Uber wealthy. One person paying $28 million to get a seat on

board, New Shepard.

I had the opportunity to speak with Bezos about these criticisms. Take a listen to what he had to say.



JEFF BEZOS, FOUNDER, BLUE ORIGIN: You know, we have there, we have lots of problems in the here and now on earth, and we need to work on those. And we

always need to look to the future. We've always done that as a -- as a species, as a civilization. We have to do both. And what our job at Blue

Origin has to do and what this space tourism mission is about is having a mission where we can practice so much that we get really good at

operational space travel.

More like a commercial airliner and less like what you think of as traditional space travel. If we can do that, then we'll be building a road

to space for the next generations to do amazing things there. And those amazing things will solve problems here on earth. And by the way, maybe

it'll be all over. He's 18 years old, maybe that'll be -- maybe he'll found a space company that uses the infrastructure that this generation is

building right now. So the real answer is yes, we have to do both.

CRANE: And Jeff, last question. You know, the timing of this flight, about two weeks after you stepped down as CEO of Amazon is that because of the

inherent risks of this flight?

BEZOS: No, I could have done this fight as CEO of Amazon and it would have been fine. So I'm -- first of all, I -- we really believe this flight is

safe. We wouldn't, you know, people say -- I had friends say to me, how about -- how about the second flight or the third flight? Why do you have

to go on the first flight? And the point is, we know the vehicle is safe. If the vehicle is not safe for me, then it's not safe for anyone.


CRANE: Now, Allison, the reason that Bezos feel so confident in the safety of this system really centers around the full envelope escape system that

it has, meaning that at any point during the flight profile, the capsule has the ability to jettison itself away from the rocket and getting the

crew members to safety. So Bezos and his fellow crew members have complete confidence they say in this system.

I had the opportunity to speak with Gary Lai, who was the architect of new Shepard. He says that -- they believe this is the safest system that has

ever been created for manned spaceflight. So, you know, they are very, very confident that this will be a safe flight tomorrow. Now I want to point out

that just behind me, you see that big building with the feather on it. That's called The Barn and the rocket is inside there right now.

And at about midnight, they'll roll it out to the pad. And as of now, weather is on our side and all systems are go for a 9:00 a.m. takeoff,

eastern time here at launch site one, Alison?

KOSIK: Rachel, how long have the crew members been training for this moment?

CRANE: Alison, it's an interesting question. Just a couple of days because I want to point out, you know, these astronauts, they're not going into

orbit. These are just suborbital journeys. So tomorrow's entire journey will be just about 11 minutes. So, they're training. They've been in the

flight simulator, I actually had the opportunity to get inside of that simulator yesterday which was a pretty neat experience to get inside the

seats, being next to these huge windows, you know, the windows of this capsule take up about a third of the capsule.

So really, really large windows but, you know, they go through various safety checks and they run through all the different scenarios that could

possibly take place while they are on board. They go out to the rocket, they get a sense of what the rocket, the capsule looks like. They go out to

the pad to familiarize themselves with the journey that they're about to take. But, you know, the training they do, it's really not that



CRANE: I mean, it's really just a few days. We're talking about because to return to that point they're not going into orbit, Alison.

KOSIK: Still just a few days is pretty amazing in my book. Rachel, I can't wait to watch the launch with you. For me, it's going to be a nail biter.

Appreciate your coverage. Thank you.


CRANE: -- Alison.

KOSIK: And U.S. markets are plunging on renewed worries over rising COVID infections. It's the worst day of the year, the worst day since the vaccine

rollout and the worst day of the Biden presidency.


KOSIK: Welcome back. I'm Alison Kosik. Let's get back to breaking news on the markets. The Dow is now hovering near the lows of the day with just

minutes left to trade. It's on pace for its worst day since October. Investors are reacting to the rise of COVID variants and spiking cases

around the globe. We've seen a return to early pandemic trading, airlines cruises, hotels, energy, they're all taking the brunt of the hit.

Paul La Monica joins me live now. Paul, great to see you. You know, we haven't had a good scare since, you know, last fall. So many would say

we're overdue for a sell off. But do you think this is the beginning of a correction or maybe a rolling correction?

PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: Yes. That I think is the question on everyone's mind right now, Alison. We are even with today's big

sell off down, you know, very sharply down about 900. You're still only looking at about a three percent pullback from the all-time highs for both

down the S&P 500. So that's not even a correction. I mean, you'd need a 10 percent pullback to really call this a correction.

I think investors are grappling with that very question. Is this the beginning of something deeper? And it comes on the same day that, you know,

the NBR declared that the recession due to COVID ended last April and only lasted two months. So I think now you have people wondering, do we have to

worry about a double dip?

KOSIK: Yes, it's almost like the NBR spoke out too soon. Is this really a reflection of where the economy is going? I mean, how the market is


LA MONICA: Yes, I think that right now, a lot of people were probably surprised by how strong the rebound in stocks has been because I don't

think it really reflex reality for many Americans that are still struggling due to COVID.


LA MONICA: You know, the jobs market for example, while it's gotten better over the past year still hasn't recovered to where it was before March

2020. So, why should the stock market? Obviously the stock market and the economy aren't the same thing, you know, but earnings -- corporate earnings

should follow the economy as people spend more money revenue goes up for a lot of big consumer blue chip companies.

And that should lead to a higher stock price. But again, a lot of average Americans don't feel that recovery yet. So, I think they look at, you know,

where the market is, you know, pulling back a little bit. And I think it makes sense to them that stocks are retreating because it doesn't feel like

a full blown recovery just yet.

KOSIK: Yes. I'm with you on that. Paul La Monica. Thanks so much for your time today.

And there are just moments left to trade on Wall Street. We'll have the final numbers and the closing bell right after this.


KOSIK: Welcome back. I'm Alison Kosik. There are just moments left to trade on Wall Street and what a day it has been. A brutal Monday here in New

York. The Dow plummeted early in the session and really didn't look back. It was off nearly 950 points at one point. It's down right now about 750


Let's look at the Dow components. No winners today at all. Red across the screen here Procter and Gamble, Salesforce, Wal-Mart all trying to finish

in less than a percent down. Boeing is at the bottom which that is really dragging the Dow Industrials lower as well. Wall Street followed Europe

into the red, the FTSE, DAX, and CAC, all closed down more than two percent.

Zurich closed down more than a percent amid renewed pandemic fears. Before the concerns were all about inflation. Now that concern has clearly turned

to COVID and the COVID, the Delta variant and what its impact could be on the U.S. economy and the concern is about slowing growth now.

That's QUEST MEANS BUSINESS. I'm Alison Kosik in New York. The closing bell is just about to ring on Wall Street. I'll see you soon.