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Hala Gorani Tonight
Broad Sell-off on the Dow; Interview with Bill Richardson; North Korea on Brink of War? Aired 3-4p ET.
Aired August 21, 2015 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:12] JONATHAN MANN, HOST: Tonight, a buyers' market or a very broad sell-off.
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MANN: We look at a dramatic day, a dramatic week as stocks slump around the world. Find out what's behind the sell-off.
And shocking scenes on Macedonia's border. I'll ask the country's Foreign Minister why migrants received the harsh reception.
Then worrying signs on the Korean peninsula. Why Korea's sabre rattling is attracting even more attention than usual.
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MANN: Hello, I'm Jonathan Mann, this is The World Right Now.
Thanks for joining us we have several breaking stories we're following this hour.
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MANN: First to today's rough ride on global markets with stock exchanges around the world taking a major tumble. The Dow Jones has plunged around
400 points today alone, look at the big board live now. Here's where it stands with just one hour left in the trading day.
Markets across Asia and Europe have closed the day in the red. Investor fears over poor Chinese manufacturing data and falling oil prices are said
to be behind the drop.
Let's take a closer look at how the markets have fared.
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MANN: CNN's Richard Quest is standing by for us in New York with more on a rough end to a rough week.
Richard, what is happening and why?
RICHARD QUEST, ANCHOR QUEST MEANS BUSINESS: The reasons are pretty straight forward, it's questions and worries about China and thereby
questions and worries about economic growth, global growth. And factor into that as well Jonathan this week's Fed minutes and the uncertainty now
over the direction of U.S. interest rates. Will the Fed rise in September or later.
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QUEST: Look at the board and I'll show you. We are now pretty much at the low point of the session. We were 390 off, we actually did just a second
or two ago dip below 16,600. And why this is significant as you come to the last hour, in the last hour an enormous amount of book squaring takes
place. ETFs Exchange Traded Funds, a lot of program trading, a lot of managing hedging positions all takes place particularly in the last 15/20
minutes of trade. So this volatility that we are seeing can probably be expected to continue certainly up until the closing bell.
Started down, went down, lunchtime was lower and as we go into the last hour Jonathan we're at the low point of the day.
MANN: Of the day, but it's been quite a week hasn't it?
QUEST: It has, the Dow Jones has been, this is the second day of sharp losses or 300 point losses and the reason of course over here I'll show you
the Shanghai Composite and if you look at how the Shanghai market has traded over the course of the week up and around 4100. But this very sharp
fall on the 19th, a bit of a recovery, and down again by the end of the week.
And the worry is that number that we got from China showing manufacturing still under 50 on the index which shows its contracting. We know that
there are worries about the rate of growth of the Chinese economy. 7% would be - is what they're saying, 5% is what people are now talking about.
Some are saying it may even be down as 2 or 3%.
But still put this in perspective and you see Shanghai over the course of six months, it's still up there but most of those gains has nearly
evaporated. You're still showing some gains and look over the course of a year and you get a much better idea of just how frothy the Chinese market
has been. And what you're really seeing is large sways of that Jonathan being wiped off.
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MANN: Richard Quest live in New York. We'll be seeing you very soon on Quest Means Business. Thanks very much.
Meantime we turn to some breaking news from the White House. It says ISIS' number two leader has been killed in a drone strike. His name is Fadhil
Ahmed al-Hayali. The White House says the strike happened on Tuesday, close to the Iraqi city of Mosul which ISIS controls. It says al-Hayali
was the Deputy, or rather Senior Deputy to ISIS' leader and was responsible for moving large amounts of weapons, explosives, vehicles and operatives
between Iraq and Syria.
ISIS has not confirmed al-Hayali's death. Let's turn to CNN's terrorism analyst, Paul Cruickshank joining us now live from New York.
He was also known as Haji Mutazz, he was known I take it by several other names. How much do we know about him?
PAUL CRUICKSHANK, CNN's TERRORISM ANALYST: We don't know much about this individual at all but what we do know is that he was a Lieutenant Colonel
in Saddam Hussein's military intelligence. He joined the insurgency. He was in prison at the U.S. detention facility at Camp Booker. It seems that
it was there that he met Abu Bakr al-Baghdadi, and then rose up through the ranks of ISIS. He then became the number two overall of the ISIS terrorist
organization.
[15:05:12] Documents recovered from an ISIS safe house in 2014 suggested that he was in charge of all the groups' operations in Iraq. So this is a
significant blow against ISIS. The only thing is that he was already believed killed back in December, so nine months later it seems that he has
finally been killed and he wasn't killed that previous time.
MANN: What's the impact likely to be?
CRUICKSHANK: Well I think the impact on ISIS will be significant. You know he's a key player for them, he's there number two. He's somebody with
a significant amount of military expertise because of his time in the Iraqi military before joining the Iraqi insurgency.
But ISIS has taken on many of the attributes of a state and so there's a lot of people who are waiting in the wings to take over. I don't think
this will fundamentally weaken ISIS.
MANN: Paul Cruickshank, thanks so much for this.
Another breaking story to bring to you now, a developing story we're following. Three people have been reported wounded in a shooting onboard a
high speed train in France.
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MANN: Details are still emerging. The train was en-route though from Amsterdam to Paris, it was re-routed though to the city of Arras. Two of
the victims were seriously hurt but officials say their wounds are not life threatening. The gunman is now in police custody.
France's railway company says he carried an automatic weapon and a bladed weapon. We're working for more details on exactly what happened. Let's
get the latest from Jim Bittermann, he joins us now live from just outside the French capital, how much do you know?
JIM BITTERMANN, CNN INTERNATIONAL CORRESPONDENT: Jonathan not a whole lot more than that except that the French Interior Minister, Bernard Cazeneuve
is on his way to the scene. The train has been stopped at a town called Arras which is about half way between Brussels and Paris. And the
passengers have all been taken off and those involved that were in the car when this shooting took place have been taken into the train station and
are being talked to by psychiatrists but probably also by police investigators who want to find out exactly what happened.
Apparently the gunman opened fire onboard the train. There was one person critically injured, another person not so seriously injured, and a third
person that may not have been struck by a bullet, may have just been injured. But in any case, three people were injured in the - in this
attack.
The spokesman for the Interior Minister says here that in fact there is no reason to connect this with terrorism yet. He said it's premature to talk
about that but that the Interior Minister may have more to say about that once he gets on the scene.
And so basically they're investigating, it's quite a serious incident of course because it happened on this high speed train which thousands of
travellers take each day between Amsterdam and Paris. It's a - it's a kind of thing that a lot of people have been on in their - in their normal
duties. And so I think (inaudible) but very jarring, unnerving to see this kind of thing happening aboard a train. It's just emphasizing a point that
you have to be ready for - on the guard for just about anything anywhere these days.
MANN: Jim Bittermann, live on the line for us, thanks very much.
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MANN: Coming up.
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MANN: North Korea says it is inching closer to the brink of war. We'll look at its back and forth threats with Seoul as the deadline for an
ultimatum quickly approaches. This is The World Right Now.
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[15:05:52] MANN: Welcome back, a dangerous bottleneck is building at Macedonia's border with Greece. Just have a look at this video.
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MANN: You don't need us to explain this. Media reports say riot police fired tear gas at migrants to disperse a crowd trying to enter the country.
At least 10 people were hurt in the faceoff with police.
Thursday Macedonia declared a state of emergency in two regions sealing off its border to migrants. Ian Lee explains how the situation became so
desperate.
IAN LEE, CNN INTERNATIONAL CORRESPONDENT: Macedonian police struggle to hold back a human flood of refugees. At one point a child struggles to
break through. A man with a baby pleas. Human misery on display and raw.
Earlier the situation reached a breaking point hundreds of migrants tried to force their way into Macedonia from Greece unsuccessfully. Riot police
responded with stun grenades and tear gas. A few were injured in the clashes.
Tensions rose after Macedonia declared a state of emergency shutting their border to the world's most vulnerable. Many families making the perilous
journey from war torn countries. The scale of this human disaster is hard to comprehend. Tens of thousands of people enter Europe monthly from
places like Syria and Somalia. They arrive any way possible. The UN says about 150,000 so far this year. The desperation obvious.
Now with the border closed many are stranded in no-man's land. Macedonia, a small country, says they can't cope with this influx especially since
they aren't members of the European Union and don't have access to those resources.
Without any permanent solutions to the causes behind the flood of refugees, this pressure will continue to rise throughout Europe until we likely reach
another breaking point.
Ian Lee, CNN, London.
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MANN: Macedonia's Foreign Minister will join me live in about 20 minutes time to talk about the crisis the country is facing at its borders. Stay
with us for that.
Neither side is backing down in a stand-off that has the Korean peninsula and the entire region on edge.
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MANN: North Korea says its frontline troops are now on war footing along its heavy militarized border with the south. It's threatening to attack
South Korea if Seoul doesn't silence loud speakers that are blaring propaganda at the north by late Saturday afternoon.
South Korean President Park Guen-hye visited an army command post Friday dressing in camouflage no less. The South says it has no intention of
complying with the North's demand and warns of a stern response if its attacked.
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MANN: Of course we have heard the rhetoric from the North before many times without hostilities actually breaking out but South Korea says
Pyongyang is now escalating tensions to what it is calling the utmost level.
Let's get the very latest now from Kyung Lah in Paju City, South Korea, near the de-militarized zone.
Where do things stand and how much do we know about what the militaries are up to North and South of that frontier:
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: Well rhetorically things are indeed very high. The tensions are quite high. We're hearing statement
after statement from North Korea from all their different embassies around the world especially from - statements from KCR through Pyongyang it is a
number of comments that are coming out from the regime.
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LAH: This is a bit unusual. As far as what military posture North Korea is taking, we simply don't have any evidence that they are moving troops or
that missiles are being prepared. If that were happening though a lot of that would be happening in underground bunkers so we simply wouldn't be
privy to any of that even through the best military analysis and intelligence.
As far as what is happening on this side, on the Southern part of the Korean peninsula. There are actually military exercises occurring right
now, joint U.S. South Korean exercises that happen every single year. So this would be an inconvenient time for North Korea to declare all-out war
because South Korea and the U.S. Jonathan are certainly in a military posture already.
[15:15:21] MANN: I have to ask you about these loud speakers because they seem to be at least the spark for this latest heat between the two sides.
They are loud but presumably they're just loud speakers, they can only broadcast however loud they are a limited distance. There is a
demilitarized zone in the way so that's a few kilometers and then there are mostly just I guess North Korean soldiers who are closet to the speakers.
Is that what the real problem is is that the speakers are addressing North Korea's soldiers?
LAH: Well the speakers aren't really pointed at anyone's ears they're actually pointed right at the eye. This is South Korea trying to tell
North Korea that they want to needle them. These speakers, they look cartoonish in and of themselves. They're actually an insult because
anything that is said against a regime in North Korea would be subject to death.
If you said this in North Korea it is the deepest insult against the regime. So what South Korea's trying to do is lob these insults across the
border. It's not that anyone inside Pyongyang can hear them it is simply the insult against the regime.
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LAH: That's what bothers the regime and what cuts to the core Jonathan is that propaganda from the South waters down the propaganda that North Korea
gives its people. You weaken the people you make them question and then the entire system could collapse.
Kyung Lah, live for us, thanks very much.
MANN: We're also learning now that the U.S. briefly suspended those joint military exercises with South Korea this week to assess the exchange of
fire across the DMZ.
Those annual exercises which infuriate North Korea have since resumed. Let's get some perspective now on all of this from a former U.S. Ambassador
to the United Nations. Bill Richardson was also a special envoy for the U.S. Government who successful negotiated the release of hostages from
North Korea.
Ambassador, thanks so much for being with us. Let me ask you the big question. Are the Koreas really going to be at war this weekend?
BILL RICHARDSON, FORMER U.S. AMBASSADOR TO THE UNITED NATIONS: Well hopefully not but there's a very, very high degree of tension the most in
the last five years.
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RICHARDSON: I recall being there some five years ago when they were about to go head to head. But this is different. Why is it? One; these are
exchanges of artillery and rockets not just small arms at the border. Secondly, the U.S. South Korea joint military exercises. We have to stand
behind South Korea here because there our allies et cetera, but this means if we get drawn in there's 28,000 American troops. North Korea has
missiles, nuclear weapons.
And what I am hoping is happening here is the North Koreans are basically sending signals to the world and the signal is this. Hey we're still
around, you have to deal with us, it's not just about Iran and the Middle East, so deal with us. And hopefully that is the war like efforts that
they are generating right now.
But with Kim Jong-un we don't know much about him. He has internal problems of leadership, he's taking terror and killing a lot of his
potential rivals. He seems to be unpredictable, thin-skinned. So this is a first test under his leadership and this is why we should be worried.
MANN: What we do know is that North Korea has always been a very nervous nation and given its anxieties, its paranoia, these annual military
exercises, are they a provocation and was it wise to suspend them, less wise to resume them?
RICHARDSON: Well this is under our treaty, we take these steps and South Korea is our alley.
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RICHARDSON: You know obviously .
MANN: As a matter of law and as a matter of treaty I'm not trying to argue against the fact that the United States and South Korea have every right to
train their militaries as they see fit. But even within that right maybe is it - is it ultimately unwise to keep doing it every year?
RICHARDSON: Well I think this is why it makes sense Jonathan to start talking to the North Koreans. The South and the North talking, the U.S.
pushing that effort. Maybe the United States and the six party countries in China, Russia, South Korea, Japan finding ways to engage the North
Koreans. Maybe an Iran type deal that says OK, you tamp down your nuclear ambitions we'll find ways to help you with your people, food, fuel,
sanctions.
Yes, people will say well you had that deal before in the Clinton Administration and it didn't work. Well that maybe the case but for eight
years while the Clinton deal was on, North Korea didn't have any nuclear weapons, they didn't build any, there was tension but at least there was
some stability. And there is no stability going on now.
[15:20:10] So I think we, the six party countries need to reach out to North Korea and see if they're ready to talk.
MANN: Bill Richardson, thanks so much for talking with us.
Our top story this hour one we have been following closely all through the day.
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MANN: We've been following it for weeks but now really in the closing minutes of the trading day on Wall Street, the closing day of the week the
last market still open of the world's great (inaudible) as you can see. The Dow Jones Industrials are down 2.5% 432 points.
What you're looking at is a broad selloff. We've seen it all through the day and we've been seeing it now for days, not just in the United States
but around the world and especially in Asia and China's markets concerns about growth. Concerns about growth in the United States, concerns about
growth in China and the never ending worries about the situation in the Eurozone.
There have been tumbling markets in Asia but really this is the latest indication that we've had. Cristina Alecsi is at the New York Stock
Exchange and joins us now. Tell us about these numbers.
CRISTINA ALECSI, CNN INTERNATIONAL CORRESPONDENT: Yes this is really in correction territory at this point. The Dow actually hit a technical
correction, we're going to have to see where it - where it closes. Again that's a 10% drop from the peak.
So clearly a lot of global concerns, a lot of global growth concerns in the manufacturing China overnight that was very negative, the worst since the
financial crisis. Really put a lot of pessimism out there about global growth. That in turn affected the oil market. Again when you have
diminishing demand in the face of a global supply glut of course there's going to be pressure on oil and then that makes the U.S. dollar stronger
which raises questions about American company's ability to sell their goods overseas.
So what we're seeing here in the U.S. is a broad base selloff. Not even the darlings of the stock market were saved. We're talking about companies
like Apple, Netflix, Disney, all of those great performers but they're getting hit hard today and we'll continue to see this if we see this circle
it becomes a cyclical or self-fulfilling prophecy when things hit these levels.
Keep in mind there are also lots of questions about what the Fed is going to do in the face of these market jitters. You know U.S. investors were
really looking to the Fed to raise rates either in the fall or the winter, now what does it do with the market so volatile.
And you know we had a Fed official come out earlier today and say hey listen the Fed doesn't make decisions on daily market moves but it's kind
of hard to believe that given you know you can't ignore this kind of thing. It's there, and it's in front of you and it's global.
MANN: Let me just ask you more about the U.S. markets, you're the one who follows them most closely. We're looking at the big board on the screen,
down 430 points, that takes your breath away. But the Dow Jones Industrials is just a narrow sample of all the activity on the markets.
How are the more broadly based indices looking?
ALECSI: You know we're monitoring both the S&P and the tech - more tech focused NASDAQ to see if they're going to official correction territory but
we're a little bit further away on those but we've got a close eye on them.
MANN: Now you say correction. Let's go over what that means because to most of us a correction is what a teacher does to a student it doesn't
sound all that dramatic. When you're talking about a correction what specifically do you mean and how nervous should we be about it.
ALECSI: Sure. And that's a great question. So a correction is anything 10% drop from the peak. Now keep in mind you have to make the distinction
between a corruption and a bear market. A bear market is a longer term trend that you have downward pressure in the market. We're talking about a
correction that doesn't mean over the longer term, and I'm talking about a couple of months, we won't see stocks turn higher at some point and maybe
continue the bull market for a while until we have a longer term trend, you know a technical bear market. That would require several corrections
before we get there. Right now we're just talking about a couple of days actions.
So that's the real important context here.
MANN: Now I wonder how important it is to be looking at our watches. There's not much left of the trading day and we may be saved by the bell to
use that expression. If this were happening at 10am this morning I guess we'd have all day to worry but time may run out before the worst of this
damage gets the chance to happen.
ALECSI: Well I've been here all day and it's been since the markets opened in the U.S. it's been really ugly. So we don't - we don't have much time
you're right, so we're probably going to end a big down day but we'll have to see when the bell officially rings. But it's on trend. We haven't seen
an uptick all day today. We haven't seen investors be optimistic at all. It's just clear pessimism throughout the day.
[15:25:11] MANN: And what's intriguing here is there are times when the market moves with the economy and there are times when the market doesn't
reflect the economy at all. We can thing about market bubbles that don't really reflect how men and women families are making their livelihoods and
making their mortgages. Most Americans have found the economy has been improving over the last little while. Is this market, I don't know what
you want to call it, this market fall out of touch with reality that most Americans have that most of the American economy is experiencing?
ALECSI: You have to make a distinction between what happens in the market and what happens in the "real world" and how real Americans are feeling.
Yes the economy is better but keep in mind that companies are still very focused - American companies are very focused on that bottom line. That
means they aren't giving workers that pay increase that will really spur consumer spending, right. That's what the Fed is worried about. They're
looking at factors like this. That's why the Fed hasn't raised rates for so long, right `cause they're still looking at things outside of you know -
yes the economy is growing but there are other factors that you have to kind of dig deeper on to really get a clear picture of how American's are
feeling right now and what the reality is.
So there are more data points than just you know GDP for example. Wages is one of those data points. And look a lot of people on Wall Street, a lot
of people on - a lot of strategists that pay attention to the market every day really hated this bull market. We haven't had a correction in the
United States since 2011. And for the reason that you just pointed out which is there was a disconnect between how average Americans' felt and the
way the markets were going, a lot of strategists didn't like it. They didn't like to see this market action `cause it go so disconnected
potentially from the fundamentals that people were calling it you know the most unloved bull market ever.
MANN: While you're talking Cristina we're looking at the numbers, we're looking at the big board and if you're just joining us that numbers right
442 points south, Dow Jones Industrials down by more than two and a half percent. A dramatic - a dramatic fall for the Dow.
Cristina, if you don't know this forgive me for putting you on the spot and maybe someone else can tell us at what point does trading get halted? What
kind of number does it take for this to trigger some action by the New York Stock Exchange to stop trading or could it keep going down until the
closing bell?
ALECSI: The New York Stock Exchange is really hesitant to step in and let market forces you know play out. I mean that's really - that really
happens when there's like a technical glitch or there's something specific related to a stock or they halt a stock. They're generally not going to
jump in and halt a slide like this one.
MANN: They're not going to halt a slide like this one. And so the Dow Jones Industrials are down 450 points, a drop of two and two thirds
percent. Richard Quest will be one of our leaders for the coverage which will continue. We're going to take a break but we're going to watch Wall
Street very closely right after this.
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