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CNN NEWSROOM

Investors Brace for Ugly Day on Wall Street; Asian, European Markets Sink; France Gives Highest Honor to 3 Americans; Biden, Obama to Meet Amid 2016 Speculation. Aired 9-9:30a ET

Aired August 24, 2015 - 09:00   ET

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


[09:00:01] CUOMO: He's challenging Crayola to match the donations.

PEREIRA: Come on, Crayola.

CUOMO: And we'll see what they say.

PEREIRA: Step it up. Step it up. What a great little man. We wish you well, honey. Thanks for sharing your love with others.

All right. It's time for "NEWSROOM" with Poppy Harlow. She's in for Carol Costello on this Monday.

Good morning.

POPPY HARLOW, CNN ANCHOR: Hi, good Monday morning, you guys. Have a great day. We have a lot of news to get to.

NEWSROOM begins.

ANNOUNCER: This is CNN breaking news.

HARLOW: Good morning, everyone. I'm Poppy Harlow in today for my friend Carol Costello. I want to welcome our viewers here in the United States and around the world. We begin with breaking news on Wall Street.

Dow futures down some 600 points this Monday morning ahead of the Opening Bell. Investors are fearful, fearful that when the market opens in 30 minutes it will be a blood bath. U.S. markets may tank, as we have seen with global markets overnight. Asian markets suffering huge losses in Monday's session.

Take a look at Shanghai's benchmark index down 8.5 percent on the day alone. European stocks plunging as well.

It is shaping up to be a very ugly day on Wall Street. We have live team coverage, CNN chief business correspondent Christine Romans here with me in New York. In Hong Kong we have CNN's Asia-Pacific editor Andrew Stevens.

We begin with CNN's Cristina Alesci live on the floor of the New York Stock Exchange.

What are you hearing? CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Well, there are two things

that drive the market, Poppy, as you know. Fear and greed. And fear took over overnight. Investors basically watched indexes around the world plunged with a specific focus on China. China, there are lots of concerns. As you said, 8.5 percent drop. That is the biggest since 2007. That is a huge hit, again sparking concerns that I think for the average person this morning they're starting to wonder what does this mean for the U.S. economy? What does this say about the U.S. economy?

And what we're talking about there is really fundamentals and the U.S., they're pretty strong. Right? We have to put this into perspective. We had 200,000 job gains over the last three months. That's good. We have strong housing. That's good. The optimists in this market would say, look, the U.S. is the best of the bad lot. The rest of the world there are concerns. And the U.S. is holding steady. At least when it comes to the fundamentals. But as we know, sometimes -- oftentimes the markets are really disconnected from the fundamentals.

And people will be asking, what do companies do in this environment? CEOs get nervous. They start to question their business models, they start to question whether or not their sales will drop overseas because we have a global -- potential global economic slowdown on our hands. And with the -- with many companies that have major sales overseas, you know, could we see job cuts? Could we see a slowdown in the U.S. economy?

HARLOW: Right.

ALESCI: All of that plays into --

HARLOW: Right.

ALESCI: Plays into it here.

HARLOW: And just for some context here, again, we're about 28 minutes away from the Opening Bell on Wall Street. The last time the Dow lost over 700 points in a single day was October 15th, 2008. Will that happen today? The last time it lost over 600 points August of 2011. What are we going to see?

Cristina, what are they talking about in terms of whether or not the S&P 500, a much broader measure of the market than the Dow, whether that will actually fall into a correction this morning like we saw the Nasdaq and the Dow do on Friday?

ALESCI: We're very close. The futures are indicating, you know, that we could hit that correction territory for the S&P. Again, that is going to spark potentially some panic selling. Also, what we don't see is the fact that a lot of this trading is computerized. So once it hits a certain level, you're going to see, you know, sort of a cycle kind of play on it and feed on itself, which isn't --

HARLOW: Right. ALESCI: Which isn't a great thing especially because we're at the end

of the summer here. Many people are away and they're going to either have come back to the office or reevaluate what's going on. But investors, everyday investors, need to see more evidence of what exactly is going on before they make any huge decisions.

HARLOW: All right, Cristina, stand by. Stay with me.

Andrew Stevens in Hong Kong live for us where we saw a huge selloff overnight.

Andrew, what's the sentiment there now that markets have closed?

ANDREW STEVENS, CNN ASIA-PACIFIC EDITOR: Well, no doubt about it, Poppy. It was panic selling in China. That is a big fall even by Chinese standards. And it's interesting seeing the contagion around this region. Japan, Hong Kong, there are really big, big falls for those two markets. And it was based on the fact that there was a big, big selloff in Shanghai.

It's interesting because this is certainly not new to see these big falls in Shanghai. This has been falling throughout the summer, Poppy. It peaked back in the middle of June. And the market in Shanghai is now down something like 40 percent in the last 10 weeks or so.

And what we've seen is the government coming in with various measures to try and take the steam out of this selloff, trying to slow things down. And we didn't see that today. This is the interesting thing. That the government is very much or regulators very much on the sideline letting the markets do what they do. And it was panic selling.

[09:05:11] Remember, this market is characterized by the fact they are small retail investors involved and the fact that many of them have borrowed money to play this market and they want to get out. And that's what we saw today -- Poppy.

HARLOW: But there is more still that the Chinese government and regulators can do. I mean, they still have other ammunition. They can pull out here, right?

STEVENS: Yes. Absolutely. The question is where do they target it? And it had been targeted. We'd seen a lot of specific targets or action on the markets to try and put a floor onto the falls in the stock market. What we'll likely to see more of now is tackling the economy. Stuff to boost the economy.

They can still cut interest rates, Poppy. There's still plenty of room there. They can cut the reserve requirement ratio. This is basically a mechanism which forces banks to give a lot of money at the central bank. They can bring some of that money back to the banks who then pump it out to the economy. And they can do still all cash and pump priming. They don't particularly want to because they did that back in the global financial crisis in 2009. They poured $600 billion into the economy, which created the sort of bubbles we're seeing in China today.

HARLOW: Right.

STEVENS: So they're reluctant to go back down that path. Remember, Poppy, this is a structural change for the Chinese economy. Everybody knew it would be slowing down. This is what they're seeing -- we're seeing now. They're just trying to manage that slowdown, that change to a different style economy.

HARLOW: All right. Andrew Stevens live for us in Hong Kong. Stand by. Christine Romans, Alison Kosik with me.

Christine, to you first. You're an investor waking up to this, this morning and you're saying, I know China has problems, I know there are growth concerns there. Why is it hitting us so hard?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: It's such a good question because people don't understand, you know, how China has been trying to save its stock market and the like. It matters because you probably have investments in the S&P 500 in your 401(k). And about half of the earnings of S&P 500 companies comes from overseas. And China is a very big source of those earnings and revenues for so many companies.

So when you see Asian currencies crashing, which they are, and you see commodities around the world crashing, which they are, those things affect American companies' bottom lines and American CEOs' sentiments. So that's a really important aspect of this.

All the markets are moving -- this isn't just the stock market in isolation, you know, come, you know, deflating.

HARLOW: Right.

ROMANS: You've got commodities moving, oil down very sharply here, Poppy. That's going to be great for drivers. It's not so great if you have any energy stocks in your portfolio and you probably do.

HARLOW: Yes.

ROMANS: So, I mean, my advice to people is don't just do something stand there. The reverse of what you usually think because a lot of times market move like this and you're struggling to find your 401(k) login.

HARLOW: Which is the last time you want to pull out.

ROMANS: This is the last time to pull out after the move has already happened. It could be rough this week. It really could be. A lot of professional investors are saying there's more room to move on the downside but you shouldn't be freaking out if you're an individual investor.

HARLOW: Alison, Christine brought up commodities, oil, oil below 40 bucks for the first time in -- since 2009. ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes. I mean, you look at

what oil has done since last summer. You look at where we are right now. Well, a year ago oil was over $100 a barrel. Guess what? It's hitting below $40 a barrel.

HARLOW: It's amazing.

KOSIK: That commodity is pretty much tanking. We can essentially say, and you don't ever want to see a commodity do that sort of spiral seemingly out of control.

HARLOW: It's a demand issue.

KOSIK: It's a demand issue and that's the worry. And, you know, we go to China. You know, one of the big worries that many investors have is that everybody kind of knows that China manipulates and orchestrate a lot of its -- the cogs in the wheel of its markets. And the big worry is, is that, you know, what else is going on? What is China not telling us. Because the way investors see it is that they are losing -- is that the government actually losing control of engineering how China's data is coming out.

So a lot of investors this morning are scratching their heads, thinking is China worse off than we think? That could spell bad news for companies. So that's why you're seeing this recalibration of stock prices to go along with what's going on in the global economy.

HARLOW: All right. I want to go back on Cristina Alesci at the New York Stock Exchange.

Cristina, what we may see today, and not to unnerve anyone, let's see where we open, let's see how we do. But we may see something called the circuit breaker take effect. And I just want you to walk people through what that would mean.

ALESCI: Well, Poppy, you brought up the S&P 500. That is what would trigger a so-called circuit breaker. But let's just put this into context. Right now futures are indicating we're about 3.3 percent, 3.5 percent down. It's been fluctuating a little bit all morning. You need to have a seven-point drop to trigger that circuit breaker. You know, we're not near that yet, but it is sparking discussion about whether that would happen. Just to give people a reset point and to prevent, you know, any kind of major, major meltdown. But we're -- you know, we're not sure if that's going to happen yet -- Poppy.

HARLOW: Right. Right. OK. You'll be there all day keeping an eye on it if it does, Christine Romans.

[09:10:02] ROMANS: It's a reminder. It has been -- stocks don't just go up. I mean, look, American investors, for the last six years have seen stocks go up and up double-digit gains year after year. And you've had zero percent interest rates. So money has been going into the stock market for years now. Now we're talking about interest rates rising. We're seeing China, an engine of economic growth, slowing and suddenly you have investors saying OK, wait a minute. Maybe stocks are not fairly valued here. Maybe they're overvalued and we need to take some profit.

(CROSSTALK)

HARLOW: What about --

KOSIK: But there's been -- but there's been this discussion for a very long time. I mean, part of it has been the stimulus that the Fed has been pumping in.

HARLOW: Right.

KOSIK: And that's helped to elevate the market as well. But now as Cristina is saying, you know, there really is this question. Well, wait a minute, are these stocks really overpriced considering what the global economic environment looks like?

HARLOW: Right.

KOSIK: One thing to keep in mind and people forget this. The stock market is about companies. How are these companies doing? Well, guess what, we are coming to the end of second quarter earnings season and yes, aside from a few bright spots second quarter earnings season wasn't all bad. It wasn't so stellar. Nothing to write home about. And there are two things that can creator a market. You have reduced sales, reduced revenue, and the prospect of the Feds raising interest rates.

WHITFIELD: Right.

KOSIK: That could create a remark and that could be part of what you're seeing happen here.

HARLOW: And that matters not just here in the United States for consumers and markets but globally for markets.

Andrew Stevens, so much talk about what the Fed is going to do given this, Andrew. And I'm just interested in how much you're hearing about that in Hong Kong and China.

STEVENS: Yes, well, just going back to Alison's point earlier. She's absolutely right about these numbers. And how much we should trust the numbers and what it all means in China. At the moment we've growth allegedly officially sort of around 6.8 percent to 7 percent.

Now everyone I speak to almost without exception will say that growth probably closer to 5 percent or 6 percent, which is a big difference. And that is slow. No doubt about it. That is slow for China historically speaking. But it's very important to remember China -- the leadership in China does have a lot of levers that can pull.

HARLOW: Right.

STEVENS: It came back to what I was saying earlier. They have to keep this economy bubbling away so they keep people in jobs. As soon as people start losing jobs in large numbers, that is when you get potential unrest. Social unrest, civil unrest. That is what keeps Chinese leaders awake at night. And they will do what it takes and they can do, they have the tools to do that, to make sure they can keep that economy growing even if it is artificial. They will do it.

HARLOW: Right. That's such an important point to make. They still have a lot of ammunition left in that war chest, if you will.

Andrew Stevens in Hong Kong, thank you. Cristina Alesci at the New York Stock Exchange, thank you.

Christine Romans, Alison, Kosik, we are on top of this. We will be live with you for the Opening Bell on Wall Street ringing in just about 18 minutes time.

Next though, coming up days after what could have been a very deadly train attack. Today France honors these heroes.

(COMMERCIAL BREAK)

HARLOW: Three Americans, the toast of Paris right now, and the newest heroes of a very grateful nation. Just a few hours ago, France's president bestowed its country's highest honor on the men and a British man who also helped subdue the gunman on the train bound for Paris this weekend. Together, they likely prevented the massacre of potentially hundreds of passengers.

And as authorities track radical Islamic to the suspect, his lawyer says it is all a mistake. She says he is he's dumbfounded by any talk of a terrorist attack because he was planning on an armed robbery instead.

CNN senior international Nic Robertson live for us in Paris with the latest.

Hi, Nic.

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, hi there, Poppy.

Well, I think European counterterrorism investigation weren't buying that story, that the gunman was getting on the train to perpetuate an armed robbery, certainly what we heard from the French president when he was thanking the three Americans and a British businessman, he talked about how they helped avoid the ultimate carnage. He said the gunman had more than 300 bullets and two automatic weapons. Another one more than 500 people on the train, the possibility for a horrible event to occur was very real.

The president of France really using the opportunity and the situation not just to thank these three young American heroes, but also to show the world and to show the French people that they should be an inspiration for others. It was Spencer Stone, the Air Force man, his arm in a sling who led the three friends into the French presidential palace this morning.

(BEGIN VIDEOTAPE) ROBERTSON (voice-over): This morning, three young Americans arriving to a red carpet ceremony in Paris. The French president presenting them with a country's highest award for bravery, the Legion of Honor. The honor came after this incredible scene was viewed around the world, a gunman hogtied on the floor of a passenger train. The close three friends say they acted on instinct.

UNIDENTIFIED MALE: It was either do something or die.

UNIDENTIFIED MALE: It wasn't a conscious decision. We just acted.

ROBERTSON: Twenty-three-year-old U.S. Airman Spencer Stone led the charge.

SPENCER STONE, HONORED FOR BRAVERY: I saw he had what looked to be an AK-47. And he -- it looked like it was jammed or it wasn't working, and he was trying to charge the weapon. And Alek just hit me on the shoulder and said, "Let's go."

ROBERTSON: Authorities say he and his two friends, college senior Anthony Sadler, and National Guard member Alek Skarlatos, along with a French and British national, prevented what could have been a bloody massacre.

S. STONE: Ran down, tackled him. We hit the ground. Alek came up and grabbed the gun out of his hand while I put him in a chokehold. He seemed like just kept pulling more weapons, left and right.

ROBERTSON: The suspect is identified as Ayoub al-Khazzani, a Moroccan national who boarded the train carrying a small arsenal of weapons, including an assault rifle with at least eight magazines, a Luger automatic pistol with extra ammunition, and a box cutter, which he used to slash Stone multiple times, nearly severing his thumb.

[09:20:08] BRIAN STONE, FATHER OF SPENCER STONE: I think he's not dead because he took immediate action to take action to protect himself and everyone else there. Plus, there being an angel in the room.

ROBERTSON: Stone's father believing it was destiny, the three men moving from coach seats to first class for better Wi-Fi.

EVERETT STONE, BROTHER OF SPENCER STONE: I expect nothing less from my brother. He's a warrior.

ROBERTSON: According to a senior European counterterrorism official, Khazzani is linked to investigations into radical Islamist networks across Europe, including a French ISIS cell in Turkey. His lawyer says he denies that he is a terrorist, instead, planned to rob passengers on the train with weapons he found in a park.

One passenger was shot in the melee. Stone rushed to help another who was wounded in the neck.

S. STONE: I just stuck two of fingers in his hole, found what I thought to be the artery, pushed down, and the bleeding stopped. ROBERTSON: Over the weekend, President Obama called the men

personally, commending them for their courage and quick action.

(END VIDEOTAPE)

ROBERTSON: And the French president said there's going to be an inquiry, and a look at the security on the transport network across France. But he reminded all citizens that the security services can only do so much and that perhaps they will be in a situation like this, faced with this type of scenario, and he quoted Anthony Sadler, one of the young Americans there, saying that faced with a crisis, you have to do something.

It's a very high honor for these three young men and to be quoted in that way as well by the French president quite something they would never imagine just a few days ago, Poppy.

HARLOW: Absolutely. Now, you always wonder, what would I do in that situation and they did what we all wished we would do.

Nic Robertson, live for us in Paris this morning, thank you very much, Nic.

Still to come, bracing for the open on Wall Street. Global stock markets rocked overnight. Dow futures in the United States down more than 850 points. What will happen when the opening bell rings in eight minutes. That's live, next.

(COMMERCIAL BREAK)

[09:25:01] HARLOW: Vice President Joe Biden could get the chance to discuss a possible bid for the White House as the man who currently holds the top job. He joins President Obama for their typical Monday lunch today. It will be the first time the two men had sat down together in awhile. It comes days after Biden held a meeting with Massachusetts senator and progressive favorite, Elizabeth Warren.

Joining me now to talk about all of this whether he will jump in or whether he won't, can't think of two better men who talked about, Dan Pfeiffer, CNN contributor and former senior advisor to President Obama, who knows Biden very well, Errol Louis, CNN political commentator and political anchor at New York 1.

Thank you both for being here.

Dan, let me begin with you.

"Politico" has a fascinating piece this morning titled, "Potential Biden Run Divides Obama Orbit."

So, that headline gets you reading. And in it, a current West Wing staffer is quoted as saying the following about members of what's called the Obama alumni network. Let me read this to you, "Even if their mind is with Clinton, their heart is with the vice president."

You're a member of the network. Are you hearing the same thing? DAN PFEIFFER, CNN POLITICAL COMMENTATOR: Well, I think there's no

question that if the vice president were to run, it's going to split the loyalties of a lot of people in Obama world, if you will, because people have grown to know Secretary Clinton, worked well with her, a lot of people loyal to her. A lot of people personally fond of the vice president, grateful for the work he's done for the president.

And political primaries are family feuds and there are going to be members of the family on both sides. So, that's not surprising that people are going to have -- if the vice president were to run, people have to decide who they want to work for, who they support, and who they think would be their best president. So, I don't think it's too surprising.

HARLOW: Errol, to you, news this morning that Vice President Joe Biden who is getting all the attention right now, has hired a new communications director, Kate Bedingfield. She was important to note, campaign spokesperson for John Edwards campaign in 2008. Interesting timing or more?

ERROL LOUIS, CNN POLITICAL COMMENTATOR: Well, yes, it's a good choice, actually, because if you recall, Clinton didn't do particularly well back in 2008, and so, you know, you want to have people who know what they're doing and John Edwards did quite well out there.

But -- I mean, something we have to keep in mind, Poppy, is that we're talking to the pollsters and pundits and everybody sort of says there's no particular reason to doubt that Hillary Clinton is going to do so well.

But when you actually talk to voters, what they're really saying is, not so fast, when you look at the numbers in Florida, in Ohio, and in Pennsylvania her numbers are what they call upside down. Meaning, more people, far more people disapproved and approved of her. She hasn't closed the deal in those states. She's under 50 percent in all of those states.

So, Biden can and really should take a look and see if maybe he's got something to offer that Democratic voters might like a little bit more.

HARLOW: And to your point -- I mean, you made the point this morning, Errol, that he sort of has to -- he has to look at this seriously given the poll numbers.

Dan, let's look at some of those poll numbers. I think the most fascinating, a Quinnipiac poll showing how Biden measures up against Trump versus Hillary Clinton against Trump in three key swing states, Florida, Ohio, Pennsylvania, and he beats Trump in all of them and Hillary Clinton doesn't beat Trump in Florida.

PFEIFFER: Well, the vice president I think would be a very strong primary candidate, very strong general election candidate. I think Hillary Clinton would be the same. The vice president has to decide whether this is something personal he wants to do, whether he wants to get in there and take on this fight. If he does, it'd be I think good for the party if the two of them ran against each other. And whoever our nominee would be stronger if we had a very competitive primary.

I think Hillary Clinton would beat trump in all the states. I think Joe Biden would beat Trump in all those states. It's early to judge who would be a better general election candidate, but they would be very strong, I think.

HARLOW: Errol, how long does Biden have to decide realistically?

LOUIS: Well, realistically, if you're getting deep into the water the nature of modern campaigning means that you've really got to start putting together a 50-state campaign in fairly short order.

So, even operating at top speed, he'd really have to get started. He himself said by the end of the summer. However you define that. If it's too much -- if it's more than a few weeks beyond Labor Day, realistically he'll have made a choice and that choice would be not to run.

HARLOW: You know, it's interesting, I've been reading about some people saying, you know, as much as they love the vice president want him to jump in, they also want to protect him. It would be a third run. It's a tough thing to do and it is a grueling process. We will be watching.

Dan Pfeiffer and Errol Louis, thank you both very much.

LOUIS: Thanks, Poppy.

PFEIFFER: Thank you.

(MUSIC)

HARLOW: Welcome, again, to our viewers here in the United States and around the world on a busy Monday morning on Wall Street. I'm Poppy Harlow, in today for my friend Carol Costello.

You're looking at claps because that's what they traditionally do every day at the opening bell on Wall Street. It's looking like an ugly day for investors and for your 401(k). The opening bell just moments away. Dow futures down more than 800 points.

Let's listen in.

(BELL RINGING)

(APPLAUSE)

HARLOW: All right. The markets are open.