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Stock Market Drop; Terror Suspect in Paris Court; ISIS Destroys Ancient Palmyra Temple; Book Club Kicked Off Wine Train. Aired 9:30- 10a ET

Aired August 25, 2015 - 09:30   ET

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


[09:30:04] POPPY HARLOW, CNN ANCHOR: We don't have that, but it was quite a day on Wall Street. So why this likely rebound today? We will break it down for you with our entire team. Alison Kosik is on the floor of the New York Stock Exchange. Joining me on set, Rana Foroohar, CNN's global economic analyst and the assistant managing editor of "Time" magazine, Christine Romans, chief business correspondent, Richard Quest, host of "Quest Means Business" also with me.

Let's take a look. Already up 100 points. A lot prettier than yesterday's open. It takes a few moments for us to get the real numbers here, but let me go first to you, Christine Romans. A reality check.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: I have that time lapse release for you yesterday. It was like this. That's what it looked like. You know, you'd lost ten minutes, 1,000 points and then you came back almost to break even. There it is. And then in the final countdown, 588 points. And now you're going to almost recover probably all of that loss here in the early going if these early indications are correct.

The perspective here. The Dow down 1,500 points in just three days. So a big bounce this morning, turn-around Tuesday, as they're calling it. Very welcome news, but you're still down dramatically from where you were the middle of last week.

HARLOW: Yes.

ROMANS: Investors in the Dow 30 stocks are down 11 percent in year.

HARLOW: Right.

I want to give our viewers some perspective here as well. Let's pull up that chart to show you the big gains over the last -- last seven years or so. So if this market does rise to where futures were and does go up 500 or 600 points, here's a look at what we're talking about. The last time the Dow went up 500 points was in November of 2008. November of 2008. That was a long time ago. That's the volatility we felt back then, we're feeling similar volatility, very different economy, right now.

Rana Foroohar, to you. You note that U.S. markets, still the prettiest house on a very sort of ugly block.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes.

HARLOW: But how long can they stay pretty if China doesn't get it right?

FOROOHAR: Well, China matters a lot more than it used to. It's about double the size as a percentage of the global economy as it was in the late 1990s during the Asian financial crisis. And it's got a huge debt bubble. It's popping right now. You know it has a -- it has a debt bubble that's very similar to what happened before the subprime crisis in the U.S. when China actually launched a stimulus program and built up all this debt to try and compensate for the fact that Americans weren't spending.

I think U.S. stocks will be hit to a certain extent by this. But, you know, we're not just dependent on emerging markets. And oil prices are coming down. That's actually going to be a little bit of a fuel for consumer spending in the U.S. So I don't see the fundamental U.S. story changing.

HARLOW: But is it about, Richard, just the fundamental U.S. story these days?

RICHARD QUEST, HOST, CNN'S "QUEST MEANS BUSINESS": In the sense of what's happening, no, of course not. It's about the global economy and how one bit works with the other. It is a finally tuned series of cogs. When you throw sand or throw a wrench in, this is what happens. And the wrench went in on the far eastern part of it with China and you saw the transmission effects around the world. But this gain that we are seeing this morning is as meaningless as the fall that we saw yesterday.

FOROOHAR: Yes. That's a great point.

HARLOW: That's a great point.

QUEST: And, you know, this is why I say even taking Christine's thousand points that we may be down, that's not a correction. That is turbulence. Corrections can only be looked at when you look back in time, when you say, ah, the market went down and stayed down, as clearly concrete went into the foundations of the market to support the gains that were already there. So what we're seeing at the moment, distressing though it is to everybody's wealth, you're seeing turbulence. Secure -- fasten your seatbelts. Seatbelts --

HARLOW: It's just a reminder to not try to time the markets.

QUEST: Seatbelts in the upright and stowed position.

HARLOW: Alison Kosik on the floor of the New York Stock Exchange.

I bet you're hearing a big sigh there this morning, Alison.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Not a sigh, but definitely the hustle and bustle that I'm felling at the moment, very different from the tension that was happening here yesterday morning around this time. I want to show you the slow, sharp u-turn that the Dow is making, up 375 points at the moment, after one of the wildest days on Wall Street.

There's definitely a lot of excitement this time around. I'm seeing a lot more smiles. A lot more buy orders today it seems. Part of the reason for this is what Richard says, there's really no reason. It's just sort of a natural bounce back after such a huge plunge for the Dow.

But the other reason is China. Even after China's Shanghai composite plummeted over 7 percent last night, the Chinese government did step in and cut interest rates and poured billions of dollars into the financial system. And what that essentially did for U.S. investors here is give confidence, at least at this moment, that the Chinese government is getting a handle on what's going on there.

But if you look at what happened to the Dow over the course of -- over the past several days, it's really taken a big hit. About 1,500 points lower. So the Dow's got a long way to go before it's back on solid footing. I say leave that seatbelt on because there's still more volatility ahead.

HARLOW: Yes, Rana, you've been saying get ready for years ahead of volatility.

[09:35:01] KOSIK: Absolutely.

HARLOW: When you look at the fundamentals of the U.S. economy, you look at the jobs created, three million U.S. jobs created over the past year. That is the strongest job growth since the technology boom of the late '90s.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes. Yes.

HARLOW: Yesterday we were talking about if this sell-off continues, that does hurt company's confidence and willingness to hire. Does --

ROMANS: Eventually. Eventually.

HARLOW: Does the volatility do the same thing?

ROMANS: The most important thing for companies is demand. They -- demand for their products, demand for their business. And they have been running as leanly as they possibly can for eight years. So when the economy starts to get better, and you're hearing this from CEOs, they've got to hire up quickly. So they don't have this cushion where they can have layoffs if -- you know, I think --

FOROOHAR: You know, demand depend on wages too.

ROMANS: Yes.

FOROOHAR: And what's happening in China, lower demand in China, lower demand for oil, actually creates deflationary pressure, which keeps wages down, makes it harder to create demand in an economy like the U.S. at 70 percent consumer spending. If people don't have more money in their wallets, they don't spend more.

ROMANS: Yes.

QUEST: Where you are going to notice the Chinese effect in real terms, not just frothing the markets --

HARLOW: Right.

QUEST: Is when you start seeing the big U.S. corporations, the GEs, the Caterpillars --

HARLOW: Right.

QUEST: UTs. When they start --

HARLOW: The automakers.

QUEST: The automakers. When they start reporting lower numbers because --

HARLOW: Yes.

QUEST: That profitability of China has (INAUDIBLE) --

HARLOW: And I will say, interesting note from Tim Cook, the CEO of Apple --

ROMANS: Right.

HARLOW: E-mailing Jim Kramer on CNBC yesterday --

ROMANS: Yes. Yes.

HARLOW: Really making news, but saying, I am still very bullish on China. Here are the strong numbers I'm seeing in July and August in China. You don't --

FOROOHAR: Yes, but, you know what, though, I'm not buying it because -- yes --

HARLOW: Buy that?

ROMANS: (INAUDIBLE).

FOROOHAR: Well, you know, sure, Chinese buy a lot of gadgets, Apple gadgets, absolutely. But if you look at the overall picture, consumer spending in China is miniscule compared to government spending. This is still a government-driven economy, command and control top down. No matter how many iPhones they buy.

HARLOW: Not as honest to read of the real economy?

FOROOHAR: Not at all of --

ROMANS: (INAUDIBLE) read of the real economy?

QUEST: Yes, I mean, you -- Apple's iPhones, iPads, I this that and the other may be magnificent, but it's the Tanjing (ph) high-rises --

HARLOW: That's right.

QUEST: That were going up.

HARLOW: Yes.

QUEST: It's the bullet trains. It's the massive infrastructure. That's where U.S. corporations are making their money, not by selling phones.

HARLOW: So you're sitting at home watching this and you're saying, what?

ROMANS: Yes. If you're sitting home watching this you say yesterday this was down 1,000 points. Now it's up 300 points. If you're dollar cost averaging in your 401(k), or you have a taxable account, you know, with a broker, these are not the days for you -- for individual investors to be making moves because you're -- you're not going to win. You're not going to win. If you sell stocks today or even yesterday, you're selling at the end of a 2,000 point move.

HARLOW: Yes.

ROMANS: I mean you're not -- timing it is just not a good idea. You need to know, how long are you until retirement. If you're close to retirement, you should not have all your money in the stock market. That doesn't -- that's just common knowledge.

HARLOW: Period.

ROMANS: Just don't -- if you're younger, you can afford to have a lot of money in the stock market. Let it ride.

HARLOW: You know what I did. I have no stomach for this stuff --

FOROOHAR: Yes.

HARLOW: So I didn't touch anything. So -- and it's just out there.

FOROOHAR: The best (INAUDIBLE) ever, don't look at your portfolio. The U.S. --

QUEST: Yes, but let's face it, if any of us were any good at investing and all this, do you think we'd be doing this?

FOROOHAR: I think Richard has an excellent point, my friend.

ROMANS: Richard has a secret island in the Caribbean if you didn't know that? All right, that's where he goes on the weekends.

FOROOHAR: And a Cayman account (ph).

ROMANS: That's where he goes on the weekends.

HARLOW: Thank you all. Invaluable analysis. Appreciate it. We're going to keep a very close eye on this market. Much more from Wall Street ahead.

(COMMERCIAL BREAK)

HARLOW: All right, keeping a very close eye on Wall Street for you this morning. Let's take a look at the Dow, the big board, at the New York Stock Exchange. Up 366 points. A dramatic reversal fortune from yesterday when we saw a loss of 1,000 points at the open. End of the day, the Dow settling down 3.6 percent, more than 500 points. Best financial team in television here with me, Richard Quest, Rana Foroohar, Christine Romans.

[09:40:09] Rana, what we didn't talk about last block was the Federal Reserve.

FOROOHAR: Yes.

HARLOW: And that matters so much. I mean if people think, oh, the Fed, that's wonky. No, it matters so much to everyone.

FOROOHAR: It's huge. And, actually, if you look at the bigger picture beyond China, what the Fed is going to do has been the major mover in the markets for a number of years now and will be. Mohamed El-Erian, the investment guru, calls central banks the only game in town because they've essentially buoyed marketed for the last few years. You know, the Fed dumped $4 trillion into the market. That's done. Rates will be going up at some point, maybe September, although China could have put a spammer in that. But even if it happens at the end of the year, we know that there's only one direction. Rates are going up. That means the end of easy money. And so that's why you're seeing some of this unwinding.

HARLOW: But isn't that what we need, Richard, to see -- to see the fully normalized economy?

QUEST: Yes, but you have to bear in mind, we have lived in an artificial, unreal --

HARLOW: Sure.

QUEST: Totally fabricated --

ROMANS: Steroids (ph).

HARLOW: For seven years.

QUEST: Word -- world.

ROMANS: Seven (ph), yes.

QUEST: With an untested, untried set of policies. If you look back at the minutes of the Fed that just came out last week, a large portion --

HARLOW: The notes from their meeting.

QUEST: Yes. A large portion of that minutes is the Fed working out how they're going to reverse everything without throwing the baby out with the bath water.

ROMANS: Yes.

QUEST: That's their problem at the moment. We are not in a real world in the financial world.

FOROOHAR: This is a genetically modified recovery.

QUEST: Absolutely.

FOROOHAR: It's been modified by central banks.

ROMANS: But they had to do it.

QUEST: Yes.

ROMANS: They had to do it because there was --

FOROOHAR: Yes.

ROMANS: The thing is, is they were kind of in this position where there was nothing else to do.

HARLOW: Right.

ROMANS: They had to make up new rules. Now they have to figure out how to make up new rules to get out from the rules that they already did.

The bottom line for anybody watching, refinance your mortgage. If you're thinking about buying a house --

HARLOW: Yes.

ROMANS: And you want to get a low interest rate, you know --

HARLOW: Do it.

ROMANS: Do it right now.

FOROOHAR: Yes. Yes.

ROMANS: Because this is -- rates are going to rise. That's going to affect car loans. It's going to affect a variable interest rate. You know, any kind of variable interest rate debt. And it will affect mortgage rates. So this is still a window for consumers to enjoy those very low mortgage rates, the low rates.

QUEST: The big problem was that the -- the central bankers came in as the fire brigade --

HARLOW: Yes.

QUEST: To put out the fire, hoping that the policy makers and the politicians would build a new house.

ROMANS: But they didn't. HARLOW: Yes, but they didn't.

QUEST: And they didn't. And what we're left with is the same rickety old house --

HARLOW: Yes.

QUEST: With a fire brigade almost out of water and --

HARLOW: Do you really see the same rickety old house? It's a whole lot stronger, the house.

FOROOHAR: Under -- no, the fundamentals of the global economy really aren't stronger. I mean the U.S. is in a recovery --

HARLOW: Here.

FOROOHAR: But it's still the longest and weakest recovery of the post- World War II era. And why is that debt --

QUEST: Leverage.

FOROOHAR: Debt still out there? Public -- the governments that were supposed to do all this work are holding more debt than ever before. They're out of ammo. So in some ways you could say, overall, the global economy is just as vulnerable, if not more so.

HARLOW: And China's debt -- debt to GDP ratio, three times worse than here.

FOROOHAR: Three times worse than here.

ROMANS: I love playing --

FOROOHAR: The biggest debt bubble ever in history.

ROMANS: At what point, though, does the conversation then switch to, wait a minute, look at the rest of the world slowing. Look at the rest of the world exposure, big exposure to China. And then the U.S. is, as Mohamed El-Erian says, the cleanest dirty shirt in the laundry.

FOROOHAR: Yes. Yes.

ROMANS: And suddenly it starts to look better. You know, a B- starts to look good when everyone else is getting a B.

FOROOHAR: Yes, but we can't pull the global economy along with us. We used to be a much bigger percentage. Not any -- not any more.

HARLOW: But we also can't be isolated. We can't be isolated from it.

FOROOHAR: Right.

HARLOW: Guys, thank you, as always.

QUEST: I'm going to get a mortgage. HARLOW: Richard's going to get a mortgage.

FOROOHAR: I've just refinanced.

HARLOW: I'm going to move on. We'll keep a very close eye on Wall Street. Thank you all very much.

Moments ago, this, the alleged gunman behind the thwarted terror attack in France was taken to a Paris courthouse in a police escorted motorcade. Authorities only have a few hours left to bring formal charges against Ayoub el Khazzani or set him free. That is because of this 96 hour rule that they have to abide by in France. We go to Paris now where CNN's Martin Savidge is live with the latest.

Hi, Martin.

MARTIN SAVIDGE, CNN CORRESPONDENT: Hi, Poppy.

Yes, as you point out, the suspect was transferred to the palace of justice. He's expected to go before a judge this afternoon where he would then be formally charged. The prosecutor in France here says they'll hold a press conference. We'll learn about what the charges are and likely learn more about where this investigation is headed.

Meanwhile, overnight, Belgian authorities say that they searched two apartments, one of them belonging to the sister of the suspect, the other belonging to a friend of that sister. They won't say what they got other than they retrieved a number of objects. And then people are saying, hey, don't forget about the other American hero. We're talking about Mark Moogalian. He is the -- or Moogalian, excuse me. He is the 51-year-old American and French citizen. He's got duel. And he was the first to confront the gunmen. He was shot in the neck by the suspect. He's in a hospital in Lil (ph). Overnight, his condition has taken a turn for the worse. So his family is asking that people not forget about him and keep him in their thoughts and prayers.

And then also Chris Norman, that's the British man who helped the Americans subdue the gunman. He is saying, look, when it comes to the public, it too has a responsibility to confront terror when it happens. Listen to what he said to "NEW DAY."

(BEGIN VIDEO CLIP)

CHRISTOPHER NORMAN, HELPED SUBDUE TRAIN ATTACKER: The police and the law enforcement agencies can do what they can, but we can't have absolutely everything done by them for us. I think as citizens we need to really move forward and we need to take some of the responsibility for it.

[09:45:06] Now, whether it's simply by being more vigilant or by actually preparing yourself for action if ever you do find yourself in one of those kind of situations, we do need to think about how to do it. Now, I'm not an expert in the area but I think we need to try and work out how way to harness the power of us, the citizens.

(END VIDEO CLIP) SAVIDGE: Chris Norman was one of those, along with the three Americans, who received the Legion Of Honor from France's president yesterday. Poppy.

HARLOW: And we'll be watching for all of those heroes to - the three Americans to come back home. Martin Savidge live for us in Paris this afternoon. Thank you very much, Marty.

Next, some very disturbing photos. Look at that. What you are seeing is the step by step process that ISIS took to destroy nearly 2,000 years of history.

(COMMERCIAL BREAK)

[09:50:16] HARLOW: ISIS -- ISIS is now showing exactly how the terror group reduced a nearly 2,000-year-old temple to rubble, releasing these photos less than an hour ago. In them, in a moment, you will see the men with barrels of explosives, how they strapped them to columns. The moment of the blast and then a mushroom cloud. Finally, the final photo, the once historic ruins now a jigsaw puzzle of destruction.

CNN senior international correspondent Ben Wedeman is live in Rome for us with the very latest. Ben, the significance of Palmyra and these structures cannot be overstated, and now they've been completely destroyed.

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, this is part of ISIS's shock and awe approach to propaganda when it comes to this sort of thing. Their excuse is that this was a temple where idols were worshipped, and, therefore, according to their very narrow interpretation of Islam, it should be destroyed. And it's important to keep in mind that these pictures are very much, and these actions are very much focused, on a western audience with this sort of suburban sensibilities that are shocked by this sort of thing because, of course, we show on CNN and other media pictures of destroyed buildings, but what we don't show are the pictures of mangled bodies of Syrians, 250,000 of whom have been killed in the last four years.

And as we faux-ponder this news from Palmyra, for instance, just after those pictures came out, UNICEF came out with a statement that as many as 5 million people in Syria are suffering from prolonged and severe water shortages, that there are some neighborhoods in Aleppo that have gone for more than 17 days without a drop of water coming out of their taps.

So in the west, yes, we're shocked by these sort of pictures, but for ordinary Syrians, 5 million of whom have fled the country, another 7 million have been internally displaced, this is really just a side show to a much larger nightmare that they've been going through now for more than four years. Poppy?

HARLOW: Absolutely is. Ben Wedeman, thank you very much for that.

Still to come here in the NEWSROOM, a book club gets the boot. Was the group being too rowdy or was it racism? The story you won't want to miss next.

(COMMERCIAL BREAK)

[09:47:06] HARLOW: One book club in California says what was supposed to be a fun getaway quickly became a humiliating experience. Eleven women kicked off a wine train in Napa Valley after complaints they were being too loud. But the women say they were not booted for being rowdy; they say they were kicked off for being black. Here is Dan Kerman.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: We made it, y'all. Look at us. We're ready to get on the wine train.

DAN KERMAN, KRON CORRESPONDENT (voice-over): What started as a joyful event for 11 African-American book club members quickly grew sour, even before they left the Napa Wine Train station.

LISE RENEE JOHNSON, KICKED OFF WINE TRAIN: She said to us I'm going to need you to lower your -- the noise level, it needs to come down a little bit because you're being offensive to some of the other passengers.

KERMAN: Some 45 minutes into the trip, they were told they had to leave and would be escorted off the train. And when that happened, a further indignity.

JOHNSON: We had to walk all the way through the additional five cars to be able to get off the train. So they took us and they paraded us through every single car with all the passengers watching us. It was humiliating, degrading, and that's the part I will never, ever, ever forget.

KERMAN: Book club members say there was only one reason this happened.

JOHNSON: Racism. I'm just going to call it like I see it. I have been a black woman all of my life, and I know exactly what it feels like, and that's exactly what it feels like to me and that's exactly what it still feels like to me.

KERMAN: A spokesman hired by the company issued a statement apologizing for their experience.

SAM SINGER, WINE TRAIN SPOKESPERSON: The issue really here was one of both the respect of this party as well as them being respected. We want to reach out to them and let them know that they're always welcome on the Wine Train and we're going to try to have a lessons learned from this event.

KERMAN: But book club members say it misses the point.

JOHNSON: To me it doesn't say they're apologizing to the way we were treated. They're not apologizing for parading us down those five train cars and giving us to the police. They're not apologizing for making us stand in the dirt for 20 minutes in the hot sun with an 85- year-old senior and somebody else who is just recovering from surgery.

They're not apologizing for any of that. They're not apologizing to how we felt we were treated on their train. They're not apologizing that we feel like we were never their customer. They never, ever in this whole incident made accommodations for us. It was about us having to make accommodations for other people.

(END VIDEOTAPE)

HARLOW: Our thanks to Dan Kerman from our affiliate KRON for that report. I do want to note, according to "The New York Times", the company denied the racism allegation and said it had a policy to remove guests who were disruptive to the - to ensure the enjoyment of all guests on that train. They also said the women were given full refunds and free transportation back to Napa.

Well, the next hour of NEWSROOM begins right now.

(MUSIC)

ANNOUNCER: This is CNN breaking news.

[10:00:00] HARLOW: 10:00 Eastern. I'm Poppy Harlow. Thank you so much for being with me, in for Carol Costello today. And we are just 30 minutes into the trading session on Wall Street, but already investors are making gains, starting to erase some of those deep losses.