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Quest Means Business
Dow Plunges Over Confusion on Trade War Negotiations; Angry U.S. Senators Demand Action Against Saudi Prince; Memo on Flynn to Reveal New Details About Russia Probe; Attorney Michael Avenatti Rules Out 2020 Presidential Bid; Thousands Visit Capitol Hill to Pay Their Last Respects to Bush; Shipping Giant Maersk to Cut Carbon Emissions By 2050; OPEC Meets this Week to Discuss Global Supply; Wall Street Trading Coach Teaches on How to Invest in Volatile Times. Aired 3-4a ET
Aired December 04, 2018 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: An hour before the closing bell and what an hour it's likely to be. Look at the way the day has gone.
Opens lower sharp all at midday, the lowest points of the day over 800 points down. Now we're just holding steady at 644 down 2.5%. The other
markets are up sharply. The NASDAQ has lost 3% of its value today.
So wherever we look, it is a sea of red. We need to understand this is what's moving the markets. It is trade worries that are swirling. German
automakers seniors head to the white house trying to dodge tariffs. Bond yields are inverting. We are going to explain this harbinger of a
recession and Theresa May, defeated twice and she's finding her government in contempt in doing so, are seizing more control of the Brexit process.
An extremely busy day on many fronts.
Live in the world's financial capital, New York City on Tuesday, December the 4th. I'm Richard Quest. I mean business.
Good evening, tonight, trade war confusion between the US and China is sending the markets into a tangled spin and any enthusiasm for an alleged
ceasefire between the two appears to have vanished. Donald Trump tweeted today, he's a tariff man an left opened the possibility the talks with
China could fail, all of which means despite the optimism on the bon ami from the weekend's dinner and what you and I talked about yesterday, all of
that investors as this graph shows realizing the trade war is far from over and arguably is getting worse.
So remember, we were up sharply yesterday, but even that was off the best of yesterday, but even that was off the best of the day. We opened about a
hundred or so points lower. Give or take. We sort of totaled around most of the morning, around 250 lower, and then just before lunch, it drops 400
points, the market and throughout the last three hours, those losses have accelerated. At one point, at half past one, it was over 805 points lower.
So you're looking at a massive fall on the day. Now, a recovery of sorts, not much. I would say a dead cap bounce has happened. The market is now
still down 679 points. But we are in the last hour of trade and that is the most dangerous volatile, whatever you want to describe. So this
market, it would be a fool that would predict which way this will go before the close of business in 58 minutes from now.
All the major indices are lower. The NASDAQ is back in a correction territory, down now. You see it's even fallen since the start of the
program. It's now 3.1%. The tech is down -- Apple, Amazon, Alphabet -- each are off some 3%. And the banks are being hit very hard today. You've
got Citi, Wells Fargo, Bank of America, all are 3%; Goldman Sachs is down 3.5%. Some of the banks are even off as much as 5%.
Peter Tuchman is at the New York Stock Exchange. Peter, good to see you, my good friend. Well, what happened? Why did the markets suddenly turn
sour?
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: So I like your introduction, Richard. You said, only a fool would be able predict what
was going to happen in the last hour of trading. So I'm happy to be here to help you with that. Anyway, obviously, what happened, the negative
turned narrative. The narrative turned negative on the day about the China question. A lot of mixed messages off of yesterday's good news, which I
think the market sort of digested midday yesterday, that it wasn't that enthusiastic about a deal that's going to happen, about the deal about the
deal.
There was nothing really locked in stone on this one at all. And today, they kind of realized with the tweets and with the narrative, of a little
bit about global economic growth slowing down. But then in fact, there is nothing going on with the Chinese that we can lock our teeth into. And
that was the enthusiasm that took the market up yesterday. And that's the lack of it that's taking it down today.
QUEST: Peter, in a moment or two, I'm going to be explaining or trying to explain the inversion of the bond yield and the mid-bond yield. Is the
market concerned that the fixed income markets, the bond yields are starting to suggest all is not well in the economy?
TUCHMAN: You know, it's only in my wheel house, Richard. I'm not going to talk about it because I don't know it, but what I am going to say is that,
it seems like the new norm are these 500 point swings. Right. So, I think we were up 2,000 points, 5%, 6% over the last six trading days. We're
giving back half of it. So let's not read that much into it.
[15:05:06]
TUCHMAN: Suddenly, all the fundamentals have not changed overnight. One day, we look like it's a great bullish market, the next day, we're in
direction mode. So I think we have to take those terms off the table because they are not relevant any longer. Five hundred point moves on a
daily basis seems to be the new norm. What we are seeing is, we are giving back the enthusiasm of the positive China news yesterday. We are giving it
back today because that narrative is off the table. Tomorrow will be another day. We'll see what happens.
QUEST: Investors, ordinary investors, not the professionals like yourself, but ordinary investors find this environment new, challenging and worrying.
TUCHMAN: No question about it. I would think a retail investor looking at this would get rather anxious. Right? I think one should not look at
their portfolio on a down 700-day. They may want to take a view added on an up 700-day. But you know, at the end of the day, if people have been
reactive in their portfolios, every time we have been down a thousand points or down 500 points, and they sold at those levels, they probably
would be regretful over the year. Although we have given back a lot of 2018 profits.
At the end of the day, it's not the end of the world, we are giving back some enthusiasm. But there is a bid in the market. We are off the lows of
the day. Let's see what happens. I am not the fool who is going to predict the end of the last hour of trading, Richard, even though you want
me to.
QUEST: You are right, I do. But there is no fool like an old fool and I'll join you in that one as well. Good to see you. Peter Tuchman at the
Exchange. We were talking there about the yields. Now, the market holding its own around here. Investors are anxiously watching for what might
happen next particularly when it comes to economic credit and the harbinger of recession.
And Monday's closing numbers, the circle yield on the US five-year bond fell below the yield on the three-year bond, so we have a so-called
inversion. Bear with me as I explain because you and I, I feel, are going to be talking about inversions for some time to come. The yield curve
across all instruments should look like this.
If you take the yield curve, in other words, shorter-term interest rates pay less interest than longer-term bonds because you are lending money for
longer. That is the way it should work, which is somewhat a bit like the way my chart should work. Unfortunately, that is not what is happening
now. What is happening now is that these two particular bonds have actually decided to invert.
You have the lower end getting higher than the upper end. Let's talk all about this with our guest. Tom Kennedy is with me to explain why this is
significant. Good to see you, sir.
TOM KENNEDY, GLOBAL HEAD OF FIXED INCOME STRATEGY, JP MORGAN PRIVATE BANK: Good to see you.
QUEST: Tell me the reason why in this scenario we - what actually happens to cause the yield to move in such a fashion?
KENNEDY: Okay. It's first of all, as you mentioned, not a common thing to happen. But we're seeing this inversion at the plainest level of saying
yields that we expect five years from now are going to be lower than we are seeing today and on average over the next three years. So when yield
expectations are lower in the future than what they are today, you should expect the Fed to reduce rates or tell you something --
QUEST: Why? I mean, okay. So that's the expectation of investors, but what are they doing to cause the inversion? Are they buying at the long
end? Or are they buying at the short end?
KENNEDY: I don't think necessarily we're thinking about our investors, you mean, Richard, yes.
QUEST: Yes, investors, to cause this inversion, I mean, the inversion doesn't happen on itself. So there is market activity that's bringing it
about.
KENNEDY: Yes, it's talking about expectations for where total value will be in the future. When you look at what a yield curve is telling you now
as an inversion, we think the Fed is going to cut rates in the future. So you are incentivized as investor today, counterintuitively to buy longer
duration bonds. I know that feels crazy to say.
But buying a longer-term bond, you are coming around to the notion that the Federal Reserve is going to bring risk-free rates, lower in the future. So
think about that from an average person. The cash return that they're getting in their checking account might be relatively high now, but in the
future, the bond market is telling us, the Fed is going to lower that rate in the future.
QUEST: So investors are actually causing this?
KENNEDY: In expectations about where rates will be are causing this. Inherently, investor activity is causing that, too.
QUEST: And so to suggest, I mean, at the moment you only have an inversion right in the middle of the EU. You need to see an inversion from the note
all the way to the ten-year or 30-year to have a full inversion. And we're still a good 50 basis points off, something like that. Would you expect to
see that?
KENNEDY: Yes. We're expecting to see - I historically will look at the difference between the ten-year bond and the two-year bond.
QUEST: This is what you can see on the screen, we are showing you the spread at the moment has evaporated.
[15:10:06]
KENNEDY: Yes.
QUEST: Between the 10 and the two.
KENNEDY: It's about 15 basis points today. When I walked in the studio with you, I expect that by the summertime to be inverted. And it is based
on a few things that are changing. It is a Fed that is telling us, they are still going to continue to hike against the backdrop of US
exceptionalism that we don't think is going to last for forever. The fiscal impulse that we've seen so far this year. I don't think it will
continue into 2019. So we should expect growth to slow down somewhat more towards trends which probably is somewhere in the 2% range.
QUEST: So it is the low - it is the short end of the curve that's going up?
KENNEDY: Yes.
QUEST: Rather than the long end of the curve coming down?
KENNEDY: Exactly. The Fed is telling us they are going to continue to hike that Fed funds rate. So the two year rate will continue to rise.
Yet, the ten-year rate which proxy something like growth is going to stay somewhat anchored.
QUEST: Now, to the old canard that everybody face, every recession has an inversion, but not every inversion leads to a recession. And it is
perverse to be talking about recession when the growth forecasts for next year are 2% to 3%? At 2.7%. I think your own bank has a 2.7% to 3%.
KENNEDY: Yes. You are right to call out. This is the indicator that often leads to you thinking there is going to be more recession than you
actually see. However, history tells us this is the best indicator --
QUEST: If we look at previous inversions. If we have a chance, if can - that shows previous inversions on the previous ones from - there we go -
whatever you've got, you've got 2000.
KENNEDY: Yes.
QUEST: You've got 1990 and you've got 1980 and you've got 2007. Every time there was an inversion, a recession followed?
KENNEDY: Absolutely, and the '90s is the anomaly that most people look at, too, Richard. It's to say there was an inversion, the curve steepened, so
on and so forth. You're right though, this is the best indicator we have. It's one indicator. But to me, when I look at the broader backdrop, I
think it is telling us the appropriate signal. We should be a little bit more cautionary about the outlook for the new economy over the coming two
years.
QUEST: Finally, you are an expert on this.
KENNEDY: I don't know about that, but I'll try.
QUEST: I hope so. Otherwise, we are both in trouble. The gap between an inversion and when we see the effects.
KENNEDY: Yes.
QUEST: In a recession or something, you are talking of a two-year term. So this isn't like we will see it next Thursday.
KENNEDY: Yes, to your point. The shape of the yield curve is just one indicator. If we look back in history, we are talking about something
between nine months to 18 months. That 18 maybe even 24 months for a time of recession. This is not science. This is just art for us, right?
QUEST: Well, that's one way of looking at it, down 700 on the Dow. The volatility is coming, everyone.
KENNEDY: It sure is. It's tough out there right now.
QUEST: Good to see you, sir.
KENNEDY: Good to see you, sir. Thank you for having me.
QUEST: Thank you for coming in and explaining it.
KENNEDY: Thank you.
QUEST: As we continue, BMW, Volkswagen and Daimler are in Washington. They are hoping the tariff man, Donald Trump can be talked out of putting a
crippling levy on their cars. Also, setbacks and embarrassments as Britain's Prime Minister feels the heat even before the main Brexit debate
kicks off. Her government now in contempt of Parliament. We'll be at Westminster in a moment or two.
[15:15:00]
QUEST: Europe's big three economies -- Germany, Britain and France tonight are each facing dire threats in their economies. Right now the auto band
is all leading to Washington. BMW, Daimler, and Volkswagen have dispatched executives for a meeting with the Trump administration on the day that the
President, himself, is calling himself the tariff man. Let's have a reminder, that once again, he is threatening 25% tariff that the European
car makers are desperate to avoid.
Europe currently charges 10% tariffs for historical reasons, we don't need to go into it now. But there is a 10% tariff on European cars going to the
US that Donald Trump says it's not fair. US only charges 2.5% on many European cars and many already made here. And that could go to 2%. But he
said it will cost you up $75 billion in growth.
Now to China. Now China, itself, has slapped on 40% tariffs on US cars. Donald Trump says, that will go to zero. The issue of cars and tariffs and
automobiles has one that's bedeviling international economics at the moment. Jack Ewing is in Frankfurt. He is the European economic
correspondent for the "New York Times," good to see you, sir. Thank you.
The issue - what are Europeans most frightened of in terms of what Donald Trump could do to them?
JACK EWING, EUROPEAN ECONOMIC CORRESPONDENT, "NEW YORK TIMES": There is the idea of the threat of the 25% tariffs, that's very scary for the
Europeans, especially for Germany, because the German economy totally revolves around cars. The three car makers that you mentioned and if the
tariffs would probably have a devastating effect on their sales in the United States and the tariffs would also apply to a components parts,
motors, transmissions, a lot of which are also coming from Europe so it would raise prices for American consumers but it would also hurt the sales
of imported cars and that's very scary for the Europeans at a time when the economy is not doing very well anyways.
QUEST: But I mean, there was the meeting at the White House where Jean- Claude Juncker and the President were higher tariffs were suspended or at least, I was going to say a China-type deal arrangement was done that left
everything a bit vague to future negotiations. Where do we stand on that?
EWING: Well, there was kind of a truce in July, but the Trump administration has continued to sort of hold that domically sworn over the
Europeans. They've said many times, we're getting impatient. The President is running out of patience. He really wants to do these tariffs.
So they've kept the pressure up on the Europeans very much.
QUEST: Any progress? Is there a sign because - I mean the tariff levels that we were just talking about, alright, they're not hugely - the
Europeans if so wish could dismantle their tariff barriers against US because it's not as if there are many US cars going into Europe at the
moment, anyway.
EWING: Yes, well, I think actually the Europeans would be very happy to take all the car tariffs down to zero. And actually, you don't hear the
Trump administration talking about that very much anymore because the other part of that is that, yes, there is a 10% tariff on American cars, but
there is a 25% tariff on European trucks going to the United States and that goes back decades. And I think that the Trump administration stopped
talking about that, because I think they've realized, if you took away that tariff, then you get pickup trucks and vans and so on coming from Europe
into the United States, and that wasn't necessarily a good thing for the US auto industry.
[15:20:00]
QUEST: Jack, doesn't this - you obviously spend - excuse me - working live looking at all of this and doesn't it just prove how nobody really comes to
this table with clean hands?
EWING: No, absolutely not. I mean, you know, we talk about tariffs a lot, but really, the big barriers are the regulations. All the rules about how
your taillight is supposed to look like, your airbags and so on, if they could harmonize those, that is actually what would do the most for trade in
both directions and in a way, tariffs are kind of distractions, it's really about the regulations and that's what the both sides have tried to work on
in the past, but that's proved very, very difficult.
QUEST: Jack, thank you very much. Joining us from Europe. The British Prime Minister is fending off slings and arrows in Parliament after two
defeats a short time ago. MPs found the government in contempt and in doing so, seized more control of the Brexit process. Theresa May says the
search for a perfect Brexit should not block a good Brexit.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: The only solution that will endure is one that addresses the concerns of those who voted leave while reassuring
those who voted remain. This argument has gone on long enough. It is corrosive to our politics and life depends on compromise.
(END VIDEO CLIP)
QUEST: CNN's Erin McLaughlin is following developments outside the Houses of Parliament and joins me now. Let's deal with this contempt vote, first
of all, as a result of losing that vote, does the Prime Minister - does the British government now have to publish the full legal advice that the
Attorney General gave her on the consequences of the backstop?
ERIN MCLAUGHLIN, CORRESPONDENT, CNN: The short answer to that, Richard, is yes. After that vote today in Parliament, which was the first time in
history that a British government has been found in contempt of Parliament, and the government will now be compelled to publish in full that legal
advice on the Brexit deal that they had previously hoped to keep to themselves. They published a summary of it. They do not want to publish
it in full. It leaked to the press anyway essentially saying that the UK is at risk and definitely remaining in that very controversial backstop
solution, in the event that that backstop solution is kicked in, in the event that they don't reach some sort of future trade deal with the EU. So
that is happening. So it was a historic vote. It was one of three that she actually lost today.
QUEST: Including this one that will give the - will give Parliament more power in directing the government in the way forward. Explain that, if you
can.
MCLAUGHLIN: Well, essentially, what she also lost today was the vote on the so-called grieve amendment. In the event as at this point is expected
that Theresa May is unable to get that Bbrexit deal through Parliament next week. She has a period of time with which to come back to Parliament with
a so-called Plan B. The grieve amendment essentially allows MPs more of a say in terms of what happens to that Plan B and it's something the
government did not want to see.
She lost it. I have the numbers here, 321 to 299. So again, one of three humiliating defeats for the government. Really what this is doing,
Richard, is building a picture, building up to next week, that historic vote next week on her Brexit withdrawal bill. At this point, things really
are not looking good for the government in that direction.
QUEST: Erin McLaughlin in Westminster, thank you. French President Macron is making a major concession. He is suspending controversial hikes in fuel
prices. The increase in taxes sparked big protests mid-November that have since morphed into an anti-Macron movement. They are known as the yellow
vest and today the French Prime Minister says the scale of the discontent can no longer be ignored.
(BEGIN VIDEO CLIP)
EDOUARD PHILIPPE, FRENCH PRIME MINISTER (Through a translator): This anger has deep roots. It's been brooding for a while. It often stayed quiet out
of reticent pride. Today, it is being expressed with force and in a collective way. One has to be deaf or blind not to see it or hear it.
(END VIDEO CLIP)
QUEST: Blind not to see or hear it. Melissa Bell is in Paris. I mean, on the one hand, you shouldn't give into violence and intimidation and
protests. On the other hand, when they do express the will of the people, I guess that's what all the French are doing.
MELISSA BELL, PARIS CORRESPONDENT, CNN: And what appears to be the case that the yellow vest now know that they have the government's ear. They
know that they are managing to hold the country to ransom in a sense. They are managing to get some kind of movement on what at least have been the
spark of all this that fuel tax, although not as much as they'd like. Clearly, they don't want a suspension, Richard, they want the whole thing
to go away.
The government hasn't gone that far and so you can expect them to be back on the streets on Saturday and there is this broader movement as you
suggested not only in its aims in terms of opposing Emmanuel Macron and his policies in speaking more broadly to the issues ...
[15:25:10]
BELL: ... that affect the least affluent in French society, it is also that they are now in a sense at the beginning of something wider. We've
seen 200 high schools disrupted today, it is the second day in a row students have been protesting against the policies of Emmanuel Macron. We
saw ambulance drivers out on the streets yesterday. There is this broader unease, this broader unhappiness. Remember, think about the economic costs
of all this, Richard, Paris town all worked out the damage done just on Saturday at three to four million euros and the French Economy Minister has
published a series of figure, the automobile industry, restaurants, retail, the hotel industry here in Paris, all substantially down and this is just a
matter of weeks before Christmas.
Clearly, the French government felt that they needed to listen. They needed to act. For those protesting, they are going to wonder, I guess,
how much further they can go and how far further the government is willing to listen.
QUEST: Mellissa, I mean, at the end of the day, this government was swept into power on a vast wave of popularity. Now, that hasn't completely
evaporated. But surely everybody knew this is what they were going to get in terms of the economic reforms.
BELL: You are right. This is the man who came in, whose entire candidature was built on the idea of reforming France and that he alone
could do it, but I think one of the things that's interesting, you were talking about - we're talking about the people who are actively protesting,
actively getting out on the streets of France, day in, day out to oppose his policies.
But frankly in the broader population, Emmanuel Macron has some pretty dismal popularity ratings. There has been no doubt a communication problem
between himself, his policies and how he is explaining to the French people, but there is a lot of dissatisfaction. Some feeling that he is
going too slowly, some perhaps that he is too great a threat to the way French society was organized thus far.
But you are right, he was brought in on this wave of popularity. But remember that the woman that he was standing again was Marine Le Pen, the
far right candidate who stood in the name of a party even though she'd understood that she could capitalize on the populist wave that had brought
Brexit in the United Kingdom and Donald Trump in the United States and she got that, Richard.
This was really part of her message. She still stood for a party that in the mind of many French people who was associated with the legacy of her
father. And I think for many two felt dissatisfied and who perhaps would have been to defer, definitely not for a liberalizing President like
Emmanuel Macron, they simply couldn't bring themselves to vote for her.
QUEST: Melissa Bell in Paris, thank you. Before we take a break, look at the markets since we are just half an hour - 33 minutes tonight. So,
slight increase or slight acceleration in losses hovering around the 700. We'll keep a close watch on that because we are getting into the most
volatile part of the day.
As "Quest Means Business continues, the future of shipping, an exclusive interview with Mersk as the world's biggest shipping company committing to
a carbon free future.
[15:30:00]
(COMMERCIAL BREAK)
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When cigarette
companies are investing in marijuana, the former president of Mexico tells me why he is pushing pot.
As we continue, this is Cnn, and here on this network, the facts always come first. Wall Street's enthusiasm for an alleged ceasefire in the trade
war between the U.S. and China vanished as the numbers in front of you show.
The Dow has -- had been as low as 805 points, it's now 733 down. The S&P is off as well sharply. The Nasdaq is now as a correction and tech and
banking stocks have had bruising losses. A select group of Republicans and Democratic senators were briefed a short time ago by the director of the
CIA on the investigation into the Jamal Khashoggi murder.
Some of the senators came out of the meeting demanding strong action against Saudi's Crown Prince Mohammed Bin Salman. One said that if this
was a trial, the prince would easily be convicted of murder.
A big reveal is expected sooner in the Russia investigation, we soon could learn what Donald Trump's former national security adviser has been telling
investigators ever since he pleaded guilty to lying about his Russia contacts a year ago.
The special counsel Robert Mueller will recommend a sentence for Michael Flynn and could detail the extent of Flynn's cooperation with the
investigation. Scratch one name off the list of possible contenders for next year's U.S. presidential race.
Michael Avenatti says he's decided not to run. He is perhaps best known as the attorney for Stormy Daniels; the porn star who helped -- who was paid
hush money to keep quiet about an alleged affair with Donald Trump.
Thousands of people are paying their last respects to the former U.S. President George H.W. Bush. His body is lying in state today at the U.S.
Capitol building. It will be a national day of mourning on Wednesday when the funeral for the president takes place in Washington.
Leaders have been meeting in Poland in Katowice to discuss the catastrophic consequences of climate change, whiles companies as you're all well aware
are joining in the effort to mitigate the damage. Maersk is the world's largest shipping company.
And today has announced new measures to improve its environmental footprint. Such shipping industry carries a heavy burden when it comes to
cutting emissions for responsible for transport and 80 percent of global trade. The very valuable stuff goes by air, everything else goes on a
ship.
And Maersk aims to have commercially viable carbon neutral vessels by the year 2030, and it will do so by accelerating new innovations and
technology. All of which means that the company will be completely carbon neutral 20 years later.
In an exclusive interview with me a short while ago, Maersk's Chief Operating Officer Soren Toft explained the plan to carbon neutrality.
(BEGIN VIDEO CLIP)
SOREN TOFT, CHIEF OPERATING OFFICER, SOREN TOFT: Let me say that, you know, climate change is one of the most significant issues facing the
planet. And as a business leader -- but in fact, also as a human being, it's vital that we find solution for this problem.
I think we all want generations -- many future generations to have a healthy and peaceful existence on this earth. So it's not only, you know,
a grand target, but it's also a necessary target that we are setting for ourselves. Is it difficult to obtain? Absolutely.
But at Maersk, we have shown that we can already significantly impact our efficiency.
QUEST: Right.
[15:35:00] TOFT: The past ten years, we have improved efficiency by nearly 50 percent. So we believe we have the right tools and I am in the
right position to also bring about the next generational change.
QUEST: So this is going to take the construction, the design and construction of new ships, many of which will not be available until 2030.
Correct?
TOFT: Yes, we will need to find new technologies, new innovative ways of basically providing the future efficient ships. These ships are not
available today, and that's why we are reaching out, not only announcing this goal, but also saying that this is a call for action.
It's a call for action for all constituents in the supply chain to collaborate and to work together. Let's remember, many of players in the
industries, including our customers are facing this dilemma. So we can only do this when we work together.
QUEST: On the question of trade and world trade, in your last results and in the announcements, you say you are seeing evidence of the slowdown or at
least containers reports, are you -- because of China, U.S. trade relations. Are you seeing that situation get even worse as we now are
seeing further tariffs and further restrictions?
TOFT: Well, let me say, we are, of course, positively encouraged by the signals and the decisions from the recent G20 Summit in Buenos Aires. It
doesn't mean we are -- we are out of the way. But it's certainly encouraging because at Maersk, we believe in free and fair trade.
Let's remember, free and fair trade has brought significant prosperity and has fueled economic growth. And now what we're announcing with the zero
carbon by 2050 is we no longer need to make it efficient, but we also --
QUEST: Right --
TOFT: Need to make it sustainable for the long run.
QUEST: But are you seeing evidence in the number of containers you are carrying, which would be the hardest proof that in some perverse way, these
tariffs are actually working and that there is a reduction in trade?
TOFT: Over the past few months, we have seen a reduction of U.S. exports. Actually, reversely, we have seen an increase in imports to the U.S. partly
because the Chinese currency has also devalued more or less, offsetting the tariffs that have been implemented already.
But also because in dialogue as we have with customers, we know that people have brought in more goods and inventories have filled up. But I think
it's too early to draw any final conclusions. We are following it very intensely.
We, of course, concerned because in our world, and in our view, free and fair trade is the right path forward. But it's too early to bring any
conclusions to bear.
(END VIDEO CLIP)
QUEST: It's the meeting all investors are waiting to see, OPEC Summit in Vienna. John Defterios tells us what to expect next.
[15:40:00] (COMMERCIAL BREAK)
QUEST: Oil prices have flattened from robust gains earlier today. Investors are looking towards OPEC producers meeting in Vienna this tweak
for crucial talks about supply. Cnn's John Defterios explains what might or could happen.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): Call it a Saudi- Russia bromance united in 2016 by a common goal to rescue oil prices. Enter Donald Trump, a big wedge aiming to come between them. The U.S.
president is fixated on lower gas prices to please his electoral base. But he seems to have a bigger game plan in mind.
MARIOS MARATHEFTIS, CHIEF ECONOMIST, GOVERNANCE CREED: If the U.S. wants to drop oil prices to damage the collaboration between OPEC and non-OPEC,
the U.S. economy will have to take significant costs itself.
DEFTERIOS: Here's how the Trump effect played out over two months. At one point, a near $30 oil correction, officially a bear market. Through a
barrage of tweets, Trump turned up the heat at OPEC headquarters. He hounded Saudi Arabia and Russia, the world's two largest oil exporters to
open up their taps to prepare the ground for sanctions against Iran.
He then shocked the oil market by giving Iran eight-country exemptions. To counter the external pressure, OPEC's Secretary General says it's essential
to maintain their two-year agreement that cut oil production to lift prices.
MOHAMMAD SANUSI BARKINDO, SECRETARY GENERAL, OPEC: We are determined to ensure that we do not relapse into the downturn which had sent this
industry into a spiral.
DEFTERIOS (on camera): During these testing times, some interesting jargon has reappeared in the oil market. For example the goldilocks price of oil,
something that's not too hot, nor too cold. A price that supports production but does not kill off demand.
Unemployment in the U.S. oil patch skyrocketed to over 8 percent between 2015 and 2016. Two years later when prices averaged over $60 a barrel,
that rate was cut in half with over 10 million jobs in the sector.
BARKINDO: If you look at the job creations in the basins, you will appreciate what OPEC and the non-OPEC have jointly done to the benefit of
the United States.
DEFTERIOS (voice-over): But Saudi Arabia's hard-charging Energy Minister Khalid Al-Falih needs to deal with today's reality. Balancing their
interests within OPEC and prickly relations with Donald Trump, that's not an easy win-win. John Defterios, Cnn business, Abu Dhabi.
(END VIDEOTAPE)
QUEST: Mercifully, the trading days only got about 17 minutes to go. So we'll update you with the markets. We are holding -- as you say all the
return, anywhere between 690 and 757-60 seems to be the way. But there is still as you say 17, as I say 17 more minutes to go, we'll look at it
closely.
[15:45:00] (COMMERCIAL BREAK)
QUEST: We're into the last few minutes of trade on Wall Street, and this really sort of tells the rather -- so, we are off the lows of the day, but
the Dow is sharp. In fact, it's barely positive for the year so far. And it is trade fairs and bear market fluctuations. Look at the Dow 30, only
one bit of green and only barely just, that's Procter and Gamble.
We're seeing an exact reversal by the way. Those companies with the lowest losses are the defensive stocks, J and J, McDonald's, Verizon and Merck.
Those were the highest losses of the financials. But obviously going to be hit by this inversion.
And VISA, your Goldman Sachs, JPMorgan Chase, and also the big four of course, they're the biggest way to the Dow or amongst the biggest waiting
of the Dow. Caterpillar, Boeing, Apple and Intel, DuPont. Alison Kosik is at the Stock Exchange. This market has fallen and I mean it sort of seems
to have found a temporary break around 750. But there's certainly no enthusiasm.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: No there is zero enthusiasm on the floor. I think that investors are looking for a bit of a breather
tomorrow, obviously to honor the late President George H.W. Bush when the financial markets are closed.
Look, you're watching the markets re-assess what came out of the meeting between China's President Xi and President Trump in Argentina. And what
investors are realizing is that there was no deal.
That means there is a lot of uncertainty as to whether even a trade deal can happen. So the positive that the market was looking for, that catalyst
to move the market higher, well, those hopes were dashed when that realization came today when the sun came up.
And when you -- all of you saw the tweets from President Trump --
QUEST: Yes --
KOSIK: Trying to explain what happened at those meetings at the G20. That just added to the confusion here on the floor of the Stock Exchange and
certainly added to --
QUEST: Right --
KOSIK: The skepticism, Richard.
QUEST: So we're seeing financials down as well. JPMorgan is up 4.5 percent, Bank of America was down 5 percent, Wells Fargo is off. So this
is -- this is hitting the financial sector as well?
KOSIK: Absolutely, and I think a lot of that, what you're seeing is the concern about what's happening in the bond market, that phenomenon that's
happening in the bond market, you know, which in the past has signaled the possible economic slowdown, those indicators, you know, that investors are
more confident about current economic growth instead of future economic growth.
So that's kind of building that wall of worry, so you put the Trump trade talks, you put the -- even the concerns about the Mueller investigation,
they're thinking that we may hear something soon from the Mueller investigation. So you pile that on, and suddenly you build this wall of
worry --
QUEST: Right --
KOSIK: For investors, Richard.
QUEST: To this morning on the floor of the Exchange, when I was talking on the EXPRESS, Matthew says that -- one of the traders said, he described
the markets as fragile, which was a phrase I have not heard -- I've heard, volatile, buoyant, depressed. But he says that these current gauge -- the
stability of the market is fragile.
KOSIK: Well, I haven't heard that term either, and you know what? At this point, I'm not surprised. I mean, the new normal is to see swings like
we're seeing today. You know, forget about the days on end that we see moves that maybe 50 points on the Dow. I think those days are gone. I
think these hundred, few hundred point moves every day is what really we should probably start getting used to, at least in this age where you're
seeing the market literally move on --
QUEST: Right --
KOSIK: Each and every news headline that comes out, Richard.
QUEST: Alison thank you, Alison Kosik, we will be there for the close and watching these events. In all of what we're talking about adds to great
uncertainty. Where does the economy go from here? The CEO of SunTrust spoke to Christine Romans.
[15:50:00] Trading in a market in this volatility takes nerves of steel, whether it'll be presidential tweets or fears of impending recession.
Investors must keep their own emotions in check if they want to make money. Clare Sebastian now gets a lesson in surviving along with the rest of us
all of this volatility.
(BEGIN VIDEOTAPE)
DOUG HIRSCHHORN, TRADING PSYCHOLOGY COACH: You want to trade?
CLARE SEBASTIAN, CNN REPORTER: This is lesson number one in trading in a volatile market, and I just failed.
HIRSCHHORN: Now, I have just done something that's revolting, right?
SEBASTIAN: Right --
HIRSCHHORN: I put $20 in my mouth, I tried to give myself hepatitis. Has my saliva changed the value of this $20 bill?
SEBASTIAN: No. Doug Hirschhorn is a former sports psychologist who spent the last two decades coaching Wall Street traders to put their opinions and
emotions aside. He's been particularly busy this year. So what's the number thing that you tell people about how to survive in this volatile
market?
HIRSCHHORN: By trying to gain points before you put a trade on. Know why you're putting a trade on, and then when the trade starts to move and
become volatile, is -- you ask you yourself this one simple question, is my reason for doing this trade still intact?
SEBASTIAN (voice-over): But that kind of discipline he says is particularly important in a world of information overload.
HIRSCHHORN: We have a president that is an active tweeter.
UNIDENTIFIED FEMALE: President Trump tweeting this morning, "oil prices getting lower. Great!"
QUEST: "Just had a longer, very good conversation with President Xi Jinping".
SEBASTIAN: And it's not just the volume of real-time information that sparks the recent market swings.
UNIDENTIFIED MALE: I do think it's not a bad time to shift towards a few things.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Is it key? Fed has gone crazy.
UNIDENTIFIED MALE: We think this is a bull market correction.
SEBASTIAN: It's the nagging sense that the U.S. economy is heading for a turning point.
UNIDENTIFIED MALE: The Fed of course is raising rates, trying to cool down the market. Usually, when we get unemployment this low, we do get a
recession within the next two or three years.
SEBASTIAN: And yet, despite those alarm bells, experts say this is not the time to over react.
UNIDENTIFIED MALE: Valuations are still sound for long-term investors. There's no reason to panic.
HIRSCHHORN: Sloppy trading comes in when we get emotional.
SEBASTIAN (on camera): Doug Hirschhorn says in this market, too many people are making that mistake. And his message is clear.
HIRSCHHORN: Want to trade now?
SEBASTIAN: Whether it's a two $20 bills that will eventually dry out or an oversold stock ready to bounce back, sometimes in volatile markets, it's
best.
(END VIDEOTAPE)
QUEST: Now, all of this uncertainty, where do we go from now? Christine Romans has been discovering.
(BEGIN VIDEO CLIP)
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Morgan Stanley says we're in a bear market. Do you think that we're in a bear market?
BILL ROGERS, CHIEF EXECUTIVE OFFICER & CHAIRMAN, SUNTRUST: It doesn't feel that way to me --
ROMANS: No --
ROGERS: You know, I spend a lot of time with our clients. I look at our own businesses, I look at our pipelines for capital markets based on our
pipelines for loan business, and I look at all of our surveys, you know, consumer confidence is up.
This holiday season is going to be -- I think very strong, early indications. So I don't think we're in a bear market. I mean, things have
cycles, but I don't feel like we're at the start of a cycle right now.
ROMANS: Why do you think people want to talk about money more? I mean, the sheer number of people who don't have even a few dollars in emergency
savings, especially in a strong economy always surprises me.
ROGERS: We just had a survey that had 43 percent of people, didn't have $500 saved for on emergency because it's fragile --
ROMANS: But this is such a strong economy when I look at these really lower -- you're saying it's a fragile recovery.
ROGERS: Right, there is a fragile recovery, not everybody is recovering at the same rate. I think we sort of have technology we had, and what we want
to do is make sure that we talk about that and help those that are on that edge to not be on the edge.
So what we've been driving is, I think the idea of providing financial wellness in combination with the paycheck is really the right way to do
it.
ROMANS: So what is financial wellness? What is it that you're doing specifically?
ROGERS: Yes, so we worked with a company called Eight Pillars out of Utah. Eight-step program, starting with your values and anyone giving back and
all the elements that go along with that. Eighty percent of our teammates participate --
ROMANS: Wow --
ROGERS: And what happened is that 40 percent didn't feel financially secure, now 80 percent feel financially secure.
ROMANS: The owners will have to be on the employer to keep the workers they want and not have job popping when you have 3.7 percent unemployment
rate.
ROGERS: And it's a great dialogue. You know, when I am -- when I visit with another CEO and we have a dialogue about what we think about our
company's talent eventually comes up pretty quickly in the conversation. And then I start the conversation with, do you have a financial wellness
program in the idea of implementing that -- the companies come pretty quickly.
Anything they can do to help retain and then provide wellness for their employees is a high priority.
ROMANS: Tell me about that wealth of talent, do you agree with that?
ROGERS: Oh, totally.
ROMANS: What's going on out there?
ROGERS: I think the number one thing is talent. I think --
ROMANS: Really?
ROGERS: Trade sort of follows maybe as a second --
ROMANS: OK --
ROGERS: To that. And it used to be specific industries, trucking, engineering, things you would -- decoding, the things you would hear, I
think it's universal.
ROMANS: It's everything --
ROGERS: I don't think it's wholly related to any one industry or any one geography. Every company I talk to, the number one thing they talk about
is attracting and retaining talent. And I think financial wellness is really tied entirely to retaining talents.
(END VIDEO CLIP)
[15:55:00] QUEST: And we will have a profitable moment after the break. The markets down, holding its own, but down sharply.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. It didn't take that long for the markets to suddenly decide that the weekend deal with China which in the
U.S. and Chinese fell apart and really it was inevitable. After all, the two were having dinner.
There wasn't a full scale negotiating agreement, and what the U.S. thought they got, maybe the Chinese didn't. Anyway, as a result, the market down
very sharply because we seem to be back to square one. Now it just goes to show as we've heard, it's the fragility of the circumstances at the moment
that is perhaps most worrying.
Volatility is not new. But the underlying causes of that volatility in this case and a full sense that somehow there was an agreement between the
U.S. and China, well that's arguably more worrying. So expect more of this, and this might take us way through to Christmas and the new year.
Ultimately though, ultimately, what the markets are looking for is some form of certainty, some sort of idea of what comes next. And that's QUEST
MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.
(BELL RINGING)
Highly unlikely, we're down the best part of 800 points. Jake Tapper is next.
END
