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Quest Means Business

Selloff Continues As COVID-19 Cases Rise And Stimulus Chances Fade; Banks Across The Globe Are Hit By Claims Of Widespread Money Laundering; McConnell On GOP Effort To Fill RBG's Supreme Court Seat. Aired 3-3:30p ET

Aired September 21, 2020 - 15:00   ET

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

[15:00:29]

ZAIN ASHER, CNN INTERNATIONAL HOST: All right, let's take a look here. The market is being pressured for a whole host of reasons, including the lack

of a stimulus bill.

You see red across the screen there. The Dow is down 750 points. It is suffering its worst day since June. Those are the markets, and these are

the reasons why.

Fears of new national lockdowns are sending investors running for cover.

And Lufthansa shares sink as it says it will have to cut even more jobs, about 22,000 actually.

And banks across the globe are hit by claims of widespread money laundering.

Live from New York, it is Monday, the 21st of September. I'm Zain Asher, and this is QUEST MEANS BUSINESS.

Tonight, the risks are mounting and stock markets are falling. With an hour left to trade, we are in the midst of a strong selloff on Wall Street. The

Dow fell below 27,000 earlier in the session. It was down more than 900 points before recovering slightly.

The week is starting on a sour note after three straight weeks of losses for U.S. markets. A lot of those recent losses have been blamed on

deflating tech shares. Today, it's airline and bank stocks, leading the way down.

Commodities are also getting hit as well. Gold, silver, and U.S. oil are all sharply lower. For investors, risks have been building for months, and

now things seem to be sort of coming to a head.

First and foremost, the pandemic is raging. The U.S. is set to surpass 200,000 coronavirus deaths today. Europe is now battling a second wave as

well and in Washington, deadlock over more stimulus is only getting even more complicated.

The death of Supreme Court Justice Ruth Bader Ginsburg and a bitter partisan battle over filling her seat is likely to make fiscal compromise

basically impossible.

Finally, bank shares are dragging amid a new scandal. A damning report from BuzzFeed News shows how financial institutions routinely processed

suspicious transactions.

Cristina Alesci is following business and politics for us. She is joining us live now from New York. So, Cristina, just in terms of the markets, just

walk us through what is pressuring the markets right now, particularly when it comes to travel and bank stocks.

CRISTINA ALESCI, CNN BUSINESS POLITICS AND BUSINESS CORRESPONDENT: Zain, you kind of hit on all the points in your introduction. The bank stocks

are, of course, taking the hit off of that BuzzFeed ICIJ report about banks mishandling funds and enabling fraud and other financial crimes around the

world. We'll have to see how that shakes out and how the banks are really impacted, but driving today, investor sentiment is really the resurgence of

cases in Europe and the fear that we might get a second wave here in the U.S. just as families are starting to send kids back to school and

universities. Some universities restart in-person classes.

Also, you mentioned this, but the fiscal stimulus, the talks and the chances that fiscal stimulus really come out of Washington, D.C., are

reduced now with the death of Justice Ginsburg because a lot of the oxygen in D.C. will go from, you know, any kind of talk about fiscal stimulus to

filling that vacancy and the heated fight that's going to take place.

And then you have the added layer of tensions between the U.S. and China, of course, TikTok, the U.S. and China are trying to work out a deal to keep

TikTok users happy here in the U.S. and keep the app up and running, but the reality is the tensions have not been this high between the two

countries since the trade negotiations, and the -- the sort of disruption in global trade that we saw in the early part of the Trump administration,

really, through most of it.

And there, things are going to be really escalating over the next couple of weeks. China, over the weekend, releasing a list of entities that they say

are unreliable entities.

We need further confirmation as what that means and whether, you know, what U.S. entities and which U.S. persons wind up on that list. But certainly,

tensions are rising between the two countries, and that is not good for the economic prospects ahead -- Zain.

ASHER: So Cristina, given that sort of plethora of factors you just listed there, we've got seven weeks to go until the U.S. election, until November

3rd, how much more volatility are we likely to see until then, especially given just how much is at stake, given the death of RBG?

[15:05:10]

ALESCI: I think we're going to see definitely increased volatility. We've seen it throughout the summer, really. Yes, stocks have been climbing

higher, but there has been this sort of softness in the ability for stocks to retain their highs.

We're way off the high in the S&P that we reached earlier in September and we're also way off the high of the Dow back in February. Now, my sources

are talking about a possible correction, which is 10 percent off the recent highs.

So we're going to see more and more of this, and frankly, you know, when it comes to the U.S. election, it's not about whether or not Joe Biden or

Donald Trump win or lose, it is more about when will we have the actual results of the election. There's real concern among my source base and

among the C-suite, really, that there's going to be a lot of confusion on Election Day and for possibly weeks after, maybe even legal actions that

could muddy the results for a foreseeable time, and that is really what is driving additional uncertainty and volatility here -- Zain.

ASHER: We all know markets hate uncertainty. Cristina Alesci live for us there. Thank you so much.

The selloff began in Europe. Stocks there actually fared even worse than they did in the U.S.

The major markets all finished well into the red. German shares took the biggest fall, closing down nearly 4.5 percent. The country's flagship

carrier, Lufthansa says it's making further cuts because the drop in demand for air travel was actually even worse than they had been predicting. Head

count and fleet size will be reduced. Shares closed down 10 percent.

Anna Stewart is joining us live now from London. So, Anna, just walk us through all these fears about a second wave in Europe, even more

restrictions. What sort of impact is that having on travel stocks in particular? You've got Lufthansa now coming out and saying they plan to cut

22,000 jobs.

ANNA STEWART, CNN REPORTER: Yes. As corona cases rise in Europe, so do fears of lockdown and we saw today a really kind of broad base selloff

across European equities.

As you mentioned, the travel sector was hit particularly badly. They are very sensitive, of course, to any further restrictions and lockdown.

Lufthansa, you mentioned, they have changed their expectations for capacity in December. It was at 50 percent. They now expect it to be at 20 percent

to 30 percent, also taking that huge impairment charge.

Take a look at some of the other stocks in the sector. IAG down over 12 percent today. EasyJet and Rolls Royce, who of course make the engines that

go into aircrafts, over the weekend, after much media speculation, they were forced to say that they are, in fact, looking at an equity raise of

over $3 billion.

So you see them trading down significantly today. I was looking for some bright spots for you, Zain, are there any winners? Not very many. Hello

Fresh is one that I did spot. It got my interest. Of course, they provide recipes for at-home cooking and lockdown fears mean they may do rather

well. Up six percent today, up over 110 percent year-to-date -- Zain.

ASHER: And another factor that is partially weighing on markets is the fact that the ICIJ released the FinCEN files, just proving how much dirty money

is transported through the financial system every single day. What sort of impact is that having on bank stocks, Anna?

STEWART: Bank stocks certainly more negative today. They've been under pressure, though, of course for months, interest rates lower for longer,

the threat of course of many more debt defaults going forward, but yes, today, I think, sparked by this huge dump of documents led by BuzzFeed, an

incredible investigative reporting.

CNN have not had access to those reports, but effectively, it shows that the world's biggest banks have flagged suspicious transactions of over $2

trillion between 2000 and 2017. That is not to say that all of those transactions are illegal, but that is to say that those have been flagged

and in all of the investigative reporting, as you tease out all the different characters involved and all the different stories of all the

different banks, there are certain examples that while they have been flagged to regulators in the U.S., it has been very slow, perhaps, to, A,

flag suspicious activities when it comes to money laundering, but also, it takes a very long time to act and there seem to be examples where some of

the sort of forged activity has gone on for many months or even years.

Of course, at the expense of individuals being scammed out of their savings, their homes and so on. I know, Zain, you are speaking to BuzzFeed

later in the show who can give you far more details of this nefarious activity and really just the alarming scale of it -- Zain.

ASHER: Yes, a lot will be revealed as we speak to BuzzFeed a little bit later on in the show. Anna Stewart live for us there. Thank you so much.

And Susan Schmidt is the head of U.S. Equities at Aviva Investors. She joins us live now from Chicago. Susan, I just want to start with U.S.

equities. Dow is down about 800 points or so right now. You know, the markets really shot up during this pandemic. Some would say, somewhat

surprisingly so.

As we head closer to the U.S. election, are we likely to see somewhat of a dramatic pullback, somewhat of a mini-correction given all the volatility?

[15:10:09]

SUSAN SCHMIDT, HEAD OF U.S. EQUITIES, AVIVA INVESTORS: Well, I think we are going to see more volatility and certainly now, we have seen a pullback.

It's not unusual.

Remember that they did shoot up, and in fact, the summer was basically a consistent upward climb for the markets with new records being reached.

It's healthy to see the market go back and forth. I think fall is here. It's that back to school time when investors are really focused, and I

think they're very concerned about upcoming elections, earnings outlook and they're very concerned, so yes, I think we can continue to see both up and

down moments for the market.

ASHER: Our reporter, Cristina Alesci, was just talking about some of the fact that her sources in the C-suite were saying that they are concerned

that there is not going to be a result on November 3rd and that there will be even more uncertainty.

If we do see a sort of repeat of 2000, Bush v. Gore, some sort of recount, I mean, what impact, then, do you think that will have on the U.S. markets?

SCHMIDT: Well, markets hate uncertainty, and so to have this additional overhang of -- and cloud, really, of thought of what might happen to the

economy, you know, now that the markets are looking at this issue, it's clear the government has other things they need to address right away.

So that stimulus package is getting pushed further out and then no one wants to see a contested election. I think the markets recognize all the

possibilities and they like to focus on the ones that might be worse and that do involve the most uncertainty.

And so, the markets, I think, are going to continue to be volatile right up and potentially through the election and really, it's all about looking

forward and trying to make a call on how the economy fares through the end of this year and then importantly, through 2021.

ASHER: And so how should investors play this? I mean, between now and, let's say, December, you know, should it be a sort of risk off approach?

What are your thoughts on that?

SCHMIDT: I think you have to be really balanced, because the issue here is that no one knows and so we're seeing days where you see big risk off.

We've seen that with the downturn in the markets lately. But we also saw a lot of days with big risk on and we saw that throughout the summer.

I think that there's going to be days of both coming forward. I think as an institutional investor, you have to be balanced in your approach. I think

we're trying to stay fairly neutral. We have some ideas that are very, we think, good and have good potential if the economy comes back.

We have other ideas that are more, I think, conservative and having that balanced portfolio going forward is what we want into yearend because we

can't tell what's going to happen either, and I think it's -- you know, everyone wishes they had the crystal ball, and in this case, no one has a

crystal ball as to what's happening and I think with all that uncertainty, you want to approach yearend, you know, both cautious and optimistically,

depending on the outcome that happens.

ASHER: Right, so, you know, just in terms of a vaccine, maybe we might see a potential vaccine at the beginning of next year, the very, very end of

this year, perhaps. Even if we do see one, it's going to be a few months, at least, before it's widely available to the general public.

OK, it looks as though Mitch McConnell is speaking. I want to show our viewers that. Let's listen in.

SEN. MITCH MCCONNELL (R-KY), SENATE MAJORITY LEADER: By all accounts, Justice Ginsburg loved her work because she loved the law. In a more

ordinary life story, her courage and continued excellence in the face of multiple serious illnesses would itself be the heroic climax, rather than

just one more remarkable chapter among so many.

On the court, Justice Ginsburg was a universally admired colleague. It's no wonder that many Americans have taken particularly comfort these past days

in remembering her famous friendship with her ideological opposite, the late Justice Scalia.

Together, they made sure the halls of justice also rang with laughter and comedy. They rarely sat on the same side of a high-profile decision, but

they still sat together at the opera and most, any other time they could manage to be together.

So, the legal world is mounting -- the legal world is mourning a giant.

But Justice Ginsburg's fellow Justices, a legion of loyal law clerks, and countless many others are mourning a close friend or a mentor. The Senate

sends condolences to them all.

Yet Justice Ginsburg's impact on American life went deeper still. Friday's loss feels personal to millions of Americans, who may have never made her

acquaintance. Justice Ginsburg was a spirited, powerful and historic champion for American women, to a degree that transcends any legal or

philosophical disagreement.

[15:15:05]

MCCONNELL: As she climbed from the middle-class Brooklyn Jewish roots of which she was so proud into the most rarefied air of law and government,

the future Justice had to surmount one sexist obstacle after another.

And Justice Ginsburg did not only climb a mountain. She blazed a trail. Through deeds, through words, and simply through her example, she helped

clear away the cobwebs of prejudice. She opened one professional door after another, and made certain they stayed open behind her.

Directly or indirectly, she helped entire generations of talented women build their lives as they saw fit and enriched our society through

professional work.

Law and politics aside, no friend of equality could fail to appreciate Justice Ginsburg's determination.

Finally, while Justice Ginsburg relished forceful writing and detailed argument, she was also, in important ways, a uniter. In recent years, many

who considered themselves her admirers and might wish to claim the justice for their political side have come to embrace reckless proposals to

politicize the very structure of the court itself.

But Justice Ginsburg remained unswerving in her public commitment to preserving the neutral foundation of the institution she loved.

The entire Senate is united in thinking of and praying for Justice Ginsburg's family, most especially her daughter, Jane, her son, James, her

grandchildren, step-grandchildren, great-granddaughter, and everyone who called her their own.

Mr. President, I ask consent that the following remarks appear at a different place in the record.

UNIDENTIFIED MALE: Without objection.

MCCONNELL: President Trump's nominee for this vacancy will receive a vote on the floor of the Senate.

Now, already, some of the same individuals who tried every conceivable dirty trick to obstruct Justice Gorsuch and Justice Kavanaugh are lining up

-- lining up to proclaim the third time will be the charm.

The American people are about to witness an astonishing parade of misrepresentations about the past, misstatements about the present, and

more threats against our institutions from the same people, the same people who have already been saying for months, well before this, already been

saying for months they want to pack the court.

Two years ago, a radical movement tried to use unproven accusations to ruin a man's life because they could not win a vote fair and square. Now, they

appear to be readying an even more appalling sequel.

This time, the target will not just be the presumption of innocence for one American, but our very governing institutions themselves.

There will be times in the days ahead to discuss the naked threats that leading Democrats have long been directing at the United States Senate and

the Supreme Court itself. These threats have grown louder, but they predate this vacancy by many months.

There will be time to discuss why senators who appear on the steps of the Supreme Court and personally threaten Associate Justices if they do not

rule a certain way are ill-equipped to give lectures on civics.

But, today, let's dispense with a few of the factual misrepresentations right at the outset.

We're already hearing incorrect claims that there is not sufficient time to examine and confirm a nominee. We can debunk this myth in about 30 seconds.

As of today, there are 43 days until November 3rd and 104 days until the end of this Congress.

The late iconic Justice John Paul Stevens was confirmed by the Senate 19 days after this body formally received his nominations, 19 days from start

to finish.

Justice Sandra Day O'Connor, another iconic jurist, was confirmed 33 days after her nomination.

[15:20:06]

MCCONNELL: For the late Justice Ginsburg herself, it was just 42 days.

Justice Stevens' entire confirmation process could have been played out twice, twice between now and November 3 with time to spare. And Justice

Ginsburg herself could have been confirmed twice between now and the end of the year with time to spare.

The Senate has more than sufficient time to process a nomination. History and precedent make that perfectly clear.

Others want to claim the situation is exactly analogous to Justice Scalia's passing in 2016 and so we should not proceed until January. This is also

completely false.

Here is what I said on the Senate floor the very first session the day after Justice Scalia passed, quote: "The Senate has not filled a vacancy

arising in an election year when there was a divided government since 1888, almost 130 years ago."

Here is what I said the next day when I spoke to the press for the first time on the subject: "You have to go back to 1888, when Grover Cleveland

was President, to find the last time a vacancy created in a presidential election year was approved by a Senate of a different party."

As of then, only six prior times in American history had a Supreme Court vacancy arisen in a presidential election year and the President sent a

nomination that year to the Senate of the opposite party.

The majority of those times, the outcome is exactly what happened in 2016, no confirmation. The historically normal outcome when you have a divided

government. President Obama was asking Senate Republicans for an unusual favor that had last been granted nearly 130 years before then.

But voters had explicitly elected our majority to check and balance the end of his presidency. So, we stuck with the basic norm.

Oh, and, by the way, in so doing, our majority did precisely what Democrats had indicated they would do themselves. In 1992, Democrats controlled the

Senate, opposite President Bush 41. Then Senator Joe Biden chaired the Judiciary Committee. Unprompted -- unprompted -- he publicly declared that

his committee might refuse to cooperate if a vacancy arose and the Republican President tried to fill it.

In 2007, Democrats controlled the Senate opposite President Bush 43. And with more than a year-and-a-half left, a year-and-a-half left, in President

Bush 43's term, the current Democratic leader declared that, quote: "Except in extraordinary circumstances" end quote, the opposite party Senate should

boycott any further confirmations to the Supreme Court.

That is the current Democratic leader a year-and-a-half before the end of the Bush administration.

So, in 2016, Senate Republicans did not only maintain the historical norm. We also ran the Biden/Schumer playbook.

When voters have not chosen divided government, when the American people have elected a Senate majority to work closely with the sitting President,

the historical record is even more overwhelmingly in favor of confirmation. Eight times in our nation's history, new vacancies have arisen and

presidents have made nominations all during the election year.

Seven of the eight were confirmed, and the sole exception, Justice Abe Fortas, was a bizarre situation, including obvious personal corruption that

extended into financial dealings.

And apart from that one strange exception, no Senate has failed to confirm a nominee in the circumstances that face us right now. Aside from that one

strange exception, no Senate has failed to confirm a nominee in the circumstances that face us right now.

[15:25:03]

MCCONNELL: The historical precedent is overwhelmingly, and it runs in one direction.

If our Democratic colleagues want to claim they are outraged, they can only be outraged at the plain facts of American history.

There was clear precedent behind the predictable outcome that came out of 2016. And there is even more overwhelming precedent behind the fact that

this Senate will vote on this nomination this year.

The American people reelected our majority in 2016. They strengthened it further in 2018 because we pledged to work with President Trump on the most

critical issues facing our country. The Federal Judiciary was right at the top of the list.

Ironically, it was the Democratic leader who went out of his way to declare the midterm 2018 elections a referendum on the Senate's handling of the

Supreme Court. My friend, the occupant in the chair, was running that year.

The Democratic leader went out of his way to declare the 2018 midterms a referendum on the Senate's handling of the Supreme Court.

In his final speech before Justice Kavanaugh was confirmed, he yelled, literally yelled, over and over at the American people to go vote. He told

Americans, go elect senators based on how they'd approach their advice and consent duties over these weeks.

Unfortunately, for him, many Americans did just that. After watching the Democrat tactics, voters grew our majority and retired four -- four of our

former colleagues who had gone along with their party's behavior. We gained two seats. They lost four. That was the issue.

Perhaps more than any other single issue, the American people strengthened this Senate majority to keep confirming this President's impressive

judicial nominees who respect our Constitution and understand the proper role of a judge.

In 2014, the voters elected our majority because we pledged to check and balance a second lame-duck President. Two years later, we kept our word. In

2018, the voters grew that majority on our pledge to continue working with President Trump most especially on his outstanding judiciary appointments.

We're going to keep our word once again. We're going to vote on this nomination on this floor.

[15:28:09]

END