Dow Rallies as Wall street Halt Global Sell-Off; IMF's Christine Lagarde Faces Trial; Clinton Campaign Didn't Reveal Pneumonia Until Sunday;



Lagarde Faces Trial; Clinton Campaign Didn't Reveal Pneumonia Until Sunday;

Samsung: Note 7 Users Should Power Down and Stop Using; Ceasefire Begins

in Syria; Barroso Stripped of EU "Red Carpet Privileges"; EU Probes Ethics

of Goldman Sachs' Barroso Hiring; Marshall: Some Businesses Are Pausing

Investment in U.K.; Saudi Arabia, Iran Boost Oil Production. Aired 4-5p ET - Part 1>

Nina Dos Santos>

Flanders, Chief Market Strategist, JPMorgan Asset Management; Pete Pachal,

Tech Editor, Mashable; Sven Giegold, Member of European Parliament; Adam

Marshall, Acting Director General, British Chambers of Commerce>

there was a global selloff that seems to have stopped at the American

shores. Christine Lagarde, the head of the IMF will stand trial. French

court has ruled. Hillary Clinton has pneumonia, and the question becomes

not only about her health and her speedy recovery, but damaging video of

her being carried into her own secret service van. Shares of Samsung fell

very heavily as a company is struggling to contain a crisis involving the

flagship phone it only just launched. Samsung is urging customers to stop

using the new Galaxy Note 7 and bring it in for a replacement. The people

inside Syria have only hope that the cease fire will hold. Traditionally,

the European Union, the commission has put out the red carpet for the

arrival even of former leaders. Now they're rolling up the red carpet for

Jose Manual Barroso. The British Chambers of Commerce has cut its forecast

for the U.K. in light of the Brexit vote. It cites weak consumer spending

and a fall in investment.>

Market; Technology; Electronics; Products; War; Treaties and Agreements>

[16:00:00] RICHARD QUEST, CNN ANCHOR: From Friday a rip roaring session on Monday. The Dow Industrial has more than 240 points at the closing bell, and Cal Atlantic -- oh, yes, a very robust gavel that brought trading to an end on Monday, September the 12th.

Christine Lagarde will stand trial. A French court has ruled. The head of the IMF is to appear in court.

Samsung pulls the fire alarm as shares plummet, and the European Commission closes the door on its former president, Jose Manuel Barroso. There's no red carpet treatment. I'm Richard Quest and we have an hour together and I mean business.

Good evening, it was very much a story of different markets on different sides of the Atlantic as you have just seen at the start of the program. The Dow Jones Industrials had a strong session in New York, but there was a global selloff that seems to have stopped at the American shores, and this perfectly shows you the way the sea of red that spread around the world. It starts off in Asia, of course, where we had falls in the Nikkei. The Chinese market, the Shanghai Composite, and the Hong Kong, Hang Seng, down 3 .33 percent. The worst losses there.

Europe's stocks were down. The FTSE as well, all the major Europeans. However, the United States market, the Dow fell 100 points in the first few seconds of trading. Then as there were more comments from the Fed governors that suggested the Fed will be prudent on interest rates, traders on Wall Street went for the rally. And you really see it. You see that opening, that, to some extent, is the hangover from Friday and the question of what will interest rates do going up sooner rather than later.

As the day moves forward, and Fed governors start speaking, then you see the rally kicking in, and the volatility over the last three months, the VIX is near record lows through July and August. Take a look at the volatility index. This is July when you hit this big peak up here. Again, it's all Fed related, but now the volatility as you expect to some extent, you would not see too much volatility over the summer months when trading volumes are low, but that spike on Friday of some 40 percent, and then it falls back again. And that really was all about worries that the Fed was going to move. It follows what Chair Yellen said. It follows what Fed governors had said, and it follows this idea of the economic data dependent Fed moving rates before the end of the year.

Tim Anderson, is the managing director at TJM Investments. He's on the floor of the stock exchange. So the Fed governors, particularly Lael Brainard, has been speaking and what she said suggested that prudence, that it does seem to still hold sway?

TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: Well, I think we have to put that into perspective. Because there's no doubt that Lael Brainard is probably the most dovish Fed member. She probably makes Charlie Evans look like a moderate hawk. I don't think the markets should really be too surprised that she was not saying yes, I think it is probably time for us to start raising rates.

Now all of that being said, you would have to have probably three quarters of the voting regional Fed presidents to vote for a hike to really get a hike in September. So maybe what the Fed is doing they're really setting the table. They're big on gradualism and they're setting the table for a raising the probability of a hike in December.

QUEST: September, it would be bizarre although not unthinkable, perhaps to raise in September just a few months before an election when there is no need to enmesh yourself into the deep political deep nasty waters. Is that right?

[16:05:00] ANDERSON: I think that's right, although I really doubt that if they raised rates to 25 basis points that it would have any impact at all on the election. You're talking about rates that would be very, very historically low.

QUEST: You had Donald Trump complaining again about the Fed saying the Fed is doing President Obama's work by keeping rates artificially low to artificially stimulate the economy. It is that view that holds sway on Wall Street?

ANDERSON: It depends on who you ask. There is no doubt that some people feel the Fed is too politicalized. And I think the timing of Trump making those comments today is very intriguing given the fact that it is very public knowledge that Fed governor Brainard has been a consistent contributor to Hillary Clinton.

QUEST: OK, now, as we pull this together, we know the fed, they've said it often enough, is data dependent. As I look at the data there is a wealth of it. Everything from purchasing managers, to unemployment, to inflation, the big numbers are showing one story. How much data are they still going to want to see?

ANDERSON: You know, they -- there is probably some data they see that is not publicly disseminated. I think that in pockets of the economy and areas of the economy there is some growth and pent up demand. And there are even those that are starting to push the argument that a rate hike from near zero would be stimulative on the economy. You've even started to hear banter around the globe from in Japan, and within the ECB, that these negative interest rates are dysfunctional, and in fact, that that Japan is going to come out within a couple of weeks on their long study as to their effectiveness of monetary policy over the last couple decades.

QUEST: Tim, good to see you on the exchange. Thank you for bringing us the upside on a date which was quite remarkable in a sense of over 200 points. Investors are looking at to the Fed's next policy meeting. It is September 21. The likelihood is that they won't actually move, but we'll be hanging on to every word that we get for a clue as to interest rates as governor Brainard said, policy should be kept loose and that the Fed needs to maintain that policy. That policy should be kept loose. The Fed needs to keep moving forward throughout the course of the prudent.

Stephanie Flanders is in London for us this evening. You heard the view from the exchange. We know what president Draghi said last week about the ECB, so pull the strands together for me if you would be so kind as to the macro picture.

STEPHANIE FLANDERS, CHIEF MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT: Well, we've had a slight disconnect in the macro picture, which has been good for markets over the summer, but maybe was set aside for a bit more bumpier times as we've seen in the last few days. Because you remember, Richard, straight after the Brexit vote, and concerns around that. There was a question about whether this was going to be really bad for the global economy. What policymakers were going to do. And then markets were surprisingly buoyant after that on the basis that there wasn't going to be much of an impact on the global economy, but policy makers were still going to ease policy and keep policy, particularly monetary policy, looser than they would have done just to be sure.

I guess there was always a tension there. When would the policy makers and certainly the Fed going to notice that actually things were going OK, and they didn't need to be necessarily pushing forward endlessly this idea of a higher rate. So I think we're now going to have this sort of period where people are trying to square that stronger economic data, it has been generally stronger in the U.S., although, not uniformly, incredibly robust. I think we've got to square that with the idea that, yes, rates are going to go up, but the big story is were still going to have the peak of rates probably much lower than in the past. I think that is something that could be quite supportive for the markets.

QUEST: How difficult then, Stephanie, in your view, does it become when you do have -- once rates move again, the second movement in the United States at a time when the ECB is still having to think about what it might do next. Unlikely to push too much further into negative territory. The Bank of England certainly is almost going to have to think of what to do next. This divergence of policy, how difficult is that make it?

[16:10:00] FLANDERS: I think it's a challenge that you have now. This real skepticism about how much more this extreme monetary policy can do. When they talk about beyond the lower bound. This negative interest rates. The fact that markets now really have this low opinion of that policy does put the challenge on Europe and on the Bank of Japan, and you see why, yes, they would love to have rates go higher in the U.S. Maybe that could add a bit more strength to the dollar and make it easier for them to get that weaker currency they want to try and push up inflation. But it's a challenge I think going forward. Because what the Fed is saying is, yes, we're going to raise rates, but were not going to raise them that quickly, and guess what, we may stop quite soon after we may be reached only 2 percent.

QUEST: Fundamentally -- I want to stay in Europe for a second if we may, Stephanie -- fundamentally even with this unbelievably accommodative interest rate policy, monetary policy, as tweak as it is possibly to be, and yet growth still is not picking up. What do they need to do?

FLANDERS: Well, I mean one of the questions around this is what is a good growth rate for the Eurozone? I mean, I'd love to see over 2 percent growth. That would certainly make a bigger dent on unemployment. But when you look at this continent that's got, as you know, shrinking labor force in many countries. It may be that their potential growth rate, there sort of default growth rate is now not very high. And so to achieve maybe a 1.5 percent -- may be a bit more than 1.5 percent growth. Maybe they should think that that's not too bad. The real challenge is they have not been able to push up inflation close to target. And that was something that Mario Draghi admitted last week. That after all of this they're really not much closer to that target than they were.

QUEST: Let me take a punt on this quick question to you. See what you actually think. Do you think and is there a discussion in economic circles as to whether the 2 percent inflation target is the right target in this post great recession world where we may not get to 2 percent inflation?

FLANDERS: Well, it's an interesting one, I mean, you know Richard, there has been a lot of debate about whether the target should be higher. But if you're not going to meet it and you're going to reduce the credibility of central banks in the process, then it probably would be a risky move to try and increase the inflation target. They talked about that in Japan, for example. But I think they have to be trying to aim for that 2 percent. That's the 2 percent which keepings things ticking over in the economy. We know it's really hard when you're below that for a long period. It becomes hard for wage growth, for all of these things in the economy. You need that friction. You need that 2 percent.

QUEST: Good to see you. Thank you very much for joining us tonight from London. We appreciate it, thank you.

Now in the latest twist in a long running saga. Christine Lagarde, the head of the IMF, will stand trial. She'll have to face a French court, a special French court in December over allegations of fraud. It's a special court that is convened for hearing accusations and charges against ministers for misdeeds when they're in office. Jim Bittermann has been following this story out of Paris for us. Jim, is this -- when we hear she's going to face trial. Explain, is Christine Lagarde going to be the dock where she's going to be expected to plead guilty or not guilty?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, in fact, her lawyer said she would be there for that court case when it opens up on December 12. That's about the only comment that we've heard out of her today. That was through her lawyer. Basically this special court, six members of the lower house of parliament, six members of the Senate and three magistrates, it's a very rare day when this court gets in session. In fact, it's only been used about five times over the last few years. And so it's not the kind of thing that happens every day here.

What she's charged with is negligence in the use of public money. That carries a one-year prison term and a _15,000 fine if she were to be found guilty and sentenced to the maximum sentence. But there's every reason to believe that won't happen. Nonetheless, the trial is going to go ahead starting on December 12th, Richard.

QUEST: OK, and is the view, and let's be real here rather than theoretical, that even in convicted, Christine Lagarde is unlikely to go to prison?

BITTERMANN: I think it is pretty unlikely at this point. It seems that she'd be exonerated in some way or another, either found not guilty or given a minimal sentence or no sentence at all. Basically the court has accepted that the things she is charged were basically predated her term as the economics minister, by the arbitration panel that awarded 400 million euros to Bernard Tapie, and that those members of arbitration panel were predetermined before she got into office.

[16:15:00] So that there's a this feeling that perhaps this is being loaded off on her for political reasons. But that in fact, when the special court comes into its verdict, is going to somehow find a way to not put her into prison for a year.

QUEST: Jim Bittermann, please, we know you will be there on December the 12th to watch the proceedings, thank you, sir.

So, Hillary Clinton has pneumonia, and the question becomes not only about her health and her speedy recovery, but damaging video like this, being carried into her own secret service van. Then claiming to be fine. Feeling great, but looking awful. The effect on the election.


QUEST: Donald Trump has promised to release specific information about his health after wishing Hillary a speedy recovery from pneumonia. The Clinton campaign is in full damage control mode after acknowledging it kept her diagnosis secret for two days, fueling concerns about transparency. CNN's Jeff Zeleny reports from Washington.


JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT (voice-over): Hillary Clinton off of the campaign trail this morning as she recovered from pneumonia. Canceling a two-day trip to California. Her health thrusted in the spotlight after aides said she became overheated and dehydrated while attending a 9/11 ceremony at ground zero. This video shows Clinton leaving early, and when she tries stepping into her van, she wobbles and slumps. Secret Service agents and aides quickly grab her and hold her up. Two law enforcement sources telling CNN, she appeared to faint. Clinton then taken to her daughter Chelsea's apartment three miles away.

More than an hour later, Clinton emerged smiling. Even taking a picture with a young girl before climbing into her motorcade and heading home. Her campaign says she was even playing with her two grandkids inside. Yet more than five hours later her doctor revealing the 68-year-old was diagnosed with pneumonia two days earlier. After an evaluation of her prolonged cough.


HILLARY CLINTON, U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE: Every time I think about Trump I get allergic.


ZELENY: Despite the diagnosis on Friday, she continued a grueling schedule. Holding two fundraisers in New York City, a large national security briefing, and a press conference. Along with an interview with our own Chris Cuomo and other media outlets.


UNIDENTIFIED REPORTER: Her health incident this morning.


Donald Trump, just feet away from his rival at Ground Zero, unusually quiet over her diagnosis, after speculating about her health for months.

DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: I think she doesn't have the stamina. Hillary Clinton does not have the stamina.

I watched Hillary, who doesn't have the strength on the stamina.

ZELENY: Trump addressing Clinton's health this morning and toeing a respectful line.

[16:20:00] TRUMP: Something is going on, but I just hope she gets well, and gets back on the trail, and we'll be seeing her at the debate.

ZELENY: Telling reporters that he is planning to release records about his own health soon.

TRUMP: It was last week I took a physical and I will be releasing, when the numbers come in, hopefully they're going to be good, I think they're good, I feel great. But when the numbers come in I will be releasing very, very specific numbers.


QUEST: CNN's chief political analyst, Gloria Borger joins me now from Washington. Whilst wishing Mrs. Clinton well, how serious is it politically that they didn't disclose on Friday? What were they supposed to do? Come out and say, "By the way that allergy is a bout of pneumonia.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: I would actually argue that it would have explained a lot of things. That if they had disclosed that she had pneumonia, she'd had this cough. She had Donald Trump constantly saying she didn't have stamina, that she was resting too much. We all get sick on the campaign planes, right? You know that. So I would argue that if they had disclosed on Friday that she had in fact some kind of pneumonia that she was walking around with, that it would have solved all of the conspiracy theories about what was really wrong with her. And it would have stopped a problem that they instead, intensified, when they were forced to disclose after she stumbled and left the 9/11 memorial.

QUEST: But clearly she would not be the first person, or president, if she makes it's that far, to have been unwell in the office.

BORGER: To hide it.

QUEST: Thank you, to actually hide it. I mean, Ronald Reagan was diagnosed with Alzheimer's after his second term in the oval. John Kennedy struggled with Addison's disease. Roosevelt, I mean the American people didn't know that Roosevelt was in a wheelchair. I know times are different. I guess I need to understand from you, Gloria, how serious this is.

BORGER: Let's look back to when Barack Obama first ran for president, we got a little note about his health. Of course, he was young and very vigorous. Mitt Romney, 65, looked very vigorous. We got kind of a note about his health. But I go back to John McCain in 2008. He was a cancer survivor. He was 71 years old at the time. And he sent a bunch of medical reporters including our own Dr. Sanjay Gupta into a room with over 1,000 pages of documents and said go read them, here, have at it. So I can put all of these things to rest.

You have Hillary Clinton with a complex health history. You have Donald Trump who is 70 years old. I think all of these factors all factor into it, and that the American public is entitled to know how healthy these people are for different reasons.

QUEST: In the great scheme of things, and this is impossible question to answer, Gloria.

BORGER: So ask it.

QUEST: In the great scheme of things, how damaging, you've got the transparency bit, which I understand is damaging. Because it reinforces the idea that the Clinton campaign is always hiding something. But just the raw fact that she has collapsed. She has pneumonia. She is 68, and frankly she doesn't look very well last week. How damaging is it?

BORGER: I think people get pneumonia, they recover from it. I think the transparency is a larger issue. And by the way, let's be fair about this. Transparency is an issue on both sides. We don't know much about Donald Trump's health other than a letter he got from a doctor saying his labs were astonishingly excellent or whatever. And he has said he took a physical, and we'll get the results from that. But that's just a snapshot. We know more about Hillary Clinton's health, but I would argue we still don't know enough, and they're going to release more.

The problem for Hillary Clinton here is that this plays into a pre-existing narrative about her, and that is the secrecy as you point out. And so that becomes a larger problem. I would also say that Donald Trump has not released his tax returns. And when you want to call for Hillary Clinton to be transparent, you have to be careful if you're Donald Trump, because he has not been transparent on his taxes.

So today, instead of dwelling on the health issue, he was very nice to Hillary Clinton. It sounded like he wanted to send her flowers, right? In fact, he was focusing on some of the things she said about his supporter. The basket of deplorables, right, if you will.

[16:25:00] So he didn't want to focus on that either, because he realizes that he needs to leave that alone and that he does have his own transparency problems. So if you're an American voter out there and you're looking at this and you're going, Ok, what do I know? Not much.

QUEST: basket of deplorable's, pneumonia and tax returns.

BORGER: Stay tuned.

QUEST: And we still have eight weeks to go. Good to see you, Gloria, thank you.

BORGER: Good to see you.

QUEST: Shares of Samsung fell very heavily as a company is struggling to contain a crisis involving the flagship phone it only just launched. The stock was down 7 percent in South Korea. 14 billion gone off its market value. Now Samsung is urging customers to stop using the new Galaxy Note 7 and bring it in for a replacement. So far there have been 35 incidents of the phone battery exploding or catching on fire. Pete Pachal is the tech editor at digital media company, Mashable. It doesn't get much worse than this. God forbid short of actually somebody being killed or maimed. But just as a branding, this is --

PETE PACHAL, TECH EDITOR, MASHABLE: Yes, bad for Samsung, good for Apple. Because would not think of a better Christmas gift for Apple who just released their new iPhones. Of course, Samsung, their new flagship, right, just came out and suddenly it is mired by the worst thing you could -- products get recalled for defects all of the time, this is a safety issue, which goes even beyond that. And you know, fortunately there haven't been many reports of people getting hurt. Although there was one just over the weekend.

QUEST: The boy in New York.

PACHAL: Yes, yes.

QUEST: And we've also had the reports, the FAA has basically said to people, you can't charge your Samsung's in the air in case they overheat.

PACHAL: Yes, and they're scourging people to use them. I'm kind of suspect of what sort of screening process or how they're going to tell who is using what phone. But I mean, when the airline starts stepping in and other airlines worldwide have actually banned the phone, you know this is pretty serious. Not that people, I think are all that excited to use their Note 7's in the first place.

QUEST: So what is the answer for Samsung? They're now facing the largest reputational crisis that a company can face at the highest form of competition.

PACHAL: Yes, if you think about what this is going to do to their brand as a smart phone vendor. I mean, yes, they're going to fix this problem. They're going to send replacement phones to people who want them, but long term, I mean you think to next year's flagship phone launch that they have, this is going to be on everyone's mind. This is going to be like, honestly, it's incalculable what this is going to do to their brand. It could be in the billions in terms of what they suffer.

QUEST: The number of incidents, 35, give or take, it's -- it is not in the hundreds. It is relatively small, are we --

PACHAL: And if you think about how many phones they actually make.

QUEST: Are we blowing this out of proportion?

PACHAL: When it comes to batteries, it's very hard to blow it out of proportion. Because it's kind of like the S35 out of how many million, you kind of like, you might think I like those odds, but I really don't think that many people are thinking that. Especially when you have other brands whose phones, pretty much every other brand, don't explode at all. I mean I wouldn't say they're 0 percent for not exploding. The thing is lithium ion batteries, I mean there a tricky thing. And it took a while to get them right. I don't know if you remember, about 10 years ago there were laptop battery issues with certain batches from Sony. They fixed a lot of these QA issues. And I'm not exactly sure what happened this time around. I think it was a new subsidiary of Samsung that supply needs. But I mean - -

QUEST: Something tells me they will not be lasting much longer.

PACHAL: Yes, it's basically that the one thing you cannot get wrong in making electronic today is making sure those batteries are safe. And they didn't do it this time out.

QUEST: And we're grateful to you sir, came in to talk to us about it. Thank you. And come back and give us an update, please, when we know more about it, thank you.

PACHAL: Absolutely.

QUEST: Perhaps more in hope than expectation, a period of relative calm begins in Syria. Officially that's the position. While the cease-fire that's in place for just a few hours now. Arwa Damon will be with us to update us on it in just a moment. It's QUEST MEANS BUSINESS after the break. Wrap


QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. We're going to tell you how Brussels is going up the red carpet for its former president. And the director of the British Chamber of Commerce insists the U.K. companies are not fat and lazy. Before we get to that story, this is CNN, and here on this network the news will always come first.

Thousands of Syrians are hoping a cease fire will allow them access to aide what they so desperately need. It's the idea behind the truce which was brokered last week by the United States and Russia. The cease fire started a few hours ago at sunset. There had been defiant words from the Syrian president Bashar al Assad is vowing to take back every piece of land from who he calls "the terrorists. And we will be talking to Arwa Damon who is covering the story immediately after this news.

Pyongyang is responding to deadly flooding in North Korea's northeast with a rare public appeal for help. The state media is reporting that tens of thousands of buildings have been destroyed. It's being described as flooding from the heaviest downpour since 1945. The United Nations citing the government data says 133 people have been killed.

Hillary Clinton's presidential campaign is facing criticism for not revealing earlier that she was suffering from pneumonia. Mrs. Clinton as you see here was seen stumbling into her van on Sunday as she left the 9/11 memorial. The doctor only then revealed that she'd been diagnosed with pneumonia two days earlier. Hillary Clinton has canceled a campaign trip to California while she recovers.