BUSINESS-01
College Projection; Top economists Slam Trump in Open Letter; Britain
Bolsters Cyber-Defenses; U.K. and U.S. Accuse Russia of Cyber-hacking;
Obama Campaigns for Clinton in Ohio; Moody's Model Predicts Big Election
Win for Clinton; - Part 2>
Heather Long>
Member of U.K. Parliament, Conservative; Gadi Evron, Founder And CEO,
Cymmetria; Betsy McCaughey, Former Lieutenant Governor of New York >
Clinton. In an election, it doesn't matter how many votes they get. It
matters where those votes are. And the reason for that is because in the
United States it's the electoral college that decides the next president of
the U.S. 370 economists, including several Nobel Prize winners, have
signed an open letter, urging voters not to elect Donald Trump. The letter
accuses Mr. Trump of misleading the public about issues like trade and the
deficit. In a rare interview, the head of Britain's internal security
force, the MI5 has called out Russia for using propaganda, espionage,
subversion, and cyber-attacks, so says the U.K., to attack its foreign
policy goals. President Obama campaigns for Hillary Clinton in Ohio.
Moody's said the president's high approval ratings are one of the factors
that will put Hillary Clinton into the White House. The Moody's model is
predicting that Hillary Clinton will take the key swing states of Florida,
Ohio, Colorado, and Pennsylvania >
Technology; Stock Markets; Crime; Espionage; Government; Europe >
There's been violence in Kashmir as India and Pakistan are now reporting 13 deaths in cross-border shelling. It had happened on both sides of the line of control, which is the de facto border in this disputed region. These deadly clashes come during a time of heightened tensions between the two countries.
President Obama is in Ohio and so is our White House correspondent Michelle Kosinski, in Columbus with the president. Has he started speaking yet?
MICHELLE KOSINSKI, CNN CORRESPONDENT: Hi, Richard, it sounds like he's coming out right now. Yes, here he is, you can probably see him behind me.
{17:35:00] You can see him waving to the crowd. I don't know if you're going to take his speech live, but his message today obviously in the final days of this race, is that as he's speaking to this adoring crowd for him, he wants people here to be as excited for Hillary Clinton as they are to cheer him. But he's been busy in these final days. We saw him make a number of appearances last week. Now this week, he's going to make his second appearance today in Ohio. His third appearance in North Carolina. Let's go.
QUEST: Michelle, I will save your voice, competing against that. And we'll listen to the president for a second or two.
BARACK OBAMA, U.S. PRESIDENT: O H, O H. It's good to be back. USA, USA, USA.
CROWD: USA, USA, USA.
OBAMA: Let me just first of all, let me ask a question here. What did everybody have to drink before you came in here? You guys had something caffeinated because you seem pretty fired up. You seem like you're ready to go. You seem fired up, Ohio. Let me begin by first of all thanking your outstanding Congresswoman Joyce Beatty for that introduction. You've got Mayors Ben Kessler and Andrew Guenther here. Your next United States senator, Ted Strickland.
Let me ask a sensitive question for a Chicagoan, how many Cleveland Indian fans in the house?
[CHEERS AND APPLAUSE]
I just want you to know that you don't have to worry because we will get you out of this auditorium before the first pitch. So, you're all good. And --
QUEST: Michelle Kosinski, if you can still hear me and talk over the roar of Ohioans, with the President, Michelle, how significant is it that the campaign has sent him to Ohio?
KOSINSKI: Well, this is one of those key battleground states. In fact, some consider this a must-win for Donald Trump. And this place is particularly interesting, especially when you think about back when that Donald Trump audio tape came out, the Access Hollywood tape, Hillary Clinton's lead over Trump here by some polls accounting by nine points. Well, now hit has shrunk and in fact, in the latest polling Donald Trump has actually overtaken Hillary Clinton by a point or two. It's still within the margin of error. But that's how critical the race has become, not just here in Ohio, but in a number of states. So, that's why President Obama is here.
You can see now in these final days, the Clinton campaign working directly with the White House, to figure out where President Obama will be most effective, because he is arguably her strongest voice on the campaign trail. It's not Bill Clinton, the former president. It's Barack Obama and his wife, the First Lady. So, they want him to be in these key states. He's going to make a number of appearances this week. And it's interesting. In that planning, which usually the White House does weeks out, they're now turning it around to days before an appearance. And the Clinton campaign, in fact, changed his locations for this week three times in one day. So, they're looking at where the numbers are closest, where his influence can be the most effective. And they're telling the White House, send the president there on this day, Richard.
QUEST: And just watching, listening to the bit that we've heard, Michelle, he is still, by far and away, campaigner number one.
KOSINSKI: Yes, he is. In fact, people consider him to be the closer on this. His enthusiasm, the momentum that the campaign sees him bringing. Even if you want to look at numbers, things like favorability rating. President Obama's is 57 percent, and it's been growing. Whereas Hillary Clinton's is around 46. When you look at enthusiasm for voting, when president Obama was first elected, his supporters had a 79 percent rating of how many people were very enthusiastic about voting.
{17:40:00] But right now, for Hillary Clinton, her supporters are around 54 percent. So, you see that gap in enthusiasm around the president, versus the candidate. So clearly the campaign sees that, the White House sees that. They see how effective he can potentially be, so they want him out there on the trail as much as possible, especially in the final days. That's when they think he can be most effective. It's not just making appearances at rallies like this, as you say, speaking to the choir, it's doing radio appearances, on programs that are popular among African- Americans. It's doing a lot of social media like Snapchat. Because in those areas where Hillary Clinton needs the most support, among young people and among African-Americans, President Obama has that popularity.
QUEST: Michelle, if I had my hat on, I'd take it off to you for battling on against the Ohio crowd. Thank you.
KOSINSKI: Thanks.
QUEST: Michelle Kosinski who is in Ohio. We'll talk Trump economics after the break.
(COMMERCIAL BREAK)
QUEST: So, in just seeing live pictures of President Obama campaigning for Hillary Clinton in Ohio. Moody's said the president's high approval ratings are one of the factors that will put Hillary Clinton into the White House. The Moody's model is predicting that Hillary Clinton will take the key swing states of Florida, Ohio, Colorado, and Pennsylvania. We showed you the model in the program. And they're correctly predicted the winner of every presidential contest since 1980. Heather long is here. Heather, is Moody's suggesting that -- upon what basis is the Moody's survey done?
HEATHER LONG, CNNMONEY SENIOR WRITER AND EDITOR: Right. So, it's not like a traditional poll of polls that we keep focusing on at CNN and other outlets. It's an economic model at the end of the day. So, they're looking at things like, is gas cheap. How is the middle-class income doing? How are home prices in the United States? And as we know, a lot of those economic factors have been getting better and better over the last two years. People's pocket books are better. Are they great? You can have an argument about that, but they're better off than they were.
QUEST: And what does the Moody's study or model suggest?
LONG: Well, it's very good news if you're in the Hillary Clinton camp. Not only are they forecasting a Hillary Clinton win, they're forecasting a pretty big blow-out. They actually go state by state and look at these economic variables. They're showing 332 electoral votes for Clinton and only 206 for Trump. So, that's a pretty big win in the Clinton camp.
QUEST: For Moody's to be doing this in a highly controversial election, if they are wrong, it's egg on their face. But at the same time, it can be quite a self-fulfilling prophecy, but it is unusual.
{17:45:00] LONG: It's a very risky proposition this year. And you're right, there's a big caveat on their report that came out today that said, this is a very unusual, interesting, whatever adjective you want to use, year, and that the usual metrics might not apply. However, as you said, they've predicted everyone right since 1980. And not just the winner, but they've predicted the vast majority of the states correctly. And not a lot of models can say that.
QUEST: Now, you're being fickle with me, Ms. Long, because yesterday on this program, you had a survey that promised me that Donald Trump was going to win by looking at a 2 percent fall in the S&P 500 since August.
LONG: That's right, Richard. Good point. So, we have two different metrics telling us different things. The stock market, based on that test we looked at yesterday. It's been a 2 percent drop in the market since August 1st. That points towards a Trump win. But this economic model in the improving economy in the United States, that's a good sign for the Democrats and for Hillary Clinton. Which one comes out on top? We'll know in a week.
QUEST: There you go. It's extraordinary. Never seen anything quite like it. Heather, good to see you.
U.S. stocks fell sharply on Tuesday, arguably that's how they bring the stumps local. The one we were talking about. The Dow dipped below 18,000 and recovered just marginally in the final hour of trading and it closed with the loss of 105 points.
The Fed is meeting in Washington and has wrapped up the first day of a two- day meeting. Frankly, there isn't anybody, including the dog, that expects the Fed to raise rates until after the U.S. election. And there's now even a growing body of support that says they won't even raise in December, and is now looking to 2017 thereafter for the first raise.
Europe and the tightening U.S. poll pushed stocks down. All the major indices were in the red. The worst was in Frankfurt, the Xetra Dax off 1.3 percent.
And it was a tale of two oil companies. A rise in profits pushed Shell stock nearly 4 percent up, and it was a similar amount 4.5 percent down after profits fell by BP from by half from a year ago.
Earlier in the program, we talked a great deal about the 370 economists that don't like Donald Trump's policies. Betsy McCaughey is one of those economists who does like them. And she is going to give as good as they've got, after you've enjoyed a "MAKE, CREATE, INNOVATE" moment.
(COMMERCIAL BREAK)
QUEST: As we told you earlier in the show, 370 economists have signed a letter, calling Donald Trump dangerous for the United States. Speaking to me on this program, the Nobel Prize winning economist Oliver Hart, who won this year's Nobel Prize, said Trump talks a good game but lacks a valid plan.
(BEGIN VIDEO CLIP)
{17:50:00] HART: Donald Trump calls for more growth and you know, he says, we've got to have faster growth, growth is terrible, trade agreements are terrible, I'm going to rip them up and start again and all this sort of thing. But you can say those things, but it doesn't mean that you can actually bring them about.
(END VIDEO CLIP)
QUEST: Now, Betsy McCaughey is a former lieutenant governor of New York and a member of the Trump economic advisory council and joins me now. They say he has magical thinking and he is ignorant on economics.
BETSY MCCAUGHEY, FORMER LIEUTENANT GOVERNOR OF NEW YORK: Well, very few presidents are experts on everything. And in fact, very few are even experts on anything, other than politics. But the fact is, he has a terrific economic team, supply-siders. And he has a very strong economic plan, slashing corporate tax rates, deregulation, including repealing Obamacare, and most importantly, energy production, oil, fracking, natural gas.
QUEST: But let me read you what they say. They say he degrades trust in vital institutions. He's misled voters about NAFTA. He claims to champion former manufacturing workers, but has no plan. He's misled the public by saying manufacturing has declined when it hasn't. And he says he will eliminate the deficit when actually it will increase.
MCCAUGHEY: Let me point out, first of all, that these economists are all academics.
QUEST: What's wrong with that?
MCCAUGHEY: Well, because 95 percent of campuses around the country are totally run -- I won't say run -- I won't say run -- monopolized by Democrats. It's almost hard for a conservative like me to even stay on a college campus because we're so suffocated by the liberal political correctness. So, talk to economists who actually work in business or in government, and you will get a different perspective. Now to the actual issue. Donald Trump's plan to slash corporate taxes, which are now among the highest in the world.
QUEST: No, they deny that. They say, if you look, they actually specifically say that if you look at the tax ratio, amongst the OECD, it is among the lowest -- and --
MCCAUGHEY: The OECD says that even after all the loopholes, it's 27 or 28 percent, which puts it way near the very top.
QUEST: The nominal rate, versus those after deduction, Betsy. That's apples and oranges.
MCCAUGHEY: I'm talking about the nominal rate is 35 to 39. The effective rate is 27 to 29, yes, the effective rate is 27 to 29, which is still way up there. I saw the OECD report and the fact is Hillary Clinton demagogic promise to raise taxes on corporations will push us into a recession. Look at what's happening here, Richard. We've had almost now four quarters of consistent decline in investment. When companies don't buy enough --
QUEST: Not in the last quarter. The last quarter it was an improvement.
MCCAUGHEY: Oh, it was like a sliver. When companies don't buy another truck, they can't hire another driver. When they don't buy another computer, they can't hire another office worker. That's what's happening in our economy. Lack of business investment because taxes are too high.
QUEST: 370 of them.
MCCAUGHEY: It means nothing, because they're all from the same point of view. The academic point of view. Let's talk to people in real life who know how to make money.
QUEST: That was my next story.
MCCAUGHEY: Now you have to wing it like me.
QUEST: Right, OK, you want to wing it, let's wing it. This question of the deficit, there is unanimity virtually.
MCCAUGHEY: I won't deny it.
QUEST: And it's going to rise as a result.
MCCAUGHEY: And you know what, that's Ok. The same thing happened under Kennedy. The same thing happened under Reagan. If you look at Reagan, who produced many years of rigorous growth. By 1991, the deficit was coming down.
QUEST: Different times with lack of globalization and the U.S. economy wasn't as integrated. The U.S. economy today is 17 percent of the global economy. It was greater in Ronald Reagan's time. Therefore, the need of overseas trading is greater today.
MCCAUGHEY: Now you're switching the topic to another issue, trade. But let me point out that although Trump's approach on trade is somewhat controversial, protectionism. He has to get it through Congress. That's the one part of his economic plan that inevitably will be modified during the legislative process.
QUEST: I can't remember what our bet was earlier in the --
MCCAUGHEY: I steak dinner.
QUEST: Was it a steak dinner? It's GDP growth, isn't it? We'll have to go back and look at the tape. Something tells me that I'll end up with the bill anyway.
MCCAUGHEY: Looking forward to it.
QUEST: Good to see you. Thank you very much indeed. On this question of the economists, it's the subject of the newsletter, the QUEST MEANS BUSINESS newsletter, it comes out after the closing bell and before Asia starts trading. And you can sign up for it at CNNMoney/quest. We'll have a Profitable Moment after the break.
{17:55:00] (COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment, so what's left of my -- of the letter from the economists after Betsy had finished with it, but we have another copy here, and it proves the point of how difficult it is for people to understand exactly what to make in the economics of this election.
On the one hand, you have a whole bunch of economists who basically say Hillary Clinton's policies are a disaster and would be dreadful for the economy. Now we have 370 economists saying that his statement, Donald Trump reveals a deep ignorance of economics and is a dangerous, destructive choice for the United States. Who to believe. And then you have Betsy McCaughey making a strong, full-throated argument in favor of those policies.
It all goes to prove the old point, to economists, at least three or four opinions on what might happen, and they may all be wrong anyway. We saw it with Brexit, where economist after economist came out and said dire and doom, and so far, it hasn't arrived. All of which leads me to basically question what use these sorts of letters are from economists. I'm not sure how far they take us further in understanding. But fret ye not, a week from today, within a few hours, it will all be over. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead. I hope it's profitable, economist and all.
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