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POPPY HARLOW, HOST: U.S. stocks are going nowhere as trading comes to an end on Wall Street, at least an end for the day. It is Wednesday the 9th of the March. Tonight it is the economy, stupid. You've heard that before. Voters in the United States show their furry at America's trade policy.
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HARLOW: The British press drags the Queen into the "brexit" debate. Buckingham palace not at all amused.
And Google passes go. How a computer beat the hardest board game ever invented.
(END VIDEO CLIP)
HARLOW: I'm Poppy Harlow, in for Richard, and this is "QUEST MEANS BUSINESS."
Good evening. Welcome to the program tonight. American voters sent a loud and clear message at the ballot box, we are sick of America's free trade policies. Tuesday night's primaries in America's industrial heartland show deep and growing resentment and discontent with the state of the U.S. economy.
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HARLOW: Donald Trump swept to victory in Mississippi and Michigan vowing to overturn the global economic order and bring jobs back from overseas.
A much bigger surprise was Bernie Sanders win a huge upset against Hillary Clinton, in Michigan. The Vermont senator blasted Clinton in her commitment to free trade agreements with the rest of the word.
SEN. BERNIE SANDERS, U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE: What tonight means is that the Bernie Sanders campaign, the people's -- the revolution - - the people's revolution that we are talking about, the political revolution that we are talking about, is strong in every part of the country. They are tired of a rigged economy in which people in Michigan, people in Illinois, people in Ohio are working longer hours for lower wages, worried to death about the future of their kids.
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: On trade, I am a free-trader, believe it or not. But I'm also a smart trader. We cannot let China -- and I like China, they're wonderful, but their leaders are too smart for our leaders. China has taken millions of jobs, thousands of factories. What they've done to us -- it's actually -- I thought about it the other day. It's the greatest theft in the history of the world.
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HARLOW: The economy is by far the most important issue for voters in both parties.
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HARLOW: Take a look at this brand-new CNN ORC poll in Ohio. 42% of respondents say it is the number one issue in this Presidential race. Immigration, national security those do not even come close. Voters in Ohio showing a serious discontent with American free trade policies.
Also a majority of Republican voters in Michigan think that trade with other countries takes away American jobs. Most of those voters say they would vote for Donald Trump.
On the free trade front, Democrats agree even more voters thought trade with other countries takes away American jobs. 60% of those respondents on the Democratic side say they are backing Bernie Sanders. His campaign ad in the state of Michigan clearly resonating with them.
[VIDEO CLIP] Millions of good jobs lost, communities devastated, the jobs moved overseas. Only one candidate for President has consistently fought trade deals that ship Michigan jobs overseas. Bernie sanders. Sanders opposed the disastrous NAFTA trade deal. Opposed special trade status with China. Now he is opposing the trans-pacific trade deal. While others waffle Bernie is fighting hundreds of thousands in new jobs losses. For jobs, for us, Bernie.
SANDERS: I'm Bernie Sanders and I approve this message.
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HARLOW: Free trade has been a cornerstone of President Obama's economic policy and American trade policies frankly for decades.
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HARLOW: The United States is in more than a dozen trade deals with 20 countries some of those you see there in yellow. And there are two more blockbuster deals in the works with Asia. Those are represented in red. And the European Union represented there in light blue.
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HARLOW: Here to talk about the big picture what this means for this election is Mohamed El-Erian; he's the Chief Economic Advisor for Allianz, the author of a brand new book, "The Only Game in Town." And CNN global economic analyst Rana Foroohar, author of the new book, "Makers and Takers." Thank you both for being here very much.
Rana, let me begin with you. When you look at the polling that we just issued this morning, CNN just put out, among American voters who think international trade takes away Americans jobs 56% of those people back Sanders compared to 43% for Clinton. Is this a referendum on President Obama and the past eight years and his policy what he's built up?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I would actually say it's a referendum on a longer time period. I think that really since even the early '90s there's been sort of growing sense as we've cut a number of trade deals that you know globalization works at global level and we know that it's actually increased wealth at a global level but within countries. And not just the U.S. but in many countries it's actually increased the divide between the has and the has-not in certain areas.
Now we know at a net level sometimes jobs are created, great jobs, higher level jobs. But for a lot of people in states like Michigan they haven't felt that. And particularly since 2008 they haven't felt the recovery.
[16:05:10]
HARLOW: And particularly also as we've frankly seen look at what has happened in Michigan in that period of time in terms of the unions, right.
FOROOHAOR: Right.
HARLOW: That's completely changed under their new Republican governor, right. So Mohamed to you, do you -- I'm interested in what you think this says about the effectiveness of President Obama's economic policies both for the U.S. and also in global terms. And why Americans aren't buying into it now.
There was this fascinating articles in the times called "Why Trump Now?" and it dug into this. Why now?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: So I would emphasize what Rana said. When the economy does not grow and when the fruits of the little growth that you get go predominantly to a small segment of the population, people get angry. And what happens when people get angry? They blame others. And what's the easiest thing to blame? Trade. So what you're getting is the anger being expressed on trade. I don't think that what we're going to ends up with is protectionism. I think that what we're going to end up with is huge emphasis on fair trade as opposed to free trade.
HARLOW: And the difference with Rana for the American voter, if you're a candidate on the stump and you see that clearly this worked last night in the primary so you are going to emphasize fair trade as Mohamed says. How do you do that and differentiate that for the electorate?
FOROOHAR: Well, it's interesting. I agree with Mohamed. I think that what it's going to mean is that policy makers, politicians are going to be starting to message that companies shouldn't just outsource jobs to the cheapest place. And that they should at this about local ecosystems, they should think about where workers have skills that might be great for their particular kind of firm. I think that you're going to see more interaction between the public and private sector creating those kinds of things.
Now Obama was actually quite big on. But I think the moment is such now that there's a real drive behind this. And many countries are in the same boat. I just want to add you know when Trump says that oh China has had the biggest theft of our jobs in years. Well China is actually worried about losing jobs to other parts of Southeast Asia. You know everybody is in the same boat.
HARLOW: When you also look at the economy Mohamed it's hard to argue that it's doing poorly. The American economy, you've got gas at you know $2. You've got unemployment under 5%, you've got growth of about 2% a year, so all those headline numbers are good. The one point that Republicans can make is the wage growth the fact that wage growth has been stagnant so long. The typical American family if you look at the numbers is taking home about the same amount of money now as they did 20 years ago. Does this come down to a wage growth fight?
El-ERIAN: It comes down to the issue of inequality and what I've called the trifecta of inequality. Not just income and wealth. But a sense that inequality of opportunity is becoming a problem. And that for Americans is a big issue. Now why have we had that? There are structural forces.
HARLOW: Technology.
EL-ERIAN: Technology being one Poppy but we have also paralyzed ourselves. We do not have an active fiscal policy and we rely on Central Banks who have no choice but to go through the stock market to promote --
HARLOW: But there's only so much Central Banks can do that will frankly help you know the half of Americans that aren't invested in the market et cetera, and the fact that companies still have so much money sitting on the sidelines and aren't hiring in ways that they did.
So you bring this up. I want to pull a quote up from that "New York Times" article that I mentioned, it stood out to me a lot.
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HARLOW: The article was called "Why Trump Now?" And it reads already disillusions with the Democratic Party the white voters became convinced that the mainstream of the Republican Party failed them not only on economic issues but on cultural issues as well. And it goes on to say the only group to grow larger after 2,000 was households with income of $35,000 or less.
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HARLOW: These are the angry voices we are hearing that are coming out to the polls many of them for the first time.
FOROOHAR: That's totally true. And you know you can see that in Michigan. If you look at the fact that Bernie Sanders came into Michigan and took a lot of African-American vote that had been Hillary's -- that was supposed to be her area. Well why did that happen? Well in part because African- Americans lost so much in the housing crisis. You know African-Americans post 2008 had liquid wealth 200, compared to $23,000 for whites. That's why Bernie Sanders is doing so well in Michigan.
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HARLOW: And Hillary Clinton has done so well with the African American vote, much better than Senator Sanders up until now. We'll see if momentum shifts on that.
You Mohamed write about this in the book "The Only Game in Town" not only about sort of the limited ability of Central Banks and our reliance on them. But you also talk a lot about rising inequality. And you say today's economy is beset by low growth and rising inequality and you say the only solution to that is inclusive economic growth.
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HARLOW: That sounds like a great line. What does inclusive economic growth actually look like in perhaps the next administration? How do you do that?
[16:10:00]
EL-ERIAN: So first it means promoting two engines of growth, not relying on finance which has been co-opted by a small segment of the population. But really focusing on education, on infrastructure, on labor rich training, things that we know promote economic growth and promote economic growth widely.
Second realize the fiscal policy has a re-distributive element to it and not be shy about night it. You know -
HARLOW: -- It doesn't have to be Robin Hood.
EL-ERIAN: Yes, it doesn't - I mean what's clear is this issue has become an issue both for the Republicans and the Democrats. It's not just the left, it's both parties now realize that this is a big issue facing the U.S. and not just the U.S. it also explains the emergence of anti- establishment movements in Europe.
HARLOW: And what's so frustrating I think Rana for Americans is you've got about half of Americans who do not have a penny in the market. They don't have a penny through a 401k, an IRA, their own investment et cetera. So when we look at today and the market today and we look at today marks the seventh birthday if you will, of this bull market right, and you look at the S&P up 194% since 2009, there are so many people that that doesn't affect at all.
FOROOHAR: Absolutely. And this actually goes to what Mohamed was saying and is in his book as well. That when you have Central bankers at the only game in town as the only ones who acted this is what you get, you get asset bubbles, you get stock wealth that enriches you know all of us and many other wealthy people but not the majority of the population. And it's a huge issue. It's why we have the polarized politics we do.
HARLOW: So what can the private sector do? I interview a lot of CEOs who tell me there are increasingly frustrated with the government, right, so they don't want to run for office. They think they can be more effective Mohamed from their corner office right, on social issues, et cetera. And we've seen that. What can they do on the job front while remaining competitive because they do have a fiduciary responsibility to their employees and to their shareholders.
EL-ERIAN: So there's a couple of good news. One is that social responsibility has become the key issue for many more corporations. Why? That's what the employees want. Especially the millenniums. So they're realizing that social responsibility is part of running a good company.
The second element is the corporate sector has a ton of cash Poppy sitting in bank accounts earning either zero percent or they have to pay interest for the banks to keep it. The key issue is unleashing this to various private partnerships. And what we need out of the politicians is not a big policy bank, it's a small policy bank. Because if business people see clarity in what's ahead the cash that they deploy can do a lot of the heavy lifting. And that's - and that's one reason to be optimistic. But it needs the political system to deliver at least a small bank.
HARLOW: Finally before we go very quickly, how concerned Rana to you first, then Mohamed, should Hillary Clinton's camp be right now seeing what they saw in Michigan? Seeing this focus on trade?
FOROOHAR: Concerned. I think particularly if Sanders gains traction in the rust belt. Even if he doesn't win the nomination ultimately that's going to be an important signal about how the generals might go.
HARLOW: And Ohio is a big question mark.
EL-ERIAN: Yes, and we'll see - I mean the next couple of weeks are going to be critical and also important for markets who so far haven't really been able to react because there are so many potential outcomes that they've just been paralyzed.
HARLOW: Right. Mohamed El-Erian, thank you so much. Rana Foroohar, thank you congrats to both of you on your books. You make me feel not very accomplished. Congrats about the view. Bernie Sanders and Hillary Clinton will go head to head just a few hours from now. CNN will simulcast the Univision Democratic Debate, it is in Miami, that is at 2:00 a.m. Thursday in London and it will be right here on CNN.
The debate over Britain's future in the European Union already tense.
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HARLOW: And now even the Queen has been dragged into it all. The details next.
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HARLOW: Buckingham Palace has complained to Britain's press watchdog over a tabloid controversial front page I am sure you have seen it by now. The sun newspaper has claimed that Queen Elizabeth is in favor of the U.K. leaving the European Union in the country's upcoming referendum. Our Max Foster reports.
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MAX FOSTER, CNN CORRESPONDENT: Well the contention issue has even reached the Queen. The Sun citing what it says is a high reliable source claims the bust-up between the Queen and the then Deputy Prime Minister, Nick Clegg, happened at a Windsor Castle lunch in 2011.
The Queen reportedly said the E.U. was heading in the wrong direction. According to the Sun, the source said people were left in no doubt about her views on Europe.
Clegg himself has tweeted today, saying the Sun's story is nonsense. He added "I have no recollection of this happening and it's not the sort of thing that I would forget."
Buckingham Palace has also dismissed the story saying the Queen remains politically neutral as she has for 63 years. "We will not comment, they said, on spurious anonymously sourced claims. The referendum is a matter for the British people to decide."
And this cuts to the very heart of the Queen's role, which is to represent the entire country and to stay above politics. She obviously has views but would never want to publicize them. Her grandson Prince William got in a bind last month when he gave a speech at the Foreign Office where he said Britain's ability to work to with other nation is the bedrock of our security and prosperity.
That prompted speculation that he was endorsing the campaign to stay in the E.U. His office had to move to deny he was referring to Europe at all.
This summer's referendum on E.U. membership has become a highly divisive debate in the U.K and the royal family is struggling to stay out of it.
Max Foster, CNN, London.
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HARLOW: Well members of the British royal family are not the only ones being dragged into the increasingly heated debate over Britain's place in the E.U.
The U.K. Lawmaker -- a U.K. Lawmaker is calling for the Governor of the Bank of England, Mark Carney to resign that is after Carney said that a "brexit" would produce a risk financially to the U.K.s stability. Critics argue that jeopardizes his political neutrality.
The head of a group representing larger British businesses has resigned after saying he wants to see Britain leave the E.U. The group, The Chambers of Commerce itself, is neutral. And Prime Minister David Cameron told parliament just a few hours ago that he will not resign if Britain does vote for a "brexit" even though he wants the U.K. to remain in Europe.
We are joined by Quentin Peel from London, he's an Associate Fellow at the Think Tank Chatham House. Thank you so much for being here sir. And you are a journalist of many many years and much experience. So put your journalist hat on for a moment and let's talk about how unusual it is for the Queen to take action against the newspaper. Sort the significance of this, "regal dispute."
QUENTIN PEEL, ASSOCIATE FELLOW, CHATHAM HOUSE: Well it's the first time she has ever done it. The first time she has ever formally complained. The Queen is normally far too gran to do anything like this. Just tries to ignore things she doesn't like.
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PEEL: But this time I think that they feel really actually embarrassed by it. I mean this splash headline in the Sun today, "Queen Backs Brexit" its complete nonsense really. The word "brexit" didn't exist when the alleged conversation took place. But I'm sure the Sun newspaper doesn't mind if it is exposed as nonsense at the end of the day because it's great publicity for the Sun.
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HARLOW: But there is quite a bit of liability here. I mean you've got the editor of the Sun coming out and saying they have "two different and impeccably placed sources" they say they will vigorously defend this -- their paper against the complaint. What do you think they need to be successful in that? To actually defend successfully?
PEEL: Well, they can claim that their sources -- they don't have to identify their sources.
HARLOW: Right.
PEEL: I note that they said they were impeccably placed. The use of the word placed is slightly odd. Why didn't they just say they were impeccable sources? But nonetheless, I think this is going to stick, to some extent, that there will be people who say yes, I think the Queen is probably -- is rather suspicious of Europe. Why? Because what we're seeing in this debate is really a battle for the soul of the nation. And if anybody is the guardian of the soul of the nation, I suppose it's her Majesty, the Queen.
[16:20:07]
HARLOW: Absolutely. And when you look into the sort of politics surrounding this, the Governor of the Bank of England, Mark Carney warning this week that a vote by the British people to leave the E.U. he said it would hit the country's economy. He talked about the impact of foreign investment on the pound. He talked about the banks' potentially some of them leaving London's financial capital. Some MPs are now calling on him to resign. I just wonder your opinion. Do you think he crossed the line with those statements or was he simply laying out the financial reality as he sees it?
PEEL: I think he was very careful in what he said. Undoubtedly what he said infuriated the campaigners for Britain to leave the European Union because he was really saying the deal that David Cameron won from his partners in the European Union for more assurances, for the state of the City of London -- that had reassured the Bank of England. So he went quite a long way to give David Cameron his backing.
Having said that, he was pretty careful and i think an overwhelming majority in the city would agree with him. He was quoting banks as saying, look, if Britain leaves the European Union, we will move at least some of our jobs out of the City of London and into the European Union because otherwise we won't be able to carry on doing business. It was really a statement of the obvious. But what I think you've got in this campaign now is you've got the economic arguments on the whole in favor of those who want to stay in the European Union. And you've got the emotional arguments on the other side, those who want to quit.
HARLOW: Quentin Peel, it is a fascinating time, certainly, to be a journalist and living through all of this. Thank you so much for joining us with your perspective this evening.
PEEL: Thank you.
HARLOW: Uncertainty over the U.K's future within the European Union could have a negative impact on the FTSE for weeks and weeks to come.
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HARLOW: How are markets reacting? On Wednesday at least, London as well as other European markets actually had a pretty quiet day, some modest gains across the board as you see there, nothing substantial. Trading was suspended in Abu Dhabi on Wednesday.
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HARLOW: We will show you the wicked weather that has wreaked havoc across the Gulf.
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HARLOW: Trading in Abu Dhabi was canceled on Wednesday amid a storm that is battering Gulf States. A power failure forced an early closure for the stock exchange. The city's airport also temporarily shut down. Jon Jenson has more on the impact of this extraordinary downpour.
JON JENSON, CNN REPORTER: The forecast called for rain but the ferocity of the storm tack many in the UAE by surprise. Massive downpours swept across this desert nation this week with more rainfall than the UAE normally gets in a single year.
The worst of it hit Wednesday with gale force winds slamming parts of Abu Dhabi. This is really something unprecedented. You can see the wind and the rain just blowing down the roof, knocking plants and tables down. On our roof, the roof next door, this is something we've never seen before out here.
[16:25:00]
Trees were uprooted across town. Security services raced to unblock roads. No injuries were reported, but there was flooding in several buildings. Abu Dhabi's schools closed, and the airport, too, briefly. The full damage has not yet been assessed. But with more rainfall on the way, meteorologists say this desert rainstorm could be one for the books.
Jon Jensen, CNN, Abu Dhabi.
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HARLOW: On the other side of the Gulf is Iran, newly released from those international sanctions. President Hassan Rouhani's Chief of Staff says his country's first priority economically is to get its oil market share back and that the rest is up to OPEC to fix the falling price of crude. Here's Mohamed Nahavandian speaking with our very own Christiane Amanpour just a short time ago.
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MOHAMED NAHAVANDIAN, PRESIDENT HASSAN ROUHANI'S CHIEF OF STAFF: We have made this clear to everyone that the first step Iran is going to take is to get back to its market share. Those who caused this price decline, they are responsible for it. They have to do something to correct that. And I think that is being understood by other producers.
CHRISTIANE AMANPOUR, CNN CORRESPODENT: So where do you see your next big market? Is it the East? Far East?
NAHAVANDIAN: We have - we have already started the exporting to Europe. And we think that the energy security in Europe.
AMANPOUR: And you think that will be fine? OPEC will accommodate all of this?
NAHAVANDIAN: Yes.
AMANPOUR: You have no doubt about that?
NAHAVANDIAN: No.
AMANPOUR: And in terms of what President Rouhani wants to do beyond reforming and opening up and attracting foreign investment, obviously he wants to also open up private sector in Iran which has been heavily dominated by vested interest. Revolutionary guards are not just military, they're in economic power as well as everywhere else. And they have major hold on huge segments of the economy. They have no interest in seeing their hold busted open for competition. That's going to be tough, isn't it? Especially as they are launching missiles.
NAHAVANDIAN: One of the priorities in the economic policy of President Rouhani and the new administration has been empowerment of the private sector. And this principle is supported by supreme leader in his policy which was announced.
So by widening the area of presence for private sector, and increasing the GDP, when the economy grows bigger and bigger, the private sector's role will be more and more. The government has already started privatization. The problem in the practice was that -- in the privatization which occurred before this administration, part of that went to pseudo private sector, some public organizations. But now that is being corrected.
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HARLOW: Well, red meat was more than just a metaphor at Donald Trump's victory rally on Tuesday evening.
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HARLOW: There was steak, and wine, and water. And a series of claims that perhaps should be taken with a pinch of salt.
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[16:32:01] HARLOW: Hello, I'm Poppy Harlow in for Richard Quest. Coming up in the next half hour of QUEST MEANS BUSINESS. Donald Trump has been touting Trump water and Trump wine and so we went out and bought some for ourselves. We look at the validity of some of his claims. Also it has taken years, but a Google computer has finally beaten the world champion of the complex board game Go. I will try it out for myself with one of America's best players live here in the studio. Before that though, here are the top news stories that we are following for you at this hour.
Israel is condemning Iran's ballistic missile tests. Iran fired two ballistic missiles today and the missiles reportedly bore an anti-Israel message. Iran claims those missiles tests are simply for defensive purposes.
