Air Speed Indicator Malfunctioned on Doomed Lion Air Flight; Khashoggi's Sons Issue Emotional Plea for Father's Body
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's a lot more QUEST MEANS BUSINESS in a moment. When you will hear from Sir Tim Berners-Lee; the father of the world wide web who wants to make the internet a better place. Amazon is warning potential hosts for its second headquarters. Don't spoil a surprise, as you and I continue tonight, this is Cnn, and on this network, the facts always come first. President Trump says there is great electricity in the air on the eve of the high stakes midterm elections. He's headlining three rallies -- key rallies in the states today, stumping for Republican candidates. Democrats hope a blue wave will help them regain control of at least one house of Congress. Indonesian diving teams have now identified 27 bodies from the Lion Air flight that crashed last week killing 189 in all. Officials are working with Boeing to warn all carries but the risk of air speed indicator malfunctions on the 727 MAX 8. The Lion Air jet was found to have that malfunction during its last four flights. The sons of the murdered journalist Jamal Khashoggi are issuing an emotional appeal for the return of their father's remains so he may be buried. The spoke exclusively to Cnn in their first public remarks since their father's murder last month. Khashoggi's eldest son says he has faith in the Saudi-run investigation into his father's killing. SoftBank says it will not sever financial ties to Saudi Arabia after the killing of the journalist. Chief Executive Masayoshi Son expressed strong regret over Khashoggi's death, and says he won't take any new Saudi money until the truth is known. The U.S. political system, Tuesday is a big day. For investors, it's a week of big events. Political shifts in the U.S. know they will certainly hit the market. The dollar, FANG stocks and emerging markets all likely to face disruption as a result of events. Now, the Fed will reveal its interest rates decision on Thursday. Policymakers have been facing pressure to soften their hawkish views, and all week corporate earnings galore. Some market watchers are concerned profits have peaked. Ben Phillips is watching it all, the Chief Investment Officer at EventShares. Of the events you are watching at the moment, Ben, what are you most concerned? What are you watching particularly carefully?</s>BEN PHILLIPS, CHIEF INVESTMENT OFFICER, EVENTSHARES: Well, so I think everyone is focused on midterms this week, but we're worried about what's going on after midterms. So regardless of the outcome of midterms, we're looking at Trump's policy towards global trade. We think how he responds to China after midterms after some of this campaigning we've seen really over the past few weeks, that's our biggest concern is that global trade breaks down and supply chains are disrupted because of trade policy.</s>QUEST: But I see where you're coming from, but haven't you neatly jumped the hurdle of the midterms? Because the result tomorrow will factor in, you know, becomes a sine qua non of all those other events.</s>PHILLIPS: Well, look, I mean, we're positioning our portfolio adventure as the PLCY portfolio in things that really are going to continue regardless of the outcome. So financial deregulation, it's out of Congress' hands, it's now in the agency, the Fed, the OCC, the CFPB. You look at education deregulation, that's in the department of ED's hands. So if we go down the list and see what's actually occurring, it looks like regardless of the outcome, we're going to have, you know, some policy catalyst that continue. So deregulation, healthcare spending driven by Obamacare, you know, those sorts of things. Defense spending, want to stay elevated, our view. So those are the types of things we're watching and those are the type of things we're positioning our portfolio on.</s>QUEST: In the event of a gridlock with the house going to the Democrats, does the situation change? Does it get worse for investors or arguably, it gets a great deal better because if Washington can't do anything, then investors are free and the market is free to make its own direction.</s>PHILLIPS: Yes, I actually think that's right. I think we'll see some more noise potentially, maybe some more hearings and things like that. I haven't heard Democrats mention the impeachment word yet again with a split Congress not even worth really taking that off the ground --</s>QUEST: Right --</s>PHILLIPS: Unless there's some really incriminating new evidence that comes out. But so, yes, I think what happens in a split Congress is less and less is more for the market. There's a whole congressional effect study out there that says when Congress isn't doing anything, markets are happy. So it's just as soon as we remove this uncertainty of midterms, then we have certainty of what the outcome is within a week depending on California races obviously if there's some delay there. But so we'll get some clarity here within the next week and see which direction Congress is going.</s>QUEST: Right, quick-fire questions, Ben. Volatility, more of it in the midterm or less?</s>PHILLIPS: More in the midterm because of trade.</s>QUEST: Turning to the question of interest rates. Another one in December, and what after that?</s>PHILLIPS: It's going to be, again, the trade can really disrupt the growth thesis of the U.S. So I think if the Fed sees slower growth because of the trade, they might delay their actions and hiking rates further, '19.</s>QUEST: Diversification and rotation, we've seen it out of tech into defensive, does that continue, is it overdone? When does the tech come back?</s>PHILLIPS: I think it continues. Tech really has had all this momentum factor built up into it. Now you're seeing people rotate more structurally, longer term out of that momentum factor. So what we're seeing is more and more investors doing that, it's really just started. So if people say, we're at the top of the cycle here, it's going to start - - this rotation continues in our view. So I would be wary of tech and the regulation of tech in big data regulation.</s>QUEST: Finally, tech and tech. Does tech like Amazon which buys and sells things on Netflix which delivers movies and has subscription basis, and then there's tech like Facebook, obviously Twitter and Snap, we can sort of leave somewhere in the doldrums down at the bottom. But is there a difference, as you say, the rotation out of tech?</s>PHILLIPS: There is, but you know, we think the whole ecosystem is affected. But where we're most cautious is around those social media names, the ones who have been data aggregators in our view, collecting everyone's consumer data and then using it and selling it. They're the ones at biggest risk. But China trade, we think hardware and the semi- conductors and really that whole supply chain is so integrated with China that they're at risk too. So we're broadly avoiding tech other than our 5G telecom exposure in</s>PLCY. QUEST: Ben, do me a favor, make me a promise, you'll come back and help us understand more in the future.</s>PHILLIPS: Absolutely, happy any time, thanks Richard.</s>QUEST: Excellent, new member of the QUEST MEANS BUSINESS family. Help give us the sort of information that we can all use and understand and put into the wider context. As we continue tonight from London, he created the web in 1989 and now he's trying to keep it on track. We'll hear from the computer scientist Tim Berners-Lee, and I'm talking tech and question of the day. I got off the word tech, it's technology. Get your phones ready for a question on technology -- where's my phone, it's here somewhere after the break. And get ready to head to cnn.com-slash-join.