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QUEST MEANS BUSINESS
Wall Street Banks Pledge to Support London; Europe Plans to Attract UK Banking Business; Gove Eliminated, May and Leadsome Last Two Candidates; U.S. Markets Drop on Oil Report; Outrage in U.S. After Two Police Shootings on Video; UK Property Fund Values Cut; Second Tesla Accident Under Investigation; Brazil Bolsters Security Ahead of Olympic Games; France Advances to Euro 2016 Final. Aired 4-5p ET
Aired July 7, 2016 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: I think he started ringing the bell a little early tonight. We're back in New York. The Dow Jones Industrials
is off nearly thirty odd point. Time for the gentleman. That is the most pathetic gavel we've seen in weeks. Sir, you could have done better. For
Thursday, July 7th, tonight, a trans-Atlantic partnership. Wall Street banks say they'll stick with the city of London. Knocking on the door of
number 10. Britain's next prime minister will be a woman.
And the scene of a tragedy. And it was all streamed live. A police shooting is broadcast live on Facebook. I'm Richard Quest. It's good to
be back in New York, where of course I mean business.
Good evening. There was a robust vote of confidence in the world's financial capital of London as two financial capitals vowed to stick
together following the Brexit vote. Some of the biggest names on Wall Street say that they are going to help London maintain its dominant
position. Goldman Sachs, Morgan Stanley, JPMorgan, and Bank of America they all signed a statement in support, praising London's workforce,
regulation, and innovation. The Britain run Standard Charter also signed.
This was all at a meeting, statement from the Chancellor and investment banks on London as a world leading financial center. However, whilst the
banks made a variety of nice statements, one of Britain's key economic strengths, it's a world leading statement, we will work together to
identify new opportunities and match anywhere in Europe, build on this with a common aim. The banks did not promise to keep all their staff in London.
And there's no guarantee that U.K.-based firms will be able to keep their unfettered access to the EU through a single passport.
So I want to show you how these latest announcements all put it together. This battle for supremacy or at least for primacy in financial markets in
Europe is playing out during the Euro 2016 tournament. Tonight, we're monitoring the semifinal between Germany and France. And I can tell you, I
don't want to be a spoiler, but France is leading 1-0 at halftime. I'll have the final results of course if it comes while we're on air. Now,
France and Germany are two countries competing for the big Brexit prize. The big Brexit prize is bank business, particularly euro clearing and
Eurozone business. Much of which, most of which, all of which probably at the moment is being done through the city of London.
London is without doubt the undisputed champion. Not only for dollar denominated euro bonds, euro clearing. Head and shoulders, miles above, it
finds itself in a different league from its European rivals. But those rivals are looking to poach key players. And within the European league,
where you've already got France and Germany are the strongest. France is planning to change tax regulations and offering assistance to help firms
move from London to Paris. Germany and Frankfurt is already home to the second biggest financial center in the EU. But it's important to
understand these two combined don't even come close to the power, for example, of Forex, euro trading, dollar trading that takes place in London.
And then you've got the other nations, the Netherlands, Poland, Republic of Ireland and Luxembourg, they also want to move up the table and take some
of the business from London. The French Prime Minister, Manuel Valls, has already explained how his government is hoping to literally snatch from the
(BEGIN VIDEO CLIP)
MANUEL VALLS, FRENCH PRIME MINISTER (through translator): Paris is also innovating. We want to build all together the financial capital of the
future, make Paris the capital of smart finance. Welcome to Paris. Welcome to France. Welcome. In one word, now is the moment, more than
ever, to come to France.
(END VIDEO CLIP)
QUEST: Nothing like a bit of naked poaching from the French, which is what they were trying to do, and indeed they'll all be doing before they're
finished. Is the CNN's global economic analyst joins me, Rana Foroohar is also the author of "Makers and Takers: The Rise of Finance and the Fall of
[16:05:04] Rana, you join me from Boston tonight. It's not surprising they're trying to steal. But are you surprised by this statement, which is
basically very well meaning. I mean, it's very senior people, Goldman and the like, are you surprised that they've done this?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I'm not really surprised. You've already seen U.S. government officials, kind of do the same flip-
flop that the banks are doing now. If you remember, right before Brexit, the banks and U.S. government officials were saying this is going to be a
terrible thing, please don't leave. It will be awful for the U.K. economy and for the world economy. You know, banks were saying we're going to move
jobs by the thousands. Now everyone's trying to be conciliatory because they are genuinely worried about what the ramifications will be from a
QUEST: The statement says, it's important to get this bit, "Today we met and agreed we will work together to build on all this with a common aim to
help London retain its position as the leading international financial center. It doesn't say a leading, but the leading financial center. Do
you think secretly the Goldman's, the Chases of this world, they prefer London to Paris or Frankfurt?
FOROOHAR: It really did make me wonder.
FOROOHAR: These banks in the catbird seat right now, if you think about it. Because the officials in the U.K. are desperate. They don't want to
lose the power of the city. They don't want to lose these jobs. So I think banks are in, ironically, after being on the run now for 8 years,
they're in an interesting position, not just in the U.K., but in many global financial capitals. Because there's going to be a lot of jockeying
now for these jobs. I was fascinated to hear the French used the word "innovate." Until recently, financial innovation was a bad word, we don't
want to hear about that.
QUEST: The other side of this is whether or not a deal can be reached so that passporting, the ability of banks in London to transact in Europe.
And we all know the European -- the ECB and others have not really wanted euro clearing done in a non-euro country.
FOROOHAR: That's right. And you're hitting on the key thing. So banks, just like people, need passports to access the European markets in a way
that would keep London at the heart at the European and global financial markets. What I think is going to be very politically interesting is
whether the U.K. government as it goes forward with negotiations with the EU, puts the financial industry interests at the top of the list. Because
there's going to be a lot of things that will need to be negotiated. Free movement of people, goods, capital. If capital goes to the top, I think
that's going to be very interesting and possibly very politically contentious.
QUEST: And you and I will talk about it many times over the whole Article 50 process.
FOROOHAR: I'm sure we will.
QUEST: Good to see you. Lovely to see you. Coming from Boston to us today.
It will be a woman who will leads Britain through its divorce with the European Union. The great schemer, Michael Gove, who is the man who is
said to have knifed Boris Johnson, metaphorically, in the political back, has been eliminated from the contest in the latest vote to replace David
Cameron as conservative leader and thereby automatically becoming prime minister. The way it works is the MPs voted, and the one who got the least
votes drops out, while the majority of Conservative MPs supported the Home Secretary, Theresa May, in the second round of voting. She's a lightweight
remainer, supported Britain remaining in the EU. She's now face Energy Secretary, Andrea Leadsome. Mrs. Leadsome campaigned for Britain to leave
the EU. The final result will be announced September 9th after all the party members get a chance to vote. This is the members in the country.
But it's crucial to understand with these two candidates, Theresa May, a sort of remainer light, but a pragmatist in the Home Secretary. So you do
have somebody from the remaining side, arguably. And Andrea Leadsome, who was very much a Brexiteer. Mrs. Leadsome touted her experience of working
(BEGIN VIDEO CLIP)
ANDREA LEADSOME, UK CONSERVATIVE PARTY LEADERSHIP CANDIDATE: Today I want to speak to the markets as well as to the nation. No one needs to fear our
decision to leave the EU. We will do so carefully, reassuring our European friends and those businesses who are worrying about change. Trade must be
the top priority.
(END VIDEO CLIP)
QUEST: Robin Oakley is following the contest, CNN's political contributor, and joins us from outside Westminster. I'm guessing, I mean, there will be
people in that building behind you who will say, Michael Gove has got his comeuppance by being eliminated and if he had supported Boris Johnson as
was originally planned, he would still be a player.
[16:10:12] ROBIN OAKLEY, CNN POLITICAL CONTRIBUTOR: And Boris Johnson might well have won if he had continued to support him, Richard. But the
contest now is between these two, Theresa May. It's a contest partly about experience and partly about how much the Europe issue is still going to
dominate, because Andrea Leadsome is saying only a Brexiteer, only somebody who campaigned to get Britain out is capable of doing the best deal in
taking Britain out of the European Union now. Theresa May, as you say, was Brexit lite. She was remain lite. What the MPs knew was she was a bit of
an instinctive euro skeptic bass was sticking with the remain camp largely out of loyalty with David Cameron. That's a not a subtlety that will be
understood by the people who will now have the vote. The Conservative Party supporters, 150,000 of them out in the country, Richard.
QUEST: But those conservative party supporters, to quote Jeremy Clarkson writing in last weekend's Sunday "Times," the former Top Gear. They now
have the advantage of hindsight. They've seen the chaos resulting from the vote. So surely there's an argument that says they're more likely to go
for the stability of Mrs. May.
OAKLEY: First signs are that they are, because in an opinion poll taken three days ago among conservative put Theresa May 63 percent support, only
31 percent support for Andrea Leadsome. Things change in these contests. And we have to remember, the last three conservative contests, whoever was
put in first place by the MPs hasn't finished up getting the job in the end by the time of activists have voted. There's a long way to go in this.
Theresa May, there's not only the Europe issue, there's the fact that she at one stage when she was party chairman back in 2002 warned the
conservatives they're the nasty party. That may not have gone down well with some of the party activists, Richard.
QUEST: Robin, allow me to take you back to your history. Because you covered in great detail and at close quarters Britain's last and first
woman prime minister, Margaret Thatcher. Do you see any similarities between these candidates and Mrs. T?
OAKLEY: Yes. Different aspects, really. Andrea Leadsome as the ideological fervor that Margaret Thatcher had. I think with Theresa May,
it's more a question of working style. Like Margaret Thatcher, she's a workaholic, like Margaret Thatcher she doesn't do jokes and doesn't wander
around the tea room patting people on the back. So there are similarities with Margaret Thatcher in both of them. But it's going to take a lot of
work before either of them prove that they can be as dominant a force in British politics as Margaret Thatcher could be. At the moment this is a
very divided country. What the two of them have got to remember is they're not just being elected leader of the Conservative Party. They're being
elected prime minister, and 48 percent of the country voted remain, as well as the 52 percent that voted to leave. There's a big gap to close, and a
lot of work to do to it any kind of unity, Richard.
QUEST: And on that point, is the party and the country, the Conservative Party in the country as split as the nation appears to be?
OAKLEY: Well, not quite as split on the specific European question, in the sense that it was 60/40 among conservative supporters who wanted to leave
Europe. So, you know, there's a slightly stronger indication one side there. But yes, it is a split party at the moment. And let's remember,
this whole referendum was caused in the first place by David Cameron wanting to close the divisions in his party, the arguments over Europe.
But instead those arguments over Europe are raging ever more bitterly, Richard.
QUEST: Robin Oakley at Westminster for us tonight, Robin, as always, thank you.
QUEST: European markets staged a rebound on Thursday in the trading. If you take a look at numbers, you can see the FTSE was again the best of the
session, up 1 percent. The DAX up a half a percent. You can see the numbers on the screen for these and the Paris market as well. Insurance
shows gains after three days of losses. RBS was up 6.5 percent, which is perhaps not too surprising when you consider the enormous falls that it has
seen and endured so far.
[16:15:02] As for New York, well, you start off in the morning, you get all the way through 11:00, then things go very peculiar. Oil futures lost some
5 percent on the news that crude oil stockpiles in the U.S. dropped less than expected. And I'm wondering, Paul La Monica, as I head over to you,
my question to you is going to be, is it that drop in oil stocks, which then shoved the oil price and oil futures, that took the Dow Jones down?
PAUL R. LA MONICA, CNN MONEY CORRESPONDENT: I think that's probably it. I think you have renewed concerns that American oil producers have maybe
have started to get a little excited by the rebound we've had in oil since those lows in February. You've got Shell gas producers all of a sudden
deciding, hey, oil at 50 is economically viable for us, we have concerns about a glut at the same time that, as you know firsthand, Europe is a bit
of a quagmire right now in how much spending we're going to get from Europe, as well as emerging markets like China.
QUEST: So we had the FOMC minutes yesterday, which is all about risk and there was lots of it. In my overnight reading, I talk about it in the
newsletter, which I know you'll be wanting to subscribe to, Paul is also writing in the newsletter. We'll show you the address on the screen in a
minute so you can subscribe. There is a view now, isn't there, that interest rates are off the agenda for the time being, interest rate rises
in the U.S.
LA MONICA: Yes. I think it would be a very significant surprise if the Federal Reserve raised rates anytime soon, even if you didn't have the
election coming into play and Janet Yellen clearly not wanting to look at any level --
QUEST: They have raised rates. They have done interest rate moves before around elections.
LA MONICA: Oh, definitely. There are some people that to this day still claim that Alan Greenspan is the reason why George H. W. Bush lost the
election in 1992. Obviously the Fed can't be held hostage by the election. 2008, as you recall, the fed was pretty active, even though we had Obama
and McCain running for president then, you didn't have an incumbent. The Fed can't just sit by idly if they are required to act. But I don't think
right now we're at a stage where the Fed necessarily needs to. What more can they do?
QUEST: Let's look ahead to tomorrow's jobs numbers. Onn CNN Money article looking at 177,000 job creation tomorrow. Is that correct?
LA MONICA: That is about what we're looking at. That would be a nice rebound from the awful numbers that we had, less than 40,000 jobs added in
May. People I think are hoping that that number gets revised higher as well.
QUEST: Not only do you want the 177, you want a revision of the earlier or at least to be able to see that the earlier was an aberration.
LA MONICA: Yes, definitely. There are some concerns that this month will be an aberration as well, because you have Verizon workers that were on
strike returning, so we might get a number that's a little bit better than it actually appears.
QUEST: Nice to be back in New York.
LA MONICA: Thank you.
QUEST: Nice to be back with you. Don't forget the newsletter. Today I'll be writing about my trip back across the Atlantic and the state of
economics across the pond. "Welcome On Board." There's today's newsletter. It arrives in your e-mail in-box just after the market closes.
There's no major market trading anywhere in the world at the moment.
LA MONICA: We are in that little vacuum, which is why this newsletter is so crucial.
QUEST: It's absolutely important. And you can subscribe to it. CNN.com/quest.
We will continue in just a moment. A woman live streams the aftermath of an appalling police shooting of her fiance as he's next to her dying. Two
police killings in two days, both caught on camera, shared around the world. The outrage in the United States. QUEST MEANS BUSINESS.
[16:20:59] QUEST: "Stay with me." Those were the words of Diamond Reynolds, as she looked into her cell phone camera, immediately after a
white police officer had shot her black fiance over a traffic stop. Diamond was speaking to her viewers on Facebook where she was streaming the
event in real-time. She then took the camera and handed it over to show her fiance, Philando Castile, lying next to her, covered in blood, dying
from the gun wounds. The officer still has his gun trained through the window. That video has now been viewed millions of times around the world.
I'm warning you, what we're about to show you is disturbing. However, we're pretty sure it's the only way to demonstrate how technology is
transforming the way we learn about these shooting incidents.
(BEGIN VIDEO CLIP)
DIAMOND REYNOLDS, FIANCEE OF PHILANDO CASTILE: Stay with me. We got pulled over for a busted taillight in the back. And the police, he's
covered, he killed my boyfriend. He's licensed. He's licensed to carry. He was trying to get out his ID and his wallet out of his pocket. He let
the officer know that he was -- he had a firearm and he was reaching for his wallet. And the officer just shot him in his arm. We're waiting for -
- I will, sir, no worries, I will. He just shot his arm off. We got pulled over.
UNIDENTIFIED POLICE OFFICER: I told him not to reach for it. I told him to get his hands up.
REYNOLDS: You told him to get his ID, sir, his driver's license. Oh my God, please don't tell me he's dead. Please don't tell me my boyfriend
just went like that.
UNIDENTIFIED POLICE OFFICER: Keep your hands where they are, please.
REYNOLDS: Yes, I will, sir. I'll keep my hands where they are.
(END VIDEO CLIP)
QUEST: What can one say? The second police killing captured on video in as many days in the U.S. It's sparking outrage and a renewed national
debate about the use of lethal force. Rosa Flores reports.
REYNOLDS: Stay with me. We got pulled over for a busted taillight in the back.
ROSA FLORES, CNN CORRESPONDENT (voice-over): How do you begin to explain this scene?
REYNOLDS: He killed my boyfriend.
FLORES: The blood. The police officer. The gun.
REYNOLDS: He's licensed to carry. He was trying to get out his ID and his wallet out of his pocket.
FLORES: Diamond Reynolds did her best to tell the story just moments after a Minnesota police officer shot her fiance during a traffic stop.
UNIDENTIFIED POLICE OFFICER: I told him not to reach for it. I told him to get his hand off it.
REYNOLDS: You told him to get his ID, sir, his driver's license.
FLORES: Reynolds live streamed the events to Facebook with her four-year- old daughter sat in the back seat.
REYNOLDS: Please don't tell me my boyfriend just went like that.
FLORES: Philando Castile died from his wounds. Reynolds reeling this morning.
REYNOLDS: I did it so the world knows these police are not here to protect and serve us. They are here to assassinate us. They are here to kill us
because we are black.
FLORES: She says police initially sent her to the wrong hospital.
REYNOLDS: They sent me in the whole wrong direction so I never got to see him before they did whatever they did. I never got to say my last words to
FLORES: St. Anthony's police department says state law enforcement is investigating the shooting.
SGT. JON MANGSETH, INTERIM POLICE CHIEF, ST. ANTHONY POLICE DEPARTMENT: The officer involved in this incident has been put on standard paid
FLORES: castile is the second black man filmed during a fatal police shooting in just two days. This scene again shows 37-year-old Alton
Sterling who was shot by police Tuesday morning in Louisiana. CNN has learned officers approached Sterling after a homeless man called 911.
Claiming that Sterling brandished a gun and refused to give the man money. The paint was barely dry on his memorial in Baton Rouge today, as
Minnesota's governor made a predictable promise.
[16:25:01] MARK DAYTON, GOVERNOR, MINNESOTA: Justice will be served in Minnesota.
FLORES: But for so many Americans trying to come to terms with these scenes, promises aren't enough.
L. CHRIS STEWART, ALTON STERLING'S FAMILY ATTORNEY: If you're getting desensitized to seeing this so many times, there's something wrong.
UNIDENTIFIED MALE: This isn't black anger. This is black grief.
FLORES: The U.S. Department of Justice has taken up the Sterling's death as a civil rights investigation and is assessing the situation on
Castile's. Protests are erupting in both states, echoing the outrage of past shootings across the nation. Presidential candidate, Hillary Clinton,
tweeted this morning, "America woke up to yet another tragedy of a life cut down too soon. Black Lives Matter." President Obama taking to Facebook,
writing, "All Americans should be deeply troubled."
Castile's family tells CNN it feels like open season on African-Americans.
VALERIE CASTILE, MOTHER OF PHILANDO CASTILE: We're being hunted every day. It's a silent war against African-American people as a whole.
QUEST: So when Philando Castile was shot by police, not 24-hours ago, his girlfriend's first instinct was to start filming on Facebook. When Alton
Sterling was shot by the police on Tuesday, two bystanders' videos quickly appeared online. It's the latest evolution in the citizen journalist, if
you like. Joey Jackson is here. He's a CNN legal analyst. There was an inevitability with periscoping and live streaming that this would all be
JOEY JACKSON, CNN LEGAL ANALYST: Amen. Amen that you have the capability to show the public exactly what's happening on the street. Now, in this
second sentence that occurred, we don't know exactly what led up to it. She started live streaming after the fact. But thank goodness you have
people who were on the scene who are letting the public know what's going on in the streets. And from what you can see, and certainly there will be
investigations and investigations, but from what you see, it's very troubling.
QUEST: It's troubling, but which bit -- I mean, in the sense that obviously the issue of the shooting is troubling. But I can hear people
around the world saying, the last thing I would think about doing in that situation is finding my phone and tapping my way to the app and starting it
JACKSON: Unless you've been depressed and you've been oppressed and no one's going to believe what I say, because there's a police officer who
says it went down differently. So maybe it is the time to say, well, if I livestream it, then the public can see. You don't have to take my word for
it. You can just see for yourself exactly what happened.
QUEST: Do you find any of that video a gross intrusion into private grief?
JACKSON: No, I don't. I find it to be something the public needs to know, so they can have a greater appreciation of what's going on and what people
commonly go through every day of their lives.
QUEST: As you rightly point out, it doesn't show us the lead-up to the shooting. Are these videos admissible in any way, shape, or form?
JACKSON: 100 percent, of course. They're admissible because they go to show evidence. What's admissible? Anything that's relevant. What's
relevant? Something that goes to show and make more likely or less likely a fact in evidence. In English that means, in the event that it's out
there and it's showing you what occurred, it can come in through a court of law.
QUEST: I've been listening to a lot of debates and discussions on our sister network, CNN, in the United States. A lot of people like yourself
making the point that maybe people like myself, A, from other countries, and B, who have not experienced it, that there is a difference in the way
you would speak to a police officer than the way, say, that one of your white partners or white lawyers do.
JACKSON: Let me say this. Not to cast aspersions on the police. My dad was one. The police, they do a very good job of protecting and serving.
What I'm seeing here is troubling. And in terms of how to talk -- this is the problem. What I tell my son and what I do, OK, what I do, three
things. A, comply now, grieve later. Don't care how rude, how arrogant, however you were mistreated, you comply now, grieve later. Number two,
traffic stop, get that key, put it on top of the roof so the officer knows you're not going anywhere. That's the second thing you do. Three, get
those hands where the officer can see them, on the steering wheel. Now, last thing, Richard, and that's this. What happens, though, when you
seemingly comply, as we saw in the last video, we didn't necessarily see, but we heard from the girlfriend, when he did comply, and you get shot
anyway. So now, what do you do then? If you're teaching people to comply, you're teaching people, don't resist at all, put the keys on the top of the
car, and you're teaching them show them your hands, what happens when you get shot in any instance? So you have to look not only to the motorist and
their responsibilities, or the individual African-American male, but the officer too. What type of training do they have? What sensitivity do they
have in that environment? And is there any fear? That needs to be addressed as well.
[16:30:08] QUEST: You will come back and talk us through this in the future.
JACKSON: Would love to.
QUEST: Good to see you, sir.
JACKSON: Thank you, Richard, thank you.
QUEST: Thank you as always. When we come back after the break, we'll return to our normal digest of business. Europe trying to steal U.K.
banking business. Now major housing funds in U.K. have been put under lock and key. This is QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest. Of course there's more QUEST MEANS BUSINESS in just a moment. When U.S. regulators are just investigating a
new crash may have involved Tesla's auto pilot feature. And while the Rio Olympics may be over budget, still doing it cheaper than London did.
Before all of that, this is CNN, and on this network the news always comes first.
The contest to choose the next British prime minister is down to two candidates. The Home Secretary, Theresa May and Energy Minister, Andrea
Leadsome. The Justice Minister, Michael Gove was eliminated from the race after coming in third in a vote amongst members of Parliament, the Tory
President Obama says all Americans should be deeply troubled by the two recent shootings of black men by police officers. Philando Castile was
shot dead in Minnesota on Wednesday. The day before Alton Sterling was shot dead by police in Louisiana. Both incidents were captured on cell
phone video and then shared online. The governor of Minnesota is promising that justice will be done.
(BEGIN VIDEO CLIP)
MARK DAYTON, MINNESOTA GOVERNOR: I promise that I will do everything and my administration will do everything in our power to see that this matter
is brought to justice, and that all avenues are pursued to do a complete investigation and to make, as I said before, sure justice is served.
Justice will be served in Minnesota.
(END VIDEO CLIP)
QUEST: Taiwan is preparing for the arrival of a powerful super typhoon now set to make landfall in the coming hours. Winds of 260 kilometers an hour.
Thousands of troops have been mobilized to deal with the fallout of what's been described as a near-perfect storm.
The director of the FBI has defended the decision to not call for charges against Hillary Clinton for using a private e-mail server while she was
Secretary of State. James Comey was called to testify before Congress. The Republican chairman of the house oversight committee said the director
was not holding Clinton to the FBI's own standards.
(BEGIN VIDEO CLIP)
JASON CHAFFETZ, U.S. HOUSE REPUBLICAN: If Hillary Clinton applied for the job at the FBI, would the FBI give Hillary Clinton a security clearance?
[16:35:00] JAMES COMEY, FBI DIRECTOR: I don't want to answer a hypothetical. The FBI has a robust process in which we adjudicate the
suitability of people for employment in the bureau.
CHAFFETZ: Given the fact pattern you laid out less than 48 hours ago, would a person who had dealt with classified information like that, would
that person be granted a security clearance at the FBI?
COMEY: It would be a very important consideration in a suitability determination.
CHAFFETZ: You're kind of making my point, director. The point being, because I injected the word "Hillary Clinton," you gave me a different
(END VIDEO CLIP)
QUEST: U.K. real estate is no longer safe as houses, as they say. British property funds are taking evasive action guarding against post-Brexit
volatility. It's the investors that are the problem. They are concerned that property prices are going to plummet. Seven major funds have halted
trading because withdrawals have been so strong and so fast that they can't sell the underlying property quickly enough to meet the redemptions.
England General cut the value of its fund by 10 percent, the second time that's happened since the vote. The Foreign & Colonial cut the value of
its fund. Joining me now, Rob Wood is a U.K. economist at the Bank of America Merrill Lynch Global Research. We heard an enormous amount from
the governor of the Bank of England, the financial, prudential committee, about how banks were better able to withstand stress. But these funds
can't. Is that because they are property related, and property are illiquid?
ROB WOOD, UK ECONOMIST, BANK OF AMERICA MERRILL LYNCH GLOBAL RESEARCH: Well, I think what were seen here is probably a couple of things. One is
of course, properties are illiquid, and in this case redemptions have come thick and fast, and it's hard to satisfy that with an illiquid asset. What
we've also seen is a large shock in terms of the U.K. voting to leave, which investors and probably consumers, and firms as well, are reacting to
QUEST: You say is for now and the coming days and weeks we're watching and waiting in an environment of severe uncertainty. But how does that
uncertainty, severe uncertainty in your words, how does that transmit itself through the economy? Do things just not get done, or do things get
WOOD: Well, I think things just don't get done. In this sort of environment that the U.K. faces, remember, there's this severe political
uncertainty. The prime minister has resigned. We've got an election to replace him. The opposition, as well, have been through some issues too.
So we have political uncertainty. Also the uncertainty of where the U.K. is heading now. What happens? Well, everybody waits and sees, I think.
Firms in particular, why not just wait six months before you make an investment and see where the U.K. is heading? I think that means growth is
going to turn down pretty sharply and in my view the U.K. will have a mild recession.
QUEST: Thank you, Rob, you anticipated beautifully my next question. The governor will not say whether he believes there will be a technical
recession are not. But you are forecasting two quarters of negative GDP. When, end of this year into next or middle of next year?
WOOD: From right now, from the third quarter this year through to the first quarter of next year. So I have three quarters of consecutive
negative growth. Now to be clear, you know, I don't know exactly what growth is going to be. We are going to have to watch the data very
carefully over the next few months. But I think growth is going to be fall sharply in this sort of environment where businesses will wait and see
before they invest.
QUEST: Let's parse that into a little more detail. We've had the reducing of liquidity, buffers at the bank. That's great if people want to borrow.
If they're not borrowing to invest, then it makes no difference. When do you expect a cut in interest rates, and a quarter or a half?
WOOD: I'm looking for one next week, next Thursday, the Bank of England's first scheduled meeting after the Brexit vote. I'm looking for them to cut
40 basis points. So not all the way to zero but pretty close. I think you're right to ask whether they cut a quarter because they may well do.
Mark Carney has become concerned. I think looking at his words about taking interest rates to very low levels because of what it means for
financial sector profitability.
QUEST: And related to that, if we look at the pound again, which continues to fall. I mean, obviously, you don't intervene in a market that is
clearly determined to push the pound down. But what's your medium term forecast for cable? We're at 1.2911 at the moment. Where do you think it
[16:40:02] WOOD: Our call as a bank is for it to go to about 1.25 in the first quarter. Of course we're in this environment where there's
tremendous uncertainty. I think what we're seeing of course is the U.K. being that markets deciding the U.K. has probably made itself poorer in the
long run by this decision. And that's reflected in weaker sterling, in weaker share prices, and in lower gilt yields.
QUEST: I shall now do something that I don't think I've ever done before after I've interviewed an economist. I shall remind our viewers that the
environment is so uncertain, it is unique, that we won't hold any of your answers against you because frankly, no one really knows how this is
ultimately going to fall out over the medium to long term. I think we can agree on that.
WOOD: We can.
QUEST: Thank you, sir. Good to see you. Rob Wood, U.K. economist at Bank of America Merrill Lynch.
After the break, Tesla's auto pilot feature seemed like such a great idea. The car drives itself. A driver says he was using it when his car crashed
and rolled over. The governments, while surprisingly, the U.S. government is investigating.
QUEST: The U.S. Department of Transportation is investigating a second car accident that involved a Tesla while it was using auto pilot. The driver
of a Tesla Model-X says he was using it when the car rolled over on a Pennsylvania highway on Friday. The fatal crash may have a Tesla Model-S,
also in the auto pilot mode, was made public last week. David Strickland is the former administer of the National Highway Traffic Safety
Administration. Always good to see you, sir. You join me from Washington. Do these cases give you cause for concern from what you know about the
background of them?
DAVID STRICKLAND, FORMER ADMINISTRATOR, NHTSA: Well, thank you for giving me this opportunity, Richard. I would say that any crash is an unfortunate
and usually avoidable situation. These two Tesla crashes, we don't know enough to make a prognostication about its outcomes, but there's certainly
an opportunity here to look at how we can make advanced driver systems safer. But more specifically, to make sure that we lean into investing in
full self-driving where you don't have a situation where the driver has to be a part of the driving task.
QUEST: Right. As I understand the auto driving on the tesla, it makes it clear you're not supposed to go sit in the back seat, nod off or decide to
start reading your favorite book. Your hands are supposed to be quite close to the wheel, aren't they? It's almost like just a relax a bit and
don't grip the wheel.
[00:45:00] STRICKLAND: That's right. But the one thing that you have to think about is, while you have been given clear and conspicuous disclosure
and warning about the usage of the auto pilot feature or any other driver assistance feature in the future, you have to at some level presume
foreseeable use and abuse. How a consumer may read the disclosure but may make a different decision which may be dangerous and unfortunately at times
QUEST: We have Google self-driving cars that have been involved in various accidents of minor severity in some cases, rear endings. The ones we're
seeing with these Teslas are the most serious, and that's obviously because they're actually on the highway, with real cars, with real people. But on
the wider philosophical question, it's not going to call into question these systems, is it? It will merely militate to how they are developed.
STRICKLAND: I think that's ability right. There's a number of manufacturers, including members of a coalition in which I have a part and
participate in, which is the Self-Driving Coalition for Safer Streets, which speaks to that human error is a part of almost every crash, 94
percent of crashes have an element of human error. When you're dealing with self-driving cars and folks have seen that people will over-rely. So
yes, this is part of the continuum and the testing and the safe testing of how we get to a universe where we have a passenger, not a driver, being
able to be in a vehicle from start to end.
QUEST: Good point, sir. Thank you, we appreciate your time tonight. Thank you for coming on the program.
France is leading Germany, there are minutes remaining in their euro 2016 semifinal match. We'll be in Paris for that after the break. This is
QUEST MEANS BUSINESS. good evening.
QUEST: Euro 2016 and the Olympics. A new study from Oxford University says this summer's Rio games are running vastly over-budget. Costs are
expected to reach $4.6 billion, that's an overrun cost of $1.6 billion. If you remember when they got the Olympic games, they had an extremely low
budgetary level. So it's 51 percent over budget. But its overall cost is still cheaper than the recent games. London actually went even more over-
budget, London games 76 percent, because of the extra security costs ramped up at the last moment. London was 67 percent. Rio is only 51 percent.
The protests against spending in Rio have continued on Wednesday. Public sector workers were out on the street, saying they're unhappy that the
money is being spent on Olympics rather than schools and healthcare.
[16:50:05] Remember, the Olympics are just weeks away until the opening ceremony. And security is one of Rio's main concerns. Brazilian
authorities, which have given more money, by the way, the federal government has given more money to the municipality of Rio only in the last
couple of weeks because Rio itself is just about broke, are preparing for the possibility of a terror attack during the games. CNN's Nick Paton
Walsh is in Rio.
NICK PATON WALSH, SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Rio dealing with the unthinkable. A terror attack on the subway. Brazilian
special forces move in. The gunman taken down. This drill bolstered by training from French SWAT team specialists. And a little drama.
(on camera): They're hoping this won't happen but preparing in case it does. The threat against the Brazilian Olympics always hanging somewhat in
the background. On display to the media to show that a country with virtually no history of dealing with terrorism is vigilant enough to hold a
LT. GEN. LUIZ LINHARES, BRAZILIAN MINISTRY OF DEFENSE: There is not a specific threat. And you have to prepare for a great spectrum of threats.
PATON (on camera): are you screening the names of people who bought tickets?
LINHARES: Always. Not just us. We have relations with the other countries. They're helping us about this. They are screening the names.
They're screening the people who are visiting us.
WALSH: this is the contradiction here in Rio. With just weekends to go until South America's first Olympics, one western counterterrorism official
told us that yes, the games are a target because they're a huge international sporting event. And ISIS do have foreign fighters still on
the loose. But at the same time also maybe they're not. Brazil lacks of extremists networks that terrorists rely upon to launch such an attack.
WALSH (voice-over): There has been one odd threat, however. One French ISIS fighter tweeting after the Paris attacks that Brazil was next.
Several ISIS fighters seen in their propaganda speak Portuguese and they've launched an internet program speaking that language spoken in Brazil.
Brazil's intelligence agency said in April that the threat and the number of Brazilians influenced by ISIS ideology had increased in recent months,
whilst also insisting the games were not threatened. A country struggling with a difficult balance between vigilance and a warm welcome, headed into
the unknown. Nick Paton Walsh, CNN, Rio de Janeiro, Brazil.
QUEST: Keep an eye on this group of people. This is one of the fan zones, as the extra time is ticking away in Marseille. France appears about to
defeat Germany to advance to the Euro 2016 finals. Germany has dominated much of the first half until their captain was booked for a handball in the
45th minute. I'll get out of the way so you can enjoy this. It's going to be any second now. This match is over.
According to the clock -- we weren't quite expecting to see that. It looks like it's over. Everyone gets over excited. That is the wimpiest
celebration that I have seen. Oh, maybe that's a bit better, they're getting more excited now in Paris. They certainly don't look jubilant
beyond belief that they've just got through to the finals. Amanda Davies, I couldn't even tell when the match had finished, looking at those fans.
You know how normally there's kissing, cheering, people start doing silly things with their clothes off. There was none of that in these pictures.
What's going on?
AMANDA DAVIES, CNN WORLD SPORT: Richard, I think that might well be, because it's been so loud, that perhaps nobody could tell that the final
whistle had actually blown. It's looked for the last 20 minutes or so that France would be going through to the final. I know you love a party. You
might want to make a quick pop over here to Paris this evening, because you can probably hear the sirens behind me, the people will start piling out of
the bars and the restaurants, and this is where the party moves from, from the fan zones it comes here. If Sunday's victory over Italy was anything
to go by, anyway.
[16:55:00] So France coach, Didier Deschamps, has called on side there to write their owned chapter of history when they were taking on Germany this
evening. He was part of the last French team to win a European championship in 2000. He's now the coach. It looks like the party is
about to start as they put their place in Sunday's final against Portugal.
QUEST: We could hear you beautiful. Thank you, Amanda Davis, who is in Paris. They must be why we couldn't see the fans getting themselves all
beside themselves. A profitable moment after the break. Good evening to you.
QUEST: Tonight, Profitable Moment. Britain's next prime minister will be a woman. And there should be nothing terribly surprising about that, let's
face it, the two candidates Theresa May and Andrea Leadsome to the party. It just makes one think about the last prime minister was Margaret
Thatcher, '79 to 1991, And since then the U.K. has had four prime ministers, John Major, then it was followed by Tony Blair, Gordon Brown and
David Cameron. And that seems to be very much the trend that happens. You have the first female who makes it to the top and therefore it seems to be
quite difficult for any other female to reach that position. So it's to be most firmly welcomed that whatever happens in this vote of the Conservative
Party, Britain's next prime minister is going to be a woman. As to which one, well we'll leave that up to the voters in the Tory Party where they
have very different policies. And we'll analyze them in the days ahead.
That's QUEST MEANS BUSINESS for tonight, I'm Richard Quest, back in New York. Whatever you're up to in the hours ahead, I hope it's profitable.
I'll see you tomorrow.