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QUEST MEANS BUSINESS
Trump Campaign in Crisis as New Accusers Surface; Fed Reserve Chair Hails "High Pressure" Economy; Fed Hold Back on Rate Decision; Wells Fargo Posts Profit Drop; Bank Earnings Beat Expectations; Twitter Stock Tanks as Salesforce Backs Out; EU President: Hard Brexit or No Brexit; Only 5 Percent of S&P 500 CEOs are Women; Krawcheck: Trump's Comments About Women are Disturbing; EU President: No Brexit Cake; David Miliband: Brexit Will Be Severe; Feds Believe Russia Behind Leaked Emails; U.S. Lifts Ban on Cuban Rum and Cigars. Aired 4-5p ET
Aired October 14, 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] PAULA NEWTON, CNN ANCHOR: Banks, central banks, it's all about banking today as the trading comes to a close on Wall Street. The Dow did
manage to hang on to some gains, but only just. It's Friday, October 14th. Pressure on the Fed and from the Fed. Janet Yellen says new policies are
needed to reverse the damage of that financial crisis. From pressure to pain, Wells Fargo feels the pinch from its fake account scandal. And the
bitter taste of Brexit. The EU's President warn there's only salt and vinegar is on the table during negotiations with the U.K. I'm Paula Newton
and this is QUEST MEANS BUSINESS.
Pressure is mounting on several fronts in the U.S. The first political pressure Donald Trump is responding to two new accusations of sexual
harassment. The most recent from a former contestant on "The Apprentice". CNN has not independently confirmed either of their account and we need to
warn you there is some graphic language you're about to hear.
(BEGIN VIDEO CLIP)
SUMMER ZERVOS, "APPRENTICE" CONTESTANT, SEASON FIVE: I stood up, and he came to me and started kissing me open mouthed as he was pulling me towards
him. I walked away and I sat down in a chair. He was on a love seat across from me and I made an attempt at conversation. He then asked me to
sit next to him. I complied. He then grabbed my shoulder and began kissing me again very aggressively and put his hand on my breast.
I pulled back and walked to another part of the room. He then walked up, grabbed my hand, and walked me into the bedroom. I walked out. He then
turned me around and said, let's lay down and watch some telly, telly. He put me in an embrace, and I tried to pushed him away.
I pushed his chest to put space between us and I said, "Come on man, get real." He repeated my words back to me, "Get real," as he began thrusting
his genitals. He tried to kiss me again with my hand still on his chest and I said, "Dude, you're tripping right now." Attempting to make it clear
I was not interested. He said, "What do you want?" And I said, "I came to have dinner." He said, "OK. We'll have dinner." He paced around the
room. He acted like he was a bit angry. He pointed out that someone had delivered a fruit basket. I felt that it was to show me how important he
(END VIDEO CLIP)
NEWTON: Now speaking at a rally in Greensboro, North Carolina, Trump denied the allegations of unwanted sexual advances.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: When you looked at that horrible woman last night, you said I don't think so. I don't think
so. Whoever she is, wherever she comes from, the stories are total fiction. They are 100 percent made up. They never happened. They never
would happen. I don't think they would happen with very many people, but they certainly are not going to happen with me.
(END VIDEO CLIP)
NEWTON: Now CNN national correspondent, Deborah Feyerick, has been following this story. Deb, we have to make clear, these are two new
allegations on top of the other accusers we have already heard from.
DEBORAH FEYERICK, CNN NATIONAL CORRESPONDENT: That's exactly right, and so CNN has now vetted the stories of at least eight of Donald Trump's
accusers. The one that you heard, the "Apprentice" contestant, Summer Zervos, she stepped forward, she said, because she wanted to be able to
sleep at night when she 70 years old. She had no intention of coming forward, but really the catalyst, why all of these women are speaking now,
was the debate on Sunday during which Anderson Cooper asked Donald Trump whether he had essentially ever acted on this locker room talk. And Trump
said he had not. And it seems to have opened the floodgates.
A second woman today coming forward, also a woman here in New York, she was in her 20s. She said she was at a nightclub on a Monday with a group of
friends. A very popular nightclub back in the 1990s. She was sitting on a red velvet couch talking when the man next to her, she all of a sudden felt
his hand creeping up her mini skirt and he touched her in a very private place. She jumped from the couch. She was repulsed. Couldn't believe
what had just happened. And when she looked she saw that it was in her words, none other than Donald Trump.
That is a report now in the "Washington Post". And she said that she didn't even come forward herself, it was a friend who had identified her.
She took a couple days to think it through. But when she thought about it, although she and her friends said initially laughed about it saying how
pathetic it was on the part of Donald Trump. She said what it was sexual assault and she wanted to speak now. So the women now are just coming
[16:05:00] NEWTON: Yes, and that seems to be very controversial as well. Of course Donald Trump supporters saying, why now? Why did this come out
earlier in the campaign? Deb, I have to ask you, we had even Mike Pence earlier today, the vice presidential nominee for Donald Trump, saying,
look, there is going to be proof. He made it seem as if there would be proof in a matter of hours to discredit some of these accusers. Have we
heard any more about that?
FEYERICK: We have not heard proof discrediting the individual accusers. What we are hearing is that Donald Trump is threatening lawsuits against
the publications that are basically reporting on this. The "New York Times" for example, is one. The "Palm Beach Post", that is another one
that is also being sued by -- or threaten to be sued by Donald Trump. But the New York Times, the general counsel, basically issued a letter in very
strong terms saying you have to prove liable, and Donald Trump has in his own words confirmed a number of things that they are now reporting with
corroborating evidence and witnesses who are speaking forward, or coming out.
NEWTON: In terms of these stories going forward, I mean, obviously will have a significant impact on the campaign, but at this point, what kind of
an impact will it have given the fact that in each and every case Donald Trump has said, look, it's all false.
FEYERICK: This is what's complicated. He's saying it's false, but you listen to the women. You listen to their stories. You listen to the
details. You know, there is a woman who came forward and spoke to Anderson Cooper last night, who basically said, she was on a plane with him, and he
lifted the armrest, and began kissing her and groping her. And she tried to fend him off. Going to such lengths that she actually got up and took a
seat back in coach just to get physically away from him
And so these are incidents that women remember. The allegations may have no impact on the people who are supporting him. The real question is, are
they going to have a greater impact on those who may be undecided. And so you're hearing a lot from Michelle Obama, President Obama, from the Hillary
Clinton campaign, all talking about what kind of America people want. And the voice of women right now is being heard very loudly. There was a poll
that was taken that said if only men voted, then Donald Trump would like I will be the winner. But you add women to the equation, and then Hillary
Clinton would be the winner. So it really has come down to sort of a vote of gender. What happens at the polls, it will be impacted by what we're
seeing now most likely?
NEWTON: Yes, and in fact, troubling. Because some people are saying that look, this has become a referendum on women and men's behavior toward
women. What's been interesting here is as well as been the reaction of the Clinton campaign. They have been more measured except for the fact, of
course, that impassioned speech from the First Lady, Michelle Obama, yesterday.
FEYERICK: Yes, absolutely. And she spoke about the way it made her feel. And when she said, you know, men who I know do not talk about this. Do not
talk this way. I think that really resonated very loudly over a large number of sectors. And so that's what it is really coming down to.
Because the discussion that has been going on in this country over the last, you know, 48 hours since some of these strongest allegations came
forward, are all about the dynamics. All about being in a situation where someone makes a move or touches a woman and it is unwanted. And so the
issue of what is consensual. The issue of when is something sort of forced on another individual. Those conversations are going on nonstop ever since
the debate in which Donald Trump tried to back away from those devastating comments that he made on board that bus about what he could get away with
because he's a celebrity. And saying basically that his celebrity, his stardom essentially, gave him the right to do whatever he wants.
This "Apprentice" contestant, Paula, you know, she speaks about it. She says, look, this is my brass ring. When I reached out to Donald Trump and
said I wanted to work for the Trump organization. And he said that he would help me with that. And then all of a sudden put the moves on me,
this woman said. She said she was devastated. She lost her footing. And that's what we're hearing from a number of these victims is that they lost
their way. They couldn't believe what had happened to them, because this contestant said she wanted to be judged on her merit. Because she was a
good worker. She could be a good employee for the Trump organization. And she came face-to-face with Mr. Trump and something very, very different
She broke down a couple times during that press conference. This was clearly very emotional to her. And I think everybody in the room was
surprised when someone said what party are you? What are you registered? And she said, I'm Republican. It's going to all sort of sectors now.
NEWTON: Yes, and that's been a real feature of this campaign. The fact that it is divided, not along partisan lines, but it's even quite
critically dividing the Republican party itself.
[16:10:02] Our Deb Feyerick that continues to follow these developments, as I said, this has been late breaking news here on CNN. Deb, appreciate it.
Now the second source of pressure this Friday centers around U.S. Fed chief Janet Yellen. Pressure both on her and from her. Just hours ago, Yellen
seemed to once again move expectations of a rise in interest rates. She warned ongoing economic disappointment may force us to rethink the economy
itself. Recommendation, crank up the pressure. The Fed chair says -- now these are her words -- a high pressure economy may reverse some of the doom
and gloom we have experienced. And a key example she gave was keeping the labor market tight. As expected there was no announcement on interest
rates rising. Yellen instead said, more study is needed to see how the Fed can influence the expectations of future rates and inflation.
Now the central bank's disagreement over increasing rates is leading to concerns about its own credibility. And so why all of that ongoing
reluctance? Back in September of last year, Janet Yellen indicated China's slowdown played a role in delaying a rate hike. That was back then in
December, when the Fed finally agreed that it was his last increase. It was tainted by new worries about global instability. And one of the
biggest fears of course was commodities. Fears that we had seen play out in that oil industry. But finally it was Britain's vote to leave the EU in
June that created even more uncertainty. Something the Fed is particularly sensitive to.
Now leading economist, Diane Swonk, founder and CEO of DS Economics, joins me now live from Chicago. I must admit I did have a little shock and awe
when I heard that high pressure. In my economic training that says to me let inflation run. Now you might have a completely different impression of
this. And you say that this is classic Janet Yellen. Why?
DIANE SWONK, FOUNDER AND CEO, DS ECONOMICS: Well I think the important issue is, one, her concept -- Janet a veteran of the 1990s. She remembers
when unemployment went so low that virtually anyone who had a pulse got pulled back into the labor market and reengaged. And that is her goal.
She is constantly reiterating this idea that there is slack in the labor market still and that if you run unemployment low enough, you'll reengage
even those most marginalized of workers from the crisis even those that people think, don't have any more skills now. She went on in her speech to
actually go on about re-engaging workers that have been marginalized. And the potential that once you did that you could get a more efficient
economy, better matching of skills and labor in the labor market. I think this is very important to understand.
The other part is, I think that high pressure, very deliberate there, that really gets to the issue of the idea of the inflation target is symmetric.
And she has flirted with this. This is a direct pivot on communications. The question is, how is it going to end up? Because there's not a
consensus. But she's actually saying, we're going to overshoot. That is part of what happens when you undershoot for a long time if you're
inflation target is symmetric. You should overshoot. The next question is how high will she allow inflation to go? It doesn't mean she won't raise
rates, but it could be that it is something we get used to for a very long time.
NEWTON: Yes, in fact, one rate hike even if they do it in December is going to do nothing. Talking more about the neighborhood of four to six
rate hikes. But Diane, I have to ask you. There has been a lot of controversy over whether or not the banks already gone too far, that all
central banks have gone too far. I know that you've written a bit about, you know, about what that means going forward. What does that mean?
Because we heard so much from central bankers saying that they wanted more transparency. That they felt that was good for the market. And yet you
and I are sitting here, we might as well be reading our horoscopes for goodness sakes.
SWONK: It keeps us in business, right, Paula? I think the important issue here, it's not the way I want to be kept in business. But anyways, I do
think there's a couple issues here. You now, are seeing central banks around the world sort of say, hey, we've used a lot of our tools. We are
starting to reach our limits. That said, there also still thinking outside of the box. You saw the Bank of Japan raise its inflation target. That
was, you know, the first sort of tipoff that we really are going to see a re-acceleration of inflation.
What many people were hoping a few years ago is that fiscal policy would come in and sort of pick up the baton from central banks so they didn't
have to go any further. I think we're now in a situation that even as we start seeing sort of the fiscal tightening or fiscal restraint we've see
ease up, and more spending on infrastructure, corporate tax reform, and a broad, the austerity push unwind. You're still good to see central banks
stuck in being very aggressive on easing monetary policy. The combination of the two is the goal is to goal is to reflate the global economy.
Remember, in this environment, 3 to 4 percent inflation would be considered almost hyperinflation. We're talking about doubling inflation potentially.
[16:15:00] That is still a low rate of inflation, but it really is a major fork in the road from where we been and where markets have been accustom to
going. In fact, we've had a bond rally and decelerated inflation for much of the last 40 years.
NEWTON: Yes, it is an interesting environment right now and Janet Yellen is either going to be judged as incredibly bold or incredibly imprudent.
We won't know the answer for a long time. Diane, thanks so much, we certainly appreciate you being here.
SWONK: Thank you.
NEWTON: With some very important news from Janet Yellen and as she said, it's not just pressure being felt though here at the Fed, but also today at
Wells Fargo. First it was pressure, now it's pain. The bank posted earnings this Friday and revealed the consumer account openings were down
by 30 percent from August. And as before the news, the bank had opened millions of bank accounts.
Also, credit card applications down 30 percent from two months ago. It wasn't all negative though, Wells Fargo said a total number of customers
actually increased in September. But just two days after the bank CEO resigned, Wells Fargo's latest earnings showed a drop in profit for that
last quarter. Now Wells Fargo still managed to beat expectations though, along with Citi, J.P. Morgan Chase and PNC.
Now this is how they did on Wall Street. As you can see there most of them up. J.P. Morgan is interesting there because it had been up for most of
the day as you can see the shares to the downside. And the shares appeared to have lost steam as that trading gained momentum.
Gillian Tett is U.S. managing editor of the "Financial Times." She joins me now from New York. I mean, look, the banking puzzle is one that is very
difficult to put together. So many people have been trying since the financial crisis. Gillian, you being one of them. I am really interested
in the sense out of the IMF meetings just last week in Washington. Many people are saying excellent. The banks are in so much better shape than
they were. And yet, Gillian, do they still show a real Achilles' heel. And Achilles heel in both Europe and the United States that is really
hurting real economies.
GILLIAN TETT, U.S. MANAGING EDITOR, FINANCIAL TIMES: Well, let's separate out the European banks from the U.S. banks. Because there is a big
difference right now and it's actually widening. But if we talk about the U.S. banks, what is interesting about the results we have today from J.P.
Morgan, Citi and Wells, is that they're not great, but they're not that terrible. And we've had quarter after quarter where the banks have frankly
been pretty disappointing, pretty feeble. Everyone almost gotten used to the idea they have to worry about the banks disappointing. And these were
actually better than expected.
And here's one really interesting reason why. That in spite all the problems that are leaning on Janet Yellen right now and that she was
talking about today, the banks have actually delivered some benefits. There have been a lot of bond issuance in the last few weeks. Because
essentially companies have been pairing for the chance of a rate hike in December. There've been a lot of market volatility and that's helped
revenues from trading at groups like J.P. Morgan and Citibank. And even at Wells, although there has been pain from the big scandal, it's not been
quite as devastating as some people might have thought.
NEWTON: When you look at the big picture here though and you pull back, in terms of where the banks are, as were going on nine years after the
financial crisis, or soon to be nine years. I think people are feeling they're still waiting for the other shoe to drop. And I think that's why,
the fact that they beat expectations today surprised everyone.
TETT: Well, here's the issue. The good news is the banks have a lot more capital, they have a lot more work liquidity. They're a lot stronger in
terms of their buffers at against big shots or risks than they were before. And that is frankly undeniable.
The bad news is that they're really still struggling to develop a vibrant business model in a world where you still have pretty low rates. And the
type of return on equity that people were getting used to a decade ago, 20 percent, 30 percent, once it was even almost 40 percent at Goldman Sachs,
that has now gone. The banks are lucky, frankly, if they get double digit returns. And that's quite a shock to investors.
But what no one should forget, is actually banks are still these huge machines, and one of my colleagues here crunch numbers yesterday, and
pointed out that in the first half of this year alone Citibank's revenues and profits were bigger than Amazon and Facebook combined. These are still
monstrously big companies. They're just not throwing off the kind of profits they use to. Some people might say, well actually you know what,
that's probably quite good. We don't want profit seeking, hungry, risk- taking banks. We want solid sensible boring banks. But if we are moving to an era where banks are utilities, that's not something that most
investors have really reconciled themselves to yet.
NEWTON: As you point out, the return on equity, it really across the board has been disappointing. Gillian Tett, thanks as always for being for being
here, appreciate it.
TETT: Thank you.
NEWTON: Now, Twitter shares meantime sink after one of the last big names bidding in that bidding more.
[16:20:00] Is it a bidding war? We're not sure. Pulled out. This is how the social network ended the day on Wall Street. As you can see they are
down nearly 5 percent. Wow, that hurts. That stock had been down though nearly 7 percent. And that was after Salesforce dropped its bid. Paul La
Monica is following the story from New York.
I mean, really, what more can be done here. It is so annoying to investors and many other people, quite frankly, that have been banking on Twitter for
some time. That something that seems to be, you know, held with such prominence at a certain point in time, can bring it home. They cannot seem
to deliver even a takeover bid that is viable. Why not?
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: It is amazing and I think is you talk about there being a bidding war. I think everyone shooting
blanks, if you will. There is in a bidding war it appears. Now it's Salesforce apparently pulling out, and CEO Marc Benioff did tell the
"Financial Times" he's not going to do it. You do have to wonder where does twitter go from here? To their credit I think the pivot that they
have made recently to live streaming of sports and politics and other news is something that does make Twitter interesting and attractive, and I think
a better user experience than just the tweets from people that, let's be honest, sometimes they're not the highest quality pieces of information out
So I think Twitter having the legitimacy of real media is something that is good, but is a good enough to get a company interested in buying it, or
good enough to get more users using it so we don't have to have these takeover rumors anymore. Facebook, no one's talking about them as a
takeover target, obviously. Because they keep growing users.
NEWTON: And that may be in the end, it continues to go it alone, and yet it seems to be able -- the theory is that if it hooks up with someone else
it would still be much better. Are there any suitors out there that are going to think, hey look, Twitter has been beaten back, being down, maybe
the price will come down and we'll get in on the action?
LA MONICA: I think it is possible that now that the stock has come pack to a more reasonable level, that maybe some of those companies that we'd heard
earlier in speculative stories could resurface. I still think that Google parent Alphabet makes a heck of a lot of sense owning Twitter and combining
their new streaming video efforts with YouTube seems to be something that could in theory work. You have a former executive of Google, Omid
Kordestani, is now the chairman of Twitter. So I still think there is a possibility that Google hasn't completely decided they're not going to do
it. But just the price probably got way out of whack with what Twitter was really worth, because of all this takeover speculation.
NEWTON: Yes, and again, you will be back talking about this for sure, Paul, that I know.
LA MONICA: Yes, this is in a cheesy pickup line. I'm a Pisces to harken back to. I'll let one of your gas talk about all that.
NEWTON: Well done, well done. Have a great weekend.
LA MONICA: Thank you too.
NEWTON: Now CEO, Sallie Krawcheck, who was one of the most powerful woman on Wall Street weighs in on Donald Trump's rhetoric on women and its
implications for women in the workplace.
[16:25:17] NEWTON: Now the U.S. presidential election is increasingly becoming a referendum on women. In January, the U.S. will be either swear
in its first female president in history, or a man who has said stream Lee controversial things about women. Now, we wanted to take a look at women
in leadership roles in politics and business around the world. The countries that make up the G20, only three right now have female leaders,
Theresa May in the United Kingdom, Angela Merkel in Germany, and Park Geun- hye in South Korea.
If you think that number is low, it's even worse when you look at business leaders. Out of the 500 companies that make up the S&P 500, only 5 percent
have women at the helm. And we've broken them down by sectors. Now utility companies have the largest percentage of women CEOs at 21 percent,
which means there are six. In tech there are four, IBM, HP, Yahoo and Oracle, but there are none in telecoms or energy. Nor are there any on
Wall Street. In fact, a woman has never run one of the big banks. There are very few women occupying the C-suites on Wall Street. The question is,
why? Sallie Krawcheck was CFO at Citi until 2008 and at the same time she was considered one of the most powerful women on Wall Street. During her
years in banking she undoubtedly heard her fair share of so-called locker room talk. So I asked her if the words of Donald Trump are as he claims,
simply banter of the boys. On Wall Street, one of the most powerful women, and I asked her about Donald Trump and is it banter of the boys?
SALLIE KRAWCHECK, CEO AND COFOUNDER, ELLEVEST: Well that's what I thought. I thought. I thought -- no, of course, it's not what I heard at the bank
at all. I worked on Wall Street for decades. You know it's a lot of guys, and you know maybe every word is not the sweetest word that was ever said,
but that kind of level, didn't we leave that in the 1960s with Don Draper. The idea that that is still going on in workplaces around America is, as a
woman in business or a person in business, certainly disturbing.
NEWTON: And yet what is pervasive there. What do we take from that kind of conversation and then extrapolate to what is still -- and you remarked
on it -- a very old boys club in politics and business?
KRAWCHECK: I can speak to the business. I can't speak to the politics. And I tell you what's going to happen if these environments are not
conducive to allowing people to work comfortably and happily. For the first time in history, women have really got other alternatives. When I
was young and starting out and I did see some of that stuff going on when I was junior. My choice was stay, go to another company, or go home and not
work. And without much visibility. What's really interesting today is there are other choices. And the other choices are, start your own
business, as I have done with Ellevest, which is a digital investment platform for women. Build your own inclusive culture, or you can build a
career in freelance. There are other options. And so whereas it didn't harm companies before, I think increasingly if they're not making the
environment great for women and promoting women increasingly, women are going to go build their own environments.
NEWTON: But doesn't that take us right back where we started? We're supposed to be seeing more women in industries like banking, on boards and
chief executive roles. How do we get there?
KRAWCHECK: Look, progress has been slow. And in fact, in banking, it wasn't so long ago that the diversity level, a year or two ago, the last
time I looked, was worse than it was before the crisis. So in ten years not only had the industry not gone forward, it had gone backwards, after
the longest financial crisis in history. When you would think it would have become more diverse afterwards. Here's what I think is going to
happen, the companies that are doing a great job advancing women, and other types difference will outperform.
The research to my mind is not only clear, it is overwhelming. That the only research I have seen about what drives great management teams and
drives great results as a result of that great management team, is diversity. So those who will have greater diversity will benefit from all
those different opinions, and perspectives, and outlooks, and those that don't will lose as women go to form -- and other people of difference go do
their own thing.
NEWTON: You've been a little bit more blunt in the last little while about saying that you were fired. That you left Citigroup because you were a
woman. Do you mean that?
KRAWCHECK: I say it a little bit for shock value. Because it wasn't, to my mind "She's got different parts, let's get rid of her."
[16:30:00] But instead it was because I believe I was the only executive on Wall Street to return client funds in the downturn. We had accidentally,
and not on purpose, not ill meaning, miss-sold products as being low risk when they turned out to be high risk. That were supposed to lose a handful
of cents on the dollar in a bad market, and lost most their cents on the dollar. I advocated returning that money -- I eventually one that at the
board level, but was fired afterwards. And so it wasn't hey, because she's got different body parts. But it very much I was told in so many words,
"You know, Sallie, stop it. Sit down and shut up about it." And so to my mind it was my points of difference. Some of which the research tells us,
women tend to have a relationship focus, a client focus, and a long-term focus, both of which were very much part of that.
NEWTON: Sallie Krawcheck there. Now, no a la cart access to that single market. And no cakes on the table. While the latest on the food imagery
that may leave a bad taste for the Brexit debate.
NEWTON: Hello, I'm Paula newton. There is more QUEST MEANS BUSINESS in just a moment. When Britain's former foreign secretary, David Miliband,
tells me why he thinks Brexit will be no cake walk for the U.K. And cyber security for the U.S. election. Our in-depth look at how hacking could
influence the democratic process.
Before that these are the top news headlines we're following this hour.
Two more women have come forward to accuse Trump of unwanted sexual advances. One was a contestant on Trump's reality show the "Apprentice".
She says he kissed her aggressively and groped her at a Beverly Hills hotel in 2007. Now Trump is categorically denying all claims of sexual assault.
U.S. President Obama, meantime, took aim at Trump a short time ago accusing him of turning the political system toxic and dragging it as low as it can
possibly go. Mr. Obama said he's glad some Republicans are now deserting Trump but said it's long overdue.
New peace talks looking to diffuse the crisis in Syria are set to begin Saturday. But they're coming just after the country's President, Bashar al
Assad, gave a defiant interview vowing to keep up his military assaults on rebels in Eastern Aleppo, and then smash other opposition elsewhere in the
A source says the negotiations that lead to the release of 21 Chibok girls also freed a number of Boko Haram commanders. The Nigerian government
denies any kind of prisoner swap took place. Some 200 girls remain missing two years after that mass abduction.
Thailand has begun a year of mourning for its late king. Thousands lined the streets as a funeral hearse carried the Kings body from the hospital to
the Royal Palace.
[16:35:00] Civil servants will wear black for the next year. And flags will fly at half-staff for 30 days.
The Gov. of the Bank of England has said inflation will rise on products such as food because of the fall in the value of the pound. It comes a
week after British Prime Minister Theresa May criticize the banks policies. The value of the pound has dropped nearly 20 percent since June's vote to
leave the EU.
(BEGIN VIDEO CLIP)
DONALD TUSK, PRESIDENT, EUROPEAN COUNCIL: The words uttered by one of the leading campaigners for Brexit, and proponents of the cake philosophy was
pure illusion. That one can have the EU cake and eat it too. To all who believe in it, I propose a simple experiment. Buy a cake, eat it, and see
if it is still there on the plate.
(END VIDEO CLIP)
As you can see there, just using the U.K. rhetoric in his own way to make his own point. The U.K.'s Foreign Secretary, Boris Johnson, hoped that a
post Brexit Britain -- and unfortunately he said, "This could have his cake and eat it too." And that's where that comes from. But as you just heard,
the president of the European Council was warning there won't be any cake and says divorce negotiations will also be painful for Britain.
(BEGIN VIDEO CLIP)
TUSK: We will conduct the negotiations in good faith. Defend the interest of the EU 27. Minimize the cost and seek the best possible deal for all.
But as I have said before, I am afraid that no such outcome exists that will benefit either side.
(END VIDEO CLIP)
NEWTON: Now, David Miliband, the president of the IRC and former British Foreign Secretary, says when it comes to baking a Brexit cake, the current
British foreign secretary is using the wrong ingredients putting hope above judgment. I asked Mr. Miliband, if Britain's decision was simply a protest
vote and whether or not some of the issues apply to American politics?
DAVID MILIBAND, PRESIDENT AND CEO, INTERNATIONAL RESCUE COMMITTEE: well I've obviously got to be careful, I'm not a voter in the U.S. election
although I'm a resident here. What I would say --
NEWTON: But you are a voter in Britain.
MILIBAND: I am and I voted on the --
NEWTON: You have and you need to stake you claim on Brexit.
MILIBAND: Well, I voted on the defeated side. And there's no question that the vote to leave the European Union was a protest vote, that is true.
But the truth about protest votes is they are popular until they get elected. And the chickens are going to come home to roost, not over the
next weeks or months, but over the next years as the reality of Britain's divorce from the European Union becomes clear. And the costs will I fear
be severe for my country of citizenship. And I think that it's very important that those of us who are on the pro-European side have set very
clear tests for the negotiations that the government is undertaking. And are clear about the fact that the geography hasn't changed by the Brexit
result. The fact that Britain is a European country isn't changed by the Brexit result. And it's massively in our interest to have the closest
possible relationship with the European Union after this divorce.
NEWTON: And yet that might be a difficult bargain to strike. People will say, Mr. Miliband, that like the others in Britain that you are
scaremongering. That this will be absolutely fine for the economy.
MILIBAND: Well, time will tell. I think I'm speaking to the facts as I see them. As I say is a matter not just of five weeks or five months, it
is a matter of how Britain will be changed over the next five to ten years. And the truth is that in a world that is becoming more closely connected,
in a world where 44 percent of Britain's exports go to the European Union. It stands to reason that to cut yourself off from your closest market and
mind your closest political allies is a very dangerous step to take. And the truth is we don't have to trade slogans about fear or hope. We can
wait to see. But my argument would be that there is a very, very important mitigation that Britain needs to take out. And to believe we can have our
cake and eat it, in the words of the Foreign Minister of the U.K., seems to me to be putting hope above judgment.
And there's that cake again, a debate that we'll continue to follow here on QUEST MEANS BUSINESS. Now another hack with a direct impact on the U.S.
election. The U.S. says Russia yet again. Russia is to blame. Up next, a CNN special report on what hackers are doing. How they are doing it. And
what they hope to accomplish.
[16:40:00] (COMMERCIAL BREAK) NEWTON: Officials in Washington have told CNN there is growing evidence Russia supplied WikiLeaks with hacked emails link to the U.S. election.
Now earlier this week Russia told CNN it wasn't behind those hacks. If the accusations highlight the crucial role cyber security is playing in this
election battle. Laurie Segall has more.
LAURIE SEGALL, CNN SENIOR TECHNOLOGY CORRESPONDENT: With the election less than a month away, U.S. officials have officially accused Russia of cyber-
attacks and interfering with the outcome. Now the White House is saying there will be a proportional response.
RYAN MANESS, NORTHEASTERN U., CYBERSECURITY RESEARCH FELLOW: The government does not do this very often.
SEGALL: Ryan Maness follows Russian cyber warfare closely.
MANESS: If you wanted to put a political context into this, we've heard what Donald Trump has said about Vladimir Putin.
TRUMP: I think it would be great to get along with Russia.
MANESS: On the other side of the coin when Hillary Clinton was Secretary of State, the Russians held elections in 2011 and 2012. Some watchdogs
called the elections fraud, and Hillary Clinton doubled down on that.
HILLARY CLINTON, U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE: We have serious concerns about the conduct of those elections.
SEGALL: On Monday, DHS reported more than 30 U.S. states have asked for help with cyber security for election and voter registration systems.
Security expert Chris Wysopal, says that modifying the voter registration isn't going to change any votes, but there are other vulnerable points of
CHRIS WYSOPAL, VERACODE, CTO AND COFOUNDER: So it all kind of starts here at the election management system.
SEGALL: That's where the ballots are created, put on a memory card, and then into a voting machine.
WYSOPAL: Then it has to be sent back to the election management system here, to be counted.
SEGALL: If there's no paper record from the voting machines, a hacker could tamper with the election management system and change the vote.
Fortunately, none of this is connected to the Internet. So hackers target election officials.
WYSOPAL: These are the election employees who are running these systems. They connect to the internet. If they're computers get infected and
they're the ones that are managing and maintaining these systems, there is a chance that memory cards come from their computers here.
SEGALL: Wysopal is skeptical that hackers could swing the vote through these methods. But he says their actions could accomplish another goal.
WYSOPAL: It could disrupt things. It can also cause people to think something is going on. It could call into question that the election was
fair. Even though it doesn't actually tamper with the votes.
SEGALL: What do you think we could see next?
MANESS: I'd say more leaks were going to come out. Russia and China do this for political advantage in some way.
SEGALL: And Maness says the faze could involve hackers leaking fake documents. Undermining trust in a democratic process. A narrative more
powerful as Donald Trump continues to charge that the election is rigged. Security research Alex Holden, who monitors Russian hackers, pointed us to
a forum on the dark web, where the security and the outcome of the election, or entertainment for Russian hackers. A common joke, "thanks to
U.S. electronic presidential elections, thousands of Russian hackers can take a part in the election process..."
NEWTON: Pretty scary comment right there. I mean, Laurie, I'm so happy you got to the heart of the matter there. Because I think, you know, it
has been said that what Russia is really trying to do is not actually tamper with the actual number of votes, but just trying to put in that
little seed of doubt so that they delegitimize the entire election process. And to that and, Laurie, I mean what are you hearing from the U.S.
government about what they can do about it?
[16:45:00] SEGALL: You know, it's interesting because it's very rare that the U.S. government actually comes out and accuses a foreign government of
trying to hack to influence. So this has happened with China in the past. This is happened with North Korea. And what White House has said, is there
will be a proportional response. Now I had the opportunity to sit down with a senior official at the Department of Justice, John Carlin, and I
pushed him on this, and I asked, what is a proportional response? What does that look like? And he explained to me what those consequences would
be. Take a listen.
(BEGIN VIDEO CLIP)
JOHN CARLIN, U.S. DEPARTMENT OF JUSTICE: Consequences can range from these are all legally available tools. Prosecuting someone, using the Treasury
Department authority to sanction individuals, or companies or nation-states responsible. It could be diplomatic. It could be military. If it's a
case where it's caused death or destruction. It could be culvert action. And then the way we've done it with terrorism or weapons of mass
destruction, is we sit around the situation room and construct a strategy that will cause pain to the adversary. That will cause them to change
(END VIDEO CLIP)
SEGALL: And what he also said, what I thought was interesting about the next administration and this hacking problem. They are going to have to
work better with private companies. And he also said the next administration is going to have to actually start securing the interment of
things. When you think about the fact that our cars are connected. Pacemakers are connected. He said, you know, this is something that is
very eye opening but were in a have to make sure in the future that these are going to be the conversations that are happening around the situation
room, and we have to have better security, Paula.
NEWTON: Yes, and even President Obama's been very clear saying, look, some of this we want to do for our own purposes. I think he's taken a lot of
issue with the fact that Is this or is it not connected to the Kremlin? Christiane Amanpour that interviewed Sergey Lavrov, the Russian Foreign
Minister, just the other day. He denies it. And yet, Laurie, I think from the information you know, there are a lot of people out there that could be
working so called freelance on this. Right?
SEGALL: That is a great way to put it. You know, it's funny, because when the U.S. officials came out and said, this is definitely the Russian
government. I got on the phone and I called a lot of security folks I know. And I said, how are we able to tell this? And what one person said
to me, which I thought was interesting, is it's very hard. And the lines often times blurred. Every hacker they might have almost a signature.
Right? The way they code. The way they steal information. And the way it looks like, with the DNC hacks, is that this is a group that's been
associated with the Russian governments. Now those lines blur. You can have these hackers that are criminals, but also have a government entity.
They might hack on the side for the government. So we don't know hundred percent know. But you do know what U.S. officials coming out and saying,
we believe the Russian government is behind it. That there is some link. And what I'm hearing from security folks, these are the techniques that
have been used in the past that connect to the Russian government, Paula.
NEWTON: So interesting, Laurie, absolutely fascinating. I know you will stay on top of it, so appreciate this.
In just over a week from now, Richard will be heading to the crucial swing state of Florida. I've Artie told him to pack the sunscreen. He will. It
is part of the "AMERICAN QUEST" speaking to the leaders and the voter who is may hold the key to deciding the next president. You can see that on
QUEST MEANS BUSINESS starting Monday, October 24.
Still ahead, they are some of Cuba's most iconic exports and now Americans can enjoy more than ever before as the U.S. lifts restrictions on Cuban
cigars and that amazing rum.
[16:50:42] NEWTON: We should play this music every day on Quest Means Business, I am sure Richard would love it.
We have a change in regulation after 50 years it could be time to light up a Cubano and pour some Cuban rum. Legally, because we know you've all done
it illegally in the United States. From Monday, American travelers returning from the island will be allowed to bring back some of its most
Patrick Oppmann is all over this story in Havana. You know the image coming to my mind, Patrick, all of these people stashing rum and cigars.
Come on it's a great story, I even love the Treasury department. But I love this quote, Treasury
Secretary, "unlock greater economic opportunity for Cubans and Americans." That's what this is.
PATRICK OPPMANN, CNN HAVANA-BASED CORRESPONDENT: That is what it is all about right here. Economic opportunity, just a few years ago, Paula,
having one of these come into the U.S. could get you into big trouble, these were contraband, a big no, no. They would tear them up in front of
you, they would put a stamp in your passport, it was a real risk to run. That has all changed, Cuba's most famous export is now coming to the United
OPPMANN: Harvesting cigar tobacco, Cuba's green gold. One leaf at a time. Long banned in the U.S. the islands' legendary cigars bring in hundreds of
millions of dollars. A bright spot in an otherwise teetering economy.
But more Americans may soon be lighting up a legal Cuban cigar following a change in U.S. regulations that now allows U.S. citizens visiting Cuba for
the first time in over a half century to bring home an unlimited amount of Cuban tobacco products.
Tobacco farmer, Maximo Perez, says the loosening of restrictions presents a huge opportunity.
MAXIMO PEREZ, CUBAN TOBACCO FARMER (through translator): The first thing we have to do with the Americans he said is create an appetite for our
product because they have lost that, but since what we make is excellent, as soon as they try it, they will see the difference.
OPPMANN: The question now is whether Cuba can begin to supply a new market for their famed smokes.
Work on this tobacco farm is done by hand the way it has been done for generations. Cuban producers say they make some of the best cigars in the
world but that means they can't cut any corners in meeting a rising U.S. demand could take years.
For Cuban cigar producers the air is filled with smoke. And the realization the industry needs to prepare for what many hope will be the
eventual lifting of all U.S. economic sanctions on Cuba which would allow for the sale of Cuban cigars in the U.S.
DAVID SAVONA, EXECUTIVE EDITOR, "CIGAR AFICIONADO": There is obviously built up demand and excitement in the United States for people to smoke
Cuban cigars. They have not been able to smoke them legally for more than 50 years. I think all cigar smokers in America are probably going to want
to give a legal Cuban cigar a try.
OPPMANN: Executives with the Spanish-Cuban joint venture that sells Cuba's cigars say within a few years of the lifting of the embargo, they could
control some 70 percent of the U.S. market for cigars without compromising their product.
JAVIER TERRES, HABANOS SA (through translator): Quality is something we could never give up, he says, entering any market, including the U.S.
market will happen with a product of maximum quality.
Cuba's cigar producers say their tobacco doesn't like to be rushed. Which means that Americans may have to wait a little longer before they can fully
quench their taste for the island's once forbidden cigars.
OPPMANN: And Paula, we are seeing this island becoming flooded with American visitors coming on those newly reestablished direct flights or
cruise ship services and just about everyone I talked to, whether they are smokers or nonsmokers, they know a coworker or relative or neighbor who
said me back some Cuban cigars. I hope they will leave some for the rest of us.
NEWTON: Patrick, it's been so many years for you, let everyone have fun now. You've been following obviously the story since that first plane of
Americans landed. We just had a picture of it up, American Airlines flight, but this is what I want to ask you. Whenever I go to Cuba, and I
have not been there in years, but I have to say the economic struggles of those who are very poor obviously affect you.
I remember talking to people who -- if their refrigerator broke that was it. they wouldn't see another refrigerator for a year, two years possibly.
[16:55:00] Do you start to see those benefits trickling down to those who need it most?
OPPMANN: It is very slow trickle down. We're seeing more Cubans entering private businesses, opening up homes, coming up with businesses that are
such as you know innovative, incredibly resilient people, but that trickle down is not happening fast enough and for the vast majority on the island,
they have not seen any benefits and it is very frustrating.
NEWTON: For so many people there in Cuba that is the key and hopefully those benefits will eventually get to them. Patrick will be following all
of it, thank you so much.
Now we're going to just quickly have a market check. Can we bring up salsa music as do it? The Dow was up 39 points on Friday, European markets ended
the week also though on a high. Financial stocks were boosted by the quarterly results of three major U.S. banks and the auto industry on
European car sales numbers.
Now the CAC was the best performer of the day was up around half a percent. Now if you want a daily digest of the top business stories, delivered to
your inbox, subscribe to the QUEST MEANS BUSINESS newsletter featuring Richard's Profitable Moment and the top headlines from the CNN Money team.
For that go to CNNmoney.com/quest. That is QUEST MEANS BUSINESS for this Friday evening, I'm Paula Newton here at the CNN center where the news
continues and Richard will be back here next week. Have a great weekend.