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QUEST MEANS BUSINESS

Hollande Will Not Seek Re-Election; Trump Celebrates Factory Jobs Deal; Howard Schultz Hands Over Starbucks CEO Role; Trump Picks General Mattis for Defense Secretary; Mexico's Central Bank Chief to Leave. Aired 4-5p ET

Aired December 1, 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] ISA SOARES, CNN ANCHOR: Let the Santa rally begin. Markets are heading for an all-time closing high on Wall Street. It is Thursday and it

is December the 1st. Tonight, the winds of change blow stronger across Europe. Now Francois Hollande says he will not run for reelection in

France.

Keep calm and carry on. Donald Trump celebrates as he helps to save hundreds of U.S. factory jobs. And king of the world, I will sit down with

the sit down with world chess champion, Magnus Carlsen. I'm Isa Soares in for Richard Quest, and I too, mean business.

A very good evening to you. Tonight, as one new leader celebrates his rise to power, another announces he will give us his presidency, right now

Donald Trump is heading to it state of Ohio to celebrate with his supporters after hailing his own deal to keep hundreds of factory jobs in

the United States.

Meanwhile, the French President, your looking there, has become the latest victim of this same populism that swept Trump to power. Francois Hollande,

declaration a couple of hours ago, throws of the race are left wide open. The man who defeated Nicolas Sarkozy to become president in 2012, says he

will not run again next year. That means the Socialist Party needs to find an alternative candidate. French voters go to the polls next April and

May, and Mr. Hollande spoke to the nation just a short time ago. Take a listen to what he had to say.

(BEGIN VIDEO CLIP)

FRANCOIS HOLLANDE, FRENCH PRESIDENT (through translator): Power, the exercise of power, the corridors of power, the rituals of power, have never

made me lose perspective. Either over myself or the situation. Because I have to act and today I'm conscious of the risks that would result from a

step, my own, that did not unite enough people behind me. I have therefore decided not to be a candidate for the presidential election.

(END VIDEO CLIP)

SOARES: The next Socialist candidate will face Republican Francois Fillon and Marine Le Pen of the far right National Front. CNN's Paris

correspondents here in New York, Jim Bittermann, Melissa Bell. Well known faces to aren't international audiences. Should we be surprised here that

his approval ratings were the worst, 4 percent approval ratings. Should be we surprised with this announcement?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: They were really in the tank. He said he would make an announcement by the 10th of

December. Some people were anticipating this happening. Something happened this morning that anticipated this. In fact, it was "Le Monde"

came out with an editorial basically saying that it's been a pretty pathetic presidency, and saying it was all Hollande's fault. That he

hasn't lived up to the ideals of the office and that sort of thing. And there was another glimmer last Sunday because Manuel Valls, the Prime

Minister said that he was making -- laying the groundwork for a presidential bid. And everybody said that means he will have to resign.

What they didn't even think of was that the president might say that he wasn't going to run.

SOARES: And realistically, his chances if they were going between both then Hollande wouldn't have had a chance.

MELISSA BELL, CNN PARIS CORRESPONDENT: He wouldn't have a chance and it would have left the Socialist Party terribly divided with no hope at all of

gathering around a candidate. And we had a rather shocking spectacle these last few weeks in France of all these current or former ministers

maneuvering ahead of this primary, the Socialist primary, which is due to be held in January. The candidatures are now open. The close on 15

December. So, they had to declare, but it was very difficult for some of them to do it while they were in office and under the President Francois

Hollande. So, there's been all of this kind of jostling for position ahead of this Socialist primary, and I think that with Francois Fillon's victory,

now, just a few days ago, the pressure was really on for them to try and fix this mess, and look ahead to their primary with some sense of dignity

and hope that they might just be able to gather around a single candidate.

SOARES: The Socialist Party seems to be facing a crisis of its own. Where does this leave the Socialist Party?

BITTERMANN: Well, in disarray. I mean, basically they are going to be scrambling to find someone to replace Hollande as a candidate. As

unpopular as he was, there wasn't really anybody emerging. Valls, the Prime Minister, might be one of those people, because his ratings -- his

popularity ratings were about twice of what Hollande's were. But that's not saying a whole lot. And as a matter of fact, it also opens up the race

to a lot of other candidates who are not part of the Socialist Party. Emmanuel Macron, for example --

SOARES: I was going to ask you about that.

BITTERMANN: -- he's running an independent bid.

SOARES: Does that strengthen his vote, do you think, slightly?

BITTERMANN: Possibly, possibly it could. He is viewed by the Socialists as kind of a trader. Because he is sort of center-right in a lot of his

positions. It should be said that Valls is also to the right side of the Socialist party.

[16:05:00] We have, on the left side of the Socialist Party, Montebourg, who's a former finance minister. He could very well -- he said he wants to

run for the presidency, and we have the far left, a nonsocial in Melenchon, who's basically a communist.

SOARES: So, Melissa, if Valls goes through it, not as strong as Fillon, in terms of to lead with him, so does that weaken Fillon in light of Marine Le

Pen? I'm speaking to a French expert last week here on the show, and he was saying it is pretty much everyone against Marine Le Pen. So, what is

the strategy now?

BELL: It appeared until this primary on the right that it would be Marine Le Pen who looked in the strongest position to benefit from this wave of

populism that we have been talking about over the course of the last few weeks. And it appears to be sweeping our western democracies. Until

Francois Fillon emerged and suddenly there was those who rubbed their hands with glee, and the Socialist Party thinking, well, someone as right-wing as

Francois Fillon, who yes, probably presents the best threat against the far right than any other candidate. Also, perhaps gives the Socialists some

hope. I wonder though in fact, whether that sort of centrism, whether it's Emmanuel Macron style, or Manuel Valls, is simply not the flavor of the

moment. The point about Francois Fillon is that he appears to have tapped into that desire for change and that cleavage between left and right is

kind of coming back. One sense is with a vengeance. And this is Francois Fillon's hour. It's very difficult to imagine what the Socialist Party do

against it.

BITTERMANN: I think one of the things that will happen here is that the right, because of the center of French politics seems to be moving to the

right, because of Fillon and Marine Le Pen, I think the left is going to be out in the streets. I think that so many of these economic policies,

Fillon is on them, and Valls himself, say when he was Prime Minister, he's is a socialist that passed very strict reforms by force and that drove a

lot of people into the streets. I think you will see a lot of pressure coming from the streets for the left-wing voters, whether there will be

enough left-wing voters out there. It may not be because of the populism you were talking about in the other countries. The center of French

politics does indeed seems to be moving more to the right.

SOARES: Fillon has focused so much on his economic grand plan as in the last time we heard him speak. What went wrong, do you think, for Hollande?

BITTERMANN: What didn't go wrong?

SOARES: Let's say economically. He promised so much and he didn't deliver.

BITTERMANN: The key thing was he said he would reverse the jobs curve, the unemployment curve, and it never happened. He said in his speech tonight,

he said something about having -- diminished things a little bit, but just on the margins, he was able to diminish the unemployment rate. But the

fact was that he really didn't in five years attack that. There was a number of shenanigans that went on in the Elysee Palace. He most recently

wrote a book about the inner workings of the Elysee Palace. Members of his own party were scandalized by this. Because he was criticizing them and he

was just not being presidential in his book.

BELL: And to be on the specifics of how he has handled his presidency and the Socialists in power have governed, there is this broader problem for

the left and we've seen it in many other countries as well. In a sense that sort of -- that centrist left wing liberal political consensus that

had for so long dominated in Europe is being swept aside. Because it is threatened precisely by what is giving populism it's moment in the sun. It

is precisely because Francois Fillon's time has come. It's very difficult to see what the Socialist can possibly offer to counter that. There is

this desire for change. There is a desire to return to this idea of the nation's grandeur that the right replies to in a way that is much more

effective than the left at the moment.

SOARES: And I think that's the mood that we're hearing right across Europe. They want the change from the status quo. Melissa Bell, Jim

Bittermann, great to have you here. Thank you very much.

Now Jean-Claude Trichet, says France and the rest of Europe has to prepare for the unexpected. The former head of the European Central Bank says

populism is on the rise. You just heard us here. And the political parties political parties, all of them, in fact, need to take it rather

seriously. Trichet told me the real battle now is against unemployment. Take a listen.

(BEGIN VIDEOTAPE)

JEAN-CLAUD TRICHET, FORMER PRESIDENT, EUROPEAN CENTRAL BANK: Protectionism, we have to be clear if protectionism is generalized, growth

will be lower at a global level and in each country, and of course jobs will be less abundant. We have to understand fully what it means to embark

on backpedaling, on the openness of market.

To take France, you have a level of, I would say, populous sensitivity, which is inferior to what you observe in Austria, for instance. More or

less the same level that you have in Italy. That is something which again, is serious.

[16:10:00] And has to be taken very seriously by I would say all decision- making people who are responsible, and also of course, by the other political parties. So, we will see. What we see is that in all advanced

economies now, our fellow citizens are very mobile. They judge the people on basis of what they hear, what they see, and they don't feel committed to

a particular faith. They are very mobile as we can see in the U.K. or the U.S. and the same in France.

So, we will see exactly what happens. What is clear is that the person, the individual who won in the primaries, it is the person who was not at

all in the two firsts. It was not Sarkozy, it was not Cope, but it was a third person, a third individual who was considered by the people that we

are voting the most interesting. So, you can exclude nothing in the future presidential election. And we will go through the primary of the Socialist

Party, which also might, you know, have a lot of surprises. So, we have to prepare for the unexpected. That is very important.

SOARES: But Fillon is promising quite severe shocks to the French economic model. What does France need to do to get their mojo back economically.

TRICHET: It seems to me that there is a large consensus. And Fillon's expressed that consensus in the most, I would say, affirmative way. And

the most decisive way that we need reform, we need reform to have more growth and more jobs. And particularly have to say my own understanding,

more jobs for the young people. Because the disgrace is that we have an immense difference between unemployment for the young people and for the

non-young people and there is absolutely no reason why you have a big difference between the two.

Across the border of France in Germany, you don't have that difference between the youngsters and the not young. So, we have to reform profoundly

the country. And it seems to me that when you look at all of the political spectrum, including the co-called Social Democrats, everyone recognizes

that a lot of reform are overdue. And again, Fillon expressed that necessity in the most assertive way, if I may. But I'm reassured that

there is a larger and larger consensus on the necessity of reform if we want to win the real battle, which is a battle against unemployment.

(END VIDEOTAPE)

SOARES: We have some breaking economic news this hour. Surprise announcement, in fact, from Starbucks. Howard Schultz is handing over the

title of CEO, but stays on as executive chairman. Paul La Monica joins me now with more. Paul, did anyone see this coming? Why the move? What are

they saying?

PAUL R. LA MONICA, CNN CORRESPONDENT: I think the timing is a little surprising, but this was well telegraphed by Starbucks. Starbucks last

year they hired Kevin Johnson, who used to be at Juniper Networks and Microsoft, to be its COO. At the time when Howard Schultz praised Johnson

for his tech leadership -- I look back at the story I wrote last year -- they mentioned the word mobile 34 times in the conference call about his

hiring. The same amount of times they mentioned the word coffee.

So, mobile is clearly the future for this company. They know that people are increasingly tech savvy and they want a tech savvy CEO. Schultz isn't

going away, he's going to remain executive chairman, but this is a bit of surprise. Plus, for the second time that Schultz has stepped back as CEO

of the company.

SOARES: Let's bring up the share price. Because I believe it's down 3 percent in fact.

LA MONICA: It was worse when the news first came out.

SOARES: When the news first came out I imagine it was much lower. Markets, know Howard Schultz. They trust him. He's recognizable around

the world. He's handled well this company. So where does this put him now within the company?

LA MONICA: He is still executive chairman. He is not leaving completely. I think if we had a different political outcome, there might be speculation

he would leave for a political job. But obviously, I don't think Howard Schultz is taking any position in the Trump administration. But Schultz

staying at the company, I think that should reassure a lot of investors, and Kevin Johnson, he was a high-ranking Microsoft executive. He was the

CEO of Juniper Networks. So, he knows tech, and this is the wave of the future for Starbucks. They're increasingly going mobile for payment

operations. This is something that will not change any time soon. It's probably going to accelerate now with Johnson as the CEO.

SOARES: Going mobile and going global. This video I believe is in Asia, I saw it not so long ago. Talking to some of my colleges in the Hong Kong

bureau, also in China. I'm guessing that's the way forward. They've expanded at an incredible rate and now focusing on the retail experience

and that mobile area.

[16:15:02] LA MONICA: Yes, international, as you point out, definitely. That is still a big area of growth for Starbucks. I don't think that

changes one bit with Kevin Johnson as CEO. The question I think that's going to be one for investors now, Kevin Johnson is a well-respected CEO,

but he is not a celebrity the way Howard Schultz is. Schultz is one of the few CEOs that the average American, I think can identify with for better or

for worse. Some people don't agree with his politics. Some people think the coffee is overpriced, but let's be honest here, Starbucks is now one of

the best retailers in America largely because of Schultz's leadership. Will that remain the same now that he's not the number one guy, even though

as executive chairman he clearly will still have very important --

SOARES: I was reading a statement here, "As I focus on Starbucks next wave of retail innovation, I am delighted that Kevin Johnson -- our current

president, has agreed to assume the duties of Starbucks chief executive officer. This move ideally positions Starbucks to continue profitably

growing our core business around the world into the future," Now Schultz is the face of Starbucks. He's been with Starbuck's since the early 1980s.

That shift may catch some people by surprise. Do you think that the new guy stepping in, the guy taking over, Kevin Johnson, do you think he will

be able to attract business the same way?

LA MONICA: I think he will. The key, I think for Johnson, is going to continue emphasizing the customer experience, and how technology is making

it even more convenient for people to go get their Frappuccino.

SOARES: How? Talk us through, because a lot of us internationally may not have the technology that you have here. So, what technology are we talking

about?

LA MONICA: The mobile app is clearly the first and most prominent interface for most consumers. Having the ability to go in and just order

on their phone, have it something that they can come pick up. I think Starbucks like McDonald's and many other retailers realize that the

ordering process needs to be more efficient. I would suspect that Johnson is going to make even more changes in that regard. But at the end of the

day, Starbucks is a brand that also people can recognize it globally and can get it in their grocery stores as well. I think that's a push that

isn't going to change either. Starbucks having success with branded products in other retailers. So, it's not only about going to a Starbucks

coffee shop.

SOARES: You talked about him being a celebrity CEO. He was also highly political with a campaigning and I believe we asked him whether or not he

would go for president before, didn't we? That is going to, I'm guessing, he will take a step back for this or will he continue to pursue it? Do we

know?

LA MONICA: I don't think we know any indication as of yet whether he still has political aspirations. I don't think he will shy away from making

comments about the political landscape, especially since his preferred candidate obviously, lost the election. For all the talk of, oh well, will

Republicans boycotting Starbucks? I don't really think that has happened at all, and I don't expect that it will happen even though he clearly has

political leanings and was maybe not thrilled with the election outcome. I think the question going forward for Starbucks now is can they just

continue this global push. We know in the U.S. that they probably just saturated the market. There was that great joke in the movie "Best in

Show" about a guy meeting his wife at a Starbucks and they were across the street from each other. Looking at each other from one Starbucks to

another. We know they can't have so many stores here, but China, India, so many. Those are key markets that they need to keep expanding in.

SOARES: How is Starbucks fairing as a company -- earnings? What was their last report like?

LA MONICA: Yes, Starbucks earnings have continued to be very solid. The U.S. consumer has been healthy. Commodity prices is something you have to

look at with that company and that something that has hurt them in the past. I think right now Schultz is leaving that Starbucks leadership in

the hands of Johnson in a time when this company is doing extremely well and they have fought off competition from McDonald's and Dunkin' Donuts.

This is not a company that is hurting. The timing, I think again, is surprising, but I don't think there are any ulterior motives here to say,

oh, he must know that something is about to go wrong and that's why stepping back.

SOARES: Now the challenge for Johnson is making sure that it keeps at a level, that doesn't lose any ground.

LA MONICA: I don't think he will mind still being second fiddle, so to speak, with regards to investors and consumers. He's not going to become a

celebrity CEO by any stretch of the imagination I don't think.

SOARES: Paul La Monica, thanks very much.

LA MONICA: Thank you.

SOARES: Now Donald Trump is saying thank you to America for sending him to the White House. Before his national tour, the President-elect visited the

Carrier plant that was going to send its jobs to Mexico. We'll have that story for you after this break.

[16:20:00] (COMMERCIAL BREAK)

SOARES: Donald Trump is kicking off his thank you tour in a few hours in Ohio. It's an unprecedented postelection post-election victory lap of the

country. But first, he visited a factory in Indiana along with vice President-elect Mike Pence, the current governor of the state. Wednesday,

Trump reached a deal with Carrier, the company that owns the air- conditioning plant to stop 1,000 jobs from moving to Mexico. A short time ago Trump made his first speech since his election when three weeks ago,

touting this deal with Carrier. Trump said his presidency will be good for all businesses.

(BEGIN VIDEO CLIP)

DONALD TRUMP U.S. PRESIDENT-ELECT: Thank you very much.

I just want to let all of the other companies know that we're going to do great things for business, there is no reason to leave any more. Because

your taxes are going to be at the very, very low end, and your unnecessary regulations are going to be gone. We need regulations for safety, and

environment, and things. But most of the regulations are nonsense. This has become a major industry, the writing of regulations, and that these

companies are going to be leaving anymore. They're not going to be taking people's hearts out.

(END VIDEO CLIP)

SOARES: Details of the plant to keep the carrier jobs in the United States. Starting to emerge. Sources tell CNN that it including $7 million

in state incentives over the next 10 years. However, that does not come close to the cost of keeping the jobs in Indiana. The union says Carrier

would have saved $65 million a year by employing lower paid workers in Mexico. Experts say Trump likely made those other promises possibly about

creating a more business friend climate.

Former Democratic presidential candidate, Bernie Sanders, is actually slamming the deal. He says United technology, which owns Carrier, took

Trump hostage and won. In an op-ed in the "Washington Post", Sanders wrote this, "He wants to treat corporate irresponsibility with kid gloves. The

problem with our rigged economy is not with our policies have been too tough on corporations. It's that we haven't been tough enough." Joining

me now from Chicago is John Challenger, CEO of job placement Challenger, Gray and Christmas. Thank you very much John for speaking to us here on

the show. What did you make of what Bernie Sanders had to say?

JOHN CHALLENGER, CEO, CHALLENGER, GRAY & CHRISTMAS: It seems to be perhaps going too far. $7 million in incentives that the government gave the

Carrier company and United Technology, really is a very small number. In fact, if you take the wages of each of those people, say at $30 an hour

over ten years, that would be $60 million plus in wages that are put back into the economy.

SOARES: Yes, he could have saved $65 million if he had moved it to Mexico. So, are saying these incentives are just window dressing for something

else, John?

CHALLENGER: That's the big question. Is this political showmanship on the part of Trump, or are we seeing the harbinger of things to come? Is he

going to work at saving middle-class job? Perhaps subsidizing manufacturing companies allowing these companies -- much like we subsidized

agriculture jobs over the years.

[16:25:00] Maybe he's going to do the same thing for manufacturing jobs. And maybe just make the sector more healthy again.

SOARES: Well, regardless of where you stand, or any of us stand on this, this is a win for Donald Trump. This was his campaign pledge, and he

managed to keep those 1,000 jobs in the U.S. Surely, we should all be happy that this is a great move, but others out there are saying this

creates an unprecedented problem for the U.S. in terms of the president getting involved with business.

CHALLENGER: Certainly, if he's going to make the first big initiative of his presidency, not building a wall or deconstructing Obamacare, but

creating jobs for middle-class Americans, and this is something that he's going to continue to do, then that certainly may not be just window

dressing.

SOARES: Yes, it's symbolic as well, John. And it shows the workers look, we're on your side. I promised you. I'll deal with this and I'm dealing

with it hands on. He says I picked up the phone. He was the one who made the call. This is what the U.S. voters voted for, isn't it?

CHALLENGER: It does seem that that's the case. He also said in that first piece. He was talking about how he was going to make things better for

businesses. Lowering taxes, removing regulations, but he also said that companies are going to get away with without consequences if they move jobs

overseas.

SOARES: I was looking at some of the numbers, John, and I saw that the Carrier jobs -- these Carrier jobs represent .02 percent of total

manufacturing employment in that state. So, this is just a band aid. You really should be looking at the root of the problem, which is unemployment

in that area. Indiana is down 20 percent since the year 2,000. This is not getting to the root of the problem, is it?

CHALLENGER: It could only be a first step and if it is just again a piece of political showmanship then it won't last. But if he is going to go at -

- his administration is going to go at the fact that we are moving to a service economy, to an information technology economy, what are we going to

do with a manufacturing jobs, the infrastructure jobs that, you know, not the people living in the cities, but the people living throughout the rest

of the country. The people who voted for him are looking for in terms of bringing new jobs back to their areas. It will be an interesting next few

years to see if he can make good on some of those promises he's made.

SOARES: John Challenger, always great to get your insight. Thank you very much.

During the campaign, Trump promised to reduce taxes right across the board, especially for businesses. He came back to that subject in the last hour

or so. Take a listen.

(BEGIN VIDEO CLIP)

TRUMP: One of the things we're doing to keep them is we're going to be lowering our business tax from 35 percent hopefully down to 15 percent.

Which would take us from the highest tax nation virtually in the world. This is terrible for business. To one of the lower tax, not the lowest

yet, but one of the lower tax.

(END VIDEO CLIP)

SOARES: Trump's economic plan focuses on tax cuts, that you just heard, well let's take a closer look at what he is proposing. Claire Sebastian

joins me now. We heard him talk there. It's the second time we heard. We also heard them Mnuchin yesterday talking about those cuts. Where does

that put the U.S. globally, Claire?

CLAIRE SEBASTIAN, CNNMONEY CORRESPONDENT: This is absolutely crucial, Isa. These corporate tax rates, and this would make the U.S. incredibly

competitive globally. We grouped it in terms of --

SOARES: I'm sorry to interrupt, we need to take to domestic. Let's go straight to domestic.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: We have now a transition of power alert. Just into CNN a source with knowledge of the

transition tells us that President-elect Trump is tapping another general for his administration. I want to get right to CNN Pentagon correspondent,

Barbara Starr. Barbara, a source just telling CNN that retired Marine General James Mattis will be the nominee to lead the Defense Department.

This was expected. He was the leading candidate. Wasn't he?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: He seemed to have emerged as a leading candidate, indeed over the last several days after meeting with Mr.

Trump in New Jersey. Trump indicating that he was very favorable toward Jim Mattis. Jim Mattis is a general very well-known in the Pentagon and

throughout the military. In fact, as many people know, his nickname is Mad Dog Mattis. A marine general, highly decorated, more than 30 years of

service. Has served in many billets, many jobs, in combat zones. Served as the head of the U.S. Central Command overseeing military operations in

the Middle East up until 2013 when he retired.

[16:30:00] Now, that 2013 date is vital. Because the law requires that an active duty military person be retired for seven years before they can

become Secretary of Defense. So, the Trump administration will have to have legislation submitted to Congress for a waiver for Jim Mattis. And in

fact, we know very quietly Congress itself was beginning to look at what that legislation might have to look like.

It will be very short, it will be very brief. It will be a waiver that will allow General James Mattis to serve as Secretary of Defense. Like

you, Jim, I have covered General Mattis for many, many years. One of the most plain spoken blunt generals out there. Do not expect him on revisit

the Trump campaign. Don't expect him to get involved in politics of what has happened over the last two years. Expect Jim Mattis to look forward

very rapidly when he gets to the Pentagon. He will have many challenges. He will have to deal with the fight against ISIS, the upcoming fight to

retake Raqqa in Syria. With Russian advances, he will an key point man to deal with Russia's advances in Eastern Europe and the Middle East. Can he

trust Vladimir Putin? What advice will he give Donald Trump on Putin.

And he will the Defense Secretary that may have to confront and deal with the North Korean nuclear situation very quickly. We know that North Korea,

even as we stand here, is working on its underground tunnels again for a potential additional nuclear test. These are the kinds of things that Jim

Mattis is walking into. He will be a Secretary of Defense that will be looking to deal with all of this, not to get mired down in the political

fights of the last two years.

But here is the big question. He will also for the first time have to deal with the mundane day to day business of running one of the world's

largest bureaucracies. Budget, acquisition, science and technology. It is a huge portfolio. Can he, do it? Absolutely, I don't think there's a

question about it. But it will be interesting to see what he decides to focus on. What his interests will be and how he will interact with other

key players? Lieutenant General retired Mike Flynn, the new national security adviser who is actually junior to Mattis and also whoever becomes

Secretary of State. Jim.

SCIUTTO: Barbara, in my experience in that five-sided building where you are now, he's also a soldier's soldier. Very popular with the armed

service men and women. But also with commanders who had their own reservations about Donald Trump. In your view from where you are, a savvy

pick, isn't it?

STARR: Yes, you know, it's interesting. Up and down the 17 1/2 miles of corridors inside the Pentagon, over the last several days as Mattis' name

rose to the top, you began to hear that hallway chatter. Everybody is like, who do you think it will be? Will it be Mattis? We want it to be

Mattis. I think it's fair to say at least in the Pentagon, here in Washington, he would be very warmly received. They feel he is so

knowledgeable and he has walked the walk-in combat. He is one of them. He has commanded troops in combat. He has buried troops in cemeteries all

over this country in these years of war. He knows about all of this having served in Iraq and in the Middle East during many different tours.

So, the feeling is this is a guy who knows. This is not a politician or some sort of, you know, University geek coming to run their shop. He is

one of them. He knows them. I think it is fair to say he will get a very warm reception far beyond the Marine Corps, which it is very fair to say

absolutely adores him.

SCIUTTO: No question. Not an arm chair general. He saw his share sadly of bloodshed in the battle of Falluja where he commanded. Barbara Starr,

thanks very much. Please stay with us. Joining me now is Democratic Congressman Adam Schiff of California. He's ranking member of the House

Intelligence Committee. Certainly, an enormous amount of experience dealing with the Defense Department on issues. You just heard the news,

Congressman Schiff, about general Mattis. What's your reaction?

ADAM SCHIFF, DEMOCRATIC CONGRESSMAN, INTELLIGENCE COMMITTEE: Well, it's largely positive you know, I met him I think at the time he was the --

leading the first marine expeditionary force. I was impressed with him. I've certainly been impressed with what I've seen and read about him and

his reputation. So, I think he's a very good choice. And I think he'll be very well received.

Probably the only issue that will come up is this issue the fact that it will require statutory change so that he can even be appointed to this

position. In isolation, that might not be as big a deal. But if the Trump administration is going to be populated with generals and many, many

positions, then that will become a bigger issue than it would be otherwise.

[16:35:00] But his reputation is excellent and frankly I guess in my view the bar has been lowered dramatically with some of the appointments that

the President-elect has made such that when he picks an adult for the room, there is I think a very broad positive reception to that. And he would

bring I think a great experience with him, a great reputation with him, a great mind with him and some comfort for members of Congress on both sides

of the aisle that the president will be getting good thoughtful sound advice. And that is not always the feeling we've with some of the other

appointments.

SCIUTTO: You mentioned the waiver, Barbara mention this as well, that would be necessary. This is law dates back to 1947, requiring the general

be retired seven years. He has not been. It's only happened once before, I believe in 1950 where a waiver been granted. To you foresee any

challenge getting that through Congress?

SCHIFF: There will be concerns about it. As I mentioned, those concerns will be put in the context of his other appointments. It will certainly be

an issue. I don't think it will ultimately be a bar, because he is so well thought of that he can overcome people's reservations about that.

Unfortunately, I wish you could have this in reverse order where you he could have the confirmation hearings go forward first. So, that he could

be thoroughly vetted and those issues could be explored and then a decision could be made about changing the statute. But my guess is because his

reputation is so strong and frankly because there is enough concern among Democrats about some of the President-elect's other choices, there will be

a desire to amend the statute if that's what is necessary and I think it will be necessary.

SCIUTTO: One potential issue is posture towards Russia. I spent a lot of time in the Pentagon. There is great concern about Russia's military

moves, in Syria, with regards to NATO, in Eastern Europe with regards to its flybys of U.S. Navy warships and U.S. aircraft, et cetera. That's the

view from the Pentagon. I haven't spoken to General Mattis about it, but it's reasonable to assume that he shares some of those concerns. We heard

during the campaign that Donald Trump has a very different view of Russia. Is that a potential area of disagreement between them?

SCHIFF: Well, it is and frankly it's one of the reasons why I'm very inclined to be supportive of this choice. Because I think General Mattis'

view of NATO and his strong support of NATO will temper the skepticism that the President-elect has expressed. And I think that General Mattis has a

full appreciation of the threat that is posed by Russia. I don't think that he will be any kind of an apologist for Russia or view Russia with

anything but the most deep skepticism.

So, I would like to see that in a Secretary of Defense. But it may bring about a conflict particularly when you have the national security advisor,

General Flynn. So, you have these two generals that have expressed I think in the past two very different views of Russia. But frankly, I'd be glad

to have the President-elect getting insights from General Mattis on things like Russia and NATO.

SCIUTTO: Of course, another major issue for the president certainly, but also the man who would be leading the Pentagon, is the fight against ISIS.

We are in the midst of a pitched battle around Mosul. Really their power center in Iraq. There is talk of taking back rack Raqqa in Syria, really

the capital of their claimed caliphate. As you look at that, what do you expect General Mattis to advise Donald Trump, who again during the campaign

has expressed his desire to pull back from some of these crises. He does not want to get involved in these overseas wars. How do you expect and how

would you advise this new head if he's confirmed to Pentagon to advise the president?

SCHIFF: I think what you can probably expect from General Mattis, because he's a pretty plain spoken person, is that he would tell the President-

elect, look, we can do this, we can drawdown our involvement in the area. But here is the consequence. You will be empowering the Russians, you're

going to be empowering the Iranians. There are going to be costs to the American reputation if we abandon support for the moderate opposition in

Syria. And here's the issues that we see in Iraq and the increasing Iranian influence in Iraq. The political problems that have still unsolved

between the Sunni and Shia in Iraq.

Conversely, if the President-elect is inclined to use force in places and he has also threatened obviously, to carpet bomb or to torture or kill the

families of terrorists, et cetera. I think general Mattis will be quite blunt about, OK, what does that really mean. Let me tell you how that

would be perceived, how that would the impact of those kind of policies. The effect on the military, the effect on other agencies. So, I think

he'll get some sober advice from the general and the general will tell him just what will be required in terms of what the military commitment would

be for military engagement. And I think that kind of sound advice would benefit the President-elect.

[16:40:00] SCIUTTO: And that could be consequential advice because we've heard that Donald Trump leaning towards pulling back even more so from

Syria there. Finally, before I let you go, Congressman Schiff, we know that Donald Trump has had several phone calls with world leaders, including

just yesterday with the Prime Minister of Pakistan, Nawaz Sharif. This was an interesting situation here, because often times we get readouts of these

phone calls. They're very boiler plate as you know. They don't reveal very much. But the readout of this phone call from the Pakistani side at

least, was quite revealing. I just want to quote from it here just to remind our viewers. This is what they said Donald Trump said.

"You are a terrific guy. Your country is amazing with tremendous opportunities. Pakistanis are one of the most intelligent people. I am

ready and willing to play any role that you want me to play to address and find solutions to the outstanding problems."

As you heard that there, and to be clear the Trump transition teams readout was much simpler, saying simply that the two had a productive conversation.

But this is a very strained relationship, the U.S. with Pakistan. Donald Trump in the past has said some very critical things about Pakistan. An

outright questioning of whether they are indeed a real ally. A delicate, important relationship. Did that readout of that call present any concerns

to you?

SCHIFF: Well, it did. But I have to say that the readout of that call sounded very much like Donald Trump's voice. You can easily picture him

saying exactly what was in that Pakistani transcript. And it wasn't surprising to me that they would release that. Prime Minister Sharif has

had a lot of difficulties in terms of the balance of power in Pakistan, and his own standing in that country. So, that kind of an unbridled

endorsement that he got in this call with Donald Trump is something they would want to put out.

But what it also told me is either Donald Trump is not surrounding himself with people who are giving him good advice about what he should say and

what he shouldn't say in these calls, and the fact that his words now have great consequence. Or he is getting that advice and he's ignoring it. I

think ultimately, we may have a situation where he doesn't listen to good advice. Doesn't have the patience or the focus to get good briefings

before these kinds of meetings. He says things, he makes commitments that he will not live up to ultimately. And what it will I think in the future

means is that these world leaders will simply not believe what they're being told by him. So, that may be the ultimate impact, which will have

other consequences. But I wish he would take the time to be briefed before these calls. I wish he would listen to the briefers. Because his words

now have a lot greater consequence then I think he really understands or appreciates.

SCIUTTO: No question. Congressman Adam Schiff, thanks very much.

SCHIFF: Thank you, Jim.

SOARES: Welcome back to QUEST MEANS BUSINESS, a busy night of breaking news here on CNN. I want to update you here on a breaking news story

Here on CNN in the last half an hour or so.

Howard Schultz is handing over the job of CEO at Starbucks. He will become executive chairman in April and says he will focus on retail innovations

and rolling out high-end coffee shops for the company. Chief operating officer Kevin Johnson will succeed him. CNN's Poppy Harlow has been

speaking to Howard Schultz in the past few minutes and joins us now on the phone. Poppy, do we know why he is handing the keys over to Johnson now?

POPPY HARLOW, CNN CORRESPONDENT: We do, I just got off of the phone with Howard Schultz and he said to me "this is a good thing." It was planned

for more than a year. He emphasized that he is not leaving the company. I asked why, and he spoke about two things in particular. One, the

premiumization of the brand and that means expanding their higher end facilities, the technology. Starbucks apps is so broadly used it is one of

the most used retail apps if not the most in the world. And he has been a big driver on the focus on the tech expansion of the company.

This allows him to do that. And at the same time very important to him is the social impact that he believes he and Starbucks as a whole and as

ubiquitous brand and entity that it can have. I asked him what does that mean? What do you want to do when it comes to social impact? He said

given the state of things in the country there is a need to help those left behind. He said he is not going to Washington, but he will focus on those

left behind, especially for young people in America right now.

SOARES: Yes, because this of course will just reignite speculation won't it Poppy that perhaps he is preparing himself to enter politics. But you

said that he said that is not his plans right now.

HARLOW: It is completely off the table when I interviewed him in New York a few months from now, I asked will you run.

[16:45:00] It is something I asked him probably a dozen times, and the first time he said, you know, not right now. He didn't take it off of the

table. He made it very clear it was not his interest. And this interview just a few moments ago, over telephone he made it very clear to me he is

not going to Washington, but when you think about the way that he has been changing the company, it has focused on under privileged youth in America.

They started things like opportunity fairs in Chicago and big cities across the country to try to help employee, young people, in different companies

that have not really had a shot before. He focused on education, partnering with Arizona State University online to make college tuition

free for Starbucks employees. It has become very clear to me as someone who covered Starbucks closely over the years. His desire to impact things

socially has only grown, and I believe that in Kevin Johnson, formally at Microsoft. He has been at Starbucks since 2015, I think he felt like he

had someone that he could hand over the reins of this company and he could focus on social things and premium innovation. You remember years ago,

when he first left, the company floundered, and he had to come back and right the ship. What happened? Wall Street reacting to the stock down 3

percent after hours. We will see what the long-term impact is.

SOARES: Absolutely, he is, after all, a very famous celebrity CEO. Do you think he will have to take that mantle, do you think he will try and

emulate him there?

HARLOW: I don't know even Johnson, I'm sitting down with the two of them next week in New York for an interview. That is a great question. I think

if you think about iconic leaders you think about Steve Jobs and you think about Tim Cook has followed him and succeeding so much. They found a way

to follow in the footsteps and also find their own voice and their own way to lead.

That is the only way to do it successfully. You can't mimic the leader before for you.

I think Kevin Johnson will have to do that but again he is a tried and tested executive.

15 years at Microsoft, 5 years CEO Juniper Networks, now he has a new challenge ahead. But he knows Starbucks having been there a few years, but

we will see how he leads going forward. And we will let you know when we see them coming together next week.

SOARES: That would be great, Poppy Harlow, thank you very much. We're back with more QUEST MEANS BUSINESS in just a minute.

(COMMERCIAL BREAK)

SOARES: Breaking news, Howard Schultz is handing over the job of CEO at Starbucks.

[16:50:00] Now Schultz is one the best-known CEO's of the United States. He is not stepping down completely he will be the Starbucks executive

chairman, and he will focus on retail innovation and rolling out high-end coffee shops for the company. Chief operating officer Kevin Johnson will

be CEO.

Speaking to CNN's Poppy Harlow, just a few minutes ago, he said the move was a good thing. He was focusing more on the social aspect the social

work they have been doing. And he put aside any speculation for the time being, at least, that he was looking, setting his eyes, on Washington.

Now let's get more on Mexico, because the search is on now far new governor for the Bank of Mexico. Markets were taken by surprise today when it was

announced Augustin Carstens was leaving next year. He is a highly- respected policy maker.

He stays on until July. Before taking the helm at the Bank of International Settlements later in the year.

Carstens has been the Mexico's central banker since 2010. The peso fell to a record low on news of the resignation. Nick Parker sat down with the

governor a few weeks ago, and he joins me now. And Nick, this came as a surprise it is fair to say to most of us because this comes at an

incredible time of geo-political change. The U.S. - Mexico relations are not at their best. They are really under pressure, so why now.

NICK PARKER, CNN CORRESPONDENT: I mean, he had another five years in office. He only just got his mandate renewed. It certainly surprised the

markets a great deal. I spoke to the chief Latin American correspondent for Credit Suisse and he said that Carstens stepping down would be a big

loss at any time. But with so much anxiety over what President-elect Trump will enforce, in terms of the policies he was talking about on the campaign

trail, this is a huge blow for Mexico.

And a lot of this stems from his record in office, he led Mexico out of the great recession. As Finance Minister, he just raised interest rates in

direct response to the election of Donald Trump. Clearly, he was highly important figure, had a long association with the IMF. He always harbored

some kind of ambitions for the world stage to some degree.

SOARES: Not related to Trump, then? He is not stepping down because of Trump taking on -- Trump becoming president?

PARKER: I don't think so. I think he made it clear that he -- when I spoke to him in Mexico City, he sounded a reassured tone. He urged

Mexicans and the markets not to overreact. I asked him, as someone that was a decades long global figure in finance, what did he think about this

backlash against globalization that elected Trump?

(BEGIN VIDEO CLIP)

AUGUSTIN CARSTENS, GOVERNOR OF THE BANK OF MEXICO: Yes, President-elect Trump has a point that some people have been probably left behind, and

needless to say, I agree with him and others who mentioned that the particular issues of groups of populations need to be taken into account.

My own personal view is that that can be achieved without having to sacrifice the gains from international trade and corporations.

(END VIDEO CLIP)

PARKER: So, there are a number of contenders in the frame for replacing him when he steps down and leaves office. One of them is the former

finance minister of Mexico. She is seen as the architect for Trump's visit in August that was deemed a public relations disaster for the president and

now it seems for strangely prescient.

SOARES: It does indeed, Nick Parker, thanks very much. We will back in just a moment. But first a highlight from Make, Create, Innovate.

[16:55:00] (COMMERCIAL BREAK)

SOARES: It is feeling rather festive here in New York, time for the lighting of the Christmas tree at the New York Stock Exchange on Wall

Street. Super model and actress Christie Brinkley does the honors this year. It is the 93rd year they've lit up a tree at the NYC. A party

atmosphere there. Believe it or not.

You'll just have to trust me, there are musical performances by the Radio City Rockettes and Jeff Timmons formerly of the boy band 98 Degrees. And

of course, we know that Christmas arrived early, at least we have been looking at the numbers this week from the New York Stock Exchange. The Dow

continues record breaking run notching up a new closing high as you can see there of just over 19,000. Banks, energy stocks, big gainers there on the

back of that OPEC deal we saw earlier in the week. Technology stocks also doing well.

I hope it is a festive deal for you, too. That's QUEST MEANS BUSINESS. Thank you for watching, bye, bye.

END