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QUEST MEANS BUSINESS
Thousand Evacuated from Aleppo; Verizon-Yahoo Deal in Balance After Hack; Dollar Heads for Parity with Euro; Putin & Abe Discuss Security, Economic Issues; Jury Finds Shooter Guilty in U.S. Church Massacre; Singapore Airlines CEO Embraces Low Cost Market; Facebook Fights Back Against Fake News. Aired 4-5p ET
Aired December 15, 2016 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: closing Bell, the gavel on Wall Street. Very strong gavel. The Dow Jones ended the session up 59 point.
We're still under 20,000. Some way to go, but it is Thursday. It's December 15.
Tonight, the biggest data breach in history hacks away at Yahoo's value. What will it mean with any potential merger with Verizon?
The greenback goes gangbusters. One dollar parity with the euro caps sooner than later. And Facebook versus fake news. New measures spot shady
I'm Richard Quest, live in the world's financial center. I mean business.
Good evening, we will have the business news for you in just a moment. But we want to begin though with the exodus of humanity that's taking place in
Aleppo tonight. A convoy of buses as far as the eye can see is taking people out of war-ravaged city. The Red Cross says some 3000 people have
been removed during the first two rounds of evacuations. Residents are scrambling to pack up whatever they can before it's their turn to board a
bus and get out. It could take days before the evacuations are complete. CNN's Frederik Pleitgen, has been in Aleppo recently, where he filed this
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): After months of siege, hunger, and violence finally a journey to safety. A
fleet of buses and ambulances carrying thousands of fighters and civilians from Aleppo's last rebel enclave to other areas held by the opposition.
Many glad to be heading to safety, but also bitter to have to leave.
SALAH AL-ASHKAR, ACTIVIST (through translator): We wanted the free Syria. No one stood by us. No one helped. And like you see now we are forced to
leave our country, our home, Syria.
PLEITGEN: The evacuation, negotiated by Russia, Turkey and Iran, got off to a tragic start. Pro-government fighters apparently opening fire on
first set of vehicles. This video obtained by Britain's Channel 4 TV.
UNIDENTIFIED FEMALE, BRITIAN'S CHANNEL 4: And now we are hearing sounds of weapons. We don't know what's happening now.
PLEITGEN: The evacuation is set to mark the end of the opposition's presence in Aleppo. Bashar al-Assad government poised to regain full
BASHAR AL-ASSAD, SYRIAN PRESIDENT (through translator): The people of Aleppo with their resilience, the Syrian Arab Army with their courage and
sacrifice, and every Syrian citizen who stood with Aleppo and their country and homeland. I just wanted to affirm that today history is being written.
PLEITGEN: And it comes after weeks of violence so bad many felt they can no longer hold out simply trying to survive.
UNIDENTIFIED FEMALE (through translator): Me and my children together, that is my final dream.
PLEITGEN: Aid worker say many of those being evacuated from Eastern Aleppo are in some of the worst condition they've ever seen human beings in. And
while those leaving Aleppo may have escaped with their lives, they move into an uncertain future having left their homes and their city, evacuated
to another part of Syria where the war is still raging.
QUEST: Fred Pleitgen joins me now from Beirut. Fred, we need to take this point by point because it is tragic and it is confusing. So, those who are
being evacuated from Aleppo, how many do we estimate in total will be evacuated from Eastern Aleppo? And will there be anybody left behind after
PLEITGEN: Well, Richard, first of all, the plan if it is sought through to the end, is that no one will be left in Eastern Aleppo once all of this is
said and done. We have to also keep in mind though that many people even before all of this started, these evacuations, fled Eastern Aleppo. I was
in some of these camps for displaced people where these folks went to, and that was tens of thousands. Now, it's anybody's guess really how many
people are actually inside the East of Aleppo in those last rebel held enclaves that there still are and that are being emptied out now.
There are some who believe that it could be as many as 50,000. There's others who believe that it's a lot less. And if you take today for
instance, so far, those two convoys that have made it from the rebel held area through the government -controlled area and then to the other side,
that was about 3000 people. So, if there are indeed still 50,000 in there it certainly would take a very long time for all of them to be evacuated.
[16:05:00] And of course, there is a big room for something to go wrong during those convoys. We saw that earlier today when one of them was fired
on. You saw that in that report, and of course that is something that could happen again, Richard.
QUEST: And where are they being takin to, because the rest of Aleppo is now in Syrian government control. One assumes if they are being taken to
other rebel held areas, they are really -- I mean, as you said in your report, pardon the phrase -- but it is out of the pan and into the fire.
PLEITGEN: Yes, it certainly is. And you know the area that they are being taking to is Idlib province, most of them at least. Some are being taken
to the North, to the north of Aleppo, that's a place that's held by rebels that are supported by Turkey, but most of them are brought to Idlib
province, which is west of the city of Aleppo, and is a place that has been under opposition control for a very long time.
But it's also a place, Richard, as you rightly point out, that's been heavily bombarded by the Russian in the Syrian Air Force over the past
couple of years, especially by the Syrian Air Force. And it is certainly a place where the war still rages. But it's also a part of a larger project
by the Syrian government to try and concentrate the rebels that are in Syria in that one place.
QUEST: Now, finally Fred, for those not following events as closely as yourself, remind me and remind our viewers as well, how much of Syria
remains in rebel control. How much is in the government's control? And I guess what I'm getting at is, what still left?
PLEITGEN: You know what? That's a very good question. I think we have to make a big differentiation, because there's a lot of territory that's under
the control of ISIS. I would say about 30 to maybe 35 percent of the country. There's a lot of territory that's under the control of the Kurds.
There's a lot of territory that still under the control of the rebels and the Syrian government as well. But the big thing is here in Syria, is that
the east of the country, there is a lot of desert. There is a very few people who live there.
The big key here is to win the West of the country. And a lot of the west of the country, the major cities, you're talking about Damascus, Tartus,
Lattakia, you're talking about now Aleppo as well, is under the control of the Syrian government. I think president Bashar al-Assad, a couple of
months ago, in an interview said he believes that around 70 percent of the population that is still in Syria is in places that's controlled by the
Syrian government. And of course, that's key.
And of course, winning Aleppo for the Syrian government was a key because there are so many people who are living there. So, a lot of territory
still under the control of many of these factions, rebel factions as well, but the key is these population centers and the West of the country. In
the Syrian government certainly has control of a lot of that.
QUEST: Fred, continue watching this closely. It is by far and away the most important story in the world tonight and we need to keep up to date on
the developments. Thank you, Fred. Fred Pleitgen in Beirut watching events in Syria.
Now, we will turn to our business agenda. A billion user accounts and a $4.8 billion deal, both are in jeopardy after Yahoo admitted it had
suffered a second attack. And this one the largest in history. Verizon executives are reportedly debating whether to lower their bid for Yahoo or
completely abandon it. That news pushed Yahoo share prices down more than 6 percent on Thursday. The date of theft occurred more than three years
ago, in August of 2013.
So, what happens? Hackers stole usernames, passwords and answers to security questions. It's unrelated to another breach of 500 million
accounts that was disclosed in September. Both breaches were revealed publicly, but only after Verizon agreed to by Yahoo. It's a deal Yahoo's
chief executive believes is in the company's best interest. In the statement, Yahoo still says, "We are confident in Yahoo's value and we
continue to work toward integration with Verizon."
Paul La Monica is with me. Paul, are they just whistling in the wind?
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: I'm not so sure yet. I think what Verizon needs to figure out is has there been a mass exodus of Yahoo
users as a result --
QUEST: But they didn't know about it until now.
LA MONICA: That is true, but that is why they need to see what is going to happen. Yahoo obviously, needs to give Verizon up to the minute data about
what is happening with the Yahoo mail accounts, and not just Yahoo mail, but Tumbler, Flickr, Fantasy Sports, Yahoo has a booming fantasy sports
business. That is something else they have to keep an eye on. If this doesn't lead to a mass exodus of users, Verizon may not abandon the deal,
but you can bet they probably want to try and renegotiate the price.
QUEST: Do we know the timescale of the first revealed and the second revealed. In terms of when these breaches, both breaches took place?
[16:10:00] LA MONICA: Both breaches took place several years ago, so, I think the scary thing is that data could have been taken many, many years
ago, before consumers were warned to change their passwords. Now everyone is hopefully doing that, but it might be too late for some of the
information that's already out there.
QUEST: And do we know when Verizon learned of this second breach?
LA MONICA: We're not getting indication that Verizon found out any sooner than --
QUEST: I beg your pardon. I met Yahoo.
LA MONICA: Yes, right.
QUEST: Sorry, forgive me.
LA MONICA: Of Yahoo finding out. Verizon, it sounds like, found out just about like everyone else. The big question with Yahoo is how long have
they really been sitting on this news? Because if these breaches happened years ago, are they just finding out or not? Yahoo said that they are
taking steps to make sure that their consumers are protected, but I think any Yahoo user has to be wary right now, because this is happened twice.
QUEST: I mean, not only does it go to what happened to Yahoo, two or three, four years ago, but did -- I don't think you know the answer to
this, it's a rhetorical question -- did Yahoo tell Verizon?
LA MONICA: We have indications that Yahoo did not tell Verizon about the first hack. Verizon seem to be takin a back by that news. And it was
standard reason that hopefully Yahoo did tell them about the second one in a little bit more expeditious fashion. Because I think if they hadn't and
Verizon really has a lot more leverage to either walk away or cut this price. They don't want to be burned a third time.
QUEST: Good to see you.
LA MONICA: Thank you, sir.
QUEST: Third that we know of. Thank you very much, Paul La Monica.
Now, on Wall Street, stocks to bounce back after yesterday's drop. Now that drop was on the back of course, the Fed raising interest rates. The
market gets the best of the day midday, 11 o'clock, is two hours into trading and it sort of peters into the afternoon giving up a lot of the
gains. But it still up 59 points, with considering what we know, although it's clearly not enough to break the 20,000 mark. Alan Valdes is with us.
Senior partner at Silverbear Capital, he joins me from the New York Stock Exchange. The interesting thing is the Trump rally, albeit more muted
today, only took a day to come back.
ALAN VALDES, SENIOR PARTNER, SILVERBEAR CAPITAL: Yes, that was pretty amazing. We thought we'd be kind of mired in a downward trend for the rest
of the week. But you know, we had great news today, Richard. The Empire and Philly Fed statements were great. Homebuilders confidence was at a
decade high. Weakly job claims came in at a 43-year low. And we got to only 49 points away from 20,000, as a result I got this hat.
QUEST: Oh, brilliant. So almost 20,000. Let me explain to viewers why markets find it difficult to breach the psychologically important barriers.
I mean, I know it happens, but what happens when it's only 40 points off, that everybody suddenly runs in the opposite direction.
VALDES: Yes, you know, I've been here 35 years and every time you get to one of these metrics, whether it's 1000 back in the 80s, whether it's
10,000, 15,000, or now closing in on 20,000, if it doesn't make it, there's a lot of skeptical traders saying, OK, that's it. This thing is going to
sell off. It never does. It always bounces back. So, that's what happened. We're coming into a Friday, a weekend. So, guys, we have 49
points away from 20,000. We stuttered, we stalled, they started to selloff. Not big, but they started to selloff. And that just perpetuates
and it's all across the board. It was widespread profit-taking, really is what it was.
QUEST: Right. So, what we're looking for now, is not only a buying momentum, but a piece of good news, economic news, that would give it a
whoosh, if you like.
VALDES: Your right. That's why we thought we get it today, because we had good news in a bunch of different Fed statements, government statements.
So, we thought we definitely see that push, but again, it got very close, 49 points. Couldn't sustain it.
QUEST: Put your hat on, Valdes. Put your hat on. Dow almost 20,000. And let's see how many days you have to wear that. Alan Valdes at the stock
exchange. Good to see you, sir.
VALDES: Thanks, Richard.
QUEST: Now as we continue our look tonight, new satellite images have emerged showing is said to be significant Chinese weapon systems in the
South China Sea. That's likely to alarm Washington. We'll be talking to a former U.S. ambassador to China, Gary Locke. The machinations are
fascinating in this particular relationship. QUEST MEANS BUSINESS.
[16:15:00] (COMMERCIAL BREAK)
QUEST: Now Mark breaking news to bring you in what's been a very busy day. Curious, South Carolina has found Dylann Roof guilty on all charges. He is
the self-declared white supremacist who murdered nine parishioners in a historical black church in Charleston. The penalty phase is set to begin
next month. Juries will decide whether Roof should be sent to prison or indeed face the death penalty. Danny Cevallos is CNN's legal analysts, has
been following the case. Good to see you, sir.
DANNY CEVALLOS, CNN LEGAL ANALYST: Good to see you.
QUEST: Look as I followed this trial, I wasn't sure what this trial was about since he admitted the crimes, the murders, and he wasn't contesting
CEVALLOS: This trial was not about guilt or innocence. It was about the sentencing phase. The liability phase is now concluded. Now were in the
sentencing phase. And it really is in a way much more critical in this case.
NEWTON: Why did they go through the first phase since it was inevitable, and he wasn't even contesting most of the evidence?
CEVALLOS: Dylann Roof had asked for a plea deal that involved taking the death penalty off the table. When you are a defendant, sometimes the only
leverage you have left in a case like this, which you are very much not likely to win, is to go to trial. That is the leverage that you can bring
to bear against the U.S. attorneys. And obviously, there's almost virtually no chance he would have been found not guilty. But now that
we've moved to the sentencing phase, he can bring in all kinds of mitigating evidence. The rules of evidence are out the window. He can
bring in virtually anything that mitigates in his favor.
QUEST: The death penalty, the federal penalty is used very sparingly. It's only in the gravest of cases. From your sort of understanding of
this, it's the jury that will decide, and then the judge will then have to affirm.
CEVALLOS: The same jury that decided the liability phase of the case, now decides the death penalty. Whether or not he's going to be executed or
QUEST: And does the judge have to accept that penalty. Does the judge have any leeway, or is it just then --?
CEVALLOS: No, no, the judge has to make sure that the jurors follow the rules of procedure in first deciding whether he's qualified for the death
penalty, and then voting on it. But he must accept their verdict, so long as it is a legal verdict of death.
QUEST: What's your feeling on this one?
CEVALLOS: I think if there's ever been -- reality is like you said, the death penalty in the federal system is used so rarely that some have argued
that there really is no purpose to it, because it happens so infrequently. But if there ever was a strong case for a death penalty, the evidence of
lack of remorse, all of the horrible nature of this crime. The planning, the premeditation, those are statutory factors. This may be the case for
yet another very rare, federal death penalty.
QUEST: Good to see you, sir. Thank you for being here.
CEVALLOS: Good to see you too.
QUEST: It's terrible. I mean, not only a horrific murder, but an appalling trial that involved tears, collapsing, heart attacks of victims'
relatives and even Roof's relatives.
[16:20:00] CEVALLOS: Yes, it's true. It's a tragedy all around.
QUEST: Good to see you, sir. Thank you.
CEVALLOS: Good to see you.
QUEST: Thank you for bringing it to us.
Now, proofing of course, of what a busy day it's been. We do return to our business agenda. And one has an economy that is struggling to get out of
the doldrums. The other is looking to attract trade and investment to dull the pain of sanctions. Japan and Russia met on Thursday. The security and
economic issues were dominating it. CNN's Andrew Stevens is in Tokyo.
ANDREW STEVENS, CNN MONEY ASIA-PACIFIC EDITOR: It has been cold here in Japan the Onsen Summit, after the Japanese word for Hot Springs. And
certainly, it was an informal setting when Shinzo Abe and Vladimir Putin met. These two countries are trying to forge a closer alliance. Trying to
shore up their relationship. Japan partly at least, to offset the rise of China in this region, and Russia in its push to the east to escape the
biting sanctions from Europe and the United States.
On the agenda, today, security issues are front and center. Particularly, and a topic very close to Shinzo Abe heart, the ownership of four islands,
the Kurile islands. These were seized by Russia just at the end of the second world war, and Shinzo Abe, says he wants to start a dialogue to
eventually get these islands returned to Japanese ownership. Don't expect any breakthroughs from this though.
There's also economic issues on the table, which will be discussed on Friday. Japan has an eight-point economic plan to help particularly the
neglected eastern part of Russia. But it does have to tread carefully. It cannot bust sanctions. Japan is a member of the G7. The G7 has imposed
sanctions. Also, the U.S. is watching this meeting very, very closely.
The news from day one is that Japan and Russia are likely to reinstate security talks between the defense and foreign ministers. The two
countries look like they've already reached one agreement. That security talks between Japan and Russia will be resumed after they were suspended
back in 2014. Andrew Stevens, CNN, Tokyo.
QUEST: Now China is looking to assert, or some would say reassert its dominance in the region and beyond through military might and media
threats. There are fresh claims that China has built a weapon system on the artificial islands in the South China Sea. China says the
installations are for self-defense. This is the satellite pictures that were showing to you. Chinese state media is reinforcing the one China
policy. And new reports are referring to Donald Trump's phone call with the Taiwanese president as a farce. On Wednesday, a Chinese newspaper has
warned that an unnamed U.S. automaker bases possible penalties for price- fixing.
Gary Locke, former U.S. ambassador to China, joins me now from Seattle. I mean, China makes noises that basically says, don't mess with the one China
policy. And all President elect Trump says is, I fully understand it, but why should I be bound by it if they're not going to include trade. Well,
they're, not are they?
GARY LOCKE, FORMER U.S. AMBASSADOR TO CHINA: Well, first of all we been bound by -- we've had this one China policy ever since normalization of
relations between the United States and China back in 1979 under President Carter. And actually, our policy toward China has been very consistent
since 1972, when President Nixon first went to China. It's been consistent under Democratic and Republican presidents. But what Donald Trump is
talking about --
QUEST: That doesn't mean that Donald Trump can't change it if he wants to. What are the risks of him doing so?
LOCKE: Well, first of all, it would be very contradictory to recognize two countries as representing each other. Because the Communists and the
nationalists battle throughout the 40s and in 1949 the Communist won. Drove the nationalists to the island of Taiwan, long a province of the
mainland. And Taiwan at that time still claim to be the legitimate government of the entirety of China including the mainland. And then of
course the Communists on the mainland claim to be the legitimate government of all of China, including Taiwan.
So, you can't go around saying we recognize both sides as being the legitimate government of the same territory. You either choose one or the
other. Now this policy that we've had since 1979 has actually benefited Taiwan as well. I'm not sure that the people of Taiwan, while some talk
about independence, they want to resolve this among themselves with the people of the mainland, and really don't need the United States
interjecting itself and really upsetting the economic relationship that's also been very beneficial to Taiwan under this one China policy.
QUEST: How much rope do you think the Chinese are going to give President Trump over this before they yank it and do something themselves?
[16:25:00] LOCKE: Well I think they were willing to give him a lot of rope when he made the phone call or had the phone conversation with the
president of Taiwan. And there really going to be looking at his future actions. But to say that -- but I think they're going to be very, very
concerned if Donald Trump starts moving away from the one China policy that has long been the bedrock of U.S. China relations. Because what will
happen is that for instance if Donald Trump starts imposing tariffs on all Chinese goods coming into the United States, or even some Chinese goods
coming into the United States, China will simply retaliate and start imposing tariffs on Boeing airplanes, on American soybeans grown by our
farmers, or wheat, or all kinds of machinery that American companies make with American workers here at home in America and shipped to China.
QUEST: Well before we get to tariffs, listen to this tonight -- you may have just heard me talking about how potentially one U.S. automaker may be
in trouble for price-fixing. Is it likely that we're going to see early signs from the Chinese government of either retaliation, retribution or
firing a corporate shot across the bows just to warn President Trump, don't mess?
LOCKE: Well, the Chinese government have many tools at their disposal and from harsh statements, strong statements to holding up licenses and permits
of U.S. companies seeking to expand their territory in the sale of made in USA goods and services, would support so many jobs here at home. They can
start talking -- or they can simply just buy more airplanes made in Europe instead of Boeing airplanes that are made in the United States. So, they
don't even have to raise tariffs. They have many, many at their disposal.
QUEST: Good to see you ambassador. Thank you, from the Pacific Northwest. Nice of you to join us tonight --
LOCKE: Thank you.
QUEST: -- on QUEST MEANS BUSINESS.
Now we'll stay with Donald Trump. He dismisses concerns about conflicts of interest. The President-elect says the issue is not complicated.
[16:30:00] QUEST: With a cease-fire in place that appears to be holding, civilians and rebels are finally being able to get out of the devastated
Eastern Aleppo. The Red Cross says some 3,000-people left during the first two evacuations and a third is reportedly under way. A little while ago
America's top diplomat said, Russia and Syria must make a strategic decision for peace.
(BEGIN VIDEO CLIP)
JOHN KERRY, U.S. SECRETARY OF STATE: With these steps, we are convinced that the killing and the suffering in Syria could stop. And it could stop
very, very quickly if Russia and the regime made the decision to do so. There are individual cease-fires being worked out. Individual arrangements
with the armed opposition group commanders. And it appears, for some period of time at least, we don't know yet if it will hold or where it is.
That airstrikes and shelling have stopped and that the cease-fire may -- I emphasize maybe -- taking hold.
(END VIDEO CLIP)
QUEST: A jury has found Dylann Roof guilty of all charges against him. Roof has confessed to gunning down nine people in a large African-American
church in Charleston, South Carolina last year. He describes himself as a white supremacist. In the trial's next phase the jury will decide if Roof
should be sentenced to death or spend the rest of his life in prison.
Investigators say they found traces of explosives on the victims of the EgyptAir plane crash. 66 people were killed when the Paris to Cairo flight
went down over the Mediterranean Sea in May. The Egyptian officials have previously pointed to a technical failure or indeed terrorism as possible
causes of the crash.
Sources are telling CNN that U.S. intelligence determine months ago, that President Vladimir Putin of Russia was aware that Russian hackers were
digging into the U.S. election. But they also say they have no direct evidence that he knew about it. Only that their analysis indicate he must
have. A prominent U.S. Republican says, all this hacking talk is hurting the country.
(BEGIN VIDEO CLIP)
PETER KING, U.S. HOUSE REPUBLICAN: Right now, certain elements of the media, certain elements of the intelligence community, and certain
politicians are really doing the work of the Russians. They're creating this uncertainty over the election. This is several days before the
Electoral College. I've been in briefing after briefing and even in the public statements, the director of national intelligence, the director of
the FBI, have all said that they don't know what the motive is. If there is a motive, it was just to disrupt the election, not to prefer one
candidate over the other.
(END VIDEO CLIP)
QUEST: The U.S. dollar which had been particularly strong in recent years anyway, is up a further 9 percent since Donald Trump won the presidential
election. And that strong dollar can do more to transform the U.S. place in the world than any diplomacy could accomplish. Take a look and this is
how it's traded over the last hours or so. Down 1.16 percent were now at 1.04. Interesting, we were at 1.06 yesterday, now down at 1.04.
The euro is continuing to sink against the dollar. And as it does so arguably, it's heading ever closer towards parity. The last time there
were these sorts of levels was in 2002. And several factors are pushing the currencies closer together. Not least of which of course, is the Fed
raising interest rates and the ECB extending stimulus.
Now, Donald Trump's spending policies are affecting the dollar. Obviously, it pushes up interest rates, because greater government borrowing, that
makes the dollar more attractive. More money flows in with our interest rates. Meanwhile, Europe has been having austerity and has the legacy for
There are a variety of other reasons. U.S. travel costs. Now a strong dollar makes tourism brilliant for Americans. Take your dollar and see the
world. That's very good news for European exporters as well, who are able to sell exports. And of course, it has a reverse effect in terms of
inflation as it relates to imports coming back into the country.
What you learn from all of this, perhaps from those like the economists in Columbia University, Jeffrey Sachs. When it comes to currencies, one's
always a bit of a loss, professor, between who wins and who loses. Particularly in this situation.
JEFFREY SACHS, ECONOMIST, PROFESSOR, COLUMBIA UNIVERSITY: We are going through another phase like the Reagan era, where were going to have fiscal
expansion, tax cuts, probably military spending increases and relatively tight monetary policy. The dollar is going to strengthen. We're going to
have big budget deficits and big trade deficits. And will have to be reversed after a few years. This is another crazy period.
[16:35:00] QUEST: You say that, I mean, if the dollar rises, and then there will be an inflow not only of imports -- I mean, clearly the trade
imbalance, the trade numbers will go down. But there will also be an inward investment to help fund that trade up.
SACHS: In other words, we're going to be selling treasury debt. Building up the government public debt once again. And we know that it's already
increased tremendously over the last eight years.
QUEST: With the very low rates. And if that inward investment and if that government spending is put to infrastructure use then truly that's to the
SACHS: These rates are going to go up. They're going to go up pretty fast. The burden of pain the public debt is going to rise. I view this as
short-term populism. But what's true is probably the Republicans and the Democratic Party Keynesians are going to say, hurrah. I'm going to say not
so good. Because the public debts going to be rising again. It's already up to 75 percent of Gross Domestic Product. It was 37 percent when
President Obama came into office, it's basically doubled. And now is going to go up may be to 90 percent and were on a path, according to the
Congressional Budget Office, where it's going to exceed 100 percent within 20 years. And this is all bad, because nobody looks ahead anymore. So,
this is another short-term gain in my view.
QUEST: It would be very difficult to reduce the public debt at the moment. The doubling that took place, the 35 to 70 percent or whatever it is, was
for legitimate reasons --
SACHS: Oh, so, so.
QUEST: -- you know, of ensuring that the global economy and the U.S. economy didn't go down the toilet.
SACHS: So, so. I thought that stimulus package in 2009 was not a very wise policy to begin with.
QUEST: But current budget deficit is what --
SACHS: The current budget deficit is about 3.5 --
QUEST: 3.5 percent, right.
SACHS: -- The CBO, Congressional Budget Office says were going to have an average of 4 percent, that's before Trump got elected. He's got absolutely
zany ideas. We're going to trash our revenue side. We're going to spend more. Geez, this is populism.
QUEST: So, do you find it -- back to the dollar -- do you find it -- I saw one suggestion that said parity against the euro might be late 2017. I
would venture to suggest it might be a week next Thursday. It's going to be much sooner.
SACHS: Yes, I don't think we're going to have to wait the way markets are going right now we're to see that most likely.
QUEST: Good to see you, sir.
SACHS: Good seeing you.
QUEST: We'll have a lot more to talk about next year. Even more to talk about I should say.
SACHS: Looking forward to it.
QUEST: Now European stocks closed higher. A rally sparked by the Fed decision. Markets were up across the board. Banking stocks led the way.
The higher interest rates should result in higher yields and that boosted banks' profits.
An attorney for the Trump organization is telling CNN, the company recently terminated three overseas deals. It follows increasing concerns of a
possible conflict of interest between Trump's companies and his presidency. The President-elect was supposed to hold a news conference today to explain
how he would avoid such problems. Instead, that was canceled. Now Donald Trump is blaming the media for hyping the issue.
He tweeted, "The media try so hard to make my move to the White House, as it pertains to my business, so complex -- when actually it isn't!" Joining
me now from Fort Lauderdale Florida, is the Democratic congressman, Ted Deutch, a member of the House Ethics Committee, I should mention, no
Republican members of the Congress of the committee, agreed to come on the program. But we're glad to have you Congressman. We're glad to have you
in your interpretation. Look, the reality is, get used to it as we saw yesterday with the -- as we saw yesterday, with the meeting with tech CEOs,
there were the children in the room. What's wrong with this?
TED DEUTCH, U.S. HOUSE DEMOCRAT: First of all, the President-elect is exactly wrong. It is very complicated.
And the fact is that it has been clear for every president in modern history they have to be very clear in divesting all of their holdings so
that the American people know that their focus is entirely on the security and prosperity of America and not on their own personal interests. And he
is at risk of violating the Ethics in Government act, he is at risk of violating the Stock act and most importantly he is very clearly at risk if
he doesn't make a change and comply with the law, he is going to violate the United States Constitution, the foreign bribery clause, that says
fairly clearly that an elected official cannot accept payments from foreign governments. And there are a myriad of examples of where he does every
[16:40:00] Well, I take your point but he says and I really don't want to get into a who says what but he says many of those federal laws, most of
those federal laws do not apply to the president. The president is exempt from the conflict of interest rules that others are bound by, and anyway,
the public knew what they were buying when they bought Donald Trump.
DEUTCH: First of all, he is technically right about the Ethics in Government law but as the office that enforces that law said just this
week, every president in modern times has adhered to the spirit of it whether they were required to not.
QUEST: Every president has released his tax returns, the reality is what I am trying to get to here, the reality is he is doing it differently.
Aren't you and others going to have to accept that?
DEUTCH: I don't think anyone in this country is willing to accept the potential violation of the United States Constitution by the president of
the United States. That for me is as troubling as any of the rest of this. If you look at his business dealings, both in this country where China
owned bank is the largest tenant in Trump Tower. If you look at Deutsche Bank which is a big lender of his which is still negotiating with the
Justice Department right now over their role in the financial crisis of 2008. And if you look at the Trump deals in Turkey and in the Philippines
and in China and Scotland, all around the world, any payments in connection with those deals as long as he is a part of them will violate the
So simply saying you knew and I am going to be different, no one expected that Donald Trump or any other president would come to office seeking to
violate the Constitution.
QUEST: He says today that he's terminating a licensing deal for a hotel in Rio de Janeiro and a couple of other deals as well.
Will you only be satisfied when he has sold the lot off?
DEUTCH: Well, I was hoping that today we would be able to talk about his big plan with great fanfare he announced he was going to share with us,
that has now been postponed until January. I mean certainly we will take a look at what he is proposing but the only way to clearly be able to comply
with law and to prevent the insider trading which is another concern. When his daughter sits in the meeting with the Prime Minister of Japan even as
she is negotiating with the company that has ties to the government of Japan. Those sorts of things all have to be addressed. We need a
president who will be focused on the American people first and foremost and not their business.
I will look forward to hearing what his plan is but has got to comply with law and it has got to satisfy the requirements of the Constitution of the
QUEST: Congressman, we were hoping to talk about that to you as well before it was canceled. But please promise me sir, that you will come back
when we do know what the plan is and we can thrash it out again.
DEUTCH: I will gladly make that promise and look forward to talking to you again.
QUEST: Excellent, good to see you, sir.
Now, as we continue our program tonight and airline known for luxury enters the budget business. The chief executive is going to explain to us how his
portfolio of airlines means he is ready to fly any passengers whatever class, whatever sort of plane they want to fly. QUEST Means Business.
[16:45:00] (COMMERCIAL BREAK)
QUEST: The chief executive of Singapore Airlines tells me his company is not immune to what he is calling the structural changes in the industry.
It all happens as the airline announced a new route today. And take a look at it, from Singapore via Moscow onto Stockholm. The existing route just
goes to Moscow but it will connect to Stockholm. The airlines second Scandinavian destination. And of course, you still got in two years' time
the longest route in the world that they will be opening up which would be Singapore to New York which will be over 18 1/2 hours.
Now the luxury carrier is getting into the low-cost game or at least SIA Singapore group is overall. Goh Choon Phong told me increased competition
has forced his hand to create a portfolio of airlines.
GOH CHOON PHONG, CEO, SINGAPORE AIRLINES: We have been doing a fair bit of transformation for the SIA group Anna, Richard, you are very familiar with
the reason why we have to do so. We are seeing structural changes in industry in particular you are aware of the intense competition from the
LCC in my part of the world. The LCC penetration is in excess of 50% which is the highest you see in any part of the world.
And of course, this rapid expansion by the carriers in the recent Chinese carriers as well.
QUEST: In many ways, your group is being clobbered more than anybody else because you have gotten the low-costs, got the Gull3, got China, and that
sweet spot of six freedom transfer traffic that you enjoyed is being eaten by everybody else.
PHONG: Not quite so because actually Singapore is a location ideal for connectivity to Southeast Asia. It is well located. And also to the
Southwest Pacific. That is why we have been focusing on expansion to both Southeast Asia and Southwest Pacific. And on top of that because we now
have a portfolio of carriers which is both LCC and full service, we are able to leverage our portfolio to actually expand can serve many points in
major markets such as China and India.
QUEST: Within the portfolio of airlines that you have, the pricing structure of tickets is fascinating. You've got Singapore Airlines at full
service, you've got Silk at full service, you've got Scoot pay-as-you-go. Do you foresee that there is going to be more ancillary encroachment into
your other airlines?
PHONG: This portfolio is actually a great thing for us because now with this portfolio which is SIA, Silk on the full service. Scoot and Tiger on
the LCC end, we now cover basically the whole entire spectrum of the travel segment. That means that we now have a tool to serve any market, any type
of travel preferences.
QUEST: Passengers are starting to get to the point where they are saying, hang on. I'm paying for everything. If you look at it in the United
States and certainly in Europe, there is a slight rebellion against you will pay for everything including the toilet.
PHONG: Richard, correct me if I'm wrong, but I think the kind of travel for domestic Europe and domestic USA is quite different on economy class I
am referring to, is quite different from that offer in Asia. Now in America has in Europe if you are traveling domestic I don't think you'll
find a lot of difference in terms of the service provision between the LCC and a full service. That is why it is somewhat easier to do unbundle and
[16:50:00] In Asia it is quite different, you are very experienced, you know what it is like in Asia. All the LCCs are offering a different model
from all the FSCs, the full-service carriers provide all the meals, the drinks and the baggage.
QUEST: The chief executive of Singapore Airlines. Facebook is tackling the fake news problem with some help from fact checkers. We will talk
about that after you have your own moment to consider Make Create Innovate.
QUEST: Facebook is introducing new features to fight fake news. These of course are the stories that are known to be false. They will start
appearing in your newsfeed as being disputed. Now Facebook is not doing the fact checking itself. All of this raises even more questions about
what is going to happen. CNN's Dylan Byer joins me from Los Angeles.
Dylan, the way I understand it, there has been this huge furor about fake news. Facebook has said it is very concerned and will deal with it. Is
this a satisfactory solution to the problem?
DYLAN BYERS, CNN SENIOR MEDIA REPORTER: We'll have to wait and see, and you are absolutely right that there has been an enormous outcry over fake
news on Facebook and also in Silicon Valley over Facebook's sort of delayed response to this issue for many months. It was something that Mark
Zuckerberg head a Facebook did not want to take seriously or seemingly did not have an adequate response to.
Now, you will remember several months ago, Facebook got in trouble because conservatives felt like conservative news stories were being tamped down by
human editors. Then Facebook shifts to relying entirely on an algorithm where humans are not involved. And then you get all of these fake news
stories bubbling up. And then that becomes an issue.
Now, we are going back to more of the human structure that relies on the user base. So, users will be asked to flag stories that they believe made
up or are false or fake. Once they are flagged a team of fact checkers, human team of fact checkers from various fact checking organizations, as
well as places like AP and ABC news will be asked to come in and check it. And if it is disputed then users will see that pop-up that says, this
story, this article is disputed by third parties.
QUEST: One of the things, just how big is this problem of fake news?
BYER: It is really interesting there is a Pew research report that came out today, a survey of American adults and what it found is that roughly
2/3s of Americans believe that fake news is sowing confusion and basically making it difficult for people to agree on basic facts about what goes on
in the news. At the same time, more like 23 percent so a little less than a quarter of the people said that they have actually shared a fake new
story. And an overwhelming number of Americans said they trusted their own ability to be able to detect a fake news story.
[16:55:00] That said, it is also true that there was a man from North Carolina who went to Washington DC with a semi-automatic rifle and went
into a pizza store because he believes that there was a child prostitution ring happening that Hillary Clinton and John Podesta were involved in.
None of that was true. It does have real-world results, it does affect people and it is a serious issue.
QUEST: Thank you. We will have a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment, I want to just take a moment to talk about the Trump and the conflict of interest questions. And perhaps why it
is so significant that these issues are being raised.
To be sure Donald Trump has said he wants to do everything differently and that seems to be the way he is going. And that is fair enough and all fair
and good, and we give him the benefit of the doubt. But there are strong, valid, long-standing reasons why they have these conflict of interest
rules. Born out of experience that shows where conflict exists, even the perception of conflict, there is a level of distrust which can eventually
lead to corruption.
In those situations, that's why those rules are there. And have your family sitting at the table, having your family sitting in meetings with
Prime Ministers, having a very murky relationship with foreign leaders, these are all reasons why those conflict of interest rules are there. They
must remain. It is not simply scare mongering, it is simply good governance.
That is QUEST MEANS BUSINESS for the night, I am Richard Quest in New York. Whenever you are up to in the hours ahead I hope it is profitable. I'll