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QUEST MEANS BUSINESS

Israeli PM Fires Back After Kerry Warning; Trump Thanks Trump for Strong Economy; "Alexa" Caught Up in U.S. Murder Mystery; Nuclear Woes Trigger Toshiba Share Nosedive;

Aired December 28, 2016 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[16:00:00] ELENI GIOKOS, CNN ANCHOR: So much for Dow 20,000. Markets have taken a near triple digit tumble. It's Wednesday, December 28th. Tonight,

Israel and the Obama administration trade dire warnings over the peace process. I'll speak to Washington's former ambassador to Israel.

Donald Trump pats himself on the back for the strength of the U.S. economy. Can Alexa solved this murder mystery? Police what to Amazon to share what

the echo knows. I'm Eleni Giokos, this QUEST MEANS BUSINESS.

Tonight, in a very public dispute, America's top diplomat and Israel's prime minister trading heated words over the Palestinian conflict. With

time running out for the Obama White House, Secretary of State John Kerry laid out his urgent vision for peace. Benjamin Netanyahu immediately hit

back calling it a big disappointment. Kerry says a two-state solution is the only solution and that is now in serious jeopardy.

(BEGIN VIDEO CLIP)

JOHN KERRY, U.S. SECRETARY OF STATE: Regrettably some seem to believe that the U.S. friendship means the U.S. must accept any policy regardless of our

own interests, our own positions, our own words, our own principles. Even after urging again and again that the policy must change. Friends need to

tell each other the hard truths. And friendships require mutual respect. They fail to recognize that this friend, the United States of America, that

has done more to support Israel than any other country, this friend that has blocked countless efforts to delegitimize Israel cannot be true to our

own values or even the stated Democratic values of Israel. And we cannot properly defend and protect Israel if we allow a viable two-state solution

to be destroyed before our own eyes. And that's the bottom line.

(END VIDEO CLIP)

GIOKOS: In a swift response, Benjamin Netanyahu said John Kerry's speech was skewed against Israel. Adding that he looks forward to working with

U.S. President-elect Donald Trump.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU ISRAELI PRIME MINISTER: I don't seek applause. I seek the security and peace and prosperity and the future of the Jewish state,

the Jewish people have sought their place under the sun for 3,000 years and we're not about to be swayed by mistaken policies that have caused great,

great damage. Israelis do not need to be lectured about the importance of peace by foreign leaders. Israel's hand has been extended in peace to its

neighbors from day one, from its very first day.

(END VIDEO CLIP)

GIOKOS: So, in the past hour, we've received a statement from the Palestinian Authority President Mahmoud Abbas, it reads the reads, "The

minute the Israeli government agrees to cease all settlement activities, including in and around Occupied East Jerusalem, and agree to implement the

signed agreements on the basis of mutual reciprocity, the Palestinian leadership stands ready to resume permanent status negotiations on the

basis of international law."

Edward Djerejian, joins me now. He was the U.S. Ambassador to Israel and Syria during both Clinton administration. Ambassador, thank you for

joining us.

EDWARD DJEREJIAN, FORMER U.S. AMBASSADOR TO ISRAEL AND SYRIA: My pleasure to be with you.

GIOKOS: Good to have you on. I mean, what an impassioned day. Whether it was watching it on TV or even the exchanges on Twitter with important

leaders. What is a major takeaway for you?

DJEREJIAN: First, this is a major war of words between Israel and Netanyahu's administration in Israel, and the United States and the Obama

administration. Fundamentally, to step back from this war of words, there has always been a tension between the Israeli-Palestinian peace process and

the efforts to make peace, and settlement activity. If you trace it back, Israeli settlements since 1967 have been declared to be illegal under

international law and that is a position that the United States has adopted under both Democratic and Republican administrations.

In fact, there was to cite one of several U.N. Security Council resolutions in 1980 Resolution 471, condemned Israeli settlements and the

United States abstained from that resolution just as the United States abstained this week on the Resolution 2334. So, there is nothing new in

the United States abstaining on a resolution that condemns Israeli settlements. But the political context is what is very difficult.

GIOKOS: Is anything that we heard going to spark a road to reconciliation?

[16:05:00] DJEREJIAN: I think it makes it harder. I think that the positions are becoming very polarized. And therefore, I don't think it

facilitates the efforts to make peace. It makes it more difficult. Having said that, we are in such a special situation now, a presidential

transition from the Obama administration to the Trump administration that is very difficult to predict where this is going to take us. The one thing

I take some solace at is that the President-elect has stated that at one point during the campaign, he wants do the deal. He called it the ultimate

deal between Israelis and Palestinians. I hope he lives up to that, I hope he tries like all of his predecessors to do the ultimate deal. But once he

sits in the oval office and he sees all the facts that are presented to him and the history of U.S. engagement on this, I hope that we can get back to

the constant American position to try to facilitate an agreement between Israel and Palestine.

GIOKOS: You're talking about a two-state solution --

DJEREJIAN: Absolutely.

GIOKOS: -- that when he's speaking put on the table. John Kerry was talking about this quite extensively today, saying the settlements are

inhibiting that process. It's going to make it more complex as the settlements expand further. What do you think will happen from here

onwards? Benjamin Netanyahu was also quite clear saying he's concerned about what the next few days and weeks hold for him ahead of President-

elect Donald Trump coming into power. What can happen between now and then in the context of what has just played out?

DJEREJIAN: I think the Israelis have a legitimate concern from their point of view. First of all, Netanyahu's government, as you know, is very

rightwing Likud government. Some of his cabinet ministers are staunch advocates of settlements. And therefore, his political options, political

options, are not -- are limited. But I think that what the Israelis are concerned about and what may happen, before January 20th, is that on

January 15th, there is going to be a conference in Paris on the Palestinian issue, the Israeli/Palestinian issue. And if that conference, which is an

international one, comes to a position on how the peace process should move forward and on settlements, and it's a slight possibility they recommend

that a U.N. Security Council resolution endorsing what they say occurs, that will in Israeli eyes make their position much more difficult.

GIOKOS: You were saying that Donald Trump once he gets the facts in front of him he will try to do -- make good on this deal.

DJEREJIAN: I'm speculating.

GIOKOS: Yes, you're speculating. But we've seen him engaged on Twitter platforms and seen this relationship between the U.S. and Israel now

starting to deteriorate. What do you think will happen in the next four years between the U.S. and Israel and a Trump presidency? What are you

forecasting?

DJEREJIAN: Well, first of all, if the settlement activities continue, if more and more land is occupied by the Israelis, the prospects of a two-

state solution are going to become so diminished that there will not be a viable two-state solution. What is the alternative that? It's a one

state. Either continue Israeli occupation, the status quo, which is very difficult to contemplate for the next five to ten years.

GIOKOS: Is that disappointing for you looking at that being an option?

DJEREJIAN: Of course, because basically what it means is that Israel can lose its Democratic Jewish nature. It cannot remain Democratic if it

continues to occupy at least 2 1/2 million Palestinians. And it cannot remain Jewish if it's one state where you have the Palestinian Arab

population multiplying demographically at a higher rate than the Jewish population. So, the one constant of American foreign policy on this issue

since `67 has been a two-state solution.

GIOKOS: Ambassador Djerejian, thank you very much to joining me. Much appreciated for your insights.

Before the speech even began, President-elect Donald Trump and Israeli Prime Minister, Benjamin Netanyahu, were making a very public show of

support for each other on Twitter. Trump firing the first message and we quote, "We cannot continue to let Israel be treated with such total disdain

and disrespect. They used to have a great friend in the U.S., but not anymore. The beginning of the end was the horrible Iran deal and now this.

(U.N.)! Stay strong Israel, January 20th is fast approaching!"

An hour later, Benjamin Netanyahu responded and we quote, "President-elect Trump, thank you for your warm friendship and your clear-cut support for

Israel!"

[16:10:00] And mentioned as well there for two of Trump's children's Ivanka as well as Donald Trump Jr. I want to bring in our global affairs

correspondent, Elise Labott. And she's in Washington for us tonight. What a day it's been, Elise. When we look at the exchange on Twitter, we are

seeing a very clear support coming through for -- between Donald Trump and Benjamin Netanyahu. What are you reading in to this at this point?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Clearly the Trump administration, the incoming administration, is sending a signal that it

will be much friendlier towards Israel. Not just in the tweets that you've seen over the last couple of days, but President-elect has promised to move

the embassy from Tel Aviv to Jerusalem for instance. He's also appointed a very controversial hardline ambassador that supports settlements. That has

very pro-Israel views. Kind of against what you have seen in this Obama administration.

And now the President-elect intervened in this whole U.N. vote. He ended up speaking with the Israelis, ended up speaking of president of Egypt, el-

Sisi, about this measure. It's clear that he's inserting himself on behalf of Israel. What you see from the Obama administration and what Secretary

of State Kerry said today is we are Israel's friend. We do care about Israeli security, but we feel that these settlements are threatening the

future viability of a Jewish state, a two-state solution. And friends can't always agree with friends if we don't agree, we need to be able to

tell you. And I think it was a little bit of tough love from Secretary Kerry. He said that no administration has been -- protect Israel more,

just signed a $38 billion memorandum of understanding for U.S. military aid. So, in their eyes, the Obama administration does think that it's a

friend of Israel, just doesn't always agree with its policies and feels that they need to say so.

GIOKOS: Exactly. And that was the message that was given out that, you know, friends sometimes need to show that tough love. It will be

interesting to see how Trump navigates that going forward. But Benjamin Netanyahu got a little personal today when he mentioned Ivanka as well as

his son in that tweet. What can we read into that? Both of them were tagged in that tweet when he was saying thank you for the support.

LABOTT: I think we have to be very careful not to overanalyze the tweets of the President-elect. He's making a statement. Or of the prime

minister. I mean, I think you heard Secretary Kerry a couple weeks ago, give a very impassioned speech where he says that complex issues of foreign

policy can't be boiled down to pithy little tweets. There sending signals. There sending messages. Clearly this -- the prime minister is looking past

the Obama administration, is sending a signal that he is looking forward to working with the Trump administration who he feels is going to be more

friendly towards Israel. Ivanka Trump, his daughter, she is married to Jared Kushner who has been advising the President-elect on matters related

to Israel and the Mideast peace process. They're both Jewish and feel very strongly about the state of Israel. So, I think that these are signals

being sent, but I don't think you can really kind of dissect them and think that there is any deeper meaning into them. They're both sending signals,

looking forward to working with each other.

GIOKOS: All right, Elise, thank you very much for that update, live from Washington for us.

Now the U.S. economy looks to be this in its best shape in years. Should we say thanks Obama or thanks Donald? On Twitter, it's Trump who's taking

the credit.

[16:15:00] (COMMERCIAL BREAK)

GIOKOS: So, Donald Trump's inauguration is still 23 days away, but already the President-elect and Barack Obama are competing over the economic

legacies. On twitter Trump is claiming credit for the current health of the American economy. "The U.S. consumer confidence index for December,"

he said, "surged nearly four points to 113.7. The highest level in more than 15 years. Thanks Donald!"

Well, thanks to Donald Trump, thanking himself, the hashtag thanks Donald has been trending on Twitter. Alongside competing #ThanksObama.

Let's dissect Mr. Trump's tweet. Consumer confidence is at a 15-year high and Trump's victory over Hillary Clinton provided a surge of optimism to

get -- to help it get there. But December's rise is just the last step of a very long climb. Take a look at that. And the Obama administration did

most of the grunt of the work.

In another tweet, Trump also took credit for putting holiday spending over $1 trillion this year. That number was actually a forecast made by

Deloitte back in September before the election. Looking at Wall Street, however, Trump has certainly spurred a rally. The Dow is up 14 percent

since the start of the year. Eight percent has come since Trump won the presidency.

Joining me now to dissect this further, we have Anthony Chan. He's a chief economist at Chase. And it's been interesting, Anthony, because when I

look at the evidence and the data, we have an employment sitting at 4.6 percent. I mean, it's lowest number that we've seen since we've seen since

2007. You've got GDP growth in the third quarter that came in at 3.5 percent. Can Donald Trump take all the credit for the optimism we're

seeing in the country right now.

ANTHONY CHAN, CHIEF ECONOMIST, CHASE: I never give all the credit to anyone that sits in the White House, whether it be President Obama or

President-elect Trump. Right now, what we see is an economy that is continuing to recover and we are creating jobs. Because we're creating

these jobs, consumers are getting more confident and more importantly, after the elections, it was less uncertainty. A lot of uncertainty, so you

would have expected a bump in consumer confidence. I'm excited and right now I don't even care who gets credits the credit. I'm very excited that

the economy is growing, but I don't attribute all the credit to any one candidate.

GIOKOS: Is Donald Trump inheriting a really strong economy?

CHAN: He is not. Because this has been one of the most sluggish economic recoveries in almost 60 years. Is the economy doing a lot better?

Absolutely. The third quarter was revised to 3 1/2 percent. That was before the election. One of the strongest growth rates we've seen during

this economic expansion. But all that took place before the election.

GIOKOS: Let me ask you this. Markets doing really well this year. I mean, 14 percent up. Big surge since Donald Trump was elected. How much

of that can we attribute to him coming in to office?

CHAN: When you look at the market, I give more credit to President-elect Trump and I'll tell you why. Some of the proposals are that he will cut

corporate taxes from 35 percent to 15 percent. Some of the estimates that we've done, if that happens, corporations will bring more money home. We

estimate that on an incremental basis, S&P 500 earnings can go up as much as an additional 19 percent to 20 percent over a 12-month period if that

takes place. Even if it goes to 20 percent, we're talking 10 percent to 11 percent more. So yes, that's why the market is rising.

GIOKOS: So, what will companies be doing with the money if you bring it home? I mean, what are you looking at. Because wage growth hasn't been

that great. And Donald Trump has also been promising a lot to the blue- collar worker, as well.

CHAN: I think that businesses are going to expand. They're going to invest a little bit more. One of the big disappointments have been

business capital investment. But when you're a shareholder, you really want faster growth whether your buybacks, that pushes value of stocks. We

know there's going to be buybacks. But that's not all. We're going to have lower personal taxes. That will increase the demand for these

products. And we're going to have repatriation. Which means these companies bring more money, which is available either for stock buybacks or

for more investment. All these things are very positive for shareholders. If it all comes true, do you have to give credit to the President-elect

because of those things.

GIOKOS: OK, he's President-elect, he hasn't acted as yet and it's all about action and how quickly he can implement the things he wants to do.

[16:20:00] What are you forecasting by way of growth, by way of unemployment figures and do you think we'll see a massive surge in economic

activity?

CHAN: No, I do not think. In fact, during the President-elect's campaign, he talked about growth in the 3 percent to 4 percent growth. And then they

brought it down, they said 3 percent to 4 percent. I never bought those numbers. But guess what, last year we grew -- this year we will grow at

around 1.6 percent. I'm forecasting about 2.1 to 2.2 percent growth next year. And then in 2018, I think we have as much as 2.5 percent. So, these

numbers are nothing close to the President-elect's forecast, but it's impressive. We should all be excited. The stock market is excited. It is

accelerating. It's not accelerating to 4 percent, but it's getting better.

GIOKOS: Would we have had this momentum anyway?

CHAN: I actually think that all the stimulus, $1 trillion worth of infrastructure expenditures, we know the repatriation, and all the

corporate tax -- all of this would give additional momentum. So, the economy would have grown, but not as much as if all the President-elect's

proposals go through. But we don't know if they're going to come through. But if they do, it will accelerate the economy, yes. But not to 4 percent.

Not even to 3 to 4 percent, but certainly a lot better than we've seen.

GIOKOS: Anthony, thank you very much.

CHAN: It's been a pleasure.

GIOKOS: All the best for the New Year.

Donald Trump has resumed transition meetings after the Christmas holiday at his Mar-A-Lago estate in Florida. He was due to meet with several

different chief executors as he looks to fill out his cabinet. As business leaders continue to dominate the Trump transition, Jessica Schneider

explains how the President-elect is toning down his attacks on Wall Street.

(BEGIN VIDEOTAPE)

JESSICA SCHNEIDER, CNN CORRESPONDENT (voice-over): It was Donald Trump's repeated rallying cry throughout the election season.

DONALD TRUMP, U.S. PRESIDENT-ELECT: With Hillary, we say crooked Hillary.

She is as crooked as they come.

SCHNEIDER: Trump on the trail slamming Hillary Clinton, calling her everything from crooked to corrupt.

TRUMP: She should be in prison. Let me tell you.

SCHNEIDER: But as Donald Trump's presidency takes shape, some of his sharper barbs are being described as hypocritical.

TRUMP: Can you imagine another four years of the Clintons? Seriously. Can you imagine, seriously? It's time to move on, folks. We got to do it

right. It's time to move on. And she's totally controlled by Wall Street and all the people that gave her these millions of dollars.

SCHNEIDER: But Trump's White House is welcoming Wall Street. Billionaire investor, Wilbur Ross, a former banker, is nominated for Commerce

Secretary. Treasury Secretary pick Steve Mnuchin made millions amid the housing meltdown. He was also a longtime partner at Goldman Sachs.

TRUMP: I know the guys at Goldman Sachs. They have total, total, total control over him. Just like they have total control over Hillary Clinton.

They have total. But they have no control, they have no control over Donald Trump.

SCHNEIDER: Trump taking swipes at Goldman bankers with their ties at ted Cruz and Hillary Clinton then, now tapping Goldman alumni for various

positions. Goldman Sachs is second in command, Gary Cohen, for director of the National Economic Council. Anthony Scaramucci who had two stints at

Goldman Sachs, is also reportedly under consideration for a position. And Steve Bannon, Trump Senior counsel and chief strategist, started his career

at Goldman Sachs.

UNIDENTIFIED FEMALE, TRUMP CAMPAIGN AD: Hillary cut deals for donors.

SCHNEIDER: This ad attacked Clinton in October. But Donald Trump is now doling out plumb positions for his own donors. WWE co-finder Linda McMahon

shelled out $7.5 million to a super-Pac backing Trump. She'll be the next head of the Small Business Administration if confirmed.

TRUMP: It is now abundantly clear that the Clintons set up a business to profit from public office. They sold access and specific actions by and

really for I guess the making of large amounts of money.

SCHNEIDER: There's certain Trump too might profit from the presidency. He's working to disentangle himself from his worldwide business empire. If

his two sons take over as expected, there could still be overlap. His children have already joined Trump for a number of meetings during the

transition with leaders from countries where the family has financial interests. Trump's team promising a news conference to address his

business dealings in the coming weeks after postponing it in mid-December. Trump slammed Clinton for avoiding the media.

TRUMP: She doesn't do news conferences because she can't. For a number of reasons. But number one, she is so dishonest, she doesn't want the people

peppering her with questions.

(END VIDEOTAPE)

GIOKOS: The #ThanksDonald rally on Wall Street lost steam this Wednesday after coming within just 19 points of 20,000 in early trade. The Dow

however, finished the day down around 111 points as you can see there. Sitting at 19,833. Further away from that market milestone. We've got

Cristina Alesci joining us live. The elusive 20,000 level. Why the retreat?

[16:25:00] CRISTINA ALESCI, CNNMONEY CORRESPONDENT: Well, it's fairly typical to see stocks kind of bounce around before they hit this kind of

historic record. And 20,000 could be the opportunity for people to hit the reset button and assess whether or not the prices really reflect some of

the fundamentals and really reflect some of the optimism that we're seeing.

The downward move today could also represent some investor sentiment out there that there is too much exuberance in the market, given what is really

happening. And today as you have been covering, we hit another milestone when it comes to the exuberance factor with the consumer confidence number

that came out. So, investors, there may be some investors in the market who want to see better economic growth, stronger jobs numbers, which we'll

get next week, before they hit the buy button or they hold their stock from here.

GIOKOS: So, you're saying we are not going to hit 20,000 this week. Well, I guess that's what you're reading. We get that jobs report next week.

ALESCI: I think a lot of people are going to wait and see what happens. Also, remember investors are digesting the good news out of the Trump

presidency. The fact that that he's going to potentially lower taxes, reduce regulation. But investors have yet to get their heads around the

potential bad news for growth when it comes to his policies. The fact that he's talking about tariffs as people and investors very nervous that he's

going to institute a protectionist stance. And that is a very negative sign for growth. So, as investors kind of digest all of this, we're going

to see this leveling bounce around and we will probably see more volatility than we have seen in the past couple months.

GIOKOS: Yes, everything has been fascinating. We've had a mixture of good news, hopefully good news, in terms of what a Trump presidency will look

like and also uncertainty in terms of policy. Christina, thank you very much for your time. Much appreciated.

ALESCI: Of course.

GIOKOS: Nuclear power is dimming the button. Shares of Toshiba, of the electronic giant, plummeted over big problems with its nuclear construction

business. Coming up ahead.

(COMMERCIAL BREAK)

GIOKOS: Hello, I'm Eleni Giokos. Coming up on the next half hour of QUEST MEANS BUSINESS, shares in Toshiba fall 20 percent after the company issues

a nuclear warning. And it used to be what the battler saw, which solved crimes, but now it's what Alexa heard. Amazon gets embroiled in a murder

case.

First though, these are the top news headlines we're following on CNN this hour.

[16:30:00] With just weeks before he leaves office, U.S. Secretary of State John Kerry is forcefully calling for Israel and the Palestinians to push

for a peace agreement. In a major speech, Mr. Kerry said the long stalled two-state solution is the only path, but time is running out.

(BEGIN VIDEO CLIP)

JOHN KERRY, U.S. SECRETARY OF STATE: If Israel goes down the one state path, it will never have true peace with the rest of the Arab world. And I

can say that with certainty. The Arab countries have made clear that they will not make peace with Israel without he resolving the

Israeli/Palestinian conflict.

(END VIDEO CLIP)

GIOKOS: Israeli Prime Minister, Benjamin Netanyahu, responded quickly and vehemently. He accused Kerry of mostly blaming Israel for the stalled

peace process and even though Kerry denied it, Mr. Netanyahu again directly accused the United States of masterminding the U.N. resolution that called

Israeli settlements illegal. (BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: We have it on absolutely incontestable evidence that the United States organized, advanced and

blocked this resolution to the United Nations Security Council. We'll share that information with the incoming administration. Some of it is

sensitive. It's all true.

(END VIDEO CLIP)

GIOKOS: The White House vowed a response to alleged Russian hacking during the November presidential election. And now officials say the Obama

administration is set to announce measures against Moscow as soon as Thursday. They say there may be covert actions, as well.

A report says turkey and Russia have agreed on a draft nationwide cease fire in Syria. It comes from the Turkish state run news agency, but there

has been no confirmation from Turkish, Russian or Syrian officials or rebels groups on the ground.

German police have detained a Tunisian man with possible ties to the Berlin Christmas market attacker, Anis Amri. That word from the prosecutor's

office comes nearly ten days after the deadly attack. The man's home and office were searched after his number was found on a mobile phone belonging

to Amri.

The acting head of Russia's anti-doping agency is disputing a "New York Times" report quoting her acknowledging a Russian doping program. The

"Times" quoted her as calling it an institutional conspiracy. The Kremlin denies the allegations of state sponsored doping but the "Times" says it

stands by the accuracy of the report.

Shares of Toshiba were hammered after reporting that it would lose billions of dollars on its nuclear construction business. The stock closed down 20

percent in Tokyo. It is the latest setback for electronic giant. CNN's Sherisse Phan has more from Hong Kong.

(BEGIN VIDEOTAPE)

SHERISSE PHAM, CNN CORRESPONDENT: Eleni, more trouble for Toshiba. The company stock tanked today after it said that it's expecting billions of

dollars in losses from its takeover of a U.S. nuclear construction business. Last year Toshiba's U.S. nuclear subsidiary acquired the nuclear

business CBNI, Stone & Webster, and the two companies were working on nuclear projects in the United States, in South Carolina and Georgia. But

then yesterday the company's CEO said those U.S. projects are running behind schedule and that the cost to complete them will "far surpass

estimates." He at one point bowed before cameras saying, he is deeply sorry for the situation.

Now all of this has really rattled investors. The company stock is down more than 20 percent today and that follow as drop of 12 percent yesterday.

And this all comes at a time when Toshiba is still trying to recover from an embarrassing accounting scandal where the company admitted it had

doctors financial results for years. Now there were also write-downs on other nuclear operations earlier this year, and all that together means

investors are very, very wary of the company. Sherisse Pham, CNN, Hong Kong.

(END VIDEOTAPE)

GIOKOS: Police in the U.S. state of Arkansas are hoping an Amazon Echo can help solve a murder. They are seeking recordings from a device that was in

a house where a man was killed. Amazon is refusing to turn over the data. The case is renewing the debate about technology and privacy. CNN legal

analyst, Danny Cevallos, is joining me this evening. Thank you very much, Danny, for joining us.

DANNY CEVALLOS, CNN LEGAL ANALYST: Glad to be here.

GIOKOS: Should Amazon hand over this information?

CEVALLOS: It depends on your viewpoint. If you're law enforcement you want everybody to give you all the information you ever ask for. But

amazon has some very important concerns, and that is safeguarding not only its own privacy, but more importantly the privacy of its customers, who

have entrusted it with this information in the cloud. And we're in a new frontier of the law. our old laws are antiquated in dealing with these new

concepts, like data in the cloud.

[16:35:00] Things that live in the ether and that don't live in hard cases like phones and other things.

GIOKOS: If you have any kind of device in your home and you're accused of murder, you're embroiled in a murder case, anybody can be searched. Right?

They can get a search warrant, and --

CEVALLOS: Not only can anything be searched, it routinely is searched.

GIOKOS: So, why is your Echo then anything different?

CEVALLOS: In many ways -- well, people are concerned because it's something that actively listens 24 hours a day. But there are a lot

things, technology and data has been convicting people for a long time. The information in your computer can be subject to a search warrant and all

kinds of crimes exist on computers. Whether it's that, your phone, anything else. The thing that make this is a new sort of era is that

nobody turns on the echo. It's always listening and when you activate it, it sends that voice -- information to be translated out in the cloud to

data, returns back to your home and then it acts on those commands. And that's what has people concerned.

GIOKOS: It's always listening, but is it always recording?

CEVALLOS: No. That's a big difference. It's listening for is activation words. The magic words, hey Alexa or hey Google, that spring it into

action. Once that happens however, it is recording I believe both locally and sending it out into the cloud. But as a defense attorney, take what I

say with a grain of salt. The idea that the police in this case are seeking a search warrant for Amazon customer private data on the off chance

that somebody said, "Hey Alexa," and then said something like I shot the sheriff or I killed so-and-so is really a bit of a stretch. But that's law

enforcement's approach. They cast a wide net and hope that they can get all this treasure trove of data and mine it for something that matches the

theory of their case. Again, jaded defense attorney. I understand.

GIOKOS: So, what do you think we are going to see from here? Because it reminds me of what happen with Apple and the FBI. Can we draw parallels?

CEVALLOS: You absolutely can. Because increasingly law enforcement is demanding that large companies like Apple or Amazon or Facebook, not just

open up their data, wherever it may be, but even go further and actually do things. Create software or create this data for them so that the police or

the law enforcement whoever, the FBI, can search it. The real issue going forward is to what degree when we give our data out to a third-party, must

that third-party make it available to law enforcement? At what point does the greater good of law enforcement get balanced against our privacy.

GIOKOS: So, it's a big gray area. Right?

CEVALLOS: It's as gray as gray could be. It's the greatest area these days. Or in Apple's case that white of the box that you get when you get

your gadgets.

Okay. Thank you very much. Much appreciative of your time, Danny.

We'll be more with QUEST MEANS BUSINESS in just a moment. Stay with us.

(COMMERCIAL BREAK)

[16:40:00] GIOKOS: Welcome back. New Year's Eve celebrations are edging closer and no matter where you're seeing in 2017, you're sure to see a lot

more security. There are huge challenges in keeping popular sites safe during the holidays and following the Christmas market attack in Berlin,

many European cities are on high alert. Melissa Bell has more from Paris.

(BEGIN VIDEOTAPE)

MELISSA BELL, CNN PARIS CORRESPONDENT (voice-over): As in Germany, the end of the year in France means colorful and crowded Christmas markets. Even

before last week's attack in Berlin, security here on the Champs Elysees was tight, ensured by regular police patrols, 200 cameras and 60 concrete blocks.

PIERRE-HENRY BRANDET, SPOKESMAN, FRENCH INTERIOR MINISTRY (through translator): Large crowds mean strong security measures with controls,

searches, protected perimeters. And all of that was obviously taken into account well before what happened in Germany. Although of course, the

Berlin attack reminds us of the need for vigilance.

BELL: Vigilance that will mean 10,000 soldiers on the streets of France over the holiday period, reinforcing a police presence that is 91,000

strong. Extra security measures announced earlier this month by this man, Bruno Le Roux, visited the Champs Elysees on the very week of his

appointment as interior minister. He called on Parisians to show their thanks.

BRUNO LE ROUX, FRENCH INTERIOR MINISTER (through translator): They are citizens who are at the service of our security. They pay a heavy price

and I ask that in this holiday period, there be demonstrations of friendship, of solidarity towards those who ensure the security of French

people in this difficult period.

BELL: For more than a year now, France has been living under a state of emergency. Bernard Cazeneuve, the incoming prime minister told Parliament,

why it was both necessary and working.

BERNARD CAZENEUVE, FRENCH PRIME MINISTER (through translator): Since the beginning of the year 2016, 420 people with links to radical Islamism were

arrested. And 17 attacks planned on the French soil were foiled.

BELL: After the speech MPs voted to extend the state of emergency until July of next year. But for those involved in policing the streets of

Paris, the extra measures are beginning to take their toll.

LUC POIGNANT, PEERS POLICE UNION REPRESENTATIVE (through translator): Obviously, we have the means to ensure Paris security during the holiday

period. Extra riot police will be deployed and also extra mobile units. But if I may ask, at what cost. What I mean, there is a human cost for the

security forces in general. Whether policemen or shambam (ph), we're already giving of ourselves, of our time and at a cost to us and to our

families.

BELL: For now, though the interior ministry insists that such sacrifices are necessary.

BRANDET (true translator): We have to maintain this high level of vigilance in the face of a threat that remains very high. Even as we

continue to live, to live freely, to live peacefully.

BELL (on camera): Authorities here in France are relieved that the Christmas period has gone as smoothly as it has. All eyes now turn to New

Year's Eve when hundreds of thousands of people will be here on the Champs Elysees to bring in the new year that they hope will be more peaceful than

the two that preceded it. Melissa Bell, CNN, Paris.

(END VIDEOTAPE)

GIOKOS: And we'll have more QUEST MEANS BUSINESS in just a moment. First though, we're taking a tour of Hong Kong with the art collector Alan Lo, in

this week's edition of Around the World.

ALAN LO, HONG KONG ART COLLECTOR AND ENTREPRENEUR: Welcome to Hong Kong. So, we're in the M+ Pavilion. The art scene in Hong Kong is changing so

rapidly. It's amazing to see how in a short four years, how M+ has accumulated such an amazing collection. It's practically the one major

institution that kind of encompasses art and design from all of Asia. It's almost like Tate and Pompidou combined but very much set in the Asian

context.

So, we are in the fabric market is the hears of Sham Shui Po. As you walk down these streets, it feels like nothing has changed in the last

30/40years and Sham Shui Po is probably one of the last remaining neighborhoods that still has kind of the old Hong Kong quality that is

still largely untouched.

We are in Wan Chai Market, one of the best markets in Hong Kong. As much as we're living in the 21st century, there is still kind of that tradition

going where there is still kind of joy of like that routine of going to the market and buying your food. You still have this kind of crazy food street

but in the middle of this whole urban gentrification with like luxury apartments a block away. I think that's a part of the charm of Wan Chai.

(END VIDEOTAPE)

[16:45:00] (COMMERCIAL BREAK)

GIOKOS: We'd like to take you somewhere rarely seen by Western journalists, Tibet. In September, for the first time this ten years, CNN

was granted access as we discovered China is looking to turn Tibet into a tourist nation. But CNN's Matt Rivers explains, the cost of that

transformation is more than just financial.

(BEGIN VIDEOTAPE)

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Ten thousand feet up, surrounded by stunning beauty. We stand in one of the most

restricted places on earth. This is Tibet, a region the Chinese government rarely allows foreign journalists to see. For CNN, it's been ten years

since our last visit. Back then, tourists were just trickling in. Today the floodgates are opening.

This year, some 24 million tourists will come to the Tibetan autonomous region, though some question if the number can really be that high. By

2020 authorities except upwards of 35 million including foreigners who still need a special entry permit. They'll stay in the dozens of hotels

like this one, five stars, international brands. Not long ago though, most western companies shunned this place. After a failed revolt against

Chinese rural in 1959, the 14th Dalai Lama, Tibet's spiritual leader, fled overseas and has been speaking out against what he calls Beijing's

religious and cultural suppression ever since.

A controversy aside, companies are lining up to come here as China's economic appeal keeps growing. We were invited here to cover an

international tourism expo in Lhasa, the Tibetan capital. It was a government organized trip where minders followed us everywhere we went,

determined to show a peaceful and happy Tibet. Things like painting, dancing and opera. And then there was construction. So much construction.

There are infrastructure needs that are being gladly constructed and improved says, Wong Sung Ping (ph), a tourism official. We are building a

world class tourist destination. Rome was not built within a day.

RIVERS (on camera): Since leaving Lhasa, we've been traveling on dirt roads like these for hours, for miles. But eventually that will change.

Because of giant construction projects like that one right there. Eventually that will become a modern highway stretching for hundreds of

miles. And you can only imagine how much this remote part of Tibet, some 14,000 feet up, will change once it's finished.

RIVERS (voice-over): This woman lives at the end of that new highway. She was the only Tibetan we were allowed to speak with, handpicked by Chinese

officials. She got subsidies to turn her home into an end for tourists. There's even a picture of Chinese president, Xi Jinping, on her wall.

RIVERS (on camera): Does she ever worry that part of the Tibetan culture is being lost here?

[16:50:00] RIVERS (voice-over): Despite being surrounded by Chinese officials she only offers an uneasy smile, and says she's not sure. Critic

say locals are being marginalized as the Chinese make money hand over fist using Tibetan culture as a selling point. This brand-new village with faux

Tibetan elements will open in a few weeks, ready for business.

RIVERS (on camera): In order to build this village, the government had to forcibly remove many Tibetan families who were living and working here.

Chinese officials tell us that those families will now be allowed to move back in, perhaps reopen some businesses. But these ground floor buildings

are big. The spaces are large, rent might be high and these families are poor. We ask what had kind of businesses those people could reopen, the

government said perhaps they could sell biscuits and tea.

RIVERS (voice-over): Perhaps questions like these are why the government won't let us roam freely here. But to any criticism, Chinese officials

argue all these changes have actually been good for the Tibetan people. Household incomes are way up and so are education levels. More tourists

mean more paved roads, cell towers and good Internet. But at what cost? The answer for many both inside and outside Tibet appears to be one the

Chinese government doesn't want to hear. Matt Rivers, CNN, Tibet.

(END VIDEOTAPE)

GIOKOS: That's incredible insight there. Let's shift gears now and "The Writer" magazine has named the business buzzword of 2017. It will be heard

over and over again in your bosses office, most likely driving you mad. In physics, it's the point at which something balances. In basketball, it's

the foot you keep on the floor when you're not dribbling the ball. For the cost of friends, it means this.

(BEGIN VIDEO CLIP)

DAVID SCHWIMMER, FRIENDS, TV SHOW, ROSS GELLER: Pivot, pivot.

MATTHEW PERRY, FRIENDS, TV SHOW, CHANDLER BING: Shut up, shut up.

(END VIDEO CLIP)

GIOKOS: Ok, it's not shut up, it's pivot. Yes, the business buzzword of 2017 will be pivot. Definition, to turn on or as if on a pivot. Neil

Taylor, is in London. He's a creative partner at "The Writer". Thank you very much for joining us, sir. So, OK, what is -- what is pivot going to

mean for the business world? It's a word I've heard so many times from CEOs especially startup companies. What will it mean for us in the next

year?

NEIL TAYLOR, CREATIVE PARTNER, THE WRITER: Right. Well, it means what we all think it means. Which is just to change direction. Do something

differently to what you were doing before. But I guess if you just say as a business leader, hey, we've tried doing that it didn't work so we will do

something else. That can sound a bit random and a bit panicky, so the reason why business leaders are loving it is because it has this kind of

meaning from physics. So, it sounds a bit technical and a bit thought through and like you know what you're doing. So, it just means change.

But makes you sound a bit clever as you change.

GIOKOS: And hopefully not like the Friends scene when someone says pivot, everyone will try to pivot together, right? I find this fascinating

because it's interesting that businesses need to take change, need to start acting differently in the new economic environment. Some of the research

that you've done shows that people are using this word more and more. Is this a sign of the times?

TAYLOR: Yes, absolutely. Because stuff is volatile in business and in politics, as well. Right? This is a word that has been used a lot in

politics in the last year, as well. There is something about the specificity of it. The fact that it has a technical meaning, I think it's

supposed to make the rest of us reassured that the people in charge know what they're doing.

GIOKOS: Where have you heard, this word showing, you know, some really big movements specifically out of the business world? You had mentioned the

likes of Blackberry being very clear about the way that they are pivoting.

TAYLOR: Yes, absolutely. Well, what we look for at "The Writer", we're a language consultancy and we work with businesses all over the world and

basically, we put words on our watch list. Things that we think are spreading. And then we listen out for them from in speeches from CEOs and

annual reports and even also just day to day meeting and power point presentations. And having spotted it, pivot was the one where we thought,

yes, definitely that is creeping into just about every meeting and a bit of communication in 2016 and it looks like it's going to carry on.

GIOKOS: OK, what are the runner up words that you saw coming through? We've heard a few other phrases that are going to be popular.

TAYLOR: Yes, there are a couple. One is tiger team, which just means a group of experts who you've brought together to solve a particular problem.

And so, I know George Bush was asked -- George Bush -- blimey, Trump was asked, did he have a tiger team in place to handle the transition.

[16:55:00] And also, the word swim lane. Which we all think we know what that means, but that is being used to mean an area of responsibility within

a business. So instead of having to say could you keep your knows out nose out of what I'm doing, you could say maybe we should all stick to our own

swim lane and that is a slightly less aggressive way of getting that message across.

GIOKOS: Oh, interesting times. Thank you so very much, Neil, for your insights. We'll be back with more in just a moment, first a highlight from

"MAKE, CREATE, INNOVATE."

(COMMERCIAL BREAK)

GIOKOS: Let's take one last look at how the markets traded at the corner of Wall and Broad here in New York. It was a day of disappointment for the

Dow. Take a look at that. We were up around 19 points in midday. Very close to that 20,000 level. It finished down 111 points. You can see it

so close at 19,833. Moving further away from the market milestone. But remember, we've got two trading days left of the year. The NASDAQ also

fell almost 1 percent, but it's low volumes and its holiday season.

On the European market front, a much better day than Wall Street. The FTSE 100 finished at an all-time high on this first day of London trading after

the Christmas break. Mining stocks help drive gains. Markets elsewhere had a flat day. Germany was up slightly but markets in France and

Switzerland were slightly in the red.

If you want a daily digest of the top business stories delivered to your inbox of scribe to the QUEST MEANS BUSINESS newsletter featuring Richard's

Profitable Moment, and all of the top headlines from the rest of the CNNMoney team. Go to CNNmoney.com/quest to subscribe. And that's QUEST

MEANS BUSINESS. I'm Eleni Giokos in New York. Thanks so much for watching.

END

END