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Quest Means Business

Obama, Pence Dig in for Healthcare Fight; U.K. Names New Ambassador to E.U.; Fed Warns of "Considerable Uncertainty"; Ethics hawks Call on Trump to Sell Business; Trump Sides with Assange on Hacking; Next-Gen Tech Center Stage;

Aired January 04, 2017 - 16:00   ET

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Type: SHOW; QUEST MEANS BUSINESS>

[16:00:00] RICHARD QUEST, CNN ANCHOR: The closing bell is ringing. Campbell's soup ringing the bell, but the Dow didn't manage to hit 20,000.

We wait for this. Oh, yes. A nice robust gavel from Campbell's at the New York Stock Exchange that brings trading to an end on Wednesday, the 4th of

January.

Tonight, prepare for battle. Barack Obama and Mike Pence have been rallying the troops as Congress looks to strike against Obamacare. Next up

is Brussels. Britain's wasted no time in replacing the E.U. ambassador and his is the man. And the Fed feels the Trump effect. The latest minutes a

warning of considerable uncertainty. I'm Richard Quest live in the world's financial capital, New York City, where I mean business.

Good evening. The fight over the future of Obamacare, the health care system put in place by the president, has now gone to Capitol Hill.

Republicans and Democrats have been plotting strategy in separate closed door meetings. Now, for President Obama, the battle is all about

preserving his signature achievement of eight years. He urged Democrats not to help the Republicans pass a replacement health care measure. The

Republicans reportedly hope to have a replacement measure worked out in six months' time. The vice President-elect, Mike Pence, is due to lead those

efforts. He has already said that dismantling Obamacare will be a top priority while staying laser focused on improving the country's economy.

(BEGIN VIDEO CLIP)

MIKE PENCE, U.S. VICE PRESIDENT-ELECT: We are going to have the classic three-part agenda that the President-elect talked about so often on the

campaign trail. Jobs, jobs, jobs. The focus is going to be from day one. We'll work with the Congress, and You Heard about the Efforts This Week.

To begin to roll back the onerous regulations that have been stifling growth in the American economy and stifling jobs and opportunities. We're

going to be working with the Congress over the course of the first several months to construct the kind of tax reform for businesses and individuals

that will unleash the bound-up energy in the American economy.

(END VIDEO CLIP)

QUEST: Michelle Kozinski is with me. She's at the White House. The battleground has been set. Obamacare looks like it's going to be the

first. What was the president basically saying to Democrats in Congress?

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: He spoke to them for a long time for about an hour and a half. We are told the mood was

passionate, that he basically wanted to spur them to action. To warn them not to work with Republicans on their replacement plan to really hold them

accountable. He used the language don't rescue them. Don't help them out in something that he finds unacceptable. So, the word we're getting from

the White House is that if Republicans intend to truly repeal Obamacare, which just today, every couple of minutes, you're hearing from somebody

else, that is what they intend to do.

Then Democrats shouldn't be negotiating with them. They should keep up the fight. What does that mean exactly technically? What are they supposed to

do when they don't have the votes to block Republican moves here? Well, the White House says they should employ the same tactics the Tea Party did

in opposing Obamacare initially. To get out there across America. Go to town hall meetings. And the point is to get their voices loudly heard,

telling the stories of the millions of people out there who've benefitted from Obamacare, Richard.

QUEST: Now, on the other side, although you had Mike Pence who was up on Capitol Hill. Donald Trump tweeted a warning to his own side about the

Democrats and their potential abilities to scuttle his plans.

KOSINSKI: Yes, this is interesting. It wasn't completely clear what he was saying. But it seemed like he was warning Republicans for their part

not to work with Democrats too much on this. He said that Obamacare is a disaster. It will collapse basically on its own weight ending it with a be

careful. Clearly a warning there. Now you have the President-elect, Republicans not wanting to negotiate with Democrats to improve Obamacare

but wanting to repeal it. You have Democrats saying they are not going to negotiate with Republicans if they repeal it.

[16:05:00] So, both sides see the need for changes. Certainly, for improvements to keep it going. But Republicans are determined to repeal

it. They are saying repeal and replace. But it could turn into repeal and delay. The White House is calling it bait and switch.

QUEST: In a moment of foolishness, I actually looked up the Affordable Care Act online and discovered that it runs to some 906 pages with several

thousand clauses. Not only is this a gigantic piece of legislation that will be difficult to repeal and replace in a nonchaotic fashion, Michelle,

you've covered the White House and Congress for a while. This is going to be the biggest battle, isn't it? This is the number one fighting ground.

KOSINSKI: Yes. I mean, we're looking at this now as an epic fight. How extraordinary this is to see a president in his final days in office go to

Capitol Hill, while his administration is winding down. He's essentially trying to gear up Democrats for this fight. And really rally them to not

give in. What this is going to look like is we know that Republicans have the votes. For the kind of process that they are using you're not going to

have Democratic filibusters here. So, repeal and replace certainly looks like it's going to happen. What this will turn out to look like ultimately

though is really curious.

I mean, you have the Congressional Budget Office projecting that Republican ideas at this point, because there really hasn't been presented a

comprehensive plan could over decades add trillions of dollars to the deficit. And I had one Republican, Rand Paul, not voting for the initial

steps the Senate took today. Saying it doesn't address the underlying budget issues here. He was the only Republican who voted against moving

forward on repealing. So, the White House has had this struggle to get the word out on the issues.

QUEST: Right.

KOSINSKI: At the very least the big question marks with the Republican ideas out there. But are their voices heard? I mean, Americans, by and

large, even though tens of millions have signed up, many like their plans. But there are many more who don't like it. Who felt they weren't able to

keep their initial plan. So, those voices have seemed to be much louder out there. That's what Republicans have been able to latch onto.

QUEST: I think you summed it up elegantly with your phrase "an epic battle." I shall plagiarize and use it freely in the future. Thank you.

Michelle Kosinski at the White House.

Exxon Mobil has laid out a plan to deal with conflicts of interest in its former Chief Executive, Rex Tillerson. So, you've got conflict of interest

with Rex Tillerson, who was the CEO of Exxon until just a few days ago. If he's confirmed as Secretary of State, one of the number one positions in

the cabinet, what Exxon is prepared to do, well, this is what they said. They have said that they will put the value of Tillerson's deferred shares

into an independent trust. It's roughly worth about $181 million. Now Tillerson will also sell his existing hundreds of thousands of Exxon shares

that he owns. That's worth about $55, $56 million.

He will forfeit bonuses and benefits, from Exxon, such as healthcare, any insurances. He probably also has rights to the corporate jet. And -- and

this is crucial -- he agrees to stay out of the oil industry for ten years. If he comes back in ten years or within ten years, then the money from the

independent trust will be given to charity and he will not decide which charities it goes to. This is a copper bottom, gold plated, blind trust

arrangement for his shares, his future benefits and his future industry. Now compare that to what the President-elect has said he will do. He has

said, that he will no longer -- the Trump organization will no longer do real estate ventures. No new ventures. He said he'll close his charitable

foundation. The only problem there is he can't, because it is under investigation by the New York attorney general. He said his children will

control the Trump organization assets. The problem there, of course, is some of the children are still involved in the transition. And we don't

really know, for example, Ivanka, what her role might be in Washington or indeed her husband Jared Kushner. What his role might be when he has his

own independent real estate company.

Now a letter from a group of ethics watchdogs and former officials says the Trump plan is not nearly good enough. It calls for him to sell his

businesses entirely. They like the Tillerson plan instead.

[16:10:00] Richard Painter, is one of the people who put his name to that letter. For two years, he served as the chief White House ethics lawyer

under President Bush. So, the Tillerson plan meets muster, the Trump plan, such as it is, does not. But there's not a lot anybody can do about it if

Donald Trump decides not to do anything.

RICHARD PAINTER, FORMER CHIEF WHITE HOUSE ETHICS LAWYER: Well, let's start with the Tillerson plan. Yes, I think it does meet muster. Indeed, it's

very good that he is going to be barred from the oil industry after he leaves the State Department. I wish we could have barred people from

coming from Goldman Sachs into the Treasury Department and going back to Wall Street. That type of revolving door is part of the problem we've had.

So, that's a wonderful new feature to have though it was reached through private agreement. I think there's a public benefit that's quite

extraordinary as we expect him to negotiate on global warming and other issues.

I do wish that Tillerson and the senior appointees would have a two-year ban, if not a longer ban on participating -- particularly party matters --

in which their former employer is a party. That's what president Obama has imposed. I think that president Trump ought to do the same. But most

important, president Trump needs to do what the people working for him are doing, and make the financial sacrifices that people like Tillerson are and

others are going to pay that are needed in order to clear himself of conflicts of interest. The president can have conflict of interest. They

are regulated differently than then the conflicts of interest for his subordinates. But there are serious constitutional concerns with a

president receiving foreign government money. He needs to divest.

QUEST: Ok, now, let's look into the discussion of whether or not he's bound by the conflict laws or not. He said he's not. That's another

issue. The reality is as you obviously have lived your life with the issues, it's all about perception, whatever the reality may be. Do you

fear that if he does not do more that president Trump's administration will be tainted?

PAINTER: Well, yes. It's going to be a constitutional disaster. It's going to be a political disaster. It could be a national security

disaster. If we have an attack on one of the buildings overseas that has his name on it, we don't just put the president's name up on the a building

overseas and worry about who will protect it. There are lives of people at stake here overseas. It's a global security risk. We have foreign

government money coming into the Trump business empire. There is the risk of a situation where someone combines their discussion of Trump business

with the United States government business. Then we have a bribery investigation. The plaintiff's lawyers are itching to sue every piece of

this business. It's going to be a huge headache for the Trump administration, for the country, if he doesn't take the steps he needs to

take to divest.

QUEST: He doesn't seem to see the need that others are saying. His last statement on this a couple of weeks ago, was basically we're all making

more of this than we need to. That it's not a real problem. You read his statement. You saw his tweet that we are the ones who are making a problem

where none exists.

PAINTER: Well, he says a lot of things. He's gotten where he is by saying things during the campaign including a lot of things I don't think he's

going to do. A number of things that are unconstitutional and otherwise things that are completely impractical. He may be saying things about his

own business empire and how we can keep it going and run the country from the White House. He's going to find out that's a very, very difficult task

and is going to create a lot of problems for him.

I hope he realizes that sooner rather than later. Ultimately the House of Representatives is going to be in charge of determining whether the

president is conducting himself in accordance with the constitution. And if not, there are constitutional remedies for that. But I hope we never

get there. And I believe Donald Trump, is a smart man, and think he has the able to figure this out and I just hope he does.

QUEST: Sir, my invitation to you is to come back again as this all unfolds and help us through the ethical thicket that I have no doubt we are going

to be snared upon. Good to see you, sir.

PAINTER: Well, thank you.

QUEST: Now Donald Trump picked the next sheriff of Wall Street. It's Jay Clayton and he's going to lead the Securities and Exchange Commission.

He's a Wall Street lawyer who defended big banks over their behavior during the financial crisis and then provided advice Alibaba's IPO. In a

statement, Donald Trump said that Clayton's background will help unleash the job creating power of the economy.

[16:15:00] Paul La Monica is here. Our guru. Good evening, guru.

PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Thank you, sir. Happy new year.

QUEST: Happy new year to you. What do we make Mr. Clayton?

LA MONICA: This is very interesting, Richard. Because I think that the SEC has a reputation, obviously, for being the cop on Wall Street, the

enforcement agency. And with this pick it seems as if Trump is really trying to find someone who may err on the side of working hand in hand with

Wall Street to create more jobs, which I think is going to make a lot of people nervous.

QUEST: Right. Let's look at what the mission statement is. The mission statement of the Securities and Exchange Commission is to, "Protect

investors, maintain fair, orderly, and efficient markets, and facilitate capital formation." Within that statement, we know the Trump -- Donald

Trump has been highly critical of regulation, not the least of which the repeal of course, of Dodd/Frank or at least large parts of Dodd/Frank he

would like to see gone.

LA MONICA: Right. That is definitely the case and it's facilitate capital formation. That's where people are focusing on. Will the SEC morph more

into a friend of Wall Street that is trying to help more companies go public, help companies buy out others and have higher investment banking

fees? I think it will worry people who had, even though there was a lot of criticism for the SEC which has been woefully under staffed and had a low

budget for years, it still has been doing its job to try and crack down on Wall Street's sins and grievances.

QUEST: But the last couple of SEC directors or heads of the SEC have been firm on all of this, haven't they?

LA MONICA: Yes.

QUEST: The names immediately escape me.

LA MONICA: Mary Jo White --

QUEST: Mary Jo White, who of course when to -- right.

LA MONICA: A lot of them have backgrounds as prosecutors. You do not have that here at all.

QUEST: She went on of course. Absolutely.

LA MONICA: You have someone who was working for Sullivan & Cromwell, a big law firm that has advised banks like Goldman Sachs, for example.

QUEST: Is this not -- I mean drain the swamp. So, let's bring in somebody from Sullivan & Cromwell.

LA MONICA: Yes.

QUEST: I'm thinking of the USTR. The person lent out to the USTR, part of Wachtell, Lipton, another major law firm.

LA MONICA: Right.

QUEST: You have to accept there are only so many people who have the experience at that high level. And many of them will be in private

industry.

LA MONICA: Oh, I don't think people are critical of Donald Trump necessarily for finding people in private industry. Because that is

something that obviously, President Obama did and many other presidents have done as well. I think the concern is if you are draining the swamp,

but then finding all of the allies of Goldman Sachs, what swamp are you really draining?

QUEST: And that will be interesting to see if other members of the administration make the same promise that Rex Tillerson has that they won't

work in the industry. But of course, Rex Tillerson is in his 60s or 70s.

LA MONICA: It's a lot easier for him to set up this trust --

QUEST: -- than some of these people who are in their 40s and 50s.

LA MONICA: A cynic would say he'll find a job at Goldman Sachs after his time in the administration. I'm not that cynic, I'm just saying a cynic.

QUEST: You're just jealous.

LA MONICA: Aren't we all?

QUEST: Replaced in the blink of an eye. U.K. has a new ambassador in Brussels only months before Brexit negotiations are set to begin. Who is

the new ambassador? We'll be right back.

[16:20:00] (COMMERCIAL BREAK)

QUEST: Britain has a new ambassador to the European Union. It is Sir Tim Barrow. The country's former ambassador to Moscow seen here presenting his

letters of credence to President Medvedev some years ago, when, of course, that was the correct operation to do. Now he's been replaced -- he's going

to take the place of Sir Ivan Rogers following Sir Ivan's shock resignation.

What's interesting is the speed of the replacement, Rogers only announced only he was off yesterday. Already Downing Street has announced this

replacement as the country prepares to negotiate the departure from the E.U. Now, Sir Tim has a more toxic role than one might expect. Sir Ivan

left farewell email to colleagues, in which he basically said, "Serious multilateral." -- this is describing the U.K.'s position -- "Serious

multilateral negotiating experience is in short supply in Whitehall." -- the heart of the U.K. government -- ".and that's not the case in the

Commission or in the Council." He also went on to say, that diplomats must be prepared to tell government ministers the unvarnished facts, even if

this was not good for them to hear. Iain Duncan Smith is a prominent "Leave" supporter and former leader of the Conservative Party. He told

Hala Gorani, that Sir Ivan could no longer be trusted and he was well rid of.

(BEGIN VIDEO CLIP)

IAIN DUNCAN SMITH, FORMER UK CONSERVATIVE PARTY LEADER: I think he thought more of himself than that. I think that he thought that because he had

contacts, he somehow should be, pretty much, calling the tune and I don't think that's how it works. It's up to government ministers to call the

tune. I also don't think that leaking emails, and things like that, if you are a civil servant is the right way to go. Because it loses trust. If

you are constantly in the news because of yourself and your views are, you can't be trusted in private conversations. It's probably a good thing he's

going and the new person should take that lesson which is keep your council to your minister and yourself and make sure you have good arguments, but

also the same time you look for solutions.

(END VIDEO CLIP)

QUEST: Dave Penman is the general secretary of the FDA, trade union for senior civil servants. He said there is a deafening silence from ministers

who should be defending the impartiality of the civil service. He joins me now. Mr. Penman, good to see you from London tonight. You have a point.

And ministers haven't been defending Sir Ivan. But by the same token, that leaving email that Sir Ivan wrote and sent to a large number of people

knowing it would be leaked as indeed invariably it was going to be was undiplomatic at best.

DAVE PENMAN, GENERAL SECRETARY, FDA: Well, I think Sir Ivan was setting out his reasons for resigning. Clearly to his staff. In that there were

clearly some uncomfortable truths to be told. Ultimately his job was to advise ministers. The minister's job is to make decisions. And leaving

the way he had done and the timing he's done, he's given the U.K. government time to find a replacement in advance of the negotiating process

going forward.

What I find extraordinary is that as former ministers have lined up in TV studios to criticize Sir Ivan, and to call for effectively the

politicization U.K. civil service, there's been a deafening silence from the Prime Minister and from the government and not only defending Sir Ivan,

but the impartiality of the civil service.

QUEST: OK. I can understand the second part. Because there are people saying there needs to be a pro-Brexiteer in that position. I understand

your second point. But the first point defending Sir Ivan, hang on a second. He left and then he kicked them very painfully. That comment

about there is no strategy. The comment about telling unvarnished truths, the comment about standing up for what you believe, that was all

unnecessary.

PENMAN: What he said to civil servants, which is who the memo was to, was that the tradition of the British civil service going back 150 years is to

speak truth to power even when it is an uncomfortable truth. And I think that was his message to say is that is the role that the civil service

needs to play going forward.

[16:25:00] That's a critical role to ensure that ministers make the right decision, that get the best advice, not just the advice they want to hear.

So, that the exit from the E.U. and as best as it possibly can be in terms of those difficult negotiations that the country faces.

QUEST: Is it your understanding that the situation in terms of Brexit negotiations at the moment, is bought between civil service, professional

civil service and government is bordering on chaos at the moment?

PENMAN: No. I wouldn't characterize it as that. I would criticize the government for is failing to set out clearly how difficult and complex this

is going to be. That's not something many politicians are prepared to say or want to hear, but that is the case. Unfortunately, what it means is

when people like Sir Ivan and others who understand this process and have worked at the E.U., and talk about how long it's going to take and how

difficult it's going to be, they are shouted down by both politicians and the media. So, I think that would be my criticism of government. But

civil servants are walking hand in hand with ministers just now to set out the possession in terms of the U.K.'s negotiating position as complex, as

difficult and it is going to take time.

QUEST: Sir, good to see you. Thank you for coming in this evening from London and joining us tonight.

PENMAN: Thank you very much.

QUEST: Now talking about what we were talking about with the ambassador, "With Respect Ambassador." It's the theme of tonight's QUEST MEANS

BUSINESS newsletter I've been writing about. The briefing on the trading day. Preparing you for tomorrow. You sign up at CNNMoney.com/Quest where

you also read about why I think -- of course, and what I think about the ambassador's issue.

Forget the euro. That's what the French National Front leader Marine Le Pen wants. That's exactly what she said she'll do if she's elected French

President this May. CNN's Melissa Bell is in Paris for us tonight. Melissa, the idea -- look, she recognize recognizes you can't just get rid

of the euro. You have to have a currency that is going to accommodate the other trading partners. And she wants to go back to the ECU.

MELISSA BELL, CNN PARIS CORRESPONDENT: You have a sense really, Richard, that the French have been watching the British very closely. Marine Le Pen

has been talking about renegotiation of the terms between France and Brussels for many months now. What we learned today is a little bit more

what she means by that renegotiation that she seeks to get.

It isn't quite a Frexit as you'd imagine. It isn't quite leaving the European Union. Rather we've been speaking to her chief economist and the

man who's been trapped in her policies. He explained it more clearly to us. It is about returning to the ECU. People who are less than 30 could

be forgiven for not knowing what that is. You and I remember it was the fictional currency that preceded the creation of the euro. It was about 18

years ago, that one euro came to represent one ECU.

Until then it had been a sort of currency that you couldn't have in your pocket. You couldn't have it in a bank account, but essentially it

represented this fictional unit of currency and did for 20 years around which through the European exchange rate mechanism, all the other European

currencies, including the franc and including the British pound, were pegs that change rates couldn't fluctuate too much. What Marine Le Pen is

saying is let's go back to that. You could have this form of currency, say the euro, that could exist for your foreign transactions, but here in

France we would go back to the franc. And essentially what she's talking about is a referendum here in France on the basis of that. The withdrawal

of France from the euro zone and a return to the franc, but within France's national boundaries.

QUEST: All right. Now of course that was one -- I mean, I remember the hard ECU was one of the options that was suggested instead of the euro, by

Nigel Lawson in the day. But more importantly, is this going to fly with the French people? I mean, ECUs and hard ECU, soft ECUs, it's all highly

technical stuff. Gut feeling, Melissa, is Marine Le Pen gathering support or losing it?

BELL: Well this is the trouble for Marine Le Pen, she wasn't due, Richard, to announce any of the flesh on the policies, any of her real program,

until the fourth and fifth of February. Now that still planned to take place. What's changed? And the reason for which the National Front, her

party, is announcing slightly more than it had intended to slightly earlier than it had intended to. Is that it's very worried about Francois Fillion.

The man who's been chosen by the French Republican Party to be its candidate.

He threatened to sort of sweep the populous surge on which Marine Le Pen had been counting from under her feet. She's still expected, if you

believe the polls, to get to the second round. He is now expected to beat her. If you listen to the polls. If 2016 has taught us anything, is that

you can't quite believe in the polls, and yet you sense the National Front is rattled. It is announcing these policies slightly earlier than it had

intended.

Among those, this policy on the return to the ECU, the withdrawal from the euro zone but not quite a withdrawal from the European Union. Something

designed to reassure the French, who won the whole, Richard, are in the majority are against the idea of referendum here in France still today, and

even more than that a greater majority still are against the idea of a French withdrawal from the European Union. So, you sense that Marine Le

Pen has really picked up on that and is not quite trying to backtrack, but rather to explain that what she's talking is a slightly smoother transition

that wouldn't quite remove France from the European Union, but would remove it from the euro zone.

QUEST: Good to see you, Melissa. We'll talk more about it. Thank you.

Now the U.S. State Department said it is 100 percent sure Russia tried to influence the election. Julian Assange said he's 1,000 percent sure it

didn't. In a moment.

[16:30:00] (COMMERCIAL BREAK)

QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. And you're watching CNN and on this network the news, it

always comes first.

Four days after an attack on a Istanbul nightclub in Turkey, it's foreign minister said the gunman has been identified. He hasn't revealed the name

or nationality. According to Turkish media, authorities have detained 20 suspected members of ISIS in connection with the shootings and seized an

array of military hardware during the raids.

An Israeli military court has convicted an Israeli soldier of manslaughter. He was captured on video shooting a wounded Palestinian stabbing suspect in

the head, killing him. The case has divided Israeli opinion and senior politicians including the Prime Minister, have called for him to be

pardoned.

Britain has a new ambassador to the European Union. It's Sir Tim Barrow has been previously the U.K.'s ambassador to Russia. Barrow was quickly

appointed after the unexpected resignation of Sir Ivan Rogers only months before Brexit negotiations are due to start.

The convicted Charleston killer, Dylann Roof, has begun his own defense in court, declaring there is nothing psychologically wrong with him. Roof is

now representing himself and told the jury to disregard his lawyer's arguments. The jury convicted Roof last month of killing nine people in a

racist attack at a church. He faces or could get a penalty of the death penalty.

At least 103 people have suffered minor injuries when a passenger train crashed into a station in Brooklyn in New York. Official said the train

smashed into a small room beyond the end of a track during the morning commute. As many as 700 passengers were on board the train.

[16:35:00] U.S. intelligent officials say they are concerned about Donald Trump's attacks against them. The President-elect has cast doubt on their

claim that Russia directed the hack that exposed emails between them and the DNC. Instead, Trump appears to side with the founder of WikiLeaks.

The site that publish the hacked emails. Julian Assange told FOX News, he didn't get the information of the emails from Russia contrary to claims

that they are politically motivated.

(BEGIN VIDEO CLIP)

JULIAN ASSANGE, WIKILEAKS FOUNDER: We can say and we have said repeatedly over the last two months that our source is not the Russian government and

it is not a state party. Why such a dramatic response? Well, the reason is obvious. They are trying to delegitimize the Trump administration as it

goes into the White House.

(END VIDEO CLIP)

QUEST: This was Donald Trump's response on twitter. He said, ".why was the DNC (Democratic National Committee) so careless?" He marks a change in

turn from Trump towards Julian Assange. Here's what he said to Fox News to the host, Brian Kilmeade in 2010.

(BEGIN VIDEO CLIP)

BRIAN KILMEADE, FOX NEWS HOST: He's going to talk about WikiLeaks. You had nothing to do with WikiLeaks at this time?

DONALD TRUMP, U.S. PRESIDENT-ELECT: No, but I think it's disgraceful.

KILMEADE: They don't think it's disgraceful?

TRUMP: There should be like a death penalty or something.

(END VIDEO CLIP)

QUEST: The President-elect now finds himself at odds with the intelligence community he'll have to work with in less than three weeks. Sara Murray is

outside of Trump Tower for us tonight. There's many strands of this, Sara, that we need to get to. First of all, have we clarified what exactly

Donald Trump believes vis-a-vis the Russians hacking?

SARA MURRAY, CNN POLITICAL REPORTER: No. I don't think we know exactly what Donald Trump believes. On a transition call with reporters earlier

today, Sean Spicer, who is the incoming press secretary, said that Donald Trump issue here is not with the raw data, with the raw intelligence that's

being collected. His issue is with the conclusion intelligence agencies are drawing that Russia may have meddled in the U.S. election.

Intelligence agencies have been clear they feel confident in this assessment. They have been less clear on what effect this has. But they

do believe that Russia meddled in the U.S. election. Donald Trump is going to have this meeting on Friday. We are waiting to see what he learns from

that.

QUEST: All right, Sara, I'm just making sure you are able to keep going while this gentleman decides -- oh, he's off on his bicycle. On your bike,

sir. On your bike. Will carry on talking. If that's the situation of what he believes, he says he's got more information that he's going to

reveal. But we have no idea what that is.

MURRAY: No. We don't have any idea what it is. Look, he does have a close relationship with Sean Hannity at Fox. He was interviewing Julian

Assange. It is possible he was referencing that interview and had a heads up that that was coming. We really don't have a straight answer from his

folks on what Donald Trump may have been talking about. And obviously, he hasn't come out and made any public comments on television or to the

reporters who are stationed here in front of Trump Tower to give any indication of what he may have been referring to.

But we do know he's going to be meeting with the head of intelligence agencies on Friday. His team has said maybe he will get a better

perspective on whether or not he believes their conclusions and we'll see if we hear from him after that briefing. Obviously, there should be an

interesting interaction between him and some folks he's been critical of.

QUEST: We know Donald Trump also can change on a dime. It's highly likely once he gets into office and sees it not only on a day-to-day basis but

he's working on people on a day-to-day basis, that suddenly the intelligence community becomes his best friend.

MURRAY: Well, and that's one of the things that's potentially very awkward. Donald Trump will choose his own heads of these agencies.

Obviously, he's put forward many nominees that he wants to see in his administration. But in terms of the people who day in, day out are risking

their lives, who are collecting their intelligence, some of these are career civil servants, who are analysts. Who are doing this kind of thing.

This is the kind of thing that could be disheartening to them. It could be an awkward relationship when Donald Trump does go into the White House.

We'll see if his tone changes after this briefing, or once he does actually get in the White House and become president. But you're right. It sets up

a pretty rocky relationship going in.

QUEST: Sara, between rogue cyclists, sirens and buses behind you, you've got the award tonight or keeping going. Thank you. Outside Trump Tower.

MURRAY: Thank you.

QUEST: Magnificent stuff.

[16:40:00] Talking of difficult situations, Samuel Burke is in a much more media-friendly -- no sirens, no rogue cyclists, no cold outdoors for the

youngster there. Just a nice gentle walk around the consumer electronics show.

SAMUEL BURKE, CNN CORRESPONDENT: Reporter: Richard, for all of the amazing inventions that have come out of the largest tech show in the

world, none have been able to solve the most important question of all. How to keep your battery charged? We know you are always borrowing peoples

chargers. One start-up said they figured it out and they can charge a phone from 0 to 100 percent in just five minutes. So, if you allow me back

on the show, we will see if the test passes, Richard.

(COMMERCIAL BREAK)

QUEST: Welcome back. Samuel is at the CES in Las Vegas, where they've been talking a great deal about new motor vehicles. Tesla wasted no time

putting a disappointing quarter into the rear-view, Samuel. Tesla shares closed 4.5 percent higher after the company announced it had started making

batteries at its giga factory in Nevada. Now that's despite some disappointing delivery numbers for Q-4 of last year.

Tesla's rival, Faraday Future, unveiled its new car in Las Vegas. It goes from zero to a hundred kilometers per hour in just over 2 seconds. Zero to

a hundred in two seconds. Samuel, that's even faster than you managed to avoid getting your wallet out to pay for something in the cafeteria. But

listen, this issue of Faraday versus Tesla, what's it all about?

BURKE: Listen, these are two electric car companies that are going after each other. But Tesla is in the faster lane now. Faraday Future has been

all talk and no walk for the past year. They finally, finally, finally debuted their flagship production car. We saw the speed. The important

thing to know of an electric car, is the range. And it has a range of about 611 kilometers with just one charge, Richard. If you're the type of

person who forgets your keys, you can use facial recognition to get in the car.

But when it actually came time to perform it hit a real speed bump. Just take a look at what happened while we were sitting in the audience when the

billionaire investor came out in his car. All of his employees were telling him to step out of the car, sir. We can actually have the car take

center stage on its own. And it couldn't make it the last lap. Just an extra few feet and it sat there. Same thing happened to Steve Jobs, but I

think this is a good metaphor for what's been going on with Faraday Future. Clearly in Tesla's shadow. Lots of financial questions about this company.

It's sexy. It looks like it has incredible people that they plucked away from Tesla, but Richard, at the end of the day, Tesla is a few laps ahead.

QUEST: All right. Now what else? You have gadgets with you. I'm particularly concerned of course, about this phone charging. Because my

phone seems to be perennial. I haven't given up the Blackberry yet. It's still with me. But I --

[16:45:00] BURKE: Oh, lord, Richard.

QUEST: I beg your pardon, young man. Right, what have you got.

BURKE: Don't date yourself with that Blackberry. But Richard, you are infamous in the office for having to borrow everybody's charger. When we

saw, this Israeli start-up called StoreDot, which promises to charge your phone from 0 to 100 percent in just five minutes. We knew we had to try it

out live on the show and give it the real test. We talked to you just about less than five minutes ago, and It had gone from 0 to 93 percent. So

right now, this is in a Samsung prototype. But they think that this is going to be hitting the market at the end of 2017 perhaps. You have to

have a special type of charger for it. It has to have a special type of port in the phone. So, it won't be just any phones. The phones that have

it. I think for all of the problems CES has solved, this is the one that they really haven't been able to solve yet. And there it is at 100

percent. So, Richard, as soon as this hits the market I'll finally give you that Hanukkah gift that I owe you for all of these years I haven't

given you one.

QUEST: I would say, you're quite right there. And that other contraption that's hovering, or will be hovering. It's wickedly dangerous. Come on,

tell me something new. A drone is a drone is a drone is a drone.

BURKE: You would think that, Richard. It's amazing how CES, which was once about just gadgets and computers, has become all about cars and about

drones. I remember when DJI was just -- I'm going to step back step back, Richard. Because I actually shaved today for once. So, I don't want to

get shaved a second time. This is a drone for DJI, which is now the world's largest drone maker.

If you fold it up, Richard, it's just the size of a water bottle and it now has auto tracking. It can follow me around if I want to be on camera all

the time, which I know you make fun of. But Richard, the important thing here is that with the rise of so many drones, so pervasive these companies

are having to pour mega bucks into safety. You have all types of municipalities trying to bring down drones. This drone has geo mapping.

If it's near the White House, a prison, an airport, it will automatically stop a rowdy pilot like me from getting too close places, Richard.

QUEST: Samuel Burke, thank you. Samuel, a challenge for tomorrow, please. I want to see you at high speed, walk as far as you can around CES.

BURKE: I'll do it. The challenge on.

QUEST: It's huge and you've got to cover as much as possible. I expect it all to be condensed into 20 seconds worth of video. Thank you, Samuel.

Samuel Burke.

We'll continue in a moment. Just the name of the Lamborghini is enough to capture the imagination. CNN style has a special report from one of the

most iconic models which is now 50 years young.

(COMMERCIAL BREAK)

[16:50:00] QUEST: U.S. car sales are headed for a new record after automakers such as Ford and General Motors posted strong results last

month. 2016 also marked the 50th anniversary of a classic Italian super car. Now the gas heads amongst you will know exactly who I'm talking about

or what or what I'm talking about. For those of you that don't, it was named after a famous Spanish bull.

(BEGIN VIDEOTAPE)

SIMON KIDSTON, CAR DEALER, KIDSTON SA (voice-over): Last year marked the 50th anniversary of a collectible classic. An Italian car whose name is

synonymous with fierce competition.

Lamborghini Miura was the first super card made by Lamborghini. It was launched at the Geneva show in March and it was named after a famous

Spanish fighting bull. The Miura. Mr. Lamborghini was born under the star sign of Taurus.

on camera) And as he intended his sports car to be arrival to Ferrari, it was perhaps natural he would choose a bull as his counterpart, as his

adversary to Ferrari's prancing horse.

DON EDUARDO MIURA, BULL BREEDER (TEXT): A Lamborghini has the same power and force as a raging bull in all its splendor and beauty. Lamborghini

cars are very beautiful and I think an angry bull is one of the most beautiful animals that nature has to offer.

KIDSTON: The cheapest Miura is somewhere around a million pounds. The SVJ's would be the most valuable. There are only three of them, so they

are almost never traded. If they were, they would have been approaching 7 million pounds probably. Why have a beautiful house? Why have a boat?

Why have a plane? People collect Miura's because they can. Maybe just to say, I have arrived, I've earned it. I'm worth it.

ANDREA PADULAZZI, COLLECTOR: It's a passion for a long time. I mean, you started some time, say for a boy it's starting when you are a child. You

know, it was the little car that you were using for playing. That's something in my dream.

MARC CAVENG, COLLECTOR: My brothers and father we own quite a few. Maybe more than 30 or something like that. But the one I love driving each time

is this one. If you have a Muira, you are fashionable.

KIDSTON: The Muira is probably the epitome of late `60s Italian automotive design in the pantheon of automotive greats, the Muira's place, I think

it's fair to say, is safe.

(END VIDEOTAPE)

QUEST: Lamborghini. Now the Trump victory was on the mind of Federal Reserve. The minutes reveal uncertainty about Trump's policies and the

effect they are having. Officials see the upside growth and believe inflation could be higher than expected. Randall Kroszner, of course,

former Fed governor is in Los Angeles. Thanks for joining us, sir. I know you had a tough time getting to us today. We are delighted that you made

it. Look, I read the Fed minutes. They won't use the t word. They just talk about what's going to happen. But they obviously -- it is obvious

that Donald Trump's policies will have an effect on monetary policy this year.

RANDALL KROSZNER, PROFESSOR, CHICAGO BOOTH SCHOOL OF BUSINESS: Of course, and they're going to be having an effect on fiscal policy, on regulatory

policy, incentives for investment. And so, the Fed has to take that into account. The key question is exactly how large these changes will be and

when they will occur. That's with the cloud of uncertainty that Janet Yellen and others have talked about is.

QUEST: But that uncertainty means -- obviously, from your reading of the minutes, is it your feeling there will be more increases in rates or just

faster increases in rates?

KROSZNER: It really will depend on how the policies come through. The challenge is that even if they want to do fiscal expansion, even if they

want to do deregulation, the effects of those tend to be much delayed. So, a key question will be how quickly they can get things done. One thing

that's changing is a boost in confidence, which seems to be moving investment and economic activity up a little bit quicker.

QUEST: Right. We have an interesting -- if the President-elect manages to get his tax policies through quite quickly, now the fiscal drag is

obviously less than the monetary drag, because obviously, money comes into people's pockets much quicker. So, the Fed dare not get behind the curve

on this, if inflation.

[16:55:00] KROSZNER: I think it's very important that they don't get behind the curve. The key challenge is that inflation expectations have

moved up since Trump was elected. And the Fed has to be very vigilant on that. Because you don't want them to move up too far. If they do, then

it's very hard to bring them back down. So, I think that's why the Fed is really focused on the issues and will probably move in anticipation of some

of the policy changes as those inflation expectations move up.

QUEST: Randall, good to see you, sir. I think you're going to be in New York next week, and I'm looking forward to having you. So, we can chew

these matters over face to face on next week's program. Thank you, sir.

KROSZNER: Be Great

QUEST: And thank you for the struggle of getting to us in Los Angeles today with all of the one or two problems. We very much appreciate it.

A quick look at the markets and how the Dow Jones, still no sign of 20,000 on the Dow. It's getting ever closer. Only off 58 odd points away from it

now. Who knows? Maybe Thursday is the moment when the Dow 20,000 comes our way.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment when it comes to conflict of interest, the Secretary of State nominee, Rex Tillerson, has clearly taken the high

ground. Unimpeachable, his plan to set up his independent trust and to bar himself from the oil industry for the next 10 years.

Donald Trump, on the other hand, has a much more difficult problem. But that shouldn't negate the fact he has to deal with it. The conflict of

interest questions surrounding the President-elect are real as much as they are perceived and that's going to bedevil him right the way through his

administration. That's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's

profitable. I'll see you tomorrow.

END