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QUEST MEANS BUSINESS
Trump Calls for Swift Action on NAFTA; Trump has Heated Call with Australian Prime Minister; U.S. Treasury Loosens Some Russia Sanctions; Trump Moves to Reshape U.S. Alliances; Microsoft Asks for Travel Ban Exceptions; Carney Admits Mistakes on Bank of England Forecasts; Trump Meets Harley Davidson CEO; Trump: Don't Worry About "Tough" Diplomacy; Snapchat Parent Company Files for IPO;
Aired February 2, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: The bell is ringing on Thursday. The market up nine points as the market comes to a close. What a busy day.
I've got a really good feeling about this ETF of O'Shares and how the gavel is going to be a strong one.
Yes, four, five, six, seven. Three usually does it, but there we have seven. That's what you call firm, robust gavels that's brought trading
across the globe to a close. No major market is open today, Thursday, February the 2nd.
Donald Trump wants to renegotiate and respell NAFTA. I'll speak to the outgoing U.S. trade representative about the difficulties involved.
The Turnbull telephone tete-a-tete. It puts relations with Australia under pressure. And the U.S. Secretary -- the Treasury Secretary announced a
slight easing of sanctions against Russia. But when is an easing, not an easing? We'll explain.
I'm Richard Quest, live in the world financial capital, where I mean business.
Good evening. It's been a dizzying day of developments in Washington. And whether it's trade, diplomacy, the American economy, Donald Trump has been
ripping up the rule book and reshaping the presidency. Think of Donald Trump, not as the commander in chief, but think of him as the commander in
chief executive. I need to show you exactly what has happened today alone. These are the sort of things.
Firstly, when it comes to the NAFTA negotiations, he said he wants to do them speedily. He's indifferent to the process, and he named Wilbur Ross
as his top NAFTA negotiator for the speeded-up talks.
He then slammed the refugee deal made between Obama and Australia, a key U.S. ally. He called it dumb. The president denied that he was easing
sanctions on Russia, as the treasury lifts restrictions on Russia's intelligence agency. And he met executives from Harley Davidson to talk
Now, that alone in one day would be busy, but there is more, because I need to mention the national prayer breakfast, that he held in Washington, D.C.,
where he prayed for Arnold Schwarzenegger's ratings and "Celebrity Apprentice."
Then he met King Abdullah of Jordan and also there are calls from Microsoft to amend the travel ban. Each of these stories is one piece of the puzzle.
And tonight, we're going to look at each one in turn, put it into perspective, and help you understand just what a dizzying array of issues
there have been. Now, let's begin with what we think is the most important. It is NAFTA. Donald Trump has told Mexico it's time to get on
with renegotiating NAFTA. And that is how NAFTA is spelled so far, but he wants to change it. He wants to add an extra "F" to make it an agreement
for free and fair trade. The president said his pick for Commerce Secretary, Wilbur Ross would lead the NAFTA talks and said Mexico's request
for a 90-day consultation period before negotiations was going too slow.
(BEGIN VIDEO CLIP)
Donald Trump, U.S. President: We would like to speed it up if possible, and you're the folks that can do it, Senator. So, important. And we will
make great trade deals and we will have something that will -- I don't care if it's a renovation of NAFTA or a brand-new NAFTA, but we do have to make
it fair, and it's very unfair to the American worker and very, very unfair to companies that do business in this country.
(END VIDEO CLIP)
QUEST: Our international correspondent, Shasta Darlington, is in Mexico City and joins me. This story today, Shasta, began when the President of
Mexico had this 90-day consultation period, and then said he would negotiate.
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Yes, it's all a bit confusing, but what we have here, Richard, is at least some kind of a
timetable, some kind of a road map. And in fact, the president, the Mexican president, Enrique Pena Nieto, was a bit ahead of the curve,
already starting to take measures, saying, we've got to have these consultations, and we've got to get legislators ready. If you're going to
renegotiate a deal, sign a new trade deal, this is something that is a bureaucratic process. You can't do it overnight.
So, he's arguing, we've got to talk to private sectors, but also to legislators, get everything lined up. President Trump, of course, saying
that's slow, but realistically, even in the United States, these things take time.
[16:05:04] And he's going to -- they're both going to need these kinds of timetables, even after Trump spoke, Pena Nieto reiterated the same thing
this afternoon, we're going to have our consultations. Obviously, we see time and time again, these guys don't agree on a whole lot. We'll see
where it goes from here, Richard.
QUEST: From your understanding, Shasta, how far is Mexico prepared to reopen NAFTA? The Canadians have said, look, we'll modernize it. The
Mexicans in the past have said, well, we can tinker around with it, but are they up for a full, wholesale renegotiation?
DARLINGTON: You know, Richard, I think they know, they don't have much choice here. It's either going to be a major negotiation or they're going
to have to walk away from that. And people are even talking about that possibility. If Trump starts demanding things they just can't agree with,
that -- they might just have to walk away from it. And you know, obviously, when you look at the trade balance, Mexico has come out, the
biggest beneficiary. They have the balance in their favor. But let's also look at the other side. Mexico is the United States' number two
destination for exports.
So, they're certainly getting something out of this, as well. The -- even after NAFTA was negotiated some 25 years ago, the United States continued
to subsidize agriculture. So, they feel that there is some way for them to say, OK, we can do this if you do that. As you know, it's extremely
complicated. This isn't just Mexico selling its products to the United States and the other way around. The vast majority of the aggregate -- the
high-value products that Mexico sells to the United States, like cars, many of the components come from the United States. So, it's really hard to
tear this thing up, Richard.
QUEST: Shasta Darlington, so good to see you in Mexico City. Thank you.
Now, we put this into perspective, Michael Pearlman is the former U.S. trade representative, the USTR. He joins me now from Washington. Freed,
ambassador, freed, unshackled from the post of power. At the moment, you can give me an honest assessment. How realistic is this idea that the U.S.
can begin renegotiating a NAFTA treaty within 90 days or thereabouts?
MICHAEL FROMAN, FORMER U.S. TRADE REPRESENTATIVE: Well, Richard, look, President Obama also called for the renegotiation of NAFTA and we worked
with Mexico, as well as a number of other countries to raise labor standards, environmental standards, make sure they're fully enforceable,
strengthen intellectual property rights, get access to Mexico's energy market, improve investment protections. That was all done in the context
of the Trans-Pacific Partnership that was agreed to a year and a half. That has already been done, is sitting on the shelf. President Trump
announced a couple of weeks ago, that he was going to withdraw the U.S. from it. But we have already worked with Mexico to upgrade NAFTA and that
was done over the last few years.
QUEST: Right, but how easy would it be then to take those provisions in the now-defunct TPP and incorporate them into a new or a polished-up NAFTA?
FROMAN: I think it really depends on what President Trump and the administration have in mind in terms of renegotiating NAFTA. We have not
heard much in the way of specifics. Certainly, our view is, you do want free and fair trade with our trading partners, that includes raising labor
and environmental standards in those other countries or making sure we have access to their market freely.
QUEST: You know as well as I do, sir, that the length of time -- you know better than a I do, forgive my arrogance in saying that, that these treats,
you negotiated TPP, you started T-TIP, they take years to do the prep and to do the talks. And you may or may not get a deal. The President is
talking about speeding things up. He says he's indifferent to the process that takes place. Is this a wise way to proceed?
FROMAN: Well, both the U.S. and Mexico, and I imagine every country, has its domestic procedures it needs to go through. Even under U.S. law, we
require 90 days of consultations before we launch a negotiation formally.
[16:10:06] But that doesn't mean that we can't be having dialogue with our trading partners, looking as what has already been agreed to in other
contexts, like TPP, and figuring out where to take it from here.
Of course, the challenge is, in TPP, we -- Mexico already had access to our markets. So, we weren't giving them anything in terms of additional access
to our markets. What they got out of TPP was access to the other TPP markets. And if we're going to do this on a bilateral basis, the Trump
administration will have to figure out how to make it worth Mexico's while to agree to raise the standards.
QUEST: I guess what I'm sort of asking you now is, just how difficult is all of this going to be? From your long experience of trade talks, how
much of a morass is it going to be?
FROMAN: Look, trade negotiations are incredibly complicated, incredibly complex enterprises. I think in this case, because we've made a bunch of
progress with our trading partners on upgrading previous trade agreements, like NAFTA, there's at least a foundation from which to work.
QUEST: The other thing we need to talk about is the difficulty of doing bilateral trade deals, when you're going around the world, offending your
trading partners. Thinking about, first of all, the row with Australia over immigration, calling Germany exploit -- or as one of the advisers did.
Now, you know, politicians are not weak, wilting flowers, but even so from your experience, does it require an element of goodwill to put together a
good trade deal?
FROMAN: Well, it certainly does. And of course, these relations with other countries are not about individual transactions. We have a
multiplicity of issues that we want to work with other countries on. Take Mexico. Obviously, trade is one very important issue. But we also need
Mexico's cooperation when it comes to stemming the flow of migrants from Central America to the United States. We need their cooperation when it
comes to dealing with narcotics and counter organized crime. They have politics, too. So, it's very important to have a relationship of trust, of
goodwill, of mutual respect, so that you can not only advance your trade negotiations, but secure the kind of cooperation you need on these other
issues as well.
QUEST: And finally, obviously, a negotiation of this size and scale is an interagency affair. I mean, I accept that. However, the Wilbur Ross
commerce is going to lead this. Has the USTR been downgraded, in your view?
FROMAN: I think it's tile too early to tell exactly how the administration is going to organize its trade function. USTR is certainly aware of the
negotiating expertise lies. Where the constitutional memory is, both for NAFTA, for TPP, for all the interaction with Mexico on the trade front.
But USTR has always done this very much in collaboration with the Commerce Department and the Agriculture Department and Treasury and State and
others. And it's not at all unusual that their big cooperation at the inter-agency level. I think at the end of the day, they're going to find
that the negotiating expertise for these trade agreements really still resides very much still in USTR.
QUEST: Ambassador, very grateful for you coming on tonight and talk. I have no doubt, sir, we'll be calling you frequently to help us understand
what's going on. But thank you, sir
FROMAN: Thanks for having me.
QUEST: Apple, Facebook, Google, and Microsoft, they help us get our messages from to point a to b. And now those very companies are reportedly
putting together a message of their own, addressed to President Trump. End the travel ban. At the same time, Microsoft is proposing that an exception
be made to this policy. So, these are the companies that are looking at what to do. The biggest names in the business. But Microsoft's president
and chief legal officer has written that, "We know that we do not have all the answers. But we believe that there is an opportunity for immediate
action under the executive order to help real people address pressing needs."
And as Samuel Burke joins me now from London. Samuel, the way I understand what they're talking about is in some form, they would like to see a new
category created, isn't it? One of a certain -- a person of low risk, with urgent need to travel, or something on those words.
SAMUEL BURKE, CNNMONEY BUSINESS CORRESPONDENT: Richard, plain and simple, in this document that they sent to the Secretary of State, and the
Secretary of Homeland Security, they're asking for an exception. You asked me earlier in the week when this all started, is this business or is this
personal? I said both, but I think now it's getting more and more personal.
They are actually listing in these documents people who are in urgent situations. Parents who are not with their children now -- employees of
Microsoft. Parents who need to go see their ailing parents in one of the seven countries. So, they're really getting down to the basics here of how
people are being affected by this. But I think they're doing something interesting. They're not saying, we're against this. They're saying, yes,
we're against this, but this is how it is, we realize that, and now we want to negotiate.
[16:15:06] QUEST: Is there any reason to assume that the government will listen to them? I mean, the word we've heard so far, off the record from
sources, is that there is unlikely to be any change, specifically in the seven countries that are part of the ban.
BURKE: I think they're just trying a new approach, now. Day after day, we've heard all of these tech companies out, whether it's on Twitter or
Facebook posts and talk about the morality, and that doesn't seem to have rung any bells at the White House. We don't have Donald Trump responding
to any of these tech companies, at least not in public. I think now Microsoft is taking a new approach. We hear what you're saying, we want to
try and engage in some type of dialogue. He's framed this for the art of the deal. And it sounds like if you read these papers, Microsoft wants to
strike some type of deal. I think they're trying another approach.
QUEST: Samuel Burke in London for QUEST MEANS BUSINESS tonight. Extremely busy day, as you can tell.
The Dow Jones, if you take a look at the Dow and how the Dow had traveled during the course of the day, it was really one of those days where it
started down, then it went up, it started down -- it, started down and went up. And by the time it was all over, what you're seeing there, although
it's a small move, it's only down six points, what you are seeing is the uncertainty of the current moment.
Donald Trump is openly questioning an agreement with Australia over refugees. He's called it a dumb deal. And a phone call is threatening to
strain relations between two very long-standing allies, after the break.
QUEST: Why are we doing this? That's what Donald Trump had to say about a refugee deal with one of the United States' closest allies on the other
side of the Pacific, Australia. Now, the President spoke to the Australian Prime Minister, Malcolm Turnbull, by phone. Sources say Donald Trump cut
short the call, that Donald Trump was unhappy with the refugee deal. After the couple -- by the way, the Australian Prime Minister denies that Donald
Trump put the phone down or slammed the phone down on him, but whatever happened, it seems that the call was cut short, and Mr. Trump tweeted later
it was a "dumb deal."
What was that deal? Well, President Obama had agreed to accept 1,200 refugees. It's extraordinary, in a way, because the Australian refugee
policy is also being criticized. The government has vowed to stop any asylum seekers who are coming over to Australia on refugee boats.
(BEGIN VIDEO CLIP)
AUSTRALIAN BORDER FORCE: Anyone who attempts to travel illegally by boat to Australia, will be detected, intercepted, and safely removed from
Australian waters. The rules apply to everyone. There are no exceptions.
(END VIDEO CLIP)
[16:20:04] QUEST: Jeffrey Bleich is the former U.S. Ambassador to Australia. He joins me now live from Los Angeles. Ambassador, good to see
JEFF BLEICH, FORMER U.S. AMBASSADOR TO AUSTRALIA: Good to see you, too, Richard.
QUEST: Before we get to the greater policy issues, come on, the diplomatic lines the for people you know still in the business, what's everybody
telling you about that call?
BLEICH: Well, I think they're saying that it wasn't an ideal first conversation and it's even worse, I think, frankly that there were people
who were leaking apparently from the White House about it. There is a reason why people tend to talk in those diplomatic terms about how the
conversation went. They'll say it was a frank exchange if there was a tough negotiation. They'll say, you know, it was cordial, which is a way
of saying it wasn't particularly warm, but it wasn't hostile. There are words that people use. And then to have people in the White House sharing
information just creates a new level of anxiety about how Australia will deal with this new president.
QUEST: Right. And a full and frank discussion used means they had to clean the blood off the carpet. In this particular case, in this
particular case, it's extraordinary, because Australia has a harsher policy on refugees or illegal immigration than the United States. So, one might
have thought that the two leaders would have common cause.
BLEICH: Well, I think that was probably the expectation, that the call would be fairly direct, because both countries were getting something out
of this deal, in terms of the acceptance of refugees, from different parts of the world. In addition, you know, there's a big context here in which
Australia and the U.S. have been taking on each other's burdens in various ways, to assist one another. When I was there, for example, there were
Uighurs who were coming out of Guantanamo, who were determined not to be terrorist, but needed a place to live. And the Australia took some of the
Uighurs into their country. And that's what -- that's what allies do. That's what friends do. They look out for each other.
QUEST: So, the deal that was done between President Obama and the Australian government, I mean, you know, at the end of the day, Donald
Trump -- when you look at it on its face value, from Donald Trump's point of view, it's a nonsense deal, it's a dumb deal. Why would I take somebody
else's refugees? But when you put entitle the context you've just done, it's an element of quid pro quo.
BLEICH: Right, we have a large, large trade surplus with Australia. We rely on Australians, in particular, these special forces in some of our
most dangerous places in the world, particularly counterterrorism and counterinsurgencies and those sorts of things. We heed Australia just to
keep track of our satellites in space. Because it's their antenna, it's their big dishes that watch them for about a third of their -- you know,
when they traverse around the world. So, there's a lot going on between the United States and Australia. And this is just one piece of it.
QUEST: So how damaging, we were talking to Michael Froman earlier, the former USTR, about the relationship with Mexico and NAFTA. On the trade
front and on the front with Australia, how damaging is it for relations if you only see it in mercantilist or single-issue areas, such as, well, this
is a dumb deal on immigrants, without factoring in all the other things?
BLEICH: Right, well, you can't do one-offs in diplomacy. This isn't a business that's going away. These are countries with long, enduring
relationships. And they existed long before we got here and will continue on long after. And so, you can't break them down into those pieces.
Instead, there are hundreds of deals going on with Australia simultaneously every single day. And the point is to have enough mastery of what those
are, and know what's important. And also, what you can trade off.
QUEST: Ambassador, good to see you, sir. Thank you. We'll talk more in the future. I look forward to it, sir.
BLEICH: I look forward to it too, Richard, thank you.
QUEST: The U.S. Treasury Department is to allow some American companies to do limited business with Russia's intelligence agency. It's a sort of
roundabout way in which you can then do deals selling various things into Russia. The White House says this does not amount to an easing of
sanctions. Elise Labott, two days in a row, Elise, from the State Department. Look, Elise, please, please explain to me how technically, you
know, literally, this cannot be an easing of sanctions, since you couldn't do something before, and you can now do it.
ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: OK, well, if you look at it that way, then, yes, it's an easing of sanctions. I'll break it down
[16:25:00] So, you'll remember that in 2015, that's when the Obama administration started these cyber sanctions against Russia in an executive
order. And they kept on kind of additionally adding. And then, in its last few days in office, the administration really, as it was going out the
door, imposed those cyber sanctions against the Russian FSB, the intelligence services, for what they said was the intelligence community
said was meddling in the U.S. election system.
Now, when they did that, they kind of threw the baby out with the bath water, as we say. There is legitimate non-sanctions-related trade that the
U.S. still does with Russia. And by putting these sanctions on, it kind of had these unintended consequences. The Russian FSB, along with all the
other things it does, also is in charge of handling some customs, taking customs payments, and also border checks. And so, because there is also
this non-related legitimate sanctions business, by imposing those blanket sanctions on the FSB, those transactions were not able to take place.
So what officials said to me, this is kind of like a technical fix, that was really, they did -- because the Obama administration did this so late
in the game, and it was kind of rushed through, I might say, they weren't able to make it as kind of all the nuance you need to impose those
sanctions, so as soon as they imposed these sanctions, working level officials were still working on it even before Obama left.
QUEST: I want to jump in here because you just said nuance and context. OK, nuance and context is good. But if we put today's actions in the
nuance and context of a president who has said he's in favor of lifting sanctions, and you bear in mind, it's in the first two to three weeks of
the administration, one is left with a feeling that there was a telegraphing of a message.
LABOTT: That's right. And there have been some reports that the Trump administration is ready to lift kind of larger, more significant sanctions
against Russia. We've been told those have been put on hold. And you know that the Congress, including many Republicans, are ready to try to enshrine
some of those sanctions into legislation. So, the president can't do anything like that.
So, yes, you could look at it as if the Trump administration is sending a signal to Russia, you know, this is just the beginning, wait and see, or,
you know, let's play devil's advocate. It could be that Russian President Putin and President Trump had this phone call. They're both talking about
better relations. And, you know, Putin might have said, to President Trump, look, you know, this is a, you know, small thing, but would make a
big difference in us being able to, you know, forest relations and do business. And since it was already in the works under the Obama
administration, you know, it was a kind of low-hanging fruit, if you will, to get this cooperation going again. And probably does go a long way for
President Trump to get some street cred, if you will, with President Putin. It's $5,000 a year. You know it related to sanctions, that's not
significant. You can't take it in a vacuum, but there is a larger issue about this administration lifting larger sanctions on Russia, and we'll
have to see how that goes.
QUEST: You have got many tea leaves to be reading in the weeks, and of course, your new Secretary arrived at the State Department. All right,
we'll talk about all of that. Look forward to having you many more times on QUEST MEANS BUSINESS we need you.
The European markets, let's leave you this half hour with the FTSE. It closed up half a percent. And you might want to know, why was the FTSE --
first of all, the Dax was down because of a hefty loss at deutsche bank, the results from Daimler. The FTSE was up, of course, because good
economic growth numbers are forecast from the Bank of England, 2 percent in 2017, and the Brexit white paper, of which we will have more anon.
Donald Trump is ripping up the rule book for government. He's making his mark, not just as Commander in Chief, but as chief executive of America
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When Mark Carney the governor of the Bank of England
admits, he got it wrong on the Bank of England's Brexit forecast. We'll be live in London for that admission.
And Donald Trump turns the White House into the C-suite. I'll speak to the former U.S. commerce secretary about the president's unique leadership
style. Before all of that, this is CNN, and on this network, the news always comes first.
Sources are calling it a contentious phone call. Now president Donald Trump is openly questioning the deal that the Obama administration reached
accepting more than 1,200 refugees from Australia. According to sources, Mr. Trump and Australia's Prime Minister Malcolm Turnbull, argued over that
deal. The U.S. President reportedly called it the worst deal ever. And on Thursday, he tweeted, why are we doing this? Donald Trump met with
Jordan's King Abdullah in Washington on Thursday. No details have been released on what the two may have discussed. Jordon's state news agency
reported they focused on the importance of busting strategic ties and working together to fight terrorism.
The first counter-terror operation approved by the new U.S. President appears to be more deadly than initially thought. The human rights group
said the joint U.S. and UAE raid in Yemen killed at least 23 civilians on Sunday. A case worker says drones hit a school, a clinic, and a mosque,
and that moments later, troops raided a tribal leader's home, killing everyone inside.
Donald Trump's new defense secretary is in South Korea where he has been meeting top officials. James Mattis defended U.S. plans to deploy a
missile system in the country, and says the U.S. developed system is needed because of Pyongyang's provocative behavior.
President Trump has brought the mentality of the corner office to the oval office. A series of executive orders to short circuit lengthy legislative
processes, long-winded, interagency negotiations, negotiations carried out in public, on NAFTA, TPP, and the border wall. And boardroom meetings to
schmooze top leaders. Think of the way he's running the U.S. as America Inc. This time, or today, it was executives from Harley Davidson, as well
as union leaders who made it to the oval office.
And put it into context, it follows meetings with auto makers, drug executives, and tech bosses is and tomorrow, he'll have more meetings this
time with his strategy group on the economy, which is predominantly business leaders. Never have we seen, or at least in recent times have we
seen a new U.S. president playing court and running things like a businessman or woman. Trump is running America Inc. His position is the
fixer in chief. And his ambitions don't stop at the water's edge.
[16:35:00] (BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: The world is in trouble, but we're going to straighten it out, OK? That's what I do. I fix things. We're going to
straighten it out. Believe me, when you hear about the tough phone calls I'm having, don't worry about it
(END VIDEO CLIP)
QUEST: You just don't hear politicians and new presidents speaking like that. From trade to manufacturing to foreign relations, the theme remains
the same. Donald Trump and Donald Trump alone can take charge and fix America's ills. It's the call decry of the chief executive.
(BEGIN VIDEO CLIP)
TRUMP: Well, you need somebody, because politicians are all talk, no action. We need a leader that wrote "The Art of the Deal."
Our leaders have to get tougher.
This is too tough to do it alone. But you know what, I think I'm going to be forced to.
Because I used to be part of the club, I'm the only one that can fix it.
I alone can fix it.
I want to do things that haven't been done.
I will never, ever let you down, America will start winning again, winning like never before.
(END VIDEO CLIP)
QUEST: Strip away the hyperbole and you realize when you look at the last two weeks, he's doing exactly what he said. Carlos Gutierrez says that the
government must adapt to this president/CEO business mentality. He should know, Mr. Gutierrez that is, he served in government and business. He was
the commerce secretary and he was the chief executive of the cereal company, Kellogg's. I put it to him that Mr. Trump has come into the White
House like a CEO in a hurry to get things done.
CARLOS GUTIERREZ, FORMER U.S. COMMERCE SECRETARY: If you look at the way that he has placed people in positions, he has come in with the same
strategic themes he had during the campaign, and he's gone out to find people who can execute his strategy. And look across his cabinet, he's
done a pretty good job of that. The point here is that he does set the strategy, but he will get involved in tactical areas. He will get involved
in the tactics, in the negotiating tactics. And that's where the COO needs to keep things on the rail.
QUEST: From what you've seen so far, I mean, I think of people like Lee Iacocca, you know, lead, follow, or get out of the way. From what you've
seen so far, is he acting more like a president or more like a chief executive?
GUTIERREZ: Well, you know, I tend to believe that there are a lot of similarities between the two, but I would say President Trump is leaning
towards CEO. He's behaving like a CEO. He has issues that he's interested in. He is not as concerned with process and not as concerned with
procedural matters, but getting his message out, and getting results. So, yes, I would say that right now, he's leaning toward CEO. Whether he will
adjust his style to the executive branch and the processes, the inter- agency processes that already exist, that is to be seen. But in the meantime, I think the solution needs to be that his organization needs to
be adapted to his style.
QUEST: But here's the real problem, with what I've just heard you say. If you have people like we believe Steve Bannon, the chief strategist, who
believe the system is so broken, that it can only be rebuilt after it's been blown up, or at least been destroyed and then rebuilt from the bottom,
what do you do then?
GUTIERREZ: It appears that what's happening here is that there are two groups that perhaps are being developed. There's the institutional
traditional group, which is Priebus, then there's Bannon, who as you say, he's coming in to shake things up. There are different roles. The chief
of staff is the chief operating officer. He operates the day-to-day. And Bannon is the chief strategist. So, where's policy going? Where are, we
going in the long-term? You know, what direction are we headed? And that's where the cooperation needs to exist. My concern here, and I think
the thing to watch is, are we going to see factions? And will there be a Reince Priebus faction and will there be a Steve Bannon faction?
QUEST: In this case, we have a chief exec president who seems to foster the factional form of government, believing it brings out the best in all.
Is he, right?
GUTIERREZ: I think that if the president wants these factions, the president can have these factions. But from the standpoint of his people,
if there's one thing that his people owe him, it's to be on his team. So, the idea of playing politics below the president, I think that can create
problems beyond just what, you know, what the president would like to see or the fact that he likes debate. So, if there's going to be debate, let
the president drive the debate. But I think his people owe it to him to be team players. And to be on one team. And to, you know, look after the
greater good and not their own little territory, and not their own image. And that's going to be the issue to watch. Because, you know, the
president has surrounded himself with some very large egos.
QUEST: Leaders of the big three U.S. airlines are asking for a meeting with the U.S. secretary of state. The thief executives of Delta, United,
and American plan to take on the gulf three. Again, they're accused of taking up to $50 billion in subsidies from their governments. Now, the
U.S. airlines say that gives Emirates and Qatar an unfair advantage.
[16:40:00] On this program you heard Munoz, the chief executive of United. It seems that this particular row is coming back. Amazon reported weaker
than expected holiday sales, and that has already taken its toll on the share price. It's down more than 3.5 percent, down 2.9 percent in after-
hours trade. But the shares are still over $800 each. The U.K. is one step closer to Brexit after the government has now
published its exit goals.
The Bank of England says the economy's holding up better than it thought.
QUEST: Now, the Bank of England has again revised its economic forecast, expecting the U.K.'s GDP to hold steady at 2 percent this year. It's more
than double what it was predicting six months ago. The governor, Mark Carney, says British consumers turned out to be much less anxious than
expected, after the Brexit vote.
[16:45:00] (BEGIN VIDEO CLIP)
MARK CARNEY, GOVERNOR, BANK OF ENGLAND: I think the thing that we missed is the strength of consumer spending. And consumer confidence associated
with that, that has been present all the way through this process. So, after an initial wobble in terms of consumer surveys, confidence surveys
and other initial indicators in the immediate aftermath of the referendum this summer, it bounced back pretty quickly.
(END VIDEO CLIP)
QUEST: Now, embarrassing, at best, or maybe embarrassing, at worst, some might say. Nina dos Santos is with me from outside the house of
parliament. The problem here is not that they got the forecast wrong, but that their original forecast and their prognosis during the referendum,
they were higher controversial because they were so gloomy and pessimistic.
NINA DOS SANTOS: CNN MONEY EUROPE EDITOR: Yes, that's right. Time and time again in the run-up to that Brexit referendum, Richard, mark carney,
the governor of the bank of England faced some really staunch criticism, particularly from pro-Brexit members of the current government, saying that
well, he was basically complicit in project fear, the idea of talking down the economic prospects in favor of getting people to try to vote remain.
Remain vote didn't prevail. People voted to leave. And at the moment, it seems as if central bankers aren't being questioned in terms of their use
here. Mark carney, he, himself, alluded to that in his press conference while delivering the quarterly inflation report.
Saying, I think central bankers are coming to the end of their 15 minutes' worth of fame, if you like. Of course, remember, these are difficult times
for central bankers. They're coming to the end of a time where interest rates have been record-low rates. And mark carney himself gave himself a
little bit of a pat on the back during his press conference, saying, one of the reasons why they upgraded their outlook for the second time since that,
is because of the swift actions by not only the government, on the fiscal front, to try to spend more, but the swift actions from the central bank,
to flood the market with liquidity in the wake to have the Brexit vote, so the credit markets didn't seize up like we saw back in 2008.
QUEST: We had the white paper today from the government. This is something the opposition had called for. Now, a brief glance at the 77
pages. I couldn't see anything that was dramatically different, bearing in mind the prime minister's speech, the 14 point, the three areas, and what
she had say. So, from your reading, what did you make of it?
DOS SANTOS: Well, less of a white paper, more like a wish list, maybe even a beige paper here, Richard. A lot of it is detail we already knew, a lot
is statistics that lays into contexts. Those 12 key goals she's trying to get from Brussels. It doesn't make any suggestion of how they'll get to
these goals. One particular paragraph that might be interesting to you, as someone who knows the finance industry very well. As you well know, a
large portion of British GDP comes from the financial services secretary. So, protecting the ability of financial companies to pass what will be
paramount to the British economy, this is their answer to it. Quote/unquote, "in our strategic partnership, we will be aiming for the
freest possible financial trade. There will be a legitimate interest in mutual cooperation agreements with the EU, as the U.K. leaves the EU. We
will seek to establish strong corporate oversight arrangements with the EU."
This is far too vague for a show like yours, Richard. It wouldn't stand up to the type of scrutiny you would expect from reporters like us. A very
vague document here. And that's prompted all sorts of accusations from the opposition party, who have called it overdue and utterly, basically,
meaningless. And so, what they want to do is rye to pass some amendments or put forward some amendments in the discussion of the bill that went
through yesterday, to try to get more meat on the bones. Of course, Theresa May's probably not going to buy that, because she wants to keep her
cause close to her chest before she actually invokes article 50 and has to negotiate with Brussels.
QUEST: Good to see you, Nina. That bill got its second reading in the house yesterday. Why a large majority but now goes into committee, and
still has to go through the House of Lords.
Apple may be on the verge of manufacturing in India. Government officials are welcoming plans to set up there. In confirmed, it's an encouraging
sign for India's tech scene. Also, the boss of the ecommerce site, Snapdeal, says the sector's booming.
KUNAL BAHL, CEO, SNAPDEAL: I remember when we first started, we thought that if we did a hundred orders in a day, that would be a big, big step for
us. Within a matter of a month or two, we were doing 100 orders a minute. My name is Kunal Bahl, I'm 34 years old, and I'm the cofounder and CEO of
Snapdeal. Ecommerce is not a new thing in India, it's been there, but over the last three to four years is when we've seen a significant amount of
[16:50:00] You know, when we were traveling a few years ago, to China, we came across what Alibaba had accomplished. And that was really inspiring.
Because China as a market is very similar to India, in terms of having very large number of, long sellers on one side, and many millions of consumers
on the other side.
A customer of a company like ours is really the people you see around you. It is actually everyone, but if I were to really be specific, it's the
youth of India.
More than half our country is below the age of 35 right now and it's getting younger and younger and younger. And most of them are connected to
the internet. As a result, as more and more of this youth goes online, they are buying everything online. They are no longer going to the stores
to buy anything. I think the biggest thing of becoming an entrepreneur in India is that there is so much impact that you can create today. Companies
like ours are the first cohort of companies in digital entrepreneurship. And many of our team members will start their own companies and team
members of their companies will start their companies. We have the best engineers in the world. We have a large Indian-speaking population. We
have a large digitally connected population. I'm very confident India will have the best digital entrepreneurship ecosystem in the world.
QUEST: 20 under 40. When I come back, Snapchat, its parent company Snapping has announced it is going for an IPO. I'll have Paul La Monica to
talk about that and put into perspective just how big will the Snapchat rate?
QUEST: We're talking about Snap, the parent company of Snapchat. It's just filed for an IPO. It's going to be one of the highest profile debuts
this year, and it could be one of the largest since Alibaba listed. Paul La Monica, it's a hundred-page document and we're going through it line by
line. The immediate thing that I see is that they're going for an ABC class of stock. A is being sold, class a is being sold with no voting
[16:55:00] PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: No voting rights whatsoever, which is for any fan of good - corporate governance, not a good
thing. You must have faith, absolute faith in CEO, Evan Spiegel, that he is going to run this company the right away and as a public company, you
now have fickle investors that care about beating estimates every quarter. You have to hope that he is going to do the right job, because you will get
no vote at the shareholder meeting if you buy these snap shares, which incidentally are going to be trading on the New York stock exchange. So, I
look forward to the Quest express down there.
QUEST: Do we know what -- I mean, they're creating class "A," so we don't know what percentage totally of a class "A" will be sold.
LA MONICA: We haven't seen yet what amount is going to be sold, at what price that actually comes, obviously down the road a little bit later. The
last estimates we've seen for snapchat was that this is a company that would be worth about $18 billion. That was on its last private round of
financing. Speculation when they were talking about going public, maybe it could be above $20 billion, $25 billion. This is obviously not just one of
the uniforms, but --
QUEST: I've got to interrupt here, because, I've just -- we're reading, as we're going through. On the dividend policy, we have never declared or
paid cash dividends on our capital stock. We intend to retrain all available funds and future earnings for the fun development of the company.
We do not anticipate paying cash dividends. So, this is a pure capital gain play.
LA MONICA: Right. To be fair, no tech company in the history that I can remember goes public and immediately starts paying a dividend. When you
are a hot, private company and you look to cash in on Wall Street, you don't start paying a dividend for a while. It's only been a couple of
years that Apple has paid a dividend, Microsoft. You're not seeing a dividend yet from the likes of Amazon and Facebook, and investors don't
want that. The key thing with Snapchat, the revenue growth is explosive, the user growth is explosive, but they're losing more money in 2016 than
they did in 2015.
QUEST: Uber's top execs resign from panel.
LA MONICA: Yes, that just broke as well, there were a lot of people of in the company and in Silicon Valley very critical of Uber CEO Travis Kalanick
because of his involvement with Mr. Trump. We know that the tech community has a very wary relationship with him.
QUEST: "Profitable Moment" is next. Thank you, sir.
QUEST: For something that's fast and disappears, Snapchat ate up all the time for Profitable Moment. And that's QUEST MEANS BUSINESS for tonight.
Whatever you're up to in the hours ahead, I hope it's profitable. Join me tomorrow in London.