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Fast Food Boss May Lose Labor Sec. Nomination; Trump Bats Away Questions on Russia Ties; GM CEO Mary Barra Tries to Calm German Unions

Aired February 15, 2017 - 16:00:00   ET


[16:00:00] RICHARD QUEST, CNN ANCHOR: The market is up over half a percent. A gain of 102 points now over 20,600. Really lit up like a

rocket. Bells are ringing on Wall Street. I'm back in New York. Hello, sir, for a man with a very big hat that was a very wimpy gavel.

It's Wednesday, it is the 15th of February.

Tonight, a fast food boss' chance of being the next U.S. labor secretary. All roads lead to Russia. Donald Trump dismisses questions about his

team's Kremlin connections. And Mary Barra buts heads with the German unions, it is all about the plans to take GM out of Europe. I'm Richard

Quest, live in New York. I mean business.

Good evening. In last few moments it's been confirmed that Donald Trump's nominee for labor secretary has withdrawn his nomination. Moments ago, a

senior source in the administration told CNN that Andrew Puzder has potentially withdrawn his name from consideration to join the Trump

cabinet. It happened, why? Because top senate Republicans have urged Trump to pull the plug on Puzder's nomination when it became clear at least

four Republican senators would vote against him. Now, the fast food chief executive admitted he employed an undocumented immigrant as a housekeeper.

He also had charges of domestic abuse levied against him in the 1980s. And he faced a barrage of attacks from former employees. On the senate floor,

Elizabeth Warren delivered a scathing rebuke. Said her opposition goes beyond differences of ideology.


ELIZABETH WARREN, SENATOR, MASSACHUSETTS: I understand that no matter who President Trump picks to run the labor department, I'm probably going to

have a lot of issues with that person. But this is different. Andrew Puzder should not be the labor secretary.


QUEST: John King is in Washington. Well, now, what do we make of this, John? I mean, was Puzder always the weakest of the pack, in the sense?

JOHN KING, CNN CHIEF US CORRESPONDENT: It's an interesting question. He certainly had the most baggage. We thought that Betsy DeVos who is now the

education secretary that she might fall into this fate. But the Republicans were able to keep the defections to only two. This is a very

political story, Richard that goes beyond Andy Puzder to be labor secretary. It reminds that you Republicans despite controlling everything

in Washington, the White House, the senate and house of representatives do so just narrowly. 52-48 in the United States senate. So, when two

defected on Betsy Devos, the vice president was able to break the tie. But as you know at least four Republicans are ready to bolt the president here.

Andy Puzder had to pull back. It is because of that personal baggage. And some of the conservative senators said they were getting blowback from the

evangelicals. Andy Puzder is out. A reminder to the new president that he has very limited political capital.

QUEST: So, was Puzder, with -- some of the baggage was known about, certainly his views on workers, on unions, on minimum wage. Less so the

questions of allegations of domestic abuse and the housekeeper. Was he simply a bad choice? Or is this a political victory for the opponents?

KING: I think it's a combination of the two. Because, again, remember, you played the Elizabeth Warren support. One of the political dynamics

we're seeing early in Washington that's important and significant is that the Democrats are staying together. Very rarely do you see Democratic

defections to bolster anybody in the Trump cabinet. That's dynamic number one. If the Democrats hold together, then it's imperative that the

Republicans hold together. Normally, you would see we're in day 27 of Trump presidency. Normally, you would see loyalty to the Republican

president but as you mention they had were trying to get the divorce records into that hearing.

That's embarrassing. Andy Puzder recently acknowledged he hired and paid with cash an undocumented housekeeper. While the Republican party is the

party that is railing against illegal immigration in the United States. I mentioned also the ads racy against.

And there are a number of factors here. Plus, a lot of conservatives were suspicious of his pick because he has spoken out in favor of a grand

bargain of comprehensive immigration that includes a pathway to legal status or a pathway to legal citizenship. They were scratched their heads

saying why did President Trump pick this man if they disagree so much on immigration or is the president going to pull the rug out from underneath

them. It's complicated but a big political defeat for the president.

QUEST: I can hear some of my viewers, watching us now, throwing things at the screen and saying, you, CNN, would be saying that, wouldn't you? And

this is what we would expect you to say. So, let me put their point of view to you. That actually, only being fair to the president, a new

inexperienced politically naive, maybe, president. But actually, is this a full-scale scandal?

[16:05:00] KING: I wouldn't call it a scandal. I would call it a defeat. It happens from time to time. If you go back, Barack Obama didn't get

every nominee. George W. Bush didn't get any nominee. And Bill Clinton. Sometimes, you get a nominee, and they have to go. I wouldn't go to the

word "scandal" on this. I would go to disappointment or defeat.

QUEST: Let me clarify that. What I am -- if you add in Flynn and you add in Russia and you add in Puzder, and you add in DeVos, are you prepared to

move -- what would your definition be now?

KING: My definition would be a president who won the electoral college and lost the popular vote does not have a honeymoon phase and therefore does

not have the political capital to demand these political issues because he does not have that capital, because Republicans are not afraid of this

president, they think their popularity back home is better than his, he needs to be perfect in this. In this case, he was far from perfect.

QUEST: John King, thank you.

To CNN, the U.S. Defense Department says it may recommend sending conventional ground forces into Syria. That will be a first time that has

happened. As part of an effort to step up the fight against ISIS. As CNN's Barbara Starr is at the Pentagon. Barbara, for those that don't

follow this too closely, give me the importance and the significance of a development like this.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, let's step to it very carefully and as precisely as we can, Richard. Here's what we're looking

at. President Trump, several days ago, lived up to a campaign promise, told the U.S. military, told the Pentagon, he wanted them to come back to

them with options within 30 days for speeding up the war against is. We're looking at that being the end of this month. What we want to know, one of

the ideas, not a formal proposal, very important to say that, but one of the ideas is cow send conventional ground forces into Syria to help with

that goal of speeding up the fight against is? So, yes, it's now being looked at, perhaps more seriously than in the past. Now, very risky idea.

And in fact, the Obama administration had always rejected it. Saying it was just too risky for U.S. troops. It will be a real test if it goes to

the president and he approves it, then he's going to accept much more risk than president Obama had, Richard.

QUEST: I'm just dredging from the bottom of my mind what was being said during the campaign. If I'm not mistaken, please correct me if I'm wrong

if I am, did Donald Trump specifically rule out ground forces in the middle east during the campaign?

STARR: Well, is this a very interesting question. He has indicated, that, you know, this whole debate that he was opposed to the war in Iraq. You

know, that he is opposed to the notion of nation-building through the use of military force. But he has talked about the idea of really fighting

ISIS much more aggressively. So, these are the questions that will be before him. And it becomes very interesting. Because the -- of course,

when Donald Trump said during the campaign he would fight ISIS much harder than the Obama administration had, what options are out there that nobody

had considered, that nobody had looked at? Probably nothing. I mean, the Obama administration had looked at everything you can possibly think of and

rejected a lot of that, as just that, too risky. And ground troops led that list of being too risky. So, Mr. Trump may find himself very rapidly

in exactly the position you're suggesting.

QUEST: But he certainly said that there would be no escalation, I mean, the two counterpoints of his position was, on the one hand, it would be a

massive -- you know, he would deal with ISIS quickly and decisively. But on the other hand, he made it clear that the U.S. would not become

embroiled and would not become more involved in the Middle East.

[16:10:00] Now, you can reconcile those two positions, if you're talking about ground troops?

STARR: Well, there you go. Right? I mean, this is the constant decades- old problem for the U.S. military in the Middle East. We're going to just send a few troops. It will be very limited. We're just going to do this,

we're just going to do that. And somehow it drifts into the phase which the penalty gone hate, which is mission creep. What the notion is if you

send a relatively small number of troops into northern Syria, as the U.S. forces are struggling to take Raqqa, maybe you increase your forces with

the Russians in Syria, maybe you arm the Kurds. So, all of these ideas are out there, and the approach might be that it's fairly limited. But there's

also that old saying for a very good reason, no idea survives first contact with the enemy. The enemy would get a very big vote in this, if it were to


QUEST: Barbara Starr, Pentagon. Clearly, this is all happening while we're on air. The news is breaking. Not only the dustup, but this option

being put forward, Senator Bob Menendez is at the U.S. capitol building. A Democratic senator, member of the foreign relations committee. Senator,

we're very fortuitous to have you with us, as this is coming out, sir. Sir, your initial reaction, even an option, even an option, I'm go nothing

farther than that, of ground troops for Syria would be what?

BOB MENENDEZ, SENATOR, NEW JERSEY: Would be a dramatic shift in our policy. The reality that we have had some special forces, particularly for

targeting, for training and assisting purposes. Of those where moderate vetted Syrian rebels. But the introduction of ground forces, it would have

to have a clearly defined mission. And in my view, would clearly have to come to the congress for support. Otherwise, the president would be

risking enormously the goodwill, not to mention, any type of support for the long-term commitments that he's thinking about. So, this is the first

I've heard of it. Of all of the hearings I've ever sat in on Syria. And all of the briefings I've ever sat in on Syria, I've never heard of the

possibility of ground forces. We have to hear what the mission is and how it would be accomplished and what size of forces would be necessary.

QUEST: So, from your perspective, it would be unthinkable to prosecute such a development, without going to congress, whether for permission or

just to inform?

MENENDEZ: I think it needs more than just information. It needs consultation and possibly, depending upon what the nature of the mission

is, it may very well need action by congress. If you are committing troops abroad, then the president is going to have to define for what purpose that

is. There's any immediate threat to the United States? Are you committing to fight an enemy in a longer term? Are you declaring war in a context?

In this context, even if it's against ISIS in Syria? For what purposes, we're going to have to have, clearly, to know, as well as obviously, the

funding of those troops for any proposition would come to congress.

QUEST: But, again, if the president says, well, you know, President Obama spent several years and a great deal of money and didn't make much inroads

in his view, in his view, on dealing with ISIS. And this president went to the country promising a decisive, groundbreaking measure against ISIS.

Would you be minded to give him leeway, to give him benefit of doubt?

MENENDEZ: Well, Richard, I'd have to know what the mission is. I've always been known in my 25 years in congress to support a president in

engagement abroad if it's in the interest of the national security of the United States. And I will send my son and daughter to fight for the cause

if I believe the cause is right. But if it's not right, I not only wouldn't send mine but to send anyone else's sons and daughters. We have

to know what the mission is here to understand whether or not we can be supportive of the president. I certainly want to do everything to defeat

ISIS. But I have to understand there is a mission that's coherent and has possibilities of success.

QUEST: We need to skate to other ice. Mr. Puzder who has withdrawn his nomination for labor secretary. Do you see -- how do you see this in the

greater scheme of things? Was it just a bad -- was it just a bad nominee, who has fallen as he should have done? Or is this the Democrats managing

to create a doubt and pick off enough Republicans?

[16:15:00] MENENDEZ: Well, today, his withdraw is a victory for the American worker. He was a bad nominee to start off with. All of his

record was being exposed. Both as why he would not be a good labor secretary. What he has been as an anti-worker individual in this country

and CEO. Personal issues that were coming up. He would have had a very exhaustive hearing tomorrow. And I don't think he could have withstood the

hearing. And he had lost support among Republicans as well.

QUEST: John King was just saying to me a moment ago, who obviously, you know, one of the interesting things is, the way Democrats are sticking

together at the moment. There's no fraying in Democratic opposition. Do you -- what's holding the Democratic caucus together at the moment?

MENENDEZ: Well, look, I think we're not -- I've voted for some of the president's nominees, such as General Mattis and General Kelly and defense

and homeland security, secretary chow or nomination. But the bottom line is, you have exceptionally bad nominees, some who have said they want to

slay the very department they've been nominated to. And some who have very ideological views like ending Medicare and Medicaid as we know it that

galvanizes the Democratic party in this country who don't share the views.

QUEST: I do need to talk to you about the very thing we invited you to talk about originally which was Venezuela. When you heard yesterday, I

believe it was yesterday, you heard the Treasury Secretary Mnuchin imposing the sanctions on individuals, allegedly, for drug dealing. Do you think

this is the sort of measure that finally the administration is taking against Venezuela that needs to be extended further?

MENENDEZ: Absolutely, I applaud the Trump administration for acting decisively. And my colleagues both in the house and senate have sent a

letter to President Trump calling for sanctions to be imposed. Sanctions that I hope write into law. For him to actually pursue one of the

individuals we mentioned, the vice president of Venezuela, it's an enormous step forward. Pie had one of the wives of one of imprisoned leaders, labor

leaders and political leaders in Venezuela, Leopoldo Lopez who said it just reverberated across Venezuela to a regime that's opposing people and cause

enormous hardship.

QUEST: Senator, may I thank you. You've been gracious with your time.

As we continue tonight. The market, an update for the market. Up half a percent. Look at the way the Dow closed. A gain of over 100 points. I'm

not saying when. I'm not saying if. I'm just saying, over 20,600. Need I say more?


QUEST: A flood of questions and reports that high-level aides in the Trump campaign were in constant communication with Russians known to U.S.

intelligence. Lawmakers are Capitol Hill are calling for hearings. At a press conference with the Israeli Prime Minister, the president avoided

discussing the substance of this team's communications with Russia. Rather, he criticized the fact that those contacts have been made public.


DONALD TRUMP, U.S. PRESIDENT: Papers are being leaked. Things are being leaked. It's criminal action, criminal act, it's been going on for a long

time before me. But now it's really going on. And people are trying to cover up for a terrible loss that the Democrats had under Hillary Clinton.

I think it's very, very unfair what's happened to General Flynn. The way he was treated and the documents and papers that were illegally, I stress

that illegally leaked.


QUEST: I am going to show you what they are. I now you may be saying give the man a chance he's only just been in office a matter of three weeks.

But these are the very real national security controversies that exist.

First of all, of course, you have the issue over Michael Flynn's resignation and they he obfuscated, some would say simply lied to the vice

president and his aides over those discussions. Then you have the allegations over Trump's dispute with the intelligence agencies over the

alleged dossier on the president. The so-called intelligence as he put it in a particular tweet. The very issue is the hacking of the U.S.

election, by whom, under what situation, and to what result?

The question with the easing of sanctions. Sanctions that were imposed over Crimea, which is now the talk is whether or not those sanctions should

be lifted. Which, of course, brings us back to the whole issue of Flynn. And they all have one thing in common, it is, of course, Russia. As we

reported yesterday, Moscow suggests it's testing Washington with a number of provocative military actions and then you have all of this leading to

Russia. Which raises the question which I know you'll be asking, are we all just paranoid? Are we seeing smoke and mirrors in making out the

Russian flag as we go about it?

AndreI Illarionov served as Vladimir Putin's chief economic adviser, he's now the senior fellow at the Cato Institute center for global liberty and

prosperity. He joins us. Sir, good to see you. You've heard the controversies. You've seen me link them to Russia. Am I making too much



of very serious allegations that have been made against the current administration and against the president of the United States. What we

really need to know now, we really need to know facts, especially concerning these contacts between the members of the Trump team during the

campaign with the Russian officials. Or with Russian intelligence officials, because different sources they claim that were intelligence

officials. We need to know who was on the Trump side. Who was on the Russian side. When, where, those contacts have been. And what is the most

important, what is the substance of those contacts.

QUEST: Right, but it comes full circle to an extent. You have the allegations of hacking. The discussions if true. Contacts between

campaign and Russia. You then have during the transition, Flynn talking to Russia. If true, this is an exceptionally high-risk strategy by President


[16:25:00] ILLIARIONOV: Yes. But Mr. Putin that he applied to different issues, but we are much more interested now in what's risky with the

behavior of the Trump administration and the president right now. We definitely know that Mr. Flynn had very extensive contacts with Russia with

Mr. Putin himself because he was at the same dinner table with Mr. Putin. Mr. Flynn has spoken with Russia today channel. We know this. That's very

clear. But what do we really know, whether the substance of Mr. Flynn or anyone else were of illegal character. That is really important.

QUEST: So, if we sift through this, and humanly, if you will, sir, so that we're not sort of talking in riddles, what sort of thing do you imagine

might have been the thrust of the prelection discussions, if they existed, between a Trump campaign and Russia? Are we basically saying one side is

saying to the other, what dirt you have got on Clinton that you can drag up?

ILLIARIONOV: We need to be very accurate, especially in such places like CNN which has a very substantial reputation, not only in the United States,

but around the world. But to distinguish between two types of action. The very contact between different people within the administration with

foreigners, even with foreign officials. Even with foreign intelligence officials, it seems to be it's OK. We're living in a very globalized

international world. And it's impossible to avoid such contact but what is really important those contacts would not include some illegal activities.

And something that those people would try to hide from the outside world, for example, the claim that there was a communication between some

particular service in Russia and the Trump team.

QUEST: Right.

ILLIARIONOV: We still don't know much about that. But we do know that as soon as the question had been raised, those communications had been

stopped. So, that is why you have to think about what type of communication, what nature of the communication, what substance of

communications have been. But on the other hand, you also should not look into the real actions and real actions of the Trump administration.

Because over the last several days, or even few weeks, the administration has taken very serious and very strong stance against the Russian

administration. Mr. Trump himself essentially agreed with Bill O'Reilly about his statement that Mr. Putin is a killer.

Today, he said that Crimea had been taken by Russia. Yesterday, press secretary of the White House has said that Crimea should be returned to

Ukraine. So, this is a series of statements. So, that is why we need to look not only into statement or action that has been during the

presidential campaign, but what actions are going to be taken right now.

QUEST: And that's -- thank you. And please come back again, because this is going to develop further. And I'd be grateful to have your thoughts as

it does so, sir. Thank you very much indeed for joining us tonight.

Quick to Wall Street, the market has extended the record-breaking streak. The Dow closed, straight out of the gate, straight up and never looked

back. A new high, the fifth in a row, S&P and NASDAQ notched up to record closes in many days. And Time Warner shareholders are going to adopt the

tellers of the AT&T merger. You know me, Time Warner, parent company of this network. We'll be back with more.


QUEST: Hello, I'm Richard Quest, there is more "QUEST MEANS BUSINESS" in just a moment. Let me remind you this is CNN. And on this network, the

news always comes first.

The U.S. Defense Department says it may recommend sending conventional ground forces into Syria as part of its deliberations about how to step up

the fight against ISIS. Ground troops mark a major departure for the U.S. in Syria until now it has only deployed small teams to assist and train

local anti-ISIS forces.

The U.S. labor secretary nominee Andrew Puzder withdrawn from consideration. Senate Republicans urged to White House to withdraw it as

opposition to Puzder grew. He was to face a confirmation hearing on Thursday.

Officials are telling CNN U.S. intelligence agencies are trying to figure out why high-level advisers to Donald Trump were in constant contacts with

the Russians during his run for the White House. Among then was Michael Flynn who recently resigned as the national security adviser, and former

campaign manager Paul Manafort who has denied the claims.

President Trump hosted Israeli Prime Minister Benjamin Netanyahu in the White House. He asked to hold back on settlement construction saying the

U.S. would push for peace deal with the Palestinians. Prime Minister Netanyahu called Mr. Trump a great supporter of Israel.


BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: I've known the president and I've known his family and his team for a long time. There is no greater

supporter of the Jewish people and the Jewish state than President Donald Trump. I think we should put that to rest.


QUEST: Malaysian police say a woman has been arrested in connection with the death of Kim Jong-Nam, the half-brother of North Korean leader Kim

Jong-Un. South Korean officials say he's believed to have been poisoned.

Returning now to the top story tonight, Donald Trump's nominee for the labor secretary Andrew Puzder has withdrawn from consideration. It became

clear that there were enough Republicans that would vote against him to block his confirmation. CNN's Cristina Alesci is here with me. So, what

did him in in the end?

CRISTINA ALESCI, CNN CORRESPONDENT: He was a deeply flawed candidate from the beginning, Richard. I mean, Democrats really wanted someone who would

stick up for workers. In this case, enforce overtime rules, create better regulations in general to protect workers. And they painted Puzder as the

complete opposite, right? Let's put aside his divorce spiraling and all of that scandal. And just take a look at his record. Not only have former

employees of both hardy's and carl's junior, the two fast food chains you mentioned that he ran, not only were they complaining about him in state

filings but he also dissed his own employees on the record, it was public quotes like, quote/unquote, in fast food, you sort of compete for the best

of the worst. That's Puzder talking about his own employees.

[16:35:00] It was very easy for the Democrats to say, look, this guy doesn't even care about the people that work for him. How is he going to

care about the American worker?

QUEST: The ability to pick off Republicans that would be necessary to defeat the nominee. Now with Betsy DeVos, they managed to get two.

ALESCI: Right. And they couldn't even get there with her.

QUEST: So, why -- what is it about this one that Republicans felt they were able to -- that another two were able to buck it?

ALESCI: There was also that element of scandal around, you know, his divorce filings. The racy ads for Hardy's and Carl's Junior probably

didn't sit well with the ultra conservatives. He's been controversial from the beginning so that is what made his confirmation so difficult and it's

not a surprise that he's pulling away. Now, we have to see who is on the short list.

QUEST: You beautifully anticipated my question. Do we have any idea?

ALESCI: I can only talk about names that were floated before this happened. One is Victoria Lipnick, who is one of two Republican

commissioners on a panel of people who are supposed to deal with civil rights violations in the workplace. But, again, she is kind of seen as

anti-worker, too. And the other name that was floated before all of this happened was Scott Walker, who is -- yes, exactly.

QUEST: The former governor.

ALESCI: Wisconsin, exactly. Former governor of Wisconsin. And he's largely seen as anti-union, as a union buster.

QUEST: And remember now, what he did in terms of unions and the way he made behaved in their own crisis.

ALESCI: Exactly. So, there's going to be opposition no matter what.

QUEST: Right, but the goal here, of course, is not to worry about the Democrats' opposition. It's mainly get back on home, back on base?

ALESCI: To your base, both Victoria Lipnick and Scott Walker are more palpable options than Puzder. At least so far.

QUEST: The name dropping, it wasn't the jaw dropping, it was the pen. Thank you.

General Motors chief executive Mary Barra in Germany today trying to win support for a deal that's causing controversy across Europe. Miss Barra

flew to Opel headquarters in Germany where she met the management and unions to discuss the potential sale of Opel to PSA the owner of Peugeot

and Citron. The German economy minister is angry. Unions have been taken by surprise and they are calling it completely unacceptable. In France,

the PSA chief executive said he wants to meet Angela Merkel as early as this week.

GM and PSA have not said what cuts they would make. And to the U.K. where it used to be Vauxhall the unions are worried about 4,500 jobs. The

British Department of Business says it's in touch with GM. Joining us now from Stamford, Connecticut is Rebecca Lindland, the executive analyst at

Kelley Bluebook an auto research company. This story came out of nowhere, came out of nowhere. It's absolutely gobsmacking, when you think of the

length of time that GM has been in Europe, whether it's Vauxhall or Opel, why this now?

REBECCA LINDLAND, EXECUTIVE ANALYST, KELLEY BLUEBOOK: Well, this is not the first time that GM has contemplated selling Opel since 1936, after they

acquired the brand that they first floated the idea of the sell. This has been long and coming there's been different flirtations over the decades

looking at selling them. They considered it back in 2009 as well and came very close to it. But what's really changed is consumer preferences even

in Europe are moving towards SUVs. And they have the ability to produce and develop small car lines that they have. There's a combination of

change within GM itself and also certainly changes in Europe.

QUEST: To anybody watching us tonight, they say, does this mean that gm -- humor me -- let's assume this deal goes through. Would GM be forsaking

Europe pulling out?

[16:40:00] LINDLAND: Well, yes and no, Europe's never been profitable for them. They have a very low market share. Only about 6 percent. And so,

it's not for lack of effort. They certainly have tried. They have 38,000 people that they employ. Europe, 19,000 of them are in Germany at the

plant where I've been several times myself. It's a wonderful, fantastic facility. And they employ amazing talented people there. But the reality

in GM's Mary Barra world is they're not making money there, they've lost $9 billion. They've got to do something.

QUEST: It goes to the issue. The issue is whether PSA can be politically acceptable to say, for example, Angela Merkel, the German unions, the

British government but his deal still has to pass muster with the European commission and European officials. So, what's going to be the issue there?

LINDLAND: Jobs. It will be -- it will be how many jobs are at stake. I mean, is this a very complicated deal. As you mentioned, it involved the

U.K. It involves Germany and France. At a time when, you know, Brexit is coming into play with those countries are dealing with their own political

turmoil. But it really comes down to jobs. As we know, the French unions are well-known for holding the government hostage.

QUEST: So, I promise you, Rebecca, I will not hold to you your next answer, let alone do anything mean and cruel such as play it back to you.

Gut feelings, straight off the top of your head, does this deal happen?


QUEST: Thank you. I promise you I won't play it back if it doesn't.

We've given it to you straight as it is to help you understand what's happening. "QUEST MEANS BUSINESS." European markets finished the day led

higher by the banks. All follows what Janet Yellen said that interest rates could rise sooner than expected given the boost, obviously, bank

profits go, too. And the best gains today, and the ZURICH SMI, .71 percent. "QUEST MEANS BUSINESS," live in New York.


QUEST: The chief executives of seven U.S. retailers are in Washington for a meeting with Donald Trump lobbying against a proposed import tax. It's

the border adjustment tax, it is the brainchild of congressional Republicans to raise revenue, but they want to have tax reform that would

lower the headline rate of corporation tax. You've got to make it up somewhere, hence, the border adjustment tax. It is a sort of VAT, it could

drive up costs to any company that relies heavily on imports like retailers versus the exporters. The chief executive of AutoZone said he was grateful

to get an audience at the White House.


BILL RHODES, CEO, AUTOZONE: I've been in the retail industry personally for 22 years. To my knowledge, the retail industry has never been to the

White House to have an opportunity to meet with the administration and key members of his team. And we have that opportunity today and we're grateful

for that opportunity.

[16:45:00] QUEST: The big names were there. Matthew Shay is in Washington, chief executive of the National Retail Federation joins me now.

Good to see you, sir. Thank you.


QUEST: What is the number one message that these retailers took to the White House? I mean, the border adjustment tax is an extremely esoteric,

somewhat arcane deeply complicated piece of policy.

SHAY: I totally agree with you well said and well stated too. This is the continuation of a number of visits that have taken place over the last

several months. Members of ours, members of associations, members of a big broad diverse coalition that includes 180 companies, organizations,

industry groups, all of whom are expressing their concern about this element of the proposed reform to the tax code. All of us support tax

reform. We all like to see a more competitive tax rate and a broadened base. But this particular proposal, we think, is going to be bad for

consumers and bad for the economy. It's going to raise rates and taxes on everything that consumers purchase.

QUEST: Well, OK. We're in an interesting situation because, what you're saying is, well, I'm hearing from others as well, we all want the good,

something of a reform of the tax code. The lower tax rate. Repatriation of tax profits, deregulation, oh, but by the way, we're not sure how you'll

make up the difference.

SHAY: Well the tax reform proposal is a proposal that makes very clear choices about winners and losers. And there have been other tax reform

proposals over the years, many of which we've supported, and they've made different choices. And this is less about one particular industry. This

is about the fact that this is going to impact consumers, American taxpayers on everything, not just what they buy from retailers. But

automobiles, gasoline, food. Everything that they purchase is going to cost more. It's really a hidden national sales tax. Or what you said

earlier, it's really a consumption tax. More nefarious, because no one knows it's there.

QUEST: Let's talk about the retail industry at the moment. We keep hearing merger talks of this chain or that older chain. Macy's, Sears,

Target, all of the big names. What if your view is going on between the traditional retailers and the newer retailers?

SHAY: Well, I think what we're seeing going on, Richard, this is dramatic transformation. We've seen the pace, the velocity of change in the

industry driven in part by globalization, in part by technology. Empowered by new things like tablets and smartphones. Consumers are moving even more

quickly than ever. When we're seeing that play out in a very disruptive and volatile environment so retailers are trying to meet the consumers

where they want to be. I think it's worth noting, however, when we talk about new versus legacy retailers, sometimes there's a false narrative that

there's an online industry and bricks and mortar industry, the truth is they're the same. If you look at the top e-commerce websites in the United

States 7 of the top 10 and 11 of the top 25 are operated by bricks and mortar retailers. Retailers are operating businesses that serve consumers

and meet them where they are. And consumers are changing their habits and preferences.

QUEST: Good to see you, sir.

Now to the newsletter the "QUEST MEANS BUSINESS" newsletter, you'll be able to see the views. Talk about my travels and the global obsession with

Donald Trump and the markets. Read the newsletter. You can subscribe to that. My own email address is on there. Oh, look at

that. Who would have thought, a glass of something appropriate. The liquid lunch, could be facing lasts orders, London's financial industry.

Those institutions ban boozing. Make the most of it while you can. I'll pour you a double.


QUEST: Ahh. Now, lunchtime tipples are on the rocks at Lloyds of London. Lloyds is a venerable insurance market of more than three centuries

underwriters and clients have traded risk. Now staff at Lloyds have been banned consuming alcohol during office hours. A midday pint, a large

scotch, has long been seen as bears to honey. Roger Foord is a Lloyd's IT consultant. consultant. He joins me now from London. Good to see you,

sir. When I read this story, I mean, is this a sign of the times, political correctness gone berserk, that they're stopping the employees

from enjoying a little something over lunch?

ROGER FOORD, IT CONSULTANT FOR LLOYD'S OF LONDON: Well, Richard, this could be a mountain out of a mole hill, no? I mean, at the end of the day,

Lloyd's employs 500, 600 people, do a top job keeping the Lloyd's name iconic globally, underwriting stuff. But they're not actually underwriting

or brokering in an insurance market. They're supporting it in a big way.

QUEST: Right.

FOORD: 30,000 people working in the investment market, who are still happily able, as I saw today, enjoy their lunches as much as they ever did.

Last week, a year ago, and next year.

QUEST: So, what you're telling me, I mean, it's still a sign of the times, isn't it, that an organization like Lloyd's would say to its employees no,

you can't have a drink at lunchtime?

FOORD: It sort of is, yes. I agree, but people are having a jolly time. It's been the most magnificent market in the whole world. Nobody is

hitting anybody.

QUEST: Why have they done it, do you think?

FOORD: Well, my understanding is, Lloyd's had taken to their own staff. For some reason, maybe HR, I believe a few events have happened that could

have been due to a little bit of alcohol. But the rest of the -- well, the Scotts company, Whitaker, that you know in the U.S., they're all running

their own shows and making their own decisions about what their staff do or don't do.

QUEST: Now, I'm old enough to remember going to the pub after the 1:00 news was off the air. Training as a journalist. You go to the pub about

1:00, you go back 2:30, 3:00, you put the 6:00 o'clock news out and you go to the pub. I don't think there's terribly anything wrong with that.

FOORD: It's more of that in the insurance markets, they go to underwriters, Lloyd's is the top insured for airlines, Mr. Trump's stuff is

probably in Lloyd's, it takes six or seven beaks to negotiate a deal. They're not hitting the screen and saying deal, deal, deal. They're

actually talking about it over a long period of time.

QUEST: Good to see you, sir.

FOORD: Does that make sense?

[16:55:00] QUEST: Makes perfectly good sense. You obviously have a good lunch. It's only ice and water. See you in a moment, after the break.


QUEST: Tonight's Profitable Moment. Now, just listening to our last story about Lloyd's banning their employees from having a little drink at

lunchtime or during the drinking day. A young lad as a journalist bashing out on the typewriter and then going to the pub for a quick one after lunch

and then returning for the evening news. You're reminded of how times have changed over the years. At one place, I used to work, they had a bar in

the building where people would repair in the evening or afternoon.

I'm not saying we should all get blotto during the afternoon or evening nor am I suggesting if you're doing something dangerous or tricky, open heart

surgery or flying a 747 before you got behind the wheel, of course I'm not saying that. But I do think we have to ask ourselves, what's wrong with a

glass of wine at lunch if that is your delight? I'm not saying go and get rip-roaring drunk. Do we need to have laws that say you cannot drink and

maybe even have a small drink before tea time? That's all. That's "QUEST MEANS BUSINESS" for tonight. Whatever you're up to in the hours ahead, I

hope it's profitable. I'll see you tomorrow.