Return to Transcripts main page
Quest Means Business
Yellen Signals Rate Rise This Month; U.S. Commerce Secretary Boosts Peso; Snap Surges on Second Day of Trading; Fillon Says No Intention of Quitting
Aired March 03, 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 markets giveth, the markets taketh. We were positive a second ago. We were over 21,000, as well, but
those look like they're not going to be held to the gains of the session. But thank you, sir, the man from PSEG, who has given us a strong -- yes!
Look at that. We may be down on the Dow, but we look like we might just hold 21,000 as we come to the end of a tumultuous week in the financial
world. Today is Friday, it's March the 3rd. Janet Yellen is ready for a rate rise. Action from the fed likely a fortnight away.
Francois Fillon's staff is bidding adieu to his campaign. And Wilbur Ross rallies the Mexican peso. U.S. commerce secretary says the U.S. and Mexico
can make a deal. I'm Richard Quest at the end of a very busy week. It may be Friday, but I still mean business.
Good evening. Delighted you are with us as we wrap up what has been an extraordinary week. And tonight, Janet Yellen says a rate rise is all but
certain this month. It was the final act of a raucous week on the markets. Quite a lot of commotion during the course of the week, but this is the way
it's just ticking over. The day started up, went down, and we are just eking out the very smallest of gains today, at 21,004. But I want to show
you, really, as the day progressed, this is roughly around the time that Janet Yellen was speaking, and you can see the market does give up most of
its gains -- or losses, they continue down, as the fed chairman is speaking. Now, she spoke, actually, at 1:00. That's where she spoke. And
that's where the market comes down.
The fed last raised rates in December. And that was the second-rate rise in a decade. The fed chair said the rate rises will likely follow more
quickly this time. Now, we shouldn't be too concerned, perhaps, because obviously, rate rises suggest rising confidence in the U.S. economy and the
strength of the economy. A decision that will have major implications for American owners and savers, as well as you watching around the world. But
to show how the week progressed, the odds of a rate rise, well, when we started the week, they stood at 30 percent. Then, on Tuesday, I spoke to
the New York Fed President, Bill Dudley.
(BEGIN VIDEO CLIP)
BILL DUDLEY, PRESIDENT, NEW YORK FEDERAL RESERVE: After the election, we've seen very large increases in household and business confidence.
We've seen very buoyant financial markets. The stock market's up, credit spreads are narrower. And we have the expectation that fiscal policy will
probably move in a more stimulative direction. Put it all together, I think the case for monetary policy tightening has become a lot more
compelling.
(END VIDEO CLIP)
QUEST: No sooner had he had those comments than it pushed the odds of a rate rise up from 30 percent to 66 percent. There were others who were
talking. For example, later that day, the fed governor, Lyle Brennand also raised expectations further when she cited improvements in the economy in
the U.S. around the world and rates went up to 77 percent by Thursday afternoon. The odds went truly higher on Friday, as Janet Yellen and her
colleagues made it clear that the rate rise is all but certain. We had the chair, the vice chair, and governors, as well, all making it clear. Now,
the rise depends on positive economic data. Because the fed has told us a million times that they are acting as data dependent. Remember what the
dual mandate is. It is to promote full employment and stable prices.
Let's have a look. Forgive me. The data. Dependent information upon which the fed is operating. They obviously have much more complicated
forecasts and expectations and PMIs, but this is the gist of it. Unemployment, 4.8 percent, with strong job growth, widely regarded as just
about full employment.
[16:05:00] Inflation, 1.9 percent, just at 2 percent, which is the target. Now, personal consumption is the fed's preferred measure. So never mind
CPI. CPI at 1.6, but the fed's preferred measure, 1.9, just about there. And GDP growth, 1.9 percent. It's solid, it's not spectacular, but it's
likely to be given a ginny up by Donald Trump's fiscal stimulus. So, if you are Diane Swonk, if you are data dependent, as I know you are, along
with the fed, then the cases are unanswerable. The rates go up.
DIANE SWONK, FOUNDER, DS ECONOMICS: Absolutely. What the fed has sort of come to realize is stars have come into alignment on the economic front and
it is the time to raise rates. And they want to get the rate hike in now, because they don't want to wait too long and have to do more dramatic rate
hikes down the road. I think that's a very important thing to understand, as well. Is that Janet Yellen still committed to gradualism, although
gradualism, this year, is multiple rate hikes. Once-a-year Yellen is now gone.
QUEST: Just remind us. We've got a quarter point on the fed funds, which would take it to where?
SWONK: We're going to move up closer to 3/4 of a percent is where we'll be. I think it's important we're moving up to that range. Still in a
trading range. I think the important issue here is that it's still below what's considered easy money. And so, what we've got is, still
persistently easy monetary policy, as the fed, we're not hitting the brakes. The fed is sort of moving into cruise control. They sort of see
us raising rates gradually, as the economy now is running on its own, they don't need to interfere with it and hit the accelerator.
QUEST: OK, but we've seen -- they all talk about inflationary expectations. Now, you've got inflation at the moment of a CPI of 1.6, 1.7
percent. The other measures are slightly higher. On that basis alone, we're getting very close to the target level of 2 percent. Now, even if we
allow for some technical issues of symmetry and how long you're going to let it go over and under and all those sorts of things, this is starting to
flash, at least amber and heading towards red?
SWONK: Absolutely. And I think that's one of the key issues, is, you know, Yellen made a point today to say, listen, we don't want to get behind
the curve. The reality is, some people in the fed already think they are behind the curve. And you put together the recent asset price rally we've
seen in the stock market, you have very buoyant commercial real estate prices, this is the time to move and they like to move gradually to allow
the economy to adjust. I would like to see the next move to see something off a press conference, so they don't get this predictability we had back
in 2004 to 2006, when every meeting they moved a quarter point. But I do think this is the time to move. I think they're seizing the day and that's
good news, because it's affirmation that the economy is actually where it's at.
QUEST: So, what is your -- because even in the minutes, the minutes still say again and again, that longer term, that the pace of rises and the top
end of the cycle will be lower than traditionally expected. So what do you think the top end of the cycle? What's your dot plot tell you?
SWONK: I'm glad I don't have to make a dot plot, but Yellen went into great detail today about how that's been lower, around 3 percent now. And
I think that's very important, that's a big move down. It means the fed would like to get to that neutral rate at a reasonable pace, but what
they're afraid of, even once they're get there, if we were to hit a recession, they want at least that 3 percent cushion, to then ease, if we
needed to. That's where -- you know, they like it to move up and they have a hope it will move up, that may be somewhat starry-eyed on their part.
And she was also very careful today to point out in the Q&A that she did not mention fiscal policy, you can't anticipate what's going to happen on
the fiscal front. She also said, hey, we're looking at things abroad, as well. Brexit and what can happen in Europe. So we're watch everything.
And she made one other thing that I thought was very important, as part of the math of the equation right now. And that is, immigration has played a
huge role in labor force growth, particularly in recent years, accounting for about half of labor force growth and it's slowed dramatically from what
we've seen prior to the crisis.
[16:10:00] That, once you take that away, lowers your potential for growth rather than boosting it. So he kind of waded in very cautiously to the
debate about what growth can actually grow at.
QUEST: Have a lovely weekend and thank you. And we'll be talking again, no doubt, around the time that rates go up. Thank you, Diane.
The Wall Street response to Janet Yellen was fairly muted. The Dow closed about 21,000, only just. Barely made it. But it was -- it did eke out a
small gain at the closing bell. The total change this week was 200 points, bearing in mind on one particular day, there was a 303-point rise. Snap
was up as much as 20 percent. It pulled back just a tad on the share price. Today is up another 10 percent. So, 44 percent on the initial IPO
of 17 to 24. It's actually gone, I think, as high as 29 today before it came back around 27. But it was a week on Wall Street that saw records and
milestones and IPOs. And throughout, we were there.
A good Monday to you. The big talking point, of course, in New York on the market front is whether or not we can make it 12 for 12. A record on the
Dow. President Dudley addressed the question of this rising market and what he called the animal spirits.
(BEGIN VIDEOTAPE)
DUDLEY: There's no question that animal spirits have been unleashed a bit.
QUEST: Animal spirits have been unleashed in the markets. Do you agree with him?
MAGGIE LAKE, CNN MONEY CORRESPONDENT: You've got to get up early and be ready. Tomorrow will be a very hectic day down here.
QUEST: I do not know what's been happening in the two minutes we've been talking about, but the market, which had been up to 90 points is now 332
points.
LAKE: Who's going to step in and sell here?
QUEST: Up 300 and one point. Not the best of the day. But through 21,000.
LAKE: It's really hard to hear myself in here. Coming from the floor, that is Snap. The process began at 9:30 when the opening bell rang. It
took them this long to get all those orders matched up and to start trading on the public market now. And it is off to an awfully good start.
QUEST: What do you make of it? It was an Amazing coup for you to get snapchat or snap?
JOHN TUTTLE, GLOBAL HEAD OF LISTINGS, NYSE: Well, we're proud to welcome them here. They're a great, great company.
QUEST: What do these do, Maggie?
LAKE: You can't take yourself seriously with them on.
QUEST: Can you take me seriously?
(END VIDEOTAPE)
QUEST: Our guru, Paul La Monica, helped us understand the moves. He's here once again. Are you as sad as I am --
PAUL R. LA MONICA, CNN MONEY CORRESPONDENT: Not wearing my spectacle.
QUEST: What do you make of the week, Paul?
LA MONICA: It was a very eventful week, obviously, Donald Trump, all he needed to do, apparently, to get Wall Street excited was stop bashing the
press and sound presidential and talk about growth again. And that seems to be sufficient for now. The fed -- Bill Dudley's interview with you
reset expectations. We now all think a rate hike is coming in march. If Janet Yellen gave the same speech today without Dudley's comments earlier
in the week, you might have had market turmoil. But today it's a smooth. We now know rates are going to go up unless next week's job report is
really bad.
QUEST: But the fed is very canny, when the fed governors speak, they do it -- I wouldn't say in unison, but they do it in coordinated fashion.
LA MONICA: Yes.
QUEST: So, they knew Dudley was going to start the whole thing off. And then, finally, Yellen would wrap out the week and basically set the tone
that rates are going up.
LA MONICA: I think the fed has gotten extremely good at managing Wall Street expectations. It is a bit of a game and they're playing it well.
QUEST: Snap gave back a few of its gains, but it's still a, we'll win this in the long-term. What it told me, and I would like to hear your
perspective, is there is a huge amount of appetite for risk still in this market.
LA MONICA: Oh, definitely. Investors were willing to turn a blind eye to the lack of profits, the competition from this company that's not exactly a
slouch named Facebook, and the fact that you don't get any vote, as we have talked about all week, when you buy these shares. So there is clearly an
appetite for these quote/unquote unicorns to go public. Will we now see Uber, despite a lot of its big problems, maybe set the table to go public
later this year or early next year? You've got a mobile phone company in China, very big company. A lot of companies that could cash in.
QUEST: And as I was reading, the appetite for risk is there, but from so many of these companies, that there's not quite the same availability of
capital there used to be.
[16:15:00] LA MONICA: No, there definitely isn't. And I think the capital is becoming more scarce. And it's going to be interesting to see going
forward with funding becoming possibly more expensive as interest rates are set to rise, how that's going to change the dynamic in Silicon Valley,
also.
QUEST: You think thing I should keep an eye on next weekend, anything in particular?
LA MONICA: It's going to be a pretty slow week based on the calendar. Of course, our president, I'm sure, will likely change things. Of course, the
jobs report, but that's not until the end of the week on Friday.
QUEST: At which time I will be in Norway. Thank you.
Traditional advertisers are paying attention to Snapchat. The clients of the advertising giant WPP spent $90 million on Snap ads last year. It's
not a fortune by any means, but it's a trend and one of which we have to take notice. WPP's chief exec was talking to Isa Soares and he said Snap
still needs to prove itself to investors and advertisers.
(BEGIN VIDEOTAPE)
MARTIN SORRELL, CEO, WPP: It's very, very different with Snapchat. It's just in its fantasy, it's a baby. But we'll see how it develops. The I
think key issue Snapchat is to demonstrate statistically through data is that investment is equal or greater to Facebook and you've seen Facebook
mimic a lot of what Snapchat does. They've made 15 or so improvements to the suite of services to mic what snapchat has been doing. And they did
try to buy on at least one or two occasions Snapchat.
ISA SOARES, CNN ANCHOR: Your earnings report says you experienced -- experiencing a slow start to 2017. And you go on to say, warning of a
tepid economic growth. Is there going to be a tricky 2017, sir martin?
SORRELL: Tepid growth, low inflation. We may see more inflation in the U.K., because of Brexit and the devaluation of the pound. We may be seeing
some in America because of Trump-anomics. But generally, low inflation, lack of pricing power, and that means clients are very focused on cost.
SOARES: You mentioned there Trump-anomics. Are you worried or not so much given what we've seen in the U.S. the last several months?
SORRELL: I think it's quite clear the attitude of the Trump administration to business is very different. If you see the people that have populated
key positions, whether it be Gary Cohn, Steve Mnuchin, Wilbur Ross, these are people with strong business backgrounds and strong financial
backgrounds. And it is a remarkably different atmosphere, even after only 42 days in terms of attitude to business. The president has met with
health care leaders, with manufacturing leaders, with retail leaders, from all areas of business. The Obama administration was much less engaged or
much less business friendly.
And I think the Trump administration is pro-growth, pro-business. We're seeing possibilities -- the question is the implementation of it.
Repatriating overseas money, lowering corporate tax rates, infrastructure spending, military spending, reducing regulation. All these points, if
they're implemented, are pro-biz. Now, it is America first, but America is about a $19 trillion economy out of a world economy of $70 to $72 trillion.
So, when the American engine is firing on all cylinders, if growth rates in America were to rise from the 2 percent that they are at the moment to 3
percent, that would have a significant impact, not just on America, but elsewhere.
(END VIDEOTAPE)
QUEST: Sir Martin Sorrell.
A new setback for a campaign in turmoil. Francois Fillon vowing to fight on and is refusing to drop out of the race. We are going to be live in
Paris, next. It's "QUEST MEANS BUSINESS." it's a Friday!
[15:50:00] (COMMERCIAL BREAK)
QUEST: Tonight, in France, the embattled presidential candidate, Francois Fillon, is clinging on to the race, ahead of a make-or-break rally by the
Eiffel Tower. On Sunday, the latest protest campaign, his spokesman, quit on Friday. He quit via Twitter, basically saying since Fillon was
investigated, it wouldn't stand, he's gone back on his word! Now Fillon, there's mounting pressure for him to step aside. He'll be charged later
this month over alleged payments to his wife for fake jobs. He remains defiant.
(BEGIN VIDEO CLIP)
FRANCOIS FILLON, FRENCH PRESIDENTIAL CANDIDATE (translator): Seven days a week, 24 hours a day, the shredder, the new scoop machine, the rumor mill
has motored on. But I'm telling you that I have no intention on giving up.
(END VIDEO CLIP)
QUEST: All right. Melissa Bell is with me from Paris. Thank you for staying late tonight. I mean, how much of this is inevitable, that he's
going to go?
MELISSA BELL, CNN PARIS CORRESPONDENT: It looks increasingly that way, although he appears to be ready to fight until the bitter end. He's almost
turned slightly populist, saying, you, the people, can save me, supporters, come out on to the streets. It's been criticized, the holding of this
rally by the French president himself, who's pointed out that by definition, this will be a rally against the institutions of the Republic,
because, after all, who they will be protesting? France's free press who brought about this story to begin with? France's justice system who has
been pursuing Francois Fillon? And yet, Francois Fillon is determined to battle on, because he has no choice. He's been hemorrhaging support over
the last 24 hours, losing some of his key campaign staff, defection after defection. More than 60 Republican parliamentarians have said they will
not back him. But it's looking more and more like a fairly desperate plea, Richard.
QUEST: OK, I've been meaning to ask every time we speak about this, he says it's politically motivated, this investigation. Now, if we think of
all the other politicians in France, who have been investigated. Christine Lagarde was investigated, Sarkozy was investigated. Every time and again,
they get investigated. So really, give me an assessment, Melissa. Is this likely to be politically motivated?
Bell: you know, here in France, as in the United States and in other democracies, there is a proud tradition of an independent judiciary and
that continues to be the case. We saw this extraordinary episode this week where two of the leaders of the highest court in the land, two of the
highest judges in the land, had to speak out and say, we're being attacked and accused of being partisan and of backing one side and of attacking the
other. We are independent. And we remain independent. Of course, if you're a politician accused of wrong doing, you will lash out against
whomever you can. And that appears to be what Francois Fillon is doing.
But it seems absolute extraordinary that France's judiciary would get involved, as Francois Fillon is alleging, and Francois Fillon clearly
believes. These were allegations in a newspaper. A preliminary inquiry was begun, to look into these allegations. If any shred of evidence that
any work had been done by Penelope Fillon or either of the two children over the course of those many years, they would have been provided to the
magistrates investigating and the whole thing would have gone away. The reason that this further inquiry was open was that the preliminary inquiry
failed to find, one assumes, any shred of evidence.
[16:25:00] He has been told now, officially, that he's likely to be charged on the 15th of march. The trouble for France what Fillon is not so much
the justice system and the way the justice system operates in France. More than a few months ago, Richard, he said, I will not stand if I'm charged.
Here's a man who's going back on his word, and that's what's proved a step too far for so many in his own ranks.
QUEST: OK, if -- OK, so let's say he won't jump and the party decide decides he needs to be pushed. Firstly, can the party push him over the
edge? And secondly, if they do, who would take his place on the right?
BELL: The man they're looking to is the man who lost in the Republican primary in November, the man who came second, Alain Juppe, the current
mayor of Bordeaux and the former prime minister of France. And already, the process of
people in France, of course, if you want to stand for the presidential election, you have to have 500 elected officials who back your candidacy.
The putting down, officially, of people who back Alain Juppe has begun even today. The truth is the party can't do very much about it until Francois
Fillon will go. And he will only step in if Francois Fillon will go of his own will. The party finds itself really in an extraordinary difficult
position. All the more so, because on the 15th of march, he's likely to face those charges. On the 17th, the whole process for getting your name
on to those lists and announcing your candidature ends.
QUEST: You have a very busy couple of weeks ahead of you, if I may say so.
BELL: It's going to be extraordinary.
QUEST: You go and enjoy your Friday night while there's still some time left.
European markets, they closed before Janet Yellen spoke. Two major indices were up, two were down. And interestingly, it was London and Frankfurt
that were down with Paris and Zurich with gains. That's on the back of this question of PSA close to buying Opel. The Financial Times reporting
it may be announced on Monday that this deal is going to go ahead.
U.S. citizens may soon need visas to visit Europe. Lawmakers want to end visa-free travel for Americans. It's a tit for tat measure because the
U.S. does not grant visa-free access to EU nationals. In red, it's Poland, but they're excluded. The green ones are the 23 other EU nations who
travel visa free. Joining me now, while the vote is nonbinding, the European parliament is urging the commission to reintroduce visas. Claude
Moraes is the chair of the committee on civil liberties in the European Parliament, he joins me now from London. Sir, thank you for that. Look,
we can dispense quickly with the heart of this. The U.S. says those countries who don't have visa waiver is because they have the most
infractions, they have the most overstays, they have the weakest security.
CLAUDE MORAES, CHAIR, COMMITTEE ON CIVIL LIBERTIES, EUROPEAN PARLIAMENT: This has been going on, Richard, for a long time. And it's just a question
of fairness. All of the other countries who have been saying this, Canada, Australia, Japan, all of them no longer say it. Canada will be ending this
action against even Romania and Bulgaria in December and, you know, for months, they've not wanted to do this and they're ending it now. Only the
United States is doing this. And what reciprocity means, this deal between the whole of the EU and the whole of the United States, where the United
States gets to have all of its people traveling freely across the EU, but 70 million don't get to do that from the EU and the U.S., is not
reciprocity. It's not fair.
QUEST: All right, but --
MORAES: And by the way, Richard, this has been happening for an awful long time and frankly, no one accepts today that this is security, if it was,
then I think Canada would not be doing it, others, Australia, Japan.
QUEST: All right, but the -- your problem is -- no matter what the parliament with his non-binding vote has, the commission is not going to
follow. The commission is not going to do anything about it. Which not only doesn't solve your problem, but actually weakens your position that
clearly the commission didn't think it was worth following up on.
[16:30:00] MORAES: You've got a point. The commission has, and we've followed the commission in front of our committee and I respect the
commissioner who's in charge of this. But the position the commission take, you're absolutely right, Richard. They're taking a position which is
clearly taken because of pressure from the United States. There's no question of that. And it is understandable pressure. Which is that it is
a big deal to even suspend temporarily visa-free travel from the United States to the EU. It is consequences, and nobody wants to see that. So,
the question is, if you want to pursue fairness and justice in this situation and 70 million Europeans want that, they got it with Canada,
Australia, and Japan, the question is, we now want the commission to stop pussyfooting around and be very clear with the United States that
reciprocity means reciprocity.
QUEST: So, after this vote, are you out of ammunition? Briefly, if the commission decides, you know, thank you very much, don't call us, we'll
call you, you're out of ammo?
MORAES: The commission never says, don't call us, we'll call you. The European Union acts together, they're the executive arm, and believe me,
there's a lot of pressure now. And remember, these five countries are countries of the council of the European Union. They make up the European
Union. 75 million European citizens. The European parliament will be placing that pressure. And I think by June when there's an EU-U.S.
ministerial meeting, I suspect that the pressure will peak and I hope that the right decision will be made.
QUEST: And we're grateful that you came in this evening on a Friday night to talk to us. Thank you, Claude.
Staying in the U.S., where the commerce secretary, the new commerce secretary is striking a more conciliatory tone with Mexico. You're going
to hear also in the next part of the program from the chief executive of Nissan on the future of NAFTA.
(COMMERCIAL BREAK)
QUEST: Hello. I'm Richard Quest. There's more "QUEST MEANS BUSINESS" in just a moment, when we will be engaged in investment 101. And visiting the
California high school that made millions with a bet on Snapchat. Donald Trump is back in Florida for the weekend. What about Camp David? The
presidential retreat? It's empty once again at the U.S. taxpayers' expense. This is CNN, and on this network, the news always comes first.
Russia's foreign minister has pushed back on Friday that assertions that his country's U.S. ambassador is a spy and he belittled scandals that have
erupted over contact with the ambassador and the Trump administration.
(BEGIN VIDEO CLIP)
SERGEY LAVROV, FOREIGN MINISTER, RUSSIA (translator): The ambassadors are appointed to certain relations with certain states. And these relations
are supported by meetings, talks, contacts with the official representatives of the executive branch of power, as well as members of
parliament, civic leaders, non-governmental organizations. And this practice has never been disputed by anyone. I can only use the quote
distributed by the mass media today. It all looks like a witch hunt.
(END VIDEO CLIP)
[16:35:00] QUEST: The former U.S. reporter who was fired for fabricating sources is under arrest for making bomb threats against Jewish
institutions. According to a criminal complaint filed in New York, Juan Thompson is accused of trying to intimidate a particular person. More than
a hundred bomb threats have been made against Jewish community centers and schools since the year began.
The German chancellor Angela Merkel is likely to meet Trump at the White House on march the 14th. It will be the first time the two leaders have
met since the president took office. In the past, the president has been critical of chancellor Merkel's open door immigration policy.
Mexico's beleaguered peso has received a boost and it comes from America's top trade negotiator. The peso gained 2 percent against the dollar. It's
not particularly weak, but the numbers there, after the U.S. commerce secretary, Wilbur Ross, said the peso should recover if a new trade deal is
reached between the two countries. The peso has plummeted in response to the vow to build a border wall by the administration and possibly
withdrawal from NAFTA. Patrick Gillespie joins me now. It's a very thin read upon which to -- upon which to have a recovery of the peso, this
comment? Doesn't it?
PATRICK GILLESPIE, CNN MONEY REPORTER: I think what's important is what ross said.
QUEST: What did he say?
GILLESPIE: He said if the U.S. and Mexico reach a sensible trade agreement, now, they won't say what a sensible agreement looks like, which
is important, that that should help the peso recover. But here's where the devil in the details is, Richard. He says, a weak peso, that's not helping
Mexican workers. I was in Mexico two weeks ago. It's on people's minds and affecting their daily lives. What ross didn't say is that a weak peso
doesn't help U.S. trade or U.S. exports and ultimately it doesn't help U.S. manufacturing jobs. So. Ross saying those comments to help the peso, you
know, that helps the United States just as much as it helps Mexico.
QUEST: OK, but this core issue comes down to, a large part of the peso's weakness is because of the uncertainty, not maybe so much of the wall, but
just as a disruption of trans-border trade.
GILLESPIE: Absolutely. Think about this. 30 percent of Mexico's exports -- 80 percent of their exports go to the United States. 30 percent of
Mexico's economy is trade. The uncertainty weighing on a third of their economy, that's showing up in the peso's weakness. Absolutely. The Trump
threats, the uncertainty of Trump's policies, that is what is the key driver right now. It is not the economics that are driving Mexico's peso.
It's the politics.
QUEST: OK, but you talk about a weak peso not being in the best interest of Mexican -- of Mexico's workers at the moment. But domestic demand in
Mexico, it has an inflationary problem, from goods coming in.
GILLESPIE: Yes, of course. I mean, the U.S. is one of the top buyers of - - I'm sorry, Mexico is one of the top buyers of American corn and soybeans. So on that level, it has an effect on the Mexican economy and for those
U.S. producers.
QUEST: You were in Mexico for a couple of weeks.
GILLESPIE: Yes.
QUEST: What did you find to be the mood in terms of this idea of the wall and NAFTA? I mean, Mexico has said that they will accept an amendment or
an updating --
GILLESPIE: A modernization.
QUEST: Thank you. But that usually means, you know, adding digitally, or those sort of things --
GILLESPIE: Ecommerce and --
QUEST: That weren't around 25 --
GILLESPIE: Left out the Amazon provision in NAFTA.
QUEST: Exactly. Exactly. But in terms of a full-scale renegotiation to rebalance the tides?
GILLESPIE: Feeling against the wall is very clear. There is no support for the wall and there is no willingness pay for the wall. On NAFTA, I
think there's a -- either a sense of, you know, Trump portrays it as, Mexico wins, America loses. Well, you go speak to Mexican farmers, they
have been gutted by NAFTA. They lost jobs. So, the winners and losers of NAFTA were more defined by industry than nationality, Richard. You have a
more checkered, jaded feeling about NAFTA in Mexico and the Mexican wages haven't picked up. In fact, they've actually stagnated more than U.S.
wages since NAFTA came into existence. The feeling is not we're winning and taking the cake.
[16:40:00] QUEST: Have a good weekend, sir.
Staying with Mexico and the Mexican economy meeting is a meeting with carmakers in Detroit. The two countries have yet to begin renegotiations
over NAFTA and automakers are fearful of U.S. tariffs on their operations south of the border.
The chief executive of Nissan says that every carmaker is listening to one man, Donald Trump. CNN's Poppy Harlow asked how the company can move
forward under a seemingly protectionist White House.
(BEGIN VIDEOTAPE)
CARLOS GHOSN, CEO, NISSAN: I think free trade is going to continue. I think there's going to be some adjustments made to free trade.
Particularly on the angle of fair trade, because a lot of the agreements have been done and probably signed 15 years ago, 20 years ago, 25 years
ago. At a moment where emerging markets were really emerging. The fact that there are some adjustments, the reality, the new reality is not
something surprise. I don't think what's happening today something that's a negation of free trade. Not at all.
It's an adjustment on free trade, taking into consideration the new reality of the market. I understand there are a lot of discussions that to discuss
trade between the United States and India, the United States and Japan, the United States and Mexico. Let's see what's going to be the outcome, but I
can bet you, the outcome is going to be more adjustments. The reality of the economy of this country compared to when the agreement was signed, much
more than the kind, OK, we're going to close the border or be putting much more taxes on trades. For very simple reason is free trade benefits
everybody. What people are asking for is fair trade. They consider if you don't retouch this agreement from time to time, the fair and free trade
that exists becomes unfair for some parties.
POPPY HARLOW, CNN CORRESPONDENT: And that's arguably what won the president this election, especially among the rust belt, where a lot of
these cars are made. You guys produce cars in Mexico, just along with just about everyone else.
GHOSN: Yes.
HARLOW: What the president has said about producing cars in Mexico, building plants in Mexico, it has shifted the plans of some of where are
competitors, like Ford, for example. Has it shifted your plans?
GHOSN: Without any doubt, all carmakers are listening to what the president of the United States is saying. This is the second largest
market and all of president is saying, guys, you have so far relied on NAFTA to make your decision. Wait a minute this is going to change.
Obviously, we are listening.
HARLOW: Does it mean you scrap plans to build plants?
GHOSN: No, no. For the moment, we want to know, NAFTA is going to be replaced by what? That's the most important thing? When this decision
will be made, and we have every reason to think it will be made fairly soon --
HARLOW: You need it to be.
GHOSN: Yes. In 2017. After this, a lot of the decision will be made. But I can tell you that absolutely no doubt, all carmakers, are listening,
watching, and deciding in consequence. We don't say, OK, we don't like this one, we don't like this one. We try to adapt to the rules. We
adapted to NAFTA, we'll adapt to whatever follow NAFTA.
(END VIDEOTAPE)
QUEST: That's Carlos Ghosn. We'll hear an interview on this program along with others. We'll have the chief executives from Volkswagen, Peugeot, and
we may be waiting for them to buy Opel. You'll hear from executives from Ford, Toyota, and BMW. Our coverage begins on Monday and it's of course
"QUEST MEANS BUSINESS."
Divine providence on Wall Street. Snap IPO has one catholic school in California rejoicing.
[16:45:00] (COMMERCIAL BREAK)
QUEST: All right. Schools are best known for planting the seeds of knowledge. Maybe in a somewhat old-fashioned way, but now one California
school has also been planting seed money. The school is St. Francis High School in Mountain View and is one of the first investors in Snap. Now, it
bought a stake in the company after a tip from one of the students' fathers. He works for Light Speed Venture Partners and you heard from
Light Speed last night on the program. So, teachers in class, pay attention over at the back. No, don't do that. So what did they buy?
They bought $15,000 worth of an investment in 2012. $15,000. On Thursday, they sold two-thirds of their stake and they made, or the income from that
was $23 million from $5,000 to $23 million. It is a gain of 2,300 percent. I'll ask questions about this later. Class, from $5,000 -- sorry, from
$15,000 to $23 million and for a 2300 percent profit. CNN's affiliate KPIX reports.
(BEGIN VIDEOTAPE)
KIET DO, REPORTER, KPIX 5: Five years ago, St. Francis put in $15,000 into early seed funding into snapchat. The stock split and split again and
again and before they knew it, they had 2 million shares. They sold two- thirds of it today, which came out to a divine amount of cash.
SIMON CHIU, PRINCIPAL, ST. FRANCIS HIGH SCHOOL: Selling our two-thirds today is probably somewhere in the neighborhood of like $23 million or
something like that.
DO: percentage wise, what's that ROI?
CHIU: Well, a $15,000 investment, I think it was like -- I did the calculation yesterday. I think it was about 2,300x.
DO: The story of how St. Francis High School came to invest in an unknown start-up began five years ago in 2012. A parent at the school by the named
Barry Eggers convinced the school's investment fund to get in early. Who is this parent, Barry Eggers? It turns out Eggers is a partner at
Lightspeed Ventures, also an early investor of Snapchat. In a blog post, Eggers said he knew it would be big when he came home from work one day and
saw his kids laughing and engrossed in this new app.
You've got the smile of somebody who just won the lottery?
KEVIN MAKELY, FORMER SCHOOL PRESIDENT: We almost feel like that.
DO: Kevin Makely was on the investment team who gave the green light and says they are blessed.
MAKELY: I'm not so sure we call it divine intervention, but we can turn $15,000 into the vast amount of money that this return will bring, then you
have to say god's looking out for us.
DO: St. Francis will put a lot of the earnings towards an endowment that be will be used for financial aid.
UNIDENTIFIED FEMALE: It's a catholic school. They're going to do amazing things with it.
DO: For parents and students, it was a teachable moment. Worthy of, Yes - -
UNIDENTIFIED FEMALE: Yes, I think that you can take risks. She's probably Snapchating me right now. I learned you can take risks and you never know
when you're going to get out of something. So I think it's just kind of crazy.
DO: In mountain view, Kiet Do, KPIX 5.
(END VIDEOTAPE)
QUEST: The moral of look after the pennies and pounds, the dollars will take care of themselves. Quiet at the back! Or there'll be a detention,
for goodness sake. You'll be staying after class! We'll be talking about Camp David after the break.
[16:50:00] (COMMERCIAL BREAK)
QUEST: President Trump is back in his favorite spot in Florida. A short while ago, he arrived in Palm Beach this afternoon for his fourth weekend
there as president. He takes the 747 known as air force one and he stays at his estate at Mar-a-Lago. Now it's known, dubbed as the southern White
House. However, you may be fooled or forgot that there is actually a real presidential retreat and it's called Camp David. Which at the moment is
empty. Now, Donald Trump has called the facility rustic. Camp David is costing U.S. taxpayers millions to maintain and it's remaining unused.
(BEGIN VIDEOTAPE)
SUZANNE MALVEAUX, CNN, WASHINGTON CORRESPONDENT: President Donald Trump taking off for Florida this weekend. First for a visit at an Orlando
school, then on to his Mar-a-Lago resort.
(BEGIN VIDEO CLIP)
TRUMP: We get a lot of o work done. Believe me, there's not rest at the southern White House. It's all work.
(END VIDEO CLIP)
MALVEAUX: His fancy Florida estate, his go-to for getting business done outside the White House and hosting world leaders, like Japan's prime
minister. But President Trump's weekends at Mar-a-Lago are costing U.S. taxpayers big money. From firing up air force one to fly to Florida with
traveling staff to securing the beachfront property with coast guard patrols. "The Washington Post" estimates the trips so far have cost up to
$10 million in just five weeks. And at the same time, taxpayers are also footing the bill to operate Camp David, the secluded presidential retreat
less than 70 miles from the White House, set aside for presidential downtime and diplomacy. Even dormant, it costs an estimated $8 million a
year to run. Trump has expressed little interest in using the cheaper alternative, describing the retreat to reporters as very rustic, saying,
it's nice, you'd like it. You know how long you'd like it? For about 30 minutes.
ANITA MCBRIDE, FORMER CHIEF OF STAFF TO LAURA BUSH: It doesn't fit everybody. President Obama, you know, he was a city guy. This is a remote
location. I don't think initially President Clinton was crazy about it, either. But then came to really love it. We remember, Jimmy Carter almost
thought about getting rid of it. And thankfully, he didn't.
MALVEAUX: Famously, Carter brokered the historic 1978 peace accord between Egypt and Israel at Camp David. Anita McBride, who worked in both bush
White Houses, says for them, it was a sanctuary.
MCBRIDE: George W. and Laura Bush had an exceptional, I think, sort of relationship with Camp David. Still, the only presidential family that
spent 12 Christmases at Camp David.
MALVEAUX: The private secure location also enables some world leaders to grow close, as bush revealed what he discovered after hosting British prime
minister Tony Blair.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH: We both use Colgate toothpaste.
TONY BLAIR, PRIME MINISTER, BRITAIN: They're going to wonder how you knew that, George
(END VIDEO CLIP)
MALVEAUX: President Franklin D. Roosevelt called it Shangri-La. His doctor believes that the cooler mountain air helped Roosevelt's sinuses.
President Reagan visited a record 150-plus times, often to ride his horse. President Clinton famously failed to get a peace deal after sequester of
the Palestinian and Israeli leaders there for two weeks.
[16:55:00] And President Obama hosted African and g-8 leaders at a summit early in his presidency, but rarely returned, spending most weekends at the
White House. Whether Trump continues to use Mar-a-Lago as his so-called winter White House, Camp David remains open, because not only is it a
retreat, it's a military installation, doubling as a bunker to assure continuity of government in times of crisis, as was the case on 9/11.
Suzanne Malveaux, CNN, Washington.
(END VIDEOTAPE)
QUEST: So, I'm going to give you -- if I was to give you a ticket for a weekend vacation, Mar-a-Lago in Florida or Camp David in Maryland? Tweet
your response. Where would you prefer to spend as your retreat? Mar-a- Lago in Florida or Camp David in Maryland? Interesting to see who likes to go where. Don't forget the news at CNNmoney.com/quest where you can
subscribe and get the take on the day and what's happening or likely to happen tomorrow. We'll have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. Janet Yellen caps a week that soared. Donald Trump's address, the stock market goes 303 points through 21,000.
Snap launches on the exchange as the best open so far or for some time. And we now of course know that interest rates are very likely to go up and
on march 14th, 15th, when the fed next meets. All of which shows it is market managing to take all of this relatively in stride. The small losses
that we've seen suggest a consolidation rather than a correction is on the horizon. It's way too soon to say what might happen longer term. At least
everybody seems to be take what's happening in the economy in their stride. Oh, by the way, I asked you which would you prefer, Mar-a-Lago or Camp
David. Tweet the response. So far Camp David is beating out Florida at least by those who have responded to Twitter. 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. And we'll do it all again on.
END
