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Quest Means Business
U.S. Drops Largest Non-Nuclear Bomb; Trump Backtracks on Economic Viewpoints; United Passenger to "Stand Up" for Flyers; WTO Head Not Clear on Trump's Trade Policy; U.S. Bombing Drags Down Stocks; North Korean Trade with China Increases. Aired 4-5p ET
Aired April 13, 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] ZAIN ASHER, CNN ANCHOR: And that round of applause right there marks the end of yet another trading day on Wall Street. Take a look at
how the market did. It started off pretty much flat, a little choppy, then around 12:00 noon our time, we got word that U.S. was striking ISIS targets
in Afghanistan, and look at what the market did. Ending down triple digits.
We were also focused on banking stocks today. Because we got earning from JPMorgan, Wells Fargo and Citi as well. It is Thursday, the 13th of April.
Tonight, the mother of all statements. The United States dropped its biggest non-nuclear bomb in Afghanistan.
Donald Trump has second thoughts first day campaign promises. And the doctor dragged off a United plane vows to stand up for bullied passengers
everywhere.
Hello, everyone, I'm Zain Asher and this is QUEST MEANS BUSINESS.
Welcome, everyone, to the program. President Trump promised a bombing campaign against ISIS, and just hours ago the U.S. dropped its most
powerful bomb, short of a nuclear weapon, in Afghanistan. The so-called mother of all bombs, although officially MOAB, that stands for Massive
Ordinance Air Blast. The U.S. military says that ISIS fighters and facilities in Nangarhar province were the target.
A short time ago President Trump said that the mission was very successful. It's the first combat use of this type of bomb. At what you're seeing
here, take a look here, it was tested in 2003. Lieutenant Colonel Rick Francona was an intelligence officer in the U.S. Air Force, he's now a CNN
military analyst, he joins us live from California. Lieutenant colonel, thank you so much for being with us. This MOAB, this massive mother of all
bombs, has not been used in combat until now. Why now?
LT. COL. RICK FRANCONA (RET.), CNN MILITARY ANALYST: Well, it's a specific weapon designed for a specific purpose. Today presented the
perfect target. It's great for going after tunnels and caves. It's not good for a hardened target, because it has no real shrapnel effect. It is
only a concussive fuel air explosive. It's a gas that ignites and causes tremendous overpressure, can collapse tunnels and can get in with a
concussive blast inside tunnels. This complex that they attack today was the perfect target for that. We've not use it in the past because you
can't use this in a civilian area where there are villages around, because it's just too much damage. The effects of this go out for hundreds of
meters. So, today presented the first target.
ASHER: So, we're sure there was no collateral damage then, no harm to civilians?
FRANCONA: Well, you could if they were in the area. You try to use it in isolated areas. It was built to use out in the open or in these areas
where you have tunnels and caves. You would not use it in any kind of a populated area.
ASHER: Do we know if there was any coordination with the Afghan government?
FRANCONA: I would imagine so. All of our missions over there are done with the consent and coordination of the Afghan government. This was an
Air Force strike on an ISIS target up in the Nangarhar province. They've been fighting there for some time now, and the target presented itself and
the Air Force was directed to do this by the local commander. This would not have required presidential approval. The tactical commander in
Afghanistan would be, General Nicholson. He has the authority to release this weapon.
ASHER: So, this is going after ISIS tunnels in Nangarhar province in Afghanistan. Explain to us, how strong is the presence of ISIS in
Afghanistan compared to Syria and Iraq?
FRANCONA: Well, you know, Afghanistan I would say is a real problem right now. It's getting worse. The Afghan army just has not been able to
develop its fighting capabilities to where it needs to be. And as the United States is trying to pull back its forces and going to this advise
and assist mission, as you know, we don't call our operations combat operations, it's always to advise and assist. What we're seeing is a
resurgence of the Taliban. We're seeing ISIS get hold in there and actually expand.
Somebody is going to have to decide what our policy is going to be. Are we going to reintroduce American combat troops or are we going to stick to
this, I believe, failed notion that the Afghan army is capable of defending the country in the near term?
ASHER: So, the actual effects of this weapon, obviously, they have physical destruction capabilities, but it's also psychological as well.
I'm curious, from your perspective, what message does this send to not just ISIS but also Syria and also North Korea?
FRANCONA: Well, the timing, I'll say maybe is coincidental, maybe it's not, but I guess you couldn't ask for better timing. We see what's going
on in Syria with the Syrian regime's use of chemicals, and our response.
[16:05:00] We're watching for a nuclear test in North Korea, and we're trying to get tougher with North Korea. We're trying to enlist the Chinese
to help us, but the president has been very clear that if the Chinese won't help us solve it, we'll solve it on our own. And we've got this massive
blast in Afghanistan. One can't help but wonder if there is a message there.
ASHER: I'm certainly sure there was. OK, Lieutenant Colonel Rick Francona live for us, thank you very much, we appreciate it.
Staying with the Trump administration now, there's whiplash in Washington and on Wall Street as the president pulls a hard U-turn on some of his
cornerstone economic promises. At the White House, Press Secretary Sean Spicer said that it's the circumstances that have changed.
(BEGIN VIDEO CLIP)
SEAN SPICER, WHITE HOUSE PRESS SECRETARY: The president's tough talk was on a variety of subjects, was to get results for the American people.
That's what he has pledged to do, to get more jobs here. To grow more manufacturing, to keep our country safe. If you look at what's happened,
it's those entries, or individuals in some cases or issues evolving towards the president's position.
(END VIDEO CLIP)
ASHER: Let's talk about some of Donald Trump's biggest reversals in the past few months. On China, the President has called the Chinese, "Grand
champions of currency manipulation." And pledged to brand them as currency manipulators on his first day in office. Did he do that? No. And now the
president met the Chinese are actually not currency manipulators. He has new priorities.
Before the health care bill collapsed, the President told the Republicans that this was their one chance to repeal Obamacare, if it fails, he would
move on to tax reform. Of course, the bill did fail, but now the President says he wants to get health care done before moving on.
And he had a completely different view on monetary policy. In September Mr. Trump said that Janet Yellen should be ashamed of herself for keep
interest rates low. He said that that was a political move. Now he says he actually likes her policies and that he likes her too. He left open the
possibility that he could appoint the Fed chair to a new term next year.
Stephen Moore was an economic adviser to the Trump campaign, he's now a CNN senior economic analyst. I spoke to him a short time ago and asked him why
the President has changed his mind on China.
(BEGIN VIDEOTAPE)
STEPHEN MOORE, CNN SENIOR ECONOMIC ANALYST: I think in part because it turns out that China probably isn't a currency manipulator. You know, the
yuan has been linked to the dollar now. For the most part for the last 10, 15, 20 years.
ASHER: So then why make that promise if you know you can't deliver?
MOORE: Well, I don't know why he did, I can't answer for that. Donald Trump made a lot of bombastic claims during the campaign. I think the
American people kind of -- the voters understood what he meant, that he was going to get tougher with China. And I think he is going to get tougher
with China when it comes to trade and when it comes to Korea and other issues. But it turns out that he's not going to go after them for being a
currency manipulator. In the end, I think the important thing is he's made the right decision here.
ASHER: OK, so when it comes to what voters are thinking, you know, a lot of people voted for Donald Trump because they felt that he was going to put
America first, obviously, he promised to bring back jobs that had been lost in trade with China. Now that he's reversing a lot of those policies or
some of those policies, aren't voters going to sort of think twice when it comes to 2020, voting for him. If they can't be sure that he's going to
stick to his promises?
MOORE: I'll make a couple of comments about that. First of all, I think Donald Trump is going to be, you know, reelected or not reelected based on
how the economy is doing. If he brings back jobs and if he gets that economic growth rate up, then I think people -- you know, he's going to be
reelected in a landslide. That's what matters.
And the truth is the economy has picked up. There's no question, our economy, which was growing at less than 2 percent by my calculations is
already up to about 3 percent growth just since the election. You see this in consumer confidence, investor confidence, you see it in the amount that
businesses are spending now. There's a new kind of spring in the step of the economy. But the other point I would make --
ASHER: But Stephen, Stephen, just quickly, though, the last jobs report came in at 98,000. Did that concern you?
MOORE: No, it didn't. That was disappointing, I agree with you. But that was an outlier, I think. I think we'll get a good jobs report for April
and all the other indicators are positive. My goodness, the consumer confidence numbers just came out two weeks ago, they were higher than at
any time in 20 years. That's a pretty good number.
Back to your central point, about Trump keeping his promises, I think you're right. I mean, I think when it comes to the key promises that he
made to the American people, he's got to keep those. I'm going to mention what some of those are. He's got to cut taxes for American people and for
our businesses. He's got to get Obamacare repealed. He does have to get tougher with China. And he's going to have to build that wall. Those are
some of the central promises.
Some of these other things like, you mentioned export-import bank, he earlier said he would get rid of it, now he's saying he might keep it. I
don't think the American people care that much about those kinds of secondary promises. But the big things, you're right, he cannot abandon
the major promises that he made to the American people.
[16:10:00] ASHER: So, in terms of health care, as you just mentioned, at the beginning he said, one of the first things I'll do is repeal and
replace Obamacare. Obviously, that didn't work out too well. Then he said he was going to move on to taxes. And then now he's saying, actually, you
know what, I'm going to go back to health care. Shouldn't business leaders be concerned about whether or not they can actually trust him to fulfill
his promises?
MOORE: Well, there is concern, there's no question. One of the reasons the stock market has been jittery for the last several weeks, is because I
think businesses are starting to wonder, wait a minute, are they going to get this tax cut done? Because some of it, quite frankly, some of the tax
cut was already priced into the market, in the stocks, and now they're getting very worried.
So, you're right. He's had a rocky first 75 days. You know, he's done some things very right, a big victory with Neil Gorsuch this week, which is
a big pleaser to conservatives. But he's got to it that tax cut done and he's got to get the health care bill done. By the way, I think if he had
to do it over again, and he's said this, he probably would have done the tax reform first, because that's a high priority for workers and
businesses.
(END VIDEOTAPE)
ASHER: To understand the policy shifts that Stephen and I were just talking about, you really need to understand who exactly has the
president's ear. Who is he listening to, is a question we tried to answer on this program many, many times. There are two ideological wings in the
White House, the globalists and the nationalists.
So, Steve Bannon leads the nationalists. He's part of that whole sort of America first way of thinking. He have shaped the campaign's message and
also led some of Donald Trump's more shall we say controversial initiatives, most notably the travel ban, you remember, back in January.
Now the balance actually shifting towards the globalists. You have Jared Kushner on this end. He's of course, the president's son-in-law, he's
married to Ivanka Trump. The president has literally trusted him with everything from fighting ISIS, solving Middle Eastern peace and the opioid
epidemic as well.
Adding some more weight is Gary Cohn. He's the president's chief economic adviser. And by the way, interestingly enough, he was actually a lifelong
Democrat. Bannon appears to be losing his power grip. He lost his seat on the National Security Council. And recently, President Trump actually
referred to Bannon as, quote unquote, a guy who works for me, playing down his role in the campaign. So, CNN's Athena Jones joins us live now from
the White House. Athena, when you think about all of President Trump's flip-flops. All of his sort of reversals in campaign promises, does it
approve Steve Bannon's reign in the White House is coming to an end.
ATHENA JONES, CNN WHITE HOUSE CORRESPONDENT: Hi, Zain. I don't want to be definitive about this, a person's fortunes in the White House, in the West
Wing, can change on a day-to-day or certainly a week-to-week basis. It appears right now, from what we're hearing from White House sources, that
there is something of a truce amongst Steve Bannon and the various sectors of the White House that he's been warring with. Whether it's Jared Kushner
or some of the other folks you mentioned, advisers like Gary Cohn, a top economic adviser who as you mentioned is a Democrat.
But it is clear, at least at this moment, that a lot of these foreign policy and economic policy flip-flops, the President is flopping in the
direction of more of an internationalist view, more of a mainstream view on several of these fronts. You've had experts arguing for months, for
instance, on the China as a currency manipulator front, that China hasn't been manipulating its currency in recent months. Despite the fact that
this was a constant theme on the campaign trail, that he was going to name China a currency manipulator on day one, something that concerned a lot of
folks because they believed it could launch a trade war. The president has backed off on that. And that is something that would please a lot of
folks.
Now when it comes to being more interventionist, we know that the Steve Bannon wing, his chief strategist, the nationalist, was not in favor of
last week's strike in Syria. We don't know yet what his thoughts were on this latest strike this week. But it seems pretty clear that broadly
speaking, the President and this White House are realizing that it's very different, what you're able to say and campaign on. The reality of
governing presents a much more complicated situation. And so, he's adjusting his approach. It's pretty remarkable, though, because it's been
a series of big reversals just in the last few days.
ASHER: Athena, here is the thing. A lot of people loved Donald Trump and voted for him because he was so unconventional. Surely if he becomes like
every other president, if he becomes more traditional in his views, he's going to lose a lot of that populist support.
JONES: Well, that's the big question. So far, his support, a certain level of his support has been very, very strong. 30 percent, 35 percent,
sometimes that's about all the support that he's gotten in some of these recent early troubled weeks at the White House. His approval rating is a
little bit on the upswing.
[16:15:00] But that is the big question, whether or not the people who looked to Donald Trump and came to his side and became supporters of Donald
Trump because he was not traditional, because he was unconventional, because he was saying things that they wanted to hear after several years
of the U.S. at war.
NATO is one of the other big ones. He said over and over again on the campaign trail that NATO was obsolete. This of course is a key alliance in
Europe and now he's said that it is not obsolete. We'll have to wait and see how his supporters respond to these changes. That is the big question
that we'll have to wait for the answer. But a lot of other folks who were hoping that he would be persuadable towards this more mainstream, more
traditionalist view, are pleased to see him making these changes, Zain.
ASHER: Yes, and that could be Jared Kushner among those. OK, Athena Jones, live for us there. Thank you so much, appreciate that.
First came the viral video, and then of course the botched response. And now, get ready for the lawsuit. The public relations nightmare just won't
go away for United. That story next.
(COMMERCIAL BREAK)
ASHER: David Dao began his week by being dragged off a United flight. And the video of his ordeal was seen around the world many, many times. Now
his lawyers say that he's ready to stand up for the rights of airline passengers everywhere. They say that their client suffered a concussion,
that he lost two front teeth, that he broke his nose. Police, as you can see in this video, forcibly dragged him from his seat and ended up dragging
him down the aisle as well. In the press conference his attorney made it clear a lawsuit is coming very, very soon both against United Airlines and
the City of Chicago as well.
(BEGIN VIDEO CLIP)
THOMAS DEMETRIO, DAO FAMILY ATTORNEY: Here is what we want as a society. We want fairness in how people treat us. We want respect. And we want
dignity. That's it. Not a big deal. This seems to simple. Forget the law for a minute. That requires common decency and the treatment of
passengers. Just treat us with respect. Make us feel like you really care.
(END VIDEO CLIP)
ASHER: Make us feel like you really care. That was the lawyer for Dr. David Dao speaking earlier. And my correspondent Ryan Young was actually
at that news conference. He's joining us live from Chicago. So, Ryan, I found the extent of Dr. David Dao's injuries very, very disturbing.
Concussion, two front teeth that he lost, a bloody nose as well. How is he doing now?
RYAN YOUNG, CNN CORRESPONDENT: They're been telling us he may have to have reconstructive surgery on top of all that. He's been released from the
hospital. You can understand the trauma he suffered, and the idea that he walked back into that airplane, you could tell he was suffering from
trauma, just the idea of all that blood pouring from his face.
[16:20:09] There have been several other people who have reached out to the lawyers, say they were scared for what happened to Dr. Dao. All of this
being played out over an hour-long news conference, that lawyer pretty much told us right down the middle that they believe he will be the person who
will stand up for customers so this will never happen again.
You talk about the lawsuits against maybe the Department of Aviation, the City of Chicago, and United. Those of course could happen if a settlement
is not reached before. But this all comes out in knowing how to say you're sorry, because the PR nightmare continues for United. In fact, the lawyer
talked about making changes at that news conference a few hours ago.
(BEGIN VIDEO CLIP)
DEMETRIO: Dr. Dao, to I believe his great credit, has come to understand that he's the guy. He's the guy to stand up for passengers going forward.
(END VIDEO CLIP)
YOUNG: So, you have a lot of people who are actually reaching out to that lawyer now, to talk about three or four things. One, how he was treated on
that plane. And other people who are coming forward to say, hey, I've been treated poorly before on the plane. And you have trainers who taught those
officers before how to handle someone in that situation. And they are telling the lawyer that is not how they were trained to interact.
We know those three police officers or the aviation officers have all been put on paid administrative leave. But there are big questions about what
will happen next. We're already seeing some of the fallout here, but there's international scrutiny going on with this airline carrier and what
happened to that man over a few minutes of time.
ASHER: Ryan Young there on that news conference called by the attorney for Dr. David Dao. Ryan, thank you so much.
Let's talk more about this case with attorney, Danny Cevallos. Is this an easy case? Is this a simple do you think?
DANNY CEVALLOS, CNN LEGAL ANALYST: No, I don't think it's a simple case. At least in terms of the damages. The damages initially seemed to be
relatively minor. Now they may have been much more serious.
ASHER: Because of his injuries.
CEVALLOS: Because of his injuries. If he has documented injuries to his sinuses, to his teeth, those are all compensable injuries and they have
value. But there are two ways of looking at this case. United's position initially on liability was that we are allowed because of our contract of
carriage to remove passengers. But the plaintiff's case is getting stronger by the day. Because --
ASHER: But the way he was removed, though.
CEVALLOS: It is.
ASHER: He wasn't just removed but forcibly dragged off that plane, inexcusable to a lot of people.
CEVALLOS: Yes, but as you know and you can imagine, there are many ways you can forcibly remove a passenger. But legally, did they have the right
to do so? Because under the contract of carriage, if the passenger is unruly, if they are intoxicated, you can remove them. But this may have
been a case of the airline giving him an unlawful order to disembark. He may have, once he had passed boarding and actually boarded and sat down,
the rules that United cited at the outset about denying access, denying boarding, don't necessarily apply to someone who has already boarded. So,
once you're on, once you're on the airline, you may not be able to be bumped, not only just because of overbooking, which as I understand wasn't
the case here. This was a case where they just wanted some nonrevenue passengers on the plane.
ASHER: Yes, flight attendants.
CEVALLOS: Yes, some staff members. Yes, to get them where they needed to be. This case is more about the PR disaster than it is about the
traditional things that drive a personal injury case, which is damages and liability.
ASHER: So, if you're United, if you're representing United, is it easier just to settle and just say, you know what, we're going to pay you $5
million, whatever it is, $10 million, and this whole disaster, we can put it behind us?
CEVALLOS: Yes. In fact, United is doing a few things that if I were their defense attorney, this is what I would tell them to do. Offer the other
passengers free tickets with the proviso that you don't sue us for damages because of what you saw or in a class action context. Then you go to the
plaintiff and you make an early offer with the understanding that each day that passes, that leverage that you have, that PR leverage is evaporating.
Because each day this goes on, the very thing that United wants to avoid is bad press. They're getting bad press. Maybe in a month from now there's
nothing left for this plaintiff to offer other than his actual injuries which are obviously to his teeth, his nose, everything else. And then it
becomes just a traditional personal injury case.
ASHER: I was wondering when I was watching that news conference, I was wondering why they were being so cagey about whether or not they were going
to file a lawsuit. Because the lawyer was like, oh, we probably will file a lawsuit. Why did he used that language? Why not just say yes, we're
filing a lawsuit next week or tomorrow, whatever?
CEVALLOS: Because it's the traditional rules of negotiation. Don't give away any information that you don't need to. While they have the potential
lawsuit, they can hang that over United's head like a sword of Damocles. There's no reason for them to commit to filing a lawsuit or commit to doing
anything.
[16:25:00] The less information you give the other side, the negotiation is better for the plaintiff in this instance. And I should add, they've
already filed a form of a court action, they've filed something to require United to preserve evidence --
ASHER: To keep the evidence, right, right.
CEVALLOS: Exactly, we call that avoiding spoliation, which is definitely a signal that there's more to come. But this gives them more leeway to sort
of negotiate something with United, instead of saying we will sue. They keep it open and they use all of their leverage, bring it all to bear
against United and possibly the government. But United is a much better defendant.
ASHER: We shall see what United's response will be. Danny Cevallos, thank you so much for being with us, we appreciate it --
CEVALLOS: Thank you
ASHER: -- for breaking that down for us.
Willie Walsh is the CEO of IAG, which owns British Airways, Aer Lingus, Iberia and Vueling as well. On Wednesday, he told Richard Quest his
outrage over the United incident is understandable.
(BEGIN VIDEOTAPE)
WILLIE WALSH, CEO, INTERNATIONAL AIRLINES GROUP: Like everybody, I was shocked. Nobody would expect the police to respond to the situation in the
manner in which they did. I can understand the outrage that has been expressed. The fact that it was widespread coverage, everybody has seen
it. I think what was disappointing, a place that did respond was that United took their time to apologize. I think that should have been done
sooner. I couldn't quite understand why the apology came out in the form that it did until yesterday when I think it was clarified and they
expressed, you know, full concern and made clear that they were going to make it right. So, I agree, it's never too late to put things right, but
they could have done it a lot earlier.
RICHARD QUEST, CNN CORRESPONDENT: One of the things Oscar Munoz said is that he's going to obviously review all aspects of how not only they
treated the incident once it was under way, but how they got to this point. The overbooking, the staff travel, the amount of compensation, the limits
and the authority given to staff. Is this something you think, well, we may not need to review but it wouldn't hurt us to take a look at again, our
procedures?
WALSH: I think that's a fair comment. You know, we all learn from other people's mistakes. It's certainly a lot easier when somebody else makes
the mistake. But I think it's appropriate that you look at it and see if there's some learning for you.
QUEST: Do you fear overbooking's days may be numbered? At least from the regulators.
WALSH: I hope we don't have a knee-jerk reaction to it. It makes good business sense to do it. You know, you had to apologize to anybody who
suffers. I actually suffered from it myself, I was on a commercial passenger in another airline that had overbooked. I know what it feels
like, when you need to get on a flight, you're there on time, and you're told there's no seats available. It's not something nice. We don't like
doing it. It is rare. Our systems are much more refined today than they used to be. But when it does happen, I think we've got to deal with it in
a professional manner. And certainly, it makes sense for everybody to look at what happened with United and make sure those events never recur.
QUEST: Were you tempted to do an ambush troll ad in the same way that Royal Jordanian did and Emirates did and one or two other people did?
There must have been someone in your office who said, come on, Willie, let's have a go at this? This is an opportunity.
WALSH: There's always that temptation. But you said it yourself, this could have happened to others. I do admire the people who come out quickly
with some of the responses and the ads. It's never nice to take pleasure at somebody else's expense like that. But we didn't do anything. That's
not to say we wouldn't do something in the future.
(END VIDEOTAPE)
ASHER: And you can see much more of Richard's interview with Willie Walsh on this program next week.
Not as simple as it looks. President Trump concedes the relationship between North Korea and China is more complicated than he thought.
[16:30:00] (COMMERCIAL BREAK)
ASHER: Hello, everyone, I'm Zain Asher. Coming up in the next half hour of "QUEST MEANS BUSINESS," the head of the World Trade Organization says
he's still not clear what President Trump's trade policy looks like.
And has Formula One gears up for the Bahrain Grand Prix, F1 legend Jackie Stewart tells us his hopes for the sport under new ownership.
Before that though these are the top headlines we are following at this hour. U.S. Air Force test video shows the massive power of a bomb the U.S.
has just dropped on ISIS tunnels and caves in eastern Afghanistan. The pentagon calls it the mother of all bombs, because it's the most powerful
non-nuclear explosive in the U.S. arsenal. It's never been used before on a military target.
In Syria, 18 fighters allied with the U.S. were killed in what's being described as a misdirected air strike by the U.S. coalition. U.S. Central
Command says the target location had been identified as an ISIS fighting position. It was actually the position of Syrian Democratic forces. The
coalition is assessing the incident.
Meantime, Syrian president Bashar al Assad says reports of last week's chemical attack are, quote, 100 percent fabrication. This despite
eyewitness reports and independent analysis that contradicts that claim. In an interview, Assad suggested photographs showing children who died in
the attack may have been staged.
A human rights court has ruled there were serious failings in how Russia handled a 2004 terrorist attack. One Chechen terrorist took children
hostage at a school.
And the man pried from his seat and dragged off a United Airlines flight is filing a lawsuit. Dr. David Dao says he lost two teeth, suffered a broken
nose, and may need surgery. He was pulled from the flight to make room for airline employees who need to get to another city.
U.S. stocks fell on Thursday. The Dow closed off 138 points with energy and financial shares suffering the worst losses. The dip happened at 12:00
p.m. New York time. Stocks were pushed down after the news that the U.S. had dropped its most powerful non-nuclear bomb in Afghanistan. Investors
were also focused on a series of bank earnings. Cristina Alesci joins me to break it down. Traditionally over the past few weeks we've seen the
markets really kind of like shrug off any kind of geopolitical turmoil. Then today we saw that massive dip around 12:00 our time when we got that
news about the U.S. dropping a bomb in Afghanistan.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: You know, what is interesting about geopolitical turmoil, you can't price it in until it actually
happens. That's why you see these massive moves in the market like this. But investors have been aware of this risk for the last several months.
Jamie diamond, president and CEO of JPMorgan, has warned that geopolitical risks are the biggest risks he sees out there. And this is not a surprise,
to see that kind of dramatic movement as investors digest this information.
[16:35:00] We could see the market come back. But investors also have some whiplash, not this move specifically, but investors also have some whiplash
from Trump's flip-flops.
ASHER: Changing his policies consistently all the time.
ALESCI: That's right. We've seen him on the economic front change his mind on Janet Yellen. He was calling for her ouster during the campaign.
He's no longer calling China a currency manipulator. He changes position on the import-export bank.
ASHER: How do investors know to trust what he says, then?
ALESCI: Well, they're still learning. It is the easy answer here. But the reality is, look, there's a learning curve, right? So, we're watching
Donald Trump's education right in front of us. But he's also doing what's expedient to do at the time. On Yellen, for example, if she goes, he might
be pressured to appoint someone that's right of her, which would mean more aggressive rate hikes, which would possibly mean slower economic growth.
That's not something he wants to see. On China, his Wall Street advisers like Gary Cohn, people in the White House now from Wall Street, have been
perhaps successful in convincing him that a trade war with China would actually be very negative for the U.S.
ASHER: Not a good idea.
ALESCI: Exactly, for the U.S. economy.
ASHER: What's interesting, looking at bank stocks, initially and Donald Trump got elected, we saw bank stocks really talk off. Bank stocks more
sensitive to the president's policies of creating a more business-friendly environment. Now it appears to be slowing down. Bank stocks would put the
brakes on the rally.
ALESCI: The good news about banks had been baked in. The pullback in regulations, rollbacks in capital requirements. Investors bought those
stocks on the thought that this administration was going to be pull back those regulations, make it easier for them to do business. Plus, rising
interest rates might help them make money on their lending. But now, what they see is a series of volatile -- investors see a series of volatile
decisions, you know, the whiplash along with the geopolitical risks, and now they want to take some of those gains perhaps off the table.
ASHER: They're not sure whether they can trust him at this point.
ALESCI: Exactly.
ASHER: Cristina Alesci, my friend, thanks for coming on the show.
Donald Trump admits he underestimated how complicated the relationship between China and North Korea is. The president has tweeted about China's
role in solving the North Korea crisis for the third day in a row. He says, "I have great confidence that China will properly deal with North
Korea. If they are unable to do so, the U.S. with its allies will." At the White House on Tuesday, President Trump said China was already putting
economic pressure on North Korea.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: They have a very big problem in North Korea. And as I said, I really think that China is going to try very hard and has
already started. A lot of the coal boats have been turned back, you saw that yesterday and today, they've been turned back. The vast amount of
coal that comes out of North Korea, going to China. They've turned back the boats. That's a big step.
(END VIDEO CLIP)
ASHER: Asia experts have little doubt China's main objective for the Korean peninsula is stability. Beijing does not want to see the south and
the north reunited, nor does it want the economic collapse of North Korea. So, it's prepared to give North Korean economic lifeline. China's trade
with Pyongyang increased by more than a third in the last quarter. Beijing says trade between the two countries is all above board. Three-quarters of
North Korea's trade is with China. The CIA says Pyongyang's main import are fuel, textiles, grain, machinery and equipment. I want to go now to
Patrick who joins us now. Patrick, explain how important coal is to the China/North Korea relationship.
PATRICK CHOVANEC, CHIEF STRATEGIST, SILVERCREST ASSET MANAGEMENT: For North Korea, China is its lifeline, whether it's exporting coal or other
minerals, its reliance on China's banking system to move money in and out of the country is something that's often overlooked. China is North
Korea's lifeline. If you turn that around, North Korea is not actually that important to China. In fact, South Korea is much more important to
China. As a trading partner.
ASHER: Patrick, I want to let our viewers know what we're seeing on the screen, Trump is getting on Air Force One. He's heading to Mar-a-Lago,
Florida, where he's going to spend the next few days. How does China then use the economic weapon of trade and sanctions to actually rein North Korea
in?
[16:40:00] CHOVANEC: Very carefully. It needs to -- it needs to weigh its considerations. The United States has had relationships with regimes like
the Shah of Iran or Nicaragua, that they know are problems. China knows North Korea is a problem. But just like that, those relationships, we
didn't really know what to do about it because we were afraid of the alternative. China is afraid of the alternative. They're afraid of a
collapse in North Korea. Remember, China fought a war with the United States in the 1950s to prevent a unified Korean peninsula allied to the
United States. So, this is a really strategic imperative for China. They're not going to trade for a few M&A deals in the United States.
ASHER: Here's the thing. China has actually said it stopped buying North Korean coal. Explain why trade has actually increased between them?
CHOVANEC: It's very opaque. And China has said that they are doing this, it's really something they're required to do, actually, under U.N.
sanctions. They're sort of announcing it like it's this act, but really, it's something that they should be doing anyway. In fact, there's a lot of
things that happen below the radar screen. When North Korea launched a missile and it failed and it landed in the ocean, they recovered it and
they found that the U.S. and japan recovered it and found that many of the parts had been made in China. Whether that was because the Chinese were
officially providing the parts, probably not, but they were turning the other way while Chinese companies were providing that.
ASHER: Can we trust the data we get?
CHOVANEC: No. I've been in North Korea twice. It is an incredibly opaque country. The trading relationship across the border, we think of it as a
hard border, right, but in fact, especially to the east, the river is -- you can walk across the river, and people do, and there are North Koreans
who go back and forth across the border. It is a very opaque relationship.
ASHER: All right. Thank you so much for breaking that down for us. Thank you.
OK. So, it is day 84 of the Donald Trump presidency, and the WTO's director says he still doesn't know what the administration's trade policy
is. He says the uncertainty is forcing investors to think twice about trade, next.
(COMMERCIAL BREAK)
ASHER: Welcome, everybody. The World Trade Organization says uncertainty has become such a big problem, they've had to add a new graph in their
annual report just to measure it. They're forecasting that global trade will grow by 2.4 percent in 2017. But it also says protectionist policies
are on the rise and could put a brake on the recovery. Richard spoke with WTO Director-General, Roberto Azevedo.
(BEGIN VIDEOTAPE)
[16:45:00] ROBERTO AZEVEDO, WTO, DIRECTOR GENERAL: Uncertainty can be good uncertainty or bad uncertainty. It doesn't matter. For the investor, he
will hold back until he has a more predictable scenario. Uncertainty is what is going to tell us whether we're going to get to that number, 2.4, a
bit lower, a bit higher. It's a big player in this scenario.
RICHARD QUEST, CNN ANCHOR: But which is the most important factor in this uncertainty? And of course, I think of things like Brexit. I think of
Donald Trump and the administration's policies in relation to, say, China or Mexico. So, what's driving the uncertainty?
AZEVEDO: Anything that makes the investor think twice. And that includes electoral processes. We have a number of them going on in Europe. You had
the U.S. electoral process with an administration that is still figuring out the way forward in many areas, economic and trade. You'll have
geopolitical tensions as well, which may play a role in the political decisions that are taken. So, all these things together, they are the ones
that will determine what fiscal policies will be in place, monetary policies, and all these things tend to have a dampening effect on the trade
numbers and the GDP growth numbers.
QUEST: From what you've heard from the Washington administration, and the president himself and his negotiations so far with president Xi, from
Wilbur Ross talking about NAFTA, three months in or so, four months in, are you more or less encouraged than when we last spoke?
AZEVEDO: I think we have to keep watching what the developments are. I still like -- like the last time we talked, I still don't have enough
elements to tell me what the trade policy is going to be in the United States. I sense that some things that were said before are shifting a
little bit in one direction or another. Many of them positive. But there is still a lot of uncertainty. As you know quite well, in terms of trade,
the devil is in the details. Just general broad statements. They don't tell us what the actual trade policy is going to be like. And the effect
that it's going to have on global relations.
(END VIDEOTAPE)
ASHER: Our Richard Quest there speaking with the director-general of the world trade organization.
Stocks in Europe closed lower. Bank shares led the way down after president Trump said that the U.S. dollar was too strong. European markets
will be closed on Friday and Monday for the Easter holiday. If you want a daily digest of the top business stories delivered right to your in-box
every single day, all you have to do is subscribe to the QUEST MEANS BUSINESS newsletter, featuring Richard's Profitable Moment and all of the
top headlines from the rest of our CNNMoney team right here at CNN. All you have to do is go to CNNMoney.com/Quest to subscribe.
Ten Formula One teams are gearing up for this weekend's Bahrain Grand Prix. We'll hear from one of the greats of motor racing, Jackie Stewart. Before
that, the latest in our series, India 20 Under 40.
(BEGIN VIDEOTAPE)
IAN PURKAYASTHA, FOUNDER AND OWNER, REGALIS FOODS: I am known as the truffle boy in my family, I am Ian Purkayastha, I am 24 years old. I am
the founder and owner of Regalis Foods here in New York. So, these are actually Gucci mushrooms from the Himalayas. My company is a foods
importer and distributor. Fresh bergamot. We import hard to find ingredients from all over the world. I focus on truffles, caviar, wild
mushrooms, anything foraged. This is actually about $100 worth of truffle. So, I started foraging for wild mushrooms when I was 15 in rural Arkansas.
And I fell in love with all things mushroom-related. These are golden chanterelles from morocco. Food is such an important part of my life. My
father is an immigrant from India. I'm always struck by what amazing ingredients India has to offer. This is it.
[16:50:00] You can't rely on anyone. To find success, it really has to come from within. It's been almost ten years now. And yes, I'm still
super obsessive about mushrooms. It's weird, it's fungus, grown underground.
(END VIDEOTAPE)
ASHER: Tomorrow night, QUEST MEANS BUSINESS will be live for you from Bahrain where the formula one circus is in town ahead of the Bahrain Grand
Prix this weekend. Richard spoke to the British racing legend Jackie Stewart. He said Formula One is an excellent investment for host
countries, even though the costs are astronomical.
(BEGIN VIDEOTAPE)
JACKIE STEWART, FORMULA ONE WORLD CHAMPION: The attraction of formula one is that it is so global. So therefore, if you're in Malaysia, the
attraction to bring people into your country, in some cases, Azerbaijan, many people didn't even know where it was. The next grand prix that's
going to be taking place in the very near future as we do this recording is Bahrain. Very few people knew where Bahrain was before the Grand Prix
came. It's a great projector. I think some of the Grand Prix contracts that were very expensive and still are, are certainly being looked at. But
I think for Malaysia to lose it would be a big mistake. They're spending a lot of money on television advertising for tourism. There's nothing better
than to have a major sporting event such as a formula one coming to that country and therefore bringing a lot of people.
QUEST: And Bahrain, where I will be on Friday, and I will be there next week, they spent a lot of money redoing the course, if I remember, a couple
of years ago. Is it your view that it's a good course, is it one of the courses that will give an exciting race?
STEWART: I remember you well coming to the Grand Prix, because I spent some time with you on that occasion. And I think you enjoyed the weekend.
It's one of my favorite weekends of Grand Prix racing. They're very friendly. The facilities are amazing. And they make Formula One very
welcome. I think that still holds. And I think that holds for almost all of the Grand Prixes, some of which you have already mentioned. It is a
first-class racetrack. They've got a night racetrack as well, totally floodlit. They've extended it so it's better for television, for example.
They've done everything possible to make it a grand prix that will stay for many years to come. This will be the first year that I have not been to
Bahrain for the grand prix, my wife is unfortunately ill and I'm staying home for her.
QUEST: You're very much involved in the charity race, you have chosen to speak publicly about this issue and your family. You have shown light,
sir, into an illness that people don't wish to talk about but which affect so many families.
STEWART: Yes, that's true. And I think even for Helen, now that it's not sometimes agreeable, I do speak of it. On the other hand, more people need
to know. It's a huge epidemic in the world. One in three people, they're forecasting, in the future is going to have dementia. And at the moment,
there is no cure or preventive medicine for that. I'm trying to raise money through race against dementia to try to use motor sport, as a good
example, we change things so quickly. We're looking for young, dynamic people to come in and assist the experience of the well-established
profession. I speak about it for that reason only, to hope and pray that some of that about defuse some of Helen's discomforts to say the least.
That's why I do it.
(END VIDEOTAPE)
ASHER: British racing legend Jackie Stewart opening up about some medical problems that his wife has. Richard is going to be close to the action for
this week's grand prix. Friday night's QUEST MEANS BUSINESS will come to you live from Bahrain. You can catch that at the usual time, 9:00 p.m. in
London, 10:00 p.m. in central Europe, and 11:00 in Bahrain. If you've missed part of the program or just want to catch up with the show while
you're on the road, there's a new and easy way to enjoy QUEST MEANS BUSINESS. you can download it now as a podcast. It's an available to all
the main provider. Or you can listen to it at CNN.com/podcast.
And that is QUEST MEANS BUSINESS for tonight. I'm Zain Asher in New York. The news continues on CNN.
END
