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QUEST MEANS BUSINESS
Dow hits Record on Eve of U.S. Holiday; Abu Dhabi Airport Wins Laptop Ban Reprieve; Tech Investor Quits After Harassment Claims; Macron; Europe has Lost Its Way; Macy's Gears Up for July 4 Fireworks Spectacular. Aired 4-5p ET
Aired July 3, 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 HOST: No records for the Dow Jones Industrials. This as an hour ago. No. Just three hours ago when the
market closed at 1:00. An early closing because of -- oh, look at that by gingko. Oh, and lots of gaveling and fireworks. It was a short day's
trading on Monday, July the 3rd.
Tonight, the markets are going up like a rocket. The Dow has an inter-day record and it's all just before Independence Day. Laptops are back in the
cabin for an Abu Dhabi airline, Etihad. And a top tech investor quits after sexual harassment claims in Silicon Valley.
I'm Richard Quest. I mean business.
Good evening. U.S. traders, the fourth of July holiday is upon them. And it started early with some fireworks on the market. Although the Dow hit
an intra-day all-time high -- you can see it at the top, about 11:30 this morning. It fell back towards the close. It was an early close today.
The close at 1:00 in the afternoon. And then the market sort of -- that's why it stays where it is, because there was no further trading. The market
closed now for the fourth of July, Independence Day holiday, which is tomorrow.
The NASDAQ did not fare so well. The NASDAQ was down. And the market up 129 points. You see the numbers on the screen. The biggest winners of the
year so far are Apple, Boeing, McDonnell Douglas -- sorry, McDonald's. Showing my age here. These stocks are all up by 24 percent. Apple having
given back quite a bit of its gains as you can see. It would have been considerably higher. But nonetheless, if you look at this -- if you take
them one by one, right in here. Apple is very, very powerful. Somewhat volatile movements that we see from Apple. Particularly this fall later in
Same, again, with Boeing, which has responded obviously to different demands and different issues. And McDonald's which got rid of its chief
executive, much more of an even keel as it rises. Haven't seen anywhere near the falloff in McDonald's. Traders will have earned themselves a
burger or two if we look at the total with it being July 4th. The sectors -- you can absolutely --
The banks they are sizzling. The rally in banks continues after the Fed stress test we talked about last week. And then, turn the grill up. Thank
you. And the energy sector is getting tasty too. Oil prices staged a mini rally. That's good for that sector. Not only that, the economy as well.
The economy has some meat on the bone. New factory data suggests strength from in the global economy and indeed in the U.S. economy. Peter Tuchman
from Quattro Securities joined me on "QUEST EXPRESS and told me the investors, well when it comes to all of this, are insatiable.
PETER TUCHMAN, QUATTRO M. SECURITIES: Nothing seems to be stopping this market. Nothing geopolitical, nothing economic, nothing Fed related,
nothing Europe related or nothing related to our administration here seems to stop this market. It's on fire.
QUEST: To the investor watching who either is not fully vested or is thinking of getting in more. Remember, we never give advice on our
programs but we give you guidance and some thought. You see a market at record levels. Is it worth getting in at frothy times?
TUCHMAN: You know what, I think what you need to do -- if you have kept -- normally the answer would be no.
TUCHMAN: OK. But if you follow that idea for the last four months --
QUEST: You missed everything.
TUCHMAN: You have missed the train.
TUCHMAN: That train left the station. Is already across the world and you're not on it.
QUEST: Paul Donovan joins me now. The global chief economist at UBS. Good to see you, Paul. Thank you for joining us. You heard Peter down on
the floor of the exchange. From your lofty heights of economics, do the economics justify -- and I realize it's a truism if this is what the market
believes, this is what the truth is -- but do the economics justify this market?
[16:05:03] PAUL DONOVAN, GLOBAL CHIEF ECONOMIST, UBS: Well, certainly I think the U.S. economy is performing reasonably well. It's not roaring
ahead, but it's doing OK. You have got trend-like rates of growth. You've got full employment. You have got wage growth coming through, if you look
at the fed's wage tracker. You've got normal inflation. And of course, this is the carryover from the economic momentum of last year, which is
continuing as we go into this year.
In that sense, yes, absolutely. And of course, you know, a large part of the U.S. equity market is made up of companies with global exposure. We
are seeing the Europeans start to do better. That too is helpful. So, I think you can justify markets on the basis of earnings growth. That there
is a fundamental story in the world economy that is doing OK, but it's not doing brilliant. It's an OK environment.
QUEST: Accepting OK is good enough. What is your concern that OK becomes oh, dear?
DONOVAN: From a market perspective, there is a bit of a risk. Because the markets seem to be having a rather unhealthy obsession with confidence
data. We had another round of confidence data today. The media gets very excited about this. Economists do not. And the reason we don't is that
this is basically opinion polls with good PR. They are exaggerating the underlying economic strength. I think that there is a danger here that the
markets start to put too much emphasis on the confidence data and they don't look at the underlying reality. And the markets are expecting far
better things than is actually going to come through. That I think is going to be a bit of a risk. This confidence data has to correct down over
the course of the next few months and we have got to see it coming back to a more realistic level of economic activity.
QUEST: You are discussing the PMI numbers at the moment. In terms of what those risks are, to a market where the Dow and the NASDAQ were -- the Dow
and S&P up 8 percent. The NASDAQ up more. Is it a -- let's take the U.S. first. Is it a failure of the administration to get its policies through
on tax reform and the like? In Europe, is it Brexit that could derail it. Is it the possibility of tapering from the ECB? What are the real issues
that you are worried about?
DONOVAN: So, from where we are now, I think that whilst you may get one or two sectors vulnerable to the U.S. administration and the legislative
agenda in the states I don't think the market as a whole is vulnerable. The underlying fundamental economic strength is reasonable, and that should
provide an OK foundation. Similarly, in Europe you have got the same sort of thing coming through. The U.K. exit I don't see as a huge deal. The
volatility there is an issue for the pound/sterling, but it's not an issue for the wider market. And in terms of tightening, both from the Federal
Reserve with a passive policy tightening, and from the ECB with the organic tightening. This is unbelievably mild. It is very, very gentle. It is
tasteful tightening. It is the Downton Abbey of monetary policy tightening.
QUEST: I see that's gotten into the record. Tasteful tightening, the Downton Abbey of monetary policy. I shall steal that and liberally use it
without proper attribution.
DONOVAN: I would expect nothing less.
QUEST: And you wouldn't be surprised. Finally, Peter Tuchman says in terms of investment strategy -- bearing in mind that we don't give specific
advice or stock picks on our program as you would imagine -- but he says have a shopping list and be prepared for that moment when it's time to buy.
When you have got frothy prices like we have now, nobody wants to buy at the top of the market. What would you advise is a worthwhile strategy for
anybody watching thinking, but when do I buy?
DONOVAN: Well, I think the first thing is that, when investors say I am going to keep my money until it's a good time to buy, they never know when
it's a good time to buy. If you look at investor behavior when it is a good time to buy, investors normally panic or don't realize that it's the
right time. So being fully invested or at least close to fully invested, tends to be better than keeping money on the sidelines and waiting for the
right moment. Because you are pretty much are guaranteed not to get the right moment.
The second thing is, I think we've got to recognize that there are longer term risks out there in the global economy. We have more political risk
than in the past and so forth. That is an environment which does suggest a degree of diversification. Diversification of asset class, diversification
of geography, with biases within it, absolutely.
[16:10:02] The diversification of asset class, diversification of geography and in these times of far more tribal politics I would also suggest
diversification of a device. You need to get the big picture in order to understand what's going on in the world today.
QUEST: That's exactly what we aim to do here on QUEST MEANS BUSINESS. Good to see you, Paul. Have a good fourth or whatever. You're probably
working since you're in Europe, but if you weren't working have a good one anyway.
DONOVAN: Thank you very much.
QUEST: Delightful to have Paul on the program tonight. Donald Trump has been celebrating these kinds of numbers and wants the media to make more of
them, the numbers I have been quoting today.
He tweeted this. At some point the fake news will be forced to discuss our great job numbers, strong economy, success with ISIS, the border and so
Now, the job numbers are out on Friday. That's obviously some time away. The President has a busy schedule before then. This morning he took calls
with the leaders of Germany and Italy. And Wednesday Air Force One is fired up and he is on his way to meet the President of Poland, and he will
also -- where they'll discuss NATO.
And on Friday, well Friday is the big one in a way, because t's the G20 summit. This is the first face-to-face meeting with Vladimir Putin and
this is going to be a fascinating occasion. Also, of course, just before that incidentally on Thursday Donald Trump will be having a one-on-one
obviously, with Angela Merkel in Hamburg just ahead of the G20. Kaitlyn Collins will be traveling with the president. She is live in Bridgewater,
New Jersey. I trust you've got the stamina ready for this. Because it's going to be quite a trip. Looking at the moment, what do you think the
highlight is going to be?
KAITLYN COLLINS, CNN WHITE HOUSE REPORTER: The highlight is definitely going to be the President's meeting with Russian President, Vladimir Putin.
This is a highly anticipated meeting that everyone is wondering what they will talk about. The format and the agenda for the meeting have not been
set yet. Administration officials have told CNN that they're looking for the President to determine largely what he'll talk about with Vladimir
Putin. His NSC staff don't expect him to confront the Russian President over Russian meddling in the 2016 election. But they do expect him touch
on Ukraine and Syria. As you know, Syria has been a big issue for this President since he took office in January. In April after the Syrian
dictator, Bashar al Assad conducted a chemical weapons attack against his people, Donald Trump sent 59 tomahawk missiles to a Syrian air force base
in response. So that'll be a thing he'll want to know why the Russian President has been supporting the Assad regime.
QUEST: Good to see you. Have a safe trip. We will see you on the road. And we look forward to hearing your reports.
Coming up, the in-flight laptop ban is still in place for eight Middle East airlines. One of those has already got the U.S. stamp of approval. We'll
tell you why Etihad -- or we'll show you how Etihad has managed to get laptops back on their aircraft flying to the United States. It's QUEST
MEANS BUSINESS. The day before fourth of July.
[16:15:19] QUEST: In-flight laptop ban has been lifted for passengers who fly from Abu Dhabi to the United States following stiffer security in place
at the Abu Dhabi airport. Etihad is the only airline that operates flights on that route. The ban remains for eight other airlines that fly from the
Middle East to the United States. Peter Goelz is with me. The former managing director, at the National Transportation Safety Board joins me
from Washington. Peter, how far do you think Etihad and Abu Dhabi was able to get their ban overturned because there is pre-clearance there, and
therefore, effectively, that part of the airport that flies to the U.S. is de facto already operating at U.S. standards?
PETER GOELZ, FORMER MANAGING DIRECTOR, NATIONAL TRANSPORTATION SAFETY BOARD: You have hit it directly, Richard. The pre-clearance center, which
is the only one in the Middle East, is a tremendous asset for Etihad. And that they weren't able to clear laptops on it was really kind of unusual.
Now they are in line. It gives them a tremendous competitive advantage that you can go into the airport, clear customs, carry your laptop on to
the plane for a 14-plus hour flight, and it was simply a matter of time before that was going to happen.
QUEST: You nailed it there because, let's face it, Etihad is fighting against Emirates, the UAE's other airline out of Dubai. If you are flying
from anywhere, changing in the Gulf over the Gulf hubs, I mean, it's a no- brainer, isn't it? Why would you lose your laptop on the transfer at Dubai when you could keep it on by doing the transfer and do the pre-clearance in
GOELZ: Absolutely. It's a blood competition for the front of the airplane between those two carriers. This really gives a leg-up to Etihad. I am
sure the Emirates are screaming about this. If you are a handler or seller of bomb-sniffing dogs you could make a lot of money right now peddling them
over in the Middle East right.
QUEST: Now tell me what do these other airlines? -- if you haven't got pre-clearance that won't happen overnight. But the new seen and unseen
measures from homeland security which will be rolled out worldwide, is it your understanding that that eventually will allow countries like Dubai or
airports like Dubai, Istanbul, and Doha, to regain the right to have laptops. Because overall the idea of no laptops seems to have gone away.
GOELZ: Right. I think there's three things have to take place. The first is, they really need to step up on the technology front. They have these
new 3d scanners. Those need to be brought online immediately, if not sooner. You are going to have to step up your personnel until those come
online to be looking at individual laptops. And then doing -- making sure that they haven't been tampered with, that they're turning on. Then you
have got to do deeper background checks.
QUEST: Finally, on this question of questioning of passengers, whenever we talk about questioning of passengers, we always talk about the allow model.
Everybody talks about the allow model as being the gold standard. Do you give it that much credence and credit, or is it really a question that, by
the time you get questioned, you know, you have already gotten rid of the Peter Goelz of this world, because you know who he is? You know where he
is going and why he's going there. You don't need to question him. It's getting away from the one size fits all.
GOELZ: Yes, and I think much too much is made of the so-called el al model. They don't fly 50 aircraft, Richard. We are talking about air
carriers that have far larger fleets and carrying far more passengers. So that there is going to have to be a different system. And it's not going
to be the el al model.
QUEST: TSA pre-check. Good to see you, Peter. Have a wonderful fourth of July. Thank you for coming in today. Thank you
GOELZ: Thanks, Richard.
[16:20:00] QUEST: Let's stay in the region. Qatar has officially responded to a list of demands issued by Saudi Arabia and its allies. Nic
Robertson is in Abu Dhabi. A few hours ago, Nic, when I spoke to you we didn't know what the letter said. Do we know now what the letter said?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Richard, you're talking to me in the Middle East, aren't you? Things don't happen that
fast on many occasions. This is just another one of those. The Kuwaitis have custody of that letter as far as we know. We did here since you and I
last talked from the Saudi foreign minister who is speaking in Germany. And he did say when he gets the letter, they will as the Saudi's, Emirates,
Bahrain and the Egyptians, they will give it proper consideration before they give a response. That's going to be Wednesday. No. We still don't
know what's in it.
QUEST: I just want to reflect for a moment. Because I saw today there was a -- the staff of Al Jazeera made a video in which they defended their
rights to do their journalism. We know the United Nations has also come out with comments about this. I am -- here I am, I suppose I talk more
about Al Jazeera than the other networks that they were told -- the Qataris were told to close down. How to these other Gulf states justify asking
Qatar to close down a reputable, well-liked, respected network like Al Jazeera, good competitors of ours?
ROBERTSON: I can tell you how they're thinking about framing the argument. And there thinking of framing the argument in these terms, which is, OK,
let's not shut it down, but let's monitor it. Let's have it monitored by independent, international monitors from Europe, or the United States or
both. And let's say, you know, maybe further down the line we would be willing -- them -- would be willing to open themselves up to that same type
of scrutiny. That's the framing that may be put forward.
But look, Qatar has put already its own framing on this. Bigger, broader than what's being said by the journalists at Al Jazeera and that is that
this touches on Qatar's sovereignty and that this is something that they're going to give into. An independent journalist of whatever sovereignty,
whatever nationality, will feel they have a right to tell the stories independently. Their critics here would say, that isn't what they've been
doing in every case. And they'd like to agree a way to make sure it can happen in the future. That would be the framing.
QUEST: Nic, big-picture stuff, please. Is this dispute between Qatar and its former friends, is it getting better, getting worse, or just about the
ROBERTSON: Look, when the 13 demands were leaked, that was pretty much a low point. Because it seemed that, you know, that caught the Emirates and
Saudis by surprise. In essence, they were really -- there's a sense that they felt they were put forward a maximalist position. That they were
expecting a compromise and this cut them short of that. It was a low diplomatic moment. They've come under a lot of pressure since then, all
The narrative that they've heard from President Trump on the weekend who called the Saudi King, the Amir of Qatar, and the Crown Prince here in the
Emirates. And you have Theresa May calling the Crown Prince in Saudi Arabia today. And the German Foreign Minister and Germany with the Saudi
Foreign Minister, all saying the same thing. Look, you need to keep the GCC unity. You need to put a lid on this. You need to bring some
stability. There are big enough problems with Syria and everything else. You need to put a lid on this. But in the context of you must tackle the
extremism and terrorism. And that really does flips this back towards Qatar. But it is sounding more diplomatic. But there is space for,
obviously, other interpretations. We've heard a few of those today as well.
QUEST: Nic, good to see you. Thank you for staying up late to talk to us in Abu Dhabi tonight to talk to us. We appreciate it, thank you.
Iran -- staying in the region -- Iran has signed its first energy deal with a Western company. The first such deal since sanctions eased in 2016. The
multimillion dollar deal is that by the French oil and gas firm, Total. It includes the Chinese state oil giant, CNPC. The U.S. still blocks most
American companies from investing in Iran. The chief executive of Total says, the deal has the support of all of the players in the region.
(BEGIN VIDEO CLIP)
PATRICK POUYANNE, CEO, TOTAL: OF COURSE, I have been very transparent with all political authorities. And I have told them that they were coming to
sign. But I don't need their approval, you know.
[16:25:00] I am not sure I will have the approval of everybody, by the way. But if I am here, it's because I am convinced that we have, of course, the
support of the French government and European departments, and more than that, of many neighboring countries of Iran.
(END VIDEO CLIP)
QUEST: John Defterios joins me now. The deal is significant. How long, John, before, if you like, full benefits are seen?
JOHN DEFTERIOS, CNNMONEY EMERGING MARKETS EDITOR: This is supposed to come on line in 2021. But I think the deal is significant, Richard, because it
is the first Western investment in a post-sanctions era. So-called ice- breaker for the Europeans to come in. I think it was apropos that it was Total, the French energy giant, because it has been in Iran since the '90s.
Took a pause due to the sanctions. After the waiver was signed by the Trump administration in mid-May, it kind of cleared the way for Total to
come back in.
Here is the structure. Total will own just over 50 percent of the field. The Chinese partner, CNPC, 30 percent. And then Petrobras, the minority
stakeholder in this, just under 20 percent. It's a 20-year agreement that should add up, at today's prices which are low, Richard, as you know, at
$54 billion. I thought it was fascinating. The deal was signed with all this chaos taking place in the region with relation to Qatar. We often
talk about the prowess of Qatar and LNG and its 65 super tankers circling the globe. Iran sits an 18 percent of the proven gas reserves around the
world and 9 percent when it comes to oil. Iran is just getting started.
And I thought also the interesting twist today was that the minister for Iran, Bijan Zangeneh flanked by Total and CNPC, said the only thing holding
back U.S. investment -- and there are $200 billion worth of contracts still on the table -- is the U.S. government. They'd like to see the IOCs from
America jump into the fray as well. We're not there yet because of the sanctions and restrictions still coming from the U.S. Treasury Department.
QUEST: John, who is next to move in?
DEFTERIOS: That's a very interesting question. Because we've seen the Chinese on the forefront. The French are now in play. We often talk about
the German services companies better on the sidelines. Same thing with Austria. The potential is clearly there. The Iranians, Richard, have set
up this Iranian petroleum contract which they say is much more favorable. I noted that Total has better than 50 percent. That would have been
impossible in the past in Iran. So, they wanted to give favorable terms in a low-cost environment to allow the international players to enter.
I have actually spoken to the minister in Iran, the Minister Zangeneh and Deputy Minister, Zamaninia, and they said we'd like to have Shell. We'd
like to have BP. We would like ExxonMobil into the play, Occidental petroleum. That has not happened yet, but it doesn't surprise me that we
would see the French, first ones in, Germany to follow, potentially Austria. One, two and three in terms of preferences in the pole positions
as we see it.
QUEST: John Defterios, thank you.
Emmanuel Macron shares a gilded backdrop for a bold statement. What he said in Versailles about his vision for France and four Europe as QUEST
MEANS BUSINESS continues.
[16:30:36] QUEST: Hello. I am Richard Quest. There's a lot more QUEST MEANS BUSINESS as we continue tonight. When Emmanuel Macron says Europe
has lost its way as he gives a state of the nation address.
Macy's is preparing for the biggest fireworks display in years. Responsible for getting the touch paper lit. This is CNN and on this
network news always comes first. 18 people were killed when the tour bus collided with a truck in the German state of Bavaria Monday morning. Two
are injured. The bus caught fire after the crash with flames so intense only steel parts were still recognizable. The truck driver was not hurt
but dozens of others were injured.
French authorities have charged a man with plotting to assassinate President Emmanuel Macron. Investigators say the self-described far right
nationalist planned to attack the president on Bastille Day next week. Ten people were injured when a taxi driver drove into a crowd at Boston's Logan
International Airport. The driver apparently accidentally hit the gas pedal instead of the brake. They also say the man is cooperating with
The White House is getting in touch with the parents of a terminally ill British baby who wanted their son to receive an experimental treatment in
the United States. The president has tweeted, if we can help little Charlie, we would be delighted to so do. His doctors wished to take him
off life support last week. The European Court of Human Rights say they have the right to do so. His illness is caused by a genetic mutation.
Tesla says its first model 3 electric car is expected to be finished by Friday, two weeks ahead of schedule. Hundreds of thousands have already
paid deposits more than a year ago. Tesla is expanding its mass market. It's a new, smaller and less expensive electric vehicle.
The French President Emmanuel Macron is vowing to breathe life into Europe. He did it in a grand fashion at the Versailles Palace. The pomp and
ceremony was everywhere. He outlined his vision for the future of France and the continent when he said he'll lift the state of emergency this year
and cut the number of seats in Parliament -- this is what he's going to do. He'll cut parliament by a third, taking it to a referendum if lawmakers
resist. He is calling for a new generation of leaders to revive Europe, not turn away from it. And the president says the EU is weighed down by
(BEGIN VIDEO CLIP)
EMMANUEL MACRON, PRESIDENT OF FRANCE (through translator): I am suggesting we take a step back, stop become dictated to by agendas, time tables and
technicalities. The decade was a cruel decade for Europe. We managed the crisis but lost our way.
(END VIDEO CLIP)
QUEST: Melissa Bell joins me now. By all accounts, it looks like a delightful July evening in Paris this evening. Let's get to specifics,
Melissa. We heard the rhetoric. What are the real policies, the actual practicalities, that he wants to do?
MELISSA BELL, CNN INTERNATIONAL CORRESPONDENT: For the actual policies, the actual practicalities, we'll have to wait until tomorrow. That's when
France's prime minister announces the legislative program for the coming year. We're likely to find out among other things how he intends to reform
France's labor laws and shake up the economy. The point about today's speech this was Emmanuel Macron doing something no French president has
ever done. Before my prime minister speaks about the details let me tell you broadly what I want to do over the course of the next five years. It's
extremely ambitious but it's also sort of an intellectual proposition.
[16:35:00] It was an hour and a half of him explaining what was wrong with France, the fact that it needed someone with the power he now has in his
hands to shake it up, to take on the unions, to go about transforming the French economy so that it functions for French citizens and to take on all
the taboos in a sense that have been put in place over the course of decades. So, an ambitious speech but short on detail for the time being.
QUEST: Can you still hear me? Yes, you can.
BELL: I can.
QUEST: So, look, you talk about was France listening, and that this was a speech for the French people. But was France listening? As much as you
can tell, is this the sort of thing that the French people want to hear and need to hear and will respond to?
BELL: I think, in a word, yes. The whole opening part of his speech, Richard, was all about the fact that the French had handed him this
mandate. He won this spectacular victory against the odds in May. He won the spectacular parliamentary elections where his movement, his party, went
from having no parliamentary seats to the kind of majority no French president has enjoyed in the history of the French Republic. So, there is
this amount of trust and power that very few people in the western world actually enjoy. This is a man with a tremendous amount of power in his
hands, by the dint of the fact that the French presidency is powerful to begin with. By dint of the fact that he has the outstanding majority and
he is free from the ideological constraints that have bound previous governments. This is a man who can really do the job. He said today you
the French people have told me you are prepared for this.
QUEST: Give me a gut feeling, Melissa. Is there a feeling -- if you are on the streets, Paris or wherever, is there a renewed confidence? Is there
-- obviously not everybody voted for him, but do young people, middle-aged, whatever, is there a feeling of we have at least got a leader that we all
seem to like who is going to take us somewhere?
BELL: I think there is definitely that. A leader who certainly seems determined to put behind him the problems of the past. That is a political
elite that's disconnected from the people and goes about protecting its own power perhaps rather than implementing the kind of courageous reform that
might cost them their seats but that France needs. There is a sense that things are changing and that people wanted what Emmanuel Macron was
promising. The real battle comes beyond tomorrow's speech and the legislative program when it begins to be unfolded. Belabor reform is
announced to parliament. When laws are begun to be pushed through that will shake up the French system.
Of course, unions will take to the streets and many will follow them. Given the parliamentary majority the unions don't enjoy the support from
the socialist benches that they used to. So, Emmanuel Macron has the power in his hands, really, to take them on. It will be interesting to see, once
they get into the streets, what power they still enjoy and whether they can actually face off this French president that they worry a great deal about.
He is, of course, public enemy number one as far as unions go because he is preparing to take on their very entrenched power.
QUEST: Half past 10:00. 25 to 11:00 where you are tonight, Melissa. You have time to sharpen your pencils so you will be able to report on
tomorrow's prime ministerial speech with the details. We look forward to the details of that on tomorrow's QUEST MEANS BUSINESS. Thank you. People
still sharpen pencils. I tried to buy one recently. Couldn't find one.
European markets finished higher on Monday. As we talked about at the beginning of the program it was banking and energy shares that lifted the
broader market. Look at this. That speech by Macron pushed it to the highest of Europe. 1.4 percent. 1.5 percent. Germany on the back
following at 1.2 percent. Britain the laggard in all of this. It was very much the Macron speech which pushed the European markets higher. As we
continue, why one of the most powerful men in tech has apologized for being a creep. After this.
[16:40:00] (COMMERCIAL BREAK)
QUEST: It's the worst kept secret of Silicon Valley. And now thankfully it is being aired more and more. Confessions of sexism coming from
offenders themselves. The investor Dave McClure has apologized and has called himself a creep for mistreating women. He writes that he made
inappropriate advances in work related situations and has resigned from 500 start-ups, the company he founded. The shark tank star is owning up to
making women feel self-conscious, anxious and fear they might not be taken seriously. Apologizing five times in a single post.
Bobby Franklin is president and chief executive of the National Venture Capital Association, recently blogged about how sexual harassment has no
place in the industry. You say in your blog, Bobby, there should be no debate about the end goal. There may be disagreements on the debate on the
most productive approach but no debate about the end goal. One insight, a lack of human capital -- look, my -- my blunt, obvious question, in this
day and age, how did these people ever think it was legitimate to behave like this?
BOBBY FRANKLIN, PRESIDENT & CHIEF EXECUTIVE, NATIONAL VENTURE CAPITAL ASSOCIATION: My obvious answer is I can't defend any of the actions that
you have reported on or that we've all learned about. There is no excuse for what's happened. I am really glad that these brave women came forward
to provide a little sunshine. It's a great antiseptic. We need to make sure that this type of behavior does not continue.
QUEST: What worries me about this is that this behavior was carrying on in the 2000s. By that stage we all knew that sexual harassment as pretty much
-- most companies will vast reams of policies against it. It goes on, don't get me wrong, but we all knew it was not to go on. What is this
culture in Silicon Valley, in venture capital, this macho culture, that allowed it to perpetuate, do you think?
FRANKLIN: I think the simple answer is there is clearly a lack of diversity in the industry. It's something that we put together a task
force, I started at NBCA at the end of 2013. We announced a diversity task force in 2014. We started listening to people about what could be done to
have a more inclusive ecosystem. And certainly, a more inclusive venture capital industry. We have been working hard on that ever since. We
released a report with Deloitte in 2016 that basically looked at exactly what we knew, but we had never taken a serious look at, which is we don't
have enough women. Underrepresented minorities.
QUEST: Mary Barra of GM said on this program, we need diversity. There is a shortage of good workers. We all seem to know that now.
[16:45:00] FRANKLIN: You're right. But it's a great example, bringing up a big company. One of the challenges that a small industry has with a lot
of small businesses, a firm is just -- it's not very many people in most venture capital firms. They don't have huge HR departments, they don't
have many of the resources that large companies have come to create and expect to have over the decades that you talked about. So, I think that's
what we are trying to be a part of, the solution. We are trying to say, as your trade association, what role would be appropriate for us to play.
QUEST: How does this move forward? We can spend a lot of time looking back. You have obviously looked into this in enormous detail. What, for
you, is the singular most important thing that a VC company -- if I was running a VC company or was an investor in a VC company, that I would now
need to say to the chief executives looking out for my money, what do I need to ask?
FRANKLIN: I think what we all need to ask is make sure there are policies in place. We put out in March --
QUEST: No, no, no! I'm not going to let you go -- forgive me, sir. Policies in place. They can have as many policies as Fox News shows, you
can have as many policies in place and it still goes off the rails.
FRANKLIN: If there is one thing we need to do is we need to train the managers in this industry to know what to do when this comes up. If there
is another thing we need to do, to make sure we have more diverse teams. It's not only the right thing to do, it's the smart thing to do because
diverse investment teams make better decisions. So, there is a financial interest for venture capital firms to become more inclusive. I think, once
we make progress on this being a more inclusive ecosystem, a lot of these things will be much harder for bad actors to act. I don't think there is
one simple answer, unfortunately. I think we have to try as many different things as we can to root out this behavior.
QUEST: Bobby, good of you to talk about it. Please come back again as we watch the progress on this. Thank you, sir.
The fourth of July. I don't have fireworks. I have a bell. Tomorrow Macy's will turn this rather ordinary looking barge into a fireworks
QUEST: There are workers putting together the final touches on Macy's spectacular fireworks display that will light up the New York city skyline.
It's going to be one of the biggest displays for years. It includes performers like Jennifer Lopez. You never get the full effect on
television. You just kind of hear the boom and ding. Macy's got the fireworks started early when they rang the New York Stock Exchange closing
bell in style. Just look. There you see, if you look -- you can see on the left of your screen, Susan ringing the bell. Here she is with me right
now. Vice president at Macy's entertainment group. She joins me here in the C suite. Tell us. Macy's has sponsored these fireworks for years.
But never really got the credit for a long time. You paid the bill and everybody thought it was somebody else.
[00:50:00] SUSAN TERCERO, VICE PRESIDENT, MACY'S ENTERTAINMENT GROUP: It's funny. We have been doing this actually for 41 years. A very long time.
We put it all together. So, it's a lot of work on our part. I would hate to hear that we haven't gotten credit for it.
QUEST: What I mean is, if you are post '76, it became very much yours.
QUEST: You now make sure people know it's the Macy's.
QUEST: How important is it for a store like yourselves to be attached to these big events?
TERCERO: I think it's in our DNA. We have not only done the Fourth of July fireworks but we have the Macy's Thanksgiving Day parade. That has
gone on for over 90 years as well. It's part of what we do. It's part of giving back. This is our gift back to not only New York but to the
QUEST: When does planning begin for this?
TERCERO: About a year in advance. Shortly after this one, we'll wrap and we'll immediately start talking about the next one. There is a lot that
goes into putting it together.
QUEST: How significant -- I always try -- whenever I go to a truly world- class fireworks display, I always try to look at the new fireworks.
QUEST: It seems to me the fireworks, they want new ones, they're very much making shapes in the sky. This seems to be the new idea, isn't it?
TERCERO: Yes. It takes a certain type of technology. We try to change it up every year.
QUEST: There they are. The shapes. Fireworks within fireworks.
TERCERO: Exactly. We have smiley faces. This year some will be actually winking at you. That will be interesting. We also have some USA pixelated
shapes coming up and spelling it out. Fireworks are spell out the words USA. It will be fascinating. Over 23 colors. A lot of stuff going on.
QUEST: The selection of music. You have to be able to hear the music or add on the radio. Is the music important?
TERCERO: It's massively important. It's part of what takes so long to plan it. Fireworks, the best part is when you can choreograph them to
music because they have a lot of ebbs and flows in them like music. Our score has --
QUEST: This idea right at the end, you know, shot up as many fireworks as you can, make as much noise as you can. And everyone will have a good time
and clap. But it has to be more than that.
TERCERO: It's way more than that. This year we have a lot of patriotic music. It is the fourth of July. We have the west point band. They
performed on the score. They're celebrating their bicentennial. Did you know the band is over 200 years old? The oldest band in the country. It
has a lot of great moments.
QUEST: You do all the major events. You are in charge of them.
QUEST: There is a brick wall over there. You might want to hit your head on it. This might as well be one of the most challenging things. There
are easier things to make your living than the fourth of July fireworks and the Thanksgiving Day parade.
TERCERO: Many people were doing it before I arrived. But we try to challenge ourselves to do something bigger and better every year.
QUEST: We're so grateful that you came to talk to us.
TERCERO: Thank for having me.
QUEST: I assume nobody actually lights them anymore.
TERCERO: No. But if you want to come out we'll give you a couple matches.
QUEST: With all that -- What could possibly go wrong.
QUEST: The latest economic shakeup by the India Prime Minister, Narendra Modi. CNN's Ravi Agrawal is with us. We have the details from New Delhi.
RAVI AGRAWAL, INDIA BUREAU CHIEF: India enacted the GST. Goods and services tax, a move to simplify an almost byzantine system here. India
has 29 states. Until last week each state set its own tax rates for everything from soap to cars and washing machines. In practice, what that
meant was lots of extra paperwork. For large companies, it also meant that trucks carrying goods from one state to another were stuck at border
crossings for long hours filling out forms. That has now changed. With the new rules, all products will have designated common sales taxes across
the country. One analogy of explaining this is the EU. The difference there is that the EU went from being an economic union to a political one.
India is the opposite. It began, of course, as a political union 70 years ago. Now it is finally united on taxes. All of this sounds very
complicated. And it is.
But it is meant to make paperwork simpler, reduce corruption, and generate more tax revenue for the government. Independent tax sources say this move
could boost India's annual growth rate by 0.6 percent over the next 15 years. It could also make India a much easier place to do business, which
many foreign investors have been clamoring for. For India's Prime Minister, Narendra Modi, the new tax system is his biggest reform to date.
But there are already teething troubles. We have reports from across the country of small traders who have shut shop this week as they try to learn
the new rules, how they impact them and how they should comply.
QUEST: A Profitable Moment after the break.
QUEST: Fireworks, July the 4th and a market that keeps rising like a rocket. All right. Maybe no records, but the Dow Jones industrials were
higher. The S&P as well. The NASDAQ over the half-year so far all showing good gains. Can this continue? Who knows. It's a mug's game to actually
say it one way or the other. What we can say, however, is that there is a momentum in this market that, for the time being, does not want to give up
strength. And as long as that continues, well, I think you light the blue touch paper and stand well back. And that's about QUEST MEANS BUSINESS for
tonight. I am Richard Quest in New York. Whatever you're up to in the hours ahead, hope it's profitable. I will see you tomorrow.