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German Car Giants Pressured Over Cartel Claims; IMF Cuts Forecast for U.S. Economy; U.K. and U.S. Get Started on Trade Talks; Ryanair Sends Brexit Warning, Shares Fall; Microsoft Looks to Wash Away Paint;

Aired July 24, 2017 - 16:00   ET


[16:00:00] RICHARD QUEST, CNN HOST: Don't forget to ring the bell in all your excitement. Closing bell ringing on Wall Street. Obviously, a very

exciting day on the stock exchange. The market is down some 51 points. So, no records for the Dow. You can stop ringing the bell now, sir. Thank

you. There we go. I don't know what he's taking, but I suggests he stops doing it now.

It's Monday, it's July the 24th. Tonight, something nasty under the hood. Shares in German car companies fall amid serious allegations of collusion.

Donald Trump's growth targets seem a long way off if the IMF's numbers are to be believed. And an even more special relation, U.K. and the U.S. are

starting trade talks before Brexit. I am Richard Quest, live in the world's financial capital and I mean business.

Good evening. We begin tonight with the share prices of Germany's biggest car companies falling with a new crisis that's threatening one of Europe's

most powerful and important industries. It's an allegation that German car makers colluded to set costs, agree on supplies and develop technologies

like emissions systems.

According to "Der Spiegel," the newspaper is reporting that under collusion -- or alleged collusion, went on for more than three decades, involving

hundreds of executives from the companies and their subsidiaries. The shares of all three and the day up to one and three percent. None of the

three, Daimler, Volkswagen or BMW are commenting specifically. Volkswagen plans to hold a special board meeting on Wednesday to discuss the


It all came about, apparently, because Volkswagen revealed to the authorities as part of the diesel emissions scandal that these meetings had

been taking place. But, if true, the seriousness can be seen when you think of how important the automobile industry, the car industry, is in

Germany. A source of national pride. If they were found guilty of collusion. It will cause damage on three fronts.

Firstly, of course, the monetary front. If the EU found them guilty and the German authorities found them guilty, monetary fines which could reach

into the billions of dollars. The commission says it's too early to speculate. That's before, for example, in the litigious United States

people decided to sue the companies in this country claiming damages, costs and compensation. The reputational damage would be devastating both to the

car industry is the made in Germany brand. Which is already struggling after the diesel emissions scandal.

And then the broader economy. In Germany alone, 800,000 jobs are accounted for in the industry. It's one-fifth -- 20 percent, of the country's

industrial revenue comes directly or indirectly from the car industry. Joining me now, Hans-Olaf Henkel, a member of the European parliament and

former director of the Federation of German Industries. I will preface, sir, I will preface, if true and if proven, this would be devastating.

HANS-OLAF HENKEL, MEMBER OF EUROPEAN PARLIAMENT: Absolutely, Richard. It would be devastating, not only because we have, as you rightfully say,

800,000 employees in Germany depending on this sector, we have tens of thousands of Americans depending also on German car companies in the U.S.

But let's face it, nothing is proven, and as far as I can see, this has not been a price-fixing deal or something like that, but possibly an agreement

on certain standards.

Now, one has to find out whether it is correct to agree on such standards like the size of the tank for a liquid which you use in order to get the

diesel emissions under control, or whether it has been something more serious. But we have to wait and, indeed, if proven correct, it would be a


QUEST: There is clearly -- I think you're right, sir, in the sense of the devil is going to be in the detail. You know, were we having ad hoc

meetings about minor matters. You know it's a very fine line on, one, of interpretation. Who should take the lead here? Should it be the

commission in Europe or the national regulators in Germany, do you think?

[16:05:03] HENKEL: Well, clearly a violation of cartel rules is a responsibility of the European Commission. The European Commission has

done, in my view, in my observation, the last decades, very good jobs. They have unearthed some of those scandals. By the way, some of them also

happened in Germany. They have levied hefty fines on those companies. So, my -- I am rather confident that the European Commission will do a good job

here. It is their responsibility. However, if criminal actions are involved, then it becomes the responsibility of the German system, like in

the case of VW, which, as we all know, this company has manipulated the software and committed criminal acts. That is being pursued by the German


QUEST: Can we turn to Brexit if we may? I read your article recently on Brexit. Your family -- if you look at the end of the second round of

negotiations, you still believe that the prevalence of view is that Monsieur Barnier and Verhofstadt are wanting to punish rather than get a

good deal.

HENKEL: Yes, I think there is ample evidence. By the way, I'd like to make sure that your viewers understand. I was actively campaigning against

Brexit. But I believe that one should honor the result of the referendum of the U.K. And in my view, especially Mr. Verhofstadt doesn't.

Verhofstadt is in Europe, the epitome of a centralized Eurofier. And he is now in charge of the group within the parliament covering the Brexit for

the parliament. By the way, he wasn't even elected by the parliament but was put in place by Her Schultz when he was president of the parliament.

QUEST: Do you believe that there is wiggle room for the commission, or for the EU, on the pillars? This idea, for example, of some form of

accommodation on the single market on the customs union but only if you take freedom of movement. Is there gray enough area to allow a deal?

HENKEL: I think we have to allow this kind of deal. Because, let's face it, Britain is so very important for the EU. At least as important for the

EU as the EU is to Britain. And by the way, the assertion of Verhofstadt and Barnier to say that a country outside the union should not have the

same deal as a country inside the union is deadly wrong. Switzerland gets the same deal as the other countries. And when it comes to the research

agreement, Horizon 2020, which is a big research funding forum for the EU. Even Israel is even part of the deal and has the same right as any other EU

country. So why not give it to the United Kingdom.

QUEST: As we end here, sir, we are grateful to have had you this evening. What is your fundamental fear in these negotiations? I know it's early

days, only two rounds. There are another 18 months or so to go. And you'll get a chance to vote on the final package, but what's your

fundamental fear?

HENKEL: My fundamental fear is that there is no agreement, and that would be a true disaster. By the way, I think Britain leaving the European

Union, quite frankly, means that the last country with common sense is leaving the European Union. Because that country always believed in

subsidiary rather than centralization. That country also believed in competition between nations rather than harmonization. And these kinds of

elements are missing. So, I think Brexit is a bad story, not only for Britain, it is also a bad story for the European Union.

QUEST: We're grateful you came to talk to us tonight. Two important stories we're covering on QUEST MEANS BUSINESS. thank you, sir.

Shares of the automakers we started out talking about, Daimler, Volkswagen and BMW. They pulled down the European indices. Just take a look. You

might have expected worse out of Frankfurt but up a quarter of a percent. The FTSE was the worse off down one percent. Only Paris ended in the

green. Ryanair shares were down after warning that fares could fall. You're going to hear from its chief marketing officer later in the program.

Also warning that Ryanair may actually stop flying from the U.K. if indeed Brexit talks go badly.

[16:10:00] QUEST: To Wall Street. The main -- the larger markets, but the narrow and the wide, the Dow was down. It's down 66.9. Right through the

session it was down. But the NASDAQ actually closed at a record. And it's its 50th closing record since the election. We're going to get the numbers

from Alphabet, which is Google's parent company. Alphabet is going to report in this hour. When it does we'll have the results for you and give

you some analysis. The NASDAQ is at a record. You see the S&P 500 and Dow both up. Which merely reinforces the significance of tech in the current

market. We'll talk about that during the course of the program.

Jared Kushner, the president's son-in-law and senior adviser, made a rare public statement after meeting the Senate intelligence committee. He said,

he did not collude with Russia during the presidential campaign. Kushner is a real estate developer New York. He is now denying relying on Russian

funds for his own business.


JARED KUSHNER, SENIOR ADVISOR TO U.S. PRESIDENT TRUMP: I did not collude with Russia, nor do I know of anyone else in the campaign who did so. I

had no improper contacts. I have not relied on Russian funds for my businesses. And I have been fully transparent in providing all requested



QUEST: Jessica Schneider, we don't hear very often from Jared Kushner. In fact, I can't remember -- I mean maybe somebody will prove me wrong in that

he spoke once six months ago to a Tea Party or something, but the reality is, the fact he had to stand there at the White House with microphones is

evidence of the gravity of this.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: It absolutely is. I mean, the Russia investigation has really overtaken this town. It's the only

thing anyone ever talks about because it does have such enormity. So yes, of course, now Jared Kushner is trying to confront this head-on. He said

in his statement that he wanted to do this to set the record straight. So, he tried to do that in releasing that 11-page statement earlier this

morning. And then, of course, again when he finally went before the cameras to speak for probably the longest we've ever heard him speak

outside the West Wing today.

It was a fairly brief prepared statement, but he said in it quite forcefully that he did not collude with the Russian government. That no

one in the campaign colluded. And then he said that his actions were proper. You know, Richard, he also talks about the political implications

of this. He talked about the fact that, in his view, Donald Trump won fair and square because he properly read the pulse of the American public,

tailored his message to that. And then Jared Kushner kind of pushed forth the president's line that we hear a lot, that any indication otherwise is

just unfair to the American people and really ridicules the American people. Any implication that the Russian influence may have tipped the

election is not a fair one to make. So, he put that in there to.

QUEST: I want to jump in here because I am fascinated by what you start off with when you're saying -- Jessica, how -- paralyzes may be the wrong

word. But the mood in Washington, as you're heading towards a long, hot summer. That mood, is it one of paralysis yet over the government and


SCHNEIDER: I don't want to say it's more chaos and confusion. The president has these agenda items he is trying to tick off. The things he

talked about a lot in the campaign. Health care, infrastructure, overturning and repealing Obamacare, however, all of that has been

overshadowed by the Russia investigation, and that's in no small part. Because the president keeps talking about it and in particular tweeting

about it.

You know, it was just last week that he talked to the "New York Times." He talked a lot about Russia. He talked about his Attorney General, the fact

that he wasn't happy he recused himself. So really, I don't know if it's paralysis, although it may be inside the White House. But really, it's

just kind of chaotic. It's confusing and the president really can't stay on message as I think lawmakers wish he would.

QUEST: Jessica, thank you. Need that. We needed to understand the situation in Washington. Much appreciated. Thank you.

SCHNEIDER: Thank you.

QUEST: Now, staying with economic growth and the president. Donald Trump once promised 4 percent economic growth. He then set the target of 3

percent. When we come back after the break, this man, you sir, are going to help us understand. The IMF says no to 4 percent. When it says 2.1

percent. Anthony Chan will be with us to talk about economics.


QUEST: You could say the IMF have lost a bit of confidence in Donald Trump. On the campaign trail, campaigning Trump, promised to rev up growth

to 4 percent. He changed that number slightly to 3 percent as the target growth. However, the IMF has chopped its own forecast of U.S. economic

growth to 2.1 percent for this year and next, down from 2.3., 2.5. Now these numbers are the latest, matched by Standard & Poor's, which is pretty

close. It says the economic backdrop is benign and uninspired. The IMF worries about uncertainty. S&P is talking about the failure to get an

infrastructure plan this year or next. Anthony Chan is chief economist at Chase Bank. All right. This is where the rubber meets the road, as they



QUEST: Your forecast this year and next for the U.S. is what?

CHAN: Two percent for this year and about 2.3 percent next year. We think some good stuff will come out of the administration next year but this year

will be challenging.

QUEST: Can growth, not should -- I suppose it can. Is it likely that growth could hit 3 percent next year or the year after?

CHAN: I think you can see particular calendar quarters which could give you 3 percent growth rate. That's not a problem. But to see the entire

year at 3 percent or more, very challenging because productivity has been very low and labor markets are so tight that it's very difficult to get

labor force growth. Remember that at the end of the day you need labor force growth and you need productivity growth to basically sum up to that

kind of growth rate. Right now, the numbers do not add up.

QUEST: Right, but there are only two ways you can get really, from the president's point of view, you can get to 4 percent economic, or 3 percent

economic growth. You either have to cut taxes and hope you don't -- you'll blow the deficit. But you will juice up the economy. Or you increase

government spending. That is the --

CHAN: There is another third way. And that is, if you make -- increase efficiency and that's done through less regulation and more encouragement

on the part --

QUEST: That takes a lot longer than a quarter or three --

CHAN: It does take a lot longer. This is a multi-year process. Absolutely.

QUEST: Right. Are you seeing evidence yet that that is happening, even though we have lots of regulations have been eliminated and you have the

take two off the table if you put one on. So, there are changes taking place.

CHAN: There are changing things that are taking place, but not of a sufficient critical mass to generate the 3 percent or 4 percent growth rate

that was hoped for.

QUEST: Does it matter that the U.S. is growing at 2.1, 2.3 percent? Historically that is on the low side. One might say it's weak growth but

not exactly disastrous.

CHAN: It is not disastrous.

QUEST: It's still growth.

CHAN: Absolutely. And, Richard, a lot of research out there suggests and, in fact, strongly confirms, that when you have sluggish growth, economic

expansion lasts a lot longer. Remember, this expansion just hit eight years old in June and the average age of economic expansion is 4.9 years.

This is precisely why this expansion has lasted longer than the historical average, because it's very sluggish, but nonetheless quite persistent.

QUEST: You don't have the feel-good factor with the 2.2 percent growth, do you? People don't feel things are going well?

CHAN: People may not feel it, but in terms of equity markets you're getting that good-feel factor looking at the equity market rates of return.

[16:20:00] QUEST: All right, you've raised the equity markets. If he can't get 4 percent, or even 3 percent, he -- I shouldn't be disrespectful.

If the president can't get 4 percent or 3 percent, how much of this market do you think he's relying on?

CHAN: Believe it or not, the equity market sort of relies more on corporate profit growth than it does on economic growth. And what you saw

in the first calendar quarter, you saw almost 14 percent growth in S&P 500 corporate profits. The second quarter is shaping up to give you a calendar

quarter that's going to be 8 percent or better and, in fact, the whole year as a whole is certainly poised to give you something close to 8 percent and

next year perhaps something similar.

QUEST: You're suggesting, then, that this -- obviously, to a certain extent this market is hoping for tax reform, it's hoping for health care

reform, it's hoping for all the things that would give that productivity growth you referred to, but it's not completely reliant upon it.

CHAN: Not completely reliant. And in fact, if you get the things that you've just mentioned, then the corporate profit growth would be a lot much

stronger. And remember, that the equity market rates of return are the sum of corporate profit growth plus dividends for the S&P 500. That's

precisely why we're looking at a number that's above 10 percent for this year already.

QUEST: Excellent, good to see you.

CHAN: My pleasure.

QUEST: As always, thank you so much.

[16:21:15] Russia is warning that the talk in Washington of further U.S. sanctions is, in the words of Russia, counterproductive and harmful. The

Kremlin spokesman Dmitry Peskof is reacting to the news that negotiators in both houses of Congress in the U.S. have agreed on new measures against

Moscow. Lawmakers say it said to be in front of President Trump in the next week.

Clare Sebastian joins me from Moscow. Where the seriousness of this -- you know, to some extent Clare, because you're normally based in the states --

that the whole question of Russia and sanctions just all gets lost, but where you are there is a seriousness to it.

CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: right, exactly, Richard. This is not a nuanced issue here. The Kremlin has been clear all along that it

does not like sanctions. It has called them everything from politically motivated to a violation of international law, and its sovereignty. In

this case today was no different. The Kremlin told us they viewed this extremely negatively. But they say, that given the kind of mixed messages

they're hearing from the White House they're going to wait, they said, patiently to see how they finalize their position. I guess to see whether

or not President Trump is willing to sign this. But Richard, this is not going away, the issue of sanctions. There is always a condition imposed to

have them lifted and Russia is not willing to make any concessions. We have a situation where sanctions on Russia from the United States, from the

European Union, are simply becoming the status quo and they're just evolving.

QUEST: OK. But this idea of sanctions and Russia. It's all tied up -- when everybody talks about, hearing over the last few days -- adoption, an

adoption discussion. And there is the strange Magnitsky law, which you need to explain and put into context for how it relates to the sanctions


SEBASTIAN: This was a law imposed in the U.S. in 2012, Richard, in response to the death in Russia of a whistle blowing attorney called Sergey

Magnitsky. It's hard to overestimate really just how controversial this is. One man who knows that better than anyone else is the man who has

picked up where Sergey Magnitsky left off. He continues to fight every day for justice for him. Take a look.


SEBASTIAN (voice-over): Nikolai Gorokhov says he's lucky to be alive. In March, the Moscow lawyer fell from his fourth story apartment block

sustaining serious head injuries.

(on camera): What happened?

NIKOLAI GOROKHOV, MAGNITSKY FAMILY LAWYER TEXT: Unfortunately, or fortunately I don't remember what happened. I came to in the hospital care

unit of the hospital.

SEBASTIAN (voice-over): Russian media at the time reported it as an accident. But he fell while trying to wench a bathtub of to his balcony.

Gorokhov says he had lifted much heavier things safely.

(on camera): Is it possible it could have been an accident?

GOROKHOV TEXT: I can suppose that it wasn't an accident because a set of circumstances suggests that.

SEBASTIAN (voice-over): To understand that set of circumstances, you have to go back a decade. In 2007, Sergey Magnitsky, a lawyer for investment

firm Hermitage Capital, uncovered a $230 million tax fraud that he claimed involved officials in the Russian government.

(on camera): Magnitsky was arrested in 2008, and a year later he died at this Moscow prison while awaiting trial. His family says he was denied

medical care and a Russian presidential human rights commission found to have been tortured. The Russian government though says he died of heart


UNIDENTIFIED FEMALE: The bill is passed.

SEBASTIAN (voice-over): The U.S. Congress instituted Magnitsky Act to which slapped sanctions on suspected Russian human rights abusers. Just

two weeks later Russia band American adoptions of Russian children. In Moscow, Gorokhov took up the case. The day after his fall he was doing

court with new evidence that he says prove government officials were behind the fraud.

[16:25:00] He finally made it to court in May. His appeal was rejected.

GOROKHOV TEXT: we continue to fight for the truth. Because time reveals new proof of Sergei's innocence.

SEBASTIAN (on camera): Are you worried for your safety or for your family's safety?

GOROKHOV TEXT: Yes, I have safety concerns about what will happen to me, to my wife, my child.

SEBASTIAN (voice-over): At the time of his fall, Gorokhov was also a witness in a now-settled New York lawsuit alleging some of the Russian tax

fraud money had been used to buy New York property. He had provided these documents to American prosecutors, 90 files in total. According to a court

filing, those prosecutors were worried individuals in Russia could attempt to threaten or harm him. Still, in a case that's become a thorn in the

Kremlin's side, Gorokhov remains undeterred.

GOROKHOV TEXT: Justice is -- Sergei Magnitsky deserves justice.


SEBASTIAN: So, Richard, Nikolai Gorokhov says he actually welcomes the new attention that surrounding the Magnitsky affair in the United States. He

says it shows, while there may noting justice for Sergei Magnitsky in Russia, it may that there's justice for him outside of Russia.

QUEST: One quick question for you, Clare. I was talking to Jessica Schneider a moment ago in Washington -- you may have heard us -- where I

was asking about the sense of paralysis or as she describes it as chaos and confusion in D.C. over the Russian affair. How is the whole thing being

portrayed in Russia, in Moscow, this obsession in Washington with Russia?

SEBASTIAN: I think there is a few elements to this, Richard. On one hand Russia is, frankly, quite surprised that it's become this kind of major

issue that it is in Washington. But on the other hand, they don't welcome this at all. They were, in fact, hoping when Trump took office that there

might be a reset in the relationship with Russia, that there might be a prospect even of sanctions being lifted. But the fact that Russia has

become this kind of Achilles' heel for Trump that's become so politically toxic that he may now be in a situation where he is forced to sign a new

sanctions bill on Russia.

This is not what Russia was looking for. They didn't want to be in a situation where it was simply too politically difficult for the U.S.

president to reset this relationship. So, there's many sides to this. And there's another one in fact that Russia does like to point out that there

is disarray in Washington because it makes them seem stable by comparison.

QUEST: Right.

SEBASTIAN: So, it's a complicated issue the way this is being received here.

QUEST: Clare Sebastian in Moscow for us tonight. Thank you for staying up late, Clare. Thank you.

As we continue tonight on QUEST MEANS BUSINESS, from tea to chickens, trade has bound that U.S. and the United States across the Atlantic for

centuries. And the prospect of a new deal which we will discuss.


[16:30:36] QUEST: Hello. I am Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. Where Ryanair's chief marketing officer tells

me, the company is running out of time to get answers from the British government on Brexit.

And exit without saving. Microsoft is finally giving up Paint. On this network, the news always comes first.

President Donald Trump's son-in-law says he did not collude with Russia and doesn't know of anyone else in the campaign who did either. It's Jared

Kushner's first public account of his meeting with the Russians during the presidential campaign and transition. Jared Kushner is a senior adviser to

Mr. Trump and insisted all his actions were proper.

The Pakistani Taliban is claiming responsibility for a bomb blast at vegetable market that killed 26 people. Officials say the attack on Monday

targeted the police in Lahore, the capital of Punjab province. Almost 50 people were wounded.

Thousands of protesters demonstrating outside Poland's Supreme Court got what they wanted much to everyone's surprise. The country's president

vetoed two controversial measures that would have given his party sweeping power over the country's courts. The president said the laws would not

strengthen the sense of justice, he vowed to rewrite them.

The parents of Charley Gard have given up their legal fight to take their son to the United States. They say it was based on new MRI and body scans

that showed it was too late to treat the terminally ill baby. He has a rare genetic disease. He can't breathe or move on his own.

Swiss police are searching for a man who went on a rampage with a chain saw in northern Switzerland wounded five people. He apparently is a Swiss

national with no fixed address and apparently lives in a forest.

The U.K. and the United States have taken the first steps to what could be a new era in the so-called special relationship. The British Trade

Secretary Liam Fox is in Washington where he has kicked off informal talks with the U.S. after Brexit. Donald Trump has said he wants a trade deal

with the U.K., Britain, and not just any deal, a very big and powerful deal, he said. Liam Fox believes the two countries have a strong economic



LIAM FOX, TRADE SECRETARY, BRITAIN: It is perhaps a cliche for a British secretary of state to come to the U.S. and talk about the special

relationship, yet the fact that a phrase is well used does not make it any less true. Britain and America are united by language, culture, history,

security and, of course, commerce and trade. It's perhaps fortuitous that we are also the first and fifth largest economies in the world. So, the

economic value of our bond cannot be overstated. Any who are tempted to see our exit from the European Union as evidence of Britain looking inwards

should think again. We have just chosen another path, to embrace the wider horizons of a truly global Britain. And as we contemplate our new place in

the world, we do so with a renewed confidence and optimism, acknowledging the vast opportunities that lie before us, especially when it comes to

strengthening our connection with our single largest trading partner.


QUEST: And the phrase is "the economic value of a bond cannot be overstated" as Liam Fox said. Let's show you, over the centuries, how deep

and strong that bond goes back. It actually goes back to the colonies in the 1700s. You can trace it back almost to golf ball equipment, which is

sent, thank you, from the U.K. to the United States. And then you have, well, the famous tea. Tea which was sent from Britain to the U.S., but

with a very checkered history because the tax on tea from the East India Company, that sparked the revolution.

[16:35:00] So, you can arguably say which side that should go. We'll put it back with the U.K. Then, into the 1800s. And you get some real

technological improvements. You get, for example, the first transatlantic telegraph cable, which connects New York and London. It is the cable that

is used for trading foreign exchange, which is why the British pound and U.S. dollar cross rate is still called "cable." By 1900s, and it's the

second world war and the land lease act of Roosevelt allows the U.S. to support the U.K. in World War II by leasing and lending boats, ships and

other important war product. So, to the cultural exchanges. Well, you've got famous artists going from the U.K. to the U.S., and in return, you have

lots of Hollywood going back the other way.

The so-called British invasion goes one way. Hollywood exports to the other. Then bring it right up to date. Barack Obama, on Brexit. He says,

Barack Obama, that Britain will be at the back of the que when it comes to talking trade. Donald Trump is a campaigner, immediately says the

opposite. He says he wants a deal. He wants a deal done fast. To show how this trade relationship continues to grow even in this modern era,

think about these two. The U.K. is now considering chlorine-washed chickens from the United States. It is a trade relationship like none

other. The depth, the range, the breadth, the value. Jeffries Briginshaw joins me now. Even allowing for the extremely extensive relationship, you

and everybody knows that the British cannot negotiate a trade deal until they've actually left the union. So, what's the purpose of these talks?

JEFFRIES BRIGINSHAW, CEO, BRITISH-AMERICAN BUSINESS COUNCIL: As you say, a lot of if, buts and maybes about when Britain can do trade deals. Customs,

unions and competencies all getting in the way. Your graphics and your kind of interesting analysis showed us that the U.K.-U.S. economy is a

source of strength, opportunity and stability. You don't necessarily need a trade deal to dial that up, to get more out of it. I think what we're

seeing with the politics, if you want, encouragement on both sides, is encouragement, yes, towards a trade deal as part of this jigsaw puzzle post

Brexit but also saying, OK, what can we do in the meantime as well. Secretary Fox was keen to talk also today about things that could be done

before a trade deal.

QUEST: How much of this is the optics? How important is it merely by showing the world that the U.K. is starting talks? Because at the end of

the day, you and we all know, nothing can really come of it, even if you get a memorandum of understanding, it will ten years afterwards to get a

full trade deal. This is about, in some case, hyperbole.

BRIGINSHAW: I would say political encouragement. Let's focus, then, on the things that could be done that don't need a trade deal. Stronger

science collaboration. Some regulatory cooperation. Talking about cyber security and new rules for cyber security. Data transfers. Movement of

people. So, things that don't need trade deals but that could dial up the potential of what's already a powerful and strong economy.

The U.K., well, the EU, as such, does not have a trade deal with the United States at the moment. Therefore, is trading pretty much on WTO terms. If

the U.K., post Brexit, just continues exactly the same way, shouldn't make much difference for the U.K.?

QUEST: Well, that's a great point. We are already at 20 percent of our exports going to the U.S. it's a trillion dollars of two-way investment.

$250 billion and a million jobs in both economies. So, the real opportunity is how can we dial that up. Part of that can come from a trade

negotiation, trade and investment negotiation, and part of it can come from, as I say, the things we can talk about already and do to strengthen

that relationship.

QUEST: Good to see you, sir. Thank you. We'll talk more about it certainly as the deal does or does not come to fruition.

Ryanair. Europe's largest airline. It is, look at the numbers. Which whichever measure you take.

[16:40:00] Ryanair says it may have to move its entire fleet out of Britain if it doesn't get clarity on Brexit. On QUEST EXPRESS when I was down at

the exchange, Ryanair's chief marketing officer told me the airline is running out of time to get answers from the British government.


KENNY JACOBS, CHIEF MARKETING OFFICER, RYANAIR: So, if we don't have absolute clarity come August of next year in terms of what's the

alternative going to be to continue open skies, then we are in unknown territory. We want to continue flying between the U.K. and Europe as we do


QUEST: Right, but you know as well as I do that flying from the U.K. to another European country and back again is really very simple. I mean, in

the industry parlance, that's just third and fourth freedoms. Countries have those all the time. It's the much more complicated stuff of intra-

European flying when you are using the U.K. fleet that's the problem.

JACOBS: Yes, but flying between the U.K. and Europe is governed by the European court of justice as part of open skies. The European government

decided they're leaving Europe and the European court of justice. Theresa May has made it clear. When they do that, there needs to be a brand-new

bilateral in place between the U.K. and every one of the EU 27. Something brand-new does need to be created. We can't go back to the bilateral that

existed. Hence, we are calling on the politicians. We are a year since the referendum and we are not any clearer on what the alternative will be.

We are making contingency plans. Those would include that, if we can't fly for a period of time -- again, we don't want this to happen, but we can see

a situation where there may be no flying between the U.K. and Europe for a number of months. We don't want it to happen. We're encouraging the

government to work fast.

QUEST: Now, now Kenny, how much of this is hyperbole? How much of this is you raising the temperature in a situation where perhaps nobody

realistically thinks that any routes will be canceled or flights won't take place.

JACOBS: There will be a solution, Richard. Absolutely. There will be a solution. But the issue will be, is there going to be a solution in time.

As I said, it's about us planning our schedules and releasing our schedules a year in advance. If we don't have clarity we'll be in unprecedented

territory. As I said, we don't want this to happen but we need greater urgency in the coming months than we've seen over the past six months.


QUEST: Chief marketing officer for Ryanair. "D" is for disappointing. Alphabet Google has reported its result. The stock in after-hours is

falling. I'll give you the numbers as to why Google appears to be disappointing tonight.


[15:45:00] QUEST: Welcome back, QUEST MEANS BUSINESS. Google shares down 3 percent after hours. The earnings down sharply from last year. Now,

there is a reason why the earnings are off badly in the quarter. Profits hit 2.7 billion by the EU, fine. So, we kick off a blockbuster earnings

week. Monday is Alphabet. Tuesday is McDonald's, AT&T and GM. I don't need to read them. You can read them yourself. They're on the screen.

It's a busy earnings week so far. Joining me now, Brian O'Keefe, deputy editor at "Fortune." These numbers from Google are interesting. A large

company everybody has heard of. The numbers suggest it was a good quarter, but it's got these regulatory issues, which is becoming prevalent for many


BRIAN O'KEEFE, DEPUTY EDITOR, "FORTUNE": I think especially for the big tech companies. Ironically, we were just flagging this in the current

issue where we released the global 500. Apple. Google, Facebook. Have changed globally. We were expecting maybe Trump to cause complications

with globalization. Now they're running into regulatory issues in Europe right now.

QUEST: On the 500, what has grabbed you about it? It's always the same suspects, as they say, at the top. They might move around a bit, but it's

always the biggest companies that are always there. What did you find interesting this time?

O'KEEFE: I think there are two big trends which kind of intersect. The two are the rise of technology, the fine against Google notwithstanding.

Big tech companies are making a march up the list. The second big trend is the rise of China which is really powerful if you look at the numbers.

QUEST: Although those Chinese companies that are moving in, maybe with the exception of Ali Baba and one or two others they're still domestic based.

They haven't spread their wings to become household recognition outside of China. It's the large domestic issue.

O'KEEFE: The largest companies in China right now are still the state- owned companies. However, we have two debuts this year. Ali baba. And Tencent. We did a profile on the H&A group.

QUEST: Which has been buying huge amounts everywhere.

O'KEEFE: Around the world. Europe, the United States. Their CEO says they want to be the local company next-door in the U.S. that's drawing

scrutiny itself in China. So, you know, they have been forced to come out and just today released information about their ownership stake.

QUEST: This issue of tech, you know, anyone who has got a portfolio that's sort of balances out, you look at the -- one looks at the gains from your

tech side, and it's 15, 20, 25 percent growth.

O'KEEFE: Right.

QUEST: Unless it's a McDonald's or a special situation, you look at everything else. Honeywell, Caterpillar, Ford. United Airlines. There is

nothing equivalent.

O'KEEFE: Certainly, tech has been the big, big powerful story. You look at Amazon, for instance. They are number 26 this year. That's just their

revenues. The stock has been unbelievable. Ali Baba, their stock is up something like 70 percent year-to-date. It's tempting to put all your

money into those stocks.

QUEST: Right.

O'KEEFE: I will say, though, you are getting the benefit of that in the indexes because they're over represented in the market cap weighted index.

A very smart guy, Warren Buffett would say spread your bets on the index and by the way Berkshire Hathaway is in the top ten this year for the first


QUEST: Never split the stock, of course. I can't remember how much one share of Berkshire Hathaway is these days. It is a huge amount.

O'KEEFE: He has never split it. It used to be going against trend but now it's becoming more common not to split the stock. It's become cool to not

split the stock.

QUEST: I always thought that's a bit of a strange thing. Who wants to buy half a share of Amazon? Because it's $1,000.

O'KEEFE: Exactly.

QUEST: Good to see you, sir. Appreciate it. Thank you very much indeed.

Now the results we've been talking about, only tell part of the tech story. Let me walk you through Silicon Valley and some of the events that have

taken place today that will make it clear what's happened. First of all, Microsoft Paint, those of us of a certain age will remember it. It's age

32. But now it faces removal. Because apparently Microsoft is thinking of dropping Paint from its next version of Windows. So, could this be RIP.

Paint, '85 to 2017. Even though there are 100 million users of it.

Then you've got an event today. Web shares. WebMD. Look at that. Just what we were talking about the other day. WebMD is being purchased by KKR.

It's bought by the investment firm. $2.8 billion is the price.

[16:50:00] WebMD says the decision is best for shareholders. But the premium. Look at that. WebMD does nothing, and that's enough to give you

a heart attack.

And finally, Mark Zuckerberg shirts. Now, Mark Zuckerberg's plain t-shirts cost just $300. And they -- feel the quality -- they are custom made for

him. But now the entrepreneur Klaas Buck created a replica. You can have a Mark Zuckerberg t-shirt for $46. And the proceeds will go to the Chan

Zuckerberg initiative. So, forget Mr. Zuckerberg's. 300. All yours for 46 and charity. Imagine trading on Wall Street before the invention of

radio, tv and computers. Now, it was this machine. It's known as the ticker tape. It changed everything. We'll look at the history of the

ticker as we have our chapter of stories from the street.


QUEST: Wall Street, and the stories from the street that we're looking at over the course of the summer. And today it is that most famous of

instruments that created a cultural phenomenon but really goes to the heart of Wall Street. The ticker tape!

This is one of the original Thomas Edison tickers.

This is the machine that changed Wall Street. Before radio and TV, the stock ticker was the way to get accurate financial information.

Transmitted over telegraph lines.


JOHN STEELE GORDON, WALL STREET HISTORIAN: It revolutionized the stock exchange business because now you could effectively trade anywhere in the

country and know what the prices were that minute. The ticker tape greatly enlarged the reach of Wall Street. Thomas Edison was one of the inventors

of it.

QUEST: The movies portrayed the breakthrough as a eureka moment. Soon after, a New York city tradition was born, the ticker tape parade.

The ticker tape also helped document one of the worst days in Wall Street history, the crash of 1929.

KRISTEN AGUILERA, MUSEUM OF FINANCE: This is undoubtedly one of the most important pieces of historical ticker tape. It was recovered from a

trading floor on the morning of the 1929 crash. This piece of framed ticker tape represents the first 45 minutes of trading on that tumultuous


QUEST: Ticker machines are collectors' items. Some go for $15,000. Ticker tape was phased out in the 1960s. But we still call it the ticker

as it crawls across the bottom of the screen. And that's the ticker tape. Another chapter in our stories from the street.


[16:55:00] QUEST: And we still, indeed, have the ticker, where you can now download or read, go to Check out the podcast. Subscribe

on iTunes, TuneIn or Stitcher. It's all up there. Or go to Where did you hear about it? On the ticker. Profitable

Moment is next.


QUEST: Tonight's Profitable Moment. The allegations of collusion by the big three German car makers, Daimler, Volkswagen and BMW could not be more

serious. If proven true it will be devastating for the made in Germany reputation that these three car companies colluded over emission standards,

engine size or whatever. I suspect the truth will be somewhere in between. As you heard earlier in the program, I think it will be much more about we

had meetings to discuss common standards.

The problem, of course, is when is a meeting on common standards turning into something more nefarious and dangerous for competition. This needs a

full, thorough, deep and dark investigation from the commission and from the authorities in Germany. Because if it's true, it's likely the sort of

thing we've not seen before. That's QUEST MEANS BUSINESS for tonight. I am Richard Quest in New York. Whatever you're up to in the hours ahead, I

hope it's profitable. Same again tomorrow.