Return to Transcripts main page
QUEST MEANS BUSINESS
Boeing Boosts Dow as Markets Set Records; Facebook Releases Q2 Earnings; Tech Bosses Speak Out on Transgender Ban; Aston Martin CEO on U.K. Plans to Send Combustion Engines to the Scrapheap; General Strike Grips Venezuela; ;
Aired July 26, 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: The bell ringing on Wall Street, the Dow Jones Industrials at a record. Nasdaq at a record, S&P 500 just about
at a record. We'll show you the numbers in a moment or two. And now, time, yes, go for it, sir. Hit the gavel. Robust gavel on Wednesday, it's
July the 26th.
Tonight, fly me to the moon -- Boeing sends markets rocketing to new records.
Facebook earnings out in this hour. In fact, any minute as it tries to stamp out Snapchat. And caught in a culture war, the tech bosses slam
Donald Trump's ban on transgender soldiers in the U.S. military. I'm Richard Quest live from the world's financial capital, where I mean
Well, the graph tells the story. Good evening. Tonight, the markets cannot it would seem be stopped. And earnings season is giving investors
more reason to believe that the record streak on Wall Street is running and the gains keep on coming. This is the way today performed, at least for
the Dow, straight out of the gate and up 96 points. It was higher earlier in the session, 21,709, that's a record. Volatility is at an all-time low
as the U.S. Fed met in its regular meetings and decided to hold rates where they are as expected. So, no change from the Fed.
There's some interesting comments about employment growth and inflation. And they're talking about how they're going to normalize the balance sheet
relatively soon. But the important thing is, all three markets, the S&P just eking out in the last seconds, it had been negative, but all three
major markets at a record. And the important thing that to bear in mind so far, is there's a specific reason why the Dow is up much more than the
others, which we'll go into in a second or two. It's because of Boeing. Most of this gain on the Dow relates to Boeing. I'll explain more in just
But even so, even allowing for the Boeing factor, all three are at a record. And looking at the stock so far, this year, the Dow and the S&P
are up 10 percent. The Nasdaq is up nearly 20 percent and you can see these very sharp gains. Which will put some analysis to over the course of
the program. This rally is broad-based. And at the moment driven by earnings. Let's put the perspective on those earnings as we look at the
earnings on the move.
So, we started off with Boeing. This the Dreamliner from LOT and from Hainan Airlines and the 777-300. Boeing put on nearly 10 percent today.
The aircraft maker is outpacing Airbus. It's cutting costs, and shedding jobs and the Dreamliner, hugely popular in Asia.
Also, earnings or at least delivering you records, Jeff Bezos, now a $500 billion man. $500 billion is the amount that his company is worth. It
joins Apple. Google and Microsoft and hiring 50,000 new jobs next week. Amazon has earnings tomorrow.
The financials are saying thank you to Janet Yellen. There's money to be made in banking. And it seems to be all because of the chair. Well, these
higher interest rates are helping institutions like State Street. State Street recorded today, high earnings easily beating what the market had
been expecting. Put it all together and you see it's business and earnings on the move.
So, Mohamed El-Erian is the chief economic adviser at Allianz. He joins me now. We talked about this movement in earnings. And the way the market is
reacting. Do you think it makes sense?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: Richard, it makes sense for now. Let me explain why. Companies are proving resilient within the
economic goldilocks. Not politics but economic Goldilocks. They're benefitting from extremely low interest rates.
[16:05:00] And there's a lot of liquidity sloshing around. The ECB and the Bank of Japan alone have pulled in over $1 trillion of liquidity this year.
So, for now, it makes sense, but at some point, fundamentals are going to reassert themselves, not just on the economic front, but also on the
political and also on the institutional side.
QUEST: Right. But that's -- what's fascinating about this week -- at least in the U.S. corporate sector -- Boeing has done very well.
Caterpillar done very well. Even Alphabet with the European fine done very well. A lot of these companies, McDonald's has done very well. There are
companies sort of making things and actually selling things that people are buying.
EL-ERIAN: That's right. Because we are in this period where there's a lot of liquidity coming in, where financial conditions -- that's what the
economists call them -- are very loose. And people are comfortable with where they are. I would also note that these are earnings per share. And
something else is going on, which is that companies are buying back their shares which boost the value of those that are held by investors.
QUEST: If I hear you correctly with your caveat, I mean, as liquidity is removed, certainly by the Fed -- look at the statement, today's statement
by the Fed, the FOMC said that they are going to start normalizing the balance sheet relatively soon. I assume that means in the next couple of
months. And I soon they're going to begin looking at their policy plan. There are going to begin by not reinvesting. And that would be the sort of
toe in the water.
EL-ERIAN: Absolutely, and what's key is, whereas they put in money at a fast rate, they're going to reduce it at a very slow rate. I say what they
want markets to believe that this going to be the equivalent of watching paint dry. It's not going to happen very quickly. It's going to be very
boring. So, it's basically telling markets, don't worry about us. That's what the market believes today. If you look at where we've ended up, not
only are stocks at record highs, but you also made money if you're owning government bonds. Which says, you know what, we're comfortable with the
Fed. The Fed are going to continue to be markets best friends.
QUEST: So, how in the politically toxic environment in the U.S. along with the dangerously Brexit environment in the Europe, how do policy makers
avoid frightening the horses so that the market runs over the hills?
EL-ERIAN: Let me tell you what should happen and what's likely to happen - -
QUEST: Oh, dear.
EL-ERIAN: What should happen is that the politicians should deliver a set of pro-growth policies. And I keep on stressing, this is not an
engineering problem. This is a political implementation problem. That's what should happen. What will happen is they will try to make this journey
much longer. They will try to convince markets that this comfortable rewarding journey is much longer and don't worry for now they will tell us
about the destination. Just focus on your comfortable journey.
QUEST: Fascinating. A comfortable journey indeed. I've got a feeling you know, Mohamed, if the VEX may be at an all-time low in terms of volatility.
But I think we've got some volatile months ahead.
EL-ERIAN: I agree with you.
QUEST: Good. That's a perfect place to say, thank you very much. When Mohamed El-Erian agrees with you, it's best to quit while you're ahead.
Thank you, sir.
President Trump is about to announce a deal for Foxconn, one of Apple's biggest suppliers, to bill a factory in the United States. In about 50
minutes from now, the president will announce that the new factory will be built in Wisconsin, possibly creating up to 50,000 jobs. Our White House
reporter Kaitlan Collins is in Washington. To use that famous phrase in Britain -- bit of a dog's breakfast, is the way it all happened. The
president announces that he, this factory before the company is ready to announce the factory itself.
KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: That shouldn't come as much of a surprise, but yes, we're expecting to hear from President Trump any
minute now in the east room of the White House. Where we're expecting he will announce that Foxconn is going to open a new factory in Wisconsin.
Now this is a company that's best known for making iPhone. We're hearing that this factory will focus more on building LCD screens. But were
expecting to hear that from him any minute now.
Governor Scott Walker of Wisconsin has been teasing a major jobs announcement on Twitter. And this would be a big victory for Donald Trump.
He ran on bringing back manufacturing jobs to the United States. And this is something certainly the White House would tout as a victory. We don't
kw much on details that are confirmed. But we will likely find that out very soon.
[16:10:00] QUEST: It's always good to have new factories with new jobs. But the core question will be, how much this factory's arrival in Wisconsin
can be laid at the door of Donald Trump's economic policies. I mean let's face it. He's only been in power for six months, arguably if you take the
transition path period longer. What do the critics say?
COLLINS: That's definitely true. He has only been here six months. He hit the six-month mark last week. But this is also something you've got to
remember that he ran on as a candidate for months. And at all of those rallies and speeches he would always talk about manufacturing jobs. It was
definitely something that was very close to the heart of his agenda.
QUEST: Kaitlan, good to see you at the White House. Thank you. We'll keep an eye out for when the president speaks. Come back and let us know
the moment that happens.
COLLINS: We will.
QUEST: As we continue tonight, we're going to have Facebook earnings. The issue with Facebook -- well obviously it's vast. But the issue here is the
revenue side and the cost side. How much is it costing Facebook to actually get that revenue in? After the break. It's QUEST MEANS BUSINESS
on a very busy day.
QUEST: Facebook shares are falling after hours even though the social network beat Wall Street expectations. Now we already know that it hit 2
billion users last quarter. However, there are issues about the news feed and the ad revenue and also the cost of doing business. How much it
actually cost to do it all. Samuel Burke is in London. Samuel, I appreciate you've only had about three minutes to look at these numbers or
five minutes at best. For somebody of your youth and experience should be able to get the gist of it.
SAMUEL BURKE, CNN TECH, TECHNOLOGY AND BUSINESS CORRESPONDENT: Well here is what the market is getting to grips with, Richard. The one number that
they don't like is earnings or rather revenue per user. And this is actually a great problem for a company to have. Basically, what this means
is that Facebook has grown so fast. They added so many people this quarter that they haven't had a chance to monetize them correctly. And this is
because a lot of them are in emerging markets. They have the users. But they just don't have ads to those users yet, especially on their mobile
app. That's bringing that RPU, the revenue per user down. But the fundamentals are looking really strong. And in the long-term that means
that Facebook should be able to catch up to those markets just given a little bit of time. So, it's a problem for a company to have.
QUEST: All right, now the users are the same. The costs of going up. Once again though, Facebook is faced with the perennial accusation that it
steals everybody else's clothes.
BURKE: Well look, at the end of the day, they steal other people's clothes, and it's working for them. You're exactly right. They stole the
clothes from Snapchat. They stole features explicitly from Snapchat. The Snapchat stories, their filters with the faces and it's worked brilliantly
[16:15:00] On Instagram they now have 250 million people using those features that are exactly like Snaps. Whereas Snap only has about 150
million. So, at the end of the day, you can steal all you want, but if it works for you, it works for you.
QUEST: Snap has fallen sharply, down 3.5 percent -- just of course to enlighten the viewer where that puts my portfolio of Snapchat. It's now
down well over 52 percent from when last reported. But no tears as they famously said in liars poker, no tears.
What's next for Facebook. If you bear in mind, what Mark Zuckerberg said in the interview with Laurie Segall, when he talked about the shift in
strategy to create communities, which sounded very highfalutin. But how do they do that?
BURKE: They do it with the great interviews like the one Laurie had. That may be more about creating a different attitude around Facebook. I think
there's a lot of fear that some of those ISIS videos could really bring down the whole reputation of Facebook. But the way that they're really
going to do it is they've created this moat around the entire company by acquiring Instagram, by acquiring WhatsApp for a huge amount of money. And
it's really becomes about monetizing those. Because once you have two billion users, what are you going to do after that? You have to focus on
the other platforms. But I think the community building when we look back into the long-term won't be a huge part of that. I think that Mie be more
about Mark Zuckerberg's personal ambitions. Many people think political though he's never really signaled that. But it may be about his personal
mantra more than any revenue mantra.
QUEST: Get back to the earnings statement. I think there's some interesting documents on page 206 that you need to attend to. Samuel
Burke, thank you.
Shelley Palmer is here. Facebook -- I want to in the course of our conversation, I want to deal with Facebook, I want to deal with Amazon and
I want to deal with, obviously, Snap as well. But Facebook, earnings good, markets seem to be OK. It was up .2 percent. Now seems to be down a bit.
SHELLEY PALMER, CEO, THE PALMER GROUP: F.A.N.G.
QUEST: That's Facebook, Amazon, Netflix and Google.
PALMER: And you might add Apple and Microsoft in there for feel like it. These are the data rich organizations. So, looking at snapshot of Facebook
today, and making some assumptions about why they got where they are with respect to revenue per user or cost of doing business. Good exercise.
Great if you're playing the market. Excellent if you're not worried about fundamentals.
But if you think about the fundamentals of Facebook, this is one of the most data-rich companies in the world and will continue to be there. And
they are going to monetize that data in ways that you literally cannot imagine. And there were things we understand about how to use data right
now and things we do not understand about what you can get out of data and how you can create value. And all of the best work being done, is being
done in those companies in the F.A.N.G.s, if you will. And so, that's where this is going. They have no place to go but up. I don't own any
stock in any of these companies. I'm not making a stock recommendation. I'm simply telling you --
[16:18:04] QUEST: No, but you're talking about something more important than the stock. You're talking about that these are the companies that we
are using, every day of our lives and if you follow the Warren Buffett theory -- never mind investing, but they are the Coca-Cola's, that's what
you drink or that's what you used to drink or whatever.
PALMER: At that time that is what you drank and times change. At the moment and the foreseeable future, Facebook has your presentation of self
this everyday life data. Amazon has your consumption data. Google has your intention data. Netflix has your passion data. They can turn that,
they can translate that data directly into value and are doing so in a serious way.
QUEST: It has to be more than ad-related, doesn't it?
PALMER: Of course, it does. And it will be too. There's Metcalfe's law, the network effect, if you will, that says that a network increases
proportional for the square of its users. And it's one of those, sort of, observed mathematical laws you throw on a spreadsheet, when you're trying
to figure out what the value of this company really going to be as they hit 2 billion users.
QUEST: I'm delighted we've got you here today. Because it allows me to go through with an Amazon. So, you have an Amazon that clobbers Blue Apron.
Because it's going to get into the same area. But then it boosts Sears last week because of the Kenmore selling on it. So, I'm left wondering
what is Amazon? Is it a tech company? Is it a retailer? It's obviously an e-commerce company.
PALMER: Is it a gum or is it a candy? Let's see? It's both. In this case Amazon can actually apply for a patent and destroy an industry or
company or bolster it up. The case of Sears, Sears is amazing. Right? Now it's a real estate. So, you walk into a Sears, it's so sad, there's no
inventory, there's no sales help. The place is --
QUEST: When did you last buy something at sears?
PALMER: Buy something at sears? Oh, my goodness, decade at least. Walked into a Sears, right after the Amazon deal was announced for Kenmore
appliances last week.
[16:20:01] I said, I must walk into a Sears and see what it looks like and it was so depressing. When I was a kid, that was awesome. They dumped off
the Craftsman brand to Black & Decker and so that's gone. Now Kenmore is gone.
QUEST: Again, great to have you with us today, because I can beat you up.
PALMER: Sure, go.
QUEST: Should we be afraid of Amazon?
PALMER: You should be scared out of your wits, not a little afraid. Not kind of afraid. Mind-blown, oh my goodness, why aren't people paying
QUEST: But what? Paying attention to what? Monopoly? Power of the company? Is it time for regulators to get involved?
PALMER: Well I'm not going to go that far. Because I think Jeff Bezos is a very responsible business person. But I will say the following, Amazon
is killing so many more jobs than they're creating and will continue to do so. I'm not sure who is going to be left to buy the products off Amazon.
Because for every job they create, how many retail jobs are gone? And how many communities are destroyed by the destruction of retail? So, Amazon as
you press a button, get your TV installed. Where are those guys coming from? They get into everything. Some 27-year-old analyst goes, wow,
there's 10 percent more margin there. Let's build a business. Amazon has the infrastructure because they're both a tech company and e-commerce
company and they're all of those things. And they get to do that all at once. Beware Amazon, they're coming to get you, Richard.
QUEST: On that cheerful note. Shelly Palmer, thank you very much.
PALMER: It's always a pleasure. Good to see you.
QUEST: Now Facebook may be a Wall Street sweetheart now. But let's take a look at its journey from IPO to 2012 it has been quite the reaper. Now
remember, the IPOs -- look at 2012, around about down there. The market debut was marked by technical trouble. Even lawsuits over it. Worst of
all, the stock stayed below the IPO price for the best part of a full year. Now despite it all, the stock is up more than 300 percent. Investors in
Twitter have by no means been anywhere as fortunate.
Look at this. Facebook is up 334 percent. Twitter has lost 24 percent and Snap is down 21 percent. That's 21 percent on its IPO price, not since its
high. And the fascinating part is one could ask, were these losses predictable if you looked at the way we use these various sites.
Two billion people use Facebook. Twitter has effectively become a news agency for celebrities to put out information and Snap is still working out
what it's going to be longer-term. Tomorrow we'll be live at the New York Stock Exchange with John Tuttle, who is head of global listings for the New
York Stock Exchange. He's going to be talking to us about the pitfalls of the IPO, both for the companies, the markets, and for the investors. John
Tuttle, head of listings, on QUEST MEANS BUSINESS, 9 p.m., 10 p.m. in central Europe.
European Union is upset with the latest draft bill from the U.S. House concerning sanctions, against Russia. The EU and U.S. have previously said
they'll work together to sanction Russia over the annexation of Crimea. That's not happening this time and now, and now the commission's president
saying the policy of America First should not mean Europe's interests last.
Europe is worried that the new sanctions that are going to be introduced if passed by the Senate and signed by President Trump will disrupt the
transport of energy from Russia to Europe. Because as you will see, the routes that this energy takes can easily be disrupted by the Nord Stream
pipeline. CNN's Phil Black is in Moscow and staying up late for us tonight, for which we are always grateful. Phil, how much are the Russians
saber-rattling that if these sanctions from the U.S. come into force, they will play the energy card?
PHIL BLACK, CNN CORRESPONDENT: I think from Russia's point of view, what they're stressing is these sanctions, should they go into place, are so
wrong, so unlawful that not only are they hurting Russia in an unfair way, but they're hurting other third-party countries, or they have the potential
to hurt other third-party countries in an unfair way, too. It's another layer to the Russian argument against why they say the sanctions should not
go into place.
Europe is worried because it wasn't consulted in on any of this. It means that they haven't approached the sanctions in a very coordinated way.
Because remember, Europe is no friend to Russia in this sense. Some of the toughest sanctions against Russia over its activities in the Ukraine have
been implemented and enforced consistently now since 2014 by the European Union.
[16:25:01] Russia has been trying to break up the European consensus on those sanctions. Every time they come up for renewal, the EU votes to put
them into place. Russia is simply saying to America, you hurt us, sure, but you could risk hurting the EU as well.
QUEST: Right, but this is an interesting conundrum here. Because here you have the EU in favor of sanctions against Russia on Crimea and Ukraine, but
the question of the election and further sanctions they're now saying enough, enough. Is this just the case of the Europeans feeling put out
that they weren't consultant? Or are there real economic issues behind it?
BLACK: They are genuinely concerned. They think that the consequences of them not being consulted and America not doing this in a coordinated way,
means that European businesses are going to be stunned. European businesses that work with Russia in energy fields, notably in
infrastructure, notably in the pipeline developments you've been talking about. They have been concerned that European businesses will be caught up
unwittingly perhaps in this sanctions regime.
It's a different ball game going on, not as straightforward, of course. Because in the past when the EU is negotiating sanctions with America when
they're getting together around the phone or working it out, it was the EU commission or heads of the EU government and the American administration.
This time it's the EU and the U.S. Congress. So, the levels of contact are not precisely the same. It's not an equal situation.
But there's no doubt that the EU is genuinely concerned about what could come from this and Russia is pointing this out. Because it doesn't want
this to happen. And it's quite upset, really that this is going to go ahead. And for all its cautious hope that President Trump could turn
things around, it now feels that this sanctions package is really going to lock Russia and the United States into the cold, frosty relationship that
really started to develop under president Obama.
QUEST: Phil Black, who is in Moscow this evening. Thank you, Phil, for staying up late for us tonight.
President Trump plans to roll back another policy of the Obama administration as we continue our program. We'll tell but the gender, the
transgender people who have been told they cannot serve in the U.S. military. Which is raising extraordinary question about what you do, about
those who are already serving. Do you kick them out? After the break.
[16:30:00] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. The chief executive of Aston Martin we'll tell
me why he doesn't agree that the U.K. plans to phase out diesel and petrol cars by 2040.
Live in Caracas as people in Venezuela start a two-day nationwide strike. As we continue, this is CNN and on this network the news always comes
President Trump announced on Twitter that he is reinstating a ban on all transgender people serving in the U.S. military. The president says
transgender troops would cause disruption and drive up medical costs. The decision reverses the Department of Defense decision that's only a year
Wildfires have forced more than 10,000 tourists and residents to evacuate from France's Mediterranean coast. They are also, burning in Corsica,
Portugal, Italy and Albania. The French interior ministry says more than 4,000 firefighters and troops are battling the fires, planes are dropping
the water on the fire from the air.
According to a U.S. official, it's believed North Korea could reliably launch a nuclear intercontinental missile early next year, if that's true
it means the north's program is moving a lot faster than expected. Also, intelligence indicates another missile test could happen any time now.
Turkey's national soccer team is parting ways with its coach, Fatih Terim and his son-in-law were seen on video in a fight with a restaurant owner.
Five men were injured in the incident.
The White House is defending President Trump's decision to reinstate the ban on transgender people openly serving in the U.S. Army.
(BEGIN VIDEO CLIP)
SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The president's expressed concerns since this Obama policy came into effect. But he's also
voiced that this is a very expensive and disruptive policy. And based on consultation that he's had with his national security team, came to the
conclusion that it erodes military readiness and unit cohesion and made the decision based on that.
(END VIDEO CLIP)
QUEST: Now the president first tweeted the news, please be advised that the United States government will not accept or allow transgender
individuals to serve in any capacity, our military must be focused on victory cannot be burdened with the tremendous medical costs and disruption
that transgender in the military would entail.
Here's a map of the United States. The rights of transgender people as a high-profile buffer ground in America's current culture wars and the issue
gains major attention from top companies. At least 24 states are the ones in yellow have proposed laws that would restrict access to bathrooms and
other facilities based on biological sex. In other words, you have to use the bathroom of the sex that's on your birth certificate. This is
according to the National Conference of State Legislatures.
If you look at some of those states that we're talking about here, take for example Indiana which has the religious freedom act. It allows businesses
to cite religious freedom as a legal defense. Now Apple, PayPal and Salesforce have criticized, strongly criticized the law. And then you go
to North Carolina for instance, where they have a bathroom bill. You'll be aware of that the NBA moved its all-star game away from the state. PayPal
again, Deutsche Bank and nearly all scrapped plans to either add jobs or do business there.
One of the biggest fighting grounds at the moment is in Texas. Where the state senate has voted overnight on a similar sort of bill. Tech companies
have now written an open letter, urging the state not to adopt the bill. And that includes Amazon, Facebook and Google. Of course, one of those
issues that's very much in the news at the moment. Duff Stewart was one of the chief executive who wrote that letter and joins me now. Good to see
DUFF STEWART, CEO, GSD&M: How are you, Richard? Thanks for having me.
QUEST: I've got the letter in front of me. Chief Executive GSD&M. I read the letter. You basically say we're gravely concerned any such legislation
would deeply tarnish Texas's reputation as an open and friendly place to do business.
STEWART: Yes, Texas has always been known as a friendly place and a great place to do business. And legislation like this, ultimately puts out a
sign that says Texas doesn't welcome all kinds of people. It's discriminatory. There are other issues that the state faces that we should
be dealing with.
[16:35:00] The state itself as we saw what happened in North Carolina. The state of Texas, some economic studies show we could lose up to $5 billion
QUEST: And yet, even knowing this, even seeing the North Carolina the way businesses, Deutsche Bank and others moved out. And PayPal canceled. The
legislature continued with, the governor continued with this.
STEWART: Yes, governor Abbott added this piece of legislation to the special session --
QUEST: So, they know about these letters. They know your views on this and they don't care?
STEWART: They don't seem to care. Businesses have come out opposed to this. There's great concern about that. It hangs out that sign as I said
and says businesses is not welcome here.
QUEST: The question is, your case is not made easier by today's announcement from the president, is it?
QUEST: This is, A, it's very strange that you would make such a policy announcement on Twitter. And B, basically saying to the 12,000 to 15,000
already in the forces, we don't know what to do with you, but you're not going to be allowed to serve.
STEWART: It's very disappointing that President Trump did that today. Ultimately, in the state of Texas we need to raise our hand and speak up
about an issue like this, it's really politics, disguised as policy. And it's, it's a move by our lieutenant governor and the governor to play to
the far right. And to protect their base. And ultimately, that damages the business environment and doesn't keep Texas open for business.
QUEST: Do you have any power to actually do anything? To quote John McCain yesterday where nothing is getting done. I mean short of saying --
we will withdraw, we will not invest more, but a company like yourself, is very difficult to do that in Texas.
STEWART: And Austin is where GSD&M is from. We're an advertising agency, we wouldn't pick up and leave.
QUEST: What power have you got?
STEWART: We've got the power of the people to stand up and speak up against this. We saw in North Carolina that their governor lost his job in
the last election because he signed that bill and hopefully the people of Texas, if the bill is ultimately passed, and signed by the governor, that
we'll stand up and we'll deal with it come the next election. I've been very impressed with speaker Strauss and the members of the house have done
in being focused on the business of Texas. And not this type of legislation.
QUEST: Do you find it slightly disconcerting? I mean everything I read from business now, is we don't care what you do, who you sleep with, who
you love. Your color, your gender, we just want the best people that we can get and talent is at a premium. Mary
Barra said this about women in the automobile industry. Last week we heard it from Xerox former CEO, we just want the best people.
STEWART: Talent is our opportunity to advance our businesses. It gives us a leg up against our competitors. So, there is always a battle for talent.
When you hang a sign out that says we don't welcome transgender people, that damages Texas's ability to recruit. People that are in Texas may
decide to leave and go elsewhere. It's not very favorable for the business environment.
QUEST: Thank you for coming in and talking about it.
STEWART: Thank you for having me, I appreciate it.
QUEST: We're very grateful that you came in to talk about it.
STEWART: I appreciate you having me.
QUEST: Now as we continue tonight on our conversation on business and economics around the world, United States is threatening to punish
Venezuela, it's over Maduro's plans to rewrite the constitution, we're going to be in Caracas, a city that is paralyzed by a two-day general
[16:40:00] (COMMERCIAL BREAK)
QUEST: QUEST MEANS BUSINESS in the middle of the week.
The U.S. is ratcheting up the pressure on Venezuela imposing sanctions on over a dozen individuals this time. They are officials in the government,
the military and the state oil company. Washington's wanting President Maduro to call off a plan to have the constitution rewritten. Opponents
say that will be a step towards a dictatorship. The president says it's a necessary move to restore peace. The two-day strike, a general strike
Sunday way. CNN's correspondent Leyla Santiago is in Caracas and joins me now. How is this -- I am looking behind you. It seems like there's
nothing really taking place. The strike biting?
LEYLA SANTIAGO, CNN CORRESPONDENT: (INAUDIBLE)
QUEST: Leila, Leila, forgive me, forgive me, I'm not hearing you. Do forgive me. We can see you. We can see you, but we're not hearing you.
So -- we'll pause while we talk to Moises Naim for a close look at the strike and the sanctions, he is with the
Carnegie Endowment for International Peace. He was 1989 to 1990, a minister in Venezuela. Look, this is really rather simple. Maduro isn't
going anywhere, as long as he has the support of the army. And the U.S. has been trying to get rid of him for as long as anybody can remember.
It's not working.
MOISES NAIM, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE: I'm sorry. I lost your, I cannot hear you, Richard.
QUEST: Can you hear me, sir?
NAIM: Now I can.
QUEST: Excellent, Maduro is not going anywhere and the U.S. policy is not working.
NAIM: We shall see, the it's not clear that the U.S. has a policy at this point it has a set of sanctions that have been targeted to specific
individuals. And that has some effect. They are thinking about expanding those sanctions to wider consequences, to have wider consequences. But we
don't know yet. As for Maduro not going anywhere, we shall see, right? Who would have said that you would have people in the streets for almost
100 days, that the international community is solidly denouncing Maduro as a dictator? That the economic situation is dire, is going to become even
worse. So yes, he has the support of the army. But I don't know that he has a solid monolithic coalition behind him there are fractures inside his
government and there are divisions.
QUEST: Right. But how much power or influence does the U.S. have by ratcheting up the sanctions against these individuals? I mean, is it going
to make an appreciable improvement or benefit? Is it going to work?
NAIM: Well, it depends, but yes, we have seen how targeted sanctions have had an effect in other countries. We also have seen how 21st century
sanctions, meaning the use of sophisticated financial tools, of even social media, has been used to identify some patterns of behaviors of individuals
in dictatorships and target those. So yes. It's very easy to be skeptical and doubtful of the impact of sanctions. But in some cases, they may add.
There is no silver bullet. It is not going to just happen because people are in the streets or just because of sanctions. Or just because
international bodies like the Organization of American States makes a statement. It's going to take a lot of simultaneous initiatives to move
the needle there.
QUEST: Good to see you, sir, thank you for joining us from Washington. Let's go back to Caracas. Leyla Santiago. I apologize, hopefully now we
can hear you. My question to you was, how is the strike biting?
SANTIAGO: Richard, again that really depends on what part of Caracas you find yourself in. If you're in an area that is a government sort of
territory, pro-government territory, you really can't tell that there is a strike.
[16:45:00] We were in an area today where a lot of people were going about their business. Talking about that election coming up on Sunday but then
if you go into areas that are really run by the opposition, where people are not pro government, you see that the streets are shut down. As I was
in that area, I tell you, you could really sort of feel that tension. And it was sort of this tension that came from uncertainty not knowing what was
going to unfold next as you saw men and even children masked and blocking the streets to make a point, to make a statement. And speak out against
QUEST: In previous strikes and demonstrations they have turned ugly and they've turned violent. Is there any suggestion here that Maduro is going
to turn the army against the people?
SANTIAGO: At this point we have not heard that. Last check, Maduro was still saying (speaking Spanish) and that means he is moving forward with
his plans on this election and with his plans on how he will govern this country. You mentioned the violence. I also want to make sure that we are
up to date. The death toll in those clashes between opposition and government is now at 104. We had one death today, given the clashes. I
got to tell you from where I'm standing right now, it wasn't too long ago that we could actually hear another clash playing out.
We heard some sort of an explosive noise. So, you know, whether or not he will turn his own army against the people, that remains to be seen what
will happen in his strategy. But those clashes between the opposition, between the government? Those are continuing.
QUEST: And just to put it into perspective for viewers tonight, the extent of the economic collapse in the, whether you want to take it as the country
or take it in the capital city. It's real and it's noticeable.
SANTIAGO: You know, somebody told me just yesterday, they said it's like two Venezuela's, I thought that was very interesting because if you're in a
pro-government section, it might be a little easier to find the things that there are shortages of. The medicine, the food, then if you're in an area
that is more opposition-friendly, you may not actually be able to find it at all. But both areas, if you look at the divide from Caracas in the
capital, both areas are having problems.
You might be able to find supplies in areas where it is a government territory, if you will. But even they will admit to you, look, you might
find it, but you won't be able to afford it. Look at the minimum wage here, you're looking at about $10 a month. It's even if you find stuff,
it's hard to afford it. No matter which side you're on in these clashes.
QUEST: Leyla Santiago joining us from Caracas, thank you.
As we continue tonight, by 2040 the United Kingdom says they will have banned the internal combustion engine, effectively diesel and petrol cars.
The chief executive of Aston Martin has told me if you want a moon shot, you need NASA. He explains why this won't work for the U.K.'s policy.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Britain says it's taking steps to improve air quality and plans to ban new cars with diesel and petrol engines, the internal combustion engine
in 23 years from now. It ends a tradition going way back. For example, look at this fine chart, the horseless carriage as it was then. Which
managed to drive along at 15 miles per hour in 1885. You couldn't even get through 15 miles per hour through the streets of London at the moment
anyway. You can hardly call that progress at the moment. Now the U.K. is planning to, Britain is clearing away all new combustion engines from 2040,
both petrol and diesel. And even hybrids will be removed.
The idea of course, is to improve health, especially in the big cities. It relates to dirty air, increased risk of cancers, asthma and strokes. That
are as a result of so many vehicles being on the road. But the U.K. is not alone. The mayors of Madrid and Athens all planning to ban diesels by
2025. Ultimately, what they're hoping is battery technology is at the heart of any improvement. Now to residents of a certain age, 1985 will
remember this, it was Sir Clive Sinclair who invented the C-5. It was supposed to be a revolutionary way to get around town, it was an absolute
Heaping huge amounts of humiliation on Sir Clive because the batteries weren't good enough, and it was also considered to be dangerous because it
was so lowly-slung on the roads. But that's not the point. The point is that batteries are the future. And as you've seen internal combustion
engine is on its way out. Except, earlier on QUEST EXPRESS the chief executive of Aston Martin expressed fears that Britain was making a bold
political statement without the wherewithal to back it up and execute it.
ANDY PALMER, CHIEF EXECUTIVE, ASTON MARTIN: I think electric vehicles are wonderful. I've been involved half of my career in the development of
electric vehicles and Aston Martin will the first luxury manufacturer to introduce an electric vehicle. So, this is not me saying we dislike
vehicle electrics. What this is saying is that if you want to set a moon shot like this and basically, ban entirely electric, ban entirely gasoline
engines, diesel engines, hybrids, plug in hybrids. And you want to go 100 percent electric, that's our equivalent of the moon shot.
To make a moon-shot work you need to have a NASA. And a NASA means that basically if you don't want to export jobs out of the U.K. then you've got
to create that capability and that infrastructure, inside the U.K. And we're a long, long way from having that capability today.
QUEST: It is funny say it because I was talking about this with a younger colleague and I said look 2040 is a long way away. I will dead and buried
by then. And then I thought about it and actually probably I won't be. And I'll only be sort of, hope I won't be, only be in my 70s, maybe late
70s. Are you saying it's unrealistic to have a 2040 deadline?
PALMER: No. I'm saying it's unrealistic if you don't have infrastructure and a plan and the technology in the country. Of course, you can make it
work. Electric cars exist today, what you will do if you don't think about it, is you'll have all of this invested capital in engines in the U.K.
which will suddenly become redundant. Your choice of vehicles that customers can buy will be limited. You won't be able to move freight by
road from Scotland to London because the technology isn't ready for it yet. So just a blanket statement of EVs for everything, 100 percent by 2040, is
not solving the problem that we have in front of us, which is actually air pollution and NO2 at the curbside, there are other ways of addressing that
QUEST: So, in a nutshell, what would you have done, briefly?
PALMER: Well, I'm good with a moonshot if that's where we want to go we want to have 100 percent EVs, we need to work with how we protect jobs in
the U.K. They don't simply get exported to Korea, Japan or China. Because that's where they would go if we source batteries today.
[16:55:00] Alternatively, work with industry to look at other ways of bringing down pollution. Alternatively, look at the infrastructure I guess
my message today is political statements are fine. You need to work with industry to find out if that's what you really dream of.
QUEST: And the twilight program will be live from the New York stock exchange, I'll have three top executives, Jean-Marc Janaillac, the chief
executive of Air France KLM group, the CEO of Turks Air will join us straight after ringing the closing bell and Warren East, the chief
executive of Rolls Royce gives me his views on Brexit and the launch of the new Rolls Phantom. We'll have Profitable Moment after the break.
[17:00:00] QUEST: Tonight's Profitable Moment, it's interesting that we spend so much time talking about the new stocks, the Amazons, the FANGS of
this world. And today the big talking point was Boeing, makers of the aircraft, the Dreamliner 787, the 777s, Boeing stock was up some 10
percent. 9.8 percent on the stock market. Just who says a big old company can't be nimble to do strange things. That's QUEST MEANS BUSINESS for
tonight. I'm Richard Quest, in New York. Whatever you're up to in the hours ahead, I do hope it's profitable. Let's make sure you join me
tomorrow when we're at the New York stock exchange.