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QUEST MEANS BUSINESS

Clapper Calls Trump Speech Scary And Disturbing; President Trump Campaign Speech; Trump Predicts Ending Up NAFTA; McConnell and Trump Are Working Together; Walmart Teaming Up With Google. Aired 4-5p ET

Aired August 23, 2017 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[61:00:44] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Tonight, president Trump calls for healing after tearing up his own agenda. On Monday night

from this chair, I showed you the three priorities in the Commander-In- Chief in trade. But in the policy in trade, you remember, laying out a policy on Afghanistan check in passing tax reform and came the president's

trip to Arizona in a no holds barred campaign speech.

AZCentral priorities are gone replace with pledges of course for his based. The president threatened a government shutdown over funding for border his

wall. He predicted the U.S. would, you know, end up killing NAFTA. There is one week after negotiations on the trade deal just began, and he

rekindled another intraparty flight. These can be lethal.

Taking shot at Arizona, Senators John McCain and Jeff Flake. Now the rally left grantees in Washington openly questioning the president fitness for

office. Extraordinary comments here from former Director of National Intelligence James Clapper who told CNN, he is concerned about the man with

the nuclear codes.

(BEGIN VIDEO CLIP)

JAMES CLAPPER, FORMER DIRECTOR OF NATIONAL INTELLIGENCE: To more than one capacity (ph), another for every president since and including John F.

Kennedy through President Obama. And I don't know when I have listened and watch something like this on a president, I found more disturbing.

I really question his ability to -- his fitness to be in this office. And I also am beginning to wonder about is his motivation for it. Maybe, he is

looking for a way out. I worry about, frankly, that you know, the access to nuclear codes.

(END VIDEO CLIP)

NEWTON: OK, the event of this week follow a familiar pattern, a presidential event almost immediately overshadowed by a Trump be in Tweet

or speech. Now Teleprompter Trump was on display on Monday in a carefully scripted speech on Afghanistan.

Campaign Trump came out Tuesday impose a divisive rally in Arizona. Now Monday speech helped Trump -- Trump help the content down the racial

controversy, the president ignited last week in an event that was supposed to be. You know, if you remember this, this supposed to be all about

infrastructure.

And the president has repeatedly set fire to White House colleagues (ph) by picking fight with T.V. hosts Mika Brzezinski and Joe Scarborough during

energy week with London mayor Sadiq Khan during infrastructure week and not to be outdone with attorney -- his own Attorney General Jeff Sessions

during Workforce Development Week.

Now, today speech in Reno was yet another chance to roll that dice. The results scripted Trump, president signed a measure designed to include

services to Veterans. And again reading from a prompter, as I am right now, he urged American to heal and unites.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It is time to heal the wounds that divide us and to seek a new unity based on the common values

that unite us. We are one people with one home and one great flag.

(END VIDEO CLIP)

NEWTON: CNN Senior Political Analyst Mark Preston is in Washington and here with us. Yes. Again unpredictable, we are absolutely used to that.

If we move forward though and talk about impacts in terms of what this will cost him if anything in trying to get his agenda?

MARK PRESTON, CNN SENIOR POLITICAL ANALYST: Well, couple of things. I think that the comments that we saw from James Clapper are incredibly

disturbing. And for our viewers around the world who are wondering who he is. He is a former head of basically the intelligence apparatus to the

United States.

He is a very somber (ph) person, a former three-star general has dedicated his life to basically keeping the United States safe. So if you hear him

on CNN last night after Trump speech talk about his concerned that Donald Trump has control the nuclear codes. That's concerning. Now to the idea

of what attended Donald Trump get done, you know, during his presidency, right now he is at a roadblock but he does not understand Paula, as to how

make allies

[16:05:07] He is constantly attacking people in his own party. He is blaming Democrats for inaction in Washington when in fact it is inaction

within his own party. He can't get Republicans in Congress to coalesce behind a vision that he is presented forward.

We heard him talked a lot about the border wall over the past week, certainly last night in Phoenix, Arizona. That's a very divisive issue

geared in the United States. It's unclear if you will even get the funding to get it done to your point that he talked about shutting down the

government. Choose the consequences if she were to let the government shutdown.

NEWTON: Yes, and must be clear. There are huge consequences to the economy and the market that they actually let that happen. Something that

he says is very important to him. OK Mitch McConnell as both CNN and New York Times reporting, of course, that they has spinning match. Mark, that

sounds like it got very ugly. Perhaps, all too real for too many people, you know, curse words, the whole bit.

PRESTON: Right.

NEWTON: And yet now, Mitch McConnell coming out with a statement saying look, you know, if you think that this is going to dissuade us from

following our agenda, you're, you know, you are wrong. But really, what are his fellow Republicans thinking about that right now?

PRESTON: So couple of things, Mitch McConnell, somebody that you don't often see on television other than that news conferences and if you look at

his appearance, she would think that, you know, this guy isn't that smart.

He is one of the most crafty legislators in the United States Congress certainly in the last 20 years. He understands how to get things done.

What we saw in that statement from Mitch McConnell today though is that -- well I should say, what we did see in that statement with Mitch McConnell

is to say that the argument between him and President Trump did not happen, because we know, it did happen. And to your point, it got very, very

nasty.

What we're seeing Donald Trump right now, as I said just a short time ago, is that he is attacking people in his own party. That is not a good thing

to do. He did it with Jeff Flake and John McCain last night. He's done it with the wife of Senator Ben Sasse from Nebraska. He has attack Lindsey

Graham. He has attacked Susan Collins. He has attacked Shelley Moore Capito who is from West Virginia. Susan Collins is from the state of

Maine, and of course, Lisa Ann Murkowski at the state of Alaska.

I don't know how we gets anything done when he makes all of this enemies, Paula.

NEWTON: Yes, and he does. He need to get things done. Mark, one thing though for our international viewers especially who are wondering what

Americans are thinking of that.

PRESTON: Right.

NEWTON: And we do have a lot of polls that showed perhaps to support this.

PRESTON: Right.

NEWTON: Flipping or whatever, again though, even here on CNN and speaking to Trump voters in the last 24 hours, they have come out and said, we don't

really have a big problem with his supporters with his Charlottesville comments. And he still believes in that, doesn't he? That his based of

support follows in and that's been 100 percent, so (ph)?

PRESTON: Correct. And he is doing a campaign rally seven months into his first term as president. This is unheard of. You don't see this happen

very often, but we should be careful to note that the folks who showed up in Phoenix last night to stand behind him to applaud and laugh at some of

the ridiculous and crazy outlandish things that you said are his base.

There is no doubt about that. But he is losing support amongst Republicans and he is losing support among some folks who have supported him by large,

and I'll just give a rough estimate here. If you are looking at about six in 10 Americans right now that have an unfavorable view at how Donald Trump

is running the country and how he has handled the recent comments on race here in the United States, so he is slipping right now.

Any political capital that he had coming in at the end of January, it is certainly diminished where we stand right now.

NEWTON: OK, Markk, again another exhausting week. I think it's only Wednesday. Mark is that true? It's only Wednesday.

PRESTON: It's only Wednesday. And let me just say this, so it's amazing because people around the world specifically world leaders are watching our

newscast on CNN international. You have to wonder, what are they thinking after watching Donald Trump last night and then watching Donald Trump

today, very unpredictable.

NEWTON: Yes, another good point Mark. Thanks so much, appreciate it. Now, with the U.S. debt ceiling deadline approaching fast, the warning

today, one credit rating company that says U.S. AAA credit rating will be under review if the government does not raise the debt limit by September

30th. It is the looming deadline.

Momentum in the market evaporated today after President Trump time hinted at the government shutdown last night. Stocks fell after their best day in

month. We should say that that selling picked up in the last few minutes. Tim Anderson joins us now from the New York Stock Exchange. He is managing

director of TJM investment.

So Tim, how about it? I mean, I know it's the summer doldrums. Volume is off. But at the same time, at what point does the market listen to under a

threaten, you know, a government shutdown over my wall? What point did that really start to hurt?

TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENT: Well, I think we possibly may saw a little bit of selling today because of that. We had a positive

tone to the market yesterday after the president's speech on Afghanistan.

[16:10:02] And today the market right out of their chute seemed like it had a little bit of a cloud over it. But I would say that we've seen this

movie dozens and dozens of times with the debt ceiling. We know that at the 11th hour, it almost always gets raised, so.

NEWTON: OK. Yes. And that's true but now without consequence sometimes. And there have been times in the government has shutdown.

ANDERSON: That is correct.

NEWTON: We're hoping the history does not repeat itself. So at this point though, how about the whole NAFTA thing? I mean things seem to be going

quite well during the negotiations as well as they can in the first week of negotiation that was last week. Trump saying, look we're probably going to

end up working it up.

ANDERSON: Well I think that he clearly -- I'm not an expert on that. I don't know exactly what the-- all of the deals are. But I think it's

probably going to be a difficult agreement to renegotiate to the likings of the three major parties involved. So we'll just have to see. We'll just

have to see how that plays out.

NEWTON: And no doubt about that and yes reaping it up could really provide adult to the market. Well, what is the market want to see and buy when?

You know, I have to remind you former Secretary, Mnuchin said that we -- they can even have the deal by August. Clearly, that's not going to

happen. It is August. Is the market sees even something an outline of something that could succeed by November, September, October? What do they

need see?

ANDERSON: There is no doubt that the market wants to see either a sweeping tax reform or our corporate tax rate cut and tax rate cut and the tax

simplification for individuals. And there are some interesting crosscurrents going on in the market right now. The rustle made a new high

just about a month ago. It's down about 7 percent from then, the transport of close below 9200 today. That's a little bit of a red flag. Both of

those indicators have lead in the past.

On the contrary side of that, the emerging markets are acting very, very well. The EEM, ETF which is an emerging market. ETF close to the three

year high today. So I think you've got a very low volume turn in the maker right now that had a little bit of downside action to it. And we got to

see how the market acts coming out of Labor Day.

NEWTON: Yes. And buckle up for September. Tim, thanks so much. Appreciate your time. Now it's not just Wall Street watching the political

situation of interest. Canada and Mexico now have to reevaluate their plans for NAFTA at President Trump's speech. We speak to a former U.S.

negotiator. That's up next.

(COMMERCIAL BREAK)

[16:15:02] NEWTON: All right. Those foreign ministers insist the renegotiation of NAFTA will go on, hours after Trump predicted the U.S.

will just terminate the agreement. Take a listen.

(BEGIN VIDEOCLIP)

TRUMP: Personally, I don't think we can make a deal, because we have been so badly taken advantage of. They have made such great deals both of the

countries but in particular Mexico. That I don't think we can make a deal. So I think will end up probably terminating NAFTA at some point. OK,

probably.

(END VIDEOCLIP)

NEWTON: Well Mexico and Canada responded to that comment. Mexico's foreign minister tweeted, no surprises Mexico will remain at the table

calmly, firmly and with our national interest at the forefront and from north. The Canadian spokesperson told CNN trade negotiation often have

moments of heated rhetoric. Our priorities remain the same and we continue to work hard to modernize NAFTA.

Joining me now, Matt Gold serves as the U.S. trade negotiator. He now teaches law at Fordham University. Thanks so much for joining us Matt.

OK. I know everybody around the table. Negotiators especially are going to say, it doesn't matter to see the rhetoric. No, I can tell you behind-

the-scenes, it does matter and the president was very close to ripping off NAFTA and having that six-month deadline trigger in April.

So what tells you, if you're negotiator at the table right now what are you thinking to yourself about the fact that you can have the pull, you know,

the carpet pulled up from under you?

MATT GOLD, FORMER U.S. TRADE NEGOTIATOR: I don't think the negotiators from any of the three countries took that seriously. President Trump has

made that threat before. It's always been a bluff. It's still a bluff. The United States cannot withdraw from NAFTA. The three countries our

economies are far too integrated. The cost will be far too high.

Canadian and Mexican governments know that they've never responded to that threat. And they're still not. And I think the professional negotiators

on all three sides are more or less cringing right now. And they probably wished that the president would keep that kind of rhetoric toned down

because the negotiators are trying the real work done.

NEWTON: But you and I both know that they won't. Last week, the U.S. negotiator came out and was pretty tough saying, look this is not going to

be about tweets. And something like the dispute resolution mechanism has got to go. We don't like it. Canada and Mexico saying, no, no, no that's

got to stay.

At this point, will the President chimed in? Does it not have a real effect on those negotiations? Clearly, his negotiator at the table is

listening to the president, he's the boss.

GOLD: If he were regular presidents, yes, of course. But Donald Trump is so devastated the credibility of the presidency of the United States and

his credibility is so -- he left his credibility three exits back. So really know the professionals just to ignore him.

I mean, I'm sorry to have to say that, but at this point that's where it is. That absolutely light (ph) high with the U.S. trade representative,

did have tough talk. But he's caught in a wedge. He had different talk when he spoke to Congress.

Congress represents the American people. And he tried when he spoke to Congress multiple times talked about, do no harm and all of the things that

American business and American workers want to hear. But at the same time when representing the president, he does take a tougher tone. But at the

end of the day the United States only has so much leverage. And we have actually very little leverage and he's only going to get what he's going to

get and he knows that.

NEWTON: You know, some of that would come as a surprise to people in the Oval Office to continually have the president harp on about how they need a

better deal. When you actually look at the details of any deal that's going forward, they want this. They want to improve NAFTA.

But for you, in terms of having looked at and negotiated an older deal, what can be fixed? I mean what's realistic that can actually make the

president happy and still continue good business relations with Canada and Mexico.

GOLD: Yes. On a scale from one to 100, NAFTA is already better 92. And we can easily prove it to us 93 or four or five. We have a wish list of

about 50 items.

Some of those will get, many of those we won't. Examples of what, we have a good chance of getting and we should get are the labor and provisions and

environmental provisions of NAFTA which require from example Mexican factories to meet certain labor and environmental standards.

They have existed since the beginning, but they have not been enforceable because they were inside agreements. We want to move them into the main

agreement and subject them to the enforceability provisions. Enforce their provisions on the main agreement. We'll get that. We're going to improve

regulatory cooperation among the countries.

There are series of things with the dispute resolution. That's not really about dispute resolution among the governments. That would be chapter 20

of NAFTA. What Ambassador Whitehouse was talking about was chapter 19, which is only appeals of one kind of trade barriers -- actually two kinds

of trade barriers into doubling to this and kind of ability in duties.

There's a mechanism for that NAFTA. The United States would like to eliminate. It would be great if we can eliminate it. I don't know if we

have the leverage. But we could probably solve the problems we have with chapter 19, sure of eliminating it by fixing it in a coupled ways.

NEWTON: But when you point to chapter 19, that case in point. President Trump's going to go to that chapter and say, what did you do for me on

chapter 19.

[16:20:02] If he doesn't get the answer that he wants, why is there any guarantees that he's going to approve even what his negotiator. The deal

has negotiator got form.

GOLD: Great question. All right, President Trump is -- by time we get to January, February, President Trump is going to be looking at an offer on

the table that's going to involve a series of changes and improvements, but again, 90 to 95. That's it. Not a change from a 30 to 100. And he is

then having option of agreeing to that or not agreeing to that.

And if he doesn't agree to it, the whole thing will go on hold for a year for the Mexican elections and he will be looking at the same option a year

later. And he is pretty much going to agree to this tweak and update either this February or year from February. Those are really going to be

his options and the decision will be driven by congressional Republicans.

How would they rather run in the midterm elections? Would they rather run with the completed deal that everyone is going to look at is a

disappointment or would they rather run with no deal in an environment where they did not get healthcare reform? And at that point perhaps they

would even have tax reforms? That's going to drive the decision.

But he is gonna have the option of a series of small changes and an update or nothing at all and he is going to have the option of doing it before the

midterms or after the midterms. That's the entire range of President Trump options.

NEWTON: Yes, and you're right it was all about with governors who depend on NAFTA, breathing down the necks of those that brought politicians

running again in 2018. Matt, thanks so much, always good to talk to you, appreciate it.

GOLD: Thanks.

NEWTON: Now, OK, we apparently can't forget Saturday's Mayweather-McGregor clash because the fight between retailing heavyweight is in fact the real

drama here. Amazon and Walmart are both adding new goodies to their shopping baskets. It's incredible how much money these companies have to

this. Whole Foods have just brought into Amazon basket with shareholders signing off on a $13 billion takeover.

But the world, the largest retailer is of course punching bag. You never can count them out Walmart's tag teaming with Google to let busy consumers

voice order its products through Google assistance. I am still skeptical but let us wait and see. We want to get some perspective now on this

remark.

On the retail war from our money correspondents, Paul La Monica and Clare Sebastian, OK, listen, these are gorillas in the room right? Never mind

elephant that they are really added. Paul, to start with you, how will they change the entire landscape especially if they are battling really to

the death of things?

PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: Yes, I think what's really interesting here Paula is that Amazon clearly has shown its brick-and-

mortar aspirations with that Whole Food sale. Which is where, you know, reported has already been closed and approved by whole from shareholders.

What's going to happen now with Walmart teaming up with Google on this voice ordering system?

It really shows that you have to just say hey Alexa, I want to buy this and get at Amazon. You can do that through Google devices and get things from

Walmart as well. So this is a real battle heavyweight here. I don't think there is a big underdog like McGregor is with Mayweather coming up this

weekend.

NEWTON: I remember you said that. Paul, we'll have you back for the on the boxing. Clare, you and I have this conversation, you never count

Walmart out. In terms of teaming up though, this is quite revolutionary in terms of teaming up with Google.

CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, I think revelation in behalf, some would describe it as inevitable because the Google has been a very

well in terms of online shopping. They dominate of course and internet says, but in terms of so shopping they are really on the first place you

think of going when you go to buy something. That of course is Amazon and for them to team up with Walmart which is of course, the biggest retailer

if not in the world, then certainly in the U.S

It dominates in grocery half -- more than half of it sales are in grocery. That is the key boon in the field for Google, this isn't just good for

Walmart. But interestingly, about the voice thing, Alexa and Echo family with Amazon was really not just about hardware sales. That is to look

people in. And I think that's why this is so important today, this move from Walmart and Google.

NEWTON: Again, a lot about market share. Now, two things here, one thing is the price wars that will consume here in the margins. You know, later

on you're going to hear from Martin Sorrell whose had a bad day in advertising. And he actually going a lot of the margins and consumer

goods, so that's one issue Paul.

And in terms of that, plus how this will all shake out in a year or two in terms of determining how people shop and where they shop?

LA MONICA: Right with regards to price, what I'm really fascinated by or I think is going to be interesting here is that Amazon is known as a place

that you can go to and get things for a pretty discounted price. I mean, they're used to be a joke about Best Buy. Retail is actually doing well

now. But it was Amazon show room, you would just go in and look at a price for a T.V. and then go buy for cheaper on Amazon.

But what's interesting with Walmart and with Google, obviously -- I'm sorry with Whole Foods, Whole Food has a reputation for whole paycheck. So it

was Amazon going to do in order to lower prices at Whole Foods and be more competitive, not just with Walmart but other groceries like Target and

Kroger and many others.

[16:25:04] SEBASTIAN: I think, we don't know yet because about -- they haven't seen yet about that deal. We're still waiting. It's still not

clear regulator, the approval before it can -- it close.

NEWTON: And Clare, in terms of this Whole Foodie trend, the independence, the people of the smaller producers of food are really excited about some

of these deals.

SEBASTIAN: Well, I'm thinking about Whole Foods in Amazon. They are really interesting because we talk about scale as key in grocery to 10

months in business. This is kind of interest me being really important and is not a paradox (INAUDIBLE) because what people buy is changing. It's

moving towards smaller batch. We want this for that movies (ph). We can call it the Whole Foods effect. If you don't want the white bread in this

--

(OFF-MIC)

SEBASTIAN: -- I'm watching you more. You're liking it more.

NEWTON: Thinking yourself Clare.

(CROSSTALK)

SEBASTIAN: But, you know, we've been talking about the small companies. Some of them Whole Food supplies, some of them who already sell on Amazon,

we've been finding out that there are actually pretty thinking about this.

NEWTON: In terms of how this is going show a check out, because you -- we all know that is at the end of the day about convenience and price. When

you look at who is well placed, you can take one side. I will let you take at Walmart side, but why do think Amazon in particular might be better

placed, again, me, a shopper, a mother, convenience on price?

LA MONICA: Convenience obviously is key. I mean Amazon's app is so easy to use. I am so used to right now buying just about every single Christmas

president -- Christmas present, excuse me for my kids on Amazon. And it's not necessarily because I want to but because it's just easier and

convenient and the prices are pretty good.

So that I think both well for Amazon, if they figure out a way to make Whole Foods, a more compelling bargain for consumers that maybe hadn't shop

there for.

NEWTON: OK, Clare, you take up the mantle on that convenience and price for Walmart.

SEBASTIAN: Walmart have two and a half thousand stores in the U.S. which is the biggest and more than pretty much to anyone else. So that's a huge

preferring. For me who had someone who has been grown on shopping Walmart is a giant place that you can pretty much get anything you want. It's a

one stop-shop. And breaking more the like, we have Amazon at the one stop shop in a comment.

And they're doing really well in the comments. It's the legacy there. It's pretty striking, 60 percent increase income in sales. In the last

quarter, they brought in some key executives to do that. In terms of price, everyday their prices, we will see the tag line. I think we'll have

to see how that plays out.

NEWTON: OK. And it is definitely important to watch. It will be entertaining to share and hopefully we'll all get cheaper grocery of that.

Thank you both for sharing.

LA MONICA: Thank you.

NEWTON: Now, a stark warnings from the world's biggest ad agency, the CEO of WPP tells me business is bleak and its biggest market is also this

weekend. We hear from Martin Sorrell.

(COMMERCIAL BREAK)

NEWTON: Hello, I'm Paula Newton. Coming up in the next half hour of Quest Means Business, the CEO of WPP tells you why it is such a rough year so far

for the ad industry. And I'll get my hand, believe it or not, on Samsung brand new Galaxy Note. Hopefully it won't blow up. So, let's hope

(INAUDIBLE) explode. Before that though, these are the top headlines following this hour:

U.S President Donald Trump is now calling on Americans to embrace, "a new unity based on the common values that unite us." But it sharply contrasted

with how he spoke to Jerry's supporters Tuesday night in Arizona, where the President ranted against his prestige enemies including resistant

Republicans and the media.

White House Senior Advise Jared Kushner traveled to Cairo, Wednesday, to meet with Egypt's president. This as U.S since decided to deny nearly a

$160 million an aid to Egypt. It also funds to hold back another $195 million until it sees new improvement in the country's record on him in

right and democracy. New York (ph) says it regret the decision.

The commander of the U.S. Seventh Fleet based in Japan has been removed from his post. Now the U.S navy says, Vice Admiral Joseph Aucoin was

relieved from his duty due to lost of confidence in his ability to USS John McCain collided with the merchant ship near Singapore Monday. It's the

fourth time this year, a U.S. warship under his leadership was involved in an accident.

Danish police say recently recovered head looks torso has now been identified it's the same Swedish journalist Kim Wall. Now, Wall was last

seen on August 10th boarding the submarine for a story on its inventor. Her torso was discovered on Monday. DNA from the torso and blood found on

the submarine positively match Wall. The vessels inventor Peter Madsen has been charged with manslaughter.

Now some blunt talk on Hillary Clinton's memoir called "What Happened?" The former U.S. Democratic presidential candidate describes how

uncomfortable she was Donald Trump covering behind her during a debate. But to ponder whether she should have said, "Back up, you creep." The book

is set for release. Next one.

Martin Sorrell said the United States, the WPP's worst market. Now the advertising CEO warned that 2017 has been a tough year. And things will

likely only get tougher. WPP shares fell, look at this, almost 11 percent in London. Wow, that is a bad day.

Thorough bleak outlook of zero growth this year has alarmed investors. He told me advertisers just aren't spending like they use to.

(BEGIN VIDEO CLIP)

MARTIN SORRELL, CEO, WPP: Q1 was not easy, but Q2 has been even tougher. And July was a tough month too. And when you look at it geographically

gross actually strongly -- was strongest maybe paradoxically given Brexit but here in the U.K was where it was strongest. Second probably was the

Western continental Europe we had a weak at Q2. And in Asia-Pacific, Latin America, Africa, and Middle East were very similar in Q1 and Q2 but similar

levels as Western continental Europe.

The toughest part of the world for us was the U.S. It might have been something to do with us in the U.S. as well because we had some account

issues last year. But having said that, all of the five agency holding companies that are reported have had pressure in the U.S., so it might be

more an industry issue or a GDP issue in the U.S.

NEWTON: In terms of what you see in the development in your industry, what worries you the most? I mean, this is really a stunning outlook that

you've had for the full year of 2017 to actually have to go and say, "Look, our early forecasts are wrong. We're now projecting zero growth."

SORRELL: What you seen is companies cutting their investment in media and in agencies at a time when GDP growth as a whole is being low, it has been

very little in their inflation, very little pricing power, and therefore there has been a focus on cost. So quite a difficult environment to

navigate. Although having said that from the period 2011 to 2016, all those years were record you as for the rest. But since 2017 as being

certainly a tough start as far as '18 is concerned, there is a mini quadrennial as we call it call it. We have the Russian Walcot. We have

the in the South Korean Olympics, and last but not the least, we have the midterm congressional in a record. I guess people saw limbering up for the

2020 general election in the U.S.

[16:35:04] NEWTON: In terms of weakness, you don see a bit of weakness certainly in the United States. You know, when we looked at the same at

the Trump Administration has promised, how much is that do you think will still get done? And if they don't get done, do you blame the President?

SORRELL: Looking at the three things that were promised, vital plans first was a decrease in regulation and from what I hear that has been some

significant decrease already. Infrastructure spending takes a long time to put in anyway or kicking anyway. But I think there are some being made on

that. We have to see how that plans out.

But the biggest part of the tripartite (ph) program was probably tax simplification or reduction because that was promised, I think when the

Secretary of Treasury Steve Mnuchin became -- took that post, he said -- suggested August and here we are in August. And then the beginning of next

year then or whether or we keep to that timetable.

And obviously, the President's room to maneuver is being hampered by inability to pause the Obamacare appeal legislation because that, I suppose

in some way, was going to fund the budget on the tech side too. So, it does look it's going to be difficult.

And then we've had obviously these sociopolitical issues around Charlottesville and the resignations of the manufacturing committee and the

general business committee. And that doesn't really help sentiment (ph) either. So, one can only hope from the GDP growth point of view that the

tax legislation at some point in time can be put in place. But time is running out. I think for -- and to have any impact in 2018.

And of course idling from a political point of view that was important for those impact on the midterm congressionals.

NEWTON: And you raise a lot of problems there. You know, you are a brand guy, Sir Martin, from a branding point of view from a business perspective,

some suggested that the President Trump has now become a bit toxic to branding for business. Do you think that that's true, that he has already

lost so much time?

SORRELL: Well, I think, it's early days. You know, it's six months into the administrations, seven months in, we have to see how it plans out.

There had been a number of major changes in personnel. And you have to see how the new personnel and the new staff is not uncommon for new

administrations to change some of their incumbents.

We have to see how those new forces work too. So, I think early days as yet, but it has been bumpy.

(END VIDEO CLIP)

NEWTON: Breaking news is in the CNN. A terrorist threat in the Netherlands has led to a concert in Rotterdam being canceled tonight. This

is according to a statement from Rotterdam police. It reads (ph) a concert that was due to be held in Rotterdam, Maassilo venue was canceled due to a

terror threat. The American band called the Allah-Las was due to be playing there tonight. We will bring you more information on this threat

and the nature of it as soon as we get it.

(INAUDIBLE) at the center of the probe into the Trump campaign contacts with Russia. Our Matthew Chance track down the former ambassador in

alleged crime master. He spoke exclusively with CNN.

(COMMERCIAL BREAK)

[16:41:00] NEWTON: Former Ambassador to the U.S. sworn future relations between the two countries are only made more difficult by those in the

sanctions. I remember Sergey Kislyak from these photos in the Oval Office he is the center of the probe into Trump campaign contacts with Russia.

And he has kept a low profile, as you can imagine since leaving Washington. I do know how hard. And Matthew Chance, our senior international

correspondent works there to track these people down. You've done it Matthew. I have to ask you, what surprised you the most when you did talk

to him?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, you know, what surprised me the most is that we actually got in, because we've been

given the runaround, frankly, by the press officials here in Modova-- Moldova, sorry, in Central Russia about 400 miles, 600 kilometers South

from the Russian capital. Take that to set us all on a wild goose chase to a village four and half hours drive away, saying that he would meet us

there. And so, it was real gamble that we took and it paid off.

Of course Sergey Kislyak has been, as you mentioned, the man at the center of these allegations of collusion between the Trump team and the Kremlin.

You know, he is the reason that General Flynn resigned as National Security Adviser. It's the reason Jeff Sessions, the Attorney General recused

himself from the investigations into Russia by the FBI and the Congress. And so, he is a key figure and we got a chance for the first time to put

some of those impulsive questions to it. Take a listen.

(BEGIN VIDEOTAPE)

CHANCE: Hi, Mr. Ambassador, two question. Did you discuss these sanctions with any members of the Trump team when you are in United States?

SERGEY KISLYAK, FRMR. AMBASSADOR TO THE UNITED STATES: With due respect I'm here to talk to the Russian people.

CHANCE: I understand that. You say you've got the secrets --

KISLYAK: I've said everything they wanted prior to this.

CHANCE: Did you discuss opening secret channels with the Kremlin with Jared Kushner (INAUDIBLE).

KISLYAK: I've said many times that we did not discuss the sanction to hold and our discussions with our American (INAUDIBLE) out of respect to all our

partners.

CHANCE: Fair enough but when you met Donald Trump, the president, were you surprised when he disclosed the secret information to you about Syria?

KISLYAK: I'm not sure that I heard anything that will (INAUDIBLE). But that was a good meeting then we were discussing things we're important to

your country and to mine.

CHANCE: What about this allegation that you're a "spy master", spy --

KISLYAK: Nonsense.

CHANCE: Did you attempt to recruit any members of the Trump Administration?

KISLYAK: You should be ashamed because CNN is the company that keeps up pointing to this allegation. It's too nonsense.

CHANCE: The U.S. Security Official, Intelligence Official that made this report.

KISLYAK: I heard the other statements by them. Also by former (INAUDIBLE) that I was a little man. I have no reasons to doubt that he knew what he

said.

CHANCE: OK, just one last question. What's your prediction to the future a hold U.S.-Russian relations?

KISLYAK: I'm afraid it's going to be the death. And it's not because of - - because of the U.S. political dynamics. The anti-Russian law it said they're going to held Russian-American discussions.

CHANCE: Is there sanctions?

KISLYAK: It's a sanctions. Sanctions is an instrument. It's basically a state of being anti-Russian. That is the most important thing. And as

long as I'm being (INAUDIBLE) it's going to say, it's going to spoil the (INAUDIBLE) of both countries to resume their normal relations. And normal

(INAUDIBLE) relations exactly what is missing.

CHANCE: Have you lost faith with Donald Trump is going to be able to what he during his campaign and make things better with Moscow?

KISLYAK: I'm not sure that -- I operate with the definitions of faith, actions of faith. We work with the United States based on the policies

that he have (INAUDIBLE). Then we have seen so many different things of our relationship (ph). And we pretty come for the low (INAUDIBLE) what we

do for Russia. And by the way, I'm here to do exactly what is important to us.

(END VIDEOTAPE)

[16:45:18] CHANCE: That was Sergey Kislyak there, no longer of course a Russian ambassador to the United States but would clearly still very

capable of the in deemed of responding with very diplomatic answers to anyone.

NEWTON: Yes, were wasting time with the (INAUDIBLE) but there you go especially now that he is so called retired. Matt, I have to ask you. In

term, you said it over, and over, and over again the Putin -- with Putin- Kremlin wanted so much more of this relationship such high hopes that ambassador in particular. Where, you know, he denied very clearly that he

was some kind of a "spymaster" or anything to do with this. And yet some people still have their doubts, and that in fact it was quite a blow and

the fact that he had to be taken out of his post in the United States.

CHANCE: Well the Russian of course say that this was part of the regular rotation of a diplomatic staff. But I think it's not the truth that the

end of his tenure as the Russian ambassador to the United States particularly this last part of it sort of marks the end of a small period

in which there was real optimism here in Russia. And that the relationship would be turned around.

The Kremlin had very high hopes that Donald Trump was their man. He was the man who sold Russia from the, you know, sort of the worldwide from the

same point of view with Russia. You know, it criticize NATO, we need settings. Why can't we get along with Russia, suggesting they call to

(INAUDIBLE) international terrorism in conflict zones like Syria. So it was genuine optimism that he would be up turn the relationship around and

would ultimately give the Russians what they wanted in terms of the lifting of the sanctions.

And what Ambassador Kislyak reaffirmed to me during that short interview and what the Kremlin has said all along is that, you know, that situation

has now been dramatically changed because of the transfer the authority to lift the sanctions of the United States from the presidency, from President

Trump to the Congress. You know, that shattered all of the hopes that Russians had that Trump was going to be a pivotal figure in their

relationship.

NEWTON: Yes and no one would expect that Congress would do anything to reverse those sanctions. In fact, they are continually putting more

sanctions on Russia. Our Matthew Chance in (Kremlin) continuing to track down all everything to do with the Russian investigation. Matthew, thank

you so much. We appreciate it.

Now, Cairo is the latest stop on White House advisor Jared Kushner's visit to the Middle East yield talks with Egypt President Abdel Fattah el-Sisi

one day after the Trump administration flash aid to the country. Egypt recently passed new laws to encourage more foreign investment. And last

week the country's investment Minister told Richard it needed to do more to boost the economy.

(BEGIN VIDEO CLIP)

SAHAR NASR, MINISTRY OF INTERNATIONAL COOPERATION: Obviously, you need more of institutional reforms and operationalize of the law, and that will

entail a lot of capacity building of civil service that (INAUDIBLE) but more important in automation of the system. For example the establishment

of a firm used to take a lengthy time and now you can do it online --

RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Right.

NASR: -- as it made that done in one year. And on touching upon the issue of anti-corruption measures, the government has loan (ph) a national

governance strategy that and take into account accountability, transparency and good governance and many anti-corruption measures.

QUEST: Is it your feeling that -- I mean the public perception of Egypt offers -- after the -- the troubles. Does the public perception investment

opportunities will consider to be lower. Are you feeling the tide has turned and that things are -- I mean the people are now looking, I mean

tourism obviously having problems in terms of terrorist activity. But isn't your general feeling tha the worst is over?

NASR: I feel we are definitely on track. I believe there is that major reform measures that have taken place not just improving the business

environment but also at the macroeconomic framework which is critical, which is also another prerequisite in terms of the fiscal (INAUDIBLE)

policy that has to be also in place.

(END VIDEO CLIP)

NEWTON: Now we some news to the CNN, something that were talking about earlier. The U.S. Federal Trade Commission has now clear Amazon's planned

acquisition of Whole Foods. Now, the FTC said it had looked into whether the deal would lessen competition and decided not to investigate further.

Now Amazon announced the $13.7 billion deal in June and that hurdle for a whole food in Amazon is now cleared.

Samsung's Galaxy Note 8 has arrived. You can buy until next month. But I've got my hands-on one now. I'm not sure I do want to touch it though.

We'll see, take a closer look at a premium cellphone, with a premium price tag.

(COMMERCIAL BREAK)

[16:52:21] NEWTON: Samsung has unveiled the phone it hopes that will make people about the Galaxy Note 7 disaster. Do we need to remind everybody

here, you know, the blowing off of the batteries.

The company holds out a Note 8 at an event just hours ago here New York. The phone has dual rear cameras and infinity screen, so again it's also

that means, Samsung has the battery underwent an additional phasing (ph) check, thank goodness, by a third party. The company lost more than $5

billion on recall that the Note 7 because of battery fires. We're going to play with this on.

Shelly Palmer is here, thankfully to help me. And look, unfortunately that jokes just go on and on right? I mean, the phone blew up. It's a

difficult thing to get over, Shelly.

SHELLY PALMER, CEO, THE PALMER GROUP: I think Samsung has done a really good job getting over that. They acknowledged that they have 8 point (ph)

battery safety check. They went over in line again, had U.L. create a special set (ph) of test for them. They have passed the test. You and I

know that if there is a problem, Samsung is going to have to deal with it. But so far, the loyal Note -- Samsung Note 7 fans are back for the Note 8.

I'm holding the Note 8 in my hand. It is super awesome. Infinity screen means that it is a huge --

NEWTON: OK.

PALMER: -- piece of glass. This is a 6.3-inch piece of glass. It's really quite spectacularly beautiful when you think about it. It's an

AMOLED screen. This is the Galaxy 8, the F8, so this is just -- this is a 6.3-inch screen. This is a 6.2-inch screen. Similarities of the phone and

there this of course for the Note lovers have the beloved S Pen, which allows you to do things like live messaging. Now, I'm just going to do

this real quick. If I don't know, can I hold this up, this way for you guys?

NEWTON: OK, yes.

PALMER: So now you can like write on the phone and it animates, which is kind of fun when you write it. Then when you are done with it, it becomes

-- it takes a second and becomes a sendable (ph) text message to anybody. You can annotate it of your Snapshot person is sort of all happening

immediately. This is of course one of the -- just one of a lot of things you can do with S Pen, you can use to, you write on their phone when it's

off.

One of the most fun things you can do with this phone, they've got a thing called App Pairing. So like if you want the calendar and the phone up at

the same time, I cannot make a phone call and I can check my calendar and I can see what happen in the calendar right now. So it's got real

capabilities that usable capabilities that you really going to enjoy.

The thing that they've done that -- that I think everyone is going to really like, is there are two lenses on this new camera. One is a

telephoto lens and one is a wide angle lens. And so that allows you this - - the bulk of the fact that you could do on the iPhone 7 plus which has two lenses as well.

[16:55:06] But it also allows you to measure stuff. So when -- and what I mean by that is because the camera itself. I think I'm going to try and

just take a picture of you if I can in live focus mode.

You are so spectacular. OK. So let's see if we can do this. Let me show this picture. We can adjust the background. Now, and I can turn -- make a

background blurry or less blurry. You see how about, I'm actually changing the blurry in the background.

NEWTON: Oh, wow.

PALMER: And after I taking the picture --

NEWTON: I see that what's happening in there.

PALMER: Yes, which is kind of slick. And then you have the option of course to say that picture and send it or you can just look at a normal

picture because it took both pictures at the same time. It took the white- angle picture, which gave it a depth and after the fact and or before, or you can just look at this, you know, spectacular --

NEWTON: OK.

PALMER: -- cool looking picture.

NEWTON: I only got about 20 seconds left. If you are having a Samsung, iPhone fight like my family, will this make any converts, do you think, is

it?

PALMER: As of today, if you're an Android person and you don't think this phone is amazing, and you haven't spend a lot of time with Android, when

the new iPhone comes out which we know nothing about, if you're an iPhone person, you're going to -- it's a religion, you're going to go there or we

going to have converts on the margin, this is an incredible phone. So we're going to see, Samsung has a real shot. They have made an incredible

business duel (ph) with this phone.

NEWTON: And yet, you did say -- just very quick, but there weren't many people of the event, not with the buzz round phone yet.

PALMER: No, there was pack (ph) today. I know the event was packed. This -- I think the buzz around this phone has been spectacular --

NEWTON: So you think they're going to some --

PALMER: Oh, no I think --

(CROSSTALK)

PALMER: I don't know. I think they are on to some -- and the phone animates it's just high.

NEWTON: Shelly, we love you, come on in time, where there was any new gadgets. That's Quest Means Business. I'm Paula Newton and I will see you

right back here, tomorrow.

(COMMERCIAL BREAK)

END