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Dow Suffers Triple-Digit Drop; Xi on the Rise as Trump Defend Party Unity; Black Passengers Warned About American Airlines; Kenya Prepares for New Presidential Election; Iconic Paul Newman Rolex Up for Auction;

Aired October 25, 2017 - 16:00   ET


[16:00:00] RICHARD QUEST, CNN HOST: Closing bell ringing on Wall Street. Dow Jones is off the lows of the session, but it's still down, So no

record, the same for the Nasdaq and the S&P 500. Overall, it was a grumbling day on Wall Street. And a nice firm gavel. Trading is over.

It's Wednesday. October the 25th.

Tonight, the Dow's record rally has run out of steam. As you can clearly see. While Donald Trump bickers, China's president reaches the peak of his

path. We compare the Donald with the Xi.

And a different kind of flight safety. Civil rights group now warning flying American Airlines.

I'm Richard Quest. Live in the world's financial capital, New York City. Where I mean business.

Good evening. Tonight, the Dow Jones has just closed. And suffering its first triple digit drop in more than a month. A cocktail of unsavory

earnings and worries over Washington have stopped the market rally in its tracks. At least for today. The Dow. The Nasdaq and the S&P are all off

by around half of one percent. Earlier at the stock exchange during "QUEST EXPRESS," Peter Tuchman told me the markets were having to deal with new

signs of dissent of Donald Trump's own party.


PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: We've often talked about the fact that what goes on in Washington doesn't really affect the

market that much. What's dragging the market down is something coming out of Washington. But not necessarily the sentiment. There is dissent

amongst the ranks. We're seeing that for the first time. Can have an effect on the administration. I don't know how much about the market.

Will it have some effect on whether tax reform gets passed? Perhaps. Healthcare off the table until next year, definitely affecting the market.


QUEST: So, let's begin with these losses on Wall Street. Paul La Monica has been tracking the numbers. You know, it's very tempting, and it's easy

to say after the run up in the prices of the indices. This is a breather. It's healthy. Its consolidation, whatever we want to say. What do you

make of today?

PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: I wouldn't be too nervous Just yet. It is Just one day of trading when you look at some of the individual

stocks in the Dow that slipped today. Let's look at Boeing for example.

QUEST: Boeing, which had numbers that weren't that bad.

LA MONICA: The numbers weren't that bad. But the expectations were probably unreasonably high. Because you're talking about a stock that's up

more than 70 percent this year. The best performer in the Dow. So, I think people really expected that company to go to the moon and maybe it

just went to the stratosphere instead. So, I think that was really the problem there. If you want to call it a problem.

Corporate earnings by and large still so far have been more good than bad. So, I know it's trite to say that, you know, maybe it's a bit of a

pullback. It's a healthy consolidation. But I think that's what it is. When you look at how well the market has done lately.

QUEST: But Cola of course, reported. Chipotle reported dreadfully.

LA MONICA: Yes. Chipotle is clearly a company that still is trying to figure out how it can regain customers' trust after the E. coli nightmare

from 2015. Sales growth is sluggish. They are not getting back many of the customers that used to be what they thought were loyal chipotle fans.

QUEST: They've had two food scares. Haven't they. Chipotle. And it's also the way you handle these things. They didn't handle it very well.

OK, so on the market today. We saw the VIX rise. Which is about 15 percent give or take on the market. And we saw a firming of the ten-year

bonds. The yield on the bond going over 2.4 percent. Now that I believe is significant. Because of the potential of the Fed.

LA MONICA: Yes. I think what we might be seeing possibly, the sign from the bond market is that they think the easy money party that we've had is

probably going to be over. Interest rates have already started to head up under Janet Yellen. Depending on who president Trump chooses to be the

next Fed chair in there are now growing indications it could be John Taylor. Who is considered to be more hawkish than a lot of the other

candidates out there.

QUEST: This follows on from a straw poll that the president held yesterday. Didn't he. When he was meeting with Republicans -- Republican

leaders. And put your hands up, and Taylor apparently won.

[16:05:00] LA MONICA: Right. So, if it is Taylor as Fed chair. I think Wall Street would be betting on more interest rate hikes as the economic

numbers justify higher interest rates. And if that's the case, may not necessarily be the end of this bull market. But it's the end of easy money

that's for sure.

QUEST: Paul La Monica, good to see you, sir, thank you.

LA MONICA: Thank you.

QUEST: Don't forget before the end of the week. We need to know how the Dow is doing, or the S&P overall in terms of earnings. Thank you, Paul.

It appears the presidents of the world's two largest economies are moving in very different directions. And we've had excellent evidence of this

this week. You've got the U.S. President mired in domestic disputes. But over in China. His counterpart is firmly in the ascendancy with an iron

grip. Xi Jinping has positioned himself to dominate Chinese politics for many years to come and beginning a second five term in office without any

apparent rivals or likely successors.

Remember, he's Just got his congress to agree with president Xi's thoughts on socialism and communism as part of the Communist Party Creed. So, Mr.

Xi is consolidating his personal power and China power in the world stage. And taking advantage of the opening left behind him. Compare the two men

on their policies.

First of all, Xi starts in politics in 1979. A regional governor, and worked his way up right the way through the party system. As many long-

standing friends and contacts from other regional governors that he's now put into power. Donald Trump comes into politics in 2015. And the

ascendancy goes up like a rocket.

Then you've got the question of economic policies. What some would call nationalism. President Bush calls NATO-ism. But the isolationist policies

of Donald Trump withdrawing from TPP, Paris, NAFTA renegotiation. Xi, on the other hand, is being praised for capitalism's globalization, the Paris

accord. Pushing the Chinese alternative for TPP. And don't forget the Belt Road Initiative which would pour tens of billions into infrastructure

for 30 or 60 odd countries.

And then the legislative agenda. For Donald Trump, it's results oriented measured in months. Longer-term for president Xi. Very much again, look

at the belt initiative. Max Baucus served as U.S. Ambassador to China. He told me when you compare these two men, you can see expediency is clearly

leading the way for Donald Trump.


MAX BAUCUS, FORMER U.S. AMBASSADOR TO CHINA: He is very smart. He knows where he's going. He's very deliberate. He a total opposite of Donald

Trump. Xi is very deliberate, systematic, rational. Whereas Trump just shoots from the hip. It is very irrational in many respects. That plays

into Xi's hands. And it enables he and other Chinese government to take Trump's measure and to frankly move ahead methodically, solidly, pursuing

their vision, economic, military, political. They're moving ahead.

We are in a very precarious position. We better get our act together as Americans. When we Americans under Donald Trump become more isolationists,

pull our horns in, and almost like hermits -- not quite that far -- but become isolationists. We are hurting ourselves. And Xi Jinping is



QUEST: Let's remember, Max Baucus was former ambassador to China and a very senior Senator. The two men could not be more different. David Rohde

is a CNN global affairs analyst and joins me now. If we Just take their grip on their own political parties and we see the fact that in Beijing of

the other members of the Politburo, there is no heir apparent. Because nobody's either young enough or has been selected at this stage.

DAVID ROHDE, CNN GLOBAL AFFAIRS ANALYST: Yes. It's clearly. You know, an unprecedented power. The highest concentration of power I think in China

in decades. But to be fair. It's unclear whether this will work in the long term for president Xi. You know, the tradition has been there has was

an heir apparent being groomed. And this is a sort of signal he's sending that he might want to stay in office beyond the traditional ten years. So,

there are different styles of Donald Trump, but President Xi is, you know, sort of authoritarian as well. And it's all behind the scenes. But, you

know, he's also trying to consolidate his own power. And I'm not sure in the long-term, beyond five years if this approach will work for President


QUEST: All right. But if we just take vision. Let's take the Belt Road Initiative of China. Which you'll be familiar with. This mammoth, multi-

country, billions of dollars, long-term vision. If I ask you. Sir. What's Donald Trump for the U.S. Equivalent of belt road. What's the

vision from the U.S.? Now I suppose the argument would go. If you make America great again everything else follows on from that. But there's no

great project.

[16:10:07] ROHDE: That's correct. Look, and you've got me here in terms of long-term policy, there's no question that President Xi has a much more

sophisticated and consistent long-term agenda. Whereas Trump is all over the place. It's about short-term wins. He very publicly tries to control

his party by publicly humiliating people. So, I would agree there. There's no question that China's long-term strategy for economic growth

internally for influence abroad is much clearer. And frankly, much more likely to succeed than the Trump administration strategy.

QUEST: We're going to be talking to Will Ripley in Pyongyang in just a moment on the question of the latest words coming out of North Korea. When

I listen to Jeff Flake yesterday, talking about other world leaders and their concern. From your experience with other world leaders, what are

they privately that you can tell us, saying about Donald Trump?

ROHDE: The don't take him seriously. He's not seen as rational. I Just met today with an American -- a seasoned American diplomat, who was just in

Iraq. He said that Iraqis were sort of paying no attention to Trump's speech where he, you know, called for Iran to stop exerting so much in Iraq

and across the Middle East. The United States isn't on the ground in Iraq. Trump sounds irrational. The Iranians are affective and patient and

playing a long-term game. Very similar to China. So, there is a steady drop in credibility, I think, for the Trump administration among leaders

around the world.

QUEST: And at what point does this hit economics? At what point does it become -- when I say the word "dangerous." Again. I'm using Senator

Flake's words last night. At what point does it become dangerous for the U.S. Economy?

ROHDE: So, there are many factors, you know, driving this bull market you've been talking about. But the drop today shows, a lot of I think is

built on expectations that the Republicans will be able to enact this tax cut. There was a lot of expectations about Obamacare. A general belief

that they could enact pro-business reforms. If this small number of moderate Senators breaks away from Trump and he is unable to enact tax

reform just as happened with Obamacare where he failed there. I think that will impact the markets. And, you know, the bull market has been Trump's

largest success, his biggest positive sort of calling card economically of his presidency. So, the stakes are very high. He's got to do a better

job. You know, compromising and working with his own party.

QUEST: Good to see you, sir. Thank you for taking time to talk to us tonight. I much appreciate it, thank you.

ROHDE: Thank you.

QUEST: Now President Trump needs Mr. Xi's cooperation to keep North Korea in line. And yet a senior North Korean official is telling CNN his

country's threat to test a nuclear weapon above ground should be taken literally. Which, of course, if that happens in the Pacific would injure

both countries. Ri Yong Pil spoke exclusively to CNN's Will Ripley, who is in Pyongyang for us tonight. Will, thank you for staying up late. It's

quarter to 5:00 in the morning for you there. So, we're all grateful for that.

But I guess you have to stay up late in the middle of the night when one of the leading officials in North Korea has basically said, yep, we may well

set of a hydrogen bomb in the Pacific above ground.

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: I'll be very frank with you, Richard, I've lost a lot of sleep about this. Because the sense that I've

been getting from North Korean officials for the last several weeks is it's increasingly likely that this above-ground hydrogen bomb or some kind of

nuclear detonation is going to happen. And the reason why -- I'm been telling you that is because the North Koreans after President Trump's

speech at the United Nations where he said he would totally destroy North Korea. Where he insulted their supreme leader, Kim Jong-un. Giving him

the nickname "rocket man." And then, of course, later after meeting with his generals talked about the calm before the storm.

The North Korean decided at that point they're not going to be talking with the United States. All diplomatic communications have broken down and they

fell they need to send a clear message to the U.S. And this kind of nuclear test they believe would do that. Of course. the real fear -- and I've

been speaking to a lot of officials on the U.S. side about this, Richard. Is that could really escalate the situation and cause a series of events.

A chain reaction that could put this region in the midst of a real military conflict, which has the potential to be catastrophic.

QUEST: Right, but I read what is part of the article of your interview with this official. And what he says is, the foreign minister knows the

thinking of the supreme leader. And so -- well, you finish the quote for me. You did the interview. Basically, the foreign minister believes that

the supreme leader intends to do it.

[16:15:00] RIPLEY: The foreign minister is a full voting member of the Politburo, which is North Korea's highest decision body. And it was a

Politburo that met and decided to gather, of course, the final decision was Kim Jong-un's. But the Politburo decided to conduct North Korea's most

powerful nuclear test recently. And this is also the group of people who have encouraged the launching of missiles over Japan.

QUEST: I don't want to seem indecent in this question. But what's the time scale on all of this?

RIPLEY: We don't know. It's been more than a month since North Korea has launched a missile. There have been U.S. Military drills, naval drills,

that wrapped up last week. There were evacuation drills in South Korea happening this week. And it's been pretty silent from North Korea in terms

of any physical action. There's been a lot of rhetoric. And it's really anyone's guess. But we do know this, Richard, President Trump is coming

here to Asia very soon. Early next month. He'll be making a number of stops, including in South Korea.

So, could that be the time that North Korea tries something? We never know with them. We don't know timing. We know they like to be unpredictable.

But it does seem that sooner rather than later there will be some sort of provocative action from the north. And the big unknown is how the U.S.

President is going to respond.

QUEST: Will Ripley, I'm afraid since it's coming into the evening hours over in the United States. We haven't got much sleep. But thank you,

Will, for joining us from Pyongyang.

QUEST MEANS BUSINESS coming to you tonight live from the world's financial capital. We'll have more after the break.


QUEST: The chief executive of American airlines has told his staff the company is disappointed after a civil rights group warned black people they

might suffer discrimination if they fly with American. The National Association for the Advancement of Colored People, the NAACP, has said

there was a pattern of disturbing incidents. And it noted four specific cases. Including the black passenger removed from a flight for petty

reasons. A black woman who was separated from her white partner and made to travel in coach despite both of them having first-class tickets. CNN

was unable to verify the claims. And American Airlines not commented on the specific allegations.

Rene Marsh is our aviation and government affairs correspondent, joins me from Washington. This is -- we have never really seen anything like this

before. So, we're in unchartered territories. But these are very -- this is a very serious move by a respected organization against the largest

airline in the world.

RENE MARSH, CNN AVIATION AND GOVERNMENT AFFAIRS CORRESPONDENT: Yes. It's not an under -- you're not overestimating it by saying that this is truly

an extraordinary move. I mean, the language used in this travel advisory that the NAACP put out is truly very strong language. I want to read Just

a portion of it for you. Richard. It says.

[16:20:00] The NAACP for several months now has been monitoring a pattern of disturbing incidents reported by African-American passengers. They go

on to say. In light of these confrontations, we have today taken the action of issuing a national advisory alerting travelers, especially

African-Americans, to exercise caution in booking and boarding flights on American Airlines that could subject them to disrespectful, discriminatory

and unsafe conditions.

I mean, very, very strong language. We do know that the CEO of American Airlines put out a memo to his staff. Essentially saying that

discrimination will not be acceptable. And also saying that the airline does plan to meet with the NAACP at the NAACP's request.

QUEST: Right. So -- but the thing I find puzzling about this, Rene, is that American Airlines -- since it merged with US Airways, is the largest

airline in the world. But when you talk about discrimination or racial discrimination, you're talking about tens of thousands of employees in hubs

from Dallas to Chicago to New York out to the West Coast. So, to make this accusation of almost institutionalized racism, it seems a long stretch. If

I may.

MARSH: Like I said, this is extraordinary. The language is very strong, and it is quite the allegation. You know, I was just talking with Cornell

Brooks, former head of the NAACP. And he led me to believe that he thought that perhaps the four incidents that the NAACP laid out may not be the only

incidents that they have. But the bottom line is that if you are going to make this sort of accusation, you really do have to have the facts to back

it up. But the one thing that he said that he was heartened by was the fact that the CEO of American has said that he will meet with the

organization and perhaps they can all get on the same page here and work this all out.

QUEST: I mean. I don't know -- I'm sure Doug Parker, who is the CEO, must have been absolutely gob smacked and floored when he heard this. But I

would wonder. OK, Rene, good to see you. Thank you.

MARSH: Good to see you.

QUEST: Twitter says it will label all political advertising it serves up and make its platform more transparent. Sort of two tech firms now being

asked questions about suspected Russian attempts to influence voting in the U.K.'s Brexit referendum. So Julian King is with me. The European

Commissioner of Responsibility for the security union. Good to see you, sir.


QUEST: Did Americans say interference by Russia. The Brits are asking questions about the referendum. And the U.K. election, whether there was

interference. What do you think? Have the Russians been up to no good?

KING: Well, eight-member states have just written to the commission, saying that they think the Russians have been waging propaganda exercises

across their countries. And I think that we have to take that seriously. Within the commission we have a unit that is there to debunk Russian

stories across the European Union. So, we have a problem with the use of online means to sometimes seek to influence politics. And we have to be

open about that. Because the first defense is raising awareness.

QUEST: Right. But the difficulty, I think, that at an EU level you have is so much of it is national. Of course, attacking national government or

national politics or a national election. And at the same time, you don't yet have the full digital single market.

KING: No, you're absolutely right. We do need --

QUEST: You'll fight with respect, commissioner. You're fighting this with one hand behind your back.

KING: Yes. But it's only one hand behind our back. And eventually will get both hands free. So, we have a problem in completing the digital

single market. One part of making sure the digital single market is fully exploited is recognizing that we have some cybersecurity issues. So, we

have just brought forward a big package of measures that are designed to offer citizens reassurance about increasing their cybersecurity. By

building resilience, by building deterrents to try and deter people from using a cyber as a means to attack us, and actually, having an

international cooperation and defense element to it. So, we are taking these issues seriously.

QUEST: Obviously with Brexit. One of the issues is the U.K.'s relationship with the rest of the EU. On these issues of cybersecurity --

now we've heard very well-meaning words. But also heard the British Prime Minister did suggest in that very first speech in the Lancaster House

speech. She did suggest that security was going to be something that would have to be looked at.

KING: Well, I think that was misinterpreted, if I may say so. Because both sides --

QUEST: It was pretty clear, commissioner.

[16:25:01] KING: -- both sides have now said very clearly and unambiguously, that is the U.K. government and the EU-27, the cooperation

on security is unconditional. So, it's not something -- like some of the other elements in this negotiation that might be haggled over. It's

something where there is a strong shared interest. And we need to find ways of continuing cooperation. Including after the U.K. leaves. Now. On

cybersecurity, the U.K. have got certain expertise. They are leaning in and sharing that expertise. I actually was invited by the National

Cybersecurity Center in London to a meeting they organized on Monday of this week, where most of the other members of the EU came to talk about

election security.

QUEST: You're going to be the last U.K. commissioner, for all intents and purposes, aren't you?

KING: I think I went into this job thinking I would be the last British commissioner. Not the last commissioner for the Security Union. These

security issues need to be --

QUEST: So, you'll be turning the lights off on the way out.

KING: I'll be taking my cardboard box with me on the 29th of March 2019. But work on these issues will continue.

QUEST: Good to see you. Thank you very much indeed.

QUEST MEANS BUSINESS tonight as we continue, Kenya is preparing for its second presidential election of the year. After an outcry that the first

was rigged. Will be joined by the chief executive of Kenya Airways. He's live in the C-suite, coming up.


QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment, when I'll be joined by the chief executive of Kenya Airways

on the eve of the countries controversial elections. And I'll get my hands-on Paul Newman's iconic Rolex Daytona watch. Which could become the

world's most expensive wristwatch ever. If they let me touch it. And assuming all goes well.

But of course, this is CNN. And on this network the news always comes first.

Protesters have turned out in several cities in Kenya. A day before Thursday's election. During one opposition demonstration, three people

were shot and are said to be recovering. Kenyan President Uhuru Kenyatta is calling for calm and for voters to act peacefully during the

presidential vote.

Brazil's president Michel Temer has been admitted to hospital. According to a statement from his office, he felt a discomfort on Wednesday morning.

He was diagnosed by the in-house doctor with an urological obstruction and went to the army hospital for treatment. No immediate word on the

president's condition.

Donald Trump is comparing an Obama-era uranium deal to the Watergate scandal. The deal gave a Russian company approval to buy a Canadian firm

that owned some 20 percent of U.S. uranium supplies. House Republicans announced a probe into the transactions. Amongst other things, they want

to know if it was fully investigated by the FBI.

[16:30:00] Kenya's president is calling for calm ahead of a disputed presidential election that takes place on Thursday. The first ballot in

August was declared void after claims of irregularities in the voting process. The leader of the opposition Raila Odinga who lost the August

election is refusing to take part in tomorrow's rerun. Instead. He's calling for a national resistance movement. And says the restaged election

is a sham.

Let's talk about all of this. Or at least some of it. With Sebastian Mikosz, the CEO of

Kenya Airways, former CEO of Lott.

I bet when you went there. You didn't quite realize you were going to be walking into this political morass that is in Kenya.

SEBASTIAN MIKOSZ, CEO, KENYA AIRWAYS: I would call it a difficult exercise of democracy. It's true that the first elections were cancelled. And even

though I was there when the election happened, and I found that they were very well-organized and. Of course. There was some turbulence. But.

Quite frankly. Kenyans voted massively.

I found that the exercise was well-done. Of course. The fact that they were cancelled by the court created a natural tension. Because now we have

to repeat these elections and it's going to be tomorrow. And calm remains the biggest issue. How to conduct the second exercise again without --

without creating too many disturbances in the country.

QUEST: It's very difficult. You've got the opposition who is not taking part. You've got the supreme court justices who didn't turn up. You've

got -- I mean. In this scenario. Do you not see instability -- take for example, your company? You're running an airline in a country that's

engaged in political turmoil.

MIKOSZ: I mean. It's -- it's a period to live through. I think that it's -- OK. It's -- I would prefer that the first election would be validated.

And then we would be over this today. So, it's true that from a business perspective. It's better to have stability for the next five years. A

government in place, a president in place. So. Yes. I'm not a fan of the situation where we repeat it. But I believe that if this is the way to go

through a democratic process. And if it gives this time the certainty that these elections are done well. And we can go forward. Let's be it.

QUEST: How much support is the airline getting from the current government in terms of the debt restructuring that has to take place with Kenya

Airways? There have been reports that basically you're out of money. The wry smile tells me you saw the report that says your planes are going to be

repossessed. You're out of money and you will have to stop flying.

MIKOSZ: No. We are an airline that goes through a very difficult financial time. But the good news is that the deal on restructuring is

almost signed. And the Kenyan press has written quite broadly about it. And it's true. So, I can confirm that we are really heading to a big

financial restructuring. And to answer your question, Richard. The Kenyan government was of very high support. The Kenyan government, the Kenyan

parliament has issued a significant -- more than 700 million guarantee for the


QUEST: Just -- you're here. Obviously. To assist in sort of flying to the United States. Amongst other reasons. Are you worried that the

turmoil in Kenya could jeopardize your ability to get FAA and all of the necessary approvals to fly to the United States?

MIKOSZ: I am not worried at this stage. Because elections are tomorrow. So, for the moment. We have no reason -- no reason to believe that there

will be -- there will be any negative impact. Of course. Everybody expects that some violence may occur. This is why the president is calling

for calm. Even the opposition is now calling for calm.

And everybody tries to have this exercise conducted peacefully. Me, as a CEO of Kenya Airways I can only repeat that the best way for us to move

forward is to be calm.

QUEST: Right. But let's just take the African aviation situation. It's pretty awful. You would have to agree. In terms of South African Airways,

a basket case that probably should have been allowed to have been restructured on commercial grounds. If you look to the east or to the

west. Airlines are either government-supported or lossmaking -- and the few low-cost carriers that exist are having difficulty.

[16:35:00] They shouldn't be, because they could be the fastest-growing aviation market in the world.

MIKOSZ: First of all. I think as a CEO of an airline. I should not comment on what my competition is doing. And you see I see rather the good

part of what my competition is doing. So, I see a competitor like Ethiopian. Very respectable. Big airline. Which has a lot. I see Wonder

in the area who is growing very fast.

I see gulf carriers coming. Of course, all of us has our own challenges. But for me there are serious competitors. And I will not comment on what

they should restructure or not. But I can tell you they fly.

QUEST: They fly some at a loss, we believe that.

Let's talk finally about you came in and I think I'm being fair when I say you have shaken things up. You have moved people in and you have moved

people out. And how long do you think it's going to take you to get a full turn-around of the airline? Do you think?

MIKOSZ: That's another -- I can escape this question -- I would like to escape this question because a turnaround of an airline is never finished.

QUEST: You know what I mean.

MIKOSZ: I think that we need to deliver the budget and business plan presented to banks. That's my top priority. I would say that turning an

airline like this is 12 to 18 months. That's what -- where you should see tangible results. Of course. There are areas in which you will see the

results quicker. Other ones when we will wait. Just because of the length of the contract. But it's true that the airline needs a shakeup and we are

doing this.

QUEST: Good to see you. Sebastian. 12 to 18 months I think you just nailed it to thank you.

As we continue. Now Amazon. It's already delivering to you. But now Amazon wants to get inside your house and deliver little boxes when you are

not even there. Final paper. The practice.


QUEST: Welcome back. Amazon's relentless quest for global domination will extend to our hallways. His new scheme can bring parcels right into your

home while you're not there if that's what you want. You'll need an Amazon camera inside. And a smart lock on the front door. That allows the

delivery carrier in and they can even be programmed for your friends or even the dog-walker.

Clare Sebastian is with me to explain this. So, Amazon sends you the camera in the smart lock.

CLARE SEBASTIAN, CNN MONEY SENIOR CORRESPONDENT: Right. You have to pay for those. Obviously, it's about $250.

QUEST: Right. How does it work?

[16:40:00] SEBASTIAN: Well. So, you have the camera. And which is their new Amazon cloud camera. Which is a brand-new device they have unveiled

today. That's a connected device. So, there is an app on your phone where you can look at the output from that.

So, the idea is that you position that. Facing your front door. When the delivery driver arrives. They scan the package and Amazon verifies who

they are. You can see everything on your camera. And then once they're verified. The smart lock unclicks.

QUEST: Amazon lets the person in.

SEBASTIAN: Right. Exactly. And that you can also get for guests or things like that.

QUEST: Right. You want. But you can let in guests.

SEBASTIAN: Would it be Amazon letting them in or you let them in?

QUEST: There's a notification on your phone so you can block it in if you don't want them to come in. But ultimately. Amazon verifies if it's a

delivery driver or someone through Amazon home services. Another division of the business. Dog-walkers. Cleaners. Things like that.

They can verify who it is and let them in through your door. And you can watch everything on your phone.

QUEST: OK. I can think of -- I'm sort of a bit gob smacked here. Because where do we start with the issues? They let the wrong person IN.


QUEST: The delivery person doesn't -- or the dog-walker doesn't close the door behind them when they leave. The thing gets hacked. The thing

doesn't work. The thing malfunctions.

SEBASTIAN: So, I think there's physical things that can go wrong and then there's kind of virtual things that can go wrong as well. On the physical

side. Obviously. There is human error. As you say. The delivery person could forget to shut the door. The dog could run out when they're

delivering the parcel. Amazon does advise you not to have a pet that can reach the door if you are going to use this service.

But on the virtual side. As well. There are concerns. This is a connected device. We're talking about internet of things. Richard. This

time last year we were talking about a worldwide hack that was executed through malware on connected devices. So clearly there are concerns about

this. So clearly. Amazon has done a lot of technology before. This is in a family of hardware devices and they are designed to be secure.

QUEST: And with this. I think the key thing. Clare. Is this. I'm sitting here raising objections and obstacles and suggests how it might not

work and all of the things that could go wrong with it. But Amazon's cleverer than me. Amazon knows what I might do and wants before I even

know it myself.

SEBASTIAN: And if you think about it. The one thing about having something delivered by Amazon that is inconvenient at the moment is the

fact that you might not be there when it is delivered. And this cracks that. You don't have to go to the post office to pick up your parcel. You

don't have to worry about it getting rained on or getting stolen. This puts it in your house.

And I think what Amazon has learned from experience is that convenience matters above all else. Convenience makes you less price-sensitive, less

likely to go to the competition. So, this is what they're really doing with this they're locking you in. It is available for prime members only.

So, it attracts people to that even more. It's compatible with Alexa. It's all in the Amazon world garden. It is a very smart move for them.

QUEST: And as we know. Those people who have Amazon Prime use Amazon something like 60 percent more of the time. By the way. One statistic I

heard yesterday. Amazon has apparently 42 percent of e-commerce traffic. I didn't know that.

SEBASTIAN: I am surprised it is that Little. Half of American households have Prime members. So, they really are gaining. We'll get earnings out

tomorrow and find out a little bit more about the business than.

QUEST: Thank you.

A close friend of Donald Trump's says the Saudi Arabia's Crown Prince has taken the right approach to reforming the economy. Tom Barrack, chief

executive of Colony Capital is in Riyadh for an investment forum. The Davos in the Desert. We asked if he thought the crown prince's plans were



TOM BARRACK, CEO, COLONY CAPITAL: I mean. His approach is exactly the right approach. You have a fossil fuel-based economy with 30 million

population. Half of which is below the age of 16. The revenues of the fossil fuels are depleting. The use is diminishing. The population is

increasing and the needs for health care, education and a workforce are increasing.

He only has one option. And that option is to diversify to an economic model that's more global and diverse while he has the revenues to support

that. And that takes bold action. Doing it inside of a conservative Islamic base takes even more courage. And I think what you have seen here

in the last few days is a real commitment. A good Islam a tolerant Islam. To say we're moderate. We're going to create an environment for the west

that will be transparent. That will be secure. That will be stable and understandable.

And we're going to create those ecosystems for the next 30 years which is primarily tech.

JOHN DEFTERIOS, CNN MONEY EMERGING MARKETS EDITOR: He says that he wants to root out radical Islam, eradicate it, what's the connection to foreign

direct investment in a conservative society for a businessman like you? Does it give you comfort that he's actually going to be aggressive on that

front? While opening up at the same time?

[16:45:00] BARRACK: Yes. It's a necessity. Right? Because in evaluating risk. The geopolitical risk is one type of risk. A civil disorder is

something that any CEO or anybody managing risk just does not want to wander into. So, I think this idea that was really proffered between the

Crown Prince Mohammed bin Zaid in Abu Dhabi and the president -- let's think back nine months ago. We had an Islamic ban. Today we're in a

palace with 3,000 of the most famous CEOs and financiers in the world hosted in Riyadh in an Islamic environment in which everybody is finding

peace in a kind of Tolerance. It could only be done with a bold action. Which this crown

prince has demonstrated.


QUEST: The Saudi plan to build a new mega city was one of the most eye- catching announcements in Riyadh.

The plan calls for technology to produce food in the middle of the desert for millions of future residents. Appropriately. In this week's

"Traders." We meet the Russian entrepreneur who is using the latest food science to keep her customers fit.


(UNIDENTIFIED MALE): Commuting by car traditionally requires a pit stop. A chance to fill up on fuel and a tempting snack opportunity. Such impulse

buys are worth $500 billion a year worldwide.

ELENA SHIFRINA, FOUNDER, BIOFOOD LABS: The journey of this bar to a store shelf in Abu Dhabi starts in Russia.

Initially. I wanted bite to be like supporting tool for the healthy lifestyle for people.

(UNIDENTIFIED MALE): Since 2011. Ellen's company has seen dynamic growth.

The award-winning enterprise manufactures vegan snacks from its Moscow factory to export worldwide. The former model traded the cat walk for an

MBA. Graduating from business school and Boston's MIT.

SHIFRINA: The long road begins with the first step. Our main goal is to be number one in Russia and former Soviet Union. It is very expensive for

Russian people to buy healthy products from overseas. And having production here will make healthy products accessible to them. We want to

sustain the success. Because market is growing really rapidly.

(UNIDENTIFIED MALE): The trade-enomics of healthy snack foods are flourishing with the global market Jumping up to $30 billion by 2025. All

demographics from baby boomers to generation z are willing to pay more for healthy foods. Busy people show a preference for food with energy-boosting

benefits to get them through the day.

With growing numbers of people conscious of excess sugar and salt. As well as the contours of their waist lines. The healthy eating trend will

continue to reshape the food sector.

SHIFRINA: We started to invest in our direct communication with the consumer. And now around 30 percent of our sales come directly from

consumers. We work with the bloggers. They do give us the maximum response in terms of increase of the customers base.

(UNIDENTIFIED MALE): These guilt-free snacks tap into the clean-living boon and enable the initial investment to grow into a $30 million company.

SHIFRINA: Since the time that I was a model. I needed to be really conscious of what I ate. That's why it was important to me to sense this

movement. Not from being thin and counting the calories. But from being healthy.


QUEST: Food for thought. Now some more food for thought. For any watch collectors brace yourselves, if you like watches, look at this, they may

let me touch it. It's Paul Newman's very own Daytona Rolex, which is going under auction here. We'll talk about it and how much it might sell for

after the break.


QUEST: Look at this. The Daytona Rolex. It's synonymous with the enthusiast. Paul Newman. There he is. Wearing it. And watch collectors

call it the Paul Newman Daytona. Now imagine bidding for the star's very own Newman Daytona. A piece of chronological history.

Newman's wife. Joanne Woodward, bought him the Rolex as a gift during the filming of the 1969 movie, "Winning." The auction house, Phillips, is

selling the iconic watch tomorrow here in New York. And it has a guide price of more than $1 million. And it is here on QUEST MEANS BUSINESS


Paul Butros is the head of America's at Philips watches. Good to see you. Sir. Pleasure to meet you. Sir. Now. Here it is. Tell me why it's so

special. I mean. I know people get extremely excited by watches. I'm not one of those people.


QUEST: I bet you are. But what is it about this one that is so special?

BUTROS: This is the ultimate Rolex Daytona. Not only the ultimate Rolex Daytona it is perhaps the ultimate collector's wristwatch. Legendary.

Important in so many ways.

QUEST: What makes it this? Besides the fact it was -- Newman's. If it wasn't Newman's. Would it still command a large price?

BUTROS: Because of the association of Paul Newman to this style of watch. In the world of collectible watches. The number one most sought off

collector's watch are Daytona's with Paul Newman style dials.

QUEST: Why. Explain this to me. You're an expert.

BUTROS: Yes. It's a fascinating story. In the mid-1980s. Wristwatch collecting had only just recently begun and in that time the Daytona was

the worst-selling model in Rolex's product lineup.

Then there was rumors that Rolex would discontinue this model. And introduce a new generation model with a self-winding movement.

When those rumors began to swirl. The collecting community also associated the name Paul Newman to this style of dial because he was seen in pictures

all around the world.

QUEST: So, in terms of -- because we're a business program -- I mean. People say watches are an investment. Or can be an investment. Do you

subscribe to that?

BUTROS: We believe watches have enduring value.

QUEST: That's a posh word.

BUTROS: Yes. They are a wonderful store of value. And. Yes. For the Paul Newman Daytona type dials. It's incredible to see, how they have gone

up in value over the years.

QUEST: Now. OK. The most expensive watch ever sold at auction was?

BUTROS: In November 2016. Phillips had the great good fortune of selling a Patek Philippe referenced 1518 in stainless million perpetual calendar

chronographs for $11 million.

QUEST: So, $11 million is the top at auction.

BUTROS: A collector's wristwatch.

QUEST: Collector's wristwatch. That is not bedecked in jewels.

BUTROS: Exactly.

QUEST: You can always make it more valuable with diamonds.

BUTROS: Sold at auction.

[16:55:00] QUEST: You are saying a million is the estimate.

But you don t believe it will go there. You believe it will go much further north than that.

BUTROS: I will tell you we have already received advance bids.

QUEST: More than $1 million?

BUTROS: In excess of $1 million.

QUEST: Right. So, we're over the estimate. Which is always a work of fiction to begin with at any auction house.

BUTROS: Not always. You never know at auction.

QUEST: Humor me. Look at that magnificent picture. Humor me. And some great pictures in the catalog.

Is it possible that this could set the new record?

BUTROS: Well. We believe it could potentially set a record of some type. But we're cautious. And anyone has an opportunity to win it. Because you

never know what could happen at auction.

QUEST: I am not going to put it on. Don't worry.

BUTROS: You are welcome to try it on. That's the fun of collecting watches. Is wearing them and with great pleasure we will put it on your


QUEST: Great pleasure to say look at the time, it seems to have stopped. We will have a Profitable Moment after the break.


QUEST: As I've already admitted. I'm not a watch fanatic. But I like a time piece and understand the significance of it. So, I've got my watch

with two-time zones on it. For a family event. I wear my late father's watch. I wear the watch for social occasions and the like.

One of the reasons I don't want the Apple watch. I do believe a watch has to be more than just a function of telling the time. It has a story about

it. It's part of you. It is a bit of jewelry if you like.

And that's why I do take with interest, hey. I'm going home tonight and thinking. I've worn a watch that might be worth many millions of dollars.

That will help me sleep. And that's QUEST MEANS BUSINESS tonight. I'll take the catalog to bed. Whatever you're up to in the hours ahead, I hope

it's profitable.