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QUEST MEANS BUSINESS
Trump Under Pressure Amid Racism Row; Facebook Shares Slide After News Feed Tweak; U.S. Companies Apologize for Angering China; T. Boone Pickens Calls Time on Legendary Career; Right Name, Wrong Book Becomes Surprise Best Seller. Aired 4-5p ET
Aired January 12, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: Closing bell ringing on Wall Street. Dow Jones at a record high. S&P and Nasdaq and the FTSE, very strong day
for stocks, right across the board. We'll be getting to the analysis on what this means. 25,800 on the Dow, and, oh -- oh. Well, we don't see
that very often. He started, he finishes, and both of them were fairly wimpy. But it is over, the trading day, Friday, the 12th of January.
Tonight, throughout this program you're going to hear words matter. Donald Trump's crude words over shadow another day of market records.
Facebook wants you to see more words on your news feed. The shares are down almost 5 percent. And choose your words carefully with China.
Western companies are apologizing after angering Beijing.
I'm Richard Quest with a full suite of words, live in the world's financial capital, New York, where I mean business.
Good evening. It gives us no pleasure this evening to start showing you the extraordinary day and events, a day when events seem so surreal that
the language of these two screens speaks for themselves.
On Wall Street, the markets continue their imperious rise to new records, and they do so whilst at the same time in Washington in the geopolitical
sphere, in the environment of politics, this word, which I'm not going to repeat, there's no reason for me to go down into the gutter. This word has
been dictating the day's agenda. Now you can call it un-presidential or offensive. You can call it racist of the events. But when the president
of the United States uses words like these, the rest of the world can't ignore it.
And yet today, that seems to be exactly what the markets have done. The dislocation between this and this is what we're going to be looking at
tonight. We'll have more on the president's comments in just a moment. But we will go to our normal business agenda, and try to make sense of how
these things have collided throughout the course of the day.
We start in the trading post. Records on the Dow. Records on the S&P. Records on the Nasdaq. Let's have a nice green, please, to show you,
25,800. Now, the Dow's third triple-digit gain this week. OK, all right, I know 100 points isn't what it used to be. But let's just stay even in
percentage terms, and the Dow is up 1,000 points or 4 percent so far, this year. Almost all sectors. Industrials, financials, energy shares.
They're among the best gainers.
So, allow me to do my duty and just update the charts. And you'll see, of course, the question constantly is being asked, just how much longer can
this go on? Well, that's an answer we haven't really got for you. The London FTSE also rose to a record. They're shrugging off any issues about
Brexit. And that shows you the overarching mood in the markets at the moment.
CNN's fear and greed index has now moved back towards 80, where now it's extreme greed levels. Let's talk to Art Hogan in Boston, the chief market
strategist for B. Riley FBR, who joins me. How do we make sense of the day's events, the market rallies strongly, Washington paralyzed over
vulgarity, help me understand these forces?
ARTHUR R. HOGAN III, CHIEF MARKET STRATEGIST, B. RILEY FBR: Yes, Richard. That's been a dichotomy we've had to live with I would say post-election,
right? For all of 2017. There was one event after another in Washington that ran counterintuitive to what the market is doing. And I think the
simple answer is the market is running on fundamentals. Unless and until something happens, whether it's, you know, provoking North Korea or
speaking ill of other countries or, you know, the events that are unfolding today. Until that turns economic, until that turns into an economic or
military event, the market is going to focus on fundamentals. And while it's focusing on fundamentals, what we're seeing is better earnings, better
economic growth and people who don't want to miss out on a rally.
[16:05:07] QUEST: OK. So those fundamentals -- I saw that -- I think it was the Atlanta Fed today upgraded its forecast of economic growth. So,
3.3, 3.4 percent, so there was clearly strong economics beneath all of this. We got JPMorgan results, which were interesting. What's your
feeling for this earnings season?
HOGAN: Well, I'll tell you this. JPMorgan is a great example for the financials. Their fourth quarter was not great. But when they talked
about what the new tax code was going to mean for 2018 for them, that's where the rubber meets the road. So, they had a fourth quarter that was,
you know, more or less in line. They have taken a large write off for their repatriated earnings. But when they look at 2018, their effective
tax rate going from something in the low 30s to something in the mid-20s, and that's dropping down to the bottom line. And they're also talking
about upbeat expectation for the consumer.
QUEST: We've just been looking at the Dow 30. We'll look again. And Boeing. Just explain to me, please -- I mean, yes, it's had record orders.
Its backlog is 6,000 planes. But nothing seems to justify the tear that Boeing has been on in the first week of this year.
HOGAN: Yes, even if you go back to -- it's up about 100 points from the beginning of October, which is, you know, it looks like it's involved in
bitcoin or cybercurrency, and not in making airplanes. But the job of making airplanes, and if you back the lens up and looking at the
performance of Boeing over the last five years, it's really coming out of a base. The airline industry is robust. If you look at Delta's earnings
that came out yesterday, I think that's a reflection of what the airline industry is doing. So, Boeing is a reflection of this reflation trade.
Activity is picking up. Both tourist and business travel has picked up. And that's not just domestically, it's globally. So, when you look at what
Delta is saying, that's a pure reflection of why Boeing is doing better.
QUEST: All right, now, finally. It's a mugs game that we will not involve ourselves in to try and forecast when a correction takes place. That is
not an issue. But it is going to take place at some point.
HOGAN: Oh, absolutely. And there will be something, whether it's a government shutdown, whether it's -- you know, some of the geopolitical hot
spots that actually escalate into something more than that. Or if it's just the business cycle and finding out that some of the companies in the
S&P 500 don't earn as much as we think they're going to earn in the fourth quarter and give us lousy guidance heading into the first quarter. Any one
of these events in the near term can cause the market to roll over. Or if the fed surprises us and raises more aggressively than we think they're
going to. And I think any one of those things could cause some sort of a pullback in this market. We haven't seen that in quite some time.
QUEST: Art Hogan, great to have you on the program. Please do come back more to help us understand what's going on in the market. Thank you, sir.
Now to the other main theme that you saw me at the start of the program. President Trump's vile slur against immigrants has triggered outrage at
home and abroad. Democrats are now openly calling the U.S. president racist. Some Republicans have joined in the condemnation. U.S.
ambassadors in multiple countries have been hauled in to explain their president's comments. And the president pushed back at a tweet, saying he
did use tough language, but not the insulting term reported. The Democratic Senator, Dick Durbin, was in the meeting and says that's
absolutely not the case. He did use those words.
El Salvador has expressed a formal protest. The president in that country demanding respect for the dignity of his people. The Republican Speaker of
the House insisted immigration reform must get done, regardless. Paul Ryan called President Trump's comments unfortunate and unhelpful.
(BEGIN VIDEO CLIP)
REP. PAUL RYAN (R), U.S. HOUSE SPEAKER, WISCONSIN: I read those comments later last night. So, first thing that came to my mind was very
I see this as a thing to celebrate. And I think it's a big part of our strength. Whether you're coming from Haiti -- we've got great friends from
Africa in Janesville, who are doctors, who are just incredible citizens. And I just think it's important that we celebrate that.
(END VIDEO CLIP)
QUEST: Now, CNN is covering it from all sides with a depth of experience that only we can bring you. Kaitlin Collins is at the White House for us
tonight. Nima Elbagir is in Khartoum in Sudan We have a reporter in Sudan. Kaitlin, stay with me. I'm going to start in Sudan. Both personally and
professionally, Nima, your thoughts on the way the day has progressed.
NIMA ELBAGIR, CNN SENIOR INTERNATIONAL CORRESPONDENT: I don't think that anybody who looks like me is in any doubt whether on the continent or
beyond of what it is exactly President Trump thinks about us.
[16:10:00] And where President Trump puts us in the hierarchy of those that he would welcome into the United States. What's been really interesting to
see is the confidence of the rebuttal. Whether it's been from the African Union spokesperson who took Trump to task by saying that a country that
took Africans by force as slaves is in no position to come out with this kind of rhetoric. Or from actual everyday Africans online, who were angry,
but not surprised.
But also, whereas in the past I think people have seen America as being incredibly aspirational. As having that Hollywood luster. As being
somewhere, where if you spoke to most Africans, they would be keen to win the lottery and end up in the states. Increasingly, people view America
within the context of the archetype of our own leadership. They view President Trump as just another doddering leader who perhaps is outstaying
his welcome. And that's been interesting. And I would be really interested to see what impact that has long-term on American brands.
They're clearly not as popular as they once were in the continent, and they have definitely ceded ground to Chinese brands. People are more likely to
carry a Samsung than they are to carry an Apple phone. And I think a lot of that has to do with what we have seen coming out of the White House over
the last year -- Richard.
QUEST: So, let's go to the White House to Kaitlan Collins. We have a straight forward, he said/he said. He said he didn't say it. Others say
he did. And there's his bizarre suggestion that it was all done with a Machiavellian intent to play to the base -- Kaitlan.
KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: Well, yes, Richard. The president is kind of issuing this nondenial denial. He's saying that he
did use tough language during that immigration meeting with lawmakers right behind me here at the White House in the Oval Office. But he is saying he
did not use the derogatory language that was reported about Haiti, where he referenced why are there so many here, get them out, why do we need so many
However, he did not deny that he referred to countries in Africa, as quote, shithole countries. And he did not deny that he said the United States
needs to take people from countries like Norway during that discussion. And then the White House also last night after it was first reported in the
"Washington Post" and quickly confirmed by CNN and several other outlets, the White House did not deny that the president said this. Instead, they
offered a defense of his remarks saying, that the president puts America first, regarding that language, and what not. But they did not outright
deny this comment, and then to get pile on top of that. White House staffers that I spoke with last night were not pushing back on this
comment. Instead they were telling me the president was phoning his allies, his friends, to see how this comment was playing out in the media
last night. And one official described that as a victory lap to me -- Richard.
QUEST: Kaitlan, stay with me for one second. Nima, this is extraordinary, the three of us are even discussing this, and using language on television
that, you know, when we all started our careers, we would have been fired for. And yet there is no other way, Nima, other to bring this story up.
So, what do African countries do? On the one hand, they need the U.S. for economic support, for trade. On the other hand, they have populace that
will be rebelling against these comments.
ELBAGIR: Well, they do what President Omar al-Bashir of Sudan did when after lobbying for years for U.S. financial sanctions be lifted. He took
advantage of his first trip to go and visit Vladimir Putin in Russia. There are options now out there. And China has really created that
template for investment in Africa. And China has done it without asking any of those tricky questions about human rights abuses that, so many
African governments are uncomfortable with. That is not an ideal situation. This is what happens when the U.S. leaves a moral vacuum when
American values, international values, are put to one side. But this is unfortunately going to be the way ahead for so many leaders. As you said,
they can't go back to their people and say, put aside the racist rhetoric for a moment here. When they know they have alternatives.
QUEST: And Kaitlan, finally, to yourself at the White House. You know, I think I've asked you this on previous occasions with previous incidents.
So, forgive the repetition. But the real core is, the base will like it, but will this play in Peoria? Will there come a moment when hard-working,
ordinary Americans say, this is not what we want?
COLLINS: Well, Richard, we're going to have to see that. We'll likely see some results of that in the midterms. But for right now, the White House
feels confident this will not become a problem for them. And this typically would be a PR crisis and disaster for any other administration.
But the way that this administration is looking at it, and staffers who work inside this White House are not looking at it from that view.
[16:15:00] Instead they believe this is a comment that will actually resonate with the president's base, not alienate it. As you know, Richard,
much like those attacks on the NFL, those players who protest by kneeling during the national anthem. That is the feeling inside this White House
right now of how that's going to play out across America.
QUEST: Kaitlan in Washington, Nima in Khartoum, both of you, thank you.
As we continue, Donald Trump has given his reasons for cancelling a visit to London. He said in an early morning -- actually, it wasn't an early
morning tweet, it was an overnight tweet. The U.S. embassy is moving out of this famous building in Central London in Grosvenor Square, and
relocating across the city to a place called Nine Elms. The president described the deal as a bad deal and in an opinion piece for the "London
Evening Standard," the U.S. ambassador, Woody Johnson, said the new embassy is not just bigger, it is better.
Erin McLaughlin is outside the new embassy in Nine Elms. This is again bizarre, because you have Donald Trump tweeting it was a bad deal. It's in
a place that no one wants to be. And yet the ambassador himself praised exactly what they have done. The left and the right hand here.
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT: That's right, Richard. And it's worth pointing out that the U.S. ambassador to the U.K., Woody
Johnson, was, in fact, appointed by, of course, President Trump. He put out that statement, rather an op-ed, that appeared in the "London Evening
Standard," in which he was in the awkward position of having to defend the new embassy. And the embassy just tonight putting out a statement as well,
explaining why this move was made.
That the old building, located in Central London, was so old, that it would have required so much investment, that would need to be appropriated, that
they took the decision to sell that site. They also sold other sites, pooled the money, and without, according to the ambassador, any additional
expense to the U.S. taxpayer, constructed the embassy brand-new. The building you see behind me to the tune of $1.2 billion. So many people
here in the U.K. are saying that this wasn't about this deal. That this was, in fact, a about President Trump's popularity here in the U.K., or
lack thereof -- Richard.
QUEST: Again, just because the day got more bizarre, a wax work of Donald Trump at Madame Tussauds ended up outside the new embassy today.
MCLAUGHLIN: Yes. That's right. I mean, the way Londoners here approached this story was actually in some ways pretty funny. Madame Tussauds
wheeling out a wax work of there'll replica of President Trump here outside the embassy, construction workers still working on the new building. We're
taking selfies with it, as were people walking by. There is also a hash tag on Twitter, trending now. The hash tag, "I cancelled my trip to
London." So, that's just some ways that Londoners are dealing with this. But, you know, the response is in some ways have been funny, but it also
underlines a very serious problem, that President Trump has an issue when it comes to relating the British people. And that's simply not being
helped by late night tweets like the one we saw last night -- Richard.
QUEST: Erin in London, Friday night. Thank you for staying late in South London at Nine Elms, which is not in the middle of nowhere, by the way, and
property prices have risen sharply I can tell you as the result of that new embassy and the various new tube lines that have been put in.
Facebook is changing its all-important news feed as we continue the prospect of words. Mark Zuckerberg said users could end up spending less
time on the app. A key Facebook exec speaks exclusively to CNN and tells us why they're going ahead with the changes anyway.
[16:20:00] (COMMERCIAL BREAK)
QUEST: Facebook says it wants its $2 billion users to have meaningful interactions with the news feed on the site. And investors are having
meaningful and negative reactions and interpretations with Facebook shares. They were down as much as 5.5 percent, closing the day off 4.5 percent down
117.9. What does change mean on this news feed? Well, the idea is, less content from brands and less media content, as well. So, you won't see as
many adverts. You won't see as much gratuitous, sort of the media content. Instead, it will be more conversations. There will be more focusing on
starting discussions, consumer actively not passively being involved. And it will focus on friends and groups. Mark Zuckerberg says users will spend
less time on Facebook, and it says the change will promote well-being.
CNN's Laurie Segall spoke exclusively to the Facebook's vice president and its director of research. Facebook believes that with greater power comes
ADAM MOSSERI, VICE PRESIDENT OF NEWSFEED, FACEBOOK: So, the idea is to try and focus more on bringing people together by trying to put more emphasis
on facilitating more meaningful social interactions between people. And the way we do that in ranking is to value things like commenting or writing
a long comment more, and valuing things like how long we think you might watch a video for less. And so, as a result, the ecosystem will shift.
LAURIE SEGALL, CNN TECH, SENIOR CORRESPONDENT: Here on this campus, the tweak of an algorithm could impact over 2 billion people. That's a lot of
MOSSERI: It's a lot of responsibility. And it's something that we try to keep very top of mind any time we make any change, to ranking or the
design. Either big or small.
SEGALL: It's about meaning interaction, but if you read between the lines, will it deprioritize big publisher content?
MOSSERI: So, what it will do is I think shift publisher content from content that people consume passively to content people actually have
conversations about with their friends.
SEGALL: Sharing with their friends and family.
MOSSERI: The overall, because there is more content on Facebook from publishers that people just consume passively than actually talk about. It
will mean less publisher distribution overall.
DAVID GINSBERG, DIRECTOR OF RESEARCH, FACEBOOK: What we have learned from our research is that it's not as much about how much time you're spending
on Facebook or any other thing, it's about how you're spending that time. So, one way I think about this, I think kind of a useful analogy is like
going to a party. So, if you go to a party and you sit in the corner and don't really talk to anybody and you don't interact with anybody, it's
likely that's not going to be a particularly enjoyable or meaningful experience. And if you do that night after night, that's not going to make
you feel great. Whereas if you go to a party and you talk to people and interact and meet new people and get closer to people, you're going to more
likely walk out of that feeling better, and that's going to be a good experience.
SEGALL: What am I up against? Because I -- this is my dystopian view. I sometimes think that every product decision is coded for me to be
scrolling. Every design decision is coded by an engineer or showing me a certain color, a certain notification, that triggers something in my brain
that says click on it. So, do I have control?
GINSBERG: So, here's what I would say. I think at my time at Facebook, what I've seen and the products we build, they have been at the core from
the very beginning about bringing people together.
SEGALL: The change today is interesting, because it's about building more meaningful relationships. But it's also about seeing more of something
from your friends and family, which is also in your circle. So, as you are a researcher, do you worry we're going to continue building a larger filter
GINSBERG: Obviously, this is something we take pretty seriously and think a lot about. What's interesting is that the research shows is that
actually, because you have ties in your family and your friends who may not have the same political views as you, who may not have the same thoughts as
you, is that you tend to get exposed to a lot of different things that you might not otherwise.
SEGALL: Are you guys willing to sacrifice revenue for well-being of Facebook users?
MOSSERI: I don't think they have to be in conflict. I think that if we create an experience that's bad for people's well-being, that's going to be
bad for business over the long run.
[16:25:00] SEGALL: Could that lead to less daily active users?
MOSSERI: I think anything is always possible. In this case, we haven't seen that people come to Facebook less often. We do see that people spend
a little less time on Facebook. But we think that if we are creating an experience that people are finding meaningful that over the long run
they're going to use an experience with the platform more, that will be good both for people and for the business.
SEGALL: The larger issue is linked to the ad-driven model. Right. This idea that attention gets rewarded and not quality of information. I know
that's something you guys are thinking about, hence some of the changes that you guys are making today. Can you make meaningful changes without
shifting the advertising model that's so core to Facebook and its shareholders?
MOSSERI: I believe so. Because I believe there's lots of different reasons why people pay attention to anything. Media is no exception. You
might be attracted to a piece or story because it's sensational. Or because it's divisive in some way. But it might be just genuinely engaging
and interesting and meaningful in other ways. So, we try to focus on identifying those types of attention, that type of meaning, and nurturing
that as best we can.
Things like connecting with friends and family, but also things like informative content. And then for things like sensational content or click
bait or false news, we try to as best we can identify it and then remove from our platform. If you were just going to try and increase as much
attention as possible, it would be easier to be agnostic. But I don't think that would be responsible, given our place in the world.
SEGALL: You guys have fallen into some uncomfortable editorial questions in the last year, whether it's the weaponization of the platform or just
hate speech and all of these real philosophical, ethical questions that come with becoming a worldwide platform. So, is this trying to take a step
away from, you know, those uncomfortable editorial questions?
MOSSERI: I don't think there's any future in which we are not having difficult conversations about sticky issues. And so, I don't think --
SEGALL: Increasingly so, right?
MOSSERI: Yes, and that's because a lot of people use our platform every single day and it's an important part of the way people communicate and
consume information. And so, I think along with that comes a lot of attention and scrutiny. And this ranking change isn't going to change
QUEST: Facebook's shift comes at a time when the market is making a fundamental change in the way they view the companies. The MSCI
telecommunications services category right now looks like this. It contains companies like AT&T trying to buy -- of course, it's trying to buy
Time Warner, Verizon, and T-Mobile. Now you bring it all together, and you have something known as the communications services sector. And that adds
in Facebook, Alphabet and Netflix. Joining me now, Pete Pachal, is Mashable's tech editor. What do you make about this? Let's talk first
about the changes to the algorithm and how they are being maneuvered. And yet at the same time the share price falls sharply.
PETE PACHAL, TECH EDITOR, MASHABLE: Yes.
QUEST: If the news feed is more relevant, surely people stay longer.
PACHAL: Well, that is not yet to be proven. With previous tweaks to the algorithm have been a shot in the arm, this is major surgery. What they're
doing, they're sort of fundamentally revamping what gets prioritized and ranked in the news feed with completely different goals as before. So,
just like when someone gets surgery, you're going to be weaker for a while in the hope that, you know, in the end you get stronger and have more
ability. That's exactly what this is.
In the longer-term, it could be good for Facebook. We don't know yet. It could actually be good for publishers. It could be good for users. But
there is a big unknown here on whether or not the tweaks they make, the more meaningful interactions they designate are, in fact, better for
QUEST: And Mark Zuckerberg said, of course, his new year ambition was to make Facebook better.
PACHAL: Yes, Yes. Can finally do his job.
QUEST: I was just about to say. I mean, that's not a new year's resolution. That's your job. That's what you get paid for. But you see
the difficulty with that map I just showed you on that chart. The way in which you've got this confluence and convergence of these different
PACHAL: Yes. They're very much all getting into the same business. You see them with Verizon, and Yahoo, with AT&T. Over the op services like
DirecTV Now. You know, and Facebook, on the other hand, with their free basics, they're kilo-drone, which of course, is a more of a long-term
project. A lot of these infrastructure ideas they're doing, they're all kind of doing the same stuff with long-term goals to own sort of both the
pipes, to some extent, as well as the content on them. So, they're all really doing the same thing.
QUEST: OK. So, the jury -- well actually the jury is not out. Investors are out on Facebook. What's your feeling on this change?
PACHAL: My feeling on this change is that ultimately, it's bold. You know, they didn't have to do it. They're trying to fix a problem that
clearly exists. It's not just the fake news stuff, which they have taken steps to deal with. And frankly, might he have been a little bit
overblown. What it is, is that you go into Facebook, and there's a lot of passive scrolling. There is a lot of junk links. I myself made a new
year's resolution like many people to stop clicking on the junk links, because they are candy. They really aren't meaningful, and you feel bad
after you do it. And so, it's very good. But ultimately, spending less time on Facebook might not necessarily be good for Facebook. I just don't
see how that works. Even if those actions are a little more meaningful. It depends if you buy that argument.
QUEST: We'll find out. That's one of those things we will find out. Have a good weekend. Thank you, sir.
PACHAL: You too.
QUEST: Really appreciate it. Thank you.
China airlines, The China Post and China Steel. Now, all these are based in the same place, in Taiwan. To put it another way, in China. If you're
confused, after the break, the western companies have been learning a costly lesson in geography and politics. After the break.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. One of the world's most famous oil men is getting out of
the game, in we are going to explore the career of T. Boone Pickens and an obscure book seven-year-old book about world war II is selling out online.
And the title is the reason. It's called "Fire and Fury." I'll speak to the other author of the other "Fire and Fury." This is CNN. And on this
network, the facts always come first.
President Trump is threatening to withdraw from the Iran nuclear deal. On Friday, he avoided upending it by agreeing to waive key sanctions to keep
the U.S. in the nuclear agreement. Top U.S. officials say Mr. Trump will pressure European allies to agree on imposing new conditions on Iranian
The president's drawing international condemnation for his vulgar slur against immigrants. The U.N. Human Rights Office is calling it shocking,
shameful and racist. And several countries have summoned U.S. ambassadors in protest. The president says he used tough language on immigration, but
denies the actual words.
It took all night negotiations and Germany now has an agreement to start coalition talks towards a new government. Follows months of political
deadlock. It means chancellor Angela Merkel remains in power. Should Germany's two largest parties agree to cap number of refugees allowed to
enter the country.
Deadly demonstrations have given way to peaceful protests in Eastern Pakistan. The frustration, the fury surrounding the brutal rape and murder
of a 7-year-old girl remains. Authorities are still searching for Zainab's killers. 11 girls have been killed in addition to her. Police say they
have several suspects in custody, and a DNA match in the case of some.
[16:35:00] Facebook shares fell after the company's chief executive announced a change to see how users use information on their feed. Mark
Zuckerberg says you'll see more posts from friends and family members and groups over posts from publishers and brands.
Three international companies have earned a sharp rebuke in China after blundering into extremely sensitive territory. Delta Air Lines, clothing
giant Zara and Marriott hotels all ran afoul of the one China policy. They listed Taiwan, countries on their website. China considers these regions
as its own territory. The Chinese authorities slammed the companies, prompting this response from Delta. It was an inadvertent error with no
business or political intention, and we apologize for the mistake. Marriott's chief executive went even further. Denying the company was
trying to support an independent Taiwan or Tibet. Nothing could be further from the truth. We recognize the severity of the situation, and sincerely
apologize. Jamie Metzl is with me, senior fellow at the Atlantic Council think tank. I mean, groveling doesn't really describe it.
JAMIE METZL, SENIOR FELLOW, ATLANTIC COUNCIL: Somewhere between groveling and kowtowing. There is a long tradition of this. But these companies are
in a very weak position, because they are coming out of the United States, where the United States is weakened by all of the shenanigans coming out of
the White House and China is feeling very strong and very confident. They're making a very strong point through this.
Quest: Why -- you've sort of just said why now. Because -- obviously, these websites have had Taiwan as a country for some time. It doesn't just
happen in the last week and a half. It's been -- you know, it's not deliberate. The timing, is it just because the U.S. might be distracted?
METZL: That's one thing. It's not just distracted. It's weak. China has these knobs which they can turn for putting pressure on all kinds of
issues. Certainly, on Taiwan and --
QUEST: Where is the weakness? Where is the weakness?
METZL: The weakness right now is a few things. One is in the United States. The United States is as weak as we have been in decades. The
White House is in disarray. Our government is in chaos. China is moving in many ways from strength to strength. They have weaknesses, but they're
addressing their weaknesses. We have strengths and we're moving toward weaknesses. Taiwan also has a very precarious relationship with the
mainland. Ma Ying-jeou, the predecessor, had a much closer relationship with Beijing than Tsai Ing-wen. So, with the United States less able in
some ways to support Taiwan, China is turning up the heat.
QUEST: OK. So, but they're not just pointing it out. I mean, you know, in the case of Marriott, they took down the website.
QUEST: For a week. Which, of course, is disastrous at one level to a company that has -- Marriott has put so much into resources into --
QUEST: -- China. This is a warning to everybody don't mess with us.
METZL: Yes. And it's a warning to all of these companies, that you may be an American company, but who is backing you? It's one company, Marriott,
against the full force of the Chinese government. And that's -- that is a real mismatch. And so all of these companies are watching. And China is,
again, in a much stronger position because China is acting in a unified, coherent way as a government.
QUEST: Jamie, can we just take you to the latest furor over the vulgar language used by the president, without repeating the vulgarities. How
easy or difficult is it for these other countries involved, and African countries, Caribbean countries, to turn to, say, a China and China to say,
do you know something? It's worth us investing more in them to take up the slack from where America left off?
METZL: This is a disaster for America. I'm just back from South Africa a couple of days ago. South Africa, Namibia, Mozambique, in all of these
countries China's presence is huge and it's growing, and China is offering an alternative to the United States where the United States presents itself
as racist and intolerant, China is there to pick up the slack. No matter what the reality is.
QUEST: What does that slack look like? Doesn't mean trade agreements, doesn't mean you AID? Does it mean infrastructure? What does that mean?
METZL: It means all of those things. But ultimately what it means is pulling into the Chinese orbit, away from the American orbit, and toward --
and this is -- nobody is ever in -- fully in one orbit or another. But the United States has had such an attractive power for so many years. And
that's been a source of our strength. We are giving that away for nothing. China is gaining magnetic power.
[16:40:00] QUEST: So, if you're right, where will we start to see the evidence of that coming through it? Because if China is pulling people
through magnetically towards its orb of power, then at some point, these are the countries that will take decisions detrimental to the U.S., or at
least not advantageous to it.
METZL: And we're already seeing that through the Asia Infrastructure Investment Bank. We're going to be seeing increasingly in votes in the
United Nations. China is building up chips.
QUEST: But is it a zero-sum game?
METZL: Well, it's not entirely. But it's not. The United States is losing leverage. And leverage can be applied in all sorts of situations,
and there will be some kind of crisis coming soon, and the United States will not be able to trust some of the partners now, as we have invested in
for so many years, because we are seen as being so repugnant and distasteful in spite of the incredible work the United States has done for
so many decades. This is really a crisis not just for America, but for the world.
QUEST: Thank you. Thank you very much indeed.
As we continue tonight, they're called activist investors back in the '50s. There were risk-takers. T. Boone Pickens calls it quits. One of the most
colorful men in the oil industry. After the break.
QUEST: One of our top stories, the decision by President Trump to keep the Iran deal in place for now. Our global affairs correspondent, Elise
Labott, is in Washington. As I understand it, he sort of has kept it in place with some tinkering, but says this is the last time he's going to do
it. If this is the last time, why didn't he just get rid of it now?
ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, because he's looking to the senate and to kind of fix that legislation that forces him to
continue to waive the sanctions every 120 days, every 180 days and to certify whether Iran is making good on the deal. He wants to kind of fold
this all together, and look at Iran in its totality of its behavior.
So that means ballistic missiles, it means human rights, it means support for terrorism. So, he doesn't want to make an indictment on the nuclear
deal every, you know, six to eight months. He wants to be able to look at Iranian behavior and talk to congress about what the U.S. is doing on that.
QUEST: Right. But what makes him think that he will be able to pull together the disparate forces on this, not least of which is of course with
European and Russian and other countries that were part of the original arrangement?
LABOTT: I mean, look. It very unlikely he'll be able to do anything with the deal. You saw the Iranian foreign minister today say it's not up for
[16:45:00] I think what he's really looking for are for the Europeans to agree to institute some other kind of sanctions on Iran for ballistic
missiles, for human rights and terrorism. And the French president recently told him that he would. So, I don't -- you know, six months or
eight months from now, I think he's going to do what he did last time, which is kick the can down the road on the nuclear deal.
I think everybody is in agreement that, you know, better to have this deal than nothing in place at all. And that's not only what the Europeans told
him, mind you. That's what even the Arab allies who hated the deal, said, look, we don't like it, but keep it in place, let's focus on the more
imminent threat, which is this other stuff.
QUEST: Elise, forgive me, skating to different ice as we talk about the events from the comments of yesterday. The state department has been
sending out information, or at least briefing to various embassies, how to handle it, when the ambassador is summoned. What are they saying?
LABOTT: They're basically saying, you know, go in and reaffirm the U.S. commitment to your host country. Say, the U.S. is committed to Africa, to
its relationships, the U.S. respects all nations. And, you know, I'm honored to serve in your country, and thank the host government. I mean,
there's not really that much these diplomats can do, but except just try to clean it up. And without, you know, overtly disavowing the commander-in-
chief, say what the U.S. policy is. And what the U.S. policy is, is that they respect all nations. It's a very tricky situation for diplomats, to
QUEST: Let's just go through this. I mean, you've got this incident here where ambassadors are being called in to ask bluntly are we a country?
LABOTT: Exactly, Yes.
QUEST: Secondly, you've got the U.K. -- the U.S. ambassador in London writing an op-ed article, in the "Evening Standard" about the new embassy
that is clearly a dramatically opposite view to what Trump tweeted overnight. And you have the U.S. ambassador in the Netherlands being
excoriated recently because of comments he made about burning Dutch politicians or whatever it was. I mean U.S. diplomacy it would seem if not
speaking with anything like one voice of administration.
LABOTT: Well, not at all. And I mean, look, the ambassador to Netherlands, Pete Hoekstra's comments, are almost kind of more in line with
President Trump's point of view in terms of no-go zone and areas that are dangerous because of Muslims. That kind of thing. I mean, I think for the
majority of the foreign service, for the majority -- the vast majority of diplomats, ambassadors serving around the world, it's a very embarrassing
day for the U.S., for this kind of moral decline.
And all they can do is just reaffirm U.S. values without, you know -- it's kind of almost like a nod, nod, wink, wink. I know Trump said this, but
don't let him paint a broad brush on how all Americans think. And, again, like I think what, so many countries have had to do over the last several
months is not look at the tweets, not look at the statements, just look at the policy and the president has these kinds of aides that will drive him
in the right direction. But to be sure, the rhetoric about the United States today is very sad.
QUEST: Elise Labott, thank you for joining us from Washington. Thank you.
The investor who helped shape the oil and natural gas sector since the 1950s is finally getting out. T. Boone Pickens is 89 years old, chairman
of BP Capital advisers, shutting the hedge fund, saying it's for the sake of his health. Five years ago, I had the pleasure of meeting him at his
company headquarters in Texas.
QUEST: Hall of fame, some might say.
T. BOONE PICKENS, CEO, BP CAPITAL ADVISERS: Well, there are some good ones up there.
QUEST: In the 1980s, T. Boone Pickens made headlines as a corporate raider. Today they're called shareholder activists. These are your
companies. Or some of them.
QUEST: He now runs the Dallas-based hedge fund, BP Capital. He is the author of "The Pickens Plan." His goal is energy independence for north
PICKENS: You have a north American energy alliance. You bring together Canada, Mexico, the United States. We're the market for their oil. That's
the case today. Our biggest supply of oil outside of the United States is Canada. Put them together. We're their market. And it's -- we're energy-
independent with north America. We don't need anything from any place else. I mean, we control our destiny. It's not left up to somebody in the
Mid-East who actually -- I consider them to be the enemy in most cases. They hate us. And there's no reason to be tied to them in any way.
QUEST: The answer is in your own backyard.
PICKENS: Oh, yes.
QUEST: In your own production. Is that what you're saying?
[16:50:00] QUEST: These are the cartoons. Even though Pickens has been lampooned in the press over the years --
PICKENS: This is signed by Ronald Reagan.
QUEST: He has always been taken seriously by those in the seats of power.
This is what we always think of, isn't it?
QUEST: After all, for a man who has made such a fortune out of oil and gas, he knows the value of what comes out of the ground.
Quest: Coming up on QUEST MEANS BUSINESS, another naming problem as "Fire and Fury" fever sweeps book shops. Some readers are making a very simple
mistake. And my next guest is delighted by that mistake.
QUEST: We've been talking about the Trump book, "Fire and Fury" throughout the course of the week. It is not number one on the Amazon bestsellers
list. 1.4 million copies on pre-order. And now a ten-year-old book title with exactly the same name has also unexpectedly jumped up the charts. As
you can see, it's called "Fire and Fury." It's about the allied bombing of Germany in the second world war. Not the same as the "Fire and Fury" by
Michael Wolff. But the author of the other book, Randall Hansen, joins me now.
We are delighted to have you with us. Thank you, sir. You must be very surprised when you realized your book of some years was suddenly rocketing
up the best-seller list.
RANDALL HANSEN, AUTHOR OF "FIRE AND FURY": Yes, absolutely. I didn't see this coming at all. Last summer, when President Trump used the phrase
"Fire and Fury" for the first time, I, of course, thought of my book then, too, but no one picked it up at all.
QUEST: So how are sales doing of your version of "f & f?"
HANSEN: Well, I won't know exactly until I get my royalty statements for a month. But it shot up to three Amazon best-sellers lists in the states.
It was the number one in military history in Canada. It's selling well on Kindle. And because the press has shown so much interest, it's frankly
getting much more attention now all around the world than it did ten years ago.
QUEST: Now, we're fortunate, because you are an expert in geopolitics, as well. A professor, as well. So, we can actually not just talk about your
book, but actually ask you, when you look at the situation at the moment, and you may have heard us talking about it much in this program, on the
events of the day, with the slur that the president used and the way in which he's integrating with other countries, your "Fire and Fury" gives
another element to all of this doesn't it? How do you see the situation for the U.S.?
HANSEN: Well, the situation for the U.S. and for the world, because of this president, is incredibly worrying. And we have a president who
casually threatens war all of the time. Who talks in the most absurd terms about the size of his nuclear arsenal. The size of his nuclear button.
Who insults in Aryan and racist terms countries that are the allies of the United States.
[16:55:00] So, it's very worrying indeed. And I think the connection to my book is that it examines in some detail the horrific consequences of war,
above all, for innocent civilians. So, we should be very worried. That said, I have a great deal of faith in the United States that we'll survive
this, because of the strength of American civil society. We have seen that. The checks and balances in the U.S. we'll get through this. But
we're in a very, very dangerous place.
QUEST: Randall Hansen, we'll have you back please again in the future to talk more "Fire and Fury." Good luck with the book sales.
HANSEN: Thank you so much.
QUEST: Thank you very much indeed. We will have a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment. A gain of some 2 percent on the Dow on the week, and 4 percent so far on the year, and it just keeps rising.
Everything I heard from the stock exchange today for "QUEST EXPRESS," people just keep saying to me again and again, this market is going higher.
Which always begs the question, at what point is there going to be a correction? We haven't had one for two years. And there is really no
inevitability to it in the short-term. Of course, longer-term we know it is going to happen.
The issue is when, not if. At the moment, as we have an earnings season about to begin, we'll be watching to see firstly, are they year-on-year --
is the year-on-year good growth. Secondly, what are companies saying about the future and how the tax cut will affect their long-term prospects? And
how much money are they going to be bringing back?
Everything that we're seeing suggests the market rally should continue, but only a fool believes there won't be a very nasty hiccup somewhere on the
way. And on a very busy week, that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I
hope it's profitable. I'll see you on Monday.