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QUEST MEANS BUSINESS
Apple in Legal Trouble? Theresa May Visits China. Aired 4-5p ET
Aired January 31, 2018 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHANIE SY, CNN INTERNATIONAL HOST: .is the closing bell, a few swings in the market today. The Dow was up 251 points, then the gain banished but
stocks have rebounded in the last hour of trading and they are up as trading come to a close on Wall Street. It is Wednesday, January 31st.
The Yellen era comes to an end. What is next for the Fed?
Earnings from tech's biggest names, Facebook and Microsoft, are out this hour. We'll explain why Apple may find itself in legal trouble.
And trade between the U.K. and China is tiny. Theresa May takes a trip to China's success.
I'm Stephanie Sy. This is Quest Means Business.
Wall Street closed higher after as a seesaw thought session where we saw shares rally, a slump then rise again, and it caps off yet another month of
gains for U.S. stocks. The Dow and the S&P 500 have now sprung it together 10 winning months in a row and that hasn't happened since 1959.
While the markets moved, rates did not. They're remaining on hold at least another month. And looking at the shares in the Dow, earnings are still
driving the market, and Boeing led the way today after it lifted its forecast -- thanks to tax cuts -- and record delivery numbers.
Facebook and Microsoft are both about to release earnings, and we'll have that all this hour.
The U.S. Fed is keeping rates steady for now. While predicting rising inflation this year, prices have risen less quickly than the Fed's target
of two percent. This was Janet Yellen's last meeting as Fed Chair Jerome Powell will be sworn in to replace her on Monday.
Joining me now, Randall Krozner who is a former Federal Reserve Governor. He is now at the University of Chicago Booth School of Business.
Randall, thanks so much. It's a good day to have you. I want to get your take first on rates. The Fed statement from today says continue to expect,
quote, "gradual increases" in the federal funds rate. So we heard that gradual a couple times last month. We hear that twice in this statement
today. But with the Fed expecting inflation to move up this year, should we expect to see the pace of rate increases accelerate?
KROZNER: So I think they were suggesting they probably would have three rate increases in this next year. That seems roughly right if their
forecasts are what forecasts come to be true, but we really have to see how inflation goes because, as you mentioned, the inflation rate has been
persistently below their two percent goal. There is a little bit of sign that there's a little bit more inflation pressure, but just a tiny bit.
If it starts to go above two percent, they're going to be a little bit more rapid and they will get four increases. If it starts to -- if inflation
starts to flag and go down, then we probably won't get nearly as many.
SY: Your measured tone sound just like that of a Fed governor.
KROZNER: Well, I was. I'm sorry.
SY: I -- I want to ask you about the legacy of Janet Yellen. Obviously, she was the first female chief of a central bank. The Fed has a dual
mandate. It encourages maximum employment and price stability. Let's look at Janet Yellen's record.
She exits with unemployment standing at a healthy 4.1 percent inflation, not quite at the target at 1.52 percent. How would you describe the
challenges that Janet Yellen faced during her tenure and how she faced them?
KROZNER: So she made it all look easy, and that's why a lot of people said, "Oh, well, you know, it doesn't really matter," or, you know, or some
people sort of quibble about what Janet did. But the reason that they can do that is because she did the exit, she raised interest rates that hasn't
been raised for seven or eight years. She started to reduce the size of the balance sheet which had gone from $800 billion to $4.5 trillion.
And all that happened very smoothly. There's no tumult in the markets. A lot of people had expected that if the Fed starts to sell the balance sheet
off or reduce the size the balance sheet or they start to raise interest rates then markets will crumble. Nothing like that happened.
She succeeded in doing these extraordinary things and make it as exciting as she said as watching paint dry. That's actually an extraordinary
achievement to make sure that this didn't cost tumult because it's never been done before. So I think she has to get a lot of credit for that.
SY: What grade would you give her, Randall?
KROZNER: A very high -- I don't give the -- like the particular grades, but she would get very, very high marks because I think she did this exit.
Well, the economy was still growing, has continued to grow. Growth now seems to be accelerating a bit not just because of the Fed, but through the
earlier times, growth staying around two to 2.5 percent. Inflation has not gotten out of -- out of controls as a lot of people thought it would.
I guess, one of the things that's uncertain is about whether the Fed policies have caused asset prices locations (ph). But as I I said, since
interest rates have already increased and the Fed has already started to say it's going to reduce the balance sheet, if that was the only thing
propping up asset prices, you think they would have come down by now.
SY: OK. You didn't give her a letter grade, but she did face challenges that her predecessors -- that were different than those of her
predecessors. How would you rate her compared to Ben Bernanke and -- and Alan Greenspan, especially given how short her tenure was?
KROZNER: So that's tough because I'm -- I'm good friends with -- with all of them and -- and served with -- with both Ben and -- and Janet. So I
think they think they faced very different kinds of economies and different kinds of challenges. I was there at the same time that Ben Bernanke was
when we faced the crisis and innovated so many policies of, you know, buying the assets so that the -- the balance sheet increased, bringing
rates down effectively to zero.
I think they both have been very good in responding to the economic circumstances that -- that they were given, then making sure that we didn't
allow what happened in the 1930's to happen where the Fed just stood by and said, well, that's not really what we need to worry about. We were very
proactive to try to make sure that the Great Recession did not return to or return into a return of the -- of the Great Depression. I think he was
very successful on that.
KROZNER: I think Janet has been very successful in the exit.
SY: All right. Randall Krozner, thank you so much for joining us with those insights given that you know all of these people. It's very helpful
to have you. Thanks a lot.
KROZNER: Thank you.
SY: All right. Let's turn back to Wall Street. It was a seesaw of a day for the markets. Peter Tuchman of Quattro M. Securities is down at the New
York Stock Exchange for us.
So, Peter, it's good to see you. I want to start with this piece of news we just got. And apparently, the former Fed Chair Alan Greenspan has said
earlier to Bloomberg News that the market is experiencing a bubble. Do you have any reaction to that? Is that a sentiment you're hearing more of
there on the Street?
TUCHMAN: No, not at all. I don't see this is a bubble at all. If you look at the way the market's been trading in a steady upward motion, and
any -- any opportunity -- we've had plenty of opportunities for this market to selloff, and it's always a bubble that and if there was a bubble that
would've been followed through in those days.
Yesterday was a perfect example. Market was down a couple hundred. They were high -- there was plenty of room for people to hop onboard that. And
really this market got so much room to go down and it never seemed to do that, so I disagree with them.
TUCHMAN: I mean, look, I'm not just me. I'm not as at all smart by any means as Alan Greenspan, right?
STELTER: All right. Well, the market had a brief selloff today, rebounded after a two-days selloff yesterday. What was the timing of that? Did any
of that have to do with the release of the Fed's statement talking about the potential for rising inflation later this year?
TUCHMAN: You know what, that number that's -- that chat has been around for a while. I don't -- I don't think that really had much to do with it.
I think today was a -- the solid buyback, you know, a bounce back relative to Boeing being a heavily weighted stock in the Dow this morning and the
market was up 150, 200 off of that, a little bit exuberance off of yesterday's selloff.
I think the selloff we saw mid-day was more significantly golden. It come out with a report yesterday. But due to the increased valuation of their
equity position over the last month, the market is up a couple of thousand points, but they're going to have to adjust it and there'll be a rebalance
today on the close or in -- or into the close as big as $34 billion worth of stock.
That big selloff we saw happen around two o'clock, 2:15 seem like -- seems like a lot of sell orders coming into the market. Selling equities, buying
bonds, adjusting their valuation for the end of the month, OK? I kind of think that was it because what we saw, normally we'll see big selling
balances on the close; we did not see that today. We saw the intraday big selloff felt like market sell orders coming into the marketplace.
We bounced back beautifully. We closed up 110 points.
TUCHMAN: We've seen no follow-through on the south (inaudible).
SY: Peter, I'm wondering what else you had your eye on today and whether this Blackstone of the acquisition of a part of Thomson Reuters Financial
and Risk unit for $17 billion caught your eye at all?
TUCHMAN: You know what, that's not really my focus. I was really watching -- today was the big day. We had a number of -- it's the end of month,
there's a big deal. We have to see how the market responded to yesterday's selloff. We had huge volatility today with reversal from up 250 to down
almost 50 points midday. That's kind of what I was watching. So you saw a huge movement in stock. Stocks thought that were up big this morning,
midday were actually down, and then they rallied back in the close.
For me, I'm an intraday forensic, you know, broker.
TUCHMAN: .so I tend to analyze it. I don't really look at the big -- I'm not an economist. I'm not Alan Greenspan for sure.
SY: All right. But you have the view from the New York Stock Exchange for us. As always, Peter Tuchman. Thanks a lot. Good to see you.
TUCHMAN: Thank you. Good to see you.
SY: In the U.S. and Europe, economies are improving and central banks are winding down stimulus programs. That is not the case in Japan.
Haruhiko Kuroda is the Governor of Japan's Central Bank. At the World Economic Forum in Davos, he told Richard Quest, "The Japanese economy is
getting better even as wages and prices remain stubbornly unmoved."
KURODA: The Japanese economy recorded seven 7 consecutive quotas of positive growth, averaging two percent. And it's the best in the last 20
years. And yet, there is some concern about protections. Another point is that despite very strong economic growth in Japan, raising on prices are
not responding so much.
QUEST: Do you fully understand.
KURODA: Yeah, yeah.
QUEST: .there is this lack of inflation when by all barometers we should be seeing.
QUEST: .signs of inflationary expectation.
KURODA: Yeah, yeah, yeah.
QUEST: .and you should be raising interest rates.
KURODA: Yeah, yeah.
QUEST: .and the Fed should be moving faster.
QUEST: .and there's no sign of real inflation? Why is this?
KURODA: I think as far as the Japanese economy is concerned, there are two factors. One is sort of universal factor, which has been making inflation
subdued not just in Japan but also U.S. and -- and Europe. I think that is caused by increased competition from outside having globalization as well
as new technology.
QUEST: If the globalization.
QUEST: .versus protectionism.
QUEST: .(inaudible) heats up.
QUEST: .washing machines.
QUEST: .solar panels.
QUEST: .Japanese economy arguably (inaudible) what you say or how open it may be.
KURODA: Yeah, yeah.
QUEST: .still perceived to be closed in many ways. That could be complete -- that's a game changer if the trade war starts.
KURODA: Yeah, so that -- I mean, from our side.
KURODA: .as you may know, Japan with other 10 countries concluded.
KURODA: .TPP 11 because U.S. decided not to join the TPP, but remaining 11 countries agreed to pursue free trade in the Asia-Pacific region.
QUEST: How -- how significant was it that you got that agreement.
KURODA: I think.
QUEST: .without the U.S.?
KURODA: I think it is significant because it does show the determination.
KURODA: .of Asia-Pacific region to pursue -- continue to pursue free trade and the better trade arrangement.
QUEST: Choose a color.
QUEST: Which color would you like?
QUEST: Where are you.
KURODA: Yeah, yeah.
QUEST: .on the fractuition? West tells us that we live in.
QUEST: .a fractured world. How fractured, not very fractured? What's the middle line? Very fractured. Where would you go?
KURODA: I think middle probably (inaudible).
SY: Straight ahead, U.S. stocks may be rebounding, but in Europe, most markets had another down day. Britain (inaudible) was among the biggest
losers. Sentiment there was hit by one corporate story, in particular.
Shares in British outsourcing firm, Capita, sink by almost 50 percent. It issued a profit warning and said it had to stop paying dividends to
shareholders. Capita's revelations came just a few days after Carillion, another company that ran services and building projects for the government
And coming up, the moment of truth for two of America's biggest tech companies, we'll have earnings from Facebook and Microsoft.
SY: All right. We just got earnings from two of the biggest tech companies in the U.S. In the last few minutes, Facebook and Microsoft have
released their quarterly numbers. Facebook shares are falling sharply despite posting numbers that smashed expectations.
Paul La Monica and Clare Sebastian are here to give us their initial reaction.
Ladies first. Clare, with Facebook, what are you reading into the earnings report?
SEBASTIAN: Well, it's an interesting one because the shares dipped dramatically when the first -- when the first news broke about this
earnings report, down about four percent and they've come back to down around 2.3 percent in after hours, but it did beat on revenue, $12.97
billion in revenue. That's up 47 percent year on year. That's much better than many people were predicting.
But I think the reason why the stock is falling is -- is two-fold. One, we saw a slowing in user growth. First months active users and daily active
users grew 14 percent year-on-year that's compared to 16 percent in the last quarter, and also because of what Mark Zuckerberg said in the
statement. We've heard about the news, few changes he's making. He said, "In total, we made changes that reduced time spent on Facebook by roughly
15 million hours every day.
SY: A reduction of that amount, OK.
SEBASTIAN: A reduction, yeah, in total so I think that's something the other guys will certainly be looking at.
SY: OK. Paul, I want you to get the Microsoft and we have a -- if we have time we'll go back to the Facebook issues. What are you seeing in their
LA MONICA: Yeah, Microsoft results looked pretty solid. The stock did take a dip a little bit after hours but it's starting to stabilize.
Revenue was up 12 percent in the quarter, $28.9 billion in sales. Earnings beat forecasts as well. And I think the story continues to be a cloud
transformation of Microsoft and your (inaudible). Cloud revenues served 150 percent.
SY: (Inaudible) that was encouraging here?
LA MONICA: I think investors are happy that the results are still better than expectations. We're waiting for guidance. They don't give that and
toll their call, so things could definitely change if the outlook disappoints, but very strong cloud revenues. The gaming revenues were
decent given that it was the holiday quarter as well. Xbox-related sales up eight percent, so that's pretty solid not as good as something like
Nintendo, but I think investors will take that as well.
SY: Now, I could ask either of you these questions. We're going to have more tech earnings coming in tomorrow. How much are these bellwethers for
what's happening in the larger economy, Microsoft and Facebook?
SEBASTIAN: Well, I mean, I think they -- they are kind of in their own category to some extent. Facebook and -- Facebook does make a lot of money
compared to some tech companies. We're going to get Amazon tomorrow, you know, it's (inaudible) dramatically would -- smaller than its revenues.
You know, its profits are significant, but I think the other thing right as a bellwether is in terms of the tax bill that's just come in.
Facebook has just said that it's a -- as a result of this legislation that's fourth quarter and full-year provision increased by $2.27 billion.
But in that -- in that regard, certainly, this is something that we are going to see coming through in this earnings season. So we're taking one
of charges even that most businesses are saying that this is good long- term.
SY: All right. I'll let you guys dig into the numbers more. Thank you so much, Clare Sebastian and Paul La Monica.
We are halfway through a big earnings week here in the U.S. Tomorrow, as Clare said, we'll have the numbers on Amazon's all important holiday
quarter, as well as very closely watched sales numbers from Apple; also reporting Alibaba, UPS and Dow DuPont.
Investors will be keeping a keen eye on Apple's numbers tomorrow. Its share price has suffered amid reports of falling demand for the iPhone 10.
It's also facing fresh scrutiny for its practice of making older phones run slower. Investigators at the U.S. Department of Justice reportedly want to
know if Apple violated securities laws in the way they announced that information.
Samuel Burke is in London with the details. Samuel, so Apple has gotten a lot of criticism for those phones slowdowns, but this is a new phase of
this controversy. What else do we know about this probe, and how is Apple responding?
BURKE: Well, it appears that the Department of Justice has the very same question that so many Apple users have -- what was the reason behind the
slowing down? Was there some ulterior motive? Were they trying to increase the amount of people who switch from an older phone to a new
phone? But we're being told by a source familiar with the matter that these are just in the beginning stages. This is just a preliminary right
The DOJ appears to be asking Apple some questions. Apple has confirmed that the government is asking them questions, and they're responding. But
I think at the end of the day, what always stands out to me with this story is why when Apple did the iOS update with this, they have a description
there which most people don't read, but tech journalists like me, we always read it. Why wasn't that update listed? That is a big question mark
hanging over Apple right now, Stephanie.
STELTER: Indeed, among many question marks, right? The company reports earnings tomorrow. What are we expecting?
BURKE: Well, I think the number will all be about looking forward to what the iPhone 10 might do the next quarter, so the guidance. What's
interesting here is we're hearing from analysts who say they're predicting Apple might have already cut the amount of the iPhone 10s that they're
going to produce for the next quarter from 40 million to 20 million, and there are a lot of signs in the supply chain that the iPhone 10 hasn't been
as successful as Apple wanted.
I just want to put up a list. This is anecdotal, things that I hear from our viewers on Twitter, people around the office, what they're telling me,
but I think it has some bearing. If you look at the -- for example, just the confusion around which phone has been released here, this is a big
gamble, I think, release two phones at once -- really three -- the 8, the 8S or the 10. Which one do I buy? Then that $1,000 price tag.
Even though, Stephanie, people are already paying that much for the bigger gigabyte phone , but that psychological put price point very difficult for
people. And no home button. People felt like they had nowhere to go home.
SY: You had even list my greatest confusion, which is I thought of the iPhone X for several weeks.
LA MONICA: You are not the only.
SEBASTIAN: The iPhone X, it's the Roman numeral.
LA MONICA: You're not the only CNN anchor who had said that today. You can pay Xs, and we all know what you're talking about.
SY: I said 10, I said 10. I've learned, but thank you so much, Samuel.
The British prime minister is in China as she hunts for a major trading partner after Brexit. U.K.-China trade is worth about $84 billion a year,
and Theresa may is looking to increase that after Britain leaves the E.U. She is traveling with 50 reps from British business and trade.
MAY: We will also be a more outward-looking United Kingdom. We want to build a global Britain that is able to sign those free trade agreements
that is playing -- continuing to play its role on the world stage in the various multinational organizations. We're part of working alongside China
and the other members, for example, in the United Nations.
SY: Mrs. May's visit will take her from Wuhan to Beijing to Shanhhai. And Bianca Nobilo joins me now with more from London.
Bianca, so Ms. May have called this the, quote, "golden era" in U.K.-China relations. What is she really hoping to accomplish with this visit?
NOBILO: So she's hoping to lay the groundwork for crucial post Brexit trade deals. China is obviously a massive market with a potential 1.3
billion consumers, the U.K. businesses. It's really important especially in the context of the fact within the U.K., there have been all these leaks
of fairly disastrous economic forecast for the United Kingdom post Brexit ranging from GDP depreciation from about two to eight percent over the next
15 years. So it's really important that the prime minister can go to China and to indicate to people that she will be able to get a good -- a broad
trade deal with China after Brexit and open up British markets to Chinese audiences.
SY: Now, Ms. May is meanwhile at home in the U.K. facing criticisms about her leadership. Is that something that is dogging her on this China trip?
NOBILO: It has been. In the first press conference right after she landed, a couple of reporters asked her about all these questions swirling
around her leadership. And she has a response. She said, "I am no quitter, and there's a big job to do." But that's a concerning phrase as
well the fact that the prime minister has to a really important states trip have to defend her position as head of -- as -- as head of the British
government is a really worrying situation to be in.
And also in British politics, the phrase "I am no quitter" has been repeated by a number of leaders who then went on to quit to not that soon
SY: Oh, boy.
NOBILO: And when she went to Japan just a few months ago, a very similar thing happened. The prime minister went away, and then all the leadership
bidders in the U.K. came out to play, and she had to utter those words again. And she said, "I am no quitter."
NOBILO: So it doesn't look good for her. She's definitely in a precarious position right now, Stephanie.
SY: And yet she still have a job to do. She's on this China trip, obviously, trying to drum up some trade deals, give the British economy
some prospects. But doesn't she also face a constraint as far as how much she can actually negotiate a bilateral trade deal under the E.U. rules?
NOBILO: She certainly does. So the United Kingdom will not be able to implement any trade deals until the transition period has ended. That is
the period where the U.K. has fully left the European Union. So Brexit will be on the 29th of March 2019. And then there's the transition period,
which is to be determined possibly in the realm of 21 to 27 months. It will be going to be after that that the trade deals can be -- be
implemented. But the groundwork can be laid for them. And we have a secretary in the U.K. of International Trade, so he's been on all of these
charm offenses trying to lay the groundwork for those deals so that they can be ready to go as soon as Britain has formally left the European Union.
SY: Got it. Bianca Nobilo from London. Thank you so much, Bianca.
Well, a short time ago, British lawmakers voted to move parliament. In the past couple of hours, they gave the go ahead to plan for a full renovation
of the Palace of Westminster. MPs will have to move out while the work is completed, and we're talking several years before the vote.
Our Max Foster got access to parts of the palace that are rarely seen to have a look at what needs doing.
FOSTER: It is one of the most iconic buildings in the world, but look closely, and the palace of Westminster is falling apart. A rare glimpse
inside these walls shows that behind the imposing exterior, beneath the ornate arches and stained glass lobbies, cracks are beginning to show. The
patch-and-mend method adopted over the centuries no longer able to keep up. Lawmakers were warned in a recent report that the building faces a growing
risk of catastrophe unless urgent work is carried out.
FOSTER: Sir Andrew, around the roof and you get a real sense here about the scale of the problem you're dealing with.
PIPER: Yeah, I mean, what you can see here is the damage that's caused 150 years' worth of use of our Victorian, you know, cast iron roofing system.
And it kind of represents what the aging condition of the rest of the building is.
FOSTER: The building has seen prime ministers come and go, some leaving more of an impact than others. The decades have taken their toll, and the
British were the House, too. Water seeps through the roof in many places.
Well, rare access indeed. This is what the whole project really comes down to. The Commons Chamber where British laws are so famously debated, you
can almost hear the noise.
(UNKNOWN): In the chamber, questions to the prime minister.
(UNKNOWN): Yeah, yeah.
(UNKNOWN): Thank you, Mr. Speaker.
(UNKNOWN): And Prime Minister is frankly in denial.
FOSTER: This chamber could fall silent for six whole years under the proposal approved in principle by MPs, which would see them move out whilst
the multibillion-dollar program or repair works takes place.
STOWELL: This kind of work is what you might think of as surgery to the major arteries and veins, the major organs of this building. What it's not
in any way, shape or form a facelift or a makeover.
FOSTER: It's not until you go underground that you really see why this proposed work is so critical and so complex.
Well, we come down to the basement and we found a typical sort of problem really released, some evidence of a leak here. We've discovered it's
coming from a pipe right up in there, but they can't get to it because of this massive cabling. A lot of it don't know where it goes, we don't know
what it's for so you can't just rip it out because it could cause all sorts of other problems.
The 19th-century building is struggling to keep up with the modern world.
(UNKNOWN): So our current telephony system, which is in desperate need for replacement.
FOSTER: The tangle of phone lines, not a reassuring sight for anyone trying to get in touch with their MP. Officials would like to make
Westminster ready for the future while it's restoring a key piece of Britain's past. Max Foster, CNN London.
SY: Max braving the boughs of Parliament.
By the way, you don't want to miss CNN's VR Tour taking you from the rook of the British Parliament to the Members Lobby to the Robing Room and Big
Ben. Simply head to cnn.com/parliament for unique 360-degree access.
Still ahead, aiming to bridge America's divisions, why Donald Trump is calling for a massive infrastructure overhaul to the tune of $1.5 trillion.
SY: Hello, I'm Stephanie Sy. There is more Quest Means Business in a moment. When President Trump has pushed us for a $1.5 trillion
infrastructure bill, we'll find out if there is political will to pass it. And the real Super Bowl contest, the ad battle -- the best, the worst and
why advertisers are staying away from politics.
Before that, the headlines this hour.
The FBI says it has grave concerns about the accuracy of a controversial Republican memo that could be released at any time. The memo alleges bias
in the agency and says it abused surveillance law. Democrats say the document is an attempt to discredit Special Counsel Robert Mueller's Russia
investigation. But the Head of the House Committee that released it calls the objection spurious.
A frightening experience for Republican U.S. Congress members when a train carrying them to a legislative retreat hit a truck. Multiple sources say
the lawmakers, their families and their staff are fine except for some minor injuries, but the driver of the truck was killed.
The director of the U.S. Centers for Disease Control and Prevention has resigned at just one day after Politico reported she traded in tobacco
stocks while leading anti-smoking efforts. She also own shared in health- related companies she has been unable to divest. Dr. Brenda Fitzgerald was selected for the position back in July.
The military parade North Korea is planning to hold on the eve of the Winter Olympics may become a major show of military might. Two diplomatic
sources tells CNN North Korea may be planning to display hundreds of missiles and rockets to, quote, "scare the hell out of the Americans," end
quote. We're hearing foreign media will be banned from covering the event.
The Australian government has launched an urgent investigation after some locked filing drawers containing top secret documents were accidentally
sold as secondhand furniture. Thousands of files were discovered at a Canberra furniture store. They are said to contain confidential notes from
the separate Australian government.
In his State of the Union Address, Donald Trump hailed a new American moment of unity and went on to tell Congress that moment needs backing up
with new infrastructure.
TRUMP: I am asking both parties to come together to give us safe, fast, reliable and modern infrastructure that our economy needs and our people
Tonight I'm calling on Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment to permanently fix the
infrastructure deficit, and we can do it.
SY: Jeff Zeleny joins me now from the White House. Jeff, a lot of people talk about the infrastructure crisis, members of both parties. But is
there political will to help fulfill the President's vision?
ZELENY: Stephanie, there definitely is political will to do something on infrastructure, but unclear if there's the political will in this climate
here in Washington. Of course, it's the beginning of an election year. Of course, yeah, there is just a brand new tax law last year that adds so much
to the deficit so there is some reluctance on the part of Republicans at that price tag, that $1.5 trillion price tag.
Now, of course, it is a mix of a -- of public money and private money, no question. But Republicans and Democrats do not seem to agree at all on
exactly how that should work or what projects should be funded or how the funding works. So we did not hear from the president last night in that
State of the Union Address specifically how he would bridge the differences between the Republicans and Democrats.
So he's talked about infrastructure a lot. It's an idea that both sides support, but there's no sense exactly he's got all of them in a room to
talk about it. And it's interesting that this is something that many people were hoping he would start on last year. This would have been a
bipartisan way to begin the administration, but now things are so bogged down in divisive partisanship. Many people wonder if anything will happen
with that $1.5. trillion plan.
SY: A tough road ahead you could say.
SY: Jeff, after the State of the Union, what else are folks in Washington buzzing about when it came to the President's address?
ZELENY: I would say first and foremost immigration. I mean there were lines of uplifting unifying lines in there. But when you look at the
speech and you look at, you know, the differences and the reaction to the speech, the immigration issue remains one that is so divisive here. Of
course, it almost caused the government shutdown two weeks ago. There is very little agreement on what to do with the dreamers and what to do with
the -- you know, the rest of the immigration policy here.
So, one other thing we did not hear last night was any -- any words from the president on how to bridge the divide, how to bring both sides together
here, what he's willing to give. So I think immigration was all sort of just scribed in the MS13 gang violence problem.
ZELENY: .as opposed to the opportunity immigration provides the United States. That I would say sort of lingers as one of the most divisive
moments that actually has consequences. Washington is no closer to any deal on immigration today than it was yesterday.
SY: Yeah, especially on the legal immigration question.
SY: Can you give us -- can you give us an update on -- on the train crash involving members of Congress?
ZELENY: Sure. Republican members of Congress were heading down to the Greenbrier Resort in West Virginia just several hours away from Washington,
and there was a -- a -- a train crash several hours ago. One person was killed in that. He was driving a -- a truck that was struck by the train.
This event is going to go on, but it certainly was destructive and concerning and scary for many lawmakers, and certainly a tragedy for the
driver of that vehicle.
The President is going to speak at that retreat tomorrow to talk about Republican principles, so it certainly has caused a -- has cast a pall on
the beginning of this.
ZELENY: .but -- but all members of Congress that were not injured seriously and they're making their way now to that resort, Stephanie.
SY: OK. Jeff Zeleny, thanks a lot.
SY: Well, polarization isn't just a problem in the United States. The rising tide of populism has alarmed leaders around the world. Queen Rania
of Jordan spoke to Richard Quest about mending divisions in an increasingly fractured world.
RANIA: Well, you know, I think when you talk about the issue of being fractured, I think when it comes to politics the world is fractured. But
when it comes to everything else, our world has never been more interconnected. And not only that, it's never been more interdependent so
I think isolation is no longer an option. Everything is traveling so fast whether you're talking about emojis or Ebola, or tourists or terrorism, or
technology or ideology, pretty much anything can go anywhere. And -- and our conflicts are now borderless and they're mobile.
And as a result of that, there's a lot of fear and this fear is not unfounded. People, there is strong forces of destruction whether social
economic or political, so people are afraid of the new technologies. They're afraid for their jobs. They're afraid from terrorism. These
things create, you know -- it's a -- it's a rational reaction, but it creates an irrational action some time.
QUEST: And when you talk about fear, that also leads to the blame game, doesn't it? We blame whether it's a political leader. We blame the
immigration problem or whether the refugees.
QUEST: We blame -- we're always looking for someone to blame, which I suppose begs the question, who do we blame?
RANIA: Well, first of all, fear makes you -- invokes irrational thoughts and behaviors so it affects your decisions whether it's who you vote for,
who you choose to travel, what are the values that you hold dear. And more important than that, I think it feeds into populous thinking. And so, you
know, people start to -- they want to go away from whatever is foreign and come to what's familiar, and that's why you have some polarization taking
So fear can be a very dangerous thing. And when you have politicians that feeds into that fear, it can be very divisive, these appointees, and really
underlines social cohesion and harmony. And that's something that we really need to look out for.
QUEST: I suppose arguably some would say do you have a politician in mind.
RANIA: No, I mean, I think you (inaudible).
QUEST: They're all -- but at some point they're all at it.
RANIA: Well, no, it's a -- it's very short-term agenda.
RANIA: .because it's -- it gives you results very quickly, but over the long-term it's very divisive and very destructive and counterproductive for
QUEST: As you watched the Me Too movement gather steam and as somebody who has led the way on many of these issues near the forefront, what are your
thoughts as you just saw Hollywood completely turn -- not to turn on itself, but have this sort of deep soul searching about activities and
behaviors and where we see the political sphere. Recently in London, we saw it in the banking sphere. What did you think?
RANIA: Well, look, I'm hoping that we can look at 2017 as the turning point, as the year where we really started to address an issue that is the
age-old issue that people have not been speaking about. So it's given new voice to an old issue. And I think, you know, it's created the kind of
social environment that allow people to do more comfortable coming out and speaking about issues that have been going on for so long.
So what I am hoping for is that this will create -- you know, these voices that have come out will turn into actual actions, but the anger that was
generated will turn into actual action and, you know, so that we can see policies changing so if we can see ethics and cultural norms still in
corporations that don't allow for these kinds of things to happen.
QUEST: On that point, everybody wants this change to take place to be permanent, to be a mindset change.
RANIA: A cultural change.
QUEST: A cultural change. Can I be cynical and suggest we need to be very careful about people paying lip service to change but nothing really
RANIA: Exactly, because I know -- I think we want to see equal pay, for example. We want to see a change in actual conduct. We want to see
resources directed towards victims. So in parts of the world, we see women breaking through glass ceilings and other parts with these things being
sold in modern days' trade markets. So, you know, there's a lot that needs to be done.
And according to the latest Global Gender Gap Report, at the current rate of progress it's going to take us 217 years to achieve gender parity. So
we have a lot of work to do. Iit's not enough to just talk about these things, we need to -- we need to move from breaking the silence to actual
SY: Richard Quest with Queen Rania of Jordan.
President Trump is promising to reduce prescription drug prices. Well, one firm in England has worked out how to make picking up medicine cheaper and
SY: President Trump says one of his top priorities is to reduce the price of prescription drugs. In a State of the Union Address, he pledged his
administration would succeed in bringing down costs.
TRUMP: In many other countries these drugs cost far less in what we pay in the United States, and it's very, very unfair. That is why I have directed
my administration to make fixing the injustice of high drug prices, one of my top priorities for the year.
And prices will come down substantially. Watch.
SY: Well, in our series on entrepreneurs, reshaping global trade, Europe is finding new ways to cut cost when it comes to delivering prescription
(UNKNOWN): This is a story of how one pharmacist in the north of England built a $22 million business delivering prescription drugs across Europe.
Meet Shamir, a pharmacist who, five years ago, began disrupting the way we get hold of our medication.
PATEL: Chemist 4 U is an online pharmacy. We supply prescriptions (inaudible) our meds across Europe. We (inaudible) where people are very
time for e-commerce was going to drive health care needs.
(UNKNOWN): This is how it works. The doctor writes your prescription and emails it to a chemist for you. The pharmacist here prepare your
medication, pack it up and send it directly to your home.
The company has become so professional that today they're among the Royal Mail's biggest users in the North of England.
PATEL: (Inaudible) tend to be embarrassing conditions (inaudible) people don't really want to go into the pharmacy and buy. This could be things
from like Canesten Cream to (inaudible) bacterials o head lice, so it's all the embarrassing problems that people don't really want the lady behind the
till knowing their takings of e-commerce. It offers a slight degree of humility.
(UNKNOWN): The company exports to eight countries across Europe, including Germany, France and Sweden.
PATEL: Since Brexit we've had a massive devaluation in our currency, so this has really opened up European trade to our business. All of a sudden
we're on average 20 percent cheaper than our European counterparts, so we're able to sell French fragrances, hair loss treatments to Germany,
razor blades to the Nordics.
(UNKNOWN): The earliest written prescription dates back almost five millennia to the Sumerian population living in modern day Iraq. By 2022,
the pharmaceutical industry will be worth over $1 trillion. Germany is the biggest exporter followed by Switzerland and Belgium, but the United States
imports the most, creating a new growth and bringing it into market takes some average 10 years and investments of $2.6 billion.
PATEL: Chemist 4 U turns over $23 million every year and is the third fastest-growing small business in the U.K., according to the Sunday Times,
delivering around 16,000 parcels every day.
(UNKNOWN): The future is going to digital pills, which is visible to you and you could just take it once a month so that delivery requirement
effectively goes away long-term.
SY: Still ahead.
SY: America is just days away from arguably the biggest event in its sporting calendar, the Super Bowl. And there are some viewers who are just
as excited about what happens at half time. Who could forget Lady Gaga in last year's Halftime Show?
The NFL says it was the most watched musical performance of all time, and that's not lost on advertisers. And for them halftime is the time to
Brian Steinberg is Senior TV editor for Variety and has more on what to expect. I mean, really throughout the Super Bowl, there are those of us
that just watch for the commercials. But I have heard that it's like upwards of $5 million for a 30-second ad this year. How is the possibly
getting even bigger?
STEINBERG: You know, there's so few events on TV these days that bring in more than 100 million people. It's -- it's unheard of. This is us doesn't
do it. Modern Family doesn't do it. Even a normal football game doesn't do it, so this is a rarity in media and therefore they're paying up for.
SY: And last year was like more than 110 million.
STEINBERG: That's right, exactly.
SY: .of the viewers. All right. Let's talk about the ad trends because a lot of them have been released already.
STEINBERG: Yeah, a lot has been out there.
SY: What trends are you seeing content-wise?
STEINBERG: What we're seeing, I will tell you this year first time I think people are backing off political kind of like, you know, social coordinated
kind of stuff. For the last couple of years we've seen people trying to talk about, you know, gender -- gender parity with -- with -- with salaries
and, you know, immigration. These are not great topics when you allow those drinking beer where you have some fun. Maybe we'll polarize.
You know, with the election the last year or so, people are ready to pound on commercials and say I don't like that, that's not for me, it's
offensive, that's not my kind of politics. People are contacting the (inaudible) be a little more humor-oriented.
SY: That -- that surprises me somewhat because last year those are some of the ads that got the biggest buzz. I mean, it's news programs like this
that end up talking about the ads that have a political message.
STEINBERG: It's true, but at the same time, I think about the long-term take-away is that ad tick me off. I didn't like that commercial.
SY: Which one was it?
STEINBERG: No. There's (inaudible) outie. I think, you know, Coca-Cola, a lot of that -- (inaudible) are very good and clever ads.
STEINBERG: That was happening. I think there's -- (inaudible) of companies -- General Mills, Coca-Cola, Procter & Gamble -- see a growing
population (inaudible) all the place, it's not just -- not just old White men watching TV, they're (inaudible) were watching and buying their
STEINBERG: .so (inaudible) with the issues and -- and -- and as (inaudible) but.
SY: P&G, by the way, I think we're going to show that ad. They have one of the funniest ads I've seen in a long time. I'll just call it his bleep
don't stink because I think that's what it's going to be known for.
SY: I heard that P&G spent more on Super Bowl ads this year. Why is that significant that we're seeing those types of companies play even bigger in
the Super Bowl game?
STEINBERG: The Procter is a huge advertiser, one of the biggest global spenders on -- on advertising in the world. What they do is just copy.
People see that and go, oh, I (inaudible) they are the best practices of advertising. They lash it with Tide and a couple others. They sure for
Breeze, I believe Tide is back as well this year. They're doing it -- I mean, they see value in it. They see (inaudible) a lot of money, they're
getting the return on their dollar. They're getting social media chatter, go to brand recall and sale.
SY: OK. And again they're going with humor. There's another ad. I've seen the Pringles ad starring the SNL star...
STEINBERG: Bill Hader.
SY: .Bill Hader, which is again an apolitical just funny feel good ad.
STEINBERG: I -- I talked to him just last week, asked about the commercial, so he just had a good time. He adlib'd. Some messages you are
going to see is not on the script, he just kind of had fun. He yells so many people on the -- on the screen. It's just good natured fun. It's
kind of what -- is mild, is not to -- you really can't find a problem, let's say the Pringles doesn't appeal to you. But other than that, it's
pretty good stuff.
SY: Bill Hader said there's not any possibility you can find anything political in that.
STEINBERG: He said he'd be surprised. He stunned himself with people that got -- they got mad at his commercial.
SY: All right. Brian from Variety, thanks.
STEINBERG: Thank you very much.
SY: All right. We have some advertising of our own to do right now. Join us for a special edition of Quest Means Business Thursday and Friday
because Richard will be live in Paris. We've got the biggest names in business, including the CEOs of Air France, Alcor Hotels and Euronext. And
we're going to review the preparations for the 2024 Olympics with the Director General, that's Thursday and Friday 9:00 p.m. London time, 10:00
p.m. in Paris.
Time for a recap now of the markets, U.S. stocks seesaw throughout the day at 261 point rally on the Dow banished by the afternoon. Stocks did pick
up in the final hour of trading, though you can see the Dow closed up about 72.5 points.
And that is Quest Means Business. I'm Stephanie Sy in New York. The news continues here on CNN.