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QUEST MEANS BUSINESS

Dow Suffers Worst Point Drop in Years; Trump Slams FBI Controversial Memo Released; Democrats Warn of Constitutional Crisis in U.S.; Champagne Boss Warns About Global Warming; Accor Hotels CEO Says Travel is a Blessed Industry. Aired 4-5p ET

Aired February 2, 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. The Dow Jones Industrials off more than 650 points. The sixth or seventh

worst points loss in history. Hit the gavel. Bring the misery to a close. Trading is now over on an ugly day in New York. Today is Friday. It's

February the 2nd.

So, market mayhem with one of the biggest sell-offs by points in history, certainly in a decade. The memo mayhem. The president releases or

authorizes the release of the Nunes memo. Now everyone says who is to blame and what is behind it? We need to get to grips with whether a

correction is under way or is this just a bit of market prop. The Eiffel Tower sparkles away here in Paris on a freezing Friday night. But still

I'm Richard Quest live in the French capital where I mean business.

And a very good evening to you, a warm welcome on a cold night in Paris. Two major stories that we will be dedicating most of the program to

tonight. Wall Street, of course, and the severe loss on Wall Street. The Dow off more than 2 percent. The six worse points losses in the Dow's

history. We will get to underneath this and explain why it is a major correction or is this just a bit of froth after some extraordinary gains in

the past 12 to 18 months.

And in Washington, the Republicans release the memo from the intelligence committee and now everybody wants to understand what was behind it. Is

this President Trump trying to discredit further the Mueller investigation into Russian interference? First of all, though, we do begin with the

market mayhem that happened in New York.

It comes -- the market gains came to a screeching halt on Friday as the Dow suffers its worst points drop since 2008. On percentage terms, just over 2

percent, it's the worst fall since 2016. It ends at the low sessions of the day off 1,000, 1100 points for the week. More significantly perhaps

volatility as seen through the VIX index, that is up 50 percent. Look at Dow 30, and if you look at the Dow 30, not a single stock manages to raise

itself above the power pit. Not surprising, of course, because as the selling continues so the portfolio and the algorithms kick in to sell vast

quantities across the entire range of the Dow 30.

Apple shares are now more than 10 percent lower since they are all-time high. That puts them as being an official correction. And if you look at

the S&P 500, every sector is negative. So, the cause and the effects. Those are the effects. These are the courses. The jobs report, now the

jobs report show 200,000 jobs were created but there's also because wages went up, there are concerns that that will spur inflation, thus prompting

the Fed to raise interest rates even faster, perhaps four interest rate rises in 2018. And we see that in rising bond yields in the bond market as

investors rotate out of stocks, but the stocks themselves get hit, because, of course, yields mean higher borrowing for companies.

Finally, on earnings, Exxon, Chevron all fall short and energy shares, the worst of the day. Clare Sebastian is on the floor of the exchange where

I'm guessing people are glad the closing bell has rung.

[16:05:00] CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: Absolutely, Richard, you know, I think it's fair to say that the fall accelerated toward the

close of the day. I'm just looking at volume now. Over a billion shares changing hands right now. It really is very high volume for a Friday

afternoon. This is across the board, Richard, down 2.54 on the Dow and on the Russell 2.06. So, very much across the board here, Richard.

But I think one thing I wanted to point out is that volatility has been so low for so long and we have seen an element of excitement here on the floor

today. Because simply because traders do well when there's volatility. But I want to bring in Peter Tuchman here. He's going to tell us a bit

more about your question, Richard, of whether this is going to be a broad- based decline? Are we going to see a 10 percent correction?

PETER TUCHMAN, FLOOR BROKER, QUATTRO M SECURITIES: But you know, I think Richard doesn't understand that I am actually not psychic. What does this

look like? Look, it's a matter of how the perfect storm sets up. It started out with bond rates and treasuries and what not, so it spooked the

market a little bit. With it heading up toward 3 percent.

SEBASTIAN: Will it continue?

TUCHMAN: It's really hard to know. I don't think we can make that decision right now. All we know was that it was a Friday afternoon, these

memos came out, which usually doesn't -- as I always say, politics don't really interact with the market that much. But just like there's a little

bit of fear and there was a couple of things triggered with the bond and treasuries going on. There's been a lot of pressure on the market and

volatility all week this week. All we know is that we close at lows because it's a Friday afternoon. The weekend is a wild card. It always

is.

Friday into Monday people are headlining. People like Richard are going to be talking about, oh it's like the crash of '08 and la, la, la. We don't

know what will happen Monday. Could it be the perfect storm and on Monday we are going to say, look at that we set ourselves up on Friday for the big

sell-off on Monday, black Monday again. That's possible. Is that going to happen? I don't really believe so. I think this is going to be a buying

opportunity.

We may see a little continuation on Monday. Depends on what happens over the weekend. My gut is this is emotional or it's a reaction. I don't

think we are triggering anything. I don't think there are a big bubble or anything like that. The market is due for a little correction. You know,

when things set up and there are a number of things in consecutive order, right? That add up that sell triggers and sell signals.

SEBASTIAN: What about interest rates and this is Janet Yellen's next week at the Fed. Is there concern around that?

TUCHMAN: I think there is. What happen was with the treasury and the bond yields going up higher, was there a fear this morning that was one of the

things that came out that the Fed may be forced to make the rises a little more rapid. There may be an emotional reaction that may put stress on the

market. We've seen gradual rises over the last little bit of time but if we suddenly bump it up in February or March, right? And that speeds it up

a little bit due to inflation and what not that could put a little spook on the market.

SEBASTIAN: All right, Peter, thank you so much. Have a good weekend. So, Richard, you know, it could continue next week. We don't know, Peter

Tuchman isn't psychic, so back to you.

QUEST: No, Peter Tuchman's not psychic but certainly, there is the worrying aspect, Clare, of this. Clare, you still with me. You've been

down at the exchange all afternoon. Did there seem to be the whites of the eyes. That's usually a good test. Was there an element of concern

bordering on worry?

SEBASTIAN: There was a mixture, Richard. We had one or two blasphemies on the floor of this afternoon as people looked at that selloff accelerating.

But I think there was an element as well -- you know, I was in an elevator with a trader and he said to me, you know, this bull market has gone on for

a really long time. You know, it was inevitable that at some point it was going to pull back. The beginning of the week even, you know, this was

seen as a market that had had an exception run even just over the course of January. So, what a difference a week makes. But I think a lot of people

here are thinking this had to happen at some point.

QUEST: Clare Sebastian on the floor New York Stock Exchange. Clare, thank you.

That selloff continued on European bourses. The earlier bourses had seen what was happening in New York. They hadn't seen the worst of the day.

They just saw 200 or 300 points down. It still is enough for European markets to turn turtle and go lower and it was the same factors in many

cases. The government bond yields are up, banking shares were amongst the worst performers of the day. Joining me, braving Friday night and it is

cold Friday night and the wind is whistling at the Champs-Elysees. It is entirely appropriate, sir. Stephane Boujnah is the chief executive of

Euronext. You have stock markets in Paris, Brussels, Amsterdam, Lisbon and now in Dublin. I'm sure I've missed one somewhere.

STEPHANE BOUJNAH, CEO, EURONEXT: No, it's fine.

QUEST: Now, I understand you are just provider of the market or the vehicles.

[16:10:00] What do you make of what we're seeing in terms of this market volatility, this turbulence at the moment?

BOUJNAH: I would encourage everyone to calm and cautious and not to interpret what is significant but is not enough to be an appropriate term.

Especially without coming into much what happened in U.S. markets especially about Europe where the valuation of companies remains lower in

the U.S. Where the prospects of the earnings season seem very positive. So, the fundamentals of the companies, of the actual producers of EBITDA

and net income are significantly better than when we had the last time a significant drop in markets. I would be cautious and not over making it.

QUEST: And there's one other factor at least from the European point of view, good growth. The best growth in a decade in Europe at the moment.

BOUJNAH: Europe is backed by any standards. In terms of GDP growth but even beyond GDP growth prospects, the confidence indices are better than

ever.

QUEST: How do you prevent or how does one prevent, if you can, the coupling of the two? Can you decouple European markets from the U.S.?

Obviously, if you get a broad-based selloff, you can't, the two are going to follow each other. But at where do you see that coupling at the moment?

BOUJNAH: The fundamental dynamics of the underlying industry on commercial and financial assets in Europe, and particular in continental Europe and in

the Republic of Ireland is much better than it's ever been in the past ten years. So, there is growth to catch now in the continent, in Europe. So,

I think that will at the very least mitigate the contamination, if any --

QUEST: Do you think there's an entire generation of younger investors who have never seen interest rates above virtually zero, 1 percent to 2

percent. Now they're going to start to see 1 percent, 2 percent, even 3 percent in the U.S. They've never seen markets quite so volatile in the

last ten years. And there's a complacency about markets that we've not seen before.

BOUJNAH: Yes, so, it's a new era. And everyone has to look at markets with a fresh eye. And definitely in a context where the situation is

changing profoundly in Europe. There is a new set of opportunities.

QUEST: I need to ask about Brexit. The role of Euronext in the post Brexit world. Now, obviously, you're in markets in all countries that

might be looking to take future listing, or existing list, from London?

BOUJNAH: Yes. Definitely, we run three out of the four cities that would potentially be the most beneficiaries of the Brexit. We run Dublin in a

few weeks' time, Paris and Amsterdam. And definitely we don't run Frankfurt, but three of those four cities will have more inflows from

London. The world as we know it today will not continue. London will not be in the same leadership to finance the continental Europe. Therefore,

there will be consequences in trading of your nominal assets, there will be consequences in investment banking businesses moving to the continent. And

there will be definitely dual listing and more listing directly in those places.

QUEST: Right, but in this environment, which is obviously an opportunity for you, are you going out fishing?

BOUJNAH: Well, yes. We don't need to go fishing. We are being fished. I mean, the reality is that the ones who more concerned about making plans

post-Brexit are the ones who need certainty. And they are definitely the ones who are weighing their options in an environment where London is a

place of uncertainty more than anything else. So, the situation is that there are numerous approaches for all sorts of market participants,

including issuers to consider listing in Europe as an alternative to London.

QUEST: You've been very kind to come and brave the cold tonight.

BOUJNAH: Thanks.

QUEST: Thank you very much, indeed, Stephane, for joining us. We'll be back again as the whole Brexit moves on. Good to see you, sir. Thank you

so much.

BOUJNAH: Thank you.

QUEST: Whilst we continue tonight, let's just look and see how the particular stocks did trade. Now, Oil stocks were the biggest losers on

the Dow. Chevron, Exxon, both fell. Disappointing earnings but the size of the fall was quite dramatic. And again, if you remind yourself how the

Dow has now finally closed out. The Dow is off 2.5 percent, a fall of 665 points. It was one of the worst performances, the sixth was so far.

The state-owned company here in France, once known as Areva. Is now making a pivot to nuclear energy. I think you've got it right way around. You've

gone from --?

PHILIPPE KNOCHE, CEO, ORANO: Areva to Orano.

QUEST: Why?

KNOCHE: We've we changed scope. We focused. We are a 4 billion company now. We used to be a 9 billion company. We refocused on nuclear

materials. Purely nuclear materials for electricity generation.

QUEST: Why nuclear? What is it about nuclear? I mean, it's politically unpopular in many cases. It's expensive.

[16:15:00] KNOCHE: It is not. It is not. It is cheaper to produce with existing reactors then with many other kinds of electricity generation. It

is $33 and euros here to generate with existing reactors. (INAUDIBLE) hour, which is cheaper than what you can build in a lot of cases.

QUEST: The long-term effects of nuclear -- I mean, I'm not going to go too far back to previous accidents or incidents? But does the public want

nuclear?

KNOCHE: We have a strong support in a number of countries, including Asian ones. And Asia is for us a target where we build our business. We have 20

percent of business in Asia today. We want to go to 30 percent. And if you go to Asian cities because of climate change, because of pollution,

Japan starts again it's reactors. China is building, India is building, you have growth in nuclear.

QUEST: Let's talk about France. Because we're here in the French capital and we've been here this week. The concept that France is back. Do you

buy it?

KNOCHE: Oh, I'm involved in it. We put energy in it. For sure.

QUEST: But is it because of the political mood. Do you believe because of the election of President Macron that the French psyche, the confidence in

this country, the economic boost of this country has returned?

KNOCHE: France always has had an independent thinking. In fact, when General de Gaulle started nuclear, he wanted to be independent in term of

energy. Following presidents mentioned, we have no oil, but we have ideas. And we want to stick to energy and innovation technically so that energy is

back.

QUEST: But France and nuclear -- I look at the relationship with the U.K. and the deals that have been done between the French and the U.K. on

nuclear and you now talk about Asia. The ability to grow France's domination.

KNOCHE: No, no arrogance here. Presence.

QUEST: Presence. Is it not that much difference from presence to domination?

KNOCHE: Presence means we are serving. We are serving U.S., serving 30 countries around the world. We don't need to be dominant.

QUEST: You don't? It's kind of you to come out on a really cold night.

KNOCHE: Thanks, Richard.

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

As we continue tonight, the Nunes memo was released. Now everybody needs to work out the political implications of that. And we also will consider

during the course of this program, whether or not the memo and the distrust in Washington is finally having an effect on the stock market. It's QUEST

MEANS BUSINESS live in the French capital.

[16:20:00] (COMMERCIAL BREAK)

QUEST: Welcome back. It is QUEST MEANS BUSINESS in Paris. The controversial Republican memo has finally been released and we're poring

over the details. The release of the Nunes memo is in direct contradiction and response and opposition to the FBI and the Department of Justice. This

is what it says. The document alleges that the FBI abused its surveillance power. It claims the surveillance warrant to monitor a Trump aid by the

name of Carter page, wouldn't have been issued without the disputed Steele dossier. It also says that the FBI's Russia investigation under President

Obama was infused with anti-Trump bias.

I'm joined by CNN's legal analyst, Michael Zeldin, who worked for the special counsel, Robert Mueller, whilst at the Department of Justice.

Michael, I have watched this all day, and I am still none the wiser as to the significance, if you like, of the release of the e-mail or the memo,

but more crucially, the political implications of it.

MICHAEL ZELDIN, CNN LEGAL ANALYST: Well, we'll see what the political implications are. From a legal standpoint it's really not a very

persuasive memo. The basis for the allegation that somehow the FBI has conspired with the Department of Justice in an anti-Trump way by obtaining

a warrant by the surveillance court against Carter Page, all of the facts that underline that assertion just don't add up. The way the court works

that requires a probable cause presentation of evidence would mean essentially that these Justice Department lawyers would have had to commit

felonies by misleading the court purposely to achieve this.

So, I think that in the end, legally, there I of no consequence. Politically, I think that it puts the president in a very difficult

situation of his own making. Which is to say, that he has it seems chosen his personal interests. That is the interests that he's trying to protect

in respect to the Mueller investigation against the collective view of the national security and law enforcement community that to release this

memorandum was against the national security and law enforcement interests of the United States. And I don't know how well that will be received

long-term.

QUEST: Right. I was reading the views of the vice chair of the Senate Intelligence Committee who basically said -- but he said that he had seen

the underlying documentation behind the memo. And in his view that underlying documentation does not support the conclusions of the memo. And

that really is the issue here, isn't it? Those who say they've seen the whole picture point out this partial picture distorts.

ZELDIN: Exactly. And this is why FBI director Wray begged the president to please not release this memo because it creates an incomplete and more

importantly, misleading picture of what the underlying, classified evidence actually showed. And of course, we'll never see the underlying classified

evidence, because it's classified. That's the way it should be. And so, you've got this narrative now in summary form by a Republican member of

Congress that to all who have seen the underlying data seems to be a mischaracterization of what actually occurred.

QUEST: Good to see you, sir, tonight. Thank you for the legal position from law to politics. President Trump wasted little time around the

release of the memo to describe the FBI's behavior and actions as disgraceful.

(BEGIN VIDEO CLIP)

DONALD TRUMP PRESIDENT OF THE UNITED STATES: I think it's terrible. You want to know the truth, I think it's a disgrace. What's going on in this

country. I think it's a disgrace. The memo was sent to Congress. It was declassified. Congress will do whatever they're going to do, but I think

it's a disgrace what's happening in our country. And when you look at that and you see that and so many other things and what's going on, a lot of

people should be ashamed of themselves and much worse than that.

(END VIDEO CLIP)

QUEST: Jeff Zeleny is at the White House. Jeff, Is the President now at war with his FBI?

[16:25:00] JEFF ZELENY, CNN, SENIOR WHITE HOUSE CORRESPONDENT: Richard, it certainly seems like that is the case. I mean, the FBI director, his own

hand-picked FBI director on the job only six months yesterday issued a warning saying he has grave concerns about the memo and the president

released it anyway, ignoring the view and feeling of his FBI. So, certainly, it would seem that he is indeed at war with the FBI. And

certainly, he tweeted out earlier this morning going after the top ranks of officials of the FBI and the Juice Department saying they are politically

bias against him here. So, trying to make the argument, bolster the argument that he believes this entire Russia investigation was politically

motivated.

Overlooking some of the facts here, of course, cherry picking some of the facts. But the reality here is this confrontation between the White House

and the Justice Department, which includes the FBI, was nothing short of extraordinary. And as we sit here right now, we do not know what the

president's view is of the deputy attorney general Rod Rosenstein. He of course, oversees Bob Mueller's investigation. The president in the oval

office shortly after he said those things he was asked if he had confidence in Rod Rosenstein. He said, you can figure it out. We know has been at

war with, he's been fuming about him. So, that is the question. Would the president try and make a move to fire or push out the deputy attorney

general? That's something that going into the weekend here we just don't know -- Richard.

QUEST: Now, Jeff, allow me to take you into our area here of QUEST MEANS BUSINESS into the business side of it and there is a link here. The

president every time he opens his mouth in a speech he talks about how the market is up 50 percent since he was elected. If the Democrat, Hillary

Clinton had been elected it would be down 50 percent. Today this week for the first time we may have been seeing a correction and the politics of

Washington infecting investor confidence. Will the White House be concerned about that?

ZELENY: I think there's no question they will be concerned. Will they talk about it? I'm guessing they won't. We have not heard the president

talk once about the market or the decline. Some of his advisers have told us, oh, look, you don't look at the daily machinations, the ups or downs,

you look at the longer averages and trend lines. But the reality is if the president was trying to have it one way by saying the market was climbing

because of him, well, then the inverse must also be true. But the question here, Richard, so much of this is built in. All of last year the sense was

will the White House, will the president get tax reform done? Will they get corporate tax reform done?

Well, now that is done and there's nothing on the horizon that people are looking forward to. So, yes, there is good unemployment, the unemployment

rate is very low no question. A lot of companies are spending more money. But the market must be a worrisome sign for this president because he's

talked so much about how he is to blame for the rise. So, one would think he might also be to blame for its fall, but of course, no mention of that

today at the White House.

QUEST: Jeff, good to see you, sir. Have a lovely weekend.

ZELENY: Richard, thank you.

Jeff Zeleny joining me from Washington.

When we come back, we need to put into perspective the 4 percent fall of the Dow. Now remember, a correction is usually defined as a 10 percent

fall, 4 percent so far. The worry is there's another six, at least to come. It is QUEST MEANS BUSINESS live tonight, from Paris where it's cold,

but clear. The Arc de Triomphe is grand, and Eiffel Tower remains majestic.

[16:30:00] (COMMERCIAL BREAK)

QUEST: Hello. I'm Richard Quest live in the French capital tonight. There's more QUEST MEANS BUSINESS in just a moment. We'll be talking about

the Democrats who are warning about the constitutional crisis in the United States on the back of the Nunes memo being released.

And bubbles of a different kind. Chief executive of Lanson champagne. And the CEO of Accor Hotels, both with us to talk about what's happening in

France. At the moment, this is CNN and on this network, the facts and the news, they always come first.

Top Democrats are warning Donald Trump that if he tries to use a disputed memo as a pretext to fire key figures in the Russia investigation it could

trigger the worst constitutional crisis in decades. Controversial Republican memo was released on Friday alleging FBI surveillance abuses and

bias against the president.

A least 19 migrants are believed to have died after their boat sank off the coast of Libya. The bodies were recovered after they washed up on the

shores of the Mediterranean. International Organization of Migration, the IOM, says three people who were on the boat survived.

The father of three daughters who were abused by Larry Nassar tried to attack the former USA gymnastics doctor in court. Bailiffs tackled Randall

Margraves before he could reach Nassar during a sentencing hearing. Nassar already faces what amounts to several life sentences for abusing hundreds

of women and girls.

So, traders have been telling us for some weeks that the stock market was due for some form of pullback. Well, this week and particularly today,

Friday, was the day in which it took place. Look at the numbers and you'll see what I mean. 666 points fall for the Dow. All stocks in the Dow 30,

all sectors were down and it's the worst week in two years. 1100 points of the index over five days. And it ends 4 percent below record highs. Some

had said that this was a bubble market. Well, listen to these economists and they seem to be divided on whether air is coming out of the bubble.

(BEGIN VIDEOTAPE)

ALAN GREENSPAN, FORMER CHAIR OF THE FEDERAL RESERVE: We have a stock market bubble and we have a bond market bubble.

JEAN-CLAUDE TRICHET, FORMER ECB PRESIDENT: I certainly share that view and we will have correction on markets.

LUDOVIC SUBRAN, HEAD OF MACROECONOMICS RESEARCH, ALLIANZ: But I think it's not a bubble. The fundamentals are actually good. These companies are

changing the world. So, that's why the stock market's pricing in, I think.

PETER TUCHMAN, FLOOR BROKER, QUATTRO M SECURITIES: We've had plenty of opportunities for this market to sell off and if it was a bubble there

would have been follow through on those days.

(END VIDEOTAPE)

QUEST: So, two central bankers and an economist. Now to Lindsey Piegza who joins me, chief economist at Stifel Fixed Income, who joins me from

Minneapolis. Lindsay, what do you think? Have we seen the beginning? I'm not suggesting stock market crash. I'm not suggesting 2008 all over again.

I am saying, the beginning of a longer correction.

LINDSEY PIEGZA, CHIEF ECONOMIST, STIFEL FIXED INCOME: Well, I think it is reasonable to expect continued volatility from here, certainly if you look

at what the equity market has done over the past years really, it doesn't seem to jive with the two-ish percent economy that we're seeing in the U.S.

[16:35:00] So going forward, you would expect one of two scenarios, either one, the U.S. economy to gain significant momentum to really justify where

the levels are that we are seeing in the equity market, or you would expect a sizable correction and a continued correction as we saw this week. Now

right now we see the U.S. economy continuing to post stable figures, but fourth quarter GDP up just about 2.5 percent is a step down from what we

had seen in terms of previous growth through the summer and into the fall. So right so right now again the stock market is grappling with a number of

different issues to determine where the economy is headed.

QUEST: But it's true to say, isn't it, that the fundamentals of the U.S. economy at the moment are strong.

PIEGZA: Well, I'd say that they're steady. I think strong is a bit overselling their hand, if you will. It's steady at about two-ish percent

and we're still struggling to see 2 percent inflation which is one of the key metrics for the Federal Serve and yes, we are seeing improvements in

the labor market as we saw earlier today, 200,000 jobs being created. But that 4.1 percent unemployment rate is really an artificial figure. It's

not telling the whole story of what's happening out in the labor market. As we know there's still a tremendous number of dropouts marginally

attached and discouraged workers, which if we add them back in, we are talking about an unemployment rate closer to about 8 percent.

QUEST: So, when you look at the prospect of a Fed, and four Fed, well, three likely, possibly for Fed rises in 2018. A change of leadership at

the top of the Fed, and you have rising bond yields which by their nature takes the wind out of equities, and it's a potent mix for the future.

PIEGZA: Absolutely. First off , if you look at just the data, again talking about the moderate growth rate on top line GDP, sub 2 percent

inflation, I do think that is going to be very difficult for the Fed to justify additional rate hikes over the coming months, but if the Fed does

force through those rate hikes against the backdrop of a still fragile U.S. economy, I do think that will continue to take momentum out of the equity

market and potentially out of the economy in general.

QUEST: Good to see you, Lindsey. Lindsay Piegza joining me, chief economist from Stifel Fixed Income, on what has been an extremely busy day

in markets and economies. A volatile day on Wall Street. All of the major indices suffered very sharp losses. Europe hadn't seen the worst of the

day, but the euro bourses still managed to fall out of bed, as you can see from the numbers.

Deutsche Bank reported its third annual loss in a row. The chief executive said it would take a few more years, before the bank turned around, but he

did say it would have made an operational profit if it hadn't been for the tax loss as a result of the change in the U.S. tax regime, that took in the

last quarters. And so, to those companies that have to in trading these difficult times. Sebastien Bazin is chairman and chief executive of Accor Hotels.

SEBASTIEN BAZIN, CHAIRMAN AND CHIEF EXECUTIVE, ACCOR HOTELS: How are you?

QUEST: Good to see you. Your warm. Your warm for the moment. But thank you for joining us.

BAZIN: Thank you,

QUEST: On a cold night. Difficult days at the moment part? In terms of, yet Europe is growing, the U.S. is growing but you get this sudden market

volatilities which gets everybody worried all over again.

BAZIN: It doesn't worry me. He does not worry me. Because I don't control the market, I control the growth of my company. Accor Hotel is

doing absolutely fine, investors are going to get back on their feet on Monday, Tuesday, Wednesday. It does not matter I'm not going to change

course, we are in a blessed industry, travel, hospitality is growing. So, the market is going to recover, and Accor is going to do fine.

QUEST: When we look at where people are traveling, we've seen some disturbing trends in terms of United States. Where numbers are down, the

USTA as reported that a number of people visiting the U.S. is falling. Are you seeing anything like that in demand in the U.S.?

BAZIN: Well, I guess, you know, it's not disturbing for me, my smallest market happens to be the U.S.

QUEST: Exactly.

BAZIN: The biggest market is outside U.S. So, get the U.S. travelers to travel more and get the Chinese to come to Europe, and I am very happy

camper.

QUEST: When we look at the Chinese is anybody ready for this onslaught of Chinese visitors that are going to be coming our way?

BAZIN: Well, we are extremely ready because there are 120 million Chinese traveling today which is far more than, surpassing American.

[16:40:00] Half of them are going to Asia Pacific and the rest going to Europe, and we really do welcome them, but we actually have to prepare our

hotels to be welcoming them, they eat something differently, they travel together. A different crowd.

QUEST: Right. But did you look at the numbers. We looked at the numbers recently and if you take just a percentage of the number of passports held

by the Chinese versus the United States. If the Chinese move at the same rate toward the United States and we are going to be talking about hundreds

of more millions of the Chinese.

BAZIN: Perfect. And I just love it. I will be happy. There is not enough supply, demand is going to be outpacing, so welcome them. So

seriously, it's good news.

QUEST: It is good news if you can cope.

BAZIN: We'll manage to cope. We have been coping with the growth of 5% percent per annum, supply has been only going to 2.5 percent per annum. It

is a blessed industry, I have 20 years of visibility. It's scalable, sizable, profitable, growing venues because it is so scalable, and it is

being disrupted fast by the digital players.

QUEST: OK, let's talk about the digital players. Thank you.

BAZIN: Expedia, Booking --

QUEST: Exactly. The argument and I heard this many times, the rising tide lifts all boats, and you participate, and some of your competitors have

gotten involved as well.

BAZIN: Accor as well.

QUEST: You did, you got involved at the high-end.

BAZIN: We did with one final step, rentals.

QUEST: Far too good for me

BAZIN: No, no, you can afford it. We welcome you. Fine. Just talk to me.

QUEST: Let me ask you, the issue of what I wanted to finally ask you is in terms of Accor, you want to grow, and you need to punch your weight more

than you already are.

BAZIN: We want to grow, and we don't need to resist the digital players, we need to embrace them, we need to align with them and we need to ponder

with them and we need to do understand what to do well and don't do well. The one big difference they never talk to the customers, they are a

platform, they have called information, they never see you. I see you when you come to my office and when you come to my hotel, and so I have a warm

interaction with you. You have emotion and I have emotion, so we are very complementary, we can put our data together, we are going to be very, very

strong. Good match.

QUEST: It's cold here.

BAZIN: But you're in Paris. A lovely city. Welcome back.

QUEST: I don't deny that.

BAZIN: I can't give you something -- there' nothing better than here. No, truly.

QUEST: I agree with you.

BAZIN: That's good. Come back more often.

QUEST: I would if I can stay at one of your hotels. I mean the rates.

BAZIN: Where are you staying tonight? Thank you.

QUEST: Give me a good rate! Give me a good rate.

BAZIN: I will give you everything.

QUEST: Thanks! I think I just got a room for the night. It's a cold night out there. We'll continue, it's QUEST MEANS BUSINESS, we're live in Paris

after the break.

(COMMERCIAL BREAK)

[16:45:00] QUEST: You just really can't -- you can't beat it. Whichever way you look at it, the Eiffel Tower, Arc De Triomphe and it's all on a

Friday night. Now some news to bring you, from the United States. The FBI Director Christopher Wray has just addressed FBI employees with an internal

video according to two people who viewed it.

The director says he knows it's been an unsettling time and, according to sources, he says he was inspired by the FBI and the work that they do. Now

Donald Trump the U.S. President has called the FBI's conduct in the alleged memo, he's called it a disgrace. Asked if the Deputy Attorney General of

the U.S. Rod Rosenstein should resign, he said you figure that one out.

The Democrats have issued a blunt response in all of this, drawing comparisons to the Nixon administration calling it a potential

constitutional crisis and saying firing Rod Rosenstein, DOJ leadership or Bob Mueller could result in a constitutional crisis of the kind not since

the Saturday Night Massacre. That is when Richard Nixon ordered the special prosecutor to be fired. Joined now by CNN's chief legal analyst is

Jeffrey Toobin. Jeffrey, pull together, please, the strands of the day as to the significance of what it means?

JEFFREY TOOBIN, CNN CHIEF LEGAL ANALYST: OK. Just for an international audience that has not been following every -- every maneuver, I think most

people know that the president is under investigation for possible collusion with the Russians during the campaign. This is an investigation

that began during the campaign, although the public didn't know it in 2016. What the Republicans are saying today is that that investigation in

significant part was created by Democratic operatives, that Democrats, you know, put evidence into circulation that led the FBI to investigate the

Trump campaign.

However, the memo that the Republicans put out today, the so-called Nunes memo named after a member of Congress is extremely unpersuasive on that

point. And does not establish that there was a political basis for this and in fact, only establishes that the FBI was doing its job as it's

supposed to.

QUEST: Jeffrey, is it becoming more likely that the president either fires the director of the FBI or he resigns anyway because he's put in an

impossible position? Rod Rosenstein's position has become just about untenable and we are moving ever closer to the firing or removal of Bob

Mueller. Do any of those three scenarios seem likely tonight?

TOOBIN: Absolutely. I'd say all three are more likely tonight.

QUEST: You know, we talk about a constitutional crisis, but you know, the big difference or one of the many big differences between the 1970s when

Richard Nixon was forced out of office was that the Democrats, the opposition party-controlled Congress. Today, the president's party

controls Congress, and the president's party has done nothing to suggest they have any independence from this president and they show every sign

that regardless of what Donald Trump does, whether he fires Robert Mueller and whether he fires Rod Rosenstein, the deputy attorney general, whether

Chris Wray, the new Trump appointed director of the FBI quits.

The Republicans in Congress are standing by Donald Trump, and I don't see anything changing that so that changes the political dynamics considerably.

QUEST: If that's right, Jeffrey, then talk of a constitutional crisis is nothing more than talk, if those who have the power to resolve a

constitutional crisis would not act.

TOOBIN: That's exactly right. That's why I somewhat object to the use of the term constitutional crisis because that suggests a conflict that could

be resolved in opposition to the president. We had a constitutional crisis in 1974 which ended with the president being forced out of office, but he

was largely, though not entirely forced out of office by Democrats. Here, Republicans control the House of Representatives and the Senate and they

show no independence. They show no interest in checking the president's power.

[16:50:00] Today's development, the release of this memo shows they are using their power even if it's inaccurately to help the president not to

force him to come to terms.

QUEST: Jeffrey Toobin making solid sense on a Friday evening which is exactly what we need. Thank you for joining us. Much appreciate it. When

we return in Paris, we will have already got the hotel room, so it would seem, now apparently, I've got a bottle of champagne to go with it. The

chief executive of this, and we'll talk about climate change and explain the connection between the two after the break. You can't be in Paris

without champagne after the break.

(COMMERCIAL BREAK)

QUEST: Welcome back to Paris. We've talked a lot about bubbles during the course of the program. By that we're talking about stock market bubbles.

Now let's consider bubbles of a different kind. Those of the champagne. Joining me is Bruno Paillard who is the CEO, good to see you, sir.

BRUNO PAILLARD, CEO, BRUNO PAILLARD CHAMPAGNE: Nice meeting you. sir.

QUEST: And delighted, now look, you will tell me there is a difference now in the way French champagne and the vintages, because the grapes are

ripening faster, because of climate change.

PAILLARD: Well, that's true, but first I would like to say that there is only French champagne as far as true champagne is concerned. Because

champagne is a geographic indication. It is the name of the region.

QUEST: And Spanish will get upset when it's got to be called Cava, in the sparkling wine in Britain. What you call it?

PAILLARD: Nobody in France, with many other regions producing sparkle wines, but they call it Cremant for instance. But champagne is only from

Champagne. I mean, that has been for many, many centuries.

QUEST: Let's talk about it because this is one of the important exports for -- in terms of whether numerically and it's famous, and is there still

the demand for real champagne when you are being hit by so many other competitors?

PAILLARD: Yes absolutely. Champagne globally is very successful and although it's fairly small in terms of volume and don't forget that entire

champagne, all producers included only produce about 300 million bottles a year. That's not much, you know? So, in volume it is small, but if you

consider the FOB turnover, we are talking about more than 5 billion euros. So, it's serious.

[16:55:00] QUEST: Serious stuff, and now let's talk about France. Macron says France's back. Is he right?

PAILLARD: I very much think so, and I must say he celebrated his election with one of our champagnes and not Lanson, which he drank that same

evening.

QUEST: Is there a greater confidence in this country, then there has been in recent years?

PAILLARD: Yes. I would say it's not very difficult, but the answer is definitely yes.

People are more optimistic because first, he's a young guy and he's showing that there may be new ways to explore others and the old guys have failed

in showing.

QUEST: Good to see you tonight, sir. I see you are holding firmly on to your bottle of champagne.

PAILLARD: I would not want it to fall down on the Champs Elysees.

QUEST: Allow me to --

PAILLARD: To open it? To look after it. I would open it but not when one is still working.

QUEST: Good to see you, sir.

PAILLARD: Thank you.

QUEST: Thank you very much, have a bottle of champagne.

PAILLARD: Thank you very much, Richard. My pleasure.

QUEST: Glad to see you.

We will have a Profitable Moment after the break. Give me that back!

(COMMERCIAL BREAK)

[17:00:00] QUEST: Profitable Moment from Paris. Well, it's not terribly profitable frankly, not if you look at your U.S. or European investments

and saw how they've fallen. A moment of perspective, no doubt. The market is down just 4 percent from its all-time high. The issue, of course is

whether we are seeing froth off the top, whether we are moving into something more serious, by way of a full-scale correction, say up to or

beyond 10 percent. Or whether this is actually a real fissure, whether the worries of Washington are now finally hitting Wall Street.

The truth on this Friday night as Peter Tuchman said, we have no idea. We don't know. The economics are solid or at least steady as you heard on

this program tonight. Corporate results are good. So, to form and suggest apocalypse now will be somewhat perverse. My suggestion and

recommendation, some bubbles would be worthwhile. Just watch which bubbles you have. And that's QUEST MEANS BUSINESS for tonight and I'm Richard

Quest in Paris. Whatever you're up to in the hour ahead, I hope it's profitable. The Eiffel Tower.

END