Return to Transcripts main page
QUEST MEANS BUSINESS
Walmart Earnings Disappoint, Amid Amazon Battle; ECB Official Refuses to Resign Amid Corruption Charges; Sweating It Out in Barry's Bootcamp; Eurostar Previews New London to Amsterdam Route; Venezuela Starts Selling Own Cryptocurrency. Aired 4-5p ET
Aired February 20, 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. No record, but we are off the low points of the day. Going to give you all
of the detailed numbers in the program. The Dow is off roughly 1 percent. The Nasdaq is also, and that's what we want to see. A good firm gavel that
brings trading to a close. Not a moment before time when you do see the numbers, but it is over, it is Tuesday. It's February the 20th.
A major markdown for Walmart shares, the super store is trying desperately to cap Amazon and may just have faltered. Accused of corruption Latvia's
central bank governor refuses to resign. The head of the Latvia's corruption prevention bureau joins me live on this program.
And where do you want to be at 7:00 a.m.? How about running and squatting in a nightclub like environment. It's called Barry's Bootcamp. We'll have
the chief executive and you'll see my rather feeble efforts in tonight's program. I'm Richard Quest live in the world's financial capital, New York
City, where I mean business.
Good evening. Let's begin at the White House where only moments ago Sarah Sanders told reporters that the President has acknowledged Russia tried to
medal in the 2016 election on numerous occasions and maintains there was no collusion with the Trump campaign.
(BEGIN VIDEO CLIP)
SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: The President has acknowledged that multiple times before. He acknowledged it during the transition. He
acknowledged it during a press conference in Poland, and he acknowledged it for a third time at a press event in Poland. He has stated several times,
I think one of the places where you guys seem to get very confused and it seems to happen regularly. The President hasn't said that Russia didn't
medal. What it's saying is it didn't have an impact and it certainly wasn't with help from the Trump campaign.
(END VIDEO CLIP)
QUEST: So, Dan Merica is at the White House. Does this put paid to the issue of whether the President accepts that Russia meddled.
DAN MERICA, CNN WHITE HOUSE REPORTER: Yes, absolutely not. You know, our reporting from what he privately believes is different than what he has
publicly said in those instances that Sarah Sanders mentioned. We are told privately he has told friends and advisers that he still questions how
involved the Russians were. Now this was before the Mueller indictment that came out on Friday that really laid out an intricate detail what
Russia actually did during the 2016 election which was a sweeping 100- person operation to medal in the election. So, despite what Sarah Sanders said there is also reporting that counteracts that. Additionally, Sarah
Sanders said, that once again, something that President Trump tweeted over the weekend that President Trump has been tougher on Russia in the first
year in office then Obama in eight years.
That's just not accurate. President Trump has declined to impose sanctions that were approved by Congress recently. That has declined to impose those
on Russia. Sure, there are plenty of Democrats that acknowledged President Obama could have done more in response to Russian meddling in the 2016
election during his last two years in office especially. But the argument that President Trump has really crack down on Russia just does not conform
with the facts.
QUEST: Dan, I need to just ask you -- you may not have seen this because you've been in the briefing -- but the President has said he has directed
the Attorney General Jeff Sessions to propose changes that would ban the so-called bump stocks that were used in the Las Vegas shooting late last
[16:05:00] a few moments ago I signed a memo directing the A.G. to propose regulations. I expect these regulations to be finalized, Jeff, very soon.
Is this the sort of measure that will appease those seeking greater controls?
MERICA: It doesn't seem like it will appease people. There are certainly people who want more or forceful response from the White House on the issue
of guns, but it is a step. And I think what we have seen over the last couple of days is President Trump is kind of gathering these chips that he
can play when he meets with people who want more gun -- more action on guns. Just this weekend he, through a statement of deputy press secretary,
Raj Shah, said that he was open to a law that would make the background check process more forceful, more cooperation between federal and state
This is just another step in that direction. After the Vegas shooting he said he was open to discussing bump stocks. And in this event, he said
he's directing his attorney general, Jeff Sessions to take action on that. I think you will start hearing that a lot at events when he's talking about
gun control and pushed on gun control. Because it allows him to say, well yes, this is what I'm doing. I do not think though it will be enough for
gun-control activists, no way.
QUEST: Dan, thank you, at the White House. Thank you.
We'll turn our attention to the regular agenda of business and economics and it was a volatile day on the market. The Dow hit late session slide.
Look at that. You see in the afternoon, stocks closed near session lows. At one point it was down around 300 points. Bond fears are rising once
again. The ten-year yields are closing in on the critical 3 percent level.
Now if you joined me in the QUEST MEANS BUSINESS trading post, we've much to talk about here. No records on any of the markets. Red, please. On
the indication of the day because you have the Dow off 1 percent, the S&P off half a percent. The Nasdaq which had been poking its head up a little
while, but Walmart shares are dragging down the market and accounting for around 70 points of the Dow's total losses. All the other markets were
lower. The tech shares in fact, as you see, and the tech shares were the best performers.
So, despite what we've seen, just to update you, though, the major markets are now just 3 and 6 percent below their all-time record highs in January.
I am joined to talk about bonds and bond yields. Tony Crescenzi, the executive vice president of PIMCO and CNN's global economic analyst, Rana
Foroohar. Good to see you both. Thank you.
Tony, starting with you. You know, we see it closing in on 3 percent, the bond and let's be blunt here. Many of my viewers, myself included, don't
really understand bonds and the significance and the yields and the prices. So how significant is this?
TONY CRESCENZI, EXECUTIVE VICE PRESIDENT, PIMCO: Well, the current yield level is not significant for those who are worried about risk. If yields
were to rise significantly, it could be a different story. So, for example, for historical context, the so-called 3 percent yield on U.S. 10-
year treasury note is quite low by historical standards especially in recent times. In 2006, the peak of the last cycle where the Fed boosted
its policy rate, the ten-year got to over 5 percent. In 2000, in the height of the .com bubble it was over 6 percent. It was 6.5 percent and
then in 1995, 6 percent. So, in that context it's not a level that's threatening to the equity investor, to the credit market investor, or even
to the real estate investors in other assets. The worry is that this 3 percent yield will become something else.
CRESCENZI: It's a worry we don't share.
QUEST: Rana, what might it become?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, I have to say that I'm also not worried that it's going to go to 4 or 5 percent, you know, any
time soon. I'm still worried that we're in an economy in which Wall Street and Main Street are really very disconnected. And I think the volatility
has something to do with that. I think that you've for a long time now seen asset prices really inflated by low interest rates. A lot of easy
money. You now see the economy coming back online. The fed kind of doesn't know quite how to play it. There's political pressure I'm sure to
make sure that we don't have a market correction before the midterms. So, I think the market is just trying to figure all of this out now.
QUEST: Tony, who's interested in bonds? Many of our viewers, again myself included, were always told as you get older and you start to look to
retirement out of equities and into bonds.
CRESCENZI: Right. Who is interested in bonds? Well, a lot of entities, a lot of people. There are 110 trillion of them in the world and it's valued
even more than the value of the global stock market. So, a lot of entities and investors globally. And yes, and you're right, as people age they tend
to want to go higher in what we call the capital structure. They want to move away from equities toward something that's less risky.
A simple rule of thumb that some people would follow, they say, take 100 and subtract your age and that's the amount of money you place in equities
and the rescue place in bonds. A very simple rule of thumb but that's what tends to happen. The U.S. population is ageing and the world population,
you can say in the developed world is aging and this will be the case for the next 15 years, roughly in many major states of the world. And this
will be an influence that benefits the bond market.
QUEST: You've got to admit, Rana, that when we talk about bonds, eyes glaze over, and we sort of all feel this is terribly significant. If only
we could understand what the significance was.
[16:10:00] FOROOHAR: Well, exactly, eyes do glaze over. But I think that the key thing here is what is growth going to be? What are growth
expectations? Are we in a real recovery here? These are the questions to be thinking about and this is what the bond market rises and falls on. I
think like you, Richard, that the key thing to remember here is that the money in the bond market is generally thought of as being the smart money.
So, we pay a lot of attention to stocks. But you're absolutely right to be focusing on bonds right now. We need to look very carefully on what
QUEST: OK but hang on. Let me delve with that 220. We're focusing on bonds, but, you know, I can tell you it's 2.93 percent or whatever, but I
can't tell you the price of the bond.
CRESCENZI: Well, because that depends on what pricing issue that would yield they were issued at. Don't worry about that. Think of the yield,
where it is and what the price changes could be on a forward-looking basis. Where the yield might eventually go in terms of whether it threatens you as
an investor in equity and credit and real estate.
QUEST: Right. If I've got these bonds, am I concerned purely on the yield that I'm getting or am I more concerned about the price that may actually
fall. I mean, I understand the boss, but there's adverse relationship --
CRESCENZI: It's a simple rule of thumb is that the starting yield is the major determinant of future returns. And so, if the U.S. ten-year is
yielding around 3 or that the Barclays aggregate which had placed through something like the S&P 500. It's a benchmark for the bond market. It
yields today about 3.1 percent. That's likely the return an investor would get if they stuck with a portfolio that looked exactly like that. When
they invest with managers like PIMCO, for example, we tend to earn alpha or something above the benchmark. Call it a hundred basis points and so these
days about 4 percent for core strategies is a pretty good number for diversified against equity risk.
QUEST: Good to see you both. Thank you. We'll talk more about it.
CRESCENZI: Thanks, Richard.
QUEST: It's crucial to understand this and we need to spend more time talking about it, thank you. Thank you, Rana, very good to see you.
Now, as we mentioned earlier, the Dow was dragged down by one particular stock. The retail juggernaut Walmart missed earnings and thanks to a sharp
drop in online sales growth. So, the shares fell some 10 percent on the news. The worst day since 1988. I've crossed from the trading post to the
CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: Right, the big box store, Walmart, the biggest of them all. And now the image behind you doesn't
exactly look like the store of the future, Richard, but don't be fooled. Walmart has been doing a lot to try to keep up with Amazon. In fact, they
started two and a half years ago in 2015 and here are some of the things they've been doing. E-commerce is obviously the big one. That's
groceries, we'll talk about that. Click and collect is a big way of combining groceries and e-commerce. They've got a thousand pickup
locations. Groceries, of course, is where Walmart dominates. It still has the edge over Amazon. They want to keep it that way.
QUEST: Whole Foods. Whole Foods.
SEBASTIAN: Whole Foods is the big elephant in the room and they do want to take on the competition and they do have the real estate, Richard, don't
forget. They've got 5,000 stores in the U.S. Whole Foods only has 460. So, clothing is another thing. Amazon is really getting into fashion.
Walmart is launching its own low-cost brands it wants to reduce the price. So, it's got private labels. It wants to appeal to millennials. Things
like Bonobos and Lord & Taylor, higher end things. It wants to up its variety.
QUEST: So, what's gone wrong with all of this? Why did they have a poor performance and the market fall out of bed?
SEBASTIAN: Nothing has gone wrong ostensibly. They said they acquired jet.com that was the biggest acquisition a year or so ago. That was $3
billion and that led to a lot of growth initially. That has tapered off a little bit.
But the real I think concern for investors here is that there were some operational issues. This was of course the peak season quarter. This was
the holiday season and they were ordering all kinds of big items like televisions and electronics and that didn't leave enough for some of the
basic items. That is where they saw some of their losses. QUEST: Jet.com.
SEBASTIAN: Jet.com. So, acquisitions are the core of their e-commerce strategy. That's one of the things they've been doing.
QUEST: They're still a huge retailer.
SEBASTIAN: They're the biggest. There the biggest private sector employer in the country. They have 5, 000 stores and it's really interesting
actually, Richard, because one other part of their e-commerce strategy is really looking at how to leverage that real estate. You saw it with click
and collect. They announced last month that they're closing 63 Sam's Club stores, 12 of them are turning into e-commerce facilities. So what Amazon
QUEST: Should we write them off yet?
SEBASTIAN: No, definitely not, 500 billion they made last year, Richard, and half a trillion in revenues.
[16:15:00] QUEST: Good to see you. Clare Sebastian, thanks, indeed.
So, from the Walmart to Latvia where the central bank chief says he is the victim of a smear campaign and won't resign. Ilmars Rimsevics who is also
a top official at the ECB, had been in custody on suspicion on soliciting a bribe. He was arrested last weekend and released on bail on Monday.
Speaking earlier, Rimsevics accused the country's banks of conspiring against him.
(BEGIN VIDEO CLIP)
ILMARS RIMSEVICS, GOVERNOR, LATVIAN CENTRAL BANK (through translator): I have become a target of an obvious and well-coordinated campaign of some
Latvian commercial banks in order to discredit the Latvian state. To exclude the Latvian Central Bank from the game and the upcoming
international arbitrary in Washington this spring.
(END VIDEO CLIP)
QUEST: I am joined by Jekabs Straume, the director of the Latvian Bureau of Corruption. He joins me from Riga. This is a mess. You've got the
governor of the bank accused of corruption and he won't resign. You've a bank that's been -- that had to be wound up. What is going on in Latvia?
JEKABS STRAUME, DIRECTOR, LATVIAN CORRUPTION PREVENTION BUREAU: Good evening. Yes, I think we can confirm that last week that the Latvian
corruption agency and points to the criminal pretrial investigation in which the president of the Bank of Latvia was detained for allegations for
soliciting and accepting bribes. A bribe that that is not less than 100,000 euros. And the most important thing that I want I want to find out
is that case, this investigation was not at all connected to the banks or financial institutions that are operating at this moment in Latvia.
QUEST: So, let me interrupt you, if I may, sir. You say it's not connected. We know that Latvia is an important banking conduit to the
east. Obviously, has Russian connections and is an important between the EU and the banking system and the eurozone. So how can we be sure that the
banking system in your country is clean?
STRAUME: That question I most likely won't be able to answer it. I am about business and my business is uncorrupted. But the most important
thing for my side is that this investigation most likely cannot anyhow impact the financial situation and the financial things in Latvia. Let's
say, everything that is connected to that just because it's not connected to any financial institution or bank that is operating at this moment in
QUEST: Thank you for joining us, sir, from Latvia. We'll talk more about it as the case proceeds and we appreciate you joining us on QUEST MEANS
To Europe where the markets ended the markets mostly high. The FTSE was pretty much flat. You'll see the numbers there, virtually unchanged. HSBC
fell 3 percent in London on weaker than expected earnings.
After the break, the chief executive of Barry's Bootcamp gives me a run for my money.
(BEGIN VIDEO CLIP)
Well, that was certainly invigorating. And I'm feeling every one of my 55 years and it's not even 8 o'clock in the morning.
(END VIDEO CLIP)
[16:20:00] (COMMERCIAL BREAK)
QUEST: Now it's currently minus 6 degrees Celsius in PyeongChang. This is the sort of thing you want to see lots of in that part of the world,
particularly -- the temperatures dipped to minus 25. It's the coldest Olympics in more than 20 years. Very little snow. In fact, 98 percent of
it is manmade and it's using machines from Michigan. The gold medal in snowmaking goes to SMI Snow Makers. Cross-country skiing -- cross-country
skiing, ski jumping, all of the downhill races simply not possible without manmade snow. The president of the company is Joe VanderKelen who joins me
now. It's quite extraordinary, sir, isn't it? That the Winter Olympics -- and it's not the first time -- relies on the snow that you manage to
JOE VANDERKELEN, PRESIDENT, SMI SNOW MAKERS: Yes. This is our seventh Winter Olympics that we've been a part of and snow making has become a big
part of mountain resort industry globally. And PyeongChang in particular, is very cold, but they don't see a lot of natural snow. So, snow making
has become a big part of these Olympic Games.
QUEST: Now look, I'm a rather fair-weather skier, and of course, I've skied on manmade snow, natural snow and it's not a particularly pleasant
sight to see on either occasion. But there is a debate about whether the manmade stuff is as authentic as the natural.
VANDERKELEN: We like to call it machine-based snow and its definitely real snow. Natural snow sometimes takes hours even days to form and it has the
dendritic arms on it. Whereas the machine-made snow, we only have 10 to 15 seconds to freeze those water droplets. So, we like to say that machine-
made snow is like two-week old natural snow. And a lot of people like to ski on groomed snow that's packed and tilled out and kind of that nice
corduroy. So, a lot of the natural snow gets compacted anyway. But yes, you're right. It doesn't compare to a two or three-foot powder day.
QUEST: Now when you get the contract for something like PyeongChang. I mean, what is the deal? Do you sort of provide the machines and charge by
the amount of snow or do they buy the machines? Do they rent the machines? I mean, with something like the Olympics, what do they do?
VANDERKELEN: Well, you take the Jeongseon Alpine Centre, and that was a new resort built for the Olympics. They didn't have enough vertical at any
of the resorts to host the men's and women's downhill. So that was a new resort switch. They started planning that resort five years ago and there
was a lot of planning that goes into the water and power resources and there was a river at the bottom. We filled a large lake with that and we
moved the water around the mountain. We actually have 130 snow machines that they bought to cover around 200 acres of terrain.
QUEST: So finally, PyeongChang and the amount of snow necessary to create an environment from Olympic standards from your machines from Michigan, as
you sat there and watched. How has it make you feel?
VANDERKELEN: Oh, we're very proud of the Olympics and you know, the venues look fantastic. The athletes are really pleased with the snow quality
that's there, and we're just really proud to be associated with the Olympics and a part of these really fun couple of weeks.
QUEST: I need to come and visit you at some point in Michigan at the winter and put to the test some of your snow machines, sir.
VANDERKELEN: We'd love to have you here. We have a dedicated research facility here and we can make snow on your head or we can slide you down a
hill and have some fun together.
QUEST: A research into snow. Good to see you, sir, thank you.
[16:25:00] Now dear viewer, please look away if you don't want to see distressing scenes. It's me this morning at Barry's Bootcamp. In a moment
the chief executive will tell me why this fitness notion shows no signs of waning and why they're expanding overseas. Barry's been going for 20 years
now it's in 40 locations and now as it expands overseas up to 60,000 people take part every weekend. The beauty of it is you can burn up to 1,000
calories in an hour. The business operates on a joint venture basis rather than franchise. And first, some viewers may find the following scenes
QUEST: In the city where if you can make it here, you can make it anywhere, you'd better be prepared, Barry's starts early.
(voice-over): The idea is simple. One group is on the treadmill while the others use the floor. Then we swap. It all started off perfectly
manageable and then --
(on camera): So, this is just the first few minutes. Concentrate, Richard. Concentrate.
UNIDENTIFIED FEMALE: Sprint.
QUEST: Sprint, she says.
QUEST: You'll see more of my suffering later. Joey Gonzalez is the chief executive of Barry's. He joins me in the C suite. Good to see you, sir.
Thank you for joining us.
JOEY GONZALEZ, CEO, BARRY'S BOOTCAMP: Thank you.
QUEST: Thank you for letting us go this morning. Now look, Barry's Bootcamp, the whole concept of the boot camp is what?
GONZALEZ: So, Barry's Bootcamp was founded on the principles that cardiovascular is as important as strength training. So, you're doing an
equal part cardio as you are doing strength as you saw in the video.
QUEST: But you are expanding the chain. You are expanding. It's not just enough and yet your expanding overseas, before in many ways you're going
into other parts of the United States, why?
GONZALEZ: Sorry. Repeat the question?
QUEST: You're going overseas. You are going into other parts of the world?
GONZALEZ: Yes. So, Barry's has always been the type of business that we see expanding into cities like Paris or Sydney prior to expanding into some
of the cities in the U.S. You're right. And part of the reason is that the pent-up demand, the customers sort of we've listened to them over the last
20 years. Right? And we've had so much feedback from so many places around the world that we sort of prioritize that as we build strategy
around where we go next.
QUEST: We look at a bit more just a second. Have a watch and when we back we'll talk about the strategy of who you're aiming at. First, dear viewer
QUEST (voice-over): 25 -- I swapped the treadmill for the dumbbells and my legs felt the effect. Some of the moves seemed a little confusing. But my
instructor Mike got me through it. And if at first you don't succeed, my neighbor Jeffrey was feeling the burn. Before long, the shirts were coming
off and the sweat was everywhere. My time had run out and so had my energy.
(on camera): I think I've worked out I'm the oldest here by about 15 years at least.
QUEST: I was the oldest by a few good years there. Who are you aiming at?
GONZALEZ: Our core demographic is 25 years to about 32 years old. But -- but shockingly enough --
QUEST: Go on. Carry on. Just stab me a few bit more.
GONZALEZ: That isn't necessarily our target demo because over 80 percent of the revenue at Barry's is actually from people who are older than that.
So, we cater to all, we don't discriminate.
QUEST: As I walk around Manhattan I see many wannabes. I see the boxing, the kick boxing, different fads, different ideas. You've been around 20
years. Do you worry that some of these other fads will start to encroach on what you're doing?
GONZALEZ: So, I think -- I hope that would have happened already at this point and 2017 was our best year yet. Same-store sales were up, new
studios have been really healthy. So, I actually think what started to happen is as the industry has become more crowded, so has the interest.
Right? The consumer group has become much bigger.
QUEST: So, this is a case of the rising tide lifting all boats.
GONZALEZ: Well, Barry's is the original, right? And so, we've been around 20 years and what we've done a good job of is built a community in an
organic way and this industry, this whole business is about relationships. It's a human capital business and so we have two decades of that under our
QUEST: And risk is always with these things that there are fads. That something else comes along.
QUEST: The capital evaporates or disappears, but this hasn't been your experience. It's a high-energy, exhausting millennial, and not cheap. A
class is 30, 40 bucks.
GONZALEZ: Yes. We've been around since before millennials, it's important to highlight that point, and Barry's is a place that at the heart there's
this thing, the efficacy, it works better than anywhere else, we believe. But also, in addition to that, the people that work at Barry's are very
different. The culture is really special. There's some feeling that you get when you walk into the space -- Yes? You have a question?
QUEST: No, here's the bet.
QUEST: We do one together before the end of the year.
GONZALEZ: Oh, my gosh, of course. I still teach once a week. You should come take my class.
[16:30:09] Julian Gonzalez, thank you.
GONZALEZ: Thank you.
QUEST: You can't argue with success. Some Barry's clubs open at 5:00. Others open at 6:00 in the morning and the early classes are usually full.
UNIDENTIFIED MALE: Oh, my gosh. It's invigorating. It is so cool to show up at 7:10 in the morning with some like-minded people and you've just got
to show up.
UNIDENTIFIED MALE: I feel amazing. You know, one hour in the morning it says my whole day off right.
UNIDENTIFIED FEMALE: I feel great. Awake.
QUEST: This is the New York way of starting your day.
UNIDENTIFIED MALE: Three, two, one.
QUEST: The "Mad Max" films envision a future that's anything but comforting.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Our world is reduced to a single instinct. Survive.
(END VIDEO CLIP)
And it's this toke vision has entered the debate of a Brexit. Ha
QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When Eurostar prepares to link Britain and the continent a
little bit more tightly, anyway. And Venezuela starts sales of its cryptocurrency, the petro.
As we continue this is CNN, and on this network, the facts always come first.
In the wake of the latest mass shooting in the United States President Trump says he's pushing for changes that would ban so-called bump stocks.
They weren't a factor in the Florida shooting last week and they were used in Las Vegas massacre last year.
[16:35:00] (BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: After the deadly shooting in Las Vegas I directed attorney general to clarify whether certain bump stock
devices like the one used in Las Vegas are illegal under current law. That process began in December and just a few moments ago I signed a memorandum
directing the attorney general to propose regulations to ban all devices that turn legal weapons into machine guns.
(END VIDEO CLIP)
Activists say the Syrian rebel enclave of Eastern Ghouta has suffered its highest death toll in nearly 3 years. They say at least 250 civilians were
killed in government shelling and air strikes in the past 48 hours and that includes at least 58 children. It's one of the last rebel-controlled areas
in the country.
A lawyer charged by the special counsel Robert Mueller has pleaded guilty to lying. Ha Alex van der Zwaan was charged with making false statements
to prosecutors related to discussions with the former Trump campaign aide Rick gate. He's now become the fourth guilty plea in the Mueller
U.S. President has said that Donald Trump Jr. is in India on an unofficial business trip. He met with Trump Tower developers in New Delhi. And he
will also plan to host at least two dinners with buyers of Trump-brand and luxury apartments. It's raised ethics concerns about mixing business and
Israeli Prime Minister, Benjamin Netanyahu, is blasting two new corruption investigations saying that part of an orchestrated campaign against him.
The prime minister is not a suspect in the latest probe, but members of his inner circle have been arrested.
The man in charge of Britain's exit from the European Union insist his country is not plunging towards a nightmare of Hollywood proportions. He
was speaking to business leaders in Vienna when the Brexit secretary, David Davis, said Britain would maintain its commitment to high regulatory
(BEGIN VIDEO CLIP)
DAVID DAVIS, UK BREXIT SECRETARY: Now I know that for one reason or another there are some people who sought to question that as these are
really our intentions. They fear Brexit could lead to an Anglo-Saxon race to the bottom. If Britain plunged into a "Mad Max" style world borrowed
from dystopian fiction. These fears about a race to the bottom are based on nothing. Not a history, not our intentions, not our national interest.
(END VIDEO CLIP)
QUEST: Now Eurostar's new high-speed service from London to Amsterdam is running a bit behind schedule, 60 months to be precise. The service was
originally scheduled to launch in December 2016. After a series of delays the first customers will now be able to board on April 4th. Eurostar
inaugurated the route on Tuesday. It was a sneak preview to a special group and that includes CNN's Ana Stewart.
ANA STEWART, CNN CORRESPONDENT: For two decades their trains have barreled under the English Channel, revolutionizing travel between the U.K. and
Europe. Since launching in the '90s, Eurostar says it's doubled the number of visitors traveling from London to Paris and Brussels. Now it's outgoing
CEO hopes a new service from London to Amsterdam and Rotterdam will deliver on a long-awaited promise.
NICOLAS PETROVIC, CEO EUROSTAR: We have so many customers saying when are you going to Amsterdam? So, that's it. We're starting.
STEWART: With prices starting at $50 each way, Eurostar is pitching itself as an alternative to low-cost airlines like Ryanair and EasyJet. But it's
going to take a lot longer. Flying takes around an hour and a half whereas this takes three hours and 41 minutes. And of course, it goes straight to
the city center and Eurostar says it will save time and money and getting to the airport.
(voice-over): Brexit has actually boosted Eurostar. It's not just the week pound, but all the EU and U.K. officials shuttling between London and
Brussels for talks.
PETROVIC: I also run on Paris, because a lot of companies are thinking, oh, maybe we should establish a subsidiary or something and let's do it now
while we are part of the EU.
STEWART: Crossing into the Netherlands wasn't easy for Eurostar. It required hundreds of millions of pounds in investment and years of
negotiations with Dutch officials. It's taken much longer than planned and some hurdles still remain.
SIMON CALDER, TRAVEL ANALYST: The huge problem for Eurostar is that they are launching effectively a trade that only goes in one direction.
STEWART (on camera): The U.K. and the Netherlands have yet to come to an agreement on passport checks and they're not expected to do so until the
end of next year. So, until then, you've got to get a separate train to Brussels where you go through passport control and then you can hop on the
Eurostar back to London. So, you can get from London to Amsterdam in time for lunch, but you'll be hard pressed to make it back to dinner.
[16:40:00] (END VIDEOTAPE)
QUEST: So, Ana Stewart -- you've been to Amsterdam. So, on the way back you've got to change in Brussels. Is that right?
STEWART: You do. You have to get out of the station at Brussels, go around the other platform and go to the Eurostar as if you were coming from
Brussels from holiday or a work business trip. And you need to go through security and passport control. So, the way back currently is clunky, but
it's supposed to be a temporary measure. But, you know, I did get back for you, Richard, because I didn't dare miss it.
QUEST: Quite right, too. What happens next though, post-Brexit. Because post-Brexit, the whole question of single market, freedom of movement and
it shouldn't, in theory, make too much difference because (inaudible) Eurostar does have security and immigration controls in the various
STEWART: It does. The question is whether the passport controls would get slightly more complicated for the Eurostar, but really in terms of trains
we're not looking at too much of a problem. Eurostar could actually win in this scenario, Richard, because aviation is the trickiest sector in all of
this and that is who ultimately, they are competing against. Particularly low-cost carriers in Europe. Now currently, this is the trickiest part to
negotiate because there are no WTO rules to fall back on. With aviation it is all about the single aviation market which is under the EU. Once we
leave that without any agreement and this is doomsday scenario and planes would be grounded in the U.K.
QUEST: On the bases -- I and I've done this story more times than I've heard at dinners -- which is faster, the train or the plane to Paris? And
now of course, the train is. Which is faster? The train or the plane to Amsterdam? Come on, Ana, when you are going on one of those luxury city
break weekends that you want to do, what would you take?
STEWART: Next time I go on one of the city break weekends I'm going to on and will do a race. I think the plane would get there faster, but it would
be a tight thing, and I think the train, at least on the way out there would be nicer.
QUEST: Ana Stewart who is in London. Will you bring me back a souvenir? Any souvenirs?
STEWART: I got you a waffle, Richard. I got your waffle.
QUEST: That will last a long time, won't it? A waffle.
Now look, whether it's a waffle from Ana Stewart or some chicken, that might even have more chance of getting the waffle than I do from chicken
especially if it comes from Kentucky Fried Chicken and one of their many branches in London. Now that's because hundreds of KFC outlets in the U.K.
are still struggling with a shortage of chicken. Samuel Burke explains how a restaurant known for its singular product ran out of it.
SAMUEL BURKE, CNN TECH, TECHNOLOGY AND BUSINESS CORRESPONDENT: Why didn't the chicken cross the road, Richard. This is the question that KFC has
been having to answer for its customers all across the U.K. this week. At one point 800 of their 900 locations were closed. Now half of them are
opened and that of course means half are still closed. And KFC expects these problems, these closures to continue until the end of the week.
The U.K. is their largest market in Europe. KFC's fifth largest market at a global level and the problems all have to do with the fact that they
changed delivery services. The new company DHL admits they're having problems getting chickens to locations like this one and that's why they
remain closed. But the more serious concern here, what was with the employees? KFC says they're going to continue to pay their employees at
the stores that are closed. But 95 percent of KFCs in the U.K. are franchises. KFC is encouraging stores like that to pay their employee, but
they're having to take on mounting losses as these problems continue.
We were peering in here and we saw some of the employees are here. They were eating a meal, of course, it wasn't Colonel Sanders' famous chicken.
It was fingerlickin' take-out from a nearby competitor -- Richard.
QUEST: Samuel Burke. So, with that waffles and on the move.
North Korean hackers are now a threat to the global economy. That much we've already known, but the cybersecurity experts at FireEye are getting
even more concerned with their latest report that suggests the situation is getting a great deal worse.
[16:45:00] (COMMERCIAL BREAK)
QUEST: A new group of North Korean hackers is targeting multinational corporations according to the cybersecurity firm FireEye. The group is
called "reaper" and FireEye says its ability to attack global companies based in South Korea is now posing a direct threat to the country's
economy. John Hultquist is the director of intelligence analysis at FireEye and told me he believes why this is now so serious.
JOHN HULTQUIST, DIRECTOR OF INTELLIGENCE ANALYSIS, FIREEYE: North Korea is a major danger more than many of the other actors that we've seen. They
have carried out a lot of very aggressive attacks. They carried out cybercrime, disruptive and destructive attacks. And because they're so
aggressive we've been spending a lot of effort looking for some of their capability. And this is one of the teams that they have leveraged mostly
in South Korea, but we're concerned that they'll be used outside of the country more and more and pose a greater and greater threat.
QUEST: Maybe it's a wrong assumption, in which case you'll put me right. These are state sponsored hackers.
HULTQUIST: We do believe that they are state sponsored. We've seen them carrying out a lot of classic espionage, targeting the military, defense
industrial base, defectors, but they're also now carrying out espionage against fortune 500 companies located in South Korea.
QUEST: Some years ago, I was in Seoul and I visited the white hackers who aimed to hack back or prevent the hackers. South Korea has a fairly
sophisticated white hacking defense structure, doesn't it?
HULTQUIST: Yes. South Korea does have a very strong defense. But these actors are becoming increasingly sophisticated and they're not just focused
on South Korea anymore. They're focused on the whole world and really, it's no longer, at some point it's no longer a question of sophistication.
It's a question of how aggressive they are, and what they're willing to do.
QUEST: Just talk me through, what is it they're doing? Is it denial of service? Is it destruction of records? And how are they gumming up the
works of multinational corporations these hackers or is it just theft of data and property?
HULTQUIST: It really is right now, it appears to be the latter and the theft of data and property, possibly intellectual property. Our concerns
though are that access can be used almost any means that the North Korean government and regime seems necessary. Other North Korean hackers have
been espionage focused and have switched to crime and destruction.
QUEST: John, this is fascinating. Is the South and the rest of us are we somewhat impotent in the face of this ever-growing North Korean threat,
say, for example, from the reapers, it often feels like we are three steps behind them.
HULTQUIST: Well, that's exactly why we are looking for threats proactively in places like South Korea. We make it a habit of looking for these actors
while they're still nascent, growing in places like South Korea, the Gulf or even Eastern Europe.
[16:50:00] (END VIDEOTAPE)
QUEST: As we continue tonight, Venezuela's currency is almost worthless. Its economy is in ruins. The debts are piling up. We might arguably say
why launch a cryptocurrency. It's part of President Maduro's grand plan.
QUEST: Venezuela started the sales of the cryptocurrency, the petro. Hyperinflation has rendered the bolivar, the currency almost worthless.
And now the President, Nicolas Maduro is prompting the petro as economic cure-all and a defense against U.S. Sanctions.
(BEGIN VIDEO CLIP)
NICOLAS MADURO, VENEZUELAN PRESIDENT (through translator): This is going to allow for advancements in international financing, for the economic and
social developments of the country. The new cryptocurrency will be backed by reserves of Venezuelan wealth in gold, oil, gas and diamonds.
(END VIDEO CLIP)
QUEST: CNNMoney's Patrick Gillespie is here to discuss the innovative approach. Some would call it innovative others would call it somewhat
PATRICK GILLESPIE, CNNMONEY REPORTER: Desperate.
QUEST: That's another word, desperate. How did this early tryout go?
GILLESPIE: Richard, today was a private presale. So, we don't know. In fact, the first-day results, but from mainstream investors to
cryptocurrency experts, you are getting a pretty much the same reaction. This is either laughable or desperation breeding somewhat useless
QUEST: Hang on, desperation breeding useless innovation.
GILLESPIE: This is the first sovereign cryptocurrency. The whole notion of a cryptocurrency is that it's not governed by a national government.
QUEST: So, what do you do? You by the petro online I assume.
GILLESPIE: $60 for one petro token.
QUEST: $60 for one -- what do you do with it then?
GILLESPIE: So, what can you trade it for? You can't use the Venezuelan national currency, the bolivar, which is now worthless. You can't even use
that to exchange these petros for. You can use what they're calling hard currencies which is like the euro, the dollar and so on. But the mechanics
of it, the governed ability of it -- the governance of it is very questionable. And it's raising eyebrows in the crypto world and it's just
becoming, you know, laughable in the investment world. But it's more, I think, a bigger picture of what stage is this government reaching? They
have presidential elections coming. They've got 13,000 percent inflation this year.
QUEST: You're talking about the elections. Does it matter that they've got elections this year in the sense of why don't we just --?
GILLESPIE: It's a foregone conclusion.
QUEST: I was just going say, why don't we just sort of way the vote and announce the result before election day? Who could sway the election is
President Donald Trump because Secretary of State, Rex Tillerson, has said there could be a full-on oil ban, 95 percent of Venezuela's exports are
oil. Most, almost all of those are going to the United States and an oil ban, many people have told me today would accelerate Maduro's demise and
his regime, so the election itself seems like a foregone conclusion. He's not allowing any opposition members to participate, but President Trump and
his administration could have a major impact on his future.
[16:55:00] QUEST: The only problem with this is for as long as I can recall in recent memory, we have been talking about the collapse of the
GILLESPIE: And we are all surprised that they have stayed on for this long. It is hard to imagine how much longer they can go, but every moment
where it seems like they're faltering they tighten their grip on power. It is as if the suffering of the people there are helping to ramp up their
control of the economy and the government. They seem to have no grip on the economy, but that doesn't seem to matter. It's hard to see when
they'll falter. But it's also hard to imagine. They're running out of reserves, Richard.
QUEST: But regionally, who does have the power to bring this to a conclusion? I was going to say a satisfactory conclusion, but there is
GILLESPIE: The problem is this is a delicate point in the region for Latin America. You've got Mexico facing threats from Trump. Brazil coming out
of its worst economic crisis. Argentina, we've spoken about is having some troubles domestically. Colombia, they're running out of oil, literally
running out of oil in Colombia. There isn't a regional power to say, hey, I have the authority to bring this on. We've got President Trump saying we
can ban oil and that could be the last card for Maduro.
QUEST: Good to see you, sir, thank you. Patrick Gillespie.
A quick check at the markets. volatile day for the Dow. Late slump at one point it was down 300 points. Rising bond yields are partly to blame.
Markets were also weighed down by Walmart. The stock had its worst day in three decades of 10 percent after earnings fell short of expectations. We
will have a Profitable Moment after the break.
QUEST: Tonight's Profitable Moment. There's something strange about a group of people that all get up at this ridiculously early hour in the
morning and go and hear loud pumping music and do these extraordinary sorts of maneuvers for an hour. Get all hot and sweaty and pay the best part of
$40 for the process. But that just goes to show you the success of Barry's Bootcamp. For 20 years they've been encouraging people to do this. And
they managed to get me to do it this morning. The issue is would you do it again? I suspect I probably would if I thought it was going to work. And
as Barry's Bootcamp expands overseas, so you've got to understand that they've tapped into something that people like. It's amazing. It may seem
a bit unreal, but the truth of the matter is that's exactly how you make money. When you find something different and you convince people it's what
they need. And that's 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 tomorrow.