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QUEST MEANS BUSINESS
Dow Sinks As Trade War Fears Return, Mnuchin Says There Is A Potential For A Trade War; Dow Drops More Than 500 Points; Russia Calls US Sanctions Unjustified, Kostin Says to U.S. and Russia, Stop Retaliating, U.S. Sanctions Target Putin's Inner Circle, Facebook Has Announced More Changes To The Site To Stop Election Meddling; China: We Will See Out Trade War At Any Cost; Lula da Silva Defies Arrest Warrant; Stakes Quickly Rising in China-U.S. Trade Dispute; U.S. Economy Created 103,000 Jobs in March; French Rail and Airline Workers Continue Strikes; Trade War Fears Upset European Markets; Elon Musk Warns About a Threat in New Documentary. Aired 4-5p ET
Aired April 6, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: The gavel has fallen. The bell has rung, closing down on Wall Street. The Dow-Jones Industrials is off two and a third
percent on Friday, it's the 6th of April. A truly awful day. The gains are gone, the Dow finishes with its worst day of the week and it's another
day of triple digit moves as Donald Trump doubles down on the Chinese trade war. We are going to talk to one of his former economic advisers to try to
understand what is going on.
An exclusive interview with one of Russia's newly sanctioned businessmen, and Bill Browder tells us why these moves are the most significant
sanctions so far.
I am Richard Quest live in the world's financial capital, New York City where of course, I mean business.
Good evening, tonight, the Dow has just closed more than 500 points lower. You see the numbers, you see the graph, you see the day the day went as
investors hit reverse following three days of really good gains, triple digit gains and now, everyone is watching a serious escalation in the US-
China trade war with a $100 billion worth of potential tariffs on the table.
We're also seeing March's jobs report which fell short of expectations and as if all of this wasn't enough, there were serious sanctions yet imposed
on Russia by Washington. All of these factors played into what happened in the markets today, and we will begin on Walls Street.
Beijing and Washington's game of chicken is clearly taking a toll on Wall Street.
Join me, let's go to the super screens and you'll see exactly the way the day progressed. Look at how low the market went. It was down all day, but
it was this selloff. First of all, at 10:30 in the morning and then a following selloff in the early afternoon just after one o'clock that took
us to the lows of down 700 and change at three o'clock. The range of course you can see of 700 points.
But put it into context of the whole week and those modest losses, the descent accelerated as the treasury secretary admitted that the US could be
headed to a trade war.
Now, on Monday, the markets were down 459. Tuesday, Wednesday and Thursday, they were up in triple digits, so triple digits every single day
of the week, and today, you see down 572.
Clare Sebastian, make sense of all of this for me.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Richard, well, I think you know, we were here in the morning when things started to accelerate and I think
what was happening was that the markets were really trying to digest a large amount of messaging coming out of the White House.
Firstly, President Trump on the radio in the morning say, you know, we're not in the trade war. We've already lost one. Then we get Larry Kudlow
coming out again trying to firefight, saying, no, it's not a trade war. We are going to negotiate.
And then we heard Steven Mnuchin who went on television in the early afternoon, have a listen to what he said.
(START VIDEO CLIP)
STEVEN TERNER MNUCHIN, SECRETARY OF TREASURY OF THE UNITED STATES: The tariffs will take some period of time to go into effect. There will be
public comments, so while we're in the period before the tariffs go on, we will continue to have discussions, but there is the potential of a trade
And let me just be clear, it's not a trade war. The President wants reciprocal trade.
(END VIDEO CLIP)
SEBASTIAN: So, there are two issues there, Richard. One, it's very rare, certainly on the context of the last few days as opposed to the President
Trump administration's official action. He is saying that in the market, there was fear around, but a trade war is possible. And second of all, the
tariffs could go into effect. The markets have been banking on a negotiation and potentially avoiding that.
QUEST: But, I mean I suppose I can hear the argument that says, "Come everybody. Grow up. Obviously, if you put the plan of tariffs, then ergo,
there is the potential for a trade war." It's a sine qua non of the fact that they are on the table, that it could happen. He is stating the
So, why are the markets giving so much credence to what somebody says, a statement that probably isn't obvious.
SEBASTIAN: Well, I think they are starting to realize that. Honestly, Richard, we've got these two countries, the US and China who laid open
their biggest weapons to each other. Trump didn't just double down on tariff. He tripled down overnight. He added $100 billion to $50 billion
and I think what we are starting to see is that neither side is going to back down.
So, the real question for the markets is where does this end and we're heading into a weekend, no one wanted to be in stocks ahead of yet more
headline that is coming up over the next couple of days, and I think that's why we sort of see the selling accelerate as well towards the end of the
QUEST: Clare Sebastian in New York. I hope you've got a restful weekend planned. I will have. See you on Monday.
After the week of reciprocation and escalation as you can see. On Monday, $3 billion worth of tariffs were announced on the table and with each
passing day, the stakes have become higher.
President Trump --
QUEST: -- on Tuesday, the US threatens $50 billion. China immediately returned that with $50 billion. Thursday, Trump - then last night, he
threatens $100 billion. China says, it will not. It hasn't decided.
So, the overall tenor of this indeed, Donald Trump admits that these trade tariffs are necessary.
(START VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We've already lost the trade war. We don't have a trade war. We have lost the trade war.
I am not saying there won't be a little pain, but the market has gone up 40%, 42%, so we might lose a little bit of it, but we are going to have a
much stronger country when we are finished.
(END VIDEO CLIP)
QUEST: Stephen Moore, Donald Trump's former economic adviser joins me from Naples in Florida where I mean, despite all of the market turmoil, at least
you've got the nice weather. Stephen, come on, you've got to admit. The level of confusion over exactly what it is this administration, what policy
- well, we know the goal, but the route to which it is going to get there is confused.
STEPHEN MOORE, ECONOMIC POLICY ANALYST: Well, I think there is some truth to that, Richard. I mean, I campaigned with Donald Trump and he said
throughout the campaign if people were listening, he was really going to get really tough with China.
And that day has come, Richard. It came a few weeks ago and now, you've got this tit-for-tat situation. It is less than ideal. We are seeing
selloff with stocks. You know, by the way, as you said, you know the market rallied on Tuesday, Wednesday and Thursday when Larry Kudlow went
out there and said there isn't going to be a trade war.
And then of course, last night, Donald Trump said, another $100 billion of tariffs. So, this is a dangerous situation for the stock market and for
the financial markets all over the world, but I will say this, Richard as a prediction to you. I do not see Donald Trump backing off here. I don't
think he is going to stand down and the ball is really in Beijing's court about how they are going to respond to what Trump is saying.
He wants concessions from China. I happen to agree with Donald Trump and the United States needs concessions from China with respect to fairer trade
and not steal our bits and services and unless that comes, this could become a - I don't know if I used the word trade war, but there is
certainly a trade confrontation going on right now.
QUEST: Oh, semantics, Mr. Moore. Semantics. Trade --
MOORE: That was semantics, that's right. But I don't want to spook the markets by saying a trade war. I mean, you saw Stephen Mnuchin said maybe
we are going to have a trade war. Look, everybody has got their fingers crossed this doesn't happen. We want to see a negotiated settlement.
QUEST: Right. Now, they say that this tariffs, the administration says that these tariffs, proposed tariffs are not a negotiating ploy in the
sense of they are not being put there just to take off the table afterwards. That there is a goal to rebalance trade.
But of course, they are in a negotiating ploy in the real politic of it. In the same way that of course, there is a possibility of a trade war, as
soon as you put tariffs on the table.
MOORE: Well, that's true and I would go back to that statement that Donald Trump, that you just played a video of which is that Trump is basically -
we have been in a trade for a long time with China and we're not getting the better end of the deal, and there is a lot of truth to that.
And I think by the way that this will be played out by the way in terms of the war of public opinion here in the United States, right now, it appears
that the vast, vast majority of Americans are behind Trump on this. They see China as not playing by the rules, as cheating and stealing and is
helping facilitate a real foreign security threat with respect to North Korea.
We view - I think most Americans, Richard view China is the bad actor here.
QUEST: Stephen, we will talk more to you a little later in the program and you're going to be --
MOORE: You disagree with that, Richard? You're in New York, I mean, you talk to folks. I mean, don't you think there is a sense among a lot of
Americans that maybe it's time to get tough with China?
QUEST: I agree, yes. I agree completely. The question is the methods. The question is --
QUEST: The question is --
MOORE: You and I agree.
QUEST: I mean, you know, we are - since we have got a second or two, Stephen, he is reversing 40 to 50 years of trade orthodoxy and traditional
ways of doing it.
Now, reasonable people can have a disagreement on whether that's right or not, but the market's uncertainty and what they have got is confusion,
would you agree?
MOORE: I agree with that and the ultimate - you know, the optimal outcome would be that China does agree to make some concessions and then, by the
way, if that happens, Richard and hopefully, it will happen soon, you're going to see the market explode.
QUEST: Hopefully in a good way.
MOORE: That's the idea.
QUEST: All right, stay where you are. Stay where you are, Stephen. We will be coming to you in a moment. When we continue, the US is targeting
Vladimir Putin's inner circle. You're going to hear from one of the men on the sanctions --
QUEST: -- list and from Vladimir Putin's so-called enemy number one. This is "Quest Means Business," live from New York.
Welcome back. Russian government is lashing out at the United States calling new sanctions unjustified and planning to support those companies
targeted. The new measures are Washington's most aggressive to date, and they target members of Vladimir Putin's inner circle.
The US government calls them a response to maligned activity around the world, not just a single event. Speaking to me on "Quest Means Business,"
Andrey Kostin urged Moscow and Washington to stop the tit-for-tat.
(START VIDEO CLIP)
ANDREY L. KOSTIN, PRESIDENT AND CHAIRMAN OF THE MANAGEMENT BOARD OF VTB BANK: In my opinion, we reached the lowest points. There is no any point
below this. I mean, we are not - we are already in the state of a Cold War. I don't think anybody in the world, people - sane people would like a
hot war between our two countries.
(END VIDEO CLIP)
QUEST: You're going to hear more from Andrey Kostin in just a moment, but first of all, let's look at the sanctions and who are they are targeted
because it is really the who is who if Russian business and government.
There are seven oligarchs with ties to President Putin, 12 companies that they control. From left to right, Oleg Deripaska tied to Paul Manafort;
Kirill Shamalov, Putin's son-in-law; Suleiman Kerimov, accused of money laundering; Vladimir Bogdanov, an oil executive.
Now, the companies include the aluminum firm Rusal and GAZ, a vehicle manufacturer. Also, government officials and state-owned industries under
Kostin are VTB, Alexey Miller of Gazprom, the weapons trading company with ties to Syria.
Put all of these together and you start to realize just how deep and serious this is.
Andrey Kostin spoke to me exclusively on the Quest Express where he denied the accusation, he is a Russian government official and insisted he has
done nothing wrong.
(START VIDEO TAPE)
KOSTIN: I don't view the sanctions as a personal one because I did nothing wrong to America, to American interest. I was always trying to promote
good business relationship with American banks, with American investors, so I am punished because the American administration considers that the
Russian government is conducting the wrong policy, and it's very unfortunate.
It shows the very high level of misunderstanding of Parliament and American administration of the intention of the Russian government, of the Russian
leadership. It is very unfortunate. I think we should stop somewhere because we are going from bad to worst and if not for us, but for the sake
of our children who definitely deserve the better world and peaceful world. We should stop somewhere.
So, I don't have any feeling of revenge. I don't even recommend my government to retaliate because we already had tit-for-tat expulsion of
diplomats. Now, there is sanctions against Russian businessmen, including the private ones. I think we should stop somewhere --
KOSTIN: -- and start to rebuild our relationship as Mr. Trump not once mentioned that he wants to reestablish relationship with Russia, but
instead of this, we are moving to another dead end.
QUEST: Now, you obviously knew this was on the horizon and therefore, you have been preparing for this as is all the other people on the list.
In a practical sense, Andrey, how does hits affect you other than probably you can't obviously come to the United States, but you have also had to
ensure you don't have any assets that could be frozen by the US government.
KOSTIN: No, Richard, of course, I will be missing you, not to be able to travel to Washington and New York, and of course for the last 24 years, I
was traveling to IMF meetings every year to meet bankers and ministers from all around the world.
But you know, my job is mainly in Russia. The business of my bank is 90% in Russia, so I will continue to conduct my business or the business of my
bank and I will try my best actually to work with all investors all around the world.
And my institution is only under sector sanction and it's good use, at least. And we will try to do whatever we can to improve our relationship.
I hope to be the last person under American sanction, that's my dream.
QUEST: Do you fear that other jurisdictions may follow this, Andrey? The European Union and the British - in other words, do you fear that this
could expand so that effectively, you couldn't travel at all or your asset would be at risk elsewhere?
KOSTIN: Richard, I am 61. You know, I am too old to be feared of something. You know, so I don't have the feeling of fear, but - and I
can't influence the decisions because you know, I can't influence the decision of the European government and other governments. I think I am
not doing anything wrong.
I am always trying to promote good business relationship with all the bankers all the world. I will continue to do it and it's not up to me to
influence this process.
QUEST: How - okay, so let's talk on this wider issue of US-Russian relations which we could also include, I mean, Russia's relations with the
West generally, if you think of the diplomatic expulsions that you have just talked about.
The relationship between the West and Russia is at its worst, even the Russian Foreign Minister and Ambassadors have said this. So, from your
point of view, in Russia, knowing President Putin, what needs to be done to repair this breach?
KOSTIN: Well, I very much expect that sooner or later, Mr. Putin will sit at the table with Mr. Trump that they will find some common ground on at
least, some most urgent issues all around the world and that could be the beginning you know, of the new process, of process of reestablishing
relationship between, in my opinion, we reached the lowest points.
There is no - any point below this. I mean, we are not - we are already in the state of a Cold War. I don't think anybody in the world - people, sane
people would like a hot war between our two countries. We should sit and talk and not to threaten each other or expel people on each side. We
should reverse this process.
That's very important, not only for Russia. It's very important for Americans as well, it might be.
QUEST: Right, on this final point though, if we just take the situation, Andrey as it is now, you've got the United States embarked in just about a
trade war with China. You've got the United States sanctioning Russian senior businessmen and businesses, it seems - would you agree from your
point of view, how do you see the US seeking its relations with other major partners like Russia and China?
KOSTIN: Well, I already explained my opinion. I think instead of mutual threats and action of wars, we should start to think about peace. I think
- here in Russia, we don't have any hard feelings, any bad feelings with America, American administration. I think we all want better relationship
and better understanding. We should start to build trust between each other.
It takes some time, but I think we will come to this point at the end of the day.
(END VIDEO TAPE)
QUEST: Let's talk about this. Joining me now, Bill Browder is being dubbed Vladmir Putin's Enemy Number One. He is an investor and a
businessman deported from Russia after exposing corruption there led the charge for a tougher stance against Russia and says, this latest round of
sanctions finally does the job.
Bill Browder, good to see you, Bill, as always in Miami --
QUEST: -- where again, the weather seems probably better than we've got here. Look, Bill, how do you rate what the US has done today and how is it
going to actually have a real effect?
WILLIAM FELIX BROWDER IS AN AMERICAN-BORN BRITISH FINANCIER: Well, I would give today's action a ten out of ten, an A-plus. This was a rock solid
decision by the Trump administration and to finally do something which really affects Putin's personal financial interest.
What you have to understand about Vladimir Putin is that he is a very rich man. He doesn't keep the money in his own name. He keeps it in the name
of oligarch trustees and by going after these oligarch trustees, we are finally touching Putin himself and that's very serious.
QUEST: So, how will he respond?
BROWDER: Well, he can't respond symmetrically because it's not as if Warren Buffet has got a whole bunch of Russian assets to sanction, and so
he is going to have to respond asymmetrically and what he has to understand is that the United States government has only sanctioned a small list of
oligarchs. There is a much larger list of oligarchs who could be sanctioned in the future, and I think he is scared of that.
QUEST: You heard Andrey Kostin just a moment ago sort of basically saying, we have done nothing wrong. We are just banks or he happens to be owned by
the state, but we're just banks going about our business.
BROWDER: Right, so first of all, let's look at what he had said. He said, "We've done nothing wrong." The Russian government has invaded Ukraine.
They've bombed children and women in Syria. They've shot down MH-17. They have manipulated the United States' political system. They have cheated in
the Olympics. They've basically been a bad actor in every different capacity. They've just poisoned using chemical weapons in the UK. There
is a whole litany of bad stuff they have done and it's not as if the world cares about Russia.
We are responding to Russia because they are bad actors.
QUEST: Do you fear your own safety still these days?
BROWDER: Of course, I do. It's an obvious thing. I have been responsible for the Magnitsky Act which is a set of sanctions which sparked off this
whole thing. I am going around the world getting other countries to impose Magnitsky Act.
Putin has hated these sanctions because they go after his personal fortune and the fortune of his colleagues, and so he is very angry at me and so are
people in his administration.
QUEST: Is there a danger here and maybe it's one that we shouldn't worry about or you don't care about, but the US and the West backs Putin in to a
corner and unlike any fighter, any cat, any animal that is cornered, they will lash back, resort to some extent following the Skripal diplomatic flak
when the Ambassadors were expelled.
BROWDER: Well, so Putin has got all sorts of different psychological traits, but the most important one is that he is a bully and the only way
to deal with bullies is with firmness and force. You cannot appease a bully. He is a dictator and a bully and so, we have to create solid
boundaries and that was done today.
He understands that if he does something more, there will be more real people with real money looking after his money that will be sanctioned.
QUEST: You've looked at this obviously all your life, explain to me finally the dichotomy, if you will between say for example, President Putin
and Donald Trump.
Donald Trump seems to like Putin. He seems to admire the strength of him and he seems reluctant to want to see anything bad about President Vladimir
Putin as it relates to the election or about any of the other things.
And yet, the US is now doing more and tougher sanctions against Russia than any previous administration. Square that circle for me, Bill?
BROWDER: Well, maybe you can square it for me. I mean, I find his positive comments towards Putin offensive. I know Putin and I know he is a
very bad man. Having said that, his administration has been tougher than any previous administration on Russia and business - that today's actions
are the surer sign of that.
QUEST: Bill, good to see you, sir. Enjoy the weekend in Miami. Thank you.
BROWDER: Thank you.
QUEST: Facebook has announced more changes to the site in order to stop election meddling. Mark Zuckerberg says every single political ad will
have to be labeled and you'll have to be verified in order to run one.
Laurie Segall joins me now. How realistic is this?
LAURIE SEGALL, CNN TECHNOLOGY CORRESPONDENT: How realistic? They have been talking about doing this for a long time. The difference is they have
also been talking about doing this with political ads. They have an issue ads too. They are not just based on a candidate. They think issues like
gun control or education - so when you see these ads, they are going to have political ad labeled on it.
They are going to have who paid for it, and in order to get one of these ads, you've got to send in a government-issued ID. You have to send in a
mailing address and they have to actually approve it.
Another change they are making, which is actually kind of interesting is they are changing, if you have a big following on pages, if you are a user
that has a big following, think about pages, the page you like on Facebook, the organization you like on Facebook --
SEGALL: -- they are going to require a verification and if you look back to what happened in 2016 with Russian trolls and meddling, they actually,
you know created all of these pages posing as Americans to create division in America.
So, all of these is trying ahead of Mark Zuckerberg going to Congress to testify.
QUEST: Realistically though, do they have the infrastructure. You know, you're talking about a globe.
QUEST: So, let's say somebody wants to do an issue page or an issue ad in Germany for the election or in Greece for the referendum, will it all
follow that same process or is it just in the US?
SEGALL: Yes, this is wide-ranging changes, and also, what they are doing, which is kind of interesting is they are trying to utilize artificial
intelligence and technology to look at ads that have already been authorized, that might have already gone through, but it's a good question.
Do they have enough people to actually do this? This is a combination of technology and people.
What they have said - Sheryl Sandberg has been on a bit of a media tour over the last days and Mark Zuckerberg said this to me to during our
interview there, adding, you know, they have 10,000 security engineers now. They are going to have 20,000 by the end of the year.
I have been told you know, by people within that they are treating the issue of election security and security on the platform like they treated
mobile years ago. So, Facebook ran into an issue years and years ago when it came out that mobile phones was going to change everything and they were
a desktop organization. They put all hands on deck.
So, they are trying. They have a lot of challenging questions they are going to have to answer to next week.
QUEST: You mentioned AI, 50 years since 2001 and Space Odyssey. You will be back later in the program and talk about that.
SEGALL: Yes, I will.
QUEST: Will AI take over for us all? Thanks for that tit-for-tat trade dispute between China and US arising, Beijing is standing firm saying it is
ready to see out out, in their words, at any cost. What could that cost be?
And of course, there is a lot more "Quest Means Business" in just a moment. When China says it will fight the trade war at any cost, I was speaking to
one of Hong Kong's top bankers on what that statement to mean.
The rise of the machines, Elon Musk wants to start your weekend with a morning about artificial intelligence.
As we continue, this is CNN. And on this network, the facts always come first.
One of the Russian businessmen sanctioned by the United States insists, he has done nothing wrong. The sanctions are the result of a
misunderstanding. Speaking to me on Quest Express, Andrey Kostin of VTB Bank said relations between Moscow and Washington have reached a low point.
(START VIDEO CLIP)
KOSTIN: The feeling of revenge, I don't even recommend my government to retaliate because we already have tit-for-tat expulsion of diplomats, now
there's sanction against Russian visas including the private ones.
I think we should stop somewhere and start to rebuild our relationship.
QUEST: British doctors treating up poisoned former Russian spy say he's no longer in critical condition. Sergei Skripal is responding well to
treatment they say, and improving rapidly.
His daughter Yulia was also poisoned in the nerve agent attack that's being blamed on Russia, she's now also in stable condition. Conor McGregor has
been charged with two accounts of assault.
The UFC star's bail has been set at $50,000 and he's been ordered to stay away from five people. On-lookers captured what appeared to be McGregor
throwing a heavy object to a bus window at the Barclays Center in Brooklyn.
The incident left some of his fellow UFC athletes injured. There's no suggestion what nerve was going on. Former Brazilian President Lula da
Silva had defied a deadline that turn himself into begin serving a prison sentence.
He faces 12 years on bribery conviction. They held up in a union headquarters in Sao Paulo where he's expected to speak to supporters at a
We need to show you our top story where stocks fell very sharply with the fears of a global trade war resurface. There were after lows of the day,
but it's still a loss of 2 and 3rd percent. Meanwhile, China says it will not back down in its battle with the United States.
It may be the public holiday in China on Friday, that certainly did not stop the government from coming out strongly against Donald Trump's latest
and newest threats for $100 billion in tariffs.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): If the United States bends on its acts of unilateralism and trade protectionism in total disregard of the
opposition from China and the international community, China will see it through to the end at any cost.
(END VIDEO CLIP)
QUEST: Joining me now from the European House - Ambrosetti Forum is Andrew Shang; the chief of Vizier of China's Banking Regulatory Commission. I
guess in -- you know, from your point of view, this is an extremely serious and deteriorating situation.
How would you judge this latest battle of wills over trade between China and the U.S.?
ANDREW SHANG, CHIEF OF VIZIER OF CHINA'S BANKING REGULATORY COMMISSION: I think the trade war is a no win situation for everybody.
The collateral damage according to a model that the European Central Bank, you know, has done is going to be much wider and deeper than anybody, you
know, could at all.
And I certainly do not appreciate how serious it would be. The country that imposes the tariffs --
QUEST: Right --
SHANG: Could suffer a loss up to 1 percent GDP, you know, every year after that. And you know, so nobody would win from this.
QUEST: So this should have of course as the U.S. puts it, and I understand there are two sides to this. Is that China needs to negotiate on this
question of fair trade to create that level playing field.
Now although one may disagree with the tariffs of the administration, other countries around the world do -- got that same view as it relates to
China's business practices.
SHANG: Well, there's no indication that China is not negotiating. The issue is that if one party takes a unilateral view on certain issues, the
other side may or will react.
And I think that's where --
QUEST: Right --
SHANG: We are at this stage.
QUEST: So the strength -- let's talk generally about the strength of the Chinese economy. We know over the years there have been worries about
property and the real estate sector.
We know that there are still concerns about the banking sector. At number four, with loans, the level of debt and that's -- can you tell us from your
perspective, are things getting better within the Chinese banking sector?
SHANG: The Chinese banking system is very strong. Capital adequacy ratios are very high, the non-performing loan situation is still very -- at the
low, you know, less than 2 percent level.
[16:35:00] The provisioning levels are very high. Most of the --
QUEST: Right --
SHANG: The banks are very cautious about their loans. The exposure is really due to the loans to the corporate sector, but it is still an
internal debt. It's not an external debt issue.
So the leveraging issue in China is being managed --
QUEST: Right --
SHANG: The -- one of the priorities of the regulators is firm and steady, concerns other financial stability. I think the economy is moving very
fast into a quality growth and chewing based growth market.
Which means that you will move more towards services, it will begin more to deal with inclusiveness issues, and the banking stability is a very
critical policy area.
QUEST: Good, thank you sir, thank you for joining us tonight, have a good weekend at Ambrosetti, we appreciate it. Stephen Moore joins me again.
Steven, interesting to know is that every -- just not everybody and you just heard the chief adviser there.
And saying, you know, nobody wins in a trade war. I have heard it from Larry Kudlow, I've heard it from Steve Mnuchin, I've heard it from --
nobody wins a -- now, let's forget what the president said about we've already lost the trade war, he's already lost the trade.
We know what he's talking about that. But if there's the next stage, it's very difficult to see how you get out of this then.
MOORE: Well, you know, one of the things that was just said was that the Chinese are now accusing the United States of trade protectionism.
And Richard, that's almost a laughable claim given that they sell us about $350 billion more than we sell them. I mean, I've talked to CEOs of major
American companies who say we cannot penetrate the Chinese market because of non-tariff trade barriers that make it very difficult as you know,
Richard, for American companies to sell in China.
So when we have a $350 billion trade deficit with China, how are we the company that -- the country that is engaged in trade protectionism. I
think, you know, and even so with respect to China and now saying, well, maybe we're going to take our case to the WTO.
I mean, really? China is going to go to the WTO and accuse the United States of not, you know, dealing fairly here. I mean, I just think China
has got to realize that Trump is very serious here. I'm a free trade guy, Richard, you know me in a long time.
I believe in free trade, when countries are trading fairly and freely, it benefits all parties. In this case, I'm not so sure that --
QUEST: All right --
MOORE: Is the case.
QUEST: All right, but has the administration made the argument if you like, it's you know, I get it. I'm trying not to personalize it down to
the president. But tweets --
MOORE: Yes --
QUEST: Don't do it. Wilbur Ross holding --
MOORE: That's a fair point.
QUEST: You know, Wilbur Ross holding a can of beer doesn't do it --
MOORE: Yes --
QUEST: You have to make an argument, you have to make a case, and I wonder on that score, whether they've done it.
MOORE: Well, you know, I think the United States has to win here. I mean, we're going to need to have concessions from China, and it's only a
question of when that's going to happen.
And I think to make that happen, Richard, I mean, if Trump has made a mistake, and I think the one mistake he has made over the last several
months is we're going to need American allies to be on our side in this --
QUEST: Right --
MOORE: Against China if this continues to escalate. Yes, and you know, we need Britain, we need Germany, we need Canada, and you know, he's irritated
those countries as well with the steel tariffs and so on.
And so this needs to be a situation where the United States with our allies as Larry Kudlow would say, a coalition of the willing is isolating China as
the bad actor here.
I don't think he's set the table for that right now.
QUEST: Steve Moore, by the way, before we do any of the jobs number today, it was weak, but I think we can write it off as being a one off because of
I mean, am I missing something on this one?
MOORE: Well, you know, we already said it's the weather when we get the jobs report that we're not happy with. You know, I was --
QUEST: Good for you --
MOORE: Unhappy with that report --
QUEST: Good --
MOORE: But it wasn't terrible, but look, you know, we average 200,000 a month, and that's a pretty good number.
QUEST: It's the weather, but then I got no sympathy because we're in April in Florida where I'm sure it's a lot warmer --
MOORE: There you go, and it's been a cold winter in the northeast, my friend, as you know in New York.
QUEST: Absolutely, good to -- have a lovely weekend, thank you. Yes, we continue with planes, trains and automobiles in France are all a ton of a
mess. After the break, I'll be talking to a French train driver about the latest strikes and why he doesn't want or what change he will accept --
after the break.
[16:40:00] (COMMERCIAL BREAK)
QUEST: The stocks in New York closed lower, investors worried about Trump's trade threat, Zurich and Frankfurt, the worst of the day but not as
bad as New York. They haven't seen anything like what was going to happen in New York so when they closed them, headed off home.
New York was just down by about 1 percent or less. Now if you were in France over the weekend, please do check everything before you travel.
Rail workers are said to continue their rolling strikes on Sunday and Monday.
And Air France says it will have to cancel around a third of all flights as pilots, crews and ground staff walk out. Air traffic controllers in the
southeast are staging action this weekend.
Axel Persson is a train driver and head of the Rail Workers Union in Trept. He joins me now to talk about this. Good to have you sir, thank you, we do
need to hear both sides of the story and until now we've heard that these changes that Emmanuel Macron is introducing are necessary for a modern
competitive transport industry.
You don't agree.
AXEL PERSSON, HEAD, RAIL WORKERS UNION, TREPT: Well, the railway industry in France is already very competitive, only this -- last year, the profit
that were generated by the railway amounted to 1.73 billion profits annually for the year 2017 fiscal year.
So that is why the private operators and the government wants to privatize the railway because there's lots of money to be made, and that is why there
are private operators that are interested in entering this industry.
There are two aspects to this reform. The first one is the dismantling of the national railway operator which aims at dismantling it and auctioning
it region by region to the highest bidder.
And the aim being that private companies recuperate regional market and the public funding that go with it. And in order to maximize their profits --
QUEST: Yes --
PERSSON: They have certain -- close down almost a third of the railway lines that are not profitable enough and are threatening to --
QUEST: Sure --
PERSSON: Raise the prices in order to maximize the profits.
QUEST: Do you see though the necessity for change? Whenever one hears France, and one hears about public sector strikes, it always comes down to,
well, the workers just don't want change.
They just want to protect their own -- some would say extremely generous packages.
PERSSON: Well, as I said, there are two aspects to the reforms. The first one is the privatization of the railway. The second aspect as you say is a
massive attack on the terms and working conditions.
And the government wants to deprive the future railway workers of the same rights that we have. But what you're saying is that -- you're implying
that we do not necessarily want change, but I can only point out to the fact that despite us having won several advantages in terms of pension,
working conditions, salaries and so forth, this has never hindered the railway from going from the steam engines to where the fastest -- to one of
the most performing highway -- high speed railway line in the entire Europe and in some aspects in the entire world.
[16:45:00] So we're not against change, and we've been changing for the past 70 years. But what the government is trying to demand right now is a
roll back in a --
QUEST: Are you --
PERSSON: And so the government is trying to implement a rollback in all our advantages --
QUEST: Right --
PERSSON: Back to the basic needs to the same situation that applied in the 19th century. So we are not the ones who are opposing change. We are the
ones who wants in a contrary to improve our conditions and expand them to all other workers, not only railway workers.
QUEST: But is this -- though, you've heard the analogy before, is this Macron's Margaret Thatcher moment? Are you at risk of being the touch-
stone, if you like, the litmus test that he is going to take on the railway workers beat the railway workers strike in a way that Maggie Thatcher did -
- Margaret Thatcher did in the 1980s?
You're well familiar, sir, I know you are with this sort of analogy between the two.
PERSSON: Yes sir, and I think you're spot-on on this fact, because historically speaking, railway workers in France and also mine workers
historically speaking in France have historically been the organized vanguard of the labor movement.
And the different advantages we have gained, for example, in terms of pension and for example paid holidays. The railway workers want them first
and then the rest of organized labor took our advantages as a benchmark and a beacon and said we want the same advantages as the railway workers.
So that is why they want to break us, that is why they want to impose a defeat on us in the same that Maggie Thatcher defeated the miners in order
not only to defeat the railway workers, but --
QUEST: Right --
PERSSON: To defeat entire organized labor in France. So that is exactly what is happening, and that is also why this fight is becoming eminently
political, and that is why also there are other industrial sectors that are currently organizing strikes alongside us, and that we are -- and that our
objective is to extend this strike to all sectors in France.
QUEST: We hope you'll come back as this continues and explain again to us or at least keep us updated on what's happening. Good to see you, sir,
thank you for taking time on a Friday night.
As we continue tonight, news just into Cnn, hundreds of passengers are stranded in Caracas as the Venezuelan government has banned Copa Airlines
from operating in the country.
Earlier, the government suspended ties with the Panamanian officials and companies for 90 days. Copa is a Panama company, it's a Panama airline
based in Panama city. It is accusing them of corruption and money laundering.
Elon Musk has plenty to keep him awake at night, that's Tesla, Space X and civilization and the slavery from artificial intelligence. His latest
warning in a documentary, it is definitely a Musk-see.
QUEST: Here's a curious thought, Elon Musk is predicting that artificial intelligence could create an immortal dictator from which we can never
[16:50:00] Now the grim warning is delivered in a documentary released this weekend on YouTube, it's called "Do You Trust This Computer?"
And they coincide with the 50th anniversary this week of 2001 space on its EF, 50 years in which AI how the computer kills the dream.
QUEST (voice-over): Fifty years ago, and 2001, a space oddity arguably showed us the future. Its most pressing and prediction, how the ship's
artificial intelligence going wrong.
UNIDENTIFIED MALE: Open the pod-bay doors now?
UNIDENTIFIED MALE: I'm sorry Dave, I'm afraid I can't do that.
QUEST: How takeover is the most extreme part of the movie. But a closer look shows that Kubrick and Clarke-imagined technologies that would indeed
Every day, things like flat screen, color televisions, video calls with Skype and FaceTime. Their predictions were generally spot-on, which raises
the question how far were they right when it comes to AI?
UNIDENTIFIED MALE: This conversation can serve no purpose anymore.
QUEST: Could Stanley Kubrick and Arthur C. Clarke have imagined a robot named Sophia(ph) addressing the United Nations.
UNIDENTIFIED FEMALE: The UN is one of humanity's greatest accomplishment representing a democratic union of nations that are working together for
the benefit of all.
QUEST: These strides forwarder obvious and so are the failures.
UNIDENTIFIED FEMALE: Alexa, replay.
QUEST: Facebook recently shut down Chatbox after they started speaking their own language. And some of tech's biggest names are sweating at
ELON MUSK, FOUNDER & CHIEF EXECUTIVE OFFICER, SPACE X & TESLA: Humanity's position on this planet depends on its intelligence. So if our
intelligence is exceeded, it's unlikely that we will remain in charge of the planet.
QUEST: Two-thousand-and-one, imagine our technological future, some would say era after era, code upon code, how is well on its way. Society needs
to ask itself when it's time to pull the plug.
QUEST: Laurie Segall; our senior technology correspondent joins me now. The music(ph) was right in many ways.
LAURIE SEGALL, CNN SENIOR TECHNOLOGY CORRESPONDENT: Right --
QUEST: But on this fundamental question of AI getting a life of its own, how close are we?
SEGALL: You know, it depends first of all until you asked, there's a divide in Silicon Valley of folks like Elon Musk who are predicting that we
need to regulate AI, there are people who incredibly concerned about it.
But this idea that machines and humans are already merging, that it's happening in the next 10 years. It's this idea of when will machines also
achieve consciousness. That's a philosophical debate that's happening behind closed doors.
But you know, even according to MIT in the next ten years, you are going to have AI that can translate languages incredibly easy, write high school
essays, let's keep going further into the future, when will they be better than humans when it comes to retail and replace people in retail.
When will they write the bestselling book, people are predicting 2049 when, you know -- when will they be surging? So you know, it's a question -- I
keep saying put back, but --
QUEST: But we've already seen some of this --
SEGALL: Sure --
QUEST: In terms of, for example the drone --
SEGALL: Yes --
QUEST: That makes it own the killing drone, that makes it --
SEGALL: Yes --
QUEST: That makes it own decision --
SEGALL: Yes --
QUEST: Admittedly to a set algorithm, but it makes its own decision of when it's to shoot.
SEGALL: Which is fascinating and which is why -- and I don't want to be alarmist as well. You think about this question of self-driving cars that
this is already happening.
Self-driving cars are going to overtake our normal cars in the future. Who is coding ethics and to this -- what decision will that car make? This is a
classic, I'm sure you've heard. This isn't the classic -- what decision will the self-driving car make when it decides it's inevitably going to get
in an accident.
Who will it decide to harm? The people on the sidewalk or the person inside. How will it make that decision?
QUEST: Fascinating, but these are real issues that are going to come our way.
SEGALL: Right --
QUEST: So back to this movie which you know, it's got word-processing, it's got flat-screen TVs, it's got video calls --
SEGALL: Yes --
QUEST: All of which 50 years ago was on the horizon.
QUEST: AI is on the horizon.
SEGALL: Yes --
QUEST: I mean, will they be clever in the next? Will they be sitting here doing my job?
SEGALL: You know, it's funny, I was going to say the same question. I was saying will they overtake our job? I will like to say they're oist(ph) to
the human element, but you know, it's funny --
QUEST: Wishful thinking.
[16:55:00] SEGALL: I will tell you something, there's an entrepreneur right now at a company called Kernel(ph) in Silicon Valley. Who is this
mad scientist type? Who says that in order to keep up, we need to implant AI into our brain.
You know, and it sounds crazy right now, but there's a race happening in Silicon Valley to make this happen. And you know, I do think the human
element will be the most important element, but we've got to start talking about it. Richard?
QUEST: Laurie Segall, this does not bode well for us --
SEGALL: No, we're not going to be -- you are irreplaceable, no AI --
QUEST: I'm not sure --
SEGALL: Will ever replace you.
QUEST: Good to see you, thank you so much --
QUEST: Profitable moment after the break.
QUEST: Tonight's profitable moment, so AI 2001 is based honestly on markets that are driven by algorithms and computers. And that's really
what's fascinating about today. Most of that map, most of that chart is irrelevant because it was purely computer trading.
Humans really in the market don't go at the beginning and at the end of the day. The rest of the day is mostly by algorithms and high frequency. The
interesting part of that is humans are still relevant, do we learn that every day on the floor of the New York Stock Exchange?
When is an IPO or when a stock stops trading? Yes, computers can go a long way and they cause a great deal of havoc, but I am thankful to say tonight
that it's not over yet for blood and flesh.
There's still some little room in the markets for now possibly, maybe. And that's QUEST MEANS BUSINESS for tonight, and down to you, I'm Richard Quest
in New York. Whatever you're up to in the hours ahead, I hope it's profitable -- we'll do it next week.