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Abe and Trump Discusses Trade and North Korea; U.S., Syria Give Conflicting Accounts on Global Chemical Weapons Experts; Prime Minister Theresa May Apologizes for Treatment of Windrush Generation; Microsoft Leads Coalition Against Cyber Warfare; Starbucks to Close U.S. Stores for Race-Bias Training; One Dead, Seven Injured on Southwest Flight; China-U.S. Trade Battle Escalates; IMF Chief Economist Predicts Global Growth will Slow after 2019; U.S. Stocks Rally, Twitter Soars on Upgrade

Aired April 17, 2018 - 16:00   ET




UNIDENTIFIED MALE: So you would have it very clear that all options are on the table and along with this line, you have demonstrated enough

(inaudible) or the pressure against North Korea.

As a matter of fact, the United States have the overwhelming military power in the world and by using this strength, you are having effectively

applying the overwhelming amount of pressure against North Korea and this actually successfully led to the outcome as we have already observed.

So, once again, if I may picture it, Donald, it is demonstrated through your unwavering determination in addressing the problems with North Korea

and I'd like to take this opportunity to express and pay my tributes to your leadership.

And also, as we have planned, a US-North Korea summit meeting which will be held for the first time, my hope is that there will be a tangible progress

for it resolving the outstanding issues of concern including nuclear issues, medical issues, as well as the abduction issue which is the

Japanese top priority issue.

So, this will be a historic meeting and I certainly hope that there will be progress of this promise.

And also to achieve such progress, we would like to carry very serious and also thorough discussion with you today.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Thank you very much, I greatly appreciate that, Shinzo and I will say that the North Korea problem

has been with us for many years. It's something that should have been taken care of, years ago, decades ago. It's at a point now where we don't

really have a choice. This must be taken care of one way or the other.

I look forward to meeting with Kim Jong-un and hopefully, that will be a success, and maybe it will be, and maybe it won't be, we don't know, but we

will see what happens. But I can say this, they do respect this. We are respectful of them and we are going to see what happens. We will bring up

the abduct case. We will bring up many different things. I think it's a time to talk and it's a time for solving problems.

I know that's been a very big factor to you.

UNIDENTIFIED MALE: (Foreign language).

TRUMP: South Korea's meetings with North Korea are very much in coordination with us, and in consultation with them constantly. Our

relationship with South Korea is a very good one. In fact, we are in the midst of negotiating a new and better, perhaps for both sides, straight

deal. Right now, it's an unfair deal frankly to the United States, but what else is new? All of them are.

But we are going to finalize a new deal fairly soon. We probably could have them already. I want to have it done, but we are in very close

communication and coordination with South Korea with their upcoming meetings and even encouraged talks with North Korea and as I said before,

the war has never ended. If we could do something even before the meeting, these big plans of meeting, that would be fine, but we are dealing very

closely with South Korea.

They are the ones that came and told us about the original meeting that they want to meet with me. They want to meet with the United States

specifically. We have not picked the site yet, but we picked five sites where it's potentially going to be. We'll let you know fairly soon and we

will see what happens.

We'll either have a very good meeting or we won't have a good meeting and maybe we won't even have a meeting at all depending on what's going in, but

I think that there is a great chance to solve a world problem. This is not a problem for the United States...


TRUMP: ... it's not a problem for Japan or any other country, it's a problem for the world.

UNIDENTIFIED MALE: (Foreign language).


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Donald Trump there where President Trump with the Japanese Prime Minister with some very interesting

comments about North Korea and its leader, Kim Jong-un. No rocket man references, instead called him by name, said we respect them, they respect

us. Talked about the potential for the meeting with Kim in which he said he thought it would be successful. He hopes it will be, but it might not


But he said that they would hold a meeting if that was to take place, he was looking forward to it. And on the question of South Korea, again,

talking about the trade deal that he hopes, and now, just on the deals in terms of North Korea and the various bilateral talks taking place.

While we monitor, we will move on. A very good evening to you and this is "Quest Means Business" where tonight Starbucks has announced dramatic

action to address the discrimination scandal.

Starbucks is to close its 8,000 US coffee stores in the afternoon on May 29th to educate its employees about racial bias. And the reason of course,

following on from the uproar over this arrest of two black men at a Starbucks in Philadelphia.

The men were doing nothing, literally. They were waiting for a friend before ordering. After they were refused permission to use the restroom,

the store managers called the police, the men were arrested for trespassing.

Protest and criticism followed. The Chief Executive, Kevin Johnson has promised the company will learn lessons.


KEVIN JOHNSON, CEO, STARBUCKS: I want to apologize to the community in Philadelphia and to all my Starbucks partners. This is not who we are and

it is not who we are going to be.

We are going to learn from this and we will be better forward.


QUEST: So, Starbucks is now actually putting its actions where its words are, or where the CEO's words are. Let's remind ourselves what Starbucks's

values, mission and statement actually says. It says, "Our values with our priorities are..." basically, so far, I can't even read it. What does that

actually say.

It says, "Our values to inspire and nurture the human spirit, one person, one cup, one neighborhood at a time. With our partners, we will fill these

values. Creating a culture of warmth, belonging where everyone is welcome." And importantly at the end, "Holding ourselves accountable to


Joining me now, Michael Nutter, the former mayor of Philadelphia and a CNN contributor, Rashad Robinson is the executive director at Color of Change,

also on the Board of Demos, one of the organizations Starbucks is consulting with over its awareness. They are both in Atlanta for us


Mr. Mayor, first with you, are you content now that Starbucks has done sufficient?

MICHAEL NUTTER, FORMER MAYOR OF PHILADELPHIA: Well, Richard, let me first say, this is unprecedented. It is bold. It is certainly dynamic. CEO,

Kevin Johnson, Chief Operating Officer, Rosalind Brewer and even Board Chairman, Howard Schultz, all on the ground in Philadelphia demonstrating

an understanding and a sensitivity after the terrible tragedy and incident in Philadelphia.

But, taking as you pointed out, taking unprecedented action to try to address some of the elements here. They've put a lot of stuff out there.

They already have many activities going on in Philadelphia and across the country, so you know, they are making steps.

QUEST: No, but that's not what I asked, sir. I mean, they are making steps, but is it sufficient? I mean, at this stage in the process what

they have done?

NUTTER: Well, I think they've done a lot since, I guess this all happened last Thursday and kind of blew up over the weekend. I am not sure in two

or three days how much more you can do, again, Richard, I don't know of any CEO, I don't know him, but I don't know of any CEO who has ever gone to a

city when some incident happened.

QUEST: Got it.

NUTTER: And literally looked somebody in the eye and apologized to him.

QUEST: Rashad, if this was a textbook, it would be a textbook case on how to handle a crisis, any company is going to have miscreant behavior,

negligent behavior, malicious behavior, any company the size of Starbucks. It's not what happens, it's what you do about it, surely.

RASHAD ROBINSON, EXECUTIVE DIRECTOR, COLOR OF CHANGE: Absolutely, and Starbucks a real opportunity to lead here. The issue will be, it's not

just the input, but what actually comes out of it. Do we see real results? Across social media, across our membership at Color of Change, we are

hearing from people who have had their incidents...


ROBINSON: ... at Starbucks. I have been in touch with the leadership at Starbucks and know that they are hearing and they are trying to move

forward. But this is not a conversation about one bad store or one bad apple or even one bad corporation that has had a challenge here in


Starbucks has an opportunity to really lead, but there is a whole community and folks that are at play here.

QUEST: But, Rashad, you say it has an opportunity to lead.


QUEST: But why do you say it has an opportunity? Surely, it is leading. I mean, are you not giving -- I mean, the mayor gives some credit for what

they are doing in the short period of time. Do you give them the same credit for what they are doing?

ROBINSON: I absolutely give them credit for what they have done in the short period of time, and what I have to say as someone who is -- like the

mayor, been in this work for a number of years is that we will look back on this time a year from now, two years from now, three years from now and see

actually, did these actions lead to the type of results, the type of changes, real world changes in to people's lives.

QUEST: Mr. Mayor, arguably, you know, corporations will follow because where profits go, and then people boycott therefore, but the police in all

of this. Now, there is a real role surely, Mr. Mayor to be answered about why the police -- obviously, they asked the men to leave, and obviously,

you know, at some point they realized there was no other way to handle this than to arrest them.

Surely, the police needs to be looking at their own actions in this.

NUTTER: And I believe, Police Commissioner Ross will continue that kind of work, but again, Richard, we go back to the beginning. The police should

never have been called in the first place. That was the first error.

And I said last night, you know, police officers do have some amount of discretion. You know, if you go through a red light, every person does not

get a traffic ticket when that happens. Officers take a lot of factors into consideration.

This one, it seems the officers went into a little bit of a rock and a hard place. They've got a store manager saying, "These people are trespassing,

we don't want them in the store anymore." They have been called, you know, maybe different officers, maybe a different decision. Supervisors et

cetera, et cetera. But I believe that Police Commissioner Ross and the folks over at the Philadelphia Police Department will also reexamine their

own actions in this particular (inaudible)...


ROBINSON: Actually, actually, this is where I have to disagree with the Mayor respectfully. Absolutely, the first thing that the Police Chief came

out and said was that the police officers did nothing wrong, but he was going to do an investigation.

This -- over and over again, in cities around the country, in communities around the country, police cannot police themselves. We have



QUEST: Hang on, hang on, Rashad. Hang on, hang on. On the point that you've just raised, all right, what in your view should the police have

done, faced with a Catch 22 that the Mayor talks about.

Starbucks doesn't want them there. The original error has been made the police have been called, but now they are faced with a situation where

somebody is refusing a lawful police instruction to leave the property.

ROBINSON: Yes, I mean, the question is why was there that police instruction in the first place? The conversation between the manager about

why they were supposed to leave, then the conversation with the other patrons about whether or not they were causing a problem. Whether or not

the police instruction was fair in the first place, whether or not that police instruction would have happened if those folks were white, would

have happened.

The fact of the matter is that there is a different type of standards and laws if you are black in America versus if you are white and for a police

department which has a fraternal order of police, which not only endorsed Donald Trump, but stands behind him even after Charlottesville, this police

department does not get the benefit of the doubt in black communities and they need to be held accountable and political leaders cannot enable them.

QUEST: All right, gentlemen, I do need to end it there, gentlemen...

NUTTER: We don't want to let the actions of a few tarnish the brave men and women of the Philadelphia Police Department.

ROBINSON: This is not a conversation about bad apples. This is a conversation about structural policy.

QUEST: Gentlemen, gentlemen, there's a reason why I have a bell on this desk and it is to say, gentlemen, thank you both very much for joining in

our discussion tonight.

Now, to something that is really quite extraordinary. Let me put it like this. If the current situation in Washington with the President was a

movie, with all of its various actors and participants, you would say, it's too far-fetched. If it was a book, you'd say it is not believable. It

simply couldn't happen, and yet, we have a cast of characters at the summit of America's government.

Imagine it's a movie trailer. No disrespect, but imagine you're watching a movie trailer. You have the President, a billionaire businessman and

former TV reality star who faces numerous allegations of sexual misconducts, who is rejecting accusation...


QUEST: ... of an affair with the porn actress, Stormy Daniels who is paid with $130,000.00 to stay silent, by none other by the President's lawyer,

Michael Cohen, the fixer whose office is then searched by the FBI looking for evidence of campaign collusions with Russians and in a courtroom drama

moment, discovers an undisclosed client who is revealed to be the star presenter of Fox News, Sean Hannity, who happens to be a close friend of

the President and his most vocal supporter, the host.

All the while as this maelstrom continues, a former, deep insider reveals all. James Comey, the Director of the FBI fired by the President who is

having the alleged affair with the porn actress who was with the lawyer who was paid off at the same time.

And now, takes revenge by describing the Commander-in-Chief as morally unfit. If you read this or saw it in a movie, you would not believe it.

David Gergen, you would say this is incredulous, this couldn't happen. Checks and balances. You couldn't have this sort of behavior. Somebody

would find out. Which bit of this do you find the most distressing?

DAVID GERGEN, SENIOR POLITICAL ANALYST, CNN: Well, it certainly is going to put a lot of novelists out of business -- that is never as should. I

think what I find the most puzzling is the degree which there seems to be a web or network of individuals now who are one reason or another under

investigation or in trouble with the law.

And that we've never seen before. I worked in the Nixon White House as a young guy. I can tell you in one case, we had a sort of a sole person in

the President himself who was pulling people towards him to commit criminal acts, but there was no web.

And so, I found it when James Comey and his book and his interviews have been saying his first reaction upon encountering the Trump team was that,

it was like, the days when he was working against the mob and prosecuting members of a mob. And that there was a sort of sense of belonging to a

group, a filth he demanded of the leader if you would, and a real sense of we're a brotherhood, we have our standards. Nobody else in the country may

understand our standards or agree with him, but we're here and we're in charge.

QUEST: So, all right, in that scenario and take for example today, the President tweets that Comey should be in jail. Comey, the former head of

the FBI tweets, "We must never accept that this is normal. It's not normal for the President of the United States to say people should be locked up,"

as he did once of course about Hillary Clinton. What do you make of it?

GERGEN: Well, I think Comey is right. I mean, this has become a mud fight and Comey says some things that are I think, have given offense to others.

But I must say, this President for whatever reason seems to take lightly the whole idea that when you are elected President of the United States,

you can punish your enemies by putting them in jail.

You know, from the campaign on, he saying, remember, "Lock her up. Lock her up." A chant in a lot of Trump rallies that Michael Flynn encouraged

that chant, and you know, right here now, the President saying Comey ought to be put in jail. That's what you see in a Banana Republic, you know,

that if you win the election, you put the other side in jail. That's the way you deal with it.

Frankly, you see it in autocratic countries and the authoritarian countries where you put your enemies in jail.

QUEST: Okay, so yesterday you would have read the "New York Times" four- page editorial against the actions of say the President and of course the Republican leadership, which leads me to ask with great respect, how

worried are you for the system? How worried are you that real damage is being done to the fabric of the Constitutional system which will take years

if it can't be repaired?

GERGEN: Well, I think it is doing damage not only internally in the United States, but hurting our reputation overseas. We pride ourselves of being a

model, if you would, with the rule of law and respect for the rule of law and what I am worried about now is, here internally in the United States is

not so much about the checks and balances. Those are still operating just as they did down in Watergate and Watergate with the Congress and the press

and others, but especially the press and the court being very tough on the administration.

But what is very, I think distressing and dangerous here, Richard is not the checks and balances. It is whether we maintain the traditions, the

norms as they...


GERGEN: ... are called, which helped to create a civilized nation so that people have certain expectations that others will be truthful, that they

will be -- that there will be transparency, there will be accountability and all of those things are being sort of kicked aside and I do worry that

this becomes a way of life, you know.

You've got a President who lies or misleads you five times a day as some of the data suggests, you know, what is that teaching our kids about how to

behave as adults?

QUEST: David, thank you, sir.

GERGEN: Thank you, sir.

QUEST: Who knows what the next chapter or the next sequel in this story will be?

GERGEN: Always spinning.

QUEST: Thank you, good to see you, David Gergen joining me from Washington. We will take a break. We'll have the markets afterwards, and

if you think it's all too far-fetched, just look at the chart and wonder what comes next?

By this time tomorrow, the curtain will have risen on Saudi Arabia's first cinema in over three decades. The AMC Complex will open in the capital,

Riyadh after a 35-year ban on movie theaters which lifted in December. Adam Aaron is AMC's Chief Executive Officer, CEO and joins me now live.

The cold question or the first question is, what will you be showing when the movies begin tomorrow night?

ADAM AARON, CHIEF EXECUTIVE OFFICER, AMC ENTERTAINMENT: Well, there has been a lot of press about that and we have not confirmed the story, but

since you broke the story way back in November, we're going to confirm it here with you, we are showing "Black Panther," the third most successful

movie of all time in the United States, and it will air about 19 hours from now in Riyadh, Saudi Arabia as you said, a historic day, the first time in

35 years that cinemas have functioned in Saudi Arabia.

QUEST: You've gone for a winner there, Adam. You've gone for an absolute winner. Nothing like getting them in for that one. All right, so listen,

when this opens, what are the ground rules that you will be operating under and I say ground rules, but you know what I mean. What is your

understanding of what you will show and what you will not show?

AARON: Well, we are going to show typical Hollywood blockbusters that are very popular in the United States and in Europe and elsewhere in the world.

You know, Hollywood has been showing movies in the Middle East for a long time. It has proven that it could be sensitive to the local cultures here

in the region and we are very confident that the big movies in the United States are going to be big movies in Saudi too.

QUEST: How significant is the Saudi market going to be for you? I mean, you are well and truly a head of the pack here, and you know, you're

obviously starting to mount on your competitors?


AARON: Well, we certainly are way out front in Saudi Arabia at AMC. We have been at this now for -- since September. We have met with the highest

levels of government. I had the great privilege to meet, His Royal Highness, the Crown Prince and hear from him directly how important it was

to reopen cinemas four decades in and here we are, we have an agreement with the Sovereign Wealth Fund of Saudi Arabia who is our partner here. We

could not possibly have a better partner.

It's our goal to open about half of all the movie theaters that opened in this country over the next decade and as you said, we've got the first

license to operate. We got the first license to open a cinema and we open tomorrow night. April 18 is going to be a historic day for the movie

industry in Saudi Arabia.

QUEST: Adam, great to see you. Thank you for revealing "Black Panther" and you and I -- we still have got to go to the movies at some point

together so I can actually see how the owner of the movie theater, what sort of seat he actually gets. It's probably near the back because it's --

good to see you, sir.

AARON: Well, the seats he gets are the seats everyone else gets which is nice, luxury, reclining seats, very comfortable and your choice. Your

choice, we will do it in New York, London or now, in Riyadh.

QUEST: I'll buy the popcorn, you buy the colas. Thank you, good to see you, Adam.

Now, investors are cheering results from America's biggest companies. Well, we're in the earning season and our spiral share case is starting to

fill in as we track the share prices in the 24 hours.

This is Clare. So, Clare you stay where you are. We will be back with you in just a moment to put some things -- this is the true barometer of what

Wall Street thinks about the quarter gone by. How the share price moves in the 24 hours after results.

Never mind the first few moments. We will have United and IBM, they are reporting this hour -- United Airlines. Bank shares have remained

stubbornly down, all of them would be down and indeed we saw that today.

If we take Goldman Sachs, Goldman Sachs have results which were very good at 27 percent despite a $2.8 billion profit. The stock has closed down 1.6

percent about sustainability of their profit, all of the banks -- Citi, Goldman, Wells Fargo, PNC -- they've all been down, Bank of America inching

it out.

As for Netflix, well, I told you yesterday, we talked about their results, but now, Netflix finished up 9 percent with another 9 percent, so it's

roughly about there, which is where it would be. Strong subscriber growth is what is moving Netflix.

You are seeing this sort of, at the moment, the banks have weighed the share case down towards the lower end, but now, I expect it will start to

move up towards the higher end.

As for the FANGS -- Facebook, Amazon, Netflix, and Google -- all gained ground during the course of the day with Facebook up 2 percent, Amazon up 4

percent, Google was up 3 percent. That's the way it looks.

So, Clare Sebastian has been looking at the numbers first and joining us on the FANGs. Why are FANGs back in stock?


QUEST: Including Netflix?

SEBASTIAN: Well, this is a kind of a media pent up, you know, buying session based on the fact that Netflix was the first of the big tech

companies, the first of the FANG to be reporting. They were really waiting for this moment. It is -- although, it is a bit smaller in terms of market

cap, and it has a different kind of business model, it is still kind of a bell weather or barometer of how the rest are going to go.

And I think that's what led everyone to pile in. They were waiting for an excuse, Richard to trade on the fundamentals rather than the kind of

regulatory noise, the Trump tweets around Amazon. All of that we were looking at last week.

QUEST: But, hang on, hang on. They still have regulatory problems...


QUEST: ... and issues. Amazon still hasn't dealt with its issues. They've got issues in terms of privacy and data, even Netflix in terms of

competition, but in terms of real serious problems, three of the FANGs are still -potentially got big issues.

SEBASTIAN: And in particular, Facebook. I think we can almost kind of put Facebook to one side a little bit because even though it is unclear what

Congress is going to do to regulate them, they do have the European all coming down that is absolutely going to happen on May 25th there, General

Data Protection Regulation and that is going to impact Facebook's business.

But I think, you know, Netflix was at a record high today. The rest of them are pretty much just back where they were at the end of March when we

started to see those four, so all of it is going to start to get some context.

QUEST: Clare, good to see you. Thank you. We will talk more about this. We will talk more about technology in a moment.

After the break, with me, Brad Smith is the President of Microsoft and there he is, waiting out on the West. We are going to talk about the new

deal. The new agreement between various tech companies, right after the break.


QUEST: I'm Richard Quest, there of course, there's a lot more QUEST MEANS BUSINESS in just a moment. When the NTSB says one person has died after

Southwest Airlines jet suffered a catastrophic engine failure at 30,000 feet.

And I'll speak to the IMF's chief economist who sound the alarm on what protectionist is in the global economy. And you and I continue tonight,

this is Cnn, and here on this network we guarantee you the facts always come first.

Right now, Japan's Prime Minister is talking about trade in North Korea, but President Trump enjoyed it. Shinzo Abe is also calling for complete

and verifiable nuclear denuclearization, and he commended Mr. Trump for agreeing to hold talks with North Korea's leader.

The U.S. president says he expects something to happen by early June at one of five possible sites. There are conflicting reports about the chemical

weapons experts have entered the Syrian city of Duma.

Syrian state television and the white helmet volunteer rescue groups saying they have, U.S. State Department says they haven't. The team is to access

where the banned substances were used and expected clinical attack 10 days ago.

Theresa May; the British Prime Minister has apologized to generations of British-Caribbean immigrants who have been denied government service, jobs

and homes and even threatened with deportation.

She said it's the Windrush scandal at a meeting with Caribbean leaders on Tuesday. The prime minister vowed to give more support to the immigrants

and insisted they are still welcome in the United Kingdom.

Microsoft just built a coalition with some of the biggest names in tech to make a stand against cyber warfare. Companies like Facebook, Cisco and

Telefonika are all part of a new accord vowing not to help government carry out cyber attacks.

And say they will come to their users aid when they're victims of an attack or a hack. Microsoft's President Brad Smith joins me from San Francisco.

Always good to have you on our program. Brad, thank you for taking the time.

Brad, the accord, the agreement and I -- I mean, how difficult was it to get everyone to sign up, and bearing in mind Amazon and Google haven't.

BRADFORD SMITH, PRESIDENT, MICROSOFT: Well, I think this is one very important step forward. We brought together 34 companies from around the

world and across the industry. And I am confident that more companies would join in the coming weeks and months.

[16:35:00] We need to take a stand, and the stand we're taking is that we'll protect customers around the world, we'll work together to increase

the resilience and ability to defend customers.

Then we're also saying that we won't help governments launch cyber attacks against innocent citizens or enterprises. I think that's --

QUEST: Right --

SMITH: Exactly what the world needs.

QUEST: OK, so is the -- is this the albeit an official non-governmental digital Geneva Convention or at least the start of it that you have been


SMITH: It is the start of precisely that, I believe. We knew in my view that we needed to have the tech sectors step forward first. It's easier to

bring companies together from around the world and governments from around the world.

But we now need to build on this and really continue to call on governments to stop attacking --

QUEST: But --

SMITH: Citizens the way we've seen.

QUEST: OK, it's all in the definitions here though. You know, you say attacking innocent citizens. I mean, if the U.S. government as some

suspect is engaged in its own version of cyber warfare or the collection of difficult privacy information, you are basically saying you will go against

the U.S. government or the British government or the Australian government or whoever it is.

SMITH: Well, I actually think if you look at the world today, the biggest attacks against probably even citizens are clearly coming from a set of

governments that we know well.

It was North Korea and a group associated with it that launched a one attack last year. It affected hospitals across the United Kingdom and

affected 300,000 computers in 150 countries.

We saw that now Turkey attack launched against the country of Ukraine, those are the big problems that we need to solve. We're principle vis-a-

vis every government, but there's no doubt who the biggest culprits are today.

QUEST: And would have thought also -- I mean, when you say we will oppose cyber attacks on the innocent citizens, we will protect against tampering

with exploitation of technology.

We will not help governments launch cyber attacks and we will protect customers using -- I suppose someone would say, well, I thought you were

doing that anyway?

SMITH: Well, I think that in many ways most of us have --

QUEST: Right --

SMITH: But we need to bring together the industry on a global basis.

QUEST: OK, so --

SMITH: Because -- yes --

QUEST: Yes, right. How do you -- let me just be cynical or skeptical. I'll let you decide after you've heard the question. How do I not take the

decision -- just a very nice document with good sounding words, but actually has no realties behind it and the companies we'll all ignore it

whether it suits their book anyway.

SMITH: Well, I think it's a fair question, Richard, and I think that as with all such things, one needs to start with words. Because we use words

to define principles. But ultimately, we all need to be judged by our deeds.

Now that we put the words down on paper, we need to live up to them and we need to take concrete steps to implement them, and that's what we're

bringing together, others to do, that's why we're partnering with other companies to do.

But it's more than fair for you and others to judge us by what we do in the months and years ahead.

QUEST: Brad, I'm going to go out to the frolic of my own here and ask you -- you would have seen today Starbucks has announced it's closing 8,000 of

its stores for one day for racial bias training.

And this is the sort of moral leadership that companies lead, isn't it? I mean, you know, one could argue about the event that happened in

Philadelphia, but it's how companies respond to crisis that's important. Would you agree?

SMITH: I do agree with that, and you know, Kevin Johnson; the CEO of Starbucks is somebody who worked at Microsoft with us closely for many

years, in the world today, we all have our difficult days.

And as you put it quite rightly, it's how we respond to those difficult days that are the tests of our times. I'm not an expert on Starbucks

issues, but I do believe that there are all days when we have to stand up for principles.

And among those principles is the importance of respect for other people and a world that honors diversity and inclusion. And do you think that is

getting more difficult in an era where social media social discourse, even presidential discourse has become so difficult, so toxic that maintaining

integrity has become much trickier?

SMITH: I think it's a challenging time, I think you're right to frame it as a difficult time. I think it's a time that requires the leaders,

whether they'd be in business or anywhere else.

Really understand the principles for which they want to stand up and they have the courage of their convictions. And there are days when -- you

know, people will disagree they have the right to.

But I do think that people ultimately respect those who have the courage of their convictions and are clear in taking principled stands.

[16:40:00] QUEST: Well, you said you've taken a principled stand, so with this document, I will be watching closely in the days, weeks, months and

years ahead to see as I suspect, you expect.

SMITH: I would expect nothing less, thank you.

QUEST: Good to see you, Brad, as always, thank you for taking time to join us --

SMITH: Thank you --

QUEST: Tonight. When we come back, pretty horrific, horrifying, cared for(ph). A Southwest plane has an engine failure that punches the fabric

-- that punches the fuselage and the person is killed after being nearly sucked out of the aircraft. After the break, we'll tell you more about it.


QUEST: For anybody who flies, it's a nightmare scenario. A person is dead after an accident on a Southwest flight from New York to Dallas, forcing an

emergency landing because of an explosive decompression after the result of an engine exploding.

An NTSB team is currently on its way to Philadelphia. So this is what we know, all believe the facts are. The left wing number one engine as you

see here appear to explode, and then part of its fractured or entered the cabin, blowing out one of the windows here which is you can see.

Now since the plane was in altitude, they caused an explosive decompression we believe a passenger was almost sucked out of the aircraft before being

pulled back in again.

Over the last hour, the NTSB chairman said incidents like this are extremely unusual.


CHRISTOPHER HART, CHAIRMAN, NATIONAL TRANSPORTATION SAFETY BOARD: Engine failure. How frequent does the NTSB see what we technically do qualify as

a non-contained engine failure.

I may ask that that is about three or four a year, and not all of those involve U.S. carriers. In last Fall, there was a A380 that had an

uncontained engine failure over Greenland and was not a U.S. carrier.

So we see about three or four of those a year.


QUEST: Peter Goelz is the former managing director of the NTSB, joins me from Washington. What's your understanding of what happened here

particularly in the face of a first someone who died.


investigation. We don't know what happened.

I mean, the obvious culprit is the internal workings of the engine. The reality is the CFM engine is a real work horse. You know, it doesn't need

to be overhauled for 50,000 hours.

But something let loose or something came off that caused that engine to disintegrate and penetrate the cabin. And it's -- we will find out


QUEST: Of course Southwest had a very similar incident just a couple of years ago, where also number one engine penetrated the fuselage, on that

occasion nobody was injured.

But it's going to raise questions on the CFM snuck-around engines.

GOELZ: Yes it will and it will raise questions about where they're maintained, how they're maintained. They will look at the manufacturing of

the individual blades, if it was a blade that failed.

[16:45:00] You know, there are microscopic fatigue crash that can sometimes go unexamined and can, you know, develop into a catastrophe.

QUEST: If we look at the major incidents of this, and let us do the recent ones. I mean, you've got the BA at Las Vegas --

GOELZ: Right --

QUEST: The 777, you've got the American 76, and you have Qantas, the 32. They all have massive engine failures where the nacelle doesn't contain the

debris. Is this something that needs to be examined.

GOELZ: Well, I think it does, I mean, the old theory or the current working knowledge is that the cowling and the nacelle has to be able to,

you know, contain an engine disintegration.

You know, there's got to a major --

QUEST: Yes --

GOELZ: Titanium, if they're not being able to do that because of the brake efficiency and the high power nature of these engines, then they're going

to have to revisit that -- their requirement.

QUEST: Do you see any urgent or immediate NTSB action in this regard?

GOELZ: Well, I think they're going to look very carefully if they've got at the fan blades and at the compressors. If they see something, they will


QUEST: Great --

GOELZ: Not hesitate.

QUEST: Finally, Peter, there's an inevitability that once -- you'll be familiar with the phrase here, the liberated parts. And once the liberated

part are ejected from the engine, there's almost an inevitability because of the proximity that the fuselage and the passengers become a risk.

Certainly, you saw that even more so with the old days of the delta in 1996 where you had the engine nine which went -- which blew at the back.

GOELZ: Right, I was on scene for that accident and it was just dreadful. And you know, those engines are nacelle-up next to the fuselage and that is

a real challenge.

QUEST: Peter, thank you, good to see you sir, come back and help us understand it when we get some reports from the NTSB. Which grade would

you --

GOELZ: I will, thank you.

QUEST: Thanks with you. We continue tonight, China is taking a twin-track approach to its trade standoff with the United States. We're really

looking at Beijing's strategy after the break.

And of course, the chief economist at the IMF who says protectionism could strangle global growth.


QUEST: When it comes to responding to threats about trade, China is deploying both the carat(ph) and the stick(ph). Here's the carat(ph), it

is the restrictions imposed on non-Chinese car makers to be removed by -- not 2022, from 2022.

[16:50:00] Until now, they had to share factory ownership and profits with Chinese companies. The sort of JV arrangement. And this is the

restrictions, easier access, bad tariffs to be originated. Now, from Wednesday, Beijing says it will apply 117 percent tariffs on U.S. sorghum


Washington this week banned U.S. suppliers from selling parts of software to ZTE; a major Chinese tech company because of sanctions busting. The

shares were suspended in Hong Kong.

And the Treasury Secretary on Monday tweeted by the president on currencies saying that that tweet was a warning shot. Donald Trump accuse China of

devaluing its currency.

In his new world economic -- out of the will, the IMF says protectionism is a major risk to the global economy. Earlier on, press expressed the firm's

chief economist said countries need to be cautious.


MAURICE OBSTFELD, CHIEF ECONOMIST, IMF: Of course, and we should remember that trade is to their mutual benefit, it's been a driver of growth through

the entire post-war period.

So you know, we do worry that there could be escalation with measures and counter measures. We hope that countries will instead collaborate in a

multilateral spirit and resolve their differences.

QUEST: At the moment, the environment is pretty good as you say, U.S. is growing faster now, employment, low unemployment, low inflation but rising

interest rates.

Are you worried about the speed at which these rates are going up in the U.S.?

OBSTFELD: You know, the U.S. is embarking on a historically large fiscal expansion at a time when it's at full employment. And our projections call

for U.S. unemployment rate to fall to levels that we haven't seen since the late 1960s.

That could pose inflation risks and the Fed would meet those by raising interest rates perhaps more times than it's currently foreseeing. So yes,

we do worry that there could be a spike in the interest rates and that would not only be a U.S. issue, it would affect dollar debts worldwide.

It affects capital flows to emerging markets.

QUEST: The president of the United States criticized Russia and China yesterday for what he says was currency devaluations. But he's wrong,

isn't he? There should be no managed devaluation of those currencies if anything in the case of China, quite the opposite.

OBSTFELD: You know, well, China has spent about a trillion dollars in reserves, not recently but certainly in 2015 and 2016, preventing its

currency from depreciating.

You know, we judge that, it might have to appreciate a bit in the future to keep the current account in line, but it's not grossly undervalued. Russia

has a floating exchange rate and it has depreciated a lot recently.

But part of the reason for that has been the new sanctions on Russia.

QUEST: Let's talk finally, Maurice, as you look across the world and you see the various factors, whether it's Brexit, higher interest rates in the

U.S., sanctions on Russia, China trade. What is the one thing at the moment that you would urge I should keep my eye on?

OBSTFELD: Well, I think we should look on debts worldwide and our fiscal monitor which comes out tomorrow will talk about that. Whether you look at

sovereign debts, corporate debts, household debts, they're historically high.

And as interest rates go up, as Central Banks normalize monetary policies, there's uncertainty about what the prospects will be. That's why we

recommend that governments in particular reduce those debts so that they have some ammunition when the next recession comes.

And as good as things are now, we know there will be another recession some day.


QUEST: That we can be sure, another recession someday. A sober warning from Maurice Obstfeld. The Dow climbed more than 200 points on Tuesday

after a number of better-than-expected earnings.

Shares have -- putting up 11 percent, and the interesting thing about that it was only after Morgan Stanley raised its recommendations on the stock

and said user growth was picking up, IBM shares are down 5 percent, down for us, United Airlines is up 3 percent.

Both reported earnings in this hour. I'll look at quickly the European bosses, the Euro bosses, Dax at its best level since February. To get an

idea of the markets, a strong day across the board with the Dax having -- up 1.5 percent and the New York markets up strongly as well.

[16:55:00] We will take a profitable moment after a short break.


QUEST: Tonight's profitable moment, Starbucks have shown us exactly how a crisis is supposed to be handled after two men were arrested for not buying

anything and then thrown out of the store, I call this year's crisis that hit Starbucks.

But the way the company responded first of all immediately, the CEO apologized. Said it was reprehensible, should not have happened, it was

wrong. Has held a meeting with the men who were arrested to apologize again and started training on unconscious bias.

And now finally closing the whole Starbucks network of 8,000 stores in the United States, a one day of training. Now of course, a one day training

isn't going to be necessarily enough, but the fact Starbucks has shown such leadership on such a tricky, difficult issue, it speaks volumes for the way

the company is actually following its own principles.

Compare that to United Airlines or to Facebook or to Equifax and how when they had their crisis, they had to blame somebody else, disappeared off

into the distance, weren't seen and the apology came to you too little and too late.

No, Starbucks has proven exactly why it is so successful because it does what it says it will do. When things go wrong, it puts them right. 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. Let's

meet tomorrow.