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QUEST MEANS BUSINESS

Lagarde: Don't Hurt Trade, Oil Prices Dropped, Arsene Wenger Is Stepping Down As Arsenal's Manager, France Wants Full And Permanent Exemption From US Tariffs, South Africa's President Has Returned To The Country And Is Now Meeting With Top ANC Leaders As Protests Grow Today, The Dow Closed Off More Than 200 Points, GE In A Long Time, Gains Has Been Up All Week, Apple Down 2 percent Yesterday, Down 4 percent Today, Wells Fargo Gets A Huge Billion Dollar Fine, U.S. Democratic National Committee Is Suing The Trump Campaign, The Russian Government And WikiLeaks; DJ Avicii Dead at 28; Police Defuse World War II Bomb in Central Berlin; Prince Charles Becomes New Commonwealth Head; Arsene Wenger Leaving Arsenal After 22 Years. Aired 4-5p ET

Aired April 20, 2018 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[16:00:00]

RICHARD QUEST, CNN HOST: On Wall Street, Dow, off the lows of the day, but still heavily lower over the course of the session.

Down along with the S&P 500, somewhat miserable day for our stocks as economic states believe and oh, yes, they go. Thank you, sir. And another

one. Three strong gavels. Trading is over. It is Friday, it is the 20th of April.

Tonight, the message, simple, "Don't hurt trade." Christine Lagarde has a word for the financial world here at the Spring Meetings of the IMF. Oil

prices dropped as Donald Trump says OPEC is at it again. And the economist who changed football forever, Arsene Wenger is stepping down as Arsenal's

manager after more than two decades

I'm Richard Quest, live at the IMF's spring meetings in Washington where of course, I mean business.

Good evening, we begin tonight with a warning from the head of the International Monetary Fund, "You must defend trade at all cost and be wary

of the cost of trust once its lost." Now, the tulips are certainly out in Washington, which clearly means, it's the Spring Meetings of the IMF and

World Bank.

However, despite the beautiful weather, Christine Legarde sees storm clouds on the horizon. Here in Washington, she tells me that trust could be

destroyed if global trade comes under attack, and on this program, as you'd expect, we're going to hear the top names in international economics.

You're going to hear from the leaders whose decisions hold the key to future in any future trade conflict. The French Economy Minister, Bruno Le

Maire will be with us immediately who says Europe is ready for a trade battle.

South Africa's new - no, he was before, oh, and he is again, Finance Minster is here as violent protest force the country's President to return

home.

Managing Director of the IMF Christine Lagarde who has a simple message for every country at these meetings.

(START VIDEO CLIP)

CHRISTINE LAGARD, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Please do not hurt trade because if you do, you should question the way in which

trade is conducted. Then investors will say, "Well, why would I invest? How will I organize my supply chain?"

(END VIDEO CLIP)

QUEST: The Managing Director says, while the economy - the global economy is looking strong, the threat of a more interventionalist, more

protectionist US President looms. Donald Trump has poked his Twitter account into every corner of the global economy in recent days.

So, for example, on oil, he says it is artificially high. OPEC is at it again and will not be accepted. On currency, Russia and China playing the

devaluation game, not acceptable says President Trump.

And on trade, he says, the US is losing cannot continue.

I asked Christine Lagarde how worried she is for the global economy.

(START VIDEO CLIP)

LAGARDE: I am more than I was in October. Dishonesty of shining, we said, the sun is shining, fix the roof. We are seeing some governments taking

action fixing their roof, taking some good structural reforms and we are seeing clouds. We are seeing clouds on the horizon, which are of the

different natures. Some are big, some are not so big. Some can be dealt with.

The ones that I am concerned about include threats on trade, include very high level of debt around the world, public and private and also include

the - in a way, good things because as growth picks up, monetary policy is going to affect the way in which money moves around the world.

QUEST: So, let's take trade first of all, the reality is that for want of a better phrase, the United States is now embarked on an America first,

which is somewhat determined as protectionist policy and seems to be bearing some fruit with South Korea and the like, but that is the way

forward.

I mean, the multilateral system is no longer the principal method for the US.

LAGARDE: Well, let's look at it that way. Trade, does it matter? It matters enormously because it fuels growth and it was on the decline for a

few years after the crisis.

It is not going up in a big way, bigger than actual growth at the moment, so it is fueling growth around the world and it is supporting investment.

Those are the two big engines that are driving growth at the moment.

So, we need to really make sure that the best conditions under which trade prospers and develops are actually put together.

Now, the US has issues, not the only one with issues, other countries have issues, but the rising of protectionism about some unfair trade practices,

about the protection of IP around the world. What I am saying as a strong message to all participants--

[16:05:16]

LAGARDE: -- in this IMF meetings at the moment is these issues have to be put on the table. They have to be debated, but please do not hurt trade.

Because if you do, if you question the way in which trade is conducted, then investors will say, "Well, why would I invest? How will I organize my

supply chain?"

QUEST: This comes back to what you were talking about in Hong Kong though, doesn't it? The issue of the breakdown of everything by which this

building and others have governed themselves and the principles for the last 70 years.

LAGARDE: Now, I am more concerned about a breakdown in trust because trust is what - it's the backbone of economic decision or economic development.

So, if there is no trust in the way in which trade is going to be organized, in the way in which IP issues are going to be discussed, then

clearly, those economic deciders, the entrepreneurs, the corporate leaders, the people in the house who are going to decide where to go and what to buy

are going to wonder, you know, what other terms and conditions of this game.

QUEST: Are we at the cliff edge?

LAGARDE: No, I don't think so. I don't think so because, number one, there is time to sit down and talk. What I heard many of the leaders say

yesterday at the G-20 meeting is we care about this multilateral process. We care about international trade and if there are issues, they must be

talked about.

I think that's what needs to happen and I hope that there is progress towards that goal on the occasion of these meetings.

QUEST: The issue of debt, the reports yesterday that came out. We are seeing already - the problem with debt is that it is never a problem until

it becomes a problem.

LAGARDE: Correct.

QUEST: And you can shout from the rooftops here about it--

LAGARDE: Which I will.

QUEST: Thank you. The rising levels of debt, but until interest rates start to tighten to the point of pain, until a country defaults and has to

come to you for relief, no one is going to listen.

LAGARDE: Well, I'll keep on shouting because I think that's the - the burden of debt that we are adding to corporate, to countries, whether they

are advanced, middle-income, low-income is actually going to weigh on the shoulders, not only of those who are deciding today, but of the young

people of tomorrow, assuming we can actually get there.

So, $164 trillion of debt is 225 percent of global GDP. We are borrowing more than two years of our creation of economic value. This is a lot and

it has been addictive for many years because the interest rates were so low.

QUEST: The US is the worst offender at the moment, with the fiscal deficit and the future plans and the tax cuts, which had some good measures

attached to them, but this country, the largest economy in the world is going in the opposite direction to that what you are talking about.

LAGARDE: I think all governments, all governments, have to look at their debt level. They have to look at their debt service and they have to be

mindful of what is sustainable in the long term.

When you are the reserve currency of the world, it puts you in a more comfortable position, but it doesn't guarantee a future and the public

finance of the future. That is what needs to be looked at. Entitlements of you know, five, six, 10 years down the road, can we afford it? Or

shouldn't we take measures now to indicate that while we have an upswing in growth, which is the case, they should be restrained on the fiscal deficit,

yes.

QUEST: Finally, we meet twice a year, more frequently here--

LAGARDE: With great pleasure.

QUEST: And I know, we love it and we discuss these issues. Do you get the feeling progress is being made? Because we do seem to have been in a

situation, and yes, I am not going to mince words, probably as a result of the change of the administration in Washington, some would say of two step

forwards, one step back.

LAGARDE: If I look at numbers, we have made huge progress. The bank is almost solid. The ratios are much higher in terms of protection, you know,

and the growth is here, 3,9 percent twice in a row is really remarkable.

But we need to build for the future and we need to do so in a more cooperative, in a more multilateral way.

(END VIDEO CLIP)

QUEST: Christine Lagarde with a somber message on trust and trade. Bruno Le Maire is the French Economy Minister. He joins me now. Good to see

you.

BRUNO LE MAIRE, ECONOMY MINISTER, FRANCE: Good to see you.

QUEST: When we spoke last, you were very clear, very clear on the unwillingness of Europe to give ground on the trade dispute with the US,

but the time is getting short now, isn't it? May the 1st, the tariffs come in and that's - in fact, they have been suspended is renewed.

LE MAIRE: Yes, I know. Frankly speaking, once again, we could not understand, we, European to be hit by the American new tariffs. We are

allies and we don't want to be hit by the American tariffs. And we are--

[16:10:16]

LE MAIRE: -- doing our best to avoid the trade war between the United States and Europe because it would not be in the interest of Europe of

course, but not in the interest of the US also, so we are trying to find compromise with the US. We do not want and we cannot accept to be hit by

those tariffs.

QUEST: But the tariffs will come back. You've only had a suspension from them.

LE MAIRE: We don't want suspension. Let me be very clear. We want a full and (inaudible) exemption from the US tariffs. Full and permanent.

Because you know, when you are telling us that it will be a suspension, we do not want to leave under the slate of a kind of sword of Damocles hanging

over our European heads, waiting for the decision of President Trump.

We cannot live like that. We are allies. We cannot live under the slate of an ally like the United States. We want a full and permanent exemption.

QUEST: Your President is describing it as blackmail, the situation--

LE MAIRE: Yes, it's like blackmail, when you are explaining it will be a suspension, but if you are not abiding by the whole, if you are not doing

exactly what we want you to do, then we will put back tariffs on you. You cannot do that.

QUEST: Are you prepared to negotiate? I think that's the point. In the same way as Japan has said we will start the negotiation.

LE MAIRE: But what kind of negotiation? What kind of negotiation? Is there a problem? Yes, there is a problem. The problem is the question of

trade rules and the necessity of building a new trade multilateral approach, and we are ready to discuss that with the US.

We have a problem with the Chinese behavior related to trade and we want to engage China into a more multilateral approach, and we are ready to discuss

that with our American friends.

QUEST: Let's go into France. You are, some would say now embroiled in the battle of the political life. Macro's Maggie moment. Are you determined

to see these strikes out in (inaudible)?

LE MAIRE: Yes, we are fully determined to adopt the law and to adopt the reforms. You know, what is usual is--

QUEST: How much pain will people in France take? Will they support the government or will they support the strikers? The (inaudible)--

(CROSSTALK)

LE MAIRE: What would be the most painful for the French people would be the government giving up the reforms. That's exactly what we have been

doing during the last few decades and that we want to avoid that time because you know, what is usual in France is that you are introducing a

reform and you are facing strikes, but what is unusual is that, this time, we will stand firm.

The law will be adopted and the reforms will enter into force.

QUEST: Which begs the question, how much pain will there be? I mean, look, I lived through you know, Maggie's 1980's, the miners' strike--

(CROSSTALK)

LE MAIRE: That is the case in France. I think that's not the right comparison because the UK was with very violent strikes, huge difficulties.

We are not facing the same kind of difficulties in France.

QUEST: Yes.

LE MAIRE: Of course, there are yet. But strikes are legitimate, but the credibility of the government is to stand firm and to provide to the people

a better economy with more competitiveness, with more jobs, with more growth. That's the sense of the reforms that we are introducing in France.

And I can assure that you that there is a full determination of the French President, the French government to adopt those new reforms and to change

France.

QUEST: And if we now put this into the wider context of a Europe post Brexit, now, I know that you've got to maintain the integrity of the single

market, and I have heard every side of this--

LE MAIRE: I can confirm you that we will continue to be (inaudible)--

(CROSSTALK)

QUEST: But at what point will the reality come that the UK is for a want of a better word, a margin in this special case because of the size and

scale of the market and there has to be an accommodation.

LE MAIRE: We will find the accommodation, but the accommodation should not jeopardize the single markets. It should not jeopardize the European

rules. The UK has decided to go out Europe. This is their sovereign choice, but it should not jeopardize the future of Europe and the future of

the European construction.

You know, we are also fully determined with Emmanuel Macron to improve the functioning of Europe and especially to improve the functioning of the Euro

zone.

QUEST: Minister, always a pleasure.

LE MAIRE: Thank you.

QUEST: Thank you very much. Busy times.

LE MAIRE: Busy times, as usual.

QUEST: Thank you.

LE MAIRE: Thank you.

QUEST: Je vous remercie.

LE MAIRE: Bye-bye.

QUEST: There, (inaudible) now. As we continue, later in the show, standby for--

[16:15:16]

QUEST: -- Wegxit, Arsene Wenger bows out of the club that sounds like his name. Twenty-one years in charge of Arsenal. We will look at the economic

impact the man they call "The Professor" had on the game.

Welcome back to the IMF and World Bank's Spring Meetings. South Africa's President has returned to the country and is now meeting with top ANC

leaders as protests grow. The President had to come back from CHOGM, the Common Heads of Government Summit in London as angry protesters were

protesting angry at alleged corruption by local leaders.

Violence and more than 20 arrests, and amid the unrest, the IMF is predicting that South Africa's economy will grow. Nhlanhla Nene is South

Africa's Finance Minister, again, you've had the job once before, and I am not being impolite when I say you got fired.

NHLANHLA NENE, FINANCE MINISTER, SOUTH AFRICA: I was fired, yes.

QUEST: You were fired.

NENE: Absolutely.

QUEST: And then you came back.

NENE: I did.

QUEST: Were you surprised when they asked you back?

NENE: I was surprised because I was beginning to enjoy what I was doing and I eventually made up my mind also that I was not going to get back to

government. But, when national duty calls, it is always very difficult to say no.

QUEST: You are in a somewhat unique position because although you were part of the previous administration and my words, not yours, the tainted

previous administration, because you were dismissed on an ethical issue in the sense of the way you wished to handle the expenditures, you come in

with a sort of a clean slate to a large extent.

NENE: Well, not necessarily, but I look - when I look back at what the work that I did and the institution I worked for, which is still standing

very strong, our National Treasury, and I believe that we actually are able to continue on where we left off.

QUEST: What's your priority? I mean, bearing in mind the protests, the riots, the allegations of corruption in the northern region, which of

course could be replicated elsewhere and we know because of the Commission that Pravin Gordhan is looking into, the depths of which just now goes

within South Africa. So, what's your priority?

NENE: Priority is rebuilding the confidence in the country, which we are beginning to see some Grinch hoods arising out of that, but growth is at

the center of our strategy, building growth in order to be able to address issues because all the protests and everything else is centered around

people who are unemployed, people who are not getting service delivery. All of that, it can only be done with an economy that is growing.

The second one is also dealing with the issue of debt sustainability, the Federal is addressing the issue of the risks, and the top of those risks

being the state-owned enterprises.

QUEST: Those state-owned enterprises and the capture of state-owned enterprises has become, well, as I say is a scandal of gigantic--

[16:20:16]

QUEST: -- proportions, can it be cleaned up?

NENE: It can be cleaned up and we've already begun doing that and as you know that if you look at Ascom alone which is the largest and it is the

largest of the country's liability as well, having set up, you know, put up a new bond, pointed the executives and dealt with the executives that were

involved in the capture scandal and all of them are facing the rap of this, and some of them have already been removed.

QUEST: How do - I mean, South Africa has tremendous natural resources, tremendous tourism, tremendous opportunity, how do you prevent - to put it

bluntly, in a country, a single party country where that's run the government for the last 20-odd years, plus, how do you prevent endemic

corruption from coming back again?

NENE: I think it's a culture change more than anything else. Because once you begin to see what you are seeing now, where everybody that has been

involved has been dealt with and dealt with - you know, in a way that actually demonstrates the government is committed to a clean government

that is happening in a big way.

But again, as I was saying that it is a culture shift. It also goes down to the society itself, to begin to have confidence that if they raise

issues with government, government is going to address them.

QUEST: And that didn't happen, all that's happened was that government lined its own pockets in many cases. You have the resources to reduce the

inequality gap in South Africa if used properly, would you agree?

NENE: I agree with you. It is for that reason that we are beginning to even look at the quality of our expenditure and how we deploy that

expenditure. One, it should go into investment. Two, it must address those issues that are actually at the center of our proposed life.

QUEST: Finally, Minister, does it feel different now in Cabinet? Does it feel that there is a change? That there is a new wind that has blown

through government?

NENE: Indeed, indeed. We actually can feel that. A lot of things have happened just since the time of the new leadership was elected in December

and to this point, where the law enforcement agencies are doing their job and reporting back. The Cabinet ministers are also embarking on a number

of these structural reforms and we are beginning to see the difference, talking to the mines, talking to the private sector, opening up in order to

be able to find these relationship, symbiotic relationship between the public and the private sectors.

QUEST: It's not often that I get a chance to say, "Welcome back" to somebody who was a minister and then, (inaudible)--

(CROSSTALK)

NENE: Thank you very much, Richard.

QUEST: Welcome, Nhlanhla.

NENE: It's good to be back.

QUEST: Good to be back. Thank you, sir.

NENE: Thank you very much.

QUEST: To the US markets, how they finished the week? Well, today, it was in the red. The Dow closed off more than 200 points. It was not the

lowest of the day, but not far, as you can see a really miserable sort of day, and if you look at the breakdown, Apple was off 4 percent. That

follows a 2 percent fall yesterday and after the Taiwanese chip maker predicted softer demand for iPhones.

But where is the bell I've got? The bell would have been ringing it. GE for the second or - well, for the first time in these many days - a long

time, is the fastest-growing or that it shows the best gains, up 3.7 has been up all week. Earnings were better than expected as the cost cutting

program kicked in and you can see GE's decline over the last three years on the share price. Look at that. Oh, painful.

The uptick is what investors have been looking for. Paul La Monica is in New York. Paul, this rise in GE, this earnings, is it indicative of things

getting better or just cost cutting making you think that what's bad look a little bit rosier?

PAUL LA MONICA, CORRESPONDENT, CNN: Yes, I think part of it, Richard is the cost cutting. Things are getting maybe less worse as opposed to

actually better, but I think Wall Street is growing a little bit more comfortable with the CEO's new strategy, John Flannery, the new CEO, his

strategy.

GE is going to be a much smaller company in the future and it is going to have to focus really on the areas of business where it actually can do well

-- healthcare and aviation -- probably are two in particular, energy if it can wean itself off of oil and more on to the alternative energy side of

things. That could probably help GE, but it's going to be a long climb back, and the stock is still down pretty sharply this year. It's the worst

outperformer last year. It's the second worst this year. It only has Proctor & Gamble to thank for not being the worst again in 2018.

QUEST: Right, and I guess the you know, his talk of split and breaking up GE. Remember, they filed that notification to the SEC that they were

looking at that. Where do we stand on that? Is it still - I know the market still looks at the potential breakup of GE as being greater than the

sum of its parts?

LA MONICA: Yes, there hasn't been any real new news per se about whether or not GE would explore--

[16:25:16]

LA MONICA: -- a full-blown breakup, but I think that there are a lot of people who think that would be a good idea that downsizing GE, right-sizing

it if you will makes a lot more sense since the age of the bloated conglomerate seems to be behind us.

QUEST: And let's just quickly look at Apple, if we may. Apple down 2 percent yesterday, down 4 percent today or - I mean, it's kind of a down

week. Serious or bleep?

LA MONICA: I think it's probably a bleep. Some of the concerns about the iPhone sale slowing might be a little bit overblown, but make no mistake,

the X doesn't seem to be resonating with consumers the way the company had hoped, whether or not the 8 and the 8-plus are doing better, we'll find out

when Apple reports its earnings on May 1st.

The investors are obviously nervous, but still the broader tech sector has held up relatively well, even though it was down today. The other FANG

stocks were all up this week even as Apple was down.

QUEST: Paul La Monica, good to see you, sir.

LA MONICA: Thank you.

QUEST: Thank you. As we continue tonight, it's less of a slap on the wrist, more of a caning really as Wells Fargo gets a huge billion dollar

fine.

And here at the IMF, just to tell you what you're looking at, well one of the major committees, the IMFC is just packing up and finishing. You've

got the ministers in there that are leaving, and really think of it this way, anybody who is anybody in international finance and government will

walk along this path.

All you have got to do is try and whish, whish, whish, dragon in. After the break.

Hi, I am Richard Quest at the IMF and World Bank in Washington. There's lots more "Quest Means Business" in just a moment.

When Donald Trump says he will not accept artificially high oil prices, which begs the question whether they are artificially high. And he came

from Japan with an economics degree in his hand, now Arsene Wenger is ending is Arsenal experiment after 22 years, as we continue on this Friday.

This is CNN and on this network, the facts always come first.

US Democratic National Committee is suing the Trump campaign, the Russian government and WikiLeaks over an alleged conspiracy during the 2016

Presidential Election. The hacking and publication of the DNC e-mails is at the heart of the suit. Those names include some of top Trump advisers

who now attended the infamous June 26 meeting in Trump Tower.

The world's biggest star of electric dance music has died at the early--

[16:30:00]

One of the world's biggest and stars of electronic dance music has died at the early age of 28. The publicist called Swedish DJ and record producer

Avicii says he was found dead on Friday in Muscat in Oman. "Wake Me Up" was one of his biggest hits.

(MUSIC)

No cause of death has been released so far. Police in Berlin have successfully defused this unexploded World War II bomb. Construction

workers discovered the 500 kilogram bomb in the central train station. Workers and residents within an 800 meters off the site were told to stay

away as a precaution, disabled and to not return to their homes and offices.

Prince Charles who is to succeed Queen Elizabeth as head of the Commonwealth, the decision was made on Friday during a meeting of the

Commonwealth Heads of Government at Windsor Castle.

There had been calls from the British and were reiterated around the 53 nations. The queen though urged leaders to back her elder son and heir

instead.

The Managing Director of International Monetary Fund says trust could be destroyed if global trade comes under further attack. Speaking to me, the

IMF's Spring Meetings in Washington, Christine Lagarde explained why trade must be defended at all costs.

(BEGIN VIDEO CLIP)

CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: These issues have to be put on the table, they have to be debated, but please do

not hurt trade.

Because if you do, if you question the way in which trade is conducted, then investors will say, why would I invest?

(END VIDEO CLIP)

QUEST: And well, welcome back to the IMF, the ATRAM(ph) of H2 Cube(ph) -- and somebody must have thought it was a good idea to give it that catchy

name. And Donald Trump is taking OPEC to task, he's blaming the cartel for the recent surge in oil prices.

The president tweeted "looks like OPEC is at it again with record amounts of oil all over the place including the fully-loaded chips at sea. Oil

prices are artificially high, very high. No good and will not be accepted.

So is the president right? Well, he's right about the prices are high. Oil prices are pushed to a three-year high, rate at 74, chart is up 40 percent

in the last year. Now American oil producers could stand for oil prices to be a little lower or make money as long as the prices are above 50 a

barrel.

Saudi needs at least $70 a barrel, not out of the ground, but because of the budget deficit for the government to make money. Antoine Halff is in

New York; chief oil analyst or was at the IEA, now senior research scholar at Columbia University.

All right --

ANTOINE HALFF, CHIEF OIL ANALYST: Hello --

QUEST: We've got to dig deep into this, and we've got to just basically get to the point. Is the president -- does he have a point when he says

OPEC is at it again. Prices are high when there's plenty of oil around.

HALFF: Well, you might think -- thank you, and with that be more appropriate because the U.S. has been a big beneficiary of the rebound in

prices. And sure, OPEC has something to do with the rebound in prices, there's nothing within you to it, it's asymmetric that's been going on for

two years since the meeting in --

QUEST: Yes --

HALFF: Two-thousand-and-sixteen and OPEC tax came into effect in 2017.

QUEST: Just bear with me one second while I just shake hands with Mario Draghi, and governor --

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: How are you? Thank you --

QUEST: Good to see you, sir, good to see you. I promise you, you see the people and that of course was Mario Draghi of ECB and the Chair of the U.S.

Federal Reserve. I promise you -- back to oil prices.

And when we look at oil prices, and you look at what's happening with them though, the supply and demand equation within it --

HALFF: Right --

QUEST: How far can that be taken in terms of the real price we're seeing. In other words, it's not just speculative --

HALFF: No --

QUEST: It's supply and demand driving this price.

HALFF: It is, it is. And the thing is over the last -- over the second half of last year, we've seen a huge plunge in inventories. So around the

world, there's been a plunge in about 200 million barrels in stocks including 120 million barrels in always the countries in developing

economies.

Which is where the OPEC has specifically sought to see a decrease in stocks. But we've also seen a huge decrease in none -- most of the

countries. Just in the last few months, we've seen a plunge of $60 million in China as measured by KO Switch(ph); measures those inventories by

satellite pictures.

So, you know, the fundamentals of the market really explain the demand in prices.

[16:35:00] The fundamentals also reflect the that OPEC has been working very hard to catch supply, to limit supply to try to get those prices back

up.

QUEST: OK, in which case -- and it's very tricky stuff, this, because it begs the question we've seen this 40 percent rise in brent, we've seen the

president saying this will not continue. This cannot be allowed.

But it -- does not in the media response that he couldn't do because what - - he has no problem in this regard. OPEC can turn it off and on on the taps --

HALFF: Where --

QUEST: Involves U.S. production is totally market-dependent -- sorry, go ahead.

HALFF: Well, I think what's on the markets mind and maybe on the president's mind, I don't know. But the president actually has the power

to get the prices higher up in a way if he breaks down the sanction -- reinstate sanctions on Iran.

You know, and May 12th is the time when Washington will decide whether to grant a new waiver of sanctions to Iran or initiate, reinstate into the

sanctions. So that could push prices higher up. And I think the market is very concerned about this.

It may be in part behind the rebounding price as only in part. But I think part of the tweeting anxiety may be traced to the -- to a sort of

preemptive efforts to blame any rebounding prices on OPEC and not found --

QUEST: Right --

HALFF: Iran policy.

QUEST: Good to see you, sir, thank you, we'll talk more about this in the weeks ahead if tech --

HALFF: Pleasure to be here --

QUEST: Tried to go --

HALFF: Thank you --

QUEST: They go higher. Now to the action taken so far by the Trump administration against a Wall Street bank. Two federal regulators have

fined Wells Fargo a billion dollars over the way it treated customers when it came to alter insurance and mortgages.

Clare Sebastian is in New York. Now Clare, are these the same allegations that cost Wells Fargo before or fresh allegations?

CLARE SEBASTIAN, CNN: These are different, Richard, and of course, you're referring to 2006 team where they revealed that about 3.5 million fake

accounts had been created, that was due to a practice called cross-selling.

And that led to a fine of about $185 million and also the loss of the CEO you remember in various other things. But 185 million is about a fifth of

the fine that we're seeing today. So many people are really looking at this numbers as a measure of just how tough the Trump administration is

willing to get on Wells Fargo.

It isn't just the fine as well, they've also been asked to report to regulators on how they're going to strengthen their internal compliance.

They also have to, you know, compensate customers and very deep in there, Richard, is the line that the OCC, the office of the controller of the

currency gets to have a say in the executive office, office as in board directors of the company.

So this is pretty stringent action coming from the Trump administration.

QUEST: And what it suggests is that Wells Fargo was rotten to the core.

SEBASTIAN: Well, it just does certainly seem that they are unable to shake this era of scandal, Richard, just when you think that they're moving on

from the fake accounts scandal, this one has -- the company itself said, you know, it's working really hard to rebuild customer trust.

It's going to compensate them, it's going to do everything it can. Of course, there's a new CEO now in place who's put out a statement saying

that, you know, they're delivering on their promise to reveal all of that back, it says and make things right for customers.

And they are, you know, they are seeing the business impact, they have cut their earnings from their last quarter down by 800 million. But even with

that, they still made 4.7 billion, Richard, so I think there's no question that they can afford it.

But it's the loss of trust here that's going to be the problem.

QUEST: That's an excellent point, excellent point when you say that. We have Barclays CEO got fined -- undisclosed fine for trying to find out who

a whistleblower was. You've got Wells Fargo, you know, no common threat between -- but raises the -- not maybe justifiable point, and the banks are

all at it.

SEBASTIAN: Well, I think there's a -- there's a question about the internal controls at the banks today, and in addition to Wells Fargo. And

Barclays, there was also, you know, Sun Trust; the 12th largest bank in the U.S. where a former employee was deemed to be trying the data of 1.5

million, you know, customers.

Now there's no question of course that there was wrongdoing from the bank there. But it begs the question about how tight the internal controls are,

how rigorous the standards and what the role any of the regulators can be in --

QUEST: Right --

SEBASTIAN: Protecting consumers.

QUEST: Good to see you, Clare Sebastian is in New York with that. We will continue investigate the volatile region, Egypt, is quoting fresh money,

I'll be talking about that with the country's investment minister in a moment. It's QUEST MEANS BUSINESS at the IMF you're watching.

[16:40:00] (COMMERCIAL BREAK)

QUEST: The Middle East is one of the only regions to have its growth forecast cut in the IMF's latest WEO, world economic outlook. And it's

been a long sag for Egypt in particular struggling since the uprising some seven years ago.

The country's Investment Minister Sahar Nasser who joins me now. Minister, good to see you --

SAHAR NASSER, INVESTMENT MINISTER, EGYPT: Hello, how are you?

QUEST: So the investment environment under which you are now trying to attract investment into Egypt is what? How would you describe it? It's

toughened the rest of the world.

NASSER: It's much more conducive business environment, Egypt is open for business, we've done major reforms to improve the business environment,

including the new investment though and ending major amendments to the company's low, bankruptcy low finally, they're out.

QUEST: But investors always want stability. Now agree with me that your president got re-elected in an election which he was the only one running,

but he still go re-elected. Which doesn't add an element of stability for now.

One wonders whether that stability continues?

NASSER: There's definitely stability at the micro level, at the economic level, but also at the political and social level, that's confirmed that

all the outlook, especially now that we're hearing Washington D.C., you see the outlook whether by the IMF or the World Bank.

This does say that very clearly. The stability is basically in the economic reform program that the government is undertaking now. There's

area versatility is moving in a very sustainable and well managed.

QUEST: If the political situation in the Middle East deteriorates, whether because obviously because of Syria, Iran, Iraq. There's anyone of a

multitude of reasons why things can -- could get worse.

How fragile -- how vulnerable, I should say, will Egypt be?

NASSER: You can look at it from a bit of a different perspective, what I see because of what's happening in the neighborhood countries is that, in

fact, Egypt has become an investment destination as a hub for a lot of investments that is coming from the different countries surrounding Egypt.

QUEST: What if --

NASSER: Because they see more stability as the economic and the political side that you referred to.

QUEST: So what is it you need now in Egypt? I mean, obviously you need investments, invite people to sort of be -- to be pouring back in again.

But what is it you'd actually -- that you need in terms of the fabric and the environment?

NASSER: We need to actually move in the same role and in a courageous manner in pursuing the economic reforms, I think that should continue. We

still continue need to improve the business environment, the micro-economic stability with the fifth and March report reforms --

QUEST: But the fascinating part about that is, as I had the South African minister here a short while ago, you know, while should implement those

reforms, hardship, greater hardship befalls on the disadvantage.

[16:45:00] That requires careful handling if you don't get more civil distress through restructuring of which Egypt is well familiar.

NASSER: Definitely, because that's exactly why we're moving with a comprehensive social safety net. In fact, today, we had an excellent

discussion on this social safety net factor which is what Egypt is putting forward.

Because we are very keen on improving area versatility of the program, so we are making sure that these rules that could be adversely affected by the

major economic reform that have been also relative.

That are provided with the different packages from this sort of cancer, school feeding for children and micro finance for women. So we are making

sure that these social safety nets are put in place to address any mitigation and mitigate any risks that might occur.

QUEST: And finally, the team in place is very qualified. You know, there's an excellent team in place to do all this. I just wonder whether

you could actually get it done.

NASSER: When you're --

QUEST: I mean, anyway, I just wanted the ability to execute what is the plan.

NASSER: Look, in order to execute such reforms, you need number one commitment at the highest political level, that is strangest and willing to

take these reforms, knowing that the long-term implication is what matters and because genuinely, that's what will happen to people in the longer

term, jobs.

We care about creating jobs because that's where -- because that's what we're afraid first, especially which is stability, social stability and

economic security, and that you have a strong team that is working together to make it happen and also being very transparent with the society and --

QUEST: Right --

NASSER: The community on the challenges and how we have to face it and succeed together. Today, we're in near of the Spring Meeting, and we had

excellent meetings with our colleagues from the World Bank that are also supporting the program.

QUEST: Good to see you, Minister --

NASSER: Thank you very much --

QUEST: Thank you very much, indeed, thank you --

NASSER: Thanks, Richard, thank you so much --

QUEST: Yes. As we continue, Arsene Wenger changed football as we know it -- he was an economist and using his economic knowledge, he managed to turn

around Arsenal, and now he's moving on.

We'll look at how he impacted the game in a moment.

(COMMERCIAL BREAK)

QUEST: Twenty two years at Arsenal, Arsene Wenger is stepping aside. He's set to leave at the end of the season. Now, it's two decades, two decades

of success. So the French man came into the Premier League in 1996 after managing a team in Japan.

During his tenure, he led Arsenal to a three Premier League titles and revolutionized the game. Its chief executive at Arsenal said he was

irreplaceable.

(BEGIN VIDEO CLIP)

IVAN GAZIDIS, CHIEF EXECUTIVE, ARSENAL FC: We're not going to -- we're not going to find a replacement for Arsene Wenger. I think for a variety of

reasons, Arsene is an extraordinary manager and an extraordinary person.

He came into the game 22 years ago when the game was very different. It's evolved in so many ways and Arsene has evolved with it.

[16:50:00] But when we look forward, the football club now is in a very different place than it was 22 years ago.

And it's unthinkable to me that we are going to have another manager in the Premier League, let alone at Arsenal who will be 20 years -- 22 years in

tenure and have the kind of run of consistent success that Arsene had over those years.

(END VIDEO CLIP)

QUEST: Now, he was nicknamed the professor, he was armed with a degree in economics and Wenger back to the traditions of English football, plus, he

signed unheralded players from untapped overseas market and brought in players like Patrick Viera and Kolo Toure on bargained deals.

He watched them become club legends. He overhauled the players diet and training habits in stressing Japanese-inspired diet of lean proteins and

steamed vegetables. And he managed the club's finances off the pitch, overseeing the planning of a new training facility and navigating the move

to the state of the art Emirates Stadium.

Put all that together, as the chief exec said, the club will be hard- pressed to find his replacement. Stefan Szymanski is the author of "Soccernomics"; a professor at the University of Michigan joins me now. As

always, good to have your understanding of this.

As opposed, give me a sober reflection on this, professor. Was he -- is he the greatest and the good-est and best-est that people are saying today?

STEFAN SZYMANSKI, AUTHOR & PROFESSOR, UNIVERSITY OF MICHIGAN: Well, I think those -- that's -- are largely justified. I think what's important

about Wenger is, and as you said really in your introduction, he really transformed the Premier League, the mason Premier League in its early

years.

He transformed the way English clubs thought about the game, and in some ways, his early success was also his downfall. Because his greatness is

demonstrated by the fact that everybody copied what he did.

And that really undermined --

QUEST: Right --

SZYMANSKI: His performance at Arsenal in later years, but it showed that he really was a trendsetter in English football.

QUEST: Piers Morgan tweeted today, "there's nothing hypocritical about feeling glad he's going. But one thing to properly acknowledge all he has

done for the club." And that's an interesting one because Piers Morgan will be highly critical of Wenger.

But it makes the point, doesn't it? That exactly what you're saying. He introduced the revolution or he calls the revolution and then was the

victim of it.

SZYMANSKI: Yes, and I think it's -- of course, the fans and people like Piers Morgan who are critical of him argue that his real weakness in later

years was an unwillingness to spend large sums of money. And one thing we know about the game is that if you spend large sums of money, you will

generally be able to buy success.

He didn't want to go down that road when all the big clubs around him were doing that. And in many ways, there was kind of -- a kind of quick sorting

virtue in this as he wanted to prove that he could just do it with his intellect, but in the end, the money men beat him.

QUEST: How far was discipline important in all of this? The discipline of the training, the discipline in dealing with the team, the players off the

pitch. How they lived their lives, how they comported themselves. How important was that?

SZYMANSKI: Oh, I think it was incredibly important. Again, part of the transformation of English soccer has really been about the way in which

training methods have changed. It's become a much more sober, much more focused, much more purely athletic activity in the way that other sports

are.

And he can be credited to a large extent with that. Although, I think again, you have to say that once he showed the way, everybody realized what

they had to do and everybody copied that lead.

QUEST: And now the finances of the ownership of clubs, and which of course is being closely looked into by the regulators in certain cases. There

seems to be a feeling of the prospect of a further revolution or at least an evolution in the often.

SZYMANSKI: Well, one thing about Wenger was he believed that money was poisoning the game, and he talked about financial doping as being a core

problem and something that he didn't want a part of.

I fear again that, that was somewhat his weakness in the sense that Arsenal really is a rich club, and so it's not quite there to say that he didn't

have the financial resources at his command.

But there's no doubt that more money coming into the game has been something that the league authorities and the UEFA --

[16:55:00] QUEST: Yes --

SZYMANSKI: Have wanted to address, and whether that should be stopped or not is really a core issue right now facing the future of the game.

QUEST: Good to see you, sir, thank you, Stefan Szymanski joining us from Ann Arbor in Michigan. And we will take a profitable moment after the

break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment from the Spring Meetings of the IMF and the World Bank. There's no doubt the weather here in Washington today is

absolutely glorious, classic Spring day. The tulips are out, which is always a good sign for the IMF and World Bank.

But as Christine Lagarde, the managing director warned, the storm clouds are out there. And never mind the questions of there will be a recession

someday or macro-economic growth which is good at the moment.

Now, the worry of course is trade. And what Christine Lagarde told us today is that trade and trust go hand-in-hand. If you cannot trust that

your partners are going to keep their word, are they going to be there when you need them? Then that trust breaks down and trade breaks down as well.

When you look at the growth in recent years, it has been driven by trade ever since 2008, and it took time to build up. But now of course, it's

going into reverse. The message from the IMF is very simple.

Don't damage trade and maintain your trust. In those two messages, they neatly sum up the storm clouds that could affect the global economy for

years to come. And that is QUEST MEANS BUSINESS from the IMF and World Bank, I am Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you next week.

(COMMERCIAL BREAK)

END