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QUEST MEANS BUSINESS

Dow Snaps Losing Streak as Market Jitters Continue; Comcast is Bidding for Sky and That's Put Rupert Murdoch's Nose Out of Trouble; Viacom Had Strong Earnings This Morning, Which Could Well Help Its Case as It Looks to Merge Back with CBS; Macron Champions Free and Fair Trade in U.S. Congress; Atos CEO Says France is Becoming the Link Between U.S. and Europe; Dow Drops 200 Points Before Ending in Green; Facebook Posts Strong Results Despite Data Scandal; U.S. Treasury Secretary to Visit China for Trade Talks; Founder of Mozaico Tells His Story on CNN's Traders Show; Marriott Unveils New Loyalty Perks After Starwood Merger. Aired 4-5p ET

Aired April 25, 2018 - 16:00:00   ET

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


RICHARD QUEST, CNN HOST: Very strange day on Wall Street, Abercrombie & Fitch ringing

the closing bell. We are going to really have to understand the market movement and machinations over this session.

Yes, one, two -- yes, she got the message in the end. A firm, deliberate gavel, which is exactly what we need when you see how markets traded on

Wednesday, April the 25th. What is going on with the markets?

We are going to dissect the underlying factors pushing and pulling the Dow and try and understand what it means for the future.

We are waiting for Facebook earnings and Twitter stock has fallen despite strong results. We will be in the trading post and the earning share case.

And media wars, Comcast is bidding for Sky and that's put Rupert Murdoch's nose out of trouble.

I am Richard Quest, live from the world's financial rainy capital today where as if you look at the market, yes, we do mean business.

Good evening, tonight. A busy hour ahead and we are expecting Facebook's earnings which will come out any moment now and as soon as we see those

results, we will bring them to you and get you some results, but the nature of the day -- what has happened over here, well, let's start on Wall Street

because while stops may have snapped, their losing streak, they have done so barely and only just.

Take a look at the market and you'll see the Dow is struggling to break even on 2018. Tonight, we are going to explore why this year's bear market

is barely recognizable compared to last year's juggernaut.

This is where we stand at the moment. This is the zero level by the way, so you can see the zero level in terms of year to date. Once, twice, three

times, four times we have been under that sort of level four years so far and if you look, you can see there, there, there, these are all major

points of contention for the Dow Jones.

We're still 2.5 percent so far this week. The yearly gains have simply evaporated. The Dow is off two percent over the year. It's up 25 percent

over the last year and there are three key factors that are playing into this.

First, earnings -- the peak from earnings, well, if Caterpillar is anything to go by, it's downhill from here. Secondly, rising interest rates. Bonds

have hit three percent and they could go considerably higher and of course, finally, politics. The uncertainty concerning and geopolitical issues like

Iran and Syria.

Art Hogan is the chief market strategist at B. Riley FBR. He joins me now from Boston. So, Art Hogan, when we look at these earnings, interest

rates, politics, they are creating undercurrents and if we look at the market and we look at the last say four months so far this year, it is just

about impossible to see how to move forward?

ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY FBR: Yes, that's a really good point and I think you highlighted exactly what the difference between

2017 and 2018 event. I think clearly, the largest difference is, in 2017, we primarily worked on positive pro-business policies, right?

We've got the tax reform and Jobs Act and we got some deregulation accomplished. Unfortunately, 2018 is much about protectionism. We've got

tariffs. We've got trade -- possible trade wars. We've got sanctions, so the medicine that we have to take in '18, unfortunately causes inherently

some of those things that are hard to justify in terms of economics and certainly hard to justify in terms of seeing earnings grow.

QUEST: So, if we put it in simplistic terms, is it your view that the bull market is dead or just resting? This nine, ten-year, 11-year bull market,

is it over and done with?

HOGAN: Well, I certainly -- I think it's resting, and I think it's resting looking for some answers, and I think the first answer we can get that will

help us a lot would be if we could actually renegotiate NAFTA. I think that will prove to the world that we can actually get something

accomplished as far as trade policy goes. That would give us a feeling that perhaps we can get something negotiated with China and we stop

worrying about potential trade wars and sort of move on focusing on the fundamentals.

Because the reason interest rates are higher is because the economy is growing. The reason that we are seeing cautious commentary from folks like

that for the interest rate is because we see higher input cost.

QUEST: And yet, looking at the year-to-date, the graph for the year-to- date, you see it falling below zero, all these -- the gains evaporating and then these sudden dramatic recoveries which leads investors leads one to

assume...

[16:05:16]

QUEST: ... that the worst may be over, only for a precipice to befall around the corner?

HOGAN: Yes, certainly a volatile year and they feel much more volatile because of the fact we have such little volatility in 2017, so I think we

notice it a whole lot more, but to your point, with the four individual significant selloffs with four individual causes, and the latest really is

around the reaction to earnings reporting season and cautious commentary around higher input cost.

QUEST: Okay, if this is the case and we know volatility, intra-day volatility is driven purely by hedge fund algorithmic trading and we could

put that to one side, but these very large -- I mean, fundamentally, in its interest rate earnings and political risk, then we are most certainly not

out of the woods.

HOGAN: Well, certainly not. The political risks are still there. There is a risk that we are going to make a trade policy mistake. There is a

risk that we will have a monetary policy mistake if the Fed tightens too quickly and flattens or inverts the yield curve for sure and that combines

with that interest rate fear that we have.

I think on the earnings front and the economic data front, the fundamental backdrop that you juxtapose all of these against still remains positive.

QUEST: But, finally, I was at the Stock Exchange earlier, one of the traders there said, "Look, this is one of the most complex times in the

market in recent years because of these very deep shifting underlying trends, which could take the market in any direction," would you agree?

HOGAN: I certainly agree with that. The things that we are concerned about are very complex. You know, trying to figure out trade with China,

the second largest economy in the world is a very complex issue, but it's going to -- and it is going to take a lot of very delicate negotiations and

we are in that process right now, but this is the process that is difficult to watch and causes a great deal of volatility in the marketplace.

QUEST: Art Hogan, great to see you. Thank you, sir for joining us. We needed that overview, sir. Later in "Quest Means Business" tonight, we

will be talking to a chartist, those who look in the technical side of it. Can we glean anything from the market in terms of its 50-day moving output,

its 200-day moving output. The sorts of nitty-gritty technical stuff that some people say points the direction to the future. We'll talk about that

later in the program.

Now, it's been a busy day of earnings. Join me at the spiral share case. We will be talking to you ladies and gentlemen later on the interesting

earnings in just a moment.

So, we are expecting results, the reason we have our guests there. Shelly and Clare. We are expecting Facebook and Ford that will report within the

hour. As soon as we get those numbers, we will bring them to you.

Earlier today, we had both Twitter and Boeing. Now, remember the principle of the share case. We monitor what the shares did in the hours after

trading. That is the most reliable barometer of what the market thinks the future earning potential and the price earnings from each share will look

like.

So, at the moment, we do have quite a glut where all the prices fell -- the banks, some of the alphabet, some of the big names like Caterpillar and 3M

yesterday. So, first of all Twitter. Twitter fell two percent after it reported its results this morning and that's after profitable numbers and

adding users and it's still down two percent. It insists, the privacy scandal doesn't affect it -- slow growth.

Then you've got Boeing. Now, this is a fascinating stock, Boeing. Think about it. It's being hit by steel and aluminum tariffs, or at least the

story on that, it is being hit by the trade and IPO issues with China. It's been hit by the question of NAFTA and yet, the company continues to

make excellent numbers and results, and so the shares, it varies interestingly. We are up four percent on the strong earnings ratios and it

raised its profit outlook, thanks to cost control.

So, Boeing bucks the trend, most say that "Q1 will not..." what most people are saying is, this is as good as it's going to get.

Just to show you what we've got coming up later in the week, tomorrow, Intel, Microsoft, Amazon, UPS, Fiat Chrysler FCA, Fiat Chrysler and GM. We

will have those numbers for you coming up later.

A busy day for tech earnings. We have got WhatsApp banning younger users and redesigns as well. We are combing it all, Clare Sebastian is with me.

Shelly Palmer is with me. Clare, what do we know?

CLARE SEBASTIAN, CORRESPONDENT, CNN: Well, as this seems to be just coming out -- just now, Facebook earnings and we haven't got a lot of

information...

QUEST: Do carry on looking at that. I will turn to Shelly. You've got your nose back into there...

SEBASTIAN: We think it's a beat, Richard.

QUEST: Sorry?

SEBASTIAN: We think it's a beat.

QUEST: You think it's a beat.

SEBASTIAN: Yes.

QUEST: Get back in there while I talk to Shelly on this question of earnings and looking over here, Twitter this morning. It gets beaten up

even though it made money...

[16:10:16]

QUEST: ... added users and things are looking good. I mean, a bit perverse, but maybe that's just the way it is...

SHELTON LEIGH "SHELLY'" PALMER, ADVERTISING, MARKETING AND TECHNOLOGY CONSULTANT AND BUSINESS ADVISER: Well, first of all, it's the second

quarter in a row that Twitter has actually had some positive earnings. It's so unusual for Twitter to have positive earnings. It made the news,

Richard. Everyone is caring about it.

They did add a million more users than they thought they were going to add, which is nice, but in practice, how many of them were bots? I don't mean

to be negative, but Twitter has a problem. They're in the anonymity business, not the identity business.

How they monetize Twitter is really still enigmatic. They just don't make enough money. They are making now, they're just not making enough of it.

And if I am an investor, I am thinking long term. I am not sure that Twitter is the long-term thing.

QUEST: And Snap was also down. Snap was down some seven percent today.

PALMER: Yes, well they don't have a story to tell. They just don't have an earning story to tell. At some point...

QUEST: Pardon me, MySnap holding is now down, I think about 52 percent from what I...

(CROSSTALK)

PALMER: I am sorry, Richard, but as it turns out, nobody is using Snap and the product is terrible. Since the redesign, it's almost impossible for

even the loyalists to use, so yes, they've got some repairing to do at a lot of levels, not surprising.

QUEST: Anything, Clare?

SEBASTIAN: So, we're still waiting for the website to load, but it does look like they beat at $1.69 per share versus $1.35 expected on the bottom

line, Richard. So, that is really good. And of course, we have seen all of those scandals coming through. The Cambridge Analytica where we saw the

share price fall off a cliff. It still hasn't recovered to that point. It's still down about 13 percent since that.

So, I think you know, a lot of focus will be on engagement. Obviously, we saw engagement fall off in that last quarter, so we are going to keep an

eye out for those numbers as they keep coming through, Richard.

QUEST: Yes, as soon as we see them, we will come back to you. Thank you. And Tim Cook by the way is -- was at the White House today.

PALMER: Yes.

QUEST: What's he got to talk to the President about?

QUEST: Boy, wouldn't you like to know. I'd like to know, too. At the end of the day, Tim Cook and -- speaking of Apple and Facebook is on this

tirade about privacy now and ethical usage of data, and so, my suspicion is that we are going to see an instigated Silicon Valley in-fight and I am not

sure how it's going to play out.

But it's fascinating where Apple wants to be, your privacy -- like your privacy stalwart and they are throwing casting stones at Facebook. At the

end of the day, Richard, Facebook is going to be completely fine. I suspect the earnings are going to be up.

By the way, all of the scandal stuff, they're going to ultimately skate through. Tell me, who is the class going to be that the leadership has put

together? What's the harm and what are they going to do? What are the damages? And the answer is nothing, nothing and nothing, which means the

issue is nothing.

So, they will apologize and they'll do what they are supposed to do and then, they'll continue to make money.

QUEST: Good to see you. Thank you. Clare, you'll be back to us with more on the Facebook earnings in just a moment.

SEBASTIAN: Yes.

QUEST: It's been Rupert Murdoch's white whale for years. Now, there is officially a new rival as he tries to take over Sky. After the break.

[16:15:16]

QUEST: There's nothing better than a good takeover battle where two companies are beating the bajeebees (ph) out of each other to buy another

one and that's just what we've got. Now, Comcast has made it official for their bid for Sky, it is now a full-blown bidding war, and on the other

side, the Murdoch's.

So, this is the state of play that you need to understand about this. Fox already owns 39 percent of Sky, and it is trying to buy the rest of it, put

over there, before it sells that stake to Disney. So, the 39 percent it's already got, it wants the rest and then as part of the bigger deal, it will

sell the lot to Disney.

However, Britain's takeover regulators investigating that deal and so as Disney may end up having to buy all of Sky in its own right. In other

words, Disney buys Sky instead.

But, forget all of that, now Comcast has trumped Fox's initial offer turning the whole thing on its head, but Hadas Gold is in Washington. We

knew that Comcast revealed a few weeks ago that they were interested. Brian Roberts went to the UK to talk to them, but this is fascinating now

because of the complexity of the 39 percent stake that Fox already has.

HADAS GOLD, CNN CORRESPONDENT: That's exactly right. There are so many moving parts in this situation already. As you mentioned, the UK regulator

has been taking honestly, quite a long time to look through this and we're actually expecting a decision from that regulator on what they will be

recommending to the culture secretary just next week.

So, we will get an idea of where that might be going, but as you said, this is a big moment today when Comcast announced that they were actually

formally making the bid that they were going to put it down on paper, and then the independent directors of Sky said that they were going to pull

back their recommendation to go with the Fox offer.

Now, our colleague, Dylan Byers has reporting that Disney and Fox are going to plan to counter offer.

And so, this is going to turn into what will likely be a bidding war. Who will come out on top at the end? I don't know, but it's clear that this is

a valuable property.

QUEST: For Comcast to win, I mean, you know, the amount of shares they've got to get and the amount of acceptances is going to be a much more

difficult task when 40 percent of the potential acceptances are already with one shoulder, who is then likely to accept until they've picked up the

other 51 percent elsewhere.

So, whatever -- I guess, it's a convoluted way of asking is, do you see here that potentially, Comcast is hoping Fox will sell their stake. I saw

those eyebrows rise. Is it likely that they are hoping Fox is actually going to sell the stake? But that would complicate the sale to Disney.

GOLD: Yes, I mean, like I said, there are so many moving parts. There are so many possibilities on the table right now for what could happen. One

thing that we have an idea though is the Comcast CEO made clear today on calls with analysts that they did not see this deal as kind of a make or

break deal for them.

They saw this as an opportunity that they wanted to jump. And look, it's clear that Fox is having trouble getting this deal through with regulators.

They are throwing everything on the table to get it approved by the regulators down to Disney agreeing that they would be willing to buy all of

Sky even if Rupert Murdoch was not approved to get the rest of the Sky share that he doesn't already own.

And Comcast perhaps saw Fox in a weakened position and said, "Why don't we jump in on this? This could be valuable for us. This could really help us

increase our scale and our operations and help us compete now with the likes of Netflix where everything is global now."

QUEST: You've got to hand it to Rupert. I mean, you really do the way which he is managing to pull off, or at least be right at the center of

these deals.

GOLD: That's exactly right. I mean, he's been around for a very long time. He is a very skilled media mogul. I mean, this is talk about a

battle royale between these huge media figures in the industry. We are all very excited to be reporting on this...

QUEST: Yes.

GOLD: ... because there's so much here to dig into.

QUEST: Good to see you, thank you. Hadas Gold who has probably spent far too long in the courts for the AT&T and Time Warner. Good. Now Viacom had

strong earnings this morning, which could well help its case as it looks to merge back with CBS. The two companies have been locked in wars for weeks,

and they got more competitive.

In fact, this is so competitive, it is more competitive than any game show. Think of it this way, taking CBS properties. Shari Redstone says "Let's

make a deal." She is President of National Amusements. Now, National Amusements control both CBS and Viacom since they were split apart from

years ago.

But, the price isn't right. Oh yes, earlier this month, Viacom...

[16:20:15]

QUEST: -- asked CBS to raise its bid over a few billion dollars, whether they do or not, it's going to be a real episode of "Survivor." They're

battling over the top jobs because if this deal goes through, CBS Chief Exec, Leslie Moonves wants his number two to be second in command of the

whole thing. Redstone wants the Viacom chief to be in that second job instead.

Fascinating with marquee properties like this. Porter Bibb is with me. The price, sir, is right.

PORTER BIBB, AMERICAN FINANCIER, MEDIA PRODUCER, AND WRITER: You're always right.

QUEST: Tell me, I mean, how fascinating is this? Redstone pulls the company apart, what? Seven to eight years now?

BIBB: Eight years ago.

QUEST: Eight years ago, now wants to pull it back together again...

BIBB: Because Viacom is sinking slowly into the mud and put together, they become an ideal target not for the long-term, but for Verizon or some of

the other digital players, the big FANG companies to come in and scoop up Viacom and CBS and that will happen.

Les Moonves is going to prevail. He is going to get his wish...

QUEST: Which is what?

BIBB: He is not so concerned about the share price. He put a low ball offer on the table. It was rejected. They will squeak it up a little bit.

It's really Joe Ianniello, his number two. He wants him to be his successor.

QUEST: But how much power does the Redstone -- Shari Redstone have? Bearing in mind that they control both...

BIBB: Eighty percent voting power in both companies.

QUEST: So, Moonves is going into this. When Shari says up your bid, he's got one hand tied behind his back, one eye covered and it really is the

case, so yes, ma'am, what would you like me to do?

BIBB: Well, she knows that he is ready to walk if she doesn't knuckle under and let him have his way, and if Les Moonves walks, it is by far and

away the most effective media mogul left in the game right now and he is the man who could make the value creation of Viacom and CBS go through the

roof when it's up for sale.

QUEST: So, your guess is that deal happens.

BIBB: I think it will happen.

QUEST: They'll bring it back together again.

BIBB: Yes, it's going to happen.

QUEST: As between, I think I am getting used to this. As between -- maybe not...

BIBB: Of course...

QUEST: Between say Moonves and the CBS Viacom and you may have just heard us talking about the Comcast...

BIBB: Right.

QUEST: ... Sky merger, which are you finding more fascinating?

BIBB: They are both really interesting because it's -- your report was terrific on the Sky deal with Comcast and Fox and Disney. But the big win

is -- has nothing to do with Sky. It has to do with Disney's taking control of Hulu. Disney wants to move as fast as they can into the digital

world and streaming.

QUEST: So, do you think there's a possibility that Disney says to Rupert, "Look, let's get our deal done. Get rid of this 39 percent in Sky that

you've got. Give it to Roberts and we will lower our price a bit to account for that and we'll get on to..."

(CROSSTALK)

BIBB: Well, I think that was a possibility several months ago, but Disney, Bob Iger has now seen what is happening. Sky has just signed a major new

contract with Premiere League. The whole FIFA concept is changing rapidly and they are positioned to grab the lion's share of those sports rights.

And that's what Disney is basing its streaming.

QUEST: Time for the quiz, some quick questions, ready?

BIBB: All right.

QUEST: Porter Bibb, you'll start at the 10, who wins in Fox versus Comcast for Sky? Ten seconds.

BIBB: Fox will win.

QUEST: Second question...

BIBB: Because they're backed by Disney.

QUEST: Second question. Who wins AT&T/Time Warner versus the Department of Justice? Ten seconds.

BIBB: The Justice Department's case is so lame that I have to go with AT&T/Time Warner.

QUEST: Who wins with Viacom, CBS and the other one -- and the Redstones?

BIBB: Okay, well the Redstones are going to win no matter what. They can't lose. Les Moonves is going to look like the punitive winner, but let

me tell you two other winners here.

QUEST: Well, go on.

BIBB: One is Chris Hohn, the activist hedge fund...

QUEST: Right, they always win.

BIBB: Well, he has invested heavily in Comcast and in Sky, so no matter who wins, Chris Hohn walks...

[16:25:15]

BIBB: ... away with a bundle.

QUEST: Good. Good to see you, sir. Thank you very much for being here.

BIBB: My pleasure.

QUEST: As we continue tonight, coming up, a warm reception in Congress and an even warmer welcome at the White House for the French President. The

former French Economy Minister (inaudible), President Macron's visit is sowing the seeds of a new special relationship.

Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. When the push me, pull you effect -- we're going to examine closer

where the markets are heading and we are going to look at it from a technical point of view. And when it comes to royalty schemes, it's hard

when you get to bigger than Marriott, how they are rewarding their members under the new joint scheme, as we continue tonight. This is CNN and on

this network, the facts always come first.

The German Chancellor, Angela Merkel is preparing to meet President Trump in Washington later this week. It comes on the heels of Mr. Trump's

meeting with the French President, Emmanuel Macron.

The French (ph) envoy say, Germany, Britain and France are trying to persuade the US President to save the Iran nuclear deal.

The Danish inventor, Peter Madsen has been found guilty in the famous submarine murder case. Madsen was given life in prison for killing the

Swedish journalist, Kim Wall while on board his homemade submarine last year.

Wall's dismembered body washed ashore after she disappeared while working on article about Madsen.

Advanced teams for North Korea and South Korea are rehearsing every possible detail in preparation for the historic meeting between the two

countries leaders that takes place on Friday.

In the Border Village, they are reviewing lighting and camera angles for the talks between Moon Jae-in and Kim Jong-un.

Union workers in South Africa are angry over proposed minimum wage bill. Thousands took to the streets in the one-day strike disrupting public

transportation across several major cities.

Day three of President Macron's visit -- state visit to Washington and this time, most definitely, he is not shying away from his differences with

President Trump. The President's state visit continued on Capitol Hill where he addressed the joint meeting of Congress.

The French leader used the platform as an opportunity to counter Donald Trump's anti-trade policies.

(START VIDEO CLIP)

EMMANUEL MACRON, PRESIDENT, FRANCE: We need a free and fair trade for sure.

[16:30:16]

(APPLAUSE)

A commercial war opposing the lines is not consistent with our mission, with our history, with our current commitments as far as global security.

At the end of the day, each will destroy jobs, increase prices and the middle class will have to pay for it.

(END VIDEO CLIP)

QUEST: Now despite such blunt language, Macron has received a very warm reception both on Capitol Hill and the White House where he and President

Trump presented themselves as fond friends.

The warmth of this greeting and the affection shown between them raised the question about France's role between the United States and the European

Union.

Is France the new power broker in the Trans-Atlantic relationship? Yes, says the former French Economy Minister Thierry Breton.

(BEGIN VIDEO CLIP)

THIERRY BRETON, FORMER FRANCE FINANCE MINISTER: What is important to notice, for the first time, I think since many years, is that probably the

link, the link between United States and Europe become true friends.

I will say unfortunately, not so U.K. anymore because of the Brexit, and probably not for Germany anymore also because of this very situation in the

trade agreement. And we know that the President Trump has been very vocal including against Germany here.

So it's true that President Macron has a role to play, but here again, here again, we need to be careful, the outcome is still, I should say uncertain.

QUEST: Right, what you've just said is fascinating because the traditional relationship between France and the United States whiles allies and

certainly cordial, there have been tensions in the past.

Think about French fries and freedom fries, think about the sort of natural tensions that take place. So if you are saying that the key to the EU-U.S.

relationship is Emmanuel Macron, then that gives France huge leverage.

BRETON: But don't mislead us. I think you know, a state visit is a symbol and President Trump wanted to send a signal, a very strong signal, so this

is it --

QUEST: Right --

BRETON: To the world and to the European community. That's for sure. It's granted. So it means that yes, probably in the future, the

relationship between France and the U.S. will be extremely important to link -- to link Europe to the United States. It is extremely important

that we continue to behave as strong allies, that's crucial --

QUEST: Does this -- does this require a certain rethinking on the French point of view? For instance, French content in the movies, the whole anti-

Hollywood movement that is taking place.

If we even take for example, look at the Camp Film Festival that Netflix was unable to distribute one of its -- show one of its movies. The natural

-- the traditional anti-U.S. feeling that has existed in France in certain areas will not have to change for this relationship to flourish.

BRETON: You know, President Macron turned a lot of things(ph) and a lot of spirits in France since he had been elected. But I don't fully agree with

your remark, Richard, because take for example, you know, I'm running out of studio a very high tech company.

And we announced this morning, this very morning during this state visit, we announced a very important partnership with Google and Atos; a European

company to protect the data of European companies and to allow them to use also great technology of Google.

So I mean, who could have believed it would have been possible one year ago. It happens --

QUEST: Right --

BRETON: We find a way to welcome user. So yes, I think things are changing.

(END VIDEO CLIP)

[16:35:00] QUEST: That's a relationship confirmed, so in the United States, things almost definitely changing in the markets. Would you have a

look at the way today went. It shows the picture, a very small open, then down for most of today, then as the afternoon moves on, goes back into the

green.

These sort of chart make it very difficult to understand the underlying trends because the volatility is so huge. Joining us is Carter Worth.

Carter, you will be best described as a chart --

CARTER WORTH, FINANCIAL ANALYST: That's it, charter --

QUEST: Who is going through from cornerstone macro, he's going to explain and put into context what we've been talking about throughout the course of

the program. So here we have 2008 to 2018.

WORTH: The entire sort of bull market --

QUEST: Right --

WORTH: If you will, at the past decade, and what we're going to do is zero-in on this current period. There's an old adage from 1930, "sharp

indecision is resolved sharply." This volatility that we're incurring every day, Dow up a 1,000, down a 1,000 typically happens at transition

points.

QUEST: OK, so let's look at the graph, we have 15 to 18.

WORTH: Right, and will --

QUEST: You can speak to the next one, yes --

WORTH: This one here, and it will jump me to the tremendous amount of up and down. What this represents is indecision sharply. Listen, there are a

lot of people who think it's great, employment is great, rates are low, earnings are coming through.

And then there're plans -- I think as this all peak end of cycle. But what we have is a series of lower highs and higher lows --

QUEST: Wasn't that on lower highs?

WORTH: So lower high, lower high, lower high.

QUEST: Which tells you what?

WORTH: Right, and higher lows. You're working to the apex, we're trying - - it represents the indecision as bulls and bears rest between whether this is a big top or whether it's a pause before we advance yet again.

QUEST: So even just knowing that --

WORTH: Yes --

QUEST: How does that help you understand what the direction --

WORTH: Well, so then you have to call the direction, that's going to be -- here's the part that I would point to. What we know is right now the

market is down only eight percent from its 52-week high.

But consider the following. This constituents are much worse.

QUEST: Right, let's look at the -- if you look at the numbers actually on there --

WORTH: That's right, because when we think of the markets, not by starting the market, we look at its parks, right? The parks compose the whole. So

here we go.

We know that the market itself is down eight percent, but consider this, 60 percent of the S&P is already down 10 percent or more, 38 percent is down

15 from its high and a full 25 percent is already down 20 percent.

Meaning, the market doesn't selloff, individual stock selloff.

QUEST: So knowing this --

WORTH: This -- from this, we make the efforts that the indecision, the standoff is going to be resolved to the downside. Because individual

components are already been resolved that way.

QUEST: So if we take this, then it's going further low down.

WORTH: That is the end.

QUEST: Confirmed.

WORTH: Right, because remember, the market doesn't exist, the market is the sum of its parts, right? So we study the whole by studying its parts.

That's -- I mean, the principle is this, the parts compose the whole --

QUEST: Right, so just because -- OK, let me just -- devil's advocate. Just because 24.4 percent is down 20 percent, that person (INAUDIBLE) that

the other 302 are going to go that way.

WORTH: No, but what it means is that there's an optical illusion to the market is better than -- it's like saying, how is the team doing tonight?

Well, the team is winning. Well, it turns out everyone is doing terribly - - one person is carrying the day, LeBron James.

Meaning, if you look at the average performance of the players, these are the players, it's much worse than the actual scoreboard would suggest.

QUEST: Right, and if you take that and the look at the highs and the lows --

WORTH: That's right, the influence is that we're -- the sharp indecision is setting up for a big resolution. Now plenty of people think it's going

to be up, my view is that, that is a set up for a down resolution. And here's the final thing.

QUEST: But you can't tell me how far?

WORTH: I will think plenty, but anybody's guess and much of your imagination won't allow 10 percent more, 15 or something meaningful. And

here's the other thing. This is not technical or fundamental, companies are all beating their numbers and you've seen it.

Big banks and every stock went down. Google, great earnings went down, Caterpillar went down, and that's the problem. If you put up great numbers

and the market is not rewarding it, what does it say?

QUEST: We need to talk more about this?

WORTH: Thank you.

QUEST: Good to see you, and thank you very much indeed, Carter Worth joining me. Now, as we continue, Clare Sebastian, hopefully, you have

Facebook's numbers.

CLARE SEBASTIAN, CNN CORRESPONDENT: Oh, yes, and they were good, this was -- this Cambridge Analytica never even happened. They beat on top, on

bottom line, it was facing a -- grow revenue by about 40 percent, just over that was 49 percent growth that we saw in terms of earnings per share, that

was 63 percent --

QUEST: A number of usage --

SEBASTIAN: So these are the --

QUEST: Go on!

SEBASTIAN: Say the active users up 13 percent, most of the active users also up 13 percent, so that is going to be seen as a sigh of relief for the

markets. But Richard, I've been going over the last year to see how fast those numbers have been growing.

And this does represent the slow-down, this time last year, those numbers grew by 17 percent, 18 percent. So this is something so far --

QUEST: Right --

SEBASTIAN: You've warned about, they were expecting it, but it's so -- you know, this is still a great report after the scandal that they've seen.

QUEST: Before the hours, please, let's find out what the after-hour trading looks like in Facebook --

SEBASTIAN: Up more than four percent.

QUEST: More than four percent, you've already got it --

SEBASTIAN: Yes --

QUEST: Thank you, as always, thank you. We'll be back in just a moment. Donald Trump is talking trade with Tim Cook at the White House, now it's

not that kind of meeting on the way to China to talk about the same thing.

[16:40:00] (COMMERCIAL BREAK)

QUEST: Donald Trump says his economic team will be visiting China in just a few days to try to reach a deal on trade. Treasury Secretary Steve

Mnuchin and the U.S. trade rep will be part of the delegation.

According to the president, they have a good chance of making a deal. Michael Froman is the -- was the U.S. trade representative under President

Obama, President of Strategic Growth and MasterCard. Do you agree with President Trump, do you have a good chance of making a deal?

MICHAEL FROMAN, PRESIDENTOF STRATEGIC GROWTH, MASTERCARD: Well, I think it depends on what their objectives are. I think the Chinese very much want

to engage with the administration and cut a deal if they can.

It was about reducing the bilateral trade deficit by buying more L&G or oil or soy beans or airplanes, then I think there's the possibility of reaching

a deal. If it's about fundamentally changing their industrial policy, their made in China 2025 policy, I think that's going to be a much harder

deal to negotiate.

QUEST: In which case, both the steel threat -- OK, I'm getting a bit lost as to which have come into force and which haven't. But you've got the

steel tariffs and the aluminum and you've got the IPO that will come into effect.

FROMAN: That's right. Right now, we've got about $3 billion of tariffs against China on steel and aluminum. There's another 50 billion that is to

come into effect soon, and another 100 billion potentially, a list being drawn up in response to China's 50 billion --

QUEST: Right --

FROMAN: Retaliation prowess.

QUEST: I was flying back from Miami the other day, and Michael, I was happy to be sitting next to on the plane a steel producer who basically

said that the Chinese have been dumping steel in the U.S. for years, nothing has really been done about it.

And these tariffs were just one measure to help readdress that. Why is he wrong?

FROMAN: Well, I think there has been a very serious problem with China and over capacity in steel, aluminum and a lot of other products. In the steel

sector in particular, our industry has been very effective using our trade laws to actually reduce the import of steel from China.

China right now is about our 11th largest source of imports, very little steel is actually imported from China at the moment. And that really

points to the underlying issue, which is that while these trade measures may not be directly effective on China, we really do need to get out this

excess capacity --

QUEST: Yes, but as you know, all that happens is that China dumps elsewhere because of the trade laws there, and those other countries then

proceed to send the stuff to the United States. I mean, if you look at the total trade as steel produced, it's relatively small.

FROMAN: Well, that's right, and a lot of countries have trade actions against China precisely because of the concern about dumping or about

subsidies. You know, we worked in the last years of the Obama administration to organize international coalition to put pressure on China

to reduce excess capacity to close down steel mills, to close down aluminum smelters.

[16:45:00] And thus I think an effort that's worth continuing to pursue.

QUEST: On the back to China and the relationship, that it is a very complex one. But do you believe that realistically, the Chinese for their

own domestic purposes will agree to open up more as indeed -- I mean, the car announcement that was made recently was already on the cards, it's

already been announced that you'll be aware.

So there were really offered something that was already there.

FROMAN: Yes, many of the announcements that they've made about opening up investment in financial services and in automobiles, those are things that

we agreed to over the last couple of years and had been previously announced.

I think the real question is, will they demonstrate that they are taking actions to fulfill all the WTO obligations? Will they agree to rebalance

their economies for the greater domestic demand --

QUEST: Right --

FROMAN: Led growth and continue on the reform path which is very much open --

QUEST: Right --

FROMAN: To question.

QUEST: Good to see you, thank you.

FROMAN: Thanks for having me.

QUEST: Trade tariffs for New York's corporate earnings, so many moving costs driving these markets, it could be difficult to make sense of it all.

In this week's traders, we take a look at a craftsman who makes his living assembling separate elements to create something cohesive and beautiful.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is the story of how one of Lebanon's first online retailers used technology to fix future in stone.

CHADY TAWIL, FOUNDER, MOZAICO: My name is Chady Tawil, I'm from Lebanon and I'm the founder of Mozaico; it's an ecommerce website that spending and

crafting hand-cut mosaics made from stone and (INAUDIBLE).

UNIDENTIFIED MALE: Mozaico started in 2003 when Tawil realized the potential for an online art market in his home country.

TAWIL: I had a vision that ecommerce is the future, so I tried different things, some statues, some puffery and then I found Mosaics, and there's a

good demand for it and people love it.

UNIDENTIFIED MALE: Each mosaics starts with imported raw materials that are cut and arranged, compose a story in stone.

TAWIL: It is the marble waste that we buy from the rock factory, really settle them and to more than 10 people.

UNIDENTIFIED MALE: Today, Mozaico says it has more than 10,000 customers with a portfolio of plans, ranging from the Qatari royal family to the

Austria monastery in Montenegro.

TAWIL: Our clients demographics are 70 percent females, 30 percent males, ranging from homeowners, they're going to renovating their kitchens, their

bathrooms, their pools. We have commercial clients, we have religious institutions that buy from us, so actually it's a very wide client base.

UNIDENTIFIED MALE: Mosaics have made their mark on history. Ancient temples in Mesopotamia to the Taj Mahal in India and Gaudi's Sagrada

Familia in Barcelona. And the skilled craftsmanship remains highly priced and collectible.

Last year, the French Mosaic National paid more than $360,000 on a second century Roman mosaic. But it's not only ancient mosaic which are valued,

the street artist in Vadal sold one of his video game mosaics for more than a quarter of a million dollars.

Last year, a company says it grew by 40 percent and now shipped to more than a 100 different countries.

TAWIL: Ecommerce is very important for our state, each year, it constitutes now 90 percent of our state. I'm lucky to live in Lebanon

actually, you live in a region rich in the history of mosaics, so it's in our culture, and we need to retain this and revive it and spread it all

over the world.

(END VIDEOTAPE)

QUEST: Think about it. Two difficult questions, Beatles or the Rolling Stones? Republican or a Democrat? Marriott or Starwood? Soon, Marriott and

Starwood will be one reward program and have 110 million members -- in a moment.

[16:50:00] (COMMERCIAL BREAK)

QUEST: Marriott and Starwood, the combination of the two hotel groups has done a great takeover battle just a couple of years ago. Now, when

Marriott took over Starwood, it created a reward, a loyalty scheme behemoth -- think about it.

You had these two -- well, it had a membership nearly the population of Mexico, over a 110 million members. It could be the 12th largest country

in its own right. For the two and a half years, business travelers have had to wait to find out what a combined Marriott-Starwood deal, what will

emerged loyalty scheme look like.

Well, some suggests would be harder to reach elite status, for the same time, easier to rack up and burn mouse, earn and burn. Certainly, more

hotels are available and all things begin in August. David Flueck is the Senior Vice President, DSPP for loyalty at Marriott.

I asked about 110 million -- well, as it now becomes too difficult to manage so many members.

(BEGIN VIDEO CLIP)

DAVID FLUECK, SENIOR VICE PRESIDENT FOR LOYALTY, MARRIOTT: The new portfolio brands really is extraordinary. So with over 6,500 hotels across

the 29 participating brands in 127 countries, and it spans an incredible diversity of brands.

And so, not only does it bring more hotels and more places, but also it's more accessible. Everything from residents in (INAUDIBLE) all the way up

to Saint Regis and Ritz-Carlton.

QUEST: All right, but let me interrupt you. Is it too big -- you've heard the argument, if I'm a member of your frequent state program, how do I feel

loved, wanted, needed? Whenever you want to say how do I feel that I am not just one of a 105 million people?

FLUECK: It's a really good question, and you know, typically, travelers have had to make a tradeoff between where they want to visit and the hotels

they want to stay to earn their points and benefits. And now with our incredible portfolio brands, travelers no longer have to make that trade

off.

But I think to your question, it's also about how do we make big feel small? And so there are a lot of things that we do on alert, per to make

sure our guests feel valued every time they stay in our hotels. It's things like being able to recognize them through our mobile app or having a

one-to-one relationship with our ambassador or having them earn benefits.

We give things like sweet night awards. So they want to get an upgrade to a suite, they have an award that they can actually attach to that stay and

make sure they're looked after on the stays that matter most to them.

QUEST: Final question, the one thing I know from having covered the aviation and travel industry for some decades is that you're not going to

please everybody. That the true cognition to you in all of this will delve into the nitty-gritty, the hashtags of gigs and travel gigs will find the

loopholes, will berate you for certain minor changes in the plan. Are you ready for that?

FLUECK: I think we are. I mean, it's really exciting to have 110 million members around the world, and you know, a lot of them did expect that we

would end up taking way benefits when we combine the program. We've actually made the program richer, and I think quite amazingly, not only

have we made it richer for our members, we end up actually lowering costs for our owners.

[16:55:00]And that really is the benefit of scale. So you know, as hotel companies like Marriott get bigger, we're able to invest, not only in our

members, but also deliver a better value proposition to our owners.

(END VIDEO CLIP)

QUEST: Marriott and Starwood. We'll have our profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment, on this program, you heard Art Hogan talking about the difficulties of today's market, how it is now amongst

some of the most complex times.

On "QUEST EXPRESS", one of the traders on the floor Mark Gislock (ph) said it was scary times, and the reason is very simple, because there are so

many deep undercurrents as we showed you with the earnings and this final share-case.

The earnings are good and companies are being beaten up. We've got trade issues with trade talks at the moment where a completely different set of

factors come into play. Geopolitical statements from the president, a prospect of trade with China, anything like that steel tariffs on say for

example, Caterpillar or Boeing or 3M takes the market lower.

And you've got interest rates rising. Now, we had a good debate in the office about whether or not 3 percent on the U.S. Vet and their bond is

actually as bad as everybody says. Well, everybody disagreed with me and they all said that no, the market was making it overblown.

My point is that there are so many underlying currents shifting the market at the moment, that is not surprising, we have this volatility, and with

this volatility comes uncertainty and with uncertainty comes investors on ease.

And that's exactly where we are now, and to be honest, as you hear on this program, is where it will be for some time. Which is why you need to stay

with us to watch. And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in New York.

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

END