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QUEST MEANS BUSINESS

Maryland Shooting Suspect Held Without Bond; Trump: Journalists Should be Free from Fear of Attack; Rescuers Find New Route to Look for Trapped Teens in Thailand; Iraq Executes 12 ISIS Members Convicted of Terrorism; Trump Pick for UN Migration Post Voted Down; SpaceX Launches Rocket with Supplies for Space Station; Events of Q2 Left Investors' Heads Spinning; AT&T Wins $85 Billion Battle for Time Warner; Spotify IPO Brings the NYSE to a Halt; Richard Quest Talks About His 11-City Tour in the Second Quarter; The End Of The Era As Toys 'R Us Finally Shuts Its US Stores. Aired 4-5p ET

Aired June 29, 2018 - 16:00   ET

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


BIANNA GOLODRYGA, CORRESPONDENT, CNN: The halftime whistle for 2018 just sounded at the New York Stock Exchange. Trading is over for Q2 on Friday

the 29th of June. Tonight Donald Trump takes a tax cut victory lap after a week of wins. It's end of the quarter, which means, it's time for

Richard's quarterly report. And it's also the end of the era as Toys 'R Us finally shuts its US stores. I'm Bianna Golodryga and this is "Quest Means

Business."

Q2 trading has finished and the rally has fizzled out. On the final trading day of the first half of the year, a triple digit gain fell away in

the last few minutes of trading. It means, the Dow finishes lower for June and marks the end of a hectic first half. Later in the hour, Richard will

break down the quarter in his Quarterly Report.

Yet even with today's gains, the Dow is still off more than 1% this year. That didn't stop Donald Trump from taking an economic victory laps of sorts

this morning in Washington celebrating six months since he signed the Republican Tax Cut Bill.

(START VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Common sense is being restored in Washington again because hardworking Americans are in charge of

their government once again. Washington tried to charge us, but that's not going to happen, instead we're changing Washington and we're changing it

quickly and for the better.

(END VIDEO CLIP)

GOLODRYGA: As news cycles pass in the blink of an eye with this administration, it's easy to lose sight of how much Trump has accomplished

so far. The tax cuts he is celebrating are historic for the US economy. The corporate rate is now 21% down from 35%. It's the first time in three

decades that the US has had significant tax reform. Trump's fingerprints were already on the Supreme Court after he got one justice through last

year. Well, now the court's swing vote will retire.

Trump has the chance to shift the balance of the court to a more conservative and pro-business one for generations. And today Axios is

reporting that Trump wants to withdraw from the World Trade Organization. The administration calling it an exaggeration, but it's still a reminder of

how he is upending global trade alliances that have been in place since the end of the Second World War.

Stephen Collinson is in Washington with more. As always, what a dizzying week, Steven. This one in particular, some domestic victories, however,

did fall on the President's lap this week. That's for sure.

STEPHEN COLLINSON, CORRESPONDENT, CNN: That's for sure. The big one, of course is the retirement of Justice Anthony Kennedy from the Supreme Court

which gives the President the opportunity to cement a conservative majority on the court potentially for a generation. This is something that's going

to last -- outlast his presidency by many years.

If you think about it, Kennedy was appointed by Ronald Reagan. That's the kind of influence these judges can have long after the presidents that

appoint them have moved on. This is particularly significant because it's the second Supreme Court Justice the President gets to nominate in the last

18 months. And this is something that really does validate the supporters of Donald Trump, evangelical voters for example who swallowed some of their

reservations about the President's character and behavior simply to get conservative judges on the Supreme Court. So this is -- it's very

difficult to underestimate how important this is for Republicans and what a big part of his eventual legacy it will form.

GOLODRYGA: And the legacy lasting for decades as you mentioned, even the list of potential nominees and replacements are 40-50 years as President

Trump said, they could sit on the bench for 30 or 40 years at that rate. So, a victory for the President in that sense. We talked about the

historic tax cuts as well that he was taking a victory lap on. However, if you look at the stock market and one can't help but think the reason that

they are so jittery is because of all of these tariff concerns and trade battle concerns.

COLLINSON: That's right. You would think that given the health of the economy, low unemployment, growth numbers, the stock market would be doing

a lot better. In fact, Donald Trump spent much of last year crowing about the stock market and basically saying that it was soaring to new highs

every other week just because of his policies, and it's clear that what is happening, the President is now implementing much more of his populous

nationalist agenda.

On trade for example, you mentioned earlier the report that he wants to pull out of the WTO. We've got trade wars brewing with the European Union

and with China. Clearly, that's something that could rattle the economy. A lot of Trump's advisers, I think are worried that the, you know, the

healthy state of the economy could be compromised in the run up to the midterm elections in November.

[16:05:09]

COLLINSON: The economy is one of Trump's biggest achievements in their eyes, and they worry that if the President does go through with a lot of

this tariff imposition, that that's actually going to dampen the economy running into the midterm elections and could hurt him politically, but at

this point, it seems that the President has decided based on his rhetoric from the 2016 campaign and implementing it, that the populist nationalist

trade agenda is a vote winner for him, particularly in the Midwest, and reduced conservative turnout in the midterm elections and is not something

that's going to hurt him.

GOLODGRYGA: Yes, seeing the impact though of these tariffs, GM just warning that a new wave of tariffs could hurt their bottom line and could

scale back at the business driving up car prices and driving down sales. This happening just weeks from the G-20 Summit where a lot of the European

leaders and G-20 members are bracing about which Donald Trump they will be meeting with. Of course, that's followed by his summit with Vladimir

Putin.

COLLINSON: Right. It's very interesting. Remember when the President was saying that trade wars would be easy to win. I think what we are seeing

are some of the knock on effects of those tariffs. Retaliation from the Europeans and the Chinese. For example, in the Midwest, the Chinese

tariffs on agricultural products are hurting the President politically.

So it's clear that the US trading partners have their own leverage and their own capacity to hurt the President. You are right, the G-7 Summit

was a disaster with the President openly feuding with Canadian Prime Minister Justin Trudeau, German Chancellor Angela Merkel. He's heading to

Europe again in a couple of weeks and as you say, he's going to meet all of those leaders again at the NATA summit.

There is a great deal of concern in Europe, not just over the trade issue, the fact that the President is holding this summit with Vladimir Putin

after the NATO summit has them worrying they are going to see the same kind of dynamic that happened in the G-7 when the President was looking forward

to his summit with Kim Jong-un wasn't particularly interested in sitting down and talking with the allies. That they fear is going to be exactly

the same scenario when he goes to NATO that all he's going to be looking forward to is his summit a few days later in Helsinki with the Russian

President.

GOLODRYGA: Yes, the NATO summit of last year didn't leave people with wonderful memories as well, so we shall see. Have a wonderful weekend. We

appreciate you joining us. Thank you.

Well, Nike shares jumped to an all-time high Friday. North American sales are off and running again after a slow down last year. The stock finished

up over 11%. It is now in first place on the Dow for 2018, believe it or not. Meanwhile, Nike's biggest global star, LeBron James, King James, has

decided to enter basketball free agency, not quite a shocker, but still big news.

It means that he can leave the Cleveland Cavaliers and sign with any team potentially going to an even bigger market. He wants another championship

ring, that's for sure. Paul La Monica is here with more. So, we'll talk about LeBron, obviously, one of the biggest stars for Nike and his

endorsement deal there, but Nike in and of itself having a banner quarter far from the headlines we saw from Nike just last year.

PAUL LA MONICA: Exactly. I think what really was good for Nike is that they've finally seem to be turning things around in the US getting sales

back on track, having products that people want. China is still a great market for Nike, and it will be interesting to see whether or not that

continues in light of all these tariffs and trade war concerns going on.

But right now, Nike, is doing extremely well, slam dunk to go with a basketball pun in pretty much all of its markets and now, LeBron, their

greatest star right now, it would be very fascinating to see where he lands.

GOLODRYGA: Yes, will be a lot of places, clearly a lot of cities will be courting him as they have been. For Nike's turnaround, how much of that is

Nike independent compared to competitors and rivals not keeping up.

LA MONICA: Well, I think a lot of it is due to Nike really turning things around and having the right sneakers that people want. Under Armour has

been a company that struggled a little bit, but they too have turned things around lately particularly internationally, and Nike's strength comes as

even as Adidas as done extremely well around the globe. So, I think it's a testament the fact that right now, it seems like the three major companies

all are doing reasonably well and Nike is participating, too.

GOLODGRYGA: And it's a testament to the idea of having a big star wearing your brand paying off, right? There have been a while where people were

questioning whether that marketing was still as effective as to say Air Jordans and Michael Jordan was for Nike, clearly in LeBron's case, he is a

big homerun for them or a slam dunk as we stay on the same sport.

LA MONICA: Yes, definitely, LeBron obviously being the star that he is helps boost Nike sales even though they didn't -- the Cavs didn't want the

championship this year, Under Armour's Steph Curry did and that's been obviously, I think something that LeBron is not too happy with and now, it

just remains to be seen whether or not he goes to another market to try and win yet another championship. I am not holding my breath about him coming

to either the Knicks or for the Nets.

[16:10:12]

GOLODRYGA: How about Houston, my hometown? That's been floated as one...

LA MONICA: If he goes to Houston and he's there with the current MVP who is an Adidas guy...

GOLODRYGA: He wants a ring...

LA MONICA: He does want a ring, with CP3 and Harden and LeBron James, it could be a very, very tough...

GOLODRYGA: One can dream. I am holding out hope.

LA MONICA: He's got the Astros if nothing else.

GOLODRYGA: I know. I want to be on a roll though, come on. Houston deserves it. Paul, thank you.

LA MONICA: Thank you.

GOLODGRYGA: Well, American unions are vowing to dig in after Donald Trump celebrated a Supreme Court ruling that could blow a hole in their balance

sheets. The court struck down a law that allows unions to compel non- members to pay them fees. That's been celebrated by Republicans like Jeb Bush who says teachers unions have become too powerful and out of touch.

We have seen large teacher protests in states across the country over funding and pay. This ruling could make things much harder for unions like

the National Education Association. Earlier, its president told me that they won't give up.

(START VIDEO TAPE)

LILY ESKELSEN GARCIA, PRESIDENT, NATIONAL EDUCATION ASSOCIATION: It's not going to stop us. We still have a very strong union culture and to us,

that union culture says, "You come together to fight for something you believe in," and we believe in our students, their families, and public

schools.

GOLODRYGA: In fact, I've heard from experts who have said that perhaps by happenstance, but through unintended consequences could actually embolden

union leaders and union members as well. The leaders obviously having to pay attention to their members' demands, a bit more now because they are

not getting the fee that they were required to be getting and members feeling emboldened that that change has affected them and that they want to

work and unionize around it.

GARCIA: You know, take a look at where the Red for Ed wave started in West Virginia, Oklahoma, Arizona, North Carolina and Kentucky. These were

states that had no agency fee, where they had the ability to charge a fee to non-members for things like bargaining their pay and their benefits.

That's what an agency fee is. And they have strong unions. They had people who worked very cooperatively with school districts and saw that the

people who were under funding those school districts were the state legislators, the governors in those states, and they let their voices be

heard.

We won't be silenced. We won't be stopped. I'm a teacher from Utah. I taught sixth grade for 20 years. I got involved in my union in Utah

because I had 39 kids in my classroom and we were sharing textbooks with Ms. Veech across the hall and I was buying my own supplies for my students.

We were able to bring our collective voice together and fight for something better for those kids, better for our profession, and a lot of times better

for our community. That's not going to stop.

GOLODRYGA: Regardless of where people stood in terms of how they viewed unions, there was a lot of sympathy out there for teachers who were on

strike when you hear some of their personal stories about having to pay for their own supplies at a modest income that they were receiving as is.

Going into this school year, though, what impact can we expect this to have on students? Because at the end of the day, while there was sympathy for

those who were striking, once it got into the weeks on end with students not being at school, it seemed like they were the ones who were paying the

highest price, students and their parents.

GARCIA: Students do pay the price for having weak unions representing the educators that serve them, and I think that's what we saw. When you take a

look at the strongest unions that were able to charge non-members that fee for the services that they were required to provide like collective

bargaining and their contract, their pay and benefits, those were the states that have the best funded school systems because they have a very

strong union demanding what those students deserve. And so the plan for of folks that were behind Janus, there is millions and millions of dollars

that were spent.

It wasn't because they were there to protect people from paying a fee to get better pay and benefits. This is something that we have been facing

for a long time. Let's kill the unions that support public services and then we can lower taxes for things like public schools, public services,

everything from your public library to the people that, you know, process driver's licenses.

[16:15:12]

GARCIA: They want things as low as possible and when you are talking about a public school, low resources for a public school impacts our kids,

sometimes our kids in the toughest financial circumstances, they need something more.

(END VIDEO TAPE)

GOLODRYGA: And our thanks to Lily. When we return, a new blow for Bitcoin. The cryptocurrency sheds half its value in six months. And

Jeffrey says his last good-bye. Oh, no, three generations of kids bid farewell to Toys 'R Us, a bit of a heart breaker there.

The Bitcoin started the quarter in bad shape and ended it even worse. The cryptocurrency has fallen below $6,000.00 for the first time since last

October. Bitcoin has lost more than half its value this year alone as a string of negative headlines from global regulators have sent investors

running. Nolan Bauerle is Director of Research at Coindesk and he is joining us on set. Nolan, great to have you. So has the Bitcoin bubble

burst, in your opinion?

NOLAN BAUERLE, DIRECTOR OF RESEARCH, COINDESK: Well, it was always built of a lot of speculation and a lot of people believing in really the long

term, the upside of the whole market of cryptocurrencies. Once there was ability to short it, which started last December and really took flight in

January, finally they were able to temper some of this exuberance that we saw last year.

And while it's probably a good thing, if Bitcoin is to be this sort of global currency and reserved currency for an entire new system, a lot of

that stuff has to be built. It can't just be on speculation. Right now, there's only really one smart -- other than Bitcoin's fundamental

qualities, its inherent qualities, there's only really the one smart contract that's working for the ERC 20s and the ICOs, that's really

affecting and changing a lot of early stage liquidity and that's a success story in a lot of ways despite some of the craziness.

GOLODRYGA: So, regardless of the selloff, you still think Bitcoin is here to stay?

BAUERLE: Oh, for sure. Yes, last year was the year where it really got this mainstream attention. A lot of people are actually relieved that the

prices have come down a little. There's time to build...

GOLODRYGA: It was just too inflated.

BAUERLE: Not too inflated. The expectations were really high for stuff to be delivered, but if you really start looking at the technology, everyone

was still in the process of building really important things.

GOLODRYGA: How many people felt and understand it, and yet they were talking about it, right? So, that had a lot of people nervous as well, but

I was interested in what Mohamed El Erian said to day. He said, his gut tells him that he would consider buying at a $5,000.00 price point. What

is your reaction to that?

BAUERLE: I think that makes a lot of sense. Really, the goal here is for Bitcoin not to be $20,000.00 or $10,000.00. It's to change things. And so

if it does what it's supposed to do and it fulfills its promise, it will be worth an extraordinarily amount, but it's not really even then about the

amount that it's worth, it's about all the positive change that it will have enabled by that time.

[16:20:11]

GOLODRYGA: Yes, on the flip side, there are those who predict that it will continue to fall for one of two reasons. One, fierce and numerous

competition, right, as time continues and that it's not proven to be very efficient and effective yet. The transaction for credit card, for example

runs much more effectively and quickly than a Bitcoin transaction.

BAUERLE: Sure, I'll break down the two questions. The first one that you said is that, you know, maybe there is other competition out there. In the

word of competition from under cryptocurrencies, it's the alpha and omega. It is the beginning and the end of cryptocurrency. It's by far the most

important and powerful. It really acts almost like the US dollar does for the rest of the world's economy, but for its own separate economy that's

being developed, this financial systems is being developed on the side. And for the other question, it's really about scalability and that's really

what I was talking about earlier.

There is a new expression in the industry this year, it's for biddal (ph) which is the same misplacing of the DNL on Huddle so that the investment

strategy of holding or Bitcoins, everyone is really happy and talking a biddal now, so that really I think speaks to this question of, it's not

really ready to compete with Visa, true, but those inventions are happening now. They are going live now. The lightning network is up and running.

There's nodes joining the network that are performing those functions, creating these new state channels they're called which are going to be a

little batch of other transactions and solve a lot of those problems.

There's other solutions on the horizon as well. There's other chains. Vitalik just sort of opened everyone's eyes his ideas for a theory named

sharding and proof of stakes, a whole new system, and it used to sound a lot like science fiction, but now that we actually see some of the results

of the research and the work that he's been doing, it actually seems really plausible and you can start imagining what this stuff looks like.

GOLODRYGA: And you hear more and more people talking about blockchain, right, and this has become part of the vernacular and not just something

that is in a small isolated group of investors.

BAUERLE: You got it. And you know, Bitcoin will never rise to its potential just off that speculation. It will rise to its purpose in this

world from the failures of other companies like Facebook, so when we saw what Facebook did with all the mischief they got up to, that's really

getting people talking about the real value proposition of Bitcoin and what it means for digital authentication.

GOLODRYGA: Give some optimism, Nolan Bauerle, great to see you. Have a good weekend.

BAUERLE: Thanks so much.

GOLODRYGA: A warning to any Toys 'R Us kids out there, this next story could be quite emotional on one of them.

Well, it's the end of an era for an iconic retail chain. Its 200 remaining US stores are closing their doors for the last time. After 60 years in

business, the bankrupt toy company called it quits in March. It's mascot Jeffrey the Giraffe was pictured at the empty aisles -- this is so

heartbreaking -- of a Connecticut store. His bag packed as he left for a final time.

I'm joined now by Sharon Price-John, CEO of Build-A-Bear Workshop, she's been an executive at Hasbro and Mattel, so clearly, you know the toy

industry in and out. There are so many reasons that people provide for the fall of Toys 'R Us. What is the first that comes to your mind?

SHARON PRICE-JOHN, CEO, BUILD-A-BEAR WORKSHOP: Well, I think it is a complicated question, but a lot has happened in the toy industry,

particularly in the traditional side over the last few years, and even though if you look at the industry as a whole, it has grown in the United

States very slightly, 4% to 5%, but if you look at it in a longer arc, the impact of the digital, all things digital, and the impact of this idea of

kids getting older, younger, has taken a bit of a toll on some of the more traditional toy spaces, and I think that over time, though, you know, the

shifts to and the retail environment ultimately may have impacted them very negatively, particularly that they had taken on a little bit of debt or

that was making it more difficult for them to maintain a certain amount of profitability.

And, yeah, so Build-A-Bear has been quite focused on maintaining the certain level of profitability, returning to that profitability, and

remaining profitable and going through a transition in the highlight and the light of all of those situations from the e-commerce impact to assuring

that we are speaking to a broader audience, to evolving our retail footprint without taking on that debt, which I think has been part of

what's keeping us relevant and healthy.

GOLODRYGA: And Build-A-Bear has managed to capitalize on the in-store experience. In fact, that's sort of your bread and butter, that's where I

take my kids to birthday parties. It's all about building that bear in the store. How are you managing to stay competitive and profitable in an e-

commerce era?

[16:25:11]

PRICE-JOHN: That's a great question and I'm so glad you mentioned the birthday piece. One of the reasons why in a recent survey, people actually

did shop at Toys 'R Us was because of the birthdays and special occasions, I believe it was 70%, and so we do feel like that our experiential retail

that we've been doing since -- for 21 years now before the concept of experiential retail was even discussed broadly, is a part of what is

setting us apart.

But your question is really valid of what are we doing from an e-commerce perspective? Because we have also broadened our consumer base in that up

to almost 25% to 30% of our consumer base is for people 12 and over now, and the giftables and affinity type of experience, we just re-launched our

e-commerce business because some of those adults don't really need to go through the experience every single time, although for birthdays and

special occasions and memory making and in some of our tourist locations, that experience is a critical part of why you choose to go to Build-A-Bear.

GOLODRYGA: Perhaps you can make room for Build-A-Giraffe and Jeffrey as well as he is looking for a new home, but Sharon Price-John, we appreciate

you joining us. The end of an era. Thank you. Best of luck to you.

PRICE-JOHN: Thank you so much. I appreciate it.

GOLODRYGA: Well, if you want to keep on top of the day's top business headlines in just 90 seconds, then try our "Daily Briefing" podcast. It's

updated twice a day, before and after the bell rings on Wall Street. You can just ask Alexa or your Google Home Device for your CNN flash briefing

every week day.

Well, if you thought Q1 was tough, Q2 was just as wild. Richard's Quarterly Report looks back at the last three months. That's coming up

after this break.

Hello, I'm Bianna Golodryga. In a moment, Richard submits his Quarterly Report for Q2. First, these are the news headlines on CNN this hour.

European Union leaders averted the collapse of a key summit by striking an 11th hour deal on migration. They agreed to share responsibility for

resettling migrants, increase funding, and ramp up the fight against people smugglers. However EU Council President, Donald Tusk warned that it's too

early to describe the agreement as a success.

The suspect in the deadly shooting at a newspaper office in Maryland will be held without bond. A state attorney said the gunman had systematically

hunted journalists barricading the back entrance so they could not escape. Five people were killed in the newsroom of "The Capital Gazette." US

President Donald Trump said his prayers were with the families of the victims. Mr. Trump said, this administration would try to prevent acts of

violence and expressed sadness that journalists have been targeted.

[16:30:16]

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This attack shocked the conscience of our nation and filled our hearts with grief. Journalists

like all Americans should be free from the fear of being violently attacked while doing their job.

(END VIDEO CLIP)

GOLODRYGA: There's new hope in the search for that missing football team in Thailand. Rescue workers have discovered a chimney that they think will

lead down the caves where the 12 teenagers and their coach are believed trapped. They've been missing since Saturday.

Iraqi officials say they executed 12 ISIS members Thursday who had been convicted of terrorism, caring out the orders of Iraq's Prime Minister

Haider al-Abadi. Al-Abadi called for expediting executions the day after the bodies of eight Iraqi security force members put out.

The United Nations migration agency has voted down Ken Isaacs; the Trump administration's candidate who will lead the international organization for

migration. That leaves it without an American at the helm for the first time since 1951.

Isaacs once wrote on Twitter that Austria and Switzerland should consider building a wall in the Alps to keep refugees out. SpaceX has launched a

rocket carrying supplies for the international space station. It's the 12th rocket launch of the year by Elon Musk company.

NASA says it will arrive at the space station on Monday carrying nearly 6,000 pounds of equipment and supplies. And those are the headlines on Cnn

at this hour, now on the final trading day of volatile second quarter, it's QUEST quarterly report.

QUEST: Into the second quarter and we need to get to grips with the state of the U.S. and global economy. Global trade derailed in Q1, now

apparently, it's completely fallen off the tracks in the second quarter as President Trump has turned on America's trading partners and they've

responded in kind.

Tit-for-tat, back and forth, quid pro quo, it doesn't matter which phrase you use, it was hard to keep up with the measure and counter-measure that

were introduced. After the volatility of Q1, Q2 was a trade whirlwind and they left us all gasping for breath.

(BEGIN VIDEO CLIP)

QUEST: Good evening, it's a new quarter on Wall Street, but there are definitely old fears on check and trade --

UNIDENTIFIED FEMALE: Moving with trade war really is -- has something, the kind of the power, the royal bees market.

TRUMP: Because we have to, because we have been treated very unfairly.

UNIDENTIFIED MALE: When you have such an unstable president who constantly is meddling with the status quo in a negative way, it's very hard to build

confidence --

UNIDENTIFIED FEMALE: Please, do not hurt trade.

QUEST: This is scenario that we've gotten currently in the war room. If you need this stuff to make your products, well, prices are now up 40

percent. So Richard, is it a trade war.

UNIDENTIFIED MALE: That's clearly the opening shot.

QUEST: Eurozone's economy no longer needs emergency support. Investors knew and we're expecting a rise in interest rates.

UNIDENTIFIED MALE: Concerns about changes in trade policy are rising, I think it's fair to say.

SAMUEL BURKE, CNN BUSINESS AND TECHNOLOGY CORRESPONDENT: QUEST MEANS BUSINESS people.

QUEST: No, go on --

UNIDENTIFIED MALE: Sure sitting well --

QUEST: In their life. You do oyez! -- no --

UNIDENTIFIED MALE: Oyez!

QUEST: As Donald Trump prepares to meet one of the world's most brutal dictators, the president continues to weigh in against American allies and

their trade policies.

UNIDENTIFIED MALE: There's a special place in hell for foreign leader that engages in bad faith diplomacy with President Donald J. Trump.

QUEST: And today, we saw the market, this went down and continued going down and they went all the way down.

GENE SIMMONS, MUSICIAN: Nice to see you again, Richard, I remember when you were over at the house, but that's just for you and I.

QUEST: That is just for you and I -- that was a wimpy gavel -- oh, yes sir, well done, good robust gavel.

(END VIDEO CLIP)

QUEST: So every quarter, we're going to look at the big themes. For example, in Q1, it was all about market tariffs and Facebook. In Q2, the

themes are very much those of trade, mergers and aviation.

[16:35:00] And where better to start as we look at perhaps symbolizing not only America, but symbolizing everything that has happened and Harley-

Davidson and motorcycles. Think about it, Harley-Davidson has advanced its moving production of certain vehicles from the United States to other parts

of the world.

For those bikes being sent to Europe to beat the 20 percent tariff that Europe has introduced and a tit-for-tat on steel and aluminum. U.S.

president has already excavated Harley, saying they put up a white flag, they've sold out, they've surrendered and has promised and threatened that

he will increase taxes -- two for this.

Harley-Davidson are a symbol of the current situation. Joining me now is Clare Sebastian here with me in the studio and Rana Foroohar is at the

Aspen, Colorado. Good to see both of you, thank you. Start with you, Rana, the theme, the overarching theme of trade and trade wars dominated

Q2.

RANA FOROOHAR, GLOBAL BUSINESS COLUMNIST & ASSOCIATE EDITOR, FINANCIAL TIMES: Absolutely, you know, it started with China, it moved to Europe,

NAFTA, I mean, this is what's been moving markets and you know, I think that we knew we were going to come here.

This is what Donald Trump campaigned on, he's certainly lived up to his campaign promises. It's going to be very interesting to see whether he

remains in a war with allies and countries like China which you know, the U.S. I think has legitimate trade beefs with all at the same time and what

that's going to mean for the global economy.

CLARE SEBASTIAN, CNN CORRESPONDENT: And I think in terms of having markets view this, Richard, we ended the first quarter with many people still

thinking, you know, this could be bad for this probably, a negotiating strategy. And I think as we've seen -- we started to see things become

reality, we started to see tariffs actually come in.

We started to see real concrete impacts on companies like Harley-Davidson. People are starting to think actually I don't know, is this a negotiating

strategy or a reaction going to continue to see an escalation here, and that's why the markets continue to be so volatile.

QUEST: So let's just look at exactly the situation. First of all, you've got steel and aluminum tariffs which were contained, they've been contained

rather except when it comes to China where you've got the --

SEBASTIAN: Yes --

QUEST: Extra 250 billion, and they come along. But as between Europe and you know, you've got the question of cars exports --

FOROOHAR: Yes --

QUEST: Do you see the situation getting worse?

FOROOHAR: I do, you know, Clare brings up a great point. Many of us were talking about whether or not this was a negotiating strategy, I don't think

it is. I think that at this point, the hawks in the administration, Peter Navarro; the president's economic adviser, the trade rep, I think that

these folks really would like to see a fundamental restructuring of the global economy and some restructuring of supply chains.

And so I do think that things are going to get more heated. You know, you have Steve Mnuchin; Treasury Secretary, really trying to pull back and

represent the neoliberal arm --

QUEST: Right --

FOROOHAR: But I don't see that working.

QUEST: But Clare, what are companies telling you? Those you're speaking to.

SEBASTIAN: Well, this is very interesting, Richard, because I've been speaking to -- obviously seen some biggest companies like Harley-Davidson,

we know that Brown-Forman; the maker of Jack Daniels, they told me that they are raising prices in Europe.

That is a choice company's phase, either move production at the moment if they're going to get hit by tariffs or raise prices, but all of them --

QUEST: Or hit the margins.

SEBASTIAN: Or hit the margins, right, but that can hit their brands as well, so and you know, their bottom line. But smaller businesses are also

starting to feel this, Richard, because this is -- tariffs are an inflation repression. And this comes at a time when the economy is growing, and

we're starting to see, you know, full employment hitting, people are starting to see labor shortages, they're having to pay more anyway.

Then adding to that, material costs are rising, so manufacturing companies in particular, and you have a situation where they're having to, you know,

cut their amount of time that they'll quote companies certain prices. They're having to make changes though, this is not -- even if they're not

at the stage of layoffs yet.

QUEST: Rana --

FOROOHAR: You know, I want to add too, if I might, just picking up on what Clare said. I think that companies are really feeling the heat and you can

see it in the bonds market, Richard, this is something to really look at this inverted view that occurred, this notion that short-term and long-term

yields are coming closer.

And long-term yields, it's looking like interest rates, the markets think interest rates is going to be lower long-term, that means that they think

growth is going to be slower, we might even be going into recession. So the markets are taking all this very seriously.

QUEST: Rana, thank you, we'll be back with you in Q3, hope we'll be back with you before Q3 and save you trespassing indeed. Some sobering thoughts

on the trade situation. As we continue after the break on the quarterly report, AT&T and Time Warner take on the government, and when they go ahead

for a mega merger which has no re-shaped the media landscape, thank you.

[16:40:00] (COMMERCIAL BREAK)

QUEST: And much of the second quarter, we reported on two American corporate giants that were in pitch battle against the Trump

administration. Some of the best and probably most expensive lawyers and antitrust in the country filed(ph) their case for AT&T to merge with what

was Time Warner, the bank company of this network.

They won the case and within days of winning it, they closed the deal. Yes, I now work for AT&T through various subsidiaries as you follow it down

through the line. Hadas Gold saw the whole thing from the court room, she joins me from D.C.

What was the case actually like, being there, seeing the protagonist, hearing the arguments, what was it like?

HADAS GOLD, CNN POLITICS, MEDIA AND GLOBAL BUSINESS REPORTER: It was actually more dramatic than you might expect a case that deals with a lot

of sort of boring things like ratings or prices that cable companies will pay to air certain networks because there was this urgency around it

because of the merger deadline of June 21st, because of the knowledge of how much this decision would not only affect the two companies, but also

the entire industry as we are saying this decision play out.

And it was a pretty heated battle between Justice Department lawyers and AT&T's lawyers. AT&T hired Dan Petrocelli who is a very well known

attorney who has worked on everything from O.J. Simpson's cases to Enron cases, he even actually represented Donald Trump in a Trump University

case.

And so he is very well known --

QUEST: Right --

GOLD: Very skilled litigator --

QUEST: Right --

GOLD: And he brought a lot of the drama to this case --

QUEST: OK --

GOLD: And he ultimately helped them win it.

QUEST: So they won, and you just said that in your answer that it was going to change the landscape.

GOLD: Yes --

QUEST: Give me the evidence that, that landscape, other situations, I'm thinking Disney and others, well, what happens since?

GOLD: Well, Disney or Comcast immediately after the trial ended and they got the decision, issued their higher bid to try to take over "21st Century

Fox" --

QUEST: Right --

GOLD: And to really get out of Disney's grasp. And they actually cited the decision the decision that AT&T, Time Warner decision as one of the

reasons why they felt confident that their offer would be better to Disney because one of the reasons that $21st Century Fox" was weary of Comcast

offer was because of the regulatory concerns --

QUEST: Right --

GOLD: They weren't convinced that Comcast could pass the regulatory master. But with the AT&T, Time Warner approval, Comcast said we're going

to be fine.

QUEST: Yes, Hadas Gold, you have got your third quarter. The Comcast, Disney, "21st Century Fox" will play out in Q3 and you will be busy

covering it, thank you. April, the 3rd was a date to remember the New York Stock Exchange, Spotify was the listing of the quarter.

It is an unusual listing the price discovery process, they did the longest opening of an IPO in stock exchange history, and you at a front row seat.

(BEGIN VIDEOTAPE)

SEBASTIAN: This will be the latest opening of an IPO in the vacant -- remember, as far as they know, essentially, it's a free for all.

UNIDENTIFIED MALE: Look, there's nothing like an IPO and this is a listing, it's also a little different and everybody is there and there have

been an option going on for the last hour and a half -- maybe now --

[16:45:00] QUEST: Hold on a second, stay with me. How long do you think it's got to go? Any idea?

UNIDENTIFIED MALE: Tremendous IPO, and that's in the face of what's going on in technology right now. This is the biggest tech IPO of the year and

you know, it's been so well received in the market place.

QUEST: Nobody really knows when this is going to actually happen.

UNIDENTIFIED MALE: Getting close.

QUEST: Getting close is the word, Shirley Palmer(ph), it's getting close.

UNIDENTIFIED MALE: It's getting close.

QUEST: What you're seeing today is a market-performing to almost absolute perfection -- oh, now, he said, his range, he's tightened the range to 169

or whatever and 69.5, and he says if that holds, he's going to open it.

SEBASTIAN: Well, I think we're breaking new grounds, Richard, we'll do it as we speak.

QUEST: Let's get it, let's get in, go on. Basically, what they're going - -

UNIDENTIFIED MALE: There you go.

QUEST: Spotify looks like it's about to open in next minute.

(CHEERS)

UNIDENTIFIED MALE: There it is.

QUEST: The stock exchange was like it's just getting burned. Was rapacious(ph), it was torturous, it was long-winded, but it's enabled the

most perfect to price transparency, every market participant was able to take in, being bold and to see the way that doesn't make the market make-up

brought the price closer to closer.

(END VIDEOTAPE)

QUEST: It's ended. After the break on the quarterly report, around the world in 17 hours, Qantas makes aviation history with a non-stop flight

from Perth to London, of course, you and I were on board.

(COMMERCIAL BREAK)

QUEST: A middle seat once again. At the annual gathering of the aviation industry, IATA in Sydney, they were all strapping themselves in for

turbulence in the second half of this year. Whether it's oil, geopolitics or competition.

I heard from three airline CEOs with problems of their own. The head of IATA was warning that there were dark clouds ahead for the industry.

(BEGIN VIDEO CLIP)

ALEXANDRE DE JUNIAC, DIRECTOR GENERAL, IATA: And areas of concern, mainly two of them, just so you know, all the trade wars, immigration debates, all

the -- you know, potential barriers that can be put on borders for us is a threat.

And secondly, we have rising cost of fuel, labor cost, infrastructure costs. So the future striking more uncertain than it was.

TIM CLARK, PRESIDENT OF EMIRATES: Don't forget, we were up at 140 at one point.

QUEST: Yes, and everybody -- and everybody was crying and screaming --

CLARK: And they were crying, but you know, actually, the whole industry money, there were casualties and how the fuel price and more likely there

will be casualties coming along there in the next year or so. But we're better managing the fuel price higher than we used to be.

[16:50:00] AKBAR AL BAKER, CHIEF EXECUTIVE OFFICER, QATAR AIRWAYS: Community have condemned this blockade, and not only that, they condemned

the blockade but they also saved, what did it achieve? It didn't do anything what it was meant to do. We are resilient, you can see that life

is normal, my government is investing, Qatar Airways is expanding, the people are happy, there are visitors increasing to Qatar.

PIETER ELBERS, CHIEF EXECUTIVE OFFICER, KLM: Of course, it gets a lot of attention and the 15 days of strike and the CEO stepping down, it's getting

rightfully so, a lot of attention.

But if you take a few steps back and you see what has been achieved in 2017, first of all, on the financial side, the debt has been reduced, and

both Air France and KLM have made a better performance in the year before.

(END VIDEO CLIP)

QUEST: The airlines CEOs. Now, the Kangaroo route is the name affectionately given to the flight from Australia to London because you

have to go various hops. Originally, it took four days over several hops. Now, Qantas will fly you nonstop from Perth to London in 17 hours.

Well, you can imagine what that must be like if you're at the back of the bus.

(BEGIN VIDEOTAPE)

QUEST (voice-over): It was 1947 when Qantas blazed the trail with the Kangaroo route, the world had opened up, the trip was not for the faint of

heart, it took four days and seven stops to make the journey from Australia to London.

The early routes included exotic locals like Singapore, later, Bombay and a gateway to India, a stopover in Cairo with its ancient pyramids and the

chance to see Rome. At its time, the Kangaroo routes was the fastest way between Australia and London.

Now Qantas has blazed the trail again, launching the first ever nonstop commercial flight between Australia and the U.K. For at least, a decade,

there have been several aircrafts that could fly from Perth to London nonstop. The issue was they all had individual problems that made such a

flight uneconomic.

It was the arrival of the Dreamliner and the A350 that suddenly made these very long routes potentially profitable. The kangaroo routes.

ALAN JOYCE, CHIEF EXECUTIVE OFFICER, QANTAS: The kangaroo because you'll not get a real one.

QUEST: I sat down with Qantas Group Chief Executive Alan Joyce in the new lounge built especially for the flight.

JOYCE: If you're in Perth and you're thinking of going to Europe, it's going to be three hours faster getting on this flight than flying on any

other flight going.

QUEST: Why and when did you decide you were going to do it?

JOYCE: Well, first of all, the economics have to work for us and we could have gone and look at it a few times with different aircrafts, but only

until the Dreamliner came along that we fill that the economics were going to have a step change.

QUEST (on camera): Your hopping days are over, Perth to London, nonstop.

(END VIDEOTAPE)

QUEST: I've done plenty of this over the last quarter, so much of the last 12 weeks I've been living out of a suitcase. Let me show you exactly where

we've been, you and I. We've been -- Q1 is the red dots, Q2 is the blue -- oh, we've been to London and to Stockholm and Oslo.

We were over in Washington and down in Miami, and then of course, there was Tel Aviv, followed by Dubai, Bahrain, Singapore, Sydney and Lisbon,

Liverpool. Gene Simmons was one of my most memorable interviews of the second quarter. Scrape away the trademark demon costume and make-up, and

beneath it all is a natural-born entrepreneur with plenty of business acumen.

His latest rock and roll venture is pitching the advantages of medical and recreational marijuana by a Canadian firm called Invictus.

(BEGIN VIDEO CLIP)

SIMMONS: I initially got involved with Invictus-md.com, I have to say that for a financial reason because I love my $10 million worth of stock within

the company because I am bullish on Invictus.

I think it's going up. They also paid me 2.5 million bucks. However, as an aside, I have been dismissive about Cannabis as a whole. I threw out

the baby with the bath water -- I'm a straight guy. Never rolled anything, never did that, never smoked or got -- you know, nothing, never been drunk

in my life.

[16:55:00] However, research has shown me --

QUEST: Right --

SIMMONS: And I urge everybody else to do their own research -- you can have a little girl shaking from, you know, epilepsy and you want cannabis-

base products and miraculously almost, it looks like she's cured.

QUEST: So are you saying that you are in favor of medical marijuana, but would you draw the line, recreational marijuana?

SIMMONS: I would not, but I urge all politicians to become more well informed because it doesn't matter whether you get elected or not, let's do

something for the good of the people. So let research determine how politicians are going to vote.

So a very simple idea is cigarettes are legal, they may give you cancer, everybody knows that, but cannabis-base products are not your killing-me.

You might get the munchies, you might reach over for, you know, Doritos -- by the way, I have never smoked any cannabis or used any cannabis --

QUEST: So should you -- now, hang on a second. If you are going to trust the dice, and if you are going to say, well, you know, let's get on with

this thing, should you not sample the product of the company?

SIMMONS: Not necessarily, that's his personal life choice. All I'm saying is in the menu of life, you should be able to pick what you want out of

life that's legal. You can drink, you can smoke cigarettes, which are not necessarily the healthiest, but I'm learning more and more about cannabis

and so should everybody else including the legislatures to find out whether it's good or bad, and pass laws based on information.

Do I want to use it? It will be my personal choice. But if I found out from the darkness that my child was sick and the diagnosis is --

QUEST: Right --

SIMMONS: Use cannabis-base products, of course, I would use cannabis-base products.

(END VIDEO CLIP)

QUEST: Gene Simmons was an exciting, informative quarter it was. And there's plenty more travels and places to visit in the quarter ahead about

to begin. And that is the QUEST MEANS BUSINESS quarterly report, I am Richard Quest in New York.

Whatever you're up to in Q3, I hope it's profitable.

(COMMERCIAL BREAK)

END