Return to Transcripts main page

QUEST MEANS BUSINESS

The Feds Presidential Intervention, Donald Trump Says He's Not Happy About Rate Rises, Dozens Of Car Executives And Diplomats Descended On Washington Today For A Public Hearing On Donald Trump's Plans For Auto Tariffs, CEO Of Volvo Says It's Time For Commonsense To Prevail, President Trump Has Stepped Up Into The Legal Battle Between Google And The European Union, Comcast Abandons Its Pursuit Of 21st Century Fox Clearing The Way For Its Rival, Disney, Tilray Joins The NASDAQ In The First Us Cannabis IPO. Aired: 4-5p ET

Aired July 19, 2018 - 16:00:00   ET

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


BIANNA GOLODRYGA, CORRESPONDENT, CNN: The winning streak is over after several digits dropped in the Dow. It's Thursday, July 19th. The Feds

Presidential intervention, Donald Trump says he's not happy about rate rises. Disney wins the battle for 21st Century Fox, but it's not over yet

for Comcast. Plus, growing ambitions - Tilray joins the NASDAQ in the first US cannabis IPO. I'm Bianna Golodryga in for Richard Quest and live

from the world's financial capital, New York City, where I mean business.

Tonight, Donald Trump breaks with decades of White House tradition, wading into the debate over US monetary policy and challenging the Federal Reserve

Chief he appointed. The President says, he is not thrilled with the Feds interest rate hikes which he believes are undercutting US growth. It is an

extremely rare move. US Presidents have stayed quiet on monetary policy to respect the Central Bank's independence.

But Mr. Trump wasn't shy about sharing his feelings on CNBC earlier.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I put a very good man in the Fed. I don't necessarily agree with it because he's raising interest

rates. I'm not saying that I agree with it and I don't necessarily can agree with it. I must tell you, I don't. I'm not thrilled because we go

up and every time you go up, they want to raise rates again, and I don't really - I am not happy about it, but at the same time, I'm letting them do

what they feel is best.

(END VIDEO CLIP)

GOLODRYGA: From Chicago, I'm joined by Randall Kroszner, he's a former Fed Governor, now Professor at the University of Chicago Booth School of

Business. Thank you so much for coming on with us, Professor, so first and foremost, your reaction to the President?

RANDALL KROSZNER, FORMER GOVERNOR, FEDERAL RESERVE: Well, it's crucially important that the Fed maintain its independence and I think that's really

the key. There was a statement that came out later from the White House clarifying that the President does respect the Feds independence and that's

really the focus. He did say in his remarks that he is going to let the Fed do what they think is best and that he has confidence in Chairman

Powell, and that's really the crucial thing because you don't want the Feds independence to be compromised, you don't want to think that it's coming to

political pressure, and I don't think that it will.

GOLODRYGA: But it is such a break from norms, and we're seeing this on many spectrums whether it's breaking the norms and alluding to the jobs

report the night before, and the President talking about what happened in Helsinki and then backing off of what he says. I mean, this has been

something we see from him time and time again.

What makes you think that this is a one-off and we shouldn't read too much into him not intervening at all in the Fed in the future.

KROSZNER: Well, I think if we look at what's happened over the last few years, with the President's - when he's been relatively quiet about the

Fed, as you may recall during the campaign, he was very critical of the Fed and of Janet Yellen that they weren't raising rates, they didn't raise

rates in September of that year, but after the election, they raised rates and he remained silent.

When he was considering various Fed candidates including Janet Yellen, he said he had a lot of respect for her. She was a low interest rate person

and he is a property developer and he kind of liked that. And so, I think he has shown a fair amount of discipline, but allowing the Fed to do what

it's going to do and I'm hopeful that this will be just a one-off thing.

GOLODRYGA: I'm glad you mentioned his comments about Janet Yellen during the campaign. We actually want to play some sound of what he said about

her and her being "political" in his words about raising rates. Let's listen.

(BEGIN VIDEO CLIP)

TRUMP: This Janet Yellen of the Fed, the Fed is doing political by keeping the interest rates at this level, and believe me, the day Obama goes off

and he leaves and he goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you're going to see some very

bad things happen.

(END VIDEO CLIP)

GOLODRYGA: Okay, so there was candidate Trump, like you said, he's been silent. He's been disciplined, but guess what? We have another election -

the midterms coming up in just a few months. The Federal Reserve is anticipated to raise rates twice more of this year before the end of the

year. Your convinced that the President is not going to speak out again as the election date looms?

KROSZNER: I certainly wouldn't want to say that I'm convinced. I'm hopeful that given the context of the remarks that he had said that he

respects and he has confidence in Chairman Powell that he has - he understands the importance of the independence of the Fed and its said in

those - the initial remarks that he is going to let the Fed do what they think is best, I'm hopeful and I don't think it would be wise to try to put

too much political pressure on the Fed, but even if you try, I think as Chairman Powell said recently, it's kind of deep in the Feds DNA to be

nonpolitical and I think it's not going to have much of ...

[00:05:13]

KROSZNER: ... an impact. It's not going to really have any impact because I think the Fed has faced a lot of political pressures over time

from Presidents, Treasury Secretaries and a lot of different lobbying groups but the Fed just tries to do what it's going to do.

GOLODRYGA: I feel like with this President, there seems to be a different category, that this is just Trump being Trump, and he is different and this

is a one-off and he walked it back and the White House issued an apology or another statement sort of walking back what he said. My question to you is

about precedence. After this President, if future Presidents break norms again, and date it back to the actions of President Trump, what does that

leave us with?

KROSZNER: Well, the key is whether this is something that is part of a concerted political pressure on the Fed or not, and if someone else tries

to put political pressure on the Fed that's problematic. Well, anyone who is putting political pressure on the Federal, that's probably - they should

be doing what they think is best based on their analysis, and I mean, certainly, there were many Presidents before the early 1990s who tried to

put pressure on the Federal, I don't think that was very effective. When it was effective, it was not a good thing, and hopefully people will learn

those lessons.

GOLODRYGA: Well, hopefully, the President does as well though. In his comments today, he said, "Now, I'm just saying the same thing I would have

said as a private citizen." Someone may say, "Oh, maybe you shouldn't say that as President." I couldn't care less what they say because my views

haven't changed. Maybe he won't express those views anymore, but he's made clear that his views haven't changed. Professor, we're going to have to

leave it there. Randall Kroszner, thank you so much for joining us.

Well, dozens of car executives and diplomats descended on Washington today for a public hearing on Donald Trump's plans for auto tariffs. The

Commerce Department had arguments - heard arguments from right across the car sector. Industry groups are warning that the tariffs would lead to

everything from higher prices to more deadly car accidents. One executive from LG's auto division urged the government to reconsider.

(BEGIN VIDEO CLIP)

JOSEPH BOYLE, SENIOR DIRCTOR, LG ELECTRONICS: I'm here today to convey a straightforward message. The imposition of extra tariffs on imports of

component parts used in the production of automobiles in the United States is a bad idea. Doing so will harm the American companies and workers that

are part of the fastest growing and most innovative segment of the US auto market.

(END VIDEO CLIP)

GOLODRYGA: John Bozzella is the President and CEO of Global Automakers Group. He also testified at the hearing in Washington today. John, great

to have you on. I was struck by something you'd said earlier. You said you cannot find a company that has asked for this protection, obviously a

lot of unanimous voices being heard right now. Is there going to be reaction to what you're asking for from the government.

JOHN BOZZELLA, PRESIDENT AND CEO, GLOBAL AUTOMAKERS GROUP: Yes, you know, it's very interesting. The Commerce Department did not present the case

that autos or auto parts imports are a threat to the national security. They didn't present a case at the beginning of this investigation. They

haven't seen a case in the over 2,300 comments that were filed. They certainly didn't hear a case today for protection or that these imports

could possibly be a national security threat.

So, look, I am hopeful that the Commerce Department will be listening and following the facts, but I remain concerned.

GOLODRYGA: Obviously, this ends up the President's decision. What do you think it will take to change his mind because he seems to be pretty

convinced that tariffs are the way to get different governments from around the world to change their practices?

BOZZELLA: Well, we appreciate the President's focus on the US auto industry. He's been very clear that he wants to see the US auto industry

strong and vibrant and it is strong and vibrant and in fact, it is thriving, and I think that what we heard today for example was not only

auto executives concerned about the tariffs, but auto workers.

I sat next to gentleman from Montgomery, Alabama, a production worker who came all the way from Montgomery, drove a car to Capitol Hill and down to

the Commerce Department that he made to actually talk about his concern about the impact of these tariffs on his livelihood and on this family and

on his community and colleagues, and I think that the President cares about workers and I think that as he hears these stories and understands that

there are better ways to support and encourage growth in the US auto industry, I think perhaps we might be able to find a way to move toward

negotiations to resolve the challenges we face in the auto market.

GOLODRYGA: Remind our viewers of some of the unintended consequences of pursuing a 20% to 25% tariffs on foreign auto makers would do to the US

economy when it comes to auto sales and when it comes to jobs.

BOZZELLA: Yes, we're talking about extremely high taxes, 20% or 25% in extraordinarily high in terms of taxes on cars, and so what would first

happen ...

[16:10:16]

BOZZELLA: ... is the price of cars would go up. When the price of cars go up, demand for cars will go down. When demand for cars goes down, less

production is required and when we need less auto production, we have less jobs, and so that's the ripple effect across the economy. We're not only

talking about manufacturing plants, but a whole network of suppliers and communities across the country that support automotive manufacturing.

There are 10 million Americans that owe their jobs broadly to the US auto industry so it's bad for consumers and it's bad for those workers.

GOLODRYGA: And it could be bad for states that voted in large part for President Trump, so to be continued, John Bozzella. Thank you for joining

us.

BOZZELLA: Thank you.

GOLODRYGA: The CEO of Volvo says it's time for commonsense to prevail. Volvo is a Swedish brand owned by Geely in China, and wants to build cars

in China before sending them to the United States. Hakan Samuelsson told Zain Asher that new trade barriers would cause American jobs.

(BEGIN VIDEO CLIP)

HAKAN SAMUELSSON, CEO, VOLVO: Our system is based on a global production structure where you really can exchange cars with each other and don't have

to invest everywhere for certain car lines, so for example, our intention is to build certain cars in China, which we could then sell in the US and

then in the other direction, build cars in South Carolina to sell to Europe and China.

And then, that's also the idea with our South Carolina factory. We will build two cars there and half of the production more or less is intended

for export. So, that means if we create - we plan to create 4,000 jobs, 2,000 of them are really based on exportation and free trade, so I think we

demonstrate that free trade is also good for employment in the US, and if the free trade cannot continue if we would have barriers and of course,

this have - half of these new jobs would be in jeopardy.

ZAIN ASHER, CORRESPONDENT, CNN: Yes, I mean, here's the thing, so not only - I think Volvo is getting it sort of on both fronts here because not only

do you have obviously, this escalating trade war with China, but also Donald Trump has talked extensively about starting tariffs on cars from the

EU, so with trade tariffs on both fronts, just in terms of the US's relationship with China and the EU, with both of those things essentially

happening at the same time, how vulnerable does that make a company like Volvo?

SAMUELSSON: I think barriers or tariffs would be bad for all, but right now, I mean, as you say, we today import a lot of cars into the US from

China and that's really what has happened so far. There, the tariff has now gone up to 20%, so that means of course, those cars imported into the

USA, they are now more expensive.

But that we can fairly well mitigate by for example, building those cars in our factory in South Carolina, so that's one example, but of course, if we

would also see barriers in to Europe for example, there being higher, then of course, also, it will be difficult to build cars in South Carolina and

sell them in Europe.

ASHER: So, do you supper no tariffs at all? No tariffs whatsoever when it comes to cars between the US and the EU?

SAMUELSSON: Absolutely, I think that would be absolute way because all attempts to protect your car industry has not led so that your car industry

is getting stronger, so I think both China and Europe and as well as US should then bring down tariffs as low as possible that would make the

industry stronger through competition and then, also the customers would have more cars to choose from, and then they would pay less for cars, so I

think that is absolutely our preferred option.

ASHER: Do you think - I mean, just - obviously the fan base in the United States are just talking about this factory of yours in South Carolina, do

you think that the US economy is actually strong enough right now to stand and be resilient towards the economic damage of a trade war?

SAMUELSSON: I think no economy in the world is strong enough to really risk escalating this into a full blown trade war. I think that would only

leave losers at the end, so I think hopefully, people can come back to common sense and really, because I think everybody is basically for the

benefits of trade, so I think right now, it's to avoid further escalation in this process that's really what I would believe would be the best.

[16:15:16]

GOLODRYGA: We're going to bring you some breaking news just in to CNN, the White House says discussions are underway for Vladimir Putin to come to

Washington this autumn. Press Secretary says, President Trump has asked his National Security adviser, John Bolton to issue the invitation.

President Trump has stepped up into the legal battle between Google and the European Union. In a tweet, he wrote, "I told you so. The European Union

just slapped a $5 billion fine on one of our great companies, Google. They truly have taken advantage of the US, but not for long." Remember,

European regulators say Google unfairly used the dominance of Android to drive users to the Google search engine.

Microsoft shares are see-sawing in after-hours trading. The company released earnings moments ago that came in ahead of expectations.

Microsoft's CEO Satya Nadella says, "Microsoft's investment in its Cloud business is paying off." Paul La Monica is here with more and they are

paying off double digit growths across all segments.

PAUL LA MONICA, CORRESPONDENT, CNN: Yes, this is a very solid report for Microsoft. You mentioned the Cloud. The continues to be an area of growth

that Satya Nadella has focused on, but LinkedIn, the social network and company that Microsoft acquired a couple of years ago, that's another area

of extremely strong growth there. Revenues there were up more than 35% from the prior quarter, and I think a lot of people are surprised that that

acquisition has panned out that well in the company so far.

GOLODRYGA: And you look at earnings per share, $1.13, gross margins up 19% year-over-year, net income $8.8 billion. I can't really find anything to

continue to think of the company is going to see another bad quarter in the immediate future.

LA MONICA: No, the company is continuing to build cash as well. The key though is that they haven't given an outlook yet. They won't provide

guidance until their earnings conference call, so that's what everyone is waiting to see. If Microsoft does for some reason say that things are

starting to weaken a little bit for whatever reason, that could be a problem, and I think another issue is that Microsoft like many other tech

stocks, the expectations were so high that this report is good as it is, might not have been good enough. That's exactly what we had in Netflix a

couple of weeks ago.

GOLODRYGA: Right, and what does it suggest about LinkedIn paying off, I guess sooner rather than they had expected?

LA MONICA: Yes, I think that Microsoft had a really smart strategy when it bought LinkedIn. We were wondering whether or not they were paying too

much, but the reason why LinkedIn always made sense for Microsoft is because of that strong business angle. It ties in with the same corporate

customers that are big Windows users and LinkedIn, unlike many other social networks, there's the fee based business as well with recruiters paying to

be on, average people who sometimes pay the premium to get the better LinkedIn products, so it's not just about advertising, which we all know is

a very fickle business.

GOLODRYGA: So banner report from Microsoft, Paul ...

LA MONICA: So far, yes, thank you.

GOLODRYGA: Thank you. And after the break, the biggest media bidding war in years is called to a halt. Comcast abandons its pursuit of 21st Century

Fox clearing the way for its rival, Disney. And high returns for investors in Tilray on its first day at the NASDAQ. The CEO of this cannabis company

will be joining me in just a moment.

[16:20:00]

GOLODRYGA: One of the year's biggest take over wars appears to be over. Comcast is giving up on its bid to buy most of Fox. It clears the way for

Disney to complete its own takeover. Comcast and Disney had been trying to outbid each other for months. Now Comcast has finally admitted defeat.

Brian Stelter is here.

For all the drama, Brian, we've been covering this from day one, this got personal, very pricey. In the end, Comcast is pulling out.

BRIAN STELTER, SENIOR MEDIA CORRESPONDENT, CNN: Yes, and this truly have gone better for Murdoch. Thanks to the Comcast bid, we knew he would get a

much higher price for his 21st Century Fox assets. This was always Disney's - this was always in the lead in this race. Comcast came with a

higher bid and Disney had to top it, and Rupert Murdoch is the one that walks away happy at the end of the day.

GOLODRYGA: It's $71.3 billion from Disney, so what does this mean for a Disney-Fox future deal?

STELTER: I think what we see is a massive media company that is going to be able to better compete with the Netflixes and the Amazons and the Apples

and the Googles, and whoever comes along next. All of a sudden, in the media business, these content owners, these channel owners, they feel kind

of small. They feel kind of puny up against these tech rivals.

So, now that Fox and Disney will come together, Disney will have access to new brands it didn't have before, brands like "The Simpsons," brands like

"Avatar," channels like FX, so all of a sudden, Disney has a lot more power in the marketplace, and what that means on a practical level is in terms of

streaming. What kind of streaming services can Disney produce and sell to you and me that will be more powerful with Fox's assets included.

GOLODRYGA: And yet, let's not count Comcast out because they are still eyeing Sky.

STELTER: Right.

GOLODRYGA: Why? And what does that mean then?

STELTER: It seems like they're kind of divvying up the assets actually. Rupert Murdoch had been pursuing Sky for a long time. Now, Disney was

going to be taking Sky as a part of this deal, but it looks like that may change. Comcast has also been bidding for Sky. It looks like how this is

probably going to settle, it will settle with Comcast owning Sky, this British broadcaster of course, this big satellite network, and Disney

happily taking the rest of the Fox assets.

I think that matters because it's showing Comcast and Brian Roberts, it's kind of a consolation price in some ways. It's showing that Comcast

believes it needs to go global. Right now, Comcast is mostly a US company, mostly about cable here in the US and there's a little bit of an

international footprint, thanks to NBC, but it's primarily in America and it needs to expand overseas, this is going to be the way to do it.

GOLODRYGA: Bringing in the international eyeballs and I couldn't help but notice, Brian, what the CEO of Disney, Bob Iger had said about Sky as well,

calling it a crown jewel given the rivalry between these two CEOs, I wonder if that may have been sort of a personal move of Brian Roberts' part ...

STELTER: He's trying to make it a little easier for Brian Roberts to let go, a little easier for Brian Roberts to move ...

GOLODRYGA: Maybe, maybe. Maybe, I'm just jumping to conclusions. Quickly, what if anything does the government deciding to appeal the AT&T-

Time Warner obviously, parent company of CNN decision mean for future M&A's because of course, we assumed that once the judge ruled in favor of the

deal that we would be seeing more M&A.

STELTER: Yes, the original approval of the AT&T deal made it easier for Comcast to make this bid for the Fox assets. Well, now that there's an

appeal process, that made it harder for Comcast to go forward. It's one of the many reasons why Brian Roberts folded today and allowed the Disney -

the part to go forward - Fox to go for with Disney.

If I didn't know better, looking at this world, I would say Rupert Murdoch is in charge of media regulation in the United States because everything

seems to be going Rupert Murdoch's way. One of his rivals, Sinclair is losing. You've got his deal - Rupert's deal for Fox and Disney going

forward, and of course, Rupert Murdoch talks to President Trump all the time.

GOLODRYGA: I was just about to say that. Maybe a coincidence, maybe not.

STELTER: Maybe not.

GOLODRYGA: Brian Stelter, great to have you on. Good to see you.

STELTER: Thanks.

GOLODRYGA: Well, Nancy Reagan famously told kids to just say no to drugs. Well, today, the NASDAQ investors said, yes, emphatically to a marijuana

company. Tilray is the first cannabis company to complete an IPO in the United States. The stock ended the day up 30%. Tilray grows and

distributes marijuana.

The company's CEO, Brendan Kennedy rang the closing bell at the NASDAQ moments ago, and he joins us. Brendan, congratulations on a big day for

you. I thought it was quite interesting that we were told you can only come on with us after 4:20.

BRENDAN KENNEDY, CEO, TILRAY: Thank you very much.

GOLODRYGA: Seriously, that was what we were told.

KENNEDY: We couldn't be more pleased with the results today.

GOLODRYGA: And talk about why. What are you anticipating doing with the company now?

KENNEDY: Well, when we set out on this journey eight years ago, today would have been unimaginable. To be the first cannabis company to publicly

list on the US Stock Exchange ...

[16:25:16]

KENNEDY: ... would have seemed farfetched even a year ago, but over the past year, we've met with institutional investors around the world -

London, Sydney, Frankfurt, Hong Kong, obviously, New York, Boston, Baltimore, and those investors see a global paradigm shift is taking place

and using the proceeds from today, we will continue to expand our capacity globally as country after country legalizes medical cannabis.

GOLODRYGA: And we should note, you are based in British Columbia, but controlled by US private equity firm, Privateers Holding raising $153

million in the offering. You are not operating in the United States even though 30 states have now legalized marijuana. Do you anticipate to be

selling in the US in the immediate future?

KENNEDY: We don't, so our investor based - they are institutions, they're a bunch of institutional investors, mutual funds, long only funds that are

looking for US investment, investment in a US-listed company, but we don't operate in the United States. We cultivate in Canada. We cultivate in

Portugal, and distribute our products to 10 countries in five continents.

But we're regulated by the SEC and the NASDAQ and so we don't operate in the US. We don't - that would be in violation of Federal law here.

GOLODRYGA: Yes, well how and when do you intend to be profitable?

KENNEDY: Well, we're seeing tremendous growth as country after country is legalizing. We also see - Canada will be the first G-7 nation to allow

adult use sales, the first sale will take place in October this year, October 17th, and so we're very optimistic about our growth opportunities

this year as well as next year with Canada being the first adult use opportunity.

GOLODRYGA: Canada first. Well, Brendan Kennedy, thank you so much for joining us. Congratulations again.

KENNEDY: Thank you so much for having me.

GOLODRYGA: One of Mark Zuckerberg's attempts to clean up controversy caused another. Now, the Facebook CEO is trying to clean up comments he

made about holocaust deniers of all things. We'll tell you more coming up.

Hello, I am Bianna Golodryga, there is more "Quest Means Business" in a moment when as Airbnb gets its wings clipped in New York, we'll look at the

future of travel, and how many languages do you speak. The CEO of Babel tells us why a second or third language is so important. Before that, this

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

The Director of National Intelligence, Dan Coats says he doesn't know what happened during a meeting between President Trump and Russia's Vladimir

Putin on Monday. The two leaders held a rare one-on-one meeting without their advisors present.

Soon after, they held a joint press conference in which Trump accused the side with President Putin when asked about U.S. Intelligence on election

meddling. Montenegro's government says it's proud of its peaceful politics after President Donald Trump called it a "very aggressive country".

President Trump made the comment as he cast doubt on whether the United States would stand up for an all NATO members. And a statement, the

Montenegrin government said its alliance with the United States would last forever.

In Syria, the government and the Russia military have reached a reconciliation agreement with rebels in the southwestern part of the

country. Under the deal, rebels would hand over their military hardware and the rest of their weapons once ISIS is removed from the region.

In Nicaragua, pro-government forces have taken control of an opposition stronghold as the country marks 39 years since its marked fifth revolution.

The organization of American states has condemned the ongoing violence against peaceful protesters and has called for elections.

President Donald Trump has hosted a special pledge to America's workers event. He signed an executive order on developing new employment

opportunities and setting up a workforce council. He's also calling on industries and private sector to promise to help develop the workforce.

Mark Zuckerberg is trying to clean up his controversial comments about holocaust deniers. The Facebook CEO caused an uproar when he said that the

deniers aren't intentionally getting it wrong.

(BEGIN AUDIO CLIP)

MARK ZUCKERBERG, CHIEF EXECUTIVE OFFICER, FACEBOOK: I don't believe that our platform should take that down because I think that there are things

that different people get wrong. Either I don't think they're intentionally getting it wrong, but I think that they --

KARA SWISHER, JOURNALIST & CO-FOUNDER, RECODE: In the case of the holocaust deniers, they might be -- but go ahead --

ZUCKERBERG: Some -- it's hard to --

SWISHER: Yes --

ZUCKERBERG: Impugn an intent and to understand the intent.

(END AUDIO CLIP)

GOLODRYGA: Not really, well, now those original comments were an attempt to clean up another controversy about censoring French voices on Facebook.

Clare Sebastian is following it all. What is going on with Mark Zuckerberg? These don't seem to be hardball questions.

CLARE SEBASTIAN, CNN: I think honestly, this is the interesting part because she even mentioned the holocaust once. He was the one --

GOLODRYGA: Right --

SEBASTIAN: Who brought it up. And he was trying to explain why Facebook doesn't just remove sites like Infowars which is world known for spreading

conspiracy theories like saying that the Sandy Hook massacre was a hoax.

And he was saying that that policy -- when it comes to stories that are false or that are conspiracy theories, it's not to take them down, but

simply to demote them in the news feed.

He says that they have a threshold when it comes to taking things down, and that is if they promote hate speech or violence. But he did e-mail Kara

Swisher back a few hours later after the uproar started around this interview and he tried to clarify his comments when he reached her.

He said "I personally find holocaust denial deeply offensive and absolutely didn't intend to defend the intent of people who denied that. Our goal

with fake news is not to prevent anyone from saying something untrue, but to stop fake news and misinformation from spreading across our services."

On spreading, he says "and it's rated false by false checkers, it would lose the vast majority of its distribution in news feed." So this is a

clarification and a point that -- well, Facebook is trying to deal with fake news, it's not to get rid of it, it's not to remove it, but it's to

demote it within the news feed.

This is a compromise that they're trying to bring when they try to balance these competing forces of censorship which they're constantly being accused

of --

GOLODRYGA: Right --

SEBASTIAN: As well. And you know, the power that they have, that they will over all this online content and their responsibility to police the

platform for abuse and for misinformation.

GOLODRYGA: And you've been talking about the misinformation that have been spread about the Rohingya, in particular --

SEBASTIAN: Right --

GOLODRYGA: But talking about holocaust deniers, that wouldn't seem to be a controversial issue especially for a CEO especially for somebody who have

been -- he had been corrected by Kara. She said --

SEBASTIAN: By Kara, you know --

GOLODRYGA: Maybe they do know what they're talking about, and then he followed it up, instead of saying, oh, yes, you're right, he followed it up

by seemingly doubling down on his point.

SEBASTIAN: Right, I think he's got a PR problem here, and the problem he faces in particular with holocaust denial as -- using that as an example

which is clearly a mistake. In this context, is that this is something that bridges the boundaries really between the idea of something that is --

that is simply false and something that incites hate.

We had a reaction today from the anti-defamation league for example which said "holocaust denial is willful, deliberate, alongside intersection

tactic by anti-Semites that is in control -- that's hateful, hurtful and threatening to do.

[16:35:00] So there are people out there, and many of them who believe that this kind of bridges the gap between just being false and being actual hate

speech than incite hatred. There was a variation of reactions off from Germany where holocaust denial is --

GOLODRYGA: Is illegal --

SEBASTIAN: A crime, right, two minutes, this came out on Twitter denouncing it. The foreign minister and the justice minister who said this

is punishable and it would be strictly enforced by --

GOLODRYGA: As I am sure it was music to the ears of many who in fact supports holocaust deniers even though they know that it is a lie. Any

implication for the stock price?

SEBASTIAN: Not really for them --

GOLODRYGA: No --

SEBASTIAN: Facebook is remarkably resilient --

GOLODRYGA: So this is a personal issue for Mark Zuckerberg that he needs to clean up.

SEBASTIAN: It's a personal issue, but I think --

GOLODRYGA: Right --

SEBASTIAN: He also needs to understand his responsibility as someone who leads this platform of 2 billion people, and I think you know, suddenly it

would be a time for him to reflect and take stock of the choice of words that he used --

GOLODRYGA: Yes, gone are the days where he can just say this is, you know, internet company --

SEBASTIAN: Right --

GOLODRYGA: That I started in my dorm room --

SEBASTIAN: Right --

GOLODRYGA: By this he constantly leads his testimony with before Congress. This was a surprise though, most didn't expect this.

SEBASTIAN: I think not, I think it was at the point where he was -- he was building his reputation back up, say off Cambridge Analytica of the whole

2016 election scandal and I think this --

GOLODRYGA: Yes --

SEBASTIAN: Was not expected and certainly not welcome to Facebook.

GOLODRYGA: Self-inflicted wound.

SEBASTIAN: All right --

GOLODRYGA: Clare Sebastian, thanks so much, great to see you --

SEBASTIAN: Yes.

GOLODRYGA: Well, if you want to keep on top of the day's 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 CnnMoney flash

briefing every day.

After the break, hold on to your hats, we will have three CEOs back-to- back. We'll cover global travel and airlines outlook and learning a language for that next business trip.

(COMMERCIAL BREAK)

GOLODRYGA: Airbnb has suffered a big blow here in New York. The city council says the company now has to share the details of who is offering

their homes or face a fine. It's an attempt to crack down on short-term rentals which technically are already legal in New York.

Many homes are listed on Airbnb regardless. Now, the city hopes these new rules will make it tougher for Airbnb and its host to get away with it.

The business travel group Carlson Wagonlit is about to release its global travel forecast for 2019, predicting where hotel and flight costs are going

next year.

Kurt Ekert is the CEO and is joining us live on set. Great to see you, Kurt --

KURT EKERT, CHIEF EXECUTIVE OFFICER, CARLSON WAGONLIT: Thanks Bianna --

GOLODRYGA: Busy travel part of the year, right? The Summer people are going on a lot of vacations while school is out. Tell us some of the

biggest trends you're seeing.

EKERT: So what we're seeing, the biggest thing that's happening within travel especially in business travel is the consumer great expectations

that's filtered into business travel. So normally, with business travel obviously, this is for commerce, procurements involved for safety and

security of the traveler is important.

But the expectation of the traveler in terms of shopping and booking into a commerce site and what they experience in transit, they expect now from the

business travel providers.

[16:40:00] GOLODRYGA: And when it comes to hotels and other accommodations, what are we seeing along the horizon there?

EKERT: Well, development in -- hotel property development has been massive especially in the emerging markets around the world. We're seeing price

increases between 3 percent and 4 percent globally, and the rise of alternative accommodation providers such as Airbnb is clearly creating

conflict and opportunity for the space.

GOLODRYGA: And yet, we continue to see headwinds, maybe not so much in the U.S., but definitely in Europe, any of it Brexit triggered?

EKERT: Right --

GOLODRYGA: How is that impacting business travel decisions with so much unknown right now.

EKERT: So overall, business travel is a $1.3 trillion sector, it's growing at an annual rate of about 4 percent, that's consistent over a long period

of time. It's a very healthy high growth sector.

There are certainly uncertainties with the geopolitical tensions, what may happen with Brexit and anywhere that there are trade restrictions or travel

restrictions put in place that creates friction. That can be negative for GDP and certainly negative for business travel as well.

GOLODRYGA: And yet, it doesn't seem to be another hurdle that we've seen. You know, a brief cycle or so, I mean these are uncharted waters that we're

going to be entering with Brexit, with these trade wars that we haven't seen in decades.

How do you anticipate what the consequences maybe since there's not much to peg it against?

EKERT: Right, I think if you look at it on the macro level, as long as there's strong global GDP growth, there'll be strong travel growth. What

may happen is that the travel patterns may change within the region.

For example, if Brexit were to go forward and there were trade or travel restrictions that were a consequence, we could see commerce shift to kind

of Europe away from the U.K. for example and so that will have a chilling effect perhaps on the U.K. economy.

And so we tend to operate pretty much in sync with GDP growth around the world.

GOLODRYGA: Let's talk about just traffickers like Airbnb. It's been up and up for years now, now we see regulators stepping in place. Airbnb is

probably not going to be the first instructor that we're going to see --

EKERT: Right --

GOLODRYGA: Regulators focus on what else do you anticipate regulators stepping in and what impact does that have on the industry?

EKERT: Well, the sharing economy has been huge, whether it is grand transport or accommodation, that's the two principal places and that choice

and the transparency for the traveler I think is a positive. When you speak about business travel, the safety and security of the traveler

becomes tantamount.

Whether it's that grand transportation or the accommodation provider, I think it's going to be very interesting for the ground industry especially

as travelers costs. And that's something -- even if the technology is there and commercial, if you have an appetite for that, the question is we

all -- regulators have an appetite.

So that's going to be huge in terms of the impact to our industry.

GOLODRYGA: And you have a company expand internationally, yet regulators that impose their own rules geographically as well. How does that balance

out? We have regulators in the U.S. focus on many different aspects and regulating differently than let's say regulators in Europe do.

EKERT: Well, great example is GDPR which is the new European protection regulations. We're fully complying with those as it just came into being

in May, it is our expectations that over time, that becomes the norm of the standard that's adopted by other governments.

So what we tend to see is that in consistency, but over time, you sort of have to drift up to the highest standard.

GOLODRYGA: Great to have you on, thank you, so fascinating to think about the future of travel and accommodation, technology, all of it and how it's

all going to impact consumers.

EKERT: Thank you Bianna --

GOLODRYGA: Good to see you, thank you. Well, the CEO of Qatar Airways says he's ready to write out the cost of the boycott against Qatar. Akbar

Al Baker sat down with Richard and one of the airlines brand new business class suites at the Farnborough Airshow.

He told us the airline would stay the course.

(BEGIN VIDEO CLIP)

AKBAR AL BAKER, CHIEF EXECUTIVE OFFICER, QATAR AIRWAYS: We will take the pressure as long as we can and if the pressure gets too much for us to bear

financially, I mean, then of course, I will like I've said many times before, will have to go to my owner for additional equity injection.

But for the time being, we had --

RICHARD QUEST, CNN: As --

AL BAKER: For the time being, we are managing it well, and we are continuously growing, and at the moment, we don't think we need any

assistance from our owner.

QUEST: But you've been giving assurances that if you did, it will be available.

AL BAKER: Well, it is quite natural, the owner is the state and if a company requires equity, that it will be provided. But again, I want to

stress that for the time being, we are not in need of it.

QUEST: Before we talk about the key issues, I have to ask you about that very strange business of IATA with your comments about being the CEO. And

what do you -- what were you -- what were you thinking?

AL BAKER: Well, I was not thinking anything, you know, I always speak my mind, I didn't mean it in any negative way. I always -- I'm a big

supporter of gender equality in Qatar Airways, and this can be proven by the highest number of any industry that has recruited female, that is 44

percent of our staff are female.

[16:45:00] So you can see how much stress we put on gender equality and as chairman of IATA, going to do something even in IATA to promote the ladies

into the -- into the aviation industry.

QUEST: Is it going to be difficult during your term as chair of IATA when several of your members you're in dispute with -- I mean, your country

you're at dispute with.

AL BAKER: Not when we are sitting as board members of the governance of IATA and meeting the chairman. We don't look at boundaries and its

countries. We look as an industry. It is my duty as chairman of the board of governors of IATA to make sure that I play a constructive role in our

industry and not in the interest of any -- not against the interest of any one country.

QUEST: So this is the Q-suite?

AL BAKER: Yes --

QUEST: Why do you regard at the moment it's the best in the air and business class?

AL BAKER: Well, show me any airline that has given this luxury in business class.

QUEST: Why have you done it? You can't make money --

AL BAKER: No --

QUEST: Look at this space.

AL BAKER: Do you think that I'm a charity organization? I'm an airline and I'm putting this product in order for us to increase our yield, to give

people the highest quality of in-flight service and at the same time make money.

If you ask my passengers, they will all complain that Qatar Airways is increasing its fare.

QUEST: So where does it go next? I mean, what more can one physically offer? You've got a double bed, those that would want it, you've got doors,

what else can you throw at it?

AL BAKER: Well, this is why we have patented it so that what we provided, no other airline should be able to provide because this is really the

ultimate you can provide in an airline. Now, for example, you just close your doors and you're in a private aircraft suite.

(END VIDEO CLIP)

GOLODRYGA: One to dream, not too shabby. Well, many would cite a fear of flying as their biggest source of anxiety when traveling. Research shows

language barriers can be a surprisingly common complaint for travelers too.

According to a survey by Booking.com, nearly 30 percent say it can actually hold them back from planning a trip. One in five are nervous about getting

lost without speaking the local language, and over a quarter feel anxious about unfamiliar situations when traveling.

I'm joined by Markus Witte; he is the co-founder and CEO of language learning app Babbel. Marcus, welcome, great to have you on.

MARKUS WITTE, CO-FOUNDER, BABBEL: My pleasure --

GOLODRYGA: So I'm a bit surprise because one would say, given all the technology, given all the Google translate and all the apps that there are

out there, but one would feel more -- you know, easy to just travel around the world now?

WITTE: Yes, in a way you can travel without speaking the language obviously, some don't want that, but even if you technically can't make it

work, it's a different experience.

And what we see with our customers at Babbel is that you don't really have to speak the language maybe fluently to make it work for you, even if you

speak just a bit, people would appreciate that and would speak to you in a different way even if they switch back to English after that --

GOLODRYGA: They appreciate the effort.

WITTE: If -- yes, it's the effort and you kind of get them to a different point, and the more you're able to talk to -- they'll actually talk to

them, the more you enter their world --

GOLODRYGA: Yes --

WITTE: And the more you go into different places where you wouldn't go if you just don't speak the local language.

GOLODRYGA: And this applies to tourists and business travelers as well. You know, the days of the ugly American traveling, assuming everybody

speaks English, you know, maybe, most countries, there are people that speak English there for you, it's always more beneficial to speak the local

language.

Babbel is a top grossing language-learning app in the world. How do you compete and stay on top with so many other rivals out there?

WITTE: I see that it's not that many, it's still a nascent market, so --

GOLODRYGA: That's surprising --

WITTE: It is, it is for us as well and it was from the beginning. When we started 11 years ago, we were completely stunned by the fact that there was

nothing out there on the internet to learn language, and off course apps fueled that dramatically.

I would say the one thing that we do differently is we get people to (INAUDIBLE) very early on. So we don't care how much you understand the

language in terms of grammar and structure and so on. We give you means to order a beer, to complain about a room or whatever, whatever is most

important for you and the conversational skills that our users get make all the difference for them.

GOLODRYGA: What is the best way to learn a language? And obviously, that depends on the age, right, and how much time you're investing. But for the

average adult who has a busy job and busy schedule, what is the best, easiest most efficient way to learn a language?

WITTE: That's three different things, that's easy.

[16:50:00] GOLODRYGA: All in one.

WITTE: The best ways always face-to-face --

GOLODRYGA: Yes --

WITTE: There's no way of beating app, this language is inherently human.

GOLODRYGA: Right.

WITTE: If you have just ten minutes a day, then probably an app is the best way. So make it a habit, do it once a day or every other day for ten

minutes, and quarter down the road, quarter of the year down the road, you will see yourself being able to have a simple conversation in the present

tense about whatever you like.

So if you keep at it with a good product, that has a decent approach to language and you trust the process, spend ten minutes every other day, you

will get there.

GOLODRYGA: And in -- don't be intimidated by this all right? So it's easier to learn, the earlier the better, right? But you can always --

WITTE: It doesn't make so much of a difference. It's surprisingly old people learn how fast as young people. So once you're a grown up after

you're 16, 17 years, age doesn't limit your ability to learn language.

GOLODRYGA: Yes, well, trilingual is the new bilingual, so I'd like to hear that.

WITTE: Very good.

GOLODRYGA: Markus, great to have you on, thank you so much.

WITTE: Thank you.

GOLODRYGA: Well, discovering an old warship hiding, sunk in treasure might sound like a plot of a pirate movie. There's ton of picture there, but

that's what might have been found off the coast of South Korea. Find out more coming up next.

(COMMERCIAL BREAK)

GOLODRYGA: Billions of dollars worth of gold could be sitting at the bottom of the ocean in a Russian ship. The Dmitriy Donskoi was found near

South Korea more than a century after it sank, sparking curiosity about what might be inside.

Andrew Stevens reports.

(BEGIN VIDEOTAPE)

ANDREW STEVENS, CNN ASIA PACIFIC EDITOR (voice-over): You're not going to believe it. I have a name, I have a name. It's in Russian, I can't read

it, and with that, the mystery of the final resting place of the Russian warship Dmitriy Donskoi was solved in a deep dark waters of a South Korean

island of Ulleungdo, 434 meters and more than 1,400 feet down.

These Russian Cyrillic letters revealing the final resting place of a ship that treasure hunters have been searching for, for decades. Video footage

from the salvaged stream shows the ship's wheel, marine-grossing crusted guns and the anchor.

It stands severely damaged as a result of an attack by Japanese warships during the Russo-Japanese war of 1905. She was so badly damaged from that

encounter that the captain had her scuffled, deliberately sunk after evacuating almost 600 Korean soldiers to the nearby island of Ulleungdo.

(on camera): And that's where it gets interesting. The Russians didn't want her to fall into Japanese hands because the Dmitriy Donskoi is being

reported was carrying gold, fabulous amounts of gold.

[16:55:00] If you believe some reports, the total amount of gold bars and coins on board would today be worth more than a $130 billion.

That's right, billion. A quick back of the envelope calculation suggests it would have to be carrying thousands and thousands of tons of gold to be

worth that much all to pay for Russia's war against Japan. But there are many treasure ships skeptics, why they ask will the Russians entrust so

much loot onto one ship?

Why would they send it by ship when they could have sent it by rail across Russia to the eastern city of Vladivostok? The salvage company that found

the Dmitriy Donskoi say they plan to raise it, but they didn't say when? And according to South Korean law they'll have to forego about a 10th of

what they think the ship is worth.

Not surprisingly, they're not commenting on the amount of gold. The Dmitriy Donskoi has already given up its location, but the biggest mystery,

what lies beneath those rotten decks remains at least for now unsolved. Andrew Stevens, Cnn, Seoul.

(END VIDEOTAPE)

GOLODRYGA: Wow, that is a lot of gold. Well, from the president's comments on the Fed to trade war fears to earnings, it all hit home the

markets, the Dow closed off 135 points, ending its five-day winning streak. Financial shares were the worst affected, ending the day more than 1

percent lower.

Stocks in Europe closed mostly lower as well, weak earnings were to blame. The advertising giant Publicist reported disappointing sales for the second

quarter. Its shares fell nearly 9 percent and pulled down other stocks in the advertising sector.

And that's QUEST MEANS BUSINESS, I'm Bianna Golodryga in New York, as always the news continues right here on Cnn.

(COMMERCIAL BREAK)

END