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QUEST MEANS BUSINESS

Shares In CBS Sink And The CEO Faces Claims Of Misconduct, Donald Trump Says America Is Winning Again After The Strongest Growth In Years, Twitter Is Trying To Get Healthy, But Investors Are Unfollowing The Stocks; Imran Khan Waits for Confirmation of Election Victory; Michael Cohen Says Trump Knew About 2016 Meeting with Russians; Vladimir Putin Extends Invitation for Donald Trump to Visit the Kremlin; North Korea Hands Over Possible Remains of U.S. Fallen Soldiers; Longest Total Lunar Eclipse of the 21st Century Occurs on July 27; Vladimir Putin: U.S. Sanctions Undermine Trust in Dollar; BRICS Leaders Urge Support for WTO; United Nations Says it's Running Out of Cash; Hospital Says it Treated Marchionne for More than a Year; Questions Arise Over Duty of CEOs Disclosing their Health Information; BP Invests $10 Billion in U.S. Shale Deal; EA Sports Falls 6 Percent on Disappointing Outlook; U.S. Stocks Sink After Weak Earnings; Carrefour, BT, Reckitt Benckiser Post Strong Earnings. Aired 4-5p ET

Aired July 27, 2018 - 16:00   ET

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


ZAIN ASHER, CORRESPONDENT, CNN: Look at that, Girls Who Code ringing the closing bell on Wall Street, let's take a look at the numbers here how we

ended the day, down about 80 points or so and that's part of the reason that even though we got plenty of headlines in terms of second quarter GTV

coming in at 4.1% despite the positivity there, investors still fearing that interest rate hikes could be on pace for this year.

We also have got consumer sentiment coming in and the six-month low, and some pretty negative headlines in terms of ExxonMobil and Intel just in

terms of earnings as well. My friends, it is Friday, tonight the 27th. Tonight, shares in CBS sink and the CEO faces claims of misconduct.

Donald Trump says America is winning again after the strongest growth in years, and first, it is Facebook, now it is Twitter. Twitter shares

tumbling about 20% of their earnings just yesterday. Hello, everyone I'm Zain Asher and this my friends is "Quest Means Business."

Hello, welcome, everybody. I'm Zain Asher. So, tonight, CBS says it will - it will investigate allegations of sexual misconduct made against its

Chairman and CEO, Les Moonves. Those accusations are reportedly appearing in an article of "The New Yorker." It is due to publish later on today.

It could happen in less than an hour or so. The article is due to be published by Ronan Farrow. CNN - and it is important that we emphasize

this, CNN has not confirmed those reports. Shares though from a business perspective, shares of CBS fell as much as 7% just after those reports came

out about Les Moonves.

They came back very slightly in the afternoon, but that steep drop and if you look at just how the share price dropped this afternoon, that steep

drop really does reflect Les Moonves' status as a titan of the broadcasting industry. He's been with the company for about 20 years or so. He has

been fighting a legal battle with CBS Vice Chair Shari Redstone with each side trying to exert more control over CBS.

So, the independent directors of the CBS board say that they take any allegations of misconduct very, very seriously. They are going to be

investigating this. They are going to look into this matter. In a statement, let me just read for you what they said specifically. They

said, "This timing of this report comes in the midst of the company's very public legal dispute. White that litigation process continues, the CBS

management team has the full support on the independent Board members."

So, Paul La Monica is joining us live now with the very latest. So, Paul, I mean, obviously, this comes at a very tricky time for CBS. I mean, we've

talked about this. The media landscape here in the United States is changing dramatically. Previously, Shari Redstone has wanted Viacom and

CBS to merge, if worse comes to worse for Les Moonves, what happens to the merger dealing?

PAUL LA MONICA, CORRESPONDENT, CNN: Yes, I think that Wall Street is clearly betting this Viacom stock went up today, while CBS's went down that

maybe there is this possibility that if for whatever, Les Moonves is no longer part of the CBS picture, it would be easier for Shari Redstone to

reunite Viacom and CBS because there are Board members that want to do just that at both companies, and I think that is what we're really waiting to

see right now. Whether or not how all of these shakes out, could it put a Viacom-CBS deal back on the table.

ASHER: As obviously, it's important to note, obviously this article hasn't come out yet, but obviously, an outlet reported that this article was going

to come out pretty much, I guess, in about the next hour or so. So, we don't actually know the details and I want to make that clear for our

audience. However, could we actually see, and obviously, the merger is one option, but could we actually see another company trying to buy CBS, for

example.

Obviously, AT&T bought our parent company, Time-Warner or WarnerMedia, but could we actually see perhaps, Verizon - Verizon being interested in CBS.

LA MONICA: Yes, I don't think it's out of the realm of possibilities, Zain, for a Verizon to have interest in CBS ...

ASHER: But it is unlikely, do you think?

LA MONICA: It's hard to say. I'm not so sure exactly how CBS would fit into Verizon's media strategy, which is more digital right now with AOL and

Yahoo.

ASHER: And it has to pay a pretty penny.

LA MONICA: And it has to pay a pretty penny for it, and also, we have to be honest here. CBS, the quote-unquote, "criticism" that the company has

had sometimes from Wall Street is that it skews old, if you will. They have shows that are more attractive to an older demographic, which isn't a

bad thing, I think, but it's apparently not as coveted by advertisers, whereas the AOL-Yahoo demographic might be a little bit better ...

ASHER: Well, the host country is having problems with cutting a deal, so anyway, Paul La Monica, we have to leave it there. Thank you so much.

Appreciate that.

[16:05:02]

ASHER: Okay, so let's take a look at the market. It was certainly a choppy day of trading. Let's take a look here, okay, so you can see there.

The day started subtly in the green until about noon, then towards the end of the day, we saw the red there. The Dow closing the day down about 75

points or so. The NASDAQ actually fell 1.5%. For results from Intel and Twitter pulled those stocks down sharply. We'll have a little bit more on

that later on in the show with our Clare Sebastian.

Okay, so President Trump says that America's economic performance is amazing and certainly getting better. Economists warn, it's just for now.

They believe it's just a sort of a temporary rise in terms of GDP. A new GDP reports shows that in the second quarter, GDP actually grew at its

fastest pace - its fastest pace in nearly four years getting to 4% annual growth was a key campaign promise of Donald Trump, if you remember, today,

the President took his victory lap. Take a listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Once again, we are the economic envy of the entire world. When I meet the leaders of countries,

the first thing they say invariably is, "Mr. President, so nice to meet you. Congratulations on your economy. You're leading the entire world."

They say it almost each and every time.

(END VIDEO CLIP)

ASHER: That was indeed President Trump taking a victory lap there. The growth surge was the result of actually a number of factors just coming

together once business investment rose, as companies invested some of the money, they say, thanks to Republican tax cuts, consumer spending and

spending by the US government also increased as well, and perversely, this is really interesting, which I am going to get into with my next guest,

perversely, the trade war actually helped as well.

US exports in fact rose as foreign buyers stocked up on US made products that they thought and they assumed would end up being hit with tariffs, for

example, soybeans. The President's top economic adviser insists this report is certainly not a blip, and he believes that the growth will

continue.

(BEGIN VIDEO CLIP)

LARRY KUDLOW, DIRECTOR OF THE UNITED STATES NATIONAL ECONOMIC COUNCIL: This is a boom that will be sustainable, frankly as far as the eye can see,

this is no one shot effort.

(END VIDEO CLIP)

ASHER: All right, are Larry Kudlow and President Trump correct. There's nobody better to answer that question than Mohamed El-Erian who is here to

answer that question. So, first of all, before we get to the facts of the idea of whether or not who is right or who is wrong because obviously,

economists believe that this is just a blip, that next quarter GDP will not be nearly as shiny and bright. What actually - what were the factors that

actually led to this dramatic increase? You and I were talking earlier as you were waiting, and it's really about one part of the story, I guess is

about exports because perversely, the trade war did seem to help in this case.

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: So the excitement about this number is twofold. One, it's a high number, 4.1 is a high number; and

two, every single driver of growth kicked in. Exports, business investment, consumption and government spending and that doesn't happen

very often.

ASHER: Perfect storm.

EL-ERIAN: Yes, perfect storm. Inventories didn't, but that's okay, so people got excited because of that. Now, the underlying story is a lot

more complicated. There are one-off factors which means they are temporary and reversible, but there's also an underlying momentum that is building

up. So, I think a better number is a 12-month number, 3.1%, and I think ...

ASHER: Yes, we really shouldn't pay that much attention to just one random quarter in terms of GDP. I mean, I think Obama only reached these types of

numbers four times, that's during an eight-year presidency.

So, really one number for one reading for one quarter doesn't necessarily matter all that much. It's the trend, you think we should look at.

EL-ERIAN: That's right. Obama had over 5% number at one point. Yes, it's a trend, but the trend is picking up. This used to be a 1.5% to 2%

economy. This is now a 2.5% to 3% economy and it is going to outpace other advanced countries, so the US for a while is going to look good.

ASHER: So, how much credit does President Trump deserve in all of this?

EL-ERIAN: So part of it is the carryover from President Obama.

ASHER: And I think he wouldn't want to admit that, but okay.

EL-ERIAN: Part of it is the responses to what he has done. So, whether you agree with the effectiveness, the efficiency of the tax cuts, were they

fair? Were they not fair? Every single economist ...

ASHER: And what about what it does to the deficit though?

EL-ERIAN: So, the deficit issue is ultimately of both issues. It's like a personal debt. How much personal debt you have depends on how much income

and wealth you have? So, I don't worry too much about the deficit. I do worry about handoffs. So, we need a handoff from the government sector, to

business investment and companies are in a unique position actually to invest and secondly, we need to bring in more people into the labor force,

so while the unemployment is very low, the labor participation rate is also - we don't have enough people in there.

ASHER: So, there are a few issues that - I mean, despite the headlines - and I'm being positive, you believe that we should look at the trend and

also, there are a few issues in there that some people might find a bit problematic.

[16:05:08]

ASHER: Let's talk about trade. This was a huge week for trade, especially when it comes to Jean-Claude Juncker and also, President Trump. Jean-

Claude Juncker flying over here. He was instructed, "Listen, do not leave empty handed. You make sure you make a deal with President Trump." That

is exactly what he did. However, at what cost? Because obviously, the EU agreed and promised to buy certain goods, a certain number of goods from

the US. They agreed on no tariffs, on non-industrial goods, but it isn't really - and I wouldn't even want to call it a deal, because it's not

really a deal. It was a deal to make a deal. It's still a negotiation period. How excited should we be?

EL-ERIAN: We should be a little bit relieved.

ASHER: Okay. Why? Because the car tariffs are put to one side?

EL-ERIAN: Well, for two reasons. One is, it defuses tensions for now. Remember, trade has to be played cooperatively. If it is not, then

everybody loses, but the reality is, the US loses less than the rest of the world, so at some point, the rest of the world comes in and says, "Okay,

what do you need?" And we heard two thing from the EU; one is, we are willing to work towards zero tariffs, and two is, we are willing to

modernize the World Trade Organization.

Now, the second one is very important because a rule-based system is critical to the wellbeing of trade. There are still details that haven't

come out and there's one interesting issue that hasn't come out which people have questioned ahead, why is the US and Europe not coming together

...

ASHER: To fight China?

EL-ERIAN: Yes, and fight over legitimate concerns about certain elements.

ASHER: That's what came out of this though. That is one thing that Juncker and other EU leaders have said, "Listen, we don't want to start a

trade war with the United States. Americans are our friends. They are our economic friends. Why don't we all get together and fight legitimate

concerns when it comes to China?" And I assume that is one thing that is going to come out of this agreement.

EL-ERIAN: We shall see. We haven't seen it yet.

ASHER: Okay.

EL-ERIAN: But it certainly would be interesting - in the interest of the whole system, including China to deal with these issues because they lead

to stronger global systems.

ASHER: All right, Mohamed El-Erian, we are going to have you back in about 20 minutes, so you can sit there in the green room, have a cup of coffee.

We'll have you back in a few minutes to talk about the Brit's economies. All right, so let's go now to the White House and more on these GDP

numbers. Jeff Zeleny is joining us live now.

So, Jeff, these GDP numbers are certainly, I would say a relief for President Trump because it comes at a very good time. He has had a very

difficult week when it comes to more news in terms of Russia, in terms of Putin, but also a very difficult time when it comes to the betrayal of his

former lawyer, Michael Cohen?

JEFF ZELENY, SENIOR WHITE HOUSE CORRESPONDENT, CNN: No question about it. I mean, this news comes at an opportune time, I guess. The President

certainly has been - is eager to find a victory and this in fact is - I mean, there's no way to slice that any differently, 4.1% growth or GDP

certainly is stronger than most people believe would happen.

Now, you can argue whether this is going to be sustainable. The President is standing on the south lawn of the White House today earlier this morning

here, saying it would be sustainable. Some economists are doubting that because of the rush to buy some exports before the trade war certainly

contributed to some of this. But there is no question, this is a bit of (inaudible) and we are told that he has been increasingly fuming and angry

by everything that is happening with this Russia investigation, and Zain, it's not just the betrayal by Michael Cohen, it's also the fact that the

CFO of the Trump organization is now going to be a witness in the case in New York.

Also, Paul Manafort, the former campaign chairman going to trial next week. There's so much going on here that this is one bit of good news, but the

question is still, Zain, the tariffs, the trade war. The EU agreement was more of a truce this week than a long-term deal. China of course, not even

a part of that, so much more economic questions on the horizon, but again, 4.1%, a big number.

ASHER: Yes, 4.1% is certainly a big number. It couldn't come at a better time for the President. As you mentioned, he was stabbed in the back by

Michael Cohen and then, also several other issues as well. But in terms of actually, how the President politically - it looks like though these are

live pictures, just standby - live pictures of Trump at Joint Base Andrews in Maryland, this comes at a time when obviously, as Jeff just mentioned,

the President is very excited about these second quarter GDP numbers that we've just got today, 4.1%.

So, Jeff, do I still have you there?

ZELENY: Yes, I am still here, Zain, yes.

ASHER: Okay, so Jeff, here is the thing. How much of these numbers actually help him politically? I mean, is this something that the

President can really take to the bank with him when it comes to 2020?

[16:05:02]

ZELENY: Well, it's unclear. I mean, the reality is, the economy has been going along very strong. So, it is - it's just one more indicator of that,

and no question about it. I mean, there is more of a sense of optimism across the business' sector, the reduction of regulations across the board

certainly has helped that, the manufacturing sector is rising, but the reality is, there are still deep concern about trade and tariffs.

So, I would say this gives the President some breathing room. There are many Trump voters out there who are still willing to give the President the

benefit of the doubt on trade, on tariffs, even if you are a soybean farmer say in Iowa, Illinois, and anywhere, and you're going to really just be

devastated by the prices on that, we still talk to many of them. We're saying, "Look, we will give the President the benefit of the doubt. We do

believe he is doing something that ultimately will be better for markets." But we'll see. I mean, the growth certainly - we'll see if it sustains in

the third quarter. Of course, that will be right - leading into the midterm election.

So, one of these things or indicators, we've seen them so many times. We tend to forget numbers like this pretty quickly. It's always about the

next number of course, not the last number, Zain.

ASHER: Yes, I mean, President Trump thinks that these numbers are sustainable, that it's not a blip on the radar. However ...

ZELENY: We'll see.

ASHER: ... many economists would certainly disagree. All right, Jeff Zeleny, live for us there. Thank you so much.

ZELENY: Sure.

ASHER: All right, it turns out, cleaning up a social media platform is quite a costly endeavor. Certainly, it doesn't come cheap. Twitter is

trying to get healthy, but investors are unfollowing the stocks and a Swiss hospital says it treated the CEO of Fiat-Chrysler for more than a year -

more than a year before he died. That's raising questions about investors' rights to know versus privacy concerns as well. That's next.

Welcome back, everybody. Twitter is undertaking a massive attempt to be quote, "healthier," and it's certainly taking a toll on their shares as

well. They actually plunged 19% on Friday, actually 20% - there we have it after Twitter said user numbers fell amid a purge of fake accounts. Before

this though, the stock was actually on a roll, and it's still up a whopping. Look at that. Look at that go up. It's still at a whopping 45%

so far this year. I want to bring Clare Sebastian with more.

So Clare, I mean, with all of this, even though the stock has been on a tear, they sort of have in the past year, all investors care about is one

thing, one thing only, and that is user growth.

[16:05:02]

CLARE SEBASTIAN, CORRESPONDENT, CNN: Yes, they completely ignored it seems the fact that the revenues are up 24%, that this was the third profitable

straight quarter for Twitter. So, essentially, revenue-wise, they are on a winning streak, and this is driven by ad sales, which is what Wall Street

has been looking for all along. They were focused heavily on the user numbers and it wasn't just this quarter. This quarter, they lost a

million. They went down to $335 million in monthly activities as opposed to $336 million in the previous quarter.

But they also guided down for the next quarter. They said, they expect it to be down in the mid single digits.

ASHER: ... they decide that it all ends up biting them.

SEBASTIAN: Because the very question the investors are asking themselves is how much of this has to do with the cleanup that they are doing of their

platform, the purging of fake accounts, the purging of apps, the dealing with SPAM and all of that, and how much is part of a sustained slow down.

Is this as good as it gets for Twitter in terms of user numbers?

ASHER: Yes, so they purged about - what was it? I know that ...

SEBASTIAN: They documented it, yes.

ASHER: My Twitter account is down by a few hundred because of this, and I woke up and I was like, "What's going on?" They got rid of like 70 million

accounts of inactive fake accounts that basically are bots, people didn't exist. So, how much of that actually affect the underlying number that

they reported?

SEBASTIAN: So, they said at the time they clarified after the stock fell off a cliff, when that news came out, that most of those were not active,

so were not included in the active user metrics, but I think it did affect it a little bit and that's why - that's part of the reason why as well as

GDPR, the new privacy regulation in Europe that we saw the numbers ...

ASHER: That has affected Facebook as well.

SEBASTIAN: Well, exactly, they are in a very similar position.

ASHER: Okay, so we're looking at - actually, guys, can you pull that up again? We were just looking at the share price over the past year, so look

at where we started versus where we are now. This is over the past year. So, do investors actually think that when you look at the kind of growth in

terms of the share price, do investors still have faith that the stock is going to continue to soar? Obviously, we had a blip today, but do we have

a recovery on the horizon?

SEBASTIAN: Well, I think it remains to be seen whether it will go back up to the highs that we saw this year - and then we saw - I mean, this - maybe

a thing as an overreaction to an overreaction and people got very overexcited by the fact that Twitter started to turn around its business.

It posted its first ever quarter of profits just in February, and they had another one in April, and that got people very overexcited and pushed the

stock up to almost double its value.

ASHER: So investors are sensitive to every rise ...

SEBASTIAN: Right. And these regulatory issues that they are particularly sensitive to, and I think with the noise around Facebook as well, that's

what led it tumble so much today.

ASHER: Okay, yes, I mean, gosh, I think I was talking to you earlier this week of just how - we had all four - the tech stocks were not resilient, it

turns out they are not as resilient as we thought.

SEBASTIAN: These are starting to show up in the numbers.

ASHER: Right, Clare Sebastian, my pleasure to have you. You have a great weekend.

SEBASTIAN: Thank you.

ASHER: Okay, so we'll talk more about this, but Facebook and Twitter joining me now from San Francisco is Kurt Wagner, Recode senior editor to

social media. So, Kurt, just explain this to us, how does Twitter from this point onwards, how should it go about boosting its user growth?

KURT WAGNER, SENIOR EDITOR TO SOCIAL MEDIA, RECODE: Well, Twitter would tell you, "Hey, user growth actually isn't a problem because our daily

active user growth is going every single quarter."

The problem with that is they don't tell anybody how many daily active users they actually have, so when they talk about the growth, it's a little

bit hard to put it into perspective, but what I would love to see from Twitter is, for them to take a little bit more engaged role that actually

fits in the product because right now, they are saying, "Hey, we're focusing on all of this cleanup stuff, we're going to do that first. We

are then going ahead and start working on features that might build growth after that." But I think they should be able to do those two things at the

same time.

ASHER: How much is this cleanup actually - just in terms of privacy? In terms of getting rid of fake accounts? How much is this cleanup actually

costing Twitter?

WAGNER: So, they haven't given a financial number, but as we learned today, I guess, about 20% of the stock price, right? Because what they

came out with today during earnings was they said, "We had been allocating resources we usually put towards these other engineering things or these

product things, and we're putting them towards this Twitter cleanup act."

And so, there are a lot of internal resources being redirected. They have not put a dollar sign on that yet, though.

ASHER: Okay, so as I was just mentioning to our reporter, Clare Sebastian, listen, these tech stocks are not as invincible as everyone had thought.

Facebook also going through hell this week as well, when you think about the hundreds of billions of dollars that have been wiped off in terms of

market cap, so how does Facebook end up digging itself out of this hole?

WAGNER: I think Facebook is in a pretty good position when you really think about where they have this long tail. I mean, we have been talking

mostly about Facebook proper, the core app, and I do think there are some concerns there. But when you look at Instagram, when you look at WhatsApp

or Messenger, especially WhatsApp and Messenger, they basically make no money from those two products right now. They've just started using ads in

Messenger and those both have over a billion users.

So, they have these huge products that they haven't even started to tap into yet. I think they have a lot of potential still. I do think there's

a little bit of concern with the core blue app, but they are going to redirect focus to these other apps pretty soon, I'm pretty certain.

ASHER: Okay, so given what you're saying about Instagram and WhatsApp et cetera, do you think that investors slightly overreacted this week?

[16:25:03]

WAGNER: I do. Shocking that folks would overreact, but I do think it was a gut reaction to an over dramatized thing.

ASHER: Okay, part of the reason also is what we're seeing in Europe with the GDPR rules that were put in place to also help user privacy as well.

Where do you see European user growth, and I am just talking about the blue app for now, just with Facebook proper?

WAGNER: Right, so we did see about three million European users fewer this quarter than we had last quarter. They said some of that was from the

GDPR, people now obviously have to opt in to some of their data collection practices so people don't do that, I imagine they are not counted as an

active user.

But we've also only seen that in play for really about a month. I think it was the end of May that GDPR actually came about, so that was only the last

month of the second quarter. It would be really interesting to look at this again three months down the road when we've really had some time to

see are those people just slow to get back onto Facebook or did they abandon it altogether and we won't know that for a little while.

ASHER: All right, because it's only giving us a slight snapshot for last quarter. Okay, Kurt Wagner. Thank you so much, appreciate that.

WAGNER: Thank you.

ASHER: You're welcome. Okay. United Nations Secretary General has a harsh message for - pay up before we end up going bankrupt. We'll give you

a peak into the messy world of the finances of the United Nations, up next.

Hi, everyone. I'm Zain Asher, coming up on the next half hour of "Quest Means Business." UN Secretary General says, the United Nations could go

bankrupt, and the football transfer window is open for a few more weeks, but now some clubs are buying video game players as well as real ones. But

first, these are the top headlines we are following for you at this hour.

All right, Pakistan's Election Commission is expected to confirm that Imran Khan's party was the winner in Wednesday's election despite widespread

claims of vote rigging. Early results show his PTI party winning most of the seats in Parliament. Every other party has claimed though that the

votes was rigged.

[16:30:16]

And sources say Donald Trump's former lawyer Michael Cohen is willing to tell prosecutors the president knew about the 2016 Trump Tower meeting

ahead of time. That meeting was between a senior campaign officials and a group of Russians.

The president is vehemently denying it, tweeting that someone is trying to make up stories. And Russian President Vladimir Putin has extended an

invitation for Donald Trump to visit him in Moscow. And the White House says President Trump is actually open to a Moscow visit as well.

Mr. Putin also said he's ready to go to Washington under the correct circumstances. And the U.S. is now in custody of what North Korea says are

the remains of 55 fallen U.S. soldiers from a Korean war. They arrived in South Korean cases draped in UN flags earlier.

U.S. President Donald Trump says they will soon be laid to rest on American soil and he thanked North Korean leader Kim Jong-un keeping his word. Take

a look at this, a total lunar eclipse is happening right now, that is gorgeous. It's happening right now in some parts of the world, this is

what it looked like on fast-forward, not only is it the longest of the century, it's also a blood moon.

And if that wasn't enough marked, will also be the closest to the U.S. than it ever actually been in the past 15 years. Just step outside and suddenly

enjoy. Unless you're in North America which is missing out this time.

All right, Vladimir Putin has accused the United States of undermining trust in the dollar by using it as a political weapon. The Russian

president was speaking at the 10th summit of BRICS leaders. The term BRIC was actually coined by an economist described the major emerging economy.

It's actually grown into a real international working group, embracing the likes of Brazil, Russia, India, China and the newest member South Africa.

Mohamed El-Erian joins us live now. Again, so when you think about what is happening in the global economy.

Obviously, we have the escalating trade war at least for now between the United States and China. These countries obviously with emerging markets

represent 40 percent of the world's money in terms of the strength of their economies.

Just walk us through how much power they actually have to stop or prevent or slow down an escalating trade war, and given that so many of their

economies actually rely on exports. How will a trade war with China -- between China and the U.S. actually impact them?

MOHAMED EL-ERIAN, ECONOMIC ADVISER, ALLIANZ: So first, they have more power, that is relative. Who would have thought that they will be able to

establish new institutions they have, a new development bank and the Asian infrastructure investment bank.

They did that despite the opposition of the U.S. China is building up the one thousand and one road which is a regional network, so they have more

power. But in absolute terms, you cannot replace something with nothing. And something is the U.S. still anchoring the system, OK, and they are not

yet strong enough to come in and anchor that.

And you know what? They may not even be willing to do so.

ASHER: Just in terms of, when you look at what has brought these countries together, I mean, obviously, they came together because they represent

several difference, so they are emerging economies. But they have a lot -- they have a lot in common, but they also have a lot that they don't have in

common as well.

When you think about the pace of their growth, the pace of industrialization, the fact that they represent different parts of the

world as well. Can they really achieve that much over the long term. A lot of the people were skeptical when they first formed.

EL-ERIAN: So there are certainly than more than what a lot of other people thought. But they have the same issue as the emerging markets as a whole.

And that is on average the stronger, more resilient and they're more (INAUDIBLE).

But within that, the dispersion has got much figures. So imagine, you're in a class and the principal comes and tells you, I have good news for you

and say what? Says the average quality of the class is high, you've been great. But I have a second pair of good news.

ASHER: I know --

EL-ERIAN: It's not so good. The good students are doing a lot better --

ASHER: Right --

EL-ERIAN: But the bad students are sleeping even more.

ASHER: So how big is the gap between China and say South Africa?

EL-ERIAN: Large, India is even bigger --

ASHER: Right --

EL-ERIAN: Than South Africa, and if you look at the group as a whole, you have Asia up here and you have Venezuela over there. So there's going to

be limits to what they can do. Now, there're very good window on the defense when they feel they have to do something to protect themselves.

ASHER: Yes --

EL-ERIAN: But they're less so when they go on offense.

ASHER: It's interesting because this is one area where Vladimir Putin who is a prier(ph) than the rest of the world, border line in the United States

because of relationship with Donald Trump that I will still say a prier(ph) in this part of the world as well.

[16:35:00] When you look at his role within the BRICS, this is one area where he does actually have clubs and have friends.

EL-ERIAN: Yes, I mean, there's been somewhat of a U.S. vacuum and two countries have jumped in, Russia and China. Russia does it in a big way,

China has massive bilateral agreements with various countries. They all secure raw material, they've gone into a lot of Africa, Latin America,

they're even going into Europe.

So both countries have realized that there's a bit of a vacuum and it's an opportunity for them to step in.

ASHER: Yes, but China is focused heavily on trying to help Africa industrialize, so when I go to Nigeria like a lot of -- a lot of buildings

that have been built by the Chinese and various other parts of Africa as well, it's the same sort of story. But Mohamed El-Erian, I have to leave

it there, thank you so much for that.

EL-ERIAN: Thank you.

ASHER: OK, the United Nation is sounding the alarm, but this time about its own solvencies. Secretary General Antonio Guterres says the UN is

running out of cash, its spokesman is urging members to pay their dues as soon as possible.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We don't have the same flexibility as governments in terms of controlling income and timing of income. We rely -- the member

states set a budget, they vote on a budget, we then rely on member states to pay their dues in full and on time.

Obviously, we fully understand that some member states have different budgetary years and counting their calendar -- you know, fiscal year so

that has an impact. But this year is worse than others.

(END VIDEO CLIP)

ASHER: Richard Roth is our senior UN correspondent and joins us live now. So what we're dealing with, there's a $139 million in terms of a deficit,

how does the UN go about making all that cash and what parts of the UN will have to be cut if that deficit does not come to fruition if it doesn't --

if they didn't get the cash.

RICHARD ROTH, SENIOR UN CORRESPONDENT: How much money do you have on you? Because --

ASHER: Well, I'm not a cash person so I just have credit cards --

ROTH: The problem is even if you gave me something to take over to the east side at the UN, the UN does not accept private citizen contribution --

ASHER: Yes --

ROTH: So we've covered the UN --

ASHER: Country money --

ROTH: Country money, country to international organization. Ted Turner by the way once tried to pay off the U.S. debt and it was rejected, a big

check.

ASHER: UN --

ROTH: The U.S. debt --

ASHER: OK, yes, right --

ROTH: Owned to the UN. Now because we've seen over the years, a headline sound pretty scary, the UN is running out of money and then it could be

true right now. But we've seen these deficits before.

Two years ago more countries hadn't paid up. So every year, a country has to hit their budget total it's accessed. And so far in the hot Summer here

in New York, 81 countries have not paid up, the U.S. has not, but this is traditional because of the U.S. budget cycle of its own.

The money comes in usually after October. And there had been years where it's a tag of war to get everything from Washington, sometimes

administrations want to --

ASHER: And a huge amount actually comes from the United States --

ROTH: Yes, they pay 22 percent of the annual UN budget, the most of any country. The peacekeeping budget is separate. So the Secretary General

sent out a note to the countries, instead it wasn't one of these robo-calls you get from maybe not you, I hope from financial collectors.

But it said we are at our lowest cash-flow points really ever and we're running low and we're going to have to make adjustments. Now, U.S., how

are they going to do it? They're saying it's not based on staff cuts or reductions, they're going to look at expenses.

I mean, I can tell you, there were days there were meetings held at the UN where hundreds of countries speak and you wonder, is this really necessary?

ASHER: So the countries that go -- I mean, obviously you put the UN in a separate category because of how their calendar works. But for other

countries that don't end up paying up, do they end up losing their voting?

ROTH: Yes, they can lose their vote, there are five -- over six countries that are right now banned from getting to vote in the General Assembly.

But there are some interesting countries on the list who have not paid up yet. New friends, the United States and North Korea have not paid and

Israel and Iran have both not paid.

There's an interesting, a collected group, a lot of the big countries seemingly have paid up. But you know there's a different atmosphere at the

UN with the U.S. Nikki Haley, when the new budget was approved last year said the United States -- the UN can't rely any more on the generosity of

the American people.

So it's too soon to say any message has been sent on any financial cutbacks --

ASHER: Right --

ROTH: From Washington.

ASHER: Right, Richard Roth, keep us posted on how they end up getting back by $139 million --

ROTH: You might see the Secretary General with the ten cup in front of the UN --

ASHER: That's covered, oh, yes, maybe you can learn, all right, Richard --

ROTH: I am hoarding it.

ASHER: Richard Roth, thank you so much, appreciate that. All right, coming up next on QUEST MEANS BUSINESS, when a company's CEO falls ill, how

much exactly do they need to tell shareholders. The push and pull between the privacy and transparency.

[16:40:00] (COMMERCIAL BREAK)

ASHER: A Swiss hospital said they treated the Fiat-Chrysler CEO for more than a year for a serious illness. Sergio Marchionne died on Wednesday, in

a statement, the company said it had no knowledge, no knowledge of the facts relating to Marchionne's health.

Marchionne's death is provoking questions about when investors have a right to know a CEO's health condition. This is tricky territory for many

companies because of privacy obviously. Railroad company CSX wanted an independent doctor's review when it hired 73-year-old CEO Hunter Harrison

instead, provided a note from his doctor, he died eight months later.

In 2004, food giant Kraft to face criticism for not providing regular updates about the reason why a CEO was hospitalized, and then there was of

course Steve Jobs; legendary Apple CEO was notoriously private and Apple rarely believes information about his cancer battle and liver transplant.

Joining me now is Douglas Chia; executive director of Governance Center of the Conference Board. Douglas, thank you so much for being with us. So

where do you draw this silence? How do companies sort of manage the balance between, you know, respecting a CEO's privacy, but also being as

transparent as possible with investors and abiding by security laws as well.

DOUGLAS CHIA, EXECUTIVE DIRECTOR, GOVERNANCE CENTER OF THE CONFERENCE BOARD: Well, I think that it's really a judgment call that obviously, it's

an intensely private situation. But the CEO can have a private discussion with the independent chair or lead director.

Even at first when he or she comes on board in terms of the subject of health matters and have some kind of a tacit or some kind of informal

agreement about keeping people abreast of the situation, and then making some kind of a determination on telling the rest of the board and

eventually the shareholders at the appropriate time.

ASHER: But it's very difficult to know what constitutes, I mean, there are some grey areas, it's very difficult to know what is a health issue that is

definitely serious enough where you have to notify the company and you have to notify investors as well.

Some people might think that for example Mr. Sergio Marchionne had shoulder surgery and at the time he may not have thought it was serious enough to

disclose.

[16:45:00] CHIA: Well, in the case -- I mean, I think we all know that health conditions can go south very quickly and unexpectedly. And also,

you could go into a hospital for one thing and then there's some complications and all of a sudden something else is the primary problem.

So it's a very tricky one when somebody has something that's an active situation. Right, if you look at the cases of Jamie Dimon with JPMorgan

and Lloyd Blankfein of Goldman Sachs, these are situations where the executive and the company came out very early with a statement and it's

almost like, you know, after discussing it with your family about having something like prostate cancer, you go talk about it with your board and

decide on what would be an appropriate statement.

And largely at that point, it's not very alarming.

ASHER: So what do companies actually, really need to know. Is it more about just being as transparent as possible, about a CEO's health or is it

more about just making sure that there's a succession plan in place and just reassuring investors that if the worst were to happen, that they have

a contingency plan.

CHIA: I think it's three things, I think it's first of all, it's communication between the CEO and the board, and that there's a trusted

relationship and understanding about how medical issues are going to be off the belt and starts internally.

Like you mentioned, the emergency succession plan or the proverbial name in the envelope is extremely important. And surprisingly, there are many

companies that don't have that. They just don't feel with that until they really have to.

But I think the case of Hunter Harris illustrates that companies should really think about having some kind of annual fiscal by a company doctor of

their CEO regardless of who it is or how old they are. Also a physical exam before the person joins, just like any -- you know, with the drug test

for any other employee coming on.

And make it a policy and make it routine so it's not -- it's not a personal thing.

ASHER: All right, Douglas Chia live for us there, thank you so much, appreciate that. All right, so BP says it is reaching a major play on U.S.

shale. The British oil giant will pay more than $10 billion for shale oil and gas assets from VHP.

It's BP's largest acquisition in two decades. Shares of both companies closed higher. I'm joined now by Antoine Halff; director of the Global Oil

Program at the Center of Global Energy Policy at Columbia University.

So we've seen quite a bit of a significant recovery in oil prices so far --

HALFF: Yes --

ASHER: This year. Just walk us through what you anticipate in terms of oil prices for the rest of 2018.

ANTOINE HALFF, DIRECTOR OF GLOBAL OIL PROGRAM, CENTER OF GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY: Oh, in terms of oil prices, there's

tremendous uncertainty partly because of questions about the implementation of the sanctions on UN that we're reaching though by the Trump

administration.

So there's still a lot of uncertainty about how aggressive the administration will be about implementing the sanctions and about the

capacity of Iran to, nevertheless apply the sanctions that continue to export its oil, perhaps the other customers, other buyers, more volumes,

maybe to China and they're possible.

ASHER: So when you look at disruptions in global oil supply, because obviously that had a massive impact when it comes to prices. You mentioned

Iran, but there's also obviously Venezuela that we talked about for quite some time.

What are the other sort of global hotspots around the world when it comes to just real concerns for supply disruptions?

HALFF: Well, in terms of disruptions, I mean, the last couple of years, I've seen a lot of events and their failure or (INAUDIBLE) failure of

several petrol states. Venezuela obviously a case in point. And Nigeria has been struggling, Angola has been facing difficulties with a decline of

prices, obviously Syria and Yemen, small producers, completely out of the picture since the civil war in those countries.

So a big increase in political risk, at the same time, a big increase in the potential of the U.S. --

ASHER: Right --

HALFF: Which is why companies like BP are investing a tremendous amounts of capital in the U.S. oil patch, particularly in the shale.

ASHER: But how does that change -- I mean, you know, obviously, you mentioned areas where there're supply disruptions, we talked about

Venezuela, we talked about Iran, U.S. is a producer, is a bright spot, but just --

HALFF: Right --

ASHER: How does that change the game for BP, their investment in terms of U.S. shale? Just in terms of their portfolio.

HALFF: It's a big move. I mean, it's the biggest acquisition by BP since its acquisition of Amoco bank about 80 years ago. Also in the wake of a --

of a billion of low prices by the way.

[16:50:00] So not accidentally, not coincidentally. This is a time when I think companies feel more confident about the outlook for oil revenues, and

at the same time there's being a lot of pain experienced by many players which has led to assets being on the market.

ASHER: Right, Antoine Halff live for us, thank you so much, appreciate that, have a lovely weekend --

HALFF: Thanks for having me.

ASHER: Of course. So the World Cup in Russia was notably without a team from the United States. Well, a lot of Americans were -- it's not about

that, next week, the American teenager giving his country a chance at redemption in a virtual world of online gaming, up next.

(COMMERCIAL BREAK)

ASHER: Sold-out arenas, major corporate sponsors, even broadcast on "Espn", this is all becoming the norm for video games. The FIFA E-World

Cup is nearly upon us, EA Sports is hoping will create some buzz after disappointing earnings report, sent its stock 6 percent lower.

There's only one American competing in it. Nineteen-year-old Alex Berkinfaur(ph) was actually signed to major league soccer sporting Kansas

City. Alex alongside James Root from MLS spoke to Stephanie Sy at the New York Stock Exchange. Stephanie asked why there's such a big push to

combine real sports with E-Sports.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Well, we know that gaming is a huge part of fandom(ph), even MLS, it's a big part of us getting new fans and it's also a big part

of us serving our existing fan base. We know a ton of MLS fans are gamers, so it really made sense for us to be an E-Sports and create an MLS that

kind of served that portion of our fan base.

STEPHANIE SY, CNN: Yes, Alex, I know the FIFA E-World Cup is coming up, but what do you do to prepare for that, and who are your big competitors?

UNIDENTIFIED MALE: You know, it's just a lot of long hours practicing throughout the year, and top competitors I'd like to say, there's no other

American, so it's just kind of me out there. But North American wise, we have to say, we have a Canadian going as well, so he's probably my rival.

SY: A Canadian, what about the European teams?

UNIDENTIFIED MALE: You know, they're also rivals, but you know, like he's my -- I feel like a local, because they're like obviously I'm going to be

competing against them, but he is like no other one.

SY: OK, James, this E-FIFA World Cup, I mean, how does it compare to the real World Cup, and how are the fans different and how are the players

different?

[16:55:00] UNIDENTIFIED MALE: Well, it's obviously different, all right, it's -- E-World Cup and what FIFA is building alongside EA Sports is new,

right? E-World Cup has been around for a lot of years, but the infrastructure from a competitive perspective surrounding it is all quite

new.

So I think as years go by and not too distant future, you're going to see a huge growth in competitive gaming and competitive gaming from FIFA

specifically.

SY: Have you seen -- you talked about how this might increase audience for actual MLS games. Have you seen that phenomenon where you have spectators

that might not otherwise have been brought in to soccer, actually start to participate in actual soccer games and see that attendance at sports

stadiums for MLS games?

UNIDENTIFIED MALE: Yes, it's a hard thing to track specifically, right? But we know based on a lot of data from our fan base that FIFA, the video

game is a major driver of interest. So we know that already and it drove a lot of what our push into gaming and to do more with EA Sports specifically

in the competitive gaming world.

SY: OK, Alex, have you actually played soccer much?

UNIDENTIFIED MALE: Yes, I played it all growing up, you know, so when I wasn't playing actual soccer, I'll be playing other virtual version, and

then one thing led to another and I got really good or something, I don't know.

SY: So are you actually -- you're 18, 19 years old?

UNIDENTIFIED MALE: Yes, 19.

SY: OK, and are you actually making a living off of this? I mean, talk about sort of the money and the sponsorships and all of the other things

that have come with these sports in recent years.

UNIDENTIFIED MALE: So you know, it's been growing like crazy, so yes, you know, I get salary from sponsors and stuff. And there's also price pools.

Like for example, E-World Cup, to win is $250,000, so you know, yes, so that's just one of the many tournaments, but this one is like the big one,

you know, the final, yes.

SY: All right, hand over, sorry, you're going into the game, so I call it a game?

UNIDENTIFIED MALE: Yes, not at all though, I'm confident, you know, I'm there for a reason basically, so --

(END VIDEO CLIP)

ASHER: All right, now just to remind you how the stock finished the day. Weak results from Twitter and Intel actually outweighing the strong U.S.

GDP report and Wall Street is actually closed down 76 points or so, the Nasdaq fell 1.5 percent.

And in terms of European stocks, on that continent, stocks actually closed higher, obviously by earnings from Carrefour, BT and Reckitt Benckiser

shares of VHP, actually rose 2 percent after it sold those U.S. shale operations to BP. And that is my friends, QUEST MEANS BUSINESS, I'm Zain

Asher, the news continues right here on CNN.

(COMMERCIAL BREAK)

END