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QUEST MEANS BUSINESS
Vatican Condemns Abuse of Minors; Jury Now Deliberating in Manafort Trial; Italy Slams Bridge Operator Amid Hunt for Survivors; World Mourns Queen of Soul Aretha Franklin; Mnuchin: U.S. Ready to Increase Sanctions on Turkey; Turkcell CEO: Turkey's Economic Fundamentals are Strong; U.S. Sanctions Hit Middle-Class Iranians; Uber Cuts Losses as Revenue Soars; Investor App Offers Shares in Classic Cars; Spain's La Liga to Play Games in the U.S. Aired 4-5p ET
Aired August 16, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: The Dow showing very good gains, off the best of the day. It's given back maybe 50-odd points or so,
but still a robust healthy session across all the major indices and that's the sort of gavel you need to bring trading to a close on Thursday. It's
Tonight, bouncing back, the Dow's just had its best day in many months. Larry Kudlow says China is looking terrible as new trade talks are put into
the diary. And football is coming here. I'll speak to the company taking Spanish football stateside, and by that, I mean football, none of that
I'm Richard Quest live in the world's financial capital, New York City, where, of course, I mean business on a good day for the Dow.
Good evening. Tonight, Wall Street comes surging back. China says trade talks are back on again, and the delegation is heading soon to Washington.
These are the reasons why you're going to see such a strong performance at the Dow Jones Industrials, indeed, and the S&P 500.
The Dow has been driven higher by those stocks which benefit particularly from the China deal or the China potential talks and Walmart results, so,
Boeing is 100 points. Walmart is 60 points. Goldman Sachs is 30 points, Caterpillar 30 and Apple 25. It puts perspective into how the Dow has made
such good gains in one day.
Larry Kudlow is the Director of the White House Economic Council and promising this rally still has room to grow.
(BEGIN VIDEO CLIP)
LARRY KUDLOW, DIRECTOR, WHITE HOUSE ECONOMIC COUNCIL: Our economy, our investors, our workforce are crushing it right now. We are crushing it.
And people say this is not sustainable, it's a one quarter glitch, just nonsense. An absolute nonsense. Any business economist worth his or her
salt will look at these trends and tell you we're going for a while. The single biggest story this year is an economic boom that is durable and
lasting and that most people thought was impossible.
(END VIDEO CLIP)
QUEST: Durable, lasting, and most people thought was impossible. Paul La Monica, guru is with me. He's right. I mean, there is an economic boom
taking place in the United States, and, well, politically, one could disagree on whether people thought it was possible, but the economics are
PAUL LA MONICA, CORRESPONDENT, CNN: Yes, this is a very solid economy right now, Richard, and I think that Larry Kudlow is correct to assert that
it could be sustainable. One of the things that a lot of people forget sometimes when they talk about how the economy is, you know, the economic
boom is getting old, is that it wasn't that big of a boom to begin with for a lot of people. It was such a shallow rebound that it felt sort of as if
the US was stagnating for a while.
So, now we're picking up some steam. I think the hope is that if you resolve some of these trade issues, and that's why the market rallied
today, that could give the economy and hence, the market a further lift.
QUEST: That's an interesting point that you've just have been talking about, the early days of the post great recession recovery. Were down less
than 1%, 1.5%, whatever. Are you saying that really this bull market, which is one of the longest in history, this bull market really we should
look at it as being from a later date in the sense of those first times where they don't really count.
LA MONICA: Yes, I don't know if you would go so far as to say as they don't count. I just think that people who only look at the age of the bull
market and decide that, well, the economy now must go into a recession soon or that the market has to fall from these levels, I think that is a bit of
a fallacious argument. You could have the rebound go on longer, as long as earnings growth is there and so far, it's been there.
Remember, the first quarter was supposed to be the best, as good as it gets for a while, what was it? High water mark going to Caterpillar and the
second quarter has turned out to be pretty much just as good, if not better.
QUEST: So the earnings season gave a certain oomph to this. Walmart, which we'll talk more about in just a moment. Walmart has given further
reason for us to accept it was a good earnings season, things are as good as they're likely to get.
LA MONICA: Yes, I think the Walmart numbers, which I know you're going to talk about in more detail were very solid, it shows the health of the US
consumer. Don't discount Cisco. Cisco was also in the Dow, it's a lower priced stock, so it doesn't have as much weight, but Cisco's results and
outlook really gave the tech sector a boost today and I think that was much needed.
QUEST: Netflix was down and Facebook was down.
LA MONICA: Netflix and Facebook were down, but I think we're at a stage now where as long as the mature tech companies - Cisco, Apple, Microsoft -
if they can keep doing well, you throw Google on or Alphabet in there, that's not the worst thing in the world if Netflix and others aren't doing
QUEST: Good to see you.
LA MONICA: Thank you.
QUEST: China says trade talks with the United States are back on and it comes as the country's stocks certainly could do with a boost. The
Shanghai composite is on a four-day losing streak and is fast approaching what one would describe as a bear market. Now, you remember, a bear market
is where - well, a correction is up to 10%. Bear market, you're heading towards 20% down. So these are the falls and the serious fall on
Wednesday, and a year to date fall of 18.2%.
China's powerhouse tech giants are feeling the pressure and we're seeing that in the numbers. Tencent was down again following a disappointing
earnings; jd.com, earnings also were short. Larry Kudlow, who you heard a moment ago, the head of the Economic Council, the Chief Economic Adviser, I
should say, Larry Kudlow says the Chinese economy right now looks terrible.
(BEGIN VIDEO CLIP)
KUDLOW: Their economy is just heading south. Retail sales, business investment is collapsing in China according to the numbers. Industrial
production has fallen, and now is plateauing at a low level. People are selling their currency. There may be some manipulation but mostly, I
think, investors are moving out of China because they don't like the economy and they're coming to the USA because they like our economy.
I'm not a China expert, although I'm boning up as fast as I can. I would just say right now their economy looks terrible.
(END VIDEO CLIP)
QUEST: Larry Kudlow brings great credibility to the whole process when he gives answers like that. David Dollar is in Washington. David serves as
the US Treasury Emissary to China and is now senior fellow at the Brookings Institution. Do you agree with Larry Kudlow that the Chinese economy is in
his words looking terrible?
DAVID DOLLAR, US TREASURY EMISSARY TO CHINA: Chinese economy is decelerating, there's no question about that, but I would not say that it's
terrible. It's still growing pretty well. It's going to do 6.5% or more for the year, so I think it's an exaggeration to say that the economy is
cratering, but clearly, the Chinese economy has decelerated while the US economy is accelerating. So the two are moving in different directions.
That's certainly affecting their respective stock markets.
QUEST: And the reason for that deceleration can often be described as bad debts, overhanging of debts in the market, under Chinese government policy,
but also the trade tariffs will eventually also play into that reason.
DOLLAR: Yes, I would put most of the emphasis on the government policy, you know, China has been growing very much based on credit growth for a
long time and starting last fall, they really began to rein that in. And so you saw their stock market starting to fall after January and that was a
result of their deleveraging campaign and now the trade war is piling on, on top of that, so definitely the trade war is not helping. The market is
down 24% from a high in the middle of January, so in that sense, it really is in a bear market now.
QUEST: But there is a feeling that there's an orderliness to it. But if the goal is to take the steam out of a Chinese economy to allow the
currency to find a more natural level, then there's a certain success in the way it's been implemented.
DOLLAR: Yes, I was just in Beijing meeting with officials and academics. They're pretty relaxed. Some of this slowdown is exactly what they wanted.
There has been overinvestment in China. The only way to correct that is for investment growth to slow down, so I think they're mostly on target,
maybe a little bit - the July data, a little bit too low in terms of investment, so then they fine tune. They come back with a little bit more
credit with fiscal stimulus, so I think they had the tools to hit their target.
QUEST: And from your recent visit, were you able to glean their stomach for a full-fledged trade war with the United States?
DOLLAR: Yes, I think they're preparing for a long-time conflict, so it's good news that their Vice Minister of Commerce is coming to talk. That's a
pretty low level, so that's just keeping the lines of communication open. I think the Chinese expect that this will last throughout 2018 and they
have to find other types of stimulus to keep their economy going. They're not really counting on quick resolution of the trade conflict.
QUEST: Good to see you, sir. Thank you. Please come back again and give us the perspective. We appreciate it.
So breaking news I need to bring to your attention. The Vatican has responded to this week's detailed report on the historic abuse of children
committed by hundreds of Roman Catholic priests in the United States state of Pennsylvania.
QUEST: Barbie Nadeau is on the line from Rome. What's interesting about this, we've been waiting for the Vatican's response. We've had various
diocese from across the United States, and now the Vatican's given its word.
BARBIE NADEAU, CORRESPONDENT, CNN: What's interesting about this is the language that they've chosen. They're using the word, "carnal." Now,
that's something we haven't heard from the Vatican when it comes to clerical sex abuse. We hear them talking about sins and omissions and
forgiveness and prayers, but this is really the first time in a statement by the Vatican we've heard them acknowledge these accusations as criminal,
and I think that that is exactly what the victims have been asking for, that validation that these are crimes. These aren't sins, these are actual
crimes punishable by courts of law and prison term and officers are saying it happened in secular society. And I think the victims will be pleased
that this is a step in the right direction, but there's probably still a long way to go before they feel justice, Richard.
QUEST: Why do you think the Vatican has taken that extra step of calling - of describing them as crimes? Why are they moving forward in that fashion?
NADEAU: Well, I think because it's been a public relations nightmare for the Pope, this Pennsylvania grand jury has really called attention to seven
decades of rampant violence against children in one state alone in the United States, and I'm going to guess that that pressure actually came from
the United States church, who have admitted their own culpability and their weaknesses in this area and having the Vatican endorse them in trying to
make valid changes and in trying to keep people in the pews, keep people in church.
Right now, you've got a situation where you think, as (inaudible) a thousand children were abused for seven decades, that can't be secret,
people knew about this, and the catholic church in the United States takes this sort of thing very seriously, and I think it's probably pressured, the
Holy See here in Rome to make a statement that counts.
I don't think (inaudible) the main spokesperson from the Vatican is American. I think that probably weighted into it quite a bit when we're
seeing language emerge from the state and it's coming from the spokesperson who certainly knows what language would work.
QUEST: Barbie Nadeau who is in Rome, thank you. Aretha Franklin won her first Grammy for this.
She would go on to win 17 more. The head of the Recording Academy joins me to remember the legendry artist.
QUEST: With a powerful voice and a no nonsense attitude, Aretha Franklin belted out one unforgettable hit after another. Fans around the world are
mourning the Queen of Soul. She died on Thursday morning at her home in Detroit, surrounded by friends and family. The first woman inducted into
the Rock and Roll Hall of Fame, Franklin won 18 Grammys in her long career, including best R&B vocals for her ode to her home city's defining industry.
Ahe also championed the motor city in another way. She actually sang the ads for Chevrolet cars, and so, let's look at her contribution not only as
a leading singer, but her contribution as a leading woman - a female singer in the world.
Neil Portnow is the President of the Recording Academy, which runs the Grammys. Good to talk to you, sir. The achievement of Aretha Franklin,
how would you sum it up?
NEIL PORTNOW, PRESIDENT, RECORDING ACADEMY: It's pretty hard to put into words, you know? As a musician, I first heard Aretha as a young person,
and just learning to listen to and appreciate all kinds of music and when I remember hearing Aretha, I was thinking, "Who is that?" And how does
anybody possibly evoke that kind of emotion and soul and feeling in three minutes on a record and then I explored further, obviously, so many of us
She's a one of a kind, you know, we've heard the words national treasure. She's really an international treasure. She's treasured the world over,
and hard to imagine seeing the likes of a talent like that come again.
QUEST: And in an industry where, as you know, there have been - there have been questions over the ability of women to make it to the top, to become
that sort of global star, she didn't just do that. She defined the book on that. I mean, doing - I mean, she wrote the book, defined it, and then put
it in the library. But was she seen as a trailblazer for women in that sense?
PORTNOW: Well, no question. I mean, Aretha would probably tell you whatever she did, she did. She didn't rely on others. She relied on
herself. She's not only great as an artist, but she was great as an entrepreneur and a promoter of her own work and was certainly going to move
forward because she had her own vision, and she had the tenacity.
PORTNOW: And she certainly had the talent.
QUEST: And that of course, is crucial. It's the tenacity, the talent, and the ability to fight on through. As she won Grammy after Grammy and you
saw her picking up more and more of them, she remained, as I understand it, extremely approachable, extremely humble, extremely normal in that sense.
PORTNOW: Yes, absolutely. I mean, I had the pleasure of working with her in the 1980s when I was running the west coast of Arista Records for the
legendry Clive Davis and I'm sure many of you will be speaking to Clive about her career, and she couldn't be more gracious, down to earth, warm,
kind, but also, you know, I'll bring back tenacious because she's somebody that knew what she wanted for herself at every minute, and she depended on
and trusted her instincts and her vision, and she also made great choices in who she would work with, whether producers and picking great songs and
working with ...
PORTNOW: ... great entrepreneurs and record label people.
PORTNOW: So she had it all.
QUEST: Neil, thank you for taking time and coming to talk to us and putting it in perspective. Thank you. We appreciate it. As we continue,
Walmart is reasserting its dominance in US retail, even as other chains crumble because of online competition.
Now, the numbers that came out today saw the shares go up more than 9% after the company said its US sales grew at the fastest pace in a decade.
Investors were pleased that the online sales in the grocery business is growing strongly. Clare Sebastian is here to take me down the aisles.
CLARE SEBASTIAN, CORRESPONDENT, CNN: Yes, well, if there's one thing you take away from this earnings report, Richard, it's that it's not just e-
commerce, it's not just the physical stores, it's the combination of the two that Walmart is doing really well and that's what's got investors so
QUEST: Let me just jump in, though. What have they done differently? I mean, in a quarter or in the half of a year, are we just seeing the results
of the policies put in place or have they changed anything recently?
SEBASTIAN: They've just been investing more and more, Richard. Their grocery has been a big thing in the last few months. They've been
investing in click and collect and delivery and all of that kind of stuff. That's very expensive, but this is essential because they're not just
competing with Amazon now, they're competing - they're trying to meet the demands of a new generation. Take a look.
(BEGIN VIDEO TAPE)
RYAN, YOUTUBER: We're so excited to see and ride a real toy.
SEBASTIAN: This is how Walmart now sells toys.
UNIDENTIFIED MALE: Three, two, one, go!
SEBASTIAN: Six years old, Ryan has racked up billions of views reviewing toys on his YouTube channel.
RYAN: Look at the boxes with my face on it.
SEBASTIAN: Now, he has his own line at the world's biggest retailer. Retailers are waking up to a younger and younger generation of influencers.
EMMA CHAMBERLAIN, INFLUENCER: It's a cute shirt, trust me, just this angle is bad for it.
SEBASTIAN: Seventeen-year-old Emma Chamberlain recently partnered with Dote, a mobile shopping app designed to appeal to Gen Z. Her line, High
Key sold out in three hours.
OLIVER CHEN, ANALYST, COWEN: Influencers and others online can offer you a really authentic kind of connection or experience or knowledge about a
product where a consumer can really see him or herself in that blogger or influencer.
MCKENZIE SULLIVAN, GEN Z: Give it to someone you know, like someone you watch videos of and you're like trust their opinion. They wouldn't, like,
advertise a product that's bad.
SEBASTIAN: At the eighth largest mall in America, Palisade Center, north of New York City, we meet Gen Z siblings McKenzie, Sydney, and Tyler
Sullivan. Who do you guys follow on You Tube for example?
TYLER SULLIVAN, GEN Z: On YouTube, I like David Dobrik.
DAVID DOBRIK, YOUTUBER: May I ask for a little help for my friends at - we've got a new car, baby!
SEBASTIAN: That means they're exposed to brand sponsoring influencers.
DOBRIK: If you press a button, it turns into a disco ball and it flies.
SEBASTIAN: While other influencers like Shane Dawson with 16 million YouTube followers even have their own merchandise. Dawson sells his on
T. SULLIVAN: When he advertises something, it's not because he's, like, getting a sponsor. So that he really like wants to advertise it.
CHEN: New generations of shoppers are open to new brands and not necessarily wedded to trusting the old and former brands. We're really
seeing the transformation in terms of the customer having more power.
SEBASTIAN: And let's say, Gen Z doesn't differentiate between online and physical stores. They're more interested in value.
M. SULLIVAN: You could go into the store, try something on, you fall in love with it, go online, get it for like 20% off.
SEBASTIAN: You guys will do that?
T. SULLIVAN: A little.
SEBASTIAN: And they want personalization.
T. SULLIVAN: L:ike the shoes I'm wearing right now, I went on the Vans website and I, like, picked out the color here and I picked out what the
fabric was going to be.
SEBASTIAN: It's kind of this connected generation are shifting the power to set trends away from the retailers.
RYAN: My favorite is ...
SEBASTIAN: The old guards are scrambling to catch up.
(END VIDEO TAPE)
SEBASTIAN: A little glimpse, Richard, there into how the younger generation do it, but the point about this is, it's very expensive, even
for Walmart to do all of this and innovation. Walmart are losing money in e-commerce. They expect that to continue for the rest of the year. But
the thing about Walmart compared to, for example, JCPenney, which I know you're going to talk about is that they can afford to do this, and that's
why they're in this leading position.
QUEST: Good to see you. Thank you, Clare Sebastian. Now, so far, this year's shares in US retailers have either skyrocketed or gone sky diving.
Now, take a look. JCPenney is down 42% year to date. Sears, even worse, 59%. But Macy's and Kohl's are each up around 40%. Nordstrom's earnings
are out. Their shares are up 14% after hours. They're looking to invest in the digital side of their business.
We'll talk more about the digital side and the winners and the losers. Keep in mind now, Kohl's is up 38% and Macy's up 41%. JCPenney and Sears
down heavily. Barbara Kahn is the professor at Wharton and author of "The Shopping Revolution." When I look at those two share price differentials
QUEST: ... it looks as if JCPenney and Sears just do not get it, and probably, maybe, never will.
BARBARA KAHN IS THE PROFESSOR, WHARTON SCHOOL: I couldn't agree more. I think the difference is, one, that Walmart and to some degree Kohl's and
Nordstrom and Macy's, they have a strategy, and JCPenney, right now, it's CEO-less. It lost its CEO, and really doesn't have a strategy. What's the
reason to go shop at JCPenney?
And I think JCPenney in particular compared to Walmart suffers from the fact that their locations tend to be in malls, and mall traffic is down.
They don't have the right mix of merchandise, they don't have a reason to go into the store, and people aren't going to the malls.
QUEST: Okay, but is the - is the bricks and mortar, we know it's not dead, but people still like going into a shop and trying it on. So it's the
ability, surely, for a Macy's to balance physical presence with online presence. I'm old-fashioned enough. I still like to go and try an item of
clothing on, but if I'm buying a pair of undershirts or underwear, well, I can buy that online.
KAHN: Exactly, and like your previous guest said, it's really an omni channel strategy and that is another reason why Walmart has done so well.
Walmart spend a lot of money investing in their website, investing into making it frictionless, online-offline, making it really easy to shop, and
if you compare Walmart, say, to Amazon, and Amazon, you're paying an Amazon prime membership, but Walmart, you're not paying that membership price.
You've got really low, low prices in their store. They've always been a low-price retailer, and when they get their website and their online
equation right, that's a winning - that's something winning for the customer and you see it in their top line and bottom line.
QUEST: But they haven't - they don't have the cache. They haven't managed to get the cool factor. Whatever you want to call it, I'm sure you
have a professorial word that would put it into true perspective. But the reality is, Walmart, look, I'll admit, and I suspect you are, too, I am a
prime member, Amazon Prime. They're getting and their hundred andwhatever it is dollars a year from me, and possibly from you as well. Now, that's
KAHN: Yes, but Walmart is aware of that. When they bought jet.com, that's a separate platform still, they're operating under a different platform.
They have a partnership now with Lord & Taylor. They have bought a lot of very sexy digitally native vertical brands, like DeNovo and Millicent, so
they're upping their wow factor as well. They're aware of that.
QUEST: When was the last time you went into a shop and bought something? An item? Clothing?
KAHN: I have to tell you, I go in stores all the time. I'm a brick and mortar person.
QUEST: Excellent. Good to see you. Thank you very much indeed. We'll talk more about this in the future.
KAHN: Sure, thank you.
QUEST: You need to keep up to date on the business headlines. We have it for you and it's just a 90-second Daily Briefing Podcast, updated twice a
day, before the start of trade and after the closing bell. Just ask "CNN Money flash briefing" to Alexa or the Google device.
As we continue, the threats are still coming from Washington to Ankara. We'll hear from the Turk's chief executive who says Turkey can withstand
the Trump administration's onslaught.
[16:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When La Liga
comes to the United States and I'll sit down with the company that made it happen, to really discuss and find out what they have to gain by it.
And if investing in stocks just doesn't cut it anymore, try 1980 Lamborghini for size. We'll have the CEO whose ad lets you buy a part of a
classic car and then trade it in the future assuming the investment goes up. As we continue, this is Cnn and on this network, the facts always come
The Vatican has responded to this week's detailed report on the historic abuse of children committed by hundreds of Roman Catholic priests in U.S.
state of Pennsylvania. It says it's unequivocally condemns the abuse of minors, calling the abuse as criminal and morally reprehensible.
The jury has began deliberating in the Paul Manafort tax evasion and bank fraud trial. The case is seen as a major test of Robert Mueller's
investigation into Russian interference in the U.S. presidential election. Manafort was one of Donald Trump's campaign managers.
Italy's government is slamming the operator of the bridge that collapsed in Genoa, having in their word "the audacity" to talk about compensation when
crews are still searching for victims. Autostrada has been pushing back against allegations, it is responsible for the deadly disaster and says it
should be compensated for any canceled contracts.
She was a musical icon, a civil rights inspiration and the queen of soul. The legendary Aretha Franklin has died after a battle with pancreatic
cancer, she was known for hits including "Respect" and "Natural Woman". She performed for presidents and inspired generations of singers. Aretha
Franklin was 76 years old.
The United States says it's prepared to place more sanctions on Turkey if President Erdogan doesn't release the American Pastor Andrew Brunson. The
lira still on the back of that gained some 2 percent. It has been so beaten up in recent weeks that perhaps any sort of better news or at least
not bad news is reason for cheer.
Donald Trump says Turkey has not proved to be a good friend. Turkey accuses the pastor of being part of a recent attempted coup. The chief
executive of Turkcell is one of Turkey's biggest companies, says the country is strong enough to get through these problems.
He told John Defterios that Turks are used to cut and see drama.
(BEGIN VIDEO CLIP)
KAAN TERZIOGLU, CHIEF EXECUTIVE OFFICER, TURKCELL: If you look back 25 years in my career, this is not the first time you're seeing a foreign
currency turbulence in Turkey. In 1994, in 2001, things of similar nature, actually even bigger magnitudes have happened.
Hundred percent evaluations overnight. But I think the difference this time, we're watching something while there are tweets, social media news
and lots of discussions and it's like a slow motion event.
[16:35:00] I think they need to take a step down and really look at the fundamentals. Turkish economy is fundamentally strong. We are a country
of small and midsize enterprises, we actually do have a very strong fiscal discipline less than 1.5 percent in our budget deficit.
And if you look to the growth, even last quarter, we were above 7 percent.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, some would say, you have too much growth in your Achilles heel of course now, particularly with
this correction of the lira is the current account deficits, so you're extremely vulnerable and the dollar is moving higher.
Then you avoid realistically an IMF bailout as the dollar continues to rise.
TERZIOGLU: I think you know, Turkey is a country which needs to continue the growth momentum. Our economy is vibrant, our population is young and I
think 5 percent growth is where we need to keep the economy steering.
Now, clearly, we are suffering energy deficit. And that is a clear burden on our current account deficit and we need to therefore manage our finances
in a much prudent way. And I think we missed an opportunity in the last 10 years to leverage this country at the levels that will sustain our growth
Now, we are back into a liquidity problem and a short-term problem, and I think Turkish economy is strong enough to get out of it. If you look at
our company, we have started making all our business decisions from day one, purging from foreign currency, hedging for mature risks(ph), hedging
for interest rate risks.
And I think every company needs to develop these types of skills, we have that experience in our DNA.
(END VIDEO CLIP)
QUEST: Now we're in position of U.S. sanctions on Iran has started hitting the country's middle classes. They're precisely the very people that the
Trump administration is hoping to influence. As Nick Peyton Walsh explains, ordinary Iranian families are now stuck in the economic
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Tehran stood proud for centuries and now life here changes by the week.
One last of Toyota until it breaks down. Yet, renewed American sanctions on cars and their parts kicking in a week ago being that few can afford
repairs, despair are drying out.
So they sit here for months.
UNIDENTIFIED MALE (through translator): Three times expensive --
WALSH: So this is just in the last three months, this is now three times, not used to be. These will normally be full, Nabiola(ph) says, you never
think that a spark plug will become such valued currency.
(on camera): Donald Trump thinks that he is pushing the Iranian people to rise up against their government. Do you think that's likely to happen
because of what's happening here?
(voice-over): No, he says, because the hunger of the people get, the more they're going to hate him. If Trump acted properly, people might even have
liked him. Behind every car is a family and Devu Taraji(ph) is at the heart of the matter.
He can't afford the parts to repair his taxi, but that hasn't stopped the monthly repayments on it. And that's led to stark changes at home for
Devu's(ph) family, Arteen(ph), seven, and daughter Assau(ph), 13.
As the local currency also plunges in value, their fancy refrigerator and their plush but tiny two-room apartment is suddenly emptying up. The price
of an egg has doubled, he says, just like the price of fresh fruits and vegetables.
Milk is about 40 percent more expensive. These are the middle class that Barack Obama wanted to win over by lifting sanctions under the nuclear
deal. But unto whom Donald Trump wants to pile pressure, hoping to force political change.
Yet instead, its ardent English lessons that may go first and perhaps Assau's(ph) Qatar tutor and perhaps even the family home will go on the
market. The U.S. says Iran's government, not its people are the target, but it's far more personal and painful here. Nick Paton Walsh, Cnn,
QUEST: After the break, just get your motor running, now this could be an easy way to play the classic car market. The only problem is, you buy part
of the car, you just can't drive it away.
[16:40:00] (COMMERCIAL BREAK)
QUEST: All Summer, we're looking at the future of mobility, future forward. Uber's financial health improved greatly in the seventh quarter,
revenue was up and losses were down. Samuel is here to put it into perspective.
When I look at those numbers, they slightly massaged because of external won-all factors.
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY NEWS CORRESPONDENT: That's right - -
QUEST: And also by some of those markets that they had withdrawn from.
BURKE: Yes, and sometimes not by choice. There's just no other option for them, but to leave. So they've got a bunch of money from there. So I was
interested to see where they're going to put that money into. So if we just look at the list on the screen here, you'll see e-scooters.
Who would have thought just a few months ago that those electronic scooters -- have you tried one?
QUEST: I have --
BURKE: OK, who would have thought that the electronic scooters would be higher on their list than serve-driving cars. They didn't even mention it
in their food delivery service, Uber Eats, Khosrowshahi; the new CEO says they're going to plow money into that as well as their main service in
Middle Eastern India.
But I've got to get back to the fact that they didn't even mention self- driving cars. They shattered their big trucks that were all funfair just a few months ago, gone, no mention, didn't talk about the death in Arizona of
So for me, it's fascinating to look at this company, and we're not quite sure where self-driving will play in the driver seat in overseas --
QUEST: How is the fundamental business doing? The core business. I mean, at the end of the day, I'm never quite sure how many other people do use
these delivery things and these food services and all the other things but the core Uber ride.
BURKE: Their fundamental ride service incredibly shown. I was actually impressed to see much growth as we did see, and the other places we saw
growth, I was also surprised because I thought some of these side products won't be as strong as they were.
QUEST: Is there a feeling that the crisis may be over that the changes have taken place.
BURKE: The very fact that we're getting a quarterly report before there's a quarterly report -- this is of course, not a publicly traded company, I
think says everything that there's transparencies starting, there aren't going to be big surprises when this company's IPO is $62 billion
Will you be buying shares at their IPO like you did SnapChat? Oh, I just had to bring it up.
QUEST: I was about --
BURKE: You were about to say it was a good report --
QUEST: No --
BURKE: Now, it wasn't.
QUEST: I was about to let you have a ding --
BURKE: Oh --
QUEST: Of the bell --
BURKE: Oh --
QUEST: But then I changed my mind --
BURKE: I should have kept my big mouth shut.
QUEST: You reminded me of my Snap, it's only down 52 percent.
BURKE: Only --
QUEST: Only -- your Christmas present, go on, thank you. Even if some people are ditching car ownership in favor of Uber, one starter believes
that the classic collectible car will always soar in value and be the sort of thing that you and I want to invest in. Now, there's a new cheap way to
invest in a hobby that's normally reserved for the exceptionally wealthy.
[16:45:00] Those who can afford to pay half a million, three-quarters of a million, a million plus. It's called Rally Road and it offer shares in
classic cars as an asset class.
Like this 1955 -- so 1956 Porsche Speedster. You can't drive the cars, that's the important thing. They're inspected, insured and then they are
secured somewhere where you and I can't get our hands on them. Two thousand shares are offered for each car which can start for as little as
Now, let me give you an example. The Porsche IPO was set at $425,000. Each share was sold at $212.50. So if you take the one that happened at
2013 to today, this car has increased in value by 91 percent.
That sounds like a really good investment. So my first question for Christopher, I mean, from the chief executive. Christopher, my first
question to you, sir --
CHRISTOPHER BRUNE, CHIEF EXECUTIVE OFFICER, RALLY ROAD: Absolutely --
QUEST: How easy is it to get out of these investments once you are in them?
BRUNE: Pleasure to meet you. Thank you for having me first of all. We built this platform with liquidity in mind. So we didn't want to build a
crowd-funding site where it was invest today and ten years later, maybe get your money back plus some.
So we built an idea of something called the trading window, and essentially once per month, we open up this trading window, we bring buyers and sellers
into the room, very much like you would have in a traditional car auction.
But we're really auctioning off the shares, so that gives us price discovery, that gives us liquidity and that allows people to buy in and out
of the different assets over a period of time.
QUEST: And from what you've seen in terms of the trading range --
BRUNE: Yes --
QUEST: Is there sufficient liquidity to get rid of -- to exit investments.
BRUNE: So to this day, we've done ten initial offerings are sent to our version of IPO --
QUEST: You bought ten cars?
BRUNE: Sure --
QUEST: You bought a car, you then put it in storage, insure it in storage --
BRUNE: Correct --
QUEST: At what point do you only buy the car if the IPO is successful?
BRUNE: Yes, in most cases we bring the cars from a collector or a dealer or a broker who has access to that particular asset, we identify it, we
study it, we make sure it is what we believe it to be, and then we bring it to market and raise the money to acquire that asset.
QUEST: And what does the -- what does the investor get? I mean, obviously, when the car is sold, it makes a profit --
BRUNE: Absolutely --
QUEST: Divided by less fees --
BRUNE: Yes --
QUEST: But --
BRUNE: Yes, well, but we're seeing people use this in different ways. One of the main ways is they're thinking about it as almost a savings program
towards a collectible they want to have in the future. They have fantastic returns out of it.
And then the part of ownership that comes with building that collection.
QUEST: But they don't get to see the car.
BRUNE: They absolutely do. So we have fantastic partnerships, we have one with Mecum Auctions, we're actually doing a pop-up at Mandarake(ph), at the
big car next week. We'll have one of our assets there that we'll be showing off.
We've done a pop-up here in New York City where we had three of our assets in our Soho warehouse --
QUEST: I love --
BRUNE: Showroom --
QUEST: You're the chief exec --
BRUNE: Yes --
QUEST: And you are very deliberate in what you're talking about. You don't say three of our cars, you say three of our assets, I understand
they're assets --
BRUNE: Yes --
QUEST: You want this to be thought of as an investment --
BRUNE: Yes, absolutely --
QUEST: Rather than as a geeks built for petrol heads.
BRUNE: This is not a geeks for petrol heads. Most of our early investors are actually more financially burnt. The young people that's
sophisticated, they're investing on Robin Hood, they're investing on Coinbase, and now they've got a way to diversify their portfolio, and
beyond that be diversified within the asset class across multiple different cars.
QUEST: So how have you -- or what sort of rate of return have you seen, if we're going to do finances, what sort of rate of return average of return
have you seen?
BRUNE: So on our first two trading windows, both our assets in our marketplace for about six months, one is up 3.25 percent and one is up 4.25
percent over that period of time. In general, the collected car market has had a great ten years, it's up about 400 percent since 10 years ago.
So really, what we look for our assets back and deliver those type of returns into the future. That's where we're trying to push it --
QUEST: Give me the perfect vehicle --
BRUNE: Perfect vehicle --
QUEST: The perfect vehicle for you for this sort of assets --
BRUNE: I'm Porsche person, so I'm a little bit bias, but I actually can do something for you, a Jaguar --
QUEST: Oh --
BRUNE: Up to date, 20 --
QUEST: A Jaguar, I used to have one, you know, and a J6, a massive old thing, so never actually worked very well, but it was a beautiful car.
BRUNE: Well, here's one from 1993, at that point in time it was the fastest car in the world only to be eclipsed by the McLaren F1. The
McLaren F1 is now $15 million to $20 million asset. We have what is basically a very comfortable car from the '90s that we're offering it
We think it's fantastic investment, the checks, all the balances --
QUEST: That's how you're selling it --
BRUNE: Providence --
QUEST: You're selling it --
BRUNE: Yes, we'll be launching that --
QUEST: Oh, you're selling it -- you're selling it as a --
BRUNE: Yes --
QUEST: So how much per share? So you have 200 divide or everybody shares - -
BRUNE: In that actual asset, it's 5,000 shares, so it's $99 per share, very accessible. And there's no minimum, so there's literally one share
you could purchase, there's no commission to the management fees. We tried to make this zero velvet ropes.
So this is car collecting for everybody, it's called democratization.
[16:50:00] QUEST: Fascinating --
BRUNE: Thank you sir.
QUEST: We might actually have to have a QUEST MEANS BUSINESS car, we'll talk later.
BRUNE: We'll have you down to our showroom in Soho when it opens up and we'll show you what we're all about.
QUEST: OK, thank you very much indeed, very interesting.
BRUNE: Thank you sir.
QUEST: And you can watch NFL games in Mexico, NBA games in London and MLB games in Australia. Now, it's European football's turn to send players on
a very long road trip across the Atlantic.
QUEST: For the first time, one of Europe's top football leagues will play part of its season in the United States. The Spanish La Liga game will be
played in the United States as part of a 15-year deal in North America. We do not know yet which team will play or indeed win.
Charlie Stillitano is the executive chairman of Relevant Sports, the media company that made this deal. So this is fascinating.
CHARLIE STILLITANO, CHAIRMAN, RELEVANT SPORTS: Yes --
QUEST: Why have you done it?
STILLITANO: Well, we've done it because our ownership group, Steve Ross who is developing Hudson yards over here in New York and also owns the
Miami Dolphins --
QUEST: He owns this building, where we are the moment --
STILLITANO: Yes, probably.
QUEST: Yes --
STILLITANO: He wanted to do the same thing that really our friends in the NFL do, Major League Baseball, NBA as you said in the intro earlier. So
we're doing the same thing, only reversed.
QUEST: And how many matches will be played here?
STILLITANO: We're going to start out with one, we're going to do one, it's going to be this season, and we're going to have one of the big Spanish
teams and a smaller team most likely.
QUEST: OK, but if you only got one, and it's your first --
STILLITANO: Right --
QUEST: It's going to be one of the big two.
STILLITANO: I can't say --
QUEST: Well, come on --
STILLITANO: Can't say --
QUEST: If it's not, people will say that's a bit of a --
STILLITANO: Well, OK --
QUEST: It's up-scrip --
STILLITANO: Yes, exactly, but I think it's a 15 -- it's a 15-year deal. So we want to start out the right foot, we're camping two small teams here
QUEST: No --
STILLITANO: For start. So the first year, we're shooting for a big team - -
QUEST: I assume that the teams involved, obviously involved in this and this sounds interesting them doing it, because at the end of the day, you
know, so you play one extra match in your own country, but one match here in a major stadium --
STILLITANO: Yes --
QUEST: Have you decided where?
STILLITANO: We haven't decided where but we do own the Miami Dolphins stadium, Hard Rock Stadium, so you know, that's the place where we bring a
lot of our games.
[16:55:00] Right now, we do the International Champions Cup and we're the ones that have filled the big house in Michigan with a 110,000 people for
Real Madrid and Manchester United.
So we do this -- we even had the Clasico in Miami two years ago.
QUEST: Were you making money on this?
STILLITANO: We make money, but we actually work with the clubs. We have the TV rights for the clubs, the sponsor rights --
QUEST: For the clubs, for this one match?
STILLITANO: No, for --
QUEST: The whole thing and the whole thing, of course, yes.
STILLITANO: For our cup. For this particular deal --
QUEST: Yes --
STILLITANO: It's a joint venture with La Liga, it's 50 percent by us, 50 percent by La Liga, us being Relevant Sports and Steve Ross and we are the
group that puts together everything from the youth development, their sponsorship sales, these games that they're putting on TV sales, we do all
that over a 15-year period.
QUEST: And it's a fascinating idea and it's not new in the sense that other sports have done it. But the poor players, who they have to fly
across to play one match and then fly back again, particularly in the middle of the season, so there's not going to be much room for error.
STILLITANO: Yes, and I think we need to -- we need to get that part right. We need to respect the game without question. But I think it will be set
up so they don't really have the big commitments before or after. So the two teams that come over the first, we want to make it reasonable for them.
QUEST: Just you and me, Madrid or Barcelona?
But you know, I decided to ask you.
STILLITANO: It was a simple question and I don't have a simple answer.
QUEST: Well, you do, you just don't want to give it to me maybe --
STILLITANO: Exactly --
QUEST: Thank you, though, good to see you sir --
STILLITANO: Pleasure, thank you so much.
QUEST: We will take our profitable moment after the break.
QUEST: Profitable moment. Obviously, the markets roared ahead and we gave you good coverage of it. But tonight, we also brought you two fascinating
stories. First of all, the classic car app that lets you invest in classic automobiles.
And then the La Liga, they're going to play a match that's going to be played in the United States, the basis of which of course is to make money.
Proving once again QUEST MEANS BUSINESS, we are defining path of how you earn and how you spend your money and we will always remain so.
And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, as you and I look at the market that is rising sharply, will it
continue on Friday? We'll find out.
Whatever you're up to in the hours ahead, I hope it's profitable. I will see you tomorrow.