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QUEST MEANS BUSINESS
Hurricane Florence Begins Lashing U.S. East Coast; Super Typhoon Roars Towards the Philippines; U.K. Rejects Russian Suspects Alibi on Nerve Agent Attack; German Catholic Church to Admit to Over 3,000 Sex Abuse Cases; Wall Street Higher on Trade Talk Relief; China Welcomes U.S. Offer of Trade Talks; A Small Clinic from the slums of Sao Paulo Grow into a Major Healthcare Provider; Global Climate Action Summit Commences in San Francisco. Aired 3-4p ET
Aired September 13, 2018 - 15:30 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: It's an hour left to trade in New York. The deal needs to be done. Now is the time and look at the
markets. The Dow is up, straight up out of the gate, never look back. It's been strong all session. Half a percent, pull it down fast and you
see Apple is up the top along with IBM and Intel. The laggard on the Dow is McDonalds, but it's green across the screen and these are the drivers of
It's technology companies, as you've seen that's driving the market higher. We'll get into exactly how. Turkey's Central Bank is stepping in to stop
the currency route; and China says it's happy to talk with Washington. Even as Donald Trump says "no pressure." We are live in the world's
financial capital, New York City on Thursday, September the 13th, I'm Richard Quest. I mean business.
Good evening to you. Two giant storm systems on two different continents are about to wreck havoc; there is a hurricane in the Atlantic Ocean and a
super typhoon in the Pacific. Look, can you see them here on the super screens, you've got the one that is out in the Pacific. Both are just
hours away and both have hugely potentially destructive ramifications. We will deal with both of them during the course of the program.
We begin, though, with United States and Hurricane Florence, which is due to arrive within hours. Now, storm force winds already hitting the coast
around Wilmington, and of course will move on towards north Myrtle Beach. Look at the - look at the wave of outer bands are hitting and you think of
what's still to come.
Let's begin in south eastern United States. The outer bands of the hurricane have now reached land. This storm is growing in size as it
prepares to dump trillions of gallons of water on the Carolinas. Ten million people are under watch or warning, hunkering down or getting out.
And bridges and roads are closing. Authorities are warning the window of time to leave is just about closed.
(BEGIN VIDEO CLIP)
BROCK LONG, FEMA ADMINISTRATOR: Many of you have been placed under evacuation. We are asking citizens to please heed a warning. Your time is
running out. The ocean is going to start rising along the coast and in the back bay and inland areas and the sound areas within a matter of hours.
Your time to get out of those areas and storm surge inundation is coming to a close.
(END VIDEO CLIP)
QUEST: So the storm's path, Tom Sater is at the World Weather Center, talk me through where this is going.
TOM SATER, METEOROLOGIST, CNN: Currently, Richard, it's 180 kilometers just off the coast from Wilmington. It went from a Category 4 to a 3 to a
2, which is psychologically the worst thing to happen because people think it's okay, it's just a two. It doesn't change a thing. It carries with it
all of the severe elements of a Category 4.
Now, to understand that, we have got to go back to the beginning. When this came off the coast of Africa, we got our first advisory on the 30th of
August. That's over two weeks ago. But for the first time in history, at a longitude at this position, the US has never had a hurricane make
landfall coming across in this direction. They always go up to the north in the Northern Atlantic.
So it is bringing with it all of the characteristics it had as a Category 4. That wall we talked about yesterday, that upwelling of water from the
ocean is carried with it. So the only thing a 2 does is it lightens those winds right around the center somewhat. So the unfortunate homes that get
flooded will not lose their roof at the same time.
Now, this is horrible to think of, but when you look at the cycle and we talked about that little eye going through its cycle, that eye wall
replacement cycle. They all do it. Every couple of days when it goes through the cycle, it pushes winds out and they stay. It goes through
another cycle, pushes them out, pushes them out.
So, this is - even though it is Category 2, it is massive covering so many states and real estate.
QUEST: What is this thing I am hearing from you and others about how the hurricane - and forgive my imprecision of terminology - but how the
hurricane will stall over the area and in doing so, could - will dump even more water.
SATER: Okay, last year, Hurricane Harvey moved into Texas. Category 4, devastated the little town of Rockport, but then you could out walk it. It
was a named storm in East Texas for almost a week. It was feeding off its own rainfall. Right now, we are getting winds that are 80 kilometers per
Here is the stall process and this is why this is a concern. Moves in overnight tonight into tomorrow morning. There's Wilmington. That's
landfall when half of that eye is over land. But then between Friday morning and late Sunday, it only moves 240 kilometers, about 150 miles.
You can out walk this. Even a tropical depression when it's got that source of water will do tremendous damage.
The river in Wilmington will probably have six-and-a-half meters of water. That's all-time record. We're talking all-time state rainfall records for
North and South Carolina. As much rain in three days that Washington, DC picks up in a year.
QUEST: So, Tom, I know we are going to talk about the super typhoon later in the program, which is also important. But just finally and very briefly
in a word, we are now in the dangerous time, the dangerous period for Florence?
SATER: Yes, we are. It doesn't get much more dangerous than this. In fact, when the window shuts, it stays shut. Those that are going to remain
behind, keep them in your thoughts and prayers because they put the first responders in danger, and many will not even answer calls to 911 because
it's too dangerous.
This is not over with, though, Richard, once this goes through the mountains, they've had water rescues up to the north this week because
Gordon came through and flooded this area. So this will be an ongoing story for a good week.
QUEST: Tom Sater, thank you. Now, the storm is expected to deliver an economic blow as well. By one estimate, $200 million a day from North
Carolina alone. And the reason is, if you look at the storm's path, it becomes quite clear. What's in its way? Well, you've agriculture. The
cotton crops and livestock that are in danger from some of the most important farming communities in the United States.
But more recently, of course, the Carolinas have become major high-tech manufacturing and industrial areas. High-tech industries. You've got
autos, planes and food processing. If that wasn't large enough, take, for example, Charlotte, North Carolina, you have banking. The largest
financial - Central Bank of America.
It's expecting heavy rainfall and flooding all in that area. And then, of course, tourism. The summer may be just about over, but this is the best
time normally to visit those parts of the United States, so businesses are taking evasive action where they can.
Ports, factories, and stores are closed. Daimler, Volvo, Boeing, Nucor, Smithfield - all have closed their factories, too. Boeing and BMW are
getting their goods out of the storm. Boeing flew their planes from South Carolina to Seattle. And BMW moved trains carrying its cars into holding
areas for safety.
Car companies are also bringing in extra workers to get the lights back on as quickly as possible and pipeline operators are making sure to keep gas
flowing - gasoline flowing to the Colonial Pipeline to the northeastern United States. You are getting an idea of just how devastating this is.
Perhaps one who knows more than most. Larry Wooten is the President of the North Carolina Farm Bureau.
Good to have you with us, sir. Thank you. The crops, the agricultural, the livestock - how much is at jeopardy with this storm?
LARRY WOOTEN, PRESIDENT, NORTH CAROLINA FARM BUREAU: Well, certainly, this huge weather system that's coming in right now as we speak couldn't come at
a worse time for North Carolina agriculture.
Agriculture is by far the largest industry in the state of North Carolina. We grow 50% of all of the tobacco that is produced in the United States,
we're the number one sweet potato producer in the United States. We're number two in the production of hogs, number two in the production of
turkeys, and so with our cotton, peanuts - all of the major crops that we grow here, this could not come at a worst time.
Our farmers have been working feverishly for the last several days, whether it be pumping down the waste lagoons for their last stop, and poultry
operation, topping all gas tanks and diesel fuel thanks for auxiliary generation, obviously, many of these operations have to have auxiliary
QUEST: Now, with the crops, are they ready to be harvested? What stage are they at that makes this such a bad time?
WOOTEN: Our tobacco crop right now is only 50% harvested. Our sweet potato crop is probably 25% or less harvested. A 100% of cotton is still
in the field, basically 100% of peanuts are in still in the field.
WOOTEN: Probably 50% to 60% of the corn crop that we grow is in North Carolina - it's going to be devastating for North Carolina agriculture.
QUEST: What do you do with live stock in this scenario? I mean, I suppose the idea of moving them to higher ground, well, that's not going to be
practical or reasonable for the numbers involved. Keep them indoors, again the numbers involved are going to be huge. So what is the best solution
where livestock is concerned?
WOOTEN: Well, with our livestock, in our pork industry, most of those are in confinement operations. Those operations are above the flood prone
areas. We've learned a lot in the last hurricanes that happened, our farmers have been - our livestock and poultry farmers have been working
feverishly to make sure they protect those animals and so it's - they're working hard. I think we're going to be okay unless you get winds in
excess of 100 miles an hour, then if they begin to take the tops off of these livestock facilities, there is nothing anybody can do.
But aside from that, they've got auxiliary power to make sure they have food and ventilation and water and so we're prepared.
QUEST: You are prepared, sir. You're prepared, Mr. Wooten. Thank you. And I want to say good luck. I mean, you know, whatever happens, we want
to find out afterwards how it all went. Be safe, sir, in what could be very difficult and dangerous circumstances.
Now, an even more powerful storm is currently about to threaten the Philippines. It's a super typhoon, and look at this, it's also coming in.
We will talk about that with Tom Sater a little later. In fact, half past the hour, in about 12 minutes from now.
Now, US stocks - back to our agenda. They gained in the final hour. A nice strong, good rally. Straight up, all right, all right, gained back a
bit from the 10:00 best of the day, but even so, not bad of half a percent, 128 points. And it was technology stocks that led the advance.
You saw on the chart right at the beginning, IBM was up and Apple was the best gainer on the day over 2% to 3%. Investors are hopeful for fresh US
trade talks. Kroger shares were up about 10%, sales of the largest US supermarket chain grew less than expected.
The world's most richest man has finally announced plans how he is going to start spreading his wealth. Jeff Bezos and his wife, MacKenzie are
creating a $2 billion fund to help the homeless. The Amazon Chief Executive had been asking his Twitter followers for ideas on how to give
back some of his $150 billion fortune. CNN's Samuel Burke is in London.
He has been thinking about philanthropy for some time. Now he's done it, it's obviously a relative drop in the ocean in the sense of the amount of
wealth that he's got, but it is a start.
SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: It is a start, and I think a lot of people in the tech world, Richard, are very happy to
see that it is going to be going directed towards helping people who are homeless -- shelters for the homeless and schools for the homeless.
And I'm specifically saying the tech community is happy about this because if you look where tech is most successful, I'm talking about Seattle, San
Francisco, as well as here in London, you see a huge amount of homelessness. 11,000-plus people are homeless in Seattle right now.
So, a lot of times when you talk about the success of tech, we don't talk about how the rising house prices have hurt a lot of people in these
communities, so, yes, it's only $2 billion of $163 billion that he has; yes, he's been criticized for not previously talking about how he's going
to donate a lot of this money in the way that Bill Gates and Warren Buffet has, but it looks like it's headed in the right direction.
QUEST: And do we know why he has decided on this? Why he and MacKenzie decide on this. I mean you make the argument about Seattle, London, New
York, and all the other tech centers, was that the reason?
BURKE: No, I'll be honest, we don't know why he did it. In fact, just a few months ago, he had been talking about the fact that he didn't know if
he would have any money left over from all that he's investing, not in Amazon, but in his other company, Blue Origin, so where this comes from, we
don't know exactly. And I think it's also worth noting that there has been extensive reporting done about how tech billionaires in particular make
these announcements and there has to be follow up.
A lot of times these announcements, we haven't seen exactly where the money has gone. So this is a story that we're going to stick with and watch.
There has been a lot of criticism about how the tax deductions have been used, of course, we haven't seen the money spent yet. We're not making any
accusations, obviously, but this is a story we have to follow very closely.
QUEST: Samuel Burke who is in London. Samuel, thank you. It is "Quest Means Business" live from New York. When we return, the Brexit Secretary
Dominic Raab tells UK companies to stop blaming Brexit for their bad results.
QUEST: Worst case scenario for many UK businesses in the question of Brexit and now, the UK government is laying out the impact on day to day
life if the UK crashes out of the European Union, if there is no deal.
New papers are predicting major disruption for everything from road travel to passport restrictions. Meanwhile, negotiators are trying to hammer out
the deal that the UK's Brexit Minister is trying to pull an ace out of his sleeve.
Dominic Raab says Britain won't pay all of its promised divorce settlement in the event of a no deal scenario. Bianca Nobilo is in London. Look,
there were so many strands today. Raab says they won't pay. They're going to need to look at the aspects of it. The Europeans say today that that
part of the deal is already set in stone, but here's the problem, everybody was always told, nothing's agreed until everything's agreed. So the
British are entitled to go back and say - and tinker at the edges.
BIANCA NOBILO, CORRESPONDENT, CNN: And I think you could interpret what the Europeans said today in a number of ways. They said that they're not
going back and renegotiating what's already been discussed. But that Brexit bill, the 39 billion pounds does take into account the fact that
there will be a future trading relationship, security cooperation, and a number of other things.
So that the UK is arguing that obviously, if that's not the case and there is no deal, then that number will have to be reassessed because they have
been haggling for every pound, so says the Brexit Secretary and the Prime Minister has echoed that this week as well, but they won't be paying that
full bill if they crash out.
QUEST: Mark Carney was at the Cabinet meeting for a short time, the governor of the Bank of England and according to the "Financial Times"
reporting, and that when he gave dire warnings of the economic chaos that will transpire if there is no deal.
NOBILO: Yes, that's what we heard. So Mark Carney is stuck in the back of Downing Street today to attend this three-hour no deal emergency Cabinet
meeting. And he, along with the Chancellor who also has been warning firmly against the economic repercussions of the no deal, tried to convince
the Cabinet that that would be the worst of all worlds and that the Chequers plan, if adopted, the Prime Minister's rather unpopular compromise
solution would actually, if it manages to pass, calls economic forecast to be ...
NOBILO: ... to outperform what's already expected. Now, what's important about why Carney is doing that is because we talk about no deal, Richard,
but as you know, there are two ways that no deal can happen. There's no deal because the EU doesn't want Chequers, and then there is no deal
because Theresa May gets the deal with the European Union, perhaps the Chequers plan, and then can't sell it within her own party. So that's why
Carney's work today was particularly important.
QUEST: But if she gets the deal within her - if she gets the deal that's based on the Chequers plan, which does keep single market access for goods,
if not services, then can she not railroad it through with the other parties and still afford a few of her own to defect?
NOBILO: It's possible. The arithmetic is very cloudy at the moment. So we know because of earlier in the week that there were 50 Euro-skeptics MPs
within the Prime Minister's own party, which is enough numbers to vote this down, that could vote against the Chequers plan; however, there is a huge
question mark over what the opposition party, the Labor Party would do because it's imperative to them to try and take down Theresa May's
government. If that means potentially not letting her plan through, we don't know yet. So that's very much up in the air.
QUEST: Bianca, thank you. We are going to stay in London because there are less than 200 days until March the 29th, 2019. That's the date when
Britain officially leaves the EU, whatever transitional arrangements are in place. The 29th is the day when it's two years since Article 50 was
invoked and some UK businesses say the effects are already being felt.
Now, the major retailer, John Lewis, of course, and John Lewis is the latest company to complain about Brexit uncertainty, hurting its bottom
line. Its profits in the first half fell a stunning 99%. So far so bad, but the UK's Brexit Secretary claims Brexit isn't to blame and speaking on
BBC Radio said companies should stop using it as an excuse for their bad results.
(BEGIN VIDEO CLIP)
DOMINIC RAAB, UK BREXIT SECRETARY: I don't doubt that some of the uncertainty around these negotiations will have an impact on business,
that's why we are putting all our energy into getting the good deal that we want with our EU friends and partners, at the same time making sure we
manage the risks, it doesn't happen.
All I'm just gently saying is that it's rather easy for a business to blame Brexit and the politicians rather than tp take responsibility for their own
(END VIDEO CLIP)
QUEST: Somewhat rich, Anna Stewart, I mean, it's sort of - it's almost, as they'd say where I come from, we're in the brass neck of it. I mean, the
politicians cannot decide what to do. They are absolutely tearing inches apart and they say that, "Oh business is blaming us unfairly."
ANNA STEWART, CORRESPONDENT, CNN: I can tell you, Richard, it didn't go down very well at John Lewis. Critics say that the timing is terrible
today as you spoke to Bianca just now. Today was the day they meant to help and advice the business about the possibility of a no deal Brexit, and
bashing Brexit, sorry, bashing businesses over Brexit doesn't seem maybe the best idea.
Now, he has had a bad week, Dominic Raab. There have been a few businesses complaining about Brexit. Jaguar Land Rover warned that tens of thousands
of people could lose their jobs in a no deal event in the auto sector. Ryanair spoke to us yesterday, they say that no flights will fly between
the UK and the EU unless they come to some sort of deal deem after March.
The flights will literally be grounded and actually, Michael O'Leary, the CEO, also said Theresa May will be out of a job by Christmas. It's not
being a good week, but for John Lewis, honestly, in the financial report, they don't really mention Brexit much at all. They named seasonality,
price competitiveness, custom new shops - all sorts of things that profit dropped.
They only blamed Brexit for their outlet which they say in part, Brexit makes it slightly uncertain.
QUEST: Okay, if you look at the way in which Brexit is coming together, you have doing some reporting on this, the difficulties that the UK faces
are now becoming extremely clear.
STEWART: Extremely clear. It's now panic stations. People make contingency plans. Investment has dropped off the cliff and one of the big
issues, Richard, particularly the businesses trading with Europe, is what will happen in a no deal Brexit. And actually, I got a chance at a report
and get my nose stuck into some excise and duty forms to have a look.
(BEGIN VIDEO TAPE)
STEWART: They glide into Britain's Felixstowe Port carrying cargo from all corners of the globe, four million containers each year, filled with food
stuffs and furniture, cars and consumer electronics. Three-quarters coming from beyond Europe.
STEWART: What's this? Where does it come from?
GEORGE BAKER, CUSTOMS BROKER: It's wooden flooring and it comes from China.
STEWART: George Baker is a customs broker, marshalling goods like this, a batch of animal feed additive through the port.
BAKER: We've got a big responsibility to keep the ports and the airports moving along.
STEWART: Non-EU imports and exports waiting transit until levies are paid and paperwork completed. A maze of minutia, the UK government says firms
with business in Europe should prepare for.
In the event of a hard Brexit, all goods coming and going from the EU will have to clear customs. For container ports like this one, the country's
largest, that could mean severe delays and congestion come Brexit day.
The EU is the UK's biggest trading partner. A hard brake in British ports will have to clear about 200 million extra shipments a year, four times
what they do today.
BAKER: We would anticipate a 500% increase in the volume of work that we would have to handle if we are going to have to suffer a hard Brexit, and I
say suffer, because it would be a difficulty.
UNIDENTIFIED MALE: So, this is a commission invoice.
STEWART: An invoice from China, a glimpse of just how one souvenir could stall supply chain. There is stuff like a half pint glass, dollar toilet
roll, light-up glasses, what do you do with it next?
UNIDENTIFIED MALE: So for the code, I go into the customs tariff here. This then will tell me how much dues was paid upon arrival. This code is
STEWART: A 2.7% tax on a light-up drink glass. And that has to be paid before it can leave here?
UNIDENTIFIED MALE: Yes.
STEWART: For businesses like Nigel Cossey's, the impact could be devastating because he exports guitar speakers across the EU.
NIGEL COSSEY, BRITISH BUSINESSMAN: When I'm selling, a 30 pound speaker, it is going to be a 25 pound charge. It makes it really difficult.
STEWART: A cost he plans to pass on to the consumer.
COSSEY: And there lies the issue. We have got competition in Europe. We go hard against a large German company and they've got the rest of Europe
to export to. Free.
STEWART: He says, he'll have to hire more staff, maybe even open a Europe office to head off the red tape and taxes.
COSSEY: That would really affect our margins and make us less competitive.
STEWART: The waves of a no deal Brexit rippling far beyond the country's ports.
(END VIDEO TAPE)
QUEST: Anna Stewart who will be reporting on it. Anna, keep looking at these interesting stories and important stories of exactly who is being
affected and when, thank you.
Now, as we continue tonight on "Quest Means Business," China says it welcomes an offer to sit down with US officials for high stakes trade
talks. I'm thinking a potential breakthrough after the short break.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. As we continue
tonight, you're watching Cnn, and on this network, the facts always come first.
Hurricane Florence is now lashing the Eastern Coast of the United States with the tropical storm force winds landfall that's expected sometime
overnight. And as you can see, we're seeing a powerful storm surge in some areas. More than a million people have now being told to get out of harm's
And it's not much, but it could be greater or worse in Asia super typhoon Mangkhut is roaring towards the Philippines. There, there are winds
gusting up to 255 kilometers an hour, 10 million people in the Philippines are in the storm's path and Mangkhut has already left its pair of
destruction when it got to Guam earlier this week.
The British government is rejecting the alibi of two Russian men accused of a nerve agent back in the U.K. The suspects said they had nothing to do
with the poisoning in Salisbury, and claimed they were merely tourists visiting the town's historic cathedral.
British authorities say the two men are Russian intelligence officers. The German Catholic Church reportedly ready to admit from its 4,000 cases of
sexual abuse over six decades. In a comprehensive study commissioned by the church on more than 1,600 priests accused of sex abuse.
Most of the cases involving young boys under the age of 13. Join now or go home! The last half hour of trade, and we need to show you what's
happening. The markets are rallying, they're up strong and there are two distinct reasons. They're running on the hopes of fresh U.S. trade talks
with China and on technology stocks with Apple.
Well, a look at the big board, Beijing's welcomed the offer of new high level trade talks from the United States. President tweet -- President
tweeter -- you know, that was a Freudian slip. President Trump tweeted, "we are under no pressure to make a deal with China, they are under
pressure to make a deal with us." Are they?
And by the way, as we start our discussion, Jamie Metzl is here; the Atlantic Council senior fellow and McKenzie Partner Susan Lund joins me
from Washington, good to see you, Susan down the line.
SUSAN LUND, PARTNER, MCKINSEY & COMPANY: Yes --
QUEST: And to you, Jamie, do you have your phone ready? Your phone, your laptop, your iPhone, your computer, iPhone, whatever it is, because this is
a question that you can join in on at cnn.com-slash-join in just a moment.
So Jamie Metzl, the talks with China, there are the threats of -- there's the real threat of $200 billion more in tariffs, with $100 billion more
still to come.
JAMIE METZL, SENIOR FELLOW, ATLANTIC COUNCIL: Right --
QUEST: What happens next?
METZL: Well, obviously, the Trump administration wants to have this threat, but they're cautious about going forward. And that's the reason
why even here at the 11th hour, Secretary Mnuchin said, well, we've heard that some people in China want to have talks, therefore, we're responding
to the non-invitation, you know, with an offer of talks.
So there's a lot of game-playing that's happening.
QUEST: Does it sound as if they want it or are they making noises?
METZL: They're making noises to try to enhance their leverage. Both sides are in many ways locked in. It's not going to be good for anybody if the
United States imposes these tariffs, and it's not going to be good for the United States if China doesn't open its markets.
There's probably some kind of deal to be had. Everybody is locked in, and that's what makes this situation so dangerous. And the Trump
administration is right that China has gotten a lot of -- gotten away with a lot of questionable behavior, but they've done a terrible job of righting
all the leverage to try to drive change.
[15:35:00] QUEST: Susan, the issue is -- could not come at a more pressing time. It is 10 years, bear with me, Susan, it is 10 years since
the financial crisis and everyone says trade worries could be the faller. So answer this question in the -- where's the next one brewing?
Well, we won't be able to join in first, while you're answering it. Get out your phones, your tablets, your computers, go to cnn.com and this is
what you see. Where will it be in the United States with the next crisis with trade wars and growing debt.
Europe with its Brexit woes, China where growth is slowing or other emerging markets. Susan?
LUND: All right, well, I think we've done a really good job at fighting the last crisis. So banks in the U.S. and Europe hold a lot more capital,
got me into their safer -- the world is also less interconnected in terms of some of the hot money that was slashing around before the crisis.
But of course, there are still worries, so over the last 10 years of really super cheap credit, lots of emerging markets were able to borrow at
historically low rates and he loaded up on that --
QUEST: This is fascinating, 70 percent of people say that they're voting at the moment, cnn.com-slash-join, the United States is the most worrying.
And then China which has more problems come to you and say this isn't China which has more problems arguably, it's only down and it's 7 percent.
LUND: Well, I think that viewers have not seen your show yet, Richard, is the problem here. I think that if we look at debt in China for instance,
it has quadrupled over the last 10 years. So China's companies now have twice as much as that as U.S. companies or just to criticize their
So definitely, debt is a worry in China as well as other emerging markets. We're seeing the news in Turkey, in Argentina, lots of countries are
starting to face the fact that they've got a lot of debt and it may be more difficult to repay when interest rates rise.
METZL: China has a bigger problem, but their government has more levers to address it. The United States is in a better situation, but our government
is in disarray. And while China has a strategic plan to try to fix their problems, what we are doing in many ways doesn't make strategic sense
economically, and it doesn't make strategic sense in terms of standing up to the threat that China poses.
Because if we wanted to address the real problem, the real in some ways threat to the United States that China poses, we would need to build an
alliance of our allies and have a real strategy, and that's not what we have.
QUEST: Stay with you -- stay with me both of you because JPMorgan Chase's Jamie Dimon told Kristen(ph) moments, the financial world has learned some
tough lessons over the last decade.
(BEGIN VIDEO CLIP)
JAMIE DIMON, CHAIRMAN & CHIEF EXECUTIVE OFFICER, JPMORGAN CHASE: Absolutely, we're better. There was a flaw, it wasn't just banks, it was a
whole -- it's the government, Fannie Mae and Freddie Mac, a lot of those things have been fixed.
I can actually give an example. If Lehman brothers just happened today, it wouldn't happen.
UNIDENTIFIED FEMALE: It would have --
DIMON: They would have two and a half thousand more equity, two and a half thousand more debt, two and a half thousand more liquidity, the regulators
had the legal authority taken over, and they had the ability to wind it down in an orderly way.
It won't happen, this huge disorderly mess that the collapse have even --
UNIDENTIFIED FEMALE: Yes --
DIMON: Created. And so the regulators should take a victory lap, they say you know what? You're right, he fixed that part. Some of the things were
overdone, like what happened in Morgan, well, it was so bad that's actually because people who need mortgages, not subprime can't get them.
Younger people in the drain(ph), self-employed prior default because of the litigation and the course around service and origination. The government
knows we need to fix that, we need proper regulation and we should just get away from the debate more is better, OK?
Everyone who is in business knows that some of these regulations become so crippling. When I travel around the country, I talk to small businesses,
it's staggering what they have to go through to run their small business. Of course, you want clean air, clean water, healthy businesses.
You want people punished when they do wrong things. But you should be really taught the designs in these things. And if you just make it binary,
more or less you're making a mistake. The banks have not asked for Dodd- Frank to be thrown out, Dodd-Frank did a lot of good things, their question is now calibration.
(END VIDEO CLIP)
QUEST: Susan, so the lessons learned and the lessons that could come back to haunt us in having been changed. We're clearly safer but are we safe
LUND: Well, I think the one thing that we know is that the next crisis is not going to come from the same source as the last crisis. So I think that
Jamie Dimon was absolutely right that banks learned a lot of lessons, I don't think that we're going to repeat the problems that ran up to 2008.
So now you have to think what are the --
QUEST: Right --
LUND: Next risks. We've got emerging market debt, that could be a problem, we have technology playing an increasing role in financial
markets. So we've seen some flash crashes in the stock market, sudden drops because of high speed trading.
[15:40:00] Now, we've got cryptocurrencies that could prove -- make asset bubbles. We have ROBO advisors, so artificial intelligence invests
QUEST: Right --
LUND: Individuals on how to invest. And we really don't know how these things are going to play out with market dynamics.
QUEST: Fascinating, Jamie, that's what she -- Susan talks about ROBO advisors, cryptocurrencies, technologies, but square this circle with
yesterday's iPhone launch where we're now prepared to pay 1,400, 1,500, $1,800 for a phone. And look at today's market where tech drove the day
and if the -- pretty much the game in town --
METZL: Right --
QUEST: Which leaves us where with risk.
METZL: Risk is going up for two big reasons. One, because as Susan mentioned, technology is leading us to a world that's very different going
forward than the world that we've known. That's what exponential change IJ curve means. It means change going forward as fast as they are going back.
When we see the intersection of rapid technological change and massive geopolitical change, that intersection in my mind is the danger point.
QUEST: Exponential change on the J curve, that's why you watch this program --
METZL: Exactly --
QUEST: This is one of the device from Jamie and from Susan. Thank you both so much. Now, look, I need to just wrap us up with our -- with our
where the next financial crisis will begin, OK, so the U.S. lost a bit of ground in the last couple of minutes. I think they were listening to
Susan, but it is still where most of you believe that crisis will begin.
It's split between China and Europe for the rest, about 64 percent of you say it will be in the United States, J. Susan, thank you very much indeed.
As we continue, private healthcare with no insurance companies. Dr. Consulta is taking Brazil by storm and they could revolutionize healthcare
elsewhere in the world. We'll talk about that after the break.
QUEST: Fascinating, the way different people become extremely successful. My next guest started his business in a favela of Sao Paulo, it's now one
of the biggest healthcare providers in South America. It's Dr. Consulta. Now, how did Dr. Consulta become so big and more importantly so significant
in the healthcare business.
Well, private healthcare is usually connected to insurance companies, that's the normal way, say, for example in the United States, you pay
network plans and premiums. While Dr. Consulta has a completely different way and this is why you go up it.
[15:45:00] Dr. Consulta uses cloud technology, it creates a digital record of every patient and that's in troves of clinical data. Then uses
algorithms to diagnose patients and link them with the best treatment. It creates a more efficient and a cheaper system.
Dr. Consulta which is now fascinating is quite simply cutting out insurance companies. It matches the patients with the doctors and only charges
people for the care they need and used. Thomaz Srougi is the founder and CEO -- this is fascinating, and look, it's clearly working.
But who pays the bill?
THOMAZ SROUGI, FOUNDER & CHIEF EXECUTIVE OFFICER, DR. CONSULTA: Patients pay the bill.
QUEST: The patients pay the bill. And the role of the insurance company is not eliminated in that sense because the patients don't pay the full
bill, surely. I mean, if it's a major operation with some major treatment, then there's going to be more pay than we will pay or they could pay.
SROUGI: So first of all, let me tell you what we do, we combine technology data and the best doctors to offer the best quality for all. And by for
all, I mean, any insured patients. So they pay out of pocket, it's cash or credit.
And we believe that people need to have the freedom of option to pay for healthcare whenever they need it, whenever they want it.
QUEST: So how do you save?
SROUGI: How do we pay costs?
QUEST: How do you save the costs? Where does -- you know, this is the holy grail of most economies at the moment. And wherever I look, every
government is grappling with it.
SROUGI: Yes, so it's a global problem, right? Not only in Brazil, but in Brazil, we can get it to cut cost because there's no other option. People
can't afford healthcare, healthcare is very expensive, they can't afford it.
Seventy five percent of the population can't pay for private health insurance. So it needed to be extremely effective to be able to offer what
we wanted. So we've deployed lots of technology along the process. We've intermediated the broker or the health insurance to have a direct consumer
And we've decided to focus on a very specific piece of the value chain, the healthcare value chain so that we could use our assets way more
QUEST: I'm always suspicious when somebody says that they've found the solution to the healthcare problem. It is the third rail of politics.
Now, Brazil is in a particularly bad economic shape at the moment, so I guess anything is of help.
SROUGI: Well, I don't think we -- we don't claim to have found the solution, we just are a way more efficient, we lowered costs, we're very
efficient and we're very fast. People in Brazil, they need access. So we've been able to combine retail your concept with healthcare and
technology. So that we're close to everyone.
QUEST: And are you finding interest elsewhere in the world from this? Because it's very difficult to change established and entrenched healthcare
systems. You know --
SROUGI: Yes --
QUEST: You know, you stuff -- it's like snagging a sweater on a nail, the thing will fall apart.
SROUGI: Well, and that's what we've done in Brazil. We've been able to recreate or reboot a healthcare model within a very well established
healthcare system. So we had to completely ignore health insurance players, we had to ignore the government to be able to set our own system.
We're self-sufficient, we have a proprietor for patients and doctors, the best doctors in the country and we leverage everything from there. And so
QUEST: Good to see you, sir. Thank you very much indeed. Now, at the beginning of the program, I pointed out that there are two very dangerous
storms, we've dealt with Hurricane Florence. After the break, it will be Asia, the Philippines that are in a great risk, great risk from a super
typhoon. In a moment.
[15:50:00] (COMMERCIAL BREAK)
QUEST: A super typhoon is set to make landfall in the northern Philippines within the next 24 hours. Tom Sater has the latest. Tell me about this
one, and tell me -- let's get to the root if you like, when does it arrive --
TOM SATER, METEOROLOGIST: Yes --
QUEST: And how bad will it be?
SATER: It's going to come at the worst possible time in the darkness of night at about 2:00 in the morning. I mean, this is a strong category 5,
both Florence and Mangkhut here completely different, but they bring with them the deadly factors.
Florence will drop twice as much rain, but these winds are incredible, 270, that's down from 280, but the wind gusts are over 300. As it moves into
the area, these winds alone, Richard, will leave a path of destruction, I think you'll be able to see from space at 2:00 in the morning.
There's the eye and then it moves off. The difference on the outer banks about 25 million compared to four up in the areas of Luzon, but every life
is precious, and we're going to see that rainfall even down to Manila about 200, and it enhances the rain, but there's 700 in Baguio.
As it makes its way in about 2:00 in the morning, Saturday, it will slide across the region, Hong Kong will see their conditions go downhill around
noon, getting worse in the afternoon, but they do not have a direct hit. It moves towards southern China in the Hainan around Haikou and then toward
So again, the factor with these storm systems is the mass of wind-field alone is going to be destructive. They still will have the massive storm
surge. This reminds me of Haiyan, it took 6,000 lives in Tacloban in the Philippines. And again, they had a 5 meter surge.
But that rain stayed south of Hong Kong, but Hanoi gets into it as well. So this is a big story again coming at the worst possible time at 2:00 in
the morning and continues. The demise of Philippines helps areas with a lesser storm in southern China.
QUEST: Tom, thank you, watch both of them for us, please --
SATER: We'll do --
QUEST: With your colleagues and come back when there's more. Now, these major weather events are coinciding with the summit on global climate
actually in San Francisco. Mayors from -- chief executives from around the world are attending including Paul Simpson; the chief executive of CDP
company that helps companies track their environmental impact, joins me from San Francisco.
The role that the company can take is what? I mean, at one level, they follow rules, they follow -- they implement the procedures put in place by
government. What else can they do?
PAUL SIMPSON, CHIEF EXECUTIVE OFFICER, CDP: Well, Richard, what we're seeing is that every extreme weather event is reminding society and the
businesses in cities and investors who work with the CDP of the need for climate action, the need to reduce greenhouse gas emissions.
And we see now more than 6,300 companies measuring and disclosing their emissions and what they're doing on climate change through CDP. And we see
these now grounds well of companies setting emissions reductions targets.
Yesterday, announced at the summit some 480 companies committing to science-base targets, that's to reduce their emissions in line with the
two-degree pathway and the Paris agreement.
QUEST: When you have the U.S. withdrawing from Paris, but you still have governors and mayors in the United States, particularly governors of large
states like California saying they will match Paris levels. Where does that leave companies as to what they should do?
SIMPSON: Well, companies obviously need to have a long-term perspective, even most American companies are working on a global stage. The science
hasn't changed, it's got stronger, all the world's governments agree to the Paris agreement in 2015.
Obviously, the White House has now said, well, we think we're going to pull out, but that doesn't really change any of the situation for businesses and
the investors. Climate change is really happening, they need to respond.
[15:55:00] There are real business opportunities. Reducing energy use, reduce costs, investing in innovation like electric vehicles, we're seeing
electric vehicle revolution gives big opportunities as it race to the top in many sectors now. Who can provide the solutions to climate change?
So I think the White House situation, it feels like a short-term thing for long-term investors and businesses who want to be around and succeed in the
QUEST: Good to see you, thank you sir, enjoy this. The very question of climate change, we look at the markets. We are seconds away, in fact, five
minutes away if you want to be precise from the closing bell. The Dow is up 132 points, you can see the numbers.
Hasn't really budged over the course of the hour, which yes, the market is well supported at these sorts of levels. The Nasdaq was up as well though,
best one on the Dow so far today is Apple. During the day, we have some 2.25 percent, and that's of course on the back of this announcement, yes.
We'll take a profitable moment after the break.
QUEST: Tonight's profitable moment, economically, we know that the world is a dangerous place. But just how dangerous really is being the topic of
discussion as we look back 10 years to the financial crisis and look forward. As our boat and I with you showed, most of you think are a large
number if you think that the next crisis is building up in the United States economy.
High levels of debt, leverage markets that are frothy, seemingly weak government or at least government that has no unity. Now, if that's right
and by the way there are those like Medallio(ph) or Bridgewater, but most certainly believe two years out, that there will be problems in the U.S.
If that's right, then everybody else needs to be very worried indeed. Because Europe is already starting to slow down without having gained full
growth. And if you look at China, the debt levels there are very high and the government maybe have problems bringing that to us of London.
Put it all together and you do end up with where is the next crisis? No one really knows. You've just got to be ready for when it happens and when it
does. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is
The closing bell is ringing, the day is done.