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QUEST MEANS BUSINESS
The Philippines, Braced For Super Typhoon Mangkhut Makes Landfall; Florence's Path Of Destruction Is Predicted To Pass Right Through Carolina's Ports; Wall Street Executives Meeting In China This Weekend Where Sources Say Beijing Wants Trade Talks Held; Former Trump Campaign Chairman Agrees to Cooperate with Mueller; Super Typhoon Mangkhut Makes Landfall in the Philippines; Hurricane Florence Hammers Carolina Coasts; Kavanaugh Denies Sex Assault Allegations; Volkswagen Finally Squashes the Beetle with 2019 Final Edition; Russia Raises Rates for the First Time Since 2014 to Protect the Ruble; Zello App Aids with Rescue Efforts. Aired: 3-4p ET
Aired September 14, 2018 - 15:00 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: We are an hour to the closing bell on Wall Street. This is the DOW of the day. Look at this, up until
lunch time, down thereafter, a point move d of more than 160 with a small loss as we head to the final hour. Pull it now apart and you see although
it's mainly green, there are some large losses down at Disney and Apple and Caterpillar which is dragging the Dow lower.
Why are the markets off of these, are the drivers of the day? The market's sudden downturn because Donald Trump gives the go ahead for new tariffs.
Russia is hiking rates for the first time in years and reason to boost the ruble. As for the Fed, the members there see more rate rises ahead, of
course, evidence that the US economy is hitting its stride.
On a Friday, live from the world's financial capital, it's a miserable sort of day, but we are in New York City on Friday, September the 14th. I'm
Richard Quest. I mean business.
Good evening. We'll put our business agenda to one side for the moment as we look at a serious weather event taking place. The Philippines, braced
for the worst super typhoon Mangkhut makes landfall. Its hitting Luzon at the northern end of the country. Now we're going to have a report from the
ground in just a moment.
More than four million people in Philippines alone are in the storm's direct path. Evacuations are under way as military personnel are making
emergency preparations. You can see the pictures and the awfulness of it. The flooding, the landslides, the power outages are all expected. James
Reynolds is a storm catcher - a storm chaser, I should say who is in the area. He sent us this video a few moments ago.
(BEGIN VIDEO CLIP)
JAMES REYNOLDS, STORM CHASER: Well, the rains are starting to go down downhill here in Santa Ana, right in the northeast of the tip of Luzon.
The super typhoon Mangkhut or Ompong is looking like it is going to track just to south of where we are. Not sure exactly by how far but the wind is
really picking up now and we're expecting the rain to start cranking it down and it's going to get a whole lot worse than this from my assumption.
(END VIDEO CLIP)
QUEST: And James will join me on the phone in just a moment. The seriousness of this could be seen when you look at the map. So for
example, Filipino farmers getting rice crops in early will be badly affected. Hong Kong's output is expected to drop by two-thirds while the
storm is overhead. And crucially as well, shipping will be disrupted.
Look at the traditional shipping routes that you see in this part of the world. If the button works, and I would show you, but it doesn't. If you
look at the traditional shipping parts - or the shipping ports of the worlds, there you go, you see them very, very detailed with a lot of high
intensity traffic coming out of places like Hong Kong, Ranshu (ph), right all the way down to the transpacific oceanic trade taking place. Now, this
is what it normally looks like.
But now ships are being diverted, and as a result, as you can see a lot less traffic on the water. And passenger ships as well are also being
affected. For example, if you take, for example, this passenger ship which is the world dream, they are getting an extra night's stay and will be able
to get into Hong Kong on Sunday.
The damage all depends on where the storm goes. And for that, Ivan Cabrera is at the World's Weather Center. So, I know we're watching Florence over
in the Atlantic. This in the Pacific is just as dangerous in an area of the world much less developed, incapable of withstanding it.
IVAN CABRERA, REPORTER, CNN: Richard, no question about it. And to your point with the shipping lanes, parts of the South China Sea are just going
to be impassable basically the next 24 to 48 hours because we have the planet's strongest cyclone of the year making landfall across the
Philippines right now. There's not been a stronger storm so far this year, this is it. It's a super typhoon. We call it Mangkhut and it made
landfall just half an hour ago across the northeastern tip of - look at that eye, right there, 2:30 local time with winds of 270 kilometers per
hour gusting to 325.
The storm continues to push off to the north and west, as it does so, it will bring its ferocious winds on shore. Look at the circulation here.
I'm really concerned about the area in Santa Ana. Off shore winds here with a coastal range, I think will protect the eastern side of the coast,
but on the northern side, we have less protection there and the winds are coming right on shore.
By the way, the Babuyan Islands is well to the north, not as populated, but still there are folks there, and this is the wind coming in ...
CABRERA: ... the water. That is going to be bringing in, Richard, I think three to six meters of water from the Ocean right onto the coast line
as a result of these very strong winds. Areas further to the south, a little bit less, so there, but still a very dangerous storm, not just
because of the storm surge, but also of course, the wind that is howling. You saw James there with a helmet on to protect from projectiles. He's
going to need that for at least the next 12 to 24 hours and there is the change, landfall one, done. Landfall two, coming up and that's in 48
hours. If you're watching from Hong Kong, this is a huge storm, it is not going to diminish in intensity all that much.
QUEST: But, but ...
CABRERA: It goes to 195 and then 215, Richard, by the time it gets just to the south of the harbor there.
QUEST: Right, and as I look at my map here, and you can see the various - again, the shipping routes that we were talking about and looking at the
ships, that are currently there. These are vital trade routes, Ivan. But I mean, short of moving out further into the Pacific, there is not much one
can do at this point. I mean, these ships are now stuck in it for the foreseeable.
CABRERA: As he said, they are going to have to stay in port, ride it out, and then people will have of course boats, and all sorts of property across
marinas. They are going to have to put away their boats or hopefully, they are in floating docks, but I tell you what? They may not bear well as a
result of these winds that we are talking about here in 48 hours - 200 kilometer per hour winds, that is a huge deal for Hong Kong, one of the
strongest storms to certainly brush or at least directly strike them.
QUEST: Comparisons. I know the old saying, compare and despair, but compare a super typhoon - compare Mangkhut to Florence in the Atlantic.
Different types, different strengths. One is a category one hurricane, this is a super typhoon. One has got huge amounts of water, but this one
also seems to have huge amounts of water with it as well.
CABRERA: And look what this one is doing. It's moving at west northwest at 30 kilometers per hour. That means that in basically 12 to 24 hours
it's out of the Philippines. The storm in the United States, Florence is at a crawl, basically wobbling and stalling, pumping all sorts of rainfall.
And the topography makes a huge difference, as well as the population.
There are millions of people in the path of Florence, not as many here across the northern tip of Luzon. Obviously, they are going to be a lot
more impacted in Hong Kong. Hopefully by then, the winds will diminish even more so than we're showing, but 215 is a good bet right now in two
QUEST: Keep an eye on it, please. Keep a close eye on what's happening over there. We are still trying to get in touch with the storm chaser
James Reynolds on the line. He spoke to Hala Gorani about 14 minutes ago.
(BEGIN VIDEO CLIP)
REYNOLDS: All I can tell you, it is raging out there. It has gone absolutely wild and it's quite fortunate that we are actually able to talk
HALA GORANI, ANCHOR, CNN: Right. I'm very thankful that we are. We actually had issues, just full disclosure with our viewers getting touch
with you on the phone and that would make sense because this is such a violent storm. Tell us what you're seeing exactly from your vantage point.
REYNOLDS: Well, it's the middle of the night here. The hotel room which we were originally checked into we're going to ride out the storm in has
become uninhabitable. The windows just blew in and then smashed in. Basically all the doors and windows of the building we're in which were
exposed to the winds have smashed in. We're in an interior room now just hiding. I usually try to (inaudible), but I can't really do that now
because safety is the priority, obviously, so, we're just waiting for daybreak, for the winds to die down and get a better idea of exactly has
happened out there.
GORANI: Right. And we are actually showing our viewers video that you shot there in Santa Ana. So, you're saying that essentially the windows
exposed to the winds have blown out, have shattered, and you're basically - people need to hunker down in parts of the structures they are living in
away from, for many of these windows.
REYNOLDS: That's exactly it. And actually, the interior corridors of the hotel we are in right now are hazardous because the typhoon is entering the
building, the plywoods are flying through the corridors of the building, glass - sharp glass everywhere and yes, it's just a case of finding an
interior room surrounding yourself by concrete and waiting for the winds to die down.
(END VIDEO CLIP)
QUEST: So I said there were two, and we've been talking about the two major storms as typhoon Mangkhut parallels along the Pacific, Florence is
already causing chaos in the Eastern United States. We've received word of the first fatalities, the Wilmington police have now said, two people, a
mother and an infant were killed when a tree fell on their home. The father was also injured.
Huge waves over the Carolina coast now lie underwater. Powerful winds and torrential rain have flooded homes and destroyed crucial infrastructure.
Six hundred thousand people are without power, many have already fled their homes, others stayed behind to protect their homes and ...
QUEST: ... and businesses. Rescue teams have been working now nonstop to help those unlucky enough to get caught up in the devastation. CNN's Daran
Gala (ph) spoke to one of the rescuers.
(BEGIN VIDEO CLIP)
MITCHELLE, RESCUE WORKER: We rescued a couple of people that were posting on Facebook, their addresses and stuff. Elderly people, blind people,
medically - problem people, just everybody. Anybody and everybody that needed help, we were there.
DARAN GALA (ph), CORRESPONDENT, CNN: And so, earlier here in Riverbend, we actually ran into them. They were going down to get somebody who needed to
come back out on a backboard.
MITCHELLE: Yes, when the water came in last night, it knocked her down and we are unsure if she dislocated her hip or broke her hip, but we took every
medical precaution necessary to make sure we got her out safely and receive and the treatment she needed.
(END VIDEO CLIP)
QUEST: And so, now to CNN's Miguel Marquez who joins me. He is in Carolina Beach, North Carolina. Miguel?
MIGUEL MARQUEZ, CORRESPONDENT, CNN: This is a storm that just will not relent. Over 24 hours, we've been dealing with the effects of Hurricane
Florence and it's not stopping any time soon. We have just been in an area that was flooded in town. The tide is receding, so it is - the flooding is
getting somewhat less, but we have another tide coming in, in about eight hours here, and then we'll see what happens.
I want to show you this here. This is the boardwalk at Carolina Beach and the wind is just blowing so hard now from the south. It was blowing from
the ocean and then it was blowing from the west this morning and now, it is blowing from the south - due south. This was sand. There was sand right
up to this area this morning. Now, about two feet of the beach here has been literally just wiped away. There is beach erosion all way down here.
The waves are just massive. What they are doing now is sort of a waiting period. They have got to sort of hunker down and wait and try to see if
they can survive the storm. The people who have stayed here, this is a town of about 6,200 people, 600 people have made the decision to stay here.
Emergency services at this point say if you're in trouble, call if it is absolutely an emergency. But if it's a tree down or a wire down or
something that they can deal with later, don't call because 911 operators are inundated and also the electricity across here in Carolina Beach and
across the county, about 108,000 people in New Hanover County no longer have electricity.
Duke Energy, the energy supplier here only has only 128,000 customers in this county. So almost the entire county right now without electricity.
When will it stop? This storm has just been crawling. We have hours to go at this point. There is another tide coming in around midnight local. We
will see how things go. But that storm surge on top of the rain, along with the wind just pushing it along, it's not a great mix.
(END VIDEO CLIP)
QUEST: Miguel Marquez who is there. Florence's path of destruction is predicted to pass right through Carolina's ports. These are critical
getaways to the eastern United States, the port of Charleston alone has around $70 billion worth of goods valued each year.
The bank executives at Moody's predicting major disruption. Jim Newsome with me. the president and chief executive of South Carolina Ports
Authority. Sir, commiserations to you, but at the same time, congratulation in the way in which the calm way it is being handled and
recovery efforts are being made even before the storm has gone. How difficult will it be get everything back up and running?
JIM NEWSOME , PRESIDENT AND CHIEF EXECUTIVE OFFICER, SOUTH CAROLINA PORTS AUTHORITY: Well, Richard, we are not going to be as much affected as we
originally anticipated. The storm seems like it will go further north of us a mainly we should experience a lot of rain. We secured the port on
Wednesday night. The last ship left early Thursday morning and we are actually preparing, you know, to re-open, we hope either Saturday night or
Sunday with vessel traffic because as you say, the ships have to get in and out of entry at the earliest possible time so that the cargo can move.
So up to right now, we think we're pretty fortunate but we have to monitor the situation.
QUEST: These are enormously difficult natural events to cope with because the sheer amount of preparation, it's always about preparing for the worse,
NEWSOME: It absolutely is. I mean if you look at this storm, I mean, early in the week it was much more powerful wind wise. Fortunately that
diminished. It has pretty much stayed on its direct path as far as landfall, but there was some thought earlier in the week that it would take
a trip down the coast and leave hurricane force winds maybe as far south as Charleston and Savannah. So that obviously got our attention very quickly
and, you know, most ports in Wilmington ...
NEWSOME: ... will be very much the same. They are very professional there. There's a protocol for how you secure a port for a hurricane.
Relative to wind and, you know that's the main thing that you can secure against. Our docks, our wharves are about five meters above the water
level at low tide and typically that would buffer most storm surge. But if you get 40 inches of rain like they are talking about north of us that's
three years worth of rain.
So It's hard to tell what the impact of that would be. There's so much you can do. Our terminals have a lot of wireless infrastructure to communicate
with us. That would obviously be affected in a wind event. And our container cranes are also electric. So the electricity is out, that's a
problem and access to the terminals can be a problem with trees and things of that nature.
QUEST: How important are your sports to the economy of the United States?
NEWSOME: They are very important. I mean if you, particularly if you look at the southeast, I mean we're a region that's experiencing a lot of
population growth and that drives imports. And a significant amount of manufacturing growth in terms of automotive industry and plastics and
aviation and things like that. So our states are very dependent on importing a exporting. And realize that while we may have a port in
Charleston, a lot of that cargo goes to places that's not near the coast -- Alabama, Tennessee -- places like that.
So a lot of just in time operations depend on getting cargo in and out of the port and most people are very sophisticated in how they approach these
things and we'll do our best to get the ports back in operation as soon as it's safe; mainly for our staff, for the people who work on the port, but
also for the ships and cargo.
QUEST: Sir, thank you. We wish you well in your endeavors. We're pretty sure you're going to. Thank you for taking the time for joining us on
what's busytimes for you.
NEWSOME: Thank you.
QUEST: It's "Quest Means Business" from New York as we return in a moment. More tariffs against Beijing. The US President has reportedly given the
signal. And as China asks Wall Street for help to fix its relationship, I'll discuss it all with the President of the US-China business council in
So earlier in the program, right at the start, we looked at the Dow and the shares of the Dow 13, then the market which had been to the good then
turned turtle and went down under at 12:00 and since then, towards the afternoon even though the low ...
QUEST: ... point of the day was off by as much as 77 points, which gives us the points being around 142 points, and what you're seeing there, of
course, I do believe the market has just now ticked up positive or is bouncing around there as you can see from the current numbers. Now, the
market at 12:00 was deflated by reports that President Trump is getting ready to escalate the trade war with China. He wants to proceed with
tariffs on $200 billion worth of goods according to one source.
The timing is not clear, if and when. Meanwhile, Wall Street executives meeting in China this weekend where sources say Beijing wants trade talks
held. Craig Allen is the President of the US-China Business Council. He joins me from Washington. It must be like being hit over the head with a
wet cloth when you see the President once again making comments that he's looking to put the extra $200 billion worth of tariffs on China and the
market falls over.
CRAIG ALLEN, PRESIDENT, US-CHINA BUSINESS COUNCIL: Well, thank you for having me on. I appreciate it very much. The President has stated this
several times and we have $50 billion of tariffs in place right now. We are hopeful that the President will hold his hand, particularly as we are
entering the holiday season and there's so many - hundreds of thousands of containers on the water right now. So now would not be a good time for
We also understand that there are new trade talks along the way. That Treasury Secretary Mnuchin has invited Liu He for trade talks, and so there
are some conflicting signals here. We are hoping that additional tariffs will be put off.
QUEST: Right. We're not just talking about $200 billion, are we? Because he's also threatened the $254 billion and only last week, he said well,
even more and that will make it $500 billion. Effectively, the President seems to want to tariff every aspect - every dollar values worth of imports
to the United States.
ALLEN: Well, certainly the President has threatened tariffs over virtually all of China's exports to the US. But currently, we're at about 10% of
that, at about $50 billion. That has already done significant damage to the US economy, to US importers and also due to Chinese retaliation to US
And thus we're hopeful that negotiations will take place and that our diplomats will be able to resolve the very real issues on the table
associated with intellectual property rights, forced technology transfer, over capacity in China. Those are the real issues that need to be
QUEST: Is anybody listening to you, do you think? I don't mean that disrespectfully, obviously, I mean, is the administration - because if what
we read in "Fear," the book by Bob Woodward is anything to go by, and there are many people in the administration who would absolutely agree with you
and say 100% of these tariffs are a bad idea, it is going to harm trade, we will all lose. But the President seems hell bent on wanting to make his
ALLEN: Well, Richard, about 2.6 million American jobs rely on China trade. That's an awful lot of jobs. We have 4,000 American companies registered
in Shanghai alone. So the trade between these two great countries is enormous. Our economies are very much intertwined. Tariffs do a great
deal of damage. And thus we're hopeful that our diplomats and our negotiators will be able to find a way out of this thicket by addressing
the very real problems in China.
A deal could be done. The two Presidents will meet in Argentina in November at the G-20. And we're hopeful that the negotiations that we
anticipate happening in September will set the ground work for the two Presidents to have fruitful discussions that will lead to good results for
American companies, for American workers.
QUEST: Right. Sir, thank you for joining us. We much appreciate it.
ALLEN: Thank you.
QUEST: In fact, let's talk more about it in the future. Now, a flurry of Chinese IPOs this week, NaChuan raised 4 billion. Neo shares soared as
much as 92%. They are priced at the bottom of the range. But really if you want to talk about IPOs and perhaps mispricing, Qutoutiao soared on the
first day of trading. The stock launched at seven. It's gone up nine. So, a gain of 128%. When I spoke to the Chief Financial Officer a short
time ago at the NASDAQ, and the market was up 152%. This is highly unusual in an IPO by the way.
You would like a nice small bump of maybe 10% or 15%, but to have a stock go from seven up to 17 ...
QUEST: It begs the question if the IPO was incorrectly priced too cautiously at the lower end?
(BEGIN VIDEO TAPE)
JINGBO WANG, CFO, QUTOUTIAO: In the past months, I agree the overall US market is quite stable. But if you look at the Chinese stocks, like
Alibaba, Weibo, Baidu - they have all done quite a bit. And the general sentiment given the China-US trade war is not very positive on the Chinese
From the (inaudible), our impression was that they are very cautious about another Chinese IPO so we did feel that pressure. And today, to be honest,
I'm not sure if the current trading is totally rational. I also believe that the dollar is an understatement. I am not sure if the current price
is right either.
QUEST: Okay. Good, all right, maybe it is what it is. And over the next period of time, we'll see where it goes. On this question of Chinese IPOs,
the rush to the market by Chinese companies, why did you decide you wanted to list in New York? I mean, there's other places - obviously you are
listed elsewhere, but there are other places you could have listed. Why are so many Chinese companies, IPO-ing either on the NASDAQ or NYSE?
WANG: Yes, well, someone like me, I was in banking for six years and then I led two companies to get - become public in the US, I think actually it's
pretty clear to me that the US capital market, the whole system, the whole design, the SEC, the exchanges are still the most efficient system in the
It is a lot more market driven than the Chinese market and also a lot more efficient than the Hong Kong market and coming back to my company, right,
we are internet media business and actually most of the internet media businesses in China are listed here, actually - Singapore, Hong Kong, other
than them, I can't even think of one sizeable internet media company in Hong Kong.
So clearly, the investor base here understand the business the best. That's why we decided to come here.
(END VIDEO TAPE)
QUEST: The CFO of the company, and I can't help to wonder if the bankers have some tough questions to answer about how you do price something at
seven then promptly close 152% or so further up. Donald Trump's campaign - former campaign manager, is now cooperating with the Federal prosecutors.
It's an earthquake in the whole issue. Just ahead. We'll ask CINN's chief legal analyst what this could mean for President Trump.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. You are
watching Cnn, and on this network, the facts, they always come first. Paul Manafort is agreeing to cooperate with the U.S. Justice Department and
mainly Robert Mueller's investigation into the Russian interference in the last presidential election.
Manafort of course is the former Trump campaign chairman, and he also pleaded guilty to conspiracy. Last month, he was convicted of eight
charges of tax and bank fraud and a separate trial. Super typhoon Mangkhut has made landfall in the Philippines.
It's now driving lot some to northern end of the country. More than 4 million people are in its path, evacuations are underway and military
personnel making the emergency preparations. Flooding, landslides and power outages are all expected. Meanwhile in the Atlantic, Hurricane
Florence has now killed two people in Wilmington, North Carolina, a mother and an infant died when a tree fell on their home.
Florence made landfall along the U.S. East Coast as a category one storm with high winds and heavy rains. Also a devastating storm surge that's
flooded lower communities and highways has been knocked out for hundreds of thousands of people.
The U.S. Supreme Court nominee Brett Kavanaugh has denied an allegation involving sexual assault. According to a source familiar with the
allegation, a woman is accusing Kavanaugh of assaulting her when they were in high school in the early 1980s. The allegation was relayed in a letter
to Senator Dianne Feinstein earlier this Summer.
Volkswagen announced it's killing off the Beetle next year. How Herbie is known to love it has fallen victim to change in consumer taste as buyers
are turning to bigger SUVs instead. Who could not love such a shaped car? As Samuel Burke reports, now the car hasn't already stopped being made, but
already the comebacks perhaps on the cars.
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY NEWS CORRESPONDENT (voice-over): The Volkswagen Beetle with its bulbar spraying and bubbly disposition, it's
one of the most recognizable cars ever made. And next year, it will roll off the production line one last time.
Now, beloved, the Beetle has an auspicious start. In 1933, Adolf Hitler wanted Porsche to develop a literal people's car, the original Volkswagen,
it's at two adults, two children and reached a top speed of 62 miles an hour. After the war, the car went worldwide, a viewing in North America in
The 16th (INAUDIBLE) Beetle's pay-day. An engine in the back and a truck in the front, it was one of the world's bestselling cars. An indelible
symbol of the hippy movement and a pop culture phenomenon immortalized by Andy Warhol, the Beetle and the 1968 Disney Classic beloved bug.
UNIDENTIFIED MALE: Oh, that is first and third place.
BURKE: After stopping production in 1979, the company revived the car in the late '90s with a sleeker, more modern look, targeting female buyers.
The new generation Beetle was made in Mexico and revamped once more in 2012, but was never as popular as the original.
Recent market trend shifted away from compact cars to SUVs. VW says it will produce a final edition Beetle series in 2019 before retiring the car.
Good to come back one day? Never say never according to the company.
[15:35:00] But now fans have the chance to say a final (SPEAKING IN FOREIGN LANGUAGE) to a truly legendary beautiful. Samuel Burke, Cnn,
QUEST: A Central Bank bonanza this week from Turkey to Russia, also staff warning from the Bank of England governor.
QUEST: As we told you earlier, Paul Manafort is now agreeing to cooperate with U.S. Justice Department after pleading guilty to conspiracy. Donald
Trump's legal team is confident that Manafort's developments will not be an issue for the president.
Jeffrey Toobin; our chief legal analyst is here, Jeffrey, good to see you, sir --
JEFFREY TOOBIN, CNN LEGAL ANALYST: Sure, as always --
QUEST: So why is Manafort cooperating. He's already been convicted in the other trial, and he's going to prison. What's in it for him to cooperate
TOOBIN: A lot, because he was looking at spending very much -- very likely the rest of his life in prison if he was sentenced in both the first case
in which he was cooperating and not convicted. And the second case where the trial was supposed to start next week.
By cooperating, you get the opportunity to have a reduced sentence for both cases if the prosecution is satisfied and the judge agrees.
QUEST: All right, so it depends on the -- I mean, the value of his cooperation. Let's just say --
TOOBIN: Right --
QUEST: He cooperates so nobody knows nothing.
TOOBIN: Then that's -- if the prosecution believes that he told the truth and he knows nothing, he should get the benefit of cooperation. I mean,
the prosecutors are supposed to believe in the truth. If they believe he's holding back, then they -- he won't get any benefit at all.
QUEST: Right, and what about Donald Trump pardoning Manafort because that has always been that the president -- I mean, he -- it's a hail Mary passed
to the president, whole pardoning can.
TOOBIN: The -- Trump has almost waited too long to pardon him in this circumstance because if he pardons him now, Mueller can simply put him in
the grand jury and make him testify with immunity because he has -- he has no legal exposure.
You can only claim the Fifth if you actually have legal exposure. If you have a pardon, you don't have legal exposure. So Mueller, the prosecutor
is going to get Manafort's testimony one way or another, pardon or no pardon.
[15:40:00] Do we know how far Mueller is in his investigation? I mean --
TOOBIN: I can give you a ringing answer to that. We don't.
QUEST: Right --
TOOBIN: This has been an air-tight investigation --
QUEST: It's impressive.
TOOBIN: It's impressive to the frustration of those of us who have covered it. But we do not know what Mueller knows, and what Mueller is going to
QUEST: But he hasn't found a smoking gun. He has not found the collision, I mean, he's picked up a lot of unsavory stuff, and there's a lot of
evidence that Donald Trump clearly consulted with less than savory advisors.
TOOBIN: We don't know what he has found. He may have found a smoking gun. He has not gone public with his findings. He has not -- you know, he has
brought several cases, but he has not reported everything he said, that hasn't happened yet.
QUEST: Brett Kavanaugh, the allegations. I mean, they were decades ago, he was 17, they're serious allegations, if true --
TOOBIN: To be sure --
QUEST: But he says they're not true. I mean, what does the Senate do?
TOOBIN: Well, I think Dianne Feinstein; the Democrat who got this information handled this in precisely the wrong way, so that everyone
involved is damaged. If she had done the right thing, which when she received this information simply turned it over to the FBI and let them do
Instead now at the very 11th hour, she exposes this accuser to potential exposure, she embarrasses Brett Kavanaugh with no basis, and she doesn't
provide her the committee with any useful information.
QUEST: But what does the committee do?
TOOBIN: Well, they've got to turn it over to the FBI and see if they can find out anything at this late hour. But this should have been handled in
the ordinary course of business instead of this 11th hour disclosures.
QUEST: The man has written a book on the Supreme Court --
TOOBIN: Yes --
QUEST: Does this -- oh, no, does this -- because it's too early. Does this potentially scupper Kavanaugh's nomination.
TOOBIN: Based on what we know now, absolutely not. An anonymous 35-year- old accusation is never going to stop someone's nomination. Now, in the period before the voting, if this becomes someone with a name who comes
forward and there's potentially corroboration, that may change things.
But certainly based on what we know today, this will have no impact on his nomination.
QUEST: It's been fascinating. Sure you wouldn't like to answer a couple of questions on central banks and --
TOOBIN: Central Banks, they're different from the outside banks. The central -- no, I'm just joking, all right, nice to see you --
QUEST: Thank you for legal, and won't -- don't call us if you --
TOOBIN: I know --
QUEST: Don't bring trouble, don't bring trouble, we'll call you.
TOOBIN: OK --
QUEST: Legal too --
TOOBIN: No, you're in charge of the Central Banks --
QUEST: No, I'm not as --
TOOBIN: Yes --
QUEST: Which is just as well for the rest of us, good, thank you Jeffrey.
We will talk about central banks, it's been a blockbuster week for the central banks across the globe. Now, Russia raised rates, the first time
since 2014 to protect the ruble. Turkey surged rates more than expected to 24 percent, even though the President Erdogan has called them a total
The ECB held rates but cut forecast and talk about QE. The Bank of England held rates but Governor Mark Carney gave Brexit warnings, dire warnings to
a cabinet. And the Fed's Charles Evans says two raises this year is possible. And if you just look at key rates, you have those economies that
are -- well, you've got the Eurozone and the Bank of England down at zero.
The U.S. is creeping up and those in deep trouble of course are much higher. Julia Coronado is President of MacroPolicy Perspectives and Ryan
Sweet is head of Monetary Policy Research at Moody's Analytics. First to you, Ryan, these are fascinating times within central banking.
When you look at what -- the divergence of rates and policies.
RYAN SWEET, HEAD, MONETARY POLICY RESEARCH, MOODY'S ANALYTICS: Yes, you're absolutely right. I mean, it's a fascinating time to be an economist,
particularly those that monitor global central banks. And this divergence should begin to narrow over time over the next couple of years because the
ECB is going to begin to tighten the Bank of England rule, you know, gradually take their foot off the accelerator and the Bank of Japan is
doing that as well.
But I mean, the Federal Reserve for example is way out in front of everyone else. You know, we think there's going to be two more rate hikes this
year, and like we're going to raise rates four times next year. I mean, you went through a great, many of what -- everything that happened this
week, but I think the one thing that's flying on the radar is the speech by Lael Brainard; Fed governor.
And she suggested -- she kind of threw water on the idea of the Fed pausing sometime in early 2019. Which means that the Fed still is going to
continue to forge ahead with rate hikes, and that means more struggles for emerging markets over the next 6 to 9 months.
QUEST: How would emerging markets -- Julia, that's exactly the problem, isn't it? In the sense that -- I mean, there's no reason to pause. If you
look at the -- I'm thinking about --
JULIA CORONADO, PRESIDENT, MACROPOLICY PERSPECTIVES: Not yet --
[15:45:00] QUEST: You know, I'm thinking about for example Goldman Sachs and their bull-bear index which shows for equities, a very dull year next
year. But there're talks about the potential for slowdown and you still got the -- a yield curve on the verge of inversion.
CORONADO: Well, and to Ryan's point, Lael Brainard basically told us, we should expect an inversion because we have a lot of fiscal stimulus that's
going to force the Fed's hand to keep raising rates, to just kind of keep up with the hot economy and hot financial markets.
And that doesn't mean though that the longer term economic prospects of the U.S. are improving. So longer-term rates should remain low, short-term
rates need to rise and we should expect to yield curve inversions. So this has been sort of the hot speculation in financial markets and she's kind of
saying yes, guys, no kidding, of course, we're going to invert because we've got this temporary fiscal stimulus that's goosing up the economy.
And that of course is also creating turmoil overseas. So the divergence between the U.S. economy that's pushing the Fed to keep raising interest
rates causes stress abroad, and we're seeing that everywhere, and the kind of interest rate hikes --
QUEST: Yes --
CORONADO: That Turkey and Russia are engaged in are not the fund kind, it's to stabilize your currency and your economy is already suffering. So
we're starting to see signs of Fed policy --
QUEST: Right --
CORONADO: By tightening conditions overseas that's not domestically.
QUEST: But on that point, I mean, what -- Ryan, the raising of rates to protect your currency is the bluntest of instruments. I mean, it's
effective in the immediate term rather than having to go through macroeconomic revisions and austerity and all of that.
But it is a very blunt tool that has extremely damaging implications to economic growth, particularly beyond Turkey when you've raised up to 24
SWEET: Yes, overall, I mean, monetary policy is a blunt tool, particularly central bank's overnight rates. When you look at -- there's trouble in
emerging markets, you can kind of split them into two. Those emerging markets that have large current account deficits and those that are running
current account surpluses.
And those that are running deficits, meaning that they're relying on foreign savings to finance domestic growth. Yet, those are the ones where
their currencies --
QUEST: Yes --
SWEET: Are significantly depreciating since the beginning of the year, they're the ones that are having a hard time, they are the ones raising
interest rates, central banks are raising interest rates to defend their domestic currencies. But again, you're going to look across all the
emerging economies and there's idiosyncratic events in each one of them that is also contributing to their current struggles.
It's not just the Federal Reserve now, the Fed is not helping them, but you know, that's not the Fed's role, they look globally to see how the global
economy is going to affect the domestic economy, but they're really acting locally.
QUEST: So finally, to both of you, Julia, just a couple of sentences to both of you. Julia, do the central banks, have they got it under control
or are -- I mean, they're under control at one level, but have they got the situation within their grasp?
CORONADO: I think that the important thing to remember was that central bank says that they're going to react to circumstances. So Mark Carney
highlighted that, and that, that would be true of the Fed. Right now, the Fed is raising rates because everything is good and the ECB is going to
stop QE because everything is good.
But if things turn out differently, then they will take that into account and respond accordingly. So do they have it under control? They're going
to do what they can to stay on top of the situation.
QUEST: And Ryan, just very briefly, the hurricane, because I know you've done a lot of work on hurricanes and the economic effects of the hurricane.
Both -- obviously, the typhoon is a bit devastating out in Asia and the one in -- how bad economically will we see these?
SWEET: Well, I mean, regionally, it's going to be devastating to some of the coastal areas across North Carolina and South Carolina. I mean, the
next few days are going to be very important to see how the storm develops, whether you know, it hovers over these areas like in the severity of the
power outages, the duration of the flooding.
All those are going to have macro economic impacts on those regional economies. Now, there's going to be some rebuilding which means that those
economies have got a, you know, a shot in the arm over the next couple of months over the next course of the year.
But I mean, from a national perspective, hurricanes typically don't leave - -
QUEST: Right --
SWEET: An enormous mark on the U.S. economy. To kind of put it in perspective, we have $20 trillion economy, output -- daily output in North
Carolina, South Carolina and most affected regions is $1 billion per day. So overall, it's going to be much more of a regional economic story --
QUEST: Right --
SWEET: Than a national one.
QUEST: Good to have you, sir, good to have both of you in fact, thank you very much indeed. As we continue tonight, the hurricane rescue efforts in
the eastern United States continues. Chief executive of Zello finds out -- joins me -- so we could find out, I should say, how the efforts (INAUDIBLE)
by the way is helping those in danger.
[15:50:00] (COMMERCIAL BREAK)
QUEST: The extreme weather battering these United States have left many without power lines of communications and the like. In some cases, that
community are facing life and death, which is why Zello which you can see here has become the most popular free app on android and the leader to
Florence's arrival, and indeed out in the west as well.
It allows users to bypass normal communications channels. It turns your device into a makeshift walkie-talkie if you have WiFi or cellular
coverage. So you can say are you there? Mr. Producer, listening closely and hopefully in a very short period of time --
UNIDENTIFIED MALE: Waiting and watching with fixated breath.
QUEST: Hopefully, you get to announce some more interesting than that. But the company itself is encouraging people in harm's way to get in touch
with rescue teams in the event of an emergency. Here you can see some of the channels that it recommends.
Crowd-source rescue, occasion Navy with a password. You get the idea as well. Now, Bill Moore is the chief executive of Zello, he joins me by
Skype from Tannersville, New York. Bill, I think you know that Zello is the backbone of QUEST MEANS BUSINESS communications because of the way
we're spread out in different production centers.
But here we're not just talking about making a TV, here we're now talking about the ability for Zello for save lives.
BILL MOORE, CHIEF EXECUTIVE OFFICER, ZELLO: That's right, we're so proud that Zello again has come to -- become a communication hub in times of
QUEST: How do you -- I mean, if you have no WiFi and you haven't got cells coverage, you're out of luck anyway. So I mean, that's the sort of
situation you can't control. But what do you hope people do with this?
MOORE: Well, we hope they make sure and get Zello, add your friends and family so that you set up a channel so that they're able to keep in touch
with the people they need to the most. Before the storm -- and of course, Zello is useful outside of a crisis. Zello requires some kind of network
access, it could be WiFi or even very poor data access from your carrier.
And the good news is it's extraordinarily rare where there would be, you know, zero data access and the carriers are quite good at bringing back
emergency service. But as you say, it requires some kind of network access and users should know that there's no magic here, without the internet
connection, you're not going to be able to use Zello.
QUEST: And the way in which Zello has grown, I mean, you're constantly a threat of others, obviously, the Juve(ph) gets the Me Toos.
[15:55:00] Do you -- you're still a leader, do you worry that a Facebook adds something like it to their app or somebody else adds something to
their -- one of the big -- one of the big players and squashes you.
MOORE: No, we really have it. It's pretty tough to get right, Zello has been building a social media around live voice for five years now. Live
voice is particularly tough to moderate, to find and encourage good content. We have a ton of work to do there.
But it's like unlike texts, it's unlike sending a voicemail, it's unlike anything that they've tried. And we've seen many well funded, you know,
strong competitors come up and go away, and Zello, you know, remain a leader for quite a while now. So competitive threats haven't been our main
QUEST: Thank you for joining us, sir, thank you again for Zello and for you as well --
MOORE: Thank you for --
QUEST: All the time. Now, the White House has confirmed that President Trump will visit the affected areas next week once the hurricane has
passed. Let me just tell my producer this in case he's not aware -- President Trump to visit the affected areas next week, I'll have a
profitable moment after the break.
QUEST: Tonight's profitable moment. Just how far should central banks go to let the party keep going? Janet Yellen in a speech today said that don't
take away the drink just as things are getting exciting.
And yet, the Fed has said that there will probably be two-rate rises or the governor have said over the rest of the year and two or three more next
year. The ECB wants to start raising rates, but that won't be for some time yet, and the Bank of England haven't raised rates is quite clear is
going to do so sooner rather than later.
This is a fascinating time because by all traditional, orthodox ways, they should have raised rates farther and faster. But they dare not. Because
those of you that says the economies can now -- this fast to growth with low unemployment and low inflation.
We really don't know. It's an economic experiment that's currently underway. And when you put it like that, you start to realize the tricky,
difficult task central bankers have, unless in case of course they get it all horribly wrong. And that is QUEST MEANS BUSINESS for tonight, I am
Richard Quest in New York.
What a week it's been, it's on new time slot, delighted for keeping with us.
Whatever you're up to in the hours ahead, I hope it's profitable. The closing bell is ringing, the day is done.