Return to Transcripts main page


Jamal Khashoggi's Family Says They Consider Jamal To Be A Missing Person And That They Have No Legal Or Official Proof To Believe Otherwise; No Sign Of A Brexit Deal And Britain And The EU Is Dragging Out The Process For Another Year Possibly To The Consternation Of Those Who Want To Leave Now, Not Later; Pompeo Tells Trump The Saudis Need More Time To Investigate Khashoggi's Murder; U.S. Treasury Secretary Pulls Out Of Saudi Business Summit; Trump Threatens To Seal Border If Migrant Caravan Continues; Taliban Claims Responsibility For The Killing Of A Prominent Afghan Police Chief; U.S. Skips Labeling China As A Currency Manipulator; Tech Sell-Off Hits Even Star Stocks; Autonomous Cars Hit The Road In Paris; Dow Ends With Triple-Digit Losses. Aired: 3-4p ET

Aired October 18, 2018 - 15:00   ET


RICHARD QUEST, CNN INTERNATIONAL HOST: We are an hour from the closing bell on what has been a very volatile day on Wall Street. The market

opened lower. A sharp pull at two, a sharp pull at 12 and then a rally in the late afternoon. Just look at how things are going. Only the four

defensive stocks are above the parapet, otherwise everything is in the red with the technology stocks, some of them losing the most.

The broader market is down, the NASDAQ is off sharply. The best part of two percent, we need to understand why, in other words, these are the

drivers of the day. From Saudi Arabia to Shanghai, markets are finding reasons to sell, the volatility is back.

Steve Mnuchin, US Treasury Secretary staying home as more ministers are dropping out from the Davos in the Desert. It begs the question who will

be there, and the never ending Brexit story. Europe says it will give Britain another year to leave or maybe not.

Live from the world's financial capital, New York City on Thursday, October the 18th. I'm Richard Quest, I mean business.

CNN "Breaking News" to bring you right at the top of our program, a new development in the case of Jamal Khashoggi in a statement given to the

network, CNN. His family says they consider Jamal to be a missing person and that they have no legal or official proof to believe otherwise. The

family says Jamal was never dissident and they have been in close contact with the Saudi government at the highest level.

The first tangible punishment from the Trump administration over the disappearance and apparent or alleged murder of Jamal Khashoggi seems to

have now roiled the market. It was after the US Treasury, Steven Mnuchin said he will not attend the Saudi Investment Summit. Now, you can see this

if you look at the clock. That first sharp fall comes roughly the same time as we are hearing about that, right about 11:00 to 11:15 right the way

through until 12:30 and 1:00 when you start to see a rally and then down again.

Mnuchin made his decision after meeting President Trump and the Secretary of State. His announcement combined with the fears about trade tech in

Europe made the bad day worse. At the lowest point, the Dow was off more than 471 points because I am looking at the low, it dipped down some 1.83


The Russell 2000 which is the broader market even became 10 percent lower overall. The 10 percent from the recent highs. The NASDAQ today, Alison

Kosik is following market developments. Alison, the NASDAQ at one stage was off 2.5 percent. now, as we go into the crucial hour of trade, what is

the feeling?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: The feeling is this is no doubt a volatile market and as usually the trend is, we see in the final hour of

trading, things get even more volatile. Now, the Dow is holding solid, 360 points down, but it has been wavering back and forth.

The reality is, this is a market that is ridden with anxiety even before Steve Mnuchin decided to pull out of the conference. The big worry that

the folks here on the floor are saying about him pulling out of the conference is, it could be opening the door to confrontation between the US

and Saudi Arabia and as you know, Wall Street does not like confrontation.

Now, interestingly enough, when you think about that confrontation, you think about business ties because the US and Saudi Arabia do big business.

Billions of dollars each year, in fact, already this year, the US has lent Saudi Arabia $11 billion. But rancor has prevailed here in talking with

some of the traders, they think that that's just fear mongering that some of the business ties could be severed especially as we heard from Blackrock

CEO last week or in the past few days saying he would not pull any business from Saudi Arabia.

One more thing to mention, we've got to talk about oil because everybody is wondering, well, why is oil down if tensions are heating up between Saudi

Arabia and the US. The thinking is that Saudi Arabia will want to give an olive branch, take the pressure off, put more oil into the market instead

of trying to push oil to an $80.00 -- $90.00 a barrel limit to kind of play nice in the sandbox as these tensions escalate, Richard.

QUEST: Alison Kosik, thank you for the update. Looking it into the broader picture of what is happening, we now need to look at the "Quest

Means Business" trading post.

As I alluded at the open, first of all, no records in Europe or here that we could pull out behind us. We've got all three markets down, so that's a

red please on the board. The NASDAQ has been hit hardest. It was a rough day. FANGs lost most of all and we'll see exactly why within the FANG

brigade ...


QUEST: ... who lost the most. But with 1.5 percent and two percent or 1.4 percent, keep an eye particularly on the Dow in this last hour, the

tradition has been -- this is when the market makers, when the big institution investors decide how they want to go into overnight. In the

"EXPRESS," Peter Tuchman told me there's plenty of investors to worry about.


PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES INC.: There is anxiety in the market. We've seen it. Now, we've hit down 1,300 points over two

days. We saw a rally back of 900 and we see a pause in consolidation, okay. There are headline driven anxiety into the market, right? The

Mnuchin story, there was a treasury auction that went sort of poorly, okay. So there is some -- there are buyers who are sitting back. There's a bit

in the market. Okay, we saw that as the market rebounded from the sell- off.

QUEST: But why should the market particularly sell-off on the back of Mnuchin?

TUCHMAN: With a 320-point sell-off on a headline, it causes anxiety because we don't know. Look, we are being told that Saudi Arabia is a very

close business ally and an international ally relative to our relationship with Iran and whatnot, in Syria and Yemen, okay, so this could be opening a

door to a confrontation. Markets don't like confrontation. It causes anxiety, right? So this is -- they're making a statement by not sending

him in my opinion.

QUEST: Right.

TUCHMAN: Whatever your politics is.

QUEST: Yes, no, absolutely. But the interesting thing is that, I mean, the VIX suddenly shoots up more than 12 percent to 14 percent which is to

be expected. The market has always traded on headlines, but the volatility exacerbates that and makes it much more extreme.

TUCHMAN: But that's the market we're in right now at the moment.

QUEST: Today, yes.

TUCHMAN: Well, that's the market we're in, in general, but a 350-point move in a market today that's been moving up and down thousands of points

within a week's time is not that much more. This market can rebound.


QUEST: The market rebounding, there doesn't seem to be any evidence of that at the moment, but there is still another 30 or 40 minutes to go and

the last few minutes, we are hearing that the Fox Business Network, one of Saudi conference's last remaining media partners has now pulled out as

Steve Mnuchin also pulls out and Mike Pompeo, the US Secretary of State is playing for time.

He said Saudi Arabia needs a few more days to investigate. The Secretary of State stressed that the US and Saudi Arabia have important ties that

must be maintained.


MIKE POMPEO, US SECRETARY OF STATE: I told President Trump this morning that we are to give them a few more days to complete that so that we too

have a complete understanding of the facts surrounding that at which point we can make decisions about how -- or if the United States should respond

to the incidents surrounding Mr. Khashoggi.

I think it's important for us all to remember, too. We have a long -- since 1932 -- a long strategic relationship with the Kingdom of Saudi

Arabia that continue to be an important counterterrorism partner. They have custody of the two holy sites. They are an important strategic

alliance of the United States and we need to be mindful of that as well.


QUEST: John Defterios is in Abu Dhabi. Jeremy Diamond is at the White House. Jeremy, to you first. The thing that struck me there about what

the Secretary of State was saying or maybe because he is in charge of diplomacy. He rested his reasons on strategic -- Islam, the military

alliance -- all of those areas, not a whiff or a word from him about contracts.

JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: That is true, but it is certainly in keeping with the administration's line that the US-Saudi

relationship is a crucial one and it is one both important not only because of those military contracts that the President has really focused his

attention on, but really because of the broader regional implications. Its support for counterterrorism programs held by the United States. It's a

role in confronting Iran in the Middle East.

And so certainly, that has been the reasoning, but some critics have said that that is essentially giving away much of the US's leverages on the

public diplomacy front, that perhaps now is not the time to stress the importance of that relationship, but rather to kind of tighten the vice a

little bit on Saudi Arabia as we await some kind of explanation from them for the disappearance of the Saudi journalist, Jamal Khashoggi who has been

missing now for two weeks after entering that Saudi consulate and is believed of course, to be killed.

QUEST: John Defterios, Mnuchin is no longer going. A few other European Finance Ministers are no longer going, Fox Business News no longer a media

partner. The Saudis may say, "All right, let's just cancel it."

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, there's not a lot of information coming out of Riyadh, Richard. I've been on the phone and e-

mailing and texting all week long. We don't have a list of the speakers or the attendees at this stage, but sources tell me that Crown Prince Mohammed

Bin Salman is determined to proceed and have had some other input from very senior people here in the Gulf that are saying that while the West is

criticizing the Crown Prince, the Gulf States are rallying ...


DEFTERIOS: ... around, but internally in Saudi Arabia, they like the idea that he is plowing ahead with the event, but let's be very candid here.

Mnuchin is the biggest defector so far. Many in the region thought he would be attending, three Ministers outside of Mnuchin, all from the West

today. The Trade Secretary of the UK and the Finance Ministers of both France and Holland deciding to duck out.

It was a very bad week we had. Twenty-five major defections of people who we'd normally see at the world economic forum in Davos, very proud to be in

Saudi Arabia last year, they are not going this year, Richard. So they are going to try to put a brave face on it, try to maintain their contacts,

remain engaged and perhaps lower level people. But I thought the message from the White House almost immediately after Mnuchin said he wasn't going,

they've made it very clear, nobody else from the US government is going as well. That is even a stronger signal in my view. They are not even trying

to tiptoe around it. They're hitting it quite blunt, we're not going right now. Wrong signal, wrong time.

QUEST: Okay, oh well, Jeremy Diamond, take on board what John Defterios has just said, is that the tenor or are they caught in a damned if they do,

damned if they don't. Let's do the least we can so that we are not overly criticized but still keep a door open for the future?

DIAMOND: Well, this decision to not send Mnuchin is certainly a significant one and it's the most significant reaction that we've seen from

this administration so far in response to these events.

But at the same time, we know that the President was waiting to see what other countries would do first and the decision by Mr. Mnuchin's

counterparts in France and the United Kingdom were told was a crucial one to ultimately his decision today to pull out.

The President did not want Secretary Mnuchin to be the first of those counterparts to pull out of this conference, really waiting to see what was

happening and we saw a series of major company CEOs, other countries pulling out before the United States ultimately did when it realized that

it did not want to be left alone in the camp of attending this conference, going through with it and made all of these questions and criticism.

QUEST: Jeremy and John, thank you. We are going to follow deeper into this question, the same one I talked about last night on "The Profitable

Moment." This issue of CEOs and companies, the moral compass and when do you put values beyond commercial contracts.

As more Ministers drop out of the summit, top companies from those same countries are being cagey. John mentioned the French and the Dutch Finance

Ministers and the UK Trade Minister saying, no, they're not going. Bruno LeMaire in France says that will not hurt French relations with the Saudis.

Many businesses though are keeping relations intact.

Now, these eight firms are still listed as strategic partners in the future investment initiative even though they may not send their CEO. In other

words, they are attempting to have their cake and eat it by remaining connected, but not at the highest levels.

David Bach says doing business with Saudi has always been very difficult. He is a Professor who teaches at the Yale School of Management and joins me

now. Professor, good to see you, sir. Thank you. I was reading your interesting comments on this. They are damned if they and damned if they

don't. But what should be the guiding principle for whether or not they go?

DAVID BACH, PROFESSOR, YALE SCHOOL OF MANAGEMENT: Yes, it's good to be with you as well. Thanks for this coverage. Look, values is not something

that you put on your website and your annual reports, it's what you live, it's what guides your decisions, your actions when things are difficult and

right now is an opportunity for CEOs to signal what their values are and what their companies are all about and this is a pretty easy but important

signal to send to not participate in the summit.

QUEST: All right, not participate, but here's the hypocrisy. You don't send the CEO, but you send the assistant managing director or the CFO or

the COO or you send a significantly high enough rep that you don't completely piss off the Saudis.

BACH: That's right. I mean, that's the pragmatic approach and that's where it really gets much more difficult. The easy decision is not to send

the CEO and not to have the photo op with the Crown Prince. The much more difficult decision is do you forego this incredible business opportunity?

Saudi Arabia wants to change its economy. It's looking for foreign investment. There are a lot of opportunities here that have been long very

interesting to these companies.

And so the really important question isn't who goes and who doesn't go anymore. The really important question becomes what do you do after this?

What happens next and how do you adapt your engagement with the country?

QUEST: So talk us through that. Let us assume for the purposes of this next question that it is proven that the Saudi regime or Saudi government

did in some shape or form have links to the death or to the murder of Mr. Khashoggi. What does a company do?


QUEST: The realpolitik versus the desirable or the -- what would you? What's your guiding principle?

BACH: Yes, so well, the guiding principle, I think for a lot of these companies as much as we talk about this should be about their values.

They're doing risk assessments and one of the factors that is becoming increasingly important is reputational risk and this hyper political,

social media always news covered environment, they are thinking about what the cost and benefits look like, and losing the support of other customers,

losing in particular the commitment of their employees is an increasingly important factor shaping the decision.

So my hypothesis is that this is going to vary across companies. It's going to vary across industries, but particularly, those companies -- they

are the consumer facing that have a lot of millennial employees, the tech companies, some of the financial services companies. For them, it's going

to be much harder to go back to business.

QUEST: So at what point does a company have to hold its nose at the stench of hypocrisy and continue to do work with -- whether it be Saudi Arabia or

whether it be one of the states in the US on their bathroom band or whatever it might -- whatever the moral issue is. At what point does a

company have to stomach it and hold its nose.

BACH: You know, I don't think a company has to do it all. I mean, I think a company can say and that's what a lot of companies say, we're doing more

good than harm by being there, by engaging and I think this is what companies wanted to do with Saudi Arabia. They seemed excited about the

direction of change. They had a lot of hope for the Crown Prince and this is so difficult for them because suddenly, it looks like those hopes may

have been misplaced.

QUEST: Good to see you, sir. Thank you very much. We'll talk more about this.

BACH: Thank you.

QUEST: Company CEOs as the new moral barometers is something we talk a lot about on this program and we'll talk to you about it in the future. Thank

you, sir.

As we continue tonight on QUEST MEANS BUSINESS, no sign of a Brexit deal and Britain and the EU is dragging out the process for another year

possibly to the consternation of those who want to leave now, not later.

The EU is willing to extend the transition period for the United Kingdom to leave next year. Now, it comes as the EU leaders have dropped plans for a

special November summit to complete the deal.


QUEST: That was only going to happen if there had been sufficient progress, but Donald Tusk said the Britain was offering nothing new at

their meetings in Brussels. There was no reason to hold this and Jean Claude Juncker went on to say that they were open to extending the

transition period after next March.


JEAN CLAUDE JUNCKER, EUROPEAN COMMISSION PRESIDENT: This is giving us some room to prepare the future relation in the best way possible and I am

convinced that under the leadership of Donald, we find the deal with Britain -- my working assumption is not that we will have a no deal. A no

deal would be dangerous for Britain and for the European Union.


QUEST: And so, the plan is, you still have Brexit, but you extend -- look at this, I'll show you exactly if we put it all together. Look at the UK's

departure board and imagine exactly how. So, currently, if you look at the date as of being say from the date of the referendum. The first one is the

referendum date which is June 23rd, 2016. That's when the British people voted to leave.

Now, that would mean -- that was the referendum when they had the vote which means that the actual date of leaving was when Article 50 was

triggered two years after Article 50 was triggered, takes you to March 29th, 2019. Now, the Prime Minister has already said, "Let's keep the

status quo," so-called transitional implementation period for another year or so, 18 months to 2020.

Now, the extension will be to go to December 2021, so a good five years after the Brits voted to leave, they would have left, but in reality, the

rules and regulations would continue.

And patience -- I mean, that shows the chart and because of this, impatience is growing amongst those who voted to leave. Nina dos Santos

reports from one English town where the fight back leave means leave.


NINA DOS SANTOS, EUROPE EDITOR, CNNMONEY: The Brexit battle bus, back from retirement and so is Mr. Brexit himself. Two years after the referendum,

Nigel Farage is on the road again, urging his troops to hold the line against Europe.

NIGEL FARAGE, FORMER UK INDEPENDENCE PARTY LEADER: The truth of it is that the remain campaign never stopped.

DOS SANTOS: But the leave campaign won and you're here campaigning.

FARAGE: Well because the leave campaign thought the establishment would keep their promise of delivering Brexit, they are not doing it, so the

leave campaign, the people's army that wants the leave campaign has reconvened.

DOS SANTOS: His brand of populism may not be for everyone.

FARAGE: Well, first today, how about that? I've got that.


DOS SANTOS: Here in Britain's South Coast, he is still a hero for those of a certain age.

Are any of you retired?


DOS SANTOS: Hands up if you are retired, are you all retired?


DOS SANTOS: Christchurch voted overwhelmingly in favor of leaving the EU, it's also one of the oldest towns in Britain with almost a third of its

population being aged 65 or over. Well, they say that that means they remember a time before Britain had such close ties to Brussels and when it

comes to Brexit, it's a hard break that they're backing.

UNIDENTIFIED MALE: We don't care if we're a bit poorer. We'll survive.

DOS SANTOS: A Brexit rerun, well, the national polls say that the public would now vote to say. Here in Christchurch, they say, no way.

Did you vote leave?


DOS SANTOS: Would you still vote leave?


DOS SANTOS: Did you vote leave?


DOS SANTOS: Would you still vote leave?


DOS SANTOS: To them, Theresa May is giving away their hard fought victory.

UNIDENTIFIED MALE: We need something strong in this country, not a white flag (inaudible), just so you know.

DOS SANTOS: Negotiating the brass and the bread pudding in this market town, we did find one, a man who says that Brexit is a historic mistake.

UNIDENTIFIED MALE: I might be an older person myself, but I definitely think the young people are going to suffer if we actually leave.

DOS SANTOS: But mostly, it's the hard Brexit side that does the talking.

UNIDENTIFIED MALE: All the things we voted for, haven't yet been delivered.

DOS SANTOS: The road show continues on in to the night, as the protests.

UNIDENTIFIED MALE: What do we want?

GROUP: Leave ...

UNDENTIFIED MALE: When do we want it?


DOS SANTOS: To a convention hall where a thousand people have gathered. It's beers, souvenirs and the best of the Brexiteers. And like any good

reunion, they played the greatest hits.

UNIDENTIFIED MALE: All of us in business know that liberty is always best than abandoned.

DOS SANTOS: And tears Theresa May's Brexit plans to bits.

UNIDENTIFIED MALE: We (inaudible) ...

DOS SANTOS: Nina dos Santos, CNN from the South Coast of England.


QUEST: Now, later on Thursday, Jean Claude Juncker met with the Japanese Prime Minister Shinzo Abe in Brussels. Mr. Abe is on a five-day European

tour and it comes after he suggested Britain could join the Trans-Pacific Partnership after it leaves the EU, which would be somewhat interesting

since the ...


QUEST: ... Trans-Pacific doesn't really touch the UK Coast, but we won't let details get in the way. Koji Tsuruoka is Japan's Ambassador to the UK.

He joins me now from London. Ambassador, always good to see you, sir. You have been -- your government and you have been outspoken in warning the UK

of the risks of a no Brexit, are you more concerned now as you witness the lack of progress to assuaging your concerns over your country's company

doing business in Britain.

KOJI TSURUOKA, JAPAN'S AMBASSADOR TO THE UK: Well, it's always been the same position that we've presented since September 2016 when we saw the

results of the referendum and we have consistently been not just talking to UK, but to EU at the same time that the British exits from EU to be

conducted in the most move and most predictable way as possible because this affects the businesses.

QUEST: Smooth and most effective, that's exactly what's not happening at the moment. So at this point, in the negotiations, from what you see, are

you more concerned than you were?

TSURUOKA: All negotiations have a climax approaching to the very end and the time limit. I don't think we should jump up and down just because we

see some remaining issues to be resolved. That still is hanging, but I have no doubt that the two negotiators including the European Union will be

able to arrive at a mutually acceptable solution in the end. And this is what my Prime Minister has been urging, the European Union as well as the


QUEST: And the future relationship of the UK to Japan, I mean, whether it be through some Trans Pacific Partnership or whatever organizations, do you

see it being relatively straightforward say for Japan to create an independent or a separate free trade agreement with Britain.

TSURUOKA: My Prime Minster has spoken very clearly that if UK is willing and prepared to join the Trans Pacific Partnership now comprising 11

countries, Japan will welcome that UK participation. It's a very clear statement that we will be looking forward to do that, but in order to do

that, we need conditions to be satisfied on the part of UK and EU.

QUEST: Right, but knowing that, yes, but putting aside the issue of whether or not the UK would be able to with customs union and all of that

sort of stuff, wouldn't be a bit strange to have a country in the middle of the North Atlantic as a part of the Trans-Pacific, a country that's not

touching the Pacific rim at all, effectively, you would be opening the TPP or the TPP 11 to any and all who are prepared to join?

TSURUOKA: Exactly, that is a very good point and this is exactly the special characteristics of TPP. Although it is centered around Asia

Pacific, the countries that could join are not as limited to the countries in the region. It is intended to become a global regime if any country

would like to join, they can accept.

QUEST: Hang on, this is fascinating. This is your Prime Minister through the backdoor creating an independent multilateral free trade area?

TSURUOKA: I am afraid that is not necessarily correct because this open global approach has been the US initiative and all the countries that

participated in this negotiation agreed to follow it up.

QUEST: Ambassador, good to see you, sir. Thank you, I feel certain as long as you are in London and the Brexit negotiations continue, we will

always be inviting you to come and talk. You always have a most warm welcome. Thank you, sir.

TSURUOKA: Okay, thank you, Richard.

QUEST: Thank you. Now, the stocks are barely off the lows of the day. We are approaching the last half hour of trade. Take a look at the market.

The issue of course is where the market goes, what are the forces, defensive stocks.

[15:30:00] You know a thing or two about defensive companies. Join me.


QUEST: OK, after the break, you'll be joining us.



QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment, when bank stocks take another dip as Amazon get into legal

trouble, Amazon versus eBay, a fascinating dispute, we'll talk about that.

And we'll take you for a spin around Paris in a driverless car, Melissa Bell is at the wheel or not at the wheel because you get the idea. As we

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

The U.S. Secretary of State Mike Pompeo says the United States is taking a wait-and-see approach to investigations into disappearance of the

journalist Jamal Khashoggi. Mr. Pompeo met Donald Trump few hours ago, afterwards, he said, the Saudis need more time to put their report


Critics are calling that a stalling tactic. Moments after the Secretary of State spoke, the U.S. Treasury Secretary Steve Mnuchin said he would not

attend an important Saudi Investor Summit. Many other world financial leaders have already said they would skip the so-called Davos in the


In the past few moments, the "Fox Business Network" has canceled its sponsorship of the meetings. A stunning threat from President Trump. He's

tweeting he'll ask the military to seal the U.S.-Mexican border, that is if Mexico doesn't stop a caravan of migrants headed across Central America

heading towards the U.S.

Earlier, Donald Trump threatened to cut aid to four Latin American countries if the caravan continued. The Taliban claim responsibility for

the killing of a police chief in Afghanistan's Kandahar province. General Abdul Razig Achakzai was gunned down on Wednesday following a meeting with

NATO's commander in Afghanistan.

[15:35:00] U.S. General Scott Miller, General Miller was not hurt, three coalition members were wounded before the attacker was killed. The Trump

administration has put off labeling China as a currency manipulator. Now, by doing this once again, it is holding back on one of the president's key

campaign promises.

The yuan has fallen 9 percent against the dollar over the last six months, and it fell further on Thursday. Which wouldn't suggest that they're not

actually manipulating. It's now at a two-year low. Chinese stocks also fell -- you'll be aware the Chinese economy doesn't look too healthy at the

moment and the Shanghai Composite closed down nearly 3 percent.

That particular market is in real problems. In our C-suite today, Andrew Puzder who serves as the chief executive of CKE Restaurants, good to see

you, sir.

PUZDER: Good to see you, Richard, thank you so much --

QUEST: Carl's Jr. and Hardee's(ph) nominated, sir, you were, and withdrew from consideration as President Trump's Labor Secretary, we'll come to that

in a moment.


QUEST: As if -- then you published a book on the Trump economic boom.

PUZDER: Yes --

QUEST: The economic boom is real.

PUZDER: It sure is.

QUEST: But it is building into it various imbalances notably the deficit which we saw this week is now 4 percent -- 3.9 percent of GDP.

PUZDER: Yes, well, look, I think there's been a lot of misunderstanding of the numbers which came out from the Treasury. First of all, it's important

to keep in mind that revenue for fiscal year 2018 increased, it didn't decrease, it increased about $14 billion.

Now, that basically is flat. Fourteen billion is a lot of money in anybody's -- yes, and it'll be a lot of money in either bank accounts. But

versus the text revenue of about $3.3 trillion, it's about four-tenth of a percentage point. So revenue is flat despite the cuts in taxes.

The problem is we increased spending by $127 billion. So you've got this huge increase in spending --

QUEST: On military --

PUZDER: Yes, well, part of it was on military, part of it was on domestic policy issues. We feel the filibuster in the Senate, so the president had

to give Democratic votes to pass this --

QUEST: Wait --

PUZDER: And so he had to give some domestic --

QUEST: When you talk about Democrat -- when you talk about domestic policies which you just did. You're talking about in many cases support --

federal government support for those with least entitlement programs. And what I worry about when I hear this argument on the budget.

Republicans now are talking about cuts, the president, he has to say it, 5 percent cut from every department. That's going to hit those who need it


PUZDER: You know, what I was saying about the increase --

QUEST: Right --

PUZDER: Is that it wasn't just military, and it wasn't just Republicans. It was a -- it was a large increase due to a deal that was cut to get

approval so they can help the military. However, there are ways -- there are ways to reform entitlements. You know, the mandatory portion of the

budget is a huge portion --

QUEST: Yes --

PUZDER: You have to address it. And there are ways to address it that don't necessarily reduce benefits. Newt Gingrich and Bill Clinton did it

during the Clinton administration. If we -- if it's the third rail of politics --

QUEST: It ain't --

PUZDER: If you can't even talk about it, we're never going to get spending down, we're going to be stuck with deficits forever. Because even though

revenue flow increased --

QUEST: It is ironic --

PUZDER: They can't increase that much.

QUEST: It is ironic that a president that campaigned, criticizing the deficit in his first two years in office has presided over a rise in the

deficit for whatever reason.

PUZDER: Yes, I think -- I think there's a very good reason for it then, I'm also very critical of the deficit. But I have to tell you, sitting in

the White House, if I were president behind that desk and I looked at our military and the planes couldn't fly, and the troops didn't have the

supplies they needed and weren't being paid, and the ships were going to be docked because we didn't make capital expenditures to support the military

for the last half of the Obama administration because of sequester.

It's like UPS didn't buy new trucks and didn't fix --

QUEST: Right --

PUZDER: Old trucks for five years to make their numbers look better. When a new guy came in, he then had to fix their problem.

QUEST: Let's talk about Saudi Arabia and the very naughty problem that CEOs face. So firstly, assuming you were still CEO and you were going --

would you have withdrawn I assume.

PUZDER: I would have withdrawn, although I'm a little -- the only drawback I have is you really -- you really hate to convict somebody of something

before you have all the facts. However, I think they should have postponed the conference, taken the pressure off these companies, and then after they

come out with their report, after they state what their -- what their side of this is, then reschedule --

QUEST: So this is --

PUZDER: You could say people believe it.

[15:40:00] QUEST: So this is the president's argument about once again -- as he said, here we go again, people guilty before proven -- in this case,

it's in their consulate, that every report we're getting says that they are about to come up with some rogue killers line.

We're hearing as the "New York Times" has got today that -- I mean, I agree that you're innocent until proven guilty. But in this case, the evidence

is starting to stack up.

PUZDER: It is starting to stack up, but you really -- you know, historically, and we could come up with examples just sitting here.

Historically, I think we've learned as a nation and as a people that it's wrong to pre-judge. Because sometimes the facts look like they're

indisputable and it turns out they're not.

So I'd say, don't judge a -- now, I would like to say, I would have pulled out of the conference, I think the Saudis should cancel the conference and

take the pressure off everybody until they get their explanation out there.

QUEST: Yes, if the explanation is the rogue nation -- the rogue killer explanation, we did it or somebody did it, wasn't authorized, we've rounded

up the suspects, they'll be beheaded by next week and the Crown Prince had nothing to do with it. Do you believe that?

PUZDER: Well, I have no idea, I can't tell you if I believe it or not.

QUEST: Right, well, exactly. But my point is, as the CEO who has to continue then doing business in the real world, how far are you going to

push this?

PUZDER: Well, I think you push it until you felt comfortable that they had done something -- you know, this is -- you've got to remember, this is --

not only -- not only the business side of this, but the military budget in Saudi Arabia is five times what it is in Israel.

They are our biggest bulwark against Iran. So at some point, we're going to have to face the reality that these -- our friends, they may have done

something wrong, but we're going to have to adjust to the fact that this is a large ally in the Middle East. As far as a business looking at that, I

think you have to take all of that into consideration, we're going to have to wait and see the facts, I don't want to prejudge it.

You know, hypothetically, if it turned out they were bad guys, you'd really think twice about doing business in Saudi Arabia. I will tell you, there

are a lot of Hardee's restaurants in Saudi Arabia, and I don't think any of them are going to close.

And we're going to -- I think -- you know, I'm not even -- I'm retired, so it's not my job anymore.

QUEST: Good to see you --

PUZDER: Good to see you, Richard --

QUEST: Thank you so much --

PUZDER: Thank you so much --

QUEST: Good evening sir. You may be retired, and you may not have had Hardee's, you have given us the insight --

PUZDER: Well --

QUEST: Of the C-suite --

PUZDER: It's my pleasure to be here --

QUEST: Thank you very much indeed. We're going to continue this later, after the break, we're looking deeper at the latest tech sell-off. And

eBay and Amazon -- now, this is really interesting. eBay says Amazon is stealing their top sellers.


[15:45:00] QUEST: It's another tough session for stocks, we'll give you the numbers in just a moment. But now, get out your phones, get out all

your devices, whatever you find suitable, is where we want to go because we're about to open our question of the day. We'll get

to that -- and so to give you a second or two to grab your devices they say.

FANG stocks are feeling the pain at the moment. If you look at the facts, FANG stocks, Facebook, Amazon, Netflix, Alphabet, here they are, there you

are, they're all in the red sharply, good Lord, three percent, three percent, two percent, four percent Netflix is in the red.

It's been a tough couple of weeks for these stocks. So our question for you today at, is the bull market charging ahead or is it

resting or is it dead? Is the bull charging, resting or dead? Which raises the question whether this is just a blip, a correction or is there

something more underneath it?

You can see the question, resting, charging or dead? Clare Sebastian with eBay and Amazon. Why is eBay suing Amazon?

CLARE SEBASTIAN, CNN CORRESPONDENT: Well, eBay says that Amazon has conducted a scheme over the last few years to basically poach their high

value sellers. Don't forget, this is critical moment because Amazon obviously sells its own products, but it also just as last year has seen

that more than half of its products come from third party sellers, which is obviously a model that was pioneered by eBay.

Now, eBay says that Amazon representatives basically created accounts on eBay and used that to access a member to member system where they can e-

mail other sellers, and that way, they try to leave it with Amazon.

QUEST: The courts will sort that one out in the fullness of time. Look at these -- look at those numbers we just showed, what's going on here, Clare?

What is the underlying -- I mean, is this the route that we have been told was on its way?

SEBASTIAN: This -- I think Netflix is a pivotal moment this week, Richard, because a lot of people will look into that, the first of the FANGs to

report the season after we saw a lot of re-pricing happening after the last earnings report that we've got all these companies and we didn't really see

the kind of gains in the wake of that report, the many we're expecting.

Certainly, did live up to the hype of after-hours trading. Now, it's basically reversed it. So I think that this kind of testing, the

conviction around these stocks, you know, all of them actually with the exception of Apple if you include it in the FANGs, are in correction

territory, Facebook is in a bear market.

So we've seen -- you know, whereas in the first half of this year, the FANGs dragged the market up, now they seem to be dragging it down, and I

think part of its interest rates, part of it is China, that overall, there's questions around whether they're overvalued.

QUEST: Sure, if they weren't overvalued, they are now, and that is -- by the way, charging, resting or dead. While as they'll view -- has their

view. Let's go through those three potential options. Charging seems highly unlikely at the moment, bearing in mind what we're seeing.

But that begs the question, is this just a pause, a rest or a break? Nobody is really -- or are they saying the bull market is dead?

SEBASTIAN: I would argue that if you think that we're going to end -- you know, we're going to see gains for the last couple of months for this year,

then you are saying that we're going to see gains in the FANGs stocks, because these are the big gross stocks out there.

And I've spoken to Paul Verri(ph) who manages over the last couple of weeks, who are rotating out of these. People are looking and -- you know,

last year, the tech stocks -- we wait, you're going to see the highest yield. Now, with interest rates rising, you're going to get those kinds of

yields elsewhere and people want more predictable businesses to put their money in.

So this is a pay-out dividend reliably, this is just -- you know, have a less whiskey kind of sense to them in these bank stocks. So I think the

tariff is still alive, I don't want to say the tariff are allowed into -- but certainly, until we get earnings from the rest of the FANG stocks,

thinks we got a thing, we have to wait and see.

QUEST: All right, the results are in, stay with us, bad news for tech. Most of you think the bull market is resting. Very few of you think --

well, let's look at those numbers, 58 -- 3, 58 percent of you say it's resting, 25, 27 percent of you joining in say it is dead.

SEBASTIAN: We've got a ton of -- actually, Richard, geared to date. It is starting to look a lot like February, so I think resting might be a bit

premature here. If you look at hours --


QUEST: Oh, it's only blipping up.

SEBASTIAN: A little bit.

QUEST: Good to see you, thank you. Self-driving cars, more of an evolution than are a revolution, and you'll see when we put a self-driving

autonomous vehicle into the complicated streets of Paris.


QUEST: Autonomous vehicles are hitting the roads in Paris, Melissa Bell find out why the technology is here to stay but pleasing.


MELISSA BELL, CNN CORRESPONDENT: Autonomous driving we're told is the way of the future. Autonomous cars featured heavily at this year's Paris Motor

Show. But how can a computer deal with the random, the chaos of Parisian traffic. We decided to put that to the test.

Our co-pilots today are our engineers developing the technology that's already been sold to car makers, and where better to start than at the foot

of the Eiffel Tower.

So the car is now driving itself?


BELL: You're not involved at all?


BELL: No pebble, no wheel, no nothing --

UNIDENTIFIED MALE: No, I got my hands in my (INAUDIBLE) --

BELL: Which should be a dangerous thing, given that cyclist, scooters and pedestrians, not to mention the bad drivers who do have their hands on the

wheel. But Benois(ph) says the car sensors are more efficient than the human brain.

UNIDENTIFIED MALE: And as you can see, there's a pedestrian here, now, you're going to slow because it's detected and then when the pedestrian

moves off the crossing, and we have -- oh, yes --

BELL: If you pass the pedestrian, it'll go much faster --


BELL: To fire(ph) from there --


BELL: It's programmed to stop.


BELL (voice-over): The technology is part programmed, part learned through its many cameras, sensors, computers and radars, the car's artificial

intelligence allows it to learn at it goes.

UNIDENTIFIED MALE: It's just always focused on its dash(ph) which is driving me safely from point A to point B.

BELL: Shows that car is just bending very rude --


BELL (on camera): It just cut across you --


BELL: And the car felt it.


BELL: And it didn't even complain.


BELL: There were no two T(ph) remorse?


BELL: There will always be an element of risk, right, there, even for computers?

UNIDENTIFIED MALE: The zero folk doesn't exist. What we want to show is that we are going to drive during 1 billion towers without any problem.

BELL: And that's more better than a human being.

UNIDENTIFIED MALE: Yes, of course.

BELL: Perhaps, the best surprising thing about all this is that this is likely to be an evolution rather than a revolution already. All of the

sensors that exist on this car and allow it to drive autonomously exists on the sorts of cars that you would buy today, ordinary cars.

And so, what's likely to happen is that little by little, we will get in the habit of letting go of the steering wheel until one day, all cars, even

here in the French capital drive themselves. Melissa Bell, Cnn, Paris.


QUEST: Before we go, an update on the Dow and the markets. Now, the Dow is off the lows of today, but which will stand here, down some 400 and

something, 20-odd points down here. But it is off the lows of the day. And if we get underneath the skin of that, you start to see, really, it is

those stocks that are positive are the defensive, Exxon Mobil, Merck, Verizon all with steady streams of revenues.

[15:55:00] Chevron, J&J, consumer staples. And when you look at the losses, even those companies with the least losses, Wal-Mart, Walgreens,

Coca-Cola, they are your classic defensive stocks -- pharma and consumer products. The techs are being routed, you saw that with the FANGs, but

even the more established IBM down two and three quarters, Intel is off 2 percent, Apple down 2 and a third, Microsoft.

So that is the absolute tone of the day as being this rotation continues from FANG and tech into defensive -- the object of course, to try and shore

up in the event of slower growth and CAT down now 4 percent, down 4 percent, just simply because industrial earnings are expected to be weaker

than expected.

We'll have our profitable moment after the break.


QUEST: Tonight's profitable moment, Steve Mnuchin is not going to the Saudi summit and most others, it would seem to be as well. But not the

easy bit to some extent. Now, the really tough part comes along. As you heard from John Posner(ph) in the C-suite. If you are the chief executive,

it's easy to decide not to go to this, but what do you do if you've got businesses there?

How do you make a decision whether or not to pull out? As he said, Hardee's which it used to have CEOs has many restaurants, hundreds of restaurants,

inns or dozens of restaurants in Saudi Arabia, and he doesn't think any of them are going to close. This is one of those moments where making a

judgment of what to do, bearing in mind you still don't have a company to run.

Which brings us to our professor from Yale who says it's about the values. Will millennials want to work for you if you continue to support countries

where the regimes are considered to be corrupt or bad or murderous. These are naughty issues.

Chief executives have to balance them, and yes, I have a certain sympathy that they get to pay the big bucks, that's what they have to do. But we're

all in this together because we all decide who we buy from, we decide who we work for and we decide what we're going to buy.

And that's the pressure that today's consumers have. That's the first time we've ever seen anything like it. So make no bones about it, we're in new

territory in the Saudis scandal. 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's profitable.


The bell is ringing, the Dow is down, the day is done.