Return to Transcripts main page


Amazon Picks New York and Virginia for New Headquarters; U.S. Congress Back in Session After Midterm Election Shakeup; Boeing Responds to Accusations it Withheld Safety Information on its 737 MAX Models; Ceasefire Stops Most Severe Israel-Gaza Clash Since 2014; Draft Brexit Deal Reached Between U.K. and EU; Forty Four Killed in California Wildfires, Deadliest in State's History; Melania Trump Calls for Ouster of a Top National Security Aide; Italy's Cabinet Meets Amid Budget Battle with Brussels. Aired 3-4a ET

Aired November 13, 2018 - 15:00   ET


PAULA NEWTON, CORRESPONDENT, CNN: It's the final hour of trading here at the New York Stock Exchange and markets can't seem to make up their minds

today. The Dow has been going between gains and losses all day. We are down now, as you can see there, by about 125 points. I have to remind

everyone, that's after the epic loss of 600 points yesterday. It's Tuesday, November 13th.

Hey, there, so we have a breakthrough on Brexit ahead for you. Brussels has agreed to terms of the deal with lawmakers in London do the same.

Amazon has a special delivery for three cities. Some want to return HQ2 to sender and Boeing is responding. The company is accused of withholding

information about a safety feature tied to a deadly crash.

I'm Paula Newton at the New York Stock Exchange and this is "Quest Means Business."

Okay, the British Prime Minister is laying her leadership on the line. This is a historic hour right now. Theresa May is looking for Cabinet

backing for a draft Brexit deal. Now, it's been nearly 900 days, yes, 900 days since Britain voted to leave the European Union. And now finally, a

draft deal has been reached. But, and you guessed it, folks, it's not in the bag yet. She's got to sell this and she's starting by trying to sell

it to her own Cabinet.

She has summoned an emergency meeting of her Cabinet Wednesday. Now, as you can imagine, there was a bit of a relief rally for the pound. It

surged on the news, before pulling back a little bit, but still, a good gain there. Still not able to break that 1.3 mark. We have a full

coverage this evening. Our Erin McLaughlin is in Brussels. But first, let's head to London and CNN's Bianca Nobilo.

Bianca, you've been following this through several hours now. Yes, apparently a deal is in hand. In terms of what the sticking points are,

and you and I have talked about this so many times, they are looking at whether or not this is hard, soft, or somewhere in between.

BIANCA NOBILO, CORRESPONDENT, CNN: Yes, Paula, the sticking point, which has marred this process basically since the EU and the UK agreed on their

joint agreement in December is the issue of how to avoid the hard border in Northern Ireland. Now, the UK and the EU were disagreeing about that

backstop. They decided that it may be feasible that the UK would remain in a customs union with the EU if they couldn't avoid a hard border through

other means.

But then they couldn't decide on how that mechanism would work and crucially how the UK would withdraw itself from that. So that is the

mystery section of the text that the Cabinet hadn't seen until tonight and then will be discussing tomorrow.

Last week, they saw 95% of the deal missing that critical part that the Cabinet hadn't agreed on, until this point. And Paula, the Cabinet is the

Prime Minister's very first test in trying to get this deal through and it's composed of arch remainers and ardent Brexiteers and some in the

middle. So it is an important litmus test of whether or not she will be able to get this deal through Parliament.

NEWTON: Yes, and we should say only the first test because of course, many are expecting a fight in Parliament, as well. Erin, to you now. You know,

this also - this deal has to be seen by the EU and all of its member countries, as well. Do you sense a relief there in Brussels, or is it more


ERIN MCLAUGHLIN, CORRESPONDENT, CNN: I think diplomats and EU officials tonight here in Brussels, Paula, are simply holding their breath, looking

to Theresa May's Cabinet to see how they handle this draft agreement. I was talking to diplomats who told me they have yet to receive a copy of the

draft text, but they are aware of the broad contours of the draft agreement, which involves a customs union for the whole of the UK and

regulatory alignment for Northern Ireland as part of that backstop that's been in dispute for months now.

But there is skepticism among diplomats I've been talking to over whether or not Theresa May has the political space to get this past her Cabinet,

because there are elements of this agreement that are seen to be deeply unpalatable to both remainers and Brexiteers. So there's a question mark

of over whether or not Theresa May will be able to pull this off.

And I also think it's worth noting that today, the European Commission behind me published over 70 papers, preparing their preparations for a no-

deal possibility, including this.


MCLAUGHLIN: They tweeted this out, "Seven things you need to know when traveling between the UK and the EU after Brexit in the event of a no

deal." So, Brussels is hoping for the best at this point, but also preparing for the worst, Paula?

NEWTON: Yes, and when we say preparing for the worst, we mean, what this is going to boil down to in terms of people's lives, people's wallets, and

the way businesses can function the day after. And Bianca, to that point, you know, Erin mentioned it, the European Union has been showing a lot of

skepticism as to whether or not politically this is the deal that Theresa May can make work.

It seems to me that there is still so much skepticism about that, even with her own conservative MPs right now.

NOBILO: There is, and even though we're surprised and shocked in some ways that a deal has finally come to fruition between the EU and the UK, that

element of this process was always regarded as the most likely to happen. These deals do happen down to the wire, but we thought it would be

possible, and likely.

The fact of Theresa May getting a deal through the House of Commons is not, definitely not a certain prospect. And I've been speaking to MPs, I've

been speaking to experts in the Parliamentary Library. I've been speaking to seasoned political commentators and absolutely, nobody can say with any

certainty if Theresa May has the numbers to pass a deal through the Houses of Parliament. And that is, Paula, of course, because she has a minority

government. She's depended on the Democratic Unionist Party for power.

Now, they are very hard to please in this Brexit deal. They won't countenance anything which they think interferes with the union, between

Northern Ireland and the remainder of the United Kingdom. So they're going to be difficult to please.

She's got her Brexiteers who are likely to find whatever she presents them with as too soft a Brexit. She will have remainers and those pushing for a

second referendum who will also be displeased and probably think her deal is the worst of both worlds. She's then got MPs who disagree with the deal

on other basis, like the so-called Henry VIII powers which they don't think are appropriate and they think give the government too much power.

So she is facing opposition to this deal from so many different directions and I didn't even mention the opposition Labor Party, which of course is

not going to be wanting to help the Prime Minister out in this instance. In fact, they're doing their utmost to try to trigger a general election in

the UK, which would further destabilize things.

So as you can tell, Paula, so much instability ahead for Britain and the hardest task is now facing the Prime Minister to get the sign-off on this

deal through her Cabinet and then try and see if she can make this deal through the passage through Parliament.

NEWTON: Well, Bianca, she certainly knows what she's up against, and as European officials have said, they have not counted her out and will not.

Erin McLaughlin there in Brussels, who continues to watch the European situation. Bianca, our thanks to you as well.

Now, it has been a busy day on the oil markets. US oil is now at its longest losing streak since 1983. Now, that's when Futures began trading.

It's down 11 straight days; West Texas and Brent Crude are each down more than 7%. Not even yesterday's message from Saudi Arabia signaling that

they're willing to cut production can prop this market up.

Now, the BP CEO Bod Dudley spoke with John Defterios in Abu Dhabi. He said there are uncertainties everywhere right now.


BOB DUDLEY, CEO, BP: Well, we are starting to see a slowdown in the growth rates around the world. So if you'd asked me two or three months ago, I

would have said, oil increases 1.5 million barrels a day in demand and now looks like more consensus around 1.3. That's probably just based on the

growth rates.

So there is plenty of oil out there. I think OPEC throttling back a little bit. I think there'll be potential more increases in US, as the Permian

gets de-bottlenecked, but you also have got uncertainties in Venezuela in terms of its production levels.

So there's uncertainties in the up and down side and I think OPEC -- the plus group -- is trying to find its way. We'll know more December 6th

after they meet.

JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: You were absolutely convinced we were overvalued before the bear market set in. What made you

so convinced that the price was getting out of control?

DUDLEY: Well, it went up so fast. It seemed to be in response to the sanctions. I mean, my view was, I think President Trump could see $100.00

oil, so he's granted the exemptions and that's what I - I didn't know, of course, but I thought maybe there would be some exemptions, it's maybe a

bit more than I expected coming out of it, but I just felt very uncomfortable very fast when it got up to $85.00 a barrel.

DEFTERIOS: Was the White House mismanaging this whole process? They talked about getting Iran's exports to zero by the end of 2018 and then

eight country exemptions and it seems like quite a shock. Was he over concerned about triple digit or $100.00 oil?

DUDLEY; Well, I think the President is a negotiator. He keeps people off balance and keep guessing and I think it's nothing more significant than



DUDLEY: I wouldn't call it mismanagement, I think it's just keeping everyone off balance a little bit.

DEFTERIOS: What is your forecast for 2019, after what we saw in October?

DUDLEY: Well, we're planning BP and have been on a $55.00 real oil price for some time. Now, this year, we've been way above that and we'll decide

what we set our budgets now, which is different than the long term plan. But right now, we're going to keep the company very disciplined. We're

going to keep our capital structure, we've said over and over, in the $15 billion to $17 billion range, going forward. We've made a big acquisition

in the US. We're going to make divestments. We're readjusting our portfolios. But we're not going to get exuberant about the oil prices.


NEWTON: Okay, as we were saying here, markets are mixed at this hour of trade, and we just gave you that big oil story, but all of these mixed

markets follow, we have to make a fine point of this, at 2% sell-off on Monday. Now, taking a look at the Dow components, Boeing is the biggest

loser after a report alleging it withheld information about a fault with one of its jets. We'll have a full report on that later on in this


Joining me now though is Ted Weiser. He is the President of Seaport Securities. Ted, we don't want to gloss this over. The market isn't down

by much right now, and it's been kind of seesawing, but 600 points down yesterday, wiped out a lot of the gains. We were supposed to be out of the

woods after midterms, Ted. What happened?


NEWTON: A whole day.

WEISBERG: A whole day. We had that one 500-point rally. You know, I just think we're sort of on the other side of the mountain a little bit. The

markets in general, and we've talked about this before, a forward-looking indicator. And the question is how far forward? Six months, a year, a

year and a half? And the problem we all have now is, what are the markets looking at?

We're looking at an economy in the US at least, that's kind of running full bore. That means some kind of inflation and higher interest rates. You

know, you go back three or four years, when we had zero interest rates and the market was looking at the eventual recovery and a lot of changes that

we have now had, so what are we going to do for an encore? And therein I think for the moment anyway lies the problem for the markets in general.

In other words, what are we looking at? What's out there that can really be positive for the markets, at least as we see them today? I'm not quite

sure what that is.

NEWTON: A China deal might do it, especially as the President is talking to Xi Jinping at the end of the month. The thing here, though, in terms of

getting to a technical bottom, are we anywhere near bottom? I think that that's the fear with investors. They feel like, "Okay, we may not growing

in the next few weeks or months, but where are we going to be?" Could we have a lot further to fall?

WEISBERG: Well, I think the answer is, nobody really knows. We have a lot of the smart people that are going to guess and give you their best

guesstimate. But I think we simply don't know. Stocks will reach a level, just when they go up, they reach a level and they will reach a level on the

downside, when the values will start to reappear in terms of pricing.

We'll know we're sort of there when stocks no longer react negatively or even to positive news or negative news and continue to sell off. Once this

news or whatever it is, is priced in, and we'll know - the markets always tell us, they never lie. I believe that as sure as you and I are having

this conversation. Markets never lie. We don't always believe what they're telling us, but they never lie.

And we'll know when we get there. We're not there yet. Where is it? Your guess is as good as mine.

NEWTON: Okay, and it's only Tuesday. Gosh, it just seems like an entire month on the markets here and you only go through two days.

WEISBERG: Well, you know also, by the way, now we're getting into this very kind of squirrely time of the year where we have tax selling and the

weak stocks tend to get weaker, because these people in this country are starting to take tax losses and that will continue right to the very last

minute to the last day of the year.

NEWTON: It will be something to take in mind to December 31st.


NEWTON: Ted, thank you so much. When we return, we go back to our top story. Theresa May's agreement with Brussels. Some hard line Brexiteers

are, as you can imagine, already not happy with the draft deal. Take a listen here to British Foreign Secretary, Boris Johnson.


BORIS JOHNSON, FORMER BRITISH FOREIGN SECRETARY: We're going to stay in the customs union on this deal. We're going to stay effectively in large

parts of the single market. And that means, it's basin states stuff. We aren't going to, for the first time in a thousand years, this place, this

Parliament will not have a say over the laws that govern this country. It is a quite incredible state of affairs. It will mean that we are having to

accept rules and regulations from Brussels over which we have no say ourselves.


NEWTON: That is former Foreign Secretary, Boris Johnson there. Daniel Kawczynski is a conservative member of the British Parliament and an

outspoken Brexiteer, he joins me now from London.


NEWTON: I'm willing to bet you agree with everything Boris Johnson just said, but it is something that many people in Britain and Europe have heard

before. In this draft deal, and it is something that they do finally have hammered out, what do you believe will be the red line for you and those

who think like you in the conservative camp?

DANIEL KAWCZYNSKI, CONSERVATIVE MEMBER, BRITISH PARLIAMENT: Well, you're right. This has caused a great deal of trouble and consternation this

evening. What we've been hearing about this new agreement, the European Union, we've had concerns about their conduct for many years, for decades.

They're moving rapidly towards a super-national state and they're trying to intimidate and bludgeon independent sovereign nation states to abandon

their own sovereignty and to be rule takers from them.

What is a red line for us is that the Prime Minister promised that we would pull out of the customs union and that after the transition period, if we

were to extend that for the backstop, for the Northern Ireland border, we would have a mechanism whereby we, the United Kingdom, could actually pull

us out of that agreement. That appears to be jettisoned and we will continue to take instructions from the European Union ...

NEWTON: But isn't it being jettisoned --

KAWCZYNSKI: ... when we can pull out ...

NEWTON: ... but isn't it being jettisoned in the interest of the British people, in the interest of the British economy? You can't have chaos.

KAWCZYNSKI: Well, no, because I think that the British people, in unprecedented numbers, over 17.4 million of them voted for Brexit. They

knew what they were voting for. They voted that by pulling out of the European Union, they knew they were voting to pull out of the single market

and the customs union.

The British people are very proud. They love their country. We value our independence and our sovereignty, and one of the reasons we're pulling out

is because we can see the European Union hurtling towards a super-national state, which is not in our interests. We are equal partners with the

European Union and it seems as if our own government has sold out and as compromised far too much. It's going to be very difficult for us to

support this in Parliament.

NEWTON: And what's very difficult now, though, I say for many people in Britain, is that even if you're supported Britain, you see - supported

Brexit, pardon me, you see a Conservative Party absolutely tearing itself apart over this. Constructively, what can the Conservative Party do to get

to a Brexit that all the MPs in government can support?

KAWCZYNSKI: Well, it's a very difficult and problematic process, because, of course, no country has ever had the temerity or the courage to take on

the elites of Brussels and to actually say, "We are leaving." So there's no road map for us to follow, there's no path. We're on virgin territory

here, and I think it's a very courageous step we're taking.

What we are looking to is the Cabinet, our senior members of the Cabinet, who were Brexiteers, who campaigned with us for Brexit, they will have to

go to the Prime Minister and say, "This agreement is too much of a compromise. It doesn't fulfill what the British people voted for. You

will have to go back and renegotiate, because you simply don't have the numbers to get this through the House of Commons." And you're right.

NEWTON: So you would like - would you like them to resign, in so doing that? Would you like members of the Cabinet to resign based upon what you

know about the deal right now?

KAWCZYNSKI: I think there is a lot of people in the European resurgence group and in the Parliamentary Party who feel that these people's

positions will be untenable, unless they either ensure that this agreement was ditched or that some additional compromises were found, because simply,

if we were to pass this, it would be going against our own manifesto, which is what we promised to the people at the last general election, that we

would pull out of the single market and we would pull out of the customs union.

And I can't begin to overemphasize to you, you in the United States cooperate with Canada and Mexico, but your Supreme Court is supreme in your

country. You make the laws in your own country. You trade very successfully with Canada and Mexico, without being dictated to by these

countries. And you would not tolerate or accept anything like the sort of things that we've had to put up with from the European Union over the last

46 years. This is a battle of wills. This is a real battle of wills, and if we lose, we will set back the euro skeptic cause on the continent of

Europe by decades.

There are hundreds of millions of people in Europe, who like us, believe in their country, believe in sovereignty and want to retake control of their

countries. We cannot be perceived, the fifth largest economy in the world, a permanent member of the UN Security Council, to be caving into the elites

of Brussels.


NEWTON: Some would say it would be caving in on the livelihoods of people in Britain, and you know that that is the argument put forth by your

conservative Prime Minister. I'm sorry, I have to leave it there, but you're welcome, as this process continues, to come back because we know

it's going to be a very long night in Britain and a long week. Appreciate your time.

Now, coming up, Amazon goes long on Long Island City and finds love in Virginia, as the search for its new HQ2 comes to an end. And later and a

"Wall Street Journal" report accuses Boeing of withholding safety information about its 737 Max. Boeing has now responded.

You know, it had all the trappings of a TV dating showing -- a group of eager hopefuls, months of courtship, and even a twisty ending. Something

no one could have predicted. Amazon's year-long search for its perfect match is now, thankfully, over. And it's picked two lucky cities to host

its new headquarters. Two, not one.

HQ2, ironically, it is called, will be split between Long Island City right here in New York and Arlington, Virginia, just across from Washington, DC.

Now, the decision brings with it thousands of new jobs, obviously, and billions of dollars of investment.

Nashville, Tennessee, though, not to be outdone, was - we'll call them, a runner-up. They get a new operations center, employing about 5,000 people.

Now, earlier on "The Express," Amazon's Senior Vice President for Communications, Jay Carney, said the decision was all about attracting

those all-important high-tech workers.


JAY CARNEY, SENIOR VICE PRESIDENT FOR COMMUNICATIONS, AMAZON: Talent was really the driving factor for us. We wanted to be in places where we could

have access to existing talent, and also places that would be attractive to potential recruits to move to. So that's how we ended up in New York and

Northern Virginia. And also, if you look at the investment, I mean, we're talking $2.5 billion straight up investment in each location, 25,000,

minimum jobs - high-paying jobs, averaging over $150,000.00 per year, per job.

And the downstream effect in terms of revenue that these locations will get, the cities and states will get are in the multiple billions of

dollars. You know, I think that that - this kind of investment by the locations makes a ton of sense.


NEWTON: Our Clare Sebastian is in Long Island City, New York. I mean, Clare, people are asking, did New York really need another high tech

investment like this and will it transform the area that you're in right now?


CLARE SEBASTIAN, CORRESPONDENT, CNN: Yes, Paula, there's no question that for better or for worse, this will transform this area, and I think the

appeal for Amazon, if you look at the geography of where I'm standing is certainly very clear.

Across the water just there, we have Manhattan, which is of course already an established business center, financial center, fashion, media - you name

it. This, if we can pan the camera around a little bit and show you the neighborhood, it's one of the fastest growing neighborhoods not only in New

York City, but in the country itself.

More rental units added between 2010 and 2016 than almost anywhere else in the country. So certainly an attractive location when they're looking to

add that kind of tech talent and a similar vantage point in Arlington, Virginia, just a couple of miles from Capitol Hill and from the White

House, but this is - obviously, a lot of people are very excited about this. The governor, himself, threatened to change his name to Amazon Cuomo

to attract this site. The mayor is very excited.

But I spoke to one state senator there who is one of several opponents here, high profile opponents who are very worried about this. I asked him

how he felt about the news.


MICHAEL GIANARIS, NEW YORK STATE SENATOR: Appalled at the size of the public subsidy that we're giving to one of the biggest corporations on the

face of the earth. They're the last people that need our sparse public dollars. Here in New York, we have a subway crisis. The trains can't

handle the volume of people that are on them. They are in disrepair. We have parents in this very neighborhood fighting over school seats for their

kids. We have a lack of health care options, and yet we're taking scarce public resources and giving it to a company that doesn't need it.

The conversation has been flipped on its head. I understand why Amazon wants to come here. This is a great neighborhood. But if they want to

come here, we should be talking to them about how we're going to subsidize our community, not how we're going to give them our scarce public dollars.


SEBASTIAN: So Paula, I want to pull out the incentives because that is the very controversial part of this, that both of these locations have offered.

It's about $1.5 billion in tax incentives from New York, about $500 million from Arlington, Virginia. That is what has got some people extremely


But overall, you see a lot of excitement around this deal, and of course, in Nashville, the runner-up as well, which is getting 5,000 jobs. Clearly,

Amazon is going to have the power over a number of years to reshape the economic and the physical landscapes of these areas.

NEWTON: Yes, Clare. It will be interesting to see the way that neighborhood that you're in right now adjust to this Amazon effect and we

will continue to follow that story. Our Clare Sebastian, thanks so much.

Now, we have to ask, will the selection process ever be the same for these big companies, as Amazon held its competition, Google very quietly

announced its plans to add tens of thousands of workers in New York as well.

Joining me now from Austin, Texas, Tracye McDaniel is the Vice Chair of the Board of International Economic Development Council. She is also founder

and CEO of McDaniel Strategy Ecosystems. Look, you're sitting there in Austin right now, I'll ask you, why not Austin? It was on the list. I

mean, what do these cities who are not Washington, or LA or New York have to do to attract a company like Amazon?

TRACYE MCDANIEL, VICE CHAIR, BOARD OF INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL: Well, Paula, I think this whole process is going to be an amazing

case study for cities not only in the United States, but around the world to look at, how do you retain and attract talent, so you can have companies

like Amazon and others to invest in your communities.

And not only that, how do you retain the companies that are there, that are looking for highly-skilled workforce and have them available for them, as

they grow their strategies?

NEWTON: You know, my issue, Tracye, is that they didn't pick, you know, Austin and New York, or Austin and Washington. Jay Carney there, and we

had him, was very transparent, saying, we need to be able to attract talent. What is that saying for people outside of Silicon Valley or New

York in terms of those cities saying, "We want high-paying jobs in our cities as well, and we want a better and higher quality of life."

MCDANIEL: I think what it's saying is that we need to start looking at our talent pipeline and making sure that we're working with employers each and

every day. That's what members in our association do. They have relationships with the community colleges and the colleges to understand

the dynamics that these employers need to grow their company.

And I think to be competitive, we need to be laser-focused on those approaches, so we can ensure that we have the people there. The talent is

the most valuable asset these companies are looking for. And Austin, I live in Austin. I would have loved to see an opportunity for Austin.

I think there are a lot of people here, though, who have to take the daily commute, just like I do, who are saying, "You know, it was great. We got

to the place we were, but thank God it didn't happen." So they may be celebrating in some corners of Austin, that we're going to be just fine

with investment and the companies that we have here and continue to grow.

NEWTON: And that's a really good point, a lot of cities don't want to be Amazon, but there are a lot of other cities that could use that growth and

that potential. I mean, were you surprised that it was in the end, some people feel pretty predictable and maybe just a publicity stunt?

MCDANIEL: Well, I know there's a lot who consider a skeptic about the process, and I think the process is one that will be studied for the next

decades on how they literally flip the site's selection process upside down, and it became more of a crowd sourcing experiment, if any.

And I think we'll be studying that for a long time. There are a lot of cities over 236 now, who are looking and saying, this is something that we

can learn from and we can grow strategies so our cities are more competitive in the future for these types of opportunities.

NEWTON: Yes, a lot to be learned there, and we'll see though if there's this kind of a clamor, if anyone starts this kind of a competition again.

Tracye, thanks so much, really appreciate your time.

Now, coming up --

MCDANIEL: Thank you --

NEWTON: It's election night in the United States again, and Congress is back in Washington as votes are counted, all that and more after the break.


NEWTON: Hello, I'm Paula Newton, there's more QUEST MEANS BUSINESS in a moment. When lawmakers return to Washington, as ballots are still being

counted in Florida, and Boeing responds to accusations it withheld crucial safety information from pilots. Before that, though, these are the

headlines this hour.

A cease-fire agreement is now bringing an end for the moment to violence across the Israel-Gaza border. Now, the truce marks an end to the most

intense fighting in years between Israel and Palestinian militants. Egypt and the UN had been working to bring an end to hostilities since Monday.

[15:35:00] British and European negotiators have agreed on a draft Brexit deal. U.K. Prime Minister Theresa May has called an emergency cabinet

meeting for Wednesday to discuss it. She needs the backing of her ministers now before she can sell it to parliament.

It has been nearly 900 days since Britain voted to leave the EU. The two massive wildfires burning from both ends of California have claimed a

record number of lives. The fire in north of Sacramento has killed at least 42 people now, and it's the deadliest and most destructive in

California's history. Two others died in the wildfire west of Los Angeles.

Melania Trump is publicly pushing for the ouster of Deputy National Security adviser Mira Ricardel. Now, in a stunning move for a U.S. first

lady, Mrs. Trump said Miss Ricardel no longer deserves the honor of serving in the White House. A source familiar with the situation points to a few

beef between the two women over the first lady's trip to Africa.

The U.S. Congress is now back in session, lawmakers are returning to Washington and it's a Washington that will, in fact, dramatically change.

Before, though, Democrats take that power in the House early next year, they have just under a month to make a budget deal with Republicans that

avoids that government shutdown.

Meantime, in California, the election is still very much underway, even a week later. The vote and ballots are being counted and recounted as we

speak right now. And just last night, the Senate race in Arizona was tipped for the Democrats. Gene Sperling served as a national economic

adviser to Presidents Obama and Clinton. He joins us now from Los Angeles.

And a lot of people here at the Stock Exchange and on main street are wondering, what does a Democratic House and a Republican Senate do for the

economy, if anything?

GENE SPERLING, FORMER DIRECTOR, NATIONAL ECONOMIC COUNCIL: Well, I think there's a couple of things. Number one, Democrats are now going to have

the ability to, I think, block some of the things that would have been the most harmful that President Trump and the Republicans were pushing, such as

taking away subsidies, taking away protections for people with pre-existing conditions.

This was very bad, obviously, for tens of millions of American families, but I ultimately think it would have cost a lot of chaos in the healthcare

market. I do think it is going to mean that there is a body in Congress that will be looking for situations where the administration might have

been turning a blind eye to certain predatory practices, affecting students or, you know, others in our economy.

And third, I think you'll see Democrats setting an agenda in a way that I think will look very good economically for middle-income and working

families. I think you'll see them being willing to move forward on infrastructure, I think you'll see them moving forward on prescription drug


Of course, this might have conflict and we may not make the big pharmaceutical companies the most happy, but for tens of millions of

Americans, having the U.S. government apply more pressure to keep their prescription drug prices lower will be important.

Third, I think Democrats will start taking on some of the problem with student debt. And I will tell you that I think it is a real problem, not

just for those students, but for the economy. When you look at what's keeping some young people from buying homes, from investing, a lot of it

is student loan debt.

So I think you're going to see that Democrats will use their new majority in the House to set an agenda that will focus on doing very positive bread

and butter, kitchen table-type of things for the typical American middle class and working poor family.

NEWTON: And to that point, and you've brought up a lot of worthy points as far as Americans who maybe did not get what they thought they were going to

get out of that tax cut deal. A lot of things they're looking for, but the debt and the deficit are enormous.

What can the Democrats possibly do without adding to the debt and the deficit, especially when -- do you believe they can get a compromise from

Donald Trump about raising taxes on the more wealthy Americans?

SPERLING: Well, if you look at what the Senate Democrats have put forward, and I think House Democrats have agreed, they've put forward an ambitious

infrastructure plan, a trillion dollars over ten years. But they have asked to do that by pulling back some of the excesses in the recent Trump

tax cut.

Now, you know, you are seeing some Republicans out there, saying, oh, my gosh, you know, we're worried about the debt, and, you know, now we might

need to cut healthcare for typical families. Well, that's just not going to play well when you've just increased the debt by over $2 trillion,

giving a tax cut that goes disproportionately to some of the largest companies -- I mean, you were just talking about Amazon.

[15:40:00] Do you think many Americans really thought that Amazon just couldn't make it if they didn't see their tax cut by 30 percent, 40

percent? I mean, their taxes cut by 30 percent, 40 percent? No. People -- you know, Democrats are going to say, let's pull some of that back and then

let's use it to create jobs to invest in our people, to modernize our country, do things that will have more lasting, positive effects, and be

good for job growth right in the United States --

NEWTON: And while also -- all of that sounds positive, but most Americans hear that and think we're just going to get to gridlock.

SPERLING: Well, you have divided government, and that can lead to gridlock. You know, I mean, I've been part of both. I've been part of

divided government where we move things forward. You know, the children's health initiative program, President Clinton pushed through when there was

a Republican Congress.

You know, President Obama was able to extend tax credits for working poor families, through budget negotiations. So we'll have to see, I think the

Democrats will set the agenda in the House of Representatives, and we'll see how the president and the Republican Senate react.

I'll tell you one area, though, where the American people are speaking pretty clearly. They were initially skeptical, but they have definitely

decided that Obamacare, the Affordable Care Act --

NEWTON: We will see --

SPERLING: And it's particularly -- it's protections for --

NEWTON: We'll see --

SPERLING: People who have pre-existing conditions is something they want - -

NEWTON: I think we're going to have to leave it there, I'm sure it's something they want, but Washington has not been able to get to a clear

solution on that yet. Mr. Sperling, thanks so much for joining us, really appreciate it.

SPERLING: Thank you for having me --

NEWTON: Now, from one -- from one government facing headwinds to another. The Italian government is holding an 11th hour meeting to decide its next

move in a budget battle with Brussels. Right now at this hour, cabinet ministers have gathered in Rome, the EU has given them until midnight

tonight to agree to a plan to revise its budget and rein in that government spending.

If they don't budge, it could set up a major showdown between Rome and the EU. Anna Stewart joins us now from London. And Anna, as if the EU needed

more troubles, especially now that they're dealing with Brexit. What are the odds that the EU is going to accept whatever Italy decides right now?

ANNA STEWART, CNN: Well, currently, it's not looking too good, Paula, because from what we hear, Italy may make very minor concessions to the EU,

like maybe putting the forecasted GDP down slightly for next year, but there'll be no budge when it comes to the actual budget deficit and those

spending plans that the EU does not like.

So from here, what we're looking at is maybe a week tomorrow, if the EU decides, this budget does not meet its satisfaction, it could launch what

is called an excessive deficit procedure, which frankly is just a very long, painful process, which can end in a fine worth billions of dollars

for Italy.

However, there is time, like all EU processes, Paula, it takes a very long time. It would have to go to the EU Commission, be voted by the council.

Italy would probably have about six months to meet the requirements before it faced this billion-dollar or billions of dollars worth of fines.

But unfortunately, at the moment, time doesn't seem to be what's needed here. It's not going to shift this government's position, at least it

doesn't seem to be just in the last 24 hours, the rhetoric has not been one of compromise. We've had one deputy Prime Minister, Luigi Di Maio saying

that a budget that met the EU satisfaction would frankly be a suicidal budget for Italy's economy.

We've also had the other deputy Prime Minister Matteo Salvini saying he doesn't accept letters from anyone other than Santa Claus, certainly not

from the EU Commission president. So not the language of compromise so far.

NEWTON: No, definitely not, and Babbo Natale(ph) making a cameo appearance at the Italian political scene, lovely to hear that, Anna. And as I said,

I think Brussels could deal with a little bit of good news at this point in time. Anna Stewart continues to follow the budget crisis in Italy,

appreciate it.

Just ahead, new developments that may involve last month's Lion Air plane crash. Boeing is responding to a report that claims it withheld crucial

information about its new model 737 planes, our aviation safety analyst joins us next.


NEWTON: Boeing is responding to a "Wall Street Journal" report that alleges the giant plane maker withheld information about a possible fault

with its 737 MAX jet. Now, that's the same model involved in last month's deadly Lion Air crash. The paper says Boeing was aware of problems with

new flight control features.

Boeing says, quote, "we are taking every measure to fully understand all aspects of this incident. We are confident in the safety of the 737 MAX."

Now, it's the latest and largest version of the world's most popular passenger jet. I want to underscore that. All of us, if we haven't flown

on it already, we'll be flying on it very soon.

As of September, Boeing has delivered 241 of its 737 MAX models, American Airlines, Air Canada and of course Lion Air all have the jets in their

fleets. David Soucie is a federal -- is a former Federal Aviation Administration Safety Inspector and he's Cnn's aviation safety analyst.

David joins me now from Denver, Colorado. And you've got to help me out with this one. I don't want understand why everyone seems so calm at this

point. We have an unexplained event in terms of this investigation. When something like the 737 MAX, a brand-new plane goes down in this way, it

seems to me that they're not being, perhaps, as vigilant as one would think they would be in terms of having another look at why -- what possibly

could have caused this accident as those new planes are in the air!

DAVID SOUCIE, FORMER FEDERAL AVIATION ADMINISTRATION SAFETY INSPECTOR: Yes, and the fact that they have the data recorders right now, they know

exactly what happened with that aircraft. In fact, the fact they're kind of playing backseat to this doesn't make any sense to me either. They need

to be proactive about it and to get it fixed. There's no question.

NEWTON: But in terms of doing that, can you just explain what is the problem in terms of what may have caused this and what the "Wall Street

Journal" report was referring to? The fact that they knew that the plane would, in fact, suddenly start to pitch?

SOUCIE: Well, it gets a little technical, so bear with me on this a little bit. The angle of attack indicator, the thing that tells the airplane what

angle it's hitting the wind or whether it's going forward, whether it's lifting or not, that's the angle of attack indicator.

That feeds information into this system, which is an automated stall prevention system. So if this angle of attack indicator thinks that the

aircraft is in this kind of a pitch, which is what happened, I think, in this situation, it's going to tell that angle of attack -- or it's going

to tell that anti-stall system to push the nose of the aircraft down.

So that's what it does. It pushes the nose of the aircraft down, and we saw this on the previous flight. The same aircraft, the same serial number

aircraft, in a previous flight did the same thing. But the previous pilot was able to turn that system off, get to the landing spot, land, and then

have it fixed that night.

Evidently, they didn't fix it, though. The angle of attack indicator was not -- was replaced, but it evidently had the same problem again. So it's

kind of a technical issue, but there are processes in the manual, and this is where Boeing's coming from.

They have process in the manual that say, hey, if you have this uncontrolled nose down attitude, then turn off that system, turn off that

nose-down system, but by the time it's happened, it's too late, you've already --

[15:50:00] NEWTON: Yes --

SOUCIE: Experienced it, and so the pilots in this case, I think in 601, they didn't respond appropriately and turn that system off.

NEWTON: Yes, and it may turn out that there would be some measure of either mechanical error or pilot error. But David, federal investigators -

- U.S. federal investigators are involved, they're keeping an eye on this. At what point do you think they may need to get more proactive?

SOUCIE: Well, I think it's right now, they need to issue an air witness directive, typically in every accident I investigated when I was with the

FAA, the air witness directive follows long after the investigation is done, but that could be two years down the road.

So they issue what's called an emergency air witness directive. And that needs -- that has to do with the operation of the aircraft today. So what

they need to make sure of is that all the pilots are aware -- critically aware of the fact that this can happen and what to do if it does happen,

rather than just say, well, go to the manual, there's non-standard product checklists you can go through to make sure that, hey, this happened to me

and I'm going to go check this stuff off.

But it needs to be more proactive than that. They need to get with every pilot, every pilot needs to know that twice its aircraft, and if they

experience this nose-drop situation, that they're supposed to turn off that automated system.

NEWTON: Yes, and you can bet most pilots are incredibly vigilant about this. And anyone flying a MAX right now has likely gone over this already.

David, thanks so much, as we continue to follow what you know, you said yourself, was a bit of a complicated story right now.

Now the fire raging in northern California is now the deadliest in state history. We'll take you to the south where experts fear a second fire is

closing in on Los Angeles and may only be getting worse.


NEWTON: OK, two deadly fires in California have claimed more lives. The Camp Fire has left 42 people dead, it's decimated more than 6,000 homes and

it is only 30 percent contained for now. Now, the Woolsey Fire near Malibu, it's only 35 percent under control, 21 million people are under red

flag warnings in Southern California.

Scott McLean is there in Malibu for us and brings us up to date. I mean, Scott, they had said those winds would really whip up today. Is that a


SCOTT MCLEAN, CNN NATIONAL CORRESPONDENT: Absolutely, that's the main concern here, Paula. And there are thousands of firefighters who are on

the front lines, trying to make sure that this fire doesn't spread. But here in Malibu for many people, the -- it really can't get much worse than

this. Today, we met a man named Thomas Hirsch.

[15:55:00] We're standing on what was once his family home. He grew up in it, his parents still lived in it. And when we think of Malibu, we often

think of the rich and the famous who own homes here, but not this family. They were actually schoolteachers who bought this property in 1965 for

just $39,000.

His parents are 94 and 97 years old, respectively. And so they've got a lifetime of things that are here. Today, Thomas was searching through to

see if he could find anything salvageable, anything of value, and actually right here in the kitchen, he managed to find a sterling silverware set

that had just melted into a blob.

Despite the destruction, despite his parent's age though, they say that they're still going to rebuild. Listen.


THOMAS HIRSCH, RESIDENT OF MALIBU, CALIFORNIA: It's -- God, it's just a lifetime of memories. You know, they said, hey, look at this, and you

know, I spent so many years here, and it's really sad to know that my parents built this with their two hands and remodeled this thing and

remodeled it and added on to the property. And it's quite devastating.

I mean, it's very sad and devastating. But, you know, you can choose to be a victim or you can choose to be a survivor, and we're survivors and we'll

rebuild, we'll come back and take whatever little insurance money they have, clean it off and rebuild it, and make it nicer than it was before.

And I told my dad this, and he said, Tom, you can't make it any nicer than it was. And I said, you're right, dad, we can't make it any nicer, it will

never be as good as it was. It will be newer, but it won't be as good and it won't have the memories.


MCLEAN: And Paula, the big concern today as you mentioned is the winds. They are going to be strong until tomorrow evening. A red flag warning and

the fact that means that conditions are primed for this fire to start and to spread. In this case -- as for any rain, it's in the forecast from two

weeks from now, maybe.

So wherever firefighters do put out these flames for good, it will be because of no help from mother nature.

NEWTON: Unbelievable, two weeks to rain. Scott, thanks so much for continuing to bring us the story from California, and we will have the

closing bell and the final numbers right after this.


NEWTON: It has been an up-and-down day here at the Dow, it really could not decide what to do. But as you can see, the indices, they're down, but

not so much. The Nasdaq though holding on to the gains for now. I wouldn't even call those gains, they're kind of flat.

And that is QUEST MEANS BUSINESS, I am Paula Newton in New York, "THE LEAD" with Jake Tapper starts now.