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QUEST MEANS BUSINESS

A Global Wave Of Selling Lands On Wall Street; There's No Lifeline For Theresa May In Brussels. Michael Cohen Says President Trump Knew it was Wrong to Make Hush Payments; Theresa May Returns from Brussels Empty- Handed; Seven-Year-Old Guatemalan Dies in U.S. Border Patrol Custody; American Student Killed in Netherlands; Chris Christie Says He's Asked to Be Taken Out of Consideration for White House Chief of Staff Position; Johnson & Johnson Shares Plunge After Damning Report; Dow Drops 500 Points in Final Hour of Trade; World Leaders Gather in Katowice, Poland, to Negotiate How to Tackle Climate Change; Federal Prosecutors Investigate President Trump's 2017 Inaugural Committee; Shares on Wall Street Plunge Amid Global Sell-Off; European Regulator Launches Inquiry into Facebook as Company Reveals Bug Exposed 6.8 Million Users' Photos. Aired: 3-4p ET

Aired December 14, 2018 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, ANCHOR, QUEST MEANS BUSINESS: We're an hour away from the closing bell, the last hour of trade on Wall Street on the last day of the

week, down 482 points. It's been a torrid sort of session, off more than 540 points at one stage, and the broader market and the tech stocks equally

- the S&P is down sharply, just about the same as the Dow, and the NASDAQ, the tech stocks are being thoroughly hit hard.

Look at the Dow Industrials, and you'll see one stock in particular pulling the market down, Johnson & Johnson, J & J - it's one of the reasons the

market is down because this is what's been moving the markets. With China, growing fears over the world's second largest economy. It's killed off any

hopes of a Santa rally on Wall Street. And the reason that J & J shares are plunging, one is that the baby powder contained asbestos. They knew

about it. Paul La Monica will be here to tell us. And a fine day at Facebook, a billion dollar fine, in fact. Users' private photos could have

been exposed. We are live in the world's financial capital, New York City on Friday, it's December 14th. I am Richard Quest, I mean business.

Good evening. Tonight again, a global wave of selling lands on Wall Street. Normally, the news that China is reducing tariffs on American cars

would send them racing higher. Today though, the worries about the trade war and how it is hurting the Chinese economy, an economy that is visibly

slowing down, is now taking over.

So look, around the world. In China, it is weak data, slow retail sales, lagging industrial production, and a variety of issues, including the

tariffs that are now hurting the economy. Europe - signs of a Eurozone slowdown, the worst French PMI numbers in years. Germany, also failing to

rebound. And in the United States, hints of a slowing growth, weak corporate forecasts, bad signs in the bond market. And we haven't even

mentioned Brexit into all of this and the negotiations - the tortuous negotiations there.

Speaking to me earlier at the New York Stock Exchange, floor trader Peter Tuchman said the future is hard to predict.

(BEGIN VIDEO CLIP)

PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: You know what? I think it is hard to predict what's going to happen. I don't think the

market is really pricing in what's going to happen next year. I think we have a year where we had huge profits, we gave them all back. People are

trying to position themselves into the end of the year. And I think the buyers are more on strike than it is - and if I can't find a reason to buy

this market, perhaps I'd better sell it coming into the end of the year.

(END VIDEO CLIP)

QUEST: Alison Kosik is at the New York Stock Exchange. Peter Tuchman earlier also made the point there when you were there with me, he says

look, the last two weeks of the year tend to be quite busy because you're squaring your books for the end of the tax year and how you want the year

to be reported to investors. So Wall Street is - if it is looking lower, you're going to take profits, even though it may push it further down.

ALISON KOSIK, CORRESPONDENT, CNN: You read my mind, Richard. You know, there's just so much negative out there. So instead of seeing investors

buy the dips, in this case the plunges, investors are actually looking just to take profit off the table and sit the rest of the year out. One trader

hinted to what you heard Peter Tuchman say, there are just no bids out there because they have got this wall of worries, the uncertainties about

this global slowdown that you explained, you didn't even get to Brexit and go into really in depth on trade because headlines on trade, that is really

what investors are really trading on when those headlines come out.

So once again, you have got the global economies that are worrying everybody and trade.

QUEST: Alison Kosik, thank you. Two of Wall Street's most reliable harbingers are flashing ominous signals about the economic future. And

there is increasing talk that not only will next year have a slowdown, but it could be something worse. People are even using the "R" word,

recession. So let's take a few moments to actually put this in perspective.

The gap between the ten-year bond and two year treasury or two-year note I should say and the ten-year bond is getting uncomfortably close. It is

close to inverting.

[15:05:00]

QUEST: Now, the normal way of course is that the yield curve goes like this, but when they invert, it goes like this. This is what - the spread.

So there you've got the 10, there you've got the two-year and that spread should be like that. That is a normal spread.

But when things are getting worse, you've got longer - you've got short- term rates going up because the Fed is pushing them up, long term rates coming down because investors are buying into the longer bonds for safety

and security, you get this narrowing. That is a harbinger of grim times to come.

The reality is, every time it's happened, a recession has followed. But not every recession has this. It's worrying. And then you've got

unemployment. Look at this particular one. Unemployment is creeping lower, and that's a good thing. Unfortunately, it is getting closer to

inflation. Now, the two hasn't been this narrow since 2008 crisis and this is because you have something known as the nonaccelerating rate of

inflation, the NARI and when the NARI starts to give this sort of indication, well, you get some serious worries.

All week, it's not - we're not just doom mongers ourselves, all week on "Quest Means Business," we have been hearing like the ghosts of Christmas

past, we're hearing the dreaded words, deceleration, stagnation, recession.

(BEGIN VIDEO CLIP)

JAREDD WOODARD, GLOBAL INVESTMENT STRATEGIST, BANK OF AMERICA MERRILL LYNCH: This is a really strange time. It's a kind of market that we

haven't seen for 20 years. We are forecasting terrible returns first part of next year, we think that it has to get much worse before it gets better.

JEFFREY KLEINTOP, CHIEF GLOBAL INVESTMENT STRATEGIST, CHARLES SCWAB: We see heightened risk of global economic recession in the next 6 to 18

months, and that's based on leading indicators, the ones we think are most important heading in that direction.

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: The balance of risk is moving to the down side owing to the persistence of uncertainties related

to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.

UNIDENTIFIED FEMALE: Is there more to come on the down side picking up?

DARIUS DALE, MANAGING DIRECTOR AND PARTER, HEDEGEYE RISK MANAGEMENT: Yes

UNIDENTIFIED FEMALE: How much more?

DALE: We think the U.S. economy's deceleration from its central peaks are reaching Q3 for both growth and inflation, are likely to continue all the

way through the middle of next year. Meanwhile, the global economy is likely to hit its nadir in Q1.

(END VIDEO CLIP)

QUEST: So there you have it. I want you to go to cnn.com/join. How worried are you about your financial future? Your financial future. There

is a range of options there. You've got, you're not worried at all, you're quite worried, you're terrified, or you're broke anyway, so it doesn't

really effect you too much. The lines are open, cnn.com/join. Gillian Tett is the U.S. managing editor of the "Financial Times." Always good to

have you.

GILLIAN TETT, U.S. MANAGING DIRECTOR, FINANCIAL TIMES: Great to be here.

QUEST: We brought you in today because there is a growing consensus that next year, there will be slower growth.

TETT: Yes.

QUEST: Everyone accepts that. The question is so slow that we fall into a recession, so slow that it becomes noticeable and difficult.

TETT: Well, here's the way I see it. 2018 was the year of two "sh"- sugar high and shakeup created by the Trump administration, in the trading order,

global relationships, everything else. The sugar high of course is all of those tax cuts and all of that stimulus. 2019 is going to be the year when

both of those two begin to really carry an economic cost. The tax cut sugar high will start to wear off, and the shakeup of trading relationships

could start to damage growth overall. So will that create a recession? Still unclear. What we do know though is almost certainly, there will be a

lot slower growth at best.

QUEST: But the tax cuts full effect won't come in until the next tax season when people start getting their refunds

TETT: And then you start to get what they call the 2020 fiscal cliff when some of the tax cuts start to come off and boost, you've had the confidence

and general excitement amongst business and consumers will start to fade. Remember this point, if you look back in the last century, there have been

very few recoveries that have ever lasted as long as the current one in the U.S. It's very unusual to have almost an entire decade of growth.

QUEST: Miss Tett, I am not going to let you bounce around be it ever so elegantly. Is it your feeling and the people you're talking to that we are

looking at a recession?

TETT: you wouldn't just take a lot slower growth as being part of that picture?

QUEST: I would take that as being it will feel like a recession. As you know, there's almost no difference between 0.5% growth and minus 0.5%

growth. There's no difference at all to how people feel.

TETT: If you're an investor, the thing you would know is that it is going to feel like a recession and the markets have been priced for perfection

during much of 2018, and that is going to be the painful realization that you simply cannot justify that going forward in my view.

QUEST: So if that's the case, we don't forecast the level of the market, but it is fair to say that this volatility, this salami slicing ...

[15:10:07]

QUEST: ... 300 points up, but 500 points down.

TETT: You've had crazy, crazy markets and a lot of it has to do with both investor uncertainty about where things are going. It's also about its

fundamental shift in trading structure, the fact you have got so much robo- trading, electronic trading and also the fact that you don't have the market makers in there like they used to be.

I was actually in the White House a few days ago and talking to some of the people in the administration, and they were pointing out that one of the

things that has happened is because of the financial regulations, you don't have big banks stepping in to try and act as buying selling orders and

stuff when the crunch hits.

QUEST: It is harder to do it.

TETT: Absolutely.

QUEST: Because - and also, not only the amount of off market trading that doesn't go through the floor of the exchange. I've heard there was 30% to

40% to go through the exchange, but the rest is under the - pulls another.

TETT: But you know, when you take away the crazy ups and downs, the trend is pretty clear. Investors are getting concerned, the market has been

drifting lower.

QUEST: I keep asking the experts this, what are you supposed to do in this environment?

TETT: Well, if we take a long term view and don't keep watching cable TV too obsessively and panicking about the ups and downs each day, but hey,

no, I think you have to basically do the usual things. You have to diversify. You obviously have to watch CNN.

QUEST: Just remove the knife from it.

TETT: Yes.

QUEST: Quick reminder of our question. How worried are you about your financial future, if you were voting, if we would have allowed you your

phone, would it be not at all, quite worried, terrified or I'm broke.

TETT: Me, personally?

QUEST: You could take it any way you want.

TETT: I think you have to take a long view and take a deep breath. The reality is, if you look back over the last decade, in spite of all the

drama, all the ups and downs, the global economy as a whole has grown pretty steadily at about 3% to 4%. So yes, you will almost certainly see

the U.S. slowing down dramatically if not go into a recession next year. Yes, things in Europe are looking tougher. Yes, China is definitely

looking a lot more alarming. But look at the picture overall, and smooth it out. Big picture, it is not falling off a cliff.

QUEST: But as the U.S. Managing Editor of this fine publication ...

TETT: I mean, I could - I'll talk about television and let's talk about it.

QUEST: That should be charming. You must be very relishing your thought of U.S. Presidential election with a slowing economy and a President under

pressure because, quote, "it's the economy, stupid."

TETT: Well, it's certainly going to make it more interesting in terms of how you start talking about the economy next year. Anyway, great to see

you. Thank you.

QUEST: Thank you. Now, go in to vote at cnn.com. Most of you are quite worried about your financial future, a few of you are broke, 18% of you are

broke, but 50% of you say you are quite worried. We are not done yet, at CNN for those of you who missed it, go to cnn.com/join, our next question,

we are talking Brexit where there is still no progress after the E.U. Summit. Who is the current biggest obstacle to the deal? The British

Prime Minister Theresa May, Jean-Claude Juncker, the Commission President; the Irish Taoiseach, Leo Varadkar, which one can we blame for the mess

we're in? In a moment.

[15:15:00]

QUEST: There's no lifeline for Theresa May in Brussels. E.U. leaders sent her away from the Summit empty handed. The Prime Minister tried to get new

concessions on the Brexit deal and she got nothing instead. Cameras were still rolling. Mrs. May and the President of the Commission, Jean-Claude

Juncker had this tense exchange this morning. Journalists asked Theresa May about this, this was her response.

(BEGIN VIDEO CLIP)

THERESA MAY, BRITISH PRIME MINISTER: I had a robust discussion with Jean- Claude Juncker. I think that's the sort of discussion you are able to have when you developed a working relationship and you work well together and

what came out of that was his clarity that actually he had been talking when he used that particular phrase, he had been talking about a general

level of debate.

(END VIDEO CLIP)

QUEST: Mr. Juncker and the E.U. Council President, Donald Tusk emphasized they still have a lot of sympathy for Mrs. May's efforts.

(BEGIN VIDEO CLIP)

JEAN CLAUDE JUNCKER, PRESIDENT, EUROPEAN COMMISSION: I have to add that Theresa May is a good friend of ours. We have the highest respect for the

British Prime Minister because she has to deliver a very difficult job.

DONALD TUSK, PRESIDENT, EUROPEAN COUNCIL: We have to appreciate the effort by the Prime Minister to ratify our common agreement. My impression is

that in fact, we have treated Prime Minister May with much greater empathy and respect than some British MPs for sure.

(BEGIN VIDEO CLIP)

QUEST: I don't think she would deny that. Erin McLaughlin is in Brussels; Anna Stewart is in Downing Street. Ladies, let's get really to the heart

of it. Erin, to you first, the Europeans gave her nothing, but are they just waiting for the right moment to offer some tidbit she can take to

Parliament?

ERIN MCLAUGHLIN, CORRESPONDENT, CNN: That's right, Richard. They gave her a lot of sympathy but little in the way of substance. You do get a sense

here that both sides are perhaps playing for time. E.U. diplomats tell me that the two sides are still talking, not negotiating, they're talking,

between the counsel and Ollie Robbins, Theresa May's chief Brexit negotiator. There is window for the U.K. to still come forward with a

proposal for clarification, the kind of clarification that Theresa May needs to get this deal through Parliament. That's what's happening right

now. We understand that if the U.K. comes up with something feasible, there is a possibility for yet another Brexit Summit sometime in January,

Richard.

QUEST: Anna Stewart, can she do that? I mean, she already says she wants some form of legally binding - but what is it she can now come up with?

ANNA STEWART, REPORTER, CNN: Well, she wants some sort of legally binding wording in the codicil or the political declaration that the E.U. can't

wiggle out of. She wants something on the Irish backstop that ensures it is temporary, that the E.U. will debate in good faith on a new agreement

and she doesn't want the E.U. to be able to wiggle out of it.

Frankly, Richard, even if she were to get some legally binding wording around this, and I don't think she can, I still don't think it would be

enough for home. In Parliament, the numbers are really stacked up against her. I don't think even if she could get that, it is enough. All we're

doing is kicking this in far down into January.

QUEST: Erin, if that is the case - if that is the case, and we're kicking it into January, how worried are the E.U. leaders? I know they're making

preparations for a no deal, but how concerned are they that at the end of the day they will not be able to pull this out of the hat?

[15:20:02]

MCLAUGHLIN: Well, I think they're very concerned, Richard. I was speaking to a senior E.U. official not too long ago and he was saying he was

extremely worried about the possibility of a no deal by accident. He actually put the odds of that at 50/50 at this point, and as this process

continues, as this impasse persists with no solution in sight, that no deal scenario becomes more probable with each passing day.

At the same time, I was speaking to one E.U. diplomat today who was telling me there's nothing like a cliff edge to sharpen the mind. So the sense

that I'm sort of getting here is that Theresa May is creating this pressurized situation to pressure both sides of the debate, to push this

deal through Parliament by positioning them with either this deal or total chaos, and she's betting that they'll choose this deal.

STEWART: But, Richard I have to say some of the opposition for instance, Jeremy Corbyn, leader of the Labour Party, he has already tweeted after she

made her declaration in Brussels to say he wants the vote next week. I don't think he is going to get it because clearly she wants more talks with

the E.U., she wants to buy more time and wants to do this in January. But the opposition is mounting. Next week could also be a really difficult,

dramatic week in Parliament.

QUEST: Okay, thank you, Erin in Brussels, Anna Stewart in Downing Street. Have a good weekend as you go home and try and put Brexit behind you at

least for three hours while you have a cup of tea and a bath. Right, we have one more question for you tonight at cnn.com/join. At the end of a

historic week for the Prime Minister, we want you to rate how she did. You can go to cnn.com/join and you can reward her up to five stars. All right,

you see the average score on the screen. How do you think Theresa May has handled this week of political drama? Just vote, give her the stars. The

average is just there.

Now, as Theresa May has seen all this week, she has delayed the vote in Parliament on the withdrawal agreement because likely, she would have lost

it. Then she survived a vote of confidence from her own party and now, she has endured a fruitless E.U. Leader Summit and she's still back where she

started. She still needs 320 votes to get Brexit through Parliament and seemingly no way to do it.

Robin Niblett is the Director at Chatham House, a think tank. He joins me live from London. Good to see you, sir. Thank you. Well, look, there is

the conundrum. What can she come up with that Europe would accept that would also get it through the British Parliament? In a simple answer, do

you think yet that is possible to square that circle?

ROBIN NIBLETT, DIRECTOR, CHATHAM HOUSE: Look, if I have to give - it has been such a mobile situation, but if I had to give a simple answer, I don't

think so. I think that the fact that she had to pull the deal literally hours before Parliament expected to vote on it, and even some of the early

reports of how Prime Minister May handled the Summit that just took place in Brussels has reminded I think many politicians in Parliament that they

don't trust her to be able to negotiate the best possible type of deal.

I think she's in an impossible situation because she has a split party, a split country, and a split Parliament. So I am not saying that she is to

be blamed for the situation. But nonetheless, I don't think Parliament trusts her to be able to strike the right deal and I don't think there is a

deal she can bring back that Parliament will approve.

QUEST: In that case, as inexorably, we get closer to the day of Brexit, March 29th, because really - because we're getting to the point where it is

too late to have a referendum almost, just sheer logistically, I know - but logistically, it won't be long before it is too late to have a second

referendum.

So you're talking about a postponement of Article 50 procedure. You need 27 other net countries to go along with it, many of whom will want to

railroad their own domestic pork belly politics onto it. Which way do you see it going forward?

NIBLETT: Well, I think let's just take that particular case. If it looked like there could be a referendum, then I think you would get the 27

countries supporting an extension of the Article 50 process, at least to be able to stop Britain from just dropping out with as they call it a cliff

edge Brexit at that particular time.

The big question we have in the United Kingdom, as I say, I think the chance of referendum of Parliamentary giving back the choice to the people,

because they cannot strike an agreement internally, that has gone on partly because of the amendment that was struck by Dominic Grieve at the beginning

of last week that in a way allows Parliament to retake possession of negotiations if Theresa May cannot get a deal that the Parliament can

approve.

[15:25:02]

NIBLETT: That's a very important adjustment. I do not think there is majority in Parliament for no deal, and Parliament will have a say over

this in the end. The problem they will face is what's the question on the referendum? Is it Theresa May's deal or no deal? Is it no deal or remain?

This, I haven't even heard the supporters of the second vote to be able to have a clear answer on.

QUEST: And it does look like it's anything - no deal or something else, would Parliament go for a Norway plus which would even though the Rees-

Mogg's of this world would claim that creates the U.K. with some justification as a vassal state.

NIBLETT: Look, the problem we have is that Parliament won't get a vote on whether we have a Norway Plus or not because that element of the

negotiation has to come in place after Britain has left the E.U. In other words, it would be quite difficult to make a transition straight from the

withdrawal process into the future agreement process. What we have got to get through first of all is whether there is a withdrawal agreement - that

means Britain actually leaves on March 29th or not. And that fundamental question has not yet resolved within the Parliament. What type of deal you

have in the future, obviously will come after it.

QUEST: And fair question, it is Friday evening. You can put in the Fifth Amendment if you really insist. How do you rate the unsinkable Theresa May

if you were voting at cnn.com/join, would it be - you can have one of five - one, two, three, four, five stars. What would you give her?

NIBLETT: I am not looking at the screen so I don't know where it is at the moment ...

QUEST: Yes, you are.

NIBLETT: I can't. It is down there. I put it at a two and a half to three. My problem is I think she's in an impossible situation, but I am

afraid, I think some of the criticism of her negotiating style means she has made it that bit more difficult than it would have been otherwise.

QUEST: Great to have you, sir, thank you. Please come back as we vend our way through this. And the answer of course, we've got - Robin wasn't far

off, it's 3.2 is the exact number of those of you who say the unsinkable Theresa May rating political savviness.

The British stalemate is not reassuring to investors and dealing with a slew of global affairs. All the major markets were closed lower. The

Director General of the group representing the airline industry, IATA says economic uncertainty won't force consolidation. But Alexandre de Juniac

told me, he is not too worried.

(BEGIN VIDEO CLIP)

ALEXANDRE DE JUNIAC, DIRECTOR GENERAL, IATA: We do not see a bad environment. There are uncertainties, but they are not very, very bad

factors that would lead to consolidation or accelerate consolidation in various parts of the world especially in Europe, so we are - as I told you,

cautiously optimistic.

(END VIDEO CLIP)

QUEST: Calling for change, climate talk heads into their final hours in Poland. It's not will they deliver it, it's can they deliver with their -

we'll find out.

[15:30:00]

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment as we continue this evening. This is Cnn, and on this network,

the facts always come first.

Donald Trump's former attorney has broken his silence after being sentenced to prison. Michael Cohen spoke to "Abc News" about his guilty plea that

implicates the U.S. president in two felony crimes. He says Mr. Trump knew it was wrong to pay women to remain silent about alleged affairs. But says

the president ordered the hush payments to protect himself before the 2016 election.

The British Prime Minister Theresa May has returned from Brussels without any concessions on her Brexit plan. The European Commission President

Jean-Claude Juncker dismissed the back-and-forth as nebulous. Labor says parliament needs to vote on the troubled plan and do so before Christmas.

In the United States, a young Guatemalan girl has died last week while in the custody of border protection. The seven-year-old and her father were

detained in New Mexico for illegally crossing into the United States. The "Washington Post" has reported on Thursday, she died of dehydration and

septic shock.

A 21-year-old American student was killed in the Netherlands on Wednesday. She had been studying abroad. Sarah Papenheim's body was found in her

apartment with stab wounds. Police have since arrested her 23-year-old roommate for the murder.

The former New Jersey Governor Chris Christie issued a statement on Friday, saying he's asked to be taken out of consideration for White House Chief of

Staff. Christie says it is not the right time for him or his family. He met with the president on Thursday to discuss the role, but no offer was

made.

Johnson & Johnson shares falling, plunging sharply. There's a report from "Reuters" that's shaken people's faith in the brands. Together, they are

down more than 10 percent of $15. "Reuters" says the company knew for decades about traces of asbestos in its baby powder. Paul La Monica is

here, what are they saying?

PAUL LA MONICA, CNN BUSINESS DIGITAL CORRESPONDENT: Johnson & Johnson for its part is saying that these are claims that are not true at all, but the

"Reuters" report which is very extensive, details several people who claim that they have come down with serious illnesses because of the use of the

Johnson & Johnson baby powder.

So I think right now, the big issue investors are worried about is what's the litigation risk going to be for J&J because presumably there could be

more lawsuits --

QUEST: So --

LA MONICA: Based on this.

QUEST: So there are already at least 10,000 lawsuits on there of people who are suing J&J over this. But this is blowing a hole in the idea that

they knew nothing about it.

LA MONICA: Exactly. If the "Reuters" report is true, and Cnn has not confirmed any of "Reuters" reporting as of yet, then that is clearly

something that I think would be extremely damaging to J&J because they are saying that they were unaware of what was going on.

And if there's going to be any evidence to suggest that's not true, that does open the doors for a lot of legal risks.

QUEST: How does this play out? Because there's a long-term -- this is a long burning fuse because it will be many weeks, months, years --

LA MONICA: Years, yes --

QUEST: Yes, before there's a clear way forward on this.

LA MONICA: Yes, I think it's possible to say that J&J, there will be an overhang on this company for the foreseeable future. Because this isn't

going to go away, and in the unlikely event that J &J has a moment where they realize, oh, my gosh, yes, we must really pay up for whatever alleged

sins and offer some sort of huge settlement that may get things out of the way, but I don't see --

QUEST: It's a long way --

LA MONICA: That happening.

[15:35:00] QUEST: The markets, today -- on today's program, we've been focusing on this view that next year will be bad and there could even be a

recession on the horizon. What are you hearing?

LA MONICA: Interestingly enough, I'm not hearing as much of the recession talk in the U.S. We're seeing globally, obviously the data is weakening

with China, with Japan, with Europe, but U.S. retail sales that came out this morning were very solid. A lot of people I talked to --

QUEST: But growth will slow next year --

LA MONICA: Growth will slow, but that's not a recession, if we go from say, 2.9 percent, 3 percent GDP growth to 2.5-ish, it's not a recession --

QUEST: No, but it will feel like a recession --

LA MONICA: It will possibly feel like a recession --

QUEST: If the U.S. goes -- if the U.S. goes to 1.6.

LA MONICA: Well, 1.6 is a different story than 2.5 obviously. Yes, if we slow that dramatically, we're essentially cutting the growth rate in half

and you'd probably have the according drop in profits as well for corporate America, that would be very damaging to average Americans and I

think the -- and the market.

QUEST: Have a good weekend.

LA MONICA: Thank you sir, you too.

QUEST: Thank you. A group of leaders literally given the task of trying to save our planet. There were supposed to have come up with a plan of

some sort by now, things are still up in the air, Nick Paton Walsh is at the COP 24 Climate Summit in Poland's coal country. Nick, what is the

difficulty?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Really, I think it's getting a 100 separate nations to all feel to having to agree of

buying into an incredibly complicated, technical framework. Remember, the Paris Agreement, everyone said yes, let's save the planet, great, but they

didn't work out quite how they would do it.

This document explains the transparency, the checks to be sure people are actually not cheating and genuinely are reducing their emissions. So to

say, a 100 nations have to sign in, the U.S. really have been on the sidelines here, kind of as one chucking eggs politically, although there

are some suggestions that career diplomats have not necessarily got in the way of a complicated task of working this framework out.

But tonight on paper, we were supposed to have had an agreement. We've seen the draft text, we've not seen an updated draft text yet, and we've

had some updates we were supposed to be getting from speakers here put back, possibly until tomorrow is dragging them into the weekend.

And there are some concerns that maybe because the task is bigger than anybody had thought, all the draft text being put around is simply too

weak. We'll see as time goes by. But I should point out, Richard, we've recently been looking into one of the key drivers of climate change here,

and that's actually beef and dairy agriculture.

Oddly enough, one of the things that form part of everyone's dart increasingly, so here is what we saw in Texas.

(BEGIN VIDEOTAPE)

WALSH (voice-over): Beef and dairy agriculture are a key and often overlooked cause of the greenhouse gases mankind must rapidly curtail by

2030, so we don't see irrevocable change to our world.

(on camera): Something about it this way. Half a pound of beef causes as much greenhouse gas to be emitted as driving 55 of these cars for one mile.

(voice-over): We drive out as the sun rises over beef country, 12 million cattle in Texas where the extraordinary toll of something so natural as

beef on the planet emerges.

(on camera): The first thing that hits you is just the smell. There are just so many, so tightly packed together.

(voice-over): There are 19,000 here on this feed lot, fed the corn that gives their flesh the fatty taste we're used to. We have to make drastic

changes by 2030 to keep global warming to 1.5 degrees. If we don't, beef and dairy will cause 10 percent of greenhouse gases.

If we do meet other 2030 emissions targets, they'll cost much more, 30 percent, either way, we must act. The United States and world will likely

this year eat a record amount of beef. We're going the wrong way. But it is the bottom line, livelihoods that understandably matter more here.

(on camera): Now, when I said global warming, you said they say. Do you believe in it or do you think this is all just made up?

UNIDENTIFIED MALE: I don't believe in it.

WALSH: Why not?

UNIDENTIFIED MALE: I just don't.

WALSH: Why?

UNIDENTIFIED MALE: I just -- it's hard for me to believe that global warming has something to do with the rainfall.

WALSH: What would it take to change your mind about that?

UNIDENTIFIED MALE: There'd have to be a drastic change. Yes, we have -- go through some droughts, that's just a normal period. But here in the

last couple of years, we haven't had much Winter.

WALSH: You're saying you're seeing it get warmer down here already, but you wanted to get really bad before you believe the scientists?

UNIDENTIFIED MALE: Right.

UNIDENTIFIED MALE: I get biscuit and I get toffees.

WALSH: So how do we change or can we? There's hope, and it is both distant and tiny. Enter cultured meat. This never seen a cow, it doesn't emit any

gas and grows in a dish and is developing fast.

MARK POST, SCIENTIST: In 2013, it had -- this would be about $20,000. I mean, two, three years from now, it's 25 cents.

WALSH: What does it taste like?

[15:40:00] POST: It tastes like meat.

WALSH: Mosa Meat Post is getting funding from food giants and even the co- founder of Google. The process is natural to appoint, given a single stem cell taken from a cow, all the nutrients it needs to divide again and

again, but no instruction as with a living cow to stop.

Are you a vegan yourself?

POST: I'm not, I should be, but I'm not.

WALSH: You like meat?

POST: Yes, I do.

WALSH: And is any of this --

POST: Sinful acting when it's I knew it --

WALSH: Consider this. It's never going to happen, but if we all went vegan tomorrow, we would cut greenhouse gas emissions by 25 percent. A

huge change to cure part of the problem. Are we even ready for that or more to keep existing as we do now?

(END VIDEOTAPE)

QUEST: Nick Paton Walsh, you're a brave man, questioning beef in the heart of Texas. And the interesting thing there is that most of us, myself

certainly included, really had no idea. We think of coal factories, we think of industrial plants, cars, aircraft, but beef?

WALSH: Yes, I mean, this is all part of the broad rethink of our daily lives frankly, that has to happen in the next decade if we're not going to

see what we saw last Summer become part of sort of the quotidian life- style, intense forest fires ranging across Europe, significant storms, extreme weather.

A cold snap in March that hit the U.K. like we hadn't seen for ages. I mean, it's quite extraordinary what we're already seeing, yet there are

still people here, elsewhere debating --

QUEST: Right --

WALSH: The science. The science is not up for debate, it's the same thing that tells you when the sun rises tomorrow, it's simply just a fact. And

so what is strange really is I think the gap between what we know is going to happen and what we're prepared to do about it.

And so meetings like we're seeing here in Poland, we sort of drudge slowly towards the end with bickering here and there, with a lot of, frankly,

lacking of international leadership and consensus, really leave people like you and me who are going to have to make massive changes to our daily

lives, and we're not going to leave the next generation with an utterly miserable place to live in.

Give us a bit more wiggle room to think, well, you know, if everyone else is not going to do it, why should I?

QUEST: Right, but if everybody else isn't going to give up meat, would you? I mean, that's --

WALSH: Why should I?

QUEST: Yes, I mean I was thinking and saying, you know, I don't want to become vegan. I mean, I have nothing against vegans or such, but it's not

for me. So it raises a really tricky, difficult question because we can report on it, we can talk about it, but we're as much a part of it, Nick.

WALSH: Absolutely, yes, I mean, look, you and I both have to agree, we have to make changes to our life-style, you may have to give up that

business class seat traveling on air in future, Richard, now it's just one of the ways we waste energy the whole time.

And if at least, are broad changes, we all have to accept we have to do, we all have to accept are going to become part of our lives. And there's a

new troubling phrase really here in the background here of dark realism that really humanity hasn't got it in it to give up the luxuries of its

daily lives to reduce its living standards so that it can continue to exist in the way that it currently does. Imagine that.

And imagine how decades from now, subsequent generations will look back at us and what we've left them. Richard?

QUEST: Nick Paton Walsh, excellent reporting in Poland tonight, thank you for us. Sources say Donald Trump's inaugural committee is under criminal

investigation. How much of a problem this could be for the U.S. president after the break.

It is QUEST MEANS BUSINESS, the market is down, it's down quite sharply, it's off more than 500 points, 547 which if I'm not mistaken, we're about

to go into the lowest points of the day which is 549 from later, and we've still got 17 minutes to trade.

[15:45:00] (COMMERCIAL BREAK)

QUEST: QUEST MEANS BUSINESS from New York. Sources say federal prosecutors in New York are investigating President Trump's 2017 inaugural

committee. Now, according to the sources, the prosecutors are checking for a possible financial abuses, more than a $100 million is raised in

donations for the inauguration.

Kara Scannell is -- what are they supposed to have done with this money or what was the problem here?

KARA SCANNELL, CNN REPORTER: Well, the theme that the U.S. attorney's office in Manhattan is looking into according to sources is whether any of

this money was misused. It was $100 million that was raised. That's double what Obama raised for his inaugural committee.

It's a lot of money. And so they're looking to see if there was any financial abuses, if there were questions of people making these donations

with the expectation of getting political favors down --

QUEST: So --

SCANNELL: The road.

QUEST: For them to be investigating this, they must -- you know, smoke and fire, they must have a reason to believe that somebody has been up to no

good.

SCANNELL: Right, I mean, I think there's still a lot of this that we don't know. It's very early in this investigation. But we've even seen

Mueller's prosecutors look at the inauguration money. They're looking -- they were looking if they were straw donors, if foreign money coming in.

If Russians were using Americans in order to influence the campaign through the inaugural committee.

QUEST: Let's look at the number. I almost feel sorry for the whole -- for the whole Donald Trump family, even Trump inaugural commission is under

investigation, the transition we know is the campaign, not for Mueller investigation, the administration for things that they've done. The

organization for moneys paid and the foundation for the charitable donations.

SCANNELL: That's right, I mean, whenever do we see this sort of exposure to someone on every step from his business when he began to now, you know,

the campaign, the transition, the administration, and it seems like we're learning something new every day.

QUEST: Is there possibly something even worse on the horizon for the president? On this program, we've been talking about a slowing U.S.

economy, some even say a recession. If that happens at the back end of 2019, with an election a year later, how much trouble and how worried is

President Trump about that?

SCANNELL: Well, the president -- that's one of the things the president really jumps on when he is promoting how successful his administration is.

He points to the strong economy and he points to the stock market. So he'll lose that talking point.

And I think as we've seen in past elections, you know, the economy is a big factor, it matters to a lot of people, and as long as the economy is doing

well, I think voters in certain parts of America are happy with him. You know, they're willing to put aside other things because really, you know,

politics is local and the economy and people's wages and them doing well really matters to people, you know, probably more than a lot of these other

issues.

QUEST: Good to see you.

SCANNELL: You too --

QUEST: Thank you very much indeed, thank you. Private photos are supposed to mean private. In other words, you control who sees them. When Facebook

tells you third party app makers may have seen your photos without your consent. You can understand why there's an uproar.

I'll have the full story ahead.

[15:50:00] (COMMERCIAL BREAK)

QUEST: Last few minutes of trading on Wall Street, 549 the low of the day. Frankly, we're not that far off. It's been -- you know, you can see the

chart really does tell the day. But also I think if you look at the Dow 30, you've got P&G which can't make up its mind.

Caterpillar is the only small gainer on the day on individuals. J&J is still down there, way down on the back of the talcum powder scandal. And

as for the rest, I mean, choose any stock and you can find a reason. Apple, it's about China and tech, Boeing is the same.

Those stocks that are least hit are the traditional defensive utilities, companies that will make money in bad times, P&G, Verizon, Cola, even Nike

is even to pull up a bit of a struggle. So really, things are moving quite strongly, and it's all in a negative direction.

The pictures you may not have wanted anyone to see might have been accessed by people you know nothing about. It's the fear facing millions of

Facebook users after the company said a bug allowed third party developers to see private photos. European regulators have launched an inquiry.

Clare Sebastian is here.

Is this -- I don't understand, you've got your pictures, you upload them to Facebook, but --

CLARE SEBASTIAN, CNN: Yes --

QUEST: You don't post them.

SEBASTIAN: So what's happened here is, when you use a third party app on Facebook --

QUEST: Yes --

SEBASTIAN: Often you consent to them accessing your photos. But what you're consenting to is them accessing the photos on your time line. And

what this bug allowed them to do is access more than that photos in your marketplace photos and stories, and perhaps most disturbingly of all,

photos that you may have never wanted to post and you might have uploaded and then thought again, or you might have uploaded and been interrupted.

So it's accessing more photos and not allowed.

QUEST: But they can't access photos on your phone. There's no suggestion of you know, just being --

SEBASTIAN: You have to upload them to Facebook first, but --

QUEST: Right --

SEBASTIAN: You don't actually have to post them.

QUEST: Isn't this sort of thing -- I mean, I understand -- this is a -- how can I put this? This is a blip, it is a glitch, it's an unfortunate,

it's regrettable, but it doesn't sound like anybody has done anything wrong.

SEBASTIAN: I think the suggestion isn't that anyone has done anything wrong, I think there's more questions about whether or not Facebook is

doing enough in general to prevent these kinds of things from happening. This is not a standalone incident, don't forget, Richard.

We had Facebook's worst ever data breach back in the Autumn, we've got 50 million, now they say 30 million accounts were accessed, it comes in the

same year as Cambridge Analytica where, you know, 87 people's data was compromised and passed on to third party apps.

And I think Facebook is batting down a lot of these crisis --

QUEST: But there's no -- maybe I am pushing this too far, maybe there's a legitimate -- maybe there's a legitimate public privacy issue, but there's

no suggestion that anybody's got these pictures other than the potential that they could have got them.

SEBASTIAN: Well, they were able to access them --

QUEST: Yes --

SEBASTIAN: During this --

QUEST: So we don't know if anybody has --

SEBASTIAN: We don't know, they're going to send tools to the app developers next week to show whether or not -- so they can find out whether

or not people were effected, and Facebook is going to try and notify the people.

But Richard, it's the time line around this. This was between the 13th and the 25th of September, they didn't notify European regulators who are now

investigating until November 22nd, and we only found out today. So I think that's another reason that questions are being asked.

QUEST: Facebook says we're finding out the full scale of this.

SEBASTIAN: They say they're looking into the impact, yes --

QUEST: Before -- they were looking into the impact before -- so is that a valid defense or is the answer no? The moment you've seen something wrong,

you go to the regulators and you announce?

[15:55:00] SEBASTIAN: I think given that this wasn't a hack, this was a bug, they probably did need some time to work out whether or not this was a

reportable incident as they put it. And then they said they needed more time to build a meaningful way, they said to notify people and get the

translations done for their notification pages around the world.

So there was work to be done --

QUEST: Right --

SEBASTIAN: But it does seem like a long lifetime.

QUEST: And talking of lifetimes, your time is up, you leave us.

SEBASTIAN: I do for a few months.

QUEST: For a few months because --

SEBASTIAN: Yes --

QUEST: I'm delighted to say you're expecting and it will be sooner rather than later. When are you --

SEBASTIAN: New year's eve.

QUEST: New year's eve, yes, it gets better. New year's eve, and hopefully, please God, you'll hear the happy sound.

SEBASTIAN: Oh, my goodness --

QUEST: Clare, from everybody here, we wish you the very best for and hope all goes beautifully, spectacularly and we have you back in the new year.

SEBASTIAN: Thank you very much.

QUEST: We'll have a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment, maybe I should say unprofitable time. As we've heard tonight, the doom and gloom is everywhere, and it's not just

based on a few rumors and gossip, there's solid reason to be less than pleased.

First of all, you've got the worries over China in trade, then you've got what's happening with Brexit along with a slowdown in U.S. growth. All in

all, it makes for extremely difficult times. The issue becomes whether there's going to be a recession, whether or not the U.S. is going to

somehow manage to pull itself back from the brink.

Well, think of it this way. Firstly, the Dow is off 10 percent, the Nasdaq is off here, 11 percent from recent highs, the Nasdaq is down some 14

percent. So the Nasdaq is already heading towards a bear markets, and there are those that believe that by the end of next year into 2020, there

will be a bear market and a recession.

We cannot know that at this stage. All we can say with any -- not even certainty, but just taking the balance of probability, listening to the

people we talk to, is that there's going to be a slowdown that will probably be worse than we think, and that the markets will follow, too.

And if you factor into that, and that's only based on growth. Factor in anything else and who knows what could happen. But I'm not going to leave

you with that, that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York.

Whatever you're up to in the hours ahead, have a good weekend whatever, and hope it's profitable.

(BELL RINGING)

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

END