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QUEST MEANS BUSINESS

Trump Orders Full and Rapid Troop Withdrawal from Syria; Fed Raises Interest Rates for Fourth Time in 2018; Corbyn Denies Calling British PM a "Stupid Woman"; Authorities in South Africa Issue an Arrest Warrant for Grace Mugabe; McConnell Introduces Spending Bill to Avert Government Shutdown; Protests in Hungary Grow as Prime Minister Gains More Power; Stocks Tumble After Fed Rate Decision; GlaxoSmithKline Splitting into Two Firms After Pfizer Deal Closes; Facebook Shares Fall Amid Fresh Privacy Fears. Aired 3-4p ET

Aired December 19, 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 are in the last hour of trade on Wall Street. Those of a nervous disposition should turn away.

The market which had been as much as 300 points higher after the Fed interest rate decision came out, rates went up. The market rallied for a

split second, and then whoosh, this is the lowest part of the day so far. It's not only the Dow. The S&P, the broader market, the NASDAQ, they are

both sharply lower. This last hour of trading is the dangerous time, and these are the reasons why. This is what's moving the markets.

The Fed stays the course. Rates are going up, but it cuts growth forecast next year and the likely number of interest rates. Jerome Powell says

there are signs the economy is softening. Mohamed El-Erian is here and he is going to help us understand. An IPO dear. The second IPO, the biggest

IPO in history is a spectacular flop. We're live in the world's financial capital, New York City. Gray day down markets on Wednesday, it's the 19th

of December. I'm Richard Quest. I mean business.

Breaking news in the last hour. Fed is on course as policymakers raised rates for a fourth and final time this year. They shrugged off a barrage

of criticism from President Trump and increased volatility on the stock markets and a slight softening in economic growth forecast, 2.25% to 2.5%

is now the Fed funds range.

Whilst the Fed still believes some rate rises are needed, policymakers expect only two in 2019, one less from previously forecast. In a

statement, the Fed said it is monitoring the global economy. Its exact words were, "We will continue to monitor global economic and financial

developments and assess their implications on the economic outlook." That is a change from the last statement.

A moment ago, Jerome Powell warned the Fed sees some signs that growth in the U.S. is slowing.

(BEGIN VIDEO CLIP)

JEROME POWELL, CHAIRMAN, U.S. FEDERAL RESERVE: Despite this robust economic backdrop and our expectation for healthy growth, we have seen

developments that may signal some softening relative to what we were expecting a few months ago.

Many FOMC participants had expected that economic conditions would likely call for about three more rate increases in 2019. We have brought that

down a bit and now, I think it is more likely that the economy will grow in a way that will-call for two interest rate increases over the course of

next year.

(END VIDEO CLIP)

QUEST: Markets gave up the earlier gains as the Fed decision was published. And what's interesting about this it was up as much as 382

points, and then at 2:30, but immediately after the actual - I mean, the market sort of stages a little mini rally-ette and then falls out of bed

and went out of the worst so far of the day.

The Fed expects economies to scuffle, this has spooked investors, and if you look at commodity prices and copper and gold, they are also down, which

is slightly unusual because obviously, an uncertainty, then that is easier for them. Arguably, in times of inflation or higher inflation or slower

economies, you might want gold as a hedge, but that doesn't seem to be the play at the moment.

I'm guessing there's more behind all of this, which is why we have Mohamed El-Erian here to help us understand. First of all, what the Fed says is

it's going to slow down.

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: It says it is going to somewhat slow down, but it came across more hawkish than the markets

expected. And what you're getting now is a signal for markets, this is a policy mistake. And I think that's important. If you look at the turn

around in stocks, if you look at the lower yields, if you look at the flatter yield curve, all that is flashing, be careful Fed. This may be a

policy mistake.

QUEST: So that's the hawkishness to stick to the fourth hike this year.

EL-ERIAN: Three things. One is they deliver on a hike. That was expected. Two is, they reduced next year's rate hikes not from three to

one, but three to two. And three is they still are going to overshoot the equilibrium rate over in 2020. So the market is saying, wait a minute that

wasn't a dovish enough hike, we needed a more dovish hike.

QUEST: So when you say a dovish hike, would that have been don't raise four, but say you'll do one next year or raise four - raise the fourth, and

say one next year and give us some language?

[15:05:08]

QUEST: I guess, what I'm trying to say is, the fourth rate hike, was it inevitable because of the political pressure that if they hadn't, they

would have been in trouble?

EL-ERIAN: Yes, it was inevitable. So I don't think the market expected them not to hike, but they expected them to signal a more dovish path from

here. That is what they missed doing. Look, you have to understand, Central Banks have gone from being the only game in town where they can do

no wrong to a being in a lose-lose situation like they are today. And that is the new realities and it is because we have over relied on them and they

simply cannot deliver now what they used to deliver.

QUEST: What justifies what we're seeing now, where a market has gone from up 300 to down 490 points with every prospect since we're in the last hour

of this getting even worse?

EL-ERIAN: Yes, it's what I call the concern about a policy mistake. That the Fed is going to hit the brakes too hard by hiking too much next year.

QUEST: But if we accept that there is an element of uncertainty about the strength of growth next year, how does a Fed - you're in touch with these

people - how do they make that sort of mistake?

EL-ERIAN: They make a mistake because they have to deliver too much. They simply cannot deliver what the market wants them to deliver. I think you

have to think about this as a no-win situation. And it comes against a background that we're coming from a year, 2017, where investors had it all.

They had high returns, they had low volatility and the correlations were all in their favor. So this is just in my view a resetting to normal, but

is a pretty painful one if you're along this market.

QUEST: It is almost inconceivable that we've gone from growth of 3.5% to 4% to where people are -- reputable people are talking of a recession next

year and it's not easy or obvious to see what's led to this.

EL-ERIAN: So what's led to this is weaker Europe, weaker China and concern about still banks. That's what led - I don't buy the recession next year.

Don't buy it.

QUEST: But it makes no difference whether you're up half of one or down half of one, it'll still going to feel very slow, very sluggish and you may

start to see unemployment going up.

EL-ERIAN: I am willing to take a bet that we'll see unemployment going down next year. That the issue is less the economic outlook and what we,

in the marketplace call "technicals." That is people being overextended. The paradigm changing in China and Europe and suddenly everybody wants to

get back on-site at the same time.

QUEST: Now, stay with me. Bear with me, all of this comes amid a backdrop of trade war with China. Alan Greenspan says there are no winners at the

end of a trade war. He spoke to Julia Chatterly.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: If you want the most efficient world economy, you have zero tariffs. Trade wars say between

parties A and B, out of a necessity hurt both. The winner of a trade war is one who is hurt the least.

JULIA CHATTERLEY, ANCHOR, CNN: Could Trump force then to lower tariffs?

GREENSPAN: Could he do it?

CHATTERLEY: Yes.

GREENSPAN: I would say he doesn't understand that well enough to know. You have a situation now which I don't know where it's going.

(END VIDEO CLIP)

QUEST: If Alan Greenspan doesn't know where it's going, then it begs the question does anybody? Julia is with me. Mohamed is still with me, we

seem to have entered a new - a new era now, a new stage in whatever economics was going on.

CHATTERLEY: Yes, I mean, we've been there all year. We've been in a stage where Central Banks globally have been chucking money into the system and

supporting the economy and now, they're somehow trying to take it back. We're in uncharted waters and I think this was illustrated really clearly

today for Jay Powell. Trade is just one of the risks here.

QUEST: They've been taking it back for some time. I mean, first of all by stopping buying and then the tapering and we had the taper tantrum and they

should have managed this better.

EL-ERIAN: Oh, I think they've managed it well. The problem is that now, it's not just the Fed that's taking it back. The ECB is doing it in a much

more serious manner. So the real question mark is how does the system adapt? As Julia said, to two systemically important Central Banks sucking

liquidity out.

CHATTERLEY: I do argue though that Jay Powell was never going to win today because if he would have come out and have been as dovish as the market was

clearly hoping, and really said, "Look, okay, perhaps, we're even going to pour it here," then the markets would have gone ...

[15:10:09]

CHATTERLEY: ... wow, he's really scared now and he's really seeing something dramatic going to happen next year and as you've kind of pointed

out, things are slowing, but we're not talking - we shouldn't be talking about a recession in 2019.

QUEST: Well, all right, so do you see recession at all or are we talking - because some people are suggesting - I mean, this is the difficulty. I can

put five of you in a room and I'll end up with eight opinions on whether or not there's going to be a recession or not. And it's towards an ex post

facto decision anyway.

EL-ERIAN: So let me give you a strong opinion.

QUEST: Go on.

EL-ERIAN: The U.S. will not go into recession. Europe may well, the U.S. will not.

QUEST: Okay, so taking that the U.S. will - I will take that to the bank.

EL-ERIAN: Do so.

QUEST: We will take that to the bank, but Julia, you're hearing as I am from those traders on the floor who are basically saying there is more to

wash out here than before it's over.

CHATTERLEY: Yes, I mean, there's a real concern here I think and you've illustrated this as well that you have a Federal Reserve here who has got a

lot of uncertainty that they're going to keep hiking rates and they are going to hike rates into a slowdown. So policy uncertainty from the

Central Bank is one fear. China, what's going to happen with the trade concerns between the United States and China another factor. Europe,

you've already mentioned it. I mean, there's so many different risk points. I mean, Jay Powell talked about it. Cross currents. How does

that impact his decisions? We don't know at this stage.

QUEST: So, is this a moment where one would prefer to have firm economic hands on the wheel? And as we know, we have Mario Draghi leaving next

year. We've got Jerome Powell who, fair dues all around, I agree with your point but he's still an untried and untested quantity and a maximum streams

of pressures. Steven Mnuchin, we'll leave that there. And the rest of the economic team.

EL-ERIAN: So we're having a lot of transitions. We are having five major transition in the context where some important policymakers are also

changing. I think the signal is this is like Julia said, a very uncertain time, markets are going to be very volatile, and you better be able to

stomach this volatility because it's not going away.

CHATTERLEY: And that's the other thing, I think. We have been going up for a long time. Markets have been going up for a long time. We've

forgotten what volatility feels like. We've forgotten all of that.

QUEST: Oh, we never had - no, no.

CHATTERLEY: Yes.

QUEST: No, no. Volatility of this sort of --

CHATTERLEY: Yes.

QUEST: No, no. We've not had volatility of this sort of magnitude for a very, very long time.

CHATTERLEY: That's what I am saying. That's what I am saying - well, fine, the 10 years markets have been effectively going up, so there's going

to be an adjustment phase where people are nervous and I think we're in that, too.

Q And there we go, we know the nerves are there. Let's go back to that, the 30. You know it is a bad day where the only gainer is Verizon.

Because it is the last gasp of rush to quality, or not for quality, but rush to defensive stocks governed by Verizon, the telco.

We'll see more from you in just a moment. Julia, great to see you. Thank you. Thank you.

Now, second biggest IPO of all time, what a disaster. Softbank officially took its mobile unit public in Tokyo and the shares fell 15%. It makes it

one of the largest IPO flops in history. The Chief Executive blames rough market conditions.

Softbank has the usual habit of being in the right place at the right time, unfortunately that didn't happen today. One of the earliest investors of

Yahoo, which made the company a fortune are back to Verizon. It won exclusive rights to carry the iPhone in Japan, a major win for the chief

executive, Masayoshi Son and it was one of the early investors in Alibaba, taking a 32% stake. Will Ripley explains what went wrong.

(BEGIN VIDEO TAPE)

WILL RIPLEY, SENIOR INTERNATIONAL CORRESPONDENT, CNN: Softbank obviously didn't want things to go this way on the first day of their eye-popping

IPO. This was the world's second biggest share sales after Alibaba back in 2014.

But it comes at a really tough time for stocks. You look at the numbers. Japan's Nikkei Index down 6% this month. Down 13% from its early October

high. And then there are some other factors at play as well. Softbank had an embarrassing service outage just two weeks ago. It lasted more than

four hours. They announced last week they might be pulling Huawei gear from their network. That potentially could be a very costly move.

And then you have this controversy over this $90 billion venture fund with Saudi Arabia focusing on emerging technologies. Softbank is under pressure

to cut ties with the Saudis after the murder of Jamal Khashoggi. They're saying they're not going to do that, but it's just yet another obstacle

that could be spooking some investors in Japan's third largest wireless network. Not to mention the fact that the Japanese government is trying to

encourage wireless providers to lower their prices.

I can tell you I've lived in Japan, very expensive to have a cellphone there, but that maybe changing because the government is pressuring mobile

carriers there. The Softbank CEO, Masayoshi Son, he has been down this road before. He has overseen a vast tech empire that has overcome

difficulties to reach really tremendous success and with this IPO, he's raising about $23.5 billion compare that to Facebook. They raised $16

billion ...

[15:15:10]

RIPLEY: ... went they went public back in 2012, and what Masayoshi is doing is he is pumping that cash into companies that are developing really

life changing technology. Everything from self-driving vehicles to robots. I remember being in Japan in 2014 and doing a story about pepper, the

emotional robot that looked at my face, read my mood supposedly and then tailored its conversation with me based what it thought I was thinking.

It's that kind of AI - artificial intelligence that Masayoshi Son says he is devoting 97% of this time and brain to in areas like healthcare and

agriculture, transportation, satellites, even e-commerce. He really is a strong believer that someday robots will be smarter than people and he

believes that the robot population will eventually rival the human population, a slightly terrifying thought for those of us who grew up

watching movies like "Terminator," but in Japan, where robots are widely accepted, they are part of the culture and a lot of people are excited

about the future that robots could help provide.

And that's where all of that money that was invested in Softbank's IPO will be going towards in the coming years. Will Ripley, CNN, Hong Kong.

(END VIDEO TAPE)

QUEST: It is "Quest Means Business." British businesses say they've reached the point of no return and activating their plans for a no-deal

Brexit. Later in the program, protesters say democracy is slowly being chipped away as the government passes a law to make people work longer

hours. A Hungarian Foreign Minister is with us to go into those details after the break.

The E.U. and U.K. are currently heading straight for a no Brexit deal. Now, that's the logical conclusion if you look at the way both sides are

stepping up their contingency plans. And the European Union has now announced a raft of temporary measures in case things turns our.

So for example, it those flights between the U.K. and E.U. would be allowed for 12 months to ensure basic connectivity. Haulers could drive freight

into the E.U. for nine months without having to apply for permits and some financial regulations such as those for derivatives trading will remain

unchanged for two years to avoid disruption.

Bianca Nobilo is in London.

[15:20:00]

QUEST: This sounds - contingency plans, yes, but they're sort of putting together a package that would be acceptable in the event that they can't do

a deal.

BIANCA NOBILO, CORRESPONDENT, CNN: What we've seen from the E.U. today has been pretty constructive and it does address some of the main concerns like

issues about transport, of goods and people, airlines, and what they will be able to do in the event of a no deal and crucially residency rights and

that's a really big concern, of course for all the millions of E.U. residents in the U.K. and vice versa.

Why they're both doing this and doing it in such a thorough way I think is because both the E.U. and the U.K. are well aware that they need to

reassure their own citizens of their preparedness. But in the U.K., they feel people who advocate for a cleaner Brexit and potentially a no deal

that the negotiating position of the U.K. is immensely strengthened if they can project that they are fully prepared for this scenario whether or not

the British government can convince anyone at this stage remains to be seen.

QUEST: Right, but if everybody's putting in place - humor me with this question, Bianca. If everybody is putting in place no deal contingencies

such that it will be bad but not dreadful, doesn't an argument develop, well let's just take a clean Brexit, take the lumps and sort out and we

know things will manage on?

NOBILO: Well, we heard from business leaders today in the U.K., the five biggest business groups like the CBI and the British Chamber of Commerce

underscoring how disastrous a no deal would be, saying they're watching in horror what Parliament is doing and how it seems to be hurtling towards

this no deal Brexit.

So I understand your point, and yes, there are many MPs that I've spoken to that are concerned that the more a no deal scenario is normalized, it may

seem a little less scary, they're concerned that it might seem like a more viable option in some people's eyes. But if we look at the small and

medium size businesses, you just simply do not have the reserves to spend this money, preparing for a scenario which may or may not happen and to try

and get legal advice and prepare customs forms and things like that, it isn't going to be an appealing prospect to people who aren't convinced.

QUEST: But, Bianca, she can't get the deal through Parliament. You and I will be sitting outside Parliament on January - the week of January 14th,

ready to talk about this in detail. She can't get it through Parliament. Nobody really likes Norway or Canada plus. The prospect of a no deal -

what happens?

NOBILO: Well, so no deal is the default option. It's enshrined in law. Yet many members of Parliament keep saying Parliament will not allow no

deals to happen. But how can that be because they'd actually need to amend legislation and pass it in order to prevent that outcome. So it does seem

to be the default option as it stands and Theresa May is trying it seems two strategies.

She's trying to use the stress of a no deal and make it realistic as we've seen in the last few days of these preparations and relying just simply on

time. The time is running out, the clock is running down and she's hoping that she will be able to get this through the more - the closer that

Britain gets to leaving E.U. and the more likely crashing out with a no deal it seems.

QUEST: We'll talk more about it. Don't go too far. Thank you. Bianca in London. Mohamed El-Erian is back. Is in your view, is it going to be as

disastrous as everybody says if there is a no deal Brexit?

EL-ERIAN: Not over the long-term. I think over the long-term, this actually is what makes most sense because you have Europe that was

interested in a marriage with the U.K., an ever deeper union. And you have the U.K. that just wanted to date for a long time, give me the access to

your markets, but I don't want this ever deeper union. And I think at some point you have to resolve it.

The critical thing is the longer this no war no peace, the longer this war of attrition continues, the more problematic it is for both the U.K. and

Europe because no one is focusing on what you need to do today to adapt to a changing world. Everybody is totally consumed by Brexit.

QUEST: That's on the European side and the British side to some extent. But they're right to be totally consumed by Brexit because if this goes

wrong then everybody will be more than consumed by it, they'll be suffering from it.

EL-ERIAN: But then the wrong negotiating paradigm. You have the U.K. unable to deliver a unified Conservative Party and therefore unable to

deliver a Parliament. You have Europe that doesn't want to give concessions that make the U.K. a big precedent. You cannot continue down

this road. It doesn't get to a solution.

QUEST: The European Union has problems across it - the range. Italy seems to have finally settled over banks. Shortly we're going to have the

Hungarian Foreign Prime Minister on the program who will be talking about their problems. Do you see the Union as being ...

[15:25:09]

QUEST: ... in peril is too strong, but do you see it being in serious trouble with all these various issues?

EL-ERIAN: So let me give you a simple number. The European Commission expects Europe to grow by 1.9%. I don't think they'll even get to one.

And the reason why - think of a football analogy. You have a team that's not playing as a team. They can't get their act together on regional

issues and your top five players are all problematic. The U.K., France, Germany, Spain and Italy. Would you bet on that team? That team is headed

towards a relegation zone. That team is not going to win the division.

QUEST: Recession in the E.U.?

EL-ERIAN: I think high risk of recession in the E.U ...

QUEST: And it will certainly feel like that anyway because with slow growth, it will feel just miserable.

EL-ERIAN: Correct. Correct.

QUEST: Which brings us lastly to this question of trade. Now, if the U.S. plays this anti-China card to its nth degree, you must be very concerned at

that point because the trade is really the last thing that's holding everybody together?

EL-ERIAN: So the nth degree means two things to me. First, a trade war or the threat of is no longer in the journey, it is the destination, that's

problem number one. Second, the nth degree means it's no longer an economic issue. It's a national security issue. So the Chinese will worry

about, "Oh, we are being contained," and they are going to start taking steps to counter that and the U.S. will ...

QUEST: How far off are we? How far are we from the nth degree by your definition?

EL-ERIAN: I don't think we're there yet. I think we're likely to get a short-term compromise and then in a year's time, this issue is reopened.

QUEST: It's all a bit of a mess. Are you going to be able to get some time off and have a rest over the holiday break?

EL-ERIAN: I love this mess. This is what makes me energetic. I am no different from you. We love this stuff. It's really interesting. It is

so good to go back to a time when markets and the economy are so intriguing. And they are really intriguing right now.

QUEST: Perhaps, the most intriguing, as we go into a break, perhaps the most intriguing in your thought, the Fed managed to drop the ball today.

They should have known better.

EL-ERIAN: Yes, I agree with what you're saying and that's what the market does ...

QUEST: You said it.

EL-ERIAN: I said the market fears a policy mistake, but the Fed has been carrying an enormous burden that it should not carry on its own.

QUEST: You're feeling sorry for them.

EL-ERIAN: A little bit, yes.

QUEST: Let's go to the market. We're down 321. Good to see you, thank you.

EL-ERIAN: Thank you.

QUEST: Really good to have you. Have a wonderful Christmas.

EL-ERIAN: You too. Thank you.

QUEST: The cries of Brexit hard didn't go into the European stock markets. Green across the board. The FTSE gained nearly 1%, the best performer of

the day was Milan's FTSE. It was lifted by a breakthrough in the controversial budget deal between Italy and the E.U.

Mohamed El-Erian, you're always on the show. I think we give you - have a ding at the bell.

EL-ERIAN: My dream come true. Not a very good one. Can I get a second try?

QUEST: Go on. Which is more than the Fed did. All right, thank you.

When we come back, all I want for Christmas is democracy. Hungarians on the streets claiming their rights are being eroded. Their country's

Foreign Minister will answer these in just a moment. This is "Quest Means Business." Good evening to you.

(COMMERCIAL BREAK)

[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When Hungary's

Foreign Minister is here with me as the country is gripped by protests. And tech shares are down with one big name having the worst. Facebook is

facing new scandals and new lawsuits. As we continue, you are watching Cnn, and here, the facts always come first.

President Trump is ordering a full and rapid troop withdrawal from Syria after saying ISIS has been defeated. About 2,000 U.S. troops remain in

Syria, mostly to train and advise an allies of Kurdish and Arab militias. The Pentagon says the process of bringing troops home is already under way.

The U.S. Federal Reserve has raised interest rates again the fourth time this year. The Fed has hiked rates, the Chairman Jerome Powell says

there're signs of a softening economy and the Fed is planning less aggressive rate rises next year.

British lawmakers erupted in fury after the opposition leader Jeremy Corbyn was accused by conservatives of calling Theresa May a stupid woman. He

denies it. Corbyn appeared to mouth an insult after Mrs. May compared his call for a no confidence in her too pantomime act.

Authorities in South Africa have issued an arrest warrant for the former first lady of Zimbabwe Grace Mugabe. She's accused of assaulting a South

African model in 2017. The model says Mugabe split her head open in three places with an extension cord. It is unclear if Zimbabwe will comply with

the warrant.

The U.S. Senate Majority leader Mitch McConnell has proposed a short-term spending bill that would fund the government through early February. It

would divert partial shutdown scheduled for Friday. Congress has made it clear, it does not want to shutdown, the president, President Trump has a

final say on the bill.

Hungarians have been taking to the streets, they are protesting against what they say is the increasingly authoritarian rule of the Prime Minister

Viktor Orban. From far-left to -- far right opposition parties have come together after the government passed contentious laws.

One allows employers to demand up to 400 hours of overtime a year. It's being called a slave law. Another piece of legislation will create a

government-controlled court system. The government insists the new courts will be independent. Hungarian Foreign Minister Peter Szijjarto joins me

now.

Minister, good to see you, sir --

PETER SZIJJARTO, MINISTER FOR FOREIGN AFFAIRS & TRADE, HUNGARY: Great to see you again --

(CROSSTALK)

QUEST: The reality is, you claim that these new courts will be independent, but nobody believes you.

SZIJJARTO: You know, in Hungary, we have democracy. We're a --

QUEST: Arguably not but we'll let that one --

SZIJJARTO: What do you mean by that?

QUEST: Keep going -- because the last election and the way in which the current government has manipulated the media, manipulated the courts --

SZIJJARTO: You know, these are accusations which I have to reject definitely. We had the record turn out on the last elections this April,

almost 70 percent of the Hungarian citizens have showed up and we have received 49.6 percent of all of the votes, 350,000 votes more than all

other parties together in parliament after spending eight years in office.

[15:35:00] So the Hungarian citizens --

QUEST: You see --

SZIJJARTO: They are pretty much aware of what we have done in the last eight years, and they're pretty much aware about their plans, and they

have made their decisions. So I mean --

QUEST: Your election results --

SZIJJARTO: So judging Hungarians --

QUEST: Your election results --

SZIJJARTO: Judging Hungarians is not fair, you know?

QUEST: Your election results are starting to look remarkably similar to those that we would have seen in the Soviet Union --

SZIJJARTO: But --

QUEST: In previous years --

SZIJJARTO: Excuse me, excuse me, why do you -- why do you judge and why do you attack Hungarian people for their democratic decision, which party they

would like to see in government and what direction they want to see for their country in the future?

Why is that so that if the Hungarians decide in favor of center right party to govern, you put such kind of accusations on the Hungarians and compare

them to a Soviet Union against which we have fought for 40 years to get out of the occupation --

QUEST: I don't --

SZIJJARTO: Of the administration --

QUEST: I don't, with respect, I don't, the European Commission does and its article 7 -- and the European parliament does in its article 7

proceedings against Hungary in which it specifically questions the rule of law and the way in which it is being harmed.

Now, let me finish the question, Minister, because we can put that to one side, article 7 and all of that. The slave law as it's being called, what

makes you think that it is right to allow companies to demand employees work 400 hours of overtime a year?

SZIJJARTO: You have said just before the news that facts come first here on Cnn. I would like to ask you to take it seriously, because this is

false how it was written here and how it was said by you.

Because this the new amendment says the following, that the employees can make individual decisions based on their own will, on a voluntary basis,

whether they would like to work 100 extra hours more on an annual basis for more salary.

That's up to their decision, voluntarily, individually, that's it. Currently, the law says 250 respectively, 300 hours can be demanded by the

employers. And the new regulation says that the employees, if they want to do it on an individual basis, based on a voluntary decision, whether they

would like to work 100 hours more on an annual basis.

This allows the people individually to make that decision. Just like -- just like very similar situation in Slovakia; our northern neighbor, the

400 hours is allowed and right in Czech Republic, where 416 hours allowed to take on as an overtime on an annual basis.

QUEST: That is not the way the law is being interpreted by people like Amnesty, by the EU --

SZIJJARTO: Yes --

QUEST: By those --

SZIJJARTO: Well, this is the facts. I know, I was there in the parliament, you know, the parliament has voted about that, and I know very

well what is written in the law. The law says --

QUEST: So everybody else -- so everybody else is wrong and you're right?

SZIJJARTO: I'm in here, you invited me, you asked --

QUEST: No, I mean, not you personally, I mean, the government --

SZIJJARTO: You asked me to explain and this is the explanation. I'm a member of the government, I'm a member of the parliament, I took part in

the voting session, so believe me, this is written in the law that on an individual basis, on a voluntary basis, people can work 100 hours or more

on an annual basis for more salary.

QUEST: Can --

SZIJJARTO: For more salary --

QUEST: Payable when?

SZIJJARTO: Sorry?

QUEST: Payable when?

SZIJJARTO: Payable at the end of the month, of course --

QUEST: Well, according -- well, even there, there's a dispute, isn't there? Because some say the law says it's payable in a year or two's time -

-

SZIJJARTO: That is another law because -- it's another amendment, sorry, because there are two amendments voted by the Hungarian parliament last

week regarding the labor code. Another amendment said that the accountability period for the working hours will be extended from one year

to three years.

But it's just like in Slovakia where you have 2.5 years and some other European countries where you have a two-year period. That helps to get

adjusted to the manufacturing or service cycles based on --

QUEST: Yes --

SZIJJARTO: The economic development. But salary, you get at the end --

QUEST: Let's --

SZIJJARTO: Of every month.

QUEST: So let's ask you for a yes or no question, you're telling me employees can refuse to work the extra overtime under the law?

SZIJJARTO: The law says that up to 250 or 300 hours, just like until now, the employer can demand the employee to work as an overtime. But above

that, up to 400, it's up to the decision of the employee, whether he or she would like to do so or whether he or she does not like to do so. If he or

she does not want to do so, he or she will not do so.

QUEST: And the money that anybody worked would be paid at the end of the month?

SZIJJARTO: End of the month --

QUEST: Yes or no?

SZIJJARTO: Yes, at the end of the month for sure.

QUEST: Of course, you haven't answered to all of this problem because Hungary's economy is doing very well, you have low unemployment, the

economy --

SZIJJARTO: Yes, full employment --

[15:40:00] QUEST: So if you're taking more migrants, I mean the argument about migrants which of course is why you're here in New York, is migration

is a way in which you enhance the work force, certainly here in the United States, and it would be the same in Hungary if you were more open to

migrants.

SZIJJARTO: Well, you know, the thing is that all countries have their own right to address the challenges regarding labor market or regarding

demography. And our position is that we address this challenge through the family policy and through modernizing the education.

This is our way, we have opened up the possibility on the German -- better, and by the way, for a Euro-type of vocational training, from the high

schools already to universities onwards. I think this is going to bring a satisfactory solution there --

QUEST: It's a shame that one of those universities won't be George Soros'.

SZIJJARTO: What do you mean?

QUEST: Well, the -- I don't know too many countries that have -- you do know what I mean, but --

SZIJJARTO: Maybe the viewers do not --

QUEST: Well, the viewer -- yes, quite right, sir, quite right, in which case the way in which Hungary has created a situation in which the

university started by George Soros can no longer operate in Hungary.

SZIJJARTO: Well, this is lie, you know. This is fake news because the university can and will stay in Budapest. They will -- they will continue

their education programs in Budapest, they have all the necessary accreditation in Hungary to continue their courses and issue Hungarian

diploma at the very end.

Sir, what they cannot do is the following: they cannot issue two diplomas for the same course, because what they want to do is to issue an American

diploma as well while not having school back in the U.S.

QUEST: But the U.S. education institutions have no problem with them issuing those diplomas.

SZIJJARTO: We have a law in Hungary because we're speaking about Hungary. Law on higher education --

QUEST: Right --

SZIJJARTO: Which says that you are only allowed to issue a diploma of another country if you have a school in that given country. Notre Dame

University for example operates in Hungary and in U.S., McDaniel College operates in Hungary and U.S., CEU doesn't have a school in the U.S., so

they operate in Budapest and they issue Hungarian diplomas.

No problem with that and they will continue doing so.

QUEST: Final question, sir, because you've been courteous to join us this evening. Whichever way we look, it doesn't really seem to matter. Hungary

seems to be criticized by all. If we look at the -- well, let me finish with the exception of maybe Poland.

SZIJJARTO: I didn't say anything --

QUEST: No, but you were about to. And the EU thinks you are against -- dangerous to the rule of law. The protesters on the street are protesting against the law -- the rule that you says doesn't force anybody to work

extra hours.

The university has left even though you say there's no reason for leaving. When I hear all these things, I'm always left with the question, how can

everybody else be wrong and the Hungarian government always be right?

SZIJJARTO: You know, number one, the Hungarian people have awarded us with the record support after eight years in position this April. This is

number one. Number two, we are definitely going against the liberal mainstream. For sure, I don't want to deny that in Europe and globally, we

are definitely not representing mainstream positions.

And there's a revenge against us, there are accusations, allegations, fake news like what you have just said before, a university is forced to leave

Budapest, not only is it forced to leave Budapest. So there are many fake news and allegations being put on the country.

But what really matters for us is the opinion of the Hungarian people. And if they support us, then we can be sure that we're on the right track. You

just said that Hungarian economy is doing very well. Look, this country had 12 percent unemployment rate eight years ago, now we're at full

employment.

We had the GDP growth of almost 5 percent in the last quarter which is twice higher than the European average. The Hungarian people are

supporting the government. So, you know, these external attacks on us can be considered as a revenge because of not representing mainstream and

because of representing an anti-migration policy. This is my position there.

QUEST: Sir, good to see you.

SZIJJARTO: Thank you so much, Merry Christmas to you.

QUEST: Well, absolutely, whatever we may be discussing, we wish you the season's greetings and then the very best, thank you sir.

SZIJJARTO: Thank you so much.

QUEST: So the Fed has made its decision, investors are reacting badly. We are about 15 minutes from the end of trading, we're holding our own, down

385 off the lows, but way off the best of the day. We'll have more in a moment.

[15:45:00] (COMMERCIAL BREAK)

QUEST: So investors are reacting to the Fed's decision. This is when the announcement comes, and we're at the best of the day when the announcement

comes. Up over 300 points and then you drop off and then you -- it's almost like the markets decides to have a rethink which it does around

about 230 and then it was over -- it's over.

And off we're down, down 367, the S&P 500 is down, too, and it's going to be its worst year in a decade for that. President Trump's views the

volatility of the market as a coddle repeatedly to calling on the Fed to stop raising rates.

Moment ago, the Chair said the president's statement played no part in the rate decision.

(BEGIN VIDEO CLIP)

JEROME POWELL, CHAIRMAN, FEDERAL RESERVE, UNITED STATES: Political considerations have played no role whatsoever in our discussions or

decisions about monetary policy. We're always going to be focused on the mission that Congress has given us. We have the tools to carry it about.

We have the independence which we think is essential to be able to do our jobs in a nonpolitical way. And, you know, we are -- we at the Fed are

absolutely committed to that mission, and nothing will deter us from doing what we think is the right thing to do.

(END VIDEO CLIP)

QUEST: Cristina Alesci is at the Stock Exchange. I tend to agree or I tend to believe Jerome Powell when he says that. But listening to Mohamed

El-Erian earlier, he says the real mistake is next year, thinking of two- rate hikes and not putting stronger language in about watching and waiting.

CRISTINA ALESCI, CNN CORRESPONDENT: Well, economic policy here clearly clashing with the market. There was such a dramatic downturn once a

decision came out, it was quite remarkable because as you and I had discussed, the market was anticipating a rate hike for so long.

And then when Powell started speaking, there was a little bit of a bounce back, but then the market quickly realized, wait, he is actually saying the

economy is strong, and they took that -- they interpreted that as more rate hikes next year. So clearly a disconnect between the market.

The market is rejecting the Fed's view of the economy. Most importantly, what I picked up on today is that Powell said that they are factoring in

financial conditions into their analysis. So that was quite new.

QUEST: Christina, you're watching the results -- not results, you're watching the close which takes place 321, we'll be back though before the

end, thank you. Now, two pharmaceutical titans are merging their consumer healthcare business. Pfizer and GlaxoSmithKline, shares in both companies

are rallying or except, well, Pfizer is now down, GlaxoSmithKline is up.

The new firm will have a combined sale of around $13 billion. The pharmaceutical sector is notorious for the shifting of mergers and

acquisitions. I am old enough as indeed many of you are too to have seen exactly how these two behemoths came together.

[15:50:00] U.K.-based Pfizer and U.K.-based GlaxoSmithKline, if you look at their notable deals, so the very name of GlaxoSmithKline, GSK comes from

the Glaxco Wellcome deal or Glaxo bought Wellcome and then bought SmithKline Beecham, and that's how that goes and then they go for GSK.

And then if you remember, Warner -- Pfizer's Warner Lambert in 2000 was the biggest acquisition in the industry along with the Glaxo Wellcome one, and

you see how the two have managed to pull together. The second deal is worth some $70-odd billion. A tough day on Wall Street and a tough day for

Facebook.

The firm is accused of not admitting how much data it's really shared with partner companies.

(COMMERCIAL BREAK)

QUEST: Facebook shares down amid reports the social network offered more of its users data to companies than we previously knew about. Shares are

set to close more than 6 percent lower. The top U.S. senators say the reports are unacceptable and they are demanding new privacy regulation.

Facebook is well and truly in trouble.

Brian Stelter is here, down 9 percent -- 6 percent.

BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: On top of losses earlier this year, look, this has been Facebook's worst year ever. What Zuckerberg

launched in his dorm room at Harvard has taken over the world. And with that power comes great responsibility.

And all year long, we've learned about misuse, abuse of that -- of the kind of power that Facebook has amassed. You think back to March in Cambridge

Analytica and the scandal there, and now in the "New York Times" are learning more about more privacy violations.

Facebook might say this has much to do about nothing and the users knew what was going on. But I don't think most Facebook users, the billion-plus

that are out there, like my mom who is watching right now, I don't think she knows that when she clicks a random box, that all of a sudden, Amazon

and Microsoft and Spotify and Netflix might have access to her private information.

That is a breach of trust and that's why Facebook is scrambling today to try to say they'll do better in the future.

QUEST: It's almost as if it's hubris, isn't it?

STELTER: Yes --

QUEST: It's a whole hubris question that we don't need to because we are the biggest.

STELTER: Yes, they are the biggest and they've amassed incredible market share, not just with the main site, but there are Instagram and WhatsApp as

well. They have cornered this market and lots of folks -- you know, I'd say they're addicted to Facebook.

[15:55:00] We're not going to see people quitting en masse as a result of any single damning story in the "New York Times", but you get enough of

these stories and enough of these concerns, and that does add up, and I think that is weighing on the stock today.

We've also seen a new lawsuit filed today in Washington D.C. by the Attorney General there with regards to the Cambridge Analytica scandal. So

you're seeing regulators and lawyers and lawmakers here in the U.S. start to catch on to these privacy concerns.

QUEST: Does it get to the point where, you know, death by a thousand cuts, that the actual future or the actual Facebook itself, its survival comes

into question?

STELTER: Hey, you remember Myspace or maybe we don't, that's the point. These networks sometimes do go away, Facebook does seem to become so big

that it's hard to imagine a world without it.

But you know, I do think there's this empty mall of danger. The idea of a mall that nobody goes to anymore. Shopping center that nobody goes to

anymore. Facebook risks becoming that place where you might still have an account, we don't log on as much anymore, and that'll be a big problem for

the company. But all this result to me about tradeoffs, right?

So people want a place to go see baby pictures --

QUEST: So --

STELTER: People want a place --

QUEST: So --

STELTER: To go share stories.

QUEST: So have you cut down on the amount of baby pictures that you are --

STELTER: Oh, I was hoping that you wouldn't ask me that. I have not, no - -

QUEST: No!

STELTER: I have not, I have not, I shouldn't be, I have not. There's a few reports out there today saying, I'm quitting Facebook. Give me a

break, it's hard to quit Facebook, that's the problem, they've got us.

QUEST: A Christmas present.

STELTER: They go -- oh, thank you. I'll practice for 2019.

QUEST: Try one more.

STELTER: OK --

QUEST: Yes, got it, nailed it. Profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment, for a market that was anticipating a rate hike by the Fed, as you can see for it to fall so dramatically

thereafter is somewhat worrying, and it is because the Fed now says it expects a slowdown in economic growth probably because it's saying it's

going to do two rate hikes even though that's one less than planned.

But it's certainly more than many people think it should. And so I think we can now call it officially the new normal is under way. The bull market

slows and maybe dies, economic growth slows down, but probably doesn't go into recession.

And we go into this sluggish rule -- what happens over the next year or so? And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New

York. Whatever you're up to in the hours ahead, I hope it is profitable. The bell is ringing --

(BELL RINGING)

The Dow is down, the day is done!

END