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QUEST MEANS BUSINESS

Congo Election Results Disputed; Paul Whelan Appeals Against Russian Detention; Car Makers to Shed Thousands of Jobs in Europe; Macy's Stock Plunges After Cutting Sales Forecast; Investors React to Earnings, Fed, U.S. Government Shutdown; Maduro Sworn in As President Amid Outcry; John Bolton: U.S. Won't Recognize Maduro's Second Term; Trump Tours U.S.- Mexico Border Amid Shutdown Deadlock. Aired 3-4p ET

Aired January 10, 2019 - 15:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: We are an hour away from the closing bell and a look at the interesting markets. It really shows how we

are testing 24,000 on the Dow. Can't make up its mind which way to go, up or down, down a bit, and all around. As a result, in this last hour, we

had a gain of just 41 points. And you can see this indecision when you look at the Dow 30. Literally, pretty much half and half.

Pfizer is the big loser. Boeing, the big gainer, that's on the back on China. We'll understand more of the currents moving the market because we

need to understand what's been happening today and what's moving the markets.

A case of patience and fortitude. Jerome Powell of the Fed says he doesn't see signs of a recession. His comments didn't dramatically move the

market. Discounts on retail shares. Macy's stock is having its worst day ever, and that's saying something. And major airlines are warning about

their outlook just in time for earnings season, American is down some 6 percent.

We are live in the world's financial capital, New York City. It is Thursday, it's the 10th of January. I'm Richard Quest. I mean business.

Good evening, President Trump even as we speak is hearing and listening as he considers his pitch to build a wall to America's southern border. The

latest effort to secure $5 billion he wants to deliver on a campaign promise to reopen the U.S. government. Look at the pictures. The

President is at the moment in Mexico -- sorry, he is in Texas on the Mexican border.

And by his own admission, this may be a publicity stunt. If it doesn't work, he says, he will almost definitely declare a national emergency. The

President is wrapping up a roundtable on immigration in Texas. He has been hearing from Border Control officers and from those in the regions. Let's

listen in for a second.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: .... will not have died in vain. I can tell you that. They will not have died in vain. There's a

very important purpose to all of this, very important. Monty, I agree, that is a very uncomfortable position. I don't know. I wouldn't want to

be in that chair, but you're a tough guy. You can handle it. Please, say a few words.

QUEST: So the President there listening to various border officers. The significance of today can't -- is of course important because the

government shutdown is causing more misery for hundreds of thousands of workers. Which is why today, we are taking longer to look at the economics

and what is happening in the U.S. government shutdown.

It begs to question why the rest of us in the world should care about this U.S. government shutdown. Is it purely a domestic matter? Well, speaking

in Texas a moment ago, Donald Trump tried to clarify his 2016 promise that he would build a wall and that Mexico would pay for it.

(BEGIN VIDEO CLIP)

TRUMP: When I say Mexico is going to pay for the wall, that's what I said, "Mexico is going to pay." I didn't say they were going to write me a check

for $20 billion or $10 billion. I didn't tell you they're going to write a check. I said they are going to pay for the wall. And if Congress

approves this incredible trade bill that we made with Mexico and Canada, by the way, but with Mexico in this case, they are paying for the wall many,

many times over.

(END VIDEO CLIP)

QUEST: He's just playing with language -- semantics -- parsing what he actually said. Let's remember Donald Trump's guarantee that Mexico would

pay for a wall and how it became a rallying cry amongst his supporters. Entering his third year of his presidency, Donald Trump's positions evolved

on this question of paying for the wall.

(BEGIN VIDEO CLIP)

TRUMP: Mexico will pay for the wall.

Mexico is going to pay for the wall.

Mexico is going to pay for the wall, believe me.

Who is going to pay for the wall?

CROWD: Mexico.

TRUMP: Who?

CROWD: Mexico.

TRUMP: Mexico is going to pay for the wall and they understand that.

Mexico will pay for the wall. It may be through reimbursement. We need the wall very badly.

Mexico in some form, and there are many different forms, will reimburse us and they will reimburse us for the cost of the wall.

(END VIDEO CLIP)

QUEST: That reimbursement is what this argument is all about, and it is about more than just semantics. The President now says Mexico will pay for

the wall indirectly through the new trade deal, the USMCA.

However, there is little evidence to support that claim. The administration argues the deal could put more tax into U.S. government

coffers. Well, the experts aren't actually sure because first of all, it is unclear if the deal will create economic activity or add American jobs

and anyway, even if it does generate more taxes that money doesn't go to the U.S. government directly.

[15:05:10]

QUEST: It goes to individuals and companies and it wouldn't be earmarked for the wall. There would just be general revenues for Congress to spend

however it likes. And finally, the USMCA is not even ratified. Democrats are in control of parts of Congress and might not give Donald Trump the

votes needed to get the USMCA passed.

Ed Lavandera is in McAllen in Texas and joins me now. What is the mood now? I mean, it's such an unlikely place to be ground zero in U.S.

politics in some sense, but Donald Trump has made this wall and who will pay for it -- the key issue.

ED LAVANDERA, CORRESPONDENT, CNN: And the reason the Rio Grande Valley -- this area of South Texas is so key in all of this debate is for a couple

things. Historically, this is where you see the majority of illegal immigration that comes in through the U.S. Southern border. This sector

which is the U.S. southern border is divided up into sector by the Border Patrol. This is the Rio Grande Valley sector. This is where you

historically have seen the highest number of people apprehended crossing into the country illegally.

It is also, Richard, if you remember, going back to last summer where you saw really the ground zero of the zero tolerance family separation issue,

and this is really where it exploded the most. So there is already, over the course of the last 15 years, miles and miles of border wall that have

been constructed in this part of the region, so there are gaps within those border wall structures that have already been put up. This is dating back

to the era of President George W. Bush.

So really, you see here in the Rio Grande Valley, in this part of South Texas, kind of the hot bed in all of these different issues and the aspects

of the immigration debate converging in one area, Richard.

QUEST: So in that sense, I imagine just about everybody agrees on the necessity of a border -- of a wall -- I mean, but what more would you build

in there? How much bigger? How much stronger? Steel or concrete?

LAVANDERA: That's the billion dollar question really at this point. For example, just so people around the world understand. The U.S. southern

border is about 1,900 miles long. Someone else can do the calculations on the kilometers there for me quickly, but 1,900 miles. About 700 to 800

miles of that, so nearly half of it already has some sort of border wall structure placed in it. Whether that comes in the form of a fence or

vehicle barrier or another type of wall, but a lot of it is already there.

So really, we're talking about adding more to what is already in place and that is why this issue becomes so much more intensified. Many people

wondering whether or not, in some of the far remote areas where the terrain is so incredibly rugged, do you need a wall in those areas? What more do

you need in highly populated areas like here in the Rio Grande Valley, El Paso into California as well. And that is where this debate intensifies.

QUEST: Ed, very good of you. Thank you to put that into perspective. For your future reference, it is about 3,000 kilometers and I didn't have to

work that out.

LAVANDERIA: Thank you, I needed that.

QUEST: And somebody else used Google. Thank you, Ed, good to see you. Thank you. Now, I want you to get out your phones as always, go to

cnn.com/join and bearing in mind what Ed was saying, tonight, we are asking you who is making the better argument over the border situation? Is it

Donald Trump or the Democrats in Congress? Nancy Pelosi and Chuck Schumer. Vote now, cnn.com/join. You will see the results, there you are, you can

see -- as you vote, you will see the results of your votes coming in and the question is, is it Donald Trump or is it Democrats by which I mean

Nancy Pelosi and Chuck Schumer? Who has got the better argument and to some extent, winning the public debate on the need or desire of having a

full throttle wall on America's southern border.

Leading us from the aviation community stage, a rally today in Washington, they are demanding an end to the shutdown. The Democrats are accusing the

President of using people as leverage by keeping the government closed. Donald Trump claims workers support his shutdown border for a wall. Randi

Kaye spoke to a family of air traffic controllers who are working without a paycheck.

(BEGIN VIDEO CLIP)

RANDI KAYE, CORRESPONDENT, CNN (voice over): These days family is the only thing Marc Schneider can count on. The 48-year-old air traffic controller

from Indianapolis is working. He is considered an essential employee, but he isn't getting paid because of the government shutdown.

An IOU he hopes the government will make good on.

When President Trump says that many people who aren't getting paychecks quote "agree 100 percent" with what he is doing and are fans of what he is

doing don't count Mark in.

[15:10:08]

(BEGIN VIDEO CLIP)

MARC SCHNEIDER, AIR TRAFFIC CONTROLLER, INDIANAPOLIS: I don't know many of those people. It must -- I assume that he is getting his data from

somewhere. I don't know many of those people that are big fans of not getting paid.

(END VIDEO CLIP)

KAYE (voice over): And when asked if he considers a safe border his safety net as the President has suggested for these unpaid workers.

(BEGIN VIDEO CLIP)

SCHNEIDER: I can't spend border security if that's what you're asking me. Border security isn't going to pay my mortgage next month. It is not an

immediate need for me right now. I would prefer to be able to pay my bills, to take care of my family.

(END VIDEO CLIP)

KAYE (voice over): None of this is good for Marc's family, and it could be downright dangerous for airline passengers.

KAYE (on camera): The system is already stressed. The number of air traffic controllers is at a 30-year low and many of them are working six

days a week and ten-hour shifts. Also about 2,000 of them are eligible for retirement. If they retire early because of this shutdown, there could be

massive delays nationwide.

KAYE (voice over): Delays and distractions. Marc is worried about passenger safety and how his fellow air traffic controllers will handle the

stress of not getting paid.

(BEGIN VIDEO CLIP)

SCHNEIDER: The last thing I want is my air traffic controller worrying about where his next check is coming from.

(END VIDEO CLIP)

KAYE (voice over): At Marc's house, the shutdown hit twice as hard as some others. Marc's wife isn't getting paid either.

(BEGIN VIDEO CLIP)

KAYE: You and your wife are both air traffic controllers. How did it feel to just lose both of your paychecks like that?

SCHNEIDER: It is terrifying. I don't have a Plan B. I have my savings account and then after that, I have no idea what we are going to do.

KAYE: Congress is still getting paid and you're not. Is that okay with you?

SCHNEIDER: Why am I different? What is less valuable about my job? What is less valuable about a TSA employee? What is less valuable about a Park

Ranger? Where is the difference? Why are my bills less important than someone else's?

(END VIDEO CLIP)

KAYE (voice over): Mark was last paid two weeks ago. If he doesn't get a check this Friday due to the shutdown, it will be the first check he has

missed as a Federal employee. He has some savings, but can't hang on more than a month or so.

(BEGIN VIDEO CLIP)

SCHNEIDER: Am I upset about it? Absolutely. Do I think it's right? It's not. It's not. Someone should be paid for the work that they do, period.

That's what our country has always stood behind. A day's wages for a day's work.

(END VIDEO CLIP)

KAYE (voice over): Randi Kaye, CNN, Indianapolis.

(END VIDEO TAPE)

QUEST: Now, the pictures you're seeing on the screen at the same time of course, President Trump in Texas listening to go various border protection

staff talking about the importance or necessity of a wall. Meanwhile, more than 30 aviation unions following on from that last report sent a letter to

the President. Nancy Pelosi and Mitch McConnell urging them to act now because the human and economic consequences are getting worse.

Sara Nelson is President of the Association of Flight Attendants and joins me now. Sara, when I look at the number of areas that are affected,

NextGen and Training, Certifications, Air Traffic Control, NTSB -- how are your members affected in a sense of -- they are not losing a paycheck

directly?

SARA NELSON, PRESIDENT, ASSOCIATION OF FLIGHT ATTENDANTS: Well, we are not losing a paycheck directly, yet, although the airlines are already telling

us that they have not been able to deliver aircraft. And that means they have had to cancel routes. So at a certain point, that does become about

our jobs as well and losing pay as well and facing furlough as well.

But I'll tell you something, Richard, the reason that the airlines are flying today is because the front line employees made sacrifices in all of

those bankruptcies. And on the first day of those bankruptcies, even in that whole host of horribles, the first thing that is done is in that

bankruptcy is to order that the paychecks continue because they understand that there is no way to restructure. There's no way to keep moving unless

the workforce is paid.

This is outrageous, and people are going to have to make decisions for their families and what that is going to do is it is going to stretch the

ability for these essential employees to do the work. These essential employees, don't forget, are also not being supported by the other people

who are not considered essential employees.

And I'll tell you something, after 9/11 my profession changed forever. We became aviation's last line of defense. We count on every single layer of

aviation security. That is not in place today. We are less secure and less safe today and our members are going to work today under those

conditions, and the traveling public is flying with us under those conditions. Safety and security is nonnegotiable. They need to get the

government open and then continue this debate.

QUEST: The president -- you know the arguments, backwards, upside down, inside out. There's no point in me rehearsing them. At the fundamental

end of the day, this is a political difference in which your members and the air traffic controller, you just heard, frankly I'm flying tomorrow

night to London, and the last thing I want to do is think about some overtired, worried air traffic controller who is flying -- who is managing

it, stressed because he or she didn't get paid.

[15:15:08]

NELSON: Yes, that is exactly right. We need these people focused on their primary safety and security functions. We don't need them worrying about

the safety and security of their own families and how they are going to provide of them. This is outrageous. Take the workers out of the debate.

The fact that we are being held hostage and put in the middle of this is just unacceptable.

QUEST: But isn't that the -- I mean your union -- you're a negotiator. If you look at the way these two are negotiating, Donald Trump on the one side

and Nancy Pelosi and Chuck Schumer on the other, they are negotiating for the big prize as they see it. Don't you see that?

NELSON; Well, that may be true. But, in negotiations, you also agree to a set of facts to negotiate together. And here, these facts mean we are

putting certain safety and security in jeopardy in order to gain additional security at a southern border wall. There are many points of entry. And

today, the system is stressed and those other points of entry are not being manned like they should be. The workforce is not there to deal with them

like they should be, so we can't trade a certain set of safety and security that is working for one that we want to have.

That just doesn't work. Negotiations are about problem solving. They are not about brinksmanship. That never gets you to a deal.

QUEST: That's the President -- that is the President's modus operandi. That is as he would say the art of the deal. Not quite zero sum game, but

pretty much, pretty close to it.

NELSON: Well, I think that what we need to do is get together and come up with solutions and it's certainly important to talk about southern border

security. We would agree with that as well, and we think that here needs to be some good solutions there. But you don't hold hostage the safety and

security of the rest of the country in order to get it done. That doesn't make any sense. The very heart of this debate is about our security and we

should not be weakening the rest of our security in this process.

QUEST: Sara, it is always good to see you. Thank you for taking the time to come and talk to us. Thank you.

NELSON: Thank you, Richard.

QUEST: At the beginning of the show we asked you who is making the better argument on the shutdown and the border. I mean, it's a whopping margin.

We don't often see that sort of result. Donald Trump, let's face it, he had most of the argument that we've heard of, 17 percent of you say that;

83 percent of you say it's Nancy Pelosi and Chuck Schumer so far. Their arguments may be convincing you, but they don't appear to have won over the

President.

American government workers are feeling the financial strain of the shutdown. Now, in Europe, it's the automakers who are blaming Brexit among

the other factors for the thousands of job cuts. We'll continue that. Whilst we're on Brexit, Japan's Prime Minister is urging U.K. lawmakers to

back Theresa May's withdrawal agreement. The whole world wants to avoid a no-deal Brexit according to Shinzo Abe.

(COMMERCIAL BREAK)

[15:20:00]

QUEST: Japan's Prime Minister says the whole world wants the U.K. to avoid a no-deal Brexit. Shinzo Abe is meeting Theresa May. They are discussing

trade relations in the post-Brexit era. Major Japanese companies have warned they could suffer big losses if Britain crashes out of the E.U.

without a deal. The Japanese Prime Minister said he hopes that scenario can be avoided.

(BEGIN VIDEO CLIP)

SHINZO ABE, PRIME MINISTER OF JAPAN (Through a translator): It is the strong will of Japan to further develop this strong partnership with the

U.K. to invest more into your country and to enjoy further economic growth with the U.K. that is why we truly hope that a no-deal Brexit will be

avoided, and in fact that is the whole wish of the whole world.

(END VIDEO CLIP)

QUEST: Right. Bianca is with me from London. Look, I'm pretty sure that, you know, Theresa May was hoping and got what she wanted is the sense that

Abe said I support your deal. But the Japanese are important in all of this because of the number of jobs. Tell me more.

BIANCA NOBILO, CORRESPONDENT, CNN: They are. They are hugely important. They have hundreds of thousands of jobs in the U.K. and Japanese business

has many interest in the United Kingdom and in fact, the Japanese generally have been more outspoken about the Brexit process than most other

countries. I know that you have spoken to the Japanese Ambassador several times, Richard, and this is what the Prime Minister was hoping to hear.

And indeed, he delivered. He said that a no-deal would be very bad for Japanese business and for the U.K. and that the Prime Minister's deal was a

good one. It's what Japan wanted to see, but I don't think that this is enough to move the dial, enough for the Prime Minister to have any chance

of passing her deal next week.

QUEST: Right. I am jumping in there, I just want to say, on that last point you made that there's no chance of -- is that the case? Is that

still the case that the PM is heading for a major defeat next Tuesday?

NOBILO: So the numbers from sources that I have been speaking to inside Parliament look like she will be defeated by one or two hundred as it

stands. Now, that is going on existing public declarations of opposition to her deal, but two MPs, two of the Prime Minister's own MPs who had

publicly come out against her deal and really eviscerated it have said today that reluctantly, they are going to support it because they fear a

no-deal too much, and that this is what must be done.

So, if we see more people come forward and make that kind of statement then who knows, she has also been appealing to Labour in the last few days. Too

little too late, the Labour Party says. You can imagine that they are only being consulted and approached at this point in the process, but

nevertheless, she is doing that. And then also, there is the issue of time and conscience which should be playing on MPs minds, too.

QUEST: Assuming she loses, there's this three-day period before next Friday when she has to come back with Plan B. That is barely time to get

your ticket and go to Brussels and ask for more, let alone to get more. What -- Parliament is against a no-deal Brexit, so what realistically can

be done after she loses on Tuesday?

NOBILO: Well that's the important question because as we both know, unless Parliament approve a majority on something else, no-deal is what's going to

happen. That is the issue that we keep coming up against. So what we are likely to see three days after that vote fails to pass, the Prime Minister

will present her Plan B, and then MPs will have the opportunity to express support for various different options like an extension of Article 50 or a

second referendum et cetera.

But those aren't legally binding, and yes, they will pile on the political pressure, but it is difficult to see at the moment that there will be a

majority for any of the other options and that's the problem because everybody knows what they are against and nobody can truly coalesce around

what they are for.

[15:25:10]

QUEST: Bianca Nobilo, thank you. European stocks fared better than their American counterparts. Most markets ended higher. Auto stocks were among

the worst performers, Ford slashing European production. We'll talk about it in a moment. Jaguar Land Rover, JLR doing similar cutting four and a

half thousand jobs worldwide. We will have more talk about cars after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, and there is more "Quest Means Business" in just a moment as you and I continue this evening, this is CNN, and on

this network, the facts, they always come first.

President Donald Trump is visiting a border town in Texas as he makes this case that America is in crisis over illegal immigration. The U.S.

President says he almost definitely will declare a national emergency to get funding for a border wall. But he says he is still open to negotiating

a standoff which had triggered a government shutdown.

Mr. Trump's former lawyer, Michael Cohen will testify before Congress. It's the first major move by House Democrats to haul in a member of the

President's team. This is connected to the Special Counsel, Robert Mueller's investigation. The testimony will be in public. It takes place

on February 7th.

The U.S. Secretary of State, Mike Pompeo has given a major speech in Cairo where he praised President Trump's agenda for the Middle East. The

Secretary is touring the region trying to reassure allies about the U.S. commitment there, stressing the United States will continue the fight

against ISIS and is not abandoning its allies despite its planned withdrawal from Syria.

The Democratic Republic of Congo has declared one of the two main opposition candidates the winner of the country's controversial

presidential election. The other opposition leader and Congress' most powerful Catholic Church are disputing the results, either way, it means

the end of the 17-year presidency of Joseph Kabila was ruled with an iron fist since 2001.

Paul Whelan; the U.S. citizen arrested in Russia on suspicion of espionage has appealed against his detention. Whelan's lawyer say he's being held

without bail and that is excessive as a citizen of the U.K., Ireland and Canada. If convicted, he faces up to 20 years in a Russian prison.

Now, automobiles are very much in discussion at the moment. So we have brought out -- well, those of you, long-standing viewers of QUEST MEANS

BUSINESS, you'll remember our barometer, our economic barometer of some years ago, ten years ago in fact, appropriate that we get it out today.

Let's make sure, yes, that one works, yes, that one works. And oh, beautiful, all working and correct. Which is -- and the reason we've got

it out today is because automobiles are very much the main talking point. Car makers in Europe have announced huge job cuts as their problems pile

up.

Ford is getting thousands of jobs and closing one factory and ending production of some models. Jaguar, Land Rover is laying off four and a

half thousand staff, and that's on top of the thousand of the staff that left last year. So across the globe, it doesn't matter which city or which

country car manufacturers are running into red lights around the world.

And we need to explain and show why? First, as with Jaguar, Land Rover, Brexit, it's the case of investment, it's down and the -- and certainly

whether you'll be able to export your vehicles from the U.K. into Europe as a single market.

And Honda has to stop production for six days over all of this. The second is diesel gauge in Germany and other parts of Europe. Its cut demand for

diesel vehicles and others, and it's tightened emission standards. I think globally, going over to China, you have a slowdown itself for the first

time in 20 years.

Which on top of the shifting trends that take place globally especially in the U.S. Ford is phasing out sedans in the United States. If we take our

traffic lights, we have definitely got things in a flashing red component at the moment. Joining me now, the car coach Lauren Fix.

The issue, Lauren, is how serious these are. Are these cyclical issues taking place or they just happen every so often or is there something

structural and systemic taking place?

LAUREN FIX, CAR COACH: Well, you have to remember we have increased sales of 17.2 million vehicles here, the light truck vehicles in the United

States. So that is good numbers. But we are not expecting those numbers to continue. You can't have a constant escalation of sales.

And China, it's been 20 years, so having a drop off, it's to be expected, and we'll probably have a drop-off here in the U.S. Right now, we're

looking at about 16.9 million as the estimation for light trucks and cars here in the U.S. So why is that? Because first off, not everyone is going

to buy a new car every three years.

And beyond that, in fact, we have a trade imbalance with China and even though Jaguar and Ford both have plants in China, they're producing

products, but there's a downturn and because of that downturn --

QUEST: Right --

FIX: They're not buying those vehicles. And there's a lot of other factors involved as well.

QUEST: So who has the best strategy to put it right and to get things going and get the light turning green, do you think?

FIX: As far as brands?

QUEST: Yes.

FIX: OK, as far as brands, you're seeing a lot of turnaround from a lot of products. Many people are going into the electric car vehicle situation.

The problem is sales here in the U.S. has not picked up. It's under 2 percent and without that government electric vehicle incentive, they don't

-- people aren't buying that.

And that incentive has been lost by Tesla and by General Motors. So you're going to see a downturn in electric vehicle sales because that's an

incentive in U.S. buy-out. But in other world like China --

QUEST: Yes --

FIX: They want to go pure electric. France wants to go pure electric. You see that a lot in Germany, they won't go pure electric because you've

got to remember, it's got to be a mix of --

QUEST: Right --

FIX: Diesel and gas. So when you're looking at who's got it right, it looks like Audi seems to be turning things around. They've got their brand

new E-tron, Mercedes is -- all the German manufacturers seem to be on top of it. VW, Mercedes, Volkswagen have shifted with --

QUEST: So --

FIX: Whatever consumers want, you're seeing that with other brands --

QUEST: Right --

FIX: As well.

QUEST: So Lauren, back to my original plan. Brexit, diesel gate, China shifting trends. Which of these factors --

FIX: Right --

QUEST: Do you see is the principal driving factor now for the industry?

[15:35:00] FIX: I think it's driving trends. I think consumers want more connectivity, they want more safety, they want more technology, and the

only way to get that is you have to be on top of your game if you're a car manufacturer. That means when it's new, you've got to have it. You can't

be last to the market and you're watching all these manufacturers going to CES, the Consumer Electronic Show this week, why?

They want to showcase that they're cutting edge, they're first to market, they want the consumer's eyes and attention, they want your attention. And

in order to do that, they have to be in front of it, they can't be lagging like they had been in the past.

QUEST: Lauren, good to see you, thank you so much --

FIX: Nice to see you too --

QUEST: I understand what's --

FIX: Thank you --

QUEST: Going on. Now, if we had a red in the industry, the car industry, there's definitely flashing red. There's no miracle on 34th Street, weak

results from Macy's are getting investors very worried about the entire retail sector. We'll talk about retails after this.

(COMMERCIAL BREAK)

QUEST: And so the QUEST MEANS BUSINESS trading post, I was just thinking actually, I wonder how long it's going to be before we have any records on

either Europe or the United States with the markets in such in-between. And today has been an up and down sort of day.

We've had the Fed shutdown, we've had -- sorry, we've had the shutdown, we've had the federal government onwards. But they are all up. The Dow is

up third of a percent, similar gains, in fact, all those identical gains and Josh, the liking boss, which color do we get? Red or green? Oh, there

we go, all right, thank you.

I think there's a debate going on because he's -- and he was quite right. There's a weak lure -- anyway, all are still in correction which is 11

percent below records, but none are in bare markets. And if you look at the Cnn Business fear and greed index, we are -- there again, will be a

green because we've gone through extreme fear to just fear and the market momentum is still worrying exactly.

So Macy's shares are down 18 percent, it's an extraordinary landmark, cutting sales and profit forecasts and it's dragged down the rest of the

retail sector. Let's cover these developments. With me is Paul La Monica, let's go through our markets and Eleni Giokos.

ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Nice to see you --

[15:40:00] QUEST: With this early, one or two reaction to the Fed and the Fed chairs comments today. Let's start with the markets. They couldn't

make up their mind today. One trader on Wall Street told me when I was in the market, they're testing 24,000 on the Dow and they're testing 7,000 on

the Nasdaq.

PAUL LA MONICA, CNN BUSINESS DIGITAL CORRESPONDENT: Yes, that was both our, you know, round numbers, psychologically important maybe milestones,

if not necessarily technical ones. But I think since we've had this really nice comeback in stocks ever since Apple warned.

Remember, it wasn't that long ago that Apple shocked everyone by warning about its sales outlook, and that sent shivers throughout the stock market.

But since then, we've had a lot of optimism, this whole notion that, OK, things aren't going to be great maybe for the fourth quarter.

But they may not be truly awful even though retail --

QUEST: Right --

LA MONICA: Looks pretty dreadful right now.

QUEST: To cut down a second. Jerome Powell, he said what he said when he said it again. And he was questioned by Ruby Sinalong(ph) longer on it.

The market didn't seem to react as strongly as it did last time. Is that because it's all priced in?

GIOKOS: It's all priced in, with addition as a thing, right, with the Fed. It doesn't that -- you know, he did say that we're not going to see a

recession in the United States. And so he is more worried about the global growth outlook. Take a listen to what he said.

And this is where the markets actually moved.

(BEGIN VIDEO CLIP)

JEROME POWELL, CHAIRMAN, FEDERAL RESERVE, UNITED STATES: I don't see a recession, I would say that if you ask me, what am I worried about? I would

say the U.S. economy is solid, as I mentioned there's good momentum going into this year. The principal worry I would have is really global growth.

If you look at Asia, look at Europe, you're seeing slowing in growth. And the question will be, how much does that affect us? It's a tightly-

integrated global economy and global financial markets, and we will feel that.

(END VIDEO CLIP)

GIOKOS: Global growth is his big worry. And it's got to do with what's happening in China. And that's really telling in terms of what we can

expect in the United States.

QUEST: Go ahead --

LA MONICA: I was just going to say I thought it was important that he once again said that the Fed will be patient with any future rate hikes. The

big question right now, we know that China growth is slowing, but he still seemed --

GIOKOS: Right, some good --

LA MONICA: To indicate that this could be short-term and that China will get out of it. And there's also the question of what can the Fed do to

help China? That's not his job.

QUEST: It's not his job, correct. But this is the first time I've heard a Fed chair be -- I think there's one speech from Bernanke, maybe one from

Janet Yellen where they gave pre-eminence to international worries during the sovereign debt crisis in the Eurozone. But to be -- for a Fed chair to

be saying, I'm more worried about overseas than I am at home.

GIOKOS: I mean, this is -- this is something we don't really hear very often. An remember, global growth outlook, coming through from China is

going to have an impact on the United States. And he even said that he is really worried about the U.S.' debt level, 22 trillion is where it's at.

You've also got the deficit increasing. Remember, if you've got a slowdown in global growth, that is going to impact what we see happening in the

United States. And I think that is what he was basically alluding to. It's going to change the way they're going to be operating going forward on

the interest rate funds.

And also, remember, if they're going to be bringing down the balance sheets and reducing their balance sheets, I mean, it's a really big gamble. It's

going to -- just a lot for the market to handle.

LA MONICA: And I think that's one reason why now, as the Fed's so-called quantitatively tightens by --

GIOKOS: Yes --

LA MONICA: Unwinding that balance sheet, fewer people expect any rate hikes this year. So that's the way they can --

QUEST: Yes --

LA MONICA: Soften the blow. Where now it's a possible rate cut in December is where the Fed funds futures indicate.

QUEST: The -- and yet, the -- Jerome Powell(ph) still said look -- Macy's dreadful, down 18 percent.

GIOKOS: Yes --

LA MONICA: Terrible outlook for Macy's, and I think what we need to recognize here, even though there are a lot of retailers that had somewhat

weak results or poor outlooks today. Macy's having probably the worst, but Kohl's as well, Barnes and Noble even though their sales were up.

They had to spend a lot in order to get people in the store. Their stocks down. I think this is the case though still, Amazon, Wal-Mart, Target had

great numbers and their stock was down, that's a little mystifying. I think that you have a handful of retailers that are doing well.

So consumers are still shopping, they're just being very selective.

QUEST: I just want to ask you before we finish since you're going back to Johannesburg in a couple of days. And I want to take the opportunity --

where are you going to take your moments when you go? I'm sure --

LA MONICA: We joked that this was coming.

GIOKOS: No, we did, we prepared.

(LAUGHTER)

QUEST: The Democratic Republic of Congo in the news, I was -- declared one of its two main opposition candidates. The winner, DRC --

GIOKOS: Yes --

QUEST: Has declared one of its two. But it's still going to be a contestant. But my point --

GIOKOS: Yes --

QUEST: Is, as I said in the news, it makes the end of a 17-year-old presidency of Joseph Kabila --

GIOKOS: Right, yes --

QUEST: And if they can manage to attach a peaceful transition of power after that, that would be extremely significant.

GIOKOS: Where is the view out there? That Joseph Kabila is going to just allow this term to go to an opposition leader so that he can take it on

again without there being too much international interference. And the international community not imposing more sanctions on the DRC.

[15:45:00] And that he's stepping away just for one term. That has been out there in the markets, and that's going to be really interesting to see

how it -- I mean we're talking about long-term, we're talking about helping in a few years time.

But the DRC is so rich in resources, I mean, when you got to Kinshasa, it's unbelievable to see the kind of growth that can happen in that country, and

I'm going to keep such a close watch on that, I think it's going to be an interesting one.

QUEST: But you can't beat that, can you?

LA MONICA: I can't, not once --

GIOKOS: You should come and visit us sometime --

LA MONICA: Sure.

QUEST: Thank you.

LA MONICA: See you --

QUEST: When we return, Venezuela's president starting his second term amid food shortages, political unrest and international isolation. We'll

talk Venezuela after the break.

(COMMERCIAL BREAK)

QUEST: To Venezuela now where Nicolas Maduro has been sworn in for another six years in power, and governments across the Americas are not happy about

it. U.S. national security adviser John Bolton tweeted, "the U.S. will not recognize the inauguration." And Venezuela's neighbors Paraguay, Chile,

Peru, Ecuador and Argentina have all issued statements condemning the second term.

Neighboring Panama has closed its embassy in Caracas as Maduro was sworn in. President Maduro begins his second term at a period of economic chaos

in his country. The hyper inflation, collapsing GDP, a shortage of crucial supplies, if that's not all enough, the economy is on its knees.

Inflation -- now, wait for this, this is extraordinary. Just bear in mind, before I tell you this next time. Bear in mind that inflation in the U.S.

is 2 percent. In Britain, 2.1 maybe. In the Eurozone, under 2 percent. Inflation in Venezuela is predicted to hit 10 million percent this year.

In that kind of situation, the normal rules of the market economy don't make sense. Paula Newton explains.

(BEGIN VIDEOTAPE)

PAULA NEWTON, CNN CORRESPONDENT (voice-over): From her rooftop perch in one of Caracas' poorest neighborhoods, Tienna Neves(ph) is back to oozing

scarce water from a winding hose. After scouring both Peru and Colombia for a better life.

She is too disillusioned now, she says, to even think about politics.

UNIDENTIFIED FEMALE (through translator): Elections are meaningless here now. That we have to go out and vote, that sense of duty has been lost,

even if the opposition gets the majority, the government always wins. So elections don't mean anything.

[15:50:00] NEWTON: With fresh contempt, she listens to Nicolas Maduro declare 2019 the year of fresh starts.

Touting his experience, Maduro begins a new six-year term after a disputed election last May and a collapsing economy that shows no sign of bottoming

out.

RICHARD FRANCIS, DIRECTOR OF SOVEREIGN RATINGS, FITCH RATINGS: It's a very difficult situation with the economy falling by, you know, nearly 50

percent, and you know, since 2013. It's the largest decline we've seen outside of a war since the fall of the Soviet Union. And you know, that's

a huge economic crisis.

NEWTON: Huge to be defined by Venezuela's astronomical inflation rate expected by the IMF to reach 10 million percent in 2019. With prices for

basic food items doubling every 26 days according to Venezuela's own numbers, that means the monthly minimum wage usually can't buy you one

chicken.

For nearly six years, Cnn has witnessed the desperation and the misery. Cues for basic foods, hospitals that lack life-saving essentials and the

backlash, the daring protesters we met in 2017 now silenced. They've been intimidated, imprisoned or forced out of the country.

The election that keeps Maduro in power had the lowest turnout in years and has been discredited by many of its neighboring countries including

Argentina, Brazil and Colombia. And so how has the Maduro regime hung on for so long?

Some insight from the latest set of U.S. sanctions that target what the U.S. Treasury Department calls an illicit scheme to scheme profits from

currency markets. In a statement, U.S. Treasury Secretary Steve Mnuchin says "our actions against this corrupt currency exchange network expose yet

another deplorable practice that Venezuela regime insiders have used to benefit themselves at the expense of the Venezuelan people."

FRANCIS: Financially, it seems like it's becoming more and more ahead. Whether that spills over into the political realm remains to be seen.

NEWTON: Propped up by deals with Russia and loan repayment extensions from China, Maduro though does hang on. And that's Tienna(ph) isn't counting on

anything to change. She joined the 3 million Venezuelans that the UN says have fled Venezuela since 2014, she returned with nothing.

UNIDENTIFIED FEMALE: If my choice is to struggle somewhere else or struggle here, I'd rather struggle here.

NEWTON: And that struggle is the only thing Venezuelans have now to count on. Paula Newton, Cnn.

(END VIDEOTAPE)

QUEST: While we've been talking in this, Donald Trump has been touring the U.S.-Mexico border in the Rio Grande in Texas. He's been receiving

security briefing. Let's listen in for a second or two.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're not talking about only Mexico, all over the world they come in. Because it's a weak spot, they

make it strong but the laws have to be strong and we need -- we need security.

We need to kind of back up that you want. And they've asked -- by the way, we have lists of things, what they need more than anything is the barrier,

the wall, call it whatever you want. Whether it's steel or concrete, you don't care. We need a barrier.

And they have done a fantastic job, never so many apprehensions ever in our history. But you know, it could be a lot easier, it could be a lot easier

for you. And you could spread your people out to a lot of different areas which would also be very helpful.

QUEST: You get the idea, we've heard it before and we'll hear it again and we'll hear it many times in the days ahead. But whiles they're talking of

course, the U.S. government shutdown continues. And as your vote says tonight, 83 percent, 84 percent of you said that you think that the better

arguments on the -- that are being made by Nancy Pelosi and Chuck Schumer of the Democrats rather than the president.

So the president is engaged in this extremely extensive what he admits is a PR stunt to make the argument. Now, let's return to Venezuela where the

condition is extremely serious and getting worse. You heard that report from Paula Newton who had been there many times.

Stefano Pozzebon is in Caracas and joins me now. Good to see you. You know, Paula Newton goes through the facts behind that say this, the bankers

say that. What's daily life like truly there?

STEFANO POZZEBON, JOURNALIST: Well, Richard, daily life means that it's impossible, it's completely impossible for everyone here in Venezuela to

plan any sort of expense. And these expense can be either the regular expenses like going to the grocery store every week that you never know how

much you sort of budget for the week of shopping.

[15:55:00] But also imagine how to deal with an emergency. Emergency how to deal with, for example a relative who has fallen ill or an accident or

something like that. Right now, the monthly minimum wage in Venezuela, because of this so strong hyper inflationary hike that he is punishing the

bolivar; the official currency here, the bolivar.

Because of that, the monthly minimum wage here in Venezuela is between 2 and 3 United States dollars. So when you earn so little, when your salary

is worth so little, it's very hard to deal with any sort --

QUEST: Right --

POZZEBON: Of -- any sort of emergency. Imagine as I said, if someone has to go to the hospital, how are you going to pay for that? And so everyone

here in Venezuela, and we're talking about a country of 30 million people. There are 30 million people here who live in the uncertainty all for what

can they do next week, next month.

So it's impossible to predict --

QUEST: Right --

POZZEBON: Any sort of -- and to budget any sort of investment or any sort of actually monetary transactions at all, Richard.

QUEST: Stefano, you're there for several days, and we'll talk more to you about this tomorrow. Thank you, sir. It's been a very busy hour you can

see. We are in the last moments before trading finishes. The market is slightly up, and it's a bit more now, 117 points, this is the best of the

day.

After the break, profitable moment.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment. Our old friend the traffic light came back for so long, we have been green, moving really far and really fast.

Economies, stock market, you name it. And then the federal shutdown and everything changed and all of sudden, it was stopped, everybody at

Christmas was worried.

So if you had to ask now what are we -- where are we in economics? Where are we in markets? Where are we in things like automobiles? Government

shutdowns, worries about 2019. Well, I don't think we're at red by any means. Things are good. Growth is there.

And we're not all at green. Full steam ahead, absolutely not. There are too many unknowns and worries from Brexit to the federal government

shutdown, no. It may be boring to say, but I think that's where we are. Wait and see, watch and wait. Think and look.

Because that's the way we're going to be looking as we move forward. I think we need to bring the traffic lights back, just for that, we'll give

you a flash as well. And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York.

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

(BELL RINGING)

END

END