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QUEST MEANS BUSINESS

U.S. Justice Department Prepares to Announce End of Mueller Probe as Early as Next Week; Bangladesh Says it Won't Take in ISIS Bride; Fed Vice Chair Cites the U.S. Economy is in a Very Good Place; Three U.K. Conservative Lawmakers Quit Party Over Brexit; British PM Holds Constructive Meeting with European Commission President; Donald Trump: Decision on Car Tariffs Depends on a Trade Deal with Europe; Samsung Unveils New Folding Galaxy Smartphone; U.S. Stocks Steady in the Final Hour of Trade. Aired 3-4p ET

Aired February 20, 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 in the last hour of trade on Wall Street. Look at it the Dow Jones. The Dow is now up 70

points, probably the best of the day so far. A choppy sort of day. We have one hour to see how things close. A busy day for us because this is

what has been moving the money and the stories and today, for us, it's all about the Fed.

Tonight, on a CNN exclusive interview, I'm joined by the Fed Vice Chair, Richard Clarida as the Fed minutes show the future of the Fed's balance

sheet. Donald Trump here in Washington says he's still not decided on new car tariffs in Europe, and Theresa May's majority in Britain gets ever

thinner just as she's going to head for last-minute talks to Brussels.

We're live today from a snowy Washington, D.C. on Wednesday the 20th of February. I'm Richard Quest on my way to the Fed where I mean business.

Good evening from Washington where tonight, the Vice Chairman of the U.S. Federal Reserve tells us monetary policy is in a good place and he speaks

as the Fed minutes are released just an hour ago. The minutes are casting doubt on whether rates will rise this year.

In my exclusive interview with Vice Chair, Richard Clarida, he tells me China worries him the most when it comes to slowing growth. The topics for

discussion tonight include the key decisions that the Fed must make, and those include drawing down on its multitrillion dollar balance sheet. The

Fed minutes suggest an announcement on halting reductions might come within months and then, you have the impact of the global slowdown. The dual

mandate of maximum employment versus stable prices and, of course, long- term interest rates.

You have the infamous dot plot maps which helps members of the MPC and it shows where they're thinking is on future rate rises, and the pace of those

rises, and any possible pressure from the President.

It's a busy interview and we have a busy hour ahead. I started by asking Richard Clarida if December's rate hike, which came despite signs of

economic softening was justified?

(BEGIN VIDEO TAPE)

QUEST: Just to start, the question of policy, monetary policy, in hindsight, was the hike in December a mistake?

RICHARD CLARIDA, VICE CHAIRMAN, FEDERAL RESERVE: Well, Richard, I don't think so. You know, 2018 the economy grew around 3%. Unemployment rate

near a 50-year low. Inflation very close to our objective of 2%. So it made sense to normalize policy in 2018, and I have absolutely no thoughts

otherwise right now.

QUEST: Right. Except that the sharp U-turn, the hand brake turn in policy statements from December through to January was pretty exceptional.

CLARIDA: Well, I really don't think so, if you actually go, as I'm sure you have gone back and looked at the transcript of that press conference

and what we've said, I really don't think it's a U-turn. What we said going to 2019 is that we were looking at global development. We were

looking at adjustments in financial markets and that was also something we emphasized at our January meeting. I think policy right now is in a good

place and we've emphasized that.

QUEST: Where is policy? Is it wait and see? I will save you the breath of data dependent.

CLARIDA: Okay.

QUEST: I realize everything is data dependent, but where is policy now?

CLARIDA: Well, Richard, we think policy right now is in a very good place and that's appropriate because the U.S. economy is in a very good place.

We can afford to be patient and we can afford to let the data come in and tell us a little bit about where the global economy is going, but we think

policy is in a good place right now.

QUEST: By patience --

CLARIDA: Right.

QUEST: I'm not trying to parse words, but what do you mean by that?

CLARIDA: What I mean by patient is that we have done a lot of normalization of policy over the past three years. We're very close to our

mandate objectives of full employment and price stability and with that set of initial conditions, we can afford without any presumption about timing

to look at the data coming in tell us what the next adjustment in policy might be.

QUEST: So when the market looks and the plot suggests, everybody thinks one more move this year.

[15:05:08]

QUEST: Does that seem reasonable?

CLARIDA: Well, there is certainly scenarios where that would be appropriate. There are other scenarios where we might not hike at all. It

really is going to depends on how the data comes in.

Let me talk a little bit about the dots. The dots give information about how individual participants, all 17, individually look at different

scenarios for the outlook. But we don't vote on the dots. The dots are not a policy decision. They're one input into a process. So I wouldn't

read too much into those dots right now.

QUEST: What about, then, on the slowdown that is happening?

CLARIDA: Yes.

QUEST: Of all the factors pushing the slowdown, what are you most concerned about?

CLARIDA: Well, so far, we have to admit, Richard that we don't have all the data we usually do right now. So, it's not even clear how much of a

slowdown, if any that we are seeing in the economy. The data, of course, was delayed by the government shutdown.

Obviously there's a range of indicators that we look at. The labor market data is still strong. We've had some softer retail numbers. So we're just

putting that together right now.

QUEST: You've got China slowdown.

CLARIDA: Yes.

QUEST: You've got Brexit.

CLARIDA: Yes.

QUEST: You've got the trade war, which of those three concerns you the most?

CLARIDA: I think broadly because China is such a big part of the global economy, obviously, you know, a sharp slowdown in China, which we don't

foresee. But if it were to happen, that would have consequences for all economies in the world, including the U.S. Brexit, with all due respect,

it is primarily big impact on the U.K. economy -- a huge impact to the U.K. economy.

We're very attentive to making sure that were a hard Brexit to happen that the global financial system and the plumbing would continue to function and

we're confident of that. But we don't see Brexit as being a big systemic risk for the U.S.

QUEST: And China and the trade war.

CLARIDA: It's not yet a trade war.

QUEST: Or we can discuss it.

CLARIDA: Oh, yes, of course. No, there are obviously, very important ongoing discussions between the U.S. and China on trade. That is the most

important trading relationship in the world. You know, obviously there are different scenarios for that. So far, it has not had a big impact on the

economy.

QUEST: The Fed's balance sheet.

CLARIDA: Yes, sir.

QUEST: It is esoteric in to the realms of economic books, but now, it is in the news.

CLARIDA: It is.

QUEST: The idea that you may stop running down the balance sheet because of your higher levels of reserves. Are you going to?

CLARIDA: Well, what we announced at our January meeting, Richard, is that we've made an important decision at that meeting which is we're going to

formally adopt and embrace the operating framework we have, which requires that we have ample reserves in the banking system.

Now that we've made that decision, in coming meetings, we can make important other decisions such as when to bring the process of shrinking

the balance sheet to the end and the pace at which to do that. We have not yet made that decision, but we will be discussing that in future meetings.

QUEST: Are you close, do you think, in your view? Not in the committee's view, in your view, are you close to the point where if you're going for

abundant reserves policy, it's best to let it now settle.

CLARIDA: Well, let me put it this way, there are a number of estimates by outside observers that to run an ample reserve system would require reserve

somewhere in the neighborhood of $1 trillion to $1.2 trillion with a buffer and under the current pace of normalization, we would get to that level

sometime later this year or early next year. So I'll just leave it at that.

(END VIDEO TAPE)

QUEST: So now, we've got today the minutes of the latest or the last Federal Open Markets Committee. They ran into some 21 pages and reading

closely between the lines, exactly what the Feds thinking was or what they mean on monetary policy. But trying to interpret what the Fed is thinking

and exactly how it can be notoriously difficult.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, former FEDERAL RESERVE CHAIRMAN: That the application of these emerging technological synergies would engender a significant

increase in rates of return on new investment.

(END VIDEO CLIP)

QUEST: Now, when the former fed Chair, Alan Greenspan did speak, Fed speak. There was no guarantee you would be any closer to understanding

what he had actually said. Under Ben Bernanke, the Central Bank pledged to bring an end to Fed speak. And of course, communication has gotten much

better over the years. However, what they say, how they say it and how they tell us about it continues to be an albatross around the Fed's neck.

(BEGIN VIDEO TAPE)

QUEST: The subject of communication.

CLARIDA: Yes, sir.

QUEST: How the Fed communicates, the statement, the minutes, interviews like this. You're in charge now. You've been asked to look at whole

question of communication.

CLARIDA: Yes.

[15:10:10]]

QUEST: How are you going to do it?

CLARIDA: Well, we have a subcommittee to do that, ultimately that will be a decision by the full committee. We're beginning those conversations.

Now, there are various elements to communication, obviously, the statements that we issue after every meeting. Chair Powell is doing eight press

conference a year, so we have a number of avenues to communicate and we're looking at the way those could be refined and worked together.

QUEST: Can I just read you --

CLARIDA: Oh, wow.

QUEST: From the Fed transcripts of 2003, one of your predecessors. Vice Chairman McDonough talking about statement. "The idea is to have the

possibility, but not the certainty of a move. Otherwise, the market will be waiting every morning for us to have a meeting." Nothing has changed.

CLARIDA: Nothing -- the old saying, the more things change, the more they stay the same. A very prescient comment from Bill McDonough there.

QUEST: But he's right. I mean, what can you do? Because if you say to me we're thinking of moving. I will say to you, when? If you say, "Oh, maybe

next week." Are you sure, Monday? Tuesday? Or Wednesday?

CLARIDA: Right, and, of course, and I think what you're pointing to here is the fact that we want to be transparent. We want to convey to the

public the way that we're thinking. The reality, though, Richard is that at different points in the economic cycle, there are different amounts of

information that you can provide and I think that what we want to recognize is that there's not a one-size fits all model for Fed communication.

QUEST: You had a dinner with the President along with the Chair.

CLARIDA: I did.

QUEST: Did he put pressure in a sense?

QUEST: What I will say about this is that it was an enjoyable dinner. We basically talked about the economic outlook and the global outlook. We did

not really get into monetary policy beyond what the Chair had said in the January statement.

QUEST: Your immediate predecessor, Stan Fisher said on the same program that you used to be on "Quest Means Business," he said that you never

really know if pressure is being effective because you are never really are sure whether there's someone in the meeting hasn't been in any way affected

by a strong statement from him, he is after all, the President.

CLARIDA: Well, let me just say this very clearly and without any equivocation. We have a simple mandate given to us by the Congress. It's

a dual mandate. Our job is to use our tools to achieve maximum employment and price stability. That is the only thing that motivates me and my

colleagues. We have a process here. It's not just us. We have Reserve Bank Presidents and I can tell you, I don't feel the pressure. The only

pressure I feel is to do the best job we can to keep the economy at full employment and price stability.

QUEST: Finally, coming back to this question, if you were sitting on the set with me, all those months ago in your previous life.

CLARIDA: Yes. Up in Columbus Circle.

QUEST: Yes, absolutely.

CLARIDA: Lovely part of the city.

QUEST: I would have asked you, so Mr. Clarida, should the Fed move? Is it time for the Fed to move? Is the Fed policy right? Well, that was then.

CLARIDA: Yes.

QUEST: If I now ask you the same question, should the Fed move? Is the policy right? Would your answer be that much different?

CLARIDA: What I'm saying to you right now, in February of 2019 is I think monetary policy is in a very good place. The economy is in a good place.

It's appropriate now and we can afford to be patient to decide on the next adjustment, and that's, I think what I would say on your set.

QUEST: We'll never know.

CLARIDA: Well, I wouldn't say we, I would say they.

QUEST: They. Which brings me neatly to the we from the they to the we. As somebody who has spent their entire professional career, you know,

you've been in government.

CLARIDA: Yes.

QUEST: But analyzing what this building does. How different was it going from they to we?

CLARIDA: Here is the way I would put it, as an academic and a Fed watcher, I had the luxury of just focusing on one piece, an important piece of what

the Fed does which is to decide to move interest rates up or down. Once you get inside the building, you realize the complexity and the interaction

among many things the Fed does.

It has a big role in financial regulation and supervision. It has a big role if you will on the plumbing of the financial system and what I

realized is that all of these interacting impinge on one another and I had not appreciated that before I got in the building.

QUEST: And the first time you sit in the board room and cast a vote. This is something that you have written about, studied, commentated on and now

certainly, I'm not sure whether it is gamekeeper turned poacher or poacher turned gamekeeper. I don't know which is appropriate.

CLARIDA: Well, it was a very humbling and exciting moment. Absolutely. It's something I take very seriously and it's an honor and privilege to be

selected and to be able to do this.

[15:15:10]

CLARIDA: So I don't take it for granted any day.

QUEST: Vice Chair, thank you.

CLARIDA; Thank you.

(END VIDEO TAPE)

QUEST: And then later at the very end, we'll show you what the room where they make those decisions looks like. It's the room -- the board room.

Now, in the final hour of trading, up the road in New York. The Dow is up, that you can see around 55 points after a day of eking out small gains and

losses, bouncing around to zero.

Paul Donovan is the chief economist at UBS Global Wealth Management and he joins me from London. Paul, listening to what Richard Clarida says there

on the question of patience and he is comfortable being patient with monetary policy in its current stance. What do you make of it?

PAUL DONOVAN, CHIEF ECONOMIST, UBS GLOBAL WEALTH MANAGEMENT: Well, I think it was largely as expected. I mean, the Fed was very, very on message at

the start of this year. I mean, it was almost Stalinist in terms of the clarity of communication that we have coming out, cadre after cadre saying,

patience and we're not going to move now and so on and so forth.

So I don't think there's a huge surprise from what the Vice Chair has been saying or indeed what the minutes were saying today. It's clear they're

going to pause. I think that they will raise rates later this year. I think they should raise rates later this year. But for now, I think they

want to pause. They want to let things settle down.

And of course, they want to see what some of the other unknowns in the global economy are going to be doing over the course of the next three or

four months.

QUEST: And what about his comments on the balance sheet? It could be somewhat esoteric sometimes, but the balance sheet has become extremely

important. And somewhat controversial as they decide how far to run it down. Why is this such a difficult issue for them?

DONOVAN: Well, I think it's a very difficult issue. As an economist, it's not a particularly difficult issue to decide that you want to have a

balance sheet which reflects money supply, cash supply that is more or less in balance with money or cash demand. I mean, that's the raison d'etre of

any Central Bank.

But what has happened is a small group in the markets have got a bee in their bonnet that this is somehow going to cause chaos in the financial

markets, now we think it's nonsense. The Fed thinks it is nonsense. Any right thinking rationale person knows this is nonsense. But that did add a

little bit of volatility in the end of last month, sorry, at the end of December when we had very thin market conditions.

The Fed minutes acknowledge this, but there's a little bit of concern that even though it's nonsense, if enough people believe the nonsense then it

might cause some problems down the line.

QUEST: And on the question of this particular Fed, it's got a new Vice Chair, Richard Clarida. It has a new Chair, Jay Powell, it's still missing

two members of the board, but are you seeing either in actions and minutes and statements, are you seeing it finding its feet? Sort of learning to

speak its voice?

DONOVAN: I think it's going through what a lot of Feds in the past have gone through when we change the chair that the Chair tends to find a little

-- it takes a little time to understand just how much you guys obsess about everything they do.

And the media over analyzing every 30 seconds, you know, what the Fed Chair is speaking or whatever. So we've had a little bit of misspeak at the

start, but that's -- it's not that unusual. We do, of course, have a Fed Chair who is not an economist. This is very unusual. Powell is a lawyer,

a great regulator, but perhaps, you know, he doesn't necessarily have quite the same authority on economic matters that say Yellen did or Bernanke or

Greenspan before them or Volker even.

So there's perhaps a little bit of question there. But there are other people on the Fed like Williams, the New York Fed President who is an

extraordinarily well-regarded economist and they are able to speak with authority and of course, with a wealth of experience.

QUEST: Good to see you, Paul. Thank you. Paul Donovan in London.

DONOVAN: Thank you.

QUEST: Later in the program, we will have more from the Fed Vice Chair, Richard Clarida. He gives me a tour of the Federal Reserve Board Room.

This is where the decisions are all made. And the Mueller report is coming. The question is how much the U.S. Congress will actually get to

see? We will get some interpretation on that.

(COMMERCIAL BREAK)

QUEST: A warm welcome back to "Quest Means Business." Live tonight from Washington, D.C. where CNN has learned that the Special Counsel, Robert

Mueller's Russia report could be delivered to Donald Trump's new U.S. Attorney General as early as next week.

It is the clearest indication yet that Mueller is wrapping his nearly two- year investigation. One his pressing questions that the new AG will face, William Barr, is how much of the report should be disclosed to Congress.

The President says the release of the findings will be totally up to the Attorney General.

Now, our political editor, CNN political editor, David Chalian is with me. Good to see you, sir.

DAVID CHALIAN, POLITICAL EDITOR, CNN: And you, sir.

QUEST: This Mueller report coming to an end. First of all, will he have any more indictments?

CHALIAN: Unclear. I don't know if there may be more indictments on the Russian front. Do you remember that?

QUEST: Yes.

CHALIAN; The initial indictment started and there doesn't seem to be more indictments about Trump's inner circle.

QUEST: Right, because the sort of question, I mean, the sexy question, to some extent is his family. the accusations about Eric or Don Jr. was going

to --

CHALIAN: I mean, as you know, Bob Mueller has been keeping his cards close to the vest on this. We don't know that indictments are coming, when

they're coming kind of a thing, but right now all indications are that this is being wrapped up, not that new phases are being moved.

QUEST: Once this report is handed over to the Attorney General, it would be extraordinary would it not, of it at least, some of it wasn't made

public?

CHALIAN: Oh, I think it would be. And in fact, as you know, Americans agree in total on very few things. One thing that our last poll showed

that nearly nine in ten Americans agree about is that this report should be made public. Eighty seven percent.

QUEST: In its entirety?

CHALIAN: Well, it didn't ask in its entirety, but made public. There were obviously, I think the public would understand some national security

redactions. There are certain things that not every word needs to be made public, but a public reporting of the findings is something that the

American people are demanding and they want it. And by the way, that is Democrats, Republicans, independents, 80% of Republicans say that in our

poll.

QUEST: So far, and I think I've asked you this before, but I think it is worth going again, so far nobody has been prosecuted for actually the core

allegation of collusion with Russia?

CHALIAN: Right.

QUEST: We've had --

CHALIAN: Or the conspiracy, exactly.

QUEST: Of the conspiracy. There are a lot of stuff around it. You lied when you were asked about it. You didn't do this, that, or the other

before it. You had talks and met somebody related to it, which you were untruthful about, but on the core allegation --

[15:25:10]

QUEST: Nothing.

CHALIAN: Well, we haven't seen that yet, right, we haven't seen any prosecution on that. Of course, I think the lying part that you bring up

begs the question why are you lying about something that you have now either admitted you lied about or you've been charged with lying for if you

weren't doing that to cover something up. I think that's a question that lingers that Mueller needs to explain.

QUEST: Good opportunity since we are here on home turf, sir, and thank you, to just consider how much of this city - it's paralyzed today because

of the weather, by the way, you get a half an inch in snow in Washington, the whole place just shuts down. I was in Helsinki last week. That's

another story.

CHALIAN: Exactly, yes.

QUEST: But how much of the city has been -- the work of politics in the city -- is governed and has been paralyzed by this investigation?

CHALIAN: Well, there is no doubt that the politics around the President teeing up his reelection effort, obviously, his strategic decision making

about constantly sort of attacking the investigation and getting his base all riled up to remain very supportive of him has all been in the

anticipation of this moment.

So this town has been frozen politically in many ways awaiting what this reveals. However, we should note in all the court filings, in all the

cases that have been prosecuted already, we've seen a lot of a sort of public narrative out there about what Mueller has been looking at. So I

don't know that there are going to be bombshells.

QUEST: Oh.

CHALIAN: But there may be a tying together of the complete picture.

QUEST: Well, hopefully you will come on "Quest Means Business" and help us all understand what happens.

CHALIAN: Sure, yes.

QUEST: Very kind.

CHALIAN: Great to see you.

QUEST: Go on, you get going. You can have one. Have one. Yes, very nice. Thank you.

CHALIAN: Thank you. In a moment, Westminster walk out. Tory MPs quit the Party over Brexit. We are live in London and Brussels.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment. When Donald Trump says it's either a trade deal with Europe

or new tariffs on cars. And you'll hear more from our Richard Clarida.

This time, he shows me around a hallowed Fed boardroom. As we continue tonight, this is CNN, and on this network, the news and the facts always

come first.

CNN is hearing the clearest indication yet that the special counsel Robert Mueller is nearing the end of his investigation into the Trump campaign's

ties to Russia. Sources say the Justice Department is preparing for Mueller's final report as early as next week.

Bangladesh says it won't open its stores to a teenage girl who joined the terror group ISIS in Syria. Shamima Begum was born and raised in Britain,

but was stripped of her citizenship there. Her family is of Bangladeshi origin, Begum wants to go home to the U.K. after giving birth last weekend

in a refugee camp.

The vice chair of the Federal Reserve says the U.S. economy is in a very good place right now, and that gives the central bank some breathing room.

Speaking exclusively to me on QUEST MEANS BUSINESS, Richard Clarida says the Fed can afford to wait on its next move while the U.S. economy is so

strong.

(BEGIN VIDEO CLIP)

RICHARD CLARIDA, VICE CHAIRMAN, FEDERAL RESERVE, UNITED STATES: Richard, we think policy right now is in a very good place, and that's appropriate

because the U.S. economy is in a very good place. We can afford to be patient and we can afford to let the data come in and tell us a little bit

about where the global economy is going. But we think policy is in a good place right now.

(END VIDEO CLIP)

QUEST: And so to London where the strain of Brexit is tearing apart the Prime Minister's party. Three Tory lawmakers quit on Wednesday over what

they called Theresa May's disastrous handling of Brexit. All three will sit with the newly formed independent group started by Labor defectors

earlier this week. There was palpable furry from the former conservatives for their old party.

(BEGIN VIDEO CLIP)

HEIDI ALLEN, BRITISH INDEPENDENT MEMBER OF PARLIAMENT: The conservatives were always recognized as the party of economic competence. But when we

allowed a cabinet minister to say "f" business, and we had a Prime Minister bullied into submission by the ARG(ph), and is now dragging the

country and parliament, kicking and screaming to the edge of a no-deal abyss -- I'm done.

(END VIDEO CLIP)

QUEST: Hours after the rebellion, Theresa May met with the European Commission president for more talks in Brussels. This was her take away

from that meeting.

(BEGIN VIDEO CLIP)

THERESA MAY, PRIME MINISTER, UNITED KINGDOM: Oh, I've had a constructive meeting with President Juncker this evening. I've underlined the need for

us to see legally-binding changes to the backstop which ensures that it cannot be indefinite.

That's what is required if a deal is to pass the House of Commons. We've agreed that we're to find a solution, we'll continue at pace. Time is of

the essence and it's in both of our interests that when the U.K. leaves the EU, it does so in an orderly way.

(END VIDEO CLIP)

QUEST: Phil Black and Erin McLaughlin is in Brussels, both of you. So we do -- Erin in Brussels where the PM was. Does the commission and the

council -- does Brussels now realize that this situation in London is dynamite? Are they prepared to move and give the legal backstop the PM is

requesting?

ERIN MCLAUGHLIN, CNN CORRESPONDENT: Well, that was a topic of this meeting between Theresa May and Jean-Claude Juncker; the president of the

commission. Out of that meeting, they released a joint statement outlining three areas of discussion going forward, committing to look at alternative

arrangements to the backstop in the future.

Also, committing to looking at that political declaration, the future relationship ways of strengthening that. But critically, one of the main

areas they're going to look at going forward, topic for discussion is guarantees and legal assurances to underline the temporary nature of the

backstop itself.

It was notable in that joint statement, no mention of changes to the Withdrawal Agreement specifically. But those are the areas the sides are

going to be looking at as this process unfolds in the coming days going forward. The key question here, Richard, is whatever comes out of this

process, will it be enough? And there's deep skepticism --

QUEST: All right --

MCLAUGHLIN: That any sort of agreement that the two sides could possibly reach, if that will be enough for MPs back in London.

QUEST: Phil, in London. Parliament is up in uproar, you've now got what -- primarily, what is ten members of the independent group, I think. What

happens next in Britain?

[15:35:00] PHIL BLACK, CNN CORRESPONDENT: A small correction, Richard, 11 members now. Which is interesting because a few days ago, there were none,

there was just simply talk of a new centrist movement. Now, it has taken shape and form. You had the eight Labor MPs -- former Labor MPs joining

first and now three from the conservative party.

Now, what does this mean? Well, in a sense, it doesn't change the eminent arithmetic when it comes to Theresa May getting her Brexit deal through

parliament because these are people -- well, their position on this is already known.

They oppose Brexit, they oppose her deal, they've already voted against it, they're all expected to do the same. And so, Prime Minister isn't chasing

them or relying upon them to vote for the deal and get that majority through the House. That said, what people from both Labor and the

conservative party, the split is from both of those party if you like.

What they say is that they hope the knowledge that others could now join them adds pressure to both leaders if you like, to reconsider their policy

steps going forward --

QUEST: Right --

BLACK: That it could influence the decisions they make in the coming days.

QUEST: So in all of this, is it most likely that the clock on the screen shows 37 days. Is it most likely that everybody says no deal is not what

they want. To you first, Phil, that they just simply lift the deadline, that they extend article 50.

BLACK: So the expectations is that the Prime Minister doesn't come back with a deal next week, then parliament will take over proceedings. At

least, to the degree which it will -- I mean, that it will force the government to delay article 50.

That is the expectation. That said, it's been the expectations before and parliament has blinked or at least kept its power to drive depending on how

you look at it. But the expectations is they would do so this time. That said, it's not a guarantee, and as you point out, the clock is ticking.

QUEST: And, finally, briefly, if parliament does come back, asking for an article 50, bearing in mind that there's no greater search here for what

the deal would look like. But in Europe, to prevent chaos, would they grant it?

MCLAUGHLIN: Well, the sure answer to that question, Richard, at this point is yes. Jean-Claude Juncker; the president of the Commission said as much

earlier in the week, saying that the Commission would support an extension regardless.

The issue here of course is that the U.K. needs to request an extension and that would require an act of parliament which at this point is not on the

cards. Despite the fact that we are 37 days away from this cliff edge.

QUEST: Erin and Phil, thank you both. In the past hour, Donald Trump says he's certainly thinking about European car tariffs, and that could come as

a surprise for Jean-Claude Juncker, who said Mr. Trump gave him his word, there would be no new tariffs.

Global Automakers is a trade association run by John Bozzella, he's with me now. Good to see you, sir.

JOHN BOZZELLA, PRESIDENT & CHIEF EXECUTIVE OFFICER, GLOBAL AUTOMAKERS: Good to see you, Richard, thank you.

QUEST: So the understanding over no tariffs was largely based on the meeting that Juncker had here in Washington. Which sort of pushed

everything down the road. Is it your view that now tariffs are back?

BOZZELLA: Well, you know, Richard, here is the problem. The problem is that an investigation was begun under a section of U.S. law that required

the Department of Commerce to send the president a report making tariff recommendations. That report was due Monday or Sunday. And when that

report went to the White House, it likely recommended tariffs.

QUEST: But that recommendation of tariffs by a report looking into the situation. Which part of the problem. Which -- Trump's -- which the fact

that he has this agreement not to do anything or this report?

BOZZELLA: It's an excellent question and I would hope -- I would hope that the Trump administration keeps its word, and that we negotiate an agreement

with the EU. My concern is that this report is a secret plan to impose taxes of thousands of dollars on hardworking Americans in the form of car

taxes. That's a problem.

QUEST: Right, but those tariffs, if they were introduced -- I mean, they're already existing tariffs. Famous one of trucks --

BOZZELLA: Yes --

QUEST: Twenty five percent on --

BOZZELLA: Yes --

QUEST: European trucks. Which apparently, according to -- nobody really knows. I mean, we know how it started, but nobody really knows how to get

rid of it. These tariffs, what would be the damaging effect of them?

BOZZELLA: Yes --

QUEST: Because remember, many of European carmakers are manufacturing in this country anyway. They all have factories.

BOZZELLA: That's exactly right. Half the cars that are made in the United States are made by internationally-named plate manufacturers. Here is

what's going to happen, Richard, prices will go up on average about $37,050 a car as a result, demand will go down.

[15:40:00] Used car prices will go up because people will go into the used car markets. Prices where servicing and maintaining cars will go up and

the industry --

QUEST: But --

BOZZELLA: Will suffer.

QUEST: Will those tariffs hit those European cars manufactured in the United States?

BOZZELLA: Yes, they will. And the reason for that is every car will be subject to these tariffs because every car, even those made in the United

States have some level of imported content, some parts --

QUEST: That's the origin --

BOZZELLA: You got it. And so as a result of that, every car would face a tariff.

QUEST: But including -- but then again, it's really messy because you can -- you can construct the tariffs so that they don't include U.S. car

manufacturers.

BOZZELLA: Well, that remains to be seen. I'm not quite sure how you could do that because a Ford that's made in the United States has about 25

percent foreign content in it just like a BMW made in South Carolina has a certain amount of foreign content in it.

It would be very difficult to do that. I suppose the president could exempt certain countries and suggest, for example, hey, look, we've got a

good deal with the EU, let's not impose those tariffs, but we should impose them on Japan or vice versa.

QUEST: That's exactly what will happen --

BOZZELLA: But it could -- yes --

QUEST: Because he obviously doesn't want to hurt Ford, Chrysler and General Motors in that sense. This is designed to hit the European

carmakers.

BOZZELLA: It could very well be. But the problem is, it will hurt Americans just as much because choices for consumers will go down, prices

will go up and American workers building cars with foreign content will be hurt as a result of this. It's a bad idea.

QUEST: Very glad that you came in, sir --

BOZZELLA: Well, thank you, Richard --

QUEST: For talking about it on a day like there's snow, it's not that heavy but it's not very nice out there. Thank you very much indeed, good

to see you.

BOZZELLA: Thank you.

QUEST: As we continue now, a whole new foldable Galaxy. Samsung unveils its latest phone and the price tag is considerable.

(COMMERCIAL BREAK)

QUEST: So the folding phone, it was once in the past, it's now in the future. Maybe not a flip phone per se, but if Samsung is to be believed,

the company just unveiled its newest range of gadgets. It's the Galaxy fold that is making the headlines and not least for its hefty price tag.

Samuel Burke is with me. Two questions, why is this different from a flip phone which used to sort of fold into itself, and how expensive is it,

anyway?

[15:45:00] SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY CORRESPONDENT: Richard, it's similar to a flip phone, in the sense that they were trying

to get more features into a smaller space. You fly on airplanes more than anybody.

So you know now when you're flying, people are watching their Netflix and Amazon series like this. They'd rather hold up a phone than watch the

movies on the airplane -- at least, a lot of folks. So what are they thinking here?

Well, they're thinking is, you can have a Netflix series playing and you can fold the phone and maybe watch it that way on the seat -- on the little

table in front of you, for example.

And they want you to be able to do multiple things at once. We're multi- taskers. So you can watch that Netflix series, Google who the actor is and at the same time text Richard Quest about the series that you're watching

on Netflix. The price point is incredible, almost $2,000, Richard.

QUEST: Hang on, I'm lost here. So where is the folding bit?

BURKE: The folding bit is actually the screen. The phone actually bends. It's a phone that becomes a tablet or maybe it's a tablet that becomes a

phone. So, on one side, and we're showing it right now full screen, so we can go through it step by step.

Right now, you're seeing the two phones, but once it flips over, that's where you're going to see the tablet. And that price may sound incredible,

Richard, even compared to the iPhone which is about $1,500 for the most expensive version. But think about this, Samsung knows that they have so

many price points for entry into the market.

Many more than apple, so they have their cheap phones and their luxury phones. And that's the word that they kept on using over and over again --

QUEST: I think I've got it!

BURKE: Luxury.

QUEST: I think I've got it. It's so -- I envisioned of a sort of -- a bit of origami where you're folding something in like this to make it smaller.

But you're talking about folding -- I think about $2,000. What's wrong with that? It sounds like a good -- it sounds like it's a sort of a good

price for a solid bit of technology.

BURKE: Listen, the starting price is $1,980. So who knows what the most expensive version will cost. They usually talk about it later on. It's

going to be available April 26th. You can see the size of this screen there. Two batteries, of course, you're doing all that computing.

But Richard, at the end of the day, this event is actually a crucial one in the history of smartphones. The Asian smartphone makers have pulled so

far ahead of Apple, not just in terms of market share. Samsung, 20 percent, Huawei with about 16 percent, I believe, both ahead of Apple.

These smartphone makers in Asia are all going to have folding screens. Huawei, Xiaomi, Samsung, we don't even know when Apple is going to have

one. The Asia one is in the next few months. Listen, Richard, this is a totally different era where these companies, as controversial as they

might be like Huawei have pulled far ahead in the innovation department.

And that really tells us everything about the trade war. And tells us why Apple is suffering, in part, with their low sales numbers because they

haven't been able to --

QUEST: Right --

BURKE: Innovate under Tim Cook the way they did under Steve Jobs.

QUEST: Excellent, all right, thank you --

BURKE: I like your origami.

QUEST: Yes, well, I do -- I can do all -- you can do all sorts of things with a piece of paper. Right, after the break -- thank you, sir. In a

special QUEST MEANS BUSINESS, we're in Washington. I go inside the Fed with the Vice Chair Richard Clarida. It's a rare honor and I simply

couldn't resist a selfie, sorry.

[15:50:00] (COMMERCIAL BREAK)

QUEST: The board room at the Federal Reserve where history is made. Where legendary figures in U.S. economics make the decisions which decide how we

all get to spend our money. And what's the point how much money we have to spend after interest rates go up or down.

The board room of the Fed is unlike the Oval Office or the houses of parliament. The entry of cameras is rarity. And today, I was given a

guided tour by the Vice Chair himself who told me how honored he was just to walk through its halls.

(BEGIN VIDEO CLIP)

CLARIDA: I get chills every day walking in. It's a lot of history in this building in these hallways. As you'll see, it's pretty compact in here.

The governors are all along this corridor. So when I want to see Chair Powell or Randal Quarles or Brandon(ph) here, Nikki Bowman(ph), it's not I

have to make an appointment or 20-minute walk, is you just walk down the hall.

QUEST: Do you -- I mean, do you really do that?

CLARIDA: Oh, yes --

QUEST: Are you popping into each other's offices and sort of ever seeing this or coffee for that or?

CLARIDA: Certainly, you know, Chair Powell has walking privileges as the other governors. And we see each other a lot. We have lunch, right,

really, I mean, I gave you a little tour of the board room.

QUEST: Yes --

CLARIDA: And this is obviously --

QUEST: There it is.

CLARIDA: The CEO --

QUEST: Wow.

CLARIDA: So Richard, this is where it all takes place. Eight times a year. I always wonder how they come up with eight, not twelve or six, but

eight times a year. So we meet. I can come show you --

QUEST: Yes --

CLARIDA: Our chairs. We actually -- in case we forget, we actually have little labels indicating where we sit. So you'll see this is my seat, and

this is Chair Powell and Vice Chair Quarles and Governor Brainard. And boom, and so we all sit along this side --

QUEST: Or so the governors are on this side.

CLARIDA: The governors are on this side, and then when we have meetings of the full committee, the rest of the committee members, the Reserve Bank

president, Chicago and New York, Philadelphia will all sit around the table. And then the rest of the room is filled with staff.

So these are big meetings, as you see, it fills the room --

QUEST: And is a cutting thrust or is it -- I mean --

CLARIDA: Excuse me?

QUEST: Is the cutting thrust --

CLARIDA: Oh, sure. And luckily, for Fed watchers, there are transcripts in the meetings released with a five-year lag. So you can go back --

including sometimes attempts that you know they'll work and sometimes don't work. I should say, although we -- you should look at these plaques.

They're very interesting.

This room was actually used extensively during World War II in order to basically game-plan the D-day invasion. It was done in this room. Read

the plaque. "The decisions reached in this room during 43 and 44 set the pattern for allied collaboration for and the successful prosecution of

World War II.

QUEST: And all the reserved notes on the wall.

CLARIDA: And we have some reserved notes on the wall. And we have a nice big map appear to remind us of the country is divided into 12 Reserve

districts, and so that map indicates that.

QUEST: Final question --

CLARIDA: Yes --

QUEST: So unless I'm accused of squeezing more out. Final question, is it more difficult for you. You used to commentate, you're an expert, an

economist. Is it more -- was it difficult for you to realize that the sort of things you might have said on my program, you can no longer really just

as freely say because it'll move markets?

CLARIDA: Well, that's obviously a consideration and also I try to be very careful during any event to distinguish between my particular view and the

sense of the committee. Because any decision on policy is a committee decision, not a Richard Clarida decision. So I try to be careful of that.

QUEST: But you can't just freelance?

CLARIDA: I try not to freelance.

QUEST: Vice Chair, thank you very much.

CLARIDA: Thank you.

QUEST: Thank you for showing us around. This is --

CLARIDA: Absolutely --

QUEST: Magnificent. Much appreciated --

CLARIDA: Thank you, sir.

[15:55:00] QUEST: Thank you.

(END VIDEO CLIP)

QUEST: Right, Richard Clarida showing me the Fed's board room. We are just a few moments away from the close of play on Wall Street. The Dow

having really been pretty indecisive. Late afternoon has roared back to something -- well, 55, how do you roar?

But we are now over 25,900, comfortably so, which begs the 26,000 question. And if you look over here, the Dow Jones, the Caterpillar is up 3 percent.

But interestingly, Wal-Mart has given back the two or 3.5 percent that it gave the other day, Walgreens.

So retailers are lower, Caterpillar is the best, Boeing is also strong on trade talks, just the old trade talks of fairly even balance across the

Dow, which is why you're seeing it reflected in the market and the closing bell in just seconds from now. We'll have our profitable movement with the

closing bell.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment. It was a rare treat and an honor to be invited into the Fed today to meet the Vice Chair Richard Clarida. And

what we saw and what we've heard I think bears out what we are seeing from the Fed. A Fed that is finding its feet and Jerome Powell that may have

had a misstep or two -- they would deny that.

But may have had a tweak on policy, but now is aware where the risks are and is clear patience is a virtue. There's nothing wrong with waiting and

seeing. Nothing wrong with taking time to see this data that they claim the data dependents upon which it depends.

There are real risks -- China, Brexit, an economic slowdown. But from what Richard Clarida was telling us tonight, the economy in the U.S. is solid

and strong with good growth in the foreseeable future. And as for all the noise from presidents and others, well, they'll just ignore all of that

and get on with the job.

And those seats are on the board table, they're very comfy, too. And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in Washington D.C.

Whatever you're up to in the hours ahead, I hope it's profitable.

(BELL RINGING)

Jake Tapper in the next studio with "THE LEAD" is next. The bell is ringing.

END