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QUEST MEANS BUSINESS
U.S. Stocks Fall As Recession Indicator Flashes; New Revelations About Boeing 747 MAX; Theresa May is back in London; Mozambique Cyclone Death Toll Nears 300; New Zealand Holds Memorials to Remember Attack Victims; Pesticide Plant Blast in China Kills 47; Trump Defends Golan Heights Decision; Brexit Deadline Now April 12 as Cliff-Edge is Delayed; European Commission Chief Spokesperson Says the EU Hopes for the Best, But is Prepared for the Worst; European Stocks Lower as Brexit Warnings Signs Flash; U.K. Prime Minister: Might not Bring Back Brexit Deal if Support is Lacking; India's Former Central Bank Governor Says Central Bankers are Running Out of Options; Trump Orders Some North Korea Sanctions to Be Removed; Dow Suffers Heavy Selling in Last Minutes of Trading. Aired: 3-4p ET
Aired March 22, 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: There is an hour to go, we are entering the last hour of trading on Wall Street. The day has been down
throughout with the lowest point just before lunchtime, but a rally of sorts moving up, not much, we're still down 1% even worse for tech stocks
on the NASDAQ. And this is what's moving these markets.
Brexit -- Theresa May is back in London, and there are warnings about the economic damage of a no deal and they are getting dire. We'll hear from
the E.U. spokesman and the article -- the author of Article 50 joins us in this hour.
New revelations about Boeing 747 MAX. One airline says it will cancel its orders and President Trump is sparking confusion, withdrawing sanctions
that had just been issued by his own administration.
We are live I'm from London tonight. On Friday, March 22nd. I am Richard Quest. Yes, I mean business.
Good evening, we do begin with the markets tonight because what you're seeing there is an exact replica, or the opposite, I should say a mirror of
what happened yesterday. We are off the lows of 247 points. But the market yesterday rallies at more than 200. And today it falls more than
200. Just about Even Stevens to where we have been.
We take a look at the broader market. They are all off more than 1%. But the worst of the session, of course, going to the NASDAQ. You needs to
understand that we need to try and help you understand what driving the drop. Well, first of all, there was weak manufacturing data out of Europe,
Germany, particularly the biggest economy contracted for the third year -- third month, I should say in a row.
Then you have this so called inversion of the yield curve on U.S. Treasuries. That's pretty much on the 10-year to the three months, but it
is a signal or traditionally a signal of being a harbinger of recession, and finally stock specific factors. Nike and Boeing -- Boeing of course,
the largest stock component; Nike, a sizable component that's pulling it down.
Peter Tuchman is with me from the floor of the New York Stock Exchange. Peter, my friend, I am missing talking to you face-to-face, I shall return.
Do not worry. But we do need to understand why should we go up 200 yesterday, down 200 today?
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: Okay, so I thought, you know, you're I think we're sort of running into reality here a little
bit. Yesterday's rally did not make that much sense. The narrative seemed like there was just nothing negative going on and the people were just
buying it to cover or it's not clear. But today, it really seems like we've hit head on into a lot of reality.
The FOMC meeting from Wednesday seems to be coming into people's attention. Okay. Obviously, the news coming out of Europe on Germany and France was a
big deal, going negative on bonds there, it forced a lot of sort of, you know, flight to safety in the U.S.
Buying bonds, yields got smashed pretty hard today in an aggressive manner, and it seems like people are just coming out of equities and going into
bonds. You know, it's funny out from one day to the next, the narrative can change that much. I kind of think we've just hit head on into reality
about economic slowdown globally, and potentially, in the U.S., Richard.
QUEST: The shift into bonds and the inversion of the yield, arguably, is the most important because they are traditional barometers of something
going wrong, or at least something not that good.
TUCHMAN: A 100%, and look, I am not an economist, it's a little over my pay grade. But from the work I've done today, to try and really get an
understanding of why this market is so aggressively being sold. It is about the inversion of the yield curve. It is the fact that the three-
month and the 10-year are crossing each other and it really -- it shows that it's a flight to safety out of stocks.
We've had a fast and furious rally over the last 10 weeks. People were sort of wondering why and when that would end. And we sort of now, today
we're engaging negative economic data, and that's why they're selling them. I don't think either -- this is portend to further sell off. I don't know,
we've rallied almost 200 points off the lows of the day. Let's see how the day ends, Richard? You know, one day does not make a market, right?
QUEST: I always smile when I look. We are looking at the Dow 30 and Verizon is the biggest gainer when -- you always know, Peter, it is a
troubling day where the biggest gainer is Verizon. It's up 2.7%.
TUCHMAN: You know what, we've seen a couple of stocks get hit, you know, Boeing we had a problem with over the last couple of weeks.
TUCHMAN: We've had FedEx earnings that were weak. So somethings portend a bit of an economic slowdown, but I don't think it's the end of the world
QUEST: Peter, have a lovely weekend. Good to see you, sir.
TUCHMAN: You, too, sir. I'll see you next week.
QUEST: Thank you. Now, we turn to Boeing and you saw Boeing stock, which is down right about 2%. It is off about 12% to 15% from its all-time high.
As new evidence shows, Boeing promoted its 737 MAX as being fundamentally similar to other 737 planes. This is despite the addition of a new safety
stability system under investigation, so called MCAS. You're going to hear us talk about MCAS quite a bit.
Boeing told the airline customers, the model was such a close match. It required little additional pilot training. Drew Griffin is CNN's senior
investigative correspondent. He joins me now from Atlanta. Drew, if we start from an assumption that Boeing is not deliberately going out to sell
unsafe planes, or would not wish in any shape or form to have what happened happen, how then do we explain this reluctance or a refusal or inability,
whatever to say about MCAS in the training?
DREW GRIFFIN, SENIOR INVESTIGATOR CORRESPONDENT, CNN: Well, I think we have to learn from Boeing and eventually the FAA, what they thought about
MCAS and how different it was.
The FAA says today, that this runaway trim situation that MCAS may have triggered in these two crashes is not indifferent than other runaway trim
situations and the fix was kind of like the same. So did it require more additional training? The problem is, Richard, that pilots I talked to say
that one of the big fixes that they had for this is just to grab the yoke that does disable the MCAS or the pitching down of the system, but only
So if you didn't know the next step, to actually go down on the panel and turn off the cut-off switches, you would be in a situation where you're
constantly fighting your airplane, which wants to point nose down, you're grabbing the yoke trying to get it back up. And it may have created this
situation where pilots may not have been completely trained in this new system for just exactly how to handle a very, very quick moving situation.
QUEST: That's a very good explanation. The reality is though, the clearest indication that, frankly, Boeing and the FAA is wrong, in their
estimation, is the fact that it happened. Three, surely -- three sets of pilots, two in deadly cases, one managed to recover, but the because of a
third pilot did not put one-and-one together and come up with two in terms of the runaway stab solution, did they?
GRIFFIN: That's right. So the solution, according to the FAA and Boeing would have been simple. The question was with this minimal amount of
training, in one case, I talked to a pilot today he had 56 minutes of an iPad training session, go from the 737 800 to the 737 MAX. Was that enough
to handle a situation that nobody foresaw where you have the plane battling the pilot in a very precarious situation, taking off at a high angle.
QUEST: Do we know whether to add MCAS to the training would have appreciably lengthened it, if they put MCAS as a request? But it's an
academic question because it wasn't done. But in the sense that, you know, Boeing was selling this plane as being virtually needing no retraining, or
cross training, if they'd added MCAS in, do we know if it would have added an hour? A day? A week?
GRIFFIN: I mean, I can't tell you how much time it would take to learn the MCAS system. I can tell you this, to feel the MCAS system and the very
problem that developed apparently on these two ill-fated planes, you would have to be in a 737 MAX simulator with the MCAS simulation on board.
Two airlines I have talked to -- American Airlines, Southwest Airlines -- still do not have a MAX simulator. No MAX simulator training time was
required to do this kind of recertification. So that training is what the American Air Pilots Association are now calling for. We want to feel what
that's like before we have to feel it and deal with it in the air.
QUEST: Valid points, Drew, thank you. We look forward to your report in the next hour. So thank you, sir.
On the business side of all of this, the Indonesian airline, Garuda says it will cancel its multibillion dollar order for the Boeing 737 MAX 8. It
follows, of course, the crashes in the last couple of months.
QUEST: Garuda spokesperson tell CNN our passengers have lost confidence in the plane. Now Garuda is the first airline that said it will cut off the
model. More than 5,000 have been placed for the 737 MAX more than any other Boeing model combined. If you want to join the conversation, get out
your phones as usual. Because the question is relevant. It's a blunt one. You heard what Garuda had to say. We want to know, have you lost
confidence in Boeing planes? Vote now at cnn.com/join bearing in mind we're talking about this -- they are all the range of planes. You'll see
the results on the screen.
CNN's Anna Stewart is with me now. Anna, they are not going to cancel these planes?
ANNA STEWART, REPORTER, CNN: Other airlines, currently? No. We've done a big call around for all the major customers of the 737 MAX. I can tell you
that American Airlines, Southwest, West jest, Ryanair, 2e, Norwegian Air, Icelandair, they are all keeping their orders, but pending investigation.
They want to see where the investigation goes first.
They also -- some of them said, they want compensation of course for the planes that are currently grounded.
QUEST: But changing planes is not easy. I mean, you can decide -- I mean, in the case of Garuda, they can go for the NGs as opposed to the MAX, which
of course of which they are familiar. But to suddenly go to Airbus, tell me why that's not feasible.
STEWART: This is the big problem in terms of capacity. For these airliners which wanted a midsize twin jet, narrow body plane, it is this
plane, the 737 MAX or the A320. And both have seven to nine years waiting time if you want one of these planes, it's not easy to switch.
And that's one of the reasons why this stock, although it's down now, today, 13% since the crash, it's still a buy for most of us most analysts.
Most analysts think this is too big to fail, there isn't a reasonable, realistic comparative.
QUEST: But if they find to systemic safety issues in this, such as the way the certification happened, the relationship with the FAA. They were
selling a plane on the promise that simply wasn't true. That would be different or not?
STEWART: This will be different. So I think you've got several issues here. Firstly, the technical fix, a software patch, additional training,
these things can get those planes up from grounding up into the air perhaps by June, perhaps deliveries will start in Q3, then you've got the criminal
issues, what happens to Boeing if they are found culpable?
Then you have the confidence issue, and this is what we're seeing today and I'm curious now -- although, there is no alternative.
QUEST: What are passengers going to do? I see from here, you know 72% say they've lost confidence in Boeing, which I think is extreme in the sense,
not that I am disagreeing necessarily with your views, but in the sense of 777 is an excellent plane, the 787 performs superbly. And the other 737s
are all beating.
STEWART: But perhaps because you're an aviation expert. If you're an average person, this was a terrifying issue. Many people are scared of
flying anyway and then you add stories like today about the training. This will be fairly shocking for people that pilots only required less than an
hour's worth of online unsupervised training to fly a new type of jet.
QUEST: Thank you. Have a good weekend.
STEWART: You, too, Richard.
QUEST: Thank you very much. Now, as we continue, it'll be Brexit. What is going to happen next? Don't expect any answers from me, but we will
certainly go through the arguments after the break.
QUEST: Theresa May missed the second day of the European Council meeting in Brussels to return to London, trading an unfriendly, but helpful
audience in Brussels for an unfriendly and probably unhelpful one in London.
For now, she has the Brexit extension that she was seeking. But anger is building in the streets as a massive rally is planned for Saturday, calling
for a second referendum and in the halls and tea rooms of Parliament, rumors are revolt-a-swirling. Now Donald Tusk, the President of the
Council, of course, made it clear. Brexit is Britain's problem to deal with now.
(BEGIN VIDEO CLIP)
DONALD TUSK, PRESIDENT OF THE EUROPEAN COUNCIL: The fate of Brexit is the hands of our British friends. We are, as the E.U., we are prepared for the
worst, but hope for the best. As you know, hope dies last.
(END VIDEO CLIP)
QUEST: Now, make no doubt about it. There is an extension involved. But the U.K. is still a hurtling towards the Brexit cliff. Now the original
date of March 29th, as you hear, we have skidded to a stop. That's next Friday. Now that is irrelevant. Now next Friday will be a pleasant day
for all concerned. We have backed off a cliff edge.
The E.U. is giving breathing room. April the 12th is the new date and Donald Tusk says anything is possible. And what does he mean by anything?
Well, one, there are four options. You've got a deal, a no-deal, a long extension, which will include the European parliamentary elections and to
So let's talk about this Nina de Santos is outside Parliament. We begin probably Nina, with the basic one, is it anymore -- because I've talked
about the options for April the 12th. But first of all, you have the possibility of getting out on May the 22nd. But only if the deal will be
passed. Will the deal be passed?
NINA DOS SANTOS, CORRESPONDENT, CNN: It doesn't look as though much has changed. In fact, MPs' attitudes have hardened to the Prime Minister after
she publicly rebuked them on British television just a few days ago. She ate a bit of Humble Pie yesterday evening in Brussels trying to strike more
conciliatory note, but you know, even members of her own Cabinet have been taken to the airwaves, saying to the radio stations here in the U.K. that,
you know, they were personally upset by her tone, but they said well, even a Prime Minister can sometimes get her words wrong.
It's not a good look for a Prime Minister that has had a number of missteps here, Richard and you mentioned those various options. You know, she's
hemmed herself in, in many different ways. Just looking at this vote here. She's been embarrassed last week by the Speaker of the House who said that
he wouldn't allow a third meaningful vote unless they've actually meant something in the sense that this vote was substantially different to the
previous two votes that were rejected by really embarrassing margin on each occasions, she'd probably be able to get around that. But what she can't
get round is the fact that she needs 75 of her own MPs to turn back towards her cause.
She needs some Labour MPs to defect. Those who may well have been wavering may have been upset by her public performance on TV last week, blaming the
Parliamentary system rather than taking blame for this herself. And then the other thing really, Richard is that, you know, this is a weakened Prime
Minister whose own party is now starting to publicly say they might like to see her go. Deafening has been the silence of the DUP since Theresa May
went to Brussels yesterday. We've heard nothing and we need their backing to try and get the rebels on board.
QUEST: Nina dos Santos, thank you. Lord John Kerr is with me. He wrote the first draft of what became Article 50. Good to see you, your Lordship.
LORD JOHN KERR, MEMBER OF THE BRITISH HOUSE OF LORDS: Don't call me Lord. Just call me John.
QUEST: John is fine then, and what a mess.
KERR: It is a bit of a mess, but it's less of a mess tonight than it was before the European Council. As you were saying, we could have gone over
the cliff on Friday of next week, Parliament, next week, will look at alternative options, will look at how we might have a softer Brexit, how we
might have a Norwegian type Brexit, how we might have a Custom Union with the E.U. if we leave, and it will also look at the possibility we won't
leave at all.
QUEST: Right now, in terms of a softer Brexit or any of these other things that we would find out about from an indicative vote, would we -- would the
Prime Minister still need to get a longer extension to work through the ramifications of those?
KERR: Yes. I mean, any of them would need negotiation with European Union.
QUEST: And that would also -- so that would also mean taking part in the European elections?
KERR: I don't think it's absolutely necessary. But I think it's probable we do it, and we should do it. We should consult the people.
QUEST: But when you -- of course, you're in favor of the second vote or the people's vote.
KERR: I am, and so is 60% of the country.
QUEST: When we look at Article 50, which you were one of the drafters, you did the original draft.
KERR: I did.
QUEST: Did you ever?
KERR: No, I didn't.
QUEST: No, you didn't --
KERR: Absolutely not. I'll tell you why wrote it.
QUEST: Go on.
KERR: We were thinking about a dictator in a central European country who breached the values of the European Union. Who therefore had these voting
rights withdrawn, has made a second class member, what does he do? He's storms out in a rage. We wanted a procedure for a dictator to storm out in
a rage in a legal way, it wouldn't create legal chaos.
We never thought that a grown up Western European democracy would exercise its rights under Article 50.
QUEST: If you had thought that, what would you change? I know it's a would have, could have. What would you have changed in Article 50 to allow
a country like the U.K. to have left? Would there have been something that you'd have put in there that would have smoothed that out?
KERR: No, I don't think so. I mean, the two-year period was designed to make the dictator think he wouldn't be trapped forever in an endless
negotiation, he would get out at the end, the two years is ample to write a divorce agreement. Our difficulty is that we have not ever decided as a
government, how close to the European Union we want to stay or how far?
QUEST: And that that goes back home. I mean, that issue is the core of the 40 years of discord between the U.K. and the E.U.
KERR: No, no. The U.K. was the prominent advocate of -- a large European -- the European Union is bringing these Europeans, the U.K. invented the
single market that was Jacques Delors plus Margaret Thatcher, the U.K., managed to maintain the link to the Euro, which we didn't want to join.
But the London market was not damaged. Because John Major was a very clever operator.
QUEST: So if you look now at this idea of revocation and the European Court obviously has since rules on this that if we revoke you can't just go
back. You can't do the hokey pokey in and out, in and out. Do you think revoking is the way forward now?
KERR: Yes, but I -- you said, I support a second referendum, I do, because I don't think Parliament would have the nerve to overturn the referendum
result and take back our notification of departure. I don't think we would have the nerve to do that without either an the election or a referendum
QUEST: We're hearing rumors, there's a lot of gossip at Westminster that the Prime Minister might not bring back her plan. She might simplify the
whole process, which probably would be good to an April the 12th date, which would mean the four options deal, or there isn't one, no deal,
extension to allow time to discuss a new deal or revoke?
KERR: Yes, I think these are the options. And I think it is possible that in the indicative votes, which I think will take place in Parliament next
week, the Prime Minister's deal will be one of them. And once again, the Prime Minister's deal will fail as it has failed twice by very large
QUEST: So, if it fails and we all left with -- I mean, what they did yesterday does clarify the issue doesn't it? It crystallized it into a few
short, sharp decisions. Which do you think ultimately it will be?
KERR: I don't know, I would expect a soft Brexit or no Brexit. I think going over the cliff with no deal is unthinkable. You saw the CBI and the
DUC business and trade unions combining yesterday to warm the government ...
KERR: ... that avoiding no deal was paramount. I think that --
QUEST: Would you agree that a soft Brexit in a sense of a Norway, Norway plus Canada minus, whatever you want to call it, the vassal state argument
that the U.K. would be a rule taker not a rule maker does have some powerful force.
KERR: Yes, it does. And I've advanced it myself, I believe we should have a referendum and take the letter back and stay a member of the European
Union. But I think to say that the deal that Norway got is the deal that the United Kingdom would get if we decided that's where we wanted to go, to
have a relationship with a single market. I think that you know that's not right.
There's a Customs Union between Turkey and the E.U. But if we wanted a Customs Union, it wouldn't allow the Turkish.
QUEST: One final question on the actual drafting of Article 50. I'm finding it was fascinating by the way. So do you wish you had included in
this a proviso that would have enabled a leaving country to negotiate their future relationship whilst doing in tandem with the divorce agreement?
KERR: I did.
QUEST: There were the few words in there. If bring it up again here, so just, there are two or three words, which everybody's latched on to, but
which suggests there could -- there you are, withdraw taking account of the framework for its future relation, that but that's not the same thing as a
full negotiation of what that should look like.
KERR: Hang on. The framework is as long or as short as you want it to be.
QUEST: And they've chosen to take it very finely, very tightly defined.
KERR: I would argue that this agreement is legally doubtful, because they drew it up with no framework, the political declaration, which is a huge
piece of paper that came later, therefore, I would say they were a bridge to my excellent article.
QUEST: Really pleased to have the on. You will go down as the man who wrote Article 50, rightly or wrongly, for whatever, thank you. We're going
to continue tonight on the program. A no-deal Brexit is very much on the table despite what we've just been talking about. That's what the
Commission's top spokesman tells me. Exclusive interview coming up next. This is "Quest Means Business" live from London.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When the
European Commission's chief spokesperson tells me Europe is hoping for the best and preparing for the worst. President Trump sparks confusion.
He withdrew sanctions that only just been issued by his own administration. As we continue tonight, this is CNN and on this network, the facts will
always come first.
Mozambique officials say the death toll from the cyclone there has climbed to nearly 300. And there are fears it could actually be much higher. Aid
agencies say entire villages and towns are completely flooded after last week's storm. Hundreds of lives were also lost in Zimbabwe and Malawi.
New Zealand remembering the late -- the victims of last week's mass shootings in Christchurch. Thousands of people turned out to join the
Muslim community in Friday prayers. Two minutes of silence were observed, followed by the Imam of Al Noor Mosque who survived the attack leading the
call to prayer.
State media is reporting an explosion at a pesticide plant in eastern China, that's believed to have claimed the lives of 47 people. More than
50 people are severely injured, and many of them were described as being in critical condition. The main fire has been put out, emergency services
are still fighting smaller upfront.
President Trump is defending his decision to recognize Israel's sovereignty in the Golan Heights. He says the territory is key to Israel's regional
security. An administration official tells CNN that a formal announcement is expected next week.
For perhaps the first time since negotiations began, there were visible cracks in the EU's united front on Brexit, but those cracks were between
those who were being nice and those who just want a harder Brexit but still being nice. France's President Macron is taking a hard line, Germany's
Angela Merkel is reportedly trying to make the landing as soft as possible, and some are simply losing patience.
(BEGIN VIDEO CLIP)
XAVIER BETTEL, PRIME MINISTER, LUXEMBOURG: You were in and you wanted a lot of things, a lot of opt-outs, a lot of special regulations for the
U.K., now you want to be out but with a lot of advantages like you would be in. It is not possible. So it's -- oh, you're a member of the family or
(END VIDEO CLIP)
QUEST: Throughout the Brexit negotiations, the European Commission has sat across from Britain, they're the ones charged with doing the negotiations.
I spoke to the Commission's chief spokesman in an exclusive interview and asked him, whether Thursday's extension was just a clever way to put the
ball back into the U.K.'s court.
(BEGIN VIDEO CLIP)
MARGARITIS SCHINAS, CHIEF SPOKESPERSON, EUROPEAN COMMISSION: I think it was a constructive summit. And beyond the technicalities and very complex
Euro speak, if one wants to present this in a very simple way, one could say that the European Union with this decision hopes for the best, but is
also prepares for the worst.
That's what we're having now. We have a deal, we have a way out that clears the horizon and allows the British parliament to decide on their
QUEST: I felt I detected amongst the leaders, perhaps in sorrow, but a realism that a no-deal Brexit could be a reality. First, well, you have
President Macron when he arrived mentioning it. You had President Tusk saying it was one of the options. There seems to be a reality that this is
no longer academic, it could actually happen.
SCHINAS: Well, a no-deal Brexit has always been one of the possible outcomes of this very sad process. This is something that no one can
exclude. As far as we are concerned, we have been working now for months to prepare comprehensive contingency and preparedness plans that would
allow the 27 to cope with the very many negative consequences of a no-deal Brexit.
[15:35:00] It's there, even after the summit, a no-deal Brexit is one of the possible options. But look, I mean, what can we do? We are the partner
who stayed behind, we didn't leave, it's the United Kingdom that opened the door and left. So there you have it.
QUEST: On this second option, which the second option is assuming that the deal fails next week. The second option gives until April the 12th for
valid reasons. But it gives the opportunity for the Prime Minister to come back with another plan, a new idea, better -- because we know that
parliament is having indicative votes.
What would happen from the commissions or from the EU's point of view if that -- if she says, right, the deal is no, we now want to go with Canada
plus or Norway minus or something like that?
SCHINAS: If the second option is to be activated, the 12th of April track, before the content of any possible outcome, the European Union would expect
a notification by the United Kingdom, announcing their intention to organize European elections in May.
This is why the date of 12th of April is part of the decision, because this is the last possible day according to which the United Kingdom can start
to trigger the preparations for the European elections.
So step one, if this option is to be followed, we need to have in a letter a very clear indication that elections will be held -- European elections
will be held in Britain. Accompanying that letter, one would expect also another request on a possible extension request, an additional extension
request and on the reasons behind it.
So I don't now want to speculate on what possible reasons would accompany this letter, but let's see.
QUEST: But is the end April the 12th?
SCHINAS: The answer to this question is yes. If there is no deal approved by then, and if the United Kingdom does not indicate to the European Union
by that date their intention to hold European Union elections and request an additional extension. That's the answer to your question.
(END VIDEO CLIP)
QUEST: Now, European stocks are falling sharply, there's a torrent of warnings that say Brexit could make the economic pain even worse for
everyone. The Bank of England says Brexit could cost the U.K. a billion dollars a week -- I mean, to the masses, $6 million an hour.
German studies estimated hard Brexit could cost the EU $45 billion a year. And the confederation of British industry in a letter to Theresa May along
with the TUC is urging a change of course, describing it as a national emergency. Joining me is Paul Drechsler; the vice president of the CBI and
Chairman of London First. Good to see you, sir.
PAUL DRECHSLER, VICE PRESIDENT, CONFEDERATION OF BRITISH INDUSTRY & CHAIRMAN, LONDON FIRST: Good evening, Richard, nice to see you.
QUEST: Let's -- your position is clear on terms of this, but as against a re-negotiation of the deal and an extended Article 50 procedure to some
sort of softer Brexit, is that something you prefer?
DRECHSLER: Well, I think -- let's be very clear. We have a crisis of confidence in the Conservative Party, in the Labor Party and the
parliament. So we need a time-out. We need a serious amount of time to go back to square one and decide what sort of quality process are we going to
have so the U.K. parliament decides what's the best solution for Britain going forward.
The only way to do that, the only way to guarantee that we don't have a hard Brexit is to revoke Article 50. There's no other way that we can
control our destiny.
QUEST: If you revoke Article 50, you're putting an end to Brexit.
DRECHSLER: No, we do -- you can -- you can -- you can reinstate it --
QUEST: No, you can't --
DRECHSLER: Already --
QUEST: No, you can't, the European court has made it clear, it can only be reinstated after a democratic event such as an election or a referendum.
DRECHSLER: But inevitably, given it's taken 1,000 days for this government and parliament not to reach a conclusion, it's very clear they're going to
have to go back to the people in order to get support whatever they propose.
QUEST: Yes, but the reality is, you just want Brexit overturned.
DRECHSLER: No, far from it. For the past two and a half years, we have done a lot of analysis, a lot of evidence to demonstrate the best way
forward in terms of Brexit. We've put lots of energy in identifying that a Customs Union, single market and access to people can enable us to have the
strongest possible economy having left the EU.
QUEST: Can just stay with me one second, sir, while I just go Nina dos Santos, she's outside parliament with some breaking news. What is it,
[15:40:00] NINA DOS SANTOS, CNN CORRESPONDENT: Thanks so much, Richard, well, I can confirm that Theresa May has written to MPs outlining the
eventual strategies that she could employ over the next week and basically what lies forward for them to vote on after obviously what we saw in
Brussels this week in that extension, shorter extension than she was expecting was granted.
So here it is. Essentially, she seems to be saying that she acknowledges that this deal of hers probably will not have the backing to pass if it is
put forward to the house next week. I'm going to read you exactly what this says to MPs. "The council's decision means that we have a clear
One, we can revoke Article 50" -- as you've been discussing with lord Keir there, Richard, but that would be to betray the result of the referendum.
She's made that point before, including yesterday evening. "Two, we can leave with no deal on April the 12th." But the house has previously said
that, that is something that it does not wish to support.
And here's the crucial bit, "three, it appears that there is not sufficient support to bring the deal back next week or the House of Commons rejects it
again. If that's the case, we can ask for another extension before April the 12th, but that will involve holding European parliament elections."
And finally, she says, "if it appears that there is sufficient support and the speaker permits it, we can bring the deal back next week, and if it is
approved, we can leave on May the 22nd." So that orderly exit again, she's trying to put back on the table for May the 22nd.
But what is interesting here is that she is acknowledging that at the moment, she doesn't necessarily think she can bank on their support --
QUEST: All right.
DOS SANTOS: And she's making a last ditch effort to try and get it, Richard, according to this letter.
QUEST: Nina, thank you, very important. Joining me -- what do you make of that? I mean, the deal will not -- I mean, she's admitting that it's not
going to happen next week. That MV3 is it will only happen if you like as part of an April the 11th procedure.
DRECHSLER: Well, I mean, I think it's self-evident that after two votes, we're between 60 percent around 70 percent of members of parliament said,
this deal is not good enough, that we need an alternative. And I certainly think it's time for those in parliament to develop a consensual
I think they probably have to do that by a series of indicative votes in order to identify what's the best way forward. They've had a thousand days
to do this. For a thousand days, they haven't discussed this between the parties, they haven't discussed it outside the government. Now is the time
for some serious work to see what sort of solution will come out of the majority in parliament?
QUEST: If this is right, then are we closer? I mean, what happens to the no-deal Brexit? Because the new cliff date becomes April the 12th.
DRECHSLER: Twelfth --
QUEST: And -- but you know, can they find sufficient around something that would allow it to go ahead rather than a no-deal Brexit? I mean, are you
still worried about a no-deal Brexit?
DRECHSLER: I -- the probability of a no-deal Brexit is far too high, which is why we would --
QUEST: On what basis do you say that?
DRECHSLER: We will call this a national, Richard, because there is at this moment in time no parliamentary process identified to stop it happening.
The only way to stop it happening is either to revoke Article 50 or for parliament through a series of votes very rapidly to agree to a solution
that will get the support from the European Union.
There's no other way. We've jumped out of the airplane, there's only one rip cord for that parachute and that's Article 50.
QUEST: Finally, whatever they come up with has to meet -- I mean, one assumes the final agreement or re-negotiation agreement will be the same
regardless in terms of money owed, the divorce bill, if you like. But it will still have to have the Northern Ireland. So you look at a Customs
DRECHSLER: Well, I think it's very clear from a business point of view that something that delivers the benefits of Customs Union is in the best
interest of peace, prosperity --
QUEST: Right --
DRECHSLER: And economic growth in Ireland.
QUEST: Can't go wrong with that peace, prosperity -- good advice, thank you, sir.
DRECHSLER: Thank you.
QUEST: Before we go to break, we do need to just look at the Dow, you're seeing it on the screen there. And the Dow is -- it's taken a tumble once
again. We're down almost 420 odd points. So, we're just 15 minutes from trade, it's not going to be a pretty close, my guess is we're almost --
somehow, correct me if I'm wrong, but we're almost at the lows of the day.
When we return, India's former Central Bank governor tells me economic policy makers are running out of options if they needed to stem another
[15:45:00] (COMMERCIAL BREAK)
QUEST: India's Central Bank governor believes that after decades of unprecedented success, capitalism is faltering in the 21st century.
Raghuram Rajan's new book describes how the 2008 financial crisis and the uneven recovery that followed is fuelling the current populist backlash
against globalization. I asked him what central bankers can do to avert another crisis.
(BEGIN VIDEO CLIP)
RAGHURAM RAJAN, FORMER INDIAN CENTRAL BANK GOVERNOR: I think central banks have done a lot, but there's not much -- sort of no more weapons in the
kitty. I think no central bank will say publicly, I have no more weapons left, that's an admission of defeat. But I think if you look at what
they've used, I think increasingly they're less and less effective.
QUEST: So if there was downturns and monetary policy was constrained, which is the fear at the moment. If that does happen, then you really
would be left with either wait it out or fiscal policy doing the job.
RAJAN: Well, I think as far as the U.S. and China go, there's still some ammunition, interest rates are still, you know -- there's some room to cut
interest rates. As far as Europe and Japan goes, there's very limited room.
QUEST: So what can they do?
RAJAN: My sense is when all else fails, you've got to find new ways. And this is why I'm saying we've spent ten years thinking about one stimulus
after another. And the Je le Jean(ph) in France are saying it's not working for us, think again. And that's why I think we need a new set of
policy, not so much here's the grand scheme, but I would argue more here is some support, here are some funds, but figure out what you need to do
because sitting in Paris, I don't know what you weigh out there in --
QUEST: How realistic is your proposal on an executable basis? It sounds wonderful --
RAJAN: Yes --
QUEST: In theory.
RAJAN: Yes --
QUEST: But if you are sitting there --
RAJAN: Right --
QUEST: As Prime Minister, Finance Minister --
RAJAN: True --
QUEST: Or even central banker --
RAJAN: True --
QUEST: You have to have concrete policies.
RAJAN: Yes, but the problem is we all want policies which work tomorrow. And we've tried those policies for ten years. Isn't it about time we say,
well, maybe these policies aren't working? Because really the world has changed. We need policies for a new world.
And that means we need to try something different, you know, the Einstein definition of insanity, trying the same thing and hoping for a different
outcome. We're doing that. And I would argue that it's time to have a different dialogue.
[15:50:00] How is it that those local depressed communities have a chance so that they're not angry all the time?
(END VIDEO CLIP)
QUEST: As we continue, Donald Trump sorting his own Treasury Department to take off some North Korea sanctions. The White House says the reason is
simple, he likes Kim Jong-un.
QUEST: Donald Trump says he's ordering his own Treasury Department to remove some sanctions from North Korea. The news came via Twitter a short
time ago. So it's not immediately clear which sanctions he's referring to. Two Chinese shipping companies were hit with North-related sanctions on
The White House Press Secretary said President Trump likes Chairman Kim and doesn't think these sanctions will be necessary. Kylie Atwood is in
Washington. So we don't know which sanctions and it seems like it's all because he likes the chairman.
KYLIE ATWOOD, CNN U.S. SECURITY REPORTER: Well, that's right. I mean, the question here is there were newly-imposed sanctions, as you said on two
Chinese entities yesterday. But the president said that there were new sanctions announced today and that's not exactly true. So there is some
confusion at the White House right now in terms of what they do to follow through and to follow the orders of the president via tweet here.
Of course, the Treasury could roll back these sanctions that were put in place yesterday. But that would be undermining the whole motivation of the
Trump administration, which has been to apply pressure to North Korea, to sort of economically --
QUEST: Right --
ATWOOD: Squeeze it to a point where it could no longer function and it would have to be forced to denuclearize.
QUEST: Could this also be a sweetener? Remember following on from the Vietnam -- from the Vietnam Summit where the chairman said, Kim said, we
didn't want all sanctions removed yet, we weren't asking, we were just asking for certain sanctions. Maybe Donald Trump is trying to do some of
that through the back door?
ATWOOD: That's possible. I mean, the bottom line is that the U.S. has said that North Korea was asking for too many sanctions to be lifted in
Hanoi and they weren't going to do it. But there is a little bit of wiggle room there for the Trump administration in terms of, as you say, maybe
taking off some sanctions.
[15:55:00] But they do say that they need to see tangible action from North Korea on denuclearization before they do that. And we have not yet
seen any tangible action or commitments to allowing in U.S. inspectors or international inspectors to see North Korea's --
QUEST: Right --
ATWOOD: Nuclear regime. So the question is, is the U.S. taking a step before the North Koreans and undermining their ultimate goal here?
QUEST: A very good question which we shall watch closely. Kylie, thank you, have a good weekend as we continue to watch tonight.
ATWOOD: Me too.
QUEST: Now, we're in the last few minutes of trade on Wall Street, and the Dow is nearing the lows of the day. We're at 444, the low -- in fact, I
think the low of the day was about 450 odd, so we're just off the edge of 450. It's the worst day since January the 3rd.
And it's not just a bit of women a sentiment, it was down mid-day during Europe manufacturing data. The yield curve between the ten and the short,
that inverted and that -- we're down 2.4 percent. Remember, only the middle of late last year we were up at 3.2 percent on the tenure, now,
we're down at 2.4, that's a remarkable reversal of fortunes.
And then the Dow 30, just to bring you an idea, Nike is now off 6.5 percent. Verizon is the best of today, when Verizon is the best, you know
it's all about growth worries and recessions. It sounds a bit odd to say this with so much red, but there's a profitable moment after the break.
QUEST: Tonight's profitable moment, there you have it, Article 50, the one that has ruled the Brexit negotiations. Tonight, it's very difficult to
know exactly which option of the two that was put forward. If Theresa May does not put her plan and therefore April the 12th becomes the new Brexit
date, is it going to be a no-deal Brexit or will parliament through its process of indicative votes manage to make some sense and coalesce around
a future that will be put to the people?
But if that happens, don't forget that means that Britain has to have European elections, which is all a bit of a nonsense since the country will
be leaving anyway. You get to see how difficult the whole thing is. But that's where we are tonight. At least, next Friday is off the cards. And
that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope it is profitable.
The bell is ringing, the day, the week is done.