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QUEST MEANS BUSINESS
New IRA Claims Responsibility for Journalist's Death; Sources: Biden Set to Enter U.S. Presidential Race; Boeing Battles to Restore Public Confidence. Aired 3-4p ET
Aired April 23, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: We are on hour way from the closing bell, 60 minutes of trade and if the day has gone
like so far, well, it's going to be a bumpy session because green at the start, earnings pushed the markets higher and it has held on to the gains
for the course of the day.
Look at the actual 30 earnings related, earnings related, earnings related -- you can just see, it is really propelling the market. We will be
talking about it because the market and the business day, put them together and this is what happens.
Earnings are beating expectations on the busiest day of the reporting season so far.
The NASDAQ and S&P 500 heading for record closes. The first of those for many months, and while the U.S. President moans about Twitter, the stock is
soaring -- earnings, earnings, earnings. Live from the world's financial capital, New York City on Tuesday, April the 23rd. I'm Richard Quest, I
Hello and good evening to you. It is the final hour of trading in the United States and the markets, the NASDAQ and the S&P are on pace to close
out record highs and the significance of this, it'll be the first in seven months.
Now, look this time last year it was record, record, record, record now though, very different, but the reason why is because of corporate
earnings. They are beating expectations, admittedly from lows. You've got the Dow strongly up by 128. You've got the SMP. You've got the NASDAQ and
these two are at record highs.
So if they hold this and just on the S&P, I mean, with sort of bubbling I bet, and it may not at the close, but at the moment, it looks like the
earnings is what is propelling the markets so far. And these are the earnings that we saw from aircraft engines to fizzy drinks. We saw
Twitter, Lockheed Martin, UT, Procter & Gamble -- very good reactions to three of them. Coca-Cola gets a strong reaction, too. Verizon down. We
need to understand. Verizon is the classic defensive stock. So perhaps not surprisingly, but on a good mark day when everybody else is buoyant.
Now, the "Express," our trader, Peter Tuchman told me what's driving this very strong rally.
(BEGIN VIDEO CLIP)
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: There is no way that the bears are going to -- are surviving this market right here. So people
are jumping in. I think there's fresh money coming in. Earnings are a big catalyst.
QUEST: That's certainly fresh money that's been waiting on the sidelines. I've been reading about waiting to come into the market. We're now seeing
TUCHMAN: I think we are because, you know, look, 2,800 in the S&P was the level, people probably putting them out on the short side and wondering,
hopefully this will be some resistance. That didn't work. 2,900 once again, these are big moves. These are big crescendos and thresholds in the
S&P and none of them from the short side are working.
So we're catalyzed by solidly good earnings. Twitter today up big. So you've got the social media space -- Facebook up, Netflix is up. And so
you've got eventually people are going to just hop on board. We've seen a fast and furious rally since the beginning of January. There has been no
time for the --
QUEST: But do we did see -- I mean, we had that fast and furious early. But the last, say two to three weeks have been a period of consolidation to
TUCHMAN: Consolidation, right, but with an upward trend.
(END VIDEO CLIP)
QUEST: Record highs, consolidations, booms all around. But now we need to understand what's next. We want you to join the conversation. Get out
your phones at cnn.com/join.
The U.S. markets seem to be at a record, at least the broader market and the techs are. So what does investors do the next time with stocks? Is it
time to buy? Is it time to sell? Take profits? Or is it time to hold? Now, it's not our investment advice. We just want to know what you're
thinking of doing at the moment, cnn.com/join. You'll see the results on your screens. cnn.com/join. Buy, sell or hold.
Joining me is Matt Egan who's been following the day so far. It was an interesting set of results where those who performed well seemed to have
MATT EGAN, CNN BUSINESS LEAD WRITER: You're right. I mean, what a difference four months make, right? In late December, the bull market
looked like it was on its deathbed. People were freaking out about an imminent recession and corporate profits were expected to plunge.
[15:05:07] EGAN: And now we've got U.S. stocks near record highs. And you're right, so much of it is about earnings. What happened was all of
that market mayhem really drove down earnings estimates quite dramatically, making it easier for companies to beat them. And we saw that again today.
Coca-Cola beat estimates. We've got everyone from the United Technologies; in the defense world, Lockheed Martin as well.
QUEST: If we take a look at the Dow 30 at the moment, and you can see how it is performing. The Dow 30, it's a narrow range, but the earnings say
for example today with Coca-Cola and how it performed, you were talking to me earlier about the earnings.
EGAN: Right so Coca-Cola really scared investors. The last time it reported, the stocks dropped 8 percent. It was the worst day since the
financial crisis for Coca-Cola because they lowered their outlook. What happened today was they came out and they beat that lowered outlook. And
so we saw the stock move a little bit higher.
Harley-Davidson is similar story. They're facing a lot of headwinds with tariffs and all of these trade issues. Their profits were down, their
sales were down, but they still managed to beat estimates anyway.
Twitter returned to -- they've returned to user growth and we had Hasbro report a surprise profit as well. Credit Suisse says that out of the
companies that have reported so far in the S&P 500, seventy eight percent have beaten on earnings, and that is better than the three-year trend.
QUEST: All right, let me make another -- the current number is what?
EGAN: So about 20 percent of the S&P 500 has reported earnings and 78 percent have beaten on earnings and that's ahead of the three-year trend.
And so that is certainly giving confidence to investors. But you know, it's not only about earnings, the economic numbers have been better than
people feared. You look at Q1 GDP estimates, they've come up really dramatically.
The Atlanta Fed was calling for Q1 GDP of just half a percent, not long ago, and now, they're saying it's going to be a little over 2 percent.
QUEST: So we were told, going into this year, that earnings were going to be less than expected, and that there was serious concerns over whether or
not you know, we were seeing those low single digits, if any earnings gains at all. Are you now revising that?
EGAN: So I'm not revising. The analysts who revised it. Quite often -- often, with the stock market, if you notice, they are now saying that
perhaps earnings won't decline as much as feared. Maybe they'll even increase in the first quarter, which would certainly be a big surprise.
Now, I think the key is going to be what companies say going forward, what their outlook is for the rest of the year, and we'll have to wait and see.
QUEST: Still early. But good to talk. Thank you very much indeed.
EGAN: Thank you, Richard.
QUEST: Now, Joseph Stiglitz is joining me in the C-Suite, the Nobel Prize winning economist. He's got a new book, "People, Power and Profits."
We've even got a copy of it in our library. "People, Power and Profits: Progressive Capitalism for an Age of Discontent." Is this an age of
discontent? The man himself is here. You're looking at the markets that are doing extraordinarily well at the moment. How risky is it for us to
take a view on the economy by markets?
JOSEPH STIGLITZ, AMERICAN ECONOMIST AND AUTHOR: Very. You were saying a few minutes ago that how different the world is today than four months ago.
STIGLITZ: And four months from now, eight months? You know, we know that markets go up and they go down. As an economist, I don't spend much time
thinking about the market. I try to look at the longer term fundamentals.
QUEST: Right. But that -- so on the question of the fundamentals, the President would tell us that all is well. And the economy is strong, you
shake my hands before I even to managed to -- he says, you know, and yet, if we take it as a barometer, we haven't got to his 4 percent growth, but
we have had reasonable growth. We've got low inflation and we've got low unemployment. Now, what's wrong with that picture?
STIGLITZ: People's income and sense of security. The fact is that a lot of people are just getting back to where they were a decade ago. Wages are
going up, but not the way they should. You know, for most Americans, there's been actually a long period of stagnation, and that's not really
been reversed and take a look at the people at the bottom.
The real wages of a worker at the bottom today are roughly the same level they were 60 years ago. The median -- typical 50 percent above 50 percent
below income of a full time male worker and, the full time guys are the lucky ones, is the same as it was more than 40 years ago.
QUEST: Who is to blame?
STIGLITZ: Well, it's been a long period.
STIGLITZ: It's been a long period of neglect of the fundamentals.
[08:10:06] STIGLITZ: Of the fundamentals -- people looking at unemployment rates and looking at GDP, but not looking at what's happening to most
QUEST: So you write in your book about the Oxfam study, which comes out roughly at the same time as we're all in Davos.
QUEST: And we will make a fuss about it because it's -- but it's really -- when you say a little over two dozen individuals, almost all men, had as
much economic heft than all the people in China, India and Africa combined.
STIGLITZ: The bottom 3.7 billion people. Isn't that amazing? Twenty six people actually have a roughly the same income as 3.7 billion people. Now,
if they had gotten their money all from new innovations, with people who discovered DNA so that we could live longer, the transistor, laser -- I
think I'd feel a little bit different about it. But a lot of this is rank seeking, what we call rank seeing, trying to get a larger size of the pie
through monopoly, power, through exploitation in one form or another. So a lot of it is actually weakening a lot of the wealth --
QUEST: It's not a judgment though, Joe, to the extent, you know, I mean, we're talking about the wealthiest man in the world, Jeff Bezos. You're
talking about Bill Gates, you're talking about Warren Buffett. Arguably, they have created -- not in proportion to their own wealth.
STIGLITZ: That's exactly it. But what's interesting about those, they all were innovators. That's not true of a lot of the other wealthy people.
But they then took their innovation and amplified it through market power.
You know, in the case of Bill Gates, for instance, you know, Microsoft was accused by courts in three continents of engaging in anti-competitive
behavior, breaking the rules law in such a way --
QUEST: It lost in three continents.
STIGLITZ: It lost in three continents, but he made his money by engaging an anti-competitive behavior, and that's one of the sources of the problem
we have today.
QUEST: So this idea of capitalism, with the capitalism dash discuss, Professor, I'm sure you've sent that question or have been part of that
question in some shape or form. What shape is capitalism in?
STIGLITZ: Well, right now, not very good. A lot of antipathy towards it. When I use the word progressive capitalism, it gets a certain pushback and
they say, you know, capitalism. The point I'm trying to make is you need a market economy. But you need to reshape our market economy in ways that
will serve most Americans. And it hasn't been true for the last 40 years.
QUEST: You've nicely taken me up to what comes next. The question of an election, and the question is a policy. Stay with us, sir, don't go
anywhere. Because after the break, Donald Trump says it's about the economy, stupid. Joseph Stiglitz, on whether Americans not at all feeling
the boom, but the opportunities and the options that they're going to get in 2020.
President Trump is guaranteed a red carpet welcome in Britain in a few weeks' time. Red carpet -- the only question is how deeply divided the
country will respond. There's no carriages for example. All of that in a moment after the break.
[15:15:59] QUEST: Strong earnings from corporate America and the U.S. economy looks well and truly to be motoring. GDP is strong and employment
is historically low. And that's despite headwinds from trade conflicts and a possible global slowdown.
Now history tells us that any President going into a reelection campaign with these kinds of economic numbers should have little to fear. President
Trump today tweeted, "In the old days, if you were President and had a good economy, you are basically immune from criticism. Remember, it's the
economy, stupid. Today, I have as President, perhaps the greatest economy in history and to the mainstream media, it means nothing but it will."
The reality is that as markets flirt with all-time highs, the economic picture is less secure for many average Americans. Baby boomers are
retiring with their clean savings. Millennials are underemployed and are on the track to be the first generation poorer than their parents.
At last night's CNN Town Hall, Democrats promised they would make economics a key issue in the 2020 campaign.
(BEGIN VIDEO CLIP)
SEN. AMY KLOBUCHAR (D-MN), PRESIDENTIAL CANDIDATE: We're going to make the kind of changes that we want to see to make it easier for working families
and for everyone to achieve things, because otherwise our economy is going to be stagnant if everyone can't have a seat at the table.
SEN. BERNIE SANDERS (I-VT), PRESIDENTIAL CANDIDATE: There is something wrong in America today, when you've got millions of families paying 40
percent, 50 percent, 60 percent of their limited incomes, to put a roof over their heads.
I happen to believe that we have to address the issue of grotesque levels of income and wealth inequality.
PETE BUTTIGIEG, (D-IN), MAYOR, PRESIDENTIAL CANDIDATE: The biggest problem that I have with corporate America is the way that concentrations of wealth
and corporate power have turned into concentrations of political power. That's why we need policies that can get ahead of the economic shifts to
come and recognize that our generation is not going to be able to count as our parents' generation often did, on the idea of a single relationship
with a single employer or a couple of employers across the course of your entire career.
SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: If your ears are stuffed with money, it's hard to hear. I want to live in an America that's
not just about opportunity for those born into privilege, but it's about opportunity for all of us. I think that this is the pace we've got a make
against Donald Trump.
(END VIDEO CLIP)
QUEST: Joseph Stiglitz is with me. The arguments aren't new. I'm wondering whether they are economically sound.
STIGLITZ: They are and the reason that they are appearing now is things are getting worse. And you know, one example that was heightened by the
great recession and the recovery. In those years 2009 to 2012, the Obama administration was saying the economy was recovering, and yet 91 percent of
the gains in those three years went to the top 1 percent.
So today, we're in a very similar situation where Trump may say the economy is great, but most Americans don't feel it.
QUEST: But do the Democrats make themselves electable by looking like they're socialists? Because it is a bat, which the President will beat the
Elizabeth Warren's, the Bernie Sanders -- your socialists.
STIGLITZ: They are not socialists, and you know, socialism, back when the term was used with meaning was the ownership of the means of production or
the basic means of production. Ownership of steel industries, coal mining and all of that. No one is talking about that.
QUEST: Redistribution of wealth is also a tenet of socialism.
STIGLITZ: Well it was a tenet of it, but it wasn't the core of it and there are many European states that are firmly in the private sector,
private market economy index, a basic part of our social contract with our citizens is providing things like social security.
[15:20:04] QUEST: But on the economic front, do you think today's America would elect a left of center, not far left, a left of center politician
when that same electorate voted in Donald Trump, right of center, strong, arguably unfettered capitalist?
STIGLITZ: I do and remember they also elected Obama. So the key thing is when you ask the electorate, what do they care about? And what did Trump
promise? He promised to do something, it was government doing something about deindustrialization.
So it was a government promise to deliver. Now, he hasn't delivered and he won't deliver. He's doing just the opposite because the tax bill actually
increased taxes when it is fully implemented on a majority of those in the middle, on the majority of those in the second, third and fourth quintiles.
QUEST: The Democrats, though, the policies I've heard we haven't heard many. They seem to be driving the economic argument further left than
we've seen him in a good few years.
STIGLITZ: Well, there's a reason for that. The way our economy has worked for 40 years hasn't been working for most American citizens, you know, and
people are not asking for a lot, but they're asking for a more secure retirement. They're asking to be able to own a home. They're asking for
an education for their children. This is not asking a lot. This is not, you know, a far left agenda. This is saying, these are the progressives
that we thought we could have gotten back in the 50s and 60s, but for the last 40 years, we haven't been delivering for the majority of Americans.
QUEST: Is there a worry here that Americans -- not just Americans -- they say this is what they want. They say they want to address the inequality,
but then they go into the ballot box. They vote for somebody who actually does exactly the opposite.
STIGLITZ: Well, I think we haven't aired the issues. And that's why they do that. But, in fact, I really do think they care about these. They also
care about can we really afford it? And part of the issue here is to explain, actually, we can't afford not to do these things.
QUEST: Will you be active in the campaign? Have you decided who you're signing up with?
STIGLITZ: My view is, the real issue here is making sure that we do something about the inequality, making sure that we do something about the
corruption that we have in the White House, the swamp has never been murkier than it is today. Making sure that we can really provide more
economic opportunity and more security than we have. Making things better is something that all the candidates are trying to do on the Democratic
QUEST: Good to see you, sir.
STIGLITZ: Nice to see you.
QUEST: As always. Now, let's go to the President. President Trump is to make his first state visit the United Kingdom at the beginning of June.
He's visited Britain before as President, not at the invitation of the Queen, a state visit. His visit last July was called a working visit. It
prompted huge protests. The next one will have the trappings of a state occasion. It comes at a time when the nation is Britain that is deeply
divided, arguably, Britain and the United States but we will stick with Britain at the moment. Mr. Trump's visit and Brexit.
London is looking to clear the way for post Brexit trade deal with the U.S. CNN's Max Foster joins me from outside Buckingham Palace. And I guess it's
not a question of if there will be protest. It's only a question of how large they will be and how the visit will accommodate that sort of
MAX FOSTER, CNN INTERNATIONAL ANCHOR: Yes, so as we understand it, Richard, there won't be the carriage procession coming down from the
official welcome of horse guards down to Buckingham Palace because security is a concern, it's very expensive. And that was the case for President
Obama as well. This is a big open space, as you know, but they are expecting protests, and we'll wait to see how the police deal with that as
we go forward.
You talk about the Brexit chaos. I mean, it is interesting how one element of that has really fed through today. Because whilst the Palace has told
us behind the scenes, we're expecting all of the core elements of the ceremonial. What isn't clear right now is whether or not President Trump
will be granted an invitation to address the joint Houses of Parliament. And what we understand is that Downing Street is very keen for that to
happen. They want to roll out the red carpet, hopefully leading to some sort of trade deal.
But Parliament, you know, in all this divisiveness we've got at the moment isn't necessarily playing ball. So waiting to hear from the Speaker of the
House of Commons, whether or not he allows that invitation to go forward and then we have to wait to see whether or not President Trump wants to
actually deliver that address. But at the moment, there's this sort of chaos in the political system as you know, and that's where it's really
[15:25:01] QUEST: Max, why do either side want to subject themselves to this at this time? I mean, the Prime Minister is having a few months of
grace before Brexit fires up again, Donald Trump, does he really want the signs of mass protests on the streets of London, a state visit that will be
basically behind iron bars and posts?
FOSTER: Well, as you know, the invitation went out. He was pretty much allowed to choose the timing as long as they could tie in with the Queen's
Diary. I think what they've done is actually quite clever because leading up to the Normandy commemorations, for D Day, and then on the third day of
the state visit, there's actually going to be a big event down in Portsmouth, which is the naval city. And what they are trying to focus on
actually is the military links between the U.K. and the U.S. to try and find some unity there. And that's actually something that most of the
British public are quite comfortable with.
So you're right. There will be demonstrations, but they're trying to show that this can be a relationship that could be celebrated in this time of
divisiveness. He is not a popular figure, as you know here, but at the same time, the government establishment here aren't popular either because
of the chaos in the country. So perhaps it's going to be more positive for him than it would have been a couple of years ago.
QUEST: In a sentence or three, how much has Brexit trade deal -- post Brexit trade deal played into this?
FOSTER: I think you know, it would obviously make Brexit much more palatable if a trade deal were possible with the United States.
QUEST: Good to see you, sir. Max, thank you, in London tonight. Now, London enjoyed a strong day in the markets and certainly the rest of
Europe. The main indices all closed higher on the first trading day after Easter. I think you've got to put all of it down to the rising price of
oil, which boosted companies like Shell of course, and BP.
The banks are underperforming. They've got earnings in the U.K. and elsewhere in later this week. As you and I continue, Twitter stock is a
star performer 16.5 percent and we will understand how the earnings propelled the stock, which propelled other parts of the market. It's QUEST
MEANS BUSINESS from New York.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in just a moment. When Jared Kushner is
playing down Russian election interference, he says it's just some Facebook ads. See what the U.S. Commissioner for Justice thinks about that.
Investors are waiting to find out how Boeing's problems are affecting quarterly profits. We'll look ahead to Q1 as we continue, this is CNN and
on this network, the facts always come first.
After Sunday's coordinated bombings, Sri Lanka's Prime Minister is warning people with explosives are still on the run. ISIS claimed responsibility
for the attacks that killed 321 people. The Prime Minister won't confirm the group's involvement, but said there are suspected links.
The head of Sudan's military transitional council says force will not be used to disperse protesters in Khartoum. He spoke to CNN's Nima Elbagir
today, denying that the military had carried out a coup. He said they're taking the side of civilians and will work to transfer power as soon as
A group calling itself the New IRA says it killed a journalist in Northern Ireland. The group said Lyra McKee stood too close to police during riots
last week. The "Irish Times" released a group statement meantime, a woman's arrest in the killing has been released from the authorities.
After months of dropping hints, the former U.S. Vice President Joe Biden is about to jump into the presidential race. Sources tell CNN, Biden will
announce his candidacy for the Democratic Party's nomination in an online video on Thursday.
Boeing is the most heavily-weighted component in the Dow, and reports earnings before opening bell on Wednesday. The company just probably never
been under more pressure than it is right now, chiefly, due to questions over the safety of its 737 Max aircraft.
Boeing's stock has fallen sharply since the Ethiopian Airlines crash and the grounding of the fleet in early March. Yet, overall, for the year as a
whole, there is still a healthy gain. If you look, 373 starts the year at 322. For now, Boeing is still working to get its best selling jet back in
the air and to get the public confidence about flying back into Boeing again.
QUEST (voice-over): Only weeks away from the start of the Summer travel season, and there is no end in sight to Boeing's woes. The entire fleet of
737 jets still grounded. In the U.S., American Airlines and Southwest are cancelling hundreds of flights through August.
DENNIS MUILENBURG, CHIEF EXECUTIVE OFFICER, BOEING: It's our responsibility to eliminate this risk. We own it, and we know how to do
QUEST: Boeing said it would shrink monthly production of all 737s by 20 percent while it works to deliver a software fix for the Max. Last week,
the chief executive Dennis Muilenburg said that work was almost done.
MUILENBURG: I had the opportunity to participate in another demonstration flight, and saw firsthand this software in its final form operating as
designed across a range of flight conditions.
QUEST: The pressure from investors is building upon Boeing. Shares are down nearly 15 percent since the start of March.
RICHARD ABOULAFIA, THE TEAL GROUP: The company is going to be extremely keen to get the existing fleet airborne and to get deliveries of the Max on
the production line under way.
QUEST: The software fix is just the start of the long road back for Boeing.
ABOULAFIA: You're looking at imminent resolution the next couple of weeks. What really matters though is getting all the regulatory bodies out there
on the world -- in the world comfortable with this fix and willing to implement it. And that could take several additional months.
QUEST: Wall Street believes even when the 737 Maxs are back in the air, Boeing still has a host of problems. Bank of America downgraded the
company, citing the cost of penalties owed to customers are weakened negotiating position with airlines and operational inefficiencies from the
Returning the fleet to service will be a hard sell for a public that's wary of Boeing's promises on safety.
ABOULAFIA: I think there is going to be an emphasis on, hey, is there an across-the-board culture problem here?
[15:35:00] QUEST: This has been a crisis of confidence in Boeing's planes. And one that won't be solved either cheaply or easily.
QUEST: Now, after Sunday's coordinated bombings, Sri Lanka's Prime Minister is warning that people with explosives are still on the run. ISIS
has claimed responsibility for the attacks that killed 321 people. The Prime Minister won't confirm the group's involvement.
Sam Kiley is with me from Colombo. This is a -- this issue of somebody still on the run, not knowing how many or the circumstances, this must be
a terrifying prospect for those in Colombo.
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, it is terrifying, Richard. And today, the police gave a bit more, if you like, energy to
that fear by saying that there was a truck and a car bomber at large somewhere on the streets of Colombo. Those two weapons, terrorists'
weapons have not been found.
Indeed, they may have intelligence that was faulty. But it does indicate just how paranoid Sri Lanka has to be at this time as the authorities
struggle to catch up with a group that, whilst they had intelligence, both domestic and foreign, that this group was planning a complex attack.
Some of the intelligence even pointed to attacks on Catholic Churches and western type hotels. But nonetheless, the authorities dropped the ball by
their own admission, failed to react properly to that intelligence, failed to raise the level of security.
And then now desperately trying to catch up with what may be a new threat in this country. This is a group that has been identified as an Islamist
group, hither to really not seen as anything much more than trouble makers. That clearly has now been entirely redefined by these massacres on Easter
QUEST: This idea of ISIS and the involvement of ISIS, we don't know whether it's true or not. I mean, clearly the ability to provide or to
produce a large scale, multi-location carnage like this does require a certain expertise. You've had experience of ISIS. Do you give credence to
KILEY: Well, the Indian Intelligence Services briefed to some of my colleagues at CNN that they had information from an ISIS source that they
had interrogated that an attack of that nature was in the planning and was being inspired by the so-called Islamic State.
So we have that coming from, if you like, an outside disinterested party in the form of Indian Intelligence. On top of that, there was intelligence
-- domestic intelligence that supported that idea too. I think that really the issue is that the skill set now to produce these sorts of
attacks is out there.
It's been polished in Iraq and Syria. It has been influenced by Hezbollah in South Lebanon, and it's promulgated on the internet --
QUEST: Right --
KILEY: Coordinating people and getting them into the targets is normally the big challenge. But in Sri Lanka, enjoying a tourist boom, there was
not much security, there was not much security around to protect these locations against this sort of malicious attempt.
QUEST: Sam, thank you, it's late tonight for you, we're grateful that you're with us tonight, thank you. Twitter and other social media giants
in the European Commission cross-hairs over fake news. The commissioner responsible for looking into these things will talk about that.
We'll also talk about what can be done with social media in an era of say, for example, mass killings online. In a moment.
[15:40:00] (COMMERCIAL BREAK)
QUEST: Twitter shares are up nearly 16 percent after strong earnings. The good news included a surprise increase in active users, a key metric for
investors. Also monitoring the company's campaign to clean up fake and abusive accounts. The shares are up 170 percent over the past three years.
Put strides ahead of Facebook over the same period which will close -- which will report by the way close tomorrow. Seth is with me, Seth
Fiegerman joining me. Is this the turning point for Twitter, do you think?
SETH FIEGERMAN, CNN BUSINESS SENIOR WRITER: You know, I think it feels like proof of a turnaround story that's really come to fruition. You
pointed out their stock returns over three years. If you look at just two years ago, this was a company that had stagnant user growth and sales were
on the decline, and it was far away from posting even its first profitable quarter.
Two years later, this is a company that is consistently profitable. In fact, its profit tripled year-over-year this quarter. Sales are on the
uptick, the one thing that hasn't really changed is that it's a user base that's remained relatively stagnant, but they've succeeded in shifting
investors to focus on how engaged and active those users are.
QUEST: And is this a case of Jack Dorsey coming back, putting it right?
FIEGERMAN: Yes, I think Jack was able to kind of shrink Twitter a little bit. He consolidated what their focus was on, got rid of certain services
like Vine, made very painful layoff decisions. And in the process I think managed to course correct the ship a little and stopped a blood-letting
company and turned it into a one that's now consistently profitable.
QUEST: Good to see you, sir, thank you very much indeed. The European Commission wants Facebook, Google and Twitter to do more to prevent -- and
actually interference. The EU says these tech giants have made progress in some areas, but there is more to do, and this is what it's risked.
The European Parliament elections next month as well as these eight national elections which have either taken place or due to take place in
the coming months. Vera Jourova is the European Commissioner for Justice and Consumers and Gender Equality. The commissioner is with me now, good
to see you.
VERA JOUROVA, EUROPEAN COMMISSIONER FOR JUSTICE & CONSUMER & GENDER EQUALITY: Good to see you, thank you for having me here.
QUEST: How worried are you with the European elections.
JOUROVA: Not only me, many Europeans are worried --
QUEST: What are you worried about?
JOUROVA: Well, we don't want interference from outside, from inside. We want the European elections to be fair, free of any interference. We want
elections to be the competition of ideas and visions.
QUEST: But --
JOUROVA: And not the competition of dirty money or dirty methods.
QUEST: Right, but the -- what responsibility do you place on the Facebooks, Googles, Twitters, and the like, if the Russians and others do
try to use fake accounts, stonewalling all the usual tricks that we saw in the U.S.?
JOUROVA: First of all, we want them to comply with the European law. We have the mantra, that's what applies offline has to apply online. So it
relates to illegal content which is hate speech, terrorism and other things. So we want them to respect our strict rules on data protection,
and the third thing, to do more against fake news and disinformation.
QUEST: Right, the first two are relatively easy in the sense that --
JOUROVA: You are right, yes --
QUEST: You know, let's wait, the first two, I mean, they're not simple, but they're not that -- but the third one, fake news. They would say,
look, we're doing all we can, what more would you like us to do.
[15:45:00] JOUROVA: You are right, that's the most difficult thing because lying is not illegal, it has always been here. But we took lessons
from some past elections and events. And we want Google and Facebook to proactively seek for this information and to put their facts and figures
and also to work as the member states to do the same thing.
QUEST: Following New Zealand and the massacre in New Zealand, New Zealand has introduced new laws for online distribution --
JOUROVA: Yes --
QUEST: And dissemination. The U.K. is talking about doing so. Do you worry that there will be a patch work quilt across the union, Germany is
looking at its own law, Austria is looking at its own law, that actually there will be no common standard.
JOUROVA: I really try hard not to let this happen. As the commissioner responsible for the digital area partly, we work together with the member
states to fine common response --
QUEST: Yes, but it's not happening so far, is it? They're all going their own way.
JOUROVA: It is happening to large extent. We have the code of conduct against hate speech. While Germany want its own way, it's true, you are
right, that there is some kind of fragmentation possible. But the Germans knew why they did it.
They had to act and they had to come as a regulation. But we have quite strong common understanding as the member states that we need to have the
QUEST: GDPR which of course -- yes, GDP --
JOUROVA: Yes, GDPR --
QUEST: Yes, after all as I still get -- what we have found is that many companies -- international companies who are already doing business in
Europe, they've basically gone to GDPR standards worldwide.
Only one website have I visited of a newspaper once refused to let me in because I was in Europe. But now you're trying to convince the U.S. that
it's the right way forward. Are you having any luck?
JOUROVA: U.S. knows what to do. I am not here to advise or to recommend something. I just come with the inspiration, and in the European case is I
think a good case to be inspired about because we did one very important thing. We gave back to the people the control over their privacy, and it
is quite an asset.
QUEST: I want to you listen to what Jared Kushner said about -- coming back to elections -- have a listen to what he said.
(BEGIN VIDEO CLIP)
JARED KUSHNER, SENIOR PRESIDENTIAL ADVISER: The whole thing is just a big distraction for the country, and you look at, you know, what Russia did,
you know, buying some Facebook ads to try to sow dissent and do it, and it's a terrible thing.
But I think the investigations and all the speculation that's happen for the last two years has had a much harsher impact on democracy than a couple
of Facebook ads.
(END VIDEO CLIP)
QUEST: Do you agree with Jared Kushner that it's just a terrible thing, these Facebook ads.
JOUROVA: I think it's a systemic error. We tried to do something efficient against it in Europe.
QUEST: But do you think the U.S. is determined as the Europeans are, to do something about it? Do you think it is in the U.S. -- that actually some
people benefitted from it, arguably the administration benefitted from it in some shape or form?
Do you see on this side of the Atlantic, the same commitment to root it out as you have in Europe.
JOUROVA: I see -- I see development in the U.S. I come here quite often, and I'm following closely what's happening here especially in the data
protection field. I was here last year after Cambridge Analytica case in March. I will give you a little bit of drama.
Cambridge Analytica was a big wake-up call for all of us. And I heard in Washington that we need to do something about that. It cannot be the case
that it -- that some company will come, abuse the data, steal the data, micro-target the people's will. We cannot continue like that. And I think
that the U.S. is now becoming more sensitive about all these risks.
QUEST: Good to see you commissioner.
JOUROVA: Thank you very much.
QUEST: We'll talk -- hopefully you'll be around in some shape or form after the elections, a new job and a new commission and you'll be back
again to talk more.
JOUROVA: We'll see.
QUEST: Thank you very much indeed.
JOUROVA: Thank you.
QUEST: We'll take a look later at the markets. They're heading towards records. The question is whether they'll get there and stay there. After
[15:50:00] (COMMERCIAL BREAK)
QUEST: For the QUEST MEANS BUSINESS trading post. No records. No records. No records for the Dow, the S&P and the Nasdaq. Today,
potentially a record closes on both the S&P, but we're flirting with this very closely. Only two above on the S&P and three or so on the Nasdaq as
we head towards the close.
This will be the first records of the year. In fact, we've got only to about September of last year before we had any records, forget Europe.
Europe is not going to see a record likely throughout the course of the year. We don't know, but it's highly getting unlikely.
Dow still got some way to go. The point is that from the lows of December, we have seen a remarkable V-shaped recovery in the market. It went whoosh
and it come back up again very sharply. And as Julia Chatterley now explains, it's all being about earnings and the bulls are back in charge.
JULIA CHATTERLEY, CNN REPORTER (voice-over): It was a Christmas eve on Wall Street that only a grumpy Ebenezer Scrooge could ever love.
QUEST: The market is down, it's off over 300 points, who knows what will happen in the last hour of trade.
CHATTERLEY: Last December 24th, the S&P 500 took a deep dive, falling 2.7 percent. The U.S. was in the midst of a partial government shutdown, the
Fed had announced a pretty controversial rate hike. And efforts by U.S. Treasury Secretary Mnuchin to calm the markets failed spectacularly when he
called the heads of major banks to see if everything was OK.
UNIDENTIFIED MALE: According to a source familiar with the phone call, these CEOs were totally baffled by a puzzled by the phone call.
CHATTERLEY: Before that day, stocks had never declined more than 1 percent on the last trading day before Christmas.
QUEST: They have just seen the Nasdaq market and the S&P go to a bear market.
CHATTERLEY: The market mood had been ugly throughout the month. Christmas eve would turn out to be the selling climax, but the damage was done.
Stocks suffered their worst December since the great depression with the S&P 500 falling almost 10 percent.
Then with a virtual flip of the switch or more precisely a dramatic Fed pivot, the market recovery began. In early January, Fed Chair Jay Powell
reading carefully from his prepared notes said the Fed had heard the market's distress.
JEROME POWELL, PRESIDENT, FEDERAL RESERVE: There is no preset path for policy. We will be patient as we watch to see how the economy evolves.
CHATTERLEY: The key word of course was "patient", and the Fed has remained so, leaving bond market investors assuming very little chance of even one
rate hike in 2019. Also helping sentiment, apparent progress in the U.S.- China trade talks, firmer Chinese economy data.
Meanwhile, corporate earnings are beating significantly lowered expectations. And despite February's blip, monthly job numbers have been
very solid. Fears of a recession have eased.
[15:55:00] As we hit fresh-record highs, the bears say stocks are due for a pullback. But one thing is certain, few on Wall Street want to return to
those dismal days of December. Julia Chatterley, CNN, New York.
QUEST: And look at how the day went, up and up and held those gains throughout the course of the session. United Technologies, Coca-Cola, P&G,
Verizon, a strong defensive stock. We are up 150 odd points, a gain of half a percent as we go towards the close.
And if you look at those stocks that did report, UT, Coca-Cola, all leading the gains. You don't often see Coca-Cola at the top of the chart here.
P&G, interestingly, P&G, which of course has had its own problems in terms of brands.
But P&G down at 2.7 percent, 2.5 percent, and Verizon are fond of defensive. In the middle, let's just -- one look and see where we've got
Boeing. Boeing hits the tweaks, and between as it can't decide which way here to travel, heading towards, it was up earlier, now it's down, it
We will have a profitable moment after we've had this short break.
QUEST: Tonight's profitable moment. There is less than a minute to go before trading is over. Do I or don't I? Do I take the risk and say that
there will be records for the S&P and for the Nasdaq? Well, we're two over there, we're about eight over there.
I think we are fair game. I could be proved wrong, and you could find me having to eat a lot of humble pie tomorrow. But I do believe with these
extremely strong earnings that we've seen, beating expectations, that it is the first records of the year.
And they seem to be holding it, in fact, they seem to be gaining. So one way or another, I think we're going to get some gains, we're going to get
two records today. S&P, it was some way off the Dow, Europe is a long way off from anything similar.
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 bell is ringing. The day is done. The Dow is up. There are records in the markets.