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QUEST MEANS BUSINESS
Donald Trump Says The U.S. Has The World's Best Economy; NASDAQ Has Been Flooding With All-Time Highs Throughout The Week; There Are Calls For New Sanctions On Saudi Arabia Tonight; Maria Butina Gets 18 Months in U.S. Prison; Uber Aims to Price Shares at $44 to $50 in IPO; PepsiCo Sues Indian Farmers Over Exclusive Potatoes. Aired: 3-4p ET
Aired April 26, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: We've got a very exciting end to the trading day here on a Friday on Wall Street, we're pretty much flat, even
hovering up and down all day. We did get better than expected best quarter GDP, but Intel and Exxon Mobil earnings weighing on the market. We are an
hour away from the end of trading.
As things stand now, the NASDAQ is at a record high and this is what is moving the markets on Friday, April 26th. Donald Trump said the U.S. has
the world's best economy after some bumper GDP numbers and Uber makes its latest pitch for the year's biggest IPO and Ford take things up a gear.
The shares are actually up 10 percent after some turbocharged earnings.
Hello, everyone. I am Zain Asher, and this is QUEST MEANS BUSINESS.
All right, welcome, everybody. A big surprise when the world's biggest economy. Talk of the U.S. economic slowdown was certainly premature in the
first quarter. The preliminary reading of GDP growth came in at 3.2% annual rate that was actually a lot better than what folks had been
anticipating. The economy managed to struggle risks, like trade disputes, severe weather and the government shutdown. The report put President Trump
in a buoyant mood.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: They were far higher than even the high expectations. GDP is an incredible number. But remember
this, not only that, we have a great growth, which is growth. We have great growth, and also very, very low inflation. Our economy is doing
great -- number one in the world. We are the number one economy right now in the world. And it's not even close.
(END VIDEO CLIP)
ASHER: So you had the President there saying that the U.S. is number one in the world. We're still actually waiting for growth numbers from other
countries of the first quarter. And that U.S. expansion could still cool off, but the United States looks like it is outpacing actually every other
-- almost every other -- I should say advanced economy.
In the latest IMF predictions for the world's eight biggest advanced economies, the Fund says the U.S. is actually out in front and Spain is the
only other one of the eight that is expected to grow more than 2 percent this year, Germany might not even quite make 1 percent.
Lindsey Piegza is chief economist at Independent Financial Services and joins us live now from Minnesota. Lindsey, thank you so much for being
with us. So pretty good GDP numbers for the United States, 3.2 percent. Just walk us through what's behind the numbers.
LINDSEY PIEGZA, CHIEF ECONOMIST, STIFEL: Oh, I think it was better than just good. I think that was a pretty solid number, well above expectations
as you mentioned, and beating the street consensus, which was at just 2.3 percent. So this really alleviates a lot of the concern that the U.S.
economy was falling off a cliff at least near term.
But what's interesting is when we look at some of the underlying details, there still is a lot of reason to be concerned about the health of the U.S.
economy as we move further into 2019 and beyond. And I say that because when we look at the details, most every key component of the report did
contribute to the GDP rise, which in part is why we saw such an elevated level.
But rising doesn't necessarily mean that it beat or continued to see this positive trend relative to what we saw last quarter. And in fact, the only
areas where we did see a beat relative to fourth quarter was in inventories, trade and government. And if we strip out those three
components and look at something called final domestic sales, U.S. GDP actually only rose 1.3 percent, the weakest pace of expansion that we've
seen in years.
When we look at consumption, consumption was still positive. So U.S. consumers are still out in the marketplace spending, but they did so at a
noticeably slower pace relative to what we saw in 2018. The same story carries forward for business investment, housing, and of course, we
continue to see this disinflationary trend in terms of inflation back in in the domestic U.S. marketplace. So really a mixed bag, when you start to
look a little further beyond that headline of 3.2 percent increase.
ASHER: I see what you're saying. So the headline number 3.2 percent, even though it sounds stellar, it is a little bit misleading. Obviously, the
Fed has talked about being cautious, they've decided they're not going to raise interest rates for the rest of 2019. Based on what you're saying it
doesn't sound like these numbers are unlikely to change that -- are likely to change that.
PIEGZA: No, I don't think they are. One number in and of itself, certainly won't change Fed policy. But again, as we look at some of those
underlying components, particularly in the weakness in consumption and investment, again, still positive, but it's that second derivative decline
or that loss of momentum relative to what we saw in previous quarters, and that's really going to set the stage for concern for the Fed.
[15:05:06] PIEGZA: If we continue to see this waning activity in those two key areas, it's very likely that we do see some disappointing GDP numbers
in the near term. And that's going to really add to this uncertainty for the Federal Reserve, keeping them on the sideline and maybe even expanding
the conversation to potentially a rate cut. If we do, in fact, see more disappointing growth reports after this more impressive start to the year.
ASHER: Okay, so speaking of disappointment, and just cautiousness in general, just a couple of months ago, everybody was talking about fears of
recession, the inverted yield curve, that sort of thing. I mean, all those fears still overblown, do you think?
PIEGZA: Well, I think there is absolutely a very real reason for concern when we talk about the risk of losing further momentum, sliding into maybe
the first negative print. Now, whether or not we're talking about a near term recession, a technical back-to-back quarters of negative growth
remains to be seen.
But I think it is very clear that there are some red flags in the domestic economy at this point in the domestic data that is showing a loss of
momentum, particularly on the consumer side, and in terms of business investment. And again, if we continue to see these two key areas lose this
level of activity, this positive level of activity, I don't think it's unreasonable to suggest that we do see negative growth or a possible
recession when we look out to 2020 and beyond.
Now, typically, in terms of the yield curve, as you mentioned, this is a good predictor of recession 12 to 18 months out and an inversion in the
yield curve. But typically, we look at twos to tens inversion. This time around, we saw some other types of inversion, which could be some sort of a
predictor but again, historically, we haven't seen yet that inversion twos to tens giving us that indication.
ASHER: So then, just based on Uber roll this idea of what you're saying that, you know, the recession fears are not necessarily that overblown.
There is some fear that is certainly a little bit justified. When you hear President Trump taking a victory lap, and saying that, you know, the U.S.
has the best economy in the world, what goes through your mind?
PIEGZA: Well, I think that's typical of politicians, right? Politicians want to make sure that they are pandering to their base to either sell the
current policies in place, or arguing against them. So I'm sure we'll hear from the other side of the aisle arguing about some of the temporary
supports that went into first quarter growth.
So I think that's a little more from a political or politically-fueled response, as opposed to some of the more fundamentals that we're looking at
in the individual details of the report. But certainly, to the President's credit, I think there was a lot of legislation that helped expand or
prolong the expansion in the domestic economy. And that's something that he's going to take credit for and certainly want to highlight as the 2020
elections are already on the forefront of most Americans minds.
ASHER: Yes, it is that game, the 2020 election, that's what the focus is squarely on. Lindsey Piegza live for us. Thank you so much. Appreciate
ASHER: All right, so even with strong headline U.S. economic numbers, Wall Street remains mixed in the final hour of trading as things down the NASDAQ
and the S&P have been trading at record highs. Right now, the Dow is actually the only index that is not yet at an all-time high.
The hotter than expected first quarter growth combined with surprisingly weak inflation, this should make for a fascinating debate at the Fed about
the direction of rates policymakers meet next week. And Intel shares are having a bit of a rough day on Wall Street because of disappointing
Tim Anderson of TJM Investors talked to my colleague, Julia Chatterley about the big picture for stocks. Take a listen.
TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: We've certainly had a whirlwind week of earnings topped off by some more earnings today. And of
course, the GDP number.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: What do you make? What's the most important here for investors?
ANDERSON: Well, I think what's very important is that though there's been numerous earnings disappointments, some very high profile stock declines of
10 percent or more Intel today, 3M yesterday, its largest decline since the crash in '87. And the market just has this way of working through all of
it and rotating into other names.
Those two names -- Intel and 3M --major components of the Dow, the Dow is down only 100 points right now in the last two days. It's just remarkable
the resilience behind the market, and how investors are -- there's no doubt that they're selling bad earnings. There's no doubt that they're also
taking some profits and some stocks that are reporting really good earnings. And that's very healthy. But now this GDP report is almost like
another variable that a lot of economists are going to have to go back and take a closer look at their model and take a closer look at what maybe this
means for the rest of the year for the whole economy.
(END VIDEO CLIP)
ASHER: Actually part of that market resilience that Tim was talking about just there has actually come from tech stocks. As we approach the earnings
endgame, we've been collecting big tech earnings like Thanos collects Infinity stones. Facebook has actually risen at more than 7 percent this
week after shrugging off various scandals to deal with. Privacy and that sort of thing.
[15:10:14] ASHER: Microsoft actually joined the trillion dollar club in terms of valuation. The very first time after impressing the market with
its own numbers, and Amazon has kept it going, announcing record profits after the bell last night. Their shares are actually at more than 1
percent today. We still have numbers from Apple. That's going to be next week.
With that kind of firepower, the NASDAQ has been flooding with all-time highs throughout the week, may still hit a record high with the NASDAQ
before the hour is done. Alison Kosik is joining us live now. So Alison, let's talk about Amazon to begin with. Because a lot of us were talking
about that they came in with stellar earnings. However, there were a few blips, one of them being the fact that their profit guidance wasn't that
great, partly because they intend to really invest in the future.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right, and some of that investment are those fulfillment centers, in healthcare, premium video
content. There are a lot of questions as to how Amazon can continue pulling in this kind of profit, when it continues to invest in these kinds
of expansions, these kinds of businesses.
But going back to that headline number, Amazon pulling in $3.6 billion in profit, that's more than double for the same time last year. So gone are
the days of Amazon, you know, bleeding money when it was acquiring and gathering its sort of businesses around it. Amazon has kind of joined the
club of learning what it's like to kind of make those consistent profits, but also deal with sluggish sales growth.
It is remarkable that once again, as we see Amazon continue to make these expansions, let's say into fulfillment centers that it is pulling in this
profit. Case in point, you think about Amazon increasing the amount of membership for its Prime members, and still in the quarter, increasing the
number of people coming in to be those Prime members, how many businesses do you know raising prices, and still able to pull in customers? Well,
Amazon is able to do that.
The other part of the profit picture for Amazon, Cloud computing and advertising business for Amazon Cloud computing, 41 percent sales increased
their advertising business looking healthy as well. And one thing that stuck out with me, Amazon upping the ante for its competitors, offering
that free-two day shipping benefit that it often gives to its Prime subscribers evolving that into one day, that one day shipping perk in an
effort to kind of increase those shopping numbers.
So Amazon is really putting the pressure on its consumers -- on its competitors rather by saying, look, "We can deliver in one day, what can
ASHER: What can you do? And when you think about just what a week, this has been for tech stocks. I mean, you and I were talking about this
yesterday, I think, you have Microsoft reaching that $1 trillion valuation partly because they've done so well with Xbox, Surface, that sort of thing.
And then you also have Facebook. I mean, they completely shrugged off all of their scandals when it came to privacy and security concerns. What do
you make of this week with tech stocks?
KOSIK: Well, forget about this week. Look at what the prognosticators were saying about first quarter earnings, everybody was saying we're going
to have an earnings recession. I don't see it. A little over a third of S&P 500 companies have reported it looks like we're not going to see first
quarter earnings go negative. We will see it flat or even positive.
So I think that all those negative naysayers who were saying we're going to see an earnings recession, I think that they were jumping the gun.
ASHER: Although Tesla didn't exactly have a good --
KOSIK: Good point.
ASHER: Unfortunately, all right, Alison Kosik, live for us. Thank you so much. Have a great weekend.
Okay, so looking at Europe those better than expected U.S. growth numbers helped lift stocks over there, too. Let's take a look here, the German DAX
and the CAC 40 Paris, you could see they closed higher. The DAX up about a third of one percent. The CAC 40 of about a fifth of one percent. In
London, the FTSE 100 was a touch lower dragged down by Royal Bank of Scotland saying that Brexit uncertainty is putting a cloud over future
All right, coming up here, tech unicorns unveil their IPO strategies. Uber keeps expectations low with a very cautious valuation and Slack cut out the
middleman in the direct listing, and after mass executions in Saudi Arabia, CNN has actually exclusive reporting that some men say they were tortured
into signing confessions, the man who inspired the Magnitsky Act, Bill Browder will join us. He is calling for sanction. That's next.
[15:17:10] ASHER: There are calls for new sanctions on Saudi Arabia tonight. The United Nations and Amnesty International are outraged over
the latest mass executions there. Now Saudi Arabia announced this week that the 37 men had been executed mostly for offenses of planning, terrorism or
spying, but trial documents reviewed exclusively by CNN reveal that contrary to Saudi claims, all defendants admitted their guilt.
Some of the 37 said they were innocent. Court filing show they pleaded for their lives and told judges they had been tortured into making false
confessions. Senior international correspondent Arwa Damon has this story from Istanbul.
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Among these hundreds and hundreds of pages are "please" statements from those who have now been
executed to the judge in court saying that they are innocent. Some of them say that their confessions were forced, that they had been tortured, that
they didn't know what they were signing.
One man, Wani Al-Adam (ph), 27 years old, slightly blind and deaf says quote, "Those aren't my words. I did not write a letter. This is
defamation written by the interrogator with his own hand." One of the other young men who was just 17 years old at the time that his so-called
crime was committed, his father pleading to the court on his son's behalf saying that his son was subjected to psychological and physical abuse, that
the interrogator dictated the confession and forced him forced his son to sign it just so that the torture would stop.
These documents that were exclusively obtained by CNN's Tamara Qiblawi center around the cases of 25 of the men out of the 37 that Saudi Arabia
executed on Tuesday. We reached out to Saudi authorities asking about the contents of these documents and whether or not the allegations of torture
had been investigated. We have yet to receive a response.
But the Saudi government did say on Tuesday that those executed had been found guilty and that they had had their day in court and that the Kingdom
had a zero tolerance policy. But it would appear from the content of these court documents themselves that there were numerous occasions -- numerous
instances where those who were put on trial were saying that their confessions were extracted under torture.
But despite all of the human rights allegations surrounding the Kingdom's activities, there seems to not have been much of an effect on a conference
that took place just the next day that saw major banks and financial institutions in attendance and human rights seemingly not on the table.
Arwa Damon, CNN, Istanbul.
[15:20:10]ASHER: The public outcry over the killing of Jamal Khashoggi prompted some overseas investors in Saudi Arabia to freeze their plans.
Six months later, that's begun to thaw.
Top executives from Blackrock, HSBC, JPMorgan and Morgan Stanley all appeared it an event in Riyadh on Wednesday just hours after the news broke
of recent executions. CNN has reached out to each of the banks and either got no response or was told no comment.
Several companies have already decided to go ahead with their investments. SoftBank is keeping the $45 billion it got from Saudi Arabia for its vision
fund. Earlier this month, AMC said it would go ahead with a plan to open dozens of movie theaters in the country. And Aramco, the state-owned oil
company had a mammoth $12 billion bond sale that was a smash hit with international investors Goldman Sachs, JPMorgan, HSBC, and Morgan Stanley
all accepted money to help Aramco sell the bonds.
Crown Prince Mohamed Bil Salman claims to be reforming and opening up Saudi Arabia, but with ever more claims of human rights abuses, overseas
observers are questioning what his reform really means.
In January at the World Economic Forum, Richard pressed the Saudi Finance Minister about the murder of Jamal Khashoggi, Mohammed al-Jadaan promised
his government was working hard to change.
(BEGIN VIDEO CLIP)
MOHAMMED AL-JADAAN, SAUDI FINANCE MINISTER: We are committed to reform. We are reforming and we will continue whether it is institutional reform
within the government, Intelligence system as announced by the government, but also in the economy. So there is a lot happening and we are committed
to continuing that journey.
(END VIDEO CLIP)
ASHER: Bill Browder helped put the Magnitsky Act into law in the United States, it empowers the U.S. to place economic sanctions on human rights
abuses. He tweeted a link to CNN story and wrote, "In Saudi Arabia, they tortured 37 men, forced them to sign false confessions and then executed
them, including three below the age of 18. Very Stalin-esque time for more Magnitsky sanctions on Saudi officials." Bill Browder, the CEO of
Hermitage Capital, joins us live now from London.
So Bill, here's my question to you. If Western powers decided to stop doing business with Saudi Arabia, because of these human rights abuses, how
much of an impact do you think that would actually have on the Saudi government on the Saudi royal family in terms of these executions?
BILL BROWDER, CEO, HERMITAGE CAPITAL MANAGEMENT: Well, first of all, the Saudi Royal Family is one of the richest and most internationally invested
families around and so if they found themselves not welcome in western capitals, if they found their money not welcome, that would be a very, very
severe punishment for them and they wouldn't change their ways.
Right now, what they do is that they were involved in this horrific killing of Jamal Khashoggi, they've now executed a whole bunch of people in a mass
trial, where three minors were executed and they don't seem to feel any consequence from this.
And so until there's a consequence, they're going to carry on doing all the terrible stuff they're doing and these two examples are just the tip of the
iceberg of the human rights abuses and oppressions that are going on in that country.
ASHER: So Adam Aron, the CEO of AMC theater chain, they're actually expanding massively in Saudi Arabia has come out and said, you know,
they're doing this for the Saudi people. That it's important for AMC to do business in Saudi Arabia in order to help the Saudi people not necessarily
the government, do you buy that?
BROWDER: Well, anytime a big company goes into a country that has a spotty record like Saudi Arabia, it legitimizes the government. And so I believe
that that he is talking his own book, his comments are self-serving for his own business and economics. But the one thing I would say is that people
like him and others may find themselves in a very uncomfortable position at some point in the future, when the West finally says enough is enough.
Because when you're in business in a country where serious sanctions are applied, you get stuck in the crossfire between the countries that are
sanctioning and the country that's being sanctioned. And we've seen this with many businesses that were doing business with Putin's cronies that
were put on the sanctions list last year, it's not a pleasant situation to be caught in that crossfire and at that point, they may then see it not
being such a great place to invest.
ASHER: Do you really think, though, I mean, just based on what you just said, do you really think that Western powers at least anytime soon, in the
short term will say enough is enough when you have President Trump, for example, indicating that he really does have no appetite to be tough on
Saudi? I mean, Saudi Arabia was the very first country that President Trump visited as soon as he became President.
BROWDER: Well, that is true. But at the same time, 17 Saudis were sanctioned for the grisly murder of Jamal Khashoggi by the United States
and by various other countries. And what I can say is that Trump may have his views but Congress and including many Republicans in Congress, are
outraged by the behavior of Saudi Arabia and are doing many things different things to try to tighten the noose on that country so they don't
get away with this stuff.
And so, you know, the world is a very fluid place. Donald Trump maybe a President for two years, maybe even President for six years, but it's not
going to be like that forever.
[15:25:10] ASHER: So what is at stake financially for Western powers just in terms of oil prices, and just financially in general, if they cut their
ties with Saudi Arabia?
BROWDER: Well, there's, there's plenty of countries that you can get oil from. We don't have to buy oil from Saudi Arabia. We don't have to invest
in Saudi Arabia. We don't have to buy Saudi Arabian bonds if they're behaving like barbarians, which is what they're where they're doing right
now. You know, it's totally optional. There's many countries in the world that produce oil.
The United States is actually an exporter of oil at this point, it doesn't have to -- the United States really doesn't need to buy oil from Saudi
ASHER: Is there any sort of western country in the wake of Jamal Khashoggi's murder, was there any western country be it Canada or any other
country that you felt really took the moral high ground in how they handled Saudi Arabia?
BROWDER: Well, it is interesting because even before the murder of Jamal Khashoggi, Canada, started speaking out on behalf of imprisoned human
rights activists and in response, Saudi Arabia cut all ties with Canada. But Canada, stood there with their head held high, and they said, we're not
going to budge. We're not going to be bullied into changing our views or changing our behavior towards Saudi Arabia. And that was a good public
posture to take.
The idea that we are beholden to Saudi Arabia is just nonsense. Saudi Arabia is not that important a country in the overall scheme of things.
ASHER: Right. Bill Browder, thank you so much for sharing your views. Appreciate that.
BROWDER: Thank you.
ASHER: All right, up next, no surge pricing for Uber, the ride hailing company plays it safe when it comes to the IPO valuation. Has it learned
from Lyft's mistakes? That's next.
ASHER: Hi everyone, I'm Zain Asher. Coming up on the next half hour of QUEST MEANS BUSINESS, there is no slacking for the IPO market as a new tech
unicorn joins the party. And the curious case of Pepsi and the potatoes. Indian farmers are outraged after being hit with legal threats.
So first, though, these are the news headlines on CNN at this hour. CNN has obtained documents that raise questions about Saudi Arabia's mass
execution of 37 alleged terrorists. Many of the defendants claim they were coerced into confessing or torture. The U.S. State Department official
says Washington is urging the Saudis to ensure basic rights in the kingdom.
A massive search is underway in Sri Lanka as security forces try to prevent more potential terror attacks. In one home, they found explosives, ISIS
flags and uniforms. The country's president says every household in the country will be checked in the wake of the devastating attacks on Easter
And Russian national Maria Butina will spend another nine months in a U.S. prison and then be deported. She had pled guilty to try and to infiltrate
conservative political circles and promote Russian interest before and after the 2016 election. Russia says the sentence is politically
And U.S. President Donald Trump says he is putting United Nations on notice. That his administration will not ratify an International Arms
Treaty. He made the announcement at the annual meeting of America's most powerful gun lobby. The treaty is meant to keep weapons away from human
And the judge presiding over the sexual assault case against Harvey Weinstein has banned the media from parts of Friday's pre-trial hearings.
It includes arguments about whether other allegations against Mr. Weinstein can be heard. Weinstein faces five felony charges, he has pleaded not
We've got details on the biggest IPO of the year earlier today. Uber unveiled the price range for its debut on the New York Stock Exchange. The
ride-sharing app is heading for evaluation of up to $84 billion U.S., that by the way is more than Delta, United Airlines and American Airlines
Matt Egan is live for us in the newsroom. So Matt, when you think about Uber's pricing, they priced it very sort of conservatively. How has what
happened to Lyft had an impact on Uber's strategy, do you think?
MATT EGAN, CNN BUSINESS SENIOR WRITER: So Zain, I think that Uber has learned some valuable lessons from its arch rival Lyft. One, don't get too
greedy on evaluation, and two, shore up support before the IPO. Uber filed paperwork with the SEC this morning, saying that it intends to sell shares
to the public at a range of $44 to $50 a piece.
Now, at the high end of that evaluation, it would be about $84 billion based on outstanding shares. And while that is a ton of money, and as you
pointed out, it's bigger than a lot of other major publicly-traded companies right now, it's actually a downshift from what Uber had
previously been indicating.
Previously, it was about 90 billion to 100 billion, last year, there was even talk of 120 billion. Uber also landed a pretty big endorsement from a
major established company, and that's PayPal. PayPal agreed to invest $500 million in Uber's common stock through a private placement at the IPO
price. And that's the kind of endorsement that I think could really sort of shore up some sentiment around this IPO.
Now, all of this is a big contrast to what happened with Lyft, which actually scaled up its ambitions right before going public, it raised the
price target. And what ended up happening is the company is actually still trading below its IPO price. I think it's you know, a reflection of the
fact that some investors are understandably nervous about betting on money- losing companies in a brand new industry, particularly at this point of the cycle where people are talking about economic slowdown and then eventually
potentially a recession.
And you know, Uber is losing money. The SEC filings that Uber filed this morning show that the company while it has about 90 million customers a
month, it also lost about a billion dollars just in the last quarter. And so I think that's another reason why it makes sense that Uber is tapping
the brakes here on the evaluation.
ASHER: Right, and investors obviously one of the things they're going to be really looking for is a path to profitability for Uber. So, let's talk
about slack because slack is obviously going public as well. But this is not your sort of traditional everyday IPO, it's sort of directly listing
[15:35:00] EGAN: That's right, Zain, so slack is taking a page out of the Spotify playbook, it's doing what they call a direct listing. And so what
that means is they're not going to be hiring investment banks and underwriters to test the market and value the stock, they're just going to
list it directly.
And that's a way to save money on some investment bank and IPO-related fees. The critics would say that, you know, it's a risky strategy because
you could have some short-term, near-term volatility in the stocks since everyone is trying to figure out and assess how much it's worth.
But you know what? Spotify pulled it off, and so they proved that it's possible. The other thing, you know, about a direct listing is that you
know, they're not actually raising money. While Uber is going to be raising billions of dollars, slack is not. What this really is, is about
insiders, the early investors, venture capitalists and the employees having a way to sell out their shares.
It gives them liquidity. But you know, when you think about slack, this is another example of a company that is growing very quickly, it's got 10
million customers, users every day. It's in 150 countries. But it's another company that is losing money. It posted a loss of $139 million in
the most recent fiscal year.
So it's another important test to see whether or not investors want to bet on a company that is not profitable right now.
ASHER: Right, Matt Egan, live for us there, thank you so much. OK, so I want to turn now to Ford. One of the standout performers on Wall Street
today, shares are actually up more than 10 percent after first quarter earnings fell by less than expected.
Strong sales -- truck sales in the U.S. were the big factor there, partially offsetting weaker numbers in China and other international
markets. Joining me now, Rebecca Lindland; the founder of rebeccadrives.com. Rebecca, thank you so much for being with us, so Ford
there beating expectations, despite the fact that the car industry as a whole is struggling right now. How have they done that?
REBECCA LINDLAND, FOUNDER, REBECCADRIVES.COM: Well, you know, they really had to rely upon their F series Pickup truck, which is you know, really the
bestselling vehicle in the states for the last few decades. And it's an incredibly profitable vehicle for them.
The average transaction price of the F series is $47,000, which compared to the average transaction price of all vehicles is $35,000. So they really
make an incredible amount of profit off of their F series Pickup truck.
ASHER: Just shifting gears in terms of talking about a possible merger, Renault wants to merge with Nissan, but Nissan executives are not a fan of
the idea. Just walk us through why not and what's happening on that front?
LINDLAND: Yes, so Renault is actually much smaller than Nissan, but it has more of a stake in Nissan than Nissan does in Renault. So it's not an
equal partnership right now. And Renault has gone to Nissan to say we want to see about making this an equal partnership.
This is something that Mr. Ghosn, who is now under indictment in Japan, always protected Nissan against, but then he started to get this idea that
this might be a good idea. And this was one of the things that people say led to his indictment with Nissan basically saying we want to protect our
company, we don't want Paris to run us.
But at the same time, Renault says, well, they don't want to be run by Nissan. So, it's this back and forth and just incredible tensions, a lot
of complications, and it's just kind of a big fat mess right now. I mean, it does --
ASHER: It's like a technical -- yes, it does sort of feel as though since Carlos Ghosn isn't there anymore, the alliance between Renault and Nissan,
it does sort of feel like that it's in jeopardy.
LINDLAND: Well, you know, it's not in jeopardy on a day-to-day basis, in that there's hundreds of people that are working every day on making
products that benefit both of these brands as well as Mitsubishi. And Mitsubishi standing in this proposed alliance is not established yet.
So on a day-to-day basis, the alliance continues. What is -- what is in turmoil is the structure and the ongoing structure. What does this look
like in a post-Ghosn world. And that's what Nissan is trying to figure out, and Renault is offering this as a possible solution.
ASHER: All right, Rebecca Lindland live for us, thank you so much, have a great weekend.
LINDLAND: Thank you.
ASHER: All right, still to come here on QUEST MEANS BUSINESS, a legal fight that's not small potatoes. The owner of Frito-lay says some farmers
are treading on its territory. We'll explain after the break.
[15:40:00] (COMMERCIAL BREAK)
ASHER: It's not exactly a traditional recipe, Pepsi and potatoes. But put these ingredients together and you get a huge uproar. PepsiCo is actually
suing four Indian farmers, accusing them of growing a certain type of potato that it says is exclusively for Lay's chips.
Is reportedly demanding damages amounting to hundreds of thousands of dollars. Farmers Association in India say the law is on the side of the
small farmers. Now, Pepsi says it will drop the lawsuit if the farmers that it's suing join its authorized cultivation programs.
It's just one example of friction between small Indian operators and international mega corporations. We've also seen local retailers accuse
giants like Wal-Mart and Amazon of running -- or ruining rather their business. Hannah Lownsbrough is the executive director of SumOfUs; an
organization using people power to hold companies to account.
She joins us live now from London. It -- you know, Hannah, it does actually seem rather aggressive to have this multi-national -- multi-
billion dollar company suing four small farmers. I mean, these farmers can't really be that much of a threat, can they?
HANNAH LOWNSBROUGH, EXECUTIVE DIRECTOR, SUMOFUS: We don't think so. I think some of us members feel that, you know, this is a really good example
of a very large corporation taking on very small -- a very small pro -- you know, in many cases family-run businesses and going after them for amounts
of money that are kind of spare change to a company like PepsiCo, but can be absolutely ruin for you know, for a small farmer.
ASHER: How are the farmers actually supposed to know that a company like Pepsi has exclusive rights to a certain type of potato?
LOWNSBROUGH: Well, I mean, I think this is exactly the question that some of us members, you know, would ask really. And it sort of highlights the
way in which it makes -- it's a bit of a nonsense really when these huge corporations seem to own things like seeds or water supply. These sorts of
things which, you know, to most people's way of thinking really belong to all of us.
So, you know, we're not surprised that the farmers, you know, didn't really believe themselves to be doing anything wrong, and that this lawsuit has
come as a huge shock and is completely overwhelming.
ASHER: The lawsuit for -- was for over a $100,000 for each of the farmers. I mean, when you have a massive -- I mean, I can't even imagine what it's
like to be a small time farmer in a place like India and having Pepsi suing you. I mean, how do farmers protect themselves?
LOWNSBROUGH: Well, I think it's difficult. I think we're seeing civil society in India has really come forward to stand with these farmers and
challenge the behavior of PepsiCo in this case. But also you know, similar corporations. You mentioned Amazon in the introduction, you know, who have
also been accused of doing things which are really damaging many Indian domestic operations.
[15:45:00] And I think there's some evidence that the Indian government is taking steps to regulate, but these are -- these are tough questions to
answer because it is critically important that, you know, we don't end up in a situation where a handful of companies are you know, owning the seeds
that we rely on to produce our food supply or, you know, are responsible for almost all the business that gets done online.
ASHER: So Pepsi's argument is that they filed this lawsuit to protect the interest of thousands of farmers who are part of its potato farming
program. Is that a fair argument do you think?
LOWNSBROUGH: I don't think so really. I mean, I think you know, you asked a good question at the beginning which is, you know, how are they supposed
to know really that these seeds are sort of, you know, they belong to somebody else. But I also think that, you know, arguably, PepsiCo is
really setting up a relationship of dependency between some of these farmers with whom it has its cultivation -- farmers with whom it has its
We're seeing examples in some cases for instance of seeds being developed that can -- will only grow and will only thrive if they're also raised
using fertilizers or what have you, that are also produced by some of these parent companies. So you are seeing sort of small farmers really ending up
sort of in-hawked to some of these very big businesses.
And it's hard to see that as kind of, you know, creating the conditions in which everybody can make a success of -- make a success of a small
ASHER: All right, Hannah, thank you so much for being with us, appreciate that.
LOWNSBROUGH: Thank you.
ASHER: OK, so from the farms of India, we are taking you to the lush landscape, that is Hawaii. If you're going to do the hula dance, you
better get your hips in gear. Richard Quest is going to be showing us all how it's done, we'll be talking tourism in two shakes, that's next.
[15:50:00] ASHER: That music should be a clue to where we're heading next. I'm filling in for Richard Quest this Friday night, but he actually
doesn't have a day off, he's got an extremely difficult awful assignment filming one of the most beautiful remote islands in the entire world.
Richard Quest joins us live now from Waikiki Beach in Hawaii.
Richard, I was there six months ago actually in Kuhio, and it's beautiful, looks as though, Richard -- it looks as though sadly, Richard can't hear
me. It looks as though we'll have to come back to him. All right, now, you don't need Hawaii's natural beauty to enjoy a holiday.
For the CEOs of Radisson hotels, beautiful design might be the key to beating the opposition in a crowded hotel market. Richard went to meet
Federico Gonzalez for a tour of the world's first ever design hotel. Take a listen.
RICHARD QUEST, CNN (voice-over): The Royal Radisson hotel in Copenhagen. The world's first design hotel, it dominated the skyline for more than five
decades. And it's here that I meet Radisson's chief executive, Federico Gonzales.
FEDERICO GONZALEZ, PRESIDENT & CHIEF EXECUTIVE OFFICER, RADISSON HOSPITALITY: Well, I think it helps, but at the same time it's really
exciting with their latest and you really can't sign --
QUEST: Federico manages Radisson's seven brands, and more than 1,400 hotels worldwide.
(on camera): Is it intimidating competing for example against Marriott with its million rooms over more than 30 brands?
GONZALEZ: No, not at all, it's exciting. When I look to Radisson Hotel Group, and what we are doing in our building is much stronger and it will
last much longer.
QUEST (voice-over): For Radisson, it's been a bumpy ride. Three years and three different owners.
(on camera): I'm often left wondering what is Radisson?
GONZALEZ: It's towards those consumers who do not want or cannot pay the price of the high, but they want a more memorable experience and they want
something more exceptional. So we call it affordable luxury.
QUEST (voice-over): And so to this design elite hotel, the Royal Copenhagen, the vision of the architect Arnie Jacobson.
GONZALEZ: Welcome in.
QUEST: Nice --
GONZALEZ: This was the inner room where he stays because he wanted to really know and understand what was lightening, what was the views, how the
views would change.
QUEST: This hotel is where savings meets functionality, according to Gonzales.
(on camera): These lights.
GONZALEZ: Yes, if we would build this today, it's much more cost effective than putting 20 different lights across.
QUEST (voice-over): But I'm going to interview a hotel CEO, and of course, we have to test the most important part of the place.
GONZALEZ: You are now behind a bit, right?
QUEST (on camera): Right --
GONZALEZ: And then you can feel not only the bed, the mattress, also the tissue. Now, what is more important is, what are the figures you have? And
if in your highest lead, you can choose where to sleep, different textures, different size, and then now you can look to your temptations. This is
QUEST: You ought to be ashamed of yourself.
GONZALEZ: Oh, you should have another one.
QUES: And as for customer service, no skimping there.
GONZALEZ: It is a culture. This is a company where every employee or associate is absolutely obsessed with servicing them, and they are worth
every moment matters.
QUEST (voice-over): An inspiring strategy that will ensure this proud hotel group will remain my host.
ASHER: All right, let's try this again, Richard Quest is joining us live now from Waikiki Beach, I believe he can hear me. So Richard, as
beautiful, as stunning as it looks there behind you, I was surprised to hear that tourists spending on Hawaii is actually falling. Why is that?
QUEST: And it's interesting, that's one of the conundrums, Zain, that they don't quite understand. In that report you heard how hoteliers are having
to find new ways, different things that tourists want. And that's certainly the same case. Let's take Waikiki Beach in Hawaii where I am for
World of Wonder.
Look, it's packed. There's no shortage of people who are coming here, actually visitor numbers are up by some 2 percent to 4 percent. But the
spending, and that's the important part in many ways, the spend is down. And this is something that many resorts are finding happening.
And Zain, what's really worrying about this is spend is the holy grail, with a resort like Hawaii and Honolulu, you want more tourists, but you
want the right sort of tourists, you want them to stay longer and you want them to spend more. So Zain, that's one of the interesting things. It is
paradise, but it's paradise with clouds on the horizon.
[15:55:00] ASHER: And just talk to us a bit more about hula dancing. I understand that you got to try some yourself, Richard.
QUEST: Yes, because we're here for World of Wonder. And one of the important things about is, is what's the DNA of this place? The 50th state
of the union, we're familiar with Hawaii 5-0. I was determined to get that in. We're familiar with all of that.
But what about hula? So I got a chance to try it out and realize it's not the tacky coconut bras and grass skirts that you often see. My hula wasn't
very good, but it gives me an understanding of the spiritual DNA of Hawaii. And this afternoon, I get to try surfing, because again, as the Duke showed
some years ago, surfing is part of the spiritual heritage of these islands.
ASHER: Richard, you've got skills, I just watched that video, you are great at hula dancing, I'm inspired. Richard Quest live for us there,
thank you so much. All right, so just a few minutes to go for the end of trading week on Wall Street. After the break, we've got the final numbers
and the closing bell. That's next.
ASHER: All right, so let's take a look at the numbers in the last few minutes of trade on Wall Street. As you can see behind me, the Dow is
actually basically flat, up about 57 points or so. And we've hovered up and down throughout the session, despite some pretty good, I should say
stellar numbers in terms of first quarter GDP.
The Dow has been dragged down by Intel earnings that aren't necessarily that great, and also ExxonMobil earnings as well. And my producer, Tom,
simply cannot contain his excitement because we're told that the Wu-Tang Clan is going to be ringing the closing bell today at some part to
celebrate a documentary on "Showtime" that is about them of "Mics and Men".
And as I mentioned, it was all about stronger-than-expected first quarter growth in terms of GDP in the United States, combined though with
surprisingly weak inflation. All of that should make for a fascinating debate when it comes to the Fed decision about the direction of rates.
They're not going to raise interest rates this year, but who knows? Policy makers do end up meeting next week. And that is the closing bell on Wall
Street. As I mentioned, the Wu-Tang Clan as you can see up there is actually ringing the closing bell this Friday, and that is it my friends
for QUEST MEANS BUSINESS, I am Zain Asher, thank you so much for joining us, the news continues right here on CNN.