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ISIS Leader Al-Baghdadi Appears in Video After 5 Years; Boeing Holds First Shareholder Meeting Since 737 Max Crisis; U.S., China to Resume Talks in Bid to End Trade War. Aired 3-4p ET

Aired April 29, 2019 - 15:00   ET


JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Welcome to the show. We are in the last hour of trading this Monday, the beginning of a busy week of

earnings. Trade talks and the Federal Reserve of course, too. Right now, as you can see the Dow up some modest gains, one-tenth of 1 percent,

perhaps a bit more exciting here, the S&P and the NASDAQ as you can see they're hitting fresh record highs in the session today. Fine, but not up

by much, but this is what investors are focusing on and it's enough.

Boeing shareholders meeting turns tense. The company's CEO pledges to re- earn trust. An investor backlash of Bayer. The board plans a crisis meeting. And franchisees assemble, Disney has a plan to repeat the success

of "The Avengers" series.

I'm Julia Chatterley in the world's financial capital, New York City. It's Monday, April 29th. And this is QUEST MEANS BUSINESS.

Welcome to the show once again, tonight, Boeing management facing a shareholder crisis after two fatal crashes, lawsuits and investigations.

CEO Dennis Muilenburg took questions amid the biggest crisis of his professional career. He told investors that Boeing is still working on new

software and training for the 737 MAX, and that it will become the safest plane in the air once they had a fix.

He also said pilot error might be partly to blame for the Ethiopian Air crash, contradicting statements from that airline's CEO and he survived the

shareholder revolt that would have split his role as Chairman and CEO.

Muilenburg's remarks began with a moment of silence for the victims of the crashes and ended with contentious shouting from reporters. In the middle,

Dennis Muilenburg was asked if he should still be at the helm of Boeing.


UNIDENTIFIED FEMALE: Have you considered resigning?

DENNIS MUILENBURG, CEO, BOEING: I think the important thing here again, is we're very focused on safety. And I can tell you that both of these

accidents weigh heavily on us as a company. I've had the privilege of working for the Boeing Company for 34 years. And we know that lives depend

on what we do. We take that very, very seriously.


CHATTERLEY: Drew Griffin is our senior investigative correspondent. He's in Chicago where Boeing held it shareholder meeting. Great to have you

with us, as we pointed out there, Drew, he remains is the CEO and the Chairman of Boeing. But that didn't stop some pretty pointed questions.

Boeing pushing back and saying, "Look, they believe that this remains a software fix issue." But that didn't stop the reporters were pressing him.

What were your takeaways from this conference -- his press conference?

DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: Well, Julia, remember, this is the first time that we've been given any access to the

CEO since these two fatal crashes, 346 people dead, civil aviation authorities across the world grounding this plane. And Dennis Muilenberg

came out today and basically said, there was nothing wrong with his plane, the 737 MAX was certified correctly, all the systems work, did point the

finger at pilot error in both of these crashes.

And this fix that he's talking about, if you listen to him, it's just a fix for the pilots basically, letting them fly this plane safer. It was a

confusing message. Reporters were left shouting at him as he left the room after just about 15 minutes of taking questioning. But that is Boeing's


They're trying to get this software fix passed aviation officials so that they can get the 737 MAX back up off the ground. But Julia, they think

they have and had a safe plane here to begin with.

CHATTERLEY: And Drew, you raise some very important points. I mean, in the shareholder meeting earlier in the session, as well, and I know you

were there. Someone said look, are you going to actually get on some of these planes when they do in fact get them back into the sky. And he said,

"Look, I've been on two of these flights in the last three weeks. We will be confident when we get them up in the air that everything will be fixed."

But I can't help having watched this whole thing and how contentious actually it got towards the end that even he was being asked questions

there that he simply couldn't answer amid an ongoing investigation here. Would you agree with that?

GRIFFIN: I would and I think that's what -- in the U.S., you have Federal and congressional investigations going on here. I don't want to get too

technical, but Boeing had a flight system on board its aircraft called MCAS. We've all heard about that. What triggered MCAS was a single

sensor, a single AOA sensor -- angle of attack sensor, which Julia is known to fail.

[15:05:05] GRIFFIN: So the question starts at the very beginning, how could Boeing design a plane with no redundancies and no tests to see what

happens when that vane fails, and triggers the system that is going to do something to the airplane unbeknownst to the pilots? That question remains

unanswered. And Boeing says it is fixing that, but not fixing it to the point where they're admitting that it was a problem in the first place. It

doesn't make sense. And I think that's when the questioning got tense, and you saw the CEO left the room.

CHATTERLEY: Absolutely, and Drew, this was the standout for me. He got a direct question from one of those reporters saying, why did you put this

MCAS system in the plane without warning the pilots? We've all been calling it this anti-stall software. It was put in place as a result of a

shift in the positioning of the engine that was ultimately making the plane more fuel efficient. But there are questions about whether that so

dramatically altered the functioning of the plane that perhaps problems were created. I mean, that remains an open question.

He called it handling system, and it wasn't that material a difference that actually the pilots need to be warned. And yet, they're now making a dual

system of sensors mandatory for all these planes that will be a standard. And they're also going to be further educating the pilots. I mean, there

were lots of unanswered questions here. Huge questions, I think for Boeing that haven't been addressed.

GRIFFIN: Yes, there's lapse in logic there as to how this thing got designed and rolled out. I will tell you, according to sources that Boeing

believes the pilots were warned or not warned, but they were told in their manuals about what MCAS was, even though MCAS, those initials weren't laid

out. It was to help basically, this 737 MAX overcome the problem it had, a design problem it had with stronger engines on a very old frame, and to

help the pilot or help the plane fly in this pitch mode that would not create a stall.

It is sort of technical, but really, it's not. The situation is should the pilots have known about this system? Yes. Did they? No. Should Boeing

have depended on two sensors or backup sensors instead of one? Yes. Did they? No. Are they fixing both of those situations now? Yes, they are.

So the question is, did you roll out a plane with safety design flaws? And Boeing says, no.

So the logic doesn't stream. We'll see what the Federal and other civil authority investigations come up with. And of course, it'll be about a

year before we know what actually did cause this chain of event accidents both in Ethiopia and Indonesia which led to this. And you know, maybe it

was pilot error in the end. But certainly, Boeing is not admitting at this point that its plane had much to do with this.

CHATTERLEY: Critical. Drew Griffin, there in Chicago for us. Thank you so much for that. And of course, no sense of the timeline of when these

planes -- this jets will be back up in the sky. We want you to join the conversation. Get out your phones, and go to If you have

lost confidence in the Boeing 747 MAX to the point where you simply wouldn't get on board one of these jets. Cast your votes. We want to hear

from you at, you'll see the results on the bottom of your screen and we'll talk you through those later on in the show, too.

Now after two crashes and 346 deaths, for many companies, it would spell ruin. But for Boeing, the financial fallout actually has been relatively

mild. Shares are down some 10 percent since the Ethiopian crash in early March. They're still up 18 percent year-to-date. At least seven airlines

are reportedly reconsidering or reviewing quote, "their orders for more Boeing planes."

Later on in the program, you'll hear from the chairman of Emirates. He says he might switch to Airbus. So far Indonesia's Garuda is the only

airline to actually cancel. And there was a brewing shareholder revolt going on in today's meeting in Chicago, but a vote to strip Dennis

Muilenberg of some power by splitting up the CEO and Chairman's role failed by a wide margin as I mentioned earlier.

Christopher DeNicolo is a Boeing credit analyst at S&P Global, and he says the worst is yet to come. Great to have you with us. What do you mean, in

terms of the worst is yet to come? You mean just quantifying the financial impact of grounded flights, whatever the fix is, and of course,

compensation payments, potentially, too.

CHRISTOPHER DENICOLO, BOEING CREDIT ANALYST, S&P GLOBAL: Yes, no, thank you, Julia. Yes, since the grounding occurred, you know, sort of the end

of the first quarter and the company just reported its first quarter results, you know, we sort of sort of the initial impacts but it was only

for a few weeks, you know, for Boeing,

[15:10:02] DENICOLO: You know, so now as they've grounded the aircraft and not delivering any, they've cut production, but they're going to be

building a significant amount of inventory over the next you know, weeks or months until the company gets clearance from the FAA and from other

countries to resume, you know, delivering the aircraft and for them to begin flying again.

So, it looks like, the impact will increase over time, like you said earlier, it's a little uncertain of when the aircraft will be approved to

fly again. You know, I guess we're looking at sort of the end of the summer is our kind of base case at this point. But so far, the impact has

been minimal on the company.

CHATTERLEY: Christopher, what did you make of the press conference today, because as you say, you believe the company will not be able to resume

those MAX deliveries until later this summer? But there's lots of assumptions in there that they do actually manage to fix this problem that

it is simply a software problem, are you still assuming that this is a software fix, and based on what the CEO said today, they are on top of

this, it's just a case of shoring up confidence for consumers, and for the airlines here that this plane is in fact safe with those fixes and the

training in place?

DENICOLO: Right. I mean, I think the preliminary results from the investigation of Ethiopian crash didn't indicate any sort of new problems.

So it does look like the software will fix it. But like you said, the key now is once they get the software fixed, they have to get it approved by

both the FAA in the U.S., and then the other regulatory agencies around the world, which may want to take their own walk, which could drag out the

whole process.

And then while they're doing that, and afterwards, they need to reassure both the airlines and the flying public that the aircraft is safe.

CHATTERLEY: How credible is it for airlines to say, "Look, we're going to cancel orders here. We're going to shift to Airbus," because when I look

at the backlog of the equivalent that Airbus produces the Neo, it doesn't seem credible that airlines could shift without having to extend the time

horizon that they have to wait to get delivery of these planes. Is the truth here actually, that there's not really an alternative source here, if

you want it, at least in the short and medium term ban Boeing?

DENICOLO: You know, if you currently have MAX orders, like you said, you can't switch over to Airbus, because Airbus is producing the Neo as fast as

they can, because they, like I said, have a six-seven year backlog of aircraft.

So in the short term, although Airbus would be able to increase production somewhat, you know, they wouldn't be able to sort of certainly replace any

significant order cancellations of the MAX. But over time, we could see a shift of orders from Boeing and Airbus, you know, if there is confidence

loss in the aircraft, but like you said, the near term there's, there's really -- the reality of it, there's just not other aircrafts for them to


CHATTERLEY: Are you surprised by how resilient the share price has been here? I mean, I know that this company is a prolific provider

traditionally of stock buybacks, they have a juicy dividend. But when the future of this company is so reliant on particularly the order book for

this plane and the 737 MAX, which has been such a workhorse for them, tied to the fact that I look at our survey and 91 percdent of the people that

are responding and saying they've simply lost confidence in the Boeing 737 MAX. I feel like there's a disconnect there somewhere.

DENICOLO: Well, yes, I can't comment on the stock price, you know, directly as a credit analyst, but you know, certainly the credit of the

company, we have an A rating on them. We still think they have sufficient liquidity to get through this crisis. Certainly in the near term, they

have $7.7 billion of cash and a $5 billion revolver.

You know, the long term reputational impact is a little harder to factor in, like I said, does this result in lower orders or cancellations in the

future? In the near term, you know, the company is very strong. I mean, like you said, they've generated significant cash flow over the last few

years. They've been returning to the shareholders through dividends and share repurchases. They shut off share repurchases after the Ethiopian

crash and we were expecting them originally to do something around $10 billion to $11 billion for the year, so they did two and a half in the

first quarter before the second crash and then they shut it off.

So if you kind of want to size it that way, we assume that they have that other $8.5 billion as a bit of cushion to get them through this problem.

CHATTERLEY: That's a great point, $15 billion worth of cash potentially available, should they require it. Christopher, great to have you with us.

Thank you so much for that.

DENICOLO: Thank you.

CHATTERLEY: Okay, Bayer is set to hold a special board meeting in the coming weeks to discuss its shareholders recent rebuke of its CEO. The

majority of Bayer investors cast a vote of disapproval of management at their annual meeting on Friday. The shares fell 2 percent in Frankfurt.

Anna Stewart has this report.


ANNA STEWART, CNN REPORTER: Well, Julia, as you can see, Bayer share price and mismanagement still being played by this acquisition of agricultural

company, Monsanto last year. Now, just two months after they made the acquisition, a jury in the United States found a Monsanto weed killer

called Roundup was responsible for causing a man's cancer and it awarded damages of $289 million. Those damages were later reduced to $78 million

and Bayer continues to appeal the case.

[15:15:10] STEWART: But since that initial verdict last August, over 13,000 other plaintiffs have filed complaints and Bayer share price has

fallen 38 percent.

Now at Friday's AGM, the Bayer CEO insisted that the Monsanto acquisition was the right decision. He said it is already delivering good financial

results. And crucially, he maintains that Monsanto's weed killers are safe, and he says they'll be proven so in court.

But during this 13-hour meeting, a majority of shareholders refused to endorse the board's actions last year. Now, this is a vote that is not

binding, but it's hugely symbolic. This type of endorsement vote is a really routine usually uneventful part of German AGMs, a majority of

shareholders voting against it is considered extraordinary.

For example, when 39 percent of Deutsche Bank shareholders voted against Deutsche management in 2015, not even the majority, the co-CEO stepped

down. So here, the pressure is really on for the Werner Baumann. He must win over shareholders trust, as well of course as the thousands of legal

complaints against Monsanto's weakness, or he risks further investor revolts and even the possibility of activist shareholders trying to seize

control of the company's strategy all together --Julia.

CHATTERLEY: Anna Stewart, thank you for that. Now, it's a day of records here in the QUEST MEANS BUSINESS trading post. The S&P and the NASDAQ are

on track to close out fresh record highs. That means we may need to update the boards here after the market close. The S&P is getting a boost from

telecom, financials and industrial stocks. And we'll keep an eye on that certainly.

It's also the beginning of a busy week of earnings this season. Spotify got the ball rolling, beating analyst expectations, but its shares are down

slightly that despite reporting a record 100 million paid subscribers.

Samuel Burke joins us now from London. Unfortunately, Samuel, it's not about the paid subscribers here, it's the whopping amount of competition

that keeps coming on to market here to challenge Spotify. They have one heck of a challenge on their hands. Walk us through this, and the numbers

of course.

SAMUEL BURKE, CNN BUSINESS AND TECHNOLOGY CORRESPONDENT: It is interesting because at first, the stock was actually surging when people saw that they

hit this big round number which we know investors love. That's the paying subscribers.

But if you look at the people who aren't paying, who aren't as valuable, but are still very important, those free subscribers, well, they listen to

ads, and there just weren't as many as people thought. That's why the numbers are in the red the way you're showing right there.

But if we go to my three takeaways on this, Julia, I think the one thing you have to think about over and over again, when it comes to Spotify:

competition, competition, competition. If we just get that up on the screen, I'll show you.

Amazon has four different music services they're offering. They have the unlimited subscription, they have the Prime subscription, the new free one,

and now there's even talk of a high definition -- high fi service -- four services from one company. Then Google adding a free music service. And

even Spotify admits that Apple Music has a huge advantage over them because of course, Spotify has to pay Apple if they get their subscribers via the


When you look at the ecosystems of these other competitors out there, like Amazon, like Google, you think to yourself, how is Spotify going to be the

dynamic ecosystem that its competitors already are?

CHATTERLEY: Yes, how? That's the ultimate question and we will take time to answer that. Alphabet now, because they're out after the bell tonight

as well. What do we need to watch for in their numbers?

BURKE: Well, I'm looking backward when I think about Alphabet, because for the last four quarters in 2018, every single quarter, they were about 15

percent over analyst expectations. So we're expecting a very good quarter for them again.

I'll just put up on the screen the three lookout points that you want to have when this comes through in the next -- when the results come through

in just a little bit here. Number one, big payoffs. They've invested in companies like Lyft, and now they're reaping the reward of that. Number

two, advertisers are increasingly looking at putting their ads on Amazon's platform. So I want to see if that's affecting Google. And number three,

yes. Huge E.U. fines that you and I talk about day in and day out, Julia, but at the end of the day, we don't ever hear talk about setting money

aside the way Facebook has mentioned. So maybe these $5 billion fines for Android are really just a blip on the radar for them.

CHATTERLEY: Peanuts. That's what I call them. Not big enough. Samuel Burke, thank you so much for that.

All right, coming up, going, going gone. Maybe. Occidental swoops in at the last minute to outbid Chevron for control of oil drilling at Anadarko

and at first glance, it might appear unassuming, but it's a video that's causing shock waves from Downing Street to Pennsylvania Avenue. We look at

images that appear to show that the head of ISIS is still alive. That coming up after this.


[15:22:45] CHATTERLEY: It looks like the highest bidder could ultimately win oil driller Anadarko, it says it will resume negotiations quote with

"Occidental." It's the latest development in a bidding war between Occidental and Chevron, a real David versus Goliath story. Occidental

outfit it's much bigger rival last week. Shares of Occidental are down around 1.5 percent. Chevron though has barely budged. Matt Egan joins me

now. Great to have you with us, Matt.

What's the likelihood here then that Goliath comes back in and says okay, we'll raise our offer.

MATT EGAN, CNN BUSINESS LEAD WRITER: Right. So this really is one of the most exciting bidding wars we've had in the oil industry in recent memory

at $57 billion. This takeover offer from Occidental values Anadarko -- it would be the fourth biggest oil and gas deal ever, the biggest since the

2015 BG takeover that was $82 billion.

And so what's going to happen next, right? So Chevron has said that it still thinks that its deal is the better one. And some of the analysts

that I've spoken to, they kind of agree in the sense that there's a lot of overlap between what Chevron has in the Permian, and what Anadarko has.

Chevron also has all this experience with LNG and deep water, and so that matches well.

So perhaps what we could see is Chevron could -- maybe it doesn't actually match the deal, but it could sort of narrow the gap. And maybe they add

more cash. Right now, the deal is 25 percent cash, 75 percent stock, that's what Chevron has done. It is 50/50 from Occidental, so maybe

Chevron comes up a little bit and also adds more cash.

CHATTERLEY: That could sweeten the deal here, too, as you're saying by making these adjustments. The other thing and we were talking about this

earlier on today, and that was that Occidental said that they're going to have to sell off around $15 billion worth of assets. That's not a simple

undertaking. They said they'd do it in a year.

So I wonder whether that's also one of the key challenges here that perhaps makes Anadarko think twice about an alternative again?

EGAN: You're right, it's one thing to say you're going to try to sell off $10 billion to $15 billion of assets, you have to of course find a buyer to

do that, right?


EGAN: And so what you're hitting on, though, is that there is a lot of leverage involved in this. There is some concern that maybe Occidental is

taking on, it is biting more than it could chew off. And so that is a factor here, and so the Occidental CEO has come out and said that if they

won this bidding war, they would expect to rapidly deleverage, clean up their balance sheet. They would sell off some of the assets.

Now what's interesting is some of the analysts that I've spoken to they've said, some of the assets that could be targeted in a sale are the LNG and

the deep water assets that Anadarko has.

[15:25:12] EGAN: Basically the ones that aren't really a great strategic fit anyway for Occidental, right? Exactly.

CHATTERLEY: Interesting. We're worrying about indigestion issues here though. Matt Egan, thank you so much.

EGAN: Thanks, Julia.

CHATTERLEY: All right now, as Boeing paces down angry investors, another customer tells CNN it might take its business to Airbus. The Emirates CEO

say safety must be paramount. That interview coming right up.


CHATTERLEY: Hello, I'm Julia Chatterley. There is more QUEST MEANS BUSINESS in just a moment, when the chairman of Emirates says he may take

his business to Airbus. And One Belt One Road, lots of controversy. China rolls out a new phase of its ambitious trade plan. Before that, the

headlines this hour.

Sri Lanka's President tell CNN the Easter bombers had quote "very clear links with ISIS." He says they were trained by the terror group. The

President blames negligence for the Intel Community not acting on warnings ahead of the attacks.

Mourners will gather next hour to bury a woman who gave up her life protecting her Rabbi during a shooting at their synagogue in California.

Lori Kaye is being remembered as a hero for shielding the Rabbi from gunfire. Police say a 19-year-old gunman opened fire during services

Saturday. He is scheduled to appear in court on Wednesday.

Spain's ruling Socialist Party is celebrating a victory at the polls even though it fell short of winning and outright majority. Incumbent Prime

Minister Pedro Sanchez says he will form a pro-European government, but it's still unclear which parties he may recruit to build a coalition.

ISIS has released a video purported to be of its leader, Abu Bakr Al- Baghdadi. If authentic, it would be the first time he has been seen since July of 2014 despite previous reports he was killed or is seriously


[15:30:00] In the video, Baghdadi praises the attacks in Sri Lanka and calls for vengeance for the fall of the last town held by ISIS in Syria.

Barbara Starr is following this story from the Pentagon for us. Barbara, two important things here, first actually, just seeing him on film as we

mentioned there for the first time in five years. But, one, acknowledging the defeat of the caliphate, but, two of course, pivotal timing in light of

the attacks in Sri Lanka on Easter Sunday. What do we make of this?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Julia, U.S. military and intelligence officials, and I suspect intelligence services around the

world are scouring every frame of this video now to see what clues they can discern.

The time references that Baghdadi made of course are most interesting since the Sri Lanka attacks were just days ago, which suggests he has a very

current knowledge of world events, of ISIS events believed that ISIS inspired those Sri Lanka attacks.

And he has the capability to move communications on a fairly rapid basis. Raised the request should -- about how -- you know, just how deep in the

hiding he may be. What officials are concerned about, obviously, is this all raises the specter that this is indeed the new ISIS that they had


It may no longer have its physical caliphate, it may not control a territory, but it can marshal and inspire fighters, train, organize,

finance and equip them. Sri Lanka, I think it's fair to say it was a real eye opener in terms of those so-called inspired ISIS attacks.

The capability that those fighters demonstrated on a large scale in that country, the havoc that they unleashed is really an eye opener for the U.S.

as it begins to calculate the ISIS that it faces now. Julia?

CHATTERLEY: Absolutely, potent propaganda. Barbara Starr, thank you so much for that update there. All right, returning now to our top story

tonight, Boeing CEO Dennis Muilenburg promises to re-earn trust, has he faced questions from investors at the company's annual shareholder

meeting in Chicago.

After two plane crashes, Boeing is struggling to limit the damage from an unprecedented safety crisis. These airlines have all either pulled their

business or saying they're reviewing their orders for more 737 Max planes. As we've noted many times, it's simply not that easy to cancel an airplane


The Emirates chairman says he's considering taking his business to Airbus. Sheikh Ahmed bin Saeed Al Maktoum spoke to John Defterios at the Arabian

Travel Market in Dubai.



aircraft, the total, 76 aircraft. You know, safety, it is always an important issue, what has happened shouldn't really be repeated. And what

is the future of this aircraft and will it be flying again?

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Are you convinced about it, that's the number one question as chairman about the 737 Max 8. Are you


MAKTOUM: It's a good aircraft when we talk about aircraft, but that also gives me the option that I have also to look, because still, I mean, still

have a big number of aircraft coming to Fly Dubai. So that give me the option to talk also to Airbus about aircraft.

DEFTERIOS: Oh, you may not be overly dependent on the new 737s, is what you're saying?

MAKTOUM: That's right, yes. You look at also at the Airbus aircraft --

DEFTERIOS: You have full view results coming out on May 9th. The first six months of your fiscal year, you had a drop of 86 percent. Currency

exposure, higher oil prices, what can we expect on May 9th? Your first loss in the history of Emirates.

MAKTOUM: No, it will not be a loss, it will be a profitable year for Emirates --

DEFTERIOS: You say that with confidence.

MAKTOUM: Yes, for sure.

DEFTERIOS: Fifty to $60 oil you prefer, we're in this range now of 60 to 70-plus, despite the interventions by Donald Trump. What is your

preference? Should the region not be fighting for a higher oil prices because it puts the squeeze on the rest of commerce in the region?

MAKTOUM: I wish I really can call that shot. It's not me. I want it as a business when we talk about the airline business. We want it anything

between $60 and below.

DEFTERIOS: And that the Emirates fleet, you cut back on the A380s, is the future because of the competition mid-sized, long haul, 787s, A350s?

MAKTOUM: You know, when we look, we're a very big supporter of the A380s from day one. But also, what we see today is the twin jet aircraft which

is coming. There are many aircraft that really carry today 400 passenger aircraft. We talk about, for example, the 777X which is coming to the --

to the market.

[15:35:00] DEFTERIOS: You've done this collaboration with Emirates and Fly Dubai, does it make industrial logic to do the same with Etihad, your

neighbor in Abu Dhabi. And will you be in a merger by the time you leave as chairman of Emirates, so we can get a timeline here?

MAKTOUM: There is nothing called merge. We've been cooperating -- there's a relationship between the airlines, but nothing called merger.

DEFTERIOS: And you won't be going to a merger, is what you're saying to me today, you're not going to a merger?

MAKTOUM: I don't know what will happen after five years or ten years. But as we speak today, I know by next year, there's no such merger. Because if

you look at the two models, we are exactly the two similar models. You know, and there are two big airlines we're really to put them together. So

it's better really to let them solo together.


CHATTERLEY: John Defterios there speaking to the Emirates CEO in Dubai. Now, in just hours, talks between the world's two biggest economies will

begin yet again with hopes the sides could be closer to ending their trade standoff. Discussions between the United States and China are due to start

in Beijing.

The White House says they will cover issues including intellectual property, forced technology transfers, non-tariff barriers and agricultural

trade too. The U.S. is not the only trading partner China is focusing on. However, Beijing has just wrapped up a major forum on its global

infrastructure plans, the Belt and Road Initiative.

President Xi Jinping has been keen to hail it as a success.


XI JINPING, PRESIDENT, CHINA (through translator): More than $64 billion worth of deals were signed during the summit this week. All these

achievements have fully shown the cooperation achieved through the Belt and Road Initiative has followed the current trend and has gained the people's

support and improved the people's livelihood and has a special place in this world.


CHATTERLEY: As you can see, China is swiftly turning its ambitions into reality both on land and at sea. More than 5,000 participants attended the

recent Belt and Road forum, including Italy of course, the first G7 nation to sign on.

Daniel Russel was an Assistant Secretary of State for East Asian Affairs under Barack Obama, and he's now vice president at the Asia Society and he

joins us now. Great to have you with us.


CHATTERLEY: Let's call this a rebranding exercise because President Xi was talking about things like taking a zero tolerance of corruption, focusing I

think on some greater due diligence because let's be fair, they've had some sheer intense criticism as a result of these projects around the world.

RUSSEL: Yes, that's right. Well, look, Xi Jinping has been saying the right things in the Belt and Road forum. The question is whether China is

doing the right things. In the fields, in these various belt and road projects. So far, the world has begun to react to the problems with

bribery, the problems with environmental pollution, the lack of sustainability in terms of the financing.

There's been a lot of blowback. The good news is that the Chinese clearly have heard that. The question mark is whether there would be more than

just sweet-sounding rhetoric and promises. The world, frankly, has promise fatigue when it comes to China. Now it is important that Xi Jinping is

acknowledging that there had been these problems.

And in committing China to a clean BRI, to an open, an internationalize BRI, to a green BRI. He is sending a political message through the Chinese

system, saying this is what I expect. But unless that's followed up with real mechanisms, including enforcement mechanisms to make sure that at a

minimum, the standards that China insists on at home for dams or for power plants are honored in the developing world, that's really the test.

CHATTERLEY: I mean, the test comes when you want international investment, particularly from the --

RUSSEL: Right --

CHATTERLEY: Developed world because the due diligence there will be enforced by others if not China themselves. But with the operations that

they have in the developing world, particularly some of the criticisms that they've come under in countries in Africa, for example, the idea

that they're just colonizing there and extracting resources.

Is it just going to be proof in the pudding to see ultimately whether they do follow through on some of the good promises here?

RUSSEL: Well, I'd say there are two big problems. One is, as you point out, our international investors are never going to put their money in a

Chinese belt and road project unless it has been fully de-risked. Unless there's been the adequate due diligence needed.

[15:40:00] And developing countries and governments have difficulty, they lack some of the capacity in order to insist that those standards are met.

And secondly, you know, there's a lot of mystery and not a lot of facts available about belt and road and belt and road projects. There's no

database of projects.

There's not even a clear definition of what is or isn't a belt and road project. And it's -- there's also a tremendous amount of difficulty for

international companies to compete because the tenders thus far haven't been open.

CHATTERLEY: What about trade here? Because the suggestion as well was that this was an opportunity and President Xi took it to say to the Americans

here, look, we're ready to step forth, we're ready to have a mutual enforcement process on the trade deal, we're willing to tackle intellectual

property theft, technology transfers.

How confident are you on this one that when China says it's ready to engage here and follow through, it actually is?

RUSSEL: Well, it's a clear signal that President Xi Jinping and the Chinese leadership definitely want to put an end to the pain from tariffs.

They definitely want to reduce the risk of instability and pressure from the tariffs imposed in the trade approach taken by the United States


But it's a start, but it's a long way from declaring on interest in a fair and balanced reciprocal trade agreement to actually getting one,

particularly given China's long record. Now, the Trump administration has been struggling to find ways to build in enforceability --


RUSSEL: In the agreement. They've been taking quite a tough line with the Chinese. Xi Jinping now has a long time horizon. And whether his plan at

least in part, to out-wait the Trump administration, to again make commitments, but use non-tariff barriers to restrict the access for

international firms, now, that's really the unknown in the challenge.

CHATTERLEY: Yes, it's a good point. Even six years isn't a long time when you don't risk elections back at home to be voted out --

RUSSEL: Right --

CHATTERLEY: In President Xi's case. A healthy dose of skepticism I hear there, Daniel. Thank so much for that. Daniel Russel there. All right,

after the break, you know, the White House says stellar U.S. growth in Q1 was no fluke, some economists say the picture isn't as rosy as it appears.

I'll ask the former chief economist of the IMF what he makes of it all. That's coming right up, stay with QUEST MEANS BUSINESS.


CHATTERLEY: It's the beginning of a big week for the U.S. economy. Let's check our economic report card now. First, GDP, that report out, Friday,

the White House claims 3.2 percent annual growth is sustainable. On Tuesday and Wednesday, the Federal Reserve will meet as questions continue

to swirl around the Fed's independence, and on Friday, the monthly jobs report will give us a snapshot of the labor market.

OK, so let's get some context. Joining us now from Cambridge, Massachusetts is Kenneth Rogoff; he's professor of Public Policy at Harvard

University and the former chief economist of the IMF. Professor Rogoff, fantastic to have you on the show. Some looked at that headline --


CHATTERLEY: GDP, and said, look, actually the consumer was muted, investment was down, inventory was high, inflation was muted, what makes

you so much more positive about the U.S. economy and growth in particular right now, particularly versus some of the other commentators out there?

ROGOFF: Well, I think a lot of people just say growth is slowing the population, growth is low in population. You just can't have 3 percent

growth. But I would say we still have a lot of makeup from the ten week years after the financial crisis. So regardless of President Trump's

policies, I thought the U.S. would do better.

This number is probably higher than the U.S. is really doing. But let's not forget, a month ago, everybody was talking about we're about to enter a

recession. And I think this really dashed that idea.

CHATTERLEY: So does that push out the prospect of a future recession for how long? What are you thinking in terms of tracking growth this year and

how long before we do have to necessarily worry about a U.S. recession?

ROGOFF: Well, it's not eminent. It's just always possible that something happened, like a crisis in China, a rise in global interest rates in any

given year, there's probably a 15 or 20 percent chance of a mild recession. But I think the chances of a really big recession sometime soon are really,

you know, getting to be long not likely.

The Fed looks like it's not going to have to hike rates for a while. Inflation is very muted. And to your point about the consumer, there was

very good data on consumers today. So the U.S. picture looks good, Europe looks a little better, China looks better, but I think the U.S. really is

the shining light in the global economy right now.

CHATTERLEY: As you said, the Fed doesn't look like it has to hike rates. What about cutting them then in light of what we've seen in terms of the

inflation picture here? Is there going to be space, particularly with the strong dollar here, that actually they could ease rates and give further


ROGOFF: They could and of course, President Trump's been pushing them to do that. But I don't think it would be very smart. Unemployment, I don't

know, like in a 50-year low, and maybe the famed Phillips curve, the tradeoff between unemployment growth and inflation, maybe it's dead, maybe

it's not.

I think the Fed is just going to sit tight and say we're excited about the numbers, but our forecasts for the year, you know, still have inflation

low, we're going to wait and see.

CHATTERLEY: So just sit on hands for now and stick with the patient policy. What about China? Because you pointed this out here, how surprised

are you by the tone that we got from President Xi in that one belt forum where he was saying, look, we're ready to tackle intellectual property

theft and technology transfers. It seemed like they were ready to do a trade deal here and give up some ill-gotten gains?

ROGOFF: It was really surprising that he was so forthright about that. I mean, let's understand, we don't know if they'll actually do any of it.

But the Chinese had insisted that we will not do this under pressure. We will, you know, do structural reforms -- we will open up our economies as

we see fit.

If you force us to do it, you know, we'll hide in our shell like a turtle. So, it was pretty surprising. I mean, I would say China blinked. They

said, they weren't going to respond to these demands. They did. Not all of the demands are really a good idea that President Trump seems to be

trying to tell them to keep their exchange rates stable.

China is a big country. They have very different business cycles in the U.S., that's like a really bad idea. But for now, they said they'd do

that, too.

CHATTERLEY: Do you think Chinese growth surprises, Chinese data surprises us this year and actually provides global economic support?

ROGOFF: Yes, well, there's no question that especially some of what Europe was feeling was that Chinese growth was low. I think auto imports in China

fell by 50 percent in December. Things have picked up. But I think you have to understand, China is coming to the end of the road on its big

growth period.

[15:50:00] They've already been falling, they're now talking about only 6 percent. I think their growth over the next 10 years might just be 3

percent or 4 percent. They're overbuilt in housing -- China still has a very rocky road ahead having a soft landing onto a downhill slope with

their economy.

CHATTERLEY: You spoke with the IMF in the last week or so, saying that we're facing the beginning of the end for central bank independence.

What's your remedy here for wrestling back control when rates are so low, inflation isn't a problem, and kind of running out of jobs to do and

should leave it to the finance ministers, perhaps?

ROGOFF: Well, I think they should leave to the finance ministers, maturity management, how much data shortage, how much is longing without getting

into a lot of rig and roll, that's what they've been doing. I think the future of central banking if interest rates stay this low is creating

more space to have negative interest rates in a recession, not just out of the blue.

Because if they don't, they just don't have an independent policy. Now, there are many countries where central bank independence is under pressure.

And I suspect in those countries, if they go ahead and re-absorb the central bank, they bully the central bank, they'll eventually get much

higher inflation.

I think central bank independence, the idea is not dead. It's as important as ever. But I do think we'll see it tested over the next year or two.

CHATTERLEY: Wow, poor, save us, Ken Rogoff, great to have you with us. Professor Ken Rogoff there, thank you so much for that. All right, to

"Avengers: End Game" saw it this weekend, making over $8 billion in a matter of days at the Box Office. Disney's dominance explained after this.


CHATTERLEY: With the snap of a finger, just like that. "Avengers: End Game" made a $1.2 billion on its debut. That's only one of Disney's super-

sized properties. The studio is focusing on the bulk of its business on massive franchises. Just look at what's coming soon in 2019. We're

looking at a remake of the "Lion King", the knight "Star Wars" film, "The Rise of Skywalker", plus a sequel to "Frozen", yes, and "Toy Story 4".

Disney's dominance of the global Box Office with "Avengers" shows its strategy is working. The first film with a billion-dollar debut,

"Avengers" is the second movie shot entirely on Imax cameras. Early on, first move, IMAX CEO Rich Gelfond told me his company has been building up

to this moment for years.


[15:55:00] RICHARD GELFOND, CHIEF EXECUTIVE OFFICER, IMAX CORPORATION: I think first of all, the fact that it was filmed completely with our cameras

and also it's the end of an era, 22 movies and all coming together. We worked with Marvel on virtually all those movies.

So you'd seen those seed pieces all along. So it's kind of natural to see the finale, and IMAX and the Russo Brothers filmed both movies for the IMAX

cameras, and we treat it with our technology, so that made it really special. But back to your ticketing platform question, we own part of the

one of the major ticketing --


GELFOND: Platforms in China called Marion(ph) and we've worked with them in better targeting audiences, better marketing, better -- when a movie

opens in China, it gets a rating from its fans on the opening day. And if it's over nine, that's really good. And on Marion(ph), this one was around



GELFOND: So the --

CHATTERLEY: Residents too --

GELFOND: The real-time data coming back definitely helps you target your marketing.

CHATTERLEY: I think as a brand here as well for "Avengers", a lot of people are saying look, this is the end of this period, but there's going

to be plenty of offshoots particularly for TV. You said in your recent earnings score that you're in talks with the likes of Amazon and Netflix to

look at perhaps bringing the movies, the TV movies that they do to screens.

How are those talks going and how will that work in practice? What kind of lag time are we talking about here between it being available on streaming

versus being in the theater?

GELFOND: Well, I think if there's one thing that the avengers opening proves, it's that people for the right content, crave a social experience -



GELFOND: And they crave being with people, and especially because you're an international show. This is global. We set records in 50 countries.

We sold out virtually every show in the world. So there's this global sense of togetherness and streaming doesn't give you that.

And I think they'd like to see that. So companies such as Amazon actually respect the windows and do theatrical openings. And even Netflix on "Roma"

opened in some theaters. So I think as time --

CHATTERLEY: The venue for you --

GELFOND: Goes by -- as time goes by in order to compete on the content side, they're going to have to have a theatrical release.


CHATTERLEY: Epics need to be in theaters. That was the IMAX CEO, Rich Gelfond. There are just moments left to trade on Wall Street this Monday,

we'll have the final numbers and the closing bell right after this.


CHATTERLEY: We're in the last few moments of trade on Wall Street. We've gotten nowhere fast, but we are seeing fresh record highs for the S&P and

the Nasdaq. After the bell, of course, Alphabet's first quarter results too, and you can hear the noise behind me as we wrap up the show. That's

it for QUEST MEANS BUSINESS, I'm Julia Chatterley in New York, the news continues here on CNN.