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QUEST MEANS BUSINESS
EU Warns Italy Over Finances; U.S., Russia Trade Blame After Warships Nearly Collided; Women's World Cup Kicks Off in Paris; A disappointing jobs report; Mexican Government Trying To Stave Off Tariffs; U.S. Businesses Slowly Abandoning Huawei. Aired: 3-4p ET
Aired June 7, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: Sixty minutes to go before the end of trading and what could have been the best week in
many, and we have a good strong session on Wall Street.
Gains from the moment the market opened right on to just of the best, but not really much, one percent. And if you look at the 30, very good.
Microsoft up nearly three percent. Apple, Intel -- all of them. The bank is having a bit of a difficult problem, but everybody is benefiting today
and put it together, those are the markets. And these are the reasons why.
A disappointing jobs report. It's perverse. That jobs report. What it means for the Fed interest rates and the health of the U.S. economy. We
will expand and tell you more. Bracing for tariffs. U.S. businesses warned they are not ready. Does the President care? And a new setback for
Huawei. Facebook is pulling its software from the apps.
Now, live from the world's walls financial capital, New York City on Friday, June the 7th. I am Richard Quest. I mean business.
A very good evening, the final hour of trading on the week on Wall Street that has been much better than anything we've seen of late. The markets as
I showed you are sharply higher. The Dow is firmly on track to break a six-week losing streak, just shy of 300 points. We might make it, although
we could also see everything dwindle in the last hour. I don't think so -- 26,000. That will be the test of the day. Can we hold 26,000 before the
closing bell rings?
And yet perversely, troubling signs for the U.S. economy. The jobs number this morning, only 75,000 new jobs -- way below estimates of 180-odd
thousand and the unemployment rate 3.6 percent, near a half century low.
A delicate moment in the trade war with China. There could be $300 billion more in tariffs coming and Mexico could have 5 percent tariffs on Monday.
It's bizarre that people are still talking about possibility of recession and the market is up. The reasons are the market is up. Investors believe
the hiring slowdown might put the Fed to work.
The probability of an interest rate cut is now 90 percent, according to CME that's gone up from 75 percent before the number came out today. Paul La
Monica is the Guru.
PAUL LA MONICA, CNN BUSINESS REPORTER: Thank you, sir.
QUEST: It is odd, and really bad number sends the market roaring.
LA MONICA: Yes, I think perverse is the best way to describe it, Richard, because clearly, we are concerned that the U.S. economy and now the job
market are running out of steam; 75,000 jobs added much lower than expected.
And also, if you look at the revisions for the prior two months, there were 75,000 fewer jobs added as well in March and April. That's a negative.
QUEST: But do we know the reasons why that they don't -- I mean, first of all, it begs the question, how did the consultants and analysts get the
expectations so wrong? But do we know the reasons?
LA MONICA: There is nothing specific in the report to explain it, but I think when you look at what is happening right now, obviously, business
confidence has ebbed a little bit. You're not going to be looking to hire as aggressively when there's all this talk about a trade war, obviously
with China, and now Mexico as well.
But also, we have an unemployment rate at what? 3.6 percent. The underemployment rate is at 7.1 percent. Most people that want a fulltime
job, have it, so it's going to be tougher and more difficult for employers to find people that actually need and want a fulltime job.
QUEST: That would normally have inflationary bells ringing because --
LA MONICA: Normally.
QUEST: Normally, yes, exactly. Because full employment, you'd have to attract workers with higher wages and labor would have much more bargaining
power, but that's not happening.
We have inflation. I mean, if we're talking about a cut in interest rates, what's the realistic possibility of that sooner rather than later?
LA MONICA: I think as you just pointed out, the Fed Funds Futures are clearly indicating that we could have a rate cut at the July meeting. The
Fed is going to meet again in mid-June. That's where we're going to see their latest economic projections.
If they downgrade their expectations for U.S. economic growth and you know, also what's going to be happening to the economy at large, and you see talk
from Jerome Powell at the press conference that strongly suggests rate cuts coming, then we can probably guess that there's going to be one in July.
QUEST: Is this a fool's rally?
[15:05:10] LA MONICA: I think that you have to be concerned that investors are getting a little ahead of themselves. So not going to go so far to say
it's a fool's rally, but it is maybe a bit of a silly one.
QUEST: Have a great weekend.
LA MONICA: You, too, sir.
QUEST: Good to see you. Interesting to see if we hold 26,000 on the Dow. Now, despite that gloomy report, Paul was saying the unemployment rate is
still near a 50-year low. And to get workers, to get employees, you have to now be creative.
For instance, let's look at the Help Wanted ads that are there at the moment. Walmart -- a cashier at Walmart. Now for Walmart, they're
offering test preparations, and a $1.00 a day college tuition. For high schoolers only, subsidized college tuition. That's a biggie in the United
States where tuition is so expensive.
A software company C3.AI is offering a Master's Degree -- free Master's Degree tuition and extra perks for graduates. And you kind of wonder what
As for Disney cast members. They are the ones who are in the parks, playing the various roles. Now there, they are saying, they will cover
U.S. workers tuition at various universities. Free college tuition.
Some though are having to be even more imaginative at what you can offer to actually get people to come and work for you. Ben and Jerry's office three
pints of ice cream a day. Sorry, three free pints of ice cream. Well, need I say more? No wonder, when we talk about the U.S. and the obesity
problem, three pints of ice cream a day.
The dating app Hinge is offering $200.00 a month for dates. I'm not sure why you can get for $200.00 and how many dates that would get you. If
you're a cheapskate more than many, but on a decent date, well, you may be lucky.
All right, and finally, Zappos is offering free food and competitive eating contest. You're seeing a theme here giving the free pints of ice cream,
the dates and the competitive eating, you'd be as large as a house.
Join the conversation, get out your devices, what's the most important benefit for you in the office perks? Is it free coffee? Is it time off?
Is it medical or tuition help? Or is it all about the salary? At the end of the day, do you really just care about how much is in your bottom line
and you'll spend it as you want?
You see the various options there, the various perks that we're giving you. What do you value most? You'll see the results at the bottom of the
Austen Goolsbee is a former Chair of the U.S. Council of Economic Advisers. He is now an Economics Professor at the University of Chicago. I think the
biggest perk you get, sir, is months off in the vacation periods in the summer periods?
AUSTEN GOOLSBEE, FORMER CHAIR OF THE U.S. COUNCIL OF ECONOMIC ADVISERS: No, it's getting to teach the students that we have at the University of
QUEST: On message right. Good to see. All right, I read your tweet, I read your message about this jobs number. I mean, you say it's a yellow
sign, not a red, the revisions done are serious. But how yellow is yellow?
GOOLSBEE: Yes, you know, I don't know what it's like. I don't know, orange is yellow, it's somewhere yellow. Because A, you'd ever want to
make too much out of any one number. So hopefully it's a blip.
But when you see a number, so far below what was expected, literally less than half the job growth that we were supposed to get, at the same time,
you've got the GDP components slowing down, and you've got the President threatening, not even one trade war, multiple trade wars with two of our
three biggest trading partners, I think that the yellow starts getting a little redder, and so you got to be careful.
GOOLSBEE: So, the job market has looked strong, but this is weakness.
QUEST: How much do you ascribe to the trade wars, trade skirmishes at the moment versus the natural slowdown we are seeing because of all sorts of a
thousand and one other factors in the global economy? In other words, how much is self-inflicted?
GOOLSBEE: I think some part is self-inflicted, not this stuff with Mexico because that hasn't even shown up yet. That was too recent. But the self-
inflicted uncertainty and fear that has come about from the public fight with China, I think is a big component.
I think that's what's driving down business confidence. I think that's what's driving down consumer confidence and that is some substantial part
QUEST: Do you know, any serious economist that believes these -- besides arguably, Peter Navarro -- that believes these tariffs are a good thing in
the wider economic sphere if it brings China to heel on the question of reforming its business practices and Mexico on immigration?
[15:10:28] GOOLSBEE: No, look, the economics of this are totally clear. They're bad for America. They're bad for consumers here. They're bad for
manufacturers. You can then ask a second question of well, but if burning down our own house got somebody else to give us some free something, would
we be better off?
I guess to that I would only observe. That has been -- the President has been promising that for two and a half years now that we were on the cusp
of having a huge breakthrough, and we haven't seen it.
I don't think it's coming even in the places where he seemed to declare victory. Like say in the new NAFTA, it was trivial. What he got them to
given in concessions were completely trivial. It's 99 percent, just the same thing it was before, and we're back to square one, we're threatening
the same trade war with Mexico that we were before, so I don't see that.
QUEST: The market likes to rally at any given good news. Peter Tuchman, who you may be familiar with at the New York Stock Exchange, one of the
traders there, he says we are a thousand points up on a tweet, we are a thousand points down on a tweet.
But if you had to give me an assessment of the underlying strength of the U.S. economy at the moment, I mean, two and a half percent, two percent,
one point five percent, what would you expect this year?
GOOLSBEE: I'd say two and a half percent on the upper end, in my view. I think, the next quarter, I wouldn't be surprised if we were below two
percent at an annual rate in the quarter to come. And if we get in an escalating trade war with either of -- with either China or Mexico, and
certainly if we got both, then I think we will be talking about recession.
QUEST: All right, on that cheerful note, I wish you a very good weekend, sir.
GOOLSBEE: You, too, Richard.
QUEST: Have a good weekend. Always lovely to have you with us on the program. Thank you.
Time is running out though, as Austen was saying for the U.S. and Mexico to strike a deal, and the Mexican government is trying to stave off the
tariffs. Monday is the deadline. Five percent, remember, on Monday.
But Mexico is cracking down on migrants. It's deploying thousands of troops to its southern border with Guatemala, because that's where they're
coming across. They come from Guatemala, and then over the next week or two or three, they work their way up to the United States and over the
The US Chamber of Commerce says if businesses aren't ready when the tariffs hit, quote, "The writing is on the wall, already that many simply will be
not ready to pay duties beginning on Monday."
Paula is following the developments. She is in Mexico City. Paula, is there a sense -- panic is putting it too hard, too strong -- inevitability,
these tariffs will happen, and pretty much there's nothing really the Mexicans can offer that will save them?
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Well, listen, as we understand, the paperwork is done or will be done and signed in just a few
hours to get those 5 percent tariffs levied on Monday.
What's going on now, though, Richard, our State Department folks tell us that look, we're into our seventh hour of negotiations, though, and this is
all over a lot of changes to asylum laws, which Mexico said they would never do. But now they seem to perhaps be buckling on.
I mean, look, we just spoke to Austen, Richard, this is causing a lot of uncertainty on Capitol Hill. What may have swayed the President on this to
see what kind of concessions he can elicit Mexico and say, "Okay, good enough," is because of not panic, as you say, but certainly concern and
what's that concern about? It is leading to that uncertainty when they have to make their investment decisions for the next quarter, for the
quarter after that. They are really getting nervous.
And that is what those business groups have been on Capitol Hill are saying remember, Richard, we also have to factor in here that the Republican
senators are looking towards a veto-proof vote, which means that the President could not overrule them.
Would they do that at 5 percent? Maybe not, but they might do it if it escalates from there. What I can tell you, Richard, is that they're still
talking. And that is incredibly good news for anyone who is watching this closely right now.
QUEST: But as one politician was saying this morning, I was just sitting on "CNN New Day," the reason so many migrants are coming up through to the
United States, 144,000 the highest number for 14 years is because the fear is the door is slamming shut.
And every trafficker and every lowlife that is charging these poor people and refugees who are coming up is basically saying you better do it now,
or, you know, you won't get in at all.
[15:15:25] NEWTON: That is absolutely part of it. No question. And you know, they have messages, you know, publicity even going on in those cities
and towns in Guatemala, Honduras, El Salvador telling them, look, do you want to get into the United States, A, you need to get in now before as you
say, the door closes and two, if you have a child, if you have one of your children with you, that will likely mean that you will be released more
quickly by the U.S. authorities.
But at the end of the day, Richard, this comes down to again, economic development. And I can tell you at the table right now, Mexico is saying,
"Give us a plan, give us something to work with where we can go to those people in those countries and say, stay where you are, we are going to help
perhaps lessen the violence and increase the economic development in your own cities and towns. So you don't have to make that very dangerous trek
through Mexico and into the United States."
It's an incredibly tall order and incredibly complicated, I have to say, when you're dealing with deadlines that are now by the hour. The President
arrived shortly back in Washington, D.C. And as we've been saying for days, Richard, the decision rests only with him.
QUEST: And as economists would say, Paula, most certainly these things do not lend themselves to the blunt instrument of tariffs. Paula, thank you,
in Mexico. You've got a busy weekend ahead as we will analyze exactly what's happening. Good to see you. Thank you.
U.S. businesses slowly abandoning Huawei. Facebook and Google are limiting their exposure to the Chinese telecom giant amid a U.S. government
crackdown. We will understand that after the break.
QUEST: U.S. companies are now starting to turn away from Huawei following a U.S. government ban. Facebook is blocking the apps from its preinstall -
- the pre installation of its apps from the phones and the new Huawei phones no longer come with Facebook, Instagram and WhatsApp.
Now Google has been forced or has chosen to force itself to stop providing software and may limit Huawei to public versions of Android or of its own
systems. According to "The Financial Times," Google is warning the White House this poses a national security risk, and would fragment the market
and aid the hackers as well.
[15:20:15] QUEST: And put it all together, it's all as Russia cozies up to China. Now remember, Huawei will build Russia's first 5G network. There's
a lot there to dissect. Brian Fung joins me from Washington.
Brian, the first issue, look, this idea that Facebook is going to remove the pre-installation of these apps. What difference does it make if it is
preinstalled, if you can go to the store, the Google Store, whatever, and just download it?
BRIAN FUNG, CNN TECH REPORTER: Well, the fact is that most consumers do just what is easiest to do. And so the fact that Facebook and WhatsApp and
its other apps won't be immediately available to smartphone users who buy Huawei devices means that they're going to have to do some work to get to
those apps if they want them.
And it potentially means that Facebook may get lesser reach into China and other markets that, you know, use Huawei devices.
QUEST: But nobody is fooled for a moment. I mean, if you if you want the thing, you'll just go and find it anyway. And then this idea that you have
Russia saying, well, we're very happy for Huawei to out our 5G. I wonder, from your understanding is the U.S. shooting itself in the foot here?
FUNG: Well, folks who are in Europe, telecom operators, government officials all say, you know, Huawei equipment is actually much more
affordable than competing alternatives from Nokia or Ericsson. And this is critical infrastructure that needs to be installed in order to build a 5G
And, you know, because 5G requires many more cell sites, you know, you're having to potentially spend a lot more on companies like Huawei to build
out these networks.
QUEST: Right, but Brian, at what point certainly vis-a-vis the United States, and if you like Europe, at what point do these measures being taken
against Huawei puts it at such a competitive disadvantage that essentially it's out of the game?
FUNG: Well, that's a great question, Richard. And I think that goes to the heart of this trade war between China and the United States, where you
have initially, you know, when the Trump administration rolled out Huawei ban, you had companies like Intel and Qualcomm being initially affected
because they supply companies like Huawei, and now are not able to.
But then later, you saw companies that you wouldn't necessarily expect affected like Google and Facebook. And so this has wide implications that
we're only just now beginning to see play out.
QUEST: Keep watching it, please. We'll talk next week more about this. Thank you. Thank you, Brian with me.
Fake meat is turning into real profits. Shares of Beyond Meat are up 40 percent, the best part of 40 percent today, after the first earnings report
since its IPO last month.
Sales jumped more than 215 percent over last year, and IPO is around 25, it closes at something ridiculous. It's now over $138.00.
CNN's Clare Sebastian is with me. These results, were they -- I mean, 215 percent sales on sales year growth sounds really good.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: I mean, it is. It was a beat on expectations. They expected them to be pretty good. They beat
slightly, but it's not just the actual results, Richard. It was the guidance.
They're expecting 140 percent revenue growth this year, not only that, but they said that is a conservative estimate because that doesn't include any
of the partnerships with restaurants that they're currently in the testing phase for.
We know about Tim Horton's, the Canadian fast food brand, but the tease there was that there are other partnerships out there and that's what one
of the things that's got investors really excited.
QUEST: But how -- now, we've got it all here. We've got --
SEBASTIAN: The cooked version?
QUEST: The cooked version, which actually, you know, we have absolutely no intention of -- well, maybe I might have a little sniff of it later or two.
We've got the sausage which -- I was barbecuing last week for some friends and the burgers, and they were very, very well received.
But the potential for the competition to move in, is Beyond Meat so far ahead that it doesn't have to worry as much?
SEBASTIAN: They do have to worry. They've got giants like Tyson Food and Nestle moving in, but they talked about this Richard on the earnings call.
They said they went to market early. They went while they were still iterating the recipe of the product.
They've got the Beyond Burger 2.0 that's going to come out because they wanted the first mover advantage. They wanted to get out there to have the
brand recognition and it seems to be working. This is the best name on the block alongside Impossible Foods.
So they are the first out there, but they do have to be careful. They haven't got the means and the resources that someone like Nestle has, so
they certainly have to keep innovating.
QUEST: But they've got this cache and everybody is wondering whether what are we? A hundred thirty eight on the stock today. Is this a $500.00
stock, and one missed the boat? How much of that is pushing this?
[15:25:18] SEBASTIAN: The hype?
QUEST: Yes, thank you, the hype. Not just the IPO hype, but people are terrified they may be missing the next gold rush and their determined not
SEBASTIAN: I mean, I'm looking at the price targets, some of which went up today from the analysts. There's a big disparity.
QUEST: What are they?
SEBASTIAN: So the biggest one I've seen is from JPMorgan, 120, so that's beyond that already. Goldman Sachs, 76, Bernstein 107. So there's quite a
big disparity there.
QUEST: We are above all of them.
SEBASTIAN: We are above all of them, and you know, people are looking at this as a big growth story, but they are also looking at the risks. Can
they scale at the right speed? Even if they get a partnership with a big brand like McDonald's to put burgers in their stores, can they actually
meet that demand quick enough? They have to be careful how fast they grow as well.
QUEST: Never mind that. Good to see you. Thank you. All right now, Beyond Meat is one of the world's newest company. Getting to be an old
company requires you to color outside the lines or in my case, ah, Crayola Colors.
Now, Crayola is a company -- it's in "The 100 Club." It's one of those companies that's actually made it to a century or more. Cyril Vanier
reports on it.
It's the smell of the Crayola Color -- crayons that I always remember from being a kid. The smell of a Crayola, the waxy crayons, the little crayon
(BEGIN VIDEO CLIP)
KAREN KELLY, CRAYOLA HISTORIAN: When I talk to anybody and tell them I work at Crayola, they always have a story to share about their first box,
their first 64-count box or the 24-count box that they used for school.
SMITH HOLLAND, CEO, CRAYOLA: I remember, I was in an art class when I was in the second grade and art to me was always a little bit intimidating.
But I got in the class, I started creating some things and what was really cool, no matter what is actually on the paper, if you're a little kid, to
you, there's a story that goes to that.
CYRIL VANIER, CNN CORRESPONDENT (voice over): Crayola the name synonymous with crayons actually began 116 years ago under a different name -- Binney
& Smith-- the company's founders.
In 1903, the Crayola brand was born with the first box of crayons in eight colors.
In 1958, the brand's signature 64-count box of crayons with a built-in sharpener was introduced. It remains incredibly popular today, and it's
still made here at company headquarters in Eastern Pennsylvania.
In fact, nearly all of the world's crayons are made here, some 13 million per day in 152 colors.
The last 116 years have not come without challenges and Crayola's relationship with our increasingly digital society will be key to the
brand's next 100 years.
HOLLAND: So from a technology perspective and a digital perspective, we want to embrace both. We want to offer these new products that include
digital experiences in a real authentic way, but at the same time lean into the importance of physical, old traditional play and the world that that
(END VIDEO CLIP)
QUEST: And you can see Cyril Vanier's special report on "The 100 Club" on Saturday at 9:30 in the evening in London, 4:30 in the afternoon in New
York. Somebody has taken my Crayolas away.
Still to come, Italy's Deputy Prime Minister isn't happy. He is lashing out at Brussels and the clash could cause more problems for Rome. We need
to understand what's happening with the budget deficit procedure in Italy. After the break.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's a lot more QUEST MEANS BUSINESS in a moment. Italy is risking EU
sanctions as the European budget battle debate roil about what's likely to happen. And hang on, just the case any suggestion that Italy at some point
in the future could lead the Euro or the Euro -- or the EU itself.
Now, I'm just about old enough to remember the pogo stick. Is it a viable mode of transport or does anybody even want to risk ripping an ankle?
You're going to hear from the CEO whose company is riding on bringing back the pogo stick. As you and I continue tonight, this is CNN and on this
network, the facts always come first.
The U.S. and Russia accusing each other over unsafe maneuvers after a near collision at sea. This video obtained by CNN was filmed from an American
vessel in the Pacific. It comes as Washington and Moscow are more and more at odds over multiple geopolitical issues, and of times of growing
cooperation between China and Russia. Look how close they actually come.
Russian President Vladimir Putin is lashing out at U.S. trade policies. The president was speaking at an economic forum in St. Petersburg in Russia
when Mr. Putin accused the United States of trying to dominate the world. He declared that trade war sanctions and scare tactics could lead to
A Saudi teenager who had spent years behind bars without being charged may now face the death penalty. Human rights groups say his only crime is
protesting against the Saudi royal family. The case is one of many that target and sometimes execute the country's Shiite minority.
The women's football World Cup has kicked off, it's all happening in France where some of the biggest stage here in the country have already sold out.
The opening match is under way with the hosts facing South Korea. France opened the score nine minutes into the game.
Theresa May officially stepped down as leader of the U.K. Conservative Party, the ruling party. The British Prime Minister announced her
resignation two weeks ago, saying she deeply regretted being able -- unable to deliver Brexit. She will stay on as Prime Minister until her
Conservative Party has chosen a successor, and that will probably be near the end of July.
United Kingdom wants to be out of the EU to be free of Brussels interference, whilst Italy is having its own budget fight with the European
Union and risking possible financial sanctions. Brussels says Rome has failed to rein in spending and cut public debt.
[15:35:00] Matteo Salvini; Italy's deputy Prime Minister hit back, saying only tax cuts would help Italy kick start growth. Now, that's exactly the
sort of thing that would make the deficit even greater, annoyed Brussels even more. And already, Brussels is about to embark on an untried and
tested deficit procedure against Italy. Joining me is Massimiliano Belingheri; chief executive officer of BFF Banking Group. Good to see you,
Max, how are you?
MASSIMILIANO BELINGHERI, CHIEF EXECUTIVE OFFICER, BFF BANKING GROUP: Good to see you, thank you.
QUEST: So first of all, what's it like being in banking in Italy at the moment when your government is basically at logger heads with Brussels?
BELINGHERI: OK, it's complicated because as a bank, you're always exposed to -- your exposure you have on government bonds, at the same time, your
financing is linked to how cheap or badly the finances of the country ran. So certainly, there's volatility in the market for banks at the moment.
QUEST: And in terms of your customers, are they finding it more difficult because of this lack of certainty, this unease that follows through?
BELINGHERI: We had a special bank so it's our customers that actually supply us to the public administration, and so at the moment, they're more
worried about their invoices being paid on time and they're more interested in selling to us, which will be the counterbalance to this problem.
QUEST: Factoring the invoices towards this -- are you then concerned about being paid?
BELINGHERI: No, not really. At the end of the day, there's no problem with solvency of the government. Certainly, there's pressure on public
finances which can result in lengthy payment time. But we don't expect a risk -- related risk on government solvency.
QUEST: It seems as if the government is hell bent on a populist battle with Brussels.
BELINGHERI: Look, there's a view that you can grow your way out of a debt position. And certainly more growth will help to support the debt of the
country. At the same time, when you have a lot of debts, you also have more constraint.
QUEST: Privately, when I talk to people in banking or in the markets, in the bond markets, they'll say look, just -- Italy is the banking disaster,
the banking titanic -- not necessarily you, obviously, you have a specific area, but it's the banking titanic waiting to happen. Is that true?
BELINGHERI: I don't think so, I mean, Italy is in either a peculiar position, it's actually a counter what the primary deficit, the deficit
excluding interest payment is positive. So actually the country is able to service its debt. It's the cost of the debt is what is the problem, and
the cost of the debt is linked to the credibility of the government and the expectations.
QUEST: Right, but there's no downward trend on that debt, you're far from it. If the government has its way, it will actually start escalating.
BELINGHERI: That's true, but at the same time, Italy started the crisis with a very high debt to GDP. So it hasn't been able to -- the same fiscal
flexibility of other countries. So --
QUEST: But I do wonder, if you know -- we're 11 years into a mature boom recovery. If you haven't put your house in order now, when are you?
BELINGHERI: That's a good point. But Italy didn't have a recovery, and that's really the problem for the country and what the government is trying
also to say. Can we actually try to grow? Now, the policies are the correct one that they're not, but that's the crux of the problem for me --
QUEST: OK, so related to that -- finally, we always hear that Italy at some point might or might not leave the Eurozone, might or might not leave
the European Union. Are -- is there anybody of serious mind in the halls of power and influence who believed that would happen in Italy?
BELINGHERI: I don't think so. I mean, we have just seen what happened to Theresa May after two years trying to exit the EU, not mentioning the
Eurozone. I think Italy in the sense in the scrambled eggs of the EU has been more intertwined with the rest of the infrastructure, it's almost
impossible to the event.
And frankly, it's not in the interest of the country to leave. We're integrated as a market and we also benefit from the support of the European
QUEST: Very good to see you, sir, thank you very much --
BELINGHERI: Thank you --
QUEST: For coming in. Conversation and confidence. There are two words we're hearing from airlines CEOs on Boeing. We'll -- after the break,
you're going to hear from Qatar Airways' Akbar Al Baker on his issues with Boeing and what he wants to see next.
[15:40:00] (COMMERCIAL BREAK)
QUEST: Any get any service on Quest Air. Well, I started my week in Seoul at the IATA Annual General Meeting. It's the big get together, the CEOs,
all of them gathered to discuss the head winds facing their industry. Understandably, the crisis of Boeing and the global grounding of the 737
Max was a major topic of conversation.
Serious issues from airlines who had bought the aircraft and who are now rather grounded it or wondered what they were going to do. For instance,
today, Qatar Airways says it will seek compensation from Boeing. Qatar owns 49 percent of Air Italy, it operates three Max planes and there on the
ground and it has more on order.
Qatar's rivals in the United States, Delta, United, American, continue to complain to the Trump administration. They believe Qatar is using its 49
percent stake in Air Italy as a proxy to create new routes to the U.S., to co-chair, to go through to basically get into the U.S. through Air Italy
what it can't do directly under existing agreements. The Chief Executive Akbar Al Baker rejects those claims.
(BEGIN VIDEO CLIP)
AKBAR AL BAKER, CHIEF EXECUTIVE OFFICER, QATAR AIRWAYS: We have not violated a single agreement that we have signed with people. We have not
put a single passenger on Air Italy, we have not sold a single ticket on Air Italy. We are a silent minority shareholder.
The only problem is that the three carriers with their anti-trust immunity, they want to control and swindle the passengers across the Atlantic.
QUEST: That's strong language, chief.
AL BAKER: Well, I always use strong language when I see that people are unnecessarily, unfairly accusing my country and my airline.
QUEST: And your aircraft, you've got a good strong battle in the air, but there's a question of the mid-market plane.
AL BAKER: Well, what I have been shown by Boeing, I'm extremely interested in that aeroplane now.
QUEST: How big?
AL BAKER: And I would like -- I hope I would like to be a launch customer for it.
QUEST: How big -- how many seats between --
AL BAKER: Well --
QUEST: Roughly --
AL BAKER: I don't want to give you too much secrets at the moment. Let Boeing launch it officially, then I will give you more details.
QUEST: Are you planning to be -- let's just go -- let's just go straight first, straightforward question for a straightforward answer, if Boeing
goes ahead with a mid-market aircraft, will you be the launch customer?
[15:45:00] AL BAKER: I would very much like to be the launch customer because what I have been shown, it is -- it is going to be a fantastic
(END VIDEO CLIP)
QUEST: Well, it is up to Boeing's board to decide whether they are going to approve going to market with the MMA. On the question of Boeing and the
whole 737 Max and issue of confidence that has been raised, Alan Joyce of Qantas says he hasn't lost confidence in Boeing, and believes the industry
will learn and grow from what's gone wrong with the 737 Max.
(BEGIN VIDEO CLIP)
ALAN JOYCE, CHIEF EXECUTIVE OFFICER, QANTAS: It's terrible and absolutely really bad what happened with results to all two accidents. But the
industry is a learning industry. And I think it will learn from this and learn from the things that have gone wrong, and I have the utmost
confidence in Boeing.
I think it's a great company, it does a great job, it will fix this issue, and we will be tendering for aircraft at the end of the year, and we will
be looking at the Max and the Neo, at both aircrafts for all replacement on our domestic fleet because I have no doubt that Boeing will fix it. We'll
be checking everything, have no doubt about that, and we'll be making sure we're comfortable with it. But we do deal with some very good
QUEST: Unfortunately, we have moved into the realms here of the one area that neither airline or manufacturer wants to have to face.
JOYCE: Yes --
QUEST: Which is trust.
QUEST: Trust of the traveling public.
JOYCE: Yes --
QUEST: Which until now had been almost a given --
JOYCE: Yes --
QUEST: That they trusted --
JOYCE: Yes --
QUEST: What they were told.
JOYCE: So we have not to the extent of this. But we had an issue, the QF 32 when an engine blew up on an aircraft and we had a trust issue. And
what we did, and it is important qualms, so we went every day out there communicating what we knew, what the issue was, what we're doing to fix it.
I had one of the engine manufacturers telling me we were out there too much, we were creating a problem. We felt transparency was really key.
And then, at the end of 23 days, we got the aircrafts back in the air, we had people that were worried about traveling on them.
We made a big deal about traveling on the aircraft, and when the aircraft had a problem, it took a year to fix it or a $100 million worth of damage,
I flew up to Singapore where it was, got back on the aircraft with the crew that were on it when the engine exploded. They had confidence and trusted
the company. They had confidence in Airbus fixing it, and that really resonated with the general public.
(END VIDEO CLIP)
QUEST: And that's Alan Joyce, the CEO of Qantas. The sharing economy has brought us e-scooters and bikes. How about the pogo stick? Well, not with
my knees. After the break, somebody who says this -- well, these people are having a go at it properly or maybe not. Come on, you cannot be
[15:50:00] (COMMERCIAL BREAK)
QUEST: Try that again -- oh, well done, genius or hopping mad. The Swedish startup Cangaroo is launching a pogo stick rental service from San
Francisco to Paris. Now, it is the alternative to the one that I have been using which is highly preferable where we're going, just bear with me a
moment, I promise you, I will -- I will return.
Yes, it's highly good, and we've done this one before. But why would you forsake this to go with this? Right, how realistic is all of it? Smart pogo
stick counts your jumps, it also has a GPS to keep you bouncing the right way, it will cost $1 to unlock, 30 cents per minute.
It's not allowed on the highways and indeed in the studios and we'll probably all be fired. Adam Mikkelsen is the CEO and co-founder of
Cangaroo, he joins me from Malmo, Sweden via Skype. You can't be serious about this?
ADAM MIKKELSEN, CHIEF EXECUTIVE OFFICER, CANGAROO: Well, in fact, we are. And like thinking about it, like we don't see if we're actually going to
compete with the e-scooters per se, but what we do see is that having pogo sticks in the city especially by, you know, city parks and boardwalks and
stuff like that, people could, you know, have fun and they could, you know, get some well needed workout into their daily routine.
QUEST: Right --
MIKKELSEN: So, we definitely see demand for it.
QUEST: So where did the idea come from? Because it is not the sort of thing you wake up on an average Tuesday and think, you know, I'm going to
bring back the pogo stick.
MIKKELSEN: Yes, so basically with a background in branding and marketing, we run an advertising agency as well. So we've been following the micro-
mobility industry for quite awhile. And what we saw was basically that all of today's players are quite generic in the industry. So we basically --
we saw an opening for a brand to launch that are actually kind of putting brand first.
And you know, naturally, the pogo sticks want to be our only product, but we definitely see that as our --
QUEST: Right --
MIKKELSEN: Main product --
QUEST: Now --
MIKKELSEN: For sure.
QUEST: Now, if we accept that this is not a particularly expensive instrument, the pogo stick that I'm holding. So what do you add that's
sort of value added, this idea of if you do so many jumps, you give it so much to charity, or that there has to be another component. Otherwise, I
mean, why would I pay a dollar to you and so much per jump or per minute when I just can spend 50 bucks and buy my own.
MIKKELSEN: Yes, sure, so basically what we want to do is definitely to add the invitational layer of it, and basically the user. You know, if you're
able to jump for example 200 jumps, you could either get a free smoothie at a local business or you can, you know, give $5 for example to your -- look
like a charity of your --
QUEST: Right --
MIKKELSEN: Choice, so we can't comment like -- add a statement later to it as well.
QUEST: Right. How much interest have you received in this because, you know, all joking aside, the best ideas are those that are simple, they take
off, and they become highly successful. So how much interest?
MIKKELSEN: Yes, so basically since we launched or announced it like two weeks ago, we have a little over 100,000 sign-ups, and you know, people
kind of reaching out to be like, you know, come to L.A., and come to, you know, whatever city.
So we'll get some traction all over the world, and I think what's kind of - - you know, being -- just turning 30 myself, I can of feel like most of us grown-ups kind of want to find, you know, ways to kind of reminisce about
their childhood again. So, I think you know, jumping on a pogo stick is quite -- you know, it's super fun. I've never seen anyone being sad on a
pogo stick, you know, so --
QUEST: Well, I can understand, yes. How -- you say you're 30 yourself. How many jumps on the pogo stick can you -- consecutive jumps can you do?
MIKKELSEN: I would say my record is probably a little over 600, but I've been practicing quite a while, and so yes, so definitely a learning curve.
But you know --
[15:55:00] QUEST: Six hundred?!
MIKKELSEN: Yes --
QUEST: I couldn't do six with my knees. All right, sir, thank you very much. I wish you well, good. Next time you're in New York --
MIKKELSEN: All right --
QUEST: I insist you come into the studio and we'll get a 100 out of you. All right, good to see you, thank you very much indeed. Now --
MIKKELSEN: Yes, sure.
QUEST: Good, we are in -- I'm not sure what I would do with this now? That's 1 point. We're in the last few minutes of trade on Wall Street.
The big board has given back some of its gains, not much, we're still comfortably up, we'll be up obviously for the week.
First week in six that we haven't actually seen -- there hasn't been a loss, but the weak job figures, that has boosted people's view that there
has to be a Fed move down. Now, nearly 90 percent of the market believes it will actually -- the next move will be down. So to the 30.
The Dow 30 there, there are -- you know, it's a good day, Verizon stand at the end, you have got Microsoft at the top on some corporate news, same
with Apple. Microsoft is expanding its clouds and Apple's -- some analysts say that it is undervalued. Banks are in the red, not a good day for
banks, Goldman and JPMorgan, Citi is also a little bit lower. And we will have a profitable moment after the break. And that break could be the
break of my leg.
QUEST: Tonight's profitable moment, we're going to be up above 5 percent for the week. Five hundred points on Wednesday, a couple of hundred on
Tuesday, more than a 1,000 points over the whole week. It's quite a remarkable turnaround in market sentiment, predicated by some bad news.
But what's really fascinating, think about it, Crayola, a 100 years old, some crayons. Beyond meat, the market is up 40 percent today or at least
the share prices just on the back of some planned burgers. And somebody wants to bring back the pogo stick.
This is what's fascinating about business, and this is why I hope you enjoy joining us each night for our conversation on business and economics.
There's the markets and then there's those people who are making real money doing things that you and I buy.
Put it all together and that's what you get with the global economy, never mind tariffs and trade wars, let's celebrate the fact somebody wants to
bring back the pogo, make a planned burger and a 100 years ago decided on a crayon that we're all still are playing with today. And that is QUEST
MEANS BUSINESS for tonight, I am Richard Quest in New York.
Whatever you're up to in the hours ahead, great week. The market is up, the day is done.