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QUEST MEANS BUSINESS
British Foreign Secretary Blasts Trump as "Disrespectful and Wrong"; Hong Kong Chief Executive Says Extradition Bill is Dead; Saudi Princess on Trial in Paris for Beating Workman. Aired 3-4p ET
Aired July 9, 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: An hour to go on Wall Street, 60 minutes of trade and you see, we've been down throughout
the course of the session. Interestingly though, there have been moments of rallies -- attempted rallies -- and we are coming back just a little
bit, only down 61 points, so nothing to worry about too much in terms of the last hour of trade, that is the way the markets are looking. And these
are the reasons why.
U.K. trade talks with Washington clouded by extremely undiplomatic language, and it's all between the Ambassador and the President. Air
France is fighting back against the French government's plan for a new eco- tax on flights out of France. And to boldly go where no space companies have gone before, Virgin Galactic is going public. Sir Richard Branson
joins me here.
We're live in the world's financial capital, New York City. It is Tuesday. It's July the 9th. I'm Richard Quest. Oh, yes, I mean business.
Good evening, the special relationship between the United Kingdom and the United States has survived six wars. It's encouraged trillions of dollars
in transatlantic trade and help bring about peace and prosperity for both countries.
Now, it seems to be in tatters over a Twitter spat. The British Ambassador to the U.S., Sir Kim Darroch is skipping a trade meeting with Ivanka Trump
after her father, the President unleashed tweets calling the Ambassador wacky, very stupid, and a pompous fool. He also said that he wouldn't have
anything to do with him further.
Donald Trump added that Theresa May, the British Prime Minister, of course was foolish over her handling of the Brexit negotiations, and the results
he describes as a disaster.
The U.S. President is responding to leaked diplomatic cables that call him inept, insecure and incompetent. Jeremy Hunt, the Foreign Secretary, one
of two candidates to be the next British Prime Minister has tweeted, "The President's comments are disrespectful and wrong to our Prime Minister and
my country. Ambassadors are appointed by the U.K. government and if I become PM, our Ambassador stays."
Now the significance of this is of course, that either Jeremy Hunt or Boris Johnson will be the next U.K. Prime Minister. Boris Johnson is a close
ally and friend of Donald Trump. Donald Trump has many times praised Mr. Johnson.
Abby Phillip is at the White House. Bianca Nobilo is in London, they join me now. I think we start with you, Abby, how much of this is bluster and
how much of this is real indignation from the White House?
ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Well, it remains to be seen how much actually it plays out in real life when it comes to the working
relationship between the two countries. But what we're being told from White House aides is that the anger that you're seeing on President Trump's
Twitter feed is very real.
He takes this as a personal insult. He does not take these things lightly and tends to fire back when he believes people are attacking him personally
or being critical of him. And so the President's response is basically the White House's response.
They're not sure exactly how much further the President will go from here. But so far, he's made it clear a couple of things. One, he expects that
whoever replaces Theresa May ought to replace the U.K. Ambassador to the United States. That was pretty clear in his tweets over the weekend.
And he's also made it clear that he won't deal with Kim Darroch whether or not the rest of the government will deal with him is another story. And so
far, we've heard from the State Department, they've been given no instructions to cut off the U.K. Ambassador in terms of that working
And so I think we can expect that for the time being, things will continue as normal in this extremely important relationship, and really up until
this point, it has been working fairly smoothly despite the disagreements President Trump has had with Theresa May over Brexit for example.
QUEST: Abby, thank you. We will leave you to continue with your news gathering and find out more about this. Let's continue with Bianca because
in many ways this story continues in London.
Bianca, this couldn't come at a worse time for the British. At the end of the day, they need a U.K. trade relationship, a U.K.-U.S. relationship post
Brexit and they must be aghast in Charles Street in London.
BIANCA NOBILO, CNN CORRESPONDENT: It depends who you ask and that's what's so significant here, Richard. As you mentioned, because Britain is now
staring into the abyss still on Brexit, it does need to make sure that its relationship with its key ally, the United States is a strong one.
But obviously, it's embarrassing to have this leak. It has also come in to a time where there's been several leaks, prominent ones from the British
government, from the National Security Council, as well as from Cabinet, which obviously make allies of Britain question whether or not they
contrast the diplomatic relations that they have with the United Kingdom.
But I must interrogate the premise that it comes at the worst possible time because if you speak to somebody from the Brexit Party or those that would
be supportive of a more Atlanticist approach to the future of British relations with the United States, they would say that this could be a move
that's intended, perhaps, to oust Sir Kim Darroch in order to ensure that there's somebody in that position in the future who is more amenable to
somebody who is pro-Trump administration and is more aligned with somebody like Boris Johnson and the Brexiteers.
QUEST: But it's not anybody's business to be trying to oust the U.K. Ambassador. I mean, look, I'm a realist. I know politics is big. But
we're talking about the leaking of some of the most confidential communications in government for the purpose of getting rid of an
Ambassador, and in paralleling the U.K. economy in the process.
Because if Jeremy Hunt wins later in July, well, he has already said, he'll keep Darroch.
NOBILO: He has and the latest polls do show that the prospect of Jeremy Hunt winning is a very unlikely one. But that is a very important point.
This is a deeply serious affair.
However, the main question here is who leaked? And why did they leak? Because the content of the leak itself, even though it is deeply damaging
to the special relationship made public is not surprising.
We do know that those in the establishment in Britain and many in the Civil Service were deeply skeptical and concerned about dealing with some of
President Trump's inner circle. And they had worries about how they conducted foreign policy.
So it's not necessarily the content that comes as a surprise, but the leak itself and who would be desiring to do that at this point in time.
Now, we heard from Sir Alan Duncan, who is a Minister in the Foreign Office today, and he said that around a hundred people, perhaps even more would
have access to that type of diplomatic cable, but it would depend on how it is classified. That goes all the way from official to secret to top
So there's a lot of question marks here. And it's now going to be investigated as to who may have been the perpetrator of this this leak.
QUEST: Okay, back to what we were just saying. Let's just focus on who is likely to be -- what's the latest polls? I realized it's very hard to get
a poll because of the way the voting of the Conservative Party across the country, but the latest polls suggest who will win in terms of Johnson or
NOBILO: The latest polls have Johnson at around 70 percent. So nearly three quarters of the vote of the Conservative Party membership. This is a
distinct entity from Conservative Party voters.
As a whole, this is only 170,000 people or 160,000 people in the United Kingdom predominantly male, predominantly white, predominantly older,
average age are about 56 to 57 who are going to be making this decision.
Now, Boris Johnson has been the favorite among the membership for years now. There is always this poll, which is conducted on Conservative home,
which is the online hub if you'd like for the Conservative Party members of who they would like to see as the next Prime Minister. And for several
years, Boris Johnson has always been the winner of that poll.
So this is really the moment that that's all coming to pass. And we do see even though there was a slip in support for Boris Johnson at the beginning
because of issues in his personal life, and the police being called to his apartment, his avoidance of the media that things have stabilized somewhat.
And he's returned to his old, charismatic, boisterous form, which does well with his base.
And tonight will be a really definitive moment though seeing the two candidates face off against each other because Boris Johnson is criticized
for not being strong on the detail, Jeremy Hunt promised to give him the fight of his life at the beginning of this leadership contest.
So now, if he has accepted that there's not much chance that he can win himself, I'm sure that's what his focus will be in this debate, which has
QUEST: All right, go and watch it. Go and watch the debate and if there's something -- if there's something interesting that comes out of it, please
come back to us immediately to report it. Bianca in London.
The conversation that you can join in of course, our question today, should Britain's Ambassador to the U.S. keep his job? Should he be maybe less
controversial? Maybe I should rephrase it. Should he be recalled? Should the Ambassador be recalled with his Ferrero Rocher chocolates and all? Yes
or no. Would you bring him back or would let him stay? cnn.com/join. We will return to your votes throughout the course of the program.
[15:10:13] QUEST: And later in the program, I'm hoping to be joined by Britain's Financial Secretary to the Treasury. He supports Boris Johnson
in the leadership race. Does he agree that the Prime Minister put together a foolish deal that resulted in a disaster and that the U.K. Ambassador is
a stupid guy?
Well, they are the President's words, let's see what the Financial Secretary says.
The markets. We are down, but not as far as we had been. And you know, the only thing you really need to know is that we're in a range here, down
a quarter of two percent. Investors are waiting for the Fed tomorrow, looking for clarity on future rates in this environment really. All day,
it's been watch and wait, too little and nothing.
Markets in Mexico are down after the sudden resignation of the country's Finance Minister, Carlos Urzua. The peso weakened as much as two percent
against the dollar. It has regained some of that ground.
Now the former Finance Minister published his resignation letter on Twitter. He mentioned disagreements with Mexico's President over economic
Jorge Castaneda is the former Mexican Foreign Secretary, he joins me now from Mexico City. Jorge, good to see you. Thank you, sir.
Look, I mean, how much of this is just Urzua just deciding to be petulant? What actually is the problem with the making of economic policy in the new
JORGE CASTANEDA, FORMER MEXICAN FOREIGN SECRETARY: Well, Richard, I think there's two elements in the letter of resignation, which are worth dwelling
upon. The first one is the one you mentioned and there are substantive policy differences, apparently, between the outgoing Finance Minister and
the President in the sense that the Finance Minister wants to stick to basic numbers, wants to spend money that there is, wants to stop counting
on money that doesn't really exist to finance a series of expenditures that are growing by the day.
But in addition to that part of the letter, Richard, there is also a very serious accusation by the Finance Minister of conflicts of interest by high
level officials in the government who have imposed officials within the Finance Ministry.
This is an accusation of corruption by a key member of the President's team, against the President's team, in a government that prides itself of
being above corruption. This is no minor affair.
QUEST: So is anybody going to take it seriously? The government's a year or so old. They only took office in the beginning of the year, but it's
been -- it's a few months since it was elected.
I suppose that the Mexico economy is not doing well. He is -- the President has managed to mesh himself in some nasty messes with the U.S.,
but is time on his side here?
CASTANEDA: Well, time may be on his side if Donald Trump lays off, so to speak, and I'm not sure that I would bet the store on that. I think time
would be on his side if the Mexican economy begins to grow.
But for practical purposes, we will have had zero growth during the first semester of this year, which ends -- which just ended a week ago.
And so the problem that President Lopez Obrador has is that he doesn't have a growing economy. Violence is not down. And his main letter of
presentation, his main boast, which was, "I've put an end to corruption in my government," which is a big deal in Mexico. This is something that
everybody applauds, now it turns out that his Finance Secretary says that he hasn't put an end to corruption, because there is a big problem of
conflict of interest.
QUEST: Quick final question on a completely unrelated subject, but you'll be following it closely. You were the Foreign Minister. You've obviously
been following the British Ambassador's mess over his comments about Donald Trump.
When you were Foreign Secretary and Foreign Minister, did you read confidential cables that you thought, "Oh, that never gets into the public
CASTANEDA: No, I didn't. But something very much like this happened with former U.S. Ambassador in Mexico, Carlos Pascual about 10 years ago,
President Obama's Ambassador.
WikiLeaks leaked a cable of his which was very derogatory, very critical of the Mexican government, and the Mexican President at the time, Felipe
Calderon threw him out of the country.
Quite honestly, my sense is that the British Ambassador in Washington, either should resign or be recalled, because he is no longer functional.
It's not his fault. But the fact is, somebody leaked it, and once it's leaked, you can't put the toothpaste back in the tube. It doesn't go back
QUEST: We're always glad to have you, Jorge. Thank you so much. Good to have your analysis on that one tonight. Thank you.
[15:15:11] CASTANEDA: Thank you, Richard.
QUEST: Now, he is about to make Virgin Galactic the first publicly traded space company. Sir Richard Branson is with us this evening. Good to see
you. Come and join us in the C-suite as we discuss Virgin Galactic, the public company.
QUEST: Virgin Galactic is not only going to space, it's also going public. The company is coming to the stock market later this year. It's part of a
merger with a venture firm, Social Capital Hedosophia, which will take or get a 49 percent stake in the new Virgin Galactic.
The SCH stock is trading at more than two percent higher at the New York Stock Exchange right now. I'm joined by the founder of the Virgin group,
Sir Richard Branson. Sir, good to see you, as always.
RICHARD BRANSON, FOUNDER, VIRGIN GROUP: Good to see, you Richard.
QUEST: Why this deal? What is it? Why did you decide to go public in this way? I mean, to some of us, Virgin Galactic is your baby?
BRANSON: It is a 14-year-old baby no. So a while ago, we had shaken hands on a deal in Saudi Arabia. And that would have funded both Virgin Galactic
and Virgin Orbit. We obviously pulled that deal when the Khashoggi thing happened and I decided then to carry on and fund both companies myself
until they both got to break even.
And then I was approached by Chamath who explained how his pack worked, which I had never heard of before and over a nine-month period persuaded us
that you know, to reverse into this pack.
QUEST: What's the advantage for Galactic of doing this?
BRANSON: So this will enable -- this will give us the money to see us right through to profitability. It will mean that we'll be able to ramp up
production and get many more spaceships built and another mothership built and many more rockets built.
And so it -- and it is actually the way that Virgin Group works. We may be spent 14 years building a company, owning nearly 100 percent and then we'll
[15:20:07] QUEST: And you've done that with the airlines. You've done that with all the other aspects of it. Is it hard to do that? Is it hard?
I mean --
BRANSON: It's painful if you're going below 51 percent, with Virgin Galactic, I'm keeping 51 percent and we also have hundred percent of Orbit.
So still going to be, you know, very involved.
But yes, many, many, many years ago when I sold our first company, Virgin Records for a billion dollars, I was spotted running down the streets in
floods of tears. But past the headline which said "Branson sells for a billion." And I thought that would be a strange photo.
But you do get, you know, companies and people and you get very attached to them.
QUEST: And this particular one, bearing in mind, obviously the difficulty, this has been one of your hardest ventures to do -- Galactic. Are you
still on track? And when I say on track, I don't mean, whether you hit December 31st or next March, it's neither here nor there.
But is the project on track to put somebody into space in the near future?
BRANSON: Yes, I mean, the exciting thing is that we have put five people into space in the last few months. They've all become astronauts. We're
the only company in the world to have done that. The last company in America that did it was NASA in 2011.
So, you know, so we've gone well into after 14 years with our test program.
QUEST: But whereas the other players must Bezos and others are going for the commercial stuff, the delivery of space stuff, the deep space, where
there could be greater revenues with commercial ventures. Where is the long term revenue coming from for Galactic?
BRANSON: There are millions of people watching this program who would love to become astronauts and go to space if they could afford it? The price
that we're currently charging, and, you know, we actually closed the bookings five years ago when we got 600 people, because that'll take us two
or three years to accommodate them.
But since we've had the people in space, we've had two and a half thousand people who've registered to go when we reopened again.
So I think the difficulty is not going to be finding people who want to go, it is going to be, you know, creating enough spaceships to cope with
QUEST: And I love the fact that at some point, Wall Street meets Main Street meets Space. Now you're a public company. The numbers are out
there. And it's a much -- it's a much more transparent -- not transparent, but it is a much harder game when the Street is involved.
BRANSON; Yes, I mean, I'm 50 years in business running Virgin this year.
BRANSON: Fifty. And in over those years, I've taken quite a few -- many companies public and I mean, the last two was Virgin America, which we
again, we built from scratch with one plane up to a really formidable airline in the States and Virgin Money in the U.K.
And, you know, as long as you get a great team of people to run it on a day-to-day basis, then it could be helpful and useful. Thank you.
QUEST: Thank you very much indeed.
BRANSON: Nice to see you.
QUEST: The shares of -- let's stay with aviation, above ground nature. Shares of Air France KLM closed down nearly three percent in Paris.
The airline says it would be extremely penalized by the French government's plan, proposing an eco-tax on all flights out of France. It would raise
the $250 billion from 2020.
It could be a game changer according to air transport group. Flight worldwide produced nearly 860 million tons of CO2 in 2017. The airline say
they are being targeted too much.
I spoke to the CEO, the Chief Executive of IATA last month and Seoul. He said the perception of airlines when it comes to pollution is simply wrong
(BEGIN VIDEO CLIP)
ALEXANDRE DE JUNIAC, CEO, IATA: We are not the greatest polluter. We are only two percent of the emission. I don't claim that it's not enough or
that it will not grow. But I say it's two percent. There are other areas that are probably more worse.
Secondly, we are the only one who have taken 10 years ago, you know a very strong commitment, not only to cap the emission, but to reduce it.
And thirdly is not only commitments in the air with nothing behind, we have implemented successfully the programs at all level with every industry
member, but also with 193 governments.
(END VIDEO CLIP)
QUEST: The industry is sharply against this. Melissa Bell in Paris is with me. Look, I don't know anybody in the airline industry or aviation
that would go along with what the French government is planning. Why they're doing it?
[15:25:08] MELISSA BELL, CNN PARIS CORRESPONDENT: And so far yet, Richard environmental groups have been fairly cautiously optimistic about what's
being announced, because they're concerned about the European Union's figures, for instance, that if nothing is done, CO2 emissions caused by the
aviation industry is going to rise 300 percent between now and 2050.
And you have this growing movement, people who are saying, look, we're not going to take planes anymore, of the young coming out to talk about the
climate crisis. And I think one of the things that Emmanuel Macron had made clear from the very start was that the Paris Climate Accord deal would
be at the very heart of what he was trying to achieve nationally. That failed spectacularly when he tried to do it last autumn.
This time, though, with the eco-tax on aviation, he believes, the French government believes that he is really paving the way for more ecologically
responsible aviation industry -- Richard.
QUEST: Melissa, but the problem with eco taxes in aviation, as we've seen from APD in the U.K., and we saw in the Netherlands and we've seen
elsewhere, is that the money often doesn't go to environmental causes. And once these taxes are on, it's very difficult to get them off.
BELL: That's right, Richard. That's one of the things that the French government has wanted to address head on when it announced these measures
today saying that the 180 million euros that are to be raised from next year from this tax.
And again, it's a different tax according to whether you're flying an economy and flying to within Europe or whether you're flying business out
of Europe, it goes up to the Eurozone and what the French government said in outlining these measures today was look, this money, this 180 million
euros that is going to be raised from it will go directly to helping more eco-friendly forms of transport and specifically, Richard, improving
France's rail infrastructure.
Of course, the airlines are against and no surprise, Air France KLM first amongst them. What Air France says is that look, we are going to be
penalized in terms of competitiveness. Fifty percent of our flights leave from France. This is going to hit us harder than others.
And of course at a time, Richard, when, bear in mind they've lost hundreds of millions of euros over the course of the last few years because of
industrial action. This is a company that spectacularly did not need this.
And yet, the French government plowing on with this. It has to come into effect next year, the French government says in order to help improve that
carbon footprint of airlines.
And again, this is one of other impositions that are being made on the aviation industry. From 2021, all of the airlines are going to have to
count how much CO2 emissions they're responsible for and they're going to have to report them.
QUEST: Melissa, thank you. It looks like a glorious evening in Paris tonight. It looks like a perfect summer evening.
BELL: It's beautiful.
QUEST: Thank you.
BELL: It's stunning. We've had nothing but good weather these last few weeks.
QUEST: Well, it's not as hot as it was, I hope.
BELL: It's getting much better, very pleasant now.
QUEST: Melissa Bell in Paris. Thank you. Now, coming up in a moment, Deutsche Bank says it's a new dawn. Investors worry there may be dark
times ahead. The issue with Deutsche and its plan is all about execution. Can they deliver and then once it's all done, what will be left? QUEST
MEANS BUSINESS live from New York.
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's a lot more QUEST MEANS BUSINESS in just a moment. We'll be
talking to Britain's Financial Secretary to the Treasury as the two candidates for Prime Minister both say they can't commit to delivering
Brexit on October, the 31st.
And your favorite episodes of "Friends" will still have a new streaming home, it's not Netflix, we'll tell you about it whilst we continue because
this is CNN and here on this network, the facts always come first. The British Foreign Secretary Jeremy Hunt is lashing out at Donald Trump.
He's calling the U.S. president's public criticism of the British ambassador to -- in Washington disrespectful and wrong. Mr. Trump says he
will no longer deal with him. And Kim Darroch after a leaked cable called Donald Trump "inept, insecure and incompetent".
Hong Kong's Chief Executive Carrie Lam says a controversial Extradition Bill is dead, which allows suspected criminals to be sent to the mainland
China for trial. Pro-democracy activists say they don't believe Lam, and that the bill won't really be dead until she officially withdraws it.
They're concerned she may re-introduce it during the current legislative term.
A court in Paris has opened a trial against Princess bint Salman; the sister of the Saudi Crown Prince Mohammad Bin Salman. She's accused of
conspiring to kidnap and beat a workman at a family's luxury apartment in Paris. The Princess have refused to return to Paris since the incident.
She's been tried in absentia.
And a big reversal by the U.S. rapper Nicki Minaj; she's cancelled a performance in Saudi Arabia scheduled for next week after social media
backlash. Minaj now says she wants to show support for the right to women and the LGBTQ community.
Shares in Deutsche Bank fell sharply for the second straight day. Investors are nervous about the bank's dramatic overhaul, 18,000 jobs are
to go over the next couple of years, and the shares in the bank have fallen more than 4 percent in Frankfurt, that's on top of 3 percent or 4 percent,
5 percent yesterday.
Doug Braunstein is the former Chief Financial Officer of JPMorgan Chase, he's made a big investment in Deutsche Bank last year with his company
Hudson Executive Capital. Good to see you.
DOUG BRAUNSTEIN, FORMER CHIEF FINANCIAL OFFICER, JPMORGAN CHASE: Richard, good to see you.
QUEST: You've lost money over the last couple of days, haven't you?
BRAUNSTEIN: Yes, but you don't worry about the short-term when the long- term looks as bright as I think it now does.
QUEST: How can you say that? We don't know how this -- the execution which is what this is all about.
BRAUNSTEIN: Yes, so part of the reason I can say that, Richard, is this is different than the Deutsche Bank of the past in as much as Christian
Sewing; the CEO and the management board have embarked on a strategic repositioning. So, this really isn't a restructuring, it's a change in the
strategic direction of the bank, and it is back to Deutsche Bank's 150- year-old roots. And going back to your DNA is the easiest place to go.
QUEST: Right, but what does that DNA look like? A national lender in Germany with some minor international ambitions?
[15:35:00] BRAUNSTEIN: Yes, so it's interesting. It is -- you've got the first part exactly right. It is a leading consumer franchise in Germany.
It's a leading wealth management business in Germany. It's a leading asset manager in Germany -- but it's much more than that. It has a history as a
global corporate bank. And so a million customers, large German companies, small German companies, Asian companies, U.S. companies will use that bank
for traditional commercial banking services.
QUEST: How can it get rid of its equity? I realize obviously it's not going to completely get rid of it, but it still needs to service those
million customers who have equity requirements.
BRAUNSTEIN: Yes, so it's interesting. So, those million customers have lots of requirements. The corporate bank really targets very basic
commercial banking services. So they're going to give them loans, they're going to sell them treasury services, they're going to provide them FX
So if Siemens want to pay their employees in Boston, they can pay them in dollars. You don't need -- the customer that buys that product is a
treasurer and assistant treasurer or a CFO, but you don't need an equity product to service that client.
QUEST: But what about bond issuance and debt issuance?
BRAUNSTEIN: So they will do that as well. So, they're preserving in their investment bank. The things that Deutsche Bank has global competitive
advantage. But Richard, that's bond issuance, debt service, FX --
QUEST: Not IPO.
BRAUNSTEIN: Not IPO. And you know what? If I want to pay my workers in Boston in dollars, it doesn't matter whether or not I led the Google IPO.
QUEST: Is this -- this is a complete and utter admission that they -- I'm trying to avoid using the word failure, but I think failure is the word
that will be on the horizon, that it's hard for a non-U.S. bank to compete on Wall Street amongst Goldman, Morgan, Chase.
BRAUNSTEIN: So, you know, what's wonderful about being an investor is I get to look forward, not back. And I bought my shares about seven or eight
months ago. And I bought them because I believed Christian Sewing and the management was the right team at the right time to actually plot a path
So, I can't speak to the 20 years of what may have been unsuccessful attempts. I can't speak to what the future looks like, and the business
strategy that he articulated on Sunday and Monday is an incredibly sound and attractive strategy for investors.
QUEST: Can he deliver? Every analyst over the last 48 hours said --
BRAUNSTEIN: Yes --
QUEST: You've read it, said this is all about, can he deliver?
BRAUNSTEIN: Yes, so the best part of my relationship with him is over the last 18 months, I've really gotten to know him well. And I'll say three
things about him. One is, he's made incredibly difficult decisions, he's changed the strategic direction set on 20 years ago.
Two is in the last 18 months, every target he set out to hit, he hit, and third is, he's built a management team and a structure now --
QUEST: Right --
BRAUNSTEIN: To execute.
QUEST: Finally, Deutsche is too big to fail. The German -- yes, the German government could not let Deutsche fail. There's an existential --
BRAUNSTEIN: Yes --
QUEST: Would you agree?
BRAUNSTEIN: So, I'm not sure, I'm not going to speak on behalf of the German government, but what I will say is part of this restructure, part of
this strategic direction shrink the balance sheet, make it less big, and change the business complexion so that the businesses are more predictable
QUEST: Yes --
BRAUNSTEIN: And they're safer. And so, the nice part about this is you get a safer, less systemically important, more predictable, better
capitalized, more liquid bank, and from a shareholder standpoint, less risk means better returns.
QUEST: And we say thank you, sir, for coming in and talking about it.
BRAUNSTEIN: Richard, thank you.
QUEST: Always good to have you, sir.
BRAUNSTEIN: Bye --
QUEST: A jittery recession for European markets, the Dax was the worst form, not surprisingly, but not just because of Deutsche. The German
chemicals giant, the largest in the world BSF warned profits could drop 30 percent this year, and they're also waiting for updates from the U.S. Fed
on the possibility of a rate cut.
And reminder of our question at cnn.com-slash-join. Tonight, we're asking, should Britain's Ambassador Sir Kim Darroch, should he keep his job, should
he be recalled or fired in the light of his leaked comments about the Trump administration? Looking at the moment, should he keep his job? Yes, so
having to squint, look, at my age, you can't see the screen very closely, I need new glasses.
I'll be speaking in a moment to Britain's Financial Secretary to the Treasury after the break.
[15:40:00] (COMMERCIAL BREAK)
QUEST: You're still tuned in to CNN. Boris Johnson says he does not expect the U.K. will leave the EU without a deal. Now, Boris Johnson is
debating Jeremy Hunt, his rival to become the British Prime Minister and replace Theresa May. The bloody relations with the United States are at a
low point at this crucial time for the British economy.
If there's a no deal Brexit, economists warn it could be devastating. The opposition Labor Party is now calling for a second referendum in that
situation. Donald Trump has long promised what he called a phenomenal trade deal for the U.K. once Brexit actually happens.
Discussions are meant to be taking place this week. The trade secretary Liam Fox is actually in the United States, having meetings with Ivanka
Trump. A reminder of our question tonight, should Britain's ambassador to the United States be recalled or keep his job in the light of those leaked
comments on the Trump administration? Cnn.com-slash-join.
With me is Jesse Norman; the Financial Secretary to the U.K. Treasury. His book is called "Adam Smith: Father of Economics". He joins us from London
tonight. We'll get to the booking in just a moment. The -- you've read the comments of the president, do you agree that Theresa May went her own
foolish way and the deal she got was a disaster?
JESSE NORMAN, FINANCIAL SECRETARY TO THE UNITED KINGDOM TREASURY: No, absolutely not. The deal she got actually was a very good one in many
respects. And what's interesting is that the only moment where the House of Commons could agree in the last few months regarding Brexit was when it
approved the deal subject to the removal of what's called the Backstop.
And so if a sensible deal can be done with the EU regarding the removal of the backstop over the next few months, then that deal should pass the House
QUEST: How damaging is this row with the United States, bearing in mind that the U.K. is going to need -- if Donald Trump gets re-elected, the U.K.
is going to need a deal with the U.S.
NORMAN: Well, listen, I lived in the states for six years and you won't find a more devout Americana file than I am. But the relations between our
two countries go a lot further than one set of comments, and I don't think anyone should pay much heed to this.
I mean, certainly, you wouldn't find anyone in Britain seeking the removal of the American ambassador, if Ambassador Johnson were to say a few frank
things to the president. So, I think there's lots of friendly relations underlying our deeper links between the two countries.
[15:45:00] QUEST: Except, I take what you say perhaps for a second here, but in this case, we're dealing with --
NORMAN: Please call me Jesse.
QUEST: Jesse, in this case, we're dealing with a president who is mercurial and who is, some would say, thin-skinned, and the real reaction
of saying that the U.S. will no longer deal with Sir Kim is an indication of the potentially perilous state that this has left us in.
NORMAN: Well, I'm not sure about that. As I say, I think there are many close relationships and you don't have to look --
QUEST: Right --
NORMAN: Far in the world of commerce or the world of security or intelligence or armed forces or diplomatic corps even to see lots of --
QUEST: Right --
NORMAN: Overlaps and lots of shared interests.
QUEST: Boris Johnson, you've come out for Boris Johnson as the next Prime Minister. In many ways, that's to say that if he wins, it's a saving grace
for this row because it is the equivalent of control-alt-delete and reset of the relationship in that sense. Why Boris Johnson over Jeremy Hunt?
NORMAN: Well, listen, I supported Boris when he was running to be mayor of London in 2008, and then having proved to be a great mayor, when he run
again in 2012, and I supported him when he tried to become Prime Minister last time around. So, he and I go back a long way. I think we're lucky to
have two excellent candidates, and they would be, I think, viable potential leaders or candidates for high office, not just now but in any previous
But the difference is that Boris has the capacity to change the political weather, and that's absolutely what we want. And when you tie that into
the kind of energy and resolution that I think he's going to bring to the Brexit negotiations, and also to the early signs we have of him forming --
QUEST: Right --
NORMAN: Quite a cracker jack team. I think it's -- there's plenty of scope for -- to be positive about this.
QUEST: Your new book is "Adam Smith: Father of Economics". Would Adam Smith approve of the sort of the trade, well, he wouldn't, would he? He
wouldn't approve of the trade war at the moment between the U.S. and China, would he?
NORMAN: Well, I think you'll enjoy the book, Richard, when you get to it, because actually Smith's views on this as on everything else, much wiser
than you might imagine. So listen, Smith doesn't -- Smith thinks that if - - when people trade with each other, the results are mutually beneficial, and he is an advocate for open markets at a time when, you know, much trade
was controlled by states and by kings and dukes and princes.
So, he is now going to open markets, but he also thinks that countries will and do preserve their own interests.
QUEST: Right --
NORMAN: And so, he's not naive about what we would call great power politics, and he realizes that sometimes to keep markets open, you have to
give the other side a bloody nose, and that may be what President Trump believes he's doing at the moment in the trade arguments he's having.
QUEST: Finally, Jesse, when I'm in London, you and I will talk more about your book, I promise you that. But you just mentioned then that, you know,
Boris Johnson will put together a cracking team, assuming he is successful. Am I talking to the next or prospective chancellor of the Exchequer here,
you, in other words?
NORMAN: Oh, yes --
No, I have to say I don't think you are. I think there're some very good candidates, and the other leadership candidates will be the first pool from
which I think Boris will draw. No, I was thinking more about his openness to talent from around politics. And one of the things that we saw when he
was mayor was, he was not afraid to bring in some quite interesting tough characters from outside and give them real authority.
And I think that will be really interesting model if he can make something like that happen here as well.
QUEST: Jesse, good to see you, thank you, sir.
NORMAN: Thank you, sir.
QUEST: As we continue in Monaco, Ross and Rachel are moving into a new home. The icon '90s show "Friends" is ditching Netflix for a new streaming
service after the break.
[15:50:00] (COMMERCIAL BREAK)
QUEST: Welcome back. "Friends", one of the biggest TV shows of all time is breaking ties with Netflix. The series is moving to "HBO Max", that's
the new name for the new streaming service from Warner Media, parent company of this network. Brian Stelter is with me --
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Hello!
QUEST: So, what do you make of it?
STELTER: "HBO Max" is the name of this brand that's going to come out in about nine months from now. We know, it's going to be the Spring of 2020.
That is after Disney launches its streaming service this Winter. So, Warner Media is coming somewhat late to this game, of course, in a world
dominated by Netflix.
But all this major media companies, the Disneys, the Warners, they all know they need to get into this business, having direct relationships with
QUEST: I read the five-page press release, what's in it? Why is "HBO Max" worth it?
STELTER: Well, it has "HBO" to begin with, that's the foundation. People can already subscribe to "HBO" and stream shows millions of people do. And
then this is an added service on top of "HBO" with more new shows and movies including from producers like Reese Witherspoon and then library of
vogue content, past content.
And when I say old past content, some of these are the most popular shows on Netflix. "Friends" is one of the most popular shows on Netflix even
though the sitcom ended a long time ago. A whole new generation of fans has found "Friends" for the first time. So "Warner Media" is making a big
investment by pulling it off in Netflix.
Remember the company is getting paid $80 million plus a year buying Netflix for this show. Now, you'll have to subscribe to "HBO Max" to watch it.
QUEST: All right, but pricing will be crucial --
STELTER: Yes --
QUEST: And you -- I mean, we don't know the methods whether you'll subscribe direct to "HBO Max" because it's not going to be like incremental
with cable, is it? I don't know if the $2.50 and you get another 15 channels.
STELTER: That's the understanding right now. The company has not revealed the pricing yet --
QUEST: Right --
STELTER: But this is probably going to be a relatively high price for a streaming service. Right now, "HBO" now is a streaming service available
for 15 bucks a month in the U.S., presumably "Warner Media" will charge more, I guess it's providing more in this new bundle. So, $16, $17, $18 a
month, Netflix is priced below that. So, that may be a challenge.
QUEST: All right, I want to turn to the ambassador's leaked memos --
STELTER: Oh, it's better than any drama, better than any TV drama.
QUEST: Is it right to publish? I can see the "Daily Mail" saying, hey, this is really good, publish. But publishing --
STELTER: Yes --
QUEST: Be done. There's no redeeming public importance or public interest, is there?
STELTER: You think there's no redeeming interest at all? I think it's important to know what ambassadors think of the United States and think of
President Trump. I think we are benefitting from learning, and when I say we, the collective we, the public benefits from knowing how the U.S. and
Trump are viewed around the world.
QUEST: Why -- in which case, you're destroying the whole -- look at that - -
STELTER: There's a lot of damage being done --
QUEST: There's a lot of damage being done --
STELTER: A lot of disruption happening --
QUEST: Is, right, but is the damage worth it?
STELTER: I think it's easy, I think the easier position for a newsroom to take is to say publish. It is not up to a newsroom at the "Daily Mail" or
another to think four steps ahead and figure out what the deal --
QUEST: Even --
STELTER: Put the whole consequences will be.
QUEST: Even -- hang on, hang on. But then where is your sense of responsibility?
STELTER: Responsibility is to the audience, to the public, let them know what's happening in private behind closed doors. Now, of course, the
argument against these leaked memos has been this is a popular point of view, it's not surprising that the British ambassador thinks President
Trump is --
QUEST: Right --
STELTER: Inept, this has been published in books, "Fire and Fury" and all the other books have detailed how incompetent President Trump is, this has
been out there for years.
[15:55:00] And that's a true critique, but it is still significant to hear someone on the -- you know, privately saying in his own words that does
have news value, news worthiness.
QUEST: And it's also interesting to see a president of the United States, I've got the tweet here --
STELTER: Yes --
QUEST: Describing an ambassador from the closest ally as a very stupid guy, describing the Prime Minister as foolish and her plan as a disaster.
STELTER: Trump confirming some of what's contained in the memos. You know, this description of Trump as inept and thin-skinned is being backed
up by Trump's own behavior. And look what's happened in the past hour, the U.S. State Department has said, hey, as far as we know, we're still having
normal diplomatic relations, we're still talking to the ambassador, nothing's changed.
I do think this is the kind of story that was more of a gossip column story than something that had really important geopolitical stakes. But
obviously, there are now geopolitical stakes as a result of this being published. The argument against publishing though, this wasn't --
QUEST: Right --
STELTER: National security, there weren't national security secrets, so I understand why the "Daily Mail" did it.
QUEST: All right, good to see you --
STELTER: Good to see you --
QUEST: Sir --
STELTER: Thanks --
QUEST: Thank you --
STELTER: Thank you.
QUEST: We will have our profitable moment after the break.
QUEST: Tonight's profitable moment. The airline industry generates roughly 2 percent of global CO2 emissions. The number remains stubbornly
high because despite the industry's best efforts, the increase in aviation air travel means that there's more going on. But there's really no other
industry perhaps that's done quite so much from biofuels to new ways of flying to new technologies with the aircraft to carbon emission trading
schemes to a variety of CO2 schemes designed to reduce it.
And yet still governments seem to believe that somehow taxing the airlines is a better way forward. The U.K. tried, is doing it with APD. The French
government now has its eco-tax. Think about it, it's going to raise 180 million euros to spend on what? On other forms of transport infrastructure,
that is peanuts.
The facts show that these eco-taxes do not work. The evidence is well and truly established, but still they do it because it is popular. And now the
French government has got on the same bandwagon and you know something, the airline industry once again will manage to lose the public argument.
And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, whatever you're up to in the hours ahead, I hope it is profitable.
The Dow is barely down, the bell is ringing, the day is done.