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QUEST MEANS BUSINESS
Puerto Ricans Celebrate Governor's Resignation; North Korea Fires New Type of Short-Range Missile; Rapper ASAP Rocky Charged with Assault in Sweden; First Full Day For Boris Johnson In Charge Of The U.K. Promising A Turbocharged Brexit; Facebook Posted A Big Earnings Beat. Aired 3-4p ET
Aired July 25, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: We're an hour away from the closing bell on Wall Street. And the market is clearly
unhappy. The Dow has been down throughout this session, right the way through. We're almost at the lows -- a minor little recovery -- which is
interesting, but it's a very big earnings day. We've got interest rates in Europe. Well, we'll go through it all because the market is down, and
these are the reasons why.
First full day for Boris Johnson in charge of the U.K. and he is promising a turbocharged Brexit. We need to look at that and all its implications.
Facebook is warning of revenue deceleration as it soaks up regulators fines. The stock is down quite heavily. And if you're talking about
stocks being creamed, Tesla is off more than 10 percent on bad earnings.
We are live in the world's financial capital, New York City on a spectacular summer's day. It is Thursday, it is the 25th of July. I am
Richard Quest, back in New York where I mean business.
Good evening. It is the first day of a new approach. The words of Boris Johnson as he took helm in his first full day as Prime Minister of United
Kingdom and began to sell his vision of Brexit.
The Cabinet first, a cull of Theresa May's top officials, carnage is how the morning newspapers described it. Seventeen positions changed. It's
given Boris Johnson almost unlimited room, and all people can pretty much unanimously committed to Brexit.
In Parliament where he called on Europe to make changes to the withdrawal agreement and said Britain is more ready than most believe for a no deal
Brexit and third, Europe. In a call with Jean-Claude Juncker, the outgoing Commission President who reportedly told him no changes to the withdrawal
agreement will be forthcoming.
Anna Stewart is in Parliament Square joins me now. Boris Johnson has completely attended British politics and has reframed the debate with the
E.U. and that's clear today.
ANNA STEWART, CNN REPORTER: Really clear. As you said, he had that phone call with Jean-Claude Juncker, I think it went well in terms of Juncker
congratulated Boris Johnson on his appointment. But he reiterated that, you know, the withdrawal agreement is the best and only option. The only
agreement on the table.
I think it was interesting that they haven't arranged to meet yet. They've swapped phone numbers. And actually a very interesting part of the read
that we got from the spokesperson from the E.U. was they remain available for the coming weeks should the U.K. want to hold talks, should they want
to clarify their position in more detail.
The E.U. wants to hear more detail about how they can avoid the Irish backstop. They certainly will not allow it to be removed entirely, and
then you also heard, not just from Juncker, but from Michel Barnier, an e- mail to other E.U. member states and this was more strongly worded, I would say. Michel Barnier being the chief Brexit negotiator for the E.U. He
called Boris Johnson's announcement that they need to eliminate or abolish the Irish backstop, he said that was absolutely unacceptable. He also said
that he thought that Boris Johnson was rather combative in his speech.
QUEST: But here's the point, Anna. Europe is now on notice that some would say milk-toast negotiating strategy of the British under Theresa May
is no longer going to be the norm. To that extent, this is Europe's nightmare now because they can threaten all they like, but they're looking
at a Prime Minister who might not care.
STEWART: Well, this is what's so interesting, Richard because I think from the E.U. perspective, what they're hearing is much of the same words that
they heard from Theresa May in terms of, "We want to come to an agreement. We will reach a deal. We found solutions for the Irish backstop." They
have heard that before, but this time they are hearing it from a real true Brexit believer. And one who is staking his whole career on taking the
U.K. out of the E.U. by the 31st of October.
He said do or die. He said you know, no ifs, no buts. So, he is staking his whole career on this and the E.U. needs to decide what to do next.
Clearly, from the E.U. bureaucrats' positions for the likes of Juncker and Barnier, there is absolutely no room for maneuver. But we are hearing
noises that perhaps first, Boris Johnson, as new Prime Minister will actually go and speak to the leaders of the E.U. states themselves --
Merkel, Macron -- will they be more sympathetic? I think it's unlikely but certainly Brussels is going to be keen to try and find some wiggle room.
[15:05:09] QUEST: Anna, how far -- you studied this -- how far can amending the -- my words -- wishy washy Political Declaration, which they
are prepared to do? How far could that solve the problem? Because the backstop is part of the withdrawal agreement.
STEWART: Exactly. And as you said, wishy washy. The Political Declaration, they are always offering to change the Political Declaration.
It is not enough. It has to be the withdrawal agreement. It is part of the entire thing.
Now, Boris Johnson as Prime Minister says, "Oh, we can just sort out the Irish backstop as part of the trading negotiations much further down the
line." The E.U. has always said this is one of their red lines. This has to be part of the whole withdrawal agreement, including that divorce bill
settlement, which also Boris Johnson thinks is too much. This is impossible to do with just the Political Decoration. The E.U. knows that,
Boris Johnson knows that. They've got to somehow find some room together or we are going to be leaving without a deal.
QUEST: Anna Stewart in Parliament where, either because of good sound or he's gone home -- the xylophone or the glockenspiel. I think it's a
STEWART: I've got someone to go have a nice conversation with him, which means that he actually paused the xylophone for a few minutes.
QUEST: Really? I think it's a glockenspiel.
STEWART: Wily. Wily.
QUEST: I think it's a glockenspiel which I can't spell. Thank you. And our time is seriously running short for Boris Johnson. It's now under a
hundred days until the U.K. is supposed to leave. The Prime Minister says Britain can do it with a little boost.
(BEGIN VIDEO CLIP)
JOHNSON: In the 98 days that remain to us, we must turbocharge our preparations to make sure that there is as little disruption as possible to
our national life.
And I believe that is possible with the kind of national effort that the British people have made before and will make again.
(END VIDEO CLIP)
QUEST: So, we're talking about turbocharging in a very short period of time. And having heard Boris Johnson in the House, seen the communications
from Europe, you can now really see that completely changed environment that exists for the turbocharging of Brexit.
First of all, and significantly, this Brexiteer Cabinet -- 17 changes -- all the major players. Savid Javid, Priti Patel -- all the major changes
that the players are hardened Brexiteers committed to leaving. Then also turbocharging along for no deal. Everybody in the old administration used
to say we're ready or we will be ready. He is saying the U.K. is better prepared than many believe.
And the third, of course, and the last, ditching the backstop. Now, the third part is going to be the hardest, the ability to ditch the backstop.
Brussels says it's a nonstarter.
On "The Express," Adam Marshall joined Julia Chatterley from the British Chambers of Commerce and told her his group won't allow a messy no deal
(BEGIN VIDEO CLIP)
ADAM MARSHALL, DIRECTOR GENERAL, BRITISH CHAMBER OF COMMERCE: I don't want to talk about negotiating tactics, what I want to see our results for the
business communities that have been waiting quite a long time and face the uncertainty of having to try to prepare for multiple scenarios, which of
course costs them time, cost them money, and it's very difficult to do.
JULIA CHATTERLEY, CNN INTERNATIONAL HOST: Will businesses manage if we see a new deal exit on the 31st of October? Or do you anticipate job losses,
small businesses failing? What's the worst case here?
MARSHALL: Well, it's impossible to say because of course, change would happen over a period of time, and the results would only become apparent
over a period of time.
What we do know right now is that the U.K. economy is relatively flat, we're not seeing a lot of growth, we're not seeing high levels of business
confidence at the moment. All of that is a problem. So too, are some of the localized impacts that we could see.
Some parts of the United Kingdom are particularly exposed to trade with the European Union, which is one of the reasons why a messy and disorderly exit
could hit some areas worse than others.
CHATTERLEY: You've also said in your 15 steps, look, there are other things. There are things that this government needs to focus on to help
support businesses. One of them I thought was interesting, a one-year moratorium on all policy measures that increase business costs. You want a
commitment to U.K. energy policy. These are all important things that have been left by the wayside of three years of negotiations and nothing as a
result of the Brexit shenanigans, quite frankly, is this possible from Boris Johnson, do you think?
MARSHALL: Well, the government has got to make it possible. They have to simultaneously try to avoid a messy and disorderly exit and start putting
in place a great business environment here in the U.K.
I did think it was significant that Boris Johnson as Prime Minister both on the steps of Downing Street and today in Parliament was talking about
significant incentives for business investment, for capital investment, for research and development.
[15:10:10] MARSHALL: Those sorts of things are important, but they're not a substitute for a negotiated solution to the Brexit problem and avoiding a
(END VIDEO CLIP)
QUEST: So, business will be looking to Boris Johnson to keep the goods flowing by striking new trade deals. Australia's Prime Minister says his
country will be one of the first cabs of the rank. Joining me now, Steve Ciobo. He served as Australia's Minister for Trade, Tourism and
Investment, now out of office. So, you can tell us, what was the view inside the government about Brexit and the ability to get a trade deal with
STEVE CIOBO, FORMER AUSTRALIA'S MINISTER FOR TRADE, TOURISM AND INVESTMENT: We sort of saw this as an opportunity. The fact is that the U.K.
traditionally has been a very strong trading partner for Australia. We really saw a big disruption Australian exports in particular, to Europe,
and that includes the U.K. with the advent of European Union.
So for us, Brexit represented a terrific opportunity. And we also knew, of course, that the Brits would be very keen to do a trade deal, especially if
they found themselves in a situation without crashing out of the E.U.
QUEST: And that remains the case, as far as you understand it. But how willing, you know -- if it comes to a choice between getting the trade deal
with the U.K. or getting a trade deal with Europe or the E.U., which is much more difficult, in limited resources, where do you put your firepower?
CIOBO: Well, I think Australia is a big arsenal, frankly, when it comes to negotiations, because we have really tried to expose the nation, very
focused on it, so we've often had three, four or five trade negotiations underway at one time, Richard.
So, it's not a case of being mutually exclusive. We can do both, but a quality trade deal with the U.K. will be no tariffs, no quotas. That's the
benchmark that I set with my counterpart, Liam Fox, we've got a new Trade Minister in Australia, a new Trade Minister in the U.K.
QUEST: And is it your general feeling that both of them, you know, you both started, I mean, Donald Trump loves that idea by the way, start at
zero tariffs. But what are the tariffs and restrictions? Like at the moment? Would you be getting rid of a lot of things?
CIOBO: Yes, it's bad, because at the moment, Australia has got really limited quotas, because, of course, the U.K. sits as part of the E.U. So,
that's what this really does represent, for us an opportunity to break back into a pretty substantial market, and especially if we can do a deal with
no tariffs, no quotas, that can be terrific for Australia and of course, will be good for the U.K.
QUEST: And the U.K. was amenable?
CIOBO: Absolutely. Because if I mean, if they find themselves in a situation where they cannot really -- they get Brexit with no deal, they're
going to be looking for partners.
QUEST: And looking at Australia's relationship with China, as China is slowing down, the need for the resources out of Australia is not -- it's
still great, but it's not as great. Yours is the only economy that I don't think has had a recession for about the last 50 years or whatever it might
CIOBO: Twenty seven.
QUEST: Twenty seven years. I mean, China slow down won't cause a recession, but it will cause problems.
CIOBO: Well, we've seen actually, historically that it can work one of two ways. We thought, for example, post the GFC, China put a big domestic
stimulus program in place, which actually was good for Australia. And even today, we see commodity prices pretty strong. And a lot of that is because
of the fact that China is driving domestic stimulus.
QUEST: I was in Sydney earlier this year at an investment conference, where again, and again, the phrase was Australia needs to become more of a
value-added manufacturing base.
But I have every OECD country wants that. Is that -- does Australia have a natural predisposition for that?
CIOBO: I think part of the problem is that we're a victim of our own success with resources and the extractive industries. But there is no
doubt -- no doubt at all that Australia needs to move up the value chain.
I mean, one of the opportunities for us, which is around lithium processing, you know, because at the moment, lithium in particular driven
through China, you've got the U.S. wanting to diversify their source supply. That's a great sweet spot for Australia.
QUEST: You enjoying life out of government? Look at the smile. Look at the smile. They always smile when they're out to government.
CIOBO: You know, people say you get less time for murder. No, it was great. Richard, I enjoyed not every minute, but most minutes, but now it's
time to do something else.
QUEST: And you'd go back?
CIOBO: Look, I don't think so. But we'll see what happens.
QUEST: Never say never. The politicians never say never. Good to see you, as always. Every time you're in New York, come in brief us on what's
going on in Australia. We thank you.
CIOBO: Thanks, Richard.
QUEST: And we shall look at the European markets which ended in the red earlier on Thursday. The ECB said it was leaving rates alone at least for
now, which is somewhat baffling bearing in mind that Mario Draghi then went on to say in the press conference that the situation in the Eurozone was
getting worse and worse.
Place your money, you take your choice. That's why the DAX is off one and a quarter percent.
Coming up after the break, Facebook suffers a revenue slow down, and an unlikely ally opposes calls to break up. Also hot, hotter, hottest, Europe
is record breaking temperatures. It might be nice for the tourists, but it is now reaching dangerous levels. QUEST MEANS BUSINESS tonight, live from
[15:17:51] QUEST: Welcome back. Stocks are lower in the United States. Now, there's a myriad of earnings, some are disappointing. Boeing is well
and truly keeping the market down. It is down nearly four percent. The last we knew about, but we're also not hearing about various other
airlines, American Southwest are quantifying the MAX damages that they will be seeking. But even so the market is off sharply.
After the bell we're going to get Alphabet, which is Google, Amazon and Starbucks. Facebook posted a big earnings beat in the hours after it
agreed to pay the Federal Trade Commission, $5 billion -- billion dollar fine. Now, the stock is down some nearly two and a half percent. This is
despite revenue being up a third Q. Clare, why is the stock off? I mean, the fine was priced in we've known about the fine for some weeks. Two and
a half percent is not long, but why?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right, and it started higher today. So, I think a lot of people were pleased with the earnings. But
there's a couple of things though. It was a point they made on the earnings call today that they expect revenue growth to show a pronounced
That was the words of the CFO towards the end of this year and into next year that they say is because of headwinds in the ways that they use data
to target ads. That is of course, how they make money. That's because of GDPR and other regulations, the way operating systems are interpreting
those regulations and tightening up their settings and the way Facebook is going to start building its own products around these new regulations. So,
that's one thing.
And there's also more than just the FTC, Richard, the regulatory overhang goes much further than that Facebook disclosed in this report that the FTC
launched another investigation, an antitrust investigation in June with the Department of Justice one as well.
I think there are concerns that while this obviously hasn't impacted their business at the moment that this is going to continue to be a bit of a kind
of overhang over the stock.
QUEST: This deceleration of revenues because they basically can't do what they used to do.
SEBASTIAN: The thing is, they can still do it, but I think --
QUEST: It's all riskier.
SEBASTIAN: It is far riskier and they are saying that we're getting ahead of this, we want to change our business model. The FTC settlement that
includes greater oversight over all the new products they produce and all of that, they say that it's going to lead to major changes, even though we
know from the Democrats on the FTC that they didn't think it went far enough.
QUEST: Okay, but the fact is, the debacle over Cambridge Analytica. They've got away with it in the sense of $5 billion fine, well, it's not
getting away with it, but it looks as if the book is starting to be closed on that.
[15:20:10] QUEST: There are other fish to fry -- to mix the metaphors -- in terms of the breakup of Facebook. But that's a more serious issue,
whether to break off Messenger and WhatsApp and the like.
SEBASTIAN: I think that's the more serious issue when it comes to Wall Street. But I think it is longer term because a lot of people think that
in order for the regulators to actually do something on that score, the law would need to be changed. So, they're kind of pushing that out down the
And in the meantime, 28 percent of that did beat expectations, and it was an acceleration embedded in the last quarter.
QUEST: You always have your -- you firmly have your finger on the market. We're off 150 -- Boeing is obviously, a large chunk of that, but the other
indices are down as well. The market is not happy. Why?
SEBASTIAN: Yes, I think there's a bit of water treading going on ahead of the Fed, I think with the ECB as well today that there's you know --
QUEST: It was bizarre. It was bizarre. He says at his press conference, Mario Draghi that things are getting worse and worse, but they don't cut
rates. They will wait until September. What do they expect to happen between now and September?
SEBASTIAN: Well, I think that's the big question. But I think that's the question that a lot of people were asking about the Fed, what's really
going to change between June and July? What kind of data points are you looking for? Because even if they get something really strong, well,
obviously, they haven't yet, but we've got GDP, don't forget tomorrow in the U.S.
Will that really change anything? So, I think, you know, I think, you know, why wait, is the big question when it comes to Central Banks? And of
course, other people are asking the question, why do it anyway, particularly in the case of the U.S. when the economy is still growing?
QUEST: Right, but not in the case of Europe, which is just about to fall over?
QUEST: Thank you. Good to see you. Now, returning to Facebook, it's not just the privacy concerns. We got regulators, presidential candidates, and
even a Facebook cofounder who said it was time to break up Facebook. A competitor begs to differ and says Facebook is not a monopoly.
Now, MeWe founder and CEO is Mark Weinstein, who joins me from Los Angeles. A competitor yes, but not a very big one.
MARK WEINSTEIN, FOUNDER AND CEO, MEWE: Well, Richard, we're growing very quickly. In fact, we had 20,000 new members yesterday. We're projecting
30 million by the end of the year, and we already have six million members.
So, you know, on scale in social media, this is actually great. And, you know, Facebook -- our business model is so different. You know, we have no
tracking, no newsfeed manipulation, no, you know, no targeting, no advertising. So, people can't be manipulated. Their minds can't be
manipulated. Their votes can't be manipulated. And we're a full featured social network.
And I'm one of the guys who invented social networking. And we didn't invent it so that Facebook could, you know, scrape data and sell everybody
down the river. So MeWe is here. And we're advised by the inventor of the World Wide Web, by the founder of the worldwide movement called Conscious
QUEST: But your business model does rely -- which can which can be, and may well be in the future, very successful way. But there's the
subscription model, which of course, everybody is moving to in some way. I mean, that's how essentially how you make money.
WEINSTEIN: Well, it's not really a subscription model. Remember, MeWe is free, free forever. It's the freemium model. And freemium has been proven
to work as long as what free people love, and everybody loves MeWe.
If you want to feel good about MeWe, look at all our reviews in the app stores and then if you want something special, let's say for example, we
have 2,800 free emojis, but if you want custom emojis and custom stickers to customize your experience on MeWe, then you buy a pack.
QUEST: Why do you think Facebook should not be broken up? And by that I mean, the group of its various giant constituent parts -- Messenger,
WhatsApp, and the like?
WEINSTEIN: Yes, Instagram, and remember, they've made 72 acquisitions in the last several years. But we have no problem. We're not advertising at
all and we're getting 20,000 new members plus every single day. And we have major relationships with some big, big stars that you're going to see
roll out over the next several months.
If we can get this much growth, 405 percent last year, twice as fast this year, without even advertising, then, you know, as long as -- and I wrote
this in "The Wall Street Journal," net neutrality has to stay.
QUEST: But that's on a matter of, you know, straight competition. But on a matter of public policy, where Facebook is now the main communicating
tool for many people, and is virtually turning into the telephone exchange with WhatsApp and Messenger and Instagram, is that healthy to have all that
power, classic antitrust under one company?
WEINSTEIN: It's not healthy to have all that data. And it's not -- listen, you mentioned this earlier on the show, $5 billion. Are you
kidding me? It was reported that Facebook could have been fined up to $2 trillion. CNBC reported that and they were fined $5 billion. Talk about a
slap on the wrist. And as you saw FTC Commissioners say this is nothing. This is like the cost of doing business.
[15:25:10] WEINSTEIN: So, what we have to prove to the world and we're proving, and as I said, with really great adviser, and really, you know,
high integrity, we're a site that people love and trust, and it's safe, and it's great. So, it's not safe for all that data to be in somebody's hands.
QUEST: Sir, when you're in New York, please come and join me live in the studio so that we can continue this discussion face to face, you have a
standing invitation to come on and join us, sir. Thank you.
WEINSTEIN: I'll see you soon in New York. Thanks.
QUEST: Thanks. I'm looking forward to that, sooner than I expected. Still to come, making Britain great again. Boris Johnson says a golden age
awaits after Brexit. The man who has to sell the United Kingdom in the U.S. Let's see how he views that golden age and his new boss, after the
QUEST: I'm Richard Quest. There is a lot more QUEST MEANS BUSINESS in just a moment. Full of optimism, Boris Johnson promises a turbo Brexit.
Will that mean turbo trade deals and the people who've got to negotiate them, they are on this program tonight.
A highway to the danger zone. See if I survive with the Breitling stunt team, the Jet Team -- my dignity is it intact? All will be revealed. This
is CNN, and here, the facts always come first.
U.K.'s new Prime Minister Boris Johnson has spoken to the European Commission President, Jean-Claude Juncker on the phone. The E.U. says the
conversation comes after the Prime Minister says he wants to turbocharge Brexit preparations.
Whilst President Juncker congratulated Mr. Johnson on his appointment, he reiterated the E.U.'s position the withdrawal agreement is the best and
Protest turned to celebrations in Puerto Rico where the embattled Governor Ricardo Rossello said he would step down after more than a week of
demonstrations calling for his ouster. The streets of San Juan erupted into a big party following the resignation annoucement.
The South Korean military says North Korea has test-fired two projectiles from the town of Wonsan. Seoul says they're a new type of short-range
ballistic missile, and is warning they pose a military threat. It comes a week after President Trump stepped foot inside North Korea.
An American rapper whom Mr. Trump has urged Sweden to free has now been charged with assault. Prosecutors say ASAP Rocky and two other men kicked
and beat a man in Stockholm last month. The rapper's attorney says it was self-defense. ASAP Rocky will remain in custody as it's normal in Sweden
until his trial and that begins on Tuesday.
And so we return to London and Boris Johnson's first full day as Prime Minister. Speaking before the House of Commons, the Prime Minister pledged
his government would throw itself into negotiations with the EU. There are only 98 days to go before the latest Brexit default deadline. And Mr.
Johnson said the payoff from leaving the EU could be enormous.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, PRIME MINISTER, UNITED KINGDOM: There is every chance that in 2050, into it, I fully intend to be around, though necessarily in this
job. We will be able to look back on this period, this extraordinary period as the beginning of a new golden age for our United Kingdom.
(END VIDEO CLIP)
QUEST: Making Brexit a success will rely on governments striking trade deals. Boris Johnson's warning a deal with the U.S. won't happen quickly.
One of the men responsible for this and others is Antony Phillipson and is the U.K.'s Trade Commissioner for North America and a Consul General here
in New York. Always good to see you.
ANTONY PHILLIPSON, BRITISH TRADE COMMISSIONER FOR NORTH AMERICA: Nice to see you --
QUEST: Good to see you, so first of all, what's it like having a new boss? I mean, how quickly do you feel the wind of change from the Prime Minister?
PHILLIPSON: Well, it's not the first time there's been a change of Prime Minister. I've been in the civil service for a long time and I've been
there, changes within the same party, changes between parties and what will be happening now in London is the civil service both in Number 10 and other
key ministries including the sector of state for International Trade, DIT, will be briefing out their ministers, explaining to them where we are in
And we will also be taking very careful notes of the Prime Minister's speech at Downing Street yesterday, at the house today, turbo-charging as
you say, no deal preparations, accelerating free trade agreements, preparations with the U.S., and we will be getting back to business as soon
QUEST: Right, but you put that very diplomatically, but it is different from the previous administration, not just in name only. There is a tonal
difference to this.
PHILLIPSON: The previous administration said that they wanted to leave the EU with an agreement, they were prepared to leave without an agreement if
necessary, although as you say, the House of Commons voted down that approach three times.
But we were already engaged in no deal preparation at the same time as preparing for an independent trade policy. I would agree with you, there
is a change of tone. There's a sense of urgency, there is a sense of as the Prime Minister said, turbo-charging these preparations, bold ambitious
statements and that's what we will now reflect into our activity.
QUEST: Tell me how you do that? That's what I need to know from you. How do you reflect that boldness in what you now have to do?
PHILLIPSON: Back in the U.K., it's departments sitting down with the new ministers. And but again, I'd say the agenda is not fundamentally
different. They will be listening very carefully to the tone of their ministers and we will be making the preparations nationally --
QUEST: Who will you be calling? Will you be ringing your counterpart at the Department of Trade, the Commerce? And I'd say, hey, it's Antony here
in New York, look, I really -- I'm determined to get a deal.
PHILLIPSON: What we'll be doing is setting up of course the first engagement between the Prime Minister and the president, and the first
engagements between the Secretary of State for international trade and her counterparts in Washington and talking to members of the administration,
members on the Hill in Congress, they're a crucial part of this and of course, the business community, in order to ensure that what we're doing is
actually going to deliver future jobs growth and prosperity.
QUEST: OK, and are you more hopeful, bearing in mind what the president says -- all right, he doesn't make a trade deal, Congress signs off on
that. But are you more hopeful that the U.S. is more open, willing, amenable to use your own word to doing an early deal with Britain when
PHILLIPSON: Both the U.K. and the U.S. and especially under this new Prime Minister, he's been absolutely explicit. The words he used that he wants
to accelerate preparations for an FTA. He sees as he said in the House of Commons today, a golden age for the U.K. including deepening and
strengthening this extraordinary relationship with the U.S.
We have an American president who said from his first days in office including with the previous Prime Minister that he wanted to see a bold and
ambitious FTA, and they both restated their commitment to that. It was recently -- it was a few weeks ago when I talked to you from London during
the state visit.
[15:35:00] Now, we have a new Prime Minister, a new sense of urgency. So, the agenda is the same, the tone is different, it's -- let's really get on
with it. I mean you're straining at the same news, and I think that's what we will now reflect into our activity with our U.S. partners on the
ground here in the U.S.
QUEST: I wondered -- how chagrin, damaged, worried, reticent are you all after the -- her e-mail scandal with the former ambassador in Washington? I
mean, let's all be men and women of the world. We all accept, you have all written e-mails, it's your job that you hope the person about them never
sees. Now, how -- do you feel somewhat constrained?
PHILLIPSON: No, we really don't. What happened with that episode has been well sort of covered --
QUEST: Yes --
PHILLIPSON: We have moved beyond it. I happened to be in Washington on the days that broke with Liam Fox. We had meetings in the White House,
and, you know, there was a sense that this was an issue that we had to address and deal with, but it's water under the bridge now. We have this
incredible relationship with the U.S.
We -- it is a relationship of trust, it is a relationship of honesty between us. We will move forward with the new Prime Minister continuing to
try and deliver this agenda for the British and the U.S. people.
QUEST: Sounds like you're going to be drinking a lot of coffee to turbo- charge. I mean, really, it's very different, the environment. I was in the U.K. this morning, there's a very different mood.
PHILLIPSON: I think that's really --
QUEST: How part worried -- part wondering what they've done, part wondering what happens next, but there is a different mood.
PHILLIPSON: I think -- so what it feels like from here, talking to my colleagues in white hall, but also obviously reading newspaper commentary
and watching the Prime Minister and others on TV, there is a sense that we have sort of moved into a new phase. Prime Minister has determined -- I
mean, it's important to listen to his words.
He's determined to leave the EU with a deal. It's his absolute preference. He talks about the necessity, if that's what it comes to of leaving without
a deal. But he wants to leave with a deal, he wants to close punch it with the EU, he wants to deepen and strengthen this extraordinary relationship
with the U.S.
QUEST: And we're glad you came in, good to see you in the hours --
PHILLIPSON: Always --
QUEST: Thank you very much indeed. Back on temperatures, have reached scorching levels as the heat wave is disrupting transport, energy and
supplies. It's a really nasty and unpleasant experience. The heat is so strong that it's triggering alerts, bringing trains to a halt, enforcing
nuclear reactors to shut down.
The problem is most cities in Europe, they're not designed to deal with triple-digit temperatures. Air-conditioning is a thing of the -- a rarity.
And most households don't have it. I don't in my place in London. Scientists say climate change is contributing to the frequency and severity
of heat waves like this.
Join in the conversation, are heat waves the new snow days? Get out your phones and go to cnn.com-slash-join. Today, we're asking -- should workers
get days off in extreme heat? Now, think about it. Would you like a day off? Well, wouldn't be very comfortable, but yes, would you -- Jim
Bittermann is in Paris where they've turned on the water cannons.
How -- Jim, you're almost in a T-shirt tonight, I think we can forgive you. How warm --
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well --
QUEST: How sticky and murky is it tonight?
BITTERMANN: Well, I've got the 42.6 degrees Celsius this afternoon which is the absolute record for Paris, breaking a record though set back in
1947. For you in the United States, so whatever is 108 degrees Fahrenheit or more than 108 degrees, so it was pretty hot I must say.
And it is kind of, I think like you said, it was a call that had all sorts of impacts. So far Notre Dame, for example, the head architect was saying
that he was concerned about the possibility part of the ceiling, right? The vault and ceiling might fall down because it was weakened in the fire, as
you remember, that was more than three months ago.
But the joints and the water that soaked into the stone and what not, was dried out very quickly over the last couple of days of this heat wave. And
he's concerned that they might be weakened by that and they could come tumbling down. There's a lot of other impacts we mentioned.
The nuclear reactor thing, had to shut down two nuclear reactors in France because they were worried about the cooling water which was exiting the
plants too hot, and they were worried about the flora and fauna down-stream from the -- from the nuclear reactor.
So, in any case, it had a lot of number of impacts including with just people out on the streets. Everybody was out there hydrating and making
sure their relatives were safe and all that kind of thing.
QUEST: There's not a lot you can do about it. I mean, the infrastructure isn't there for air-conditioning. I don't know whether you have air-
conditioning in your home in Paris, perhaps not. The infrastructure is not there, you're unlikely to start putting it in. People just -- the
continent isn't equipped.
Even in the southern part where they have these weathers and these temperatures quite frequently.
BITTERMANN: Well, there's a survey apparently that was taken that indicated about 5 percent of Europeans have air-conditioning in their home.
So, that's very low, compared to the United States. And it's one of the reasons that people are impacted by this so much. One of the things that
was interesting today is we're seeing a lot of tourists from all over the world.
[15:40:00] And some tourists that came from countries or where average temperatures are a lot higher than here in Europe, but I think they
probably thought that Europeans were a little bit precious. But the fact is, as the Prime Minister here said, they're just not adapted -- their
bodies aren't adapted to this kind of temperature.
QUEST: Jim Bittermann, quite acceptable to be in a T-shirt tonight in those higher temperatures. Thank you very much indeed.
Now, according to those of you voting on cnn.com-slash-join, most workers should get a day off in the extreme heat. The numbers aren't overwhelming,
I can't -- I have to squint, it looks like it's about 16 and 18 to 20, give or take. Problems in the auto sector are hitting companies large and
small. New and old Nissans laying off thousands and Tesla is taking a beating after yet another rough quarter. And there is the need for speed.
You'll see my dizzying flight with the Breitling Jet Team. Did my launch stay down? After the break.
QUEST: Tesla shares took a throttling on Wall Street today after the company's second quarter losses turned out to be much wider than expected.
It shed $408 million in Q2 despite delivering a record number of cars. And investors really absolutely attacked the stock, 13.4 percent down. But
Paul La Monica, guru Monica, I mean, what was it about these numbers that really frightened people?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think investors, Richard, are still very concerned about Tesla's inability to generate a profit on a
consistent basis even though the sales are very strong. I mean, the demand for the Model 3 is there. The problem is that the Model 3 though is the
quote, unquote, "cheaper" Tesla car.
I mean, it's the cheapest. I mean, the Model S and the Model X, those are the premium brand price, it's very high and that means it's a little bit
easier to make money off of those, but profit margins are coming down and that is of a big concern.
QUEST: Tesla also lost a senior member of staff, a longstanding member of staff from the technical side --
LA MONICA: Yes, chief technology officer, one of the co-founders and there has been this brain drain at Tesla for some time, I think that is a big
concern as well. People are starting to wonder, you know, can Elon Musk really run this company by himself?
QUEST: But when you get the 12 -- 13 percent or 14 percent drop in a share price, how usually -- I mean, even in a volatile market, that suggests
crisis. This company lurches from crisis to crisis.
[15:45:00] LA MONICA: Yes, I think, you know, it is fair to say that Elon Musk probably likes all of the attention, I think. But you know, this is
probably not the type of attention that he really craves. I mean, the stock is now down about 30 percent year-to-date. You know --
QUEST: And why does that matter?
LA MONICA: It's a far cry from the $420 that he supposedly had funding secured, taking the private act --
QUEST: Right, but hang on, hang on, hang on.
LA MONICA: Why does what matter, that the stock is down?
QUEST: Yes, the -- I mean, other than your bank, you know, guarantees and your bond issuance regulations. I mean, at the end of the day, the market
would say, well, it's now property-priced. It's priced towards investors, think is -- the company is losing money, no big deal.
LA MONICA: Well, that's really not the case at all. I mean, obviously, if the price is continuing to go down, that's going to make it more difficult,
I think for Tesla to convince Wall Street that it can survive for the long haul. I mean, all of a sudden, if the price continues to drop, maybe you
do have questions about, should Tesla go private?
And it won't be $420 a share, I can guarantee you that or does it become a takeover target? And again, the questions are still going to be there about
Elon Musk and how he can manage this company --
QUEST: This --
LA MONICA: And SpaceX at the same time without the help that he has at SpaceX.
QUEST: This is not about cars, it's about Musk.
LA MONICA: I think a lot it is --
QUEST: Right --
LA MONICA: About Elon Musk. It's a cult to personality stock, and right now, that cult is not looking pretty promising.
QUEST: Good to see you, sir.
LA MONICA: Thank you.
QUEST: Thank you. Nissan will cut 12,500 jobs after its quarterly profits plunged by nearly 99 percent, and it's not just falling sales in the U.S.
and Europe. The company is also reeling the after-effects of the dramatic arrest of its former Chairman Carlos Ghosn. "MotorWeek" host John Davis
joins me from Maryland.
And it gets worse and worse for this, and I mean, down 99 percent on your profit, a bit more than out there at all.
JOHN DAVIS, HOST, MOTORWEEK: It does, Richard, but Nissan is just the latest to be looking at declining sales and rising investment needs for
electric cars and autonomous cars. We've already seen this year, Ford announced 12,000 layoffs and mostly in Europe.
GM is cutting staff. You know, it's coming at a bad time when everyone is losing faith that the economy, especially the U.S. economy will keep moving
forward, but then it's compounded not only by the Carlos Ghosn situation, but that failure of the Renault-Fiat-Chrysler merger back in May which
would have affected Nissan as well.
QUEST: Do you think -- let's talk about this. Where do you stand on the conspiracy theorists as it relates to this? Do you believe that Carlos
Ghosn was done over because of what he wanted to do to Nissan and the Japanese investors and the Japanese establishment wanted him out?
DAVIS: I think it's kind of odd that this happened just when he was pushing for the full integration of Nissan with Renault and of course
Mitsubishi as well. And it was clear that Nissan really wanted -- did not want that to happen and has drug its feet on a lot of projects as they've
worked on over the years since this alliance took place.
I wouldn't say -- I have absolutely no proof --
QUEST: Right --
DAVIS: To say it was a conspiracy --
QUEST: All right --
DAVIS: But it sure smells like one. And all of this insider dealing that is supposedly he did, I have a hard time believing that was kept secret,
secrets are very hard to keep. So --
QUEST: John --
DAVIS: I guess I just don't think it was a coincidence.
QUEST: John, I am totally inundate and I freely admit it, bemused, confused and bewildered over who is leading in the autonomous race. We saw
Ford last week teaming up with a German --
DAVIS: Right --
QUEST: It can't be, you've got everybody is doing a deal for engines or transmissions or this or that. Who is actually in the lead?
DAVIS: Well, when it comes to autonomous, I actually think a non-car maker, Google, probably is in the lead, but we really don't know that many
details about what they're doing. When you look at all the bigger manufacturers, everybody's got a system that sort of works. Mercedes,
Ford, GM, they've all got different pieces of the puzzle.
But I have yet to drive anything that I would trust myself or my family in for a long distance, especially if doing --
QUEST: Right --
DAVIS: Something like going to sleep or watching a movie. I just don't think we're there yet, and we're not going to be there for quite a while.
QUEST: But when we are, you'll be there to tell us all about it, we're grateful --
DAVIS: I hope so --
QUEST: We're grateful that you came in tonight to talk to us, thank you, sir.
DAVIS: Thank you, Richard.
QUEST: After the break, a top gun makes a comeback. Well, sort of -- yes, that's me, stomach-churning, acrobatic jet experience. I'm inverted, I'm
tossed around the skies, and yes, that we'll be right back -- well, no, that is not fair. I mean, right back comes out, but the issue is whether
it was used.
[15:50:00] Wait, you'll find out more. The Breitling Jet Team who are superb after the break.
QUEST: Tonight, we talked about turbo-charged Brexit. But how about this? This is real turbo-charged stuff. The stunt planes of the Breitling Jet
Team. It is the largest and perhaps only professional civilian flight team performing jets anywhere in the world.
And I have flown on many planes. I've even flown the F-16s, but I've never flown in formation. Where the other plane is just over there and there's
one up there. It is terrifying, as you'll find out.
QUEST (voice-over): This is not your typical flight where you ensure your seatbelt is fastened and the tray table is up.
(on camera): It's such an extraordinary to be flying so close to another aircraft.
(voice-over): Seven thousand feet above ground, and the Breitling Jet Team, it's a battle of laughs.
UNIDENTIFIED MALE: Brilliant.
QUEST: It all began in such an ordinary fashion.
UNIDENTIFIED MALE: Some are good, some are not.
UNIDENTIFIED MALE: Good morning.
QUEST (on camera): Good morning.
UNIDENTIFIED MALE: Guilty orders, singing time here.
QUEST: The singing pilot.
UNIDENTIFIED MALE: Yes, OP is a better pilot than a singer --
UNIDENTIFIED MALE: Because all of us are in trouble --
QUEST: That makes three of us. Excitement overflowing in the room.
UNIDENTIFIED MALE: So, Richard would be in position number three, and he would have a fantastic view on the whole jet team, the seven jets. It's
frightening, but I'm sure you'll enjoy.
QUEST (voice-over): With this sort of flight preparation --
(on camera): So what do I wear? Is every --
UNIDENTIFIED MALE: You have to wear this one, this is your size.
QUEST: You can't fly if you're not dressed properly.
UNIDENTIFIED MALE: Just like this, just push and roll.
QUEST: Perfectly comfortable.
(voice-over): Like any other flight, here, there's a safety briefing. But this one involves ejector seats.
UNIDENTIFIED MALE: Let's go.
[15:55:00] And so into the air where everything changed? I was fine for the first. The barrel roll had me in stitches. Then the second, the
loop(ph). Dignity requires you avail over the rest. Back on the ground that I can reflect, the pilot's skills, the plane's performance, the
excellence of the experience. I feel elated.
UNIDENTIFIED MALE: I told you, it's --
QUEST: Let's be honest though. I won't be doing this again.
QUEST: I did not throw up. No, I did -- it was a close run thing, and the bag came out, but the bag went back unused. You're going to hear from the
CEO of Breitling tomorrow about why he has the team and how he is repositioning the watch-making company. That's tomorrow's QUEST MEANS
BUSINESS -- profitable moment after the break.
QUEST: In tonight's profitable moment, it's interesting. I flew back from London this morning, and there is a different air in Britain, for better or
worse, there is a feeling that, at least as a Prime Minister and an entire shift in direction of where the country is getting a bit of an impetus.
What Boris Johnson called turbo charging.
Now, it may go horribly wrong, and it may all become a total and utter disaster. But at the moment, after three or four years of wishy-washy
moving left, moving right, and no one really understanding, the fact that there is this Trumpian-type character now at Number 10 Downing Street, has
sort of given everybody a shock.
They haven't quite worked out what it means, but for the time being, at least, they sort of seem to be saying, well, let's see how it goes. A new
atmosphere in the U.K., and you heard it described here by the consul general himself.
And that's 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 down, the bell is ringing, the day is done.