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QUEST MEANS BUSINESS
President Donald Trump Says China Wants To Run Out The Clock And Him With It; Federal Reserve's Two-Day Meeting Begins; New York Attorney General Investigating A Massive Hack At The Capital One Bank; U.S. Democratic Candidates Prepare For Second Round Of Debate; U.S. Women's National Soccer Team Pay-Fight Escalates; Hong Kong Protesters Disrupt Rush-Hour Transit. Aired 3-4p ET
Aired July 30, 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: Sixty minutes to go on trading on Wall Street and the Dow has been down, but not too much. Look, it was
further down this morning. A little bit of a smidgen of green, a rally perhaps underway.
So, we're off 29 points not to be too concerned about that. The reasons of course, well, these are the markets and these are the reason why.
President Trump is lashing out at China. Trade negotiations are underway, why the President says China wants to run out the clock and him with it.
The rate cut come off. Mohamed El-Erian joins us in the C-suite as the Fed meets. And Beyond Meat comes back to the market for seconds. The stock is
We're live in the world's financial capital, New York City on Tuesday, July the 30th. I'm Richard Quest, of course, I mean business.
Good evening, Donald Trump has warned China don't play a waiting game on the trade deal. The U.S. President has been talking trade just as his
negotiators over in Shanghai are getting back to talks. He says China's tactic is to let the clock run down on his presidency.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: China would love to wait and just hope -- they hope -- it's not going to happen. I hope. But they
would just love it if I got defeated. So they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden or any of these people because
then they would be allowed and able to continue to rip off our country like they've been doing for the last 30 years.
(END VIDEO CLIP)
QUEST: Matt Egan is with me. The President is on and on and on about this. I mean, he is there talking about trade. But this morning, he was
seemingly in a very convoluted economic understanding of trade.
MATT EGAN, CNN BUSINESS LEAD WRITER: Right. He is certainly nodding to the fact that there are these political calculations going on. China knows
that at a certain point, President Trump has an economic and political need to get a trade deal. He needs those votes in the rust belt, which is
hurting from the trade war. He needs the votes from the farmers, which is -- they're really hurting from the trade war.
And so he is saying that, "Listen, Beijing wants to wait out the clock on me. They want to get another candidate in there in the White House, and
perhaps that's when they'll make a trade deal."
But you know, Richard, he's also kind of contradicting himself, because on the one hand, he said right there, "China would love to wait for him to
leave office." On the other hand, he then said, "China is dying to make a deal with me." So, we shouldn't listen to carefully to what he says
because some of these messages are a little bit contradictory.
QUEST: Right. So, on the one hand, these -- they want to make a deal. They keep saying they want to make a deal. They want to make a deal. They
should have taken the deal that they had before they reneged. But on the other hand, they didn't want to make a deal, because the next time they're
waiting for the next President, which is it?
EGAN: Exactly. It's not really clear which it is. But here's what I think is very telling is that President Trump tweeted this morning, that
there's no sign yet that Beijing is making these large purchases of U.S. crops like soybeans and other products.
And I think that's really telling that they haven't made those purchases yet, at least according to Trump, because that is the lowest hanging fruit.
If they can't even just go through with buying a whole bunch of crops from U.S. farmers that they already need, then how are they going to make
progress on the much harder structural issues?
QUEST: Who needs the deal most?
EGAN: It depends on when. I think six months ago, China seemed to really need that deal. I think right now it's shifting because we're coming into
an election season. And if the U.S. economy slows too much, really, if the global economy slows too much, China, as you know, plays the long game,
I mean, they're thinking the next 20, 30, 40, 50 years, and the United States is thinking about it in, you know, a two-year or four-year election
QUEST: The President said this morning that China was paying for the tariffs. His argument was that they've manipulated the currency lower.
Therefore, the goods were cheaper. Therefore, they were eating into their own margins in terms of what they're selling them at.
And although -- therefore, that they were able to -- they were able to hold the cost down when the goods come into the United States.
EGAN: China has long been accused of devaluing its currency. But President Trump's own Treasury Department has not labeled China a currency
manipulator. And that's in part because China has actually spent a lot of money preventing its currency from going into a free fall.
In some ways, they've actually propped up their currency because they don't want all of that capital to leave.
[15:05:01] QUEST: But if the price of the import from China is the same, even after the tariff, so if they've lowered the price through currency, so
that by the time it reaches the U.S. shores, it's 15 percent lower, so the tariff just takes it back to where it was, then he is right, China is
paying the cost of the tariff.
EGAN: I guess that's one way of thinking about it. But you have to remember --
EGAN: It's convoluted.
QUEST: Eccentric and a bit averse way of thinking about it. And I'm probably wrong.
EGAN: But listen, we're also -- the United States is now coming out with these bailouts for farmers, $10 billion last year, another $14.5 billion
coming in the next few weeks, and that is money that's coming out of the U.S. Treasury, really coming out of U.S. taxpayers to help mitigate some of
the effects of the trade war. And that's on top of the tariffs that the U.S. companies are paying, and the U.S. consumers as well, Richard.
QUEST: Good to see you, as always. Matt Egan. Wall Street is trading slightly lower. The President's trade comments had certainly sent it down.
And now all eyes are on the Fed.
But what's interesting is the way in which the market has rallied over the course of the day, as the Fed's two-day meeting begins, Donald Trump is
again attacking the Central Bank and calling for a large interest rate cut.
(BEGIN VIDEO CLIP)
TRUMP: I am very disappointed in the Fed. I think they acted too quickly by far, and I think I've been proven right. People have said I was right,
they were wrong. The Fed is often wrong. The Fed is often wrong.
(END VIDEO CLIP)
QUEST: Investors are certain there will be a rate cut of some kind, the question is how big? The decision of the market is saying the chance of a
quarter point cut is 78 percent. The chance of a more dramatic half point cut is 22 percent.
But we need to go back to basics. Why are we cutting rates at all? Economics 101, and today's lesson, The Federal Reserve and interest rates.
The rate we're talking about is the Fed funds rate. It's the rate that the Central Bank uses to dictate what banks will lend between each other on an
overnight basis. It changes the cost of credit. It can stimulate growth or it can restrain an economy.
It's typically lowered very quickly during recessions on the prospect of recession. Here is '99, but this is the great recession, of course,
lowered very, very fast from a nearly six percent, right the way down to just half a percent.
And then it is gradually raised when the economy is healthy, which is what you're seeing over there on the far edge. The nine rate stages that we
have seen. This is what we will see, if they cut tomorrow, by the way, it will be the first of a downward series since 2008.
Today, the U.S. economy is looking healthy by most metrics, growth is solid 2.1 percent. Donald Trump says he wants it higher. Well, let's see if we
can do that. Four percent seems a long way off.
Unemployment 3.7. That is the stellar performing part. And in fresh inflation figures, a 1.6 shows getting closer the Fed's target.
The Fed, the current Fed rate is 2.5 percent. Higher than most other countries except emerging economies. Donald Trump's chief complaint says
that this 2.5 percent puts it at a disadvantage compared to the U.K. at three quarters, the EU at zero percent, Japan negative.
There's a lot there to take in. Luckily for us, Mohamed El-Erian is an advisor at GIC and he is with us. Good to see you.
MOHAMED EL-ERIAN, INTERNATIONAL ADVISORY GROUP, GIC: Good to see you.
QUEST: Make yourself comfortable, sir.
EL-ERIAN: Thank you.
QUEST: Now, first things first, is a rate cut tomorrow, which everybody believes, I think you probably believe, too is going to happen. Is it
EL-ERIAN: It is not justifiable on traditional metrics. As you pointed out, I economy's doing fine. In fact, we got very strong numbers this
morning on consumer confidence. So if you look, in terms of your traditional metrics, it's not.
The justification the Fed is going to make is twofold. One, they're going to say we need an insurance cut because the rest of the world is hurting,
and we don't want to be contaminated. And two, is that the PCE, the 1.6 percent you showed is below our target.
What I really think is happening is they are unwinding a mistake. They made a mistake last December, they shouldn't have hiked last December.
That fourth rate hike was excessive, and they're just trying to take it back.
QUEST: Right. And if we look at the graph of the Fed funds rate, the steep decline, of course of 2008 was entirely justifiable, the slow rise up
again. Does it make a difference if you just take one back?
EL-ERIAN: So it shouldn't make a huge difference at all.
QUEST: There you are. What difference will it make if you just nudge off one notch?
EL-ERIAN: So, ironically, where it makes a difference is in the rest of the world. The rest of the world sees this as either being forced or being
able to relax their monetary policy.
So, what are we doing? We are creating an umbrella for everybody else to lose in the monetary policy. That is why the dollar is not getting weaker
as the President would like.
[15:10:08] EL-ERIAN: So, normally when you lower interest rate, you attract less capital because people earn less. And that brings pressure on
your dollar, on your currency. But what's happening now is that the rest of the world is being even more dovish than we are.
So our currency today is at the strongest level it's been all year, and that's quite an appreciation since the start of the year.
QUEST: which makes the President's call for an interest rate cut, somewhat justifiable in that sense. But it also shows the lack of understanding at
the numerous currents underneath that really dictate the economy.
EL-ERIAN: So, two things. One is that it's justifiable in terms of what's happening elsewhere.
EL-ERIAN: And it's justifiable in terms of most people would agree, December's hike was a mistake. But you know, this is a political equation.
It's a win-win for the President.
If the economy slows, who do you blame? The Fed. If the economy does well, who do you say? It is because of me, despite of what the Fed did.
So, politically, it's a win-win situation.
QUEST: But economically, one can't really justify this particular cut.
EL-ERIAN: Correct. And economically one can't justify politicizing the Fed.
QUEST: Okay, but listen to -- but the President of Mexico has also taken - - seemed to have taken a leaf out of President Trump's book, in terms of how he views the ability to cut rates. Have a listen.
(BEGIN VIDEO CLIP)
ANDRES MANUEL LOPEZ OBRADOR, MEXICAN PRESIDENT (through translator): They are more cautious -- they are more cautious about inflation. That is not a
bad thing. This is not the wrong thing to do. I'm not saying that. But it's important to lower rates to encourage growth.
(END VIDEO CLIP)
QUEST: Lower rates to encourage growth is fine when inflation is not a problem. Inflation is not a problem is it?
EL-ERIAN: No, because of what's happening to price discovery. With you and I, it's what I call the Uber effect, the Google effect and the Amazon
effect, have taken pricing power away from people who sell it to us.
QUEST: But everything you are taught in Economics, and everything that I've ever understood suggests, with an unemployment rate at 3.7 percent,
growth of two to three percent, interest rates should not be near zero.
EL-ERIAN: You're absolutely right. So, you have to understand, the reason why interest rates in the U.S. are so low is because of Europe. They are
negative in Europe.
You have $13 trillion of bonds trading at negative yield. People are willing to give their money to either government or a company and pay for
the privilege of doing so. You will find no textbook that has this in there. But that's the amount of distortions that have been created in the
in the global economy.
QUEST: Let's stay with Europe. The British pound is falling steadily this week, touching its lowest level against the dollar in more than two years.
Now, it nearly dropped in a $1.21, it slightly recovered a bit on an earlier ground. It's a factor of the no deal Brexit under the new Prime
Minister Boris Johnson, what are they fearing here?
EL-ERIAN: So, they're fearing a no deal Brexit that will cause a major recession. That would cause the Bank of England to really bring down
interest rates a big way and will cause the government to increase fiscal spending.
So they're looking at what are the consequences of a no deal Brexit, and the U.K. has policy space, but the policy space it has is bad for the
QUEST: But the U.K. -- I mean, everybody thought Theresa May would never do a no deal. Boris Johnson is far more likely to do a no deal than the
others. And that's the worry. But do you think there'll be no deal?
EL-ERIAN: I think it's a 50 percent probability.
EL-ERIAN: Yes, I do.
QUEST: Really? Are you sure?
EL-ERIAN: I do. Not sure enough, 50 percent is not sure.
QUEST: No, are you sure with the 50 percent?
EL-ERIAN: Yes, I think it's a relatively high probability. And you know what? If the choice is between a hard exit or three more years of what
we've had, you should go for a hard exit because three more years of what we've had is going to create serious damage, and you might as well get to
You know, there's a limit to how long a journey can be. People lose confidence in you if the journey is too long.
QUEST: Final question, who should be the next Managing Director of the IMF? Do you have a thought on that?
EL-ERIAN: It shouldn't be done the way it's done today. I feel quite strongly about this.
QUEST: Go on, go ahead, tell me.
EL-ERIAN: You know, I understand why 75 years ago, we gave nationality as the basic criteria to select the leader of the IMF and the World Bank
because Europe and the U.S. are dominant. Today, that's no longer the case.
So, for the rest of the world, it looks ridiculous that we have a nationality-based approach. We should have a merit-based approach, and
Europe is doing itself a disservice by first saying we don't have a clear candidate, but insisting he should be --
[15:15:03] QUEST: I know, and so far, there doesn't seem to be anybody particularly brilliant --
EL-ERIAN: Correct. And there are brilliant people.
QUEST: Hang on. Hang on. We are missing an opportunity for yourself.
EL-ERIAN: No, forget about me. You have brilliant people out there like Mike Carney, like Tharman, the Senior Minister, like Raghuram Rajan --
these are top quality people. And the only problem, they're not European or they're not European enough. That's a ridiculous way to make a decision
about the leadership of such an institution.
QUEST: Good to see you. Thank you very much indeed. When we continue, millions of Capital One customers are wondering if their data has been
exposed. You can count me as one of them. After the revelation of a hacker who stole supposedly secret files.
And Beyond Meat shares get roasted on Wall Street. The meat and potatoes of the business are looking juicy. It's all about some funny finagling
with the finances. But the stock is still up about 600 percent, so maybe we shouldn't be too upset.
It is QUEST MEANS BUSINESS.
QUEST: The New York Attorney General is investigating a massive hack at the Capital One Bank. It involves more than a hundred million consumers.
A 33-year-old American woman has been arrested by the F.B.I.
Now, she is accused of gaining access to 140,000 U.S. Social Security numbers, a million Canadian Social Insurance numbers, 80,000 bank account
numbers. The hacker was caught in part because she boasted about it all online.
The F.B.I. complaint features these Twitter messages, which now show the suspect bragging about gaining access to all this data. "I've strapped
myself in a bomb vest if dropping Capital Ones dox and admitting it." "I want to distribute these buckets. I think first." Anyway, you get the
Donie O' Sullivan is with me from Washington. Was it -- I was reading Shelley Palmer's views this morning. He sort of says it wasn't a
particularly sophisticated hack. And once it was done, she then basically put up a red balloon and said, "Here I am."
DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Yes, it's incredible, really, Richard. I mean, you think of the lengths that many hackers go to, to
cover their tracks, to conceal their identity. And then you had this woman, Paige Thompson, the suspect in this case who was allegedly out there
for months bragging and saying what she did and also posting some of the information up online.
[15:20:02] O'SULLIVAN: That actually raises I think some interesting questions, too, about what companies need to be doing more to proactively
be on the lookout for information from their companies that's leaking, and how they could have caught this before.
They got tipped off to it by a concerned person who just emailed Capital One and said, "Hey, guys, this woman is out there. She is boasting that
she has your information."
QUEST: Right. Does -- is there any evidence that the data has been used nefariously yet?
O'SULLIVAN: There's not. But I mean, you know, the sort of means and methods of how to get in there, and the information was up online,
available for quite some time.
So, you know, it's always very difficult to say, whether for sure that this information has not been used, but Capital One is saying at the moment that
they have found no evidence of that, but more than one hundred million people here in the U.S. affected and six million in Canada. It's actually
one of the biggest breaches ever.
QUEST: I'm one of the one hundred million and will obviously be checking my credit card statements extremely closely for the foreseeable future.
Isn't this inevitable, though?
As I said earlier, on "The Express," Donie, I've had my -- I've had every credit -- every credit card that I've got, the issuer has had to write to
me to tell me that I have been -- it's been compromised. My health insurance has been compromised. My -- everything. Is this just sort of
something we are going to have to live with?
O'SULLIVAN: You know, I think you're right. You know, everything from your Facebook data to Equifax to --
QUEST: Oh, yes, I forgot about that one. Yes, my Equifax account was hacked as well. Yes, thank you.
O'SULLIVAN: And then we see very little recourse, you know, for these companies. I mean, you think about even Facebook last week getting the
historic $5 billion fine from the FTC for not respecting users' privacy. You know, that fine in and of itself is only about a month's revenue for
So, there really isn't, you know, proportionate punishment for acting in this way. And one thing that I think a lot of folks thought, you mentioned
that this was not a particularly sophisticated hack, it was not.
One thing that is quite interesting is that this suspect that was formerly an Amazon employee, Capital One was using Amazon's Cloud Services, but
we're told that it involved no insider information or anything like that in order to get in, that the issue seemed to be on Capital One's end rather
QUEST: Good to see you, Donie. Thank you, sir. Chinese tech giant, Huawei says revenue is soaring even after it was blacklisted by the Trump
administration. Sales hit nearly $60 billion in the first half of this year.
Sherisse Pham has more from Huawei's headquarters in Shenzhen in China.
SHERISSE PHAM, CNN BUSINESS REPORTER: Huawei posting huge growth for the first half of this year, Huawei saying sales from January to June came in
at more than $58 billion. That's up 23 percent compared to last year.
Huawei Chairman, Liang Hua striking a defiant tone today saying the company is still growing and it's still a leader in 5G technology despite being on
a U.S. trade blacklist.
But he also said that Huawei is fighting for survival and warned that there are challenges ahead.
(BEGIN VIDEO CLIP)
LIANG HUA, CHAIRMAN, HUAWEI (through translator): Our business results for the first half was quite good and we achieved steady growth. But
objectively, we still face difficulty ahead, and for the second half and into next year, we will still face these difficulties.
(END VIDEO CLIP)
PHAM: Washington added Huawei to a trade blacklist back in May, barring American firms from selling tech and software to Huawei.
That means companies like Google and Qualcomm can't sell software or computer chips to Huawei. Asked if new phones can continue using Google
software, Huawei's Chairman said that's up to the United States to decide. Sherisse Pham, CNN, Shenzhen.
QUEST: And so to the Beyond Meat saga, the shares are way off the lows of the day, but they're still down around 10 percent on the session, after the
firm said it plans to sell more stock -- 12.3 -- it's going back down again.
The price is a bit of a blip though, even after today's setback, they've rocketed around 700 percent since they were first listed less than three
The company had its latest quarterly revenue almost quadrupled compared to a year ago. Clare is with me, this is an interesting one because the
actual performance of the company was stellar, but the stock is down on the technicalities of issuing stock.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: So I mean, the earnings were really good. The revenue was up some 287 percent, Richard, which is not a
number you tend to see that often. The last they reported was slightly wider than many had anticipated at $9.4 million, but not enough to warrant
that this, as you say, is due to the dilution effect of new shares possibly entering the market this week.
Three million of the shares that they're offering come from existing stockholders --
[15:25:00] QUEST: So that's not dilutive?
SEBASTIAN: That's not dilutive, but there's another quarter of a million that are issued by the company that is what they'll use to fund things like
manufacturing and building out their supply chain, but I think it's the optics as well.
You know, existing stockholders, including their CEO cashing out at this stage doesn't exactly inspire confidence going forward.
QUEST: Why are they doing it? Why are the owners selling in?
SEBASTIAN: Well, so I mean, if you look at the share price over the last few months, three months since the IPO, really, I think from their
perspective doesn't make sense to leave all that money on the table. It gives them an opportunity to get this liquidity before the end of the
traditional lockup period from the IPO, which is at the end of October. I think this is pretty much as simple as that.
The CEO himself Ethan Brown is selling about 39,000 shares. We don't know exactly the price yet. We expect them to go on sale later this week.
QUEST: But there's a reason why you have a lockup. This is -- I mean, there's a reason why executives are restricted from selling. If they
wanted to raise more shares or raise more money, they should have issued a whole lot or they should have waited until October. They're having their
cake and eating it.
SEBASTIAN: I mean, I think everyone is probably, including the executive officers of the company themselves have been surprised by how this has
gone. I think the 700 or so percent rise means that perhaps the IPO itself was mispriced.
Other companies have done this, Richard. Grub Hub in 2014, GoPro. I think you've got there an example of why this is now so successful.
QUEST: What have I got here?
SEBASTIAN: This is a Dunkin' Donuts Beyond Breakfast sandwich with the Beyond Sausage in there. It isn't that old.
QUEST: How old is this?
SEBASTIAN: I don't know. Is it warm?
QUEST: It is still a bit warm, which makes me rather worried.
SEBASTIAN: All right, so clearly that's not vegan because it's got egg and cheese in there, so this just shows you the crossover a lot of people who
eat the Beyond products are not vegan, they eat meat well and this is still in the testing phase.
Dunkin' has just rolled this out in Manhattan, but they're looking at a national rollout if this goes well. It's just one of the many partnerships
that Beyond has struck up with restaurants.
QUEST: But it shows -- what it shows is the phenomenal power. I mean, when you're doing deals to supply food to Dunkin' Donuts, and the sheer
size and scale of it, that's very impressive.
SEBASTIAN: It's very impressive and there's --
QUEST: What other contracts are they going for?
SEBASTIAN: So they've got Dunkin' Donuts. They've got TGI Fridays. They've got Blue Apron. Carl's Jr. Del Taco, Tim Hortons in Canada. One
statistic that really shocked today, Richard, the market cap of Beyond today even with the sharp fall is still around kind of $11.5 billion.
Dunkin' Donuts about half that.
SEBASTIAN: Yes, well, 6.8, a little more than half of that.
QUEST: Yes. Good to see you, Clare. Thank you very much indeed. The scene is set and the candidates are ready to fire away. Two leading
progressive square off alongside each other as eight presidential hopefuls -- eight others, each hoping to emerge from a crowded Democratic field.
We will be live in Detroit in just a moment. I have no idea how this is.
[15:30:00] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. We learned left-wing economic policy has gone
mainstream in the presidential race. The Democratic candidates are preparing to face off tonight.
And the U.S. women's soccer team -- football team hits back after the head of the U.S. football claims women are already getting equal pay. Assuming
I can get the Beyond Meat out of my teeth -- before that, this is CNN and here, the news and the facts come first.
Right now, ten U.S. Democratic presidential candidates are preparing to face off in Detroit in Michigan. Tonight's debate is the first of two
back-to-back nights right here on CNN. These are live pictures from the debate site. Ten more candidates will take the stage on Wednesday as
Democrats try to whittle down a large field of presidential contenders.
Protesters in Hong Kong disrupted subway service during the rush hour. They're outraged that the police have charged dozens of people for what
they call a legal protest on Sunday. Authorities accuse the pro-Democracy activists of attacking the police officers, setting up robots and damaging
American rapper A$AP Rocky has pleaded not guilty to assault charges on the first day of his trial in Sweden. A$AP Rocky is accused of assault in a
June street brawl. He says he was acting in self-defense. President Trump's appeal for his release and even sent an envoy to the trial.
Income tax will soon be a thing of the past for many young workers in Poland. A new law goes into effect on Thursday and will eliminate the levy
entirely for 2 million people, 25 and younger. It's part of a plan to keep younger people from fleeing to other EU countries in search of better jobs.
For many on the stage, it will be make or break tonight in the race to be the next president of the United States. Tonight is the first of two CNN
Democratic debates. It is only hours away. Ten of the top 20 Democratic hopefuls face off in Michigan. They're all in agreement on opposing
President Trump and divided on reshaping the economy.
Let's check on the preparations, Jeff Zeleny is in Detroit. Jeff, what are you going to be looking for tonight? What for you is the 'gotcha' moment?
JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Richard, I think there's no question that the reason that this whole debate is being held in
Michigan, it was the site of one of the most surprising and stinging Democratic losses in 2016.
Donald Trump beat Hillary Clinton here. So that's where the Democratic Party picks up from where it left off. And there's a debate inside the
Democratic Party about which direction the party should go. Should they pick someone, a candidate, who can reach out to those more moderate voters
who may have voted for Donald Trump four years ago or should they pick someone from the left who excites and turns out voters and enthuses them?
So, that is what we're going to be watching play out on stage tonight. A range of ideologies. You have Bernie Sanders and Elizabeth Warren, there
will be standing side-by-side and their positions are essentially identical. Personalities, of course, are much different. But they support
Medicare for All, they support the vast changes in the healthcare system. Vast economic changes.
Well, as you move farther out on the debate stage, they're going to be much more moderate voices here saying, no, that will not work, that will simply
re-elect President Trump. So, Richard, the range of ideologies, the range of age as well. Think about this, South Bend, Indiana, Mayor Pete
Buttigieg, 37 years old, standing next to Bernie Sanders, 77 years old.
So, a range of 40 years there, just standing only a few feet apart. So, those are the differences at stake here. But more than anything else,
this is a conversation about the differences in ideology inside this Democratic Party.
[15:35:00] QUEST: But what it proves, and we're listening closely to what you said is that, at the end of the day, this is all about a few voters in
a few states because if the, you know, if the -- if the Democratic Party goes to the left towards Sanders and Warren, there are those people in
those right-wing states that are never going to vote for them and the Democrats will never take those states.
ZELENY: Well, that is correct. I mean, of course, we know how, you know, the rules are the electoral college is how someone is elected. Is why
Donald Trump won the presidency but lost the popular vote. Of course, that's controversial in some circles, but that is the rules as they play.
So, that's why Michigan is so important as well as Wisconsin and Pennsylvania.
If Democrats win back those states, they win the White House. If President Trump wins those states, he wins the White House. Of course, it's about
much more than that. They need to have a broad-base appeal as well, but when you do boil it down, it frustrates many voters in some of those other
states, but that is simply how this works here.
But it is, you know, a question of direction of the party and we'll see that on stage tomorrow night as well with Joe Biden. But for tonight, it
is Bernie Sanders and Elizabeth Warren, we'll see if they dust it up at all, mix it up at all, I don't think they will, but others certainly will
for them as they make a larger argument that they're too liberal for this party, Richard --
QUEST: Final thought, Jeff, is there -- when you go to these debates and over the next few months, you'll go to many of them. Is there a feeling
that they are going through their party speeches, their stump speeches or when you get to these big set events, are all bets off?
ZELENY: I mean, all bets are off as we saw during the first debate. No one was really expecting Senator Kamala Harris to, you know, essentially
expose Joe Biden's weaknesses there. So, there will be unexpected moments. Of course, our CNN colleagues who are doing the moderating of this night's
debate will try and get the differences within this party.
But, you know, sure, they basically stick to their scripts, if you will. But these candidates are coming prepared to break out.
QUEST: Right --
ZELENY: Because the difference with this debate is the next one is in September -- you have to qualify for that one, you need twice as much
standing in the polls and twice as many supporters. So, this is the last time that many of these candidates will --
QUEST: Yes --
ZELENY: Be on stage. That's why some of them are looking for their break- out moment, we'll see if it happens.
QUEST: It's brutal, television is brutal. Tonight, it is at 8:00 live from Detroit on CNN, only on CNN. And tonight -- thank you, Jeff.
Tonight's heavy hitters are Bernie Sanders and Elizabeth Warren. And there isn't much ideological daylight as we were talking about. They both
support Medicare for All.
It's a plan to abolish private insurance companies and move to a government system that looks more like Canada or the EU. The latest polling shows
support has been falling for a national health plan. It could be an issue their rivals attack on. Other controversials could include whether a
public college tuition should be free and if student loan debt should be forgiven.
A green deal, a new green deal, another climate change policies are feasible. And if millionaires and billionaires should be subjected to a
wealth tax. Rana is with me, Rana is our global business columnist and associate editor of the "Financial Times". You heard Jeff there talking -
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes --
QUEST: The Democratic Party is turning to the left.
QUEST: Attempting to appeal to grassroots, but is it a dangerous strategy?
FOROOHAR: You know, it's a very risky strategy because it galvanizes this demographic difference between older baby boomers and younger millennial
Democratic socialists, you know, and that's the big divide of our time, really? Not just -- you know, at this debate, but I think in the next few
The question is, how are Sanders and Warren going to sell them on what part of a shrinking pie they get? Is it going to be about Medicare for All? Is
it going to be about healthcare or is it going to be about student debt? And I think that you're going to see other candidates come in and say, we
can't make everything free.
How do you pay for all of this? I think it's also going to be very interesting to see whether Elizabeth Warren reiterates what she said on the
campaign trail. But look, I'm a capitalist, all right? Sanders is pretty much calling for wholesale revolution.
Warren is kind of trying to hedge her bets and say, you know what? We can fix the system, but when she comes more to the left and says, Medicare for
All, no private insurance, makes it tough to square those two positions.
QUEST: OK, the reality is though, most of middle America is conservative with a small C.
FOROOHAR: True, but these states that we're talking about, Michigan, Pennsylvania, these are the states, remember these are the Rust Belt
states, these are the states that had been hit hard in the last ten years, and I think we're going in probably to another recession, maybe by the
And I think that in those states, you're going to feel more pain more quickly. They're already feeling it from tariffs and -- you know, you have
a base of people that I think are beginning to swing more left.
QUEST: Well, but if you look at previous Democratic presidents with the exception maybe of those after the second World War. You know, let's take
FOROOHAR: Yes --
QUEST: For example. Here you have a physical conservative who balances the books and actually runs a budget surplus --
FOROOHAR: Yes --
QUEST: But a social liberal.
[15:40:00] FOROOHAR: Well, you're making a great point. I actually think I'm going to go on a limb here and say, I think we're in for a paradigm
shift. I think that Clinton was the last of the Democrat that could have sort of adopt pseudo-Republican policies and get away with it.
I think we're headed to an era of wealth redistribution in this country, and I think that the -- it's going to have big market impacts, and I'm sure
I'll come back and be talking to you about them in the next few months and years.
But I think that this election is going to side that, and I really do think that the Warren-Sanders economic platform, this idea that, look, you know,
you cannot have corporations not sharing the --
QUEST: Yes --
FOROOHAR: Wealth. I think that that's going to carry the day, I really do.
QUEST: Right, but when you get -- you then get to the sort of Biden --
FOROOHAR: Yes --
QUEST: Who turns around and, you know, none of the commentators after the last debate who all say, you know, I saw Biden got beaten up by Kamala
FOROOHAR: Yes --
QUEST: But at the end of the day, they say he's the only one who can actually beat --
FOROOHAR: Well --
QUEST: Donald Trump. And you know, forget your trendy left-wing policies and actually concentrate on beating the president.
FOROOHAR: Well, OK, but then, this -- you know, very important thing. I mean, we know that there's a big divide in the party, should we just worry
about beating Trump or do we need to --
FOROOHAR: Yes, or do we need a reset or do those things co-exist? I actually think those things co-exist, and I'll tell you why? I think that
one of the reasons that you saw Trump win is that there was a voting bloc and, you know, some left amongst those folks that felt sold out by the
corporatist wing of the party.
And I think that that's where the two things come together. I think that - -and Elizabeth Warren has an opportunity here. If she doesn't swing too left and she says, look, I see that we can't go back to the '90s, those
weren't working for a lot of people, but guess what?
This is not a socialist country, we're going to meet in the middle. I think if she can carve out that landscape, it will be interesting.
QUEST: I don't know whether you can these days.
FOROOHAR: We'll see.
QUEST: Good to see you as always --
FOROOHAR: Great to be here -- yes --
QUEST: By the way, what do you think?
QUEST: Poland stopping income tax for the youngsters.
FOROOHAR: Well --
QUEST: It doesn't make any economic sense --
FOROOHAR: Biggest structural paradigm shift of our era will be an era of wealth redistribution. And I think you're going to see things like that
all over the world.
QUEST: You're sounding remarkably socialist, that's right --
FOROOHAR: I just -- I call them like I see it.
QUEST: And I'm taking my bell with me before you redistribute it somewhere.
Good to see you.
FOROOHAR: Thank you.
QUEST: Debate coverage begins in four and a half hours. You can see an encore presentation -- encore -- a repeat at 7:00 a.m. London time, 2:00
p.m. in Hong Kong, Wednesday and Thursday, it's only on CNN. As you and I continue tonight, President Trump's son-in-law says money is the key to
solving a decade's old conflict in the Middle East.
We'll hear from some of the Palestinians who see things very differently. We're in the West Bank in a moment.
[15:45:00] (COMMERCIAL BREAK)
QUEST: The Trump administration is hoping economic solutions can resolve political grievances in the Middle East. Some business owners in the
region say financial incentives are not adequate to make them drop territorial claims. CNN's Michael Holmes went to the West Bank to find out
MICHAEL HOLMES, CNN CORRESPONDENT (voice-over): The type of brewery in the West Bank is a Palestinian success story, producing 600,000 liters a year
shipped locally to Israel and to 15 countries from Morocco to the U.S. It's a family-owned enterprise founded 25 years ago and now run by a second
generation of Khoury family brewers.
And for all of those 25 years, the family has negotiated a myriad of obstacles, just getting their brewed to markets abroad.
(on camera): It's a windy day here in the West Bank, but we wanted to come up here to show you the water tanks because one thing you cannot make beer
without is water. And water has always been a big issue in the West Bank. Israel controls the water supply.
Tight in the air like all Palestinians, they get an allowance, once that allowance runs out, that's it. You want more? You have to pay for a tanker
to ship it in.
MADEES KHOURY, GENERAL MANAGER, TAYBEH BREWING COMPANY: At the moment in the Summer time, that's when we feel the water shortage. That's when you
want to brew more beer and that's when we have water coming once a week.
HOLMES (voice-over): Under the 1995 Oslo 2 agreement, Israel retained ultimate control over water resources, but COGAT, the Israeli military
authority responsible for civilians in the West Bank says the brewery is in a Palestinian-controlled area and the Palestinian authorities are
In essence, when it comes to water issues, both sides blame the other. The latest attempt to untangle the Israeli-Palestinian conflict took place in
Bahrain a few weeks ago. The U.S. president's son-in-law Jared Kushner unveiling an economic plan for Palestinians, one criticized by many for
rehashing old ideas, being vague about implementation and putting off political solutions for later.
Madees Khoury and her family say economic dreams are pointless without a political settlement first.
KHOURY: We need to resolve the political issue, we need to go back to negotiating and resolving the political problems and then talk about the
economy and economic solution.
HOLMES (on camera): So, when you heard that plan, what did you think?
KHOURY: I just brushed it off.
HOLMES: Instead of aid or vague investment promises, Madees Khoury says much could be achieved by the easing of Israeli restrictions. Taxes, red
tape, rules and regulations she says are for Palestinians only. The first road block, a literal one. The Israeli checkpoint between the West Bank
KHOURY: If you would look at the map, you would see the distance between our town Taybeh to Haifa Port which we use to export -- on the map, it's an
hour and a half drive. In reality, it actually takes three days, if everything moves smoothly, which it never does.
HOLMES (voice-over): Israel's COGAT says those claims are quote, "not consistent with reality. The checkpoint transit times for goods are down
to an average 90 minutes and further improvements are planned." The Khourys disagree that back in Taybeh, the family will continue to brew and
wait their business, a microcosm of the broader economic hurdles that confront the Palestinian economy.
Hurdles, the Khoury family say won't be cleared without there being that political settlement. Something that looks more remote now than ever
before, although Madees' father Nadim is the eternal optimist.
NADIM KHOURY, OWNER, TAYBEH BREWING COMPANY: Some day we will be free, we have high hope in the future. Nothing left for us except the high hope.
HOLMES: Michael Holmes, CNN, Taybeh in the West Bank.
QUEST: As we continue tonight, the women's football world champion say that they may have to take their bosses to court after all, in their bid to
get equal pay for equal play. In a moment.
[15:50:00] (COMMERCIAL BREAK)
QUEST: Some news to CNN. Now, after winning two-straight Women's World Cups, Jill Ellis is stepping down as coach of the U.S. women's national
team. She'll remain with the team for its five-game victory tour which begins this Saturday against Ireland in Pasadena.
It all comes as the long-running pay dispute between the women's national soccer team and their bosses may be heading for court. The row was paused
during the World Cup, long enough for the U.S. women to scoop the trophy. Now, the teams reacted angrily after the president of U.S. soccer released
a letter on Twitter saying the U.S. women are paid more, not less, than the men. Alex Thomas has more.
ALEX THOMAS, CNN WORLD SPORT ANCHOR: Richard, it was less than three and a half weeks ago that U.S. Soccer Federation President Carlos Cordeiro was
embracing the players on the podium after they'd been crowned champions of the women's game for the second World Cup-running and the fourth-time
The pay row had been put on hold so the team could focus on the tournament, and the hopes for a successful mediation seemed higher at that point. But
the mood of optimism has been vented by Cordeiro releasing what he calls a fact sheet claiming the women players actually get paid more than the men
while generating less revenue.
According to Cordeiro's figures, U.S. soccer paid the women more than $34 million in salary and game bonuses between 2010 and 2018. That's over $7
million more than the men's team. He also claims the women's team earns nearly $85.5 million less in revenue. The fact sheets released prompted a
sharp response from Molly Levinson; spokesperson for the women players.
She said the comparison is not a fair one because of the different way in which the men and the women's teams are paid, and ultimately, the men are
paid a higher base salary and bonus per game than the women. Part of her statement read, "this is a sad attempt to quell the overwhelming tide of
support the U.S. women's national team has received.
The U.S. Soccer Federation has repeatedly admitted that it does not pay the women equally. This is why they use words like fair and equitable, not
equal in describing pay. Any apples to apples comparison shows that the men earn far more than the women.
The U.S. Soccer Federation fact sheet is not a clarification, it is a ruse." Levinson also stated that if U.S. Soccer can't agree to this
central fact, they will see them in court instead of mediation. Richard?
QUEST: And interestingly, we have a statement from the U.S. men's soccer team's players association blasting the federation's president and backing
the women's fight for higher wages. The statement says "the federation downplays contributions to the sport when it suits them.
The women's national team players deserve equal pay and are right to pursue a legal remedy from the courts or Congress." Last few moments of trade on
Wall Street, very interesting day. It's wait and see.
[15:55:00] The Fed is already meeting in Washington, it's a two-day meeting where we're expecting -- just about everybody's expecting a rate
cut that will take place tomorrow -- quarter point. And if you look at the way the market has moved, we opened up very low on the day, but then rally
-- and then we sort of have a bit of a sell-off towards the end.
It's not really much to talk about, but if you look at the Dow 30 stocks, Pfizer is falling the most, 7 percent, this is on an endless report that
says Pfizer could have some real problems, its deal with Mylan is less popular on day two. Proctor & Gamble, two good stocks, solid, pharma and
household consumer goods. P&G, that's a good staple, that's up 3.5 percent after it beat earnings.
We are waiting for Apple which reports after the bell. So, Apple is pretty much flat at the moment, Boeing's having a good day as well, it's up nearly
2 percent. And if you look at the FTSE and you look at Europe, well, a weak pound can often help the FTSE, but nothing was helping the European
The Dax was the worst of the session, it was off some 2 percent. Everybody was down with German being the worst because of worries about the future
economic growth. We'll have our profitable moment after the break.
QUEST: Tonight's profitable moment, right at the end of our interview with Mohamed El-Erian tonight, he talked about how ridiculous it is that the IMF
is still done by nationality -- the managing director. A European to the fund, an American to the World Bank.
He has a strong point, particularly since Europe seems unable to be able to put up a consensus candidate. They're still arguing between Olli Rehn and
Jeroen Dijsselbloem and the head of the World Bank.
The variety of candidates -- instead of simply saying the best person should win, almost certainly, the Europeans will get the IMF. It is
incumbent upon them to come up with a strong credible candidate that can command the respect in the way that Christine Lagarde has done for the last
If they fail to do so, and put some jobs worth in there, I guarantee you, it's the last time they'll ever have that position. And that's QUEST MEANS
BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.
The bell is ringing. The Dow is down. The day is done.