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QUEST MEANS BUSINESS

Economists Say The Risk Of A Recession In The United States Is Rising; The Houston Rockets Play Defense In China After An Executive Tweets Support For Hong Kong; Trump Defends Withdrawing U.S. Forces In Northern Syria; U.S. Pulls Troops from Northern Syria Before Turkish Incursion; Democrats Subpoena Pentagon And Budget Office Amid Inquiry; U.K. Prime Minister Urges Return Of U.S. Diplomat's Wife Over Fatal Crash. Aired 3-4p ET

Aired October 7, 2019 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[15:00:22]

PAULA NEWTON, CNN INTERNATIONAL HOST: Good luck if you tried to predict where this market was going. I mean look at this. It is the final hour of

trading. It looks like a roller coaster, doesn't it? Rumors about the trade talks between the U.S. and China are making for quite a choppy day.

Here's what investors are watching.

That trade threat. Economists say the risk of a recession in the United States is rising. The Houston Rockets play defense in China after an

executive tweets support for Hong Kong. Chinese companies are cutting ties. We'll take a look at all the money that's involved.

And a trade deal with Japan would be signed this hour at the White House. We will bring it to you live, but for now, live from the world's financial

capital, New York City. It's Monday, October 7th, I'm Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.

All right, good evening, a busy day in the markets and we're getting used to it, right? Wall Street is trying to hold its ground as the risks pile

up for in the last hour of trade, stocks as I said have been struggling for direction. We were up, we were down. The good news is, there is seesawing

between gains and losses, but there's nothing dramatic on either end of this.

Investors are staring down the barrel though of two major factors. First, trade talks. They're due to resume this week. China is narrowing the

scope of the negotiations according to Bloomberg. Trump economic adviser, meantime, Larry Kudlow says the U.S. might be open to what he's saying is a

short term deal. Meantime, new warning from us economists, the National Association for Business Economics predicts U.S. growth will slow even

further in 2020. White House trade policy is seen as in fact, the biggest risk.

Clare Sebastian is following all of this for us. And, you know, it's incredible how this market twitches. You and I were watching in the last

couple of hours, any mention of trade in either direction?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Totally. I mean, twitch is the right word because as you say these are pretty small moves today. But

it just goes to show in a kind of a microcosmic form. First we have, you know, the report from Bloomberg that China might be narrowing its focus.

We had been hearing noises that they might be coming with something of a good compromise, with some, you know, potentially meaningful concessions to

the U.S. This seems to suggest that might not be the case. But then we have Larry Kudlow coming out and saying, you know, everything is on the

table. Anything is possible. He said the music has been improving. China has been buying more agricultural products, and the market goes up.

But I think the bottom line is ahead of these talks, they are really going to be struggling for direction here. I think any headline is going to move

the markets in the coming days until we get some resolutions Thursday and Friday.

NEWTON: I think my issue on this is would the market welcome any deal, even a superficial one? And you know, that answer seems to be changing,

depending on when you ask it and of course, who you ask it to?

SEBASTIAN: Well, I think it depends on what is in a superficial deal. I think what the markets are looking for, is something on the tariffs going

forward, will they stop where they are? Will they hold off on implementing the increase and the tariff rate on $250 billion, which happens next week?

Will they hold off potentially on the big one, which is the $160 billion in consumer goods, which the President has delayed until December 15th - that

is really going to play into earnings in the next -- in the in the coming quarter, particularly when it comes to retailers.

That's really going to be the big one when it comes to the consumer, which of course is most of the economy. But all of this is hype, Paula. You

know, even if the markets do welcome an interim deal - that does beg the question, what has this all mean for? Two years of negotiations, two years

of market volatility and uncertainty that's playing into business investment, if the President doesn't end up getting anything of what he

originally wanted from China, which are those structural reforms.

NEWTON: And it's not just you know, everything that we've been talking about, businesses are suffering, and a lot of them are paying tariffs,

otherwise known as taxes on goods that they would normally source?

You know, this has been a debate about whether or not businesses have actually decoupled in a way from China. How much have you observed in the

last few months in terms of people actually changing their behavior -- behavior, that's not to come back whether they get a fulsome deal, a

partial deal on trade?

SEBASTIAN: In terms of whether they are moving the supply chains. I mean, a lot of people have started thinking about it. In bigger companies, it is

possibly slightly easier, because it is an expense up front. You have to set up a factory. You have to train staff. And a lot of people actually

are telling us that they're finding it harder to do that, because of the tariffs.

Because of the uncertainty, they can't spend that kind of money up front to shift a supply chain. They're kind of stuck where they are hoping that

something will change because of course, no one really knows where this is going to go. The more tariffs would come in, tariffs could be taken away.

And that makes it incredibly difficult for these businesses.

NEWTON: And in terms of this economic survey. I mean, the biggest risk to the economy right now, the U.S. economy right now. Right and it's still a

debate.

[15:05:03]

SEBASTIAN: Fifty three percent of those asked -- and these by the way are chief economists who were asked, they worked for big companies, trade

policy is the big one, but if you look at the other ones as well. Paula, slowing growth, market volatility and geopolitical event, all those could

potentially be impacted and are being impacted by trade policy.

It's the trade war that's leading partly to slowing global growth and of course, if you look at today, market volatility.

NEWTON: Yes, which isn't a big deal and a lot of people have reminded everyone if you're on the market floor and saying, look, we are still in

sight -- in sight of market records here. So let's wait to see where all of this goes. Clare will continue to watch this throughout the hour.

Appreciate it.

Now China is cutting business ties with an American Basketball team that's got enormous, enormous amount of Chinese fans, at least until now. It

comes after the Houston Rockets General Manager tweeted and then deleted a message of support for pro-democracy protests in Hong Kong. The NBA is now

being criticized from two sides first, the Chinese, but also from U.S. politicians who believe the league is now kowtowing to Beijing in the name

of money.

David Culver is in Beijing and sets the scene.

(BEGIN VIDEOTAPE)

DAVID CULVER, CNN CORRESPONDENT (voice-over): China's passion for basketball can be seen in a neighborly game of pick-up. When he is not

shooting hoops with his friends in Beijing, 15-year-old Erik Qu is closely following the NBA.

(BEGIN VIDEO CLIP)

ERIK QU, NBA FAN: Toronto Raptors.

CULVER (on camera): The Toronto Raptors?

QU: Yes.

CULVER (on camera): They're your favorite?

QU: Yes, they win the championship.

(END VIDEO CLIP)

[09:15:10]

CULVER (voice-over): But a team that's no longer on his preferred watch list, the Houston Rockets because of a now-deleted tweet sent out Friday by

team general manager Daryl Morey. The Rockets GM tweeting a photo that read, "Fight for freedom. Stand with Hong Kong," referring to the months'

long democracy protests underway in Hong Kong -- protests that have both embarrassed and angered China's government.

Over the weekend, Morey's tweet unleashed a strong response in Mainland China. The Chinese Basketball Association severing ties with the Rockets.

CCTV, the Chinese state-run broadcaster, no longer planning to air upcoming games. And the Chinese tech giant, Tencent, suspending its deal to

livestream Rockets games.

The reaction led to an apology by Morey, tweeting in part, "I have always appreciated the significant support our Chinese fans and sponsors have

provided and I would hope that those who are upset will know that offending or misunderstanding them was not my intention."

CNN was in Tokyo as the Rockets hit the court Monday, practicing ahead of their preseason game against the Lakers.

Rockets guard James Harden echoing his GM's apology.

(BEGIN VIDEO CLIP)

JAMES HARDEN, HOUSTON ROCKETS: You know, we love China, we love playing here. I know for both of us, individually, we go there once or twice a

year. They show us the most support and love, so we appreciate them as a fan base.

(END VIDEO CLIP)

CULVER (voice-over): The NBA acknowledging Morey's tweet deeply offended many in China and called it regrettable, but that has U.S. lawmakers on

both sides upset.

Republican Senator Ted Cruz tweeting, "Human rights shouldn't be for sale and the NBA shouldn't be assisting Chinese communist censorship."

Democratic Congressman Tom Malinowski called the NBA's response shameful.

Back on the streets of Beijing, Erik and his friends try to see past the off-court drama.

(BEGIN VIDEO CLIP)

CULVER (on camera): Does it make you think differently about the Rockets?

QU: Just okay. It didn't change my opinion on them. I still like Harden and -- but maybe I won't watch them too often.

(END VIDEO CLIP)

CULVER (on camera): Basketball has been a big deal here in China for decades. But their love for the sport really intensified in 2002 when Yao

Ming, one of their own signed with an NBA team, the Houston Rockets.

Yao today is the President of the Chinese Basketball Association, the same association that severed ties with the Rockets, his former team. David

Culver, CNN, Beijing.

(END VIDEOTAPE)

NEWTON: Okay, now while it's still thought of, of course, is an all American game. The fact is the Canadian team, right, won the championship

last season. And that's just one reminder that the NBA has truly gone global.

And now it has invested massive amounts of money right around the world. Games are now broadcast in 215 countries and 49 languages. Nowhere has

that strategy been more successful in China. Nearly 500 million Chinese watched on Tencent last year. But is all that now under threat? That's

the question because of the league's tradition of embracing free political expression.

Last year, it's supported Turkish player, Enes Kanter when he spoke out against Turkish President, Recep Tayyip Erdogan, and in the U.S., it is

routinely stood up and stood for players as they've protested racism, gun violence, police brutality, and engaged in high profile battles with

President Donald Trump.

With so much Chinese money on the line, the NBA is trying to strike a different tone though, when it comes to Hong Kong. Why? We want you to

join in this conversation get out your phones. I know you have an opinion on this and go to cnn.com/join. Our question to you, should the NBA have

apologized to China over Morey's tweet in support of Hong Kong? Yes or no? Cast your vote at cnn.com/join. We will see the responses at the bottom of

your screen.

And in the meantime, Christine Brennan is in Washington for us. I say Christine, thank goodness

Cast your vote at cnn.com/join, we will see the responses at the bottom of your screen in the meantime, Christine Brennan is in Washington for us.

[15:10:09]

NEWTON: I say, Christine, thank goodness. You're a columnist for "USA Today." And of course, the CNN Sports Analyst. Christine, we were just

lining up there. And you've pointed this out to me before about how different the NBA is from even the NFL. They normally stand up for this

sort of thing. Why has it been so different now?

CHRISTINE BRENNAN, CNN SPORTS ANALYST: Well, this is a missed opportunity for the NBA. I would line up in saying the NBA should never have

apologized for defending democracy.

My goodness, where is the NBA? Of all leagues, Paula, the league that has, as you pointed out, been so open minded, letting athletes speak out,

coaches speak out, wanting them, encouraging them to speak out, whether it be about Donald Trump or other issues out there. LeBron James was on the

stage with Hillary Clinton during the 2016 election in Ohio.

On and on it goes, the NBA has been known for outspokenness and individually freedom. And to see the NBA twist and turn like this. It's

frankly -- it's appalling. Because I would make the case that as big a deal, and you've made the case, the billions of dollars that are available

to the NBA, in China, China needs the NBA more than the NBA needs China.

And if the NBA had said, listen, we support our general manager, Daryl Morey, we support him completely and we are not going to apologize for

someone who is defending democracy. And if China said, okay, we don't want basketball. How long would that last?

And the potential there to make real change because the Chinese would have had to come crawling back eventually, because they love the NBA so much --

missed opportunity and it's very surprising to me that that the NBA is in this mess.

NEWTON: And yet this controversy will likely go on. I was really surprised, Christine, maybe you can explain it to me, to hear a couple of

basketball executives, high profile say that he shouldn't have tweeted what he tweeted. It is shocking to me.

BRENNAN: Well, that would be the just to stick to basketball. Right? And just --

NEWTON: And that was the argument.

BRENNAN: Right. And that is the argument. And I understand that argument, because we can see the firestorm that has occurred. So if you're

a general manager of a team, Houston Rockets, so popular in China, there's so much -- there's a study that shows that there were actually more people

watching Game 6 of the NBA Finals last year in China than we were watching in the United States. It's amazing. That's an incredible statistic.

So we get the power there. This is not Pollyanna, I understand. I've been to China several times, I get the incredible opportunities there for

American business, for worldwide business, for worldwide sport. We all understand that. The NBA understands that, too.

So yes, if you don't tweet, then you don't have this firestorm. But once you tweet the thought that you would then somehow have to pull back on

support of democracy that is quite a statement and it reminds me, Paula, you and I were at the last Olympics together in 2018 going back to the 2008

Olympics in Beijing.

When Beijing won the right to host the Summer Olympics, which was in 2001, they pledged that they would change their human rights policies, they would

open up, they would be more open minded, they would allow for individual freedom and an expression. They did nothing of this sort and the

International Olympic Committee did not hold them to it.

Again, an incredible missed opportunity for a major sports organization to hold the Chinese accountable for their terrible record on human rights and

social justice. And now we're seeing it again. The NBA of all leagues, it should know better, not doing what it should do.

NEWTON: Christine Brennan, you have set out the red lines there very, very definitively. We'll see where the NBA and everyone else goes from this.

Really appreciate seeing you. Thanks so much.

BRENNAN: Paula, you, too. Thank you.

NEWTON: Now, I just want to say we have had our survey, more than 80 percent of you say that, in fact, he should not have apologized to China.

We will continue to have more information on those votes as they come in.

In the meantime, the United States is pulling back some of its forces in Syria. It's a shock announcement that some warn will put longstanding U.S.

allies at risk.

(COMMERCIAL BREAK)

[15:16:35]

NEWTON: President Trump has been defending his shock announcement that U.S. troops in northern Syria would pull back and not try to prevent

Turkish forces from advancing. Now, in a series of tweets, the President said the Kurds had been paid to fight with the U.S. against ISIS and now

it's time to get out, in his words.

He later added that if Turkey does anything he considers, quote, "off limits," he will his words now, destroy their economy. The move is a major

shift in U.S. policy, President Trump going against efforts by his officials to keep Turkey from launching military action in the area.

Now, this comes after a phone call between Presidents Trump and Erdogan. The Turkish President says he wants to drive what he calls terrorists, he

has called them terrorists always out of the area near the Turkish border and to return to Syria -- to return Syrian refugees from that area.

(BEGIN VIDEO CLIP)

RECEP TAYYIP ERDOOGAN, PRESIDENT OF TURKEY (through translator): Regarding this matter, after our talk in the evening on this issue, the withdrawal

has started as U.S. President Donald Trump has stated. Now, counterparts are carrying out their work and will continue to do so.

(END VIDEO CLIP)

NEWTON: Now, President Trump is facing fierce criticism for the pullback even within his own party. Republican Senator Lindsey Graham, usually a

strong supporter of the President called the decision a disaster. Ryan Browne joins me from the Pentagon.

Now, you know, that was on the heels of Nikki Haley, the former U.S. Ambassador to the UN calling it a big mistake. What's at the heart of this

for the President in terms of making this move?

RYAN BROWNE, CNN PENTAGON REPORTER: Well, it's an interesting move that the President has made, you know, a lot of officials, both here at the

Pentagon and elsewhere had kind of played up this arrangement with Turkey that did kind of signal that it was being successful that this wouldn't

have to come to this, this so-called security mechanism safe zone.

They had been in negotiations with Turkey for some time. They had issued positive statements about those conversations. The U.S. had actually

convinced those Kurdish fighters, the Syrian Democratic Forces to withdraw their forces, to destroy some of their defense positions as part of this

arrangement.

And then this whole kind being up ended all after one phone call. President Trump announcing that the U.S. was pulling out of the area and

implying more broadly that the U.S. was done with Syria saying that the 8,000 plus ISIS prisoners being held by the SDF, saying the U.S. would not

have responsibility for those anymore, saying that that would now fall to Turkey even though those prison facilities are far, far from the proposed

Safe Zone that Turkey has proposed.

But again, President Trump is kind of tying this into some of his political messages about getting the U.S. out of the Middle East, getting the U.S.

out of these counterinsurgency counterterrorism campaigns. Something he has long protested, but usually he has been talked into continuing with by

his military advisers here. He seems to be very much keen on getting out as quickly as possible.

NEWTON: You know, his tweet was extraordinary. We'll have it up again, "As I have stated strongly before, and just to reiterate, if Turkey does

anything that I, in my great and unmatched wisdom, considered to be off limits, I will totally destroy and obliterate the economy of Turkey. I've

done it before." Clearly, a threat to Turkey to not behave in a certain way.

But what is the reaction from the Pentagon who has been trying for years to make sure that at least the issue of that buffer zone which has been so

important has remained in position?

[15:20:05]

BROWNE: Well, exactly I mean, the threat to Turkey -- it's also not entirely clear what exactly he is asking them to do. You know, President

Trump made a similar threat in January, actually, when the kind of first wave of withdrawals from Syria were announced as threatening Turkey saying

if they went after Kurdish groups in the region, he would impose economic sanctions on them. Again, kind of reiterating that, but not exactly

drawing any red lines as to what Turkey shouldn't, can or can't do.

You know, the Pentagon issuing a statement saying that they were opposed -- that they're not supportive of this Turkish operation, something that

wasn't entirely clear from that first White House statement. But that, you know, again, that they are complying with the -- they warned that Turkey

risks creating instability in the area.

But to your point, the U.S. military has worked hard with the Syrian Democratic Forces in fighting ISIS, regarding ISIS prisons, getting rid of

ISIS sleepers cells, and had worked hard to convince them that they could trust this process, the Kurds, that they could pull back, that this safe

zone could be created.

That trust, very much damaged by the sequence of events, you know, the Kurds themselves saying we did everything we were supposed to do, as part

of this arrangement, the U.S. did not fulfill its obligations.

So again, a lot of mistrust now created as a result of the fallout from that conversation.

NEWTON: And now listen, Nikki Haley, pointing that out today, Ryan, you'll continue to follow the story from the Pentagon, thanks so much.

Fawaz Gerges is the author of "Making the Arab World" and a Professor of International Relations at the London School of Economics. He joins me now

from London, you know, some have called this one of the most -- potentially one of the most destabilizing things that could have happened in the Middle

East and several years. And you better than anyone know, boy, that is saying something. Why? Why could it be so potentially destabilizing?

FAWAZ GERGES, PROFESSOR OF INTERNATIONAL RELATIONS, LONDON SCHOOL OF ECONOMICS: First of all, I mean, really, to summarize President Trump's

decision, he basically threw the Kurds under the bus. Not only -- I mean, remember, the Kurds have been fighting -- the Syrian Democratic Forces have

been fighting for four years with the American forces against ISIS and other extremists. They lost several thousand men. They shed blood in the

area.

I think we try very hard to make sense of Donald Trump's decision. Could it be that he is chaotic? Could it be that he is temperamental? Could it

be that he is incoherent? Could it be that he does not really give a damn about any strategic considerations?

The big point about really what the decision does, it delivers a blow to American credibility. Who can trust the United States now? Can the Kurds

or the Saudis or even the Israelis? I think what the decision says is that what President Trump wants all along is to get rid of Syria, to get out of

Syria. And finally he got it.

He vetoed the judgment of the American Military Central Command, he vetoed the judgment of most of his advisers. So now what you have is that Russia,

oh and Syria, and no one knows the extent of the violence, basically, and the confrontation between Turkey on the one hand, and the Kurds, on the

other hand, and you have ISIS in between. ISIS is positioning itself for a comeback.

And my take on it is that ISIS will be the main beneficiary of any measure all out confrontation between Turkey and the Kurds, if this confrontation

takes place.

NEWTON: And that is certainly advice that the President would have been given. He would know that reality. So I ask you, how did President

Erdogan convince Donald Trump to do this? What do you think he dangled in front of him?

GERGES: You know, what we need to understand, Paula is that this is not the first time that President Trump has made the decision to pull out to

say. This is the third or the fourth time. He has been aching to pull out of Syria because he has promised his political base in the United States,

not just in Syria, but in Syria and Afghanistan and other places.

My take on it is that President Trump now believes that President Erdogan is his "friend" quote-unquote. So this is really a personalized foreign

policy.

He believes that his relationship with President Erdogan is much more important than America's relation with the Kurds. I mean, he was given a

choice between Turkey and the Kurds. He has decided to choose Turkey, but the reality is that he has not taken the broader strategic considerations

into account.

And I think this is why most of the American military generals and the security establishment dreads the consequences and the implications of this

particular decision.

NEWTON: You know, Fawaz, in Iraq, the Army is also admitting that it used excessive force in clashes with demonstrators who are protesting over the

state of the economy and corruption. The Interior Minister says 104 people have killed and 6,000 have been injured since the Iraqis have been taking

to the streets.

[15:25:04]

NEWTON: You know, the outpouring there has been in fact something to see because in a short span of days, you have really seen that anger come to

the streets at great risk, as we have seen to those young people going to the streets. What's that work there? But what I really want to know from

you is if you believe this will go in any different direction, right, than it did in Egypt? Than it did in Tunisia? Than it did in Algeria? Than it

did in Sudan?

GERGEN: Well, you know, what we are seeing is that a new wave, a new wave of protest, in Iraq, in Algeria, in Sudan, even in Egypt, and the reason

why it's about the desperate conditions of young men and women.

Just to give you an idea, I know we don't have the time about Iraq. Steep decline in the living conditions of millions of Iraqis, unemployment among

young men and women is over 30 percent, lack of basics services, basically clean water and electricity, systemic corruption.

My take on it that this is a systemic crisis, and it will take a systemic solution, and it will take many years to undo the damage. I think the

challenge facing the Iraqi Prime Minister, even though he really basically he did not create this particular crisis, he owns it now because he is at

the helm.

You need to diversify the economy, it is based mainly on oil. You need to invest in basically productive sectors, and you need to fight corruption.

You need to fight corruption.

Paula, more than $400 billion have been siphoned off by politicians in Iraq since the U.S.-led invasion and occupation of Iraq. It's one of the most

corrupt countries in the world, probably number 12 in the world. And so no wonder why Iraq is desperate. They are willing to die in order to make a

statement and make their voices heard.

I don't believe we are seeing another Arab Spring uprising, but we -- basically what we're seeing, the return of urgency. People are willing to

really stand up basically in order to reclaim their countries and have a dignified life.

NEWTON: Yes, in a country that has the resources to do better and its young people now massively unemployed are expecting better. Fawaz, thanks

so much. Really appreciate your insights tonight.

GERGES: Pleasure.

NEWTON: Now, for U.S. farmers, relief is on the way. President Trump is set to sign a trade deal with Japan this hour. We'll bring that to you

live.

(COMMERCIAL BREAK)

[15:30:00]

NEWTON: Hello, I'm Paula Newton, there's more QUEST MEANS BUSINESS in a moment when President Trump is due to sign a trade deal with Japan. The

former chair of the president's Council of Economic Advisors joins me live to discuss it.

And London's iconic red buses get a green update. I promise they won't be green, literally. Before that though, here's a check of our headlines this

hour. Condemnation is growing over the U.S. president's decision to pull American forces from northern Syria ahead of a Turkish military offensive.

He's accused of betraying the United States' Kurdish allies.

President Trump tweets that, "if Turkey does anything like that, I in my great and unmatched wisdom, consider to be off limits, I will totally

destroy and obliterate its economy." In Washington, House Democrats have expanded their impeachment probe by issuing subpoenas to the Pentagon and

Office of Management and Budget tied to the freezing of foreign aid to Ukraine.

Lawmakers are demanding the agencies turn over documents by next Tuesday. Prime Minister Boris Johnson says he'll go straight to the White House if

he has to, to seek justice after a car crash that killed a British teenager on a motorcycle. Johnson says the collision involved the wife of a U.S.

diplomat who left the U.K. and is now claiming diplomatic immunity. Police say the car that collided with the teen was driving on the wrong side of

the road.

A federal judge dismissed an effort by President Trump to prevent his tax returns from being released. An attorney for the president immediately

appealed the ruling. They're seeking to block a subpoena from the Manhattan District Attorney's office for Trump's tax records going back

to 2011.

This hour, President Trump is expected to sign a limited trade agreement with Japan. You see a live picture right there as dignitaries gather,

waiting for the president to sign that. Now, it provides relief for U.S. farmers who have been hit so hard by the U.S.-China trade stand-off.

Farmers have been at a disadvantage in Japan since the president pulled the U.S. out of the Trans-Pacific Trade pact in his first week in office.

The deal does not end U.S. tariffs on Japanese autos, which are being left at 2.5 percent. Kevin Hassett who was the chairman of the White House

Council of Economic Advisors, and he joins me now. You know, Kevin, thanks so much for being with us, really appreciate it --

KEVIN HASSETT, FORMER CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: Thank you and thanks --

NEWTON: You know, the president has said and perhaps with some reason, saying, OK, we all miss this great trade deal. And I have to say, getting

Japan as you and I both know to move on trade is not an easy thing.

HASSETT: Yes --

NEWTON: Having said that, at this point in time, is there any suggestion this in any way, shape or form will make up for what American farmers -- to

name one group, but many others are missing from not having that all- important U.S.-China deal?

HASSETT: Right, well, I think this is -- and you're right to cover it, a really big week for trade. And the Japan trade deal has basically gotten

U.S. farmers a heck of a lot of stuff. I think that relative to what I was hoping for, the only negative for me is that I wish they got a little bit

more dairy concession out of the Japanese. But you know, people who are selling agricultural products, especially meats and soybeans and so on into

Japan, they're going to not have any trouble after this deal.

And more importantly, the Japanese deal also lays some groundwork, some 21st century groundwork for what the new economy tariffs are going to look

like or trade is going to look like. So, for example, it prohibits data localization, which is something that everybody is really worried about.

But now we moved to like the main event which is Thursday, you know, we're going to see the leaders of the Chinese delegation come to the U.S., so

they're going to talk about, you know, whether or not they can work out a deal, the deputies are in DC right now, and I think everybody's hoping that

the Japan deal is basically a precedent that China will follow.

NEWTON: But when we talk about a deal, it's a four-letter word for a reason, right? I mean --

HASSETT: That's right --

NEWTON: At this point in time, what kind of a deal would satisfy you? Because right now -- and what's being discussed, it's almost as if

something superficial may happen, and that, that will be good enough, not for U.S. farmers or U.S. industry, but good enough for a 2020 campaign.

HASSETT: You know, I'd be really surprised if that's what happens. You know, the Chinese were very close to a comprehensive big deal last Spring

or so, and I think I can remember, you know, being on CNN and saying I think we're about to have a deal, and then all of a sudden we were

surprised because the Chinese walked.

[15:35:00]

And so I think something like the deal that we saw in the Spring is what everybody is hoping for this week. And I think that there are a lot of

things that people come to the table with that are you know, suggest that there might be a deal. So, for example, one of the surprises for me as I

look back over the year is that because they had a swine flu in China, then they had a much smaller pig population, and the pigs eat soybeans and

sorghum.

And so, I thought the consumption of those things would drop a lot. But in fact, it didn't because the Chinese are taking the pigs that they have and

trying to make them heavier, and that means that they need lots and lots of soybeans. And so they're coming, really needing a lot of U.S. soybeans.

And I think that, you know, we've got some to sell and that kind of thing. You know, if you line them up and get a bunch of them means, you know,

that's the basis really for a deal.

NEWTON: I know, but it just doesn't seem like they're there, anywhere close to getting substantively what the president had promised, at least

not yet.

HASSETT: Well, again, they were really close in the Spring, and so they could just photocopy the document that you know, we saw in the Spring --

NEWTON: But Kevin -- but Kevin, is it not true, but is it not true --

HASSETT: And then vote out at this stage then --

NEWTON: That if you're the Chinese here right now, we are getting very close to that 2020 campaign, that you see an embattled president who's not

looking all that strong right now. And that you do believe you might be able to get the upper hand in this negotiation because the Trump

administration needs a deal, any deal.

HASSETT: You know, I think you're right to look ahead to the election and think about how it affects China's strategy, but I would just beg to differ

about how they're thinking about it. You know, I think that Joe Biden has looked a lot weaker lately because of the mess that we're in.

And if you look at the political futures that give you the odds of who's going to be the nominee, then Senator Warren has really skyrocketed. And

she's more of a traditional Democrat that kind of likes tariffs and so on. And so I think that the idea that Biden is going to come and eliminate the

tariffs that President Trump put on it is probably much less likely --

NEWTON: So, you're thinking they're -- yes, they're quoting -- they're quoting the movie, right, as good as it gets. You think China is just

saying, this may be as good as it gets whether Donald Trump is re-elected or not.

HASSETT: If they want -- if they want the tariffs to go away, then the surest way to do it is to make a deal with President Trump before the

election. That's all I'm saying.

NEWTON: I want to talk a little bit about this UAW strike in the United States. It's significant --

HASSETT: It's a big --

NEWTON: You know, they have not seen this kind of a labor dispute in the United States for more than a decade. How risky do you think this can be

for the U.S. economy? We already know it's going to be devastating in any measure for the Michigan economy.

HASSETT: Right, it absolutely is devastating for the Michigan economy, and I think that in the third quarter GDP, we're looking at maybe about three-

tenths of a percent, lower GDP growth. Just because of this one strike, and if it carries it into the fourth quarter, then you're talking really

big numbers.

And so, you know, when I look at the positions on the two sides, I'm a little bit puzzled that it's gone on this long, that GM has been selling

cars, they've been profitable, they have a profit-sharing plan with their employees that's been paying them, I think on average about $10,000 a year.

And so, I think that their offer looks like something that if I were a GM employee, I'd be pretty happy to take. Now, I understand that folks want

more production moved back from Mexico to the U.S. and so on. And so, they have a defense of a position --

NEWTON: But that's in line with the president, right?

HASSETT: But I think again, they should be close to a deal as well --

NEWTON: But that's in line with the president because the president got us -- that's what he wanted. That's what he asked of companies like GM, and

that's what they're supposed to be doing.

HASSETT: Right, well, that's -- and that's presumably one reason why the auto workers are taking a firm stance right now.

NEWTON: But in terms of that, in terms of how this will even play out in the 2020 election -- and look, you and I both know that, that will shape

what the president will do with the economy in the next few months and thereafter. How much do you think that the UAW talks right now are shaping

the way the president thinks about what to do about these companies in months to come? Whether with a --

HASSETT: Right --

NEWTON: Tweet or policy or whatever else.

HASSETT: Well, I think that, you know, aside from what the president thinks that we all know, you know, I know that if we're cruising along at 3

percent growth next year, then his path to re-election is much smoother. And you know, right now, the numbers are in the 2s, but they're being held

down by the GM strike.

It's something else we didn't mention, which is that, you know, Boeing has really cut production of 737 Maxs while they try to work that out. And so,

these temporary phenomena are hopefully things that will go away and it'll get the economy back to north of 2 percent, going into next year. But if

they continue, then it could go exactly the opposite direction.

And so fourth quarter GDP growth, you know, the GM strike ends, and if Boeing starts ramping up their production again, it could easily go north

of three, but it could easily go the other way too. And I'm sure that, that has people a little bit anxious everywhere in Washington that are

worried about the economy next year --

NEWTON: And you already see it in the data, and they know they'll be going into that data into an election campaign --

HASSETT: Sure --

NEWTON: And they don't want to when we're there. Kevin, we hope to see you back here early and often, OK?

HASSETT: Thanks, great to be here, thanks.

NEWTON: Appreciate it, thanks. There's no end in sight in terms of -- we were just talking about that GM strike. Union negotiators say talks have

taken in fact a turn for the worse. Vanessa Yurkevich has our report from Detroit.

VANESSA YURKEVICH, CNN CORRESPONDENT (on camera): Talks falling apart this weekend is unwelcome news for these picketers here behind me. They're

surviving on $250 a week. And that is especially difficult for single mom Jessie Kelly. She's been saving up, she was ready to buy her first home

for her and her young son and then she went on strike, having to put that dream on hold. We asked her how she's feeling.

[15:40:00]

(BEGIN VIDEO CLIP)

JESSIE KELLY, GM WORKER: It's devastating. It's very hard. You just see your savings depleting every single day a little bit more and more. The

other day, I had to go get a new rim on my car and I remember just that sinking feeling of, this is my whole strike check for this week is the cost

of this rim.

(END VIDEO CLIP)

YURKEVICH: Now, the key issue is to why these talks fell apart over the weekend is that the union has been insistent since the very beginning that

GM bring product lines back from Mexico to the United States. GM is slated to close four of their plants here in the United States by the end of 2020,

including this one right here behind me.

Also in 2020, the next presidential election, Trump won the state of Michigan in 2016, but auto workers vote with how the economy is doing and

whether or not they have a job. Many of the picketers here that we spoke to say they appreciate that the 2020 candidates have come to visit them

because they are looking for someone, Paula, who has their backs and is willing to support them until the end. Paula?

NEWTON: Vanessa, thanks so much for that update from Detroit. And in the meantime, QUEST MEANS BUSINESS will return in a moment.

(COMMERCIAL BREAK)

NEWTON: OK, farming is usually, of course, a hands-on field, right? And it also requires a lot of investment. But one African company is making it

possible for almost anyone to get involved. No land or tractor needed. Yes, just a smartphone, if you can believe it. Our Eleni Giokos has more

in this installment of "In The Making: South Africa".

(BEGIN VIDEOTAPE)

ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice-over): It's a typical day at this farm outside of Durbin. Workers herding and taking

care of cattle.

UNIDENTIFIED MALE: They get fed twice a day.

GIOKOS: But their type of farming is anything but typical.

UNIDENTIFIED MALE: Crowd farming. Which is one farm, one manager, one herd, but different owners of cows in the herd.

GIOKOS: A play on crowd funding, crowd farming is when multiple people put money together to lease a cattle farm.

UNIDENTIFIED MALE: The cow is the people's money. You know, you wouldn't give your money to an amateur.

GIOKOS: The concept was a brain child of Ntutu Kochezi(ph), he came up with the idea after a frustrating experience.

[15:45:00]

UNIDENTIFIED MALE: I tried to buy a farm, but I would go to view farms, but they were just too expensive.

GIOKOS: So, in 2014, he started Livestock Wealth to make farm ownership more accessible. Here's how it works. Investors have a choice of buying a

portion, a whole, or a pregnant cow.

Livestock Wealth takes care of it at a farm that it leases. After 6 or 12 months, the cow's meat or its calf is sold, and then the investor gets a

percentage of that money. Farmers who work with Livestock Wealth also seem to come out on top.

UNIDENTIFIED MALE: In the cattle farm, the farmer makes one payday a year. So, how we then work with the farmers is to say, farmer, you've got a

pregnant cow that someone who is our investor would want to own. Sell that cow to an investor through our platform, and then what we then do is that

when the babies are ready to sell, then the farmer buys it back from the investor at a profit.

GIOKOS: Livestock Wealth claims to have paid out almost $500,000. They own a little less than $3 million worth of cows, has 1,500 customers, 30

percent of whom are women, partnered with 11 farmers, providing about 300 jobs and says to be the largest independent provider of free-range beef in

South Africa.

UNIDENTIFIED MALE: My goal in life is really to see more and more people being financially free.

(END VIDEOTAPE)

NEWTON: OK, authorities right around the world are cracking down on vaping. There are now more than a 1,000 people in the U.S. alone with lung

injuries thought to be linked to vaping, and doctors say more are likely to come. They admit they don't know exactly what it is that's making people

sick.

The CDC says 70 percent of patients said they vaped the active marijuana ingredient THC, 17 percent only used nicotine. Now, New York and

Massachusetts both have tried to implement bans of those flavored vaping products. Meanwhile, electronic cigarettes were banned in India last

month. And in China, JUUL found that its products were removed from online marketplaces, but no official explanation was given.

Now, we have more just in from New York University researchers that have found that e-cigarette vaper causes cancer in mice. Now, they conclude

that it's very harmful to humans as well. One question is why didn't we see all of this coming?

[15:50:00]

Naomi Oreskes is the author of the new book "Why Trust Science?" and professor of history of science -- again is a professor of the history of

science at Harvard University and she joins me now. I think it's an important distinction because you know, you've pointed out that whenever

you were trying to really present a scientific argument, people would still approach you and say, how do you know what you know about science?

As if science is still being manipulated as if it's fiction. Why do you think this has been a problem, especially when it comes to issues like

vaping?

NAOMI ORESKES, PROFESSOR OF HISTORY OF SCIENCE, HARVARD UNIVERSITY: Well, it's been a problem with controversial issues like vaping because the

scientific community has faced large-scale organized efforts to undermine and discredit science. And the tobacco industry is really number one

culprit in this area.

We knew that tobacco caused cancer at least as far back as the 1950s. Some people would argue earlier, but the tobacco industry over decades, many

decades, ran a campaign deliberately designed to discredit the science and to confuse the American people about what we really knew about tobacco.

NEWTON: But what did we miss here on vaping? And you know, I had it pointed out to the young people on our show who said that they also believe

that the current data is alarmist. They say that there aren't that many cases, perhaps, and that the science that they see isn't definitive enough.

ORESKES: Well, this is the argument that we face all the time, and of course, one of the problems that scientists face is that in the early days

of a problem, in the early days of an epidemic, any time someone tries to draw attention to it, they can be accused of being alarmist. If there's --

right now, there's maybe only 1,000 cases of people affected by vaping.

But eventually, if this isn't controlled, it will be a much larger number than that. And of course, what I always say is if the house is on fire,

you need to pull the alarm.

NEWTON: And people seem reluctant to -- you know, this debate started in terms of you presenting it this way. You cut your teeth on the climate

issue, and it's a treacherous topic for sure. You know, you first noticed that discontent that people were feeling as if they wanted to dispute the

science because they felt that it was far too alarmist. What have we learned in the last 20 years when it comes to climate and trying to use the

indisputable science to basically inform policy?

ORESKES: Well, sometimes, I'm sorry to say, it feels like we haven't learned anything because it seems like we have to keep repeating the same

messages over and over and over again. But I think one thing that we have definitely learned that my work shows and other people is that scientists

are not alarmists. If anything, it's the opposite.

Most scientists are very cautious people, science as an enterprise tends to be quite conservative. And scientists typically don't really speak clearly

on an issue until they have huge volumes of information, often, actually much more information than ordinary people would expect in their own lives.

And in the specific case of climate, we now can show without any doubt that actually if we look back on climate science, that not only were scientists

not alarmists, but actually, they understated the threat. And today, we see climate change and many of its related parameters happening faster than

scientists predicted, and many of the consequences and impact being greater than scientists predicted.

NEWTON: It's interesting, you know, though I still feel as if the public seems very confused, even when you use the word science. I'll give you an

example. This week we had this controversy over whether or not red meat is good for you or not good for you. And people were pointing to, you know,

studies in either direction. Why is it -- why is it that we cannot discern science and look at it and say, look, the arrows are pointing in a certain

direction here?

ORESKES: Well, there's two things. And one, I hate to say this to you because you're a journalist, but I feel like journalists --

NEWTON: Go for it --

ORESKES: Really contribute tremendously. Yes, this last week was not the high moment of journalism in my opinion. One of the things we know about

science and that I talk about at great length in my book is that science works to build bodies of evidence. We don't come to scientific conclusions

based on any one person's opinion, and we don't come to scientific conclusions based on any one study, even a study that seems to be perhaps

very good.

So journalists ran this week with the story about the beef. It was all over the newspapers, big headlines, maybe meat is OK after all. And it was

one study --

NEWTON: Right --

ORESKES: In a landscape filled with thousands of really rigorous, good studies that tell us that eating a lot of meat --

NEWTON: Yes --

ORESKES: Is not good for us. So, I think journalists really did the public a disservice there.

NEWTON: We would --

ORESKES: And the other important part is the role of the --

NEWTON: Sorry, I have to cut you off there, I have to cut you off there, but as long as you promise to come back because of course, we all want to

learn better about how to better report the science which will get us going in the right direction here. Professor Oreskes, thanks so much --

ORESKES: Definitely --

NEWTON: I really appreciate it, thanks.

ORESKES: Thanks --

[15:55:00]

NEWTON: Now, we want to talk about London's iconic double-decker buses that are getting an update in an effort to reduce air pollution. The bus

will be the first hydrogen-powered mass transit vehicle to hit the streets. John Defterios has more.

(BEGIN VIDEOTAPE)

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): London's mass transportation systems which were first developed in the 1800s. These

arteries of the city facilitate more than 25 million journeys every day. Deep below ground and above it to meet climate and emission reduction

targets, the difficult task of modernization is under way.

The most radical change will begin on the roads first. By 2037, all buses must have zero emission status.

TOM CUNNINGTON, TRANSPORT FOR LONDON: London's got one of the biggest bus fleets in the world outside China with over 9,000 buses carrying over 6

million passengers a day. And over the years, we've constantly improved the quality of our vehicles and particularly the emissions that come out of

the back of the vehicles. But that's not good enough, we realize that air quality is such an important part of London, and we've got a stretch here

at the moment to take us from a current diesel fleet to a zero emissions fleet over the next 17 years.

DEFTERIOS: A planned $14 million investment in the bus fleet will help decrease air pollutants further. Electric, hybrid, and hydrogen fuel cell

models that emit only water are the future.

MAYOR SADIQ KHAN, LONDON, ENGLAND: The next vehicle revolution across our city.

DEFTERIOS: London Mayor Sadiq Khan and his team have been working hard to announce changes and bring on board all stakeholders.

KHAN: I'm confident that we have a delivery plan in place that takes us forward. It came from a standstill position of having hardly any. To make

it, we've got a plan in place to make sure we have more of charging points and a coordination of plan to make sure we help those who want to have the

infrastructure they need to move towards making sure we can have a reality of this electric vehicle revolution.

We have in London now more electric and hydrogen-powered buses than any city in the world outside China. We're trying to help taxis move away from

diesel and petrol to electric. But hydrogen is a really important power source. It's clean and I think it's a really exciting alternative to

petrol and diesel.

DEFTERIOS: After trials with single deck models, the next generation of the iconic double-decker buses will be powered by green hydrogen, produced

via offshore wind farms on the East Coast.

KHAN: We've seen the evidence where we've done bold, brave things like the world's first ultra emissions zone where we monitor the knocks(ph), says

it's at 20 percent reduction, that's just in two months. Where you've got, you know, leadership from city hall, you can make transformative claim.

DEFTERIOS: Yes --

KHAN: But it's really important you take people with you, we're trying to do that here in London.

DEFTERIOS: John Defterios, CNN, London.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

END