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Quest Means Business
Lebanese Prime Minister Saad Hariri Announces Resignation; U.K. Parliament Gives Preliminary Approval to Early Election; Wildfires Force Evacuations Across California. Aired 3-4p ET
Aired October 29, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:12]
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: It's the final hour of trading on Wall Street and the Dow is back to where it started, and as you
can see on this graph, playing between that positive and negative line.
These are the reasons why the markets have been performing the way they have. In the Brexit election, the U.K. Parliament looks certain to fire
the starting gun on the December votes.
Boeing's CEO faces lawmakers and the relatives of a crash victims in a dramatic Senate hearing.
And Lebanon's Prime Minister resigns after weeks of protests that bring the economy to a standstill.
Live from the world's financial capital, New York City. It's Tuesday, October the 29th. I am in Eleni Giokos in for Richard Quest and this is
QUEST MEANS BUSINESS.
All right, a very good evening to you and tonight, Britain is barreling towards a general election in December that will determine how and if the
U.K. leaves the E.U.
(BEGIN VIDEO CLIP)
JOHN BERCOW, SPEAKER, HOUSE OF COMMONS: The question is that the bill be now read a second time. Those in favor in the group then say "aye."
GROUP: Aye.
BERCOW: Of the contrary, no?
GROUP: No.
BERCOW: The ayes have it. The ayes have it.
(END VIDEO CLIP)
GIOKOS: Well, the ayes have it and with that the bill calling for an early election clears its first hurdle in Parliament. It cost easily after two
stumbling blocks were removed. Those were amendments calling the 16 and 17-year-olds along with E.U. nationals to be given the vote. We've got Nic
Robertson, outside the House of Parliament keeping track of all the voting that's happening within the House of Commons. Tell us what is the latest,
Nic? I mean, now that we've got those hurdles out of the way, we are closer to securing a date for elections.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: We are, yes. After that second reading that clearly passed just on a show of voice -- strength
of voices, and then the amendments came up.
The amendment as you say that was to allow 16 to 17-year-olds and E.U. citizens in the U.K., that amendment wasn't allowed to be discussed. So
the only sort of thing that's in question at the moment is the date, whether it's going to be the 12th of December or the 9th of December that's
in the motion, and this is being discussed in Parliament right now. Some MPs saying that this is going to be disruptive for schools, that it's going
to be harder for people to remember if they're supposed to vote on a on a Monday or a Thursday because traditionally voting in the U.K. is on a
Thursday.
Some MPs saying well, if we are short of places to vote, then perhaps pubs -- some pubs can be turned into temporary polling stations. So that's
where the debate is at the moment.
So in all probability, it does appear that later this evening that it will be clear and set that there will be an election in December the 9th or the
12th. That seems to be the only thing we're waiting to find out about right now -- Eleni.
GIOKOS: Yes, it's really interesting because it's been such a U-turn that's come through where it was rejected, and now we're seeing opposition
parties saying, yes, we really -- we want to see an election coming to the fore. Why that change?
ROBERTSON: Well, the main opposition party had become the big holdout. The two smaller opposition parties, the Liberal Democrats and the Scottish
National Party had said that they would be willing to support the government in this, you know, simple majority vote as such as it is today
for a general election, which sort of backed the Labour Party, the main opposition party into a corner because they would then be played by the
government as being the party that stood in the way of what the people wanted.
So really, it became untenable for the Labour Party, the opposition party to continue to hold out, so they opted in. But the reality for those
smaller parties as well, and part of the pragmatism that they've sort of taken upon themselves to support this is, quite simply the SNP and the
Liberal Democrats don't want to leave the European Union.
And the only way to -- of the two options that were ahead of the government right now, either to go through the Withdrawal Agreement Bill, which would
ultimately arrive at the point of Brexit being agreed, probably, or an election, the only way for them to sort of take a path that would stay in
the European Union for the short term, at least was to go for an election and that's why they've gone for it.
Also add on to that the Liberal Democrats and SNP believe that they can win seats and it's the Labour Party really, that seems to have the biggest
question mark over there -- over how they're going to do an election and the assessment is not as well as Boris Johnson's Conservative Party.
[15:05:02]
GIOKOS: Yes, so what is the sense there, Nic, on the ground because essentially bringing up early election is basically voting for a party that
has a specific stance towards the way they view Brexit would be playing out or just doing away with the Brexit overall.
And do you think that perhaps there's this big sense that they want to see a referendum with a party that is pushing for a referendum perhaps have the
upper hand here, what are you hearing?
ROBERTSON: You know, I think there's this -- there's a hope, and certainly the Liberal Democrats and certainly within the SNP that they are going to
pick up a significant number of seats and return in a much stronger position. And if they feel if they're in a stronger position, then there's
a reasonable probability that the Conservatives will be in a weaker position.
One of the reasons that Conservatives might be in a weaker position as well is that the party to the right of them if you will, the Brexit Party could
be run a stiff contest for some of those real hard lined Brexiteers in the country who don't buy into Boris Johnson's deal at the moment.
So if the strategy for the Liberal Democrats, if you will, would be quite simply that if the Conservative Party loses enough seats, they make -- the
SNP, the Liberal Democrats make a few more, then the next government might be a hung Parliament. There might not be a party with a big -- with a
significant majority.
But it would essentially undermine the Conservatives' Brexit progress, and in that way, leave the space further down the road for a second referendum
that would be their sort of best analysis at the moment.
GIOKOS: All right, Nic, thank you very much for that analysis. And let's go through the four main groups in the election. A vote for each is a
vote, as Nick mentioned, for a specific Brexit outcome.
So the first, the favorites, the Conservatives, and that's a vote for the deal that Boris Johnson had negotiated with the E.U. Now, the Prime
Minister needs to convince voters he can be trusted after promising to get Britain out of the E.U. by the end of this month, which of course is a
couple of days away.
And then now to Labour. Now it plans to negotiate a softer Brexit with the E.U. If it succeeds, it says it would offer voters a choice between its
Brexit deal and then remaining in the E.U., and then you've got the Liberal Democrats and they say they'll do everything they can to stop Brexit. They
would even revoke Article 50 and keep Britain an E.U. member.
And then finally, you've got the Brexit Party. Leader Nigel Farage once a no-deal Brexit and if his party picks up momentum that will squeeze the
Conservatives, so as you can certainly see, there's lots of news coming through from London and the Prime Minister told Parliament earlier, an
election is the only way to get the U.K. out of the Brexit deadlock. Take a listen.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, BRITISH PRIME MINISTER: I think that this delay is becoming seriously damaging to the national interest because families can't plan,
businesses can't plan. And the climate of uncertainty is not only creating trust in politics, but is beginning to hold everybody back from making
vital everyday decisions.
(END VIDEO CLIP)
GIOKOS: So Mr. Johnson looks like he will not get his wish, but none of the election outcomes will bring certainty to business. Joining me now
we've got Edwin Morgan, the Director of Policy at the Institute of Directors. Edwin, great to have you on and you're watching all of this
from a business perspective. And you've got to price these things in, you've got a look at your models and say, well, this is what the economic
outlook is going to be based on these various scenarios. So how do you then price in this uncertainty?
EDWIN MORGAN, DIRECTOR OF POLICY, INSTITUTE OF DIRECTORS: Well, I mean, it's very hard to look at lots of different models and try and predict how
they may turn out. I mean, in fact, actually, the government canceled their budget session that was to be held in a couple of weeks and we would
have got forecast there on what might happen to the economy. So we don't have those to work around.
I think what businesses are saying to us is that, actually, they would just like us to move on from this phase. Ideally, they would leave the E.U.
with a deal. Getting that deal is very important. Avoiding no deal is absolutely critical.
I don't think they're looking forward to this general election with a lot of enthusiasm. But if it breaks the deadlock, it means that we can move on
from this horrible position which is being trapped that we've been in for three years, that it might possibly be a way forward for business.
GIOKOS: So this is interesting. I mean, we're heading towards an election now in the U.K. and just looking at the survey that you've done with your
members, 55 percent voted for the deal that Boris Johnson had negotiated with the E.U. and 44 saying, well, no, this isn't the right deal.
Do you think it's a case of let's just get this done and deal with whatever rules have been negotiated, rather than create this uncertainty and push it
out to you know, the end of January?
MORGAN: Yes, businesses aren't unanimous as you've just quoted in those statistics, but clearly the majority are saying that a deal is a way of
ending the uncertainty. You know, it doesn't stop the negotiations that we will still have to do with the E.U. This is just the first phase. I mean,
that that's what's so difficult for businesses that we haven't really moved on.
He was talking about the future trading relationship with the E.U., so clearly most businesses are making the calculation that a deal progress
will be better. But what we've got now realistically is an election, you know, elections always creates uncertainty. We don't know who's going to
win or even whether, you know, there will be an outright winner. So we are just realistically in another extended pair of uncertainty for business.
GIOKOS: Yes, and this is what's interesting is that one of the questions you also asked was whether they saw any opportunities coming through in the
U.K. in 2020, and you had only a fifth of them saying, yes, there are opportunities, but most of them actually said, we're going to look at the
E.U. and the U.S. you know for investment. That's pretty scary, isn't it? That just shows that we are going to see quite a significant amount of
percentage wiped off the U.K.'s GDP in a big Brexit scenario?
MORGAN: Well, I mean, there are various different forecasts. But certainly I think one of the big concerns for us is, as you say, it's the
effect of uncertainty on investment. Because businesses haven't, you know, known whether that it's a good idea now to put money in their new
machinery, in building new workshops or new factories, that kind of thing. They've just been holding off. So that means they've had this dragging
effect on business activity, on the economy as a whole. And that's why we really do need to move on.
Because we as I said, we are just stuck and that means businesses, you know, holding onto their resources, not using them and that's not good for
anyone.
GIOKOS: Yes. So I mean, what are you hearing? Are elections the right way to go and perhaps even talk of another referendum and putting the votes
to the people? Is that what business wants to see?
MORGAN: So we did ask -- when we asked about the deal, we also asked in the event an extension, which we have now, what would be the best thing to
happen? And unfortunately, there really is no consensus. All I can say is the general election is the least negative outcome. It's slightly ahead of
a referendum.
I suppose because most businesses think a referendum will just create another cycle. Now, some businesses don't want referendum, but it seems to
be that a general election is slightly more favorable than a referendum at the moment.
GIOKOS: Fantastic. Edwin, thank you very much for that update. Appreciate it. All right, so European stocks ended the day mixed. The
FTSE closing low as MPs in Westminster went into that election debate. This was market index, the best of the day, up a quarter of a percent. And
as you can see, FTSE down about three tenths of a percent.
Here in the U.S., the Dow mostly flat, up and down day, investors are waiting for a possible rate cut at this week's Federal Reserve meeting and
that's happening tomorrow. The S&P rising further into record territory and of course, lots of earnings that investors had to digest today as well.
I would walk before I would get on a 737 MAX. Those are one U.S. senator's words to the Boeing CEO during a fresh grilling in Washington. Still,
Boeing insists the plane will fly again soon.
And the Ukraine expert inside the White House telling U.S. lawmakers, he heard Donald Trump's call with the Ukrainian President. Top Democrats are
calling his testimony extremely disturbing.
(COMMERCIAL BREAK)
[15:16:03]
GIOKOS: Welcome back. So Boeing's stock is rising on Wall Street and that's despite its CEO taking a grilling in the U.S. Senate and admitting
that the company made mistakes that led to two crashes and 346 deaths. The accusations against Boeing are serious - that it cut corners, and that it
lobbied for a cozy relationship with regulators, and has been slow to respond to the investigation.
Dennis Muilenburg said the company deserves the scrutiny it is now receiving over the 737 MAX jet.
(BEGIN VIDEO CLIP)
DENNIS MUILENBURG, CEO, BOEING: No number other than zero accidents is ever acceptable. We can and must do better. We've been challenged and
changed by these accidents. We've made mistakes, and we got some things wrong.
(END VIDEO CLIP)
GIOKOS: All right, so we've got Rene Marsh following aviation and government regulation in Washington for us and Rene, what a day? You know,
seeing the families of the victims coming out in force to show the impact that these mistakes have had on their lives. And then just hearing the CEO
basically admitting to these mistakes, but what are the repercussions? What are the consequences going to be for Boeing?
RENE MARSH, AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Right. You know, I would have to say that this image that you're looking at there, it
really does put this all into perspective, because as we continue to talk about who is to blame, and were regulations, you know, up-to-date, and were
they able to prevent this sort of thing from happening. When you look at that image, you remember, this is about the families of 346 people and all
these people did was step on an American-made plane and that is how they lost their lives, and that should not be.
And so the CEO of Boeing certainly faced some tough questions from lawmakers. Among them was, did Boeing conceal the defects of the plane's
flight control system from the F.A.A.? Did they know this ahead of time and just not reveal it? Also, why didn't Boeing revealed sooner those
internal instant messages and e-mails that illustrated already there were concerns internally about the plane systems and how difficult it may just
to control the plane in the simulator.
And more importantly, did they put profits before safety? And did they lobby the F.A.A. not to ground the plane after the first crash? Now, on
that last question about whether they lobbied the F.A.A. not to ground the 737 MAX after the first crash of Lion Air? The answer is yes. And we
found that out in this hearing today in which Boeing's CEO said look, they wanted to collect more data and that's why they wanted the F.A.A. to hold
off.
But we also heard Muilenburg say that he does agree that more oversight of the company, certainly could be improved, but he denies that there's any
coziness between Boeing and the F.A.A. But again, the focus was on this flight control system, which investigators say played a major role in both
of these crashes.
As you know, that system only relied on one sensor. There was no redundancy. So it made it very vulnerable if that one sensor failed, and
we know that pilots weren't trained on the system, and it also was stripped from flight manuals.
At one point, even the senator, Senator Blumenthal from Connecticut said that these planes were essentially flying coffins, and he slammed Boeing
for not disclosing details about the flight controls and the manuals.
GIOKOS: And it is interesting, Rene because, you know, a senator actually came out and said, you know, initially Boeing had shifted blame to pilots
that they weren't actually trained properly. And then Boeing at the same time knew that there was some kind of issue that they had actively been
concealing some of the information which is pretty mind boggling to think and again, I'll go back to this, who takes the ultimate fall for this
because of the lives that have been lost?
[15:20:05]
MARSH: Yes. Yes. I mean, that is the key question. We know that the Department of Justice is also probing this. They have opened a criminal
probe into all of this. They're specifically looking into oversight and the process leading up to getting this plane certified as safe to fly. So
we'll see what comes out of that and who is held accountable there.
But I would have to guess and I would put my money on it that all those families that you're seeing there, they do at the end of this all want to
know that their family members did not die in vain.
So not only do they want to see someone held accountable, they want to see the laws, the regulation, the oversight change in a very significant way to
make sure this sort of thing can't happen again.
GIOKOS: Thank you very much, Rene Marsh. Much appreciated. So the Boeing's CEO testimony coincides with the one-year anniversary of the Lion
Air crash. One hundred and eighty nine passengers and crew lost their lives due to design flaws in Boeing 737 MAX jets. Since then, just one
senior executive has been ousted from the company. Lawmakers on both sides of the political divide asked if more of the blame should be laid at the
door of the CEO Dennis Muilenburg. Take a listen.
(BEGIN VIDEO CLIP)
SEN. SHELLEY MOORE CAPITO (R-WV): Between the Lion Air crash and Ethiopian Air crash, it defies logic to me that some of these folks who wrote e-mails
or sent text messages did not come to you.
SEN. RICHARD BLUMENTHAL (D-CT): Those pilots never had a chance. These loved ones never had a chance. They were in flying coffins as a result of
Boeing deciding that it was going to conceal MCAS from the pilot.
SEN. TOM UDALL (D-NM): Boeing's own culture is more blameworthy for installing a faulty system that resulted in too many deaths and could have
caused more. This culture starts at the top.
SEN. TAMMY DUCKWORTH (D-IL): You've not been telling this committee the whole truth. Time and again, this is my frustration, Boeing has not told
the whole truth to this committee and to the families and to the people looking at this.
SEN. TED CRUZ (R-TX): That is passive voice and disclaiming responsibility. You're the CEO, the buck stops with you.
(END VIDEO CLIP)
GIOKOS: All right. So Boeing continues to say that it hopes that the 737 MAX is clear to resume flying before the end of this year. The grounding
weighs heavily on the company's bottom line. Peter Goelz is in Washington and he is the former Managing Director of the National Transportation
Safety Board. Great to have you on the show, Peter. Much appreciated.
Just listening to some of the commentary from Boeing's CEO, what is the sense that you're getting in terms of taking on the responsibility for
what's played out?
PETER GOELZ, FORMER MANAGING DIRECTOR OF THE NATIONAL TRANSPORTATION SAFETY BOARD: Well, I think he took a couple of steps in that direction, but
clearly, the senators were not satisfied. He got a fairly tough grilling today. He is going to get a tougher grilling tomorrow when the House of
Representatives brings him up afore. And I would question whether he, at the end of the day, whether he is going to remain in his office.
I think clearly the elected officials were looking for accountability, and they were looking, frankly, for someone to pay a price for these two
terrible tragedies.
GIOKOS: I mean, when you say pay a price, are we talking about -- you know, someone going to jail? Are we talking about jail time here? What
are we talking about? Having their day in court? What are you seeing playing out?
GOELZ: No, I think -- I think there's a likelihood that this guy's tenure as a CEO is probably limited. He is not -- and that the Boeing Board is
watching these hearings carefully. They took him down as chairman just recently. They need to make a decision for the company for the long haul.
Just today there was some bad news about orders on the 787 Dreamliner. The idea that this plane is going to be back up and running in early January is
a stretch, I believe. Boeing is facing some fairly strenuous headwind.
GIOKOS: Look, when you get on a plane, you have complete trust and faith that everyone's done their job right. So when you look at the 737 MAX, and
taking to air again, do you think that consumers and flyers are going to want to get back onto this plane?
GOELZ: I think that's going to be a real challenge. And you know, what you look for in a company is a culture of safety, a culture of
understanding when they've made a mistake, a culture of really committing themselves to get it right. And I just don't feel as though we've seen
that yet.
And, you know, Boeing has had a long history of resisting fundamental criticisms of their aircraft, and it's understandable. They're engineers,
they think they get it right every time. Well, in this case they didn't. And then the past case, on the 737 rudder, they didn't get it right.
[15:25:08]
GIOKOS: But here's the thing, right, as well, that you've got engineers and people in the company that are experts, that what we seen through the
messaging that have been revealed that they actively tried to keep this out of the public eye.
GOELZ: That's correct. And that's going to be, I think, the final judgment on CEO Muilenburg. He is going to pay for that kind of almost
deceit, in which they knew they had a problem when the first plane crashed. Their response was, read the manual and fly it. Except MCAS wasn't
mentioned in the manual. So pilots were really in a terrible position.
GIOKOS: Thank you very much, sir. Appreciate it. All right, so elsewhere on Capitol Hill, new developments in the Impeachment Inquiry, a White House
National Security official is testifying before house lawmakers about the infamous July 25th phone call between President Donald Trump and Ukraine's
Volodymyr Zelensky.
Now Lieutenant Colonel Alexander Vindman is expected to say he was alarmed when he heard Mr. Trump urge the Ukrainian President to investigate Joe
Biden and that he reported his concerns to his superiors. We've got Lauren Fox joining us now from Capitol Hill. This is going to be really
interesting. When you have someone of this caliber testifying, what are we expecting to hear and how is this going to play out for President Trump?
LAUREN FOX, CNN POLITICS U.S. CONGRESSIONAL REPORTER: Well, he is already a significant witness, given the fact that this is the first person that
lawmakers had heard from that was actually on that July 25th phone call between President Trump and Ukraine's President.
Now there were some fireworks behind closed doors. We're told that Adam Schiff, the Chairman of the House Intelligence Committee had to stop a
Republican line of questioning, the Democrats argued was the Republicans trying to get to the bottom of who exactly the whistleblower was and
Democrats came out of the meeting earlier today arguing that that was concerning to them.
Debbie Wasserman-Schultz, one Democrat in that room told me quote, "What the Republicans are trying to do in there very clearly in their questioning
is try to front door or backdoor Vindman into revealing who the whistleblower is," and we do know that there was a bit of a dust up, a
shouting match between Mark Meadows, a Republican and a close presidential ally, and Eric Swalwell, a Democrat on the House Intelligence Committee.
We also are learning in just the last couple of minutes, the House Rules Committee has released the text of the resolution that the House will vote
on, on Thursday that establishes the rules for the next steps in the Impeachment Inquiry. We are learning that the Republicans are getting some
more rights, they can basically request testimony or documents as part of this Impeachment Inquiry.
We should note that they have to do that with consultation from the Chairman of the committees and if there's a disagreement, the full
committee which is controlled by Democrats would have to vote.
We're also learning that that resolution makes clear that the House Intelligence Committee will produce a full report of what they have learned
as part of their Impeachment Inquiry. And of course, we're learning that this sets up the ability for these committees to release the deposition.
So those closed door meetings that have been going on for several weeks, they will release the transcripts of their interviews, of course, revealing
more details about what they've learned behind closed doors.
GIOKOS: I mean, what's shocking here as well, is that you know, you heard the Colonel saying that he had reported it, and he had flagged concerns
about that conversation. And nothing has been done in the interim, and now it's coming to the fore. That really stood out for me.
FOX: Well, that's right, and we heard similar from Fiona Hill, another top adviser who came before lawmakers on Capitol Hill behind closed doors that
she had concerns and reported them, but obviously the fact that nothing was done is why Democrats are now launching this Impeachment Inquiry.
They have more questions, and of course, there will be a few more weeks of these closed door depositions, and then at some point, they will move to
public hearings - that also was part of the resolution.
GIOKOS: Thank you very much for that update. Good to have you on the show. All right, so the Lebanese Prime Minister says he has given the
masses of protesters what they're asking for.
But he is also plunging the country into new uncertainty. We'll discuss where Lebanon goes from here after this. Stay with us.
(COMMERCIAL BREAK)
[15:30:00]
GIOKOS: Hello, I'm Eleni Giokos, there's more QUEST MEANS BUSINESS in a moment. When we'll be live in Lebanon where weeks of protests have toppled
the country's Prime Minister. And it's a buffet of bad news for food stocks. Shares of Beyond Meats and Grubhub take a beating. Before that,
the headlines for this hour.
Saad Hariri is stepping down as the Prime Minister of Lebanon. Hariri bowed out in the face of paralyzing protests and warnings of an impending
economic collapse. The three-time Prime Minister said he'd reached a dead- end in a speech just hours ago. Nobody is bigger than the country, he said.
British Prime Minister Boris Johnson has won a key vote in parliament on holding a general election before Christmas. The House of Commons in the
past few hours gave its preliminary approval on the vote second reading. But the deputy speaker refused to allow votes on lowering the voting age to
16 or allowing EU nationals living in the U.K. to cast ballots.
In Washington, Boeing's CEO Dennis Muilenburg faced tough questions during a hearing on Capitol Hill, and admitted his company had made mistakes in
the design of its 737 Max jet. His appearance comes one year after the first fatal crash involving that plane, 346 people were killed in two
separate crashes.
Millions of people in California are under a red flag warning today as powerful winds fueled wildfires across the state. In southern California,
more than 20,000 people under evacuation orders, and to the north, more than a 100 homes and buildings have been destroyed. Officials say it could
take months before the fires are completely out.
Two British tourists have been attacked by a shark at a popular snorkeling spot in Australia. The men were enjoying the water off the Whitsunday
Islands when the shark grabbed them. One of the men lost a foot. Now, both men are being treated in hospital. The area has had a number of shark
attacks in recent years, one of which killed a paddle border.
The Prime Minister of Lebanon says he can't find a way through his country's troubles, and is handing in his resignation after nearly two
weeks of anti-government protests. In a televised speech, Saad Hariri said he came to a dead-end faced with a crisis that's plunged the country into
turmoil.
[15:35:00]
(BEGIN VIDEO CLIP)
SAAD HARIRI, PRIME MINISTER, LEBANON (through translator): I call on all Lebanese people to put Lebanese interests and security of Lebanon and the
protection of the civilians of Lebanon before anything else. Regarding all my partners in the political field, our responsibility is how to protect
Lebanon and stop any province reaching Lebanon. Our responsibility is improving the country's economy and this chance should not be lost.
(END VIDEO CLIP)
GIOKOS: Right, we've got Becky Anderson in Beirut. Becky, things have escalated over the past week. I mean, just a couple of days ago, you had
the governor telling you that the country is just days away from an economic crisis or collapse. You've got the Prime Minister resigning,
you've got Hezbollah leadership warning of a possibility of civil war on the ground if the power vacuum isn't filled. What is the next step here?
BECKY ANDERSON, CNN CORRESPONDENT: Well, that is the great unanswered question at this hour. In the end, he said try as you might, he hit a road
block, there was nothing more he could do. And so in submitting his resignation in front of a portrait of his late father and former Prime
Minister, Rafic Hariri, Saad Hariri handed the protesters here who have demonstrated against his government as you rightly point out for nearly two
weeks now a victory.
But only a victory of sorts. They demanded his resignation loudly, and they got it abruptly. The Defense Minister telling me in just the last few
hours, that it was unexpected and uncoordinated. But for many here, Saad Hariri is just a symptom of what is a much deeper issue. They accuse the
entire sector and political elite of endemic state corruption that over decades has crippled this country's finances and as you rightly point out.
The Central Bank governor telling me here in an exclusive interview that without immediate action towards a political solution, Lebanon is just days
away from economic collapse. But the point is that the protesters wanted to see the end of the lot of them, and moving to sort of transitional phase
to a civilian government.
But at this hour, we are nowhere close to that becoming a reality. What Lebanon now faces is a political vacuum, which so sadly not unfamiliar in
this country, could be extremely dangerous. So in announcing his intentions to resign Saad Hariri said and I quote, "I call on all Lebanese
to ensure that Lebanon's interest and safety, the protection of civil peace and the prevention of economic deterioration prevail over everything else."
The irony is that his resignation could actually deepen this latest unrest and exacerbate this economic --
GIOKOS: Yes --
ANDERSON: Crisis. As I said at the beginning of this, there really isn't any --
GIOKOS: Yes --
ANDERSON: Real answer to this real economic and security --
GIOKOS: Yes --
ANDERSON: Crisis here in Lebanon at present.
GIOKOS: I mean, exactly. You've got the economic issue because I know banks are still currently closed, which of course brings in a whole range
of issues --
ANDERSON: Right --
GIOKOS: For the population, but at the same time, you've got the current leadership, and you're talking about sectarian politics here, they've got
to make a decision, are they going to go for election or going to put in, you know, an interim government, and this is going to happen really quickly
because protests action is probably going to continue one would expect.
ANDERSON: And don't forget, it took nine months for Saad Hariri to put this last government together. The wrangling in this sort of -- what's
known as this confessional setup, the sectarian setup when everybody wants a piece of the pie, everybody has got competing issues.
And many of these ministries have enormous amounts of money and that money is what the protesters say has just been looted effectively from this
country. It is why they want to see the end of that. So they will have a caretaker government --
GIOKOS: Yes --
ANDERSON: Here in place going forward. But, you know, this country historically has found it incredibly difficult to put governments together.
And that has been at times when the economy has been in good shape, relatively good shape compared to now, and the security situation hasn't
been as bad as it is now.
So, yes, it's a very -- it's a very difficult situation that behind me tonight, you hear the sort of soundtrack to these protests, Eleni, once
again booming music, a sense of celebration, that which we've heard now for the last 12 days. But there are not nearly as many people on the streets.
And we've seen violent scuffles in some parts of Beirut today.
Some people clearly very fed up with the fact that they can't get to work. They need to work, they can't get through some of these barricades. So,
you know, this is a real -- I mean, to use the term a crossroads is a real understatement --
GIOKOS: Yes --
ANDERSON: At this point, it is fractured, it is divisive, it is polarized, and none of that is going to be improved probably in the days, months or --
days, weeks or months ahead.
GIOKOS: Yes, Becky, great reporting, thank you very much for your insights.
[15:40:00]
So, we can take a closer look at this with our CNN's John Defterios who is in the Saudi capital Riyadh. Investment summit that opened there today has
drawn political and business leaders from around the world. And John, the reality is here that we've seen protests action occurring in various
countries within the region and Lebanon is just escalated dramatically here. What are you hearing from business leaders there?
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, Eleni, there's a common thread that runs through Lebanon, Egypt, Sudan, Algeria. And that is that
the employment creation does not keep pace with the birth rates. It's a very harsh reality. By the way, Saad Hariri is very well known here in
Saudi Arabia because his father Rafic Hariri was a construction tycoon.
But during the temporary kidnapping by the Crown Prince Mohammad Bin Salman in the name of corruption, he took back millions of square meters from the
Hariri family. He was resigning then at the end of 2017, then went into power back into office in December of 2017. I spoke to the IMF regional
director about the challenge of youth unemployment, why it is so pervasive in countries that don't have natural resources. Let's take a listen.
(BEGIN VIDEO CLIP)
JIHAD AZOUR, IMF DIRECTOR, MIDDLE EAST & CENTRAL ASIA: We are in a region where 60 percent of the population is below 30, and average unemployment
rate exceeds 25 percent. Therefore this is something that requires a strong investment in infrastructure, structural reforms and boosting the
role of the private sector in order to provide the 25 or 27 million new job opportunities in the next five to seven years. And this is where the real
challenge is.
(END VIDEO CLIP)
DEFTERIOS: Jihad Azour is one of the Lebanese Diaspora. There has been an absolute brain-drain over the last 30 years in that country, and something
that King Abdullah of Jordan had talked about in his key note address, saying we need to offer more opportunities to Jordanians, Lebanese and
other countries that have been talking about because it is like a powder keg. I would even describe it as Arab Spring two, what we've seen over the
last nine months, Eleni.
GIOKOS: Yes, and it's really interesting, I mean, it's the whole conversation between the youth dividend and of course, the youth risk if
they of course not included in economic prosperity. But let's now talk about what's happening with Saudi Aramco. I mean, this is what's been
interesting. We've been covering this sorry for a while, an IPO in the making settled November the 3rd. Is that now going to happen?
DEFTERIOS: I talked to a number of different people here at the Future Investment Initiative. One senior source within the Ministry of Energy --
you know, and this is more defined than I've seen ever before. They're suggesting that they'll spell out their intentions, November 3rd or 4th.
And that about a month later, perhaps even lists in Riyadh.
And I think they're trying to manage expectations here in Saudi Arabia because they want to have retail investors heavily involved. This kind of
the Crown Jewel of the country and to give this as an end of the year kind of bonus to Saudi investors going forward. We know the CEO of Aramco is
visiting the financial capitals trying to line up support.
But they have to be careful here, Eleni. They tried this on three different attempts. Then we had the attack on the Aramco facilities.
They've rebuilt protection, but do they need to rush the market because that window is very short. After December 15th, it would be very difficult
and may need to spill into the first quarter of 2020 according to other sources involved in the process.
GIOKOS: Yes, thank you very much for that update, John, much appreciated. OK, so still to come, the U.K.'s December election is almost certainly not
how Britain votes. Could finally settle what happens with Brexit and the pound. HSBC's head of FX Strategy lays out the scenarios. That up next.
(COMMERCIAL BREAK)
[15:45:00]
GIOKOS: Welcome back. So, British Prime Minister Boris Johnson is close to getting his wish, an election in December. These are live pictures
coming through from the House of Commons, and voting is about to get under way. They're trying to decide on whether elections are going to happen on
the 9th or the 12th of December. And of course, that is what everyone is waiting to see.
There's been quite a few developments over the last couple of days. And of course, with that brings a lot of movements in terms of what the pound has
been doing. As you can see, it's sitting at 1.2872. The U.S. dollar, you'll remember a couple of weeks ago, we actually saw the pound bouncing
quite nicely when Boris Johnson was negotiating with the EU, so much has happened since then.
And that is why we caught up with David Bloom; he's the global head of FX Strategy at HSBC. And he told me the different Brexit outcomes will cause
dramatic moves. Take a look.
(BEGIN VIDEO CLIP)
DAVID BLOOM, GLOBAL HEAD OF FX STRATEGY, HSBC: At the moment, the way sterling is trading, it has the signs, but if we leave without a deal,
sterling could fall very heavily to roughly 1.10. If we get a deal, sterling roars ahead to 1.45. If you don't know and it's a coin toss and
it's 50-50, then sterling trades at roughly 1.28, and that's where we are.
So, everyone is playing the 50-50 game at the moment. But one way or another, if we get a result, sterling will break a lot higher or a lot
lower.
GIOKOS: At the end of the day, this is inside British politics, it's also impacting the rest of the world, it's impacting what we see regionally --
BLOOM: Absolutely --
GIOKOS: It's impacting global sentiment. Are you able to quantify that for us? And how are you then looking at the winners and losers in this kind
of scenario where we know that this could possibly continue for a few months to come?
BLOOM: Well, the way -- the way I look at it is, how does it impact the euro and basically the European economy? Now, we know the German economy is
particularly weak, the European economy is weak. They don't have growth to give away. So, what we're saying is whatever hits sterling, it will hit
the euro a third as much.
Although, if we get a deal and sterling goes up, it will impact the euro again a third as much. So, imagine a scenario that we get a deal that's
gung ho and sterling goes up 9 percent, that means in our eyes, the euro will go up 3 percent, which is a third of 9, just for those of you out
there. So, then we'll get like a 3 percent well in the euro.
So, the knock-on effect are quite great, and as you say, that could give a boost to European economy. And we need a bit of a boost here in the world.
And so, everyone is hoping some kind of deal gets done.
GIOKOS: Yes, absolutely, look, we also know that, you know, the European Central Bank is very much in stimulus mode. We've seen that happening with
the Fed as well. You've got emerging markets kind of stuck in the middle. Are you feeling overly optimistic that we'll be able to find a resolution
on this?
We've also got to take the trade wars that are currently on the go, and of course, that's also spilling over into Europe as well. And we've got to
also think about how that's going to play out between the U.K. and Europe, because they're going to have their own trade issues to contend with.
BLOOM: Yes, I mean, we've got our own business going on and we don't look further than Brexit at the moment. It's a single issue that's absolutely
dominating the U.K. And I hear you on all those other things, but once we either get a resolution, then we start looking at those other things and we
might go -- we didn't realize all this was going on.
So, we've got one issue, one issue only, and we need that resolved in the U.K. The rest of it at the moment doesn't really matter that much to us.
(END VIDEO CLIP)
GIOKOS: All right. Investors seem to think shares of Beyond Meat are a bit over cooked. Why appetite for the stock is waning, that coming up
next.
(COMMERCIAL BREAK)
[15:50:00]
GIOKOS: All right. So, I've got a buffet of bad news for you. Some of Wall Street's favorite food stocks are in negative territory. Early
investors and Beyond Meat are moving on to greener pastures, selling their shares for the very first time since May's IPO. The shares are down more
than 20 percent.
Take a look at this, 23 percent basically, it's unbelievable to see this kind of drop despite solid third quarter earnings, that is, and even worse
day for the likes of delivery service Grubhub. Its shares sinking more than 40 percent on weak third quarter results. We've got Paul La Monica
following it all. I know he's tasted it all as well.
We've seen all the skits here with Richard. I mean, it's unbelievable to see Beyond Meat coming under so much pressure. And when investors had an
option to get out of the stock, this is the result. Do you think it was just immensely overbought?
PAUL LA MONICA, CNN BUSINESS REPORTER: I think it was. You had obviously the lock-up period expiring as you mentioned, so insiders were able to cash
in. And keep in mind, Beyond Meat shares are still trading at around 100, they went public a couple of months ago --
GIOKOS: Yes --
LA MONICA: Twenty five. So, four times your investment if you got in on the ground floor. That's not too bad, so, it's not a surprise that people
are rushing for the exits. Beyond Meat also -- they have a lot of competition that's going to be troublesome going forward. Yes, they're an
industry leader, but Impossible has the impossible whopper with Burger King, they're now in grocery stores in the U.S., you have Nestle, you have
Kellogg with the oddly named Incogmeato. So, this is definitely not just beyond market for the taking --
GIOKOS: Yes --
LA MONICA: There's a lot of competition.
GIOKOS: I love all these names that are coming out, right?
LA MONICA: Yes --
GIOKOS: It's pretty incredible. I mean, the question is just how big the market is going to be, and whether there's just enough appetite for
products and the stocks as well. You've got solid earnings that came through for Beyond Meat. But Grubhub disappointed, I would guess, after
the third quarter earnings were released.
LA MONICA: Yes --
GIOKOS: What does that tell us about the stock?
LA MONICA: There was little to be found in Grubhub's results that were positive. They missed on earnings, they missed on revenue, the guidance is
weak. The big issue right now, Eleni, is that there is like with Beyond Meat, so much competition. Grubhub is facing Uber as a big threat with its
Uber Eats business.
You have DoorDash and post mates to really buzzy private companies with a lot of Silicon Valley backing that are also in the business. So, everyone
is rushing to give these free -- these promotions where it's like --
[15:55:00]
GIOKOS: Yes --
LA MONICA: Free delivery and promotional discounts, and that hurts profit margins, and that's a big problem.
GIOKOS: Exactly, but how do you become more competitive? You know, what is the thing that you're going to do that's going to be completely different
to everyone else? So, what do investors want to see from the likes of Grubhub?
LA MONICA: Yes, I think Grubhub is in a bit of a bind right now because investors probably don't want them being so overly promotional to try and
gain market share.
GIOKOS: Because you created expectations as well.
LA MONICA: Right, and if you lose market share to these rivals, that's going to be a problem. But I think Grubhub, they're moving more into the
mass market if you will, with national partners like McDonald's and other big restaurant chains. But by doing that, these are the companies that
want those promotional discounts.
GIOKOS: So, in terms of the likes of Beyond Meat and all the other brands that are within the space, do you think that Beyond Meat has first mover
advantage and they'll be able to capitalize on that?
LA MONICA: I don't think they do because you look at a company like Blue Apron --
GIOKOS: Yes --
LA MONICA: They were among the leaders in the meal-kit delivery business, and then everyone woke up and said, yes, sending ingredients in a box to
time-pressed consumers that want to make a meal at home and make it easy, that sounds like a great idea. Let's do it, too, and then will do it, and
then all these other businesses got into it --
GIOKOS: And they're learning mistakes from the other guys, right?
LA MONICA: Well, there just isn't really that much of, you know, a competitive advantage for being first mover here because it's a low-buried
entry business.
GIOKOS: Thank you very much.
LA MONICA: Thank you.
GIOKOS: Great to have you on set, thank you. Right, the voting is almost over in the House of Commons. Lawmakers deciding which date Britons will
head to the polls for an early general elections. These are live pictures coming through from the House of Commons. We've got Nic Robertson outside
houses of parliament with an update. And this is going to be an important vote to decide on a date finally, right, Nic?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: It is. But look, I mean, it really seems certain now that Britain is going to the polls in
December. We're going to see over the coming days, parliament trying to clear up the rest of its business, it has to pass a budget for Northern
Ireland.
That's the sort of biggest outstanding issue, and this vote will come, we'll get the results of this vote really in the next couple of minutes.
It normally takes about 15 minutes for the voting to take place. They went out about 13 minutes ago, so, it should all be wrapped up fairly soon.
It seems, you know, for all the debate that has gone on about Brexit, that it has come to this. It has come to the fact that the country needs to
have a general election to try to move the Brexit issue forward. This is just an indication of the depth of rancor, the depth of division that's
been created, and the lack of trust that there is in parliament by all sides.
And the real spoiler line -- spoiler if you will on all of this, even the general election that appears to be coming now may not resolve the Brexit
issue. It may not return one party with a big enough majority to be able to push through the legislation and agreements that it wants to push
through, further compromise may be needed in the future.
But the hope of all the parties here is that they will improve their standing and at the very least get a better insight into what the country
wants. The question now just seems to be, will everyone vote on the 9th of December or the 12th of December?
GIOKOS: Yes --
ROBERTSON: Short days, long nights, cold times, not typically good times to get an electorate to come out and vote, Eleni --
GIOKOS: Absolutely, I totally get that, right? But you said something really interesting, you know, he is going to get an outright majority to be
able to pass something through the house. And that's going to be interesting, do you think that we might see a coalition government-scenario
playing out where you've got politicians that then will be forced to work together to find a resolution here?
ROBERTSON: It's very hard to say. The liberal Democrats won't want to go into coalition. They got punished by the electorate last time. They could
be the kingmakers in all of this. So, it's unlikely I think that we'll see a coalition government. We might get a government of national unity, but I
think a lot of machinations to go through before we get to that point. All parties are going to want to see how they perform in the election, trying
to read the tea leaves, trying to understand what the electorate is saying for them about Brexit.
It seems most likely at the moment that if there was a coalition of sorts, it would be ad hoc on an issue basis. Clearly, Boris Johnson; the Prime
Minister hopes and believes that he can come out ahead and command a majority. He has just brought ten members -- former members of the
Conservative Party back into his party today. He'd expelled 21. He's brought ten of them back into the party.
He knows he needs the numbers. He doesn't have the support of his former political allies in Northern Ireland, and that could cost him even at this
stage after the election is a majority.
GIOKOS: So, Nic, and we also know that this is going to be about campaigning as well, hitting up to early December. Thank you very much,
well, Nic, rather. All right, so we'll continue to monitor developments in London and bring you the latest. I'm Eleni Giokos in New York, we've got
"THE LEAD" with Jake Tapper starting .
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