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QUEST MEANS BUSINESS
U.S. Diplomat Revises House Testimony to Say Ukraine Aid was Linked to Announcement of Investigation; President Trump`s Chief of Staff Asked to Testify in Impeachment Inquiry; Mexico`s President Thanks President Trump for Offering Help with Deadly Attack. Aired 3-4p ET
Aired November 5, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNNI HOST: An hour before the closing bell on the question, of course, records or not. Well, obviously last night we closed at a
record and if this is anything to go by, strong rally in the afternoon. So highly likely that they`ll be a record tonight for the DOW Jones.
The market as they are and these are the reasons why. Signs of a thaw in the trade war, now that set the stock market racing to these record highs.
But Uber`s costs surge in the latest quarter, the losses of the company now topping $1 billion, the share price is being creamed.
And no recession in sight. San Francisco`s Fed chief tells CNN, an economic down turn is not around the corner. We`re live in the world`s
financial capital, New York City on Tuesday November the 5th. I`m Richard Quest, and yes, I mean business.
Good evening. New revelations tonight from what witnesses have been telling the impeachment inquiry into President Trump, and one`s revelations
that could dramatically change the nature of the investigation.
A key witness has revised his testimony. In doing so, shedding fresh light on the dealings between the Trump administration and Ukraine. The pages
that have just been revealed and released, reveal that the U.S. Ambassador to Europe, Gordon Sondland, he now says he told a top Ukrainian political
aid there was a direct quid pro quo involved.
A security aid in exchange for an investigation into the Biden family. Remember that is something that until now the president continues to deny
no quid pro quo. Meanwhile, another document shows that the U.S. Special Envoy to Ukraine, Kurt Volker, said he was surprised and troubled after he
read that transcript of the famous July phone call between Donald Trump and Ukraine`s president, Zelensky.
So lots there and major developments. But we need to remind ourselves who`s who in this cast of characters. The witnesses and their roles. So
on the left of your screen you have Kurt Volker. He`s the former U.S. Special Envoy to Ukraine.
He resigned a day after the original whistleblower report. Said he had set up the meeting as the advisor for the Ukrainian President Zelensky and Rudy
Giuliani. On the right, Gordon Sondland, the U.S. Ambassador to the European Union.
A major Republican donor and it was his text messages about the original phone call between the two have become a key part of the investigation.
Boris Sanchez is at the White House. First of all, Boris, the -- the Sondland testimony, he`s revised it. So in the original he kept saying I
don`t remember, I don`t remember.
BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Right.
QUEST: And hang on, now all of the sudden he remembers.
SANCHEZ: Yes. And it`s really a glaring admission. As you said, he effectively admits to a quid pro quo between the Trump administration and
the Ukrainian leadership, specifically the administration had been in discussion for several weeks with the Ukrainians about putting forward a
statement, a public statement that President Trump wanted made by President Zelensky of Ukrainian outlining efforts to fight corruption.
Specifically naming former Vice President Joe Biden and his son Hunter. The Ukrainians ultimately did not put out that statement because they were
encouraged by the Special Envoy Volker to not do that because as he told the Trump administration -- he testified that he told the Trump
administration that those allegations about Biden were false and the Giuliani and Trump were misguided in trying to pursue this policy.
Something that he ultimately said he was concerned about.
QUEST: Right. In that scenario and with that background. How then -- look, when the administrations key person now says it was quid pro quo, how
does the White House get out of that?
SANCHEZ: That`s going to be very difficult, Richard, because as you said for weeks now, since the beginning, before this transcript came out when we
first heard the allegations coming from this whistleblower within the administration, the president has maintained that there was no pressure put
That there was no quid pro quo. It`s something that he`s repeated over and over and over. There are indications, there is some recent reporting that
Republicans on the Senate side in Capitol Hill have considered coming out and acknowledging what is now obvious that the Trump administration
withheld this aid in order to try to gain some leverage and get Ukraine to commit to these political investigation (inaudible) White House perspective
it`s unclear how the president is going to pivot out of this, Richard.
QUEST: OK but does it matter - I mean it might disclose distributing trends of malfeasance in government but an impeachment vote is almost
certainly would go in favor and a trial would certainly not. So I`m left wondering what does it matter to a row of beans?
SANCHEZ: Well at this point it`s difficult to say because we`ve already seen some republicans suggest that the behavior that President Trump
displayed on that phone call with President Zelensky is troubling but not illegal and ultimately there is a majority of republicans in the senate.
They are not likely to convict this president unless there is some other unforeseen evidence that emerges at this point.
So it really comes down to a symbolic gesture by democrats to impeach him at this point and then it largely rests on the shoulders of the American
people in the 2020 election whether they are comfortable with the behavior that this president has displayed.
QUEST: Boris, good to have you explain it. Complicated, but important stuff. Thank you sir.
Turning to our business agenda tonight, Wall Street is applauding Donald Trump considering backing down in his trade fight with China. Now the DOW
has been lower and now it`s suddenly higher and it`s all because the prospect that China and the U.S. might delay some tariffs that were due to
come in next month.
Boeing though is leading the surge in the DOW 30. That - it is Boeing that`s pushing it up as you can see quite dramatically Boeing being the
largest component in the DOW.
The S&P is flat. The NASDAQ having a strong session. Both of the NASDAQ and the DOW are records but the S&P - well it`s pottering up and down. We
could go either way before we`re closed.
After nearly two years of battling tariffs with Beijing the president is eager in (ph) claiming a victory before this (ph) election next year.
Sources are telling us Mr. Trump is willing to lift some tariffs if it helps finalize phase one of a deal with China.
The Chinese President Xi Jinping is making a call to bring down barriers to global trade. In Shanghai he was speaking and he said all are welcome in
the Chinese market.
(BEGIN VIDEO CLIP)
XI JINPING, PRESIDENT OF CHINA (THROUGH TRANSLATOR): China will continue to expand market opening. With a population of nearly 1.4 billion, China
has the largest middle income population in the world and the Chinese market is noted for huge scale, huge potential, and unlimited prospect.
The Chinese people often say the world is a big place and I want to see more of it. So here I want to say that the Chinese market is such a big
one and all of you are welcome to come and see what it has to offer.
(END VIDEO CLIP)
QUEST: David Lynch is with us, the global economics correspondent at The Washington Post. All are welcome - roll out, roll out - come on in. It
doesn`t work like that really does it, in China?
DAVID LYNCH, GLOBAL ECONOMICS CORRESPONDENT, THE WASHINGTON POST: Well not according to the Trump administration and not according to many American
businesses that have faced quite vexing problems over the years in China.
This entire trade war began almost two years ago as you problem know with a series of complaints from the administration from President Trump that U.S.
businesses faced a host of obstacles in China, not least of which is the Chinese governments policy of forcing companies to surrender their
technology, their trade secrets in return for access to the Chinese market.
The administration wants that to stop and that was one of the core complaints in the trade war.
QUEST: The idea now - I mean it`s quite easy to lose track of how many tariffs there are against what and what threats remain but the idea that
they will delay some of the tariffs that were supposed to come in, how realistic is that now?
LYNCH: Well I think that is pretty realistic because after all we`re only talking about the tariffs that have been in place since the beginning of
September and some that are threatened to take affect in December. These rounds of tariffs are ones that many in the U.S. government and in American
business objected to because they would hit consumers particularly hard.
And so giving those up if you will isn`t much of a concession. The bigger issue is the last minute Chinese push for the U.S. to get rid of all the
tariffs that have been put in place and go back to the status quo (inaudible).
QUEST: Drawing together the politics and the business, how important is it for Donald Trump to go into next years election by say spring to summer
next year either with a deal or certainly with most of those tariffs gone?
LYNCH: Yes. I think he would very much like to have some sort of deal that he can crow about that he can taunt (ph) on the campaign trail.
I`ve been out in Iowa and Wisconsin in recent weeks and even folks who are very strong supporters of the President - I was in a very conservative
corner of Iowa for instance and the farmers there who support his confrontation with China say you know we thought this would be over with a
long time ago and we`re worried that we`re loosing markets in China permanently and that this isn`t worth the price.
QUEST: Good to see you sir. I appreciate it. Thank you for joining us tonight.
To the markets now and how they`ve traded. The DOW and the NASDAQ both hitting intra-day highs. Join me over at the super screens (ph) and you`ll
see exactly - we`re putting into perspective, this is the way the days gone, little bit of a wobble over there but Boeing came through strongly on
China and issues relating to Boeing and that sent the market higher and that`s holding the gains.
If you look at the year so far they have - the green is the DOW, blue is the S&P and red is the NASDAQ. Now the DOW is the worst performing of the
major indices so far expect for that 18%. The S&P is there but the NASDAQ just above 28% and this record setting rally that you`re seeing at the
moment, well and truly under way (ph) is in contrast to the negative news that we`ve seen throughout the course of the year.
The bull market has smashed through barriers and many of them. The bull is on a charge and it`s charging through the barriers that seem to be against
it. For example, one major barrier that one might have thought was that relating to impeachment. Think about it. Donald Trump saying impeachment
hoax is hurting our stock market.
The do nothing democrats don`t care. Now the strategist say he may say it`s hurting the stock market but the reality is the strategists say
there`s little impact so far. That could of course change. It is one of the factors out there. A much more significant factor is the other trade
tensions again related to what the administrations headlines like this, "China and the U.S. ratchet up trade war", "China tariffs may stay for a
substantial period of time".
Add in vague indications of progress and it`s those vague indications, the one or two little germs that suggest there`s progress on phase one that
pushes the market higher but take the totality and you end up with economic weakness. This is the worst year for global growth since the financial
crisis and the recent indicators show some 3% the fears may be overblown but they exist nonetheless.
Paul La Monica is with me at the moment. This rally, it`s crept up on us, we were talking about that last night, it`s crept up on us. It`s real.
It`s got earrings behind it but how fragile is it?
PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: Yes. I think it is still fragile because you have still all of these concerns.
I think right now the market is brushing off impeachment, obviously, but if for some reason more senators seem to be on board or maybe more importantly
if impeachment concerns started to make people feel that there`s a realistic chance that Trump might not win re-election in 2020 that could
possibly rattle the markets depending on who the democratic challenger is but I think right now investors are focused on the better headlines that
we`re getting regarding a U.S./China trade deal.
Earnings have been decent if not spectacular and this might be the worst of this. We might get a rebound in profits in the fourth quarter and in 2020.
The FED is helping things along with those three rate cuts and consumers are still spending.
QUEST: Last year or earlier this year the talk was that if there was a rally eventually the big one is still to fall. Do people still believe
LA MONICA: I mean I`m sorry the -
QUEST: The big - the market crash. No, not in (inaudible). There`s no crash around the corner but the viewers or some of the (inaudible) say
eventually it`s gone too far, it`s gone too high, and it is - a calamity will be great.
LA MONICA: There have been some dooms day sayers talking about how we need yet another massive shake out in the markets like 2008 but a lot of people
I talk to aren`t that concerned about that because evaluations while may be a little stretched are not unreasonably so, so we`re not looking at
companies trading at exorbitantly high prices.
The fundamentals have been good. I think there is a risk somewhat perversely people that I talk to about, what happens if we do have a trade
We`ve had so many rallies on, oh a trade deals finally going to happen so lets bid the market higher. When a deal finally happens do we get that
sell the news sort of phenomenon? It doesn`t mean stocks come crashing down but if we get an actual deal then we can`t rally anymore on
speculation about a deal coming.
QUEST: Good to see you sir.
LA MONICA: Thank you sir.
QUEST: Thank you, sir.
The president of the San Francisco Federal Reserve says policy makers are mindful of the economic slowdown. Still Mary Daly says a recession is not
around the corner. She spoke to CNN`s Poppy Harlow about economic outlook and pressure from President Trump to cut rates.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNN ANCHOR: President has called the Fed quote, "out of control, wrong, boneheads, no guts, no sense, no vision." Are you worried,
Mary, about the independence of the fed?
MARY DALY, PRESIDENT, SAN FRANCISCO FEDERAL RESERVE: No. The reason I`m not worried is because our independence has been longstanding since 1913
and the FOMC room is where we go to meet and when you cross the threshold, there`s a certain reference, and politics literally never come up, ever.
HARLOW: So you guys don`t care what the president says, insulting the Fed.
DALY: We don`t talk about it.
HARLOW: You don`t talk about it.
DALY: We never talk about it.
HARLOW: So to anyone who may be watching saying well I wonder if the Fed kept cutting rates because the president kept telling them to.
DALY: No. The answer is no. It`s unequivocal.
HARLOW: And to the president saying the Fed puts the U.S. economy on a competitive disadvantage?
DALY: Our work is to calibrate monetary policy so that we can achieve the dual mandate goals. It`s a narrow mandate. And we have one instrument and
two goals, price stability and full employment and we take that very seriously.
HARLOW: This is the longest economic expansion in American history.
DALY: Which is terrific. And look at how many people have been lifted up from it.
HARLOW: Do you think it`s got more muscle?.
DALY: I do think we have more muscle, I think we have more room to run. I think there are more people we can bring from the sidelines into the labor
market. They can get into jobs and get skills and training and experience.
HARLOW: What do you make of the manufacturing contraction? Three straight months now.
DALY: Well there two things going on there that is pushing on manufacturing, and also business investment. One is slower global growth,
I mean, I`d put that at the top of the list. And then also trade uncertainty.
HARLOW: What about the potential for Midwest recession?
DALY: It`s possible, it`s very possible. But right now if you look over the comments from the other regional Fed presidents who cover the Midwest,
they`re not seeing that kind of recession, they`re seeing a slowdown for sure. But in their written comments that you can see publicly, they`re not
calling a recession even in their area. A recession is not in my judgment, right around the corner. But we are mindful of the slowdown.
(END VIDEO CLIP)
QUEST: Mindful, slowdown, Recession. But not around the corner. Uber lost a billion dollars last quarter, it`s less than they lost the quarter
before. The stock is still going to an all-time low. Also it may just take a laser to hack into your smart speaker. We`ll shine a light on the
risks when the program returns (ph).
QUEST: Oh dear, what can the matter be? Uber stock is down do an all-time low. Down nearly 9 percent, low (ph) number, 28. -- excuse me -- 35. The
reason the company lost $1.1 billion in the third quarter -- now that was less than in Q2 and revenue growth improved. So why then if it lost less
and growth was stronger, why did it stay 8.7 percent, because it lost 8.7 percent. Clare Sebastian is with me, you know the answer to that.
CLARE SEBASTIAN, CNN CORRESPONDENT: Well, it`s a number thing, Richard. There are concerns on Wall Street that they saw a deceleration when it
comes to growth in monthly users, in growth in trips. There`s concerns and Uber Eats, because the ride sharing business, which is of course the core
of it all, that is is starting to show a bit more stability. It`s maturing, the market is becoming less competitive. But Eats is
cannibalizing that. That business lost $300 million plus in the quarter, so there`s concerns around that, given the competition.
QUEST: OK. So this isn`t -- in the IPO business, Uber is clearly a loser, a big loser. A big loser, and it doesn`t look like its recovering. What
SEBASTIAN: Well, this is just some of the companies that have been going public this year. It`s really a bit of a mixed bag. But a lot of them
lost making rich (ph) at the beginning. Beyond Meat has made a profit, But Uber, obviously made (ph) losses, Peloton also making losses, and we have
the cautionary tale here, WeWork, that really never got out of the gate; and that is really just leading to questions across the board about the
thesis of these loss-making companies coming to the public market.
QUEST: So what is the common theme about this. I mean, if you`re losing a billion here, this probably has the best chance in the sense of making a
product that people do seem to actually want to use or eat. This, wonderful, and that, is in trouble.
SEBASTIAN: A lot of these companies, what you see them trying to do is get out there and say we`re going to change the world and I think you know Uber
clearly has done that, by now they`re trying to do it again with Uber Eats and that`s leading to more concerns they`re going to have to keep spending.
Beyond Meat, a slightly different bag (ph) because they make something and sell something which is just the kind of traditional business, but they`re
also trying to change the world. They say fake meat is the future. Peloton, their tag line is transforming lives of people around the world.
But WeWork, do you remember elevate the world`s consciousness, that was the motto, and (inaudible) people to question whether a real estate company was
actually going to do that.
QUEST: Let`s have a look at beyond, because this is an interesting one. We get up to here and there will be many people who wish they had sold out
at that point. But it`s been a solid downward line ever since. Now you accept that some of this was probably too much...
SEBASTIAN: That was a bit of hype.
QUEST: A bit of hype.
SEBASTIAN: But around here thereabouts, we have a profit for the company. But then of course we have the end of the lock-up period and that explains
some of the volatility that we see in Uber today. The lock-up (inaudible) expires tomorrow. Millions of shares are going to appear on the market and
Beyond loss 20 percent after the lock-off expired..
QUEST: So it`s difficult to understand the underlying trading.
QUEST: What about Peloton?
SEBASTIAN: Peloton, here we go. Also now trading below its IPO price, which was $29. They reported a loss today. But the thing that`s really
giving Wall Street the jitters on this is that the CEO came out and said look if we were to stop growing, we would be striking distance a profit.
We are choosing not to do that. And I think what we`re seeing Richard, now on Wall Street is that there is less and less appetite for that whether or
not it`s the WeWork cautionary tale or the macro headwinds, it`s a little unclear.
QUEST: Back to the class photo. Of these four, which ones stand the best chance, does the market believe? Think about it. I took an Uber back from
the airport today. I could easily have a Beyond Meat sandwich, there`s plenty of them today. That`s a little beyond me. I won`t sit in a WeWork
office. One is left thinking it`s these two, that stand the most chance.
SEBASTIAN: Here the theme is competition, they both have first mover advantage. But Uber, of course, facing a lot of competition from the likes
of Lyft, although they are still the biggest business and Beyond Meat is at serious risk from the competition, coming from the likes of Tyson, Nestle,
Kellogg, Big Food. But Uber, they say, profitable by full year 2020 and analysts are saying it`s achievable.
QUEST: Good to see you, thank you for our IPO update. Turn to oil and OPEC says demand growth for oil is significantly slowing. The energy group
has issued a downward revision of its outlook, of over 110 million barrels a day by 2040.
And it`s citing a challenging year for energy markets, what they describe as signs of stress in the world`s economy. CNN`s John Defterios spoke to
the OPEC Secretary General.
(BEGIN VIDEO TAPE)
MOHAMMED BARKINDO; SECRETARY GENERAL, OPEC: The kingdom of Saudi Arabia has reiterated times without number. It`s continued commitment not only to
OPEC but in providing the leadership to this organization and we have also had from the highest levels of government in the kingdom that the IPO will
not in any way impact on their membership or the leadership role that they provide within OPEC>
JOHN DEFTERIOS, CNN CORRESPONDENT: The world oil outlook that you put out here still shows market share for oil and gas by 2040 at 53 percent, just
dropping 1 percent. What makes you believe in an energy transition you can hold on to that level of market share?
BARKINDO: These are the facts, these are the hard data that go into these projections and we are not alone in these projections. If you look at the
IA (ph) in Paris or the EAA (ph) in Washington and other reputable institutions; oil and gas will continue to dominate the energy mix into
DEFTERIOS: In this scenario, at the end of the day you`re suggesting thought that OPEC goes total liquids with crude production from 36 million
barrels a day now, to 44 million barrels a day by 2040. It`s not the shale producers that went out but the OPEC producers who have a lower base.
BARKINDO: OPEC will continue to serve as the base load for global energy requirements. The shale producers, in particular in the United States, have
done extremely well in the last several years to revolutionarize this industry.
And we are beginning to deceleration as we go into the median term. I think it`s a growing consensus that going beyond the median term, the world
will revert back to the conventional oil. The producers mainly in OPEC will account for over 80 percent of global proven reserves.
DEFTERIOS: You say there`s planet B (ph), i.e., there`s no plan B for the world itself and the environment. How do you get away from the fact that
most people think that`s jargon from the Secretary General and not the real deal?
BARKINDO: All members of OPEC are developing countries. We live the impact of climate change on daily basis in our countries. And therefore, there
are no climate deniers here in OPEC. Internationally we have also engaged with the international community in the Paris agreement to jointly combat
(END VIDEO TAPE)
QUEST: When we come back, you know what they say, if you want to know what life is like, walk a mile in somebody else`s shoes. In this case, the
shoes belong to this man. The CEO of Croc will be joining me after the break on collaboration and tariffs. Come over here good sir, after the
QUEST: Hello, I`m Richard Quest, a lot more QUEST MEANS BUSINESS in just a moment. India`s Tourism Minister tells me how rising smog levels are
affecting the country`s tourism industry. And Senegal`s favorite son Akon is launching his own cryptocurrency, telling U.S. how he hopes it would
change Africa`s economy.
As we continue, this is CNN, and on this network, the facts always come first. U.S. House Democrats have released more key testimony from the
closed-door depositions. This time, Kurt Volker; the former U.S. special envoy for Ukraine and Ambassador Gordon Sondland, the U.S. Ambassador to
the European Union.
Sondland has now amended his testimony and says he did tell Ukrainian aide that the release of U.S. aid was conditioned on Ukraine publicly announcing
an investigation, but could help Donald Trump politically. White House impeachment investigators want to hear from the acting White House Chief of
Staff Mick Mulvaney.
They`ve asked him to testify on Capitol Hill on Friday. It appears unlikely that he will comply. Mulvaney and the White House already have
refused to turn over documents even though there was a subpoena from the Democrats.
Mexico`s president says it`s his country`s responsibility to deal with the horrific attack on an American family. He thanked Donald Trump for
offering U.S. help. Nine family members, including six children were killed on Monday on the Mexican side of the U.S. border. Authorities
believe criminal groups ambushed, shot and burned the victims.
The British parliament closes today ahead of a general election on December the 12th. In a major speech, the Labor Party leader Jeremy Corbyn has been
setting out his Brexit policy, saying he would secure a new Brexit deal and hold a referendum on it within six months of being elected.
A senior Turkish official tells CNN that the sister of Abu Bakr al-Baghdadi has been captured in northern Syria. She was detained along with her
husband and daughter-in-law. All three are being questioned by Turkish authorities in what the country says could be an intelligence gold mine.
The Dow is giving back many of the gains that it had earlier. We were up over 100, but it`s now slipping back. Now, remember, as long as that stays
green, and that stays green, they are records because we close outside of the record. The S&P is down 2.7 points, so it`s unlikely to. But what is
propelling the market forward? That`s the key question.
Well, sources are telling CNN the White House is considering lifting some tariffs on China if it helps secure the first part of a trade deal, a quid
pro quo of a different type. The clog company Crocs is taking a stand against the U.S.-China trade war. It`s joined more than 200 footwear firms
including Adidas and Nike in asking President Trump to cancel tariffs affecting shoe imports.
Joining me is the CEO. Good to see you --
ANDREW REES, PRESIDENT & CHIEF EXECUTIVE OFFICER, CROCS: Thank you, Richard --
QUEST: Sir. The idea that you`re going to move production, you`re moving production from China or the production for shoes for the United States
from China elsewhere.
REES: So, we already had a very diversified sourcing base. As we look at our sourcing base, we`re in China, we`re in Vietnam, we`re in Mexico, we`re
in a wide variety of countries. But as we looked at this, you know, tariff war, we proactively moved some additional production out of China. So, as
we look at next year, only 10 percent of our U.S. imports were actually manufactured in China.
QUEST: Right, how easy was it for you to make that shift?
REES: It was relatively easy because we`ve been planning it for some time. This is not all our response to the tariff situation going on. The
diversification of our sourcing made total sense and it was something we were considering for some period of time.
QUEST: We`ll talk about the product in one second there, but there`s no question the worsening trade relations, the tariffs does take a toll on
REES: We haven`t seen much of an impact because we`ve been managing this.
QUEST: I know, but that`s the thing, you`re managing it.
REES: Absolutely, we`re managing this. We haven`t seen a lot of impact today. You know, but frankly, I think it`ll be better for both parties if
they would come to a sensible agreement.
QUEST: Right, the demand for your product and the way in which you`ve had to shift, attracting different -- making them cool, millennials --
REES: Yes --
QUEST: Even younger than millennials actually, how difficult has that been?
REES: It`s been difficult, so the brand has been on a five-year transition, there`s been a major turn-around, but we`re seeing real
traction on that turnaround. We just announced our third quarter of earnings last week and we grew at 20 percent in the third quarter. And we
also indicated that we`ll grow significantly in the future.
The trick of that has been attracting new customers -- we`ve attracted a lot of new customers through collaborations. Collaborating with
celebrities and singers like Post Malone, Luke Combs. But also other brands, Balenciaga and Vera Bradley are good examples.
So, an incredible variety of brands that we`ve collaborated with to build incredible products that appeals to our core customers --
QUEST: What -- who is your core customer?
REES: That`s a great question. So --
QUEST: Who is it? Is it somebody my age?
REES: There are a lot of people your age --
QUEST: Careful --
REES: Who are our core customer.
REES: Well, I hope --
QUEST: I know, it`s just about how you would describe being my age, but then probably not a million miles of yourself.
REES: Not at all, I`m sure.
REES: But we also have a lot of younger customers. If we look at a lot of the growth we`ve seen in the business, it`s been with teens. So, just
recently there was a major study published that listed the top teen brands and Crocs is the number seven footwear brand for teens in this country.
That`s up from 13 last year in 2017, two years ago. So incredible progress with that younger consumer. The younger consumer is really important to
us, because it influences a lot of people. They influence their brothers and sisters, they influence their parents, they influence a ton of people.
QUEST: But you`ve got to sort of create -- listen to this interesting point you make. You`ve got to create almost a virtuous circle, don`t you -
- a cycle.
QUEST: You want the celebrities to make them cool, so the youngsters or the millennials or whatever buy it because the celebrities -- although why
anybody buys a pair of shoes because celebrities wore them have yet to fully understand, but --
REES: But they do.
QUEST: But they do, and that`s what you really care about, isn`t it?
REES: One of the things I care about.
QUEST: Right. So, once they`ve built -- so once, the celebrities worn, the youngsters bought, you then hope it infiltrates further along.
REES: That`s a good part of it. There`s another very important thing here, you see the story-telling on these shoes, right? So, these are called
QUEST: They`re called?
REES: Gibbets Charms, so gibbets. They go in the holes in the shoes, what this allows the consumer to do is tell a story on their shoes, completely
personalize this purchase, it`s a little tricky to get them out, but I`m sure you can manage.
They allow the consumer to tell a story.
QUEST: Right --
REES: And so by -- this is an incredible personalization opportunity. So, personalization is a global megatrend. Every young person around the world
would like to -- would like some help? Would like to be able to make this purchase. A purchase that`s for them.
QUEST: Right, but is it going to be -- I mean, obviously you buy the shoe, but can you see -- I mean, do you see an ancillary market in selling the --
REES: We absolutely do.
QUEST: And like the gamers, like the online gamers where the gaming is free --
REES: Right --
QUEST: But you buy all the --
REES: Annuity --
QUEST: There`s annuity. Would you --
REES: Yes --
QUEST: I mean, I can`t see you ever giving away the Crocs.
REES: I don`t think we`ll ever give away the Crocs, because they have a lot more value than that to us and to our consumers. But obviously, this
is a significant incremental purchase. Each one of these is $4.
REES: That`s a great deal, to be able to tell a story that only you --
QUEST: Four dollars?
REES: Can tell.
QUEST: So, this has got 4, 8, 12 --
REES: Thirteen, 13 holes in each shoe.
QUEST: And $4 for that, extraordinary.
REES: Well, if you buy multiple, we`ll give you a deal, but --
QUEST: Excellent -- no, but just show me. There`s a fascinating part about this is the way you have to think differently.
REES: Yes --
QUEST: The way you have to, you know -- and you`re battling headwinds from trade talks.
REES: Correct --
QUEST: And your new market, and you`ve got to think differently.
REES: Yes, we`re a global company, right? So, 60 percent of our business is outside the United States. In Europe, in Asia, so we`re selling this
product all over the world and this trend of personalizing your shoes and telling a story on your shoes is a global trend. And we`re the only shoe
company in the world that does that.
QUEST: You won`t be the only one for long.
REES: Well, we`re hopeful it`s -- a lot of this is trademarked and protected. So, we`ll protect it as long as we can.
REES: Appreciate it --
QUEST: Thank you very much, sir.
REES: Thank you.
QUEST: Could you give me that back? Thank you very much, $4 each, right. Toxic smog is creating dangerous conditions in India. The process are a
risk to the tourism ministry. The tourism minister tells me the government has a plan to boost visiting numbers. We`ll talk about that after the
break. Now, these gibbets, it doesn`t seem like the end of the line.
QUEST: India`s top court says local authorities in New Delhi have violated citizens right to life by failing to limit pollution. Now, officials have
declared a public health emergency. Earlier today, the air quality in New Delhi was upgraded from severe to very poor. In Agra, authorities have
deployed air purifiers to try to preserve the Taj Mahal; it`s one of the seven wonders of the world and the pollution has been turning it yellow.
The smog is yet another blow to India`s critical tourism sector. Earlier in the year, Jet Airways ran out of cash and stopped flying. Speaking to
me at the World Travel Market in London, India`s Tourism Minister said the government has a plan to reach its tourism potential.
(BEGIN VIDEO CLIP)
YOGENDRA TRIPATHI, TOURISM SECRETARY, INDIA: We are not happy or satisfied with the numbers we have.
QUEST: Yes --
TRIPATHI: Though these numbers are a great improvement over the last five years or six years, the potential is high, and therefore you would see that
the government is adopting new strategies to insure that more foreign tourists visit India have the intention and experience that.
QUEST: And if you look at the Jet Airways went bankrupt, that was a loss. But you have so many -- I mean, IndiGo, you have Spice, you have Vistara.
The aviation market is absolutely thriving in some ways, but not in others.
TRIPATHI: Aviation market in India has been on a real growth trajectory. If you look at the number of passengers which has been increasing, has been
more than double digit, more than 20 percent, 30 percent, something we`ve seen for the last three, four years. I accept that Jet Airway going was a
QUEST: It was a shock.
TRIPATHI: It was a setback, I won`t call it a shock. Businesses happen, sometimes succeed, sometimes fail.
But Jet Airways definitely was a setback. But can I say, I understand that most of the Jet Airways, planes which were on work visas from places have
already been taken over by various other private airlines in the country. The IndiGo, the SpiceJet and others. And the market is thriving.
And I would say that even in the -- all the global economic slowdown scenario, and there`s still timing economically, and will continue to
thrive, and that would help the process of better tourism, increase tourism.
TRIPATHI: All right.
(END VIDEO CLIP)
QUEST: Now, the Annual Web Summit is under way in Lisbon where the singer Akon is pitching his new cryptocurrency. What he hopes is a Akoin will
bring to Africa in just a moment.
QUEST: Yes, forget super computers. This may be all you need to hack into someone`s e-mail, make online purchases or unlock their car. Researchers
say a flaw in smart speakers like this makes them react to the light in the same way they react to sound. So, if an attacker wanted to mess with your
tech, they would code their command in intensity in a light beam, maybe not as a little more sophisticated than I`m doing over here.
You then shine the light at the speaker and the speaker would vibrate like the spoken command. All of which is a terrifying thought, luckily, Anna
Stewart has been looking into exactly what it means.
ANNA STEWART, CNN BUSINESS REPORTER: Richard, it`s malevolent worthy of Dr. Evil himself. Researchers have found that an encoded laser beam can
trick voice-activated smart devices like Amazon`s Alexa, Apple`s Siri and Google`s Assistant. And the laser beam can be up to 110 meters away.
Great and funny you might think for Nepad(ph) pranks, you can you mess with someone`s music, a thermostat and genuinely cause a little bit of chaos.
Of course, it`s less fun if you consider the potential for malicious hacking here, given voice commands, can be used to open a garage door,
unlock a car, shop on Amazon.
Google says the company is reviewing this research, Apple and Amazon haven`t yet commented. However, before you go and banish your smart
devices from your home, this kind of hack isn`t all that easy. Firstly, the hacker needs direct line of sight of the actual device, secondly, some
gadgets already require additional authentication, a code, a fingerprint, facial recognition.
So, actually the laser beam by itself wouldn`t work. And to pull off this hack, you don`t just need a laser pointer, but also around $400 worth of
additional high-tech equipment and you need to know how to use it. If you`re still worried, though, simply move Alexa, Siri or Google, so you
can`t see it through your window or through your letter box. Richard?
QUEST: Now there`s a thought, through the letter box. Cybersecurity is a hot topic at the Annual Web Summit in Lisbon. The tech giants are gathered
to discuss their industry`s future. And a former NSA contractor Edward Eric Snowden -- Edward Snowden has warned via a video link that Facebook,
Google and Amazon are complicit in government spying, accusing them of a Faustian bargain to exploit and to pass on personal data. Hadas Gold is at
the summit in Lisbon and joins me now.
Hadas, what was the warning about when we talk -- specifically as relating to Facebook and Google, et cetera?
HADAS GOLD, CNN CORRESPONDENT: Well, Eric -- Snowden was warning them the most powerful institutions are not being held accountable whatsoever. And
he said while he believes the general public is catching on to some of what he warned about from his 2013 links, he actually said that he doesn`t
believe that they are getting mad at the -- they`re getting -- he said they`re getting mad at the right people but for the wrong reasons.
And interestingly, he actually bashed a little bit. Some of the new efforts we`ve seen in recent years about data protection like GDPR, he
called it actually a paper tiger. He said that the issue is not data protection, it`s actually data collection and how people are being
exploited, not their data.
It`s actually people themselves being exploited, not their data. But for him, the way to fix it is more encryption and honestly, he thinks that we
need to completely redesign the way we connect to each other. He said, you pretty much cannot trust anybody, any company because they`re all in it for
their own private -- usually profit interests and not for the public interests, Richard.
QUEST: No, it`s a valid point, except for the fact that most -- many of us work for companies that make their profits and pay our wages from doing
stuff any way. So -- but look, talking of cryptocurrencies, Facebook is not having much luck with Libra, but Akon believes that Akoin will be
better. How is this a cryptocurrency?
GOLD: Yes, really interesting. Akon is better known as a singer, but he is launching an Akoin cryptocurrency, he says specifically for Africa. He
says he hopes to launch it in the first few months of 2020. And he hopes it will help especially the youth of Africa get over some of the issues
that they might have on the continent in trying to launch new businesses. Take a listen to some of what he had to say.
(BEGIN VIDEO CLIP)
ALIAUNE DAMALA BADARA AKON THIAM, SENEGALESE-AMERICAN SINGER: Well, the platform is built to be a worldwide platform. But I`m targeting Africa
specifically because that`s where the need is necessary the most. But then of course as you go, the neighboring countries in worldwide most likely in
the future, they will adapt to it if not currently.
GOLD: You`ve had some success in more traditional development issues like bringing electricity to people. Why go the cryptocurrency route for your
THIAM: One of our biggest issues and biggest problems has always been corruption. You know, the corruption is the reason why the country has
never been built -- I mean, grown and then built to become a super power. So, we want to be able to kill that corruption just through the blockchain
itself, and I think starting with currency is the biggest thing.
If you follow the money, you`ll always follow the truth. And at the bottom-line, you know, follow the money, fix the situations, follow new
solutions, and then from there, the future can be built in Africa.
GOLD: And what do you hope that Africans will be able to gain from using this cryptocurrency?
THIAM: Well, the main thing they`ll be able to gain is, you know, independence. And I think being in a position to make your own decision
financially is the key. Because a lot of the things that`s in Africa is not controlled by Africans, and I think this will give Africa back its hold
on not only their resources, but also just their ideas and being able to live in a more better way to where they can utilize the continent to their
most -- to their own benefit.
(END VIDEO CLIP)
QUEST: Excellent idea and plan there, using it as against corruption, using it in favor of transparency, all of the things. But why will his
currency not fall foul of the same problems of Facebook`s where regulators will say hang on, this could become too powerful?
GOLD: Yes, that`s a very good question and something that he doesn`t necessarily have the answers to, yet. But what I found actually most
interesting about his proposed cryptocurrency is that it`s not actually tied to a stable currency like we`ve seen other cryptocurrencies, it`s
actually tied to cell phone minutes which are incredibly important in Africa.
He said that people in Africa trust cell phone minutes and the cell phone companies more than their local currencies.
QUEST: Hadas, thank you, enjoy the summit, thank you very much. Now, to the markets in the last few moments of trade on Wall Street. Well,
assuming nothing goes wrong in the last minute which is highly last five minutes or so, we will have a record on the Dow, Boeing has pushed that
market up, it`s given back some of its gains, but it`s -- Boeing is largely responsible.
This is probably unlikely to finish at a record. It takes a lot more, the S&P is a lot less susceptible to automated markets and movements like that.
And the Nasdaq also probably will aim at a record. The reason of course, is trade, and the prospect and possibility that tariffs may be reduced or
at least not increased, so that you can get a deal on phase one of the existing arrangement. That`s the promise. We will have our profitable
moment after the break.
QUEST: Tonight`s profitable moment, we had a very good example of real- life economics and business, and how global politics all come together as - - in tonight`s show. The CEO of Crocs was with us, and made the point how they have moved their business for those shares -- for those shoes that are
sold in the United States.
They have moved it from China to other places like Vietnam and the like. For example, this pair, which is made in Vietnam. And then of course we
talk about how we don`t necessarily think about tariffs on a daily basis. You and I, when we go out there don`t think, oh, that might be tariffed,
these shoes have a tariff.
But for businesses, they do. And the CEO again of Crocs was absolutely open about telling us the difficulty they have. First of all, on what to
put in the product, too much fur and you end up paying a higher tariff. If you manufacture in the wrong place, and you end up paying a lower tariff or
no tariff at all.
These are real live issues facing CEOs on a daily basis. And it brings home why tonight, the market will probably end at an all-time high. As the
threat of tariffs recedes, so the market rises even higher. But we`re not out of the woods yet, and when you think of the amount of jobs that rely on
something like this, you realize just how difficult it`s all become.
And that`s QUEST MEANS BUSINESS for tonight, I am Richard Quest back in New York. Whatever you`re up to in the hours ahead, I hope it is profitable.
Yes, record on the Dow.