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Quest Means Business
Brazilian Traders Cautious Amid Impeachment Vote; Brazil's Senate Convenes for Impeachment Vote; Trump: My Tax Returns Stay Private; Senators Call for Airlines to Drop Bag Fees; Allegiant: Our Customers Demand Low Fare; Allegiant is an "Ultra-Low-Cost" Carrier; Bricker: We Only Fly When People Want. Aired 4-5p ET
Aired May 11, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
MAGGIE LAKE, HOST: Deep in the red as trading comes to a close on Wall Street. It's Wednesday May 11th. At this hour, Dilma Rousseff's political
future hangs in the balance. Brazilian lawmakers prepare to vote on whether to impeach her.
(BEGIN VIDEO CLIP)
LAKE: It was the scandal that nearly ruined Volkswagen, but VW says the people at the top were not to blame.
And Donald Trump breaks decades of precedent, he says his tax returns will stay under wraps. I'm Maggie Lake. This is "Quest Means Business."
(END VIDEO CLIP)
LAKE: Good evening. We are a matter of hours away from a decision that could remove Dilma Rousseff from office in Brazil. 81 senators will vote on
whether to begin impeachment proceedings against the president. Miss Rousseff is accused of breaking budget laws by hiding government deficits
in the run up to the 2014 election.
(BEGIN VIDEO CLIP)
LAKE: Anti-Rousseff protesters took to the streets in Sao Paulo Wednesday a day after her supporters staged their own demonstrations across the
country. The political turmoil comes with less than three months to go until the real Olympics. Sasha Darlington is live in Brasilia for us this
evening.
(END VIDEO CLIP)
LAKE: And Shasta, this has been going on all day, what are we hearing from the senators?
SHASTA DARLINGTON, CNN CORRESPONDENT: That's right, Maggie. Things got a slow start to begin with because the city is in a bit of a lockdown, so it
was hard for the senators to get here, they stated late and they were given 15 minutes each. Well they've been taking plus that. So while the vote was
originally set to take place this night, it looks like now it's going into the wee hours of tomorrow.
(BEGIN VIDEO CLIP)
DARLINGTON: We've heard a lot of senators expressing their support for an impeachment trial and a few against it. But I have to say, despite all of
this back and forth, and we've seen months of this, at this point it's come so far that it really is hard to find anyone who doubts that this is the
beginning of the end.
LAKE: Shasta it appears --
DARLINGTON: The popular Brazilian President, the first female to hold that office. Now facing possible impeachment. Rousseff grew up in an upper
middle class family from southeastern Brazil. Following a coup in 1964, a teenaged Rousseff joined the resistance movement against the military
dictatorship. In 1970, she was arrested by government forces, jailed and tortured by her captors.
When the charismatic leader of the Workers Party Luiz Inacio Lula da Silva was elected in 2003, Rousseff was appointed Minister of Mines and Energy
and was chair of state-run oil company, Petrobras. In his second term, Luiz da Silva groomed her to be his successor.
In 2010, Rousseff won the Presidential election with 56% of the vote. Her approval ratings soared to nearly 80% by 2013.
But a year later with the economy taking and Petrobras in the midst of a giant corruption scandal, she just barely won re-election. In the meantime
dozens of politicians in her party and coalition were charged for bribes and money laundering amount to billions of dollars.
Lula da Silva was called in for questioning. Rousseff wasn't implicated in the probe, but millions have taken to the streets demanding that she step
down protesting institutional corruption and economic woes.
Now she's likely to face an impeachment trial for allegedly manipulating the federal budget to hide a shortfall ahead of 2014 elections.
In an exclusive interview, CNN's Christiane Amanpour asked Rousseff if she thinks she'll survive.
DILMA ROUSSEFF, BRAZILIAN PRESIDENT: (As translated) I wish to tell you one thing, more than just thinking that I will survive, I will fight to
survive. Not just for my term in office But I will fight because what I'm advocating and defending is a Democratic principle that governs political
place in Brazil.
Who filed the impeachment process against me? All of them are being charged with political process especially speaker of the house. My life was
turned upside down. They looked everywhere to find something against me, and there's no corruption charge at all against me.
DARLINGTON: But in the meantime her vice president, Michel Temer is already waiting in the wings ready to take over as soon as the senate approves the
impeachment motion.
So this looks so inevitable at this point that Dilma Rousseff as actually already started moving her belongings out of the Presidential palace.
She's setting up a bunker in the presidential residence which she'll get to keep during her defense in the impeachment trial. And we expect that she
could be stepping down, suspended temporarily as early as tomorrow, and Vice President stepping in, Maggie.
[16:05:02]
LAKE: Shasta, so she's stepping down but she's not going to stop fighting Rousseff. Rousseff all along has said that she's basically being thrown out
of office because she's unpopular which she says is no grounds for impeachment and a threat to Brazil's democracy?
DARLINGTON: That's right, Maggie. And that's why she wants to set up this bunker in the presidential residence where she'll have a lot of her
supporters helping her fight the accusations in this impeachment trial.
Of course she's not accused of corruption which so many politicians are these days in Brazil but of breaking budget laws so it really hides the
sorry state of the economy ahead of the election. She's going to fight those accusations, and we're likely to see a lot street protests and
possibly even strikes with the labor unions that back her and the worker's party sort of getting out there and trying to get their message out that
they are not going to let the next government 00 governing piece, they want their voices heard, Maggie.
(END VIDEO CLIP)
LAKE: That's Shasta Darlington live for us from Brasilia tonight. Shasta, thanks so much, a long night ahead for everyone there.
Now the impeachment crisis is just one of a series of major challenges hitting Brazil at the same time. Many of Rousseff's allies as Shasta
mentioned are facing corruption charges related to a scandal at Petrobras the state-run oil company. Rousseff was chairwoman at Petrobras before
becoming president.
There was also the matter of an economy in recession. GDP is shrinking for the second straight year and unemployment has climbed to nearly 10%.
Finally Brazil's medical services are being stretched as they try to contain the Zika virus. Brian Winter is the V.P. Of Council of America. He
joins us here.
Brian Winter is the VP of the American Society and Business Organization, the Council of Americas. He joins us know. Brian thanks so much for being
here. This is a very trying time for this country. People watching the impeachment process has said this is a threat, a test, to Brazil's
democracy. Is that overstating it?
BRIAN WINTERS, VP AMERICAN SOCIETY AND BUSINESS ORGANIZATION: Well, I think the democracy has performed pretty well so far. I mean the institutions
have remained in place, you've seen some pretty unpredictable stuff like this week when it looked briefly like the impeachment was off, then now
it's back on again, and it's been kind of crazy.
(BEGIN VIDEO CLIP)
WINTERS: But more or less things have been working the way that they're supposed to. You know President Rousseff has said this is a coo that's
being led against her. It's not a coo. Impeachment is (inaudible) under Brazil's constitution.
Now you can argue the merits of the impeachment, maybe it's a bad impeachment but it's not a coup and democracy is working more or less like
it's supposed to.
LAKE: And she will presumably have a chance to make that case now that the impeachment proceedings move ahead.
The markets seem to have a belief that somehow this is better that with Rousseff out, things will improve. Is that based in reality?
WINTERS: It is based in reality.
(END VIDEO CLIP)
WINTERS: I mean the guy who will replace President Rousseff is her Vice President, Michel Temer. Now they were running mates back in 2014 but they
think very differently about how the economy should work.
A Temer government would be less apt to interfere in certain aspects or the private sector of business, compared to Rousseff. He may try to even do a
tax reform. The World Bank says that Brazil has by far the world's most complicated tax code. It takes you an average --
LAKE: Which is saying something.
WINTERS: Well, it takes your average business 2,600 hours a year in order just to calculate what they owe. That's three times worse than the second
place -- or the second worst country. So he may try to tackle some of those things.
LAKE: Can he get it through though because there are some polls that we've seen that say 62% of Brazilians may want her out, but 58& want him out too.
Can he push through those kinds of reforms especially with a population that's very fed up with the economy right now?
WINTERS: That's the question. And I have my doubts. I think that there's some wishful thinking on Wall Street and in other places about exactly the
kind of political support that he is going to get. They did a poll where they asked Brazilians who they would vote for if presidential elections
were tomorrow, only 2% said they would vote for Michel Temer. Now, he's going to have an opportunity to generate some support but to think that
he's going to be able to do these big dramatic pro-business things that will be political unpopular in the short term, I think we're going to have
to wait and see.
LAKE: Does Brazil have the resources in place to try to fix the economy, if they can move past this political crisis? I mean, there's a lot of
attention about the fact that maybe they didn't diversify enough away from natural resources. A lot of countries find themselves bogged down by a
global economy that, frankly, they have no control over. Can Brazil right the ship if they can move past this political crisis? Do they have the
tools?
WINTERS: Yes, absolutely. I mean there is nothing fundamentally flawed or broken about Brazil.
(BEGIN VIDEO CLIP)
LAKE: Which is a very important distinction.
WINTERS: I think so I mean this is a country don't forget - this is a country that as recently as five years ago, everybody thought the sky was
the limit. Everybody thought was going to continue to grow 5% a year into eternity. Well things weren't that good then, and things maybe aren't that
bad now.
I mean look, things are pretty bad. I don't want to try to sugarcoat it.
(END VIDEO CLIP)
[16:10:03]
WINTERS: But it's a place that still has a demographic bonus that has this incredibly entrepreneurial culture. I lived there for five years. I mean
people just have innovation in their bones. It's a question of the politicians both stepping out of the way on some things and also stepping
up in order to do some of these reforms to unlock that potential.
LAKE: And putting that era of corruption which we can see the toll it's taking all around behind them. Brian, thank you so much for coming in,
lovely to see you in person.
WINTERS: Thank you.
LAKE: Now Chinese and British officials are playing down comments made by Queen Elizabeth in a rare unguarded moment. She was overheard saying
Chinese officials had been very rude during a visit to Britain last year. The Queen was speaking to the police commander in charge.
(BEGIN VIDEO CLIP)
LAKE: Steven Tsang is Professor of Contemporary Chinese Studies at the University of Nottingham in England, and he joins us now via Skype.
Steven, thank you for being with us. A lot of people were quite shocked at hearing that moment. How damaging do you think this will be to relations
between the two countries?
STEVEN TSANG, PROFESSOR OF CONTEMPORARY CHINESE STUDIES, UNIVERSITY OF NOTTINGHAM: I don't think it's going to be terribly damaging, not least
because neither governments want to damage the relationship. And the passing remarks that the Queen made was not directed towards President Xi
Jinping, so I don't think the damage will be very big.
LAKE: This was the first state visit by the Chinese leader. Do you think that this was just a one-off gaffe from the Queen and her staff? Or do you
think that it's a sign that these countries have much to learn about each other?
TSANG: Well, I think what it affects is the way how a lot of Chinese officials and diplomats, how they manage relationship with countries. It's
not the first time when Chinese officials have made very excessive demands on their hosts. What is surprising is the unguarded movement when the Queen
makes a passing remark which was then reported. But what happens is fairly normal.
LAKE: How will this type of event play at home? I mean, we're all quite surprised to see it, and realize, I'm sure, it's embarrassing for the
palace. But how well will this play back at home? Will Chinese people even hear about it or know about it? Will it play in the media there and what
would the reaction be?
TSANG: Well, it will not be allowed to be played on Chinese television. I think the BBC World's report on the issue already was been immediately
blanked out. And people in China do hear about it, I can see that the Chinese government may well (inaudible) good for them - good for the
Chinese officials who stood up against those old imperialist who can't really suffocate China any longer.
LAKE: There is always spin and perhaps at this moment a learning opportunity for everyone involved. Steven, thank you for joining us today.
Steven Tsang for us.
(END VIDEO CLIP)
LAKE: Well Saudi Aramco gets ready for its close-up, the world's biggest oil company prepares to go public.
(BEGIN VIDEO CLIP)
LAKE: We take a rare look behind the scenes.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:16:00]
LAKE: Volkswagen says none of its current or former executives did anything seriously wrong in the emissions scandal that nearly ruined the company.
(BEGIN VIDEO CLIP)
LAKE: An internal review is clearing the VW board for the time being. CNN's Money Paul La Monica is here. Paul, I think there are going to be some
people that look at this with some skepticism and say really? Nobody at a senior level had any idea this was going on?
(END VIDEO CLIP)
PAUL LA MONICA, CNN MONEY CORRESPONDENT: Yes. I think when we've seen so many corporate scandals over the past couple of years, usually there is
somebody at the upper levels management that had an idea of what was going on.
(BEGIN VIDEO CLIP)
LA MONICA: And it does seem difficult to chock this up to just a couple of rogue engineers.
So I don't think that this scandal is over by any stretch of the imagination. Obviously, we've already seen some executives being forced out
at Volkswagen as a result. But they haven't brought in outsiders, they've just promoted the head of Porsche to the top and there are concerns about
what he might have known.
(END VIDEO CLIP)
LAKE: And I think this issue of bringing in outsiders, we know, we've seen in crisis situations (inaudible) has to by their ability to really take it
seriously and really make changes that customers and investors can believe in. If you don't have anyone from the outside involved or if you're not
cleaning out somehow, it begs the question can you really move on from this.
I mean this was a huge issue. It wasn't in one plant in one country. I mean this was very global, this scandal. Is it going to make investors hesitant
or cast into doubt how well Volkswagen is really grappling with this?
LA MONICA: I think so. I think it's a fair criticism to say that the company hasn't done enough to address the scandal.
(BEGIN VIDEO CLIP)
LA MONICA: As you point out, it's not just the VW brand. It's some of the other Volkswagen brands as well into so many different markets. But to your
point of whether or not an outsider has to come in, I think as long as you have the right person, it doesn't matter if they're internal or if they're
coming in with some fresh blood. I think most people will argue that Mary Barra has done a really incredible job of riding the ship at GM, and she's
a GM insider. She didn't come from outside the company to really try and shake things up.
I think that most people feel that she was pretty honest right from the get go addressing the situation. And you know GM has really turned itself
around under her leadership.
(END VIDEO CLIP)
LAKE: They have and she gets a lot of points for that. Before I let you go, Paul I have to ask you, what happened today, things weren't looking
this bad when we spoke at the opening, though, and we were up, yesterday, investors can't seem to make up their mind?
LA MONICA: Yes. The retail - the retail earnings are pretty dismal.
(BEGIN VIDEO CLIP)
LA MONICA: What we've seen from Macy's this morning, The Gap as well, and I think that's bringing into question how strong really is the American
consumer. You can maybe chock it up to these are struggling retailers that have flailing brands they need to reinvent themselves. You say that, oh,
well Amazon is killing everyone. But more and more retailers are disappointing Wall Street. And it does beg the question if consumers aren't
spending when gas prices aren't low what are they going do now the gas price is well not, are going up again?
LAKE: Or they're not spending on clothes. I mean I think -- I think there's enough question in there whether this is shifting tastes and shifting
landscapes, and where are they buying it.
LA MONICA: Right. Fashions with know is definitely hurting Macy's and the Gap.
LAKE Or if it's a bigger problem. But unfortunately, there's not enough clarity so I guess you have investors that are sort of on the see-saw
right?
LA MONICA: Although Amazon hit an all-time high today. So that's going somewhere.
LAKE: That's right. Guilty, guilty. Paul, thanks so much.
LA MONICA: Thank you.
LAKE: It was nice to catch up with you. Paul La Monica for us.
Now shares of Staples and Office Depot both plummeted. The two retailers, the giants of the office supply market called off their plan merger.
Staple shares were down 18% while Office Depot saw its stock collapse by a stunning 40%.
(END VIDEO CLIP)
LAKE: The $6 billion merger was cancelled after a judge issued a preliminary injunction delaying it. That was at the request of the federal
trade commission which said a merger could mean higher prices for consumers.
(BEGIN VIDEO CLIP)
LAKE: This is not the only high profile merger to fail recently. Proposed deals between Halliburton and Baker Hughes, Comcast and Time Warner Cable,
and Allergen and Pfizer all had to be junked because the government opposed them.
(END VIDEO CLIP)
[16:20:04]
LAKE: Earlier I spoke to Deborah Finestein the Director of the FTC's Bureau of Competition. She said the merger would have reduced competition in the
business sector.
(BEGIN VIDEO CLIP)
DEBORAH FEINSTEIN, DIRECTOR FTC BUREAU OF COMPETITION: What we looked at people mostly know Office Depot as the retail stores that are all over the
place where individuals can go and buy their pens, and their pencils, and their post it notes.
But what we also learned is that they have very significant sales to very large businesses. And those businesses have very specialized needs. If
you're McDonald's or Bank of America, you have locations across the country and you really need some specialized services so that you can get your
office supplies when you need them. So that you can keep track of all of the purchases that you're making so that you can be efficient about your
spend. And what it turned out was that because of these specialized needs, there were really only two companies that could take care of the needs are
very large business customers. And those were Office Depot and Staples. And this is a very big segment of the business. These large customers account
for about $2 billion in office supplies. And we were concerned that prices to those customers would go up if the merger were to happen.
(END VIDEO CLIP)
LAKE: Without anyone else stepping in the market, I mean, Amazon is incredibly efficient itself, especially when it sees opportunity. And there
are some who say their business-to-business market, although not the main focus, is getting to be about $1 billion a year. That seems significant.
You don't think they could flip a switch and enter this and be a viable competitor?
FEINSTEIN: We looked at that very seriously. We spent a lot of time looking at the evidence, and of talking to the customers. And what we learned is
Amazon really has a different kind of business model. It's very well suited for small and medium business customers. But we saw that at least right
now, and for the foreseeable future, it was not going to be a significant competitor for large businesses who have very different kinds of needs.
LAKE: There are some people who look at this, coming on the heels of Halliburton, coming on the heels of Pfizer's failed deal and say that this
is a hostile environment for all mergers. Is the Obama administration trying to send a message to corporate America?
FEINSTEIN: I think we're trying to make clear that when we see mergers that lessen competition, we will take action. And we've seen a lot of mergers
that combine the number one and number two players in an industry.
(BEGIN VIDEO CLIP)
FEINSTEIN: Those are aggressive deals. We saw them in the Sysco U.S. Foods transaction at the Federal Trade Commission successfully blocked a year
ago. And what we saw when we looked at that was a very similar situation to Staples and Office Depot.
(END VIDEO CLIP)
FEINSTEIN: For business customers especially large businesses, restaurants in multiple locations, they were by far the two best competitors. And a
merger between them would have increased prices. So we're trying to make clear that when we see any competitive deals we're not afraid to go to
court if we think we need to block them, to preserve competition.
LAKE: And another tie-up that will not be going ahead. This one if Europe. The European Commission has blocked a deal that would have created
Britain's largest Telecom operator.
(BEGIN VIDEO CLIP)
LAKE: The parent company of the mobile network 3 U.S. was trying to buy O2 for $15 billion.
Regulators said customers would be left without a narrow choice of carriers resulting in higher prices.
It was a mixed bag for European stocks. In London.
(BEGIN VIDEO CLIP)
LAKE: The FTSE closed slightly higher. Boosted by a rally in mining and national resource shares. Markets fell in Frankfurt and Paris. Zurich was
more or less flat.
Oil prices rose after the U.S. Crude inventories dropped for the first time since March.
(END VIDEO CLIP)
LAKE: Brent Crude rose more than 4% the second straight day of gains. The largest oil company in the world is putting the final touches on an IPO.
When Saudi Aramco goes public, it will list the current, Saudi Arabian state owned firm.
CNN's John Defterios got a rare look inside its operations.
JOHN DEFTERIOS, CNN CORRESPONDENT: Maggie, I'm standing in the eastern province which could easily be called the oil province of Saudi Arabia. It
is the home of Saudi Aramco. And one thing I found out occurring this visit that the low-cost very discrete producer is opening up to the outside
world. And as it does, the burden on this company to help in diversification of Saudi Arabia is starting to grow.
Even in this remote patch of desert, the giant Saudi Aramco is present. The Sheba field in the fabled empty corner will soon hit a major milestone
producing 1 million barrels a day.
MOHAMMED AL-QAHTANI: We just (inaudible) it here in Sheba, and this is a frontier area. We have many other frontiers in the kingdom. The Red Sea in
the north, here in the empty quarter, and the south great potential.
[16:25:02]
DEFTERIOS: Whether it's onshore or its shore facilities, the kingdom is ready to lift the cover off its crown jewel. A tour of Saudi Aramco's vast
compound in Dhahran is all part of that effort.
AL-QAHTINI: You see here is the giant -- the largest field in the world.
DEFTERIOS: An engineer describes what sits beneath the desert sands and Gulf Waters. The bigger the blot, the more crude there is.
This is a rare peek into the inner workings of the energy giant. This is part of the operational center that tries to maximize each oil reservoir.
In the past Saudi Aramco was shrouded in secrecy but that is beginning to changed. The company is being pried open by this man, Deputy Crown Prince,
Mohamed Bin Salman, and is playing an essential part in what he calls his 2030 vision.
Through an IPO the Prince is hoping to unlock over $2 trillion of value, An ambitious goal after the steep decline in oil prices. If all goes to plan
in 2018, up to 5% of the company would be listed in New York, London, and Hong Kong.
AMIN NASSER, CEO SAUDI ARAMCO: As we are privatizing other industries in the kingdom, privatizing let's call it the crown jewel, is something
important and is a vote of confidence in what we have.
DEFTERIOS: As we explore the country's new discoveries over 500 kilometers south of Aramco's headquarters one is well aware the heat is on. The
government burned through $115 billion of cash reserves last year and has less than $600 billion of money on hand that the IMF says could be depleted
by 2020.
Aside from the work being done by Saudi Aramco in fields like Sheba, now the regional players want to grow their production.
In fact by the early part of next decade, Iran and Iraq's combined production could match that of Saudi Arabia, altering competition within
OPEC. Which could make Aramco's masterplan including the IPO, an even bigger challenge.
And they're certainly not sure on ambition. If you think about it, $2 trillion is about three times the size of Apple computer. It is clear now
that the Deputy Crown Prince wants to use Saudi Aramco almost as a Trojan horse to drive diversification, to serve as an example. And in fact the
chairman of Aramco Khalid Al-Falih is not just the Minister of Energy, but the minister of industry and the minister of minerals as well.
So also, great responsibility on him to deliver. Maggie, back to you.
(END VIDEO CLIP)
LAKE: As brazil's political crisis gets worse, its stock market goes from strength to strength.
(BEGIN VIDEO CLIP)
LAKE: We'll explain the Rousseff rally next.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:30:00]
LAKE: Hello, I'm Maggie Lake, coming up in the next half hour of Quest Means Business; Donald Trump said he won't release his tax returns until
after this year's election.
And the list of people who are sick of long lines at the airport security section is growing. Passengers, senators and even airlines themselves.
We'll speak to them later this hour. First, these are the top news headlines we're following this hour.
More than 90 people have been killed in a string of ISIS terrorist attacks across Baghdad. The carnage began with a car bomb, which killed at least
64 people at a market. Two other suicide bombings killed dozens of others. All of the attacks were aim at Shiite Muslims, ISIS, a Sunni group, claimed
responsibility. A U.S. military commander in Baghdad said the attack shows ISIS was getting desperate.
(BEGIN VIDEO CLIP)
GARY VOLESKY, U.S. COMMANDING GENERAL: First, our condolences go out to the families that were affected by the bombings in Baghdad today. As we've
seen, as the enemy loses more and more terrain they resort to some of these desperate acts. The security forces in Baghdad have the situation under
control but our condolences go out to those families.
(END VIDEO CLIP)
LAKE: Brazil's Senate is deciding the fate of the President Dilma Rousseff. These are live pictures from the capitol. The debate on whether
she should be impeached should go on through the night. Miss Rousseff is saying she'll fight the impeachment with all of her strength.
Britain's Queen Elizabeth was overheard saying Chinese officials were very rude during a state visit to the U.K. last year. Her remarks were caught
on a microphone during a garden party on Tuesday. China's Foreign Ministry says its delegation made great efforts to ensure the visit was a success.
Meanwhile, Nigeria's president says he cannot fault David Cameron for saying Nigeria was one of the world's most corrupt countries. The British
Prime Minister was overheard telling the Queen that Nigeria was "fantastically corrupt." Speaking to CNN's Christiane Amanpour, President
Muhammadu Buhari defendant Mr. Cameron's right to speak.
(BEGIN VIDEO CLIP)
MUHAMMADU BUHARI, NIGERIAN PRESIDENT: I think he's is being honest about it. He's is talking about what he knows about the two of us, Afghanistan
and Nigeria. And by what we are doing in Nigeria by the day I don't think you can fault him. I hope he did not address the press. He said it
privately, and somehow you got to know it.
(END VIDEO CLIP)
LAKE: Donald Trump is set to meet with Republican leaders in Washington on Thursday after winning the Republican primaries in West Virginia and
Nebraska. The unopposed Republican candidate comes closer to clinching the party's presidential nomination. Bennie Sanders win over Hillary Clinton
in West Virginia keeps him in the Democratic race but Clinton still holds a big delegate lead.
After two days of volatility in Brazilian financial markets traders are now playing the waiting game. Stocks in Sao Paulo have typically risen each
time President Dilma Rousseff seemed likely to be impeached. Right now their slightly lower as we wait for the final vote in the Senate. As this
crisis has grown, Brazilian stocks have kept rising. They're more than 20% higher already this year. Alberto Ramos, is the Senior Latin America
Economist at Goldman Sachs and he joins us now. This seems very counterintuitive for people watching this saying the president impeached.
The country seems like it's on a downward spiral. What are investors betting on?
ALBERTO RAMOS, SENIOR LATIN AMERICA ECONOMIST AT GOLDMAN SACHS: I mean, there is a lot of hope invested in an ocean of a successful political
transition. That may eventually lead to a more stable, political balance, political equilibrium. And equilibrium that will be more inclined to
embrace the structural reforms that the economy needs. There's also a lot of hope invested that the new administration could bring together a set of
policy, more orthodox, more discipline, more conventional, and also politically capable to see, through Congress, the approval of those reforms
that will stabilize the economy and will address the significant concerns of the fiscal sustainability over the medium term.
LAKE: Are investors looking at the same picture that the rest of us are. Because the vice president who's going to step in terribly unpopular as
well. So many of the politicians embroiled in a corruption scandal. And you've got a populous that is very angry and frustrated about what they see
as a system that's not working for them. That does not seem fertile ground to be able to push through tough economic reforms?
RAMOS: There's no doubt about it, it's going to face significant political, economic and social challenges. On the political front you'll
have to manage a very broad coalition fragmented, ideological diverse. We'll have to adopt very unpopular measures against a backdrop of
significant social and political polarization.
[16:35:00] Against the backdrop of significant social and political polarization. Against the backdrop of one of the most severe recessions of
recorded history in Brazil. Where we have seen a rapid deterioration of the labor market. We have now 11 million people unemployed. Real wages
are coming down and this is a legitimate administration. It will be a legitimate administration but a special one. It's a transition
administration that does not have a clear mandate from the ballot box to implement the difficult measures that are need.
LAKE: So to put this together, you're painting, you know, a very risky situation. Why is it that investors are looking through that?
RAMOS: On that hope that will lead to a better policy mix. And will lead to a more political equilibrium. It is not a certainty that will move in
that direction. Pardon me?
LAKE: Is there a feeling that Brazil has no choice that they must make these reforms if they're going to get the economy back on track? Is that
really what's happening?
RAMOS: That is correct. Unfortunately, those measures are difficult and most of them are unpopular. But they are desperately needed to heal the
economy in order to rebalance the economy, in order to stabilize the economy, in order to bring the public finances into a sustainable path.
LAKE: Sometimes it's easy to focus on the negative news especially when there's so much of it at the moment. When you pull the lens back in terms
of the fundamentals. You look at the economy, human capital, natural resources, the balance of their trade. Where does Brazil fall based on the
money that they'll be looking elsewhere in emerging markets? Do they have a promising future?
RAMOS: They do. I mean, the onus is on the authorities to unleash that potential. They have short-term cyclical problems that they have to
overcome. Some of them on the fiscal side, but they as have very high inflation and other distortions in the economy that need to be fixed. But
those are the short-term cyclical problems that one day will be solved. But then we have the long-term more perennial issues that relate to the low
levels of human capital, low levels of investment, low levels of savings. It's an economy is extraordinarily close to trade tremendous deficit and
physical infrastructure. A government that spends too much and yet investments too little. But that's the medium term agenda that will only
be overcome through structural reforms. The sooner we start, the better. But the future can be as bright as the authorities and the Brazilians can
make it.
LAKE: As we've seen before, you don't pile in on an investment when times are good. You look for your opportunities when there are struggles and
times are difficult. That's when you get the big payoff. It takes an iron stomach though. Looks like a long night, Brasilia. Thank you, so much for
coming in for us, Alberto. It's wonderful to see you.
RAMOS: Pleasure.
LAKE: Donald Trump is set to break another electoral tradition in the U.S. yes, another. The man looks at to be the Republican presidential nominee,
once again planed by his own rules. Refusing to do whatever he nominee has done for the past 40 years.
(COMMERCIAL BREAK)
LAKE: Donald Trump is rejecting calls to release his tax returns. The presumptive Republican presidential nominee who based his appeal in part on
his claimed business acumen said voters would not learn anything worthwhile if he did put them out in public. CNN's national political reporter Sarah
Murray has more.
(BEGIN VIDEOTAPE)
[16:40:00] SARAH MURRAY, CNN NATIONAL POLITICAL REPORTER (voice-over): Donald Trump's bucking tradition once again. Refusing to release his tax
returns before election day. Trump tells the associated press, there's nothing to learn from them. But Trump would be the first nominee since
1976 to keep all of his tax info under wraps. The returns shed light on a candidate's effective tax rate, charitable giving and investment income,
all issues that have tricked up politicians in the past. Earlier this year, Trump suggested it was only a matter of months before he'd release
his return.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: But I have one of the world's most complicated tax returns. It's a massive return but I will
get it done as soon as I can.
(END VIDEO CLIP)
MURRAY (voice-over): Now, the billionaire businessman isn't budging, his latest reason, claiming that he cannot because they're under audit.
(BEGIN VIDEO CLIP)
TRUMP: I will absolutely give my return, but I'm being audited now for two or three years. So I can't do it until the audit is finished, obviously.
TRUMP: While I am under audit I'm not going to release my tax returns. No lawyer would let you do that.
(END VIDEO CLIP)
MURRAY (voice-over): It's an excuse that some tax experts balked at. Saying releasing the returns wasn't likely to cause additional problems.
But other experts said it may make sense as a legal strategy to keep his taxes under wraps. As for the IRS, it says individuals are free to release
their own tax information. In fact, Richard Nixon did just that releasing his returns while he was under audit in the 1970s. Today, Hillary Clinton
seizing on Trump's reluctance to release his returns.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE: When you run for president, especially when you're the nominee that is kind of expected. My
husband and I have released 33 years of tax returns. We've got eight years on our website right now. So you got to ask yourself why doesn't he want
to release them? Yeah, well we're going to find out.
(END VIDEO CLIP)
MURRAY (voice-over): Trump's resistance is a sharp about-face after he criticized 2012 nominee Mitt Romney for failing to release his tax returns
sooner.
(BEGIN VIDEO CLIP)
TRUMP: I think that mitt was hurt really very badly by this whole thing with the income tax returns. I believe that he should -- either said I'm
giving them April 1st or I'm giving them soon.
(END VIDEO CLIP)
MURRAY (voice-over): And the tables have turned and it's Romney questioning what Trump's hiding.
(BEGIN VIDEO CLIP)
MITT ROMNEY: I predict there are more bombshells in Trump's returns.
(END VIDEO CLIP)
MURRAY (voice-over): while Trump may never win over Romney, he's looking to patch things up with Paul Ryan tomorrow on Capitol Hill. Even though
the House Speaker said he's not ready to endorse Trump. He insists he's still pushing for party unity.
(BEGIN VIDEO CLIP)
PAUL RYAN, SPEAKER OF THE HOUSE OF REPRESENTATIVES: what we're trying to do is be as constructive as possible to have a real unification. We just
finished probably one of the most grueling primaries in modern history. It's going to take some work. And that's the kind of work we're dedicated
to doing.
(END VIDEO CLIP)
(END VIDEOTAPE)
LAKE: That was CNN's Sarah Murray. Joining me now is Mark Preston, CNN Politics Executive Editor. So, Mark, a lot of people, especially our
viewers, are looking at this saying why is this so important?
MARK PRESTON, CNN POLITICS, EXECUTIVE EDITOR: Well, so important for a lot of reasons we saw this in 2012 with Mitt Romney. Mitt Romney made a lot of
money as a businessman going and taking companies, dismantling them and selling off assets. He was moving money to offshore accounts. Now that
doesn't bode very well for the American taxpayer, when they see the wealthy here able to take advantage of these financial loopholes that the average
person can't get. Now, Donald Trump is correct he probably has one of the most complicated tax returns for an individual certainly in this country.
But the question is will it politically hurt him if he chooses not to release them. I'm not sure that it does hurt.
LAKE: In fact, it may -- he has nothing to lose. And if you find out, one of the questions people are wondering, is he as rich as he says, has he
been as successful as he has claimed he is.
PRESTON: He talks about a net worth somewhere between 8 and $10 billion, I believe. Some folks have said that is probably half of that. A lot of
people say that it's really a net worth based upon paper, and not necessarily on hard currency. Who knows. I don't know. I do know this,
he's definitely worth more money than I am.
LAKE: And me.
PRESTON: Yes, us together. But the question is how much is he worth, quite frankly, does it matter how much he's worth. Or does it matter that
perhaps if he's not worth between 8 and 10, does he matter that he's fibbing about how much he is.
LAKE: Yes, I think that's the question. We have this really important meeting coming up. His supporters seem to support them no matter what. We
have this important meeting coming up with Paul Ryan. How critical is that going to be, again, the master negotiator, the guy who says he can unify to
get deals done around the world. He needs to show that he can somehow make a bridge of his own party again, or not. Or is conventional wisdom on its
head on this.
PRESTON: Right, not only make a bridge to his party, but a bridge to a coequal branch of government here in the United States. Three branches of
government, you have the White House. You have Congress. And you have the Supreme Court. Now, tomorrow I don't believe we're going to see a unity
moment come out of this meeting. I think do think they're going to come out of this meeting and going to say we've made a lot of progress and we're
going to continue to talk. At some point, the Republican Party, by and large is going to come together. But can Donald Trump, as you said, seal
the deal. Because that's what he's good at. I think he would have been smart last week to embrace Paul Ryan, and say I agree with Paul Ryan we
need to bring together the Republican party and basically force Paul Ryan to serve as his emissary, and he didn't do that. Instead he went out and
attacked Paul Ryan.
LAKE: That is what makes people think does he have what it takes to be president. Can he resist going and taking the bait and getting in spats
that the big picture may not be that important. It's going to be fascinating to watch, Mark. Thank you very much. Really great point about
equal government.
Now as the summer vacations approach, American airports are advising travelers to arrive up to three hours before their flight. Now Senators
are weighing in on the problem.
[16:45:00] (COMMERCIAL BREAK)
LAKE: Some U.S. Senators say they have been pleading with airlines to do something about what they call staggering long lines that are clogging U.S.
airports. Richard Blumenthal and Edward Markey have written to 12 airlines with a solution, stop charging passengers to check baggage into the hall.
They say travelers trying to avoid fees are taking more carry-on luggage instead, which is leading to more security checks and longer lines. The
trade body for airlines, Airlines of America, says Senators are misguided. And is calling for more staff to do security checks so the lines move
faster.
Jean Medina, from Airlines for America, joins me now from Washington. Jean, thanks so much for being with us. The idea that anyone would have to
go to the airport three hours before their flight is enraging everyone we talked to. How do we get around this? Why not just drop the baggage fees,
at least for the peak season?
JEAN MEDINA, AIRLINES FOR AMERICA: Well, I think the thing that's missed here is that this is not a new phenomenon. The idea of pricing airline
tickets in a way that customers can choose what they value and what services they use, including the cost of checking a bag. That's not new.
It's been around since 2008. What is new are these lines. We started to see the lines creep up in spring. And we're actively working with the TSA
to address it. But changing airfare is not the way to do it. Airfare is actually quite affordable and that's why we're seeing so many people
traveling.
LAKE: I'm going to disagree with you, because I think people have hated the baggage fees ever since they've come on. They've been frustrated with
the experience that it creates with overcrowding in the overhead. The lines are just sort of the last straw that seems to be putting people over
the edge. And I don't think that they necessarily feel like things are getting cheaper. We know that costs for airline have gone down
dramatically in a lot of cases, to be done to reduce temporarily, get rid of the fees?
[16:50:05] MEDINA: Well, again, we don't think that people carrying on bags is what's causing the plays at TSA, we think there are other issues
that need to be addressed there including making sure you have the right staff and equipment in the lanes. One thing I would know, we did a survey
of 3,000 Americans, and 67 percent if they know their ticket price is going to be lower actually prefer the a la carte pricing model so that they can
pay for what they value and what they use.
LAKE: I have not been on the plane with I guess the 67 percent of the people who responded. But what is the best way? What can be done, do you
think, to help this? I mean, adding more staff is also probably going to be a cost that ends up getting passed on to consumers. What is the
conversation the airlines are having with the officials on the other side to try to figure out something that will prevent these long lines? What is
in agreement that both sides can come to?
MEDINA: Well, we're very actively encouraging enrollment in expedited screening programs like TSA pre-check or like custom border protection
global entry. Customer satisfaction for people in those programs is much higher. We know the levels aren't where they need to be for enrollment.
We are encouraging people to enroll. TSA had projected to have 25 million people in the program by 2019. Right now, there's only 9 million people in
the program. So getting people that those programs is going to help speed the lines for everyone.
LAKE: And we have heard that for many frequent travelers. That certainly does help smooth things out. Jean, are you worried if you can't come up
with a solution, if the industry can't come with a solution on both sides, both security airport management as well as airlines, that customers will
just say, you know what, this is become, especially those traveling with families over the summer, this is becoming so difficult, I'm just going to
drive?
MEDINA: Well, that's why we're so focused on this right now. Because we share the same goal of TSA, which is the safety of our passengers and our
crew. That's always our top priority. Getting them through the lines efficiently is in our best interest in our passengers' best interest. We
don't want people missing planes. That's why we're actively encouraging enrollment at pre-check. We're encouraging people to get to the airports
in plenty of time. We're also encouraging people if they are seen long wait lings to report it and share it through social media. We launched the
Ihatethewait.com website, which is a mobile optimize website where people can take a picture, posted to social media, Instagram and Twitter and
#Ihatethewait to try and drive awareness. And also alert other passengers where there are long lines.
LAKE: And information can be incredibly powerful especially when you're trying to plan a long trip and get out the door. Jean, thank you for
joining us today.
MEDINA: Thank you.
LAKE: Airlines charge for everything. It's the low cost model that has been adopted by main line carriers. At the same time, low cost carriers
are going increasingly mainstream. Many of them offering long haul flights. Richard Quest recently traveled around the world on low cost
carriers and flew Allegiant from Honolulu to Los Angeles, he asked the chief operating officer about his business model.
(BEGIN VIDEOTAPE)
JUDE BRICKER, CHIEF OPERATING OFFICER, ALLEGIANT AIR: It really started with Vegas and Colorado Springs, which is a market that no one served at
the time. I mean, we went into that market and found a lot of success there. So then we said, well wait a second, this working on a less than
daily service to a market no one else serves. And then from there, where else can we go.
QUEST: You are what would be described as an ultra-low-cost carrier.
BRICKER: Yes.
QUEST: What makes you ultra-low-cost?
BRICKER: You know, I don't think there's much discernment between -- I think a low cost carrier what it means to me, you have the lowest cost in
the region you operate in, period. That gives you the ability to price whatever you want it to be. You can drive the price a lot lower were other
people can't go. So low-cost carriers is a rubric to me which means you have the lowest cost in that region. What we tried to do is say Southwest,
Alaskan, Virgin, JetBlue -- the Southwest in particular, those are low-cost carriers for whatever reason. But they're really -- their costs are much
higher than ours. I would say they're in a different business than what we do.
QUEST: Your business being the low-cost leisure travel on very specific routes?
BRICKER: I think the definition of low-cost as I would describe it, is people travel us on primarily for the airfare we offer. We fly only when
people want. We don't fly when people want to travel. So in order to do that you have to build a business really low fixed costs.
QUEST: More fixated an airline becomes on silly revenues, getting money out of my wallet, other than for the ticket, the perception is the nastier
they become. How do you address that?
BRICKER: First and foremost, our customers demand of us a low-fare. So I think part of customer experience and customer satisfaction is delivering
what they expect. That's number one. Number two flying where they want to go. We don't really create demand for markets. We service demands that
already exist. People would otherwise drive or they wouldn't go. But they would go.
[16:55:00] So we fly nonstop to where they want to go. The third part is the experience of the travel. And for me, it kind of breaks down three
categories I think we can attain. Number one, we want clean airports. Number two, we want friendly empathetic crew members and staff. Number
three, we want a reliable service level.
(END VIDEOTAPE)
LAKE: That was the chief operating officer of Allegiant. You can see Richard take flight on the second part of his round-the-world trip.
"Business Traveler" is this Thursday at 9:30 a.m. in London.
Gender equality in the workplace apparently includes emojis. We'll show you that women can the same work as a men emoji style.
(COMMERCIAL BREAK)
LAKE: The campaign for gender equality has a new face. A group of Google employees has proposed a range of new emoji apparently designed to combat
sexism. They show women in 13 professions from farmer to software engineer to rock star. There will also be male equivalents. The proposal was
submitted to Unicode which approves emojis to make sure they are able to display properly on different operating systems. Recently Unicode added
different skin tones on characters as well as everyone's favorite, of course, the taco emoji.
Let's take a look at how wall street finished the session and it was a rough one. The DOW jones industrials were down more than 200 points at the
close. Around the disappointing retail earnings helped drag the Dow lower. And that is QUEST MEANS BUSINESS. I'm Maggie Lake, stay with CNN.
END
