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Quest Means Business
Apple Unveils New iPhone, Watch; Trump Call for Major Military Spending; U.K. Leaders Pressed on Brexit; Mexico's Finance Minister Exits in Wake of Trump Visit; Starbucks CEO Endorses Hillary Clinton; Sony Launches PS4 Pro; Paralympic Opening Ceremony Begins in Rio; FC Barcelona Opens New York Office. Aired 4-5p ET
Aired September 07, 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, CNN ANCHOR: Coming to an end on Wall Street. The stock is going nowhere fast. It's Wednesday, the 7th of September.
Tonight, back in black. Apple unveils its brand new iPhone.
Donald Trump issues a calls to arms and vows to rebuild the military. And the CEO of Starbucks tell us, "I'm with her."
I'm Maggie Lake, and this is QUEST MEANS BUSINESS.
Tonight it's the moment that the Apple faithful have been waiting for. The iPhone 7 is here. Apple unveiled it a short time ago in San Francisco. It
has a new camera for sharper photos, stereo speakers and a faster processor. It also includes a water and dust resistant housing.
Controversially it does not include a standard headphone jack. Head phones will now connect wirelessly or to the data port with an adaptor. Preorders
begin Friday and the devices will be available one week later.
Apple is looking for a turn around. The iPhone is Apple's bread and butter and sales have fallen for two straight quarters. CNNMoney's Samuel Burke
is in San Francisco. And he has been watching all of the activity. Samuel, I have to tell you. We want to know what it was like and of
course, the event opening with some Carpool Karaoke. I didn't know Tim Cook had it in him. Let's have a listen.
(BEGIN VIDEO CLIP)
TIM COOK, CEO APPLE (singing): I, I did it all I owned every second that this world could give I saw so many places, the things that I did With every broken bone, I swear I lived
JAMES CORDEN, HOST, "THE LATE LATE SHOW," COMEDIAN (singing): I, I did it all
I owned every second that this world could give I saw so many places, the things that I did With every broken bone, I swear I lived
(END VIDEO CLIP)
Of course he's doing that with James Corden whose made that skit famous. I'm sure that got a huge reception.
SAMUEL BURKE, CNNMONEY CORRESPONDENT: Oh, yes, we're all used to Tim Cook walking up on that stage not getting into a car to start these events.
Everybody loves James Corden. Everybody loves carpool karaoke. How could you not start the show that way? Especially if you have the rights to
Carpool Karaoke. That wasn't done just for fun. Don't forget Apple has purchased the syndication rights so they can stream that on Apple music. A
music service, but they are getting into video now. Interestingly it doesn't look like James Cordon will be a part of that syndication. So I
think there's a big question mark over whether it will go well or not, but of course it went well with the crowd today seeing James Corden there with
Tim Cook, maybe the most fun of this whole entire event.
LAKE: Yes, so, of course, they didn't announce the car, Samuel. We mentioned some of the things that they did roll out. In general, what was
your sense? I mean did it live up to expectations? The crowd there is always full of the Apple faithful, so probably a little too soon to tell.
You and I have talked about that headphone a lot.
BURKE: Listen. These are not the days of Steve Jobs where they get up there, and you see it and you think, "Oh, I just bought a new one, but you
know what, I've got to go out and get the next one as soon as possible. Because I want to have Facetime. I want to be able to see my mom back in
Arizona when I talk to her.
It did live up to basically the expectations that were out there. Tough expectations were not that high. That's why the stock is only closing up
about a half a percent. Like I say, this change for the headphone is really monumental in a sense because when Apple does something, the rest of
the industry follows. Think back to when they got rid of the floppy disk. When they got rid of removable batteries in the iPhone, and people said
this would never be a success because of it. When they got rid of the DVD drive. They do this and the whole industry of tech and electronics follows
suit.
You have a couple of options. Don't get too worried. You can keep on using your old head phones if you like. They are going to include an
adapter for now. They have a new set of headphones that are also include that go through a charging port but the headphones that you mentioned,
Maggie, it's a new product. Maybe investors are excited about that because they're going to charge you $159 for those wireless headphones. They have
a microphone built in. Really I think that with us the newest thing that we saw is the new product.
LAKE: For one, I'm going to have a problem with having to fork out that money for the phone. Maybe it's part of a wider plan of theirs though,
Samuel. They also did make some announcements about the Apple Watch too, didn't they?
BURKE: In some ways that was disappointing. The expectations were gone for -- or rather the hope was gone that you could use the Apple watch
without an iPhone, that it would be an independent device. That did not happen here. I don't think that's going to happen into the next iteration
maybe a year from now. But it's water-resistant, so that's good. But you know, that's really going to be interesting, I'm going to get in the pool,
the way you've seen me with these other devices. I've been in the pool with that Samsung device and I could even shoot video under the water.
So I really want to know where it falls between water-resistant and waterproof. They're saying water-resistant, but I really want to get me
hands on those puppies very soon. Test them out and see if we can really drag them through the dirt or the water.
[16:05:00] LAKE: Yes, exactly. And Samuel, we know the cameras do matter. We live a lot of our life and the apps and photos and video are a big part
of that, so we shouldn't discount that more powerful phone at least in terms of keeping up. Samuel, I know you've been at it all day, we look
forward to the demo. We'll catch up with you later. Samuel Burke for us, live from San Francisco.
Now more than 300,000 people have signed a petition calling for Apple to keep the old analogue headphone jack. Here's The Moment When Apples, Phil
Schiller explaining why that wasn't going to happen.
(BEGIN VIDEO CLIP)
PHILIP SCHILLER, SVP OF WORLDWIDE MARKETING, APPLE: Our smartphones are packed with technology and we all want more. We want brighter displays.
We want larger batteries. We want faster processors. We want stereo speakers. We want taptic engines. We want all of that. And it's all
fighting for space within that same enclosure. And maintaining an anxious single purpose analogue big connector doesn't make sense because that space
is at a premium.
(END VIDEO CLIP)
LAKE: Well, OK. He's making us feel old showing that pitch. Apple has a history of killing off technologies it sees as outdated. The tech grave
yard is full of them. First to go was the right click. Steve Jobs reportedly insisted on that for simplicity. But Apple did introduce a
multi-button mouse in 2005. In 1998 Apple's new iMac included USB drives and a CD drive. Both were modern technologies at the time, but the floppy
drive got the ax. And the optical drive soldiered on until 2008. That was the year Apple brought out the super skinny Mac air book.
Now today none of Apple's computers comes with a DVD drive at all as you well know. The trend for removable batteries began with the original iPod,
then extended to iPhones and iPads. As battery life on laptops improved Apple sealed their batteries into.
Connie Guglielmo is editor in chief for news at CNET, she joins me now from San Francisco. Connie it's great to see you. We talked a little bit with
Samuel just now about the expectations and what came out. Talk with me how people are feeling feel about Apple as an innovator. Is it fair for us to
look at this phone and decide whether Apple still has its mojo? Are we kind of moving past the phones?
CONNIE GUGLIELMO, EDITOR IN CHIEF FOR NEWS, CNET: Actually we're not moving past the phone. It's a really important part of what Apple does.
You said it. It's their top money maker. It accounts for three quarters of their sales. They can't really afford to lose that franchise. They
can't really afford to be seen as slipping behind, which is why in part they took the risk, as you notice today, with those wireless earbuds. Phil
Schiller, the head of marketing, actually went into a little bit of a description about why they did it. And he called their move courageous.
That it took courage for them to really go a different path than what their users want. That's what people want from Apple. They expect it. They
might not agree with it right away, but usually in the long term people come around.
LAKE: Yes, that's right. They push us on something that they are convinced that we will realize while after they do. Let me rephrase that
about the phone. I know it's really important, but it seems like we've squeezed enough out of the hardware itself and now it's really about what
these phones can do for us. The services are going to be available on the phones. The eco system, and that eco system is something that Apple does
have that other phone makers don't. They sort of own their own vertical line. How important is that going to be and should we be seeing more on
that front?
GUGLIELMO: We absolutely should be seeing more from Apple in terms of how they're trying to make you think of Apple as not a product company but as a
lifestyle brand. About not just a phone but a phone with a watch and services and Apple Pay, which allows you to pay wirelessly without your
credit card or cash. So they are going to be investing even more than they have in getting you to look at Apple as a way for you to get through your
daily day as much as possible with the phone maybe being a remote control and the camera of your life. The watch being your fitness tracker and
notification engine and the services they provide. Just an easy way for you to get through your day.
Today what we saw with Apple watch, we didn't see them untether it from the phone. They don't really want to do that just yet. The phone is only 18
years old. Even though Apple says it's very popular. It still has a lot to go. Apple doesn't disclose sales or shipments. So they still want to
tie those things together into that ecosystem where Johnny Ive, who's the lead designer, talked about it in one of the demos today. They want to
have a seamless experience among your devices and services. So that tells you what they're looking to.
LAKE: Yes, I know. I had the watch right away. I'm an ardent supporter of it. I really rely on it. I'm giving them the time to show me what more
is available on it. Connie, we saw a lot with Nintendo today too. Super Mario and the app stuff. Was that just some fun or also something we
should consider kind of these relationships or partnerships crucial to Apple.
GUGLIELMO: You should absolutely consider the relationship a big deal. When the creator of Super Mario Brothers came out on stage, he got a huge
round of applause and not just from the Apple employees who were sitting in the stands.
[16:10:00] That's a big win for them to have Super Mario Bros. Which is a cult classic brought to the iOS first. That will mean something to people
who are really passionate about the game. Ditto Pokemon go. These are popular apps, and Apple wants to show a little bit with the James Corden
opening. They had CeeLo as their end guest, their musical guest. That they are hip. That they are cool. That they are in trend. And they're
listening to the majority of their customers want in terms of being on the leading edge.
LAKE: We often talk about the differences Between Tim Cook and Steve Jobs. It's hard to imagine Steve Jobs doing a Car Karaoke with James Corden. So
a little bit of a departure for sure. Connie, great to catch up with you. Thank you so much.
Now, the Dow ended the session in the red. Apple shares are up, but just fractionally, a little more than half a percent. The NASDAQ closed at a
record high of just 0.2 percent. Airlines also posted some big gains. American and Southwest both rose more than 4.5 percent.
Donald Trump says it's time for the U.S. to spend more on its military. The Republican nominee said the armed forces are unprepared for the threats
they face. He called the increased numbers of troops, ships, and fighter jets.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: As soon as I take office I will ask Congress to fully eliminate the defense sequest. And
will submit a new budget to rebuild our military. It is so depleted. We will rebuild our military.
(END VIDEO CLIP)
LAKE: Joining me now, Olivia Nuzzi, is a correspondent with "The Daily Beast." Olivia, thanks so much for being with us. This focus, he's trying
to beat back these attacks that he's not prepared to be commander-in-chief. What do you think the reception is going to be in the message he gave
today?
OLIVIA NUZZI, CORRESPONDENT, THE DAILY BEAST: Well I don't think this speech is going to help you much in that area. There are a few problems
with it. Number one, he's contradicting himself. Back in April he gave his first serious foreign policy speech and he said that the military was
overextending its resources at that point. So calling for an expansion of the military today doesn't really make a lot of sense in that context. But
the other problem is that he didn't say how he's going to pay for it.
LAKE: That's what I was going to ask you. When he talked about what he proposes, these are massive spending increases for a party that has been
talking about reducing the deficit.
NUZZI: Donald Trump is constantly talking about the $19 trillion deficit. How outrageous it is. It's completely unacceptable and yet he's calling
for this multi-billion-dollar plan without saying what he's going to do. Is he going to put it on a credit card? How is he going to pay for?
LAKE: he wouldn't be the first president that's come into question about how you're going to pay for military spending.
NUZZI: He was very critical of George W. Bush for that reason. He's been completely all over the map unsurprisingly on the issue of foreign policy.
And this speech today really is not going to help him be taken seriously.
LAKE: But he does seem to resonate. When people feel like things are not going in the right direction. They are concerned about security as a
threat, about their safety. There is frustration that more wasn't done to see the threat of ISIS coming. There does seem to be some eerie where even
though his policies may have been questioned or murky, that there's traction in terms of criticizing what's been done to date.
NUZZI: Certainly, and I think his rhetoric really helps him. The content of what he's saying doesn't make a lot of sense, but to a certain faction
of the American public, that might not matter. So I think his delivery helps them a lot. But if you actually scratch beyond the surface at what
he's saying, it just doesn't make sense as a policy. He's calling for, as I said, multibillion-dollar spending on the military. When there is really
no indication. Yes, the military is smaller, but we are more technologically advanced than we have been in other times in history.
LAKE: What about him bringing out these ex-military people that he says support him? I mean this is in direct response to Hillary Clinton who a
few weeks ago had a bevy of ex-CIA, ex-FBI, sort of heavy hitter military types, even Republicans, speaking out against Trump. Does that help? Does
that counter that? Does that weaken her attempt to discredit him?
NUZZI: I don't think so. I think to his supporters, that's something that they'll find comfort in. They can say, well, Hillary did that. Well, we
did that to. They want to go sort of tit-for-tat with her. But experts in this area, no one is going to look at that and be comforted by Donald
Trump's foreign policy, which has been completely inconsistent. I think more than any other area that is talked about in his campaign.
LAKE: They've been attacking each other, so we've been focused on that. We haven't talked so much about his relationship within the Republican
Party. Again, there's been tension on and off if not outright rifts. Again, on this position on national security. How is that going to go down
with the establishment that he's going to have to govern with if he makes it to the presidency?
NUZZI: I think they're worried like a lot of Americans are worried, by the lack of specifics. Donald Trump is very critical of Hillary Clinton. Her
lack of a plan to defeat ISIS. Donald Trump's plan right now is that when he gets in office he will ask experts for a plan. It's not really a plan.
So I think people in Congress, establishment Republicans, are looking at him as someone completely unprofessional and unprepared to answer these
tough questions and fight against Hillary Clinton. I mean, there is a poll in Arizona where she's leading right now. To have screwed this up pretty
badly is a huge problem for the Republican Party.
[16:15:00] LAKE: Arizona of course, John McCain, home territory. They've had their issues in the past as well.
NUZZI: And there are a number of red states now that are highly competitive and they frankly shouldn't be.
LAKE: It's going to be interesting and certainly an issue that is going to factor highly in the debates. Something Hillary Clinton, I assume, hopes
she's able to capitalize on. Olivia, thank you so much for joining us today.
NUZZI: Thank you.
LAKE: The British Prime Minister, Theresa May, back the campaign to remain in the European Union. And the Governor of the Bank of England said a
Brexit could cause an economic disaster. Now they're at the helm of post Brexit Britain. We'll have the latest on their strategy next.
(COMMERCIAL BREAK)
LAKE: The two most important people guiding Britain through Brexit uncertainty, say that are competent about the course of action. The
governor of the Bank of England Mark Carney says he's in a serene state of mind despite his previous warnings about leaving the European Union.
(BEGIN VIDEO CLIP)
MARK CARNEY, GOVERNOR, BANK OF ENGLAND: This financial system under the oversight of the bank of England sailed through what was a surprise to the
vast majority of financial market participants, sailed through.
(END VIDEO CLIP)
LAKE: The British Prime Minister, Theresa May, was back in Parliament after her G20 visit to China. She says she will take her time with Brexit
and warns not to expect regular updates on the British position.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: It's not about the Norway model, the Swiss model, or any other country's model. It's about developing our own
British model. So we will not take decisions until we are ready. We will not reveal our hand prematurely, and we will not provide a running
commentary on every twist and turn of the negotiation.
(END VIDEO CLIP)
LAKE: Access to the single market is a biggest concern facing British manufacturers. That's the message from the CEO of the manufacturers
organization, Terry Scuoler. It comes as UK factory output dropped by nearly 1 percent in July. Earlier I asked Mr. Scuoler how mixed a British
economy is following the decision to leave the European Union.
(BEGIN VIDEOTAPE)
TERRY SCUOLER, CEO, EEF: Well, after the Brexit vote, Maggie, you used the term "mixed." I don't think it's mixed. I think one could say it's
volatile. There's a lot of differing information coming out here. We've seen different factors. This will unravel itself and I think it will take
us into next year to unravel itself. But let us not look at it one monthly indicator. Whether it be the tremendous upside we saw in the second
quarter or indeed the latest in the industrial manufacturing figures for July. This is volatility. I think, however, there's a sense of relative
businesses being subdued and people waiting for the future, and that, I think, is worrying.
LAKE: Especially when that future looks uncertain. The government still not out with a very detailed plan. What is the biggest concern from the
businesses that you're speaking to? What are they most worried about?
[16:20:05] SCUOLER: I think that you've put your finger on it here. The biggest thing is uncertainty. And of course that uncertainty drives
probably the biggest single important factor for manufacturing industry, which is investment, which in turn drives productivity, innovation, et
cetera.
Let me say also I commend. I commend our prime minister for having the courage to metaphorically put her foot on the ball, think through what she
and our cabinet colleagues want before triggers Article 50 of the EU treaty, but nonetheless there's a time for reflection. There's a time to
come out of the blocks and start working here and I suspect that will be early 2017. Hence my comment, about this will unravel itself next year.
LAKE: We've see big moves in the pound. Is a weaker pound going to help at least offset the weakness related to the uncertainty?
SCUOLER: Once again, you refer to a very important issue here. As ever, life is never as simple as you know. Yes, a weaker pound makes it more
competitive internationally. And indeed when we look at the last quarter, when we look at the last month in terms of the ONS figures we're seeing a
modest increase in exports. But of course, before you increase, you have to take a view of imports and what we call raw material and imported supply
chain components. Whether or not they are the benefits to exports will outweigh imports, no one at this stage can say. You're looking at a view
from me, let me give it. On balance, I think the weaker pound will help our exports, and support our exporting community.
LAKE: We see the government putting on a brave face. We heard Theresa May talking about seizing the opportunities Brexit presents. Do manufacturers
feel like those opportunities are real? What would they like to see from the government?
SCUOLER: There is a sense in manufacturing in the British industry of Brexit means Brexit. Let us get on with this. And that's a quiet, I
think, and I hope determination. What do we want from government? Well, clearly we want as soon as possible the key priorities laid out and taken
to the EU in terms of our exit strategy, whether it be, of course, in terms of free or fair movement of labor, whether it be as access or as much
access as possible to the very large market and let us be clear also, this is an opportunity for something for government to buy into and that's an
integrated industrial strategy which I and other so-called business leaders have been calling for some time.
(END VIDEOTAPE)
LAKE: Mohamed El-Erian, chief economic adviser at Allianz, joins me now to talk about the situation. You know, it's interesting. We heard Theresa
May say today, listen, don't rush me. I'm going to take my time. We're not going to model it on anything but what we want. Are her European
partners going to give her that luxury?
They will.
LAKE: And is that good? Is it good to have a long period of time?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: So, it's certainly good for Britain. Remember you cannot replace something with nothing. So it's
very important to have a credible alternative. And that alternative from the U.K.'s perspective has to maintain as much of the free trade and goods
and services as possible. So for the U.K. it makes total sense to go slow.
For their European partners, it's a different issue. They want this uncertainty resolved. They have referendums coming up in Italy. They have
elections coming up. The last thing they want is this uncertainty in the U.K. You're going see a bit of a clash between what the U.K. will end up
doing and what the European partners would like them to do.
LAKE: We also have a situation in Spain where there's no government. Are European leaders doing what they need to do to move the economy forward?
EL-ERIAN: They're not. And let me just say, it's not just Spain that doesn't have a government. We have Italy with the referendum. You have
Germany, where Mrs. Merkel's governing party was humiliated over the weekend in local elections. You get a sense that governments are under
pressure. And they're under pressure from antiestablishment movements.
LAKE: Just like we're seeing here in the U.S. Different circumstances but that feeling is real in Europe as well.
EL-ERIAN: And that would come as no surprise. When you growing economy very slowly and when the benefits of that growth goes to a small segment of
the population, people get angry. The result of that ironically, is the established parties cannot act. So it's very hard to break the stalemate.
LAKE: We are seeing central bankers trying to pick up the slack where they can. They say they still have ammunition, some argue not. We see negative
rates in so many countries. Are you worried about any unintended consequences from a situation where we have negative rates and investors
definitely looking for yields?
EL-ERIAN: Yes, and we've seeing it. Central banks have been carrying too much of the burden for too long. They don't have the right tools. So
they're using whatever tools they can. And like any doctor who prescribes not quite the right medication, you worry about the side effects. And
we're seeing it.
[16:25:00] Negative interest rates. People disengaging from the financial service in Japan. And we're seeing companies not investing, even though
they have a lot of cash. The answer is not to blame central bank. The answer is to get other policymaking entities to step up to their
responsibilities.
LAKE: Which is difficult, as you point out, when we're in election cycles here in the U.S. as well. We have our election coming. We don't have
negative rates here. The economy is doing a bit better. Donald Trump being very critical of the U.S. Federal Reserve saying they should raise
rates. Do you think that's helpful and how do you feel about the Fed's policy prescription right now?
EL-ERIAN: I don't think it's helpful. And whenever a politician intervenes, central banks will tend to react. Because the last thing they
want is give up their political autonomy. Having said that as an economist, I think there was a case for hiking rates this year. The case
has to do with two things. One, is the economy is doing pretty well, and financial headwinds -- when headwinds from abroad are diminishing. And
secondly the longer we maintain these low interest rates, the greater the risk of financial instability down the road.
LAKE: And I think that is the worry. Because no one knows what happens when you're in this situation where the balance sheets look the way they
do. Is there a good place to invest right now? Does all of this uncertainty present opportunity? It's so easy to be negative all the time.
EL-ERIAN: So there is. And ironically the best thing to do right now is to have dry powder. Because we are entering a very volatile period in
principle. And what tends to happen is when volatility gets hold of markets, good names and bad names get hit equally and you get good names at
bargain prices. So not just yet. But wait, make sure you're building up cash, because I certainly believe there will be attractive opportunities.
LAKE: Building up cash and doing your homework. Because you've got to be able to tell the good from the bad when it happens because they all look
the same when the fallout calms.
EL-ERIAN: And to have that list because emotions tend to play in too big a way when markets are moving.
LAKE: That's right. Especially when so many of us are still recovering from the battering and the financial crisis. I think it's hard. It's hard
to get in there. Mohammed, it's always a pleasure to talk to you, especially in person. Thanks so much for coming by.
EL-ERIAN: Thank you.
LAKE: The European markets posted gains on Wednesday. The FTSE is up 0.3 percent, despite weak manufacturing data that we mention from the U.K.
Investors were also reacting to the bank of England, Governor Mark Carney, said a further cut to interest rates is possible. The DAX was the best
performer of the day. Up a little more than half a percent.
Just ahead, how Donald Trump's trip to Mexico could be to blame for the country's finance minister losing his job. We'll have the details.
(COMMERCIAL BREAK)
[16:30:00] Hello. I'm Maggie Lake. Coming up on the next half hour of QUEST MEANS BUSINESS, the CEO of Starbucks tells us why the next president
of the United States should be an obvious decision. And the president of FC Barcelona tells me about the team's expansion right here in New York
City.
Before that, these are the top news headlines we're following on CNN this hour.
Donald Trump is proposing an increase in U.S. defense spending. The Republican presidential nominee says the best way for America to keep the
peace is to showcase its military strength. He wants to build up the military with more troops, fighter aircraft, ships, and submarines.
The U.S. defense secretary says it is working with both the Syrian government and opposition forces and the objective remains the defeat of
ISIS. High-level talks were held in London Wednesday about the ongoing Syrian conflict. Ash Carter tells CNN they are trying to manage the
tension between pro and anti-Assad forces.
(BEGIN VIDEO CLIP)
ASH CARTER, U.S. DEFENSE SECRETARY: We understand what our interests are here, which are the defeat of ISIL. We communicate that to them and we
work with both sides. And we try to manage the tension, which we understand. But the way to manage that is for each of them to know exactly
what they're doing and for us to establish the way with them, ways that they cannot interfere with one another in the pursuit of their separate
objectives.
So, for example, we have agreed with them about where each party will be geographically in such a way that they can conduct their operations against
ISIL and not run into each other, which might create a circumstance in which there could be a collision between the two of them which we don't
want to see.
(END VIDEO CLIP)
LAKE: U.S. President Barack Obama and Philippine President Rodrigo Duterte have finally come face-to-face. They exchanged pleasantries just before
the ASEAN gala dinner in Laos. The exchange comes after the meeting between the two leaders were canceled over controversial remarks by the
Philippine president.
Two suspects are being held in Paris after several full gas cylinders were found in the back of a suspicious care. It was parked near Notre Dame
Cathedral and spotted by a bar employee. France remains on high terror alert since a string of attacks in the past year.
The opening ceremony of the Paralympic games is about to start at any moment. The Paralympic torch arrived earlier in Rio at the statue of
Christ the Redeemer. About a million tickets for the games remain unsold even after last-minute rush for seats.
Mexico's finance minister has been replaced and Donald Trump's visit to Mexico may be to blame. The circumstances around Luis Videgaray's exit are
not fully clear but Mexican sources have told CNN it was the finance minister's idea to invite Trump and Hillary Clinton to meet with Mexican
President Pena Nieto. Rafael Romo joins me now. Rafael this is a bit of a curious story. Exactly what went on here?
RAFAEL ROMO, CNN SENIOR LATIN AMERICAN AFFAIRS EDITOR: Yes, Maggie, and now the question is, was the finance minister's the fall guy to last week's
Trump visit fiasco. There was no official explanation given. President Enrique Pena Nieto simply said today he had accepted his finance minister's
resignation
Luis Videgaray has been the president's right-hand man since Pena Nieto was the Mexico's state governor. Videgaray was also the president's chief
architect of his presidential campaign in the brain behind the president's economic and education reforms. A Mexican government official and a source
close to the Mexican government, as you said, both told CNN previously that the whole idea behind extending an invitation for Donald Trump and Hillary
Clinton to meet with Pena Nieto came from the finance ministry, meaning Mr. Videgaray himself.
Now Pena Nieto didn't even mention anything about the controversy in today's announcement. He only said that he was deeply grateful to
Videgaray, whom he considers a personal friend. And Donald Trump is almost universally despised in Mexico, as you know, as a result of comments he has
made on the campaign trail calling Mexican immigrants criminals and rapists and promising to build a wall at the border. Now Maggie, the interesting
thing is that the Mexican president is not much more popular either. A recent poll by a Mexico City newspaper puts the president's popularity at
just 23 percent. So not a very popular guy in any case, but again, Videgaray, his friend is gone.
LAKE: I think a lot of people were surprised he held a meeting at all. I guess hindsight's 20/20. How are investors going to react to this? A lot
of times when you have a change in finance minister, it creates a level of uncertainty. Often investors don't like that. What do you think the
fallout is going to be in terms of markets?
ROMO: Trying to find an explanation as to why he was invited to Mexico, meeting Donald Trump.
[16:35:00] Some people in Mexico in the financial circles were speculating that it had to do with the fact that every time Hillary Clinton was above
on the polls, it seemed to favor the Mexican peso and the reverse happened when Trump was ahead. And so it could've been an effort to contain that.
But again, that's just speculation. There's no reason to believe that that's going to be the case in the long term. And what people in Mexico
are saying is that a meeting like that should have happened after the election with a president elect and not with the candidate even if we're
talking about a candidate from a major political party in the United States. Maggie.
LAKE: Yes, Rafael, this election cycle has been full of the unexpected. We'll put this on the list with the rest of them. Thank you Rafael.
Howard Schultz referred to Trump's policies as vitriolic and divisive Wednesday. As the CEO of Starbucks, endorsed Hillary Clinton for U.S.
president. Schultz is a lifelong Democrat and is known for being outspoken on social issues. But had not yet announced his stance on the 2016 race
for the White House. Poppy Harlow spoke to Schultz and joins me now. Poppy, we had these made up. I don't think they're going to be selling
this one.
POPPY HARLOW, CNN CORRESPONDENT: it's a collector's item.
LAKE: Although the choice was pretty clear for Howard Schultz and he's really not mincing his words when it comes to this election.
HARLOW: I mean, he's not. Look, this is the CEO who, as you said, I think has been the most outspoken CEO period, on everything that doesn't have to
do with coffee and the core business. Right from guns to gay rights to race relations in this country to politics. I mean, Maggie, you remember a
few years ago he called on all business leaders and the American public to stop giving any money to Washington, any money to politicians at all. So I
was really surprised when this morning, add a CNNMoney American opportunity event that we held, where he was the key speaker. He came out and he
endorsed Hillary Clinton. And not only did he endorsed Hillary Clinton, he also talked about perhaps dipping his own toe into politics. Watch.
(BEGIN VIDEOTAPE)
HOWARD SCHULTZ, CEO, STARBUCKS: I think it's obvious that Hillary Clinton needs to be the next president of the United States of America. And I
think the reason for that is so clear. We have a situation in America today of such divisiveness, of fractured leadership, and on the other side,
I think we've seen such vitriolic display of bigotry and hate and divisiveness and that not the leadership we need for the future of the
country.
In almost every election cycle going back probably to when I was a young boy when John Kennedy was running for president, the media has framed this
election and the elections before it, as perhaps the most important election in a generation. And I think given the challenges that we are
facing domestically and all of the hot spots around the world, the life experience and professional experience that Hillary Clinton has had, I
think, positions her best to be the next president of the United States and she has my full support. I've spoken to the campaign and I made it clear
that in the coming days this is what I was going to do?
HARLOW: What did she say to you?
SCHULTZ: That's a private conversation, so I think we'll just leave that for now.
HARLOW: So every time I interview Howard, I ask you one question. Can times I've asked maybe?
SCHULTZ: Probably more than that.
HARLOW: Should we make it 11.
SCHULTZ: OK.
HARLOW: Will you ever run for president, Howard?
SCHULTZ: You know, I think, as we discussed this many times, my own life experience has given me a unique perspective on the plight of working-class
American people and the position and platform I've had at Starbucks has given me the voice and the opportunity to do many things that I don't think
I could have ever done as an elected official. Having said that, I'm a young man. There's a lot of time in the future of the country and what I
might and I might not do, I would never say never, but this is not the right time.
HARLOW: You have said no previously. This is first time I've heard you say I'm a young man. It's true.
SCHULTZ: Well, I've been reminded by friends of mine who heard me say that this this morning that I'm no longer that young. We'll have to see how
that goes.
(END VIDEOTAPE)
LAKE: Poppy, Secretary Treasury Schultz. That would not be a first time. It's been a long time since it came from Wall Street.
HARLOW: I didn't think about that.
LAKE: but the tradition used to be industry is where the Treasury Secretary came from or a new post. This is a very different tone. And it
must be an indication of how frustrated he feels.
HARLOW: It is such a different tone. Maggie, four years I've asked that if he would run for president.
LAKE: We've talked about it every time.
Because he writes op-eds in the "New York Times". He's very politically vocal, but he's always insisted no, no, no. So I was shocked this morning
when he said that I am a young man. That was the quote, "I am a young man." He's 63. He certainly has time ahead. But he also said to me,
people cannot -- talking about CEOs around the world -- he said to me, "People cannot believe what is going on in this country. What we have
witnessed in the last year is inconsistent with the guiding values and principles with this country."
[16:40:00] He's had it.
LAKE: Do you think that he stands alone? I mean, there is a sense of frustration. If we take the partisan politics out of it, do you think we
will see more engagement from the private sector when it comes to issues. We used to think gridlock was good. I hear from more and more CEOs that
that's not the case anymore. That leaders in Washington are not tackling the serious problems. Do you think this is a tipping point?
HARLOW: I do think it's a tipping point. But what I've seen, Starbucks and more companies individually, is go it alone without Washington.
Because they find it so frustrating to work with Washington at all. They go it alone. So this event this morning was all about the opportunity gap
and the income gap and things at the private sector is doing to help close that and create opportunities for the poorest kids and the kids most in
need.
Most people don't remember, Howard Schultz was born in the projects. As poor as can be in Brooklyn.
LAKE: And he led the way on minimum wage.
HARLOW: Right, but is his American dream alive today? Are kids' destinies determined by their zip code too often today, and he essentially said, "I'm
afraid so." But I don't know, Maggie. Will he jump in four years, eight years and make a run for the White House?
LAKE: Or will he be tapped sooner.
HARLOW: I know.
LAKE: It's hard to say no to the president. Let's see what happens. To be continued, this conversation. Poppy, thank you so much. Great stuff.
Now Sony has launched its latest gaming console. We'll have more on the tech world after the break.
(COMMERCIAL BREAK)
LAKE: Apple was not the only company with a big product launch Wednesday. Sony is unveiling a new gaming console today for the PlayStation 4 Pro. It
targets the hard core gamer who values high definition display. Clara Sebastian joins us now. They may be targeting the hard-core gamer but I
know my son is going to start asking me for it. What exactly do I need to know? What is this about?
CLARE SEBASTIAN, CNNMONEY REPORTING: Right. This is balancing act that Sony faces with this. You think of it, you know, done the Apple
comparison. It's like the MacBook Pro versus the MacBook. It's more powerful. It's faster. It's got a bigger processor. And crucially it
accommodates 4k and HDR. This is what Sony was really emphasizing today. It was the display element of this. This is where the arms race really
comes in with these gaming companies. They're fighting to stay relevant, Maggie, in a world where PC gaming and mobile gaming are really taking off.
LAKE: That's the thing. When you're thinking about that time you have to play and you can so easily get -- we talked about Pokemon earlier and
Nintendo. They want to keep their hard core gamers happy. Does it mean, if I don't want to shell out, I don't have a hard-core gamer at the age of
eight, am I going to be out of luck? Am I going have to do it because I have to upgrade? That was always the issue with the consoles.
SEBASTIAN: Right, this again is the balancing act they face. They are emphasizing that they are, while they're giving you options to the hard-
core gamers to upgrade, they want to keep the casual gamers, family gamers on-site. This they emphasize over and over again in the launch. It's part
of the same generation as the original PS4. This counsel here that has sold 40 million -- over 40 million worldwide.
LAKE: I'm looking at this. I'm pretty sure I have. But I have no idea what those other ones are.
[16:45:00] The gaming industry has -- there's been a lot of controversy about how they do the updates and what happens to them. Are they sort of
changing their strategy here?
SEBASTIAN: Absolutely. Is what we're seeing. They're going more toward a more kind of Apple-style strategy. More frequent, more incremental
updates. I mean, just look this how it's changing.
LAKE: Look at this. This looks like a dinosaur.
SEBASTIAN: This is from 1994 this launch. This is the original PlayStation.
LAKE: I think it brings back memories for some.
SEBASTIAN: Look at the distance between these timewise. This is the PS2. That launched in 1994. This launched in 2000 into the PS2 that was six
years. Then another six years, this is the PS3. I think you can see that there. Quite heavy. That launched in 2006 and it was not until 2013 that
there was another iteration.
LAKE: This is a lifetime in technology. They try to shrink it and keep everyone hooked into their ecosystem.
SEBASTIAN: Absolutely. The difference with these is the games that you played across these consoles were not compatible with the different ones.
So that's what they're moving towards now. They were keen to emphasize today that on the PS4 Pro and on the PS4 they introduced another slim
version today. All the games would work the same. They would just look better on the PS4 Pro for those really high end games.
LAKE: while that is a huge relief to me. And I guess the next thing I'm going to have to worry about is virtual reality. But we'll have to wait.
To be continued for that as well. Clare, thank you.
Now, ticket sales were sluggish and budget cuts were rampant. Yet the Paralympic games have managed to begin in Rio. We'll be live in Brazil
next.
(COMMERCIAL BREAK)
LAKE: After a wrath of well-documented troubles, the Paralympics are under way in Rio. The opening ceremony began a few minutes ago. CNN's Shasta
Darlington joins me now. And Shasta, what do we have to look forward to? How is the event going?
SHASTA DARLINGTON, CNN CORRESPONDENT: Well, this is obviously just the beginning of what's expected to be a really exciting day in Rio de Janeiro.
The first Paralympic games in South America. I'm standing in front of the Maracano stadium where the opening ceremony is beginning.
This is the same stadium, of course, where the Olympics' opening ceremony was held and a pretty famous football stadium as well. What we expect is a
lot of samba, we understand there is going to be a lot of samba bands in there. The artistic director is a well-known Brazilian artist, Devic
Muniz.
We'll have more details as this develops, but it's been great. We're standing up here on a ramp that leads in to the stadium. Everybody walking
by in their national uniforms. Brazilian families, lots of Brazilian flags. This is really finally kicking off after the financial problems
that we talked about before, Maggie.
Local organizers announced they were in dire financial straits. They only sold between 12 percent and 13 percent of tickets, they were going to have
to reign in the budget. That was affecting everything from the venues with a lot of the competitions being moved to the central venues, as well as
seating and staffing.
[16:50:01] This was even a surprise to the International Paralympic Committee. The local and federal Brazilian government had to step in with
an emergency $77 million funding package. Of course, that's really just about half of what they had initially promised, so it's been a frustrating
experience for the International Paralympic Committee but they're pleased it's finally come together.
Ticket sales took off in the last couple of weeks. About 1.5 million tickets have sold, about 60 percent of those on offer. They're hopefully
more will be sold in coming days with the opening ceremony, of course the torch has been going around Brazil, enthusiasm has been building, Maggie.
LAKE: Shasta, we're going to let go, get to the festivities. But just really quickly is there a sense now that they've hosted the Olympics with
all the nerves that went into it, that they have a little bit more confidence that they know what they are doing. And they know what to
expect?
DARLINGTON: I think -- I think we can't go that far yet. In some ways I am surprised at how little attention this is getting in the national press.
This is a big deal in Rio, but as you know, the former president of Brazil was impeached less than a week ago. A new president was sworn in and the
national focus is really still on the political chaos of the political drama playing out. This is a big deal for Rio, it is a big deal for the
tens of thousands of visitors here but I think they still have to prove themselves on global stage.
LAKE: All right. Shasta Darlington, thanks so much. We're going to keep ourselves focused on the wonderful athletes as we should. Now speaking
staying with sports, Barcelona has one the best homes in football, now it is opening a new HQ right here in New York City. The club is looking to
expand into the U.S. market and later today it plans to transform some of the Big Apple's most famous landmarks into the red and blue of Barcelona.
The plan has reunited the club with the Barcelona legend Ronaldinho who celebrated the occasion by scoring a pretty easy goal at the press
conference. They really did take it easy on him. I spoke to the president of the club and asked why he thinks they can succeed in America.
(BEGIN VIDEOTAPE)
JOSEP MARIA BARTOMEU, PRESIDENT, FC BARCELONA: FC Barcelona from a long time ago, he's already in the U.S. doing soccer schools, doing a lot of
agreements with some foundations, social help, basically with UNICEF and also with the Bill and Melinda Gates foundation. We have some sponsors,
important for us like Nike, Black and Decker or Gillette.
Our history with the U.S. is from a long time ago. But right now we decided that we have to be here in a way permanent. Being permanent means
being closer to our fans, closer to the people, the people that love our club, love our brand, and, well, we think that with this we are going to
succeed and we're going to stay a staple.
LAKE: But you acknowledge it's difficult. So many players, so many children participate in the sport. So much competition on a professional
level that draws fans in other directions.
BARTOMEU: We have an advantage. Right now for example we are the club in North America with more fans in the social networks. We're very
successful. People love the way we play soccer, treat the ball and we see when we do summer tours sometimes, we would have it in Los Angeles, San
Francisco, Washington, the stadiums are full. It's true we have a lot of Latin Americans there but in North America it's played in the schools.
LAKE: That's right. You have some of the biggest stars on the planet. Although I think the American audience sees them in the world cup venue and
they think, they hear Neymar but they think of them playing in their home country in those tournaments. How can you really build out the Barcelona
brand? What are you going to do?
BARTOMEU: What we're going to do is continue, of course, expanding our soccer schools in the U.S. Right now we have one in Florida, North
Carolina, soon one in New York, expand -- show to the young children from 6 to 14 years old about soccer. In a way we are finding in our brand and, of
course, doing a lot of projects with our foundation which is very important for us.
Children is key for us, help children. Of course, like this, we'll probably receive more sponsorships from companies in North America. We're
going to have more events and something that's very important for us we want to do is try also to have a little bit soccer and probably we are
going to open a franchise in woman soccer league.
LAKE: Which, of course, is huge especially here. Some argue our women are better known than are men. Are you going to pay them equally as the men?
BARTOMEU: Well, we're going to see how is the market. But we have -- right now we have a professional women team in Barcelona that plays the
European champions league.
[16:55:00] So from now on in the future we want to have this team in North America, the U.S. to play. It seems very interesting. I hope to expand
our brand in America.
LAKE: Do you feel the pressure to build revenue given the fact that you have U.K. clubs, spending big. New managers who are going to be very
aggressive. You have the Chinese in spending.
BARTOMEU: Right now actually Barcelona is one of the top clubs in the world in terms of revenue, in terms of values like "Forbes" magazine said
several times. And we're working very much and also we have something which is very good, we have Lionel
Messi who is the best player in the world, still young, 29 years old, Neymar, Suarez.
We have a group of players attracting other players to play on our team. This will help us. The team is very successful in the past 30 years.
They're winning, they make people laugh, people love seeing how they play. That helps, of course, all the time to be closer to the people and also
that a lot of people are interested in our team.
That's why we think we are going to grow. Right now the club is one of the top clubs with revenue in the world. We have a vision to reach $1 billion
in four to five years.
(END VIDEOTAPE)
LAKE: Now, if you want a daily digest of the day's top business stories delivered to your inbox, subscribe to the QUEST MEANS BUSINESS newsletter
featuring Richard's Profitable Moment. And for all the top headlines from the rest o of the CNN Money team just go to CNNMoney.com/quest to subscribe
that. And that is QUEST MEANS BUSINESS. I'm Maggie Lake in New York. The news continues here on CNN.
END
