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Quest Means Business
Dow Continues Record Rally; Starbucks CEO: I'm ready to Hand Over; Former U.S. Astronaut John Glenn Dies at 95; President-Elect Feuds with Union Leader; Ericsson's Hot Consumer Trends 2017
Aired December 08, 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] RICHARD QUEST, CNN ANCHOR: All the major markets at a record high in New York. the Dow Jones is up some 55 points, a gain of just a
third of one percent, but it is over 19,600, which should be a good day -- I suppose that -- oh, that was a bonus, a bonus gavel which overrides the
wimpy-ness of it, but it means markets are closed around the world on Thursday, it's December the 8th.
Tonight, 20,000 here we come. The Dow's unstoppable march continues. But how much more life is there in this bull?
One more cup of coffee before I go. The chief executive of Starbucks tells us why it's time to step down.
And the aviator, the astronaut, a true American hero, the former senator, John Glenn has died. I'm Richard Quest and I mean business.
Good evening, I begin tonight with breaking news. That the former astronaut John Glenn, a true American hero, has died at the age of 95. Now
the news was just announced a short while ago. Senator Glenn became the first American to orbit the earth in 1962. He was part of the famed
Mercury crew. He wasn't done with space at the age of 77. He flew a mission aboard the space shuttle. John Glenn was then elected Senator from
Ohio in 1974 and he served until 1999. He also ran for U.S. president in 1984. CNN's Martin Savidge has more on John Glenn's extraordinary life.
(BEGIN VIDEOTAPE)
MARTIN SAVIDGE, CNN CORRESPONDENT (voice-over): John Glenn, one of America's first astronauts. One of seven men known as the Mercury Seven.
Chosen to take part in the United States first attempt to put men in space. He had already made history in 1957 by breaking the transcontinental speed
record flying from Los Angeles to New York in three hours and 23 minutes. In 1962, the military test pilot became the first American to orbit the
earth.
As Glenn lifted off in his Friendship Seven capsule, fellow astronauts Scott Carpenter and mission control uttered some of the most memorable
words in U.S. history, "Godspeed, John Glenn." Three revolutions and four hours and 55 minutes later he returned an instant legend. He was awarded
the Congressional Space Medal of Honor. And New York through him one of its signature tickertape parades.
Later in life Glenn would poke fun at the risk.
JOHN GLENN, FORMER U.S. ASTRONAUT: we used to joke about it in the past, when people would say, what do you think about on the launchpad? And the
standard answer was, how do you think you'd feel if you knew you were in top 2 million parts built by the lowest bidder on a government contract.
SAVIDGE: Until Glenn's flight, the Russians had led the space race. Glenn's success bolstered America's spirit and gave credence to President
John Kennedy's pledge to put men on the moon. Glenn would not be one of them. JFK ordered NASA not to fly him again. He was too valuable as an
American figure. He resigned from NASA in 1964. In 1983, the Mercury Seven more immortalized in the movie "The Right Stuff."
GLENN: I didn't much care for that movie. I thought it was dramatic enough without Hollywood doing this number on it. No, we had no control
over that at all.
SAVIDGE: He learn to fly as part of a college course and went on to join the Marine Corps in 1943. Glenn flew 149 combat missions in World War II
and the Korean War, before becoming a test pilot. After leaving NASA, he spent the next decade as a businessman. But in 1974 he ran for, and won, a
U.S. Senate seat from Ohio. When he announced, he'd retire at the end of the 105th Congress, Glenn had served for 24 years. He was widely regarded
as an effective legislator and moderate Democrat. Not everything went perfectly for Glenn, however, in 1984, he ran for president.
GLENN: With the nomination of my party, I firmly believe I can beat Ronald Reagan.
SAVIDGE: John Glenn never gave up on his dream of one day returning to space. He got to be, as he often called it, a willing Guinea pig once
again. At the age of 77 he flew on a nine-day space shuttle mission. The mission was to learn more about the ageing process in space. The flight
proved once again, Glenn was a man who embraced a challenge.
In 2012, president Obama recognized that and all of his accomplishments by awarding the former astronaut and senator, the nation's highest civilian
honor, the Presidential Medal of Freedom.
[16:05:00] For most people, fame is fleeting. For John Herschel Glenn, it lasted a lifetime.
(END VIDEOTAPE)
QUEST: Extraordinary life of an extraordinary man. And NASA has just tweeted about the passing of John Glenn. NASA says, "We are saddened by
the loss of Senator John Glenn, the first American to orbit Earth. A true American hero. Godspeed, John Glenn. Ad Astra."
Joining me now from Hong Kong is the retired NASA astronaut Leroy Chiao. Sir, good to see you. First of all, tell me how and when you came across
John Glenn?
LEROY CHIAO, RETIRED NASA ASTRONAUT: I met John Glenn, of course he was my boyhood hero, from growing up in watching the beginning of the space race.
But I actually met him when he came to NASA to train for his shuttle mission. So, that would have been around 1997 or '98 time frame.
QUEST: What sort of man was he? Obviously, he was going to be the oldest person in space. He comes with an incredible pedigree. How did he behave?
CHIAO: He came across as kind of what you would expect. He was very personable, very outgoing, very friendly man. He took his studies
seriously, as you would expect, being one of the first astronauts. And all of us there at NASA at the time, especially in the astronaut office, we
were just thrilled to meet him, get a chance to meet him and spend time with him. He was a real sweet guy.
QUEST: Did he seem to have detailed knowledge? I mean, going back into space after all of those years, clearly things had changed dramatically
since he went up in the Mercury mission. But you say he still had thirst for knowledge and to learn?
CHIAO: Absolutely, he was defensibly very sharp. He impressed all of us with how sharp he was. Took his studies seriously and even though the
space shuttle was a lot more complex vehicle than the mercury capsule, you know, he just dove right in and took it very seriously and performed very
well.
QUEST: And afterwards, I remember him coming out afterwards, he had thoroughly enjoyed the whole ride.
CHIAO: Absolutely, it was a disappointment to him, I think, that he became such an icon after flying his first American orbital mission. It was
basically deemed that he was not to be risked -- his life was not to be risked by flying him again. So, I think getting a chance to fly again into
space, especially aboard a vehicle as wonderful as space shuttle, was just a thrill for him. And he thoroughly just really had a great time.
QUEST: Leroy, thank you for joining us and putting it into perspective.
CHIAO: My pleasure, thank you.
QUEST: John Glenn who died today. We'll talk more about that hopefully during the course of the program and we'll certainly bring you more
reaction when we get it.
Now to our normal agenda of the day, the Trump stock market rally continues with unstoppable gains this week. The Dow 20,000 is very much in play.
Bearing in mind were in record territory, we're only 380 odd points away. The Dow year to date is up some 12.5 percent. Interestingly all of this at
a time when we've been told that an election of Donald Trump during the election was going to be catastrophic. Joining me now, Richard Clarida,
the global strategic adviser for PIMCO, and professor at Columbia University. First of all, do you accept, Richard, this is the Trump rally.
RICHARD CLARIDA, GLOBAL STRATEGIC ADVISER, PIMCO: Well, I think there are couple things, but clearly, I think the markets -- it took about eight
hours to sort of get over the surprise, and then the first trading day markets are up, why? Couple things, one, markets see fiscal stimulus.
They had not been expecting that. Number two, they see deregulation, or at less regulation in key sectors, financials and energy. And number three,
for better or worse, there's no more gridlock. There will be accountability in Washington. And face it, we've had gridlock for six
years. So, so far, the repricing has been -- to that also, we've had a decision out of OPEC to keep oil prices stable. And I think that's a
positive as well.
QUEST: OK, but if you accept that all the Trumpian policies were known during the election, certainly fiscal stimulus, infrastructure spending,
deregulation and the like. The analysts -- I'm not saying you personally, and let's face it we got it wrong as well -- buy a major miscalculation on
what the post Trump election victory would be.
CLARIDA: And I think as usual, you get right to the heart of the issue. Because I left out one thing that would be a huge negative that the markets
are ignoring, which is concerns about a trade war. Concerns about a descent into a spiral of protectionism. So, essentially the betting now is
that in the end, there will be an accommodation on trade that will not be destabilizing globally. The markets are betting on that outcome.
[16:10:00] QUEST: OK, so with that in mind, nor are the markets focusing on what will be the greater deficit as a result of the infrastructure,
fiscal stimulus and lower taxes. Why not?
CLARIDA: Richard, the bond market is starting to focus and rates have gone up since the election, and part because of deficit concerns. They're not
back to where they were in the bad old days, but we have had an increase in rates.
QUEST: So, to that point, is this -- to use the technical phrase that you'll explain to us, is this a rotation that we're -- are we seeing a
formal rotation under way from bonds to equities? Or is this just a repricing?
CLARIDA: I think it is a repricing. I wouldn't say it's a full-blown rotation. I think you've seen a move from government bonds into
investment-grade credit for example. And remember, Richard, although rates have gone up, they're basically back to where they were a year ago, and
they're still less than 2.5 percent, barely above inflation. So, we're still in a low-rate world.
QUEST: Actually, two final questions -- if that's not a contradiction in terms. Firstly, does the Fed raise next week?
CLARIDA: Yes. Slam dunk.
QUEST: Done deal?
CLARIDA: Yes.
QUEST: Secondly, does the Trump rally have legs?
CLARIDA: Well, you know Richard, I actually think the markets may be a little bit ahead of themselves. We may get fiscal stimulus, but we won't
get a lot next year, for example. And so, I actually think that there is some chance of a pull back once we actually see the reality of what 2017
looks like and not the forecast.
QUEST: Good to see you as always, sir.
CLARIDA: As always.
QUEST: Thank you.
CLARIDA: You bet.
QUEST: Now the European markets cheered the ECB's surprise move to extend its bond buying program. The monthly purchases will be smaller, although
the program will last longer. The best performance were the banks in Milan. Monte dei Paschi climbed for a third straight day.
Since we industrial you here, Richard, on that ECB announcement -- just very quickly -- does it make much sense to extend the duration, but reduce
the amount being bought? What the thinking behind reducing the amount?
CLARIDA: It was a bit of a surprise. I certainly expected them to keep the amount in place. This extension, they can certainly revisit it and I
expect it will be extended further. I think what they though, is that in essence, what they're trying to do -- it's a bit tentacle -- is to steepen
the yield curve to move up long waits relative to short waits. Why? It's good for bank profitability. And right now, European banks need some
profitability. So, it's a bit of a subtle move to steepen the curve. Lower the front end of the curve through some tentacle adjustments. So, I
think that was the goal, and also weaken the currency and it actually did weaken today somewhat.
QUEST: We shall read about it overnight and understand its implications. Thank you, sir.
CLARIDA: As always.
QUEST: As we continue tonight, we talked about the Trump rally. Donald Trump has left no stone unturned when it comes to criticisms against him.
It's Donald Trump versus the Steel Unions. We'll talk about after the break. QUEST MEANS BUSINESS, good evening.
(COMMERCIAL BREAK)
[16:15:00] QUEST: So, to the transition. The union leader, who claimed that Donald Trump lied to the employees at the Carrier Corporation, is
telling CNNMoney, he has no regrets about calling out the President-elect. The devil is in the detail here and this is how the feud unfolded. At 7:18
p.m. last night, Chuck Jones, the president of the Steelworkers Union appeared on CNN and he disputed the number of job that's will be saved by
Donald Trump's deal with Carrier.
(BEGIN VIDEO CLIP)
CHUCK JONES, PRESIDENT, UNITED STATES STEELWORKERS 1999: Yes, I think he's did a lot of negotiations, and I have, like wise. If you're dealing with
people's livelihoods, I'm sure the world ought to know what the numbers are.
(END VIDEO CLIP)
QUEST: It appears that the President-elect was paying close attention. So, 7:18 Jones speaks, and 23 minutes later, after he appears on CNN,
Donald Trump tweeted that -- Trump says, "Chuck Jones, who is president of the United Steelworkers 1999, has done a terrible job representing workers.
No wonder companies flee the country."
So, you see the times there. We're back at 17. The Jones comes back on air at 8:56 to defend himself, whereupon Trump follows up with another
Tweet just before 9 o'clock, in which he said, "If United Steel Workers 1999 was any good, they would have kept those jobs in Indiana. Spend more
time working, less time talking. Reduce dues." -- I assume he means union dues. At the heart of this dispute is the disagreement over exactly how
many jobs have been saved. Donald Trump repeatedly insisted it has been more than 1,000.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT-ELECT: I will tell you that, ah, United Technology and Carrier stepped it up and now they're keeping -- actually
the number is over 1100 people. Which is so great. Which is so good.
TRUMP: We're saving jobs at the carrier plant from going to Mexico, 1100 jobs.
QUEST: But numbers are not all they might seem. So, Donald Trump claims it's 1100. But that he says, is misleading according to the unions,
because only 800 of those numbers were factory workers, the rest were office workers who were never going to go to Mexico. Speaking on CNN,
Jones says that confusion meant -- and the reason why this is important from the union's point of view, is that this discrepancy between the two,
there are still hundreds of jobs that will be lost at Carrier.
(BEGIN VIDEO CLIP)
JONES: The reality is that we're grateful, once again, to have 730 of our members still have a job, and it is due to President-elect Trump getting
involved. My progress is when they put out earlier in the week that 1100 and some odd jobs would going to be saved. A lot of people thought at that
point in time that they were going to have a job. During the conference that Pence and Trump were at, at Carrier, they talked about over 1100 jobs.
They didn't mention anything about 550 jobs here in Indianapolis going to Mexico. So, a lot of people in the crowd and throughout the plant, thought
they were at that point in time we're going to have a job, only to find out when we told them the next day that 550 of them were going to lose their
jobs to Monterrey, Mexico.
(END VIDEO CLIP)
QUEST: CNN's political director, David Chalian is with me from Washington. On these situations, I always think perhaps the first question to ask,
David, is cough up or deliberate obfuscation of the numbers by the President-elect.
DAVID CHALIAN, CNN POLITICAL DIRECTOR: I go back to President-elect Trump's book "The Art of The Deal", Richard, and get to this expression
that he used there, that he says he employees all the time is "truthful hyperbole." But clearly there is a discrepancy in the number, and in
Donald Trump's mind, he did save jobs. So, if he's a little hyperbolic exaggerates the number to tell his story, that sort of the way he has
conducted himself. It's a different universe to do that as President-elect or even more so as President of the United States, when everybody hangs on
your actual words. And I know, to the audience it might be, guys what are you doing quibbling about 300 jobs.
[16:20:00] He saved jobs. But as you said, those 300 jobs, those are people. Those are livelihoods, sitting around kitchen tables, it matters
to them whether or not there in the count or not. That is their future.
QUEST: So, as I understand it from this, the 300 difference weren't going anyway, therefore, there are several hundred of the manufacturing job
that's are going.
CHALIAN: Right, exactly. I think about 500 or so are heading to Mexico, which was reported at the time, and of course, Trump didn't want to focus
on those at all. Some of these jobs in the discrepancy in the count, they were, as you noted, they were staying anyway. They were never really on
the chopping block.
QUEST: David, stay with me. Do not go a millimeter from where you are. Because we need to talk about a fast food chief executive that is Donald
Trump's choice to be the Labor Secretary. Now it is Andrew Puzder, who runs CKE restaurants, owner of Carl's Jr. and Hardee's. The company is
known for its risqu, commercials.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (singing): What are you doing this weekend? Wish to say in to have us a threesome. She's giving her some. They giving me some.
Yeah.
UNIDENTIFIED MALE: With bacon strips, bacon jam, and bacon crumbles, it's a bacon lovers fantasy.
UNIDENTIFIED MALE (singing): We're having us a threesome. Menage a trois. Menage a trois. Menage a trois.
(END VIDEO CLIP)
QUEST: Good grief. We don't often get this on QUEST MEANS BUSINESS. Be still my beating heart. Easy there Chalian, easy. What do you make of
this particular appointment, bearing in mind -- apparently, the person was a friend of Trump's? The commercials had been used on some of "The
Apprentice". What do you make of the appointment?
CHALIAN: Well, first of all I just want to make sure everyone in the audience is clear, I they were selling hamburgers in that ad. In case it
wasn't entirely clear what they were selling. Listen, the new Labor Secretary designee who is responsible for this ad, had said in previous
context that he does think this reflects his views. That not always do ads get to reflect the CEO's views. And so, clearly some Democrats are
drumming up that he has similar feelings about women the way Trump does.
I think, but more substantially, Richard, one of the things I think is going to be really interesting that comes out in the confirmation hearings
for the Labor Secretary, is the issue of the minimum wage. Because he has expressed discomfort with a federal minimum wage increase much above $9.
Donald Trump has been a bit all over the map on the minimum wage throughout this campaign, but seemed open to the idea toward the ends of the campaign,
of a substantial increase in the minimum wage and it will be interesting to see how they square that with each other.
QUEST: It is also unusual though to have a cabinet secretary, it's not the first one we've got here, but who is CEO of a major company, for many years
by the way, one assumes he'll sell his stock under the favorable grant that is allowed under the capital gains tax provisions for incoming cabinet
secretaries. But he is a CEO who is going to become a cabinet secretary. It is unusual in these situations
CHALIAN: Richard, it is. I think, look at what is happening now. The cabinet room in the White House is turning into a board room. You have
this nominee, Linda McMahon of the World Wrestling Entertainment Group, you have Steve Mnuchin there. A bunch of people that are coming in and a lot
of these folks are used to being top dog. When you are cabinet secretary, you are taking the marching orders from the president. It'll be very
interesting to see how they sort of adjust themselves in that realm to being, you know, employees, for all intents and purposes, of Donald Trump.
QUEST: We're going to be talking about that in tomorrow's program. David Chalian, you've beautifully allowed me to tease the program tomorrow. Good
to see you, sir.
CHALIAN: You too, sir.
QUEST: We will indeed be looking at that. Now, airlines worldwide, recorded record profits in 2016, more than $35 billion. These good times
will be somewhat reduced next year. The International Air Transport Association, IATA, expects profits to fall 16 percent over next year to
around 30 billion. Now that 30 billion is industry wide. The first decline in some six years, and IATA blames rising oil prices for the
decline.
If you look at those that are doing best, North American carriers are still forecast at the most solid earnings of next year. They're likely to make
$20 her passenger. That figure is $5.65 in Europe. Airlines in Africa are actually running at a deficit, an expected loss of under just $10 per
passenger.
[16:25:00] So, there you have $19.58 in the U.S. Just a bit of money in Latin America. Africa loses money, Middle East in Europe. So, by far and
away, that shows you just who is making money out of us when we fly and the best profits in North America.
Alexander de Juniac, is the new head of IATA. When he joined me on the line from Geneva, I asked if he was satisfied with the profit performance.
This performance that you see. Is he satisfied?
(BEGIN VIDEOTAPE)
ALEXANDER DE JUNIAC, DIRECTOR GENERAL & CEO, IATA: We're satisfied that the airline business is profitable. We are satisfied that for the third
year in a row in 2017, we will make a significant profit and we will have a return on capital, which is a above our cost of capital. But that should
be the normal situation for an industry, and with roughly 5 percent of revenues in profit. What we say is that we are still fragile and we are
not among the most profitable sectors in the industry. So, we are profitable, but we should aim at doing better.
QUEST: For all of your forecasts to come true, you have to hope that airlines act responsibly and either don't increase capacity and don't start
price wars.
DE JUNIAC: You're right. Our forecast are based first of all on macro- economic forecast which are coming from the major international bodies, that are not over optimistic, that are reasonable in the forecast and
stability, for instance in GDP growth, first of all. But, we also think that the airline business will remain reasonable in terms of capacity. We
think it could be the case because in 2016 we have seen additional capacities coming on the market in excess compared with the demand. And
all the airlines, everywhere in the world and particularly in Europe, in Middle East or in Asia, have suffered from a significant decline in the
yield. So, we expect for 2017 that the alliance will be more reasonable in their capacity to avoid or facing a strong decline in their yield, so
meaning in their ticket price.
QUEST: A very troubling incident, airline incident, when a plane allegedly ran out of fuel. You'll be aware of course, that Colombia, the Lamia
incident. This sort of thing, obviously, shouldn't happen. An investigation is under way into that particular crash. But how concerned
are you, as not only head of IATA, but as a former airline CEO, that this could ever happen?
DE JUNIAC: If it is a shortage of fuel, it's something very worrying that should never happen. Because in all airlines, especially IATA members, we
have some very strict rules in terms of fuel. To have reserve, not to fly above fuel capacity tanks. So, it is something that is very, very strictly
controlled.
(END VIDEOTAPE)
QUEST: Alexander de Juniac talking to me earlier today. We'll be back in just a moment. This is QUEST MEANS BUSINESS. Good evening.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard quest, there's more QUEST MEANS BUSINESS in just a moment. But before we get to any of our program, this is CNN and on this
network the news always comes first.
The legendary U.S. astronaut, John Glenn has died. He was taken to hospital last week. Mr. Glenn was the first American to orbit the earth.
He became a U.S. senator from his home state of Ohio for many decades. And then went on to participate in a shuttle mission in 1998 when he was 77
years old. He was 95 when he died.
This tsunami threat in the South Pacific has largely passed after a powerful 7.8 earthquake hit near the Solomon Islands less than 30 km oft
Makira. One resident described this quake as the largest and longest said he'd ever felt.
Thousands of traumatized people are still fleeing eastern Aleppo as the Syrian government troops battle their way through the old city. Now, the
Rebel fighters are said to be on the verge of losing their last stronghold there. Russia says the Syrian army is halting attacks to allow civilians
to leave.
Britain's spy chief says Moscow and Damascus are working to wipe out opposition in Aleppo at any price. Alex Younger gave a rare public speech
on Thursday at the Secret Intelligence Service headquarters in London. He said Russia and Syria were putting the global fight against extremism at
risk.
(BEGIN VIDEO CLIP)
ALEX YOUNGER, HEAD OF BRITISH SECRET INTELLIGENCE SERVICE: In Aleppo, Russia and the Syrian regime seek to make a desert and call it peace. The
human tragedy is heartbreaking.
(END VIDEO CLIP)
QUEST: President Obama has just paid tribute to John Glenn who died today. In a statement, Mr. Obama said, "John spent his life breaking barriers,
from defending our freedom as a decorated Marine Corps fighter pilot in World War II and Korea, to setting transcontinental speed record, to
becoming, at age 77, the oldest human to touch the stars." CNN's Rachel Crane joins me now to discuss this more. It's incredibly sad. He's 95 to
be sure, but John Glenn is a hero.
RACHEL CRANE, CNN CORRESPONDENT: We just lost a true American hero. Military veteran, the oldest man to go to space, the first man to orbit the
earth that was an American, a senator, being mourned by the space community, also Washington as you pointed out. President Obama making a
statement also Donald Trump just tweeted out, "Today we lost great pioneer of air and space in John Glenn. He was a hero and inspired generations of
future explorers. He will be missed." Also, NASA putting out a statement saying, "We are saddened by the loss of Senator John Glenn, the first
American to orbit the earth. A true American hero. Godspeed, John Glenn. Ad Astra."
QUEST: To the stars.
CRANE: Right, to the starts.
QUEST: Ad Astra, to the stars. But what I find fascinating about John Glenn's life is even having been the Mercury, the first man in space, he
chooses to go on to do public service as Senator for decades, and a respected Senator with a detailed knowledge of things like budgets and
things like that.
CRANE: Just to point out, he wasn't the first American in space, but he was the first American to orbit the earth, and he did it three times just
under five hours. And you know, space travel is always risky, it's always difficult. But even back then, it was even more risky then. The
astronauts were part of the Mercury program were true, true heroes.
[16:35:00] John Glenn went up in Friendship 7, that was a space capsule that he was in, all by himself, orbiting the earth those three times just
under five hours. He described the experience, which we'd all heard about, but being very rocky. But you know, he had the real stuff, the right
stuff, and you know, a true, true American hero.
QUEST: When he went back into space in '97, I remember vaguely in the back corner of my mind, there was some question of -- a 77-year-old popping off
into space.
CRANE: There was some criticism. People were skeptical. It was irresponsible to be sending him there. But I also think, you know,
obviously, NASA has very strict protocol about the health that somebody needs to be in order to go to space.
QUEST: He was determined.
CRANE: Yes, he was determined.
QUEST: He was absolutely determined.
CRANE: And he persevered. And I think that that's why he's so respected by not only the space community, but by all Americans, by all people around
the world. Because he's somebody that was really passionate about space exploration, about space travel, up until the day that he died, especially
at age 77 when he signed the dotted line and shot up into space. So, a real brave man and a true American hero, Richard.
QUEST: Our space correspondent, thank you very much.
CRANE: Thank you.
QUEST: You brought it to us, thank you.
As we continue our discussion tonight, Howard Schultz of Starbucks says this time it will be different. Now he's exiting the stage for a second
time as Starbucks chief executive. Poppy Harlow will be with me after the break to answer the question, Ms. Harlow. Will it stick? Or it be like
the opera singer, he won't leave the stage, he will be back for one more encore?
(COMMERCIAL BREAK)
QUEST: Which is the cup? Where is it going? And who is the CEO? And who will take over form him when it's all over? Howard Schultz says he is now
emotionally prepared to hand over Starbucks to a new chief executive. He announced last week he would step away as chief exec next year. He's going
to remain the executive chairman, so he still going to have his sticky fingers in the coffee cup. He said he will focus on other Starbucks
projects including the opening of a chain of high-end coffee shops. CNN's Poppy Harlow spoke to him at Starbucks investor conference. Poppy is with
me now. Tall --
POPPY HARLOW, CNN CORRESPONDENT: Tall, venti, English breakfast tea with lots of milk. Boring order, that's my order. However --
QUEST: Why is he going and why now?
HARLOW: He tells me it's not to run for president, at least not right now. That's a question we get to in the interview is you'll see in a moment.
When he walked away it was disastrous back in 2000. So much so he had to come back in 2008. He's 63 years old. He's been at this company for 34
years. And I think finally, Richard, he found someone he trusts to ensure a company that he says he loves as much as his family.
(BEGIN VIDEOTAPE)
[16:40:07] HOWARD SCHULTZ, CEO STARBUCKS: Kevin and I have worked together both on the board and in the last two years as he's been in the company, as
a President and COO for almost ten years now. And in that period, we basically have co-authored the long-term strategy of the company. I also
think, with great humility, that Kevin's skill base and experience is better suited to run Starbucks on a going forward basis than myself.
HARLOW: He is better than you right now to run this company?
SCHULTZ: Yes.
HARLOW: Why?
SCHULTZ: His skill base and an experience, especially with regard to a global enterprise, how customer facing technology is going to play a huge
role in our future. And also, I'm not leaving. I'm around to help and support and coach, whatever I can.
HARLOW: So, you're not going to hover? You said you're not going to hover.
SCHULTZ: No, I made some mistakes many years ago, it was a different time in my life. I wasn't as emotionally prepared as I am now. But I'm ready,
more than ready, to hand over the reins to Kevin.
So, my colleague, Paul La Monica, I think put it best, and he said, you have some venti size shoes to fill. That's what he said. How are you
going to lead Starbucks, Kevin? I mean, how much will you lead it like Howard has? How much will this be your own footprint? You've got a ton of
experience, especially when it comes to the tech side of the business, Microsoft, Juniper Networks. How do you make this your own, while also
building on what Howard built?
KEVIN JOHNSON, COO, STARBUCKS: We co-authored the strategy. So, the strategy that we put together that we share today, my fingerprints are all
over that, along with Howard's and along with the rest of our leadership team. You know, I realize I'm not Howard, I'm Kevin. So, I'm going to
lead in an authentic way. I think I had the opportunity to get to know the management team over the last two years. I travelled the world and worked
in every part of this company. I believe in the strategy and what we're doing, but I also know that I have to be authentic in my leadership.
HARLOW: Howard, you said part of why I'm leaving is to focus on social impact. And you said to me, given the state of things in this country,
there is a need to help those left behind. What are you going to do?
SCHULTZ: We clearly view the fact that we have stores in almost every community in America, and have an understanding of what happening in cities
across the country. So, give you two examples. We have a significant homeless problem, both in Seattle and around the country. In addition to
that, one out of six people in America are hungry every single night without food. These are areas where I think it is a natural place for us
to play. It is not a political cause, it's a cause for humanity. And I think we're going to continue to look for ways to leverage our scale for
good, and not do anything that would be disrespectful to the President- elect.
HARLOW: In our interview in September, you endorsed Hillary Clinton, and after the election you wrote a letter to all of Starbucks employees and
partners saying you were shocked by the outcome of the election. Right before the election you said that the Donald Trump campaign was a vitriolic
display of bigotry, and hate and divisiveness. And noting that's not the future leadership of this country. Since then you've said, it's our
responsibility to give him about opportunity to governor and to come together. Have you seen encouraging signs from the President-elect and his
team?
SCHULTZ: I think it is too early to make that conclusion. I think, what I said, I want to be very clear is that I think as Americans whether we voted
for Donald Trump or not, he is going to be the president of the United States. And I think we have a moral obligation to do everything we can to
ensure the fact that he and his team are successful. America needs a successful president and so does the world.
HARLOW: If he calls on you to advise him, we have seen people from both parties there, would you do that and what would your advice be?
SCHULTZ: My advice would be that I think the country really needs servant leadership. And I think the country needs unity. And I think more than
anything else, the country needs to come together, that would be my advice.
HARLOW: In September, when I asked you if you ever considered a run for president, you told me I'm still a young man, I would never say never, but
this is not the right time. You were supporting Hillary Clinton at the time. Most of America thought she was going to win. Things are different
now. Are you considering at all throwing were hat in the ring for 2020?
SCHULTZ: You know what, I don't know how many times you have asked me this question and each time I have had a pretty consistent answer. And
certainly, I am deeply committed to all things Starbucks at this time.
HARLOW: It's not a never.
SCHULTZ: I'm deeply committed to Starbucks.
(END VIDEOTAPE)
HARLOW: Howard Schultz there. It is not a never, Richard. He 63 years old. So, he'd be 67 comp 2020. It would be a different story if Hillary
Clinton were the President-elect and if she had potentially eight years ahead of her. He was very opposed to Donald Trump. And look, you know his
personal story. This is a kid that grew up in the projects in Brooklyn and built this. Will he use that and will he run? Will see?
[16:45:00] QUEST: All right a very simple question for you, Ms. Harlow. Assume you were a betting woman, and you may not be. But if you were a
betting woman, shall we bet a Venti, do you think he'll run in 2020?
HARLOW: I would bet two Ventis that he will run in 2020. That is not based on anything other than him telling me constantly that he will not at
this point time. It's my gut. I have no evidence.
QUEST: No evidence never stopped us before. Just think of the fabulousness of two titans, Donald Trump maybe goes for reelection and
Howard Schultz. It truly would be board room America.
HARLOW: With no experience in politics and no experience in the military. It would be the first for America, but the American people have told us
they're sick of politicians.
QUEST: Good to see you.
HARLOW: You, too.
QUEST: It's rare for a woman to be chief executive of a Indian company. Ameera shah is an exception. She is growing a single pathology lab into an
international chain. And will meet her in an ongoing series "INDIA TWENTY UNDER FORTY".
(BEGIN VIDEOTAPE)
AMEERA SHAH, CHIEF EXECUTIVE, METROPOLIS HEALTHCARE: When I was 12, 10 to 12 years old, when my father was running his lab, I used to come for every
summer to work. And I would come to the lab and I would, when you get blood taken you have to usually put a little bandage here that was my job.
My name is Ameera Shah, I'm 37 years old. And I'm the promoter and managing director of Metropolis Healthcare. Metropolis Healthcare is a
chain of pathology laboratories. Were one of the only branded chains available here. We do everything from a very simple cholesterol test to
very complicated genetics. We something like 200,000 labs in India. Unfortunately, there's no regulation in this country. So, anybody can
start a pathology lab. It can be quite scary when quality results are not up to standards.
The Indian industry is very focused on individual doctors. What we had the opportunity to do is to really take that lab, which was built by an
individual, and convert it into a brand and steal it from one location in Bombay to multiple locations across the country. We really disrupt the
market and build a brand and an institution that is beyond the individual.
We may be processing 100,000 tests per day, but my guidance to my team always is that remember that every sample is not just one of 100,000.
Treat it like it's your mother's sample. Treat it like it's your family's sample. Because that's what it means to the person we call important.
The journey has been a roller coaster in every way possible. People talk a lot about the success that you get at the end of it if you're successful.
What people forget is the emotional journey that an entrepreneur has been through during the ride. It is a combination of a lot of uncertainty, a
lot of risk taking, you've really got a push yourself. Find courage and choices that you never knew existed.
In India, especially with women, we are pushed to choose the safest spot, always. The challenge with that is you become comfortable in life and you
never want to take any risks to do anything new or adventurous or innovative. The biggest asset that a woman has is confidence. And that is
the most critical part, because systematically, all people in our lives from when we're young, out of wanting to protect us, have killed our
confidence. Have told us that we can't when actually we can. I think building our own confidence continuously, systematically as we get older,
it is the most critical aspect for any woman and I think the biggest asset for any woman.
(END VIDEOTAPE)
QUEST: Fascinating. Now the merged reality, the internet of things, the self-driving cars, so what are the trends for 2017? We'll be talking about
that after the break once you've had a moment to cogitate as you "MAKE, CREATE, INNOVATE". No, that's not a rude word Jenna.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Now we've already talked about the management changes at Starbucks. If you're both a Pokemon GO fan and a Frappuccino drinker, you're in luck.
Starbucks is now offering both. Capitalizing on the augmented reality craze that is just about everywhere at the moment.
This sort of thing is the big thing in tech, augmented reality. Putting virtual characters into my real world. While first we have reality, then
we had virtual reality. Now you have augmented reality. And it's all going to come together as merged reality. Virtual, augmented, merged, what
do all of these things mean? Well, Erickson has taken a survey of what we call, early adopters. And most people believe that merged reality will be
indistinguishable from normal within three years. What is merged becomes my perception, becomes my reality.
Other big trends to take hold during the course of the year, the internet of things, where just about every device that you've got is connected.
House, car, lights. And then you have artificial intelligence with devices like Siri and Alexa. All of which keeping you informed. And don't forget
self-driving cars. Put it all together and you end up in a world where you're never quite sure what is real, what is unreal and what is being
constructed for purposes of my vision. Let's put all of this together and talk about it with one of the authors of the report. Dr. Michael Bjorn, is
the head of research at Ericsson. Sir, you are putting together a frightening prospect for us. Tell me what it will look like in reality.
MICHAEL BJORN, HEAD OF RESEARCH, ERICSSON CONSUMERLAB: If you think about the internet, ten years ago, you were saying I'm online, I'm are you online
offline. Are you online right now by the way? Are you on the Internet right now?
QUEST: In several places, yes.
BJORN: But you don't really think about it. It's all part of reality. So, this is what's going to happen with virtual augmented and all these
kinds of realities as well. People are saying that you know, you can't have a split vision. In the industry, we talk a lot about mixed reality.
But if you mix things and they don't match, it's not good for you.
QUEST: So how does this, because this is crucial. Because Ericsson is always at the forefront in these sorts of things and what you can to
forecast, tends to come true. How will this affect my life.
BJORN: Well, for example, if you're playing table tennis.
QUEST: Which, of course, I have not for 45 years, but don't let that were you.
BJORN: As an example, I was playing table tennis when I was a kid. I met a guy who is a total technophobe. He doesn't do any virtual -- all these
kinds of realities and stuff -- and he beat me at virtual table tennis right from the start. Because he is better table tennis player than I am.
So, this is going to be, you can practice table tennis in virtual reality and then go out there and beat the real person.
QUEST: I haven't quite yet worked out how the Internet of things helps me. I mean, my refrigerator doesn't do anything except keep things cold. I
suspect in time it will change.
BJORN: Well, the Internet of things is very abstract for consumers, right?
QUEST: Yes.
BJORN: But if you think about it like this, your phone, you said it's on internet right now, maybe that will learn your behaviors, and do things for
you. Book meetings for example, simple thing, maybe answer some of your emails or post status update on social networks. So, that will then be an
Internet of things, acting on your behalf.
[16:55:00] QUEST: So, in the examples that I gave, merged reality, Internet of things, cars and those sort of things. How far along this
development are we? If you say, for example, are we just at the beginning? Are we halfway through? I know that's how long is a piece of string. But
how much more development will there be that will affect my life in my lifetime? And I'm 54. Be careful with your answer.
BJORN: I think there will be a lot. You mentioned Pokemon GO. And if you go back to just the spring, no one new about augmented reality, or very few
did. And then all of a sudden, hundreds and millions of people are playing Pokemon GO in the street. And then of course, people are saying hey, you
know, this is something I would like to do something more with --
QUEST: But you still had to get on a plane and cross the Atlantic. We haven't managed to get over that have we?
BJORN: You don't have a VR studio here, so you need to get one of those I suppose.
QUEST: Next time. Good to see you, sir.
BJORN: Thank you.
QUEST: We'll have a Profitable Moment after the break. QUEST MEANS BUSINESS. Good evening.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. It is a brave new world. And for those of us over 50, of a certain age things are arriving left and right.
Well, it's hard to keep up with it all as we move on, forward through. But if there is one thing we learned tonight, when you think about the life of
John Glenn, there really is only one thing to remember, keep moving forward. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest
in New York, whatever you're up to in the hours ahead, I hope it is profitable. I'll see you tomorrow.
END
