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Quest Means Business
U.S. Homeland Security Defends Travel Ban; Merkel Responds to Trump Adviser's Attacks; Dow Stumbles for Second Straight Session; Trump and Israeli PM to Discuss Cybersecurity; Amazon, Expedia Back Lawsuit Against Travel Ban; Gulf Carriers VS. U.S. Airlines; Universities Battle Against the Ban. Aired 4-5p ET
Aired January 31, 2017 - 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: The Dow Jones up 107 points. Volunteer group ringing the closing bell at the New York Stock Exchange.
I've got a good feeling about this gavel. Come on don't let me down! You win some, you lose some. It's Tuesday. It is the 31st of January.
Tonight, backing the ban. U.S. Homeland Security comes out fighting in defense of Trump's executive order. It's Trump versus the chancellor. In
this case, the Bundes Chancellor, Angela Merkel, says Germany's playing fair after claim it's fiddling the euro.
And couple it a double shot of triple-digit losses. The Dow takes a second stumble. It's off more than a hundred points. I'm Richard Quest, live in
the world's financial capital, where I mean business.
Good evening. We begin, of course, with the latest developments in the Trump travel ban. After four days of confusion around the globe, the new
head of the U.S. Homeland Security Department says that Donald Trump's travel ban is working. John Kelly is standing firm, and says he will not
gamble with American lives. But he does say that it will be implemented humanely, the policy. The secretary insists the airport scenes that
dominated headlines was confined only to the protests and wasn't because of the rollout of the ban itself.
(BEGIN VIDEO CLIP)
JOHN KELLY, U.S. SECRETARY OF HOMELAND SECURITY: This is not, I repeat, not a ban on Muslims. The homeland security mission is to safeguard the
American people, our homeland, our values and religious liberty is one of our most fundamental and treasured values.
By preventing terrorists from entering our country, we can stop terror attacks from striking the homeland. We cannot gamble with American lives.
I will not gamble with American lives.
(END VIDEO CLIP)
QUEST: The news conference filled in several lingering details that had to this point been somewhat unclear. It confirmed that dual nationals will be
processed according to the passport they present, so if you've got a Syrian and a U.K. passport or a German passport, you can use the other one.
Waivers will be given to some refugees who arrive this week. Over 800 are expected. And countries named in the temporary ban are unlikely to be
taken off the list anytime soon. Tal Kopan is in Washington. Good to see you.
Look, as I watched today's news conference, I couldn't help feeling it was a day late and a dollar short. It's the sort of thing we should have seen
over the weekend or even on Monday.
TAL KOPAN, CNN POLITICS REPORTER: It was a little bit, you know, off with what we've seen. It was sort of a message everything went great is what we
heard over and over. Everything went according to plan. We only had to redirect our efforts a little bit after a court order, which, of course,
does not comport with what people were seeing with their own eyes, which was, you know, airlines being given conflicting guidance, first green card
holders were allowed, then they weren't allowed, then they were again. So, you know, it was a little bit off-key from some of the officials on how
much they said everything was sort of executed swimmingly. And we definitely did not see that. We saw confusion and protests. You know, the
message was we handled this well. That's not really borne out by the facts.
QUEST: So, as I understand it now, green card holders potentially go to second recall. Almost any go to some form of second re-questioning or
second re-inspection, but possibly, most of them, have been let in. Dual citizens can use their secondary passport and therefore enter the United
States. And these refugees that are on their way, what do we know about them, if anything?
KOPAN: We know that they expect 870 and a handful this week. And these are presumably people who have been cleared through the system going
forward. What we don't know is if anyone will come after that. We don't know what their cutoff has been for if you had been being processed as a
Syrian refugee and whether you will be going forward. It appears from the text of the order that this is going to be fairly strict. At this is going
to be on hold and we shouldn't expect any refugees to get in for at least three months if not longer. And in fact, the entire refugee program may be
reassessed and sort of just scaled back a little bit in terms of numbers.
[16:05:00] QUEST: As I understand it, and the devil's in the details here, so please feel free to jump in and tell me I've got it wrong. You've got
the refugee program, which is suspended for 120 days. And thereafter will be reviewed after a report, but Syrian refugees, there's an absolute ban on
those coming in. Do we know if Syrian refugees would be eligible for waivers, as clearly some of these 800 are? Or is this still very
uncertain?
KOPAN: I think very uncertain is exactly right. We don't know. And you know, the notion of who is eligible for a waiver seems to be changing day
to day. More and more people are sort of being issued sort of certain acceptable categories. Like you said, green card holders, what's the line
we're hearing, that's sort of a dispositive factor in their favor. So, that's sort of a presumption in their favor. You know, keep in mind, the
order also made a note of folks fleeing religious persecution, who are a minority religion in a country there originating from. That might be good
for Christian Syrian refugees, but we haven't heard specifically if that is going to be the case moving forward.
QUEST: Brilliantly the way you said, dispositive I -- I saw in the statement. And I've been trying to pronounce that for several days.
Dispositive. Thank you very much indeed. I knew what you meant, I just couldn't say it. Thank you.
Relations between the two parties in Washington seem to be deteriorating, and I mean by the hour. Democrats on the Senate Finance Committee are now
boycotting the vote of two of Trump's cabinet nominees. They are for the Treasury Secretary, Steve Mnuchin, and Health and Human Services, Tom
Price. MJ Lee is on Capitol Hill. I'm assuming -- and this is all some parliamentary gesture to try and prevent a quorum so that the vote can take
place. But it's not terribly legitimate, is it? The correct way to deal with this is you have a vote and if you lose, you lose.
MJ LEE, CNN U.S. POLITICS REPORTER: Yes, I can tell you that the Republicans in that hearing room today were absolutely stunned, they did
not see this coming. Actually, there was supposed to be a vote to take place in that room at around 10:00 in the morning. And a few minutes
later, the Democrats who sit on that committee, the Senate Finance Committee, they decided to convene a press conference with reporters, just
down the hallway, while the Republican members of that committee were waiting in the room, basically not knowing what was about to happen.
And the Democrats making the case that because of certain answers that both of these nominees gave during their confirmation hearings, that they are
simply not ready to take a vote in the committee and potentially send these nominations to the full Senate.
But you're absolutely right, this is more of a procedure act that is going on. At some point, we do expect one or both of these nominees to be taken
up by the Senate. I can also tell you that the Republicans on this committee are very angry over how the Democrats conducted themselves this
morning.
QUEST: Delaying tactics at best. I mean, you know, we're men and women of the world. These nominees are going to get confirmed.
LEE: Well, the interesting thing though, and I don't want to get too much in the weeds, but if you look at the rules of the Senate Finance Committee,
it states that at least one member of the opposite party has to be present in order for this committee to take a vote.
What happened this morning was that not a single Democrat of that committee was present and that's why they could not move forward. Now, I was talking
to the chairman of this committee, and asking, well, if you were to bring up a committee vote tomorrow, for example, what makes you think that
anything is going to be different? And he sort of shrugged and said, look, we don't know, we're exploring our options. So as of right now, this is a
real problem. Again, Republican lawmakers and committee aides are trying to figure out how they can maneuver around this sort of predicament, that
they faced earlier today.
QUEST: MJ, thank you very much, indeed. You've got your work cut out for you in the next few hours watching these various committee meetings. Thank
you.
Donald Trump says Democrats should be ashamed for holding up his cabinet appointments. Early on Tuesday morning, he tweeted, "No wonder D.C.
doesn't work."
Betsy McCaughey was on Trump's economic advisory council. She's also a former lieutenant governor of New York and joins me now. Come on, Betsy.
You know, you and I have talked many times, but the speed of deterioration of comity in Washington and the level of confusion, I'm not saying crisis
or cash, just confusion, is --
BETSY MCCAUGHEY, TRUMP CAMPAIGN ECONOMIC ADVISER: Well, with let's deal with the lack of comity, because I find it very concerning. And it
happened even before the inauguration, when a significant number of, 67 members of the Democratic Congress, 67 Democratic members of Congress said
they would not attend the inauguration of the president because they did not regard him as legitimate.
[16:10:00] That's very threatening to our system of government. And then - -
QUEST: Oh, now, hang on! It's no more -- whoa, whoa! If we're going to go down threatening to systems of government, no more threatening than the
President-elect and then the president saying that 3 million to 5 million people voted illegally, without having a shred of evidence --
MCCAUGHEY: I disagree.
QUEST: -- without having a shred of evidence.
MCCAUGHEY: He does is have a shred of evidence.
QUEST: No, he doesn't.
MCCAUGHEY: Let me point out that the Pew Foundation, a nonpartisan group, has found that one out of every eight names on the voter rolls is either
dead or fictional or a duplicate --
I'm not saying --
MCCAUGHEY: -- and these voter rolls must be cleaned up.
QUEST: And that same Pew report found no evidence that any of those people had voted. And more than that, none of the Secretaries of State --
MCCAUGHEY: They are elected. Let me point out, they are elected --
QUEST: Even in Republican states.
MCCAUGHEY: That's right, but if they're elected and if they claim that the votes were irregular, it would mean they were not doing their job. That's
why they all say it's all above board. I am glad that the new president is willing to investigate voter fraud. And I want to know what the Democrats
are afraid of.
QUEST: Right, you have brilliantly taken me down a rabbit warren that I didn't want to go down. I wanted to -- let's get back to the economic
agenda please.
MCCAUGHEY: OK.
QUEST: So TPP is gone.
MCCAUGHEY: Yes. And let's hope other multi-lateral trade agreements are gone, because the fact is, they have not served the United States well in
these multi-lateral agreements, all the countries kind of gang up and what's good for the globe, right, is what wins out. But we have seen, and
I hear this argument again and again, globalization has lifted millions of people out of poverty, moving them from the fields to the assembly lines.
QUEST: It's true.
MCCAUGHEY: It is true, but it has also created a new kind of poverty right here in the United States, where factory workers are now flipping
hamburgers.
QUEST: Now, come on. I heard this again and again at the IMF in Davos.
MCCAUGHEY: And it's true. It's true. If Donald Trump doesn't turn it around, he's the promise keeper and that's why he won those rust belt
states.
QUEST: Hang on, hang on.
MCCAUGHEY: For those of you who are listening who are unfamiliar with rust belt, that means Minnesota, Michigan, the states around the Great Lakes
that were heavily industrial.
QUEST: Right. That is a failure, Betsy, of U.S. administration policies, of both parties --
MCCAUGHEY: True.
QUEST: -- to put in place proper retraining and measures to alleviate the effects of that. That is not the problem of the globalization per se.
MCCAUGHEY: Let me point out that our former president, Barack Obama, who said that he could make the oceans rise and solve the problem of climate
change, said he could do nothing about automation and globalization. Well, we can do things about it --
QUEST: No, you can --
MCCAUGHEY: -- and this president is already --
QUEST: Going to do what? Going to do what?
MCCAUGHEY: Let me point out, in this first week, in this remarkable first week, he's gotten a commitment from Ford to not build a plant in Mexico.
Instead to expand --
QUEST: Oh, a small number of jobs.
MCCAUGHEY: $10 billion expansion by Toyota, another commitment.
QUEST: That arguably was on the cards anyway. But keep going.
MCCAUGHEY: I can keep going. On day three of his first week in office, the Keystone Pipeline, the Dakota access pipeline will provide jobs --
QUEST: One final question --
MCCAUGHEY: -- again and again, the whole agenda has been, more jobs for Americans.
QUEST: One final question, if jobs are being --
MCCAUGHEY: It's over already, Richard.
QUEST: If jobs are being reimported back into the United States and manufacturing is coming back into a higher cost base, to a higher cost base
-- then American consumers are going to pay more for those goods.
MCCAUGHEY: That is true, but in some cases, it will not be true. For example, you can predict a very good bilateral trade agreement with your
wonderful Prime Minister in England, Theresa May. And that was clearly a product of last week's meeting.
QUEST: I believe that I owe you dinner over a bet that we had during the election.
MCCAUGHEY: Do you want to make another bet?
QUEST: I owe you the first one. We'll film the dinner. What are we having? What sort of food?
MCCAUGHEY: Well, you suggested fish. That's fine.
QUEST: And you wanted red meat?
MCCAUGHEY: Yes.
QUEST: Red meat it is. All right, good to see you, Betsy.
MCCAUGHEY: Thank you.
QUEST: I'm exhausted and it's only 14 minutes past the hour.
Angela Merkel is fighting back after a top adviser to Donald Trump is accusing Germany of manipulating the euro to hurt the United States. We'll
talk about that after the break. Don't touch the bell.
[16:15:00] (COMMERCIAL BREAK)
QUEST: Germany is using a weak euro to exploit the United States and other trading partners. It's a charge from their head of President Trump's trade
council, Peter Navarro, who has been on this program. Now, it's a straight forward argument about whether or not Germany is manipulating the currency
for trade advantage, and it's a charge that Angela Merkel has strongly rejected.
Now, the euro has fallen thanks to the ECB's quantitative easing program. At the same time, the Fed's interest rates have risen and strengthened
against the dollar. So, because you've got QE, the euro goes down. You've got higher rates, or the prospect of, the dollar goes up. So, it appears
to make European goods appear cheaper, while American goods look more expensive. Thereby addressing or creating a greater trade balance between
the EU, particularly Germany, which has a vast trade surplus, and the United States.
So, now, Donald Trump, or at least his advisers, are calling Germany an EU vehicle -- sorry, for Germany. The European Union is merely serving a
purpose for Germany to export more. Germany is the top exporter by far. And of course, its cars and its auto parts. And when you put it into
perspective overall, they send $123 billion worth of goods one way, that's going west across the Atlantic, and only $65 billion are going the other
way, 50 percent. Needless to say, though in that scenario, Angela Merkel denied her government has its finger on the euro scales.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, GERMAN CHANCELLOR (through translator): Germany is a country that has always called for the European Central Bank to pursue an
independent policy. Just as the Bundesbank did before the euro existed. Because of that, we will not influence the behavior of the ECB. And as a
result, I cannot and do not want to change the situation, as it is. And apart from that, we will try to stand our grand in the global market, with
globally competitive products in fair competition with everyone else.
(END VIDEO CLIP)
QUEST: Now, joining me now is Gillian Tett, from the "Financial Times," the U.S. managing editor at the FT. Gillian, first of all, let's test the
line. Can you hear me?
GILLIAN TETT, U.S. MANAGING EDITOR, FINANCIAL TIMES: I can hear you very well, absolutely.
QUEST: All right. Core question. How valid is this claim? Not that the euro has devalued, which I think is true on economic and other grounds and
monetary grounds, but how true is the allegation that Germany has been fiddling the numbers or fiddling the market?
TETT: Well, here's the thing. We had this FT scoop earlier today, and it caused a huge stir online. People feel very strongly about it. And on the
one hand what Peter Navarro said today echoes a line that the U.S. Treasury itself has been saying earlier, which is that Germany has been benefiting
from a weak currency. Nobody doubts that. The issue, though, is that there's very little evidence that Germany has deliberately tried to lean on
the ECB to create a weak currency, as Peter Navarro suggests. And if anyone's been losing out on this, it's the other members of the European
Union, not so much the U.S.
[16:20:00] QUEST: So, when he -- because he wrote the article for yourselves, as I believe.
TETT: No, it was actually an email exchange with our reporter. That is where the scoop came from. And we just asked him some great questions and
he came back with a very long, very well thought out set of arguments. Not just about the euro, let me stress. He said some explosive things about
international supply chains, too. And the fact that he considered T-TIP the trade agreement to be dead as well. So, in many ways, it's equally
important, particularly for business people watching.
QUEST: But bearing in mind this administration says what it does and does what it says. And Navarro clearly has an ear of the President on these
matters, as the head of the National Trade Council. Should Europe be worried that they are now in the firing line, in the crosshairs of a trade
policy?
TETT: Well, right now, it looks as if Washington has bigger fish to fry, if you like. They're focused on the Mexicans. I personally think the
Mexicans were a warm-up to the Chinese. I think that at the moment, Europe is not the main focus, except the fact that we actually do know, from Peter
Navarro's own words, that T-TIP is dead. In some ways, it was dying already. But we now know there is not going to be a Transatlantic Trade
Agreement anytime soon.
The bigger issue, though, the people in Germany are asking tonight is, is it the case that actually they're laying the ground for people to blame if
Trump's reflation trade goes wrong? Because one of the things that's very irritating to people in the White House is that Germany actually produces
the kind of goods that America wants to revive inside its own heartlands.
QUEST: Gillian, wonderful to have you, thank you. Great scoop to get and we're glad to have brought it to our viewers tonight. Thank you.
TETT: Thank you.
QUEST: Jason Furman is with us. He served as chairman of President Obama's that. Jason, you and I have talked many times over these issues.
And I'm now starting to see that this administration obviously does what it said it's going to do, but your perspective obviously having come from the
other side of the political aisle, how damaging do you think these trade threats are against China, against Mexico, and now seemingly against
Germany?
JASON FURMAN, FORMER CHAIRMAN, WH COUNCIL OF ECONOMIC ADVISERS: Look, I think the comment that Germany is manipulating its currency is really
silly. The euro/dollar exchange rate is a heavily liquid market. It's traded in markets. It's determined by markets. It's unfortunate, because
it distracts from what is a real issue. Germany has the largest current account surplus of any country in the world $300 billion or 8.6 percent of
its GDP. That is a global imbalance that's contributing to problems in the world. But the root of it isn't an exchange rate policy. It's in Germany
not investing enough, not doing enough fiscal expansion, and it's also in the macroeconomic policies we've adopted here in the United States.
QUEST: Every time one raises this question of a fiscal expansionary policy with Minister Schauble, he sort of fumes and says, and wheels off a realm
of statistics showing how much Germany is spending. And the idea that you can sort of increase domestic demand, again, they all discounted in
Germany.
FURMAN: Germany has a big problem with investment. Its investment is very low, as a share of GDP. It has seen subpar productivity growth for the
last decade. And you could help solve both of those problems and reduce the current account surplus. That's not a zero-sum world. That's not
arguing about currency manipulation, but there are macro issues at the root of this. I think they have their own diagnosis.
QUEST: Let's talk about U.S. diplomatic policy. When do you think, we'll see something on taxation from the administration? The great pillars of
the victory, they are being built one by one, pretty much as promised. But lower corporate taxes, repatriation of profits and lower personal taxes
were very much part of the victory.
FURMAN Yes, by the way, these domestic issues are linked to the international ones. You know, if your goal in life was to have a stronger
dollar and to expand the U.S. trade deficit, you would talk about large unpaid-for tax cuts, you would criticize the management of the Fed, and you
would talk about tariffs and border adjustment in our future. They're doing all of those things. That's helping to drive up the dollar. They
follow through, the dollar will be, you know, even stronger. I think it's a little bit of an irony of complaining on the one hand about Germany and
their currency and then on the other, adopting a set of domestic policies that are doing precisely the same thing.
[16:25:10] In terms of those tax cuts, this country could really use a business tax reform, it could really use something that brings our rates
down, but it doesn't need to do that so much that it's worth raising our deficit over the medium and long run. And we certainly don't need to raise
the after-tax incomes of the highest-income households in this country, which is another thing that the proposed plan would do. But will see what
they come out with.
QUEST: Good to see you, sir. Thank you for being with us. We look forward to having you on the program more in the future as we wind our way
through all of this. I appreciate it, thank you.
The Dow has closed in the red, the second day in a row. Down 107 points. Paul La Monica is with me. Before we see Paul, look at how the day went.
It was down right at the start and it stayed down. It was only towards the end, maybe, that the market did encourage itself. Paul, he's over there.
Paul, I have written in tonight's newsletter, you may have seen --
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: I have.
QUEST: I have written that these triple digit losses, they're cracks. And I get the feeling the market is teetering deciding.
LA MONICA: Yes, these are two consecutive triple point losses for the Dow. They are, by no means, a really scary sell-off along the likes of what we
had in 2008, of course. But it does seem safe to say that investors are a little nervous that all the pro-growth stimulus, lower taxes, what they
loved from candidate Trump and even President Trump in the first few days of his administration, that's what they wanted to hear. It's why the Dow
hit 20k last week. But now with the crackdown on immigration, investors are starting to worry, wait, will some of these social policies take
precedence over what we need to really get the economy back on track?
QUEST: And yet the president, I think it was only yesterday, talked about the market, the day before, in the White House. He sort of said, the
market's going up and it's going to continue going up. I can't remember too many times when I've heard a president actually forecast that. But
that's beside the point.
LA MONICA: Obama did it just great. He did help call the bottom in 2009.
QUEST: It's different when calling a bottom and true.
LA MONICA: And what's also different is that President Trump went out of his way to criticize the market for being too bubbly, when he was a
candidate. Now he wants to take credit for the fact that it's doing well.
QUEST: The pharma. Big pharma was up the White House in the same way that tech was there, before the inauguration, in New York, and the autos had a
meeting. What was the purpose of today's pharma meeting?
LA MONICA: I think there were two purposes to the meeting. One for president Trump to warn the industry in no uncertain terms that he is going
to be very much like what he was during the campaign trail and like many Democrats, he's going to put them on notice and be very critical of them,
if he sees drug prices skyrocketing out of control. He was very critical, calling them outrageous and not, you know, pulling any punches or mincing
any words. But at the same time, he promised lower taxes. He promised a new FDA chief that would maybe speed up the approval for drugs. And drug
stocks and biotech's went up. They didn't go down on all the concerns about Trump warning them for the prices. They went up, because they, for
the time being, feel that lower taxes and more loose FDA is going to be good for them.
QUEST: So, what we end up, of course, is the carrot --
LA MONICA: And the stick. Of course.
QUEST: Good to see you.
LA MONICA: Thank you.
QUEST: Thank you.
It's a new lawsuit, an old thorn in the backside. Jeff Bezos says Amazon is backing the legal action against the travel ban, as are many companies
in Silicon Valley. We'll talk about it after the break.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello. I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. When the chief executive of United Airlines tells me the
election of Donald Trump gives him an opening to take on his Gulf rivals once again. And universities on both sides of the Atlantic are warning
that the travel ban will harm research and education. But throughout all of that, this is CNN, and on this network, well, of course, the news always
comes first.
Top Trump administration officials are again defending the president's travel ban and clarifying the details. The secretary of Homeland Security
says dual nationals will now be allowed into the U.S. if they show a valid passport from a country that is not specifically banned. He also blames
much of the chaos at U.S. airports on the protesters, not only the bans' rollout.
President Trump has fired America's Acting Attorney General after she denied to support his immigration order. He said Sally Yates betrayed the
Justice Department. President Trump quickly appointed a temporary appointment who says he will defend the lawful orders of our president.
In a few hours, Donald Trump is expected to announce his supreme court pick. The nominee who will be a conservative will replace the late
conservative justice Antonin Scalia. Two finalists have been summoned to Washington in a move that could be meant to build up suspense ahead of the
announcement and distract from the uproar over the travel ban.
Donald Trump says he will empower government agencies to improve their cybersecurity. A few hours ago, he met with cyber experts, including Rudy
Giuliani. Now, he was scheduled to then sign an executive order. That was canceled without explanation. Speaking earlier, the president says he
wants to improve the government's online defense.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We will empower these agencies to modernize their IT systems for better security and other
reasons. We will protect our critical infrastructure, such as power plants and electrical grids. The electrical grid problem is a problem, but we'll
have it solved relatively soon.
(END VIDEO CLIP)
QUEST: Mr. Trump is set to discuss cybersecurity with the Israeli Prime Minister when they meet next month. Joining me to discuss this is John
Medved, the CEO of OurCrowd, the Israeli crowd funding company for start- ups. The cybersecurity issue, John, we know is a serious one, but the president sort of says, we will sort it out soon. Is he just being -- is
this just hyperbole?
[16:35:00] JOHN MEDVED, OURCROWD: No, I don't think so. I think, first of all, there needs to be increasing emphasis on how important cybersecurity
is. We need to hammer this every day. In fact, Rudy Giuliani just last week was in Israel, before he came to be part of this cyber summit at the
White House, he was visiting Israel, meeting again with Prime Minister Netanyahu and Israel cyber companies. It turns out, we're sort of a
superpower in this area. Of the 1,800 start-ups, worldwide in the cybersecurity area, about 400 are in Israel. In our portfolio, in our
crowd, we have 10 companies that are engaged in cybersecurity.
QUEST: Why is this, by the way? Is it because either Israelis are paranoid or --?
MEDVED: It's three letters. It's called IDF. The Israel Defense Forces. We are constantly at risk, right? There are a lot of people --
BALDWIN: But everybody's at risk in some sense from the Russians or the Chinese, if you're in South Korea, from the North Koreans.
MEDVED: We have a unique breed of warrior geeks. In other words, many people look at technology and say, well, the new technology isn't going to
come out of the army or West Point. They're wrong! In Israel, our whole start-up culture is driven by start-ups that come from the army. And at
the heart of that are our units who are dealing with cyber. I'll give you an example of a couple of cool things that are happening. Number one,
we're protecting the connected car. We're all excited about the next generation of cars that drive themselves. So are the hackers. We've got
to stop them. We're involved in critical infrastructure protection, things that president Trump were talking about.
QUEST: So, are you ahead in these areas than the United States? Is this something is that when there's obviously going to be the question of the
settlements, be the question of the geopolitical and the security questions when president and prime ministers meet, but these cybersecurity areas, is
Israel looking at this as a way to build a further bridge?
MEDVED: We are neck and neck. In terms of cybersecurity, Israel punches in with the top of the class and that's the U.S. and we share a lot. Right
now, our intelligence communities are still best of friends, and I think you're going to see this cooperation get even better.
QUEST: Finally, is there a feeling in Israel that -- and a mass generalization, that there's a generalization about the way Netanyahu, the
prime minister, has latched on to president Trump, arguably in the same way, maybe as Prime Minister May latched on to, and that actually, this may
come to grief for the prime minister?
MEDVED: I think it's important that the support for Israel be bipartisan here in this country. That's been the great bulwark of the American Israel
relationship. It's not been Republican support for Israel or a Democratic support for Israel. You can't overlook some of the great things that
president Obama did for Israel in his presidency. However, there were some very well-publicized spats between those two guys. And I'm sure that our
Prime Minister, Netanyahu, is breathing some serious sighs of relief that he's dealing with Donald Trump now.
QUEST: We'll need you to come back and talk about these start-ups in the future, sir.
MEDVED: Will do.
QUEST: Thank you very much, indeed.
Now, we'll stay with technology. Amazon and Expedia are backing a federal lawsuit against Donald Trump's travel ban. Samuel Burke is following the
story from London. How is this, Samuel, how is this different from all the other litigation that there is on the cards at the moment? What are they
hoping to get out of it that's different?
SAMUEL BURKE, CNN CORRESPONDENT: Well, they want to get it turned around. And here, they've talked online. They've put money where their mouth is, a
lot of these companies, and now they're actually sticking out their necks in court. But just to be clear, amazon and Expedia are not actually suing
the president or the government. They're enjoying a lawsuit in Washington state, and really, all they're doing is putting their words on to this. I
want to read you something Expedia put in the document they registered with the court, saying, quote, Expedia believes that the executive order
jeopardizes its court permission and could have a detrimental impact on its businesses and employees as well as the broader U.S. travel and tourism
issue.
I went through these documents and how they'll have to spend a lot of money researching all the effects that this could have if it goes past 90 days.
But there's a lot in here about the actual people. Their employees, both amazon and Expedia, talking about people, their lawyers, for instance, lead
lawyer here in the U.K. for amazon, born in Libya, but that as a U.K. passport, won't be able to complete their travel plans in the U.S. now.
[16:40:00] QUEST: Samuel, I need to take you to different areas. Apple has reported. I'm looking at the email you sent me, forgive me, I'm only
just seeing it now, earnings per share and revenue higher than expected. Q1 iPhone sales, $78.3 million. This is the iPhone 7, if I'm not mistaken.
BURKE: That's correct.
QUEST: Thank you. 76.3. What does all of this mean, Samuel?
BURKE: Bottom line, there's really only one number you need to know with Apple, that's the number you just mentioned. How many iPhones they sold.
This is, of course, the iPhone company, and where they get the vast majority of their revenue from. And they were expecting only 76.3 million
iPhone to be sold. And they actually sold 78.3 million and that's why you see the stock up, about 2.5 percent right there. Everything else will
follow in suit. But this is the iPhone company, and after two very difficult quarters, it looks like they've turned things around, at least
for now.
QUEST: OK, but, the dependence on the iPhone is still worrying to the investor community, vis-a-vis, a long-term rebalancing to other areas. The
macs, the thousand and one other things that they've introduced. The watch, even.
BURKE: Medium term, a lot of analysts are very corresponded. A lot of investors think that they could lose more market share, especially to the
Chinese companies, but long, long term, a lot of analysts believe that actually, Apple is very well placed, because they can get so much money
from their services, whether it's Apple music or Apple pay, which I find myself using more and more, even in the London tube, I use it every day,
instead of the famous oyster cart. And they get a little percent each time you use Apple pay. So, people think that long-term, that big ecosystem
might help make up for whatever losses they have with the hardware, as they compete against so many new players in the cell phone market.
QUEST: Samuel Burke, out trying to get him to use his wallet. Samuel, thank you. Some of the world's most respected centers of search are
rallying to the voices against Donald Trump's immigration ban. Indeed, it was universities that really came out with some of the strongest comments.
We'll talk about it after the break.
(COMMERCIAL BREAK)
QUEST: As opposition to the travel ban in the United States gathers pace, some of the world's most famous universities are now adding their voices,
warning of the damage it will cause to research and education.
(BEGIN VIDEO CLIP) MARTY MEEHAN, PRESIDENT, UNIVERSITY OF MASSACHUSETTS: It is important as a leader of this institution to speak out and say that we will do everything
we can do to protect our faculty, our students, our scholars, our researchers.
(END VIDEO CLIP)
[15:45:00] QUEST: University of Mass is not alone. Harvard's University's president has already written, "we cannot and will not conflate people of a
venerable faith with people predisposed together as of terrorism and violence." And on the west, leaders of Stanford University said "the
current situation is causing deeply regrettable alarm and uncertainty." Whilst on the other hand of the Atlantic, the vice chancellor of Cambridge
wrote, "the executive order is an affront to one of the most fundamental human freedoms."
Mary Sue Coleman, is the president for the Association of American Universities and joins me now. Good to see you, ma'am. Thank you for
joining us. Look, what is the fundamental issue here for you? Bearing in mind that most of the people who had green cards or visas are eventually
being let in. What's the problem for you here?
MARY SUE COLEMAN, PRESIDENT, ASSOCIATION OF AMERICAN UNIVERSITIES: The problem for us is that this travel ban really disrupts work. Students who
had valid visas, who were students in the United States, we think there are between 16 and 17,000 in our universities are being stopped at airports.
Researchers who had work underway can't come to the United States if they're from these seven countries. People who are in the United States
who are researchers and from these countries won't be able to leave, for fear they can't come back. So, there's tremendous concern. And also, the
spillover effect, that is, it's these seven countries, but what about other countries in the middle east or other countries around the world? Is this
going to be expanded to other countries? There's just heightened concern.
QUEST: The president said, I'll take no risks with U.S. security. My number one priority is U.S. security. Today, head of homeland security
says, I will not gamble with the security of the American people. If this is their view, that there is a risk, then isn't -- I mean, forgive me being
unacademic and putting it bluntly, don't you just have to live with?
COLEMAN: We believe that a valid visa program, a secure visa program, is really important. And we've been working with homeland security, ever
since 9/11, to make sure that we help in this regard. But we believe that this kind of blanket ban is going to be very disruptive, is going to really
threaten our preeminent position in the world for free exchange of information, for people doing research, knowing that people have to go
through a vetting process to get a visa. So, we understand the need, but we believe that this is not the way for us to be able to really stay at the
forefront of both research and our education.
QUEST: What do you think it will take for the administration to hear your clarion call since they seem to be deaf, or at least ignoring such calls so
far?
COLEMAN: Well, we are trying to reach out to have a discussion with Homeland Security. We would like to do that and explain our position. I
think the widespread nature from almost every university president is issuing a call that students are actually getting involved. That we hope
that this will make an impact. And that we can enter a dialogue.
QUEST: Thank you for joining me. We'll talk more about it in the future, but I'm very grateful that you've come in to put in your perspective.
COLEMAN: Thank you.
QUEST: We'll talk about continuing this idea of Muslim tech workers are being offered a chance to bypass the travel ban by moving to Ireland
instead. It's a company called Intercom. It's headquartered in San Francisco. It has an R&D facility in Dublin. It's offering up to 50
people affected by the ban immigration advice and opportunities. Eoghan McCabe is the chief executive and joins me now. When I saw this story this
morning, I wasn't sure what to make of it. It sounds interesting. You're basically saying to anyone of 50, roll up, roll up, we'll find you
something to do in Ireland.
EOGHAN MCCABE, CEO, INTERCOM: Sure. I think that's fair. I think the most important thing is we help people understand that they do have
options. They have options. In some sense, our hope is that nobody would take this offer, nobody at all. That would probably mean that they both
feel safe and that ultimately there was a happy resolution to this important and worrying topic.
QUEST: So, what's been the reaction in the few hours that this story has been up? Has anybody been in touch with you?
MCCABE: he reaction has been real. People have got in touch with us to say that for some time now, they've not felt safe in the United States and
that they are interested in exploring their options and in particular relocating to Dublin.
QUEST: What are they telling you about why they're not feeling safe? I can certainly see as a result of the last few days, that there's a certain
jeopardy about it. But this will blow over, most people say.
[16:50:00] MCCABE: It may blow over. I think the last few days and week have shown us that we should not take anything we have been taking for
granting, that we should not assume a lot of these words are just words. I think it's really hard to appreciate how it feels, that certain place that
you have been able to call home, that you have been able to know for sure that you could be safe there, that in a heartbeat could become not your
home, that could become a place that's not welcoming to you. And when that change happens, it fundamentally changes the whole nature of how you relate
to that place. And therefore, it changes how safe you feel.
QUEST: As I read this story this morning, I am -- you obviously have the necessary relevant papers to be here, to be in the United States. Would
you consider moving back to Ireland?
MCCABE: I love the United States. I moved here for a reason. It's a beautiful, incredible exciting world, in particular the valley. I don't
want to move home. But I will say that if it is the case that Muslims, for example, are forced out or not allowed the same rights as the rest of us,
it will change how I feel about the United States. I came here because it was the land of the free. I came here because it was open and accepting.
And it stops being those things, I don't know how much I will want to be here in the future.
QUEST: And how long and hard and with your colleagues and your fellow senior execs did you have to think about before you put in place this
offer? And also, when do you hope to make the first offer to somebody?
MCCABE: We didn't need to think too hard about it. This is a pretty fundamental human issue. Our immediate reaction to the idea that anyone on
the basis of their religion would not be allowed here was to try to help them. It is simply a response from one set of humans to another set of
humans to try to comfort them. We didn't have to think too hard.
QUEST: Mr. McCabe, thank you for joining us. Let us know how things go. We look forward to talking to you more about this in the future. Thank
you, sir.
United Airlines chief executive has told me that the election of Donald Trump gives another opportunity to reopen the dispute over perhaps state
subsidized airlines versus the U.S. three. We'll hear from Oscar Munoz after break.
(COMMERCIAL BREAK)
QUEST: Two years ago, the Gulf carriers and their U.S. rivals went head to head here on QUEST MEANS BUSINESS. Delta, American, and United cried foul
against the three gulf carriers and claimed that they were receiving illegal subsidies, from their respective governments. Now, the Mideast
carriers put their complaint to sour grapes. The Obama administration tried to referee and not take sides. In the end, sort of a wishy-washy
compromise was arranged with informal negotiations or informal talks was how it was put.
That was then. Things are different, and now it seems a rematch with a more protectionist administration in Washington seems certain. This time,
the U.S. carriers are ready to play, literally, the Trump card. Earlier this week, I was joined by United chief executive, Oscar Munoz, and the
question is very simple. Are the big U.S. three hoping to reopen the issue against the gulf three?
(BEGIN VIDEOTAPE)
OSCAR MUNOZ, CEO, UNITED AIRLINES: The answer's yes, absolutely.
QUEST: That's putting you well and truly into the thick of it again, isn't it?
MUNOZ: Absolutely. It has to be. It's a meaningful thing.
QUEST: That you put with a president who is more likely to side with you than the last administration?
MUNOZ: Again, it's more than likely a very broad geopolitical issue inside of an administration. And I'm sure there are more information and data
that folks, you know, beyond our pay grade, sort of speak. But the facts of the matter and what we as an industry, domestically have to protect is
American jobs. And there's a lot of folks involved in this process. And that is something I take very seriously, as do my CEO peers. And I think
the facts very supportive of an unbalanced playing field. Again, let's just make the competition a little bit more even.
QUEST: So, this issue isn't going away?
[16:55:00] MUNOZ: Not anytime soon.
(END VIDEOTAPE)
QUEST: Doesn't get more blunt than that from a chief executive. And you'll hear from James Hogan hopefully tomorrow night. A press conference
with Lufthansa and we'll be there.
There's a Profitable Moment coming your way, after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment," as you've just heard on this program from the CEO of United Airlines, a relatively old wound is about to be
reopened as the big three U.S. carriers once again try to get these anti- subsidies rulings and get the open skies treaty revisited against the big three, Emirates, Qatar. Here's the difference this time, though. There is
an administration in Washington that is probably more disposed, because what the big three U.S. are claiming is exactly what Donald Trump has been
talking about.
This idea that American companies are not facing a level playing field, that they always lose around the world, and therefore, it's time to
readdress the plans. And here Donald Trump has a perfect opportunity to actually do something about it, if he agrees or seeks a renegotiation of
the open skies treaty with the UAE and Qatar. I assure you, if that happens, we'll be in a very different world. But tonight, we certainly
can't say it's off the agenda, as perhaps we did with the Obama administration. And that's QUEST MEANS BUSINESS for tonight. I'm Richard
Quest in New York. Whatever you're up to in the hours ahead, hope it's profitable! I'll see you again tomorrow.
END
