Return to Transcripts main page

Quest Means Business

Dow Rides Winning Streak to Fresh New Record; Top Marine Le Pen Aide Placed Under Investigation; Tillerson to Talk Immigration with Mexican President; Tesla's Valuation Closing in on Ford's; South Africa Unveils New Budget; Airbus CEO Says EU Spends Too Little on Defense. Aired 4-5p ET

Aired February 22, 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: Ninth Dow record in a row. We'll have the stats on that. Axalta is ringing the closing bell. They make

commercial paints for vehicles or something like that. Let's see if they're going to give a -- that's a firm gavel. Justifiably on the ninth

Dow record and indeed all the U.S. indices are at a record on Wednesday. It's the 22nd of February.

The Dow is on cloud nine and the all-time high. We need to discuss how long it will last.

A fake job fedora in France. Marine Le Pen's chief of staff is now under formal criminal investigation.

And Tesla threatens to overtake the Ford in terms of market value. The earnings are due out any time after the closing Bell. You'll hear them in

this hour.

I'm Richard quest live from the world financial capital where I mean business.

Good evening, tonight, there is political intrigue on one side of the Atlantic, and market euphoria on the other. As France's election campaign

sinks further into scandal. Stocks in Europe and on Wall Street show no signs of being spooked at the moment. And were going to discuss exactly

how long this is likely to continue.

We start of course with the news that's just happened. The Dow's ninth straight sessions of gains. Now, the last time there were nine days in a

row was seven months ago, but it's also the ninth straight session with the Dow setting record highs. By the way, we believe that the last time there

were nine record highs in a row was about 30 odd years ago, but we haven't quite source that fact.

It really doesn't matter because look, we open down and the losses were quite small at the beginning. There are about a dozen or so points. Then

it goes with a little bit of a blip in the midmorning. And although the gains are not that high at 31.6, volume was relatively light. All the

other indices were positive as well.

The fact that is heading now towards 20,800. Barely 28 days since 20,000 was reached. This momentum that just keeps forcing forward. We have Fed

minutes. Again, interestingly the 2 o'clock dip -- you see that diff at 2 o'clock? That comes on from the Fed minutes which said that Fed many

members of the FOMC see a rate rise in the words of the minutes, fairly soon. Whatever that might be. And not only the Fed believed that the

policy changes from Donald Trump might not materialize. So, there is uncertainty from the Fed on the question of the fiscal advantage that will

come from Donald Trump's victory.

What does it all mean? Well, it means that these market gains may not last forever. And it may not stay up there and record territory. But look at

the market since Inauguration Day. The NASDAQ showing the best gains just shy -- by the way this doesn't include today's, but the NASDAQ's up 6

percent. The Dow is over 4 1/2 percent at a time when interest rates are barely one. And the S&P, the broader market, not rallying as hard.

When you put it into perspective, the president has already said, he does not believe he's getting the full credit. The White House Press Secretary

said, thanks for this to Mr. Trump's policies.

(BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: In his first month in office the president has already taken numerous actions to boost job creation and the

key economic indicators are showing that it's working. CEO and confidence are up. Stock market continues to reach record highs and the January

numbers were strong.

(END VIDEO CLIP)

QUEST: We're lucky tonight we have Paul Donovan with us. The global chief economist at the Swiss bank, UBS, he joins me live from Zurich in

Switzerland. Paul, good to see you, sir. Thank you for staying up late to talk to us this evening and Swiss time. We'll come to the market in a

second, but what your interpretation of the phrase fairly soon that the Feds used in the minutes?

PAUL DONOVAN, GLOBAL CHIEF ECONOMIST, UBS: Fairly soon means, go in June. I think it's reasonably obvious that the federal reserve is going to have

to tighten policy again. I mean, inflation is really starting to pick up quite noticeably in the states. And the Fed needs to react to that. But I

don't think we've had enough signals that they intend to go in March.

The minutes were much of the same tone that we heard from Fed chair Yellen in the congressional testimony last week. So, I think it's consistent and

is pointing to a summer rate rise.

[16:05:00] QUEST: Summer rate rise. OK. The forces driving this market at the moment -- now, we've talked on this program many times about the

Trump rally. The Fed seems sanguine about the way the economy is moving forward, the prospect of infrastructure, all these sort of things. Are

these the forces that you see driving the market?

DONOVAN: Well, I think we have to be careful about the phrase Trump rally, because of course, global asset prices have collapsed in the last two

months. The movement in bond markets has been larger than the movement in equity markets at a global level. So, we've got to recognize that this is

a euphoria from all investors all over the world.

I think what we're seeing though is recognition that the labor market in the states remain strong and that is feeding through into a strong

consumer. And that of course is a function of the gradual improvements in the economy over the last few years. You're also looking at a reasonable

earnings outlook. And to the extent that the tax changes do come through, their perceived as being favorable to U.S. corporates.

QUEST: Yes, but you make a valid point there, Paul. You point out that global assets may have fallen elsewhere, but then for the U.S. -- except

the bond market -- but for the U.S. to have risen -- or U.S. equities to have risen against that falling tide is even more remarkable in that sense.

DONOVAN: Well, I mean I think, you can't really just say, except the bond market. It's rather large and it's a signal of many factors. Around

inflation, around growth, around interest rates, around confidence in fiscal policy in the future. So, I think we've got to consider the fact

that bonds have been weakening at a time when equities have generally been rallying. And that is clearly a cause for some concern in terms of global

wealth effects and similar issues like that.

QUEST: Let's talk about France. What point do you believe the markets start -- we've already seen the difference now generated between French

bonds and German bonds and a widening of gap there. At what point do markets start to price in an uncertainty -- or a greater uncertainty I

should phrase that -- over the French election?

DONOVAN: I think that this is a tricky one. What we've got to remember is that generally speaking domestic investors will have a better understanding

of political risks ban foreign investors do. And that's quite relevant when we're looking at European market performance this year. Because if we

think about it, what drives European markets? It's not what Americans think about French politics. It's not even what German expatriate

journalists with the mid-Atlantic accent think about French politics. What matters is what the French think about French politics, because they're the

ones that influence the bond and with other Europeans influence the CAC and the euro.

So, I think that financial markets are probably not going to be panicked in Europe about the uncertainties around France in the way that perhaps we've

seen more volatile reactions in say sterling or in U.S. markets in response to political risk.

QUEST: So, we've also had earlier this week, we had the -- I'll tell you why they use these University phrases -- the winter semester and the

collegiate report and the economic numbers from Europe. I have absolutely no idea why they choose to use these phrases, but it matters not. The

reality is we did get the winter forecasts from the European Commission. And at the same time, we've also had -- look, simple question, does Greece

give more grief in the few months ahead?

DONOVAN: I think you can rely on Greece to provide a certain amount of irritation in Europe. Fundamentally though, the situation is not where it

was three years ago, now Greece can pay its way except for repaying the debt. So, what do they need the bailout money for? They need the bailout

money to pay the interest payments to the people who are bailing them out. So, if they don't get the bailout money they can simply say, OK, well, we

won't repay you the interest payments.

QUEST: I need to interrupt you, forgive me. We need to go -- thank you, sir, for joining us. We need to go now to Mike Pence, the vice president,

who's speaking at the Jewish cemetery recently attacked.

MIKE PENCE, U.S. VICE PRESIDENT: I spoke once earlier today in St. Louis from the heart. There is no place in America for hatred or acts of

prejudice or violence or anti-Semitism.

I must tell you, the people of Missouri are inspiring the nation by your love and care for this place, for the Jewish community in Missouri, and I

want to thank you for that inspiration.

[16:10:02] For showing the world what America is really all about. I also want to thank Anita for her great leadership to walk and to see that they

had stones that were vandalized are already repaired.

UNIDENTIFIED FEMALE: All replaced.

PENCE: It's evidence of your love and your care for the heritage in the history and those that are cherished to you. To the Federation and to all

of you -- but let me also say, I just want to thank your new governor. Your new governor for bringing me --

(APPLAUSE)

Thank you, Governor Greitens and in behalf of the president of the United States, let me just say thank you to all of you for coming out and showing

the heart of the state and the heart of this nation in this place. You just make us all proud. So, God bless you all.

QUEST: The vice president of the United States. I mean, it's a very interesting, you know, away from the very formal and very polished

performance. There you have the vice president in a Jewish cemetery just basically talking through a makeshift mike, megaphone, electric megaphone.

But the message was clear. This is a further reinforcement by the U.S. administration following on from Donald Trump's own comments yesterday with

a sharp renouncement of anti-Semitism. And now the vice president visiting the cemetery that had been vandalized.

So, let's continue our business agenda and more on the latest twists in the French presidential race. I was talking about it a moment ago, with Paul

Donovan at UBS. Marine Le Pen has reported and responded angrily. A Chief of Staff and her bodyguard have been detained and questioned by police on

Wednesday. They're accused of accepting payment for non-existing jobs at the European Parliament. Paris prosecutors say they've placed Le Pen's

Chief of Staff under formal investigation.

In an extraordinary race -- well this is truly quite remarkable. Every major candidate has now faced scandalous accusations. Marine Le Pen has

already responded to these accusations and perhaps characteristically, defiance.

(BEGIN VIDEO CLIP)

MARINE LE PEN, FRENCH PRESIDENTIAL CANDIDATE, NATIONAL FRONT (through interpreter): If the French people know exactly how to differentiate

between solid cases and political conspiracies, that's it. You understand it very well. French people, they know.

(END VIDEO CLIP)

QUEST: Now, the market is clearly rattled by what's happening with Marine Le Pen's improving poll numbers. Maybe not the equity markets as Paul was

saying, the bond markets. French government bond yields have risen sharply, which is a good sign of either inflation or uncertainty I had.

Which means of course, it raises the cost of borrowing for the French government. Not hugely, but as that graph shows the German bond is lower,

the French bond is rising. Money has flowed into the more stable German bond pushing yields to its record low.

Melissa Bell is in Paris for us tonight. Let's take this point by point. We can dispose quite quickly with this allegation against Marine Le Pen's

Chief of Staff and bodyguard, but it's all a bit extraordinary.

MELISSA BELL, CNN PARIS CORRESPONDENT: It is extraordinary and there seems to be a revelation at the moment in this race within the whole country

watching carefully to see which way this most unpredictable of races will go. No one can remember one with more uncertainty at this stage. And were

only weeks away now from the first round of voting, Richard. Now, these allegations are nothing new. That's what Marine Le Pen has been saying

tonight on French television. And indeed, if this does go back some time. She's already been ordered to pay back that money that the EU says was paid

for parliamentary work never carried out.

The allegation is essentially that she had some of her party costs paid with European parliamentary money. The fact that your chief of staff has

now been charged does significantly she's headed for a bit of rocky time on the judicial front. That's probably not the worst of her worries right

now, Richard. The worst of her worries I would imagine is that the man immediately behind her, Emmanuel Macron, who's hoping to be her main

challenger in the second round of voting had a significant -- good bit of news today. Francois Bayrou, a traditional established centrist here in

France, has rallied to his cause announcing an alliance. And that really boosts his chance fairly significantly of seeing off Marine Le Pen.

QUEST: OK, but the market, you know, we like markets on this program, Melissa. We are always keeping our eye on the French OAT bonds.

[16:15:02] Now that is suggesting --

BELL: And markets, Richard, do not like uncertainty. That's for sure. And that is exactly what we have. And that uncertainty doesn't seem to be

going away. Either way that you look at it these two front runners, one is Marine Le Pen, the far-right leader who would take France out of the

European Union. The other is an entirely untested candidate who's never been elected to any political office. Whichever way you cut it, this is a

period of huge uncertainty and is likely to remain so right up until voting day.

QUEST: Well, but then what happens to dear old Fillon and his accusations about -- I was going to say nonexistent jobs -- by paying his family? I

mean, what is going on in France that everybody seems to be employing somebody on the books that might not be doing a job that actually exists?

Or so it seems or at least at the look of your political leaders.

BELL: You're actually right. Francois Fillon is a Republican candidate who was leading this race until the start of this year, is also the subject

of this inquiry into whether or not his wife and children were paid for nonexistent jobs.

Now of course, Marine Le Pen should have been able to pounce on that and say, you see, here is the old guard, former Prime Minister, they were all

at it. I'm something new. Believe in me. And that is why of course, these particular judicial troubles she's facing cast a significant cloud

over what should have been a fairly easy case for her to make.

QUEST: Something tells me in the days and weeks ahead with uncertainty galore, you and I will be having our evening rendezvous at this time

between New York and Paris. Good to see you Melissa, thank you.

BELL: Look forward to it. Thank you, Richard.

QUEST: Now the now the U.S. Secretary of State and Homeland Security are headed to Mexico City where they are due to discuss President Trump's

immigration crackdown with the American president. Mexico's Foreign Minister has made it clear his country will not accept unilateral changes

by the United States.

Meanwhile, the Speaker of the House, Paul Ryan, is on a visit to the U.S. border with Mexico. Some Republicans have expressed concern about what it

will cost to build the wall. The wall that we've heard -- numbers are adding up to $20 billion have been mentioned so far. Now, as EUS plans is

wall, Mexico is building a hedge against economic damage from the Trump administration policies.

So, this is what the Mexican central bank is doing the moment. This is a hedge against the effects that are going to happen. Firstly, the central

bank will offer $20 billion in currency hedges was designed to smooth the volatility in the exchange rate. We've already seen the exchange rate

significantly appreciate. The peso put on good ground against the U.S. dollar over the last 24 hours. So, that's the first tier of the head.

Then there's another one. Remittance protection. The Foreign Minister has proposed protecting remittances. By the way, what are remittances? That

is the money that those who go overseas sent back to Mexico. Remittances are an exceptionally important part, certainly in Southeast Asia and in

developing economies. And a significant part of importance to the Mexican economy too.

And if you really want to build a hedge you better build it nice and high. Economic growth has expanded 2.4 percent over the last year, better than

the earlier estimates. So, all in all policies being put in place. CNN's Leyla Santiago joins me from Mexico City. I don't know whether your

gardening woman yourself and you like a hedge growing. But it seems to me, Leyla, that the Mexican government is tending to its garden to make sure

economic forces do not blow it off course.

LEYLA SANTIAGO, CNN CORRESPONDENT: Listen, Richard, the peso plunged when President Trump was elected. And as you mentioned there is a bit of a

recovery, but it's not just the peso that is really having a lot of people concerned here. I mean, you've got NAFTA as well. That is quite the talk,

the free trade agreement between Canada, Mexico and the U.S., and President Trump has called that one of the worst deals in history.

Now all along, the Mexican government has said they are willing to renegotiate it. It needs to be updated. But there is a lot of concern

among not only U.S. companies in Mexico but also Mexican businesses that are worried about trade.

QUEST: So, when Tillerson and Kelly get to Mexico, I assume they're going to try and find some common ground. Otherwise it'll just be argy-bargy

fight. What is the common ground which they can discuss when it comes to say, renegotiation of NAFTA and bilateral policies between Mexico and the

United States?

SANTIAGO: Well they have already agreed to disagree on certain things. Right, we're talking about who's going to pay for the wall, immigration.

Already this morning the Foreign Minister in Mexico said that he was very concerned about these new measures coming in from the United States when it

comes to immigration. He said that Mexico does not need to accept a unilateral measure imposed by one government on another.

[16:20:00] So, that's what we know for sure they don't agree on. But where they do agree is on trade. On the connection, on the need for bilateral

cooperation when it comes to the border and the security there. I mean, there is a great understanding in the U.S. that many of those crossing that

U.S./Mexico border are not actually from Mexico. We're talking about Central America, [16:20:00] Guatemala, El Salvador, Honduras.

So, the U.S. understands that it needs Mexico if they want some help on the border. And Mexico has been saying that all along. So, that's one point

where there is common ground. And then again to the trade, already Mexico has talked about how the U.S. depends on Mexico buying a lot of corn. So,

that's one example. And then of course, a lot of the cars are made in Mexico that end up in the U.S. So, trade is also something they are likely

to talk about.

QUEST: In sending Rex Tillerson, let's face it, Rex Tillerson, former chief exec of Exxon, smooth as silk when it comes to this sort of

diplomatic niceties isn't he? He is unlikely to rock any boat. Hard to the point, but he's exactly the sort of chap that will sort things out in

that sense.

SANTIAGO: And Tillerson met with President Trump before he left. But this will be all about tone I think. A lot of people here in Mexico are waiting

to see how these meetings go and what the tone of those meetings are. I mean, Tillerson and Kelly will be meeting with President Pena Nieto, with

the Foreign Minister, and some high-level cabinet members. And what will come out of that or what Mexicans want to know is the tone that is struck,

because let's take it back a few weeks, a few months.

You know, the tone that was struck from President Trump, then candidate Trump, when he made some controversy over remarks about Mexico, didn't

really sit well with the Mexican people. And then there was at back-and- forth on Twitter between President Enrique Pena Nieto and President Trump about the wall and whether or not President Pena Nieto would go to the

meeting, which by the way, was a meeting that never was and still has not been set publicly anyway.

So, I think tone -- I think I've said that four or five times -- tone is what a lot of people are waiting for when it comes to these meetings with

Tillerson and Kelly.

QUEST: We're looking forward to talking to you tomorrow about the tone of the tone of the meeting. Good to see you. Thank you very much.

Tesla cars are known for their extreme acceleration, even though it's still an upstart of a company. The company's actually catching up to America's

biggest automakers. Their earnings are out. We're going to discuss them after the break. It is QUEST MEANS BUSINESS live from New York.

(COMMERCIAL BREAK)

[16:25:00] QUEST: Tesla shares are bouncing between gains and losses after hours. Fourth quarter earnings are -- revenues topped expectations, but

the company still lost 69 cents per share. The Model 3 is on track for initial production in July. The market Is poised to a level with Ford.

Look at that. There's Ford and there's Tesla. Big strong gain on Tesla in 2013 and quite a strong gain at the end of last year. The shares are up 28

percent this year. Only 76,000 cars sold. I say only, but I say only because Ford sold 6.7 million.

Paul La Monica, look, great cars. People love them. They're wonderful and they're building a giga factory or whatever it's called.

PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Nearly five of them now.

QUEST: There's going to be five of them, but they're still losing money.

LA MONICA: They are losing money and I would expect the will continue to do so for the foreseeable future, because ...

QUEST: Who's funding this loss?

LA MONICA: Wall Street in part as the stock continues to go higher and higher. It's not far from the record highs. It is stunning. In many

respects, it's like the tech stocks of old from the late 90s boom which is disconcerting. There is the promise, the hope, eventually were going to

make money. To be fair to Elon Musk, what he's doing is not something that is cheap. It's very capital-intensive. Of course, you're going to lose

money for a while, but the question is does it deserve Ford's valuation one is not profitable.

QUEST: And of course, this is capitalism at its best in many senses. You lose money until the thing takes off. It's investment in the future.

LA MONICA: Right, and as long as investors are willing to tolerate those losses it seems like it's higher and higher.

QUEST: I've just got to ask you before we finish. I've just got to ask you. Snap, which has been doing a roadshow.

LA MONICA: Yes.

QUEST: London and New York. What's the one big concern of the investors, the potential investors in Snap?

LA MONICA: No votes for your average shareholder that buys the stock. It's pretty astonishing that they're trying to get away with this. I know

that founders want to keep control of their company.

QUEST: Then don't sell in the market.

LA MONICA: Or don't sell son the market. Before you can sell shares with lower voting rights. Facebook has done that, Google, but to give investors

absolutely no say in the company whatsoever, it really is just a shame. Especially since there are so many questions about this company's future

growth.

QUEST: But if Snap floats and it hit certain valuations and it has to be part of various indices and therefore portfolio players have to have it,

pension funds, institutions and the like. And there are caught between a rock and a hard place.

LA MONICA: Yes, if this is a company that does so well and he gets added to the S&P 500 and other major indexes, certain funds will have to buy it.

But obviously, at the big if. Twitter is not part of the S&P 500 or any significant indexes because it hasn't done well. If SnapShot is the next

Twitter that's the problem. If it's the next Facebook, of course, people probably don't care about their lack of a vote, because they're just

counting their cash.

QUEST: Paul La Monica, good to see you, sir. Thank you very much. Our guru, you always put the market into perspective.

The South African government is raising taxes left right and center to try and pay down the country's deficit. Will hear from the finance minister,

Pravin Gordhan. That's next.

[16:30:00] (COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment when South Africa's finance minister tells us how the media

can help defend the treasuries independence. The chief executive of Airbus tells us he can't believe how long Europe has been under investing in

defense and getting away with it. We will have those stories after you have had the news headlines because this is CNN. And on this network the

news always comes first.

Mexico's foreign minister says his country is worried about the changes to US immigration measures and making it clear that the country does not have

to accept unilateral measures imposed by another government. The comments came only hours before the US Secretary of State and the head of Homeland

Security arrive for meetings with Mexico's president and other top officials.

The French police report the top eight of the far right presidential candidate Marine Le Pen is under formal investigation. It stems from

allegations that Le Pen illegally paid staffers with European Union funds. Le Pen is questioning the timing of the probe which comes two months before

the first round of voting.

Malaysian police are seeking at least six more suspects in the murder of the North Korean leader's half-brother. Meanwhile security at the morgue

where Kim Jong Nam's body is being held has been increased after an attempted break-in. The police say they know who the suspects are but they

wouldn't say if they were from North Korea.

Astronomers have found seven earth size planets in a nearby solar system that could potentially support life. This is the first time a scientist

have found that many planets orbiting the same star which is called Trappist-1. Now they will spend the next decade confirming whether the

planets have liquid water and seeking signs of life.

South Africa's finance minister says the budget that he has just unveiled is not about taxing the rich rather it is a new top income tax rate of 45

percent, it is up from 41, so it is 4 percent up. As the government tries to balance the books in today's budget. He also warned of a growing

impatient and ferment within South Africa. Eleni Giokos has been speaking to Gordhan. Eleni joins me now from Cape Town. Good to see you, the issue

of course is always with Gordhan, been on this program many times, how much longer can he survive in that job?

ELENI GIOKOS, CNN MONEY AFRICA CORRESPONDENT: I mean that is exactly the question that everyone is asking, Richard. And what is fascinating is

we've heard the budget today, we got all the numbers we needed but at the top of everyone's mind is his job safe after today's announcement? But it

is more than just that political cloud that is hanging over him and of course the treasury, if you put 50 percent debt to GDP, it has risen

dramatically over the last seven years. You've got a budget deficit that is playing out, you've got an economic malaise. He has very little tools

left in his box to try and kind of toe the line and make sure that he on the one hand, embarks on radical economic transformation to try and spur

economic growth. And of course, you've got the credit rating agencies that are circling. And he also has to show that they are taking a prudent

fiscal stance.

So, what do you do? You basically taxi higher income earners. But he says there's more to it than just taxing the rich, let's take a listen.

(BEGIN VIDEOTAPE)

PRAVIN GORDHAN, FINANCE MINISTER, SOUTH AFRICA: It is not about taxing the rich, this is about a normal tax system that is designed efficiently, that

is firstly progressive in nature, given our level of inequality and poverty. The redistribution from a privileged minority historically

speaking. To a less privileged majority is a crucial part of sustaining social peace and stability in South Africa.

GIOKOS: What do you make of the political noise currently about a possible cabinet reshuffle and even the fact that some people are saying that you

are going to be removed?

GORDHAN: Well, we have a conference of the ANC coming up in December, you're going to have contestation, and there will be mobilization, so we

must expect the political noise for now. And hopefully we can get over this hump and keep the economy on track. We serve at the president's

pleasure like any politician in the world.

GIOKOS: What is your sense, minister, is your job safe after the announcement of this budget?

GORDHAN: Who knows? On 13 December 2015 to come in at a time when there was a great deal of volatility, when former minister was asked to leave,

and together with the treasury team we have stabilized the fiscal situation. We have stabilized the markets, we have continued to build

credibility for South Africa in terms of a sovereign that can borrow and pay. Can we created a greater level of confidence, we will continue to do

the work as long as we are allowed to?

[16:35:00] GIOKOS: I don't like to think about rumors but at this point I guess I have to.

GORDHAN: You don't have to.

GIOKOS: Brian Molefe, finance minister. With that worry you?

GORDHAN: People like him I have known for a long time. There are pieces of information in the public domain and we leave it to his conscience as to

what he thinks he should do. For us the more important question stick to our job and do it as best we can while we are allowed to do it.

GIOKOS: Can the treasury keep its integrity?

GORDHAN: We are right at the top, and one of five out of 94 countries in terms of budget transparency. So, the treasury has developed a phenomenal

record both outside the country and inside the country. And South Africans will want institutions like the treasury, not only the treasury, to survive

the current turbulence, to continue to serve South Africans as we have done in the past. Because building institutions takes time, takes an enormous

amount of effort. Destroying an institution, you can do in a couple of months.

GIOKOS: Abuse of power at the top echelons, do you think that is going to derail us?

GORDHAN: We are very strong democracy. To shine the spotlight as brightly as possible in all the dark corners. We have a very vibrant media that

puts us on the national agenda as well. And then start asking the courts to hold people to account. We had a citizenry that is very alive to what

is going on.

GIOKOS: The rise of populism globally, we have got a sprinkle of that in South Africa as well. Would you make of this, is this a concern?

GORDHAN: You will get cheap political stuff entering the marketplace and populism essentially means that you as a political movement are able to

take that anger and divert in the wrong kind of way. And people can make mistakes in terms of what they support, they support, and in what form they

support.

(END VIDEOTAPE)

GIOKOS: Yes, those mistakes, Richard, he was telling me was about that people feel angry. Inequality is a reality, unemployment is a reality, so

on the ground you've got people that are really upset with their economic reality. And of course, you got a finance minister that is trying to get

the numbers right as well.

QUEST: Great interview. And the one thing I take from listening to that was you are very direct brutal question basically. Will you still have

your job? And he says who knows?

GIOKOS: I know that is the thing, who knows, and that is a really honest answer because over the last few months that has been the big topic of

conversation. When you speak to investors, when you speak to analysts and so forth, but they keep on saying, will Jacob Zuma, will the president

upset the apple cart once again. He did it once before when he tried to get involved in the treasury and that is why he had to bring in Pravin

Gordhan, so that is the kind of thing that we are talking about at this point.

QUEST: Thank you, Eleni, just got to ask you, those wonderful lights twinkling behind you, Cape Town. What are those twinkling lights?

GIOKOS: It's is not one of the seven livable planets that were found actually, this is Cabell Mountain, isn't that absolutely beautiful?

QUEST: We can't exactly see the mountain but I will take it that it is there, we can see the lights, thank you very much.

Airbus says Donald Trump's commitment to America first does not necessarily mean the company will get the cold shoulder. Airbus' chief executive is

next, Tom Enders. It is QUEST MEANS BUSINESS and we are live from New York.

[16:40:00] (COMMERCIAL BREAK)

QUEST: The chief executive of Airbus, Tom Enders says that the company has had oral assurances from the U.K. government over its future after Brexit.

Enders told Nina dos Santos he is confident about the company's position in the U.S. market despite question marks raised by Donald Trump and the White

House.

(BEGIN VIDEOTAPE)

TOM ENDERS, CEO, AIRBUS: We feel pretty well positioned, we are producing a large commercial aircraft in Mobile, Alabama producing helicopters for

the U.S. Army in Columbus, Mississippi. We are just about to break ground for a new facility of satellite manufacturing together with our partner

OneWeb in Florida. And on top of that most importantly we are procuring year after year roughly US$17 billion aerospace goods, and that makes us

the largest customer of U.S. aerospace goods. That means hundreds of thousands of jobs in the United States, so I feel pretty confident about

our positioning in the U.S. market and we hope to grow our market share there.

NINA DOS SANTOS, CNN MONEY EUROPE EDITOR: But what about the concerns of the U.S. president saying I am making America great again, Americans should

be buying American products, and that would mean obviously, Boeing.

ENDERS: I think it is not that easy, I think we need to realize that all of our large commercial aircraft for instance on average have a U.S.

content of roughly 40 percent. So, it is no longer black against white, Boeing against Airbus, the aerospace industry is very much intertwined

globally, internationally. And that goes for the other big aeronautic manufacturers as well.

DOS SANTOS: When it comes to developments in Washington they have also centered around NATO and a big push from the new administration to try and

get European countries to spend more on military hardware to meet their NATO spending criteria. Would you benefit from that? It sounds like a

windfall for a company that also makes military equipment?

ENDERS: Yes, certainly, that is good news for defense companies. But our share of defense business is 20 percent or even less. But I have always

been amazed about America's patience with the Europeans when it comes to defense spending, and that is certainly something in new administration is

right on target. The Europeans have to spend more on defense, and they know that, and they declared that, and I hope there is a little upside for

us as well indeed.

DOS SANTOS: Going back to the subject of Brexit, what kind of assurances have you have from the British government and other stakeholders hear about

how they can try to mitigate the effect on big international businesses like yours after Brexit?

ENDERS: I think we receive some oral assurances but all this is obviously preliminary because nobody knows exactly how this all plays out, as I said

we watch with a lot of interest would is going to happen. We will not stay passive on that, we know what our interests are in the U.K. we need to

keep our manufacturing, our engineering in the U.K. competitive. And we will try to make an input into these discussions in the coming months and

years as much as we can.

(END VIDEOTAPE)

QUEST: Tom Enders of Airbus. Donald Trump's senior strategist Steve Bannon has told in Germany they used a flawed institution, and the Trump

administration is not committed to it. According to various sources who have spoken to CNN, they said that in a conversation between Bannon and

Germany's ambassador to the United States, Bannon said the U.S. is now looking to foster nation to nation relationships. And yet days later, Mike

Pence visited Brussels and delivered a very different message. Our global affairs correspondent Elise Labott. She joins me from Washington. Now

this is a rum deal, isn't it? During the election, Donald Trump several times said post Brexit there will be other countries falling apart and

would be leaving the EU, not necessarily here forever. Bannon follows the same, Pence says something different. What are we supposed to believe

here?

[15:45:00] ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Nobody really knows, Richard, you heard Mike Pence give this message that Pres. Trump

sent him here to talk about deepening and strengthening political and economic cooperation with the EU. You heard Rex Tillerson, the secretary

of state, and defense secretary Mattis all kind of giving this moderate message of cooperation with the Europeans. But my understanding is this

conversation between the German ambassador, Peter Wittig, and Steve Bannon which was described to me as combative. Bannon cited all of these

nationalist, populist movement sweeping through Europe and said the US wants to deal with these countries bilaterally.

And that is the message that Steve Bannon, and as you said President Trump have talked about before. The Europeans don't really know what to think,

they are hearing one thing from the White House, their hearing another thing from the other secretaries, and they really don't know what to think.

But what they do know is that they don't think that anybody in this administration really understands the European Union experiment, their

contribution to collective peace and security in Europe. They are saying, you know what, that is fine. They don't have to understand it, they don't

have to respect it, but they do have to understand it is important to these countries.

QUEST: Yes, but also maybe Mr. Bannon needs a treaty lesson, European countries are not able to establish bilateral independent relations, if you

like, or certainly on a trading ground with United States. Because the EU has competency in this area. Is it your feeling that actually the Bannon

et al band wagon would like to adopt a divide and rule strategy as it relates to the EU 27?

LABOTT: I think that is exactly what he would like to do and he has been pretty clear about it, right, and you have these European elections this

year in the Netherlands, and Germany, in France and his former organization Breitbart which kind of prided itself on helping fuel the Brexit movement

is now opening up in Berlin. Is now opening up in Paris, and I think the concern is that the administration is going to support somebody's right

wing nationalist populist movements. And diplomats are saying listen if you don't want to deal with the EU as a collective, that is your

prerogative but stopped treading on our front lawn. You have to understand that this is a strategic interest to us and don't do anything to help undo

it.

QUEST: Finally, I mean the mood at the State Department, how would you describe it?

LABOTT: I would describe it as anxious, look, Secretary Tillerson did not come in on day one, he came in just a few short weeks ago. He does not

have a team in place, he didn't get the deputy he wanted, Elliot Abrams. He was vetoed by President Trump and so most of the career top officials

are gone from the building, he is really home alone. There has not been a State Department briefing since this new administration and I think

diplomats are very concerned, career officers are very concerned about whether this State Department is going to have influence in the next

administration. And let us be honest, Rex Tillerson was a CEO, he does not have government experience, he is coming to it was a very different

perspective and there is a lot of growing pains there.

QUEST: Elise, joining us from Washington, thank you, with the story of Bannon and the EU which was also reported first by Reuters which we bring

to you. Now, into a roll and down the rabbit hole, Ruth Negga tells CNN she feels like Alice in Wonderland when she acts. The actor who described

herself as a scaredy-cat says it is a safe way to take risks. After the break.

[15:50:00] (COMMERCIAL BREAK)

QUEST: QUEST MEANS BUSINESS from New York. The White House press secretary says Donald Trump will be focused on the Governors Ball on Sunday

night, not the Oscars or Academy Awards. A number of Hollywood figures including Meryl Streep have spoken out against the president. If Mr. Trump

isn't watching, he could miss some of Hollywood's rising stars. He may not be watching but we are.

"The Creators", the Oscars, the Academy Awards which are this weekend. Never mind Mr. Trump, we have already got for you, we have already spoken

to Dev Patel and Natalie Portman. Now in today's episode of "Creators" we hear from Ruth Negga who was nominated for her leading role in the movie

"Loving". She spoke to CNN about taking risks and disappearing into different characters.

RUTH NEGGA, ACTRESS: Acting is a full-bodied profession, I don't think I could do anything else at this stage. I mean I'm sure I could but I

wouldn't want to.

As a child, I fell in love with storytelling, Ireland has a very rich storytelling history, I wanted to be part of that. I loved renting movies

with my cousins spending our Friday nights and weekends watching various movies. And then when I was a teenager my mom started bringing me to

theater. And I thought that is how I want to be part of this world. I want to tell stories with my body and my mind.

Playing different people, I find that extremely, I don't know, energizing. There is an element of that delicious feeling of disappearing into

something else, into a different world. It is a bit like Alice in Wonderland, really. Disappearing down the rabbit hole. And you know

anything can happen in storytelling. And I think that it is a safe way to take risks. You know, being an actor because it's a very closely monitored

sort of situation. So, I think maybe essentially it is because I am a scaredy-cat.

I've always been interested in accents, I grew up in a lot of different places where that kind of comedian aspect takes over, it is like anything,

it is craft and work, put the hours in and cross your fingers. When people don't understand on a basic human level that's when dangerous things can

start happening, when we don't appreciate one another for our individuality and our commonality. We are all a reflection of one another and I think

that that is another part of what storytelling does, it is a point of connection for all of us which I think is a very important part of how we

are going to become a better world.

(END VIDEOTAPE)

QUEST: "The Creators", the Academy Awards, we will have the director of "La La Land" where you are going to hear his view after the break.

[16:55:00] (COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment, astronomers have found seven planets that could sustain life, that they are going to investigate over the next

10 years at least. I find this fascinating. The contradiction between astronomers and their planets with decades and light years to think about.

And the stock market is worried about a quarterly report and whether markets are up one day over the next. That's why Elon Musk at Tesla is

fascinating because it is taking the long view rather than a short knee- jerk reaction. And that is QUEST MEANS BUSINESS for tonight. I am Richard quest in New York, whatever you are up to in the hours or years ahead, I

hope it's profitable. We will do it again tomorrow.

END