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Quest Means Business

Dutch Exit Polls Suggest Far-Right Struggles; Russian Spies Indicted Over Yahoo Hack; Fed Makes First Major Move of 2017; Trump Vows to Defend U.S. Automakers; Federal Reserve Increases Interest Rates; German Officials Raid VW

Aired March 15, 2017 - 17:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[17:00:00] RICHARD QUEST, CNN ANCHOR: Closing bell on Wall Street was ringing very strong performance for the Dow Jones industrial. Time for the

gavel to be hit with the St. Patrick's Day Foundation ringing in the bell. St. Patrick's Day, by the way, is not until Friday. They are doing it a

little bit early. The day is over. It is Wednesday, it's the 15th of March.

Tonight, exit polls from the Netherlands suggest a tough night for the far- right. Mark Rutte performing well in the general election. We will be live in The Hague in a moment.

Two Russian spies facing charges for hacking half a billion Yahoo accounts.

And we have liftoff. The Fed's first rate rise of the year has taken place, and the markets interestingly, loved what it saw.

Executives charged with hacking Yahoo accounts.

I'm Richard Quest, life in the world financial capital, and I mean business

Good evening, wherever you look today there were major stories breaking. You can see some of the stories that we'll be bringing you tonight.

Whether it was the polls closing in the Netherlands, the Dutch elections. The Department of Justice indicting Russian spies for hacking Yahoo. We

have the Fed chair, Janet Yellen, announcing an interest rate rise. Or President Trump promising a new industrial revolution for car companies.

Today's events will have major long term ramifications for business and markets around the world and we are going to cover each one for you this

evening. We begin, of course, in the Netherlands where tonight an exit poll in the Dutch election suggests the incumbent, Prime Minister Mark

Rutte, is ahead. It projects, as you can see here, his Freedom Party -- Freedom and Democracy Party will come first with a possible 31 seats.

Geert Wilders, Freedom Party, the Christian Democrats and the Democrats are in a tie for second with 19 seats each.

Now as always with these things, please remember any exit poll may not be precise enough to predict the final outcome and this exit poll was not

commissioned for CNN it was done for the Dutch broadcaster NOS but we take notice of it, of course, because it suggests the Rutter has performed

better than expected or arguably Wilder performed worse than had been predicted. This election widely seen as a bellwether for populism in

Europe and whether the Dutch would resist it or embrace it. Hala Gorani is at the seat of government in the Netherlands. Hala is at The Hague, and

this is a very fascinating result tonight.

HALA GORANI, CNN HOST, THE WORLD RIGHT NOW: it absolutely is, by the way, I'm in front of the Parliament building here in The Hague. The world was

watching why? Because Donald Trump was elected last November. Brexit won unexpectedly, even though every poll pretty much suggested that Brexit

wouldn't go through in the referendum last year.

In 2017 the first big test was this one. It was Geert Wilder, the far- right, extreme right politician, anti-Islam, anti-immigration, anti-EU. Will he come first as so many polls had suggested? Today was disappointing

for him no doubt, because he did not. The party of the incumbent Prime Minister, Mark Rutte, the Freedom and Democracy Party, with 31 projected

seats firmly on top.

You mentioned, Richard, this is not a poll conducted for CNN it was commissioned for the national broadcaster but experts tell me these exit

polls are usually pretty accurate. What does this tell us? It tells us that the centrist parties including, for instance the D66 Party which is

pro-European in the center that want a much softer approach to immigration for instance, but they are tied for second place with the far-right party

of Geert Wilders. It's a comeback of some of the centrist parties. Can you say that this populace wave stopped here in the Netherlands? Perhaps

can you. Or you can say the fragmented nature of Dutch politics means no matter which way you look at it you will always have this type of sort of

fragmented, fractured political landscape you see in that exit poll. One thing is for sure Geert Wilders did not come out on top period.

QUEST: Right, but Hala, look, I know it's an exit poll, it was done from somebody else and there's plenty of moments before the results. But

listen, do this seem to suggest that Rutte stays as Prime Minister? That he becomes the man who is able to cobble together some form of coalition as

indeed all Dutch governments are and he remains in power.

[17:05:00] GORANI: Listen, it suggest, perhaps that will be the case. When you ask politicians here, even the member of the European Parliament,

Marietje Schaake of the D66 party was not willing to venture a guess. Dutch politics are very different from the types of elections we're used to

covering, certainly very much unlike the U.S. election or the upcoming French election. You have days, weeks, oftentimes months of negotiations

between parties in order to cobble together some sort of coalition. It could be between four parties, five or six.

Now, the fact that Mark Rutte even though he performed -- did not perform as well in 2012 is still on top. The probability he'll be called to form

the next government is higher than, you know, would have been expected if some other polls had materialized today. Can I say that with certainty?

No.

QUEST: Good. There we are. We're in an uncertain world. Hala Gorani who is in the Netherlands, in The Hague, which is not the capital. The capital

is Amsterdam as we been reading about all day. But The Hague is the seat of government. There we are, we learn something new every day. Hala, good

to see you there, thank you very much indeed.

There are 156 in the Dutch parliament as Hala was talking about in that space in The Hague. And there are 28 parties in total in are vying to fill

them. So, these are the parties that are represented at the moment. The seats are handed out on the basis of proportional representation. Now you

need 76 seats for a majority. That's obvious, if that's the number of seats. No party has ever won outright.

So, let's look what we got currently. This is the current one. The VVD which is Rutte's party and the Labor Party, they are the ones that are in

current coalition. And they are the ones that will obviously be looking at how they can put together some other new coalitions. Geert Wilders, PVV

party is the one that is obviously with 19 seats, he's going to be -- the question is he going to be looking for the opportunity to put together a

coalition with some other parties. Always bearing in mind that the other parties are not willing to do a deal with him.

It means it gives Rutte the opportunity to do a deal here, to do a deal here, to bring other people here, and to create that coalition, leaving

Wilders way out of it. Charles Grant is the director of the Centre for European Reform joins me now from London. If the result is as it looks

like tonight are we overstating it to say that the mood of populism met a solid wall in the Netherlands?

CHARLES GRANT, CENTER FOR EUROPEAN REFORM: I think that might not be overstating it. I don't think the Netherlands was ever going to be the

third part of the story that began with Brexit and Donald Trump. A lot of commentators like to join up the dot and say populism is on the march. It

was never going to win Netherlands. Wilders was never going to get more than 13, 14, 15 percent of the vote. The government was never going to

include in it. It doesn't mean the populism wave is dead or varied are not still very significant for Europe. When we turn next to France, for the

French elections coming up in May, my guess is that Macron, a pro-EU, liberal pro migration centrist will win, but Marine Le Pen will give his a

good fight. The real worry for those people like me, who are worried about populism is Italy. Italy will have an election before February of next

year, perhaps this year. The populists might even win in Italy.

QUEST: All right and if we take the situation where, you know, there's an element of populism still around, there's anti-immigration element still

festers, even if the Wilders of this world or the Le Pens of this world do not win, surely the established politicians, the established parties have

to accommodate some of that populist agenda and how will they do that in the Netherlands?

GRANT: Well, I think you're absolutely right, Richard. They are doing that. One of the reasons Mr. Rutte has done very well tonight is he has

moved some way to the right, been quite tough on immigration and the problem of Islam and terrorism and indeed his very tough approach to the

Turkish government's row over the banning by the Dutch government of Turkish ministers from entering the Netherlands.

[17:10:00] His running support sees that he's booted his popularity by taking a top line on turkey. The center parties are learning. They have

to move a little bit to the right in order to stay of the populace threat.

QUEST: Let's put aside, for example, this question of immigration. The big issue, not just Brexit but it's going to be the future of the European

Union, particularly the Juncker Plan, and the question of a two speed Europe. Where will countries like the Netherlands recognizing they want to

remain in the EU, do they become moderately Eurosceptic?

GRANT: Well, I think the position of a new Dutch government probably as you've said to be led by Mr. Rutte will be no more treaty changes, because

has to be a referendum probably to approve any treaty, which could be lost. No more treaty changes. No more integration. No creation of a transfer

union for the Eurozone where the richer countries shift money to the poorer countries in some mechanism. I think the Dutch will be one of the

countries putting a break on future integration.

But interesting if Mr. Macron wins in France, as the polls suggest, he will be in favor of a new move to integration and perhaps with new treaties and

setting up new institutions for the Eurozone, like a Eurozone finance minister. We may see the French pushing that and the Dutch and Germans

resisting it. If they don't agree then nothing will happen and we won't get a more integrated EU.

QUEST: Good to see you, sir. Complicated events, but they're all taking place and were grateful that you came in tonight to help us understand

them. Thank you very much, sir, good to see you.

U.S. officials have indicted two Russian spies for the hacking of at least half a billion Yahoo. Accounts. The Department of Justice calls it one of

the largest data breaches in history. The four people were charged in total. Two of them are FSB spies or believed to be. And one is Dimitri

Dokuchaev is already in custody according to his lawyer. He's under charge for treason said to be a spy for the Americans. Then you got Igor

Sushchin, as well. The other two hackers -- this is fascinating -- one is arrested in Toronto and the targets were often very specific.

Let's just take a look at what the targets were. Bearing in mind this was not a bulk hack designed to just get credit cards. You had the former

Minister of Economic Development of a country bordering Russia. But wonders who that could be. We'll ask Jose Pagliery. We have a sales

manager that's a major U.S. financial company. A senior officer of a major U.S. airline. The chief technology officer of a French transportation

company. And an international monetary fund official. Yahoo was not the only target, indeed, in all of this. There was also Gmail that was also

under Russian web mail was also compromised. The Department of Justice was outraged of the Kremlin's connections to this monstrous hack.

(BEGIN VIDEO CLIP)

MARY MCCORD, ACTING ASSISTANT U.S. ATTORNEY GENERAL: The involvement and direction of FSB officers with law enforcement responsibilities makes this

conduct that much more egregious. There are no free passes for foreign state-sponsored criminal behavior.

(END VIDEO CLIP)

QUEST: we need to put this into some's perspective. Jose Pagliery is with me. Good to see you, sir.

JOSE PAGLIERY, CNNMONEY CYBER SECURITY REPORTER: Likewise.

QUEST: This was not a bulk hack to get credit card details and that sort of thing that we were talking about earlier.

PAGLIERY: No. This is amazing. What's laid out in these 38 pages of indictment, these details are incredible because we finally have a concrete

detailed example of how the Russian government leverages cyber criminals to conduct its espionage. And so, while we know that a half a billion Yahoo

users were hacked in this, really the targets were some 6,500 or so powerful people that the Russian government wanted to spy on. We're

talking about CEOs, government officials, outside and inside of Russia.

QUEST: But how did they know that those 6,500 had Yahoo accounts or Gmail accounts or did they just randomly try?

PAGLIERY: This is one of those cases where the FSB, the spies knew they wanted these people and so they teamed up with hackers to target Yahoo,

because lots of people use Yahoo. And so, it's not that they knew that these people were using Yahoo accounts, it's just that lots of people have

Yahoo accounts. And they also targeted Gmail too. They were after the people.

QUEST: How successful were they in actually getting to their target? Do we know? Is there anything in here that tells us that?

PAGLIERY: Extremely. Because what this indictment says is that they got access to the email accounts which is a treasure trove. They got access to

email accounts that belonged to -- I'll read it here -- an officer of Russian ministry of internal affairs who investigates cybercrime. So, it

looks like the KGB were after some of their own. They got access to these emails and within that find out who their friends were, their family, where

they shopped, what they did, what email accounts they used separately.

[17:15:00] QUEST: How did they come up with this list? We caught that list earlier, I mentioned earlier, and the country bordering Russia --

PAGLIERY: Most likely Ukraine.

QUEST: Ukraine, right, but --

PAGLIERY: FSB has been after everyone in that country.

QUEST: And then you've got the question of the technology and leading salesman in the U.S. airline. How did they come up with this list? Do we

have any idea?

PAGLIERY: Not yet. It seems reading this and talking to former federal --

QUEST: A sales manager to a major U.S. financial company. Go on.

PAGLIERY: Talking to former federal prosecutors, former FBI agents who have worked alongside the FSB, and partnered up with them or trying to

catch criminal hackers in Russia. They know that the FSB is a spying agency. Right? These are all potential targets for Russian intelligence.

QUEST: We have four alleged bad guys.

PAGLIERY: That's right.

QUEST: One is in Canada. I suspect will be extradited to the United States in the fullness of time.

PAGLIERY: Likely.

QUEST: We have one that is in prison awaiting trial in Russia.

PAGLIERY: Stoyanov, he's a very complicated tale. From the looks of this, it looks like he was a double agent.

QUEST: He's in a lot of trouble tonight.

PAGLIERY: Oh, yes.

QUEST: Done matter which way he goes. You know, the Russians spy --

PAGLIERY: The Russians excuse him of spying for the United States. The United States is excusing him of being a downright criminal.

QUEST: Not a good day for him. And the other two, they're FSB spies, any chance in your wildest dreams that they would come to -- get extradited?

PAGLIERY: Extradited to the United States, absolutely not. This is a frequent complaint that U.S. law enforcement has that Russian law

enforcement will not play that game. Here's the thing. What's so incredible about this indictment is that it is emblematic what we reporters

have been hearing for a long time. That the FBI will seek cyber criminals in Russia. They will call FSB and say, can we partner up on this. Here's

who are looking for. And the FSB instead of arresting them and extraditing them, or merely arresting them and trying them in Russia, will turn around

and recruit them as a tool for the FSB. It's a terrible game that we're playing here.

QUEST: It always was. Good to see you.

PAGLIERY: Likewise.

QUEST: When we come back, just shows you a story that would normally lead QUEST MEANS BUSINESS and will have it after the break. Rates are up and

going higher. Jessica Yellen says she has a simple message for the economy. Been a very busy day and I'm delighted you're with us tonight.

(COMMERCIAL BREAK)

QUEST: So today interest rates went up. And they are going higher. And interestingly and perhaps more perversely, investors are cheering. It was

just the third-rate rise since the financial crisis. And the Fed says it expects to raise rates twice more this year. It's all a sign the economy

doesn't need the Fed's help as much anymore. The rate rise -- so it actually the Fed fund is a target rate and the target rate now goes up to 1

percent. That's the increase from .75 to 1 percent, but is a target rate. Janet Yellen said that Americans have cause for confidence.

(BEGIN VIDEO CLIP)

[17:20:00] JANET YELLEN, U.S. FEDERAL RESERVE CHAIRWOMAN: The simple message is the economy is doing well. We have confidence in the robustness

of the economy and its resilience to shocks. It's performed well over the last several years. We've created since the trough in employment after the

financial crisis around 16 million jobs. The unemployment rate has moved way down and many more people feel optimistic about their prospects in the

labor market.

(END VIDEO CLIP)

QUEST: Jessica Yellen. Now the pace of increase is more gradual than investors had expected. They went on a buying spree. Stocks surged. You

saw the Dow was up over 112 points. If you look at the way, the Dow moved during the day it's absolutely at that 2:00 moment where you suddenly get

the very sharp rise in the market.

Demand for bonds rose with the ten-year yield falling off. And the dollar also sold off. Which is interestingly if interest rates are going up the

fact that yields fell at the same time as stocks rose and the dollar fell, shows that there are underlying currents greater at the moment than the

numbers would suggest. Randall Kroszner, is the former governor of Fed Reserve, now a professor at Chicago Booth School of Business good to see

you, sir. Thank you. I want to talk about that second part later. First of all, reading the statement, every bit -- the every change between the

last statement and this one related to inflation. Inflation was no longer rising, it was now sustained. Inflation was here. Inflation was to be

monitored.

RANDALL KROSZNER, PROFESSOR, CHICAGO BOOTH SCHOOL OF BUSINESS: Yes, exactly. I think the Fed will keep a laser focus on that. Because one of

the things that they have been doing for the last few years is trying to make sure we have the conditions to get close to their 2 percent goal. And

that now they basically said we're here. It had been years where they said we're getting closer, we're getting closer but now we've made it. That's

why they are starting to move.

QUEST: Why would we get this unusual situation today where stocks absolutely roared up at exactly the news. Bond yields fell. Now if rates

are going up that seems slightly contrary.

KROSZNER: So the key was about where rates are going next. I think everyone anticipated this one quarter percentage point move today, but

everyone was thinking about are they saying they will move rapidly, are there going to be more rate increases in the future? They didn't say that.

They still said they're going to move at a gradual pace. They didn't increase the number of rate increases that they forecast for this year or

for future years. Since that's more about the ten year, about the forward- looking rate even the short rate came up, the long rate came down a little bit.

QUEST: #FinancialGeeksUnited, because we have here in the studio the dot plot which we're now going to thoroughly --

KROSZNER: Ahhh.

QUEST: -- so talk me through this dot plot. Because as I look -- to our viewers not familiar with this wonderful piece of arcane-ry. In 2017 we

now have more people -- more Fed members are expecting 1.5 percent by the end of the medium -- by the end of 2017. That's different from before,

isn't it?

KROSZNER: So, what those dot plots are is they ask the members of the Federal Open Market Committee, what do you think the interest rates will be

at the end of this year, end of next year, the year after? They report each one of those as an individual dot. You can see the average of those

dots has begun to move up a bit. But it's basically the same as what they had forecast in December. That there'd be a total of three rises this

year. Bringing us to around 1.4, 1.5 percent. Another three or so the year after that. Another three or so the year after that. And that's with

that saying. It's their own forecast of where they think things are going.

QUEST: Do you think they are right? As I look at it you're looking at 1.5 percent by the end of this year and if we take the end of next year you're

looking at 2, 2.25 percent on rates. But the longer run is now somewhere near 3 percent.

KROSZNER: Exactly. That's really where the big question is. Where is that long run equilibrium or neutral rate where the Fed is no longer trying

to be accommodative. No longer trying to take the punch bowl away. They now estimate that to be about 3 percent. That strikes me reasonable. But

over the next two or three years that could move a bit.

QUEST: Good to see you, sir. Thank you very much indeed. Thank you for helping us with the dot plot. Always enjoy a bit of dot plottery on a Fed

day. Thank you, sir.

Now just hours from now on Thursday, President Trump's revised travel ban is set to take effect.

[17:25:00] Major U.S. tech companies have joined a legal fight against the original ban. They are doing so once again. Laura Jarrett is in

Washington for us tonight. And the arguments haven't changed substantially. The tech companies are still against this ban, even though

Iraq was removed from the list and waivers were included to help hardship cases.

LAURA JARRETT, CNN U.S. JUSTICE REPORTER: Well, that's exactly right, Richard. But these businesses say this is still bad for business and

therefore we're against it. As you know there are a number of different state challenges happening in places like Hawaii and Maryland and

Washington State. Federal judges are hearing these as we speak. But the tech companies are joining in Hawaii as friends of the court, so to speak,

and saying look this is really hurting our business.

QUEST: OK. If that's the case, and we've also got the issue of the H-1b visas as well, and the restriction on those or the new rules relating to

them. What's the feeling now in justice circles on the ability of any further changes? Is this new regime likely to pass legal muster?

JARRETT: Well, you know, it's interesting. I was in court earlier today in Maryland and the judge was asking really tough questions of both the

Justice Department as well as the challengers here. Really ask what do you want notice do here? How am I supposed to look behind an executive order

that on its face looks neutral and doesn't mention discriminatory purposes or anything like that. But the challengers want him to do that. They want

all of the judges to look at Trump's statement from the campaign trail and say look, judges, that shows a discriminatory purpose. Now obviously, the

Justice Department disagrees with this and says not at all. You can't look at statements from Trump on the campaign. He wasn't even president then.

So, it's not an official declaration.

QUEST: We'll watch this closely. Thank you.

JARRETT: Thanks.

QUEST: Before we leave you in this half hour I want to remind you what happened on Wall Street where stocks rose quite sharply. The NASDAQ was

virtually at an all-time high. 112 points on the Dow, over 20,950. Just look. It's that 2:00 sudden rocket rise which is most unusual on the back

of a Fed rate hike that the market actually seemed to like.

As we continue tonight, coming up, we'll hear from a group that says the decision to raise interest rates is very bad news for American workers even

though Janet Yellen says it's evidence of a stronger economy. In a moment.

(COMMERCIAL BREAK)

[17:30:09] QUEST: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in just a moment. When Donald Trump says the assault on the

American automaker is over as he tours a plant in Michigan. I'll be joined live by the executive chairman of MSC Cruises for an exclusive television

interview. And we will have our robust discussion of what means full employment. Before any of that we do say this is CNN and on this network

the news always comes first.

Exit polls from the critical election in the Netherlands from the Dutch broadcaster NOS and it shows the estimate is that the Prime Minister Mark

Rutte's party is in the lead. A three-way tie for second place. That does include the far-right leader Geert Wilder's party. The poll wasn't

commissioned by CNN it is important to know exit polls alone are photo precise enough to predict final outcomes.

The U.S. Justice Department says two Russian intelligence officers are among four people indicted in the massive hack of Yahoo. Arrests came on

Tuesday in Canada. Hack in 2014 affected 500 million Yahoo accounts. It included names, addresses and passwords but not financial information.

Republican congressman heading the house investigation into the alleged ties to Russia says he doesn't believe Donald Trump's wiretapping claim.

He's seen no evidence that Barack Obama tapped Mr. Trump's phones in Trump tower. We'll hear from the FBI director at his first formal hearing and

that will take place on Monday.

The Fed's decision to raise rates has not been warmly received by all Americans particularly the Fed-up campaign which has been calling the Fed

to loosen rather than tighten policies. In a statement fed up says the data simply does not support a rate hike right now. Wage growth is still

too slow. Millions of people who want to work full time cannot. It also says increasing rates at this moment relies on a dubious assumption.

Sean Sebastian is the co-director of Fed-up campaign joins us now. What do you want? You've got unemployment at 4.6 percent. And on the CPI, you got

inflation arguably over, on a CPI basis over 2 percent at the moment. The latest number was 2.7 percent year-on-year.

SEAN SEBASTIAN, FED-UP CAMPAIGN: Actually, I would like the Federal Reserve to stick to its word and not use that measure for inflation it uses

core PCE. And that core is 2 percent. Your previous guest said that was goal. It's not a goal. It's a target. We've been below target for the

past five years. Core PCE is at 1.7 percent. This is the Fed's stated goal. I would argue it's too low. They haven't even met their own goal.

QUEST: With the monetary lag, which as you know is about 12 to 18 months, if the Fed does not stay with the curve, never mind get ago head of the

curve you could be over 2 percent particularly if these tighter levels of employment and we have seen wage growth starting to rise.

SEBASTIAN: We've seen wage growth starting to rise but wage growth is still below target. And inflation goes above the 2 percent target for 12

to 18 months we've been below that target for five years. It's OK. By the way, the problem of this recovery has not been -- the problem in the last

several decades has not been runaway inflation the problem is stagnant wages. That's the problem for the last several decades. If we get

inflation tipping over the fed has plenty of tools to bring it back down.

QUEST: Well you say that. You say that. The only tool the Fed has to bring it back down again is to jack rates up faster. As the chair, has

said, she would rather move slowly and move now than have to suddenly jack up rates if things do take off. Aren't you slightly forgetting we're

moving from an exceptionally accommodative position with rates at 3 quarters of a percent.

SEBASTIAN: Another thing the Fed said raising rates is not their only option. They don't have -- I don't buy this idea that they need to jack up

rates all of a sudden very quickly. There's severe down side risk. You're talking about like inflation being a little bit over 2 percent for 18

months as opposed to potentially losing millions of jobs and even more in wages. That's a much, much bigger risk of leaving that on the table than

getting a little bit over the inflation target.

[17:35:00] QUEST: Finally, I mean you are not on your own, your organization just announced -- one voting member of the FOMC wanted to keep

rates on hold and wasn't in favor. But just about every private economist does believe now was the time to raise rates and there should be two more

rate rises this year.

SEBASTIAN: So, this is part of the problem. This is why we have this campaign. Because you look at the data. Inflation is below, is below

target. Wage growth is not at the fed's own target. This is the data we're seeing that affects people's day-to-day lives. That's why we need

tube part of this conversation because when it comes to employment to population ratio, we're still way below pre-recession levels. When it

comes to involuntary part time work we're still way below pre-recession levels. We need to look at data points that affects people's real lives.

QUEST: Never let it be said here on QUEST MEANS BUSINESS you don't hear all views from all sections. Good to see you, sir. Thank you for coming

in.

Donald Trump has taken his message of buy American hire American into the heartland of industrial America. The president delivered a campaign style

speech at a Michigan car plant and vowed to roll back regulations. He'll protect the American automaker from all form of regulations.

(BEGIN VIDEO CLIP)

DONALD TRUMP, U.S. PRESIDENT: The assault on the American auto industry, believe me, is over. Not going to have it any more. We're set up a task

force in every federal agency to identify and remove any regulation that undermines American auto production and any other kind of production.

(END VIDEO CLIP)

QUEST: John Davis is the host of "Motor Week." He joins me now from Maryland. Good to see you, John. What did you make -- you know, look, you

turn up in front of a bunch of auto workers? If you turn up in front of a bunch of auto workers, promise them their jobs are safe, say you'll expand

and stop nasty imports you'll get cheers.

JOHN DAVIS, HOST OF "MOTOR WEEK": Without a doubt that was a real party. All that President Trump has done right now is give the automakers the

chance to make their case to keep the fuel economy standards from ratcheting up from 2022 to 2025. They were promised that under the Obama

administration. It was probably with a wink and a nod. They had that taken away during the last days of the administration. So basically, the

president is just giving them back something that they were promised. As far as actually rolling back the numbers for the future, that's still to be

determined.

QUEST: All right. Now how risky, give us an assessment. When you hear rolling back emission standards, one side of the argument will say that

these emission standards were necessary. The other will say that we're playing with risk with our health and fresh air.

DAVIS: Well, the standards -- the fuel economy standards will keep going up between now and 2021. Plus, California, unless they get their waiver

taken away where they set their own standards and by the way 13 other states follow their standards, unless that's taken away the car companies

are still is going to have to increase fuel economy to sell cars in California. It just means they will have a little bit more latitude and

take some of the investment that they might have put in and frankly put into new models and make more jobs.

QUEST: Let's talk about the movement of cars. Every time the president speaks on this issue of industry, creating a new industrial age he reminds

us gm will not move a plant, ford has said it won't do this, Chrysler. Where do we stand on all these promises as best you know?

[17:40:00] DAVIS: Well, so far it does look like that some of the car production, there was say in Mexico might be moving back to the U.S.

anticipating tariffs or whatever measures might come up. On the other hand, some manufacturers like Toyota still will be building small car

plants in Mexico because they can't make money on small cars here and want to be able to ship them worldwide and can do it better from there. I think

it does bode well for getting more car production back here. Probably, not an avalanche but at least reverse trend for a while.

QUEST: I need to take you into an area I haven't warned you about but I am sure you are aware of. There was a search today of VW headquarters in

various places over Audi and looking for evidence of more cheat devices or defeat devices for emissions.

DAVIS: For diesel.

QUEST: Thank you. How serious is this? Is there another shoe to drop, is your understanding?

DAVIS: I think they are still looking for evidence that they can send somebody to jail because so far, you know, we've had only a couple of minor

players within the company that have faced any charges. They've already basically agreed to pay out lots of money in this country and the thing

that's going on right now is a lot of the other countries that had vehicles that didn't meet standards they are kind of angry that Volkswagen hasn't

she would out a lot of money in their jurisdictions. So, I think this will continue for a while.

QUEST: Good to see you. Always makes good sense. Thank you.

Mark Cuban said he won't rule out a presidential run. He owns the Dallas Mavericks and appears on the reality show "Shark Tank". He's has been a

fierce critic of Donald Trump. He spoke to Jack Tapper a short time ago.

(BEGIN VIDEO CLIP)

MARK CUBAN, OWNER DALLAS MAVERICKS: I don't want to say no but it's not my dream to be president of the United States. Would I like to have

influence? I love helping entrepreneurs, I love helping create jobs, I love to spur industry and I'm good at that. If I can continue to do that

I'm happy. If I think, there's a need -- one other significant issue right now is technological illiterate. We're about to go into an era of deep

learning where we literally will see a change in the nature of employment. These companies he's building factories with, don't pay attention to the

number of jobs he's saving for the factories pay attention to the number of jobs in those companies two, three out. I guarantee you they will be 30

percent, 40 percent lower.

(END VIDEO CLIP)

QUEST: As we continue tonight an exclusive interview with the executive chairman of

MSC Cruises. Talking tourism, Trump and Cuba.

(COMMERCIAL BREAK)

QUEST: When American air carriers got permission to fly to Cuba the assumption it would start a tourism boom. Two smaller airlines have pulled

out of Cuba completely. Silver Air Ways and Frontier Airlines, both ultralow cost carriers are scrapping services to the island citing low

demand and high costs. A very different story is for the question of cruising to Cuba and the whole question of the cruise industry which not

only is booming in relation to Cuba but also in relation to China and number of ships being built.

[17:45:00] The executive chairman of MSC Cruises joins me now from Florida. Thank you for joining us.

PIERFRANCESO VAGO, EXECUTIVE CHAIRMAN, MSC CRUISES: Good afternoon. Good afternoon to you, Richard.

QUEST: If we look at the industry, you have just launched or just dealing with your new smart ship, what is the trend? What is it people want? I've

asked you this before. What is it that turns around the image of cruising for millennials?

VAGO: Well, Richard, I mean cruising the already a great alternative for vacations and every year we see new platform, no ships being offered to the

consumer. And, of course, these ships are very hardware. They are quite expensive. There's a lot of investment. A lot of innovation. A lot of

technology. Everything that is the latest in the market, everything that will have to come in to market will be on cruise ships. One of them is

technology. So, we see a lot of facilitation not only to find the children with bracelet, pay your bills, book your drink in advance but the ships are

getting bigger and bigger. Technology helps.

QUEST: They are getting bigger and bigger. But, I'm always surprised at the number, the relatively small number totally that take cruises. You're

still fighting in the same waters. The Caribbean is over cruised at the moment and you're all moving resources towards China as fast as can you.

VAGO: Well, you know, cruising is becoming global. So, the Caribbean, the bookings are great. We're doing much better than last year. We have

advance booking. Europe is booming as well. Cruising is actually penetrating more and more around the world including China. Chinese love

to cruise. Love to travel. And it's very easy for them to get on board, to embark from the home port whether Shanghai or Beijing and go and visit

the countries around them. It's becoming a way to go on a vacation.

QUEST: But would you consider bearing in mind for example the travel ban, the Trump travel ban the difficulties, the perception. We know for

instance the U.S., the number of people looking for dollar days in the U.S. is down. Would you think of moving ships away from the U.S. so that

overseas visitors do not have to come through U.S. ports to start a cruise?

VAGO: Well, we moving ship MSC to the U.S. MSC decided we'll be increasing in December, you know, coming to Miami. So actually, you're wrong because

there's more and more passengers going cruising, the penetration is still very low, only 4 percent. And let me tell you, Americans also love to

travel the world and cruise cigarette a safe way to see the world. They know that they can -- every day they can wake up in a different country but

at night they have the safe coon of the ship itself. Numbers are very promising, very bullish.

QUEST: Is your message you would like more ships. You're going to build more ships. Bigger ships. More expensive ships?

VAGO: Well, I've done my fair share and in fact I have 11 ships been built. 9 billion euros have been put on the table. So, a lot of new

platform, a lot of new shipping innovation and new experiences and, you know, we think we are on the right track. Also, don't forget, Richard,

even with all the yards being fully booked, we only took three yards, so with each yard delivering eight ships a year, we only took in about 7

percent extra supply in the market. That's very, very sustainable. So very confident about the future.

QUEST: Very glad you came on today, sir and put the economics of the industry. Thank you, sir. Good to see you.

As we continue tonight CNN's original series Mostly Human and it's a story of the activist who ended up on the pentagon's kill list.

[17:50:00] (COMMERCIAL BREAK)

QUEST: Today's indictment of four people for hacking Yahoo emails, shows us the open skies, scope and size of the hacking community. As part of our

new series mostly human we've been tracing one hacker who turned his skills to the most extreme causes. Fascinating stuff.

LAURIE SEGALL: I've been fascinated by this story. This guy was known as the third most dangerous member of ISIS. Not because he was violent but

because of his ability to hack and his ability to tweet and incite violence. What not a lot of people don't know

about Junaid Hussein was he was also called "Trick" online and hung out in these hacker forums. A lot of his hacker buddies go to a hacker conference

in Vegas. The feds infiltrate this conference to get information about him before they killed him in a drone strike. As part of the investigation, I

actually went to some of the same hacker parties and spoke to hackers. Take a look.

(BEGIN VIDEOTAPE)

SEGALL: We're at one of the many defcon parties. We'll go party with hackers. Many of these people hack to show security vulnerabilities. More

are in the gray area.

UNIDENTIFIED MALE: You have to be careful when people give you their business cards. The thing will activate and own your telephone.

SEGALL: And that is card someone is handing out here.

UNIDENTIFIED MALE: Yes.

SEGALL: The spirit of this community is all about curiosity. Finding things and breaking them. It's an underground. Weird. Interesting. But

it's not the face of terror. John Nichols spent six years as a propaganda specialist for the U.S. government. He monitored Trick and other

terrorists online and watched how they use social media. What was it about his abilities, his skills that made him so dangerous?

JOHN NICHOLS, EX-PROPAGANDA SPECIALIST: Everybody loves a good propagandist. The ability to tell a good narrative. His story was sexy

too to the kind of people were influenced.

SEGALL: I get it. I can't wrap my head around somebody like Trick who loved the spirit of this community of anti-authority and, you know, maybe

not taking things at face value. I still can't wrap my head around how he could go that extreme.

NICHOLS: Isn't ISIS really just -- it's not just but isn't ISIS absolutely a giant anti-authority organization? You don't have to be a front to back

Koran reader to buy into that narrative.

SEGALL: The narrative appealed to people like Trick. People behind a screen looking for belonging. He encouraged his followers to take action

and he was accessible and relatable to a western audience.

NICHOLS: The internet is full of people who are disaffected. You get into this for some way by being a little bit disaffected youth. That's true for

a lot of hackers.

SEGALL: Not a lot of hackers become known as the third most dangerous person of the ISIS. So, what divides you and Trick?

[17:55:00] NICHOLS: You shouldn't join ISIS because they chop off heads. I shouldn't join the west because you bomb our wedding parties from the

sky. From that perspective, which is the greater Satan there?

(END VIDEOTAPE)

QUEST: How difficult is it for you doing this and getting people to talk?

SEGALL: That's a good question. I'll tell you none of these interviews you see in the series were easy. It took a lot of time and a lot of

reporting that goes into it. I know I went from trying to get hackers who didn't want to talk, to talk to me and knocking on doors in Birmingham

because I wanted to know who Trick was. We have a clip for when I was door knocking. Take a look.

(BEGIN VIDEO CLIP)

SEGALL: OK. Should I go knock? Junaid Hussein?

UNIDENTIFIED FEMALE: (Arabic)

UNIDENTIFIED MALE: You're on my private land, come into my land, you can't do that you bitch.

SEGALL: Sorry. OK. I don't think it's safe for us to go out there.

(END VIDEO CLIP)

QUEST: Looking forward to see more of this tomorrow. Brilliant series.

Our Profitable Moment after the break.

(COMMERCIAL BREAK)

QUEST: Rates went up and they are going to go up even more before the end of the year and yet the market likes it. That's QUEST MEANS BUSINESS for

tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable.

END