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Quest Means Business
Dow Clings to Record as Tech Stocks Slide; Air France-KLM Agrees New Alliances; Bill Browder: Putin Doesn't Want the Magnitsky Act to Exist; Rolls Royce Unveils New Phantom; New York Stock Exchange Courts New IPOs;
Aired July 27, 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 HOST: Closing bell ringing on Wall Street. Just behind me today, the program going live from the New York Stock
Exchange. Top of the hour it is. Hit the gavel, sir. A strong gavel. You're going to hear from that man later in the program. He's one of our
guests tonight. It's Thursday, it's July the 27th.
The Dow clings on to its record. The market action is still not over. Four carriers, three continents, two giant alliances, Air France-KLM with a
new joint venture. The chief executive is on this program tonight.
And which of these men is the richest in the world? Bill Browder says it's Vladimir Putin. We'll hear my interview with Browder during the course of
this hour. I'm Richard Quest, today, live from the New York Stock Exchange, whereof course, I mean business.
Good evening, tonight it was an interesting day's trading on Wall Street. There was a surprise fall in the middle of the day and a new record for the
Dow Jones Industrials. Take a look at how the Dow traded. An early strong rally on the U.S. market on the back of excellent earnings from a variety
of companies, evaporated during the early afternoon. Particularly at 1:30, as, you see there, the market actually went negative, the Dow went
negative. The S&P 500 and the Nasdaq stayed in the red throughout the course of the session.
As trading comes to a close, the Dow is the only major index in finish in the green closing at a record. Strong corporate earning ticked CNN's fear
and greed index to extreme fear for the first time since February. The S&P and the Nasdaq both hit intraday highs and they both dropped sharply around
lunchtime. It was quite dramatic, if you look at the graph of the S&P. It was really, it fell off a cliff. At the close the Nasdaq and the S&P are
down less than 1 percent.
Out of the 500 so far, 300 companies have reported results today -- more than 300 -- and they include some of the biggest names in tech,
manufacturing and consumer goods. Amazon is releasing during the course of this hour.
You're going to get stories behind the stocks. The chief executive of Air France will tell me about the massive expansion announced today.
Turkcell's chief executive -- you just saw him ringing the closing bell -- will discuss his results and the relations between Turkey and Germany.
And a new phantom, a new Rolls-Royce Phantom. The chief executive of Rolls-Royce motorcars will show off his new phantom later. And we'll also
hear from the man responsible for IPOs. You saw him on the podium as well, John Tuttle. First, we need to understand what happened today in the
market. I can hear a chuckle. Peter.
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: Yes. You want me to give you an explanation?
QUEST: All right.
TUCHMAN: Right after we spoke at lunch-time and talked about Christmas in July, we had one of in my opinion, one of the most significant sell-offs
we've had in a while here. Surely since the election. So apparently around lunch time what happened was -- there's a way to look at it in
retrospect. At the time, we saw a massive sell-off in the market. I tried to figure out what was going on. It turned out there was a $1.2 billion
trade in the Nasdaq futures, triple Qs. It sold the market down over a four-minute period of time. Seven to ten times more than the average
volume.
QUEST: Was it a mistake?
TUCHMAN: No, it was not a mistake.
QUEST: Why would somebody sell the Nasdaq futures by over a billion in the middle of a Thursday?
TUCHMAN: OK. So, it turns out after much research and forensic breakdown of this market is the relative strength index. OK? Had suddenly gone into
overboard mode, not seen in 20 years, 99.33 percent in the Nasdaq RSI.
QUEST: What's the significance of it?
TUCHMAN: Look, this market has been on a tear for a long time. At some point -- it's a betting game here. At some point people are going to go,
you know what, somebody's going to make a bet or things are going to cross a line technically where somebody makes a decision to be the first guy to
sell the market. We saw the market reverse, OK. You saw Amazon go from up 30 to down 7. That's a technical, that's a Nasdaq reversal that's
significant.
QUEST: Good to see you, sir.
TUCHMAN: Ha, ha.
QUEST: Do it again tomorrow.
TUCHMAN: Yes, sir.
QUEST: Thank you.
TUCHMAN: Bye.
QUEST: Now European markets mostly closed lower after a back-and-forth session in London. The shares of the drug maker, AstraZeneca, stumbled
some 15 percent, weighing on the FTSE. That was because of a failure in tests and trials of a lung cancer drug. The German Dax closed down nearly
.8 percent -- get me numbers right here, Richard. Peter Tuchman's got me all over the place. Smaller losses in London and Paris.
Air France-KLM has unveiled a big investment and some major strategic changes, signing new partnerships with major airlines on three continents.
Air France is buying 31 percent of Virgin Atlantic, $287 million. It's forming a global joint venture with Virgin and Delta.
[16:05:00] And Delta and China Eastern are each taking 10 percent stake in Air France-KLM. Complicated? Absolutely. Joining me now is the chief
executive of Air France-KLM, Jean-Marc Janaillac, who joins me from Paris. Good to see you as always, sir. First of all, congratulations on this
deal. It's a major development in trans-Atlantic aviation. But I ask you, why the need, do you think, for these equity exchange? And particularly,
for you to buy 31 percent of Virgin.
JEAN-MARC JANAILLAC, CHAIRMAN AND CEO, AIR FRANCE-KLM: Hello, Richard. We are very excited about this move. And for us, it's very important to build
this joint venture that is going to be the most powerful with, Delta and Virgin altogether, between the states and Europe. And for us, it was
important to consolidate this commercial and strategic move by this equity. And for Delta to enter into the capital of Air France, for 10 percent. And
for us to buy 31 percent of the share of the Virgin. It's a way to consolidate and to structure and to make it more powerful the commercial
links we have decided to create.
QUEST: Now, the everything I know about equity exchange within airlines, they work when everybody is on the same page with values, direction -- you
know this. You and I have talked about this before, sir. Equity exchanges work when there is a commonality of view and you're all singing from the
same sheet. So, what is that view for Air France-KLM, Delta and Virgin?
JANAILLAC: The view is to work together, like kind of a total company on the North Atlantic. Deciding together what is a network? What are the
pricing? What is a yield management? And also joining our sales force in order to be a more powerful in Europe, in the U.K. and in the States. We
have exactly the same view in terms of quality of service for our passengers, and working together to provide the most number of vision
between North America, USA and Europe.
QUEST: Are you concerned that post-Brexit, any rules that might exist post-Brexit, for Virgin as a U.K. registered airline and company, it will
be majority non-U.K. owned. After March 2019. Will that be a problem for you?
JANAILLAC: We know there is a risk. We don't know what's going to be decided by the authorities in terms of ownership of a U.K. companies. And
so, we have a clause of that allows Delta and ourselves to come down under the limit of 50 percent and that would allow us to continue working on the
joint venture and being less powerful in the capital of Virgin. It has been planned and forecasted.
QUEST: The JVs across The North Atlantic, yourselves, IAG with, American, the Lufthansa Group with United and a whole variety of other airlines, the
critics say look, prices, fares are now up around 20 percent because the JVs have a stranglehold on the Atlantic. Yes, you are in competition with
each other. But there's only three of you. And you're very powerful.
JANAILLAC: Well we are perhaps powerful. But we are also in competition. And if you see as the prices on the long-term, they went down. And so, we
are able to do a very solid promotion. And to offer very affordable prices in order for American visitors to spend more money in Europe.
[16:10:07] Final question, sir. Your new low-cost carrier, first of all, give me the correct pronunciation of it. I've heard "jeune", I've heard
every pronunciation of it and secondly, who is it appealing to? Is it appealing to 55-year-olds like me? Or is it just for millennials?
JANAILLAC: No. The word is said "Joon" but if you want to call it "jeune", you can call it. We are quite liberal. Our first goal is to
appeal to millennials, but I would say it appears also to people that would like to be millennials. So, it's open to everybody indeed.
QUEST: I'll settle for that. Joon. Congratulations, you've had a very busy week, you've made some major developments and you've moved the
aviation industry on, sir. Congratulations, thank you for joining us tonight on QUEST MEANS BUSINESS.
Coming up as we come to you live from the New York Stock Exchange, after the break, the man fighting to expose corruption inside Russia is the
financier Bill Browder. He gripped -- his story gripped U.S. senators today. And he's on our program tonight.
(COMMERCIAL BREAK)
QUEST: While the Europeans are fearing the cost of it, the White House might veto it. And President Putin calls his hysteria. The White House
communications director, the new man in the job, Anthony Scaramucci is telling CNN the president will decide whether to green light a bill, in
other words, sign into law a new bill on sanctions even though it's already been approved on Capitol Hill.
(BEGIN VIDEO CLIP)
ANTHONY SCARAMUCCI, WHITE HOUSE COMMUNICATIONS DIRECTOR (via telephone): He's looking at the sanctions right now. He may decide to veto the
sanctions --
CHRIS CUOMO, CNN ANCHOR: Why?
SCARAMUCCI: --and be tougher on the Russians and the Congress.
CUOMO: So, you think that if he vetoes it it's because he wants to look tougher than what they have in the sanctions bill?
SCARAMUCCI: He may sign the sanctions. Exactly the way they are, or he may veto the Sanctions and negotiate an even tougher deal against the
Russians.
(END VIDEO CLIP)
QUEST: They're concerned about the sanctions within the European Commission. They said they might cause collateral damage to EU countries.
President Putin is describing it as an outbreak of anti-Russia hysteria in the U.S. This is how he responded to CNN's Matthew Chance at a news
conference.
(BEGIN VIDEO CLIP)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: With these U.S. congressional investigations, now thoroughly under way into allegations of
Russian meddling in the U.S. election. And with the possibility of U.S. sanctions being tightened, shortly. Do you sometimes sit in your office in
the Kremlin thinking about how badly U.S./Russian relations are going? And regretting the day that Donald Trump was elected?
VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): The first point about the election of the U.S. president, that's not our business. And it
is not up to us to assess what he does in this very senior post. That's up to the U.S. public.
[16:15:08] As far as the investigation which you refer to is concerned, I don't actually think it is an investigation, because an investigation
implies a full study and analysis of the investigation, the causes. And so, what we see is merely a growth of anti-Russian hysteria, and
utilization of Russophobia for domestic policies.
And to answer your question do I regret the worsening of these relations? My first direct answer to that is yes, I very much regret it. It's a pity
because we are acting together in agreement, we are much more able to solve the acute problems which exist throughout the world and in Russia and in
the States. But we know that we have many friends in the U.S. we know that there are lots of people with common sense. I hope that today's situation
will be over and we will then be able to turn into a different state based on trust and confidence.
(END VIDEO CLIP)
QUEST: That's President Putin answering Matthew Chance. At the same time, a star witness took center stage in the inquiry into alleged Russian
meddling in the U.S. election. In the U.S. congress, the American financier Bill Browder said that President Putin's priority is avoiding
sanctions which freeze his assets overseas.
(BEGIN VIDEO CLIP)
BILL BROWDER, CEO, HERMITAGE CAPITAL MANAGEMENT: Vladimir Putin, I believe to be the richest man in the world. I believe he's worth $200 billion.
That money is held all over the world in banks in America and all over. And the purpose of Putin's regime has been to commit terrible crimes in
order to get that money. And he doesn't want to lose that money by having it frozen.
(END VIDEO CLIP)
QUEST: Now Bill Browder's name probably is familiar to you if you're a regular viewer of this program. The financier who became a critic of
corruption in Russia. He was a Putin supporter for the longest time, the largest investor in Russia's stock market. And then, the Russians expelled
him in 2005. And his lawyer, Sergei Magnitsky died of suspicious torture circumstances in prison after claiming he had uncovered a $230 million
fraud scheme.
Three years later the Congress passed the Magnitsky Act. It sanctions certain Russian officials for alleged human rights abuses. Now Bill
Browder continues to fight for justice for Magnitsky. This is the book that he wrote, "Red Notice" a true story of high finance, murder and one
man's fight for justice. Bill Browder joined me earlier and he thought that the Russian lawyer, Natalia Veselnitskaya wanted to overturn the act.
That was her goal when she met Donald Trump Jr.
(BEGIN VIDEOTAPE)
BROWDER: Let's just unpack the whole story for second. Vladimir Putin doesn't want the Magnitsky Act to exist. It's his single largest foreign
policy priority. Because he's scared that it will affect his own money. Therefore, he's made it very clear on a number of occasions, that he wants
to repeal it. He's been working together with members of his own government, including the general prosecutor of Russia to do everything
possible to discredit the Magnitsky Act and discredit the Magnitsky story.
And then all of a sudden, this woman, Natalia Veselnitskaya, who admits that she has a regular working relationship on this issue with the general
prosecutor of Russia. Goes to New York, has a meeting with Donald Trump Jr. at a time when his father is the possible next president of the United
States. And it's clear to me, that this was a well-planned-out operation in order to get President Putin's biggest foreign policy priority achieved.
QUEST: How much of your understanding -- because when I read your testimony, it reads like, it reads like well frankly, this book is true. I
mean, the true story of the high finance murder and one man's fight for justice your book, "Red Notice." But when I read your testimony, it has
all the elements of a thriller within it. And I suppose some people will find it incredible. If not incredulous.
BROWDER: People have often said to me, if this was fiction, they wouldn't believe it. The unfortunate thing, very unfortunate thing, is that it
isn't fiction, it's true. And a number of people are dead as a result of this massive crime that Sergei Magnitsky uncovered. It's a very, very
shocking story and a very, very dangerous story and one that goes right up to the top of the Russian elite.
QUEST: And as we look at the U.S. presidential election last year, obviously you have these meetings and these contacts with Donald Trump.
[16:20:00] But you also have what the U.S. intelligence has pretty much confirmed, the hacking, placement of stories, fake news, within the media
that you -- you and I have spoken before about this -- believe was on a wholesale scale.
BROWDER: Well, basically what Vladimir Putin has figured out, is that he can take advantage of our liberal democracy in the West. He can take
advantage of elections. He can take advantage of free speech. And he can take advantage of a legal system. He can take advantage of all these
things and insert all these sorts of cancerous insertions into the whole thing. And he does. And he does so far with impunity. There has not been
consequences for him doing that. And he's going to do it as long as he can get away with it.
QUEST: Do you think the sanctions that the house has passed, the Senate is going to consider, the Europeans are against. Do you think those sanctions
are the sort of punitive measures that are needed to get Putin's attention to stop?
BROWDER: There's no question that these sanctions are absolutely powerful, punitive and decisive. And they go much further than I would have hoped
for and I'm very happy to see them. And what these sanctions do, basically, is take away the discretion from the president, and make them,
make the Ukraine sanctions and the hacking sanctions an act of congress which means that to repeal them, the president just can't sign a piece of
paper, it has to go through Congress.
QUEST: If you were -- and I don't know whether you've met him or known him or you've had dealing with the president of the United States -- but if you
were to sum up in your view, the president's approach to dealing with Putin, what would it be?
BROWDER: Well, I would sum it up as sort of a schizophrenic approach. On the one hand, he has an incredibly strong cabinet of people who are true
realists about Russia. He's got the Defense Secretary, Mattis. He's got the Nikki Haley, the ambassador to the United Nations. He's got the head
of the CIA. These people know exactly what Putin is up to. And they're not going to take any nonsense from him.
On the other hand, Donald Trump is saying all these extremely warm things about Vladimir Putin, which I know to be not true. And so, it's very hard
to really figure out what all this means. And the one thing I can say is so far as of today, Russia's -- or America's foreign policy towards Russia
has not changed. But that doesn't mean it won't change in the future which is why these sanctions are so good because they're now basically
entrenching them in stone.
QUEST: Finally, Bill, for the rest of us, for the U.S., are we in your view being naive? Do you still think that we have such a wish not to rock
the boat or at least to find rapprochement that we are in danger of doing our own damage?
BROWDER: I do think that. I think that Putin is not a man who you can reason with. He's not a man to negotiate with. He's a guy who will get
away with as much as he can get away with until you put a hard stop to it. That's how you have to deal with Vladimir Putin. And every world leader
that shows up thinking they're so charming, they're so persuasive, they can convince Putin, have all been sorry disappointed. We've seen it with three
American presidents, starting with George Bush and then with Obama and now with Trump. Everyone thinks they can somehow reason with Putin. He's not
a man to be reasoned with. He's a man to be contained.
(END VIDEOTAPE)
QUEST: Bill Browder talking to me earlier. Have a look again at today's closing bell that took place 23 minutes ago.
Turkcell, Turkey's leading mobile phone operator rang the closing bell here at the New York Stock Exchange. There he is, ringing the closing bell.
The second quarter results are out. Strong gains in profits and revenues jumping 30 percent. And the best quarterly growth in new customers for
some six years. The man who rang the closing bell is the chief executive Kaan Terzioglu. He joins me now. Turkcell's digital transformation. Good
to see you, sir.
KAAN TERZIOGLU, CEO, TURKCELL: Thank you, Richard, nice to be here.
QUEST: It's great fun ringing the closing bell.
TERZIOGLU: Yes, it is.
QUEST: It's nervous.
TERZIOGLU: You know what? It's a fantastic day in New York because this is an all-time high Dow. I think also for the Dow. At 52-week high for
Turkcell, you know, it's the perfect timing.
QUEST: You have been on the Exchange -- you've been quoted here for the last 17 years. But you're not new.
TERZIOGLU: No, 17 years we have proudly represented Turkey on the New York Stock Exchange as the first and only Turkish company here. I hope it will
not be long for the only bit. But the first bit makes us proud.
[16:25:08] QUEST: Let's talk about the results and this digitization. You're a national carrier in Turkey. How does one compete on digital with
the big names, the WhatsApp, the Facebooks? You're trying to build a national brand.
TERZIOGLU: Yes. So, Richard, we have 5,000 people in Turkcell, 1,000 works on research and development. And I figured out that if are you such
a resourceful company, why not creating the best digital services applications yourselves? And that's the journey we started about two and a
half years ago. Now we have a fantastic instant messaging platform. Competing with likes of WhatsApp and WeChat. We have a fantastic music
platform called Fizy, competing with Spotify. We are two times bigger than Spotify in Turkey. And we have a TV platform, which is actually watched 51
minutes per day. So, we have discovered a new world.
QUEST: It's not easy because you have to bear the full burden of marketing it. Promoting it. And against some very powerful forces, for example an
Apple or a Facebook that have got vast resources that they can bring against you.
TERZIOGLU: Well you know, as a telecom operator we have unique capabilities. Those are identity management, call management capabilities,
access nationwide resources. And on top of that, when you bring the innovation of creating a fantastic app, it's unbeatable.
QUEST: I don't want to take you into too heavy political waters but we need to talk about if you like, the political certainty and the structures
within Turkey at the moment, the government of President Erdogan. How, how challenging is it for you? I mean there was a coup last year, or an
attempted coup last year. There are constant questions about the legitimacy of legislation, new constitutional reforms. How difficult is it
for a company or do you just have to focus on your business?
TERZIOGLU: We do not only focus on business but we actually work to the best of the economy to make sure that access the means of economy is
optimized. I think telecommunications in emerging markets is such an important tool for country's success, democratization and access of equal
opportunities. And we work hand in hand with the government. I have to tell that the world has challenges. Of course, Turkey is not alone with
that. But Turkish economy is I think at the rise, and as part of that, 88 percent of our business in Turkey, I'm proud to say that we rise together.
QUEST: So finally, 52-week high?
TERZIOGLU: Yes.
QUEST: Congratulations.
TERZIOGLU: It's an unforgettable day.
QUEST: Unforgettable day, you rang the bell beautifully. The gavel was good and robust. Thank you very much indeed.
TERZIOGLU: Thanks a lot, Richard.
QUEST: As we continue tonight, Amazon isn't delivering for investors. The earnings are out. The stock is down sharply. We will show you the
numbers, Samuel Burke will have an interpretation on that. It's QUEST MEANS BUSINESS live from the New York Stock Exchange.
(COMMERCIAL BREAK)
[16:30:24] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When Rolls-Royce has just unveiled its new
Phantom 8. And the chief executive will describe the architecture of luxury to me in a moment.
The man in charge of IPOs at the New York Stock Exchange tells me why this building is still the place to list.
For all of that, this is CNN and today on this network, the news always comes first.
The Russian president says he very much regrets the worsening relations between his country and the United States. During a news conference if
Finland, Vladimir Putin said the world is witnessing the America's anti- Russian hysteria and calls the sanctions bill working its way through congress illegal under international law.
Former ally turned enemy of Vladimir Putin testified before senators investigating Russia's interference in the U.S. election. Speaking to
QUEST MEANS BUSINESS, Bill Browder says he welcomes U.S. sanctions against Moscow that have been approved by U.S. lawmakers.
(BEGIN VIDEO CLIP)
BILL BROWDER, CEO, HERMITAGE CAPITAL MANAGEMENT: No question that these sanctions are absolutely powerful, punitive and decisive. And they go much
further than I would have hoped for and I'm very happy to see them. And what these sanctions do, basically, is take away the discretion from the
president. And make them, make the Ukraine sanctions and the hacking sanctions, an act of congress. Which means that repeal them, the president
just can't sign a piece of paper, it has to go through Congress.
(END VIDEO CLIP)
QUEST: The U.S. Attorney General, Jeff Sessions, says the president's recent criticism of him in his words, kind of hurtful. But he calls Mr.
Trump a strong leader. The attorney general made the comments to Fox News while traveling to El Salvador. He also told the Associated Press he will
continue to serve as long as the president wants him to.
Amazon stock is down sharply after-hours trading. Earnings came in well below expectations. Now it's not only a blow to the company, it's a blow
to Jeff Bezos and his wallet. For a short time today, he became the world's richest man, thanks to Amazon's early rally. He flipped places
with Bill Gates. Who wasn't. And other news,
Facebook's tops $500 billion in market cap, thanks to strong earnings, only four other companies have crossed that threshold. Amazon did it yesterday.
$500 billion. And other news in the tech earnings sector today. Twitter plummeted 14 percent. Global users growth stalled. It lost users in the
United States. Let's start with the Amazon results, Greg Portell is the lead partner at Kearney, good to see you. Amazon misses. By a lot?
GREG PORTELL, LEAD PARTNER, A.T. KEARNEY: It was a lot.
QUEST: Does that mean street got it wrong? Or that Amazon didn't guide properly during the quarter?
PORTELL: Well, it's no surprise that Amazon's building out that distribution network. I think many people were surprised about the cost of
that fulfillment as they try to push deeper and deeper into the American economy.
QUEST: But this is a classic case where the market is going to be childish, and, you know what I mean here.
PORTELL: Yes.
QUEST: The market is going to bid down the stock because it misses on one quarter. When Jeff Bezos is sitting at home thinking -- I'm thinking about
2030. 2040, 2045. They're thinking about a week next Tuesday.
PORTELL: The question that needs to be answered, is this a one-time blip in the cost of fulfillment and content that Amazon can eventually work
through and bring down? Or is this a systemic increase in distribution costs that's going to weigh on the stocks for a while?
QUEST: What do you think at the moment?
PORTELL: Amazon has a pretty good track record of being able to work down costs and build efficiency as they pump more product through their network.
QUEST: I'm not suggesting for a moment that anything should buy on the back of anything we say on this program, but at $1,000 a stock if this
stock takes a 10 percent to 15 percent hit, which could do over the next week or three, that's an opportunity, potentially.
[15:35:00] PORTELL: Amazon has a pretty good track record of proving skeptics wrong so how they work through it will be interesting.
QUEST: Twitter. I mean all right. Twitter had really bad user numbers. The stock dropped some 12 percent to 14 percent. It's extraordinary.
PORTELL: Well that's where you see the impact of investor expectations. Because --
QUEST: Right, Twitter is not delivering anything. Twitter is just a straight --
PORTELL: But they beat both numbers. They beat the earnings and the revenue. It's how they did it that the investors didn't like. Which is
that miss on the user number.
QUEST: There's a huge difference between Amazon, which has real warehouses delivering real things, to tens of millions of people on a daily basis.
Amazon is -- we call it a tech company. It's not. It's an e-commerce company. It's delivering things.
PORTELL: Right. Twitter is investing in content. And they're getting into areas of content that are more expensive. So, when you think about
live sports broadcasting. It's very expensive. So, if they are not able to increase the revenue, ad revenue they're bringing in from consumers,
that's what makes investors worried.
QUEST: What I saw this week was fascinating, we saw mature stocks, Citi up 4 percent, Boeing up 8 percent, another 2 percent today. Whirlpool down 7
percent, these are large, mature companies, seeing disproportionately large movements in prices. Why is this?
PORTELL: We're seeing at A.T. Kearney is the interest by investors, not where the metric is it's not whether you succeed or don't succeed, it's how
you succeed. Every investor has an opinion on if a company is doing it the right way. And that could be costs it could be revenue it could be users.
That's why these companies are starting to see big swings, because investors are looking at how they're doing it.
QUEST: Good to see you, sir.
PORTELL: Thank you very much.
QUEST: Have you ever driven a Rolls-Royce?
PORTELL: I have not. I look forward to that luxury someday.
QUEST: We all do. Talking of luxury and the Rolls-Royce, Rolls-Royce Motor Company, motor cars has just unveiled the newest addition of one of
its iconic models, the Phantom 8, featuring an all-aluminum shell and a luxurious interior. It is called the architecture of luxury. Rolls-Royce
calls it the most technologically advanced car it's ever produced. Torsten Muller-Otvos is the chief executive of Rolls-Royce Motors joins me now.
I'm so glad, Torsten, you've dressed properly to be on QUEST MEANS BUSINESS.
TORSTEN MULLER-OTVOS, CHIEF EXECUTIVE, ROLLS-ROYCE MOTORS: Yes.
QUEST: Raising the standards.
MULLER-OTVOS: A pleasure.
QUEST: Tell me a bit about this, this Phantom. I mean the architecture of luxury is the base, the aluminum base. What else does this car have that
the individuality that makes it different?
MULLER-OTVOS: I mean, first of all, Phantom is all about greatness. And that was always in the history of Phantoms. And the same is true for
Phantom 8 again. And what we have done when we thought about how can we improve coming from Phantom 7, and we said to ourselves, we're going to
improve every little detail. And I think that is what Phantom is all about. Exceptional quality and excellence in every single detail. And we
can talk hours, Richard, on what we have improved. But I can tell you, everything is improved. It is magic carpet ride, which is on complete new
levels. It is insulation when you sit in the cabin, it is when you ride this car, and you will see something and feel something which really
touches all your senses.
QUEST: All right. Then you have, it's a highly competitive environment for you. Owned by BMW. But you're trading in an environment where the
pound has fallen sharply. And you've got a Brexit worry in the future in terms of your access to a single market. Now I know a large number of your
cars come to the United States that will not be worried about that Brexit issue. But these are clouds that you're going to have to navigate.
MULLER-OTVOS: I mean, I'm a positive thinker. I see glass as always, half full. And I'm pretty sure that we're going to see at the end of the day,
all out of that Brexit discussions, whatever comes, a very amicable situation as far as motor cars when it comes to global trade for that are
reason, I'm not really worried about that. And by the way, anyhow I am not worried today because it is launch of the 8th generation of Phantom. That
is an historic moment for us. And for our brand. So, I must say, Brexit is somewhere else, today is the launch of the 8th generation of Phantom.
[16:40:00] QUEST: My final question, you'll forgive me, Torsten, you've known me for a while. I've got to be vulgar about this -- how much will it
cost me to have one of your Phantom 8s in my garage?
MULLER-OTVOS: I mean, Richard, it would start probably around half a million. But then knowing you, very well, you would probably go for many
bespoke contents. So, a little bit more than half a million.
QUEST: Sign me up for one for the weekdays and one for the weekends in the country. Good to see you, as always, and next time I'm in London let's go
for a ride in it and you can point out all of those delicious details.
MULLER-OTVOS: Brilliant. Rest assured we will go and do that.
QUEST: Excellent. Good to see you.
MULLER-OTVOS: Cheers.
QUEST: Look, anybody who is watching this program, well, you know very well, I'm much more of a plane geek, an aviation geek, than a motor car
geek. I cannot see the attraction for motor cars, except the Rolls-Royce, there's something about the Rolls-Royce that just -- all right enough of
that.
(COMMERCIAL BREAK)
QUEST: Various IPOs, it is the sight of the New York Stock Exchange loves to see. CEOs ringing the opening bell as they take their companies public
on the New York Stock Exchange. But don't think the NYSE has the business to itself. It's a highly competitive business, where companies choose to
list. And for the companies themselves, it's just the beginning of life in the investors' eyes. As opposed to being a private company. And it can't
always be easy.
Snapchat launched here with as many bells and whistles as you can possibly think, including snap spectacles, a few short months later the bank that
underwrote the sale downgraded the stock and it's still down 20, 30 percent. Spotify reportedly wants to list without underwriters, a major
test of a slightly different listing process. The early-stage investors will sell some of their existing shares, instead of the company offering to
sell new stock and then there's the biggie -- Saudi Aramco, the world's largest IPO. The advisers are recommending the company go to London,
according to "Reuters" because of the potential for post-9/11 mitigation in the United States.
John Tuttle is the man responsible for getting the companies into the door and on to the floor. The global head of listings at the NYSE. He joined
me on the floor, as he said, business is strong, and he intends it to stay exactly that way.
[16:45:00] JOHN TUTTLE, GLOBAL HEAD OF LISTINGS, NYSE: The IPO market is important for the entire economy, but for the New York Stock Exchange we've
had a great year. We had 49 IPOs on the NYSE. Raised about $20 billion for companies. And we're excited for the second half.
QUEST: How competitive is it? Because obviously you not only have the other domestic market in the United States, the Nasdaq, that here, but
you're also competing with London, with Frankfurt and with the other international markets.
TUTTLE: Well, the world's greatest companies list on the New York Stock Exchange if you look we have companies from 46 different countries listed
here on the NYSE. And if you look at every large IPO domestically or internationally, the rule of thumb is $700 million raised and above, every
single company has chosen to list on the New York Stock Exchange.
QUEST: What's the advantage in your view of here? You've got a very nice floor and you've got a bunch of history that goes with it.
TUTTLE: Absolutely. We also have a market model that's different from any other exchange in the world. You see these folks down here? They have an
obligation to be on the bid and the offer of your stock at all time. Better market quality for our listed companies. Flawless IPO execution, as
you know better than anybody, you're bound to meet a tech entrepreneur, a Fortune 500 CEO, a Prime Minister and a Nobel laureate, so that does not
happen anywhere else.
QUEST: There are two big ones coming up for the rest of the year. There's Spotify which the rumor says is going to be here.
TUTTLE: I can't comment on a specific company. But like said if there's a large company out there considering an IPO or any company --
QUEST: There's another one, John, Aramco, which is going to be the biggest of all. The sheer size and scale. The rumor is -- Saudi Aramco. The
rumor is that you could lose out to London because of fears of litigation against the company that's launched on the New York Stock Exchange.
TUTTLE: I can't talk specifically about a company. But we're not afraid of what's reported in some press reports out there. But like I said, if
you want a deep pool of liquidity, a broad investor base, every large company, including state-owned companies going to privatizations --
QUEST: You're going hard sell for Aramco? You're going hard for it?
TUTTLE: We go for every IPO.
QUEST: Let's just walk over here. Join me over here for a second. I understand that you are the vehicle and the venue. You don't set the
price. You don't set the trading mood. But you do have to deal with the fallout. When a stock launches and an IPO doesn't go very well. Whether
it's Twitter or Snap or these new companies like Twitter, Snap or Blue Apron. Is it inherently difficult for you, dealing with these very
volatile stocks that can sour an IPO's performance?
TUTTLE: Look, markets go up, markets go down. We've met the management teams of these companies, they're managing it for the long-term. So, not
day by day, not necessarily quarter by quarter, but for a year, three years, five years. For all the companies that you've mentioned that may
have stumbled coming out of the blocks and may not be happy for the first few weeks of the IPO, there's a lot of great tech companies as well that
came to market share performing well in the weeks, months and years.
QUEST: But that proves my point, doesn't it? That you have the obligation as a general sort of PR mission, to explain that the IPO is not just what
happens on the day of the IPO. And the fact that Snap might be down 30 percent or 20 percent off its IPO. You have to remind people that there's
another side to that coin.
TUTTLE: The IPO is a starting line. I mean the companies are being managed for the long-term. We help them raise capital to go out and
execute their vision. Sometimes it takes a while for that vision to come to fruition.
QUEST: John Tuttle with me on the floor of the stock exchange where we are today. CNNmoney.com/Quest is where you can subscribe to today's
newsletter. Today I'm writing about Air France-KLM and the sale buying part of Virgin Atlantic.
Rome wasn't built in a day, neither was Wall Street. In a moment, we're having a stroll down memory lane. I'm going to show you how an unassuming
street became the global financial powerhouse.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Stories from the street. The New York Stock Exchange, the very building where I am at the moment reeks of history. You only have to look
back and look at the trading floor. When I first came down here back in 1988, you weren't even allowed on the floor. We had to stand on the
gallery. You certainly couldn't switch television lights on. Times have changed hugely. But the phrase has always remained. Wall Street. And
long before the money and the markets, the very phrase "Wall Street" had a much more humble beginning. Yes, there was a real wall and it's not a
million miles from where I'm sitting tonight. Even though it was very different as you enjoy tonight's chapter of the stories from the street.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: The street names in old New York were simple and to the point. There's Pearl Street. Pine Street, Gold Street, and Wall
Street. And yes, there really was a wall on Wall Street.
JOHN STEELE GORDON, WALL STREET HISTORIAN: This is supposedly the remnants of it along the street. Ran all the way to the East River on that side and
then all the way over to the Hudson River on this side. Because of a defensive wall you need troops have to move behind it and stuff. That's
what caused the creation of Wall Street. Which was only half as wide as it is now. This was the outer northern limit of the city of New York.
UNIDENTIFIED FEMALE: There was a wall, there was also water.
GORDON: This is broad street which intersects Wall Street. And the reason it was called Broad Street is because it was much the widest street which
was then New Amsterdam and it had a canal running up the middle of it, the canal disappeared centuries ago.
UNIDENTIFIED FEMALE: In time, Wall Street would become a fashionable address. Alexander Hamilton had a home here on 57 Wall. It's right across
the street from Federal Hall where George Washington was sworn in as the first president of the United States. Three years later, it came perhaps
the most fateful day in Wall Street history.
GORDON: Where this build is now is where the buttonwood tree once stood and under that buttonwood tree that Wall Street really began, when a group
of brokers in those days they traded not just stocks and bonds, but also, they would trade insurance, they would trade lottery tickets and they got
together and they signed an agreement.
UNIDENTIFIED FEMALE: The agreement established the New York Stock Exchange and Exchange Board. The organization that would one day become the NYSE.
The original agreement is on display inside the New York Stock Exchange. It goes without saying, this document is priceless. And that's another
chapter in our stories from the street.
(END VIDEOTAPE)
QUEST: Absolutely fascinating. And even today, if you take a walk down Wall Street, well, the tourists are here looking up at Federal Hall there
is still something majestic about looking up at this building. And thinking about the New York Stock Exchange. And wondering for a moment not
only all the companies that have been listed on here and which are the original ones. By the way, ExxonMobil is probably one of the only
companies, that used to be Standard Oil and the way it all followed on from there. If you take a look hand you think about down on the floor, the
Great Depression, the Wall Street crash.
[16:55:00] Dot-com boom and bust. With the market crash of 1988. When the Dow fell some 24, 25 percent. And then you bring it right up to date and
you think of the IPOs that we talked about tonight. It puts it all into perspective that the New York Stock Exchange still really is the center of
finance on Wall Street. We'll have a Profitable Moment after the break. Remember, what a day for us to be here, with the Dow at a record.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. What a week it's been for the earnings season here at the New York Stock Exchange and in corporate
America. We might say Samsung was sweet. But Caterpillar has been classic. Boeing was brilliant. Verizon today as voracious. The best
results in some eight years. And the market has responded accordingly with all those stocks, mature stocks, rising sharply. 5, 6, 7, 8 percent.
Even Facebook was fat, which fell and then rose. But when things go wrong, as they do and they have, that's a different type of story. So, for
example, we have Twitter that has been terrible, and the stock has been tanked, and you have Amazon tonight which is awful and the stock is being
creamed. Put it all together, it's a classic earnings season, which is tinged at the top by the fact that the Dow Jones industrials hits a record
high while the NASDAQ and S&P fall off their tops. That's QUEST MEANS BUSINESS for tonight. I am Richard Quest at the New York Stock Exchange.
Whatever you're up to in the hours ahead, I hope it's profitable. I will be in London tomorrow.
END
