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Quest Means Business

Investors Look for Safety Amid North Korea Tension; U.S. and North Korea Trade Threats; YouTube CEO Speaks Out on Google Diversity; U.S. Hits Chinese Aluminum with New Duties; Kenyan Candidate Says Election Was Hacked. Aired 4-5p ET

Aired August 09, 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: The Bell ringing on Wall Street. The market is off 31 points, well off the lows of the day. Carriage Services,

a death care company, funerals, caskets and the like. And the Bell has rung. Yes, look at that for a death care company, a lively gavel that

brought trading to a close. It's Wednesday. It's the ninth of August.

Tonight, investors are taking no chances when it comes to North Korea. The flight from safe havens has begun.

Deal or destruction. I'll ask a Nobel winning economist how Donald Trump can bargain with Pyongyang and the game theory and whether it's true.

YouTube's chief executive tells the world what Google's diversity scandal means to her and her daughter.

Live from the world's financial capital in New York City, I'm Richard Quest and I mean business.

Good evening, we begin tonight with the story of the markets and how they are in retreat as nuclear tensions advance. The U.S. Defense Secretary has

issued a stark warning to North Korea. Stop your threats or face the destruction of your country and your people. It all happens after North

Korea said it's examining its operational plan to strike the U.S. territory of Guam. You can see where Guam is on the map.

Now, look at Wall Street where the Dow opened lower and fell sharply throughout the session. Paring its losses toward the end of the day.

Defense stocks jumped, Lockheed, Raytheon, Northrup, Drummond, they all hit record highs.

Investors have turned to safe havens. And we see it absolutely throughout the course of the market. Obviously, the old perennials, but just look at

exactly which safe havens we can see. First of all, you have the U.S. 10- year bond, which may be moved just a tad or two. The fell to 2.24 from 2.8 or so, down nearly 1.75 percent. Gold prices were also higher. Now that

is not a true reflection of New York. In New York trading, it was up well over 1 percent. Now that's showing towards Asia trading. The Swiss franc

also rose the best part of 1 percent against the dollar. It's the most since the currency was removed and as the Swiss franc rose, so the Zurich

SMI fell because the effect on Swiss companies. And the yen asked the dollar, interestingly, the yen in this environment is considered a safe

haven and it put on weight.

Volatility, you know the VIX index has been at all-time lows. That sort of started that reversal got underway today. The VIX, as you can see, a

whooping great big rise. It spiked another 8 percent. Into context, it still much lower than a year ago, but the trend perhaps is being set.

And then to those markets that might have been most at risk, the KOSPI. Well, the KOSPI in Seoul, bearing in mind 20 million people in Seoul are

within conventional weapons range or artillery. When it supposed to be some to cover 100,00 to a million artillery shells aimed at them. Not

surprisingly, the KOSPI also was down 1 percent. And yet again, keep in mind it's the rising probably because of the way in which the political

issues, the impeachment of the president, the new president has been dealt with. But that seems to be have put into reverse.

And so, to New York where it was just red right across the day. The losses got bigger at 11:00. They certainly got serious at 2:30, but they pared

back towards the close.

We need to put all this into context. Are good friend is here, Richard Clarida. Good to see you, sir.

RICHARD CLARIDA, GLOBAL STRATEGIC ADVISOR, PIMCO: Good to see you, Richard. And you're looking very dapper.

QUEST: You're very kind. Yourself too. We know North Korea was catalyst for what's taking place. But was it the reason -- I mean, or was this a

good excuse for people to just take money off the table?

CLARIDA: I think there's a bit of that, but obviously geopolitics has been hanging over our market now for years. And we've had versions of this

before. This was a risk off event. It wasn't a big one.

[16:05:00] It's too soon to tell whether just a blip or trend. But obviously, you know, there's a lot of uncertainty about the world right

now. And I think markets are appreciating that.

QUEST: If we look yesterday at Donald Trump's comments, the fire and fury, the market reversed almost as soon as he said it. Then you get Kim's

comments back. If they continue trading barbs does it take the air out of this market?

CLARIDA: I think it's a headwind for sure. And you know August has not been kind to markets and folks go on vacation. There is less liquidity.

So yes, this could carry on for some time.

QUEST: But I look in your notes, you say you will remain invested with a focus on liquidity and high quality.

CLARIDA: That's right.

QUEST: Describe high quality.

CLARIDA: High quality means exactly what it says. I mean, it means you don't chase the last basis point. It means you try to have high-quality

names. We are keeping more liquidity in our portfolios than in the past. But yes, but we are invested. That's for sure.

QUEST: Again, the bond, it usually moves by .02 or .03. Today, it took a whopping great big hit.

CLARIDA: The treasury bonds are the flight to quality are the flight to safety. We will see that. You know, treasury still, Richard, do in the

range that they really been in all this year. And actually, treasury's been pretty boring so far, this year. And I think that continues at least

for today.

QUEST: So, you don't see rotation.

CLARIDA: I think it's too soon to call that. And were not calling that as of today. But obviously, you got to keep your eyeballs on what's going on

right now.

QUEST: If we remove this current hiccup crisis -- one doesn't want to make light of, were talking about a nuclear Armageddon here. If we remove this,

there's still a feeling this market wants to rise higher.

CLARIDA: There is. In fact, Goldilocks, I think I use that last time on your show, we have a bit of a Goldilocks here. The economy is growing but

not too fast. Inflation is not overheating. Right now, we've had some strong earnings, and so, there's pretty powerful momentum behind this

market that's for sure. But certainly, we wouldn't say the prices are cheap. This market is fairly add a fully valued. There may's be some

froth even.

QUEST: And that's what we may be seeing. Good to see you, sir. You're looking very well.

CLARIDA: So are you.

QUEST: Hope you're going to have a good holiday.

CLARIDA: You too.

QUEST: Thank you.

The U.S. Secretary of State, Rex Tillerson, said Americans should sleep well at night. The Secretary's remarks were part reassurance and part

dialing back some of President Trump's threats of fire and fury. The secretary defended those comments saying, it's the only language Kim Jong-

un will listen to.

(BEGIN VIDEO CLIP)

REX TILLERSON, UNITED STATES SECRETARY OF STATE: I think what the president is doing sending a strong message to North Korea in language that

Kim Jong-un would understand. Because he doesn't seem to understand diplomatic language. We're hopeful is that pressure campaign, which the

entire world now has joined us in, and with the engagement of China and Russia, two of North Korea's closest neighbors. That they can begin to

persuade the regime that they need to reconsider the current pathway they're on.

(END VIDEO CLIP)

QUEST: Rex Tillerson there. Beijing is urging both sides to de-escalate tensions. China is uniquely placed to pressure Pyongyang. It's North

Korea's biggest trading partner. And as the Chinese Foreign Minister admitted, it will suffer the most -- not hugely -- but as a result of the

increased U.N. sanctions against North Korea that were passed recently.

CNN's Will Ripley is following the developments in Beijing and joins me now. So, Will, 24 hours of you and I talking about this and we seem to

have reached a sort of a stalemate in the sense that Kim came back with some more comments. They've now threatened Guam. And the U.S. -- well,

you tell me. What's the Chinese making of it?

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: there finding themselves in a very familiar position, Richard. Just kind of caught in the middle.

Because they're allied and they're friends and they're trading partners with North Korea. But they also have a much larger and more important

economic relationship and they need this. Strategically have good -- relatively good relationship with the United States if they can.

And so, they continue to kind of tell both sides, calm down, take it easy. And that's the statement that we got from the Chinese government here in

Beijing. Stressing that this is a sensitive complex situation and firing bombastic words or actions, words on the part of the U.S. president, and

perhaps actions as well. The flying of a B1B bomber in the Korean Peninsula. And certainly, words on the part of the North Koreans with all

their threats and their launching of missiles. They're saying this is not productive. That both sides need to stop this provocative behavior and

talk to each other. That's what China has been calling for.

QUEST: But can China influence this scenario? Bearing in mind they have been relatively unsuccessful influencing Kim Jong-un so far.

[16:10:00] And they're entreaties seem to be falling on deaf ears.

RIPLEY: The North Koreans have told me repeatedly -- and in fact, I've had some very heated almost arguments with North Korean officials who say,

China absolutely has no influence over there missile program and the nuclear program. They got very angry when we did a story pointing out all

of the Chinese goods that were on store shelves and the Chinese fashion that people were wearing, the privileged consumer class in Pyongyang.

Because they said those things don't matter. What matters is there national sovereignty, which they say is under attack and therefore if they

need to make cuts they'll cut everything else but those programs. Of course, that is the government line and that is what people repeat to us on

the street.

China could do a lot more economically against North Korea. Even if they implement these sanctions and North Korea loses a billion dollars of its

export income, it's not going to be fatal economic blow to North Korea. Despite six rounds of sanctions their economy grew by almost 4 percent last

year, Richard. In large probably because of their trade with China. China would have to cut off North Korea completely, completely, two really in

essence try to cripple the regime economically.

QUEST: Will Ripley in Beijing. Will thank you. Get some sleep. I see on television just about around-the-clock. I guess there's plenty of time to

sleep afterwards. All right, will Ripley in Beijing.

Shares in Netflix and Disney, they were both down after the deal that we talked about on last night's program. It's a decision that has huge

implications for the streaming industry. If you look at Disney it was down nearly 4 percent. It was off 5 percent at one point and indeed was amongst

the largest if not the largest loser on the Dow.

Netflix down 1.45 percent and I'm guessing it's more serious for Disney than for Netflix that particular loss. But will get Shelley Palmer's view

longer term.

Disney's revenues missed Wall Street expectations. It's taking its films off Netflix in 2019 and they'll be a streaming service in two years' time,

which will compete with Netflix, Amazon, CBS, HBO, which of course is owned by Time Warner, which is the parent company of this network. Shelly Palmer

is with me. Good to see you, sir. OK, Shelly.

SHELLY PALMER, CEO, THE PALMER GROUP: OK, Richard.

QUEST: Who suffered most out of this Disney or Netflix?

PALMER: Look over there I'm buying a streaming company. Oh wait, I'm going to have four, five, six, seven quarters of terrible earnings and ESPN

is a mess. And oh boy, I guess I didn't fool anybody on Wall Street yesterday, the Disney organization. But ultimately, they tried to change

the narrative and it didn't quite work. At least not yet, but it will.

QUEST: Gone.

PALMER: It will work. Because what Disney's done is that they've made a very bold and important mood. They finally done something as opposed to

talk about it. You can either milk the old model to death until it dies, and when it does because it very much by surprise, as will everyone else.

Or you can say I am going to invest in the future. I'm going to look at what's going to happen and I'm going to do it now.

QUEST: So, you're talking about the streaming service.

PALMER: Yes.

QUEST: But hang on. Why would somebody want to sign up to another streaming service, which may or may not have a subscription base?

PALMER: You're making the assumption that there are going to be a dozen more streaming services as the world turns. People are going for skinny

bundles. People are looking for free. Free is very pro-consumer. Consumers are changing and demanding. Every day we see new things

happening. We have Tier 1 Tech being able to deliver video in ways that the regular distributors have never dealt with our thought about dealing

with. And now they're thinking about dealing with it.

QUEST: Explain what to a naive young chap like myself in this technobabble world. Explain what Disney's own streaming service gives them in 2019 that

they don't have now?

PALMER: In practice major league baseball advanced media, which is a spectacularly well-oiled workflow machine. The way they get video in and

out at scale beautifully and you don't trivialize that. The technology is only part of that story. There are great people there that do amazing

work. Having that functional right now and being able to just plug Disney content in means that on the day they decide to flip the switch, the switch

is flipped in their in their business. So, nobody has at now except major league baseball advanced media. And now Disney has it. There are other

people that do have it. Let me think of who they might be called. YouTube, Facebook, Amazon, Hulu and now is going to be numbered among the

tier 1 capable -- meaning technology capable -- distributors. And data gatherers.

QUEST: Netflix.

PALMER: Yes.

QUEST: Do they suffer from not having the Disney content?

PALMER: That is a fabulous question. Now, I don't think so. What I think is going to happen is the nice people at Netflix are buying up content --

original content -- that dollars that Hollywood is in love with.

[16:15:00] QUEST: But many of those original content is not very successful.

PALMER: It's whole quote --

QUEST: Orange is the New Black, but every Orange is the New Black --

PALMER: By the way, 99 percent of new television content is born dead. And so, they're learning. They're learning that it's a hard business, but

they've got the money and they've got the distribution. I'm not sure that Netflix doesn't come out of this being just like, wow, the best day of our

lives is when Disney decided to pull their content and we were forced to go even deeper into making original stuff that the world loves. This is not

going to be bad for anybody. Ultimately, it's going to be good for both companies.

QUEST: Good to see you, sir.

PALMER: All right.

QUEST: Always good to have you. Thank you. We need you on these sorts of stories to help me understand what's happening.

As we continue our conversation tonight on business and economics, you're most welcome. From compromise to confrontation, President Trump's breaking

with decades of diplomacy. His comments from 1999 provide a look into his thinking.

(BEGIN VIDEOTAPE)

QUEST: We told you that Rex Tillerson is saying President Trump's rhetoric of destruction is the only way to get through to Kim Jong-un in North

Korea. It's a style of negotiation for the U.S. president, that he espoused as far back as 1999.

(BEGIN VIDEO CLIP)

WOLF BLITZER, CNN HOST: Is there something the United States should be thinking about doing as far as North Korea's potential nuclear development.

DONALD TRUMP: Absolutely. They should be thinking about it. And frankly --

BLITZER: Like what? Give me an example.

TRUMP: I'll say this. You go and you start negotiating. And if you don't stop them for doing it, you will have to take rather drastic actions.

Because if you don't take them now, you're going to be in awfully big trouble in five years from now when they have more missiles than we do.

BLITZER: When you say something fairly drastic that sounds like you're suggesting a potential Israeli like unilateral strike against the us Osirak

reactor in Iraq in the 80s.

Trump: You can never rule it out. What Israel did was fantastic. And you can never rule it out. And you know what, if you ruled it out you couldn't

talk to them. Why would they -- the only thing they're afraid of is exactly what you just said.

(END VIDEOTAPE)

QUEST: For decades U.S. presidents have used incentives and isolation to influence Pyongyang. The calculus is changed dramatically over the past 24

hours. For the first time both sides are using confrontational rhetoric. For the first time both sides have nuclear capabilities although we could

question the integrity, if you like, of the North Koreans for the time being.

Let's talk about this aspect of negotiation, game theory, bargaining. Joining me know is Eric Maskin, who won the Nobel Prize in economics for

his work on bargaining. He has written papers on the threat of destruction and how it affects negotiations. Professor, honor to have you on QUEST

MEANS BUSINESS tonight.

[16:20:00] Do you see strategy in what Donald Trump said or do you see -- to quote Nancy Pelosi -- bombastic comments?

ERIC MASKIN, PROFESSOR OF ECONOMICS AND MATHEMATICS, HARVARD: I'm afraid that representative Pelosi has it right. That this rather bellicose

rhetoric on the part of the President is exactly the opposite of what we should be doing now.

QUEST: And yet if I read your theory, this theory that says you've got to be prepared to do it. You've got to bargain from a position of strength.

How is what he's doing not what you suggest?

MASKIN: The North Koreans know that we have nuclear weapons. And they know that if they attack we will retaliate. So, that doesn't need saying.

What does need saying is that a negotiated solution. A solution where both sides sit down at the bargaining table is in both sides best interest. And

when Trump talks only about war and not about negotiation, he's sending the wrong message.

QUEST: Right, but if we just take a listen to what Senator McCain said yesterday on this question -- I'm sure you heard it. But it's well worth

pointing out again. Let's listen to Senator McCain when he talks about the ability to keep your promises.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I take exception to the President's comments because you got to be sure that you can do what you say you're

going to do. In other words, the old softly but carry a big stick, Teddy Roosevelt saying, which I think is something that should have applied.

Because all it's going to do is bring us closer to some kind of serious confrontation.

(END VIDEO CLIP)

QUEST: I suspect you agree with that to the extent, and indeed you say in one of your pieces, a bargainer exercises power over the other party only

by the threat that the deal will not occur.

So, in this situation how do you make that sense?

MASKIN: The best threat that has been made in recent days is the renewed and very severe sanctions that the Security Council imposed last week.

It's those sanctions, which clearly have got to the North Korean leadership. They've ramped up their rhetoric in response to those

sanctions. So, we're certainly touching a nerve with those sanctions. And that is the leverage we should be using to get them to strike a deal. The

deal similar to the one that we struck with Iran.

QUEST: Right. So, is the sanctions and the deal, rather than the threat of fire and fury, which you may not be able to carry out. Not without

nuclear Armageddon for the rest of us.

MASKIN: That's right. The problem with making the military threat is that unlike the situation between Israel and Iraq, we cannot be sure that we can

take out their nuclear capability. And even if we could, South Korea is so close that North Korea's conventional forces would be enough to overwhelm

them very quickly. Making military threats as a first mover are simply not credible.

QUEST: Professor, we're really delighted you came on tonight and talked about it. Thank you, sir. Much appreciated.

MASKIN: My pleasure.

QUEST: As we continue, Donald Trump's talk of fire and fury, it all bears a similarity, and eerie similarity to what another President once said.

And the timing is remarkable too. Seventy-two years ago, the U.S. dropped the atomic bomb on Nagasaki in Japan. And just to remind you, then

President Harry Truman -- remember he had warned earlier after Hiroshima, ruin from the air the like of which has never been seen.

Also on this day in 1974, Richard Nixon resigned as U.S. president. And like Donald Trump his foreign-policy was a source of fierce debate.

Critics had called it the impeachment diplomacy, saying Nixon hoped successes abroad would distract from troubles at home.

[16:25:00] It's fascinating how all of this is coming together. CNN's presidential historian is Timothy Naftali. He joins me now. Everything I

have read in the last 20 hours says that what this President said yesterday is unprecedented and people like yourselves, can't fathom out where it was

going.

TIMOTHY NAFTALI, CNN PRESIDENTIAL HISTORIAN: Let me tell you why I think people are saying that. Normally presidents drawer redlines. John F.

Kennedy drew a redline. Barack Obama drew a redline. As you just mentioned, Harry Truman general redline. When they drawer redline they

make it clear to the adversary what they are not supposed to do. Yesterday statement from the presidency improvised, because it wasn't clear if he was

threatening a nuclear first use just in response to a threat from North Korea.

QUEST: I've seen that interpretation that he said, if they threaten we will do. But I understood that as being more as a real threat if you

actually act upon your actions.

NAFTALI: You know, when you draw a redline it's so important. It shouldn't be open to Talmudic discussion and debate. I think the problem

here is it's not clear. And I don't know Korean. So, I don't even know how it would be translated into Korean. But was absolutely important is

that the North Korean government understands what they may not do. That's what has to be clear. Now, is President Trump arguing that unless they

dismantle their nuclear program, we will attack them. And it's not clear from what he is saying, if that's the threat.

QUEST: So, if he's winging it, which is what seems to be the suggestion, bearing in mind the circumstances under which he made such a dreadful

statement -- or when I say dreadful I mean in terms of the gravity, not in terms of what he said. He's with his wife and his homeland security --

NAFTALI: Richard, the fact that he was probably winging it is evident in what's being said today by the U.S. government. Look at Mattis's statement

today, the Secretary of Defense.

QUEST: Yes, I saw it.

NAFTALI: Much clearer. There is a real sense of what's being threatened. What the redline is. It's a very clear statement. Compare that to the

President's statement, they're very different in tone and I think in professionalism.

QUEST: Have you ever seen anything like this before?

NAFTALI: No, we haven't seen anything like this before. Remember that this is not the first president to be dealing with the problem of nukes in

North Korea. President Clinton started the process and presidents Democratic and Republican have dealt with it ever since. They have been

very careful both to make clear our disapproval and our concern, without drawing a line that they thought the North Koreans would cross.

QUEST: Good to see you, sir. Than you.

NAFTALI: My pleasure.

QUEST: Thank you, we appreciate it. Thank you.

As we continue our program tonight, tensions between the U.S. and China are rising. Now the Trump administration is planning to foil trade practices

that they claim are unfair, literally with the cost of foil.

[16:30:00] (COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When the United States is putting new duties on Chinese

metal. I'll be speaking to the organization whose complaint sparked the move.

And Kenya's former prime minister says the presidential election was hacked. We'll be live in Nairobi.

But before all of that this is CNN and on this network the news always comes first.

For the second straight day of a dramatic ultimatum from the Trump administration to North Korea. The U.S. Defense Secretary, James Mattis,

told the North to stop considering in his words, actions that would lead to and of its regime and the destruction of its people. This follows the U.S.

presidents threat of fire and fury. Earlier the top U.S. diplomat tried to downplay that remark.

French police have arrested a suspect after six troops were wounded in an attack near Paris. Authorities say the man rammed a car into the troops

outside their barracks. Is the sixth attack targeting French security forces this year.

A source telling CNN, FBI agents raided a home of Paul Manafort. President Donald Trump's former campaign chairman in July. It was part of the

ongoing Russia investigation and came a day after Manafort sat down with Senate intelligence committee investigators.

The U.S. Treasury Department has sanctioned the Mexican star, Rafael Marquez, for suspected links to an accused kingpin. Marquez an almost 2

dozen other Mexican nationals are accused of financial ties with Raul Flores Hernandez, a suspected drug trafficker with links to the Sinaloa

cartel.

Extraordinary story now, breaking news on a mysterious situation involving U.S. personnel, diplomatic personnel in Cuba. According to the State

Department in Washington, workers at the U.S. Embassy in Havana were subject to what they're calling, a so-called acoustic attack. Apparently,

it affected their brain waves. Patrick Oppmann is in Havana. Apparently, State Department medical experts and technical experts went to Havana.

They went to see what they could find. Couldn't find anything. Do we know what these acoustic attacks -- does it even exist?

PATRICK OPPMANN, CNN CORRESPONDENT: No, were just learning about this now, Richard. And certainly, the State Department does feel that two of their

employees here at the newly reopened U.S. Embassy were subjected to some kind of attack, devices or device that essentially radiated sound waves.

Perhaps like the ones that are sometimes used to control riots. And targeted employees who were so affected by these acoustic attacks that they

actually had to go back to the United States for treatment.

And the State Department is taking it so seriously that just a few months ago they told two Cuban employees at the Cuban Embassy in the United States

to pack up, go back to Havana until this was all cleared up. The Cuban government has not put out a statement. But one Cuban official I talked to

strenuously objected to this. Said they had been approached by the State Department, asked to explain what happened. And had denied that any

attacks were carried out against U.S. employees here in the Havana. That very much the State Department seems that they want to make this into a

diplomatic incident. Not backing down. An essentially, calling shame on the Cuban government for targeting two U.S. Embassy employees here.

QUEST: Extraordinary. You couldn't make this up. I guess the question becomes what happens now? Obviously two Cuban diplomats have left

Washington. The Cubans are denying anything took place. Nobody can find out what actually happened. Doesn't just drift off into the blue yonder?

OPPMANN: It just very spy versus spy, Richard. And let's look at this from the larger context. Just in June, Donald Trump said that he's backing

away from the Obama opening with Cuba. That he's going to pressure the Cuban government on human rights and take a much tougher line with Havana.

And prior to that Obama opening with the Cuban government, you know, you hear from U.S. diplomats here, Richard, that they had their cars broken

into. That they had their homes broken into. That sometimes they were harassed by the Cuban government. That all stopped it appears in the last

years. And we just don't know if once again, that kind of harassment is becoming policy, Richard.

[16:35:09] QUEST: Patrick Oppmann in Havana. Thank you, sir.

Some people call it aluminum. Other people may be in the rest of the world call it aluminium. It doesn't really matter whether you are selling

aluminum or aluminium a set of taxes might take to shine off America's trading with China. On Tuesday, the U.S. Commerce Department slapped new

import rates on China's aluminum foil. That is supposed to help so-called harmful trade practices.

Allow me to show you, if I get the foil out of the tin, it will come out eventually, here we go, so what are we talking about? The decision will

impose duties of up to 81 percent that is quite a large amount of duties. After all, when you think about it, in 2016 the United States imported

nearly 140,000 tons of aluminum foil worth almost $400 million from China.

Now, that gives you an idea of the perspective in terms of this particular crisis. The complaint against the Chinese producers started with the

Aluminum Association here in the United States. And Heidi Brock is the chief executive of the organization, and joins me now from Washington. I

read your statement, you basically say that you can compete with anyone but not with subsidies. So, you must be pleased that the administration's

first real move against China is on your case.

HEIDI BROCK, CHIEF EXECUTIVE, ALUMINUM ASSOCIATION: Richard, thanks so much for having us, and yes, we are very pleased with this. We applaud the

administration's very bold decision yesterday, yes, it is a preliminary decision, but it was a significant step in signaling that this

administration cares about U.S. trade laws and is committed to enforcing those laws.

QUEST: China of course denies that it is subsidizing to the egregious extent that your organization says.

BROCK: You know, China, yes, they are planning to challenge this investigation and the U.S. Department of Commerce plans to validate the

information that we brought forward in the case. But we saw 26 subsidies by the Chinese government in this case. And that is significant and it is

very difficult for U.S. industry to compete against subsidies like that.

QUEST: And if you take the way you compete against other manufacturers, as I understand it, you sort of say well, bring it on, we will compete. But

not in this case.

BROCK: I believe our U.S. aluminum industry can compete with the invest in the world but we cannot compete with the Chinese government. And our issue

is with China and the fact that they have systematically been subsidizing their industry and ramping up overcapacity and production of that industry

in a way that far outstrips demand.

QUEST: I understand your concern is aluminum. But let's be honest here, Heidi, you are the tip of the spear, aren't you? You are the foot in the

water, the toe in the water I should say. I mean let's get these aluminum sanctions or tariffs on and then let's start looking at something say for

example, steel.

BROCK: You know, Richard, we could use you at the Aluminum Association. I think you've done a great job of displaying the significant problem that we

have. I am not an expert on the steel industry but what this action signals from our association is that we are going to stand up and make sure

that our trade laws are enforced. And this is an action that we do not take lightly. We are very free and fair trade oriented organization, and

in the history of the nearly 85 years of our association, this is the first time that we have taken an action like that. We are very fact-based.

We've looked hard at this at the facts here and we believe the facts support the case.

QUEST: Final question, by the way, you will be pleased to know that the aluminum we have been using, I am looking here is made in the USA, so you

will be OK with that. Final question, is that aluminum or aluminium?

BROCK: Well, you know, for those of us in the United States, it's good old aluminum.

QUEST: Thank you very much, good to see you Heidi, nice of you to come.

Yes, absolutely made in the U.S. As we continue the results are still not in or at least the final results and Kenya's general election. However,

very worryingly, there are the first beginnings of violence flaring up a day after. And the fear of course is that will get worse as the results

become clear. We are in Nairobi after the break.

[16:40:00] (COMMERCIAL BREAK)

QUEST: It is the outcome in some cases that people feared, and now violence it seems is breaking out in parts of Kenya following Tuesday's

election. Sources say the police shot two protesters in Nairobi's slum area of Mathare. There has been unrest after the opposition called early

election results fake. Raila Odinga said his rivals carried out a hacking attack on the country's electoral system.

Farai Sevenzo is in Nairobi. Oh dear, I mean last night you specifically said, look, this is the one thing we want to try and avoid, the police

attacking or the police killing. What has gone wrong here?

FARAI SEVENZO, CNN CORRESPONDENT: Richard, it's one of those political dramas that always seems to be on repeat. This contentious fight between

the incumbent Uhuru Kenyatta and as you say, the former Prime Minister Raila Odinga. This morning the whole euphoria of yesterday's vote

disappeared as Mr. Odinga held his press conference. As you said, he made this astounding claim that somebody had use the details and passwords of a

dead official in the IEBC to alter the results. He doesn't accept what was coming through. And of course, his supporters in Mathare as you mentioned,

and in Kibera spontaneous protests onto the streets, many young people are very poor areas wanted their voices to be heard. And that is what happened

and when they encountered the police, two of them died witnesses told us.

QUEST: OK. Obviously, one hopes for no more repetition of any violence but in terms of these allegations, I know that the law in Kenya requires

there to be a hand counting of the ballot papers which would negate any question of tampering with the early results transmitted electronically.

Will that solve the problem?

SEVENZO: This is what they are hoping for, they are hoping there is a form called the 34-a form which all candidates and all the people vying for

political office are supposed to see and sign and agree with whatever the electronic system has tallied. That paper has been missing. And that is

why most of all they really want complete proof of whatever they saw coming out of the IEBC's website is exactly what happened. Of course, don't

forget, Richard, that all the time we have been reporting we have been talking about one percentage here, one percentage there for either

candidate. Suddenly there is 54 percent for the incumbent and 44 percent for the man who has been challenging him. Questions are being asked and

quite rightly so according to many people including Kenya's Human Rights Commission.

[16:45:00] QUEST: Which would only though -- but let me play devil's advocate here to that extent, Farai. It could be argued and perhaps

successfully with the opinion polls before were wrong, certainly not the first, won't be the last.

SEVENZO: You are absolutely right, I mean what do we know about opinion polls? Many of them hold true, many different countries and much more

developed democratically have been wrong. But the point is the race has been so tight from what we have seen and from what the candidates

themselves have seen, that they need complete transparency in terms of these results. Otherwise we go back to repeat 2007 and nobody wants that.

QUEST: Final question in a sentence, when do I get a result from you?

SEVENZO: From me, Richard? I think you have to ask that of the electoral body which is the IEBC, and they have by law a week to do this. So, I

would say what, they've got five more days.

QUEST: Five more days from them to you, from you to me. Good to see you, Farai, thank you, joining us from Nairobi.

As we continue after the break the chief executive of YouTube says her daughter asked her a pointed question, is it true there are biological

reasons why there are fewer women in tech and leadership? We will have the response next.

(COMMERCIAL BREAK)

QUEST: The chief executive of YouTube he was personally affected by the recent diversity scandal at Google. Susan Wojcicki says it reminded her of

being on the receiving end of sexist behavior. Now in "Fortune" magazine she has just written, I have had my abilities and commitment to my job

questioned. I have been left out of key industry events and social gatherings, so when I saw the memo circulated last week, I once again felt

that pain. She also says of course, in an interview that her daughter had made some comments. Laurie Segall is with us.

LAURIE SEGALL, CNN SENIOR TECH CORRESPONDENT: Yes, when her daughter said are their biological reasons why there are fewer women in tech, her

response was the answer is no, not true. But everything that happened in her head which he talks about this idea of this frustration that here we

are in I am having to explain this to my daughter. I think that speaks to the larger question of this memo. And I think it's also about the larger

conversation happening in Silicon Valley about gender and diversity, and also the nuances.

I recently actually sat down with Susan, also the founder of Twitter and entrepreneur named Tim Ferriss who has a huge following in Silicon Valley.

And we spoke about the nuance issues of diversity in the topic of gender in Silicon Valley. Take a listen.

(BEGIN VIDEOTAPE)

SUSAN WOJCICKI, CEO, YOUTUBE: I feel a responsibility to talk about women in technology because I think it is an issue. I think it is a problem that

we don't have enough women in tech and there are not enough women graduating with computer science degrees. They are not enough women even

working in the nontechnical parts of tech. And so, I just want to tackle it head on and talk about.

[16:50:00] SEGALL: Is there anything you guys want to ask or say about it that you might not feel is PC? Because it is nuance, it is nuance.

EV WILLIAMS, FORMER CHAIRMAN & CEO OF TWITTER: It is tremendous how much we are tuned in to it, just in the last few years, but it's embarrassing

how much we weren't 10 years ago. I think you speaking for myself and people I know, we didn't talk about it, we didn't think about it.

Diversity and inclusion of all kinds not just gender and so I feel like I have been on this tremendous learning curve as a naive white male who

happened to be leading companies. And so, we have a lot of ground to make up but is good that we are focusing on it now.

TIM FERRISS, AUTHOR AND ENTREPRENEUR: There are very few things that I am afraid of. When is the escalating degree of division say in the U.S. I

think it's very important to actively seek out intelligent people who have opinions that are contrary to your own. It is very difficult. I am not

asking for any type of pity, certainly, but looking the way, I do as a white male it is very difficult to try to engage in conversations about

gender or race in any way. There is effectively no winning.

SEGALL: Why is that? Why do you feel that way?

WOJCICKI: You are in such an important position and you could influence and help so many people

FERRISS: Unfortunately, I would just say being born the way that I am, there are many people who have fit the same profile, who have opted out of

public discourse and debate because they don't see that there is any upside to it. And that makes me really sad. And I hope that changes.

WOJCICKI: But I also think people who are in a position that can actually affect change, so I think, that you as leaders need be able to find your

own way, that you're figuring out, well, A, how do I support the diversity, and I always say look, all my mentors were men. All the people who

supported me along the way, they were all men. If you look at what is going to take to change Silicon Valley, it's going to have to be the men

because those are the ones who are in charge. And those other ones who are in power.

(END VIDEOTAPE)

QUEST: Laurie. Laurie. How does an industry that is at the forefront of modern thinking of supposedly youngsters, millennials have such

antediluvian views about diversity in the workplace? I could understand and maybe some will find this odd, if it was an old steel factory or a coal

mine, yes, but we are talking about Silicon Valley.

SEGALL: I think it is frustrating, I think you have a lot of women who are frustrated in general, but this memo that came out but the Google engineer

that had some pretty extreme views on women and gender and diversity, that is not how everyone feels. I actually think the larger problem is what you

hear from Ev Williams the founder of Twitter talking about, which is we just didn't even realize it was an issue. There are so many of the same

type of person, young, white, male that sometimes you don't even think about all of these other things.

QUEST: How are these people being brought up? I mean I was brought up, you know, I've got three sisters. In that sense, anybody who has been

brought up --

SEGALL: I think when you have so many male leaders, sometimes it is maybe we don't realize that if they are all men around the table, and one woman,

maybe we don't realize that we are interrupting maybe her. Maybe, we don't realize we were doing some of the stuff, and it takes women at the top,

women in those leadership positions to solve problems for women.

QUEST: But also, there has to be a recognition throughout the workforce. Because I read if you look at the one of the biggest issues that they

always mention these manifestoes, will and will necessarily have to take time off for childbirth and for maternity purposes. Until the workplace,

both sides, male and female accept that this is just going to have to happen, then that is part of the problem again. It is not a discussion

issue.

SEGALL: But even if you look at what, Susan that in this op-ed when she talks about work-life balance they should not even be gender specific.

They should be something that we are all talking about. You disagree.

QUEST: I think you have to accept not that there is a difference, but that there are different requirements and then you neutralize the amount.

SEGALL: In order to accept that, I think you have to have people who understand that and who are positions of leadership where you can talk

about these in a more nuanced way. And not completely ignore them or polarize them in a way that doesn't need to be polarized. I think that is

part of the dialogue that is happening in Silicon Valley. Or the one that needs to happen which is why you have these memos leaking and women coming

forward and talking about their frustrations.

QUEST: Good to see you.

SEGALL: Good to see you.

QUEST: Thank you very much indeed. Now, Laurie's upcoming series absolutely don't miss it, frank conversations about technology and culture

with some of the biggest names in the business, it is called "A Mostly Human Conversation". And it's coming up soon, and we are just so glad and

lucky to have Laurie with us on QUEST MEANS BUSINESS.

[16:55:00] You can download our show as a podcast, it is available with all the main providers, and you can listen to at CNN.com/podcast. As always,

we will have a Profitable Moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment, was this the canary singing in the mine? Did today we get just a little glimpse of geopolitical worry in the

markets that might cause stocks to fall back or at least take the enthusiasm out of the market. Was North Korea a catalyst for the market's

fall? Or as we heard from Ted Weisberg earlier in the day on QUEST EXPRESS, was it really just an excuse for people who are seeing 20 to 30

percent gains in the market already to take money off the table?

The issue of the markets at the moment is one that is fascinating and it is made worse in some cases by summer volumes which are low, people are on

holiday, trading is to one side. And then there is the other aspect, as well, put it all together and you have got to ask yourself, economic growth

is good, unemployment is down, there is a wage growth at the same time. So, for the market to fall out of bed would seem perverse. Unless, there

is this extraneous event which needs to be factored in.

In that we just don't know at the moment. And nor will we for another couple of weeks, has Kim Jong-un and Donald Trump continue to spar it out

in the public domain. And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Wherever you are up to in the hours ahead, I

hope it is profitable. I was see you again tomorrow.

END