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Quest Means Business
Catalan Banks Debate Shifting Headquarters; Harvey Weinstein Apologizes for Sexual Harassment; Trump to "Decertify" Iran Deal; Netflix Shares Hit All-Time High; Trump Calls for Investigation Into "Fake News". Aired 4-5p ET
Aired October 05, 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. Dow Jones pretty much at the best of the day. Half a percentage point gain
for the Dow, over 109 points, 23,000 looking enticingly close. And the bell finishes. Clorox, very deliberate robust gavel, trading is over on
Thursday the 5th of October.
Catalan banks take evasive action as Spain tries to stop a declaration of independence.
One of Hollywood's most powerful men faces claims of sexual harassment. Harvey Weinstein's lawyer joins me live here in the studio.
And investors are binge buying Netflix. The shares have just closed at an all-time high. Now, live from the world's financial capital, New York
City. I'm Richard Quest where of course, I mean business.
Good evening, we begin with Catalonia where the exodus of banks has begun as relations between Barcelona and Madrid deteriorate further. Banco
Sabadell, the second largest bank in Catalonia, has announced plans to move its legal headquarters to Alicante, another region. CaixaBank, the biggest
in Catalonia and the third largest in Spain is weighing a similar move. The Board of Directors is expected to discuss the issue on Friday.
Both banks have rushed to reassure customers that the that deposits are safe. They are worried that a crackdown from Madrid will destabilize the
Catalan economy. Spain's Economy Minister, Luis de Guindos, says the growing tensions have already stopped the flow of investments into
Catalonia.
(BEGIN VIDEO CLIP)
LUIS DE GUINDOS, SPANISH ECONOMY MINISTER (through translator): Evidently this is generating uncertainty that is paralyzing all investment projects
in Catalonia. I'm convinced right now not one international or national investor will take part in a new investment project in Catalonia. This is
evident until it is clear.
(END VIDEO CLIP)
QUEST: Now bank shares bounced back on Thursday after steep losses a day earlier. The broader Spanish market also recovered somewhat. The IBEX
having fallen about 2, 2.5 percent yesterday. It came back the same amount. And it really the issue has all got to be the way it looks versus
-- now versus pre-referendum levels. So, let's just take a look and put this into perspective in Catalonia's terms.
Sunday's vote and the escalation intentions is Catalonia and Spain with three potential paths forward. This it is crucial to understanding the
uncertainty in the market, the possible outcomes and the risks ahead.
First, is a negotiated settlement. Giving Catalonia more autonomy. The EU says it cannot act as a mediator without an invitation from Madrid. And
the Catalonians said that they're disappointed that the King didn't even talk about mediation.
The second, and this perhaps -- the most controversial. Catalonia declares independence. That was expected to happen today. Leaving Spain would also
mean leaving the European Union. Catalonia would find itself outside the single market and would need to set up border controls. And it's highly
unlikely, highly unlikely that Catalonia as an independent country would be allowed to rejoin the union anytime soon for no other reason than Spain
would veto it. So, this is absolutely -- I was going to say the nuclear option, but is the dramatic and drastic.
The third, is just perhaps with the market. Spain clamps down. Now using what might be described as a nuclear option, Article 155. In that case it
would suspend the autonomy that Catalonia already enjoys. To do that invoking that is dangerous in a country where memories of Franco are still
very much alive.
So, the options. This obviously is preferable. This is drastic. This would be catastrophic in some views for Catalonia. Vicki Pryce is with me,
a board member for the Center for Economic Business and Research. A true dilemma. None of the options are particularly pleasant.
[16:05:00] VICKY PRYCE, CENTER FOR ECONOMIC AND BUSINESS RESEARCH: That's absolutely true and I think it's coming at a time when the EU has quite a
lot on its plate, particularly of course with Brexit. I believe it will be interesting if there is something perhaps that Spain can learn from the
U.K. despite the fact of course that we are leaving the EU. There has been quite a lot of autonomy given to regions here in the U.K. Much more than
it's actually been the case in Spain. There's quite a lot that they can learn from this. And then of course, the EU did have quite a substantial
role. You mentioned yourself, the issue of whether there could be intervention at all. They've had a big, big role to play in the peace
process in Northern Ireland. So, that's something that can be done to avoid, if you like, the cliff edge. We talk about that here in the U.K.
But of course, the cliff edge could happen there too. And that I think is something we must be watching very carefully.
QUEST: But greater autonomy for devolved regions, such as Scotland, did not stop the Scottish government from going for a referendum. Which they
lost and perennially threatening a second referendum on the back of Brexit. So, to give Catalonia more autonomy wouldn't solve or salve the ardent
secessionists.
PRYCE: Well, that's true. And of course, we've had years in Spain where - - look at what was going on in the Basque country and things that have come down after a while. But is absolutely true, that of course we had a
referendum in Scotland too. But that was with the agreement of the government at the time, the U.K. government at the time. And this of
course, isn't what's happened right now. And that increases tensions inevitably, very significantly.
QUEST: Let's talk about the economic impacts. So, we've got one big bank looking to move to Alicante, at least the headquarters. The others will
probably follow if this uncertainty continues. We are seeing a seesaw of share prices, down 2 percent, up 2 percent. This is to be expected. But
how damaging is it to the Spanish economy which is fragile?
PRYCE: I think if banks perhaps want to for the time being move their operations somewhere else, their headquarters, just to be on the safe side
that may well and hopefully will be a short-term measure. It's not, as we just been hearing earlier, a question of whether people will in the future
if things continue to be so uncertain and not very peaceful, whether firms will just move somewhere else and stay. The real question is, will they be
looking at Spain the same way? Because the Catalan region is such a large part of the economy and a very rich part of the economy, Spain needs it.
Needs it to be doing well. And there's no guarantee that anything they move out of the Catalan region goes to anywhere else in Spain at all. So,
Spain I think will suffer economically as a result.
QUEST: Vicky Pryce, good to see you. Thank you. We'll watch and wait. And the speculation of course, thank you, Vicky.
Now, just like the hit sci-fi show "Stranger Things." Netflix shares are quite simply out of this world right now. And it's not just because a new
series is due out. Now, whether you are in New York City or in Hawkins, Indiana, it'll cost much more to watch Netflix in the United States. And
the cheapest plans remain the same. High-def services are going up. Arguably a horror story if you like HD. But look at this. Netflix shares
were up 5.4 percent and that helped with the broader markets up as well. All the three major indices hit record highs. The Dow 200 and something,
225 off 23,000. So, it's getting there and it's sliding together. Just like the characters in "Stranger Things." Paul La Monica is a child of the
80s. He joins me now. You remember the 80s?
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Oh, I certainly do. I wish we can go back to them sometimes. They were easier times to live in.
QUEST: This rally in Netflix shares. I mean, the first question everybody -- because just a few weeks ago they miss numbers and the shares were down.
Now they're back up again. What's the prevailing view of Wall Street?
LA MONICA: The investors are obviously very fickle when it comes to Netflix stock. And they really are obsessed with the subscriber numbers.
It really isn't about revenue or even profits that is driving the stock. But I think right now any investors that are betting against it there stuck
in the upside-down world like 11, because there's really no way out. Netflix just continues to go up. It shows that they have all of the
original content that consumers want. Even with Disney taking a lot of its shows a way in the next few years, that doesn't seem to be stopping people
from subscribing to Netflix.
QUEST: And did you look at the performance of stock prices of Disney, which has been abysmal, versus Netflix which is like a rocket. It's
telling us something about one versus the other.
[16:10:00] I mean, our own share price has been boosted because --
LA MONICA: Thank you, ma bell.
QUEST: Because of AT&T. So, you have to take AT&T -- we have to take Time Warner out of this equation, since the takeover is coming forward. If you
just look at those publicly traded traditional media companies of which you talk about Time Warner or Disney, basically that's it.
LA MONICA: Yes, I think right now the big concern that's impacting all the major media companies, us notwithstanding because of AT&T, there are
worries about people not watching traditional TV as much and what's happening to the amount of money that the cable companies are willing to
pay for cable channels. And that's the problem with Disney. Disney has all these hit movies, but they're eventually going to have streaming of
their own service. But no one cares about Star Wars or Marvel right now or Disney princesses. The only story that matters to Wall Street with Disney
is ESPN and the declining viewership there. And that is a huge problem for Bob Iger, who may or may not have that problem much longer if they can
finally find a CEO to replace him.
QUEST: Well, he says he's gone in 2019, doesn't he? He says he's not hanging around.
LA MONICA: He's extended it several times already.
QUEST: The last one he said, I'm out. I'm gone. But more significantly, anybody watching who says is the run-up -- I mean, the billion-dollar
question with Netflix is that if you haven't got in yet, is it too late?
LA MONICA: It is a great question. You do have to wonder whether or not the stock has finally run its course. But we could've said that a few
weeks ago when you thought there were big problems because of the stock going down. And here we are today at an all-time high. And that's pretty
much the story for most big tech. It's Apple, Amazon, Microsoft, Google or Alphabet, people that want to bet against them have been consistently wrong
by doing so.
QUEST: Finally, the QUEST MEANS BUSINESS newsletter. We'll be putting it out today. It comes out on a Thursday.
LA MONICA: It comes out on a Thursday so it'll be in your mailbox this evening if you have subscribed. It'll be up on the CNNMoney site tomorrow
if you haven't subscribed and you want to see what it looks like on a website.
QUEST: And the subscription of course, is CNNMoney/Quest.
LA MONICA: Yes.
QUEST: Good to see you.
LA MONICA: Thank you.
QUEST: Thank you very much.
Now, as we continue our program tonight, after the break, an apology of one of Hollywood's most powerful producers, Harvey Weinstein, the man behind
Miramax. He has admitted that the way he behaved in the past has caused pain. He apologizes and he says I need to be a better person. After the
break.
(COMMERCIAL BREAK)
QUEST: Welcome back. Over in Europe Spanish stocks rallied and banks and particularly rebounded amid ongoing uncertainty surrounding the dispute of
the Catalonian referendum. The IBEX closed up 2.5 percent. It's still below the level as it's seen before Sunday's event.
[16:15:00] Harvey Weinstein is the cochairman of the Weinstein Company. And tonight, a bombshell accusation from the "New York Times" against one
of Hollywood's biggest players. The newspaper says numerous women over three decades have accused the movie producer, Harvey Weinstein, of sexual
harassment. He says according to unnamed sources, at least eight women have accepted legal settlements from Weinstein. Now the film mogul gave a
statement to the "New York Times." Although he didn't admit to specific incidents, he said, I appreciate the way I've behaved with colleagues in
the past has caused a lot of pain, and I seriously apologize for it. Though I'm trying to do better, I know I have a long way to go.
Harvey Weinstein is the cochairman of the Weinstein Company, TWC. Which made films like "The King's Speech" and "Django Unchained." Earlier with
his brother Bob, he founded the studio Miramax, which produced Oscar winners such as "The English Patient" and "Good Will Hunting," "Shakespeare
in Love" was one of theirs too. Miramax was an absolute titan of companies. In the forefront of the independent movie center until the
Weinsteins sold it to Walt Disney in 1993.
So, were very fortunate tonight, Lisa Bloom is the lawyer advising Harvey Weinstein. She joins me now. And indeed, Lisa, you are referred to in
this. Over the last year I've asked Lisa Bloom to tutor me and she's put together a team of people.
OK. It is legitimate I think, even though he's a client to some extent. Let's start with the accusations. The accusations are many fold over
numerous years, aren't they? And they really go to the heart of a pattern of behavior that is simply unacceptable.
LISA BLOOM, LAWYER ADVISING HARVEY WEINSTEIN: So, when Harvey came to me about a year ago to talk to him about this, he said immediately, I'm not
going to attack any of the women. We are going to do this differently. I am willing to acknowledge I've made mistakes. How many top CEOs do you
hear in this kind of a situation say that. And I've had very frank and honest conversations with him about, Harvey, your behavior needs to
improve. And he acknowledges that. What our beef has been in the last couple of days has been with the "New York Times" who gave us two days to
respond to an article they've been reporting on for months and months.
We had witnesses. We had information to discredit some of what they said. But that's not really the point. Because as Harvey has acknowledged he has
demons that he needs to slay. And I am working with him on that. Is it going to be solved tomorrow, or next week, or next month? Probably not.
But here's a guy who is handling this with some dignity and some honesty, which is I think a sharp break from what we've seen before.
QUEST: Let me ask you. Why did he come forward and do this? And the reason I ask is, was it of his own volition? Or was it a case of I'm going
to fess up before I'm outed?
BLOOM: Well, he did fess up to the "New York Times." They ran very little of his statement. You have some of it that you've talked about right now.
But he's talked very candidly about how he needs to --
QUEST: Why did he come to you in the first place?
BLOOM: Because these rumors have swirled around him for a long time. And he knows that he's made mistakes and he needs to improve. You know, a lot
of men who grew up in his generation grew up with a whole different mentality towards women. And as I've said to him, Harvey, that may be, but
it's not an excuse. He says the same thing himself. Times have changed. It's 2017. You know, Harvey's a dinosaur in certain ways. He doesn't know
how to work his iPad very well. I am trying to do something from the other side. Usually I'm on the women's side. Right?
QUEST: But that's what's fascinating about this.
BLOOM: Hey, it's been fascinating for me too to say, guess what, you're bringing me in. You're going to get an ear-full, from me. And that's what
he's gotten.
QUEST: Because that's your risky part. Isn't it? You are normally on the other side.
BLOOM: Yes.
QUEST: You are putting your credibility on the line.
BLOOM: This it is not about me.
QUEST: No, I know it's not.
BLOOM: It's not about me with any client.
QUEST: But at the same point Harvey Weinstein is cloaking himself in your integrity because of the way -- I'm not suggesting it's wrong, but it is a
fact. That by bringing you on board as his mentor/advisor he does cloak himself in your integrity.
BLOOM: There certainly haven't been any allegations in the last year since I've been working with Harvey. And I hope that will remain the case. He's
also brought me in to do a top to bottom review of the policies and practices at his company. To make sure that everything is done properly.
So, people's rights are respected. He agrees that's important. He agrees he has a problem. I mean, this is groundbreaking.
QUEST: I agree. And that's why I just want to move on in one sense, because when I read the "New York Times" article -- and that's all we have
to go on at the moment. So, if you disagree with it then forgive me, but that's all we've got to go on at the moment. When I read it, one major
aspect is the way in which -- again, similar to other companies that we've talked about, similar to Fox. Other executives knew that something was
wrong and they either shoved it under the carpet, they look the other way. He didn't challenge
[16:20:00] BLOOM: I am not here to demean or denigrate anyone. Especially other people that Harvey may have --
QUEST: No, it wasn't --
BLOOM: -- but I will say that NDA's are standard in every business. I'm sure CNN has them with their employees. I have them with my employees.
NDA's are very, very common. Most women who I represent, who are bringing sexual harassment claims want to have confidential settlements. So, the
fact that somebody may have had them and nobody is acknowledging that they existed. Because if they did exist you can't talk about them.
QUEST: That's not the point I'm making here. The point I'm making is not about NDA's or women who didn't disclose. The point I'm making is that a
lot of companies have to find ways to deal with these problems and senior executives need to have ways to challenge other top executives.
BLOOM: I think one way to do it is bring in prominent feminists to set men straight about how things should be done, and that's what Harvey has done
with me. And do I take a lot of grief for it? How do you represent Harvey Weinstein? You know what? He's a human being. He's made mistakes.
Unlike most of us he's very blatantly now in front of the entire world, acknowledged them, and vowed to do better. And I think he will do better.
But he also has said he has been working on anger issues for 10 years. These are very persistent issues.
QUEST: The one disturbing part I did find about this story, some of the allegations are 2014/2015. By this stage it is well known in corporate
circles the incidents of sexual harassment that are prohibited or the behaviors that are not acceptable. So, it's not like he can claim this is
historic in many cases.
BLOOM: Well, the 2015 one that you're referring to was withdrawn in writing by the complainant. But you're right as a general sense. Again,
were not going after any individual woman. I think it's terrific when women come forward and voice their complaints. It's the only way we can
ever get change. Yes, is there anybody being engaging in bad behavior in 2017? No. Nobody should be.
QUEST: But there will be.
BLOOM: Of course.
QUEST: Right. So, tell me, a company like the Weinstein Company or Miramax where the bosses name is over the door. And it is de facto and
enterprise of the boss. Give me some guidance. What do senior executives do if they see and perceive inappropriate, unacceptable behavior by the man
or woman whose name is over the door?
BLOOM: Well, that's an easy one. Because the law is very clear, at least here in the U.S., that if somebody makes a complaint about workplace
misconduct companies have a legal obligation to do a prompt, thorough investigation and get to the bottom of it.
QUEST: And the deputy says, hey, come on Harvey, we know you're up to this stuff, stop it now. But nobody did that.
BLOOM: Well, you are making a lot of assumptions here.
QUEST: Yes.
BLOOM: I wasn't around 30 years ago. So, I'm not going to say that. I will tell you that as a very real human being today, Harvey takes this very
seriously. And that's why he's issued this very broad statement sincerely apologizing. Offering to meet with any of the women, with me present, if
they would like to. If they want him to go jump in the lake, then that's fine too. He is not going to attack or demean any of his accusers. He's
going to try to work on himself. And I think that's admirable. You might not like all of the things that he has done. I don't like some of the
things that are alleged. But I think what he is trying to do now is a good model for anybody who's been caught up in something like this.
QUEST: And that you said the longer-term will be the more important thing. Isn't it?
BLOOM: And time will tell. And as he said, judge me. Let's check in in a year and see how he's doing.
QUEST: Was it had a hard decision to take this on?
BLOOM: No, it wasn't hard at all. You know, Harvey Weinstein is a longtime activist for LGBT issues. He's doing a lot of film and television
series about racial injustice. That's the topic of my book and how you became connected. He was a supporter of Hillary Clinton. He's got a lot
of female executives. You know, and he's a major philanthropist. He set up a huge -- I think one of the biggest foundations for female directors.
He does a lot of good things in the world. Does that outweigh -- he says he's caused women pain. Does that outweigh? You know, I don't know.
Other people can decide that. It doesn't justify, it doesn't excuse. But this is a complex human being.
QUEST: We're very grateful that you took time today.
BLOOM: Thank you. Yes, it is.
QUEST: Thank you very much indeed. Much appreciated, thank you.
As we continue tonight, more breaking news to CNN. Pres. Trump is planning to decertify the Iran nuclear deal, according to two senior U.S.
officials. The decision fall short of completely backing out of the deal. Although, on the election campaign Mr. Trump said he would scrap it. By
decertify in the deal Donald Trump will pass the matter to Congress. Yesterday the Secretary of State, Rex Tillerson, said the president had
been given a range of options.
(BEGIN VIDEO CLIP)
REX TILLERSON, U.S. SECRETARY OF STATE: We'll have a recommendation for the president. We are going to give him a couple of options of how to move
forward to advance the important policy towards Iran. As you've heard us say many times, the JCPOA represents only a small part of the many issues
that we need to deal with when it comes to the Iranian relationship. So, it is an important part of that, but it is not the only part. And I've
said many times, we cannot let the Iranian relationship be defined solely by that nuclear agreement.
(END VIDEO CLIP)
[16:25:00] QUEST: David Rohde is CNN's global affairs analyst enjoys me now. I am confused. All right, David, help me understand. Decertify
versus pulling out. In layman's language what is the difference?
DAVID ROHDE, CNN GLOBAL AFFAIRS ANALYST: In layman language he's handing this problem to Congress. The way the agreement was reached after certain
periods the President of the United States has to certify that Iran is abiding by the deal. What we're hearing today is that next week Trump will
say Iran is not abiding by the deal but it's up to Congress to decide what to do about that. Will the Congress reimpose U.S. sanctions on Iran? If
they do that that is that is abrogating the deal. So, this is the first step towards abrogating the deal.
QUEST: So, what's the real politic of doing that? Does he know, for instance, it's a straw action where Congress won't act. Or is he hopeful
in believing that he has the votes and Congress will sanction the event. Which is exactly what he probably wants in the first place.
ROHDE: I think he believes he has the votes. But I also think this is a pattern. For international viewers is confusing, but where these hard
problems, reforming American healthcare, you know, is the biggest example, reforming immigration. He kicks all this to Congress. This is a White
House that doesn't present its sort of detailed plans. And what he's essentially doing in an American political sense is keeping his promise.
The president talked about this all the time. So, throughout the campaign he called this the worst deal in history. But he's been certifying it so
far. He's been saying that Iran isn't abiding by the deal. He's not going to do that anymore.
QUEST: So, arguably, classic Donald Trump, if Congress doesn't act then I will have a scapegoat for, you know, I decertified it was up to Congress.
The fact he could've withdrawn as he has with Paris seems to be lost in the noise.
ROHDE: Yes, I mean, that's the play here. And the other complication is that this involved many other countries. This was not simply, you know, an
agreement between the United States and Iran. So, how will the European Union react? How will Russia react? How will China react? All those
other parties to this nuclear agreement have said they do not want to abrogate. They wanted it to continue they all say it's working. And that
this is essentially another exaggerated campaign promise that Donald Trump is going to keep that's going to create instability and this time in the
Middle East.
QUEST: David, thank you. I appreciate it. You've explained it beautifully. I much appreciate it, thank you.
ROHDE: Thank you.
QUEST: As we continue tonight, investigators are piecing together a financial profile of the gunman behind the horrific attack in Las Vegas.
There is no indication of what motivated the deadliest shooting in U.S. history. At least none that's been real so far. This is QUEST live from
New York
(COMMERCIAL BREAK)
[16:30:21] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.
Catalan officials are vowing to defend the sovereignty of their parliament after Spain's High Court suspended Monday's session. The Catalan president
was expected to declare independence at the meeting following last Sunday's banned referendum. The parliament's president says the decision violates
freedom of speech.
In Washington, a Republican congressman is expected to introduce a bill that would ban the sale of a gun accessory that turns a semi-automatic
firearm into an automatic weapon. The shooter behind the Las Vegas massacre appeared to use what is called a bump stock to increase the
firepower of his guns.
Three American Green Berets and five Nigerian soldiers have been killed in an ISIS ambush in the remote West African nation of Niger. It happened
about 20 km north of the Nigerian capital. U.S. officials say the troops were on a joint patrol but as many as 50 ISIS militants attacked them. Two
of the elite U.S. soldiers were wounded.
In Brazil, federal police have arrested the Brazilian Olympic Committee President on charges of corruption according to the state-run media.
Carlos Nuzman was allegedly involved in an operation to buy votes in Brazil's bid to host the 2016 games. The director of operations for the
organizing committee has also been arrested.
The British writer Kazuo Ishiguro has won the 2017 a Nobel prize. His best-known novels are "Remains of the Day" and "Never Let Me Go". The
Nobel Twitter feed says he is associated with themes of memory, time and self-delusion. The 62-year-old moved to Britain from Japan when he was
five years old.
A hotel in Chicago says the Custer armor giving the name Stephen Paddock which is the name of the Las Vegas gunmen reserved a room in August at the
time that the Lollapalooza music festival was being held just outside the hotel. Now we are learning new details about the finances of Stephen
Paddock who killed 58 people at a country music festival on Sunday. His real estate agent says that the gunmen said he earned his living by
gambling. He claimed to gamble about $1 million a year, the agent says he paid for his retirement ranch in cash, over $360,000.
CNN's counterterrorism analyst Phil Mudd joins me now. Battle over guns, on this program last night, we had a heated discussion over the right to
bear arms. When the protagonist pointed out that terrorist will get guns, terrorists will always have guns. And mention France as being an example
where they have a higher incidence of mass murder. What would you make of it?
PHIL MUDD, CNN COUNTERTERRORISM ANALYST: I don't buy this. This country is inherently on analytic on the issue of guns, on the issue of how we
compare internationally on healthcare, on the issue how we compare internationally in preparing kids for a competitive global market
education. We think we are exceptional, we are exceptional in every category.
I racist, Richard, for one simple reason. Let's ask the question, what countries in Western culture have low incidences of killing by guns?
Countries like the Netherlands, countries in southern Europe, countries like Spain. How do those countries differ from another country that has an
incredibly high incidence of murder by weapon? That would be the United States.
And ask a simple analytic question, what are the differences between countries that have low incidence, and countries that have high? We can't
do that in this country because this is so political and as you said you had an emotional discussion last night, so emotional, we cannot seem to ask
the question, are there countries that seem to have a lower incidence of this kind of violence?
QUEST: I did ask, and the answer was Venezuela, apparently, has a higher incidence, the analogy is made to Venezuela. But look, the point is this,
surely bad people will get guns if they want them, the terrorists get guns.
MUDD: Sure, so why don't we give them explosives too. I do not understand why that is an argument, if the question is, well, they are going to get
bad stuff anyway, why don't we give marijuana to a 12-year-old? I think the question is, there are ways to limit the access to a weapon and respect
the First Amendment, and the start of the conversation cannot be well, because they might get something that we think is evil anyway, let's just
let it happen. That does not make any sense to me.
And by the way, as I mentioned earlier, other countries seem to be able to get around that problem, why can't we talk to them?
[16:35:00] Part of the problem is we look in the mirror and say because we are better than they are, and we are exceptional. I don't buy that
argument.
QUEST: I need to turn to you, you are the analyst on all issues for today. The Iran decertification that we have just been talking about, and the
significance of it. If the president decertifies Iran, kicks at the Congress for them to decision on whether sanctions should be re-imposed.
How damaging in your view is that?
MUDD: Damaging for one reason, and no one has mentioned this point that I have heard, that is remember the implications for North Korea. If you want
to have a North Korean conversation about limiting their nuclear program, if I am in North Korea I am turning to my Chinese partners and saying, why
would I ever have a conversation with the Americans. They showed in Iran that they won't respect the deal.
QUEST: President Rouhani made exactly that point to Amanpour and it's a valid point, but then surely the administration is aware of that.
MUDD: Of course, but I mean there is a political issue here were they are saying this is red meat to our followers, nobody likes Iran because they
are a sponsor of terror, so we are going to throw the agreement out the window. The problem here is very simple. Framing this. Here is one
frame, this is a bad deal. I agree with this. This is not a great deal.
The question is what are your other options? Number one, kinetic, try to destroy a very dispersed program, nuclear program with military power. You
cannot do it.
Number two, continuation of sanctions. The Chinese and the Russians will work around them. Number three, draw a program that might limit, try an
agreement that might limit the Iranian nuclear program, knowing it is the best of three not very good options.
QUEST: We really get you to sit in this chair, so I am going to throw everything that I have that you. We need to have you back more often.
North Korea. Have you heard any military option? None of them makes sense at one level, but that minimizes losses, for example, if the US feels it
does need to quote President Trump, we will deal with it. Are there any military options that don't result in the almost annihilation of Seoul?
MUDD: No, for a couple of simple reasons. When you look at the potential of military action, as soon as you take military action, you give the North
Koreans justification obviously to respond. You open a can of worms about the potential nuclear use. Two quick points on that. One political and
one military. You better guarantee that your intelligence is good enough to know were there nuclear warheads are, and that you did not miss any.
I have been in intel for 25 years. The intelligence is not going to be that good. And second, you better guarantee that you are ready for moving
in there militarily, because you have to take out the leadership as well, otherwise they are going to rebuild. Who wants to invade another country,
Richard? I don't.
QUEST: Good to see you.
MUDD: Good to see you.
QUEST: I guess Philip Mudd is entitled to hit the bell. Normally, that would be a grave matter. Thank you.
The chairman of the Senate intelligence committee has turned down President Trump's suggestion for an investigation into so-called fake news, at the
same time, Richard Burr says that the media must be held accountable for its reporting on the committee's investigations.
(BEGIN VIDEO CLIP)
SEN. RICHARD BURR, NORTH CAROLINA (R): Our report, whatever we come out with will present the facts, it will be the news organizations that covered
it somewhere differently that will be the ones with egg on their face. I am very, very confident that we will weigh it out there in a way that the
American people will be able to tell who was covering this actually, and who was sensationalizing the coverage.
(END VIDEO CLIP)
QUEST: The president tweeted this morning, why isn't the Senate in Intel committee looking into fake news networks in our country to see why so much
of our news is just made up fake?
The president has accused this network and others of peddling fake news. Senior media correspondent Brian Stelter is in Washington. It continues
this idea of fake news that which you and I are supposedly part of it.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: There our factual pieces and opinion pieces of this, right, Richard. The factual matter is that
journalists are not going around making up stories, they are not inventing anonymous sources out of thin air. I felt that we have to say that
nowadays because there is widespread distrust of media, and because the president is claiming that journalists make up stories.
In fact, we have seen a lot of reporting recently on the Trump administration, a lot of embarrassing stories about the Trump
administration that have come from months and months of hard work. For example, the Politico reporters who waited at the airport to see Tom
Price's private flight.
So, Trump is wrong on the facts, he is entitled to say whatever he wants about journalists but as one First Amendment expert said to me, this is the
kind of statement that you expect to hear from a despot not from the American president.
QUEST: But the corrosive affect if such should be of the president of United States making these comments is what?
STELTER: That over time, his base, and most loyal members of his base, will trust even less what the media reports. And if push comes to shove,
if Robert Mueller has some shocking things to share, if Congressional investigators looking into Russia have some big news to report, then his
base may not believe it.
[16:40:00] When the president has this big Russia problem, his solution has been to beat the press. And the good news if there is good news, is that
most people don't believe him. Most people actually do trust the news that they are hearing.
QUEST: OK, you say that, you say that most people believe it but there does come a point doesn't there, when look, I am sure like me, just going
about our daily business, people love to pull or hair, pool our chain by saying, fake news, hey fake news has arrived. I am sure you get that as
much as I do.
But at the end of the day, doesn't matter?
STELTER: I think it does matter, because there is some rebuilding that has to get done not in the next year or four years but over the long term, you
have a U.S. president shouting fake news all of the time. It does to damage, it does have a corrosive affect not on the entire population but
among a subset of that population. It requires newsrooms to work even harder to win people's trust. But the bottom line is that the president is
trying to distract from the Russia investigations. That is the one thing I think we can all agree upon, when we see his tweets you should go
investigate this and that, he is trying to distract and divert from the Russia investigations. Because he knows it is the biggest thing out there
against him.
QUEST: Brian Stelter, good to see you, thank you for being in Washington.
As we continue tonight on QUEST MEANS BUSINESS, we will be back in just a moment.
(COMMERCIAL BREAK)
QUEST: Eurostar chief executive says bracelet is not a major concern for him and his train company, because the company moves people not goods
between the U.K. and Europe. Eurostar is soon to launch a new service from London to Amsterdam, it will take less than four hours. I asked Nicolas
Petrovic, if he hopes to achieve market dominance on that new route. Like the 80 to 90 percent market share Eurostar enjoys between London and Paris.
(BEGIN VIDEOTAPE)
NICOLAS PETROVIC, CEO, EUROSTAR: The travel time is a bit longer but we first want to enter the market, it will take several years to shift people
from air to rail. So, we do not have a target so far. We're starting with two return trains a day, I know that in a few years we will go to three,
four maybe five returns a day. And then we can eat into their market share.
QUEST: How did the roots to the south of France perform? They were also new routes. How did they perform?
PETROVIC: They performed very well.
QUEST: Because that is long hours, that is six, seven hours.
PETROVIC: They performed very well, especially, in the summer it is full, we have heard of a lot of people coming down to the south and discovering
all of that. So, it is I would say from May until August, early September is doing very, very well. The rest of the year is more quiet, but we
expect that.
QUEST: When Brexit it comes because Brexit is coming, are you affected? In the sense that obviously, there will be questions about borders, but of
course it is already there with the non-Schengen.
[16:45:00] But do you have to get new treaties, new agreements as a result of this in the same way that aviation now does?
PETROVIC: Yes, it should be lighter than for aviation, but we will definitely need some sort of agreement between the U.K. and the E.U. but I
know both from the government in the U.K. and the E.U. in general, and nobody wants us to stop the service on 28 March 2019. Nobody wants that.
So, we are confident we will have a solution there.
The main question for Brexit is what will it do to the commercial element of the business. Will some segments of the market shrink or disappear? We
don't know yet, it is very difficult to tell. Generally, we are optimistic, people will still travel.
QUEST: But at the end of the day, how would you describe your level of concern as pardon the pun, Brexit train is moving seemingly uncontrollably
to down the path, and no one seems to know what is going to happen. How would you describe your level of concern?
PETROVIC: It is low to medium. I am not that worried actually for us as a business, we have performed due diligence on it, we don't have any goods.
I think you could carry goods across the border, then you can be a bit more worried.
QUEST: You are here in New York which is a long way from anywhere that your trains run, why are you here?
PETROVIC: Because the U.S. market is one of our largest markets, we sell more tickets in the U.S. than in Belgium, which is one of our countries.
This year the market has gone up 25 percent in the U.S., so we came here first thank our partners. Also, to tell them the good news about
Amsterdam. The U.S. market is very strong for us.
QUEST: Fine, new trains, done. South of France, done. Amsterdam, just about done. What is your next big project?
PETROVIC: Amsterdam is not done yet.
QUEST: Nearly done.
PETROVIC: I think there's a lot in the digital space to sell more than just a train ticket. How can we sell a bit more than what we are selling
today?
QUEST: Oh, this is the incremental, isn't it? This is it. You are going into the ancillary business.
PETROVIC: Not ancillary.
QUEST: Oh, it is, ancillary, it is.
PETROVIC: No, you can't say that. We want people to enjoy the stay that they're going to, and we know what's going on, and actually we can help
them package all of that. We look at that.
QUEST: Ancillaries by another name. Good to see you.
PETROVIC: Good to see you, Richard.
(END VIDEOTAPE)
QUEST: Nicolas Petrovic of Eurostar.
Bridgewater Associates is part hedge fund, part psychological experiment, in the founder Ray Dalio tells me his management principles are at the core
of his firm's success.
[16:50:00] (COMMERCIAL BREAK)
QUEST: This if the formula that built the world's biggest hedge fund, Bridgewater Associates. Pain plus reflection equals progress.
Ray Dalio says that forms the basis of his famous management principles. For instance, all new Bridgewater employees get a copy Of Pain Plus
Reflection Equals Progress.
Number six, you also have to be radically transparent, that is another of the principles. At Bridgewater that means recording all meetings and
encouraging open, sometimes bitter debate. Other principles from Dalio, number 26, recognize that conflicts are essential for great relationships.
Dalio says his goal is to build an idea meritocracy. The critics say the employees only tolerate the harsh workplace because of the firm's financial
success and lavish salaries.
And with these various principles Ray Dalio has now written his book. Number 100, evaluate people accurately not kindly. Employees rate each
other on skills, a range of skills, managers are encouraged to remove employees who do not fit the company.
With such principles like these, you might wonder why anybody does work for Bridgewater other than the financial rewards. When Ray Dalio joined me in
the QUEST MEANS BUSINESS C suite, I needed to know how on earth you do you come up with principles like this?
(BEGIN VIDEOTAPE)
RAY DALIO, FOUNDER, BRIDGEWATER ASSOCIATES: I encountered my realities, often the most important ones were the painful realities, mistakes. And
then I over a period of time started to learn to reflect on them. My whole attitude started to change. That mistakes started to become like puzzles,
and I figured that if I could solve the puzzle, I would get gems. And those gems were things that I would never do again, and I would write down
those principles.
QUEST: But recognize that tough love is both the hardest and the most important type of love to give because it is so rarely welcomed.
DALIO: I think it is true. If you give people strength and you are tough on them, but honesty and care about them, you can be the best type of love
to give them. But it is not so much appreciated sometimes.
QUEST: And that is the heart of much of what you have done at Bridgewater, isn't it? It is that tough love, difficult environment, not difficult,
challenging environment, to work in. That was highly rewarding but sometimes controversial.
DALIO: Right. Some people call it an intellectual Navy SEALS. Right? It's tough but it is rewarding and makes people strong.
QUEST: Can anybody survive in those circumstances? Do you have to shift the balance because there can be some brilliant people that you want, but
they are not going to survive in an adversarial difficult scenario.
DALIO: It is not an adversarial -- it is a totally honest environment. It is an idea meritocracy, OK, you come because it is an idea meritocracy.
And in order to have an idea meritocracy, you have to do three things well.
The first is you have to be radically truthful with each other. Can you be radically truthful? Can you say what you think and have an exchange?
Second if you have to have thoughtful disagreement to be able to listen, and taken what others are thinking, and to make a decision that is better
than you can individually make.
And the third is if you have disagreements that remain, you have a process of getting past those disagreements that everybody believes is a? If I can
have an idea meritocracy and people believe in that meritocracy, it is powerful.
QUEST: CEOs have become the new barometers to some extent of the moral compass. They are speaking out on issues whether it is transgender,
whether it is DACA, whether it is the travel ban, in a way they are leading the argument. They are leading to debate. Do you find that acceptable?
You find that correct and proper?
DALIO: I don't think that it is clear whether it is correct or proper, there is no absolute correct or proper, the question is what are the
principles that are agreed to. For example, a CEO works at a company, are they in agreement with the board on their principles? And are they
operating by those principles?
I think in any relationship it is the most important to be clear and in line with your principles. I think that is the biggest problem that faces
our country today politically. In other words, it is not just about board questions, it's also do the principles that bind us together, are they
stronger than the ones that divide us? Do we have processes in which there is an idea meritocratic way that we can get past our disagreements that we
consider to be fair?
These are issues right now of our time. They are not just in a business environment. It is a personal environment. You have to have those ways of
disagreeing and getting past your disagreements.
(END VIDEOTAPE)
[16:55:00] QUEST: Ray Dalio, absolutely fascinating. And you do not need to be a hedge fund legend to have made money on the stock market this year.
You just need to have been long on stocks. Another record-breaking day on Wall Street. All the three major indices closed at all-time highs, you are
looking there at the Dow Jones industrials, up 113 points. The S&P finishes at an all-time high for the sixth day in a row, that is the
longest streak of record since 1997. Put it all together, in the issue of course is whether or not the markets continue this record breaking run.
If you have missed any part of today's program, download our podcast, you can watch the show as a podcast. Is available from all of the main
providers. Or you can listen to it at cnn.com/podcast.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment, so Harvey Weinstein has been accused by the "New York Times" of decades of sexual harassment. And the film
mogul, Hollywood producer has admitted it, saying, I realize I need to be a better person. I appreciate the way I behaved with colleagues in the past
has caused a lot of pain. And I sincerely apologize for it.
What is different about this is that Weinstein apparently has been seeking help and mentoring to solve this for some time. This is not going to be
one of those cases where the man says, I never did it. Only then to be having the accusations and admissions dragged out into the future.
Also, the decision to go to Lisa Bloom, a very attorney that represents most of the women. Now obviously, with Lisa Bloom comes huge integrity and
cloaking himself, Harvey Weinstein, in that integrity. After all, if he is able to say I've got Lisa Bloom, she's the attorney who represents the
victims normally. She is now working with me. That is a huge masterstroke.
However, Harvey Weinstein now needs to prove that it is genuine. And merely cloaking himself with Lisa Bloom and making statements like this
won't necessarily finish off the accusations. It requires more action before this thing is by any means done.
And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, as always, whatever you are up to in the hours ahead, I hope it is
profitable.
We will do it again tomorrow.
END
