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Dow Closes Above 23,000 for First Time; Mnuchin Says Stocks Will Slump Without Tax Reform; Xi Promises a New Era for China; Cities Ready Bids for Amazon HQ2; Suffering Drags on for Puerto Rico. Aired 4-5p ET
Aired October 18, 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] ZAIN ASHER, CNN HOST: All the fist pumping excitement. And by the way, we did it. The Dow actually smashed through that 23,000 milestone
right out of the gate. Ended the day up triple digits, 23,156. It really seams there is no stopping this thing. A big factor today was IBM. Shares
rose about 10 percent on the back of a very strong earnings report.
It is Wednesday, October 18th. The Dow, as I mentioned, is at an all-time high. But the U.S. Treasury Secretary warns that it will actually tank if
Congress doesn't end up passing tax reforms.
China's President forecasts the new era of economic domination. Xi Jinping says it's time for his country to take center stage.
And $5 billion and 500,000 jobs is up for grabs. Cities around this country, around the U.S., are pulling out all the stops to host Amazon's
new headquarters.
Hello, everyone, I'm Zain Asher. And this my friends, is QUEST MEANS BUSINESS.
OK. So, the Dow has done it again. It's a massive milestone for the stock market. The Dow has just closed over 23,000 for the first time ever in its
one -- look at the fireworks there. In its 121-year history, blowing past his previous high with a triple digit gain. For the U.S. Treasury
Secretary Steve Mnuchin, says the fireworks you see behind me could actually end up fizzling over very, very quickly. He says that it's a
promise that the idea of tax reform that has driven the market higher. And if Congress doesn't follow through, there will be a significant drop for
stocks. Steve Mnuchin told "Politico," the message is simple. Past tax reform, and stocks go up. Fail, and watch them tumble.
(BEGIN VIDEO CLIP)
STEVE MNUCHIN, SECRETARY OF TREASURY: There is no question that the rally in the stock market has based into it. Reasonably high expectations of us
getting tax cuts and tax reform done. To the extent we get the tax deal done. The stock market will go up higher. But there is no question in my
mind, if we don't get it done, you're going to see a reversal of a significant amount of these gains.
(END VIDEO CLIP)
ASHER: All right. So much to dig into here. Joining me live now. CNN's Sunlen Serfaty. Sunlen, this message from Steve Mnuchin that if Congress
doesn't pass tax reform, the market is going to take a nosedive. Just seems like such a strange thing for a Treasury Secretary to say. Walk us
through that.
SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: That's right. It certainly is, Zain. And I think that was intended to be somewhat of a warning shot
fired, at least rhetorically. Fired up here on Capitol Hill for lawmakers who have not moved on tax reform yet. There are some small procedural
movements that are taking place this week that are important to overall tax reform, and that Senate Republicans likely tomorrow night or early Friday
morning will pass the budget.
That's important, because that allows them to pass tax reform with only Republican support. Which they believe they will only have Republican
support. And not Democratic support. That makes it a little easier for them going forward. But of course, they're just in the early phases of
this after they get through the budget of attacking tax return. And there is still fundamental disagreements within the Republican Party's as to what
should be in the tax reform bill.
We've heard a lot of talk about timelines, when they could get it done, when they should get it done. It definitely is a sliding target, I should
say. Speaker of the House, Paul Ryan, he said he wants to have lawmakers stay in town here, over potentially the Christmas holiday, get it done
before they take off for the end of the year. But aides privately saying that might not be achievable. They still haven't even agreed to do the
broad contours of a tax bill. Of course, those negotiations continuing in earnest after they pass the budget up here this week -- Zain.
ASHER: So, have we had any -- just in terms of Steve Mnuchin's comments, have we had any sort of concrete reactions from congressional Republicans?
He's basically saying, listen, you guys are to blame if the market tanks. If you guys don't do anything.
SERFATY: Yes, and I think no specific congressional reaction to that just yet. I'm sure will hear in the coming hours and days. But I do think that
reflects the pressure and that the White House and President Trump himself are putting on Republicans up here on Capitol Hill. They know they have a
huge list. And is no easy task. This is something that's usually complicated and that they do need a legislative win.
[16:05:00] Everybody up here is well aware of that pressure. Everyone is well aware of the stakes of getting this done. And I think we saw a
certain amount of that rhetorical warning shot fired from President Trump, too. Yesterday he said, look, Republicans have got to get this done. This
would be a big, in essence, embarrassment for them if they don't. That's him kind of distancing himself from the effort going on up here. If it
fails, the White House does not want to be anywhere near it -- Zain.
ASHER: All right. Sunlen Serfaty, thank you so much.
Want to bring back Ted Weisberg. The founder of Seaport Securities. To talk a little bit more about the Dow pushing past 23,000. So, here's the
thing, Steve Mnuchin is basically saying, listen, it's the hope, it's the idea of tax reform that has pushed the market higher. That's not 100
percent true, though. Because what the market is really focused on, Ted, as you and I both know, is strong earnings reports. And also, economies
around the world doing better.
TED WEISBERG, FOUNDER, SEAPORT SECURITIES: Yes. I think quite frankly, it's all of the above. Unfortunately, you know, you can't really define
what is the most, you know, influential and motivating factor. No question that tax reform is a big factor. But, I mean, I think you can go back to
the election of November and for many months prior to the election. I think a lot of Wall Street professionals will poise for a change in the
White House, and quite frankly, I don't think it mattered who got elected. But the change was absolutely going to be a breath of fresh air. Almost
like letting the genie out of the bottle, if you will.
And in the backdrop of all of this is eight years of zero interest rates, which, you know, some folks think has more to do with equity prices moving
higher than almost anything else. So, I think whether it's the prospect of tax reform or the change in Washington on November 11, it's all, you know,
kind of icing on the cake. But the biggest factor, and that still continues, is this environment of zero interest rates, which is
historically completely unusual. We've never been through it before. And it's driven a lot of folks into asset classes, including the stock market.
ASHER: Right. So, Steve Mnuchin is not, you know, dare I say it, not 100 percent right in terms of his comments. But --
WEISBERG: Well, I mean, you know, I don't know. He might be. Only time will tell.
ASHER: Maybe a little, OK. So, it's debatable. But if we don't get tax reform by the end of the year, how much will that slow the market down in
terms of a possible look into a crystal ball for me, Ted.
WEISBERG: All right. I'm looking right now. I don't know Mr. Mnuchin, you know, but he came out of the 800 pound -- the belly of the 800-pound
gorilla, which is Goldman Sachs. All right. They don't have any dummies working over there. And I would never bet against Goldman Sachs or most of
the people that graduate from there.
I would say this about his comments. In a way, actually disagree with him. And at the same time, I agree. I think, actually, once we get tax reform,
and I think will get it eventually, I don't know when, you don't know when. I'm not sure if even he knows when. But I think it's cool coming. Because
I think it's a good thing for the American public and for the U.S. economy. But when that happens, I actually think the market is probably a better
sale than a buy. On the other hand, as long as they keep pushing that off onto the horizon, is clearly an underlying plus for the stock market.
The crystal ball simply says, as long as that it's out there, it's a positive. As long as the Fed has a benign position in terms of raising
interest rates and they have been pretty good at delivering that message to investors, that's a positive. But at the end of the day, it's all about
corporate earnings and so far, we have seen some pretty spectacular earnings from a lot of companies that basically people don't expect to see
them from. And were right in the -- no, were not even in the sweet spot of earnings. We have more tonight. I mean, every day now. We start to get
some very high profile corporate earnings. And clearly, there will be disappointments. But on balance, the earnings have been coming in quarter
after quarter, better than expected. And which just tells us that corporate America, with all the issues that are going on, is quite healthy.
ASHER: OK. So, it's all about earnings. But as you mentioned, the possibility of tax reform is certainly a positive. But some might say that
Steve Mnuchin's comments could be politically motivated.
WEISBERG: Oh, maybe. Will see.
ASHER: Maybe. Maybe. Maybe. Ted Weisberg, thank you so much, appreciate that.
WEISBERG: OK, bye-bye.
ASHER: OK. So, turning now to Asia. It took Chinese President Xi Jinping more than three hours to actually lay out his full vision of the next three
decades for his country. Mr. Xi use that very, very long keynote speech at the Chinese Communist Party Congress to sketch out its path to becoming a
true global force on its own terms.
[16:10:06] The president says the next few years will be critical, and that China must be a modernized socialist country by 2035. He celebrated the
massive crackdown on corruption that's taken place on his watch. State media says 1 million officials have been targeted. And he promised to open
up China to foreign investors. And said China and the rest of the world have to work together.
(BEGIN VIDEO CLIP)
XI JINPING, CHINESE PRESIDENT (through translator): The dream of the Chinese people is closely connected with the dreams of the people in the
rest of the world. The Chinese dream can be realized only in a peaceful international environment. And under a stable international order.
(END VIDEO CLIP)
ASHER: Joining me now is the economist and broadcaster, Linda Yueh. Linda, thank you so much for being with us. So, Xi Jinping, he's
consolidated a lot more power, and he's sort of become this cult of personality figure. But just walk us through in concrete terms, what is
his strategy for steering China forward economically for the next five years?
LINDA YUEH, ECONOMIST AND BROADCASTER: I think he's looking to cement his legacy by making China prosperous. So, the overwhelming goal that he set
out by 2035, 2050, that's going to be beyond his term. What will really matter to him is that Chinese incomes by 2020 will have doubled from 2010
levels. And that means China would firmly be a middle-income country. And I think that, plus the crackdown on corruption, he would argue, would
probably be the two things that should cement his place as one of the biggest economic reformers to follow in the footsteps of Deng Xiaoping,
another very powerful Chinese leader.
ASHER: But it's not just about the economic reform. Because he does have to juggle a lot of challenges, especially when it comes to foreign policy.
He's in the middle of the crisis between the U.S. and North Korea. Has also got certain issues with President Tromp himself, and then a lot of
other countries oppose what he's doing in the South China seas. So how does he juggle all of those challenges with the economic reforms he's
putting forward?
YUEH: Well, I think in one respect, and China has been much bolder, more bold, under him than it had been under previous presidents. So, we see
China's belts and road initiative investing overseas, not just in Asia, but going through Europe, Central Asia, Eastern Europe. And that plus the fact
that under his tenure, China's companies have also gone global. Establish themselves in global markets. I think he would view that as consistent
with his economic vision of delivering a prosperous China. And probably all the other issues that you mentioned would be somewhat secondary in his
mind.
Because, remember, the Chinese always want to separate economic from political issues. But as we all know, that's not possible that when you
start to build a port in Pakistan, India is going to have something to say about that. And of course, you mentioned that North Korea stepping on to
the world stage with Trump and trade deals. There's a lot on his plate, and certainly even in a three-hour speech we didn't get much clarity on
that.
ASHER: Yes, I was going to ask about that. I mean, you know, the speech seemed very high on rhetoric. Any lot of feeling good terminology in the
terms of his vision for where he wants to take China over the next five years economically. But in terms of concrete specifics, did you get much
from it?
YUEH: I am afraid, no. But I think probably a couple of things to take away. Which is, one, China's move on the global stage is precipitated by
America stepping back. And you got a real sense that President Xi, part of the legacy he wants to leave, is that he's made China a responsible, global
stakeholder, leading the way on trade. And that's why he said foreign companies will be allowed to invest in China. Because that's one of the
criticisms levied against him. Which is, you say you have to lead on global trade, but it's very hard for foreign companies to actually invest
in China.
And I think the other thing, of course, is China has been hankering after a greater global role in terms of super national institutions. So, setting
up their own Asian infrastructure investment bank. I think, is the first of more steps we are going to see as China asserts itself probably more in
the World Bank and more and the IMF. And so, I think we didn't get any detail how that's going to happen. But I think this general gist of it is
quite clear. Under Xi Jinping, but the end of his five years, we are going to see a China who will probably be as important as the United States in
terms of global economic affairs, and probably globally, period.
ASHER: General gist of it certainly sounds good on paper, but as you mentioned, not much in terms of concrete policies. Linda Yueh talking to
us there about Xi Jinping's vision for his country's future economically. Linda, thank you so much. Appreciate that.
[16:15:03] It was a strong day, not just in the U.S., because we actually closed above 23,000 for the first time ever. But also in terms of European
stock markets, as well, helped by some very positive quarterly earnings reports. All the major markets closed higher. Autos, food, and beverage
makers were actually among the best performers. Look at that. Green across the board for European stocks there.
A strong economy has helped drive U.S. stocks to new highs. But there is one economic marker that isn't keeping up. And the Fed doesn't know why.
Richard's exclusive interview with the president of the Atlanta Fed is next.
(COMMERCIAL BREAK)
ASHER: All right. So, with the market at record highs, Donald Trump must decide whether to replace one of the people most responsible for its rise.
Here I am, by the way, in my little mini Oval Office that they designed for me here. He's decided between five people to run the Federal Reserve. Let
me show you who they are. Here they are, here are their pictures. I'm not sure if you can see. He's going to be deciding between these people once
Janet Yellen's term expires in February. She is currently the continuity candidate but let me tell you, it is certainly far from certain whether or
not she is going to get the nod.
So, her dovish stance, which would fit in nicely with Mr. Trump's plan for tax cuts and more borrowing, but the president has kept, if you have
noticed, I'm sure you have, he's kept very few of Barack Obama's appointees. His chief economic advisor, Gary Cohen, was a front runner,
but then he clashed with the president over his response to the violence in Charlottesville. As Fed chair, Cohen would likely prefer to see a weaker
dollar. The other contenders, though, are less well known. Let me show you some of them.
So, the Fed governor, Jerome Powell worked for George W. Bush, and also alongside Yellen, as well. He's warned about raising rates too quickly,
and like Donald Trump, thinks the U.S. economy could do with faster growth. The former Fed governor, Kevin Warsh, is actually related to one of Mr.
Trump's close friends. He's got a Wall Street background, and he's actually criticized the Fed in the past for overreach.
And then there's John Taylor. A Republican and monetary policy expert. He wants to lay down clearer rules for the Fed and how it makes decisions.
Gosh, that was a lot to get through. So many people. OK. Paul la Monica is here to break it down. When you think about Janet Yellen, you know, she
has been in the chair during this amazing market rally. She's dovish. What is there not to like? Why would he replace her? What's the logic?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: That is a great question. I think that the logic, Zain, is just that President Trump has shown that
he wants to really be his own man, so, to speak.
[16:20:00] And not necessarily hold onto any of the legacies of the Obama administration, whether or not that is good or bad. The interesting thing,
though --
ASHER: Shock. Shock and awe.
LA MONICA: That is true, there is a lot of shock and awe. But the interesting thing is, he bashed Janet Yellen on the campaign trail because
it was politically expedient to do so, talking about rates and the market bubble and this isn't real. Now that he's in charge and he can get credit
for this stunning market rally that we have, Janet Yellen looks like a pretty appealing candidate, because she probably wouldn't upset the apple
cart. She would gradually raise interest rates, which is exactly what the president would want. So --
ASHER: You know, the president has talked a lot about this amazing rally that we have seen, and if he disrupts that, if he removes her in February,
isn't that going to hurt the stock market? Is that a possibility?
LA MONICA: It's a possibility, depending on who he would replace Janet Yellen with. And I think Jerome Powell is largely viewed as another in the
camp of Bernanke and Yellen. That they would be very, very transparent in what they were going to do. Not shock the market at all. Rate hikes would
be gradual. So that probably wouldn't be too big of a concern. Gary Cohen would also probably be dovish but ironically enough --
ASHER: The experience though.
LA MONICA: The experience, he's the former CEO of Goldman Sachs. You would have potentially people that voted for Trump not too thrilled with
the fact he would supposed to be not the establishment candidate, and now all of a sudden, it's government Sachs, which was another of the Obama and
Clinton criticisms. So, I'm not so sure that would be something he would want to do. Kevin Warsh and John Taylor are more interesting because they
are more hawkish, which means they would raise rates more aggressively, which probably doesn't fit all that well into what Trump wants. If he
wants low rates, continued market rally. Because we know, how many times does he tweet about how high the market has gone under his leadership. He
doesn't want to see that go away.
ASHER: And I would love to be a fly on the wall listening to that conversation between Trump and Yellen. Seeing how she pitches herself to
keep that job.
LA MONICA: Assuming she still wants the job as opposed to going off into retirement.
ASHER: Right.
LA MONICA: I think there is a good chance she could be the Fed chair this time next year.
ASHER: We shall see. How many months? Four? Four months. We shall see.
LA MONICA: The decision is probably coming in a few weeks.
ASHER: Yes. But until she actually takes it over or continues. Paula Monica, thank you so much.
LA MONICA: Thank you.
ASHER: The next Fed chair will inherit a strengthening economy. The central bank has a mandate. While the Fed has hit its target. Inflation
has stayed below the target. The president of the Atlanta Fed spoke exclusively with Richard Quest, and explained why the Fed hasn't managed to
get prices moving. Take a listen.
(BEGIN VIDEOTAPE)
RAPHAEL BOSTIC, PRESIDENT AND CEO, FEDERAL RESERVE BANK OF ATLANTA: This is what we wrestle with every day. And I come to my staff, and I know they
must be sick of me at this point, with a new theory every day about this is what it is. So, there was a lot of discussion about globalization.
Driving hyper competitiveness in the marketplace to reduce the pressures, the ability of firms to increase their pricing. But if you look at what's
happening with profit margins, profit margins have actually gone up. They have increased in the last few years, which is not consistent with the
theory.
I have a similar story around technology. Technology reducing the marginal cost of producing goods. To the extent that's true, the pricing in markets
should not have to be going up as rapidly. But, you know, my staff has done analysis, and has suggested that the segment of the marketplace that
is touched by this is not large enough to be really driving aggregate numbers.
RICHARD QUEST, CNN CORRESPONDENT: So, we don't know.
BOSTIC: I think that we are still feeling around. The latest theory that I've heard, and I actually just saw a report on this just before we started
today, is that healthcare prices, the prices in the healthcare segment, have been reduced in part because of a legislation, the affordable care
act. That's really forcing efficiencies, and that's a large segment of the marketplace that could be driving some of these aggregate numbers.
QUEST: Is it possible the post great recession, the parameters have changed, and that you might need to rethink the inflation target of 2
percent, and say drop it to 1.5 percent. I mean, if you don't get inflation up, after nine years of unbelievable printing of money and, maybe
it's time to rethink the target.
BOSTIC: Well, were having that discussion, as well. I'm trained as a psychologist before I became an economist. And you know, so I understand
that psychology matters a lot. I'm actually reading a couple books right now on the great depression. That's the only economic experience we've had
compared to what we saw in the great recession.
And we know that families that lived through the Great Depression changed their behavior. They saved a lot more. They spent a lot less. There are
much more conservative.
[16:25:00] And so, I am actually starting to wrestle in my head with the question of whether that's part of what the story is, and that our
benchmarks do need to move. And to the extent that we can get our hands very closely around that, you know, I would be strongly advocating for that
type of change in our positioning.
QUEST: Where would you describe your concern at the moment? Would you be green, things are OK? Amber, I am watching very closely. Purple, things
are getting a bit frothy. Red, I'm worried.
BOSTIC: I am in the Amber space. I would have to say, by that measure. Certainly, there is a lot of, I would say, households are feeling that they
are not as well off as they might have been in the past generations. They're definitely worried about whether their children are going to have
better lives than they will. And so, I think that there is this sense that our potential should be greater and we should try to get there.
But I was in Washington and from 2009 to 2012 at the height of the great recession and the financial crises. And we are a long way from there. And
so that memory stays in my mind. And it gives me some comfort that we have made a lot of progress in terms of positioning in the economy to be more
resilient and to be on a growth trajectory. As you noted, we have been growing for more than seven years now. And that looks like it's going to
continue.
QUEST: Are you looking forward to casting your first vote? Because at the end of the day, when you are a Fed bank president, on the rotating system,
and you got this great place here and everything, but come on. The sexy bit is when, I cannot believe it would even describe --
BOSTIC: Yes, no. It's one of the rare times you're going to hear it. I am ever going to hear it described that way.
QUEST: You got to admit, the first time you're sitting at the big oval table in Washington, and you get to cast a vote on interest rates. Are you
looking forward to that?
BOSTIC: I am. And I'll tell you a story, which is really funny. So, the first time, my first FOMC meeting happened the six day I was in this room.
And so, I went into the room, and I didn't really know what to expect. It was -- it's rarified air. And it comes around to my time to give my
statement. And I am a professor by trade. I talk a lot. I get paid to talk in hour and 1/2 increments. It was one of the most nerve-racking
incidents or times I've ever had.
Because of the gravity, because of the seriousness. And because of the importance of the policy. One of the interesting elements to this is that
our roles as bank presidents don't change whether were voting or not. We provide the same amount of input. I engage my colleagues and try to
convince them what I'm seeing is interesting and worth considering. They do the same to me. And on some level, it's a detail who gets to vote. But
it's not a detail at the same time. So, it will be, it will be a nice thing to do. And I'm looking forward to it.
(END VIDEOTAPE)
ASHER: Richard Quest speaking with the Atlanta Fed chair.
Now if I told you that 3 million Americans are still without power after a hurricane that happened a month ago, you would be shocked. You would
expect an outcry. But yet this is the reality in Puerto Rico, where slow progress is being made to restore essential supplies. We will take you to
that territory, next.
(COMMERCIAL BREAK)
[16:30:44] ASHER: Hello, everyone, I mean Zain Asher. There is more QUEST MEANS BUSINESS in just a moment. When one month after hurricane Maria
plowed into Puerto Rico, suffering on the island is far outstripping the aid. Live to San Juan for you.
And Amazon go shopping for a second headquarters bids are coming from all around the United States. Before that, though, these are the headlines at
this hour.
Syrian democratic forces are working to clear out remaining threats in Raqqa. One day after driving ISIS out of its self-declared capital. The
U.S. backed SDF are searching for improvised explosive devices and trying to root out any militants left in the city. The latest in a string of
defeats suffered by ISIS in the last two years.
In northern Iraq some Kurdish families are fleeing Kirkuk which Iraqi forces seized on Monday. The military operation followed an overwhelming
vote for independence by Iraqi Kurds. Iraqi's prime minister says his government has banned all armed groups in Kirkuk except the local police
and counterterrorism forces.
A Kenyan electoral official has resigned from her duties, she claims the electoral commission is under siege and unable to guarantee a credible
election. rerun of the Kenyan presidential election is scheduled for October 26
Spain's prime minister says he won't extend Thursday's deadline for Catalan leaders to clarify whether they have declared independence. Mariano Rajoy
said Spain would seek to suspend the region's autonomy if the Catalan president presses for independence.
All right. 3 million people are still without electricity. 1 million people are without running water, and the death toll is climbing towards
50. This is the awful and dire situation right now in Puerto Rico, four weeks, one month after hurricane Maria struck the island. Leyla Santiago
joins me live now. What are the visible signs, Leyla, that things aren't actually getting better. If I am a person living in San Juan, what hope do
I have right now to clean onto?
LEYLA SANTIAGO, CNN CORRESPONDENT: FEMA aid is moving around. You look in the sky, you see more helicopters. On the interstates, you'll see more
trucks that are moving aid to be distributed. But at the end of the day, you go outside of San Juan, my cell phone and most area still says no
service. And people still don't have clean water to use. Many getting used to this new normal.
He's been cleaning for a month. Not much seems to have changed.
ANGEL ST. KITTS, RESIDENT OF HURRICANE, PUERTO RICO: So, it's like it was yesterday.
SANTIAGO: Angel, he lives in the eastern coast of the island, where the sea rushes in, and Maria left little behind.
ST. KITTS: We our suffering because we don't have electricity.
SANTIAGO: One month later, there are still people gathered at the church, hoping to get supplies that come in here in this area. And their lives are
on display. On the sidewalks you can see furniture. You can see paintings. Even a Christmas tree stand down here. This home doesn't have
part of its roof. There is no cell service here. Nobody has power. And food and water are limited.
A month we've been here, we've seen and felt Maria's terrifying force. And in the aftermath, dramatic rescues. Desperation. On the ground and
through the mud. We have been first to reach communities cut off by the storm. Despite President Donald Trump's visit and his own rave reviews on
the recovery, more than 80 percent still don't have power. About 40 percent of the cell towers remain down. And roughly 1/3 no running water.
[16:35:00] Banks that are open have lines that can be hours long. More than 100 bridges damaged, 18 closed until further notice. Cutting off
entire communities. Rebecca Rodriguez tells us her families bakery has been here for decades.
Wow. Yes, this is how high the water came, which is at least 4 feet. The only light here is from our camera. What once smelled of fresh bread is
really now, smells like something is rotting in here. And she's upset, because none of this will be covered, according to her insurance.
Every day brings uncertainty. All the things you had in here, this is what --
ST. KITTS: This is what I've been able to save. Because the mattress, I threw it out. The bed, I threw it out. The chairs --
SANTIAGO: This isn't much.
ST. KITTS: No, but what can we do?
SANTIAGO: As time passes, these are all your watches.
ST. KITTS: Watches. All wet.
SANTIAGO: Disaster has become a way of life.
ST. KITTS: This is no good.
SANTIAGO As if Maria --
ST. KITTS: It's a mess.
R SANTIAGO: Never ever left. And when you talk to people and ask them how long do you think it will take before things are back to the way they were
before Maria, many are no longer saying months. Many are now saying it could be a matter of years -- Zain.
ASHER: That's a terrifying prospect for people who are living in that situation. Leyla Santiago, life for us there in San Juan. Thank you so
much.
All right. Some news just into CNN that I want to share with you. Corporate news, in fact, the CEO of American Express has just announced his
retirement. Kenneth Chenault has been with the company for a whopping 37 years and has been chief executive since 2001. So that 16 years now. He's
one of the few African-American CEOs at the Fortune 500 company. He's going to be replaced by the AMEX vice chairman, Steven Squeri. And Warren
Buffett calling him the gold standard of corporate leadership. Berkshire Hathaway, by the way, is AmEx's largest shareholder. So, the American
Express CEO announcing his retirement there. After 37 years with the company.
All right, still to come here on QUEST MEANS BUSINESS, Amazon is shopping for a second headquarters, and there could only be one winning city. The
bids are due on Thursday, that story next.
(COMMERCIAL BREAK)
ASHER: Cities across the United States are pulling all kinds of stunts. They are pulling all the stops in their bids to be chosen as Amazon second
North American headquarters.
[16:40:00] Amazon has said it will invest $5 billion to rebuild HQ2 an employee 50,000 people. So, you can see why a lot of cities around the
United States are excited about that prospect. The first of the contenders, Stonecrest, Georgia. The city council voted to hand the
company 345 acres of land if selected. The new city, get this, would actually be called Amazon. Second, Chicago. Business leaders are backing
the bid. Big names getting involved including United Airlines, CEO Oscar Munoz and Abbott CEO Miles White.
Third, where I am, New York, the city's iconic buildings will light up in Amazon orange tonight in a bid to actually get Amazon to come this way.
Fourth on the list, Philadelphia. It sent to Seattle to meet with people intimately familiar with Amazon's culture. The deadline for HQ2 to bids is
this Thursday.
Clare Sebastian joins me live. You know, this is so you can see how much of a nerd I am by the things that get me excited. This is so exciting,
what Amazon is doing. But you been looking into Philadelphia. But what does Amazon actually want? You know, if Amazon could actually write out a
list of its top five requirements, what would they be in a potential location?
CLARE SEBASTIAN, CNN MONEY CORRESPONDENT: Well, I mean, they did write out a list. They put out a detailed request proposal on September 7, six weeks
ago, I haven't had long to put these bids together. There looking for an urban or suburban environment with more than 1 million people. They want
somewhere that can attract and retain talent and has a business-friendly environment. And there are a lot of cities among those that have bid that
don't fit that criteria. But there are a lot of those --
ASHER: Try anyway.
SEBASTIAN: People willing to try. But among those, as you say, is Philadelphia. And I went to see how they are really kind of pulling out
the stops in the last few days. And they were really living and breathing this. Take a look.
(BEGIN VIDEOTAPE)
SEBASTIAN: In Philadelphia's Amazon war room, a small, tired group are finishing a six-week marathon. What's it been like? Has it been a lot of
pressure?
RAKIA REYNOLDS, #PHILLYDELIVERS CAMPAIGN: Oh, my gosh. It has been, I will say probably one of the most intense processes I've ever worked on.
SEBASTIAN: Rakia Reynolds, who leads her own multimedia company, took time off to lead the creative side of the bid. And every detail matters.
REYNOLDS: So, for all of our videos, we want really great title slides. We picked this really cool blue sort of turquoise.
SEBASTIAN: For a city where 1/4 of the population still lives before below the poverty line, this bid is not taken lightly.
JIM KENNEY, PHILADELPHIA MAYOR: It's been all Amazon, all of the time. And some of our people are getting, sleeping three or four hours a night
and getting back up and getting at it again. It makes you feel good that all of our community can come together the way it has. All of the segments
of our community. To go after this golden ticket.
SEBASTIAN: The home of Rocky knows all about chasing dreams. And the prizes here are huge. Amazon is offering a $5 billion investment. 50,000
high-paying jobs, and of course, the prestige of hosting one of the world's most powerful companies. Other cities are also going all out. Birmingham,
Alabama installing giant Amazon delivery boxes. Washington DC, finding support from one of Amazon's own --
UNIDENTIFIED FEMALE: Alexa, where is the most interesting company in the world?
ALEXA: Obviously, Washington D.C.
SEBASTIAN: And Tucson, Arizona, even sent Amazon a giant cactus. Philadelphia was one of several cities to send a delegation to Seattle on a
fact-finding mission and launched a campaign #phillydelivers.
KENNEY: Too big a deal. 50,000 jobs would impact almost every segment of our population in a positive way. We could manage growth. Managing growth
is a good problem to have.
UNIDENTIFIED MALE: We are estimating a range --
SEBASTIAN: Local excitement is growing. The city's top business school even holding a mock pitch competition. The mayor listening closely for
ideas.
JOE AMMON, WHARTON MBA STUDENT: Everyone wants to work for Amazon. So just imagine having Amazon down the street versus on the other coast.
SEBASTIAN: Do you want to work there?
UNIDENTIFIED MALE: Oh absolutely. I think we all do.
SEBASTIAN: So, do you feel like you're bidding for the Olympics?
KENNEY: We actually make money off of this, and will grow as a result of this.
(END VIDEOTAPE)
ASHER: Gosh, that isn't the Olympics. And one of the things that Amazon really cares about in all of this is of course, the financial incentives.
Does it make sense in terms of its business? Particularly when it comes to tax incentives. In the cities also have to make sure it's worth their
while, as well.
SEBASTIAN: Right. The numbers have to add up. And if you dig through the request for proposal that Amazon put out, they do say, they want you to
outline and detail which, what kind of tax incentives, state, local, even you know, city incentives that these cities are going to put out. But the
numbers have to add up. There's been some controversy in the past. If you just look at Foxconn going to Wisconsin. They're offering $3 billion in
tax breaks. Is that going to translate into that equivalent in economic development?
I think this is a serious question. If it doesn't, then that's money that's missing from the state's tax revenues. But certainly, in
Philadelphia, I did ask the question to the mayor. He said, again, this is just too big an opportunity.
[16:45:00] We do think this is just going to be game changing for Philadelphia and that the money that we put down, up front --
ASHER: Not just in Philadelphia, but a lot of cities. You and I talked earlier about Newark. What this would do to Newark would be a game changer
for them. Clare Sebastian, thank you. And I love you running up the steps. It's not easy.
ASHER: By the way. You're probably way better than me. Thank you so much.
New developments in the Kobe Steel scandal. The European aviation safety agency says plane makers should stop using metal from the Japanese company.
The first major regulator to issue a warning. Kobe bosses apologized last week after admitting that staff had faked data about the quality and
strength of copper and aluminum parts. Our aviation editor joins us live now from Seattle. So, John, how much is safety a concern with all of this?
JOHN OSTROWER, CNN AVIATION EDITOR: Well, at this outset, this is a massive headache for plane makers. The metal used by Kobe Steel that goes
into airplanes in both Europe, the U.S., and Japan, is extensive. And first and foremost, they have to account for all of these parts. And
understanding first how broad of an effect that is actually, you know, occurred here is first and foremost.
Once you establish that, you test the parts, figure they do meet the quality and safety that we come to expect in terms of the safe air traffic
system. So that is really first. Through my sources, they tell me this is mostly a regulatory headache, just to account for all of this. But lately,
not a huge safety impact, at least on its surface right now.
ASHER: But just to be on the safe side, even if it's not a huge safety concern, just to be on the safe side, should these companies be issuing
recalls? Some of them, at least?
OSTROWER: Well, as far as, there is no really formal recall process in the aviation world. There's what's called service bulletins that aircraft
manufacturers put out, which are advisories to airlines to inspect a certain part, be on the outlook for any issues. On top of that, we see
what EASA has done in terms of seeing, OK, this is not material that would be used. And find an alternative if possible.
So, you know, from a regular maintenance perspective, this is going to almost certainly become a part of how airlines operate their fleets, and
really just ultimately ensure that the material that's on there, first and foremost, is accounted for. And once that's done, making sure that hand to
hand, it's safe.
ASHER: Right. John Ostrower on the Kobe Steel scandal. Appreciate that.
As we told you earlier this hour, China's president is setting sweeping goals for the future. China's new incarnation of the ancient Silk Road
trading route connects the country with Europe by rail. And in this week's "Traders" we focus on the dairy farm that wants to turn Silk Road into the
milk road.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: At this supermarket in China, dairy products are a popular buy. The journey this milk makes to this shopping cart starts on a
Polish farm. Mlekovita is a successful family run business that exports around the globe.
DARIUSZ SAPINSKI, PRESIDENT, MLEKOVITA (through translator): In the last decade, the Polish dairy industry has made big progress. It's been totally
modernized. In 1928, these were all tiny dairies. In 1991, the company was renamed, and is still growing. Recognized internationally.
UNIDENTIFIED MALE: The trade-nomics of milk is set for gains. Whether maturities, cream or in the natural state, the increasing global population
and rise in income drives demand for all dairy products. By 2022, China will overtake the U.S. as a largest dairy importer and consumer market.
MAGDALENA SZABLOWSKA, EXPORT SALES DIRECTOR, MLEKOVITA: In China, they want to introduce milk as a drink for children. So that's why it's a
really growing position. The best-selling products to China is UHD milk, and also some flavored milk. Generally, we sell to the Internet shops,
which are very popular in China. I think this Internet industry is growing much faster in China than here in Europe.
UNIDENTIFIED MALE: Poland is uniquely positioned to capitalize on the growth of the Chinese market. All because of a transportation link.
[16:50:00] China's one belt, one road infrastructure project will connect Europe to Asia by passing through Poland.
SZABLOWSKA: At this moment, most of the products to China go with containers by sea. And we would like to introduce a big range of products
with a short life.
UNIDENTIFIED MALE: Cutting 45 days at sea to 15 days over rail would allow Polish products to flow further afield. But to switch today would come at
a cost.
SZABLOWSKA: At the moment, this train transport is very expensive. And Chinese people, they are still learning to eat milk products. They have a
big keychain with big history. 10 years is the time of growing dairy consumption.
UNIDENTIFIED MALE: It's companies like these who stand ready to broaden their foothold in the Chinese market. If Western taste for milk turns
sour, Asia offers a change in perspective.
(END VIDEOTAPE)
ASHER: All right. After the break here on QUEST MEANS BUSINESS, the fallout from the Harvey Weinstein scandal shows no signs of slowing down.
And actually, one silver lining is a lot of people are saying is if it convinces more women to come forward and report the abuse they have
experienced, than that can only be a good thing. That story, next.
(COMMERCIAL BREAK)
ASHER: All right. The shock waves from the Weinstein abuse claims are spreading. The fallout continues, and now "Variety" magazine is reporting
that a female producer has accused Harvey's brother, Bob Weinstein, the man you see here, of repeatedly making unwanted romantic overtures. So, the
scandal has spread from Harvey to now his brother, Bob. His attorney, this is Bob's attorney, is closer to saying the claims are riddled with false
and misleading assertions.
Harvey Weinstein, by the way, has resigned from the Board of Directors of the Weinstein company. Movie and TV studio is crippled. And facing
possible sale. A lot of people are talking about that, listen, can the Weinstein Company actually end up surviving? We've got a Lotta people
weighing in on the story. Gretchen Carlson, who you remember, sued Fox News for harassment. Roger Ailes, specifically, and won. Says the
Weinstein case has opened the floodgates.
She wants Congress to outlaw a certain type of contract where an employee has to give up their right to sue the employer and complaints can only be
dealt with in private. Let's talk about this with CNN reporter, Hadas Gold.
Thank you so much for being with us. So, it's interesting now that this is actually spread to Harvey's brother, Bob. So, what is he being accused of,
specifically? Because he does, dare I say, have a reputation for being some might say a bully.
HADAS GOLD, CNN REPORTER: Oh, yes. Definitely.
ASHER: But now this has spread to sexual harassment. What is he being accused of specifically.
[16:55:00] GOLD: He's being accused -- a producer has accused him, said just a few years ago, he was making romantic overtures to her and continued
to do so even one she said no, and said she was not interested, and continue to sort of press her in an inappropriate way and make comments
toward her. It's clearly not to the same level as what Harvey, his brother, is being accused of.
ASHER: But still.
GOLD: But still not helpful, and your right that Bob actually has a long reputation of being a bully. Jeffrey Katzenberg used to run Disney's movie
studio when they took over Miramax, used to be owned by the Weinstein brothers, and said it was Bob Weinstein who caused most problems for them
because he was such a bully, would terrorize people and even get physical with people. So, it's clearly not very good for the Weinstein brothers and
their company.
ASHER: So, what has Bob actually said about how much he was aware of what his brother has been accused of.
GOLD: So, he has said that he was aware that his brother was not faithful to his wife, Georgina Chapman, who has now announced that she is leaving
Harvey Weinstein. But he said that she had no idea about the extent to which this alleged abuse was occurring. He said he didn't realize or
understand how Harvey was acting on his own. He thought they were all consensual affairs. Clearly, that's not what a lot of these women are
alleging.
ASHER: Dare I say, that's still devastating for the wife.
GOLD: Definitely.
ASHER: Georgina Chapman.
GOLD: It's definitely devastating. But it's still sort of hard to believe because of all the settlements that we knew happened. And it's hard to
believe that the board and that his brother was not aware or at least had heard of these rumors about his brother and didn't realize that something
else was going on beyond just consensual affairs that he thought they were.
ASHER: So, in terms of the future -- I mean, people had been skeptical about the future of the Weinstein Company to begin with. Now Bob's images
tarnish as well.
GOLD: Right. It's hard to imagine that Bob would survive with this company. There has been some talk that he would take a certain portion of
it on his own. But now that we have an investor, which is Tom Brecht's company, is interested in investing in the company. Is interested in a
sale. It's hard to believe that Bob would still be involved now that Harvey is gone, as well.
ASHER: Right. Have to leave it there. Time is ticking. Thank you so much. Hadas Gold, appreciate that.
All right, guys this is QUEST MEANS BUSINESS. I'm seeing Asher in New York. The news continues right here on CNN. See you next time.
END
