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Quest Means Business
Markets Close at Records Amid Tax Plan Hopes; "Congratulations" for British Prime Minister as Brexit Advances; Europe Make Net Neutrality Offer to Tech Firms; New All-Time High for Bitcoin After Historic Week; Stellar Debut for New Star Wars Episode. Aired 4-5p ET
Aired December 15, 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: There we go. We've got records on the Dow, records on the Nasdaq, record high on the S&P 500. And we could have
an all-time record for the number of records. Go on, yes, that's enough bell. To the business. Well, I suppose that's a firm gavel. Trading is
over. It's Friday, it's December the 15th.
Tonight, records all around on Wall Street. As Republicans are closing in on their tax plan. Theresa May gets some congratulations as Brexit talks
now formally go to stage two. And European politicians tell tech companies to cross the Atlantic in search of net neutrality. Europe is the place to
be.
I'm Richard Quest, live in the world's financial capital. A rainy/snowy capital today, where I mean business.
Good evening. Tonight, volume is high, and so are the spirits on Wall Street. A record-breaking session to end the week, with all three major
markets closing at an all-time high. And it comes as the Republicans in Congress are edging ever closer to an historic victory on their tax plan.
So, join me at the trading post as we put this into perspective. No question with the Dow, the S&P and the Nasdaq, we have green all across the
board today. And with record highs. So how many records? Where do we stand so far, this year? The Dow now has 69 records. S&P, 61. And the
Nasdaq has hit a record 71 times so far, this year. The Dow ends at a record -- it's the fourth time this week it's had this record. And the S&P
with 61 is on track to have made gains every month this year. If that happens, and it looks like it will by the end of the month, then that will
be the first time in history that it's happened.
Now, one of the reasons why we saw extreme volatility during the course of the day was its quadruple witching day at the New York Stock Exchange.
What that means is options, futures and cash market, various contracts, all expire at the same time. And when you put it like that, then you manage to
get huge volatility. For example, the best part of 200 million shares had changed hands just the open alone. And we were heading towards 600, 700
million by the close of trading today.
Europe still lags somewhat on the record. We haven't had any really new -- we haven't had any new all-time highs on the FTSE, the DAX or the CAC for
some time. Speaking to me earlier on the trading floor of the New York Stock Exchange, the global head of listings told me it had been a strong
year all around, reinforced when you look at those numbers.
(BEGIN VIDEOTAPE)
JOHN TUTTLE, GLOBAL HEAD OF LISTINGS, NEW YORK STOCK EXCHANGE: It's been a strong year for U.S. capital markets. It's been a great year for the New
York Stock Exchange. Last year, worst year in over a decade for capital- raising, equity capital-raising. This year we had 88 new listings on the New York Stock Exchange, raised more than double we did last year. And the
pipeline for next year is strong, too.
QUEST: Why do you think that is? What is it about -- I mean, or is it just one of the things that goes in cycles and favors?
TUTTLE: Well, the IPO window is open. What that means is that volatility is low and stable, interest rates are low but telegraphed to steadily rise.
The companies that have public this year have performed well, by and large in the weeks, months and quarters following their listing. There is strong
investor confidence.
(END VIDEOTAPE)
QUEST: So now one of the reasons why the market has moved so sharply, the Republican tax plan. Now or never for this odyssey. The bill should
release shortly. We're expecting it at 5:30 eastern time. Some crucial votes not yet fully locked in. In the past few hours, Marco Rubio and Bob
Corker have announced they're back on side. So that's OK. There are three key senators that are still wavering. And two more Republicans have
question marks over their health and ability to vote. Whichever way you look at it, President Trump remains bullish that this will get done.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I have. I have seen it. I think it's going to do very, very well. I think that we are going to be in
a position to pass something as early as next week, which will be monumental. I think they'll be great. They're great people. He wants to
see it done. I know him very well. I know how they feel. These are great people. And they want to see it done. And they want to see it done
properly.
(END VIDEO CLIP)
[16:05:00] QUEST: Phil Mattingly is on Capitol Hill. Phil, I was listening to you last night, talking to Anderson. This -- you were very
forthright about the fact that, you know, no single senator is going to see this come down or have -- or risk the problem that will come with it if
they bring it down.
PHIL MATTINGLY, CNN U.S. CONGRESSIONAL CORRESPONDENT: Yes, look, I think that's long been the feeling of the top Republican aides and, frankly,
lawmakers here. I've talked to a bunch of senators. Keep in mind, Richard, yesterday the GOP leaders were scrambling for Marco Rubio, didn't
necessarily know that Senator Bob Corker would ever come back to yes. He was a no the first time around. And today it looks like they're on a glide
path. Now you noted, there are still three Senators that haven't come out and said yes yet, Susan Collins, Jeff Flake, and Mike Lee. But the
expectation right now, according to the GOP aides that I've been speaking to in the Senate, is that they will all likely come around.
The biggest concern was Marco Rubio. The one that they thought maybe wasn't even gettable at all was Senator Bob Corker. Now they're there.
And I think you understand kind of the point the Senators were making to me last night which was the political imperative here, the idea of getting tax
cut legislation, which has been something Republicans have campaigned on year after year, cycle after cycle. Is too great for them to try and stand
in the way of it. And that seems to have won out at the end of the day. There are still some steps to go here. But right now, Republican leaders
are very confident that they're not just going to pass this, they're going to actually pass this relatively easily.
QUEST: And the fascinating part, Phil, is that we're arguing or discussing, I should say, about a bill that no one has seen. That we don't
have the full details yet. I mean, it is bizarre that the public debate continues, and nobody knows the minutia of what's in the reconciled bill.
MATTINGLY: Right. And you've got senators that are now saying, yes, to a bill that they haven't fully read yet. Obviously, public hasn't seen it
either. If you think about it this way, this conference report that will come out, the final bill, is 503 pages long.
We haven't seen it. Most senators haven't seen it. The reason Senator Mike Lee is not officially a yes yet on this bill is because he hasn't read
the bill yet. And if he hasn't read the bill, that means the rest of conference hasn't read the bill either. And I think there's a couple
things here. First, look, they went through a process, obviously, they went through a committee process. The U.S. House passed their version of
the bill. The U.S. Senate passed their version of the bill too. There are large portions, almost entirety of portions of those bills that will be
reconciled under this bill. So, they have a framework of what they're voting on. They have a pretty decent knowledge of large pieces of it.
But there are major changes here. You know as well as anyone, Richard, major changes in transformative tax legislation can mean billions of
dollars for an industry or millions of dollars for individuals. Or just a couple hundred dollars for individuals that could be extremely important,
depending on how much money they make. And so, the speed with which they're moving on this is unquestionably stunning on some level. And I
think Republicans that are being candid with you would acknowledge that. But the reality is, this is something they have said they wanted to do.
They feel comfortable with the direction that it's been going over the course of the last couple of weeks. And they're ready to go. And they're
going to do this probably early next week.
QUEST: Phil, good to have you on the program, putting it into context for us tonight. Thank you.
Straight to the stock exchange. Peter Tuchman is at the New York Stock Exchange. Good to see you, Peter. The rally, three records -- I mean, any
-- is it the tax? Is it general feeling of goodwill? Why such a strong rally today?
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: You know what, I listened to the interview you just had, and I kind of -- I was not sort of
a big fan of the fact that this keeps being the tax bill that's making this market go higher and higher, but it's very convincing, your last interview,
talking about all of the other sort of the small bits and pieces of the tax reform bill that are really -- that the people who are in the money, who
are in the brighter side of this business, are obviously understanding in a better way. This is real valuation. Obviously, there's a lot of money
savings. Tax reform seems to be a big part of it. But I think it's the end of the year. There's no window dressing here. This is real money,
real valuation. A lot of euphoria in the marketplace. I think it's amazing. Record highs again across the board.
QUEST: And I'm looking at the list of record highs in our trading post, 69 Dows, 61 S&Ps. 71 Nasdaq. And if it continues, it will be the most
records f for the S&P in history.
TUCHMAN: You know what, Richard, this year has been unprecedented as far as records go. I think it's really important to see the speed with which
the market keeps going higher. There are people who are probably betting this market cannot keep going higher. And that's sort of fueling it in a
way too. There's a lot of people who have been waiting around for this market to break. They're sitting here in December having seen the market
go up 5,000 points, they've got to jump on board too. So, they're around here too.
QUEST: One of your colleagues was saying -- down at the exchange on "QUEST EXPRESS" to me that today may have been the busiest day of -- for the rest
of the year. It may be -- or may be a quiet day now. What was the final volume?
TUCHMAN: The volume is 2.4 billion. Richard, I told you earlier, the opening volume is 400 million. We did 2 billion probably over a billion
three on the close.
[16:10:00] It was an S&P rebalance, a Russell, a Gold, an Illyrian across the board and a quadruple witch. It was probably the busiest day of the
year.
QUEST: I'll see you down on the floor tomorrow for "QUEST EXPRESS."
TUCHMAN: I look forward to it, sir, see you later.
QUEST: Thank you, Peter Tuchman joining me.
Now the tax uncertainty in Washington weighed on some of the European markets. Take a look at how the numbers traded. They mostly finished in
the Green despite weak results from the Swedish retailer, H&M. The pound fell nearly 1 percent against the dollar.
The most difficult phase of Brexit negotiations is ahead, and now the EU member states say it can begin. British businesses our breathing down the
neck of Prime Minister Theresa May's neck. Talks will begin almost immediately. Negotiations on the trading relationship won't start until
March. The parties must find agreement on key issues by next October. That gives a time for the EU, the Parliament and the U.K. Parliament before
the U.K. leaves in2019. Donald Tusk is warning, though, that this schedule, tight though it is, will not easy to be met.
(BEGIN VIDEO CLIP)
DONALD TUSK, EUROPEAN COUNCIL PRESIDENT: Still early, of course, dramatically difficult. For sure, the second phase will be I think more
demanding, more challenging than the first phase.
(END VIDEO CLIP)
QUEST: Erin McLaughlin is in Brussels for us tonight. Erin, if the trading or trade policy is not going to be the guidelines until March, what
are they going to be negotiating between now and then since the Prime Minister, Theresa May, said that talks would start immediately? What will
they be talking about?
ERIN MCLAUGHLIN, CNN CORRESPONDENT: Well, focus of phase two of the negotiations will be on the transition, or the implementation, as it's
called, in the U.K. And that is something that Theresa May has asked for. A transition period of around two years in which basically the status quo
remains the same after Brexit, March 29th, of 2019. Essentially things stay the same in order to give businesses the opportunity to adjust to
implement the Brexit deal, the withdrawal agreement, which I expected in October.
And today, what we heard from the EU Wayne out in stark terms, what it sees that transition period to entail. Essentially meaning that the U.K. is
going to have to continue to follow EU rules. Remain under the jurisdiction of European courts. Pay into the budget. But critically,
Richard, they lose the seats at the EU table. So suddenly the U.K. will be in the position of becoming rule-takers, not rule-makers, likely to be a
bitter pill for many Brexiteers to swallow.
QUEST: I can see how they have come to that argument. The U.K. doesn't have much choice in that sense. It's their gain if you want to still sit
at a table or if you still want to enjoy our benefit, this is the price you've got to pay.
MCLAUGHLIN Yes. And to some extent, Theresa May has already acknowledged that. That if the U.K. I going to remain within the single market in some
capacity following Brexit as part of this transition agreement that they're going to have to follow the -- the U.K. is going to follow EU rules. Now
questions remain about the transition in terms of trade. I was just speaking to an EU source. The question being, will the U.K. be able to
negotiate trade deals going forward. And the EU source is telling me what they want to hear from the U.K. at this point. They want to hear Theresa
May articulate her vision for the transition, specifically on trade. Will the U.K. want to remain a part of the customs union as part of that
transition? That will impact this implementation period, as well. They also want to hear from the U.K. in terms of what they see the future
relationship being. We know that Theresa May is going to begin to have those discussions with her cabinet next week.
QUEST: Erin in Brussels. Erin, thank you.
Canadian firms are planning to do more business with Europe because of uncertainty over whether the NAFTA trade rules will survive. This is
according to a new report that says 23 percent of firms surveyed by the Export Development Canada said NAFTA was having a negative impact. And a
quarter of those impacted said they were considering moving to the United States. Others could drift away, 23 said they were trying to diversify
their markets. Pivoting attention to the EU. Of course, there is a new trade agreement.
Peter Hall is the chief economist at the Export Development Canada, and is in Ottawa for us tonight. We've known now for some months that the risk of
NAFTA collapsing was a theoretical one.
[16:15:02] But this number suggests it's becoming real and businesses are starting to make contingency plans.
PETER HALL, CHIEF ECONOMIST, EXPORT DEVELOPMENT CANADA: Well, we were back in May, confronted with a business community, an exporting community in
Canada, that was already having pressure put on it by U.S. buyers to actually locate in the United States then. So, at that time, I was doing a
cross-Canada tour. I do that every May. And Canadian exporters were coming up to me saying, look, my buyer is actually talking to me and is
saying, you really need to co-locate down here. We're worried about the risks that we face. So, they were saying, what should I do? This is real.
QUEST: So -- I mean, the problem is, in many of the cases, I mean, co- locating sounds like a nice idea. Buti f your factory is north of the goods have to go backwards and forwards -- let's take automobiles, for
example. It's not the sort of thing you can just ginny up in a couple of months or so. It's going to be very difficult for some, particularly
agricultural and obviously heavy manufacturing, to just have token presence in the United States for the purpose of a post NAFTA.
HALL: Well, absolutely. And U.S buyers actually understand that completely. You know, our information was anecdotal. I wouldn't say it
was across the board, because when the poison pill clauses were put in round four of the NAFTA negotiations, of course, what happened then? Well,
the U.S. Chamber of Commerce got very active in Washington, D.C., lobbying for NAFTA. The auto lobby, which is a very tightly insinuated supply chain
on either side of the border got very active. The retail sector, which would be responsible for passing on the higher cost of goods that have to
cross a border to the average American, did not want that role. And so, they got active in support of NAFTA, too. So, it's not just costs for
Canadian businesses. It's actually costs for Americans and American businesses, too.
QUEST: Can -- I mean, how damaging will it be for Canadian exporters if NAFTA -- if the U.S. does pull the rug on NAFTA?
HALL: Well, at the limit, we've done a study that has said, look, if it took us back to pre-U.S./Canada free trade agreement days, it could tip us
into recession based on last year's numbers. So, this is something that may be quite damaging. That would all be borne by the trade sector. So,
of course, if it was a recession in GDP terms, it would be definitely a recession in export terms. However, there are other ways of getting around
that. If we reverted back to most favored nation trading status and had to pay higher tariffs, you know, we -- essentially wouldn't be under -- under
the gun to bear all of this paperwork that would go with country of origin requirements and sourcing and North American content and so forth. You'd
bypass all of that. And some firms may actually choose to pay that premium in order to get by on all the paperwork.
QUEST: Good to see you, sir, thank you. We look forward to talking more about it in the future.
HALL: Thank you.
QUEST: There are new rules for travelers visiting the United States. It's hitting people from the 38 countries that are part of the visa waiver
program. We'll discuss them after the break. QUEST MEANS BUSINESS, live from New York.
[16:20:00] (COMMERCIAL BREAK)
QUEST: It was an extraordinary moment, both what you're seeing just then at the trading post. Extraordinary moment and also the United Nations with
the representatives from the United States and North Korea in the same room. First time in a decade the North Korean ambassador has addressed the
Security Council. The U.S. Secretary of State says North Korea must earn its way back to negotiating table. Rex Tillerson warned that U.S. will not
let up its pressure on the regime.
(BEGIN VIDEO CLIP)
REX TILLERSON, U.S. SECRETARY OF STATE: We simply cannot continue to accept the progress of North Korea's program. We will maintain the
pressure campaign. And in fact, we undertake efforts to increase the effectiveness of the pressure campaign, both through a combination of the
sanctions regime, full implementation and compliance of the sanction regime, as well as unilateral actions on the part of many, many countries
to send the message to North Korea through diplomatic steps, as well as economic steps. That we do not accept the pathway where you're on.
(END VIDEO CLIP)
QUEST: Michelle Kosinski, CNN's senior diplomatic correspondent. We saw you're in New York, and we reeled you in to make --
MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Always happy to do so.
QUEST: This was an extraordinary day. But so difficult for Rex Tillerson. Who is saying one thing about North Korea, whilst his boss believes
something different.
KOSINSKI: Yes, I mean, on the one hand, you have this unique, crazy situation of Tillerson being right across the table at the UN Security
Council from North Korea. And the whole session is about how bad North Korea has been. So, you're sitting there watching, what are they going to
say? Is there going to be any sharing or any kind of softening on North Korea's stance? And, of course, we got none. So, it's probably bad to be
so optimistic about anything fun happening there. I mean, it was pretty anti-climactic from that standpoint. There was also the question of what
is Rex Tillerson talking about?
QUEST: Tell me more, though, about what's happening in Rex Tillerson's State Department? I mean, if I read the reports, obviously ambassadorial
posts are unfilled. Senior --
KOSINSKI: Dozens.
QUEST: Senior posts are unfilled.
KOSINSKI: Right.
QUEST: Morale is rock-bottom.
KOSINSKI: Yes.
QUEST: How is this thing functioning?
KOSINSKI: It functions because there are still people filling those positions. The problem is, people are leaving on the lower levels. And
also, the people who were in acting positions, like acting assistant secretaries, it's not as if they're seen around the world as being the word
of the administration. And, you know, President Trump will say, well, I'm the only one that matters, so don't worry about that. But other countries
are having legitimate problems dealing with the State Department. And the State Department will deny this, and they say everything is functioning
fine. And they'll push back. But the people that we talked to say that that's not quite the case.
QUEST: So how does -- because, you know, as a business show, we look at it from a management perspective. How does Rex Tillerson justify what is
being reported as a State Department that some have seen -- I won't say in chaos, but at least ineffectual because of the lack of management?
KOSINSKI: He doesn't really justify it. He makes the point that the State Department needs reorganizing and to some extent, absolutely, I don't know
there are too many people who would disagree with let's put more efficiency back into it. And let's trim away things that aren't working. Absolutely,
sure. But what we're hearing just this week when he sort of unveiled to a town hall at the State Department his plan, people saying, you know --
these are former senior State Department officials who are saying, wait a second. This is what he spent a million dollars on in less than a year?
Like that's it? This is his big reorg plan? Whys he putting such a high emphasis on things that lower-level tech people may should be handling?
Like, there's a lack of understanding as to how all the energy he's put in is going to come out putting the U.S. in a stronger position
internationally.
QUEST: Talk to me about what you are hearing other leaders, diplomats, ambassadors in Washington saying about what's happening in the U.S.
capitol.
KOSINSKI: It's so much. I almost don't know where to begin.
[16:25:00] QUEST: Please.
KOSINSKI: But to be brief, on the sort of day-to-day aspect, it's fascinating. Because they say it will take days to set up a meeting. You
call the State Department, and they say, oh, yes, maybe, sure we can do this. But then even to set up a meeting it's taking time. And they say
they need information to send back to their own country immediately. So what they do is they go on the State Department website and fish around.
And they find that that doesn't work so well. So, then they start looking at places like the BBC and CNN. And they'll go to the CNN website to get
the information that they need. And it's coming from places like that and not from the State Department. On the higher end, we're hearing
ambassadors saying the State Department is invisible right now. And that's the scary thing.
QUEST: Thank you. Thank you for taking time and joining us in the studio.
KOSINSKI: Thank you. Happy to.
QUEST: Have a bell.
KOSINSKI: Oh, I get just one?
QUEST: One.
KOSINSKI: Can I do it five times?
QUEST: No.
KOSINSKI: OK.
QUEST: Talking abo giving them an inch and they'll take a mile. Five times.
There are new rules coming tourists visiting the United States on these visa waiver program. It allows 90 days of travel without a visa.
Travelers from 38 countries our facing increased vetting. The new rules also target companies where 2 percent more have tourist overstay illegally.
Hungary, Greece, Portugal and San Marino -- for some reason -- all break the limit. It means they'll have to launch public information campaigns to
reduce violations. Tal Kopan, CNN's politics reporter is in Washington. I guess, do we know why San Marino for some reason -- is there a particular
quirk of this that I'm missing?
TAL KOPAN, CNN POLITICS REPORTER: I'm not sure. I mean, the issue here is, the percentage of travelers that these countries send to the U.S. who
then stay past what they're supposed to, which is one of the contributors to illegal immigration in this country. I don't know why San Marino
appears to be one of those countries.
QUEST: We know countries, for example, Poland, for example, it is not in visa waiver. Because it's not had the 2 percent, or it has breached --
consistently breached the 2 percent limit. So, the U.S. is saying, as I understand it, have a campaign or we'll take your visa waiver.
KOPAN: Right. This is a little bit vague, exactly, what they're asking these countries to do. But it's a combination of increasing the vetting of
people coming through their borders, and then in this particular instance, doing some sort of public awareness to their citizens that they cannot
overstay their visa once they get here. And yes, there are also are some vague threats involved. But it's not clear exactly what the consequences
are going to be. This seems to be another effort by the Trump administration to get into this so-called extreme vetting, where they also
sort of conceal exactly what they want that to look like.
And yet, Tal, we see numbers from U.S. travel. The number of tourists are down. I mean, you know -- there is a view that some say I'd rather not go
to the United States. Who wants to be insulted at the border? Who wants to have extreme vetting? Who wants an embassy appointment? It's not worth
it. There's plenty of places l the rest of the world to visit.
KOPAN: That is absolutely something that critics of the Trump administration are pointing to right now. Student visa numbers have also
lagged. You know, there as a sense that the Trump administration is making America look unwelcoming. And keep in mind, there's major industries in
the U.S. that rely on travel and foreign travelers are a big contributor of that. And so, when you see those numbers starting to down, universities
are scared about their enrollment, the hospitality industry, some of these major cities that really enjoy some of those high tourism numbers. This is
something that could have widespread implications for American businesses. But it's unclear if the Trump administration sees this as an unfortunate
consequence or actually by design for some of the policies they're putting into place.
QUEST: Good to see you. Thank you.
KOPAN: Thanks.
As we continue tonight on QUEST MEANS BUSINESS, come to Europe then. If you don't want to go to the U.S., Europe, land of the free internet. Home
of the open wave. One member of the European parliament pitching her content as the U.S. rolls back on internet neutrality. QUEST MEANS
BUSINESS, live from New York.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I've Richard Quest. More QUEST MEANS BUSINESS in just a moment. When bitcoin hits a new all-time high as it prepares for another
market milestone for this weekend. And Disney can afford to buy about 2,000 more bitcoins after a stellar opening for the new "Star Wars." As we
continue, this is CNN, and on this network, the facts always come first.
The North Korean Ambassador to the United Nations says the U.S. is terrified of his countries, quote, incredible might. He spoke at a lengthy
security council meeting on Pyongyang's nuclear program and said North Korea doesn't pose a threat to any state, as long as its interests aren't
infringed upon.
Palestinian officials say four people were killed in Friday's protests over the U.S. decision to recognize Jerusalem as Israel's capital. Hundreds are
also hurt. There were clashes in the West Bank, Gaza, and the Jerusalem suburbs behind the separation barrier.
Dutch police say they are not currently treating an incident at Amsterdam's Schiphol airport at terrorism. Officers shot a man in the leg after they
say he entered the airport's police office and threatened someone with a knife. The airport was briefly evacuated but is now back to normal.
President Trump has praised police and FBI agents at a speech he gave at the FBI National Academy on Friday. He struck a different tone only
moments earlier on his way to the speech. He called congruent to the FBI disgraceful and vowed to rebuild the federal agency.
It is official. We have a date. Kensington Palace say Prince Harry and Meghan Markle will marry May 19th of next year. The ceremony will be at
St. George's chapel in Windsor. The pair announced their engagement last month. Harry said he knew Markle was the one from the first time they met.
So, another day, another record for bitcoin. A record on Friday. Over the course of a very busy week, it's traded between 13,000 and nearly 18,000.
Futures began trading on the CBOE on Sunday. They launch on the CME this weekend. Bitcoin suffered setbacks to multiple exchanges suffered outages,
and that enraged investors. Janet Yellen's called cryptocurrency highly speculative. The current price of bitcoins, as you can see in the trading
post, 17,432. A gain of a -- a mere gain of 5.5 percent, up $901. Joining me, Michael Casey, is the chairman of the CoinDesk advisory board. Good to
see you, sir.
MICHAEL CASEY, CHAIRMAN, COINDESK ADVISORY BOARD: Thank you. Nice to meet you.
QUEST: When you're backwards and forwards on whether bitcoin is speculative, bubble or not, it doesn't really take us anywhere. Other than
to ask, what purpose does bitcoin serve at these elevated prices?
CASEY: Well, I mean, I think if we think of it purely as a currency, a normal medium of exchange, it's hard to see it functioning very well at
that level right now. People are truly hoarding it or hoddling it, as the bitcoin enthusiasts like to call. And that doesn't really make for a
currency exchange. But it certainly plays a role as a mechanism for establishing a store value.
[16:35:00] But just as importantly, I think, and it's hard to actually quantity this, is just the buzz around things. Right. And that buzz
itself --
QUEST: Why is that important? That buzz? Because if it's something that is speculative, where people believe that there is a fall about to happen,
simply on -- look, I'm not being prejudiced against bitcoin.
CASEY: Sure.
QUEST: But on history --
CASEY: Yes.
QUEST: It tell us anything that rises this fast, falls quickly, too.
CASEY: I would not be surprised if we get a big correction from these levels. I think that's absolutely fair. If we look through history,
bubbles have played this role of forming capital. With the classic is the dot-com bubble, of course, which collapsed and then led us to this
infrastructure that led us to Google and Facebook and everything else.
Those of us who believe that the underlying technology of bitcoin, the decentralized architects that allows us to resolve the problem of trust and
have peer-to-peer exchanges and an internet of value, think this is the building of that base. And the reach why the buzz matters is because it
gets people talking about it. It gets people thinking, how could the world be different? What sort of decentralized applications could we think
about? So there's immeasurable number of conversations going on around the world right now. We don't know where this is going to go. But the buzz is
actually important.
QUEST: The buzz it is important, so you see, but widows and orphans, ordinary investors, they require architecture of regulation to ensure
safety. I understand and before every bitcoiner out there flames me. I understand you all love the fact that it's no regulation, there's nobody
watching over, you can do what you like with it. But ordinary people do require an element of security.
CASEY: Absolutely. And I think that this -- we need to grow up.
QUEST: Yes, thank you.
CASEY: I've been saying this for some time. I mean, bitcoin, the whole to the moon idea, it's not a really sophisticated way to go good investing.
We need two-way flow. We need self-governing institutions. We need journalists who start probe these things. We need, you know -- we need
some form of regulation. And we need some mechanism to keep this under control. I think ultimately that will come. I mean, this is very early
days. There are people who are building out professional investments institutions and vehicles. We're going to get to a point. But in the
meantime, yes, we might see some widows and orphans --
QUEST: Just gone up.
CASEY: -- suffer. Oh, there it goes.
QUEST: You're talking about nuts. Finally, one question. Look, assuming I bought a bitcoin, and I bought it at, say, 1,000, and it's now worth
17,000, and I want to spend it, and I'm buying something from you, but -- what I'm buying from you is only $1,000. How -- how do you pay change?
What do you do?
CASEY: Yes. So, the bitcoin protocol, if you're talking about how it actually --
QUEST: Yes.
CASEY: It has a mechanism for change. Basically, it then sends an amount back to the same address. And so, if you're talking specifically about the
functionality of that, that's why if you look at bitcoin entries on the block chain, it actually has two of them. One is the change. And that's
the way it works, yes.
QUEST: And there is nobody regulating it?
CASEY: No, it regulates itself. That's the pure beauty of it. Right. It actually doesn't need a regulator. Because it's run through this
decentralized system. That's actually what matters.
QUEST: I need to rethink what I think about all of this. Thank you for coming in, sir.
CASEY: You're most welcome.
QUEST: Thank you.
Now, a top U.S. Senator is mocking the backlash to Thursday's vote to roll back net neutrality. Ted Cruz is calling activists snowflakes who are
believing online propaganda. The co-founder of Reddit, Alexis Ohanian, told CNN, the repeal of the regulation makes internet like cable TV.
(BEGIN VIDEO CLIP)
ALEXIS OHANIAN, COFOUNDER, REDDIT: What repealing this does is effectively giving service providers the ability to turn our internet into something
that looks like our cable bill. Where you might one day want to visit your favorite website, and find out that actually, it's not part of your
internet package, and for some additional amount of money, now you can get access.
(END VIDEO CLIP)
QUEST: One member of Europe's Parliament says tech companies should come to Europe if the U.S. is going to crack down. Marietje Schaake, says
Europe's rules can help companies to compete. She joins me now from Brussels. I see what you're saying. But you say this with a straight
face, since many, many tech companies believe Europe to be a chilly and unfriendly regulatory environment for them.
MARIETJE SCHAAKE, DUTCH MEMBER OF EUROPEAN PARLIAMENT: Well, I disagree, of course. And certainly, when it comes to net neutrality safeguards, we
have secured those in Europe. And think that it will prove to be very important for innovation and for startups to have a chance to compete with
the very, very large, almost monopolistic players in the U.S.
QUEST: So, Europe has gone against google and antitrust it's got the right to be forgotten. It has taken Apple over taxation. Facebook, as well, on
taxes. I understand, you know, Europe sees this as a legitimacy in each of these actions. But from their -- from the industry's point of view, they
don't see it as a favorable -- or at least a laissez faire environment like the United States now.
[16:40:05] SCHAAKE: Well, that may be the case. But I think you also see in the United States in the whole discussion about the impact that social
media platforms and big-tech companies have on democracy, the filter bubbles that people find themselves in. The so-called fake news
discussion. That actually people are concerned about the major role of these tech companies. And if we don't want the huge technology companies
and the huge internet providers to cut deals with each other for faster access to their content at the expense of public websites or smaller
competitors, then net neutrality is key.
QUEST: What if president Trump and the FCC administration are right? And that actually, by getting rid of net neutrality, as they believe, rules
that are somewhat anti-competitive in that sense, but allow everybody to compete against each other. That there will be greater innovation and that
you don't actually need all this net neutrality nonsense, as they would put it.
SCHAAKE: Well, I think it's an illusion to think that fair competition regulates itself. There is always rules of the road, and net neutrality
safeguards fair competition in the digital economy. If they prove to be right, of course, I'm happy to be convinced. But at the moment, I'm really
not sure. And I'm not alone. There were 22 million Americans that submitted their comments on an online application to the FCC. And 98
percent of them were in favor of keeping net neutrality. The founders of the internet spoke in favor of net neutrality. I know a number of startups
and consumer rights organizations did. And I really wonder why they would if they think that competition would benefit all of them.
QUEST: Right. But of those 28 million, you will be aware that a large number have since been proven to be from dead people, or from others. And
it's highly questionable exactly how many of those were legitimate. But your point is taken. Your point is well taken, that there were -- that
there are a large number of traditionalists who are against the continuation of net neutrality. Finally, Europe --
SCHAAKE: I wouldn't consider myself a traditionalist, to be frank. I consider myself to be a modern-day regulator. And I don't think it's
traditional to be in favor of net neutrality.
QUEST: On the question of completing the digital single market in Europe, which, of course, is still some way off, and might be delayed in a post
Brexit world, how much of a priority is that?
SCHAAKE: It's a top priority. And it will continue, even as we're dealing with the unfortunate Brexit negotiations that are ongoing. But I think the
U.K. will find that it's actually quite helpful to be part of one regulatory space of 500 million consumers. And that when it comes to the
global internet, even the EU is small. And so, for us to have predictable and level playing field rules is actually a benefit for both large and
smaller companies.
QUEST: Marietje Schaake, thank you for staying up late and working late tonight to talk to us. We appreciate it.
Saudi Arabia is continuing to look forward as a part program and a new program of its vision 2030. The idea, of course, move the economy away
from oil.
[16:45:03] (COMMERCIAL BREAK)
QUEST: Saudi Arabia has revealed a new $19 billion program to boost housing and small business. It's part of the country's vision 2030 plan to
pull the economy away from oil. I'm joined by Ali Shihabi, the executive director of the Arabia Foundation, who is with me. Good to see you, sir.
Thank you. $19 billion should go some way. But why is it necessary?
ALI SHIHABI, EXECUTIVE DIRECTOR, ARABIA FOUNDATION: Well, it's necessary, because the country has been going though effectively economic and
political shock therapy for the last 12 months. There is so much change happening. And you know when you have change, necessary change, critical
change, but change, nonetheless, investors get nervous and cautious. So, the economy has got into a bit of a stand still. And I think you need this
to -- it's a bit of testosterone if you want to shake it up.
QUEST: Testosterone it is true. But really what we're all focused on at the moment are the hundreds of people who are still locked up at the Ritz-
Carlton hotel, particularly Prince Al-Waleed. What's happening with them? That's what everybody wants to know. And information is few and far
between about the discouraging of allegedly corrupt profits. Who is being released, who is not. It is not a transparent procedure at the moment.
SHIHABI: No, it's not. And there is a fundamental logic and reason to that. Because under Sharia law, naming and shaming actually is part of the
punishment that you would get, and that would only come after a judgment by court. So effectively, you have to maintain -- until people go to court,
you have to maintain their anonymity. And until they are convicted, you have to maintain their anonymity. Now, understandably, a few names have
been leaked. But those are sort of high-profile names and they were leaked for a reason. To send a political message, if you want, that nobody is
immune. But beyond that, everybody else has the right -- that right to anonymity.
QUEST: I fundamentally understand what you're saying about this. However, as this stimulus package, and the 2030, and the new city that's being
built, as all these policies, they are designed to show a modern Saudi Arabia that's playing in the international capital markets. And investors
require transparency of procedure. For want of a better word, the rule of law.
SHIHABI: Well, yes. But you are going through surgery now. You see? In a way, you're in triage. Saudi Arabia is like a patient that's been taken
into the emergency room that's in triage. Triage is very messy. There is blood all over the place. It has to happen. It has to be done with. Now
once it's done with, and you've seen that in countries that have gone through different types of shock, a few months and the hedge funds come in.
And then a few months after that, more normal investors come in. So, people really get over these things quite quickly. But you are through a
period of pain that you have to undertake. You see? So, there is a price associated with that.
QUEST: Right. There is no question. I was in Riyadh last month. There is no question that the changes being introduced, and the anti-corruption
drive, is exceptionally popular. No question about it. As indeed the idea of opening cinemas, allowing women to drive, as of next year. Does the
Crown Prince have to be careful that he's not moving too far too fast?
SHIHABI: Well, that's always a question of judgment. And a bit of luck. You know? The problem is that Saudi Arabia has always gone too slow, too
little and too slow. The country for the last 30 years as hardly moving at all. So, I think a lot of that speed or so is a reflection of the fact
that there was such an accumulated list of issues that had to be addressed. That addressing them by definition means that all these things come at the
same time.
QUEST: Good to see you, sir. Thank you. Next time, in Riyadh, we'll go to the cinema together.
SHIHABI: Look forward.
QUEST: Thank you very much indeed.
Talking of the cinema, the force remains strong for "Star Wars," after "The Last Jedi" storms into the box office. Makes millions. We need to know,
is this going to be a record opening? Frank Pallotta will be with us after the break. It's QUEST MEANS BUSINESS.
[16:50:00] (COMMERCIAL BREAK)
QUEST: And that reporter is here now. Having braved the cold.
FRANK PALLOTTA, CNNMONEY MEDIA REPORTER: It was the Hoth system out there. I was freezing. It was so cold. The Hoth system is an ice planet in
"Empire Strikes Back." We'll get into it some other time.
QUEST: Is it going to be a record?
PALLOTTA: It's going to come close. So, some new numbers just came in. Disney is now projecting that it could bring in around mid-90s -- mid 100 -
- mid $90 million. It will be close to $100 million for its opening day. To put that in perspective, "The Force Awakens" brought in around $120
million for its opening day. And last night for its opening night, it brought in $45 million, which was only second to "force awakens".
Is that because there was a lot more hoopla over it, and there's only a few years between "force awakens" and this one?
Look at it this way, the last time we saw Han Solo, Princess Leia, Luke Skywalker, 32-1/2-year wait. And then after the prequels it was a decade-
long wait. This is only been a two-year-long wait. And we had a "Star Wars" movie "The Rogue One" spinoff last year. So, we are back in the
"Star Wars" galaxy compared to two years ago when we were just thrown right back into this wonderful world in a galaxy far, far away.
QUEST: Is it good?
PALLOTTA: It's good. I saw it Monday. I saw it with a bunch of other people at AMC Lincoln Square, the theatre I was standing outside of, and
people were cheering. People got a little emotional. There was even a moment where it was just pure silence. You could hear people gasping.
It's good. People like it. There has been a little blow back online from some of fans who were saying it's too different. It's hard to please "Star
Wars" fans. They were saying "Force Awakens" is too much like the original. Now they're saying "The Last Jedi" is nothing like the original.
You can't please some people.
QUEST: How much did across to make? Do we have a number yet?
PALLOTTA: We don't have -- Disney keeps the numbers very close to the vest. But it's in the hundreds of millions -- it's in the hundreds of
millions of dollars. This is their major franchise. This is what they're really banking on. You saw that huge deal yesterday. This is what it's
for. Things like this. There is movies and then there's cinematic events like "Star Wars." Disney hooks up with Fox to bring in more, so they can
make Marvel bigger. So, that they can make "Avatar" the biggest movie of all-time bigger. This is where we're going. It's no longer just going to
be movies. It's going to be like going to a concert. You can watch a movie at home, but you can't experience it like the opening weekend of
"Star Wars." If you want to put it on, Richard, you look good in it. Do you want me to do it? Sure. You can even talk like this. Woo!
[16:55:00] QUEST: Ooh, keep it on and tell the dear viewer that there is a Profitable Moment -- I'll do it. Give it here.
PALLOTTA: There you go.
QUEST: There's a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. A very profitable moment, if you look at the way the markets have risen today. Three records on the Dow, the
Nasdaq and the S&P 500. And the S&P on record, or at least on track, for having a record every month of the year, which in itself would be an all-
time record. Put this together, and you're seeing markets -- it's difficult to understate or to really put into context what's happening.
Because at the same time as you have huge political machinations in Washington, a tax bill, will it or won't it.
Peter Tuchman tonight summed it up. It's real money going into the real market and making real profits. And that needs to be borne in mind. This
is not bitcoin that we are seeing. Oh, to be sure, a correction may be on the way. We haven't had one for many years. But that doesn't mean to say
that the gains that we're seeing at the moment are illusory. They are not. They are real, they are here, and at the moment, they seem likely to
continue. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's
profitable. Lots of green. We'll do it again on Monday.
END
