Return to Transcripts main page
Quest Means Business
Facebook under Fire over Controversial Memo; Kenyans Question Cambridge Analytica Role in Election; Russia Expels Diplomats from Countries Worldwide; RT to Go Off Air in Washington; Israel Military Uses Force to Contain Gaza Protests; Russian Foreign Ministry: U.S. is Trying to Recruit Expelled Diplomats; Woman Accuses a Top U.N. Official for Forcing Himself on Her; Space X Launches Rocket, But Recycling Effort Fails; Extreme Volatility Rocks Markets in First Quarter; Dow Posts First Quarterly Loss Since 2015; Wall Street Optimistic About Q1 Earnings; Trump Worries Global Elites in Davos; Zimbabwe's President Searches for Inward Investment; Mnangagwa: Priority of Zimbabweans is Economy, not Social Rights; Quest Tours UPS; World Sport. Aired 4-5p ET
Aired March 30, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
(MUSIC PLAYING)
STEPHANIE SY, CNN HOST: There's no trading on Wall Street on this Easter and Passover weekend. It is Friday, the 30th of March.
Tonight, the ugly truth about Facebook. Mark Zuckerberg disavows a leaked company memo.
Russia's retaliation against the West goes global as more diplomats are expelled.
And on the final show of an extraordinary quarter, Richard delivers his first quarterly report.
I'm Stephanie Sy. This is QUEST MEANS BUSINESS.
(MUSIC PLAYING)
SY: Facebook CEO Mark Zuckerberg has been forced to disavow an internal memo that called for growth at any cost. The leaked memo argued growth was
the priority, even if users were harmed.
The note, written by Facebook executive Andrew Bosworth in 2016 reads, "Maybe someone dies in a terrorist attack coordinated on our tools. The
ugly truth is that we believe in connecting people so deeply that anything that allows us to connect more people, more often is de facto good."
Mark Zuckerberg said in a statement that most people at Facebook disagree with this memo's message and that last year the company changed its mission
and focus.
Dylan Byers joins us now in Los Angeles.
Dylan, let's just take a step back.
Who leaked this memo?
DYLAN BYERS, CNN CORRESPONDENT: It's a really good question, and you'll say the amount of leaks, the fact that every time Facebook comes forward to
try to put out one fire, another fire pops up just a few days, sometimes just a few hours later, suggested to folks who are happy to see Facebook go
through the PR crisis that it's going through right now.
The memo was written by Andrew Bosworth, who is really one of the core executives at Facebook. This is not a rogue actor. This is somebody who
was very much part of the central discussions and conversations about Facebook strategy happening well before 2016 and certainly in 2016 when he
wrote the memo.
The conversations I've had with my Facebook sources suggest that what he was trying to do was rally the troops and say, look, we are pursuing
growth. We believe that connecting the world, bringing more people onto the platform is fundamentally a good thing.
There will be good news along the way and good things will happen along the way and there will be bad things that happen along the way and we'll have
to accept that as part of the growth strategy.
Obviously in the context of everything that's happened with Facebook, all of the scandals with Cambridge Analytica and Russian meddling in the
election, general fear about how Facebook handles user data, this looks callous. It looks insensitive and it sort of confirms or at least seems to
confirm so many people's worst suspicions about Silicon Valley and certainly about Facebook.
SY: All right, Dylan Byers, thank you so much.
I want to bring in Rana Foroohar in a minute.
But it's been a week to forget for some of tech's biggest companies, the quarter may be over but their problems are not. Over the last five days,
Facebook's stock fell over 3 percent. Tesla fell nearly 15 percent.
The company announced a recall after the market closed. And Amazon, down 6 percent as the company faces President Trump's wrath and new competition in
the health care sector.
Its rival, Walmart, is reportedly in the early stages of talks to buy the health insurance, Humana.
So bringing in our global analyst, Rana Foroohar, joins us now.
Rana, I want to get back to the Facebook story for a moment because, according to BuzzFeed, this memo leaked a day after a shooting death in
Chicago was captured on Facebook Live.
And I think the question it brings up for a lot of folks is, what control does Facebook actually have over the content on its platform?
RANA FOROOHAR, CNN CORRESPONDENT: Well, you know, I think they have more than they would like to admit. I think that there hasn't always been the
use of all the tools in the arsenal to police the content. Internet companies in the mid-1990s actually got sort of an exemption from liability
that typical media companies, traditional media companies have, where if something libelous, if something nefarious happens and you're a traditional
cable company or a print paper, you're on the hook --
[16:05:00]
FOROOHAR: -- for that. But internet companies really haven't been and I think that's led to a tremendous amount of carelessness. But they do have
algorithms they can use to police what happens -- pornography, for example. You often see that being taken down very quickly.
(CROSSTALK)
SY: -- do they want to police it?
Because --
FOROOHAR: -- I think this memo gets to is that question.
SY: Zuckerberg in his statement said this is one provocative leader at Facebook.
But do you think it speaks to the culture?
FOROOHAR: I have no doubt, Stephanie, it's the culture. As a matter of fact, I think that there's a very particular culture in Silicon Valley,
which is coming to the fore now. It's sort of a libertarian, everything deserves to be disrupted, move fast and break things. Everyone is in the
way, government, consumers, other companies and that is an attitude that will change.
This moment reminds me a lot of 2008 and how Wall Street looked right after where you had a lot of guys, mostly guys, who seemed pretty out of touch
with what the rest of the world was doing and thinking of them.
SY: And maybe haven't caught up to what was happening in the financial world, same questions being asked about the digital world.
Let's take the broader look at what's going on with the tech companies and we saw a lot of stock prices slide.
But what is really going to come out of this techlash at the end of the day besides a slide in the stock prices?
FOROOHAR: It's such a good question. The markets are clearly reacting to the idea that they think big tech is going to be regulated. I think it
probably will be but not necessarily in the U.S.
I think you may see regulation coming first in Europe. Europe is actually rolling out some very important privacy shifts that are really going to
give people a lot more control over how their data is used. That's happening in May.
I'm a little worried, frankly, that again, there are parallels to the 2008 efforts to try and rein in financial firms. There's a lot of lobbying
power from big tech in Washington. Google is the number one corporate lobbyist, I believe.
The industry as a whole is a major influencer and I think it's going to be really hard for politicians to come together around the right types of
regulation even though they need to.
SY: And not only that but would there be a patchwork of regulations versus a comprehensive way to deal not only with issues of policing content but
also with data usage?
FOROOHAR: And that's the bigger question because we see the scandal at Facebook. We hear about the fangs but our data is being used by any number
of companies in any number of industries.
Artificial intelligence, which is what a lot of companies are counting on for the next generation growth is basically data plus computing power.
This is the tip of the iceberg. I think we'll be hearing about these scandals for a long time.
SY: All right, I want you to stand with me for this next piece because, as Facebook tries to move on from Cambridge Analytica, Kenyans are learning
that the firm appears to have been heavily involved in the election of president Uhuru Kenyatta.
From there, Farai Sevenzo reports.
(BEGIN VIDEOTAPE)
FARAI SEVENZO, CNN CORRESPONDENT (voice-over): Nairobi, thousands of miles away from the offices of Cambridge Analytica. When the political
consultancy firm revealed to an undercover news team that Kenya's current president was a client, their managing director claimed, "The Kenyatta
campaign which we ran in 2013 and 2017 for Kenyatta, we have rebranded the entire party twice, written the manifesto, done research, analysis, and
messaging. I think we wrote all of the speeches and we staged the whole thing. So just about every element of this candidate."
These are polarized elections, full of animosity and questions are being raised now over how big Cambridge Analytica's reach was.
Kenyans are painfully aware of the dangers of negative campaigning given the history of violent elections in this country and, of course, they want
to know what it is Cambridge Analytica did for their government and what impact that it had on Kenyan democracy.
Have you heard of Cambridge Analytica?
UNIDENTIFIED MALE: Yes, I have.
Those are the guys who manipulated -- in a way, manipulated the elections.
SEVENZO: Do you think they gave Mr. Kenyatta unfair advantage?
UNIDENTIFIED MALE: I don't know if there is substance to that story. But if there is, then it's unfortunate.
UNIDENTIFIED MALE: It (INAUDIBLE) into question the whole electoral infrastructure in relation to the elections which were held last year must
be fully audited. I think we'll see the footprints of Cambridge Analytica.
SEVENZO: (voice-over) Images of Kenya's president appear on Cambridge Analytica's website as well as on that of parent company SCL, where these
images have since been removed.
UNIDENTIFIED FEMALE: Let's not absolve Kenyan politicians of their role in this because Cambridge Analytica didn't pay themselves. They paid a
foreign company to come to Kenya.
SEVENZO (voice-over): This video appeared on social media. It made astounding claims about the opposition leader.
UNIDENTIFIED MALE: Whenever you try to --
[16:10:00]
UNIDENTIFIED MALE: -- go to Kenya, you can -- your first greeting was (INAUDIBLE) and all that trash about me.
SEVENZO: And do you think it contributed to ethnic tensions in this country?
UNIDENTIFIED MALE: Certainly and there's dozen of loss of lives. I think very many innocent people lost their lives as a result of that negative
epic campaign (INAUDIBLE) by Cambridge Analytica. Somebody need to take responsibility for this.
SEVENZO (voice-over): We arrived at President Kenyatta's party headquarters to try to find some answers.
UNIDENTIFIED MALE: We hired them to do analysis, a focus group discussion, focus group discussion results because they did have that expertise. They
did demonstrate to us that they had that expertise.
SEVENZO: And that was it?
UNIDENTIFIED MALE: And that was it.
SEVENZO: No sort of strategy to be completely negative about the opposition?
UNIDENTIFIED MALE: No. No.
SEVENZO: And you don't know where all of these videos that were around in 2017 came from?
UNIDENTIFIED MALE: We had no idea. We saw them, some of them were sent out to us.
SEVENZO: Now it's possible that, in this investigation, there will be a massive paper trail that leads right here to (INAUDIBLE) headquarters.
What do you say to people who are worried about things like that?
UNIDENTIFIED MALE: It doesn't bother me because, in our engagement with SCL, which you say is related to Cambridge Analytica, in our engagement, at
no time did we ask them to do any kind of data mining.
SEVENZO: Why don't you want to find out who they are and who their parent company is?
UNIDENTIFIED MALE: No, no, it's not necessary, not by a business who find out who else are your business associates, is it?
SEVENZO: But if this business associate have such a terrible reputation and (INAUDIBLE) in terms of negative campaigning, would you hire them again
in 2022?
UNIDENTIFIED MALE: No, I would not and there would not so much of the reputation. I would not because I don't have time to be dealing with all
these side issues. I have to deal with my core business. And my core business is to run a campaign and win an election.
SEVENZO (voice-over): The fallout over Cambridge Analytica's tactics is far from over for this East African nation and time will tell whether
Kenyans get the answers they're looking for -- Farai Sevenzo, CNN, Nairobi.
(END VIDEOTAPE)
SY: Cambridge Analytica has denied any acquisitions of wrongdoing and the company did suspend its chief executive after Channel 4's undercover report
aired.
I want to bring in Rana Foroohar again on this story.
And Rana, of course because of the violent history of Kenyan elections in the past, the stakes seem higher, although it occurs to me that Cambridge
Analytica being hired by one of the politicians to message is not illegal.
FOROOHAR: It's absolutely not illegal and this brings up the fact that there are free speech issues involved in all of this. And this is going to
become a bigger issue both in the U.S. and abroad. There is actually an interesting case going on right now in California looking at free speech,
data scraping, how much of this should be illegal -- sorry, legal under the First Amendment.
So watch this space. But as of now, you're absolutely right. Just hiring Cambridge Analytica to do a research project, to do (INAUDIBLE) is not
illegal.
SY: And just because they were foreign, that seemed to really bother the Kenyans that were interviewed in that piece. But it does raise some
important questions about whether, if they had used data, for example, from Facebook, which they deny, for example, for targeted political messaging.
FOROOHAR: Yes.
SY: It raises questions about the impact of big data on democracies.
FOROOHAR: Well, it absolutely does and it's interesting that you say that because there are some studies out that show that rising social media usage
actually coincides with declining trust in liberal democracy.
And if you just look, there was an interesting study from MIT showing that fake news on Twitter had a 70 percent more likely chance of being spread
than real news. So you think about the kind of informational bubbles that people are living in, this is a huge, huge threat.
SY: It occurs to me that informational warfare to a certain degree has always been part of politics.
FOROOHAR: Yes.
SY: Whether we have the online accelerant that we have now is the question.
FOROOHAR: That's a good point.
SY: And it doesn't seem clear what the rules are.
FOROOHAR: Well, here's what I think. I think the rules should be the same for media companies across the board. This is also something that's being
contested in the U.S. There is a bipartisan bill actually called the Honest Ads Act. It was put out by McCain and Warner, saying Facebook,
Google, you should have to disclose political advertising just like CNN would, just like the "Financial Times" would.
That seems fair to me. I think let's get rid of the special treatment, the subsidies for these industries, particularly given how it puts these
problems on kerosene, as you say.
SY: Yes, transparency and oversight, those are the words of the day when it comes to these companies and their impact on our societies. Rana
Foroohar, thanks as always for your insight.
FOROOHAR: Thanks for having me.
SY: Well, what --
[16:15:00]
SY: -- started in the quiet English market town of Salisbury has now become a major international incident. Russia's retaliation against the
West continues as dozens of diplomats are expelled.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
SY: Russian relations with the West are plumbing new depths as Russia expels diplomats from nearly 2 dozen countries with more to potentially
follow. Foreign ambassadors were summoned by the Russian government, where they were given notes of protest.
The Kremlin denies accusations by Western governments that it was behind the poisoning of a former Russian double agent and his daughter in England.
All in all, Russia has expelled diplomats from at least 19 countries. Britain's ambassador to Moscow said Russia's actions would not make him
back down.
(BEGIN VIDEO CLIP)
LAURIE BRISTOW, BRITAIN'S AMBASSADOR TO RUSSIA: (INAUDIBLE) it's important to bear in mind why this crisis has arisen in the first place. It's the
use of a chemical weapon on the streets of the United Kingdom that has threatened the lives of a number of people in my country.
We asked certain questions of the Russian state and we've still not received adequate answers to those questions.
(END VIDEO CLIP)
SY: The White House has yet to respond to these new expulsions.
While President Trump has kept a relatively low profile this week, we've seen two significant shifts in terms of his foreign policy. The first is
Russia, where Monday's expulsion of Russian diplomats sparked today's countermeasures.
The second is South Korea, where the Trump administration revamped its first major trade deal. Donald Trump has since said that he could delay
that deal to use as leverage in talks with North Korea.
Speaking on this program earlier this week, the president's top trade adviser went as far as to say this week had been historic.
(BEGIN VIDEO CLIP)
PETER NAVARRO, DIRECTOR, WHITE HOUSE NATIONAL TRADE COUNCIL: A lot of news went on today but 10-20 years from now in the history books, this day will
be marked as historic because this was one of the first times an American president has ever successfully renegotiated a horrible trade deal.
And the president did that and what it does is it symbolizes how trade peace can come about and bring about fair and reciprocal trade. This was
the poster child for trade peace through good negotiations with our allies and partners.
(END VIDEO CLIP)
SY: CNN's senior political analyst David Gergen joins me now. He's advised Presidents Reagan, Nixon and Clinton.
David, thank you so much for your time.
DAVID GERGEN, CNN SR. POLITICAL ANALYST: Thank you for having me.
SY: What do you think people will most remember about this week in the Trump administration?
Will it be the accusations of extramarital affairs?
Will it be the major staff shakeups we have seen?
Or will it be these significant moves we've seen on the foreign policy front?
GERGEN: Well, the moves in foreign policy, I think, will have more impact on history. But they're less noticed here in the United States. There are
not a lot of people talking about the staff renegotiating the Korean trade --
[16:20:00]
GERGEN: -- deal. If anything on the national security side, this country is concerned about the shifts in personnel, the new secretary of state and
the new national security adviser both very hard line.
And there is a good chance, a rising chance now that Trump will not renew the Iranian agreement in mid-May, saying that he won't accept it. That may
fall apart and that will have large implications for our negotiations with the North Koreans.
It may make it much more difficult to reach an agreement with the North Koreans. So there are important things that are underlying all of this.
But the truth is there are more probably people in this country talking about a woman named Stormy Daniels. She was on "60 Minutes," the program
this past weekend and they got the biggest audience they've had in 10 years.
So there are a lot of people gossiping. That's easier to grasp than trade and nuclear armaments. But it actually does have some bearing on the
president's capacity for governance.
These cases that women have tried to file against the president could be -- he could be vulnerable -- to me, there's some embarrassment or worse.
We'll have to wait and see. Right now it's not changing our politics but it is providing a lot of fodder for gossip.
SY: It will be interesting to see if it weakens the president in any way in the future. You talk about hard line and his new foreign policy team to
include Bolton, one of the biggest hawks out there.
One might point to the expulsions of Russian diplomat as well as the closures of consulates, including in Seattle, as proof that Trump is now
taking a harder line when it comes to Putin and Russia.
Do you see a policy shift here that's meaningful?
GERGEN: I don't think we quite know yet. The president himself has kept a very low profile on this whole issue of expelling diplomats. His team, his
White House team and the State Department taking much more of the lead.
Let's give it -- let's have another couple of episodes of one thing or another and we'll have a better judgment on that. The cynics argued that
the president took a harder line on this and jumped in by expelling a lot of diplomats because it showed that he was not in Putin's pocket with
regard to the Mueller investigation. It wasn't really about a harder line he had about the Russians (INAUDIBLE) that were barely on the job.
But I think it's a little hard to interpret. What we do know is that the U.S. and Russians and Europeans have thrown out each others' diplomats in
the past but there seems to be a harder edge this time and there is much more of a sense that Putin has become very tough since he now has become
essentially the Russian leader for life.
He's been very sharp edged and in return the U.S. and the Europeans are getting a sharper edge. And there's a growing that this could become in
fact a major blowup among the countries. It could lead it a crisis. We are not there yet. But right now we're on the front edges of something and
we don't know where it's going to go.
SY: David Gergen, thank you so much for your analysis, appreciate it, and have a good holiday weekend.
GERGEN: Thank you. Take care. 'Bye.
SY: The Kremlin says plans to take the Russian news channel RT off air in some U.S. regions may be discrimination. Starting this weekend, RT will no
longer be available in the Washington, D.C., area after its distribution deal expired. The distributors say the timing is just coincidence. CNN's
Hadas Gold is in Washington with more.
(BEGIN VIDEOTAPE)
HADAS GOLD, CNN CORRESPONDENT: Stephanie, RT, that Russian government funded network that airs in the United States will no longer be available
in the Washington area starting this Sunday. It will still be available on satellite and streaming on its website.
But if you're looking for it on cable or broadcast, you won't see it in the Washington area. The distributor for RT in the United States says it just
has to do with licensing agreements and that they lost access to the license that they were leasing out and they couldn't afford to buy it back.
But RT is blaming the Justice Department. Back in the fall, the Justice Department forced the American production company that produces RT here in
the United States to register as a foreign agent.
What this means is they have to give certain disclosures to the Justice Department and include a disclosure to their audience that they are
registered as a foreign agent. RT s deputy editor in chief Annabel Kena (ph) told me in a statement that while they're not at liberty to
disclosure the details, we know that the reason for this was linked to RT's forced registration as a foreign agent in the U.S.
She went on to tell me that this has put pressure on RT's partners and as a result it's lost access to Washington. This is clearly an ongoing
situation between RT, the Justice Department and how they reach their audience --
[16:25:00]
GOLD: -- out here and we've actually even seen some pushback in Russia against American reporters there and there's now fear in Moscow for foreign
reporters there, that they are going start feeling even more backlash, potentially even being banned from reporting there --Stephanie.
SY: Hadas Gold, thank you for that report.
And as the business gears up for a fresh quarter, we'll recap memorable moments of the one that just ended in "Quest's Quarterly Report" when we
return.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
SY: Hello. I'm Stephanie Sy. Coming up on the next half hour of QUEST MEANS BUSINESS, on our last program of Q1, Richard Quest presents his
quarterly report and a look ahead to the next three months in global economics. First, these are the top news headlines on CNN this hour.
(HEADLINES)
AMARA WALKER, CNN: Those are the headlines for this hour now, QUEST QUARTERLY REPORT.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It is the last day of the first quarter. What a quarter it's been. Extreme volatility of the markets,
swelling fears of a trade war and this major reckoning for Facebook, and of course we covered it all on QUEST MEANS BUSINESS.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: The U.S. markets are heading for all-time highs and the very first trading session of 2018.
QUEST: Records are falling faster and faster.
UNIDENTIFIED MALE: Clearly, the momentum is absolutely on the up side.
QUEST: Some are really worrying when wondering whether this rally is out of control.
(BELL RINGING)
The Dow suffers its worst single day point fall.
UNIDENTIFIED MALE: I don't think I've ever seen anything so bold in my life.
UNIDENTIFIED MALE: It's like a perfect storm, the stock market's natural fear of uncertainty all conspires here.
QUEST: The U.S. may be on the verge of imposing hefty tariffs on steel and aluminium imports.
UNIDENTIFIED MALE: It's a quite a blunt tool because it hits a lot of other countries.
GARY COHN, FORMER CHIEF ECONOMIC ADVISER TO DONALD TRUMP: We really believe in free, fair, open and reciprocal trade.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's about time, right?
UNIDENTIFIED MALE: That's right, sir --
UNIDENTIFIED MALE: Oh, no, sir --
TRUMP: We've been waiting for a long --
UNIDENTIFIED MALE: Yes sir --
TRUMP: Time --
UNIDENTIFIED MALE: Yes sir.
UNIDENTIFIED MALE: I'm not going to call it a trade war, but wars usually start with one battle.
QUEST: In the war room as you'll recall, I've shown you exactly what has been happening. Each side is already showing up its arsenal of trade
weapons.
UNIDENTIFIED MALE: We will take the necessary strong measures to protect our own interests.
TRUMP: This is number one, but this is the first of many.
QUEST: Mark Zuckerberg says his new year's resolution is to focus on tackling Facebook's problems, stopping hate speech and warding off foreign
meddling.
UNIDENTIFIED MALE: Facebook is a turning point. The question is how many resources can they invest to solve these problems.
UNIDENTIFIED FEMALE: A whistleblower says a (INAUDIBLE) firm linked to the Trump campaign tried to brainwash the American electorate.
UNIDENTIFIED MALE: The company that I remember was really aggressive without protecting user data. Yes, I do think the company should have
acted earlier.
MARK ZUCKERBERG, CHIEF EXECUTIVE OFFICER, FACEBOOK: I am really sorry that this happened. We have a basic responsibility to protect people's data,
and if we can't do that, then we don't deserve at the opportunity to serve people.
(END VIDEO CLIP)
QUEST: Exhausting and it's only Q1, three topics on the board for the first quarter: markets, tariffs and Facebook, and three Syrian reporters
who have been living those stories for the whole quarter.
Paul is our man in the markets.
PAUL LA MONICA, DIGITAL CORRESPONDENT, CNNMONEY: Thank you, sir --
QUEST: (INAUDIBLE) has been watching all matters on tit-for-tat tariffs, and in Atlanta, joining us from the Cnn Center Lori Siegel who
magnificently secured that exclusive interview with Mark Zuckerberg, we'll be with you Lori, in just a moment.
February with volatility defined the quarter. When we came out of that volatility, we sort of knew it wasn't over, but we didn't quite expect it
to ramp up again like it has.
LA MONICA: I think clearly Richard, the issue that the market is grappling with right now is that there was way too much complacency in 2017.
A lot of people laughed off on Wall Street, all of the crazy soap opera-ish sort of things coming out of Washington and the Trump administration and
the environment.
[16:35:00] Everyone really thought well, companies are going to continue spending, consumers are going to continue spending, none of this is going
to really matter, but I think that change once all of a sudden you have this fear of a trade war, you had tariffs coming in to play.
You always had questions about whether or not the Trump administration was going to be fuelling the economy with too much stimulus at a time when they
didn't need it and could cause the economy to overheat.
QUEST: So that question of a trade war - I mean, Peter Navarro said on this program earlier in the week, look, everybody knew what the policies
were, everybody knew what we were going to do.
Why are you surprised that we went out and did it?
PATRICK GILLESPIE, CNNMONEY ECONOMICS REPORTER: He has a fair point, Richard, the markets knew -- should have known for a long time that this
was in fact coming, I think it was the delivery and the communication of Trump's trade policy that threw markets off.
You might remember earlier in the quarter, President Trump haphazardly mentioned the 10 percent tariff on aluminium, the 25 percent tariff on
steel. He ended the meeting and then a reporter asked him a question and he shouted out the numbers.
No announcement on policy or paper from the White House on that particular day. So there was a lot of confusion at the time in markets and you know,
and even here in the press, we were trying to figure out what exactly was going to happen.
And there's still some confusion about how the countries will be exempted and what measures they're going to have to take.
QUEST: Well, with that -- with that in mind, Paul, if we look at the way the market had risen so sharply in 17, this idea that almost it couldn't go
down. But at the same time, it seems to want to go higher.
We saw this after February again. You know, you had the volatility, but it makes another -- now, that's just definable in the back of corporate
profits which we'll get the Q1 numbers.
LA MONICA: Yes, I think many people on Wall Street are extremely optimistic about what earnings are going to look like --
QUEST: Justifiably --
LA MONICA: First quarter -- justifiably and probably for all of 2018. The question becomes whether or not some of these trade policies impact 2019
results. You have some people wondering whether or not we might have a recession sooner rather than later.
I mean, we --
QUEST: Right --
LA MONICA: Are due for a slow-down inevitably. Will it be during this Trump administration or after 2020 during a second Trump administration
perhaps, or someone else's.
QUEST: Trade in Q2, go on.
GILLESPIE: Well, it could be good news or it could be bigger fears. We could get escalation between China and the United States. On the other
hand, we could get a trade agreement and principle on NAFTA between Canada, Mexico and the United States.
This has been an ongoing concern for markets, so there could be a mix of good and bad news. It will be interesting to see if the countries that
received exemptions on the steel tariffs, Richard, are facing a quota or if they get off scot-free.
Peter Navarro told us earlier this week they're not getting off scot-free.
QUEST: And it will be in that second quarter. January, February, March, April, May, June -- thank you sir, we've got a busy quarter ahead, good to
see you.
GILLESPIE: Thank you.
QUEST: Lori Siegel is in Atlanta. Lori, Facebook, and the reality is regulation is coming. The only issue I need to understand is for more you
understand about Facebook and what we saw in Q1, why didn't they see this coming?
Why -- did they -- was it arrogance? Was it hubris? Was it incompetence?
LORI SIEGEL, CNN: What a fascinating question. I think there's always been this sort of arrogance and the idealism about Silicon Valley. And
this is a watershed moment. This is a moment that tech fenders are coming out and saying wait, how did this happen, why didn't we see it sooner?
And I think this is the problem with Facebook. You see the bloc post after the fact. After Russia interference, you saw Mark Zuckerberg come out and
say fake news didn't do anything for the election.
And then months later, he wrote a manifesto saying I'm going to get this right. You know, the idea when I sat across from him at one of the most
crucial moments in the company's history, where you could see him sweating, you could see --
QUEST: Right --
SIEGEL: How nervous he was for this moment. You know, I said to him, how do you guys become more proactive and not reactive because you can make
mistakes when you're a small start-up, but when you're a large kingdom with 2 billion users --
QUEST: Right --
SIEGEL: Those mistakes can impact democracy, can impact mental health, and can put you on Capitol Hill having to answer these really difficult
questions that lawmakers are now going to be asking him, and also trying to regain user trust.
QUEST: Right, so question to all three, start with you, Lori, Q2, what are you preparing for?
SIEGEL: Oh, I think the backlash has began, I think this is going to be damage-control. I think they're going to be investing quite a bit in
security as we had here in America at least toward the mid-term elections - -
QUEST: Right --
SIEGEL: I think they're going to be investing in quite a bit of that, and then I think are they going to make a prediction?
QUEST: No --
SIEGEL: They're going to start putting Zuckerberg -- I will raise my hand now, they can put him on with me, but they're going to start putting him
out there more. He has been, Richard, in his own filter bubble.
You know, and they haven't put him out enough. This is a time when his company needs --
QUEST: Right --
[16:40:00] SIEGEL: Accountability and transparency. I think we're going to be hearing more and more frequently from him and not just in bloc posts
and he can't Facebook live.
QUEST: Lori, you have given us a new -- right on our very first quarter, you have given us a new catchphrase. Gentlemen, put your hands up, what
are you going to see in Q2?
GILLESPIE: Potential escalation --
QUEST: Hands up! What is it?
GILLESPIE: Potential escalation on trade wars between -- trade conflict between China and the United States and Richard, let's face it, we are in a
red hot U.S. market right now, this is the engine of the U.S. economy and to some extent the global economy.
QUEST: Hands up!
LA MONICA: Along those lines, if the U.S. economy continues to hold up reasonably well, will Jerome Powell, the new head of the Fed have to be
loose more aggressively with regards to interest rates hikes, and how will President Trump who is technically his boss because he appointed him --
QUEST: Can't fire him though --
LA MONICA: Be able to do that. He can't fire him, but do we have to announce the situation to Greenspan potentially as some would argue
destroying chances per George H.W. Bush get reelected in 1992, because the economy eventually slowed because of rapid rate hikes.
We're not there yet, but I think it's something this Fed is watching.
QUEST: The team will be covering and watching. Trade is a global business, it requires global coverage, I'll take you to Davos, where world
leaders challenged President Trump's agenda.
And to UPS Worldport where packages go before they arrive at your door.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
QUEST: The lights are on, it didn't sparkle, I'm pretty certain, the -- I knew you said (INAUDIBLE), I knew when the Eiffel Tower will sparkle at the
top of the hour.
(END VIDEO CLIP)
QUEST: That's something else to remember where I am sometimes. Ranging the year in Times Square, and since then, as the map shows, we've been in
Davos, Paris, London, we went to Dubai, we've been in Kentucky, Brussels, Atlanta and down in Perth, western Australia.
Sometimes I find myself out of place and that was the problem facing President Trump when he traveled to the annual meeting of the global
leaders at Davos. If he was nervous about going, the leaders in Davos were nervous about what he would say when he got there.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Mr. President!
TRUMP: Very exciting.
UNIDENTIFIED MALE: He is just a voice of a Russia probe. We have to look not just at the person, we have to look at the reasons behind.
UNIDENTIFIED MALE: We want to level the playing field to put our workers at a competitive equal level to workers around the world.
UNIDENTIFIED MALE: There's been deregulation which has been helpful in some respect. The effect of the tax cut is coming now.
UNIDENTIFIED FEMALE: I think it's now when we go down to the details and how we deal with the unfairness, that's where we need to do the hard work.
TRUMP: Thank you very much.
UNIDENTIFIED MALE: You have to look at both the rhetoric and the actions. The message is firm, others are measuring up how to handle that.
[16:45:00] UNIDENTIFIED MALE: We need the United States and its leadership to solve big international issues. Be it in the economy, be it state-to-
state, be it not electorally.
UNIDENTIFIED MALE: We do a survey every year, 1,300 CEOs, geopolitical risks rose to the top of that survey as well.
UNIDENTIFIED MALE: Geopolitics and macro economics, feel very disconnected. You see a huge optimism about the economy and huge
nervousness about the world of politics.
(END VIDEO CLIP)
QUEST: So the leaders come together to tackle the world's biggest problems and talk of their own countries. It's a particularly tall order for
Zimbabwe's new President Emmerson Mnangagwa is telling businesses his countrymen.
Now the corruption of the past Mugabe era is gone. However, what he won't change, laws dealing with same-sex rights. The president told me it's up
to the voters to decide.
I put it to him that his country is being left behind.
(BEGIN VIDEO CLIP)
EMMERSON MNANGAGWA, PRESIDENT OF ZIMBABWE: My priorities today, I will draw my economy right? Increase the standard of life of my people, putting
that as a priority.
Our priority now -- my government is to embrace the international community and then say Zimbabwe is opened for business, let people who want to invest
in Zimbabwe say this is what they want, these are the constituents they see, and this is what I believe is necessary for us to catch up with some
of the developing countries in our world --
QUEST: One moment --
MNANGAGWA: In our region.
QUEST: One moment, I venture to disagree with you, Mr. President --
MNANGAGWA: That's democratic --
QUEST: Surely, by changing -- whether it's on women's rights, gay rights, whatever rights, it is human rights. Surely, by changing those, you really
send the true message that you're not just interested in money coming in for dollars for business.
But creating an equal environment for all. Surely, that's a much more powerful message than just asking for a bit of extra foreign direct
investment.
MNANGAGWA: It's not your personal dollars in Zimbabwe, it's a personal development. We must be functional, there are systems in my country -- we
must have functional infrastructure in terms of our highways and so on.
We must have a functional manufacturing sector in the country. I must modernize and mechanize my agriculture in Zimbabwe. I must have a
developed mining sector in Zimbabwe.
These are the things as far as I am concerned are the issues which my people look out for governments to address and facilitate for their
development so that we catch up with members of the region.
(END VIDEO CLIP)
QUEST: As we were on the road in the quarter, from Davos to Kentucky, UPS Worldport is the heart of a network that handles 20 million packages every
day. And I learned what it takes to be the man in route(ph).
[16:50:00] (COMMERCIAL BREAK)
QUEST: Now every quarter, we travel the world to show you the economy at work. The beating heart of the global shipping industry that happens to be
in Kentucky, it's the Worldport of UPS which can handle 115 packages every second, keeping them moving is a huge undertaking.
(BEGIN VIDEOTAPE)
QUEST (voice-over): Hair spray for Houston, dog food for Dallas, samples to Sydney, a contract for Kansas. Sorting parcels seems so simple. The
goods come in, they are assorted but then they leave.
But when your warehouse is bigger than 90 football fields and you're handling 2 million packages a day, there's no room for a snooze that the
UPS Worldport have in Kentucky.
In charge of it all is Jason Foote.
JASON FOOTE, UPS WORLDPORT OPERATIONS MANAGER: This is so many -- I mean, one will think they only process too many packages. Your PCs will handle
more than double that.
QUEST: Well, only, that's an enormous number.
FOOTE: It's something we do every day.
QUEST: And roads and conveyors everywhere. One-hundred and fifty five miles of moving bolts, while automation is key, humans remain part and
parcel of this operation. Many of them working here are local students.
And the pay seems relentless.
(on-camera): This is never ending. Hour after hour, these small packages float into this tidal wave, assorting now has to take place to ensure these
little packages end up in the right destination.
(END VIDEOTAPE)
QUEST: Now, the most important piece of the logistical apparent arguably of course is the last day, the final now. From distribution center to your
front door. So I went that final mile with the man in brown.
(BEGIN VIDEOTAPE)
QUEST (voice-over): We're out on the road. He is the man in brown, Jeff Goodman, hired intern Richard Quest. And when a package's journey music
end, it's down to us to get it the last mile all the way to the front door.
Delivery driver rule number one, handle with care. When something so fragile, handle with care. How much care?
JEFF GOODMAN, UPS DELIVERY MAN: I see these people every day, I don't want to get a report saying that something of theirs was damaged, so I handle it
as if it was mine.
QUEST: You ever wonder what's in all these things?
GOODMAN: It's a duct tape(ph) --
QUEST: What?
GOODMAN: It's a duct tape(ph).
QUEST: How do you know that?
GOODMAN: Because of the way it sounds.
QUEST: That's the real beauty of being local deliverer. You know the area, you know the people you're delivering to and you know the dog.
GOODMAN: I probably know the dog better than the people.
QUEST: You want a house -- at the end of the month -- the last bit is you --
GOODMAN: Walking --
QUEST: Going in there --
GOODMAN: Walking into the door --
QUEST: And walking into the door.
GOODMAN: Walking into the door.
QUEST: Right, roger now.
(voice-over): Rule number two, you need to walk and there were a lot of walking.
(MUSIC)
Number three, beware of the dog. You and (INAUDIBLE) when it comes to the dogs.
GOODMAN: Those have been my best friends or like they can be your worst enemy. So you've always got --
QUEST: Emergency resources. There's a lot of planning involved, isn't it?
GOODMAN: The more you plan, they need to be laid(ph).
QUEST: Something tells me I am not going to make a very good UPS delivery boy.
Finally, I earned my stripes, well done, my socks. I heard you were admiring our socks.
GOODMAN: Because not anybody can just get these done.
QUEST (on camera): Look at this.
GOODMAN: So you are officially a UPS driver --
QUEST: Yes, I know you're a UPS driver, UPS socks. For a moment at least, I was officially a man in brown.
(END VIDEOTAPE)
QUEST: Time to get out of the truck and back to my own comfort zone. The stock exchange, you always just gavel three times for a couple more, it's
the sound that brings trading to a close every day.
[16:55:00] However, as you'll have watched on many occasions, not all gavels are banged equally, and it takes a range of skills.
(BEGIN VIDEO CLIP)
QUEST: It's a quite miserable sort of day. Hello, a bit like that gavel which is a bit of a pathetic one. And yes, they're trying to break the
gavel but they can't.
It was a strong, firm, robust gavel. The market has fallen very sharply. Please sir, put us out of our misery. Hello, yes, something tells me that
gavel is entirely appropriate.
Yes, that's a good one, that's a robust one. And a second one, but you don't often play it to the crowd quite like this. There you go.
Yes sir! One! You're going to go one time, boy. That was rather weakened - - would be. Four, five, six, seven -- I think that called over egging the pudding. Three hefty gavels and a hi-five, that's why the early bit of
cheering you're going to get today.
Come along sir, one, two, three, yes, there we are, that's how we close the market.
(END VIDEO CLIP)
QUEST: And that is the QUEST MEANS BUSINESS quarterly report for Q1. I am Richard Quest in New York, somehow I don't think the gavel is going to beat
the bell. Because whatever you're up to in the quarter ahead, I hope it's profitable.
END
