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Quest Means Business
Congress Grills Secretary of State Nominee; Massive Power Outage Hits Puerto Rico; National Enquirer Paid Trump Doorman $30,000 to Keep Quiet about Trump Affair Rumor; Duterte Apologizes to Hong Kong Victims of Manila Hostage Tragedy; Analysts Say Bitcoin won't Regain Record Levels; Japanese Band Makes Song and Dance about Cryptocurrency. Aired 4-5p ET
Aired April 12, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST ANCHOR, QUEST MEANS BUSINESS: Today, having that ringing on Wall Street. Dow Jones Industrials rocketed out of the gate and never
looked back.
It's at the highs of today. Come on, sir, you have to do justice. No, that was not doing justice. That was a wimpy gavel on a day when the
market rallied up, but trading is now over. It is April the 12th.
As the Dow rallies, the world waits. Western nations marshal forces for a possible attack on Syria. We pulled out, now we must be back in again.
There are reports that President Trump is thinking about rejoining TPP, the Asia Pacific reform.
And takeover talk in the skies. British Airways and the IAG is eyeing a possible deal to buying Norwegian. I am Richard Quest, live from the
world's financial capital, New York City, where of course, I mean business.
Good evening, we begin tonight with two unknown driving the markets, as the world waits for a possible action on Syria. The two unknowns are if and
when. Leaders in Europe are making the case for some kind of strike even if President Trump says nothing is set in stone, and yet despite all of
these nerves and tensions, the Dow has closed more than - nearly 300 points higher.
It erases Wednesday's losses. It was about 350 points up at the best points of the day. Investors are less worried about an imminent conflict
it would seem.
So, if you'll join me at the super screens, you'll see exactly the way that day progressed on the question of Syria and remember, throughout all of
these, the market was up at the open and remained higher throughout.
So, let's start with what Donald Trump said. Remember, he said yesterday that the missiles would soon be on their way. That was the tweet
yesterday.
Today's tweet, "Never said when an attack on Syria would take place. It could be very soon or not so soon at all." Two exclamation points. "In
any event, the United States under my administration has done a great job." So, there you go.
Now, on the opposite side of the Atlantic of course, when you talk about what is happening, President Macron in France, he says, "We have proof of
chlorine attack." This is the first time another country has actually said, "We have proof of an attack of chemical capabilities."
And then in Britain - Britain which is suggesting that it may and then suggested it may not join in any united allied attack over Syria. The
Prime Minister Theresa May is holding an emergency cabinet meeting where the cabinet agreed on the need to take action. The British media says now
that the UK submarines are in reach to send the missiles.
So, the coverage that we have is complete and comprehensive. Nick Paton Walsh is in Northern Syria, Barbara Starr is at the Pentagon, Sam Kiley is
in Moscow. Colleagues, I am going to go around you all quickly together, an overview on what is happening.
Start with you, Barbara Starr in the Pentagon, the confusion from the President suggests what? What, and when and if?
BARBARA STARR, PENTAGON CORRESPONDENT, CNN: Yes, good question to hold no answer. Of course, the National Security Council held a meeting at the
White House this afternoon. We do not know yet if that is over. We do not know if a decision has been taken, if the President has given the thumbs up
go for any kind of strike mission against Syria's chemical weapons attack capability.
This is everything that the world is waiting for right now. You can assume legitimately that the US military plus the allies have everything in place
to prosecute any campaign that they might want to. They don't really just sit around and wait once these things get discussed at the highest level,
so they will be ready if and when a decision is taken. Expect to see them stand off a bit, in other words, nobody is exactly going to fly pilots in
the Syrian airspace.
QUEST: Let's go straight to Syria - Northern Syria, Nick Paton Walsh. What is the expectation there?
NICK PATON WALSH, SENIOR INTERNATIONAL CORRESPONDENT, CNN: It's a very tight timetable, really. We are seeing the OPCW - the UN's chemical
weapons investigators due to start work on Saturday and according to Syria's envoy to the UN, potentially heading in now or maybe tomorrow
according to him.
So that potentially puts them on the ground investigating this chemical weapon's attack and that would be very hard frankly to launch airstrikes
while that is underway. So, you have a small window ahead of you. Potentially, you have UK cabinet coming out just now suggesting that some
kind of response needs to occur. That is a key bit of messaging from one of the US's major allies here and of course, you have a lengthy
telegramming of exactly what the US might do to assist the Syrian military, already on high alert to move things around to get them out of the likely
path or out of the...
[16:05:15]
PATON WALSH: ...way of likely targets for any potential US action, Richard.
QUEST: Sam, in Moscow, if and when the US and its allies attack, what would you expect Moscow's response would be? I mean, let's face it, Sergey
Lavrov has said in words at one (inaudible), there were no chemical weapons used. There is no evidence of chemical weapon usage.
SAM KILEY, SENIOR INTERNATIONAL CORRESPONDENT, CNN: Well, you are right, Richard and also the Ambassador - the Russian Ambassador to the United
Nations has said that any kind of an attack on Syria will be a violation of the United Nations charter and a violation of international law.
Now, of course, the critics of the Kremlin, which say that is coming a bit rich from a country that is still involved in destabilizing Eastern Ukraine
and illegally annexed a big chunk of the Ukraine, called the Crimea, but nonetheless, I think really the Russian response will depend on the scale
of the attack. The level of calibration that is going to go on if there is a decision to attack Syria.
And that will depend on the extent to which the United States and her allies would send a much wider message to Russia about Russia's role in the
world. Russia is now being seen very strongly by the West as a force to destabilization, much like Iran and that would - may depend on how they
calibrate this attack if indeed it comes.
QUEST: Barbara, we are going to go to all of you again, but Barbara, what would the attack - I mean where would they attack? What's the goal? Do
they have targets in mind? From your understanding and then we will go to Nick, from your understanding, what would be the object of the attack?
STARR: Well, Richard, first they are going to have to get from President Trump what his military objective is. Is he going to try , you know, at
the top of the scale to attack Bashar al-Assad's power centers. We don't know. Maybe not because that's going to provoke a Russian response due to
the escalation, but is it going to be more like it was a year ago? Bombing some air fields where you think things may be happening and bombing the
chemical weapon sites themselves.
Bombing the chemical weapon sites is very tough business. You risk civilian casualties when you do that and I will tell you from everyone I
have talked to, nobody thinks another round of airstrikes is fundamentally going to change the situation on the ground. When it is all over, if it
happens, Bashar al-Assad will still be in power.
QUEST: That's an excellent point, and finally to you, Nick. I mean, that is the point, isn't it? What's the purpose other than to show there was a
purpose?
PATON WALSH: Well, it's to say, used chemical weapons, namely Sarin and nerve agent here because that is that suggestion that UN investigators saw
the muscular twitching in victims in the videos - horrific - from Douma over the weekend.
It's just maybe a nerve agent was being used and President Macron hinted at that that if Sarin or nerve agents were used in warfare like this, there
will be a price. I don't think anybody suspects this time if this strike will necessary change the course of this incredibly messy war, but it may
inflict a cost. Jim Mattis suggested that in fact, 17% of Syria's Air Force was taken out by last year's 59 tomahawks. That's a pretty generous
estimate or maybe a suggestion of how slight the Syrian Air Force frankly is.
But there is a whole load of potential risks they run here with US forces so close to where I am standing. There have already been a direct shooting
match, with we didn't know were Russian mercenaries back in February, things could quite easily get out of hand.
QUEST: Thank you all. I appreciate it. You've got busy hours ahead. I'll let you continue with your news gathering duties, and now to some of
some of the extraordinary stories. Donald Trump has told his economic team to look at getting the United States back into TPP - the Trans-Pacific
Partnership on trade. That's according to some senior senators who met with the President earlier.
Patrick Gillespie is here. Remind us, the President - one of the first things he did or not the first thing he did was withdraw the US from TPP,
but the 11 countries ex-US carried on.
PATRICK GILLESPIE, REPORTER, CNNMONEY: And signed the deal and TPP is still alive, but it would be significantly better with the United States,
Richard.
TPP right now is 14% of the global economy. With the United States it becomes 40% of the global economy. I think this is a smart move and a
significant reversal. If you're a Trump voter, especially on trade, you can't help but feel that you are, you know, you could find fool's good with
this reversal.
QUEST: All right, so listen to what the President said back then.
(START VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The Trans-Pacific Partnership is another disaster. Done and pushed by special interest, who
want to rape our country, just a continuing rape of our country. That's what it is too. It's a harsh word, it's a rape of our country.
(END VIDEO CLIP)
QUEST: All right, so he pulled out...
[16:10:15]
GILLESPIE: Not mincing words.
QUEST: No, he's not. But he also said, even after the 11 got together again, he said, if there was a renegotiation, that he would consider
rejoining. So, really this becomes what would the terms be required for the US to rejoin and would the other countries give it to them?
GILLESPIE: I don't think they are looking to renegotiate this. I think they are saying, "This is the deal. We have come to it. You know, do you
accept it." The deal between the US left and when it was signed into action earlier this year is not very different. It has some environmental
changes. That's not going to change President Trump.
I think this is significant because it could be a swipe at China' s economic influence in the Pacific at a time of increased trade tensions,
Richard. So, there's a lot of politics at play here, and this could be a sign that Larry Kudlow, the President's Chief Economic Adviser, a pro-trade
guy finally has the President's ear on trade.
QUEST: But I can't see how he's going to do it, and not lose face at the end of the day, unless there is - unless there is a sizeable renegotiation,
to give him something that was not in the original TPP. Everybody is just going to simply say, "What was all of that about?"
GILLESPIE: Absolutely, because we have seen this time and again. Look at NAFTA. I mean, he said, almost forbade in the same words about NAFTA and
there are strong signs from the White House, they are saying, good chance, you know, we are making good progress, a deal could get struck.
It happens over and over again. They wanted to do steel and aluminum, they reeled it back on seven countries in the European Union, so I think this is
a repetitive trade strategy of going hard on rhetoric and coming soft on the action.
QUEST: All right. Patrick, we just - the tariffs on trade are still there on steel and aluminum, as we went for negotiations, and there has been -
and that China has...
GILLESPIE: And it is a tight run. This happens on May - the countries will have it on May 1st to negotiate with the United States.
QUEST: And on IPO China, well, China did make some statements on their automobiles, which apparently was already in the cards.
GILLESPIE: They have already previously promised to repeal their tariff on or lower their tariff I should say on American car imports. The problem,
Richard is that we are exporting far more cars to China than China is importing to us, so white the tariffs aren't fair, the trade is still
benefiting the United States.
QUEST: Patrick, thank you. A sad day for us by the way. We say goodbye to Patrick. We say goodbye to you. God speed in your future endeavors.
GILLESPIE: Thank you, sir. It's been a privilege.
QUEST: Our loss is somebody else's gain, but we wish you well in your future endeavors.
GILLESPIE: Thank you very much.
QUEST: Patrick Gillespie. Now, let's continue with that, is a trade pact or a trade war underway? And I know which path my next guest prefers. The
WTO Director General says if countries take tit for tat measures on trade, there could be unmanageable escalation.
The WTO expects curve on trade will grow, almost slowly over the next year or so, predicting 4% in 2019. It says, recent tensions could put a break
on that. The Director General, Roberto Azevedo join me on the line to talk about tariffs unveiled recently and how concerned he was by the
relationship between US and China at the moment.
(START VIDEO TAPE)
ROBERTO AZEVEDO, DIRECTOR GENERAL, WORLD TRADE ORGANIZATION: I have constantly urged the attention of world leaders to the situation that we
are facing. I am very concerned with the possibility of a tit for tat kind of escalation of trade restrictive measures because as I said before, every
time that you go down this road, it is very difficult to revert course of direction.
I am concerned about that, very concerned about that, but I have to say, it is comforting to know that at least, conversations are ongoing and that
discussions are happening trying to solve the situations and also, that the WTO mechanisms are being used.
QUEST: President Trump specifically tweeted against the WTO saying that the international trade body was unfair to the United States. Do you
accept his criticism, and if not, why is he wrong?
AZEVEDO: So, the United States has said here in Geneva and very publicly that the WTO is extremely important particularly at this moment, but they
also say that you know, the WTO needs updating. The rules of the organization needs to be reformed to reflect the kind of business
environment and practices that we see out there today in the 21st Century.
Other members have welcomed in fact the comments. They said that it's not the first time that we talk about upgrading and reforms. Let's hear what
the suggestions are and see whether there is something that we should or could do about that.
It's about having the conversation and make an opportunity out of this.
QUEST: I think you'd have to agree, sir that it is a very difficult position the WTO finds itself in...
[16:15:16]
QUEST: ... when it is being attacked by the leader of the largest country and the largest economy. I mean, I can understand their wish to be
diplomatic about it, but the fact is, you are being throttled by the US.
AZEVEDO: Well, Richard, let's be clear. What you are saying is that the United States is saying that the WTO must be forgotten or ignored. That's
what you are saying. That is not what I hear. I hear explicitly from US authorities, the fact that they value the system. They have been using the
system. They are negotiating. They are making proposals. They are participating in the dispute settlement mechanism of the WTO, right now,
under this administration.
So, the system is being useful. Now, what they have also been saying is that the rules that we have in place today do not reflect the kind of
environment that we have out there, and they believe that that is detrimental to the US interest. That's fair. I understand that and that I
think is the kind of conversation that we are having at this point in time.
(END VIDEO TAPE)
QUEST: The DG of the WTO on QMB. That's enough initials for you. As we continue tonight, a potential takeover is brewing in the airline industry.
What makes Norwegian Air Shuttles attractive to a much larger neighbor? After the break.
IAG, a group that owns British Airways and Iberia, Aer Lingus amongst others is mulling a bid for the low cost carrier in the (inaudible)
Norwegian Air Shuttle. Now, despite Norwegian's Air Shuttle, it is still a small player under the shadow of a much larger company, but this idea has
revolutionized what is happening in the industry.
IAG's revenues is more than six times those of Norwegians. It has planes of - it has a fleet of planes of 547 compare that to Norwegian's 150.
Can IAG carried 150 million last year, 150 million and compare that to the 33 million taking the budget carrier. Simon Calder is the travel editor of
"The Independent" who joins me now.
This, you've got to admit, Simon, when we all woke up and heard that IAG had taken a 4.1% stake, it was somewhat remarkable.
SIMON CALDER, TRAVEL EDITOR, THE INDEPENDENT: It certainly was and it was very exciting on the Oslo Stock Exchange this morning. If you've managed
to buy $100.00 worth of Norwegian shares this time yesterday, you'd be looking at a profit of (inaudible) for $50.00 overnight.
This company is now -the market capitalization is now $1.3 billion which is an awful lot healthier than it was looking...
[16:20:16]
CALDER: ... yesterday, but other people, of course are saying that what IAG is doing is moving while Norwegian is weak. It's got lots of debt.
It's not making money at a time when other airlines are.
QUEST: True, why does Willy want to buy Buhund to put it in personal terms?
CALDER: Well, look, Willy Walsh used to be Chief Executive of British Airways, which is the most - the senior player within AIG, British Airways
has plenty of trivia in terms of taking lesser competitors out of the marketplace. British Caledonia in the 1980s, Dan-Air in the 1990s, and
more recently BMI or British Midland as it used to be.
So, the idea is that- it's quite useful to remove competition particularly of course, British Airways dominance at Heathrow Airport, but the second
London airport, Gatwick about 30 miles south of the capital, Norwegian is a key player there. It would also strengthen BA's hand against easyJet and
Ryanair because Norwegian has plenty of short holder and Britain as well, and also, you've got a pretty impressive order book of around 200 aircraft
coming through at a time when supply is quite tight.
QUEST: But hang on a second, the regulators won't let this go through shortly. I mean, it's not even - the IAG statement says that it's by no
means certain that it would actually happen, but as a regulator, let's face it, Norwegian is a growing transatlantic carrier at a low cost out of
Gatwick competing head on with BA's main line services out of Heathrow.
CALDER: Oh sure, and it's a great time to be a traveler, because they are both competing very, very aggressively. But I am not sure that it would be
a regulatory matter, Richard, simply because if you look at the rest of the competition, you've got Virgin Atlantic tied up with Delta of course.
You've got United American who are in partnership with British Airways, but I really can't see there will be huge issues, and if you're looking at
short haul, well, easyJet and Ryanair are just so much larger than Norwegian is.
So, I think it could just go through on the north and at that point, British Airways will become a little bit more powerful.
QUEST: Finally, the idea though, I mean, Norwegian is a Norwegian product. It is a private company, but it is much loved in Norway. It has got a
great low cost footprint in your third largest low cost carrier. It would solve IAG's problems, wouldn't it? In terms of diluting premium versus low
cost?
CALDER: There's all sorts of things it would do for AIG. It would give them a really interesting business model with cabin crew and pilots being
employed from interesting places which aren't necessary, Norway - some are based in Ireland where Norwegian doesn't actually fly much.
So, yes, all kinds of possibilities from this and actually that Willy Walsh is looking very carefully at all of them.
QUEST: Final - in a sentence, in a sentence because there's never any guarantee that these things happen, Willy is the candy man though, he
doesn't start things that he can't finish. Will it happen, do you think? Yes or no?
CALDER: I'd say if we are looking at Norwegian still being independent in three month's time, I will be very surprised.
QUEST: Simon Calder, I will buy you lunch. Thank you. It was a fairly muted day for the rest of the European market, all the big four finished
high. Domestic engines in Germany boosted by Volkswagen of around 2%. It came on the day it switched its Chief Executive and we'll talk more about
that later in the program.
Now, going to Paul La Monica, stay where you are.
PAUL LA MONICA, CORRESPONDENT, CNN: I will.
QUEST: While I just do the numbers for you. We'll come straight back to you, but first, listen carefully and tell me why I am wrong. Join me to
the trading post. You see the Dow, no records but we have three solid gains on the Dow, the S&P and the NASDAQ.
So, lighting down the man green if you please. It is green across the board, erasing the losses of Wednesday, a nearly broad-based rally with the
S&P and NASDAQ. The retailer, Bed, Bath & Beyond lost nearly 20% - 20% after all earnings would not meet expectations.
Now, the earning seasons has began with a bang. The Dow popped its triple digits and early season is underway with the exception of Bed, Bath &
Beyond which sort of seemed to have gone down the plug.
LA MONICA: Very, very nice.
QUEST: But a strong day on the Dow.
LA MONICA: A very, very strong day on the Dow. Probably because Bed, Bath & Beyond is not in it. Even if it were, it's such a low priced stock, it
wouldn't have done much, but Dow, the rest of the market, a lot of it obviously does have to do with Donald Trump's tweets, seeming to be a
little bit less antagonistic towards Syria and Russia, that helped.
But earnings - earnings are...
[16:25:15]
LA MONICA: ... back and we have very solid results from Delta despite rising fuel costs, despite all the bad weather we had earlier this year
particularly in the northeast, solid numbers from them and Blackrock which owns iShares and huge Wall Street firm, big money manager, their numbers
also topping forecast and that got people excited and we have big banks reporting tomorrow -- JP Morgan Chase, Citigroup and Wells Fargo, I think
there are rising hopes that those companies maybe not Wells, as much but JP Morgan Chase and Citi should have solid quarters.
QUEST: So, the view is that we're going to see earnings growth of anywhere between 14% and 18% in terms of where and why - that will be a very
impressive for a mature bull market at this stage.
LA MONICA: Definitely, I think that the knock that some people have had about the bull market, because it's gone off for so long, it's just
celebrated its 9th anniversary, how much longer can it really go on? There is an old adage. It is a cliche that bull markets don't die of old age,
but there is truth in that.
Though we are not going to see stocks go down if fundamentals are still good, so if results are strong, and you have revenue growth and profit
growth, that should justify stocks going up especially with the valuations that have come back a little bit because of all of the (inaudible) effect.
QUEST: What does Syria play into all of these because I noticed today, oil actually gave a bit of ground. I mean, it didn't sort of run one would
have expected, but across the board, the VIX was down, gold was down, the 10-year bond put on some yield, but it would expect to if things are
looking much more robust.
LA MONICA: Yes, I think that is a good point. With regards to oil, I think what a lot of people are waiting for is to see just where do things
settle, will we have an actual military conflict involving Syria and potentially the US and Russia? What does that do to crude prices? If oil
goes a lot higher, that's when people start wondering, maybe you're not going to buy a new car, particularly not a new SUV that hurts GM, that
hurts Ford, consumer spending and we know that when oil prices get too high, that is definitely a problem for the broader market.
QUEST: Good to see you, sir.
LA MONICA: Thank you.
QUEST: Paul La Monica. As we continue tonight on "Quest Means Business," Donald Trump pick as the Secretary of State has developed a reputation as a
hawk. Mike Pompeo says he will always choose diplomacy over conflict.
And I am Richard Quest, there is more "Quest Means Business" in just a moment when Volkswagen gets rid of its Chief Executive, after not even
three years on the job, and it's a landmark day for the chief executive of Danone, he'll be joining me here in the -- as we continue tonight, you're
watching Cnn on this network, the facts always along with the news come first.
World powers and the White House are weighing their military options on Syria as the U.S. president down faces earlier threats. Donald tweet has
now trumpeted he never said when the attack would take place, could be sooner, very soon or not at all.
Russia's UN envoy says any strike on Syria would be against international law. The president -- the U.S. president's nominee for secretary of state
has faced a grill on Capitol Hill as several Democrats calling on lawmakers to reject the former CIA Director Mike Pompeo.
Today's hearing became contentious earlier on when questions arose about Pompeo's relationship with the president and about Robert Mueller's
investigation into Russia. Puerto Rico has been hit by a massive power outage across the island. The mayor of San Juan says at least 870,000
people are without power, it might not be restored until Friday.
Officials say a fallen tree caused the power cut, thousands of others in Puerto Rico haven't had power since Hurricane Maria, it's last Autumn. A
door man at one of Donald Trump's buildings says he has an agreement with a "National Enquirer" tabloid company to revolve a rumor alleging that Mr.
Trump fathered a child out of wedlock -- complicated stuff.
Dino Sajudin said he was instructed not to criticize one of Mr. Trump's former housekeepers rumored to have given birth to Mr. Trump's child in the
late 1980s. The "Enquirer's" parent company emphatically denies it paid Sajudin to shut down the story.
Philippines President Rodrigo Duterte has apologized for 2010 hostage crisis in Manila that killed eight Hong Kong tourists. His first formal
apology for the deaths from a sitting Philippines president.
Now to our top story and to recap in the last 24 hours, the U.S., France and Britain have all indicated they are preparing to possibly strike Syria
in response to regime's alleged use of chemical weapons. Michael Holmes looks at the potential backup field.
MICHAEL HOLMES, CNN INTERNATIONAL CORRESPONDENT: Well, it is unclear just when and how the strikes against Syria will unfold. But the U.S. and its
allies, they have a range of hardware at sea and at air bases throughout the region.
Have a look at the map. The U.S. has two destroyers in the area and submarines probably as well, almost certainly. French war ships, they are
in the eastern Mediterranean and a British official told Cnn the U.K. is preparing for possible action against Syria.
British media reports say submarines have been deployed to the region already. The U.K. has military jets at its base in Cyprus, a French Rafale
jets based in Jordan and in the United Arab Emirates. So of course, the U.S. has a vast air base over here in Qatar.
Now as for possible targets, we can really only guess at what the allies might be aiming for. But we've got a map here that will give you an idea.
It shows Syrian air base is marked by these black planes, but also the Russian and Iranian positions in Syria.
Iranian in yellow, Russian in green. Now, all of the allies of course are going to be anxious to avoid Russian casualties, and the fallout that that
would bring, as the U.S. Defense Secretary James Mattis said on Thursday, there are plenty of Syrian bases, military and also air field right across
the country.
Western analysts think that perhaps the Dama base, and you can see that down here, may have been the one from where the most recent gas attack was
launched. But the Syrian military, they've almost certainly taken measures to protect their planes perhaps by moving some down to the Damascus
International Airport or to the Russian base at Khmeimim.
Now it is more difficult of course to know about chemical weapons facilities, but analysts say the Center for Scientific Study and Research
near Damascus is the main research establishment.
Now one big unknown is will the Russians activate their powerful S400 anti- aircraft missile system which is deployed to protect its Syrian bases. You can see here, the range, some 400 kilometers. Now of course, we are
working with open source information.
The governments involved will have classified intelligence of course on where Syria has moved its planes and hidden its chemical weapons program.
After you.
QUEST: Michael Holmes there. Donald Trump's picked secretary of state says war is the last resort. The confirmation hearing on Capitol Hill,
Mike Pompeo was grilled on foreign policy matters, from the Iran deal to North Korea and Syria.
He told lawmakers, his time in the military taught him to favor diplomacy over war.
(BEGIN VIDEO CLIP)
[16:35:00] MIKE POMPEO, UNITED STATES SECRETARY OF STATE NOMINEE: The story is I'm hawk, I'm a hardliner or you know, I read that and -- there's
no one, as you just heard in what I described. There's no one as someone who's served in uniform, who understands the value of diplomacy and the
terror and tragedy that is war.
Like someone who's served in uniform, it's the last resort and must always be so. And I intend to work to achieve the president's policies with
diplomacy rather by sending our young men and women to war.
(END VIDEO CLIP)
QUEST: Michelle Kosinski is in Washington. Let's start with sort of the clarity of it. Former CIA director -- or current CIA director and members
of Congress, I mean, he's well qualified for the job, no one doubts his ability to do the job.
MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: Well, I mean, he's obviously a very intelligent person, went to Harvard Law School, he served
in the military for several years, part of which was overseas.
Yes, director of the CIA, well, for a short time, I mean, he's been there for a year. But I think questions can be asked as well, was he first of
all qualified to be director of the CIA? He was confirmed although it was something of a split decision obviously along party lines.
But there are plenty of questions about whether somebody -- however intelligent they are, with no foreign policy experience should be leading
the State Department.
QUEST: On that front then, bearing in mind the mathematics of any vote. What options do the Democrats have to try and actually err or to let the
critics to forestall him getting it.
KOSINSKI: Well, this is -- it's going to be really close. There's even a question, a very real looming question at this point. But whether he's
going to be voted out of this committee. This was tough questioning today as we expected. We know that Republican Rand Paul is not -- he's already
said at least that he is not going to vote yes, on Pompeo, and remains to be seen if anything changes his mind today, although he didn't sound like
it.
So if he is not confirmed out of this committee, they're going to have to use special procedures to bring it to a vote on the floor of this Senate.
Yes, there's a narrow majority for Republicans, but with Rand Paul on the other side, John McCain, Republican out because he's been recovering from
being ill.
And then other Democrats who voted for Pompeo to confirm him for the CIA are not certain to vote --
QUEST: Right --
KOSINSKI: The same way this way around. So there's a real possibility that this will not go Pompeo's way. Although sources I talked to think
that ultimately, if it does go to a floor vote on the Senate, that they think he'll be confirmed, but obviously a lot of question marks here.
QUEST: And his views. I mean, he did a very -- he did a full-throated defense, says he's never wanted regime change in North Korea --
KOSINSKI: Right --
QUEST: That he's not the hawk that everybody says or suggests that he is. Unlike all military men, he says, you know, I prefer diplomacy over
fighting.
KOSINSKI: Yes, and in fact, the White House put out -- of course, they wanted to -- his prepared remarks which he didn't stick to, but he had this
written set of remarks before this hearing. So the White House took the best kind of, you know, most amenable to being voted in, parts of that if
they could, put it out there.
And yes, he was saying all the right things, hitting all the points that both Democrats and Republicans were concerned about. However, the hearing
was a much different animal. So yes, he did pay special heed to the value of diplomacy and strengthening the State Department.
But there were plenty of weird parts too --
QUEST: Yes --
KOSINSKI: And much of this was based on controversial things he said in the past about Muslims, about gay marriage and gay people in general. And
the fact some of the most contentious questioning came from Senator Cory Booker when he asked Pompeo outright, do you really think that being gay is
a perversion?
Do you think that gay sex is a perversion as you yourself have indicated in the past, and Pompeo would not answer that question. And that was striking
to a lot of these senators who we heard from afterwards.
They can say they don't feel that --
QUEST: Right --
KOSINSKI: Having those views, you know, that you should be leading the State Department where you're going to have to deal with different kinds of
people all over the world. Same thing with his views on Muslims. He didn't disavow anything he had said in the past, he just kept saying, well,
look at my record, my record --
QUEST: Right --
KOSINSKI: Speaks for itself. I think one of the most breaking parts of this too was when he was asked whether he agrees with President Trump, that
the Mueller Russia investigation is an attack on our country.
[16:40:00] So Mike Pompeo, is this indeed an attack on our country? And he wouldn't say it simply no.
QUEST: Michelle Kosinski in Washington, thank you. Volkswagen is trying to put the past behind it, and that means major changes at the top. We go
through the reshuffle next.
(COMMERCIAL BREAK)
QUEST: We're talking a bit of war to anybody (INAUDIBLE) in the business story of the year, world trade and who better bids and who doesn't? In this
case, it's well placed to have a view as his company is at the heart of the global food and drink industry.
Now, Danone operates in more than 130 countries, its Evian water bottles are recognizable around the world. And today, the company says it's past
the milestone in the sustainability of its business.
Its U.S. division is achieving certification into a so-called B Corp Program. What is the significance of this? And more importantly, at the
time when though -- that when world trade is so threatened, we need to talk to Emmanuel Faber; the chief executive. Good to see you sir.
EMMANUEL FABER, CHIEF EXECUTIVE OFFICER, DANONE: Thank you for welcoming me.
QUEST: First of all, congratulations.
FABER: Thank you --
QUEST: On getting the -- this moving forward. And you've sort of changed the name of the U.S. division from Danone to Danone USA which I suspect you
all probably wanted to do in the first place, but couldn't for logistical reasons.
But last year -- but truth be told, we are at a turning point, a dangerous point in world trade at the moment. Would you agree?
FABER: Yes, I would agree.
QUEST: What do you see as being the risk here?
FABER: Well, I think the landscape is one that the world is going to be more fragmented than it used to be, and we hope, our generation hope to see
it. The digital networks and social media is actually spreading news, but it's not making the world any flatter.
I think inequalities are mounting, I think climate change is no consensus for the new generation, they want to act on this, and the danger is that
the political fragmentation of the world is going to change the way businesses need to operate.
QUEST: And was he even up -- today, with the trade issues. U.S. versus China, U.S. sanctions or show tariffs on tariffs and trade. For chief
execs like yourself, doing business in these times becomes much more difficult.
FABER: I think it becomes different.
QUEST: Different.
FABER: It becomes different because if we ever thought that one day the food business would be a global business, that there would be sort of
unified to apply chains, one side speaks all systems.
These are all illusions of the past. We know it's not going to work, we know it's broken in a way, we know it's reached its limit and I bet on the
fact that a lot of things are going to go back to localization.
[16:45:00] People want local for many reasons, and the fruit system of tomorrow is going to be multi-local and not global.
QUEST: Does that create unique problems for large scale food manufacturing such as yourself. When you're selling a bottle of Evian which is naturally
pure source from the French Alps, but is then shipped across the Atlantic or across the Pacific.
How do you square that circle?
FABER: I square the circle in many different ways including the fact that we need to take care of the sustainability of this. So this is probably
neutral. At the time at which we are holding this in your hands, Richard, it is carbon neutral.
We have a business system that means that this is climate neutral. But this is important, otherwise I won't be in a position to continue to
convince consumers of the next generation to continue to hold to this.
The same way we are in agriculture, going for regenerated agriculture because the soils are losing fertility everywhere. The same way we are
looking at one planet, one health ambition is about this. People want to reconnect with their food.
How ingredients are made, who are the people behind the brand and this is where the B Corp certification is achieving a huge milestone for us.
Because it's an independent body that says that these brands, the people behind the brands are respecting the highest standards of extortion.
The way they look at the world and what -- the way they operate their business.
QUEST: Do you ever find that you have to make some very hard decisions on the sustainability question. Because what's happening now of course is
that there's a general acceptance of sustainability of principles, whether you turn to the sustainability development goals --
FABER: Yes --
QUEST: Or whatever it is. There's a general acceptance. But sometimes as a CEO, you have to balance that against profitability, shareholders and
stakeholder interests.
FABER: Yes, it's always a question of balance, and it's always a question of building the short, the mid and the long-term horizons. I think we have
huge examples around us of situations where companies have lost their sight of the long-term --
QUEST: Right --
FABER: In a way, invested in the short term, cost-cutting all over the place, et cetera and just lost their track. And I think this is
participating in the lost of consumers in the trust that they place in the brands.
Consumers need to understand that companies are not driven by making any profit at any cost. They are here to serve their needs as consumers. I
will leave here the bottle by the way. But this is fundamental, this is fundamental to the story, and this is where they're getting their
certification as a B Corp is bringing --
QUEST: Right --
FABER: An outside element that says a lot about who the people behind the brand are.
QUEST: I tell you what? They've got another one over there. Have a bottle of water on us.
FABER: Thank you my friend.
QUEST: Good to see you sir, thank you very much indeed.
FABER: Thank you, my pleasure.
QUEST: Now Volkswagen, now it's time for one company -- Volkswagen has abruptly got rid of its chief executive -- Clare Sebastian is going to tell
me all about that. What -- how come, what happened and why?
CLARE SEBASTIAN, CNN FINANCIAL & BUSINESS REPORTER: Well, so Matthias Muller as you know took over about a week after we found out about the
diesel emission scandal in 2015, he's been in the job less than three years.
And this is a quite a sudden move. But the way the company is presenting this, as I say, this is part of a big and management structure, they're
overhauling the business. Volkswagen, don't forget has been widely criticized for years, having too much of a top-down structure for being the
concrete and cumbersome of having to being too slow to make decisions to help keep up with the rest of the industry.
But I think a lot of people looking at this and thinking, well, they just want to make it better to clean break --
QUEST: Yes, but why --
(CROSSTALK)
I mean, have they done anything wrong?
SEBASTIAN: Well, no, but I think yes, you took over a week cost there and he's had to shut the company through --
QUEST: Right, so it seems so much unfair to oust him.
SEBASTIAN: You know, I think certainly people are going to say, well, but if you look at the shared prices, it has come up in the days since we had
that rather cryptic statement on Tuesday that the company was considering management changes.
I think people are looking to someone who, you know, is completely separate. From this Herbert Diess came in, who is the successor, he came
into the company just months before the diesel scandal broke.
Don't forget Matthias Muller worked at Porsche before -- which is one of the Volkswagen brands before he took over as CEO. So he -- you know,
Porsche has been, you know, at various points embroiled in the emissions scandal. So I think to some extent, he's been seen as tainted by
association.
But he has -- you know, Richard, to be certain, taken a very mere -- cop an attitude to all of this. He you know, shepherding through various
settlements and expensive recalls of cars, you know, on to him, the company admitted to criminal charges of conspiracy and paid a $4 billion fine in
the U.S.
So it's been a rough three years for him, but I think the company needs to fight against all the competition, particularly --
QUEST: And yet --
SEBASTIAN: When it comes to electric cars.
QUEST: We had on this program the head of America joining us from the New York auto show. You know, a good range of vehicles, many electric
offerings. The way Volkswagen has come back from the scandal which has cost it billions.
SEBASTIAN: Yes, $30 billion.
[16:50:00] QUEST: Thirty -- tens of billions is remarkable. This would have sealed off most other companies.
SEBASTIAN: They've really prioritized. China has been a huge market for them, Richard, and particularly in terms of SUVs, they've sold huge numbers
of SUVs in China. But I still think with all the competition coming through, they said they want to elect by their entire range by 2030.
Their car basic out there would have done it ten years before that. So I think they still need to move faster.
QUEST: Clare Sebastian, good to see you, thank you so much indeed. We're now going to go to the markets as we continue tonight. Just look at the
markets to see how the Dow is performing. The Dow has had a very strong day, not the best of the day.
It was up by over 350 points at one particular point, but it has still managed to get a 1.2 percent rise. More bad news is growing for bitcoin,
if you're hoping for signs of a bounce-back, we're looking at cryptocurrencies after the break.
(COMMERCIAL BREAK)
QUEST: The price of bitcoin spiked early on Thursday, briefly climbing over $8,000, and that wasn't 11 percent of the day which is somewhat
unusual. A new research from Barclays says there's little chance or whatever it can to the record levels, it hit in December when it was up to
nearly $20,000.
They say that was a speculative ball which has deflated and it's all downhill from now. That said, if rallies like that weren't enough to
entice you, then maybe Japanese girl band and wrestling masks could (INAUDIBLE) once you change your mind.
Anna Stewart in Tokyo.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN (voice-over): There are eight girls lifting pop band. Bitcoin ethereum and ripple alongside some less well known sidekicks like
NEO and MonaCoin. Such a currency is a tricky concept to wrap your head around.
These girls who take the French-made outfits and Mexican wrestling masks are here to decode it. From mining, it doesn't sound investment advice.
The front woman is Lara Naresa(ph), also known as Bitcoin.
UNIDENTIFIED FEMALE (through translator): There are risks and rewards when investing in cryptocurrency and we're using our lyrics to help people
understand that.
STEWART: Demand following is on the rise but their salaries might not be. That's hot paid in, you guessed it, cryptocurrency. Bitcoin to be precise
which has flagged merely 60 percent against the dollar in the first three months of the year.
In fact, their funds was frozen by the coin check exchange after it was hacked in January. But it doesn't worry these girls.
UNIDENTIFIED FEMALE (through translator): I'll be excited if I get all my salary in cryptocurrency.
STEWART: Their optimism is clearly contagious. This is a block chain. Dog chain, get me a mask, I'm ready to join as the ninth member.
Ann Stewart, CnnMoney, Tokyo.
(END VIDEOTAPE)
QUEST: Now, let me just remind you, we just got -- the White House has confirmed that President Trump has asked the U.S. Trade Representative
Robert Lighthizer and the chief economic adviser Larry Kudlow to read -- to look at the TPP deal that ended last year.
[16:55:00] In a statement, he said last year, the president kept his promise to end TPP, the president consistently said he'll be opened to a
substantially better deal. To that end, he's asked them to take another look at whether a NAFTA deal -- whether or not a better deal could be
negotiated. Profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. In the last hour, the White House has confirmed that President Trump has asked the USTR trade rep and the
National Economic Council Director Larry Kudlow to look at ways in which they could renegotiate their way back into the TPP, the Trans-Pacific Trade
Partnership with Asia.
Which you'll remember the president withdrew from, that's one of the first things he did -- or the first thing he did when he came into office --
extraordinary. Eleven other members of the TPP kept together in Asia, Australia, Japan, Canada and the likes and signed up to the deal without
the U.S.
It became known as the 11 minus U.S. Now the U.S. is saying it wants in again if it can negotiate itself back in again. The problem is why will
the others negotiate? They've already said they're not prepared to do a full scale renegotiation.
So the issue will become, can they tinker with the existing new agreement, with the new agreement sufficiently to get Donald Trump back in again, but
without doing a renegotiation that would require treaty approval from all the other members.
I am not sure they can. It's going to be fascinating to watch. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whatever
you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
END
