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Quest Means Business
German Stocks Down Heavily After Angela Merkel Gets An Ultimatum From Her Own Partners; Audi's Chief Executive Is Under Arrest; Google Is Betting A Half A Million Dollars On China; President Trump Has Ordered The Creation Of A Space Force, Calling It The Sixth Branch Of The Armed Forces; Trump on Separations: U.S. Will "Not Be a Migrant Camp;" CNN Poll: Most Republicans Back Border Policies; German Chancellor Merkel Given Two Weeks to Fix Immigration; Fresh Brexit Defeat for U.K. Prime Minister; Croatia Sends Star Striker Home from World Cup; England Defeats Tunisia 2-1; World Cup Fever Sweeps Across Russia; Jay Z and Beyonce Give Tidal Streaming Service a Boost with New Album; British Chambers Of Commerce Predicts the U.K.'s Economy will Experience the Weakest Year Of Growth in Almost a Decade; World Health Organization Warns of Gaming Disorder. Aired: 4-5p ET
Aired June 18, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: That is off the lows of the session, but still unable to hold 25,000. It has pulled up quite considerably from the
opening of force, but PSE giving the closing bell. So, we have got one wimpy one and one okay one, but trading is over. It is Monday, 18th of
June.
Tonight, two weeks to save her coalition. German stocks down heavily after Angela Merkel gets an ultimatum from her own partners.
Audi's Chief Executive is under arrest. Dieselgate is rumbling on and Beyonce's new album has some shade for Spotify. You can hear it now,
ironically, not exclusively on Spotify.
I am Richard Quest, live from the world's financial capital, New York City where it's mixing hot here, but where I still mean business.
Good evening, Angela Merkel is facing a moment of reckoning. She is being given two weeks to save her coalition and resolve the immigration debate
that threatens to bring down Germany's fragile government.
The Chancellor has been given an ultimatum -- overhaul Germany's migration policies or face a new rebellion from coalition partners. Facing his own
migration debate in the United States, President Trump seized on Mrs. Merkel's position to launch an attack on Twitter. He claims the migration
issue has caused the people of Germany to turn against their leader. Investors seem concerned by the political turmoil.
The Xetra DAX fell one percent on Monday, markets are unlikely to be soothed by the words of the Chancellor's chief antagonist. The CDU's party
leader warns the crisis won't be over any time soon.
(START VIDEO CLIP)
HORST SEEHOFER, FEDERAL MINISTER OF THE INTERIOR: (Through an interpreter). It is ridiculous to say now to determine public that is all
about those two weeks and then after that, it will all be wonderful.
I repeated it to the Board gathered today. I warn you that we are not out of the woods yet, not at all.
(END VIDEO CLIP)
QUEST: Atika Shubert joins me now with the latest from Berlin. Two weeks -- now before we get to what happens in that two weeks, let's first of all
analyze the compromise that she has agreed to just to get the breathing space for a proper negotiation.
ATIKA SHUBERT, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, well, basically, you heard there from Horst Seehofer that of course is the
Interior Minister. He is also the leader of the Bavaria sister party, the Christian Social Union and he was threatening to essentially break up the
coalition government unless he was allowed to unveil the 63-point plan to reduce migration, specifically, he wanted to reject the asylum seekers at
the border if they had already applied for asylum in other EU countries, and that is where Merkel drew the line.
She said, "Listen, I can't accept that one point in your plan. Give me two weeks to find an alternate solution by brokering bilateral agreements."
And that is where we stand now. So, she has to try and figure out those deals with other EU nations come back on July 1st, report back to her party
and say, "This is how I have resolved it."
QUEST: Right, but what is the core issue here? I mean, I know it is complex that she has to do it, but the agreement to allow for instance
migrants to stay in the country where they have arrived. What is the difference between her and her coalition partner?
SHUBERT: Well, the difference is essentially that of as you know, in the EU, if you're applying for asylum, you're supposed to apply in the country
where you enter. Unfortunately, this means that you get a disproportionate number of asylum seekers in Italy, Greece and those external countries.
Germany did take in about a million refugees during the 2015 crisis and that as far as Seehofer and Merkel's critics are concerned is too many.
So, what they want to do is reduce the number by then saying, "If you've already applied in Italy, Greece or somewhere else, you can't come here to
Germany." And then push them back.
Now, Merkel is saying that's a violation of the EU principle of freedom of movement and that Germany can't do that automatically. It needs to broker
some sort of a deal if not with all of the EU, then bilateral agreements with different EU partners. That's the difference there.
So, she has basically bought herself some time to try and broker those agreements, and maybe stave off any political crisis at home.
QUEST: Is it likely though that the CSU would promote this to a full blown crisis to the point where it would endanger the coalition and Merkel's
position?
SHUBERT: Well, that's the key question. I mean, the CSU is looking at Bavaria local elections in October, that's probably one reason they have
taken this up a notch to such high drama, but the reality is, if they broke up the coalition, then the CDU, the Christian Democrats could field their
own candidates in Bavaria and it could end up hurting the CSU in the long run.
[16:05:12]
SHUBERT: Also, as much as the general public wants to see tougher immigration laws, they don't want to see another round of elections coming
up. So, it could work out that the CSU says, "Listen, we have proven our point, now we will just back down," but we'll know better in about two
weeks, Richard.
QUEST: Atika Shubert in Berlin. Elmar Brok is a member of the European Parliament -- Parliament of the House and a close ally of Chancellor
Merkel, joins me now from Verl in Germany. Good to see you, sir. Thank you.
How likely is it how that a solution can be found in the two weeks breathing speace that Chancellor Merkel has been given, bearing in mind,
she is going to have to get a green light from the other parties, the other countries in Europe?
ELMAR BROK, MEMBER, EUROPEAN PARLIAMENT: Look at the party (ph) this morning and there was a very strong support from all the leaders of our
party and the thing she was pressing (ph), that was the European solution. And (ph) now that per month, 95 percent less migration in (ph) countries
than we had October 2015. The great success story and many other measures were taken, and here is a small question around -- around France about was
the close with their regional elections and I believe that that (inaudible) and Mrs. Merkel will talk to the neighboring countries because she says if
she does not do that without an agreement with our neighboring countries, we will (ph) -- these measures will have no effect.
QUEST: All right, is in your view -- I mean, it may not be nice or pleasant to say this, but is the German coalition in danger over this
issue?
BROK: Look, you can never know how far people go, but (inaudible) on that with interest (inaudible) breakdown, nothing would be delivered. And also
about (inaudible) success (inaudible) for the elections. The only (inaudible) would be the (inaudible) party and therefore, I believe that if
some things were to be pushed forward, but that at the end of the day, government will stable (inaudible) of the Bavaria Party in their own
elections.
QUEST: Elmar Brok, thank you. We will keep it short because we have a poor connection tonight, so we will talk to you hopefully again in the
future about this, but thank you for joining us in this evening.
Now, we say with Germany, there was no shortage of drama in the country today after authorities arrested the Chief Executive of Audi, one of the
country's biggest auto makers. Rupert Stadler was taken into custody. Investigators are worried he could influence witnesses related to the
emission scandal.
Shares in Audi's parent company, Volkswagen, which has already paid tens of billions of Euros in fines and fees because of the emission scandal fell
sharply on the news. Anna Stewart is in London. What's he been arrested for?
ANNA STEWART, CNN CORRESPONDENT: So, this is an investigation, a criminal investigation of Audi and it involves the alleged fraud by some 20 former
and current employees and one of those is Rupert Stadler. He is being investigated.
Now, he was arrested, Richard. He is being detained because of the risk of evidence tampering or influencing other witnesses, other managers from Audi
over the scandal, so that is why he is being detained today.
We knew that his apartment was raided last week and today, the Volkswagen supervisory board were meeting to discuss this amongst other things, so
everyone is on tenterhooks wondering whether or not he will be forced to tender his resignation.
QUEST: Okay, so let's be clear about this, the emissions scandal related to Volkswagen cars, where does the emission scandal fit into the whole Audi
question?
STEWART: Well, Audi as a subsidiary of BW is also part of the emissions diesel scandal. It also had cars that were fitted with cheating devices
like Volkswagen, but there is a separate investigation that has also linked Volkswagen and watched those CEOs and managers know.
What they want to know here, Richard is who knew what when and what did they do about it? Was it transparent? Many shareholders have brought this
up in separate lawsuits. I mean, there are numerous lawsuits around this saying there wasn't enough transparency from the Board on how big the
liabilities would be.
As you said, tens of billions of dollars.
QUEST: All right, so that's already been paid, but the moment somebody gets locked up and I am trying to remember how many of the people have been
locked up in this case, and I am not sure there have been any, but the moment somebody gets locked up on allegation of -- or potential allegation
of witness tampering, then we're moving into a different area, a much more serious area of criminality in that sense.
STEWART: Absolutely, I think it would be much harder to really dodge this bullet as a CEO. The Board has been incredibly supportive of Rupert
Stadler throughout, his being in the company since 1990, and he has faced many calls for his resignation over the last couple of years.
[00:05:12]
STEWART: Particularly, actually from minority shareholders, but the Board has supported him every step of the way, and actually last year, despite
what he has caused, they actually extended his contract by five years.
But as you say, bringing someone under arrest changes the story entirely, so everyone is watching to see what will happen in the next sort of 12
hours.
QUEST: Anna Stewart, thank you for putting that clearly into perspective for us. Thank you.
Now, stocks are down almost everywhere you choose to look. In fact, there was -- the Dow opened lower and although it recovered, it really was a
fairly sharp fall. Look at the grid and you will see. The Dow was off in its worse point down about 260 to 270 points, so it did come back quite a
lot.
But still close of 133 and failed to hold the 25,000 mark. Similarly, losses -- percentage-wise, much less for the NASDAQ and indeed, the fan
stocks for most of the day were actually higher. But, that misery could be seen of what we saw or we had just been talking about, not only with Angela
Merkel, but Audi can certainly be seen here with the Xetra DAX which is off 1.3 percent and indeed, over the whole market, if you look at the global
markets, you've got the US, you've got Europe, you've got Asia.
It was the Xetra DAX, which is the one that has the biggest fallout, the political fallout for Angela Merkel. US stocks were also lower, it's the
trade wars that were worrying those. Paul La Monica is with us. And Paul, as we look at this graph over here, we can see clearly, we were down about
252 to 260 odd points at the open. I mean, there were several attempts to claw back but the day was still down quite sharply.
PAUL LA MONICA, CNN CORRESPONDENT: Yes, we couldn't get there. We obviously still had a triple digit loss and this is a similar pattern what
happened on Friday. It looked as if the market was really going to fall very sharply, things looked very bleak and then we recovered by the end of
the day.
I am getting sense from talking to people that there still is nervousness obviously about a potential trade war with China and just about every other
major country in the world -- with them and the US, but no one seems to be panicking yet. I think there is still this notion that the cooler heads
may eventually prevail, that this is just tough bluster by President Trump et cetera.
QUEST: Right, so there was an article in "The Times" over the weekend that basically said, in the business section, why the trade war everybody is
saying Armageddon is dreadful, it will be awful, but there is no evidence of that in the market.
And Peter Tuchman at the exchange was saying to me today, look, there is not the evidence of it yet in the market because the economy is strong.
LA MONICA: The economy is still strong, Richard. Earnings growth for the second quarter is expected to be extremely robust. There's talk about
analysts projecting almost 20 percent profit growth year over year. The question is going to be when do companies start talking about the
nervousness coming into play for the rest of this year and next year.
You've got the Atlanta Fed, President Raphael Bostic making a speech today where he talked about how earlier this year, he was incredibly optimistic
because of the tax cuts, and now he is getting a sense that he is a little bit more worried about the environment going forward because people are
telling him that yes, all of these trade bluster could have an impact on their profits going forward.
People are going to be a little bit more skittish. They may not buy as much as stuff, both corporations and consumers and I think that's a
legitimate concern going forward.
QUEST: It's interesting when we look at it. It's good to see -- didn't you say, as we look at the market, it has tried to rally, and it did to a
certain extent, but could not do it.
LA MONICA: At least not for the Dow, but the NASDAQ did finish positive. You've got people still loving those companies like Facebook and Google and
Netflix, Amazon. They seem to be resistant to all of these macro concerns.
QUEST: Good to see you. Thank you.
LA MONICA: Thank you.
QUEST: When we return, President Trump is looking beyond his borders with dominance and out into the universe -- we will look for his plans for a
Space Force, what that actually means, and Jay-Z and Beyonce remind the world they have their own streaming service and then promptly, we get all
the results upon arrival. Go figure.
[16:15:00]
QUEST: Now, I do need to just correct one or two minor matters. We showed you all the market numbers earlier, and I am afraid, I think that the
machine must have frozen. The top line, the US market shows the Dow, we had it down 113 points, it's not 103 at the close, but the important thing
which Paul La Monica quite rightly points out, the NASDAQ actually did eke out a small gain for the session.
So, just to correct. In case you were a little bit concerned that it didn't look like we've got it exactly right. We didn't get it right, but
we have got it right now.
Google is betting a half a million dollars on China and that's despite Google being blocked mostly by Beijing. Clare Sebastian is here. Who are
they buying and how much?
CLARE SEBASTIAN, CNN CORRESPONDENT: They are buying just under 1 percent of jd.com for $550 million in cash, Richard, so obviously, this is a big
foray into China for Google. They have basically not been operating in terms of their search maps, e-mails, YouTube entirely since 2010, but
clearly, they haven't given up on the country.
We have seen little moves in this direction. They have got two apps in the country. They have got translation and they have got file management.
They have visiting since -- which I was there back in November. They have opened an AI center there, so I think this is more of the same
(inaudible)...
(CROSSTALK)
QUEST: Remind us why they are not there as Google.
SEBASTIAN: Right, because of the Chinese's government's laws on censorship. They basically couldn't comply ethically with the rules there
and they left in 2010.
QUEST: And they pulled out.
SEBASTIAN: They pulled out despite the fact that there are 730 million Internet users in China, Richard, more than twice the US's entire
population, they still pulled out. But this is something they kind of ignored -- the size and scale of this market. But it is important for
jd.com as well.
QUEST: Why?
SEBASTIAN: Because jd.com just like Alibaba, you've seen them you know, doing road shows in the US and beyond. They want to expand outside of
China, that's really important for them because the market there, even though it is huge isn't growing at the same rate as it was. So, there is
room for growth. It seems to be international, South East Asia, Europe, the US -- all of these areas jd.com will be able to access through the
steel. Its products will be on Google Shopping and there are more what they call retail solutions on the guard...
QUEST: But what does jd.com do in the EU? We think of jd.com like Alibaba, as just being China's version of Amazon?
SEBASTIAN: Actually, jd.com is even more China's version of Amazon and Alibaba is because it has the logistics network. I've got a video I think
of one of their fully automated warehouses. They do what Amazon does. They have their own logistics there. They do two-hour delivery in 50-plus
cities around China.
So, they really do the kind of -- the supply chain that is crucial to e- commerce, and I think that's what Google is so interested in here. They haven't cracked the e-commerce yet.
QUEST: Thanks. Good. Thank you. Clare Sebastian. Big tech firms like Google aren't the only ones working in this more complex environment. John
Stankey, the new head of our parent company, WarnerMedia tells "New Day" that everything in the entire economy is more difficult now.
(BEGIN VIDEOTAPE)
JOHN STANKEY, CEO, WARNERMEDIA: I think everything in the industry right now is probably more complex and more difficult than it has ever been, and
I think if you were sitting over at Facebook today and asking about what it's like to run their business, the transparency dynamic that any company
has to run under and the volatility that it brings in the decision making, that's just part of industry today and I don't think it's unique to our
circumstances. I think it's just broad scale across the economy right now.
ALISYN CAMEROTA, CNN HOST: So, for all of our viewers who are watching, they want to know what this means for them, are there costs going up? What
else -- how will this affect them?
STANKEY: Contrary to what the government alleged, no. Our goal here is actually to innovate on product and you know, for me, personally, why I am
excited to be here, I have always been happiest in my career when I get to build things and do unique things and do things that are different.
And our goal here is to invest in this business and our goal is to do it in a way that provides for platforms and capabilities that are consistent with
where technology is taking things. And you know, a classic example might be here at CNN.
[16:20:11]
STANKEY: How can we broaden the distribution of the great content you guys build every day? How can we make it more readily available and the push
lifestyle that everybody leads and I think there are some very exciting things to do in that regard.
So, it's about innovating, it's about building new product, it's about investing heavier in content. It's certainly not about going out and just
trying to think about we want to raise prices on content for what other people buy.
BRIAN STELTER, CNN CORRESPONDENT: I think that's interesting because there have been some concerns in the cable industry that we are in a period of
decline or shrinkage as opposed to growth and investment? And you're saying in places like HBO, there is more money that should be spent?
STANKEY: Look, I think that the model as we know it today, you know, standard linear television is a very immature model. Standard linear
television in the form how ads are supported in it.
But there is an opportunity to innovate in that regard, not only with how the content is configured, but to think about how advertising supports that
content, and that's why we established the advertising entity with an AT&T that is being led by Brian Lesser.
The purpose of that is to start building the new ad formats and the more targeted advertising. They can lower ad loads and still monetize content
the way where it remains affordable for the customer.
So, that's the kind of innovation we are going to be working on.
(END VIDEO TAPE)
QUEST: Thank you. The CEO of Warner Media, my boss. President Trump has ordered the creation of a Space Force, calling it the sixth branch of the
Armed Forces. Now, the appropriate name, Barbara Starr, joins me from the Pentagon.
All right, a Space Force will do what?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: I haven't actually thought about that, Richard, until you mentioned it. Well, you know, I thought I
would try not to make the "Star Wars," "Star Trek," "Battlestar Galactica" jokes, but let me have a go at it.
I mean, you know, this is not a brand new idea. It's something the Pentagon has long been involved in and trying to make sure that its
satellites in space, the things that it relies in for war fighting are safe and secure from adversaries, and that the US can dominate in space.
So, we already know that some parts of the military pay an awful lot of attention to this, especially the US Air Force.
The President has for some time now talked about he wants a separate Space Force. Not getting total support from the Pentagon about all of that
because there is a lot of worry, it's just going to wind up being more bureaucracy, but here is a bit of today when the President announced this,
a bit of his vision from the White House.
(START VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This time, we will do more than plant our flag and leave our footprints, we will establish a long term
presence, expand our economy and build the foundation for the eventual mission to Mars, which is actually going to happen very quickly.
(END VIDEO CLIP)
STARR: Well, going to Mars quickly, we will see, as with all things in the United States government. It is going to depend on Congress' funding all
of these ideas that the President has, but let's look at a very practical task ahead. One of the biggest things in space for the US military for
example is to make sure its GPS satellites -- global positioning satellites -- are always safe and secure because if you have an adversary trying to
take those out somehow with some sort of attack, that would not just devastate US war fighting capabilities around the world, it would devastate
communications around the world.
So, it gives you an idea of how much it is a problem, how much it is an issue, but is the President's solution the one that Pentagon wants, not
exactly clear just yet that it is, Richard.
QUEST: Okay, so Barbara, with all of this, I guess, you know for a President that loves hype, obviously this has been in the works for some
time, what is that gap between hype and reality to fruition and execution?
STARR: Well, for people, for top commanders in the US military, their question starts with if there is something out there that we are not doing
to defend and protect Americans in that space environment, is there something more we should be doing?
A lot of money, time and attention is being paid to the very question -- advanced defensive capabilities, defensive information attacks all of that,
the key question I think, Richard, Congress wants to see something happen, but there may be a very limited appetite for an entire new branch of the US
military.
QUEST: Our own shining star bright and comets skating and great to tell us the story, Barbara, good to see you as always, thank you.
STARR: Thanks.
QUEST: Barbara Starr at the Pentagon. Now, from space to slightly at lower altitude, but we all get to fly anyway where Lufthansa, now, we know
Norwegian has received already two bids and rejected them from IAG -- the owners of BA et cetera.
[16:25:16]
QUEST: Lufthansa is reporting they have now been in contact with Norwegian Air Shuttle as well. So, you have Lufthansa and British Airways and IAG
interested in buying Europe's third biggest aircraft low cost group. Both have budget players in play.
I wanted to look at the destination board and we are going to show you exactly why this is so fascinating because if you look for example at what
Lufthansa already owns at the moment, you will see the complexity.
Now, you've obviously got in the Lufthansa group, Lufthansa the German, Swiss the Swiss Airline, you've got CityLine which is the regional;
Edelweiss, the low cost; German Wings and Euro Wings and your Austrian -- they are the main components that Lufthansa already owns within it.
It's already got as well minority stakes in the Aerologic and Sun Express, so Lufthansa on the one side. Now, you've got AIG and if you look at the
airlines AIG has, you'll see exactly how significant that is going to be.
BA, Iberia and Aer Lingus, Vueling and Level, they are the majorities already that they have got. They are the big carriers that they have got.
The minority stakes that -- this is the key one, the key one here, there. Already got 4 percent of Norwegian, nearly 5 percent.
So, on the both hands, you have Lufthansa and you have IAG, two of the largest groups in the world now both seemingly doing battle trying to get
Norwegian. I can tell you from within the industry, the view is Lufthansa may just have the upper hand in all of this if Carsten Spohr decides to go
for the full bid, may indeed.
But Willie Walsh is not going to give up easily, neither Chief Execs, neither Spohr, nor Walsh is prepared to overbid for an airline that they
see is already in trouble.
We will have more after the break.
Hello, I am Richard Quest, there is more QUEST MEANS BUSINESS in just a moment. When Beyonce and Jay-Z set up for a big weekend on their streaming
service and how title's rivals are catching up and arguably, the two of them shot themselves in their own fight for bid.
And the World Health Organization now shows that video game addiction is real. I will speak to the founder of a rehab center for gamers. As we
continue, you are watching CNN and here, the facts always come first.
President Trump is again falsely shaming his political opponents, the Democrats for his own policy on immigration which resulted in family
separation at the borders. In remarks earlier today, President Trump said the US would not become a migrant camp for refugee holding facility.
[16:30:16] Meanwhile, the new CNN poll shows most Republicans approve of the policies which meant more parents and children being separated at the
border. Overall, two-thirds of Americans disapprove, the president's approval rating is now at 39 percent.
Chancellor Merkel of Germany has been given two weeks to reach an agreement with the EU on a new immigration policy that both members of our coalition
government can support. The CSU Party, her partners wants a deal to ban migrants who have already applied for asylum elsewhere from entering
Germany.
CSU says if there's no deal, it will unilaterally move forward with the plan. In Britain, the Prime Minister Theresa May has suffered a fresh
defeat of her Brexit plans. The House of Lords voted to give parliament the final say on what happens in the event her government fails to reach an
exit deal with the EU.
The legislation is to be debated in the House of Commons on Wednesday. Croatia's Nikola Kalinic has been sent home from the World Cup after he
refused to come on as a substitute. The striker said he couldn't play against Nigeria because of a back problem.
His coach pointed out he also refused to play during a friendly with Brazil earlier this month. A thriller outside of Saint Petersburg where a short
while ago England defeated Tunisia, it's the end of day five in the 2018 World Cup. After some early missed chances, England's Captain Harry Kane
gave his team an early 1-0 lead, Tunisia leveled it with a penalty, and that was just before the end of the first half.
Then as time was draining away, it was Harry Kane again with a dramatic header -- yes, and to give England the 2-1 victory. Amanda Davies is in
Moscow -- it's a haunting of a match.
AMANDA DAVIES, CNN CORRESPONDENT: Richard, it was, but it's dangerous times because England have won their opening match of this World Cup, and
everybody in England has been doing so well in terms of playing down expectations for this very young, relatively untested England side.
Now, they've won, you do worry what happens next. It wasn't the most convincing performance, it has to be said, but there was some very exciting
moments within the side against a Tunisian team that -- or in their first World Cup since 2006 and we knew it would sit very deep, defend very deep
in numbers.
So it was always going to be tough with this England side. The moment that you do get excited about is the fact, so in days gone by, a warm one,
England's generally would have settled for that or even worst perhaps conceded a late goal.
But these guys kept on pushing, kept going and Harry Kane led by example as the captain as you said to score the winner in the 91st minute, and you saw
--
QUEST: Right --
DAVIES: Just what it meant to him and his manager Gary Southgate, a massive results early doors.
QUEST: Oh, hang on Amanda, it's better to win than lose.
DAVIES: Absolutely Richard, but you know, I have been through some downs and downs. A little, a few ups. But more downs as an England --
QUEST: Right --
DAVIES: Supporter over the years, and so you know, I am wearing my red dress, I wore my shirt this morning for breakfast, so we've got to be
realistic about it. As this is, you know, one of the rare groups, after this point in the competition has actually gone to plan with the big teams
--
QUEST: Right --
DAVIES: Drawing their opening games, Belgium also won earlier today. So compared to what we've seen with Brazil, with Argentina, with Germany
losing yesterday, we know that you can't take anything for granted at all in a World Cup.
QUEST: And the beauty of all of this is that the atmosphere is starting to build. Whether it'd be the Germany match or even the first match from
Russia and Saudi Arabia right the way through to this match, the atmosphere is building up as it's supposed to.
DAVIES: Yes, it truly is a World Cup. We're just at the bottom of Red Square as we've said to you before, and there's a lot of Mexican fans,
there's been some Colombian fans here today. And remember four years ago, Richard, you had your flag pole of flags really and you were texting me as
to which flag needed to come out on which day.
And today, that was really tested, I had a fantastic moment by Saint Basil's which has been open for the first time after they've taken down all
the stadium from the concert last week.
[16:35:00] And there were three fans, there was a Mexican and Argentinean and a Spaniard having a photo taken.
And then they saw a Colombian and said, come on over, and then there was a Peruvian who joined the party and then there was some Moroccan fans who
joined the party and a German and a Swedish fan, and it was really a fantastic moment in front of Saint Basil's, seeing everybody in their shirt
with their flags and it is what you would hope a World Cup would turn out to be.
QUEST: And be assured, Miss Davies, that your vexillology knowledge will be required before we are finished, because the flags return, the flags
return when the economic World Cup returns once we get into the knockout rounds which comes later.
So you may not rest easy, you'll be up all night studying flags, good to see you.
DAVIES: I will, bye-bye.
QUEST: Sorted that out. Beyonce and Jay-Z say they don't care about the music industry's obsession with streaming numbers.
(BEGIN VIDEO CLIP)
(MUSIC)
(END VIDEO CLIP)
QUEST: Plenty stuff, there it is, streaming service and the streaming business, we're going to see -- discuss what it says about the future of
Tidal streaming service. That they bring out a new album, maybe it's exclusive to them and then give it to everybody else -- after the break.
(COMMERCIAL BREAK)
QUEST: Beyonce and Jay z dropped the surprise album over the weekend, it wasn't expected. It managed to get the whole world talking about their
streaming service Tidal once again.
Fans were sent rushing to the app because it was only app -- it was the only way to hear the album at first. Now Beyonce and Jay z have given it
to the mega streaming rival Spotify, Apple and Amazon.
And speaking of Spotify, Beyonce has some choice words about the music business and its obsession with streaming numbers. Listen carefully.
(BEGIN VIDEO CLIP)
(MUSIC)
(END VIDEO CLIP)
QUEST: Savory stuff, Larry Miller is here thankfully. Help us to understand it, director of music business at the NYU Steinhardt School.
We'll get on to the obsession with streaming numbers in a moment.
But being weird to surprisingly release your own material on your own streaming service that you've got an interest in and then given away to the
competition the next day.
LARRY MILLER, DIRECTOR OF MUSIC BUSINESS, NYU STEINHARDT SCHOOL: Well, true enough. And if we go back to not so long ago when "Lemonade" dropped,
of course that dropped on an "Hbo" special, but it was also exclusively available on Tidal for a short period of time.
[16:40:00] QUEST: It was exclusive for a day.
MILLER: Yes, right, that's very short.
QUEST: That's very short.
MILLER: That's very short indeed. But I think that streaming has evolved and the music industry has evolved and Spotify have about $180 million
subscribers and Apple have another $40 million or so, and Amazon have many and there are other places people go to stream music.
QUEST: Right, but if you are Beyonce and Jay z, you're not worried about the money necessarily.
MILLER: Right.
QUEST: And if you are committed to your Tidal streaming service, you're prepared to take the punishment that will come by insisting it's only
there. So why give it away?
MILLER: Well, it's important to be where the eyeballs are and air balls are. And any artist wants to be able to gather attention around their
latest music --
QUEST: But you can't have both, Larry, you can't -- I mean, what I'm trying to say is it suggests a lack of commitment to Tidal that they would
have done it so quickly --
MILLER: Well --
QUEST: Not even seven days.
MILLER: Right, not even seven days. And so in today's tension economy, who knows what we'll be thinking about a week from now. And so right now,
while attention is riveted on Beyonce and Jay z and that amazing video they chose to make some music available a day later.
QUEST: The louver, they got access to the louver --
MILLER: Amazing --
QUEST: For this video which is extraordinary, which is gratifying in a sense to see the amount of money and the amount of effort and care on
production values that are put into these, some things, even though sort of extreme things as you say, here today, gone tomorrow.
MILLER: Fair enough, and so it's incumbent upon artists and the people who they work with today to be able to drive attention by releasing music and
video and other things in other to maintain attention for as long as possible.
QUEST: OK, so as to Beyonce's somewhat vulgar references to streaming and let me -- and then Spotify, you're right, it's a numbers game. I mean, I'm
glad you're -- we've got -- the music business expert here, it's a numbers game and Spotify has got the numbers, 175 million.
MILLER: It is.
QUEST: Right, as anybody else, I mean, if you want to be heard, you've got to go there.
MILLER: Yes, you need to be aware that people are and let's not forget, they are in the middle of what I believe is a gigantic sold-out stadium --
QUEST: Right --
MILLER: For -- they just finished playing in the big football stadium in London --
QUEST: They did, Wembley. Quick final question, can we say that Spotify is now too big to fail?
MILLER: I think it's hard to say in this day and age whether anything really is too big to fail, but they are the leader in a growing and super
important segment of the music business that now accounts for two-thirds of the revenue in the country.
QUEST: Good to see you sir, thank you.
MILLER: Thank you for having me.
QUEST: As we continue tonight, you want to stay on top of the day's business news and headlines in just 90 seconds and try our daily briefing
podcast, it's updated twice a day before and after the bell rings on Wall Street, (INAUDIBLE) or Google for CNN flash briefing, just try it, see what
you get, and if it doesn't work, e-mail me.
When we return, Britain's Brexit blues are starting a report, claims the U.K. is about to see its lowest growth if the financial crisis and things
aren't going to get much better any time soon.
[16:45:00] (COMMERCIAL BREAK)
QUEST: So in the pubs of London where it is still time to get the last order of drinks, and I suspect the England victory is dominating, but once
the thrilling World Cup win sort of dissipates, the U.K. will come back to earth.
The British Chamber of Commerce is now predicting it will be the weakest year of growth for the U.K. economy in almost a decade. Adam Marshall is
the Director General of the British Chambers of Commerce, good to see you, Adam, thank you for taking time tonight.
I hope you saw the final results, you saw the game before popping into Australia's to join us. But it is sobering, your numbers, I mean, it
doesn't show complete collapse of destitution, but it does show sub-par growth for the foreseeable future.
ADAM MARSHALL, DIRECTOR GENERAL, BRITISH CHAMBERS OF COMMERCE: I think that's right, Richard, we are looking at about 1.3 percent growth this
year, 1.4 next year and 1.6 in 2020. Those are not the sorts of numbers that really blow the doors off when it comes to a major advanced economy.
And I think what we'd like to see is two things, one obviously, firms want to see clarity on Brexit as that debate rumbles on terminally. And I think
in the U.K., there's also a sense that we have other things to get on with as well to make conditions great for business.
And there's quite --
QUEST: Right --
MARSHALL: A lot that the government needs to do here at home as well.
QUEST: Is there -- is this lone number, is it predicated on the uncertainty on what happens or is there a general view now within the BCC
and you're an economist, that whatever happens immediately after Brexit, growth will be lower, even in best case scenario, the U.K. will not be as
well off as it was within the EU.
MARSHALL: Well, the U.K. will certainly see slower growth that it might have done had the country not gone down this route at least in the very
short term, that is what we are forecasting. But I think there are some other factors that work here as well.
Obviously, some of the global trade skirmishes that we've been seeing in recent weeks, unsettled businesses here in the U.K. about their future
prospects. So anything that happens between the U.S. and China for example, they may sneeze but the U.K. may very well catch cold as well.
Same thing about input prices and oil prices --
QUEST: Right --
MARSHALL: Which have been going up for a lot of U.K. companies too.
QUEST: And on this question of future growth, obviously, you would have preferred -- I mean, I know the BCC, it would have preferred a single
market access. But if you can't get single market access, what is your preferred option for Customs Union and the way forward especially now we
seem to be at that essential moment when the negotiation has to decide which way to go.
MARSHALL: Well, our firms are not much interested in the chronology(ph) about this. They see a lot of labels around Customs Union and single
market. And what they say to us is they want answers on practical questions. Who do I pay tax to? Who can I hire? How long can they stay in
my business?
Who is my regulator going to be? And those sorts of practical questions are what really are driving a lot of business considerations around this. You
could call the rapport(ph), whatever you want to, but businesses want clarity on their trading conditions and they need to see that with some
urgency over the next few months.
QUEST: OK, so we've had the white paper recently from the -- well, we had the agreement back in March, we've had a white paper, we've got the current
disarray one might arguably say in parliament. You just saw today obviously, that the lords says -- once again voted that it should take
primacy if there's no deal.
Something that the Commons is going to have to look back at. I mean, yes, I guess I'm taking you into the chronology of the Brexit process and what
you're telling me is it's not very helpful.
MARSHALL: It's not, in fact, a lot of firms around the country who say look, they're watching and waiting, but what they need is something
concrete upon which they can act --
QUEST: They're not going to get it I think --
(CROSSTALK)
I've got news for you, that's exactly -- I mean, and that's the dirty secret here isn't it? They're not going to get it and even once the
agreement is signed, there's still going to be a level of uncertainty that will be damaging to your members. Can you accept that?
MARSHALL: No, I think businesses know that there's going to be uncertainty for some time to come, a very few pundits have said to us, well, once you
negotiate with the European Union, you negotiate with the European Union forever.
It's very likely to be the case that those negotiations will be ongoing for a long time. But businesses do need a degree of certainty here, Richard,
they do need something to work off of, and I think their biggest dismay, their biggest opprobrium is actually for the U.K. politicians, they can't
agree on a route forward to go into that negotiating room.
[16:50:00] Because what we know in business is you go into a negotiation with a clear position and that's what we need our government to do.
QUEST: Right, let's just talk about these, the strength at the moment of the U.K. economy. All right, unemployment is down and there could be a
labor shortage, but wage inflation is starting to pick up again. Now, the Bank of England would like to start raising rates because inflation has
started to move up, but it can't because of their -- I mean, all roads lead back to Brexit because of the uncertainty.
But the economy itself is fundamentally robust.
MARSHALL: Yes, there's some strength in the economy, it's been threading water though as the way we like to put it. It's not sinking, but it is
threading water. We're not seeing the kind of growth we'd want to see.
These are the interest rates we're forecasting one rise over the coming months and perhaps one more in the period until 2020. But even the window
for those minimal source of rise to 75 or a 100 basis points is starting to close. Because as you rightly say, uncertainty is going to mean the bank
is going to want to keep conditions as smooth as possible for business.
So we don't see a very strong case for significant rate rises in the near future.
QUEST: You'll forgive me if I don't say I'm sorry to hear that, I mean, got a U.K. mortgage, I'm rather glad that it might be a little bit longer
to enjoy the good times, good to see you sir, thank you.
MARSHALL: And you, Richard.
QUEST: We'll talk more about this in detail as the process goes on, good to have you. The games industry is taking in $100 billion, that's right,
$100 billion a year. The World Health Organization is now warning it could be triggering(ph) a new public health concern.
It's called gaming disorder and it's just been listed as a mental health condition. It describes compulsive players who just plays from similar to
those of gambling addicts. The WHO says it applies to behavior lasting 12 months or more.
Joining me now is the co-founder of a rehab center for internet and video gaming addiction is Hilarie Cash, she joins me from reSTART which is live
from Seattle in Washington. Were you surprised that it's taken so long to get the WHO to recognize gaming as a gaming disorder.
HILARIE CASH, CO-FOUNDER, RESTART: Not really, I -- you know, this whole phenomenon has taken the world by storm and actually moving very quickly.
And research, you know, they're going to make their decisions based on the research findings. And research is by its nature rather slow.
So I think it's not -- but I think I'm just glad it's finally here.
QUEST: What are the symptoms of gaming disorder? How does somebody recognize when they've got it?
CASH: I think the best way to think about it is that when you are out of control and you are gaming in spite of its negative consequences, you've
got a problem.
QUEST: And the treatment for it, how far does it accord to the other traditional addictions? Obviously, drugs, alcohol, gambling, overspending,
all the others. Does it follow the same model for treatment, whether it'd be the 12-step model or otherwise?
CASH: Well, I can tell you that our model of treatment is to be very holistic in what we're trying to do. So we are -- the adults as well as
the adolescents tries spending at least two months free of all screens, and the idea is that they need that time to -- for their brains to come back to
normal functioning, they need that time to get their health back, they usually are chronically sleep deprived, unfit and they've been eating very
poorly for a long time.
So they're getting their health back, they're developing skills that they really are going to need if they're going to be functional young adults.
And they're getting a plan together for how they're going to abuse digital technology again in a sustainable and healthy way.
After that two months period, there's been if they choose and about 80 percent of them do choose, you go on to the second phase of the program,
that's the phase where they're now for the adults living in apartments together in --
QUEST: Right --
CASH: In small groups, they're getting part-time work and they're just starting to live life like adults need to live life --
QUEST: OK, so final question, with the other addictions, alcohol, drugs and the like, the general view is total abstinence. What is too many, a
thousand, never enough. With gaming addiction or gaming disorder, do you believe that you can't do it at all or do you believe there's a manageable
way you can do it.
CASH: Well, I think there's a manageable way you can use a digital technology.
[16:55:00] I think if you're gaming addict, you're really getting on thin ice if you try to go back to gaming and chances are very high that you will
relapse. So we ask the guys when they come into program and are developing what we call the life balance friend --
QUEST: Right --
CASH: To think through -- what are their bottom lines and those bottom lines almost always are going to include video games.
QUEST: Good to talk to you, thank you, I appreciate your time tonight, thank you. We will have a different profitable moment after the break,
this is QUEST MEANS BUSINESS live from New York.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, it is lovely in an era where we are talking about the misery and mayhem that we're able to turn our attention
to something much more pleasant. Weddings within the QUEST MEANS BUSINESS team who makes no apology for showing you the very best that we have got.
Our senior producer John and his new bride Ali(ph), yes, that's the two at the front, and the rest are the QUEST MEANS BUSINESS team that all sort of
-- I think the director summed it up rather well. I think -- well, she says you all scrubbed up rather nicely over the weekend.
And our technical director Rick Flair(ph) and his new wife Emily, yes, they also scrubbed up rather nicely on the way to and from their ceremony. So
we take this opportunity because it's only right and proper that we remember this program that we bring to you every night with love and
privilege is made by people behind the cameras and they actually put it together.
And today, four of them have enjoyed weddings. And that is 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. Congratulations to all my colleagues.
END
