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Quest Means Business
White House Defends Trump Despite Accusations from Former Attorney; Tearful Goodbyes as Koreans Leave Family Reunions; John Bolton: U.S. will Exert "Maximum Pressure" on Iran; U.S. Retail Shares Rally as Target Wows Wall Street; Lowe's Shares Rise as Stores Set to Close; Boxed Takes on Big Retailers with Online Wholesale; Saudi Arabia Denies Reports that it's Scrapping Aramco IPO; Hurricane Lane Heads for Hawaii as Category 4 Storm; Airlines Issue Travel Advisory Ahead of Hawaii Hurricane; Aretha Franklin Leaves No Will for Family; Wall Street Shrugs as Trump Defends Hush Money Payments. Aired 4-5p ET
Aired August 22, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CORRESPONDENT, CNN: The bell rings and you know what? The selloff kind of picked up right after lunch. You see the Dow down a little
bit, nothing to get all flustered on and they are certainly not concerned about politics. It's Wednesday, August 22nd. Pollsters saying crisis,
what crisis?
It shrugged off Cohen, Manafort and all these DC chaos. This bull has stamina, saying it's all bull. Wall Street hit its longest winning streak
in history. The CEO of Box tells us why he thinks we will all be spending less time in the grocery store. Hallelujah to that, I'm Paula Newton is
this is "Quest Means Business."
Okay, tonight, the Trump Presidency is in crisis. On Wall Street though, the bulls continue to run over everybody. Donald Trump is fighting back
and speaking out a day after his former attorney and long time fixer, so- called, Michael Cohen directly implicated him in crimes.
Now, here in New York, as you can see, look, there was a bit of a selloff, a third of a percent. Really, nothing at all. We're calling this a shrug.
The Dow is only a touch lower. The S&P is flat, the NASDAQ even made small gains.
Now, it comes on a historic day for markets. This bull run is now, in case, you were wondering the longest in United States financial history.
Back in Washington though, the President says Michael Cohen pled guilty to crimes that just aren't crimes. He told Fox News that any payments made to
women covering up their alleged affairs with him were not taken from campaign funds.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Did you know about the payments?
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Later on, I knew. Later on. But you have to understand, is that, what he did - and they weren't taken
out of campaign finance, that's a big thing, that's a much bigger thing, did they come out of the campaign? They didn't come out of the campaign.
They came from me.
And I tweeted about it, I don't know if you know, but I tweeted about the payments. But they didn't come out of campaign.
(END VIDEO CLIP)
NEWTON: Catherine Rampell is here. She is a CNN political and economic commentator and an opinion columnist for the "Washington Post." I mean, I
just want to just set the whole stage here. In terms of markets and in terms of the economy, they are looking at what is going on with Donald
Trump and just basically wagering this isn't going to change the economic fundamentals one bit because they don't believe that he can be indicted and
they do not believe he will be impeached.
CATHERINE RAMPELL, POLITICAL AND ECONOMIC COMMENTATOR, CNN: Well, I think the bigger risk to markets going forward has to do with tariffs, right? It
has to do with things that this Presidency would pursue that actually affects economic fundamentals or that could mess with markets. So in terms
of impeachment, yes, maybe that could present some risk to investors, to markets, but the real thing that investors are paying attention to is what
is happening to the bottom line of the companies that they are investing in.
NEWTON: You know, it's interesting, Catherine because even today as the Fed minutes were released at 2:00, they really discussed the risk of a
deepening trade war. I think some people thought, looking at this, you can't ignore the political situation and the reason is that you do not know
when this President will decide to escalate trade tensions despite a lot of the chaos that is going on in both his political and personal life.
RAMPELL: Yes, it is bizarre actually, I think that markets have managed to shrug off the threats of this escalating trade war ...
NEWTON: And believe me, Catherine, I was down there today, they've got their head in their sand, they're like nope, you are talking to the hand,
we don't care about this.
RAMPELL: And I don't exactly know how to explain that. I think it could possibly be that markets are assuming, "You know what? Trump is all
bluster. This will go away," even though we have levied at this point lots and lot of tariffs and we have been subject to retaliatory tariffs by many
of our major trading partners. Let's hope that Trump sees the light and all of this stuff will go away, and of course, we have had some low level
talks between the United States and China resuming; supposedly, there is going to be some kind of announcement about the US and Mexico making the
beginnings of a deal. We don't know exactly what's going to come.
But it could possibly be that markets are just sort of assuming that all of that stuff is going to blow over; and of course, remember, we had a major
tax cut. We've had a major spending, federal spending increase. That of course juices the economy and that is going to raise the valuations of
stocks as well.
I mean, stocks are a claim on the after tax profits of firms, and if you are cutting their taxes, by definition, you are increasing the after tax
value of those stocks. So there are a lot of things that investors seem to be happy about. I mean, if you look at the long term price to earnings
ratio, that Robert Shiller at Yale keeps, stocks potentially look a little overvalued at this point. They are at basically their highest level more
or less since the dotcom bubble. So who knows how much longer this will continue. It could continue for a while.
There were lots of people who called the mortgage crisis well before it actually happened and they lost their shirts. So I don't mean to suggest
that there is like a crash around the corner, but it does seem like there is some momentum coming here from the tax cuts, from the fact that we still
have very low interest rates and that means that ...
[16:05:16]
RAMPELL: ... maybe there aren't that many places for investors to stick their money, whether in bonds or in emerging markets or developing markets
at this point, so it is a little hard to say - animal spirits, you never know, but so far, people are shrugging off a lot of the risks that are out
there.
NEWTON: And before I let you go, I do want to talk about Donald Trump saying that he doesn't appreciate that the Fed is not helping him out on
interest rates. He'd like to keep interest rates low. His motivations in that are quite clear. You have argued in saying, "Look, this is not good
that a President wants to interfere or believes that he can interfere with the Fed's independence."
We have the minutes that came out today besides the trade, they are holding the line likely on two interest rate rises this year, penciled in three
next year. Your points are so on the money because you are basically saying that, look, these Fed nominees, which there are still four
vacancies, one of them said in May, "Look, that the President talks to us about if we are dovish or hawkish about interest rates." He described it
as top of mind, you said.
RAMPELL: Yes, this is Kevin Warsh who actually was being interviewed for the top job for the Fed Chairman job, and did not get the job. We don't
exactly know what he told the President about his views on interest rates and whether he was going to hike rates, but look, it is incredibly
important that the Federal Reserve is shielded from any sort of political influence.
We know that politicians basically from the beginning of time have had a temptation to cut interest rates and pump money into the economy to juice
the economy in the near term, but the tradeoff of that, while it may be good when an election is coming up, is that you get inflation.
And if markets fear that there is any sort of political influence over the Fed, that the Fed is not independent, you can get runaway inflation even
just from the expectation of that. We've seen that happen in Argentina, and in Venezuela, and lots of other countries. So, I think it is critical
that Trump and the White House stop jawboning the Fed.
NEWTON: And Jay Powell so far showing no signs that he is listening to the President at all. We will continue to follow this. Again, markets don't
seem to be rattled by that at all. Catherine, thanks so much. Appreciate you coming in.
RAMPELL: Thank you.
NEWTON: Now, it has taken nine years, five months, two weeks and yes, one day and now this bull market is the longest period of uninterrupted gains
in American history. Now, with a slow, but steady economic recovery and unprecedented aid, as Catherine was just saying from the Fed, the Dow has
catapulted from around 6,500 to nearly 26,000. The S&P 500 has quadrupled and newer players like Netflix and Amazon have helped, oh, yes, have they
helped that NASDAQ sky rockets.
We've come a long way, baby, since this bull market started. Claire Sebastian takes us all the way back to the beginning.
(BEGIN VIDEO TAPE)
CLARE SEBASTIAN, CORRESPONDENT, CNN: It was Monday, March 9th, 2009. Bernie Madoff was under house arrest, the greatest Ponzi scheme in history.
Famed investor Warren Buffett issued a dire warning on the state of the economy ...
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We're talking about it being an economic Pearl Harbor, it's sort of on a cliff.
(END VIDEO CLIP)
SEBASTIAN: And Larry Kudlow, then a TV pundit railed against efforts to rescue world economies.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: They are doing the wrong kind of stimulus. They are spending their tuckuses off.
(END VIDEO CLIP)
SEBASTIAN: On Wall Street, still reeling from the collapse of 2008, it was just another down day. The Dow falling over 1% to 12-year lows. Most
people unaware this was as low as it would go. The bottom of one of the worst bear markets in history. On March 10th, stocks rallied, the Dow
soaring almost 6%. Soon there was talk of economic rebirth.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Do you green shoots?
UNIDENTIFIED MALE: I do. I do see green shoots.
(END VIDEO CLIP)
SEBASTIAN: By the end of the year, the Dow was back above 10,000 again. Over the years, the bull run had been tested in August 2011 by the US
Credit Rating downgrade.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The political brinkmanship we saw over raising the debt ceiling was something that was really beyond our expectations.
(END VIDEO CLIP)
SEBASTIAN: In early 2016, by plummeting oil prices and a slowing Chinese economy.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: What is going on in the yuan, the Chinese currency, that sharp devaluation is very bad.
(END VIDEO CLIP)
SEBASTIAN: And just this February, as markets spun lower over fears of the end of cheap money.
(BEGIN VIDEO CLIP)
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Worries over rising interest rates, concerns about higher inflation.
(END VIDEO CLIP)
SEBASTIAN: Indeed, a cyclical downturn that stops the record run ...
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: The risk of recession rapidly rises as we look out to the second half of 2019 and into 2020.
(END VIDEO CLIP)
SEBASTIAN: ... was something unexpected. One thing is clear, March 9, 2009 was the buying opportunity of a lifetime. Clare Sebastian, CNNMoney,
New York.
(END VIDEO TAPE)
NEWTON: And so many of us missed it. Now, earlier on the floor of the New York Stock Exchange, I spoke with a man who spent decades in the boom and
bust of Wall Street, only booms lastly. Ted Weisberg is President of Seaport Securities and he told me why, get this, that this - they say this
on the trading floor, you hear it, it's the most unloved bull market in history.
[16:10:04]
(BEGIN VIDEO CLIP)
TED WEISBERG, PRESIDETN, SEAPORT SECURITIES: It's Fed monetary policy that's going to have the biggest influence next to corporate profits.
NEWTON: Politics won't bother this market?
WEISBERG : I mean, I think the answer to that is no. I mean, just politics are politics, but we always have politics.
NEWTON: But what if it derails the Trump agenda, if we do start to talk impeachment or it just - all the deregulation the market loves, all the tax
cuts that the market loves.
WEISBERG: To me, it is just all chatter, and it is background noise. It's perhaps worth listening to, but at the end of the day, it is still
background noise. And by the way, I would question the longest bull market in history because in fact, if you go back to 1980 when Reagan was elected
and the Dow was 1,000 having taken 12 years to get through that 1,000, 12 years, all right, in 1982, the market got through a thousand and then it
ran ten times from Dow 1,000 to Dow 10,000 in the year 2000 including the crash of '87 down 22% in one day, the market went up ten times. That is 18
years.
So, I would say, this has been bits and starts and I guess, with the benefit of hindsight, it has been a heck of a run, but we've had other big
runs besides this run.
NEWTON: You literally have five seconds, why do people call this the most unloved bull market ever?
WEISBERG: Because the background noise is so toxic, but at the end of the day, it is Fed monetary policy and terrific corporate earnings and the rest
of it is simply noise.
(END VIDEO TAPE)
NEWTON: Simply noise, and even Ted says, it is toxic. We go now to the White House and Abby Phillip. You know, Abby Phillip, we saw Sarah Sanders
today during that briefing trying to answer a lot of those political questions. Again, the same thing from the White House saying there are no
contradictions on what the president is saying.
ABBY PHILLIP, WHITE HOUSE CORRESPONDENT, CNN: That's right. It seems very much that Sarah Sanders came out to the press podium to answer some of
these questions after really a bombshell day for this White House yesterday. Two of the President's former aides found guilty of Federal
crimes, felonies and the White House today had not a whole lot to say.
She repeated the talking point that President Trump has not been charged with a crime, that he did nothing wrong and that there was no collusion,
but she was also asked about why President Trump continues to insist that he didn't know about the payments, two women who claimed to have an affair
with him, made by his personal attorney which led to some of these charges against Michael Cohen. He claimed today that he didn't know about them
before those payments wit payments were made even though we know that there is an audiotape of the President discussing those payments with Cohen
before they were made. Listen to how she responds to some questioning by CNN's Kaitlan Collins.
(BEGIN VIDEO CLIP)
KAITLAN COLLINS, WHITE HOUSE CORRESPONDENT, CNN: In his interview today, the President said he found out about those payments that Michael Cohen
made later on, but he is on tape discussing how to make one of the payments with Michael Cohen before the payment was made. So how do you explain
that?
SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: Once again, I've commented on this pretty extensively. What I can tell you about this is that the
President did nothing wrong. There are no charges against him, there is no collusion for anything beyond that. I would refer you to the President's
outside counsel.
COLLINS: Rudy Giuliani is not a taxpayer funded spokesperson for the President, you are ...
SANDERS: I am aware of that.
COLLINS: So, how come you're not explaining something that the President said today on the grounds of the White House that seems to contradicts an
audio that has been confirmed that it is of the President saying that.
SANDERS: Once again, I have addressed this a number of times just because you continue to ask the same questions over and over. I'm not going to
give you a different answer. The President has done nothing wrong. There are no charges against him. There is no collusion. That's what I can tell
you about this. If you want something further, I would refer you to the President's outside counsel. Sorry, I've called on Francheska ...
COLLINS: So the white maintain the President did not have affairs with Karen McDougal or Stephanie Clifford?
SANDERS: We've addressed this a number of times.
(END VIDEO CLIP)
PHILLIP: So lots of no answers there from Sarah Sanders, but sources are telling CNN that the White House's strategy and the President's strategy is
going to be to try to discredit Michael Cohen. This case could be one of those cases that really folds in some big issues for the President both on
his business side and also on the personal side as well.
Meanwhile, we have also learned that President Trump was surprised to find that Michael Cohen claimed in his plea deal with Federal prosecutors that
the President directed him to make those payments which were in violation of Federal law. It remains to be seen how they will deal with this and
what more Michael Cohen has offered to prosecutors that allowed them to offer him a plea deal.
NEWTON: Yes, and as you continue to hear from the President, Abby, I just want to let you know, if you haven't seen it already that the president
just tweeted n the bull market we were talking about, he said, "Longest bull run in the history of the stock market. Congratulations, America." I
would say he showed quite a bit of humility in that tweet compared to what we're used to, but Abby, do you believe this is part of the strategy now if
he continues to concentrate on the great economy, on deregulation, tax reform, trade deals that he may still get in the coming weeks that those
around him believe he can survive this political crisis?
PHILLIP: Well, it is not clear whether the White House believes that the economy is going to be enough. In fact, it seems very much that they don't
believe that it is going to be enough.
[16:15:16]
PHILLIP: The President does plan on spending a lot of his time on the campaign trail in the next two months. The White House announced last
night, he is planning 40 stops between now and November, but the big issue for President Trump, even though the tax cuts are something that he would
like to talk about, the big issue has actually been immigration. I think there are a lot of worries both here at the White House and among
Republicans in general that even this booming economy, even those tax cut, won't be enough to get Republican voters in particular out to the votes in
November.
NEWTON: Yes, and he is certainly worried he wants the Republicans to keep control of that House for many reasons now, Abby. Thanks so much.
Appreciate the update from the White House.
Now, social media firms are scrambling to protect their platforms ahead of the US midterms. Facebook and Twitter are the latest companies to take
action. We'll tell you who they are accusing of spreading false information, next.
Some of the largest US tech firms are fighting against foreign cyber attacks ahead of the US midterm elections. Now, earlier, Facebook took
down 652 pages that it says were spreading false information, false pages on Facebook.
Now the social network says they were linked to Iran this time and Russia. Twitter has taken action removing 284 accounts allegedly linked to Iran.
Now, it comes after Microsoft said it thwarted a cyber attack from Russia with links to the Kremlin.
Now, the company's President tells me the threat needs to have a serious response.
(BEGIN VIDEO TAPE)
BRAD SMITH, PRESIDENT, MICROSOFT: We're seeing attacks really across the board and we need to redouble our defenses, and this is true for
conservatives, liberals, Republicans and Democrats alike, and we're only going to be successful in defending democracy in the 21st Century if we
take more proactive and systemic steps to strengthen defenses as we're doing today in terms of the kinds of initiatives we're announcing and
taking with political candidates and campaigns and parties across the board.
NEWTON: What is confusing to some people is that we had the Director of National Intelligence say, they monitor these attacks, they know that they
are happening, how is Microsoft working with the government and why does the government need Microsoft at all?
I know that you are saying that you are offering to some of these think tanks free software, but the question is, what is the government doing?
[16:20:03]
SMITH: Well, I think the government is increasingly doing quite a bit. We work and share information with people in government, not just in the
United States, but in many you countries especially Democratic societies around the world.
The government is doing more, the tech sector is doing more and we both need more ahead. We need to collaborate more closely, we need to
strengthen defenses, we need to strengthen our responses. Frankly, we need to set aside enough of our differences across the political spectrum and
between the political parties to come together and do what it takes to defend democracy.
(END VIDEO TAPE)
NEWTON: In a notice, the issue he is bringing forward there, he calls it defending democracy and he is saying that a lot of these attacks do not
discriminate between political groups. Now, the cyber security company, FireEye helped to identify some of that contents we were telling you about
on Facebook.
The company's Vice President of Global Intelligence told me these campaigns of false information are a threat now right across the globe.
(BEGIN VIDEO TAPE)
SANDRA JOYCE, VICE PRESIDENT OF GLOBAL INTELLIGENCE, FIREEYE: Well, influence operations are nothing new. What is new is that it is leveraging
multiple fake news sites and social media platforms across the world. This is something that is targeted at a global audience. The target audiences
are in the US, UK, Latin America, and the Middle East. So, it's really a broad global issue.
NEWTON: It's a broad global issue and yet, the attacks seem to be coming from different places now as well. I mean, we're used to hearing that
these attacks originate from Russia, but now they are originating as well from Iran and perhaps elsewhere.
JOYCE: They are certainly taking a page from Russia's playbook when it comes to trying to influence a target audience, and in this case, what we
believe are Iranian actors, what they are doing is trying to promulgate and disseminate ideas that align with Iranian national interests.
NEWTON: What do you think is at work here? Do you think these attacks are actually quite effective and how much of it are tech companies like yours
able to uncover?
JOYCE: Well, unfortunately, they don't need to be technologically advanced to be effective. We're the target audience, our opinions, our ideas and
how we interpret the information is what they are looking to manipulate. So unfortunately, they don't need to be sophisticated to be effective.
NEWTON: And how much of it do you think is getting missed out there? Meaning that there are campaigns that are working? I know I saw a study
from the UK recently that had focused on a town in Germany saying that in fact incidents of even violent attacks had increased where these programs
were prevalent.
JOYCE: Well, certainly we're seeing it all over. It is not just an issue here in the United States, it is a global audience, and we are seeing a
real focus on trying to really get a pro-Iranian narrative out there and there is a lot of work that we need to do across all organizations, so
across law enforcement, technological companies, cybersecurity groups. We can't tackle this just on a case by case basis. We need to do it together.
NEWTON: How damaging can this be to elections around the world? And I know we have got the midterms coming up in the United States, but there are
elections going on all the time in different areas of the world, not to mention just political issues that some people are trying to influence one
way or the other.
JOYCE: These can be very effective. They are really trying to touch a nerve when they are putting these ideas out there. And like I said, they
don't need to be that sophisticated. They mix both original content as well as adopted, you know, real content and really curate a narrative that
can be very effective.
NEWTON: Yes and we have seen that work and in fact, we've had the US government, and now European governments detail exactly how effective they
can be. Sandra Joyce with FireEye, thanks so much. Appreciate it.
JOYCE: Thank you for having me.
(END VIDEO TAPE)
NEWTON: And you heard there about the fact that Iran has also been involved in some of these cyber attack attacks. In the meantime, US
sanctions against Iran are set to ratchet up in November when Washington targets the country's oil industry. Now, some citizens on the streets of
Tehran though are rejecting the hard line rhetoric against the United States. CNN's Nick Paton Walsh reports.
(BEGIN VIDEO TAPE)
NICK PATON WALSH, SENIOR INTERNATIONAL CORRESPONDENT, CNN: The lights still sparkle in Tehran, sanctions be damned. Nobody here chants "Death to
America." Rather, the design is from California, the clientele from Iran's worldly elite.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Most of the Iranian people, they travel, they used to travel to America. Now, with the sanctions, I'm not sure, but they are fed
up with the politics, yes. But the Americans, no.
(END VIDEO CLIP)
WALSH: Take away the head scarves, add a few real cocktails and you could be in Europe.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: People just like Americans, they like Americans and Iranians always try to create - recreate like American look. I don't think
they hate Americans at all. Who knows what's going to happen in the next 15 years, we don't even know what's going to happen tomorrow because every
day is something new.
(END VIDEO CLIP)
WALSH: Here, you can't help think Iran and America's people ought to get to know each a little better. Don't tell that to both their leaders.
Their decades of animosity on display in the ghoulish remains of the US Embassy.
[16:25:16]
WALSH: American diplomats were held hostage by Iran here and the coups plotted by the CIA. The museum filling this top secret spy room with
dummies. Now, the Trump administration is really doing all that it can to try and drag the image of the United States here in Iran back decades to a
time of espionage, subterfuge when the United States was doing again all it possibly could to undermine or change the Iranian government.
President Barack Obama, well, he saw that in the age of the iPhone, there was an opportunity to improve Iran's economy and persuade its people that
its future lay with the outside world.
It has been better way back when, too. Jim and Gladys Drain (ph) from Riverdale, New York first came here for their honeymoons in the '50s. The
love affair is still going.
(BEGIN VIDEO CLIP)
GLADYS DRAIN (ph), TOURIST: People are wonderful. They are friendly. They are welcoming. They offered us roses. Lovely.
JIM DRAIN (ph), TOURIST: We're disgusted with our President. Our President is misbehaving.
(END VIDEO CLIP)
WALSH: Across town in southern Tehran is the Iran that gets up early. This day begins long before the sun's heat. There is far less money here,
but still out to clear views on how the White House messes with their lives.
"I don't have a deep a understanding," he says, "But the US don't act justly. We don't count at Mr. Trump's eyes. He has problems with the
government, but what is my sin?" The poor, the clerics who guide Iran, the young conscripts in an army which regional grip has expanded.
"When we chant "Death to America," he says, it is the government of America, the people are respectable and we have no problem with them. I
haven't fought in Iraq or Syria, but if our military hadn't gone there, we'd be fighting ISIS on the streets of Iran cities.
Sanctions are already felt here. Less animals are slaughtered with each delivery, each lamb less profitable. "I've got things to do," he says, "I
don't have time to chant "Death to America." Yet not all rising prices like a 40% jump in housing costs they complain of here are blamed on
America.
"It's got nothing to do with the USA," this man says. "They don't (inaudible), they don't provide me with my bread. They are not here." He
added, the protests, like Iran has sporadically seen this year, were futile. Yet the ebb and flow of Washington and Iran's enmity make daily
choices here harder. Nick Paton Walsh, CNN, Tehran.
(END VIDEO TAPE)
NEWTON: And we thank nick for those sights from Iran. Okay, coming up, I sit down with the CEO who is taking on Walmart and Amazon, his big idea.
Who the heck wants to carry this on a bus or into your car? We'll have more of that coming up.
[16:30:18]
(COMMERCIAL BREAK)
[16:30:00] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment. When retail's
old guard comes roaring back, Target is the latest proof it's ready for a fight with the digital competition.
And almost Hawaii right now is preparing for Hurricane Lane, before that, this is CNN, and here the news always come first. The White House says
President Trump did nothing wrong, that despite his former lawyer saying under oath that Mr. Trump directed into paying hush money to two women who
said they had affairs with him, and that was in order to influence the presidential election.
And the White House points out there are no charges against the president. War torn Korean family members reunited after decades apart. They said
their final goodbyes Wednesday, buses of mostly elderly South Koreans departed North Korea, leaving loved ones behind just a few days after
coming together for the very first time in decades.
The reunions were part of the Panmunjom Declaration signed by the leaders of North Korea and South Korea earlier this year. Donald Trump's national
security adviser John Bolton says Washington is prepared to exert, quote, "maximum pressure" on Iran to prevent it developing its nuclear program.
Speaking in Jerusalem today, Bolton added the United States isn't seeking regime change in Iran. Here, we've been saying this for quite some time on
QUEST MEANS BUSINESS, it's sink or swim for the big American retailers.
Target shares are up 3 percent, so they just had -- get this, their best quarter in more than a decade. Sales are up, customer traffic is also up
and it's upgrading forecast for the rest of the year as well. Now Lowe's shares are also up, although it's not necessarily on good news, it's
closing stores and cutting forecast.
Our Paul La Monica is here. You know, Target, let's start with them, really stellar results from a company that some people didn't believe could
actually project this kind of growth into what is an incredibly competitive retail market.
PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Yes, I think Target deserves a lot of credit, their CEO Brian Cornell for really turning things
around, particularly on the digital side. Target is gone out and they bought this company, shaped to really try and help with same-day delivery.
And their digital sales probably were up more than 40 percent in the quarter. So that is better than a lot of other retailers out there, and
it's showing that Target just like Wal-Mart can go toe-to-toe with Amazon.
NEWTON: And before we get to Lowe's though, bricks and mortar also worked for Target, didn't it?
LA MONICA: Yes, the bricks and mortar are still a very important aspect of Target's overall, you know, blueprint of course. The sales there are
improving and I think what retailers that are doing it right are finding is that you can have this scenario where people may want to order online, but
go pick up at the store.
And maybe while they're there, they buy other things as well. And that is something that is helping them boost overall sales.
NEWTON: Yes, well, they mentioned that before, right? So getting the customer in the store is important because that's where sometimes you're
going to get a higher price purchasing point, one for each trip. Lowe's, very interesting story here because the stock is up because I guess people,
analysts just thought they're finally getting down to pairing down some of their inventory or --
LA MONICA: Yes --
NEWTON: Their source?
LA MONICA: They're cutting back on inventory, they are also shutting a separate subsidiary they own, has some stores in California and arguing,
and I think what's really important for Lowe's though is that under new CEO Marvin Ellison who was formerly of J.C. Penney, he recognizes that they
need to slash that inventory to be more competitive with Home Depot and Wall Street.
But the news is the stock was surging today even though the numbers were more mixed than they were at Target where they were unabashedly good.
[16:35:00] NEWTON: Before I let you go, high point for retail, what are we thinking?
LA MONICA: I think that as long as the overall economy is doing well, this is probably not going to be the best that we see this. Remember, the
holidays are right around the corner and consumers typically find a way to keep spending.
NEWTON: They do indeed, people like me.
(LAUGHTER)
Paul, thanks so much, appreciate being you. Now, buying in bulk is of course a sheer fire way to save a bit of cash, at least so they tell me.
But what about getting packages like this home, who the heck wants to carry this even into your car, believe me, I don't. Paul doesn't either, he's
nodding his head.
Now, the CEO of Boxed says he can deliver any kind of these things in bulk directly to your door. But get this, charge you less than those big
retailers like Amazon and Costco. Boxed has just found new funding from Japanese retail giant AEON and the chief executive told me how he came up
with this business model.
(BEGIN VIDEO CLIP)
CHIEH HUANG, CHIEF EXECUTIVE OFFICER, BOXED: We started in a garage, kind of where I grew up --
NEWTON: Hear that story again --
HUANG: Yes, here we go again --
NEWTON: Back in the garage --
HUANG: All great things happen in a garage. And really was just I didn't have a car, later in life, as I moved into the city to drive to and from
the local Costco. And so, I always thought, OK, you can either buy in bulk and save a little bit of money or you can just buy the single items at your
local kind of convenient store downstairs and pay like three, four, five, six times the price.
And so I thought, why not create a service for folks who didn't have the physical means to get to and from a warehouse club. But what we found over
the last four and a half years was that the bigger opportunity was folks who didn't have the time or the patience to go. And that's where we are
today.
NEWTON: Patience, clear. But some people would say, look, I can do this at Wal-Mart, they don't have a fee item, I can do this at Target, they
don't have a club fee item. What's the difference?
HUANG: So one, when we sell things, that we only sell the big bulk items, so you will save money versus like buying the smaller packs. So
individually, it's a lot more expensive than buying that 68 counts of Royal Scot's Biscuits that you just saw.
No membership fees, and we deliver this directly to your door. And so on a basket of goods for around 10 items or so, we're just about the cheapest
online including versus some of the names that you just mentioned.
NEWTON: OK, I do check you guys online, for some --
HUANG: Yes --
NEWTON: Of the products that I get --
HUANG: Yes --
NEWTON: Your price is competitive, but --
HUANG: Yes --
NEWTON: I wouldn't say you're always the cheapest, which is why I'm asking you, how do you feel you can get the competitive edge, and what -- I know
that you had some big name investors come in --
HUANG: Yes --
NEWTON: To try and expand. What are you saying -- what are you telling them about the kind of revenue growth that you've seen in this industry,
because I have to tell you, when I look at it, I think this is a no brainer, they're always going to be bought by someone bigger or they're
going to be pushed out of business by someone bigger.
HUANG: Well, that's what makes our jobs, including mine so exciting and heroic at the same time. So --
NEWTON: Yes, I know that one --
HUANG: We're in this -- we're in this industry where it's not the biggest retailers in America, it's not the biggest retailers in the world, it's
actually the biggest companies in the world. But what's interesting is that no one has really figured out online grocery. If you think about
someone who's dominated online grocery, has the playbook and is scaling it worldwide, there's that name today, Amazon, Wal-Mart, Target included.
Everyone has different services right now in a multitude of different services, not because they found the winning formula, but they're all
trying to test to see what's working. So for us, we have our hat in that ring and you know, we're no longer in the garage --
NEWTON: And --
HUANG: Anymore, so getting to scale at the right time.
NEWTON: And I'm going to challenge you on one thing, I always see that North America is mid-evil in comparison to really the city of London, I
lived there for five years, I ordered groceries like those --
HUANG: Yes --
NEWTON: From every single solitary corner of the world, and think -- I wasn't there when we had the app, but they have the app now. It is so
easy. What are you doing in terms of taking that kind of model and refining it, because I know you've looked at players like Ocado for
instance and seen what they're doing.
HUANG: Yes, so one of the biggest things for our model is that instead of shipping one thing to your house or to your door, like how Amazon has
pioneered ecommerce in the U.S. at least. What we do is actually get folks to buy eight, nine, ten items.
And so as you get that big box with eight, nine, ten items, in effect, you're actually paying less to ship per unit, per item. You're paying a
price that's actually less than when Amazon pays to ship one item in a single box. And so when you think about higher margin items like -- I
don't know, TVs or remote controllers or whatever it is, you can kind of hide those unit economics by just making a lower margin.
But when it comes to the food items that you just saw, you can't really hide behind that because the margins are so thin that the economics don't
work out for you to just mail a single item. So I -- going back to your original question, our model is different because we do ship, big bulky
items and ship a lot of it to your house.
Which ironically enough is cheaper to do as a business than it is by shipping a single item.
NEWTON: Which is still really interesting in terms of -- in terms of a model. Where do you see your biggest challenges though in terms of
expansion?
HUANG: A bunch of things. So I would say making sure that we're keeping up with consumer trends, like you just said, ironically enough, the rest of
the world, they're probably way ahead of the U.S. when it comes to online shopping and online grocery shopping.
But here in the U.S., staying ahead of the trends as the trends are being set because we don't know if the same flavor is going to happen here as it
has in the U.K. But staying ahead of those consumer trends is really high on a list of things to do.
[16:40:00] NEWTON: Millennials, how big, how important are they in terms of this game?
HUANG: They are really important. You know, like to your point, you know, we're competitive on price. When you go in-store versus online, you will
pay a little bit of a premium until maybe they meant driverless cars. But folks like millennials are leading that charge to pay for a little bit of
convenience in their lives, and I think not just millennials, but busy folks like me, like you.
I think what we found is that their trend is not going away. So I don't think the trend of having less time, wanting to go in store is the trend
that's going to be reversed in the next 10, 15 years.
(END VIDEO CLIP)
NEWTON: OK, Hawaii is bracing for a powerful (INAUDIBLE) and very dangerous category 4 storm could make landfall just in the next few hours.
The CEO of Hawaiian Airlines will join me live from Honolulu.
(COMMERCIAL BREAK)
NEWTON: Saudi Aramco has denied reports it's scraping its IPO. Now Aramco sources tells Cnn what, while the company's plans may have slowed down a
bit, its intention is still to go public and it remains intact, that IPO and plan.
Now Aramco IPO would likely be the largest public offering in history, it's been mulling over whether to list in London, New York or somewhere else
entirely. Now a rare and dangerous hurricane is bearing down on Hawaii, the island would start to feel that powerful punch from the category 4
storm right in the next few hours.
American and Hawaiian Airlines have now issued travel advisories to customers, both are waiving reservation change fees, our Tom Sater is at
the World Weather Center, I know you've been following this closely. Tom, it's not our imagination, right? I mean, Hawaii is not used to these kinds
of hurricanes.
TOM SATER, METEOROLOGIST: No, in fact, just hours ago, Paula, this was a category 5, it's at the top of the charts. This is the strongest hurricane
to ever come this close to the Hawaiian islands, and the records go back to the 1950s, more on the records in a moment.
We're just under 500 kilometers away from the Big Island, just over 700 kilometers away from Honolulu. This was a category 5 hours ago and as you
mentioned category 4, we're starting to see the outer bands move into the Big Island, there's Hilo.
And remember the volcano Kilauea, that's right on this little point here, so heavy bands of rain moving over that area. But where is this going to
go? I mean, there's some uncertainty when you look at the computer models, this is what we call the spaghetti plots, and there are a couple of
outliners that bring it over toward Maili, keep it south of Oahu and Kauai.
[16:45:00] But again, there's still a cone of uncertainty, I'll show you. But going back to 1959, Dot in '59, and Iniki, those are the only two
hurricanes to ever hit the Hawaiian islands. So there's been 14 storms that come within 60 miles or 100 kilometers. But the other two storms were
just tropical storms.
So this really is a beast. And remember, when we look at the track, the cone of uncertainty includes a lot of the islands. The worst part of these
hurricanes are the front white right quadrants.
So it circulates counterclockwise, the seas, the storm surge, the heavy rainfall, and keep in mind, it's amount -- necessarily that's going to
squeeze out a lot more rainfall. We're looking at about 20, 25 foot waves, and that's about 6 to 8 meters, plus, and that would be more over toward
Maili here.
So the waves are a problem, evacuation, sandbagging, schools are closed, University of Hawaii. We've got the warnings in effect, now from the Big
Island westward and then we have a watch. And they're still be upgraded to warning as the storm gets closer.
Its closest approach should be Thursday afternoon. But this computer model wants to stall it, and if that occurs, what we already believe is going to
be about 200 to 400 millimeters of rainfall, could that possibly become 500, 600 millimeters of rain? It's possible.
I mean, we could see in crazy amounts, 20, 25 inches because these areas of purple are 15, and then you get up to these areas of white, that's 500
millimeters where you can have those higher terrains. So flash flooding is a major concern, Paula, not just that, the landslide threat that we see
when heavy rains moves into the area.
The damaging surf, of course, most of the structures, because it is a tourist area can handle this. But many people live in rural areas, again,
vulnerable, and many are off the grid. But even if you're on the grid, we're looking at power outages.
So this really could impact it, but right now, we think it's going to stay just offshore to the south and just give them a slight chance of hurricane
winds. But tropical storm force winds no doubt will be felt across all of the islands.
NEWTON: Yes, they'll still be quite severe, Tom, just before I let you go, do we have then a concrete idea that this storm will hit in the way that
you just projected there. There are still a lot of uncertainty. I mean, what's the real risk that it will stall or that they will take a direct
hit?
SATER: Well, if it stalls and there's one model that -- a couple of models that want to do that. The heavy rainfall could be devastating alone. I
really believe this is going to stay offshore, but if we --
NEWTON: Yes --
SATER: Have that eye, well, Paula, just start to reorganize and that could jog it one way or the other, that would throw the track off.
NEWTON: OK, sure, fair enough. Tom, who --
SATER: Yes --
NEWTON: Continues to track this storm for us, appreciate it. We now go to Peter Ingram; he's the president and CEO of Hawaiian Airlines. You are one
busy man right now, you're joining me on the line from Honolulu, we appreciate your time.
In terms of what you're doing, first and foremost to keep people safe, but also guard against what would be some of the more severe effects of this
storm.
PETER INGRAM, CHIEF EXECUTIVE OFFICER, HAWAIIAN AIRLINES (via telephone): Well, sure, thanks for having me on, Paula, it is you know, pretty dynamic
situation right now. When I just heard you talking about a lot of the uncertainty in the forecast, and I think that's what our operational teams
are facing is trying to make decisions in the face of uncertain information and obviously we're doing that with the safety of our guests and our
employees paramount and are thinking.
NEWTON: At this point right now in terms of threat level to an airline like yours, have you grounded everything? I mean, in terms of trying to
keep as you said, your people safe, but also your position -- your equipment in position where it needs to be.
INGRAM: Yes, actually, you know, as we sit here today, our operation is operating as normal. And you know, I'm sitting in a conference room in
Honolulu right now and the sun is shining outside. And you know, the closest point of approach of the storm isn't expected until you know, early
to mid-day on Friday, our time at this point.
So we're operating fairly normally today, obviously guest are you know, making arrangements to get to where they want to be. We expect to run a
fairly normal operation today and actually for much of tomorrow, even into the evening.
It will vary a little bit by island. But we operate throughout the chain of islands, and so the effect of the storm will hit Hawaii Island or the
Big Island first, and you know, here in Oahu, it is -- it is more of a Friday event for us than a Wednesday or Thursday event.
NEWTON: Yes, as unfortunately as we've all come to know up here, these storms are unpredictable, and I know that's why you guys are working hard
to make sure you can definitely guard against any of the worst repercussions. Peter, we'll check in with you again before the end of the
week, keeping our fingers crossed of that storm, stay offshore, appreciate it.
[16:50:00] Now, Aretha Franklin's children have some difficult decisions to make. The queen of soul reportedly -- get this, she didn't leave a will,
her attorney is now predicting a battle.
(COMMERCIAL BREAK)
NEWTON: A date has been set for Aretha Franklin's funeral, it's to be held in Detroit on August 31st. However, her family is already scrambling to
try and secure her legacy because this is hard to believe, after 76 years, Aretha Franklin didn't find any time at all to write a will and leave one
behind for her family.
Now recent survey showed only four out of ten Americans have a will or a living trust. And Franklin's attorney says these situations always end up
in a fight. Tim Maurer is the wealth adviser and author of "Simple Money". You know, that's the word, Tim, it seems simple.
Is it very common, we just heard the statistic there that people do not leave behind a will. People like Aretha Franklin and why?
TIM MAURER, AUTHOR: Paula, it's simple, but it's not easy. And there are a couple of reasons for that. First off, in terms of estate planning, that
is a pretty intimidating phrase that folks who aren't Aretha Franklin are probably thinking, I don't have an estate.
But one thing that applies to all of us including Prince and Aretha Franklin is we don't generally like to consider the inevitable demise,
right? And so we don't want to think about death. It tends to be one of those conversations we actually avoid instead of taking care of it.
But it is a vitally important financial planning to do.
NEWTON: We can understand how it's important for Aretha Franklin, and I think some people who don't have money wonder why it's important for them.
I want to highlight something that you said to us earlier that these are the most important, you say, love letters that you'll ever write to those
that you love. What do you mean by that?
MAURER: Absolutely, when you write your will for example, you're dictating off a lot more than just what you want your assets to be. I'll give you a
great example. A young couple with young children might think, well, what need do I have for a will? We don't have a whole lot of assets.
But it's in your will that you will actually stipulate the guardian provisions, in other words, it's where you decide who the new parents would
be for your kids in the case that heaven forbids, mom and dad go on a cruise and the boat goes down.
So there are numerous elements inside of a will that don't necessarily apply strictly to financial provisions that are important for all of us.
[16:55:00] NEWTON: And we're going to learn unfortunately the consequences for Aretha Franklin's family that she didn't have a will. What are
normally the consequences if you don't have one? Again, not just in the United States, but around the world as well.
MAURER: Sure, if you die intestate, it's normally going to be in the hands of -- if you are in the United States the state and the judge who makes
decisions. But around the world, the point is, it's probably not going to be in your hands or perhaps even in the hands of your heirs.
Someone else is going to come in and be making these important decisions for you.
NEWTON: OK, Tim, here's one for you though. A lot of people think not only do I not have anything, I'm actually in debt up to my ears. So at the
end of the day, why have a will because I think people feel as if you will not leave your family to deal with that if you don't have a will. Is any
of that true?
MAURER: Well, I understand that hesitancy, if you're thinking well, I don't want them to have to deal with it, well, guess what? They're
precisely the ones who have to deal with it if you don't lay the word down yourself.
So what it does is it gives us an opportunity to have some say, to have some control even from the grave so that our friends and family members
don't have to make those decisions on our behalf.
NEWTON: But even if you have zero money, even if you owe $200,000, $300,000 on a house or even, you know, credit card bills, what -- people
assume that they have more protection with that debt if they don't leave a will.
MAURER: Now and sure, that is actually a mistake to think that that is not the case. But will go back to the non-financial provisions that you may
stipulate inside of your will as probably the best example for why you don't want to use that as your excuse.
NEWTON: Interesting, OK, we will see what happens with Aretha Franklin, unfortunately this means that we'll likely stay in the news for some time
to come. Tim, thanks, appreciate it, very good solid advice there, appreciate it. Now, as you want to keep on top of the day's business
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.
You can also just ask Alexa on your Google home device for your CnnMoney flash briefing, and that's every weekday. Now, we just want to give you a
quick reminder of how markets finished the day. Remember, we were saying the selloff has started a little bit after lunch time, the Wall Street
actually shrug off the political news but still a selloff there, down better than about 88 points even after Donald Trump's former attorney
directly implicated the president in crimes.
Now, the S&P meantime was slapped, the Nasdaq was up a slight bit, and of course, we were reminding you this comes on a historic day for markets with
the longest bull market in history. And that's it for QUEST MEANS BUSINESS today, I am Paula Newton, I will see you right back here again tomorrow.
(COMMERCIAL BREAK)
END
