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Quest Means Business

A Spokesman for Gatwick Airport Says Passengers Shouldn't Go to Gatwick Airport without Checking with Airline; Trump Refuses to Sign Spending Bill Without Wall Funding; Lindsey Graham Critical of Trump's Syria Withdrawal Decision; Putin Says He Agrees with Trump on Syria Decision; U.S. Charges Chinese Nationals with Hacking for Beijing; Dow on Track for Worst December Since 1931; European Markets Close Lower Following Fed Statement; Dubai Airport Welcomes its Billionth Passenger; Trump Speaks Ahead of U.S. Government Shutdown Deadline; PNC Calculates Cost of "12 Days of Christmas". Aired 3-4p ET

Aired December 20, 2018 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

RICHARD QUEST, ANCHOR, QUEST MEANS BUSINESS: We are an hour left to trade on Wall Street and it is an ugly looking session so far. We're off the

lows of the day. Down from more than 500, but barely. Up 421, a loss of 1.8 percent. This is all about the Fed and it is across all the markets.

The Dow is down, the S&P 500 is down. The NASDAQ is sharply lower, too. And the NASDAQ might also just be in a bear market, all of which we need to

understand. What is it that's moving these markets? Well, the Fed put the fear into stocks and investors are now predicting a global slow down and a

sell-off that has followed. Tech stocks like Twitter are getting a downgrade. Twitter has been creamed in the market today. So the NASDAQ

close to being a bear market. And dysfunction in Washington, despair on Wall Street. The U.S. government could still be headed for a shutdown.

We're live in the world's financial capital, New York City on Thursday, December 20th. I'm Richard Quest. I mean business.

Good evening. It is a very busy day. Besides markets, in this hour we're also going to be live at Gatwick Airport where there is an unprecedented

airport shutdown as a result of drone activity. We'll be talking about that in some detail. We do need to start with the markets because things

have gone from much bad to worse over the last 48 hours.

Down 447 on the Dow, nearly 2 percent as we enter the critical last hour, and its worries about the Fed's outlook for the U.S. economy that's hurting

stocks. A drop of well over 1,000 points this week alone. The Dow, Christina Alesci, is now under 23,000. Now, it's 14 percent of its recent

highs, but what's the mood like now in the market?

CHRISTINA ALESCI, CORRESPONDENT, CNN: The mood's just pessimistic. I mean investors see very little good news out there, and they are very

disappointed by the Feds' language yesterday. But to be clear what caused an even more dramatic downturn today was the fact that the President

started tweeting about the frustration over a border wall funding and that really undermined the potential for a deal to avoid a government shutdown

here in the U.S., which is the last thing investors wanted to hear after the Federal Reserve decision to hike rates.

Look, this is an epic battle at this point between Wall Street and the Fed and you and I have talked about this. Wall Street got addicted to easy

money. It wants that spigot to be turned on, so does the President of the United States and the Federal Reserve believes that Wall Street has to be

weaned off of that easy money, so it's going to go ahead and continue hiking interest rates until there's a really big warning signal out there

that there is a slowdown in the economic data, and it's just not seeing that right now. And as a result, the Street is disappointed and selling

like crazy.

QUEST: All right, so they didn't get what they wanted. The view is now that there's more to flush out. So if we look ahead, not back, this really

becomes a question of how long and how bad.

ALESCI: Right, exactly. And right now, investors think that valuations of most companies like the ones that you have flashing up on the screen right

now are overvalued, especially if you factor in the potential that the boost these companies were given post tax cut may be wearing off.

Investors are looking for another piece of stimulus. They thought it would be potentially easy money and the Fed laying off rate hikes. They didn't

get that, so now you have a piece of stimulus rolling off, at the same time the fed not accommodating and not capitulating like the market wanted.

QUEST: All right, Christina Alesci, thank you. Now, we to put some perspective and show you a few more details. Let's go to the "Quest Means

Business" trading post. You see - well, we showed you 2 percent down for the Dow; 1.6 percent for the S&P, 1.6 percent for the NASDAQ. So Fred, I'm

afraid, it is - we didn't even have to wait for that. It was obviously - it's a red. These records seem a long time back. The Dow is now below

23,000. It's down as much as 679 points today. All S&P sectors are in the red and the NASDAQ is barely out of a bear.

[15:05:08]

QUEST: And the U.S. oil is at 17-month low. Now, Central Banks are warning the risk of the global economy. A slew of interest rate decisions.

The Fed has raised rates. The Bank of England and the Bank of Japan are keeping rates on hold, where there have been an argument that they should

perhaps be moving.

Sweden has raised rates for the first time, it's not a non-Eurozone country - for the first time since 2011. Still negative like Japan and

Switzerland, but this gives you an idea of the way in which things are moving.

HSBC is warning Central Bank policies in Europe and the United States are some of the top risks in 2019. Ben Laidler, co-authored the report and

joins me now. Good to see you, sir.

BEN LAIDLER, GLOBAL HEAD OF EQUITY RESEARCH, HSBC: Thank you.

QUEST: So, we will get to the Central Bank's role in this misery in just a moment. How much more do you think we've got to go here? The flushing out

process that is under way.

LAIDLER: So I think we clearly see in the investor capitulation right now, and I think that is potentially us building a base. I think valuations are

really pretty attractive. I think earnings are actually lot more secure than the market thinks they are, and this investor capitulation you have

more outflows from equity funds last week than you've ever had, and that includes the global financial crisis. You have levels of volatility, we've

only seen three or four times before and I think the reaction - there is slightly - you know, this reaction to the Fed yesterday was also probably a

bit overdone.

QUEST: Okay, so in this scenario where there is this capitulation, what does one do?

LAIDLER: So, I think hopefully, you've been pretty defensive so far, but I think right now, you need to lean into this. You need to be taking a

little bit risk. It may feel unnatural, but we have a 20 percent plus equity return on the table over the next 12 months, which is more than

we've had in a very, very long time. So I think you need to be maybe adding some - a little bit of risk back to your portfolios right now.

QUEST: I mean, you're never going to get it right, exactly. You're never going to get it totally at the bottom or totally at the top, and the

Central Banks in all of this, this is an unknown here because the Fed tightened. Do you think they made a mistake yesterday? Not so much in the

initial tightening on the fourth one, but in the guidance of next year?

LAIDLER: I think the guidance could have been better given how sensitive the market is. But fundamentally, I think this is an economy in the U.S.

which is growing well above trend and it's going to grow above trend next year, so you know, so it's slowing. It's growing gradually, but I think

all is good here.

The market is concerned about a policy mistake, so this report we've written, whence you polled investors, what are they worried about? The two

things that they are most worried about are a Fed policy mistake and a policy mistake in Europe.

QUEST: Okay, what policy mistake in Europe would that be because he is going to stop buying bonds and he has announced these to be stopped?

LAIDLER: So let me start explaining there. I mean, I guess it's really the fact they --

QUEST: What? You think they should have continued?

LAIDLER: Well, I think the concern in Europe is that - so growth is slowing globally, it's been led by Europe. Yes, the risk is that Europe

gets caught in the next recession. Its policy rate is at zero.

QUEST: If growth is only being upheld by extraordinary measures that should have been long past their sell by date for a financial crisis, I

mean, QE was not designed for your average cyclical recession.

LAIDLER: I agree, and the U.S. actually I would argue now has given itself some policy flexibility, right? The Fed is where it is. There's not quite

a lot of CapEx, and Europe is what I think you worry about. It's leading the slow down. There's a lot less policy flexibility, there's a lot more

policy uncertainty, there's a lot less growth going around. That's the big concern for investors and I would join and I would second that.

QUEST: We'll come back to Europe in just one second, but a thought just occurred to me. Can you tell me tonight why what we are looking at is not

the start of something similar if not as extreme as 2008? And the reason I ask it in these terms is, I was around then, as indeed -- and at the time

people said, "Oh, yes, this is just a bit of nonsense and it'll soon flush itself out."

Well, it didn't. Why is this different?

LAIDLER: Rates are lower. There's more policy forbearance now. In some places though, there is more flexibility in some places than others. The

growth cycle is meaningfully stronger. It's obviously slowing, I would argue is slowing a lot slower than the market thinks it is. There aren't

obvious imbalances sort of out there that what set us off - the housing crisis in --

QUEST: How much does this sort of volatility - this down volatility create a cause and effect? Investors, consumers see what we're talking about and

immediately stop or slow down spending and a downward cycle, a downward spiral is created. The opposite of the wealth effect.

[15:15:03]

LAIDLER: Absolutely. And you could well see some of that. But I do think one of the strengths right now is the U.S. consumer. Unemployment - they

are at all-time lows. You're seeing wage increases, you know, who is deleveraged since the last crisis? Actually, the U.S consumer. So I think

the consumer is fine.

QUEST: When I saw your 20 percent forecasts for next year on earnings - its earnings --

LAIDER: For the markets.

QUEST: Yes, for the markets. You're a bit of an outlier there in the sense of others aren't quite so positive.

LAIDLER: Yes, I mean, I think sentiment has got too negative. I think growth is absolutely stalling, but markets are way ahead of that. They

have over discounted that. I think our economic outlook, which we don't have a particularly bullish economic outlook, but it's completely

consistent with double digits earnings growth.

And I think this narrative that markets are expensive, they're worth 30 percent long ago, they're not now. I mean, you've had 25 percent earnings

growth in the U.S. and the market is down 5 percent. Valuations are 30 percent cheaper now. Things have changed a lot and now we're having a

sentiment capitulation, I think our dots are beginning to line up here.

QUEST: Very good to see you, sir.

LAIDLER: Thank you.

QUEST: Please come back and help us in the New Year as those ducks decide whether they're going to rollover or fly. We'll talk more about it. Thank

you.

Now, look, there is absolute chaos at Gatwick Airport outside London. Nearby drone sightings have brought holiday travel to a standstill. What

you need to understand - what can be done? We'll speak to a CEO who makes drones that can take out other drones.

How can something as small as this cause as much chaos as has been seen with drones at Gatwick Airport? Only days before Christmas, Gatwick's -

Britain's second busiest airport is paralyzed leaving hundreds of thousands of passengers stranded.

And it's because of a drone, because a manhunt is now under way and the British military has been deploying special equipment after drones were

spotted over the airfield. The runway at Gatwick has now been closed for the best part of 24 hours. It's closed for the rest of the night and won't

open again until tomorrow at least.

The terminal inside is being described as total chaos. And Gatwick's chief operating officer said authorities believe that using a drone near Gatwick

was a deliberate act.

[15:15:02]

(BEGIN VIDEO CLIP)

CHRIS WOODROOFE, CHIEF OPERATING OFFICER, GATWICK AIRPORT: This is deliberate act. This is someone who's seeking to disrupt those passengers,

and it's so disappointing that you've got a perpetrator of a crime out there punishable by five years' imprisonment who has now disrupted 120, 000

passengers' journeys this close to Christmas.

(END VIDEO CLIP)

QUEST: Anna Stewart at Gatwick Airport this evening. Before we get into the details of what it's like in the terminal and what's happening there,

Anna, do we have any information from the authorities about when that runway will open?

ANNA STEWART, REPORTER, CNN: No, absolutely no information yet, I'm afraid. Because the drones still seem to be in the air, at least not

identified yet despite the best efforts of the police and now the British military. And I do have an update, Richard, because I just got handed

something from the airport. They can tell us now that 646 flights out of 760 have been canceled.

Now, that actually means that 114 flights haven't been canceled but that means they're delayed and actually that isn't necessarily good news for

passengers because it means they may have another night on the airport floor, a second night for many of them and that's because a lot of them

have found the hotels around here are all booked up.

QUEST: How well is Gatwick handling that fact because airports are used to delays, they're used to suddenly needing to feed, bed, whatever thousands

of people. But the speed at which this happened, how's the airport coping?

STEWART: The airport is doing their very best, and I'm told they're handing out water. They're going to keep the terminal heated overnight,

lucky passengers. But it's really up to the airport and the airlines to help find these people hotels. Now, some of the airlines aren't

necessarily doing as good a job as others.

I would say Easy Jet from all the passengers I've spoken to are doing very well and they have actually canceled all flights out of Gatwick tonight,

which gives some passengers reassurance that at least, they can go home and get some sleep, get a refund or rebook.

QUEST: Now, Anna, this takes us into the intricacies of compensation versus care and comfort. Now, as I understand it, the authorities have

already said that the drone incident would be an extraordinary circumstance, so you can't get - you can't get compensation, but under

E.U.-261, you can still get care and comfort which would be a hotel.

STEWART: Exactly, so you can't get financial compensation in terms of say you're booked to go to Lapland, you're going to miss the first two nights

of your hotel in Lapland. However, under E.U. law, the airlines are duty bound to make sure that you are looked after. That you are fed, that you

have somewhere to sleep and that you are able to travel to and from your accommodation, if of course you don't leave nearby.

So although airlines aren't necessarily able to help you book all of that, they can give you vouchers and if you keep your receipts, you should be

able to get that money back.

QUEST: Anna Stewart, I suspect you have a long evening at Gatwick Airport. Thank you, Anna Stewart. Now, I want you to go to cnn.com/join. Today and

tonight, we're asking you what's the best way to tackle drones, and there are a variety of options; cnn.com/join. You've got geo-fencing, you've got

shooting the drones down, you've got stiffer penalties for those involved, lock them up, some would say or should we just ban them altogether?

Oh, they're cute and they're nice, and then you can fly them over your house and watch all of that, but let's not be outweighed by the fact of

what could happen? cnn.com/join. This is significant one, too.

It is illegal to operate a drone within a kilometer of airports in the United Kingdom. Now, within that idea, there's nothing physically stopping

pilots from doing it. Drones are becoming more commonplace and getting in the way of planes is a growing problem.

There were just six reported instances of drones entering restricted U.K. airspace in 2014. This year, through November there have been 120. If a

drone hits a plane's wing, it probably wouldn't cause much serious damage or danger. But if it were to be ingested by the plane's engines, it would

be the equivalent of say a bird strike, possibly even worse. And if it went into the cockpit window, that could cause a major crack as well.

Jaz Banga is in San Francisco and joins me. He is the CEO of Airspace, which creates technology to capture and remove unauthorized drones - he

joins me now. And what's your solution here for this particular drone, which it seems to be, every time they just lift it off the ground and send

it across towards the runway, you have to close the runway.

JAZ BANGA, CEO, AIRSPACE: Absolutely. So if you want to control that airspace around the airport, if you think about what they do with radar and

other airplanes, they know exactly where everything is when it's flying around.

[15:20:06]

BANGA: The first problem is they have to find a way to do long-range detection. They should have known about that drone four or five miles away

from the actual runway, and then they have to be able to detect where the operator is. So getting that long-range detection, understanding where the

operator is, identifying, "Hey, maybe this is police drone that's doing some work on an accident scene," or is it a drone that shouldn't be there,

and then finally you have to have a system that if everything else fails, that you can pull it away and take it away from that environment.

QUEST: Well, all of those things are extremely complicated and so far there's no - there's no 100 percent success answer.

BANGA: Absolutely. So this is actually what we stood up for, this is the reason why we exist. We've been around four years, we've invested a lot of

time, a lot of ex-folks from Google and Apple came together to solve this problem. This is what we call airspace galaxy.

So we've actually deployed these types of solutions already. We just finished doing the World Series here in San Francisco both in Boston and in

Los Angeles.

QUEST: So what is the fundamental problem with the drone going near the airport? I mean, the plane - look at it. It is a - even allowing for it

going in the engines of the plane, it's a relatively light piece of equipment, even the larger ones.

BANGA: Yes. But the fundamental difference between a bird and a drone in that a drone has machined metal parts. And if you look at some of the

videos that the University of Dayton has published, it's incredibly dangerous because of those metal parts, it can really cause a lot of havoc

inside of an engine and also, actually, they can also penetrate the wing as well. So very dangerous.

Now, look, I wear two hats, right? One is a founder of a company that's trying to solve this problem, and the other hat I wear is I'm on the FAA

Drone Advisory Committee, so 22 of us trying to figure out how to tackle this problem here in the U.S. And it's a very challenging problem and it's

not just airports, it's stadiums, there's many other areas that have the same problem.

QUEST: All right, so what's the best solution for this? Answer the question that we've just asked at cnn.com/join. Geo-fencing --

BANGA: Absolutely.

QUEST: Shoot them down, stiffer penalties or a complete ban. I am only going to allow you - you aren't going to tell me, well, it's a combination

of them all. I am going to allow you one, which one?

BANGA: I think you're going to - if I was allowed to have one of them, you've got to shoot them down. That's the only way. You've got to stop

them from being able to conduct their missions.

QUEST: Good to see you, sir. Thank you. We'll talk more about it in the future. Thank you. As we continue tonight, Carlos Ghosn could soon be out

of jail after a Japanese court rejected a request to keep him detained. The former Nissan chairman is still in a Tokyo prison cell after being

accused of financial misconduct.

The court decision came hours after the wife of his alleged accomplice to Nissan, Greg Kelly, said, her husband had been setup.

(BEGIN VIDEO CLIP)

DEE KELLY, WIFE OF GREG KELLY: Greg has been wrongly accused as part of a power grab by several Nissan executives headed up by the current CEO,

Saikawa. We will be discussing this more in coming days. The truth of this will come out. But until then, my husband is still behind bars.

(END VIDEO CLIP)

QUEST: That's very dramatic stuff. Nissan says it rejects Mrs. Kelly's claims saying it was only Ghosn and Greg Kelly's misconduct which sparked

their investigation. The finger pointing, the in-fighting at Nissan could spell disaster for its alliance with Renault.

Nissan's chief executive met with the acting Renault CEO on Wednesday. Talks were described as positive. If the Ghosn saga ends up splitting up

the alliance, it will not be pretty. Now, think of Daimler and Chrysler. In fact, that's almost - I almost still call it Daimler-Chrysler by

accident. It was one of the least successful mergers in auto history, with Daimler taking a $4 billion charge just to get rid of them.

And then there was GM's deal with Fiat in Europe that caused GM $2 billion to unwind in 2005. Volkswagen's investment in Suzuki in 2009, two years

before the two sides decided to break up again. Rebecca Lindland is with me from Kelley's Blue Book executive analyst. Good to see you.

REBECCA LINDLAND, EXECUTIVE ANALYST, KELLEY'S BLUE BOOK: Likewise.

QUEST: Before we get to the general question, what do you make of this question that there was something fishy going on, something underhand, the

claim by Kelly's wife, that there's more to this story than meet the eye?

LINDLAND: Well, it's very dramatic. And rumors of some kind of executive coup were really floating as soon as the news broke. I think when I'm

reading about Mr. Kelly's situation where he was expecting to have surgery, they actually sent the corporate jet for him in Nashville to bring him to

Tokyo for this meeting and then he actually was arrested.

[15:25:10]

LINDLAND: It is incredibly dramatic. I mean it's really unsettling in many ways, and it speaks to a significant betrayal of his colleagues at

Nissan. So we'll see how this plays out. I am encouraged that the court rejected the efforts to continue to detain them in prison. But they still

have to go through a bail hearing. So they're really not close to being out yet.

QUEST: And the question of these alliances, do you get the feeling that Renault-Nissan one is on the rocks?

LINDLAND: Well, it's on the rocks because of Carlos Ghosn's situation. So it certainly was not seen as on the rocks prior to this. But it was

actually starting to make some - you know, get some momentum.

One of the things that we're finding in the industry is that we are seeing the need for alliances grow because the investments in things like car

sharing, ride hailing, future mobility, autonomous vehicles, the expense that is required to invest in this technology is enormous. It's why we're

seeing companies like BMW and Mercedes Benz or Daimler come in and form new companies together.

It's again, very shocking to think about these chief competitors, you know, living together.

QUEST: Well, in somewhat unhappy circumstances in many ways. Because if we go through the ones that failed, which I've talked about, it's not easy

to keep these things together. And, you know, precisely the point, if you take Carlos Ghosn out of that alliance, the thing starts to fray and fall

apart. It has not got the ability. He was or is the glue that's holding it together.

LINDLAND: Well, it depends on how they're structured. You know, Richard, one of the things when I look back at that Daimler-Chrysler merger of

equals, it was called. One of the things that really disrupted it so much was that they didn't have a common consumer.

They were not designing vehicles for the same type of buyer. It's why Fiat Chrysler has actually done pretty well, because their buyer has the same

mentality. So I think that's one of the things that there is a possibility that we could see the Renault-Nissan-Mitsubishi alliance. We could see it

succeed and work its way through this because they have a common buyer, but it's definitely very disrupted right now.

QUEST: Good to see you as always, and I bet I'm not the only who still sometimes by accident says Daimler-Chrysler. It's somewhere lodged - have

a happy Christmas.

LINDLAND: Absolutely.

QUEST: Have a good Christmas. Now, as we continue, we are going to have to try and find some Christmas cheer, but investors worldwide are

expressing fear after the Fed struck a tone and it wasn't as dovish as some had hoped.

In a moment, Johnny (inaudible) from BNP Paribas. Good to see you, sir. Hopefully, you will bring some Christmas cheer. If not, we'll just have to

settle for champagne. Come and join me over here.

(COMMERCIAL BREAK)

[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. When it's the

turn of two airports, we'll hear from the chairman of Dubai Airport as it welcomes its billionth passenger. And we'll take you on a tour of

Istanbul's brand new airport which is hoping to muscle in and take market share from the Middle East.

As you and I continue this evening, this is Cnn, and on this network the facts always come first. A spokesman for England's Gatwick Airport says

passengers shouldn't go to the airport on Friday without first checking with their airline.

Flights there are grounded after at least two drones were spotted on multiple occasions near the airfield. The army has joined the hunt to find

out who's operating the drones. Ryan Air says all its flights to and from Gatwick will instead operate from London's Stansted.

It now appears Donald Trump's quest for a border wall will cause a portion of the U.S. government to shutdown tomorrow, that's Friday. Republican

leaders say the U.S. president will not sign a Senate-passed spending bill because it doesn't include money for his wall.

According to the Senator Lindsey Graham, the U.S. Defense Secretary believes the job in Syria is not yet done. Graham tells Cnn he spoke to

James Mattis after President Trump's decision to withdraw U.S. troops from Syria. And he said he's confident Donald Trump did not make the decision

based on advice from his national security team.

The Russian President Vladimir Putin says he's skeptical the U.S. will actually withdraw from Syria, so he called America's decision a correct

one. Mr. Putin said he agrees with President Trump that ISIS has largely been defeated.

And U.S. prosecutors have indicted a pair of Chinese nationals who they say were working with the Chinese government in a scheme to steal business

secrets across the globe. The alleged hackers are accused of targeting the intellectual property of 45 global companies. U.S. officials say there's

no question the Chinese government is behind this.

(BEGIN VIDEO CLIP)

CHRISTOPHER WRAY, DIRECTOR, FBI: Chinese goal, simply put, is to replace the U.S. as the world's leading super power, and they're using illegal

methods to get there. They're using an expanding set of non-traditional and illegal methods.

China's state-sponsored actors are the most active perpetrators of economic espionage against us. In short, to strengthen themselves and to weaken the

United States.

(END VIDEO CLIP)

QUEST: So, we need to check the big board, let's survey the damage 30 minutes or so. Well, we pull back a bit from the lows of the session of

over 500, but the Dow still deeply unhappy. A list of fears plaguing Wall Street keeps growing. You've got the Fed hike, you've got trade tensions,

and now the government shutdown all weighing on investors' minds.

I'm joined by Jean-Yves Fillion; the CEO of BNP Paribas USA.

JEAN-YVES FILLION, CHIEF EXECUTIVE OFFICER, BNP PARIBAS USA: Sure --

QUEST: Good to see you, sir.

FILLION: Thank you for having me.

QUEST: Which of those nastiness are you most worried about?

FILLION: Well, two things which are the U.S. economy is doing extremely well. You know, but in the meantime, you have a series of factors even

that are bringing uncertainty and volatility.

[15:35:00] U.S. economy, longest expansion for a long time, the job status, the expansion, the consumer confidence, the liquidity of double

markets here is amazing.

In the meantime, you have a series of situations building up. You mentioned it. Trade, government shutdown outside of the U.S., Brexit, some

interesting credit situations in Italy and so on. This is what really influences what's happening up here as well.

QUEST: Mohamed El-Erian on this program yesterday said he's most worried about Europe, and you might have heard the -- people say Europe is going to

be the difficult area. Now, I know you're responsible for the U.S., but you may be the only engine that's really pulling the BNP Paribas bus along.

FILLION: Same concept. If you look at the metrics of the Eurozone, it's been growing at almost 2 percent this year. The consumer confidence, the -

- you know, corporate fabric is pretty vibrant there, and the ECB has done pretty much what the Fed has been doing here for many years, which is

providing QE, which is keeping rates low and using the balance sheets --

QUEST: The things you can -- but Europe is -- Europe is in trouble.

FILLION: The main difference between Europe and the U.S. is actually on the global markets side. You have a country here which is very

disintermediary, which you know, funding is coming mainly from the global markets, it's very efficient, it's transparent. Which help us to continue

to build its more securitization, more access to capital markets to provide more sustainable growth.

QUEST: But BNP Powerball, which you have a very sizable operation over here, retail and wholesale. And you're well in a good position to talk on

both sides. And the U.S., do you expect your U.S. business to grow next year?

FILLION: Actually, it's been growing quite significantly over the last few years, particularly this year, capitalizing on a still good economy, we

expected to continue to grow because our business model in the United States is very diversified.

We own retail on the West Coast, Bank of the West, very focused in a key state, California, providing funding to individuals, small entrepreneurs,

small caps, mid-caps, and a wholesale activity based in New York has been very active at, you know --

QUEST: What?

FILLION: Supporting the large U.S. company and they're capitalizing in the Eurobond where we lead.

QUEST: Why do you bother --

FILLION: It's been very beneficial --

QUEST: Why do you bother with the retail side in California? I mean, it must just be a bloody nuisance.

FILLION: Right, two things. You know, when you want to belong to a community, to a country, you have to be part of the fabric. Bank of the

West is really part of the community, it makes us really part of the U.S. environment, and actually we found a lot of synergies between comfort

retail and how investment banking activity here in New York.

QUEST: So we need to look at France and here's what -- how much of a -- how much of a difficult situation is France in? And the economic results or

consequences of the riots currently underway, the yellow jackets-orange vests, how much do you expect to come from this?

FILLION: Well, first and foremost, I think you bring a very important point here. The situation -- the social I would say challenge that, you

know, the world is facing here, France is no exception, it's something the government is taking very seriously and I think they're taking actions.

You cannot have, I would say, expansion and systematic expansion if you don't have social stability. I was traveling last week in Mexico and

Brazil, across Europe. This is not idiosyncratic to France. And I think the world has to really reflect on where is the location and maybe where's

redistribution to keep this going.

QUEST: Right, but the difference being France as President Macron is trying massive industrial and societal reform, and he is meeting exactly

the opposition that everybody said he would get.

FILLION: I think you are very good with metrics which are the impact of the riots, there would be some very limited of the current quarter,

absolutely. But our prediction for the next year -- as long as we manage to, you know, get this back to stability, should be the minimum.

France actually will continue to grow, it's an innovative country and a vibrant corporate fabric here with a good sense of expectations.

QUEST: Final question, just how many miles do you think you fly a year? I mean, just listening to you then, I mean, you must be always on a plane?

FILLION: Like you, actually, probably over 2 million miles. We can compete together.

QUEST: Oh, there, you wouldn't. You would, game, set, and match. And of course, and all of the back of the plane. And as we continue tonight,

thank you.

FILLION: Thank you so much, thank you for having me --

QUEST: I suppose a lot I would imagine, you would be staying at home. It's good to see you, sir, thank you.

FILLION: Thank you.

QUEST: As we continue tonight, Europe has followed Wall Street's lead, all the major markets are lower as investors had their first opportunity to

react to the Fed's rate decision. Paris was down nearly 1.8 percent.

[15:40:00] And as we continue tonight, and the battle of the skies, we visit two airports, one of the world's busiest, the other looking to steal

the crown. And I'm guaranteeing that my last guest has flown through either Dubai and, or Istanbul and probably many times.

(COMMERCIAL BREAK)

QUEST: So please join me together, let us take a trip first back in time. It was 1960s into this little airstrip in the desert. It's where the story

of where Dubai Airport begins. It was initially a refueling stop mainly, where the airport didn't have an asphalt runway until 1965.

Move to the 1970s and then suddenly Dubai Airport goes through a growth spurt, gaining a three-storey terminal building. Three storeys,

nonetheless, and a control tower with longer runways. But look at it today, and it's completely different.

From those small beginnings, Dubai transformed itself into the world's busiest international airport. This week it welcomed its billionth

passenger, a nine-year-old Arjun Jayem(ph) who was greeted by the airport chairman as he arrived from Florida. John Defterios asked the Chairman

Sheikh Ahmed what milestones mean to Dubai.

(BEGIN VIDEO CLIP)

SHEIKH AHMED BIN SAEED AL MAKTOUM, CHAIRMAN, DUBAI AIRPORTS: We see that the one billionth today took us about 50 years to do 500 million, and seven

years to do another 500 million passengers. And that's a big achievement.

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: How do you revive that growth to remain double-digit and sustain it?

MAKTOUM: We have to make the place as very friendly for the customers and doing that, using the innovation. It makes it an easy place to come in, to

leave, to use the facility here. And what they are looking for, so it is always about customers.

And the more you please your customer, I think they will come again and again.

DEFTERIOS: The U.S. Federal Reserve raised interest rates again, and it's putting pressure on emerging market currencies and you're a bridge between

east and west. It hit your first half as the CEO of Emirates Airline. How do you buffer such a shock to the global economy?

MAKTOUM: This revenue got to be transferred into dollar, we have losses there. But that's the way it's been for the last 30 years, and now we're

in a much bigger terminal I would say, so it's always currency and oil prices will always affect the airline, but always we have to find a way to

be able to maneuver.

(END VIDEO CLIP)

[15:45:00] QUEST: OK, we're going to break out from that, let's listen to the president of the United States.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: My campaign promise, this is the promise every lawmaker made, it is the solemn promise to protect and

defend the United States of America, and it is our sacred obligation.

We have no choice. For decades, Washington abandoned this commitment and allowed millions and millions of people to enter our country illegally and

over the objections of the American people. No one voiced or voted for a policy.

No one endorsed this policy, and no one ratified this policy. It was a total assault on our democracy itself. Illegal immigration costs our

nation $275 billion a year. You hear many different numbers. You can say billions and billions, but the number that I hear most accurate is $275

billion a year at least, millions of jobs and thousands of innocent lives.

More than 90 percent of heroin comes across our southern border. Heroin deaths have tripled since 2002. Every week, there's illegal heroin, kills

at least 300 Americans and costs our nation over $230 billion to $289 billion or nearly $5 billion a week.

I spoke with President Xi of China, and he has agreed to make fentanyl another one of the big problems. And probably, I think it's just gone to

number one. Kills 80,000 people a year in our country. He's going to make that a major crime in China.

And if you get caught, you'll pay a major penalty, it's called the death penalty, and it wasn't listed as a crime until I spoke to him. So I

appreciate President Xi for doing that. That's a tremendous -- that's going to have a tremendous impact.

(APPLAUSE)

Every day, ten known or suspected terrorists try to gain entry into our country. Every day, 2,000 illegal aliens try to cross our borders. They

try. We get most of them. It's hard without a wall. Every year, 50,000 illegal children are smuggled by coyotes and criminals into our country.

In the last two years alone ICE officers arrested criminal aliens charged with or convicted of 100,000 assaults, 30,000 sex crimes, and 4,000

murders. It's rough stuff. Yet, the Democrats continue to oppose border security no matter how many innocent people get hurt or die.

Ridiculously, and dangerously, certain people want open borders which allow potentially massive crime. Our nation has spent trillions of dollars and

sacrificed thousands of brave young lives defending the borders of foreign nations. I am asking Congress to defend the border of our nation for a

tiny fraction, a tiny fraction of the cost.

Essential to border security is a powerful physical barrier. Walls work whether we like it or not, they work better than anything. In Israel, 99.9

percent successful. Thank you, but I spoke to Benjamin Netanyahu; the Prime Minister two days ago.

We were talking about it. He said it's 99.9 -- I mean, he came up, I didn't ask, I said 99.9 percent successful. We have promised a steel flat

barrier to hold the deadly flow of these illegal traffickers, smugglers and terrorists. Every day that we deprive our border patrol and ICE officers

the resources they need, we put many innocent lives in harm's way.

It should be bipartisan. I think it will end up being bipartisan, I really do. Illegal immigration also strains public services that Americans depend

on and illegal immigration drives down wages for the neediest Americans. No one who calls themselves a progressive should support illegal

immigration.

Open borders hurts poor Americans more than anyone else in our society. In life, there are certain principles worth fighting for, principles that are

more important than politics, party or personal convenience. The safety and security and sovereignty of the United States is the most important

principle of all. If we don't stand strong for our national borders, then we cease to be a nation and we betray our commitment to the loyal citizens

of our great country.

[15:50:00] I look forward to signing a bill that fulfills our fundamental duty to the American people. It is all about -- and I say this in any way

they want to hear it -- it's all about America first. We have to put our country first. We have to put our people first, and we have to put safety

first.

So thank you all very much and we'll be working on that. Mitch and Paul and Kevin and everybody, and we'll see what we can do. But hopefully,

that'll all come together. Now to the Farm Bill, we are proudly joined today by so many members of Congress, Republicans, Democrats --

QUEST: Well, I'm sure the Farm Bill is important, but it's not something we need to trouble ourselves with tonight. Having heard President Trump,

essentially we are getting to a situation where the U.S. is getting ready or the president is getting ready to allow a shutdown of the U.S.

government because he has not got funding for the wall.

And there you heard his justifications or recitations, we've heard it before, the reasons, but it was useful to hear it again as the U.S.

government gets ready to shutdown. We'll have more in a moment.

(COMMERCIAL BREAK)

QUEST: It is that time of year when we look at the 12 days of Christmas. For 35 years, economists at PNC have calculated how much each of the 12

days what costs if you were to buy in the songs. For example, doves, French hens and calling birds, they are unchanged in price.

The swans traditionally volatile, it's been a flat year, the third year in a row. Now, geese did rise, they flew, and tight labor markets pushed up

the cost of those entertainers, those lords are leaping, pipers piping, drummers drumming, they advanced some 3 percent.

And as for those five gold rings, now they are a serious problem because they're done some 9 percent. But the gold rings follows 10 percent rise of

last year. Now, if you want to know how much it costs to buy all of this in one go, it is $39,000. But remember, the total cost of all 364 items is

$170,000.

[15:55:00] It's up 5 percent, French hens. There you are, total cost of Christmas, $170,000. Now to the last few minutes of trade -- actually, by

the way, talking of all that, the true cost of Christmas, you won't have much left by the time -- windy outside, cold in the weather and cold on the

markets.

The Dow is down 555 points, we're off 2.3 percent. The broader market is also off as well. That's off quite sharply. We are now in a bear market,

near enough. I mean, technically because it's down 20 percent for the Nasdaq, which is all giving some cause for concern.

And the issue is what or when will this turn around? The common census seems to be that's not going to happen any time soon. Dow fall off 540, a

loss of 2.4 percent. The loser down was Twitter, Twitter on the Nasdaq. Twitter was down almost 10 percent after being downgraded by a research

company calling it the Harvey Weinstein of social media.

It is cold out there, and the financial world doesn't look like it's going to get any warmer any time soon.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment, it's not easy to be talking about the sort of horrible losses at the same time as everybody's getting ready for

the holiday festival season. But talk about it, we must. Because as I showed you with the 12 days of Christmas, prices are barely going up at

all, a bit of inflation on the PNC Christmas prices index.

But what we do learn from all of this is that next year is not going to be as cheerful as this, which is a bit of a slightly depressing outlook as we

head towards Christmas. Not a bit of it as we do our last program tonight from New York, even though I'll be with you tomorrow night in London.

Let us reflect that over the last 12months, we've had a chance to talk about the markets, see the good, experience the bad, witness the

wonderful. Put it all together, it's been a real treat and a delight to be here with you throughout the season(ph).

And so that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, whatever you're up to in the year ahead, I hope it's profitable. I

will be in London with you tomorrow.

And now ding --

(BELL RINGING)

The Dow -- the bell is ringing, the day is done!

END