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Quest Means Business
World Economic Forum Gets Under Way, And The IMF Has Warned They Have Their Work Cut Out For Them; The British Prime Minister, Theresa May, Says She Aims To Develop A Brexit Deal That Parliament And The E.U. Can Support; At Least 10 Dead After 2 Ships Catch Fire in Kerch Strait; Venezuela Says it Put Down Mutiny Attempt; Zimbabwe Arrests Union Leader Who Helped Organize Protests; Senator Kamala Harris Jumps into Race for the White House; Global Uncertainty and Trade War Weigh on Earnings; PWC Survey: Record Jump in Pessimism Among CEOs; World Economic Forum to Kick Off Without Donald Trump; Kingdom Holdings Wants World to Reconsider Saudi Arabia; Saudi Arabia Aims to Repair Image After Khashoggi Murder; Construction of World's Tallest Tower Hit By Delays; Richard Quest Walks to World Economic Forum Through the Davos Corporate Makeover; Quest Means Business Turns 10. Aired: 3-4p ET
Aired January 21, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: "Prepare for the worst," says the IMF, as the world economic forum gets under way. China has the slowest
growth in decades. Business leaders are worried; and Brexit, Theresa May is back to square one.
We're live at the World Economic Forum. I'm Richard Quest with my new friend, Sidney Snowbot - together, we mean business.
And I promise you, you'll meet Sidney Snowbot a great deal more over the days ahead. Tonight, the World Economic Forum gets under way, and the IMF
has warned they have their work cut out for them.
Global growth is slowing, risks are rising. Christine Lagarde put it into appropriate terms for the environment here.
If the global economy is a cross-country skier, then the trail is starting to go uphill and the going is getting harder. The first hazard to watch
for, a slowdown in China. New figures out today show the economy in 2018 grew at its slowest pace in 28 years.
Now, add to the danger, the trade tensions and the effects could hit snowball, hitting financial markets, emerging economies. Christine Lagarde
says, "Leaders need to get ready to dodge what may come their way."
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: The risk of a sharper decline in global growth has certainly increased; add to this the uncertainty, the
geopolitical worries and disappointing long-term growth prospect and you have an economic picture with a pretty clear message.
Address remaining vulnerabilities and be ready if a serious slowdown were to materialize.
(END VIDEO CLIP)
QUEST: Let's talk about this. Victor Chu is the CEO of First Eastern Investments. Good to see you, sir.
VICTOR CHU, CEO, FIRST EASTERN INVESTMENTS: Happy New Year.
QUEST: Good to see you. Happy New Year to you. And Happy Chinese New Year for next month.
CHU: Absolutely.
QUEST: When it comes along - right, so we've got this warning from the IMF about slowdown and it comes in the general economy and we know China is
slowing down. China seems to be the problem at the moment.
CHU: I'm not so sure actually. I'm worried, but not too worried because this has been the policy of the Chinese government the last five years.
They are shooting not for headline growth, but quality, sustainable growth. So the market expects the Chinese growth will suddenly come down from the
high years.
QUEST: How much of this, though is being managed? For instance, the measures that the Chinese government have taken to initially reduce
liquidity to initially tighten up on credit lending ...
CHU Right, deleveraging.
QUEST: Deleveraging - then now, reducing bank reserve limits to make sure things don't dry up.
CHU: Because the U.S.-China trade tensions has a psychological effect. You have to remember, the Chinese GNP is now $13 trillion. It's a big, big
economy, and the population growth last year was only five million people, so 6.6% overall is actually not that bad.
QUEST: I suppose people are worried about what's coming along? How bad this might get.
CHU: Right, yes.
QUEST: And I can't believe we're talking about it in these terms, but is the China slowdown now strong enough or weak enough to put it bluntly, to
call everybody else?
CHU: Not quite. But you have to remember, the demographic challenge is huge. By 2050, the Chinese population will be a few hundred million less.
Obviously, GDP will be much less, but I think the combination of Brexit, the combination of shutdown and the trade wars give people the
psychological effect that the China slowdown could be worrying.
QUEST: Stay with me. We want to invite our dear viewer to join in, cnn.com/join is where you can add your understanding. What is the biggest
risk facing the global economy? Is it China's slowdown? Is it the trade war, or is it Brexit? If you had to vote on that, which of those three
would it be -- China slowdown? Trade War? Brexit? The biggest risk?
CHU Brexit.
QUEST: Really?
CHU: It's the more immediate.
[15:05:06]
QUEST: Right, it's the more immediate, but this trade war - this trade war, is it real? There's a truce. Is it your feeling that we'd come in
for another round of bashing or will they settle it out of the truce?
CHU: I am hopeful that there will be --
QUEST: Well, we're all hopeful, Victor.
CHU: That there will be peace at the end of February. Because both White House and Beijing needs a win, both for domestic challenges. They have
enough to do domestically. They need to make sure that the U.S.-China relations and the global war becomes more stable.
QUEST: We're going to go to our world of worries. What color?
CHU: Green.
QUEST: Green, now this year, just to introduce you to the worries, basically, we don't have a list of what they can choose. We're following
wet the new global architecture. You choose it yourself. Now, here we go, "The World of Worries." What would you like to add? Just write what you
think is the biggest worry of concern for you.
CHU: Right here?
QUEST: Yes. Climate and cyber.
CHU: Yes.
QUEST: You're going for two.
CHU: Going for two.
QUEST: Climate and cyber. Good to see you.
CHU: C and C.
QUEST: C and C. That's well done, thank you very much.
CHU: Thank you, Richard.
QUEST: Nice to have you with us.
CHU: Thanks so much.
QUEST: And so we begin. Thank you. The British Prime Minister, Theresa May, says she aims to develop a Brexit deal that Parliament and the E.U.
can support. The next step she says is back to Brussels to discuss new ways to solve the Irish border backstop issue, which had scupper in the
last deal.
According to Britain's "Daily Telegraph" newspaper, the Prime Minister was considering renegotiating the Good Friday Agreement which established
seamless border between the North and the Irish Republic. Theresa May concede tonight, she had considered any such thing.
(BEGIN VIDEO CLIP)
THERESA MAY, BRITISH PRIME MINISTER: Mr. Speaker, I'm sure that the whole House will join me in condemning Saturday's car bomb attack in Londonderry
and paying tribute to the bravery of the Northern Ireland Police and the local community who helped to ensure those that everyone got to safety.
This House stands together with the people of Northern Ireland in ensuring that we never go back to the violence and terror of the past.
(END VIDEO CLIP)
QUEST: Now Bianca is with me in London. Fine words, but is any progress actually being made? She has a deadline - I mean, I'm going to steal your
thunder, Bianca. From what I hear, Plan B is very much Plan A redact.
BIANCA NOBILO, CORRESPONDENT, CNN: Yes, but MPs weren't really expecting much different than that. It's the Prime Minister's style just to keep
plowing ahead with the plan even if it is proving to be unsuccessful and having the undesired effect.
What is interesting and actually, since we've last spoke, Richard, I've been back and I've looked at the hand sod, and what the Prime Minister
didn't say today might be the most significant thing of all because several Members of Parliament pressed her on a Customs Union.
She didn't rule it out once and when MPs said to her, "Prime Minister, if the House of Commons votes for a Customs Union with the European Union next
week, will you implement it?" And she said, "Of course."
So I think that is the direction that everything is moving in and that's the most significant development that I heard from today, short of what we
already knew that the cross-party talks continue and she'll be going back to the E.U. to discuss the backstop again.
QUEST: All right, so I do realize there's a certain frustration coming from you as I'm asking questions that I've asked many times. But what's
the point? They said that the best they will do is on the political declaration, and they did that before the last vote.
NOBILO: Brexiteers remain adamant that it's in the E.U.'s sort of - it's in their style to at the last minute make those changes. They think if
they can continue to push the European Union until the clock runs out, there's a chance they could remove the backstop.
A select few individuals in Parliament believe that could still be the case, so that's something which is contributing to this. The Prime
Minister understands that the E.U. is reticent to - not just reticent, they have said on record that they're not opening up the withdrawal agreement
again.
The room for maneuverability lies in the Political Declaration. She says she intends that to be flushed out as well. We know that that is the part
that can be added, too, because indeed if there is a transition period, that's going to be spent fleshing out that future relationship, so she's
focused on that as well.
But in terms of her ability to try and get a consensus, she lost her Brexit deal going through Parliament by 230 votes. So a tweak here and a tweak
there just isn't going to cut it. She's trying to triangulate, but I don't know how much real progress she's going to make with that approach.
[15:10:03]
QUEST: You're quite right. How can one triangulate when your triangle has been smashed. Thank you, Bianca Nobilo in London. Here in Davos, the show
will go on despite several leaders like Theresa May not showing up.
I suppose people well understand why she isn't here. It would be somewhat strange to turn up the Swiss mountain when she's got virtual open rebellion
back at home. Theresa May on Brexit is her domestic problem, Emmanuel Macron has the gilet jaune as his domestic problem. Emmerson Mnangagwa
from Zimbabwe, the President, he was going to come, but he is staying away because of domestic issues, violent fuels protests; and Donald Trump, now,
the government shutdown started it and then the entire delegation was pulled.
Now, this was all very disappointing to Klaus Schwab, the head of the WEF, the founder of the economic platform though is downplaying the absence of
the big names. According to Schwab, it won't stop important work from being done in Davos.
And now, more than ever, it's time for unity.
(BEGIN VIDEO CLIP)
KLAUS SCHWAB, FOUNDER, WORLD ECONOMIC FORUM: There is more the need to come together again than ever before.
QUEST: Which is a shame in some census that arguably the architect of much of the discord, Donald Trump, and perhaps for understandable reasons, is
not here nor any of the major U.S. delegation.
SCHWAB: We have - nevertheless, we have 700 Americans here -- business, intellectual leaders and so on.
QUEST: If we just stay with the big names, though, the reasons they're not here in many cases --
SCHWAB: First, I have to say 60 heads of state and government are here and 300 Cabinet level Ministers, and all the international organizations.
QUEST: Yes, you're right. You're right to put me right on that because we focus on whether Macron is here or Putin is here or May is here.
SCHWAB: But Merkel is here, Abe is here, who chairs the G-20, so we have - we have real leaders here.
QUEST: This year, the focus is on the Fourth Industrial Revolution and building the architecture. What does that mean?
SCHWAB: Take, for example, artificial intelligence. Take all the new technologies, particularly also gene technology, gene editing. We lack at
the moment, global mechanism to shape those technologies. The Fourth Industrial Revolution is characterized by an enormous speed, so we don't
have so much time to shape those technologies in a human-centered way.
QUEST: Because it's moving faster than you and I can even imagine.
SCHWAB: Exactly. It's moving exponentially.
QUEST: How able is the world to take this onboard? It may have to, but has it got the capacity? It's dealing with a trade war against China.
It's dealing with Brexit, there's a U.S. government shutdown.
SCHWAB: That's the whole problem which we have. The speed is so fast and so multi-faceted, it's such a complex world, so people are overwhelmed by
change, political structures are overwhelmed, individuals are overwhelmed, and what do they do? They revert to a banker mentality.
QUEST: And that's what's happening.
SCHWAB: That's what's happening, and which creates this egoism, it creates populism, so we have to find solutions. And Davos is the place where we
create the attention, so there's little time to address those issues.
QUEST: Are we better off this year or worse off this year than when you and I sat here last year?
SCHWAB: If I take our global risk report which we just published some days ago, I think the world is more in a critical situation. We are at a
crossroad. There are so many threats, so many risks, and if we don't get them under control, we risk a kind of explosive situation of all the
imbalances and, let's say, weaknesses which we have.
QUEST: Good to see you, sir. Excellent, thank you.
SCHWAB: Thank you.
(END VIDEO TAPE)
QUEST: Klaus Schwab, as we continue getting under way, full steam ahead, I get suited up like never before. Join me on the ice after the break. I
show you it's quite a feat to endure, and as for here, well, there's no snow, but it is the most beautiful full moon. Yes, Davos, a full moon.
Who knows what will happen next.
(CROSSTALK)
[15:15:00]
QUEST: Now, Davos is facing economic reality. The potential for slip-ups, well, instead of being here, they should go, frankly, just over there
beyond those trees. Well, that's where you'll find the real experts in how to avoid slip-ups.
(BEGIN VIDEO CLIP)
QUEST (voice over): Ah, the peace of the Swiss Mountains. Tranquil. A place to think amidst the quiet. Hockey Club Davos makes its presence
felt. When they train, you know about it.
The club is right next door to WEF. Leaders should come here to learn a few tricks. Think of the players as today's economic problems. The speed
of going on the attack. The ferocity when things going wrong. Just staying upright is a challenge.
First up, get more padding when things go wrong.
UNIDENTIFIED MALE: You want to step forward?
QUEST (on camera): What? What do you mean, if I can step forward? I can barely move.
All set. Yes.
UNIDENTIFIED MALE: Good.
QUEST: Right. Now we're ready with all the tools.
UNIDENTIFIED MALE: No, no.
QUEST: What?
UNIDENTIFIED MALE: So this is to block the puck and this is to catch it.
QUEST: Now we're ready to attack the global economy. Think of me as the global economy -- fragile, uncertain, not sure of what to do -- needing all
the help I can get.
QUEST (voice over): So onto the ice and what the world is facing today. Brexit, where no one knows what's happening and everyone seems to be going
in circles. Then there's the U.S. and China, bashing each other over trade. The world's economy caught in the middle, could fall over.
[15:20:03]
QUEST (voice over): Finally growth; after several years of speed, countries like China are slowing, and for some, it may come to a sudden
stop. If we don't get it right, it won't be pretty.
QUEST (on camera): What about style and grace?
UNIDENTIFIED MALE: It doesn't really matter as long as you win.
QUEST (voice over): HC Davos may not be having their best year ever, but they are a good example of how to get the economy right.
QUEST (on camera): What all this shows is that if everyone pushes in the same direction instead of trying to pull it all apart, well, the global
economy stands some chance of staying on its own two feet. Richard Quest, CNN, Davos.
(END VIDEO CLIP)
QUEST: Good to see you, Christy Hoffman is the General Secretary of the Global Union. Welcome.
CHRISTY HOFFMAN, GENERAL SECRETARY, GLOBAL UNION: Thanks, it's nice to be here.
QUEST: And I say, welcome because your predecessor, Philip Jennings who was much loved and is much remembered never gave any quarter and I expect
one from you.
HOFFMAN: That's a fair deal.
QUEST: All right, in that report, lighthearted maybe, but we did discuss, we did show the issues, the very real issues. Are you convinced that Davos
is prepared to deal with them?
HOFFMAN: I think the issues are identified in the report, whether the solutions are there is not clear to me, and we have come here, the unions,
a number of global union leaders including me to say workers of the world need a new deal and we're calling it Social Contract 4.0 and which means --
QUEST: What's the fundamental part of that new deal?
HOFFMAN: So, first of all, let's look at question of sharing in the prosperity. We've got so much prosperity right now, we are not getting our
fair share. It brings us back to the age-old question Davos has been talking about the past few years, no progress.
QUEST: I saw some statistic this morning, admittedly, the banking industry is at the top of any scale. But even there, I saw that bank leaders in the
U.S. got 5%, 6%, 7% increases; workers got 2%, 3%, 4%.
HOFFMAN: Yes, that's true, but look at in 2017, the numbers just came out, no real wage increase for workers in Western Europe, zero. When you look
at the report that came out today from Oxfam, 26 billionaires own as much wealth as the bottom 50%. Last year it was 43 - 43 people. It went from
43 down to 26. Next year, it's going to be one billionaire, Jeff Bezos.
QUEST: Well, actually, probably not because his wife will have got half of it, but you have a point.
HOFFMAN: Well, maybe, but look, when you drop down from 43 to 26 in one year, what does that say about the direction we're going? So we need some
real measures to deal with that.
QUEST: Well, you could have said of course that the money is being distributed to everybody else, but it's not.
HOFFMAN: But it's not.
QUEST: It's not. Do you ever get tired though to see this call - this call of there needs to be greater sharing. You come here and you're given
a good audience and you're listened to, but is anybody listening to you?
HOFFMAN: Well, that is the question. We have a good analysis of the problems, we don't have the solutions, but we're all in a bind now because
people are mad about what's happening to workers. I mean, the workers are getting mad. You see it. You see it in France. You see it in the U.K.
You see it in the U.S., and the question is, how do we have --
QUEST: But they're not - but are they organizing? Are they organizing? They're going on the streets, but are they actually organizing in a way
that would give you leverage in negotiations?
HOFFMAN: Yes. The answer is yes. Not every single place, but absolutely, yes. Look at the numbers. Just take the U.S., for example. Last year,
they expected in 2018 that union membership would collapse because the Supreme Court ruled against dues collection. It's the same. Not a drop.
Not a drop, which reflects a lot of organizing.
The teachers of Los Angeles are on strike right now, 60,000 supported by sympathy strikes all across California, at least, so you know, we see a
lot. Look at the Google workers, they organized 20,000 workers out in one day. I mean, you know, now --
QUEST: Finally, the issues that people are out on, Google was obviously - had other issues like harassment and things like that. But do you believe
that the anger is going to ferment more?
HOFFMAN: More? I think, you know, there's anger and then there's hope and strategy. And as a union organizer, you don't always win on anger. You
have to have hope, you have to have a plan, you have to have a demand. And we are now saying we want digitalization to be - let's look at this new
economy we have right now.
Can we shape the future? Are we in a moment where we can say we can have shared prosperity? Because otherwise, it's not sustainable. We are not
going to have growth next year. People don't have enough money in their pocket.
QUEST: Well, I have in my pocket, not enough money, I have three pens, choose your color of pen.
HOFFMAN: I'll take green.
[15:25:10]
HOFFMAN: Just for sympathy.
QUEST: Right, so the idea this year, we've got rid about giving people choices. It's all about equality. You decide the agenda, setting the
globe. So we're creating a word cloud in a way. Write your biggest worry at the moment.
HOFFMAN: Okay.
QUEST: You can maybe have one or two. What are you going to go for? It's a "World of Worries."
HOFFMAN: Well, first, inequality. Because we've got to fix that. But I have to put climate up there too, because everyone needs to be worried
about climate.
QUEST: Good, thank you very much. Come back --
HOFFMAN: There you go.
QUEST: Thank you very much indeed. There we go. Good to see you.
HOFFMAN: Thank you very much. A ot of fun.
QUEST: Give Philip my best.
HOFFMAN: I will.
QUEST: And we're delighted to have you onboard with us.
HOFFMAN: Thanks very much.
QUEST: Now, as we continue, well, we told you about the warnings from the IMF. CEOs are now issuing their own warnings. A new survey shows a surge
of pessimism like never before. We'll explain what's worrying the C-Suite as "Quest Means Business" in Davos continues.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. I'll have the chairman of PWC. Their new survey shows
confidence is dropping inside the C-Suite and I'll take you on a tour of this charming little resort that's about to become the center of the
economic universe. Before all of that, this is CNN and on this network, the facts always come first.
Dramatic images of a huge explosion at sea. Two Tanzanian flagships caught fire in the Kerch Straits near Crimea on Monday. Russian media says at
least 10 people have died. There were 31 Turkish and Indians nationals on the two ships.
Venezuela says it has put down an early morning mutiny attempt by members of the National Guard. The uprising triggered more anti-government
protest.
[15:30:08]
Demonstrators burned trash and security forces responded with tear gas.
At the same time, Venezuela's Supreme Court today declared the new opposition-led Congress illegal. Authorities in Zimbabwe have arrested a
union leader who helped organize mass protests last week. He's accused of trying to subvert the government. Zimbabwe is facing widespread criticism
over its deadly crackdown on protests over surging fuel prices.
At least, five people were shot dead by security forces. The U.S. Senator Kamala Harris of California is the latest Democrat to jump into the 2020
presidential race. She says the time has come to fight against what she called injustices of the past two years of the Trump presidency.
U.S. stock markets are closed Monday. It's Martin Luther King Day, investors are looking ahead to a busy week of corporate earnings. Ford and
Texas Instruments will come on Wednesday, Intel, Starbucks and American Airlines on Thursday.
TI and Intel rank second and third amongst the U.S. companies most exposed to China, look at numbers from them. The trade war and global uncertainty
are two of the key risks that chief execs have cited to PWC as part of its annual survey released today.
Now, the survey showed a record jump in pessimism. Last year showed that a record jumped in optimism. Robert Moritz is the Global Chairman of PWC.
Good to see you.
ROBERT MORITZ, GLOBAL CHAIRMAN, PRICEWATERHOUSECOOPERS: Pleasure to be here, Richard.
QUEST: It would not be day one of Davos if we didn't have your survey.
MORITZ: Absolutely, we've been doing it for 22 years.
QUEST: More than I've been here. But anyway, I've got the point. And of all the 22 years, though, have you ever seen a reversal of optimism as fast
as last year to now?
MORITZ: Absolutely not. We've seen periods of this pessimism previously when you look at 2010 coming out of the financial crisis. You've seen some
drops, but you've never seen the reversal that we've had this past year in the last 12 months, especially when you look at all the uncertainty that's
coming at the eyes of the CEOs and how they manage it.
QUEST: So what is underneath that? Which part of the economic problems is causing this?
MORITZ: So you have a number of different issues, but to step back for a second, the amount of risks individually are far broader than ever before.
QUEST: Such as?
MORITZ: Such as trade issues in terms of the conflict between the U.S., regulation, taxation, the issues around the politics in terms of political
agendas of what's happening in the EU. The combination of where technology is going and the social implications from that. So the list goes on and on
and on.
QUEST: But if you look at this list --
MORITZ: And it's down to where do we go from here?
QUEST: If you look at the list and the top of the list, I mean, many of these have been around for some time. What has been the catalyst? I mean
or I'm leading inevitably to saying how has Donald Trump been the catalyst?
MORITZ: Donald Trump has been some of the catalyst, not all of the catalyst --
QUEST: Right --
MORITZ: In this regard. The reality is these risks are coming faster and having much more prominent effect in terms of institutions, in terms of the
level of confidence. Their ability to execute a strategy as well as can they deliver what they promised their investors and their stakeholders to
do right now.
And that's a big question in terms of how do I execute better in this world of uncertainty.
QUEST: They feel -- I mean, CEOs have to execute in this regard. But do they feel helpless to set the agenda in this way?
MORITZ: So, yes, because when you look at those risks that you just had up on the slide, many of them are not controllable by them.
QUEST: Right --
MORITZ: So the challenge is how do you get CEOs that can scenario plan for them and move really fast in executing and do a heck of a job better than
they had in the past in terms of executing and controlling the risks.
QUEST: We had slow growth numbers in China you will have seen --
MORITZ: Yes --
QUEST: Just in the course of the day. Now, the trade war isn't directly affecting it, but indirectly because of a lack of confidence. If I
understand you right, whether it's Brexit or shutdown or trade war, it's because of -- it's making consumers worried and they're not going to spend.
MORITZ: Combination of consumers as well as the CEOs and their boards. Let's remember that they're sitting on a lot of cash. What do I do with
that cash? Where do I go with it? Should I actually pay down or should I make an investment?
When you look at rising interest rates, how do I actually de-leverage what I have to -- better -- say for the future. So it's a question of what
choices do I make in response to the consumers and how do I manage the risks --
QUEST: Right --
MORITZ: That I absolutely control.
QUEST: Now, forgive me if I plagiarize and take on board your survey. But I want you to get out your phones and go to cnn.com-slash-join. Which do
you think is the biggest risk facing the global economy? Now, we've got our own three of risks in the global economy.
China's -- without looking at the results, China's slowdown, trade war or Brexit? Of those three, which would you go for? Biggest risk.
MORITZ: I would actually go for the trade war.
QUEST: The trade war?
MORITZ: Yes --
QUEST: Which most of the rest -- most of the rest of our viewers also seem to agree with you.
[15:35:00] On this survey and the way in which it has taken this dramatic reversal, I ponder, if it was able to go backwards over a year, by next
year it could be back up again.
MORITZ: It could be, but let's go back --
QUEST: But you don't think that it will be?
MORITZ: No, I don't believe it will be because let's go back to the predictive nature of this. When we look at the last 22 years, there's
been a tremendous amount of correlation between the CEO's confidence and the GDP growth.
And we've seen it time and time again with the exception of going into 2008. And the reality is the CEOs, if you take it verbatim with an
analogy, probably have a lesser confidence than GDP growth and the IMF came out with today.
QUEST: And it's -- the worst is in the United States at the moment looking at your service already --
MORITZ: The worst is in the United States, but let's not limit it to the United States because the contagion effect of whatever happens in the U.S.
--
QUEST: Sure --
MORITZ: Has a huge impact around the world.
QUEST: All right, just for a moment. How many people do work for PWC?
MORITZ: Two hundred and sixty thousand people around the world.
QUEST: Two hundred and sixty thousand, right, which is it makes a very good reason -- which color would you like?
MORITZ: I'll take blue.
QUEST: I've eliminated green because everybody was going with -- you've got the idea, a world of worries. Where would you trade inequality,
climate, write your own, what would you put in there?
MORITZ: So, let me throw up something different, which is tech-slash- social implications.
QUEST: Very interesting, tech-social. The tech conundrum -- really good to see you sir --
MORITZ: You as well, me too --
QUEST: Thank you very much --
MORITZ: Pleasure --
QUEST: Indeed, thanks for coming on the program --
MORITZ: Thanks so much --
QUEST: Thank you. As we continue after the break, his name might be on everyone's name. He's nowhere to be seen, Donald Trump's absence from
Davos.
(COMMERCIAL BREAK)
QUEST: Welcome back to Davos. Turn our attention to the other side of the Atlantic. It's day 31 of the shutdown in the United States after being the
star guest at last year's Davos, Donald Trump will leave a noticeable empty chair this year. David Gergen is with me, always good to see you --
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Oh, good to see you, sir.
QUEST: OK, I mean, here we are, Davos.
GERGEN: And we are indeed.
QUEST: What were you just saying?
GERGEN: I was just saying it's such an interesting -- we were just hearing Bob Moritz, it's such a reversal as going on among CEOs. We see the same
thing happening in politics. You know, last year, we had a very self- confident Donald Trump praising America, the path that it was on.
It was going to knock out, you know, be the best recovery ever. We had Macron who came here, self-confident, new president of France. You know,
we had Theresa May who came here, it was low key but it was very self- confident.
All three are in deep trouble now. Leading -- starting with Trump. But you know, you wouldn't want to be Theresa May or Macron either right now,
they're both at least --
[15:40:00] QUEST: But how have they got into trouble?
GERGEN: That's really --
QUEST: I mean, is it -- or maybe I should rephrase that. Is there a common thread that's enabled them to get into trouble?
GERGEN: I think all three have angry publics. Macron definitely under -- misjudged the public.
QUEST: Yes --
GERGEN: He didn't think he would join the people in the streets the way he had. He thought he had some resistance, but he can't come back. I can
tell you Donald Trump never anticipated the number of women and millennials who came out to vote against him in the off-year elections.
You know, they are not -- and who would have thought Theresa May would get the worst drubbing of any president --
QUEST: Exactly, but the shutdown, we even got to the stage when sometimes here on QUEST MEANS BUSINESS, we will -- we'll say to you, oh, should we do
the shutdown?
(LAUGHTER)
I mean it's 31 days that the -- a large part -- now, what's your argument? A large part of the U.S. government to shut down.
GERGEN: Right --
QUEST: And is there a sense of feeling of crisis?
GERGEN: No, and that's what's -- that's what's really troubling. There is a sense of crisis among the 800,000 --
QUEST: Of course --
GERGEN: You know, who can't meet their mortgages, they may get any item. May have to sell their cars or they're going through a lot of hardship.
Many of them are being ordered back to work without pay, without pay and no assurance they'll get back pay. So it's very tough on a lot of these
people. I think there's been a little difference in the way --
QUEST: How do the rest of the American public allow --
GERGEN: That's a good question.
QUEST: You know --
GERGEN: Yes --
QUEST: Because we were told that one side or the other will give in on the --
GERGEN: Yes --
QUEST: On the question of the $5.67 billion for the wall when they feel they're losing the political support. But for the other 282 million
whatever --
GERGEN: Right --
QUEST: Why aren't they up in arms about this?
GERGEN: I -- they're not yet, but they will be. I don't think this is going to last much longer without much more of a protest. You know, it's
just so many people are getting hurt. The -- both sides are too dug in right now. You know, they don't want to compromise because they think
they'll lose their base, which is very dangerous.
But you know, inside the White House, this is having real economic repercussions, as you so well know. Inside the White House, they're
expecting for each week --
QUEST: Yes --
GERGEN: Of a shutdown, we lose one-tenth of a percent of growth for the year. That means we've already been out four weeks, it's already four-
tenth of a percent. That's a heavy loss.
QUEST: It's a heavy loss, and it's going to get worse if it doesn't --
GERGEN: Yes --
QUEST: It will start to snowball.
GERGEN: Right --
QUEST: On this question of Davos, back to --
GERGEN: Yes --
QUEST: Davos, is there any realistic -- I mean, why do people still come?
GERGEN: Well, I think if you're a CEO of a major company, you need to be here, because this is an opportunity to see more people more quickly than
you could flying all over the globe for two or three weeks --
QUEST: Right, and that's one of the reasons why absolutely I come here because we get to see people like you --
GERGEN: Well --
QUEST: Bob Moritz and --
GERGEN: Yes --
QUEST: Kristin Hanson(ph) --
GERGEN: But I think that this has been the foremost institution in favor of globalization, global rules --
QUEST: Yes --
GERGEN: Collaboration --
QUEST: Yes --
GERGEN: And right now, it's -- there's real pressure inside here. You can feel it especially with the young and the rest of the world is resisting
that. You know, our democracy --
QUEST: So when --
GERGEN: Are in trouble over something --
QUEST: So when Klaus Schwab as he said on this program earlier, talks about the need for the -- you know, the fourth industrial revolution which
is coming, but the building of the global architecture.
GERGEN: Right --
QUEST: You've been around government long enough. Is there any hope that they could ever agree?
GERGEN: It's not, and nowhere close of rebuilding that or regard architecture(ph), but Klaus is right, we need to do it. You know, we need
to adapt to the 21st century, and we need to bring our people and have more equity in our system. I do think there's push-back that's coming now
from the streets about women and the young and minorities and others and gays for more equitable treatment.
QUEST: Kamala Harris joined the race today.
GERGEN: She did.
QUEST: Is it going to be -- is it going to be -- the Democratic primary for 2020, is it going to be a circus or is it going to be, you know,
something tremendous to watch?
GERGEN: Well, it's going to feel like a circus for a long time until somebody emerges. I know now -- Kamala Harris, you know, we have like four
women who have already declared now.
QUEST: Yes --
GERGEN: It's pretty interesting.
QUEST: Right --
GERGEN: Never had that before.
QUEST: Choose your color.
GERGEN: Oh, all right, I'll go for the blue too.
QUEST: You'll go for the blue?
GERGEN: Outside one, yes --
QUEST: All right, you know the idea.
GERGEN: I do.
QUEST: Write on the wall what is on your mind? What are you concerned about?
GERGEN: OK --
QUEST: Oh, that's heavy thinking, David. That is --
GERGEN: Our economies will only grow if we get our democracies right.
QUEST: And you're worried about democracy.
GERGEN: Yes.
QUEST: I suppose that's because you're coming from the U.S.
GERGEN: All right, I think that's right, but you look at Europe, you know, look at the number of parties that have emerged on the alt-right. You
can't help but look at the politics.
QUEST: Good to see you, sir --
GERGEN: Very good to see you --
QUEST: Have a good Davos.
GERGEN: OK, take care.
QUEST: Now, the head of one of Saudi Arabia's biggest investment companies says he wants global investors to reconsider the kingdom after its
reputation was tarnished by the murder of Jamal Khashoggi. John Defterios asked the Chief Executive of Kingdom Holdings if investors are willing to
look past this dark chapter in Saudi history.
(BEGIN VIDEO CLIP)
[15:45:00] TALAL AL MAIMAN, CHIEF EXECUTIVE OFFICER, KINGDOM HOLDING SAUDI ARABIA: Well, I hope to -- for them to size things as they are, not to
blow them out of proportion. And we are putting our moneys in Saudi Arabia.
And therefore, I hope this is an invitation to everyone to reconsider and come to Saudi Arabia and see the potential investment opportunities.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Talal, I don't want to be cynical, but some would suggest you're forced to invest in Saudi Arabia
because of the power of the Crown Prince. How do you dispel those fears?
MAIMAN: Absolutely not, Deezer is a French company. How could it happen?
DEFTERIOS: Which you invested in?
MAIMAN: Absolutely, we just invested --
DEFTERIOS: You invested in Lyft as well.
MAIMAN: Correct.
DEFTERIOS: OK, do you see opportunity for them to come into the Saudi market as well?
MAIMAN: Yes, definitely. And we believe also it's not only for the investors, also the companies that we are invested in to be able to come
and participate in the 2030 plans and initiatives.
DEFTERIOS: You know, you've been all through a lot over the last 24 months in Saudi Arabia after the Ritz-Carlton arrest, which includes your Chairman
Prince Al-Waleed, and then we had the death of Jamal Khashoggi as well. What do you tell everybody that says I really don't trust where Saudi
Arabia is going, despite the opportunity it being the largest market by a wide margin in the Middle East and North Africa?
MAIMAN: Well, unfortunate incidents happen everywhere. And we think it's an unfortunate thing that happened, but I think we should go forward, Saudi
Arabia is full of opportunity and full of potential investments. So we welcome everyone to come and have a look at what we have to say.
DEFTERIOS: Now, Saudi Arabia wants to close a chapter on Khashoggi, but the world is not ready to close the chapter on this. I know it's a very
difficult question, but is Saudi Arabia, the Crown Prince, others seen the reality of how the rest of the world sees the kingdom today with the fits
and starts of reform?
MAIMAN: I have no doubt with the wise leadership of Saudi Arabia. They know exactly what they're doing and they know exactly when to respond to
it. As for myself, I am only a businessman trying to answer all the business questions, if you have any.
DEFTERIOS: Which are plenty and we have the nexus between geopolitics and --
MAIMAN: Sure --
DEFTERIOS: Investment. The final question is Jeddah Tower, I had the chance to visit it just over a year ago the building was taking place, and
now there's a pause. It's the -- going to be the largest tower in the world. You have a huge stake in it, what happens to the Jeddah Tower?
MAIMAN: It's actually the tallest tower in the world.
DEFTERIOS: Absolutely.
MAIMAN: And it will be continuing within the next six months. The contractor had an issue with laborers and actually was (INAUDIBLE) at the
time, and therefore the tower has halted. But all the infrastructure worth $400 million is being taken place as we speak and it's almost going to be
handed over in March, 2019.
(END VIDEO CLIP)
QUEST: The head of Kingdom Holdings. After this short break, now, up there is the promenade. The promenade is where all the shops are, which
have now turned into something rather extraordinary. The corporatization of Davos is complete. After the break.
[15:50:00] (COMMERCIAL BREAK)
QUEST: Every year, when I come to Davos, I use as a barometer my walk from the hotel to the Congress Center to see just how far this place has gone in
terms of corporate takeovers. This year, it was extraordinary, and remember, it's a short walk.
(BEGIN VIDEOTAPE)
QUEST (voice-over): It is barely 800 meters from my hotel to the Congress Center. And it's not long before I discover changes.
(on camera): The old Schneider's Cafe has always been India house, and interestingly, look, next door to it, well, there you have the Russians.
The Russians have bought the last bit of Schneider's Cafe that stayed open during WEF. The famous Cafe Klatch used to be here. Last year, it was the
Russians, this year, it's the South Africans who have taken it over.
(voice-over): There's a new one, Amazon web services. I don't remember them being there, you'd never know Huawei was a telecom's pariah. After
all, it's got a prime spot on the promenade. Old favorites have held on to their spaces. Sales force is always on both sides of the street. Then
there's the Swiss Alps Fantasy souvenir shop. It stands in splendid isolation.
(on camera): The owner of this shop told me she refuses to rent it out, regardless of the huge amount of money she could make during Davos week.
(voice-over): Halfway to work and the battle ship Belvedere comes into view with some surprising changes.
(on camera): Now that is really interesting. The British have taken pride of place across the front of the Belvedere Hotel. A Brexit message, no
doubt, to the powerful that will be staying there.
(voice-over): The Belvedere Hotel is festooned with sponsors, loads of them all over the building. I'm surprised there's any room for the guests.
Onwards passes Zurich getting ready to offer up free soup and hats, the nearest Davos ever gets to a soup kitchen.
Every year, the entry procedures changes. But if all is gone well and they let me in, it's down the famous inflatable tunnel, which collapsed one
year, and I'm ready to improve the state of the world.
(END VIDEOTAPE)
QUEST: Right, John Defterios is with me. You were just watching that out of the corner of your eye.
DEFTERIOS: Let's just say there's no space left on the promenade whatsoever. And it used to be the space where the emerging markets decided
to go, right? And I wanted to pontificate about my 29 years at Davos, but actually, what I was thinking, I really wanted to do was take a look back
ten years to your first profitable moment, because I read the transcript and it's very profound.
I think I want to share it with others here --
QUEST: Oh --
DEFTERIOS: On the program, if you don't mind.
(BEGIN VIDEO CLIP)
QUEST: No. Let me just say tonight, I'm deeply privileged and honored to be with you at this time every night. I hope that between us, we have a
debate, a discussion. We get to grips with world economic issues and of course corporate events. The times ahead are going to be hard, but with a
bit of humor, a lot of good will and a smile, well, we might even have some fun.
(END VIDEO CLIP)
QUEST: You got me! You're right, ten years --
DEFTERIOS: Happy anniversary, happy anniversary, happy anniversary. We have key members of the team, Anna Maya(ph) --
QUEST: Come on in --
DEFTERIOS: Roseanne(ph), come on, Robert North, come on in, our executive editor. We're celebrating ten years of QMB. You're a mainstay and you
said in your profitable moment, it's going to be hard work, but let's have some fun along the way. I think that personifies you.
Your director, Chris, is on the other side in New York, Tom Foster, you assembled a fantastic team. So we had to single it out because this all
started ten years ago at --
(CROSSTALK)
QUEST: Ten years ago QUEST MEANS BUSINESS started, and we were very clear about what we wanted this program to be, the definitive word on how you
earn and spend your money. Now that's not about -- that's not about money is great, money is wonderful --
DEFTERIOS: Right --
QUEST: Money is the best thing ever. We don't worship money on this program, but we look at how you earn and how you spend your money. Gosh, I
was young in those days.
DEFTERIOS: I think you're wearing the same bloody jacket.
QUEST: No, I am not!
(LAUGHTER)
[15:55:00] That coat -- fair enough, I've just given up --
DEFTERIOS: And I don't carry cakes for everyone, so I don't want to burn my hand, so blow out the candles. Not bad, not bad --
QUEST: Oh, thank you very much.
DEFTERIOS: I honestly hold a candle to you --
QUEST: No!
DEFTERIOS: Nice work, congratulations --
QUEST: So, I mean, I've been doing this ten years.
DEFTERIOS: Yes.
QUEST: You've been doing -- coming here -- I've been doing it 16 years. What's the big difference between then and now? Between when you -- the
first time you came and now?
DEFTERIOS: Oh, my gosh, I mean, there was 250 participants, you had direct access, maybe 30 journalists in total. And I said my first meeting had
Maggie Thatcher, Francois Mitterrand, Helmut Kohl, his counterpart from East Germany --
QUEST: Keep talking, keep talking, keep talking --
DEFTERIOS: Gorbachev --
QUEST: I've got a cake -- yes --
DEFTERIOS: Yeltsin --
QUEST: Yes --
DEFTERIOS: But this is a lot of fun --
QUEST: Thank you sir --
DEFTERIOS: And congratulations --
QUEST: Thank you very much indeed --
DEFTERIOS: It isn't about you, not me tonight, that's for sure.
QUEST: Thank you --
DEFTERIOS: Yes, and to the team.
QUEST: Thank you.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, gender-free and into the fourth industrial revolution. This is Sidney Snowbot(ph). We knew we had to have
something different this year, something that was going to move the needle, as they say, and so Sidney is going to help us as we work our way
throughout the course of the week.
Frankly, if you told me ten years ago that QUEST MEANS BUSINESS would still be going stronger, better than ever with as good a guest and with you there
too, of course, I'm not sure I would have believed you. It was always the hope that we would become part of your morning.
If you're in Asia, you're in evening having dinner. If you're in Europe, afternoon in the Americas. Without you being there, there really is no
point in us doing it. And so we look to the future because we don't want to spend a second more than is necessary looking at the past.
We look at the past just to see where we've gone wrong, perhaps the programs that didn't work, the ideas that looked great on paper, but really
best left behind. And then we look forward to the future with Sidney Snowbot(ph).
Who knows what color Sidney -- it's an "it", a "she", a "he", a "they"? It doesn't really matter because that's QUEST MEANS BUSINESS for tonight, I am
Richard Quest in Davos. Whatever you're up to in the hours ahead, often going to say, I hope it's profitable, we can't get the stuff these days.
END
