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Quest Means Business
The U.S. Economy Keeps Its 100 Straight Months Of Job Growth; It Is Shaping Up To Be A Bad Year For The Chinese Economy; Foxconn Going Ahead with Wisconsin Plant After Trump Call; Effective Today, The Jim Yong Kim Has Stepped Down As President Of The World Bank; U.S. Suspends Nuclear Arms Treaty with Russia; Trump: "Good Chance" I'll Declare Emergency for a Wall; Venezuela's Guaido Urges Mexico, Uruguay not to Be Neutral; Media Industry Gears Up for the Super Bowl; New England Patriots Face L.A. Rams on Sunday; Coke and Pepsi Do Battle Over Super Bowl; A Historian Goes Against the Tide at World Economic Forum; BP to Link 36,000 Workers' Bonuses to Climate Targets; U.S. and Venezuela Battle Over Citgo's Future; Dow Ends Week Higher, Boosted By U.S. Jobs Numbers; Chevron, ExxonMobil Boosted Output in 2018; Amazon Shares Fall Despite Record Q4 Profits. Aired: 3-4p ET
Aired February 01, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, ANCHOR, CNN: As you can see there, it's been a meh-kind-of- day, same thing on the S&P, they're trying to take some money off the table in the NASDAQ, and this is what's moving the market on Friday, the 1st of
February.
The U.S. economy keeps its 100th - that's right - 100 straight months of job growth. What impact will that have on the Fed? Amazon reports record
holiday sales, but get this, investors say, the earnings just didn't deliver what they wanted to see. Shares are down. And I will be right
there at the share case. And as Jim Yong Kim leaves the World Bank, some say the organization needs a new vision, fast. We have a very busy day
ahead. I'm Paula Newton and this is "Quest Means Business."
Okay, we are in the final hour of trade on the first day of a new month. Investors seem to be - let's call it a transitional phase, okay, with muted
reaction to the latest U.S. job report and earnings. It was a blockbuster though as you can see there. The Dow none too impressed, but let's face
it, it had come off the best January in 32 years.
Now, the U.S. had another strong month for job creation in January. Employers added 304,000 jobs, way above expectations. It was the 100th
straight month of job gains, incredible. The unemployment rate ticked up though to 4%.
You know, we've been through this before. More people enter the workforce, and that's why it's up. The report also said average wages were up some
3.2%, in the past 12 months, that's impressive wage growth that we haven't seen for some time.
Although comparing January to December, they were in fact almost unchanged. Diane Swonk is the chief economist at the accounting firm, Grant Thornton.
She joins us now from Chicago. I'm really interested to hear whether or not this jobs report and the revision from December, they lost 90 -- that
revision ended up negative 90,000 -- whether it's changed your mind on the economy at all right now.
DIANE SWONK, CHIEF ECONOMIST, GRANT THORNTON: Not really. I mean, we have a nice sold jobs report. We did have a little extra help from, believe it
or not, after this polar vortex that I was living through in Chicago, we had unusually warm January when this survey was taken, which really boosted
those construction jobs which were over 70,000.
So we saw a nice big gain in construction that really was more because of unseasonably warm weather. It's just kind of really wacky. On the other
side of it, we did also see some of the increasing unemployment rate was due to workers that were furloughed -- temporary unemployed -- 175,000 that
showed up there in the unemployment rate for government workers.
And we also saw a big movement, half a million people took part-time instead of full-time jobs because for economic reasons. That usually shows
up in the U6, that's a stress measure, so that popped up to 8.1%. What's important about that is, many of those workers, it was noted in the report,
were actually people taking on other jobs to try to give themselves some money while they weren't getting money because they were either furloughed
or they were contractors and not being paid by the government.
And the good news is, in a strong economy, we could actually absorb them and help pay them a little bit when they weren't being paid at all.
NEWTON: Yes, which is also impressive in terms of showing the strength of that market. I have to ask you, we saw in the middle of the week, the Fed
essentially folded. I mean, it walked away from the table, it put its cards down and walked away. Do you think this changes anything?
SWONK: You know, we will see some effects of what's going on with the weather. But really, this is - we're going to see the employment number
for February. I think it will finally give us some clarity. There's more noise than news in this number, and I think we have got to really get into
February to start getting some of the data.
All the data that we're looking at right now is backward-looking, and we're trying to catch up and we are under these big data dumps. We saw a big
data dump today as well. I think we're going to have to really get into February to see what's really going on.
NEWTON: And when we try and go into February, I mean, a lot of people are looking at this job market and still wondering why - know, the unemployment
rate actually ticked up, it went to 4%. There are still workers there on the sidelines you think in terms of they're not being that kind of labor
pressure on American companies and it really halting their growth?
SWONK: Well, I think it is - one of the things we are seeing is people are willing to throw their hat in the ring. Now, I think it was boosted a
little bit extraordinary, because we had all of these people willing to take on part-time jobs that really already had full-time jobs, and so that
helped the participation rate a bit during the month. But the trend has been in the right direction.
We've been seeing people finally being pulled back from the sidelines that weren't participating in the past and that's really the Fed's long run gain
here. They want to extend the expansion long enough so we can reengage a lot of those people that were still on the sidelines.
[15:05:00]
SWONK: Now, it means that wages although at 3.2% are better than they were a year ago, they're not spectacular. Wage gains are certainly better than
they were especially after adjusting for inflation and lower prices at the pump help. But they're a small shadow of their former selves and they're
almost entirely concentrated in low wage jobs.
Now, that's great for people who are earning low wages to get the boost up, but we're not seeing them move up through the middle class as you usually
do and into higher incomes. Not worried about the high income household so much, but that middle class -- many of those people who are earning low
wages now and getting a boost used to be in middle income jobs.
NEWTON: Yes, and it definitely gives them more purchasing power which also propels itself through the economy, all good things. It was not a good
thing this week, was it, that polar vortex. Something tells me we're going to be hearing about that in the next job numbers as well. Maybe even GDP.
Gosh, I hope it gets warmer there next week in Chicago, I think it will. Have a great weekend.
SWONK: It's already melting.
NEWTON: There you go. Thanks, Diane, appreciate it. All right, and I told you, we are off to the earnings share case. Remember, this is where
we track the change in a company's share price in the 24 hours after it reports earnings. Now, it's the best gauge of what investors think about
the company's results. And key here, it's not just about the results, but about the 2019 outlook as well.
Okay, we're going to start with Amazon. Amazon was a bit puzzling because it had -- it's now in bear market territory, by the way. It fell 5%. So
we're going to take it right there, in the middle, 5% and it actually worried investors somewhat that had slowing sales growth, which means some
people are seeing, yes, it's a term you're going to hear more about, peak Amazon.
Now, Friday was a good day, though, for America's oil majors. Chevron and ExxonMobil were both up 3%. This is something we haven't heard about for
quite some time. We're going to put them right here, there you see, 3%, both Chevron and ExxonMobil. What impressed investors there, in fact, was
the surge in production, even though we have had some oil shocks recently, especially with the sanctions against Venezuela.
Paul La Monica joins me now. You have been with me through the bitter end and the bitter cold all week of what was an exhausting week of earnings.
PAUL LA MONICA, CORRESPONDENT, CNN: Yes.
NEWTON: So what do we say at the end of the week in terms of what the expectations were on Monday morning and where we're at with just less than
an hour of trade?
LA MONICA: Yes, I guess when you look at the staircase there, it's obviously a mixed picture. But I think a lot of companies were able to
ooze over expectations that had come down pretty dramatically in the past couple of weeks. I mean, Apple is a great example of a company that really
shocked the market early this year, right after New Year's, by saying that revenue growth was going to slow. And then when the numbers came out, they
weren't great but they weren't as apocalyptic, or i-pocalyptic, if you will, as many people thought they would be and the stock actually went up.
NEWTON: Just there on the share case, we were focusing in on Facebook. I mean, it was a shock this weekend, and yet, probably more better - more and
better results to come from Facebook because they seem to be sector leaders.
LA MONICA: Yes, I think Facebook is a company that has clearly shown that despite all of the drama surrounding the many problems that they've had
from a PR standpoint, that for users, I think a lot of users may, you know, throw up their hands and complain about it, but they're not leaving
Facebook or Instagram or WhatsApp, and advertisers aren't either, because right now it's Facebook and Google, are the places you want to be from a
digital standpoint.
Google reports earnings after the close on Monday. It will be very interesting to see what their ad growth was like for the core Google
platform, as well as YouTube. But if you're a marketer, where are you going to put your money? I mean, we know that those are the two platforms
where a lot of people are still going.
NEWTON: Yes, apparently, in terms of getting what you want on the ad buy, no one can compete right now. We'll see if that holds true in 2019. I
have to ask you about Tesla. I know you follow the company. It was a really interesting week for them, the share is down.
LA MONICA: Yes, I think Tesla, we joked about it before, Elon Musk can't get out of his own way. The numbers were good for the Model 3 production,
they reported a profit, but having at the very end of the call, "Oh, by the way, the CFO is retiring," like that's the type of thing --
NEWTON: You pointed out that wasn't a good strategy.
LA MONICA: It would have been nice to have led with that and then maybe have analysts have a chance to ask questions. Instead, it was just tacked
on at the very end and I think that left a bad taste in investors' mouths and a lot of people question, you know, they questioned why Elon Musk does
the things he does in the way he does it. And you know, he's a genius, obviously, but sometimes genius and Wall Street don't go hand in hand,
always. They may misunderstand each other.
NEWTON: And the stock took a hit for it. Okay, before I let you go into what I hope is a relaxing and warm weekend, looking ahead to next week, you
had mentioned Google, not quite as busy as this week, but still a busy week.
LA MONICA: No, not as busy, but Google, I think is going to be one of the main highlights we've seen, as you pointed out, Facebook had a very strong
quarter, Apple did better than the lowered expectations. Netflix numbers were really good. And you have Amazon today, as you pointed out, the
profits were pretty solid.
[15:10:10]
LA MONICA: I think people are a little worried about the physical retail stores, the Whole Foods, for example, revenues declining there. So will
Google - where do they fit in what's a muddled tech landscape right now.
NEWTON: Yes, it is hard to know and definitely tech was once again this week. It surprised me, Paul, tech was once again the story this week, it
definitely was. Paul, thanks so much, and I mean it, have a good weekend and keep warm.
In Europe, stocks nudged ever higher, thanks in part to the strong U.S. jobs report that we've been talking about and some strong corporate
earnings from companies including appliance maker, Electrolux.
In Germany, though, meantime, Deutsche Bank shares fell and that was despite posting its first full year net profit since 2014. When we return,
as the U.S. economy steams ahead, there are new signs that in China, growth is slowing just as we hear that trade talks with Washington may - may
actually be making some progress.
And Foxconn said it wasn't going to build flat screens in Wisconsin and then apparently, Donald Trump, yes, picked up the phone and we'll tell you
what happened next when we go live to the White House.
(COMMERCIAL BREAK)
NEWTON: Now, as we've told you before, it is shaping up to be a bad year for the Chinese economy. We're seeing yet more troubling economic data as
trade talks with the United States forge ahead.
The PMI index on Chinese manufacturing showed the sector contracted for a second straight month. It's at its lowest now in nearly three years.
Those figures will add to fears that Chinese growth continues to slow. Joining me now is Robert Lawrence Kuhn. He is the longtime adviser to
Chinese leaders and the author of "How China's Leaders Think." And we will get to your insights on that in a sec.
But first, I have to ask you about some of the figures. You know, it doesn't matter for something like that or for its GDP, some people wonder
what kind of an insight do we have into exactly what's going on in China when we get numbers like that.
ROBERT LAWRENCE KUHN, LONGTIME ADVISER TO CHINA'S LEADERS: China is a continent. And it's very difficult to get everything straight. It has
provinces. It has a long history of a divide between the center and all the different provinces, which like individual countries, and in the past
run by what would be the equivalent of modern day emperors, very independent, running those provinces.
And if you go back historically, there were times when the GDP growth for all of the provinces, there would not be a single one below the national
average.
[15:15:05]
KUHN: And so you know that's mathematically impossible. But today it's getting much better. The leadership is insisting on good, and that doesn't
mean they're perfect by any means, we've got to get those in.
NEWTON: But our numbers aren't perfect, right? So --
KUHN: Well, but China needs to go a long way. But I think we can begin to be fairly confident in the numbers. But the numbers are not that critical.
Look, here is why. Projecting a growth rate of even 6%, 6.5%, what does that mean?
When China first joined the WTO in 2001, what was China's GDP at that time? It was $1.3 trillion. What is it today? It's $13 trillion.
NEWTON: Incredible.
KUHN: Ten times. So how do the numbers work? China today, put it at a low number, put it at 6%. Six percent of $13 trillion is $780 billion.
And if you go back to the glory days when China had double digit growth, make it 12%. Twelve percent of $1.3 trillion, you know, what's that? $150
billion. So China is growing, arguably, four, five times bigger now with the smaller growth because the base is so big. That sounds good.
But there are other issues involved. There's how much money is being spent on infrastructure that is not productive. And so you're creating GDP in
the short term and creating problems in the long term --
NEWTON: A lot of those --
KUHN: Yes, overcapacity, high debt, and China is trying to deal with this. Xi Jinping has recently had a big conference with all provincial leaders
and his focus was on risk and it was very blunt. He started with political risk because of all the turmoil going on in China and internationally.
He was concerned about keeping stability and elevating the party more than any of us can remember in terms of its importance in the country to keep
stability. He is focusing on completing this anti-poverty campaign, poverty alleviation and he has focus on it. He said - Xi Jinping has said
that's what he spends more time on than anything else, more time now on the economy and that's remarkable.
NEWTON: But I believe it, because he believes that's the way you keep the social cohesion, right, that is --
KUHN: And delivering for the people, delivering standard of living growth.
NEWTON: Okay, but let's get to him and I wonder if in that meeting they talked about things that could be a credit or a debt bubble coming up in
China. But I want to ask you about trying to get into his mind because a lot of people are wondering now if we did not take the right measure of the
man because they thought he was a reformer, they thought he would privatize, they thought he would liberalize. Many people think the way
he's running his economy mirrors the way he would like to run the social contract with everyone.
And they are looking at this and thinking, we thought that he would liberalize this economy. They are not going to. They are not about to.
They don't think it's the right way to go.
KUHN: Let's start at fundamentals. Xi Jinping wants to deliver two big categories. Number one, elevate the standard of living of the people,
which embeds eliminating all extreme poverty in China. As I said, he said, he spends more time on that than anything else. That's number one.
Number two is the reemergence of China in the world, China playing its role as a major power, as a great power. Not taking over the world, but being
an equal.
NEWTON: You're going to get some argument on that.
KUHN: I know, and I feel very confident. China wants to participate among the great nations in the global governance of the world. He may not agree
exactly how they think it should be run. I think China is learning lessons with the Belt and Road. The Belt and Road is a wonderful initiative which
will bring infrastructure to poorest countries in the world. We all should support that.
There are problems with it. There are debt structure problems, there are bribery problems. China is recognizing that and will correct it. China
has a history of making new things, correcting it and then expanding it forward.
NEWTON: And before we go, I don't have much time but I do want to bring it down to what we saw in Washington this week. So you know, you wrote the
book. How China's leaders' think? How is their approach to negotiation different than the U.S. approach to negotiations?
KUHN: Well, first of all, both Presidents want a deal, and I think we can be very confident about that for very different reasons. Xi Jinping has
the risk. He has to deliver on the economy. He has many other pollution, we haven't talked about all the problems, we don't have time. It took us
three hours talking about all the problems.
We know President Trump needs the stock market, he's going into an election with those personal problems, et cetera. So both need a deal. So I feel
very confident a deal will be reached, but that doesn't mask that we have passed the point, where for the midterm, however long midterm is, three
years, five years, ten years, who knows, that there will be increasing competition. We hope it doesn't get worse.
NEWTON: Well, that's a bit sobering for going into the weekend. Thank you very much, I really appreciate the insight into the numbers. It's really
important to pull back and see that perspective of that Chinese economy and how far it's come.
Robert, thanks so much. As we continue --
KUHN: We'll keep watching.
NEWTON: We will indeed. It is quite a show going on right now with those trade talks as well. Thanks so much. Appreciate it.
Now, there have been questions over whether Foxconn -- very controversial again -- would call off its plan to build flat screen panels at a new
factory in Wisconsin. Okay, so just a little while ago Donald Trump called the company's chairman and Foxconn now says this whole thing will now go
ahead.
[15:20:06]
NEWTON: Jeremy Diamond is at the White House. Jeremy, I am interested to learn, you know, the President after Foxconn put out its statement saying
yes, we're going to go ahead and do everything we said we were going to do, the President tweeted, and saying, yes, this is all going ahead after my
phone call. How is the White House spinning this?
JEREMY DIAMOND, WHITE HOUSE REPORTER, CNN: You know, it's interesting because the President was so involved in this Foxconn factory opening in
Wisconsin. He announced the deal at the White House, then a year later last summer, he went to Wisconsin for the groundbreaking of the facility.
And then we didn't hear anything from him.
When we initially got that news that Foxconn was reconsidering its plans to build a factory, instead moving towards research and engineering jobs with
a technology hub, and it appears that behind the scenes, the President was phoning the Foxconn chairman, Terry Guo and speaking with him to urge him
to reconsider and in fact go forward with this factory.
Now that's what Foxconn is indicating in their statement, although I would say that the wording is very specific, very narrowly tailored where they
say that the campus will serve both as an advanced manufacturing facility, as well as a hub of high technology innovation for the region.
So it looks like it might be somewhere in the middle of what they were originally planning and what they indicated earlier this week they were
going to be doing. Because remember, when the President was touting this project, he was very focused on the fact that this was going to be
manufacturing jobs for those blue collar workers who he promised he would bring back manufacturing for during his 2016 presidential campaign.
And that was going to be up to 13,000 manufacturing jobs. The question is, will it now be up to 13,000 manufacturing jobs, or just half of that,
perhaps? That still remains to be seen. But clearly the President trying to show that he is remaining involved with this and touting this once again
as a win for him in terms of getting these companies to manufacture in the United States.
NEWTON: Definitely a lot of pressure. It's interesting that the President felt that much pressure on this story to actually get out there and pick up
the phone and obviously, encourage Foxconn to put out that statement. Jeremy, thank you very much, really appreciate it.
Now, effective today, the Jim Yong Kim has stepped down as President of the World Bank has stepped down as President of the World Bank. Now the list
of people, who at the White House - remember, the White House gets to choose who replaces him, is getting more and more intriguing.
Reports say Mohamed El-Erian, who was on this very program on Wednesday has been interviewed as well as David Malpass, a Treasury official. Donald
Trump has also interviewed the Goldman Sachs banker, Heidi Cruz. You'll remember, she is the wife of Senator Ted Cruz and a woman, who shall we say
looks he insulted on the campaign trail. I don't have time to get into it now, but it's a doozie if you don't remember it from the campaign, and of
course, the former CEO of Pepsi, Indra Nooyi who has also been mentioned, and of course, there's then Nigeria's former Finance Minister and Ngozi
Okonjo-Iweala who told Richard, yes, I would be up for the job.
Now, if you're wondering who is leading the search in the White House, it's Ivanka Trump. The White House says she has been working closely with the
World Bank, but denies that she is in the running herself. There were a lot of rumors about that for a while.
Now, the World Bank is responsible for billions of dollars in funding for development. But Jim Yong Kim's Presidency was very, very controversial.
David Adler is a policy coordinator for DM25, it's a new political party led by the former Greek Finance Minister, Yanis Varoufakis. They say the
World Bank is on the brink. A very direct question here. Why? Why is the World Bank on the brink?
DAVID ADLER, POLICY COORDINATOR, DM25: Well, as you mentioned, Jim Kim is stepping down three and a half years ahead of his scheduled departure and
he's heading off for a private equity firm known as Global Infrastructure Partners.
So for one of the most powerful institutions in the world as you mentioned, governing billions of dollars of investment, this is a tremendous crisis
and signals a real need for reform for the World Bank, and in particular for this Jim Kim, who already positioned himself as a principled visionary
for the World Bank. He is a career physician who prided himself on fighting poverty in the global south, this is a tremendous owned goal. It
is quite the equivalent of a progressive Supreme Court justice hanging up his robes in the middle of a Republican White House.
Because you go from Jim Kim, this global health expert to a Donald Trump appointed head of the World Bank. Now, we can get into a longer
conversation about what it signals about the deeper problems at the World Bank, that it is in fact, the President of the United States who has
historically appointed the head of this tremendously powerful multilateral institution. Certainly
But certainly, it's a touch of absurd that the job has now fallen into the hands of Ivanka Trump, obviously building on years of global fashion
diplomacy.
NEWTON: But having said that, that doesn't mean that the White House isn't able to pick a skilled person to run this. Certainly, if you're
interviewing somebody like Mohamed El-Erian, I think that his credibility stands for itself. Having said that, why don't we turn to the World Bank
itself.
[15:25:07]
NEWTON: You know, in terms of what you guys are suggesting, which a massive international investment program, I mean, I thought the U.S.-China
trade talks were ambitious until I read this. Can you succinctly let us know what the vision is there because you know how many visions for the
World Bank have made the rounds within the World Bank itself and have gone absolutely nowhere.
ADLER: That's true, but I think, actually to answer your question, we have to go back to the very ambitious vision of the Bretton Woods system that
was set out in 1944 at that famous New Hampshire conference. This was an amazing experiment in multilateralism -- 730 delegates from 44 countries
coming together to think through questions like how do we manage the international economy?
Now, what we would argue is that that spirit was lost -- that multilateral spirit was lost to a kind of unilateral control of the United States. So
it's not just about the short term crisis of leadership that Jim Kim's resignation represents, but a much longer term loss of the kind of
multilateral ambition.
So to answer your question, where did they go wrong? Your viewers may remember the World Bank and the IMF as the architects of the Washington
consensus, this brutal program of privatization and austerity that was attached to lending programs primarily in the global south.
And this is just built into the architecture of the new Bretton Woods system, this shredded ambition from the 1944 conference. What it means is
that as Jim Kim was frustrated by, they have to rely on private finance to deliver the kind of development programs they need.
Now, the vision we're putting forward is to build precisely on the foundations set out in 1944. John Caines, the Chief British negotiator and
one of the architects of Bretton Woods argued for an international clearing union that would help rebalance the global economy.
Now, the chief irony here is that the World Bank would be one of the architects, as I mentioned, of major imbalances in the global economy,
trapping southern countries in relations of economic dependence to the core countries like the United States.
What we're calling for is to redeem the radical spirit at the heart of Bretton Woods and put these amazing institutions with tremendous investment
power to use in services for all.
NEWTON: Okay, but I just challenge you on this. You're putting this forward. In terms of whoever the next President of the World Bank is going
to be, what is your sell job to them in order to help them -- convince them that the kind of reform that you're talking about, and that again, it seems
to be a multilateral approach that many countries are discarding right now for better or for worse, how do you convince them that it's the best way to
go and where do you get that multilateral consensus from?
ADLER: Yes, so I think that the major shift we have to do is between two different types of multilateralism. The former type of multilateralism,
which is getting a lot of flack is the sort of flagellating multilateralism. I cut down if you cut down. It's the cut of thing we've
seen with the U.N. environmental negotiations. I'll cut my emissions only if you cut your emissions. It's sort of a race to the bottom.
What we're proposing by putting these institutions and service of what we call a global green new deal is a much different kind of multilateralism.
It's a positive sum multilateralism. So you may say it's a radical vision, but it's actually quite easy to maneuver, by changing the remit of the IMF
and the World Bank, to roll those investments programs out, not as instruments of private finance to socialize the risks of finance for the
many and privatize the gains of the few.
But to initiate a massive ecological transition to these investment programs that cannot only rebuild economies that have been devastated since
the global crash in 2008, but also save the human race from extinction. So that's the kind of urgent remit of this global green new deal.
NEWTON: Right, and it is an intriguing program which no doubt you will get some kind of an audience with whoever leads the World Bank and we'll look
forward to continuing this debate, because believe me, there's a lot of controversial debate right now about how best to go forward with the World
Bank. David, thanks so much, really appreciate it.
Now, we're going to completely switch gears here. The Super Bowl is coming to CNN's hometown. We've got a new stadium there so we're throwing a
party. And yes, you're all invited. Doesn't it look good? I mean, come on. We've got pizza and Pepsi coming out for you, all after the break.
Look how excited everyone in the studio is. Look at that.
[15:30:00]
[15:30:00] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment. When the teams
are ready for the biggest competition of the year -- no, it's not football, with the Super Bowl, it's all about the ads and we shouldn't even be at
work today, no, we shouldn't.
Rutger Bregman will join me to explain the benefits of a four-day work week and many other things, and why he decided Davos was the best place to make
a case for taxing the heck out of the -- out of the rich. You do not want to miss that interview. Before that, though, these are the headlines.
The U.S. is suspending its participation in the decades-old treaty on intermediate range nuclear forces. Secretary of State Mike Pompeo says the
U.S. can no longer be restricted by the pact while Russia violates it. He accuses the Russians of having a missile that is prohibited under the
treaty, something Moscow denies.
U.S. President Donald Trump says there's a good chance he'll declare a national emergency to bypass Congress and build a border wall. Mr. Trump
suggested to reporters that an announcement could be coming in Tuesday's State of the Union speech. He made similar comments during an interview
with "The New York Times".
Venezuela's self-proclaimed interim President Juan Guaido is calling on Mexico and Uruguay to choose quote, "the right side of history". Both
countries have offered to alleviate the crisis in Venezuela. A letter says Guaido declines the invitation on behalf of Venezuela's people.
All right, so I am guessing that many of you think that, oh, you know it's just a game. This tells you, Frank, it's not just a game, is it? Explain
to everybody.
FRANK PALLOTTA, CNN MEDIA REPORTER: This is the most interesting fact. If you look at wings, if you look at pizza, and you see the NFL logo, you're
like, oh, we must be talking about the Super Bowl. That's how good of a brand the Super Bowl is. And that's why the advertising is so expensive
this weekend.
So what we're going to have is about $5.2 million per 30-second ad. And that seems like a lot of money, but in this age of Netflix and social media
and all of these distractions and competition for people's time, the Super Bowl is unlike anything else. It's a national holiday, I mean, look, we
have pizza, we have wings.
NEWTON: Did you try any yet?
PALLOTTA: No, but the whole reason I'm on the show right now is because I was told there would be pizza and wings.
NEWTON: Yes, and of course, my favorite would be the crisps which I'm going to say, Crisps, I hate that word though, called crisps in Britain.
What do they call it here, Frank?
PALLOTTA: They're potato chips.
NEWTON: They're called potato chips. OK, here is the issue, some people say that, look, it's too hyped up, it can't possibly be worse about much to
advertisers anymore.
[15:35:00] And you know, sometimes, the games are let down, sometimes the half-time -- you're looking at me like I'm -- like what are you talking
about, Paula?
PALLOTTA: There's nothing bigger than -- like last year about 103 million people watched the game. They're expecting that it will probably be around
and maybe even higher because this year this NFL ratings went up above 5 percent after two years of sluggish numbers.
We have the Patriots in the Super Bowl again this year. It's going to be up against Los Angeles, which is a major market.
NEWTON: It is a major market --
PALLOTTA: You know, Philadelphia has the fanatics that, you know, everyone loves, like the Philadelphia Eagles -- love their Philadelphia Eagles, but
the Rams are an entire big market team. It could be completely different. It could be really good.
I mean, the half-time show is Maroon 5, it's a big name, not the biggest name. But it's a Super Bowl. And people who do not watch any football,
who don't watch any sports, watch this game, and that's why advertisers like Pepsi and --
NEWTON: Almost --
PALLOTTA: Everybody wants to really be a part of it --
NEWTON: Almost as old is the clash of the titans, it's a clash of coke and Pepsi.
PALLOTTA: Right --
NEWTON: Now Pepsi is one of Super Bowl's biggest sponsors, it sponsors the half-time show as we all know, Pepsi half-time show. The only problem is
that the game is in -- was in Atlanta, wasn't it?
PALLOTTA: Yes --
NEWTON: Atlanta is the home of --
PALLOTTA: Coca-cola --
NEWTON: Oh --
PALLOTTA: There's a whole museum.
NEWTON: So Pepsi --
PALLOTTA: Yes --
NEWTON: Has covered the city in ads, even right down to the coke-vending machines, pretty cute, they thought they were pretty cute. It also tried
to declare a so-called Cola Truce, putting up a statue of the two companies founders sharing a toast.
It was kind of cute. Now, I spoke to Pepsi's Chief Marketing Officer and the CMO of Frito-Lay in charge of doritos. In case anyone was wondering,
and they've already seen the half-time show and they have one word to describe it.
(BEGIN VIDEO CLIP)
GREG LYONS, CHIEF MARKETING OFFICER, PEPSICO: I was going to use the word epic, but it's -- we were so thrilled when we saw the rehearsal last night.
It's got three great artists in it, and we couldn't be prouder to be sponsoring it with Pepsi.
NEWTON: You know, there's a lot of hype around a lot of things to do with the Super Bowl, and one of them is that half-time show. Why do you think
it will live up to the hype? Because there has been a lot of controversy around it as well.
LYONS: Yes, this year, probably a little more controversy than normal. But again, I feel so good heading into it with Maroon 5, Travis Scott and
Big Boi. I think you've got something for everyone, and the show is just so incredibly entertaining. People are going to love it, so again, we feel
great about it.
NEWTON: Why do it, especially given that so much of what is effective right now in branding and advertising is this kind of guerilla marketing
which happens more on social media? So why do you still need to be a part of the Super Bowl?
LYONS: So I'll just talk to brand Pepsi, so for the last few years, Pepsi has been the number one brand on social media, on Twitter, during the game.
And we have done a lot of guerilla stuff as well in Atlanta leading up to the game. The 30-second ad, though, is the basis that you can revolve a
lot of other conversations around.
NEWTON: And in terms of trying to get your money's worth out of the Super Bowl, historically, what would you say it actually gives any brands or
launching any products on edge? How do you know that that's what it does for a product?
JENNIFER SAENZ, CHIEF MARKETING OFFICER, FRITO-LAY: Yes, we definitely see a boost, we see a boost in the winners, we see a boost in interest in both
consumers, we also see a boost and interest in retailers. And so, it is really important to make sure you're taking full advantage of that
ecosystem that is created around Super Bowl.
But it's -- if you let it die just in that moment, that's not good. You also have to have a plan for what happens after, and how do you keep that
momentum going? So --
NEWTON: Right --
SAENZ: It's an amazing platform for that initial awareness and that boost, but you have to have a plan for the next day too.
NEWTON: Now Greg, since you brought it up, you didn't really brought it up -- bring it up, but I'm going to go there anyway. There was a Coke-Pepsi
truce. You are in the home of Coca-Cola right now in Atlanta --
LYONS: Yes --
NEWTON: For those of you who didn't know, so what about this truce, what is that all about or is it already over, the truce?
LYONS: Well, again, we thank our hosts for having us here. We have tried to paint the town blue and have a little fun being in Atlanta --
NEWTON: Good luck with that. Good luck --
LYONS: And we do have -- we have 350 out-of home billboards and we have 500 bright blue recycling bins that we've put out. And yes, we went a
couple of days ago to the world of coke and they have a statue of their founder outside. And we made a statue of our founder Caleb Bradham and
he's cheersing the coke founder, and we called it Cola Truce for one day.
And everyone who would take a picture with Pepsi and coke on social media, we would donate a meal to the Atlanta United Way, and we were able to help
a lot of people by doing that.
NEWTON: OK, that all sound a good cause. The truce, is it over now? It's officially over, that truce, still you guys will be hard at it on Super
Bowl day?
LYONS: I think the truce is officially over, but it's all in good fun, and so we love the competition.
(END VIDEO CLIP)
[15:40:00] NEWTON: The competition, Frank, is doing a taste-test right here, this never gets old, OK, is it Pepsi or is it Coke? Go Frank.
PALLOTTA: That is coke.
NEWTON: Wrong!
PALLOTTA: All right --
NEWTON: Wrong! I love it, and you're a Packers fan, you should have known the difference between Pepsi --
PALLOTTA: It's been a tough year for the Packers and myself.
NEWTON: And me here, Bills fan, OK, it was a moment that turned heads at the World Economic Forum, we speak to the man who chose a gathering of
billionaires as the moment, Frank, to talk about how he should -- the Brits should pay more taxes. We'll be back in a moment after this great Super
Bowl party. You want to check them?
PALLOTTA: I'm going for the pizza.
NEWTON: You want to go for the pizza?
(COMMERCIAL BREAK)
NEWTON: The man who decided to break the mold on his first visit to the World Economic Forum in Davos. Now in a panel on inequality on the final
day of the forum, a group of men, a Dutch historian and the author of a book entitled "Utopia for Realists "made an impassioned statement that
absolutely went viral and prompted countless discussions.
(BEGIN VIDEO CLIP)
RUTGER BREGMAN, AUTHOR: This is my first time at Davos, and I find it quite bewildering experience, to be honest. I mean, 1,500 private jets
flown in here to hear Sir David Attenborough speak about, you know, how we're wrecking the planet.
And I mean, I hear people talking the language of participation and justice and equality and transparency. But then I mean, almost no one raised the
real issue of tax avoidance, right? And of the rich just not paying their fair share.
I mean, it feels like I'm at a firefighters conference and no one is allowed to speak about water. This is not rocket science. I mean, we can
talk for a very long time about all these stupid philanthropic schemes. We can invite Bono once more, go on, is we've got to be talking about taxes,
that's it, taxes.
All the rest is -- in my opinion.
(END VIDEO CLIP)
NEWTON: The bleep and all -- Rutger Bregman joins me from Amsterdam via Skype. But first though, we want to hear from you, get on that phone,
tablet, or computer, go to cnn.com-slash-join. Our question to you, do the rich need to pay more tax?
So I want you to cast your vote again at cnn.com-slash-join, and we will discuss the results in a moment. Thanks so much for joining us today. You
know what? I'm going to quote you back to you. You said "ten years ago, it would have been unimaginable for a random Dutch historian to go viral on
something like this. Why do you think it hit a nerve?
[15:45:00] BREGMAN: Well, the times are changing. I'm really part of a much broader movement of people who are starting to realize that we need to
do something, you know, about the huge tax avoidance that is going on, and the rich that are just not paying their fair share. That's what's
happening.
NEWTON: In terms of what you're suggesting, though, there are some things that we've heard the very parameters of an idea. So a universal basic
income, fewer hours in a work week, a social safety net. So people talk about those things on the margins.
Do you believe higher tax rates would make wholesale change possible without bankrupting governments?
BREGMAN: Oh, it's just about going back to the past. So if you look at the 1950s during the presidency of, you know, Eisenhower; a Republican, the
top marginal tax rate for billionaires was 91 percent. The estate tax was more than 70 percent.
And this was also the period in American history with the most innovation, the highest economic growth, et cetera. So again, as I said during my
speech as well, it's not rocket science. We can just go back to old solutions that worked in the past.
NEWTON: In terms of those solutions, though, I swear I could see people squirming in their chairs. And you know that in many countries, even if
you are middle-income, even if you're low to middle-income, many people squirm at the thought of taxes, why?
BREGMAN: Yes, but -- yes, but I'm not talking about low and middle- incomes, right? I actually think that taxes for many of those people should go down. And the rich should start paying their --
NEWTON: OK, but --
BREGMAN: Fair share --
NEWTON: When you say that, everyone says that won't work because the rich have options. They will move out of certain countries, they will shelter
their funds --
BREGMAN: Yes --
NEWTON: Are you talking more about naming and shaming?
BREGMAN: That is absolute -- that is absolute nonsense. The United States is the most powerful country in the world. I'm from Holland, which is a
major tax paradise -- well, I can assure you, we are not the most powerful country in the world, right?
So if the U.S. would say to Holland, stop being a tax paradise or we'll invade you or something, I can assure you, we'll be over the next day
probably. So, this is not a question of whether this is possible, yes or no, it's really a matter of political will. And what you now see is that
people are coming together, a movement is building.
And these ideas are moving into the mainstream. So I'm actually quite hopeful that this is just a matter of time.
NEWTON: OK, now, this will come as no surprise to you. The results are in, pretty overwhelming. The vast majority agree with you that the rich
need to pay more tax. You know --
BREGMAN: There you go --
NEWTON: Go ahead, the old age -- the old age adage though is here, that look, the rich, A, will take their money elsewhere, and, B, that it does
not motivate the best of capitalism if you're taxing the rich to that extent.
BREGMAN: Well, what we have now, if you go to Davos, you meet many billionaires who talk in the language of entrepreneurship and of hard work.
But if you really look at their business models, it's not about hard work, it's about exploiting their workers, it's about not paying them a living
wage.
It's about rent seeking. It's about coming up with destructive financial products. It's about, you know, letting people click on ads as much as
possible. That's not wealth creation. The real wealth creation is going on in the lower classes and the middle classes, and yes, they need to pay -
- they need to pay fewer taxes.
But the rich need to start paying their share.
NEWTON: Now, I have to ask you --
BREGMAN: Because I mean, it's not left-wing or right-wing, it's just common sense.
NEWTON: I have to ask you before we go, you went viral, we had this viral moment that has a lot of people talking, which is good. Do you think in
ten years -- at the beginning of the interview, I talked to -- you know, you said ten years. In a decade, do you think anything will change on
this?
BREGMAN: Oh, absolutely. I mean, these ideas always start on the fringes, you know. People first admit this is crazy and ridiculous and irrelevant
and naive. But now, there really is a new generation that, you know, it starts to see that this can't go on like this.
We need to do something about inequality that is spiraling out of control. And there's also a new generation of politicians like someone as
Congresswoman Cortez in the U.S., who is working together with top scientists, top economists to come up with a sensible proposal, to do
something about this. So as I said, you know, I'm actually quite hopeful for the future.
NEWTON: Yes, it is definitely a conversation here in U.S. politics. Now, I want to thank you for being with us on a Friday because of course you
advocate a four-day work week, and I can assume Friday is going to be your favorite day to take off, all right, I appreciate it. And --
BREGMAN: Oh, this is work, this is just fun.
NEWTON: OK, take care --
BREGMAN: Good to have you --
NEWTON: We hope to hear more from you, appreciate it.
(CROSSTALK)
Now, after mounting pressure from activist investors, BP tells its 36,000 employees that if the company's carbon footprint shrinks, your bonuses will
grow.
[15:50:00] (COMMERCIAL BREAK)
NEWTON: The BP is telling its staff, if you go green, you'll get paid more, yes. The oil giant is linking bonuses for its 36,000 employees to
climate targets, bowing to precious from activist investors. Cnn's business elite writer Matt Egan joins me now. You know, I have to ask you,
is this a gimmick, a PR stunt or is there something really valid in doing this and will it lead to change?
MATT EGAN, CNN BUSINESS WRITER: So I think it's fascinating. Here, you have one of the world's largest fossil fuel companies in BP, saying they're
going to link pay, bonus pay to reducing greenhouse gas emissions. And you know what? I think it's a smart way to get at this.
Because we have seen other companies -- maybe they'll put it in their mission statements, they'll put out promises, they'll pledge to do this.
But here they're actually saying, there's a financial incentive here to actually shape our policies and change the way we're doing business.
So I do think that relative to other times where we've seen companies just sort of give lip service to this, I think that this has a better chance of
actually working.
NEWTON: You know, some people have compared oil companies to, you know, tobacco companies, they should just become extinct, they're bad for the
environment. Is that true though, because some other people say that, look, they will be the innovators, they can lead the way to greener energy.
EGAN: So there's a fascinating push and pull here, right? Because on the one hand, when we talk about the U.S. shale boom, and we're talking about
massive job gains, really important implications for national security, when we talk about how much production is coming from the United States.
And yet there are real environmental concerns as well. And I think that what needs to happen is, Exxon and Chevron need to take a little bit more
of a page from what the European oil companies are doing. We're seeing BP, Total and other European companies, they're really -- and Shell, they're
all taking a little bit more progressive approach.
They are investing more in renewables, they are acquiring electric car- charging companies, and solar panel makers, and so they're hedging their portfolios a little bit more. Whereas we haven't seen Exxon and Chevron
really dip their toes into clean energy yet.
NEWTON: And it might be something that leads the way even if they don't have to, per se, they'll think that's the right thing to do, Matt, thanks
so much, really appreciate it --
EGAN: Thank you.
NEWTON: Oil giant Citgo finds itself stuck in the middle of a power struggle between the Trump administration and Venezuela's Maduro regime.
Now, the White House believes it can tighten the screws on Mr. Maduro by hitting him in his most economically vulnerable spot, of course, it's oil
Citgo may now have to take drastic action to survive.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: GPS, take us to where we're going, please. Here we are.
NEWTON (voice-over): Citgo has been such a familiar part of the American landscape for decades. That it's easy to forget that it is majority-owned
by the state-owned Venezuelan oil company PDVSA. Now, it holds about 50 percent or more of Citgo, and has held that position since the mid '80s.
[15:55:00] Citgo is one of America's largest refiners operating plants in Louisiana, Texas and Illinois. And it operates more than 5,000 locally-
owned gas stations. At the same time, it is Venezuela's largest foreign asset, and the cash it's generated has helped prop up the Maduro regime.
In its efforts to bring down Maduro, the U.S. this week slapped sanctions against PDVSA and moved to transfer Citgo ownership to opposition leader
Juan Guaido.
STEVEN MNUCHIN, SECRETARY OF TREASURY, UNITED STATES: The path to sanctions relief for PDVSA is through the expeditious transfer of control
to the interim president or a subsequent democratically-elected government, who is committed to taking concrete and meaningful actions to combat
corruption.
NEWTON: The measures would freeze all U.S. money that flows to Citgo, a huge blow to Venezuela whose oil holdings are its main source of revenue.
President Nicolas Maduro calls the U.S. actions against the law.
NICOLAS MADURO, PRESIDENT, VENEZUELA (through translator): With these measures, they intend to rob Citgo from all Venezuelan men and women. Red
alert, Venezuela. The United States today has decided to embark on the path of robbing the firm Citgo from Venezuela. It is an illegal path.
NEWTON: Reports suggest Citgo may file for bankruptcy to protect its operations, although, the company officially denies it. One thing is
certain, a unique American institution now finds itself on the front lines of the battle for Venezuela's future.
(END VIDEOTAPE)
NEWTON: Day trading is coming to a close in New York. We'll have the closing bell and those final numbers to an incredible week of news right
after this.
(COMMERCIAL BREAK)
NEWTON: OK, just a few moments here left on that trade on Wall Street, as you see a little bit momentum going to the -- going into the weekend. The
Dow is looking to try that higher finish, they're really solidifying above that 25,000 market.
They started off on a positive note, thanks of course to those blockbuster job numbers, U.S. employers added 304,000 jobs, way more than expected and
gains in each and every sector. It was also a huge day for earnings. Chevron and Exxon mobile both jumped 3 percent after reporting surge in
production.
Amazon shares though fell 5 percent there now in bear market territory, investors are worried that slowing sales growth means we could be within
sight of what we are now calling peak Amazon. And I am going to leave you with that closing bell and hand you over to "THE LEAD" with Jake Tapper.
That's it for QUEST MEANS BUSINESS, I'm Paula Newton, Richard will be back on Monday.
(BELL RINGING)
[16:00:00]
END
