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Quest Means Business
Northern Ireland Secretary Apologizes for Saying Killings By U.K. Forces 'Were Not Crimes'; U.S. Stocks Fall After ECB Cuts Growth Forecasts; Amazon Pulls the Plug on Pop-Up Stores; New York Governor Asks Amazon to Reconsider HQ2 Cancellation; British Royal Family Takes Action Against Trolls; Michael Jackson Abuse Claims Trigger Business Backlash; Michael Jackson's Family Sues HBO Over Leaving Neverland Film>. Aired 3-4p ET
Aired March 07, 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: We're in the last hour of trading before the hour of 4:00 Eastern Time, and look at the market and
you'll see it has been down, the lowest point seems to be in there, but we're still off just over 1%, a loss of nearly 260 points. And if you look
at those that are actually moving, yes, we can see there is only Verizon that is higher and ExxonMobil. If Verizon is higher, it tells you a lot
about the way it is going. Walgreen's is the worst off. And this is what investors are watching.
A case of a stimulus surprise. Mario Draghi is dusting off the ECB's punch bowl. A pivot to privacy for Facebook. It says it will change the way it
handles your data. Mark Zuckerberg knows you're skeptical. And a longshot lawsuit, experts say Huawei is likely to lose this legal battle against the
United States, but it's still going to have a try.
Live from London, it is Thursday, it's March 7th, I'm Richard Quest, and yes, I mean business.
Good evening. Tonight, here we go again for Super Mario, Mario Draghi will never know the thrill of raising rates as he nears the end of his term, the
European Central Bank President is instead having to launch a new stimulus as the Euro zone slows. Speaking in Frankfurt, Mr. Draghi warned of
continued weakness and pervasive uncertainty.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, ECB PRESIDENT: Basically, our actions increase the resilience of the Euro zone economy, and so make us confident, keep us
confident, that convergence and sustainable rate of inflation, our objective will happen.
(END VIDEO CLIP)
QUEST: Now markets in Europe were all in the red after the ECB's surprise. Italy and Spain were lower. It was the bank stocks that led the way down,
the euro is down against the dollar, having hit a four-month low.
So the ECB is once again bringing out the punch bowl. Trying to keep the economic party going and they're doing so in the face of the global
financial crisis. The Central Banks kicked off a wave of unprecedented stimulus. If you look at just what happened, the way in which rates went
to zero, and an entire alphabet soup of different plans on both sides of the Atlantic.
Last year, a full decade after the crisis, the stimulus punch bowl was finally emptied. In December, the ECB was the last major Central Bank to
sunset its emergency bond-buying program. Three months later, Mario Draghi is having to return, after years of criticism for moving too slowly, he's
the first central banker to take action in the face of a new economic slowdown.
You remember back in 2012, Draghi promised to do whatever it takes.
(BEGIN VIDEO CLIP)
DRAGHI: Within our mandate, within our mandate, the ECB is ready to do whatever it takes to preserve the euro, and believe me, it will be enough.
(END VIDEO CLIP)
QUEST: Whatever it takes, well, it will be enough, will it be enough? Carsten Brzeski is the chief economist at ING, joining me from Frankfurt
tonight, why is this situation so bad that the ECB needs to be loosening monetary policy rather than just remaining neutral? Is it that bad?
CARSTEN BRZESKI, CHIEF ECONOMIST, ING: No, the situation is not that bad. The only thing is, it is uncertainty. The word we've heard every day, all
over the world, all over financial markets, and this is why the ECB -- I wouldn't even call this adding extra easing to the economy, it is more that
they extend the current level of easing than a far longer period than we previously thought. So therefore, it was also a bit of a balancing act for
Mario Draghi.
He tried to get ahead of the curve, but obviously, if he does too much, it also looks a bit like panic.
QUEST: Right, but the fact he has to do it at all, the fact that ten years on, with rates already at just about zero, he cannot simply say there is
enough accommodation in the system.
[15:05:01]
BRZESKI: Well, I think he has to continue. I think the bigger question is when you look along the line in the coming years, are we not moving toward
a Japanese situation in the Euro zone and probably the answer is yes. So what we do see right now is yes, Mario Draghi and the ECB will always
whatever it takes to stimulate the Euro zone economy, to let the euro survive, but they cannot do it on their own.
What they do need is support by governments, by structural policies, by fiscal policies, and I think, call this the last trick of Mario Draghi,
because if we really were to go into a severe downturn in the Euro zone, the ECB will stand there empty handed.
QUEST: Well, that's where they could do another round of bond buying, but the jury is slowly coming back, that that's not as effective and certainly
not on the third, fourth, or fifth round. What is causing this slowdown, this malaise? Obviously, Italy has a banking crisis on its doorstep, but
what else is causing such woes in the Euro zone?
BRZESKI: There are a couple of one-off factors, temporary factors, especially in the German auto industry and German manufacturing, towards
the end of last year. Where we also had issues about the oil price, that the drop in global oil prices was not passed through to consumers in the
Euro zone.
Then we have the Italian story, which probably was also distorted by the policies of the new government and what everyone is currently chewing on is
the question, is this really temporary? Will these one-off factors disappear and will we see a gradual rebound in the economy? Or is there
more at hand? And more could be the slowdown in China, the ongoing trade conflict between the U.S. and China, and Brexit.
QUEST: Let me invite you, sir, finally, to answer your own question. Is this enough? Or will more be required in your view?
BRZESKI: In my view, this is enough, because I think we have a very strong domestic economy in the Euro zone, investment, private consumption, also
government consumption, should be enough to lead to a gradual rebound in the Euro zone economy towards the summer of this year which means what the
ECB did today should be enough to put a floor under uncertainty, and the risks, that we finally see a gradual rebound in the course of this year.
QUEST: Good to see you. Thank you, sir. We much appreciate you staying up late from Frankfurt tonight to talk to us.
We will stay in mainland Europe where Brussels says the Brexit talks are difficult, and today, the same was certainly said of traveling uncertain
Euro services out of Paris. There, Customs workers are causing huge delays in the name of Brexit. Long lines were causing tension. It was because of
Customs officers doing work to rule, tighter checks, they were behaving as if Brexit had already happened, and the most extreme measures were
necessary.
Jim Bittermann joins me from Paris. There was no need for such extreme measures. In a post-Brexit world, things could be more orderly. This was
them making a statement, Jim.
JIM BITTERMANN, SENIOR INTERNATIONAL CORRESPONDENT, CNN: It was indeed, Richard. They are making a statement about how they believe their jobs are
going to get tougher, when Brexit happens, if Britain crashes out of Europe, and as a consequence, they wanted to prove their point, and ask for
more money. That's one of the things that's on the table here. They're asking that they be paid a little bit more, because they believe they are
going to have to work harder.
But the government comes back, and says look, we've hired 700 new Customs agent, they'll be online, so even if Britain crashes out, it should be
enough people to handle the new problems that a Brexit is going to create. It remains to be seen. We'll see what the - how this all works out, but
the government did only start this program, in mid-January.
Back then, if you remember, everything was looking good, for a deal on Brexit, and people were thinking, well, somehow, it would be worked out.
Well, now as we get down to 22 days away, there is a lot of concern about the idea that Britain may crash out, and France is going to have to impose
the border controls that haven't been there for the last 25 years.
QUEST: And with 22 days to go, the reality is now sinking in. I mean, well, is suppose they've always we've always known it was going to happen
but the true reality, if you like, is there a feeling in France to the British, just go and get on with it?
BITTERMANN: I think absolutely, Richard. I think that at this point, they've been planning for the worst now for at least a couple of months,
and I just don't think that there is much patience anymore for any more back and forth between Brussels and London.
[15:10:10]
BITTERMANN: So I think, you pretty well summed it up, that get on with it, and we'll see how the new system works. I mean, they're installing all
sorts of computerized checks and stops and things like that, which I suppose to speed things up, a smart border they say, but we'll see.
It could still be the kind of mess that we saw today, could still be the kind of mess we will see 22 days from now.
QUEST: Jim Bittermann in Paris. Jim, thank you. With me is Sir Peter Westmacott, the former U.K. Ambassador to France, to Iran, and to
Washington. Good to see you, Peter.
PETER WESTMACOTT, FORMER U.K. AMBASSADOR TO FRANCE: Good to see you, Richard.
QUEST: Look, the CBI, the British business organization, says nearly 90% of U.K. businesses are concerned by the prospect of a delay. You saw today
what happened in France. How much of this is posturing versus reality, do you think?
WESTMACOTT: Well, I think what happened in France was a gesture. This was people making a statement, as an indication of what might happen in the
future. I think people are worried in business about delay. They're also still worried, a number of them, about no deal, crashing out, without an
agreement. That is still the number one of the possibilities.
QUEST: So what is the likelihood of the Prime Minister, Theresa May, getting her deal, the one that was historically defeated, but now getting
it through, on Tuesday?
WESTMACOTT: Last week, a number of people thought that it had a reasonable chance of getting through. At the moment, her envoys to Brussels,
including Jeffrey Cox, the Attorney General, doesn't seem to be getting much change out of Michel Barnier, but the political people here think that
if he comes back with something which he says is sufficiently legally binding on this issue of the backstop and that is good enough for the
D.U.P., the Northern Irish politicians on whom the government is dependent, then this thing might go through.
QUEST: What would that be?
WESTMACOTT: What would it be? I cannot tell you. He is keeping his cards very close to his chest. He doesn't even want to tell his Cabinet
colleagues what is going on in case it leaks. He says that it is still all go. He says that there is plenty going on in the next few days and that he
can still come back with a deal which will get Theresa May's package over the line. Most people I think here do not believe that is very likely.
QUEST: So let's just flow chart it out, if we may.
WESTMACOTT: Yes.
QUEST: So Theresa May's deal, say for purposes of our discussion, fails on Tuesday, on Wednesday pretty much there is a majority in Parliament that
no-deal should be off the table.
WESTMACOTT: I think that's right.
QUEST: Therefore, on Thursday, either Parliament is perverse, and still decides not to delay, which of course will be the opposite of what would
naturally flow or they decide to delay. What happens?
WESTMACOTT: Well, if they decide perversely, as you put it not to delay, that means that we are in legal default position of crashing out with no
deal on the 29th of March.
QUEST: Which is exactly what Parliament said it didn't want to do on Wednesday.
WESTMACOTT: Exactly and Parliament doesn't want that and the markets don't think it is going to happen. You can look at the sterling for the time
being, and so the most likely thing is if we get to the third vote, in the way that you have just described, there is going to be a vote and a wrangle
for the question of a delay. Putting off the 29th of March until a future date for the Brexit.
QUEST: How much of a mess is this?
WESTMACOTT: Oh, I think it's a complete mess. I don't think anybody knows how this is going to come out. We're down to the last few years, as you
say. Business is worried about the uncertainty. People who are down in the weeds of this negotiation, which we still think there is a reasonable
possibility we would crash out with no deal and that's the most worrying of all.
QUEST: So why won't the Europeans, the E.U. side, just give ground? They can keep Ireland at bay, on this question, and give the British something
that they can get this over the line. Or do they not want to? Do they believe -- are they playing a very high political risky game that will be
hard lined and they won't go?
WESTMACOTT: I think the Europeans think that they have given the British government what they wanted. It was negotiated. It was accepted by
Theresa May, and now they're saying, "Why don't you sort out what you want amongst your own Party, in your own Parliament and then we can see what we
can do."
QUEST: It's no skin off their nose to give the British government something that will allow them to get this through.
WESTMACOTT: Well, the British government seems to be rather unable to tell them what it wants.
QUEST: No, I don't agree. They've said quite clearly. We want a legally binding guarantee which means some form of removal of the backstop from the
withdrawal agreement. It couldn't be clearer, Peter.
WESTMACOTT: But it asked for the backstop. The British government was the one who wanted the backstop, but there is no border. So there is a
contradiction, I'm afraid in the position. Can the Europeans actually give the British government something to get Theresa May's deal over the line?
I think it is possible. That is why Cox is still working at it and I still think it is possible that her deal will go through.
QUEST: Possible but not probable.
WESTMACOTT: Nobody knows at this point.
QUEST: Good to see you, sir.
WESTMACOTT: Good to see you, too.
[15:15:02]
QUEST: As always. Thank you. Coming up next, Mark Zuckerberg has a privacy pledge. Facebook's CEO has a plan to fix the social media giant.
Also, Huawei fights back by suing the U.S. government. It's calling the administration judge, jury and executioner over their product's ban.
(COMMERCIAL BREAK)
QUEST: Facebook is promising to be a champion of privacy. It's a major turnaround for the company whose stated goal it to make the world more open
and connected and which has spent the last year dealing with privacy scandals.
Mark Zuckerberg's plan firstly, encrypting messages; secondly, more disappearing content. Content that disappears off your screen after a
while and no one sees ever again. And no sensitive data stored in countries weak on human rights. The key to it all, integrating Facebook
services including Messenger, Instagram and WhatsApp, and that raises of course, concerns for regulators.
Now, if you want to join the conversation on this. Get out your phone and it's cnn.com/join, forgive me. So excited at the prospect of asking you a
question, and finding out your views. Who do you trust to protect your privacy? Now, of all of them, would it be Facebook? Apple? Google? Or
are you suspicious and wary of it all, so none of them? Cast your vote. You'll see the results at the bottom of the screen.
Samuel Burke is with me. Why does Facebook need to integrate Messenger, Instagram et cetera into Facebook to make this work?
SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: They don't need to. I think there may be a bit of trying to get ahead of regulators there.
So they're mixing two totally separate issues which I don't know if I would have done if I was advising them on PR. But certainly on the privacy
front, they are correct.
This is a move that needs to be made and follow in the footsteps of folks like Apple, which I see is winning there, none of them is winning, and Tim
Cook has really led this charge that that there is market value to be had in privacy.
QUEST: But hang on a second, how does -- I mean, encrypting messages, all right, WhatsApp already encrypts messages, but who are you encrypting
against?
BURKE: Well, you're encrypting against literally everybody except for the two people, the person who sends the message and the person who receives
the message, but the real answer to your question is government's prying eyes. There is this school of thought that says with all of these
accusations flying against China, Huawei, who is going to own the internet, that people will migrate to platforms where they have more privacy. Go
ahead, Richard.
[15:20:08]
QUEST: But that's not the issue where Facebook is concerned. The issue of Facebook seems to be on the privacy front, that they were allowing people
to have a good old troll through the data, not that the government hacked it.
BURKE: No, no. I think there are two totally separate issues here. On the one hand, you've got this issue about the Messenger and on the one
hand, the other hand they just want to make the platform as safe as possible. But look at your poll. Will people really trust them to do
that? I just want to put up on the screen what Mark Zuckerberg said, admitting that this is going to be a very big challenge, saying in this
memo, quote, "I don't understand that many people don't think that Facebook can or would even want to build this kind of privacy-focused platform
because frankly, we don't currently have a strong reputation for building privacy protective service." That may be the understatement of the
century. But Richard, this is the key for companies moving forward.
QUEST: Privacy from my neighbor, privacy from my government?
BURKE: Exactly. Call it privacy or privacy, this is what people want --
QUEST: Privacy from law enforcement.
BURKE: Exactly, and this is one place where I think Facebook is going to have a lot of trouble, because the more they do this, the more encryption
that is going to put them not in the good graces of many countries including Russia, Vietnam and China, this makes it even more and here, you
can see right now what the stock has been doing, not too bad lately.
QUEST: That bounce back, from last year, and all of the woes, and indeed, I mean everybody was down in December, but Facebook started from a lower
level. Look, more importantly, no sensitive data stored in countries weak on human rights.
BURKE: Well, that's very -- that's such a gray zone, isn't it?
QUEST: It is because who is and who is not.
BURKE: Yes, I mean, that's a ridiculous statement because nobody is ever going to be able to agree on that, but at the end of the day, Facebook has
a lot to prove here. I mean, this is arguably the highest profile platform with the most privacy problems.
QUEST: So let's look at how the results are. Only 2% of you said Facebook, 33% of you said Apple, and Google was 6 --
BURKE: Six percent.
QUEST: I'm getting old, my eyesight and 59% said none of them.
BURKE: If you forget the none of them, which that doesn't surprise me, going back to my original thesis here is that, Apple has really become the
leader and the most trusted on this --
QUEST: Because?
BURKE: And they say this is why they charge their high premiums and a lot of people in security say that they use Apple over the other ones out there
because they do believe that it is more secure and apparently your viewers are aware of that.
QUEST: Good to see you, Samuel. Thank you very much indeed.
BURKE: Nice to see you in London.
QUEST: Good to see you. Don't even think about it. Huawei is suing the U.S. government. Beijing says it is standing behind the Chinese tech
giant. Huawei is fighting claims this technology poses global security threat. Sherisse Pham reports from Shenzhen, the home of Huawei.
(BEGIN VIDEO TAPE)
SHERISSE PHAM, CORRESPONDENT, CNN (voice over): Huawei dropping a big announcement at their headquarters here in Shenzhen, China. Defending
their name and their global business. The tech giant suing the U.S. government saying restrictions on Huawei are unconstitutional, an act
against the interest of American consumers.
Huawei is challenging a specific section of the National Defense Authorization Act or NDAA. The law bans Federal agencies from buying
Huawei products.
(BEGIN VIDEO CLIP)
GUO PING, DEPUTY CHAIRMAN, HUAWEI: These sanctions strips Huawei of its due process, violate the separation of common principle, breaks U.S. legal
traditions and it goes against the very nature of Constitution.
Enacting the NDAA, Congress acted unconstitutionally as judge, jury and the executioner.
(END VIDEO CLIP)
PHAM (voice over): The tech giant even accusing the U.S. government of hypocrisy hacking their servers and source codes and stealing e-mails.
Huawei is the largest maker of telecommunications equipment and sells more smartphones than Apple. It is also the global leader in 5G technology.
The U.S. government says it believes the Chinese government would be able to use that tech to spy on others. It's been pressuring other countries to
restrict the use of Huawei.
(BEGIN VIDEO CLIP)
MIKE POMPEO, U.S. SECRETARY OF STATE: We believe that competition, whether it's in 5G or some other technology ought to open, free, transparent and we
worry that Huawei is not that, and so our task has been to share with the world the risks associated with that technology.
(END VIDEO CLIP)
PHAM (voice over): In January, the Department of Justice unsealed two indictments against Huawei accusing them of trying to steal trade secrets
from T-Mobile and skirting Iran sanctions.
Huawei has denied those allegations. All of this happening while Meng Wanzhou, Huawei's Chief Financial Officer and daughter of the founder faces
extradition to the U.S. from Canada. She was arrested in December and has since been charged with violating U.S. sanctions on Iran, claims the
company has rejected.
China has also detained and accused two Canadians of spying and stealing sensitive information. The arrests were widely viewed as a retaliatory
action for Canada's detainment of Meng. Canada has demanded the release of its citizens.
[15:15:08]
PHAM (voice over): But when asked at the press conference, Huawei senior executives said they think the case against Meng is independent from the
Canadians in China.
PHAM (on camera): Huawei has repeatedly said that it is an employee-owned company with no ties to the Chinese government and that none of its
products pose any kind of a national security risk. But this new lawsuit, brings this standoff with the United States government to a whole new
level.
Sherisse Pham, CNN, Shenzhen.
(END VIDEO TAPE)
QUEST: As we continue after the break, Amazon's popup flop. The tech giant calls time on its experimental shops. It is sort of worked on in
some places and in not so in the others, but books are still very popular, in a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment, when the business backlash against Michael Jackson is now
getting under way and the Royal family takes on internet trolls.
As we continue tonight, you are watching CNN and on this network, the facts always come first.
President Trump's former campaign chairman will soon learn his fate for committing tax and bank fraud. Paul Manafort is in court within the hour
for sentencing. He could get life behind bars. The charges stem from the Special Counsel Robert Mueller's Russia investigation.
Another longtime Trump associate is also going to court for a different reason. The former attorney, Michael Cohen is suing the Trump
organization, saying he has earned millions of dollars in unpaid legal fees and costs. He says the organization stopped paying him last May after it
became clear he was cooperating with various investigations.
The U.K.'s Northernm Ireland Secretary says she is profoundly sorry after saying that desk calls by security forces during the troubles were not
crimes. Pam Bradley is facing -- calls to resign over the comments. I'm in London tonight as we get ready for Brexit over the next few days, at
least the various votes. However, in New York, the trading post is up and running, and you can see, we -- the Dow is off around 200 points, the
fourth straight session of losses.
We've got red on the Dow, red on the S&P, red on the Nasdaq, I think we can call that, yes, that's already there, a stunning red. Downgraded growth
forecast from the ECB have hurt the sentiment, they're not sure it's among the weakest sectors.
Ben Phillips is the CIO of EventShares, he joins me from Los Angeles. Ben, good to have you. The market is seemingly saying, look, we're not going to
fall out of bed like December, but we do need a new fresh reason to go on the next rally.
BEN PHILLIPS, CIO, EVENTSHARES: Yes, I think that's right. I mean, we -- the technical indicators were all showing overbought, you know, we have
been talking about it for a few weeks here, so this is a little natural pullback, we expect these types of things from time to time.
I think it's a little bit too of -- the markets were buying the rumor if you will, and that the China deal was going to get done with the U.S., and
now they're selling the facts and it's rolling out that it might actually occur soon. A little pre-emptive on that, but it's a little baffling to
me, you know, healthcare stocks are selling off right now, that's interesting because they're more defensive.
So you know, we're taking this as some opportunity to buy some of those healthcare names we like, and then look at some other names that have taken
a little bit of a beating in the past week.
QUEST: Right, but specific reasons they're on healthcare, aren't they? Because of course, the questions over Medicare and changing of the rules,
and all of that. Which has hit the healthcare stocks. As we look at the Dow 30, the fact that Verizon is the only gainer -- the highest gainer,
when we see that, it usually suggests what?
PHILLIPS: Well, Verizon, we're playing for 5G telecom, so it's got a little bit of that and where people are looking at that. But I think
people view it as a defensive stock as well. So people aren't canceling their cell phone subscriptions or anything like that.
People are, you know, view of the smartphone as one of the key --
QUEST: Right --
PHILLIPS: Assets, he has more valuable than their cars. Some people -- and some studies have shown. So I think that's really what's driving that.
QUEST: So, the -- but at this point, we had -- at the end of last year, we had the rotation into defensives. The first four weeks of the year really
saw that to some extent reversal, and it was back into growths. What do you think? Is this just a wait and see or are we seeing some form of
rotation under way?
PHILLIPS: I think it's a little early to call it a broader trend. I think we are at the end of the cycle here in the rotation, the long-term rotation
we're going to see here, is going to continue to be defensive. And I mean, Richard, you always asked me about what your viewers should be doing in
their own accounts, I think they should be rotating more defensive too.
If you look out, you know, with a two-year outlook where our markets is going to be worst, stocks are going to be where our bonds are going to be,
I think you're going to get better opportunities to buy stocks and bonds right now or actually are offering some good value.
QUEST: Interesting, because what of course happens is you get the first whiff of a good bull run like we saw in January -- admitted January was
acceptable, but you see it in February as well, and everybody immediately plows back in again.
PHILLIPS: That's right. I think people are chasing momentum, and it's not just individual investors, it's institutional investors as well. So
they're chasing this momentum factor and they keep adding to it as this is going up, but then it can be really painful on the way down.
So, you know, the reason I'm telling you and your viewers is to just be cautious of that, because that reversal can happen so quick, that you can
be caught offside, and I think now is the time to, you know, start raising a little cash, forget another good rally here of another 5 percent to 10
percent, you know, use that to raise some cash, 10 percent, 20 percent of your portfolio, buy some bonds, you know, rotate out of some stocks.
QUEST: Excellent advice, which is exactly why we like to have you on, but as always, I remind everybody, nothing we ever tell you on this program,
it's just a guidance, a bit of advice, and a few suggestions. We're not telling you --
PHILLIPS: That's right, talk to your financial adviser, absolutely --
QUEST: What to do on -- good to have you, sir, really good to have you, thank you. Now, Amazon --
PHILLIPS: Thank you, Richard --
QUEST: Pulling the plug on its pop-up stores in the U.S., and rethinking his entire retail strategy. All 87 of the pop-ups will shut next month.
And instead, the company is putting its money into more specialized shops, to expand its retail empire.
More Whole Foods branches, along with its own new Amazon Go grocery chain. It's planning to invest more in its four-star Amazon book store chains.
Paul La Monica, good evening, Monica is with me. The interesting thing about this is, it can't avoid -- it can't avoid bricks and mortar because
it owns Whole Foods.
[15:35:00] And you know, that's always going to have a huge shopping mall presence, but it begs the question, what is it not going to do?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think Amazon, Richard, has decided that these smallest stores, these pop-ups, you know, their
locations may not make that much sense. So I think that is why you're seeing Amazon revamp the retail strategy and getting more specialize.
The book stores have really hurt Barnes and Noble which reported weak numbers this morning, bad guidance, that stock is tumbling on that news. I
think Amazon also with the four-star stores is an interesting phenomenon there to really focus on the products than it reviewed most favorably on
Amazon's site and sell them in brick and mortar stores as well.
So Amazon isn't giving up on physical retail, it's just kind of fine-tuning the strategy, figuring out what actually works and what doesn't.
QUEST: It's so big, it's so powerful, we watch it incessantly. Is there a feeling that they know what the strategy is when it comes to bricks and
mortar retailing?
LA MONICA: I think that they're still trying to figure it out, as they go along, and that Amazon by virtue of being so large, they can afford to make
a few mistakes here and there, and it's not really going to damage the company in a major way.
Because also, let's be honest here, Amazon is a beloved stock on Wall Street right now, but the reason that it's doing so well isn't necessarily
the retail side, it's Amazon web services. Their cloud unit is churning out gigantic profits, as long as AWS is doing well, it gives Jeff Bezos
some wiggle room, to you know, kind of throw things at the wall and see what sticks.
QUEST: And the idea of going back to New York, I saw that the governor and others have asked Amazon to reconsider. Have we heard from them whether
they are reconsidering or is it nope?
LA MONICA: Yes, last I've heard, I don't think it seems that Amazon is going to reconsider. I think they are really focusing now on northern
Virginia. Also Nashville, people forget that they have, you know, made a move there to have thousands of jobs in another location. So I think
Amazon realized that there are other places around the country, they are happy to have them there, and that's what they're going to focus their
attentions on.
QUEST: Wonderful city, Nashville, not sure you've ever been, I went to school in Nashville.
LA MONICA: I know, you're a Vandy guy and my in-laws all live there --
QUEST: I am, that's a story for another day from both of us, thank you. When we come back, rethinking Michael Jackson's legacy and the
profitability. Abuse allegations against the late singer are prompting some businesses to keep their distance. In a moment.
[15:40:00] (COMMERCIAL BREAK)
QUEST: The queen is 92 years old. And she has always had the knack of knowing how to communicate with her subjects. Forty three years ago, she
sent her first e-mail, I beg your pardon, yes, now let's look at her other first texts. Today, the queen made her first Instagram post, it was during
her visit to London's Science Museum that she shared a letter sent by the 19th century computer pioneer, it passed 90,000 likes this morning, it's
now over 140,000.
And then five years ago, she tweeted for the first time. At the same place, the Science Museum. It went out to more than 700,000 followers,
it's had 43,000 likes ever since. And she joined Facebook way back in 2010. Users couldn't friend her, that was against the rules.
More pages where people could follow the royals. According to the daily telegraph, the page received 40,000 likes within its first hour. Now, as
the royals know only too well, keeping in touch in this sort of modern way is a double-edged coin because with the internet, you can't control the
narrative.
And the trolls have been slandering Meghan Markle with racist and offensive posts. Now, the palace is fighting back. Max Foster reports.
(BEGIN VIDEOTAPE)
MAX FOSTER, CNN CORRESPONDENT (voice-over): One of the most talked-about women of our time, a fashion icon --
MEGHAN MARKLE, DUCHESS OF SUSSEX: The winner this evening is Clare Waight Keller --
FOSTER: And role model, earning her this homage from pop royalty. The Duchess of Sussex bringing something completely new to the very top of the
British establishment. Yet, from the moment their relationship became public, Prince Harry and former American actress Meghan Markle detected
racial and sexist undertones in parts of the press.
There were the references to the duchess' rich and exotic DNA. How her family had gone from Cotton slaves to royalty. And this piece suggesting
the Los Angeles native was almost "Straight Out of Compton", a reference to a song by NWA.
The authors of these stories deny racism. But the couple saw underlying prejudice, which they articulated with this palace statement from 2016,
calling out the racial undertones of comment pieces, and the outright sexism and racism of social media trolls and where the article comments.
But the regular members of the royal press pack will tell you is that they're just doing their job, reporting the news without prejudice. And
they actually do far more positive stories about Meghan than negative.
(on camera): The problem they say is when digital news sites pick up on their firsthand reporting and then sensationalize it.
(voice-over): A typical example is the ongoing narrative that the Duchess of Sussex is at war with her sister-in-law, the Duchess of Cambridge. This
is based on just one report in a respected newspaper that Meghan made Kate cry at a bridesmaid dress fitting just before last year's wedding, and
even that story is disputed by the palace. The two women have endured constant comparisons.
YOMI ADEGOKE, JOURNALIST & AUTHOR: Essentially, Kate is no deviation of the norm. She is very much the quintessential sort of British girl next
door.
FOSTER: Where Kate's now celebrated for wearing an off-the-shoulder dress, Meghan is accused of breaking royal protocol. When Meghan wears dark nail
polish, she breaks royal protocol again with vulgar fashion move. The comparisons are as awkward for Kate as they are for Meghan.
ADEGOKE: She's very much what you envisage when you think of the word "princess". And you know, frankly, she's white where someone like Meghan
is very much a deviation. She is foreign not just by being American, but she's got black heritage, she's a divorcee, she's just a very different
type of person and somebody that I don't think your average British member of the public sort of thinks of when they think of the word "duchess" or
royal family at all.
FOSTER: A CNN royal source accepts the duchesses aren't best friends. They may not hang out or call each other, but they are friendly and they
text. Stories about a rift are just click bait, the source adds. But is that click bait that online trolls are linking to and using against Meghan.
[15:45:00] On Twitter, we investigated the most commonly used anti-Meghan hashtags from the beginning of January to the middle of February. In
total, we analyzed 5,204 tweets, and discovered 20 accounts were behind 70 percent of the posts.
Their profile descriptions typically contain Meghan-related hashtags, like Mexit, but also political hashtags such as Brexit and MAGA, Make America
Great Again. We don't know how many people are behind the accounts, and we found no evidence of a coordinated right-wing campaign against the duchess.
But --
PATRICK HERMANSSON, HOPE NOT HATE: Meghan Markle fits into this bigger idea of a west and the U.K. in decline. And here, it's symbolized by
Meghan who kind of corrupts this old institution of the Buckingham Palace.
FOSTER: CNN has been told the trolling escalated when the duchess announced her pregnancy, that was at the beginning of a high profile tour
of Australia. Palace staff are having to spend more time deleting comments on their social media platforms, also blocking accounts and reporting
abuses.
ADEGOKE: There's definitely sort of an unspoken sort of interest in what the baby will look like, and you know, there's been a lot of talk on
Twitter, not just from racists, but also from people who are very pro- Meghan, about recessive genes, about whether the baby will have an afro, whether the baby will have its mother's nose.
There's all these kind of coded conversations happening about what the baby will look like, and it sounds sort of really horrible to think, but a lot
of people have sort of offered up the idea that the blacker the baby looks, the worst its treatment will be.
FOSTER: Our royal source tells us, they even had to pre-block the "N" word on Instagram, plus, emojis of knives and guns.
(on camera): It was celebrated as the wedding that united Britain and cemented the American alliance. But it also exposed divisions that a
small group of haters are trying to exploit. The royal family are determined to starve them of that platform. Max Foster, CNN, Windsor
Castle.
(END VIDEOTAPE)
QUEST: As we continue, still to come, rethinking Michael Jackson's legacy, and profitability. The abuse allegations against the late singer are
prompting some businesses to keep their distance.
(COMMERCIAL BREAK)
[15:50:00] QUEST: The backlash against Michael Jackson is building. It follows the explosive allegations of sexual abuse against the late singer.
Now radio stations have banned his music, he's been dropped in Canada and New Zealand, statues are coming down, this one in Britain's National
Football Museum.
There's more at risk. Sony reportedly paid $250 million to distribute his music. There's a Broadway musical planned for 2020 and future earnings of
course are always relevant up in the air. "Forbes" says Michael Jackson has made $4 billion so far.
It all follows the release of "Leaving Neverland"; the documentary with horrific allegations of child abuse. The film aired earlier this week in
the United States on our sister network "HBO", part two will be showed in the U.K. tonight. In it Wade Robson and James Safechuck say Michael
Jackson abused them for years.
(BEGIN VIDEO CLIP)
WADE ROBSON, SEXUAL ABUSE VICTIM OF MICHAEL JACKSON: He told me if they ever found out what we were doing, he and I would go to jail for the rest
of our lives.
JAMES SAFECHUCK, SEXUAL ABUSE VICTIM OF MICHAEL JACKSON: Secrets will eat you up, you feel so alone.
ROBSON: I wanted to be able to speak the truth as loud as I had to speak the lie for so long.
(END VIDEO CLIP)
QUEST: Michael Jackson's family has since pushed back against the film. His estate is suing "HBO", Jem Aswad is the senior music editor at Variety,
he joins me now from New York. This is an extremely difficult one, morally, ethically, business-wise, can you love the music but hate the man?
JEM ASWAD, SENIOR MUSIC EDITOR, VARIETY: Well, that's the moral dilemma that everybody is faced with now when they put on a Michael Jackson
record. You know, some people choose to ignore it. There's a similar thing going on with R. Kelly's music, and that's something people ask
themselves a lot.
Is it OK to be listening to and enjoying this music if the person is guilty of the things they're accused of?
QUEST: I think, that yes, R. Kelly of course is very prescient in this sense, Michael Jackson arguably is much bigger, his music is much more --
is more mainstream, and of course, as somebody pointed out, he's dead. Do you think -- how will people treat, how will radio stations treat Michael
Jackson? What do you think? Where do you think the consensus is going to come down?
ASWAD: I'm not sure there is going to be one, necessarily. There has not been a widespread movement against playing Michael Jackson's music. As far
as we can tell, none of the U.S. radio networks are commenting on it. There were three radio stations in Canada that banned his music, a couple
in New Zealand, I think.
This isn't a giant upwelling, right? So in terms of the regular business of Michael Jackson's music, I'm not sure how much is really going to change,
unless you know, unless there is an uprising in the next couple of days. What it seems more likely to affect to me, are projects going forward.
Like this Jukebox musical that they have sort of canceled, it's going straight to Broadway, instead of having a run in Chicago later this year
which was originally planned. They canceled it, saying that it was because of an actor strike in Chicago, but I suspect it was actually because they
saw that "Leaving Neverland" as coming, and the environment just wasn't right to launch something like that. Projects like that could be in
trouble.
QUEST: What is interesting is that, this, the "Leaving Neverland" has reignited issues that have long been in the public domain, and as you know,
of course, were litigated in a criminal trial, in which he was acquitted. So nobody has been under any illusion that there wasn't something unsavory
going on.
What is it about this documentary, obviously, in the Me Too era, that has created this resurgence?
ASWAD: Well, the Me Too era has caused people to not only look around at current offenders, but to look back at past offenders because there's, you
know, an impulse to say, all right, if this person did it, well, what about that person? OK, what about Michael Jackson?
And through the lens of the R. Kelly documentary, which I assume is being produced at around the same time, so they weren't necessarily -- you know,
they weren't really in tandem, but the same issues were coming up. And you know, it's a very -- the Me Too era has changed the lens on everything.
[15:55:00] QUEST: I guess you don't really know how this is going to play out literally, and figuratively, until Thriller is on the Jukebox and you
see how people react.
ASWAD: Yes, that's true, that's personal, though. You know, I mean for business, like if they have big plans to launch another big musical or
another thing like their Cirque du Soleil show, anything else, you know, the way that you keep a catalog alive is to do projects like that, and it's
going to be a bit more difficult going forward.
QUEST: Jem, very good of you to come in, sir, I apologize I'm not in New York to be with you as I normally would. Thank you, thank you very much,
sir, thank you sir --
ASWAD: It's very lonely here, thank you.
QUEST: Thank you. Now, in the last few minutes of trade on Wall Street, all three of the major averages are deep in the red, you can see the Dow is
sort of lost again what it had gained. The financial row is the worst hit, weighed down by a lower growth forecast from the ECB.
The supermarket giant Kroger was among the biggest losers. And then you see between ExxonMobil and Verizon, battling who is going to be number one
in the green, but only three bits of green and Walgreen is way down at the bottom. As we continue, we will have our profitable moment after the
break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. It may be a cliche that Central Bank should be seen and never heard. The original vessel virgins, if you like.
Well, Mario Draghi came in, in 2011 and thereafter -- well, he never -- he is the only one who never actually had the job of raising interest rates.
Because throughout his entire presidency, Mario Draghi has had to face up to slowing economies, markets in trouble and deep worries over what's going
to happen next. And today, it came back. The T-L-T-R-Os, the statement that he wouldn't raise rates for the next 12 months, at least are all
serious indications that the euro zone economy is in trouble.
Now, whether it's a canary in the mine, whether it's a ticking time bomb, whether it's -- no matter which cliche we use, the reality is things are
serious and that's the importance of what Mario Draghi's statement was today all about. And that is QUEST MEANS BUSINESS for tonight, I am
Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it is profitable. The Dow is down, the bell is ringing --
(BELL RINGING)
END
