Return to Transcripts main page
Quest Means Business
Christine Lagarde Picked To Run The European Central Bank; Donald Trump Announced Two New Picks For The Federal Reserve Board; Tesla Sets New Records For The Number Of Cars Delivered In A Quarter; Canopy Growth CEO Speaks Out on Being Fired; Zimbabwe Faces Passport Shortage; Security Council Meets on Libya Migrant Attack. Aired 3-4p ET
Aired July 03, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Roaring session for Wall Street. U.S. trading closed early ahead of the July the Fourth holiday,
and all three indices sitting at record highs. Dow Jones up seven tenths of a percent today, S&P 500 and NASDAQ sitting at record levels. It's been
an unbelievable start to the second half of the year. So those are the markets and these are the reasons why.
European investors are betting on easy money with Christine Lagarde at the ECB. I'll be speaking to one of the few men who has done the job -- Jean-
Claude Trichet.
Elon Musk finally delivers and Tesla shares soaring. And no smoke without fire, the CEO of a top cannabis company tells us why he was suddenly
sacked. Live from the world's financial capital, New York City, it's Wednesday, July the 3rd, I'm Eleni Giokos and this is QUEST MEANS BUSINESS.
All right, a very good evening to you. So we're also keeping a very close eye on the Second World Cup Semifinal between Sweden and the Netherlands.
But first tonight, the trading day is over here in New York and markets are at record levels and investors prepare for a new era of the top of the
world's biggest central bank.
Now, the Dow closed 179 points higher after a short trading day on Wall Street. That's its first record close since October last year. And now
the broader market is also sitting at record highs. Donald Trump announced two new picks for the Federal Reserve Board. Both agree with the President
that interest rates should be lowered. So that is putting a lot of optimism in markets.
Now over in Europe, stocks got a boost after Christine Lagarde was picked to run the European Central Bank. Bond markets are rallying with fears of
low growth in Europe. Investors think Lagarde could usher in an easier monetary policy environment.
Anna Stewart is in London and Anna, I'm looking at how the markets are responding. And then we look at the bond yields as well, what are these
figures telling us today about Christine Lagarde taking over at the ECB?
ANNA STEWART, CNN REPORTER: Well, she said he wasn't a front runner. It came as something of a surprise. But as you can see from bond yields and
you can see that the German and the French were, the 10-year were already negative territory, so they pushed down even lower today, and I think it
shows that investors think that Christine Lagarde is likely cut from the same economic cloth as Mario Draghi, you can expect interest rates to stay
lower for longer fiscal stimulus in the wings, despite being head of the IMF and being all about fiscal prudence. She's actually always been very
supportive of easing of QE specifically. And that's where investors are betting on here -- Eleni.
GIOKOS: Okay, this is really interesting that we've seen coming through and at the same time, she is not a politician -- she is a politician.
She's not a central banker. Is she the right person for the job? I mean, what are you hearing from investors that you've been speaking to?
STEWART: This has been so interesting, there have been a few analysts that have said, she's not qualified for this position. She doesn't have an
Economics Degree. She hasn't worked in monetary policy. She's never worked at a Central Bank.
And they questioned whether this role has become politicized, because she is, above all things, really a politician with a legal background. But
perhaps that's what is needed here. Because there is a whole ECB committee. She is very good at being a leader. She has got a real clout
and presence on an international stage. And she's very good at finding consensus.
So she may be very useful at a time when we are getting a bit of an imbalance with hawks and doves in the ECB, a very tricky time at the moment
with inflation stubbornly low. She might be the right person for the job.
GIOKOS: All right, thank you very much, Anna Stewart. So the European Central Bank has had only three Presidents in its relatively short
existence. It was created in 1998, ahead of the introduction of the euro and back then, it had just 11 countries to worry about.
Now it has to juggle the intricacies of 19 countries that use the euro and major challenges lie ahead for the next President. But this is what it
looks like right now.
Jean-Claude Trichet, we're going to be speaking to him in just a few minutes. He is the man that navigated the euro zone area and Europe out of
the financial crisis in 2008.
Mario Draghi is the man that always says he'll do what it takes. And the question is, what is Christine Lagarde going to be doing? Remember, she is
viewed as a technocrat because of her leadership at the IMF.
Now, growth is slowing in Europe, but most of the stimulus measures established after the financial crisis are still very much intact, and the
ECB doesn't have many more tools left to use.
Political pressure exists on all sides. Donald Trump has publicly berated the bank and is threatening the E.U. with a trade war.
And of course there is the uncertainty Brexit. In addition, Eurosceptics across the continents are making life tough for believers in the European
projects.
[15:05:08] GIOKOS: Jean-Claude Trichet was President of the ECB from 2003 to 2011 and he know, joins us tonight from Paris. Mr. Trichet, very good
to have you on the show. Thank you so much for joining us. Is Madame Lagarde the right person to take on the ECB?
JEAN-CLAUDE TRICHET, FORMER PRESIDENT OF THE ECB: Well, she is certainly qualified. If you look at what happened during the last eight years --
almost eight years -- she was Managing Director of the IMF. And she convinced the international community that she was doing a good job.
I guess, that is the main reason why the Council -- because the Council seems to have floated the name, the Council considered that she could do
the job, that that is something which of course, was considered decisive, taking into account, as you said that she was not a central banker, and
that she will have to embark on this new job, which is extremely demanding.
Again, her performance in the past seems to be --
GIOKOS: This is the interesting thing, because she's not a central banker. She's not an economist. She is, you know, she's got political savviness.
And this is the thing you know, people are saying, what is she going to bring to the ECB that traditionally has been very strict on looking at the
technical aspects of things? Is this what the ECB needs right now? Or is it becoming too political?
TRICHET: Well, I would say that, again, she is not a central banker, that's absolutely clear. She has not got a degree or a PhD in Economics.
On the other hand, she run, if I'm not misled, the International Monetary Fund, which is the central economic powerhouse in the world, and also is an
International Monetary Fund, as the name indicates.
So I think that one has to say, good luck. And I'm sure that all the members of the governing council will consider that the success of the ECB,
her own success, the success of the college is at stake, which is very important for Europe, of course, but also very important for the world. It
is really the equivalent of Jerome Powell and of the Open Market Committee.
GIOKOS: Okay, that's interesting. So let's get into Jerome Powell, as you mentioned this. And, you know, we know that President Trump has been
talking about Jerome Powell, even compared him to Mario Draghi, and he is saying that the U.S. needs more stimulus. What is your stance on this when
political leaders and you know, Presidents of the United States are starting to publicly intervene in a sense, in monetary policy?
TRICHET: I think it's very bad, obviously. I think it is very bad, because it destroys the credibility of the Central Bank. The Central Bank
is there to ensure stability, stability of the prices, in particular, without inflation and without deflation in the long run, in the medium and
long run.
And market participants, investors, savers, economists, the economic agents have to trust the institution, otherwise, bad things can happen. So I
think that it would be good if the political sphere could be more prudent.
In Europe, as you know, the independence of the Central Bank is guaranteed by the treaty, in very, very, very strong words.
GIOKOS: Mr. Trichet, you know, we know that you had rates in 2011, and it's a conundrum that a lot of central bankers face. Do you look at the
data? Do you be proactive? Do you be reactive? And, you know, what are your assumptions going forward? And it's interesting, because Christine
Lagarde at the IMF, obviously talks about being prudent, don't overstimulate because you create bubbles. And it's such a difficult
situation that the European Union is facing right now. Because it's perhaps addicted to stimulus. It's addicted to low interest rates.
Looking at the situation at the moment, what would you do and what should she do?
TRICHET: Well, first of all, things changed. You would be very surprised, but when I left the ECB, inflation in Europe was three percent and the
materialization of a deflationary risk was not at all in the cards. My main problem was to fight against the horrible crisis we had to cope with
and to embark in very bold, non-conventional measures, including massive purchases of treasuries of the countries that were in difficulty. That was
very bold. That was very politicized, but it was really the demand and the threats of the time.
Now things are totally different. Clearly in Japan, in Europe, In the United States of America also, we have a level of inflation which is not
normal, much too low and that drives of course, the central banks to be very accommodating in order to avoid the materialization of the
deflationary risk.
[15:10:18] TRICHET: That is something which is not normal. It's very abnormal. And it seems to me that it's both an economic and monetary
problem on the one hand, and also a political problem on the other hand because it's clear that the bargaining power of labor unions, organized
labor and organized labor is very weak now and they are the reason why wages and salaries are not augmenting as they used to do in the past.
GIOKOS: Okay, so now --
TRICHET: Together with a number of other factors.
GIOKOS: Absolutely. Mr. Trichet because I want to get in as much as possible, I have to ask you this, you know, the bond yields that we are
seeing coming through from Germany and France, and even in the United States, the 10-year bond yield is showing that perhaps we should be pricing
in a recession.
Isn't there a concern that central banks are just using too many of their tools now that they won't have anything left to use if drama does happen.
Is that one of the biggest challenges that Christine Lagarde will face?
TRICHET: Yes, it is, again, it's an issue that all central backers have to face and Christine Lagarde will have to face that. You're absolutely
right. We have two threats.
One threat which might come first in the United States of America, it's not for tomorrow, but maybe the day after tomorrow, the start of the
recessionary episode in the cycle. And of course, that goes for a very active, I would say decisions by the Central Bank, and by the government
also, that's one.
And then you might also have unexpected crises, I would say not as gray as what we had in 2007-2008, but nevertheless, a big crisis, you know, in all
cases, you have to be very, very active, of course, to react by not unconventional or conventional tools, you are right when you say that the
tools are very limited now, very limited in Japan, very limited in Europe, very limited also in the United States of America.
To the extent that five points are considered the appropriate room for maneuver to decrease rates, when you are fighting against the recession,
and we are far from that and maybe we would be even with a much bigger room for maneuvering.
So we are in a difficult situation, obviously. And that's the reason why I am making the point that we have a connection between the problems of the
central banks, the problem of very low inflation and by way of consequence, very low interest rates, and also the frustration of a large part of the
population which thinks that they are not treated as they should and that's so-called populism in all the advanced economy.
GIOKOS: Absolutely.
TRICHET: And there is a connection there. So the problem that we have to face up within the central banking is also partially of a political nature,
and that is the reason why I used to say myself, the central banks are not the only game in town, we need the other partners, parliament, executive
branches and so forth and the private sector to step in. It's very important.
GIOKOS: So what would you then do if you were Christine Lagarde and getting in and so much expectation that you would usher in a new era of
something new and think differently? What would be your first move? And it's -- you know, it's interesting, you're know watching from afar. I am
sure you're glad you're not in this drama, but what would you do?
TRICHET: No, frankly speaking. We do not need to rock the boat. There is the college. The college is thinking of the decisions. New ways were
indicated by Mario Draghi in the last colloquium he participated in, in Sintra, Portugal and I would not suggest myself, neither the college, don't
forget, all decisions are taken by the Governing Council.
And I would not suggest to Christine to rock the boat and do something totally different. But I expect all Central bankers, Christine, as well as
all others to communicate very, very clearly, that if the rest of the society, again, the political sphere as well as the private sector thinks
that the Central Bank can settle everything, they are wrong, because the Central Banks need the participation of the other partners, two in Japan,
two in Europe, for Christine as well as well as from Mario, two in the United States.
GIOKOS: Mr. Trichet, what a pleasure to speak to you, sir. Thank you very much for making the time and for your insights. Thank you.
TRICHET: It was a pleasure.
[15:15:05] GIOKOS: So investors are weighing up Donald Trump's nominations for the vacant seats on the Federal Reserve Board. And Christopher Waller
is currently Executive Vice President at the St. Louis Fed, and Judy Shelton, was an adviser to Mr. Trump's 2016 campaign. She is a critic of
the Federal Reserve and has even spoken of a return to something like the gold standard. This is what she said on the program before the
presidential election.
(BEGIN VIDEO CLIP)
JUDY ELTON, THEN ECONOMIC ADVISER TO DONALD TRUMP: I think we need -- we need another Bretton Woods, or at least we need to be thinking in terms of
a neutral reference point, a global unit of account, I mean, something like a gold standard even, updated, to reflect a digital world and fast moving
financial flows.
(END VIDEO CLIP)
GIOKOS: All right, so Clare Sebastian has more on the story. She has been looking into these potential candidates to get the Federal Reserve Board,
the gold standard. That's -- I mean, that's pretty crazy to think about. It's something we've abolished for a very long time ago, for obvious
reasons.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: It's pretty out there. She's not the only one who thinks that the previous -- one of the previous
potential nominations from the President, Herman Cain was also quite warm to the idea of the gold standard.
But her view is that this would be a better way of ensuring trust in the currency, of ensuring stability in the currency than relying on what she
called, you know, a dozen members of the Fed Board meeting eight times a year.
So this is essentially putting the cat amongst the pigeons. He wants to nominate someone to the Fed Board, who actually thinks that the Fed isn't
the right tool to be regulating the money supply. So this is a pretty out there view.
But having said that, there is -- it is important on the Fed board to have diversity of views. The whole point is to build consensus there.
GIOKOS: Absolutely. Are these two people, the right ones to join on the Fed? I mean, given the fact that Mr. Trump has been criticizing Jerome
Powell for quite some time, he is wanting those rate cuts, they are just want materializing.
SEBASTIAN: These two are seen as dovish. These might be the right way if you want to call it that for the President to move towards getting the rate
cut that he wants, obviously, aside from the fact that the market now seems to be expecting it.
I would say, in terms of Christopher Waller, he has a more mainstream pick. He is an insider. He works for the St. Louis Fed, which is one of the 12
regional banks. His boss, though is James Bullard, who is the head of the St. Louis Fed and he was the one dissenting voice at the last Fed meeting
who voted for a rate cut. So he is the most dovish at the moment on the Fed Board. So that is certainly seen to be playing into the potential pick
for Christopher Waller.
GIOKOS: And it comes at a time where the President has been criticizing Jerome Powell and then people are saying, you know, are we going to see a
change right at the top? The markets are still pricing in a rate cut. We're not getting it. I mean, this is -- these are the things that people
are weighing up.
SEBASTIAN: I think certainly July is very much in play in terms of a rate cut this month. This is what the markets are expecting. If we don't get
one, there could be some significant time.
Well, in terms of whether the President can actually get rid of Jerome Powell, that is very much up for debate. The Federal Reserve Act says that
he has to do it for cause, but his nomination to the Fed Board do give him another kind of power. If he manages to fill these two vacant seats, he
will have personally filled five out of the seven members of the Fed Board. So that is a certain amount of influence there.
GIOKOS: It's going to be interesting to see. Thank you very much, Clare. Great to have you on. All right, so turning from politics to sports,
Sweden and the Netherlands are fighting for a chance to take on the U.S. in Women's World Cup Final and the game is scoreless right now. We want you
to join the conversation, get out your phones and go to cnn.com/join. Who will win the Women's World Cup? Sweden, the Netherlands or the United
States? Vote now and you'll see the results on your screen.
And still ahead on QUEST MEANS BUSINESS, life in the fast lane. Tesla sets new records for the number of cars delivered in a quarter. While tributes
are being paid to an auto pioneer, the driving force behind the Ford Mustang. Stay with us.
(COMMERCIAL BREAK)
[15:21:30] GIOKOS: Welcome back. So Tesla is stepping on the gas or should we say the electricity. It smashed its own record in the second
quarter delivering more than 95,000 cars and Tesla shares as you can see for the day, up four and a half percent and this is a really good
performance because it has been underperforming year-to-date.
Now, the record quarter marks a big rebound for Tesla after a steep slump in deliveries to just 63,000 and the first three months of 2019 automotive
expert Lauren Fix, aka the Car Coach is in Buffalo for us. Great to have you on the show. Thank you so much for joining us. I mean, this is an
interesting move --
LAUREN FIX, THE CAR COACH: Thank you for having me.
GIOKOS: A very competitive environment, they want to get into mainstream, can they get it right? And are these numbers sustainable?
FIX: I don't know if the numbers are sustainable. I would have huge discounts when they lowered the prices in order to increase the total
amount of sales. Certain countries are offering some pretty excessive discounts. And they have to remember there's some serious competition, the
Jaguar I Pace, the Audi e-Tron, Mercedes has vehicles. Pretty much all the manufacturers are offering all electric vehicles.
So the competition is increasing. More models are coming out. So it's going to be very hard to sustain those numbers. In addition, Tesla has
lost a lot of executives over the last couple of weeks, so they're going to have to replace those executives and put some money into their service
facilities on a global basis.
GIOKOS: All right, stay with us a moment Lauren because America has just lost a Titan of the auto industry. Lee Iacocca, the man who made the Ford
Mustang, an American icon has died at age 94. I want to get your thoughts in just a moment. But first, here's Stephanie Elam with Iacocca's legacy.
(BEGIN VIDEOTAPE)
STEPHANIE ELAM, CNN CORRESPONDENT (voice over): Lido Anthony Iacocca, better known as Lee was born in the rust belt in Allentown, Pennsylvania in
1924. Trained as an engineer, he vaulted to auto industry superstardom by helping design and championing the amazingly popular Ford Mustang.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is car that dreams are made out of.
(END VIDEO CLIP)
ELAM (voice over): He also fathered the world's first minivan.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Dodge Caravan, Plymouth Voyager. They're the most versatile wagons ever built in America. There's nothing like them.
(END VIDEO CLIP)
ELAM (voice over): With a Master's Degree from Princeton, Iacocca started at Ford in 1946 as an engineering trainee. He earned his reputation with
Ford's racing program in the 60s, but found his place in history with the introduction of the Ford Mustang at the 1964 World's Fair.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The Mustang can be tailored to be virtually anything its fire designs.
(END VIDEO CLIP)
ELAM (voice over): The Mustang was an overnight success. It spawned the American muscle car movement is still in production today. He was named
president of the company 26 years later in 1970.
Despite his success at Ford, in 1978, he was unceremoniously fired by company Chairman and namesake Henry Ford II, who told him according to
Iacocca's autobiography, sometimes you just don't like somebody.
Within months he was hired at Chrysler. The next year, Iacocca was named CEO. The company was in serious financial trouble and nearly out of
business, but Iacocca persuaded Washington to bail Chrysler out with a billion dollars in Federal loans.
As part of that effort, he agreed to take a personal salary of just $1.00 a year. Even so, he took heat from critics when he cashed in stock options
worth millions.
His response was vintage Iacocca.
(BEGIN VIDEO CLIP)
LEE IACOCCA, FORMER CEO OF CHRYSLER: I mean, that's the American way. If little kids don't aspire to make money like I did, what the hell good is
this country? We've got to give them a role model, right?
(END VIDEO CLIP)
[15:24:10]ELAM (voice over): Iacocca was Chrysler's pitch man. He starred in 61 Chrysler commercials touting American cars and American values.
(BEGIN VIDEO CLIP)
IACOCCA: I have one and only one ambition for Chrysler, to be the best.
(END VIDEO CLIP)
ELAM (voice over): He made Chrysler profitable again and paid the government back every penny. He did it with an emphasis on quality.
(BEGIN VIDEO CLIP)
IACOCCA: If you can find a better car, buy it.
(END VIDEO CLIP)
ELAM (voice over): Iacocca introduced longer warranties, lower prices and a new kind of vehicle. The minivan sold so well, dealers had waiting list
six to 10 months long. Iacocca's quest for new models actually redefined the landscape for Detroit's Big Three.
He engineered the buyout and eventual demise of number four car maker American Motors, just so he could add AMC's Jeep brand to Chrysler's
inventory.
Iacocca chaired the commission that raised almost $300 million to restore Ellis Island and the Statue of Liberty.
(BEGIN VIDEO CLIP)
IACOCCA: We remember the millions drawn here by that flame. And we renew our commitment to the ideals that kept it burning.
(END VIDEO CLIP)
ELAM (voice over): Iacocca was known for talking tough, and he often sounded like a politician.
(BEGIN VIDEO CLIP)
IACOCCA: The administration has seemed to understand the importance of bargaining chips in nuclear disarmament, for example, but they don't have
the faintest idea how to bargain in trade.
(END VIDEO CLIP)
ELAM (voice over): In the 1980s, he resisted entreaties to run for the White House himself, but has campaigned since for both Republican and
Democratic presidential candidates.
Iacocca retired from Chrysler when he was 68, yet, when the company presented him with a Legacy Award 20 years later, his vision couldn't be
any clearer.
(BEGIN VIDEO CLIP)
IACOCCA: I think the big three is coming back.
(END VIDEO CLIP)
ELAM (voice over): Only one car was ever named for Iacocca, a 45th Anniversary Special Edition Mustang produced in 2009.
(BEGIN VIDEO CLIP)
IACOCCA: Who did you expect?
(END VIDEOTAPE)
GIOKOS: All right, Lauren, I mean, what a great speaker, what a fantastic chief executive and also an incredible salesman. What are we going to
remember from him? I mean, what an incredible legacy.
FIX: He had an incredible legacy. And he was a leader. He also was involved in Diabetes Foundation, trying to raise money to find a cure. He
really was a person for all people. And he was as good as the people that were behind him. When he left Ford and went to Chrysler, he hired the best
people in order to make the minivan a success.
He built the Jeep brand back up, he really was someone that we all looked up to. And as a Mustang person, who we named our daughter Shelby, he was
the father of the Mustang and the Maverick and the Mark Three. So he really was a truly impressive man. And he's really what the auto industry
is all about. And we, in the auto industry are very sad to see him go, at 94, he certainly live life to the fullest.
GIOKOS: Absolutely. I mean, and what's also interesting is that, you know, receiving a government bailout, and then paying that money back
almost setting the scene in terms of, you know, the government needing to help the auto industry during bad times. It's interesting that he set that
precedent.
FIX: He did set the precedent, because before you would never see the government bail out any manufacturer, but when he went to the Federal
government and said, "Listen, I need a billion dollars," that was unheard of. And he said, "I'm going to pay you back." And in order to actually do
that, he built cars like a cake.
I mean, we all know about the minivan, but to build vehicles that consumers wanted and to bring back American built cars, and to make a statement, like
if you can buy a better car then buy it, you know, this is the best built car. And they did a great job and Chrysler survived because of that, and
they paid back the loan, which sets a better precedent, it's not just the loan, it's paying it back.
GIOKOS: Absolutely, I mean, made in America. That was his big motto at a time where we saw so much competition from the outside in imported
vehicles.
You know, what are some of the best cars that he was able to produce locally that I mean, obviously the Mustang, but what else are we going to
be seeing going forward that he will live on in our memories and on the roads?
FIX: Well, the Mustang is still the number one selling sports car. It out sells the Camaro and the Corvette combined. So you're still seeing great
Mustangs come out. And Ford is still producing cars that are part of his heritage. For example, the Ford GT which is the supercar that Ford is
making just for a few years represents those four years where Ford beat Ferrari, and that's part of his racing history.
But you're looking on the Chrysler side, the Jeep brand is so successful. The Ram truck line from Chrysler is very successful. And you also start to
see that evolution of SUVs which he was a part of with jeeps and minivans, so it's really great to see how that whole industry has risen.
Cars are not as popular, but SUVs and minivans and that new technology that we all crave to want to be safer on the road and still be connected.
That's just starting to see come down the road and that's all part of him starting this big change of looking ahead and made in America.
[15:30:09]
ELENI GIOKOS, HOST, QUEST MEANS BUSINESS: Lauren, thank you so very much for your time, great to have you on the show. So, coming up, one of the
best start executives in the cannabis industry says he's been fired. We'll hear from former CEO -- co-CEO of Canopy Growth, stay with us.
(COMMERCIAL BREAK)
GIOKOS: Hello, I'm Eleni Giokos, coming up on the next half hour of QUEST MEANS BUSINESS, one of the most famous names in the legal weed industry is
out of a job. You'll hear from Bruce Linton in just a second. And Zimbabwe is running out of passports, it's all to do with the currency
crisis.
I'll be speaking to the former Finance Minister. First, these are the headlines on CNN at this hour. The U.S. Security Council is meeting this
hour on the deadly bombing of a migrant center in Libya. Forty four migrants were killed and scores wounded.
Libya's internationally recognized government is blaming the attack on rogue General Khalifa Haftar who denied this. Some scuffles in Tel-Aviv as
protesters turned out for a third straight day, outraged over a police shooting that killed an Israeli-Ethiopian teenager. Several arrests were
made, but these demonstrations are smaller and less violent in Tuesday's protest nationwide.
"Like being in hell", that's how someone described the volcano on the Island of Stromboli. It began erupting Wednesday in Italy, shooting out
smoke and lava. Many tourists have reportedly fled the region and a helicopter had to rescue hikers who were on the mountain.
Right, so one of the highest profile executives in the fast growing cannabis industry tells CNN his contract was terminated. Bruce Linton is
out as the co-CEO of Canopy Growth and is also leaving the board. Shares in the Canadian company closed higher despite falling heavily in early
trade.
[15:35:00] Linton told CNN, the company won't have any problem finding a capable leader.
(BEGIN AUDIO CLIP)
BRUCE LINTON, FORMER CO-CEO, CANOPY GROWTH: I was terminated and the co- CEO is working through a transition as they search for a new CEO which I suspect there's nobody listening to your program who's not thinking I
should apply to that, like this is the fastest growth sector in the world and these guys have the most IP -- has the biggest market share.
The cannabis space is probably the only thing in the portfolio, but well, never be smaller. Really, the government's models are just beginning to be
set up globally and Canopy is the best position company in the world with the trash and Constellation, the IP that we created.
I suspect in about a couple of months or three or four months, an unbelievable candidate will be named because they will have the pick of the
latter.
(END AUDIO CLIP)
GIOKOS: All right, so, Bruce Linton wanted to be more than just a CEO. He became part of a sort of poster child for a new industry. The company
received a huge stamp of approval from the drinks company Constellation Brands. It owns more than 35 percent of the company worth around $5
billion.
Canopy share prices up nearly 40 percent since the shares were listed on the New York Stock Exchange in May 2018. We've got Paul La Monica joining
us now. And Paul, I was looking at Canopy Growth's share price today and yes, it was under pressure in the morning and then it landed up closing in
positive territory. How important was Bruce Linton to Canopy?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, Bruce Linton was the face of this company. He did a lot of media interviews including this network to
really talk about the growth potential for legal cannabis, not just in Canada, but in the United States. And several states are starting to
legalize recreational medical cannabis as well.
You kind of got the sense though that with Constellation taking its big stage in Canopy that they really wanted to see this company move a lot more
aggressively towards profitability, and I think that the casualty here was, Linton losing his job and now, you know, Constellation is probably going to
be looking for a new CEO.
GIOKOS: Look, companies have good and bad results. The question is, is it because of the decisions that CEOs take or was it because the industry is
just not moving fast enough? And we know that this is a new space people are playing in. And we don't really know what kind of profits we're going
to see down the line. It's still a very young company.
LA MONICA: Exactly. I think the biggest question marks for companies like Canopy right now is, what happens as marijuana and cannabis becomes more of
a legitimate business product in Canada, in the U.S., in other developed markets. With more competition, you have prices on the retail side going
down pretty sharply, it's becoming a lot more competitive.
Cronos, another Canadian cannabis company, they have a big investment now from Altria; the tobacco giant, so big business recognizes that this is a
legitimate industry to be in, that's great news for Canopy, but I could think it can also be a problem.
GIOKOS: I mean, Paul, it's fascinating because even in Africa, South Africa, Lesotho, Zimbabwe, I mean, you've seen so many countries literally
jumping on those cannabis bandwagon. Everyone is growing, everyone is trying to sell globally. Is there going to be just too much competition
with these companies, you know, some of the weak companies are just not going to make it.
And do you think that people are going to start thinking about these things when they look at the cannabis companies?
LA MONICA: Yes, I think that all of the cannabis companies have to probably partner up with a larger consumer products firm, and that's why
you're already seeing Canopy do it with Constellation, Cronos, with Altria, there's another one, Aurora, they now have Nelson Peltz who is a well known
deal maker on their -- as an adviser and he's specifically looking for partnerships as well.
I mean, Big Pharma also was attracted to this space because of the possible health benefits of cannabis and drugs derived from it --
GIOKOS: So, it's not going to be producing -- do we -- are we going to see the demand? I mean, I think that's going to be really interesting too.
LA MONICA: I think the demand is going to be there. It's becoming --
GIOKOS: Yes --
LA MONICA: Less of a stigma, particularly when you add CBD, a little --
GIOKOS: Yes --
LA MONICA: Off-shoot to the mix, but there's just too much competition.
GIOKOS: All right, thanks so much, Paul La Monica, great to see you.
LA MONICA: Thank you.
GIOKOS: Much appreciate it. So, incoming EU leaders have their eyes on the future as they gear up for political battles at home and abroad. A
look out to Europe's horizon next.
[15:40:00] (COMMERCIAL BREAK)
GIOKOS: Political storms are looming across Europe, presenting Christine Lagarde with an array of challenges as the next president of the ECB. The
head of the World Trade Organization told me earlier on "THE EXPRESS", she's just the person we need right now.
(BEGIN VIDEO CLIP)
ROBERT AZEVEDO, DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: Well, we have troubled waters ahead of us, and I think if we need to have somebody
holding, you know, the steer, Christine is precisely the person that we need there. She's a very smart woman, very competent, fully dedicated, she
knows the risks, she knows the issues and she knows the politics.
So, I think we are in great hands with her there. And I think there will be many challenges, we will not be talking about measures for a stimulus,
we will not be talking about coordination of central banks. If we're looking at blue skies, I think there are a lot of cloudy storms in the
horizon, and I think we need somebody like Christine at the helm.
(END VIDEO CLIP)
GIOKOS: The new class of European leaders will be immediately plunged into Brexit problems. Charles Michel, he will take over from Donald Tusk as
European Council President has said a no deal Brexit would be better than a bad deal for the EU. That is a harder tone that we've ever heard from
Ursula von der Leyen; the candidate for president of the European Commission.
She has called for more patience with Britain, although her critics say she has no real experience of European policy. Quentin Peel is from the
Europe Program at the British think-tank Chatham House. Great to have you on the show. So -- and the big question is, these top jobs, was this just
a hasty compromise to just get things done because we know that, you know, people were discussing from Sunday and they just wanted to get some names
in the fray.
QUENTIN PEEL, ASSOCIATE FELLOW, EUROPE PROGRAMME, CHATHAM HOUSE: No, I think it's actually a lot better than that. A bit surprisingly, they've
come up after an awful long wrangling. They've come up with a pretty impressive package. And by far, the most impressive thing about it is that
we have two very competent intelligent women who are running the two most important jobs now in the -- or going to be running in the European Union.
Because Ursula von der Leyen has a lot of experience as a German government minister, she's also steeped to Europe, she was born in Brussels, went to
the European school, and is a completely fluent speaker of three European languages, French, English and German. And Christine Lagarde, you've
talked a lot about her already on the program is a very impressive operator too.
So that actually is a remarkably strong team and I think better than any of the previous ones they were talking about.
GIOKOS: Look, we know Madame Lagarde is very good at crisis management. We saw that playing out in terms of what the IMF did in Europe. Do you
think that her and the new team in the EU will be able to handle the crisis that face them?
[15:45:00] We spoke to Jean-Claude Trichet a little earlier, and he says, you know, we've got to be prepared to deal with even things like recession
down the line and it's not easy, there are many headwinds ahead of us.
PEEL: Yes, absolutely. There are a lot of problems ahead. I mean, I think the first and most immediate is the threat of a global economic
slowdown with the danger of the U.S.-China trade war still out there and still very real.
And that could have big consequences for Europe and it could aggravate, if you like, the internal economic problem of Europe which is really, I think,
focused on Italy within the Eurozone. The economic crisis in Italy is very real, and Italy is a country that is -- would be by far the biggest
European country to have an economic crisis that needs dealing with.
So, those things have not gone away, and precisely as you were talking about earlier, the tools available to deal with economic crisis --
GIOKOS: Yes --
PEEL: Are actually much more limited precisely because we had such a terrible crisis --
GIOKOS: So --
PEEL: In 2007-'08.
GIOKOS: So, this new team that's going to be in place. Do you think that they are capable of balancing the competing domestic perspectives that
we've seen and present a unified start? And I say this because these -- this is a team that's going to have to deal with Brexit.
PEEL: Yes, they certainly are going to have to deal with Brexit, if I may say, it ever happens. We're getting used to the fact that it keeps getting
postponed, but it's not any easier at all and it has big economic effects. There's huge uncertainty, above all in Britain, but also in the rest of
Europe.
About just what sort of relationship is the United Kingdom going to have post-Brexit with the rest of the European Union? Now, that's something that
also if underlined will have to deal with as president of the commission, and it's something that Charles Michel will have to deal with as the
president of the European Council. Key figures.
Now, they're only going to come into office after the next deadline for Brexit. That deadline is October the 31st, but nonetheless, the long-term
relationship is the key one that they will be critical to sorting out. I think they're as competent as anybody who's been dealing with this up to
now, but we will see the -- really, the competence will be proved in the doing --
GIOKOS: Yes, thank you so very much, Quentin, great to have you on the show, appreciate it. So, now, in Zimbabwe, a currency crisis means basic
items are running out. The government simply doesn't have enough foreign currency. No, we're not talking about the mid-2000s and that infamous
inflation problem that we saw.
This is going on right now. Items including passports and even number plates, anything that needs to be imported are in short supply. Tendai
Biti is the former Finance Minister of Zimbabwe.
He's with us now from Harare. Mr. Biti, what a pleasure to speak to you, sir, and you know, my last trip to Zimbabwe was in early 2016 and, you
know, Zimbabwe was using a basket of different currencies and it had just introduced the bond coin.
And that was a fear in terms of when are we going to see a new currency come into play in Zimbabwe? It's now here, the government has decided to
embark on its own currency. And there are such big fears that we're going to get the same environment and scenario that we saw playing out in the mid
2000s. Is this your fear as well?
TENDAI BITI, FORMER FINANCE MINISTER, ZIMBABWE: Well, good evening. It is already playing out. As it's already playing out. And the sad thing is
that this disaster is taking place less than ten years after the crisis last time in 2006 to 2008 in which you're referring to.
The government has introduced a new currency, but you cannot introduce a new currency if the conditions are not there, the material conditions for
the introduction of a new currency. We don't have foreign currency reserves, we have got a negative current account, which is almost 15
percent of GDP.
No one is investing in Zimbabwe, so we've got a negative capital account. But most importantly, there's a crisis of confidence, most importantly,
there's a crisis -- political crisis, and the economic issue is just a symptom of the deep economic crisis, political crisis we have arising from
the disputed election of July 2018.
So, it's a dog breakfast, there are huge queues, fewer queues, we are having 18-hour power shortages --
GIOKOS: Wow --
BITI: So, our GDP this year is likely to be around minus 8.5 percent --
GIOKOS: Yes --
BITI: The IMF regional economic outlook has put it at minus 5.5 percent. It's a complete disaster --
GIOKOS: Yes --
BITI: In no country, which is not going to war physically, is going through or has experienced the kind of disaster that Zimbabwe is going
through, and that we Zimbabweans are going through.
[15:50:00] GIOKOS: Mr. Biti, you're talking about power outages, we're talking about not having enough paper for passports. I mean, it looks like
it's a really fundamental problem. In fact, Zimbabwe is not even able to pay its electricity fees to neighboring South Africa.
Are you worried that we are going to see -- you know, hyper inflation coming back to the fore. We're sitting at a 100 percent right now,
Emmerson Mnangagwa in the past was saying Zimbabwe is open for business, but the money is not coming in. Why is it not coming in?
BITI: Well, firstly, just on inflation alone, the official rate of inflation is 96 percent, but all independent economies including the
respected experts as Steve Hank, they've put our inflation around 500 percent. There is no --
GIOKOS: Wow --
BITI: Money that is coming in. Because the mistake we made as Zimbabweans is that in November 2017, the removal of Robert Mugabe, we equated to
change. We removed Robert Mugabe but not Robert Mugabe and the system. So, the same system of extraction, the same system of -- privy to
infrastructure, corruption and cartels is reproducing itself.
We want reforms. Zimbabwe needs to go through a serious structural reforms, but there can never be reforms without reformers. And Emmerson
Mnangagwa in his lot has clearly not reformed. Notwithstanding the attempts by the IMF to sugarcoat and to put lipstick on what clearly is a
discredited process that is not working at all.
GIOKOS: Mr. Biti, we have to continue this conversation at some point in time in the future. Thank you very much for your insights and giving us an
update on the situation on the ground in Zimbabwe. And we're now moving on, and it's half-time in Lyon where the Netherlands are taking on Sweden
for a place in the final of the Women's World Cup. Full details after this, don't go anywhere.
(COMMERCIAL BREAK)
GIOKOS: It's goalless at half-time in the Women's World Cup semi-final between the Netherlands and Sweden. Now, the winners of tonight's match
will face tournament favorites, the USA in Sunday's final. Don Riddell has the half-time report for us.
[15:55:00] Don, I have to ask you, are you -- have you recovered from yesterday's match?
DON RIDDELL, ANCHOR, CNN WORLD SPORTS: I have. It was very dramatic, disappointing obviously --
GIOKOS: Yes --
RIDDELL: For England, especially since it was another semi-final and another penalty disappointment, but the --
GIOKOS: Yes --
RIDDELL: Better team won, the United States won fair and square --
GIOKOS: Serves you right, you should wear your favorite, and of course, your lucky tie next time. So tonight, who are the favorites, Sweden or
Netherlands?
RIDDELL: Well, it's hard to say, and I'll tell you what, it's hard to say based on the first half, it's been very quiet, very tight, it's goalless at
half-time. We've only had three shots on target in the whole game. Very tight, it's very hot. We've seen that a lot in -- a lot of these games in
the World Cup with the heat waves that's hitting France, however, players have been taking on water throughout the first half.
I should say though, whilst we haven't had anything like the drama that we had in the first half and throughout the game yesterday, both these teams
have made a habit of scoring goals in the second half in their matches. Sweden have scored six times in the second half --
GIOKOS: Yes --
RIDDELL: The Dutch 8 in the second half throughout the tournament. So, hopefully, there are some fireworks to come. But I must say, regardless of
this first 45 minutes, this has been a really fabulous tournament and a lot of people are very excited --
GIOKOS: Yes --
RIDDELL: About it.
GIOKOS: OK, so we boxed in a little poll to see what our viewers are thinking in terms of who is going to take the cup. And USA comes up top.
So, I mean, three times world champions, they are the favorites, they have had a lot of things happening around them as well, not only on the field,
but off the field.
RIDDELL: Yes, absolutely. I'm not surprised that people think they're the favorites. Three-time champions, four-time Olympic champions. The
American team really has set the standard for, you know, the last couple of decades, and they're the team that everybody else wants to emulate.
So, not surprised at all. Of course, a lot of interest off the pitch --
GIOKOS: Yes --
RIDDELL: Around them, as you say. Megan Rapinoe --
GIOKOS: Yes --
RIDDELL: Getting into the Twitter spat with President Donald Trump. The team are suing the U.S. National Team Federation over equal pay, a lot of
interest around this team in more ways than one.
GIOKOS: Equal pay, really important thing, Don, thank you very much for your time --
RIDDELL: Yes --
GIOKOS: All right, so we'll be back with the day's market numbers in just a moment. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: What a day of trade, of course, closing early today, but look at this, Dow Jones record high, S&P also sitting at record levels, so too is
the Nasdaq. Who said that this market doesn't have more legs? We're pricing in some good news like rate cuts.
Let's take a look quickly at the gainers and losers, here we go. And thank you so very much for joining us for QUEST MEANS BUSINESS, I'm Eleni Giokos,
I'll leave you with the closing bell fireworks earlier at the New York Stock Exchange, cheers for now.
(BELL RINGING)
END
