Return to Transcripts main page

Quest Means Business

FAA Faces Grilling On Capitol Hill As Bombshell Report Claims Regulators Knew About Deadly Defects In Boeing's 737 MAX; Shares Of Aramco Jumped 10 Percent On His First Day Of Trading; Former Canadian Ambassador Reacts To USMCA Negotiations. Aired 3-4p ET

Aired December 11, 2019 - 15:00   ET

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

[15:00:30]

PAULA NEWTON, CNN INTERNATIONAL HOST: It might be Fed day, but not a heck of a lot of drama on this market. It is the final hour of trading on Wall

Street.

Markets as you can see have now turned positive after that latest Fed decision and here are the reasons why.

The F.A.A. faces a grilling on Capitol Hill as a bombshell report claims regulators knew about deadly defects in Boeing's 737 MAX.

A fairytale ending for Saudi Aramco's long IPO journey. Shares jumped 10 percent on his first day of trading.

And speaking of those fairy tales, Bob Iger heads for the exit at Disney. "Times" names him its first ever Business Person of the Year.

Live from the world's financial capital, New York City. It's Wednesday, December 11th. I'm Paula Newton, in for Richard Quest and this of course,

is QUEST MEANS BUSINESS.

Okay, tonight, Boeing is back on focus on Capitol Hill. A devastating new document details how regulators in the United States allow the 737 max jet

to keep flying, despite having analysis showing it would crash with shocking frequency.

You'll remember, a 737 MAX plane first crashed last year killing 189 people. The plane crashed again just five months later, killing another

157 people.

Officials from the F.A.A. have just finished testifying in Washington. A whistleblower who ran the 737 program at Boeing is now -- was in fact under

oath. He says the company prioritized profits over safety and nobody at the F.A.A. or Boeing listened to his concerns.

Lawmakers pressed the F.A.A. administrator asking how that was allowed to happen.

(BEGIN VIDEO CLIP)

REP. SEAN PATRICK MALONEY (D-NY): Are you aware that four months before the first crash, you brought these problems to Boeing's attention? Are you

aware of, gentlemen? Four months.

STEPHEN DICKSON, ADMINISTRATOR, FEDERAL AVIATION AUTHORITY: I know that there were -- yes, that concerns were raised. Yes.

MALONEY: That's right. And do you understand that after the Lion Air crash, he went up and down the chain at Boeing. He went to the CEO. He

went to the general counsel. He went to the Board. Are you aware of that?

He sent them letters, too.

DICKSON: Yes.

MALONEY: Saying all of the same things. And you know what they did? They sat on it until a second plane crash. That's what happened. A bunch more

people lost their lives.

(END VIDEO CLIP)

NEWTON: Stunning. Rene Marsh follows aviation and government regulation on Washington, and I have to ask you as someone who follows this so

closely, to me, I'm incredulous. I think these are people who know that there's an excellent chance that their own family members would eventually

be on a 737 MAX. And yet according to the whistleblower, nothing was done.

RENE MARSH, AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Yes, I mean, today is really stunning, Paula, just because I think of all that we've

heard, I mean, yes, we've heard from the whistleblowers and it was stunning to hear it from their own mouths.

But the document that came out to me was quite damning for the F.A.A. I mean, they faced these tough questions about this publicly released

document, which essentially shows that the F.A.A. did its own internal analysis after this first crash following that Lion Air crash last fall,

and it found that this plane was significantly more likely to crash than other aircrafts.

And on top of that, it predicted that it would crash 15 more times for the life of the plane, but that 15 number was actually a conservative number

because it was based on this assumption that 99 out of 100 flight crews would successfully react to all of those alarms and alerts within just 10

seconds.

And Paula, as we've been following this, we know that that assumption was so, so wrong. The pilots in both of these crashes, they were overwhelmed

and could not resolve the problems in 10 seconds. So the bottom line from what we learned today is that the F.A.A. knew this, but they didn't act.

This is the regulator, the safety regulator who was supposed to provide this oversight for the manufacturer to make sure that the planes that we

get on a safe and this document shows that they didn't act in a way that would protect passengers.

But yes, we just heard a short time ago before things wrapped up from these whistleblowers, one from the F.A.A. as well as a whistleblower from Boeing

and they were essentially adding on to what we've been hearing, this narrative of, you know, corners being cut at Boeing, the incredible

pressure to get this aircraft completed.

[15:05:10]

MARSH: And on F.A.A. side of things, ceding to the demands of Boeing and giving them way too much power there in this process of certifying the

plane as safe.

NEWTON: And Rene, it seems to be that relationship that has been at issue in the last few months with everything you've been following. And how did

this work in the sense that the F.A.A. was under financial constraints and that Boeing was actually their own watchdog that had -- basically they used

Boeing engineers, right, and safety inspectors to kind of certify their own planes.

MARSH: Yes. So here's the fact of the matter. The F.A.A. is a government agency with limited funds and they just cannot match the sort of salaries

that a Boeing could offer an engineer.

So what the problem is, is that the F.A.A. doesn't have the sort of brain power that Boeing has. It is a lopsided sort of relationship where the

people who really understand the mechanics of this plane and all of the new technology as these aircrafts continue to get more and more technologically

advanced, all those people who understand that stuff, actually they decided to go work for Boeing who is going to pay them much more money, rather than

going to work for the F.A.A.

So the F.A.A. finds themselves in a situation where they don't have all of the people working within the agency that could really look at this

technology and pinpoint all the issues.

And so what happens is, they rely so heavily on the manufacturer, and that's a huge problem. And I expect to see that that sort of relationship

will change as we move forward.

NEWTON: Well, certainly, we would hope so. And obviously, not just for the future of Boeing in the United States, but all around the world knowing

that this was a plane that literally hundreds of thousands of people would fly on.

Rene, again, really appreciate you following this as you will continue to do so. Appreciate it.

MARSH: Sure.

NEWTON: Now in a new statement, a Boeing spokesman says that despite today's revelations in Washington, the company broke no rules.

They said the actions that Boeing and the F.A.A. took were fully consistent with the F.A.A.'s analysis and established process.

Meanwhile, the whistleblower, a former senior manager at the 737 factory says his warnings reached the very top CEO, Dennis Muilenburg.

(BEGIN VIDEO CLIP)

ED PIERSON, FORMER SENIOR MANAGER, BOEING 737 FACTOR: After the crash, I wrote a letter directly to Boeing's Chairman, President and CEO, Dennis

Muilenburg. Mr. Muilenburg asked the General Counsel to communicate with me, and we spoke on three occasions where I renewed my warnings.

I stressed that investigating the factory and talking with frontline employees was urgent, as I was very concerned that this might not be an

isolated incident.

In February -- on February 14, 2019, the Boeing Assistant General Counsel assured me that Boeing had seen nothing that would suggest the existence of

embedded quality or safety issues.

I wrote a follow up letter with supporting documentation to Boeing's Board of Directors, requesting that they take urgent action, but received no

response.

Less than a month later, on March 10, 2019, Ethiopian Airlines Flight 302 crashed killing 157 people.

(END VIDEO CLIP)

NEWTON: Peter Goelz is a former Managing Director at the National Transportation Safety Board, and he joins us now and I have to ask you in

terms of your tenure at the N.T.S.B., I mean, how much of what you heard is just such a gross departure from any acceptable scrutiny that you would

have demanded that anybody would have demanded of both Boeing and crucially, the F.A.A.

PETER GOELZ, FORMER MANAGING DIRECTOR, NATIONAL TRANSPORTATION SAFETY BOARD: Well, I have to tell you, you know, when I was at the Board, we had

a similar issue, which was the rudder of the 737, there were two accidents, both fatal. We investigated this four years, and we could not get either

the F.A.A. or Boeing to acknowledge that there was a problem in the rudder.

Finally, after over four years, the rudder design was changed, and this problem went away.

So this is not something new, this kind of unholy relationship between the F.A.A. and Boeing, and it's a problem. But what was amazing was that the

new administrator said, well, the system isn't broken. Well, I would say that a lot of people think the system is broken.

NEWTON: But doesn't that bring up even more serious issues from the fact that through all this investigation and introspection, we could end up with

the same failures when some other airplane design or even this airplane.

GOELZ: Well, I think it does raise those issues. But the one good thing is, Chairman de Fazio -- Peter deFazio who was running this committee and

is running this investigation has got over a half a million documents sent to him and he is not going to let it go and Boeing and the F.A.A. are going

to have to, you know, pay the piper on this.

[15:10:07]

GOELZ: This is not going to be something that there's going to be a hearing, people will say, well, we'll try to do better and we'll move on.

This is a watershed moment.

NEWTON: Certainly, many people hope it is. But let's talk about accountability here. I mean, I know the Department of Justice is

investigating. Apparently, they're investigating both the 737 and any issues with the 787 Dreamliner as well.

But do you think that's what it's going to take? Criminal responsibility? And do you think that will actually happen here in terms of investigation

without prejudging the results here, obviously, if the Department of Justice is investigating.

GOELZ: Yes, charging people criminally in these kinds of accidents is very difficult. It's happened a few times after the ValueJet accident in the

mid 90s. The company Sabre Tech was charged criminally as were three of their employees. Two of them were found innocent, one absconded, and the

company paid a rather modest $500,000.00 fine and then went bankrupt.

Now, on the airbag side, GM, Takata and Toyota were charged and there were huge fines, but nobody went to jail. So the whole philosophy of aviation

safety has moved counter to charging people criminally because they want people to acknowledge mistakes so that the system can improve.

NEWTON: But it's just -- it's so stunning, Peter, because that didn't happen this time. And it almost seems as if, unless there is the

accountability that's needed here, it's going to happen again. You just told us about the rudder, you know, incident before this.

GOELZ: I agree with you. I mean, I think -- and that's something that Mr. deFazio's committee is going to have to wrestle with in the coming months

is how do you put -- how do you keep the system set so that people can self-reveal, but at the same time, make people understand that there's

going to be accountability, even criminal accountability if you don't do your job.

NEWTON: Yes. Knowing this time that even the whistleblowers' complaints didn't work. Peter, we will talk to you again about this, I'm sure.

Appreciate it.

GOELZ: Thank you.

NEWTON: Now, Saudi Aramco started trading publicly on Wednesday after the largest IPO ever. The company had, in fact, another big day.

And a new poll shows the election call to end Brexit uncertainty. Yes, you guessed it, now it looks more uncertain than ever.

(COMMERCIAL BREAK)

[15:15:08]

NEWTON: Shares in Saudi Aramco jumped 10 percent in its trading debut. That's the maximum price increase allowed on the Saudi Stock Exchange. It

caps off the largest IPO ever.

The company raised 2.56 -- that's $25.6 billion -- billion with a B -- by selling just one and a half percent of the company. Nic Robertson is in

Saudi Arabia with more.

(BEGIN VIDEOTAPE)

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, no doubt a big day for Saudi Aramco and a big day for the Crown Prince as well, Mohammad

bin Salman, this was his vision. This IPO was designed to raise money for his Vision 2030, the sort of future vision of a diversified economy, less

reliance on government employment, more in the private sector.

So this was a triumph for him in many ways. The detractors were saying this was such a big deal, it was a really heavy lift, and he wasn't going

to be able to pull it off.

So that's sort of in the plus column, but if you will, in the minus column it takes a little bit of a shine of that sort of 10 percent boost that they

got today, the anticipated $1.7 trillion valuation, now $1.9 trillion at the end of the day.

But you know, the initial anticipation, the initial hope would be that it would be valued at $2 trillion, that they'd be able to sell off $100

billion worth of shares. The reality was it was $25.6 billion that was sold off in the end, and it was really much more of an investment of

Saudis, rich Saudis investing in this, a few people in the region, rather than the initial anticipation of bringing in a lot of international money.

And part of that was the shine got taken off of this investment.

The big sort of ritzy, glitzy rollout when high rolling investors were brought in, taken to the fancy Ritz Carlton Hotel, given the spiel about

how wonderful this was all going to be, this IPO would be a solid investment.

But less than a year later, more than 300 of the country's princes and top businessmen found themselves corralled, essentially imprisoned in that

hotel. The government called it an anti-corruption drive. Many of them found that their fortunes after that were dwindled and cut down, their

power and influence cut down and it really did to the outside world, look like a consolidation of power by the Crown Prince, Mohammad bin Salman.

So that that if you will takes some of the shine of this, but in essence, what the Crown Prince is left with now is the ability in the future, to

borrow against Aramco's significant amounts of money, the $25.6 billion raised by the IPO is really a drop in the bucket in terms of the sort of

Saudi economy.

So it's very -- this is an important day for him, a success for him in many ways, but this gives him a lot of opportunities to raise more money in the

future.

Nic Robertson, CNN, Riyadh, Saudi Arabia.

(END VIDEOTAPE)

NEWTON: Yes, they already have their eye on that on trying to raise more money. Now, the 10 percent jump in shares brings Aramco's market value to

$1.88 trillion.

We really want to put that figure into perspective here. It is now officially the world's most valuable company, well ahead of most of the

next valuable corporations: Apple, Microsoft, and Google. That's the parent company, Alphabet. They can't even touch it.

And now just to give you some more perspective, it's well ahead of its western competitors. In fact, it's worth more than Exxon at $2.94 billion,

BP at $1.25 billion, Chevron at $223.1 billion and of course, Shell at just over $230 billion.

Yes, more than all of those combined. When we return, the clock is ticking to a crucial election in the U.K. We'll look at the state of the race and

we're going to tell you it's going to be a cliffhanger.

(COMMERCIAL BREAK)

[09:20:47]

NEWTON: And welcome back to QUEST MEANS BUSINESS. We're going to have a check on the markets that weren't very moved, shall we say by the Fed

decision because we had been up as you can see the green there on the Dow. And now yes, again, we'll call it flat.

The NASDAQ seems to be having a little bit more traction, but not by much. We'll continue to watch it as we have about 40 minutes now left on the

trading day, but kind of interesting. We will get to more on that Fed decision coming up with Clare Sebastian.

Now as investors are looking ahead to next week when the U.S. House is expected to vote on, of course, that new trade agreement involving the

United States, Mexico and Canada.

I spoke to the former Canadian Ambassador to the U.S., David MacNaughton, who was in the room for those negotiations. He told me about the process

of making what he called Trump's deal.

(BEGIN VIDEOTAPE)

DAVID MACNAUGHTON, FORMER CANADIAN AMBASSADOR TO THE U.S., DAVID MACNAUGHTON: All in all, you know, I think the most important thing is --

and I give Bob Lighthizer an enormous amount of credit for this is that he was able to work with Speaker Pelosi and Chairman Neal, to find a way to,

you know, come to a consensus that Democrats and Republicans and you know, the President are all prepared to support and I think that gives an

enormous amount of confidence and stability to investors who are looking, whether they're going to invest in Canada, the U.S. or Mexico, that there's

bipartisan support in the United States.

There's clearly bipartisan support in Canada, and I think the Mexicans are pretty united in terms of support for this, too. So, you know, there were

some concerns that came out after the agreement was initially signed.

And as I say, I think Ambassador Lighthizer has done a great job of working with Speaker Pelosi and Chairman Neal and, you know, Rich Trumka and others

to find a way which doesn't distort from the original deal, it doesn't make it a different deal, but actually makes it stronger.

NEWTON: What's your advice to people in Brussels and Tokyo and Seoul in terms of getting that trade template together with the Trump

administration? You've been quite candid about what this has taken, both personally and professionally to get this done.

MACNAUGHTON: Well, you know, I just made some very complimentary remarks about Ambassador Lighthizer, and I would say the same for Jared Kushner in

terms of his role in all of this.

During the negotiations, I wasn't always so complimentary because I think everybody was really working hard for -- to do the best for their country.

They were really tough negotiators, as were the Mexicans.

And I think what we came to realize at the end was there was really a win- win-win here for all of us. And, you know, this is the largest trading zone in the world.

I mean, people talk about the U.S.-China in negotiations. The North American trade is bigger than the U.S.-China trade and so what I would say

to people in Tokyo or Europe or whatever is, you know, you need to think about how do you, you know, the tide raises all boats and we've got to

start thinking more about that, and it doesn't mean that the negotiation is going to be easy. It means that you just have to focus on really making

sure that you get a deal.

NEWTON: I know, I guess the issue though, is we've got self-described, Tariff Man who injects himself into the argument at all times. I mean, is

this deal bulletproof, do you think from that? And would you advise other countries to try and get a solid deal where a President, a Prime Minister

can't just walk into the situation and say, I'm upending everything.

MACNAUGHTON: Well, you know, I think, you know, the important thing about this deal is that the President has been part of it all the way along.

I mean, he campaigned in 2016 saying it was a bad deal. We may -- we may or may not have agreed with him, but at the end of the day, we were

prepared to work at improving the deal. And I think we've done so.

And I think he is now, you know, it's his deal, and then I think the other thing as I say, Ambassador Lighthizer was extraordinarily clever.

[15:25:02]

MACNAUGHTON: And I think you've got to give some credit to Speaker Pelosi and Chairman Neal, who actually said, and you know -- and I heard all this

talk about, well, we don't want to give the President a win.

But at the end of the day, what was demonstrated was that you can have bipartisan support for things that are actually good for Americans, and

we've got it in Canada in terms of things that are good for Canadians. And I think the rest of the world should look at this and say, good on them and

why don't we try to do the same thing?

(END VIDEOTAPE)

NEWTON: I am sure many of them will try. Still to come, the Fed holds firm. Let's find why policymakers don't see changing rates until all of

2020.

(COMMERCIAL BREAK)

NEWTON: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment when we'll be in South Africa where rolling blackouts have been

leading homes and businesses in the dark.

And Disney's CEO is "Times" first Business Person of the Year. And we will look at his legacy.

Before that though, these are the headlines this hour.

The U.S. Department of Justice Inspector General is defending his blockbuster report before the Senate Judiciary Committee. Michael Horowitz

was found no political bias in the decision to launch the F.B.I.'s 2016 investigation into Russia and the Trump campaign. But his report did cite

significant errors in surveillance warrants.

Horowitz is standing by the report despite Attorney General William Barr saying the conclusion is wrong.

The formal debate over the Articles of Impeachment against the U.S. president begin just hours from now in the U.S. House Judiciary Committee.

Democrats unveiled two charges against Donald Trump, Tuesday: Abuse of power and obstruction of Congress. Mr. Trump says the case against him is

weak and pathetic.

New Jersey authorities say they're still working on the motive for a deadly shooting at a kosher market. They have yet to label it an anti-Semitic

hate crime.

The targeted attack claimed the lives of three people inside the deli as well as a police officer. The shooters, a 47-year-old man and a 50-year-

old woman or later killed. The F.B.I. now says a pipe bomb was found in a U-Haul outside the market.

A Nobel Peace Prize winner who was the face of human rights for Myanmar for decades is now defending her country from accusations of genocide at The

Hague.

[15:30:00]

Aung San Suu Kyi called the allegations regarding a brutal crackdown on the Muslim Rohingya community in her words, incomplete and misleading.

Swedish teen and environmental activist Greta Thunberg has been named "Time's" person of the year. At 16, she's the youngest person ever to be

recognized by the magazine. She addressed the COP 25 Climate Summit in Madrid earlier on Wednesday, saying, every fraction of every degree of

warming matters.

To Britain now, there are just hours to go until polls open in Thursday's general election, and the race, yes, once again, looking too close for

comfort. A key poll suggests Boris Johnson is headed for a small majority of just 28 seats. The prediction is so narrow though, that YouGov says a

hung parliament is a distinct possibility, an outcome that will prolong uncertainty about Brexit.

Peter Goodman is European economics correspondent at "The New York Times", he joins me now. I cannot imagine how people's stomachs are turning right

now. And that, you know, that's going to be the case in many political parties. Just take us through this, if you've got a hung parliament there

with so much at stake, how can they possibly deal with this outcome, and doesn't it mean that Brexit is essentially doomed one way or the other?

PETER GOODMAN, EUROPEAN ECONOMICS CORRESPONDENT, THE NEW YORK TIMES: Well, I'll save you some time, the short answer is that nobody knows. Every

scenario is on the table. I mean, if there's a hung parliament which means no party emerges with enough seats in the parliament to form a government,

first thing that happens is the party that got the most votes gets a chance to try to form a coalition, that's likely to be the Conservative Party.

The problem is that they've already burned bridges with their last coalition member, that was the Democratic Unionist Party that represents

Northern Ireland. And the way that the Prime Minister Boris Johnson structured the Brexit deal that finally broke the impasse in parliament and

got a majority of votes was at the cost of the alliance with the Democratic Unionist Party by basically drawing a border between Britain and Ireland.

And there's been a lot of back-and-forth about whether there'd be Customs checks on goods flowing from Britain to Ireland. But suffice it to say

that the Northern Ireland coalition partners are gone. So if the conservatives can't form a coalition, then it falls to likely the Labor

Party. The Labor Party headed by the highly unpopular Jeremy Corbyn.

And there are a lot of misgivings among the other parties that oppose Brexit. And Labor despite having a very difficult to divine position is in

the camp of opposing Brexit in some scenario. So there would be a whole bunch of negotiations that would go on, Corbyn may or may not be able to

command a majority. It's possible we'd have another referendum on Brexit. I mean, all of this is in play.

NEWTON: As you said, it's all on the table, the table has been set for another you know, cliff hanger of a vote. Here's a --

GOODMAN: Right --

NEWTON: Question for you, though. What do you think Europe is rooting for at this point in time?

GOODMAN: Well, Europe is divided. I mean, there's been this yearning for certainty, everyone is talking about the uncertainty that we've lived

through since June 2016 when Britain shocked the world with the referendum. The French Prime Minister -- French Premier Emmanuel Macron has of course

said he would prefer, let's just get on with it, let's be done with Brexit.

But the fact is that if you ask economists, they'll tell you that while uncertainty has certainly been costly, not just for Britain but for the

rest of the European Union, there have been investments that have been deferred. Companies have not done as much hiring as they might have

otherwise done, waiting to find out what the future is.

Getting certainty could be really bad.

NEWTON: Yes --

GOODMAN: Because certainty could mean that we're back to the likelihood that Britain could crash out of the European Union without a deal or even

if Boris Johnson's deal passes assuming that conservatives emerge with a large-enough majority. We're going to have one year during which Britain

is supposed to negotiate its future trade agreement with the European Union.

Trade deals are not easily negotiated. Every conceivable industry emerges with its list of goodies that it wants out of a deal. So, you know, it's

very unlikely that we're going to wake up on Friday with some real certainty about the future.

NEWTON: Yes, which is so depressing even if you don't have any skin in the game. Because we've been going through the same arguments for such a long

time now, and someone wants to break through in one direction. How are people feeling in Britain if you can measure that?

[15:35:00]

I mean, this campaign has been quite --

GOODMAN: Right --

NEWTON: Bizarre, I don't even know what to make of it in terms of looking at a party and a policy and a strategy, and saying, boy, British voters

really were turned off by that or British voters really took on --

GOODMAN: Right --

NEWTON: How are they feeling about all this?

GOODMAN: People are feeling beleaguered, they're wondering if democracy is really up to the task of governing in an age when there's so much

misinformation spread by social media sites. There's been talk of Russian interference in the election, and people don't really like the choices that

are in front of them.

There's a lot of talk of so-called tactical voting where you hold your nose and you vote for a party that you don't even necessarily really support

because Britain has this first-pass the post system through which every constituency is awarded to whichever candidate gets the most votes,

regardless of how that party does nationally.

And you know, Corbyn is very unpopular even within the Labor Party. He -- by many measures, he's the least popular head of a major party since

polling began. Johnson is -- Boris Johnson is highly controversial and divisive. Though, he is popular with his base, he's distrusted by many

members of his own party, he's seen as an opportunist.

So, there's you know, a lot of confusion, people are tired of talking about Brexit, and yet, there's this feeling that Brexiternity is, you know, just

with us going forward, that there's no real way out of this. I mean, let's remember, we got here because every conceivable parliamentary path dealing

with Brexit has been exhausted, and finally the idea was OK, let's go back to the polls, let's reset and end up with a new government that can figure

this out.

If the result of that is a government that still doesn't have a mandate to sort this out, boy, the mood is going to be pretty sour around here.

NEWTON: Yes, they're in danger of this actually, defining a generation, if something doesn't happen soon in terms of how long we have to talk about

this and then depending on what happens, how long this will continue to affect everyone. In terms of what will happen in the early-morning hours

as we expect it --

GOODMAN: Right --

NEWTON: Tomorrow -- you know, Boris Johnson is an unpredictable operator here. Are there discussions going on, do you think behind the scenes right

now to say look, depending on how all of this shakes out, just trying to find a run-around, I mean, we saw what he did in terms of trying to

prorogue parliament, that didn't work.

One would think he has other --

GOODMAN: Right --

NEWTON: Things up his sleeve.

GOODMAN: Well, look, he's clearly a very skilled strategic politician. I mean, he pulled off a trick that nobody around here for the most part

thought was possible, which was getting some kind of bill through parliament and living to fight an election. I mean, the conventional

wisdom when he came in was that his premiership would be very short-lived, and he would -- he had such little room for maneuver, and he would probably

end up frustrated like his predecessor, Theresa May.

The problem is that unless he ends up with a truly sizeable majority and the polls such that, that's a lot less likely to look even just a couple of

days ago, then he's really beholden to the Brexit hardliners in his party. I mean, Brexit above anything is really a kind of a civil war that's been

playing out in the Conservative Party.

Fought between, you know, the camp that is pro being part of the European Union. They may have problems with the European Union, they may not think

it's the greatest club on earth. But better to reform it, better to have a strong voice within Europe than to blow it up as opposed to the European

research group, this group of special hardliners and other Euro skeptics who think, you know, no, the European Union is a bureaucratic strait jacket

and it's time to be done with it, and we'll forge our path on our own.

And if he -- if Johnson ends up with a slender majority, then the power of these Brexit hardliners is amplified and he'll have even less room for

maneuver, and that will actually tend toward a harder kind of Brexit.

NEWTON: Right --

GOODMAN: A greater separation --

NEWTON: Right, because --

GOODMAN: From Europe.

NEWTON: They'll drive a hard bargain in order to be brought along, understood. Peter, I'm going to have some food and drink to watch this

election tomorrow, I've got earlier hours on this side of the pond. But I suggest everybody do the same thing and watch CNN as we'll continue to have

the results for you. Peter, thanks so much for this, appreciate it.

GOODMAN: Thank you.

NEWTON: Now, the Fed is keeping its finger on the pause button and says it may not budge the entire whole of 2020. I can't believe as policy makers

decided unanimously to hold rates steady between 1.5 and 1.75 percent. That decision was expected, and stocks ticked only slightly higher. The

Fed says the U.S. economy is growing at a moderate pace and the labor market remains strong.

[15:40:00]

But business investment and exports are still weak. Speaking last hour, the Fed Chair Jay Powell said he would need to see significant in his words

and a persistent rise in inflation before he would actually raise rates.

(BEGIN VIDEO CLIP)

JEROME POWELL, CHAIRMAN, FEDERAL RESERVE, UNITED STATES: Our policy rate is appropriate and will remain appropriate as long as incoming data are

broadly in keeping with our -- with our outlook. In order to move rates up, I would want to see inflation that's persistent and that's significant.

A significant move up in inflation, that's also persistent before raising rates to address inflation concerns, that's my view.

(END VIDEO CLIP)

NEWTON: And Clare Sebastian has been digging into his view. This is stunning to me when I saw the words, right, don't expect to raise or lower

rates for the entirety of 2020.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right, and this is a change, Paula, this obviously was expected unchanged. The statement was a copy-

paste apart from the language. They said they were leaving rates unchanged. So, these are the projections before we get -- for the coming

years.

Now, of course, the caveat being anything can change. This is how the policy makers view this in this moment. But this number over here, 1.6

percent back in September when we last got these projections, that was 1.9 percent, suggesting they were factoring in a rate hike in 2020. That has

gone away.

Longer-term, the 2.5 number has stayed the same. And so, it looks like policy makers are saying we're going to get to 2.5 percent in the longer

run, it's just going to take a bit longer, and that is because of all the risks that we see in the economy. Trade uncertainty slowing global growth,

all of that crimping manufacturing and business investment.

He wouldn't comment when asked what would happen if the trade dispute with China is resolved, what would that mean for the economy? He said he wasn't

going to talk about a hypothetical. But he did say that the USMCA has removed some of the uncertainty, just hinted that China is a bigger deal, a

longer term. So, this is where we are, Paula. As of today, we got a little bit of a flat line here based on the longer on the race.

But you see the picture overall, how this has evolved. We started hiking rates and sort of tried to normalize monetary policy, you know, back here

at the end of 2015, and it was a very slow process, compared to the cutting of rates that we saw in the financial crisis. And I think the big question

is, you know, this has now flat lined.

We're not looking like we're going to get back up to those dizzy heights of 5.25 percent that we saw in 2007. Rates are going to stay slightly lower.

And interestingly, Jerome Powell has been criticized for making a mistake last December when he raised rates for the fourth time that year,

specifically by the president.

We haven't seen any tweets yet today. He said look, at that point, rates were still accommodative. We were still under what participants saw as the

neutral rate, so he didn't acknowledge that, that was a mistake, although, he did say things have markedly shifted this year -- his words were, I

don't think anybody saw the challenges that we faced this year.

NEWTON: Now, in fact, when you talk to people who deal in CapEx, capital investment, they're saying a lot of these moves at this point won't make a

heck of a lot of difference only because if you want to capitalize the money, it's out there. This Fed Chairman though -- you know, he's really

had to weather a lot, a lot --

SEBASTIAN: Yes --

NEWTON: A lot rhetorically as you point out --

SEBASTIAN: Yes --

NEWTON: From the president and a lot on the trade front. Is there more of a sense of what he is like and what he's going to continue to be like? You

and I have discussed to the point where the president might fire him for being --

SEBASTIAN: Yes --

NEWTON: At one point.

SEBASTIAN: Well, we know him. I met with the president last month, I think for the second time this year, he would not comment on that. He said

there's an age-old tradition and Fed officials not commenting on their meetings with elected officials. But there was an interesting moment in

this, and not so much about the president, but he talked about humility in the face of this.

The situation they're dealing with when it comes to inflation. Inflation has remained throughout this year consistently below their 2 percent

target. He said, this isn't about confidence, this is about humility. It's been a real challenge, he said, trying to get inflation up. And

that's why it's so important what you heard him say that we're looking for the framework, the parameters of what he means when he says a material

change in outlook to raise rates.

I think inflation is key there, and he said he would need to see a persistent and significant rise in inflation to do that. So, that is

something to watch for.

NEWTON: Yes, and Europe is instructive on that --

SEBASTIAN: Right --

NEWTON: Issue obviously. And we have a new head of the ECB, and Madam Lagarde taking over. Tomorrow, we'll hear from her. Clare Sebastian,

thanks so much, really appreciate it. Now heavy rains and flash flooding plunging parts of South Africa into darkness. We're going to tell you

about those rolling blackouts that are hurting production in a key sector of an economy that, I don't have to remind you, is already on the brink.

(COMMERCIAL BREAK)

[15:45:00]

NEWTON: South Africa is facing a major electricity crisis with rolling blackouts affecting homes and businesses. Now, heavy rains and flooding

have forced state power utility Eskom to impose power cuts known as load- shedding at stage 6 out of 8. Now, the outages have also hit the country's key mining sector.

Eleni Giokos joins me now live from Johannesburg. I mean, you know, we said it before the break, Eleni, this is an economy that really can't

afford this. At the same time --

ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Yes --

NEWTON: These electricity problems have been going on for a very long time.

GIOKOS: Yes, exactly, Paula. I mean, it's really interesting in South Africa right now seeing a stage six cut. In other words taking 6,000

megawatts out of the system to avoid a national blackout, to stabilize an already fragile system. It's pretty scary to see what happened in South

Africa over the last couple of days.

But just so, you know, things have stabilized at this stage. But we're starting to see things changing hour to hour. Things that have exacerbated

the situation of course is the ongoing rain that we've seen near the power stations have created flooding. But remember that even though we've seen

rain, it has -- it's basically catalyzed a problem that has existed.

We've seen power cuts in South Africa happening over the last 10 years, it's because of lack of maintenance, bad management, corruption, the list

goes on. Eskom is sitting with a huge debt pile as well, and then it's averaged South Africans and of course businesses that are bearing the brunt

of these power cuts.

NEWTON: And Eleni, give me a sense of kind of the level of alarm right now with -- in the country between --

GIOKOS: Yes --

NEWTON: Both residents and businesses.

GIOKOS: It's alarming, it's frustration as well, and it's of course lack of confidence towards policy makers and Eskom that we've seen, having

making promises through the years to rectify the situation. I'm going to give you an example of what we went through just this week. Yesterday, I

had no power at home from 9:00 a.m. to 10:00 p.m.

Here at the bureau where we are right now, we're operating on generators. When you're driving through the streets, our traffic lights that are out,

that of course creating a backlog of traffic every single day. You just don't know what you're going to see in the streets. And then let's take it

to big industry, mining companies had to shut down.

We had Telco companies, talking about their towers also running out of battery space -- in fact, when you're using your cell phone in South Africa

right now, most of the time, you don't have a good signal. You can't get your e-mails to download. That's just from a personal perspective.

And then if you take it from a macro level, it's going to impact, and already has over the last 10 years, impacted economic growth, perceptions

towards South Africa, credit rating agencies are circling again and saying, they're going to downgrade the country if they don't rectify this.

And then you've got a huge debt problem and mismanaged power utility, and the numbers absolutely right now do not add up.

NEWTON: Yes, and unfortunately the government continues to say a lot of things, and then do not make good on the promises. And as you said,

credibility --

GIOKOS: Yes --

NEWTON: Has been an issue. Eleni, thanks so much, really appreciate it.

[15:50:00]

Now, when we return, Greta Thunberg has been crowned "Time's" person of the year, and she's not the only one honored in this issue. We'll look at

which CEO made the cut.

(COMMERCIAL BREAK)

NEWTON: "Time Magazine" has named climate activist Greta Thunberg its person of the year. Now, the Swedish 16-year-old is the youngest honoree

ever. Speaking earlier at COP 25 in Madrid, Thunberg accused world leaders and CEOs of misleading the public about that climate crisis.

(BEGIN VIDEO CLIP)

GRETA THUNBERG, CLIMATE ACTIVIST: I still believe that the biggest danger is not in action, the real danger is when politicians and CEOs are making

it look like real action is happening, when in fact almost nothing is being done apart from clever accounting and creative PR.

(END VIDEO CLIP)

NEWTON: Tough words there. And now back in the pages of "Time", Thunberg appears with the winners of four new categories, Disney's CEO Bob Iger has

been named business person of the year, getting his own illustration -- do you recognize, featuring the Baby Yoda, the new star 2019, to say it was a

big year, understatement of the year.

Disney acquired 21st Century Fox, launched a streaming service and raked in close to $10 billion at the Box Office so far. Frank Pallotta has been

doing the numbers all year long --

FRANK PALLOTTA, CNN BUSINESS MEDIA WRITER: Yes --

NEWTON: Watching Disney and watching Disney and watching the CEO --

PALLOTTA: Right --

NEWTON: Which at this point in time, really, likely a very well deserved business person of the year award.

PALLOTTA: Yes, but Belinda Luscombe in "Time" wrote this, and I think this is the best way to kind of put it together. Which is "Iger's tenure as the

leader of the world's most lucrative dream factory has been one long CEO highlight reel. But 2019 was the apex year when many of his carefully

incubated eggs hatched." I think that really sums it up.

Which is, this year was the perfect storm of Disney. You had pretty much across the board, everything from the Box Office which you said, $10

billion, biggest year, and first studio ever set back in July. They opened Galaxy's Edge at their parks and of course Disney Plus.

A huge pivot for the company to go into streaming after years of being -- working with distributors to get their content out there. It's just a huge year for Iger.

[15:55:00]

NEWTON: He's been at the helm for how long?

PALLOTTA: About 15 years.

NEWTON: Fifteen years, and where does Disney go next?

PALLOTTA: Well, you know, this year was really a dominant year for Disney. So, the theme of this year has been dominance. Next year, 2020 is going to

be really -- the theme is going to be refinement of that dominance, refining Disney Plus, refining Galaxy's Edge, the movie slate, so on and so

forth. But the big theme for next year is going to be succession.

Because Bob Iger is supposedly stepping down in 2021. He has said he is going to step down multiple times before, and he's always extended his

contract. But real talk is going to be who is going to be the next Bob Iger, and what's the future of Disney?

NEWTON: And right now, a succession looks like it would come from within and to run Disney --

PALLOTTA: I mean, you never know, you never really know. It could -- it could be from within, it could be very much more of almost kind of running

a company by committee, having some of the big heads of the company lead their separate divisions under one umbrella. It could go in multiple ways.

But I assume it's going to come from within. There's multiple people who could potentially be in talks, but we just don't know yet.

NEWTON: Yes, some people are kind of positive or negative about a celebrity CEO, he certainly is the epitome --

PALLOTTA: Yes --

NEWTON: One. Frank, thanks so much, as we continue to follow Disney's story, appreciate it.

PALLOTTA: Now, there are just a few more minutes left on Wall Street. We'll let you know how those closing numbers shake out, especially, given

the Fed today.

(COMMERCIAL BREAK)

NEWTON: There are moments to trade here on Wall Street. The Dow is on track to end as you can see there, the session pretty much flat. Saw

stocks were pushed slightly higher by the Fed's decision to hold interest rates steady. But that was a generous view really, this is a flat market.

Within the Dow components, United Technologies is the best of the day as you can see there.

Home Depot coming up last on the lower-than-expected growth forecast. Boeing spectacularly holding on despite that damning report that we told

you about at the front-end, given the 737 Max and those controversies, perhaps a lot of that already baked into the stock. Now, stocks finished

higher in Europe and Germany, stocks were leading the way there.

Investors are looking to tomorrow's ECB meeting, of course, it will be the first time that Christine Lagarde is at the helm. Remember as well though,

we're leading into whether or not the Trump administration will delay those Chinese tariffs, we'll be looking at that for you. Right now though, that

was QUEST MEANS BUSINESS, I'm Paula Newton in New York, the news continues right here on CNN.

(BELL RINGING)

END

END