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Quest Means Business
China's Government Is Taking Steps To Speed Up The Economy As President Trump Sets A Date To Sign A Phase 1 Trade Deal; Carlos Ghosn Escapes Japan; China Reportedly Suspended Partnership Between London And Shanghai Stock Exchanges. Aired 3-3:30p ET
Aired January 02, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:14]
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: It is the final hour of trading on Wall Street and a strong start to the year. We are sitting in
record territory across the board. The Dow Jones is up eight tenths of a percent. And this hour, we'll look at whether 2020 can measure up to 2019.
And here's what investors are watching. China's government is taking steps to speed up the economy as President Trump sets a date to sign a Phase 1
trade deal.
Carlos Ghosn is on the run and we've seen raids and detention, all Mr. Ghosn will say is that his family was not involved.
And a potential breakthrough in the fight against breast cancer. Google says it has a system that can detect the disease better than doctors.
Live from the world's financial capital, New York City. It's Thursday, January 2nd. I'm Eleni Giokos in for Richard Quest, and this is QUEST
MEANS BUSINESS.
All right, a very good evening to you. Great to have you with me and tonight, New Year, same market drivers. Wall Street is ringing in 2020
with all-time highs. Investors can thank stimulus out of China for that rally. Beijing gave the green light for Chinese banks to inject more than
$100 billion into the country's slowing economy. There's also continued optimism about a possible cooling in the trade war with Donald Trump.
Phase 1 of a deal is due to be signed on January the 15th.
Rana Foroohar is associate editor at "The Financial Times" and CNN's global economic analyst. Great to have you with me.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Thanks for having me.
GIOKOS: All the best for 2020.
FOROOHAR: And to you.
GIOKOS: I mean, what fantastic news. You've got stimulus and you finally have a date, 15th of January.
FOROOHAR: Exactly. No. And I mean, it's interesting because China is now doing what U.S. and European banks have been doing for some time, injecting
money into the system and everybody wants to keep this party going.
We have a Phase 1 trade deal potentially being aimed. Now, I want to say potentially, because, you know, with our President, Donald Trump, there's
always a risk that this can come undone.
But I think that if you do see a signing of that trade deal, I think there's about a 50 percent chance or more that that's going to happen,
you're probably going to see markets being, you know, pretty happy for at least the first or second quarter of this year.
GIOKOS: I mean, it's been such a fascinating 12 months just to see the tit-for-tat between China and the U.S. and what kind of impact it's had on
the global economy.
FOROOHAR: Yes.
GIOKOS: So there is hope there is going to be some kind of resolution. But many say that trade tensions are not going to end with the signing of a
Phase 1 trade deal.
FOROOHAR: Well, that's true. And it's important to step back and say what is in this trade deal? I mean, essentially what this does is it allows the
President to not impose new tariffs to get rid of half of the old tariffs he put on September, but that's basically fixing a problem that wasn't
there to begin with. So we've had to go through a lot of pain to get to what is potentially a deal.
Now, on the Chinese side, there are some more meaningful steps forward. You've got promises to buy $40 billion of U.S. agricultural goods. You've
got promises, and perhaps most importantly, to really crack down on IP theft.
That gets to the longer term tensions between these two countries, which are really about who is going to own the high tech industries of the
future? How is that trade system going to work? That's the thing that I think we're going to see trouble about in the future.
GIOKOS: I look at China's stimulus package. And it's an interesting move because China's economy is slowing. And that has a detrimental impact on
global growth, and even here in the U.S. as well. How important is that stimulus package going to be?
FOROOHAR: Huge. Oh, it's huge. I mean, if you look at the last 10 years, China has actually made up the largest chunk of global growth.
So you know, we're now at a point where, you know, the Chinese consumer is arguably as important as the U.S. consumer, as Europe and the global
economy. It's going to be interesting to see how long the stimulus party can continue.
I have no doubt that the Chinese authorities can manage their economy for the next year or two ahead. In the five-year time horizon, I think you
might see both the U.S. and China slowing. And that's where you're going to run into more problems.
GIOKOS: It is funny, because we know we're reading a lot about, you know, the analysis, looking back at the last few years, and it's always the fight
of the Titans between China and the U.S. and who is actually going to come out first.
FOROOHAR: Yes.
GIOKOS: And who has got, you know, the deepest pockets.
FOROOHAR: Yes.
GIOKOS: What are you guys putting into your forecasts or thinking about, you know, how that's going to play out and in an economic level?
FOROOHAR: So I think for 2020, you know, you have to say it's going to be about two percent growth in the U.S. I don't think you're going to see a
hard landing in China.
Both the U.S. and the Chinese have a lot of reason to keep the economy in good shape for the year ahead. The Trump administration doesn't want to
rock the boat before November. Chinese authorities want to continue to make this transition that they're trying to orchestrate from being the
factory of the world to being a more consumer-led economy.
But in the next, again, two to five years, I think that both economies are really going to come up against some challenges. It's going to be
interesting to see if we -- if we were to get a Democrat in 2020. What are those policies going to look like? Is the market going to want to correct
off the back of a progressive?
[15:05:13]
GIOKOS: Right. It's going to be an interesting one. Really good to have you with me. Thank you very much.
FOROOHAR: Thank you. Thanks for having me.
GIOKOS: See you soon. All right, so they are more questions than answers over the flight of former Nissan boss, Carlos Ghosn. He fled Japan to
avoid trial and arrived in Lebanon on Tuesday. Today, Ghosn made it clear his family had nothing to do with his escape.
Meanwhile, the Lebanese government has received an Interpol red notice confirming that Ghosn is wanted by police.
In Turkey, seven people have been detained, including four pilots for a private airline on a suspicion of helping him escape.
We've got Gul Tuysuz live with us from Istanbul with the latest. Gul, it's quite interesting, you know, as investigators are trying to piece together
how Ghosn managed to flee the country. What we do know right now is that people have been detained in Turkey, but Japanese authorities haven't
really been vocal here.
GUL TUYSUZ, CNN SENIOR INTERNATIONAL PRODUCER: Well, so far, at least here in Turkey, there's been one investigation that has been launched.
And as you mentioned, seven people have been detained. Four of them are pilots for this private airline that allegedly smuggled Ghosn out; one is a
manager at that company and two ground service staff people have been detained and are being questioned by Turkish officials.
What they say their testimonies, they're questioning is probably going to reveal a small part of the puzzle into this mysterious escape that Ghosn
engineered from Japan.
Flight tracking data shows that there was a plane that took off from Osaka, Japan and traveled to Istanbul, at which point there was a change in planes
and a little bit while later, another flight took off from Istanbul Airport and made its way to Lebanon, perhaps carrying Ghosn.
Now at this point, Turkish prosecutors are looking into what happened at the airport here in Istanbul. And it wasn't the main International Airport
that Ghosn suspectedly flew into, it was the decommissioned Ataturk Airport that will now only service cargo planes and private charters like the one
that Ghosn is thought to have escaped on.
So investigators here are trying to piece together what happened in Istanbul. While Japanese investigators and we've seen the reporting out of
that are looking into how it was that Ghosn was able to escape his house arrest in Japan.
GIOKOS: Yes, Gul, it's really interesting to just kind of see how no one was able to intercept the escape, so to speak, but you've got Interpol
involved now. There's a red notice out. Lebanese government, it's going to be interesting to see how they react and whether they would be the
looking into extraditing Ghosn.
TUYSUZ: Absolutely. The red notice has gone out by Interpol. But red notices or more like requests rather than orders. They notify
international law enforcement that there is a fugitive, someone that's fleeing justice, but they don't really end up being an order for individual
country's law enforcement.
So at this point, what impact that red notice will have is something we don't know at this point. But what we do know is that Lebanon and Japan
don't have an extradition treaty. So it is very unlikely that Lebanon is going to extradite Ghosn back to Japan, and in fact, so far he has been
welcomed in his home country.
GIOKOS: All right, Gul, thank you very much for that insight. Appreciate it.
All right, so let's turn to the business now. The auto alliance that Carlos Ghosn put together helped Nissan, Renault and Mitsubishi keep
development and engineering costs down.
In 2017, Carlos Ghosn told me that this kind of consolidation was becoming more and more necessary. Take a look at my interview.
(BEGIN VIDEO CLIP)
CARLOS GHOSN, THEN CEO, NISSAN AND RENAULT: These kind of opportunities move towards more consolidation of the interest. It is going to continue
one way or the other, whether it's a merger, an acquisition, as an alliance, a long term cooperation. Anyway, the name of the game is sharing
investments and benefiting from scaling.
(END VIDEO CLIP)
GIOKOS: And so much has happened since then. Mr. Ghosn's arrest, the cooperation between Nissan, Renault and Mitsubishi has suffered. At
Nissan, profits fell more than 90 percent through the first three quarters of 2019.
We've got Lauren Fix, the car coach, an automotive industry analyst. She joins me now. Lauren, great to have you with me and just listening to what
Carlos Ghosn had told me back at the Geneva Motor Show in 2017.
He had this vision to create an alliance to consolidate, so to speak, to share resources within the auto industry, and you see this man right at the
top back then and a few years later, he has fled prosecution and trial in Japan. How do you see this just looking at it, you know in terms of the
last two years?
[15:10:08]
LAUREN FIX, THE CAR COACH: Well, this is obviously a coup. You know, the merger of Nissan and Renault was not taken lightly by Japan. That is not
part of their culture. They definitely didn't want this to go together. And even though Carlos Ghosn who did save Nissan from going out of
business, they said, you know, this is not something they want.
So, they created this coup as far as most of us are concerned. There's been no proof shown to anyone. And he's been in prison for quite a long
time. You're talking about someone who saved their car company, they're turning on this man and health-wise, he has paid the price in many ways.
They won't let him talk to his wife, Carole. Even at Christmas time, he asked to speak with her and they said no. And she hasn't been allowed to
see her either. So this has been a tough situation and I think he really didn't have many options.
The interesting thing was, just the other day, they changed his court date from April 2020 to April 2021. That meant a whole another year in change
before you would even get a chance to have a trial.
Remember, in Japan, the conviction rate is 99.9 percent.
GIOKOS: So I was just looking at the first quarter results. And when you are seeing profits coming under so much pressure, and seeing just how much
trouble the company is, I guess right now, many have said Ghosn was the man that kind of kept the company together.
But surely everyone can be replaced. I mean, where do you see Nissan going when you also see the Alliance coming under pressure?
FIX: There's a lot of pressure in the Alliance and I'm sure there's a lot of friction as well, because each of those companies have taken a hit
financially and also loss in sales. And with China's sales being down, especially for gasoline-powered vehicles, this is a problem.
And they're going to have to do complete restructuring in order to save all three companies and the Alliance is going to have to get stronger, not
weaker in order to share platforms, share technology, share components, because in today's day, if you're not sharing those components, like a lot
of other companies are doing, it could actually put a huge dent in that the company.
And if you're looking at Nissan on a global basis, they've even said, no unexpected travel in the U.S., no travel at all. I mean, that's huge when
this is going into the first of the year. We've got 2020 miles out on the floor, they need the promotion, and they're doing huge cutbacks, and
they're going to have to come up with some new products and some big changes.
GIOKOS: All right, and Lauren, just very quickly, where do you see Nissan stock going? I mean, look, every company has a cycle and changes and
clearly, it's a very competitive market right now.
But do you think that there is a crisis in terms of the people that are running the company?
FIX: Well, I don't think the house is on fire. I think it's smoldering at least. I think that stock prices are going to stay low for Nissan until
they find a savior to turn the company around. They need someone like a Carlos Ghosn? Maybe Alan Mulally or someone like that who could help turn
the company around.
GIOKOS: Lauren, great to have you with me. Thank you so much and Happy New Year to you. All the best. Take care.
FIX: Thank you. Happy New Year to you as well.
GIOKOS: As protests reignites in Hong Kong this New Year, large financial institutions are caught in the firing line.
(COMMERCIAL BREAK)
[15:15:57]
GIOKOS: Welcome back, China has reportedly suspended a partnership between the London and Shanghai Stock exchanges. Reuters is reporting Beijing made
the move after Britain's stance on the protests in Hong Kong.
HSBC is also getting hit. Protesters vandalized a pair of bronze lions outside its headquarters in the city as well as some ATMs.
The bank has been accused of working with Chinese authorities against the protesters, which it denies. It joined several other companies that have
been hurt by the unrest in Hong Kong from Disney to Prada to Cathay Pacific.
Matt Egan has the details for us. What do we know about the deal between the two stock exchanges? And it sounds like it is being politicized here?
MATT EGAN, CNN BUSINESS SENIOR WRITER: Yes, it has. I think this is just another example of how the crisis in Hong Kong is proving to be a political
minefield for multinational companies and the London Stock Exchange is finding that out the hard way.
China according to Reuters has temporarily halted these cross border listings between London and Shanghai, and sources have told Reuters that
it's because of political tensions, specifically around the Hong Kong protests.
And you know, this is an example of China basically flexing its muscle a little bit. It's not shy about striking back financially when it feels
like it's been wrong, but --
GIOKOS: And we have so many examples of this. I mean, China knows how to retaliate if they don't like a political message.
EGAN: They do. They do, but you know, both sides kind of lose out here though because this stock connected has been seen as a way, kind of as a
win-win, right? It was a way for Britain to gain access to the world's number two economy at a time when Britain is bracing for Brexit, but also
for China to sort of open up its capital markets by getting investors from more places from Europe and also to get its own investors in China to get
exposure to European companies.
So you know, it's a little bit of a lose-lose if this is taken off the table.
GIOKOS: It's interesting. So you've got the government intervening, I guess, in a deal, but you've also got the protesters saying, look, we can
also retaliate when we don't like something happening as well.
EGAN: Exactly. HSBC is feeling it from the other side. They've had branches in Hong Kong get vandalized, red paint was splattered on these
bronze lions outside of the HSBC headquarters in Hong Kong.
And remember, I mean, HSBC is the biggest bank in Hong Kong. It's been there for more than 150 years. But the pro-democracy movement has blamed
HSBC and sort of said that they've been working with the Chinese authorities to stifle fundraising for the movement.
HSBC is denying those charges, and they're condemning this violence, this vandalism, but it's another example of how these multinational companies
they're getting caught in the middle.
GIOKOS: Exactly. I mean, and here you have a political problem about democracy, and it's literally spilling over into the economy. It's
spilling over into how markets have been faring, and it doesn't look good for 2020.
EGAN: It doesn't and it is also spilling over into tourism, of course. I mean, it's not just these financial companies. We've seen Cathay Pacific,
they've talked about cutting capacity in 2020. Disney's theme park profits, they've been hurt by the tourism drop off. Luxury brands
including Prada, they've suffered from declines in sales.
And you know, it's not even just Hong Kong. It's broader than that. I mean, I think that it's pretty safe to say the political volatility that is
going to be a theme for 2020 whether we're talking about the turmoil in the Middle East, Brexit, the U.S.-China trade talks, and by the way, there's an
election here in the United States coming up in just about 10 months.
GIOKOS: It's going to be an interesting time for us, journalists covering all of these stories. Matt, really good to see. All the best.
EGAN: Thank you.
GIOKOS: Take care. All right, so the Australian state of New South Wales has declared a state of emergency as deadly fires ravaged the region. All
visitors have been urged to leave before Saturday to get a sense of the scale of the fires.
Take a look at the numbers. The Insurance Council of Australia estimates losses are around $207 million and SGS Economics and Planning says the
fires could be costing Sydney's economy up to $35 million each day.
Anna Coren has more.
(BEGIN VIDEOTAPE)
ANNA COREN, CNN INTERNATIONAL CORRESPONDENT (voice over): This is what a mass evacuation looks like. Thousands and thousands fleeing the area's
worst hit by the deadly bushfires that has swept across the Southeastern coast of Australia.
A mandatory evacuation for tourists before catastrophic conditions return on Saturday, but some want to head the opposite way.
(BEGIN VIDEO CLIP)
TREVOR GARLAND, DAUGHTER STRANDED BY FIRE: My daughter stuck in Sussex Inlet with friends down there.
(END VIDEO CLIP)
COREN (voice over): Trevor Garland's 16-year-old daughter, Haley is stranded in one of the hardest hit regions with some friends. She told him
she's safe, but he's not taking any chances.
(BEGIN VIDEO CLIP)
GARLAND: Been here for quite a while trying to see if I can get down there to get her out. I don't know the way because it's one road in, one road
out.
(END VIDEO CLIP)
COREN: It's dangerous but Trevor is not alone.
(BEGIN VIDEO CLIP)
ZANTHIA WALSH, RESIDENT: At the moment we're just focused on trying to get family back together.
(END VIDEO CLIP)
COREN: Zanthia Walsh and her family were away when fire struck the family home in Conjola three hours south of Sydney. They all escaped unharmed,
but their house was completely destroyed.
(BEGIN VIDEO CLIP)
WALSH: It was a family that actually built the house. So it's hit a lot of people quite hard. It used to be a holiday house prior to us living in
it. So all of our family has stayed in there at some point or another.
(END VIDEO CLIP)
COREN (voice over): Walsh and Garland are but two of the many that stuck around and inside some of the areas hardest hit by bush fires across the
states of Victoria and New South Wales. Dozens of roads are being cut off and some communities remain isolated.
Stranded residents, dependent on the Australian military for the most basic of supplies. It's part of the Australian government's efforts to deal with
the crisis, but for some it's too little, too late.
The Prime Minister, Scott Morrison, who has been heavily criticized for his lack of leadership during this crisis and his government's inaction on
climate change was heckled by residents during a visit to Cobargo.
A large part of the town was destroyed during the New Year's Eve bushfires and residents say the government has not done enough.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: This is not fair. We're totally forgotten about down here.
(END VIDEO CLIP)
COREN (voice over): The Prime Minister left without responding. Conditions have improved slightly in the past few days allowing the
countless men and women who continue to battle the flames a temporary, but very limited reprieve. And just enough time to say goodbye to one of their
own.
Firefighter Jeffrey Keaton was honored for his bravery at his funeral. The medal given to his young son. Just one of the many victims of a nightmare
with no end in sight that is expected to worsen in the coming days.
Anna Coren, CNN, Narra, Australia.
(END VIDEOTAPE)
GIOKOS: Authorities predict the return of very hot and very windy weather this weekend increasing the danger. Allison Chinchar is at the CNN World
Weather Center.
Allison, just absolutely no reprieve, it seems and the hot weather is expected to continue, but for how much longer?
ALLISON CHINCHAR, CNN METEOROLOGIST: Right, so the worst of it is likely going to hit in the next 48 hours as we head into the weekend. Here's a
look at what we've been dealing with.
IN New South Wales and Victoria alone, you have over 160 active fires that are under a watch advice or some type of emergency. Keep in mind, nearly
50 of those have been deemed out of control.
For this entire region of New South Wales, there is a total fire ban. It doesn't matter whether you were under level one, or level three fire
danger, the total fire ban takes place for this entire region because they're trying to see if they can get ahead of these fires, be able to make
some advancement in the containment numbers before the conditions get worse as we head into the weekend.
Here's a look at the air quality. Canberra, your worst is actually going to be on Saturday, getting up to around the level five. Sydney likely to
peek around Friday of this week. So really later on today is when you're going to see the worst of it there.
Here's a look. You do have some cooler air that will start to push back in. Once this front makes its way through, you'll start to see those
temperatures drop back down and then behind the front, the winds should also start to decrease a little bit as well. The concern is as that front
slides in, it is going to increase the winds.
The heat is going to still be there. So it's really that critical timeline of the next 48 hours for a lot of these areas to see how much damage is
done before we finally get some better conditions moving in.
And with that, yes, perhaps albeit small, there is a chance of rain. Again, you can see it's not much, most of these areas, if you pick up any,
it's likely going to be less than 25 millimeters at best, but at this point, anything will be welcome in the form of rain.
Here's a look at the forecast, wind gusts on Saturday. Notice when we start off the day, initially, those winds aren't that bad, but they really
start to increase as we go through the day Saturday, especially Saturday afternoon and into Saturday evening.
Some of these areas 50, 60 if not even as high as 70 kilometers per hour. Not only does that make it very difficult for the firefighters, but it can
take those fires that already exist and spread them rapidly. So that is going to be a huge concern, even going into Sunday, you still have some of
these areas that are looking at 30, 40 if not even 50 kilometers per hour.
No, that's not as high as Saturday, but it's still high enough to trigger more damage. Then hopefully once we get into Monday, those winds finally
start to calm a little bit after that front has finally pushed through.
Taking a look at the forecast for Sydney, Saturday, again, very hot conditions. You also have wind. That high temperature looking at likely
right and around the mid-30s. Keep in mind, the average high this time of year in Sydney, right around the 27-degree mark.
Sunday and Monday. Yes, those temperatures come back down. But again, it stays very windy on Sunday. You don't see those winds start to calm until
you get into Monday.
And again. Look Friday and Monday both have rain chances. They're small, but at this point, I think anybody will just take any rain that can come
out of these next few systems.
GIOKOS: All right, thank you very much for that Allison. All right, so 2019 will be a tough year to beat on Wall Street. Our market guru, Paul La
Monica will give us his predictions for the year and decade ahead. Don't go anywhere.
(COMMERCIAL BREAK)
[15:29:02]
GIOKOS: Hello, I'm Eleni Giokos. There is more QUEST MEANS BUSINESS in a moment when we'll look at whether the U.S. stock market can repeat its
stellar performance from 2019.
And a new study finds Google's artificial intelligence is better at spotting breast cancer than human doctors. You'll hear it from the
researchers behind the system.
Before that, the headlines this hour.
The death toll from Australia's bushfires has risen to 18 after a second death in Victoria. The state has now officially declared a state of
disaster.
And in hard hit New South Wales, officials have declared a state of emergency. Roads are jammed with people fleeing the South Coast.
Conditions are expected to worsen this weekend.
Lebanon says it has received a red notice from Interpol for the arrest of auto executive, Carlos Ghosn. The former Nissan Chairman arrived in Beirut
earlier this week, after skipping bail in Japan where he was awaiting trial for alleged financial misconduct.
He reportedly traveled through Istanbul and seven people there have been detained in connection with his trip.
[15:30:00]
A strong warning from the Pentagon to Iran-backed forces in Iraq. It says anyone who tries to overrun the U.S. Embassy in Baghdad will face, and we
quote, "a buzzsaw."
The U.S. has fortified security at that Embassy following days of violent protests. Demonstrators try to storm the compound in anger over deadly
U.S. airstrikes that targeted an Iran-backed militia.
Investigators want to know why a battery warehouse in New Delhi caught fire and collapsed. One firefighter was killed and several people were trapped
under debris after the building gave way following an explosion. Last month dozens of people were killed in a fire at another New Delhi factory.
Julian Castro, the only Latino to run for U.S. president this time around has suspended his campaign. He failed to gain traction in the large field
of Democratic candidates even though he was part of the Obama administration as Housing and Urban Development Secretary.
It is the first day of trading for the new year, and the new decade. So far 2020 is off to a really strong start, take a look at this -- green
across the board and we're setting up 8/10 of a percent on the DOW, and in fact record highs on all the major markets in the U.S. After a healthy
2019 investors want to know if this decade will bring another roaring 20s.
The forecasters are not so sure though, market experts are predicting between 1 and 5 percent growth for the S&P 500 this year. It's a far cry
from the massive 29 percent gain the index made in 2019.
We've got Paul La Monica with us, and he's been looking at his crystal ball to tell us what 2020 is going to look like. Happy New Year to you --
PAUL R. LA MONICA, CNN BUSINESS REPORTER: Happy New Year to you as well.
GIOKOS: I mean, just looking at the markets doing so well on the first day of trade, but granted, we did have two very good gifts this morning. We
have a date set for phase one, trade deal to be signed hopefully beginning of January. And then you also had stimulus coming in from China, but I
guess the question is how much longer can markets really increase at these levels for?
LA MONICA: Yeah, these are great questions. I think that the 1 to 5 percent gains for 2019 -- '20, excuse me. That might be a little bit
conservative. I think it's possible that as long as earnings growth is pretty robust, then stocks could do better than just kind of flat to
middling (ph) gains.
But 30 percent gains that we saw last year, it's going to be very difficult, if not impossible to repeat that, because the FED is unlikely to
raise -- excuse me, lower interest rates any further than they already have. If they do, it's probably because the U.S. economy is slowing
dramatically and they go in to panic mode.
So if they do that, that's not necessarily a good sign for earnings and economic growth, so that's one thing right there. And I think it's also
important to note all these great gains that we have for the market today, the Russell 2000 index, which is a lot of small caps in the U.S., it's
actually down a little bit.
So I think maybe investors are continuing to flock to these big multi- nationals that will benefit from the U.S.-China trade deal, but maybe concerns about a pull-back in the economy here, is leading people to flee
domestic-oriented smaller companies.
GIOKOS: But that doesn't change the fact that you've got excess liquidity in the system, and it's got to go somewhere. And for as long as the FED is
still in kind of stimulus mode, that's going to be the reality -- and I guess, where is that home going to be?
LA MONICA: Yeah, that is a great overarching point that has some people worried that things are overheated. In fact, if you look at the CNN Fear &
Greed Index today, it's at 97. It can only go to 100, so we're talking about investor enthusiasm that is at near-record highs.
And you're right, I think because bond yields in the U.S. are so low they're negative in many places around the world. People that are looking
to invest their money, if they have to park it somewhere -- bonds are not attractive, neither is cash, so U.S. stocks. Everyone talks about TINA --
there is no alternative, it might still be the case.
GIOKOS: Yeah -- most like -- throw fundamentals out of the window for now, because we need to put our cash somewhere. Thank you very much --
LA MONICA: Thank you.
GIOKOS: Paul La Monica, great to see you -- appreciate it.
All right, 2020 presidential candidates say they received big fundraising boosts in the fourth quarter. Vermont Senator Bernie Sanders leads the
Democrats with more than $34.5 million, Joe Biden raised $22.7 million -- his best quarter yet. Andrew Yang also saw a surge raising $16.5 million.
President Trump higher though, remains far ahead of his rivals with $46 million, his campaign boasts that that's not dispute the impeachment, but
rather because of it.
Rebecca Buck is in Washington with more. Rebecca, great to see you today. I'm just (ph) looking at these figures and it's interesting -- do you think
that this is kind of a (inaudible) test in terms of just how much excitement there actually is about these candidates?
[15:35:00]
REBECCA BUCK, CNN POLITICAL REPORTER: That's absolutely the case -- the fundraising numbers that we get in this stage of the campaign, especially
before the Iowa Caucuses which are one month away, and the start to the Democratic primary season.
These numbers are a great measure, and a great reflection of the enthusiasm for these candidates. Because it's one thing to say, you know, here is the
candidate I would support if I were forced to choose, it's another entirely to open up your pocketbook, give money out of your own pocket to this
candidate and vouch your support for them.
So what we see with these fundraising numbers so far, as you mentioned, Bernie Sanders is the clear fundraising leader among the Democrats, and one
interesting thing to note about the numbers we're seeing from Sanders, is these are not only donations coming from loyal Sanders supporters -- and he
has many of those, that's been one of the markers of his campaign, relative to other Democrats.
But he had 300,000 new donors this quarter -- that's a huge surge in support for Sanders, and a really good sign for them as they go in to this
primary process in a month. Now at the same time we're seeing surges, however, for other candidates.
Joe Biden posting a stronger fundraising number than he has at any point in this campaign so far, and his campaign is noting that he doubled his
grassroots fundraising this quarter, that's an important marker, because big donations from some of these big donors oftentimes aren't necessarily a
reflection of the enthusiasm on the ground -- so you're looking for those grassroots donations.
Bernie Sanders and Elizabeth Warren -- that's all they've been raising this campaign, so it's a slightly different measure between Biden, and Pete
Buttigieg, and Elizabeth Warren, and Bernie Sanders.
Of course Elizabeth Warren, we don't have her numbers yet and we're expecting actually a bit of a downturn in her fundraising which could be a
very interesting number to see here before the caucuses. This is not the time when you want your campaign to be losing momentum.
GIOKOS: Absolutely. I mean, it's been interesting just to watch how some Democrats have left the game only because they just didn't have the
funding. And it was interesting to see how Pete Buttigieg didn't really make it in the top three, why do you think that is?
BUCK: So, he's still one of the fundraising leaders here, and he has been doing these big money fundraisers. He received a great deal of criticism
for that in the last Democratic debate. So he's going to have the money to go the distance in this race, the question is will he be able to grow his
base of grassroots support?
He's been struggling to bring the younger votes in to the fold and build enthusiasm there. He's been struggling with some minority voters,
especially African-American voters. So the question for him is what can he do to turn those dollars in to momentum? That's the question for all of
these Democrats as we move forward in this primary.
GIOKOS: It's going to be interesting. I mean, where do you then, you know, target in terms of raising funds? Is it in wine cellars, or caves,
or is it more (inaudible)? Anyway, thank you very much all the best for 2020.
BUCK: Thanks Eleni.
GIOKOS: Thank you -- thanks. Well the Trump administration has just announced it's banning the sale of most flavored e-cigarette cartridges in
the United States. Under the new policy vape companies must stop selling the fruity or dessert flavored cartridges, but not the menthol or tobacco
ones.
The move is receiving fierce criticism from health and anti-tobacco groups who say the vaping products being left on the market still appeal to young
people. Elizabeth Cohen is live in Tel Aviv with more.
Thank you so very much for joining us. I mean, just looking at this decision, there's so many questions that come to the fore, and I guess the
-- one of them is, what is the FDA's involvement here, and why were these specific products not banned?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You know, this gets so incredibly complicated, Eleni, and I want to sort of broaden it out a bit.
There are different types of vapes, and what the FDA is saying -- or the government is saying is, look we're going to take off these cartridges, and
I think a lot of people are familiar with them right now.
They're cartridges where you buy them pre filled, you don't touch the liquid -- it's in there, in the cartridge. And many of them have fruity
and dessert flavors, and you won't be able to get those.
However there are also these empty tanks where you buy the nicotine fluid in a whole variety of flavors, and you fill it up -- and those will still
be on the market. So advocates for children's health and safety are saying, wait a second -- why are we taking one off the market but allowing
the other one to stay?
You know, when you're addicted to nicotine you will do whatever it takes to get the nicotine -- you'll just switch to the different type of vape. Even
if you don't like it as much you'll deal with that and you'll switch to it.
I want to read to you what the American Academy of Pediatrics just put out, the president telling the media, the bottom line is that children are at
nearly the same level of risk now as they were before this guidance came out -- meaning Trump's guidance, and that is a shame.
So there you have the American Academy of Pediatrics, they call Trump's new policy, a shame. Eleni.
GIOKOS: And it's really interesting to see -- we know that some of those flavors that appeal to the younger generation have been banned, but you
know, some kids might just want to switch to menthol. And it's interesting that this policy doesn't even cover the tank system, so to speak -- and if
you've got a tobacco addiction, you might just shift over, one would assume.
[15:40:00]
COHEN: Right, exactly. You'll shift over to the tank system.
GIOKOS: Yes.
COHEN: You'll shift over to menthol. I mean, listen. It is good that they're getting those tuitty-fruity (ph) cartridges out of there. That's a
good thing, but if you leave other types, as you said, when you're addicted, you're addicted. You'll just switch over.
GIOKOS: All right, Elizabeth. Great to have you on the show. Appreciate your time. All right, he took a struggling sports league and turned it
into one of the most world-recognized global brands. Former basketball executive, David Stern, has died. We'll look back at his incredible
career.
(COMMERCIAL BREAK)
GIOKOS: The sports world is mourning the death of the man who helped make the National Basketball Association what it is today. Former Commissioner,
David Stern, died Wednesday at the age of 77. He is being remembered as one of the most influential business leaders of his generation.
Over three decades as basketball's top executive, Stern presided over skyrocketing growth and transformed the sport into a truly global game.
The NBA under Stern's tenure was the first American sports league to play games outside of the U.S. He orchestrated massive TV deals so the NBA
could be broadcasted all over the world. Today, the league is made up of players from 38 different countries and becomes more internationally
diverse every year. World Sports, Coy Wire, has more on the life and career of David Stern.
(WORLD SPORTS)
[15:45:00]
And David Stern was 77. Still to come, Google built a computer program to tell people if they have breast cancer. A report says it might be even
more accurate than doctors.
(COMMERCIAL BREAK)
Welcome back. So Google says it has developed an artificial intelligence system that can detect breast cancer more accurately than doctors. The
program was developed using tens of thousands of mammograms from women in the U.S. and U.K. A report found it reduced false positives and false
negatives. Daniel Tse and Shravya Shetty are the Product Manager and Technical Lead at Google Health. They join me now from San Francisco.
Great to have you on the show.
[15:45:00]
Happy New Year, and congratulations on your findings and the development of this new technology.
DANIEL TSE, PRODUCT MANAGER, GOOGLE HEALTH: Thank you. Happy New Year.
GIOKOS: So it's fascinating to see how the detection of cancer using A.I. is far better than doctors and you're using less information to do this.
How does it work?
SHRAVYA SHETTY, TECHNICAL LEAD, GOOGLE HEALTH: So at a high level, we use two principles. One, which is similar to what radiologists, might do in
practice, which is to look at these mammogram sand find lesions on them. And then we aggregate all this information and then predict the breast
cancer risk. The other principle that we used is to look at the images globally, which is look at all the context in the images and then predict
breast cancer, and we combined the two to predict the final risk.
GIOKOS: That's pretty incredible. OK, so Daniel, tell me about why you started with this and -- and -- and what kind of impact you can make to the
overall industry.
That's a great question. You know, a couple years ago, our team got together and started looking at a number of different problems to
potentially tackle. And so we're lucky at Google to have access to a lot of machine learning and computer vision technology that's been used on a
lot of different products across the world and we wanted to find ways of taking that technology and applying it to new areas. And so we looked at a
number of areas and eventually settled on medical imaging. When thinking about medical imaging, there's lots of problems you can look at, but some
of the greatest are often screening programs for cancer and so we naturally started looking at breast cancer, which has a -- a huge impact on a lot of
women around a the world.
GIOKOS: That's an incredible. OK, so how are these x-ray machines going to be retrofitted so to speak, using A.I.? I mean, how exactly can it be
implemented today in the medical industry. What's the plan?
TSE: I think there's -- that's a great question as well. There's a lot of different ways it can be implemented. I think the next stages of our
research are actually going to be looking at a lot of those questions; like what's the best way of technically refining the model, what are the best
ways of surfacing that model in a ways that is the most productive for patients, providers and health care systems. The concrete plan is still in
flux and depends a lot on the health care is system and screening program, but we're excited to work with our partners around the world on it.
SHETTY: And there are many ways of integrated this into a work flow. It could be on the hardware side, but it could also be on the software side.
So it doesn't necessarily require a retrofitting into existing hardware.
GIOKOS: So these are find interesting findings Shravya, but what is it going to take to actually get it into the system? Are we talking about it
being years away? Are we looking at you guys teaming up with various companies? How do you plan to actually do this?
TSE: I think a lot of those options are on the table and a lot of it depends on the particular application that we're building. But we're eager
to work with patients, providers, regulatory groups like the FDA or the CD (ph) groups in Europe to better understand how they would like to see these
experiments played out so they can recommend or not.
GIOKOS: I was just looking at the numbers as well through, you know, some of the work that you've done. And we saw quite a dramatic reduction in
false positives as well as false negatives as well. And this is a game changer for women that are misdiagnosed, which happens way too often. Take
us through some of the findings that were pretty shocking to you.
SHETTY: So (inaudible) like you pointed out, the numbers look quite encouraging on (inaudible) the false positives and false negatives.
Something that was very encouraging for us is we saw that A.I. did well. Not just on the data that was trained on. We trained the models on U.K.
data and evaluated it in U.S., and these are very different screening populations, the screening protocols are different and we found that the
A.I. still performed really well, it was still outperforming the radiologists by a significant margin.
GIOKOS: OK, so what are radiologists and doctors doing incorrectly?
[15:50:00] TSE: I think it's not necessarily that they're doing anything incorrectly. I think it's a tough task to be taking these images. When
you get a mammogram, you're actually not getting one image, you're four images or more, and you have to take that into context, you have to take in
past imaging into context, a lot of other clinical contexts that might come between screening programs and screening periods, rather. And so that plus
doing the task all day. And so if anything, one of the goals of our research is to build tools to assist these doctors...
GIOKOS: What really stuck out for me as well is that you're using less information. We know that radiologists also tend to look at family
history, the possibility of being hereditary and so forth. Do you think that using less information and not just looking at background information
gives a cleaner result in a sense?
SHETTY: Not necessarily because at the end of the day, you're not expecting A.I. to stand alone, they expect it to work with the doctors. So
that means at the end of the day, you do have this information available.
GIOKOS: Can doctors be replaced? Will they be replaced?
SHETTY: So like Dan had mentioned a little bit earlier, we don't think that it's one versus the other. In fact what we saw in our results is
there's a number of cases where the A.I. get it right and the doctors don't. But there's also a number of cases where the doctors get it right
and the A.I. don't. I think they can complement each other and bringing the two together is what can help bring out the strengths in each.
GIOKOS: So it's exciting times for Google Health. What other projects are you working on and is A.I. and machine leaning at the center of this?
TSE: There's lots of applications. Obviously we're talking about right now is medical imaging. Actually our team published a paper earlier this
year in nature medicine looking at lung cancer screening. And so we're very encouraged by a lot of these results and want to explore a lot of
other areas where we can use imaging to help with current clinical work flow.
GIOKOS: Shravya and Daniel, thank you very much and all the best.
SHETTY: Thank you.
TSE: Thank you.
GIOKOS: Well there are just moments left to trade on Wall Street. We'll have the final numbers and the closing bell, right after this. We're at
over 1 percent. Don't go anywhere.
[15:55:00] (COMMERCIAL BREAK)
GIOKOS: And there are just moments left to trade on Wall Street. The DOW is ringing in 2020 with an all-time high. Take a look at that, we're up
over 1 percent. It's all thanks to (inaudible) art (ph) of China. Beijing gave the green light for Chinese banks to inject more than $100 billion
into the country's slowing economy. We are green across the board, the DOW, the S&P and NASDAQ sitting in record territories, and tech and
industrials are leading the sectors as well. 2019 will of course be a very tough year to beat. The S&P 500 finished up -- get this -- 30 percent last
year.
The trade war and election in the U.S. are significant uncertainties for investors; forecasters are predicting the S&P 500 will rise from 1 percent
to 5 percent in 2020. So definitely not the kind of double-digit big returns that we saw last year, but hopefully there will still be a bit of
optimism leading into 2020. And, of course, that's "Quest Means Business," I'm Eleni Giokos in New York City. The news continues here on CNN. Happy
new year to all.
[16:00:00]
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