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Quest Means Business
Fears About The Coronavirus And The Economic Impact Continues To Grow; Coronavirus Outbreak Is At The Top Of The Agenda As Finance Ministers From G-20 Meet In Riyadh This Weekend; Iranians Head To Polls Amid Coronavirus Fears; S. Korea Coronavirus Infections Almost Double In 24 Hours; Judge Orders Deadlocked Weinstein Jury To Keep Deliberating; Nevada To Hold Democratic Caucuses Saturday; Sanders Leads Ahead of Nevada Democratic Caucuses; Trump Holds Las Vegas Rally Ahead of Democratic Caucuses; Sources: U.S. Intel Officials Told Lawmakers That Russia Interfering In 2020 Election To Help Trump; Trump Scoffs At Oscar Win For "Parasite"; Record Industry Fears "Vinylgeddon" After Fire At U.S. Plant. Aired 3-4p ET
Aired February 21, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:18]
ZAIN ASHER, CNN INTERNATIONAL HOST: The losses continuing on from what we saw yesterday as fears about the coronavirus and the economic impact
continues to grow.
Those are the markets and these are the reasons why. Investors are on edge as more countries report a spike in coronavirus cases.
A budget stalemate in Brussels. E.U. leaders argue over how to plug the funding shortfall left after Brexit.
And Warren Buffett hunts for an elephant. The Berkshire Hathaway CEO could be set to lift the lid on the search for his next big acquisition.
Coming to you live from the New York Stock Exchange. It is Friday, February 21st. I'm Zain Asher in for my colleague, Richard Quest and this is QUEST
MEANS BUSINESS.
All right, welcome everybody. Tonight, new fears about the global spread of the coronavirus are spooking investors.
Stocks are down on Wall Street across Europe and in most of Asia as well. They rose in Shanghai as the government vow to help companies affected by
the outbreak.
The Dow is on track to end the week with a loss. China has found 500 new cases of the virus spreading in its prison system. In South Korea, the
number of cases doubled in just 24 hours. And in Iran, officials say the outbreak has spread to several cities. They've confirmed about four deaths.
Rana Foroohar, is CNN's global economic analyst and associate editor at "The Financial Times." She joins us live now.
So Rana, we look at U.S. markets down about 250 points. Goldman Sachs says the worst is yet to come. Would you agree?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I would absolutely. I mean, Zain, I think that this virus has been such an example of what China means
in the global economy and how much more it means today than it did 20 years ago when we were grappling with SARS, the last time around that we really
had this kind of a global pandemic emanating from China.
China has been the largest single chunk of global growth in the last few years. The Chinese consumer has kept the global tourism business and the
luxury brand business afloat.
You've got companies like Apple who are issuing revenue warnings off the back of the coronavirus. I expect that this will be just the beginning, and
I think the big question is whether this knocks the U.S. equity story back, whether this starts to become something that's going to be a real tailwind
in advance of the November elections in the U.S.
ASHER: So why is the market relatively -- relatively -- nonchalant about this? Why isn't the market pricing this and more?
FOROOHAR: Well, there's two factors in the market right now. One is what happens in China, and the other is what happens in Central Banks around the
world.
And you know, if you look at the ladder, you see that interest rates are still at record lows. You have quantitative easing, you know, still the
effects of that have been lasting. You have central bankers saying, look, we're going to do whatever it takes.
They admit that they don't have as much firepower now as they did 10 years ago, but I think markets are in this state of suspended animation, really
saying which one of these powerful forces -- Central Banks and low interest rates or China -- is going to win out.
ASHER: You're seeing a lot of countries or a few countries, rather announcing sort of stimulus measures, is not going to be enough to offset
the drop in domestic demand we're seeing out of some countries in Asia?
FOROOHAR: Well, it's really interesting. I mean, China itself is probably going to do the largest stimulus program it's ever done off the back of
this.
I question whether you're going to see that having as much effect on the markets as again, as it might have done 10 years ago in part because
there's been so much easy money dumped into the global markets.
The other part of this is that when you do a stimulus package, it's really about getting people to spend getting businesses to invest in China right
now and in many parts of Asia that's not a possibility.
I mean, the economy is stalled because people are quarantine. Factories are shuttered.
So I see really, this being a tipping point in a number of trends that were already underway. The decoupling that we've seen of the economy of China
and the U.S. and many other parts of the developed world, I think you're going to see a lot of companies reevaluating their supply chains.
We are already seeing some production continue to move to Vietnam, which was a trend that was already underway. I think you're going to see that
speeding up as people really reevaluate the risk of doing business in China.
ASHER: But in the meantime, you know, we're all familiar with that old cliche, when China sneezes, the whole world catches a cold. In the
meantime, though, how resilient is the U.S. economy?
FOROOHAR: Well, it's interesting, you know, that cliche actually started with the U.S. sneezing and the rest of the world catching a cold, but
you're absolutely right. Now, when China sneezes, 16 percent of the global economy, the rest of the world does catch cold.
[15:05:02]
FOROOHAR: Goldman Sachs itself said that the U.S. is probably going to take a half percentage point GDP hit off the back of coronavirus.
One question I have though is if you see things getting better within the next couple of months, then you might have a demand surge by the fall. If
that happens, things might look better by November.
On the other hand, if you see this virus continuing to spread and problems grow into the summer, then I think that you're really going to be looking
at a lot of big headwinds for November in the U.S.
ASHER: All right, Rana Foroohar, always good to see you. Have a lovely weekend. Thank you.
FOROOHAR: Thank you.
ASHER: The outbreak is taking a toll on the Chinese economy. New figures show car sales in the first two weeks of February dropped 92 percent than
the same period last year.
China's Passenger Car Association said there was very little foot traffic at the few dealerships that were open. Clare Sebastian is tracking this
story.
So Clare, this is really the last thing that China's sort of car industry needs. You think about the fact that it's suffered already from the slowing
Chinese economy.
And then there was the trade war with the U.S. that is still technically ongoing. This is really the last thing it needed or wanted.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, this is a shock to an industry that was already in a fairly prolonged decline. January, we got
auto sales, they were the 19th straight month of decline. So this coming off the back of that 92 percent drop, that's for the first two weeks in
February.
Now that China Car Passenger Association says that they actually see for the full month, the drop will be 70 percent. So suggesting a sort of
creeping back of some sales in the second half of February.
But it's still a pretty bad number, and we see it reflected, Zain, in what's happening with the international car makers. It is very clear that
they're having difficulties getting production back up and running.
Nissan says that it is delaying production, starting with two of its factories close to the epicenter. We're hearing from Toyota that by Monday,
they expect to have single shifts at all of their four car plants in China, but single shift, that's half the level of production that they had before
this.
So it's a very slow, a very gradual process and it's clear that given that China makes more cars than any other country in the world, given it's the
biggest car market in the world, this will be a shock to the global industry as well.
ASHER: The fact that this virus originates in Wuhan, I mean, that is the hub of car manufacturing in China. The fact that it originated there, how
much is that making matters that much worse?
SEBASTIAN: It is a significant part of this. A lot of these companies have operations there. A lot of them have joint ventures with a with a Chinese
partner, and you see it with, you know, the likes of Nissan and others who -- Renault is also in the area -- they mercifully perhaps were closed when
this first broke because they were already planned to be closed during the Lunar New Year holiday.
So some of the disruption was baked in, but given that this is now still ongoing, and it's still difficult to get back up and running. There are
still local regulations that are affecting this area. You know, we're hearing from Nissan that that's one of the reasons why they're staying
closed. That is a crucial part of this and this continues to be, you know, an area that's on lockdown.
ASHER: What's going to be the sort of knock on effect to global manufacturing? We've got Japanese PMI numbers that weren't very good at
all. That's putting it lightly.
And obviously people are hoping that that will lead to more stimulus measures. Then there's German manufacturing that we have talked about in
this program. They're obviously heavily linked to China.
What do you think will be the overall impact when it comes to global manufacturing because of the coronavirus?
SEBASTIAN: Well, I think it's clear that this is a global story. We have China that is the second largest economy in the world, which is known as
sort of at a partial standstill.
Japan is the third largest economy in the world. Their business activity survey showed that output declined at the fastest pace since 2014.
It seems almost certain now that that will tip Japan into a recession, which is two straight quarters of contraction. They contracted quite
sharply in the last quarter of 2019.
We also got manufacturing and services data out of the U.S. which showed that this was the first time that output could have had contracted since
October of 2013.
So there are concerns creeping into U.S. when the manufacturing was already declining because partly of the U.S.-China trade war.
But sentiment is still pretty good in the U.S., Zain. They still say that most people expect this will rebound and will be a V-shaped recovery. So
literally, this is how we will break down.
ASHER: That V-shape everyone keeps talking about. All right, Clare Sebastian, live for us. Thank you so much.
The outbreak is at the top of the agenda as Finance Ministers from G-20 meet in Riyadh this weekend. The French Finance Minister Bruno Le Maire
says the outbreak will take one tenth of one percent of France's economic growth. Le Maire also said that it shows the world is far too reliant on
China.
(BEGIN VIDEO CLIP)
BRUNO LE MAIRE, FRENCH FINANCE MINISTER (through translator): I really think that we have to take this situation of the epidemic to ask ourselves
about our strategic dependence in terms of supply for certain industrial sectors.
I've talked about the automobile industry. I also want to talk about the health industry. You know that 80 percent of raw materials for active
components for medicines come from China or from Asia. It's obvious and the epidemic shows this to us that this could bring about problems on sanitary
independence in the medium or long term.
We have to respond to this challenge and this risk.
(END VIDEO CLIP)
ASHER: Dan Berger is an economist and CEO of the National Association of Federally Insured Credit Unions. Dan, thank you so much for being with us.
Do you agree that the world is simply far too reliant on China?
DAN BERGER, CEO, NATIONAL ASSOCIATION OF FEDERALLY INSURED CREDIT UNIONS: Yes, it seems to be that way. Because you're seeing it right now. People
have to realize, 500 million people are currently locked down across China. That's 1,800 cities across China and it's locked down.
So there's going to be a supply chain disruption here. So there is a lot of reliance on China from a manufacturing standpoint. And you're seeing that
now with all this with the coronavirus and the impact that it's having across all manufacturing sectors.
ASHER: So what is the solution? I mean, long term as companies try to learn lessons from this, are we going to see a sort of decoupling as our previous
guest was talking about in terms of companies sort of unlinking their supply chains from China?
BERGER: Yes, there will be some decoupling occurring, but this was truly a black swan event, meaning they're going to sit there and look for some
redundancy and maybe have places in South Korea, maybe India and other places that also have a very robust manufacturing facilities.
You'll see some people being a little better prepared than this. But this was a black swan event that is being felt globally, not just China, not
just in the U.S., but across the globe.
ASHER: So how resilient is the U.S. economy? I mean, if China goes into a real sort of tailspin as a result of the coronavirus, what happens to the
U.S.?
BERGER: Well, there's going to be some spillover effect. This would -- this will be a headwind that we're dealing with. But it's affecting -- you saw
Apple came out earlier this week and they announced they're not going to hit the revenue expectations.
But you also saw Volkswagen and Volvo and some other manufacturers saying, hey, it's going to take a while for us to get ramped up again, and so
you're going to see that spill over.
What we're beginning to see as some of the service industry is being affected by this now, not just the manufacturing sector. So you see in the
restaurants, you see in the travel, the transportation sectors, those are being impacted now, and it's going to take a while to get that ramp up
going, to get people back online from a manufacturing standpoint.
This has a likelihood to be a little bit longer. But the American economy right now is extremely strong and so we're resilient at this point. But you
have to also remember, these kind of outbreaks and pandemics have a potential to have a secondary flare up, and those are the ones that kind of
causes the damage from a long term timeframe standpoint.
ASHER: One of Trumps economic advisers, Larry Kudlow believes that this is slightly overblown. I want you to listen to what he had to say.
(BEGIN VIDEO CLIP)
LARRY KUDLOW, WHITE HOUSE CHIEF ECONOMIC ADVISER: Even with headwinds, we've had very tough Fed tightening, I wish they hadn't, but they had. Now,
they're beginning to unwind that and add to the balance sheet. That's good. But that hurt us a lot.
The Boeing shutdown hurt us a lot, Carl, as you know, we'll see about the virus, somehow, at this point, it doesn't seem like a problem.
(END VIDEO CLIP)
ASHER: Well, that's one way of looking at it. What are your thoughts on what he just said there?
BERGER: I think there is going to be an impact and then how big that bandwidth of the impact and how deep it's going to be is still to be
determined.
It is going to affect the GDP of countries across the globe, not just the U.S., but I will tell you what, you're seeing it in the stock market, even
though it's ticked down about one percent across on the indices today.
But the American economy is strong, and so if we get through it, I'm just concerned about that secondary flare up where it makes the timeline a
little bit longer.
From this standpoint, he is probably right. We're strong enough to get through it at this standpoint. My concern also is with China and the CCP,
they're not usually all of that forthcoming with accurate numbers in data.
So I'd like to see more of that information that's coming out of China in a more timely fashion, we would be able to predict and do some modeling from
that standpoint, but right now, we're doing OK. We're stable.
ASHER: All right, Dan Berger live for us there. Thank you so much.
Iran's Health Ministry has confirmed 18 coronavirus cases and four deaths. That comes as voters head to the polls to choose the country's new
Parliament.
Iran's Supreme Leader urged people to vote calling it a religious duty. CNN's Fred Pleitgen has more on the selection.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Voter turnout is certainly going to be one of the things that the authorities are going to
look at after this election is over and the votes are counted.
We went around to several polling stations here in Tehran. It seemed to us as though more people seem to be coming in the evening hours rather than
the morning hours.
We don't usually see too many long lines, but the authorities did extend the period where voting was allowed. It was supposed to end at 6:00 p.m.
local time, but then they extended that to 8:00 p.m. local time.
Folks that we spoke to who are casting their ballots pretty much all said that the main topic for them is Iran's very difficult economy and how that
economy can be fixed.
In the run up to the election, it certainly appeared as though the more conservative candidates were kind of in the lead or having the edge as far
as the popularity was concerned.
Moderates under President Hassan Rouhani, certainly under fire, with the big problems with the economy, with the sanctions, and also all the issues
around the Iran nuclear agreement.
One of the big wildcards here as far as turnout is concerned is going to be the outbreak of the coronavirus here in Iran. Iran has now confirmed that
it's had several deaths from people who have contracted the coronavirus.
They also have well over a dozen confirmed cases now and even people who've been diagnosed with the coronavirus abroad, who had come from places in
Iran or visited places in Iran who had nothing to do with China in the first place.
[15:15:44]
PLEITGEN: So with that, it's going to be interesting to see whether or not that could also have had an effect on voter turnout, whether or not it's
high or low here in Iran as well.
What we're seeing at the polling places that we're going to is that there are people who are wearing protective gear, masks and also rubber gloves to
try and heal themselves while they perform their civic duty.
Fred Pleitgen, CNN, Tehran.
(END VIDEOTAPE)
ASHER: All right, Brexit might be over. The deadlock in Brussels, however, continues. The Budget Summit has ended without answers to an $80 billion
funding gap.
And the annual look inside Warren Buffett's investment thinking is a day away. We'll examine if the oracle of Omaha might seem to purchase that
elephant.
(COMMERCIAL BREAK)
ASHER: Welcome back. E.U. leaders deadlocked in a budget battle and have ended their Summit in Brussels without deal.
With the U.K. out of the bloc, the remaining 27 countries are fighting over how to fill the $81 billion funding gap. It is pitting the Frugal Four,
this is a group of wealthy countries who say they won't pay any more against the poorer countries who rely on more E.U. funding.
French President Emmanuel Macron says the impasse proves, "We don't need Britain to show disunity." Anna Stewart has been following this line from
London.
So Anna, just talk about a bit more about what these two groups want. You've got the Friends of Cohesion on the one hand, and you've also got the
Frugal Four. What's going on?
ANNA STEWART, CNN REPORTER: And we have this every seven years as they try and plan the budget ahead. It's a seven-year kind of budget gap, and
there's always loggerheads to be honest. It's always between the net payers and the net beneficiaries. Those that pay more and those that take more.
[15:20:03]
STEWART: This year, of course, has been made slightly more tricky by Brexit, in fact the U.K. is leaving, and it's leaving a massive budget
hole. I think that's reflected, to be honest, with these talks breaking down, and the E.U. Council President Charles Michel, he's very new to his
job saying that they need more time.
In a quote, he said, "We know that this European budget is a very difficult topic. It's a very difficult negotiation, especially after Brexit and the
gap between 60 and 75 billion euros."
To be fair, this is always an issue with the E.U. budget. Now let's talk about the two different sides that we have, as we say the net payers. We
have Germany who is an arch hawk and the Frugal Four as you mentioned, so we have Austria, the Netherlands, Sweden and Denmark. So they are the
richer member states. They put in more than they receive.
On the other side, we have 15 member states that includes Poland, Hungary, and it's actually led by France, which is a net payer, however they've got
a very powerful farming union. They want more money in terms of subsidies, and so on.
Now, the crucial two components of the battle that has been the last 48 hours that has gone on all over last night is number one, that the richer
member states want to keep their rebates. They get rebates on their contributions. There was discussions about scrapping that and they're not
budging on it.
There's also an idea that for those countries, they would like to cap the E.U. budget at one percent of E.U. GDP, whereas the other member states
like them to pay a bit more. They want more money, more funding, particularly for cohesion funds, which is for the sort of poorer regions of
the E.U.
So it has ended like many E.U. meetings with no agreements, but a decision that more talks need to continue, I think, Zain.
ASHER: So as all the countries that are focused on where this sort of funding gap is going to be made up from, who is likely to win? Which side
is likely to budge on this?
STEWART: Well, it did feel this morning, waking up, but overnight, there had been some movement from Germany and the frugal states. Perhaps, they
suggested some from an FT report that $21 billion could be saved from that seven-year budget.
And that would bring the budget down much closer to the one percent of E.U. GDP, but not quite, it would still be slightly further above.
I think the real sticking point has been the rebate and honestly, it doesn't appear that either sides are willing to move on that. So it's an
absolute game of chicken at this stage.
I'm sure there will plenty of bilaterals underway. Charles Michel, the E.U. Council President, he has only been in the job for a few weeks, so it is a
baptism by fire. But he is ever hopeful that he will get the two sides to sort of talk and reach some sort of agreement -- Zain.
ASHER: Anna Stewart live for us there. Thank you so much.
This weekend, investors big and small around the globe will turn their eyes to Nebraska. That's where Warren Buffett is going to be publishing his
annual shareholder letter.
The tradition actually dates back to 1977. The Oracle of Omaha will give us a glimpse into his view of the stock market. It is required reading for a
lot of investors.
Last year, Buffett said he was ready to make an elephant-sized acquisition. Since then, he has amassed a war chest of over $120 billion dollars. But
the elephant, the acquisition elephant he has been talking about certainly does remain elusive.
All the while, his Berkshire Hathaway shares have underperformed compared to the S&P 500.
Paul La Monica is joining us live now. So Paul, you know, you and I talked about this earlier, this sort of elephant-sized acquisition. He has got a
lot of money in terms of what he has to purchase, $120 billion if he chooses to use that much but he probably won't.
But just walk us through which sectors Buffett is likely going to be eyeing up. Is it retail?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think retail is a potential area that Berkshire Hathaway might want to make a deal, and we've seen with
two of their most recent portfolio additions that there have been some interesting moves that they made there.
RH - Restoration Hardware is a big stock that Berkshire Hathaway has bought a position in and what's notable there is that he already owns Nebraska
Furniture Mart and other big furnishing retailers as well.
So would they go so far as to buy all of RH down the road? It might not be that plausible, but he has the cash to do it if he wants, and it's a higher
end luxury retailer that you know, could fit within the Berkshire portfolio.
ASHER: One of the things that Warren Buffett complained about last year, it is the reason why he wasn't spending money on some kind of major
acquisition was because share prices were too high. That was last year. Now, they are even higher. So surely, that's going to still be a problem
for him?
LA MONICA: Yes, I think it's going to be a problem. And, you know, I think that's one of the reasons why a very big deal that he could have made, he
didn't because of price. Tiffany reportedly approached Berkshire Hathaway about a possible takeover and Buffett did tell "The Financial Times" that
yes, he did get a call and he turned them down and then LVMH wound up scooping up Tiffany instead.
You know, Tiffany could have been another company that would have fit within the Berkshire portfolio because some of their own jewelry retailers
that they own, Borsheims in Nebraska.
[15:25:03]
LA MONICA: But I think right now, Berkshire is still hoping to find a good value. But you know, they haven't been able to get there yet, at least from
a full company perspective. They're obviously still buying stocks, but they're not buying whole companies.
ASHER: So Buffett basically says, you know what? There's nothing out there for me to buy. I'm still going to sit on my $120 billion cash pile. How are
investors likely to react to that?
LA MONICA: Yes, I think investors do want to see Berkshire use that money because with interest rates so low right now, you're not exactly earning a
lot of money on that gigantic hoard of cash.
So it wouldn't shock me if there's more speculation about a possible deal Berkshire could do. Another area could be airlines. We know that Berkshire
Hathaway loves transportation. They already own Burlington Northern Santa Fe, the giant railroad.
And Berkshire has stakes in for humongous U.S. airlines with American, United Continental, Southwest and Delta. So would he basically decided that
he wants one of them all for himself as part of Berkshire Hathaway? It's possible.
I mean, it would certainly be a splashy sort of end of his career type of deal if he took one of the major airlines private.
ASHER: Warren Buffett is 90 this year. Munger, his partner is 96.
LA MONICA: Ninety six. Yes. On New Year's Day.
ASHER OK, so obviously, it's time to talk about succession planning, isn't it?
LA MONICA: Yes. Munger is not going to be the new CEO of Berkshire Hathaway. I think I can safely say that with some confidence.
There are four people that people look at --
ASHER: That's why we have you on the show.
LA MONICA: Yes, there we go. It's not going to be me either. But there are four people that I think people on Wall Street are focusing on.
And that's Ajit Jain, who's the insurance guru. We've got Greg Abel, who runs the energy businesses and a lot of other subsidiaries at Berkshire
Hathaway.
And then you have two lieutenants that helped Berkshire -- helped Buffett pick stocks, and they're the guys who have probably pushed them into things
like apple. That's Ted Weschler and Todd Combs, and we know that Combs recently got a promotion to take over Geico.
So I think a combination of those four people will ultimately in some manner, replace Buffett because Buffett is irreplaceable. There's probably
not going to be one person just to take over everything he does.
ASHER: You know, he is not your typical sort of CEO. You can't just have one person. All right, Paul La Monica, have a great weekend. Thank you so
much.
LA MONICA: Thank you.
ASHER: The Nevada Caucuses are coming and they will be a crucial test for the Democratic candidates. The state could give us our first real look at
what's to come. That's next.
(COMMERCIAL BREAK)
[15:30:00]
ASHER: Hello, everyone, I'm Zain Asher, there's more QUEST MEANS BUSINESS in a moment when we'll be looking ahead to tomorrow's caucuses in Nevada
and what could be a make or break moment for Democratic candidates. And the record industry is warned on "vinylgeddon" as a fire had a major
manufacturing plant threatens the world supply of vinyl records. Before that though, these are the headlines We are following for you at this hour.
All right, first, an update on the deadly Coronavirus outbreak. The head of the World Health Organization says the window of opportunity to contain it
is narrowing. This, as cases in South Korea soar to more than 200, nearly doubling in just 24 hours. Nearly 77,000 people are infected worldwide, at
least 2200 died. Mainland China remains the hardest hit.
Hardline candidates are expected to win big in Friday's parliamentary elections in Iran. Many Moderates were banned from running, and there were
concerns turnout might be low. Iranians are facing high unemployment rates and inflation. And women and young voters, in particular, are said to be
the solutions.
A reduction in violence agreement negotiated by the U.S. and the Taliban took effect about an hour ago in Afghanistan. It calls for Taliban
fighters, Afghan troops, and international forces to refrain from attacking each other for the next week. If successful, it could lead to the signing
of a broader agreement in about a week from now.
And jury deliberations are done for the weekend in the Harvey Weinstein trial. Earlier, the jury sent the judge a note indicating they might be
deadlocked on two counts. The judge urged them to keep deliberating if the producer is charged with rape, predatory sexual assault, and other crimes.
Voters in Nevada are heading to the polls Saturday for the Democratic caucuses. Data show Senator Bernie Sanders is the candidate favored to win.
Officials estimates 75,000 votes have already been cast in early voting. The contest will be the first of the presidential race in a state where the
racial makeup reflects the country's population, as a whole. It could provide insight of what's to come in the weeks and months ahead. Ryan
Nobles is live for us in Las Vegas. So, Ryan, Bernie Sanders is, of course, the clear frontrunner at this point. The question is, is he unstoppable?
RYAN NOBLES, CNN CORRESPONDENT: Yes, Zain, and I think we're going to find a lot more about the answer to that question on Saturday. Sanders won the
most votes in Iowa, didn't -- hasn't necessarily been declared the victor there. But he won New Hampshire. If he wins here, that's three contests in
a row, where he has gained more votes than any other Democratic candidate. And to your point, this is the first contest where we're seeing a more
diverse group of voters weighing in on this process. And that's going to be an important for this Democratic primary moving forward.
Now, Sanders is slowly moving up the polls in these national polls, as well, and in the other states that are further down the calendar, including
South Carolina next week. And then the Super Tuesday states like California, Texas, and Virginia that are going to go a long way in
determining the Democratic nominee. There's no doubt that the momentum is on his side. But he's also now dealing with an expectations game here.
Sanders expected to win; if he fall short or if the margin is a little bit closer than expected, does that then open the door for someone like Joe
Biden or Elizabeth Warren to have a resurgence?
And then, of course, Zain, as you get further down the line, Michael Bloomberg and his billions of dollars are sitting there waiting to join
this democratic contest in a full-bore fashion. So, while Bernie Sanders is certainly in the driver's seat right now, this Democratic primary has a
long way to go. The next stepping tomorrow here in Nevada.
ASHER: It's important to remember that, Buttigieg technically has the most delegates at this point. But he's sort of been relegated to kind of an
afterthought, particularly in the last debate. I mean, the fact that there is diversity in Nevada, what does that mean for him?
NOBLES: Yes, I think what you're seeing here is that Pete Buttigieg, his best two states were the first two states, and not only did he need to win,
he really needed to win in a convincing fashion so that it could turn the tide for him in states further down the calendar. He does have a problem
with voters of color, both Latino and African-American voters, he polls very poorly with them. And also, when you look at him in the national
standings, many of these polls, he has a hard time even cracking 10 percent.
[15:35:04]
So, the fact that he wasn't able to build the kind of momentum necessary out of Iowa and New Hampshire, and then leading into states like Nevada,
South Carolina, and beyond, is a real problem for him. And it's a problem on another level, as well, Zain, because he's got to raise more money. He
was enjoying very healthy fundraising leading into Iowa, New Hampshire. He had to spend a lot of it in order to get to the position he was in now that
fundraising is not as flush as it once was. So, it's a big test for him. But, again, Zain, a lot of this is expectations, right? So at this point,
we don't expect Pete Buttigieg to do very well here. If he defies those expectations, because -- could that turn around his momentum? A lot of this
is just symbolic. It's not necessarily tangible. And that it's important for these candidates to beat expectations in these next couple of states.
ASHER: All right. Ryan Nobles live for us there, thank you so much. I want to turn now to President Trump who is speaking, holding a rally of his own
in Las Vegas. Let's listen in.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: -- start a rumor. It's disinformation. That's the only thing they're good at. They're not good at
anything else. They get nothing done. Do-Nothing Democrats. That Putin wants to make sure I get elected. Listen to this. So, doesn't he want to
see who the democrats is going to be? Wouldn't you rather have, let's say, Bernie, wouldn't you rather have Bernie, who honeymooned in Moscow?
Wouldn't that be -- wouldn't that be -- these people are crazy. That's all they think about. They don't think about the country. They don't think
about jobs. They don't think about lowering your drug costs, infrastructure. These people are crazy. Trust me, I like -- I like what
we're doing and I love this country. I love this country.
Now, and I campaigned on it. At the same time, we want to get along with Russia. We want to get along with China. We want to get along with all
these countries. Who the hell needs to have conflict? But these people are sick, they are sick people. The radical lefts attempts to poison our
democracy and overturn the last election, have totally ended in a big fat failure. And by the way, you saw it today, single best day I've ever had is
the polls.
And any poll that the fake news gives you because the real numbers are higher, but any poll they give you is a fake.
ASHER: That, in Las Vegas, Nevada, President Donald Trump speaking, talking about the fact that there have been reports that the Russians are trying to
interfere in the U.S. elections yet again, a repeat of what we saw in 2016. Donald Trump saying, you know, we want to get along with the Russians. I
want to bring in Jeff Zeleny who's joining us live now from Las Vegas. So, just sum up how the President has been handling this belief that the
Russians are at it again?
JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, there's no question, you heard it right there, Zain, that President Trump is calling
it a misinformation campaign by Democrats. And this is all about that meeting last week that House members of the Intelligence Committee were
given a briefing by the Director of National Intelligence, saying that Russia is trying, once again, to interfere in the 2020 election, and they
are trying to do it to the benefit of President Trump.
But President Trump was irate over that. It led to the dismissal of the Director of the DNI, and he's talking about it here at the campaign rally,
as you heard, he's blaming Democrats for this. He's calling it a hoax. He's calling it a misinformation campaign. And again, saying that he has been
hard on President Putin. Well, that simply is not true.
So, the reality here, the question here going forward, all the U.S. intelligence officials have agreed that Russia did interfere in the 2016
election, most believe that there will be interference going forward. So, what is this White House going to do about it. President Trump has long
been loathed to recognize this because he believe it undermines his election from 2016. So, that is the worry going forward among many U.S.
officials, Republicans and Democrats. What is the government doing? What is the White House doing to try and stop this interference? That's simply
something we do not know. The president just made light of it here a short time ago. So, this is a very interesting issue, Zain.
ASHER: I mean, how surprising is it, though, that authorities are still dealing with the same issue that we were talking about four years ago?
ZELENY: Not that surprising, perhaps, because this has been a soundtrack of this campaign. This has been a soundtrack of, you know, the first three
years of the Trump presidency here. So, other question is, Will any Republicans on Capitol Hill break from their party and say something about
this? So, look, the issue here is a serious one. It's, you know, nine months or so before an election, what is the government doing to avoid
election interference? And we simply don't know the answer to that. The President has not taken it nearly as seriously, as his intelligence
officials have asked him to. Zain?
[15:40:14]
ASHER: Some isn't taking it seriously. And clearly, his supporters aren't either.
ZELENY: No, I mean, there's no question that it is largely viewed as sort of a joke. We just heard the President just a few moments ago, essentially
laughing it off. So, the question here is -- the bigger question, election interference doesn't necessarily have to go for one party or the other.
That's why all Americans indeed, everyone around the world should care about this, because it doesn't necessarily have to benefit President Trump.
But it's certainly, at least in the view of the intelligence officials, Russia is trying to interfere to help President Trump. So, we'll see, you
know, how this proceeds, but we know what the President has talked about, and we don't, you know, assume that he would change his view anytime soon,
Zain.
ASHER: And this rally there in Las Vegas, Nevada happening on the eve of the caucuses there tomorrow. What is Donald Trump saying about the
democratic race?
ZELENY: Zain, he is watching this democratic race very, very carefully. He's one of the most faithful viewers of the primary debates. In fact, he
was watching that debate here in Las Vegas just a couple of days ago. And he's going through a laundry list of what he views about the Democratic
candidates. He and former New York City Mayor, Michael Bloomberg, have particularly been keeping going back and forth. The Bloomberg campaign has
put billboards up around this arena here. And they, you know, are making fun of President Trump.
So, look, President Trump, it's an open question, who they want to run against. They have been worried about Joe Biden, worried about his
strength. Of course, Michael Bloomberg has unlimited money. They're also some concern about Bernie Sanders. Is he able to win over some of those
Trump supporters?
So, look, they don't know who they're going to run against. We know one thing, that President Trump plans to play a very active role in this
Democratic primary campaign. He's here on the eve of the Nevada caucuses. Next week, a week from today, he'll be in South Carolina for a rally on the
eve of the South Carolina primary. So, he's trying to impact the Democratic race. We'll see if he does, Zain.
ASHER: All right. Jeff Zeleny live for us there. That thank you so much. Speaking of President Trump, he wasn't happy at all with this year's best
picture winner at the Oscars at a rally he gave some ideas of the movies he likes instead, that's next.
(COMMERCIAL BREAK)
[15:45:11]
ASHER: President Donald Trump is not pleased with this year's Oscar winner. Moments ago, at a rally in Las Vegas, he doubled down on his criticism of
"Parasite" the South Korean film is the first foreign language film to be named Best Picture. This is what Mr. Trump had to say on Thursday night in
Colorado.
(BEGIN VIDEO CLIP)
TRUMP: And the winner is a movie from South Korea. What the hell was that all about? We've got enough problems with South Korea with trade. On top of
it, they give them the best movie of the year? Was it good? I don't know. You know, I'm looking for like -- wait, wait, let's get "Gone with the
Wind." Can we get like "Gone with the Wind" back, please? "Sunset Boulevard."
(END VIDEO CLIP)
ASHER: Frank Pallotta is here. Frank, why "Gone with the Wind" and "Sunset Boulevard" and not "Parasite"?
FRANK PALLOTTA, CNN BUSINESS MEDIA WRITER: So, fun fact --
ASHER: Explain the obvious to us.
PALLOTTA: Fun fact, "Sunset Boulevard" did not win Best Picture. It lost to "All About Eve" back in the 50s. It just -- it's a foreign film, it's
something different. It's -- it doesn't really make a lot of sense because when you think about it, he's kind of talking as if "Parasite" is a small,
international film that no one has seen. It's made over $200 million. The weekend after it won Best Picture, it went up 245 percent of the domestic
box office. Like, I mean, it's not "Avengers: End Game." It's not. It's not the biggest movie of all-time, but it's still a really big history-making
film. And it's a great movie. It was well deserving a Best Picture.
ASHER: And Hollywood has had some reaction to what the President had to say. Neon?
PALLOTTA: Neon actually responded last night with a tweet saying that, "Understandable, he can't read." Because the film is in subtitles. So, that
was their response. It was a pretty quick response, but I think the thing we're all missing here is that, you know, I like "Gone with the Wind." I
like "Sunset Boulevard" and I like "Parasite." I like all three of those movies. All three of those movies are best picture contenders. They deserve
the awards that they won. They're some of the best movies I've seen. You know, I like -- you know, I thought "Sunset Boulevard" should have won Best
Picture, but it's not -- you don't have to pick or choose. That's the good thing about the movies. You can like all of them if you want.
ASHER: It's interesting that, like, you know, in sort of Donald in -- sort of past four years, we've had Donald Trump as president, we've seen various
movement in Hollywood be Oscars so white, or the move, sort of to become more progressive, to become more inclusive.
PALLOTTA: Yes.
ASHER: And you're seeing this massive divide, growing divide between the Hollywood and the president.
PALLOTTA: Well, I'll say this right now, like you talked about Oscars so white, the Academy has worked incredibly hard to have more diversity in
their ranks. And by that, I mean, their academy has changed their demographics, and by doing that, you change the voting, which then changes
who wins these films. So, "Parasite" winning is again, a history-making movement. It's a big movie, and it deserved to win. And it's showing that
the Academy is evolving with the time. If President Trump doesn't like it, that's his opinion. He doesn't have to like everything.
ASHER: All right, Frank Pallotta live for us there, thank you. Still to come, the record industry faces one of its biggest battles in years. We'll
talk to one executive warning of "vinylgeddon," next.
(COMMERCIAL BREAK)
[15:50:00]
(COMMERCIAL BREAK)
ASHER: The record industry is facing an unprecedented setback after a fire wiped out the world's biggest maker of raw vinyl materials. The California
company, Apollo Masters, says it suffered a catastrophic damage from the blaze earlier this month. Apollo is one of only two plants in the world
that makes the lacquer necessary for producing records. The fire comes at a crucial time for the industry, which is seeing its biggest boom in more
than a decade.
Vinyl sales actually grew about see, six percent worldwide in 2018. That same year, U.S. sales topped 419 million. That is the most about 30 years.
And sales in the U.S. actually spiked 15 percent in 2019. My next guest says the record industry is now at the risk of vinylgeddon. Gil Tamazyan is
founder and president of the vinyl company, Capsule Labs, he joins us live now from Los Angeles. So, how significant is this? What sort of damage
could this cause to supply chains when it comes to vinyl records?
GIL TAMAZYAN, FOUNDER AND PRESIDENT, CAPSULE LABS: Hello and thank you for having me with you guys here today. It's up in the air at the moment. We
don't know how hard this is going to impact our industry at the moment. We are lucky to have a lot of great people in our industry, who are coming
together and are going to put a remedy to this situation. There's already a few companies who are developing new discs. We are hearing news and word
that things are going pretty smoothly, they're doing test cuts on some new discs, and I think we're going to be OK. It's going to slow down slightly,
but vinyl is not going away.
ASHER: So -- but how much pressure do you think this puts on prices, though?
TAMAZYAN: A little bit of pressure, of course. Again, it's too soon to know the pressures there. There's -- we went from, you know, the Apollo
supplying 80 percent of the industry to now only our Japanese supplier MDC who is only supplying 20 percent in the industry. We're hoping that MDC is
going to ramp up production and help keep everybody supplied while we figure out what's next for us.
ASHER: Just in terms of changes that end up happening after this, I mean, is the industry far too reliant on just two sort of factories? Does there
need to be more?
TAMAZYAN: Absolutely. I think this is a big awakening for our industry. Until this happened, a lot of -- we didn't realize how significant this
was. Now that this has happened, I think everybody is coming together and hoping that this will never happen again. So, we are all hoping that
there's going to be more than one or two new suppliers of these discs coming our way in the near future.
ASHER: It's actually a -- you know, quite a significant business opportunity because --
TAMAZYAN: Exactly.
ASHER: -- even before this fire, the sort of facility had a lot of pressure on it in terms of keeping up with demand.
TAMAZYAN: Exactly. Having just two suppliers in the world has been quite scary. We never knew what could happen if something like this was to
happen, and it did. So, absolutely, there's going to be a shift, there's definitely going to be a shift. There's a -- production is going to slow
down. Prices might change. Again, the -- it's a little too soon, who knows what's going to happen six months down the line, a year down the line. If
somebody doesn't come up with a great backup disk or if MDC doesn't step up their production, we will see -- we will see problems.
[15:55:00]
ASHER: You know, it's important to note that, actually, just the fact that sales, vinyl records are growing year over year. I mean, some people might
find that surprising. Is it because that people are eager to relive their youth? There's a need for nostalgia. Why is that?
TAMAZYAN: It's a combination of things. You know, records do have a phenomenal sound quality. It's the only way for us to record and
manufacture analog sound. Other than cassette tapes and vinyl records, there's no other medium for the consumer to purchase analog music in a
world of digital and iPods and EarPods and downloads. Vinyl is a significant tangible product that really ties in the consumer with the
artist, and you get to hear the entirety of the album. Not just one hit download.
ASHER: Right? Gil Tamazyan, by sending you positive thoughts, we hope that things get better. Thank you so much.
TAMAZYAN: Thank you very much. Thanks for having me.
ASHER: All right, there are just moments left to trade on Wall Street. We'll have the final numbers and the closing bell after this.
(COMMERCIAL BREAK)
ASHER: There are just moments left to trade on Wall Street. The Dow is still solidly in the red. Investors are reacting to an uptick in
coronavirus cases outside China. You see the Dow down about 240 points. In South Korea, the number of cases actually doubled in just one day, in just
24 hours. And Iran, officials say the outbreak has actually spread to several cities. Let's look at the broader markets in the U.S. Tech shares
are by far the worst of the day. The NASDAQ is down, the most of the three major indices. All three are set to end the week down more than one
percent. It is the first weekly loss in three weeks.
Stocks are also down in most of Asia and around Europe, as well. We saw weakness across the board despite some encouraging numbers on manufacturing
activity. This month, German and French stocks fell over half of a percent. All right. It's been a pleasure being with you this week. I'm Zain Asher,
that is QUEST MEANS BUSINESS. The news continues with our Jake Tapper here on CNN. Have a lovely weekend wherever you are.
END
