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Quest Means Business
Special Counsel To Investigate If Biden Mishandled Classified Documents; Rate Of Inflation Eases Again In December; Activist Investor Nelson Peltz Plans Disney Proxy Fight; Russian President, Vladimir Putin, Is Now Hoping A Change In Military Leadership Will Save His Flogging Invasion Of Ukraine; Soaring Food Prices Is Very Tough To Swallow For Restaurant Owners. Aired 3-4p ET
Aired January 12, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: We've got a very busy hour ahead of us. It is the last hour of trading, and the Dow is on course for the third
session in a row, strong, good. It is holding, which seems to be the encouraging part for today's gains. I'll explain why. It has all to do
with, in the US we had inflation numbers, and the moderation of inflation, which of course leads to the Federal -- we will talk about it, we'll get to
it. Do not fret.
The markets and the main events. One of the big events that we're talking about as well, a Special Counsel to investigate President Biden's potential
misuse of classified documents.
The Magic Kingdom is under attack from an activist investor.
And food keeps getting more expensive. The Chief Executive of the restaurant chain, TGI Fridays joins me live to talk about why and how.
We are live in New York. It is Thursday, January the 12th. I'm Richard Quest, I mean business.
Good evening, a legal bombshell unfolded today at the White House where a Special Counsel is set to investigate whether President Biden mishandled
The Attorney General Merrick Garland announced the news only hours ago, not long after the President himself confirmed that documents from his time as
Vice President were found in both his home and his personal office.
(BEGIN VIDEO CLIP)
MERRICK GARLAND, US ATTORNEY GENERAL: Earlier today, I signed an order appointing Robert Hur as Special Counsel for the matter I've just
The document authorizes him to investigate whether any person or entity violated the law in connection with this matter. The Special Counsel will
not be subject to the day-to-day supervision of any official of the department.
(END VIDEO CLIP)
QUEST: Now the Attorney General is trying to avoid double standards, you can see on the screen, because the current President is now accused of it
and the former President Donald Trump is under investigation for the same matters or same offenses.
Now there are big differences. You can see there, Donald Trump has hundreds. There is barely a couple of dozen for Joe Biden, the level of top
secret, one cooperates, the President is cooperating, the former President didn't. And in one case, the lawyers actually found and did it themselves;
meanwhile, Donald Trump's team basically falls every step of the way.
Does that make a difference in terms of how it is been handled? Our reporter, Kevin Liptak is in Washington. He joins me now. We're waiting for
the White House. They can't be pleased by this.
KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: No. And this is going to be a cloud that hangs over the White House for at least several months as this Special
Counsel investigation proceeds. White House officials had been bracing for this over the last couple of days, in some way seems like an inevitability.
But you know, some Biden allies are trying to find a silver lining in this. They say it will be short term pain, but in the long term, President Biden
will be vindicated, that the Special Counsel will not find any ill-intent in these hoarding of classified documents. And that in the end, when you
compare Special Counsel to Special Counsel, the Special Counsel for President Trump and the Special Counsel for President Biden, President
Biden will come out of it looking a lot better because his team cooperated with the Justice Department.
But still, there are a lot of unanswered questions that the White House hasn't answered, that the President's lawyers haven't answered,
specifically, how did these documents get from the White House when he was leaving as Vice President to these two locations? Who specifically packed
up the boxes? Who moved them to the President's house?
Now that there is a Special Counsel investigation underway, it seems exceedingly unlikely that those questions will go unanswered, at least
until the duration of this investigation.
And so, we are waiting for the Press Secretary, Karine Jean-Pierre to come out and speak to reporters, but I would not expect her to really be all
that forthcoming about what she knows and what the President and his lawyers know now that they have this cover of the Special Counsel
investigation to refer to.
QUEST:` Is there a risk? Every time I hear the phrase Special Counsel, Special Prosecutor, I always think of whitewater and how these things go
like a runaway train. And we did resort in the last administration, all the ancillary issues in the various Trump investigations. Is there a danger
with this one it becomes a runaway train?
LIPTAK: Well, certainly in the public mind, a Special Counsel is never something that you want to see a president subjected to, because it implies
some sort of wrongdoing that is being investigated. Whether or not the Special Counsel at the end of this comes out with any wrongdoing, I think
for now, the public sees the Justice Department having identified something that went wrong in the White House. And for a President or any politician,
that is never a good thing, particularly when you look back at their recent history.
President Trump subject to Special Counsel Robert Mueller for potential ties to Russia during the 2016 campaign; now a Special Counsel
investigating former President Trump for his handling of classified documents.
So in the public mind, I think the phrase Special Counsel means something, and certainly President Biden's aides know that and knew that going into
today. We do see Karine coming out here now. Yes.
QUEST: And I will pause you. Thank you, sir. You ended beautifully, just in time for the Press Secretary.
KARINE JEAN-PIERRE, WHITE HOUSE PRESS SECRETARY: Okay, just two quick things at the top. We've seen the breaking news reports of the tornado
damage in Selma. First, our hearts and thoughts go out to the Selma community, and everyone impacted by the storm.
Our team here is monitoring and assessing the situation and reaching out as appropriate to local and state officials to offer our support. And before I
start and turn over to my colleague who is going to be giving you all a preview of the bilat that the President is going to have with the Japanese
Prime Minister, and also do a preview of next Tuesday with the President's bilat with the Prime Minister of Netherlands.
I just want to say a couple of things and make sure that everyone saw this. It's a statement from Richard Sauber. His statement reads: "As the
President said, he takes classified information and materials seriously, and as we have said, we have cooperated from the moment, we informed the
Archives that a small number of documents were found and we will continue to cooperate."
"We have cooperated closely with the Justice Department throughout its review and we will continue that cooperation with the Special Counsel. We
are confident that a thorough review will show that these documents were inadvertently misplaced, and the President and his lawyers acted promptly
upon discovering of this mistake."
With that, my colleague is here, John Kirby to talk through the bilat tomorrow and also with Japan Prime Minister, and also the bilat with the
Prime Minister of Netherlands next Tuesday, and then I'll come back.
QUEST: Right. Right. So I'm sure it's fascinating to hear about the Japanese arrangements, but we've got other matters to consider. We will be
back when questions are being taken. I think, Kevin is still with me.
LIPTAK: Yes, I think Kirby will go for at least 25 minutes, so --
LIPTAK: Yes, So I mean, yes, and I think it's interesting. Sorry. It's interesting what she said. You heard her say the word "cooperate" four
times in that span of that, like minute long statement. And I think that's something you're going to continue hearing from the White House is that
we're cooperating, we will talk to the Justice Department, we will talk to the Special Counsel, but they're not going to say anything more publicly.
And they're essentially making that clear.
The word "cooperate," though, is important, because it is such a distinction from what's going on with former President Trump who is now
also being investigated for obstruction based on his unwillingness to hand over some of these documents. So even as they are unwilling to lay out
exactly the parameters of what exactly happened, they do want to make this distinction, and they do see that as sort of their advantage heading into
this Special Counsel's investigation.
QUEST: Kevin, I'm grateful for the heads up on how long Kirby is likely to go. We'll move on. Thank you, sir. I'm grateful.
We will of course look to come back to the Press Secretary when she takes questions.
Now, we are in the opening act of a proxy battle for the media giant, Disney.
The company's share price is actually up more than three percent, the whole market is up, but it's still an impressive performance nonetheless. This is
a fight between the activist investor, Nelson Peltz and the Chief Executive, the returning Chief Executive, Bob Iger.
It is a corporate drama worthy of "The Lion King" himself.
(VIDEO CLIP OF "THE LION KING" PLAYS.")
QUEST: On one side of this drama, Peltz says, Disney is a company in crisis and he points to figures like these. The last decade, shareholder
return, not even half of the S&P 500. The streaming losses are mounting. They fell to one-and-a-half billion dollars, but that was only a quarter.
And Peltz's investment firm has bought a $900 million stake in Disney a few months ago. He has been pushing for a seat on the Board. Now Disney has
On Wednesday, reshuffling the Board naming the Nike executive, Mike Parker as its next Chairman. We will be talking more about this in just a moment,
so an official will join me from Washington where we will get more details on exactly what is happening with this.
I want to update you with the market because it is roaring on to a strong session today. The Dow Jones Industrials is up the best part of more than
200 points. It is US inflation falling to its lowest level in a year.
Citi's chief economist -- US economist, puts it all into perspective what it means after the break.
QUEST: US inflation has slowed for a sixth straight month in December. It's now at its lowest level in a year.
At the close of the year, consumer prices were up six-and-a-half percent on what they were 12 months ago, down from an inflation rate of 7.1 in
November. The peak, of course, was just over nine in June.
The markets are liking. The figure was in line with expectations. Investors had penciled in CPI to fall, as it did largely thanks to lower gas prices.
Matt Egan is with me.
So Matt, well, there we go. The medicine is working.
MATT EGAN, CNN REPORTER: Yes, Richard. You know, there is no denying it inflation is cooling off in a big way. And that, of course is a big deal.
You know, for much of 2021 and last year, it felt like inflation was this wildfire that just kept spreading and spreading and really threatening to
consume the whole economy.
Now, the fire has clearly not been put out, but it does seem like it is more and more getting under control, 6.5 percent year-over-your inflation,
of course that's not healthy. It's not good, but everything is relative.
As you mentioned, six straight months of cooling inflation. This is the lowest rate that we've seen in 14 months. So that is encouraging. I think
the officials at the Fed are going to be very happy to see that month-over- month, inflation actually declined. Consumer prices were down. We haven't seen that since this inflation crisis began.
We know that food prices are still high. Shelter prices are high, that is painful, but it does feel like things are moving in the right direction
here -- Richard.
QUEST: Yes, every speech from every Fed Governor hawk and dove alike continue to say we're not seeing what we want to see.
EGAN: Well, I think that we're going to start to see them acknowledge that they are seeing what they want to see in some ways. In fact, the
Philly Fed President Harker, he came out today, and he just -- he actually flat out said, you know, I don't think we're going to see any more of these
75-basis-point hikes, he thinks that it's going to be 25 basis points, and I think that's why we're seeing this reaction in the market.
If we could put the big board back up on the screen. You know, US stocks up pretty solidly today and markets are betting that the Fed is going to once
again slow the pace of interest rate hikes. At last check, the futures market is pricing in a 90 percent chance of a 25-basis-point interest rate
hike, and that is up significantly from yesterday, from a week ago, from a month ago.
The question, Richard is, if they can stop raising interest rates all together before they slow the economy into a recession and we don't really
know the answer to that just yet.
QUEST: Matt Egan, thank you.
Here is what inflation at six-and-a-half percent looks like for families. Moody's says that US households had to spend $371 more a month to keep up
with rising prices. The US President said slowing inflation shows his administration is getting a handle on the problem.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: Today's inflation numbers are good news, good news about our economy. We have more work to do, but we're
on the right track.
We are seeing bright spots across the country where great things are happening. Roads and bridges are being built, factories are coming online,
people back to work again, families breathing a little bit easier. That's why I can honestly say, you've heard me say this before and I mean it from
the bottom of my heart, I've never been more optimistic about America's future than I am today.
(END VIDEO CLIP)
QUEST: Andrew Hollenhorst is the Chief US Economist at Citi. Andrew is with me now from New York.
So the medicine would appear to be working, and I am assuming you're in the 90 percent of economists that believe, it will be a quarter point at the
next Fed meeting.
ANDREW HOLLENHORST, CHIEF US ECONOMIST, CITI: I am in fact not, Richard, I am in that 10 percent of economists out there that still think this could
be 50 basis points, and I'll tell you why.
I mean, it's because, you're right. I mean, it's certainly we're off the peaks in terms of inflation, very good news to see things like gasoline
prices coming down, that makes a big difference to individuals in terms of day to day cost of living.
What I am concerned about is we still have a lot of wage pressure. We still have a lot of momentum in this economy, so has that really cooled down
enough? And then the other thing is, if I look at financial conditions, broadly, interest rates are lower now, we have equity prices that are
higher, that's not going in the right direction to slow down the economy.
So I am in that that 10 percent group.
QUEST: All right, if they did nothing and just carried on, since inflation is already falling, if they didn't do any more, wouldn't it just
continue to fall?
HOLLENHORST: So I think there are elements that look like they will fall, so goods is where we've really seen a lot of slowing down in terms of price
increases and some price decreases.
Used autos is probably the best example. We had a big run up, those are coming down now. Shelter prices, we know house prices are coming down. Now
if you get into some of the detailed mechanics of how these numbers are put together by the Bureau of Labor Statistics, it is going to take some time
for that to show up. But we know that we're going to see cooler shelter prices and inflation.
The area that concerns me is what we call non-shelter services. So things like education, healthcare, travel. That's where you may need to see more
restriction from the Fed or at least the level of restriction that they're talking about it.
I'll tell you what's going on in financial markets today, is the markets are not just saying, Oh, the Fed is going to hike 25 basis points in
February. They're questioning now whether the Fed will continue to hike after that. So that's really what they're dealing with in terms of their
QUEST: So the rally, arguably is a little -- I don't just mean today. I mean, we're on a three-day rally, in a sense, arguably a little premature.
HOLLENHORST: I would think so, I would think so, and I would think if I were Chair Powell and I was watching what was going on, I would say yes,
good news on inflation, good news that the economy is still performing, right? There's a lot of good news out there right now, but a little bit
concerned that financial conditions keep easing and this rally continues.
QUEST: So Olivier Blanchard, who you'll remember, was the Chief Economist at the IMF. Olivier was on this program last night and we were
talking about the rate of inflation when the Fed really has to decide, do keep going? And he says three percent.
If you get to three percent, we can call it Even Stevens and we don't need to keep pushing down to the last one percent. Do you think that? Or do you
have or you have the hash shirt mentality that believes it must be strict and severe, all the way to two percent.
HOLLENHORST: I don't know if we need to be strict and severe about two percent, but it is a concerning notion that the Fed would start guiding
today that they are going to ease up when we get to three percent, and the reason why is once we start to think the Fed might well, you know, we're
going to call three percent close enough to two percent, well, then why wouldn't we think that they would call four percent, close enough to three
percent or five percent close enough to four percent, right?
That's the kind of logic that the market will work with, and that the public will work with and say, is this a Fed that is really committed to
bringing down inflation? So that's why I -- you know, I completely understand the point that is being made. We should not put the economy into
a recession to move from three percent to two percent, but there needs to be that strong resolute messaging about getting inflation back to two
percent, otherwise, we start to question the whole enterprise.
QUEST: Andrew, I'm looking forward to discussing this many times in the weeks ahead, as we see the machinations. Thank you.
Grateful for your time tonight.
HOLLENHORST: Thank you, Richard.
QUEST: Now, back to the Magic Kingdom, which is under attack from an activist investor. Now, the investor is Nelson Peltz, and he is waging a
hell of a battle against Disney's Chief Executive, Bob Iger, who only came back a few months ago.
Peltz also wants a seat on Disney's Board.
Our media analyst is Sara Fisher, and is with me in Washington. But I thought, Sara, that Iger's return was the great hero coming back to the
Magic Kingdom to restore. Now, Mr. Peltz clearly doesn't think so.
SARA FISCHER, CNN MEDIA ANALYST: He clearly does not. And I think what he is eyeing right now is a Board seat. He wants access to internal figures,
internal strategy, so that he can make better decisions about what position he wants in the stock.
It is also notable that he has been accumulating this position, which is worth around $900 million over the past few months. So, at the end of Bob
Chapek's tenure, that is also when Disney's stock started to seriously come under pressure, mostly because it wasn't posting profits in the streaming
That Richard, is where Nelson has really big problem. He is arguing that you can't subsidize streaming with your parks revenues forever.
QUEST: Okay, so we've got parks, movies and TVs and streaming. If you take that totality of the Disney Magic Kingdom, which bit is doing well?
FISCHER: Great question.
So parks and resorts and experiences is the biggest division within Disney. The challenges that their international parks division has taken a hit, in
part because you have parks like Shanghai that are in China, which has been close for a little bit. The domestic parks are doing well, but the
challenge, Richard is they are not doing well enough to offset streaming losses, which are growing bigger.
And then you have media which sort of lays in the middle. Obviously, we know linear television is under a lot of pressure, but Disney has one
interesting asset in ESPN. Sports continue to post pretty good profits right now.
And so if I had to say, which is doing well and which is not, streaming is letting investors down, it's not profitable. Media is not a long-term play,
but in the short term, it's all right. And parks continues to do okay, but they took a big hit at the end of last year because of COVID in China.
QUEST: All right, now, Bob Iger is very experienced. How do you think he plays out the Peltz's attack at the ramparts?
FISCHER: Well, we saw his first maneuver yesterday when they announced that Susan Arnold, the longtime Board Chair was not going to be pursuing another
term, and instead they elevated one of the Board directors, former Nike Executive, Mark Parker to be the Chairman of the Board.
In doing that, he was able to sort of delay a proxy fight with Trian and with Nelson. Now the challenge becomes, is that going to be enough? And if
you listened to Nelson today on CNBC, it sounds like it will not be. He is going to continue to put pressure on Bob Iger and Disney's Board until he
gets what he wants.
And it seems that what he wants, if it's not going to be a Board seat, Richard, it is going to be just more access and visibility into the numbers
behind the scenes.
QUEST: Sara, good to have you with us. I'm grateful. We'll talk more as it progresses. Thank you, for course, for that good information.
FISCHER: Thank you.
QUEST: Now you may have seen in your morning reading that the new COP President at COP28 is Sultan Al Jaber. He is the Chief Executive of the Abu
Dhabi National Oil Company, and you would perhaps rightly suggest, well why is the head of one of the world's major oil producers heading up a Climate
No wonder NGOs are outraged, you will say so.
Some of the climate action networks are saying that Sultan Al Jaber has to stand down over what's a potential conflict of interest. The oil CEO is
heading an industry that is responsible for the crisis itself.
You will see there are many twists and turns, and so I needed Becky Anderson to give me the gist of what this is about.
BECKY ANDERSON, CNN INTERNATIONAL ANCHOR: Richard, on the face of it, this is a controversial move, the first serving oil executive ever to take
on the lead role in shaping the world's climate agenda, but drill down and there is a deeper story here.
Dr. Sultan Al Jaber has been instrumental in shaping a cleaner energy pathway here in the UAE, one that is absolutely instrumental for this
country, as it eventually looks to wean itself off oil.
His first chief executive role was back in 2006 to launch Masdar, that's the country's renewables company, which is today, the second largest
renewable investor in the world.
He has been the special envoy on climate change since 2020, and was out front regionally in committing to net zero emissions by 2050.
If you want buy in from the industry and you want it to experience, giving it a seat at the top table, that may just ensure progress in these climate
talks. And after all, it's progress we need as the clock is ticking -- Richard.
QUEST: Becky Anderson with the gist on the COP President.
President Putin has a very busy 24 hours between browbeating a Minister and demoting his top General in Ukraine, well, read the Kremlinologists and
they'll say there is trouble inside the Kremlin.
QUEST: Hello, I'm Richard Quest. Together, we will have a lot more QUEST MEANS BUSINESS.
I will tell you about the Russian president, Vladimir Putin, who is now hoping a change in military leadership will save his flogging invasion of
Ukraine. There are frustrations within Russia that are growing.
As for soaring food prices, we will talk that as well. It's very tough to swallow for restaurant owners. The chief executive of T.G.I. Friday's is
All of that is to come. But only after the news headlines.
This is CNN. And on this network, the news always comes first.
(VO): There have been violent antigovernment protests from Peru, which have now spread to Cusco, a major tourist destination.
One protester was killed in clashes with the police. Nineteen officers have been injured.
The protesters are demanding the reinstatement of a former president, Pedro Castillo, who was ousted after attempting to dissolve Congress.
U.S. scientists say last year was the fifth hottest year on record, even though cooling La Nina conditions were in place. A climate researcher at
NASA say this year will be even warmer. The agency believes the past nine years were the warmest on record.
Prince Harry is breaking sales record with his memoir, "Spare." The English-language version sold more than 1.4 million copies on the first
The publisher, Penguin Random House, says the company's largest first-day sales, total, for any nonfiction book it has ever published.
(oc): Let us return to the White House where Karine Jean-Pierre is taking Questions.
(WHITE HOUSE PRESS CONFERENCE BEGINS AT 15:32:06 TO END)