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Quest Means Business
Trump Slashes Tariffs On India After Modi Agrees To Stop Buying Russian Oil; Georgieva: Risk Of Trade Collapsing Did Not Materialize; Former U.K. Ambassador Quits Labour Party Over Epstein Files; Iran's Foreign Minister: We Are Open To "Fair And Equitable" Talks With United States; Canada's Prime Minister Warned Of Rupture In The Global Order; Pagliuca: We Will See New Breakthroughs In Technology. Aired 4-5p ET
Aired February 02, 2026 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:17]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. The markets, as they have wended their way through
the start of a new week. The markets, as you can see from the Dow Jones Industrials, we are up comfortably, have been up for the entire session
holding its own, tells us -- firm gavel to bring trade -- oh madam! You tried so hard to try and break it but you failed.
Those are the markets and these are the events.
President Trump announces a trade deal with India after its Prime Minister agreed to stop buying Russian oil.
The head of the IMF with a clarion call to smaller countries: Do deals, form relationships and take risks if necessary. Tonight on the program,
you'll hear from Kristalina Georgieva.
And Disney shares falling. The company has warned fewer international visitors are visiting its U.S. theme parks. For most of you, it is still
Monday, February the 2nd. Here in Dubai, we have slipped grande elegante into Tuesday.
I am Richard Quest and yes, I mean business.
Good evening.
Tonight, President Trump says the U.S. and India have reached a trade deal that will immediately lower tariffs on each other's goods. The President
posted online he spoke to the Indian Prime Minister, Narendra Modi on Monday. Prime Minister Modi agreed to stop buying Russian oil and instead
will buy much more from the U.S. and potentially Venezuela.
The President added the U.S. will lower tariffs on Indian goods to 18 percent. They've been as high as 50 percent. India will reduce their
tariffs to the U.S. to zero.
Kevin Liptak is at The White House. This is a resounding success, in a sense, for President Trump's pressure points on the Indian economy, if
indeed the Indians have agreed to stop buying Russian oil.
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: And I think that is an if. You know, it is going to take a lot more than this social media message for
the Indians to totally wean themselves off of energy products from Russia. They are importing a million-and-a-half a day and when the President says
that potentially they will get some from Venezuela, I think the potentially there is doing a lot of work.
You know, the President himself has said that it is going to take a lot of time and a lot of money to get Venezuela's oil industry up and running
again, to the point where they will be able to replace all of the countries that rely on Russia, but all that said, you're right, it is a big victory.
This had been a major sticking point between Trump and Modi, who by all other accounts seemed as if they get along very, very well.
I think one of the pressure points that we saw added over the last month or so was India agreeing to a new trade deal with the European Union. In a lot
of ways, I think that lit a fire under Washington to try and come up with some sort of agreement here.
At this point, a lot of this is somewhat vague. You know, we haven't seen written down on paper, for example, how India would invest $500 billion in
the United States. You know, as of now, India is only importing around $40 billion worth of American goods. So, how they're going to bring that to
$500 billion remains to be seen.
But it does seem as if it has eased what was, to be sure, one of the biggest trade disputes of the president's term.
QUEST: But we know from other countries like South Korea that when they don't immediately implement these policies, tariffs come back and they come
back quickly.
So I guess, you know, yes, a bit of clear water, but perhaps not totally smooth sailing.
LIPTAK: Yes, and I think the one thing that President Trump is going to be watching here very closely is how India fulfills its side of the deal. You
know, the President says that Modi has agreed to remove tariffs and non- tariff barriers, things like the VAT to zero. I think when you look at how India has structured its trade relationships, a lot of analysts say that
its sort of difficult to imagine that they are going to bring those down entirely.
And so you could kind of foresee perhaps in the future, if the President doesn't see this moving quickly enough that he could slap some of these
tariffs back in place. He has also only brought the tariff rate down to 18 percent. You know, a number of other countries who negotiated deals with
the United States were able to bring the tariff rates down much further.
And so, there are still a number of implementation questions that remain to be resolved.
[18:05:10]
And a lot of questions just generally about what this deal actually consists of, but you know, at least for now, the President seems as if he
has repaired what had been quite a contentious back and forth.
QUEST: I am grateful, Kevin, bad luck, by the way, you were not the Kevin that got the job at the Fed.
LIPTAK: Yes.
QUEST: But I am sure you you're --
LIPTAK: Yes. I thought it was going to be me.
QUEST: -- many times.
LIPTAK: I thought it was going to be me, but no.
QUEST: Yes. Listen, I had money on you. I had money on you. But, hey, not to be.
Good to see you, Kevin. Kevin Liptak at the snowy White House for us tonight.
Now, that deal with India and with the United States, as Kevin was saying, predicated by India and the E.U. also doing an arrangement. Well, now, the
Managing Director of the International Monetary Fund, the IMF says countries need to look beyond the U.S.
I was talking to Kristalina Georgieva here. She is in Dubai for the World Government Summit. The M.D. said despite current changes in U.S. trade
policy, mid-level countries will need to work together to deal with current fragmentation.
It is, in a word, in a version of Mark Carney's idea of what needs to be done. But she told me, despite the new challenges, the world is learning to
adapt to the U.S. policies.
(BEGIN VIDEOTAPE)
KRISTALINA GEORGIEVA, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: What we see is that the risk of trade collapsing did not materialize. It didn't
materialize because actually the United States has calibrated tariffs down through negotiations, 23 percent announced. When we look at what is
collected, it is much less.
And it did not materialize because the rest of the world not only continues to trade, but there is an uptick in bilateral and multilateral trade
agreements. The short and the long is trade is like water. You put an obstacle, it goes around it.
QUEST: Having come from Davos, where we all were, whether or not Carney's rupture exists or not is not really the point. The point is, this idea of
middle level countries and how middle level countries can respond in the future. Do they need to -- because they are all your members.
GEORGIEVA: They are.
QUEST: The middle level countries, do they need to rethink their strategy?
GEORGIEVA: What we strongly recommend to all our countries is get your own house in order. Because in a world in which exogenous factors affect you,
the only thing in your hand is the strength of your own economy. Make it more competitive, and then look for alliances.
For the middle-sized countries, Richard. There is no such thing as closing borders and relying only on themselves, they have to work with each other.
QUEST: I can't remember the phrase the Prime Minister used, but it was basically the idea that you will find alliances, allies, bilateral on
different areas, with different groups depending on the subject area.
Do you subscribe to that?
GEORGIEVA: I believe that we are in a multipolar world in which inevitably, countries will seek common interests and they are going to be different
configurations of common interests.
So yes, in that future, and actually at the Fund, we have been strongly advocating for regions -- look for regional integration more, trade with
each other and for cross-regional bridges to be built.
QUEST: This is exactly the opposite of what we've always done. This idea of a multilateral, large-scale agreements. And now you're saying,
fragmentation with risk.
GEORGIEVA: Fragmentation is for real. It does not need to be a destroyer of our prosperity.
QUEST: Does this involve taking on -- well, when I say taking on more risk, I've got to be careful with that phrase, because that means things in
economics. I will rephrase it. Does that mean being prepared to be more risky in what you do?
GEORGIEVA: The world is changing very, very rapidly. There is no way you can make informed decisions way ahead of every step. So yes, we are in a
world where taking more informed risk becomes a necessity. Who is best positioned to do that? It is actually private sector.
[16:10:01]
And what we have seen over the last years, Richard, is that private sector agility has been buffering us against the uncertainty within which we
operate. In fact, over the last decades, governments moved out of economic activity and they let the private sector in. Thank God for it, because here
is the private sector, more agile, more adaptable, more capable to take risks and manage risk.
QUEST: I just want to ask you finally about Venezuela -- very difficult. The Fund hasn't been there. Well, you've been monitoring, but you've not
been there since 2019.
When are you planning to really look at this?
GEORGIEVA: Well, we are looking into Venezuela. Our membership is to give us the authority to engage. And of course, the Venezuelan authorities have
to be interested to engage. But we have done a fairly careful assessment of the economic situation. It is devastating, Richard. The country's economy
shrunk to one-third of what it used to be.
Eight million people, this is, as share of the population is more than Ukrainians fleeing war have left Venezuela. We have no data. We have no
understanding of how decisions are made. And you know that without data, you cannot make good decisions.
So, there is a long way to rebuild strength in Venezuela. Of course, we know from experience it can be done, but it is really hard. So, buckle up.
QUEST: Are you willing to take on that task if asked?
GEORGIEVA: Of course, of course. This is our duty.
We are built to support countries, especially when they are in trouble. And I know we actually have a very good track record in that. Remember eurozone
crisis? Portugal, Greece, Ireland, Iceland -- these countries are now the best performing countries in Europe.
QUEST: Finally, Kevin Warsh at the Fed. It will be up to the senate, of course and I fully understand you'll caveat. It is up to the Senate, but as
a matter of nomination, does it pass your --
GEORGIEVA: Very good choice, somebody who has already demonstrated his understanding of the role of the Fed, and somebody who I believe, if the
Senate confirms him will do a very good job for the United States. And, of course, the Fed matters for the rest of the world -- for the world economy.
(END VIDEOTAPE)
QUEST: Kristalina Georgieva, the Managing Director of the IMF, and while she was talking, and you heard me say, I couldn't remember the phrase that
Prime Minister Carney used to describe this new multi-relationship, multi- allied. I found the speech. He says, "We are doing something else to help solve the problem. We are pursuing -- " variable geometry is the phrase. In
other words, "... different conditions for different issues based on common values and interests." That's indeed is what the Managing Director was
alluding to.
As QUEST MEANS BUSINESS from Dubai continues tonight, newly released files show Jeffrey Epstein ties to the rich and powerful. They were further,
deeper, widespread than previously known. The fallout has already begun in a big way.
QUEST MEANS BUSINESS tonight for you.
(COMMERCIAL BREAK)
[16:16:20]
QUEST: Lord Mandelson, the Former British Cabinet member, has announced his resignation from the British Labour Party after new revelations about his
ties to Jeffrey Epstein.
Peter Mandelson says he has no record of receiving payments from Epstein as the newly released documents suggest, and Mandelson says he will
investigate the claims, which he believes to be false.
The British Prime Minister, Sir Keir Starmer, fired Mandelson last year as Ambassador from the United Kingdom to the U.S. over his friendship with
Epstein.
Max Foster is with me in London.
I can -- I mean, if I am the British Prime Minister, not only am I believing that I made the right decision. I am seething that the
information we are receiving, Max, is on a different scale now. I mean, pictures of Mandelson in his underpants.
MAX FOSTER, CNN CORRESPONDENT: Indeed, but also, he is coming under pressure for the fact that he appointed Mandelson in the first place to the
U.S. Ambassadorship, which was an unusual appointment. They didn't go for the career civil servant. He went out of his way to bring in this Tory
grandee and there was talk at the time that he had associations, at least a friendship with Epstein.
So, the Prime Minister is under a lot of pressure tonight, obviously not as much as Mandelson. We've just heard from the London Metropolitan Police
that they are going to look at the case because there was a case, a complaint basically filed by an opposition member of Parliament saying that
the police should look into this. It really is escalating.
There is the $75,000.00. What was that for? He didn't just -- he actually said he couldn't even remember it, which is extraordinary when you consider
that it was such a large sum of money, and then there are further allegations now that Mandelson, whilst working for Gordon Brown as Prime
Minister was sharing market sensitive information with Epstein, which he could trade on.
Obviously, we don't have any evidence for this, but this is what was coming out in these e-mails. Mandelson saying he is looking at it, but it now
looks there is a huge amount of pressure now, and the Prime Minister is backing it up, but he should be thrown out of the Lords and he should lose
his title as well.
QUEST: Talking of people who have been further and lost titles, the former Prince Andrew, now Andrew Mountbatten-Windsor. Any further fallout reaction
to the photographs? By the way, I will say it before you have to. Andrew Mountbatten-Windsor denies any allegations.
And look, the photos are at one level, perfectly innocent and another level just rather salacious. But they do show him sort of kneeling over a young
lady on the floor. Any further reaction on that?
FOSTER: Not really, because the Palace won't say anything about it, because they say they don't represent him. But, you know, we have pressed them on
that because at the time when these images were taken, he was a working Royal and he was part of that system.
Also, there were allegations that he had Epstein-related experiences, if I can call it that, in Royal residences, offered tours of Buckingham Palace.
So, there may be something for the Palace to answer. They are not doing that.
And certainly, Andrew's office, what's left of it is not responding to any of this. So, we are not getting anything. They are just allowing these
images to sit there and undermine the story that he initially told in that big interview with the BBC. Also, every single piece of evidence that seems
to come out in these files do back up many of what -- you know, what his accusers have said.
So, the reality is there isn't any evidence there against him, but the other reality is that every time we see more information, it backs up what
the accusers are saying.
QUEST: Max, I am grateful. Thank you.
[16:20:18]
Whether its Andrew Mountbatten-Windsor or Lord Mandelson, they are the high-profile names mentioned in the latest document. President Trump is
named more than a thousand times. That includes references that are benign and verified, and certainly do not imply any wrongdoing.
Mr. Trump has posted on Truth Social, he wasn't friends with Epstein. He never visited Epstein's island, unlike, in his words, "... almost all of
these crooked Democrats."
Tom Foreman is in Washington. This is a really tricky one because there are a gazillion names, all highfalutin and what has to be careful just guilt by
association, but at the same time, it is all very salacious.
TOM FOREMAN, CNN CORRESPONDENT: Yes, yes.
And all sorts of people are running away from this as fast as they can, pausing just long enough to point at somebody else and say, "What about
him? What about him?" There is a lot of that going on here right now.
I think, Richard, one of the things -- you know, a lot of conspiracy theorists have this idea that there is this great big cabal out there of
wealthy and powerful people all cavorting together. The problem with these documents is they seem to suggest an awful lot of rich and powerful and
influential people were hanging out together, sometimes for no reason, because they just wanted to hang out, sometimes for what appear to be
nefarious, or at least, as you noted, salacious reasons.
That's what these documents are doing right now. They are just flooding that market of ideas with people saying, yes, look at all of these people.
What are they doing this for? Why were they all hanging out with a guy like this? And how could their judgment be so bad?
QUEST: Tom, can I put it to you? If I may, sir?
FOREMAN: Sure!
QUEST: That the reality is those of us who sort of cover summits, Davos, even here, WGS, World Government Summit -- these people all know each
other. It is not surprising, that -- now maybe I take on board your point about, you know, Epstein post-2008 and his prison time, but the fact that
these people, these elites are all in touch with each other, to those of us who have covered this sort of thing, this is entirely normal.
They are always talking to each other. They meet in the same circles. They travel. They're on the same boards.
It does not surprise me that they are all sort of chatting with each other in a sense.
FOREMAN: Yes, but that's the problem for a lot of normal voters. Normal voters say, hey, in my own town, when I see somebody where I get the vibe
that there is something not good about them, I get away and I have no trouble walking away from that group.
But the sense is that people here, in exchange for that access to power, to finances, to all sorts of things, that these people did not show judgment.
That's one of the key issues, and there are so many big names in here that you're like, why are these people having anything to do with any of this?
You know, when we talk about Woody Allen -- well, Woody Allen has got his own issues there. Martha Stewart, Katie Couric, Richard Branson, the owner
of the Giants, Steve Tisch, Brett Ratner, the guy who just directed the "Melania" movie, has shown up in a photo in all of this. This isn't to say
that this was wrong, but it does feed this notion of, you know, you're right, Richard, we cover these things. We are in the hallways to see how
chummy all of these people are.
Normal people are not, and to the contrary, I think what a lot of them think is, hey, if you're this rich and this powerful, you should be even
more careful about who you hang out with. You don't need to be hanging out with these people, you need to be showing some leadership and some
discretion, and the feeling is that this shows that they don't.
QUEST: It is this feeling of entitlement.
FOREMAN: Yes.
QUEST: Once -- I mean -- it is not -- it is Tom Wolfe's "Bonfire of the Vanities." Masters and mistresses of the universe that once they have
reached this area and my word, no else is untouchable!
FOREMAN: Yes, I think there is a lot of that and sort of that feeling of -- I think it also feels to a lot of people, almost like a type of social
fraud. Like you stand in front of me, whomever you are and you say your company, your political party, your brand stands for certain principles,
and then I see pictures like this where you're standing in the hall with people who seem to be about entirely different principles that may even be
opposed principles.
Why are you standing there? Why aren't you saying I will not be around people like this because this does not represent my principles.
[16:25:10]
And where we see it in the United States is, you know, somebody from the Democratic Party gets accused of something and a lot of Democrats rush to
their side and say, oh, no, they would never do that. Someone from the Republican Party, oh, no, they wouldn't do that and I think what a lot of
people are hungering for is to say, Republicans, if you think Donald Trump or somebody did something wrong, Republicans, you call him out. Democrats,
if you think somebody did something wrong, you call him out.
And that clubbiness, that chumminess seems to agitate against that kind of accountability. I think that's one of the reasons this is so upsetting to
people. They look at the documents and they say, here is the proof of what I've been talking about and they are still walking around saying, oh, no,
no, no, no, I had nothing to do with it.
QUEST: Tom, brilliant exposition on exactly what this whole issue is about. I am so grateful for you, sir tonight. Thank you very much.
FOREMAN: Nice chatting with you.
QUEST: As QUEST MEANS BUSINESS continues tonight from Dubai, fresh hope tonight, the U.S. and Iran will find diplomatic off ramp. Energy markets
are calmer. I will talk about that next.
(COMMERCIAL BREAK)
QUEST: Hello, I am Richard Quest.
Together, we are going to have more QUEST MEANS BUSINESS. You're going to hear from Iran's Foreign Minister, who is warning of disaster if U.S.
strikes his country and Bain Capital's advisor, Stephen Pagliuca gives his take on President Trump's pick for the next Fed President.
Only after the headlines, as you would expect, this is CNN, and here are the news always comes first.
President trump says he plans to reduce tariffs on India after it agreed to stop buying Russian oil. The President spoke to the Indian Prime Minister,
Narendra Modi, and says the two leaders agreed to replace Russian crude imports with oil from Venezuela and the United States.
[16:30:05]
The U.S. Justice Department is making clear no new charges are coming related to the late sex offender, Jeffrey Epstein. In its latest release of
files, some survivors had their names and identifying information exposed. The survivors' attorneys calling them an unfolding emergency and what the
judges to enforce the removal of the files from public view.
It appears NASA ran into a problem during the major test of its moon mission today. A leak was detected in the super cold liquid hydrogen that
is used to fuel the Artemis II rocket. NASA had hoped todays test would confirm Artemis was ready to take four astronauts to orbit around the moon.
NASA is still testing the rocket and has still not ruled out a liftoff this weekend.
Oil prices were down on reports that the U.S. and Iran will hold talks this week in Turkey. Brent down to $65 a barrel after President Trump said Iran
was seriously talking with Washington. A fall of four percent over.
Iran's foreign minister sat down for an exclusive interview with our Fred Pleitgen in Tehran. The minister said the possibility of war and the U.S.
president's latest remarks.
(BEGIN VIDEO CLIP)
ABBAS ARAGHCHI, FOREIGN MINISTER OF IRAN: So, I'm not concerned about war. What I'm concerned of is miscalculations. And I think, President Trump is
wise enough to make the correct decision.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: How can a meaningful negotiations process be jump started right now?
ARAGHCHI: We have lost our trust to the United States as a negotiation -- negotiating partners. There are now some intermediators, some friendly
countries in the region, who are trying to build this confidence.
So, I see the possibility of another talk if the U.S. negotiation team follows what President Trump said. A fair and equitable deal to ensure that
there is no nuclear weapons.
PLEITGEN: So, if this confidence is built, you are ready and willing to sit down directly with the American side.
ARAGHCHI: No, the question of directly and indirectly is something else. That is that the form of negotiation, and we have to -- we have to --
(CROSSTALK)
PLEITGEN: So, basically, they want that.
ARAGHCHI: Yes, but we have to take care of the substance of negotiation, and that is more important.
PLEITGEN: President Trump says that negotiations are already going on. Would you say that these talks that are going on right now are fruitful?
ARAGHCHI: So far, yes. Fruitful.
PLEITGEN: Things like enrichment, things like ballistic missiles, things like proxy forces in the region. Is that completely out of the question for
you, or is that something you could at least talk about?
ARAGHCHI: President Trump said no nuclear weapons, and we are fully agree. We fully agree with that. That could be a very good deal. Of course, in
return, we expect sanction lifting. So, that deal is possible. Let's do not talk about impossible things.
PERGRAM: What do you think the consequences would be if there was a full-on military confrontation between Iran and the United States?
ARAGHCHI: If war starts, that would be a disaster for everybody.
In previous -- in the previous war, we tried hard to limit the scope of -- scope of war between Iran and Israel.
This time, if it is between Iran and the U.S., since the U.S. bases are spread all over the region, then, inevitably, you know, many parts of the
region would be involved -- engaged, and that could be very dangerous. Being prepared doesn't mean that we want war. We want to prevent a war.
(END VIDEO CLIP)
QUEST: Now, the latest tensions before we move on. Let me just remind you that CNN is operating in Iran with the permission of the Iranian
government.
The latest tensions between the two countries come at a time of debate about how countries wield their power. At Davos, the Canadian Prime
Minister Mark Carney described as a rupture in the international system, saying large countries are weaponizing economic integration to get what
they want.
And so, to our next guest, who argues the U.S. has been doing just that against Iran. Henry Farrell is the professor at Johns Hopkins University
and co-author of "Underground Empire: How America weaponized the World Economy".
Professor, very grateful to have you. Thank you.
As I read your views, you know, the Carney speech, which was a turning point in many ways, was basically saying, we all know the rail politic of
it, that the big countries do what they want.
[16:35:09]
And we have all accepted that for our common benefit. The difference now is the weaponization of that acceptance.
HENRY FARRELL, STAVROS NIARCHOS FOUNDATION AGORA PROFESSOR OF INTERNATIONAL AFFAIRS, JOHNS HOPKINS UNIVERSITY: It's wonderful to be with you, Richard.
And I think that, that is exactly right. Carney talks about the ways in which we used to. For a long time, we have known that the world economy was
indeed run according to principles, where the strong did what they wanted. But there was a certain degree of give and hypocrisy associated with it,
and that has gone. And now, what we are seeing is the very naked weaponization of the underlying infrastructural systems through which the
United States is capable of really shaping global politics.
And so, we see countries like Canada, like the European Union, and indeed, Iran, trying to figure out what to do in this much more difficult and much
more uncertain world.
QUEST: It's almost a sort of an exam question, which is worth the hypocrisy of the living the lie, as Havel put it. Living in the lie as Havel put it.
Or the reality of the real politics, as you actually know what's going on. Which is worse? Discuss.
FARRELL: OK. So, I think that the way that I think about it is that hypocrisy. There is a famous saying that it is the homage that vice pays to
virtue. But also, hypocrisy can be the way in which virtue, to some extent, chains vice down and forces it to behave in ways which it otherwise might
not behave.
So, I think, in a world where the United States was much more committed to a variety of different rights, that this was a world in which U.S. allies
could rely on it for some things, countries such as Iran could also hope or believe that there will be certain things that the United States would not
do. And we are now in a world where a lot of those have really just gone out the window.
QUEST: Right. But here is the point. Let's take India tonight. India reaches U.S. deal with the U.S. on no -- on tariffs by agreeing not to buy
Russian oil. Classic case of what you are talking about.
Is the problem here, not the use of force, the weaponization, but the capricious nature by which it seems to be at the whim of one man, the
president. There is no process leading to the decision.
FARRELL: So, I think that's a lot of what is happening. And certainly, if you looked back as Abe Newman, my co-author and I did in "Underground
Empire", if you look back over the last couple of decades, you will see a lot of process that was associated with these decisions. And now, we see a
world in which the Trump administration seems to be jumping from one to the other thing without any huge degree of consistency.
But I think that, that is also a problem for the Trump administration.
(CROSSTALK)
QUEST: Right.
FARRELL: Because with Yeah, with the United States in the old configuration, you used to at least have some hope that the United States
would stick to a deal. And now, Trump, I think, you know, whether he'll stick to this deal with India or not. Who knows? It may depend on what who
he talks to two weeks from now, whether he wakes up in a bad mood, whether somebody says something mean about him on social media.
QUEST: So, finally, on this point, let's assume we have this for the next three years, whatever comes after cannot, I would suggest, put the genie
back in the bottle. We can't go back to the old way, because I think you would probably agree, because trust has been destroyed. Therefore, what is
the new modus operandi between large powers and middle to small powers?
FARRELL: So, I think that, that is absolutely right. And certainly, the Biden administration after Trump's first go did think that they could come
back and that everybody would welcome them with open arms. And they discovered that this was absolutely not the case.
So, I think that whoever comes in after Trump, whether this be a different kind of Republican or whether the Democrats win back the presidency, is
going to have to confront a world in which people will not trust the United States, in which they are building their own systems, and in which, I
think, we are going to see, for example, Europe, China, middle powers such as Canada, building more and more their own systems, and being extremely
distrustful of wanting to get too entangled with what the United States has built.
QUEST: Professor Henry, if I may call you by your first name. Henry, let's agree that we will talk more over the next three years, so, I can get your
perspective on exactly how this is all playing out. Thank you for joining us tonight. I'm very grateful. Thank you. Yes.
[16:40:00]
After the break, Bain Capital senior advisor tells me that for many companies, investing in A.I. is now a matter of a survival.
QUEST MEANS BUSINESSI from Dubai.
(COMMERCIAL BREAK)
QUEST: Nvidia's shares were down after a report that the chip makers having doubts about its investment deal with OpenAI. Chief executive Jensen Huang
denied the Wall Street report that he is unhappy with OpenAI strategy. Even so, shares in the chip maker slipped down nearly three percent of the
session lows.
Bain Capital's Stephen Pagliuca says many companies will have no choice when it comes to investing in artificial intelligence. Here in Dubai, he
joined me and where Steve compared the current A.I. boom to the early days of the Internet.
(BEGIN VIDEOTAPE)
STEPHEN PAGLIUCA, SENIOR ADVISER, BAIN CAPITAL: Basically, business performance is very strong still, and I think we are in probably a good
cycle right now where A.I., as you know, is driving everything.
And as opposed to the .com bust that was financed by some debt and by a lot of a thousand companies forming. A.I. is very financeable because these big
seven companies have billions of dollars of cash built up, and it's existential to them. So, they will spend that money, and that's ratcheting
through the whole system.
QUEST: But the -- which is perfect, in a sense of it's necessary. But the productivity gains and the profitability from those investments will come
eventually, but we don't know when.
PAGLIUCA: Yes, it's going to be a while.
(CROSSTALK)
QUEST: And that's a problem for markets.
PAGLIUCA: And their -- by definition, they are going to overspend. Because if they don't spend, the competitor will take it away. You know, if you're,
--if you're -- if you're Apple or Amazon, or you're Meta, you've got to have the infrastructure. And so, it is booming.
QUEST: Right. But is the market sophisticated enough, or what I would describe as rephrase that, is the market not childish enough that it can
look through that to the future product -- profitability? Or is it going to punish because you missed your quarterly number.
PAGLIUCA: At some point it will punish, but they haven't punished yet. It's starting to happen a little bit.
But again, the company's perspective is they got to spend that money, because if they don't have the infrastructure, they don't get ahead in
A.I., they are going to really fall behind the competition. So, this crazy competition between these very well capitalized companies is driving the
whole economy.
And then, there are knock on effects, because you need energy for that. So, you are looking at things like fusion, nuclear power being put up. So, the
whole -- they are going to spend in the next three or four years over a trillion dollars of investment. That's incredible, that's unheard of, and
that's going to ratchet through the economy.
[16:45:09]
QUEST: It's going to ratchet and boost and put it on steroids. But is there a moment when we say, this is not sensible, this is not -- this does not
make common sense?
PAGLIUCA: Well, the markets will determine that. But it -- but --
(CROSSTALK)
QUEST: But how far away from that moment?
PAGLIUCA: I think we are -- I think, we are far from that moment, because these companies have cash. The market knows they have to be state of the
art in A.I. to beat the other companies.
So, you have to make those investments. And now, I'm on the boards of several companies to supply those companies, and our orders have doubled
and tripled, and we are having -- we are having to invest billions in these companies now to get those orders fulfilled. And that -- that's not I even
speaking to the energy need, which is -- which is gigantic.
QUEST: If we look at your own areas that you are looking at. Biotech, A.I., the growth of all these areas, what's driving it?
PAGLIUCA: The fact that the new technology -- we've mapped the genome. And now, with A.I. and quantum computing and regular computing in massive scale
with GPUs, you can now do analysis, you can do almost simulated clinical trials. You can do amazing things you couldn't have done before, faster,
quicker, cheaper, and that's going to drive improvements in the technology and new breakthroughs.
QUEST: Now, for a man who has made a sizable amount of money in very sensible areas of the world or industries, you then decided to get into
sports teams.
PAGLIUCA: I did.
QUEST: Which, of course, is exactly the opposite. It is a labor of love that consumes large amounts of money, and you have to really be hold your
nose sometimes and enjoy it.
PAGLIUCA: It is. You have to -- you have to be disciplined. And the clubs I've been involved with the Celtics and now at Atalanta, have had fantastic
management, and they have been able to kind of balance that fact of not lose balance that fact of not losing lots of money but still winning. It's
been fantastic to be involved. There is nothing like it.
QUEST: Kevin Warsh at the Fed. Looking at the comments from everybody, everybody seems to think it's a very good move that, you know, the jury is
out on whether or not he will -- what he agreed before he signed on. But as a -- as an economist, as a policymaker, people seem to be very pleased.
PAGLIUCA: Everything I've read, you know, I think he was -- he was the youngest guy ever on the -- on the Federal Reserve Board, and one of the
brightest students. So, everything I've read has been positive so far, and the markets have reacted positively that.
(END VIDEOTAPE)
QUEST: Steve Pagliuca joining me here in Dubai. In a moment or three, Disney's warning that a dip in international travel poses a challenge to
its theme parks. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:50:13]
QUEST: Disney says a decline in international travel to the U.S. is hurting the business at the theme parks. Its shares were down seven percent,
despite otherwise decent earnings, and that includes strong success at the box office. 13 percent growth in streaming revenues.
Brian Stelter joins me. The theme parks have always been a sort of a staple, Brian. The revenues, if not exactly guaranteed, but fairly
predictable, but it's the reason why people are staying away. That's important.
BRIAN STELTER, CNN CHIEF MEDIA ANALYST: Yes, it's the international visitors who are thinking twice before coming to the U.S. to visit Disney
World in Florida or Disneyland in California.
That situation is something that's so far out of Disney's control. It has nothing the company can do about it, but it is suffering the consequences.
And who specifically? Josh D'Amaro, who's the parks chief, who is believed to be the front runner for the CEO job., Bob Iger, the current CEO, of
course, signaling he's getting ready to step down for real this time. His comments today certainly signal that an announcement is imminent. We are
told the board is about to meet. Josh D'Amaro seems like the man to beat, and he has had a stellar track record building up the parks around the
world, recently announcing another park in Abu Dhabi.
But it's this issue about international visitors, maybe not being so eager to visit the U.S. parks that is a drag on Disney stock today. Richard.
QUEST: And, as we look, I mean, the WTTC warned about the numbers of visitors to the United States will be lower because of policy. People just
to be great product, great opportunities, but people don't want to come here because of some of those policies. As a result, we would expect to see
more of this across others like Universal and the like.
STELTER: Yes. Comcast is the one that comes to mind operating other big theme parks in the U.S. Those are the Universal properties. And typically,
when you go to visit Disney World, you go to Universal as well. You get a lot of that spillover. So, that company usually benefits as well, but also
suffers in the same way. And like I said, totally out of Disney's control.
Typically, the problem the theme parks have at Disney is actually too much demand. The debate the last two years has been about how much they are
charging and whether the prices are going up too much. This actually creates a little bit slack in an otherwise very tight system.
QUEST: Brian Stelter at Disney. I'm grateful. Thank you.
"BREAKING NEWS" to CNN. Elon Musk plans to merge his company's SpaceX and xAI. The deal was announced on X a moment ago. It comes ahead of Space X is
expected IPO later this year. Hadas is with me. Hadas Gold, what's the logic behind this?
HADAS GOLD, CNN MEDIA CORRESPONDENT: Well, I mean, reading Elon Musk's memo that SpaceX just posted, he says it's all about vertically integrated
innovation on and off. Where Earth with A.I. rockets, space-based, Internet, direct mobile devices, and the world's what he says, foremost,
real time information.
A lot of this comes -- there is both a money element to it, but a lot of this comes with the data and A.I. data. And there is, you know, huge need
to power these A.I. data centers. And Elon Musk and others in the AI world have talked about space data centers.
And this is something that Elon Musk specifically addresses in this memo. He says that he is -- they are trying to change how A.I.s are dependent on
large terrestrial data centers. Saying that the global electricity demand for A.I. simply cannot be met with terrestrial solutions, even in the near
terms.
And so, in the long-term, he say space best A.I. is the best way and the only way to scale to harness even a millionth of the sun's energy. And
saying the only logical solution, therefore, is to transport these resource intensive efforts, these A.I. data centers to a location with vast power
and space in space as well.
This is all part of Elon Musk's memo that he just posted on SpaceX.
And also, if you think about it, x AI is a money hungry company. It needs a lot of money to help fund and run these massive data centers for making a lot of investments. And as you
noted, SpaceX is about to have a huge IPO. There is been reports that they're planning to have an IPO that could raise as much as $50 billion.
This is, according Bloomberg.
Bloomberg is reporting that the combined company of SpaceX and xAI could have prices shares about $527 each, in a valuation of 1.25 trillion. That's
according to Bloomberg.
QUEST: Right. The -- look, Elon Musk doesn't do anything without careful thoughts and consideration and law and in many ways, strategic, three-
dimensional trust, way beyond the rest of us. So there, he's obviously got this through, because it seems to be long-term strategically making sense.
GOLD: Yes. I mean, Elon Musk thinks not in terms of, you know, months or years. He is thinking in terms of decades.
[16:55:00]
He is thinking about this sort of utopian future that he dreams about of literally people getting to Mars. This is why he is so focused on A.I. and
robotics when it comes to Tesla. And, you know, he made this shift recently, in saying, Tesla is focusing more and more on Optimus, getting
rid of some of the models that they create at Tesla. You know, it's a car company, but getting rid of some of their car models, not replacing them
with new ones. But instead turning that factory over to make robots.
He sees Optimus as a key part of his way of getting to Mars, the same way that he sees A.I. and Grok as a key part again of getting to Mars, of what
he believes is saving humanity and really changing the world.
QUEST: Hadas, I'm grateful. Thank you for coming up so quickly as this news has broken. I'm grateful for you. Let me show you quickly how the markets
have closed as they ended their first day to the session. They rallied to a high close amid earnings after last week's sell off.
The Dow was up about rest part, one percent. Half a percent for the NASDAQ. The S&P, you get the numbers over there. It's easing of tensions. You get
the idea of what's happening with the markets. We will have a "PROFITABLE MOMENT" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "PROFITABLE MOMENT". The repercussions over that Mark Carney speech at Davos continue to reverberate as we have put on tonight's
program. Kristalina Georgieva, talking to us here in Dubai, says that middle countries -- middle power countries and smaller countries do need to
take risks, get their economies in order, become more competitive, look for new advantages, the whole panoply of new and way new thinking, because, to
an extent, they can no longer rely on the United States.
And that was born out in our second interview. The professor who says this idea of the hegemon, as Mark Carney put it. The United States throwing its
weight around. It also means that everybody is having to rethink what to do and where to stand. And the difficulty is, nobody really understands how to
put this into practice.
You have middle power countries like the U.K., like Australia, to a lesser extent, Canada, all wondering what is next. And you might say, why is
Canada different? Because, as Mark Carney made clear in that speech, Canada was the first country to feel the force of the new Trump trade policies.
[17:00:01]
They are the ones, in Carney's words, that are no longer misty eyed about the old ways, but are now moving forward to work out what they have to do
to play in the future.
And that was the point of the IMF managing director with what she said to me tonight.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Dubai. Whatever you are up to in the hours ahead, I hope it's profitable.
Tomorrow night, we are at the world government summit here in Dubai. Do join us then.
Have another bell.
END
