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Quest Means Business
Trump Orders U.S. Government to Build Border Wall; Dow Closes Above 20,000 for the First Time; The Road to Dow 20,000; Interview with Christopher Hill; Trump Repeats Voter Fraud Claim; Actress Mary Tyler Moore Dies At 80; Dow Closes Above 20,000 For First Time; British PM Prepares for Trump Meeting. Aired 4-5p ET
Aired January 25, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:01] RICHARD QUEST, CNN ANCHOR: There we are. The Dow Jones is ringing the closing bell. Looks to celebrate as for the first time in
history the Dow closes above 20,000. Give us a good yes. Oh, my goodness gracious me. That's how you bring trading to a close.
The Dow has closed for the first time in its history over 20,000 at the New York Stock Exchange. And remember the day. It is Wednesday, the 25th of
January. You will remember it for another reason.
Tonight, build the wall. Donald Trump signs the order to fulfill his promise of building a wall along the Mexican border.
Theresa May says she is not afraid of tough talk when she meets the new U.S. president on Friday.
And, as I say, time for a few more of these, I think. Remember the moment. The Dow has closed at a record. It is over 20,000 for the first time.
I'm Richard Quest live in London where I mean business.
Good evening. Look, we knew it was coming. And we knew it would be sooner rather later. But that shouldn't undermine the moment. The opening bell
rang and the wait was over. Dow 20,000 became a reality after weeks of close calls.
The Dow, as you can see, went up and stayed there all the way to the closing bell. In fact, looking at the way that looks it's virtually -- I
think it might even be at the high point of the session where it finally ended.
It is called the Trump bump. And today the president took on his biggest campaign promise which is what we'll talk about next. Because we'll come
back to the Dow in a moment. The other big story of the day was build the wall.
It was the slogan throughout the presidential campaign and now it has the weight of the presidency and two executive orders to back it up. A short
time ago President Trump signed two actions to advance his immigration agenda. He's directed the Department of Homeland Security to immediately
begin constructing the wall on the southern border. And cutting funds and grants from so-called sanctuary cities and jurisdictions that harbor
undocumented immigrants.
The president insisted again that Mexico will pay for the wall, even if American taxpayers have to pay for it to get it built initially. And he
said his actions will benefit the U.S. and Mexico's economy.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I just signed two executive orders that will save thousands of lives, millions of jobs, and billions
and billions of dollars. These orders are part of an immigration reform we outlined during the campaign. I want to emphasize we'll be working in
partnership with our friends in Mexico to improve safety and economic community on both sides of the border.
(END VIDEO CLIP)
QUEST: CNN's Stephen Collinson is in Washington.
I mean, he had no choice, Stephen. He had to do this. He'd promised to do it. It was a tenet of his election. But as you read the devil in the
detail of what he said today, what stands out for you?
STEPHEN COLLINSON, CNN SENIOR POLITICS REPORTER: That's right, Richard. If he was to have any credibility with the people who sent him to the White
House and any chance of re-election in four years he has to build that wall in whatever form that may take. What's interesting about this executive
order is not particularly the fact that he's ordering the wall to be built. He's providing for more border agents, that he's going to defund sanctuary
cities. It doesn't tell us exactly how he's going to do it.
Now you said that he's going to ask Congress to fund the wall initially. But there is nothing in the executive order that relates to Mexico actually
paying for it. Now there are a lot of people on Capitol Hill as well who, A, don't see the need for a wall. And B, don't want to pay for it. So
Donald Trump is really going to have to get some detail into this. You know, that's the only way that he's going to get this wall built.
But the symbolism of this is most important. If he can go to the American people in a few years time, even if the wall is half built.
QUEST: Right.
COLLINSON: Even if Mexico hasn't paid for it and say, I built the wall, that's what's important to him.
QUEST: Right. On the funding point. Well, first of all the wall is defined as a physical, contiguous, physical wall or other similarly secure
contiguous and impassable physical barrier which is quite something. But on the funding front it says to identify to the extent permitted by law
allocate all sources of federal funds for the planning, designing and construction. So at this point he's sort of basically looking in the
teapot, turning over the sofa, and without going to Congress yet basically saying we'll find the money by robbing Peter to pay Paul.
[16:05:21] COLLINSON: That's right. And obviously you know you can hide all sorts of things in budgets but there is also the big question about how
much is this going to cost. Donald Trump has said it's going to cost around $6 billion to $8 billion. Most experts saying that's a lot closer
to $20 billion. So you've got the difficulty of not just finding the funds but finding all the funds you need. Then when it comes to the question of
what does Mexico pay for it Donald Trump has said he's going to renegotiate NAFTA.
So it's not impossible that during those negotiations they could come up with some kind of fudge by which Mexico could say, well, we didn't pay for
the wall.
QUEST: Right.
COLLINSON: Donald Trump can say in the NAFTA they effectively did pay for the wall. It's going to be -- I think it's going to be a lot of smoke and
mirrors here.
QUEST: Now that's an interesting point because we're a business show. So we turn our attention to money pretty quickly. On that issue with who is
going to pay for the wall. In his ABC News interview with David Muir he says, as you said, one way or another they are going to pay for it. Now
that could mean simply on the basis of U.S. exports to Mexico have increased by $30 billion. That's $20 billion more than the wall. It could
be that the trade deficit -- I mean, the definition of one way or another is going to, I predict, confidently it is going to live well into the next
election.
COLLINSON: Definitely. And it's very fluid. They've also said, well, perhaps we could tax remittances from Mexican immigrants who send money
back to their family, for example. There is the NAFTA issue I was just talking about. There is going to be some way that they can -- each side.
You know, this is what diplomacy is after all. Each side gets what they want.
QUEST: Right.
COLLINSON: The Mexicans say we didn't pay for it. Trump says, you did pay for it. And you can -- you know, you pay your money and take your choice.
QUEST: Stephen, good to see you. Thank you, sir. We will talk more about it. Keep an eye on that as you move forward.
Now let's turn from Wall Street -- from the wall itself to Wall Street itself and the Dow's record as it hits 20,000.
Three major factors are responsible for the fireworks that have taken place. Firstly, you've got strong earnings. Secondly, you have calm in
overseas markets. And thirdly, you have Donald Trump. But if you look and let's analyze how we got here. Well, you've really got to consider in some
conceivable detail the number of times and the way in which the Dow has actually managed to get there.
So roll up. Roll up at the times of the fair. Many times they have tried and failed to hit 20,000 until today. A little bit of history in the fair.
First of all, roll up. The Dow first reached 17,000 back in July 3rd, 2014. Now behind that was global confidence, rising markets and the
feeling that economies were out of the woods at least in the U.S. Merger and acquisitions and the jobs numbers were getting better and better into
the Obama administration. 18,000 was the same reasons and then you get to 19,000.
And the reasons for the 19,000 struck last year. That was after the election. And it was quite clearly the Trump bump. No doubt about it.
Donald Trump comes in, prospect of greater growth. Prospect of higher corporate earnings and you see the Dow over 19,000.
But we flirted with 20,000 many times. It just couldn't get there. It tries and tries and tries. And finally today it has achieved. 20,000 for
the Dow Jones Industrials.
CNN's Paul La Monica is at the New York Stock Exchange.
Paul, the ability to breach this psychological barrier, we talk about it frequently. Some on the floor of the exchange will deny and decry its
significance. But it is significant.
PAUL LA MONICA, CNN MONEY CORRESPONDENT: Yes, I think it is, Richard. I love the sound effects by the way. This is key because as you pointed out
we tried to get to 20,000. We failed a couple of times. We're finally above it. And when you look at which stocks in this collection of 30 that
are helping to lead the market higher. Boeing. So you have defense and aviation helping. That is clearly a cyclical area of the market. Visa,
financials. People expect Trump to try and roll back some of the Dodd- Frank regulations.
You have Caterpillar. There is talk again about building a wall. Caterpillar likely would be a beneficiary of that. Even Home Depot really
rallying, too.
[16:10:03] Housing market strength and consumer strength as well. Right now we still have a lot of optimism about the new Trump administration.
QUEST: Right.
LA MONICA: Will it last? Remains to be seen. But for the time being it's upwards and onwards.
QUEST: In the last hour, Jonathan Mann asked me a question that I'm just going to punt across to you. Why is the market choosing to focus on these
positives of infrastructure, stimulus, construction, and not on the downside of a potential trade war with China tariffs, all of which could
disrupt trade flows?
OK. Paul La Monica, I think he was either stumped by the prescience and brilliance of my question, which is entirely possible, or his earpiece went
funny and he couldn't hear what I was asking. Anyway, just as well he didn't say something unfortunate which would have put us all in trouble.
The question people are asking is why we are so fixated on big round numbers like the Dow Jones Industrials. And there is no doubting and
denying the role that they play in financial and in cultural history. As CNN's Maggie Lake explains.
(BEGIN VIDEOTAPE)
MAGGIE LAKE, CNN MONEY CORRESPONDENT: It was mid-November 1972. This hit was number on the Billboard charts. Richard Nixon had just won reelection
and on Wall Street traders marked Dow 1,000. With IBM the growth stock of the day leading the charge. It was the first truly mega Wall Street
milestone.
It took the Dow 27 years to hit 10,000 in March 1999. Cher's hit "Believe" was topping the charts. The most popular movie was "Forces of Nature" with
Ben Affleck and Sandra Bullock. Stocks were truly a force of nature back then and at the NYSE traders went nuts.
STEPHEN GUILFOYLE, PRESIDENT, SARGE986: That was kind of a big deal. At that time there were still a lot of people down here with price all between
us in the end. Maybe 7500 people. So at that time, yes. It was confetti in the air. Everybody wearing baseball caps.
LAKE: A little event called the global financial crisis leveled stocks in 2008 sending the Dow plunging below 7,000. But those with the stomach for
risk were rewarded when stocks roared back.
President Trump's victory in November sparked a powerful rally bringing the Dow less than a point away from 20,000. Stocks turned choppy. The
milestone remained elusive.
But current hit makers the Chainsmokers put it best. The bulls were getting closer. Some may play down these benchmarks.
UNIDENTIFIED MALE: It signifies a big round number. All right? That's all it is. It really has no economic significance.
LAKE: But soaring stocks can boost consumer confidence. And for traders on the New York Stock Exchange, big round numbers remain magical.
UNIDENTIFIED MALE: I think it's exciting when we hit these certain levels. Right? It's things we'll remember back one day in our career.
LAKE: And with this big number behind us, some contemplate the milestones to come.
UNIDENTIFIED MALE: I'm doing some math in my head. Dow 30,000. That's another 50 percent. So if we get 8 percent a year, what is that going to
be? About six years? That's not impossible.
LAKE: It sure to be another rocky ride higher. But history tells us there is still money to be made for those who believe.
Maggie Lake, CNN Money, New York.
(END VIDEOTAPE)
QUEST: I think I've still got the clothes that I was wearing when I was dancing to Cher singing that. Maybe if you ask me nicely we may show
pictures before the month is out.
European markets closed firmly in the green, boosted by bank stocks. And the Trump bump. The Keystone pipeline also saw it. The DAX if you look at
the European markets was the best performer of the day. It was up nearly 2 percent. Zurich also I think comes in strongly at 1.7 percent.
Mark Newton is from Newton Advisers, joins me from the New York Stock Exchange.
Mark, let's make sure, first of all, sir, that you can hear me. Can you hear me, sir?
MARK NEWTON, MANAGING MEMBER, NEWTON ADVISERS: I can hear you fine. Loud and clear, thank you.
QUEST: Excellent. All right. Good. Congratulations. Dow 20,000. I'm not having anybody -- I'm not having anybody rain on the parade that simply
says it's a number because this actually does signify a mood of the market.
NEWTON: Right. No doubt. Look, 45 years ago when we first hit 1,000, and that was November 1972. So certainly an important level, more so than
19,000 which was just a blip. We went right through it.
[16:15:02] The market spent almost two years near 18,000. Within 2 percent. And now we're finally at 20. So certainly a historic
achievement. You know, reasons for a lot of optimism with regards to, you know, potential regulation being reduced in the months ahead, hopefully.
So certainly something to celebrate, no doubt.
QUEST: Now, Mark, let me ask you the question I have been asking others. Why is the market focusing on the lack of regulation or regulatory changes,
stimulus spending, infrastructure spending, but not focusing on the prospect of a trade war or disruption to trade flows with China, Mexico,
and elsewhere? Why one and not the other?
NEWTON: Well, I think personally that's hugely important and something that we have to discuss. And the market is completely ignoring that. But,
you know, the market moves in funny ways. It doesn't always obey, you know, news about potential trade wars. If anything, earnings have sort of
helped break the market out over the next couple of days. It had been range bound for about a month and a half. So certainly a great move.
Reasons for optimism.
I think all of us that work on the exchanges are hopeful that we'll see return to some higher volumes of trading. So I think that's why you hear
people talk about regulation a lot.
QUEST: Right.
NEWTON: You know, the repeal of Dodd-Frank or the Volcker rule. Something to give the banks some sense of liquidity again that really has been
stripped away over the last 10 years. So -- but obviously anything with regards to a trade war would be hugely problematic and, you know, could
cause real concern in the months ahead.
QUEST: Well, good to see you, sir. Thanks for joining us from the New York Stock Exchange.
The president's quick action -- President Trump's action on campaign promises have fuelled the rally. And today the president took on his
biggest promise so far. He basically said -- he said I -- directing that we will immediately begin the construction of a wall. We'll talk about it
after the break.
(COMMERCIAL BREAK)
QUEST: Donald Trump says his plan to start building a wall between the U.S. and Mexico will help relations between the two countries and
strengthen the economies between the two nations. Speaking a few moments ago at the Department of Homeland Security, Mr. Trump said a secure border
was a starting point for a better relationship.
(BEGIN VIDEO CLIP)
TRUMP: By working together on a positive trade, safe borders and economic cooperation, I truly believe we can enhance the relation between our two
nations to a degree not seen before certainly in a very, very long time.
(END VIDEO CLIP)
WHITFIELD: The president says these new actions will bring border security, in his words, over the top.
Now let's put it in perspective. According to Pew Research the number of unauthorized Mexican immigrants has steadily fallen during the Obama years
even as the number of unauthorized immigrants from elsewhere has grown. That's the number. Look, you can see it's dropping from 6.9 million down
to 5.8 million in 2014.
[16:20:02] Still Mexicans make up more than half of all unauthorized in the United States. And the Pew estimates 5 percent -- 5 percent of the entire
U.S. work force is made up of unauthorized immigrants.
The president said his policies will be good for Mexico. Arturo Sarukhan served as Mexico's ambassador to the United States. And he joins me now
from Washington.
Mr. Ambassador, as the ambassador listening -- or the former ambassador, listening to what the president said, what was your immediate gut reaction?
ARTURO SARUKHAN, FORMER MEXICAN AMBASSADOR TO THE U.S.: Well, I'm reminded of what Oscar Wilde once said which is that when the gods wish to punish
us, Richard, they listen to our prayers. And the problem is that President Trump with some of these actions could be unleashing a whirlwind. A
whirlwind because a lot of these actions, whether it's the talk about the border wall or whether it's about renegotiating NAFTA, is having a
tremendous effect on the Mexican peso, it could have an important impact on foreign direct investment into Mexico.
But I don't think the United States needs an impoverished Mexico on its southern border. On the contrary, one of the beauties of NAFTA and what
these two countries have done together for the past 20 years is that we have been slowly building a paradigm of joint prosperity and joint
security. So, again, you know, this whole issue about the wall is built on alternative facts.
QUEST: OK. So if that is the scenario, how important is it for President Pena Nieto and/or Mexico's leaders to make it clear they are not going to
cooperate in this wall, let alone pay for it, as a former president has done in fairly fruity tones.
SARUKHAN: Well, I think there are many things that Mexico and the U.S. have done together. But building a wall together is not going to be one of
them. Mexico isn't a military super power or a global super power but it is not toothless either. There are a lot of issues that the U.S. and
Mexico have been doing together, Richard, particularly since 9/11 as it relates to border security and ensuring that our borders are not used by
potential terrorists.
QUEST: Yes .
SARUKHAN: Who want to undermine the security of the United States. So there are things that Mexico can do.
WHITFIELD: Yes, but --
SARUKHAN: To ratchet down and change the dynamics of that collaboration.
QUEST: Right. But what I'm asking is, how important is it for the president and the administration in Mexico to be seen to be doing those
things? Say construction starts immediately, planning and construction starts immediately. They can say all they like but at some point to the
Mexican people doesn't the president -- the country's president have to appear to be doing something?
SARUKHAN: Well, the United States has sovereign right to do whatever it sees fit on its side of the border. The Mexican government will have to
respond and react. I think there is a great deal of pressure, Richard, today in Mexico City as to what the president should be doing. In fact,
there are already calls for the Mexican president to postpone his trip next week to D.C. in light of the developments in Washington today regarding the
announcement of the wall.
WHITFIELD: Right. Do you think he should postpone his trip? I can understand a diplomat is always sort of trying to find a negotiated
settlement or solution and it is anathema to you to take your bat home and say I'm not playing. But do you think, as some form of symbolism from
Mexico against this measure is called for?
SARUKHAN: Absolutely. I think that there are no conditions at least at this stage for a trip next week. I think we should let Mexican officials
and the new U.S. administration hammer out some of the details of what this negotiation will look like before bringing the president up.
QUEST: Right. Ambassador, please, do promise that you'll come back again. As the NAFTA talks take off we're going to need your expertise to guide us
through the thicket of a renegotiated NAFTA. Thank you, sir.
SARUKHAN: My pleasure, Richard.
QUEST: The U.S. president -- we've got to be careful with all these presidents that we're talking about. The U.S. president is also planning a
major visa crackdown. Reportedly affecting seven mostly Muslim countries. The announcement could come as early Thursday and is expected to impact
Iraq, Iran, Syria, Yemen, Sudan, Somalia, and Libya.
Christopher Hill is a former ambassador to Iraq. The author of "Outpost: A Diplomat at Work."
Christopher, good to see you. Nice to have you with us. Frankly the Obama administration already made it very difficult for anyone who has visited
those countries to visit the United States by denying them, even if you come from a visa-waiver country.
[16:25:04] So what more difficulty can this extreme vetting involved?
CHRISTOPHER HILL, FORMER U.S. AMBASSADOR TO IRAQ: It's a good question. Because already the vetting of various refugees, especially those from
Syria, I think by any standard would be described as extreme. So it's pretty unclear what this means.
I think what has been very important to the president is to show that he's got momentum, he's working hard, he's got a really vigorous approach to
things. So in the matter of a couple of days after the inaugural he's going ahead and trying to show that he's fulfilling all his campaign
promises. And frankly, you know, he might want to study some of these things and have a little better idea of what the consequences might be.
QUEST: All right. Now when you talk about the whole visa question, there're really two issues here, isn't it? You've got obviously the -- the
visas from countries such as Yemen and Iraq and Iran. And then you've got the issue of the h1b visas and the number of visas and the ability of the
U.S. to attract and you know as well I as do, sir, U.S. corporations are screaming for more visas to bring in properly for those people for the
economy. Does all this make it more difficult?
HILL: Oh, yes. I mean, the problem is when you put in these presidential directives and this case we're talking about 120 days. The question is how
do you implement these things? By the time you figure out how really you're going to implement them, that is, how is a councilor section in some
embassies somewhere going to implement this thing? You're already getting to the end of this trial period. So they're going to be -- there's going
to be a lot of confusion and frankly a lot of people who might want to go for those work visas might just say, no, thanks, I'll go elsewhere.
So, look, the real problem is there are these countries where there is no way to really know does the person or what has the person been doing?
There are problems with vetting countries from vetting people from countries that are war-torn. No question there is a problem. But to use
terms like terrorism-prone, I mean, what, are we going to talk about Belgium? I mean, what is this? So I think the problem is this is kind of
a domestic thing in the U.S. to show that we've got a new president where a lot of vigor, is really taking care of these things in a matter of days,
but in fact these are pretty complicated problems.
QUEST: Ambassador, imagine -- humor me if you would be as kind. Imagine you were still in post in a capital and you had been -- I was going to say
summoned. But you wouldn't be summoned. You've been invited for tea to discuss the new administration. How would you defend what it's doing?
HILL: Well, I mean, you try to explain that look, everybody has politics. We have politics so we have to look at some of these things and anyone
coming in as president needs to show that he's kind of in control of things, knows what he's doing, and has an appetite for, you know, working
quickly. So you'd try to kind of explain -- try to make the point that you ought to, you know, hang in there and cut the new president some slack and
try to work with him.
That said, you would be kind of furiously try to get back to Washington to find out what these things mean so that you can kind of give clarity to the
people that you're dealing with out on that far flung outpost wherever you are. So I think the problem is that these things are very unclear. We
don't even really yet know what the countries involved are. And we don't really know what the objective is. I mean, are we really going to start
identifying who's a Muslim from Somalia?
I mean, is this kind of thing? So I think we have -- you know, I understand the need for speed. But, you know, I think the fast you go on
these things the more unintended consequences and frankly the more confusion you're going to sow. And by the way, I might add, too, a lot of
countries in Europe are trying to square this circle of how do you have immigrants consistent with your humanitarian policies at the same time how
do you protect yourself.
And this kind of pulls the rug out from under some of our allies who are going to be under tremendous internal pressure to either do what he's doing
or not do what he's doing. So it's going to -- it's going to increase tensions all around the board.
QUEST: We're grateful, sir, that you've given us insight into how it all comes together. Thank you, Ambassador.
Mr. Hill joining us from -- to talk about that.
As we continue tonight on QUEST MEANS BUSINESS. Oh, it did work. 20,000. It's a big number. It's huge, as the president might say. And that's who
investors can thank for the Trump bump that pushed the market to its new record.
(COMMERCIAL BREAK)
[16:30:00] QUEST: Hi, I'm Richard Quest as more of QUEST MEANS BUSINESS in just a moment. But we'll talk about Theresa May, the British Prime
Minister says, she's ready for some frank talks with Donald Trump and she will be honest with him when she meets in Washington. Now, the Chief
Executive of Bank of America tells me why the stock market is really all about confidence. While we talk about those issues, this is CNN. And on
this network, the news always comes first.
President Trump is pushing ahead with his grand plan for immigration reform. U.S. President says construction of a border wall will begin
immediately and although U.S. taxpayers will initially pay for it, Mexico will eventually reimburse U.S. He claims this walls will save thousands of
lives, millions of jobs and billions of dollars.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA: A nation without borders is not a nation. Beginning today, the United States of America
gets back control of its borders, gets back its borders.
(END VIDEO CLIP)
QUEST: Mr. Trump is also calling for a major investigation in his words into voter fraud. After again, racing allegations that millions of illegal
votes were cast in the presidential election. There's still no signs of any evidence to back up the claim. The White House Press Secretary says
the probe of voter fraud will focus beyond just 2016's election, and again, without citing evidence, said problems with illegal voting has occurred in
bigger states.
(BEGIN VIDEO CLIP)
SEAN SPICER, WHITE HOUSE PRESS SECRETARY: I don't want to start throwing out numbers, but there's a lot of people that are dead, there on rolls,
there are people that are people that are voting in two -- or that are on the rolls in two different states, sometimes in three different states. I
think taking the necessary steps to study and attract what we can do to both understand the scope of the problem, and then secondly, how to stop
the problem going forward. It's something that's definitely clearly in the best interest.
(END VIDEO CLIP)
QUEST: The American actress Mary Tyler Moore has died at the age of 80. She was best known for her roles at "The Dick Van Dyke Show" and the "Mary
Tyler Moore Show." She's credited with helping reshape the image of single women at the time. Her representative says Mary Tyler Moore will always be
remembered as the woman who once turned the world on with her smile.
Investors can thank Donald Trump for the Dow's record. It's up nearly 10 percent since the election. And now, you know, look, we've talked often
enough, you and I about the Dow just 30 stocks. But let's go to the broader market. The S&P and the NASDAQ, both are at record high levels as
well. And S&P is up 9 1/2 percent since the election.
[16:35:02] The Dow is doing better than the others, but the S&P is still -- and the NASDAQ, of course, has roared up around 8 percent. Financial
shares have gained the most, up 17 percent followed by industrials and materials. And I believe Goldman is up something like 30 percent since the
election. Paul La Monica is at the New York Stock Exchange. We should not be surprised by that, Paul, because deregulation and a reversal of
regulation in the financial sector will boost the big banks.
PAUL LA MONICA, CNN CORRESPONDENT: I think that goes without saying, Richard, that's why Goldman Sachs has been rallying so ferociously since
Trump's victory. Visa at an all-time high. They didn't have as much stand in the game with regards to regulations. But being the credit card
processing giant, they obviously impacted as well. The prospect of lower or last regulation also definitely helping to boost Heathcare stocks as
well. They have really done extremely well, and I think many people feel that those big insurance mergers are probably not going to happen either,
which is somewhat interesting. But tech stocks also rallying, Richard. I think that's fascinating, is we all thought that Silicon Valley and Trump
would be at odds. But maybe there's been a little bit of peace between the President and the tech community Elon Musk has met with him several times
already.
QUEST: And yet, tech stocks will suffer if there is a trade conflict with China or if there's any disruption to the supply chain from Asia.
LA MONICA: Definitely. There are so many moving parts here, though, Richard. I think that's what investors are trying to figure out. Yes, any
tension with China regarding trade is bad for the likes of Apple, Google owner Alphabet, probably companies like Microsoft and Facebook. But by the
same token, if stimulus helps boost consumer confidence and consumer spending, you wind up having a big boom for tech earnings and tech revenue
from U.S. sales. That's probably a good thing.
And then also, we all know that Trump has talked about lowering taxes and making it easier for U.S. tech giants to bring back cash or repatriate cash
that they have sitting in bank accounts in Ireland and other parts of Europe here to the U.S. That could be big boost for Apple, Facebook,
Google, these companies could wind up using the cash back here to increase dividends. Start buying -- start paying dividends, buying back stock,
buying companies. So there are a lot of tisk, not really black and white with regards tech and the market.
QUEST: Tisk, tisk, tisk, Mr. La Monica. That money, if it is repatriated under Trump's plan is supposed to be for investment, sir. It's supposed to
be for new jobs, for manufacturing plans, not enriching the rich with dividends and buybacks.
LA MONICA: Yes. I totally agree with you there. But let's not make this completely into class warfare. If you own an S&P 500 ETF, you have Apple,
you have Facebook, you have Google. You benefit when these companies buyback stock and boost dividends. That being said, I agree with you 100
percent. What we want tech companies to do and what obviously Donald Trump wants them to do is invest more in the U.S., manufacture more in America.
And have American consumers buy more of the products. So, it can't be just financial engineering. That wouldn't be great for the overall economy.
QUEST: Good to see you. Paul La Monica at the exchange. Looking forward to you, Paul, next week when you'll join me when "QUEST EXPRESS" starts.
And over the next few months we'll talking to more at the exchange. It's a very famous phrase, "the lady's not for turning". Well, it was originally
said about Lady Thatcher. Now it's about another British Prime Minister who said she will not backtrack on key policies in order to win approval
from Donald Trump.
(COMMERCIAL BREAK)
[16:40:00] QUEST: The British Prime Minister Theresa May is on the eve of departing for the United States. While there, she'll meet new U.S.
President on Friday. Securing a post-Brexit trade deal or at least the beginning of that process. The agreement that a deal could be reached in a
relatively quick period of time, that's of paramount importance. And the question is how far can the U.K. negotiate before it leaves the E.U.? Now,
the rules say, that the E.U. has competence in dealing with commercial arrangements with other countries. The E.U. has it not individual
countries. European parliament's top negotiator Guy Verhofstadt said on his program last night that it's not possible to negotiate until they've
left.
(BEGIN VIDEO CLIP)
GUY VERHOFSTADT, EUROPEAN PARLIAMENT LEAD NEGOTIATOR ON BREXIT: They cannot do that. The treaty is very clear. Until they have left the
European Union, it is -- the European level who is dealing with trade deals. And it is certainly in his first two years of the negotiation on
the leave of the European Union that is not possible.
(END VIDEO CLIP)
QUEST: Not so, says Andrew Lilico, the Chairman of Europe Economics who disagrees with Verhofstadt and says the U.K. government is perfectly
possible and should be able to ratify new trade deals. And this is, of course, is crucial as the P.M. goes to D.C.
(BEGIN VIDEOTAPE)
ANDREW LILICO, EUROPE ECONOMICS CHAIRMAN: Now, I think that that's wrong. And it seems clear from some recent discussions within the U.K. government
and statements by (INAUDIBLE) that the U.K. government doesn't believe that itself anymore. It thinks that it can have negotiations and have things
signature ready as (INAUDIBLE) put sit. I think actually, they should be up to ratify as well. But that seems to be the government's position that
it can negotiate but it can't sign until it leaves.
QUEST: Right. Now, that sort of "we can negotiate that but not sign" is a halfway house in a way, isn't it? Because -- but the traditional view is
that the competency for signing commercial agreements rests with the E.U. and therefore the British cannot negotiate external trade deals at the same
time.
LILICO: I agree that that is true in respect of anything which is -- to do with the commercial police whilst we remain in the E.U., provided that
something doesn't come into force until awfully left. Then the policy would not be part of the commercial policy of the European Union. So the
E.U. wouldn't have competence over that. And it's important to bear in mind that the E.U. doesn't have any power to negotiate the deal for us. So
it's not a matter of the E.U. having competence instead of us. It's a matter of deciding can anyone negotiate a deal for the U.K. after it leaves
the E.U.
QUEST: Well, maybe that they can't. It may be that the U.K. is caught in the middle in the sense that Europe can't negotiate for a post Brexit and
any deals that they do won't be valid in the U.K. And the U.K. is not permitted to negotiate. So in that situation, what would you suggest that
Prime Minister does?
LILICO: If that were really the legal situation, I don't concede that it is the legal situation. But if it were the situation, I think we should
consider it an absolute and urgent imperative to get permission from the European Union to negotiate. Because --
QUEST: But they're not going to give it.
LILICO: The European Union hasn't --
QUEST: Well, I don't -- they gave in the past in the -- in the examples that you're talking about. But not with the recalcitrant member who was
planning to leave and therefore that ability to negotiate from the E.U.'s point of view could shift the balance of power.
LILICO: I don't think it would be right to think of us in anyway hostile or our interests in securing a trade agreement outside being in any way in
conflict with the European Union. We're seeking to do a trade agreement with the European Union ourselves. So I don't see why they want to be
unfriendly with us in that -- in that way.
(END VIDEOTAPE)
[16:44:59] QUEST: Now, Theresa May says she will not be afraid to speak frankly to Donald Trump. British M.P.'s are urging the P.M. to challenge
the President's view on climate change and on torture of prisoners. The lead of the opposition Jeremy Corbyn of the Labour Party urged her to
standup against the new President.
(BEGIN VIDEO CLIP)
JEREMY CORBYN, LABOUR PARTY LEADER: Many have concerns, Mr. speaker, that in her forth coming meeting with President Trump she will be prepared to
offer up for sacrifice the opportunity of American companies to come in and take over parts of our NHS or our public services. Will she assure the
house that in any trade deal none of those things will be offered up as a bargaining chip?
THERESA MAY, BRITHISH PRIME MINISTER: I'm pleased that I am able to meet President Trump so early in his administration. That is a sign of the
strength of the special relationship between the United Kingdom and the United States of America, on -- a special relationship on which he and I
intend to build. But can I also say to the leader of the opposition, I am not afraid to speak frankly to a President of the United States. I am able
to do that because we have that special relationship.
(END VIDEO CLIP)
QUEST: The special relationship. Well, let's put it into perspective. Tonight is Burns night. Robbie Burns, the Bard of Ayrshire. You'll
remember the best laid schemes of mice and men ( speaking in a foreign language). Or how about there is no such uncertainty as a sure thing. I'll
put that into perspective of what's happening and there is no such uncertainty as a sure thing of haggis. The great chieftain of pudding race
wrapped in sheep's intestines. Now, why we are showing you this delightful piece of meat (INAUDIBLE) tonight? Well, the reason is because it is
banned from the United States. You can't take haggis into the U.S. I'm not sure why you'd want to. It seems appropriate on the night of Robbie
Burns. I spoke to Crispin Blunt, the chair of the British Foreign Affairs Committee. And when you think about all these issues that the U.K. is now
looking at from the United States, the issue is whether Britain can turn to America and yet at the same time not close the door on Europe.
(BEGIN VIDEOTAPE)
CRISPIN BLUNT, BRITISH FOREIGN AFFAIRS COMMITTEE CHAIR: I don't think they are mutually exclusive. I think she can be an advocate in a sense for the
European Union and help with the relationship between the White House and the leaders of the European Union. Also at the same time she's going to be
taking part in an internal administration debate about the direction of policy about a number of areas. Russia, the Middle East, Syria, for
example. But it's quite likely she will be acting really as an advocate on behalf of the new Secretary of State and the new Defense Secretary and the
head of the CIA in the United States. And it will be important for their voices within the Administration to get reinforced by the prime minister.
QUEST: Would you be in favor of the U.K. negotiating with other countries during the Brexit process, and of the Brexit negotiations even if it's not
strictly allowed by the treaties? Basically saying, go on, do your worst, we're going to talk to Australia, we're going to talk to New Zealand, we're
going to talk to the United States.
BLUNT: Well, when is a negotiation not a negotiation?
QUEST: But you know what -- you know what I'm saying, Sir. I mean, are you in favor of the Brits basically saying, listen, we may not legally be
entitled to it but we'll do it but we're going to do it anyway and what are you going to do about it?
BLUNT: Well, you -- there are obviously going to be preliminary discussions about the potential shape of future trade deals with a whole
number of other powers and organizations from the United States to Australia to the GCC to China and India. All these discussions are going
to be taking place. And there'll be discussions. Because, of course, the final shape of any trade agreement between the United Kingdom and other
parties can't be decided until the final shape of the deal with which we leave the European Union and our future relationship with the European
Union is secure.
QUEST: But you don't want to get to a situation where your discussion as you put them have -- or so tenuous or light that you've effectively got a
two or three-year negotiation post Brexit. In an ideal world, you'd be (INAUDIBLE) crossing (INAUDIBLE) and getting the next deals done within
days, if not weeks.
[16:49:55] BLUNT: Well, ideally, and I have put this point to republican congressmen. Is that what the United Kingdom would like is to, I believe,
it would be to have done a deals on -- with the United States before we go to our general election in 2020. And before -- this thing before the
United States goes into its electoral cycle in 2020 as well. And that would demonstrate that the climate for free trade has been recovered in the
United States and it's not a dirty word as well as doing a -- showing at the United Kingdom has a new global role and with the most important
trading partner after the European Union we secured a trade deal.
(END VIDEOTAPE)
QUEST: Securing trade deal is all about the haggis. Ask Richard Quest. What would you do if you were to win this final -- if you were to enjoy
this fine piece of haggis that we have? I'm not even sure how you cook it. but I'm sure somebody will tell me what they would do with it. No
vulgarities, please. Thank you. Not on Robbie Burns night. And no Scottish accents. As the Dow continues its climb through the stratosphere,
see as much of the game that you can find, optimism about Donald Trump's plans for pipelines, walls and deregulation. We'll talk about that.
QUEST: Welcome back. QUEST MEANS BUSINESS. Shares in Bank of America continue to rally since election day. And now outperforming their wall
street rivals which are listed in the Dow 30. Last week in Davos the bank's Chief executive Brian Moynihan told me the rally is all about
optimism.
(BEGIN VIDEOTAPE)
BRIAN MOYNIHAN, BANK OF AMERICA CEO: Well, it moved up pretty quickly and pretty -- you know, pretty high. So naturally things have been in flow.
But why? If you go back and look from the election to the increase in confidence is American market. The increase in confidence in U.S.
consumers, the increase in confidence in small businesses, you know, basically America is saying you know, we are optimistic. And now the next
stage will be, will things happen? And you know there's great enthusiasm. That change will take place and we'll see what happens.
QUEST: On this question of speed of change, what are you expecting?
MOYNIHAN: Well, I think you have to sort different types of change. Right? Executive order change, that's going to happen over -- literally
overnight. Right? They'll stop issuing executive orders. They could go back and revisit ones so that's quick. On the affordable care act there's
already been tasks taken. Because basically that's a repeal with an idea to replace without having to work through what the next one is.
QUEST: That's going to be, who knows?
MOYNIHYAN: There will be a time. And tax forms, things like that will take time. That will be my expectation to take time. I'm not an expert in
the parliamentary process. But these are hard works. And there is a lot in them and it takes some time to figure them out.
QUEST: And in terms of the -- I was going to say deregulation of your own industry, the repeal of Dodd-Frank or the change of Dodd-Frank or the
reregulation to a lower level you must be preparing for that. And I'm wondering where that goes.
[16:54:55] MOYNIHAN: Well, I think the first order of business is to talk to all my teammates out there, the laws of the land haven't changed. We've
got to keep operating under the current law. You can't change anything. I think that you'll see -- we as an industry in Bank of America is not for
repeal Dodd-Frank. What we are saying is , take a look at some of the rules and regulations. The outline of the regulation, more capital, more
liquidity scope of activities, resolution plans. These are all critically important to the strength of the American financial institution and the
world's financial institutions. And so, what you are saying is that pendulum swing too far here, too far there or did rules get passed at
different times or overlap. Those are things that will help to go look at. It will take time to go through all that. But right now, the message is
that the rules are the rules. And we'll watch it play through over the next several months.
QUEST: We'll have a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight very profitable moment. The Dow has hit 20,000 after much celebration. And the truth is it only took over 60 days to get from 19,000
to this particular level. And there is one reason and one reason only, it is the Donald Trump bump. That has moved the market to such a direction.
To be sure that there are plenty of what is and concerns over things like trade and dispute in the -- in the balance, but at the end of the day, when
the market hits that sort of milestone, everybody can at least say there is optimism out there and that is what is driving the market to its next
level. And look at the other global markets. Say for example, London as well. Even in the midst of Brexit, London is also managing to hit record
highs.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead. I hope it's profitable. I'll
see you tomorrow.
END
