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Quest Means Business
Titans of Tech Report Earnings This Hour; Spanish Stocks Rally Amid Catalonia Confusion; Top Journalist Suspended After Harassment Claims; Saudi Finance Minister Says We Need to be Ready for Change. Aired 4-5p ET
Aired October 26, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: Closing bell ringing on Wall Street. No records on the Dow, the S&P. That bell doesn't sound very healthy
today, but the market is up 70 on the Dow. And, well, I think we'll just say that was an OK gavel on a very busy day, as you'll discover. Today's
overtrading, it is Thursday, it's October the 26th.
It's judgment day for Silicon Valley. In the next few moments, Amazon, Google, Microsoft, all reporting earnings within the next few moments.
Over in Spain, the stocks soared before Catalonia's president throws a new spanner into the works. And the Weinstein affect continues. More public
figures are exposed as the sexual harassment scandals are now piling up. We'll discuss what this means in the workplace.
I'm Richard Quest live in the world's financial capital, New York City, where the Dow Jones has gone through 23,400, and where of course, I mean
business.
Good evening. A huge day on Wall Street for earnings and companies and we are only just getting started. Around now, we're waiting for a trio of
tech titans that will give us their latest quarterly report cards. Amazon, Alphabet -- that's Google, basically -- and Microsoft will always release
earnings. And we've already had results from blue chips like Ford, American Airlines and many more. We're going to put it all into context
for you. With me are these two. Paul La Monica, guru La Monica, and -- get back to it, you're meant to be watching the latest results.
PAUL LA MONICA, CNNMONEY CORRESPONDENT: It's a quartet actually, Richard. We forget poor Intel, which is only in the Dow. They're reporting as well.
QUEST: I look forward to hearing about it.
LA MONICA: All see if I can find that also.
QUEST: Then These two are watching for the results and the analysis when it comes on. Otherwise, I'm going to take you and introduce you to our
brand-new earnings center. It is here that we're going to track the results and future from America's biggest companies. We're going to use
Wall Street ultimate metric, share price, and how it responds in the 24 hours after reporting. It's the share price immediately after in the day
that can capture investor's thinking in the quarter just ended and the outlook for the next three months.
So, companies get a pop after the results, go to the top of the stairs. For example, 3m and United Healthcare, both of which have seen sure gains
of 5 to 7 percent. If the market goes down on that particular share, as it did with Costco, Southwest, American, Citi, and AT&T, then we put them at
the other end.
So, with the trading day over, we' re going to add the companies that have reported so far this morning. And we must start with Twitter. Twitter
with subscriber growth and the potential for profit by the end of the year, Twitter's share price is up nearly 20 percent on the day. An
extraordinarily high number for Twitter. So, it goes actually there, because it's way above 3m, which had just 7 percent.
Ford and UPS, largest parcel delivery service in the world. Ford, bellwether for industry. Both of these had good results, were impressed by
the market, and both are up around 1 percent on the day's trading. Imax, the movie theaters, Imax, excellent results, huge potential in China. Imax
shares are up 11 percent. We'll have the Imax chief executive Rich Gelfond who will be with me later on the program.
What you see here is a gist. You get a feeling from the laggards and the lows, all the way through. And what it's telling me at this point is that
this earnings season, under the bulls, has been better than we expected. Caterpillar, JetBlue, Imax, J&J, FCA, 3m, these, these are all the shares
and we've still got many more to come.
So, the Dow Jones Industrial and how the Dow traded. The Dow has finished up 71 points. That's a third of 1 percent. The S&P up just 3, just a
tenth of a percent. The Nasdaq down. Down for the Nasdaq 7.12. No records on any of those markets or, indeed, on the Europe forces. We will
wait to put these on the earnings center.
[16:05:00] On "QUEST EXPRESS," I asked two traders, whether the earnings that we' re seeing here can really sustain the rally that we're seeing in
the market.
(BEGIN VIDEOTAPE)
QUEST: Which part of this chart do you find most significant, other than the fact there's been a constant movement.
JONATHAN CORPINA, SENIOR MANAGING PARTNER, MERIDIAN EQUITY PARTNERS: Right, I like the -- you know, the April to June. That consolidation
there. Yes, it moved higher. And we didn't see a real breakdown in the market. I think investor confidence is in this market and it seems like
the muscle behind it, the potential behind it is still here.
QUEST: Yourself?
KEVIN QUIGG, CHIEF STRATEGIST, ACSI FUNDS: I think it was the summer of love. So, what I was looking for, traditionally you see in the summer,
that the markets are going to --
QUEST: Go on, just draw --
QUIGG: -- take a bit of a pause. We had at there. Right around there is what I'm looking for. Because that prepared you for the growth were seen
right now. That's where you set the table for what we're doing.
QUEST: So, if you're right on that, then we should be hoping after this rise, that we get a sort of a consolidation, to put some concrete into the
market?
QUIGG: I think, people are yes, we're redefining consensus and that really speaks to what we're going to -- moving forward, where our floors is, where
our base is, what we're looking for growth.
(END VIDEOTAPE)
QUEST: The trading post and the earnings center. And now let's talk to Paul and Clare the see what the results are so far. All right, which one
of you has got so far? Amazon has reported?
CLARE SEBASTIAN, CNNMONEY CORRESPONDENT: Amazon has reported.
QUEST: Tell me what Amazon -- what we're hearing from them.
SEBASTIAN: Sales are up 34 percent year on year, it was a beat. It was above the guidance they issued at the end of the last quarter. $43.7
billion in sales with a net income and profit 256 million. If you look at that --
QUEST: 256 million out of 43 billion.
SEBASTIAN: This is the model for Amazon. This is high sales and high expenditure. This is how they dominate. They spend money to do that. So,
we see that in this quarter. Sales were -- the profit was actually slightly higher than we saw in the last quarter, that was 197 million. So,
256 million, I mean, in the world of Amazon, is not too bad, really.
QUEST: All right, so Amazon beet on its -- Paul?
LA MONICA: We are digging into Google and Microsoft. It looks like Google and Microsoft have both beat. I'm waiting to get the both companies to
give you a little more detail.
QUEST: We'll get the actual details on that has as we move forward. While we wait for the minutiae on Microsoft, bearing in mind its new -- well it's
not new -- it's successful strategy of cloud, AI, quantum computing and the like. Microsoft's chief executive told me he wants the company to
rediscover what made it great. Remember, Satya Nadella has released a book about his attempt to change the company. He's worked at for most of his
career. It's called "Hit Refresh." He'd been in Microsoft for decades, so nobody was closer to the company than Nadella. And that, it seems, is part
of the problem for Microsoft, generally.
(BEGIN VIDEOTAPE)
SATYA NADELLA, CEO, MICROSOFT: You know, I' m a consummate insider. I grew up at Microsoft, is how I look at it. And having grown up there, I
felt that there was things that we got right and there were things that we got wrong. And it is important for us to learn from the things that we got
right in the past, because I'm a product of the company that Bill and Steve built. And I wanted to rediscover. That's why I sort of talk about, even
though there was this issue we had, but I wanted to rediscover what made us great in the first place. And get that back.
QUEST: Why do you think companies lose their way? Why do you think -- they've got thousands of people, any one of whom can say, actually, we're
losing our way here. But you are suggesting that it is endemic, it is inevitable that you will lose your way.
NADELLA: Look, here's the thing that I write a lot about, which is, because that's -- even the purpose of trying to even reflect in -- this is
not about -- while we achieved anything, or we've reached a destination, while in the fog of war of change, how does it feel? The thing that at
least I've discovered or at least I recognize is this amazing virtual cycle one creates between the product or the concept that, first of all, made you
successful. Your capability and your culture. Right? They reinforce each other. But accept the challenges. At some point, the product that
initially drove your success runs out of gas. You need new capability. And your culture needs to cultivate it long before your conventional
wisdom.
QUEST: Do you have to have a crisis to get to that point?
NADELLA: One of the greatest things I've learned in observing our own history of 43 years, right? And think about it. Microsoft has had
existential competitors who are threatening us in the 80s, in the 90s, in the 2000s and now. They're all different. And yet we were the constant.
Why did we and how did we achieve that? The only way we were able to achieve that is we were, in fact, able to hit refresh. Some we got it
right, some we missed. But we were constantly pushing.
QUEST: But the size of the company now, as you try and hit refresh, you're now facing inertia, you're facing opposition, you're facing the sclerotic
nature of any company.
[16:10:00] NADELLA: Well, the job of leaders and the job of anyone in the company is to understand that systems challenge, which is to say, well, you
know what? The thing that is successful today is not going to be the thing that's going to make us succeed tomorrow. And I'll be pushing on the
status quo. And by the way, it's easy to say -- like you and I can sit here and talk about change as if it' s the easiest thing. And we know that
it's the hardest thing for humans, as individuals and institutions or organizations are built of humans. So therefore, it's hard for us as
organizations and societies, by the way.
QUEST: You have to write in the book about a lot of the personal stuff of your family. Most people, most CEOs run in the opposite direction. But
you obviously talk about your children and the difficulties there. And you do so with a pride, obviously, of your family. But you don't shy away from
it.
NADELLA: When does one learn about hitting refresh the most? It's life's experience. Where does one get the courage, even, to lead at work? It's
through life's experience. And I felt that I needed to, in fact, do that uncomfortable thing of writing about my own personal life and the moments
that have shaped me and who I am at work, and how I lead.
QUEST: You say in the book that you are betting the company on three things. Particularly AI, artificial intelligence, but also mixed reality
and quantum computing.
If you are wrong, history will not be kind.
NADELLA: In fact, I do right, which is anybody who sort of claims that we are going to forecast technology, don't trust them. So, it's not that -- I
write these as three major technology trends. The real thing is, what does Microsoft do with these technology trends that's unique? But talking about
these three trends, I absolutely believe the ultimate computing experience something that's going to be right in front of your eyes.
(END VIDEOTAPE)
QUEST: Satya Nadella talking to me earlier last month. While we're waiting for the results, Paul La Monica, Clare Sebastian are tracking the
developments. Microsoft. Let's talk, Paul, about Microsoft. $0.84 on earnings versus 72 expected. What do you make of the results from
Microsoft?
LA MONICA: Microsoft's results are very strong and the cloud business that Satya Nadella loves continues to really show great strength. They say in
their release that they're exceeding a $20 billion commercial cloud annual one rate. So, they think they're going to be eventually at $20 billion in
annual sales just from the cloud. And here's what the thing is that really strikes me. The business line that this is a jargon-laden sentence here,
but what they call productivity and business processes, that was up 28 percent. That's essentially office line of business is still extremely
soft strong for Microsoft. And I think that's a testament to the fact that just pretty much everyone in corporate America still is using Word, Excel,
et cetera. And then it winds up in the cloud.
QUEST: Good results for Microsoft.
LA MONICA: Yes, these are very good results.
QUEST: Do we have an after-hours share price on Microsoft at the moment? While you're looking for that one, Clare, you do have an after -- you do
have a share price for Amazon after-hours.
SEBASTIAN: Yes, about a minute ago, it was up about 6 percent or so after- hours. Now this share price has been under a bit of pressure. It is up still around 30 percent on the year the last time I checked. But it was
under pressure after the last earnings report which missed. So, is not immune to falls, Richard. But I want to point out as well that this was
the first report that we had from Amazon since its acquisition of Whole Foods. That closed on the 28th of August, so about a month before the end
of the quarter. And that added 1.3 billion to those sales, that 43 billion number.
QUEST: All right. So, you've done Amazon. We've done Alphabet. Never mind about intel -- sorry, we've done Microsoft.
LA MONICA: We're about to do alphabet.
QUEST: Tell me about alphabet. What can you tell me?
LA MONICA: 27.8 billion in quarterly revenues that's up 24 percent --
QUEST: Wait, so revenue's up 24 percent.
LA MONICA: Better than expected.
QUEST: Which is 9.5 -- $9.57 earnings-per-share as against $8.33 expected.
LA MONICA: Yes.
QUEST: So again, that has beaten.
LA MONICA: Definitely beaten. The profit -- the quarterly profit, $6.7 billion. That's what translated to the $9.57 a share. And with Alphabet,
it continues to be search advertising. It continues to be YouTube. These are the core businesses. Even though Alphabet, obviously, is doing a lot
more with their quote, unquote other bets, things that are a little bit far off in the future. It's just the simple click-based advertising that is
really doing extremely well for them.
[16:15:00] QUEST: We won't have a share price to put on there until tomorrow night, because it's the day after that will reflect in terms of
these three in our new earnings center. Will put these on after in tomorrow. But Clare and Paul, as we come to an end here. No records on
the markets. The Nasdaq was down, just on a frolic of its own. But 70 percent of S&P companies are beating expectations. In the market likes
what its seeing.
LA MONICA: Yes, without question. I mean, whether or not this is because of the hope for more regulatory reforms in Washington, maybe some
deregulation tax reform, I think that remains to be seen. I think for the most part, as we've discussed on this show many times, a lot of businesses
our ignoring the turmoil in Washington. Consumers are still spending. And that's great news for corporate America.
SEBASTIAN: And I think there's still an appetite for these tech companies where you see such a major difference between the amount of sales that
they're producing and the amount of profit. They're willing to take a leap of faith, particularly for a company like Amazon, that is just dominating
in so many sectors, Richard. They're just not looking so much for that core kind of income number, as much as they are for what they're going to
do in the future.
QUEST: Good to see you both. Thank you.
LA MONICA: Thank you.
QUEST: Much appreciated. We'll continue tonight on QUEST MEANS BUSINESS. We'll turn our attention from earnings to Catalonia's high-wire
independence bid, which seems to have faltered for the moment. A last- ditch plan for regional elections has been called off and Madrid central government is still preparing to suspend autonomy in the matter of hours.
Catalan lawmakers are planning their next move. Erin McLaughlin is in Barcelona after the break.
(COMMERCIAL BREAK)
QUEST: The Spanish Prime Minister's path to direct rule over Catalonia appears to be open now. After Catalonia's president called off a plan for
snap regional elections. Promised watchers had hoped a new election could stall the independence crisis. Carles Puigdemont said he couldn't get a
guarantee that elections would have stopped the federal government from suspending his regions autonomy. He made his announcement later in the day
amid rumors there would be an election. And Spanish stocks rose nearly 2 percent, 1.9 for the IBEX.
In Madrid, the deputy prime minister has now accused the Catalan government of damaging the economy through its independence moves. Tourist numbers
are down, and more than 1,300 companies have announced plans to move their legal headquarters out of Catalonia. Earlier this week, the economy
secretary told me it is not an economic crisis.
(BEGIN VIDEOTAPE)
PERE ARAGONES, CATALAN ECONOMIC SECRETARY: A economic crisis and different companies and they are taking some positions among at municipal
headquarters. But finally, central offices, facilities, data centers continuing in Catalonia.
That's only that now, now that's only really an initiative position. Thirdly, if this situation continues over the time, over next months, then
there will be affections on the Catalan economy.
QUEST: If this drags on, Catalonia's economy will suffer. You can agree with that.
ARAGONES: If this situation continues, it's obvious that there will be a problem in the Catalan economy. But also in the Spanish economy. Because
there's two economies are interlinked. So, it clearly shows that there is an incentive for negotiation and solving this problem, because it's a
political problem, so it needs a political solution.
(END VIDEOTAPE)
QUEST: Economy minister of Catalan in Madrid and Barcelona lawmakers are planning their next move. CNN's Erin McLaughlin has been following it all
from Barcelona.
(BEGIN VIDEOTAPE)
ERIN MCLAUGHLIN, CNN CORRESPONDENT: Many moderate voices here in Catalonia had hoped that Catalan President Carles Puigdemont would call for snap
elections on Thursday. The thinking was that would provide enough political room for Spanish Prime Minister Mariano Rajoy to soften his
stance on article 155 and provide some sort of off-ramp to this crisis. But that didn't happen. Puigdemont explained his reasoning for ruling it
out. Take a listen.
CARLES PUIGDEMONT, CATALAN PRESIDENT (through translator): You know that I wanted to call for this election if we had certain guarantees that would
allow their celebration and period of normality. There are no guarantees to justify today the calling for elections in the Parliament. My
obligation was to try, to try honestly and loyally to avoid an impact on our institutions of the application of article 155, like the council of
ministers and likely to be approved in the Senate.
MCLAUGHLIN: Puigdemont also said that Catalonia's response to article 155 will be made by Parliament. On Thursday, there was a parliamentary session
and debate. It's expected to continue on Friday. At the end of Friday's session, it is possible that they could vote to formally declare
independence. But we're going to have to wait and see.
Meanwhile, what seems certain is that the Spanish Senate in Madrid will move forward and formally vote for article 155 on Friday. If they do that,
then that means that essentially come Saturday, Puigdemont and his entire government will be sacked, and emergency rule will pervade in Catalonia.
Erin McLaughlin, CNN, Barcelona.
(END VIDEOTAPE)
QUEST: And so, to the European markets. The euro bosses and they all made gains. The CAC was up 1.5 percent. As indeed the Dax was up 1.3. The
European Central Bank announced a slimming down of its massive stimulus program. It will half its bond-buying program to $35 billion from next
year. But it extended -- it agreed to extend the length of time that it would be making those purchases for.
Janet Yellen's chance of being asked to stay at the chair of the Fed seems to be fading according to two reports. Both "Politico" and "The Washington
Post" both say the choice is now between two candidates, Jerome Powell and John Taylor. The two men you see here. You can always expect the
unexpected with this president. He called Yellen very impressive in a recent FOXBusiness interview.
Randall Kroszner is a former governor of the Fed and joins me live from Chicago. Let's just be blunt in this one. What's your understanding of
the situation now?
RANDALL KROSZNER, FORMER GOVERNOR, FEDERAL RESERVE: Well I think it's still fluid. I don' t think the president has made the decision. The
president has said that he's very happy with all the candidates that he has gone -- has met with. And, you know, as you had said, the president often
likes to surprise. So, I don't think we really know. There are a lot of reports that are coming out, but I don't think the president has made his
decision.
QUEST: OK, let's assume for the purposes of this next question that it's not Janet Yellen. As between Jerome Powell and John Taylor, who do you
prefer and why?
KROSZNER: Well, they certainly have different set of characteristics. Jay has been at the Fed recently, Jay Powell, Jerome Powell, has been there and
would likely extend the kind of monetary policy is that Janet Yellen has been pursuing, very, very gradual interest rate increases. John Taylor, on
the other hand, has been very critical of the slow pace of increases in interest rates.
[16:25:00] Has been critical of the balance sheet, not moving it down more quickly. And so, he would certainly tighten faster than Powell would.
QUEST: And of course, John Taylor from the Taylor rule, or the Taylor principle, once you understand the Taylor principle about its relationship
between inflation and interest rates, you can sort of see where he' s coming from at the slow pace which is the Fed has tightened, can't you? I
mean, if you were dealt the Taylor principle or the Taylor rule, it should have been further and faster.
KROSZNER: Yes, but we still haven't seeing that much inflation pressure. And so, the question is, do we want to follow up that rule? And actually,
there are a lot of different versions of the rule. John has published a couple of different papers with different versions of it. And if you look
around, central banks around the world, they publish different versions of it and talk about it differently. So, you could get one that moves the
rates up faster or moves rates up a little bit more slowly. So, there's still some flexibility. It's not completely mechanical.
QUEST: On a more basic question. Both men are qualified to run the Fed, aren't they? I mean, Jay Powell, obviously, because he' s already there.
John Taylor, an eminent economist, whether one agrees with economics or not, but both men are qualified. Would you agree?
KROSZNER: Oh, for sure.
QUEST: So, in that sense, what we really are is in extremely fortunate position, if it is one of the three, Yellen, Powell or Taylor that the
president is unlikely to sort of impose somebody on a political whim, as a political -- I mean, I'm thinking of Gary Cohn here, who's not out of the
running. But Gary Cohn, president of Goldman Sachs, certainly knows his way around markets and business. But one might argue when it comes to
monetary policy, he's not of the PhD ilk to run the Fed.
KROSZNER: Well, certainly, he doesn't have a PhD but neither does Jay Powell. But I wouldn't want to say that disqualifies jay because he
doesn't have a PhD. I have a PhD, so of course, I'm kind of biased and in favor of PhD's, generally. But I also understand the incredible value of
having practical experience. And so, if you have some PhD's around and some people with practical experience, as long as you have a good mix of
that I think it works. And so, you can have a very effective chair who does have a PhD or one that doesn't have a PhD.
I think with Jay's experience, that helps to mitigate concerns that people might have that he doesn't have a PhD. Mario Draghi going to slow the
tapering, sort of. It's not quite a tapering, but it's a buying at a reduced level. But extending by nine months or extending out into the
future beyond into September of next year. And most people expect the ECB to continue the asset purchase program longer after that at lower levels.
KROSZNER: And Mario Draghi made a very strong point of saying, this is not a taper, because taper suggest that is going down to zero. He said it's a
downscaling, a downsizing. So, a sort of step down of the purchases. But he really wanted to say, this doesn't -- you know, don't expect to it to
come to an end in September 2018. You know, it might. He left open that possibility, but he really wanted to draw that distinction, that unlike the
Fed when they started the taper that that meant they were going to stop the asset purchases. He wanted to leave that possibility open. And that I
think surprised the markets a bit and one of the reasons why the euro fell.
QUEST: The euro fell, however, but the equity markets were up, which of course, just merely shows the confusion in the markets at the moment.
Randall -- Dr. Kroszner, I must get it absolutely right. Doctor, good to see you, sir.
KROSZNER: Yes.
QUEST: We shall not leave those --
KROSZNER: It was great to see you.
QUEST: Thank you. PhD in honor intact.
Now, as we continue tonight on QUEST MEANS BUSINESS, there's new sexual harassment allegations and it involves the veteran journalist Mark
Halperin. And in this environment, we feed to consider what employers need to do to eradicate, educate, and protect in the workplace. And I think,
also, it's important employees. If the rules have changed and there's a load of dinosaurs still around who believe it's the'70s and the'80s, what
do you do about it?
(COMMERCIAL BREAK)
[16:31:49] Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. When I'll be talking to the IMAX chief exec about how he
turned Hollywood's summer of duds to a record quarter. There'll be a Chinese issue in there as well.
And the Saudi Arabian finance minister tells us the country doesn't want to wait around for economic reforms. It wants to get on with the job. This
is CNN. And on this network, the facts and the news always come first.
Disaster struck in a fireworks factory west of Jakarta, when an electrical short is suspected of triggering an explosion on Thursday morning. At
least 47 people were killed and dozens more injured. Ten people are still missing.
In Kenya, presidential election day clashes between the police and the opposition protesters have left at least one person dead and several
wounded. Officers fired live bullets and tear gas at the rock-throwing demonstrators. However, across most of the country, voting was peaceful.
It was a re-run of Kenya's disputed august poll, which the nation's supreme court ruled was marred by irregularities and therefore void.
President Trump has declared the opioid epidemic a national public health emergency in the United States. That means federal agencies will provide
more ground money to fight it. The president made the announcement at the White House saying, we can be the generation that ends the epidemic.
Former president George H. W. Bush has apologized after the actress Heather Linde accused him of touching her, in his words, from behind during
a photo opportunity a few years ago.
A spokesman responded saying President bush has been confined to a wheelchair for roughly five years, so his arm falls on the lower waist of
people with whom he takes pictures. On occasion, he has patted women's rears in what he intended to be a good-natured manner. To anyone who is
offended, President Bush apologizes most sincerely.
So, the me-too hashtag has been used as an empowering tool encouraging women who have suffered sexual harassment to share their stories. Now,
five women have come forward with harassment claims against the journalist, Mark Halperin, relating to his time at ABC news. Halperin says he's now
stepping back from his role at MSNBC and NBC news. And while he denies some of the allegations, he does say he's deeply sorry. HR departments are
the ones we turn to in these situations.
Davie Temin is president and chief executive at Temin and Co., a crisis management company. Good to see you. It's difficult to know where to
begin here, but let's just put into practicalities.
[16:35:00] What is a company supposed to do when there are people like President H. W. Bush, who believed it was OK to pat a woman's posterior.
You've got Halperin, who asked people out on dates and then tried to kiss them, allegedly. Where are we going with this?
DAVIA TEMIN, PRESIDENT & CEO, TEMIN AND CO.: Well, I think from time immemorial, we're going to something that has been almost always true. And
we' re reaching a tipping point right now where it's no longer acceptable. People are starting to talk about it more. Women are telling their stories
more. And it starts with one person' s personal narrative.
QUEST: Right. But the company itself -- never -- I mean, what is the company supposed to do?
TEMIN: All right. So, first of all, they've already got the stuff on the books. They've got their regulations on the books --
QUEST: Right! That's the problem!
TEMIN: They haven't ever enforced them in the way that most women would like to see it. So, what can companies, if the companies are getting
serious about this, because of social media, because of 24-hour news shows, what now they need to do are carrots, sticks, and nudges. This is to
change behavior. Carrots, sticks, nudges.
QUEST: Give me a carrot.
TEMIN: Carrot, you have a clean record for "x" amount of time with no -- nothing against you, you get a bonus. Real money. Stick. We hear you're
doing it, immediately you're put on leave, paid leave, because we don't know whether it's true, and false allegations occur all the time. We
investigate seriously. We pay attention to what we find.
QUEST: OK, nudge.
TEMIN: Nudge is we make it socially acceptable not to do it. There's no wink, wink, nudge, nudge in there. There's nothing like, it's OK, boys
will be boy's kind of stuff. If we hear about it --
QUEST: So, it ' s changing that -- well, let's put Harvey Weinstein to one side, because this man was harassing on an industrial scale. I'm more
concerned here about the everyday office, the everyday factory, with middle management, junior management,
assistants. One might arguably say, any company, the office.
TEMIN: Yes, yes, yes. The tone from the top. Tone from the top. It is not acceptable for this behavior to happen.
QUEST: What behavior?
TEMIN: Any behavior that is seen as abusive or harassing.
QUEST: But -- let's delve into this. All right. Because you know that there are -- I won't say occasions, but there are highly charged
environments where -- I won't say horseplay, but you know what I'm saying here. The office environment can become ribald.
TEMIN: I came from Wall Street, I had fun on Wall Street. And let me tell you something, nothing terrible ever happened. Yes, of course, there were
all kinds of little things, but I could deal with them. But they weren't really serious, and I never got scared, I never had to walk out of a room
shaken and pale because somebody had done something to me. And some of these women with Halperin have done that, have said that they had.
QUEST: Now, the challenge here for both sides is that what one set of people thinks is just a bit of horseplay and, you know -- nobody takes
offense.
TEMIN: Right.
QUEST: Somebody else, legitimately, take offense. Right. So where does an employer balance that in the workplace?
TEMIN: Let me tell you, this morning I actually came from an unconscious bias training that a major organization, major financial organization in
the city put on. They are putting it on for almost all of their senior people. And they talk about exactly that. What for you may be absolutely
nothing, for me is upsetting. So, we have different points of view. There's a sensitivity to that.
I can't tell you -- it's a little bit like art. I know what I like when I see it. It's a little bit like that, but with firmer roles. No touching.
No unwanted touching. Like, somebody puts their arm around you and goes, atta-girl, fine, but they put their arm around you and it hits some other
part of your anatomy, not fine. You can tell the difference and I can tell you most women can absolutely tell the difference.
QUEST: We are in -- would you agree that we are in a very new environment as a result of this? And I'm not saying that -- the rules of the road have
changed years ago, we just were not following them.
TEMIN: That's right.
QUEST: But now we're following those. We're going to make mistakes on both sides.
TEMIN: Absolutely, we will. But we -- at least the intent is they are to be serious about the rules.
QUEST: Ultimately, though, I just want to finish on one point. What do you do, besides find a new job, if frankly, you're HR department is
useless, bordering on nonexistent.
[16:40:00] And HR, whilst not willingly concluding, the head of HR might as well be part of the problem.
TEMIN: Exactly.
QUEST: What do you do then?
TEMIN: Well, if you're ready to go for broke, you tell your story and you write it as a narrative and put it on a blog and get other people to echo
chamber it. That's how it started with Susan Fowler. That's the way this new communication world allows these stories to have more power and
resonance.
It starts with one narrative, other people start telling their narratives, often around the same people, because people don't do this singly, if
they're real harassers. And so, then a pattern starts to emerge and then it starts to -- you pick it up and there it goes.
QUEST: Please, I have a request. Come back again. We need you more.
TEMIN: I would love it.
QUEST: Good to see you.
TEMIN: Good to see you.
QUEST: As we continue tonight, the so-called Davos of the desert wraps up in Saudi Arabia. You'll hear from the Saudi finance minister as the
kingdom tries to attract a new wave of investment. It's QUEST MEANS BUSINESS live from New York.
(COMMERCIAL BREAK)
QUEST: Saudi Arabia is promising a return to moderate Islam. Something that would be a huge for the nation. The Saudi finance minister told us
that it needs to be ready for change if it's to meet the vision for 2030. The minister was speaking to John Defterios.
(BEGIN VIDEOTAPE)
MOHAMMED AL-JADAAN, SAUDI FINANCE MINISTER: The whole vision 2030 is to ensure that we are building capacity, we are ready to develop, we cannot
wait for the slow pace of development. So, we need to ensure that we are ready, there are very complimentary initiatives.
The deals that we had with the U.S., the deals we had with China, with Japan, with other countries, they are all complimentary. Some of them are
actually going to complement each other. The IF is going to invest in SAMI the Saudi Arabian Military Industries Company. Which will also invest in
some of the contracts that we have signed with the U.S., so it is all complimentary.
We are building capacity as we speak. And as we are moving on. We are fixing the engine as the flight is on, because we really need to do that.
There is a lot that we need to capture. And we are doing that while we are moving and flying.
JOHN DEFTERIOS, CNN MONEY EMERGING MARKETS EDITOR: Three global CEOs came up to me and said after the crown prince announced he wants to eradicate
radical Islam, they took it as a sign that it's moderation happening in the country. And a signal for foreign investors to come in. Is there direct
relationship between the two in your views?
AL-JADAAN: I think there is a direct relationship between that and upcoming investments, that with economic development, that with going to
the next level. I think moderate Islam is our faith. Our culture, our social fabric.
DEFTERIOS: It was almost hijacked for four decades. You would agree, right?
AL-JADAAN: Unfortunately, it was. And now we are back to the moderate Islam. And we want to make sure that that continues to be the engine, the
base behind what we are doing in terms of economic reform and social reform.
DEFTERIOS: Six months ago, when we spoke, you were worried about overreacting to the budget deficit, cutting too quickly, and trying to
protect growth. Flatlining in 2017. What happens in 2018 and how do you adapt to all of this?
AL-JADAAN: I think it is in reforms that we are undertaking to ensure that our economy structure is corrected. Our income is diversified, our economy
is diversified, you would expect a slowdown. And that is just a base for another pickup. That is expected.
The IMF have just concluded their article four consultation. In their report says that
while they are expecting almost zero this year, they are expecting moderate and then more growth for the years to come.
(END OF VIDEOTAPE)
QUEST: Saudi Arabia. Now to Russia, which is threatening to retaliate after Twitter said it would in longer accept advertising paid for by two
news organizations, RT, used to be Russia today, and Sputnik, the agency. The U.S. intelligence says both companies which are owned by the Russian
state tried to interfere in the U.S. presidential election.
Samuel Burke is in London for us tonight. So how will they retaliate?
SAMUEL BURKE, CNN CORRESPONDENT: Well, that' s really the key question here, because I was actually gob smacked by this news, Richard.
For so long, these companies have said, we don't want to be the arbitrators of truth when it comes to politics. We don't want to take down accounts.
And now all of a sudden Twitter is saying, well, we'll do this and keep in mind, this is not only in the United States. You'll no longer see RT
content on Twitter promoted anywhere around the world.
But what happens if Russia says, hey, we don't want American news networks, for instance, we don't want to see their content promoted in Russia. Now
you have this Pandora's box opened up.
What if the U.S. says, we don't want to see CCTV there. This is position that we rarely see if these tech companies asking for.
QUEST: What is the point of not accepting paid advertising? The allegations concerning these organizations and so-called fake news and the
fake accounts of Facebook, I mean, they were nefariously put together. They were anonymous. They were masqueraded, there were invented.
I suppose there was some paid advertising involved.
BURKE: These are two different issues. On the one hand, you have these kind of dark, Russian-linked accounts, Facebook says. And on the other
hand, you have stuff from RT. I don't think anybody thought that RT wasn't a mouthpiece of the Russian government. It's state-owned media. This is
very retroactive.
And it's almost funny in a way that they're going after RT in this way, when everybody knew what they were doing. Anybody who's ever watched some
of their program will know exactly what their agenda is.
QUEST: So why has -- I'm going to be basic in my questions here. Why has Facebook done it? I know they're being questioned by the U.K. authorities.
I know they're going to be called before the Commons. I know -- Congress. But why have they decided to take this action then?
BURKE: I think it has less to do what's happening over here on my side of the pond and more to do with what's happening on your side of the pond,
Richard. They have this congressional hearing coming up. And I think it looks like to a lot of observers that they're facing a lot of pressure from
the U.S. government and it's not just Twitter, a lot of other social networks trying to do what they can to please the U.S. government ahead of
those hearings that we'll be covering next Wednesday on CNN.
QUEST: Samuel, that's an extremely smart pocket square, handkerchief, which, is it real?
BURKE: It's real. I think it cost me $4.
QUEST: You were robbed! After the break, we'll have more QUEST MEETS BUSINESS.
[16:50:00] (COMMERCIAL BREAK)
QUEST: In the past few hours, President Trump declared a national public health emergency to fight the opioid epidemic in the country. Americans
who have died from opioid overdoses has quadrupled. It' s not just prescription drugs, but the legal forms, too. Donald Trump says his
planned border wall with Mexico is a key weapon in the night against those drugs getting in. Dr. Sanjay Gupta has traveled to the Mexico-U.S. border
to find out if that claim stacks up.
(BEGIN VIDEOTAPE)
SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: What is the first thing that sort of flags this?
SCOTT BROWN. U.S. HOMELAND SECURITY INVESTIGATIONS: Driver' s behavior. They are unnaturally nervous for crossing the border. Sometimes it's the
car hasn't crossed the border a lot or sometimes the car has crossed the border too often.
GUPTA: What you're witnessing here are efforts in stopping drugs from coming through the U.S.-Mexican border.
BROWN: Almost every car crossing for a legitimate reason. It's just a very small percentage that comes in carrying contraband. But I think when
the inspectors pick up on something, their success rate is pretty high. When you tell the dog to sit down at the back of the car, that is how that
particular dog alerts.
GUPTA: Special agent in charge, Scott Brown, oversees the Tucson field office for homeland security investigations. And drugs are a big part of
what he does. So, this is how it happens. What we're witnessing here is - -
BROWN: Is what happens every day along the southwest border of the U.S. and, you know, the officers at the ports of entry are phenomenal. They're
fantastic in identifying fresh tool marks that shouldn't be there. So, a screw that's been recently turned that there wouldn't really be a reason
for it to be recently turned. They can pick up on that. I mean they are experts.
GUPTA: This is human art and intelligence together.
BROWN: Absolutely.
GUPTA: What they find, about 24 kilos of hard drugs. Minutes later, field testing reveals cocaine. This is a win today?
BROWN: This is definitely a win.
GUPTA: In the midst of the countries opioid epidemic, President Trump has made building up the wall a cornerstone of his agenda.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The wall is going to get built, folks. In case anybody has any questions, the wall is going to get
built and the wall is going to stop drugs.
(END VIDEO CLIP)
GUPTA: But I wanted to learn just how effective the wall would be at accomplishing that?
This literally is a physical wall in between two countries that we are looking at here.
BROWN: The vast amount of hard narcotics, do not come through at places like this. The vast amount of hard narcotics come through at the ports of
entry where we just were.
GUPTA: And besides meth, cocaine, heroin, or marijuana, it's fentanyl, which is 50 times stronger than heroin. It is the biggest challenge
nowadays. The most recent numbers from the center for disease control found that overdose deaths from synthetic opioids like fentanyl rose over
72 percent in just a year.
In the past, cartels might try to smuggle 100 kilograms of drugs across the border. It wasn't easy to do. They were likely to get caught. But here's
part of the problem. Nowadays, they could smuggle across something that looks like this.
This is just a one-kilogram bag of flour. But if this were street fentanyl, it would cost about $8,000 to make. Could be turned into a
million pills, and then sold for $20 to $30 million on the black market.
All of that from a small container that looks like this. The vast majority of fentanyl is produced in China. Comes into the U.S. two ways. Comes
into Mexico where it is easy to compress into pill form or combine with heroin. The other way it comes in is American consumers buying it direct
oftentimes from vendors out of China.
GUPTA: Then it gets mailed in?
[16:55:00] BROWN: U.S. mail which is the most common, a very small quantity of fentanyl is hard to detect in the masses of letters that come
into the U.S. every day.
GUPTA: How effective is a wall at preventing drugs from getting into the United States?
BROWN: In terms of hard narcotics, no, I don't know that we would get immediately safer over hard narcotics. As of right now, the vast majority
of hard narcotics come in through the ports of entry in deep concealment or come in through the mail order express consignments.
GUPTA: as you can see it's a totally different war on drugs nowadays when you are talking about a package this, a kilogram, about $8000 of raw
ingredients. That can be turned into a million pills each pill costing $30, that' s $30 million. $8 thousand into $30 million.
The economics of it are such a tremendous incentive for people to keep on trying. Through the mail.in the back of the car. Whatever it takes.
That's what the war on drugs looks like these days with all these brand-new drugs. Back to you.
(END OF VIDEO CLIP)
QUEST: Sanjay Gupta.
When we come back, we will be in the earnings center to discuss it with a true Profitable Moment.
(COMMERCIAL BREAK)
QUEST: Tonight's True Profitable Moment from the earnings center.
Our new earnings center will give you a really good idea of how corporations are performing. You know, we often think of the quarterly
reporting and the earnings as well, what's the relevant in the longer term and there is certainly truth that we can
often become too obsessed, was it up, was it down? How is the afterhours share price?
Amazon up 8 percent. Microsoft just up 3.6 percent. But the reality is over time earnings are a reflection of how a company performed in the last
quarter and the future earnings stream going forward.
That's why our earnings center is going to be so significant as we show you the immediate day after share price, Twitter up 20 percent, Costco down 5
percent, the earnings center will give you a feeling for how the market is viewing the largest companies in the world. UPS and Ford. The earnings
center will be a barometer we can all use.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up in the hours ahead, I hope it's profitable.
END
