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Quest Means Business
Spain Tumbles into Constitutional Crisis; Triumphant Tech Stocks Rally to Record; Puerto Rico Power Contract Under Fire; Lessons in Leadership for an Open Source World; Aired 4-5p ET
Aired October 27, 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: Party City ringing the closing bell on Wall Street. Fancy dress because it's Halloween coming up. This is the
weekend before Halloween. The Dow is up but no record. The S&P and Nasdaq are both at records. And that gentlemen going to have a coronary if he
continues to hit the gavel like that. Trading is now over worldwide. It's Friday, October the 27th.
Tonight, celebrations in Barcelona, defiance in Madrid. Spain falls into a full-blown constitutional crisis. Silicon Valley rules supreme. Tech
stocks go through the roof. And Puerto Rico's power struggle. The company's trying to restore electricity comes under investigation. We have
the commerce ministry on this program live tonight.
I'm Richard Quest live at the world's financial capital in New York City where, of course, I mean business.
Good evening. Breaking news to bring you tonight. The constitutional crisis that's been brewing in Spain four months has arrived. The Catalan
government has declared independence. Live pictures for you on the screen just over there of what's happening in Barcelona as the crowds are on the
street. That's Barcelona.
In Madrid the Spanish Prime Minister seized control from the regional government. He has dissolved the Catalan parliament, fired the Catalan
police chief and called call for fresh elections, regional elections, to be held on December 21. Meanwhile in Barcelona tonight, pro-independence
demonstrators are on the streets where it's 10:00 at night. The government there, the regional government, is looking for support as leaders around
Europe saying they will not recognize an independent Catalonia.
And on the market Spanish stocks tumbled. Reversing most of Thursday's gain. The volatility absolutely extreme. It all came down to one dramatic
hour. The governments in both Barcelona and Madrid triggered their nuclear options. By 70-10, Catalan lawmakers voted to form an independent
republic. The opposition lawmakers walked out before the vote began. The President Puigdemont admits independence will not be easy.
At the same time in Spain at the National Parliament, the Senate granted Mariano Rajoy powers under article 155 of the Constitution. And a short
time ago the Prime Minister invoked those powers dissolving the Parliament, Catalan Parliament, scheduling elections, firing the government, and firing
the head of police. As the crisis has reached fever pitch, both Prime Minister and Catalan President recognizing the tinderbox that you're seeing
on your screen tonight. Both of them recognize this and appealed for calm.
(BEGIN VIDEO CLIP)
MARIANO RAJOY, SPANISH PRIME MINISTER (through translator): The objective is to insist on taking back legality and, and therefore, I what to tell
Spaniards and all Catalans to be calm, that things will be fine. They will be measured, and they will be effective as they had been up until now.
Spain is a serious country. It is a great nation, and we will not tolerate that a few people tried to liquidate our constitution, our standards of
living, our rules of play.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
CARLES PUIGDEMONT, PRESIDENT OF CATALONIA (through translator): Citizens of Catalonia, in the coming hours, we will have to maintain our country's
pulse, and most of all, maintain the peace, public spirit, and dignity as we've always done. Without a doubt it will continue to be that way.
(END VIDEO CLIP)
QUEST: 10:00 now in Barcelona. CNN's Erin McLaughlin is in the city. The mood, please, Erin.
ERIN MCLAUGHLIN, CNN CORRESPONDENT: Hi, Richard. I'm here outside of the Catalan central government headquarters. This was the scene of a massive
pro-independence party. They just asked people to begin to leave and to leave in a peaceful manner.
[16:05:00] The announcer making that very clear that she wants things to remain peaceful tonight. There was fireworks here, though, there was
music, there was dancing. The people I was speaking to said they could not be happier. That this was their lifelong dream finally realized. Many
people saying that they were declaring victory with the Catalan Parliament voting for independence today. Take a listen to what some of them had to
say.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I am beyond excited. I am speechless. I can't have words what the people here want and what the people here expected. This is
something we wanted for years for ages something we wanted -- my grandfather wanted, my father wanted, and I can -- I don't have words for
the meaning of all this.
UNIDENTIFIED MALE: We're waiting for you, the world, to recognize us like a country and we think we can do it like great to the world.
UNIDENTIFIED FEMALE: We don't know how long this is going to be, but today we're at a party.
(END VIDEO CLIP)
MCLAUGHLIN: And, Richard, many of the people that you see behind me tell me that they feel that they live in an independent Republic of Catalonia,
and that sentiment presents a unique problem for the Spanish Prime Minister Mariano Rajoy, in terms of how he's going to respond to this. We know that
the emergency measures to sack the Catalan government are already in place. They're preparing charges for the Catalan president and his minister of
rebellion charges. It can carry up to 30 years in prison.
But the question becomes how does he enforce that considering that many people here feel they now live in an independent country. Some here are
fearing that the solution to that rests in the streets of Barcelona, the streets of Catalonia. It very much depends on how the general public
responds and how the police responds to direct rule from Madrid -- Richard.
QUEST: All right. This is an extremely difficult situation. But are the people in the square behind you, are they going to wake up tomorrow and
next week with a hangover? And I don't mean just from what they may have drunk tonight in celebration, but when they realize the place is going to
be taken over by central forces, and their government will not exist?
MCLAUGHLIN: You know, that's a question that I was actually asking some of the people here. And they were telling me that at this point, their
lifelong dream has been realized, Richard. They're living for tonight. They know that tomorrow is uncertain but today it's about celebration. For
them today it's about declaration of an independent Catalonia. But keep in mind that sentiment is not a reflection of all of Catalonia. Catalonia is
very divided. There are plenty of people in Catalonia tonight that are scared and anxious that don't want independence that are our worried about
what may happen next.
QUEST: Erin McLaughlin in Barcelona. And thank you, 10 o'clock at night there.
So, an unprecedent crisis for the European Union. At a delicate time with separatist movements bubbling around the region. Join me at the super
screens and you'll see exactly what I mean. So, the Europeans who have spoken are united in their support for the Spanish government.
Let's start in the U.K. The Prime Minister there, Theresa May, the spokesman said, the U.K. doesn't recognize independence. But it's worth
pointing out that the Scottish leaders who had their own independence referendum that failed, they said they had sympathies with what's happened
in Catalan. Obviously, they're in a much trickier position, because the Scottish referendum was authorized by the U.K. government. The Germans say
pretty much the same as Theresa May, not recognizing.
As for the French, full support says for Rajoy, says Emmanuel Macron. And arguably in the trickiest of all, in Brussels, the European Council
President, Donald Tusk, urges Madrid to show restraint. For EU, nothing changes. Spain remains our only interlocutor. I hope the Spanish
government favors force of argument, not argument of force.
And what is interesting about this, that has become the quote of the day. Force of argument, not argument of force. Because as you can see from the
pictures in Barcelona that we were showing a moment ago, the potential for argy-bargy bursting out is riots in a highly favored environment is very
real.
[16:10:06] Let's talk about the economics of all of this. Angel Talavera is the Senior economist at Oxford economics. Joins me now from London.
All right, let's put aside the politics as such. Tonight, the situation as you look at it, the criticality of it for economics of both Catalonia and
Spain, how would you judge it?
ANGEL TALAVERA, EUROZONE ECONOMIST, OXFORD ECONOMICS: I think in practical term, it doesn't change anything. I think that it's a great show for
people who are supportive of independence, but it's almost, I would say, a farcical, I'll call it yesterday. The central government has already
basically dissolved the parliament and they have removed the Catalan government from power. So, I don't think it's really good time to look at
the economics of what an independent Catalonia would look like because there's not going to be such a thing as an independent Catalan Republic
anytime soon.
QUEST: No. Fair enough. Good point. But the uncertainty of what's coming. If we take for example, the euro is down, Spanish bonds are down,
gold has gone up. The uncertainty of the situation that could hinder the national economy, couldn't it? Bearing in mind 20 percent of the economy
is Catalonia.
TALAVERA: Yes. That's, I think, the critical question for us economists especially. What is the impact of this political crisis, this tension and
this uncertainty in the economy. Until now we haven't seen any real effect. But the truth is that all the economic indicators that we look at,
they are actually a bit behind to what's happening. We haven't had any numbers from October which is when the situation started to get worse.
There would be an economic impact of this, well undoubtedly. But how much? It's really unclear at this point. I think we could see GDP growing a bit
less next year, but I'm not really sure about making a big call yet until we have a little more data on what the impact is.
QUEST: The Spanish economy having weathered terrible, terrible storms during the 2008, 9, 10 crises, starting to show -- I was going to say,
first shoots of recovering, but doing more than that. Actually recovering. Does this in your view endanger the recovery?
TALAVERA: It does pose a risk which is an obvious downside risk, but at this point for your me, it does not mean that it Will probably derail the
recovery yet. The economy, the Spanish economy is growing really strongly, as you mentioned. It has a lot of momentum. Again, there's a lot of
uncertainty about how much of this -- what kind of impact this could have. My view is that it will decelerate growth but not derail the recovery
altogether.
QUEST: Angel Talavera, thank you very much for joining us from London tonight. We appreciate it.
Now the wider European boards were mostly higher despite the drama. European stocks, European shares, hit a five-month high, boosted by the
weak euro. The euro had fallen, of course, and the central banks is going to taper its stimulus program. Major banks such as UBS and World Bank of
Scotland also posted strong results. London showed again in the quarter. The only loss there was Zurich SMI. And of course, we showed you the Ibex
in Madrid.
When we return on QUEST MEANS BUSINESS, evidence that the U.S. Economy is hurricane-proof. And join me at the earnings spiral share case as we look
at stocks on the way up, thanks to stellar earnings.
[16:15:03] (COMMERCIAL BREAK)
QUEST: So, to the markets that are now closed, but let's see exactly how they treated. And you can see the Dow Jones, no records there. Let's
concentrate instead on those that were. The S&P up over .75 percent and closes at a record high. And the Nasdaq which closes at a record high as
well up 2.25 percent. All fueled by good tech results.
On all of those tech results I insist you join me on the earnings share case. And, remember, the idea here is we look at the closing price
immediately after the company got results. Down here you've got the losses. Up here you've got the company that showed gains in the hours
after on the share price, which is the best barometer from how existing and past performance in the future earnings streams. What you see, of course,
when we add in the ones from yesterday, in last night. Amazon shares were up a whopping 13 percent. It makes Jeff Bezos the richest man in the world
ahead of Bill Gates. That 13 percent by the way, still less than Twitter's 20, and Twitter put on even more today.
Microsoft, good results on the cloud, last night we told you about. And the shares were up some 6 percent on the day. Whoops. There goes my five.
Such agility for a man of my age. There goes that. And alphabet. Alphabet is also up some 5 percent. It gives you an idea. If you talk
about other markets or other stocks, Exxon Mobile for example, was hurt by Harvey, still beats profits and revenues. It's just about zero. Just
about 1 percent. Put all this together and what were now seen very clearly the losses around about 5 percent. Not that many of them.
Moving up the share case and you start to see the balls absolutely taking control. You've got 1 percent, 3 percent and when you get to the 5 percent
plus -- if you make that quite clear here -- when you get to 5 percent plus you've got this huge number of tech companies that skewed the earnings
season. On "QUEST EXPRESS" Teddy Weisberg told me, tech stocks are on fire.
(BEGIN VIDEO CLIP)
TED WEISBERG, FOUNDER, SEAPORT SECURITIES: The earnings period has always been a good period for the market. You get good earnings, bad earnings,
but the tech companies last night just blew the numbers out. But this earnings, third quarter earnings period started with the big financials,
and those earnings were better, but they don't have the Jews that the tech stocks have
QUEST: OK, if we just take the Dow at the moment. The top three of the Dow. Microsoft's up 7.25, Intel's up 7, and even Apple, which has lagged,
is up nearly 4 percent.
WEISBERG: Right. Fabulous. But this is where the earnings growth is, and this is what investors really are paying for.
(END VIDEO CLIP)
QUEST: Joining me now Peter Tuchman from the floor of the stock exchange. Peter, good to see you. As you go into your weekend and you head off to
your palatial residence, Mr. Tuchman, will you be happy this weekend because of what you seen in the market?
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: You know, I really will. Look, we saw one day of a selloff. You know, and everybody is
wondering when this rally will dislocate. We saw 100 we saw 200-point selloff midweek for a number of different reasons. And there was
absolutely no follow-through, Richard. We came back roaring Thursday and Friday. Yesterday's earnings last night on the tech sector, which you
talked about with Teddy, were off the charts. The projected sales of the iPhone X, off the charts. Amazon, Jim Bezos, becoming the richest man in
the world. Microsoft, intel, blowing the cloud space away, as well as Amazon.
QUEST: But, Peter, what concerns me somewhat if you look at the -- if we look at our earnings share case, what we've seen, it's all about tech.
It's all about tech. And if you look at those other companies and we're looking at them now, the Exxons, the McDonalds, Boeings, the AT&T, American
Airlines, they had good results. But markets beat them up or at least didn't give them full credibility.
[16:20:00] TUCHMAN: You know what, I don't think -- look, we've seen that the Dow stocks carried the market for a while when people were shifting out
of tech and back into Dow. We've seen these things happen over time. I don't think you can really make a judgment that, you know -- look, there
were two or three or four maybe big Dow components that had earnings and guidance that was OK, but in fact, they did still sell off. We've got the
old buy the rumor, sell the news perhaps happening then. They didn't post bad earnings, Richard. They just posted reasonable earnings and the market
-- and it was perhaps profit-taking. Perhaps they were -- look, maybe people were really making a bet that the tech sector was going to really
kill it and they were profits and rolling money over into the tech sector. We do see that shift often.
QUEST: I just wonder, are we coming into a situation where we know the significance of tech. Let's face it. We've got every gadget known to man
that were using on a minute-by-minute basis. But I'm wondering, the industrials -- let's looking at today. Ford down 1.75 percent. Chevron
off 4 percent. Disney down -- Disney's got its own problems. But you see where I'm going with this. It's still all about technology.
TUCHMAN: I think you see different sectors get really excitable at different time, right? And different parts of the economy take the market
higher at different times. Sometimes it's the Dow component, sometimes it's tech. Tech are high flyers, Richard. You know, you are seeing Amazon
up $120. Right. That had broken a thousand at one point, had sold off. The Dow sort of carried the market up for a while. Now it's tech. For
today, these are one-day events. You have to realize, you look at the market over the last nine months, we're up 5,000 points. Nasdaq at all-
time highs. Dow and S&P at all-time highs. I wouldn't really read that much into that.
QUEST: Have a lovely weekend and I look forward to seeing you next week.
TUCHMAN: I look forward it, Richard. Have a great weekend. Good luck to everybody.
QUEST: Thank you.
TUCHMAN: Stick with the NYSE, guys. You've got it.
QUEST: Peter Tuchman. Exxon profits were up despite the hurricane season. U.S. growth is also proving to be weatherproof. GDP came in at 3 percent
for July to September, more than expected. CNNMoney's Patrick Gillespie, joins me. Good to see you.
PATRICK GILLESPIE, CNNMONEY REPORTER: Good to see you, sir.
QUEST: Three percent, what was expected?
GILLESPIE: Better-than-expected and really today the U.S. economy showed just how resilient it is, Richard. Think about this, for the last six
months, we've average 3 percent growth. That hasn't happened since 2014. So, what you're really saying is an economy almost near a full-blown
health. You've got 4. 2 unemployment, the lowest in 16 years. You really are seeing momentum and resilience
QUEST: The important thing is, of course, the U.S. does quarterly numbers on an annualized basis as opposed to other countries who do it on a q-by-q
basis.
GILLESPIE: Sequential. Yes.
QUEST: So, Sequential, thank you. Does Donald Trump's 4 percent -- does it look possible?
GILLESPIE: Three percent doesn't look possible for this year. Because we still had a sluggish start to the year. This is a trend that we've been
seeing over and over. The U.S. just starts sluggish. Whether it's a number-crunching thing or something going on in the U.S. economy at the
beginning of the year, the U.S. Is still in this 2 percent range. Four percent is way out of the ballpark. Three percent still look like a big
challenge for President Trump and his administration to reach. They've even cautioned, that hey, it may not happen this year. It may not happen
until tax cuts come through. So, were looking at still a 2, 2.5 percent economy. But you're looking at some really good signs going into next
week. You've got a big jobs report and you've got the Feds meeting coming up too.
QUEST: On the Feds, since you led me elegantly into that. I see that there's an announcement from -- let me stop a minute and see what the White
House is saying. According to Sarah Sanders at the debriefing today, President Trump will announce next week his choice for who will lead the
Federal Reserve. What are you betting?
GILLESPIE: Powell. Donald Trump is down to Jerome Powell and John Taylor. He says he likes Janet Yellen. And he says that hey, Janet Yellen and I
are doing really well, look at the stock market. It may not be what a lot of people would measure as the quality of a Fed chair. But the president
also says, hey, I want to make my own mark on the Fed. How do you do that? You appoint not only a Fed chair but a Fed vice chair and someone like John
Taylor, who is a Stanford economist, he's created a much different look at how you design monetary policy, that would be a game change situation for
the Fed.
QUEST: And he's a governor already.
GILLESPIE: Jerome Powell.
QUEST: Beg your pardon, sorry.
GILLESPIE: Powell is a governor and I think he would sort of continue to usher the ship forward. He would continue to move things in a generally
same direction. However, Taylor represents a much different sort of body of thought when it comes to monetary policy.
QUEST: The Taylor rule.
GILLESPIE: The Taylor rule. Which basically means we'll use a calculation to raise and lower interest rates.
QUEST: If that goes to the Fed chair, who gets the deputy or the vice chair and then you've still got some other positions to fill in underneath
as well.
[16:25:05] GILLESPIE: I think Taylor -- I think the bet right now on the street and elsewhere is Powell takes over as Fed chair, John Taylor as vice
chair and then Yellen who's still a governor at the Fed probably steps down.
QUEST: Good to see you. Thank you, sir.
U.S. Defense Secretary, James Mattis, says the United States and Seoul are committed to diplomatic situation in North Korea. Mattis spoke during a
visit to the demilitarized zone that divides North and South Korea. CNN's Will Ripley is in Pyongyang and says the North has us wrong message for
President Trump ahead of his visit to Asia next week.
(BEGIN VIDEOTAPE)
WILL RIPLEY, CNN CORRESPONDENT: The sentiment I'm getting from North Korean here in Pyongyang, the U.S. Secretary of Defense, James Mattis,
didn't say anything at the demilitarized zone that divides the north and south that would further enrage the North Koreans. They're already angry
with the United States. And so, what he said that North Korea is obsessed with weapons and that they pose a risk to this region. That's something
the North Koreans have heard before.
He did take note of the secretaries remarks about a possible diplomatic option. But when he said that a total denuclearization of the Korean
Peninsula is the objective of the United States, the North Koreans said that really is a deal breaker. It's a nonstarter for talks. Because they
fell they've come so far in developing their nuclear arsenal, that they're not going to walk back now. Especially given the fact there might be a few
more tests they say, before they prove to the Trump administration that they have the capability to launch an intercontinental missile that can
potentially the mainland United States with a nuclear warhead.
But of course, the real concern, not only in this region but around the world, is that a North Korean nuclear test or missile launch could push the
Trump administration to take an action or reaction that could then lead the region down a very dangerous road, possibly where there's no return. North
Korea is also watching very closely President Trump's upcoming visit to Asia. He'll be arriving in the region next week. Meeting with allies in
Japan and South Korea, then traveling to China to meet with president Xi Jinping before heading down to the Philippines. And it's really the visit
to South Korea that the North Koreans are going to be watching very closely. Wondering if he will follow the lead of other U.S. presidents and
visit the DMZ. And if he goes there what is he going to say.? Will it be something inflammatory. If he did that it could make a very bad situation
here even worse. Will Ripley, CNN Pyongyang, North Korea.
(END VIDEOTAPE)
Facebook as we continue. Facebook is planning to put a face to advertising. The company is announcing a new way to improve transparency.
You'll hear about it after the break. Don
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. I'll be joined by Puerto Rico's economy secretary. who
says It's time to reimagine the island after the hurricanes.
[16:30:00] And how to be the boss in an open-source world. I'm going to sit down with a management guru who's advised some of the world's top
executives. Before that, this is CNN. And on this network, the facts always come first.
Spain's constitutional crisis has come to a boil as the Catalan government voted to declare independence and Madrid has imposed direct rule on the
autonomous region. It's far from certain or clear how this will now play out. Both the EU and U.S. are expressing support for the Spanish
government. Live pictures tonight there from Barcelona outside Catalan Parliament.
A political crisis is deepening in Kenya where violence and voting delays are marring a rerun election. Electoral officials are suspending voting in
some areas indefinitely after some unrest broke out in Thursday's election. Only a third of registered voters cast their ballots after the opposition
leader urged a boycott.
Two women who had been adrift in the Pacific Ocean for nearly five months have now been rescued. They had set off from Hawaii towards Tahiti towards
last spring. But their sailboats engine was damaged in bad weather, the U.S. Navy says that women along with her two dogs were found on Wednesday.
Tiger Woods has been sentenced to 12 months of probation after pleading guilty to reckless driving. The professional golfer in a Florida court on
Friday. He was arrested on Memorial Day under the suspicion of driving under undue influence.
Lots of money even for a Rolex. According to the New York auction house Phillips, a bidder agreed to pay $17. 8 million for a Rolex Daytona that
used to belong to Paul Newman. They declined to identify the buyer.
Facebook's announced plans to improve transparency for advertising. After criticism over Russia, social media in the US election, it all becomes
before the big three Facebook, Twitter, and Google go before Congress.
Dylan Byers is in Los Angeles, what are they going to do, Facebook? How are they going to add in transparency?
DYLAN BYERS, CNN SENIOR REPORTER FOR MEDIA AND POLITICS: It's going to be greater transparency and also greater authenticity checks. On the
transparency front what you will get is any account that buys advertising or page that buys advertising, and that could be anybody, not just
political, you'll be able to go to the page and see the entirety of the ads they have running on Facebook, even ads that are not targeted toward you.
And there's the authentication part and this applies specifically to political advertising, advertising that promotes candidates in an election
year or around an election. They're going to step up the verification process for those accounts, which means that you will have to -- you will
have to prove that you are a real person, that you are not a Russian bot or fake account.
On top of that, all of your advertisements are going to have to do what television advertisements and radio advertisements already do. You're
going to have to put a disclaimer, paid for by. Users can click on that "paid for by" and find out more information on who bought that ad and who's
trying to direct that information toward them.
QUEST: Right. It sounds extremely cumbersome, and it sounds like it's difficult if it's going to become practical, particularly in the social
media world. It's one thing to do it in television where there's a lot of human involvement from master control, through to purchasing, traffic, all
these things, but a lot of these are bought, go into algorithms to just turn up on people's feeds.
BYERS: That's right. What it has done is allowed Facebook to sell advertising at an extraordinary clip because there wasn't a human element.
You could come along and pay $30, $300, $3,000, buy ads. Chose who you wanted the ads to be targeted at.
Facebook never had to touch it. It was all algorithm. So, this going to slow down that ad review process for them, that is one of the reasons it is
something they resisted. They don't want that process to slow down. But as you and I both know this problem about Russian interference in the
election and the idea that Russian bots were advertising to voters ahead of the 2016 election has become such an enormous problem for Facebook, such an
enormous PR problem, they really have no choice at this point.
[16:35:00] QUEST: OK. Explain to me, please. Is the problem the bots? Is the problem the advertising? Because if you take the Twitter reaction
yesterday in London where Twitter is saying it will no longer take advertising from RT, Russia Today and Sputnik, as I understand the Facebook
problem, some of these Russian ads, provided they were bought openly and people said, we're Russians and we are buying this. They could go ahead
and buy them.
BYERS: That is absolutely right. If you pull back the real problem here is that companies like Facebook and Twitter have not figured out clear
guidelines for what kind of content, they want to accept on their platform. They always make the argument we're an open platform. We don't like to
stipulate between who can and can't speak platform.
The problem with that is that's not going to be acceptable in a world where the Russian government is trying to meddle in U.S. Elections. It's not
going to be acceptable in a world where over 2 billion people use Facebook around the world and they need to rely on it for reliable information that
can inform the decisions they make as citizens and as voters.
QUEST: Finally, I hear Mark Zuckerberg at Facebook takes this extremely seriously and is becoming almost all but consumed by this issue,
recognizing the morass that they're in but also wanting to keep Facebook and his commercial interests there. They may not know what to do, but at a
high level, they're taking it very seriously.
BYERS: Richard, that is absolutely right. Mark Zuckerberg is taking it very seriously. It's not that he takes the issue of accountability very
seriously. It's a question of the product. Zuckerberg is frustrated with how cluttered the Facebook experience has become. It used to be a very
simple way to see content that was being family.
All of a sudden, the entire experience has been so polluted with fake ads and bad news and spam and junk, it's not the clean seamless experience it
used to be, and that is hurting the product. And the Russian bot ads, that's all of a piece. What we know based on the sources we know in Menlo
Park, they're working on trying to improve that product and part of that is cleaning up the political element
QUEST: Thank you. Have a lovely weekend.
BYERS: You too.
QUEST: To Kenya now. The highly controversial election marred in delays and bloodshed now voting in some areas has been postponed indefinitely.
Five people have been killed. The leader of the opposition who lost the original and disputed vote in August is refusing to take part. He spoke
exclusively to CNN.
(BEGIN VIDEOTAPE)
RAILA ODINGA, KENYAN OPPOSITION LEADER: This is just a sham because it basically removed the lid off the can for what Mr. Kenyatta has been
claiming.
Because hardly 5 percent of the people turned up to vote yesterday. They're now trying to doctor the figures through increases. Accordingly,
only 3. 5 million people participated in the voting yesterday. That is just about 20 percent of the total regions of the voters. That shows
physically the people don't have confidence. It is a vote of no confidence. In the government of president Kenyatta. If I were him and I
know in most democracies he would actually resign and step aside.
ROBYN CURNOW, CNN CORRESPONDENT: If that does not happen and he's announced president again, how will you and your supporters react? What is
it going to look like in Kenya in a week's time when those results are announced?
ODINGA: Our constitution article one says if the government imposes itself on the people, the people have a right to self-determination, they have a
right to disobey the government.
(END OF VIDEOTAPE)
QUEST: As we continue, Puerto Rico's entitled to as the U.S. for emergency aid to help restore power to the island after hurricane Maria. Instead its
debt-ridden power authority gave massive contract to a small U.S. company with ties to the Trump administration.
[16:40:00] (COMMERCIAL BREAK)
QUEST: Welcome back to QUEST MEANS BUSINESS. The U.S. government is investigating a $310 million contract granted to a small company in Montana
tasked with the restoring power to Puerto Rico. It's called White Fish Energy which has ties to the Trump administration. And it has the largest
relief contract of any company in the aftermath of hurricane Maria.
Speaking a short time ago, the White House press secretary tried to distance the administration from the controversial deal.
(BEGIN VIDEO CLIP)
SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: This is a contract that was determined by the local authorities in Puerto Rico not something that the
federal government played a role in. but as we understand there is an ongoing audit and we will look forward to seeing the results of that later.
UNIDENTIFIED MALE: Were there red flags raised by this? And can you say definitively the fact that the primary, one of the primary investors in
this company was a major donor to the Trump campaign, had nothing to do with the fact this contract was awarded?
SANDERS: Right. The federal government has nothing to do with this contract or the process. This was something solely determined by the
Puerto Rican government and as I said, we'll look forward to the audit to see if there any other issues beyond that.
(END VIDEO CLIP)
QUEST: Manuel Laboy Rivera is the Puerto Rican Secretary of Economic Development. The last thing you need is a scandal over the procurement of
the replacement for electricity.
MANUEL LABOY RIVERA, PUERTO RICAN SECRETARY OF ECONOMIC DEVELOPMENT: Well, I am the Secretary of Economic Development, and my role is to attract
investment, create jobs, grow the local businesses and achieve economic growth.
Certainly, I was not the person directly involved in this particular situation, but I can
assure you that one of the pillars of the governor is transparency. It was before the
hurricane. And it is more valid than ever today. There are several contractors.
I believe, and we feel very confident we're going to keep the priority where it needs to be, which is restore electric service, fix the problem, a
get back on track in terms of rebuilding Puerto Rico.
QUEST: In the fullness of time it will become clear whether Whitefish can or cannot do the job and whether experienced people have been employed.
That will take care of itself. But I'll take you up on this, you say you're the head of economic development. But it is your problem in the
sense that if there's a perception that something's gone awry, people will say, why should I invest there you're going to find people questioning the
integrity of the investment situation.
RIVERA: Indeed, the reputation of Puerto Rico is always something that needs to be part of any economic development strategy, without exception.
But, again, you know, I think important. We need to focus on results. We need to get back the grid as soon as possible. That is probably the most
expected thing that needs to happen on the short term.
[16:45:00] While we do that, we still need to work on the rebuilding of Puerto Rico and most importantly, we need to know simultaneously what is
going to be the economy we want in the future.
Confidence is very important. We need to provide confidence to the investors, that the government of Puerto Rico is on top of its game in
terms of not only addressing the current circumstances but can navigate through this situation and get us to a safe harbor, and I think that the
governor has proven to be a true leader. We're providing confidence to our investors not only to our longstanding partners but potential investors
that may go to Puerto Rico like Tesla for example or Google.
QUEST: OK. So, let's -- I mean the governor has been on the program several times during the debt crisis. We've looked at this in some detail
over the crisis. This didn't happen overnight and it's certainly deep. Whether it's the debt, the electricity, the infrastructure. But anybody
looking to invest in Puerto Rico, start a business there now, what's your strongest argument?
You've got a population that's departing or young population departing. You've got an infrastructure that I was going to say moribund but decrepit
will do, what is your strongest argument other than the fact of this is an opportunity?
RIVERA: Well, I think we should look to the track record and I think that every jurisdiction faces challenges. That is true everywhere you go to.
QUEST: If I was saying to you, look, pharmaceutical. Let's face it. You have a great record in pharmaceutical medicine production in Puerto Rico.
If I was a businessman sitting in front of you saying, OK, well, convince me to come to Puerto Rico, what would be your strongest argument?
RIVERA: Well, I was going to say that one of the facts is that they keep expanding the island and they've been expanding even though we've been
going through some challenges on the physical side of the equation.
Just for the last couple of months we've been announcing expansions on some key pharmaceutical companies, same thing with the aerospace. We were ready
to announce expansion in the medical industry.
We are actually attracting new businesses. We're working with local businesses as well. We are pushing a big agenda in terms of innovation and
technology. I think you look at the pillars of why Puerto Rico has been a good place to invest for the last couple of years, you're talking about
real economic incentives, our location, geographic location where you look at the talent pool that we offer and we're a U.S. jurisdiction we're
protected by the U.S. laws, those are very powerful arguments and they're still there. They have never been gone, even after Maria.
QUEST: What is the one thing you need?
RIVERA: We need to restore the electrical grid as soon as possible there's no doubt. More than that, we need to prove we're heading to the right
vision, the right direction. Everybody's expecting that the electrical system will be rebuilt. But the question is what type of system are we
going to be rebuilding. Everybody is expecting, rightly so, that we take this opportunity to transform the electrical grid, and that we transform
our infrastructure.
QUEST: It's a moment of opportunity. If you fail, if the government of Puerto Rico fails, you'll never be forgiven, because you have had a chance
to get it right.
RIVERA: I think we have the right leader to do the job. I think he has the right vision it's the very first time that we have a scientist in
charge. He has the capability to lead this effort for Puerto Rico.
QUEST: Thank you very much. When we return, it's the fine line of leadership. How far is it when it's too far when it comes on speaking out
on perceived injustices we will talk the open society after the break.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Whether it's stamping out sexism in the workplace, transgender rights or immigration a seismic shift is underway in what is expected of
CEOs and when they decide to speak out and when they're going to stay silent, so the author whose new book "Open Source Leadership" has come out
at a very timely moment and says leaders much have a clear purpose before diving in.
(BEGIN VIDEOTAPE)
RAJEEV PESHAWARIA, AUTHOR: It's a question of judgment, right? It is a question of judgment when you're super clear about values, not just super
clear, but super clear, what I'm, willing to live by 24/7, 365 days a year, when you're that clear, you should not be scared to speak out and you
should speak out.
QUEST: Do you find CEOs don't have the value, haven't thought it through, or are waking up to the fact that it's part of their job in the 21st
century to have values on these issues and be leaders on these issues?
PESHAWARIA: All of the above.
QUEST: Because in the old days, I was just running a company.
PESHAWARIA: I'm showing up and doing what I have to do. Those days are over. Just working for shareholders, those days are over. Today
leadership is about creating a better future not just maximizing shareholder wealth.
QUEST: Of all the CEOs you meet, and you've met most, how many of them get that or how many have had to have been dragged kicking and screaming?
PESHAWARIA: Many know it but they're so open and exposed, they get it. That's the beauty of the open source era. Look at the engineer recently?
The world is 50-50. He shouldn't have been fired. He should have. Yet he had no difficulty. He had to do it. He had to send a clear message. Yes,
freedom of speech is. Important at Google but gender and equality is even more important, and, therefore, I'm going to fire you and fire you
publicly. Let everybody understand this is the kind of company this is.
QUEST: What is -- I know you say it takes a CEO with true values that have thought it through, I understand that. But what does it take for the CEO
to get to that position?
PESHAWARIA: Ah, very good. Only one thing will get you to that level of clarity, and that's deep, deep reflection about who you are, why you're in
this world. Most people don't ask themselves that question. But CEOs will. Everybody asks themselves. Who am I, why am I here, what am I
willing to pursue even if it means harm to me and my loved ones. You've done that. Now you've lost fear. Decisions.
QUEST: Does that have to -- from your experience with CEOs, does that process happen on the way up the greasy pole or once you get to it?
PESHAWARIA: Earlier. You don't put an astronaut into space and then start teaching them about space. That's a little too little, too late. This
ideally happens when they're mump younger. But I have seen them think about top.
QUEST: What do you think when you receive the environmental in your decades of looking at this?
PESHAWARIA: Absolutely. Absolutely. The big it change is the total transparency and nakedness of the leaders. That -- that's a good thing
because there's a built-in mechanism for check and balance in there. Because I'm totally on display, because I'm naked, I've got to be watchful,
and I can't fake it because everybody today has a super computer in their pocket. So, you have to be genuine if you want to stay there. Exposed.
That to me is the biggest defining sort of feature of the open source era.
(END VIDEOTAPE)
[16:55:00] QUEST: So, let me just recap the markets in our earning center. 54 records for the Dow. There was no record today, just the existing
number. For the S&P it was a record. So, the S&P goes to 50 records so far, this year. And the Nasdaq, which as you can see here is also a
record, means that we have 61 Nasdaq records so far, this year. So far, this year. 54 Dow records, 50 S&P, 61 Nasdaq's so far, this year in a
rally that's fueled by strong earnings from major tech companies. And you can see the numbers here.
Amazon, Alphabet, Microsoft all showing gains into over 5 percent, Amazon, up 13 percent
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment, Washington, D.C. It was here that Lincoln wrote the proclamation freeing the slaves.
A year or so earlier, the southern states had seceded from the union, an act which the United States said was illegal and must not be allowed to
stand. I thought of these events when I think of what's happening now between Spain and Catalonia.
Catalonia says it is entitled to go. Spain says it's unconstitutional and must not be allowed. In the U.S. case, the civil war ensued, a four-year
battle that Lincoln himself described as the most terrible, more than half a million soldiers died.
Now perhaps today it's unthinkable that such a thing would take place in the country of the European Union, but let's remember the riots that took
place during the referendum and the arrest that have happened since. So, it behooves both sides to start thinking of history and deciding on the way
forward for the future.
Because once you go down this road, who knows where it ends, and that's QUEST MEANS BUSINESS for this Friday night. I'm Richard Quest in New York.
Whatever you're up to in the hours ahead, I hope it's profitable.
END
