Return to Transcripts main page
Quest Means Business
New Poll Says Voters Dubious of Trump; British Prime Minister Loses Second Cabinet Minister; Celebrating One Year of "The Trump Trade"; Uber Teams Up with NASA on New Project; Turkey is Ready to Build More International Alliances. Aired 4-5p ET
Aired November 08, 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] BIANNA GOLODRYGA, CNN HOST: Stock Markets are barely clinging on to their record highs as trading come to an end on Wall Street. It's
Wednesday, the 8th of November. Tonight, Americans are confident in the economy. Not so confident in their President. We have new poll numbers,
just in to CNN.
Theresa May's government in a tail spin as she loses her second cabinet minister in a week. And remember where you were this time last year? Well
investors certainly do. It's one year since the Trump trade began. I'm Bianna Golodryga, and this is QUEST MEANS BUSINESS.
Just in, a bleak report card for the president one year after his election and one day after voters showed their disapproval of him at ballot boxes
across the country. A new poll out this hour shows confidence in the U.S. economy is at its highest point in more than 16 years. But confidence in
the U.S. president is low. More than two-thirds of Americans say they are less confident in President Trump now with then when he took office.
Without a major legislative victory to his name, just 40 percent believe the president is doing a good job keeping the promises he made as a
candidate. Even fewer, one-third, say the president deserves re-election.
Meanwhile, on Wall Street, the Trump rally is undeniable. U.S. markets are still settling. If the Dow ends higher, it will be a record. That's a
phrase we've heard a lot on this show over the last 365 days. The climb says the 2016 election has been nothing short of remarkable. There have
been more than 70, that's right, 70 record closes on the Dow. A gain of nearly 30 percent. That's more than 5,000 points.
One year ago, tonight, Dow futures actually plummeted 900 points. Investors reacted to the dawn of the Trump era with uncertainty and fear.
The next day markets turned green and well, they haven't stopped. Here's a look back at the very beginning of the Trump rally on Wall Street.
(BEGIN VIDEOTAPE)
RICHARD QUEST, HOST OF QUEST MEANS BUSINESS: As markets push close to an all-time high, a mind-boggling swing that took place on election night.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We have a great economic plan.
UNIDENTIFIED MALE: Coming into this, there's a lot of uncertainty as to what he said he was going to do and what he's actually going to be able to
get accomplished.
UNIDENTIFIED MALE: Immediately, maybe the day of his inauguration, he'll begin dismantling regulation.
UNIDENTIFIED FEMALE: I would not be at all surprised if by next year you saw higher tariffs slapped on China and on Mexico.
UNIDENTIFIED MALE: And this sense of relief in the aftermath of the election. The sun did come up. The world didn't come to an end.
UNIDENTIFIED FEMALE: No one should discount the fact we may just may be at the beginning of a policy inflection point. And that's one thing that the
markets are now reacting to.
UNIDENTIFIED MALE: Lowering corporate tax rates. Bringing those foreign earnings back to the U.S. Reinvesting those earnings. Stimulating
Keynesian type government projects, infrastructure projects. Maybe it won't be quite so bad for the U.S. Economy.
QUEST: And tonight, the largest economy in the world chooses a bold new path under a president-elect Trump.
(END VIDEOTAPE)
GOLOGRYGA: What a year it has been. And as you have just heard, Americans are raving about their economy. 68 percent think economic conditions are
good. Those are the highest marks for the U.S. economy since September 11th terror attacks. Joining me now, Michael Purves, is the chief global
strategist at Weeden and Co. Michael, great to have you on. Thanks so much for being with us. What a year it's been. What a rise it's been for
the stock market. What can we attribute it to?
MICHAEL PURVES, CHIEF GLOBAL STRATEGIST, WEEDEN AND CO: Well, a few things. You referred to earlier as the Trump rally. But if you look at
emerging market equities, they have well outperformed the U.S. stock market, for example. And of course, right after the election, the emerging
market equities were hurt, because we thought we were going to get this more closed economy, really at the expense of some key emerging markets.
But so far what we have really seen is a backdrop of globally synchronized growth. When you step back, we haven't had that since really before the
financial crisis of 2008. That's a very, very powerful force to have every major economy, China, Japan, Europe and the U.S. all growing.
GOLOGRYGA: Double digits most of them.
PURVES: Right, exactly. And revisions to their GDP estimates have climbed up.
[16:05:01] But most interestingly, the one that hasn't climbed up most this year has been the U.S. Europe's economic expectations across -- consensus
estimates, not mine, you know, have doubled since January but the U.S. is flat.
GOLOGRYGA: So, the U.S. stocks are up about 30 percent this year alone. So, the president is absolutely right to tout that. Of course, others
would say we have been on this trajectory the past eight or nine years. How much of this is attributed to the president himself and his policy or
the policies he's trying to put forward.
PURVES: There's no question he certainly helps certain sentiment indicators. If you look at CEO sentiment indicators, after the election
the shot up particularly among small businesses and they stayed really pretty strong through this. But aside from that, we obviously haven't seen
any major legislation coming out of D.C. So right now, you know, at some point it's really -- you get back to the hard facts of what is the actual
economy doing. And these economies, they don't just turn around in a few months or a couple quarters. It's turning on an ocean liner. So, it takes
some time to do that.
One of the charts I'm very fond of to help sort of identify how much do you attribute to Trump is you can look at certain ratios. For example, small
caps, which would benefit the most from a Trump type plan, relative to the S&P 500, broader base, larger cap stocks. If you look at that chart, it
has gone steadily down in favor. In other words, small caps have been the under performer this year. Interestingly, that chart, if you look at
Trump's approval ratings, it almost goes tick for tick with that chart since the inauguration last January.
GOLOGRYGA: Interesting. And there have been some who pointed to anticipation maybe early on of legislation passing. And, of course, all
eyes now on tax policy. We didn't get to see any health care policy pass at this point. At least not yet. If we don't see tax policy or any
legislation pass before the end of the year, will we see the markets react?
PURVES: Sure. Certainly, among certain segments. You're going to see, you know, a hit to smaller cap stocks. You'll see a hit to the high tax-
paying stocks that may have been supported by hope for corporate tax reform there. But I think the overall force is you have to get back to what I
would called global Goldilocks condition. When bond yields in the U.S. and globally are all very low. The dollar has been weak, that's generally
constructive for the U.S. stock market. And on top of that, you know, the earnings picture has really been pretty good this year. And I think so
much of the earnings, of course, come from overseas. You know, nearly 50 percent for the S&P 500, and even more so for the Dow.
These are not -- they may be domiciled in the U.S., but they're really global proxies for global growth, as well. So, I would say that as long as
those conditions are in place, you're going to see the stock market continue to do very, very well, with or without tax.
GOLOGRYGA: All right. Well, Michael, thank you so much for joining us. Appreciate your insights.
PURVES: You bet.
GOLOGRYGA: Thank you.
And the Speaker of the House, Paul Ryan, says Tuesday's sweeping Democratic victories put more pressure on Congress to pass tax reform quickly.
Republicans worry their control of Congress may slip away. Voters sent a clear message of rejection to the president and his agenda. Democrat Ralph
Northam took the governorship in Virginia beating Republican Ed Gillespie. The president accused Gillespie of failing to fully embrace the Trump
agenda, even though the president supported Gillespie's candidacy.
Tuesday's election delivered a series of firsts. Virginian's elected their first openly transgender state lawmaker. Danica Roem defeated the
incumbent Bob Marshall who had been elected 13 times. Across the river from New York, voters in Hoboken elected the first Sikh mayor in New
Jersey's history. And the boyfriend of a TV reporter shot and killed on the air beat a candidate backed by the NRA. For more on the politics and
perception of the president's agenda, we turn to CNN's chief political analyst, my good friend, Gloria Borger. Gloria, how big of a game-changer
was last night?
GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: I think it was a huge game- changer, if you are a Democrat and you're looking for some good news, because there hasn't been a lot of good news lately. And I think if you're
a Republican, particularly suburban Republican, who lives in a kind of a moderate district, I think you're thinking about what you're going to do
next. Because this was a clear message that Trumpism, without Trump, doesn't succeed. Because the president himself is unpopular. And, you
know, look at in the state of Virginia. The president's popularity was low. And the candidate tried to kind of do Trump-lite without inviting
Trump into the state. Tried to, you know -- Ed Gillespie try to thread the needle there. And it just didn't work.
GOLOGRYGA: How much of an impact does turnout have? And what does that suggest to you? Because we did see rather significant turnout last night,
despite bad weather.
[16:10:00] BORGER: Right. Usually midterm elections, turnout is bad, particularly for Democrats. And I remember when Barack Obama went into the
state of Virginia sort of mid-October, he said, you know, Democrats, you get a little sleepy in the midterm elections. You have to turn out.
Democratic turnout was up. There's no doubt that the Democrats are the energized voters. The voters who were the most energized, it seems to me,
were the college-educated voters, who turned out in great numbers. And so, when you see an enthusiastic turnout in a midterm election, you know,
there's a good chance that that's going to continue. It's easier in a midterm, because, you know, you have a mutual enemy, which is Donald Trump
for the Democrats.
It's a little bit more difficult when you're in a presidential race because that means also supporting your candidate. So, you have to have a
candidate you like. So, the party out of power in midterms often does very well and that was the case -- that was the case last night.
GOLOGRYGA: So how much pressure -- you heard us talking about Paul Ryan earlier, and his push to pass tax legislation.
BORGER: Sure.
GOLOGRYGA: How much pressure is on Republicans? That was probably the most candid I've seen Paul Ryan in a while.
BORGER: Yes, have to do something. You know, when you looked at the exit polls from last night, Bianna, issue number one was health care. And what
did Republicans do on health care? They failed to repeal and replace. So now tax reform, which is not high on the agenda list, but it's kind of the
Republican mantra. And so, they've got to do something. They've got to succeed at something, or else they're really in danger of just getting
swept out. I think they know that. The problem they have was in clear view last night. When after Gillespie lost, the president sends out a
tweet saying, well, you know, he didn't really embrace me enough. And he wasn't a great candidate. So, if you are somebody who is about to walk out
on a limb on tax reform, and potentially upset some of your constituents, are you going to do it for a president who doesn't have your back? And I
think that's a real question mark in a lot of legislators' minds this morning, particularly Republicans.
GOLOGRYGA: I was watching your analysis last night, and just -- people still shocked at just how the president is able to throw somebody under the
bus --
BORGER: Unbelievable.
GOLOGRYGA: -- just hours after publicly endorsing him. You know this president so well. You know what makes him tick. You know what's going on
in his in his head better than most journalists. He says -- I guess reporting from those in his camp -- say he's not sweating this. He's not
really worried about last night. Do you think that's true?
BORGER: No. I think he sweats it. I think he's upset because he endorsed Gillespie. And he lost. He endorsed Luther Strange in Alabama and he
lost. And don't forget, this President, everything is about him. So, the Gillespie race, his response to it was about himself. Well, he didn't hug
me tight enough. He didn't allow me to come into the state. And tax reform is going to be about him. And that is why Republicans are going to
think twice. If it's about him, do they want to win one for the Gipper. I don't think this is the Gipper that they want to endanger themselves for.
And I also think one more thing, Bianna, look for more retirements among house Republicans who come from those suburban districts. Who might decide
that it's too dangerous for them to run in 2018.
GOLOGRYGA: Yes. And more pressure, of course, from Steve Bannon, as well, in part of the Republican Party.
BORGER: Absolutely.
GOLOGRYGA: A big night for Democrats. They have still got a lot of regrouping to do. Gloria Borger, great to see you. Thanks so much for
joining us.
BORGER: Good to see you.
GOLOGRYGA: U.S. Companies, meantime, have struck billions of dollars of deals with Chinese firms during President Trump's trip to Asia. Getting a
breakthrough on China's trade policies overall may be difficult. Earlier, Trump and President Xi dined in the Forbidden City, meeting lawmakers and
business leaders. The U.S. President arrived straight from South Korea, where he had some tough words for Beijing about its relationship with
Pyongyang.
(BEGIN VIDEO CLIP)
TRUMP: All responsible nations must join forces to isolate the brutal regime of North Korea. To deny it and any form -- any form of it, you
cannot support. You cannot supply. You cannot accept. We call on every nation, including China and Russia, to fully implement UN Security Council
resolutions, downgrade diplomatic relations with the regime and sever all ties of trade and technology.
(END VIDEO CLIP)
GOLOGRYGA: CNN's Sara Murray is in Beijing with us tonight. Sara, a lot of people were holding their breath ahead of the president's speech last
night. But for the most part, it seemed to be pretty run-of-the-mill. At least when it comes to foreign policy. We heard some brash terms and
phrases, and some Trumpisms in there. But not as harsh as many had expected.
[16:15:20] SARA MURRAY, CNN WHITE HOUSE CORRESPONDENT: Yes, I think that's right. Look, you didn't hear him taunting Kim Jong-un, and calling him
little rocket man. You didn't hear him talking about threats of fire and fury. He certainly took a tough tone when it came to North Korea. He
still is calling for the denuclearization of North Korea. But he kind of laid out why he feels like that was necessary. He laid out a number of the
human rights abuses. And laid out why he believes that other countries should join in on this effort. Why he wants to see countries like China
step up their efforts to isolate North Korea. So, in that sense, it was kind of more of a traditional policy speech that we would expect from a
president abroad.
And I think, you know, if you are one of the South Koreans who are watching that at home, that's welcome. There was a lot of anxiety there when you
see an American president throwing out terms like fire and fury. Obviously, that looks very different when you are the people who are
sitting on the other side of that border.
GOLOGRYGA: And the president, meantime, as we know, has developed a closer relationship with President Xi and China. We saw images of them in the
Forbidden City with their wives with them. Front and center, aside from trade, obviously, North Korea. What is the president's approach to
bringing China to the table when it comes to curtailing North Korea's nuclear ambitions?
MURRAY: Well, if you want to talk about one of the biggest surprises in terms of President Trump's diplomacy, look at this relationship between the
president and Xi Jinping. He has said they consider each other friends. It's a much warmer relationship than I think analysts expected going into
this, given President Trump's tone toward China, mainly on trade during the presidential campaign.
But the president goes into these meetings today. Yesterday was, you know, more of an informal social thing. They had dinner, yes, there was lots of
pomp and circumstance, but they had dinner. They went to an opera. Today it's the formal bilateral meeting and this is where President Trump is
going to try to convince China they should do even more to pressure North Korea. And this is one of the situations where the United States needs
China more than China needs United States. So, there's an imbalance of power here at a time where Xi Jinping is particularly powerful. He's
consolidated his power herein China. Whereas President Trump is on a little bit more uneven footing in the U.S. So, it will be a very
interesting power dynamic when these two men are meeting to discuss what is a very thorny issue today.
GOLOGRYGA: Perhaps even more interesting power dynamic is if and when we do see a meeting between president and Russian President Vladimir Putin.
There have been Russian publications that have said that meeting will, in fact, take place in Vietnam. I don't believe we have confirmation on our
end, at least from the White House yet. But going back to what you said, the president is in favor of these bilateral meetings and these bilateral
relationships. How much anticipation will be on this particular meeting, if it does happen?
MURRAY: Well, the White House has -- the president has said he does plan to meet with President Putin. We are expecting that. It's most likely
going to happen in Vietnam on the sidelines of the conference that they will both be attending. They haven't given us a lot of details about
whether the president is hoping for a formal bilateral meeting. Whether this will be a pull-aside. But the main topic of that discussion is going
to be North Korea. It's going to be President Trump trying to urge President Putin to do more, to continue to isolate North Korea. But this
is a fraught relationship. For so many reasons.
I mean, this -- the relationship between the U.S. and Russia was fraught before President Trump took office. And now the two of them are meeting at
a time when there are still ongoing investigations by a special counsel, as well as by the House and Senate into potential collusion between President
Trump's campaign and Russian officials. So, this is going to be very closely scrutinized from every angle. From the question of, OK, what are
the next steps with North Korea? Is Russia prepared to do more? But also, just the personal dynamic between these two men.
GOLOGRYGA: And pressure on the U.S. President to finally implement those Russian sanctions that Congress has been pushing him to do. Sara Murray,
thanks so much for joining us. Great to have you.
MURRAY: Thank you.
GOLOGRYGA: And earlier this week, the market moved after a report that Disney wanted to buy most of 21st Century Fox. 21st Century Fox's latest
earnings are out. We'll bring them to you, next.
And there's late night drama for the British Prime Minister, as a second member of her cabinet resigns in just one week. We'll be live in London.
[16:20:00] (COMMERCIAL BREAK)
GOLOGRYGA: 21st Century Fox has just reported earnings after the close of business on Wall Street. Earnings per share were in line with
expectations, and revenue of $7 billion beat estimates. And what would be a blockbuster deal reports say the company has considered selling most of
its assets to Disney. Brian Stelter is here to explain more. Brian, thanks for joining us. Help us make sense of what this potential merger
would look like?
BRIAN STELTER, CNNMONEY SENIOR MEDIA CORRESPONDENT: There's a lot of intrigue of what the Murdoch's are going to say now that the earnings have
been released in the last few minutes. They're about to have a conference call, taking questions from investors. Maybe they'll address the
speculation about Disney. Because as of the last couple days, the talks have been on hold. Disney initially approached Fox about this idea. This
blockbuster idea to break off most of 21st Century Fox and sell and sell it to Disney.
That would give Disney a lot more scale in the marketplace as Disney tries to rival Netflix, Apple and Facebook. But right now, as I said, the talks
are apparently on hold. There's curiosity about who the Murdoch's might also talk about, if not Disney. Are the Murdoch's looking for some other
buyer? It does seem 21st Century Fox, at least a big part of the company is effectively up for sale.
GOLOGRYGA: And what role, if any, does the Murdoch's' potential acquisition overseas in the U.K. have with this deal if it does play out?
STELTER: According to reports about the Disney talks, Disney would take control of Skye, that big satellite broadcaster, as well as the Fox movie
studio, cable channels like FX and National Geographic, et cetera. What Disney would not buy is Fox News and Fox Sports and Fox local stations.
So, Skye would end up in Disney's hands. Right now, that Skye deal is such a challenge for the Murdoch's. 21st Century Fox hits new road blocks
almost every week on the Skye deal. The smart money right now is that the deal will probably not get approved by British regulators and will end up
once again the Murdoch's being rejected in their bid for Skye.
So that's one of the other X factors in this conversation. But you look at the earnings in the past few minutes, Fox continues to be quite strong.
Revenue as you said, was ahead of expectations. Even though the company faces headwinds with cable subscriptions and advertising, it is a very
healthy business right now. Maybe that's why the Murdoch's think now is the time to sell.
GOLOGRYGA: So, you know these players behind the scenes better than most. You know Bob Iger, you know the Murdochs. Who has got more to lose here by
this deal not going through?
You know, Bob Iger has said he's going to retire in 2019. Everybody in the industry wonders if he wants to run for president. They wonder about that.
If he's trying to make one big deal before heading off the reins of Disney to a new CEO, this could be that deal. He looks around the immediate
universe and doesn't see Fox or Time Warner or AT&T as rivals. He sees Netflix and he sees Apple. He believes that he needs to prepare Disney for
this future where Netflix is a giant -- which actually is the present day already. He believes he needs a to rival Netflix on a daily basis with
Disney's own streaming services. And gaining content from Fox would help him do that.
So, there's some logic to this. But I think on the other side, why is it that Rupert Murdoch and his sons are ready to sell? Maybe they look down
the road five and ten years and think this cable business is not going to get any better than it is today.
[16:25:00] Maybe now is the right time to make an exit. And, of course, Rupert Murdoch loves his newspapers. ''Wall Street journal,'' "New York
Post," he has papers in Britain and Australia. Maybe he can reunite those assets with Fox News and Fox Sports. Of course, four years after the two
companies broke up.
GOLOGRYGA: Brian, so many ifs and potential mergers.
STELTER: There are.
GOLOGRYGA: But you're always here to bring them for us. So, we appreciate that.
STELTER: Thanks.
GOLOGRYGA: Thanks, Brian.
And Snap's CEO Evan Spiegel admits it is time for his company to grow up and work on attracting the users who have shunned Snapchat. Snap shares
fell 20 percent after dismal earnings. They closed Wednesday's session off 14.5 percent.
Spiegel says Snap will redesign Snapchat to make it easier to use. That's a response to user complaints, but also to the warning signs and Snap's
business. First anemic user growth. Snap is getting crushed by Instagram stories. A knockoff of Snapchat's own stories features. Second, weak
sales. Snap's transition to an automated ad platform caused a major drop- off in revenue. And third, hardware. Snap builds itself as a camera company, but thousands of its smart glasses have gone unsold. Snap took a
$40 million write down on excess Snap spectacles. The company's change in strategy comes as China's Tencent reveals it has taken a major stake in
Snap. The owner of WeChat says it looks forward to sharing ideas with Snap.
Here to tell us what's next for Snap, Kurt Wagner is the social media's editor at Recode. So, Kurt, are these the first initial steps, the right
steps that we're hearing from Evan Spiegel actually coming out and talking about some change?
KURT WAGNER, SOCIAL MEDIA EDITOR, RECODE: I think so. I mean, people have been complaining about Snapchat's ease of use for a long time. And it was
always kind of a feature of Snapchat, right? It was one of the things that made it popular with younger people versus, you know, their parents,
because it was an app that they understood that maybe others didn't. But obviously, that does hurt growth. And it hurts getting the app to the
widest possible audience. Which when you're a public company, especially an advertising-driven public company, it's kind of required. I think what
a lot of people were shocked about is that this is nine months into Snapchat's life as a public company. How did they not see this problem
happening a year ago? What has changed to the fact that they would make such a dramatic change this early into that kind of life as a public
company. So, I think people were caught off guard. But I do think it's something that's needed to be done.
GOLOGRYGA: When you look at Instagram, really eating Snap's lunch, what is it that they're bringing to the table that users are staying with as
opposed to going back to Snap?
WAGNER: I think it all has to do with your network of people that are on the app. So, if you're 16 years old, your whole life may happen on
Snapchat. All of your friends may be on Snapchat. Once you get into college and beyond, you all of a sudden have a network of people perhaps
all over the country, all over the world. And I think that Instagram and Facebook have made it very easy to stay in touch with people throughout all
of those different regions, whereas Snapchat has very much kept it close, like your very close friends and family. So, I think as people have gotten
older, they've realized, OK, I can reach a lot more people using Instagram then I can Snapchat. And so that's kind of lent people to use some of the
features that are available on both apps. But I think that they have stuck with the Instagram versions of those features, simply because they have a
broader network on that app.
GOLOGRYGA: Yes, that generational divide does seem to be a big roadblock for Snap. We talked about this major investment from Tencent, the Chinese
company. It's obvious as to why Tencent would be interested. They can learn a lot of technology and user-friendly tactics that the company brings
to the table. Aside from just cash flow, what does the investment bring for Snap?
WAGNER: It's a really good question, and it's kind of a unique scenario. Because the way Snap's stock is structured, the that Tencent actually not
getting any, you know, voting control with this big investment that they made. So, there's nothing that says that Tencent is going to be able to
come in here and actually influence the way Snap does things. But as they pointed out in their earnings report, or excuse me, their filing, they
said, we look forward to collaborating together. So, you know, CEO Evan Spiegel at Snapchat has been fascinated with China. I think he sees there
is a lot of value there.
And so, there is certainly learning that could be shared between the two companies. But there's nothing that says that has to happen. Right? I
mean this could simply be Tencent feeling that Snap is undervalued and they're making a financial investment here. They think they can get a
return on that money. But certainly, putting that much money in, it does open I think a lot more kind of lines of communication between the two
companies. And so, WeChat being a place where snapchat could probably really learn a lot of things and also Snapchat giving Tencent a chance to
kind of have a foothold here in the U.S.
GOLOGRYGA: It is fascinating how all of these tech companies really are turning and have been turning to China for growth and will continue, I'm
assuming in the years ahead. Huge market potential there. Thank you so much for joining us. Really appreciate it.
And still to come, another member of the UK cabinet decides to walk rather than face marching orders. Can the Prime Minister survive the latest test
to her authority? We'll be live in London after the short break
[16:30:00] (COMMERCIAL BREAK)
GOLOGRYGA: Hello, I'm Bianna Golodryga. Coming up on the next half hour of QUEST MEANS BUSINESS, Uber wants to give you a new high-flying option.
And is teaming up with NASA to do it. And Turkey's tourism minister tells us the country is ready to build more international alliances, despite the
instability in the Middle East. Before that, these are the top news headlines we're following for you at this hour.
British Prime Minister Theresa May has lost a second cabinet minister in just one week. Her international development secretary, Priti Patel has
resigned. Patel admitted she had unauthorized meetings with Israeli Prime Minister Benjamin Netanyahu and other officials during a private trip to
Israel in August.
The Trump administration is following through with its promise to roll back president Obama's openings towards Cuba. The U.S. Treasury department is
re-imposing restrictions on U.S. travel and business dealings country with the Communist Caribbean country. The treasury secretary says they're meant
to economically isolate the Cuban military and encourage political and economic reforms.
Zimbabwe's recently sacked vice president is safe and on his way to South Africa, according to its allies. Emerson Mnangagwa was fired by President
Robert Mugabe this week. After accusing him of being disloyal. Mnangagwa was seen as a potential rival to Mugabe's wife, Grace, who looks to succeed
her husband. He vows to return to help lead party members.
The British cabinet is in is in trouble with two resignations in just one week. This time the secretary for international development, Priti Patel,
after unauthorized meetings with Israeli officials. It's yet another crisis for Prime Minister Theresa May. Her former defense secretary,
Michael Fallon, resigned amid the sexual harassment scandal at Westminster.
[16:35:00] Mrs. May's de facto deputy, Damion Green, has denied having extreme pornographic content on his work computer in 2008. And the foreign
secretary, Boris Johnson, is under pressure after a diplomatic blunder over a British citizen imprisoned Iran. Priti Patel was summoned back from an
official trip to Africa earlier today. Flight radar says more than 22,000 users followed her flight home.
Diana Magnay is outside 10 Downing. Diana, explain why this new minister felt compelled to resign today.
DIANA MAGNAY, CNN CORRESPONDENT: Well, feeling compelled to resign is probably more of a figure of speech. She was, as you say, hauled back from
an official trip to Africa to explain herself, and I think one can assume that it was suggested that she step down in a meeting in number 10 just a
few hours ago. What happened was that when she was on a summer holiday in Israel with her family last summer, she decided to hold a series of
meetings with officials, including Benjamin Netanyahu, the Israeli Prime Minister. Tech startups, NGOs, without really telling anyone about it, not
the foreign office at the time, nor number 10. Even when the Prime Minister was meeting the Israeli Prime Minister last week she didn't know
that her international development secretary had had these meetings.
And apparently also the idea had been floated in departmental discussions when she came back to send British aide money to the Israeli defense forces
in the Golan Heights to support their work with Syrian refugees. Now that all sounds all well and good, but given the fact that Britain doesn't
officially recognize the Israeli occupation of the Golan Heights, that is against British protocol. She went and talked to Theresa May about this on
Monday, admitted to 12 meetings. Then it transpires that over the next two days there were other meetings that she hadn't told the Prime Minister
about. And that is why she was then called back. And this meeting was had. And she's gone.
In actual fact, it's probably the first time that Theresa May has shown a degree of authority in the last few weeks. Weeks in which we have seen Sir
Michael Fallon, the defense secretary, step down. And as you say, these other question marks over various other cabinet ministers. But it does
show how fragile this government is at a time when they have to be tougher to get the Brexit through that Britain wants.
GOLOGRYGA: And, of course, that's obviously what the Prime Minister wants to be focusing as opposed to these scandals. How much pressure does this
put on the Prime Minister herself? And use her position in fact, in jeopardy?
MAGNAY: Well, I think her position is safeguarded by the fact that very few people want to take on her role at this very torturous time in the
Brexit negotiations. There are plenty in the cabinet and in the party who have big ambitions. But whether they want to replace her now is another
story. We're probably going to hear in the morning who will replace Priti Patel as international development secretary. There are question marks
over the rest, whether she will have a broader cabinet reshuffle. questions, too, about whether the back benches are going to sort of pushed
through a vote of no confidence. But the fact remains that Theresa May at the moment is almost preserved by the precarious nature of the Brexit
negotiations.
GOLOGRYGA: Right. Sort of a thankless position to be in at this point. But note to self for all cabinet ministers, when you're not forthcoming,
situations like this can actually transpire and you can lose your job. Thank you so much for joining us. We appreciate it.
And after the break, if you're heading to Riyadh and fancy treating yourself to the Ritz-Carlton hotel, you might have difficulty. As the
Saudi kingdom continues to crack down on corruption. I'll explain coming up next.
[16:40:00] (COMMERCIAL BREAK)
GOLOGRYGA: There are new signs that Saudi Arabia's corruption crackdown is going to be a long-term operation. At least 17 Saudi Princes and top
government officials have been arrested. Some of them are being held at the Ritz-Carlton in Riyadh. Earlier, I tried to reserve a room at the
five-star hotel, only to be hold its fully booked through mid-December. Fawaz Gerges is a professor of international relations at the London School
of Economics. He joins me from our London bureau. Thank you so much for joining us. So, Fawaz, let's talk about what we've seen over the past few
days, because now some reports of 500 people having been detained. Are we expected to see more purges and arrests over the next weeks?
FAWAZ GERGES, PROFESSOR, LONDON SCHOOL OF ECONOMICS: Well, obviously, this is no longer really a symbolic message on the part of Crown Prince,
Mohammed bin Salman. More than 1,200 bank accounts have been frozen in the past few days. We have reports of hundreds of princes and businessmen who
have been arrested. I mean, there are no sacred cows. The Crown Prince seems to be targeting the entire power elite. Not only the
multimillionaires and billionaires, but even elements of the royal family. What we are really witnessing in Saudi Arabia, basically -- Saudi Arabia is
being transformed. It's been changed before our eyes. And the reality is, power has not just shifted from one generation to another. From the
parents to the sons. But, in fact, Saudi Arabia is no longer really governed by consensus but by one man's vision. And the vision is the
vision of Mohammed bin Salman, the Crown Prince.
GOLOGRYGA: The 32-year-old crown prince, who was formerly the defense minister, though he hadn't served in the military at all. This is being
described as an overhaul. Getting rid of corruption in the country, as some are saying, though, this is more of a power grab on the Crown Prince's
part. Which one is it? Or is it a mix of both?
GERGES: Well, Brianna, it's not just either/or. I mean, obviously, Mohammed bin Salman is trying to transform Saudi Arabia from its eviction
on fuel and oil, as he says, to a more diverse economy. He believes that the old way of doing business in Saudi Arabia has not really been
effective. Regardless of what we think of the moves by the Crown Prince, and I think myself, it's partly consolidation of power. It's partly
instituting certain checks and balances on the power elite.
But the measures are basically resonating with young ordinary Saudis. Saudis under the ages of 30 years old who represent 70 percent of the 23
million Saudis are under the age of 30 years old. They see a great deal of corruption, a great deal of decadence, and they basically like what they
see. So even though there are risks, even though there is uncertainty, my take on it is that his primary audience are young Saudis who basically
would like to see more accountability and less corruption and decadence by the power elite, including the royal family itself.
GOLOGRYGA: Yes, and there is some 20 percent unemployment amongst that, an incredible size in youth there in the country. All of them, obviously,
familiar with the Arab Spring, just a few years ago. How concerning is it to those who may say the Crown Prince has taken on too much, dealing with
both domestic issues and international military issues in the region a well? I'm talking about the proxy war with the Iran and Yemen. We saw the
firing of the Prime Minister stepping down from Lebanon. Is this too much for such a young man to take on in one time?
GERGES: Indeed, Brianna, it a tall order. He has taken on the entire power elite in Saudi Arabia. The business community, the other branches of
the royal family, including a very powerful Princes. And, of course, Saudi Arabia now is basically pursuing a very ambitious, very muscular foreign
policy.
[16:45:12] It's challenging Iran, one of the most powerful regional heavyweights. It's involved in war in Yemen. It's challenging Iran now in
Lebanon and other places. You have the crisis with Qatar. So, yes, there are many risks for Saudi Arabia. And obviously, what we are seeing really
now in Saudi Arabia is a -- the Crown Prince, Mohammed bin Salman, laying out his vision. It's a very expensive, very ambitious and, of course, very
risky business. Regardless of what happens in the next few weeks and next few months, it's going to take a long time for this particular new order,
which is being erected by Mohammed bin Salman to get settle in Saudi Arabia and also Saudi Arabia's international relations as well.
GOLOGRYGA: No doubt a boost of confidence, though, for the Crown Prince, getting the endorsement from the President of the United States in multiple
tweets we have seen. And obviously the meetings that have transpired between this U.S. Administration and his. Thank you so much, Fawaz.
Always great to have your input on the show. Thank you.
Turkey's tourism minister says his country is looking to bring peace to the region through these turbulent times. At the World Travel Market, he told
Richard that the country is building alliances through the Middle East and beyond.
(BEGIN VIDEOTAPE)
NUMAN KURTULMUS, TURKISH TOURISM MINISTER: We have some traditional allies and we have new good friends. They are trying to establish peace in the
region, and also to kind of make a kind of balance between the different groups and the international communities. We are -- in our position, we in
a very strategic location. We are following the democracy principle of coexistence. And also, we are trying to create a kind of peaceful region,
including Turks, Kurds, Arabs and --
QUEST, CNN HOST OF QUEST MEANS BUSINESS: But if you take for example --
KURTULMUS: We are part of the international community.
QUEST: You are part of the international community. But do you see your natural alliance with, say, for example, the United States? Which you have
traditionally been to. But those natural lines are being frayed, or they're being put under pressure, say, for example by the activities of
Saudi Arabia.
KURTULMUS: Well, as you know, between questions between Turkey and the United States, there is fluctuation. A kind of going ups and downs. So,
it will never remain in the same track. So now we will recover the relations with the United States and some of the Western allies. But in
the meantime, we will establish very strategic a cooperation with Russia, with China and other regional countries and it will --
QUEST: But that's fascinating. Because the relationship with China, or with Russia, do they come at the expense of the relationship with the
United States?
KURTULMUS: Well, first of all, we have also there are international interest. And we have a kind of trade relations and some positive steps in
other economic relations with those countries. So, we will of course, keep our national interests.
QUEST: On the wider issue, minister, what I find interesting when I come to a place like this, you've got tourism, you've got politics. How do you
keep the two apart?
KURTULMUS: Well, actually, the two -- I mean, we have really very attractive country. We have ancient civilizations. Turkey is a cradle of
24 different civilizations. Starting from Troy to Ottomans. We have all historical monuments, richness in the cultural traditions. Either in
Islamic term or prior Islamic term. So, we have so many different varieties of the cultural richness. And we have beautiful location. And
in the meantime, we are in convenient position in the continents.
(END VIDEOTAPE)
GOLOGRYGA: Turkey where East truly does meet West.
After the break, Uber partners with NASA to shoot for the skies. But first, the latest in our series, traders, where we take you to Japan's
undisputed city of knives.
(BEGIN VIDEOTAPE)
[16:50:00] UNIDENTIFIED MALE (voice-over): Food makers Sosharu in London fuses the best of Japanese cuisines. For executive chef, Alex Craciun, a
trained sushi master, the most important tool in kitchen armory is this knife with a single edged blade. To be able to slice with precision it
takes a craftsmanship of the Japanese blacksmith in Sakai. Tanaka works alongside his son who is also his apprentice. They're part of a small
community of artisans involved in this craft.
YOSHIKAZU TANAKA, BLACKSMITH (through translator): Eating and hammering have a great significance. And the last tempering process is important.
It decides the sharpness. I heard our method is not found in any other places in the world. These are not made by machine. Since these are made
by hand, we can't make many, but we will continue to make what machines cannot.
UNIDENTIFIED MALE: The trade economics of Sakai blades began a millennium and a half ago. In the fifth century the artistry of the local blacksmith
put the city on the map. But it was the tobacco trade between Portugal and Japan that forged an industry. As profits from crop-growing went up, the
mass production of blades was needed to cut the leaves. It was during the Edo period that Sakai swords worked to even cutlery and were trademarked
and exported beyond the city walls. In 2016, the Sakai knife industry earned $12 million, but only 11,000 of that came from online sales. The
city has introduced training facilities to maintain production at an English language website to boost foreign sales. For the Yamawaki Company,
these initiatives are a welcome lifeline. YOSHINOBU YAMAWAKI, PRESIDENT YAMAWAKI CUTLERY (through translator): The
number of craftsmen is decreasing due to bad working conditions, a lack of successes. Or they quit. Give up. But if we can increase our sales
through e-commerce, it expands our possibilities in the future. There will be more youths, new people joining us. And actually, it's already
happening.
UNIDENTIFIED MALE: The strategy can be encapsulated in an old Japanese expression. A frog in a well knows nothing of the great ocean.
YAMAWAKI: If everyone around the world gets to know about the craftsman of Sakai, it will support their craftsmanship.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
GOLOGRYGA: Well Uber is aiming for the sky. The tech company says it's partnered with NASA to develop air traffic management systems for flying
the taxis of the future. Earlier this year, Uber unveiled plans to introduce airborne taxi fleets, known as Uber Air. Samuel Burke is
following the story from London. Samuel, this is something out of "The Jetsons," I guess. But this is inevitable in a way. Tell us how this
works.
[16:55:01] SAMUEL BURKE, CNN TECH, TECHNOLOGY AND BUSINESS CORRESPONDENT: Out of the Jetsons, but I can say it's very strange for me to be on
television talking about Uber and transportation. Because almost every time we talk about Uber in the past year, it's about sexual harassment
allegations the bad behavior --
GOLOGRYGA: Now we're talking about the business model itself.
BURKE: Exactly. So, the new CEO must be very happy that a lot of people are discussing this partnership NASA. NASA would be controlling the air
side. But it would be overseeing this fleet, really, that Uber is talking about launching in 2020. Four seats in a flying car that would take off
vertically instead of the normal way. But the real problem with all this is that this technology is unproven. Nobody knows if it's actually going
to work, and so many companies, Brianna, are going after this.
The QMB viewers probably remember at CES, the technology show in Las Vegas, I looked at the Ehang. It's a Chinese drone company. Their human drone.
They promised me I was going to be the first journalist to fly this puppy over Dubai. It never happened, not just me hanging on for dear life but
they haven't flown it over Dubai. So, lots of companies trying to do this. Lots of big names, big money. But it's not actually taking off just yet.
GOLOGRYGA: Yes, and the NTSB, you think of all of the regulation that would come along with this. The technology itself, though, from everything
you've heard, how advanced is that?
BURKE: It's incredibly advanced. And you do see prototypes here and there. But everybody is trying something different. On the one hand, you
see these kind of flying cars, they're calling it with Uber. Which is very different from of drone that I was seeing, this prototype with Ehang. So,
everybody is trying something different. But I think the one question nobody has asked, do people really want to see all these cars up above
them? There's all these great things you might be able to do with technology. Google Glass, everybody thought that was next. But people
haven't really answered that question. Do I want to see cars polluting above me and literally polluting the skies also with the cars themselves?
GOLOGRYGA: That's right. There's debate enough just about having drones flying above you, much less cars. In your opinion, is a driverless car
where we'll be going as opposed to cars in the sky first?
BURKE: I wouldn't be surprised if it's where we're going. But it's -- I want to know exactly where it's going to be. It's like drones for example.
They may not be over the cities. People may need them for delivery in the outskirts. And I think that's the real question. Where exactly will it
take on first?
GOLOGRYGA: Well Sam, I'll be looking for you up and above in the sky. Thanks so much for joining us.
And that's QUEST MEANS BUSINESS. I Bianna Gologryga, thanks for watching.
END
