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Quest Means Business
U.S. Federal Reserve Raises Rates; Moore Defeat Adds Urgency to Tax Push; Theresa May Defeated on EU Withdrawal Law; Apple Invest $390 Million in U.S. Chipmaker; Star Wars Fans Prepare for "The Last Jedi". Aired 4-5p ET
Aired December 13, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: Closing Bell ringing on Wall Street We've got a record high on the Dow. The S&P is hovering between a record
and not. The Nasdaq is up, but not at a record. It's been a very busy day, as you'll hear over the next hour. And -- oh. Oh, that's what you
call a determined gavel. Trading is over. It's Wednesday, it's December the 13th.
It's a last hurrah for Janet Yellen. The outgoing Fed chair raises rates one more time before she's gone. A setback for the Trump agenda. Roy
Moore defeated in Alabama adds urgency to the push on taxes.
And a humiliating defeat in Parliament for Theresa May. Members of her own party tie her hands, on Brexit.
I'm Richard Quest. We're live in the world's financial capital, New York. Where I mean business.
Good evening. In the past two hours, two pivotal moments in Washington for the U.S. economy. You're going to hear about them both in detail and with
analysis on this program. At one end of the mile, the federal reserve announced it was raising interest rates. And moments later at the White
House, President Trump, at the other side of the mile, vowed to deliver on the tax plan now agreed by Republicans, despite a humiliating setback in
Alabama. We'll talk about that during the course of the show, as well.
And the markets where at record high. We've a high on the Dow, not on the S&P or the Nasdaq. And an economy near full employment, more stimulus
coming down the Washington pipeline from the tax cuts and other policies. And so, the Fed has raised rates. It's the third time the Fed's moved this
year, and it's widely expected, although two board members did vote to keep rates on hold. That's what you see the target rate of the Fed. They have
a lower in an upper band. 1.25 to 1.5. We tend to talk about the benchmark rate now standing at the upper end at 1.5 percent, although the
Feds hope the market committee attempts to keep it within that bound. According to the so-called dot plot, most of the Fed is expecting three
rate rises next year. In her final news conference as Fed chair, Yellen said, there's not a great deal to be worried about with the U.S. economy.
(BEGIN VIDEO CLIP)
JANET YELLEN, FEDERAL RESERVE CHAIR: You know, I can always give you a list of, you know, potential troubles, international developments, that
could result in down side economic risk. But, look, at the moment, the U.S. economy is performing well.
(END VIDEO CLIP)
QUEST: Randall Kroszner, former Fed governor, is with me. Good to see you. Are you a hawk or a dove? Was this rate rise justified? Two members
of the FOMC thought it was not.
RANDALL KROSZNER, FORMER GOVERNOR, FEDERAL RESERVE: Yes, the presence of the Chicago and Minneapolis Fed, I call them the Midwest doves I guess I'm
more of a Chicago hawk and I think it was reasonable to raise rates now, because the economy is doing quite well, as Janet Yellen had said. It's
likely to continue to do well at least for the next year. And although inflation is not reaching the 2 percent target, I think it's much better
for the Fed to be ahead of the curve than behind it.
QUEST: OK. Ahead of the curve, though. But as long as I can recall, the Fed's statements have talked about the medium term returning to the 2
percent inflation target. They just never get there.
KROSZNER: It has been a long time since we've been there. And that's one of the reasons why inflation expectations are so much lower than they had
been from before. But the economy overall is doing quite well. And so, I think buying a little bit of insurance through having rates a little bit
higher now rather than waiting, because we could suddenly get a boost up of wage or inflation pressures, because the unemployment rate is quite low.
It's better to be I had been behind.
QUEST: The fifth rate rise since the whole tightening cycle began, this is the stewardship of the Fed under Janet Yellen. This was her last rate-
setting meeting in that sense, and her last press conference. How do you grade her?
KROSZNER: I give her very high grades. I think the U.S. economy has created a lot of jobs over the last four years that she has been in. I
think the growth rate has started to move up from 2 percent to now close to 3 percent over the last few quarters. I don't think there have been any
disasters that have occurred. The discussion of the winding down of the portfolio has gone very smoothly.
[16:05:00] And as exciting as watching paint dry, as she had said. That didn't happen in 2013, when we had the taper tantrum. So, a lot of
difficult things I think she has handled quite well.
QUEST: OK. On the core question though of the future direction of monetary policy next year, the dot plot -- well, if we look at their
forecast -- FMC's forecast on unemployment it goes even lower. Down into the 3. something percent. Growth remains around about 3.2 to 3 percent.
Three rate rises next year. Do you go along with that too?
KROSZNER: I think that's where we'll have to see how inflation is evolving. Because if inflation starts to move down, then I would be a
little bit more wary of doing that. If inflation at least stays in the 1.5 to 2 percent area, I think, you know, a few more rate rises might be
justified. But we're really going to have to see what those inflation dynamics are, because they're quite different than what they traditionally
have been.
QUEST: Randall, good to see you, sir. May I wish you and your family a very happy holiday season, sir. We're always grateful that you come on
QUEST MEANS BUSINESS, thank you.
Now we're going to head over to the trading post to talk about how the market has moved today. On the way, we see -- hey. What are you doing
here? You're going to help us understand, Teddy Weisberg.
TED WEISBERG, PRESIDENT, SEAPORT SECURITIES: Well, of course.
QUEST: You make your way over there, while I update on the market. Teddy Weisberg will be with us in just a moment. Record high on the Dow. S&P
off. So, no records there. Nasdaq up there. I think we have to say, there's two up, one down. It's a green day on the market, thank you. And
let's just update -- there we go. So, we have a record on the Dow, which proves 68, 60 and 70 so far for the markets. The issue, of course, is what
was driving this. And no, we still remain 20, 25 and 10 over on the European boards. But this is what we're talking about with Ted Weisberg,
who hopefully is now comfortable. OK. Today was an interesting session, wasn't it? Green for the markets, because the Dow and the Nasdaq are up.
What was the driving force?
WEISBERG: I think earlier in the day, it was there was a headline news that both the Senate and the House had come to an agreement on the tax
bill. So, we saw the market pop. The market was up all day, but popped at 150. And then once again, as you get into the weeds a little bit, you
know, we gave back --
QUEST: Why can't it hold on. What happens during the latter part of the day, particularly at the close, that means those early gains evaporate.
WEISBERG: Listen, we have a lot of cross currents, a lot of traders. You know, it just could be people lightning up. You know, everyday there's a
new news cycle. So, there's a reluctance on the part of traders, really true traders to go home long anything.
QUEST: Ted, I need you to pause for a second. Let's just have a look and see. Doug Jones is going to talk now. He's listening. We need to listen
in.
DOUG JONES, ALABAMA SENATOR ELECT: -- little bit of an orderly process. Because I really want to get to as much as we can. Let me just start out
by saying how thrilled that my family and I are for this win last night. It has been a fun campaign, despite what people say and despite all of the
things that get thrown at you. It was nothing that we didn't fully expect.
Most important thing we've had an opportunity to travel around the state, talking to so many people from so many walks of life. Listening to their
cares, their concerns, their joys, their happiness. And that's been so gratifying. And it is especially gratifying to know that in this day and
age, here in the state of Alabama, that a message of inclusiveness, a message of equality, a message of dignity and respect, and importantly,
messages of issues that really are at the end of the day, those issues that people care about. The kitchen table issues that we have talked about,
that you guys have heard me preach about over and over. It has been and amazing night for us. It has been an amazing day today. I have received
calls from so many well-wishers, of friends and family. But also, future colleagues in Washington on both sides of the aisle. I have received calls
from Democratic Senators. I've received calls from my long-time friend --
QUEST: A bit of Doug Jones. We are listening in for when he says something that's, you know -- is significant in terms of the future of the
way he will be in the Senate. Dan Merica is at the White House. The reverberations at the White House as a result of this. Donald Trump's --
Donald Trump's tweet basically saying, I always knew that Moore was going to lose. Sounds like sour grapes.
[16:10:00] DAN MERICA, CNN POLITICAL REPORTER: Yes, it is sour grapes, frankly. I mean, there's no doubt that President Trump was fully behind
Roy Moore. And this changes the calculation here at the White House. I mean, there's the practical matter. Frankly, the Senate now has one less
Republican and one more Democrat, which really would imperil aspects of the Trump agenda. There are things that have happened in the last ten months
that wouldn't have happened with that kind of margin. It also puts a lot of power back into the hands of more moderate Republican Senators, Susan
Collins, Jeff Flake, Bob Corker, those who have spoken out against the president over the last few months.
It also drives a division in the Republican Party, as well. I mean, there are many Republicans who are blaming Steve Bannon for this. There are some
who are blaming Mitch McConnell. You know, the blame game is alive and well here in Washington, including here at the White House. I don't think
Republicans have fully figured out how to blame for that loss. But this will cause, you know, kind of a moment of reckoning for many to figure out
what went wrong. Was it just a candidate who had his own issues, or is this a broader problem they'll have to confront in 2018?
QUEST: Just how difficult is it going to be with 51-49? You talk about the likes of Susan Collins and there's the moderates. But at the end of
the day, if they scupper their own president or the president from their own party, don't they de facto shoot themselves in the foot?
MERICA: I mean, you have to remember, some of these Senators who you're mentioning are not running for re-election, namely Jeff Flake and Bob
Corker. So they're, you know, unencumbered in many ways from President who leads their party. So, there are many members who certainly feel tied to
this president, because they will remain in office. But many don't. And that is going to be a problem this White House is going to have to
confront. You have seen the president take to Twitter, use events to really go after Senators who have spoken out against him. Said things
that, you know, somewhat would be seen as slights towards him. He may not be able to do that as freely if this -- this margin is less, because he's
going to need those Senators to pass things.
As you see with this tax bill, they want to get this done before Doug Jones is seated. Now, president Trump said today that has nothing to do with the
loss in Alabama. But if Doug Jones does get seated, and this moves past this Christmas holiday, that is a very, very tricky predicament that the
White House has to confront.
QUEST: Good to see you, Dan.
Donald Trump says passage of tax reform is only days away even after his party suffered, what Dan was telling us about, the damaging defeat. The
president has just finished what was billed as a final pitch on his tax plan. A package which is now all but agreed. Speaking a few moments ago,
he said the bill could take effect within weeks.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: If congress sends me a bill before Christmas, the IRS -- this is just out. This is breaking news. Has
just confirmed that Americans will see lower taxes and bigger paychecks beginning in February. Just two short months from now.
(END VIDEO CLIP)
QUEST: Republican aides tell CNN, they want to wrap-up the tax vote even quicker after the Alabama result, of course, they don't want to wait until
Doug Jones gets seated. The whole thing could be done by this time next week. Long before Jones gets anywhere near Washington. The final plan
agreed in principle to be unveiled on Friday. And then, as you move on, you've got the final votes, the House will vote on Tuesday. And then, of
course, you've got the Senate that votes, and Donald Trump, the president, would sign it on Wednesday.
Now, some top Senators from the Democratic Party want to delay until Doug Jones gets seated. Chuck Schumer says it's the right thing to do. Stephen
Moore helped draft Donald Trump's tax plan during the presidential campaign. Good to see you, Stephen.
STEPHEN MOORE, CNN ECONOMIC ANALYST: Hi, Richard.
QUEST: I can answer my own question here, or maybe you'll do it for me. I guess you don't think they should wait until Doug Jones gets seated in
January. Do you think it's the right thing to go ahead now?
MOORE: Yes, you do it while you've got the votes. That's the way politics works. And, look, I think they've got 51 votes. I think they're going to
probably lose Senator Corker. But they have -- it's a very slim majority. Shame, by the way, Democrats, not a single Democrat will vote for this.
Just one slight correction on something you said. I got some intelligence today, Richard, that this is kind of unusual, but that the Senate will
actually vote before the House. Usually, the House goes first and then the Senate. They want to have the Senate go first so the House can basically
know that it's done if they get it passed.
[16:15:03] And you're right, the vote is scheduled for Tuesday. And then Wednesday or Thursday, you can have a presidential signing. But I
guarantee you, they're not going to wait until the beginning of the year when the new senator is sworn in.
QUEST: If it's gone through reconciliation and both sides are agreed in reconciliation, I mean, it would be somewhat extraordinary to then lose it
in the full vote.
MOORE: It would be. But, you know, I have seen -- I'm a sports fan. I've seen teams blow leads in the fourth quarter of the game. So, you know, it
looks like they are in very good shape right now. I would put pretty heavy money on the fact they're going to pass this. But, you know, I'll believe
it when I see it.
QUEST: So, what you understand is the difference. Now a slight raise of 1 percent in the corporate tax.
MOORE: Corporate rate, yes.
QUEST: And a reduction in the top level of income tax, 39.6 down to 37 percent. Why do you need to give the wealthy more?
MOORE: Because what we wanted to do, and as you know, I've been involved with this for two years with Donald Trump, is get small businesses a tax
cut. It turns out, about two-thirds of small businesses, the ones that are really successful, are the ones that are people in that highest income tax
bracket. So that is a tax cut that's really meant to grow small businesses. We get, Richard, about 60 percent of our jobs in this country
from small businesses. So, people are -- and by the way, one other quick thing. This bill gets rid of something state and local tax deduction. And
that's affecting very high-income people and very high-income states like New York and California. So, one of the tradeoffs was, we'll get rid of
the state and local tax deduction, but we'll reimburse people by cutting that rate a little bit, so they don't get too clobbered.
QUEST: You mean those of us like -- that live in New York, just to rub salt into the wound a little bit there.
MOORE: There you go.
QUEST: OK. Let's move forward. Let's assume this is done, deal -- it is a victory. No question about it for the president, to have got this
through in record time. What's the next economic fight that you see on the horizon?
MOORE: Well, by the way, again, I'm not sure I would say this was done in record time, because it took a good year. And Ronald Reagan passed a tax
cut in eight months. So, I actually think it took too long. But anyway, what's the effect of this bill? I think it's going to be very positive for
the economy. We've gotten some good news on the economy here just in the last couple weeks. I just heard you talking about the stock market. I
mean, there's no doubt investors love this tax cut. Businesses love it. They're anticipating the positive effects of this. We have about 3 to 3.5
percent growth right now in the economy. I'm going to predict on your show that we get in the first six months of next year when this tax cut hits,
you know potentially 4 percent growth. We haven't had that, you know, in 15 years in this country. So, I'm expecting some big boosts in the economy
starting in January.
QUEST: So, you're asking us to believe a prediction from a man wearing Santa's on his tie. Is that the gist of it?
MOORE: I'm surprised you can see those. But yes, I am asking you.
QUEST: Good.
MOORE: And, look, I want to be on your show in February and March of 2018 and will see whether I'm right. But you've got to admit, Richard, that the
market really loves this tax cut. Another 150 points today on the Dow.
QUEST: Either in D.C. or in New York, one of us is buying dinner. All right?
MOORE: You got it, my friend.
QUEST: Good to see you. Thank you.
MOORE: OK.
QUEST: As we continue tonight, it's QUEST MEANS BUSINESS, live from the world's financial capital. The Apple boost shares Finisar, up 23 percent.
Apple's investment we're going to explain in this hour. And, of course, the Brexit battle, part two. Theresa May's long, dark night of the soul.
A government loses a key Brexit bill vote. Will be in London after the Break. QUEST MEANS BUSINESS.
[16:20:00] (COMMERCIAL BREAK)
QUEST: Tough night for Theresa May, the British Prime Minister, who's been humiliated by her own party. Her MPs and others voted to guarantee a
meaningful vote on the final Brexit deal. It's all about the ability of Parliament to actually change the Brexit deal. They tied Theresa May's
hands. Bianca Nobilo in London, tell me more.
BIANCA NOBILO, CNN WESTMINSTER: Tied her hands, Richard. It means that the government can no longer tinker with beginning to withdraw the U.K.
from the EU without getting parliament's approval first. It just means that this process has got a whole lot more difficult for the government.
They've said that they're disappointed by this result, given the strong assurances they said they gave. But it's going to make the next few months
even harder for the Prime Minister, and she's got one more vote left on this bill and that's not looking good either.
QUEST: All right. So why? What was the fear? Was it that through the back door, they were going to start to implement Brexit before Parliament
had voted?
NOBILO: That was the concern. Because they could in theory have done that with the previous wording of the bill. Brexit, in its entirety, was about
taking back control. Parliament was arguing, yes, the British people wanted to take back control. But give it back to the British Parliament,
not to the prime minister, and to the government. So, while it was a defeat for Theresa May, it was a real victory for democracy and for the
Parliament this evening.
QUEST: Why would her own party want to do her in, in such a way?
NOBILO: According to them, that was not their intention. This is because they believe it's Parliament's job to ensure that powers don't get moved
away from the House of Commons and to retain them. The lead rebel that tabled this amendment was a former attorney general and Tory MP, Dominic
Grieve. He made the case strongly today when he spoke. He said this is not about sabotage. This is about trying to improve the legislation. Of
course, Labour MPs, who supported this amendment, probably had ulterior political motives, and indeed there were huge cheers and jeers from the
opposition benches. Jeremy Corbyn got in there straightaway, saying this is a humiliating defeat for the Prime Minister. So, it's unfortunate.
There are two reasons why people supported this. Some political and others because they truly believe that it would be corrosive to democracy not to.
QUEST: Bianca Nobilo in London, thank you.
A short time ago, I spoke Guy Verhofstadt, on "QUEST EXPRESS." He's the Brexit coordinator for the European Parliament. He's angry over what he
sees as a fudging of the agreement last Friday. I asked if he was getting reassurance from the British government.
(BEGIN VIDEOTAPE)
GUY VERHOFSTADT, BREXIT COORDINATOR, EUROPEAN PARLIAMENT: Yes, I got a phone conversation by Mr. Davis David, the Brexit negotiator. And we said,
Yes, Yes, this statement of intent, the words that were used that were not appropriate, in fact we stick to our commitments, not only I will stick to
the commitments we have made in this arrangement, but also the whole U.K. government. So, we were reassured. So, the best way to be reassured,
Richard, is that all the commitments that have been taken in this agreement are now translated into legal text of a withdrawal agreement. So, what we
expect is that in the coming weeks, after the break, that there will be a withdrawal agreement on the table in which all the commitments are
translated that have been taken by the U.K. side and by the EU side in this agreement.
QUEST: If you accept the principle, as everybody does, that nothing is agreed until everything is agreed, then all the commitments that were made
on Friday are, by definition, going to be circumspect to that which comes next. In other words, the trade negotiations.
VERHOFSTADT: No, that's not the way it works. Because in the treaties of the European Union, it's very clearly stated that the first thing to do
before you can talk about the future arrangements is that you have an agreement on the withdrawal.
[16:25:03] And an agreement of the withdrawal means three things. First of all a financial settlement. Secondly, clarity on the border issue between
Northern Ireland and the Irish Republic, and three, the citizens Right. And for us, for the Parliament, this is very important that these rights of
the EU citizens are guaranteed in the future. And when you have an agreement on this, you can go into the next phase of the negotiations.
(END VIDEOTAPE)
QUEST: Janet Yellen has called bitcoin highly speculative. But said a crash, while it would hurt some investors, does not provide for systemic
economic risk. Potential for chaos though is plain as Bitcoin booms, major exchanges have suffered embarrassing outages, and some have suffered
setbacks. On Tuesday, bitcoin exchanged Bitfinex and Coinbase both reported problems with service. Last week, more than $70 million were
stolen from NiceHash. Bitfinex sufferer a similar hack last year. It's a matter of time, perhaps, before a collapse, as we've see Mt. Gox which fell
into bankruptcy after 460 million was stolen. Paul Vinay is a Wall Street Journal reporter. Author of "The Age of the Cryptocurrency." He joins me
now. Good to see you, sir.
PAUL VIGRA, REPORTER, "WALL STREET JOURNAL": How are you doing?
QUEST: Thank you very much indeed.
VIGRA: Thank you for having me on.
QUEST: She's right, isn't she, Janet Yellen, highly speculative.
VIGRA: Yes, that's putting it light. She's right about two things. Yes, it is highly speculative. And if it did crash, it really would not affect
the wider economy. I think the thing to keep in mind with bitcoin, there is a lot of hype right now, a lot of mania, a lot of people want to get in.
But this is still a pretty small market. Pretty disconnected from the wider economy.
QUEST: She sort of said, this isn't legal tender. It's not a -- basically, it's not a safe way to proceed.
VIGRA: Well, it's not legal tender in that the U.S. government has not recognized it as such. Whether or not that makes it safe or not isn't
really the case. But the issue of safety is a legitimate one. It's just not a matter of because it's legal or not legal.
QUEST: There were two areas -- I've been reading the fascinating work you've done. There were two areas I want to talk about this safety.
VIGRA: Sure.
QUEST: The first is whether it goes up or down in price. The markets will regulate that. The second is these two keys that you have, the public and
the private.
VIGRA: Right.
QUEST: Who looks after your bitcoin wallet? If my bitcoin wallet is on my computer and the hard drive goes caput, what happens?
VIGRA: You are out of luck. So, this is the thing. In a real nutshell, this is the thing about bitcoin that makes it interesting. The idea is you
could have this currency that is not regulated by any one central party. The way they do that is by having transactions on an open ledger that
cannot be changed. Can't ever be altered. So, the key thing is that once a bitcoin transaction is confirmed it's confirmed for all-time. As opposed
to, say, if you're -- if JPMorgan gets hacked, your bank account gets hacked, your credit card get hacked, those charges can be reversed.
Bitcoin is different.
QUEST: But what do you do if you lose the key?
VIGRA: You are out of luck. And this is what I'm talking about. So, the difference is, in the real-world transactions can be reversed. So,
security is important, but you know there is somebody behind you that can probably make you whole. In bitcoin you can't be made whole.
QUEST: OK.
VIGRA: So, what happens is, you have a wallet, which is really just an online account. There are two points of access to that online account.
These are the keys you're talking about. There are two ways to move money in and out of that. One is the public key. That is an address, it's like
an e-mail address. Anybody can see it. Anybody can use it. I could use it, I could use your public key for me to send bitcoin to your wallet. The
other is the private key. You're the only one -- or you should be, Richard, the only one who has access to the private key. That's your way
to unlock your account.
QUEST: But as we move to a situation where more ordinary investors want to be at bitcoin, then the risk moves slightly, not just from my computer, but
I now contract with bitcoin exchange. And you look after them. And now my risk is, are you good, are you secure, are you solid.
VIGRA: Right. And that's the risk with any third party when you request or rewrite.
QUEST: Right.
VIGRA: Again, the difference is if -- and you talked about Mt. Gox, which was an early bitcoin exchange. It was very poorly constructed. A lot of
money was tied up there. A lot of money disappeared. There was no real recourse. That money was gone. That is a risk when you're going to have
your money with any third party. That's why a lot of bitcoiners, they don't want their money with any third party. That's why they have the
wallet in the first place. But the difference is, then the security is on you. And even sophisticated people who understand how these things can
work can lose access to their private key, they can lose access to their wallet. They can lose their bitcoins. It's not for everybody.
QUEST: I'm having -- good to see you, sir. Thank you very much indeed.
Republican control of the Senate is shrinking. A real threat to the Trump agenda. A major voice from the Obama White House will be with us after the
break. QUEST MEANS BUSINESS.
[16:30:00] (COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment of course. Apple invests in America $390 million. Brings an
old factory back to life in Texas. We'll talk about that. And a first look at "The Last Jedi." Fans line up for midnight screenings. As we
continue, this is CNN. And on this network, the facts always come first.
President Trump's made his final pitch on tax reform amid words, House, Senate and negotiators reached a tentative deal on a tax bill. Just last
hour, Mr. Trump said he believes we are days away from seeing lawmakers pass that bill.
Fresh off his stunning win in the Alabama senate race, the Democrat, Doug Jones, is speaking at a press conference. He said he's received numerous
calls, including one from president Trump. And from Democratic and Republican colleagues. He said he has not spoken to his Republican
opponent, Roy Moore.
The White House now says an aide to Mr. Trump plans to leave the White House next month. Her resignation follows news that the president s deputy
national security adviser is also to leave.
South African President, Jacob Zuma being ordered to launch an investigation into himself. The South African Supreme Court is forcing Mr.
Zuma to set up an official inquiry into allegations of corruption an influence peddling. He has 30 days to appoint the investigators.
One of the world's top cyclists has failed a drug test that threatens his victory in one of the most prestigious events. Chris Froome says he has a
good excuse. He's accused of exceeding the maximum allowable dosage of an anti-asthma drug during the Vuelta a Espana in September. He says he takes
the drug, not surprisingly, to treat his asthma and it had a particularly violent attack.
A short time ago, President Trump said tax reform passage was just days away. But the loss of his senate seat, his legislative agenda is at risk.
And you'll see what I mean if you take a look here at what's happening. These are the promises that Donald Trump said he was going to do. You can
see how he has managed to do this. President Trump's promises. He was going to halt the Muslim entry. That's on hold although it is moving
forward.
[16:35:00] He's going to renegotiate NAFTA. These -- the withdrawal from TPP, labelled China a currency manipulator is not there. Repeal Obamacare
has not been done and defeat ISIS. Well, we can argue about that, bearing in mind what happened in Iraq over the last few days. Jim Messina is a
former White House deputy chief of staff, responsible for setting priorities with Congress. He's also Barack Obama's campaign manager and
the Messina Group. And good to see you.
JIM MESSINA, FORMER WHITE HOUSE DEPUTY CHIEF OF STAFF: Good to see you too. How are you?
QUEST: I'm very well, sir. Very well. Now, when you look -- when you look at what has happened in this -- in Alabama, how -- where do you give
the credit?
MESSINA: Well, it gets probably the most stunning political upset of the last decade, right? Alabama is the second-most conservative state and
country. Democrats hadn't won a senate seat there in 25 years. And I think you have to give a credit to three people. One, the candidate,
Jones, who Doug Jones, who ran a great campaign. Two, Roy Moore, who is the worst nominee of any major political party of my lifetime. And then
Donald Trump, who, you know, today a poll came out, he's at 32 percent approval rating, which is the lowest of any president since Nixon.
QUEST: So how does -- forgive me. How does the Democrats capitalize on their strengthened position in the Senate in the New Year without being
seen as obstructionist, so that they lose the support of the public who basically says a plague on everyone?
MESSINA: Right. You're exactly right. The worst thing the Democratic Party could do is just say we're not going to do anything. What we need to
do is come together with a very clear vision about an economic future for this country. And hold to it. And you have seen Democratic Party numbers
rise during the tax debate, because Democrats have been very clear what they're for, and what they're not for. And I think this tax debate gives
us a crystal-clear ability to do that, and next year, you know, the one place we do agree with president Trump is infrastructure reform, and
funding more of those programs. And I think that's a place where we can move forward and get something done for the country.
QUEST: Do the Democrats keep Alabama in 2020?
MESSINA: Well, that's a long way between now and then. What is true is that Doug Jones is the only southern Democrat in the Senate if you take out
Florida. But he also showed a way to win last night. He won a race that, you know, as he said, about half an hour ago, he didn't even think he was
going to win last night. And he did. And so, there is a -- a plan for that. You know, I was privileged to run President Obama's campaign, and
people looked at that plan and started running campaigns like that. So, I think we all need to shut up and go down to Alabama and learn a couple
things from Doug Jones.
QUEST: The "USA Today" editorial that was published, describing President Trump as uniquely awful, and not fit to clean the toilets of President
Obama's presidential library. What significance do you get, or do you give to such vitriol?
MESSINA: Look, it's unprecedented in my lifetime. I've been involved, as you know, in world politics for 25 years. I've never seen anything like
that editorial. But the truth is, you know, I've worked hard for 20 years in the United States Senate before I went to the White House on both sides
of the aisle, trying to get things done. And let's just be really clear about it. We have never had anyone this bad as President of the United
States. And you showed it. I thought you had the most interesting graph I've seen recently. He hasn't gotten anything done. We're one year into
it, in a country that desperately needs some leadership and we have done nothing. It's not me saying that as a Democrat.
QUEST: I've got to correct you here. You withdrew from TPP. You restarted oil pipelines, and the tax thing is just about done.
MESSINA: Well, let's not get ahead of ourselves. It's not done yet. And TPP was a disaster to get out, and our economy is going to feel that for
the next 10 years.
QUEST: Good to see you, Jim. Please come up to New York. Come and join us on the set.
MESSINA: Any time, thanks.
QUEST: Thank you very much indeed.
We continue tonight, President Trump wanted Apple to create jobs in the U.S. and now it has. We'll show you where and how after the break.
[16:40:00] (COMMERCIAL BREAK)
QUEST: A very busy day as you can tell. Much enjoyment of the day. But we must have time for business on the move. Abu Dhabi has seen its largest
IPO in a decade. It's all to do with Adnoc, the retail distribution arm. The IPO, you can see the closing price and the IPO price. There again it
values the company $851 million at 8.5 in total.
Target's buying same-day delivery service company Shipt for the price of $550 million. That is where Target will be delivering to 72 cities and
plans to expand. It is competing, of course, with Amazon, and Fresh and Google. Amazon delivers in those parts of the country. Apple -- the
Apple, who does this belong to? Apple's investing $390 million to a U.S. chipmaker Finisar. Produces laser chips that power face IDs and indeed
these AirPods, however these are. Maybe they won't miss them if they come over here. That's business on the move.
Gene Munster is the expert on all things Apple. Managing partner at Loup Ventures joins me now. Why does Apple want this company and invest in it
and why not just buy them?
GENE MUNSTER, MANAGING PARTNER, LOUP VENTURES: Because they can get exactly what they want without spending more money. So, they put $350
million in, and this gives them a pull position, which this is the most important part here, in terms of the future of phones. What we use phones
for are going to change, augmented reality is going to become a bigger part of that. But to answer your questions, they could achieve this opportunity
around gather and company without buying the whole company. And also, an important point is they can keep other suppliers in the game, because they
need other people like Lumentum to be building those components to fulfill all their demands. So, they accomplish two things.
QUEST: What does Finisar do that's worth $1 billion over time?
MUNSTER: What they do is they map the world extremely well, the real world. And so, when you think about augmented reality, in order for our
phones and eventually some form of glasses to be able to superimpose these images on the real world, think of Pokemon, or Snapchat with images on our
face. In order to do that, you need to do 3D mapping and that's what they do. They have a laser that maps the environment around you.
QUEST: When Apple has withdrawn support from a supplier in the past, the supplier has collapsed. I'm thinking of the English company, the British
company, which was a major supplier until Apple pulled out. If I was Finisar, might have a worry that at some point in the future might decide,
not today?
MUNSTER: Well, you would have a little bit of worry, because they have done that. If a supplier that they have invested in doesn't deliver on
what they say they're going to do, Apple will pull the plug. And they have let companies go bankrupt to do that. But I would rather be in that
position than be a competitor that is trying to win the business or currently has the business. That would happen more frequently, as someone
is a supplier to Apple, and Apple just decides to go away.
[16:45:02] And so, it is a ruthless customer, Apple is. Obviously, it's a huge opportunity for these suppliers. But I would rather be the company
that has the investment then one that doesn't have the investment.
QUEST: As we have seen in recent days with other investments, Apple is almost parsimonious when it comes to making their investments. They -- I
mean, it's the opposite of Facebook in terms of getting out the checkbook and writing a very large check. They make sure they pay not a penny more
and not a penny less.
MUNSTER: Yes, that's exactly right. I mean, you look at this -- last week, they did Shazam for $450 million, at one-point value $1 billion. But
that's exactly right. They do not do multibillion, $20 billion acquisitions. WhatsApp from Facebook like you re mentioning. And I don't
think you're going to see anything change. And we've studied this over the last 15 years, and the reality is Apple buys technology. They don't buy
brands. And most other big tech companies buy brands. And Apple loves their brand, and they're not going to buy someone else's brand.
QUEST: Gene, thank you helping us understand what this is about.
MUNSTER: Thank you.
QUEST: Really appreciate it.
Red, white and blue. Not the typical options for wine. It's the latest in our trader series.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE (voice-over): The British wine importer, the wine drinker, has a new offering for its client, the Olive Tree. Its drink is
an unusual hue. Diners will get to try a wine that's blue. It was first developed in 2014 by a handful of tech entrepreneurs in Spain who wanted to
shake things up in the countries traditional wine industry.
TAIG MACCARTHY, CO-FOUNDER, GIK: The wine in Spain is full of rules. We didn't really resonate with that. So, we wanted to offer something to the
new generation of wine drinkers.
UNIDENTIFIED MALE: What started as a team of five young entrepreneurs running the startup company called Gik has now grown to 14 employees. Gik
blends red and white grapes sourced from nearby vineyards to craft the blue wine.
MACARTHY: We had to choose the right grapes. And to do this, it's very important for us to work with the experts in the wineries. This is how we
personally mix the pigment. That comes from the skin of the red grapes into the wine. And in the second stage, once it's in the stainless tanks
we add once again the same pigment. And this is how we make this neon blue wine.
UNIDENTIFIED MALE: The tradenomics of the global wine market flowed to almost $300 billion in 2016. Five countries savor almost half of all the
world's wine. Europe dominates wine production. Vineyard's cover more of Spain's landscape than any other nation. But this delicate crop is
vulnerable to weather conditions. Recent frosts and droughts have taken a toll on grape harvests. Three billion fewer bottles of wine were produced
in 2017 worldwide, increasing the cost of draining a glass.
MACARTHY: We really are at the risk of losing grapes because of the climate changes. We had a really rough winter. So, it made an impact on
the amount of grapes we actually produced.
UNIDENTIFIED MALE: But Gik is still finding success. Since launching, the company's revenue is 2 million euros and it's now selling to 31 countries.
MACARTHY: It made a lot of sense to us to just export. To countries from the U.S. to Japan, where they're more open to wine innovation.
UNIDENTIFIED MALE: The internet has also helped the company take off with a bright blue Spanish wine.
MACARTHY: We have wine e-commerce for each country in which we sell. And they're really key. It has allowed us to reach the amount of customers
that otherwise wouldn't be possible to reach. A new way of connecting with customers, a new way of discovery and a new way of working.
(END VIDEOTAPE)
QUEST: It's like Christmas, Halloween New Year's Eve, all at the same time. That's if you're a "Star Wars" geek. The new film is out tomorrow.
A couple hours from now, some fans are too excited to sleep. So, they're going to sit in the middle of the night.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Old friends, new faces and cute critters. That's how the "New York Times" described "The Last Jedi," which opens on Thursday. Fans in London
are about to see the very first public screenings. There have been premiers. Anna Stewart's is in Leicester Square where a showtime is about
two hours away. Good to see you. Cold night in London. Anna, who will be at this first screening? How difficult was it to get a ticket?
ANNA STEWART, CNN PRODUCER: Pretty darn difficult, Richard. There are 1,100 people descending on this cinema to watch the first screening at
midnight. And we've seen quite a few of them. Lots of Jedi have turned out. We've just had a massive downpour here in London. So, they have all
gone under cover. But if that appetite is anything to go by, this movie is going to do very well at the box office. But the big question is, can it
do as well as the last movie in the saga, which was "The Force Awakens, " which was something of a record-breaker.
(BEGIN VIDEO CLIP)
BOB IGER, CEO, WALT DISNEY COMPANY: We think the way we're releasing them is the right way. So that the trilogy in this case is every other year,
and we filled in the middle with something that is not part of the trilogy. So, we don't think we're overdoing it at all. You know, there's so much
interest in "Star Wars," as you know, witness tonight. And as long as you're in business with great directors, great writers, good story-tellers,
then I think the audience can't get enough of it.
UNIDENTIFIED MALE: Can I ask you, what's the latest on the Fox take over?
IGER: I'm here for "Star Wars." I'm not going to say anything about that. Thank you. Sorry.
(END VIDEO CLIP)
STEWART: So, there you have it from Bob Iger, the Disney CEO. Now he doesn't think there will be any franchise fatigue here in this movie
release. But that is the worry in the industry. Because if you think about it, "The Force Awakens," which had the highest grossing opening
weekend ever, was the first "Star Wars" movie after a ten-year gap. This, Richard, is the third "Star Wars" movie after three years. So, there is a
bit of concern there.
QUEST: OK. I mean, I've enjoyed "Star Wars." I can't say I particularly could quote from it, unlike some of my colleagues in the studio. From what
you've heard, from those who have seen, does it hit the grade?
STEWART: The reviews have been pretty kind to this movie, Richard. So, I would say probably yes. But I haven't yet seen it myself. It's got lots
of the old characters. We have Luke Skywalker. We have Princess Leia or General Leia as she is in this movie. And we also have some new creatures.
We have the Poe, which in one review described it as something between a puffin and Justin Bieber. So, if that doesn't make you want to see it, I
don't know what will.
QUEST: Final question. It is coming up to 10 o'clock in London. Have you got a ticket? Are you going in to watch it?
STEWART: You're keeping me too busy, Richard. I would love to be in there. But I'm also a little late on the ticket sales, I fear.
QUEST: Thank you. Anna Stewart, proving that duty comes first in Lester Square. Thank you very much, indeed. Cold night in London.
Final check of the markets. Dow Jones, it was a record. The Nasdaq and the Dow ended high. The S&P was off just a tad. The Dow is up 80 points.
Again, a third of 1 percent. The S&P was only lower. Consumer and industrials were the biggest gainers overall.
You can download our show as a podcast.
[16:55:00] It's available from all the main providers. And you can also listen to it at CNN.com/podcast. And also, you can always, of course, e-
mail me or tweet me as usual. Will have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. You can see what a busy, complicated world it is at the moment. You have Donald Trump with tax. You have the
markets at record highs. You have change at the Fed with Janet Yellen, talking about bitcoin and saying it's highly speculative. And then at the
last minute, you have Theresa May losing a crucial vote before Parliament, which basically will tie her hands in terms of the negotiations.
Fascinating undercurrents in the global economy. And throughout all of this, the stock market just keeps rising.
Which gave rise to a question from one of my colleagues that if, for instance, the tax plan failed would the stock market, or would it hit the
economy? The answer is yes. If there is more dislocation on Brexit, would that hit the U.K. economy in the UK stock market? Yes. If there are
further problems with world trade as the WTO is talking about now. Does that hit global growth? The answer is yes. My point is simple. There are
many pitfalls out careful. Of which we need to be careful. And what we've seen tonight in this program, we just laid them out all for you. But don't
worry. It's nearly Christmas and the new year. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up
to in the hours ahead I hope it's profitable. Will do it again tomorrow.
END
END
