Return to Transcripts main page
Quest Means Business
Two Black Men Get Arrested at Starbucks for Trespassing; Starbucks CEO Apologizes for the Arrests of Two Black Men; WPP Shares Fall after Sorrell Resigns; Martin Sorrell Quits Amid Investigation of Misconduct Claim; Comey Releases Book About Trump and His Administration; Beyonce Becomes First Black Woman to Headline Coachella Festival; Phelps Becomes Colgate Ambassador; Stormy Daniels and Attorney Addresses Press; Earnings Boost U.S. Markets. Aired 4-5p ET
Aired April 16, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: All of that has got to end, but still an impressive performance across all the major indices where earnings
are very much in focus. We'll talk about that over the next hour.
That was a wimpy gavel. I only hope their hotel is better than their gaveling that has brought trading to a close. Today is Monday, it's April
16th.
Quit playing games. Donald Trump accuses China and Russia on devaluing their currencies and it puts him at odds with his own treasury. We are
waiting on a blockbuster release, Netflix earnings are out in about five minutes from now and we will have the reviews on how they performed.
And it's an unconscious bias, Starbucks promises to retrain staff after two black customers suffer a reprehensible experience and that's the words of
the CEO. I am Richard Quest live from the world's financial capital, New York City where of course, I mean business.
Good evening, we begin tonight. President Donald Trump is attacking China and Russia via Twitter and accusing them of playing games with their
currencies. In doing so, he is directly contradicting this, the Macroeconomic and Foreign Exchange Policies of Major Trading Partners.
In other words, his own Treasury Department which says there is no manipulation of currencies. Even so, the President tweeted Russia and
China are playing a currency devaluation game as the US keeps raising interest rates. Not acceptable.
Just last Friday, the Treasury Department published a report on foreign exchange and it says that there is no US trading partner who is
manipulating its exchange rate. Now, if you look at the dollar versus the yuan over the last five years, you do start to see what the President is
talking about.
In 2015, let's have a look at here. So, in 2015 over here, the Central Bank of China let the currency devalue by 2 percent in a single day. You
can see the movements there. And as the dollar versus the ruble over the same period, you can see again, similarly those sorts of movements. But if
you look at the way the movement has been over the recent few months, say from 16 onwards, it starts to question it.
And again, you can certainly make the same argument with the renminbi, which you can see from this very sharp devaluation.
The question of course is, whether this is as a result of a manipulation or allowing the currency to devalue or is it because US interest rates are
going higher, but -- and joining Eswar Prasad. He is the author of "Gaining Currency: The Rise of the Renminbi." Joins me from Washington.
You are the perfect man to tell me very simply, is Donald Trump accurate when he makes that claim in his tweet?
ESWAR PRASAD, TOLANI SENIOR PROFESSOR OF TRADE POLICY, PROFESSOR OF ECONOMICS AT CORNELL UNIVERSITY: It is a Presidential tweet, Richard, so I
guess you have to take it seriously. But I can tell you that economic and financial circles are perplexed and so am I.
Over the last 13 to 14 months since Donald Trump took office, the Chinese currency, the renminbi hasn't quite gained in value relative to the US
dollar by about 9 percent to 10 percent, so in fact, China has been doing the US a favor by allowing its currency to appreciate, which means that in
principle, the US exports are more competitive in China and Chinese imports are less competitive.
So, the President seems to be harking back to an earlier time when in fact China was intervening in foreign exchange markets to prevent this currency
from appreciating, that is no longer the case.
QUEST: Right, but on my chart here, you can see the US dollar versus the yuan and you can see over the last six to seven -- or 18 months or so, from
6.8 to 6.2, so in that regard, is that a conscious move or is that just a move as a result of macroeconomic forces? A stronger US dollar, I mean, a
stronger -- higher US interest rates?
PRASAD: No, let's be clear about that. That move from 6.8 Chinese yuan to 6.2 actually means that the renminbi is strengthening...
QUEST: Exactly.
PRASAD: ... meaning that the dollar is depreciating and the reason for that is that the Chinese economy has been doing quite well, and even though
there are prospects of an increase in interest rates in the US, the fact that China has managed to stabilize the economy means that its currency is
in fact appreciating against the US dollar and not losing in value.
QUEST: So, to pull the full string of that together, again, looking at my chart, when if I draw the medium line across, we are pretty much back to
where we were in the middle of 2015. I guess, I am trying not to put it in quite such blunt terms, but the President is wrong.
PRASAD: The President is wrong in this instance. It is not correct to...
[16:05:16]
PRASAD: ... argue that China is manipulating its currency. One indicator of currency manipulation is how much the country's Central Bank intervenes
in foreign exchange markets and you can look at the level of foreign exchange reserves to see if there is any intervention over the last year.
The level of foreign exchange reserves held by China has actually stayed relatively flat. Now, certainly before 2015, the renminbi was
depreciating. A lot of capital was flowing out of China. China was in fact trying to prevent its currency from depreciating too fast, but
certainly right now, there is no analytical basis for the case that Mr. Trump is making.
QUEST: Good to see you, sir. Thank you very much for joining us. Much appreciated.
The deteriorating relationship between Russia and the west is being severely tested. And President Trump's unpredictability is keeping
America's friends and rivals on their toes.
Saturday's US airstrikes in Syria followed weeks of Mr. Trump insisting he wanted to pull US forces out. Moscow and Washington have expelled dozens
of each other's diplomats following the Salisbury nerve agent attack, and now a new round of tit for tat economic sanctions looks inevitable. Let's
break this all down. Dr. Richard Haass is the author of "A World in Disarray" and indeed is the President of the Council on Foreign Relations.
He joins me. Good to see you, as always, Richard. Thank you for joining us.
The President on Syria and the policy on Syria, do you see any strategy following on from -- following on from the attacks?
RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: The short answer is no. Probably the long answer is no as well. And the attacks were a
limited attack to penalize Syria for the use of chemical weapons. It was not for example for committing genocide or anything like it per se. The
attacks were not there to unseat Mr. Assad.
Again, they were narrow execution against three sites. They were careful so not as to hit Russians or Iranians and again, they were there to
penalize for the use of CW and hopefully to deter the future use of chemical weapons.
QUEST: So, in that regard, if we take also what the President says, for instance, he always said that he wouldn't telegraph what he was going to
do, but isn't that exactly what he did do in this tweets in the 24 hours or 48 hours before he attacked?
HAASS: At the risk of being a broken record, again, the short answer is yes. He did telegraph the cruise missile attacks. I don't know, I am not
sure we do know what if any movements then were made by the Syrians, the Iranians and the Russians either to move supplies, weapons, personnel what
have you.
But also, the President put pressure on himself by being so open about the need to respond. He, if anything diminished his own flexibility as to the
timing of a response.
QUEST: You talk obviously to world leaders. You talk to policy makers -- foreign policy makers at the very highest level. How is the rest of the
world, vast overstatement of course, but dealing with this seemingly mercurial inability to get any sense of where the United States will go
next.
HAASS: I think it's particularly trying for America's friends and allies because an alliance relationship is predicated on a presumption of
predictability, of reliability. That's the essence of being an ally and a security provider.
So, I think it's very rough there, but I think it's also somewhat difficult. You were just talking in your previous story, Richard about
China, about the introduction of tariffs and what to expect next. So, it's awfully hard for others to gauge, you know, that can sometimes give us, the
United States a bit of tactical advantage vis-a-vis our adversaries. I think it's never good vis-a-vis our friends.
The danger is our adversaries may start challenging us because they don't know if the President is bluffing and that's a world that becomes more
dangerous if people don't take your word seriously, they then do things, and then the question is, do you respond to that?
And that seems to be an awfully, awfully dangerous set of potential dynamics.
QUEST: The James Comey interview and the James Comey book, you said this morning as to Comey, he seems a guy who was just talking to himself, was
intellectually unmoored almost without a compass.
He took on a disproportionate role in American politics without the mandate to do it. And yet, you know, in the court of public opinion, at the
moment, I'll grant you, just at the moment, it seems to be with Comey.
HAASS: Well, it does. He is upright. He is an honorable man. He has a career of public service, some of his critiques of this President clearly
resonate, but that said, what he did in the run up to the 2016 Presidential election, I think went far...
[16:10:16]
HAASS: ... beyond his remit, that's why we have a Justice Department, Attorney General, a Deputy Attorney General and the rest. The idea that he
made these decisions that he played, what truly may have been a historical role, I think again is simply way beyond as we used to say, his pay grade.
QUEST: Finally, sanctions -- prospective sanctions, Nikki Haley promised more sanctions on Russia. While Russia hasn't even responded yet to the
last set that they have -- that we have introduced, all the sanctioning I should say of various individuals.
This is getting really serious. I mean, obviously, I am not being flippant when I say that, you know what I mean in the sense of because the other
side will have to respond and the last thing President Putin wants to be seen as is weak.
HAASS: Right, and that's why they responded to the diplomatic sanctions. Economic sanctions are tougher they have to respond to in kind. They
simply don't have that kind of economic leverage, vis-a-vis, the United States.
But there's a larger point, we're beginning to run out of things to sanctions the Russians for and there is very little relationship left. The
President is right about this. At the height of the Cold War, the United States and the Soviet Union had more texture, more depth and breadth to
their relationship than the United States and Russia have now. That can't be a good thing given our ability to run into one another or to affect
things in Europe or the Middle East.
QUEST: Finally, is this the most complicated or difficult or truculent time that you have seen in world politics, do you think?
HAASS: Short answer is yes. Richard, when I woke up during the years of the Cold War, I kind of knew how the table was set every day. Right now, I
don't know how the table is going to be set when I wake up, and even if it's set a certain way at 9 a.m., it's not going to be set that way by 4
p.m.
QUEST: Richard, thank you, good to see you, sir. As always, you're much appreciated.
HAASS: Thank you.
QUEST: As we continue, just proving to you the complexity of the day. Bearing in mind, we have talked about the currency issues, and now we've
just talked about Russia. Well, the next, let's run to the way the day falls, I mean, we haven't dealt with the markets by the way, which we will
do of course as we move forward.
But Donald Trump's personal attorney revealed, he also represents the Fox News host, Sean Hannity who is one of Donald Trump's greatest supporters on
television and the former Republican fundraiser, Elliott Broidy who also was alleged to have paid a large sum of money to a Playmate -- a former
Playmate who had an illegitimate child.
You're getting the idea of the flavor of the day. Michael Cohen was ordered to provide information about his clients as part of the court
proceedings. He is bidding to prevent prosecutors from reviewing materials seized when the FBI raided the lawyer's office last week.
Brynn Gingras is outside the courthouse. I think I have tried to give as best summary, but you were there. I mean, when Sean Hannity's name came
out because Judge Kimba would basically say it, you weren't going to name the names.
BRYNN GINGRAS, CORRESPONDENT, CNN: Yes, I mean that's really it, Richard. This is all backing up to Friday when Michael Cohen's attorney said they
wanted -- they filed a restraining order telling the judge they wanted privilege to those documents seized by the FBI. They wanted to take a look
at them before the investigation continued. That's what the whole purpose of this hearing was.
And then, at time on Friday, the judge in this case said that he needed to turn over a list of all of his clients. Now, we got a list or the judge
rather did, and on that list, of course there was Trump and as you already mentioned, there was Elliott Broidy who Michael Cohen actually negotiated a
$1.6 million payout to a Playboy model who he allegedly impregnated.
And then, there was Sean Hannity and that name, they didn't want to release when they handed over this list to the Federal judge, well in court, there
was a lot of drama because they still persisted that that name they didn't want to disclose it, and the judge could not find any reason why that name
should not be revealed, they even -- according to my colleagues who were in the courtroom, they even told the judge they would hand over a slip of
paper that was sealed so that she would know the names, but it would not become public.
Eventually, the judge made them say the name out loud and that's when they said Sean Hannity. So, yes, quite a bit of drama on here for a hearing on
those documents that were seized by the FBI.
QUEST: And when do we get a decision on the actual reason for the case which was whether or not they get to -- the President gets to review the
papers before the investigators?
GINGRAS: Right, that complicated all of this, right, Richard? Last night, the Trump attorneys filed a motion saying that the President himself in an
unprecedented move should be the first to look at those documents.
So, that is what the judge is also reviewing as part of the hearing. Now, this hearing started at 2 o'clock Eastern Time, so we are now well over two
hours into this hearing. We know that the judge canceled everything she has for the day, Federal court usually wraps up about five, so we would
assume, we will have some...
[16:15:16]
GINGRAS: ... answer within the next hour or so, but again, as you just pointed out, there's a lot to consider here, but both sides want to know an
answer especially the US Attorney's Office who wants to go forward with this investigation and important to point out, Richard, last week, the US
Attorney has admitted, they have been working on this investigation for several months, that they have a ton of information on Michael Cohen when
it relates to this investigation, at least that's what they told the judge.
So, we'll see what happens hopefully in the next hour.
QUEST: Right, Brynn, I'm going to let to get back. You've got -- get back into court and find out what's happening in the moment. If there's
anything you need to tell us, please come back. Thank you very much, indeed.
Now, as we continue, after the break, Samuel Burke will join me to breakdown the Netflix numbers which have just been released, as soon as
Samuel is with us, we will bring them to you.
Go to the markets and US stocks surged. Investors looked past Syria, all sectors were higher and I think -- look at what we've got, the Dow, the
S&P, the NASDAQ -- don the lighting, then you choose, green or red? Yes.
It is green, three big greens. New records that the markets are pushing themselves up quite nicely over the course of the day and the reason of
course for the earnings and the earnings are in focus with the share case.
Oh yes, the earnings share case, the spiral share case is back. Remember, this is how it works. The best barometer of a company's performance in its
quarterly reports is the movement of the share price in the following 24 hours.
So, we track the movement in the following 24 hours, so for example, the banks last week, they had good results, but they were down 3 percent and 5
percent. Delta Airlines had excellent results and the share price went up some 3 percent.
So, today, it is Bank of America. It bucked the trend. It had good results and most of the banks were down even though they had good earnings,
but this actually ended up the best part of half a percent, which is what Bank of America here.
And as we wait for more expectations, now we are still waiting for Netflix numbers. The only thing we know about Netflix is that the stock is up some
60 percent over the course of the last, since the beginning of the year, the last 12 months.
So, Netflix, I am going to park up here and tomorrow, we will put it on the share case, but the idea is, that over the course of the next two weeks,
you will get to see exactly how companies have performed in relation to their corporate earnings and their share price.
European stocks and shares closed lower on Monday, Syria weighed down on the markets. EP and Shell were down in London. WPP is off 6.5 percent...
[16:20:16]
QUEST: ... for reasons that you'll know but we will go into later. Now, Netflix shares are up 6 percent in after-hours trading. All right, we will
put Netflix here since it is 6 percent in after-hours trading. Samuel Burke is looking through the earnings. They've just come out. Have you
managed to clean that all important subscriber number?
SAMUEL BURKE, CORRESPONDENT, CNN: That's the only number that matters here, Richard and they've blown it up out of the waters, they've gained 6.2
million new users added worldwide with expectations of just 4.83 million, the stock up 6 percent earnings per share stronger than expected. Great if
you have Netflix stock, but what I always hear from the analyst is long- term, the price that you and I paid for Netflix has to go up. They cannot continue to have this type of content without making a go.
QUEST: It did.
BURKE: And it's going to keep -- and it's going to keep on going they tell me.
QUEST: I must be one of the last people in the world that actually got Netflix and within about a week of me getting it, the price went up, but,
they are spending what? Seven or eight billion on content?
BURKE: And we have to pay more for that content. They're stealing people like Shonda Rhimes away from ABC. She did "Grace Anatomy." Folks like
Ryan Murphy who has that big hit right now in the United States, "Versace" which has just come to here in the United Kingdom as well as Europe.
Richard, at the end of the day, that content, the money has to come from somewhere. It is going to be you and I. I don't think we spend enough
time talking about the regional competitors. Here in the UK for instance, we have Now TV. There in the United States, Richard, you have Hulu, a
different mix of content.
The advantage though that Netflix has over these regional players which are getting stronger and stronger is Netflix owns so much of the content, so
they get a show, they can put it out across the world. Hulu gets something, they just have the rights in the US. Now TV is really just in
the UK. That's the big advantage that Netflix has. They are a majority international user company at this point. More people using them outside
the United States and I just don't see a company on the horizon that has that type of power outside of their homebase.
QUEST: All right, Samuel Burke. There is Amazon of course, there is Amazon.
BURKE: That's correct and the advantage they have there is they have the ecosystem. You can get free shipping, movies, TV shows and music and one,
that's the big challenge from Amazon. Apple will be their next big challenger.
QUEST: Samuel Burke in London. Thank you for staying up late and doing the numbers first. Thank you.
Netflix best known shows are of course dramas like, "The House of Cards," and "The Crown" which paid and cost them a fortune. Now, as Claire
Sebastian explains to us. It is going off book.
(START VIDEO TAPE)
UNIDENTIFIED FEMALE: Two hours on the clock, $10,000.00 on the line.
CLARE SEBASTIAN, CORRESPONDENT, CNN: This is binge watching (inaudible)...
UNIDENTIFIED FEMALE: They are very gooey.
(CROSSTALK)
SEBASTIAN: (Inaudible) Netflix with bake-off series "Nailed It," it's part of the streaming services you pushed into reality programming. The segment
is still dominating via traditional TV and cable.
UNIDENTIFIED FEMALE: ... my sister, of course I want to know who she is hooking up with.
?RICH GREENFIELD, MANAGING DIRECTOR, MEDIA AND TECHNOLOGY ANALYST: It's a natural progression for Netflix to move into categories like reality now
that they have executed so well in dramas and comedies. They want to be HBO, AMC, Nickelodeon, ABC. They want to be everything. And so, if you
want to be everything, you need a tremendous array of content not just high-end dramas or comedies for families. You need reality TV programming.
UNIDENTIFIED MALE: Boys, are you ready?
SEBASTIAN: "Nailed It" joins the newly rebooted "Queer Eye" as the (inaudible) most popular reality show. Along with Amazon's daredevil
extravaganza of (inaudible), they are the most watched original reality program in stream right now according to one in the two groups.
Thanks to these hits, viewership in the US reality shows has risen over 100 percent, no streaming (inaudible) so far this year.
UNIDENTIFIED FEMALE: We're just getting started.
SEBASTIAN: While they don't yet have the popularity of scripted series like "House of Cards," Netflix unscripted is just getting started. They
just announced second season of five programs, all of which a Netflix original.
And it has new offerings like "Fastest Car," the (inaudible) Amazon.
GREENFIELD: They know that I watched a documentary. They know that I watched a reality TV show. All of that type of data is used and aggregated
to decide what they spend money on. So, I think if the data bearers, that they should do more reality, they will do more reality.
SEBASTIAN: Netflix is taking some heat for one of its new reality offerings.
UNIDENTIFIED MALE: Chris is enmeshed in a web of lies...
SEBASTIAN: The premise of "The Push" is to see that an ordinary person can be driven to commit murder. Some critics call it disturbing.
UNIDENTIFIED FEMALE: Let's see who nailed and who failed it.
SEBASTIAN: Still, it's Netflix who had nailed the unscripted is baking yet more value to hungry investors. Clare Sebastian, CNN Money, New York.
(END VIDEO TAPE)
QUEST: As we continue tonight, after the break, Starbucks is at the center of a media fast storm. They are taking urgent steps to diffuse a wave of
anger after an incident in Philadelphia. The interesting part about it of course is...
[16:25:16]
QUEST: ... the way in which the company has responded. We will be in Philly after the break.
Hello, I am Richard Quest. There is more "Quest Means Business" in just a moment. We are going to hear about Starbucks which goes into a fighting
mode after the two men are arrested in one of its coffee shops for doing absolutely nothing.
And shares of WPP, they sink as the Warren Buffett of advertising steps down. As we continue, you're watching CNN and here on this network, the
facts always come first.
There's a bombshell moment in the New York court as a judge forced attorneys for President Trump's lawyer, Michael Cohen to reveal that his
mystery client is Fox News' host, Sean Hannity.
The sources telling CNN, Hannity never had a former relationship or current relationship with Cohen. The only calls he get is input on legal issues
from time to time.
Thousands of Syrians rallied in Damascus on Monday in a show of support for President Bashar al-Assad and the military and to celebrate the re-taking
of Eastern Ghouta from rebels. They waved Syrian flags and forces fired celebratory gunshots and fireworks.
Syrian state media aired the rally live on television.
In London, the British Prime Minister Theresa May defended her decision to join the US and France in airstrikes against Syria without consulting
Parliament and she fired back at Russia's insistence, the west should have waited for international inspectors to examine the site of Syria's
suspected chemical weapons attack.
She said that might have given Syria a chance to do it again.
Thousands of immigrants from the former British colonies are facing deportation as they struggle to prove their citizenship. The so-called
Windrush Generation has been in the UK since they were children invited by Britain to boost their economy after the Second World War.
Today, the UK have Secretary Amber Rudd apologize for the inhuman and cruel way that they have been treated.
Thousands in India are protesting against shocking rapes including the rape and murder of an eight-year-old girl. The demonstrators claim their
government's silence is protecting rapists and murderers. The anger is growing over the country's treatment of women and minority groups.
Two black men who were arrested at a branch of Starbucks in Philadelphia have agreed to meet with the Starbucks Chief Executive. The protesters,
they were accusing the chain of racism after the men were arrested for trespassing while waiting for a third person to join them at the store.
The very apologetic CEO Kevin Johnson appeared on morning television in America.
(BEGIN VIDEO CLIP)
KEVIN JOHNSON, CHIEF EXECUTIVE OFFICER, STARBUCKS: The circumstances surrounding the incident and the outcome in our store on Thursday were
reprehensible. They were wrong. And for that I personally apologize to the two gentlemen that visited our store.
Now certainly, you know, it's my responsibility to understand what happened and what led to that and ensure that we fix it. There are some scenarios
where the police should be called if there's threats or disturbance, those may be appropriate times.
In this case, none of that occurred. It was completely inappropriate to engage the police.
(END VIDEO CLIP)
QUEST: Johnson says Starbucks staff will get additional training on unconscious bias. Cnn's Polo Sandoval is at the coffee shop where it
happened. And it's difficult to know what they are now protesting about, bearing in mind the president, the CEO of the company has said, we got it
wrong, it was reprehensible, we're apologizing, we're meeting the men and we're going to have unconscious bias trading.
What more do they want?
POLO SANDOVAL, CNN CORRESPONDENT: And yet, Richard, we saw here from some of these groups including Black Lives Matter who are still protesting.
This picture is kind of rare, we haven't seen this at a Starbucks at least in a while.
We just witnessed a few moments ago when this large group of demonstrators essentially went inside the Starbucks where it all happened. As a protest,
what they want is simply more regulation for law enforcement.
But they said that this apology is simply not enough. They still feel that law enforcement could have perhaps send more to try to de-escalate the
situation. Where one demonstrator put it just now, Richard, what they would have liked to have seen offer these two gentlemen to simply be
allowed to leave the premises without being arrested.
Of course, we also hearing from officials who are saying they were given opportunity to do that, they were asked repeatedly to leave. Law
enforcement there during the incident was here for about 15 minutes before the cops finally went out.
Of course, we now know how it all ended, charges were filed against these two men after Starbucks decided not to do it. While Kevin Johnson,
Richard, as you mentioned is certainly in some major damage control mode.
QUEST: Well, you're saying he's in damage control, but you know, I mean, he's done it by the text book, you know, in that sense. I mean, as I -- as
I followed it throughout the course of the day, it's very different say for example to the Mark Zuckerberg -- we're looking into it, they all -- the
value, days before they come out to talk about it.
Doesn't give any major press interviews, doesn't make a full scale apology, except for some days. Starbucks has literally done it by the book.
SANDOVAL: Most will describe these efforts as successful. Yes, he has gone online, he has posted on social media, he has repeated apology, he
traveled here to Philadelphia to actually meet face-to-face with these two gentlemen and offered a personal apology.
And we can tell you that these two men according to several sources accepted this apology. So yes, he certainly has gone an extra step to make
sure that this doesn't happen again, and he's tried to ensure that this won't happen again by trying to reform some of their management up --
QUEST: Right --
SANDOVAL: And down the board. But when you hear from a smaller group, they still say that that's not enough.
QUEST: OK, so now, let's look at the police side of it. The police are called and the police obviously have to turn up, that's their job, and they
ask the men to leave and the men won't leave.
What options do the police have?
SANDOVAL: That's a very important question, Richard, we have to look at what's in place here according to officials. Commissioner Richard Ross
here on scene basically described that they were called after management said that there were two unwanted individuals on the premises.
Two unpaying customers that were asked to leave. Law enforcement gets called in, asked to investigate, this is a case of trespassing. They start
having conversations with these two individuals, it never really escalates. But after repeated requests --
QUEST: Yes --
SANDOVAL: For these men to leave this property, they refused and that's when they had to forcibly remove them. So as we heard from the
Commissioner here, Richard, their own officers did not want to make the arrest --
QUEST: Right --
SANDOVAL: But in this case, their hands were tied, they had to make this - - make that arrest. But these community leaders, especially some of the advocacy groups here in the community say, no, those handcuffs should have
still never have gone on. So we're still certainly --
QUEST: Polo --
SANDOVAL: Have controversial issue here in Philadelphia.
QUEST: Good to have you, thank you. I don't know, enough here. So Martin Sorrell known as Mr. WPP, arguably without him, well, now the company's
shares are plunging, they're down 6.5 percent in London after he retired -- whether we call it a retirement or a resignation, it doesn't really matter.
[16:35:00] The result was he was ousted. In a statement, Sir Martin said the probe to allegations of personal misconduct was putting too much
pressure on the business. And what a business it is. Thirty three years, three decades it took Sir Martin to build a strolling art network
comprising more than 200,000 employees and 400 companies.
He made his own fortune and he was made a Knight. He began in 1985, the company was called Wire and Plastic Products. It was a reverse takeover.
They bought it, they were looking for a listed company to build an art empire.
So they bought this wild plastics and they called it WPP. Then over the next few decades, accusations fueled growth, buying Ogilvy nearly
bankrupted them at one particular point.
In the mid '90s, reorganization and the digital age, and new services like Kantar, the firms are vulnerable and beats -- WPP breaks up. And in 2006
global expansion took over, always marketing in China, the world's biggest ad agency by 2008.
In 2017 last year, the finances took a big hit. So many good people inclined budget cuts and the growth of e-commerce. The breadth and the
length of Sorrell's tenure has basically given him a unique expertise as he shared on QUEST MEANS BUSINESS.
(BEGIN VIDEO CLIP)
MARTIN SORRELL, FOUNDER, WPP PLC: And we're not an agency where a group, a parent company --
QUEST: You're a conglomerate, right.
SORRELL: No, that's even more offensive, not a big one, a focus group of advertising and marketing services. Come mister.
Its low cost of capital is leading to some distortions and tremendous pressure, distortions are not on packaged goods companies in particular.
So that's about 30 percent of our revenues, one-third of our revenues.
And those clients are on the receiving end of a lot of short-term pressure to improve performance and cut costs.
QUEST: The populism doesn't affect you, because no, your shareholders aren't going to rebel because you've come to Davos --
SORRELL: No, as long as we perform, they probably don't rebel.
(END VIDEO CLIP)
QUEST: But they rebelled certainly over those accusations. Sorrell's departure leaves a gabbing hole as the organization thought even with a new
two COOs and the chairman becoming executive chairman.
The organization itself may be in danger. Joining me, Brian Wieser; senior analyst at Pivotal. Let's start to get it out the way. Do you know what
he's alleged to have done?
BRIAN WIESER, SENIOR ANALYST, PIVOTAL: No, I don't. I believe that very few people know what the actual underlining allegation is or was, whatever
it was.
QUEST: Allegations of misconduct, but are not materially significant in terms of amount, and that's all we know. Do you follow -- I mean, do you
believe as the leader of the British liberal democrats have been -- well, believes, but we should know that shareholders have a right to know, it's a
public company.
The CEO has gone in somewhat dubious circumstances with a retirement, not a resignation, you know, he's been allowed to walk out with his share options
intact. Do you think we have a right to know?
WIESER: I think that's an interesting question, and I -- you know, looking at mostly U.S.-centered companies and you know, WPP as well as producers,
the corporate governance centers as I see from WPP are heads and shoulders about everyone else that they look at.
And so if you look at what the -- you know, best in class principles might be, should that happen? Maybe. They've already gone well above and beyond,
I think what most companies would do, certainly, you wouldn't see any American company go any further in this.
I don't think any investor is realistically expecting that. I think the fact that they resolved this quickly. If the matter was really one of --
finding a means to persuade Sir Martin to move on and maybe it was --
QUEST: Right --
WIESER: An appearance of a problem. You know, the board did what it wanted to do because the board thought the shareholders interest was the
right thing to do.
QUEST: So no, we look at WPP, this vast -- you heard Sir Martin there, bristling it, being called a conglomerate, but it is. It's an advertising
behemoth, the largest in the world. Can it survive as a group without the force?
Because that's what he is. The force of this Sir Martin.
WIESER: Yes, you know, and the agency holding company in general is only powerful at the center when you can persuade the individual business news
to support the center.
Agencies are very different than typical companies with a stricter hierarchies. And yes, you do need someone at the center who can persuade
members of the federation to --
QUEST: Right --
WIESER: You know, and to submit. Can someone else do it? I think it's possible, it will be hard, but possible.
QUEST: Right, but where do we -- OK, so just finally, briefly, to the future. Where do we see the split? Do we start to see it from investors
that try to break out -- assuming the share price recovers somewhat.
Do investors start to quantify the breakup value versus the current value?
[16:40:00] WIESER: Some shareholders are already doing that. I think that there's a lot of hidden assets as we say. Minority stakes at the company
has, and many of those could be liquidated without much problem.
I think there may be some other assets that get pruned, but when you think about the core business, as long as the board believes the WPP should be a
growing concern -- and I don't see any reason why you shouldn't.
Let's keep in mind, the company only underperform the industry by the 1 percent --
QUEST: Right --
WIESER: We got at growth last year. This was not a massive underperformance versus the industry.
QUEST: Thank you for the context, good to see you sir, thank you. We'll talk more about it as it plays out. Thank you.
WIESER: Thanks very much.
QUEST: Now, hitting books store shelves in a few hours from now, the most talked about book of the year, more than "Fire and Fury", James Comey
already gave us some jaw-dropping insight into Donald Trump's White House, drawing a barrel to the views from the Oval Office as it is.
(COMMERCIAL BREAK)
QUEST: The FBI director sacked by Donald Trump is trading blows with the U.S. president. Now, you're familiar with the interview, the first
interview since he was fired almost a year ago.
Now, James Comey says Mr. Trump is morally unfit to be president.
(BEGIN VIDEO CLIP)
JAMES COMEY, FORMER FBI DIRECTOR: Most leaders -- all leaders that I have known have some sort of external framework. They make the hardest
decisions by touching a religious tradition or philosophy or logic or history or tradition.
I never saw any of that with Donald Trump. The only reference point is internal. What will bring me the affirmation that I so badly crave, that
collection of attributes makes a person morally unfit to be a leader, and no less the president of the United States.
(END VIDEO CLIP)
QUEST: His part, the president has called Comey the worst FBI chief in history. Among an array of less dignified terms including a slimeball --
yes, they got to that level. The escalation in rhetoric comes as James Comey promotes his new book, "A Higher Loyalty" is released tomorrow.
In it, he claims the president doesn't understand the FBI's role, he is unethical in his leadership and he's transactional and ego-driven, and
compares Trump to a mob boss who lies constantly and demands total loyalty.
The book is guaranteed to be a bestseller, Macmillan is printing -- agents are printing thousand copies to meet expected demand. Brian, have you read
yours yet?
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: I have not read it yet, but I have watched all these interviews that he is doing, he's going to be on
even more shows tomorrow when the book releases.
Now, I do think it's extraordinary. So I want have it as everybody else and bought a book though fast, my own Amazon, well, I guess that's the new
fast --
QUEST: Is this -- oh, Brian --
(LAUGHTER)
STELTER: So I'll read it tomorrow like everybody else.
QUEST: Right. The way -- this is going to be a bestseller, it would -- I think probably, it has more credence than the Michael --
STELTER: Yes, the Wolff, yes --
QUEST: Because Comey was a player, Wolff was a voir.
[16:45:00] STELTER: Yes, this is an insider, that's why I think this Comey book matters. This is an insider describing what a lot of outsiders have
been saying. Comey is saying, this presidency is a forest fire.
And you know, we've heard a lot of pundits, talking heads, commentators say that. This is a man who was in the room with Trump who observed it first-
hand. Others really telling on Twitter the other day as this, you know, media fire storm against Comey.
Comey said, look, I worked for three presidents. Two of them taught me lessons about ethical leadership, the other is the counter point, meaning
President Trump, and I hope people read the whole book.
That's what he's saying, I hope people read the whole book. Now, we'll see about that as he goes on this TV tour. But given the number of --
QUEST: Right --
STELTER: Topics that are being printed, it is already guaranteed to be a bestseller.
QUEST: Brian, when you can't find your coffee, it's in my office, we share --
STELTER: That's enough --
QUEST: We're next door to each other --
STELTER: That's right.
QUEST: So do feel at home. Thank you --
STELTER: Thank you.
QUEST: To be (INAUDIBLE) high praise for Beyonce's performance at Coachella. She becomes the first black woman to headline the festival.
After the break.
(COMMERCIAL BREAK)
QUEST: Now, that is an entrance. Beyonce the first black woman to headline the Coachella Music Festival in a performance a lot of people are
still talking about today. Those of you who couldn't make it to Coachella this year, either because you couldn't get there or it's simply too
expensive.
The tickets is on -- best part of a 1,000 and above. A sample of the reviews, Champ(ph) said -- the rapper said, "I just saw the greatest show
ever to happen."
Adele(ph) watching from home joined in the fun, dancing along with a series of Instagram posts and using the hashtag Beychella. Jem Aswad is the
senior music editor for Variety and joins me now and is going to bring us back to earth with a sober assessment of the performance. What do you
think?
JEM ASWAD, SENIOR MUSIC EDITOR, VARIETY: It was one of the greatest things I've ever seen, how is that for sober. No, it was absolutely astonishing -
-
QUEST: Why?
ASWAD: It was astonishing. It was precision-timed, everything was so carefully rehearsed, there were 150 people there. And visual -- all of her
songs are rearranged for a marching band, essentially for the most part.
And there were all this little visual and sonic references in them, most of them having to do with black history.
QUEST: Right, let's talk about it, because that's what people are saying overnight. The marching bands, the majorette, the drum line (INAUDIBLE),
it's all stemmed from black colleges and universities, even the collegiate outfits that they all wear all relating back to black history.
ASWAD: Absolutely, and of course, relating that to her. Like all of the jerseys had a beta, delta and cappa --
QUEST: Interesting.
ASWAD: Yes, her initials ended, delta is a reference to number four which is her favorite number. But more significantly, there was obviously a
collegiate team which was driving to the announcement this morning that she gave $100,000 to -- $25,000 each to four separate black colleges.
[16:50:00] So there was an education theme to the performance as well. But she came on dressed as Nefertiti, you know, a legendary black deity. There
were Malcolm X sound bites in the performance, there was a reference to a Nina Simone song in there.
And yes, you have questions --
QUEST: And in an era where many artists think it is just sufficient to turn up, and maybe if you're lucky, they'll do the full set. A long call
would be I think -- this is completely different. This is -- this is performance, this is responsibility of the artist who actually give the
people what they've come to see.
ASWAD: Oh, and so far beyond what they came to see. I mean, I saw her last tour and it was mind boggling itself. But it was not a 150 people on
stage and a marching band and a majorette and a baton twirler --
QUEST: Why did she do it?
ASWAD: Because she can. To show she can and to show there's a reason she's there, right? Because you know, after the Nefertiti entrance, she
appears on stage and you know, everything goes silent, and this big dramatic moment.
She stands there for a second, and then she does this insane dance that most human beings can't do. As if to say, this is why I'm up here. And
that's why --
QUEST: Best in the world?
ASWAD: The best performer, certainly the best concert I've ever seen and I wasn't even there. I watched it on a live stream. Yes, she is the act to
beat for the foreseeable future.
QUEST: Go next time, go --
ASWAD: I will do.
QUEST: We were just talking about that, thank you. Colgate-Palmolive shares are up, now one of the most successful Olympians will be Colgate's
global ambassador. So Michael Phelps is trying to get everyone to save water, which is somewhat extraordinary when you think about how much he's
swam.
Maggie Lake asked him why?
(BEGIN VIDEO CLIP)
MICHAEL PHELPS, RETIRED COMPETITIVE SWIMMER: For me, I spent my whole life around water. I mean, I've lived in water for over 20 years, and for me
it's just been such a big part of my life.
And now that I am retired and out of the water, I get to really kind of talk about the things that are passionate for me and my family. You know,
for me now being a dad of two and teaching them some lessons throughout everything.
You know, I think Bumer(ph) is to the point now where he brushes his teeth by himself, and we're teaching him to turn the water on and off, especially
off when he's done.
We've been very fortunate, very lucky to always have clean water, to always have drinking water. And there are so many places all over the world who
don't have that. And for us, to be able to just turn off and have something so easy that we can all join in together to help make a huge
difference in, for me it's --
(END VIDEO CLIP)
QUEST: Let's go straight away to New York, to the court house and Stormy Daniels is live.
STORMY DANIELS, ADULT FILM ACTRESS: Especially women, and even more women like me matter, that ends now. My attorney and I are committed to making
sure that everyone finds out the truth and the facts of what happened.
And I give my word that we will not rest until that happens. Thank you very much.
QUEST: All right, while we wait for -- while we wait, let's just see this go to -- I can tell you what you've been looking at. This is the lawyer
that --
MICHAEL AVENATTI, LAWYER: All right, I will now accept questions about today's hearing and other topics relating to my client.
UNIDENTIFIED FEMALE: (INAUDIBLE) --
AVENATTI: Yes, I think Judge Wood was very reasoned and measured in her approach relating to the documents. Our number one concern was that the
documents, the integrity of the documents be maintained during the process.
It is clear from the order by Judge Wood, that that's exactly what's going to happen. That will ensure that no documents are spoliated, destroyed or
otherwise tampered with. Which is our chief concern in connection with this process.
UNIDENTIFIED MALE: Does she not -- Trump too?
AVENATTI: I'm not going to answer that, that's a ridiculous question. Next question.
Well, I think she's ultimately going to determine whether special master is appropriate or now -- or not. One thing I will say is this. I said last
Friday and this weekend that Michael Cohen was radioactive, and that anybody that was associated with him in the last 20 to 30 years should be
very concern.
What we witnessed earlier in the hearing with the disclosure relating to Sean Hannity proved my point exactly. He is radioactive. Anyone that had
any contact with this man in the last 20 years should be very concerned about what secrets of theirs are within these documents. Next question.
[16:55:00] I'm sorry?
UNIDENTIFIED MALE: How then do you get to oppose --
UNIDENTIFIED MALE: Lieutenant --
UNIDENTIFIED MALE: To President Trump?
UNIDENTIFIED MALE: Thank you.
AVENATTI: Depending on what is contained within those documents, I think there is significant danger to the president, the president trusted, the
president trusted Mr. Cohen as his fixer for years.
He trusted him with his inner most secrets and I think that the chickens are about to come home to roost. Next question.
UNIDENTIFIED MALE: No witnesses, is President Trump wants to (INAUDIBLE) - -
AVENATTI: I wouldn't even begin to advise the president at this juncture, I think the ship has sailed.
UNIDENTIFIED FEMALE: (INAUDIBLE) --
AVENATTI: No, there was absolutely a reason because we wanted to ensure that the integrity of the documents was maintained and we wanted to lend
her voice towards making sure that the American people learn the truth, the whole truth and nothing but the truth about what happened to her and to
others in her position over the last 10 to 15 years.
We haven't made a determination yet as to whether she will attend each hearing in connection with this process.
Well, I think it speaks volumes and I think Sean Hannity got thrown under the bus by Michael Cohen's counsel today who was clearly more concerned
about protecting the president than protecting Sean Hannity. But we're going to let them sort that out.
Is it enough?
UNIDENTIFIED MALE: Yes, are you concerned for your safety right now as we speak today?
AVENATTI: I will be concerned with my safety for the duration of the case as my client has been. But we've decided the risks is more than worth it,
and we're going to see this to conclusion whether it's next week, next month, next year.
No matter how long it takes, we're not going away. Thank you.
QUEST: All right, so that came unexpectedly, let me tell you what it is you've been watching. You can see with the -- it was the lawyer for Stormy
Daniels; the adult entertainer who claims that she had an affair with Donald Trump.
And it was the lawyer Michael Cohen who allegedly gave her the money, $130,000 to pay her off. She was in court today, remember Michael Cohen,
Trump's lawyer, his offices were raided, those offices were raided and documents were taken and the president is trying to get those documents, so
he gets to see them first before anybody else.
But as you just heard the lawyer say and Stormy Daniels herself say, as you heard them say, they are afraid that if the president or the president's
people get hold of these documents first, they will be destroyed.
You're getting an idea of just how complicated this whole matter has become, and just how unpleasant the whole matter is turning into. As we
look at this -- just as before we finish, take a look at the markets, to remind you exactly what has been happening over the course of what's been a
busy day.
We'll also look at the European bosses as well. The Dow Jones Industrial is up 212 at 24,573, the European markets were lower, they had seen the
best of what was happening in New York, but they still managed to hold their own overall.
And that is QUEST MEANS BUSINESS, I am Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable, extraordinary day.
(COMMERCIAL BREAK)
END
