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Quest Means Business
Stock Market Streak Comes To A Roaring Halt, Boeing And Airbus, Both Claimed Victory In Their Battle Over Subsidies, Iran's Central Bank Is Hit With New Us Sanctions, North Korea Is Warning The United States Over Its Forthcoming Summit Between Donald Trump And Kim Jong-Un, The Question Of Customs Union Or Not; Palestinians Gather to Bury Protesters Killed by Israeli Troops; North Korea Warns U.S. Over Trump-Kim Summit; Trump's CIA Pick Wins Support in Nomination Fight; Sichuan Airlines Pilot Says Co-Pilot Got Sucked Halfway Out of Cockpit Window; WTO Rules EU Unfairly Propped Up Airbus; U.S. and UAE Resolve Gulf Carriers Dispute; Tom Wolfe, Author Who Satirized Wall Street Dies; TMZ: Meghan Markle's Father Changes His Mind, Wants to Attend Daughter's Wedding. Aired 4-5p ET
Aired May 15, 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: Closing bell ringing on Wall Street. Dow Jones Industrials coming off their leads, a very full day, all
the New York market are sharply low. We will show you the numbers in just a moment.
At the top of the hour, one, two -- that's right, Tom Farley , you tell them how many to count. Three gravels, trading is over. It is Tuesday,
it's May 15.
Tonight, the stock market streak, it comes to a roaring halt. We'll show you how the Dow drops and bond fears are back.
Boeing and Airbus, both claimed victory in their battle over subsidies, who really won in the two plane makers.
And turning the skew on Tehran, Iran's Central Bank is hit with new US sanctions. I'm Richard Quest tonight, live in London where of course, I
mean business.
Good evening, we're tracking breaking news from both North Korea and Gaza. We will update both those stories for you during the course of this hour,
especially the announcement that the North Koreans may be breaking off talks with the South and what that means for the US. We will get to that
in a moment, but we do need to start with the markets, which have just closed sharp in -- with the numbers down three quarters of a percent, off
192, not the lowest of the Dow, but it does mean that an eighth-day winning streak has come to a roaring and a screeching halt.
The warning signs are flashing. The stocks opened solidly in the red and did not improve. Now, we're off the lows of the day as you can see just
right at the end. But you know, the day was extremely choppy on the down side.
Put it into perspective though, today is 192 point loss, while we are at over a thousand points over the previous eight sessions. There are three
main reasons why the market fell sharply today. One, bond deals hit -- the 10-year bond is the highest since 2007. It's something like 3.07 percent,
so the yield has gone up.
The trade worries -- now, last night, trade worries are reemerging. Last night, we talked about how they were more relaxed about trade and the
market went up. Tonight, it's exactly the opposite story. The trade worries have reemerged and finally the US CEOs are lobbying Trump
administration.
Also, you have Home Depot earnings, and a possible warning sign for housing despite solid retail sales numbers.
Clare Sebastian is in New York. The market, Clare was simply unhappy today.
CLARE SEBASTIAN, CORRESPONDENT, CNN: Yes, Richard, as you say, the snaps and eighth session winning streak, and now, really, just as you laid it out
a number of factors, bonds bears well and truly back, they climbed over that 3.0, but critical pressures and they kept growing.
This is a signal that as the economy seems to be on a shore of putting -- we saw that with the retail sales meeting expectations today, a gain for
the second straight month. This means that investors are really interested in a fixed returns you get from bonds, and are more interested in riskier
investments, but nevertheless, stocks kept falling and that was partly to do with those bond deals that was partly to do with concerns around trade.
We had pronouncements like from the US Ambassador to China as we are about see talks between the two sides resume this week. They are still very far
apart, and of course, broader macro issues around inflation.
I talked about this retail thing. We've also got rising energy prices and as that one specific company with Home Depot, Richard, and you saw the
bottom fall out. This is still a very sensitive market, still very sensitive to headlines that are coming through.
QUEST: Okay, so putting this together, you've got the retail sales number which was good. You've got growth that's good. Inflation is ticking up.
There's going to be higher interest rates and the bond is higher as well.
With a thousand points on the plus side over the last seven sessions, I mean -- it's significant that the market hasn't held its gain, but it has
to be put into perspective.
It's significant that the market hasn't held its gains, but it has to be put into perspective.
SEBASTIAN: Yes. And the perspective as you say, a thousand points over the last eight sessions, but we're also a shade lower, Richard just a few
points on the year now, based on today's losses, on the Dow, but look, it's not just you know, things like the bond yield. Things like retail sales
that are causing inflationary concerns.
Don't forget tariffs, also have inflationary effect on the economy. We're talking about the retailers. They are one of the most vocal groups that
are lobbying the US government at the moment. The USTR against those tariffs. The National Retail Federation has been very vocal from the
beginning in number of press releases describing this as a tax on the American economy.
But this week, Richard, they went one step further. I want to play you an ad that ran for the first time yesterday on "Fox and Friends." Take a
look.
(START VIDEO CLIP)
UNIDENTIFIED MALE: Class, what are tariffs? Anyone, anyone know?
UNIDENTIFIED FEMALE: I am not sure, but my best friend's sister's boyfriend's brother's girl friend heard from an economist who said that
tariffs will raise prices...
[16:05:16]
UNIDENTIFIED FEMALE: ... on everything from clothes to cars. I guess, it's pretty serious.
UNIDENTIFIED MALE: Thank you, Simone. That's right. Tariffs raise tax on hardworking Americans. It's not complicated. Tariffs are B-A-D economics.
Bad economics. Bad.
(END VIDEO CLIP)
SEBASTIAN: Well, that pretty much makes it clear, Richard, tariffs are bad economics that of course, recreating the famous scene from "Ferris
Bueller's Day Off." And I think here, we have a picture here of the complex relationship between corporate America and the Trump
administration. They agree broadly that there needs to be a more level playing field in terms of trade. But they disagree with the remedy.
QUEST: Let's talk about this more as we continue. Claire Sebastian, thank you, we'll talk about the whole question of tariffs, trade and China.
Executives of some of America's biggest companies and trade organizations are in Washington delivering that message to President Trump. Tariffs on
trade are a bad idea.
American Soybean Association, the organization is amongst the biggest, it's Chief Executive is Ryan Findlay, and he joins me now. Mr. Findlay, we know
that the potential for tariffing more soybeans is to some extent almost a nuclear option for the Chinese in this trade dispute with the US. How
concerned are you?
RYAN FINDLAY, CHIEF EXECUTIVE, AMERICAN SOYBEAN ASSOCIATION: Well, it's a major concern. It's a 25 percent tariff on our biggest export partner and
when you have almost one in every three rows of soybeans that we grow in the United States are exported to China.
That's a lot of soybeans, and when that partner says, "Hey, we're thinking of putting a 25 percent tariff," that's going to have a dramatic impact and
it already has had an impact on the trade that we have with China.
QUEST: What can you do about this because I mean, the complex relationship with China is best exemplified by the extraordinary decisions over ZTE over
the last month. The Commerce Department bans them and forbid sales, now the President says, that's okay, and we're going to reappraise it because
President Xi got in touch.
There's very little you can do in this scenario.
FINDLAY: Well, I think that it's very complex and ZTE is just one factor in a whole bunch of other factors and we have to go back to the original
premise, why did all of this start? And that was in the 301 report, there is concerns from the United States and over intellectual property rights
and the US says, "Hey, we need to address that," and so, China comes back and you're absolutely right, they target soybeans and so our approach has
been on the Hill, on Capitol Hill with every aspect in the administration both with the US Department of Agriculture and with people inside the
administration to say, "Hey, we're not going to disagree with the findings of the 301, we just think that there are other options that wouldn't have a
negative response to soybeans.
QUEST: But you can -- hang on, you can understand though, once you get to the situation of tariffing and if you look at the amount that we're talking
about, I mean, the US is promising to tariff virtually the Chinese goods more than the US exports to China in terms of the quid pro quo, the tit for
tat.
So, we're already at an extremely dangerous situation, but clearly, the Chinese are going to hit where it hurts, and with respect that's you.
FINDLAY: It is us unfortunately, and we are hoping that negotiations this week, they can start to find a solution and go down a different path, I
mean, that's what we -- we are welcome -- we welcome the opportunity to be a part of the solution and there's upward potential for us to export more
soybeans and more value-added agricultural products to China.
So, there's some options out there that we believe we can play a role in, but there's no question, this will hurt farmers on the tractor seat big
time.
QUEST: So, finally, how much are you going to have to remind the President or the administration that in many cases, it was your members that's the
reason why he is there. At the end of the day, it's farmers in the Midwest, it's the soybean growers of America that for a large reason for
the far right victory or the right victory of Donald Trump.
FINDLAY: I think the administration completely recognizes that and our farmers right now are going through planting. They are planting soybeans.
They are planting corn. They are going through that process and in some parts of the country, it is not easy. When you can't get into the field
because of rain, you have all of the economic factors starting you in the face, and so, they have to do everything they can to tell the
administration, "We put you into office, you need to help us out in our time of need and that's right now."
QUEST: Good to see you sir, Mr. Findlay. Thank you. Please come back in the future. We promise you time and we promise that your arguments and
your points of view will get across. Thank you, sir.
FINDLAY: Thank you.
[16:10:16]
QUEST: Now, it's the breaking news this evening, North Korea is warning the United States over its forthcoming summit between Donald Trump and Kim
Jong-un, Pyongyang says it has suspended talks with South Korea after it held military drills with the US. The North says, Washington should care
to consider the fate of the Trump-Kim summit.
Paula Hancocks is in Seoul. Paula, they knew when they made the summit that these exercises were taking place. They haven't come out of the blue.
I heard you talking to Hala a moment or two ago, so why are they suddenly being bellicose and argy-bargy about them?
PAULA HANCOCKS, CORRESPONDENT, CNN: It's a good question, Richard. We don't know the answer to that. This high-level brand of talks that was
supposed to happen in just a few hours, it's 5:00 a.m. on Wednesday morning here in Korea, they were proposed by the North Koreans on Tuesday, so it's
less than 24 hours later, the North Koreans have now decided that they are going to suspend those discussions because they see these military drills
as a military provocation, according to state-run media KCNA.
Now, the interesting thing is, a couple of months of ago when a five-Korean delegation went to Pyongyang and spoke to Kim Jong-un, the North Korean
leader, they reported that he had said he understands the need for these military drills, he didn't complain about the previous military drills,
Foal Eagle, which are the main spring drills.
So, certainly, this Air Force drill that's going on right now between the US and South Korea, North Korea would have been warned about it. They
would have known about it and one interesting line we're hearing from KCNA is that they are saying, "We will keenly watch the future attitudes of the
US and South Korea."
So, potentially, is this the North Koreans putting the US and South Korea on notice, telling them what sort of concessions they are going to want in
the future because they believe this is against the Panmunjom Agreement between the North and South Korean leaders where they agreed to no
hostilities.
QUEST: So now, Paula, how much of this is the scales falling from our eyes, having seen the summit meeting on the border, having had President --
having had the release of the three detained US citizens, having had the summit on the horizon, everybody sort of thought there was a kumbaya moment
and everybody was going to sit around the camp fire and hold hands.
The reality, the real politic is now coming home to roust perhaps.
HANCOCKS: It's a good point. The fact is, North Korea does not like these military drills. It has never liked these military drills. Every single
year it is infuriated by these military drills.
One word of caution I should give as well is that we do sometimes hear this from KCNA, from the state-run media, at the same time, it is seeing
relationships between North Korea and South Korea, between the US and North Korea flourish even though to recent months, we have still seen some
damning reports on state-run media, at the same time as these relationships appear to be warming and tensions appear to be soaring.
But the fact that they have mentioned the summit specifically is interesting. It is effectively putting the US on notice. So, we are
expecting to hear some kind of reaction from the White House and it will take South Koreans by surprise.
I mean, this high-level round of talks was going to have people like the Vice Ministers for Railways, they were going to be talking about economic
integration between North and South Korea. They were getting into the nitty-gritty of how these relations could improve.
So, the fact that the pulled back just so suddenly, within less than 24 hours will come as a surprise, I think.
QUEST: Paula, thank you. It's early morning. Thank you for getting up and for staying up late or getting up early and the truth is, it's probably
a little bit of both. Paula Hancocks who is in Seoul.
The United States is tightening the economic communities in Tehran with new sanctions, to make it even harder for Iran to do business with the West.
Some of those being targeted by Washington is the head of the Iranian Central Bank. He is being designated a terrorist who allegedly are
funneling money to Hezbollah. At the same time, Iranian foreign minister, Javad Zarif is in Brussels, the hope is he's there to keep the nuclear deal
alive.
Speaking ahead of that summit, the German Chancellor told trade unions that Europe wants to protect the deal.
(START VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY: (Through an interpreter). We have experienced the setback in German-US and European-US relations because we
crave for -- Germany and France are of the opinion that the deal against Iran's nuclear armament is a deal that while for only, it has weaknesses,
is a deal that we should stand behind.
(END VIDEO CLIP)
QUEST: Fred Pleitgen is live in Tehran. Fred, look, the Iranians have given the Europeans basically a 60-day deadline to decide if it is going to
maintain the deal. However, Fred...
[00:05:16]
QUEST: ... on this program, we deal in reality, and the reality is, if those US sanctions are in place, then the European companies or the rest of
the world that also does business with the US cannot do business in Iran, ergo, the deal may survive but Europe's companies will be hit hard.
FRED PLEITGEN, CORRESPONDENT, CNN: Well, they would be hit hard unless the Europeans find some sort of diplomatic way to deal with the United States
on this, but that seems like something you're absolutely right, Richard. That would be extremely difficult.
You know, it's interesting because there was an extremely important interview on CNNMoney that we had -- that John Defterios actually had with
the head of Siemens, of course, a big international company that does business in the US, also does some business, or tries to do some business
in Iran as well.
And they said flat out, they don't see how in the future they are going to be able to do business in Iran simply because they don't want to get the
wrath of the Trump administration and generally, of other administrations in the future in America as well.
Nevertheless, you have the Europeans and the Iranians, they are in Brussels, trying to sort something out, and it was interesting today that
Javad Zarif was there in Europe. He got all of these assurances from his European counterparts, but he said, "Look, what they need is specific
action. Apparently, the Europeans are trying to work on some sort of mechanism or it becomes sort of agreement to try and make that happen.
But you're absolutely right, it's very difficult to see how that could be possible with the economic power that the United States has. Of course,
for the Europeans, it's an extremely difficult situation. It's no secret, Richard, they weren't happy about President Trump's decision to pull out of
the nuclear deal, but of course, the US remains an important trading partner and ally, Richard.
QUEST: Fred, thank you. You have set the ground nicely for my discussion with Allie Renison, the head of Europe on trade policy at the Institute of
Directors the IoD. Good to see you.
ALLIE RENISON, HEAD OF EUROPE ON TRADE POLICY AT THE INSTITUTE OF DIRECTORS: Hi.
QUEST: Thank you for being here. Let us understand exactly the worry, the principal concern of British and European businesses is what?
Effectively that we are going to go back to a situation whereby not only do any companies who have any exposure to the US dollar have to worry about
their investments, but in fact, and I think the US Ambassador to Germany really put it very succinctly and very worryingly, all companies who have
any business should divert completely from Iran.
QUEST: Now, explain where it is in the sanctions rules? Because it doesn't specifically say other countries cannot and other companies cannot.
They have done it in a very clever way, haven't they?
RENISON: Well, it depends to some extent also. We have seen some sanctions come out today, primary sanctions, but the big questions about
the secondary sanctions for European companies.
QUEST: Explain how those secondary sanctions did? What is it that has happened? Because again, the sanctions document does not say, "Oh, and by
the way European companies can't do business either." They've done it through the money, through the dollar. Explain.
RENISON; Yes, so effectively, if you have any financial transactions that are being processed coming from Iran and you have any exposure to the
US dollar, a lot of multinational companies do all the...
(CROSSTALK)
QUEST: Even if those two transactions are not one and the same.
RENISON: Even if they are not one and the same. If there is any way that you can prove that there is a link there, and the big question here is the
enforcement of the Department of Justice because you can have the sanctions, that's one question, but when it comes to how strongly the DOJ
enforces that, even accidental breach of compliance to the sanctions, that is a huge worry for companies.
QUEST: So, if I am a company that does business with Iran, and I also do business with the United States in the dollar, but the two are not
connected, am I still liable or do we not know?
RENISON: We don't know completely. So, effectively what a lot of companies have been doing previously to get around this is to go through
European banks, small regional German banks that have absolutely no connection to the dollar whatsoever.
So, I think companies who have been in compliance with banking before this deal came into effect would probably have a way out of this, the big
concern is A, for companies who had invested in Iran since the deal opened up and particularly, as a deterrent for future investment opportunities in
the country.
QUEST: Now, if we look at the oil companies, Total, and we know who have been moving smartly. We look at Airbus that sold large numbers of planes.
Now, clearly, in both of those cases, it's a no-brainer because it's a dollar -- I mean, planes are sold in dollars to start with.
And secondly, a lot of the parts come from the United States. So, they are -- there is no if, buts or ands, with them is there?
RENISON: They will certainly have contingency measures in place. They know that these things were coming up, but the big question is how it is
enforced. How is the office for foreign assets control in Washington, which under the Obama administration was actually encouraging European
companies in reassuring them they weren't in the final one. How are they going to go after enforcing that? That's the big question.
QUEST: And what sorts of penalties can they enforce? I mean, what's the downside risk?
RENISON: Well, if you look at HSBC, HSBC entered into what's called the "Deferred Prosecution Agreement" with the Department of Justice. These are
multimillion pound dollar fines. They are huge. I mean, they are the kind of things that can completely cripple a company, and then, there's also
there's the potential for criminal prosecution as well, so this is no light matter.
[16:20:16]
QUEST: At the IoD, I mean, there's not much you can do about it because it's macro US government policy, but it is extraterritorial, and the
extraterritorial nature of these sanctions will have a very wide dragnet that will capture Europe and (inaudible).
RENISON: Yes, I think there is a twin factor approach for the UK government to be taking. One is to be using all maximum -- you know, the
leverage we saw, that Donald Trump actually came out and said, that a Chinese company should potentially be exempt, have a waiver from the
sanctions, is there a potential for direct discussion there? But principally through the European Union.
So, at the moment, the EU definitely wants to keep the deal alive, but most importantly, they want to find some financing route that will effectively
allow European companies to survive without being massively hit. That's the big question and how do you do that?
QUEST: Just very quickly, to throw this at you, you can say you weren't prepared for it. Customs union or no customs union.
RENISON: It depends on when we actually get to that point. We may be on customs union for quite a while longer before we actually get to the final
deal.
QUEST: I think. Good to see.
RENISON: Nice to see you.
QUEST: Thank you very much, indeed. The reason I asked that of course, when we return, we will be talking about the question of customs union or
not. Kenneth Clarke, a very senior British member of Parliament will be here. Former Chancellor David Gauke, I think he might even have been
Father of the House at the moment, anyway, they will be here to talk about customs union or not.
The Brexit mess continues. The United Kingdom could be headed for a constitutional crisis after Scotland's Parliament rejected Prime Minister
Theresa May's Brexit legislation.
And so, what's further down into the path of unchartered territory the UK goes and further complicates Theresa May's situation as she presses ahead
with the Brexit bill regardless. Kenneth Clarke is the former British Chancellor and Father of the House which means, he has been in Parliament
the longest, more than anybody else.
KENNETH CLARKE, FORMER BRITISH CHANCELLOR: I have been there longer and more continuously than anybody else, actually there's a notorious left-wing
firebrand called Dennis Skinner, but I am 25 minutes ahead of him.
QUEST: Really?
CLARKE: He got sworn in after me. I saved the House from Dennis Skinner as Father of the House by 25 minutes.
QUEST: Excellent.
CLARKE: The two of us have been there far longer than anybody else.
QUEST: Right. Now, let's talk about this Brexit. The question -- there's two issues here. First, customs union or no customs union, and the
indecision within Cabinet and the seeming failure of Cabinet even after Theresa May said go away, and decide amongst yourselves and we'll decide
what we're going to do.
CLARKE: Well, the Cabinet is incapable of agreeing what it wants with the negotiations, which is a serious crisis. Customs union, in my opinion is
essential, but she's ruled that out unnecessarily, so we need some arrangement that keeps our trade reasonably barrier free with Europe and
indeed, barrier free altogether if we possibly can.
And at the moment, we are deadlocked inside the government, time is running out. By the end of June, we have got to settle this and we really must
come up with a solution...
[16:25:16]
CLARKE: ... that doesn't damage our economy and at the same time, doesn't cause a crisis in Ireland.
QUEST: You with respect, cannot do that. They are mutually exclusive. It is not possible to find a solution particularly in the Northern Ireland
problem, the whole issue that doesn't allow for freedom of movement and all the other issues.
CLARKE: I agree. I mean, you say with respect to me, I am someone who says that when we leave the European Union, it's perfectly possible to stay
in the single market and in the customs union.
QUEST: Not without the four pillars.
CLARKE: We won't need that for...
QUEST: You know, it's freedom of movement, freedom of labor, freedom of capital...
CLARKE: Well, I am probably -- those pro-European (inaudible)...
(CROSSTALK)
CLARKE: But you can modify that. That's what we should negotiate, see if we could tighten up freedom of movement a bit, or all of that, but however
we are, you are right about Ireland. And I think -- one thing that was reassured by these curious briefing meetings yesterday, and I went to one,
now it was the Prime Minister who talked to us about it all.
She was very sound on the Irish border in my opinion. She realizes the constitutional significance of alienating the nationalist, Republican
opinion there. It has got to be no fixed frontier. No infrastructure put in place. We do need though a border, but I think that means that you have
visibly a border, at Dover, at Holyhead, elsewhere.
It means a customs arrangement whereby and large, we have an understanding about external tariffs and we have some regulatory alignment, but the
Cabinet is a million miles from getting there, reality may take them there.
QUEST: Okay. That will also require the Europeans, Michelle Vanier, Angela Merkel and perhaps even at the level of her counsel to say this is
now intractable. We have got to move towards the British position if they move towards the opposition.
CLARKE: Well, actually, I think the Europeans will also -- no sensible person either side of the channel wants to see no deal, it all collapsing.
If they can possibly avoid it, I think what I have described where there is no fixed border, where there is a customs arrangement that resembles what
we've got and there is a reasonable degree of regulatory alignment, I think that's possible.
What the Europeans would have preferred, the early Europeans is what I would have preferred to say, "Why don't we stick basically to the single
market and the customs union we've got." But with what the customs arrangement, Theresa May describes sometime, she gets very near describing
something, it is not a million miles what we've got.
QUEST: Is it workable to have a customs arrangement with variable tariffs, where the government might reimburse on some verses of this because key to
this is that the UK still has the ability to do third party trade deals.
CLARKE: That's not the key. That's the swag. That is being insistent on it. That's why we have her latest idea, which I thought the Cabinet must
be able to agree to, was customs partnership and that means, because the problem is, usually, you've got to have an external board normally if you
are having a free border and what she said was, where our tariffs differ because we have different -- we will correct the tariffs with EU rate and
if the British rate is lower, we will reimburse businesses.
Now, I regard that as a bureaucratic nightmare.
QUEST: It is.
CLARKE: You are also going to have some understanding on regulatory convergence. What my hope was that they'd agreed that last week in this
warring Cabinet that this week, they would be sitting down with the technocrats to see if they could get that to work. That all fits and
pushed off down the road again, end of June is the deadline.
QUEST: So, finally, and briefly, you were in Cabinet during some of the worst days of Maastricht but also miner strike, the whole thing. You have
seen Cabinet at its worst moments.
CLARKE: No, to be honest, you've already asked me, I've never seen anything as chaotic as this. No, this is the maddest political situation I
have ever seen. What worries me -- this is one of the most important crises in British politics in the modern times. We are taking decisions
and making big effects on the prosperity and wellbeing of my children and grandchildren.
QUEST: Good to see you, sir. Thank you very much, indeed. I can't put it more bluntly than that. As we continue tonight, the World Trade
Organization has ruled on a major dispute between Boeing and Airbus. No, don't let the eyes glaze over. It has been going for decades or at least a
decade or so.
Both sides are claiming victory. How can this be?
(COMMERCIAL BREAK)
[16:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. And we have
dueling press releases from Airbus and Boeing after a controversial ruling on trade, absolutely, and what a difference they have made.
And you are either making a million or you're timid and incompetent. We're going to bring Tom Wolfe and his portrait of Wall Street d-day, as we
continue, this is Cnn, and on this network, the facts will always come first.
Chaos taking place across Gaza a day after Israeli troops battle Palestinians who were protesting against the U.S. embassy opening in
Jerusalem. At least, 60 protesters were killed on Monday, Israel continues to defend its actions, claiming a number of those killed had in the Israeli
view a terror background.
North Korea has warned the United States over the upcoming summit between Donald Trump and Kim Jong-un. According to North Korean media, Pyongyang
has suspended talks with the South after South Korea held military drills with the United States.
The North says Washington should carefully consider the fate of the Trump- Kim summit. Donald Trump's pick to run the CIA has won the support of a key Democrat senator, and that all but ensures that she'll get the job.
Mark Warner said he will vote in favor of Gina Haspel despite it being a difficult decision in his words. And final, said votes likely to come next
week. Chinese state media says a co-pilot on a Sichuan Airlines flight was partially sucked out of the plane's cockpit and the plane's windscreen
shattered in the middle of the flight.
The captain pulled him back in and made an emergency landing in Chengdu. Chinese officials say the co-pilot only suffered scratches and a sprained
wrist, one flight attendant was also injured.
And the latest in Gaza where Ben Wedeman continues to watch at the events. Ben, night time there, and has the -- has the fighting ceased, as there're
still evidence of troubles?
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Richard, the protests have stopped. They normally stop at sundown, and we left a couple
of hours ago and we were the last people to actually leave the area near the fence that separates Gaza from Israel.
And of course, today was the 70th anniversary of the Nakba, the catastrophe the Palestinians call the creation of Israel. And this was one of the
reasons why for week after week, there have been these demonstrations, not just the American decision to recognize Jerusalem as the capital of Israel,
but this is a historic anniversary.
[16:35:00] QUEST: Right --
WEDEMAN: And that's what has brought many of the people out to these demonstrations. But to the best of our knowledge, there are no further
demonstrations or protests planned --
QUEST: Right --
WEDEMAN: At the moment, Richard.
QUEST: Ben, it's an opportunity perhaps for me to ask you slightly why the question tonight, and the reality is how does the U.S. continue to say it
will have a mediating role in a peace process that is just about -- well, I was there in its last legs, its fall -- it's well and truly fallen over.
When the U.S. decision over the past few months clearly shows its partisan nature and anyway, the Palestinian say they won't sit down with the U.S.
Without the U.S., who is left?
WEDEMAN: Decision not to sit down with the Americans is largely of the position taken by the Trump administration. And this is an administration
that has made it very clear from the beginning that it leaned far more in the direction of Israel than any administration in the past.
Now, we've heard a lot of talk over the last year that Jared Kushner is working on some sort of grand deal of the century to resolve this never-
ending problem that he's been working closely with the 32-year-old Saudi Crown Prince Mohammad Bin Salman to come up with this deal.
But the Palestinians, certainly, President Mahmoud Abbas and his senior advisors have come away with the impression that they are simply -- that a
deal is being made --
QUEST: Right --
WEDEMAN: Behind their back and certainly the Europeans don't seem to have signed on to a deal in the making. So the question is, is the progress
being made to somehow resolve this problem? And I think most sober individuals would tell you, no, Richard.
QUEST: Ben Wedeman, thank you for joining us from Gaza. Now, who actually won in the battle between Airbus and Boeing over subsidies? I promise you,
if you read the press releases that came out over the past few hours, you'll be as confused as I am.
The U.S. says it won and it's preparing to propose tariffs on Europe, just hours after the WTO appeared to rule that Europe unfairly subsidized Airbus
sales. Boeing's chief executive says the decision sends the message that rules must be obeyed and that the commercial success of products and
services should be driven by merit and not by market distorting actions.
Not so fast, A boy, not so fast. Read the Airbus press release and they will say that there's more to it. Today's significant legal success for
the European aviation industry confirms all strategy which we have followed for all those years of the dispute.
This report is really only half a story, the other comes out later this year, well, true rules -- Boeing's subsidies and see where the balance
lies. You see the problem was that the appeals panel ruled in favor of Airbus of something like 240 -- after 214 different charges, Airbus won 207
or 208 full, Boeing just won the rest.
Douglas Holtz-Eakin is the president of the American Action Forum. He served as director of the U.S. Conventional Budget Office. You get my
point, sir, both sides claim tonight that they won -- I mean, there's not getting away from it.
Airbus says we won on most of the counts, Boeing says we're going to impose tariffs because we won.
DOUGLAS HOLTZ-EAKIN, PRESIDENT, AMERICAN ACTION FORUM: I think at the end we don't know who won. This has been a tremendous clash for years now, if
you keep score by a number of issues, you get one winner, you keep score by dollars, you might get another.
I think the ultimate reality here is that there's going to have to be a serious step toward getting some clarity in the nature of disclosure of
these financial relationships to clean out any suspicion of government subsidies, and when they do that they'll still fight.
So you know, this is a high stakes battle, there's going to be enormous expansion in the Middle East and in China, and both of these companies are
positioned to try to take that business.
QUEST: Right, and as I see it, I mean, Boeing will be able to impose tariffs as a result of today's decision on those counts that they won --
HOLTZ-EAKIN: Yes --
QUEST: But Airbus, on the second report, which Airbus is likely to take the majority of the decision will be able to impose tit-for-tat tariffs the
other way round.
[16:40:00] I can't help feeling there has to be a better way to do this.
HOLTZ-EAKIN: I think you've got good instincts on that front. I think what they've done is essentially use the WTO as a great way to paralyze
their competitor whenever possible to try to get new business.
I think the really interesting development has been the Trump administration is pretty clear this satisfaction with the WTO and they
argue that they don't really want to use that to settle disputes.
I don't know where that will leave Boeing in terms of having a place to appeal on Airbus behavior. And I think Boeing faces another threat in
that, they could face very severe tariffs from the big growing Chinese market the Airbus won.
And so I think the stakes --
QUEST: Right --
HOLTZ-EAKIN: Are pretty high for Boeing right now, they better be happy with what they've got in the near term.
QUEST: OK, now let's talk about Open Skies if we may. The deal has just been announced --
HOLTZ-EAKIN: Yes --
QUEST: It's a carbon copy deal. First of all, Qatar signed up to it, secondly, now the UAE. It basically puts to bed the Gulf three -- the
battle against the Gulf three on subsidies. It sort of recognizes the Gulf's right to have government-owned, and then has a very minor limitation
on so-called freedom rights.
It's bizarre --
HOLTZ-EAKIN: Right --
QUEST: Once again, I'm not sure who won.
HOLTZ-EAKIN: I think this is a pretty big victory for the U.S. to be honest. This is a stronger agreement than the Qatar agreement, in that for
the first time, UAE admitted that subsidies will distort market competition and are sort of inappropriate.
They also agree to adhere to international standards for financial preparation audits and accounting, and they're going to meet once a year
and display their books. So if you do that, they're not going to have inappropriate subsidies.
The U.S. carriers are going to have to show the help they've got from the government as well, so it's even in that regard. But I think that's a big
success for the U.S. side to get that admission that it's inappropriate, they didn't get that in the car deal.
And they got a freeze on the fifth freedom flights, which was the competitive threat they felt most strongly. So in the near term, I think
this is a step forward --
QUEST: Wow, but sir, now hang on second, there's a bit of a dispute on that tonight as you may be aware --
HOLTZ-EAKIN: I know that --
QUEST: The fifth freedom -- the fifth freedom is in a side letter to the agreement.
HOLTZ-EAKIN: Yes --
QUEST: And even tonight --
HOLTZ-EAKIN: Agree --
QUEST: Or even tonight, Emirates is saying, hey, we merely said but we have no plans to do it. And admittedly, I'll grant you if they did
suddenly launch a fifth freedom flight from somewhere, it would be -- talk about tweaking the nose of the other side.
But it does suggest that in the future they're not off the table.
HOLTZ-EAKIN: I think this wasn't in some level an elegant diplomatic solution, and I put it in a basic -- do it as a side letter, I think you're
right, it would be thumbing their nose to the agreement to do anything quickly.
I think it will be awfully hard for them to launch a new fifth freedom flight in a new era of disclosure when there were huge losses being run in
the previous ones. How can they justify that without some outside subsidies.
So I still think that de facto situation is they're going to be a freeze on these, but you're right about the sort of way it was laid out in the
agreements.
QUEST: There's peace, come back again and help us understand these trade matters and issues of these things before -- we're very grateful to have
you back on the program, thank you sir.
HOLTZ-EAKIN: Have to, thank you, Richard.
QUEST: One of the great novelists of our time Tom Wolfe has died, we want to take a particular moment to talk about him on this program, business
program because of course "Bonfire of the Vanities"; a book that many of us read as we started getting into the financial world.
It's QUEST MEANS BUSINESS in a moment.
[16:45:00] (COMMERCIAL BREAK)
QUEST: He lived on Park Avenue, the street of dreams. He worked on Wall Street, 54 Up, the legendary piers and piers overlooking the world. That's
how Tom Wolfe describes Sherman McCoy; a fictional bond trader and one of his most famous characters.
Tom Wolfe died on Tuesday in New York, the city whose culture of Wall Street greed, curses and corruption, whatever you like. He secured it in
the novel "Bonfire of the Vanities". It was later turned into a movie starring Tom Hanks.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: In the '80s, making money and living well was all that mattered and no one did it better than Sherman McCoy. He was a master of
the universe.
UNIDENTIFIED MALE: Tom --
UNIDENTIFIED MALE: Sorry --
UNIDENTIFIED MALE: Call later. Some loose, I can punch you over a few hundred million dollars.
(END VIDEO CLIP)
QUEST: Masters of the universe, no doubt, William Cohan, be inspired by Tom Wolfe, former M&A banker, now special correspondent for "Vanity Fair".
Good to see you sir, thank you.
WILLIAM COHAN, SPECIAL CORRESPONDENT, VANITY FAIR: Good to see you, Richard.
QUEST: The -- look, we'll focus on "Bonfire of the Vanities" and what it told us when he wrote it, and when he told us about the whole -- because it
came at the same time as greed is good, lie is poker, that idea that money was a god that had to be worshipped.
And what "Bonfire of the Vanities" did was to spell out this puncture, the pomposity of it.
COHAN: Well, Richard, first of all, thank you for having me on to talk about Tom Wolfe. I mean, the great loss here in the New York literary
community, he was not only a great fiction writer, but he was a great journalist as well.
A rare (INAUDIBLE) and it's a great loss. You know, in "Bonfire of the Vanities", he really captured the zeitgeist of the '80s on Wall Street.
That period of time when first investor bankers were kings supplanted to some degree by bond traders and Sherman McCoy was the perfect embodiment of
the bond trader, the big swinging D was we used to say and master of the universe.
He really captured it just magnificently, and that's why he will live on for a long time.
QUEST: And a quote about the bond, let me read it. He says "just imagine that a bond is a slice of cake, and you didn't beg the cake, but every time
you hand somebody a slice of the cake, a tiny little bit comes off like a little crumb, and you can keep that.
If you pass around you enough slices of cake, that produces when you have enough crumbs to make a gigantic cake. I mean, that's prescient when we
think about the subprime mortgage crisis which then hits some 10, 20 years later.
COHAN: Well, first of all, so beautifully written and such a wonderful image and such a perfect way to share with -- you know, regular everyday
people what bonds are all about and why people --
QUEST: Yes --
COHAN: Buy bonds or why people get clipped coupons. So yes, it was beautifully written and then of course, of course it was amazingly
pressured about what happened in 2006 and 2007 and 2008.
You know, I remember when I was first starting out on Wall Street, I was working late one night and feeling very sorry for myself, and I was walking
down Madison Avenue and "Bonfire of the Vanities" had just come out, and I found a $100 bill on the ground on the street on Madison Avenue.
And I looked up and I ran into Tom Wolfe. And I said my God, I can't believe how prescient you were in writing "Bonfire of the Vanities" because
remember, Joanna Bradley(ph) was also the big story then.
And he looked at me and he smiled and he said, yes, I guess I was. And it was just a beautiful moment, and I'll never forget it and it inspired me to
go on and try to be a writer too.
QUEST: Has Wall Street changed? I do sometimes wonder has Wall Street changed or again the quote is, "do you really think this is your city any
longer? Open your eyes, the greatest city of the 20th century.
[16:50:00] He comes down from your sworn(ph) co-ops, your general partners of merger lawyers." Has it changed?
COHAN: Well, there are very few general partners now, now all these Wall Street firms are public companies where Wall Street bankers and traders now
take their shareholders and creditors money and put it into their pockets as if it's their own.
So no, human nature does not change, Richard, you know that as well as I do.
QUEST: Wonderful to see you, sir, thank you --
COHAN: Thank you.
QUEST: Let's have a drink -- let's have a drink when I'm back in New York --
(CROSSTALK)
Good night there, thank you sir. And we continue, the reason we're in London of course all this week, the royal wedding is this weekend, the
drama of it all, my goodness, he couldn't write it, but people believe it, after the break.
(COMMERCIAL BREAK)
QUEST: Oh, I love a wedding and an invitation with a bit of gilt-edge around the edge. Four days away from the royal wedding and we're hearing
about a change of heart from Meghan Markle's father.
Now, you remember on last night's program, we told you about the "Tmz" report that Thomas Markle was going to skip the big day this weekend. He's
now told the same news organization that he wants to attend after all.
Bianca Nobilo is in Windsor and joins me this evening. Bianca, you couldn't write this, you couldn't make this up five, four days before one
of the largest events in the calendar of the year.
Do we know -- is he or isn't he? Because besides whether or not is the embarrassment factor of the paparazzi and non-paparazzi, there's also a
serious question about the man's health.
BIANCA NOBILO, CNN: There is, and apparently he's willing to risk his health by leaving hospital, so reports from "Tmz" to come to the wedding
and walk Meghan down the aisle. The "Tmz" also reporting that his heart did sustain serious damage after a heart attack about a week ago, and that
he's under huge amounts of pressure from the media and so much scrutiny.
The answer is Richard, right now, we don't know. "Tmz" saying that he wants to come, but he is still in hospital at the moment. Kensington
Palace not giving us any clues other than saying give the man understanding and respect.
I've been at Windsor today speaking to people by the castle, on the high street and this is all everyone is talking about. Will he -- won't he
come? And of course, it is something everyone can relate to, the family drama that you really don't want ahead of an important event or a wedding.
Some people saying he shouldn't come because he's embarrassed Meghan --
QUEST: Right --
NOBILO: And shouldn't be in the spotlight, others saying the best thing he can do is support her and actually come over.
QUEST: But I seem to remember, gone a few years on you, Miss Nobilo, I seem to remember that Diana before her wedding through a bit of a wobbly,
she had a bit of a moment of tears, a big one, because of the pressure.
[16:55:00] And those who are joining this --
NOBILO: Yes --
QUEST: Family have no idea what it's really like until it's too late.
NOBILO: That is what we keep hearing that Meghan and her family definitely have no idea what they're getting themselves into. People often say that
because Meghan has been an actress, and she's been in the spotlight somewhat, that she might be better prepared.
And she probably is, because she's been working with the press. These members of the family, the British press is saying, you know, should they
have been better prepared by the palace, everybody knew that there would be unprecedented media focus on them.
Well, how well prepared were they? We don't know, it doesn't look as if they've been following any particular guidance or training in terms of how
they're interacting with the press.
But you do mention the paparazzi and Diana, and of course, let's not forget the complex relationship that this royal family has with the press, and
intense media scrutiny and overstepping the boundaries in the U.K. because of course, William and Harry --
QUEST: That's right --
NOBILO: Believe that they lost their mother in part due to overstepping paparazzi. So it is definitely a very complex issue ahead of the wedding.
QUEST: Good to see you, Bianca, thank you, see you in the next few days as we celebrate the wedding. We'll have a profitable moment next.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, if you want to know how bad the Brexit situation is in Britain, on this program tonight, Britain's longest-serving
member of parliament, a member of the ruling party and club said it's the most chaotic I've ever seen, it's as bad as ever experienced.
That's how bad Brexit is tonight. And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in London. Whatever you're up to in the hours
ahead, I hope it's profitable -- let's do it again tomorrow.
END
