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Quest Means Business
Emmanuel Macron Tries To Turn France From A Striking Nation To A Startup Nation; Turkey Is Taking Emergency Action Raising Interest Rates To Stabilize A Currency In Free Fall; Comcast Confirms That It Will Start A Fight With Disney For 21st Century Fox; U.S. And China Are At Crossroads Negotiating On So Many Levels; JCPenney Exec Leaving The Struggling Retailer To Become Lowe's New Chief Executive; European Markets Closed Firmly In The Red; Talk Of A Mega Banking Merger Between Barclays And Standard Chartered Is Brewing Again; Italy Has Made It Official; The New Prime Minister Is Giuseppe Conte; Russia In An Age Where Sanctions Are Flying And Relations With The West Is Sinking; U.S. Embassy in China Issues a Health Warning After a U.S. Government Employee Reported Abnormal Symptoms Resembling a Mild Traumatic Brain Injury; Nerve Agent Survivor Yulia Skripal Speaks for the First Time; USA Gymnastics Head Apologizes for Abuse By Nassar; Judge: Trump Can't Bar Critics from His Twitter Feed; E.U. Privacy By Default Data Law to Come into Force; E.U. Companies Race to Become GDPR Compliant by Friday; Turkey Halts Lira's Slide by Hiking Key Interest Rates; Dow Recovers Early Trading Losses Over Trade Fears; British Stocks Slip from All-Time Highs
Aired May 23, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: T Boone Pickens who of course is retiring ringing the closing bell, what a very popular way to end the docket as he tugs down
a tug or two, that's it for the bell. One, two, three -- yes, true -- oh well, and with that he hit himself in the head, it is Wednesday, it's May
the 203rd.
Emmanuel Macron tries to turn France from a striking nation to a startup nation. Turkey is taking emergency action raising interest rates to
stabilize a currency in free fall. And Comcast confirms that it will start a fight with Disney for 21st Century Fox.
I am Richard Quest live from London, where of course, I mean, business.
It is not every day you get to start QUEST MEANS BUSINESS with the Fox theme. But it's not every day that three of the biggest moguls in the
media industry are going head to head with each other. A media tug-of-war is going to a whole new level, Comcast is ready to trump Disney in its bid
for 21st Century Fox, picking the bigger all cash bid for the media and Murdoch empire.
Rupert Murdoch, Ryan Roberts, Bob Iger -- the three big titans who are about to go into battle and this is how it goes.
Remember 21st Century Fox wanted to buy parts of Sky, there's bits of Sky that it doesn't already own. Then, along came Disney, and Disney said,
"Well, we will buy most of the assets of 21st Century Fox, along with what its bought from Sky."
So far so good. But then recently, Comcast -- Comcast came into the game and said, "No, we are going to make a hostile bid for Sky," as well what is
a bid for Sky that is higher than 21st Century Fox, and now today, Comcast says, it is very likely, they will make a bid for the whole of 21st Century
Fox or the assets that were going to be sold to Disney.
Put it like this, and you have a straightforward battle between Disney and Comcast for these prize assets of 21st Century Fox. To say nothing about
what it means with Sky, the UK and European broadcaster, and if all of these wasn't complicated enough, let me throw in Time Warner which is going
to be sold to AT&T if a judge agrees in a court case.
Look at these. They are the prized assets of the media industry. Rarely do you see anything like this all coming up for sale at once, and if you
think about the men involved, you realize huge stakes that are up for grabs.
Rupert Murdoch's legacy and his new company, Ryan Roberts and his ability to go international with Sky and get the 21st Century Fox assets and Bob
Iger, desperate to get his hands on these excellent assets to help shore up the Disney franchise.
Brian Stelter is with me to try and make some sense out of it. Brian, rarely have we seen such a fight over such prized beautiful media mogul
assets.
BRIAN STELTER, CNN CORRESPONDENT: Yes, and it speaks to the desperation that some of these media companies feel. There is a game of musical chairs
underway right now and when it's over, some of these companies are not going to be able to continue.
What we see are these technology giants like Netflix, Amazon and Apple changing the media business.
Now, as a result, companies like Disney and Comcast are trying to make huge bets in order to compete. They are trying to look five and ten years down
the line, trying to make sure that they are still having a chair and able to compete because, just in the last few minutes, Netflix, which of course
has been growing, growing and growing, it surpassed Comcast by market cap.
Now, that's probably why the Comcast stock was down suddenly on this news about Fox and Disney.
But the point is, it's another symbolic moment of these tech giants gaining more and more ground. Netflix now is about to become even bigger than
Disney, but as of today, and just in the last few minutes, its market caps surpassed Comcast. It's a sign of the times and explains why both Comcast
and Disney, both down today are both buying for Fox.
QUEST: Which of the deals do you think makes more sense in that who needs the 21st Century Fox movie studios and TV station assets, along with the
Sky assets assuming they get them. Who needs it more? Comcast or Disney?
STELTER: Looking at the --
[16:05:16]
STELTER: -- bidding, Comcast believes it needs the assets more because it was willing to pay $60 billion. Right now, the Disney deal that's on the
table is worth almost $53 billion. Keep in mind, Comcast tried to make a play for these assets more than six months ago. Ryan Roberts tried to make
a bid as though it was higher than the Fox bid six months ago, but the Murdochs went with Disney. They went with Bob Iger, partly because of the
antitrust concerns you talked about AT&T.
Fox apparently was concerned that Comcast wouldn't be able to get it approved. That is why all of these depends on what a judge decides in a
few weeks. If AT&T is able to go to forward and buy Time Warner, that means Comcast is going to show up at the table with its all cash offer.
QUEST: Brian, is it your understanding that Comcast is going to make a bid, all things being equal. I heard what they said today about you know,
they are exploring a bit, but they said that about Sky. They warned us that a bid was coming before it came. They are pretty much doing the same
thing again here.
STELTER: Yes, sources were clear with me several weeks ago that Comcast is going to bid for Fox, unless the AT&T deal doesn't work out. Unless the
judge decides that AT&T cannot move forward, that's going to make a lot of these companies rethink what they are doing, but it is a remarkable time to
see these media assets in play, these companies circling Fox, Rupert Murdoch has a lot of power in this situation, and hey, there's also a CBS
buyer coming out there.
The future of CBS and Viacom is also at stake in this.
QUEST: Who? You weren't planning on seeing your family any time soon, were you?
STELTER: Only on Facetime, it works really well nowadays.
QUEST: So, I am told. Brian Stelter, we will be needing your help. Thank you very much indeed.
STELTER: Thank you.
QUEST: As we continue. Now, the U.S. and China are at crossroads negotiating on so many levels. It's almost impossible to comprehend.
You've got the summit between Kim Jong-un and the President which is seemingly now up in the air. And Donald Trump believes that the framework
trade agreement announced days ago will not bear fruit. He tweeted today, "Our trade deal with China is moving along nicely, but in the end, we will
probably have to use a different structure in that this will be too-hard to get done and too hard to verify results after completion."
What on earth does that mean? Secretary of State, Mike Pompeo met with his Chinese counterparts in the last hour and said, he hopes the summit will go
ahead -- that's the North Korea summit. He would also meet his Japanese counterpart later today.
Martin Wolf is with me, the Chief Economics Commentator at the "Financial Times." Martin, I think you will agree, these are somewhat extraordinary
times in the way in which this news is imparted to us by officials, but this trade deal with China, it looks like it is now on the ropes?
MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, FINANCIAL TIMES: Well, it's completely bewildering, but my response is what trade deal? We have
absolutely no idea as far as I can what trade deal there is? What it covers? There is an indication that China has agreed to unspecified
reductions in its bilateral surplus with purchase of U.S. commodities and goods and so forth, we don't know what they are. We don't know what the
quantities are. U.S. have very specific demands, $100 billion this year and $100 billion more next year. None of that is precise.
We don't know what they are agreeing on any other areas. As far as I think, there is no deal and meanwhile, Mr. Trump announced completely off
the bat that he would reverse an administration decision, the whole administration on the treatment of ZTE.
So, I don't know what it is going on. It is absolutely bewildering.
QUEST: And the Fed, in its minutes today, the Feds, you start to see they are worried about the trade situation, the Fed now says. They are worried
about what might come down the road as a result of this.
WOLF: Well, the moment -- again, they must be in the same position. It could be something very big and very disturbing or very big and very good,
or absolutely nothing at all. My bet at the moment is it is going to end up as nothing at all.
QUEST: So, how dangerous is the situation in a world where global trade had only just really started to pick up after the great financial crisis,
things are still very weak, Fed increasing rates because of growth -- how dangerous or worrying is a situation like this?
WOLF: If we ended up with a really big trade war of the type what was implied by one side, $150 billion worth of goods with penal tariffs, an
immense sort of friction between the two biggest traders, that will be very serious.
But at the moment, it doesn't look at all likely that is going to happen, so I think it might just be very, very noisy theater in which case, in the
end, people will get used to it. There's a lot of theater about this and it really doesn't matter.
QUEST: It is useful -- I am here in London at the moment, and I get the chance to have you in front of me, as opposed to down the satellite, and I
can now ask you what then is worrying you? When you look at the global economic situation at the moment, if it is not this with trade, with Brexit
potentially, what really has got your alarm bells ringing?
WOLF: Well, I think, the trade could be, but I think the most immediate thing is what we are seeing with Turkey --
[16:10:16]
WOLF: -- is we are seeing a big reprising of emerging market risk, a big reprising of the dollar. People are beginning to realize that this
conversation in the U.S. is really out of control. Interest rates could rise much more. If inflation rises as do interest rates, the U.S. could go
up a long way and remember, the big fact, there is more debt outstanding in the world now than there was before the crisis.
So, it's the interaction of rising dollar, rising interest rates and this huge overhang of debt. Those are the things that really worry me.
QUEST: But this conundrum of rising dollar at a time of rising U.S. borrowing at the same time, that suggests that the dollar still remains as
they have favored, even though the U.S. is borrowing like a billion.
WOLF: That's what happened in the early '80s. This was the Volcker shock. They've got a fiscal deficit increasing under Reagan and interest rates
soaring, it's not as bad as that. And everybody goes at the dollar because in the end, it's a safe haven, and that generates a huge shock in the rest
of the world particularly all of the countries with large net debt positions in dollars.
QUEST: Optimistic? Pessimistic? Or just simply worried?
WOLF: Interested, very mildly pessimistic at the moment. I think anything can happen.
QUEST: We'll need you to help us understand this. Good to see you as always.
WOLF: Thank you.
(CROSSTALK)
QUEST: The markets -- and you want to see exactly what happened. Look at the turbulent day. You saw that the triple digit fall after Donald Trump
warned on trade. If you didn't get the Fed minutes which talked about trade, and it perhaps suggested that interest rates won't go up quite as
high as we thought is fast, and then, the market goes up and finishes up 52 points.
How General Electric -- the shares in General Electric fell. The biggest percentage fall in a decade. It follows the Chief Executive, John Flannery
who has failed to say, they will definitely have a dividend next year. Guru La Monica is with me.
GE is a basket case in terms of its stock. The company is a fine company that makes excellent world-class medical leading products and I bow to no
one in saying that, but the stock is a dog with fleas and today, those fleas just grew.
PAUL LA MONICA, CNN CORRESPONDENT: Yes, without question, Richard. This is a huge problem for GE when you have the CEO not really having firm
confidence that there could be a dividend in 2019. What he seems to suggest was that you know, that will depend on the company's cash flow by
next year, which is pretty weak right now, and he also talked about the company's power division, not really showing much in the way of growth and
that is a big problem for the company right now.
He talked about healthcare, they want to focus more on healthcare, but they still have a big power division. Obviously, big in aviation as well and a
lot of their units are struggling.
QUEST: And the share price is down. Paul La Monica, Guru, thank you for joining us.
LA MONICA: Thank you, sir.
QUEST: It's a very busy day, so we move quickly on JCPenney's Chief Executive. That's the retail store, JCPenney -- is leaving the struggling
retailer to become Lowe's new Chief Executive. That's Marvin Ellison who announced the move on Tuesday, and the share price is just over $2.00 is
the very reason he gave for leaving.
(START VIDEO CLIP)
MARVIN ELLISON, FORMER CHIEF EXECUTIVE, JCPENNEY: We brought this company back to positive sales and positive earnings. I am really proud that I
played a role in the successes, but one thing I did not do as Chairman and CEO was grow the stock price and generate wealth for you and your
associates and the shareholders, and team, this is the number one responsibility of a CEO, and something that I did not deliver on.
(END VIDEO CLIP)
QUEST: Those shares dropped more than 10 percent. Clare Sebastian who looks after retailing for us joins me from New York. That sounds like a
really weak excuse for why he is off to another better job?
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Richard. It is interesting -- that video statement coming about 12 hours after the initial announcement
that he was leaving and there was a lot of talk during those 12 hours about whether or not he was dumping a sinking ship, and certainly, you can see
from the share price of Lowe's today, up more than 10 percent, and that there is a lot of optimism in him moving that.
That's also a matter of the difference between these two companies. JCPenney is in a very weak position. As he said, the stock is basically a
penny stock, it's heavily indebted. It has been closing stores. It's been cutting staff. Lowe's is in home improvement which has really been the
kind of bull work against this so-called retail apocalypse. The housing market has been booming and it's really a two-horse race -- it's Lowe's and
Home Depot.
And Marvin Ellison has a lot of experience in this area. He was at Home Depot for 12 years before he was at JCPenney, so I think he called this a
once in a lifetime experience, and I think that video was really him trying to justify that in the face of quite a lot of criticism.
QUEST: And Target, which of course is the other major retailer, it has many problems and continues to struggle.
SEBASTIAN: Yes, I mean, that stock was down about 5 percent today. It was perhaps a bit of an overreaction because the earnings did miss, but they
were up 28 percent in e-commerce and really, this is what we are seeing across the board in retail. This is the cost of turning around your
business in the face of competition...
[16:15:16]
SEBASTIAN: -- from the likes of Amazon, from Walmart and Target is doing that. They are investing heavily in e-commerce. They are revamping their
stores, and I think you know, they are still in a pretty strong position. Up until today, the stock was up 15 percent so far this year, Richard.
So, perhaps there is a bit of an overreaction, we may see the stocks rebound in the session tomorrow.
QUEST: Clare Sebastian who knows pretty much all there is to know about retailing and probably spends a bit of time in the shops as well. Clare,
thank you.
European markets closed firmly in the red. Frankfurt was the worst performer, dragged down by the weak manufacturing data. The country's
biggest bank, Deutsche reportedly by the "Wall Street Journal" planning to cut 10,000 jobs. In Milan, the prices fall amid the prospects of a
populist government and London retreated from record highs, with inflation numbers in the UK.
Talk about a mega merger -- banking merger between -- let me start that one again. I have no idea where Lloyd came into all of this. Talk of a mega
banking merger between Barclays and Standard Chartered is brewing again. Shares in Barclays were down in London. The bank is mulling a deal in
response to pressure from an activist investor, Edward Bramson. Both banks of course declining to comment.
Mark Zuckerberg's European talk continues, after the results in Brussels, this time he was in Paris where he made new friends.
What a difference a day makes. Yesterday, Mark Zuckerberg was lambasted in Brussels, today, he is being wooed in Paris. The Facebook Chief Exec met
President Macron ahead of a tech conference. The French President said he would press Zuckerberg on data privacy. He is also vying to bring
Facebook's investment dollars to France.
Now, while Macron is striving towards a new economy, all problems keep getting in the way. This is his vision. A vision of the CEOs of Facebook,
Microsoft, IBM, Uber and more -- all of the elites there, (inaudible) in there. You have of course, Satya Nadella, you have Zuckerberg -- all there
to talk. So, it's quite an achievement to get these big guys at the summit.
Macron has promised to turn France into Europe's startup nation. He wants to attract investment with faster growth and he is tweaking employment laws
to do it. For now, the statistics aren't cooperating. French unemployment actually ticked up to 9.2 percent in Q1. Now, think about it, 9.2 percent,
the UK is about 4 point something and the U.S. is just under 3.9 percent. So, 9 percent in France.
Meanwhile, whilst all of this goes on, the strikes -- the reformers have had French people taking to the streets, continuing nationwide strikes or
threatening to bring France to a halt. It's a very different vision which means -- so the reality of the strikes and the unemployment and the vision
which he wants to create of the startup nation.
Melissa Bell is in Paris for us. How do we square this circle between the reality and the vision?
MELISSA BELL, CNN CORRESPONDENT: It is a massive circle to square. As you say, the gap is enormous --
[16:20:16]
BELL: -- between the vision and what actually is, and yet, Richard, when you talk about for instance this sudden hike in unemployment that we have
seen since the beginning of 2018 where the economists here in France is that that is a result of people getting back on to the jobs market because
they believe of the full on unemployment at the end of 2017 and the picking up of the French economy that there may be jobs to be had. They simply
haven't been counted before.
We will probably have to wait a little more to see precisely whether the joy should be out on that, what the real results of that is. Whether he
has money to fix things, whether he has money for this reform, to kick start the French economy as he hopes to do.
You mentioned the strikes, we are in the middle of a strike that has lasted now for many weeks. It is strike of the rail workers. We saw yesterday
the public service demonstrators, and we have seen successive strikes and protests over the course of the last few months because, Richard, his
reforms have been as broad a statement, and because they have been carried out at such a great neck speed.
France is simply not used to these sorts of reforms. In a sense, what you are seeing on the street is a protest to precisely where he is succeeding
in changing France.
QUEST: But Melissa, how realistic is it for France to be a startup nation on a global tech industry when the first time anybody says, "Well, you
should do it in English," or "It has to be done to global standards, not the French way." Everybody says, "For the Glory of France, (inaudible)."
BELL: You know, it's a really good point, Richard. That's historically been the problem of France, and yet, it occurred to me today as we waited
outside the Elysees for this meeting, not just between Mark Zuckerberg and Emmanuel Macron to finish, but the meeting is a series of one-to-ones
between the French President and a number of leaders of the tech giants of California. It occurred to me that this was the first time a French
President had been able to have those meetings without a translator.
That in itself is new, and you are right, there is this question of French regulations. There is this question of France's way of life, and there is
this piggy back. There is a part of French society that simply doesn't like the way that Emmanuel Macron is seeking to take this country, and yet,
he has signaled his determination and perhaps, most crucially, Richard, he has the French public behind him.
The latest polls show that most people here in France, a majority of them believe that he will win the rail strikers, also the other strikers will
lose, that he will see his reforms through and that is perhaps what no other French President has had before.
He has come into power with this written into his DNA. This is what he tried to do as Economy Minister, bring through reforms that hadn't been
carried out. Now, he is doing them as President and he appears to have the public behind him.
QUEST: Melissa, we'll talk more about it. Thank you. Melissa Bell in Paris, staying up late for tonight and we are grateful for that.
Italy has made it official, the new Prime Minister is Giuseppe Conte. If you've barely heard of him, you almost definitely are not alone. He is a
law professor with almost no public profile. The new populist government plucked him from obscurity. Speaking earlier, he promised to govern for
all Italians.
(START VIDEO CLIP)
GIUSEPPE CONTE, PRIME MINISTER, ITALY: (Through an interpreter). I am a lawyer and throughout my life, I have taken care of many people. I am
preparing myself now to defend the interest of all Italians in all places - - in Europe and internationally -- speaking with European institutions and with representatives of other countries.
I will be the defense lawyer for the Italian people.
(END VIDEO CLIP)
QUEST: Barbie Nadeau is in Rome. Simple question, what on earth makes this man think he can be Prime Minister of one of the largest economies, a
G7 economy and be successful at it?
BARBIE NADEAU, CNN CORRESPONDENT: Well, there are two people that have made him think he can do that, and one is the head of the Northern League,
now called "The League" and the other is the head of the Five-Star Movement. Many people are calling this man a puppet for them that he will
be tasked for doing their work for them.
And as a result of that, he may not actually have much of his own agenda. This man has never run for public office. All we knew about him was what
on his resume and some of that has been proven to be inflated to some extent.
So, there is very little that we know and there is -- you've got a lot to prove essentially, but if we look at who is backing him, I think we have a
very good idea, Richard about what direction Italy is going.
QUEST: But will the Italian people rightly or wrongly be angry? Won't they say, "Hang on a second, you know, I don't want somebody who has never
done medicine to be my doctor. I don't want an amateur pilot to land my holiday jet, and I don't want somebody who has never run in government to
be Prime Minister and steward of the economy." Won't the people be annoyed?
NADEAU: Well, you know --
[16:25:16]
NADEAU: -- I think they are annoyed when they have a very qualified politician. We have seen governments collapse over and over and over again
in this country for the last 40 years, and you cannot look at Italy and look at it as a role model for how you should run a country in terms of the
politicians.
He could do a good job. He could surprise everyone or he could -- you have mentioned in the way of expectations to me because no one is really
expecting much, and you look at this on the back of the fact that it's been 11 weeks since the election, March 4th.
Italians are pretty Federal up. It's nice to just have a name right now, at least someone to argue about at this point.
QUEST: Barbie, you'll be watching this in the days ahead. Thank you for joining us from Rome tonight, staying up late as well.
The head of Russia's Direct Investment Fund says he understands the pain that sanctions are causing to some European companies. Kirill Dmitriev is
the man in charge of attracting investment to Russia in an age where sanctions are flying and relations with the West is sinking.
He tells John Defterios the world is on a dangerous path.
(START VIDEO TAPE)
KIRILL DMITRIEV, HEAD, RUSSIA'S DIRECT INVESTMENT FUND: We believe that if this trajectory continues, the risk of global conflict increase
dramatically and people should really think, is it worth it? Is it really a right strategy to continue on the path of antagonistic relations or is it
a time to really say, "Listen, it really goes into a very dangerous territory right now." It is time to start restoring the relationship.
It's time to start like Japan, have positive discussions with Russia on the economic front and in other fronts.
And I think more and more reasonable people understand that and follow this approach.
JOHN DEFTERIOS, CNN CORRESPONDENT: Are you suggesting the President is being unreasonable, President Trump going after Oleg Deripaska or a Roman
Abramovich, it seems to get very personal when you pick out the oligarchs who are big investors in Europe for example.
DMITRIEV: Well, we see that lots of people in Europe are very much against sanctions. We believe that sanctions are really against the -- you know,
having positive discussions and addressing issues, but it is difficult for us to comment otherwise from the U.S. sanction policy.
DEFTERIOS: Is it going to be wrong that it actually closes the gap between Europe, Russia and China in your view? Is the U.S. putting ultimate
pressure with the latest round of sanctions on Iran. Do you think this is a bridge builder that brings Germany back in to the full view of Vladimir
Putin?
DMITRIEV: Well, we believe that relationship with Europe is very important for us and for Europe. We don't have much trade, much investment with the
U.S., but Germany is our number one trading partner in the world. Many German businesses are suffering from sanctions. I met with many CEOs whose
revenue declined by 30 percent to 40 percent of medium sized German businesses because of not being able to do much with Russia.
So, we believe there is a general sense in Europe that it wants to restore investment and trade relationship and I think we are seeing some of the
discussions happening even now.
DEFTERIOS: There has been a lot of global attention about your January 2007 meeting in the Saychelles with Erik Prince, the founder of Blackwater,
what was your primary motivation behind this meeting? Was it to establish a back channel with the United States and improve relations or not?
DMITRIEV: John, the meeting was hundred U.S. business people throughout the year. Nothing restrict U.S. people from meeting with us or from co-
investing with us, and I am very passionate about restoring U.S.-Russia relationship. I believe it's very important. I believe that we are going
into a very dangerous territory, by hearing such adversarial relationship and when I was in school in the U.S., I really believed in critical
thinking and then follow what you believe in.
If you like critical thinking, you understand that you need to start improving U.S.-Russia relations or otherwise, we in a very dangerous zone,
and if you follow what you believe in, as I do, I will continue to work very heavily on improving a U.S.-Russia relations on working with U.S.
businesses because this is what is needed right now.
(END VIDEO CLIP)
QUEST: As we continue tonight, more e-mails arrived this morning inviting me for privacy statements, opt-in, opt-in, opt-in. GDPR embraced the new
rules. Hallelujah. Or shut up shop, Europe's new data law comes in with severe financial penalties. I will discuss them with E.U.'s top supervisor
who will join us live from Brussels. Mr. GDPR, after the break.
(COMMERCIAL BREAK)
[16:30:00] QUEST: Hello, I'm Richard Quest, there is more QUEST MEANS BUSINESS in just a moment. But it's a case of adapt or die -- big tech
companies, in fact, all the companies are scrambling ahead of Friday's European privacy deadline, and smaller firms have decided enough is enough
and they're backing up.
And the economic turmoil in Turkey, the central bank takes action to stamp out fears of a crisis, as we continue tonight, this is CNN and on this
network the facts always come first.
U.S. Embassy in China has issued a health warning after a U.S. government employee reported abnormal symptoms that resembles a mild traumatic brain
injury. A U.S. diplomatic official says the State Department is looking into whether the symptom is similar to that which took place last year in
Cuba.
The government has characterized that as a sonic attack. The daughter of a former Russian double agent is speaking up for the first time since she and
her father were attacked with a nerve agent in England.
Yulia Skripal recall their recovery slow and extremely painful. She says she's now helping care for her father and eventually wants to return to
Russia. The head of the U.S. Gymnastics has apologized for horrific acts of his former team doctor.
Kerry Perry told the Congressional panel she was appalled and sickened by Larry Nassar's sexual abuse of hundreds of young gymnasts. She also say
USA Gymnastics have taken a new course over the last five months.
A federal judge has ruled Donald Trump cannot block critics from responding to his tweets. The judge in New York ruled in doing so violates the
constitution, he goes Twitter is a public forum. The Justice Department denouncing the ruling, saying Mr. Trump, as it is his right to decide who
he spends time with on social media.
Sweeping E.U. privacy laws is called GDPR, you're familiar with it that much. It's two days away and it has all the companies particularly the
tech companies scrambling. Now, what did I get this morning? Well, of course, I got at least five GDPR opting in e-mails.
But then I also got from various companies, so for example Deloitte sent me a nine-page document on their privacy policy, and I remember Soho House and
they decided to send me a seven-page, but it's tightly formatted policy and buried on page seven, its right to withdraw consent which is one of the
bits of course that's important.
Look, the reality is we're all swamp at this, none of us know what to do with it. You really don't get any choice, you have to accept that if
you're going to do business with these people, and sometimes are playing bull, Apple is telling users what data it has, Microsoft and Facebook vows
to make the rule global and thus, they're going out of business.
But the online reputation service cloud, others are shooting services, Uber entertainment and the check search engine stays numb.
[16:35:00] And some firms are blocking Europeans like gravity interactive because remember this is only relevant if you have European customers or
European citizens, European citizens very costly.
Mark Thompson do help me, please -- the global privacy head at KPMG. This is complex.
MARK THOMPSON, HEAD, GLOBAL PRIVACY, KPMG: Absolutely, there's complex, and I think one of the things that's misunderstood is the foundations in
GDPR, and it's one of hundreds of price regulations that is just global.
What he's really trying to do is provide a framework for businesses to leverage a person's information create value, but also making sure that
when they do that, individual's rights are protected.
QUEST: How does a nine-page document from Deloitte, which I -- we're processing a special -- person measures, but I'm -- your consent and you
withdraw that consent, we received processes of -- this is exactly what we talk about though, isn't it?
This isn't helping anybody or is it?
THOMPSON: I mean, I think one of the react is and I can't obviously comment on Deloitte --
QUEST: Oh, no, I mean, then you want to go where you've got tons of examples. And I'm sure KPMG has exactly the same thing as well.
THOMPSON: I mean, we've got to realize is the regulation is trying to fight transparency to -- I'm sure it's a holiday to the Jews, and you can
argue that's transparent or not. But fundamentally, that is -- that is the purpose of why some of these notices are coming up.
QUEST: The real food to me, it seems to me, the real issue here is not so much about me withdrawing consent in all of that. It's the companies
making sure they have the proper security and safeguards, the data protection officer, the various storage facilities and the role concerning
breach.
THOMPSON: Absolutely, I mean, first, this is one of the most valuable assets, and organizations need to manage to value that asset so they can
leverage it to give a great product and services, great customer experience. But also manage the liability that is associated with that.
And you've seen in recent times how severe that liability can be.
QUEST: Do you think this is -- do you think this edifice is behemoth that has been put in place of GDPR will do the trick. Is this what was needed?
THOMPSON: And I think it's what was needed. I think it's about getting it right and a balance. And I think over time, you'll see the requirements of
what people have done changing it both.
QUEST: So for example, when I write to the -- one of these companies next week when it's in the zone, would you please withdraw -- I wish to --
what's the phrase to use here? I wish to withdraw my consent to personal data.
What are they going to write back and say -- what would you be advising them to write back and say?
THOMPSON: And I think withdrawn of consent means you didn't get the opportunity to leverage the product and services they offered often. So
the question would be is, what's the value of changing that organization --
QUEST: No, but my point is, isn't there a real problem? I'm not asking you to necessarily to comment on a specific case. But if I do take to say for
example, Soho House example. If I say to them, no, I still wish to be a member of your organization, but I wish to withdraw my consent for you to
use my personal data.
Or it could be anything, it could be an -- I mean, these are things we don't know what the result will be.
THOMPSON: Absolutely, and individuals have got a lot of questions that are unable to get answers from the organizations, and I don't think there's a -
- this is golden answer for any of this. It's very much about striking the balance as an individual for once you get the product to service from an
organization as well as understanding it if you want that product and services, the organization uses your data.
QUEST: Finally, we've talked many times on this program about the seriousness of data privacy and cybersecurity. Is it your view that it is
one of the biggest existential threats that any company faces?
THOMPSON: Absolutely. I mean, if you look at the value of data, and you can see it in the way that tech companies and the big concentration
companies are valued, there's a huge value being placed on this intangible asset. And if you look at the comparison to this who they get all the gas
companies, that's just too big across his personal information companies.
Although less revenue, less turnover, their big personal information leverage comes at a higher market cap.
QUEST: What does this say about our society when your name, address and who you are is worth more than some of the things (INAUDIBLE). Good to see
you, sir --
(CROSSTALK)
Thank you very much indeed --
THOMPSON: Right --
QUEST: To coming in and talking to us tonight, thank you. Turkey seems to have put the pin back in its economic crisis at least it would seem to be.
Economists wanted the central bank to do more, it's done so. Paul Donovan from UBS will discuss this after the break.
It's QUEST MEANS BUSINESS live tonight from London.
[16:40:00] (COMMERCIAL BREAK)
QUEST: Turkey is scrambling for economic stability. The central bank employed a massive 3 percent, 300-basis point make highlights to throw the
brakes on the slide of its currency that seemed to have worked for the moment.
The lira pushed higher that had fallen into a record low against the dollar earlier in the day. Economists think the hike could have been even higher,
4 to 500 points. Paul Donovan is the chief global economist at UBS Wealth Management. What's gone wrong here? What's gone wrong in Turkey?
PAUL DONOVAN, GLOBAL CHIEF ECONOMIST, UBS WEALTH MANAGEMENT: So essentially, Turkey has always had a bit of an Achilles heel, which is its
current account deficit -- its current account deficit basically says Turkey needs to borrow money from the rest of the world.
And to the rest of the world, it says actually, you know what? We're not too keen on lending money to Turkey this week, the currency goes down. So
that's your basic point. You've always had this problem with this need to borrow.
And then a couple of weeks ago, President Erdogan came out and suggested some noble economic ideas. But reducing Turkey's quite high inflation rate
and inflation is almost 11 percent, could be achieved by lowering interest rates.
Now this runs counter to what the role of Society of Economics for example would recommend and the markets didn't like it. And it's where we are
today.
QUEST: Is this a classic balance of payment crisis?
DONOVAN: It's -- I'm --
QUEST: I mean, let's face it, raising we know, we know that raising interest rates in this fashion will not work and will cause -- other than
just very temporarily, and the ERM debacle proved that.
DONOVAN: Well, it depends because if you're raising interest rates with a view to slowing domestic borrowing, so, you know, until --
QUEST: Right --
DONOVAN: Its growth recently has been fueled by a credit binge, and you know, goodness, if anybody knows about credit binge is it's going to be two
English people sitting across a desk and talking about it.
They are trying to slow down map, if they succeed in slowing down the credit, they will reduce the current account deficit, they will help. So
it might work where the 300 basis points is enough bearing in mind the Turkish lira has simply gone back to where it was yesterday morning is
perhaps a more debatable point.
QUEST: I am fascinated to hear your views on Italy's new prime minister and his economics. He says that he will -- he's aware that they will
respect international and European obligations --
DONOVAN: Yes --
QUEST: And responsibilities. But that is counter to the policies that the two parties, populist parties want, which is vast deficits spending.
DONOVAN: Yes, absolutely, and --
QUEST: Square that circle.
DONOVAN: A government with an entirely contradictory set of policies where we see NATO where in Europe. So -- or outside of Europe, perhaps. This I
think is going to be a problem. Now, the government has got a very small majority in the Senate.
Assuming that it wins a vote of confidence, so it succeeds majority in the Senate. That's going to make it fairly fragile which suggests that they'll
get lip service for the commitment to European obligations and then there'll be an attempt to support their position with their own supporters
in the country through --
QUEST: When will the market finally give their verdict? I mean, we've seen a little bit of tinkering around with that, but nothing like the sort of
anger and resentment that the markets will wreak if they don't like what they see.
DONOVAN: Well, I think there's a -- there's an important point to bear in mind. Italian assets are generally owned by Italian investors --
QUEST: Small investors --
DONOVAN: Italian investors are used to political uncertainty. But good to say, they had 70 years of practice at this.
QUEST: And I was talking earlier to Martin Wolf, and I said, look, if it's not China trade and it's not Brexit and it's not whatever, what is the most
troubling aspect in the global economy? Bearing in mind, yes, the fact that they said it was worried about trade and the fact that it's -- we're still
talking about further rate right this year.
So if I give you the broad brush of the global economy, what is most concerning to you at the moment?
[16:45:00] DONOVAN: I think in the short-term, there's a risk of an overheating in the United States, not this year, but something which builds
next year. You've got deficit finance, fiscal stimulus in an economy that is already going full capacity.
That is something which raises a risk, the Fed is aware of that, raises a risk.
QUEST: But the dollar is not reflecting that risk yet, because it's being boiled up by the higher interest rates to some extent and by safe haven.
But you -- with that deficit spending, you will start to expect a current account deficit that is a trade that is horrendous.
DONOVAN: Yes --
QUEST: You would expect to see some pressure of the currency -- well, we're seeing the opposite.
DONOVAN: Well, we've seen pressure over the course of the last year, the problem with currency is because they don't move in a straight line
forever. Now, I think on a 12-month view, on a 2-year view, the trend of the dollar is going to be weaker and you know, in 12 months, 18 months
time, the dollar will be weaker than it is today.
But we've got some headwinds against that, there's the interest rate differential, as the oil price increase, price of oil is in dollars, so the
price of oil goes up, everyone needs to buy more dollars to buy oil. So that's another form of support.
So there are some factors, we've got the politics in Europe which is also perhaps weighing a bit on the euro. So there are factors which are causing
temporary headwinds, but we get this a lot of the time. In the short term, six-month view, those headwinds can be an issue which will support the
dollar. Long term, yes, not so convincing.
QUEST: All right, finally, since we are in London together, Brexit, and the hard versus the soft, the customs union versus some facilitation,
bizarre thing that doesn't quite work yet. Technically, how worried are you that this country is heading towards -- it's certainly got political
paralysis and government chaos on the issue.
But in terms of economics, how bad is it going to be now do you think?
DONOVAN: I think we're going to end up with a relatively soft Brexit which is not going to do too much damage in the short term. And I think one of
the things about the longer term -- because a miracle is a long-term decision --
QUEST: Yes --
DONOVAN: We take a ten-year view. You know what we're not going to be trading in the way that we do today in ten years time because the world is
going to change radically over the next ten years of course.
And I think that's one of the things where the cost of bigger structural changes.
QUEST: Do you understand GDPR?
DONOVAN: I've got a vague idea about what it means, but I get lots of rotating e-mails which I tend to just delete.
QUEST: I see your point --
DONOVAN: Richard, nice to see you, Richard --
QUEST: We're going to talk GDPR probably with the man who actually is responsible for it, I will ask him whether we should be deleting those e-
mails after the break. It's QUEST MEANS BUSINESS, we're live tonight in London.
(COMMERCIAL BREAK)
QUEST: EDP Giovanni Buttarelli is the European Union's Data Protection Supervisor joins me now from Brussels. Thank you sir, hoping that you are
able to hear me. Congratulations, this is going to happen on Friday. What's your biggest concern as it now comes into operation?
[16:50:00] GIOVANNI BUTTARELLI, SUPERVISOR, EUROPEAN DATA PROTECTION: Well, 24 hours to go here in Brussels, we are ready to start with a full
enforcement of the GDPR, and therefore we're saying to the big over-the- top, the tech giants, please surprise us before we will surprise you.
QUEST: So when would you expect to start doing the first enforcement? Because the thing that's really about GDPR is the enforcement and the
somewhat draconian penalties for failure to perform.
BUTTARELLI: Tomorrow morning, Brussels time, we will let the first and formal meeting of the newly established law that will serve as a member and
with a first class secretariat. And we will be discussing our working methods, we will be -- re-establish our task force on social networks and
we will synchronize our fights on recent scandals including but not only Cambridge Analytica, and we will finalize written guidelines including
those concerning fines.
And all these documents are to be validated by Friday which is our day one, and therefore no rest periods, no transition period. We are ready to
start.
QUEST: We are all getting e-mails, hundreds of them, we're all being bombarded with privacy papers and privacy policies, most of which we don't
even read. Tell me, sir, how is this useful?
BUTTARELLI: It is not. I'm afraid that all this message I am receiving as a user, subscriber consumer, they aim to protect their data, they can see
the data not as personal as relating to data subject, they're protecting themselves in a legalist language.
I know that there are a lot of patent are going in defensive mode, but what is missing is the human face on what they are doing. It's time to start
respecting people and privacy, not the companies themselves.
QUEST: Right, but that can only happen once the enforcement mechanism which you're putting in place happens. Because at the moment, if write to
one of these companies and say I wish to withdraw my data, please tell me what that means.
Does it mean I can't use the phone or I can't -- my mobile account or I can't go to the restaurant or whatever. We don't understand what GDPR is
going to give us.
BUTTARELLI: Well, GDPR is going to reinforce your rights, it's going to allow you to put in control of the data, and therefore the take it or take
it or take it or leave it approach, I know that in this kind of notices you mentioned is exactly out of the context.
And therefore, I'm afraid that they are wasting their time in transforming what was previously based on freely given consent to an acceptable or at
least controversial contract we're closing, we will scrutinize severity.
QUEST: Sir, you are now heading the global standard on privacy and data protection. The rest of the world is looking to the E.U. and taking GDPR
as the gold standard. How does that make you feel?
BUTTARELLI: Well, it is a responsibility, we need to be accountable, credible, reliable, knowledgeable, we don't want to dictate our values to
the rest of the world. They are based also on our cultural experience. But crisis is dead now, national lows are domestic, but data flows are not.
And therefore it's time for more interoperability, mutual recognition, and therefore I have an appeal for countries late in this process including
U.S. at federal level to start cooperating more with the 121 countries, now we keep in the world with a more than generation of data protection and
provision including but not only Europe.
QUEST: Sir, very grateful that we managed to get you into the program tonight after some technical difficulties. Good luck for Friday, thank you
and congratulations on what has been a Herculean task, very grateful --
BUTTARELLI: Thank you for inviting me --
QUEST: I enjoyed this, thank you. Now, allow me to show you what's happened with the markets. The Dow fell triple digits to the open after
Donald Trump warned on a trade deal.
[16:55:00] The Fed minutes drove right back up again, we went from 117 to 81 points loss over the course of the session and we had to close up 52.4
when all said and done.
GE, poor old GE punched the biggest percentage fall in nine years. It's all to do with the pain and to be able to say the company is going to make
any profits any time soon or at least -- no, not profits, it's going to make a dividend any time soon. We'll take a profitable moment after the
break, it's QUEST MEANS BUSINESS, good evening to you.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, how many GDPR's e-mails have you received, and how many clicks have you decide, yes, I'll accept your
privacy policy, and now opting for your future communications. GDPR sounds like something rather nasty that you go to see the doctor who gives you a
prescription to cure.
But the reality is it's the biggest change to happen in privacy. I've got dozens of these e-mails. What you heard tonight on this program is that
it's got absolutely nothing to do with all these e-mails. This is just face-saving stuff that companies are doing CYA and that's what they're
hoping to cover.
No, the reality is it's about companies, companies and how they handle your data and how they deal with breaches and how they protect what you and I
allow them to have. I'm sure there'll be some activists who will on Friday morning text saying please withdraw my data, but continue services.
There will be the trouble makers who want to make hay out of this. But longer term, GDPR is a safeguard for us against companies and the reckless
use of our data. Now, they just have to make it work. The head of the GDPR on the program tonight gives us hope it will work.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'm off
for the rest of the week, I'll see you on Monday.
END
