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Quest Means Business
High Ranking North Korean Official Heads to U.S. for Talks; French Investigators Say Father of Dangling Child at a Balcony was Playing Pokemon Go When the Incident Happened; Haze from Hawaii Volcano Reaches Guam; Lava Threatens to Trap Residents on Hawaii's Big Island; Oil Falls as Saudis, Russians Prepare to Pump More; Petrobras Shares Up 14 Percent in Sao Paulo; Four-Year Search for Malaysian Flight MH370 Ends; PWC: Drones Could Add $55 Billion to U.K. GDP by 2030. Aired 4-5p ET
Aired May 29, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:56] RICHARD QUEST, CNN INTERNATIONAL HOST: Budweiser ringing the closing bell in New York, as trading comes to a close, perhaps at the
moment you see a couple of those the way the day actually went. It was all over the place in the market. It was down heavily. I will show you the
numbers in a second.
One, two, three - three and we are done on Tuesday, it's May the 29th.
Disney puts the boot into a reboot. It's ABC network cancels "Roseanne" over the star's racist tweets.
Triple digit falls on the Dow. Italy and oil are taking their toll and the worries all over the market is of the worst of the day.
And up, up and away. Drones are predicted to lift the UK economy and we will look at the cost in the wider terms.
I'm Richard Quest live in London where of course, I mean business.
Good evening. Wall Street has closed with losses of almost 400 points. The Dow has once again turned negative for the year, and the fears are
rising that Italy may plunge the US into another Euro crisis and its worst point during the day, the Dow was off 505 points. So, it did pull back
somewhat, but as you can see from that chart, it was down for the whole session and it was really only a question of just how bad the losses would
be.
We will return to the markets in a moment to give you the perspective, but first though, corporate America is once again taking up the role of moral
compass. The TV network ABC has cancelled its hit show "Roseanne" after a racist tweet from its star, Roseanne Barr who tweeted this, she said,
"Muslim brotherhood and planet of the apes had a baby equals VJ," now VJ is Valerie Jarrett who was one of Barrack Obama's most senior advisers during
the whole of his administration and indeed a life-long friend of the former president.
We go to our senior media correspondent who is Brian Stelter, who is covering the story. First, Brian, take a look at this from "Builds"
newspaper in Germany, which shows that this is not just a US television story, this is a global story, one that has widespread ramifications.
BRIAN STELTER, CORRESPONDENT, CNN: Yes, because this is about entertainment, speech, and what speech is unacceptable from a company, from
someone who is employed by a company like Disney.
The bottom line here, Richard is that what Roseanne Barr was tweeting was racist hate. She was insulting African-Americans, Muslims, and she was
promoting an anti-Semitic lie about George Soros. She was really supporting all of these ridiculous conspiracy theories that have bubbled up
from the fever swaps in the internet, and the she was pushing those to her millions of fans. That's ugly no matter how you slice it, and that is why
within a number of hours, ABC decided to pull the plug on the show.
Now, I've never seen anything quite like that, where you've got a major network with the number one new show on television in the US, suddenly
cancelling it because of the off-air behavior of a star.
But that is because the behavior was so egregious and because let's face the cloud that this is under, the United states is going through a
difficult period where we are seeing racism and intolerance bubble back to the surface, and companies like Disney want to have no part of that at all.
QUEST: Right, now, Disney's Chief Executive, Bob Iger defended his decision that is perhaps a bit needed defending saying, "There was only one
thing to do here, and that was the right thing." The calculation, though, do you believe that - I mean, in making that decision, was there a
calculation, this is an extremely valuable asset, it's a valuable franchise that we just brought back, or from what you are hearing, was it just a
case, "Of don't be ridiculous, this thing has to go now?"
STELTER: Well, it was a very quick decision by Iger, by Ben Sherwood, his deputy, and then, by Channing Dungey, the head of ABC Entertainment who b
the way is of the few African-American women in a position of real power in Hollywood.
These executives together pulled the plug within a couple of hours, it took a couple more hours to get it ready to be announced, but they did decide
this pretty quickly. That's partly because Disney could not be in business with someone who is posting racist hate on Twitter, and it's partly because
advertisers were probably going to shun the show when it came back this fall.
It was scheduled for Tuesday at 8:00, and it was going to be a key part of the network's prime time schedule in the fall. ABC now has to figure out
how to fill that part of the schedule. A couple of hundred people lose their jobs as a result of this decision, so it is a very consequential
decision, but you can understand how a company the size of Disney decide, it just can't be in business with someone like this. It can't defend the
decision to stay in business with someone like this, so it had to pull the plug.
[16:05:02]
QUEST: Brian, thank you for giving us that side of it and putting out the significance of this because this scandal comes on the same day that
Starbucks closed thousands of its cafes across the United States, 8,000 of them, and the reason was racial bias training.
A hundred and seventy thousand employees are going through it right now. Now, you'll remember the reason why after two black men were arrested in a
Philadelphia Starbucks in April for no obvious reason, in fact, for no reason at all. They however was just waiting for friends, a couple of
minutes had passed, they weren't buying anything, and they were arrested.
Poppy Harlow spoke to the Starbucks' Executive Chairman, Howard Schultz and now, with hindsight and with the training, Howard Shultz's take on that
incident.
(START VIDEO TAPE)
HOWARD SCHULTZ, EXECUTIVE CHAIRMAN, STARBUCKS: I can absolutely say that of all the incidents and situations in the almost 50 years of history of
Starbucks, this situation was not only reprehensible, but we were shamed, horrified and I think, it was totally inconsistent with the values and
guiding principles and the humanity of the company, and that's why we've taken such a swift action.
Immediately going to Philadelphia and meeting with the two young men, apologizing, and then, asking ourselves in view of what took place, we have
a responsibility, a moral obligation to look at this and realize we need to advance the training about the issues that the country is facing and what
is happening in our stores.
POPPY HARLOW, CORRESPONDENT, CNN: So, that will happen today. Eight thousand Starbucks stores across the country are going to be closed all
afternoon. You're going to train 175,000 workers on anti-bias training.
Some of that is going to be showing them this documentary by the legendary documentary film maker, Stanley Nelson, which I watched part of it where
you have young black men and women talking about wanting to walk out of a house and feel as safe as any white person would feel, you're going to have
the woman, Sherrilyn Ifill who heads the NAACP Legal Defense Fund participating in this training.
What will actually happen?
SCHULTZ: Well, first of, I have gone through the training myself as has the entire leadership team of the company last week, and we did that so
that we could experience it firsthand. It is interactive, it's been co- authored by Bryan Stevenson, Sherrilyn Ifill, Heather McGhee and I think we wanted to try and really get professional people to help us understand and
walk in the shoes of people of color and understand that racial bias does exist, unconscious bias exists and what can we do as a company to create
the reference points to establish empathy and compassion and a welcoming environment for everyone.
HARLOW: For critics who say, this is an afternoon, how on earth can you tackle racial bias and unconscious bias in an afternoon?
SCHULTZ: I think one of the most important thing to do is we need to have the conversation. We need to start. We realized that four hours of
training is not going to solve racial inequity in America or anyone coming in to our stores that may have a problem, but we have to start the
conversation.
We have also said that we are deeply committed to this being a long term journey which we are going to integrate this training, not only in every
Starbucks store from this point on, but also the on-boarding of 100,000 new people a year.
HARLOW: So, this is the beginning of more trainings to come.
SCHULTZ: Yes, without question and we are going to do this around the world.
HARLOW: What was the gut, Howard, I have been in media for I don't know, almost a decade now, right? And this company is as engrained in you
arguably as almost a family. You are Starbucks, Starbucks is you in many ways, so can you just tell me your gut, what did you feel when you realized
what happened to these two men because of their race?
SCHULTZ: I was personally horrified by it. When you think about the values of Starbucks providing health insurance, free college tuition, the
things we have done for opportunity for youth, veterans, refugees - all of these things for this to happen is such an anathema, however, it did
happen.
And we did not blame the manager. We took full responsibility. I took full responsibility, immediately went to Philadelphia, but from a personal
level, it was hard for me to actually imagine this could happen at Starbucks.
And in a way, because it did happen...
HARLOW: Why is it hard for you to imagine it could happen in Starbucks? You think of it sort of in every corner, and you think about race relations
in this country, and you know, there was a poll last year that showed that 70% of Americans feel like race relations have gotten worse in the last
decade.
SCHULTZ: Because the culture and values of the company are so steeped in compassion and humanity, 40% of our workforce are people of color. We have
hired over 100,000 opportunity youth over the last couple of years, so we are steeped in an understanding of inclusion and diversity as part of the
history of Starbucks.
(END VIDEO TAPE)
QUEST: Rashard Robinson is the Executive Director of the Civil Rights Advocacy Group at Color of Change and joins me from New York. Good to see
you as always.
RASHARD ROBINSON, EXECUTIVE DIRECTOR, CIVIL RIGHTS ADVOCACY GROUP, COLOR OF CHANGE: Good to see you.
[16:10:03]
QUEST: To help us understand and very much put this into the business and corporate context since we are of course a business program. Let's talk
about, Rashard, you have been very complimentary about what Starbucks did having faced a problem and even today, when you listened to Howard
Schultz, there is an element of authenticity that comes through.
ROBINSON: Well, it looks very different than a lot of other corporations that we push on at Color of Change. You know, we do a lot of work both
behind the scenes and out front, and pushing corporations to be more responsible around issues of race, around issues of class, around issues of
culture in our society, and you know, you don't see corporations do make these big steps in response to incidents like this.
We saw a young black man get shot on video camera in a Walmart store in Ohio and nothing happened. We saw no sort of big statements from Walmart.
It was basically them sort of backing away from any responsibility.
While at the same time, we need to be very clear that this is a big step that Starbucks is taking, we also have to recognize that one step alone
will not change the engrained culture, and Howard has spoken to that. Howard spoke to that to me when we spoke shortly after the incident on the
phone and when I have spoken to other people at Starbucks, and so, I think that what's going to have to happen, like with any business is that the
incentive structures inside the institution have to change.
How people get promoted? How people are seeing their value in the stores? It just can't be about a training, there has to be accountability and new
incentives.
QUEST: And let's take that one step further with the Roseanne Barr story tonight and decision by Bob Iger, because I want to assume that it was he
personally that fairly took it to fire her and cancel the show.
Again, I've read your views already that you've tweeted, you applaud the decision, but you're critical that they ever employed her in the first
place.
ROBINSON: Yes, I mean, she was out front calling black people apes years ago. This is not the first time she has done it. I do think that
sometimes, it's been my experience that corporations will sometimes step back and make a controversial decision that they think will make them money
and hope that they can sort of wait it out, that they can wait out t he attention, that it might not be a problem.
These are bets that they are taking, and in this situation, the bet failed, and I think for corporations who are paying attention and watching not just
to what's happened with Starbucks, but what is happening at ABC is that we are entering a new culture where the response from the public is quicker,
that the stakes are higher, and that you're going to be able to get away with less.
QUEST: Now, on this, and to the point why we've led our program tonight on this story, on a day when the market was off 500-odd points, but we've
decided this was clearly the more important issue to talk about and it really comes down to me asking, are corporations and CEOs, are they the new
barometers that we turn to, to lead the way where politicians clearly no longer can or will?
ROBINSON: CEOs have a tremendous amount of power, not just in sort of dictating a set of written rules inside of their corporations, but the
unwritten rules in our broader culture, and an you know, when corporations back away from let's say, advertising on the "Bill O'Reilly Show" and since
that sent that show off the air, or when they send a very clear message to back out of Trump's business counsel after he made those comments in the
aftermath of Charlottesville, when they make those statements, they are sending a message about the range of acceptable range of acceptable debate.
And they are also sending a real message about where they see the impact on their bottom lines, because at the end of the day, they are there to serve
their shareholders, and so if people didn't care about it, the American public didn't care about it, the CEOs might not actually care about it as
much either.
QUEST: Rashard, great to have you on the program tonight.
ROBINSON: Always good to be with you.
QUEST: We needed to hear that assessment. When we come back in just a moment or two, we will now look at Italy. The market was down another
2.5%. There is confusion over whether or not the government - the temporary government of Cottarelli will indeed actually get a vote of
confidence and now contagion is spreading way further in the Italian border.
[16:15:00]
QUEST: Global markets suffered a very nasty bout of indigestion and geopolitical jitters, the Dow fell the best part of 400 points. It was 505
after its lowest point of the day and the financials were very hard hit, dragged lower by fears of political crisis in Italy and renewed trad
tensions between the US and China, not surprisingly Boeing was a major faller on the Dow.
The billionaire investor George Soros is now seriously worried about a new financial crisis as well. Peter Tuchman is the floor broker at Quatrro
Securities. Peter, I have not been in New York to give you grief face to face, so we'll have to do it...
PETER TUCHMAN, FLOOR BROKER, QUATRRO SECURITIES: We really miss you, Richard, we miss you.
QUEST: I will be back soon in town. Tell me, what was the main movement today? What were you most concerned about?
TUCHMAN: You know what? Look, it's a matter of what the market focus on. Right, we have seen a major move in oil over the last few days after a huge
rally and that really didn't spook the market that much, but what we saw this - coming in this morning, the original - obviously, the catalyst of
what's going on in Italy over the weekend, right? So, whether this dissent within Italy per se politically is one thing, but if there is any global
contagion, okay, which flows over outside of Italy and the question whether we are going to save the EU or not and any fears about that, that seemed to
really start cracking the facade of the market per se.
So, we have seen that in sort of - you know, it brought back memories of the whole Greek financial crisis a number of years ago. You know, it's
rare that this market really responds to geopolitical situations like North Korea or whatnot and really breaks the market.
But when it has a much bigger and broader effect on the financials, we saw the financials get hit pretty hard today. So, whether it's a question of
whether any of our financial institutions have exposure to Italian debt and whatnot, I don't think that's the factor. I think it's the spillover into
the potential that the complete dissent within Italy could cause some problems as far as their relationship in the EU.
QUEST: Now, Peter, with that in mind, the US companies are doing reasonably well at the moment, the earnings season wasn't that bad. The
economy is growing. Is it your fear though as Soros says everything that could go wrong has gone wrong? Is he overstating that?
TUCHMAN: You know what? It's funny how people will come out on this market this at a beautiful rally back from sort of the crackling of
February, some parts of April and whatnot. But one day down 400 or 500 points, you know, look at the way the market ended the day.
It felt like we sort of locked in a sort of triple bottom, it felt a little oversold and they rallied the market back over to over 120 points.
So, you know, to make a decision about everything being negative and that negative narrative over one day selloff, I don't think that's significant.
I think we should look at oil and what's going on there between Saudi Arabia and Russia. I think we should look at the headwinds of potential
trade war and tariff problems with China and what that will - how it will affect the market, but at the end of the day, earnings season was good.
This market feels strong. At the end of every day, where we're down 500 points, it seems this market catches a bit, and you and I have talked about
that, that's where people feel there is a bargain, and there is stocks to buy here.
QUEST: Peter, thank you, Peter Tuchman on the floor of the Exchange. Everything that could go wrong has gone wrong. Now, there were the
comments from George Soros at the annual meeting of the European Council on Foreign Relations...
[16:20:16]
QUEST: ... in Paris, so these are some of the things he was particularly talking about. Iran and tariffs for example, which has divided - he was
particularly concerned about dividing the EU and the United States. In his words, "Effectively destroying the transatlantic alliance," and of course,
tariffs as a result of Iran - and we are not talking about the tariffs that were waged into China, which is at the moment we're talking about the Iran
tariffs, tariffs could hit Germany the hardest.
And then you have what he described as the existential crisis - the refugee crisis, the territorial disintegration which he described as Brexit, and
now of course, the phrases, "Quitaly" or the thing that everybody is talking about, the issue of austerity. All of which Soros talks about as
being an existential crisis.
And then finally of course, the EU needs to transform. The Euro has unresolved problems and must differentiate between the EU and Eurozone.
Now, on this program last night, Paolo Carlo Padoan, the outgoing Italian Finance Minister specifically said, EU needs to reform as well.
Put all of these together and you do end up with a situation that we've got at the moment of uncertainty. Rana Foroohar is in New York, and joins me.
Rana, he may have been overstating gilding the lily if you like, but do you think there's a fundamental kernel of truth in the Soros comments?
RANA FOROOHAR, CORRESPONDENT, CNN: I absolutely do, and I think particularly the comments about Europe. You know, Soros has been right on
Europe for a long time. He always said that if we had economic union without political union and without real integration, we were going to have
problems and that's exactly what we have.
I am put in mind actually of a great quote that the economist, Ken Rogoff gave me some time ago that Europe is like a couple that decided to have a
relationship, didn't want to commit to marriage, but had a joint checking account and it's not really working, you know.
You need to go kind of fall in or not and I think that what we are seeing now is Italy is just the latest wrinkle in what we knew was going to happen
unless you have a real solid political integration in Europe.
QUEST: Okay, but that - and I mean, that's your Guy Verhofstadt, that is not going to happen any time soon and certainly, the issue becomes though
whether you think the fault lines, the existential crisis, the Iran and the tariffs. The tariffs on China, whether you think there are now enough
issues to cause concern for growth and/or markets.
FOROOHAR: I do. I think that we are at a tipping point, you know, we were already, Richard in a tipping point in terms of where the markets were
going to go before this, right? I mean, we've talked about this before. We have had really 40 years of a certain kind of monetary policy. We have
10 years of strong growth. We are at the end of a recovery cycle and the US - China has a lot of debt problems, short term things are okay, but not
so great long term. Italy and Europe are blowing up and then you throw in to that Iran, you throw in Russia, you throw in all the political risk,
absolutely.
I think that there are major worries on the horizon and I wouldn't be surprised if we saw some pretty serious corrections in the next few months.
QUEST: Rana, thank you, stay with us. You will be back with us later in the program to talk about the other favorite subject, artificial
intelligence, so go ahead and have a cup of tea and put your feet up for a moment.
Shops in Milan tumbled nearly 3% out of the back of a 2% fall yesterday. The worries about the prospects of new elections in Italy. The concern is
that the third largest EU economy would vote to leave the Euro. Italian bonds and other - were the worst in 25 years. The yield of the two-year
bond is now at 2.4% compare that to Germany, which is zero point something.
The country's stop gap Prime Minister is a former IMF economist. He is known as "Mr. Scissors." Francesco Guerrera is Head of EMEA Dow Jones
Media Group. Good to see you.
FRANCESCO GUERRERA, HEAD, EMEA DOW JONES MEDIA GROUP: Good to see you.
QUEST: Why is the market so concerned? Why are they so worried? Now, they have a caretaker government, but one that you don't think believing
the Parliament?
GUERRERA: I think that's - today is the day when the market has really realized that the whole thing could go pear shaped pretty quickly. Partly
because this caretaker is not going to take care of the country for that long, and I think the market realized that, and they would have another
election in July, it could be a vast majority in favor of Euro skeptic parties, a new government in collision course against the EU and possibly,
"Quitaly."
QUEST: We'll get to "Quitaly" in a second. Why do you - I mean, first of all, there would have to be an election in July if this government does not
get through - the prospective government doesn't get through Parliament. You don't think they will get to Parliament do you?
GUERRERA: There is a very small chance of them getting through Parliament now because they don't have the majority needed to get a vote of
confidence, which is the first hurdle to get through Parliament.
QUEST: Right. So, if they didn't get through Parliament, then there'd almost certainly have to be a July election is the nearest time after the
previous one?
[16:25:08]
GUERRERA: That's right, and this is very unusual in Italy. We don't like to vote in the summer in Italy, but this will be required because
otherwise, we will have a power vacuum that will last too long, so that's the situation at the moment, and there are a lot of questions about the
role of the President of the Republic, which essentially proceeded in this situation, and therefore, now, the markets are very, very worried about
what is going to happen next.
QUEST: All right, so pull that strand together, ultimately, why would - if people realized the danger of leaving the Euro, surely in an election, it
is just as possible that they would swing back to the traditional parties, but you don't think so.
GUERRERA: I think the Euro skeptic sentiment now is very strong, very...
QUEST: Really? Across most of Italy?
GUERRERA: Most of it Italy, yes, because of the problems with the economy, problems with social disparity, immigration...
QUEST: Is this an anti-Euro or an anti-EU? Do they want to leave the Eurozone or do they want to leave the whole EU?
GUERRERA: I think there is an anti-Euro campaign and then within that, there is an anti-European campaign. Now, I am not saying that Italy is
going to leave the Eurozone, but I am saying that the parties that campaign for that will get a lot of votes, and I think that's the problem at the
moment, and that is what the danger is if you are Brussels, if you are at the markets, if you are the rest of the European countries.
QUEST: Good to see you, sir. Thank you for coming in and putting it into context. Much appreciated. We'll talk more about it. Good. Now, anxiety
over Italy dragged all the way to the European markets into the red, but under which, supposedly it's the biggest loss in more than two months,
banking stocks such as Barclays were hit by the political uncertainty. Zurich - look at that, Zurich was down 1.5%, in fact all the markets, and
it was banks that pretty much led the way.
Oil prices are falling fast, investors in OPEC is about to switch strategies. We will talk about that with John Defterios in a moment.
Hello, I am Richard Quest, a lot more "Quest Means Business" in just a moment. Four years since MH370 disappeared, and now the search is over.
The mystery is unsolved. The new case putting high hopes on drones to push the economy, we will explain.
As we continue tonight, you are watching, CNN and we are grateful to have you with us and forever, on this network, the facts, they always come
first.
The head of the Liege police in Belgium says, a gunman there was targeting police during a brutal attack on Tuesday. Two officers and a passerby were
killed in the attack. The police say, the attacker's objective was to harm police institutions and the state of Belgium.
Officers said the attacker was fatally shot after he took refuge in a local store.
A top North Korean official is traveling to the United States where he will meet with the Secretary of State, Mike POmpeo. Kim Yong Chol is the most
senior North Korean official to visit in nearly two decades. He is preparing for the on again, off again summit in June with President Trump
and Kim Jong-un.
The French prosecutor says the father of the four-year-old child seen dangling on a balcony in Paris was out shopping and playing Pokemon Go when
the incident happened. Twenty two-year-old Mamoudou Gassama climbed several storeys to rescue the child.
Father was arrested and released, he faces up to two years in prison and could be sentenced as soon as September. Hawaii's Kilauea volcano is now
having an impact 6,400 kilometers away. Guam; the U.S. territory is warning people with respiratory to stay inside because of the haze.
Scott McLean surveyed the latest volcanic activity, this time from a boat off the Hawaii coast.
(BEGIN VIDEO CLIP)
SCOTT MCLEAN, CNN: You can see from this vantage point just how much lava Kilauea has pumped down into the ocean. All of this black rock along the
coast line that is brand new log, it created just over the past couple of weeks. And you can see the lava continues to ooze down into the ocean.
Georgia say that the rate has actually slowed over the past couple of days, but it is still coming down at a decent rate where we are. And you can see
these white plumes that are going up, that is something called lava haze or laze, that is a potentially deadly mixture of gases, hydrochloric acid,
tiny bits of glass and of course the steam it's created as the lava hits the ocean.
And look what direction the wind is going, back on shore creating potentially more air quality issues for the people in this area. Now
because of the danger of this laze, there are marine restrictions in this area, we have to stay about a 100 yards off shore, other boats have to stay
much farther than that.
But the real story is actually beyond our vantage point in the Lelania(ph) States neighborhood and the areas surrounding it where old fishers have
reactivated, sending new lava into the sky and some points, shooting 200 feet up into the air and sending lava onto parts of streets that simply
have not seen it before.
There have been more 80 structures destroyed by Kilauea already, about half of those are homes and the people who live here simply do not know when
this will end. Scott McLean, Cnn, off the coast of Hawaii.
(END VIDEO CLIP)
QUEST: Oil prices are struggling as investors have braced Saudi Arabia and Russia, promise to -- look, there's crude, down about $1 a barrel and 67,
Brent is at $75 give or take. John Defterios goes to the Palace in St. Petersburg on Friday where the Saudi and Russian ministers announced, they
would ramp up production. Let's begin.
JOHN DEFTERIOS, CNN: Well, it's pretty interesting, they tried to manage expectations, but this is not an easy game, Richard, manage your
expectations, deflate the price and then try to put a floor under that price. But that's what we see so far.
That panel by the way was loaded with a lot of symbolism, having the Russian minister and the Saudi minister sitting side-by-side with the OPEC
secretary general and then three CEOs basically saying we need stability right now, not rising prices.
But that's what it looks like today. But some are suggesting this is actually a response, a political response to the pressure coming from
India, the minister was suggesting 80-barrel sits back there, imports and the cost of production and importing those costs.
And also Donald Trump who complained on April 20th that OPEC was making these prices artificially high. So we've gone from $80 in a week down to
$75 a barrel and this Scoldy Lox(ph) price if you will, Richard, it's 70 to 75, they want this market to heat up because they worry about it hitting
demand in the second half of the year --
QUEST: But it's low -- we know the issue is of course the U.S. and the shale producers which has put in such a huge amount of production. But you
-- how can OPEC, even with Russia, how can they -- unless they take drastic action and remove or add huge amounts, massage the price.
DEFTERIOS: Oh, this is very interesting because as you know at the end of 2016, they took $1.8 million barrels a day off the market, and that did
rebalance the market. And in fact, this is the first time that we've had the market in balance, so they're done with the cutting.
Right now, they're proposing and this is very good guidance by the Saudi Minister Khalid Al-Falih, we're going to add more or less a million barrels
a day. Good guidance for the market, but Richard, I think they're looking down the pipeline here and saying Venezuela is likely to lose another
600,000 to 700,000 barrels a day over the year.
Iran's facing pressure perhaps, losing a half a million --
QUEST: Right --
DEFTERIOS: Barrels a day according to Goldman Sachs. So they need to add oil right now, but of course, with this price, stability runs $70-$75 a
barrel. We see America producing almost 10.5 million barrels a day and half of that is coming from shale.
So they make space for the shale producers, but right now, the argument with an OPEC and with the Russian minister, they need to provide the oil
because demand remains strong.
[16:35:00] QUEST: Petrobras; the chief executive has been commenting on the government's decision to cave to the Brazilian trackers.
DEFTERIOS: Yes, indeed, very interesting because this all happened in the last two hours. The government basically caved in after a week-long
strike, they're going to allow these prices to continue for another two months with subsidies, it's going to cost the government $2.7 billion.
Interesting that the CEO of Petrobras decided to say that because it's not going to cost Petrobras anything, and the government promised to cut taxes
--
QUEST: Right --
DEFTERIOS: On the fuel which will help Petrobras going forward. It doesn't look very good, the way they handled it, and we have to think with
elections coming up in October, perhaps the CEO of Petrobras may not be there as the nationalist government that comes in.
The oil workers threaten to strike right now --
QUEST: From midnight, tonight apparently.
DEFTERIOS: Yes, but the courts are looking to block it on the request of the government.
QUEST: Good to see you, sir, yes, nice to see you --
DEFTERIOS: Of course me too --
QUEST: Right, has --
DEFTERIOS: We're like ships passing in the night at different --
QUEST: You should have a pretty well -- in my life.
DEFTERIOS: This week, QMB uniform for this evening.
QUEST: Dark suit and white shirt and with tie. All right, thanks --
DEFTERIOS: Nice to see you.
QUEST: As we continue tonight, the four-year hunt for MH370 has come to an end. The chief executive meeting the latest deadline says he hopes one day
they will be able to resume the search.
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
NAJIB RAZAK, FORMER PRIME MINISTER OF MALAYSIA: Flight MH370 ended in the southern Indian Ocean.
QUEST: It took two weeks, but now beyond any reasonable doubt, missing Malaysian flight has ended in disaster.
UNIDENTIFIED MALE: It is difficult to imagine a problem in a structure failure of the plane. The Boeing 777 is a modern plane.
QUEST: The mashup data will guide the search for the foreseeable future. It's all they've got.
UNIDENTIFIED MALE: This is all the basis that we have for what's happened for those six or seven hours is important that we all get it right.
QUEST: Is Malaysia prepared to put whatever it cost, for however long into finding this plane?
RAZAK: We owe it to the families to find answers that they're looking for.
UNIDENTIFIED MALE: The next couple of days and the next couple of months, eight years we will find the ending.
(END VIDEOTAPE)
QUEST: So four years on, and the greatest aviation mystery of modern time remains unsolved. Today, the latest search for the aircraft and the 239
souls on board came to an end. It was a U.S. company running the private search, and it says it's covered a 112,000 square kilometers of ocean
floor.
It was only intended to search over 25,000. Well, even though this wider area, they found nothing.
[16:40:00] The chief executive of the company will explain why and what happens next. First though, we need to hear from Anna Coren who puts into
perspective exactly how the search got this far.
(BEGIN VIDEOTAPE)
ANNA COREN, CNN (voice-over): A routine Malaysian Airlines flight from Kuala Lumpur to Beijing would rock the aviation industry.
(WAILING)
And shattered the lives of the families of the 239 people on board. Flight MH370 vanished on the 8th of March, 2014, less than an hour after takeoff.
These were the last communications with air traffic control.
UNIDENTIFIED MALE: Malaysian 370 contact Ho Chi Minh 120 decimal 9 g-o-o.
UNIDENTIFIED MALE: Good night Malaysian 370.
COREN: Captain Zaharie Ahmad Shah was flying the Boeing 777 when it vanished from radar. Mounting speculation the disappearance of this ill-
fated flight was in fact a deliberate act.
A massive search immediately focused on the South China Sea, but a week later, tracking data released by Malaysian authorities reveal the plane had
flown up to 8 hours in the opposite direction before crashing in the southern Indian Ocean of the coast of western Australia.
One of the most challenging and exhaustive searches in history began, with the initial search zone roughly half the size of the United States.
UNIDENTIFIED MALE: We're not searching for needland(ph) high steck(ph), we're still trying to find where the high steck(ph) is.
UNIDENTIFIED MALE: The loss of MH370 is the most bizarre mystery ever in aviation, and arguably probably one of the most bizarre mysteries in any
history at all.
COREN: In an Australian-led search, experts hounding on 60,000 square kilometers of sea bed, 2,000 kilometers off the coast of Perth.
UNIDENTIFIED MALE: If there's a plane down there, you know, we will see it.
COREN: Using sonar equipment and autonomous underwater vehicles, they navigated trenches, volcanoes and underwater mountains searching for a
debris field up to 6 kilometers below the surface.
UNIDENTIFIED MALE: We're looking for small features similar to something like this pics.
COREN: But more than a year into the search, thousands of kilometers away, debris from MH370 began washing up on the coast of Africa, an island in the
Indian Ocean.
As the underwater search dragged on, the Australian, Malaysian and Chinese government funding the $150 million operation decided it had gone on long
enough, officially ending the search in January, 2017, devastating families all over again.
Earlier this year, a private U.S. company took up the search on a no find, no fee basis. But after five months, it too has failed to produce any
results and it's ending its operation.
UNIDENTIFIED MALE (through translator): If the Malaysian government decides to end the search and there's no further search, then I will be
very angry, says John Wei(ph) who lost his mother. We cannot accept this kind of outcome.
Shakayas Newindrin(ph) whose beloved wife was aboard MH370, he is also pleading for the Malaysians to keep searching.
UNIDENTIFIED MALE: Do not give up the search, stay focused on finding what really happened, finding the plane and finding the truth.
COREN: Anna Coren, Cnn, Hong Kong.
(END VIDEOTAPE)
QUEST: The chief executive of Ocean Infinity says he does hope to search again someday. Oliver Plunkett joins me from Houston, Mr. Plunkett, thank
you, we appreciate it, we thank you.
And obviously, your statement said today very disappointing for the families and for everybody concerned. But you were searching in the new
area that was most likely, and you even extended it four times greater and you didn't find the plane. So where is it?
OLIVER PLUNKETT, CHIEF EXECUTIVE OFFICER, OCEAN INFINITY: You know, that's right, and I think it's important to say that it is incredibly
disappointing and particularly for the families. And one of our objectives of getting involved in the search was to find the answers.
So we find ourselves today feeling very disappointed. In answer to your question, the search that we followed, followed along from the previous
search and carried on north, taking into account the ocean drift data and the analysis done by a variety of international organizations that imply
that it was in an area farther north of where the original search had continued.
We don't think we've quite yet finished the whole area that you've covered, looking only at that data. So the answer to your question is, it could be
farther north still.
QUEST: Right --
PLUNKETT: And if not --
QUEST: So what was the purpose, why did you decide to stop searching -- I mean, judging by what you've just said, you know, there were still, if you
like, good ground to be covered. So why stop now and not maybe go on just a bit farther and a bit farther.
[16:45:00] PLUNKETT: Well, we entered into an agreement with the Malaysian government that we wanted to honor, and that agreement was to search for 90
days and we've been in constant dialogue with them, and we've now reached the point in time where to a certain extent the weather is against us.
But also with a new government in Malaysia, I think they wanted to pause and not repeatedly extend our agreement, and so that they can reflect and
decide what is best next to do.
QUEST: If you had your drivers, would you have carried on searching?
PLUNKETT: I think we would like to. You know, as an organization, people are very invested in this, we've spent a lot of time talking to a lot of
different people. It's a question that deserves to be answered, not at least just for the families, but for everybody who travels on an aeroplane.
QUEST: Are you convinced -- I mean, you know, the plane is that you are searching in the right area. But not only the indoor's(ph) act handshakes,
but the telemetry that the performers of the aircraft, the reverse drift analysis does lead you to the seventh arc in the northern part.
PLUNKETT: Yes, indeed, I think that has to be right.
QUEST: If that is the case, what will it take do you believe to get a search going again. Because frankly, you know, I mean, you talk about
this, you know, I was horrified when they stopped after in January, 2017 having just had the first principles report which identified exactly why
you were searching.
Now, you've searched the area but not quite completely finished it, and I wonder what it will take to get the thing going again.
PLUNKETT: It's a good question, so I think it requires political will, and I hope that the new government in Malaysia who've indicated that finding
what happened is a priority for them will follow through with that and recommend the search in an appropriate time.
QUEST: Did we learn anything new about -- besides the topography of the ocean, because you were using some then state of the art equipment,
techniques, you covered a vast area. Yes, actually, before I asked you that, are you convinced, are you sure of the integrity of your search
because it was much faster than the previous ones.
Can we say it's near damage to a 100 percent, you didn't miss it if it was there?
PLUNKETT: Yes, we have confidence and faith in the data that was produced by the equipment. The reason we're able to go so much faster is almost
simply scale. We were using up to eight vehicles, and for the search compared to one --
QUEST: Yes --
PLUNKETT: Previously.
QUEST: My next move forward, is it your view that the technology exists with political will, then a search can be undertaken within a reasonable
economic cost that will determine the plane's final resting place.
PLUNKETT: I sincerely hope so. I think you said there's a possibility there will be a future search, I think the technology does exist and I
sincerely hope that that together would lead to the answers of the question.
QUEST: So I mean, commiserations that you didn't find the plane, congratulations if that's the right word, I don't think it is, but you know
what I mean for having the nerve and the innovation to actually suggest a no fee -- no find, no fee and actually helping advance the cause of this.
We're grateful you came tonight on the program, thank you sir.
PLUNKETT: Thank you.
QUEST: We will be back with more, it's QUEST MEANS BUSINESS live.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Drones could be the savior of the British economy with Brexit on the horizon and staggering growth, the U.K. economy is looking for a lift.
New research by PWC says that it should turn to drones. Yes, the real thing.
The study estimates that the boost to GDP by these things could be as much as $55 billion by the year 2030. Now PWC expects over 76,000 drones flying
in the British skies in 12 years time. That would create nearly 630,000 jobs even though one news anchor may actually lose it as a result.
How can these drones with the prospect of artificial intelligence, how can they in any shape or form be a savior of an economy. Rana Foroohar is back
with us without a drone nearby.
Rana, wait, you have written books on artificial intelligence and productivity, do you see the advantage of these sorts of things in the way
PWC does?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Well, look, if you look historically at tech base disruption, it is always been a net new job
creator. So that's definitely true. Now, I've been a bit of a tech skeptic recently because of things of the pace, the breath of change is
happening so quickly that I think it's going to be very difficult for the labor force to retool fast enough.
That said, a longer term, yes, I can believe that drones as an industry might create jobs, the question is what are we going to do in the next sort
of five years while they're displacing a lot of workers who don't have training to do other things.
QUEST: OK, that is a fundamental issue that goes to the core of everything to do with economics at the moment. How we usually --
FOROOHAR: Yes --
QUEST: Deal with the change that's taking place? But I wonder if you take AI and you add drones, the sort of -- the sort of jobs that they will take,
those people, can they be retrained for something else?
FOROOHAR: You know, that's the million-dollar question, Richard. I think it's going to frankly have to be a combination of retraining and a greater
social safety net, but that then begs the question, particularly in countries like the U.K., but in most developed countries, the public sector
is under siege, right?
The public sector has record levels of debt, there are populist politicians coming in. The government, it didn't really in no position to be ramping
up, spending, even though that's exactly what you're going to need.
Greater educational spending, a social safety net under people as they lose their jobs and transition. I think frankly, we're also going just have to
think about what's the meaning of work? Are we going to have to stretch our lives differently? These are big questions.
QUEST: They're big questions rather, and what I worry about is that there are so big questions that we don't worry about them. Look, come on --
FOROOHAR: You're doing more --
(CROSSTALK)
QUEST: Whether you go back to spinning journeys and children up mines, down mines or --
FOROOHAR: Yes --
QUEST: Whether you go back to the first era of computerization, productivity, the board, the assembly line, unless the round trees of the
day are no longer there. People with big --
(CROSSTALK)
FOROOHAR: That's right --
QUEST: Don't exist.
FOROOHAR: Well, you know, that's absolutely right particularly in the public sector. You know, I think that there are interesting private sector
initiatives, there's actually a lot of action in education coming from businesses because businesses are desperate, I mean, they realize, you
know, not only do they need entirely different workforce, is that they're in the firing line, everyone is going to point to them when the jobs go
away and say you need higher taxes.
We need to reform the way companies work and they're trying to head that off by doing things like innovating an education. But how the public and
private sector are going to work together in this area, big challenge.
QUEST: Rana, thank you, good to talk to you, lovely to talk --
FOROOHAR: And you --
QUEST: About these bigger issues tonight, thank you very much indeed doing double duty for us. We'll have a look at the markets and how perfect.
[16:55:00] To talk about the markets when you've got a drone because if you look at what happens with the markets over the last few months, well, the
markets have gone up very sharply, and then they went down just as sharply again, and then they went back up again.
And today, we saw the markets which went down and continued going down and they went all the way down. The question of course is what happens
tomorrow with the markets, up or down? Profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, we spent much of the day deciding or discussing what was the lead. When the market went down 500 points, it
seemed fairly obvious that that was the most important story to tell you.
But then "Abc" fired "Roseanne" and canceled the show. One of the most profitable franchises in American television that they brought back
specific, maybe because it was so profitable. And if you add in the Starbucks closing 8,000 stores for racial re-training or racial
understanding and diversity training, well, there's no contest.
But what the "Roseanne" "Abc" story along with Starbucks told us it's the shift that's taking place in corporate America. We've talked about it many
times, you and I, the way CEOs are the new moral arbiters, moral barometers if you like because they've got so many different stakeholders to look
after.
Customers, suppliers, employees, shareholders, you have to balance them all, and that means doing the right thing and as Bob Iger basically said,
"there's never a wrong time to do the right thing", and when they knew what they had to do, it had to be done.
Staying with Howard Schultz, he made that point on this program tonight. And so we're left with once again, corporations and chief executives being
in the uncomfortable position perhaps of leading the way.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. As always, whatever you're up to in the hours ahead, I hope it's
profitable. I'm off for a week now, see you when I get back in the meantime.
END
