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Quest Means Business
US Commerce Secretary Says The Sky Will Not Fall When Tariffs Go Into Effect In Europe And China Commenting A Strong Response, And Brazilian Oil Workers Deal Get Another Blow To A Country That Is Certainly Already Reeling; Roseanne Barr Is Blaming Sleeping Pills For Her Extremely Racist Tweet Yesterday, Brazil Where Oil Workers Have Gone On Strike; Adman Is At It Back Again; Hamas Gaza Militants Agree to Ceasefire if Israel Does; Fast-Moving Lava Shuts Down More Roads in Hawaii; Italian Stock Market Gains 2 Percent on Government Debt Sale; Investors Hope for Solution to Italy Crisis; SnapChat CEO Accuses Facebook of Copying its Features; Roseanne Barr Blames Sleeping Pills for Racist Tweet; ABC Cancels Roseanne After Star's Racist Tweet; U.S. Markets Rebound, Boosted by Energy and Bank Stocks. Aired 4-5p ET
Aired May 30, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(CLOSING BELL)
ZAIN ASHER, CORRESPONDENT, CNN: And it is pointing how the markets are doing. Are they are about to hit that gavel? Is it me? Is it me? Oh,
maybe I just missed it. But we turning to how the markets are doing, isn't this a sight for sore eyes. We actually saw the market actually down
triple digits yesterday, you can see we have recovered some of those losses today. It seems as though all of the political fears out of Italy have
somewhat subsided when it comes to US markets and also oil is on the upward march, as well.
My friends, it is Wednesday, May 30th. US Commerce Secretary says the sky will not fall when tariffs go into effect in Europe and China commenting a
strong response, and Brazilian oil workers deal get another blow to a country that is certainly already reeling. We will have our Shasta
Darlington coming up a little bit later on.
And Roseanne Barr get this, is blaming sleeping pills. Yes, sleeping pills for her extremely racist tweet yesterday. The drug maker is firing back
and President Trump is weighing in. We'll explain what the President said.
Hello, everyone, I am Zain Asher and this is "Quest Means Business."
All right, hello, everyone, I am Zain Asher, let's start with how the markets did. As I was mentioning, a very collective sigh of relief across
trading floors in both the United States and Europe.
The Dow as you can see here actually ended up the day up to four digits, certainly in positive territory obviously, a rise in oil prices is helping
boost energy shares, while becalming political situation in Italy also lifted European stocks, as well.
But first, I want to start with trade because out of the main business views coming out of Europe and the US today, situation though is certainly
far from certain. China and Europe are warning the US over tariffs basically saying that you know, this could spark a trade war if you hit us
with tariffs, we are no doubt going to do the same and officials from the US administration are also giving conflicting messages, so a lot of people
are confused about what is actually going to happen. We are going to take this piece by piece starting with Europe specifically.
The US Commerce Secretary Wilbur Ross is in Paris as I speak for an economic forum just two days - two days for US tariffs are set to go into
effect on Friday, Friday being the deadline. European Ministers are promising a very strong response in terms of possible retaliation if
American tariffs go into effect on European goods.
Wilbur Ross, you see him there at the podium, insists at talks to avoid a trade spat can actually continue after the deadline. Let's listen to what
he had to say.
(START VIDEO CLIP)
WILBUR ROSS, US COMMERCE SECRETARY: The sky has not fallen in the United States since we put the tariffs on. It just hasn't fallen and it won't
because of the proportionality that I am describing is just too small. The whole amount of tariffs and steel and aluminum are a fraction of 1% of the
US GDP. So, how much impact can that have on anything? It's just silly.
(END VIDEO CLIP)
ASHER: So you heard him there, Wilbur Ross, basically saying, "Listen, it's just silly, the sky is not necessarily going to fall." John Defterios
joining us live now from London.
So, John, how exactly are European officials specifically going about trying to persuade American officials, I guess, specifically Wilbur Ross
that tariffs should not go into effect? What is their strategy going to be over the next two days do you think?
JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: Well, it's interesting, Zain. I think when we look at the overall trade spats we have between the
United States and his trading partners, most of the attention has been on China because of the scale of the trade deficit and some of the rhetoric
tossed around.
But I like to call the European Union trade spat with the US a sleeper threat because we though the problem was over. We didn't think it was
going to be a big issue. We thought the big leaders would negotiate this, and is coming back to haunt us. We are just about 48 hours away from the
deadline.
Wilbur Ross was suggesting, of course, we can negotiate with tariffs in place, that's silly if we cannot, but unequivocally, the Europeans are
saying we don't want the tariffs in place or we don't go to the bargaining table.
Cecilia Malmstrom, who is the EU Trade Commissioner said, "We are free traders, but we are not naive and we prefer to follow the multilateral
path," making reference to the World Trade Organization, of course, Wilbur Ross and his USTR that are in place at the OECD in Paris see it very
differently.
I think it is worth going back just a month, we had Emmanuel Macron, the President of France meeting with Donald Trump. We thought that they
bonded. We thought they could find a resolution, that wasn't the case. Just 24 hours later, Angela Merkel was at the White House suggesting we
don't want to negotiate with the United States if you hold a guillotine over our head.
They said, they will protect their interest going forward if the US doesn't show flexibility, but this is a 48-hour window and it is a showdown. Both
sides will have to play the cards very quickly or this $1 trillion bilateral trade relationship will perhaps come undone or show very severe
strain, Zain.
[16:05:12]
ASHER: So, John, I mean, how is this - it was just interesting to see the markets, you know, up what? In the US at least, triple digits. I am
curious how given the two-day window - now, we have it on the screen. I mean, given the two-day window that we have, until the deadline, how do you
expect it to weigh on investor confidence, particularly in the US?
DEFTERIOS: Well, first and foremost, I think this rally we saw today is somewhat of a relief of what is taking place in Italy. We saw the oil
market recover at the same time, but like we saw the last time, when they were trading barbs against each other, the markets did react and I think we
could see that reaction on Friday.
The Finance Minister by the way of France, Bruno Le Maire said, "We are drafting our own list of tariffs right now, amounting to $3.3 billion."
The list hasn't varied a great deal. We are looking at US motorcycles like Harley Davidson, cranberry juice, peanut butter, blue jeans, and a list of
other products of tariffs coming on the Europeans is $7.4 billion. The Germans have the most to lose because they export the most finished steel
to the United States.
We hope it can be avoided. You can hope you find common ground, but there is a distinct difference between the two. The Americans think they can
kind of fire a couple of rounds on the tariffs, and the Europeans will be happy. They suggest otherwise, and say if the US becomes the bilateral
bulldozer, they have to go back the WTO and rework the rules. They are getting frustrated by it.
ASHER: All right, John Defterios, live for us there. Thank you so much. John Defterios for us there on the back, but we have just two days left
until this looming deadline of whether or not the US is actually going to be imposing tariffs on European goods. The Europeans have said that we
will retaliate if that is the case.
All right, I want to turn now to China and Beijing says it is ready to retaliate, them as well if the US hits it with new trade tariffs. If you
think you've been here before, you are certainly not wrong. Here is our Sherisse Pham with more.
(START VIDEO TAPE)
SHERISSE SAM, CORRESPONDENT, CNN: This feels a lot like deja vu. The US threatening to tariff billions of dollars of Chinese goods, China saying it
will hit back. Analysts and officials bring about a trade war.
This exact same scenario played out weeks ago. Both sides had agreed to put tariffs and escalating talk of a trade war on hold while they try to
hammer out a trade deal, but that all changed when the White House suddenly said it would go ahead with plans to tariff $50 billion worth of Chinese
goods.
And now, China is saying it is ready to fight back. Foreign Ministry Spokeswoman Hua Chunying saying today, "We don't want a trade war, but we
aren't afraid of fighting one." She is also calling the US's sudden change of heart arbitrary and reckless.
Commerce Secretary Wilbur Ross is scheduled to travel to China later this week, for trade talks and analysts said the US may have been trying to get
some leverage ahead of his visit, but Beijing officials say, the about-face is damaging the US's credibility.
The surprise move from the Trump administration now raising questions about whether talks with Ross will even happen.
The "Wall Street Journal" reporting they could be canceled if China and the US can't agree in advance on what issues will be discussed during Ross's
visit. Sherisse Pham, CNN, Hong Kong.
(END VIDEO TAPE)
ASHER: All right, so I want to move beyond steel and aluminum now because cars are the next front in the Trump administration's global trade spat.
The Commerce Department has actually launched an investigation into whether or not car imports are hurting US national security as their potential
argument.
The US currently imposes a 2.5% tariff on imported cars, take a look at Europe. Europe is at 10%, China there as you can see far side of your
screen is at 25%. China actually plans to lower its import tariffs to about 15% later on this year. The US is using the threat of tariffs as a
cudgel in negotiations with the EU, as well as Canada and Mexico.
John Bozzella, he is my next guest says that that is bad for everyone, especially American consumers. He actually represents foreign car makers
who operate and manufacture in the United States. John joins us live now. So, John, I want to look at what the Commerce Department is actually saying
what the Trump administration is actually saying because from their perspective, the number of imported cars into the United States has grown
from about a third of total cars about 20 years ago to half today.
So, they feel as though it is in the country's best interest to do something about that, I mean, what is your argument? How can they - what
is the better way, I should say to level the playing field?
JOHN BOZZELLA, PRESIDENT AND CEO, ASSOCIATION OF GLOBAL AUTOMAKERS: Well, first of all, you have to look at the US industry as it is today. The US
car market is the most vibrant competitive market on earth and what is happening here is, all competitors come and compete and the customer wins
in the United States of America.
So, if we impose tariffs - significant tariffs on US imports - or excuse on auto imports into the US or on auto parts coming into the US, the customer
is going to lose. We are going to have higher prices.
[15:10:16]
BOZZZELLA: And we are going to have fewer choices for consumers in the US market.
ASHER: Right, so the customer is going to lose. I mean, I think a lot of economists would agree with that, but the Trump administration is focused
on the worker, the American worker, how might they better protect the American worker?
BOZZELLA: Well, the American worker is going to lose also in this because here is what is happening, first of all, half of the imports that you are
talking about are coming into the United States from our trading partners in Mexico and Canada, and those cars have significant US content.
About 40% of the content in a vehicle built in Mexico is US parts made by US workers and exported down to Mexico, so frankly, these tariffs are going
to hurt American workers as well, and by the way, our trading partners will not stand idly by and take this if these tariffs goes into effect.
So, we are going to get retaliation.
ASHER: They have talked about retaliation many, many times, so another - you know, I am obviously going to say that (inaudible), but another
argument the Trump administration is sort of talking about is this idea that it is a national security interest. It has actually launched an
investigation as you know, the Commerce Department is launching an investigation into whether or not it actually affects national security
relying on so many car imports.
What do you make of that argument?
BOZZELLA: It's confusing to say the least. There are 13 car companies building cars and trucks here in America today and soon that number will
get to be 14. You know, frankly, the auto industry is thriving today. We are at or near record levels of sales, of production and of exports, so
this is not an industry that is asking for protection, in fact, I have heard no car company, say, "Hey, look, we need protection."
This isn't like steel and aluminum where the companies have said, "Hey, we need some protection to restructure." We've got a thriving industry here.
And so, the national security argument I think it is a bit of a stretch here.
AHSER: All right, John Bozzella, we have to leave it there. Thank you so much. Appreciate you joining us.
BOZZELLA: Thank you.
ASHER: All right, so moving to Brazil where oil workers have gone on strike. It follows nine days of protest by truckers against an increase in
diesel prices. That brought the largest economy in Latin America to a standstill. President Michel Temer was forced to make concessions on
Sunday after truckers blocked the supply of medicine and goods and the 72- hour strike by oil workers is the fresh blow to an extremely weak government that is facing elections in October.
The workers want the CEO of the state oil company, Petrobras to resign. Let's take a look at what the share prices of the company are doing. They
are down 30% over the past two weeks amidst fears of government interference in the firm.
Shasta Darlington is joining us live now from Sao Paolo. So, Shasta, let's just talk about why specifically oil workers want to go on strike? They
are rallying against the market-based pricing technology for fuel or pricing policies of fuel. Just walk us through what exactly that means,
because this strike has not just spread from oil workers, it's also truckers and people are angry about the economy as a whole, and corruption
as well.
SHASTA DARLINGTON, CORRESPONDENT, CNN: That's right, Zain. I think in many ways, this strike is as much about politics as anything else. Now, as
you said, what these workers are demanding is the removal of the CEO. They also want an end to the market based fuel pricing.
And what that means is under the President, Michel Temer who came in two years ago after his predecessor was impeached, they started really linking
the prices of gas and diesel to the fluctuations in international oil prices. Something that hasn't always been done.
The idea that - being, that this would be more market friendly, get more investors in here and then get people believing in Petrobras again after
the major corruption scandal involving bribery with Petrobras and officials.
Well, that has been detrimental for a lot of buyers and consumers when the price of oil is going up. But, I think what a lot of people see here is
the truckers after a prolonged nine-day strike, basically got a lot of the concessions they were looking for and the concern is now, this being an
election year, you are going to get a lot of workers piling on trying to take advantage of a lame duck presidency, secure advantages before those
elections at a time when Brazilians really lashing out at the government at what they see as a corrupt elite governing class, hoping that this will be
the time.
We saw a poll today that showed 87% of Brazilians actually supported the truckers' strike at least at the beginning, even though it meant that gas
stations were running out of petrol, that planes were grounded and the food and supermarket shelves were running low and that more than 90% of
Brazilians disapproved of the way President Michel Temer actually dealt with the crisis.
[16:15:13]
DARLINGTON: So, I think, you just see this perfect storm that could make it more interesting for even more workers to try and secure their
advantages, Zain.
ASHER: It is interesting that 87% of people there actually supported the truckers even though it meant a massive disruption to their lives. Shasta,
thank you so much. Appreciate that.
Okay, so Latin America's largest economy is running on empty triggered by discontent with the economy and the political ruling class. First, the
country's fuel protest of course chaos, as Shasta was just saying and President Michel Temer says lower diesel prices will last 60 days and then
be adjusted monthly.
Second, Brazil is emerging from the worst economic recession in its history and third, Brazil has actually suffered from several political scandals
with numerous leaders engulfed in corruption allegations.
Laura Barbosa de Carvalho is an economics professor at the University of Sao Paolo. She joins us live now from Rio de Janeiro. So, Laura, thank
you so much for being with us, so how will all of this impact the elections in October do you think? People have really had enough when it comes to
corruption.
LAURA BARBOSA DE CARVALHO, ECONOMICS PROFESSOR AT THE UNIVERSITY OF SAO PAOLO: Well, at the moment, the big question is whether we will have
elections in October. Part of the movement is now asking for a military intervention given how much despair people are going through. We are
seeing a very huge democratic disruption in the country, but the feeling I have is that President Michel Temer lost any possibility and whoever runs
for his Party to claim that the economy is actually out of the recession and stable which was the discourse in the public discourse of the
government a couple of months ago.
Now, it is clear that not only the recession - well, we came from a recession to stagnation pretty much, unemployment rates are still very high
and on top of this, you have this crisis that has to do with the pricing policy that his government has established last year, which is more than
just following the oil prices in the market or international markets, it is actually following the prices of the dollar and made the oil prices and
fuel prices very, very volatile as only a few countries chase this kind of volatility, and...
ASHER: Yes, so Laura, you know, Shasta was just talking about - she gave us an overview of some of the concessions that the government is offering,
just walk us through what the concessions actually are specifically and how it might affect the strike and the protesters?
DE CARVALHO: Sure. Well, the President has lowered taxes on fuel pretty much to lower the diesel price of 60 days, the taxes have been lowered
permanently, but the price that Petrobas - the oil company set is going to be frozen for 60 days, and the government is going to pay back Petrobras
for the impact of freezing prices right now, and it's also paying back foreign companies to avoid having Petrobras in a particularly comfortable
situation relative to its competitors, which is taken as surreal by Petrobras workers and people in general given how the world is now
establishing tariffs. It's actually taken as a scandal that the government is paying off foreign companies to compete freely in the oil market in
Brazil.
So, yes, there is a huge cost, a huge fiscal cost and we are now in the middle of a fiscal adjustment that has been lasting for the past three
years and that has heavily touched priority areas for the population.
ASHER: All right, Laura, thank you. I thought we were running out of time, but thank you so much. Appreciate that.
Okay, so the Adman is at it back again. Martin Sorrell is trying to turn another obscure company into an empire, but the big question is, can he
pull it off? And Dollar General is an American institution dating to the Great Depression. We will hear about the family behind this famous facade,
coming up next.
[16:10:00]
ASHER: All right, advertising giant Martina Sorrell is making a comeback. He has unveiled a venture just a month - just one month after he resigned
in the helm of WPP amid an investigation into personal misconduct, now he is using a formula that worked for him previously.
Let's talk a little bit about him. So, the rise to the top began in 1985 when Sorrell invested in wire and plastic products. He was looking for a
listed company to build an empire and in 2008, WPP became the world's biggest ad agency. Now, he is trying the exact same move. He is taking
control of a listed shell company in London with the aim of transforming into S-4 capital, a multinational communications service business.
Brian Wieser is a senior analyst at the (inaudible) research company, Pivotal Research, he joins us live now from Portland, Oregon. He actually
last joined Richard Quest when Martin Sorrell was actually ousted from WPP, so welcome back to the show, Brian.
So, Brian, the big question is can Martin Sorrell replicate the same level of success here that he enjoyed at WPP.
BRIAN WIESER, SENIOR ANALYST, PIVOTAL RESEARCH: It's certainly possible. Agency services and all of the adjacent businesses is still an incredibly
fragmented industry. You know, taking the agency business by itself, six holding companies account for about half of the industry, but you saw tens
of thousands that account for the rest of it.
If you layer on marketing and technology, you see a similar distribution. If you look at other adjacent businesses between services and software,
which Sorrell knows as well or better than anyone else on earth, there is opportunity out there.
ASHER: Well, did it surprise you how quickly he jumped from one venture to the next? How quickly, how short the time was between leaving WPP and
starting this new venture?
WIESER: Not particularly. I think he made pretty clear that he wasn't ready to ride off into the sunset, and so in that sense, this is not
surprising at all.
ASHER: I think it's interesting that we still don't know - I mean, correct me if I am wrong, but we still don't know that much about the personal
misconduct allegations that bought him out of WPP. I mean, is it fair that investors don't know. Should we know what happened?
WIESER: You know, I think there are plenty of situations where if something doesn't pass a threshold of importance, that investors probably
don't have the right to know. I think it is unusual to say the least that you could have something that was important enough that he felt he needed
to resign, but not important enough that the Board felt it needed to disclose.
We can imagine scenarios. You can use your own imagination.
ASHER: I mean, that sounds so interesting that it was big enough for him to resign, so you know, it was big, but not big enough to disclose?
WIESER: Right, and so, this is where you have to have some confidence in a board that they have made the right decision. It is really hard to know
from the outside. That said, unless we heard some reason to believe that there is some reason to be concerned and I don't know of anyone who has,
then I think you kind of just assume it was something that fell into this...
[16:25:16]
WIESER: ... unusual middle ground.
ASHER: Middle ground. So how does he make S-4 capital sort of bigger and better and just in terms of techniques. Bigger and better than his last
venture?
WIESER: Well, I think it would be hard to anticipate on making something bigger. WPP was so large. Obviously, there are new companies of
comparable scale invented, not irregularly. So, it is certainly possible that that could happen. But I think you could look very tactically and
assume that there are plenty of investments in the marketing technology or agency services and related businesses that they could buy. They have some
capital to start with.
Sorrell certainly has access to banks who I am sure will provide debt under the right conditions, and so you can imagine how you could then start to
issue shares in exchange for equity that you basically take over at your helm.
There is plenty scenarios you can imagine where they could turn what is presently a small shell company into something substantially larger.
ASHER: All right, Brian Wieser, thank you so much. Appreciate that. All right, still to come here on "Quest Means Business" the big question is, is
Italy heading towards a showdown with the EU? We are going to be analyzing the country's current situation and the direction it is heading in, up
next.
A Russian journalist thought murdered, get this, is actually alive. Arkady Babchenko appeared on TV after the reported murder and apologized to his
wife for not letting her in on the plot. Ukraine's authorities said that his death was fake to foil an assassination attempt by Russia's security
service.
Bill Browder, a critic of the Russian President Vladimir Putin tweeted his release from police custody after he was briefly detained in Spain. Police
arrested Browder because of a Russian Interpol warrant. They said, they let him go when they realized the warrant was actually not valid.
A Hamas official says that Gaza militants have agreed to ceasefire if Israel does the same. But Israeli authorities are not commenting.
Overnight, both sides exchanged fire. The recent surge of attacks has been the largest since 2014.
[16:30:16]
Fast-moving lava is shutting down more escape routes near Hawaii's Kilauea volcano. First responders are now telling residents who waited too long to
evacuate, they're on their own. The geothermal plant damaged by the lava flow has now officially been shut down.
Italian stocks turned positive today with the Milan index gaining 2 percent on a successful bond sale. The government has managed to sell $7 billion
in debt. The downside for Italy is that investors are demanding better returns.
So yields on ten-year bonds are at around 3 percent double, double what they were just a month ago. Let me bring in Lorenzo Codogno in London,
he's a former chief economist of the Italian Treasury Department. Lorenzo, thank you so much.
So the fact that --
LORENZO CODOGNO, FORMER CHIEF ECONOMIST, ITALIAN TREASURY DEPARTMENT: Thank you --
ASHER: I mean, obviously, you're also going to be higher, but the fact that there's a healthy appetite for Italian bonds, doesn't that say
something about the fact that the fear generally has subsided and there's a level of optimism there.
CODOGNO: Well, probably has being just a technical correction. I mean, it's difficult to say. What I can tell you is that today, there seems to
be more confidence about a possible solution. So basically, now that they're trying to launch a populist government, possibly with a strong
commitment to remain within the Euro and a strong commitment to fiscal discipline.
That certainly is a master, you know, for the new government to be launched, otherwise president would not allow that.
ASHER: So if the next election basically ends up being, you know, a referendum on whether or not, Italy ends up staying in the Euro. But what
happens to the markets then? I mean, what would be the level of investor confidence and uncertainty if that were to be the case?
CODOGNO: I mean, I think at this stage, the President Mattarella has two options. One is to give another goal to the extent to form a government.
But again, this time, it must be on condition that there's commitment to maintaining the role of Italy within the EU and the Eurozone and commitment
to fiscal discipline.
If that is the case again, probably, this new government will take off. Otherwise, Italy will go to elections and again election might be very
nasty as you mentioned, it could become a sort of referendum on the Euro if part is pushed for that.
I don't think that Italians want to leave the Euro, but certainly it would be a nasty campaign.
ASHER: Yes, I mean, a lot of people are saying that Italians themselves don't necessarily want Euro, that's why a lot of populist parties didn't
campaign on a Eurosceptic platform. But overall, looking forward, just looking into your personal goal, how likely is it do you think if you know,
as we go towards the next election that Italy might end up -- one of the chances that Italy might actually end up leaving the Euro.
Is that -- is that a realistic possibility, do you think?
CODOGNO: I think it remains a very small probability, but still you have - - you might have a lot of turbulence because the two parties that were due to form a coalition, a populist coalition made some mistakes. They
basically discovered that they had some intention to at least design a path on how to leave the Euro.
And they made some striking statements in a sort of common program that they drafted just a few days ago, and one preliminary draft was leaked
there, suggesting that they were even asking for cancellation of debt through the ECB.
So that was really a blow and there was a kind of eye-opening experience for investors. And certainly, if they want to govern the country, they
need to back down on these ideas.
ASHER: All right, Lorenzo, I appreciate you being with us, thank you so much. A source at Italy's presidential palace tells CNN, parties are
discussing a political solution to the crisis. Analysts say, members of Italy's two leading populists parties could be added to the list of
ministers for a new interim government.
EU leaders are watching very nervously, watching their mails of course, Italy is simply too big to fail and Brussels knows it. Ryan Heath is the
senior EU correspondent for "Politico", he joins us live now from Brussels.
Ryan, thank you so much for being with us. So do you think the EU is partly to blame for the situation that Italy is in right now, especially
when it comes to the fact that some people say that they didn't handle the influx of refugees of migrants appropriately.
[16:35:00] So of course, you want to see a rise in populism, a rise in populist parties.
RYAN HEATH, SENIOR EU CORRESPONDENT, POLITICO: Yes, I think at the end of the day, the primary responsibility is on successive Italian government for
not doing structural reform. Even though, there haven't been a lot of growth in Italy over the last 20 years, there were better times and the
hard work wasn't done during those better times.
So that left Italy very exposed either to Brussels bureaucrats who don't really understand how tough it is for ordinary Italians on the ground or of
course people who feel overwhelm by this influx of migrants, the EU hasn't had a proper secured border.
It's left Italy to deal with a large trunk of the problem, it hasn't really shown a lot of solidarity, and so of course, you're going to see a drop in
support for the EU in Italy. But I think Italians sometimes are also looking to deflect blame.
They're not really looking at the main cause of this situation which is that Italy hasn't kept up with some of the more modern, reforming and
progressive economies in Europe.
ASHER: Do you expect that as we approach the next elections, that these populist parties will be more open and sort of more openly campaign on a
more sort of Eurosceptic platform. Much more opening than we saw this time around.
HEATH: Yes, I think that's what President Mattarella has forced into the situation. Obviously, he had a constitutional duty to make sure that Italy
wasn't going out of the Euro without a proper discussion, so in his mind, he's upheld that duty.
But one of the side effects is that it's cornered the legal and the Five Star Movement. They now have to come out into the open and say, we really
do want to leave Europe, and then we'll see the real measure of whether Italians want that to happen or not.
And of course, what we'll probably see is both of those parties do very well in the election, but just coming first, just getting 25 percent of the
vote, that's not necessarily a mandate to leave the Euro. So we might see more clarity after this election, we won't automatically have a resolution
though.
And maybe depends on those numbers for those two parties.
ASHER: Yes, a lot of people are saying that it's ordinary, it's how it can actually -- no desire to leave the Euro. So I want to read you a quote
from the EU budget commissioner who said that "the markets will teach Italy to vote for the right thing."
What's been the reaction to that?
HEATH: There has been a lot of people in Brussels run away as fast as they can from that comment. It's really a situation of the commission putting
its foot in it, and we've seen this before in the Greek crisis, it doesn't play well when you reinforce the idea that Brussels thinks it knows best,
and that it's interfering in national identity or decisions that really are not to be taken in Brussels.
So I think that what you're seeing now is a lot of people in Brussels feeling a little bit powerless. They now have this sense of we want to
take back control so they find it hard to resist making comments like this.
And actually, they've really got to step away and let Italians solve this for themselves. As hard as that is, as risky as it is, because it's true,
Italy is too big to stay. The thing is that if Brussels try to interfere, it's likely to make matters worse for itself.
ASHER: Yes, one who outraged by those comments, I mean, too many cooks in the kitchen, that's what people thought. Ryan Heath, has to leave it
there, thank you so much.
OK, so after the break here on QUEST MEANS BUSINESS, a leopard cannot change its spots. The CEO of Snap takes aim at Facebook, saying some key
things to like isn't fun, and that's not all he had to say. That story next.
[16:40:00] (COMMERCIAL BREAK)
ASHER: Welcome back everybody. Snap CEO has thrown some serious shade at Facebook. At a conference, Evan Spiegel took pot-shots at his much bigger
rival, accusing it of copying it features and that's certainly not all.
(BEGIN VIDEO CLIP)
EVAN SPIEGEL, CHIEF EXECUTIVE OFFICER, SNAP INC.: We would really appreciate it if they copied our data protection practices also.
(END VIDEO CLIP)
ASHER: Samuel Burke has more on this story from London. So Samuel, we've heard Adam Spiegel many times complaining about Facebook copying them,
imitating them, but this time, boy, did he really stick to nice end?
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY NEWS CORRESPONDENT: Oh, that's a really low blow in the tech world right now, and I don't know if Snap
should really be throwing shade at anybody for privacy practices, given the long history of hack that they've had that we've reported here on CNN.
So let's cut to the chase, Zain, this is basically somebody who's -- let's say you give a ring to somebody, they think you're going to get married,
and then not only do they dump you, they make off with the ring. This is the situation that SnapChat is in.
Facebook wanted to buy them, they thought they could get a lot of money out of that, they decided to go on their own, but now they're left, well, with
not that much. I mean, you just think about the stock prices here, Zain.
Snap was worth about 20 bucks at one point, now they're only worth 10. Facebook who copied all their features, that's the runaway bride in this
metaphor is laughing all the way to the bank. They have a stock that in spite of the privacy scandal that Evan Spiegel which he's talking about,
they have really recovered almost fully.
So at the end of the day, he can make all the swipes that he wants, but if you're an investor in this stock, much like Richard Quest is and if he were
here today, would ask him how much money he's lost so far, it's a really painful position to be in.
ASHER: I don't envy Richard at all. So how much has Facebook success actually hindered Snap's growth. I mean, if you take Facebook out of the
equation, how much more successful would Snap really be? I mean, Facebook - -
BURKE: Well --
ASHER: Isn't their only problem.
BURKE: Yes, Facebook is not their only problem, but I think it actually is their biggest problem, the numbers actually backed this up anecdotally if
you ask young people -- hey, which platform are you using?
Since Instagram created Insta Stories which is just a copy of SnapChat's stories, you've heard anecdotally tons of teens saying, oh, I'm using Insta
more now, but the numbers back it up.
At the end of the day, you've seen people stop using SnapChat stories, switch over to Instagram. And actually Facebook or rather Insta Stories
which is owned by Facebook, just to be clear now has more users of just that one feature, then SnapChat has total users.
So this is an existential crisis, for SnapChat, that's part of the reason that their stock is as low as it is.
ASHER: But I don't -- Samuel, I just don't get what Evan Spiegel thinks that he can gain by spewing all this vitriol and making all these
complaints publicly about Facebook. What has it actually achieved? It's not going to necessarily bring you back more users, is it?
It's not going to boost your stock price? What has it achieved?
BURKE: Exactly, and this is the reason that I'm using the bitter person who's been left at the altar analogy, because there's really not that much
to be gained here. At the end of the day, SnapChat has made some redesigns which haven't gone very well for the company.
You've had celebrities outraged about it, the point that they've lost literally millions, tens of millions of dollars in their stock price
because of it. I think what a lot of people wanted to hear was what types of changes are they going to make, what have they learned fundamentally
about doing a redesign.
I spoke to somebody at Facebook who said, well, we learned a long time ago, you don't do a draft pick, dramatic redesign, you just redesign little
parts and bring it on slowly and it looks like SnapChat hasn't learned that yet.
So you can make jokes about the privacy policy, let's just you know, say SnapChat has a better price to see policies than Facebook, it doesn't
change the end of the game, we always say on this show, I hope whatever you're up to, it's profitable, and it's really not that profitable right
now if you had a 20 --
ASHER: So not profitable, it's not -- oh, my gosh --
BURKE: Yes --
ASHER: Samuel Burke, there it is, there it is, thank you so much, appreciate that. OK, a dollar won't buy you very much nowadays, but the
Dollar General chain is actually a retail powerhouse here in America. There are 14,000 of them in 44 states.
So behind the facade, the firm's growth was filled with suddenly turmoil. Former CEO Cal Turner Jr.'s new book "My Father's Business" goes behind the
scenes, he told Stephanie Sy that keeping it in the family has its challenges.
(BEGIN VIDEO CLIP)
[16:45:00] CAL TURNER JR., FORMER CHIEF EXECUTIVE OFFICER, DOLLAR GENERAL: Our company and its development were a father and son enterprise, starting
off as entrepreneurial chaos and by the time of the end of my career, portion 300 status is a company.
But we went through a lot of father-son stuff all the while.
STEPHANIE SY, CNN ANCHOR: In fact, your book is called "My Father's Business" account --
TURNER: Yes --
SY: But it seems to be much more about how you evolve from your father and his business model, isn't it?
TURNER: It is indeed about that. I went into that company to pursue my father's business, and honestly, I intended to take ministry into
retailing, that was my quest. So "My Father's Business" means my father, the real Cal Turner, but to me, it means my heavenly father also.
SY: Talk about that, because I understand that when you first took over, your dad said he thinks the business should be run like a church, and you
disagreed with that.
TURNER: He said, son, I think the business needs to be run like a church, and I said, oh, no, daddy, if we don't do better than that (INAUDIBLE).
I've been very active in church work, I was familiar with church committees and bureaucracy and politics and I thought we have to run a company better
than that.
SY: So what kind of a father-son moments you call them, occurred when you ran up against sort of your dad's philosophy.
TURNER: Well, I went into the business to learn everything I could from my dad, the quintessential entrepreneur. He was dynamic, he was wonderful, he
was loving, he affirmed me as his son, he wanted to turn the company over to no one other than his son Cal Jr.
However, I found out that an entrepreneur is sometimes not a good teacher, and he couldn't explain to me how he made decisions, I just had to learn by
watching, and he was an incredible study for a son to make, but he was -- he was wonderful.
He started a whole new sector of retailing, yet my dad set about himself that he never had an original idea in his life, everything good that he
knew, he'd gotten from somebody else.
SY: And I know, listening is one lesson that you talk a lot about in the book, and your advice to CEOs, the importance of listening. But what was
it like when you would go back to the dinner table after you would have a disagreement about how the company should be run?
TURNER: Well, my father and I had very few disagreements, and I attribute that to him because by the time I came into the company at the age of 25,
he already knew that management style that was his was no longer appropriate.
The company had grown beyond that, and he wanted me to discover what the management style should be and what the management philosophy should be and
he was supporting me all the way, but it was up to me to learn it and he'd be my number one cheerleader.
SY: You know, you also talk a lot about leadership and I think there's sort of an undercurrent of integrity in the way you left Dollar General,
and sort of you know, took responsibility for some mistakes that had been made at that company.
What was that choice like for you, Cal?
TURNER: Well, leadership is all about integrity. It's all about looking out for the welfare of others. And the company's mission statement
described the leadership that we intended to pursue at Dollar General. Two words: serving others.
It's not about me, it's not about my career, it's about the others that I can serve, and our company was determined to give a better life to
struggling customers where they were, out in all the boonies of America.
And we learned a lot. Yes, I learned a lot about leadership, and I developed the opinion that many don't really understand leadership, perhaps
management is better understood. But I think there's a big difference.
(END VIDEO CLIP)
[16:50:00] ASHER: And Dollar General actually reports their results tomorrow in a packed week of retail earnings, Dick's Sporting Goods does
very well, the designer shoe chain DWS also delivered solid earnings, but it wasn't enough to actually stop the stock price from falling though as
well as Dollar General -- Dollar Tree is also going to report on Thursday as well.
So a question that a lot of people are asking themselves, could racism be caused by a sleeping pill? A drug maker has a strong response to Roseanne
Barr's excuse for her racist tweets, we'll bring you that next.
(COMMERCIAL BREAK)
ASHER: So you may have heard the actress Roseanne Barr is actually blaming the sleeping drug Ambien for her racist tweet yesterday. Barr actually
compared our former President Barack Obama's senior adviser to an ape, Valerie Jarrett.
"Abc" responded by canceling her hit TV show "Roseanne". But we got a response, quite the response from Sanofi; that's the maker of Ambien, they
had this to say. "While all pharmaceutical treatments have side effects, racism is not a known side effect of any Sanofi medication."
Let's talk more about this with our media reporter Frank Pallotta who joins us live now. It is amazing, Frank, what excuses people will come up with.
We know that in terms of side effects, Ambien side effects are nausea, crumbs, headaches, racism, according to Roseanne Barr, it's actually
another side effect.
But it's great for Ambien responded to this quickly.
FRANK PALLOTTA, CNN MEDIA REPORTER: Yes, I mean, just look at the timeline here from yesterday. It's been a while like 24 hours for the TV industry,
the number one scripted show on television completely wiped out.
That is probably the first time in history of television. Then she says I'm leaving Twitter, she apologizes on Twitter and then says she's leaving
Twitter. Few hours go by --
ASHER: She's back on --
PALLOTTA: She's back on and then she blames Ambien -- well, in so many words for her tweet, and then an Ambien company had to come out and say,
yes, you know, one of our side effects is not racism. It's just been a really wild couple of hours.
ASHER: Incredible, so we didn't just get a response from Ambien or Sanofi, we also had a response from President Trump, he actually tweets, so let's
put it up on the screen. He said "Bob Iger of "Abc" called Valerie Jarrett to let her know that "Abc" does not tolerate comments like those made by
Roseanne Barr."
Gee, he never called President Donald J. Trump to apologize for the horrible statements made and said about me on "Abc", maybe I just didn't
get the call. It's interesting the president made it about him and in no way shape or form did he himself -- did we hear from the president himself
condemning what Roseanne Barr had to say about Valerie Jarrett.
PALLOTTA: Yes, yesterday everyone was kind of thinking would he jump into this kind of conversation, would he be a part of it? And then what stance
would he take? Would he be very critical of Roseanne, would he not?
[16:55:00] He kind of shows this third option just really making it about himself and about this treatment that he's been getting from "Abc". It was
like again, with the Ambien stuff and the cancellation of the show, it's just been one of the most wild couple of -- like two days -- my goodness --
ASHER: It's incredible because even though, you know, what Roseanne Barr - - I mean, as a black person myself, as anyone would agree with me, I think that what was said about Valerie Jarrett was absolutely abhorrent.
However, I did find myself feeling sorry for all the producers and writers and other actors on the show who did absolutely nothing wrong, who now have
to contend with the fact that they don't have a job.
Is there any way that those people can actually find employment elsewhere? Could the Conner family end up on another network without Roseanne Barr, I
don't know how that works, you tell me.
PALLOTTA: They might end up on the same network there on right now just without Roseanne. They might change the show -- so the Conners, like last
night on Jimmy Kimmel live "Abc's" "Late Night" host, he was joking around, saying they should name the show Dan after John Goodman's character.
But I mean, that's a very possibility --
(CROSSTALK)
It's not though, that's why this has been very shocking even though it kind of made some sense obviously with the decision they made because this is
Roseanne, this was her show, it's a name sake -- she's the name-sake of the show.
ASHER: Yes --
PALLOTTA: You just can't get rid of her without completely changing what the show inherently is.
ASHER: And just quickly, I have to go --
PALLOTTA: Yes --
ASHER: Do they get severance, all the people that were let go?
PALLOTTA: They keep that very close to their vest, but -- and plus, they don't know yet, they don't really know what's going to happen to them yet.
Some of them might be locked down with network contracts, we don't really know yet.
ASHER: All right, all right, Frank Pallotta, thank you so much, appreciate that. OK, so let me give you a final check of the markets before I loving
leave you. Stocks on Wall Street bounced back after a heavy selloff on Tuesday.
The Dow closed more than 300 points higher, boosted by energy and banking stocks, investors gained some confidence over the fiscal crisis in Italy,
hopeful the country might avoid a general election.
And that my friends is QUEST MEANS BUSINESS, I'm back tomorrow, I'm Zain Asher in New York, the news continues right here on CNN.
(COMMERCIAL BREAK)
END
