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Quest Means Business
Before President Trump Took Off From Washington, He Repeated His Demand That America's Allies Pay More For Their Defense; Tesla Is Mapping Out Its Own Future As It's Set To Build A Massive Factory In China That Will Effectively Double Its Manufacturing Capacity; Toyota Has Announced A New Car-Sharing Scheme Which It Says Can Change The Car Rental Industry As We Know It; All Trapped Boys and Coach Pulled Safely from Thailand Cave; Thailand Cave Boys Recovering in Hospital; Search for Survivors Begins After Japan Flooding Kills 155; George Clooney Injured in Scooter Accident in Italy; France Beats Belgium to Reach World Cup Finals; Stocks Slide as Erdogan Names Son-in-Law as Finance Minister; Democrat Senators React to Brett Kavanaugh's Nomination; Investors Optimistic About Corporate Earnings; European Stocks Rise as Earnings Season Begins; Airbus Unveils Rebranded C-Series as A220; Britain Celebrates 100 Years of the Royal Air Force; Saudi Arabia Eyes Economic Boost from Women Drivers. Aired: 4-5p ET
Aired July 10, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: There's the bell ringing on Wall Street. Dow Jones Industrials are up, the broader market is up. The techs
are up again. Do not buy as much and oh well, there we go - that sort of faded towards the end, but it was a gavel, and it's brought trading to a
close on Tuesday. It's July 10th.
Tonight, solidarity over money, Donald Tusk welcomes Donald Trump to Brussels with a word of advice as the President on stuff on the table.
Elon Musk is making a big bet on China; and the Bastille Day weekend like no other. France are heading to the World Cup. Live pictures from Paris
where the jubilation can be seen as France has just beaten Belgium in the semifinals.
I'm Richard Quest, live in the world's financial capital, New York City where of course, I mean business.
Good evening, breaking news tonight from Russia where France has made it to the World Cup finals. They've beaten Belgium by a single goal in St.
Petersburg, but not finishing less than 10 minutes ago. There was a very filled up signs of jubilation in Paris which has just about come to a
standstill while the streets to came to life with a goal in the 51st minute. The defender Samuel Umtiti found the net after a corner from
Antoine Griezmann, and that's all it took to send the Belgians home.
The scenes in Paris are extraordinary this evening with celebrations, fireworks - you can hear the noise. Don Riddell is at the CNN Center.
Wow, this is a real humdinger of an evening, isn't it?
DON RIDDELL, CNN CORRESPONDENT: I'd love to be in Paris this evening, yes, what a night those fans are going to have, Richard. Yes, and an
extraordinary achievement from the French team. They were among the favorites of the start of this tournament. People were talking about maybe
Brazil, maybe Germany, maybe Spain, but of course, as we know, all the heavy favorites crashed down along the way and it really shouldn't be a
surprise to see France in this position.
They have a team that is absolutely pack-full of megastars. They have grown in confidence and flare throughout this tournament. Remember, they
got to the finals of the European championships that they were hosting two years ago. They lost in the finals to Portugal, so they are a very, very
good team and I think they were really fancying themselves in the final against either England or Croatia.
When you think about the teams that France have had to put out to get to this stage, they of course knocked out Argentina, then Uruguay and Belgium,
the highest ranked team left in the tournament.
QUEST: So, if you have to grade the match that you just watched --
RIDDELL: It was a great game. It was earned to win, it was very open. We were expecting it to be that kind of game. Both teams really do have a lot
of attacking flare. I guess, the only surprise was, there was only one goal in it at this point from Samuel Umtiti just earlier in the second
half. But both teams had their chances. Both goalkeepers had to produce some really big saves to keep the scores down, but in the end, I do think
France deserved it even though Belgium had more of the possession and the Belgians had more possession in the second half, but they never really
liked scoring after France had taken had taken the lead.
QUEST: Now, Goldman Sachs have made their last prediction for the tournament. Now, before today's game, Don. They said Belgium would play
England in the finals with Belgium most likely to win. But earlier, they had gone for Brazil, but they got knocked out by the Belgians in the
quarter finals, so now, they've obviously done a bit of a nifty footwork. It's obviously France and they are still saying that between Croatia and
England, England will win. Who should win? Not will win, but on merit and form, who should win tomorrow between Croatia and England?
RIDDELL: But isn't it convenient that you can just kind of keep redoing your predictions. I mean, they've not gotten any of them right up until
this point. It's fascinating, isn't it? I mean, it's a great time to be a fan of all of these teams. Both England and Croatia didn't necessarily
that they would expect to be in this position in the so-called weaker half of the draw. They've had a great run to this point.
I would think that England should be the team to take on France on Sunday, but honestly, this has been the tournament not to make predictions in
because everybody has been made fools of them --
(CROSSTALK)
QUEST: Oh, humor me, Mr. Riddell. Humor me. I mean, look, you're looking at it from a sporting point of view. I take sort of the geopolitical
economic point of view. The Brexit point of view, the negotiations point of view and England, France, final will be quite something.
[16:05:09]
RIDDELL: It would be fantastic. It would be a great occasion. Yes, but I'm with you on that and I think it would be one of those finals that would
kind of speak to a lot more than just football, but of course, you know, football is football, sport is sport. You and I can be all poetic about
it, but at the end of the day, it's what the 11 guys in the pitch have to say about it.
QUEST: Don, thank you. Melissa Bell is in Paris. I am hoping that she hasn't been sampling the local vino. Hello, there you are, Melissa, you're
looking - the celebrations must be absolutely ecstatic.
MELISSA BELL, CNN CORRESPONDENT: You know, I'm standing here just outside the town hall in Paris, vast fan zone was behind me. You can see that now
the crowd have already moved up onto the other streets of Paris and all over this area has been closed off so have the Champs Elysees. They were
waiting until the victory to close off the avenue because all of these people are out here celebrating a win beyond the semifinal. Frankly,
Richard that everyone hoped for, but no one really dared believe it.
And Didier Deschamps, the man who is the coach of France looking as though he might just do something that very few have managed, that is lead the
team into a World Cup victory back in 1998, it was captain, and then led to victory. If they get through the final, Richard, as the team's coach. So,
there has been of course a lot of excitement about this particular side, the French did consider that they were pretty extraordinary, that they
might just make it through to the semifinal, clearly, getting through the finals is really more than anyone had hoped for here in France.
QUEST: Bare with me, stay with me, Melissa. Erin McLaughlin, I'm imagining the scenes in Brussels are not this jubilant.
ERIN MCLAUGHLIN, CNN CORRESPONDENT: That's right, Richard. In fact, let the camera pan around to show you where I am standing. Richard, that is
what a sea of disappointment looks like. Just a short while ago, this square was absolutely pack full of 10,000 people wearing the colors of the
Belgium flag - red, yellow, and black - I'm speaking to fans. They were so confident that Belgium had what it took to get all the way to the finals,
especially after that defeat of Brazil.
They were telling me that they felt that their time was now. That this would be history in the making. You know, the last time Belgium went to
semifinal was some 32 years ago, Richard. Many of the people behind me weren't even born 32 years ago. So there was a real sense of history.
There was also a real sense of unity here tonight despite cultural divisions here in Belgium between the French and the Flemish, they all
really united around the Belgium flag. But it was not meant to be in the end.
QUEST: Not meant to be for you, Erin in Brussels, more for your still Melissa in Paris. Don Riddell, we will watch your predictions closely and
then go a rogue way. All right, all thank you.
You saw the scenes in Brussels just then. I'm surprised anybody was at the airport to meet President Trump when he landed in Brussels a short while
ago. The mood of the NATO Summit is likely to be as somber as they saw in Brussels today in the cup fan zone. Before President Trump took off from
Washington, he repeated his demand that America's allies pay more for their defense. He said the meeting he'll have with Vladimir Putin next week
might be easier than the ones with the allies in Brussels and in the U.K. Donald Tusk, the President of the European Council urged Mr. Trump to
remember who his friends are.
(START VIDEO CLIP)
DONALD TUSK, PRESIDENT, EUROPEAN COUNCIL: First of all, the America, appreciate your allies, after all, you don't have that many. And you would
have spent more on your defense because everyone expects an ally that is well prepared and equipped. Money is important, but genuine solidarity is
even more important.
(END VIDEO CLIP)
QUEST: Arguably, those who haven't paid the bills always say that money is important, but solidarity is more important. Well, this is the heart of
President Trump's some would say, quite legitimate complaint. Now, under the NATO agreement, members are committed to spend 2 percent of GDP on
defense.
Of the 29 members, only five actually meet the requirement of 2 percent or more. You can see the green ones, the United States, the United Kingdom
and some of the northern countries. Now, the problem is NATO says most will meet the targets by 2024, but to put this in perspective, look at the
countries that pay less than one percent, and you're talking about Belgium, Luxemburg, and Spain spend less than 1 percent on defense at the moment.
The President's complaints aren't new and he is not the only one making them as CNN's Anna Stewart reports from London.
[16:10:13]
(START VIDEO TAPE)
ANNA STEWART, CNN CORRESPONDENT: It's U.S. President Donald Trump's biggest gripe with NATO.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Twenty three of the 28 member nations are still not paying what they should be paying and what
they are supposed to be paying for their defense. This is not fair to the people and taxpayers of the United States.
STEWART: After Russia annexed Crimea in 2014, NATO members pledged to spend 2 percent of their annual GDP on defense by 2024. The U.S. and the
U.K. do, but most don't, including Germany and Canada.
JENS STOLTENBERG, SECRETARY GENERAL, NATO: President Trump has a point when it comes to defense spending because we have not a fair burden sharing
in the lines now. The U.S. is paying more than 70 percent of all of the defense spending in the NATO alliance.
STEWART: The U.S. has long pressured its allies to open up their wallets.
BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: And that's why every NATO member should be contributing its full share, 2 percent of GDP towards
our common security. Something that doesn't always happen, and I'll be honest, sometimes Europe has been complacent about its own defense.
STEWART: Defense policy expert, Bastian Giegerich says spending more in the military isn't quick or easy.
BASTIAN GIEGERICH, DEFENSE POLICY EXPERT: You can't just put a next generation fighter jet on a airfield and assume that everything around it
will just happen. You need to train people, you need to provide support structures, you need to put a lot of pieces in place to do this.
STEWART: For some allies like Germany, it would need to almost double its defense spending. In 2017, the country spent about 1.1 percent of GDP on
defense. To reach 2 percent, it would have needed to spend an extra $40 billion. The result --
GIEGERICH: I think what we will be looking at is a somewhat larger German military, a fully modernized military that has re-equipped across air,
land, and sea. To be frank, even if you started that now, right now, it will probably take a decade to achieve.
STEWART: It's a scary thought for Germans. The country shrunk its military in both scope and manpower after the Cold War, and Giegerich says
spending more in defense to please Trump isn't a popular position.
GIEGERICH: The more it becomes an issue of spending money for Trump, the less likely you will see European members that increase their spending
actually because that's not a political argument that you're currently winning.
STEWART: Now, Germany says, it is pushing to get to 1.5 percent by 2024, with the goal of eventually hitting the NATO target. It's planning to hire
20,000 soldiers and more staff to fight cyber attacks. It's not the only ally changing its tune on defense.
STOLTENBERG: All allies have stopped the cuts in defense spending, all allies are starting to increase and the majority of allies have before has
not reached 2 percent, so we are really moving in the right direction.
STEWART: It may not be fast enough for the U.S. President. Anna Stewart, CNN, London.
(END VIDEOTAPE)
QUEST: Carl Bildt is with me, the former Prime Minister of Sweden. He says that the spending issue is more complicated than a simple 2 percent
target. It is more complicated, Carl Bildt, but the reality is that the treaty or the agreement requires 2 percent and countries - long standing
countries have had many decades to get to 2 percent and haven't, and it's justified for those who are paying the largest part to the bill to say,
"cough up."
CARL BILDT, FORMER PRIME MINISTER OF SWEDEN: Well, what was said by NATO, go back to the Summit in Wales when this Committee was made was that one
should aim at reaching 2 percent by 2024. So it was a long term aim, and if you look at what is actually happening throughout Europe, not primarily
due to the NATO commitment, but due to the defense requirement, is that we see fairly substantial increases in defense spending all across the board.
If we take Germany, which you highlighted, you will see over this time period an increase in defense spending by roughly 50 percent, that's a lot
of money. You're talking about the largest single economy outside - in Europe, so you will have a very large addition in the resources go into
defense. That is of course correct to say that there was a period of complacency. That applied to the United States as well. There was
virtually no U.S. forces left in Europe. All of the U.S. facilities in Europe were geared to operations in Iraq, Afghanistan and the Middle East.
We were sort of a basin position for far away expedition in our American phase. So complacency, there was, and now there are increases, yes.
QUEST: I need to talk to you about Brexit, your article in "The Washington Post," yesterday, you talk about the - you say, it's ugly and it's likely
to get worse and I think what you said of course is, what Theresa May is trying to do or was trying to do was combine the rhetoric of hard Brexit
with the policies of a soft Brexit.
[16:15:12]
QUEST: But wasn't that inevitable to some extent? And more importantly, do you think that the other European countries now recognizing the
difficult position that Theresa May is in will show the flexibility she sought in Parliament yesterday?
BILDT: No question, Richard that that will happen. I mean, the European Union has indicated roughly what kind of agreements are possible under the
rules that are there. And then the EU will have to take a look at the white pact with the U.K. government has got to produce next week, and see
what's going to be possible.
I do think that this combination that Theresa May has of the rhetoric of hard Brexit and the reality of soft Brexit, that creates a lot of problems
for her in the domestic political scene as well as externally. It would be better if she said, "This has got to be bloody complicated. We need to be
far closer to the European Union. There are some compromises we need to make." It's that she sounds like, it's a hard Brexit and then de facto
moves or wants to move very closely indeed.
QUEST: The European side does not appear to have shown any flexibility in the core issues that they've always known were going to be difficult for
the U.K.. And as Theresa May said yesterday, that you know, she's looked at every Brexit option backwards, upside down, around and about, this is
the best way forward. If they don't help her out, then they are pushing her towards hard Brexit?
BILDT: No, but I don't agree with that. I mean, the European Union has of course been in a rather different position that we have known what the U.K.
wants. It was only really around sort of the Chequers meeting at the end of last week that the U.K. government started to come forward with
something that perhaps is a semi-coherent position. So, there wasn't very much to negotiate with prior to that.
The European Union has made clear that there are numerous options on the table. The single market option along the lines of Norway, there is the
customs union option that was there as well. There might be other options, the Canada agreement type of option. So, there are three or four different
options that have been outlined by the European Union. And the U.K. has effectively said, "We don't want any of these particular options. We want
something very strange that is sort of trying to be inside the customs union by being outside of the customs union, trying to be inside part of
the single market, but not wanting to be inside the single market. And this is squaring the circle and I don't think it is going to work.
QUEST: Is everybody - you obviously talked about the leaders, you obviously talk to those at the top. Are people preparing seriously for a
hard Brexit or do they believe there will be a fudge deal at the end?
BILDT: I hope - well, I mean, one needs to think through that option, and I think one needs to think through that option in order to avoid it,
because to have the U.K. crashing out of the EU would have a lot of immediate very negative consequences, as well as create a lot of bad blood.
So, I hope that sort of - towards the end, that sanity will prevail and that that particular rather catastrophic position will be avoided.
QUEST: Always good to see you, sir. Thank you for taking the time this evening. We appreciate it. Thank you. As we continue tonight on "Quest
Means Business" the battle to confirm President Trump's Supreme Court nominee is now underway. His name is Brett Kavanaugh, and his record on
business is interesting and needs investigation. If you're a Tesla fan in China, there's good news and bad news. A new factory is coming to Shanghai
and the price of the Tesla is going up. It is "Quest Means Business" live from New York.
[16:20:00]
QUEST: Well, come along, we'll look in the future of mobility as we look "Future Forward." Tesla is mapping out its own future as it's set to build
a massive factory in China that will effectively double its manufacturing capacity. The Chief Executive, Elon Musk signed the agreement for a plant
in Shanghai. It's capable or will be of producing half a million cars a year. It was announced just as Tesla said it was raising the price of its
cars in China.
In other words, passing on the cost of the trade war between the U.S. and China. Clare Sebastian is with me. Fascinating, never mind the new
factory. Why are they passing on the cost? Which cost? These are the tariffs going from U.S. to China?
CLARE SEBASTIAN, CORRESPONDENT, CNN: Right, these are the tariffs that came in last Friday, barely a few days have gone past and already, we're
seeing the prices have gone up on Model S and Model X cars in China and they are not insignificant price rises, Richard. It was about $20,000.00
or the equivalent in yuan on the Model S and $40,000.00 on the more expensive Model X.
QUEST: So, that means that Tesla has decided, obviously to pass it on and not to absorb, or at least we don't know how much they're absorbing,
because they'll also about to pay more for their steel that may be imported.
SEBASTIAN: Right, exactly, but I think overall, this is the dilemma that these companies that are caught in the middle of this trade war face and
the decision and the calculation that Tesla seems to have made as you say is to pass it on. This is a company, don't forget that has faced
significant cash flow issues recently. They have skeptical shareholders out there wondering how they're going to become cash flow positive as they
promised, plus the cost of this factory in China, Richard. We don't even know how much it's going to cost yet, but that is going to be significant.
QUEST: But the share price, Tesla share price, which was down in the doldrums last - earlier this year, has recovered some 30 percent or 40
percent over the last few months, and was up again over the last couple of days.
SEBASTIAN: It's had a rough ride. It went up - you'll remember, it went down a bit after that rather unfortunate --
(CROSSTALK)
QUEST: It was down at 316, it's now back at 322.
SEBASTIAN: Right, then it went up about 25 percent after their recent shareholder meeting, and then it came down again another 14 percent to 15
percent and now, it's come up a little bit in the last few days, so it's all over the place. People are looking at this company and thinking,
"Well, it's great that they finally started to meet their Model 3 production targets, but when are they going to actually show that they are
going to be cash flow positive?"
And I think, that's why the reaction today was positive. People are looking at features in China --
QUEST: Is the market just not being short term when it looks at Tesla?
SEBASTIAN: That is what is Elon Musk would say.
QUEST: Well, you know, the man has created something that nobody has created before, and done it in a brilliant way and all you're worried about
is whether you're going to make the quarterly numbers?
SEBASTIAN: But looking at the positive reaction today from the market is a long term play because obviously there are some concern about raising cost
in China, raising prices for consumers, how that could dent demand, but building this giga-factory don't forget, China is Tesla's largest factory
outside of the U.S.. It's the world's largest electric vehicle market. For them to do this and to fully own this factory, which is the first for
an American company is really significant for their long term growth.
QUEST: Back to general tariffs, where else are we seeing the strains now starting to show? Obviously, in car manufacturing, what about agriculture,
pork bellies or whatever else, soybeans? Where are we starting to see the strains yet?
SEBASTIAN: Yes, I mean, I think there are movements. So far, there has been very few companies that have actually come out and said this is --
(CROSSTALK)
QUEST: We'll find out in the quarterly earnings --
SEBASTIAN: We're going to find out in the quarterly earnings. Daimler is the only carmaker who has said this is actually going to hit profits, but
BMW are also going to be raising prices in China, they told me today. They don't know by how much yet, but they said, they are not able to fully
absorb the cost. So, a lot of factors are impacted, but it does seem that the carmakers are particularly caught in the middle here.
QUEST: Clare, thank you. Toyota has announced a new car sharing scheme, which it says can change the car rental industry as we know it. Now, the
plan is launching in Hawaii for some reason best known to Toyota. The users will be matched with a Toyota at various stations. They can unlock
and start the car with their phone, and then the user for however long they need - it's just the latest move by Toyota beyond its main business of
making and selling cars. Last month, it made a record $1 billion investment in the ride hailing firm, Grab, an Uber rival.
[16:25:13]
QUEST: In March, it said it would invest almost $3 billion researching self-driving cars, and a new partnership with Mazda working on electric car
technology. Toyota was also an early investor in Tesla and Uber; and now, this car sharing scheme in Honolulu. The man you see testing it out there
is Zack Hicks, Chief Executive of Toyota Connected in North America who joins me now. And Mr. Hicks, good to see you, good to have you. Look, why
are you going into this car sharing business?
I mean, there are plenty of other companies doing it. They are doing it well, why compete against companies that you should be selling cars to, not
being competition against?
ZACK HICKS, CHIEF EXECUTIVE, TOYOTA CONNECTED IN NORTH AMERICA: Well, good morning, Richard from Honolulu, and I can tell you, we launched Toyota
Connected which is our big data science company, the technology arm of Toyota about two years ago, and a year into the company, when we were
talking about building a platform that would allow commerce for our vehicles and consumers and commerce to connect together, Servco who is our
distributor in Hawaii came to us. They've been a partner with us for about 60 years and they think consumer behavior and purpose is changing and they
wanted to try out this market.
And so that's what we did, so working in conjunction with Servco, we launched Hui and Hui in Hawaii means extended family or club and what we
started off with here in Hawaii is 25 locations throughout Honolulu between Honolulu and Waikiki and 70 really nicely appointed Toyota and Lexus
vehicles and the great thing is, you can download and app really quickly, walk up to a car, find where there is a car available and use your phone to
unlock it and drive it away.
QUEST: Right, right.
HICKS: It's really to use --
QUEST: But there are other companies, Zipcar of course being the largest that are doing this as well, so what do you bring to this? What business
is it of a car manufacturer to be getting into all of these other areas of investing in Lyft of investing in these other things, your business is
selling and manufacturing cars.
HICKS: Yes, well, I think that there is an opportunity here, so not only the cars have embedded technology particularly what is known as a DCM,
embedded into the vehicle combined with now new mobile technology. You don't have to have this disparate clunky experience in being able to
connect to a car, so we had purposely built this technology and this platform uniquely for this business, and so you don't have extra devices on
the car.
So, being embedded in the car, we're also giving to the fleet managers is transparency into that vehicle, so not just for the consumer side but for
the fleet management side to know exactly where these vehicles are located and what fuel is in them, and you know the condition of the tires in the
vehicle, so I can also now send a mobile service delivery or even gas delivery to that vehicle, give a one-time trunk release and allow them to
fill up the tank and go on.
This isn't something that people that are kind of entering into the market as an aftermarket and easily do.
QUEST: How much of all of these different areas of Toyota Connected getting involved in? How much of this is a recognition that in the future,
the number of auto sales to individuals and companies is going to fall and I used to own a car in London, I certainly don't now living in London or
New York, I use one of the car sharing schemes. I'm not alone in that. Your sales of new cars, you have to find new markets.
HICKS: That's right and consumer preferences and behaviors are certainly changing, but I'll tell you, what we saw earlier on, we did a car sharing
program in Dublin, Ireland and what we saw there were people that never considered a Toyota at the entry level actually after driving one of our
vehicles had a higher conversion rate than what we saw to people - compared to those that hadn't tried the vehicle, and we certainly saw that here in
the Hawaiian market, when we launched this, we put some Lexus vehicles in the market and several customers, they tried the Lexus that I never saw
myself as a Lexus customer now actually became a Lexus owner from this. So, while it could potentially be displacing some buyers, it certainly is
attracting more that would be considering it.
QUEST: Well, I am envious of you being out in Honolulu. I am sure the weather is glorious. So, I look forward to trying it next time. Thank you
very much. Good to see you, sir.
It is QUEST MEANS BUSINESS from New York. When we return, Turkey's President gains sweeping new powers to reshape the country's economy. He
appoints his son-in-law as the Finance Minister, a man with absolute limited experience of running such a large economy and investors that watch
are unsurprisingly are getting worried.
(COMMERCIAL BREAK)
[16:30:00] QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in just a moment. Turkish stocks are sinking after President Erdogan picks
his son-in-law as the finance minister. And it's a proud moment for France -- oh, no, not the World Cup, the launch of the Airbus A220, and we're
excited about that on this program.
As we continue, you're watching CNN, and on this network, the facts always come first. An ordeal that lasted nearly three weeks in a cave in Thailand
is over. The remaining members of the youth football team and their coach have been pulled to safety. All 13 are at the hospital where their
conditions are being observed.
The last trip to emerge from the flooding cave on Tuesday included a doctor and three Navy SEALs. Most of the boys families have not been able to see
their children in hospital yet, tests are still underway to make sure that the boys are not at risk of infection.
Speaking exclusively to CNN, one of the boys' father said he could hardly wait to see his son.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)
(END VIDEO CLIP)
QUEST: Rescue teams in Japan continue to work feverishly looking for survivors after flooding and landslides killed more than 150 people in this
region. Thousands of people are staying at the evacuation centers and the Prime Minister Shinzo Abe is expected to visit the flooded areas on
Wednesday.
Actor George Clooney is out of hospital after a scooter accident that happened on the Italian island of Sardinia. A police officer says Mr.
Clooney was hit by a car after the driver failed to stop at a turn. Mr. Clooney told the officer he's doing fine and so far no charges have been
filed against the driver.
And certainly yes, look at that. The Champs-Elysees in Paris tonight as France make it to the World Cup final. They beat Belgium by a single goal
in Russia's St. Petersburg when Samuel Umtiti scored to decide it, it was the 51st minute. Now, France will go on to face either England or Croatia
in this weekend's final.
The market backlashed to President Erdogan's shake-up of Turkey's finance ministry, it's been swift and suitably severe. The Turkish lira struggling
to recover after a 3 percent fall on Monday. Mr. Erdogan then appointed his son-in-law as finance minister.
[16:35:00] Turkey's benchmark stock index fell 3 percent on Tuesday as the rating agencies voiced concern about the political decision. Now our
Emerging Markets editor John Defterios is in London. And so far, what do we know about the son-in-law?
I mean, arguably, just because he's the son-in-law doesn't mean to say he's not qualified to be finance minister.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, I don't know about that, Richard. Let's just take a look at the market reaction over the last
24 hours. I think it tells us a great deal, so too does the very brief set of comments from S&P saying we're just watching Turkey carefully.
This transfer of son-in-law to super minister I should add is going to cover both finance and treasury as was raised in the alarm bells here. And
the fall of its own, the lira on Monday when the announcement was made was the worst performer since the attempted coup exactly two years ago.
It's been a pretty nasty though, 2018, I wanted to take a snap shot of the three factors that we're looking at here. Number one is the stock market
correction, better than 16.5 percent, the lira which is down 17 percent and we have the corporate bond shooting up today to a record high, 17.84
percent.
As to your point about the son-in-law, I think the best comparison is to the White House and Jared Kushner. Prior to this, he was the energy
minister, but he kept a very low profile, very close relations with Russia, the new pipeline connections going into Turkey are also with Iran.
But this is a very different rule as you well know, this is public-facing role, managing the capitals, the financial capitals of the world like New
York and London. He replaces Mehmet Simsek who was an economist in London at bankrupt Merrill Lynch and had very good relations with New York.
And you know the backdrop with President Erdogan, he thinks there was an interest rate lobby against Turkey, so going to have to try to reset this
going forward. Clearly, with the son-in-law that doesn't have that public- facing dialogue if you will in the financial capitals.
QUEST: All right, well, the issue is the central bank, isn't it, fundamentally, at the end of the day. The issue is whatever remaining
independence of the central bank is now being questioned by the new degree from the president which we haven't seen the final version of, but could
firmly put the central bank under the control of the president.
DEFTERIOS: And he'll get the chance to pick the central bank if he chooses to do so, Richard. I think the clear and present danger for the central
bank and for the new super minister of course is inflation right now. It's running out of control. And in fact, if you take a look at my list of the
biggest worries, it has to be inflation of above 15 percent, which is at a 14-year high.
Often overlooked in this debate by the way, Richard, is it's still taking in and arresting people, 130,000 so far, 18,000 over the weekend, another
big concern with the lira falling right now is the rising corporate debt in Turkey. It's about a quarter trillion dollars.
So it is a huge challenge here. But once powerful business association TUSIAD which has been sidelined by Erdogan were saying with almost begging
for an independent economic policy, I think they're going to be left wanting in that policy going forward, Richard.
This is the reality today. Can they rebuild confidence for the lira? Can they stabilize the economy and the current account deficit and not just go
for growth kind of willy-nilly going forward. Growth is strong, but inflation's doubled that.
QUEST: John Defterios in London, John, thank you. The battle for President Trump's Supreme Court nominee is Brett Kavanaugh is on Capitol
Hill drawing up supporters, Democrats are vying to oppose his confirmation. Lawmakers are scrutinizing his views on issues like abortion, guns and
business.
Earlier last year, Judge Kavanaugh argued that rules opposing in that neutrality violated free speech. Regulators, they drove -- returned those
rules. In 2016, he said crisis -- there are banking laws that place too much power in the hands of the director of the Consumer Financial
Protection Bureau.
And four years before that, he argued the EPA, the Environmental Protection Agency exceeded its authority in regulating green house gases, and later
criticized the agency for failing to consider costs in imposing new regulations. Joan Biskupic is CNN's Supreme Court analyst.
Let's just start, before we get into the nitty-gritty, there's always the fundamental question with a Supreme Court nominee, are they competent and
qualified to be -- whether their views may be, are they competent and qualified to be on the highest court in the land?
And I think the consensus would be whether you love him or hate him is his views, he is competent and qualified.
JOAN BISKUPIC, CNN SUPREME COURT ANALYST: That's right, you might remember, back in 2005, there was this moment when President George W. Bush
nominated a woman by the name of Harriet Miers who had no constitutional law background really, so to speak.
[16:40:00] She had been a White House counsel to President Bush and all sorts of questions arose over her competency and her credentials. That's
not the issue here, and it hasn't been the issue really since 2005. Brett Kavanaugh has spent many years in both the executive branch and the
judiciary the last 12 -- and are U.S. Court of Appeals for the district of Colombia Circuit which handles so many regulatory and business matter that
you just laid out there.
So competence is not --
QUEST: Right --
BISKUPIC: An issue here.
QUEST: So, does he rubber stamp on the business side in the sense that is he pro-business in his decisions?
BISKUPIC: I would say if you want to -- you know, that some people would claim that was more of a caricature, but I think that's an accurate
assessment that generally, he would be more -- he would be more in favor of business, more against regulations.
In fact, he was in descent to as you mentioned there when the --
QUEST: Right --
BISKUPIC: Polls (ph), D.C. Circuit upheld the power of Consumer Financial Protection Bureau in part because he said agencies have become this --
QUEST: Right --
BISKUPIC: You know, very strong threatening institution, encroaching on the power of the executive president --
QUEST: Right --
BISKUPIC: And hurting business, yes.
QUEST: Sketch out for me a way in which the Democrats can stop this nomination from taking hold or from taking office. Bear in mind, they are
in the majority, unless they can hive off one or two Republican senators.
BISKUPIC: Yes, under their scenario, there's something secret, because right now, what we know doesn't look like it's going to stop the nomination
of Brett Kavanaugh, precisely because of the mass few lot just laid out.
Is that the Republicans hold the majority in the Senate, the Democrats are closed to being able to thwart things, but you know, we no longer have the
kind of filibuster rules that we had up until April of 2017 when Senate Majority leader Mitch McConnell got the chamber to --
QUEST: Right --
BISKUPIC: Change the structure, so that, you know, Gorsuch could go through. So it's a really tough battle. So to answer your question, there
has to be something in this record that we don't know about right now or there will be clear about for example his potential rejection of abortion
rights for women or something -- something that would come out that could be a game-changer.
But right now, I just don't see it.
QUEST: OK, let's talk about that because the big issue of the two big ones or the --
BISKUPIC: Yes --
QUEST: Three constitutional, that's gun control, obviously marriage equality --
BISKUPIC: Right --
QUEST: And abortion rights or at least a woman's right to choose --
BISKUPIC: Yes --
QUEST: Roe v Wade. How close, Joan, how close can the Senate in its questioning of him get to a yes or no, are you in favor of Roe v Wade if
the issue came up again, would you be in favor of reversing the precedent?
BISKUPIC: Oh, man, creative questioning and creative answering all coming down to a session that will not be truly illuminating about his views. I
really believe that, I've just seen it so much over the last 20 years including most recently in the Spring, 2017 hearings for Neil Gorsuch.
The Democrats are going to try and try and try to pin him down and what he'll say is Roe v Wade is precedent. It's important, you know, the court
has upheld it, but he will -- I cannot envision a scenario that he truly reveals where he will go on that.
It's just -- it's just been the state of play for us now.
QUEST: OK, thank you, we'll talk more about this, but it's fascinating as this process goes on, thank you, good to have your input, thank you.
BISKUPIC: Thank you.
QUEST: As we turn to markets tonight, the Dow rose sharply and the Russell 2000 -- well, rose though rather Russell 2000 on this program, it is an
all-time high and they fell back. Investors are optimistic about earnings, Pepsi's results beat expectations, Pepsi's shares are up almost 5 percent.
We will soon be bringing out the final share case of course to show you exactly how the earnings season is progressing and the same story in Europe
where stocks closed slightly higher than the most trope ongoing concerns about not surprising industry -- Theresa May government and you can see
that in the numbers.
Whether it's Brexit plans in turmoil or an English World Cup semifinal, there's one man truly seems (INAUDIBLE) brokered of all time, simple, keep
calm and carry on and no one epitomizes that more than the Royal Air Force. Celebrating the centenary of the RAF.
[16:45:00] (COMMERCIAL BREAK)
QUEST: So, look, this may be familiar to hashtag our gigs, the Mumbai DA C-Series is the 100 or the 300, but no, look closely, it's now called the
Airbus A220, it's a rebranded version of the Bombardia plane. Now, of course, Bombardia is air -- civil aircraft division is part of Airbus or
owned by Airbus and this is the new aircraft.
It took its debut flight at the Airbus headquarters in Toulouse, remember this plane carries about 100 to 150 passengers, it will complement the 320,
the existing range, very sexy front -- cockpit window, similar to the A350. But the interesting thing is that it is now of course with Embraer going to
Boeing, well, it's all pretty much the same sort of idea.
Britain bucks down with Brexit has lifted high and proud as the Royal Air Force celebrated its centenary today with a huge fly pass across the south
of England. Allow me to show air corridor or wind commander Quest at the helm. Now, there were other -- well, now, better to be there, better
to(ph).
There were nearly a 100 planes and they followed the route from Ipswich, we're going to come down from Ipswich, we're going to come down from the
eastern part of England or (INAUDIBLE), you're going to go to the mall over here, right past her majesty the queen, out towards Ronelean and there's
Windsor Castle.
Be careful of Heathrow Airport which is on the way, it was an extraordinary fly-pass of extraordinary talent. I spoke to Air Commodore Nigel Bradshaw
(ph) about today's event which reminded me of the historic and heroic dumbusters.
(BEGIN VIDEO CLIP)
ELIZABETH ALEXANDRA MARY, QUEEN OF ENGLAND: Today is a very special day, I remember the battle of Britain being fought in the skies above us, and we
shall never forget the courage and sacrifice of that time.
QUEST: What does the future imply for an Air Force which has such an illustrious past, but faces many problems at least of which are pending
what role it needs to play in the future.
UNIDENTIFIED MALE: I think the Air Force is always had innovation at its core.
UNIDENTIFIED MALE: I'm going into attack, stand by (INAUDIBLE) by the order that I tell you.
UNIDENTIFIED MALE: Our people have always been innovative of equipment has always been cutting edge, we've been adaptable, we've been flexible to deal
with variety of scenarios and situations that have been (INAUDIBLE). As the world has changed around us, and I -- you know, I'm confident that the
key factors will be achieved in the first 100 years.
But we will remain just (INAUDIBLE).
(END VIDEO CLIP)
[16:50:00] QUEST: And I leave you with this part of the program with the words of Winston Churchill, "never in the cause of human conflict was so
much owed by so many to so few."
(COMMERCIAL BREAK)
QUEST: A recent study says that Saudi Arabia's decision to end its ban on women driving could actually boost the Saudi economy by $90 billion over
the next 10 years or more. Careem, which is the Middle East's answer to Uber says it will help transform the country and Careem is already hiring
female drivers and reportedly attracting takeover interest from Uber.
I spoke to Careem's co-founder before those reports emerged and there was enthusiastic opportunity he said across the country.
(BEGIN VIDEO CLIP)
ABDULLA ELYAS, CO-FOUNDER, CAREEM: I cannot think of more exciting times to be in Saudi than now. We indeed opened up our platform for captainess
(ph), how we call them, to come on board, female drivers and drive for Careem. And you know, we are super excited about that because our mission
is to ease the lives of people and so far we have been able to create income opportunities for men, Saudi men who came on board and have driven
with us.
Now with the decree coming to action, we are able to address a whole 50 percent of the society and tell them, come on board and drive for Careem,
we give you an income opportunity and with that we transform your life and make it more easier and more enjoyable.
QUEST: This is indeed a major shift, and I suppose the next -- you know, it is always the case of not what just happened, but what comes next
because the prospective captainess(ph) still need male approval or permission to apply to become captainess (ph), don't they?
ELYAS: So when captainess (ph) apply to work on Careem, they can apply to work on Careem without any additional approval from someone else. We
opened up the platform, 2,000 women applied and they are now going through the training process and some of them are already driving around since last
Sunday and driving our passengers around.
I cannot -- I'm not here to predict what will happen next in terms of change of regulation, but what I know for a fact is that a lot of what we
have being knowing as the social rules in our society are being changed, and we are as excited and very ready.
And I'll give you an example. Two years ago, it was an absolute taboo for a Saudi to drive as a taxi driver. Now, when we opened up our platform for
Saudis to come on board, everybody told us this is not going to fly at all. When we did, we completely transformed our industry.
[16:55:00] By today -- and I'm talking only about two years, by today, we have 170 men, Saudi men -- 170,000 Saudi men already working for us here on
our platform, and we're talking about 95 percent of the overall fleet is now Saudi.
And with that, I'm very confident that the change which is happening will pick up very fast.
(END VIDEO CLIP)
QUEST: The CEO of Careem, and we will have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, the mantra keep calm and carry on, the Second World War famous in Britain was very much on display in the United
Kingdom, not only with Brexit turmoil with the government on its last legs and absolute chaos over what's happening, but then there's nothing
magnificent red arrows fly past over London.
It's the centenary of the Royal Air Force. Keep calm and carry on, well, all need it in England for tomorrow, for their World Cup semifinal against
Croatia because if they win -- well, look at the scenes in Paris tonight, just imagine what will happen. A final in the World Cup between England
and France?
Arch rivals, oh, you couldn't write the script for this -- all at the same time as Brexit and the two sides are fighting -- keep calm and carry on.
That will be the mantra that we'll hear again and again, I promise you, in the next 24 hours, be still my beating heart.
And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York -- and markets. Whatever you're up to in the hours ahead, I hope it's
profitable, we will do it again tomorrow.
END
