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Quest Means Business
Trump Says He'd Be Willing to Meet with Iran's Leadership Without Preconditions; Deadly Indonesia Earthquake Traps Hundreds of Tourists; A Top Official In Laos Says Substandard Construction is to Blame For Dam Collapse; Malaysian Authorities Say They Have Failed To Determine Why Flight MH-370 Vanished Four Years Ago With 239 People On Board; Zimbabwe Votes in First Post-Mugabe Election; Trade War Hits Corporate Earnings; Harley-Davidson Unveils First Electric Motorcycle; U.S. Program Tracks Unsuspecting Air Passengers. Aired 4-5p ET
Aired July 30, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHANIE SY, CORRESPONDENT, CNN: Trading is over on a tough day for tech stocks. It's Monday, July the 30th. Tonight the CBS board meets to decide
the CEO's future, a harassment scandal hangs over Les Moonves. The FANG fallout continues as the NASDAQ flips 1% and Hog 2.0 - Harley-Davidson
tries to tempt the next generation of riders. I'm Stephanie Sy, this is "Quest Means Business."
Tonight, a media titan awaits his fate. The CBS Board of Directors is meeting and is expected to form a special committee to investigate CEO, Les
Moonves and the overall culture at the network. It's unclear if Moonves will be asked to step aside during the probe. Six women told reporter,
Ronan Farrow that Moonves sexually harassed them.
Farrow spoke to CNN earlier and said a culture of fear prevented the women from speaking out sooner.
(BEGIN VIDEO CLIP)
RONAN FARROW, AMERICAN JOURNALIST, LAWYER, AND FORMER GOVERNMENT ADVISER: One of the things that made these women so afraid to speak out, I mean,
this took months and months of complicated conversation, these were not people knocking on my door. Even Illeana Douglas who did reach out after
the Weinstein story didn't reach out saying, "I'm ready to go on the record." They were all scared, and I think that comes from the fact that
this is someone who is at the heart of the financial fortunes of a company that is a really important institution.
And it will be an interesting test of resolve and of whether a company and a board is willing to live up to the kinds of statements we've seen since
the popularization of the #MeToo Movement because this is more than cosmetic. I think accountability here will mean potentially taking a hit
in terms of the bottom line.
(END VIDEO CLIP)
SY: Dylan Byers has been all over this story and joins us from Los Angeles. So, Dylan, this is a sexual harassment assault corporate culture
story mixed really with a big business story, what will this come down to for the Board and what do they need to consider.
DYLAN BYERS, SENIOR MEDIA REPORTER, CNN: Well, you know, it's really interesting actually, just as you were going to air, the Board concluded
its meeting today and decided they are of course going to proceed with the investigation and they've selected a committee to oversee that
investigation. They are not going to suspend Leslie Moonves from his position as CEO while that investigation takes place, or at least if they
are going to do that, they didn't decide if they were going to do that today.
Now, you're absolutely right, the considerations here touch on both cultural considerations, the #MeToo Movement. It's been nine months since
Harvey Weinstein was first accused of sexual misconduct, nine months later, we now have a media titan, one of the most influential, largely well
respected and certainly, well paid figures in Hollywood who now - his career stands on the precipice.
Meanwhile, CBS itself is locked in a bitter dispute with Viacom and CBS chairwoman Shari Redstone over the fate of that company as to whether or
not those two companies should merge. So, the implications here range across business and culture and that is why all of Hollywood is sort of on
the edge of its seat waiting to see how this investigation plays out and also waiting to see what the CBS Board of Directors ultimately decides to
do about Les Moonves.
SY: And of course, you bring up that Viacom deal mired in legal dispute as well, Dylan, what are financial analysts and investors saying about how
having Les Mooves embroiled in these allegations may affect the outcome of this. Are they weighing in either way and if he goes, is there a sense
that there is a greater likelihood that we will see a merger with Viacom and CBS?
BYERS: Yes, absolutely. Once you have Les Moonves out of the picture, it becomes a lot easier for Shari Redstone to unite these two companies. Now,
the reason for that being, Moonves fought against this merger so hard that he even filed a lawsuit against Shari Redstone which as of now is scheduled
to play out this fall. If you take away Moonves, it becomes a lot easier for Redstone to unite these two companies, and of course, in the media
landscape right now, that is so significant because it's a game of scale. Everyone is trying to become bigger as they try to compete with the new
force that is really Silicon Valley - Amazon, Apple, Facebook - all of these companies have to do that.
At the end of the day, both CBS and Viacom are small companies in the grand scheme of things and even united, there's a question as to how big they
would be and how viable they would be as competitors to some of those big companies I just mentioned.
But clearly, that is Shari Redstone's goal. If she gets - if Les Moonves gets moved out of the picture. She has a clear path towards making that
happen.
SY: All right, Dylan Byers, thank you so much. The head of CBS Films says she has known Les Moonves to be a champion of women inside CBS. In fact,
Terry Press wrote in this comment on Facebook quote, "I do not believe that it is my place to ...
[16:05:13]
SY: "... question the accounts put forth by the women. But I do find myself asking that if we are examining the industry as it existed decades
before through the lens of 2018, should we also discuss a path to learning reconciliation and forgiveness." Here to discuss all of this Chloe Melas,
she is with me here in New York. She is our entertainment reporter and she has covered the #MeToo Movement quite extensively and broken her own
stories on that front.
We are also joined by Catherine Mattice Zundel in San Diego. She is President of Civility Partners, which helps companies create better
workplace cultures. Ladies, thank you both for your time. Chloe, I want to talk about that sentiment echoed by the head of CBS Film. Are there
many people at CBS who are echoing this sentiment, in essence maybe we should forgive him because this was another time and give him a pass?
CHLOE MELAS, ENTERTAINMENT REPORTER, CNN: So there have been individuals that have come forward in support of Les Moonves since Ronan Farrow's
investigation came out. Look, there is a wide spectrum of bad behavior that we're seeing come out in this #MeToo Movement and you find that some
people give some a pass because it doesn't quite hit the bar of Harvey Weinstein for some people out there, and I have experienced that with some
of my own stories and with an investigation that I did on Morgan Freeman that came out recently.
And you have to ask yourself this question, is that, the accusations against Les Moonves in this piece in "The New Yorker" it doesn't matter if
it was 20 years ago. It doesn't matter if it was five years ago. It was bad behavior then, if it was true, and it's still bad behavior now. So, to
give someone a pass because it was so many years ago, I can't quite reconcile that thinking right there.
But I do think that there is a way forward because this does open up the conversation about what is and isn't okay in the workplace and definitely,
pinning a woman down, forcing yourself on her, trying to kiss somebody is never okay, and I am just glad that these stories are coming out because it
will and my hope stop any behavior like this from happening going forward hopefully.
SY: Everyone talks about a degree and while these allegations may not have risen to Harvey Weinstein's degree, Catherine, what is depicted in the
article by Farrow is sexual assault. Moonves denies that there was any assault. He doesn't deny that he tried to kiss the actress interviewed in
the piece, what do you think of the excuse of, "I didn't invent the casting couch."
CATHERINE MATTICE ZUNDEL, PRESIDENT, CIVILITY PARTNERS: Well, I don't think that's fair excuse. I think everybody needs to be held accountable
to their behavior. Somebody violates somebody else's personal space or tries to force them to kiss or anything like that, it needs to be
addressed, and I think any time we allow lesser behaviors to go so it was, "I didn't invent the casting couch, I just tried to kiss her." Anytime we
let any of that kind of thing go, we are creating opportunity for the worst things to happen like the assault."
SY: And what does it mean Catherine that we're talking about the CEO of the company. He was not CEO necessarily at the time of any of these
allegations, but we're also talking about Jeff Fager who is the executive producer of "60 Minutes," the flagship show and the allegations against him
and what does that mean for CBS culturally, because the article also goes into lower levels examples of this kind of behavior. Does it work that
way? Does it permeate an organization when you have your leadership accused of this kind of behavior?
MATTICE ZUNDEL: It does, so CBS has an opportunity if all of this is true, they have an opportunity to take a stand and say, "We're not going to
tolerate this kind of behavior no matter what level of the organization you're at." So, CBS needs to do a lot more than for example, remove him,
if it turns out all of these things are true and the investigation has a bunch of findings. They need to take a stand against any behavior that
goes against one's right to have a dignified and healthy and safe work environment no matter the level that somebody is at.
SY: Chloe, CBS has been described by some former people that have worked there, former employees as an "all boys club," that they do things the old
school way. How do these allegations contribute and reinforce that image of CBS and how much do they need to really do something about the culture
now that this has all surfaced?
MELAS: Great question. Well, according to this investigation, Les Moonves allegedly knew that there was bad behavior by other people in positions of
power including Jeff Fager and that those people were promoted as opposed to fired or demoted. That there was a culture of silence and people were
afraid that they were going to be retaliated against by Les Moonves or by other people ...
[16:10:15]
MELAS: ... in the industry. Katie Couric came out and she used to work at "60 Minutes" and she described CBS as a boys club. I think that CBS has
some very important decisions to make because it's a huge company and it looks as though overall, the culture there has not been great and
hopefully, they can move forward with the rest of everyone in TimesUp in making these changes for safer workplaces and to not suspend him doesn't
really send that message out there.
SY: Chloe Melas and Catherine Mattice Zundel, thank you both for your insights on this. Well, Donald Trump wants to bring his deal making skills
to the table with Iran. Just one week after threatening the country with quote, "consequences the likes of which few throughout history have ever
suffered," end quote, the US President now says he is ready to meet with President Rouhani, quote, "Any time they want." Meanwhile Mr. Trump seems
to be fostering a new kind of special relationship in Europe. He has called Italy's Euro skeptic populist Prime Minister, a new friend in a
joint press conference, Monday.
The two men heaped praise on each other, but it was Mr. Trump's comments on Iran that have raised the most eyebrows.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I would certainly meet with Iran if they wanted to meet. I don't know that they're ready yet. They
are having a hard time right now. But I ended the Iran deal, it was a ridiculous deal. I do believe that they will probably end up wanting to
meet and I am ready to meet any time they want to, and I don't do that from strength or from weakness. I think it's an appropriate thing to do. If we
could work something out that's meaningful, not the waste of paper that the other deal was, I would certainly be willing to meet.
UNIDENTIFIED FEMALE: Do you have preconditions for that meeting?
TRUMP: No preconditions, no. They want to meet, I will meet.
(END VIDEO CLIP)
SY: Jeff Zeleny joins us from the White House now. Jeff, we've heard this before in reference to North Korea's leader, Kim Jong-un and they did
indeed meet. So, has the White House expanded or clarified the US President's comments on a potential meeting with Iran's President?
JEFF ZELENY, SENIOR WHITE HOUSE REPORTER, CNN: Well, look, this was the President answering the topic of Iran earlier today and there's not
necessarily any strategy for when a meeting would be. He is not extending an invitation, but it's very much in line with what President Trump has
done with other leaders, as you said, Kim Jong-un is the most obvious example here, the meeting - the summit in Singapore just a month ago, a
little over a month ago.
It was something that the President believes that he can win over a dictator leader. What's interesting in this, Stephanie, is that in the
timing of just a week ago, the President sending out that threatening tweet, and today, saying he will meet without preconditions. Once a upon a
time, it wasn't that long ago in fact when then Senator Barack Obama, some 10 years or so ago was running for President. He said he would meet with
leaders without precondition, was criticized by Republicans and Democrats alike at the time, but of course, this is something that President Trump
believes that he should do, would meet without precondition.
So, we'll see if anything specifically comes of that, but the sanctions on the Iranian regime are coming up in the next month or so, so that is
something to keep an eye on as well if they will do a new deal, if they won't.
We'll see if any meeting actually would end up happening in the future. The rhetoric has been pretty hot, but of course, it was on North Korea as
well and that changed at least in the short term, so something we're keeping on Iran, Stephanie.
SY: Jeff, another headline that came out of the question and answer session between these two leaders, we know that the real bonding point
between Trump and the new Italian Prime Minister is their hard line stance on immigration and Trump was asked about whether he would be willing to
shut down the US government, if he doesn't get funding for the border wall, what was his response?
ZELENY: Look, the President - the US President said he would be willing to entertain the idea of going through the process of shutting down the
government if he did not get that funding for the border wall. We're talking about some $25 billion or so. Now, he said - and he left
considerable wiggle room here, he said he is open to negotiation on this, but he said, he would consider shutting down the government.
One issue here, Republicans on Capitol Hill who control Capitol Hill, Senator Mitch McConnell of course, the Senate Majority Leader not in favor
of this strategy at all, and we'll see how serious the White House actually is about it because the government shutdown could do one thing, the White
House really wants to see done and that is the confirmation of the Supreme Court Justice, the nominee, Brett Kavanaugh if the Senate is consumed with
the government shutdown, that could push off the confirmation of the Supreme Court Justice.
So, I'd be very surprised if a shutdown actually happens, but the President certainly holding up this potential leverage as he made that immigration
argument today standing alongside the Italian Prime Minister here, Stephanie.
(END VIDEO CLIP)
[16:15:11]
SY: Okay, Jeff Zeleny at the White House for us. Thank you, Jeff. It was a story of trade and tech on Wall Street, the Dow closed off by triple
digits, a fall in tech shares dragged down the NASDAQ by more than 1%. Caterpillar shares ended the day down 2% as the company warned tariffs will
raise its cost. Paul La Monica is tracking the numbers, good to see you, Paul. I want to start out with this Caterpillar story because the stock
seemed to go up and down throughout the day. First of all, there were some really strong record results from last quarter given all the talk of how
tariffs might affect companies. That was a surprise to most of us lay people.
PAUL LA MONICA, CORRESPONDENT, CNN: Yes, I think that with Caterpillar, it was a bumpy ride most of the day. The good news was the results were
better than expected and that's something that people really wanted to see because the CFO last quarter said that first quarter earnings were the high
watermark and that spooked out the entire market.
But I think people were a little disappointed by that $100 million and $200 million that Caterpillar said it is going to be hit with as a result of
higher tariffs. The good news there though is that Caterpillar has pricing power right now. So, they claim that they are going to raise prices to
offset any impact from the tariffs and that's why they didn't cut their guidance, they actually raised it. So there might have been a bit of an
overreaction today.
SY: Okay, why is Caterpillar doing so well and what does that foretell about global growth because isn't Caterpillar in selling its construction
machinery very much viewed as a bell weather for global growth?
LA MONICA: It is. It's one of those proverbial canary in the coal mine type of stocks. If Caterpillar stumbles, people tend to get nervous, but
there are two things that are still driving the growth. One, the continued explosion of demand from the US oil business right now with all the shale
companies, people going into Texas and that is very big for them, so oil and gas equipment, huge for Caterpillar and then also, China which
continues to build out its infrastructure even though China's economy is slowing a bit, still obviously, growing enough of a rapid pace that they
are spending a lot on infrastructure and that boost Caterpillar demand as well.
SY: These Caterpillar tractors are all over China. Paul La Monica, thank you so much. Well, it began with Facebook last week, now the selloff among
tech stocks is spreading like a virus dragging everything - stock - into the red. We'll look at what's got investors so worried.
And saving MoviePass is starting to look like mission impossible. Tech glitches add to a mountain of problems at the company. Executives are
desperately looking for a twist ending.
[16:20:00]
SY: Investors appear to be defanging their portfolios as an exodus from tech stocks to continues to drag down the NASDAQ. The index closed down
more than 1% Monday, Facebook, Apple, Amazon, Netflix and Google - look, all ending in the red, all ending lower. Facebook and Netflix were the
worst hit. Samuel Burke joins us from London.
Samuel, so Facebook earnings outlook report came out last week. Twitter came out Friday, drop in monthly active users. What precipitated today's
selloff?
SAMUEL BURKE, BUSINESS AND TECHNOLOGY NEWS CORRESPONDENT, CNN: There has been a lot happening since then. I think there are three real things here.
Number one, we're starting to snow with regulation, both here in the UK as well as over in the United States, so both sides of the Atlantic. We're
seeing that possibility really start to materialize.
Number two, tariffs, a lot of people thought that tech companies like Facebook and Twitter don't have actual products, so how could they be
affected by tariffs, and people are realizing that Cloud computing, the networks that they rely on, the equipment could be hit by the tariffs, and
now everybody could be hit even Netflix, and number three, maybe people are starting to look at cheap stocks, value investing as opposed to the stocks
that they thought would have endless growth like Facebook, but I just want to circle back on the regulation that we're hearing on both sides of the
aisle, an important report was released here in the UK and then over on your side of the Atlantic, we got wind of a blueprint being circulated by
Senator Mark Warner. He is the vice chairman of the intelligence committee and if I can just put up on the screen some of what he is proposing here.
These are just talking about real regulations that would hit Facebook and Twitter. Number one, Federal funding for media literacy programs,
something that people like Brian Stelter have been calling for, for a long time to figure out the difference between facts on CNN and fake news on
Facebook, increased identifies for authentic accounts, so more than just that little blue checkmark and making platforms legally liable for
defamation claims.
Now, we don't know if this will become law, but investors are seeing, Stephanie, these are the possible tools that legislators might use.
SY: What's ironic about laying out that regulation, Samuel is that Facebook's forecast in part is because it is doing things to address data
privacy and security in light of Cambridge Analytica and yet, it seems like investors are losing their faith. So, there's that point and I also want
to ask you, last week, I interviewed some analysts that said, you can't look at the FANGS as one block anymore. Amazon and Apple are really
different. They don't face the same regulatory pressures when it comes to data privacy, for example, and yet today, we definitely saw investors look
at FANG as a block.
BURKE: That's 100% correct when it comes to that type of regulation. What I just showed on the screen, that's going to hit Facebook and Twitter, it
won't hit Apple or Amazon, but then, we get back to the tariffs, that could hit everybody. Everybody uses the Cloud and it's so interconnected. For
instance, Netflix, all of those movies and series that you binge on, Stephanie, they are saved on Amazon's Cloud.
So, all of a sudden, if Amazon has to pay more for the networking equipment that they get from China, then they have to pass that class on to Netflix
and then on to you. So, red is the new black, then.
SY: That's the one you binge on? Samuel Burke, thank you so much. That is the trailer for the new "Mission Impossible" film which came out over
the weekend, and for fans using MoviePass in the United States, the title kind of ironic or appropriate, their mission impossible as getting tickets
through the MoviePass service apparently.
The glitches were just the latest problem for MoviePass, that's a subscription service offering movie tickets for less. Right now, it's the
company's stock that's discounted. Shares fell more than 50% on Monday. Company executives are struggling to raise the stock price and keep the
servers humming. Last week, they approved a $250.00 for one stock split, and took out in an emergency loan to pay the bills.
Frank Palata has been following all of this. Frank, do we think there is a long term future for MoviePass, do we think there is a long-term future for
MoviePass after this latest setback or was this always kind of written in the cards, too good to be true.
FRANK PALLOTTA, MEDIA REPORTER, CNNMONEY: I feel like there is not going to be a movie, but the idea will survive. So, this was - this subscription
idea, which we can see in Netflix, we can see in even Uber. We can see in many different ways of our life, has never really touched the movie theater
going experience. But with MoviePass, that kind ...
[16:25:16]
PALLOTTA: ... of changed things, and now we see more places like AMC which is the biggest theater owners really kind of embracing this. But
right now, perfect example, if I went on my phone right now, I am a MoviePass member and I go and I am trying to find a theater in New York
that shows movie times, there is not any. It just seems like it's the last days of Rome, so ...
SY: So accessibility is a problem, the thing is not really working and functioning the way it should be. Is there any chance that they have
enough loyal users that will stick with them through these troubles?
PALLOTTA: I think that users like myself have been kind of up and down, up and down with the whole process of MoviePass. Perfect example, let's talk
about surge pricing for a quick moment. Basically, they announced that after you kind of bought the $10.00 a month, and then they say, "Well,
we're going to surge pricing now for these big time movies. You might get a bit of a surcharge." And then if you look at this weekend, not only
could you not go see "Fallout," you really couldn't see anything without paying an extra $8.00 on top of the already $10.00 that most people pay for
the service.
It just - at a certain point, you're just going to go, "All right, well, this is gone now. I'm just going to go either not have this or just and
find something else that's better for me."
SY: You don't want to be changing the rules once you've already got subscribers and we've seen other companies, ClassPass et cetera that have
sort of stumbled with that. What are the MoviePass struggles, Frank. say about the challenges at large facing the entertainment industry?
PALLOTTA: I think the entertainment industry is at a very interesting point. I like to look at it very positively. This thing came across and
it really sent a surge. People were going back to the movies again. People were talking about it. It became this big thing.
Just a year ago, it wasn't even really anything and all of a sudden, last year, everyone was talking about MoviePass. People were going to more
award movies that they normally wouldn't go and it sparked something. So, it's really going to be more interesting to see where we go from here, but
the movie industry needs something like this. They need a good idea in the same way that taxis had Uber and Lyft kind of spark that ride sharing
environment that we are in now. I feel like the movie industry needs the same.
SY: They need something disruptive. Frank Pallatta, thank you so much for your insights on this.
PALLOTTA: Thank you.
SY: Well, the future of democracy and economic stability are on the line for Zimbabwe. We're in Harare next as polls closed in the first election
without Robert Mugabe in four decades.
[16:30:00]
(COMMERCIAL BREAK)
[16:30:00] STEPHANIE SY, HOST, QUEST MEANS BUSINESS: Hello, I'm Stephanie Sy, coming up in the next half hour of QUEST MEANS BUSINESS, Harley-
Davidson wants to sell you its first-ever electric motorbike. And if you like to sleep or fidget on flights, then beware.
A new report says U.S. Marshals maybe more likely to track you. First, these are the top news headlines we're following on Cnn. U.S. President
Donald Trump said he'd be willing to meet with Iran's leadership without preconditions.
That comment was made just hours ago during a joint news conference with Italy's Prime Minister. Mr. Trump says he's ready to meet "whenever they
want to." A hiker in Indonesia caught the moment a powerful earthquake struck. The quake killed at least 15 people on Lombok Island.
Rescue crews now face landslides and after-shocks as they try to evacuate hundreds of tourists trapped on a mountain. A top official in Laos says
substandard construction is to blame for dam collapse that killed at least 26 people.
In a statement to Cnn, one of the companies involved says it's too early to determine the cost. More than a 100 people remain unaccounted for.
Malaysian authorities say they have failed to determine why flight MH-370 vanished four years ago with 239 people on board.
But a just released report rules out air pack malfunction or the pilot mental status possible causes. Officials said they would continue to
investigate if the plane is ever found.
Polls are now closed in Zimbabwe after a vote that could cement the country's democracy and signal that page is finally ready to turn on its
economy. For the first time in nearly four decades, former strongman Robert Mugabe was absent from the ballot.
Mugabe ruled Zimbabwe with an iron fist and his policies brought about financial ruin. The two leading candidates both campaigned on promises to
tackle corruption, add more jobs and bring about the return of foreign investment. Farai Sevenzo has this report from Harare.
(BEGIN VIDEOTAPE)
FARAI SEVENZO, JOURNALIST (voice-over): They queued in the dark and as the son rose as Zimbabweans are waiting to cast their vote, it was an
unprecedented achievement of optimism. This is after all, the country's first election in almost four decades without Robert Mugabe at the helm.
UNIDENTIFIED FEMALE: I feel so excited, there's freedom in the air.
SEVENZO: Many hope is a chance for real change. Many like Grace here showing off their signature purple finger to show that she has voted. She
says it was simple and peaceful.
Wearing his trademark scarf of the nation's colors, the current President Emmerson Mnangagwa; the man in charge since Mugabe was forced out in
November cast his vote with a similar message.
EMMERSON MNANGAGWA, PRESIDENT OF ZIMBABWE: I'm happy that what the process for campaigning was peaceful. Watching today is peaceful. I have no doubt
that the end process of the entire electoral process will remain peaceful.
SEVENZO: His main opposition Nelson Chamisa; the young charismatic leader of the MDC Alliance Party was mobbed by a crowd of supporters as he voted
in the capital, Harare.
Should he win, the 40-year-old lawyer and preacher would become Zimbabwe's youngest ever president. Dismissed but never far from headlines, the
country's 94-year-old former President Mugabe also drew attention at the polls, voting near his childhood home.
ROBERT MUGABE, FORMER PRESIDENT OF THE UNITED STATES: I have also said --
SEVENZO: After grabbing the headlines on Sunday, when he declared there's no way he'll be voting for the party that has tormented him, throwing away,
he believes its history as Zanu-PF's longest-serving leader.
By the polls, Zimbabwe has been one of hope.
UNIDENTIFIED FEMALE: I'm expecting to see a lot of change in our country, we have a lot of challenges that we've been facing as a country and I am
hoping to see whoever willing, attempting to make sure that they start working for the country including our politicians as a nation so that we
become the breadbasket of Africa that we've always been known for.
[16:35:00] UNIDENTIFIED MALE: I would expect the counting to take place quickly, and for the announcement of the result to be announced as quickly
as possible.
UNIDENTIFIED MALE: Yes, because we're expecting a lot, we're expecting that Zimbabwe moves forward. You know, something must start happening.
SEVENZO: As the sun sets on a momentous poll, no one quite knows what dawn will bring, but Zimbabweans have put down their marks for a future they
hope is removed of the shadow of the past. Farai Sevenzo, Cnn, Harare, Zimbabwe.
(END VIDEOTAPE)
SY: For 37 years, Robert Mugabe mismanaged the once prosperous economy and imposed poverty on his own people. Zimbabwe was once known as the
breadbasket of Africa. Then 4,000 white farmers were forced to give up their land, there were bad harvest and a drought led to the country's worst
famine in 60 years.
In 2008, the economy shrunk by 18 percent, and at the height of the crisis, prices doubled every 24 hours, inflation peaked at a staggering 7.9 billion
percent. The Zimbabwean dollar became so weak, the country was forced to adopt the U.S. dollar.
Eleni Giokos is our correspondent based in Johannesburg and she knows the checkered history of Zimbabwe's economy, well, joining us from London
tonight. Eleni, clearly the stakes very high for Zimbabwe's economy. How do these two candidates differ in their plans for reform and to once again
attract foreign investment?
ELENI GIOKOS, CNN CORRESPONDENT: Yes, I think the general slogan when it comes to Zimbabwe from both candidates is that Zimbabwe is open for
business. Let's take Emmerson Mnangagwa; Zanu-PF's leader, is a man that we know quite well, he was actually Robert Mugabe's right-hand man for a
very long time.
He's come out with some really strong comments. And I mean, I caught up with him at so many conferences around the continent, around Africa and
there's one thing that he keeps talking about is that you've got to get investment back into the country.
He's talking about open-door policies, talking about regulations that are going to be in place, the friendly incentives, trying to get the commodity
rich country back on the map. And we keep talking about it being once the breadbasket of Africa.
It's a country that has just so much potential. And when you look at the opposition, the MDC leader who of course is the youngest -- one of the
youngest candidates that is running, again, also trying to get the economy back on track.
But I think either Emmerson Mnangagwa or Nelson Chamisa, they are both going to have a very tough job. And it's about trying to sort out this
cash shortage and you alluded to it. I mean, reverting to the U.S. dollar, allowing seven different currencies to be used for trading and on the
street.
And now, because of money being so scarce on the ground, they've had to -- they're forced to print out a new currency, a bond note that is -- they say
backed up by the U.S. dollar. And these are some of the big fundamental issues that they need to sort out as quickly as possible.
So it's not going to be just policy, but it's going to be action on the ground, getting investors back, and maybe even getting the IMF and World
Bank --
SY: Yes --
GIOKOS: To lend a hand here.
SY: Well, I was just going to bring that up, that is an option that's been talked about, and clearly, after Pakistan's election, that's what they're
hoping for as IMF bailout of sorts. Was that an issue that played into the election, the possibility of an international bailout?
GIOKOS: Yes, I mean, look, I think a lot of investors want that surety where they say, well, if you know, Zimbabwe is going to be an investable
country, we've got to have the backing of IMF reforms of assistance from the World Bank of sort.
And that would probably add to the credibility of change that could possibly happen on the ground. And remember, Zimbabwe's had, you know, a
lot of black marks to it when it comes to its relationship with the investor community.
Actually because it's been changing policy and regulations specifically around commodities, diamond mines and a lot of other industries as well.
And you, of course, was also talking about the farm issue, the land issue. Investors want surety, they want safety, they want to know that their money
is going to be safe on the ground.
So IMF assistance of sort could be on the cart, Emmerson Mnangagwa has been very open about it, so that could be something that will play out in the
next few days, but I think more importantly right now, the investor community is watching very closely to see if these were in fact fair
elections and of course the outcome is going to be just as important.
SY: And they're going to want to see a smooth transition --
GIOKOS: Yes --
SY: A democratic transition of power. Eleni Giokos for us in London, thank you Eleni. It is earnings season and it is a tariff season.
Companies face a choice of absorb costs or pass them on. Their pick, next.
[16:40:00] (COMMERCIAL BREAK)
SY: The trade war between the U.S. and China is forcing businesses to decide, absorb, increase cost or pass them on to you and me. First up,
Caterpillar, we told you about their record earnings for the second quarter, but it warns tariffs could cost it up to $200 million in the
second half of the year and it's planning to offset that with price increases.
Next, the meat processor Tyson Foods, the tariff war with Mexico and China has reduced demand adding to an already serious meat glut. Tyson has been
forced to cut prices, its shares were down more than 7 percent today. And finally, BMW, a German company that manufactures its SUVs in America.
Chinese customers who want an X5 or an X6 will pay between 4 percent and 7 percent more. Clare Sebastian is following it all up. Clare, good to see
you. Let's start with BMW, how big of a hit is this for the company?
CLARE SEBASTIAN, CNN: Well, I mean, we're not sure yet, how big of a hit it's going to be financially for them, but certainly, this is a very
serious decision for them to take. China is their biggest market, it was 560,000 cars sold out in the last year and last quarter.
It was about the same as the U.S. and Germany combined in terms of delivery, not only is it their biggest, it's also their fastest growing.
So they really don't want to do anything to upset the balance there, to reduce demand among consumers.
And I think that's why you see them only increasing by between 4 percent and 7 percent and not by the full 25 percent of these tariffs. But you
know, we'll get earnings later this week from that company. I think we may get more details then on just how much of a financial hit this could be --
SY: You know, you have to ask at what point if it starts to dampen demand for those SUVs, does that cost American jobs as well? Those SUVs are
produced in the United States.
SEBASTIAN: Well, absolutely, it's Spartanburg, South Carolina is the biggest exporting facility for autos in the United States earned by a
German car company. They've got 10,000 people working there, they expanded it last year, there's a lot of investment going into that.
So I think that will be a concern in the long term. They've got of course -- this isn't just a dilemma for companies between raising prices or
absorbing them. There's a third way as well which would really worry the Trump administration and that is moving production overseas.
We've seen Harley-Davidson --
SY: Yes --
SEBASTIAN: Do that to avoid the tariffs, (INAUDIBLE) all the German car company that manufactures in the U.S. said that they're not ruling that out
in the earnings report last week. So that is something that just escalates car companies of an increase they have to consider.
SY: It's BMW just the tip of the iceberg? Are we seeing a lot of companies potentially have to make this really tough decision whether to pass along
the tariff cost to consumers or potentially to their stockholders?
[16:45:00] SEBASTIAN: Yes, I mean, I think that's the concern certainly within the auto industry. They are particularly caught in the middle of
this. Tesla has already raised prices in China, GM cut this out last week because they're not just, you know, it's not just about China, they were
hit by the rising cost due to the steel and aluminum tariffs --
SY: Yes, well --
SEBASTIAN: So they're being hit by all sides, they did get a reprieve though, don't forget, Stephanie, last week when the EU and the U.S. came to
that agreement to put those tariffs on imports --
SY: Of course --
SEBASTIAN: In their own eyes for the moment. But I think uncertainty is another factor that we have to consider here, that can be really corrosive
to companies long term. So I think that's why you see people kind of making contingency plans at this point.
SY: All right, Clare Sebastian, thank you for that. Well, this is not your dad's -- Harley-Davidson. The company is rolling out a range of new
models to bring in new customers. And let's check out the workshop, there are heavy weights and light weights as this is the custom 1250 CCS.
At the other end, Harley is planning a series of light-motor cycles, light- motor cycles for emerging markets in Asia. Next up, the Pan America, the iconic Harley-Davidson road travel takes place entirely on smooth paved
roads.
This is a bike for the rougher stuff, what Harley-Davidson calls an adventure touring motorcycle. And wait to (INAUDIBLE) Tesla and a Harley.
They're live wire, it's Harley-Davidson's first electric motorcycle. Harley-Davidson says it will be in showrooms next year.
Robert Pandya says this is the most important announcement for the motorcycle industry in recent memory, and he wouldn't know because he's a
veteran motorcycle industry consultant. Robert, thank you so much for joining us.
I guess I -- they look cool, all the bikes. Is this a smart move, a necessary move or potentially risky move for Harley-Davidson which is known
for its big HOGs, not its light weight electric motorcycles.
ROBERT PANDYA, MOTORCYCLE INDUSTRY CONSULTANT: It's really a great question. I think it's a critical move for Harley-Davidson. We've been
seeing stagnant motorcycle, new motorcycle sales in the U.S. since the big recession back in 2008.
Meanwhile, the stock exchange went up and housing stocks are going up and that sort of thing. But motorcycling has stayed largely flat. So in order
for Harley-Davidson, which is arguably the -- one of the best known motorcycle brands on the globe to really prosper and to find new markets,
they have to export that brand in a compelling way.
And frankly, the traditional Harley-Davidson as you know it is not always the best tool for the job in some of these smaller countries.
SY: You know, our correspondent Clare Sebastian was just talking about the tariffs and Harley is such an iconic American brands that it was one of the
first to get targeted by the EU tariffs. How does that battle relate to this strategy if at all of rolling out new motorcycle models?
PANDYA: Well, this is not something that Harley-Davidson did in the last few weeks. In order to develop this kind of product and program, this is
something that's been on the shelf for a long time, it's been in the process for a long time.
Developing motorcycles for the U.S. is very different from developing them for, you know, a smaller countries or third world countries where
population densities are a lot thicker.
SY: Yes --
PANDYA: So, this is a critical move for these guys, and if they don't do that sort of thing, if the rest of the industry doesn't follow behind that,
really motorcycling is going to be in trouble. So this is something that they've been planning for a little while.
But I guarantee you, the tariffs and this current conversation and climate is hastening a lot of these decisions.
SY: Good point. So presumably, Robert, they're trying to capture younger consumers, millennials pointedly with things like an electric motorcycle.
Do they run the risk of diluting their brand among their core consumer which is the older white men in the baby boomer generation?
PANDYA: You know, I think the Harley-Davidson brand in particular is so enduring that the core customer is always going to have access to that
product that makes them happy. If they continue on that path and only that path, then the real challenge is, as they go away and they go into
retirement and they quit riding, who's going to take things back up in motorcycling?
And in their recent promotional videos, you see little kids riding bicycles, a strider bicycle which is a balance-type bicycle. Bicycle sales
have been down I think 21 percent in the last few years. And most motorcyclists started on a bicycle.
So it's really smart for them to move it down the ladder in order to plant the seeds for future sales. If they don't do that, we're going to be in a
significant motorcycle drought.
[16:50:00] SY: I think it would be so interesting to see the marketing going forward for these bikes. I mean, you talk about them wanting more
access to overseas markets and more play there, more piece of that pie. Do you think the marketing of Harley-Davidson as the sort of iconic American
brand will continue to play well in those markets or do they need to rethink that as well?
PANDYA: Well, they're definitely going to have to rethink it in the terms of how you use motorcycles in Asia or in India or in Europe. We all know,
we've seen iconic images of these countries, and a large vehicle just simply doesn't fit.
In many of these countries, a motorcycle is simply a utility. So Harley- Davidson coming at it as a premium American brand, they're going to have to find to that -- strike that balance in between a utility product and
something carries over that sense of premium and what makes a Harley- Davidson a Harley-Davidson.
SY: You know, I've lived overseas including in China, I've never seen a HOG on a Chinese road, it'd be pretty tight with all those bicycles and the
many scooters. But how does Harley compare to other foreign brands that are producing motorcycles when it comes to the lighter weight bike?
PANDYA: Well, in their current lineup, frankly, they don't have much. They have a 500 CC which is -- which is you know, a very small bike from an
American sensibility. But honestly in India and China, a 500 CC which is - - which is a measure of the displacement, the size of the engine, that's a very large motorcycle in those markets --
SY: Yes --
PANDYA: So again, they are from -- it's not just the product fix, it has to be an attitude adjustment on the behalf of the dealers, on the behalf of
the management team, and as you've noted, particularly the marketing team are going to have to be really strong in order to create the message that
maintains the brand quality in the U.S. but elevates it in all this other countries that have such a great opportunity not just for Harley-Davidson,
but for other American brands like Indian motorcycles.
SY: Yes, good of a balancing act on two wheels. Robert Pandya, thank you so much for your expertise --
PANDYA: Indeed --
SY: I appreciate it --
PANDYA: Yes.
SY: Coming up, have you slept on a flight recently or used the plane's rest room a couple of times? You may be tracked by U.S. airport security,
and the U.S. Congress knows all about the surveillance -- more, next.
(COMMERCIAL BREAK)
[16:50:00] SY: U.S. airport security is tracking ordinary passengers with methods usually reserved for criminals and terrorists. The idea is to
gather details about people's behavior on the plane to try and thwart any potential aviation threats.
According to a report from the "Boston Globe", passengers could be tracked for sweating heavily, sleeping or using the rest room repeatedly. Rene
Marsh has been following this for us from Washington. There you go, Rene, I've been tagged, I've done all three of those things in recent months.
This kind of sounds sketchy, this program.
What other details do we have?
RENE MARSH, CNN GOVERNMENT REGULATION & TRANSPORTATION CORRESPONDENT: Well, you know, as people are learning about it for the first time, and the
TSA says that they've been doing this for some eight years. Certainly, when you hear these details, people are drawn, taken aback because of
course it raises some privacy issues as well.
We do know that TSA holds this program, a Sensitive Security Information Program, so that's why they hadn't advertised it so to speak in quite some
time. But in speaking with the agency over the weekend, we got a better sense as far as what it entails.
We know that they've been tracking passengers with no obvious ties to terrorism, and the agency is pretty upfront about that. They won't divulge
many details about this program and how it works. But we do know that passengers are selected first based on their travel pattern.
Do they travel some place like a terrorism hotspot, multiple times, that would certainly raise a red flag. The agency is also getting information
from the Intel community. So they're using that sort of information to determine if you should be tracked or not.
If you do raise a red flag, let's say because of your travel patterns, then a U.S. Air Marshal will be placed on your flight, you won't know that. But
they'll be dispatched to their flight and they will be seated strategically in a seat where they can observe your every move, your entire -- you know,
if you move your left hand, they'll see that, your behavior in the entire fight.
And they're looking for a number of things, you mentioned some of them off the top including like excessive fidgeting and perspiration, rapid eye-
blinking, even sleeping. So they say that -- and 'they' meaning, TSA say that they're doing this not so much to survey ordinary Americans, but they
say because they have to do it as a way to secure air travel.
SY: All right, Rene Marsh, let's hope that they know what they're doing. Thanks a lot. That is QUEST MEANS BUSINESS, I'm Stephanie Sy, Richard will
be back tomorrow. For now, the news continues on CNN, thanks for watching.
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