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Quest Means Business
Donald Trump Warns We'll All Be Poor If He Gets Impeached; The Rand Is Left Reeling As The President Turns On South Africa; The U.K. Government Has Laid Out The Potential Risks If Britain Crashes Out Of The EU With No Deal; A New UBS Report Says That Investors That Do Not Identify As Heterosexual Could Benefit From A Different Approach To Their Wealth Management; Jeff Sessions Fires Back at Trump's Public Criticism; South African Government Repudiates Trump Tweet; Pompeo Names Special Envoy, Announces Trip to North Korea; Landslides in Hawaii as Residents Brace for Hurricane Lane; Australia's Prime Minister Clings to Power After Revolt; China's Tech Giant Huawei Says Australia is Blocking it from Providing 5G Technology; Concerns Linger Over China's Tech Amid Trade War; Alibaba Shares Lower Despite Surge in Revenues; National Enquirer Boss Granted Immunity in Cohen Case; Cohen Sets Up Fundraising Page for Legal Bills.Aired: 4-5p ET
Aired August 23, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CNN INTERNATIONAL HOST: OK, so it wasn't exactly Donald Trump's fault. Let's just say it had to do with trade, but the NASDAQ, the
S&P and yes, the Dow, the Dow now lower for a second day in a row. It's Thursday, August 23rd.
Tonight, drop me at your peril. Donald Trump warns we'll all be poor if he gets impeached. The rand is left reeling as the President turns on South
Africa, and how to drive over that Brexit cliff edge. Britain lays out its worst case scenarios. I'm Paula Newton, and this is "Quest Means
Business."
OK, tonight, high crimes and market crashes. Donald Trump is sending a message to Congress, impeach me and we'll all be, in his words, very poor.
In a friendly chat, we'll call it, with Fox News, the U.S. President predicted stocks would nose dive if Articles of Impeachment are ever
brought against him.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I guess it's just something like high crimes and all. I don't know how you can impeach somebody who's
done a great job. I'll tell you what, if I ever got impeached, I think the market would crash. I think everybody would be very poor, because without
this thinking, you would see - you would see numbers that you wouldn't believe in reverse.
(END VIDEO CLIP)
NEWTON: In reverse. Let's be clear. The American economy is quite strong. The Dow is up nearly 30 percent under Mr. Trump's watch.
Corporate profits are absolutely booming, insert any hyperbole you want to and thanks to the President's tax cuts and deregulation, the banks have
never made so much money. But Wall Street has taken the most recent round of White House turmoil, as we've been telling you, quite frankly, in its
stride.
The markets have barely budged as talk of impeachment has grown louder. Earlier, during "QUEST EXPRESS" Peter Tuchman told me the fundamentals are
strong no matter what the heck happens in Washington.
(BEGIN VIDEO CLIP)
PETER TUCHMAN, STOCK TRADER, NYSE: The prediction that the market was going to crash if Trump got elected did not come to fruition. Brexit, did
not come to fruition. We've seen emotional headline-driven selloffs over the last 18 months due to geopolitical and geo-economic stuff and some
internal stuff here in the U.S., because there's been a bit of a wild card coming out of Washington.
I don't believe - I think, obviously, there will be anxiety in any kind of an impeachment.
NEWTON: And a little tremor. There's market tremors, we should call them.
TUCHMAN: There are tremors, but at the end of the day, if you look at the graph from the last 18 months, it's going from lower left to the upper
right, so the fundamentals are the same. Will that change if the President is impeached? It will, in my opinion, it will be short-term anxiety. I
don't know, I don't believe the market will crash.
(END VIDEO CLIP)
NEWTON: Paul Donovan is in London. He is the chief economist at UBS Global Wealth Management and Stephen Moore is in Washington. He has been
an economic adviser to Donald Trump. Stephen, we will get to the fact as to whether or not you still have his ear. You know, I'm going to get
through that right now. Have you spoken to him recently?
STEPHEN MOORE, FORMER ECONOMIC ADVISER TO DONALD TRUMP: With President Trump?
NEWTON: You got it.
MOORE: I talked to the President about a month ago, and you know, he's very gleeful about this economy. He feels like his policies have been a
huge success. I remember I said to him, now, Mr. President, these policies are working better than we even thought it would be ...
(CROSSTALK)
NEWTON: Stephen, perhaps on some of that, I'm sure many people in the United States would agree, especially the people on Wall Street. Having
said that, he is assuming that the great downside risk to this economy, Stephen, is the fact that he gets impeached. We spoke to many people and
many analysts who say that's just not so. The market wouldn't like it, but at the end of the day, this has been a very long bull market. It started
under Obama and quite frankly, his words are, to use the term, bull.
MOORE: Well, look, I mean, a lot of people you speak to, Paula, frankly, are the people who said that if Donald Trump was elected President, we'd
have a second global depression, and that Trump's policies would destroy the economy and so on and we've had a 40 percent rise in stocks. We've had
the best economy in 20 years. We have six million more jobs than we have workers.
I mean, so, all of the analysts and frankly, I'm embarrassed as an economist because most economists had the whole Trump rally completely
wrong. So if Trump were not in the White House today, yes, I think the economy would suffer for it and so would the stock market.
NEWTON: Paul, I want to bring you into this conversation, you know that is one thing that you hear when you talk about the deregulation, the tax
reform, and just the business-friendly environment, is that true? That if the market - if CEOs - and never mind the stock market so much, but CEOs,
as they're doing their five-year plans, if they were to contemplate that kind of turmoil in Washington, do they believe it would severely cripple
the economy.
[16:05:00]
PAUL DONOVAN, CHIEF ECONOMIST, UBS: No, of course, it wouldn't. First point, any country in the world, politicians are not nearly as important as
they think they are. Economists are important, of course; politicians are not. The economy jogs along perfectly well because in the near term, what
matters is the answer to two questions: "Do I have a job? Can I afford to buy what I want to buy?" And actually, politicians don't have a great deal
of influence over those questions in the short-term.
The second thing is that if there was impeachment and conviction, remember, impeachment and conviction are not the same thing, but if there was
impeachment and conviction, what do we get? We get President Pence. President Pence's tax policies, in terms of domestic taxation, pretty much
the same as those of President Trump, possibly even slightly more market friendly. Policies on deregulation, pretty much the same. Policies on
trade taxes, remember, President Trump is raising taxes at the moment. Policies on trade taxes, probably better for the market than under
President Trump.
So, I don't think that the market would take a negative reaction to impeachment and conviction if we were to get there. Frankly, I don't think
we will, but if we were, I don't think we should assume it's an automatic negative.
NEWTON: OK, Stephen, in terms of Trumponomics themselves, and if we take your point that the policies have been good for business, some policies
haven't. You have to admit there is some downside risk to Trumponomics, principally right now on the issue of trade.
MOORE: Yes, that's right. I mean, this is a risky strategy. I'm more of a free trader than Donald Trump is, and you know, he believes that we need
to get very tough with China. By the way, I happen to agree with him on that. I don't think we can live with the status quo any longer of them
stealing from us and not playing by the rules, and so the big question with respect to trade is whether this will all turn out okay.
And you know, the market seems to have a sense that at the end of the day, Trump will win. I think he will win. China needs the United States a lot
more than we need them, and if Trump does get a victory on trade, and I'm not guaranteeing that, but I think, at the end of the day, he will, that, I
think, you're going to see the stock market even go further than that.
And by the way, look, I agree with a lot of what Paul said, but I disagree fundamentally with what he said at the beginning. Politicians - the
President makes a huge difference in terms of the economy. I mean, there's a reason the economy, Paul was growing at 1.5 percent in Barack
Obama's last year and now it's growing at 4 percent. It's because of the ...
(CROSSTALK)
NEWTON: But that is - I am going to get Paul ...
MOORE: ... I mean, that's a huge, huge seismic difference ...
NEWTON: ... I'm going to get Paul back in here.
MOORE: ... it didn't just happen right after that.
NEWTON: But that's from a very low point, Stephen, and we've been through this before. Paul, go ahead.
DONOVAN: Well, I mean, the U.S. economy is growing not at 4 percent, that's on an annualized basis ...
MOORE: For the last five months now.
DONOVAN: The U.S. is the only country in the world - so it's growing at about - it is growing slightly above trend, 2.8 percent and yes of course,
it's doing well. You've just had tax cuts with the deficit finance, so that's given you a boost in the near term and the U.S. economy over the
last few years has been hovering around plus or minus trend growth.
An independent Central Bank, I think, is a key part of that. The flexibility of the labor market is important. The fact that we're
recovering from the worst economic downturn in 70 years is also a part of that. The direct impact of policies on this, still relatively small. I
mean, we look at the tax cuts, they haven't induced a significant increase in investment.
The latest U.S. data is showing, no significant change in investment trends. We're not seeing an increase in investment in education. So,
people aren't taking personal tax cuts and increasing in education. But it's doing fine. I mean, I'm the last person to deny the U.S. economy's
doing perfectly well. I just think that's more because of broad economic trends, rather than any specific set of policies.
MOORE: Well, one thing I would say about this is Paul, you should just go out into the major cities of the United States. I mean, I've been on the
road for four or five straight weeks, whether you go from Portland, Oregon or to Portland, Maine, there is a construction and infrastructure and
spending boom, investment boom like I've never seen before. We're in the midst of the single biggest construction boom, Paul, in the history of the
United States, and again, how can you say we're not having capital investment? That's exactly what that building boom is.
NEWTON: I would ...
DONOVAN: But it's a very small part of the economy.
MOORE: The construction of factories, of warehouses, of office buildings? You think that's a small part of the economy? It's the best lead indicator
of where the economy is headed - this investment boom that we're seeing and the numbers have been very strong and steady.
DONOVAN: Everywhere except in the data. You know, if you look at the data, the capital spending numbers are basically where they've been for
the last couple of years. It's not bad. I'm not saying that you have got bad capital spending. The U.S. economy is jogging along quite nicely at
around its trend rate of growth, which is what it's been doing for the last few years.
NEWTON: And I have to call time there. I will point out there is still no government infrastructure bill. Stephen ...
MOORE: I'm talking about private infrastructure, not public infrastructure.
NEWTON: I know, but we were promised that infrastructure from the government. Look, I am getting in big trouble here. But we will have you
back. Stephen Moore, thank you so much. We will see you any time, especially in the hour after you've spoken to the President. Thank you
very much, Stephen.
MOORE: Thank you.
NEWTON: Paul, glad to say we will have you back a little bit later in the program to talk about your latest research there at UBS.
Now, what are economists worried about in that trade war? Cristina Alesci is here. She is going to talk to us about what is going on with trade.
[16:10:11]
NEWTON: We just had the debate with the economists. Today, we actually had movement on trade, but not in the direction that we wanted to see it.
I mean, the tariffs came into being and they're a reality now.
CRISTINA ALESCI, CNNMONEY CORRESPONDENT: They are a reality and this is a ratcheting up of tensions, right? This is the tit for tat between the U.S.
and China. The U.S. imposed tariffs on $16 billion worth of goods, China retaliated quite swiftly. China also took the additional measure of filing
a complaint with the WTO today, so we're not seeing a de-escalation at all.
Now, the optimists would point to the fact that Chinese officials are here in the U.S. meeting with Treasury officials today and yesterday to talk
about a potential deal, but no one I've spoken to today and I've spoken to a lot of people, thinks that a deal can come out of these talks.
So yes, the Chinese are at the table. Yes, there are talks going on. But what's to come of them is the big unanswered question here. In the
meantime, CEOs are trying to figure out how to run their businesses and how to save potential companies from laying people off because of the tariffs.
NEWTON: And we were just talking about trade as one of the downsides to that Trumponomics; another one seems to be the immigration policy of the
Trump administration and we have businesses stepping up and basically saying, "We don't like where this is going."
ALESCI: Right, the preeminent CEO business group that does a lot of lobbying in Washington, DC put out a letter today saying that the
immigration policies of this administration have created a lot of disruption in their business. In fact, they poignantly said that these
policies have resulted in arbitrary and inconsistent adjudications for many of their foreign workers and that impacts business operations, right?
You can't have, perhaps, some of your most talented employees, in some cases we're talking about STEM people and engineering jobs and science
jobs, those are competitive, and they're tough to get - employees to come over, and once you get them over, there's this whole question mark over
their status, it creates a lot of disruption.
Now, people forget that, yes, CEOs love Trump because of the tax cuts and the deregulations - but the deregulation that's taken place. But they also
do the not like him for all of this uncertainty over trade and immigration.
NEWTON: The unpredictability.
ALESCI: And the divisiveness that's putting them on the spot, right? They've got people like me calling and saying, like the President just said
something divisive, are you going to stand with him on this or that? CEOs don't like that. They shy away from controversy because they don't want to
alienate any of their customers.
NEWTON: And again, it's not very predictable in terms of what will happen to them through that business cycle. Our Cristina Alesci to follow both
issues. We appreciate that.
Now, the South African rand, meantime, is falling against the U.S. dollar, and again, you guessed it, because Donald Trump criticized the government's
land seizure policy. Now, the rand is down, as we were saying, by more than 1 percent as it stands there. In fact, now down almost 2 percent.
The anti-defamation league denounced Mr. Trump's comments, calling them deeply troubling and saying it's a white supremacy talking point. Now,
the South African government also shot back, tweeting that these words were reminiscent of the country's colonial past.
We want to go straight to David McKenzie in Johannesburg who has been following this, and I know exactly what a complicated issue, an incendiary
issue this truly is. Is there a feeling there that Donald Trump really isn't reasoning with anyone? Isn't showing any rational thought when he
tries to interject himself into this - what is a very contentious argument in South Africa?
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, the short answer is yes. I think that is the predominant feeling both from the government and
from many people in South Africa, that the President didn't necessarily put much thought into these tweets - into this tweet and that the Fox News
segment which he appears to have based it on, Paula, is, in fact, factually incorrect in two ways.
One, the farms that they describe as being seized aren't being seized right now; and two, farm murders, which are, of course, tragic, are, according to
at least one agricultural group, which surveys this, at 20-year lows.
So based on the facts and the - that this is a President - a Presidential tweet wading into very sensitive domestic issue here in South Africa, it
hasn't been viewed very well at all, Paula.
NEWTON: When we say not viewed very well. It was interesting, I want you to hear now, we spoke to the opposition leader of the Democratic Alliance,
and he tends to agree with what the government is saying. Take a listen.
(BEGIN VIDEO CLIP)
MMUSI MAIMANE, SOUTH AFRICAN OPPOSITION LEADER: What's absolutely crucial for economic terms is that we have trade relations with the U.S., certainly
around our agreements on Goa, and much of our exports into the U.S., and we want to enhance that relationship.
For South Africans and from where we stand, we've always upheld it. We are going to produce policy, we're going ensure that private property rights
are protected and we want to be able to enhance trade relations with the U.S. and so, for President Trump to have taken that stance, it's certainly
not helpful for ...
[16:15:12 ]
MAIMANE: ... bilateral relations, which I think are beneficial to both countries.
(END VIDEO CLIP)
NEWTON: Yes, the implication there, David, is that if you really wanted to help South Africa through this very difficult time, you would butt out. I
mean, do you think there will be any long-standing economic or political consequences to this, assuming that Donald Trump and Secretary Pompeo don't
go any further with it?
MCKENZIE: Well, I don't think there will be any long-term consequences necessarily over President Trump's tweet. Now, it depends on how the State
Department, as you say, reacts to President Trump's tweet. I'm sure that there are embassies throughout this continent today from the U.S. side that
were trying to figure out how to deal with this like they have been for several times that President Trump seems to have gone out on the cuff and
dealt with foreign policy issues in this way.
The issue of land is a serious one in South Africa. It's been debated, as you saw there, from the leader of the opposition. He has very different
views on many aspects of this than the ruling ANC does, which wants to accelerate the land, possibly land redistribution, without compensation.
Seventy percent of the land here in South Africa, private land, is owned by white South Africans. The government says they want to redress that issue,
which is kind of a hangover from a racist past.
The investor outlook on South Africa is quite tricky when there is this overall lack of clarity on how they're going to actually move forward with
these policies, but that is a very different question and debate from what President Trump was talking about, which, in essence, is largely a white
nationalist conspiracy theory that is being peddled for several months in the way that he framed it.
So it's a complex issue, but the way that it was framed in that tweet, at least, will be seen universally as divisive here, I think by most people in
South Africa.
NEWTON: Yes, and it was clear that both the opposition and the ANC basically saying the same thing today. Our David McKenzie, thanks for
staying up for us to guide us through what has been a very complicated day, both economically and politically. Appreciate it.
Coming up, the consequences of a no deal Brexit, how crashing out of the EU, yes, we said crashing out, could hit the U.K.'s pocketbooks and
hospitals.
[16:20:16]
NEWTON: The U.K. government has laid out the potential risks if Britain crashes out of the EU with no deal. Now, U.K. residents could see higher
charges on international credit card payments. British people living abroad could lose access to their bank accounts and their pensions and
there will be more red tape, just what we wanted for British hospitals trying to import blood or organs.
Our Bianca Nobilo is following all of this from London. I don't want to put too much of a panic pull, too much of a panic button here, but I woke
up this morning and I had like red alert on my phone from people in Britain, my friends saying, "Can you believe this? After all of this,
we're going to crash out," and I think they have been a bit stunned with the government's candor by saying, "Look we have to be prepared."
BIANCA NOBILO, CNN CORRESPONDENT: Well, it's a difficult position that the government's in because, of course, if they don't release any form of no
deal preparation, then people will be saying it's a dereliction of duty, why aren't they making contingency plans to make sure that all
eventualities are being taken care of, but then of course, when they do, people accuse them of projecting fear and trying to thwart the whole
democratic process of Brexit, so it's a very difficult position for the government to be in.
And of course, with Brexit, and it's not too conspiratorial to say this, you've always got to be thinking, what are they really trying to achieve
here? There have been whispers in Westminster about whether or not these no deal plans are in fact an attempt to almost scare Theresa May's
Brexiteers into line to get behind her plan, which is softer and more of a compromise.
NEWTON: Or perhaps a better negotiating ploy at the table with the EU, you never know. They're saying, look, we're serious.
NOBILO: Exactly.
NEWTON: Yes, listen, I am fascinated by some of the little itty bitty annoying charges and even some very crucial things like medicine that
they're saying that perhaps could - these things could happen if they crash out of Brexit.
NOBILO: Yes, well, it's interesting because these papers, this 148 pages worth of technical notices range fairly vague and obtuse to incredibly
specific. There are things about cigarette packaging, for example, the photos of the ill people on the cigarette packets that we currently see in
the U.K. actually belong to an EU library, therefore they wouldn't be able to be used in the event of a no deal.
As you say, there could be charges on credit cards, say for example, if I bought something from an EU website, I might encounter a similar charge
that I would currently find if I bought something from a U.S. website. There's obviously issues with pensions and question marks over whether
Brits living in the EU would even be able to access their bank accounts. So these are really big, tangible problems for people in the event of a no
deal that are being foreseen.
NEWTON: Before I let you go, Bianca, please give me a fourth quarter, we are in the United States, so we're going to say fourth quarter, not second
half, update politically on where this stands right now between the UE and the U.K. because I'm lost.
NOBILO: So, it is the final stretch. So, Brexit happens in about nine months' time. There's a really important EU Council meeting coming up in
October. That was initially the date that was set aside for the EU and the U.K. to agree a deal. Now, Dominic Raab, the Brexit Secretary has said
today that he thinks that 80 percent there in terms of striking a deal. So, it just depends what that 20 percent left is.
And I must say, Paula, I'm glad that you asked me that question because there is nothing today in these technical notices that really addresses the
issue of Northern Ireland and that border and that remains the most intractable sticking point in all of this and that's still the main problem
holding up this process.
So, both sides are saying progress has been made. There's a conciliatory tone, but many raise an eyebrow, whether or not that progress is really
that genuine, given that such important issues are yet to be addressed.
NEWTON: Yes, and like most matches, the last tense moments are always the worst to have to live through for any fan. Bianca Nobilo, thank you so
much. She is long suffering there trying to get through the details of Brexit.
In the meantime, that Brexit uncertainty we were just talking about did weigh on European markets. The FTSE closed marginally in the red with the
pound though also falling. Investors were also worried about of course that escalation in the trade war that we were talking about earlier between
Washington and Beijing.
Now, a new UBS report says that investors that do not identify as heterosexual could benefit from a different approach to their wealth
management. Paul Donovan is the bank's global chief economist. He is back with us again to discuss this study. I am truly fascinated by what this
means, because while I am used to hearing that perhaps your legal rights are different in each country and perhaps a bit, quite frankly, not black
and white even in countries where they have extended a lot of legal rights or most legal rights, why is it different for their wealth management?
[16:25:13]
DONOVAN: Well, I mean, obviously, any individual's wealth management depends on their personal circumstances, but if you have different legal
rights, that's very, very important to your investment future. So, one of the key things is around job security. If you're in a country where you
don't have job security, if you are not heterosexual, if you are unfortunate enough to live in one of the 30 U.S. states where you can be
fired for not being heterosexual, you need some insurance again that, and that means that you need what economist or investment analysts call
precautionary savings.
You need a larger pot of money against a rainy day, because if you're not heterosexual, the chances of a rainy day hitting are a lot higher. And
that's one example of trying to adapt your investment strategy to deal with the fact that your legal rights are not the same as a heterosexual person.
NEWTON: And in terms of that, one thing that stuck out for me was even how long this is really going to impact people in terms of their even estate
management of their lives? I mean, in your report, you're saying that the traditional retirement vehicles - and I want to point out these are
retirement vehicles that people paid into with their own money or earned through their jobs - may not be part of their household longevity strategy.
What does that mean?
DONOVAN: Well, so, the issue here is that if you are in a same-sex partnership or if you are in a same-sex marriage or an equal marriage, then
you may or may not be able to transfer the pension rights across. And again, it depends on the legal position as to whether your partner gets the
benefit, whether you, as a household, as a family, are able to enjoy the benefits of whoever is working in that family in the same way that a
heterosexual couple can.
And there's another issue. If you're not heterosexual and you are in a same-sex female partnership, the chances of one member of that partnership
living to 100 years old is 50 percent higher than in a heterosexual partnership because women tend to live longer. And so, then you've got to
plan for the fact that part of the family is going to be around for even longer and that's an additional complication. Throw in the fact that you
also possibly got job insecurity and that really starts to complicate your retirement planning, and it requires a different approach to the approach
that you would take, say, with a heterosexual couple.
NEWTON: Sure, and a lot to think about there, as you say even in places where you do have some legal rights. Paul, thanks so much for staying with
us and coming back to discuss.
DONOVAN: Thank you.
NEWTON: Appreciate it. Now, after Saudi Arabia delayed what still might be the biggest IPO of all time, there are new questions about Mohammed Bin
Salman and his plan to take the Saudi Kingdom way into the future.
(COMMERCIAL BREAK)
[16:30:00] NEWTON: Hello, I'm Paula Newton. Coming up in the next half hour of QUEST MEANS BUSINESS is finance minister, yes, versus prime
minister as Australia is gripped by political madness, some are saying.
And investors are not going gaga for Baba, I can't believe I just read that as another Chinese tech company underwhelms. First, these are the top
headlines here on CNN. U.S. Attorney General Jeff Sessions has now fired back at Donald Trump after the U.S. president says, he quotes, "never took
control of the Justice Department."
Sessions says he has been in control since the day he was sworn in, will not let the department be closing properly influenced by political
considerations. South Africa has responded after U.S. President Trump tweeted concerns about land reform and the quote, "large scale killing of
farmers".
South African government said the tweet was based on false information, with the spokeswoman for the president telling CNN hysterical comments do
not assist in the process. U.S. Secretary of State Mike Pompeo says he will travel to Pyongyang next week with his newly appointed envoy.
Now, a short time ago, Pompeo named Stephen Biegun as a special representative to North Korea. Biegun is a former Ford executive who
served in the George W. Bush administration. Hurricane Lane is beginning to pound Hawaii's Big Island, multiple landslides already have closed
roads.
If it makes landfall, the category 4 storm would be the first major hurricane to directly hit the island in the modern day. OK, last night, we
told you about how Saudi Arabia has at the very least slowed down its plans for a massive $2 trillion IPO of Aramco.
It's now raising questions about Saudi -- what Saudis vision 2030 plan and the ability of Prince Mohammad Bin Salman, his ability is to deliver on the
promise of modernizing Saudis economy. John Defterios is in London now and he follows this for us quite closely.
What is the issue now because I have to say if you look at the way Saudi Arabia has been in the news in the last few weeks, it's quite perplexing as
to where their plan goes next.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, I think it, Paula, boils down to the fact that this IPO is much more difficult than the
designer of the vision 2030 was expecting that of course as you suggested. There's the crown prince -- Aramco has a lot of bragging rights tied to it,
$2 trillion in terms of evaluation for 5 percent, $100 billion going into the public investment fund, that was the design.
And then Aramco serving as a real charge or a bulldozer to break down business as usual and think about the future. Now, they run into the hard
realities, the public investment fund has a target to raise $400 billion by 2020, that's still on the table.
Then we understand from the "Financial Times" today they're going to take out a loan of $12 billion because of the commitments on the table. Then I
really think we have to address the bigger picture here, two and a half years into the game as I was suggesting, we've had a four-year campaign led
by the crown prince into Yemen.
That bus bombing that we saw over the last 10 days, and the Saudis kind of dispatch. So a really hard line on one side by this crown prince and then
saying, I'm allowing women to drive, they're going to be more women working in this overall economy.
And at the same time, about foreign investment, what happens here if you can't hit those promises, hit the deadlines for the IPO. We started off
with an IPO in 2018, perhaps for the first half of 2019, now we just know that perhaps it's hold, Paula.
NEWTON: And this has been such a center piece, John, what stands in the way right now? I mean, the market conditions can't be as -- they're going
to have to pick a time because market conditions are certainly not going to be perfect when they decide to do it.
[16:35:00] DEFTERIOS: Yes, I mean, a lot of calls today, and one of the leading industry analysts and consultants I spoke to said the optics really
just don't look good. But we shouldn't be overly surprised by this. I went back to the interview I did with Khalid Al-Falih; the Minister of
Energy, Industry and Mining.
And this was back in June, his last public statement, and he didn't take on this date with destiny for the IPO, saying and this is quote from him, "I
think it would be nice if we can do it in 2019", he said, "but at the end of the day, there's a lot more at stake here than just ticking a box off
the list."
He's never been a fan of the IPO, Paula, and this is the real issue here. They're focusing on SABIC and the $70 billion stake they plan to acquire of
the chemical giant. Some of that money can go into the fund. But there are three big road blocks that I took note of here.
The litigation issues and going on into the New York Stock Exchange, updating the proven reserves, this is the jewel box here, the grand secrets
they've kept, how long will those reserves last as a publicly traded company? And basically, they have to review those.
And then the very sensitive issue that nobody ever wants to talk about, the payment of royalties here, how much money goes to the royal family? If
you're listed in London or the New York Stock Exchange, you have to really reveal where all the money goes.
You can't take it off the top line and say this is now the publicly traded company. Thorny issues and not easy to tackle, and the other concern out
there, I think, Paula, is capital flight. JPMorgan did a survey that $140 billion have left the country ever since that tough crackdown on the 350
millionaires and billionaires over the last year.
It's a sensitive issue and it's hurting investment and capital flight.
NEWTON: Yes, and that obviously combined with that, as you were saying that burden of transparency that comes with an IPO is something that might
just be a bit too difficult to get accomplished, you know, in the near future. John Defterios, thanks so much, appreciate it as always --
DEFTERIOS: See you --
NEWTON: Next on QUEST MEANS BUSINESS, we go down under where political chaos has reached the very top. Australia's prime minister under siege by
his own party.
(COMMERCIAL BREAK)
NEWTON: Australian Prime Minister Malcolm Turnbull is clinging to power after a revolt, it was spectacular by senior party -- senior party members.
Now, this all includes his very own finance minister. Mr. Turnbull was refusing to concede his position.
(BEGIN VIDEO CLIP)
[16:40:00] MALCOLM TURNBULL, PRIME MINISTER, AUSTRALIA: The reality is that I -- a minority in the party room supported by others outside the
parliament have sought to bully, intimidate others into making this change of leadership that they're seeking.
It is a -- it's been described by many people including those who feel they cannot resist it as a form of madness.
(END VIDEO CLIP)
NEWTON: As a form of madness. I'm joined by Alexander Downer from London; he's the former Australian foreign minister and a former Australian High
Commissioner to the U.K. I can't imagine what it's like for you to watch this from afar, excruciating, I'm sure. Listen, could you give us a really
quick primer on Aussie politics and what the heck is going on?
ALEXANDER DOWNER, FORMER AUSTRALIAN FOREIGN MINISTER: Right, so we have the parliamentary system, the government is the party with the largest
number of seats in the parliament. So the Prime Minister is the parliamentary leader, he's a member of parliament.
So if the members of that party in the parliament decide they want to change their leader, that is change the prime minister, they can do so by a
simple vote within the party. And that's what's been on and off here at this stage.
I mean, it's not for certain that it looks as though there'll be another vote on Friday, and I would assume that will lead to a new prime minister
being elected.
NEWTON: You think Turnbull's time is up.
DOWNER: I think it's going to be tough for him to win. I suppose it's technically possible. There was a ballot of the liberal party members of
parliament on Tuesday and he won that 48 to 35. But there seems to have been some drift in his support since then, so he might be hard pressed to
win it if there's a ballot on Friday which does look likely.
NEWTON: Now, besides the politics of it, which does seem like madness and it's hard not to point and stare, shall we say and just gawk at it. On the
other hand, you're telling us that, look, this could really lead to some significant policy implications in Australia that will impact Australia and
the world quite frankly for decades to come.
DOWNER: Well, it will have an impact on some policies. So first of all, in terms of domestic economic policies, Malcolm Turnbull and his government
have been trying to get the company tax rate for large companies reduced. And that has been opposed by opposition parties in the Australian
parliament.
So that looks as though it's going to be abandoned as a policy objective altogether now by the government, we're under a new prime minister. But
secondly, the issue that has really caused constellation for the last decade in Australian politics has been the collision between the public
desire for the Australian government to do something to help mitigate CO2 emissions on the one hand, and on the other to keep energy prices down.
So we've seen CO2 targets set and Australia has signed up to the Paris agreement on the one hand, but on the other hand, the energy prices have
been going through the roof for consumers. So when the consumers want the energy prices to be brought down, that they don't want Australia to abandon
the planet change targets --
NEWTON: Yes --
DOWNER: So this is close -- a huge problem policy-wise.
NEWTON: But it's a huge problem that's been going on around the world. I mean, many people having trouble trying to meet those Paris climate
obligations. Having said that though, I mean, quite frankly, Australia ink is getting nervous, even the quant CEOs kind of look hooked(ph).
This isn't helpful. If you could not in the non-partisan way sit these people down and say you need to get down with it. What advice would you
give them or is this just a necessary bloodletting that needs to happen.
DOWNER: Well, you can -- you can't -- you can't easily just make people see common sense in politics often that can be as you know all over the
world very volatile. Australia went through more than a quarter of a century with just three prime ministers up until the end of 2007.
And since then we've had a succession of prime ministers, not one of the prime ministers we've had since 2007 has served a full time as prime
minister. So we've gone through a period of quite remarkable political instability and you might think, well, that must be caused by, you know,
upheavals in the Australian economy, but nothing could be further from the truth.
The Australian economy is one of the richest in the world, it's growing at 3 percent, unemployment is low, wages haven't been growing very fast, but
they've been growing a little. So it's hardly a country on its knees, but --
NEWTON: And --
DOWNER: Politics is very volatile --
[16:45:00] NEWTON: Yes, and you would know it by looking at the stage of the -- basically, the stage that has been set for the politics and the
drama yet to come in Australia. I can't thank you enough for your time there, appreciate it.
Now, China's tech giant, and this is another issue -- hot political issue in Australia. China's tech giant Huawei in Australia says the country is
blocking it from providing 5G technology. The Australian government is reportedly worried about alleged ties between Huawei and the Chinese
government.
It's the latest setback for China's major tech players who have lost hundreds of billions of dollars in market value over the past few weeks.
Alibaba is now down about 13 percent, that's from its 2018 high, Tencent, nearly 25 percent, JD.com, 37 percent and Badoo is down about 22 percent.
They are all suffering from increased regulation, western competition and of course that cooling off of the Chinese economy. Now, Alibaba shares
have finished in the red today, they were up slightly in the morning, and that's despite a 60 percent jump in quarterly revenues compared to the last
year.
Paul La Monica has been following all of this closely. I want to get to what Alibaba said about a possible trade war later on. But first off, you
know, Alibaba, is it specific in terms of it being a unicorn among a lot of tech problems or is it -- is it really an example of the tech problems
playing in China right now.
PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Yes, I think that China's tech stocks have all taken a big of a hit lately. As you pointed out, the
-- you know, quote, "bad stocks", a lot of people like to use acronyms by new Alibaba and Tencent have all taken their lumps lately.
Alibaba today, even though the numbers were really good, you have this overhang of trade tensions between the U.S. and China that I think is
clearly still rattling a lot of investors. But it's hard to really find much default in these numbers. We're in 60 percent growth on the ecommerce
side, that cloud business nearly doubled, so Alibaba is definitely becoming a more formidable threat against Amazon, Microsoft and Google there.
It's hard to really look at the numbers and say, oh, there's something wrong at Alibaba, Jack Ma needs to sleep at the factory if you will.
(LAUGHTER)
NEWTON: And there's though that nervousness around what regulation or western competition will hold. We've been talking about the U.S., China
trade talks. You had an interesting conference call with Alibaba about that today.
LA MONICA: Yes, the Vice Chairman Joseph Tsai kind of was like the bad cop to Jack Ma's Alibaba good cop. He's a little bit more, you know,
cantankerous, if you will, a little bit more feisty --
NEWTON: He can -- yes, he tells it like it is.
LA MONICA: Yes, Tsai pretty much was very blunt and said that, hey, we don't want a trade war, but that being said we think that Alibaba has
enough growth possibilities outside of China in other emerging markets, and clearly that is something that can help Alibaba grow their revenues and
profits going forward.
They do want to do business in the United States, and they are worried that there could be some tariffs and going back and forth along those lines.
But what I found really most interesting, Paula, was that Tsai specifically pointed to the fact that Alibaba is a company that can help U.S. farmers
and small businesses sell their goods in China.
So that sounded to me like something that was right out of President Trump's playbook. It's like yes, you want to talk about middle America and
the heartland, we're a Chinese company that's going to help those consumers and farmers do their job better and make more money. So, yes, it's very
interesting to hear that.
NEWTON: It's interesting. It is a line that the Chinese negotiators have been using as well, has not worked so far on the Trump administration -- we
continue to watch those talks closely. Thanks so much, Paul --
LA MONICA: Me too --
NEWTON: Appreciate it. Now, a feud with the Attorney General, his attorney general talk of impeachment. Now, sources tell us a powerful
media CEO is ready to place Donald Trump at the center of hush money payment.
Former federal prosecutor Jeffrey Toobin joins me next.
[16:50:00] (COMMERCIAL BREAK)
NEWTON: Now, for those keeping score at home, so far today, the U.S. President and his attorney general are in a public war of words. Donald
Trump is also talking about his own impeachment and now has his friend David Pecker who runs the "National Enquirer" tabloid has been granted
immunity in exchange for information, that's according to the "Wall Street Journal".
Our Jeffrey Toobin is here. You've been following Mr. Pecker and in fact his relationship with Donald Trump for a while. I heard you talk about
this months ago, this doesn't surprise you, does it? Because you were talking about it in relation to what prosecutors had on Michael Cohen.
JEFFREY TOOBIN, CNN LEGAL ANALYST: Right, well, you know, when I interviewed David Pecker for the "New Yorker", he was very candid about the
fact that he is a Donald Trump supporter and the magazine, the "National Enquirer" was going to be supportive of him, and there's certainly nothing
wrong with that magazine to have editorial positions for one side or another.
What makes this story complicated and what brings him into potential criminal liability is Michael Cohen's statement that he engineered a
payment to one of the two women with whom Donald Trump had alleged relationship on the eve of the election to keep it quiet.
Now, a magazine that pays money to support a candidate, that is potentially a violation of campaign finance rules, that's why undoubtedly Pecker's
lawyers insisted on immunity before he would talk to prosecutors and apparently he did get them.
NEWTON: Apparently, he listens to his lawyers.
TOOBIN: This -- he -- this one does.
NEWTON: OK, Jeff Sessions --
TOOBIN: Right --
NEWTON: Donald Trump, what -- where does this go from here? Because we continually see them sparring, we continually --
TOOBIN: I think we don't --
NEWTON: Go ahead, go ahead --
TOOBIN: What you see, have for months is Donald Trump berating publicly his attorney general, saying that he's terrible, saying that he's weak,
saying that -- he calls it the Justice Department with "justice" in quote. I mean, demeaning the work of the Justice Department all the time.
And it wasn't until today that Jeff Sessions; the Attorney General spoke up in his own defense. That's what was unusual today is finally Sessions
took, you know, you know, took note of the demeaning treatment he'd received and said that the Department of Justice will not be manipulated
for political gain.
It took him a long time, but that he finally did say it.
NEWTON: And Jeffrey, just to put a fine point on what's at stake here, it's not that he demeaned his attorney general, he's demeaning the entire
justice system in the United States. We go to his "Fox" interview again yesterday where he said flipping, so-called flipping or being broken should
be illegal.
Another day, the president of the United States basically said that if you don't want to cooperate with the justice system, you don't have to.
TOOBIN: Well, and you -- and you're a stand-up guy if you don't. You know, our viewers from outside the United States might not know that it is
absolutely standard in the United States, that when prosecutors are investigating an organization, whether it's an organized crime family or a
drug distribution group, the way it works is you get lower-level people, get them to plead guilty and then cooperate to flip.
That's the only way to prosecute really high level criminals in the United States. It's been done routinely and very successfully. But here you have
the president of the United States saying the whole practice of flipping people is improper because his friend Paul Manafort was just convicted --
[16:55:00] NEWTON: And --
TOOBIN: It's an extraordinary time --
NEWTON: It is extraordinary when you think that sometime, this has things to do with violent crime or murdering, so it's not just about --
TOOBIN: He's made a whole crusade about getting MS13, which is -- which is --
NEWTON: The gang --
TOOBIN: The drug gang from Central America. The only way to get them is to have lower-level people flip on the leadership.
NEWTON: It is such a good point, Jeffrey, which is why we have you in here, unfortunately, I suspect you'll be here quite soon again, thank you
so much --
TOOBIN: That's my job --
NEWTON: He gave up his entire vacation, he's supposed to be on vacation today --
TOOBIN: That's true --
NEWTON: Jeffrey Toobin, thank you so much. You might think Donald Trump's fixer would have set aside just a little cash before pleading guilty to
felonies. Apparently, Michael Cohen didn't do that, and now he needs help. Jeanne Moos has more.
(BEGIN VIDEOTAPE)
JEANNE MOOS, CNN NATIONAL CORRESPONDENT (voice-over): Feeling generous, Michael Cohen would like you to donate to his GoFundMe page.
UNIDENTIFIED FEMALE: And I was like, I knew nothing, facts, I couldn't believe it.
MOOS: Believe Cohen's lawyer was all over TV asking for donations.
LANNY DAVIS, LAWYER: He's without resources, wanting to help Donald -- Michael Cohen, tell the truth. And we've set up a website called Michael
Cohen Truth Fund --
MOOS: Are you kidding me, red one tweet, how about you get a go -- you account?
UNIDENTIFIED FEMALE: No, I won't give him a dime. Not one dime.
UNIDENTIFIED FEMALE: Not one dime. Not even a dime that I found off the street.
MOOS: But someone is donating towards the goal of half a million dollars, some woman who contributed five bucks using Melania's name, says she did it
to see if the site was legit.
On Megyn Kelly's show, the audience laughed out loud.
DAVIS: Some help from the American people, so we can continue to tell the truth.
(LAUGHTER)
MEGYN KELLY, JOURNALIST: See, the audience, they don't know if you are ready to donate --
(LAUGHTER)
UNIDENTIFIED MALE: And I'm thinking they're all dirty, and I'm thinking they've all been grabbing the money and now they just want to grab mine.
MOOS: Some wondered why Cohen needs cash when he bought a $6.7 million apartment that he now rents out for $25,000 a month. Read another tweet,
here's who really is linking to audio of Cohen threatening a reporter.
MICHAEL COHEN, LAWYER: So I'm warning you, tread very -- lightly because what I'm going to do to you is going to be -- disgusting. Do you
understand me?
MOOS: We understand. Some of those willing to contribute want Cohen to bring down President Trump.
UNIDENTIFIED FEMALE: The enemy of my enemy is my friend. So --
MOOS (on camera): How much will you be willing to give him?
UNIDENTIFIED FEMALE: I think 20 bucks will be the most because I think like I give like $30 to world wildlife funds, so I can't give more to Cohen
than I give to pandas.
MOOS (voice-over): Cohen like pandas may end up in captivity, who would you rather contribute to? Jeanne Moos, CNN, New York.
(END VIDEOTAPE)
NEWTON: Don Foster, our producer has just told us it's up to $144,000, that is quite a deal. If you want to keep up with the day's business
headlines in just 90 seconds, then try our daily briefing podcast, it's updated twice a day before and after the bell rings on Wall Street.
Or you can just ask Alexa and your home device for CNNMoney flash briefing, and that's every weekday. And that is QUEST MEANS BUSINESS. I am Paula
Newton in New York, the news continues right here on CNN.
(COMMERCIAL BREAK)
END
