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Quest Means Business
U.S. Senator McCain Lying in State at Arizona Capitol; Trump White House Counsel McGahn to Leave Job; Dam-Burst in Myanmar Displaces 50,000 People; San Juan Mayor Blames Trump Administration for Storm Response; Jimmy Carter: West May Need to Seek Peace with Assad; Aston Martin on the Road to $6 Billion IPO; Ferrari Shares Up 160 Percent Since its IPO; FTSE Dragged Down By Miners, Energy Stocks; U.K., French Fishing Boats Clash Over Scallops; NYT: More Than 100 Employees Push Facebook for More Opinion Diversity. Aired 4-5p ET
Aired August 29, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CORRESPONDENT, CNN: Yes, you guessed it. More records on Wall Street. It's Wednesday, the 29th of August. Tonight, Donald Trump
watches the US economy grow even faster and says he's optimistic about a trade deal with Canada.
Former US President Jimmy Carter tells me how the world can fix this housing crisis. And after a century of business, Aston Martin, that's
James Bond's car, is ready to go public. You'll hear from the Chief Executive this hour. I'm Paula Newton and this is "Quest Means Business."
Yes, what is going to keep this market down? That's the question. Strong US growth numbers put so much steam into this market, all the major US
markets moved higher and, of course, the NASDAQ and the S&P hit all-time highs. Here we are again, folks, with my chicken scratch, I'm going for 18
there and 29 here. That is incredible. That is just this year.
Now, US GDP growth for the second quarter was revised up to 4.2%, that is the highest rate since 2014. You can imagine, President Trump was pleased
with those numbers, tweeting, "Our country is doing great." And then saying this to reporters.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: You know, our economy has picked up in terms of worth. There's a lot of money for everyone sitting
around this table, but we picked up about $10 trillion, general, since my election and we're doing record business, record stock market, record
everything, and also, record unemployment.
(END VIDEO CLIP)
NEWTON: I'm joined now by Julia Coronado. She is the founder of MacroPolicy Perspectives and formerly worked at the Federal Reserve. I
don't know what you can think at what your former colleagues are thinking right now. You know, this market just does not see any danger ahead, but
more importantly, do you think issue is that they see nowhere else to put their money at this point in time?
You know, it is slow and steady at the Federal Reserve and the growth in the rest of the world just isn't looking as attractive.
JULIA CORONADO, FOUNDER, MACROPOLICY PERSPECTIVES: That's right. I mean, part of what we're seeing in the US markets that is that the US economy is
humming along. That was confirmed again with a minor upward revision to second quarter GDP. We see strong jobs growth and the rest of the world
hasn't seen such great times. We've seen some slowdown in Asia, some slowdown in China. So relatively speaking, it does look attractive for
now. Keep in mind, though, we've got a lot of stimulus under our wings from the tax cuts and that is inherently temporary, so, the party won't
last forever.
NEWTON: And yet, at this point in time, it seems that it will. Remember, the record bull that we have going on here, Julia. when you think about how
you actually try and care for this economy, if I can put it that way, whether you're the Fed or whether you're Congress, I mean, we've got some
real fiscal issues in this country, once that will concern a lot of different people.
CORONADO: Correct.
NEWTON: And in Jay Powell's remarks last week, what I read from him was that, "Look, we will be a lot more cautious going forward," but the data
just doesn't -- it's not coming in the way we would like it to in real time. There are still some puzzling features about the data, especially
where it goes to wage growth and inflation.
CORONADO: Exactly. And that is what justifies the Fed's sort of gradual approach is that so far, we have seen great growth numbers, great jobs
numbers. Wage growth, still stuck below 3% and inflation at the Fed's target, but showing no alarming signs of acceleration.
So, for the Fed, that all adds up to, yes, take the punch bowl away, but very slowly, just sort of dim the lights a little bit on the party, but not
slam on the brakes.
NEWTON: Definitely, they won't be slamming on any brakes. There's been a puzzling feature to this recovery, and that is the fact that the wages,
they still do not continue to grow.
CORONADO: Correct.
NEWTON: One thing we've discussed over and over is that marginalized set of workers in the United States, who have been really closed -- really shut
out of this economy, if you will, for so many years. Do you think that's why there isn't the wage pressure? Or do you think it has something else
to do, even with undocumented workers, let's say?
CORONADO: No, I think that you've put your finger on a very important element of this, and in fact, Chairman Powell spoke about that at Jackson
Hole and has spoken about that before and Janet Yellen has been talking about it for years, which is that the labor market was so terrible during
the great recession, a lot of people gave up and left the labor force. Would those people come back? We are seeing them come back.
So that is the source of slack, if you will, that will keep downward pressure on wages until everybody that wants a job has found a job. So the
labor market is great, but it's not exactly looking like it's moving into overheating territory, and that's a positive thing. We can bring back
workers into economically active status. That's good for our potential growth rates.
[16:05:06]
NEWTON: Now, I want to throw -- I want to run something by you. There's been a great debate, as you know, about deregulation and tax reform policy
in this country. I want you to listen to Mohamed El-Erian, who spoke to me yesterday just about whether or not this vindicates Donald Trump's economic
policies.
(BEGIN VIDEO CLIP)
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: It's a vindication of tax reform, it's a vindication of deregulation, it's a vindication of the
hope that we'll also get infrastructure.
(END VIDEO CLIP)
NEWTON: What do you think, Julia? Do we need infrastructure now or just too much juice in the economy?
CORONADO: Look, I think infrastructure has been a great idea on the table for a long time, that we haven't gone down that road. I would be a little
bit more cautious in calling this a vindication. We have borrowed a lot of money. This tax reform was not revenue neutral. We sort of all agreed
that lower tax rates would be a good idea, but originally the intention was, let's close some loopholes, as well so that we don't explode the
deficit.
Instead, we're going the exploding the deficit route. So we're borrowing against our future, and that will present us with harder challenges down
the road. So again, it feels great right now, but I don't think you would recommend say, for example, that your teenager follows such a strategy in
borrowing against their future. So I think it's a short-term vindication, that presents us with longer term challenges. It would have been probably
more ideal to go with some infrastructure spending that was financed with public/private partnerships, something that would address some deeper
productivity-enhancing investment without, necessarily, blowing up the deficit. But call me old school.
NEWTON: You and me both, Julia. I am happy to be in that category with you, because I would have loved to see some infrastructure, you know, those
of us who use it in this country. Julia, thank you so much. We'll continue to check in with you. Appreciate it.
Now, President Trump says he's optimistic that Canada will join the US/Mexico trade deal and expects a breakthrough could come by Friday.
(BEGIN VIDEO CLIP)
TRUMP: The deal we've made is a fantastic deal. It's gotten great reviews with Mexico, trade deal. Right now, we call it the US-Mexico Trade
Agreement and we'll see whether or not Canada gets into it. Otherwise, we'll doing something separately or we won't do anything, which is okay,
too.
UNIDENTIFIED FEMALE: Are you optimistic?
TRUMP: I think so. I think Canada very much wants to make the deal and I think it's going to be obviously very good for Canada if they do and I
think it's probably not going to be good at all if they don't.
(END VIDEO CLIP)
NEWTON: Some more negotiating tactics there from the President. Now, those comments came as Canadian Foreign Minister Chrystia Freeland is due
to meet with US Trade Representatives in about 45 minutes from now. Prime Minister Trudeau says that Canada is ready to walk away if he has to,
adding no deal is still better than a bad deal.
(BEGIN VIDEO CLIP)
JUSTIN TRUDEAU, PRIME MINISTER OF CANADA: As I've said, Canada is always willing to sit down and work in a constructive and responsible way around
the table. We've, done that from the very beginning and we will continue to be creative and constructive around the table. We're working now. We
sent our whole team down to Washington to engage in this week's negotiations. We recognize that there is a possibility of getting there by
Friday, but it is only a possibility, because it will hinge on whether or not there is ultimately a good deal for Canada, a good deal for Canadians.
I've said from the very beginning, no NAFTA deal is better that a bad NAFTA deal and we're going to remain firm on that principle, because Canadians
expect us to stand up for them, and that's what this government is going to do.
(END VIDEO CLIP)
NEWTON: Both the US and Canada are continuing to play politics. The auto sector, though, meantime, it's of material importance to them and they're
watching quite anxiously.
Joining me now on the phone is Ann Wilson. She is senior vice president of the Motor and Equipment Manufacturers Association. Now, I want to stress
that you deal -- you're not -- you deal with all the companies, the Ford, the GMs, the Chryslers of the world, but you are auto parts manufacturers,
you have a huge stake in these negotiations though. From what you've seen so far of the US-Mexico deal, that Canada says that in principle they agree
to, but they also have to see the details, does that put all three countries in a better position in terms of having a more competitive car
industry?
ANN WILSON, SENIOR VICE PRESIDENT, MOTOR AND EQUIPMENT MANUFACTURERS ASSOCIATION: Well, first, Paula, thank you very much for having me on the
show. We are heartened by what we see between US and Mexico on many fronts. We do think that there's a real possibility here with the regional
value content and the increase that our administration, the Trump administration sought to improve the trade agreement for all the parties.
But I would like to go back to what you started off the show on. It is really important that Canada be at the table and that this be a three-party
agreement. We represent motor vehicle suppliers. We are actually the largest employer of manufacturing jobs in the United States.
[16:10:11]
WILSON: And our jobs have actually grown under NAFTA. So NAFTA has been good for our companies, but it's also been good for the American workers
who are employed by our companies, but we need Canada to be there.
NEWTON: At times, President Trump does not seem to have listened to that message. He thinks that, look, if he doesn't get the trade deal that he
wants, the trilateral deal doesn't have to happen. Do you find that sometimes that your message falls on deaf ears when it comes to the
administration?
WILSON: Well, with I think the President is challenging all of us in the business community to come back to them to explain exactly why something
that we have come to expect from NAFTA needs to continue, and I think that the auto industry has done a good job of trying to show how NAFTA allows
the United States to be competitive in a global environment.
So it allows the three countries to be competitive compared to Europe, compared to Japan and Asia, and that's why this three-country agreement is
so important.
NEWTON: If there is no deal, Donald Trump continues to say that he will impose tariffs on cars coming in from Canada into the United States. Given
the integrated nature of the auto industry that you work in, is that possible? Would that be feasible?
WILSON: Well, it is feasible, but we are very much opposed to that. We build cars, we sell cars in a global environment. Most of our members are
global players, but we also have a lot of manufacturers in this country who have just the facility in the US, but they are very dependent on all of the
vehicle manufacturers being able to be successful.
I'm from the south, and I say a lot of rising tides with small boats, and what we need to talk about here is the dependency between vehicle
manufacturers and their supply base, and then the dependency on US workers for those jobs.
So, you know, if we cannot be able to get parts into this country on a financially viable front, it's going to be much more difficult to make cars
in this country, and if it's hard to make cars in this country, we won't employ as many people.
NEWTON: Yes, and that is a very clear message there. Ann Wilson, thanks so much for your time. Really appreciate it.
Now, later in the program, you are going to here from the Chief Executive of Aston Martin which has just announced it is preparing for an IPO. He
will tell us why he's actually not worrying about the threat from auto tariffs.
Tesla shares closed down another 2% amid new trouble from CEO, Elon Musk. Now, he may face legal action for his verbal attack on a cave diver, after
all. Here's a reminder of how we got here. Thank goodness. Last month, Musk offered a miniature submarine to help rescue 12 boys and their
football coach who were trapped in a cave in Thailand.
One of the rescue divers called, Vernon Unsworth called it a PR stunt and said Musk can, quote, "stick the submarine where it hurts." In a Twitter
outburst, Musk called Unsworth a pedophile.
The Tesla boss later apologized, but on Tuesday, Musk tweeted that he thought, it was, quote, "strange" that that Unsworth hasn't sued him. Now,
it appears that is going to change. Clare Sebastian has been following this.
Thank goodness, Clare, because I've completely lost track. You're going to give us the details of what' going on right now, but at the end of the day,
it's still clear that Elon Musk has a trouble actually staying focused.
CLARE SEBASTIAN, CORRESPONDENT, CNN: Right, and staying quiet on Twitter, Paula. In the wake of that whole 17-day debacle over whether or not he was
going to take the company private, a lot of investors had really been hoping to see a more restrained Elon Musk and there were a couple of days
when it looked like that might be the case on Twitter, but clearly that moment is over. This is the tweet that he put out in the last 24 to 36
hours about Vern Unsworth. It was a reply to another Twitter user. He said, "You don't think it's strange that he hasn't sued me? He was offered
free legal services." Well, as you said, he hasn't sued him yet, but we do have this letter that was sent by lawyers that have been retained by Vern
Unsworth to Elon Musk. It's dated August 6th.
They say that they are preparing a civil complaint against Elon Musk for false and defamatory statements. They said that he had no basis for
calling Vern Unsworth a pedophile and he did it in anger, which is something that Musk himself later admitted. So all of this, Paula, yet
another example of how Musk's tweets are damaging the company, and I think this is going to prompt more calls, not only for him to stay off Twitter,
but also for the board to step in and keep up that search for someone to fill his number two position and take the pressure off of him.
NEWTON: Yes, as you were saying, you know, we talked earlier, the stock down 2% there. The new price targets are flying from analysts and they say
it doesn't look good. And if we can allow ourselves to focus, unlike Elon Musk.
[16:15:08]
NEWTON: In terms of the production targets that you and I have talked about so much, Clare, people are still saying, look, it is going to be a
rough third quarter for Tesla anyway you have it. And there you see a chart of what's gone on from his antics just in about the last four weeks.
SEBASTIAN: Right, the stock is down almost 20% from that peak, which you see of the back of that going private tweet on August 7th. The interesting
thing is, Paula, the stock had risen just before that. They'd produced a good earnings report. It beat expectations, cash burn was starting to slow
and they were starting to meeting those Model 3 production targets, but despite the noise and the distractions of the last month, the financial
problems and the challenges that Tesla faces haven't gone away.
They are still burning through cash. They are under pressure to meet those Model 3 production targets. A lot of analysts are saying that if they
don't, they will still have to raise money. They have $1 billion plus in bonds that are coming due by March next year. There are real questions
over how they'll make those payments and musk has continually said that he doesn't want to raise cash externally.
I think a lot of people continue to question that and it doesn't help that they're losing confidence. You can see it in the market today. They're
losing confidence in his ability to focus on the task at hand.
NEWTON: Yes, and he is going to be caught in that whole issue of numbers don't lie and they will expect to see some better numbers. Our Clare
Sebastian continues to follow that soap opera that is the Tesla story. Appreciate it.
Now, a sea battle between the British and the French -- I'm not kidding. This is the 21st Century now, I think we're in -- that's not a scenario for
the historical drama. It happened on Tuesday. You'll want to see this video. We'll have details, coming up.
And former US President Jimmy Carter joins me to talk about his hands-on effort to build affordable housing. Plus, more from him on Syria and the
current President.
Now, think about this. Nearly everywhere in the United States, a minimum wage worker can't afford the rent on a one-bedroom apartment. Now, the
government estimates about half a million people have no home at all. Habitat for humanity works to combat that crisis by building homes right
across the United States and in 70 countries worldwide.
Now, the struggle to pay for housing is a global one, affecting families from Rio to Beijing. Two of Habitat's most well-known volunteers are
former US President Jimmy Carter and his wife, Rosalynn. They have personally joined teams in 14 countries to help people achieve their dream
of owning an affordable home.
[16:20:11]
NEWTON: Now, I spoke to the former President a little while ago and I asked him what progress has been made towards affordable housing in the
last three decades.
(BEGIN VIDEO TAPE)
JIMMY CARTER, FORMER PRESIDENT OF THE UNITED STATES: Well, although Habitat has grown in the last 13 years that I know about, 30 times larger
than it was 13 years ago, because of good leadership and the enthusiasm that people feel about it. In spite of the fact that we are building now a
house or finishing up a house for a family to move into, every 50 seconds, 24 hours a day, in 70 countries around the world in 1,300 places in the
United States, the need for low-income housing increases every year.
Because construction has increased in cost, because it's more expensive to finish a house, and because land has gone up. And as you know, rent has
just skyrocketed in some places. So, nowadays, what we try to do is to make housing available through Habitat, which it always, invariably, is
lower cost per month, without interest. We don't charge any interest because the Bible says you don't charge a poor person interest. If they
just pay 30 years on the principle itself, they can own a house themselves cheaper than they used to pay rent for an inadequate place for a human
being to live.
So we see Habitat as increasing rapidly in its service, but the need for low-income housing increasing and so local, state, and Federal governments
ought to know this and the private sector, as well.
NEWTON: Yes, and you're right there, in the sense that the need is intensifying. We continue to see stories about homelessness, not just in
large cities in the United States or expensive cities in the United States, but right around the world. Getting back to the issue, in terms of what
you can do about that, I mean, what do you think that governments and regular folk are missing about how we can actually end homelessness, even
in our richest cities?
CARTER: Well, I think most of the low-income housing is provided not by the government, but by private enterprise in America and the banks need to
be more liberal, more progressive, more forthcoming in making housing loans available. The low interest payments that are imposed now make it very
attractive.
But I think bank policies are very important, and I think that just the public sector, you know, people who serve in public office, mayors and city
councilmen and members of the Congress and members of state legislatures, need to have public housing or low-income housing at the top of our agenda,
as a top priority.
NEWTON: If you'll allow me, Mr. President, I just wanted to delve into current politics. I know you say you're out of the business of politics,
but you have said that, you know, you don't think it's right that the Democrats pursue President Trump in terms of impeaching him. Why not?
CARTER: Well, I'm not -- I never have mentioned the word "impeachment," I don't think o want to get involved in that. I think it's a mistake,
politically, for Democrats to be talking about impeachment of a President. We need to wait until the special investigator or special prosecutor makes
his report.
I think that Mr. Mueller is completely qualified to do that and if the President turns out to be guilty of a crime, I'm not assuming that he will,
then the Congress will take action. But I don't think that it's good for Democrats to be talking about impeachment at this time.
NEWTON: I mean, how worried are you in general, though, about the fractious nature of politics right now in the United States? You know, we
have these memorials to John McCain, someone who did reach across the aisle, we just don't see much of that anymore.
CARTER: Well, you know, obviously, all Presidents make mistake and I think that President Trump has been guilty of making a lot of mistakes. One of
the mistakes that he made last week that was very troubling to me was not honoring John in an adequate way and the Senator has been a great hero for
our country in the Navy and John McCain and I both graduated from the same institution, and that is the US Naval Academy in Annapolis, and I looked
upon him as a great hero for our country, both in the military, and also as a great public servant through the US Senate.
So I think that President Trump made a mistake at first, by, you know, going back and forth on whether to raise a flag or not -- or lower the
flag. I think he's made a correction on that. So, we all make mistakes, but I think that he's trying to correct his mistakes, as best he can. He
made a mistake at first, I think he's partially corrected it.
[16:25:16]
NEWTON: You had an editorial in "The New York Times" regarding Syria and you wrote that many Syrians have concluded that almost any peace, even an
imperfect or ugly peace, is better than ongoing violence.
CARTER: Yes.
NEWTON: I mean, some would say, that at worse, that's complicity in Syrian war crimes and at best, it's really vindication of the brutal war that has
been conducted by Syria and its backers, Iran, and Russia. I mean, why are you calling for this now?
CARTER: Well, I think, the best thing to do is to end the violence now and then work out the problem with the incumbent President Assad. I know him
quite well, as a matter of fact. I used to -- I haven't talked to him in many, many years now, but he has committed, I think some very serious
crimes against his own people.
But the first thing we need to do is, as I said in the editorial, is to stop the war and then work out with the United Nations and other forces the
-- how to treat the incumbent leader of Syria and it's inevitable, I think that he and with his allies, particularly the Russians and to some lesser
degree, the Iranians are expanding his hold on the country.
So he needs to be given a chance for peace, first of all, and if he accepts it, then we can accommodate his crimes later on.
NEWTON: But at any cost? You know, they have called him a butcher. Many people in Syria would really have problems with the fact that he would
remain in power and basically win at this war.
CARTER: Well, I think the basic assumption is he's going to be in power anyway, and his power is increasing. But in the meantime, a lot of people
in Syria are getting killed and can't move back to their homes. So the first thing to do is to end the war and that would end barrel bombs and
that would also end the use of chemical weapons on innocent people if the war ends. And then when that is done and a lot of people are in favor of
that, then we can deal with the crimes that have been committed already.
(END VIDEO TAPE)
NEWTON: The former President there, now 93 years old. So we move on to a skirmish over scallops. Tempers fly as British and French fishermen clash
on the sea. You do not want to miss this story.
(COMMERCIAL BREAK)
[16:30:00] PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton, coming up in the next half hour of QUEST MEANS BUSINESS, Aston
Martin's chief executive tells us how the company is preparing for Brexit as it gets ready for its own IPO.
And never mind, the scour of some British and French boats are doing battle in the English channel. First, these are the top news stories we're
following this hour. Late Senator John McCain is now lying in state in Phoenix, Arizona on what would have been his 82nd birthday.
You are looking at live pictures there as National Guard members carried his caskets to the Arizona Capitol building where visitors continued to pay
their respects. Now, earlier, the war hero's wife Cindy McCain delicately patted flagged-draped casket.
There will soon be another high profile departure from Donald Trump's inner circle. The U.S. President announced on Twitter that Don McGahn will leave
his job as White House counsel just in the next few months. Mr. Trump said it will happen following the expected confirmation of Supreme Court Justice
nominee Brett Kavanaugh.
A dam bursting has forced more than 50,000 people in central Myanmar to evacuate their homes, but officials say several villages are now flooded
and at least one of them was hit with a wall of water more than 2 meters high -- incredible pictures there. There's no word yet on any casualties.
The mayor of San Juan, Puerto Rico said Wednesday that bureaucracy and government inefficiency are to blame for the death of almost 3,000 people
in the wake of Hurricane Maria. That revised death toll came to light as part of a new study commissioned by the Puerto Rican government.
Mayor Carmen Yulin Cruz blamed President Donald Trump's administration for not providing more assistance. Former U.S. President Jimmy Carter says the
west may have to work with Bashar al-Assad in order to end Syria's civil war. Now, Mr. Carter has called on western nations to re-engage with the
Syrian government as a step for securing peace.
Speaking to me on QUEST MEANS BUSINESS, he said there were major risks in simply waiting for the Assad regime to fall.
(BEGIN VIDEO CLIP)
JAMES CARTER, FORMER PRESIDENT OF THE UNITED STATES: Yes, basically, Assad here is going to be in power anyway and his power increasing. But in the
meantime, a lot of people in Syria are getting killed, they can't move back to their homes.
For the first thing they do is to the end the war and that would -- that would end barrel bombs and that would also end their use of chemical
weapons on innocent people. If the war ends and when that is done and a lot of people are in favor of that, then we can deal with the crimes that
have been committed already.
(END VIDEO CLIP)
NEWTON: James Bond's favorite car maker is gearing up for a $6 billion IPO. Now, Aston Martin's long road to its market debut has been far from
soon. It was founded by Robert Bamford and Lionel Martin in 1914 and passed through numerous owners including Ford Motors.
Most recently though, it was bought by an international consortium in 2007. Now, the company has flown the flag for the British car industry for more
than a century now. It is of course famous for being James Bond's car of choice.
Here you see Daniel Craig Bond putting the car to its chases in "Quantum of Solace". Now, it's perhaps fitting that the company has gone bankrupt 007
times in history, that is the quirk, there we go, not a coincidence, but now that it's back on firmer footing, it seems to be taking inspiration
from Italian rival Ferrari.
Shares in that company are up 160 percent since its New York IPO back in 2016. Anna Stewart is live in London, she's been speaking with Aston
Martin's CEO and he's quite optimistic about not just the company's legacy, but going forward, he says that this could be a popular IPO.
I'm curious though, Anna, you know, we've got Brexit, we've got auto tariffs, he's not even a little bit worried.
[16:35:00] ANNA STEWART, CNN: Not really, he was very bullish. He's really determined. This will follow on the footsteps of Ferrari which of
course, as he said IPO in a couple of years ago, three years ago and has since over-doubled its valuation. But the market is kind of different now
and the headwinds are huge, so much Brexit uncertainty.
And the risks still lingers that President Trump could impose tariffs on European car makers. So I asked him, why IPO now? What's in it for you?
What about all these headwinds?
(BEGIN VIDEO CLIP)
ANDY PALMER, CHIEF EXECUTIVE OFFICER, ASTON MARTIN: From a management point of view, the management view is based upon our history. Our history
is we have 105-year-old brand. We've made beautiful cars in the past, but we've always not been successful on the balance sheet basis.
And you've had a tendency over the years to have millionaires and billionaires buying into the company, build their car and walk away. And
in consequence, the company suffered in rebuilding the company which I hope me and my team have been able to do since 2015 in bringing it back to
profitability.
In creating the cadence of product, seven cars over seven years, one car every year, each car having a seven-year life, copy, repeat, copy, repeat,
copy, repeat. In doing that, we've been able to create this tempo in the company and it is this tempo that's making the company profitable.
Now, what I hope in leaving a legacy is though I leave behind stability and importantly government. And what listing does, it forces you to have
independent chairman, independent non-executive directors, a governance around the company which will allow that tempo to continue.
And the reason that we call the plan the second century plan is about taking all of the earnings from the first century, improving them into the
second century and making sure that we have the last British, really British car company which is capable of surviving for the next 100 years.
STEWART: You turned the company around, but it has been bankrupt several times before. Will investors really want to buy into this company?
PALMER: By the way, you know, a turnaround isn't one gentleman, it's a team. And the team that we've created is very much a meritocracy, the way
we work together. And I think that's what investors are buying. They're buying this team, this team that's demonstrated this company.
You can liken to Ferrari and of course, Ferrari has been very successful. So if you want a benchmark, it's there, you see the multiple that they've
managed to generate against their aevitas(ph). Obviously, our aevitas(ph) is a little bit behind them, but with the same time of company.
I mean, in fact, over time, as we add new models and we replace models, the pricing is accretive, that means the margin is accretive and we tend
towards the Ferrari margins over time, and of course, we go from today's roughly speaking 7,000 cars a year to a volume in 2022 of 14,000 cars a
year.
So you've got this wonderful luxury growth model which of course is very attractive to investors.
STEWART: Now this IPO will take place among some pretty strong headwinds. Brexit uncertainty on the one hand and still risk lingering at the
potential tariffs from the U.S. with President Donald Trump waging tariffs potentially on European cars. Is this the right time to IPO?
PALMER: Well, I'd say it's therefore the risks that you outline, which are risks to the general economy. I'd say that Aston is the counter that in
many cases, it's sheltered from those risks. So if you're looking for a kind of safe haven for your investment, then you choose luxury companies
like Aston Martin.
Luxury companies tend to survive through this turbulence and turbulence better than anybody else mainly because our buyers are less affected by
those macro-economics. Now, if you take Brexit for example, we export 25 percent of our cars to the EU, and we sell 30 percent of our cars in the
U.K.
Let's assume that there's a hard Brexit, let's assume that the EU puts a 10 percent tariff, yet, that would have been cars that go to Europe a little
bit more expensive, and you might argue we might lose a little bit of market share.
On the other hand, coming in the other direction, Ferraris and Lamborghinis are also now 10 percent more expensive, and that means that we're more
competitive in our own market where we sell a slightly higher percentage of our cars, therefore in that instance, it's a little bit positive.
On top of that, of course, one assumes that if you have a hard Brexit, that the pound is going to go softer, it will weaken. And when the pound
weakens, that's good for us as an exporter, so improves our profitability. So you see in the case of Brexit, it's not something that keeps me awake at
night, it's not something that I put you know, hard Brexit with tariffs.
It's not something though I would advocate, but it's certainly not something that worries me.
(END VIDEO CLIP)
[16:40:00] STEWART: Andy Palmer; the CEO there, Paula. He did put a very positive spin on Brexit, but I would say later in the discussion he did say
he was prepared for a hard Brexit, for a no-deal Brexit. Although, all that's hard amid here in the U.K., most of the components are imported in.
In fact, most of them from Europe and Germany in particular. And as a result, they offer a just-in time production, much like all the car makers
around Europe and many in Asia of course. Which means components arrive just in time for them to be fitted into the car.
They now have a process whereby they keep components for five days in a warehouse because they are ready for potential custom delay, and he said
they could even increase that.
NEWTON: Yes, and that is going to be a problem, you know, just in time, obviously, pioneered really in the auto industry in North America is so
important, interesting even to a luxury car maker. I know you're saying he put a positive spin on Brexit, did he also put a positive spin on Asia's
growth because obviously, if you have to look at the evaluation of this company going forward, Asia's got to be part of the equation.
STEWART: Asia is actually where they're really planning to double-down in terms of sales coming up. They have a vast increase in sales planned for
the next few years, particularly when they're new facility in Wales comes online. And Asia is certainly the biggest target for them.
In the United States, they're still planning to continue their growth there, and they said that, yes, with any tariffs that may come their way,
they'll simply pass on that cost to the consumer. Paula?
NEWTON: And I didn't ask you, I should have before, did you get a spin in the car?
(LAUGHTER)
STEWART: Paula, they were just on (INAUDIBLE) reason to get spin on anything. But I can tell you, at least I've already broken the bad news to
all our viewers out there, the ticker symbol will not be 007, I'm sorry to say --
NEWTON: Oh, shame --
STEWART: The CEO himself told me, it wouldn't be, it's more likely to be AML, which I think is a huge disappointment.
NEWTON: Maybe they could have come up with some other James Bond acronym, but I'll leave it there, maybe I'll get creative, Anna, thanks so much for
bringing us this story, appreciate it. Now, European markets ended the day on a mixed note.
In London, the FTSE was dragged down by energy stocks and miners, it was a slightly better story on the continent indices. And Paris and Frankfurt
ended about a third of a percent higher, it will be interesting where they go tomorrow, given those highs in the U.S. markets.
Now, next on QUEST MEANS BUSINESS, a turf war on the high seas, these fishermen are brawling over scallops, I can't get enough of these pictures,
it's incredible. Bumper cars pulling the shrimps.
(COMMERCIAL BREAK)
[16:45:00] NEWTON: This is not a historical feature, this is bumper cars in the English channel, boats running into one another, flares being shot,
bottles being thrown, rocks, it's a story that really takes you back in time. British and French fishermen have clashed in a spectacular fashion
over scallops.
Now this is where the skirmish took place, the English channel, French fishermen were restricted by their government on when they can try and
catch those scallops. Now regulations they say the English ignore.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It's seven days a week for them, they fill up, they come, they dretch, they fill up the hole and then they go home. There you
go. They just leave us the scraps.
(END VIDEO CLIP)
NEWTON: Leave us the scraps. Now, the CEO of the U.K. Federation of Fishermen's Organization told Cnn this is not the way to solve this
dispute.
(BEGIN VIDEO CLIP)
BARRIE DEAS, CHIEF EXECUTIVE OFFICER, FEDERATION OF FISHERMEN'S ORGANIZATIONS, UNITED KINGDOM: There had been disputes over fishing rights
in the past and I'm sure there will be in the future. The place to resolve them is around the table by talking, not by firing flares, throwing
shackles, engaging in dangerous maneuvers that jeopardize safety at sea.
So what we've seen here is a step change that is really concerning, and we very much hope it isn't the pattern for the future.
(END VIDEO CLIP)
NEWTON: Yes, so do we all. Now, that's the British side of the story. We want to hear of course from the French side as well. Manuel Evrard is the
director of the Normandy Fishermen Organization, he joins me now live from Normandy, France, via Skype.
I mean, look, we are all just stunned by that video, that was incredibly dangerous. What kind -- what was the boiling point here? What was the
tipping point to make the French fishermen take those kinds of extreme actions.
MANUEL EVRARD, DIRECTOR OF NORMANDY FISHERMEN ORGANIZATION: Well, you know, that is a kind of piece of many of the resource for the French
fisherman particularly in Normandy. I think the French and the U.S. market, both of them are the main consumers of scallops in the world.
Regarding of fishermen, of late, it represents up to 80 percent of the annual sales, so it's significant for fishing industry. The French
fisherman adopted in the past years specific fishing model, taking good measure to make it sustainable.
We are opening an enclosure of baits, we also have bigger net size or fishing gear. We also have daily quarter of fishing vessel, and we may
have sometimes from time to time to close the fishing for one or two days just --
(CROSSTALK)
NEWTON: OK, I understand -- I understand that -- I understand what you're saying. You're saying that the French are doing this sustainably, but
look, I'm really good by the pictures that I'm seeing there. Do you think there's a risk that this would happen again and who should negotiate this?
Because clearly, there's got to be a resolution. This can't go on, I mean, look at this.
EVRARD: Yes, it may happen again. The last few years we reached an agreement with the U.K. vessels and over 16 meters length, but this year,
we have not reached this agreement again, so on the British side, it's just an open fishery this year.
So yes, it may happen again. But still we have to keep in touch with them and we still have a -- we still think that we must have a dialogue and to
solve that problem.
NEWTON: Yes, and I hear you're enforcing, you're saying this may happen again. When you look to a dialogue, and I know this is visceral, I know
the fishermen are fighting for their livelihoods, but is the onus on the fishermen or is the onus on the British and French governments?
EVRARD: You mean, what do you mean?
NEWTON: Who needs to negotiate this? Are you looking to the government to negotiate that --
EVRARD: OK --
NEWTON: For you or the fishermen?
EVRARD: I believe that, that should be solved between fishermen themselves. You know, the thing is -- the trouble is that, the
counsel(ph), you know, is that they have to spend time to hang on it at sea. So it's -- sometimes if you go to them to gather, to be around the
table.
But I'm pretty sure that sometimes all the fishermen themselves are on the table, we can -- we can reach an agreement.
[16:50:00] NEWTON: Well, I'm certainly hopeful that that arguing goes on in a conference table and not on the high seas as we've been watching.
We'll continue to follow this story, appreciate it. Now, when we come back, Facebook is under pressure again, this time from inside the company.
The internal posts, that's the talk of the social network.
(COMMERCIAL BREAK)
NEWTON: OK, there's apparently a growing group of Facebook employees. I'm happy about what they see as the company's lack of diversity and tolerance
of their different political views. Oliver Darcy is here to explain. You know, the reporting on this was really interesting that from inside
Facebook, they kind of are going with a line that, look, our conservative views are sometimes not tolerated.
OLIVER DARCY, CNN SENIOR MEDIA REPORTER: Yes, there's a couple of things you want to mention first. So this happened in the "New York Times" last
night, and it's a group of Facebook employees who feel that, like you said, their conservative views are not tolerated by the company.
It was posted on the internal message system at Facebook. But it's important to remember, there are thousands and thousands and thousands of
Facebook employees, I think about 25,000 in total, and this group only had a few dozen individuals in there, got a lot more popular groups on
Facebook's internal message board where there are thousands of members.
This one like I said has a few dozen. They're upset that they said their conservative views aren't taken seriously, but a lot of their colleagues
too have been pushing back, saying they are taken seriously, and so you're seeing a little debate grow inside Facebook itself.
NEWTON: But this does play into the narrative certainly from Donald Trump saying that, look, he's not getting a fair shape from the big tech company.
I want to talk about that, though, for a minute, Oliver, because you and I are trained to not be so naive about our own bias.
DARCY: Right --
NEWTON: We know that we have bias and we try and have people that back our stories, edit our stories, guard against that bias.
DARCY: Yes --
NEWTON: I think when Jack Dorsey from Twitter said last week that, oh, you know, yes, our staff is mostly liberal, but it's not a problem. I kind of
don't believe it. And if I believe it, I'm willing to bet that even the employees inside these companies don't believe it. What can they do? Do
they not have to do more to guard against that bias?
I mean, Jack Dorsey was very open in saying, yes, our employees are mostly liberal.
DARCY: Right, but he also said right after, that Twitter works extremely hard to make sure that their personal biases of their employees don't get
into how they enforce their policies. Now, I think actually if you just study Mark Zuckerberg and Jack Dorsey, I think they're actually really
committed to this.
[16:55:00] You see, Jack Dorsey for instance, he didn't cave to pressure to ban Alex Jones in for worst founder who pushes conspiracy theories on those
platforms. So I think if they really were these left-wingers that are portrayed in the press or -- sorry, in the conservative press, you would
see them taking issue with Alex Jones and banning him from Twitter.
And Twitter hasn't done that, they've actually let him stay on the platform. So while their personal biases on employees might certainly lean
left, they are saying, they work really hard to make sure that doesn't sip into how they enforce policy.
NEWTON: And here's the thing. Here at the "New York Times", at the newspapers, you know, you have an arm, but sometimes you have a certain --
let's say a certain outlet to kind of test that --
DARCY: Yes --
NEWTON: I don't see that yet at these technology companies. We're going to have these hearings coming up next week, do you think we will learn more
about this and many other things that go on at those tech companies.
DARCY: I imagine we'll get very loyally responses to a lot of the questions. The fact is that big corporations, whether it's media outlets,
whether it's big tech companies, they don't like being transparent. They generally refuse transparency. They don't like people coming in and
examining every single detail they do.
And I think that while we're like calling for transparency, these corporations -- I don't think you could find any corporation that would say
yes, invite the media in, but examine everything we do, let's make sure it's all public for everyone to see.
No company really likes that, and Facebook, Twitter and YouTube are no different. The issue is that they have a lot of influence on the public
debate, and so you're hearing people say, you know, you guys need to be a little more transparent in the way you enforce policies, the way you make
policy and so on and so forth.
NEWTON: And we should be a little more vocal, I mean, we've been trying to get Google on here for literally years, these are not secret societies, the
CEOs need to come and talk, at least Jack Dorsey came on Cnn --
DARCY: Well, both do, doesn't want to go to Congress, so --
NEWTON: Exactly, they're going to have empty chairs --
(CROSSTALK)
They're going to have empty chairs at these hearings. Yes, so, you know, the more they speak, the more we'll start to learn about how these things
are functioning and the more we'll have confidence, right? That they don't have a bias.
DARCY: And I think one last thing to keep in mind is they're worried that any word they say is going to be misconstrued and exploited by certain
outlets, particularly partisan outlets on the right to say, see, we caught you, you do have that kind sort of bias.
I think that that's something they really are cautious of, so when they make statements, when they go before Congress, you get a lot of loyally
responses because they're really afraid that their comments might be taken out of context.
NEWTON: And that tees up the hearings very well. Oliver, thanks so much - -
DARCY: Thank you --
NEWTON: I appreciate it. Now, if you want to keep on top of the day's business headlines in just 90 seconds, try our briefing podcast, it's
updated twice a day before and after the bell on Wall Street. You can just ask Alexa or your Google home device for your CNNMoney flash briefing every
weekday.
That is QUEST MEANS BUSINESS for today, I'm Paula Newton in New York, I'll see you right back here again tomorrow -- in the meantime, the news
continues right here on CNN.
END
