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Quest Means Business
White House Say It's Outrageous To Suggest President Donald Trump Bears Some Responsibility For The Recent Violence In The United States; Bloomberg Is Reporting That The US Plans More China Tariffs If Talks Between Donald Trump And Xi Jinping Fails Next Month; Life Without Chancellor Angela Merkel After A Tenure That Has Come To Symbolize Much Of How We Think Of The EU itself; The Far Right Jair Bolsonaro Will Be The Country's Next President After Winning The President Election By A Wide Margin And Brazil's Markets Cheered The Victory Sending The BOVESPA To An All-Time High And Then It Just Popped Back At The Close; Families Wait For Word On Their Loved Ones As They Look For Bodies Are Recovered After The Indonesian Plane Crash. Aired: 3-4p ET
Aired October 29, 2018 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: We are in the last hour of trading on Wall Street, and things do not look good. A day which started
with promise of a rally has evaporated and the losses would appear to be extending. We'll need to keep a close watch over the next 60 minutes.
It's even worse if you look at the broader market, that is Sharpy the NASDAQ. That is down over nearly 1.5%. And put it to the reasons and
understanding what's happening, late falls, but this is what's been driving the day.
Angela Merkel is preparing for her exit in Germany's political life, Germany's most powerful woman is stepping down as her party leader.
Brazilian stocks, they hit a record high as the country elects a far right president. And Kenya's President tells me, it's time to put Kenya first,
our special coverage from Nairobi begins tonight. Live in the world's financial capital, New York City on Monday, October the 29th, I'm Richard
Quest. I mean business.
Now, before we go any further, let's look at the Dow Jones Industrials, because the Dow is falling and it would appear to be falling fast. We're
off now 194 or so on the market. That is the worst we've seen of the day.
And we're in that part of the day when brokers and investors decide how they want to go into the night. So we could see some very sharp volatility
over the next 60 minutes. We'll watch it closely, and if those losses extend, we'll bring them to you immediately.
And now to the other news before we get to the full details of our business day. We've just heard the White House say it's outrageous to suggest
President Donald Trump bears some responsibility for the recent violence in the United States.
Jewish worshippers were shot and killed at their synagogue in Pittsburgh, Pennsylvania, and politicians threatened with mail bombs across the
country. Yet, a few moments ago, the Press Secretary, Sarah Sanders said the media was rushing to criticize the President for the action of heinous
individuals.
(BEGIN VIDEO CLIP)
SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: The very first thing that the President did was condemn the attacks both in Pittsburgh and in the pipe
bombs. The very first thing the media did was blame the President and make him responsible for these ridiculous acts. That is outrageous that that
would be the very first reaction of so many people across this country. I'm not finished.
The only person responsible for carrying out either of these heinous acts were the individuals who carried them out. It's not the President no more
than it was Bernie Sanders' fault for the individual who shot up a baseball field of congressional Republicans. You can't start putting the
responsibility of individuals on anybody but the individual who carries out the crime.
(END VIDEO CLIP)
QUEST: Kaitlan Collins is in Washington. This isn't a new line, but they seem more angry. Sarah Sanders seems more riled up about it, as if the
accusations that somehow the President does bear personal responsibility or some responsibility has finally gotten to them.
KAITLAN COLLINS, WHITE HOUSE CORRESPONDENT, CNN: Yes, it does seem like that, Richard. She came out at the beginning there. She was very
emotional while talking about the shooting at the synagogue, getting choked up at one point while announcing that the President and the First Lady are
going to visit there tomorrow in Pittsburgh.
But then she quickly changed course and her tone, and we essentially saw what we've seen from President Trump, going from making these calls for
unity, denouncing what happened and then quickly pivoting to blame the media.
Now, Sarah Sanders said multiple times that the President is not putting the blame at the feet of the media for all of this, but that is exactly
what we've heard from President Trump. He directly said that the media is partly to blame for the negativity and the division in this country, saying
that they are the ones that are stoking up because of the negative coverage of the President and the hostile coverage, he says, of him, and that is
what they say are driving this force, not the President's rhetoric as has been the question not from not only the President's critics, but even some
people who are supporters of the President who have raised questions about what his tone has been in light of not only this shooting at the synagogue,
but also the pipe bombs that were mailed to people that the President often criticizes last week.
QUEST: Let me just jump in there, Kaitlan, a very interestingly point. Is there any -- I mean, the President -- to give him his fair due, the
President has come out and denounced both events. I'm just wondering what is it in the sense that the media believes he hasn't done?
[15:05:02]
COLLINS: So essentially they asked -- some of the people have criticized saying we heard that from not only the media, but from Jewish leaders
saying the President needed to condemn all white nationalists before they would invite him to come and they also felt that the White House is just
there, asked if the President and the White House feels that he's done enough to denounce that and they said essentially yes, that they do feel
that.
But also it's not just raising questions from the President's critics about whether or not he is to blame for some of the division because of his
rhetoric, but they said essentially there that he's not.
And Richard, what we saw play out there at briefing is what we've reported on privately, which is that aides do believe the President should only call
for unity, that he should come out seem presidential in moments of these tragedies as we've experienced in the last week.
But they also believe that the President is right, that the media doesn't report accurately on him, and they are not pushing back against the
President, going on Twitter early in the morning calling for unity and then later in the evening denouncing the news media saying they are the ones for
stoking divisions in the country.
QUEST: Good to see you. Thank you. Thank you for bringing us up to date on that. And now the markets and US stocks. When we started right at the
beginning showing you -- look at that, and they are extending exactly as we thought might happen, and down 246. Bloomberg is reporting that the US
plans more China tariffs if talks between Donald Trump and Xi Jinping fails next month.
It's unusual today because initially, as you can see, all that green on the left of the chart was cheered by IBM and Red Hat and their merger, one
which sent IBM shares down, but Red Hat shares going up by 40-odd percent. Now, the mergers were at $34 billion, but the market like that, it doesn't
like what it's seeing later in the day and from what you're seeing here.
Another thing that's well worth talking about, if you look at the triple stocks of the markets, the Dow may have been positive for most of the day,
but I assure you others were not, particularly the FANG stocks. Amazon is down 6% or 7% on worries over taxation in Europe and on what's happening
whether the company was overvalued.
European stocks closed higher. Germany was up 1%, and that was specifically on the news about Angela Merkel. Putting it bluntly, Europe
had seen nothing of what the United States was going through later in the morning.
Now, right now Europe's biggest economies have been processing the idea of something it hasn't had to look at in 13 years. Life without Chancellor
Angela Merkel after a tenure that has come to symbolize much of how we think of the EU itself. Now, she says she won't stand again after her
current term ends in 2021. The decision was made after heavy defeats for her party and its partners. One that she believes sound a call for change.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (Through a translator): This fourth term is my last term as Chancellor of the Federal Republic of Germany. In
the next Bundestag election in 2021, I will not run again as Chancellor. I will not run for the German Bundestag anymore and I will not take any other
political positions.
(END VIDEO CLIP)
QUEST: Fred Pleitgen is with me to talk about this, a serious Chancellor, but if it's so bad the situation, Fred, why doesn't she go now thus
allowing a replacement from her party to bed down as Chancellor?
FRED PLEITGEN, SENIOR INTERNATIONAL CORRESPONDENT, CNN: Well, that's certainly is what some people are asking. I think what she's done today is
essentially, she's bought herself some breathing room, but I do think it was quite remarkable, some of the things that she said because essentially,
what she said in that longer sort of press statement is that she believed that at this point in time, at least, she is actually part of the problem.
She said the way that the coalition currently is working is unacceptable. She said it hasn't gotten the job done -- excuse me -- and a lot of things
the German people care about. Like, for instance (inaudible) diesel gates scandal that the Germans have had here. She wants to finish her term as
Chancellor, but she feels that giving up her seat as head of the party is something that will at least buy her the time to finish the term as
Chancellor, Richard.
QUEST: Right, and Fred, to buy time for what? For the economic situation to turn around? The immigrant situation to turn around? The Brexit to
take place? What is the purpose of waiting, other than so that people don't remember the bad side of what happened in the last year or two and
remember her legacy as different?
PLEITGEN: You know what, I think essentially what she's trying to do, I think she has the agenda that she wants to see through. I think that she,
quite frankly, still believes that she is the best person to lead this country. I think she believes that there were some distractions. There
were a lot of inefficiencies recently in the coalition, but I also still believe that she thinks she is the right person to be able to right the
ship, if you will.
You look at the economic situation here in Germany, it's actually not that bad. If you look at some of the outlooks, they don't seem that bad either.
[15:10:00]
PLEITGEN: She does have some turmoil obviously with the United States, The Trump administration is not exactly the kind of the relationship that for
instance, she's had with the Obama administration. She still has a tall task as far as integrating the many refugees that came here, but I still
think that she believes she is the one that can right the ship.
One of the things, I'm glad that you touched on this that she said today that was very interesting, she said that one of the reasons why she is
standing down as the head of the party but not as Chancellor is because she wants to give the party, the CDU, a chance to renew itself while she was
still in office without her being in the way.
It's an interesting way of seeing these things, but it certainly seems as though she believes the party needs to make a new beginning. For the
moment that she's not Chancellor anymore for them to have a chance to perhaps retain power and to have a sort of a new vibe to them, which is a
very difficult thing to do here in Germany. Of course, this is a country that has had several Chancellors that have served for a very long time, and
it usually is something that does leaves a lot of wear and tear on the political party that they're in and the personnel that they have, Richard.
QUEST: Fred, thank you, Fred Pleitgen in Berlin. Now, from an end of an era for Angela Merkel to a new dawn in Brazil. The far right Jair
Bolsonaro will be the country's next President after winning the President election by a wide margin and Brazil's markets cheered the victory sending
the BOVESPA to an all-time high and then it just popped back at the close.
Another major economy elects a far right populist leader and the markets like it. Part of the trading day, Shasta Darlington in the San Paolo.
This is very interesting, isn't it? What was is it that the population or that the voters liked about this?
SHASTA DARLINGTON, CORRESPONDENT, CNN: Well, Richard, in some ways, it's sort of the lesser of two evils. Brazilians are fed up with only the
endemic political corruption that has emerged over the last year, as well as rising crime and violence, but also with this terrible recessions that
started in 2014, the worst on record that dragged on. It's barely emerging now and they hold the Workers' Party, which won the last four elections,
responsible for all of these woes.
So when it came down to a choice between a far right populist and yet again the Workers' Party, many Brazilians weren't necessarily excited about this
man's rhetoric, but they didn't want the Workers' Party back in power, Richard.
QUEST: So what can we expect from this new President? I mean, an impressive vote. Arguably something of a mandate. What economically are
we going to see in the short and medium term?
DARLINGTON: You know, I think it's sort of ironic that markets have gotten so excited about Jair Bolsonaro, when if you look at it, he sent such mixed
messages. I think what they are excited about is the man that he has chosen to be his Finance Minister. He announced this even before
elections, Paulo Guedes. He is a University of Chicago educated economist and investor who has an extremely ambitious, free market platform.
He wants to launch a new wave of privatizations. He says they're going to finally get this really badly needed pension reform through Congress. But
every time he speaks, Bolsonaro kind of comes out and undercuts him and says, well, we can't take away the pension rights that some people have.
So again, if you look at his record in Congress, Bolsonaro, he has voted against privatizations in the past, so I think until we actually see
concrete measures coming through, people are getting a little bit excited here, Richard.
QUEST: And indeed. We will temper the excitement as we await for more details and you'll be there to help us understand them. Thank you.
As we continue, Kenya is expecting stronger economic growth after seeing a boost in foreign investment. You'll hear from Kenya's president later in
the program. Also, utter unimaginable agony. Families wait for word on their loved ones as they look for bodies are recovered after the Indonesian
plane crash.
[15:15:00]
QUEST: Passengers' remains have been taken to a hospital for identification after the plane crash in Indonesia. The search for more
bodies will continue at daybreak. It was a Lion Air 737 Max carrying 189 passengers and crew that went down after taking off from Jakarta. CNN's
Will Ripley has more.
(BEGIN VIDEO TAPE)
WILL RIPLEY, CORRESPONDENT, CNN: For the families of Lion Air flight JT- 610, agonizing hours of waiting, waiting against all odds for any sign of hope. Hope for the 189 people on board, including two infants and one
child. But any hope of survivors disappears as bodies are recovered and debris rises to the surface.
Pieces of the plane, a cell phone, life jackets, telltale signs of a plane that crashed into the water, broke apart and sank. Hundreds of rescuers,
including divers scour the Java Sea some 34 nautical miles from Jakarta where the plane took off Monday morning local time.
Ahead of the Indonesian National Transportation Safety Committee says divers are searching relatively shallow waters up to 35 meters or 114-feet
deep looking for the flight data recorder in wreckage.
It was supposed to be a quick flight, about an hour from Jakarta to Pangkel Pinang. The plane dropped quickly from 5,200 feet before vanishing from
the radar.
The Boeing 737 Max, a new plane, only 800 flight hours delivered to Lion Air in August. The airline says, the captain, Indian national Bhavye
Suneja had more than 6,000 flight hours. His co-pilot had 5,000. They asked to turn back shortly after takeoff. The plane disappeared after just
13 minutes in flight.
Lion Air says there was an unspecified technical problem reported the night before the flight, but engineers checked and repaired the issue and the
plane was reported ready to fly. There were also scattered thunderstorms in the area, but nothing that would have posed a danger to the flight.
For the devastated families of 189 people, a growing list of painful questions, not only what happened but why. Will Ripley, CNN.
(END VIDEO TAPE)
QUEST: We are talking here about one of the most -- one of the newest and most modern airliners in the business. The crash is putting focus on the
Boeing 737 Max 8. There's also a Max 7 and a Max 8, a Max 9 and a Max 10.
Lion Air was the first airline to put the 737 Max 8 into service and as for the airline itself, Lion Air has been one of Boeing's biggest customers for
the new planes. It signed a $21 billion order in 2011, which at the time many suggested was overreaching a rate of expansion that would dwarf or at
least frighten even a recognized legacy carrier.
Peter Goelz is the former managing director of the NTSB and is in Washington with more. This is really a conundrum, isn't it? A brand new
plane with a reasonably experienced, 5,000 to 6,000 hours on both left and right seats, and it falls out of the air when it's in an early cruise or
early climb.
PETER GOELZ, FORMER MANAGING DIRECTOR, NTSB: It's an extraordinary challenge.
[15:20:00]
GOELZ: Because as you said, this plane is brand new. It has got all the advanced safety and navigational components. The flight crew was
relatively well skilled and there's not much indication of what happened. They did not declare an emergency, they did not actually turn the plane
back, and it really fell out of the sky.
So this is a real challenge, but one that they'll solve because this plane has got advanced data recorders, the engines have many recorders on them.
There are lots of places that investigators will be able to get data from.
QUEST: It does focus the attention arguably on the aircraft in particular, but also on the airline, Lion Air, which has had difficulties and which has
had questions about its safety in the past. But more importantly, the rapid rate of growth of this particular carrier in Southeast Asia.
GOELZ: You're absolutely right, Richard. Any time a carrier goes from 20 million passengers per year flown to 60 million in three or four years,
that is extraordinary growth. They placed this huge order with Boeing. The question is do they have the internal infrastructure to manage this
kind of growth? And the question is not so much heavy maintenance and that sort of thing, the question is the overnight maintenance. Was it done
correctly? Was it done to the book? And we won't know until we get the boxes back.
QUEST: Were you surprised by this one this morning?
GOELZ: Well, I am never surprised when you see such a growth area of travel as in Asia and South Asia, and there just may not be the government
or company infrastructure to manage the safety aspects. It's a real challenge.
QUEST: If we just look at aviation today, and later in the program I'll be talking to the CEO of Kenya Airways which has just opened a new route from
Nairobi to New York. The level of growth globally in aviation -- I often come out with the numbers frequently, three billion journeys will be taken.
Are we keeping up in terms of infrastructure? Even, for example, in the United States, allowing for the FAA reauthorization.
GOELZ: No, we're not keeping up with the infrastructure, particularly in the United States. Our airports are overtaxed, the air traffic control
system is stretched, the number of experienced pilots is squeezed. We need more pilots, we need more airports, we need more runways. So the question
is -- the answer is we are falling behind.
QUEST: On that point, the airlines would say, well, what do you expect in terms of quality of service if you're paying (inaudible) for your seat and
there is a price war that's being engineered. This is the cost of that.
GOELZ: Well, that's right. People buy their seats by price, and it keeps the prices extraordinarily low in most cases. We need to figure out a
system in which the government has the resources to provide the rigorous oversight both in the operations and in maintenance.
QUEST: Peter, good to see you, sir. Thank you. We shall be talking on happier circumstances, but thank you.
GOELZ: Good seeing you.
QUEST: Now, we do need to look and see what the market is doing. There we go. We're going to follow this very closely over the next half hour,
because if history is any guideline, this is the way it's going to end today, if not even further.
I'm not going to forecast where we'll end the day, but if you do look at what happened roughly at 10 past 2:00, it was the prospect of greater
tariffs on China, it is a feeling that all is not well, earnings are not good. And a general correction that has been overdue.
Now, before we get all excited and run off to the races, remember, we've only been getting back the gains of the year so far. The markets are
barely in correction territory which is just a loss of 10% from the ties.
But the worrying numbers there, the NASDAQ is down 2%, so the tech stocks are being beaten up sharply. I'll show you later in the program exactly
what those tech stocks look like.
As we continue tonight, Kenya's President tells me he's determined to leave the troubled Kenyan elections in the past and prioritize the economy.
We'll hear from him after the break.
[15:25:00]
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when we will show exactly what the Dow is happening and
itself more than 300 points on reports of new tariffs on China. And I'll show you my unusual commute this morning from Nairobi to New York on the
first ever direct flight between Kenya and the United States. This is CNN and on this network, the facts always come first.
The suspect in the deadliest attack against Jews in the United States appeared in Federal court behind closed bars today. Robert Bowers is being
held without bond. He is accused of opening fire at a synagogue in Pittsburgh and killing 11 people. He acknowledged the charges against him
and he is due to return to court on Thursday.
Another high profile suspect also appeared in Federal Court today, Cesar Sayoc is accused of sending mail bonds to top Democrats and indeed,
ourselves, this organization, CNN. He is being held without bond pending another hearing on Friday. Officials tell CNN that Sayoc had a list of
more than a hundred potential targets.
Leicester City Football Club is mourning it's beloved owner who died in a helicopter crash on Saturday near the club's stadium. The club described
him as a generous family man and a successful leader. Prince William and the British Prime Minister Theresa May were among those to pay tribute over
the weekend.
The Dow has seriously fallen in the last hour of trading. It's now off more than 330 points after an optimistic start to the day that simply
disappeared.
Kenya's President tonight tells me it's time for his country to go to the next level. This morning, I returned from Nairobi where President Kenyatta
faces a choice over which foreign partner can help him get where it needs to be. It was a turbulent election last year and a new study from Ernst &
Young says Kenya has seen a big uptick in foreign investment.
[15:30:10]
The United States is still the top investor in Africa. The president, President Kenyatta has looked to though, to keep those ties intact. He
visits Donald Trump at the White House in August.
Yet at the same time made great in-roads, turning to Chinese investment and securing massive funds for infrastructures such as the single rail, the SRG
or SGR Railway. The president told me Kenya welcomes any international partner that can help it achieve its goals.
You'll hear from him in just a moment. However, despite the new investments, rising food, fuel and phone costs are testing some Kenyans
resilience. Cnn's Farai Sevenzo went to hear how ordinary Kenyans are coping.
(BEGIN VIDEOTAPE)
FARAI SEVENZO, CNN CORRESPONDENT (voice-over): This is the Ingala(ph) food market in Nairobi. Here food sellers rent stalls from Nairobi's city
council. There is no better place to measure the path of the country's economy. Over the past month, prices have soared, an 8 percent rise in
fuel tax and increases in the price of maize, plus, it now costs more to make a cellphone call and is hitting these traders hard.
(on camera): Like any African city, Nairobi realized a great deal on the informal sector. People who make buckets and wheelbarrows and of course
like the fruit sellers all around me, these are the people that keep Nairobi's economy turning.
Esther Njeri has been a food seller for a decade. She says she educated her two daughters to university level through her fruit sales.
ESTHER NJERI, NAIROBI FRUIT SELLER: Business was good before, but now it's very slow.
SEVENZO: Why?
NJERI: There is no money for trade in the country. I don't know where the money has gone to because before the kind of sales we used to do in a day -
- in terms it could do sales maybe 20 or 30 per day.
SEVENZO: Does 20 to 30,000 Kenyan shillings around 2 to $300.
NJERI: There's no money floating around within the country, so somebody has to budget on the little we have.
SEVENZO: Yes --
NJERI: And fruit is around --
SEVENZO: Daniel Gitau, another fruit seller, says times are hard and many are complaining.
DANIEL GITAU, NAIROBI FRUIT SELLER: Because many customers come from far to come here to get fruits --
SEVENZO: To get fruits?
GITAU: Yes, but they're still complaining.
SEVENZO: A lady told me just now that fruit is a luxury right now.
GITAU: Yes, it's luxury, yes --
SEVENZO: It's luxury?
GITAU: That's true.
SEVENZO: People can't afford it.
GITAU: Yes, they can't afford it right now.
SEVENZO: Across town is Gikomba; home to over 10,000 artisans working in metal, customers are few there, too. Artisan Paul Awour says this is the
biggest informal manufacturing it had been in East Africa, but --
PAUL AWOUR, ARTISAN: Business is going down. Maybe the increase of the fuel and maybe livelihood is going up. So long as we are dealing in the
metal, if you can even bring your drawing and we just produce for you whatever you want.
SEVENZO: There's no doubt about this artisan's sense of industry. And will they survive the new pressures on their wallets from rising prices?
AWOUR: Kenyans are hard workers and they are hustlers.
SEVENZO: They're hustlers?
AWOUR: Yes --
SEVENZO: So this is the hustle.
AWOUR: That's the -- this is -- it's part of hustle, yes --
SEVENZO: Farai Sevenzo, Cnn, Nairobi.
(END VIDEOTAPE)
QUEST: I said to the president of the country who knows that businesses have been unsettled. When I sat down with him last week in Nairobi, the
president said it's time to move on from the election battles of the past and put Kenya first.
(BEGIN VIDEO CLIP)
UHURU KENYATTA, PRESIDENT OF KENYA: As you well know, we came from quite an election last year that was contested, and we ended up with two
elections. So last year was not a very interesting year, let's say, for business. And this is what we're coming out of.
And maybe a lot of people have yet to feel the real impact of that. And that's why we've been really keenly focused on ensuring we create this
atmosphere, the political atmosphere of getting people together, of trying to put that year behind us so that we can focus ourselves on matters
growth, on matters development, on matters economy because this is what matters to our people.
QUEST: So what policies will that include?
KENYATTA: This is one of the key things that we ourselves brought about. We had focused on our first five years, really focusing on the hard
infrastructure. Looking at the railways, looking at the roads, looking at power connectivity, looking at water connectivity.
But what we've now agreed and moving now towards is focusing more on the software, the softer aspects, you know, the health aspects, the housing
aspects, issues related to job creation. These are the elements and the areas that we're looking into, which we believe, tied with what we started
doing in our first four years, will move the country now to the next level.
[15:35:00] QUEST: I was anchoring many programs during your election and obviously watching the twists and the turns. How deep are the scars of
that election? One person said to me the other day here, we have a really peaceful and gentle country who everybody gets on until there is an
election. Would you agree with that?
KENYATTA: And that is, I believe, what we're trying to come out of. That's why we've been really focusing ourselves on working together even
when your opposition leaders say Kenya comes first. We can't always go through this cyclical five-year periods where we're talking about
elections, we're fighting over elections, we are conflicted as a society.
We've got to be able to move, and that actually is the basis of the partnership that we have actually agreed on with the leader who actually we
were competing against last year. And we've said, look, we don't have to always agree on everything, but we can agree on things Kenya. And we can
agree that this issue of cyclical elections has to come to an end.
QUEST: You're raising money, you've got high debts, the country has a fairly high debt to GDP ratio at the moment, and much of that money, the
largest part of the bilateral debt is to China.
KENYATTA: China as well as to many other institutions as well.
QUEST: So are you comfortable with the increasing -- the increasing burden that this country, the increased debt that this country has to China? Isn't
-- is China --
KENYATTA: What --
QUEST: At risk?
KENYATTA: What would worry me is if the debt that we have incurred has gone into the current expenditure, has gone into paying salaries, has gone
into paying salaries or electricity bills and so on and so forth. But what we have utilized our debt for is to close the infrastructure gap.
And anybody coming into Nairobi after 10 years, just Nairobi alone, let's not talk about the rest of the country, will be able to note that the
number of roads that we've been able to do, the new railway lines that we've been able to do, all aimed at both improving business and increasing
job opportunities for our young men and women.
The number of people we have moved as a country in 10 years --
QUEST: It's not --
KENYATTA: From 32 percent of our people connected to the electricity grid. We are now closing to 65 percent of our population --
QUEST: My point is not the money being borrowed, it's who is doing the lending? China. You're putting yourself in Beijing's debt.
KENYATTA: We are borrowing from China. We have borrowed from the United States. We have borrowed our health care system. It's money that is being
-- we're working together with companies like General Electric. They are - - who are the back bone of what we're doing in our health sector. When it comes to energy, we are working very closely with AFD, the World Bank --
QUEST: So this is --
KENYATTA: The World Bank and the African Development --
QUEST: The criticism is though that China has another agenda. You're familiar with these --
KENYATTA: We are familiar with those arguments. But our position is a very clear one. We have an infrastructure gap that we need to fill. And
we are going to work with our partners across the globe who are willing to partner and to work with us to help us achieve our social economic agenda.
Because Japan for example is our biggest lender when it comes to all our port developments today.
Mombasa Port wouldn't be without the support of Japan. When we talk about electricity and electricity generation, we wouldn't be where we are without
the support of AFD affronts.
QUEST: But they --
KENYATTA: So why are we focusing ourselves only on one agenda? Actually to me --
QUEST: You know the reason --
(CROSSTALK)
KENYATTA: As far as I am concerned, we have a very healthy mix of debt from the multilateral lenders who are basically the World Bank and the
African Development Bank. To bilateral lending like I said Japan, China, France, all who are participating and working with us to help us achieve
our agenda --
QUEST: The argument is they don't have the same agenda that president Xi might have in terms of --
KENYATTA: Well --
QUEST: Bringing Africa within the greatest sphere of influence of China.
[15:40:00] KENYATTA: We are looking at it, like I said from our Kenyan perspective. And our Kenyan perspective is that we have a development
agenda, we have a social agenda, we have an economic agenda, and we are willing to partner with all countries that help us achieve our objective.
QUEST: Your term of office ends in what?
KENYATTA: Twenty-twenty two.
QUEST: Twenty-twenty two. You've said that all -- the constitution prevents you from standing again. Are you going to try and seek to change
the constitution? Now, on your birthday, a simple yes or no will do on that one.
KENYATTA: No.
QUEST: And when anybody says, oh, we want you to stay, we want you to stay, you will say, no! The constitution says it, I am not having a third
term.
KENYATTA: Not interested in a third term.
QUEST: Didn't ask you whether you were interested. If asked, would you have served?
KENYATTA: No.
QUEST: That's a clear no.
KENYATTA: No.
QUEST: You sure?
KENYATTA: Absolutely.
QUEST: You're not going to turn to Mike Bloomberg and suddenly change the law.
KENYATTA: People are talking about constitutional change, but they're talking about constitutional change not necessarily because they're
desirous for the president to seek a third term. They're talking about constitutional change because of issues related to the costs of running
this new constitution, et cetera, that's the issue --
QUEST: The final --
KENYATTA: That are on the table.
(END VIDEO CLIP)
QUEST: Well, it doesn't get clearer than that. At least, I think it doesn't get clearer than that. Let's wait and see if and when in two or
three years time there's a bit of wiggle room that the president goes through. But at the moment, he seems clear, he says no, no third term.
And it started this morning, a landing for Kenya Airways after completing its first direct flight from Nairobi to New York City. The Chief Executive
Sebastian is with me, specific ushers, we'll talk about your flight --
SEBASTIAN MIKOSZ, CHIEF EXECUTIVE OFFICER, KENYA AIRWAYS: Yes, good afternoon --
QUEST: After the break.
MIKOSZ: OK --
QUEST: You're still awake --
MIKOSZ: Yes, I am --
QUEST: Just barely.
(COMMERCIAL BREAK)
QUEST: OK, you need to look at those numbers because the market is turning extremely serious. We're now down 2.25 percent just on the day and it has
all happened -- and let's be honest about this. There is no obvious reason for this, there is no specific reason why all of a sudden at 3:00 today,
the market turned total.
[15:45:00] But we are down 536 with just 15 minutes to trade. Watch closely and I'll bring you more information on it as we move towards the
closing bell. Kenya Airways has just completed its first direct flight from Nairobi to JFK in New York City. The carrier is the first to fly
nonstop from East Africa to New York.
It's a 15-hour journey that's expected to increase annual revenues by 10 percent according to the chief executive who is here with us tonight. For
Kenya, the direct flight means access to the U.S. economy from the Northeast and a boost in tourism. The flight is a milestone for Kenya, yet
Africa as a whole lack seriously behind the rest of the world.
From the U.S. to Asia, there are roughly 21 flights, direct flights on any given day across. Now Europe, of course, has many more. Europe has
roughly 44 flights from different airlines, and even Iceland has five airlines with direct flights. Last but not least, Africa. If you look at
Africa, there are just a total of six, these are U.S. carriers by the way.
U.S. carriers -- I beg -- airlines in general, airlines in general. Now, the U.S. airlines are Delta, South African, Royal Admiral, Egypt Air and
Ethiopian Airlines flying down to Africa. And now Kenya joins the group. On Sunday night in Nairobi, I boarded the inaugural flight back to the
United States.
(BEGIN VIDEOTAPE)
QUEST (voice-over): Nairobi to New York nonstop. On Sunday night, passengers boarded the first direct flight between Kenya and the United
States. At the moment, the estimated time of flight is about 14 hours, give or take. It's an important milestone for Kenya Airways. And just a
year ago, they were on the brink of bankruptcy.
MICHAEL JOSEPH, CHAIRMAN, KENYA AIRWAYS: It's a big turning point for us and an indication that we are now no longer in significant trouble.
QUEST: It's difficult to -- for others outside this country to appreciate that one flight to New York is a national event.
JOSEPH: It's also important for us, because as Kenya Airways and for Nairobi to become a hub for Africa.
QUEST: This is the pride of the fleet, and Boeing 787 Dreamliner that will service the route. One of the fleet pilots is Captain Irene Mutungi. How
long have you been flying?
IRENE MUTUNGI, PILOT: Twenty three years now. I started as a cadet in the airline and worked my way up to a first officer, and then a captain working
up to the bigger aircrafts as I went along.
QUEST: But now you're a captain on the 787.
MUTUNGI: Yes, I am, fortunately, I became the first African Dreamliner captain in the world.
QUEST: The U.S. granted security clearance for nonstop flights between the two countries last year after a sustained push by Kenyan authorities.
This case is one of the requirements demanded by the United States for U.S.-bound flights. Kenya Airways had to build it and will store any U.S.-
bound cargo in a sterile environment. And it's fragile cargo indeed. Let's just check -- yes, they're roses. The airlines believes access to a
new market will boost revenue by 10 percent next year.
DICK MURIANKI, GENERAL MANAGER, KENYA AIRWAYS CARGO: One of our major export is agriculture products. Look at flowers, look at the vegetables we
export and being part of the chain which is driving this economy which is a promise(ph) if you wake up in the morning.
QUEST (on camera): The promise of a new frontier awaits as long as the plane gets off the ground -- oh, and I am not near the controls. Oh, there
it is, somewhere.
UNIDENTIFIED MALE: Yes --
QUEST: Richard Quest, Cnn, Nairobi -- oh, well done.
(END VIDEOTAPE)
QUEST: Sebastian Mikosz is chief executive of Kenya Airways. He joins me now -- Sebastian.
MIKOSZ: Good afternoon.
QUEST: Congratulations first of all on the flight, but we must start on other matters.
MIKOSZ: Yes, I just wanted to use this opportunity to express sentiment and solidarity with the passengers, the families of the passengers and the
management of Lion Air. You know, in this industry, whoever has this type of tragedy, we -- it always make me feel very bad and very sad, so I hope
they're going to be OK and --
QUEST: It's just to speculate, but brand new equipment -- brand new aircraft just in six months ago, you know, and what should be the safest
normal flight from part when you're in the later climbing early(ph) cruising.
MIKOSZ: That's indeed something which is a -- which is a fact. Now, you know, in this industry as you know it very well, speculation is the worst
thing we can do. So I think that in Indonesia, people are very professional and Boeing will clarify it. I'm more thinking about the human
side of it.
QUEST: Right, the -- talking about your own flight, congratulations today --
MIKOSZ: Thank you --
QUEST: And what struck me is for many airlines, a new route is a new route is a new route.
MIKOSZ: Yes --
[15:50:00] QUEST: But this was more in the sense of -- it was like the old days of establishing trade relations. You can imagine ships going
across oceans to establish connections between two countries, and that's what they felt like this morning.
MIKOSZ: But indeed it was, it was. You know, first of all, I'm extremely happy today, because I was sitting at this table at least twice announcing.
So there was an announcement, a project and now this morning there was a flight. So just the matter -- the fact that you materialized, it is
something really which we all of us, so all the team that worked in Kenya and the U.S. is very happy about.
But indeed, it's more than a Kenya Airways project. And this is where the interesting part of working in airlines kicks in. It's a Kenyan project.
You showed it in your statistics yourself, we are just a fifth African airline and the sixth airline flying a nonstop flight between North America
and Africa.
QUEST: So if this is a new flight, and I imagine it will be profitable eventually, let's face it, and frankly. With the Dreamliner and improved
efficiency, if you can't make more money between New York and Nairobi nonstop, you shouldn't probably be in business.
MIKOSZ: I concur. But we also know that in this industry, nobody makes business day one, you have to build a route, you have to give yourself time
for the public and for the sales power to kick in.
QUEST: So what's next? What's the next route because you heard there, the president talking about the relationship with China. Now, Kenya's
relationship with China is growing and deepening, and how are you going to reflect that?
MIKOSZ: So first of all, we already flied to Banjul, so we already have a feet on the Chinese market and into the Chinese market. Now, we are part
of skirting, and the plan is to open Beijing route whenever the new airport Daxing is going to be operational. Because they're going to be a skirting
terminal, so yes, indeed it's in our plans to have a Nairobi-Beijing very soon.
QUEST: How long are you going to stay on the job?
MIKOSZ: Me?
QUEST: Yes.
MIKOSZ: That's not a question to me, hopefully, so I don't have to answer. That's the question --
QUEST: Is it an achievement what you've done today?
MIKOSZ: It's -- but again, I didn't start it, I continued it. Of course, there's always -- I'm not denying my contribution, but I prefer to always
point out that, that I was not alone in this, and there were many of us. So --
QUEST: OK --
MIKOSZ: If the board wishes to, you know --
QUEST: Right --
MIKOSZ: Yes, the blanket --
QUEST: I have no idea how this got into my luggage.
MIKOSZ: Yes --
QUEST: But I think you might want to return it.
MIKOSZ: Why, you liked it, you liked it?
QUEST: Yes, it's used. Right, after last week's sellout, stocks rebounding on Monday morning, now all three of the indices are trading in
the red, it's pretty ugly. A bit of a rebound back, but the volatility is intact -- after the break.
[15:55:00] (COMMERCIAL BREAK)
QUEST: So there's the market. We have as much as 560 odd lower, now it's down 283, so the volatility is quite intense. And if you look, Boeing is
off nearly 7 percent, other major ones, IBM is off nearly 4 percent, now over 4 percent at the moment even despite its merger news. So you can see,
there's some buying, look at these, absolutely the all-defensive stocks.
And if you look at the way in which the tech stocks have sank, the high points just back in October -- I mean, look at Netflix, it's a high point
up here and then just completely all the way down, down 28 percent for Netflix, 30 percent give or take. Amazon is down 16 percent, so the three
high flyers are showing the biggest losses in what is an absolute route of tech stocks, almost into a bear territory for some of them.
We'll do a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. Africa is a continent of 1.2 billion people, that is dramatically underserved in the world of aviation. We've
talked about it many times. Today's Kenya Airways flight is significant because it is opening up routes, new routes to establish allies.
And when you think about what the Kenyan president said on this program tonight about the way in which African countries will create new
relationships and new allies, we can argue whether that's good or bad when it comes to China, but the reality is it does mean a whole new vista for
the aviation industry.
There is no question that there needs to be more air routes that will increase the middle class that will then create even more air routes in the
future. A star which was made today is a long way for that particular flight to go.
And those are the markets, dreadful at the moment. The Dow Jones Industrials looks like it's going to close off 260 points, but that is
QUEST MEANS BUSINESS, I am Richard Quest in New York. Whenever you're up to in the hours ahead, on this particular day it's not looking good, the
day is done.
(BELL RINGING)
