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Quest Means Business
LG Trumpets Televisions of the Future; Last-Minute Deal Keep Sears Open; Top U.S. Officials Talking to Allies About Troop Pullout in Syria; Turkish President Slams Bolton's Remarks on Syria as "Serious Mistake"; Russian Lawyer at Trump Tower Meeting Charged in Separate Case; Heathrow Airport Resumes Flights After Drone Sighting; Egypt to Host 2019 African Cup of Nations; U.S. Markets Rise, Investors Hopeful on Trade Talks; Amazon Becomes World's Most Valuable Company; IBM Trumpets Hyper-Accurate Weather Forecasts; LA Sues IBM's Weather Company Over "Deceptive" App; Daimler Trucks Boss Speaks Out Against Tariffs, Protectionism; Carlos Ghosn Appears in Court, Maintains Innocence; U.S.-China Trade Optimism Boosts Stocks; Zuckerberg to Hold Talks on Tech in Society; Theresa May Has Just Suffered A New Setback In Parliament, One Week Before Her Big Brexit Vote; New Numbers Show Germany Could Be At Risk Of Recession, The World's Two Largest Economies Have Extended Talks To Bring Their Trade War To An End. Aired: 3-4p ET
Aired January 08, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELENI GIOKOS, BUSINESS CORRESPONDENT, CNN: Green across the board when it comes to the Dow. We are up 1%. One hour to go before the close of trade
here in New York, and it is all about trade and the U.S.-China trade war that's playing out. People are feeling optimistic we will find a
resolution, but this is also what's moving the markets on Tuesday, the 8th of January.
Theresa May has just suffered a new setback in Parliament, one week before her big Brexit vote. New numbers show Germany could be at risk of
recession. I'll be speaking to the CEO of one of its biggest industrial companies, and stay another day, the U.S.-China trade talks get extended.
I am Eleni Giokos, and this is "Quest Means Business."
All right, a very good evening to you. And tonight, the pressure is truly on for Theresa May. She has one week to try to get her Brexit deal
approved by Parliament, and just over an hour ago, hundreds of lawmakers, including some from her own party, staged an attempt to close off the other
option - Britain leaving the E.U. without a deal in place.
Now, the House of Commons passed a bill that would restrict the government's powers of taxation in the event of a no deal. Ready or not,
the United Kingdom is set to exit the European Union on March the 29th. Time is, of course, running out, and the path to Brexit has gotten very
twisty.
One month ago, Theresa May had four main options. Firstly, to put her plan to Parliament, where it would likely fail, or go back to Europe for more
concessions. Hold a second referendum or, finally, cancel Brexit altogether.
Now, she chose to negotiate, but European leaders didn't give ground and trying to put pressure on MPs to change their position doesn't look like it
is working. That means the path to Brexit has looped around. And Theresa May's January is looking a lot like December, with added time pressure.
Now, the Prime Minister has promised to put her plan to a vote next Tuesday, but it is still unlikely to get through. So the Prime Minister is
taking the path she took in December and appealing to European leaders once more.
Speaking to the BBC, Theresa May's former Brexit Secretary said this time could be different.
(BEGIN VIDEO CLIP)
DAVID DAVIS, FORMER U.K. BREXIT SECRETARY: The simple truth is that they will hold fast to their line. This is the traditional approach of the
European Commission, the European Union. They'll hold fast the line until the last possible minute, and then, if we hold fast to our line, then they
will actually come back and renegotiate.
(END VIDEO CLIP)
GIOKOS: So after weeks of saying it could never happen, some E.U. leads leaders seem to be suggesting Brexit talks could reopen. So I want you to
go to cnn.com/join. Our question of the day is open. And tonight, we're asking you, should the E.U. reopen negotiations if it means avoiding a no-
deal Brexit?
You'll see the answers live on your screen, so please do join in.
All right, let's speak first about today's vote in Parliament. It is a huge defeat for the Prime Minister. We've got CNN's Bianca Nobilo standing
by for us outside of Parliament, a big defeat again for Theresa May. I mean, right now, as we head to next week, Tuesday, it seems very unlikely
we'll even get Theresa May's plans voted in by Parliament even by then.
BIANCA NOBILO, CORRESPONDENT, CNN: That's right. It was a big defeat for the government today, a deeply inconvenient one, but even more so, because
of the symbolism of this. There's one week to go before the vote on Theresa May's deal, and 20 of her own MPs backed this amendment today,
which defeated the government, including some former Cabinet ministers. So that certainly doesn't bode well for next week.
And we have no more reason to be more confident today than we were before the Christmas recess that the Prime Minister has any chance of getting her
deal through. Even the most optimistic MPs that I've spoken to think that it is going to be defeated once, twice, maybe even three times before it
has a chance of getting through.
But, again, we are returning to this problem of the backstop. So what can the Prime Minister do to try and seek reassurances from the E.U., which
could persuade potentially wavering MPs to support her deal? There's been talks for many months now of an exchange of letters between the European
Union and the U.K. reaffirming a pledge to strike a trade deal before 2021, which would exclude the need for a backstop all together, or
potentially to give Parliament more powers to activate and stop the backstop if it did come into existence.
GIOKOS: Yes, all right, Bianca, thank you very much for that. So for more on Theresa May's appeal to the E.U., I want to bring in Quentin Peel, he is
an associate fellow with the European Programme at Chatham House. Thank you so much for joining us. A lot of begging, so to speak, asking for the
E.U. to come back to the table.
[15:05:07]
GIOKOS: Asking MPs to play ball, as Theresa May runs out of time. But is that perhaps going to play in her favor, that it is just get getting to
crunch time and it actually is getting into dangerous territory of a no- deal Brexit possibility?
QUENTIN PEEL, ASSOCIATE FELLOW, THE EUROPEAN PROGRAMME, CHATHAM HOUSE: Well, she was accused in Parliament today of playing chicken with this
incredibly serious decision, i.e. What she's been threatening, the rest of her party, to try and persuade them to back her deal is, if you don't back
my deal, we'll crash out with no deal.
Tonight, she was defeated on that in Parliament, in that a majority said, including, as you said in your introduction, 20 of her own members, we are
not prepared to back no deal. So she's really very trapped so she gone back to the European Union to say, what can you give me to persuade all my
rebels? The trouble is, I don't think there's anything there that will persuade them. Because the E.U. is saying, look, we'll give you political
declarations. We'll make nice statements to say we don't want to have a backstop on the Irish border that will last forever.
But at the same time, we're not going to reopen the legal text of the treaty that we've agreed.
GIOKOS: Let's talk about Brussels only offering political assurances so far. I mean, and that is the big problem, isn't it? Give us a sense of
what the E.U. could put on the table that could perhaps convince the MPs to finally say yes to a possible deal.
PEEL: Well, I think what they are thinking about is saying, we don't want this special arrangement, which would keep Britain effectively in a customs
union until they have a final trade deal. They could say, we absolutely don't want this to become an open-ended deal.
But at the same time, I don't see them going as far as the Brexiteers and Theresa May's party wants them to say that Britain alone could decide when
enough is enough and just unilaterally agree they won't be in the customs union any longer regardless of what trade deal they've done. So I don't
see any deal that Brussels can offer that will persuade the really hard line members of the British Conservative Party to actually roll over and
accept the deal they've negotiated.
GIOKOS: And, I mean, you mentioned the backstop and that is also going to be a very important choice, whether you've triggered the backstop to avoid
that hard border with Ireland or, you know, up for an extended transition and it seems that there are negative elements with of those both scenarios,
aren't there?
PEEL: Yes, I mean, the fact is that the Europeans actually have made a very big concession already. They've agreed that the whole of the United
Kingdom will remain ineffectively a customs union, until there is a long- term trade deal agreed.
Now, what Theresa May is trying to pin them down to is to guarantee that that trade deal will be agreed by the end of, let's say, 2021. Anybody I
know who knows trade negotiations at the international level, and above all, with the European Union, thinks that that target at the end of 2021,
is for the birds. It will probably take four or five years to agree a final deal.
GIOKOS: Thank you so very much for that, Quentin. Great to have you on the show. Quentin Peel from the Chatham House. All right, Theresa May is
asking for the E.U. - the E.U. rather, for concessions. Most of you and around 80% in fact say, European leaders should not give ground. These are
our results from our question of the day.
Remember, without new concessions, it is looking unlikely Theresa May's deal will be passed by Parliament, and unless the Prime Minister changes
course, that means Britain would leave the E.U. without a deal, so that is the result right on the screen right now, 80% of you saying, no, they
should not reopen negotiations.
All right, so Brexit chaos would not just hurt the U.K. Europe's biggest economy may even be in recession by the time Britain leaves. New numbers
show industrial production in Germany fell nearly 2% in November compared to the month before. Economists were expecting it to tick up slightly.
Now, this as the all-important car industry in Germany struggles with weak sales and a pressure from a slowdown in China, as well as tighter rules on
emissions.
ZF Group is a major German producer of auto parts, CEO Wolf-Henning Scheider joins us now from the Consumer Electronics Show in Las Vegas where
he has just announced a partnership to create autonomous electric vehicles.
In the midst of all the drama happening back home, where you have got industrial production coming under pressure, car sales are not looking that
strong.
[15:10:09]
GIOKOS: And here you are, wanting to invest billions into innovation. When you look at what's happening back in Germany, does it worry you? Do
you think a recession could be on the cards?
WOLF-HENNING SCHEIDER, CEO, ZF GROUP: Sorry, could you repeat again? I could not hear you.
GIOKOS: Could we talk about back home in Germany, you've got industrial production numbers perhaps pointing to a possible technical recession.
People are really worried about the health of Germany's economy, but at the same time, you're investing billions in innovation. What is top of mind
for you right now?
HENNING-SCHNEIDER: Well, we definitely expect the softening of the market in Europe, but also in other regions this year. But I don't expect a major
downturn, just a softening. On the other hand, with this technology change in mobility, we need to invest in future solutions. And if we don't do it
now, it would be too late later on.
So there is no choice. It is going for both ways, keeping our current business as a good basis for revenue, even with the softening market, and
invest heavily into these new technologies, like autonomous driving, and electro-mobility.
GIOKOS: You're investing - you're wanting to invest $14 billion in the next five years. That's a really big chunk of money that you want to be
putting into new technologies. Do you think it is going to reap the returns versus your investment?
HENNING-SCHNEIDER: Absolutely. Because the future is electro-mobility, and the future is also autonomic driving functions. It is necessary to put
huge amounts of money into our hand because otherwise, we cannot be a major player also in this sector, as we have been in other sectors, like the
combustion engine over the last 50 to 100 years.
So this huge investment is now the right choice. We want to be a player that shapes the future of mobility. That's why I invest this huge amount
of money.
GIOKOS: I mean, it is interesting, you're looking at robo-taxi, ride hailing applications as well, I know you're in the chassis business, of
course, you're in parts. Tell me what your business is going to look like in five years' time, after you invest so heavily within all these
technologies.
HENNING-SCHNEIDER: Well, we still have - we'll have a lot of the existing technologies as an earning base. And this is why we don't invest only in
the new technologies, but also, for example, in hybrid transmissions that electrifies the vehicle, but even has the combustion engine on board.
Because it is a great solution for the next 10 to 20, maybe 30 years.
If a family has just one car, so it is a combination of both technologies, the new one and the one of the last hundred years. So it is both. This is
why we are really on these two legs. So in five years, we will have some robo taxis on the road. I will see them first in areas like airports or,
you know, restricted areas, geo-fenced areas, but in five to seven years, we might see them in cities at a larger scale.
GIOKOS: Sounds exciting. Thank you very much, sir, for your time. Much appreciate it. All right, European stocks closed higher in today's
session, even the surprise fall in Germany's industrial production didn't hurt the Dax too much. Look at that, you have the FTSE up around eight
tenths of a percent. Dax in Germany up 0.5% in today's session, as well, despite the fact that we saw contraction in that industrial production
number.
Now, the world's two largest economies have extended talks to bring their trade war to an end. Isn't that good news? As the dispute weighs in on
the economies of both China as well as the United States, negotiators say they need more time to hem out an agreement. Now, Wall Street is
cautiously optimistic today.
Take a look at that. We're up 1%. Stocks are looking really good. And of course, China approved some genetically modified crops for import. That
concession comes after years of pressure from Washington. President Trump tweeted, "Talks with China are going very well. Beijing has even given
ground on the number of the Trump administration's complaints. The problem is, they haven't always kept their promises."
So China has agreed in the meantime to lower auto tariffs, but that could be temporary. They've restarted soybean orders, which they could cancel.
Over Christmas, China approved rice imports from the U.S. for the first time, and it is unclear how much rice, if any they'll actually buy. So
Beijing also outlined punishments for stealing intellectual property, agreed to delay parts of the China 2025 plan, and also promised to allow
foreign banks greater access.
[15:15:04]
GIOKOS: None of this appears binding. We've got Ken Rogoff, who served as the IMF's chief economist, and now an economics professor at Harvard.
Thank you very much for joining us, sir. And look, I know that you predicted that China was going to slow down, but what we didn't know is
that this trade war was going to rear its head and it's creating economic troubles globally.
Companies are coming under pressure. What are you reading into the way that we're seeing the Trump administration conversing with Beijing at the
moment?
KEN ROGOFF, FROMER CHIEF ECONOMIST OF THE IMF: Listen, I hesitate to read into Donald Trump's mind. It is hard to know. But the fact is, he's been
focusing so much on the trade balance, the fact the U.S. imports more than it exports. It is really not the core problem. The core problem is the
theft of intellectual property rights, forcing companies to share their technology, restrictions on U.S. imports. And if they're focusing the
talks on this, it could be quite a win.
But as you said, they're very hard to enforce these things. So we'll see. I mean, Trump gave a positive tweet. We all know that that can turn
around.
GIOKOS: Yes, I mean, we know that we actually need to see something quantifiable, something written on paper. We need - because I mean, it
seems right now that this is vague negotiations going on, but nothing is really enforceable. What would you like to see in black and white that
could allay global slowdown fears?
ROGOFF: Let's understand much more than the trade talks is the fact that the arc of China's growth is slowing. We've never experienced this before.
A lot of what's going on in stock markets in the world is China slowing. The trade war, in a sense, is a kick in the pants on the way down, but it
is not the cause of this.
But the trade war is not good for the U.S. either, to the extent it makes China do a lot worse. It is very bad for American companies and a lot of
what's going on in Germany almost surely has to do with China. They're a big exporter. The slowdown in China has been bad. But of course, the
trade talks have also poisoned the atmosphere for investing in new exports. And I think German manufacturers are very cautious right now.
I know we've been hearing from Apple. We heard Samsung and LG also having trouble in terms of slowdown coming through from China. Emerging markets
are feeling the pain, as well. But China is really good at stimulating its way out of trouble. Does it have any tools left to do this? And of
course, if it slows down dramatically, what does that then mean for the rest of the global economy?
ROGOFF: So you've hit the nail on the head, but there is this belief that, somehow, the Chinese authorities can magically, you know, keep their
economy growing much faster than anyone else forever. And I think that is coming to an end. For one thing, they do a lot of it through housing.
Residential, real estate, you know, looks like Ireland or Spain before their crisis by a lot of measures.
It doesn't mean they're going to have the same kind of financial crisis. It is a different banking system economy. But they're just not going to be
able to keep building it at this rate. They are not going to be able to keep exporting at this rate. They have not had a lot of reforms. And
importantly, the Chinese President Xi has centralized power much more than ten years ago, and it is very hard to have a dynamic, decentralized economy
with power so centralized. I think they're running up against it.
GIOKOS; Okay, Ken, quick question. I mean, are we looking at a full, blown out China crisis that could have a detrimental impact on commodity
prices and of course demand for raw materials around the world, or are we just looking at a slowdown and a new normal? Because remember, China was a
big reason that global growth numbers were able to recover after the financial crisis.
ROGOFF: Absolutely. I think we're looking at a significant, sustained slowdown. Exactly what it'll be, we might never know from the numbers.
But I think it is much more than the tiny change that the authorities say it is. It is clear from everything going on that it is worse. I don't
think they can so easily stimulate their way out of it. I think this is going to last.
GIOKOS: All right, Ken, thank you very much. Appreciate your time.
ROGOFF: Thank you.
GIOKOS: Later in "Quest Means Business," Sears might live on to see another day, an 11th hour deal that could keep the troubled giant is
business. Don't go anywhere.
[15:20:00]
(COMMERCIAL BREAK)
GIOKOS: Welcome back. For the first time, auto executive Carlos Ghosn has given his version of events, which led to his arrest in Tokyo on suspicion
of financial misconduct. Prosecutors say he underreported his income by tens of millions of dollars and transferred personal investment losses to
Nissan.
Ghosn who entered the court in handcuffs said he had always acted honorably, as well as legally. He said he had been unfairly detained based
on an unsubstantiated accusation. Ghosn has been locked up since November, and prosecutors have permission to keep him in custody, at least until
Friday. Nissan and Mitsubishi ousted Carlos Ghosn, but he remains the CEO of Renault. Melissa Bell is in Paris for us tonight.
Melissa, a very good evening and what do we know about the latest? I know he pleaded not guilty and innocent. I guess this is the first time we've
actually heard of his appearance not really in public but, of course, in court.
MELISSA BELL, CORRESPONDENT, CNN: Right. It was the first time that we got a chance to hear from him, Eleni, a chance to hear that he believes he
is entirely innocent of the charges against him are wrong. And of course, we didn't get a chance to see him. We didn't get a chance to see this
titan of industry being led into the courtroom, not only handcuffed but led in with a rope around his waist, as that is the custom in the Japanese
judiciary.
This has been an extraordinary story to follow for seven weeks. This titan of industry has been in a cell and the fear of his lawyers - this is what
they had to say in Tokyo around that hearing this morning, Eleni, is that he might be there for several more months. But they expect, beyond that
January 11th deadline, until which he will be kept behind bars, is that he will then either be indicted or as had happened this last few weeks, have
extra charges leveled against him. They didn't sound terribly hopeful that they would be able to get him out on bail.
GIOKOS: Exactly. I mean, is he viewed as a flight risk right now? I mean, it is fascinating that he hasn't had a lot of time with his lawyers.
He hasn't been able to see his family either.
BELL: Well, you know, Eleni, this is of the surprises that the international community has had as it looked on into these proceedings.
And as France's Labor Minister said today, this is, after all, a judicial process going on in a sovereign country.
It wouldn't be right to comment, but it has struck people as unusual, that he could be incarcerated essentially for so long, and right up until a
conviction. That, for instance, the access that his lawyers or his family have to him is as restricted, as is it is.
And for the time being, until today, until the Labor Minister pointed out that we had to respect the Japanese judicial system, calling still, Eleni,
for due process and the presumption of innocence to play out in the courtrooms around Carlos Ghosn. What we've heard from French authorities,
really, and so far, and remember that the French state has a 15% stake in Renault.
[15:25:08]
BELL: So given that it is the entire alliance between Renault, Mitsubishi and Nissan that is now in the balance, as a result of Carlos Ghosn's legal
misfortunes, the French state has really done - the French government has done all it can to try and encourage Japanese authorities to be as
transparent as they could with regard to the charges that were being leveled against Carlos Ghosn. He remains of course the official chairman
of Renault. It is merely an interim chairman that has been put in place whilst he can't be at the reins of the company himself.
But for the - according to the French, he has not lost their trust and there is this anxiety from French authorities that they will not be able to
ensure or have their voice heard in the coming days and weeks and months, as the future of this alliance is considered.
GIOKOS: Thanks so much for that, Melissa Bell. Appreciate it. Now, after Apple stunned the market last week, two more tech giants are sounding the
alarm for profits in the fourth quarter. First up, Samsung, it says operating profits were down nearly 30%, putting the blame on weak demand
for memory chips and China's slowdown.
Even worse figures coming through from LG, also from South Korea, estimating a 78% slump in profits. Now, that's below what analysts were
expecting. We've got Samuel Burke joining us from the world's biggest tech expo, the CES in Las Vegas. Samuel, these numbers are so shocking. We
thought Apple scared the market. When you've got Samsung and the likes of LG coming through with these kind of expectations and profits. I mean, it
is really bad news, isn't it?
SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT: Eleni, shocking yet not surprising. There was some guidance on this, and if you look at what
happened with Apple, it was really a bell weather for what would happen with Samsung and, likely, the largest - and likely some of the other large
cell phone companies.
Now, this is what everybody is talking about at CES because this really tells you what's going to happen with all of the other markets that depend
on these companies. And if you think about it, it is not just the intense competition for that space in the cell phone market, it is also the fact
that Samsung said here that this had to do with the amount of chips.
So if chip demand is not high, that means there is low demand for many other products besides just cell phones. No, they didn't blame China and
the trade war directly, but they did talk about the macroeconomic situation.
So the people that I'm talking to, the analysts who are here, say they're reading between the lines, and they do feel that the trade war is already
affecting many different companies and they don't have to be Chinese. They don't have to be American. They believe that this just proves that you can
be a Korean company and be affected by everything that's happening between the U.S. and China right now.
GIOKOS; Absolutely. I mean, when I look at these numbers, as we said, 30% down for Samsung and 78% down for LG, is there a sense, as well, that
structurally, companies need to think differently about the gadgets, about the technology that they're offering consumers? Because at the end of the
day, it is consumers that aren't actually buying.
So a trade war might be playing out. You might see tariffs and so forth. But consumers are not feeling comfortable to go out and spend.
BURKE: Let's take exactly what you're saying and connect it to another story that's playing out here at CES. You talk about maybe people aren't
buying as many gadgets. Maybe it has to do with the macroeconomic situation. But maybe it also has to do with the fact that gadgets are
lasting longer.
Samsung has led the way in waterproof gadgets. Analysts have long been sounding the alarm that the more waterproof gadgets you have, the less
people are going to need to update those gadgets. So what does that mean? A company like Samsung and Apple has to pivot more to be a services
company.
Apple just announcing yesterday as you reported that they're going to make some of their TV services available on Samsung. That just shows you,
companies like Apple know they can no longer beat the iPhone company. And that close ecosystem that you and I have been talking about for years,
Eleni, they're starting to open it. Apple doesn't want to be the iPhone company. They want to be the services company. That's going to be Apple's
narrative, as they try to pivot that way in 2019.
GIOKOS: And LG coming out with some really cool TVs. We know that they've really been focusing on that, hoping that that is going to perhaps turn
things around for them down the line.
BURKE: Eleni, I tried to be very judicious when talking about televisions because for years here at CES, we were talking about 3-D televisions. And
skeptics like you are saying, "Come on, Samuel, that never came to fruition."
GIOKOS: How much better can TV's get?
BURKE: Can you imagine us in too much HD, where we just don't want to see ourselves that way? But listen, I want to just show you some of the
standouts. You'll look good, I don't know about me, but some of the standouts that I saw that I think are actually going to impact the market
this year and in the coming years. If you start, number one, with a transparent television, OLED technology now, so powerful that when the
pixels creating their own light, and they don't need to have a back light.
So you see this maybe for commercial purposes, but imagine a time when your bedroom window is a transparent screen, yes, you can see outside, but
maybe you can put up a poster for your favorite music group there and things can change from night to day.
[15:30:10]
Another television I saw there, really stood out to me are these portable screens. It could be TVs, it could be monitors, but they're becoming so
light that now the TV makers are looking at making docks, so you can just pick up your screens, spin it around and move it from your kitchen to your
home office.
And lastly, and I think this one was the most impressive and really tells us where TVs are moving. This is an 88-inch screen, Eleni, and what it
does is it doesn't have a speaker below, it doesn't have a sound bar hidden behind, the sound is built into the screen.
That means that the image, the sound can follow --
ELENI GIOKOS, HOST, QUEST MEANS BUSINESS: Yes --
BURKE: The image. So if there's a car racing across the screen, that sound can just race across the screen with it, you can't hear it at home,
but it was so cool to be immersed in that sound and it felt like you were more a part of the picture.
GIOKOS: That's very awesome, Samuel, but I hope the makeup companies are listening because I'm going to come up with better products to help us out.
BURKE: I hope they're listening too --
GIOKOS: Thanks Samuel, appreciate --
BURKE: For me, not for you.
GIOKOS: Thanks. All right, so Sears has come back from the brink, at least for the moment. Fallen retail empire accepts a deal from its own
chairman's hedge fund to keep its doors open. Fifty thousand American jobs are at stake.
(COMMERCIAL BREAK)
GIOKOS: Hello, I'm Eleni Giokos. Coming up on the next half hour of QUEST MEANS BUSINESS, the head of Daimler Trucks tells me he's worried about the
threat of auto tariffs from the United States. And the way the company wants your smartphone data to help with forecasts, I'll be speaking to the
CEO, but first though, these are the headlines on Cnn this hour.
Two top U.S. officials are meeting with key allies in the Middle East, discussing the withdrawal of American troops from Syria. Turkey's
president declined to meet with John Bolton in Ankara, slamming his recent comments as serious mistake.
[15:35:00] Bolton said the U.S. would pull out of Syria only if Turkey pledged not to attack Kurdish fighters there. Federal prosecutors in New
York have charged Russian lawyer Natalia Veselnitskaya with obstruction of justice.
She's known for attending a Trump Tower meeting during the presidential campaign with dirt on Hillary Clinton was promised. Today's charges are
for a separate money laundering case.
London's Heathrow Airport temporarily grounded all departing flights on Tuesday after a drone sighting. After about an hour, flights were resumed.
It was a major disruption for the busiest airport in Europe.
Egypt will host this year's African Cup of nations. Cameroon was stripped of the rights to stage the football tournament after fears they would not
be ready in time. South Africa was the only other country to offer to host. The games themselves begin in June.
So we're in the QUEST MEANS BUSINESS trading post right now, we're in the last half hour of trade, and take a look at this, we're green all around,
Dow Jones sitting in positive territory, up 1.2 percent, S&P also looking quite strong today, 1 percent to the good.
Nasdaq also sitting in positive territory. It's the tech stocks that did really well. And guess what? We've got the U.S. and China trade talks
getting into the third day, and it seems like there's a bit of progress happening there. So people are cautiously optimistic.
Remember, this is the reason that we saw a lot of volatility towards the end of 2018. We saw the worst month in December since 1931. We started
the year off on a negative note and it seems like, right now, as we head into the second day of this week, it's looking good, so hopefully, we can
keep that up.
All right, so in the meantime, shares of Sears Holdings are shooting up as much as 3 percent. The company reached an 11th hour deal on a bid to buy
the business and avoid shutting more than 400 stores. We've got Paul La Monica with us in studio today. Good evening, Paul, how are you doing?
PAUL LA MONICA, CNN BUSINESS DIGITAL CORRESPONDENT: Thank you --
GIOKOS: Good to have you with us. I mean, an 11th hour deal. We've got something really important happening here because we really thought that
Sears was just going to fall apart. And now, it's looking much better. I mean, are we feeling optimistic that it's going to save the day?
(CROSSTALK)
LA MONICA: I wouldn't go that far, Eleni. I mean, yes, it is true that Sears, it appears, is not going to have to completely liquidate as of
today or start that process today. But there's 11th hour deal, gives Eddie Lampert a little bit more time to try to convince creditors.
I think that there is a viable plan to save some of Sears and Kmart. And this is a company that still has nearly 90,000 employees, was once the pre-
eminent retailer of its day, the Wal-Mart and Amazon, you know, combined. But now, I think there are legitimate concerns about even if Sears finds a
way to keep some of those stores open --
GIOKOS: Yes --
LA MONICA: Completely really reverse --
(CROSSTALK)
GIOKOS: They keep 425 stores open. I mean, that's --
LA MONICA: I'd be very surprised if 425 stores wind up staying open, but I think at this point, we just have to wait and see what Eddie Lampert is
able to do with regards to any deal with the bankruptcy court and you know, the creditors.
GIOKOS: But --
LA MONICA: I mean, remember, you know, Sears stock, you mentioned, it's up a lot today --
GIOKOS: Yes --
LA MONICA: Still, there's a Q at the end of its ticker, which denotes that it's a bankrupt company, and I don't know if it's going to change its
fortunes just --
GIOKOS: But is money the problem here? Does it just need money? I mean, at the end of the day, it hasn't reinvented itself through the years, and that
is the point that customers are not going to Sears as much as before.
LA MONICA: Exactly.
GIOKOS: So it doesn't matter how much money you pump into it, you still have the fundamental problem.
LA MONICA: Yes, the fundamental problem, Sears sales have been plunging for years. Kmart sales as well. It's a company that lost its way, you
know, consumers moved on. It's not all just about Amazon because there are many bricks and mortar companies out there that have thrived.
Wal-Mart and Target are two that also have, you know, admittedly done a good job of going digital as well. But Sears really never did anything to
get into the e-commerce game. But even if it did, the stores, I mean, when you go into a Sears, a lot of them are just depressing shells of their
former selves. And I think that's why a lot of consumers aren't going there.
GIOKOS: And Amazon is now the most valuable company in the world.
LA MONICA: Yes, it's the most valuable company with a market cap around $800 billion. That's actually not even its all-time high because --
GIOKOS: Yes --
LA MONICA: Remember, Amazon and so many other tech stocks have fallen in the past couple of months. It was worth more than a trillion not that long
ago, but it's now worth more than Microsoft --
GIOKOS: Yes --
LA MONICA: Google, Alphabet, and poor Apple, Apple used to be number one, and now it's measly number four.
GIOKOS: Listen, companies are going to have to reinvent themselves so they can avoid a Sears top scenario, right? Thank you so much --
LA MONICA: I don't think any of those four just yet --
GIOKOS: No, I know, maybe like in a fewer case --
LA MONICA: QMB in 2083 maybe.
GIOKOS: Maybe. Paul La Monica, good to have you in the studio, nice to see you in person, thanks so much. All right, so IBM likes talking about
the weather, especially when it's got a new forecasting system that might help major industries across the world.
[15:40:00] I'll explain with the help of the CEO of Big Blues Weather Company right after this, stay with us.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. So IBM says it's using its weather company division to come up with a super accurate forecasting system. It's called Graph,
and it was unveiled today at the CES Expo in Las Vegas. IBM says it can be really useful to industries like agriculture and transportation,
especially in developing countries.
Weather Company's CEO Cameron Clayton is in Las Vegas and joins us now. Thank you so much for joining us. How much more accurate can our weather
forecasts become? I know that -- I mean, any really minuscule change for agriculture is important, but it's also about doing it in the right time
frame as well.
CAMERON CLAYTON, CHIEF EXECUTIVE OFFICER, THE WEATHER COMPANY: Absolutely, it's fantastic to be here. Forecasting and forecast accuracy is something
we've been working on for 30-plus years. Today, we're excited to announce Graph Model, it improves forecast resolution.
So the number of places in the world where we actually model a forecast to every two miles or three kilometers. We've also improved the time-frame on
that, from once or twice a day to every hour. And what that means is, you know, a farmer in Kenya gets the same forecast now with this new system as
a farmer in Kansas.
So we're helping connect the entire world, the first time there's been a true global model and it's 200 percent higher resolution than the next
closest model.
GIOKOS: Cameron, I mean, what's important here as well, and you speak about, you know, countries like Kenya is the long-term forecast as well.
That's really needed to understand when to plant, when the rains are going to come. How much of an increase are you going to see in terms of accuracy
for the long-term side of things as well?
CLAYTON: So, actually, what we find is the way the company is really all about helping people make better decisions. And most of the decisions are
made in the next 24 hours, right? So, as a consumer is what to wear, what to pack, et cetera.
For enterprise, it's all about, you know, how many stuff do I need tomorrow at my retail store?
GIOKOS: Yes --
[15:45:00] CLAYTON: Should I plant tomorrow? Should I spray tomorrow? How's my truck going to be impacted on its route today or tomorrow? That's
where we see the vast majority of decisions being made. And so for the entire world to be able to net the atmosphere, so from the -- you know,
ground zero all the way up to 62 miles, the edge of space, we're mapping the entire atmosphere --
GIOKOS: Yes --
CLAYTON: To this degree of granularity. That wouldn't be possible without better data, better science --
GIOKOS: Yes --
CLAYTON: And better computers.
GIOKOS: I know that this is going to be counting on a lot of data, and you're even looking at crowd-sourcing in terms of census and so forth. But
right now, there's a lawsuit that's underway for allegedly, you know, sourcing data from consumers from the application and using their data.
Tell me about the mix between privacy and, you know, getting the information that you need and how you're going to be more transparent down
the line.
CLAYTON: So IBM and the Weather Company have always been about trust and transparency. It's in our DNA, it always has been and it always will be.
We will vigorously defend the LA issue that you mentioned. And look, we ask for people's consent today, and we'll ask for it tomorrow.
We're really excited about the ability for people to contribute to make the world a better place, to help their neighbor by crowd-sourcing the weather.
And with their permission, you know, they'll be able to do that.
GIOKOS: Are you going to be more transparent in getting permission --
CLAYTON: And that's an incredible impact --
GIOKOS: Are you going to be more transparent in getting permissions from users?
CLAYTON: We're looking at all aspects of that currently.
GIOKOS: All right, fantastic. Thank you very much for your time, sir, much appreciated, good to have you on the show. All right, so after the
break, the truck industry is on the road to autonomy. We'll hear from the CEO of Daimler Trucks in North America. Don't go anywhere.
(COMMERCIAL BREAK)
GIOKOS: All right, so the head of Daimler Trucks in North America says he has real concerns about the U.S. tariff wars and protectionism. The U.S.
subsidiary of Germany's Daimler unveiled an autonomous enabled truck at the CES in Las Vegas. Martin Daum told me a multi-national company relies on
the freedom of movement of goods.
(BEGIN VIDEO CLIP)
MARTIN DAUM, CHIEF EXECUTIVE OFFICER, TRUCKS NORTH AMERICA: We are a truly global company. That means we have, you know, a lot of countries or
nearly every country with a very strong footprint.
[15:50:00] And we benefit that we have a free exchange of goods between all of our -- and also we are not exporting out of one place into the whole
world. We have a network of factories, of production locations, of engineering locations around the world that cooperate very healthy
together, so we don't have to invest in one country.
Everything so we can invest in one country, engines, we can invest in other countries and transmission and then we exchange the both -- the two goods.
So our company is based on free trade and a global world, where free exchange of goods is.
And we truly believe that this increases the wealth and the health of each nation that participates. So we are really concerned this protectionisms
and the tariffs which we see jumping out left and right. And that could make our business more difficult in the future. But we have to cope with
it.
GIOKOS: I mean, you're saying it's going to be more difficult. Are you guys looking at what the economic impact is going to be for the company?
And where are you most concerned about a drop in sales? Is it North America? Are you worried about your European markets? Where exactly are you
worried mostly?
DAUM: I mean, at the moment, we go in 2019 pretty optimistic. You know, the suspects for difficulties in 19 are the same that we ended in '18 was
difficulties, that's basically Argentine and Turkey. We see the Brazilian ups being continuing.
We see Europe still going very strong, hoping that the Brexit will not make too much of a dent into our European sales. North America is strong,
Japan, India, still going well. China is an extremely high level, trucks are always kind of volatile so we feel under extremely high level like in
China and goes back a little bit.
It doesn't matter too much. We are prepared for volatility. We don't see too many dark clouds on the horizon for 2019.
GIOKOS: OK, we also see, you know -- we've spoken about this. A lot of tech companies getting into the trucking space. Do you think you've got
one up on them?
DAUM: I mean, trucking is a global business, and you need to be global because you need the size and the volume. You know, we sell our 500,000
trucks around the globe, and that's a lot. We are, by far, the biggest company around the globe.
So anyone who competes just is a local footprint, will have it very difficult here. Secondly, trucks is not just the one type fits all. For
example, we sell in North America about 170,000. And this encompasses from the (INAUDIBLE) as a local delivery vehicle through school buses, through
mid-sized trucks, to their tractor, to their tractors, to mining trucks.
I mean, these are 20, 30, 40 complete different vehicle types. So it will be very difficult from anyone who is not in the business for long term.
Like our known competitors to access that market.
(END VIDEO CLIP)
GIOKOS: We've got Lauren Fix better known as the car coach joining us now. Thank you so very much for coming to studio.
LAUREN FIX, CAR COACH: Thank you.
GIOKOS: All right. So at the CES, all we're hearing is about autonomous vehicles, electric vehicles, companies pumping a lot of money into new
technologies --
FIX: Yes --
GIOKOS: Daimler doing the same. I mean, a truck, you know, commercial company, doing this for their trucks.
FIX: Right.
GIOKOS: Are you buying into this story?
FIX: Well, I'm not an autonomous car fan yet.
GIOKOS: Yes --
FIX: We're far from that. But as far as testing, Ford has been testing in an enclosed environment for years and Nissan is testing, of course, Audi
has been testing, all the big brands have been testing their technology. And there's a couple of factors that are slowing it down from coming to the
streets on a regular basis.
GIOKOS: OK, when I see this truck which you see on the screen right now, imagine that being autonomous.
FIX: I think that would concern --
GIOKOS: Yes --
FIX: People.
GIOKOS: Would that concern -- I mean, it would, right? I mean, you'd have to have really top-notch technology, and you'd still have to have a driver
in it to take over the wheel, just in case.
FIX: Absolutely because if a snowstorm happens, a windstorm, there's black ice, something that could happen without much notice, although we get the
communication, would it react the same way you would? I mean, it's not going to pull over and park if there's suddenly a windstorm or a snowstorm
that happens. That could be a problem.
So these are things that we have to think about. And if it needs an update, is it going to stop on the side of the road and like go, I'm sorry,
we'll have to wait while this updates.
GIOKOS: I guess I have to invest, I mean, everyone is doing it, right?
FIX: Right, you have to --
GIOKOS: You have to be ahead of the curve.
FIX: Right.
GIOKOS: So let's just shift gears now and --
FIX: OK --
GIOKOS: Look at Carlos Ghosn. And of course, he appeared in court, he is pleading innocent right now. What are you making of this? Because if you
look at what's happening under Japanese law, we're not really hearing very much from him. We're not really hearing a lot from his lawyers either.
FIX: Right, you've got to remember, he only sees his lawyers a limited amount of time. There's no family members allowed to communicate with him,
even his son has been trying to communicate.
And the rules that they have in Japan are completely different than here in the U.S. So he's been under -- essentially in prison since November 19th.
And they thought he would be able to be let go on January 11th, which is coming up.
[15:55:00] But it looks like they're going to come with more charges to hold him. It's actually pretty sad.
I mean, someone who saved Nissan, who runs Renault, who put a company relationship together with Mitsubishi, he's in prison. We don't even know
if the accusations are true. That's the thing. You can accuse anyone in that country, and they'll arrest you.
And they'll think he's a flight risk or would tamper with evidence. You know, I've known him a couple -- you know, quite a few years, and I've had
dinner with him. And I'm just thinking I --
GIOKOS: So you're not buying into this? I mean, you're saying --
FIX: No, I think it's a coup.
GIOKOS: Really?
FIX: I think it's a coup, I think it's a very strong message they're sending him, and the message is sent and received.
GIOKOS: Why would they -- why would that happen though?
FIX: I think that Carlos Ghosn was looking to retire at some point down the road, and Nissan doesn't want to be owned by a French car company. And
I think what you know, he was thinking, well, merge this together to create a strong, three-company relationship.
And they didn't like what he was doing. And that's why you're seeing a couple of the executives here in the U.S. taking a leave of absence, as
they're calling it.
GIOKOS: Yes, and it's interesting, he is still in charge of Renault, which is interesting.
FIX: Well, they trust him, they believe in him.
GIOKOS: All right, well, thank you very much for this, Lauren, great to have you in the studio, much appreciated --
FIX: Thank you --
GIOKOS: For your time. All right, so trading is nearly over on Wall Street, we'll have the closing numbers right after this. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: Just a few moments left of trade here in New York, and as you can see, the Dow Jones sitting up 1 percent, we're up 260 points, and just
looking at that graph, progressively went better today as people were focusing on the China-U.S. trade talks.
Of course, that continuing over in the U.S., and this is why we've been seeing a lot of positivity coming through into the markets. S&P also
sitting in positive territory. You've got the Nasdaq also sitting to the good.
In the meantime, Mark Zuckerberg has announced his new year's resolution. Listen to this, he says that he will host a series of discussions on the
future of technology in society. That's his new year's resolution. So Facebook shares are down 25 percent over the last year, partly as a result
of the company's privacy scandals.
And of course, a big drop over the past year. Hopefully, that's going to turn around in the next year, perhaps this is the bottom and a good time to
buy. And don't forget, everyone is focusing on China-U.S. trade talks, that's top of the agenda.
We've got all the tech stocks doing really well in today's session today as well. And as you can hear now, that's the close in New York. I'm Eleni
Giokos, this is QUEST MEANS BUSINESS, "THE LEAD" with Jake Tapper is next. Thanks for watching.
(BELL RINGING)
END
