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Quest Means Business
President Trump Cancels Pelosi's Unannounced Overseas Trip; Car Bombing at Bogota Police Academy Kills At Least Eight; Top Korean Negotiator to Meet with Pompeo in Washington; Cohen Admits to Paying a Firm to Rig Online Polls to Favor Trump; Duke of Edinburgh, Prince Philip Unhurt in Crash While Driving; Gillette Ad Challenging Toxic Masculinity Receives Backlash; Black Workers Sue General Motors, Alleging Racism; Bullying at Ohio Plant; Dow Seesaws on Conflicting Reports About Tariffs. Aired 3-4p ET
Aired January 17, 2019 - 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: As we enter the final hour of trading on Wall Street, the graph chart behind me tells the story.
Tootling down, not doing very much for most of the day and then all of the sudden, half plus two about half an hour ago, the market really does go up
like a rocket. We need to explain what's happening because this is what's moving the market.
Stocks took a big upward swing on reports of a possible breakthrough in the U.S.-China trade talks. European stocks in the red. There are new details
about Britain's message to business ahead of Brexit. The winning streak for Wall Street is over. Morgan Stanley falls after a big earnings miss.
Put it together, it's Thursday, it's January the 17th. I'm Richard Quest in London, where, of course, I still mean business.
Hello, good evening to you. Most of the session, I wanted to spend time thinking about what was happening and why, well, it's not a quiet session
anymore. Stocks spiked in the final hour of trade. The Dow Jones goes up over 160 points. Now, to be fair, it's getting back some of those gains,
but the reason it rose so sharply was a report by Dow Jones that the Trump administration is considering whether to roll back tariffs on some of the
Chinese goods to move along the trade negotiations.
All the major indices are now in the green and every single sector is positive for the day. Stocks are just getting back slightly over the last
ten minutes or so. We will watch closely to see how that progresses. Christian Alesci is following the developments in New York and does it
justify, does the announcement justify what we saw or is this knee jerk?
CHRISTINA ALESCI, CORRESPONDENT, CNN: The news doesn't justify the spike that we saw. I think it's a knee jerk reaction. I feel like it's
groundhog day. You have Treasury Secretary Steven Mnuchin arguing to give China a concession to get it to the negotiation table and perhaps push a
deal along and on the other side of the spectrum, you have the U.S. Trade Representative Robert Leitheizer who doesn't seem like he is any kind of a
mood to strike a deal with the Chinese.
Here is why I think the move is overblown today. Neither of these officials who are important in these trade negotiations has taken this idea
of lifting the tariffs to the President. So he is the ultimate decision maker in all of this, and if he doesn't want to lift those tariffs, that
won't happen. That said, the move today does demonstrate how critical this issue is and how front of mind it is for most investors. Any little
indication one way or another is going to move the market, Richard. It's very clear investors want clarity at this point.
QUEST: Right, and you see straight away, those components in the Dow 30. Caterpillar, even though it's not that reliant on China, for some reason,
it always does respond. Apparently, the company says it's not that reliant. Boeing certainly is, DuPont - DowDuPont most certainly is. Nike
manufacturers and brings in. All of those are gaining as a result of this. The question, of course, it begs the question, in the middle of an earnings
season, whether or not this has got staying power.
ALESCI: Yes, that's the question and companies definitely want clarity and the reason that you're seeing those individual companies move the way that
they are is because they're all exposed to risk of a trade war with China.
I was at an economic club meeting in New York where the CEO of JPMorgan Chase, one of the biggest banks on Wall Street and really around the world
was saying, "Look, we need to hold the Chinese accountable for some of these misuses and allegations of stealing intellectual property and this
needs to get resolved, even he was saying to the detriment of business in the short-term because this is a long-term issue that has implications for
our companies, not a year from now, but 20 years from now.
QUEST: Christina Alesci, thank you. Good to have you on this and please, do keep an eye, if you see massive movements, we'll come back to you to
talk more about it. Christina Alesci, watching markets
Forty eight hours of debating, voting and squabbling over Brexit here in the U.K. Businesses across the country are still wondering what comes
next. Perhaps things will become clearer over the next week.
[15:05:01]
QUEST: The Prime Minister Theresa May has promised to put a Plan B before Parliament on Monday - and probably, it won't be Monday actually, it's
going to be the following week. Now, the plan which lawmakers tried to amend will go to a vote on January the 29th. It's a week after Davos - or
it's a week following Davos, and we'll be here for that.
The Opposition Leader, Jeremy Corbyn says he won't discuss the next steps with the Prime Minister unless she rules out a no-deal Brexit once and for
all. Now, in the last few hours, the British Prime Minister has written to the Opposition Leader saying that is an impossible condition. The Labour
Leader reminded her, time is running out.
(BEGIN VIDEO CLIP)
JEREMY LEADER, OPPOSITION LEADER, LABOUR PARTY: To get a deal that can command the majority in Parliament, Theresa May has to ditch the red lines
and get serious about proposals for the future.
Quite clearly, if no agreement has been reached within time that it could be implemented by the end of March, then obviously, the issue of extending
the exit date - of extending Article 50 does come into play and indication is that may well be the case coming up after April.
(END VIDEO CLIP)
QUEST: Nina dos Santos with me from Downing Street. The letter that the Prime Minister sent on this question of taking no deal off the table, she
basically says she can't because the law requires the U.K. to leave and you can only leave either with an agreement or without.
NINA DOS SANTOS, CORRESPONDENT, CNN: Yes, that's right, or indeed, she also said you could just revoke the will of the British people and then
that would bring us into a second referendum, but of course, Downing Street has staunchly said they don't want to go to.
Just a quote from this letter here, as you were saying, Richard, she bats the ball right back to the Labour Party's court, in particular, Jeremy
Corbyn's insistence that he come to the table for any of these cross-party talks unless she takes no-deal off the table. May says, quote, "I note
that you have said ruling out no-deal is a precondition before we can meet, but that is an impossible condition because it is not within the
government's power."
So the impasse here is what type of Brexit arrangement, what type of future the United Kingdom wants, and over the last 24 hours, what we've seen is
Downing Street hosting a number of senior politicians, from all parties except of course the Labour Party for those kind of cross-party talks to
try to hammer out some kind of agreement that could command the majority in the House of Commons but without Labour on board, it's very hard to see
that happening and of course, as you said, she has to come back very quickly to The house with the Plan B.
QUEST: All right, Nina. Nina, good to see you. Thank you. Nina in Downing Street tonight. The Chancellor of the Exchequer claims that
lawmakers may be the ones who liked a no-deal Brexit. "The Telegraph" newspaper published what it says is the transcript of the call between
business leaders and senior ministers on the night Mrs. May's Brexit deal was rejected.
The Chancellor stressed that a motion proposed by MPs could well take a no- deal off the table. He apparently said, there is a significant majority in Parliament opposed to no-deal. The business secretary Greg Clark expressed
great regret that things were still unresolved and the Chancellor added that the government's number one operational priority is preparing for a
no-deal Brexit.
On Wednesday's "Express," I asked the Chief of Britain's Food and Drink Federation if he felt reassured by Phillip Hammond's message.
(BEGIN VIDEO CLIP)
IAN WRIGHT, CHIEF, BRITAIN'S FOOD AND DRINK FEDERATION: I think he reassured us that he had our best interests at heart, but he didn't
reassure us that he was going to able to do anything effective about it in the immediate short-term. And so many of my members and many of the people
on the core were very perturbed about the no-deal Brexit.
(END VIDEO CLIP)
QUEST: Right, we say good evening to Ben Fletcher who is the Director of External Affairs for the Manufacturer Organization, the EEF, also on that
call with the government ministers on Tuesday. Good to see you.
Ben, was it your sort of understanding that Phillip Hammond was basically saying as the transcript seems to show we're going to get no-deal off the
table?
BEN FLETCHER, DIRECTOR OF EXTERNTAL AFFAIRS AND POLICY, EEF: I think what he said very clearly and normally, we wouldn't comment on these kind of
calls. They're usually very private. But I think --
QUEST: There were hundreds of it.
FLETCHER: There have been plenty of people on it and a certain number of people have looked at the transcript today which is broadly how we remember
it. I think from our perspective, what he was trying to do was to reassure business that every effort is being made to make sure that no-deal doesn't
happen. I think it was very clear that this isn't government activity, but he said that he and many in government were recognizing that that was under
way and they were looking very, very clearly to reassure business that if at all possible, no-deal wouldn't happen.
QUEST: Very hard to square that with the Prime Minister's letter tonight to the leader of the opposition. I can understand the back bencher may try
to take it off, but the government is basically saying that actually, it's a legal impossibility ...
[15:10:10]
QUEST: ... to take it off.
FLETCHER: Well, I think what Phillip Hammond said I don't think was completely contradictory to that. I think what he was saying was we're
making efforts. He made it clear that this was back bench activity, it wasn't government activity and I think there is this fundamental difference
between the two, but equally, I think as many people have said who were on the call, their business was pushing very hard to say what we'd like you to
do is to go further and to see what can be done to take no-deal off the table because it is such a huge risk
QUEST: The risk, one hopes your members are preparing.
FLETCHER: I think we can say without any doubt that our members are preparing. I think their challenge is they are not sure what they're
preparing for at the moment and --
QUEST: But the French government today announced that it was upping it's - it was actually executing its preparations along the northwest French
Coast. Related to that, Jamie Dimon of JPMorgan Chase said it's costing hundreds of millions. What sort of expense are your members now engaged
in?
FLETCHER: I think our members are engaged in expense in the hundreds of millions if you look across the sector. I think in many areas, if smaller
firms in the supply chain are having to stockpile inventory because they have no confidence that they can move goods across Europe from the 30th of
March onwards, larger firms are having to invest in that process as well and take steps to ensure that they have trading relationships, they have
premises, they have legal entities that will allow them to continue to operate.
When you aggregate this up, just across our sector, which is a huge part of the economy, we're talking hundreds of millions if not more and a huge
amount of uncertainty because of the range of options you have to prepare for.
QUEST: An over the cliff Brexit is disastrous, but we are told - although there are some economists who still say it's okay, but a managed no-deal
where in the last two or three weeks, those necessary structures. I agree you can't suddenly build ports, but can alleviate the prospect of confusion
and chaos by not requiring certain papers, making it a lot easier at the last minute.
FLETCHER: My children are too old for fairy stories, but I think the concept of a managed new deal pulls in to that kind of territory. It's
very clear from the E.U. that if we leave, we leave on the 29th at 11:00 and the preparing for it in the time that we have is almost non-existent.
QUEST: I agree with you to that extent. We probably should have been preparing for that a great deal sooner since that was always on the cards,
but the French and the Dutch and all those who also have ports that are likely to be affected are certainly not going to be - they are going to be
putting as much pressure on the European side to come up with some solution that at least keeps things moving in the interim.
FLETCHER: I mean, I think there's lots of speculation about solutions or we can deal with the facts at the moment. And if a customs border is
imposed on the 29th of March, the impacts on vehicles moving just through one port over Calais where we have over 10,000 vehicles a day moving
through that port, some estimates suggest that 75% to 80% of that capacity will be lost even if you just introduce very basic checks. That has an
impact on food supply in the U.K. and that has an impact on manufacturing; that has an impact on pharmaceuticals and health care products and so on.
So I think that that is all very well to aim for solutions and plans and so on, the practical impact is that if the rule is introduced at midnight, we
will be in a really bad place.
QUEST: I mean, I am comfortable - thank you for coming in and telling us and discussing it. Please come back. As we get closer, assuming no deal
is in place, I'd like to keep in close touch so you can tell me what your members are doing and how they are preparing.
FLETCHER: We would be delighted to.
QUEST: Thank you very much, indeed. London's FTSE saw the worst losses of the day in Europe. Again, I repeat what I said over the last couple of
days. The only remarkable thing is it was only down half of a percent. The only remarkable thing is how the FTSE is not down even allowing for it
to be priced in, which does worry me that as you get to the end of all of this process, it could have a very sharp fall ahead of us.
Anyway, stocks across the continent closed mostly lower. The CAC 40 was way down by the warning from the banking giant, Societe Generale. It's had
one of its key unit at a steep dropping revenue in Q4, thanks to volatility in the stock markets.
We'll continue the markets. It may have calmed after the volatility of last year. The pain isn't over yet. The big banks have been revealing their
profits and how they were dented by the violent moves in 2018. The latest one tonight. And we remember the man who went against all Wall Street to
help out Main Street. His name was Jack Bogle who died. He changed the way we invest forever. Next time you invest in an index fund, and we all
do in some shape or form, this is the man that invented them.
(COMMERCIAL BREAK)
[15:15:00]
QUEST: Bank balance sheets obviously won't forget the violent market moves of last year, the very difficult trading conditions, so we go now to the
share case. Remember, the share case tracks price markets and price movements after earnings. It's the best barometer of what investors think
and you can see already we've got some companies on it.
So first, to Morgan Stanley, down 4% after volatile markets hurt the results. The Chief Executive says 2019 will be better. But you can see
from the share case, you've got Wells Fargo next to it, which is down 2% but the rest of the sector has weathered the storm much better. Go around
the case and you see JPMorgan shares, they were higher, some 1% in the 24 hours after despite that bond trading debacle.
And at the top of the trade, Bank of America, Goldman, and Citi all up 4% or more on the back of what they saw, of what they experienced. Paul La
Monica is tracking it all in New York. It begs the question, when you look at those numbers, Paul, is this just Morgan's own misfortune?
PAUL LA MONICA, CORRESPONDENT, CNN: Yes, I think that when you look at Morgan Stanley, they just had more exposure to the volatility in the bond
market than many of their peers. That's why fixed income trading revenue was down 30% from a year ago. Obviously, a huge problem and they don't
seem to really have the diversification working to their advantage as much as Bank of America which is a huge retail banking arm of course, and
Goldman Sachs, which is now really, I think, the king of Wall Street once again.
I mean, there was a time when people were worried about Goldman's stature among the big investment banks, but they have done a lot of work to reclaim
the title as the king of investment banking with big IPO revenue, underwriting, new stock offerings, bond offerings as well and merger
advisory.
QUEST: Explain how Morgan has that institutional exposure to the bond market. I can understand how they have a problem with the trading side of
it in the sense of there - their customers or their clients were not hit, but their own account?
LA MONICA: It is mainly because of the trading revenue just across the board. The volatility was so massive because no one knew it was going to
happen with interest rates going forward. We really didn't have much more clarity until earlier this year once Jerome Powell started talking about
the Fed being patient with rate hikes.
[15:20:09]
LA MONICA: Also, Richard, and you saw that Morgan Stanley got hit by lower revenue from bond offerings and I think a lot of companies decided that it
wasn't the time to start selling more bonds in a highly volatile market.
QUEST: Paul La Monica in New York. Paul, thank you. The financial world tonight. Mourning a legend, John Bogle died at the age of 89. He was known
as Jack and his ardent followers, as Saint Jack. He arguably did more than anyone else to make the benefits of investing accessible and affordable to
people on ordinary incomes.
He founded the Vanguard Group in 1975 and invented the first index tracking fund for individual investors. He liked to say he put the mutual back in
mutual funds. So how did he do it? The theory was instead of paying a broker to cherry pick winning stocks, a basket of diverse holdings could be
managed at a low cost. Over time, that basket would provide modest steady returns. It would literally mirror the index.
As he would say, "Don't look for the needle in the hay stack, just buy the hay stack." His methods helped tens of millions of people build better
lives. He was a product of the Great Depression and Bogle railed against success on Wall Street. Even as Vanguard became the largest investment
firm in the world, he flew coach class and took cabs instead of a limo.
And then in 2017, he tells CNN he was happy to take less so investors could have more.
(BEGIN VIDEO CLIP)
JACK BOGLE, FOUNDER, VANGUARD GROUP: I don't want any bigger piece of the pie than I have. I'm doing fine by the standard of normal America. By the
standards of Wall Street, I'm kind of an idiot. Why didn't I get all those big rewards? But the facts of the matter is, I'm comfortable. My wife is
comfortable. Neither of us like to spend much money. We live in a nice house, not particularly big, but very nice and we're very happy there. We
don't need anything that we can't buy. We don't buy much and if I have any regrets, it's that if I'd had a lot more money, I could have given a lot
more away.
(END VIDEO CLIP)
QUEST: Rana is with me, global economic analyst and economist for the "Financial Times." You had met and interviewed Jack many times.
RANA FOROOHAR, GLOBAL ECONOMIC ANALYST AND ECONOMIST, FINANCIAL TIMES: Many times. He was a big source on my book, "Makers and Takers: How Wall
Street Destroyed Main Street." And you wouldn't think that a guy who had spent his entire life in finance would be ready to talk about all the bad
things Wall Street has done, but he really viewed himself as a steward of people's money and he was very of his generation in that way.
QUEST: The Index Fund which we now take for granted and there are dozens, hundreds, thousands of them, how did it come about?
FOROOHAR: You know, he again, saw himself as somebody that was there to help you look after your money for the long haul. He was not into picking
stocks. He was not into betting on today's story, tomorrow's story. He was in it for the long haul.
And so as you say, why buy - why look for the needle in the hay stack when you can buy the hay stack? He really felt that it was his job as part of
the financial sector to be a conduit for wealth, not to be the action itself.
QUEST: But of course, the Index Funds, unless, I mean, they've been juiced up.
FOROOHAR: Yes, true enough.
QUEST: The derivative elements of it. I was looking at some bond funds only today, you start to - if you're doing a comparison, the highest rating
ones can produce 5%, 12% or 15% as opposed to - that's not what he was about.
FOROOHAR: It's wasn't what he was about and really towards the end of his career, when I got to know him, he was starting to worry that passive
investment community, the people that are running funds like Vanguard should actually be worried more about corporate governance. That's
something that he talked to me about.
I remember him saying, people say, "Well, just let the invisible hand manage it," and he said, "I am the invisible hand."
QUEST: Right, and he was also seriously worried that the fund management would eventually - or the funds in issuance would eventually own most of
the stocks.
FOROOHAR: And indeed, we're exactly at that point right now.
QUEST: Because if you look at all of those funds, the Vanguard this, the Blackrock that, the Ivy this, the Morgan Stanley that, the bulk of them are
all of the same stocks. The same apple shares in all of them. Different apple shares, but you know what I mean.
FOROOHAR: Just for an apple share, and thousands of companies and then that begs the question, well, all right, who is looking after the watchers?
You know, if the investors are supposed to be watching management, well, how can a company like Blackrock or Vanguard or Fidelity watch the
thousands of companies that they are investing in and they are offshoring and some have responsibility to proxy advisors, which have all kinds of
problems?
So there's a big backlash at the moment against passive investing, but for a lot of people, this is how they got to retirement.
[15:25:10]
QUEST: I was just- you weren't able to hear it, but his last answer was about, "I don't need anymore money."
FOROOHAR: Yes.
QUEST: If I need it, I've got it. I can afford it. My wife and I are happy. We've got a house that's not big and ...
FOROOHAR: Just like Warren Buffett, I mean, he was just like that.
QUEST: Yes, but where's the next generation of that?
FOROOHAR: Oh my God, Richard. They're not around. Well, let me take that back. I think that there is a movement actually afoot on Wall Street to
kind of push back against excesses in part because frankly, the boom days, I think that they're over. I think we're moving into - I know you're
skeptical, but I think we're moving into 40 years, it's going to be a lot harder to make money than it was in Jack Bogle's day. I'll tell you that.
QUEST: He was a great man.
FOROOHAR: He was a great man. He was a kind man.
QUEST: We need to just very briefly talk about Davos.
FOROOHAR: Oh my God, I've got my big boots. It's going to be cold. Big snow. Big names.
QUEST: What's the thing good thing we need to watch for in it?
FOROOHAR: China and big data and the two of them together actually. I think that you're going to see a lot of talk about how we've heard a lot of
backlash against the U.S. administration for screwing up the world trade system. China is doing a lot of things to itself, too. A lot more power
for state-owned companies. Surveillance tape.
QUEST: Finally, the most telling question of it all. Will you skate?
FOROOHAR: I never skated. I never - I'm working too hard with you.
QUEST: See you at the mountain.
FOROOHAR: I will see you on the Magic Mountain.
QUEST: As we continue tonight, coming up, Huawei finds itself not one but two overseas battles from Germany to the U.S., we'll discuss and find out
what war. It's after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment. We're going to be inside the GM plant in Ohio where black
employees say they were subjected to the most vicious racial abuse.
And Gillette's new ad campaign has left some customers very upset with the head of communications at P&G, Procter and Gamble. As you and I continue
tonight, this is Cnn and here on this network, the facts I promise you will always come first.
A bitter fight over the U.S. government shutdown is escalating with an apparent tit-for-tat. President Trump has informed the top House Democrat,
he's cancelling her previously unannounced trip to Belgium, Egypt and Afghanistan. That's after Nancy Pelosi essentially disinvited the
president from making his State of the Union address.
The Colombian authorities have identified the suspect in a deadly car bombing in Bogota. And now trying to track anyone who may have been
helping him. At least eight people were killed and the blast rocked the police academy. The president is calling it a terrorist act.
North Korea's lead negotiator in nuclear talks is due to arrive in Washington to meet U.S. officials. He's expected to meet on Friday with
the Secretary of State Mike Pompeo and possibly visit the White House. The talks could lead to a second summit between President Trump and the North
Korean leader Kim Jong-un.
President Trump's former Attorney Michael Cohen has admitted to paying thousands of dollars to a tech company in 2015 to try to rig online polls
in Mr. Trump's favor. Cohen told Cnn he did so at the president's discretion or Mr. Trump's discretion. And that he quotes, "regrets my
blind loyalty to a man who doesn't deserve it."
Let's return to our business agenda in just one moment. A low -- I do want to update you on news from Britain where dramatic images from the scene of
a car crash involving Prince Philip, the husband of Queen Elizabeth. Buckingham Palace says the prince also referred to as the Duke of Edinburgh
was not injured.
Prince Philip who is 97 was driving his Range Rover when it took place. Anna Stewart, going to be -- shortly, going to Sandringham. What do we
know?
ANNA STEWART, CNN REPORTER: So, so far, Richard, as you see from the photos, it was a very serious car accident. Prince Philip's car was on its
side. We know that it happened around 3:00 this afternoon, and thankfully, Prince Philip is OK. He's seeing a doctor at the Sandringham Estate, he's
not injured.
I imagine very shaken. He's 97 years old and this looks like a very serious car accident indeed.
QUEST: Do we know -- were there other occupants of the car, do we know anything about that?
STEWART: No, we don't know anything about who else was in the car, we've had a very simple statement from the palace, pretty much emphatically
saying that the Prince Philip is OK.
QUEST: But do we know the circumstances? I mean, looking at these pictures. Look, it would be difficult -- it will be fairly traumatic for
anyone, let alone a 97-year-old who has had poor health.
STEWART: On a main road just outside the town of Kings Lynn, we understand about 15 minutes away from the Sandringham Estate where he was staying. We
don't know whether anyone was in his car, we do know that the vehicle that he collided with or they collided with him, not quite sure what happened
here had two women in it, both of them had to be treated in hospital for minor injuries.
So it was a significant accident. Hopefully, he's shaken, but OK. He's not injured, but we would --
QUEST: It could have been a great deal worse.
STEWART: It could have been a great deal worse, and we have had many concerns about Prince Philip's health. Now, we didn't see him at
Sandringham over Christmas. He's 97 years old, there are always concerns, of course, about his health.
Earlier in the year, you remember, his granddaughter got married, Princess Eugenie. We weren't sure whether he would attend until the day, the palace
very much pulled a wait-and-see process of Prince Philip, see how he feels on the day. We haven't really seen him much since he retired which was
last Summer.
QUEST: He retired from public duties in 2017 as you said, and we didn't even see -- we didn't see him in the Cenotaph, either the Cenotaph for the
memorial services of remembrance Sunday or the concert of remembrance that evening. But what's the understanding of his underlying health?
STEWART: So we know that he's had various conditions. He's been to the hospital a few times with things like bladder infections, a coronary
artery, a hip replacement just last year. But apart from that, his overall health as far as we know from the palace has been good.
He's very active, he has been known to drive, he was driving to Windsor just last year, and the queen herself, she's 92, was riding a horse less
than a year ago. So they are very active royals despite being 97.
QUEST: And they have been all their lives -- Anna Stewart, you're heading over to.
STEWART: Heading to Sandringham.
[15:35:00] QUEST: Right, go anyway, thank you. When we continue in a moment, a new advert, the best that you can get is become the best that you
can be, and in doing so, Gillette has stirred a hornet's nest of criticism.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Is it?
(END VIDEO CLIP)
QUEST: If the goal of Gillette's latest ad campaign was to get people talking, well, by any barometers, it's a massive success. Five days on a
commercial that's addressing toxic masculinity, sexual harassment, bullying, and the Me Too movement is still garnering headlines.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Is this the best a man can get? Is it? We can hide from it. It's been going on far too long. When can't laugh it off.
UNIDENTIFIED MALE: What I actually think she's trying to say --
UNIDENTIFIED MALE: Making the same old excuses.
UNIDENTIFIED MALE: Boys will be boys.
UNIDENTIFIED MALE: Boys will be boys.
UNIDENTIFIED MALE: But something finally changed.
UNIDENTIFIED FEMALE: Allegations regarding sexual assault and sexual harassment.
(END VIDEO CLIP)
QUEST: Well, the reaction has been swift. A "Fox News" commentator asked, does Gillette want men to start shaving their legs too? Piers Morgan says
"this absurd virtue-signaling PC guff may drive me away to a company less eager to fuel the current pathetic global assault on masculinity."
Dana Schwartz a correspondent for "Entertainment Weekly" wrote, "Gillette is a company trying to make money. Don't laud them or any company into
being moral arbiters. They would have made an ad praising rugged manliness if they thought it would have led to more buzz and higher sales. Companies
are not our friends."
All right, it's time to hear what you think -- Cnn.com-slash-join. Cnn, we're asking you -- I honestly don't -- I see both sides of this. I sort
of get it. I get what they're trying to do, but at the other side, I think, well, is it their job to be doing it? Is it PC for PC sake?
[15:40:00] Look, are companies going too far in pushing the model issues in advertisements? Gillette, Nike, Pepsi and many others, too far or are
they just reflecting society? Cnn.com-slash-join. Damon Jones is the vice president for global communications of Proctor and Gamble which owns
Gillette.
He joins me from Cincinnati. Sir, very kind of you to take time, good to talk to you. Well, I mean, I imagine the discussion within the company was
almost as feeble(ph) as it is afterwards if everybody discussing what it's all about. Did this go all the way to the CEO?
DAMON JONES, VICE PRESIDENT, GLOBAL COMMUNICATIONS, PROCTOR & GAMBLE: Well, I haven't spoken the our CEO about it, but I can tell you what's
really clear for us, Richard, is that we believe we have, you know, an obligation and a responsibility to be both a force for good and a force for
growth.
P&G is one of the largest advertisers in the world, and so we believe that, you know, we can really have a positive impact by bringing to light and
sparking constructive positive conversations on issues that we know are important to our consumers.
Nine out of ten consumers tell us that, you know, they want brands to be active on social and environmental issues, and they will have a more
positive view. We know that half of those consumers influence, you know, the purchase decisions or influence by their shared beliefs from a brand.
So we believe it's an opportunity for us and we believe that when we do it, we can again have a positive impact on society and reflect well on our
brands.
QUEST: Right, well, we've done quite a few stories on QUEST MEANS BUSINESS about companies and CEOs being the moral barometers. So we're across the
concept of what you're saying. But one thing we have discovered is, it only works if the real values are those behind it. If this is nothing more
than a PC-PR stunt, it's going to blow up in your face.
JONES: Well, that's no doubt about it, Richard, and I can tell you that this campaign is more than an ad. Gillette in setting a positive example
and really encouraging others to set positive examples. We've committed to more than $3 million over the next three years, partnering with
organizations like the Boys and Girls Club of America to really fuel community programs that set a positive example.
But for all the debate that's out there, you know, what we really want to do is encourage people to watch the nearly 2-minute ad. When we do that,
study after study has show that it's actually had quite a positive review despite what some of the online commentary has.
There's been debate about some of the negative imagery because that reflects some bad behavior that's out there, but the positive is also out
there. You know, what's really not up for debate is what do we want for future generations, and we want people to be standing up for women, we want
them not to be bullying, not to be cat-calling.
And so when people see the ad and they see it in its entirety, we're confident they'll come around and really, you know, be reassured that
we're standing up and doing --
QUEST: OK --
JONES: The right thing.
QUEST: But to Dana Schwartz of "Entertainment Weekly's" point, "don't laud them for being moral barometers. They would have made an ad praising
rugged manliness if they would have thought it would have led to more buzz and higher sales." Tell me why Dana's wrong. Is she?
JONES: I can tell you why? I believe what we're doing is the right thing to do, Richard. Is we have values at our brand and those values are really
encouraging guys to be the best that they can be. They're not saying that the guys are bad, they're not saying that we're perfect.
But what we are saying is that there's a higher standard that we should be holding ourselves accountable to, and we and our consumers look at us as a
brand and us as a company and they make decisions not just on the product features or benefits.
They want to know the values behind the brand --
QUEST: Right, so --
JONES: And at the end of the day --
QUEST: So --
JONES: We want to put our values on display, and if people come to see those values, we think they will feel good about them, but we don't want to
get caught up in the debate, we want people judge us both on the values that we have and the actions that we take at the end of the day.
QUEST: Finally, wouldn't you perhaps have been better to make an ad showing what you do in Gillette? I've watched your commercial several
times, many times now. And it's very well done, but there is an element of nanny state or hectoring or lecturing about it.
Wouldn't you be better off just saying, this is what we're doing at Gillette. Why don't you do too?
JONES: Well, that's exactly what we're doing. When you go to the best a man can be, and you look at that side, it lays out there clearly the
manifesto of what we're stepping up to do. It lays out what we believe in. In the end of the ad is all about, Richard, you know, what we're doing
right?
We're setting a high standard for guys. We're saying it's not OK to harass women. It's not OK to be a bully, and when you see that action happening,
it means you as a guy have a responsibility to stand up and stop it.
We're putting a lot of effort behind this campaign to say that's what we believe in, and that's what we're really trying all guys to do. So again,
at the end of the day, we're going to be judged by our actions --
QUEST: Is that right?
JONES: As well as our words and we're quite confident by that.
[15:45:00] QUEST: Sir, I have to tell you, we don't often get this sort of result on our straw polls at cnn.com-slash-join. To the question, are
companies going too far in pushing moral issues in ads? Forty three percent say yes, but surprisingly to me, 56 percent-58 percent, it's moving a bit,
saying no, you're not going too far.
So have you -- there is a split, but so seem to be on the right side of the split for this evening. Good to see you, thank you, thank you for taking
time.
JONES: Thank you, Richard.
QUEST: As we continue on this idea of doing the right thing, the moral issues, corporations in the moral barometers. Well, now we're going to
hear about white-only bathrooms, nooses in the office, some of the allegations in a lawsuit accusing GM of racism. Is our real stories about
real actions in the world at the work place. It's QUEST MEANS BUSINESS live from London.
(COMMERCIAL BREAK)
QUEST: Nine black workers at a General Motors plant in Ohio have filed a lawsuit against a company they allege racism and bullying. They say new
season, white-only signs were put up around the plant, and the management failed to respond appropriately.
GM has said in a statement that it treats cases with sensitivity and urgency. Cnn's Sara Sidner has the story, and I must warn you her report
does contain offensive language.
(BEGIN VIDEOTAPE)
SARA SIDNER, CNN NATIONAL CORRESPONDENT (voice-over): Every day, he walked into work, Marcus Boyd prayed he'd survive his shift unscathed.
MARCUS BOYD, FORMER SUPERVISOR, GENERAL MOTORS: I felt like I was at war risking my life every day at work.
SIDNER: Derrick Brooks; a former Marine worked in the same place. Both were supervisors on different shifts at the General Motors transmission
plant in Toledo, Ohio. Brooks considers himself tough from his military training, but he struggled to handle what was happening at work.
DERRICK BROOKS, FORMER SUPERVISOR, GENERAL MOTORS: How rough and tough can you be when you got 11 or 12 people who want to put a noose around your
neck and hang you through your day?
SIDNER: There's a reason he brings up nooses, it's not just a figure of speech.
BROOKS: This is the picture of the noose that I found the night that I was at work on my shift.
SIDNER: According to a lawsuit now pending against GM, this is one of at least five nooses discovered at their workplace in separate incidents. The
suit also claims there were signs that blacks were not welcome there. Whites only scrawled on a bathroom wall along with swastikas on bathroom
stalls and niggers not allowed, scratched or written on bathroom walls.
[15:50:00] BROOKS: This was saying, you don't belong here. This was saying, if you stay here, this is what could possibly happen to you.
SIDNER: In the struggling town, Brooks and Boyd didn't want to leave their six-figure jobs. Brooks has children, boy takes care of his mother who is
an amputee. Now, they and seven others have sued GM for allowing an underlying atmosphere of violent racial hate and bullying.
(on camera): When did you notice over racism?
BOYD: Well, when I was employed, I was under -- he told me that back in the day, a person like me would have been buried with a shovel.
SIDNER: He said what to you?
BOYD: That was a death threat, and I was told to push that to the side.
SIDNER (voice-over): Boyd says he reported the incident.
BOYD: He admitted to it, and I was pulled to the side and said, you know, if you want to build relationships here, you know, you just let things go,
he'll be all right.
SIDNER: But he says the threats got worse.
(on camera): Were you afraid for your life?
BOYD: Definitely, that's why I left.
SIDNER (voice-over): When the noose appeared in March of 2017, Derrick Brooks says he reported it to upper management. He was sure he was the
intended target, but says he was told to investigate by questioning his employees.
BROOKS: It felt like a slap in the face, it did, but I had to be professional.
SIDNER: Brooks and other black employees also noticed being called Dan.
BROOKS: I thought they just, well, mispronounced my name for Derrick, and then later I found out Dan was an acronym for dumbass nigger.
SIDNER: General Motors sent us a statement, insisting "discrimination and harassment are not acceptable, and in stark contrast to how they expect
people to show up at work. We treat any reported incident with sensitivity and urgency and are committed to providing an environment that is safe,
open and inclusive."
(on camera): And that every day, everyone at General Motors is expected to uphold the values that are an integral part of its culture. But according
to more than half dozen current and former black employees, the problem is the culture. They say inside this plant, racism and harassment are the
norm, not the exception.
BROOKS: It is a culture.
BOYD: It's a culture.
BROOKS: Yes.
BOYD: You have to -- it's from the top down, and the bottom up.
SIDNER (voice-over): One employee filed a police report, others filed complaints with the Ohio Civil Rights Commission prior to filing suit.
DARLENE SWEENEY-NEWBERN, CIVIL RIGHTS COMMISSION, OHIO: The ultimate decision that was made is that GM did allow a racially hostile environment.
SIDNER (on camera): They allege they investigated quickly and have done remedial things to take care of the problem.
SWEENEY-NEWBERN: The commission disagrees with that position. GM did not do very much at all or what they did do was not effective.
SIDNER (voice-over): GM says that they held mandatory meetings and even closed the plant for a day for training and to address the issue with every
shift. The Civil Rights Commission report noted a former union president's testimony that during one of those meetings, a white supervisor said "too
big of a deal was being made of the nuisance.
After all, there was never a black person who was lynched that didn't deserve it." The lawsuit alleges that supervisor was never disciplined.
BOYD: General Motors is supposed to stand for something, right? That's the great American company. Well, what are you doing about this?
(END VIDEOTAPE)
QUEST: Sara Sidner joins me now from Los Angeles. From your understanding, I mean, the allegations are horrific and the story is
dreadful. From your understanding, what's been the reaction within GM to learning about this? Never mind their official statement of urgency --
SIDNER: Yes --
QUEST: And sympathy, all of that. What do you believe? Are they shocked, are they horrified or is there a case, Sara?
SIDNER: Yes, you know what? I think that when the nooses showed up, and this is from those who still work in the plant. When the nooses showed up
and there was actual pictures and evidence that this was happening, not just employees coming to them and saying this is -- people are saying these
things to me.
Apparently, that wasn't enough to give the shock value. When the nooses showed up, GM said, oh, we have a problem. And this is coming from some of
the sources we've spoken to who work in the plant and who have worked in the plant.
So those things certainly --
QUEST: Yes --
SIDNER: Sparked a reaction and GM did tell us that they have not fired anyone in connection with the hanging of those nooses. However, they
haven't figured out who did that --
QUEST: Right --
SIDNER: Also, they said though, that they have dismissed some workers at that GM plant after its extensive anti-discrimination and -- excuse me --
QUEST: OK --
SIDNER: Anti-discrimination and anti-intimidation work they've been doing across the plants. The issue here is you heard the woman from the Ohio
Civil Rights Commission. That actually, Richard, is a law enforcement agency.
They have a right to investigate, and they had thousands of pages of evidence that they look through, they interviewed a ton of people and they
came to the conclusion that GM simply did not respond the way that it should have responded in the beginning, and by the way, it's still
happening. One of the employees inside --
[15:55:00] QUEST: All right, Sara.
SIDNER: Sent a picture -- still happening to this day.
QUEST: Sara Sidner in Los Angeles. We wanted to -- before we finish, show you exactly what's happening with the closing bell. But we're moments away
from the closing bell. And I want to show you what's happening. The day has been pretty much going nowhere until these rumors on Dow Jones -- on
the Dow Jones news site that there may be movement on the talks of the China-U.S. trade talks.
And official of the Treasury Department has told the "Wall Street Journal", they haven't made any recommendations on tariffs despite the fact that Dow
Jones is reported the Trump administration is considering whether to roll back tariffs. Well, it just shows you the market is trading on rumors
rather on news.
And if you look at the Dow 30, Dow DuPont, Caterpillar, Boeing, they are still the big gains of the day which does show that it is -- it is -- it is
the China news that's driving this and much to my surprise, P&G is down at the bottom there. Surprise -- not surprise, P&G, Walgreens, all the
defensives are losing out as against the values. We'll have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, we talk about the Gillette advert that be -- for men to be the best that they can be. And I was fascinated that
really were half and half on the question of whether it is up to companies to take the moral barometer.
Do you -- I don't think it really matters, actually, oh, I think it might annoy and piss off people like Piers Morgan that they've done it. But I
much would prefer that they did. It is so much easier to do nothing. What's that old saying about the evil to thrive, all you need is for good
men to do nothing?
I mean, that's all that happens here. But when a company, for whatever reason is prepared to say, nope, that is not what we stand for and we're
going to try and encourage you to do the right thing.
Yes, maybe it's a bit hectoring, maybe it's a bit lecturing, but I think I'm prepared to live with that because the alternative to ignore what's
going on is far worse. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope
it is profitable. The bell is ringing --
(BELL RINGING)
Pfizer ringing the bell, there, Stacey Cunningham -- the day is done.
END
