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Quest Means Business
U.S. Attorney General Barr Refuses to Testify at House Hearing; Tropical Cyclone Fani Picks Up Speed Ahead of Landfall; Maduro Shows Off Military Loyalty in New Video. Aired 3-4p ET
Aired May 02, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: We are an hour away from the closing bell and what an interesting day it's been on
Wall Street. You have this -- a little bit of green in the morning, and then 11:00, it's when selling really kicks in. Throughout the course of
the day, there's been attempts at a rally, but I think the word to describe the market today, down over half a percent is unhappy, and it's unhappy on
the Dow, the S&P, and the NASDAQ.
We need to understand of course, the reasons behind it goes put it together and this is what's been moving the market. A candidate no more. President
Trump loses yet another of his picks for the U.S. Federal Reserve. Tesla goes on a fundraising drive. Elon Musk is chipping in his own money. And
Beyond Meat. All the way to the NASDAQ, a doubling of price for Beyond Meat after it IPOs. And the chief exec explains why investors have an
appetite for fake beef. We are live in the world's financial capital, New York City on Thursday. It is May 2nd. I am Richard Quest, I mean
business.
Good evening from all in to all out and all in a matter of hours. Stephen Moore's bid to join the U.S. Federal Reserve is over. The conservative
commentator spent the morning telling reporters he still had the full support of the White House, well not for long, he didn't.
Shortly after in the afternoon, Donald Trump tweeted that Moore would withdraw from the Fed process. It was a controversial pick from the start,
injecting political drama into the typically independent Fed. And then CNN uncovered decades of disparaging comments that he had made about women and
senators began to express doubts that Stephen Moore should or could ever be confirmed.
This afternoon, Stephen Moore released a statement. He said, "The unrelenting attacks on my character have become untenable for me and my
family and three moments of this would be too hard."
So look at the Fed Board and how it stands at the moment. President Trump's last four picks to fill the empty seats have now failed. The Board
shows, if we can see -- we will come and show you that in a moment. But essentially you've got -- he has managed to fill four seats. There are
still two empty seats. And there have been numerous attempts -- Herman Cain dropped out, and now Stephen Moore.
Rana is with us -- Rana Foroohar is the associate editor of the Financial Times and CNN's global economic analyst and Andrew Kaczynski runs CNN KFile
and has been digging through Stephen Moore's old writings. Good to see you both.
ANDREW KACZYNSKI, CNN "KFILE" SENIOR EDITOR: Good to see you.
QUEST: We'll spit this in half, we'll start with you. What did you find that made in the views of senators that Stephen Moore was not qualified?
KACZYNSKI Look, I mean, you referenced it a little bit in the intro. He made all these different comments disparaging women over the years, saying
women shouldn't be allowed to rough basketball games or announce them unless they were attractive. And he you know -- when I first talked to
him, he said this was a spoof, and then said I have a sense of humor. And then he apologized for it.
The odd thing is if it was a spoof, why did he write it so many different times? So I just don't think there was any will there for the senators to
have a confirmation fight when they didn't think it was going to be a winning battle?
QUEST: Was he qualified economically? He'd been on this program many times.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: He and I used to square off regularly as you know. I don't think he was and I'll tell you why. I
mean, he is an economist, but he made some seriously bad calls right after the 2008 crisis. He wanted interest rates to go up. He was worried about
sort of Weimar Republic hyperinflation.
QUEST: Every central banker that has made that call on the direction of monetary policy -- there would be you and I left doing it.
FOROOHAR: Well, well, why not? There's two seats now, Richard, let's go for it. You know, that's one thing. And I could give you another dozen
list of calls. But I think he was too political. And as I've said before, I think it's very important at this moment in time that the Fed remains
apolitical.
I mean, it's not completely apolitical, but we do not need people who have been apologists for the President being on the Fed right now.
QUEST: How far do you think today we should import into our decisions, the sort of things that you have found? I mean -- all right, I'm just going to
-- let's go on a limb here.
[15:05:05] QUEST: He may have said some particularly unpleasant things. And that's in fact he wasn't a very good choice in the first place. But
does that disqualify him for being able to lead on monetary policy at the U.S. Fed?
KACZYNSKI: Well, the interesting thing about him is it's not clear what economic beliefs he actually had because she said he supported a gold
standard then on Erin Burnett's show, he said he didn't. He said --
FOROOHAR: Went on a flip flop.
KACZYNSKI: He said, well, he said, he didn't even he didn't even speak about it. And then we played him three clips for it. And he said, "Oh, I
don't support it anymore." When I was doing a story on some of his views, he said he no longer -- he said he didn't support a minimum wage. He said
he did. So it's honestly not even actually clear what he believed economically.
FOROOHAR: I would second that. I mean, I've been on air with Stephen watching him flip flop. And again, that gets back to the point of being
political, you really do need the Fed to be run, I think largely by technocrats. Now, they need to be well chosen, but they need to be people
who, you know, like Powell, and I'll give Powell his due. That was a Trump pick, but I think he's actually --
QUEST: And he does not have a PhD in Economics.
FOROOHAR: He doesn't. But he is a data driven guy. I mean, I think that he is really looking at the numbers and calculating the very complex things
that they're weighing right now at the Fed and doing the right thing. And PS, the Fed is disrupting itself right now.
I mean, Donald Trump comes on and said, "Oh, I'm going to disrupt the Fed with Herman Cain and Stephen Moore." You know what? The Fed is thinking
all about what it should be doing with monetary policy, they're doing a listening tour right now all around the country, talking to real people
about these things.
QUEST: Let's just delve into the politics here, and electing to people to the Federal -- appointing people to the Fed, nominating them I should say,
has always been a tricky business. But it's not been terribly controversial. We were just looking earlier who has been appointed,
normally, they get about 70 votes to 20 or 30 against because there's always somebody that objects to your political or your economic views.
But Donald Trump to lose two, Herman Cain and now Stephen Moore because they could not get them confirmed. That's quite serious.
FOROOHAR: It's very unusual. But you know, the Fed has become very politicized and that's because it's been on the hot seat for the last 10
years, the Fed has been really the only institution that's been able to act and do anything about the downturn and about the recovery. And I think
that that really speaks to the dysfunction in Washington and you could say that about Europe, too. You could say the same thing about central bankers
and politicians in Europe.
QUEST: But let's see what happens -- let's see who he replaces Mario Draghi.
FOROOHAR: Indeed, indeed.
QUEST: Which is kind of -- or indeed and Mark Carney at the Bank of England.
FOROOHAR: Yes, for sure.
QUEST: Who is just coming up to be replaced -- Andrew, I'm fascinated by the work that KFiles does on these sorts of things. Give us an idea of
what is your barometer? What is your guiding post as you look into these things?
KACZYNSKI: Well, I can't give away too many secrets --
QUEST: No, but you can give me the principles.
KACZYNSKI: Well you know with Moore, we just -- this is a guy who is not picked for the Fed because it's all this man has basically done, you know,
besides working at the Heritage Foundation and Cato is he gives speeches, he writes columns. So we sort of set out just to look through all of that,
which was what's so odd about he called this a smear campaign, attacks on his character. It was us literally just posting things that he had said
and done.
QUEST: Good to see you. Go ahead.
FOROOHAR: Well, I was just going to say I mean, the other thing he did was work with Art Laffer on the Laffer Curve, and you know, I think the fact
that Stephen Moore still believes in trickle down is another reason he should be --
QUEST: Oh, there's still some people who think of the Laffer Curve. The Laffer Curve --
FOROOHAR: I will come and argue this another time, Richard.
QUEST: I am not so --
FOROOHAR: Laffer Curve -- dead, dead. Don't ring that bell on me.
QUEST: Is this your first time on QUEST MEANS BUSINESS?
KACZYNSKI: Can I ring the bell?
QUEST: Your first time QUEST MEANS BUSINESS.
FOROOHAR: You have to let me ring the bell.
QUEST: We asked you to ring it, not break it. Good to see you, as always. It's the economy, stupid. IT is a mantra which famously helped win the
election battle for one Democratic President. Donald Trump may be hoping the same philosophy will propel him to another term in the White House.
A new CNN poll shows public support shifting in the President's favor, 56% now approve of his handling of the U.S. economy. Compare that to 51
percent in March, 48 percent in February.
Stephen Collinson is with me from Washington. I don't think it's been unduly -- I don't think it's been controversial at all, Stephen to say, low
unemployment, low inflation and interest rates contained by the Fed, growth at 3 percent over multiple quarters. The President is right to be getting
credit for a strong economy.
STEPHEN COLLINSON, CNN WHITE HOUSE REPORTER: Certainly, and the President is hoping that that strong economy will prevail into next year. He can add
people who are very happy about that to an electrified political base, get just about 50 percent and win reelection.
And if you look at the history, Richard, Presidents who run for reelection when the economy is good traditionally do well. Think of Ronald Reagan in
'84, Bill Clinton in '96 and if you're a President who has the bad luck to prevail to preside over a recession, George H.W. Bush in 1992, for example,
you could be in trouble.
[15:10:10] COLLINSON: There are some caveats here, though, because if you look at the data, a President's actual approval rating across the board is
actually more dispositive of what happens in the election than his ratings on the economy.
In 2004, for example, George W. Bush was below his approval rating for his rating on the economy. The same thing happened to Barack Obama in 2012.
So a big question is will the election be just about the economy, or will be about all the other things that the American people show in the polls
that they disapprove of in Donald Trump's performance?
QUEST: But besides that phrase, the economy stupid, the other famous phrase, voters vote their pocketbook, their wallets. And I guess what I'm
saying -- and I've got right here who I will come to in just a second, but, Stephen, it's going to be very hard to raise an economic argument, I mean,
against this President.
He's got a new trade deal at the USMCA, whether you think it's good, bad or indifferent? It looks like China is about to come to some sort of
fruition. There's the potential for trade talks with Europe high and the tariffs are bringing in money, even though they may have some costs.
COLLINSON: Yes, that's true. And I think it's complicated, the democratic -- the efforts of the Democratic field that is forming up for the 2020
race. They want to run on middle class issues. It's very interesting. Elizabeth Warren, who is basically an economy first candidate isn't
actually doing very well in the Democratic polls. We've seen Joe Biden launch his campaign.
He is basically running, although he is well known for his middle class bona fide as the anti-Trump candidate, and the revival of Barack Obama,
because Democrats still like Barack Obama. He has actually not stressed the economic argument in his successful launch so far, at least, for his
2020 campaign. And I think that reflects the complicated approach now that this good Trump economy is giving the Democrats.
QUEST: Stephen, thank you. I've got Rana with me. You are listening at least to part of the conversation there. And it's true. I mean, the
economy is -- I know, you can always find some small number. I'm not --
FOROOHAR: That's how my brain works, what can I say?
QUEST: And I am not decrying income inequality, which is rising, and those sort of issues. But Donald Trump is stewarding an economy in excellent
shape.
FOROOHAR: Well, he is but he is coming at the very end of a long recovery cycle. And I think a lot of this is down to the markets. When we were
speaking earlier about the Fed appointments, and one thing we didn't get to about Stephen Moore, he wanted Stephen Moore, in part because he was going
to keep interest rates low for longer.
I mean, Stephen Moore is the kind of guy that probably would have done another round of QE if he thought it would raise the markets. Everything
depends on the markets. Are we going to see a big correction by 2020? And that I think could really hurt him.
QUEST: Rana, thank you.
FOROOHAR: Thank you.
QUEST: Talking about the markets -- very strange sort of day. You saw there the number there. The market opened, well, it was down just a tad,
and then it went up. And then it turned turtle. But I mean, it really did it by 11:30. It was down over nearly 200 points. The major indices -- all
three are off with the NASDAQ, the S&P and the Dow, and perhaps we shouldn't be too worried.
I mean, they are coming off all-time highs. And that decision, of course of the Fed to hold rates steady seems to be a bit confused over exactly
what it is the Fed was saying.
Next data point is tomorrow, it's the U.S. job reports. Ben Phillips is the Chief Investment Officer of EventShares. He joins me now from Los
Angeles. Why did the markets move as they did today? Because that was a strange fall at 11:30?
BEN PHILLIPS, CHIEF INVESTMENT OFFICER, EVENTSHARES: I think there's a little digestion of the Fed. I mean, the Fed has been the biggest driver
of the markets probably a year-to-date, as they've really reversed course, right? So I think it's just digesting what the Fed actually said, the
change in tone there.
But I think the big picture for us, if you're looking at the full year, the liquidity spigot is still on, there's still a lot of cash chasing the same
assets, U.S. stocks for the most part. And we think that's probably good for U.S. stocks, kind of for the remainder of the year.
QUEST: All right, this is fascinating. We go into the year with everybody telling us that it's not going to be a good year for stocks or it is going
to be a middling year for stocks. We have this tremendous run up. We're clearly having some sort of pause. Not a rethink, but a pause.
But I hear everybody warning that it's what comes next into a potential recession in 2020. I can't see that at the moment. Can you?
PHILLIPS: No, and it's really hard predicting out even beyond six months. I mean, 12 months is about the farthest that we feel comfortable
predicting. But yes, we don't see any real dramatic slowdown coming. I mean, what we're actually seeing is acceleration and if the Fed keeps
liquidity on, that's going to be more you know -- more of that money chasing other investments, too.
The one area of caution is CEO confidence and CFO confidence is still a little muted and has been soft since Q4, so they got shell shocked. We
were all expecting maybe we were entering a recession.
[15:15:10] PHILLIPS: But you look at the data. Wage inflation is picking up, economic growth just surprised, right? The upside. It looks like the
growth story is still good. Earnings look like they're going to be okay this year on an earnings growth front. So all in all, I mean, we're I
think we're looking pretty good as far as the U.S. is concerned, and I can't see 2020 outside of an exogenous, you know, catalyst as geopolitical.
QUEST: Ben, the number of articles in recent weeks that I have read, saying, wait until the market gets back up again then get out because there
is either a fall or at least there's something -- there's something nasty in the woods just over the hill.
PHILLIPS: Yes, there's always something nasty just over the hill. I mean, it's when is it and how much longer we would be climbing this mountain? So
I think we're saying the market could go up another 25 percent to 30 percent from here. I mean, that's kind of the upside scenario.
So how are we going to say sit that one out to investors? And you know, this is -- we've changed. We were a little more cautious, like you
mentioned in the beginning of the year, and we turned more constructive on the Fed reversal and on China talks being more constructive. So I mean, it
looks like things are setting up for markets to go higher and I'm not going to sit that one out.
QUEST: Ben, next time you're in New York, please, there's a seat for you here, so do come and join us, as always, thank you.
PHILLIPS: Absolutely. Thanks.
QUEST: Now Tesla is starting a fundraising drive after a brutal quarter. Elon Musk says he'll raise $2 billion to combat cash, and he is going to
put his own money into it as well. So we're going to talk about it with a guest who says he is still optimistic on Tesla.
(COMMERCIAL BREAK)
QUEST: Strong day for Tesla shares, up 4 percent on Wall Street. Cash has been dwindling as the company is burning through money with investment
infrastructure and losses of course and it says it will now raise $2 billion to strengthen the balance sheet.
Now, a year ago, if you look at the thermometer, Elon Musk said he would never need to raise cash again. Since then, a lot has gone wrong. There
was a falling share price that forced the company to make a massive bond payment with cash rather than stock.
Then Tesla lost another $700 million after the quarter after it failed to keep up with deliveries. Now, it is planning to sell off $650 million
worth of stock and $1.3 billion in convertible debt. Musk says he will even put in $10 million just get the shares to help things get the shares
to help things get started.
[15:20:11] QUEST: Gene Munster is still optimistic about Tesla in the long term despite its recent troubles. He is the founding partner of Loup
Ventures and he joins me now from Minneapolis. Good to see you, Gene.
Look, the issue is why Tesla needs this money. It's not unusual for new ventures to require more capital. But this is a car company building an
extremely expensive product with large facilities and plants.
GENE MUNSTER, MANAGING PARTNER, LOUP VENTURES: Exactly right, Richard. And I think one of the distinctions here that's important is even though
Tesla is a public company, it operates more like a private company and what is involved with something in the venture industry known as blitzscaling.
So if I may humor your viewers for a second here, what that means is the company is trying a lot of different things to really reach optimal output
so that can come on the manufacturing side, it can come on how they're going to market, whether it's retail stores, or direct to consumer, what
countries to roll out to -- all of this is work in process.
And what you should really take away from blitzscaling is that there's a lot of risk that's associated with that. And so that is why the company
needs more money, as some things, as you mentioned, in the setup, have not gone as Tesla's way over the last three months.
QUEST: That's fascinating when you're talking about a company that makes widgets or vacuum cleaners, or even just an app company or a technology
company, but this company is making vehicles, and they are large and expensive. And they have a risk element to them or a safety element to
them. Do you really want your companies building motor vehicles running out of cash like this?
MUNSTER: Well, I want to be clear, Tesla is not going to run out of cash. With this race, we can go through the mechanic of it, but this should
really set them up for the next few years. That's first of all, to answer your question is, is it general rule? No, you do not want your companies
that you're riding around in their vehicles to run out of money. But I do not think Tesla is at risk despite this bull and bear case, which will
continue to rage on I'm sure.
QUEST: Right. So we're taking that point. What's interesting is that normally, issues like this, I mean, I'm not sure whether it's going to be a
placement or a rights issue. You might know more about that. But obviously, you know more about that than me.
But normally when you have a dilutive issue, then the stock falls. Here, it's gone up, which I think tells us volumes about what the market thinks
of the move.
MUNSTER: Exactly this does, at the end of the day de-risk the story. I think this was also in terms of what the market thinks about it. I think
that's the simplest takeaway is de-risk rest of the story.
Keep in mind, too, as the stock has gone down, it has traded down in anticipation of this news, too. So it's a bit at the end of the day, it
does de-risk the story.
QUEST: Gene, we will need your help in the months ahead to try and understand what's happening at Tesla. And so thank you and kind of you to
join me.
MUNSTER: Thank you.
QUEST: Let me invite you to join, we're going into a new enterprise. We were talking about business and risks with Gene Munster. Well, we are now
going into a new enterprise 24 hours a day. It's the QUEST MEANS BUSINESS burger joint. Don't worry, there's plenty of food, but just no wheat.
Investors are hungry for a stake in the meatless meat industry.
And the plant-based protein company, Beyond Meat made its debut on the NASDAQ today. The shares -- look at the numbers. The shares are up over
150%. That's extraordinary. $39.00. it clearly shows they mispriced or for whatever weird reason, they priced that under, but you see 157 percent.
It's backed by celebrities like Bill Gates and Leonardo DiCaprio.
Now, let me show you what we are talking about here. This is the Beyond -- forgive my fingers. But then this is what it looks like. So it looks
pretty much like -- well, it looks like a burger. And its main competitor that you will want to know about is of course Impossible Foods. We had
them on the program. We made one on this very desk.
Now which one of these do you prefer? They are straightforward, simple question. I'm offering them to you, which would you prefer? Julia
Chatterley spoke to the Beyond Meats CEO Ethan Brown and asked him what's next for the company now that it is public.
(BEGIN VIDEOTAPE)
ETHAN BROWN, CEO, BEYOND MEATS: Our long term plan is to be a global protein company and I felt that this was an important step toward that
ambition.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: I mean, you're growing like crazy. It's a mind boggling level of sales growth that you're seeing
whether that's new deals. What do you put that money towards that this stage? What's going to be the focus?
BROWN: Sure, so we're going to put it toward the activities that got us here. And you know, first and foremost, our company is an innovation
engine. And that's what I focus on the most. It's that process of invention, innovation and commercialization and we have ambitions to be
this global protein company and so to be producing in Europe, to be producing in Asia, those are things that we're going to be pursuing in the
next several years.
[15:25:19] CHATTERLEY: Who is a typical Beyond Meats customer or someone looks at this product? Is it meat eaters? Or is it someone who is a vegan
or a vegetarian, perhaps, that are looking for alternatives and great tasting, great textured alternatives?
BROWN: Not just vegans and vegetarians that are interested in this, in fact, 93 percent of the people that are putting a Beyond Burger in their
cart at the nation's largest grocer are also putting animal protein in their cart. So let's picture a mom or dad shopping Saturday, Sunday going
to the supermarket saying like, "What am I going to get for my family for the week?" Well, they may be putting salmon in, they maybe putting poultry
in, but they're also now putting Beyond in, and to us, that's a tremendous sign that we're able to grow the business and able to bring more and more
consumers into healthy plant based eating.
(END VIDEOTAPE)
QUEST: What does this thing actually tastes like? If you ever want to give away free food, you can't do anything better with one of my
colleagues. All right, it gets the crew's seal of approval. We're back after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. We were talking about corporate sponsors pulling out at an
event honoring Brazil's President. The one who left standing are under pressure. Why and what and how?
And $6.5 million to get into Stanford. New revelations and the college admissions scandal in the United States. This is CNN. And on this network
the facts always come first.
The empty chair said it all. The U.S. Attorney General William Barr refused to testify in the House today about the Mueller report.
[15:30:10]
(COMMERCIAL BREAK)
[15:30:00] RICHARD QUEST, HOST, QUEST MEANS BUSINESS: The empty chair said it all. U.S. Attorney General William Barr refused to testify in the
House today about the Mueller report. He objected to the format which would have required him to answer questions from staff attorneys on the
committee.
Barr defended his handling of the Mueller report yesterday before a Senate committee. Tropical cyclone Fani is picking up strength as it heads for
India's heavily populated eastern coast. Current winds are blowing at 250 kilometers an hour. When it makes landfall on Friday, Fani could be the
strongest tropical cyclone to hit India in two decades.
Police in London say they are not investigating a national security leak that cost the Defense Secretary his job. Gavin Williamson was fired by
Theresa May after revelations about Huawei's role in building Britain's 5G mobile network were released. Williamson denies being behind the leak.
Facebook has banned several high profile individuals that it deems to be dangerous. Among them are the nation of Islam leader Louis Farrakhan, the
right-wing media personality Milo Yiannopoulos and Alex Jones of "InfoWars". Facebook says the exclusions follow an extensive vetting
process.
The Venezuelan President Nicolas Maduro showed off his support among the military on Thursday, appearing with a large number of cheering troops.
Earlier this week, the opposition leader Juan Guaido called for the backing of the military. So far, few are seen to have gone across.
CNN's Paula Newton is in Caracas. The long and short of it, Paula, we've discussed this many times, but the long and short of it is, as long as
those generals and that senior brass are with him, he stays in power.
PAULA NEWTON, CNN CORRESPONDENT: Absolutely he does. And that was an extraordinary piece of video, Richard. I haven't seen anything like it in
this country before. And it is the comeback, it is the comeback -- it's a little bit more than two days ago when the opposition leader Juan Guaido
claimed that he had turned significant members of the military.
That just didn't happen. Richard, today, we haven't even seen Juan Guaido. Things on the streets of Caracas are fairly quiet, the opposition leader
continues to say that look, there will be national strikes, we will continue to hit the streets. But at the same time, you saw President
Maduro there, his comeback is that video and saying the military is solidly behind me.
I have to point out that even Juan Guaido's really mentor in all this, Leopoldo Lopez, there's now an arrest warrant out for him, he has taken
refuge in the Spanish ambassador's residence. It is not looking like a point of strength here for the opposition.
And Richard, you know this better than I, in terms of where this comes down, in terms of how long the Maduro government can last, in terms of its
debt, its debt obligations to countries like Russia and China, it is meeting those. The price of oil remains high despite the U.S. basically
imposing an oil embargo --
QUEST: Right --
NEWTON: They continue to try and get as much oil as they can -- as they can pump out to certain countries, and that is also helping them.
QUEST: Paula in Caracas, thank you. Six million dollars it costs for a place in one of the United States' most prestigious college. Sources
telling CNN, that's how much the family of one student paid to help get their daughter into Stanford University.
The money allegedly went to Rick Singer, he is believed to be the ringleader behind the U.S. college admissions scandal. No charges have
been filed against the parents or the student in this particular case. Brynn Gingras joins us now from New York. This is an interesting case,
isn't it? It's so extraordinary.
But why is this one different from those that we've heard where there are already guilty pleas?
BRYNN GINGRAS, CNN CORRESPONDENT: Yes, for several reasons. One, they haven't been charged, the parents of this student. But it's so significant
because of the amount of money, $6.5 million is the most amount of money that U.S. prosecutors in Boston say any parent or any family paid to Rick
Singer.
Now, again, it's unclear from investigators and from our source at this point if that money, if they gained any sort of advantage by giving that
money to Rick Singer. However, we do know the child of this family did go to Stanford. And Stanford really distanced themselves in the savings,
saying "it's important to clarify that Stanford did not receive $6.5 million from Singer or from a student's family working with Singer."
But also important to note with this family is that we've learned from a source that they were connected to Singer by a financial adviser who
formerly worked for Morgan Stanley and his name is Michael Wu. He's since been terminated from his job according to Morgan Stanley because he
didn't need to cooperate in that company's --
QUEST: Right --
GINGRAS: Own internal investigation into this college scam. But it certainly shows you, Richard, the global effect that this scam has had, not
only the amount of money, but also the fact that it's reaching all the way to China.
[15:35:00] QUEST: I'm fascinated by who the parents are, who the family is.
GINGRAS: Yes --
QUEST: Because six -- I mean, the other people in the hundreds of thousands which is a --
GINGRAS: Right --
QUEST: Dollars, which is a large sum of money, very large sum of money. But $6.5 million, to have that much disposable income, cash, whatever you
like, that's really quite a different kettle of fish.
GINGRAS: Well, exactly. And you bring up a good point, and that's a question I actually posed to Michael Wu's attorney who I spoke with today.
And he said, there's a reason that's so significant. From his point of view -- and again, Wu hasn't been charged either in this case.
So he has a defense attorney, but hasn't been charged. But his attorney basically says the $6.5 million was a donation they thought going to some
sort of programs that Singer posted them. Now, this is something we've heard a couple of times when it comes to conversations with the defense
attorney that Singer was this huge mastermind, he was a fraudster.
He told parents what they wanted to hear. So according to this attorney, again, who was representing Wu, not the family, that they were under the
assumption that this money was going to a bigger picture here, this isn't just a payment to Singer to help get the kid into school.
And again, even that's being investigated. So, it is a little bit different, but we'll see how different it is as this investigation
continues.
QUEST: Good to see you, thank you. Keep watching. Brazil's President Bolsonaro is headed to New York. Public protests are mounting, sponsors
are leaving an event that is being held. The president of GLAAD tells me why she thinks more companies need to do the same. In a moment.
(COMMERCIAL BREAK)
QUEST: The Brazilian President Jair Bolsonaro's controversial and homophobic views are causing huge problems for an event that's honoring the
president of Brazil in New York. Now, the president is meant to receive the person of the year award from the Brazilian-American Chamber of
Commerce.
And by all accounts, he's still going to receive it. The only question is where and how? Because the event is loaded with corporate sponsors and
attendees. So far three of them have withdrawn. So, for example, Bain and Company, the management consultants says it is committed to LGBTQ, the
community, and they have withdrawn.
[15:40:00] The "Financial Times" has also withdrawn, as indeed has Delta. And now there's intense pressure on all the other sponsors from HSBC, UBS,
well, you can read them on this. To either withdraw, to make some sort of motion against. The event itself was originally meant to be at the
American Museum of Natural History. Now, that museum pulled out after an outcry.
It's now being held at the new venue, which is the Marriott Marquis. But pressure is being brought to bear on the Marriott Marquis to also withdraw.
The LGBTQ advocacy group, GLAAD, G-L-A-A-D has been one of the events most vocal critics. It has slammed Bolsonaro's anti-gay rhetoric and is urging
companies to abandon their sponsorship.
Joining me is Sarah Kate Ellis, GLAAD's president and CEO. Good to see you as always, Kate --
SARAH KATE ELLIS, PRESIDENT & CHIEF EXECUTIVE OFFICER, GLAAD: Thank you for having me.
QUEST: And it is -- well, eventually that I have actually moderated in the interest of transparency, various events for you at World Economic Forum
and the like. So, Kate, what is the issue here?
ELLIS: I think the issue that we're dealing with is that in New York, he is going to receive person of the year, and his rhetoric is absolutely
dangerous and causing distress and a dangerous environment back home in Brazil. And we speak to LGBTQ activists all the time in Brazil about
what's going on in the country.
QUEST: What he said --
ELLIS: He --
QUEST: I mean, to viewers who are coming to this and saying, oh, come on, load of all nonsense, load of nonsense, get over it, he's getting an award.
ELLIS: He has said multiple times, first of all, you can go to glaad.org, g-l-a-a-d.org and we have a list and a timeline of everything that he said.
One thing that he said outright and often is that he would rather his son be dead than be gay. And he has said that he encouraged father of an 8-
year-old gay son to beat him.
He's used violence against gay people and LGBTQ community.
QUEST: Probably said -- I mean, there's a whole dose of sexist --
ELLIS: There's that, too, yes.
QUEST: If you can -- but what do you want these companies to do? I mean, "Financial Times" and Delta have pulled out. Delta haven't said why, Bain
hasn't said why? We showed the list of sponsors. What do you want them to do?
ELLIS: Here is the deal. We're living in new and uncertain times, and we lack moral leadership coming from the largest country in the world. We
need the largest companies in the world to stand up and step up for moral leadership. This is human rights issues.
And there are crisis that are breaking out all around the world. If you look at Brunei, if you look at Chechnya, this is how you lay the ground
work for these large undertaking of anti-LGBTQ abuses.
QUEST: But it doesn't happen. George Clooney on Brunei spoke out and a few other people spoke out that they weren't going to go to the Dorchester
or the Beverly Hills. I'm not saying you have to look the other way and just go ahead in regardless because you can't make a difference, but you
can't -- but it's difficult.
ELLIS: Well, we're talking about a sultan there --
QUEST: Yes --
ELLIS: And very different than a president. And so I think the sultan, though, there's still added pressure there, there was pressure last week, a
company said to its employees, it wasn't allowed to stay at any of the Dorchester properties. So it's continuing that pressure.
And I think that we've seen here in the United States especially that when companies step up, whether it'd be in Atlanta or North Carolina, they can -
- they can create change.
QUEST: But what do you then do once -- so you've got your president that you -- or President Bolsonaro. But do you then go as far as start asking
the LGBTQ community to boycott going to Brazil? Do you start boycotting Brazilian products?
ELLIS: Well, the president last week said that he doesn't want LGBTQ tourists himself. So I think also it's what's really important, Richard,
is that the people, the LGBTQ people living in Brazil hear from us, know that we're standing up for them, that when they have a hostile president,
we're going to step up and speak up for them when they're rendered voiceless. And that is at the heart of this.
QUEST: Isn't the action, the hard-nosed action has to be against UBS, HSBC, that entire list of people, Marriott Marquis, they're the ones you
have to go after, isn't it? Because you're not going to get any change out of Bolsonaro. I promise you this, if nothing else, he ain't going to
change his views.
ELLIS: Well, I think that what you want to do is set up the stage for that there could be economic ramifications for being -- you know, creating human
rights issues and crisis in your country. We know there's a direct correlation between human rights crisis and economic crisis in a country.
And so that's where they're headed or he's headed. And it's really important for the people of Brazil that we're standing up and speaking up
for them.
[15:45:00] QUEST: Finally, I was looking at some numbers on hate crimes - -
ELLIS: Yes --
QUEST: Some statistics of New York was brought out today about hate crimes, which shows general crime is down, but hate crimes are up.
ELLIS: We live in a world right now where it is OK to say that you hate somebody and to target marginalized people. And so we need to stand up for
that and we need the powers of corporate America and global powers to stand up against that, and we're not getting it from the White House here in
America.
QUEST: Good to see you, thank you.
ELLIS: Thank you.
QUEST: Thank you. As we continue tonight after the break, a dark day for democracy. That's how some Democrats are describing what happened on
Capitol Hill or rather what didn't happen. David Gergen is with us to talk about the Barr debacle. Now, Gergen is exactly the sort of man you want to
hear from today.
(COMMERCIAL BREAK)
QUEST: You're looking at an empty chair in Washington D.C., that's where the Attorney General William Barr was supposed to be. He chose not to turn
up at the House hearing because he objected to the format of today's questioning about the Mueller report.
The house before the Judiciary Committee, he didn't show up. The empty chair represented him instead. He's left house Democrats calling it a dark
day for American democracy. Barr also defied a legal order to give Congress the full unredacted Mueller report by Wednesday.
And he defended President Trump's conduct during Wednesday's hearing. The former FBI Director James Comey has written a blistering op-ed in today's
"New York Times" about Barr's relationship with the president. And he says -- he argues that "accomplished people liking inner strength can't resist
the compromises necessary to survive this president."
According to Comey, Rod Rosenstein, Bill Barr failed that test, one that Jim Mattis passed. In the "New York Times", Comey wrote, "it takes
character like Mr. Mattis to avoid the damage because Mr. Trump eats your soul in small bites."
David Gergen is with me. And you, David, you've advised presidents from Nixon, Ford, Reagan and Clinton and you helped found the center for the
public leadership at Harvard. You've been in that Oval Office enough times to see presidents in action.
I mean, the way -- well, first of all, were you surprised of what Comey wrote? Think about it. A former FBI director writing this about a sitting
president.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: And there's -- I -- everything about this has been unprecedented. We're in uncharted waters.
[15:50:00] Was I surprised by the Comey piece? Not really. Was I taken by the Comey piece? Yes. That phrase, "Mr. Trump eats your soul in small
bites". That is going to resonate for a long time, and that having worked in White Houses, I understand that process.
You can get corrupted by the president because you want the president to succeed, you try to be loyal. And if they take a stance, you try to
support it sometime irrationally, and eventually you can get drawn in and be complicit in helping that president.
That's what happened to some of the people around me in the Nixon days, especially the young who didn't know better and they wound up going to jail
with their careers ruined. And is that, that I think we are -- I don't know whether to call things a crisis anymore, Richard.
It's -- they're -- it's an overused word. But I haven't seen the U.S. government in a place where a leader of the -- the Speaker of the House of
Representatives, in this case, Nancy Pelosi, called the Attorney General of the United States a liar and a criminal. That is also way beyond our
normal experience.
QUEST: When I read Comey, he describes the process by which this happens. He says it starts off with people hearing things in the meetings and not --
GERGEN: Yes --
QUEST: Speaking out against them. Then they have to implement the policies that they didn't speak out against. And before long, they are,
small C, conspirators within that. So they are now defending something that was indefensible. And he describes this process. Do you recognize
that process?
GERGEN: Absolutely, I recognize that process. I shudder at it because it's so insidious and some ways evil. But it is -- it's the nightmare of
anybody who works in the White House that you might go down in that direction. Then that's why, you know, some years ago, one of our most
distinguished historians David McCullough wrote, that the single most important asset of a president is character.
And when your president lacks character, it sets a tone for the entire government, certainly for the White House, but also for the cabinet. And I
think a man like Bill Barr, listen, he can defend himself. He's responsible for his own actions. But he got sucked into this vortex and
he's now is a very -- his reputation in many important impartial circles has been badly damaged.
Because he took an office under the pretense of being independent, and now he looks like the president's man who is spinning this, the story of the
Mueller probe in a way that's entirely favorable to the president and not respectful of the facts.
QUEST: There's not too many people who have touched this White House, who have come out unscathed. I mean, if you just think of Rex --
GERGEN: Yes, I agree --
QUEST: Tillerson. If you think of Rex Tillerson, he arrives, he's from a very good job, he then gets booted out several days or several months
later. Think of Reince Priebus, arrives, great reputation of the RNC, gets kicked out later. Even Mattis arrives and leaves suddenly. Nobody it
seems -- you either leave under a cloud or in handcuffs.
GERGEN: Well, there's a lot of piece -- I thought that in fairness that Secretary Mattis at the Defense Department left on principle.
QUEST: Right.
GERGEN: He left and then they tried to gut him afterwards. But it was -- I think he still stands up as somebody that bothers -- look to as a
responsible player who tried to do right by the country. You know, General Kelly who was the Chief of Staff is a different case.
You know, he is a man who has been a patriot all his life, but suddenly he got put into this maelstrom. He did get -- you know, it slopped up on him,
too. And you're right, the overall -- the overall narrative is if you work for this president and the White House, eventually you're going to emerge
with your reputation diminished.
QUEST: David, we had the economic numbers out today which showed 56 percent of Americans think that the president is doing a good job on the
economy. And to be fair, the economy is doing extremely well. Now, I realize you're more on the political side. But give me -- put your
political economic hat on, if you'd be as kind. In that sense --
GERGEN: Sure.
QUEST: If the economics on their own, that heads towards a re-election.
GERGEN: Yes, on a -- just in isolation, the performance of the economy, 3 percent growth, you know, maybe a percentage point higher than mainstream
economists would have predicted at this point, is a substantial positive in his direction.
You can argue he didn't cause it. Presidents don't usually have that much influence on the economy, but they live and die by the economy. And so if
you look at it in isolation, he would be re-elected. But the notable thing, Richard, is with 56 percent approval and a 3 percent growth rate on
the economic side, he's still down in his overall approval rating, maybe 20 points below that, almost 20 points below that.
[15:55:00] He's still down against the democratic potential nominee Joe Biden, first polls, Trump was down by 8 points. So the rest of his
presidency, the tone, the moral tone, the lack of the moral tone and whatever you want to say about it is I think really causing him -- so --
QUEST: Right --
GERGEN: It's weighing more heavily than the economy itself.
QUEST: David, thank you. Nice to talk at some length about this --
GERGEN: Thank you, Richard --
QUEST: We'll talk -- we will talk more about this as this develops into the election. We've still got to discuss at some point the Democrats and
how many more -- we're up to 21, I believe so far and counting. Good to see you David, thank you very much.
The last few minutes of trade from Wall Street and the market has at least stabilized, I would say. The Nasdaq is down just 15 points, a quarter of a
percent or fifth of a percent quarter for the S&P. The Dow is off half a percent. So the big board is losing the most.
I mean, you and I can make an argument for saying what's 145 points? What's half a percent after this phenomenal rally that's taken markets to all-time
highs. And I think that is a valid reason. If you look at the Dow 30, Dow DuPont is leading the way down after disappointing earnings. And it has
been disappointing earnings that have been pushing the markets. We'll take it in its stride and we'll have a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, it seems the Fed is Donald Trump's Achilles heel. He's had two nominations -- well, potential nominations for
Herman Cain and now Stephen Moore. He's having quite a lot of difficulty at the Fed, and he keeps bashing the Fed non-stop. He keeps reminding the
Fed that they should be lowering interest rates when yesterday they decided to leave them on their own.
He attacked Janet Yellen mercilessly and he does the same for Jay Powell, saying that he wish he never appointed him as Fed chairman. All over an
organization that is supposed to be independent. It is fascinating to what's happening with the Fed. Because if you draw a line with what James
Comey said today about Donald Trump, "he eats away your soul one bite at a time."
He's had more difficulty eating away at the Fed than it seems anywhere else. He cannot get his nominees passed because he's not choosing
qualified people and is being told that in no uncertain term, "one bite at a time." And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest
in New York.
Whatever you're up to in the hours ahead, I hope it is profitable. The Dow is down.
(BELL RINGING)
The bell is ringing, the day is done.
END
END
