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Quest Means Business
The White House Is Launching A Fresh Offensive Against Iran's Economy; Donald Trump's Trade Threats Sparked Frenzied Selling Earlier This Week; Uber Gears Stop For Its Wall Street Debut. Aired: 3-4p ET
Aired May 08, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:00] RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: We are an hour away from the closing bell on Wall Street. What the
difference a day makes. Look at this, we opened up lower. Well, think about the last two days, and perhaps that's not surprising. We had a very
sharp bump. I'll explain that later in the program. And the market continues to rally. We're just about at the best of the day so far, give
or take and it's not just the narrow markets, the Dow that's up, the S&P is up similarly, and the NASDAQ not quite as much, but there are good gains
and those are the markets.
And these are the reasons why. Coming to make a deal. President Trump gets investors' hopes up as trade talks are set to begin tomorrow. Picking
sides. The United States and Iran trade accusations. I've got some developments on that in just a second. And dissatisfaction ahead. Uber
drivers are on strike two days before the company's IPO.
Live from the world's financial capital, New York City, glorious, spectacular day today. On Wednesday, it is the 8th of May. I'm Richard
Quest, I mean business.
Now, we begin with news just in to CNN. The White House is launching a fresh offensive against Iran's economy. It is unveiling new economic
sanctions, which targets Iran's metal exports. President Trump issued the executive order in the last hour. The sanctions relate to Iran's iron,
steel, aluminum and copper sectors.
In a statement issued a few moments ago, the U.S. President said, "Today's action puts other nations on notice that allowing Iranian steel into your
ports will no longer be tolerated." The new sanctions come hours after the Iranian President Rouhani announced his country will no longer comply with
key parts of the Iran nuclear deal, if -- if Europe doesn't play its role, too.
The agreement is designed to keep nuclear weapons out of Iranian hands. U.S. backed out of that deal a year ago, claiming Iran was violating the
commitments.
Tehran now says it will resume stockpiling components, which could be used to build nuclear weapons.
(BEGIN VIDEO CLIP)
HASSAN ROUHANI, PRESIDENT OF IRAN (through translator): The JCPOA was a win-win agreement. We will not allow the United States of America to turn
this win-win agreement into a win-lose agreement for us. And the world m must know the JCPOA will never turn into a win-lose agreement as the U.S.
wishes.
(END VIDEO CLIP)
QUEST: John Defterios is with me from London. John, we just got the news of these latest sanctions as they relate to iron and metals. What do we
understand it means? I mean, the goal here is clearly to stop Iranian exports of metals. But who is buying anyway?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, Richard, I think this is a case -- and I'll use the analogy the U.S. taking out a
wrench and then tightening the screws on the Iranian economy. We think of Iran as a major oil and gas player, particularly when it comes to gas
sitting on 18 percent of the proven reserves around the world. But it's a major industrial power in the Middle East when it comes to car
manufacturing and steel manufacturing. So the industrial metals will undermine the Iranian economy.
It ranks number 15 in the world when it comes to car manufacturing and went into the top 10 in 2018 when it comes to steel and because of the 2015
agreement, Richards, those sectors are growing at 15 percent a year over the last couple of years.
So the Iranians will try to put on a brave face. But the wrath of the U.S. sanctions are tough and they say there's more to come. So they went after
the banks. They went after the oil exports. And now they're going after the industrial metals where they are a pretty major player.
QUEST: But the sanctions hit those who buy, correct? It is the same as the oil sanctions in a sense. The idea is you punish those who are buying
Iranian goods or services or oil in this case.
DEFTERIOS: That is the case, Richard and you make a very good point because China is a major manufacturer of steel. And so is Japan and South
Korea, they are major clients of Iranian oil. So this is going to be a different challenge for the Iranians.
But I don't think we can overlook the pain that's hitting the Iranian economy at this stage. For example, the International Monetary Fund just a
week ago, put out its forecast for 2019 of a contraction, a contraction of negative 6 percent after going down 4 percent in 2018. But this is before
the waivers were lifted by the United States on oil exports.
[15:05:10] QUEST: Yes.
DEFTERIOS: So if you bring up this bar chart here, the exports, Richard are hovering around a million barrels a day; with the JCPOA into effect
back in 2016, Iran was exporting three million barrels a day. So this could cost the Iranians just on oil alone, Richard, $50 million and
strategically going after one sector after another each single time. The U.S. is playing a pretty nasty game. Let's put it frankly.
QUEST: All right, but on the question of what Rouhani said today. Now, as I understand it, he is threatening to take away to remove commitments that
they gave if the Europeans don't do certain things in return.
But it strikes me that if he goes down this road and the Europeans have already said they're not going to, the JCPOA is pretty much dead.
DEFTERIOS: I think that is the fact. We know who does support the Iranians in this case. China is likely to continue importing oil. Russia
said it was regrettable that the U.S. decided to go down this path. But will the Europeans get off the fence? They had the special purpose vehicle
to try to help the Iranians. It's had no influence whatsoever.
So this is a cat and mouse game by Tehran at this stage, Richard, putting the pressure on the Europeans to say, "Look, you keep on telling us you
support us. You say we haven't violated the 2015 agreement. When are you going to step up and challenge the United States?" There's a bully on the
block. It is the United States right now. They went after, as I suggested, oil and gas. They went after the banking sector and the U.S.
dollar, their inability now to trade in it at the industrial sector.
And Richard, I think we have to kind of look down the road here. What is the U.S. trying to do here? They're going into Iraq, as well. Mike Pompeo
made that big detour and they have a $53 billion oil deal sitting on the table here with Exxon Mobil and Petro China offering to Iraq to try and
serve as a wedge between Iran and Iraq right now. Again, a nasty game by Washington.
QUEST: When there's more to report on this, please come back to us immediately, John Defterios.
The case of the tariff man taketh and then he giveth again. Well, it appeared that Donald Trump's trade threats sparked frenzied selling earlier
this week and now, we're up. Difference a couple of days makes.
Think about yesterday and Monday. And now look at today, but look at the beginning of the day. Now, that first strong bit of green -- that is Sarah
Sanders saying that the Chinese are coming and they hope to do a deal. It's sort of evaporates, but it comes back later in the day and it seems to
be holding.
The markets were set to open lower after Donald Trump delivered an early morning tariff twist. In a series of tweets, the U.S. President claimed
China was stalling on the trade talks to get a better deal with a new Democratic President in 2020. The he said, quote, "Guess what? That's not
going to happen. China has just informed us they (the Vice Premier) are now coming to U.S. to make a deal."
Later China upped the rhetoric, warning that if the U.S. does follow through with tariffs on Friday, it will respond tit-for-tat. Joining me
now from London is Myron Brilliant. He the Executive Vice President and head of the International Affairs of the U.S. Chamber of Commerce. Good to
see you. I assume you're doing good duties in the course of your business in London tonight, but what's your understanding of the current situation
with the talks and Beijing?
MYRON BRILLIANT, EXECUTIVE VICE PRESIDENT AND HEAD OF THE INTERNATIONAL AFFAIRS OF THE U.S. CHAMBER OF COMMERCE: Well, Richard, it's good to be on
the show again. Let me just say it may be sunny in New York, it's cloudy in Washington and Beijing. Ten days ago, you would have forecasted that
this was a week where likely the two sides would have agreed to a framework understanding and agreement that would have paved the way potentially for a
Summit sometime in the next few weeks.
That's more difficult. Now there's a high stakes game of poker being played. I would not expect the President of United of the States to blink
here. I think the reality is certainly there's been some backsliding on the part of China. That's very concerning. I think it's in the interest
of both countries. They have a high standard, high comprehensive agreement between the two countries that addresses a range of issues.
QUEST: But Myron --
BRILLIANT: This is going to be a very timely visit. I'm glad the visit is still on. There was debate in Beijing about having the visit, but we're
going to see what comes out of it. What does Liu He in effect bring to Washington? What are the concessions? What are the areas that he brings
to Washington?
QUEST: Myron, what is it the U.S. Chamber wants? Because, you know everybody wants a deal. Everybody says that there needs to be a more level
playing field, et cetera, et cetera, et cetera. But are you in favor of ramping up the pressure with more tariffs if that gets the deal done?
BRILLIANT: What we need is greater intellectual property protection. We need to address the forced technology transfer issues.
[15:10:10] BRILLIANT: We need to make sure there's market access for U.S. companies. There's a range of areas that we have addressed with both
governments. And we hope that the progress is being made there.
In terms of ratcheting up pressure. Look, we don't want to see an escalation of tariffs on either side because that doesn't help our economy.
It doesn't help China's economy and it will hurt the world economy. But at the end of the day, if China is in fact, backsliding, which it appears to
be doing, then it is important that the United States stands up and address these issues and make sure that we get the best deal possible.
QUEST: Right. But to paraphrase, Prime Minister Theresa May on Brexit, is no deal better than a bad deal? And if so, how do you characterize a bad
deal?
BRILLIANT: Well, it's a different situation than Brexit and of course, I've been here on that topic this week. But what I would say to you is, we
need a deal. But we don't need any deal, we need a good deal that is, again, high standard, comprehensive. It's not going to be the end of all
disputes between China and the United States. But we need to put this relationship on a more positive trajectory and the markets are going to
remain nervous.
Investors are going to remain nervous. The business committee is going to remain nervous. And it's not in the interest of either country, to force
still the opportunities that present themselves by getting a deal on the table. But we're not there yet. There's certainly an impasse that has to
be resolved.
QUEST: Good to see you. Thank you. We'll talk Brexit at some point, I promise you. We'll talk -- we'll discuss Brexit. Thank you, sir, from
London tonight.
BRILLIANT: Thank you.
QUEST: Many of the foreign direct investment flows between the U.S. and China dropped massively last year, largely because Chinese investments in
the U.S. plummeted by more than 80 percent. Look at the numbers, it's rather dramatic.
On the other hand, American investments in China fell somewhat slightly. Joining me now is the President of the National Committee on U.S.-China
Relations, Stephen Orlins. Good to see you, sir.
STEPHEN A. ORLINS, PRESIDENT, NATIONAL COMMITTEE ON U.S.-CHINA RELATIONS: Good to be back.
QUEST: As always. Before we get into the nitty gritty, what is your understanding of the state of play of the negotiations? You're plugged
into this?
ORLINS: The trade negotiations? I've been puzzled why President Trump did this publicly? China 101 teaches you that if you want to make a deal, you
make your representations privately that when you back the Chinese publicly, put their backs to the wall, it decreases, it doesn't increase
the chances of a deal. So I'm worried that the Federal Register today talked about potentially imposing tariffs at 12:01 a.m. tomorrow night.
QUEST: Isn't it arguable that it is only the existing tariffs and the prospect of more that has brought the Chinese to the table, where decades
of complaints have failed to do do?
ORLINS: The Chinese I have a terrible habit of making promises and not implementing them and that the frustration that the Americans feel,
President Trump channel that into these tariffs and shakes it up.
QUEST: But that's a valid legitimate negotiating strategy against an opponent that doesn't keep their word.
ORLINS: A better negotiating strategy would be to do it privately.
QUEST: Why?
ORLINS: That over the years, that you know, the Chinese have expression, which is "Gei tamen yige xiatai," give them a way to step down, to make the
necessary compromises. Stand in the shoes of the Chinese. If you're a Chinese leader, and you've been threatened publicly with this, does it
increase or decrease the chances of you making the deal? And I think those who deal with China know what decreases mean and it doesn't increase it.
QUEST: There comes a point when there's a realpolitik and the Chinese would say, "Well, he's serious. He is going to raise tariffs, and that is
going to hurt our economy."
ORLINS: Absolutely. As Myron said, it's not in the interest of either country to raise tariffs. It's going to make business decisions even more
difficult. They are going to raise prices for American consumers. It is going to do a lot of bad things. So there is no question, but why this was
done publicly is a puzzle to me.
And if you kind of couple that with the statement by the head of policy planning at the State Department last week, which didn't receive much media
attention, where Xi said that we have -- it is the first time in American history, we have a strategic competition with a non-white civilization.
Wow. That was quite a statement and when you couple that with this, it gives me a great unease in where the U.S. government is going.
QUEST: There's also -- I hear what you said about backing them into a corner. But there's also an argument that the Chinese are fairly
sophisticated. They're not idiots in the sense that they're amongst the most wily negotiators in the world. And they will sit there and say,
"That's just Donald Trump." Bluster. He may put a few tariffs on, he may make a lot of noise. But we know ultimately, that's not good.
ORLINS: This is a very proud country. Despite it being authoritarian, you have a leader that needs support from all sorts of places in his
bureaucracy.
[15:15:10] ORLINS: And putting his back to the wall is probably not -- look, he's done it. So there's not much I can do about it.
QUEST: Right, but can I just advance one argument that would be -- I understand that. But the U.S. is also a proud country and the U.S. and
Donald Trump would say, "We have been beaten up and taken advantage of."
ORLINS: And now, it's a false narrative. That's a false narrative.
QUEST: And now it's time to draw a line.
ORLINS: That's the trouble is this false narrative has been perpetuated, that we look at this bilateral trade deficit, oh, come on. Bilateral trade
deficits don't tell you the story about whether a country is a protectionist. As I have said, it's -- use the current account surplus to
GDP. And what we've seen in China is it went from 10 to moving towards zero, it's now below 1 percent. And that really tells you, is China really
protectionist?
Should we be making these arguments? Yes. Should we be asking China to reform? Yes. But are they this mercantilist protectionist country that
the Trump administration is portraying them as? No.
QUEST: Me thinks that you are going to invited to the White House anytime soon.
ORLINS: You never know. They're very open to differing opinions. We didn't talk about investment, though.
QUEST: In what sense?
ORLINS: That Chinese investment has fallen off a cliff and it contracted last year, which I think is bad for the United States. And we have got a
broadening definition of national security, which is basically making it more difficult for Chinese investors to create jobs in the United States.
So that's another kind of trend which is fairly negative.
QUEST: You've mainly given me another reason to invite you back.
ORLINS: Happy to come back.
QUEST: To discuss that a bit more.
ORLINS: Always happy to.
QUEST: There are so many other interesting issues, but we will, I promise you. Lovely. Thank you. As always.
ORLINS: My pleasure.
QUEST: As we return, Uber gears stop for its Wall Street debut, it's drivers though are stepping from behind the wheel in protest, in a moment.
Polls have just closed In South Africa. It's an election widely seen as a major test for the ANC. We will -- Eleni is in Johannesburg after the
break.
(COMMERCIAL BREAK)
QUEST: Two days away, Friday is Uber's blockbuster IPO. Now, it's not the best thing that you'd really want drivers taking to the streets not to pick
up passengers. But to demand better working conditions. Uber and Lyft workers worldwide -- and Lyft it's important to note are staging worldwide
protests.
[15:20:11] QUEST: Obviously, bearing in mind, Lyft is I mean, is not outside the United States. But if you look where else, you're talking
about down in Brisbane, Sydney, Melbourne, San Paolo, Nottingham, London, right there across the United States. They want regulated fares, higher
pay and increased job security.
Now, this is at a time when Uber's IPO could raise roughly $10 billion for the company. And of course, in doing so, set arguably, the valuation for
up to $90 billion to $100 billion. Samuel Burke is in London. Just how bad are the pay scales for Uber drivers?
SAMUEL BURKE, CNN BUSINESS TECHNOLOGY CORRESPONDENT: Oh they are quite bad, and what's really interesting here is the fact that at the beginning of
Uber's life, it was really this gig economy that they were helped building which was seen as one of their pluses. Now, it's seen as one of their
biggest liabilities.
Let me just put up some of the numbers on the screen for you, Richard, because we've had some great empirical data come in, studies carried out by
places like Georgetown University, which show things like the following: 33 percent of Uber drivers take on debt as a result from working for Uber.
$9.21 is the average wage after expenses. You and I living in London in New York know that will get you nowhere, and 40 hours per week, that equals
$20,000.00 in annual salary after expenses. Richard, that's really just not a lot of money.
QUEST: Okay, does Uber know this. Uber know that these are the numbers. But there's still no shortage of people. I remember being down at the Uber
headquarters here in New York, and prospective drivers are lined up out on the street.
BURKE: A job is a job. And at the end of the day, I saw a lot of the Uber drivers leaving the protest today because they needed to go out and earn
money. And it is a job where you can set your own hours. And Uber always points out some other numbers that I want to put up on the screen that
their most loyal drivers do get a slice of the pie, although not a very big slice of the pie.
They'll get some rewards in terms of shares with the IPO. If you've done about 100 or rather 2,500 trips, you'll get $100.00 all the way up to
$10,000.00, but that's only if you've completed 20,000 trips.
And some of the drivers I've talked to who said, "Listen, I've been working for the company for years, I was hoping that I would get more than this."
It is a company where you don't really have a chance of moving up in any way, shape or form if you're one of the drivers.
QUEST: That begs the question, of course, would be very surprised if you look at people who are paid in Amazon fulfillment centers and the like, but
let's put that to one side, Samuel, if we may, because the other side to this coin is the lack of profitability.
As Uber prepares to go public, if we look at Lyft for a cautionary tale. Now Lyft shares are down some 7 percent on its first earnings report. Lyft
says it lost more than a billion dollars -- a billion in a quarter -- admittedly was a bit of a kitchen sink quarter. They threw everything into
it, all the costs associated to its IPO. It cleaned up the balance sheet, you name it.
Revenue, though, was up 95 percent from a year ago, and the numbers of riders are still on the rise. Now, if you've got rising revenue, and
you've got increased numbers of people, then Uber, it begs the question, what would it take to make money. Uber believes there's more driver
dissatisfaction ahead.
Samuel, the issue of Lyft losing money and the inability to make profits for the foreseeable future doesn't look good.
BURKE: It doesn't look good, though, the big advantage that Uber has is scale. When you look at Lyft. And they most certainly did not get a lift
from their quarterly earnings report. Lyft is only operating in two countries -- Canada and the United States. That is it.
So at the very least Uber will be able to rely on different countries, different regions when they have problems in one and use that scale to
their advantage. The other problem with Lyft, Richard, is that already in their first quarterly report, they're changing the metrics. And you and I
both know, anytime a company, especially a tech company is changing their metrics. It's never a good sign.
QUEST: All right, Samuel. Samuel Burke who is in London, thank you. Now, Uber believes there's more driver dissatisfaction ahead. If you take the
IPO, for example, the IPO which is coming along. The difference between income between those at the top and those in the cars.
You've then got the question of incentives -- the reduced incentives of it all, and then finally, you've got the cutting down, the automation.
Ultimately, you wonder what is going to happen there. The automation could reduce the need for drivers, arguably -- arguably, the whole Uber-Lyft
dynamic only becomes profitable once you've got rid of those pesky people who drive the cars.
[15:25:14] QUEST: Bhairavi Desai is the Executive Director of the New York Taxi Workers Alliance, good to see you.
BHAIRAVI DESAI, EXECUTIVE DIRECTOR OF THE NEW YORK TAXI WORKERS ALLIANCE: Thank you.
QUEST: Thank you very much indeed. And the issue is what?
DESAI: That's a pretty dystopian picture, right? They're going to cut back on incentives. They're going to cut back on pay. This is after
admitting that the majority of drivers barely make even a minimum wage, and then ultimately down the line, they're just going to remove you altogether
from a job.
There's -- I mean, meanwhile, they're looking to be evaluated at a billion at $100 billion for themselves.
QUEST: Okay, so that's -- yet, there's still no shortage of people wanting to drive?
DESAI: You know, that's a bit questionable.
QUEST: And there's still no shortage people using them.
DESAI: Yes, I mean, I think the latter is true. But in terms of the shortage of drivers, there's actually a pretty high turn around -- 25
percent to 30 percent of the drivers end up leaving the job within a year because of the poverty wages.
QUEST: Wherever taxi companies, whether it be in Berlin, or in London, or wherever, or in New York, wherever the license cabs have taken on Uber, the
public has been more in favor of Uber, that's worrying for you.
DESAI: Well, we represent the drivers. What's worrying for us, we represent also the Uber and Lyft drivers. What's worrying for us is the
business model of these companies, right? It's not about the technology, it's not about the service, it's about the fact that workers are left in
poverty and in lifelong debt, but the money is there.
They're looking for $100 billion valuation. It needs to come back to the workers that have built on their empires.
QUEST: So what is the model that you think best accomplishes that? Because if let's say, for example, if you didn't, you know, if you look in
pari passu, you've got cab drivers, and you've got Uber drivers. Now, the Uber trip comes in less than the cab by and large in terms of the cost, but
what would you say is the model that rewards fairly?
DESAI: There needs to be a regulated commission system, so that drivers get 80 to 85 percent of the fair revenue, you know, that comes out of their
labor. We don't need to see drivers just stuck at minimum wages and they need to have basic employment protections and access to that revenue.
QUEST: Does this invariably lead to higher prices on the meter? And I'll give you an example. You'll be familiar with the London cabby, obviously.
There's no question. Superb service. Brilliant operation. And it costs an arm and a leg. Get into a London cab, and you really do wonder where
the money went.
Uber does the same journey at maybe two thirds of the price. That's really the problem, isn't it?
DESAI: But there are lots of protections that they leave off the table in terms of consumer protections. Right? Even the impact on the environment.
But you know, let me just tell you in New York City, what we've seen is that, actually Uber on some fares charges more than a yellow taxi cab.
So I think it's a bit of a stretch to me that they are so much cheaper. The reality is their prices have gone up. It's just not trickling down to
the drivers who do the work. They're left behind while their bosses, the CEOs of Uber are looking to, you know, make out like bandits.
QUEST: And I think we can all agree, Friday when we see the numbers, it will be. It will be recorded. Good to see you. I appreciate it.
DESAI: Thank you.
QUEST: Thank you very much for coming and talking to us. Thank you.
DESAI: Thank you.
QUEST: As we continue, the polls have closed in South Africa, it's an election seen as a key test for the ruling ANC. Eleni is in Johannesburg.
We will be live in Johannesburg to understand what the results are likely to be.
[15:30:00]
(COMMERCIAL BREAK)
QUEST: I'm Richard Quest. There is more Quest Means Business in just a moment. We're going in South Africa where polls have just closed and all
of this. Fake meat, real returns. Is this a phenomenon? The fake meat you're seeing it with Beyond Meat, is it a phenomenon, the success on Wall
Street?
Before we get to all of that, this is CNN, and here, the facts always come first.
In the last hour, the U.S. has announced new sanctions targeting Iran's steel and mining sector. The move comes hours after Iran announced it will
no longer comply with some parts of the 2015 nuclear deal. Iran's President blamed the U.S. for the move because Donald Trump pulled out of
the deal last year.
The U.S. House panel should vote any time now in holding U.S. Attorney General William Barr in contempt for refusing to give Congress the full
unredacted Mueller report. It comes after President Trump himself got involved. He's invoked executive privilege over the entire report and its
underlying evidence.
An 18-year-old Colorado man is due in court right now accused of opening fire at his high school on Monday. A fellow student was killed and eight
people were injured. A girl who is under 18 is also in custody. A vigil for the victim is planned for tonight.
Ajax are in the driving seat to reach the Champions in the League Final. The lead Tottenham by a goal to nil in the second leg of their semifinal
after winning the first leg one-nil. If they win, they'll face Liverpool after one of the most amazing comebacks in European football history. The
Reds beat (INAUDIBLE) in a full nil on Tuesday, just days after losing three-nil in the first leg.
The wait is finally over. The Royal Baby's name has been announced. It's Archie, Archie Harrison Mountbatten-Windor. Meghan and Harry made their
first public appearance. Look at that (INAUDIBLE) the baby a couple of days ago. Baby Sussex, as he was being called, was born on Monday.
CNN's Max Foster is in Windsor. Max, we can dress this up any which way we like and backwards. But the fact is, Archie is an eyebrow raising name for
a Royal.
MAX FOSTER, CNN CORRESPONDENT: Yes, particularly in America. Lots of people in America saying it's a very unusual name. Here, I think we got
used to the name, Archie. It's a very popular name for the kids at the moment. So maybe they're reflecting that. It's obviously unusual for any
Royal to have a nickname effectively as a Christian name. But that's what they're going for.
And what I've been told is that they just like the name, nothing more complicated than that. So that's the story, really, and they haven't taken
the title.
[15:35:01]
We've discussed that a bit yesterday, didn't we? But that's been confirmed today as well.
QUEST: Right. Quickly, is his name Harrison because he's the son of Harry?
FOSTER: Yes, I was told that as well. It's really an uncomplicated, extraordinary.
QUEST: All right. Well, we look forward to -- Archie, there we go, not even his Royal Highness, Prince Archie of somewhere. Max Foster, thank
you.
South Africa now, polls have just closed in the general election, which has seen by many. It's a big test for the ruling African National Congress,
the ANC, and the President, Cyril Ramaphosa. The first results should arrive late on Thursday local time.
The ANC has been in power since the end of apartheid, faces widespread foe (ph) apathy following years of corruption.
Join the conversation. This is interesting. Get out your phones, well, we have them here, to cnn.com/join. What is the urgent, the most urgent issue
facing South Africa? Corruption, inequality, unemployment or land reform? South Africa's number one issue, cnn.com/join, and the results in a moment.
David McKenzie joins me from Johannesburg. David, when you look at the list of economic woes, miscreant behavior, scandals and corruption, it
begets belief that the ANC would be re-elected. So why are they going to be re-elected?
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, part of its legacy, that name, Nelson Mandela, certainly still has a lot of sway, Richard, with
old and the old generation in particular. So the expectation is, yes, the ANC will win this one.
There is also Cyril Ramaphosa, the President, somehow even though he was Deputy President under the former president, Jacob Zuma, who faced a litany
on a personal level on corruption allegations, Richard. Somehow, people disassociate himself with that past president. So he's been the kind of
man who was right there in the seat of power but many see him as separate because of his history as a trade unionist, a powerful businessman and his
words against corruption that even lasted into today.
QUEST: So when the results come out, let's put aside the fact that they'll win, what should we pass from the results so we get a better understanding
of actually whether they're good or bad, whether Cyril Ramaphosa should be pleased or not? What are the indicators?
MCKENZIE: Well, the major indicator will be if they slip in the percentage of the vote in any shape or form. This is a parliamentary democracy. Last
time, Richard, they had around 62 percent as a ruling party. Anywhere close to 50 percent will be seen as a major loss for the ANC. And it's a
slide that they saw in the last local elections. And if that continues into this election, they will be in big political trouble. Richard?
QUEST: Is there any (INAUDIBLE) of the two main opposition parties? One is far left, one is perceived to be white-led or at least the Democratic
Alliance, the D.A. for the whites. I mean, is there any realistic possibility that they combine at least to provide a realistic opposition to
the ANC?
MCKENZIE: Well, they aren't exactly obvious bed fellows. You've got a kind of classic liberal party in the Democratic Alliance, and the leftist
party, as you say, and the economic freedom fighters. Though here in Johannesburg, for example, they've had a successful coalition government to
rule the city. I think it's unrealistic to think that most people believe they won't be able to really rule the country. As an opposition, they have
been pretty effective in pointing out the corruption in taking the ANC to court. But when Jacob Zuma, the former president, left, they lost their
major foil. And so they have struggled a little bit.
Now, the major caveat to that is the EFF, the leftist party, the issue of land and jobs for the most, the poor urban black vote, they have managed to
really capture the imagination of those voters. And even though on both those issues, they can't change things in the short-term, I think that's an
important thing to watch and the party itself has certainly made investors a little bit nervous with some of their populous rhetoric. But they have a
pull over a growing number of the electorate here.
QUEST: David, you'll not be surprised that 68 percent of the Quest Means Business viewer lies in the extreme, says corruption is the largest issue
as against inequality, unemployment and land reform.
[15:40:06]
David McKenzie is in South Africa.
The country was once hailed as an African success story. Now, the sluggish economy is in the heart of disillusion of many feelings about the ANC.
Unemployment, 27 percent, where Black South Africans locked out of job markets in much greater numbers than their countrymen. The economy grew
just 0.8 percent and it's still reeling two recession in the last decade. And as for wealth distribution, the richest 10 percent owned 71 percent of
the total wealth of the country. The poorest 60 percent owned 7 percent of the wealth.
Amaka Anku is Africa's Practice Head at Eurasia Group. She's with me from Washington. I'll ask you the same question that I asked David McKenzie.
With so many economic woes, why are the electorate prepared to at least give opposition parties the chance to run things?
AMAKA ANKU, PRACTICE HEAD, EURASIA GROUP: Well, the answer to that question is the lack of alternative, right? David was talking about the
two main alternatives being the Democratic Alliance, which a lot of voters view as the white party, and then the Economic Freedom Fighters, which has
very radical ideas on economic policy, they want to expropriate all private land, they want to nationalize banks and mining companies, they want to
grab farms.
And so for a lot of South African voters, they're not happy with the ANC, but they're not a lot of alternatives.
QUEST: Well, yes. But then why hasn't the D.A. managed to make better inroads other than on the Western Cape? I mean, I think you'd have to
agree that the economic situation is dire and the corruption scandal aspect of it is nothing short of criminal.
ANKU: Well, my view is that the D.A. is not addressing the most critical issue for the majority of South Africa's which you alluded to in your
introductory remarks there, which is the transformation of the economy to include and improve black participation, right? The economy is still
dominated by whites, they own over 70 percent of farm land, a lot of blacks are still locked out of the economy, corporations, landownership, and so
the D.A. is seen a party that isn't willing to confront this essential issue.
QUEST: Hang on. Just a second. Let me (INAUDIBLE). That may be true, those numbers. I'm not quibbling with your statistics in any shape or
form. But that is an even greater reason against the ANC because they have been in power since the (INAUDIBLE) Mandela right away through. And if
black participation is still pathetically or very weak and low, and there is not the opportunity, you might as well try the other lot, because the
current lot haven't done a very good job.
ANKU: Well, this is why we currently have this battle within the ANC between the Cyril Ramaphosa faction and the Zuma, Jacob Zuma, former
president, faction. A lot of people are hoping that Ramaphosa can create - - turn the ANC into the party they want it to be, a more progressive party, a party that is more liberal, a party that is less focused on rent-seeking
(ph).
And so, I mean, I go back to my first answer, the opposition right now is not seen as a credible alternative. So the answer for a lot of people has
to come from the ANC reform in itself.
QUEST: Good luck with that. Let's finally just say -- I mean, you've got to admit, this is a shoddy state of affairs. The country is magnificent,
the people are productive and have great opportunity. And over the last two or three decades that I've been going there, the situation has just got
worse.
ANKU: Yes. I mean, I think this is an opportunity. There's a lot of focus on what margin the ANC gets in this election, right? I think that
focus is a little overblown. But I think that there are two key things to watch, right? One is if the ANC does end up with a very poor result, it
could force it into a coalition with the EFF in the major province of Gauteng. Now, that will be an opportunity for the EFF to then sort of
start to make arguments about ANC's popularity has fallen and potentially try to take over the party. That will not be good for South Africa, right?
So the margin of victory is not only important in terms of what signal Ramaphosa can send about his own popularity that enables him to fight the
Zuma faction, it's also important in terms of staving off the ANC, continuing to slide further down this populous route.
[15:45:01]
QUEST: Good to see you. Thank you. We'll talk more.
ANKU: Thank you.
QUEST: We'll interpret the results once we see them.
Next on the program, the CEO of Barrick Gold following the firm's first earnings since its merger with Randgold Resources. Fascinating. That's
next.
(COMMERCIAL BREAK)
QUEST: U.S. stocks leading the session rally encouraged by a message from Donald Trump that China is ready to make a trade deal with the U.S.
Today's gains have quite recovered at 2 percent, we saw on Tuesday, but, you know, better than nothing. Well, let's see if they can hold on to
those gains in the 30 minutes or so.
The world's second largest gold producer came out with earnings. Barrick Gold beat estimates with its first earnings report since the acquisition
merger with Randgold resources back in January. The stocks underperformed the markets so far this year and it's currently trading marginally lower.
And gold prices hit a three-week high on Wednesday void (ph) by concerns over China's U.S. trade dispute.
With me is the CEO of Barrick Gold., always good to have Mark Bristow today joining us from Toronto. Mark, good to see you, sir. I appreciate you
taking time.
So first set of results, how much more difficult is it running this much larger company?
MARK BRISTOW, CEO, BARRICK GOLD: Richard, nice to speak to you again. It had been a long time. A lot of fun, there's no difficulty in this. We've
got high quality assets, as you said in your summary, came out of blocks after the merger in 1st of January with a solid set of results. And this
is a long game, and I've got absolute confidence that we'll be able to continue to build on this.
QUEST: Does the market like it though? I mean, the share price today is neither one thing nor the other. But shares are undervalued at the moment,
or low valued, and some would say that the deal may have been done but the jury is still out on whether it should have been done.
BRISTOW: Sure. I mean, I'm not sure about that. If you'd look to the 23rd of September when we announced the deal, the share prices
substantially up. So, again, we don't run this business for the short-term share price or, in fact, even quarterly results.
But we've got a lot to do. As you know, on the top of the merger, we delivered the joint venture in Nevada, and that in itself is a fantastic
opportunity.
[15:50:50]
So lots of assets to work with, all high quality, and that's the building (ph) blocks of success in any gold mining industry - I mean business. And
so, I just say to you watch this space We will derliver.
QUEST: And the price of gold, what do you see as being the principle influences on it? Not just on a short one day basis, but if you look at
the last year and the range, we - from (inaudible) did fall quite sharply into the 1180s into the 1200s. It has recovered, but what's the main
influence?
BRISTOW: So the main influence is - you know, price of gold, as you and I have discussed many times before, is driven by the supply and demand. And
right now the supplier's under pressure. The gold process's done relatively well, given the economic improvement, certainly, of the U.S. and
the strength of the dollar relative to the other currencies. But at the same time, we are in a - you referenced the discussions on - between China
and the U.S., we're also seeing a change in the trading block and the - what I would call the contract to trade, the global currency - the global
reserve currency and the - and China wanting to create a different - a sort of contract.
QUEST: But are you seeing - are you seeing central banks adding to their stock of gold? I mean, you know, the speculation on the market is one
thing, the gold for jewely is something else, but the core of it is the big stuff going into central banks and who are buying big (inaudible) again.
BRISTOW: So definitely, and even the last report out by the World Gold Council, on the supply and demand side, we've seen a continued buying of
gold by the central banks, particularly the merging central banks. And of course China continues to grow its gold reserves. So - that's what's
really supporting the gold at the moment. I think, I would say given the current situation, gold is stronger than it perhaps should be, driven by
the fundamentals, but in the medium to long term, the support for gold, as I've shared with you before, is genuinely there and the new gold supply is
under pressure.
QUEST: Great to see you. Thank you sir. As always, we like having you.
BRISTOW: All right. Cheers, bye-bye.
QUEST: Gold is the ultimate safe haven. But if you want a bit more risk, appetite meatless meat. After the break.
(BREAK)
[15:56:00]
QUEST: So that number tells the story. Beyond Meat's meteoric rise might be coming to at least a temporary pause. They were up 6 percent earlier
today, up 6 percent, now down roughly 10 percent. That was 10 percent a second ago.
The stock remains well above its IPO price which went to market at 25, closed on day one at 65, 163 percent premium, and risen even further. So
it went as much as 85 or something 200 percent above its IPO price.
Paul La Monica, we're looking at the graph here of the price. The rise -- what actually stopped this rise, Paul? Why today have we seen a reversal
in beyond meat fortunes?
PAUL LA MONICA, CNN BUSINESS DIGITAL CORRESPONDENT: Yes, it's kind of crazy. I'm not really sure there's a specific catalyst per se, Richard. I
did notice that about an hour ago that Bloomberg had a story citing a short seller who said that the stock's valuation was absurd. So maybe that could
be the catalyst. But, I mean, if you thought the valuation is absurd right now, it's absurd the day it went public. So I'm not sure why all of a
sudden now people are waking up.
But, interestingly, there is a tiny little burger company, Chanticleer Holdings. The ticker symbol is BURG. They own a couple burger joints.
They announced a partnership with Beyond Meat this morning and their stock is up 25 percent. So it does seems like it's a plant-based bubble, if you
will.
QUEST: All right. But there will be those that are saying, Paul, this is -- if you've got faith in this, those that are saying this could be the
opportunity to get in.
LA MONICA: Yes. I think that you can clearly appreciate the health benefits and even the taste of plant-based burgers and at the same time
think that these are way overvalued. Now, I'm in that camp. I like Impossible Burgers. When the stock comes out, if it goes up 200 percent in
a couple days, I'm going to be writing and Tweeting about how absurdly overvalued it is.
QUEST: La Monica and Quest will be trying them all out. It is the battle of the burgers. Thank you, Paul. We'll have a profitable moment after the
break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, real meat or fake meat? Meatless, I don't know. But Paul La Monica and I are going to try them all out.
Beyond Meat, Impossible Meat, a good, solid, real burger. Now, that will put the mettle to the test. We'll do it in the week or so and let us be
the judge and you be the viewer.
And that is Quest Means Business for tonight. I'm Richard Quest in New York.
[16:00:00]
Whatever you're up to in the hours ahead, I hope it is profitable. I think we've rigged (ph) a small gain for the Dow. The bell is ringing. The day
is done.
END
