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Quest Means Business
A New Video Shows a U.S. Drone Being Shot Down; Chinese President Visits North Korea for Talks with Kim Jong-un; Johnson, Hunt Remain the Final Two Competitors in Race to Become the Next U.K. PM; U.S. President Donald Trump Appears To Dial Down The Tension Over The Downing Of A U.S. Drone By Iran; Secretary Of State Mike Pompeo Has Just Released The Annual Trafficking In Persons Report; Carole Ghosn Says Her Husband Was Setup. Aired: 3-4p ET
Aired June 20, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: There we have it, the Dow squarely in the green. It had been pretty much in the green all day. There you see
it, up about 200 points or so after the Fed comments yesterday, Fed coming out and saying they are squarely focused on the fact that inflation is
still below two percent. Trade is now predicting a 100 percent chance of a rate cut next month in July. It is the final hour of trading on Wall
Street. Stocks are trying to come back to higher ground. The S&P is on track for record close. Those are the markets and these are the reasons
why.
The world is waiting to find out how the United States is going to respond to Iran shooting down an American drone; Congressional leaders are at the
White House. Oil prices right now are spiking, we will discuss that a little bit later on the show. And a new unicorn on Wall Street, Slack
shares rocket in their market debut; and speaking out, Carole Ghosn says her husband was set up. She is telling CNN there was actually a conspiracy
to stop the Renault-Nissan merger, live from the world financial capital in New York City. It is Thursday, June 20, I am Zain Asher in for my
colleague, Richard Quest and this is QUEST MEANS BUSINESS.
All right. Welcome everybody, I'm Zain Asher and tonight, a new wrinkle, a fly in the ointment and a big mistake. The U.S. President Donald Trump
appears to dial down the tension over the downing of a U.S. drone by Iran. This hour, congressional leaders are gathering at the White House to
discuss the United States' next move. We are waiting to hear the outcome of that very meeting.
Meantime, new video from the Pentagon supposedly shows the moment the U.S. drone was shot down by an Iranian missile. President Donald Trump says the
U.S. has scientifically documented evidence that the drone was over international waters, but Iran says it has evidence of its own.
In the past few minutes, Foreign Minister, Javad Zarif tweeted a timeline on the U.S. drone being targeted over Iranian airspace. When asked if the
U.S. plans to retaliate with a strike of its own, the President Donald Trump replied, "You'll find out."
Sam Kiley is in the UAE and Ryan Browne is at the Pentagon for us. Ryan, I want to start with you. Donald Trump came out earlier and said that he
believes this was a mistake. What evidence is that based on?
RYAN BROWNE, CNN PENTAGON REPORTER: Well, it's not entirely clear, Zain that he did say that this might have been a mistake. He kind of alluded to
the idea that some lower level commander may have done this without the appropriate approvals from higher up, but nothing that we've seen or heard
speaks to that.
I mean, I think U.S. officials have said very publicly that the drone in question was in their view in very well into international airspace over 20
miles from the Iranian coast. This is one of the larger drones in the U.S. fleet. Very easy to detect. It's not trying to hide, it's not a spy
drone. It's very easy to see and track. So there was no -- it would not have been used for any kind of clandestine spy secret mission inside
Iranian airspace.
So this is -- from the U.S. perspective, it's hard to see how this was a mistake. President Trump seeming to imply that a Commander may have not
had the authorization to shoot it down, that that it may have not received the green light from Tehran. But there hasn't been any evidence to suggest
that that's exactly what happened.
ASHER: Whether or not -- regardless of whether or not Ryan, this was a mistake or not, do you anticipate -- just based on what you're hearing from
sources there at the Pentagon, that there will be some kind of response from the U.S. side? And if there is, what are the President's options as
of this point?
BROWNE: Well, the military has been watching Iran for some time in anticipation of some kind of provocation. There have been deployments of
additional troops to the region, some of them actually drone, personnel, surveillance personnel, other force protection measures. The U.S. has been
increasing its posture to provide potential options if some kind of crisis were to emerge.
Whether or not the President decides that this incident represents that kind of crisis that is to be seen. But the military is a plan
organization. There are a lot of options that are available to them should the President order a retaliation, but something this serious would
definitely need very senior, the most senior level approvals from the White House before the military were to do anything. But again, they are
postured in the region, they have the assets needed to carry out a variety of responses should those be ordered.
ASHER: I'm bringing in Sam Kiley, so depending on what the U.S. ends up doing in terms of response, Sam, just walk us through how much division
there is between hardliners and moderates there in Iran about how to handle the escalation of tensions with Iran -- with the U.S., rather.
[15:05:03] SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think that's very interesting question indeed. I mean, within Iran,
there's possibly only one issue that would unite all of the various factions, and there are many factions. And that would be an act of quote
unquote, "aggression" towards Iran in response to the downing of let's face it, is a flying robot. No human beings were involved in this act
whatsoever, putting at risk far fewer people, then the bombing of two super tankers last week, which the Americans say, joined by the British was the
work of the Iranians.
But within Iran, you have the IRGC, the kind of military elite organizations that were allergic to the deals struck with the United States
and other nations, Europeans and China and Russia, to suspend their new nuclear program. That was a deal that was walked away from by the Trump
administration, arguably playing into the hands of the hardliners inside Iran.
Then you have the political classes that are perhaps represented by President Rouhani, who is more conciliatory, at least was prior to the
ending of American acknowledgement of that deal last year, and very keen to try to bring Iran much more closely into the economic community of nations.
So at this time, though, I think any kind of retaliation for the downing of a flying robot would definitely hardened hearts and lines and play into the
hands of the hardliners within Iran. It would also, I think spook quite a lot of elements right across the wider Middle East, whilst there's broad
support, particularly from the Gulf monarchies and Israel for Trump's attitude towards Iran, and they too, were allergic to the deal struck with
Iran over its nuclear program. There would be a deep concern to any kind of retaliation for the downing of a drone could result in a military
escalation -- Zain.
ASHER: All right, Sam Kiley, Ryan Browne live for us, thank you both so much. Okay, so the increase in tensions has caused oil prices to spike.
Brent, is up nearly four percent. WTI is up even more, actually nearly six percent. You see there, 5.6 percent or so. It briefly broke through the
$57.00 mark.
Meantime, U.S. markets are also heading for a strong finish with a record close in sight for the S&P 500 with about 45 minutes or so left for
trading. You see the Dow there, up about 200 points, hints that the Fed might soon cut rates next month in July pushed all three major indices
higher.
Dow had gains mid-day after U.S. tensions with Iran escalated. It is back, as I mentioned, to roughly around 200 points higher. The S&P which is
trading at an all-time high and the NASDAQ are both up for a fourth day in a row. Paul Monica is here to break it all down.
So Paul, let's just start with oil for the time being. So if the escalation between the United States and Iran continues, how likely is it
that we will soon see a noticeable dip in supplies when it comes to oil?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that is a big concern, Zain that you would have supplies coming from Iran and in the Middle East
in general wind up, you know, declining, and that could put further pressure -- upward pressure on oil prices.
We know that there's always, you know, concerns about Iran and the Strait of Hormuz. So that's definitely something that is in play. But of course,
the U.S. is now a gigantic producer of oil in its own right, because of the shale gas revolution. So that is something that I think has strengthened
the U.S. in respect with -- they don't have to necessarily depend on Middle Eastern OPEC oil as much as they had prior.
ASHER: Because if it was a factor, oil prices could actually be much higher.
LA MONICA: Yes, I think especially when you couple that the Fed is signaling rate cuts, as you just pointed out, that's weakened the dollar.
The dollar weakens, oil prices tend to go up. So the other issue, though, of course, is it is two sides for oil prices. There's the supply side,
there's also the demand side. And that could be something that is problematic, though down the road because we do have concerns about a
weaker global economy, the Chinese consumer perhaps being hit by all these tariffs, the trade tension with the U.S.
The U.S. has held up relatively well, but there are worries that you're going to see GDP start to slow down. If that's the case, then maybe that
winds up diminishing some of this recent oil price spike that we've had, as people start to wonder, is the demand really going to be there?
ASHER: I actually just want to play your sound bite of Donald Trump actually speaking about Fed Chair, Jerome Powell. Let's play it.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Well, I guess they indicated they're going to be lower. They should have done it sooner, but
what are you going to do? Can't win them all. He should have done it sooner. But you can't win it all. And eventually, he'll do what's right.
Perhaps. Let's see what he does.
(END VIDEO CLIP)
ASHER: So you hear the President there essentially kind of sort of putting pressure on Fed Chair, Jerome Powell. I mean, what are your thoughts on
that?
[15:10:04] LA MONICA: It's still mystifying that the President has been this critical of Jerome Powell because last I checked, Jerome Powell was
selected by President Trump. This isn't a case of, "Oh, I inherited Janet Yellen or Ben Bernanke, and I just have to deal with it." Like he in
theory has his guy in charge of the Fed and he is being critical. I think Trump is probably trying to make political points now because we all know
the Fed is probably going to cut rates in July, it seems like it's a hundred percent certainty based on the most reason Fed futures after
yesterday's meeting.
ASHER: And it tells us what traders think as well.
LA MONICA: So Wall Street wants a rate cut. Jerome Powell probably realizes that because the global economy is in flux, a rate cut would make
sense. He is probably not going to do it because the President wants him to do it. But of course, Trump can spin it that way and it winds up being
a political victory even though I hope most market observers would realize that Jerome Powell isn't caving to the President so to speak.
ASHER: Yes, and obviously with the Fed rate cut potentially happening in July that's what pushed stocks higher. S&P 500 at a record high at a very
interesting time because you've got gold also higher as well and the 10- year as we just talked about earlier.
LA MONICA: Yes, 10-year is two percent.
ASHER: Exactly. Just a very sort of interesting environment we are in. Paul La Monica live for us there. Thank you so much. Appreciate that.
The U.S. State Department is calling out countries for doing too little to stamp out human trafficking.
Secretary of State Mike Pompeo has just released the annual trafficking in persons report. Several European countries have been downgraded as well as
Saudi Arabia and Cuba for ignoring human suffering. Pompeo says countries turning a blind eye for traffickers will pay a price.
(BEGIN VIDEO CLIP)
MIKE POMPEO, U.S. SECRETARY OF STATE: These designations -- Tier 1, 2, 3 - - aren't just words on paper, they carry consequences. Last year, President Trump restricted certain types of assistance to 22 countries that
were ranked for Tier 3 in our 2018 TIP Report. That action and the message that flows with it is very clear. If you don't stand up to traffic, then
America will stand up to you.
(END VIDEO CLIP)
ASHER: "America will stand up to you," words from Secretary of State Mike Pompeo there warning there could have big implications for Saudi Arabia. I
want to bring in Nic Robertson who is live for us in London. So Nic, you had Secretary of State Mike Pompeo there talking about the U.S. standing up
to countries that don't do enough to combat human trafficking. But isn't it telling that he didn't actually mention Saudi Arabia by name in that
presser?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes. So well, very telling. Saudi Arabia along with Cuba, which he mention the Gambia,
Bhutan, all downgraded from Tier 2 to Tier 3, obviously, a lower rating there and Secretary Pompeo are not mentioning Saudi Arabia.
Now, we know that in past years, the U.S. is sort of, you know, the President has been able to issue waivers for certain countries, but you get
that impression, the impression that Secretary of State Pompeo was creating there is that Saudi Arabia has been downgraded, but somehow in a separate
category, because they're not going to get called out in the room at the podium at the microphone on camera.
And is this because the United States has such a strong economic -- strong economic reason not to be calling Saudi Arabia out? I.E. it is doing a
huge -- it is selling a huge amount of weapons to Saudi Arabia. It does a lot of business there and is this what's sort of stake there? Is that why
they're not being called out? So yes, not appearing to be as evenhanded as he might have been.
ASHER: Yes, it's not just the economic implications. It's also -- I mean, when you think about what's going on today, it's also the fact that the
United States, its relationship with Saudi Arabia is even more precious, especially given the ramping up of tensions with Iran.
ROBERTSON: And it's fundamental as well to the position that the United States is taking in terms of trying to bring Middle East peace. I mean, he
was standing there in that room and then he had the President's special adviser, his daughter, and they're standing at his side and on that other
issue, on the bringing the peace -- a peace deal to the Middle East that's another President special adviser involved in that, his son-in-law, Jared
Kushner.
So that you have both the husband and wife involved with the Secretary of State on these key issues that involve Saudi Arabia. Saudi Arabia is an
important part of the economic mechanism that Jared Kushner wants to sort of embrace the Palestinians with, if you will, to give them reasons to move
towards a peace deal with Israel.
So, yes, in that context, again, Saudi Arabia, hugely important on a number of things, but as you rightly say, right now on Iran, and so, you know,
President Trump is hugely important to Saudi Arabia on Iran as well because he is backing their view and he is perhaps the President in recent times
who has been most strongly behind Saudi Arabia, backing them on their calls for Iran to stop its expansionist efforts in the region.
[15:15:19] ROBERTSON: So I think in all of these contexts, it throws it into that light that you know, and we saw it with a killing of Jamal
Khashoggi as well. President Trump when it comes to Saudi Arabia is prepared to look the other way. Secretary of State Mike Pompeo seems to be
stepping along the same path there.
ASHER: All right, Nic Robertson, live for us. Thank you so much. Appreciate that. Carlos Ghosn's wife says that he was set up in a
corporate coup after a stunning fall from grace, hear our interview with Carole Ghosn who wants Donald Trump to pressure the Japanese Prime
Minister. That story next.
(COMMERCIAL BREAK)
ASHER: Welcome back, everybody. We bring you explosive accusations tonight from the wife of Carlos Ghosn. Seven months after the auto
industry titan was ousted as chief of Nissan and thrown into a Japanese prison, Carole Ghosn says her husband was set up in a broad international
conspiracy to stop a merger between Nissan and Renault. Listen to this.
(BEGIN VIDEO CLIP)
CAROLE GHOSN, WIFE OF CARLOS GHOSN: My husband was a victim corporate coup by a few Nissan executive and they have conspired with the METI, the
Ministry of Economy, Trade and Industry in Japan. In order to stop the merger, they thought the best way to do it was to arrest my husband.
(END VIDEO CLIP)
ASHER: Okay, so before we go any further, we actually need you to understand how exactly we got to this point. How did one of the world's
most powerful business executives end up in this situation?
Over his 40-year career, Carlos Ghosn brought together three carmakers -- France's Renault, and Nissan and Mitsubishi from Japan. With a fragile
alliance, they were able to rival the auto giants Volkswagen, Toyota and General Motors as well.
In November of last year, Ghosn was on the cusp of his most important and controversial and ambitious move yet, a full blown merger between Nissan
and Renault, that's when as he stepped off his private plane in Tokyo, he was arrested, hauled off to prison and spent more than 100 days in solitary
confinement. Since then he has been released only to be arrested in jailed again.
[15:20:07] ASHER: He is currently out on bail and awaiting trial. He has been stripped of his corporate titles of the companies he once held. The
charges, financial misconduct, using company funds for personal use and under reporting his salary.
Ghosn maintains his innocence and says the accusations are meritless and unsubstantiated. Now, his wife, Carole Ghosn says, the Japanese have
illegally taken her passport, barred her from seeing her husband and have failed to produce any evidence, this are her words, "of his wrongdoing."
Speaking to Paula Newton, she is calling on the U.S., French and Brazilians to pressure Japanese Prime Minister Shinzo Abe next week at the G-20
meeting in Osaka. Let's listen to this.
(BEGIN VIDEO CLIP)
GHOSN: I'm an American citizen and I am hoping at the G20 that President Trump will call on Prime Minister Abe to give my husband a fair trial.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: But I go back to the original question, why not ask President Macron?
GHOSN: Because now I am talking about me also seeing my husband.
NEWTON: Your husband is a French national.
GHOSN: Yes. Yes. I mean, I do. I am also calling on President Macron which I have in the past, and I am today and Carlos is also Brazilian, so
also President Bolsonaro, I hope they are all going to be at the G-20 and I hope they will talk to Prime Minister Abe.
NEWTON: Some of the conditions that you describe here, he was in isolation. He wasn't getting enough food. There was no heat?
GHOSN: Exactly, and the lights were on 24/7. He showered twice a week. It was a system that's made to break the person so they confess to a crime,
even to crimes they haven't done. It's called the hostess justice. Now, Japan is known for that.
NEWTON: And you believe they wanted him to confess so that he would relinquish any and all control over Renault, but principally Nissan?
GHOSN: Yes. I mean, they wanted to get rid of him so by making him look guilty, it justifies why they arrested him.
NEWTON: The allegations are quite specific that they have made most recently and that's that there were a diversion of corporate funds for you
personally, your family personally and your husband personally. Do you dispute that there's any evidence there of that?
GHOSN: I think they have twisted the truth because they needed an excuse to put him in detention, and it's all lies and I think with time, the truth
will come out, but he has to get a chance to a fair trial so he proves himself.
NEWTON: And yet, you don't believe there can be a fair trial right now?
GHOSN: I don't think so. Even our lawyers in Japan who are Japanese are not confident because their system is rigged.
NEWTON: You know, those are quite explosive allegations in terms of the fact that Japan is looking at this as a corporate dispute that your husband
did not follow the rules when it came to corporate funds and that dividing line, that blurred line between corporate funds and personal funds.
GHOSN: You know, we haven't seen any of the evidence. It has been seven months since he has been arrested and we have not seen any documents
against my husband. We haven't seen anything. You know, they just keep on accusing us and we haven't seen a thing.
NEWTON: He was rearrested in April. What was that like?
GHOSN: It was a nightmare. At 5:50 in the morning, they barge in on us and first of all, they called -- all of the journalists were downstairs to
make a show out of it, to embarrass my husband more, and they walked in and they made him get dressed and they took him away.
And then I was left for hours. They searched a 50 square meter apartment. They searched everything and I was my pajamas so I asked to change my
clothes and I wanted to shower and get dressed.
The prosecutor, the lady prosecutor went into the shower with me and handed me my towel and every time I needed to use the bathroom, she would go into
the toilet with me.
So I mean, it's just -- how much more do they want to humiliate us? And then they took my passport, which is illegal to take a passport. I am not
under arrest. I am not a suspect. What is it? Forms of intimidation? Is this how you know, the democracy in Japan works?
NEWTON: Why do you think in the end that it came to this though? Why do you think we're at this point with this dispute? Because it obviously
seems to be incredibly complicated involving Nissan and Renault and the Japanese government?
GHOSN: I think it's -- my husband was collateral damage to a bigger story. I think Nissan and Renault did not want to merge. My husband wanted to
merge them and they thought the best way of doing it is getting rid of my husband.
NEWTON: Why do you think your husband is not getting more help from Renault, but I would say, principally the French government. I know that
you have asked President Trump to try and do what he can to intervene, but why not the French government?
[15:25:01] GHOSN: Because the French government has interests in Nissan. They want to merge. So, you know, they threw my husband under the bus for
the merger. To them that was more important than my husband, unfortunately. Again, I say it's collateral damage.
NEWTON: So you're saying that the French government and the Japanese government are both complicit?
GHOSN: No, I don't think the French government was complicit. The Japanese government was complicit at the beginning parts of it, not all of
it.
NEWTON: But then why wouldn't President Macron at this point, get involved and say, "This is a corporate issue." And at least say, "Show us the
evidence." Let's have --
GHOSN: No, I wish I knew the answer. You know.
NEWTON: What do you think the answer is? Have you spoken to French officials?
GHOSN: I've spoken and they said they're doing everything they can that you know, it needs time, because there's diplomacy involved and there's a
way to do things and that we have to be patient.
NEWTON: It must be pretty hard to be patient right now.
GHOSN: It's devastating, you know, our lives have turned upside down. Nothing major sense. And we see no end in sight.
NEWTON: Now, I know you've told me that you can't see him. You're not in Japan? What is his health like? How do you communicate with him? How is
he doing?
GHOSN: I don't communicate with him. One of the bail conditions when he came out the second time, they forbid him from seeing his wife. I mean,
I've never heard of that. It's outrageous even by Japanese standards, this is outrageous. So I have no communications with him.
I asked about him to his children, but they just want to punish him more. They want to break him more by him not seeing his wife.
NEWTON: But what do you know about his health right now? What have you heard?
GHOSN: I mean, I heard that he is combative, because this is Carlos. He is a strong man. But, I mean, if you spent 130 days in solitary
confinement, he is tired and, I mean, he is depressed, of course. But I mean, that's all that I know.
NEWTON: How do you see this being resolved at this point?
GHOSN: You know, I hope that my husband will get a fair trial because I think with a fair trial, he'll be able to prove his innocence. I hope they
will respect the presumption of innocence in Japan. And I hope I'll get to see him and be there by his side and take care of him at a time where he
needs me the most and I need him and they separated us.
(END VIDEOTAPE)
ASHER: CNN has reached out to the French Finance Ministry and Justice Ministry. They did not offer comment. Japan's METI said, "We have yet to
be aware of Ms. Carole Ghosn's comments. However, if she claims that the Ministry of Economy, Industry and Trade is involved in the arrest of Mr.
Ghosn, it is groundless."
Oil prices have spiked as tensions between the U.S. and Iran appear to escalate. We will check on those. But ahead of that, we're in Tehran for
more insights on who might be spoiling for a fight. That's next.
(COMMERCIAL BREAK)
[15:30:00]
ZAIN ASHER, HOST, QUEST MEANS BUSINESS: Hello everyone, I'm Zain Asher. There's more QUEST MEANS BUSINESS in a moment, when we'll get the
perspective from Iran on the tensions with the United States. And Slack becomes the latest unicorn to stampede on to the New York Stock Exchange.
Before that though, these are the headlines at this hour.
Iran says it has retrieved parts of the U.S. military drone that was shot down today. State TV released this video saying the drone was over Iranian
waters. The U.S. says it was international waters. And this hour, top congressional leaders are meeting at the White House for a briefing.
And Xi Jinping has become the first Chinese President to visit North Korea in 14 years. Chinese state media says he and leader Kim Jong-un are
pledging to work towards peace and stability on the Korean Peninsula. And it rained in Chennai today. The first major rainfall of the year. India's
sixth largest city is dealing with a severe water shortage.
Hundreds of thousands have been waiting in lines for water, more than 500 people were arrested for protesting water shortages in another city, a
nationwide heat wave is making things worse. And Boris Johnson and Jeremy Hunt are the ones left standing in the race to become the next British
Prime Minister.
Johnson; the former London mayor remains the favorite with a commanding lead after Michael Gove was knocked out by just two votes. The world is
waiting to see how the United States will respond to Iran shooting down an American drone. President Trump says he believes Iran made a mistake,
adding that he finds it hard to believe it was intentional.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Iran made a big mistake. This drone was in international waters, clearly, we have it all documented,
it's documented scientifically. Not just words. And they made a very bad mistake, OK?
UNIDENTIFIED FEMALE: How will you respond, Mr. President, how will you respond?
TRUMP: You'll find out.
(CROSSTALK)
UNIDENTIFIED FEMALE: Are you willing to go to war with Iran?
TRUMP: You'll find out, you'll find out.
(END VIDEO CLIP)
ASHER: Our Fred Pleitgen is in Tehran for us. So, Fred, how likely is it that this was indeed a mistake?
FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: It's not likely at all. And it's certainly not what the Iranians are saying if this is a
mistake. It's quite interesting to see, Zain, because the Iranians actually themselves put out a video of the missiles they say -- the
surface-to-air missiles that shot down that drone.
And if you look at that video and you hear some of the voices in that video, it certainly doesn't sound like the people who shot those rockets
who were around there seem to think that they made a mistake when they shot down that drone.
And it's not something that we've heard from any Iranian official throughout the course of day, whether it was a military official or a
civilian official. There was not a single Iranian voice that we've heard today that in any way, shape or form was trying to say that this was a
mistake or was trying to walk this back.
Now, the big dispute in all of this, Zain, right now, seems to be where exactly this drone was shot down. Now, we heard there from President
Trump, we've heard from the U.S. military, they were saying that this was in international waters, it was in the Strait of Hormuz, and it was there
for an unprovoked attack by the Iranians.
The Iranians of course have a very different take. They say that it was in their airspace where this happened. It's interesting to see because even
Iran's Foreign Minister is now getting involved in this, he basically tweeted out some information, which is almost a play-by-play of the flight
that took place. He said it took off shortly after midnight from the United Arab Emirates, it was then circling around, he said it was flying in
stealth mode.
Which it's quite interesting to see because before that, Iranian officials had said it was masking its identification which I guess seems to mean that
it might have turned its transponders off, that was something similar. The Iranians are saying it violated their airspace.
[15:35:00] The Iranian Foreign Minister even giving coordinates of where the drone was allegedly shot down. We've looked those coordinates up and
they're about nine miles off the territorial or off the coast of Iran which would put that into territorial waters of Iran. Whether or not that's true
is of course is still very much up in the air.
But the bottom line is the Iranians are definitely not saying that they shot the drone down by accident. In fact, they are saying that they
believe it violated their airspace.
They say it's a red line for them, and the unit, Zain, that shot this drone down is the Revolutionary Guard Corps, which is the most elite unit of
Iran's military and the head of the Revolutionary Guard Corps came out really very shortly after this incident took place and said that this was a
clear message to the United States that going -- getting close to Iran's airspace or into Iran's airspace would be a red line for them.
And the Iranians then saying they don't want this to escalate into a war, but he also said unequivocally that Iran, as he put it, is ready for war,
Zain.
ASHER: So, it's interesting because given that they have essentially admitted that this was indeed intentional, Iran is playing quite a
dangerous game here because this was certainly a provocative move, intentional as you mentioned, and makes it much harder for the Europeans to
come out and give the Iranians the benefit of the doubt.
PLEITGEN: Yes, it certainly is, and it's really interesting to think about what the Iranians were trying to achieve. I mean, on the one hand, it
certainly seems as though right now with the current tensions that they are trying to make a point in saying, look, don't mess with us. If you come
too close to our territory, this is what is going to happen.
I mean, we need to understand that right now in that area, in the Persian Gulf area, that's the same place where those tanker incidents took place a
week ago which the U.S. blames on Iran, the Iranians said it wasn't them. And in all of this, Zain, and that's why it's such an interesting question
that you just asked, in all of this, it seems as though both Iran and the United States are sort of waiting to see where the Europeans are going to
be in all of this.
Because the Europeans on the one hand like for instance, in the form of Angela Merkel have said that they've seen the evidence from the Americans
about the tanker attacks and Angela Merkel said she believes it is quite likely that Iran could very well be behind it. But she and all the
European signatories of the nuclear agreement still believe that, that agreement needs to be kept in place.
So, in that respect, they are more on Iran's side rather than the Trump administration's side that has of course, already ditched the nuclear
agreement. Whether or not this changes the equation is very much up in the air, but it certainly is, you're absolutely right. A very delicate game
that all sides are playing right now.
Of course, it could also be a very dangerous game as we're looking into the future of a nuclear agreement and then possibly, of course, also looking to
the future of whether this conflict escalates in the Persian Gulf area, Zain.
ASHER: Fred Pleitgen live for us there in Tehran. Thank you so much, appreciate that. All right, coming up, the USMCA gets the OK in New
Mexico, and now Donald Trump is calling on Congress to do the same. We'll look at U.S. efforts to get the landmarked trade deal passed at home.
That's next.
[15:40:00] (COMMERCIAL BREAK)
ASHER: Drama between the Trump administration and Iran played out on the sidelines of a major trade event at the White House today. Canadian Prime
Minister Justin Trudeau visited Donald Trump to discuss the newly inked USMCA. The trade agreement will replace NAFTA, which President Trump
sought to tear up soon after taking office.
On Wednesday, Mexico became the first nation to ratify the new deal after a vote in the Senate. Now, Donald Trump is calling on the U.S. Congress to
do the same. Lawmakers in the United States have a history of holding up trade deals under previous presidents. In the meantime, Canada has yet to
set a date for its ratification.
Now, the process there is expected to be much smoother. Paula Newton who is normally based in Ottawa is actually joining us from Washington today.
So, Paula, what are some of the main sort of sticking points, especially when it comes to things like the environment and that sort of thing that
are holding up House Democrats from wanting to sign this deal?
PAULA NEWTON, CNN CORRESPONDENT: I mean, look, a lot of the things that are in this deal and that Democrats want to be in this deal. Canada makes
the argument that we fought for you. We fought on your side and what you wanted. A lot of it has to do with in fact a lot of the labor agreements
that Canada had pushed to have included in this deal that have to do with Mexico, and not even with Canada.
And I think that's the kind of stand that Trudeau took, he just had his meeting with Nancy Pelosi and that is the key here. And in that meeting
with both Donald Trump and Justin Trudeau, I'm sure Justin Trudeau made it clear that look, we will do all we can to convince the Democrats that in
terms of what we wanted in this deal, we have those provisions, we have those guarantees.
But Zain, as you know, it's incredibly complicated on Capitol Hill right now, and all you have to do is understand, you know, the weight of the
issue right now in trying to get this USMCA ratified, and that's Vice President Pence, has put his reputation on the line as well. He has said,
I will go in, I will speak to the Democratic leadership, I will do what I can.
And in so doing, they certainly want Canada's help. Canadian sources tell me that in the end, they do believe the Democrats after some guarantees
will come on site. The problem is that in a few weeks -- is that in a few months -- and remember, Zain, while you just said that it would be more --
it would go more smoothly in Canada to be ratified and that's likely, it's only likely until October in the sense that there's a federal election in
Canada in October and no one wants to fool around with that.
It is in everyone's interest in terms of those three signatories to the deal right now, that this thing get passed as soon as possible.
ASHER: OK, so just -- but looking at just the worst case scenario, Paula, if the U.S., for example, Congress decides not to sign this deal, what are
the global implications of that, do you think?
NEWTON: You know, I hate to say it, but after that, you're into 2020 campaigning, and you might be into a whole new deal. Now, look, I'm not
sure that -- remember, it was Donald Trump that started all this, right? If you talk to Mexico, if you talk to Canada, yes, the NAFTA agreement had to
be modernized, but at the end, this is Donald Trump's deal.
They like the new deal, they want to ratify the new deal, but if they have to go along with the old deal, that's fine, too. Here's the problem
though, Zain, more than once, the president has threatened to just pull out of NAFTA altogether, and we're right back where we started, right, a lot of
uncertainty in trade.
So that might be one that the Democrats say it themselves, we're not going to risk that, we're going to try and ratify the USMCA.
ASHER: All right, Paula Newton live for us, thank you so much. OK, so, as we head for the close of trading, Wall Street -- let's get a quick check of
the markets where you've got about 15 minutes or so to go. The Dow is actually climbing -- last time -- from the last time I checked, it was up
about 250 points or so after hints of a third rate cut coming in July, coming next month, certainly, sustained any worries over escalating
tensions with Iran.
The S&P 500 is heading for a record close as well, the Nasdaq is also trading higher as well. Now, a looming economic risk, the Fed hinted it
could be cutting rates in the near future. Bank of America CEO Brian Moynihan says the economy is slowing down, but he isn't worried about a
recession.
He spoke exclusively to our Matt Egan.
(BEGIN VIDEO CLIP)
MATT EGAN, CNN BUSINESS SENIOR WRITER: You see the likelihood of a recession by the end of 2020 higher than you did a year ago?
BRIAN MOYNIHAN, CHIEF EXECUTIVE OFFICER, BANK OF AMERICA: I think the uncertainty around that question is more of what's causing the debate than
it is the finality that people see. So what we see -- we have to back up. We know what we see so far.
[15:45:00] So a year-to-date through last Friday, the Bank of America consumer base has spent $1.3 trillion. That's up 5.5 percent versus the
last year which is up 8.5 percent from the year before. So, that's a tall order to keep the growth going.
EGAN: So, it's decelerating?
MOYNIHAN: Yes, it's decelerating, but it's consistent more with where it was in 16 and 17 before the benefits of the tax cuts, the consumer has got
-- more spending took place. It's back to levels of this, consistent with 2.5 percent growth. So, if you think about it, the idea is slowing down.
That's what people predicted.
The question is, is it going to slow down and level off or is it going to slow down and keep going? We don't see anything that says it's not going to
slow down and keep -- and level off. But you know, we'll find out as we move through the quarters.
EGAN: So, you said, the economy is expected to slow down. Has the chance of a 2020 recession in your mind gone up?
MOYNIHAN: Not really, because you know, we are -- we are not seeing the kind of activity that would give rise to an actual negative quarters of
growth. That people talk about recession, they've confused it with slowing down. The economy was predicted by everybody last year to slow down.
There was nobody saying that '19 was going to be bigger than '18, including ourselves.
That's coming true. About is, we feel -- we feel good about the economy. What we see in the activity -- are there uncertainties out there? Sure.
Are the trade issues, Brexit, what will happen to Europe? Will Europe slow down more? Slow down a little bit more? The uncertainties around -- those
are all real, but they're all against positive numbers becoming less positive numbers. Nobody is predicting real slowdowns at this point.
(END VIDEO CLIP)
ASHER: OK, so when we come back, it is all things Slack. The messaging tool made waves at the New York Stock Exchange, what makes its market debut
so different? We'll explain after the break.
(COMMERCIAL BREAK)
ASHER: Right, you're looking at live pictures there in Tbilisi, Georgia where it's almost midnight. Angry protests have erupted around Georgian
parliament in the capital of that country. Protesters are essentially accusing the ruling party of collaborating with Russia. Tensions flared
when Sergey Gavrilov; a member of Russia's Duma actually sat in the parliamentary speaker's chair to address the gathering members of Georgia's
main opposition parties on denouncing his presidency.
You're looking at live pictures, protests there, you can see throngs of people, crowds there in the streets, some of them waving the Georgian flag.
Again, a Russian MP visited Georgia's parliament, it's got a lot of people angry.
[15:50:00] Georgian opposition essentially tried to rush to the podium to help him -- remove him from the podium there and this ended up leading to
skirmishes between protesters there and police. Again, these are live pictures in the Georgian capital where major protests have broken out in
the streets around Georgian parliament there, we'll bring you much more news on this as and when we have it.
OK, so when it comes to the Wall Street workplace, Slack is not slacking off. Shares on the office tool are up close to 50 percent on the first day
of trading. That is off the highs of the day though. Slack actually opted for a direct listing rather than an IPO. First, I want you to understand
exactly what Slack is. Clare Sebastian reports a little help from Paula Newton.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT (voice-over): Slack is on a mission to change the way we communicate at work and do away completely
with office e-mail.
STEWART BUTTERFIELD, CO-FOUNDER & CEO, SLACK: You have your family e- mailing you, former co-workers, friends, people you work with today. It becomes just totally overwhelming.
SEBASTIAN (on camera): Here at CNN, we take bulging inboxes to a whole new level, not to mention the constant meeting makers.
NEWTON: It is communication overload, which makes us a prime target for the people at Slack.
SEBASTIAN (voice-over): Slack isn't just about messaging, everything you do at work, charts, spread sheets, social media can be found in one place
and compiled by topic.
NEWTON: A fancy word for it, information management.
BUTTERFIELD: Some people's first reaction to switching to Slack is, oh, my God, another -- yet another thing that I have to take care of and respond
to and pay attention to. But in the ideal case, we consolidate and replace a lot of those other systems. They don't feel quite as overloaded.
SEBASTIAN: Slack says more than 600,000 organizations use its products, but only 88,000 are paying customers.
(on camera): It's not just e-mails. Slack is also trying to bring your video conference needs into its eco-system. Let's see if I can call Paula.
NEWTON: Hi, Clare.
SEBASTIAN: Hey, Paula, so your 9:00 a.m. works, let's have a quick chat about the show.
(voice-over): The video conferencing lets you share your screen, draw on slides and integrate useful apps like Outlook, Twitter and Google Drive.
The company is going public in a direct listing. Meaning that it won't be raising extra cash. There's just one problem.
RETT WALLACE, CHIEF EXECUTIVE OFFICER, TRITON RESEARCH: They lose money. Unlike Dropbox and Darkesan(ph), they still lose money.
SEBASTIAN: Slack urgently needs to add more paying customers, and it's facing mounting competition from the likes of Google's Hangouts,
Microsoft's Teams app and Facebook's Workplace.
WALLACE: If you look at the growth characteristics of it, it's really actually pretty impressive. Anything that cuts your e-mail box down to a
place where it becomes manageable, I think people will find useful and ultimately will pay for. Is that a huge business? Who's to say?
SEBASTIAN: Slack says it's a tool for collaboration, so its products works best when everyone in the office uses it.
NEWTON: But sometimes there's no substitute for in-person communication. Clare, stop slacking, you're live in five minutes.
(END VIDEOTAPE)
ASHER: How dare she talk to you like that. I absolutely love that explanation by the way especially for people who don't actually use Slack
or know what it is. But just talking about their non IPO today. So, they went via direct listing.
SEBASTIAN: Right --
ASHER: Why does that benefit them?
SEBASTIAN: So, a direct listing is essentially -- it's written -- and only a few kinds of companies can do. Because you're not -- unlike a normal
IPO, you're not raising any capital, they're simply allowing existing shareholders, the likes of employees, venture capital firms, early backers
of the company to cash out.
So, they're taking the existing owners of the company and allowing them to sell their shares. So, no capital is going to be raised, there's also no
underwriters. So there's no set price, really. They let the market decide on the day.
That's why we see so much activity on the floor of the stock exchange in the first few hours of trading today. There was no road show, there was no
pitching to investors really like normal IPOs. So, really, this is -- this is the preserve of companies like Slack who already have good brand
recognition like we saw again with Spotify last year.
They also have good brand recognition, so it's not so important to go out there and pitch to investors. And the benefit of the company of course is
they save a lot on those fees from --
ASHER: Right --
SEBASTIAN: Wall Street investment bankers.
ASHER: Yes --
SEBASTIAN: That is a -- that is a lot of money that companies shell out for that.
ASHER: So they've done well today, but in terms of where they're going, I mean, they do sort of have the same problems as other sort of traditional
IPOs, these unicorn IPOs that we've seen --
SEBASTIAN: Right --
ASHER: For example, Uber, they have issues when it comes to making money - -
SEBASTIAN: Yes --
ASHER: Profit, and they've also suffered from slow growth as well.
SEBASTIAN: Yes, they're not profitable. They've lost about 140 million give or take for the last three fiscal years. And revenue growth has been
impressive. Last year was about 82 percent growth, but this year, they're only forecasting 50 percent, so it is coming down.
Now, Slack says their retention rate is good. So in companies where they already are being -- you know, the way the companies are already paying for
them, the actual usage within the company is growing, that accounts for a lot of their growth, they say.
But they do as we said in the piece, urgently need to attract more customers that pay a premium for their service. Their revenue is very
concentrated, 575 customers account for 40 percent of their revenue.
[15:55:00] So they're attracting these big companies, the likes of the Fortune 500 is very important for them.
ASHER: So how much do market conditions matter for either A, direct listings for example like say Spotify and Slack today, but also even
traditional IPOs like for example Uber. When Uber went --
SEBASTIAN: Yes --
ASHER: Public, they were dealing with the U.S.-China trade war. Today, Slack is going public and you know, the market is very buoyant because
everyone knows the Fed is probably going to cut interest rates next month. So, how much the market conditions --
SEBASTIAN: It's -- I mean, the luck of the draw.
ASHER: Yes --
SEBASTIAN: I mean, every CEO basically blames the market conditions at the time for the fact that their IPO has had such a disastrous start. But it
was interesting because we actually asked this to John Tuttle; the head of listings at the NYSE today, and he said that actually if you're a direct
listing, you're less vulnerable to market conditions because you're not selling shares direct to market, you're essentially just going from buyer
to seller. That's what we saw, that's how -- that's how this works on the floor, so a bit less vulnerable there.
ASHER: Interesting, all right, Clare Sebastian, I love -- I might actually go and watch Jerry Springer again, it was so entertaining. Thank you so
much, appreciate that. All right, there are just moments left to trade on Wall Street. We'll have the final numbers and the closing bell right after
this, don't go away.
(COMMERCIAL BREAK)
ASHER: All right, there are just moments left to trade on Wall Street, about 90 seconds, in fact. The S&P 500 is trading at sessions highs as it
heads into a new record. The Nasdaq, you can see there, showed minor gains. Both having their fourth straight day of gains.
You can see green across the board there. All sectors, noticeably higher, energy shares are actually the best of the day. The chart tells the story
of the day. The Dow actually began this session, you see it there at the beginning of the session is up about 250 points.
And then there was a slight dip around halfway through the trading day or so after U.S. tensions with Iran spiked ever so slightly or rather quite
dramatically, I should say. It's been climbing back ever since. Well, we're going to end the day roughly around 300 points or so, markets
squarely focused on this idea that the Fed is likely going to cut interest rates in July.
An increase in tensions between the U.S. and Iran has caused oil prices to spike as well. Brent is up nearly 4 percent, WTI is up even more, nearly 6
percent and briefly broke through the $57 mark. And that is QUEST MEANS BUSINESS, I'm Zain Asher in New York, "THE LEAD" with my colleague Jake
Tapper starts right now.
(BELL RINGING)
END
