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Quest Means Business
This Week's Stock Market Roller Coaster; Hong Kong's Week Of Protest Cost Cathay Pacific Chief Executive His Job; General Electric Is Fighting Back Accusations Of Fraud; Congresswoman Tlaib Rejects Israel's Invitation After Ban was Lifted; Violence Escalates in Zimbabwe's Capital; Hong Kong Officials Deny Permits for Sunday's March. Aired 3-4p ET
Aired August 16, 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 HOST: All right, even though we are up triple digits right now, we are still down for the week. Investors today
do seem to be happy about a fresh round of stimulus measures the ECB is likely going to be announcing in September.
It is the final hour of trading here on Wall Street. This is what is moving the markets.
As I mentioned, investors have that Friday feeling as plans for new stimulus give stocks a boost. And Hong Kong's week of protest cost Cathay
Pacific Chief Executive his job. We'll talk more about that a little bit later on the show. And GE's Chief Executive fights back against the
whistleblowers. Now the share price is fighting back, too.
Live from the world financial capital here in New York City. It is Friday, the 16th of August. I'm Zain Asher, in for my colleague, Richard Quest and
this is QUEST MEANS BUSINESS.
Good evening, all, I'm Zain Asher. The stock market roller coaster is finishing with an uphill climb. The Dow is up one percent, S&P 500 and the
NASDAQ are doing even better as bond yields rise off of their lows. It has, let me tell you, been a very, very volatile week. So many, so many
wild swings with the Dow, the S&P 500 changing direction every single day. And when you add it all up, the three major indices are set to end the week
with moderate losses.
So even though today has been a relatively good day, positive day, especially on the Dow, we are still on track to end the week rather with
loss.
Speaking to us earlier today at the stock exchange, floor broker Peter Tuchman said there's a lot for traders to consider. Take a listen.
(BEGIN VIDEO CLIP)
PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: So, you've got a lot of different data coming in on a week that's got some anxiety and fear in
it. It's a matter of what story are we spinning? We're closing out the week on an option expiration. On the upside, markets are up 300 points.
So yes, there is anxiety, there are headwinds. We're not clear what the market will do. We don't know what the Fed is going to do come September.
So there's so much on the table. For today, we have a Green Day. It's a good thing.
(END VIDEO CLIP)
ASHER: Joining me now, Kristina Hooper is the Chief Global Market Strategist at Invesco. She joins us live now. Kristina, thank you so much
for being with us.
So the Dow is up right now, almost 300 points or so. I mean, just walk us through what is really boosting the market today. It's all about these new
stimulus measures that the ECB is likely going to be announcing proving that in this environment, everybody is looking to the Central Banks to save
them.
KRISTINA HOOPER, CHIEF GLOBAL MARKET STRATEGIST, INVESCO: Absolutely. And this is really a pattern that began during the global financial crisis. A
lot of countries didn't have the willingness or the ability to fiscally stimulate out of the crisis, so they relied on their Central Banks and that
began a pattern of dependence. And we're just seeing a continuation of that now.
We are looking to the Fed to get us out of the mess we're in. We're looking to the ECB to get us out of the economic doldrums we're in, but
what it's likely going to do is impact markets, but not necessarily the economy.
ASHER: It is so interesting, because we already, for example, in the U.S. in this very low rate environment, even though the Trump administration is
putting so much pressure on the Fed that isn't -- I mean, how much can they actually really do in this environment?
HOOPER: Right, it's basically pushing on a string. It's not a lot that the Fed can do to impact the economy, because it's -- they can't force
people to borrow. They can't force banks to lend. They can just lower rates.
And so what happens in a scenario like that is that the greatest impact occurs to asset prices quite often, because it's a confidence game with the
economy.
And so if the participants in the economy aren't confident, what the Fed does isn't necessarily going to help them. So we're likely to see a boost
for the stock market and other risk assets, but not necessarily a boost for the economy.
ASHER: A boost for the economy is one thing, but is this economy likely going towards a recession in about a year and a half from now?
HOOPER: Well, that's a great question. And we can look into a variety of indicators that are telling us different things. And of course, many are
focused on the yield curve, which inverted briefly on Wednesday morning.
I would just give the caveat that while it often has a history of being quite predictive. Usually, it is most predictive if the inversion lasts
for three months or more. So a warning does not, I think, count as much as if we were to say this extend on for weeks and weeks.
[15:05:04] HOOPER: Second, we could be seeing a skewing of the yield curve of the Treasury market just because of the enormous amount of QE that the
Fed has conducted. It has a very bloated balance sheet and that may have in some way distorted the Treasury market. And that's not --
ASHER: Another guest said something very similar to me earlier this week, actually.
HOOPER: And so while I would say that, yes, there are some signs that the economy is clearly slowing, I don't know if we can say that a recession is
a foregone conclusion.
ASHER: Actually, some members of the Trump administration, his economic advisers actually do believe that fears of recession right now are
extremely overblown. I want to play our audience what Peter Navarro had to say about the inverted yield curve.
(BEGIN VIDEO CLIP)
PETER NAVARRO, DIRECTOR, WHITE HOUSE OFFICE OF TRADE: I didn't write the book on the inverted yield curve. But I've actually written several books
about that within the context of the business cycle. We don't have a strict inversion of the yield curve. What we have is a flat curve, which
is a much less of a sign of recession.
And the problem is that the Federal Reserve raise rates too far and too fast, so let's not do the gloom and doom. It's all good.
(END VIDEO CLIP)
ASHER: So he is pointing the finger at the Federal Reserve. Is the Federal Reserve deserving of the blame in all of this? Isn't it Trump's
trade war policies in part that may indeed cause the economy to slow down?
HOOPER: Well, I would say that last year, the two risk factors were that the Fed was tightening too quickly. And that the tariff wars were also
creating significant negative impact on the economy.
But the Fed risk factor has been removed because the Fed has stopped aggressively tightening, and in fact, has taken back one of its rate hikes
from last year. So that is now a neutral to actually a positive.
What remains though, is the trade wars, and it is actually getting worse because tariffs -- the real issue behind tariffs isn't the actual increase
in cost. Yes, that's certainly a problem that can weigh on consumers and businesses.
But I think the much greater damage comes from the economic policy uncertainty they create. That idea that businesses do not know what to
plan for in the future, because they don't know what the rules are. And that, to me, really goes to the heart of the problems weighing on the
global economy.
ASHER: One good -- one sort of positive piece of news that we got this week is obviously retail sales. You know, a lot of people are talking
about the fact that the American consumer, at this point is strong. Is the American consumer strong enough to stave off all the issues that could end
up resulting from a trade war?
HOOPER: Well, certainly the American consumer is strong, and we saw that in the retail sale number, but that is looking in the rearview mirror.
We actually just got University of Michigan Consumer Confidence numbers today, and what it shows is that there was a decline in the overall number.
But if you actually look at expectation versus current conditions, expectations fell more than current conditions fell.
And so we need to follow that closely because that's not dissimilar to when the 10-year falls to or below where the two-year is, it means that people
assume the future is not as bright as the present, and that's a problem for spending.
ASHER: Right. Kristina Hooper, live for us. Thank you so much. In Europe, stocks finished the week with solid gains. Italian stocks were
among the biggest winners, rising 1.5 percent. U.K. stocks rose over half percent after a rough start to the session. You see green across the board
there in terms of European stocks, a technical glitch delayed the start of trade for many stocks on the London Stock Exchange.
Okay, to Hong Kong now, where Cathay Pacific CEO has resigned after the airline was swept up in numerous controversies stemming from the protests
in the city. In a memo to staff, Rupert Hogg said that in hindsight, company leadership could have managed things differently. The airline's
Chief Commercial Officer is also stepping down as well.
The company has faced criticism from Beijing and from demonstrators as well over how it dealt with staff that had join the protest. Cathay is also
facing economic damage from the protests now in their 11th week. Andrew Stevens has our report.
ANDREW STEVENS, CNN ASIA PACIFIC EDITOR: Cathay Pacific's highly regarded CEO appears to have become the latest casualty of Beijing's growing anger
against the Hong Kong demonstrations.
Rupert Hogg said he was resigning to take responsibility for what he described as challenges in recent weeks. Well, those challenges really
began when it emerged that staff at Cathay Pacific had been joining demonstrations in Hong Kong now in their 11th week.
Beijing was swift to respond demanding that Cathay ban any staff who had taken part in demonstrations from flying into Chinese airspace. It also
asked for a new security and safety plan from Cathay. Cathay responded. The regulators agreed, but Cathay then said it had absolutely zero
tolerance for any of its staff joining demonstrations, illegal ones, and also it announced that it was sacking two pilots who have been involved in
the protest.
[15:10:08] STEVENS: All that because it really had no choice. China is too important to ignore.
(BEGIN VIDEO CLIP)
ELEANOR OLCOTT, CHINA POLICY ANALYST, TS LOMBARD: What the Cathay example shows us is that, essentially for this company that is a Hong Kong legacy
brand, the Mainland audience, the Mainland consumer is just too important.
(END VIDEO CLIP)
STEVENS: Almost half of Cathay's flights travel through Chinese airspace. About 50 percent of all seats it sells are sold to Mainland Chinese
customers.
Well, the departure of Rupert Hogg was met with shock and disappointment in Cathay and surprise in the broader aviation industry.
The chairman of Cathay, John Slosar said this in a statement, "Recent events have called into question Cathay Pacific's commitment to flight
safety and security and put our reputation and brand under pressure. This is regrettable as we have always made safety and security our highest
priority. We therefore think that it is time to put a new management team in place who can reset confidence and lead the airline to new heights."
Well Cathay is owned by Swire Pacific or controlled by Swire Pacific, which is one of Hong Kong's oldest companies with interest in property in
trading, and also in bottling. It has big interest also north of the border in China, as is common with many Hong Kong companies, also feeling
the pressure from Beijing.
And if you want to see an illustration of the power that Beijing now exerts, just have a look at how the Cathay announcement was made. It was
actually broken in the media by CGTN. That is China's state owned broadcaster. Andrew Stevens, CNN, Hong Kong.
ASHER: All right, as usual, I want you to join the conversation, get out your phones and go to cnn.com/join. Tonight, we are asking was the Cathay
Pacific CEO right to resign? Did he do the right thing by resigning? That is our question to you. Just go to cnn.com/join and you'll see the results
in a moment on your screen.
Cathay's legacy is intertwined with Hong Kong and the Mainland. The company began in 1946 as a freight service between Australia and China. By
2010, Cathay was the world's biggest international air cargo carrier.
In the decades after its founding, Cathay opened Hong Kong to business travelers. It launched direct flights to New York, London, Los Angeles and
Vancouver. Travelers going to the Mainland used Hong Kong as a stopover.
The economics of that have changed recently, where the rise of Chinese carriers offering direct service and this week isn't the first time Beijing
has targeted the airline, for example, when cabin crew opposed plans that would have required them to wear badges with their official Chinese name,
Chinese state media said the opposition came from an enslaved mindset referencing Hong Kong's colonial past.
Brian Sumers is the Senior Aviation Business Editor at "Skift." He says the events of this week could be a turning point for Cathay Pacific.
Brian, how so?
BRIAN SUMERS, SENIOR AVIATION BUSINESS EDITOR, "SKIFT": Well, you know, Cathay Pacific, as you mentioned there is a storied brand. I don't know if
people know this, but it's really up there with say American Airlines or British Airways or Qantas just in terms of its history and its power.
You know, if you wanted to get from the United States or Europe into Southeast Asia or Hong Kong, you fly Cathay Pacific. And right now, people
are skittish about this airline.
Of course, Cathay Pacific has to protect its brand in China, and I think that this has a lot of fallout from that. But if you're looking at people
who are coming from the United States, in Europe, who are going to Asia, they may be worried about flying Cathay Pacific right now, not because it's
dangerous, or it's unsafe, it's perfectly fine airline, but as a hit to a corporate brand and an image, this is a very big deal.
As the report before mentioned, Rupert Hogg was just a very good airline manager. You know, when he took over a couple of years ago, the airline
wasn't in great shape. It was losing money. They went on a big cost control program. And last year, they made money. Things were looking
really up for this airline.
ASHER: He had no choice. I mean, you know, our question to the audience is, is it right that he resigned? But it seemed as though given that
Beijing sort of controls the strings here, it seems as though he may have indeed had had no choice. I mean, can the leadership of Cathay Pacific
really control what activities their staff participate in?
SUMERS: Well, in some ways, this is more of a political question than an airline question, right? I mean, I'm the airline expert. But it does
strike me that he had no choice.
I did speak on the phone earlier this week with Cathay Pacific's top executive for the Americas. And he said, look, you know, if our regulator
tells us something to do, we have to do it. You know, U.S. airlines don't go to the FAA and say, "No, we don't like that." China is a big market for
Cathay Pacific and also a lot of these flights, if they don't stop in China. They overfly China.
[15:15:10] SUMERS: If you want to go from, you know, Hong Kong to Los Angeles where I am, you have to go over Chinese airspace. You can't anger
the regulator and fly over Chinese airspace. So you're right. Rupert Hogg probably had to go just for that reason alone.
ASHER: So how much economic damage have these protests caused Cathay Pacific, especially when you consider just how long the Hong Kong airport
was shut down for?
SUMERS: You know, it's far too early to know. I did have this conversation earlier in the week with a Cathay executive. He said they
haven't seen it in the bookings yet. That strikes me as little disingenuous, right? I mean, of course, they must be seeing it in the
bookings if just for people wanting to postpone their trip to Hong Kong or being a little bit jittery.
I mean, the better question is, in a year or two or three, will this all dissipate? People will forget it? Or are people going to be having long
memories, and they're going to say, "You know, look, I'm going to Ho Chi Minh City, I could transfer through Hong Kong like I always have on this
famous airline. But I'm going to fly ANA through Tokyo and Narita. That just seems like a better idea." It's going to take a while for this -- for
us to see the fallout from this and see what happens.
ASHER: Right, but the big question is, how long will it take to blow over? Brian Sumer's live for us there. Thank you so much.
SUMERS: Thank you.
ASHER: He alleged the scandal is bigger than Enron. But the GE whistleblower now says he estimates -- his estimates are probably too low.
(BEGIN VIDEO CLIP)
HARRY MARKOPOLOS, CERTIFIED FRAUD EXAMINER: Yes, we are probably too low in our loss estimates. We're trying to give them the benefit of the doubt.
(END VIDEO CLIP)
ASHER: Donald Trump is being mocked for expressing interest in buying Greenland. One hundred and fifty two years ago, the same thing happened to
the guy who bought Alaska. I'll explain how the Arctic has become the final frontier for international trade.
(COMMERCIAL BREAK)
ASHER: General Electric is fighting back accusations of fraud. CEO Larry Culp has bought almost $2 million in GE shares, doubling his stock in the
company. GE shares rebounding on that news, see they are up eight and a quarter percent, a day after the biggest drop in over a decade.
Now compare that to a year ago, as you can see here, GE has recovered from late 2018, but still down from what it was last August. The man who
sounded the alarm, Harry Markopolos famous for blowing the whistle on the Madoff scandal in 2008. He spoke with Julia Chatterley about the alleged
scandal he says is bigger than Enron.
(BEGIN VIDEO CLIP)
[15:20:12] MARKOPOLOS: I look at this as a month-long endeavor, and we'll see how long GE lasts. If they make it into 2020, that would be great for
them. We'll see.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Who would you want to see prosecuted in this case? Because you're arguing that this goes right back
to Jack Welch. This was a consistent scam effectively to mismanage the books and to effectively hide the underlying performance of the business
from investors.
MARKOPOLOS: GE has been cooking books for many decades. Jack Welch acknowledges that in his autobiography. I'd give you the page reference.
I'd you the direct quote, and it has continued to this day.
As far as prosecutions, the statute of limitations is six years, anybody who signed false financials, or who helped prepare false financials would
presumably be brought to justice, we will see.
CHATTERLEY: How long does it take -- you mentioned by 2020? But right now investors are giving them the benefit of the doubt. A whole host of -- I
mean, I've got a list of them of people that have come forward and said, "Look, we believe -- we believe in GE. We believe what they're saying.
The CEO bought two million shares." What do you think of that?
MARKOPOLOS: If people want to drink the Kool-Aid, great. If the CEO wants to buy into an accounting fraud, great. Let them. Everybody gets to vote
in the capital markets. I'm looking at this long term.
If they make it to 2020, then can they make it through 2021? They are one recession away from Chapter 11.
CHATTERLEY: That's how close you think this is.
MARKOPOLOS: Their balance sheet is in tatters. Their current liabilities are $60 billion. Their current assets are $40 billion.
CHATTERLEY: Is that why you're comparing it to Enron. You said it's worse than Enron and Worldcom put together, simply because you're looking at the
sheer scale of the losses here versus the market cap of the company.
MARKOPOLOS: Yes, so let's take a look there. They are cash flow negative. How long can you burn cash? And lower interest rates actually kill them.
It hurts their investments on their long-term care reserves, and it also hurts them on their pension liabilities.
Their pension liabilities have increased so much with long-term rates so low, less than two percent. Their pension liabilities have ballooned from
$27 billion to who knows what they are today?
CHATTERLEY: Could you have made a mistake? Because your point this is sensitive to a market environment? We're talking about such huge numbers
here. It is 174 pages. Could you have made a mistake?
MARKOPOLOS: Yes, we are probably too low in our loss estimates, but we're trying to give them the benefit of the doubt.
CHATTERLEY: So this is you being conservative on loss estimate.
MARKOPOLOS: Yes.
CHATTERLEY: And to those that say you're a profiteer, you're a market manipulator. What's your response?
MARKOPOLOS: I'm not, I'm a fraud examiner. I'm a seeker of the truth. If I see accounting fraud, I go after it.
(END VIDEO CLIP)
ASHER: Paul La Monica joins us live now. GE seems to think that this is a clear case of market manipulation. Harry Markopolos says, no, there's
something actually here. How do we know the truth?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think only time will tell before we realize whether or not this is a case of just GE, maybe having
accounting that's a little aggressive, if you will, but not necessarily fraudulent or illegal. And I think that, you know, at least today with the
stock rebounding the way it is, investors are giving GE the benefit of doubt.
It helps to have Larry Culp who is not a long time GE exec, he came in to clean up this mess. And I think you know him buying shares is a sign of
confidence. And his very strongly worded statement about Markopolos saying how wrong he feels all of these allegations are is lending some confidence
today.
ASHER: So he bought -- the CEO, the new CEO -- bought $2 million worth of the company stock, proving, hey, look, I have so much faith and confidence
in this company. So for ordinary investors who are looking at that, what should they be reading into Culp's move?
LA MONICA: Yes, I think it's fair to say that when a CEO or another insider, be it a Board member or an executive buys shares, you're
committing money to purchase the stock you think it's going to go up. Sometimes, we get all worked up about insider sales, and that might be a
little too much hyperbole because you know, you can sell a stock for a lot of reasons and still own a significant amount. You just need to diversify
your portfolio or what have you -- pay some bills, and execs have to do that, too.
But if you're going to buy stock, there's really no compelling reason to do that unless you think it's going to go up.
ASHER: Right. So it's important to note, obviously, Markopolos was paid by hedge fund to conduct this research. Is there a conflict of interest
there? I mean --
LA MONICA: Yes, I think it's fair for GE and for investors to wonder whether Markopolos despite the fact that he has got a great track record
helping to expose Madoff, whether or not there is this conflict of interest, even though he is not specifically shorting the stock and taking
any financial position.
You know, he is doing this at the behest of a firm that wants to see GE stock goes down. And I think it's interesting, there's another short
selling research firm that's independent called Citron Research, and they tweeted this afternoon, "Markopolos' report on GE was the worst that
activist short selling has to offer. Aggressive accounting is not fraud. Disingenuous all the way through."
[15:25:09] LA MONICA: Some pretty strong words a research group that doesn't mince words about companies and they often blast firms that they
find to have found have done things with an accounting standpoint that are either illegal or sketchy. So they're defending GE.
ASHER: There are a few Wall Street analysts that came out in GE's defense. So we'll see where it goes. Paul La Monica, live for us. Thank you.
LA MONICA: Thank you.
ASHER: Amazon shares are up more than one percent after a bruising week for tech stocks. Tonight, on CNN, Poppy Harlow has a Special CNN report on
"The Age of Amazon" and where the company goes next.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNN ANCHOR: Amazon recently won a patent for a floating warehouse that could store drones 45,000 feet into space.
One of many stranger than fiction ideas Amazon has in the works.
AMY WEBB, FOUNDER, FUTURE TODAY INSTITUTE: They are deep in research now on recognizing not only who you are, but what you are in that moment in
time.
HARLOW: According to Bloomberg, Amazon is working on a wearable device that can read human emotions.
UNIDENTIFIED MALE: Voice profiles give you the ability to teach Alexa your voice.
WEBB: Using a baseline of your biometrics.
UNIDENTIFIED MALE: Alexa, close the shades please.
WEBB: You know, are you depressed?
UNIDENTIFIED FEMALE: Alexa, tell Roomba to start cleaning.
WEBB: Are you happy?
UNIDENTIFIED MALE: Alexa, what time is it?
WEBB: Are you manic? Have you had a stroke and you don't realize it yet? Do you have early onset Parkinson's.
UNIDENTIFIED FEMALE: Alexa, turn the TV on.
WEBB: These are all discoverable, if there's a big enough database of your voice.
UNIDENTIFIED FEMALE: Alexa, tell my coffee machine to prepare --
UNIDENTIFIED MALE: Healthcare is clearly in the next big business they want to offer. They acquired this company called PillPack which
distributes drugs.
UNIDENTIFIED FEMALE: It's your medication made easy.
UNIDENTIFIED MALE: They are working on ways to turn Alexa into a doctor in your home.
WEBB: It's plausible that Amazon will pretty soon know you better than your spouse does, better than your kids or parents do, better than you know
yourself or you're willing to admit.
(END VIDEO CLIP)
ASHER: All right, set your DVRs. You can watch our special report on "The Age of Amazon" in about six hours from now. It's 9:00 p.m. New York time
or 9:00 a.m. Saturday if you're in Hong Kong.
We are open for business but not for sale. Greenland responds after sources said Donald Trump might want to buy the island. The Chairman of
the Greenland Business Association joins us next.
(COMMERCIAL BREAK)
[15:30:00]
ASHER: Hello everyone, I'm Zain Asher, there's more QUEST MEANS BUSINESS in a moment, when I'll speak to the president of Bugatti, which has just
unveiled one of its most exclusive super cars ever.
And Donald Trump's plan to buy Greenland has sparked outrage, excitement and a little bit of ridicule as well. He's actually not the first
president to suggest it though. Before that, these are the headlines we are following for you at this hour.
U.S. Democratic Congresswoman Rashida Tlaib is rejecting Israel's offer to allow her to visit her elderly grandmother in the West Bank. She was
initially banned and granted a humanitarian visit on the condition that she would not promote boycotts while there. Now, she says her grandmother
wouldn't want her to go under, quote, "oppressive conditions."
In Zimbabwe's capital, tensions between the main opposition party and President Emmerson Mnangagwa's government turned violent after a court
ruled against an opposition protest. Police fired teargas and used batons against protesters who defied the ban. Members of the Movement for
Democratic Change are protesting the government's handling of the nation's economic crisis.
In Hong Kong, officials have denied permits for an anti-government march on Sunday. Approval still stands for a rally in the city's Victoria Park.
Meantime, protesters are calling for the boycott of Disney's upcoming live action "Mulan" remake after the movie's star expressed her support for Hong
Kong police.
Greenland is not for sale. That's the message from the autonomous Danish territory after reports surfaced that Donald Trump has repeatedly inquired
about buying the island. Martin Lidegaard who chairs the Foreign Police Committee in a Danish parliament says the idea is down-right insulting.
(BEGIN VIDEO CLIP)
MARTIN LIDEGAARD, CHAIRMAN, FOREIGN POLICY COMMITTEE, DANISH PARLIAMENT (through translator): This must be a joke from the American president.
Its' an insult against the people of Greenland. We live in 2019, you don't sell islands, countries or people like this. It's a grotesque idea. It's
not going to happen under any circumstances.
(END VIDEO CLIP)
ASHER: The notion of the United States buying Greenland makes for an easy punch line, and let's face it, it's probably not going to happen. But it
does have a few merits and it's also not entirely without precedent. The 2 million square kilometer island rests between the Atlantic and Arctic
Oceans, even though it's mostly covered in ice, Greenland has emerged as an important strategic access point to the Arctic Circle.
The area is particularly sensitive to the climate crisis as the ice melts, it's opening up a rare economic frontier. Russia and China already racing
the U.S. to take advantage and to take out control of new shipping lanes. This is allegedly Washington's third attempt to buy Greenland.
The first time was in 1867 by Secretary of State William Seward. He eventually settled on buying Alaska from the Russians instead. The U.S.
and Denmark struck a deal in 1917, $25 million worth of gold was good enough to purchase what is now the U.S. Virgin Islands in the Caribbean.
In 1946, documents show President Harry Truman offered $100 million for Greenland, Denmark declined to sell.
Henrik Leth is the chairman of the Greenland Business Association, he is in Greenland's capital for us. Henrik, thank you so much for being with us.
So, what did you make of the idea when you heard that Donald Trump was interested in buying your island?
HENRIK LETH, CHAIRMAN, GREENLAND BUSINESS ASSOCIATION: Yes, he was the laughing stock, I was at the party yesterday and everybody was laughing
when they heard about it, so, people don't take it very seriously that this offer has come true, if it has been done, actually.
ASHER: OK, but sort of more seriously, as I was just saying, this is not the first time the U.S. has inquired about potentially buying Greenland.
So, just walk us through why you think -- the -- why you think Greenland has so much to offer economically the rest of the world especially the U.S.
[15:35:00] LETH: Yes, but I mean, what we have here is of course, minerals, a lot of minerals in the underground, but it has not been very
much (INAUDIBLE), given that. We also, of course, have furniture(ph), and then -- but we don't export very much to the U.S. So, you can say the
economic relationship between Greenland and the United States is not very big.
ASHER: So, there's also -- oh, I'm sorry, continue.
LETH: No, OK, but I'll just say that we don't see the big potential in the U.S. markets sort of. We have a big market in Europe and the far east, so
that's why we are concentrating our efforts.
ASHER: Just in terms of the sort of colonial element to all of this, what does Greenland think of the idea that sort of countries are talking about
simply buying and selling them?
LETH: Yes, but I mean, right now, we live in the 21st century, and I think it's something you were doing in the 1700s or something like that. You
could talk about selling and buying people like the suggestion from -- that has been put up, and of course, it's totally ridiculous. I mean, if it was
land without anything on, you could discuss having it, but this is a land of 56,000 people, and you just don't sell them like it's cattle or
something else.
ASHER: And there's also in Greenland amongst some officials -- there's also a movement to get independence from Denmark itself.
LETH: Yes, I mean, that's a movement that, you can say, all people probably wants to be, you can say, economically independent of other
people, and right now, Greenland is very dependent of Denmark economically and so on. But I don't think anybody, no matter how much they wanted
dependency would like to sell the country in order to get it.
So, I think it's a question of developing the country so that we can be more economically independent, but I don't know, I think that's a process
that will last for many centuries.
ASHER: All right, Greenland is saying that they are quite simply not for sale. Henrik Leth live for us, thank you so much, appreciate it. All
right, Sara Westwood is our White House reporter, she is in New Jersey where President Trump is on vacation. Sara, thank you so much for being
with us.
So, what prompted this idea from President Trump to potentially try to buy Greenland?
SARA WESTWOOD, CNN WHITE HOUSE REPORTER: Well, Zain, the "Wall Street Journal" which first reported the president's inquiries about purchasing
Greenland said this is something that the president has repeatedly asked his aides and advisors about over the past several months with varying
degrees of seriousness.
Two sources tell CNN that the president has asked the White House Council to look into the possibility of purchasing Greenland, whether that would
even be legally feasible. But the "Wall Street Journal" reported that aides within the White House are divided over whether this would actually
be a smart move.
There are some within the White House who think that perhaps this would be an economically strategic move, they don't think Greenland has a lot of
natural resources and it could be geopolitically strategic because of its location, because of the fact that there are already American military
assets there.
And there are another group of aides who don't really see the wisdom in this kind of move or even question whether President Trump is serious about
buying Greenland. Keep in mind that the U.S. has its northern most military base in Greenland, that's the Thule Air Force Base, it's also one
of the places where the U.S. can detect ballistic missiles coming from Russia.
It's an early radar system and early warning radar system that the U.S. has there, so there are strategic reasons to be interested in Greenland, but of
course, the president's inquiries have sparked some outrage in Greenland as we just heard the country's government saying that they have no interest in
being sold to the Trump administration, Zain.
ASHER: So, when do we know just how serious Trump actually is?
WESTWOOD: Well, Zain, that's extremely hard to tell in any circumstance, but particularly about one in which the president hasn't been speaking
publicly. He hasn't really brought up in public settings his interest in Greenland. This is something that he's asked aides and advisors about,
according to the journal's reporting in private dinners, in private meetings, something that he's been mulling over himself behind closed
doors.
He hasn't really put it out there as any sort of trial balloon to gauge the public's interest in this, and of course, the White House Counsel's office
according to those two administration officials who spoke with CNN seems to be still looking at the feasibility of doing this if that's something Trump
wanted to pursue. Some aides, Zain, comparing the potential purchase of Greenland to an Alaska-like legacy item for President Trump.
ASHER: All right, Sara Westwood live for us there, thank you so much. OK, so, if buying Greenland isn't an option, how about something new for your
garage? After the break, I'll be with the president of Bugatti whose new super car -- get this, is going to be costing $9 million.
[15:40:00] (COMMERCIAL BREAK)
ASHER: It's been 110 years since Bugatti cars first started speeding around corners and a few things have changed since the days of Malcolm
Campbell. Now, the company known for its dazzling super cars has unveiled one of its most exclusive models yet to celebrate its 110th birthday. This
is the new Centodieci -- that's Italian for 110, by the way.
It's a homage to Bugatti's famous EB110, it's strictly limited edition. In fact, only 10 will ever be made and each one will cost you $9 million.
Stephan Winkelmann is the Bugatti president, he joins us live now from Pebble Beach. So, Stephan, obviously, you know what I'm going to ask you.
Why the $9 million price tag on this? What are customers going to be getting in exchange for that?
STEPHAN WINKELMANN, PRESIDENT, BUGATTI: A customer gets a car which is outstanding, the Bugatti Centodieci is an 8 liter capacity engine, it has
16 cylinders and it has 1,600 horse power. And it's a power to weight ratio which is incredible for a super sports car also of just 1.1 kilos per
horse power.
And then the design is really outstanding. Yes, it has an inspiration coming from the EB 110, which is our Italian intermeds out of the 90s. But
he gets a wonderful car which is very limited just in the unit, and what is important, we put a lot of effort into the development of the cars, and
this is also the reason of the high price. So, the high cost of developing them and their volumes which are very exclusive, so just 10 units to be
built.
ASHER: Right, so 10 units, presumably 10 drivers. What is the kind of driver? What kind of person do you envision behind the wheel of this
Bugatti?
WINKELMANN: Yes, let's say, that all these cars are sold already. This is one of the things we do because it has to be a business case for us, and we
don't want to put the company at a risk if we do something like this. But usually, they're male, there is no average age. And we are -- this boosted
very well all over the world.
[15:45:00] So, we have customers in the U.S., in central Europe, in Asia and also in the Middle East. So, we try to keep it very much on the -- on
the -- say major regions of this world, and we have always more request than cars to offer.
ASHER: That's very interesting, more requests than cars to offer even with a $9 million price tag. So, obviously, this car is to commemorate the
110th anniversary of Bugatti. What is the next 100 years of Bugatti going to look like, do you think?
WINKELMANN: Yes, we always need to surprise our customers. We have to be ahead of the dreams of our customers. We say "if comparable, it's no
longer Bugatti." So, we have to be the best when we get in the market, we don't have to be the first ones doing the things, but we have to do it in
the right way.
So, also in the decades to come, all our cars will be very limited, there will be collectors' items as the cars are from our past of the 20s and 30s,
and they will be collectors' items also in the future. And this is one of the biggest challenges we have as a company because these cars, they have
to maintain them, value and all, they have to be much better, more valuable in the future.
ASHER: All right, Stephan Winkelmann ahead of Bugatti live for us there in Pebble Beach, California, thank you so much. All right, on to something
strictly vintage, an anonymous bidder got the keys of a four wheeler built for 007 for $6.4 million at a classic car auction in California. Making
the 1965 Aston Martin DB5 the most expensive James Bond-themed car ever sold. CNN's Peter Valdes-Dapena reports why it's causing quite the stir.
(BEGIN VIDEOTAPE)
PETER VALDES-DAPENA, CNN SENIOR BUSINESS WRITER (voice-over): Sleek, sophisticated and fit for a sport. The Aston Martin DB5 inexplicably
linked to James Bond.
BARNEY RUPRECHT, CAR SPECIALIST, RM SOTHEBY'S: So much of it was, you know, cultural iconic status. It was really ahead of its time and today,
the cars are really a throwback to that.
VALDES-DAPENA: Seen as a classic today, the James Bond DB5 was the pinnacle of special effects ingenuity in its era.
RUPRECHT: Yes, we do have a phone back to MI6 headquarters here.
VALDES-DAPENA (on camera): So, I can call RM?
RUPRECHT: Exactly.
VALDES-DAPENA (voice-over): The car option by RM, so the beast is fully loaded with all 13 gadgets seen in the movies.
JAMES BOND, FICTIONAL CHARACTER: Dejected to see you're joking --
UNIDENTIFIED MALE: I never joke about my work, 007.
VALDES-DAPENA: From a 30-caliber gun in each fender to tire slashers and even a smoke machine.
RUPRECHT: Everything is housed in here as is the bulletproof shield.
VALDES-DAPENA: Sold by an anonymous owner, it is one of three surviving models of its kind.
REPRECHT: The restoration around the car really involved making everything functional again. So, the rotating license plate, motor surf boats to the
GPS flashing in the dashboard, everything about the car fully works.
VALDES-DAPENA: Used for a promotion, this DB5 never actually appeared on film, but Sotheby's says that doesn't make it less of a game changer.
REPRECHT: DB5 was really the first broadly-speaking commercial mass- produced car for Aston and it was a tremendous success.
VALDES-DAPENA: The car is ready to go home with a lucky buyer, helping them turn their deepest spy fantasies into reality.
REPRECHT: Fully road legal, fully compliant, anywhere in the world.
VALDES-DAPENA: As long as the new 007 doesn't run afoul of the real world authorities.
(on camera): I guess, just please don't use the nail spreader or the oil sling.
(voice-over): Peter Valdes-Dapena, CNN, New York.
(END VIDEOTAPE)
ASHER: All right, still to come here, peace, love and rock and roll. Woodstock celebrates its 50th anniversary. How it spawned the modern music
festival next.
[15:50:00] (COMMERCIAL BREAK)
ASHER: It was the Summer of love and a pivotal time in modern music history.
(MUSIC)
ASHER: Fifty years ago, half a million people descended on a dairy farm in Up State, New York for the Woodstock Festival. It was a time of
celebration by coming together and for watching world class performers like of course Jimi Hendrix. Today, the spirit of Woodstock lives on in the
booming music festival economy, festivals are expected to make $20 billion by the early 2020s while Woodstock ended up being free.
Festivals now cost hundreds of dollars to attend and big brands are getting into the game as well. Woodstock's 50th event was planned for this
weekend, but was cancelled because of problems securing funding and location. Richard Florida is the co-founder and editor-at-large of
CityLab, he joins us live now.
So, Richard, thank you so much for being with us. So, when you just saw that clip or at least heard that clip of Woodstock 50 years ago playing,
what sort of memories did that bring up for you?
RICHARD FLORIDA, EDITOR-AT-LARGE, THE ATLANTIC & CO-FOUNDER, CITYLAB: Well, first of all, I was a guitar player before I'm an academic, and Jimi
Hendrix was my boyhood idol. So, I spent a lot of time as a kid practicing "Purple Haze". Moreover, I was 11 years old when Woodstock took place, and
the two neighbors wanted to take me to Hippies and my parents wouldn't let me go.
So, it's been a sweet memory for me, I would take it -- it's one of the great, you know, powerful events that defined what came to be known as the
'60s in the counter-culture.
ASHER: So, how has the festival economy evolved since 1969?
FLORIDA: Well, very fortunate, you know, one of my colleagues -- in fact, one of my former students, there's young man named Patrick Adler(ph), and
as part of his dissertation research which I talk about in this article in "The "Atlantic" CityLab, he's been tracking the music festival economy.
So, he and I cooperated on this and basically, you know, after a while, after Woodstock, there were a lot of buzz, you know, altima(ph), a lot of
failures. But then in the '90s, this kind of new kind of more -- I don't even want to call it, celebrity-driven, money-driven festival economy
started to emerge.
And then right around the turn of the new millennium when you got Bonnaroo and Lollapalooza Coachella, you've got this boom in these new kinds of
music festivals, which weren't about any more peace and love. But were now about making money and kind of creating this celebrity-driven music
industry.
ASHER: So, will we ever have a Woodstock-type festival that's sort of free and all about love and less commercial ever again? Can you envision that
happening in this country?
FLORIDA: Well, I don't think so. I mean, it was a naive time and remember, Woodstock had plenty of problems, like it was muddy, it was
dirty. But I think what people thought is these 500 million young people coming -- well, 500,000 young people made their way of it, you know, made
it happen -- and the music, I mean, the music is just -- you heard, mind- bending.
No, I don't think so, and I think the music industry has changed. You know, it's a different kind of music industry. It's less technical, if you
will, it's less instrumentally-driven, it's more about beats and DJs, which is fine, but it's a different -- it's a different kettle of fish these
days.
ASHER: But wouldn't music fans, real music lovers absolutely crave another Woodstock equivalent of our generation?
[15:55:00] FLORIDA: Yes, you know, well, it was sad. You know, the 50th anniversary thing, it looked like it was going to be really interesting and
then it just ended up tanking. But the other point of this is, there's a lot of -- you know, there's been an oversaturation of music festivals in
general, and even though the industry has grown over time, it's kind of, you know, in this -- in this period of resetting itself.
Yes, and I think, you know, the success of Coachella, the great glass and berry festival in the U.K., this festival had ochella, you know, last year
where they brought back some of the acts like the Rolling Stone and McCartney and the who? But I think music is different now.
You know, Woodstock was about a different time and a different kind of music. Just like the Newport Gas festival or the Newport Folk festival was
about the music of that time and that day. And I think the music industry has changed and people would say some for the better, other people who are
like me maybe would say for the worse.
ASHER: It's so beautiful that you shared your memories earlier on, just being an 11 or 12-year-old boy, being so excited to go and not being
allowed to. Richard Florida live for us there, we have to leave it there, we're out of time, thank you so much.
FLORIDA: Thank you.
ASHER: All right, there are moments left to trade on Wall Street, we'll have the final numbers and the closing bell right after this.
(COMMERCIAL BREAK)
ASHER: All right, there are moments left to trade on Wall Street. Take a look here, the Dow is up 300 points or so, it is at the best point of the
day. Investors are excited by this new round of stimulus. The ECB is set to unveil in about a month from now in September, proving that it's really
the central banks in this environment that investors are looking to save them from all the volatility.
The market though is set to close for the gain of 1.3 percent, yes, you have a 100 and the Nasdaq are doing even better, but it has been -- let's
not forget, a very volatile week. We are still down for the week even though we are up triple digits today. Let's look at the Dow components
more specifically.
They are all up for the day, green across the board, bank shares are doing particularly well, thanks to a rise in bond yields. Away from the Dow,
shares in GE are up 10 percent, you heard earlier how the chief executive is buying up shares after the company was accused of major fraud. It's
still though -- there's still some concern about this escalating trade war between the U.S. and China, and that is really driving the markets.
And that is QUEST MEANS BUSINESS, I'm Zain Asher in New York, the closing bell is about to ring on Wall Street, "THE LEAD" with Jake Tapper starts
right now.
(BELL RINGING)
[16:00:00]
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