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Quest Means Business
China Will Exempt U.S. Soybeans And Pork From Its Most Recent Tariffs; Democrats Criticize Trump On Trade Strategy, But Split On Tariffs; Actress Felicity Huffman Is Being Sentenced Over Her Role In The College Admissions Cheating Scandal; ; The Bahamas Braces for Another Storm System; Crews Search for 1,300 People Missing After Hurricane Dorian. Aired 3-4p ET
Aired September 13, 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: Stocks ending the day in the green. We are up 55 points or so as the U.S. and China extend olive branches to
each other in a sort of detente in the trade. It is the final hour of trading on Wall Street. The Dow is on pace to close out the week with its
eight straight gain. We are on the cusp of new records. Let me show you what investors are watching.
The question is how to solve a trade war. The Democratic candidates lay out their plans as China makes new concessions and WeWork takes power away
from its CEO in order to save its IPO, but the company's valuation keeps dropping. And the London Stock Exchange rejects Hong Kong's takeover bid.
Hong Kong could now go hostile. Coming to you live from the world financial capital, I'm Zain Asher, it is Friday, September 13th, and of
course, in for my colleague, Richard Quest, and this is QUEST MEANS BUSINESS.
Good evening, tonight investors buy into trade war optimism. The Dow has been on the cusp of a record high. If it holds these gains, this will be
the eighth winning session in a row, the longest for the Dow is September 2017. The S&P 500 gave up an earlier rally and is now virtually flat.
China will exempt U.S. soybeans and pork from its most recent tariffs. The announcement comes after several other olive branches in the trade war.
First, China said it will suspend spend tariffs on 16 American goods for a year, then the U.S. postponed a hike on tariffs of Chinese goods. Mr.
Trump also said Thursday that he would prefer a whole deal with China rather than an interim deal that leaves harder issues to be resolved later.
Still, he said he would consider a smaller deal.
Alison Kosik joins us live now. So we've seen the stock market, Alison, obviously rally on this news about 55 points of so, so basically flat. But
do investors actually buy? Do they actually buy that this detente between the U.S. and China is actually going to last?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: That's a very good question, isn't it? Well, I think for today, they do buy it, and I think what you're
seeing investors and traders really do is follow those headlines. And right now the headlines are positive, at least for a cooling off a little
bit from that escalation we've been seeing so much of in the trade war.
You know, you talked specifically about, you know, what China has offered the U.S. There's also what Mr. Trump has offered China, and that actually
is helping President Xi kind of save political face, because by delaying those tariffs, from October 1st to October 15th, it's helping President Xi
focus on that 70th Anniversary of the founding of the People's Republic of China, it's a big celebration. It means that President Xi won't have the
distraction of these tariffs going into effect on October 1st.
So what do we see? We see a flat market today, but we also see them marching higher up the market. We see the Dow and the S&P 500 within
striking distance of all-time highs at a time when you know, never mind the fact that we still don't have a resolution to the trade deal.
Never mind that, you know, you're seeing these multinationals warn and we're seeing the expectation that they're going to have weak earnings for
the third quarter. Never mind that we saw manufacturing contract for the first time in three years.
Oh, and never mind that we see President Donald Trump continue to berate the Fed about cutting interest rates, which increases the uncertainty of
the market. So it looks like the market is willing to just put all of that aside in favor of these positive headlines we're seeing for trade.
And to boot, we're seeing analysts say, "You know what? We think that there's sufficient tailwind to see the markets march even higher."
ASHER: Okay. So with the positive headlines that we saw today, I mean, what changes at all in the Fed's calculation, if anything?
KOSIK: That's a very good question. Let's see what the Fed is going to do. I mean, will they cut, number one? And how much will they cut? Well,
most likely, they're going to cut that quarter of a percentage point. But I think what investors are really going to be digging in for what they're
really going to be looking for is, is the Fed going to be on this rate cutting roll? Is this one and done? Or is this the beginning of seeing
more cuts throughout the year, throughout next year?
And what is that plot going to look like? That could that could wind up disappointing investors if they don't hear what they want, and we can see a
stocks march lower again.
ASHER: All right, Alison Kosik, live for us. Have a great weekend, my friend. Thank you.
KOSIK: You, too.
ASHER: All right. Donald Trump likes to say that Beijing is dragging its feet on trade negotiations, simply trying to wait out his term, in hopes a
Democrat takes power next year.
Thursday night's debate revealed the Democrats have a lot of criticisms of the President's China policy, but they don't have a unified message against
his tariffs. Take a look.
(BEGIN VIDEO CLIP)
ANDREW YANG (D), PRESIDENTIAL CANDIDATE: I would not repeal the tariffs on day one, but I would let the Chinese know that we need to hammer out a
deal.
PETE BUTTIGIEG, (D-IN), MAYOR, PRESIDENTIAL CANDIDATE: I would have a strategy that would include the tariffs as leverage, but it's not about the
tariffs.
[15:05:02]
SEN. AMY KLOBUCHAR (D-MN), PRESIDENTIAL CANDIDATE: So what I think we need to do is to go back to the negotiating table, that's what I would do. I
wouldn't have put all of these tariffs in place.
JULIAN CASTRO (D), PRESIDENTIAL CANDIDATE: When I become President, I would immediately begin to negotiate with China to ratchet down that trade
war. We have leverage there.
SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: The leverage? Are you kidding? Everybody wants access to the American market.
JOE BIDEN (D), PRESIDENTIAL CANDIDATE: If we don't set the rules, we in fact, are going to find ourselves with China setting the rules. And that's
why we need to organize the world to take on China to stop the corrupt practices that are underway.
SEN. CORY BOOKER (D-NJ), PRESIDENTIAL CANDIDATE: We cannot go up against China alone.
SEN. BERNIE SANDERS (I-VT), PRESIDENTIAL CANDIDATE: So Trump obviously hasn't a clue. Trump thinks that trade policy is a tweet at three o'clock
in the morning.
SEN. KAMALA HARRIS (D-CA), PRESIDENTIAL CANDIDATE: Donald Trump in office on trade policy, you know, he reminds me of that that guy in the Wizard of
Oz, you know, when you pull back the curtain, it's a really small dude.
(END VIDEO CLIP)
ASHER: All right, Chad Brown is in Washington for us. He's a Senior Fellow at the Peterson Institute and served as a White House Economic
Adviser to Barack Obama. So Chad, you just heard there a lot of criticism from the Democrats in terms of President Trump's China policy, but what is
a viable solution from the Democrats' perspective in terms of how to make sure that China's stops stealing U.S. intellectual property, and also
treats American companies fairer?
CHAD BROWN, SENIOR FELLOW, PETERSON INSTITUTE: So first, I agree completely, you saw a wide range of views across the potential candidates
last night, some not differing all that much from President Trump in terms of their treatment of trade, others being, you know, a bit more proactive,
talking about a better way to do this, would be to work with allies that have common grievances in dealing with China, work within a rules-based
system to get China to play by the rules, to have some rules that could be enforceable there. And I think that's ultimately, you know, the way that
we're ultimately going to have to go.
The United States really can't go it alone in dealing with China on these trade issues, and really shouldn't have to go it alone, because we'd
effectively be fixing all of the world's partners, you know, bring in the Europeans, and bring in Japan. We have common grievances, and I think that
would actually be a much more constructive approach than what the Trump administration has done so far.
ASHER: But wouldn't it be difficult though, for a Democrat, let's assume a Democrat wins in 2020, wouldn't it be difficult for a Democrat to come into
power and then start removing tariffs?
BROWN: Oh, absolutely. I think now that we have both the tariffs that are already on, you know, President Trump is, I think, going to find it
difficult to remove them even if he wants to at some point in the negotiations.
But this is the problem with going the tariff route in general, once they're on, they're very, very difficult for anybody to get rid of. And
especially in the current climate, where, you know, the Trump administration has turned this into an issue that's not just about
economics, and not just about trade, but it's largely become an issue about national security. It's going to be very, very difficult for you know,
whether it's President Trump in 2020, or a Democrat in office to really change the momentum on China.
ASHER: So China has already said that they're going to remove tariffs on some agricultural goods. I mean, what does that do for the farming vote
for President Trump?
BROWN: So I think the announcement this week were actually extraordinarily minor. So you know, basically, what Beijing did is, as far as we can tell,
we haven't seen the details yet. But they have said they wouldn't apply the next set of tariffs on, say soybeans, but the tariffs they already have
on soybeans are enough to stop the soybeans from Iowa from being able to get there.
They have said they would resume some purchases, and so maybe that will happen. But right now, that's also an opportunity for them. Soy bean
prices are incredibly low. They need soy beans for their own economy. And there's a tremendous amount of these things sitting in stock in the United
States. So this is actually a good buying opportunity if you're China to just do this in your own interest.
ASHER: But even though as you say the announcements are relatively minor, these aren't sort of life-changing headlines, we shouldn't read too much
into them, they still provided an opening for that to be some kind of truce between the two countries.
BROWN: They do and President Trump as well said that he is going to postpone his next round of tariff increases, which you know, we're an
increase from 25 to 30 percent on $250 billion dollars of imports from China. Those were originally scheduled for October 1st. He gave us a two-
week grace period to October 15th.
So he didn't put these off indefinitely. He only gave it two weeks. So again, yes, these are slight positive signs and the Chinese are coming to
Washington, or there's going to be talks, hopefully in October. But at this stage, these are really small signals. And I don't think a deal is
anywhere close. And I think, you know, we need to get comfortable with the fact that this is very much the new normal.
ASHER: Right. Chad Brown, live for us there. Thank you so much. Appreciate that. While politicians debate Donald Trump's trade war, the
fact remains that it's hurting real people across the United States. Vanessa Yurkevich is in a small Pennsylvania town, that fell on hard times,
which Mr. Trump promised to revive.
[15:10:15]
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS REPORTER: Hi, Zain, at last night's Democratic presidential debate, we heard from the candidates on how
they would handle trade with China. And that is a sore subject here in Monessen, Pennsylvania, where many of the steel jobs moved overseas to
China, and this town has never recovered. And now voters here are facing down a trade war that they say they really don't need right now.
(BEGIN VIDEO CLIP)
JOHN GOLOMB, RETIRED STEEL WORKER, MONESSEN, PENNSYLVANIA: I'm going to look at the mill because I've got so many memories.
(END VIDEO CLIP)
YURKEVICH (voice over): It's been 32 years since John Golomb worked in this steel mill in Monessen, Pennsylvania. Once the lifeblood of this
town, now it's gone. He still wears his jacket to remember.
(BEGIN VIDEO CLIP)
GOLOMB: But this is all I have left after all of those years I had with a mill. I gave my heart and soul and there's many men and women, who did the
same as I, and especially in Pittsburgh, in the Pittsburgh area, and it's like we were spat upon.
(END VIDEO CLIP)
YURKEVICH (voice over): Which is why this Democrat voted Republican for the first time, after then candidate Donald Trump came to town.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Many of these areas have still never recovered, and never will unless I become President.
GOLUMB: And then we had Donald Trump come here, and profess about reviving American steel. And that's just what all of U.S. steel workers wanted to
hear. Then when he was elected. He pulled a Houdini on us. He disappeared.
(END VIDEO CLIP)
YURKEVICH (voice over): Monessen was a thriving steel town, but it's lost half its population since the mill closed in the '80s. Today, it's coming
apart at the seams. The poverty rate is 60 percent higher than the national average, and now what little business remains is being threatened
by the trade war --
(BEGIN VIDEO CLIP)
YURKEVICH (on camera): ... they're all from China.
BUZZY BYRON, OWNER, B&D FIREWORKS: They're all from China. Yes.
(END VIDEO CLIP)
YURKEVICH (voice over): Buzzy Byron also worked at the steel mill, but he's found new life in his fire workshop and sports apparel store in town -
- both will be hit with a 15 percent tariff.
(BEGIN VIDEO CLIP)
BYRON: Nobody wants see the price goes up. I don't care what it is, you know, you don't want to come in here this year and spend 10 bucks for this
and come back next year and spend 15. And I feel bad because I know all of these people. And I don't -- you know, I feel bad that I'm now going to
let you pay that bigger, higher price.
(END VIDEO CLIP)
YURKEVICH (voice over): The trade war is expected to cost American families $1,000.00 more each year.
(BEGIN VIDEO CLIP)
MATTHEW SHORRAW, MAYOR OF MONESSEN: That is something that residents that are already struggling can't afford. We need jobs here. But we need jobs
that fit the 21st Century. We were founded to help supplement what Pittsburgh was doing with steel. And I think that we could play that role
again.
(END VIDEO CLIP)
YURKEVICH (voice over): While the mayor sees opportunity, Golomb has lost hope. He says voters in the Rust Belt like him believed President Trump
had their backs helping to elect him. Now, he feels lied to.
(BEGIN VIDEO CLIP)
YURKEVICH (on camera): If you had an opportunity to see the President again, if he came back to Monessen, Pennsylvania, what would you say to
him?
GOLOMB: He wouldn't speak to me.
YURKEVICH: Why?
GOLOMB: He wouldn't speak to me because I'd have to tell him the truth. Where are your promises?
(END VIDEOTAPE)
YURKEVICH (on camera): John's story and the story of Monessen, Pennsylvania isn't unique. This is happening up and down the Rust Belt.
And it's not just about whether or not President Trump can maintain support here. It's whether or not the 10 Democratic candidates we saw on stage
last night can connect with voters here and in order to do that, they have to come to places like Monessen, Pennsylvania to win the trust of voters
here and deliver on their promises -- Zain.
ASHER: Vanessa Yurkevich, thank you. All right, actress Felicity Huffman is being sentenced over her role in the college admissions cheating
scandal. Huffman pleaded guilty in May, to conspiring to pay $15,000.00 to a fake charity that boosted her daughter's SAT scores. She is going to be
first of dozens of wealthy American parents to be sentenced in this particular scandal.
Joining me live now is CNN legal analyst Paul Callan. So, Paul, how significant do you anticipate her penalty is going to be. Will it be jail
time? Or will it be community service? What are your thoughts?
PAUL CALLAN, CNN LEGAL ANALYST: Well, it's a hard one to predict. Although I understand from reports from a court room, the U.S. Attorney,
the prosecutor in charge of the case denounced her as lacking a moral compass in doing what she did for her daughter to get her into college.
However, prosecutors have only recommended 30 days in jail, a $20,000.00 fine and one-year probation, also 250 hours of community service. So
usually, that's what you could expect the maximum sentence to be. Of course the judge, it's up to the judge if she could get more. I'm betting
that it's going to be even lower than a month and she could even get a no jail sentence given the nature of the crime.
This bribe that she paid, 15,000.00 seems like an enormous amount of money, but other parents paid as much as $6 million to get their kids into college
and she actually pled guilty early in the game and usually judges reward you for accepting responsibility.
[15:15:08]
CALLAN: So I think we're going to see a relative slap on the wrist as a sentence in this case.
ASHER: So you know, we've often talked on this network many times about how the American justice system can sometimes be rigged against people of
color and people of lower income economic status. The fact that she is rich and famous, how much does that help her in this case, do you think?
CALLAN: Well, I think that's what's going to be disturbing to very many people if this is a very light sentence. And obviously, the judge I think,
would be conscious of this as well. It will look like the rich are able to buy justice. But her defense attorneys would say, the nature of this
crime, it was a non-violent crime involving $15,000.00.
In Federal court, you know, the crimes you see are terrorism, narcotics crimes, drug dealing, murder. Judges see a lot of very, very serious
crimes. This is a relatively minor crime by comparison. So that would be the defense of a light sentence for her.
ASHER: All right, you have to think about the people who were denied admission because her child got to go. Paul Callan live for us there.
Thank you so much. We well, of course come back to you as soon as the sentencing is announced, hopefully, in a few minutes. We return now it's
our business agenda.
It is the incredible shrinking IPO. WeWork says it is planning to list on the NASDAQ, even as its target valuation keeps on falling, and there's life
left in Facebook's Libra cryptocurrency. The head of the Libra Association gives his reaction to the French government's crackdown on the virtual
currency. That's next.
(COMMERCIAL BREAK)
ASHER: WeWork is keeping its IPO alive even as its target valuation continues to fall. It announced Friday, it will list on the NASDAQ.
WeWork also announced changes to its corporate governance to limit co- founder, Adam Neumann's influence. It says the changes are in response to market feedback.
Matt Egan is following it also. Matt, I'm assuming market feedback is a euphemism for the fact that the valuation fell from $47 billion to about
$10 billion. How does corporate governance change going to help all of that?
MATT EGAN, CNN BUSINESS LEAD WRITER: Well, it's pretty clear this IPO is on life support and WeWork in is really desperate to try to salvage it. I
mean, the problem is that investors are on such high alert right now for problem IPOs, right?
[15:20:08]
EGAN: We have the big flops of Uber and Lyft. And there's some real issues here with WeWork, it's got these questionable corporate governance
practices, and it's losing a lot of money.
Now, WeWork has had a really turbulent summer. I mean, if you just think about some of the things that have happened. I mean, in July, "The Wall
Street Journal" reported that the CEO had withdrawn about $700 million in stock and in loans from WeWork. They still decided they were going to try
to go public, right? They announced plans to go public in August, but it was met with resistance almost immediately, because Fitch downgraded it.
And then "The Wall Street Journal" had reported that they were going to be slashing the valuation to $20 billion. Now, we're learning that that's
actually going to be more like $10 billion. I mean, we have to keep in mind, this was a $47 billion company just eight months ago. In a lot of
ways, Zain, it just feels like we're seeing this WeWork bubble pop right before our eyes.
ASHER: So the IPO though, they still plan to go ahead?
EGAN: They still plan to go ahead. And look, I mean, people will buy anything at some price. Right? And there is some appeal to the WeWork
story, right. I mean, they're providing office space to startups, but there's definitely some concerns around the financials. I mean, they've
lost almost half a billion dollars, just during the first six months of this year. They've lost $4.2 billion since the start of 2016.
And the Uber and Lyft IPOs show that, you know, Wall Street needs to see a path to profitability, and in some ways, Zain, it feels like WeWork missed
its moment. Right? They should have done this about a year ago.
ASHER: And so just in terms of its profitability, how bad are the numbers?
EGAN: Well, they are definitely concerning. I think that the issue, though, is the business model, right? And they have, what is it? $17.9
billion in long-term lease obligations. That's what they're on the hook for. At the same time, though, their tenants have these short-term
flexible leases.
So there's an inherent risk there, especially because their tenants are startups, many of whom probably won't survive the next recession. And I
think that that is definitely causing some concern, and that's why we've seen the valuation get cut really dramatically here.
ASHER: You know, after Uber and Lyft. I think that some analysts fear that WeWork coming out and going public could actually ruin the stock
market rally, that it could be contagious to the stock market rally. What do you make of that?
EGAN: Well, listen, the market right now is near all-time highs. The stock market seems to be kind of shrugging off some of these WeWork issues,
but I do think it is causing some concern around these high flying stocks, right? We've seen momentum, these stocks that have really high valuations,
they've come down pretty sharply.
And I do think that in part that is a reflection of this concern over WeWork and other companies that have gotten these really ridiculous
valuation in private markets. And there's just concern over what happens when these companies try to go public.
ASHER: All right, Matt Egan live for us there. Thank you so much. Okay, so the Managing Director of the Libra Association tells CNN the
cryptocurrency isn't dead in the water. Libra suffered a major blow at the hands of the French government this week.
Finance Minister Bruno Le Maire pledged to block its development in Europe. Libra Association's, Bertrand Perez spoke to our Melissa Bell. She joins
us live now from London, So Melissa, what did he say? And what did he make of Bruno Le Maire's comments.
MELISSA BELL, CNN CORRESPONDENT: Well, you know, the challenges facing Libra at the moment as it seeks to get off the ground, as it seeks to try
and convince the world that this is the right thing. And it has, Zain, been described as the most ambitious crypto effort yet. It really seems
fairly daunting. They have so many people to convince.
We heard that scathing criticism from Bruno Le Maire yesterday saying that, as it stands, Libra will not be allowed to operate in E.U. He doubled down
on that today at an informal meeting of Finance Ministers in Helsinki putting out a joint statement with the German Finance Minister saying that
Libra as it was being presented, pose a serious threat to consumers, to financial stability, and even to the monetary stability of sovereign
nations. And that is why they're opposed to it.
Now, I was able to catch up with Bertrand Perez last night, the man in charge of Libra Association, the man with a very daunting challenge ahead
of him. I asked him whether those words didn't mean that the whole idea was dead in the water even before it was able to get up and running.
(BEGIN VIDEO CLIP)
BERTRAND PEREZ, MANAGING DIRECTOR AND COO, LIBRA ASSOCIATION: I don't think so. I think the regulators are in their role. Basically, they need
to understand better and that we need to show them what we are planning to do when it comes to anti-money laundering, counter financing of terrorism.
So for now, and as they said, under those conditions, I can get that for them. It's hard to say, to give a go from that perspective. And this is
also reason why we have announced that project the year before launch. Because we knew that it would require time for us to work with regulators
to define the proper frameworks to be sure that we understand what they want from us, to be sure that we put in place the proper measures, whether
it's technological measure within the blockchain or get organizational measures on the side of the Libra Association.
[15:25:22]
BELL: You seem to suggest that this is all about explaining and negotiating with net regulators, trying to get everyone to understand what
it is you're trying to do. But you are actually seeking to revolutionize the monetary system as it stands now.
PEREZ: Yes, and that's the goal that we have set for ourselves. We're in 2019, and with the technology that we have today, we cannot continue having
financial services relying on technology that is 20 or 30 years old and that having people waiting days before getting their money when you send
money to them and paying expensive fee.
So basically, it's like the internet, and a few years ago, when you want to have an e-mail address, and in an e-mail box, you have to pay for that
service 15 years, 20 years ago. Now, who is going to pay for having an e- mail address? No one.
So it's the kind of similar situation where basically, sending, receiving and storing value can be achieved in a $40.00 mobile phone with an internet
connection that a lot of people are having, and that millions of new people are having every year.
So it's basically that -- revolutionizing the way you send, receive and store money, and then on top of that, building new services that bring real
added value to the consumers. But no more on the basic transmission of money like today, you're sending messages, you're sending images worldwide,
and you basically don't pay anything for that. It's kind of near free, right? It should be the same thing.
(END VIDEO CLIP)
BELL: Bertrand Perez there speaking to me last night, Zain. That was what he had to say about the ambitious plans. And just to be clear,
essentially, what Libra are trying to become, what they're trying to create is a cryptocurrency, a sovereign currency that would function outside of
the usual regulatory systems.
They insist they are not a bank, but want to be considered a payment system, even though it is the equivalent of a sovereign currency that
they're seeking to create. It is a tremendously ambitious challenge.
I asked him, how he slept at night? He said that he wouldn't have taken on a job if he didn't believe it was not only possible, but necessary -- Zain.
ASHER: So with Bruno Le Maire threatening to block Libra in Europe, wouldn't a better response be to tighten the regulatory framework around
it? Why go to the extreme of trying to block it?
BELL: Well, what Libra is saying and what Bertrand Perez is saying is they're hoping to explain to governments, to Finance Ministers, to the
banks, to the Central Banks, to the regulators, essentially all of those people who make up the architecture of global finance. He wants to
convince them that they can put measures in place that will allow them to regulate themselves and remain outside of the framework.
It's very difficult to see how he's going to do that. But it is precisely what you are suggesting that he is going to be trying to explain to
European leaders, to leaders around the world that they don't need to be afraid of this new form of currency. He says it is there to complement the
currencies that exist already, not challenge them directly.
ASHER: All right. Melissa Bell live for us there. Thank you so much, Melissa. Surprised, disappointed and fundamentally flawed -- Hong Kong's
attempt to take over the London Stock Exchange has crashed and burned. Centuries after its founding, the LSE will stay in British hands for now.
(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 new hopes of a Brexit
deal left the pound, and brands cash in on a 25-year-old show, we'll look at the enduring impact of "Friends". Before that though, these are the
headlines we're following for you at this hour.
Sentencing is under way for actress Felicity Huffman in the U.S. college admission scam. She's been making an emotional statement to the court,
apologizing and saying she is ashamed. Huffman admitted that she paid 15,000 to boost her daughter's test scores.
The U.S. Democratic presidential candidate Julian Castro says his jab at former U.S. Vice President Joe Biden's memory was not a personal attack.
He accused Biden of forgetting what he said minutes earlier, and one of the most controversial moments of Thursday's Democratic presidential debate.
Nearly two weeks after Hurricane Dorian, parts of the Bahamas are under a tropical storm warning. The system is expected to bring wind and rain to
the Abaco Island by Friday night and the Grand Bahama by Saturday morning. That could hamper ongoing rescue efforts -- 1,300 people are still
unaccounted for there.
The U.S. has announced sanctions targeting three cyber groups it says are sponsored by North Korea. The Lazarus Group and two of its subgroup are
accused of cyber attacks on critical infrastructure. In order to support Pyongyang's weapon and missiles program.
London's Stock Exchange has rejected a takeover offer from its Hong Kong counterpart in a strongly-worded statement. The LSE says the board
unanimously rejects the conditional proposal and giving its fundamental flaws, sees no merit in further engagement. London is meanwhile going
ahead with its acquisition of the data company Refinitiv. Hong Kong wanted to stop that deal as part of its takeover bid. Paul La Monica joins us
live now. So, this -- let's be real, this bid is actually expected to be rejected, right?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I don't think it's a huge surprise, Zain, obviously, you know, Hong Kong, there's a lot of concern
right now because of the recent protests and also, you know, the Hong Kong Exchange does have control by the Hong Kong government. Carrie Lam gets to
appoint, you know, a lot of their leaders.
So, I think that was one of the big issues, but in the LSE's defense, even if you throw politics aside, they feel that by buying Refinitiv, that will
help them on the data side which is where a lot of money still stands to be made as opposed to actual trading on the exchanges, that would make them a
more formidable competitor to Bloomberg.
ASHER: And so -- but one of the other reasons it was rejected was that the $37 billion deal was too low for LSE --
LA MONICA: Yes, so, I think it's possible that Hong Kong will come back with another offer, whether or not they raise the price, if they add more
cash, that remains to be seen and the LSE will have to take any new offer seriously as opposed to just outright reject --
ASHER: Well, I mean, when you think about the statement, will they come back though because the statement we got from LSE was the board unanimously
rejects the conditional proposal and given its fundamental flaws sees no merit in further engagement.
LA MONICA: Yes, I --
[15:35:00]
ASHER: That's not an invitation to come back.
LA MONICA: No, that's not an invitation to come back, but it's clear, I mean, you can interpret that as, you know, show us more money and then
maybe we'll talk, at $37 billion, obviously, the LSE is not interested if that price tag goes up, then I think it behooves the LSE to at least think
about it --
ASHER: Think about it --
LA MONICA: Even though they probably still would prefer to buy Refintiv and not have to have all of the tension and potential problems tied up with
being a part of the Hong Kong Exchange in light of trade continued trade concerns with U.S. and China and obviously the protests in Hong Kong and
what that might mean.
ASHER: Could we see possibly a hostile bid?
LA MONICA: I wouldn't rule it out. But I think it would be difficult to get that done. I can't imagine that many LSE shareholders would prefer a
Hong Kong offer just because the price might be better because of all the legitimate worries about what would happen to the LSE politically if
they're now, all of a sudden, part of a Hong Kong-based company.
ASHER: Partly because of China, fears about China's --
LA MONICA: Exactly --
ASHER: Influence on financial institutions. Paul La Monica, we have to leave it there, thank you so much. All right, the British pound getting a
boost after reports that some progress has been made on Brexit. We'll give you an update on where the sterling stands now and why?
(COMMERCIAL BREAK)
ASHER: Right, breaking news for you. Actress Felicity Huffman has just been sentenced to 14 days in prison. Felicity Huffman has been sentenced
to 14 days in prison in her role in the college admissions cheating scandal. Speaking at a court moments ago, Huffman actually became very
emotional as she addressed the judge.
She said that she is very ashamed of what she has done. Let's bring in our legal analyst Paul Callan. Now, so, Paul, what do you make of it? Fourteen
days, and obviously she showed a lot of remorse and she you know, took the plea deal. That obviously went a long way.
PAUL CALLAN, CNN LEGAL ANALYST: Well, yes, it did go a long way. She took the plea deal early and she saved the prosecutors and the judge an
unnecessary trial. So, generally, all defendants get something knocked off the sentence when they do that. The judge, Judge Talwani who apparently
got into both Ratcliffe and Berkeley law school without cheating on her test scores, was very kind and gave only a 14-day sentence.
[15:40:00]
Now, that's within the sentencing guidelines under federal law, so she didn't do anything that's unusual. But I think a lot of people are going
to be unhappy and feel that this is a case where money and celebrity bought justice in the American system. I'm not sure that that's a fair criticism,
but I guarantee you, most people will feel that way, and think this sentence was overly lenient under the circumstances.
ASHER: It's bound to hit a nerve. So, I'm just getting word that it's 14 days in jail, in addition to that she's going to be fined $30,000, not sure
how much that is, given how wealthy she is, but $30,000 on top of that, and also 250 hours of community service as well. How does this bode for Lori
Loughlin, do you think?
CALLAN: Well, I think Lori Loughlin is really rolling the dice here because she is not pleading guilty, and I think Lori Loughlin now will get
an example of what a lenient sentence is for somebody who takes responsibility early by pleading guilty. Now, she's fighting it, she's
presumed innocent under the American system of justice, so we'll have to see what happens in the trial.
But I think she's going to be facing a much stiffer sentence if she's convicted by a jury in this matter.
ASHER: The fact that this case has received so much attention in the media, not just in the United States, but really all around the world as
well. I mean, these actresses have international fame. Just how much did that complicate things when it came to sentencing Felicity Huffman and how
much will it complicate things for Lori Loughlin?
CALLAN: Well, I think it complicates any celebrity who gets arrested and charged with a crime. And the reason is if an ordinary -- if it happens to
an ordinary citizen, the judge is not worried that the public is going to be watching and looking at the sentence. And so, you know, sentencing does
two things, it punishes the person for committing the crime, but it also sends a message to society that we won't tolerate this kind of conduct.
That message gets transmitted ten times, a hundred times, a thousand times louder when it's a celebrity. So, what I've found through the years is
that celebrities when they're convicted, they often do get sentences that some times are stiffer than what a normal person would get in a situation
like this.
ASHER: It could definitely go either way though for a celebrity, just in terms of whether it's stiff or whether it's a lot more lenient. Some
people will listen to this and think, well, you know, she's famous, she's very wealthy, of course she's only going to get 14 days in jail. But you
mentioned that, you know, you didn't think that was necessarily fair, that criticism, why not?
CALLAN: Well, because first of all, the prosecutor only recommended 30 days in jail. So, if the prosecutor whose job it is to go after people who
violate the law thinks this is a case that's only worth 30 days in jail, I can't really criticize the judge for cutting the baby in half and saying,
well, I'll give her 14 days in jail.
I would also tell you that there's something called the federal sentencing guidelines where a case is evaluated for the nature of the crime, the
participation of the person charged with the crime, and the crime's harm to society. And a point score is made with respect to that. And under those
federal sentencing guidelines, no jail sentence was permissible.
So, this is not like the judge said -- walked away from a case that most judges would have given two or three years in prison. The judge was right
within the sentencing guideline recommendations on it. Maybe even a little bit higher with the 14 days. So, I think people aren't going to like this
sentence, I think this judge is going to get criticized, but the judge seemed to follow the law under the circumstances.
ASHER: So, what about the other parents who are -- or were guilty of the same thing who are not famous? I mean, will they see this -- see Felicity
Huffman being only dealt sort of 14 days in prison and will they breathe a sigh of relief?
CALLAN: Well, I think that they'd make a mistake if they did that because all of the cases are different. Now, remember, what Felicity Huffman did
was she paid somebody to correct her daughter's SAT score so that she boosted the score by about 400 points. Now, that's very different from
some of the other people who paid bribes to get them admitted to prestigious colleges and who created phony resumes indicating that they
were star athletes and other things.
Now in those cases, you could say by admitting somebody as a star athlete, he eliminated somebody else who deserved to get into college. That
argument is stronger I think than those other cases than it was in this case. This was sort of at the low-end of the spectrum in terms of what
people were doing to buy their kids' way into college.
And I think the last thing that I just mentioned, that a lot of people will wonder about -- you know, a lot of really rich people get their kids into
college by building a building on the campus. They have it named after themselves, and I can assure you that their kids tend to get into those
colleges.
[15:45:00]
So, a lot of people are looking at this and saying, well, this is just a lower level version of that. It's not the crime of the century.
ASHER: I actually did have that thought as well. So, overall, do you think this will be a deterrent though, seeing Felicity Huffman punished in
this way, especially the public shaming element of it as well?
CALLAN: Oh, I think it will be a deterrent. And I think Felicity Huffman, you know, she's the mother, she wants her kid to get into the best school
possible, so, she does everything possible. But she crossed the line. She broke the law. She made a bad example for her child -- as a matter of
fact, she humiliated her own child.
So, I think a lesson out there is, let your kid take his own test and earn his own way or her way into college, and you know something, that's good
parenting, not paying bribes to get benefits in college. So, I think there's some good lessons from this case.
ASHER: The judge actually said -- I'm just going to read briefly here, the judge said, "I think this is the right sentence here, I think you take your
sentence and you move forward." He added, you can rebuild your life after this, you've paid your dues. I mean, can she rebuild her life after this?
I mean, just in terms of as we talked about the public shaming element of this, I think it's going to be quite tricky for her even though she's only
having 14 days in jail, it's going to be quite hard for her in terms of her career?
CALLAN: Yes, I think it will be hard for her. I mean, I don't think she's out of the industry, but I can assure you, she's not going to be playing
the part of an honest and sweet mother in some future film. It may change the kind of role she has to play, and so, I think it's going to have an
adverse effect on her career.
And I will tell you something, Zain, having represented so many people and prosecuted people as a prosecutor myself, you're stained by any kind of a
criminal conviction. It haunts you for the rest of your life. It labels you. Now, if you have a lot of money, it's clearly not as bad as if you
have no money but -- because then you can't even get a job any place.
So -- but she's been punished by it and she'll suffer as a result of it, I think. That's not to say that maybe she deserved a little more jail time
than 14 days.
ASHER: I did -- I did like the fact that she was genuinely remorseful as well, and I think a lot of people did appreciate that. But Paul Callan, we
have to leave it there, thank you so much.
CALLAN: Thank you, Zain.
ASHER: You're very welcome, QUEST MEANS BUSINESS will be back in just a moment.
(COMMERCIAL BREAK)
[15:50:00]
ASHER: It has been 25 years since six friends gathered around this couch at Central Park, yes, this is the couch and TV fans couldn't be more
excited with 236 episodes, 10 seasons and millions of viewers, "Friends" has become a sitcom and a streaming staple. Big brands are looking to cash
in on the nostalgia. Clare Sebastian has our report.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN BUSINESS REPORTER (voice-over): From product placement --
UNIDENTIFIED FEMALE: No, but this wonder broom is amazing.
(LAUGHTER)
SEBASTIAN: To memorabilia and even haircuts, "Friends" has always been a brand that sells.
(on camera): And 25 years on, that hasn't changed, it's still not enough for viewers just to watch the show. They want to live in the world of
Monica Chandler, Ross, Rachel, Phoebe and Joey. And that means eating their food, sitting on their couch and of course drinking their coffee.
(voice-over): And businesses are taking advantage. Coffee chain, Coffee Bean and Tea Leaf jumped to the chance of attire for the anniversary,
launching a special edition range of coffee, specialty drinks and memorabilia.
DARRIN KELLARIS, MARKETING VICE PRESIDENT, COFFEE BEAN & TEA LEAF: A "Friends"-themed coffee mugs we pre-released and actually sold out in about
three hours.
SEBASTIAN: They also hosted two pop-up Central Park events in Los Angeles in August.
KELLARIS: Those two locations, we saw significant spikes in food traffic, but more importantly, as a business it really bolstered system-wide sales.
UNIDENTIFIED FEMALE: Isn't it cool? It's an apothecary table.
SEBASTIAN: Pottery barn also brought back the famous apothecary table which despite its $1,000 price tag, is a top seller in its department, the
company says must be anti-properties.
UNIDENTIFIED FEMALE: You can almost smell the opium.
SEBASTIAN: Even Lego is getting in on the action with a $60 replica of Central Perk, Lego says it's one of its fastest-selling sets ever.
(on camera): Now, of course, none of these promotions would work nearly as well if "Friends" hadn't experienced a revival in the age of streaming.
Last year, it was Netflix's second-most watched show -- and the company reportedly paid around $100 million to keep the rights to the show for one
more year before it goes on a break, moving to Warner Media's "HBO's" Max streaming service in 2020.
UNIDENTIFIED MALE: It's an iconic show and ultimately it's really one of the crown jewels of streaming. Everything changed now with HBO coming in,
a major shot across to -- about Netflix taking "Friends". And I ultimately believed 2 percent to 3 percent of Netflix viewers watch it just because
of "Friends".
SEBASTIAN (voice-over): So, for those who say "Friends" and the money don't mix.
UNIDENTIFIED FEMALE: What's more important, your friends or money?
UNIDENTIFIED MALE: Friends --
UNIDENTIFIED FEMALE: Money --
SEBASTIAN: This 25-year-old sitcom still gets the last laugh.
(LAUGHTER)
(END VIDEOTAPE)
ASHER: "Friends" is owned by Warner Brothers TV which is of course part of CNN's parent company Warner Media. Let's pivot it to our conversation.
Joining me now, my friends, Clare Sebastian and Frank Pallotta. So, guys, this is the couch.
SEBASTIAN: The couch.
FRANK PALLOTTA, CNN BUSINESS MEDIA WRITER: This is it. I can smell the coffee.
ASHER: Sitting on the couch. So, Clare, obviously a lot of --
SEBASTIAN: Yes --
ASHER: Companies have really tried their best to try and make money from "Friends", the success of "Friends" --
SEBASTIAN: Yes --
ASHER: How successful have their efforts actually been?
SEBASTIAN: Well, it does actually seem to be really making an impact. The Coffee Bean and Tea Leaf that you saw in the piece, they tell me that this
is going to show up in their full-year profits. This is really having that much of an impact.
And if you look that, you try and buy some of these products, it's actually now impossible, Lego seem to have sold out temporary, they seem to own the
set, the apothecary table, a $1,000 is still available, but Pottery Barn has some other products that now aren't shipping until December, things
like mugs and tea towels and things like that.
And there's this pop-up in New York, a whole "Friends" experience of very different Instagramable things that you can do, and they have also sold out
of tickets. You have to sign up into a list and wait for more to become available. So, it seems people are already going crazy for this.
ASHER: Frank, what is it about this TV show that producers got so right --
PALLOTTA: Well --
ASHER: Twenty five years ago?
PALLOTTA: It's comfort food, I mean -- and that's why it's still so popular with streaming services. You think of some of the most talked
about shows on television right now, you have shows like "Turn Whole Ball(ph)" or "Succession", they're not exactly shows that are easy to
watch. They're heavy --
ASHER: Right --
PALLOTTA: They're important, but they're heavy and they're very well made. "Friends" is a background blockbuster. You can have it on in the
background when you're cooking, when you're having friends over, when you're just sitting around --
ASHER: Or --
PALLOTTA: Yes, exactly, the audience agrees with me.
(LAUGHTER)
ASHER: You can't laugh --
PALLOTTA: Yes, the audience agrees.
ASHER: I think it got this following me on everywhere --
PALLOTTA: It's a really easy thing to kind of just take in and it's easily bingeable, and that's why things like Netflix and "HBO" Max really want it
so much, it's because people can just turn it on and turn their brains off and enjoy these --
ASHER: Turn their brains off?
PALLOTTA: Yes, I mean, not in a bad way, but it's a very enjoyable show.
ASHER: So, Clare, one sort of more serious angle --
SEBASTIAN: Right --
ASHER: Of all this is that the "Friends" cast at one point --
SEBASTIAN: Yes --
ASHER: We learned about actors collectively bargaining --
SEBASTIAN: Yes --
ASHER: For their salaries towards the end of was it the last season or so --
SEBASTIAN: Watched the seasons, yes --
ASHER: They were making $1 million per episode and that's because they fought for that.
[15:55:00]
SEBASTIAN: Yes, they bonded together. It was collective bargaining as you say, and they said it's, you know, either all of us get the same, a million
per episode or we don't do it at all. And of course "NBC" relied on "Friends" for its Thursday night line-up, it was a huge part of their
business at the time. And so, they said, you know, eventually yes, and I think since then, it's really only very few others who have managed to do
this like domineering kind of set the tone.
Big money really stalked this production.
ASHER: Incredible. And Frank, just in terms of how it changed the media landscape, what other shows did "Friends" pave the way for?
PALLOTTA: Oh, you can see in terms of just the cast contracts, you can talk about "Big Bang Theory", you can talk about "Modern Family", I mean,
and it was worth it. I mean, look at it this way. The final seasons of "Friends" was bringing in around 20 million to 25 million viewers on
average for that, the final episode, more than 50 million --
ASHER: You don't see those numbers anymore --
PALLOTTA: No, not even close --
ASHER: The only numbers --
PALLOTTA: The only thing that either comes close now is live sports. In terms of sitcoms, it's very rare to have something like that. So,
"Friends" brought in more friends that made them family.
(LAUGHTER)
See, they thought that was funny, see, I'm very witty.
ASHER: I'm so funny, oh, my God --
PALLOTTA: I'm very witty --
ASHER: I'm so funny. Actually, they were all laughing with me.
PALLOTTA: That's fine, whatever you think.
(LAUGHTER)
ASHER: Thanks, or rather laugh constantly. Thanks Frank, Clare Sebastian, thank you so much and be sure to watch our CNN special report, "FRIENDS
FOREVER: 25 YEARS OF LAUGHTER" airing Sunday at 10:00 p.m. Sunday in New York and 10:00 a.m. Monday if you are watching from Hong Kong.
And there are just moments left to trade on Wall Street, we'll have the final numbers and the closing bell right after this quick break, don't go
away.
(COMMERCIAL BREAK)
ASHER: There are just moments left to trade on Wall Street. The Dow is climbing -- clinging to its gains. Rather, the stocks started the day
higher as investors bought into optimist signs in the U.S.-China trade war -- close in positive territory, it will be the eighth winning session in a
row. That is the longest streak for the Dow since September 2017.
Now, let's look specifically at some of the components here. Apple is losing ground, Goldman Sachs lowered its price tag, yet the bank says the
aggressive pricing on some of Apple's new services might hurt the company's margins, Apple's market cap is now back down below a trillion dollars.
And there's that round of applause -- that is QUEST MEANS BUSINESS, I am Zain Asher for you in New York, "THE LEAD" with Jake Tapper starts right
now.
(BELL RINGING)
[16:00:00]
END
