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Quest Means Business
Donald Trump Targets Iran's Central Bank In His Latest Round Of Sanctions; CNN Tours Site Of Attack On Saudi Oil Facilities; Stocks Fall Suddenly Over Cancelled China Agriculture Talks; President Trump Defends Mystery Talks that Triggered Complaint to the Intelligence Community IG; Wal-Mart Says it will Stop Selling E-Cigarettes; New York City Mayor Bill de Blasio Drops Out of Presidential Race. Aired 3-4p ET
Aired September 20, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:07]
PAULA NEWTON, CNN INTERNATIONAL HOST: Well, the picture says it all, doesn't it? It is the final hour of trading on Wall Street. It was plain
sailing for stocks until about, yes, you guessed it, 1:00 p.m. this afternoon. We're now set to finish in the red. And here are the reasons
why.
Donald Trump targets Iran's Central Bank in his latest round of sanctions. Oil prices are back on the rise. We will give you a tour of that giant
Saudi facility that was attacked last weekend. And one canceled meeting, just one in Montana is enough to all of a sudden send stocks sliding.
Live from the world's financial capital, New York City. It's Friday, September 20th. I'm Paula Newton, in for Richard Quest and this QUEST
MEANS BUSINESS.
And good evening and Happy Friday. Tonight, U.S. President Donald Trump says he has applied sanctions to Iran's National Bank at quote, "the
highest level." Washington has been pointing the finger of blame at Tehran following the strikes on two critical Saudi oil facilities last weekend.
Speaking alongside President Trump, the Treasury Secretary said the sanctions will cut off funding for terror.
(BEGIN VIDEO CLIP)
STEVE MNUCHIN, U.S. TREASURY SECRETARY: Today, we are continuing the maximum pressure campaign. This is last remaining source of funds, so both
the Central Bank of Iran, as well as the National Development Fund, which is their sovereign wealth fund will be cut off from our banking system. So
this will mean no more funds going to the IRGC in order to fund terror, and this is on top of our oil sanctions and our financial institutions
sanctions.
(END VIDEO CLIP)
NEWTON: Sarah Westwood is in Washington for us and Sarah, in terms of him laying out the sanctions. No surprise there. I think more people were
wondering whether or not he believes that the military option is still an option because I can tell you around the world, most people think that's
right off the table.
SARAH WESTWOOD, CNN WHITE HOUSE REPORTER: Well, Paula certainly that's something that's going to be discussed later today. The President has a
meeting with his National Security Council and Secretary of State Mike Pompeo has just returned from the region. He is expected to brief
President Trump and other senior administration officials on what he heard from the Saudis.
But there's been indications that the administration is not considering a kinetic response to this strike that they claim was from Iran. As he was
leaving the region, Pompeo said that he was looking for a peaceful resolution to the situation and today, standing alongside the Prime
Minister of Australia, President Trump said that this, going the sanctions route was the easier option. That he is showing restraint in not striking
Iran, which he claimed he could do very, very easily.
But some of the options on the table that could be discussed today, sources tell CNN could include moving more troops to the region, moving more
resources to the region to show that the U.S. is serious about responding.
But at the moment, Paula, administration officials seem to be signaling that a military retaliation is not going to be their first choice
responding to the strike that they claim was perpetrated by Iran over the weekend.
NEWTON: Yes, and yet, it's interesting because they always call these sanctions against Iran before, maximum pressure. I think the issue is how
effective will they be? Did you hear anything more on that, especially from the Treasury Secretary, who might have a better handle on things when
it comes to the kind of impact they're looking for?
WESTWOOD: Right. Well, there are some analysts who say that, you know, we've already sanctioned Iran so much. There have been so many sanctions
placed on so many institutions for Iran that at a certain point, you do have sort of a diminishing returns from those kinds of actions.
You have others who say that there are just unlimited sanctions that the U.S. could place on Iran. In the case of the Central Bank here, the U.S.
had already sanctioned that institution, but now is designating it for terrorism that's going to make it harder for a future administration to
undo that action.
So still, these are crippling actions that also have a symbolic effect to send a symbolic message, Paula, that the U.S. is serious about responding
and has no intention of letting up on the gas.
It's hard to imagine just a week ago, Paula, we were talking about potentially President Trump sitting down with Iranian President Hassan
Rouhani at the UN General Assembly that does not appear like it's in the cards now, the U.S. ratcheting up pressure on Iran instead of down.
NEWTON: You are so right to bring that up, Sarah. What a difference this week has made definitely with Iran. Sarah, thanks so much. Really
appreciate that update.
We want to get of course the reaction from Iran. CNN's Nick Payton wash joins us now live from Tehran. Okay, Nick, in terms of the reaction here.
The Iranians have said that these sanctions, the ones that were already imposed, not to mention the new ones were economic warfare anyway, was what
has been the reaction today?
[15:05:10]
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: We haven't heard a specific reaction to these latest round of sanctions. But I have to tell
you, talking to analysts about how effective they'll be, it really seems like they could be substantially hollow.
As you heard from Sarah, that yes, the Central Bank has already been sanctioned under the time when Donald Trump pulled out of the nuclear deal.
Calling it a part of a terror organization or assisting a terror organization makes it way more toxic, but probably, it doesn't change the
calculus people had of whether they're going to do business with the Central Bank or not.
New today was the sovereign wealth fund, the National Development Fund, NDF being targeted and being called also assistance to a terror organization.
Now, that is new, but we simply don't know how much money is in that or where it is.
The Treasury itself said that $4.8 billion was taken out of it in January to assist the Iranian Revolutionary Guard Corps. Now, they have been
prescribed as a foreign terrorist organization a few months ago. And so the extension is that organizations like these banks that work for it, or
assist it are also now assisting a terror organization.
As Sarah said, that makes it hard to undo that in the future. But really, it doesn't seem like it enormously changes the calculus for people as to
whether or not they're going to do business with these banks in the first place.
The only thing left, one analyst said to me, they could do is go after the countries that are doing business with the so-called assistants of terror
groups, like Russia and like China. That's an enormous political minefield to get into.
Essentially, one analyst said to me, the magazine is already empty when it comes to sanctions. So today's rhetoric was extraordinary. But actually,
in terms of the damage, it may end up doing well, pretty minor, as far as we can see right now -- Paula.
NEWTON: And yet, as Sarah was saying, it looks like for now, any kind of military reply is off the table. I just want to ask you here, though, in
terms of that international consensus, we've been trying to talk about this all week, in terms of the Saudis trying to get it from their perspective in
terms of trying to get some support.
But I feel as if Iran has been working its own game at this with Europe. I mean, we talk about sanctions. But you know, France was talking about
extending a $5 billion line of credit to Iran in some capacity. Europe has been talking for months about a way to keep the nuclear deal alive. Do you
feel that Iran is actually pinning its hopes on at least being able to keep some quarter of the international community on its side, even despite these
latest attacks?
PATON WALSH: I think if you were an Iranian official here, you would look at this week, and frankly think that the U.S. and the Saudis have done a
pretty bad job of getting a consensus on this.
Yes, everyone has being united in condemning the attacks on the Saudi oil fields, but they've been conspicuously silent outside of the U.S. and Saudi
Arabia pointing the finger necessarily at Iran, even Japan, a key U.S. ally when it comes to dealing with Iran, an interlocutor for them said that they
thought it was highly probable the Houthi Yemeni rebels who Iran blames for the attack or sorry, says carried out the attack, and have claimed
responsibility for it -- have claimed responsibility for the particular attack.
So if you look at this week as a whole, Iran denies involvement, it's threatened all-out war if it's attacked. It seems Saudi Arabia and the
U.S. point their finger at it, but conclusively failed to put forward evidence that anything was fired from Iranian territory, as some of them
suggested that may have been the case and not face any military retaliation at all.
These sanctions are relatively weak. They've been delivered with great pompous, but that's fairly nothing new for the Trump administration. And
so as the UN greets the Iranian President and Foreign Minister in the days ahead, they're traveling there, diplomacy with the U.S. seems off the
table.
Iran said they're willing to talk to Saudi Arabia or the United Arab Emirates, and they might possibly in Tehran, be feeling here that this week
hasn't turned out too badly for them.
They've not been attacked. They've been blamed for an extraordinary attack on Saudi sovereign territory, which they've actually denied any involvement
for, they've not seen any convincing evidence laid in front of them that means they have to change their position at all.
The U.S. and Saudi have utterly failed to produce that at this point in terms of whether these things were launched from Iranian territory. And so
all in all, I think the Trump administration's policy is now increasingly in doubt, sanctions continue to be an option, but are they willing to back
up their allies in the Middle East in military force? It seems from this week, not.
Donald Trump says that's for strength, but maybe other people here in this region might make a different calculation -- Paula.
NEWTON: Yes. And we will see where this diplomacy will go. If it goes anywhere, as you say, those Iranian officials on their way to the United
States right now for the UN General Assembly next week.
Our Nick Paton Walsh, thanks so much for being there in Tehran for us all week. It's really added a lot to our coverage. Appreciate it.
Now oil prices moved higher on Friday capping a historic week. Brent crude is hovering just under $65.00 per barrel as you see it there. Prices have
seen their largest weekly rise in seven months.
Meantime, CNN has been granted access to the site of that attack on oil facilities in Saudi Arabia. The strikes caused extensive damage. Saudi
officials say they are proud though of their emergency response. Nic Robertson has more.
[15:10:03]
(BEGIN VIDEOTAPE)
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (on camera): This is the largest oil processing plant in the world, Abqaiq. It is at the heart
of Saudi Arabia's oil facilities, oil pumping system. And you can see, in the tower up here, just how badly impacted it was. I've talked to one of
the engineers here, he says they're still in the assessment phase.
Right now they're replacing pipelines here, steel, heavy pipelines at the back. And you -- and I'm counting down here, I can see one, two, three, at
least another four towers that have been hit.
In total, 18 drones flew in here and targeted this site. They came in from the northwest. The sun is setting here, the north is up here. And that
direction of impact is another reason that Saudi officials believe Iran was behind this attack.
They're telling us here that this facility will be back up and running, full speed, full production, by the end of September. The government says
they will be reaching their expected levels of 11 million barrels a day.
This, they say, taken down -- taken down that night of the attack, but they were back up to 30 percent capacity within 48 hours. Everyone we're
talking to here at the production here, is saying just how well they responded.
But the reality of the situation is, they're responding to this. They're putting it back together. But repairing international confidence that this
isn't just -- that this isn't just the beginning of something else, rather that it is only a single incident that is going to be much tougher.
This will look maybe brand-new in a few months. Saudi Arabia, however, has got a much, much bigger problem ahead of it, deciding its next move. Nic
Robertson, CNN, Abqaiq, Saudi Arabia.
(END VIDEOTAPE)
NEWTON: Joining me now is Antoine Halff, he is Chief Analyst at the data analytics company, Kayrros, and former Chief Oil Analyst for the
International Energy Agency. It's so good to have you here at the end of such a tumultuous week.
Tell me, where did we sell out at the end of this week? Because of course, we saw that giant spike and yet the price pulled back to something that is
still you know, in terms of, if you look at it seven months, okay, fine. If you look at the graph, it's not that -- so where do you think we've sold
out at the end of the week?
ANTOINE HALFF, CHIEF ANALYST, KAYRROS: That's absolutely right. On the face of it, it's a big increase, 60 to 65, more or less for Brent, but if
you look at the scope of the disruption, it's a very small increase. It is kind of a very subdued reaction from the market.
You're talking about the largest oil processing plant in in the world. You're talking about the country that accounts for 10 percent of export, of
consumption, really. So the risk is really significant. It's not really priced in the market.
I think the market is really pricing in all the efforts made by Aramco to come back in and restore exports. It's not really pricing in the risk of
escalation, the risk of further incidents. All of the questions that the incident --
NEWTON: And the theater of risk have moved to the Strait of Hormuz after this, right? I mean, there are lots of risks in terms of the transport of
oil.
HALFF: True, true, true, true. The response from the Kingdom has been very remarkable from the company. So we are actually monitoring the
reaction on the ground, we're tracking the satellites, what's going on there. There's been an initial period of damage assessment and
precautionary shut downs, but we've seen the flares at the various fields, and then production come back, and we've seen the trucks start moving in
the damaged facilities.
And the company has been really good at trying to keep exports going, partly by importing products, partly by, we, jigging its own consumption to
free up barrels for exports. But what that means is that the customers may be getting some supply, but in terms of the global supply in the world
market, those barrels are being pulled from somewhere. So at least for now, the whole pool of supplies has tightened.
NEWTON: I'm going to get back to that issue that you said it's not pricing in the risk. I want to deal first with the fact that Xi Jinping finally
had a call in Saudi Arabia. And, you know, they agreed that this was an attack, a troubling attack, wanted a fair investigation and full
investigation. How much do you think China will actually be concerned by what happened here? Clearly, being so dependent on the imports from Saudi
Arabia and elsewhere.
HALFF: China is extremely concerned. Even before the attacks, they were concerned about being over dependent on imports. It's always a recurring
concern for them to be input dependent or overly dependent on outside sources. So this is the debate that's been going on in Beijing for a
while.
There's no doubt that the recent events will exacerbate the demands from the leadership for more domestic production of oil and gas --
NEWTON: Yes. Because I just kind of see them as a major player here. We hadn't heard from them until the end of the week and quickly before I let
you go, you're saying they're not pricing in the risk. What do you think the price would be then? Do you think it should be -- let's say with
Brent, more of the international --
[15:15:07]
HALFF: There's no spare capacity whatsoever in the world, most of the spare capacity, which is thin, is in the Kingdom. So if anything happens
to the Kingdom, that spare capacity is just not there. So the world has very little room to maneuver and the strategic reserves are not really the
answer there. They're not significant enough.
And if you noticed, last weekend, there were different noises from the IEA and from President Trump. So that doesn't really bode well for the
capacity of the world to respond in a coordinated fashion.
NEWTON: Are you saying there's a risk -- I'm sorry, I have to go, but I'm just trying to pin you down. Do you think there's a risk to the upside
here where we could see $70.00 to $75.00 on Brent?
HALFF: There's a risk to the upside and to the downside, so there's a need to really monitor the market very closely because it's a very, very
volatile, a very dicey market right now.
NEWTON: Thanks so much. Really appreciate it. Now, a global outcry to save the planet and their future. A generation is demanding action on
climate change. And now, see if you can spot where Friday got a little less fun for investors. Oh, yes, I know, you can see it. Wall Street got
an unpleasant surprise from U.S.-China trade talks.
(COMMERCIAL BREAK)
NEWTON: Okay, it was looking like, you know, run of the mill day on the markets until about one o'clock here in New York. Now just look at that
graph. I don't have to explain much to you, do I? All of a sudden, the Dow went sharply negative. That was after a report that Chinese officials
were canceling a visit to the State of Montana. And they were meant to be talking agriculture.
Clare Sebastian is here to get us through it. I mean, it just shows right how jittery this market is to anything on trade. They're waiting for that
trade deal.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: It's at the bottom of absolutely everything. It's the reason why the Fed is cutting rates. It
is the reason why we saw the OECD cut the outlook for the global economy to the lowest since the financial crisis. So this isn't necessarily material.
We don't know why exactly they've canceled the visit. We only found out about it yesterday in an e-mail sent to the Montana Farm Bureau.
The Embassy of China in D.C. said that the team have had to return to China earlier than previously planned. That's all we know. Is it something that
shows that the talks that have been happening, the deputy level talks that have been happening in D.C. this week have broken down? Is it something
that perhaps darkens the outlook ahead of the principal talks at the beginning of October?
We don't know. That is what the market is speculating right now. But this isn't the only thing that's been happening today that worries people in
trade. Have a listen, Paula, to what President had to say.
[15:20:01]
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: But I'm not looking for a partial deal. I'm looking for a complete deal.
QUESTION: Do you feel you need that before the election, sir?
TRUMP: No, I don't think I did it before the election.
(END VIDEO CLIP)
SEBASTIAN: So this is -- he went on to say that you know, he wants a complete deal. He doesn't want an interim deal. And both of those things
are worrying the markets because at the moment, we have no evidence that the two sides are any closer on the big issues.
The fact that the U.S. still wants structural reforms from China for them to reduce the state involvement in the economy to create a level playing
field for foreign companies operating in China; if he had opened the door to an interim deal, something that would involve Chinese purchases of
agricultural products, perhaps that would have created some more optimism in the market. But a complete deal, it seemed a little ambitious at this
point.
NEWTON: I guess the issue is, what would he have said, oh, yes, I need this deal done. I've got a deadline here, folks. I'll take any deal I
can.
You know, we were speaking yesterday to former Australian Prime Minister, Kevin Rudd, who basically said this is coming down to the last few weeks.
How jittery and I know, you know, you look at the data and you also talk to companies. How jittery are they because we had a time when the market was
already pricing a trade deal. It was done, right, as far as they were concerned.
SEBASTIAN: You know, I think there's a sense to which people are kind of factoring this in as the new normal. Tariffs are pretty much here to stay.
And right now, we have a situation where hundreds of billions of tariffs are in place. More are coming and really none have been lifted.
There's no precedent for anything being taken off the table here. So companies -- we heard from the Fed, just this week that they are holding
off on investment. They're very nervous about big ticket investments, when we really don't know what's going to happen.
So I think this is something that whoever you talk to -- big businesses, small businesses -- it's now part of the calculus, the everyday calculus of
doing business.
NEWTON: And we will learn to get used to it. Clare Sebastian, have a good weekend. Thank you.
NEWTON: Pardon me. The planet is heating up. Apparently, so is was my throat. So the demand to save it. Tonight, and entire generation is
speaking up around the world. Millions of young people are taking to the streets for protests -- pardon me -- calling on justice, climate justice.
The younger generation is speaking up all around the globe, as you can see them there, and has a message for boardrooms.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: This movement has grown so fast and so much, and just to watch all of these countries slowly start taking part has been
phenomenal.
UNIDENTIFIED FEMALE: It's certainly the biggest protest we've had so far. The real emergency is the climate crisis. But it's not just climate
change, it is our attitude towards it. So the real emergency is the fact that the government and corporations are failing to accept their
responsibility.
(END VIDEO CLIP)
NEWTON: So is the private sector listening? Royal DMS CEO, Feike Sijbesma is a global climate leader at the World Bank. He has been urging
businesses to do more on climate change and he joins me now.
You know, beyond my -- apologies for my cough. But beyond that, I will try and spit the question out here. We were talking just earlier about oil
prices, you and I could have been having that discussion about the old economy in the 80s and 90s. Do you not feel it is kind of stark that we've
been talking about this for such a long time? And yet what underpins our global economy, so much is still carbon at the end of the day. Pollution
at the end of the day.
FEIKE SIJBESMA, CEO, ROYAL DMS: True. And therefore we need to change. Four years ago, almost 200 governmental leaders were together in Paris, and
we agreed to be within one and a half, two degrees Celsius.
Four years later, we are ready derailing from that trajectory. So there's all reason to get as soon as possible back on the trajectory we have
agreed.
Once again, with 200 governmental leaders, with hundreds of CEOs, with many NGOs in the world for the next generations, we need to take care that we
decrease our carbon emissions.
NEWTON: Okay, your company has led the way. Carbon pricing should be part of this and yet remains controversial in so many areas. What is your
recommendation from the private sector because we've heard so much more not just from all of those climate protesters, but also from businesses who
want to try and do the right thing?
SIJBESMA: Yes. So how to get as soon as possible back on track on what we agreed in Paris. In my opinion, that is putting a price on carbon, even
business itself. Many of my colleagues have said listen, if there is a price on carbon, and if it is meaningful enough, that is about $30.00,
plus, if there is a meaningful price on carbon, then we anchor into our own economic system doing well for the climate and well for the world. And
companies will move faster. Companies will transition faster.
Now governments are saying, yes, but will this make a big hit on our competitiveness, our jobs, et cetera. And what we did with the World Bank
and the United Nations and publishing tomorrow, is to show that if the price is not above 125 or 150, but above 30, and in that corridor, it will
not hurt competitiveness, and it will give a big semblance of making the transition faster.
And I think that's what we need to do and I don't see any reason why governments should not move fast.
[15:25:06]
NEWTON: You know, as you've been talking, we've been showing pictures, you know, of these young climate protesters next generation, I can't help but
look at those pictures and say that we are failing them. And that doesn't -- it doesn't matter what end of the spectrum that you're on here.
We have seen governments try but fail. Can we have trust that the business community can take this up where governments can't? And I ask that,
because we've certainly seen at a local level, cities be able to try and take over.
SIJBESMA: Correct.
NEWTON: I mean, and without hyperbole, right, because I know the UN has been trying to work with private business on this for many years now, and
they've come up with a lot of studies. And then I'm still talking to people who talk about the comeback of coal, for instance, and how we can
have clean coal.
SIJBESMA: You sound a little bit that you are you are not hopefully giving up or being cynical.
NEWTON: I think I feel -- I think I feel like a lot of people do that we are letting down the younger generation, and I think and feel hopeless to
do it. And you know what, I'm going to tell you something, it's not just from, you know, let's say people like me, who don't, you know, I'm not
running a business, I think even where small business are people are trying to do the right thing.
SIJBESMA: Right.
NEWTON: They don't feel like they're getting that support from big business or even from their governments to be able to implement, you know,
a very coherent strategy on this.
SIJBESMA: Well, in this report about putting a price on carbon. So giving a hit to companies who do not transition fast enough, is supported by
almost hundred companies.
I'm leading a group with the World Economic Forum of almost 80 business leaders, CEOs of big multinational companies, who say voluntarily to
governments, please put a price on carbon, please give us the financial stimulus to transition faster.
Because once there is a price on carbon, there is a reason for companies, a financial reason to move. And I think that goes a little bit faster than
the moral reason.
You were referring to the next generation. You're referring to our moral obligation. And I totally agree with you. There is a moral obligation for
this generation for the next one.
But those who are more triggered by financial incentives then the moral obligation, putting a price on carbon goes the fastest. And if it is
meaningful enough, and not too high, there is no reason to escape from that.
NEWTON: Yes, and I guess --
SIJBESMA: So many companies want to do that. And at the end of today, we need to solve this in a collaboration between business and government.
Business has the innovative tools, business has the means. Government is going to set the policy.
NEWTON: Yes, I guess that's the issue. If we can come to that happy medium, we have so many people so starkly on each side of the climate
debate right now. Thank you so much for coming in. Again, apologies for my coughing in the middle there.
SIJBESMA: I hope it was not the climate.
NEWTON: It was not the climate. Not in the studio anyway. Apple's new iPhone is officially on the market. Now, how it compares to those older
models and other brands.
(COMMERCIAL BREAK)
[15:30:00]
PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment. When Netflix shares are
awesome, 6 percent, as the CEO admits he's watching the competition. And if you're wondering whether to get the new iPhone 11, we've got a couple of
the playlist right here in the studio.
But before that, these are the headlines at this hour. A beautiful, total appropriate conversation, that's what U.S. President Donald Trump calls his
talks with the foreign leader that triggered an urgent whistleblower complaint.
"The Washington Post" reports the president's mysterious conversation involved Ukraine and an unknown promise. We still don't know who was on
the other end of the telephone call. From South Africa to Australia, Thailand to France, hundreds of thousands of young activists are demanding
action on the climate crisis.
Students are putting pressure on politicians and policy makers to act on the climate crisis. Wal-Mart says it will stop selling e-cigarettes over
growing concerns about the health risks of vaping. Now, the retailer released a statement saying it will discontinue sales after the current
inventory is gone. Wal-Mart is the largest chain in the U.S., so the decision could influence other stores.
New York City's Mayor Bill de Blasio has announced he is ending his presidential bid. De Blasio did not make the last debate and was polling
at 1 percent in the latest CNN poll. President Trump mocked de Blasio shortly after the announcement, tweeting that New Yorkers are devastated
that their mayor will be returning home.
Japan overcame a nightmare start to their own Rugby World Cup to clinch a 30-10 victory over Russia in Friday's opener. The host nation recovered
from conceding a fourth-minute try to defeat the Russians. Kotaro Matsushima became the first Japanese man to score a hat-trick at the Rugby
World Cup.
Apple fans can now get their hands on the newest iPhone, the 11, 11 Pro and 11 Pro Max hit shelves worldwide on Friday boosting -- boasting better
cameras and of course, what we really need, which is longer battery life. I seem to need it more than most today. CEO, Tim Cook ringing in the
occasion at New York's 5th Avenue store, iPhone sales as a whole are on the decline, and they no longer account for the majority of Apple's revenue.
Samantha Kelly is here with me, you test drove the phones, OK, what do you think? You got them there --
SAMANTHA KELLY, CNN BUSINESS EDITOR: Yes, so let me show you some, this is the iPhone 11, nice purple color, other colors as well. And this is the
Pro model. There's a regular size pro and there's a Max which is a little bit bigger. So, the main difference is the -- obviously, this is more of
the premium phone here, it comes with an extra camera.
Some people aren't crazy about -- there's a bump here, and you know, some people are saying this looks like a little Mickey mouse. It's hard to kind
of un-see that now. But I don't mind that the camera is fantastic, both models are faster, they're smarter, longer battery life. But they are
pretty incremental. There's nothing really ground-breaking here.
NEWTON: When we talk about the battery life, I'm really interested in that. Will it make a huge difference to somebody's life in terms of how
many times you have to go charge it?
KELLY: Yes, I think it depends on what model you're using right now. So, if you're using a model from a few years ago, absolutely. If you have a 10
and up, it's probably going to get you like an extra hour too, but I mean, you know, after a long day of commuting or you know, even just being away
from an outlet, that's you know, anything -- anything extra will help.
NEWTON: There's a lot of question marks as to whether or not this will actually have the sales that Apple wants it to. I mean, Tim Cook was at
that store, obviously perhaps, trying to get some rock-star fascination --
KELLY: Yes --
NEWTON: Some new publicity for the phone. I mean, you said it's incremental, but yet the orders are looking pretty good right now.
[15:35:00]
KELLY: Right, yes, I mean -- well, looking at it like this, you know, at a time when Samsung is taking risks with like a foldable phone. They also
have a 5G phone on the market, Apple is pretty much staying the course, and there's some risk in that too. But at the end of the day, you know, I took
these out a few days ago on the street, and usually, when I'm testing something, you know, I'm kind of -- no one is really bothering me, but this
time, people were coming up to me, they wanted to see the new camera, they wanted to see the new colors.
So, even though, these are pretty incremental updates, if you're in the, you know, iPhone IOS ecosystem, and you're ready for an upgrade, these are
you know, pretty great phones.
NEWTON: And we've had some of the comparisons there, we're showing them now, especially on price -- Apple is trying something a bit different with
these phones on price, right?
KELLY: So, so, the base model, which is actually the one I recommend, unless, you are a photographer and really want the bigger, better camera
system. But this is $50 less than the 10 R from last year, which is like base model 699, which is pretty competitive in the brand new smartphone
space, especially when the Pro models are $300 more, and this is just as good. And you know, you'll save a lot of money going with this.
NEWTON: And in terms of that whole big open 5G question.
KELLY: Yes --
NEWTON: So, I mean, it's going to eventually roll out. Is it the issue that everyone is going to have to get a new phone at that point in time,
and is that when the big load of phones will be sold and many different competitors.
KELLY: Yes, that's a really good question especially since people who might be on the fence now if they're going to upgrade or if they should
just hold off for the 5G phone, it's definitely the future. Samsung is starting to roll it out, 5G networks especially in the U.S. are pretty
slow, pretty limited, not much you can do.
But in a year or two, it's going -- you know, more developers and businesses are going to start making you know, new services for this.
Without 4G, we wouldn't have Uber, we wouldn't have FaceTime, 5G is going to introduce self-driving cars and so much more. So, eventually, yes, we
will probably all be on 5G phones. So whether or not, you want to upgrade now or hold off is preference.
NEWTON: And probably, depending on how large your wallet is right now --
KELLY: Right --
NEWTON: Samantha, thanks so much, you did a nice job with that, we're going to give you more stuff to try out --
KELLY: Oh --
NEWTON: You look forward to that --
KELLY: Really --
NEWTON: Thank you, I appreciate it. Thomas Cook now in a race against time to secure $250 million in extra funding. The travel firm is now on
the brink of collapse and at risk of stranding thousands of customers overseas. Preparations are already under way to bring them all home under
a plan known as quote, "operation matterhorn".
The company shares closed down, you bet they did, more than 22 percent on Friday. Anna Stewart joins me now from London. I mean, what a nightmare.
I mean, Anna, this company really had such a branding in Britain. It's how a lot of people around the world went on vacation. The company they took
on vacation with them.
ANNA STEWART, CNN BUSINESS REPORTER: And it survived. You know, two world wars, a recession, there was nationalism, it was 178 years old, but it does
look like it could well be nearing the end here. As you said, it needs $250 million just to secure a package deal. That is already being sorted
out, but it's not looking good.
And the last six hours since I last spoke to you, we've had no news. So, what will it mean? Well, currently, right now, there are 600,000 holiday
makers from Thomas Cook abroad, so they potentially could get stranded, 160,000 of those are actually based in the U.K., and I think that is why,
of course, the government is so keen to make sure that they can repatriate all those customers.
However, the British Pilots Association today was actually saying it would cost the government just as much to repatriate 160,000 customers as it
would to simply save Thomas Cook. So, there's a lot of pressure here on the British government and on British banks to step in.
NEWTON: I mean, Anna, you and I were doing that math earlier today, weren't we? At the end of the day, well, as we discussed it, this is not
great for a company, right? You're not going to be booking another vacation with Thomas Cook, given all this turmoil.
Do you see anything in the offing where it should be taken up -- or taken up by someone else who will come in and at least try and save the parts of
the business that were doing well? Well, I feel like from all the reports we're seeing from inside, it seems that the last hope is that the
government is going to step in and do something simply because it's going to be so expensive to bail it out.
But you know, bailing out companies is a problem in and of itself. We already had Monarch Airlines that closed in 2017, very similar story, and
they did say, they would create a better compensation scheme because it would just simply cost the taxpayer so much to bail them out. At this
stage, it's not looking good for Thomas Cook.
But for any holiday makers out there, try and relax because it's not ended yet, and there will be ways to sort of sort out your holiday and get
compensation, you know, all these things will be worked out eventually, Paula.
NEWTON: And before I let you go, your advice for those people who may be in this position right now and watching our program.
STEWART: Don't freak out, don't panic yet, enjoy your holiday your way -- no, the real advice here is if you booked a package holiday with Thomas
Cook, that is all protected under the Atoll Insurance Scheme, that's run by the CIA, you'll be refunded for upcoming trips, and if you're on holiday
right now, they'll make sure you'll finish your holiday with as little disruption as possible and they will get you home.
[15:40:00]
Gets a bit trickier if you just booked a flight with Thomas Cook, in that case, you may be covered by Atoll, you may not, check your sort of small
print of your booking, you might get compensation -- your credit card company, your debit card company, your own national aviation regulator, you
can also of course, have your travel insurance. But it does get a bit more complex.
But you know, generally, I would say, don't panic, you're not alone, 600,000 people are aboard right now, so, you're in good company, yes --
NEWTON: Or the British government needed that to worry about along with Brexit. Anna, thanks for staying, yet, another late-night there for us in
London, appreciate it.
Now, when we return, a tough day for Netflix sliding on comments from its own CEO where the platform stands in the streaming wars.
(COMMERCIAL BREAK)
NEWTON: Netflix stock is sliding as you can see after its CEO pointed to tough competition in the streaming space. Shares are currently down as you
can see here about 6 percent. Speaking earlier on Friday, Reed Hastings said it will be a whole new world when Disney Plus and Apple TV Plus arrive
in November.
That's not it, either. Amazon Prime video, Hulu are also in the mix, and "Warner Media"; parent company of this network and "NBC", all of these
people set to launch their offerings by next Spring. Frank Palotta is with me now. Frank, I hate to say that everybody predicted this, but they did.
Everyone saw this coming, and you know, how come such a frank statement from the CEO really dinged this stock today. Did they think that the
content was going to just keep Netflix afloat forever?
FRANK PALLOTTA, CNN BUSINESS MEDIA WRITER: It's because it's real now, it's really happening. I mean, Reed Hastings has talked about competition
before where he says we welcome competition. More and more people are going to come to streaming, it will kill everything else, but it won't kill
us, we are the king of streaming.
And now it's here. We're talking about -- you know, Apple TV Plus, it's November 1st, Disney Plus is going to be November 12th.
NEWTON: And Apple TV with some huge shows that everybody is talking about.
PALLOTTA: Yes, you have the morning show which is the Jennifer Aniston and Reese Witherspoon show, you have "Oprah" on that one. And then you look --
like things like "HBO Max", they're going to get "Friends", "Friends" made its name on Netflix the last couple of years.
"The Office" is going to go to Peacock and Disney Plus speaks for itself, it's going to have Marvel to "Star Wars" to a bunch of other contents --
NEWTON: And sports --
PALLOTTA: And sports too because it's going to be able to bundle with Hulu, which is going to adult -- which is going to skew more adult and
"ESPN Plus" which will have some live sport offerings.
[15:45:00]
NEWTON: Frank, tell me this, so, we talked about cord-cutting for years.
PALLOTTA: Yes --
NEWTON: OK, so there's no cables. So, now we've got all of these streaming things all put together. At the end of the day, does anyone have
a vision for where all of this is going to settle out in terms of content? How we're going to consume it? Where are we going to consume it, from whom?
PALLOTTA: I think right now, that's what they're all trying to figure out. They're trying to own the future. They're trying to be one of the last
ones up. We keep saying streaming war, streaming war. I don't know if it's going to be one above all of them. I think there will be four or
five.
Your studies have shown that most people want about four streaming services. So, about ten, five, ten years from now, Disney, Apple, Netflix,
all the rest of them are going to be one of those four. They're going to try to be. And I think Netflix does have a lot working in its favor
despite this stock kind of taking a hit today.
I mean, really, think about it. For the last ten years or the last five years, Netflix has been synonymous with streaming. We don't call it Apple
TV Plus and chill. Do we now or not?
NEWTON: No, we say we're Netflixing, it's even a verb --
PALLOTTA: That's right, they created Bingeing, they created all this. They've had such a head-start and they're synonymous with the idea of
streaming. So, they have a lot working in their favor as well.
NEWTON: In terms of the costs to consumers though, when you look at something like a Netflix, how much are these companies trying to settle out
the monthly offering, right, what it's going to cost you?
PALLOTTA: This is really interesting as well, it's like we get something like Apple TV Plus, they're going to offer you $5.99 or even think cheaper
than I think, it might be $4.99. But it's basically free if you buy an iPhone, $6.99 for Disney, $12.99 for the standard plan for Netflix.
These are all going to probably change in the next couple of years. I mean, Disney is probably going to go up in price, Apple TV Plus might go up
in price. We don't even know what "HBO Max" and "Peacock" is going to cost yet. This thing -- these things are going to change and we're going to
really see how much consumers are willing to pay for streaming in the next couple of years because they need that money coming from everywhere.
I mean, a new "Star Wars" series is not cheap.
NEWTON: Definitely not, especially with some of the bidding. We've had --
PALLOTTA: Right --
NEWTON: Price wars for some of the content.
PALLOTTA: I mean, we're looking at the perfect example like "Seinfeld"? "Seinfeld" is now on Netflix, "Friends" had to go over to "HBO Max", "The
Office" is going to "Peacock", and it was -- there are some reported numbers out there that we're talking about, $400 million, $500 million.
The "Big Bang Theory", some reports had it in billions of dollars for the syndication --
NEWTON: You're in --
PALLOTTA: Syndication rights and streaming rights, and these are incredible numbers, that money has to come from somewhere. And places like
Netflix, the big concern for them is that they don't have a ton of revenue streams beyond the subscriptions.
Disney still has its parks, its films. What's ever left of television, it's merchandizing. But Netflix is really about getting their subscribers
to sign up en masse.
NEWTON: They'll be really interesting space to watch over the next couple of years for sure. Frankie, thank you so much, I learned so much in this
little conversation, thank you very much. Trust is one of the driving forces behind a company's success, yet, mistrust seems to be mounting.
We'll discuss how trust can make or break a business.
(COMMERCIAL BREAK)
[15:50:00]
NEWTON: And some breaking news just in to CNN. The "Wall Street Journal" is reporting that President Trump repeatedly pressed the president of
Ukraine to investigate Joe Biden's son. According to the "journal", sources say Trump urged Volodymyr Zelensky to work with Rudy Giuliani on an
investigation. We of course will have much more on the story at the top of the hour with Jake Tapper.
Trust is more important than ever. That's quite a segue than we've gone over to trust into the success of a business. However, from geopolitics to
tech regulation, trust seems to be increasingly in short supply. And now a new expanded addition of the book, "The 10 Laws of Trust", building the
bonds that make a business great offers companies a playbook on building a culture of trust.
Joel Peterson is the book's author as well as the chairman of JetBlue Airways, and he joins me now. And I know a lot of people admire what
you've been able to do in aviation. I'm going to bring it first to that, right off the bat.
Boeing 737 Max, did they not read your book?
JOEL PETERSON, CHAIRMAN, JETBLUE AIRWAYS: Yes --
NEWTON: And I don't want to take anything away from, you know, Boeing. You know, excellence in engineering, the fact of the matter remains, air
travel is one of the safest ways you can travel more now in the world --
PETERSON: It's the safest --
NEWTON: It's the safest, thank you for being categorical. But what went wrong there? Because certainly as we see more uncovered in this, mistakes
were made.
PETERSON: Yes, well, it was an Air France -- a 1960s Air Frame, and they were adding these new engines to it, change the center of gravity and this
all was solved with software, and then that means training and the training didn't keep up with what they needed to have people learn.
So, there were no problems here in the United States with it, but there were a couple of overseas problems.
NEWTON: But in terms of the hoops that they didn't go through, also some lapses, certainly with regulation from Washington. How do you see it
playing out and it certainly has gone on for a lot more than Boeing wanted it to and then a lot of companies wanted it to.
PETERSON: It's having an impact on the airline industry --
NEWTON: Sure is --
PETERSON: Because delays of deliveries were impacted, we're an Airbus shop, but people are buying Airbus products now. We're having a slowdown
in deliveries there. So, it's a ripple effect throughout the entire industry.
NEWTON: Right, because their capacity isn't there --
PETERSON: Right --
NEWTON: And they're basically Airbus and Boeing. And that's -- if you look at it from the prism of that, but in terms of building that trust,
there's been a lot of conversations about the new industries out there. You know, Mark Zuckerberg was in Washington this week, trying to talk to
the government about where regulation comes in and where it doesn't.
We've had new books out on Uber, talking about what they did behind the scenes in terms of having this safety fee levied on customers, but then
just basically pocketing it and not doing anything with that kind of money. It still seems as if we're in an age in this last ten-year expansion where
businesses are not being careful with their consumers.
And by definition seem to be losing that bond with consumers about what they can and should be doing.
PETERSON: So, I don't think it just started here. I think -- I think we're getting a lot of press on it as it relates to primarily these tech
companies. But I think if you look at Enron and WorldCom, I mean, it's been a problem. So, I think there's a bit of a crisis of trust now.
But if you go all the way back to kind of -- so, I teach at Stanford, and my students, my millennial -- my millennials have lost trust a bit in the
system. We saw that on Wall Street meltdown, they saw the mortgage crisis, they were told to get an education and they're in debt and they don't have
jobs, now, they have jobs, but it's, you know, it's a crisis of trust.
NEWTON: And so -- that as a starting point where we go from there? Because we were certainly led to believe as well that there was accountability
through regulation. But also through things like shareholders, we seem to have boards that don't seem to have -- you know, that are appointed in ways
where governance becomes a question. Where do you strip it all down and then start to build it back up again.
PETERSON: Well, I think the way that he said that is right. You know, you have to kind of strip it down, figure out what is the current trust level
in your organization. I think a lot of CEOs don't know what is the trust level within their organization. Many would be surprised at how low it is.
And I think you have to build trust, sort of a conversation at that time, a delivery on time, on budget, delivering on promises and build it up slowly.
And so it will take some time and you need leaders with a lot of integrity to do that.
NEWTON: And I think that's unfortunately what seems to be missing. We're going to do a rapid fire around. Are you ready?
PETERSON: Sure.
NEWTON: Cheap Trans-Atlantic routes. You think that's something that you can still muster here?
[15:55:00]
PETERSON: Well, we're flying to London here, I don't know if you've read about that --
NEWTON: I have, but I mean, you know, Paris, what's next, right?
PETERSON: Yes, so, we're flying narrow bodies which I think will be very popular with -- and we're only adding about 2 percent capacity.
NEWTON: We just heard the saga of Norwegian Air though as well. They didn't quite muster this. I mean, and people are skeptical, saying that
look, in this age of climate consciousness, is it really the thing to do?
PETERSON: To fly across the Atlantic?
NEWTON: On the cheap flight to not pay the real price in terms of carbon.
PETERSON: Well, so, I know from JetBlue's standpoint, we are very sensitive to carbon offsets and to doing things that are protective of the
environment, so we pay a lot of attention to that. I can't speak for the other airlines.
NEWTON: Two other things, the fuel prices, still, are they bothering you right now as you see what's happening in the oil markets this week?
PETERSON: Well --
NEWTON: Can they really rattle you?
PETERSON: They went up and then back down again. So, they're what? About $60 a barrel now or something like that --
NEWTON: Sixty five for Brent, yes.
PETERSON: So, they've been as high as $149 a barrel as you know. So, fuel prices move around a lot --
NEWTON: But you still think they're in a more --
PETERSON: They're in a band that you can work with.
NEWTON: And finally, trade war with China. Concerning you?
PETERSON: Of course.
NEWTON: Still pre-occupation for many executives.
PETERSON: I think for all businesses, you have to think about that. They're a huge trading partner all over the world. So, I think hopefully,
they'll get that solved.
NEWTON: Joel Peterson, thanks so much for being here --
PETERSON: Nice to be with you --
NEWTON: Really appreciate it --
PETERSON: You're welcome.
NEWTON: Now, there are just moments left to trade on Wall Street. We will have of course those final numbers, we'll catch up with Wall Street when I
come back
(COMMERCIAL BREAK)
NEWTON: A few moments there left to trade. And yes, unfortunately, traders are making the most of it there -- as you can see, the losses are
picking up on Wall Street, U.S. stocks are about to finish lower as you can see.
Investors of course now focused on the state of U.S.-China trade talks after that Chinese delegation canceled plans to visit farms in Montana.
Traders watched for volatility from of course the quadruple witching day which was today when a variety of options in futures contracts expired.
But it was really in fact those trading numbers that spooked everyone. Let's have a look at some Dow components, Microsoft led the Dow lower along
with Boeing and Caterpillar which of course fell more than 1 percent mainly on those trade worries.
Drug giant Merck Pharmaceuticals was the Dow's best performers, though it had a four-day winning streak after one of its cancer treatments won FDA
support. And you can see there, we're about to close off quite a week on Wall Street, another big week here to come.
That is QUEST MEANS BUSINESS, I am Paula Newton in New York, "THE LEAD" with Jake Tapper starts right now.
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[16:00:00]
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