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Quest Means Business
Investigators Say Design Flaws In The 737 MAX, Major Contributor To The Deadly Lion Air Crash; Boris Johnson Insists Brexit Can Still Happen In Six Days' Time; White House Trade Advisers From Two Different Administrations Weigh In On The Chance Of An Early, Quick And Simple U.S.- U.K. Trade Deal; E.U. Members Agree In Principle To Brexit Extension; British Prime Minister Calls For December 12 Election; Hezbollah Pushes Back Against Anti-Government Protests. Aired 3-4p ET
Aired October 25, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:13]
RICHARD QUEST, CNN INTERNATIONAL HOST: An hour to go before the closing bell on Wall Street as we come to the end of what has been a busy week, and
it's a strong session. Green out the gate -- well, except for that little bit of nonsense. Green out the gate and holds on to the gains throughout
the course of the day. Earned a half percent, 27,000, probably not today, but it is very close. Those are the markets. And these are the factors
and the reasons why.
Boeing is under pressure. Investigators say design flaws in the 737 MAX, major contributor to the deadly Lion Air crash.
From the back of the queue to the front. White House trade advisers from two different administrations weigh in on the chance of an early, quick and
simple U.S.-U.K. trade deal.
And Amazon shares sinking after corporate spending spree eats into profits.
We are live in the world's financial capital, New York City on Friday, October the 25th. I am Richard Quest, of course, I mean business.
Good evening, tonight, Boeing says it is addressing all the safety recommendations that were issued by the Indonesian authorities concerning
the 737 MAX aircraft. The investigators have released their final report on Lion Air flight 610. It crashed last October. A hundred eighty nine
people died.
Investigators say there was an entire string of factors that played a role in the tragedy. It was one of two crashes that led to the grounding of all
Boeing 737 MAX jets, a grounding that's worldwide and still in effect today.
CNN's Rene Marsh, our aviation correspondent is in Washington. We're going to get to the bits and bobs of what they recommended, but from the U.S.
side today, how are they responding? What's Boeing saying?
RENE MARSH, CNN AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Look, you have not heard any sort of resistance as it relates to Boeing or even
the FAA once that report came out.
Even the press release, announcing an overview of the findings came out immediately in our inbox as we saw responses from the FAA and Boeing, and
they all had a tone of condolences, obviously, for the lives loss and also making the points that they are already addressing many of the issues
highlighted in the report and they plan to take seriously all of these safety recommendations that were made in the report -- Richard.
QUEST: Okay, so the problem for Boeing is that although there were lots of other issues such as the pilots and the airline and the faulty angle of
attack sensor, but at the end of the day, it's the way they designed MCAS, isn't it?
It's the way -- they put aside their own values that you've covered so many times -- safety first, pilot redundancy -- all those sort of things. Do
they seem as if they've got the message?
MARSH: You know, I would say so. If not, as my mom used to say you have a pretty hard head if you don't by this point. And here's the truth of the
matter, if they don't get the message, the scrutiny at this point is so intense, that there's no way that that plane will fly until they get the
message.
You know, there's already the scrutiny amongst international regulators. So even once the FAA says this plane is safe to fly, they're going to want
to cross their T's and dot their I's as well.
But yes, I think that once this plane is flying again, it will have gone through so much scrutiny. You would have to believe that Boeing has
learned a lesson here as far as any sort of fast tracking that was happening in the development of this plane, that that's a no-no.
Trying to make perhaps a product, you know, seem more desirable to customers, because perhaps there is not a requirement for pilot training in
a simulator. I think many people will think twice about that, and there will be a lot more diligence.
And look, the truth of matter is, this is an issue of just more complicated planes, and so in many cases, the FAA caught flatfooted as well, because we
see this all the time. The regulations just aren't keeping up with the advancements of these software and these programs on these aircrafts.
[15:05:00]
QUEST: And that's something we will be talking about a little later in the program. Thank you, Rene. Rene Marsh in Washington.
Let's go to Brexit where Boris Johnson insists Brexit can still happen in six days' time. The British Prime Minister is daring the opposition to
consent to an election on December the 12th, if they want more time to scrutinize this deal.
E.U. leaders have agreed to the principle so there will be a deadline extension on October 31. Nic Robertson is in London. He joins me.
Nic, there's -- realistically, there's no chance to say in a sentence, there's no chance realistically of October 31st Brexit.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: There isn't because the E.U. can give that extension. They say that they're minded too, but
they just haven't decided how long they would like some things to happen, I think in London, that are not going to happen. So yes, the E.U. can remove
that. But they're not at that moment yet.
QUEST: What about this idea of a general election? The vote on Monday seems redundant or superfluous because unless no deal has been removed by
the E.U. extension, the opposition will do what?
ROBERTSON: They're not going to support it. At least that's the majority position. Look, the Prime Minister needs two-thirds majority in Parliament
to get that election on the 12th of December.
The opposition is not minded to go for it. They say a no deal has to be removed completely. That statement is a little bit ambiguous. This is all
about politics at the moment. And what the Prime Minister put on the table is doubly unappealing to the opposition.
They would have to sign up for two things they don't want -- a short conversation about the withdrawal agreement and an election they're not
ready for.
QUEST: I was in London, obviously with you and we went through this in great detail. Tonight, as it's a Friday and it's a good opportunity for a
bit of a step back, do we seem to be -- is there any clarity? Do you feel in your assessment, Nic, that we are able to see a path forward one way or
the other?
ROBERTSON: No, I think Monday is going to be a moment that utterly lacks clarity because you have this clash of Johnson and Corbyn, the Prime
Minister and the leader of the opposition. They are at an impasse over when an election should be. It seems that Corbyn might be up for it, but
different terms.
How do we get around that? Again, the number of ways that could go, could shoot off from here are multiple, but none of them are clear. Perhaps the
only thing that's clear is the E.U. having this card to play to negate a hard Brexit next Thursday.
QUEST: Nic Robertson, you have a busy week ahead, next week, of course with Brexit. Try and have a bit of a rest over the weekend.
Donald Trump's trade advisor says the U.S. and U.K. can strike a deal with lightning speed after Brexit. He says everything has change since Barack
Obama said Britain will be at the back of the queue if it splits away from the E.U. Peter Navarro told me a deal will be easy.
(BEGIN VIDEOTAPE)
PETER NAVARRO, DIRECTOR, WHITE HOUSE OFFICE OF TRADE: We can move in lightning speed, and we've done all the prep work. So we're ready to go.
And U.K. is one of our greatest allies. We love the U.K. Our economies -- and this makes it easier for a trade deal -- look alike. We're
manufacturing economies. So it's a little easier to do a deal with that. So we're ready to go as soon as they're ready to go.
QUEST: Will you accept that the National Health Service, the NHS is not on the table? The Prime Minister said as much -- well, he didn't specifically
say that, as part of a negotiation, will the U.S. accept that that is a sacred institution in Britain?
NAVARRO: I am not the U.S. Trade Representative nor the President will let them handle those details. I grant you that might be a big detail. But
all I can tell you is that we're ready to rock with the U.K. when they're ready to rock.
(END VIDEOTAPE)
QUEST: Ready to rock when they're ready to rock. Michael Froman is with me, the U.S. Trade Representative under Barack Obama, now Vice Chairman at
MasterCard. In the run up to the Brexit referendum, the Obama administration discouraged the idea that a trade deal would happen quickly,
but the Trump administration is ready to rock. Where will they be rocking to?
MICHAEL FROMAN, FORMER U.S. TRADE REPRESENTATIVE: Well, I'm delighted they're ready to rock. I think as Peter's interview demonstrated, there
are a lot of complexities of this. And one of the things that needs to be worked out and the reason why we still haven't ventured into that
negotiation is until we know what the U.K.'s relationship is going to be with the rest of the E.U., it is hard to negotiate a bilateral trade
agreement.
For example, will the E.U. -- will the U.K. want to implement the same rules on digital trade, digital economy as the E.U. or closer to the US?
Will they want to apply the Food Safety Standards of the E.U. or closer to the US? What services are they willing to open up?
[15:10:01]
FROMAN: Those are -- those little details as Peter referred to them, those are pretty big negotiating items, and the U.K. is going to have to figure
out once it's outside the E.U., where it positions itself vis-a-vis its main trading partner, which is the European continent, and its aspiring
trading partners like the United States.
QUEST: But if the administration wants to give some sort of flip to Britain, probably on political grounds rather than trade grounds, they
could do so and Donald Trump has suggested that it could be multi-layered, it doesn't have to be all at once, some grandiose scheme. It can be goods
to start with in certain areas, and then something more later. But you don't think that's realistic?
FROMAN: I think it's all possible. Just remember that any agreement that requires a change of U.S. law, such as reducing or eliminating a tariff or
changing any of our standards, that has to go through Congress, and Congress will have a lot to say about what we do on agriculture, what we do
on services, as well as which manufacturing sectors we open up.
QUEST: So you're being very diplomatic as I would expect you to be. But what you're really saying is there's a cut in hell's chance of an early
deal.
FROMAN: Look, I think if there's goodwill on both sides, there's no reason the teams can't sit down and --
QUEST: Michael --
FROMAN: But these trade agreements are complicated. They take a lot of time. And so far what we've seen whether it's with China, or Canada, and
Mexico, or Japan or any of them, these things take longer rather than shorter.
QUEST: Michael, stay where you are because we're going to talk more. We're going to talk after the break. We're always going to talk about
China trade and the China trade deal, but also about the purpose of the boardroom. Exactly what is the purpose now of top people, like yourself in
boardrooms and where you see your responsibility, which obviously, is a particularly valid thing when we're looking at things like Boeing. In a
moment, we'll be seeing that.
Donald Trump's Trade Rep says he has been headway on a deal with China. And how a cardigan came to $300,000.00. It's not new, it's got stains, but
it was worn by somebody famous who is no longer alive. In a moment.
(COMMERCIAL BREAK)
QUEST: Amazon investors are feeling the pinch after the company's latest spending spree. Shares are under pressure. Third quarter profits fell
nearly 28 percent. Now, that's extraordinary.
Heavy investment in next-day delivery is the reason. Amazon is warning, expect earnings lower in the all-important holiday shopping season. So the
temptation is to say, wither Amazon. Amazon is over. Forget about it. All go home.
But you join the conversation. Our own survey on Amazon's business health. Get out your phones and go to amazon.com with your digital things and this
one is have you bought anything on Amazon, say in the last 30 days? I'll make it 60 days, if you like. Have you bought anything on Amazon in the
last 30 or 60 days, you get the point of what we're saying. And you'll see the responses at the end of the program.
[15:15:39]
QUEST: Clare Sebastian is here. Why are they spending so much on one-day delivery? Nobody else is doing it. It's not like they've got a competitor
that is snapping at their heels. Everybody else has to wait next Thursday.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, they want to be fast because the competition is snapping at their heels, Richard. Prime has
been around since 2005. It launched with two-day shipping and 14 years later, Amazon is laying down the gauntlet to the competition and saying
look, we're going to take away essentially the delayed gratification of online shopping. You're going to get your products the next day.
But that is a huge overhaul to its logistics system. It means --
QUEST: Right, but surely Wall Street can see that. Wall Street can understand what it's doing and why beat up on the stock?
SEBASTIAN: Right. It is not actually as nearly as beat up as we were expecting. In after-hours trading when this report came out, Richard, it
was down almost as much as nine percent. It has really come back.
I think a lot of people that, you know, actually just bought on the mini dip today, but it is don't forget still down more than 10 percent since the
last earnings report in July, which is when we really got the sense that they were in this new investment cycle.
So it is now discounted in the medium term, but in the long term people are still very bullish. Amazon is still in these markets that are growing and
it is the market leader be it Cloud, be it online retail, be it advertising, so it's in a winning position.
QUEST: Is it making money in all its divisions? I mean, we know that Cloud is basically like the Feds printing press.
SEBASTIAN: Right.
QUEST: But what about the actual stuff that it sells?
SEBASTIAN: So Cloud -- these are the numbers. This is the one I always look at with Amazon because it's so interesting, 12 percent of revenues in
the past quarter, 71 percent of operating income. That is crucial to understanding why Amazon is where it is today.
By contrast, you know, e-commerce, that division, particularly in the U.S., makes the bulk of the revenues, but very small amount of profits. That's
why it has been able to grow the way it has and prop up the retail part of its business. Many would argue that's why we now have antitrust questions
because that's the way Amazon has been able to kind of funnel market share away from physical retail.
QUEST: And I'm always skeptical about this wither Amazon. Let's see. What are we up to? What is it 96? Sorry, 66 percent -- it was 100
percent, but obviously some no's have arrived. Sixty six percent of people said they bought something from Amazon.
Now, bearing in mind many of our viewers are in places where Amazon doesn't trade at the moment. I bought something from Amazon in the last week. The
scenario remains healthy.
SEBASTIAN: It does, certainly. I think--
QUEST: You're going to suggest a but.
SEBASTIAN: They are still in a position where people are prioritizing convenience over pretty much everything else. And Amazon is of course, the
everything store of the internet, you can get anything you want on there and Prime has now more than a hundred million members worldwide.
They are facing a number of questions around the third party sellers in that platform. There have been questions about counterfeiting. That came
up on the earnings call. They say they've been very diligent about that.
We are hearing that they're taking steps to combat that. But as their platform grows, there are going to be issues that come up that they have to
combat.
QUEST: Good to see you. Thank you very much. U.S. stocks are flooded with records. The S&P could closer to a record today. Intel shares are up
after strong earnings. Tesla shares, nine percent at the moment. I think the S&P is just shy of its record, which I think is 3,025 and change.
The U.S. Trade Representative says the U.S. is close to finalizing parts of the trade deal with China. Michael Froman is with me, former Trade Rep.
What do you make of this trade deal?
Last night, Peter Navarro said it is only Phase 1 and because it's Phase 1, it will take time to be embedded in, but there will be more. But others
say, look, this is just smoke and mirrors. There's nothing there, which is it?
FROMAN: Well, we certainly hope that there is going to be a trade agreement reached and a Phase 1 deal right now, we don't know the details
yet. But the discussion is that it's really around how much more of U.S. exports might China buy -- soybeans, liquefied natural gas, et cetera.
That's fine. That's fine and good for farmers and ranchers and commodity producers. We do hope that either this agreement or the subsequent one
will get at the more fundamental issues that have been at the core of the U.S.-China trade tension around intellectual property rights protection,
SOE subsidies, forced technology transfer, and what's unclear at this point is when that -- those issues will really get resolved.
QUEST: I want to talk about bigger issues in the sense of the boardroom's responsibility because obviously you are Vice Chair at MasterCard as well.
We've had obviously the Boeing board in a very difficult position at the moment as to what to do, whether to fire the CEO, whether to -- how much
responsibility to take. What do you see as well as Boards' responsibilities? Bearing in mind in my view, there are often weak-willed,
lily-livered and fail to stand up to the CEO or chairman.
[15:20:29]
FROMAN: Well, I think there's an interesting discussion going on now. The conversation has shifted with Larry Fink's letter last year, the "Business
Roundtable" statement a couple months ago about how businesses need to be focused both on shareholder returns, but also the broader impact that
they're having.
And there's no real false -- there is a false dichotomy when people say shareholders on one side and stakeholders on the other. Ultimately, if
you're trying to deliver long-term shareholder value, you have to be focused on your employees, the communities in which you operate.
In our case, at MasterCard, we're very focused on inclusive growth and financial inclusion, because we understand that the only truly sustainable
economic growth is inclusive growth, and that will thrive in that kind of environment.
That's the kind of judgment I think every company is increasingly going to need to make.
QUEST: But the Board themselves, do they -- do you think that they are -- Boards are very sufficiently taking responsibility? Or is it a case of get on the Board, be bamboozled by the numbers. Get the check when it's
arrives for that and just vote yes.
FROMAN: Well, like I think corporate governance is absolutely critical and the role of the Board in representing the shareholders fundamentally is to
hire or fire the CEO and to approve the corporate strategy and then to leave it to management to implement and manage day-to-day.
But I think there's been more and more attention in boardrooms to these broader sets of issues and that's a positive thing.
QUEST: Good to see you, Michael, thank you.
FROMAN: Thanks for having me.
QUEST: I appreciate it. Have a good weekend, sir. Have a good weekend. Boeing says it is addressing the safety recommendations issued by the
Indonesian authorities about the 737 MAX. The report, which was released - - the final report -- by the way of the Indonesian lays out nine different factors that contributed to the Lion Air crash.
And it is worth today just showing how complex this is. The responsibility is really shared between Boeing, the manufacturer, the regulator, the FAA,
the airline, and the way it trained its crew and its maintenance and the pilots.
So watch. So the first mistake, of course, they recognized or the first problem was the assumption of pilot responsibilities. How would pilots
respond to MCAS, the software when it's activated? They got that wrong. But that was Boeing and the FAA that got that wrong. They failed to
understand.
Then you have the regulators' certifying a design with only one sensor that would activate. Again, joint there. Boeing's decision to install only one
sensor in the first place, arguably that is Boeing's fault and responsibility. The lack of guidance on the system for pilots, that
probably goes to the airline, Boeing, and probably the regulator. All of them.
We will put it down here for the moment, although the airlines didn't really know, so it probably belongs there.
Boeing could have enabled an AOA disagree alert, but they didn't. You're starting to see how this thing comes together. There was a replacement
sensor, miss-calibrated. That's the airlines responsibility. And by the way, the FAA that's just revoked the license of the repair shop.
It's unclear if it was tested properly. That's again is the airline's responsibility. Flight and maintenance logs. A previous flight had
similar problems and it wasn't reported. That goes to airline and pilots.
And then you have workload management. Were they trained properly? You get the idea. You start to see how it's simply too simplistic to say it
was one or the other. But the bulk of responsibility goes to Boeing and the regulator.
David Soucy is with me to talk about it. David, I've gone through that in some detail, and tell me why I'm wrong or right.
DAVID SOUCIE, CNN AVIATION SAFETY ANALYST: Well, I think you're right in looking at it the way you are. The challenge is going to be what how they
move forward now.
The commonality with everything you've mentioned is the fact that the communication, the way that things are communicated between every entity
within this complex system is what is weak. And that's something that we had challenges on back in 2004.
We had a rulemaking committee to try to fix this problem. But it didn't happen. It didn't end up a result in some kind of regulatory authority
because you can see how complex this is, how things work together. And when they work together improperly, then each step along the way can cause
that problem.
QUEST: Right, but what we saw here of course is that -- if you think of it, I mean I'm not being flippant when I say this, if you think about it as
a cake being baked, you know the ingredients were all put in by Boeing and the FAA But how it was cooked was the airline and the pilots. And these
pilots, you know, good men to be sure. But the first officer simply did not have the airmanship to handle this situation. They didn't even know
the system existed.
[15:25:26]
SOUCIE: The question is, should he have had to have that level of competency to be able to do this? You look at Sully, did he do it right?
Did he -- a lot of people question whether he could have gotten back to the airport, but he didn't. So there's those kinds of things that all has to
be considered.
In the teleconference with Boeing this morning, this senior VP was talking exactly about this, about the fact that it takes one second to recognize an
issue and it takes up to three seconds to respond to that issue. That's the regulatory requirement. And that's the challenge here is who didn't
see that it was going to take longer for them to do that. How could they recognize and react if they didn't know the system existed in the first
place?
So again, in an accident investigation, they've got to go back to the root causes and if not, it will get too complicated and to finger pointing at
everything and never find any way to make it better in the future.
QUEST: The corrections or modifications, excuse me, being put forward by Boeing, you know, first of all, there would have to be two sensors that
have to agree. It can only fire once MCAS -- it can never be more strain than the pilot can countermand.
But, arguably, this is something that Boeing has had in its ethos. Pilot is in control, redundancy of systems, safety first -- how did they manage
to lose their way?
SOUCIE: That's the question, Richard, and that's the question that I just got done asking Vice President over at Boeing, and I'm going up there
within the next week or two to get that answer. They didn't answer that directly to me. But they did tell me that they've done a lot of things to
improve that communication and to make sure that this doesn't happen again.
And I'm pretty confident in what they're doing. They're making some changes in their information sharing where the lessons learned that they
get aren't shared just within a specific model of aircraft, but across the entire organization, which was not done before.
So let's say for example, something similar to this happened on a different model or a different -- even a different type of device. Now, you've got
this communication that's going to share it across, so those lessons learned and those assumptions will be carried on.
QUEST: David Soucie, thank you for joining us. Much appreciate it. Thank you, sir.
SOUCIE: Thank you, Richard.
QUEST: The E.U. has agreed in principle to a Brexit deadline extension. Now the question is, how far will the can be kicked down the road? We're
in Brussels with Belgium's Deputy Prime Minister. That is next. This is QUEST MEANS BUSINESS live from New York.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. We're live in Argentina as investors are bracing for a pivotal
election. And a 25-year-old cardigan that's never been washed, and it could sell for $300,000 -- of course, it's whose cardigan it belongs to,
and we'll reveal that later in the program.
This is CNN and here on this network, the facts always come first. Ambassadors from 27 EU member states have agreed in principle to grant the
U.K. a further Brexit extension. They'll meet to make a final decision next week. This after British Prime Minister Boris Johnson has called for
an election to back next few weeks in early December, early December the 12th.
Lebanon's Hezbollah movement is pushing back against anti-government protesters. Hezbollah supporters clashed with demonstrators in Beirut on
Friday, and the group's leader said the protest movement was quote, part of an international conspiracy against Lebanon. Protesters are angry over
corruption and economic conditions in the country.
Reports say as many as 30 people have been killed in protests across Iraq on Friday. Sources are blaming live rounds and injuries from tear gas for
the fatalities. The demonstrators are demanding government action on corruption, unemployment and basic services.
British police say the nationalities of the people found dead inside the truck in Essex are now part of a developing picture. Police had previously
said they believed the victims were Chinese nationals, now Vietnamese authorities have since been alerted by family members. Also a fourth
person has been arrested in the case.
Belgium's opened its own investigation into the 39 deaths that I was just talking about. Prosecutors there say preliminary findings show that the
container in question arrived at a port in Belgium on October the 22nd, and left the same day. It arrived in England earlier on the 23rd.
Alexander De Croo is Belgium's deputy Prime Minister, he joins me from Brussels tonight. We will talk other matters in a moment. But let's serve
-- spend some moments talking about this. Obviously of great concern to yourself, how this has happened, what happened on the Belgian side. What
more can you tell me?
ALEXANDER DE CROO, DEPUTY PRIME MINISTER, BELGIUM: Well, let me first express the fact that we obviously think this is a profound human tragedy,
and that we should do everything to avoid things like that happening in the future. In Belgium, the federal prosecutor is leading the investigation.
Containers were moving between Belgium and the United Kingdom, obviously, they are within the single markets, so there is no Customs investigation.
The only investigation that takes place is the police who is doing that actually together with the U.K. police officers during scanning of
containers based on heat for example. Obviously, this was a refrigerated container. So, it was very hard to understand that someone was inside.
But at first, it seemed that the container arrived at the port sealed and left the port sealed as well.
So people have moved in the container outside of the premises, and probably outside of Belgium.
QUEST: We can all agree the horrific nature of this, I guess, what one does to prevent it in the future. It's not the first time that immigrants
moving from one place to another in such circumstances have been found dead. What more can you do to prevent?
[15:35:00]
DE CROO: We have over the last years invested in a lot of cameras on those port premises. We do a lot of controls, obviously it's hard for us to know
what is happening outside of our own country. And in the end, if we're looking for who is responsible for this, let's be quite clear. The person
responsible are human smugglers --
QUEST: Right --
DE CROO: Who are trying to make money on the misery of people who are in extremely difficult circumstances. So more international cooperation would
help, especially in fighting those criminal activities.
QUEST: Can we talk now -- let's move, sir, if we may, to Brexit. There's an agreement in principle -- why didn't you -- why didn't ambassadors in
countries, the other 27, why didn't you just agree instead of -- oh, well, you know, will agree in principle and then we'll find out. Why didn't you
just simply say yes, we'll do it until January the 31st, have an election, good-luck, off you go.
DE CROO: I understand that there's a principle agreement on that. You have to understand that on the European main lands, we have been quite
patient over the last -- the last three years in trying to understand which direction we are going. The main problem we have, obviously, is the
uncertainty. Pick one direction, pick the other election.
At some point, pick the direction you want to go and we will adapt to it and we are not a fan of this, and for example, in Belgium, we know this
will have quite some economic impact ranging between losing 10,000, up to more than 40,000 jobs. We are a small open economy, this is impacting us,
we understand that we probably will have to wait for another election.
We will be -- we will be patient, but please, let's get on with it.
QUEST: Right, but hang on, you can't have your argument both ways, sir, which is sort of what -- not just you, but the whole of Europe wants to do.
You're saying please get on with it, but we will wait. You're like the jilted bride who says well, I'll come back again tomorrow, and I promise
you, I want you to make a decision, but I'll be here if the -- why don't you just simply say to the U.K., it is January the 31st, and if you don't
leave by then, then it's no deal. Force their hand.
DE CROO: Because it is, in my view, since last week, quite clear, that the British Prime Minister has taken distance from the no deal option. And
that for me is the most important development that we've seen over the last week. Is that the British are not pushing for a no deal, and I think we
have to be clear about this. A chaotic no deal, no one is winning with this.
In the end, what you're seeing here is -- if you look at it from an economic perspective, this is not a good thing. You used to have an
American president who said about the economic policy while it's quite simple, don't do stupid stuff. Well, this is textbook stupid stuff.
QUEST: All right --
DE CROO: We are not a fan of this. But if in the United Kingdom, the decision is being made to do a negotiated soft Brexit, we have now a deal
on the table which have gained an approval in the British parliament which is a big step forward. Don't put the burden on our side.
I mean, if you decide on certain things, we will go along with it, but please, stop pushing the burden on the 27 countries because this in my view
is not the right view, not the right way of looking at it.
QUEST: Good to have you on, sir, have a good weekend, I appreciate your time tonight on a Friday night in Brussels. Much appreciated.
DE CROO: Thanks.
QUEST: The protests are erupting in countries across Latin America. It's all about economics. Voters in Argentina are facing a big decision, some
people are saying Sunday's election could sink the economy. In a moment.
(COMMERCIAL BREAK)
[15:40:00]
QUEST: In Chile, the National Congress building has been evacuated as a week of protests continues. Violent protests of that. Nineteen people are
now known to have died amid repeated demonstrations against yawning inequality. The United Nations says it's sending a mission to Chile to
investigate allegations of human rights abuses.
The Chilean president has publicly apologized for decades of economic problems and promised to make reforms. No sign yet though that the
protests are abating. Matt Rivers is with me from Santiago. This latest development -- but Matt, the number of people who are known to have died,
19 -- please, take care wherever you are.
And if you need to of course just stop, then just signal that to me.
MATT RIVERS, CNN CORRESPONDENT: Yes, sure, no problem. No, we're good, yes, no problem at all, Richard. There's just a lot of very passionate
people out here as a result of this protest. Since we spoke a few hours ago, the numbers here in the Plaza Italia area of the city of Santiago, the
capital of Chile had swelled into the tens of thousands, if not nearing a 100,000 people at this point.
You can see behind me there's just a line of people that are kind of making their way towards the main area of Plaza Italia, that's the main
gathering point here, and they're angry, despite the fact of what the government has done recently, which even today saying that they're going to
raise pensions by about 20 percent for roughly three million people here in the country.
They've announced other economic reforms, though, not as concrete, Richard, in terms of tangible steps, this is not ameliorating anyone here. People
are still really upset with the government. They're not happy with what they've said they'll do to fix this economic inequality situation that has
plagued Chile for decades now. And you can see it just by the amount of people that are still on the streets.
QUEST: Matt, from the comfort and coldness of the studio, if you say -- don't they realize -- many experts have said, Chile has been living beyond
their means, and that any form of economic reform ultimately is going to involve a dose of austerity. I'm aware I'm saying that as I say in the
cold comfort of a business studio.
RIVERS: Yes, I mean, I think if you had a rational conversation with a lot of people here, they might acknowledge that. But they would say
essentially that essentially any reforms need to benefit them. What they would say is that over the last 30 years, any economic steps that have been
taken by the government in terms of policy have only benefitted the elite.
And yes, Chile has lived above its means. As you say, it is without question, Latin America's most wealthy country. It has been an economic
success story, but for people that are out in the streets right now, students, younger people, people who are under-employed if not unemployed,
they say that this economy is simply not working for them. They've got problems with wage growth. They have problems with their pensions as we
talked about earlier.
They say that healthcare costs are too high. And so, even if it means a little bit of austerity which some here would argue wouldn't be the case.
But whether that's true or not, I think as long as they feel like the economic reforms are benefitting them and not the elite, which is a tall
order then they're going to be OK with it.
But what those reforms actually look like, I'm not sure everyone here on the streets could simply lay that out for you.
QUEST: Matt Rivers, thank you, sir, excellent to have you there tonight and much appreciated. Adding to the uncertainty across Latin America,
voters in three countries go to the polls this weekend. Presidential elections in Argentina, Uruguay, and local elections in Colombia.
[15:45:00]
Investors are especially on edge to see what the results in Argentina means for the economy on the brinks. The polls show that the center-left
candidate Alberto Fernandez is in a commanding lead over President Mauricio Macri. When Fernandez defeated Macri in the primary ballot in August, the
stock market lost well over a third of its value overnight, and the peso plunged.
In the last 60 years, Argentina has needed to call on the IMF nearly 30 times. Daniel Marx is an Argentina economist and former Secretary of
Finance who helped renegotiate the country's foreign debt during the past crisis. He joins me now. The reality is, sir, anybody running this
weekend is going to have to make major economic reforms, the core of which has an element of austerity. It's just a question of who admits
that, isn't it?
DANIEL MARX, FORMER SECRETARY OF FINANCE, ARGENTINA: Very correct, yes. We're going now to very high inflation, the expected inflation rate for
this year would be around 60 percent. With a recession on top of that, the economy has been reducing itself by around 2.5 this year on top of the
recession that started last year as well.
So, people feel that one initial step would be bringing down inflation to stabilize the currency. Stabilize the expectations in a way --
QUEST: Right --
MARX: That would -- that those around the -- around the currency.
QUEST: Do you -- when President Macri was elected, he came in with such high hopes with so much goodwill. He was the young, vibrant man who was
going to lead Argentina. What went wrong?
MARX: Yes, I would say the first two years, I think was an extended honeymoon, and then he started doing some reforms. But I think the main
thing was that he somehow postponed some of the adjustments that were needed and financed it heavily, particularly abroad. And then at some
point, there was a bit of --
QUEST: Right --
MARX: More than a year ago, he run out of steam and started -- all of sudden, to make a serious adjustments.
QUEST: How hopeless is the economic situation in Argentina. Is it going to require a full-scale bailout by one of the international organizations?
MARX: Well, Argentina had already significant bailout from the IMF and to a lesser extent from the World Bank and the Inter-American Development
Bank. So, I think something more is expected there. But mainly, I would say it's working on the domestic front --
QUEST: Right --
MARX: Trying to restore confidence, and with that, a solid out over time.
QUEST: Good to have you with us, sir, I appreciate it, thank you. And some breaking news --
MARX: Thank you --
QUEST: To bring you tonight from Washington. A U.S. federal judge has handed a major victory to Democrats in the House of Representatives. Now,
the Department of Justice has been ordered to release grand jury information that was redacted in the Mueller report. The judge set a
deadline of October the 30th.
The redacted information, of course, the Democrats have been trying to get for ages, it will be information that will help with the current
impeachment inquiry of Donald Trump. When we return, another meaning to grunge, Kurt Cobain's unwashed cardigan is at the auction block.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: Desirable cardigan, it has cigarette burns, a missing button and an unexplained stain over the pocket. It's not exactly what you would expect
from the world's most expensive cardigan. Although, it was though worn by Kurt Cobain in Nirvana's iconic "MTV" "Unplugged". There you have it, you
see it and it could fetch as much as $300,000 this weekend.
It's up for sales through Julien's Auction along with items once belonging to David Bowie, Elvis Presley and Janis Joplin. And amount of celebrity
memorabilia is strong, anything you could possibly imagine. Marilyn for example -- Marilyn Monroe's happy birthday, Mr. President dress sold for
$4.8 million. Madonna's desperately seeking Susan jacket, $252,000, and William Shatner's kidney stone, $25,000, all of those through Julien's as
well. With me, good to see Martin Nolan --
MARTIN NOLAN, EXECUTIVE DIRECTOR, JULIEN'S AUCTIONS: Good to be here with you --
QUEST: Executive director. This is fascinating. Why -- what makes them sell at these prices?
NOLAN: You know, we're all nostalgic, we cling to a memory, these are tangible assets, representing a time in our lives when we really loved that
and we saw that performance.
QUEST: But the interesting thing about this cardigan was --
NOLAN: Yes --
QUEST: When it was last sold --
NOLAN: Yes, by Julien's --
(CROSSTALK)
QUEST: By Julien's, it was sold to an investor --
NOLAN: Correct --
QUEST: For $100k or something --
NOLAN: Hundred and twenty thousand --
QUEST: Right, now it could -- if you have a 200 or 300 which raises the question of was it -- I mean, is it an investment?
NOLAN: Yes, people look upon these items as an investment. Tangible asset. Great conversation piece, you have this in your boardroom, in your
office, in your home, it will strike a conversation no matter where -- who you're with. And so people are nostalgic as well. It's a throwback to a
time when people were young and that was a really important performance by Kurt Cobain, released after he sadly passed away.
And so the people that watched that 25 years ago, they have disposable income now, and they can invest in --
QUEST: Oh, come on --
NOLAN: On these, but --
QUEST: Right --
NOLAN: Half of these items.
QUEST: But Michael Jackson's concert rehearsal worn Fedora. Michael Jackson owned and worn Fedora.
NOLAN: Yes --
QUEST: I mean, it's strange that people will pay large sums of money for something that celebrities worn.
NOLAN: You know, people pay huge lots of money for everything. Cars, whatever they collect. But memorabilia is fantastic.
QUEST: But the gist of an investment, the Cobain, I can see, but something on the lesser scale like for example a shoe worn by Jackson or you know,
B.B. King's multiple performance jacket.
NOLAN: Yes --
QUEST: What advice would you give if somebody is buying one of these things as an investment?
NOLAN: Well, you first of all buy it, even if it's artwork you're buying, you buy it because you love it. That's what it is. You have to be drawn
to it, you have to love it, you have to appreciate the artist, and then you'd own it. And in years to come, it's likely that it will appreciate in
value.
And we've seen that. We sold that Marilyn dress for $4.8 million -- $4.81 million. Maurice White bought it in 1999, he was an investor for one and a
quarter million, a world record at the time, 17 years later, we sold it for $4.81 --
QUEST: Right --
NOLAN: Million.
QUEST: Right, but --
NOLAN: Are we selling this jacket now? Going on the block --
QUEST: Yes --
NOLAN: Hard rock cafe?
QUEST: This is a fine jacket which has my name in it, it's good worsted wool.
NOLAN: Absolutely, fantastic piece --
QUEST: As worn on QUEST MEANS BUSINESS --
NOLAN: With Martin Nolan.
QUEST: With Martin Nolan, yes.
(LAUGHTER)
What will you give me? Sell it for me
NOLAN: That and $2.75 will get you on the subway downtown, Richard.
QUEST: Sold!
(RINGS BELL)
(LAUGHTER)
Hand out the money! It's about all it's worth.
[15:55:00]
Are you surprised, though, that this celebrity culture has now become so imbued, which is -- well, it's nonstop?
NOLAN: Yes, it is -- I am surprised, technology has helped that with social media. People feel more in touch with the celebrities --
QUEST: Yes --
NOLAN: That they appreciate. A lot of celebrities will do auctions as well and they raise money for charity, like living -- Janis sold her grease
jacket.
QUEST: Good to see you, sir --
NOLAN: Pleasure.
QUEST: Two-seventy five, come on, give me a bit more.
NOLAN: Yes, give me $3 --
QUEST: Three dollars, do I hear $4 in the studio? Four dollars, seventy one --
NOLAN: Come on, somebody, yes, I sell a bit out there --
QUEST: I'll sell it, I'll sell it --
NOLAN: And sold!
QUEST: Sold. The market is at 159 as we head to the closing bell. Coca- Cola is bing at the bottom as is Boeing. Hardly surprising that Boeing is down by what we know has been happening. The rise in the market, the
overall market is because of China and the trade deal.
The S&P is just short of a closing high at the moment. I think -- it's not a bad way to end the week overall as we put it all together. A strong
close on a good market, no record on the S&P, you need to have 3,025. But nonetheless, you do see good gains and it is on the back of trade talks and
earnings, all of which we've seen throughout the course of the week.
We'll have a profitable moment after the break. Come on, 5 bucks, come on, give me 5 and this jacket is yours.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. Today, the FAA and Boeing repeated the mantra that they have put out ever since Lion Air and Ethiopian and the
grounding of the Max 737s. They said once again that the plane would not fly until they were absolutely certain it was safe. Why should we believe
them? These are the same organizations and regulators that allowed the plane to fly when it wasn't safe.
And as today's report from the Indonesian government makes clear -- and it's not a perfect report by any means. The nine possible causes which fit
into the various buckets I showed you earlier, that there's plenty of blame to go by. But the truth of it is, two things. Firstly, Boeing and the FAA
allowed this to happen through the way they lost sight of the bigger picture.
But blame is shared by the airline which doesn't train pilots, particularly low-cost carriers being trained to fly these extremely complex instruments
in difficult circumstances. If you read the report, you are left in no doubt that these areas that need to be worked on still have much work to be
done.
And so I say to you and to the FAA, by all means say, yes, you will only let the planes fly when it is safe to do so. But you have to prove to us,
why we should believe you in the first place. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, whatever you're up to
in the weekend ahead, I hope it is profitable.
The Dow is up, the bell is ringing, the day is done!
(BELL RINGING)
END
