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U.S. General Says Images from Baghdadi Raid will Soon Be Released; Former Top Trump Adviser Defies House Subpoena; Wildfires Rages at Both Ends of California; House Of Commons Has Rejected Boris Johnson`s Plan To Hold A General Election On December The 12th; Stocks At Record Highs Amid Strong Earnings And Trade Hopes; Iconic U.S. jeweler, Tiffany Has Become A Takeover Target. Aired 3-4p ET
Aired October 28, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:00]
JOHN BERCOW, SPEAKER OF THE HOUSE OF COMMONS: ... Parliament Act 2011, and because the recorder -- we keep coming to the resolution -- because the
majority required has not been reached, the no`s have it. Point of order, the Prime Minister.
BORIS JOHNSON, BRITISH PRIME MINISTER: Point of order, Mr. Speaker. The leader of the opposition literally and figuratively has run away from the
judgment of the people. For the third time, Mr. Speaker, he has turned down our offer to get Brexit done, in spite of the fact that he and every
member of his party stood on the promise to deliver Brexit in this Parliament, and I think frankly that the electorate will find his behavior
utterly bewildering.
But as I said, when moving the motion, we will not allow this paralysis to continue in one way or another, we must proceed straight to an election.
So later on this evening, the government will give notice of presentation for a short bill for an election on the 12th of December so that we can
finally get Brexit done.
And this is -- there is no support in the House that we`ve heard earlier on from the benches opposite for the WAB to proceed. But Mr. Speaker, this
House cannot any longer keep this country hostage.
Millions of families and businesses cannot plan for the future, and I don`t believe that this paralysis and this stagnation should be allowed to
continue. Now that no deal is off the table, we have a great new deal. We have a great new deal and it`s time for the voters, we have a chance to
pronounce on that deal, and to replace this dysfunctional Parliament with a new Parliament that can get Brexit done so that the country can move on.
BERCOW: Thank you. Point of order, Mr. Ian Blackford.
IAN BLACKFORD, BRITISH MEMBER OF PARLIAMENT, SCOTTISH NATIONAL PARTY: Thank you, Mr. Speaker. I am most grateful. It is clear that it is the
desire on the opposition benches to bring forward a bill that can give us an election, but Mr. Speaker, we don`t trust this Prime Minister, and we
don`t trust this Prime Minister for this reason.
So the Prime Minister, if he is going to bring forward a bill, there must then be absolute custom assurance, that until the passage of that that on
the rise of a Parliament, that there`ll be no attempt to bring forward the Withdrawal Agreement. And of course, the SNP will do this job and
scrutinize any bill that comes forward.
But it`s absolutely demonstrably the case that we want an election. We want the people of Scotland to be given the opportunity to have their say
and we will that election -- we will fight that election, Mr. Speaker on the right of the Scottish people to determine their own future, and that we
will not, under any circumstances, consent to be taken out of the European Union against our will.
In that election campaign, we`ll make it clear that the right to determine our future will be in the hands of the Scottish people.
BERCOW: Thank you, point of order, the Father of the House Mr. Kenneth Clarke.
KENNETH CLARKE, BRITISH MEMBER OF PARLIAMENT, CONSERVATIVE PARTY: Mr. Speaker, we`ve had a -- just we have in the House, a slightly out of
control Student Union debate and it sounds like we might have a rather similar classical performance tomorrow.
Is there any chance, Mr. Speaker, you`re obviously the Chair of the House, persuade the usual channels to resume their meetings and produce a sensible
timetable for the bill we have in the floor so this has can resume discussion of this serious matter in a greater fashion and come to
resolution on the deal, which personally, I repeat, I will vote for if it reaches that reading as I think it will. And it could well be that we
could get back to the orderly government, which I think the general public are daily wishing we would rapidly do.
BERCOW: Careful note of what the Father of the House has said, and I`m certainly open to any such discussions, but it does require willing
participants, and it remains to be seen with the passage of time, whether that be so, but I think everybody will be attentive on this occasion as on
every other to what on the basis of 49 years` experience in the House, the Father of the House has had to say to us. Point of order, Mr. Jeremy
Corbyn.
JEREMY CORBYN, BRITISH MEMBER OF PARLIAMENT, LABOUR PARTY: Thank you, Mr. Speaker. I apologize to you and to the Prime Minister for not being here
at the point when he raised his point of order. I was detained outside the chamber. I`m now back here.
I understand -- I understand the bill will be tabled tomorrow. We will obviously look and scrutinize that bill and we look forward to a clear,
definitive decision that no deal is absolutely off the table.
[15:05:10]
CORBYN: And there is no danger of this Prime Minister not sticking to his word because he has some form on these matters. And taking this country
out of the E.U. without any deal whatsoever, knowing the damage it will do to jobs and industries all across this country.
BERCOW: That point stands in its own right. Point of order, I think on a completely unrelated matter. Point of order. Mr. Stephen Doughty.
STEPHEN DOUGHTY, BRITISH MEMBER OF PARLIAMENT, LABOUR PARTY: Thank you, Mr. Speaker. As you know, I believe in correcting things when I get things
wrong, and I want to apologize to the Honorable man of East Yorkshire, a very Honorable Gentleman, and for incorrectly referencing his seat in my
points of order earlier on to the Prime Minister.
I understand he has in fact been re adopted by his association. And I want to apologize to him for mistaking his seat for another and for that, I
truly apologize to him.
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: All right, you`ve been watching live pictures from the British Parliament. Good evening from New
York, I`m Eleni Giokos and the House of Commons has rejected Boris Johnson`s plan to hold a general election on December the 12th.
It was a near impossible task for the Prime Minister. His motion depended upon getting the support of two-thirds of MPs and the opposition Labour
Party and it said all along, it would block it.
Now, it comes on the day that Europe granted an extension to the Brexit deadline from October 31 to the end of January. Now, we hear and there is
no Brexit and no election either. Nic Robertson is outside the British Parliament for us tracking all the developments.
It`s really difficult to keep up, but this is pretty significant. So no general election but it`s interesting because Boris Johnson was saying that
he has got a plan for a short bill and he`s still setting the date for December the 12th. What does that mean?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: When he says a short bill, this will be what`s known as a one line bill and he will lay out that
he wants a General Election at a different date, but this bill would be under different rules in the vote today, the rules on the vote today were a
two-thirds majority requirement where the Prime Minister is saying that he will do is to move forward with a vote that would require a simple
majority, just 50 percent. And there is support in the House of Parliament for that.
However, that support is conditional and as we heard from the most senior member in Parliament there, Ken Clarke, predicting that tomorrow will be
another day like today because when the Prime Minister lays out that one line bill, it won`t meet the conditions to get the necessary support.
So clearly, we seem -- British Parliament seems to be moving towards a general election, but it seems also to be painful in that process for those
taking part in it.
GIOKOS: And it`s really interesting because the opposition party is saying look, we want to make sure that we`ve got an assurance is that there`s
going to be no hard Brexit, that that this is going to be done smoothly and they want details on that.
Will Boris Johnson be able to offer opposition parties that kind of detail and those kinds of promises?
ROBERTSON: I think it`s going to be difficult for him to give the Labour Party what they`re looking for, which is ensuring that there`s a no-deal
Brexit because part of that is tied up in the legislation that the Prime Minister was trying to get through the House of Commons and has now put on
hold.
So I suspect and there is a little bit of ambiguity in the opposition`s position, but the way that it`s been spelled out, it refers not just a
disagreement now, but to the transition arrangements that were due to be negotiated in the coming year with the European Union to get Parliament the
opportunity to extend those.
So at the moment, it`s at best a little ambiguous and as we`ve seen with the Prime Minister, he generally doesn`t give the opposition what they
want, because it suits his political needs to cast the opposition as standing in the way of the will of the people. And that`s the way the
Prime Minister will fight the general election when it does get underway.
GIOKOS: I mean, do you think that this is a show of force where he feels confident that he will be able to survive this and that he wants to prove
he is the right man to move and to get Britain out of the E.U.?
ROBERTSON: It seems that the Prime Minister doesn`t really have another option there. He is not dead in the ditches. He said he would be, but you
know, in an effort to have a no-deal Brexit or a deal or no-deal Brexit by Thursday this week, that`s not going to happen.
So he is running out of options, because if the Withdrawal Bill was to be negotiated, the Prime Minister would concern -- would be concerned that
given a long period of time for it, that there would be amendments to it. That would be counter to what he wants. He said he would lose -- he would
lose the support of his party to deliver it.
So those would be his concerns for negotiating the Withdrawal Agreement Bill. So the other option is to go for an election. His difficulty, of
course, is that he can`t call for it himself. He needs the support of others, including the Scottish National Party, including the Liberal
Democrats who are going to hold the Prime Minister to a high, high degree of accountability and legal language to make sure that there is no
opportunity that the Prime Minister wouldn`t along the line in going in the direction of an election, go for no deal.
[15:10:39]
GIOKOS: Thank you very much. Nic Robertson for us. So we`ve got a new Brexit deadline and of course a new added word to the lexicon of Brexit
it`s flex-tension, and of course it means the U.K. leaves the E.U. on January the 31st or earlier if a withdrawal deal is agreed on before and it
all started with the Benn Act, a law passed by British MPs requiring the Prime Minister to request a Brexit a delay if no withdrawal deal could be
agreed by this Thursday, October 31.
Now French President Emmanuel Macron played the role of bad cop holding outs against the fresh Brexit delay until he spoke with Boris Johnson over
the weekend. Melissa Bell is in Paris for us. Melissa, I mean, we know that Emmanuel Macron has been taking a hard stance in saying, look, it`s
time. Britain needs to make a decision, and we need to move on for the sake of Europe.
And now we`re almost kicking the can down the road it seems.
MELISSA BELL, CNN PARIS CORRESPONDENT: Well, it was a very clear will not only of France, but of a couple of other European countries amongst the 27,
and that`s why we`ve had these delays over the course of the last few days and these divisions within the European Union about how long that extension
should be.
The flex-tension was very important to those on the hard line of the European Union. I`m thinking of France and of the others who absolutely
want to see Britain out, who believes that Brexit has taken up too much time, too much political capital, too much energy and that it`s time to get
back to the business of running Europe post the United Kingdom`s exit from it.
So the idea is that yes, he has until the 31st of January, but if he can get it through Parliament before, then the United Kingdom can leave early.
Now, just before Boris Johnson walked into the chamber, we were watching him live just a short time ago, Eleni. He had accepted the EU 27 offer of
an extension saying that it was an unnecessary prolongation.
As you mentioned a moment ago, it was a part of the Benn Act that he was obliged to request it. He also urged the 27 in that letter, not to think
about ever offering another extension.
Now, on this point, he and the European leaders are one, in a sense, the message very clearly, from the European Union today has been you have this
extension until the 31st of January, but there will be no other. There simply will not be more time, given you therefore have two possible
outcomes from this point onwards, either the British government gets that bill through Parliament and the United Kingdom leaves, or we head to a no-
deal Brexit on the 31st of January. There is simply nothing in between -- Eleni.
GIOKOS: Thank you very much, Melissa, for that update. Much appreciated. We`ve got Tom Kibasi in London for us. He is the Director of the Institute
for Public Policy Research. Thank you very much for joining us, Tom.
I mean, look, we`ve heard this before from the E.U. leadership that you know, they don`t want to extend further. They want this to wrap up as
quickly as possible. And here we are. We had a bit of euphoria coming through a couple of weeks ago when Boris Johnson was negotiating the deal.
And it`s almost like we`re back to very close to step one.
Is there any optimism and trying to wrap this up as quickly as possible and are we able to meet these new deadlines that have been set out?
TOM KIBASI, DIRECTOR, INSTITUTE FOR PUBLIC POLICY RESEARCH: Well, I think plenty of people wouldn`t see that as an achievement, getting a new deal
that`s in fact worse than the last deal that was negotiated. In fact, the economic impact shows that Boris Johnson`s plan would in fact be almost as
bad as a no-deal exit.
Now, I don`t agree that the only choices are getting a deal through a no deal exit. If there`s a general election, a new government is formed and
that government decides to have a referendum on the decision to leave, then I think the European leaders will permit time for that scenario.
GIOKOS: Okay, so what do you think of the vote that just came through from the House of Commons that Boris Johnson is able to embark on a general
election on December the 12th, and he is talking about a plan to bring in a short bill. And then you had the opposition party saying, look, we want
assurances that there`s not going to be any kind of opportunity for a hard Brexit to occur in the coming months.
KIBASI: Well, I think opposition parties are reluctant to give the Prime Minister the benefit of the doubt on any topic, whether that`s calling a
general election or on a no-deal exit.
[15:15:00]
KIBASI: So in the agreement the Boris Johnson has negotiated, if there isn`t a new trade deal in place by the end of 2020, and an extension to the
transition hasn`t been agreed, then Britain would effectively crash out almost like a no deal scenario entering on to World Trade Organization
terms.
GIOKOS: And what would that look like? I mean, we know already, we are worried about a new era of deregulation, of concerns about how we know the
labor market is going to be playing out, the export market is already under pressure. We don`t know exactly how that`s going to play out even further
and the negative consequences on the U.K. economy.
We`re hearing about three percent wiped off GDP in the next few years, according to the IMF. So it`s a pretty dire scenario that we`re looking
at, it`s almost in everyone`s benefit to find some kind of clarity very soon.
KIBASI: Absolutely. I think everyone is looking for this painful process to come to an end.
Some people want that process to end by Britain leaving the E.U. with a bad deal and others want to stop Brexit and give the people the chance to
consider the matter again and to confirm whether they really want to leave on these particular terms or whether they would rather stay in the E.U.
with a deal that we already have.
GIOKOS: All right, Tom, thank you very much for joining us, much appreciated for your time. All right, so coming up right after this, LVMH
wants to add a new jewel to its crown. What`s inside the blue box of Tiffany`s? Coming up after this.
And three, two, one, liftoff, Virgin Galactic becomes the first spaceflight stock ever. Richard Branson is here to talk planets and profits.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. You`re watching QUEST MEANS BUSINESS. I`m Eleni Giokos. The U.S. markets continue to surge, and that`s thanks to strong
corporate earnings and high hopes for a U.S.-China trade deal.
Take a look at this. You`ve got the S&P 500 and NASDAQ both sitting at record highs. The Dow is around a percent away from new records, but it`s
incredible to see how these stock markets have been performing over the past while.
So investors are looking at the massive number of earnings due this week and look at this. It`s incredible. I mean, 150 companies are out with
earnings this week, I`m told, so it`s pretty incredible.
You`ve got a lot of the FAANG stocks that are going to be releasing and some of the more sort of traditional stocks. You`ve got GM, ExxonMobil as
well as Chevron up with some numbers to look at as well.
[15:20:00]
GIOKOS: Alphabet is going to be an interesting one, and of course, Starbucks. Those are the numbers that we`re going to be focusing on later
on this week. And with me, we`ve got Art Hogan, joining us, and he is ready to give us some details in what kind of numbers we can expect. He`s
the Chief Market Strategist at National Holdings. Thank you, sir, for joining us. Good to have you with us.
ART HOGAN, CHIEF MARKET STRATEGIST, NATIONAL HOLDINGS: Thank you very much for having me.
GIOKOS: Fantastic. Okay, so 150 companies, you need to look out for what, what is going to be really important? I mean, the bellwether companies,
the barometers, in terms of the health of the U.S. economy, what are you looking for?
HOGAN: That`s such a great question. And typically you look at the things that are most popular first, right? So you think about the FAANGs and you
brought that up in the last piece. I think it`s more important to look at the companies that we`ve forgotten about that haven`t done as well.
So the most interesting thing to me in a takeaway from the earnings that we`ve heard from so far as the banks are doing better. The Bank Index has
caught up in the S&P 500, they diverged a lot in the month of August.
I think the industrials are actually doing much better than we thought and that`s part of the economy that I am most worried about and then some of
the consumer facing names that are actually doing much better.
So, you know, away from those sexy sort of household names in the FAANG group, I think it`s more important to look at the companies that have been
under invested this year, because that`s where the opportunities are.
GIOKOS: I mean, are earnings shooting the lights out? Because we know that when you take out the energy stocks, the markets would have performed
a lot better and actually earnings would have looked a lot better. We`ve got, you know, Chevron and Exxon up with numbers this week. Are we just
like now moving and pivoting more towards like the sexier kind of move techy stocks that are going to be offering growth for instance?
HOGAN: Yes, that`s a really good point. So not just taking energy out. But when you think of what our anticipation was coming into this earnings
season, we thought the S&P 500 will probably lose somewhere between three and five percent on a year-over-year basis, and we`re actually making about
three percent.
So the difference there is significant and the difference is coming from the financials and certainly coming from technology. It`s coming from
healthcare and the biotech which are doing very well. It`s not going to come from energy, I think we know that. This is another one of those
quarters where just like energy investing is very difficult in this environment.
GIOKOS: Are you going to be buying into cool new stocks like Virgin Galactic. Is that something you`d be interested?
HOGAN: Well, that`s such an exciting story. There`s so many exciting stories out there where we love the product, but don`t love the stock and
this is one of them.
GIOKOS: Are you going to wait until they make some money. Right?
HOGAN: Really?
GIOKOS: That`s the whole thing.
HOGAN: You know, I think in this day and age, I think it has been proven, this is the year that we wait until companies make money.
GIOKOS: Yes, absolutely. Look at the markets are looking expensive for you. What are you doing right now? What are you investing in? Are you
holding out? Are you going to be cashing out anytime soon? Because even the general economic matrix are looking really strong.
I mean, you know that even the PMI numbers are well above 50, which of course is very hurtful.
HOGAN: Right, and I think not just the U.S. PMI`s, I think we`re going to see a bottoming in the global PMI`s and I think a lot of that has to do
with the tone around U.S.-China trade. You touched on that in the beginning. I think that`s a massive improvement of what we are looking at
in the month of August.
And I think with that improvement, you might see a release of some economic energy globally, and I think if we can see the global PMI`s improve at
least bottom and not get worse. I think that`s very --
GIOKOS: Are you guys pricing in a good news scenario in terms of the China-U.S. trade war?
HOGAN: We are.
GIOKOS: I mean, bad news has been priced in this --
HOGAN: Bad news has been priced in and what the market does very effectively is compartmentalizes this when it`s not escalating and right
now, if we`re going to have a Phase 1 deal that means we`re not going to be escalating and that`s really important.
GIOKOS: FOMC meeting, Wednesday? What are you pricing in?
HOGAN: We are pricing in, like 95 percent of the rest of the Street, we`re pricing the fact that we cut rates one more time, but we`re going to hear a
relatively neutral command in the statement. I think he`s going to take a positive after this and say, hey, now we`re data dependent.
GIOKOS: Markets all-time high, economic data is looking good. Let`s cut rates.
HOGAN: I know.
GIOKOS: It is mind boggling to think. Thank you so much, sir, for joining us. Great to have you in studio. Much appreciated.
All right, so iconic U.S. jeweler, Tiffany has become a takeover target. LVMH, the French company that owns Louis Vuitton is making all cash offer
for the firm known for its little blue boxes. Tiffany shares are up more than 30 percent on the proposal. The deal would value Tiffany at $14.5
billion.
We`ve got Anna Stewart with us from London taking a very close look at the deal. Is it shiny enough for Tiffany, do you think?
ANNA STEWART, CNN REPORTER: Well, it seems pretty sparkly, but possibly not sparkly enough. Tiffany`s Board are considering this offer, but we`ve
had no result from that yet and the general consensus is they`re likely to want a higher price.
Now, why does LVMH want to buy Tiffany? Because this is a stock that`s actually performed quite badly over the past year. It has had a bit of a
sales slump.
Jewelry is still one of the most attractive categories in luxury. It`s doing quite well for LVMH. They bought Bulgari in 2011. This actually
broadens out the consumer because it`s a lower price point, it is a little bit more affordable, all of that silver jewelry.
And it also would really increase LVMH`s U.S. exposure because overall, LVMH has a huge presence in America. But when it comes to watches and
jewelry, actual sales is just nine percent North America. Tiffany, 44 percent in America, so that would really give them geographical exposure --
Eleni.
GIOKOS: Yes. Okay. So look, we know that you know, there`s a lot of things going around to the markets and I mean, when I`m looking at the
share price now, it`s up around 30 percent. That`s pretty incredible. But we are hearing that perhaps Tiffany is not going to be, you know, the
shareholders are not going to be as excited about this down the line.
[15:25:12]
GIOKOS: Could they be a takeover target by another company? I mean, do they want to be sold at the right price?
STEWART: I think this could be it and we`re seeing as you see up 30 percent. There could be a rival bid. People are pointing at Reshma as a
potential. Also some analysts simply saying this does not value it quite right. $120.00 per share is a 20 percent premium on their share price
closing on Friday.
One analyst from Cohen says it could go all the way up to $160.00. That would actually be a 60 percent premium. It sounds crazy, but that`s the
exact premium that LVMH bought Bulgari for in 2011, so it is not unheard of.
Now although Tiffany has been in trouble, we`ve had a big sales slump, particularly wealthy tourists not buying as much. There are some good
spots and bright spots and sparkly spots, particularly Mainland China and I think there could be a lot of synergy and growth here. So I think LVMH
will likely come back with another offer if this one is rejected -- Eleni.
GIOKOS: Thank you so very much, Anna. Great to have you on the show. Much appreciated. The European markets closed higher today. Let`s take a
look after hitting the highest levels since January 2018. Stocks were buoyed by the latest Brexit extension and optimism over a trade deal
between the U.S. and China.
Shares of HSBC, Europe`s largest bank fell more than three and a half percent as protests in Lebanon drag on. In the meantime, the head of the
Central Bank warns financial collapse maybe just days away and he is speaking exclusively with CNN. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: Hello, I`m Eleni Giokos. There`s more QUEST MEANS BUSINESS in a moment when we`ll speak to Virgin Galactic founder, Richard Branson about
becoming the first spaceflight company to list on the New York Stock Exchange.
And after weeks of protests, Lebanon`s Central Bank chief says the country could be days away from economic collapse.
Before that, the headlines this hour.
[15:30:09]
The top U.S. General says photos and videos from the raid that killed ISIS leader Abu Bakr al-Baghdadi will be released in the coming days. He says
first, they must be declassified. And when we learned today that Baghdadi`s remains were buried at sea, that`s according to two U.S. defense
officials.
A top witness was a no show Monday in the house impeachment investigation. Former deputy National Secretary and adviser Charles Kupperman defied a
subpoena from three house committees. He has asked a court to decide whether he should comply with the subpoena or respect the opinion of the
White House that the investigation is illegitimate.
In California, wildfires are raging at both ends of the state, fueled by powerful winds. A new fire broke out early Monday outside Los Angeles,
forcing thousands of people to clear out. In the northern part of the state, 200,000 people are under evacuation orders, and utility companies
have cut power to almost a million homes as they try to keep new fires from cropping up.
Chilean President Sebastian Pinera has a new cabinet to replace eight of them including the ministers of the Interior as well as finance in an
effort to put an end to two days or days rather of mass protests. The demonstrators are still calling for more protests and demanding he steps
down. At least, 20 people have been killed in the unrest.
Britain`s House of Commons has rejected Prime Minister Boris Johnson`s plans to hold a general election on December the 12th. It comes on the day
that Europe granted an extension to the Brexit deadline from October the 31st to the end of January.
So Boris Johnson says he`ll have another try with a different kind of bill to get parliament`s approval for a December 12th election. It would only
need a simple majority rather than a two-thirds majority he needed in the motion that failed a short time ago. We`ve got Bianca Nobilo with us in
London. Bianca, I know that you`re always drawing flowchart and you`re looking very closely at various potential scenarios. How are you seeing
this one playing out?
BIANCA NOBILO, CNN CORRESPONDENT: Well, Eleni, I do love a flowchart --
GIOKOS: Yes --
NOBILO: And it is likely that we might see an election before the end of the year here in the United Kingdom. But a lot of it depends on what the
Labor Party, the official opposition, the second biggest party in the British House of Commons decides to do. And the reason why they`re sitting
on the fence, because let`s be honest, and historically speaking, most opposition --
GIOKOS: Yes --
NOBILO: Parties want an election at any given opportunity. But it`s because out of all the main parties, Labor really suffers the most when it
comes to having an election before Brexit is delivered on. You see the conservatives under Boris Johnson will be very clear on their Brexit
position that they want to take Britain out as soon as possible.
You have the liberal democrats who want to revoke and remain in the European Union. You have the Scottish National Party that also want to
remain in the European Union. Labor is the only party that has a very confused and equivocating --
GIOKOS: Yes --
NOBILO: Stance when it comes to Brexit. So at the moment, they are not keen to support a motion for an early election. But as you mentioned, when
we need to see this next bill which will just require a simple majority --
GIOKOS: Yes --
NOBILO: There is a good chance that Boris Johnson could very well get his election before Christmas, which is the --
GIOKOS: Right --
NOBILO: Present he wants the most.
GIOKOS: So let`s scenario plan here. He gets his election, what happens then, and what are the possible outcomes that could further kick the can
down the road? And I say this because we`ve -- that`s all we`ve been seeing. And you know, when I take a look at the various --
NOBILO: Yes --
GIOKOS: Trends, one could surmise that that`s possibly going to happen again or am I wrong?
NOBILO: No, you`re not wrong. In fact, trying to look at the polls and predict whatever constellations might emerge from an election is like a
kaleidoscope of different shifting results. It really is. We may as well get a magic eight ball out and shake it because it`s very difficult to
determine. For months now, pollsters have been saying it`s highly unlikely an election would turn up anything other than another hung parliament
likely to be played with very similar issues.
It may well be a labor government in concert with the Scottish National Party and the Lib Dems. But then you have the Labor Party wanting a second
referendum, some wanting still to leave the European Union, being pulled in a remain direction, which is sort of the opposite of what we`ve had over
the last couple of years with the Conservative Party being pulled at a harder --
GIOKOS: Yes --
NOBILO: Leave direction, but unlikely to bring any clarity. And that`s why you`ve got a growing chorus of voices like the former Chancellor
Phillip Hammond, others across the political spectrum who are saying we need to sort Brexit out first because an election is unlikely to solve it.
[15:35:00]
And as you say, just potentially kick the can down the road even further. However, the polls have been vacillating. The Brexit party, which was not
doing well at all many weeks ago when Boris Johnson was taking a very firm line on Brexit, sapping up a lot of their support is now surging,
particularly when voters are asked if Brexit doesn`t happen by the 31st of October, which we now know it won`t be, who will you then support?
Well, then the Brexit party surges up again in support. So, a lot of different factors are shifting these political allegiances for voters who
are not --
GIOKOS: Yes --
NOBILO: Voting in traditional blocs as they have been for decades here in the United Kingdom.
GIOKOS: All right, fantastic, Bianca, thank you very much for that, appreciate it. So not months, not weeks, but days. Lebanon could be that
close to economic collapse. That`s according to someone who is well placed to know, the Central Bank Governor of the Lebanese Central Bank rather. He
spoke exclusively to our Becky Anderson about the damage that weeks of mass demonstrations have caused. Let`s take a look.
(BEGIN VIDEO CLIP)
BECKY ANDERSON, CNN CORRESPONDENT: You say that you have enough reserves to ensure that this country can stave off economic collapse as long as the
political situation here is sorted out. Are we talking days, weeks, months?
RIAD SALAME, GOVERNOR, CENTRAL BANK, LEBANON: It`s a matter of days because the cost is heavy on the country, but more important, we`re losing
every day confidence, more and more confidence. And finance and economics is all about confidence. The banks are closed. The real asset of Lebanon
are the Lebanese working outside our Diaspora.
If they don`t see a solution that gives hope for the future, then these inflows on which Lebanon relies will diminish in an important manner, and
in order to save this situation, we need immediately a solution.
ANDERSON: The banks need to reopen, and the longer that the banks stay closed, as they are today in Lebanon, the further the crisis of confidence,
the bigger the risk there is, a run on those banks and the further damage to the Lebanese economy, correct?
SALAME: This is correct. We want on one side to see the demands of the people of Lebanon being satisfied. We share their views --
ANDERSON: Whom you sympathize with, correct?
SALAME: Which I sympathize with. But on the other side, we need from the politicians to all the political parties to take initiatives to solve what
is happening today and creating all this paralysis.
(END VIDEO CLIP)
GIOKOS: So, Microsoft has snatched the Pentagon`s $10 billion Jedi contract from Amazon`s grasp. The Amazon empire may still strike back.
Coming up, after the break.
(COMMERCIAL BREAK)
[15:40:00]
GIOKOS: Welcome back. The Virgin Galactic is blasting off into investors` portfolios. The company listed on the New York Stock Exchange today,
becoming the world`s first publicly-traded space tourism stock. Shares have come back down to earth, as you can see up just under 1 percent. It`s
off their best levels, a little earlier, it was up around 5 percent.
I spoke with the founder and the CEO after today`s launch, Richard Branson told me the new investment in the company means the business can expand
even faster.
(BEGIN VIDEO CLIP)
RICHARD BRANSON, FOUNDER, VIRGIN GROUP: What`s exciting is the public can now invest in a spaceship company, they`ve never been able to do that
before. They can invest in the best spaceship company there is, Virgin Galactic. And we`ve managed to get the resources from this float for
Virgin Galactic to expand rapidly the number of spaceships we`ve got.
GIOKOS: Yes --
BRANSON: And the advantage of expanding the amount of spaceships we`ve got rapidly is that we`ll be able to start bringing the price down in the years
to come. And so, you know, it`s great to be able to prove that we have built a company that the --
GIOKOS: Yes --
BRANSON: Public love and the institutions love, and it`s so far, so good.
GIOKOS: When I look at this spaceship, I mean, it looks like an airplane. I know that you guys do have an ambition to get into hypersonic travel as
well, which is -- I mean, it will help someone like me who`s always in the air. But how quickly can that happen?
GEORGE WHITESIDES, CHIEF EXECUTIVE OFFICER, VIRGIN GALACTIC: Well, I think -- so, what`s exciting is that when we are operating commercially, and
we`ve already done this in test flight, is we`re going to be the only company that`s bringing people on a winged vehicle at mach 3-plus speed,
right? So, that`s really tremendous, right? That`s a huge thing, and we`re going to be developing, you know, a ton of data that will help us design
future vehicles, and --
GIOKOS: Yes --
WHITESIDES: And that`s going to come --
GIOKOS: Is that in the process already?
WHITESIDES: Yes, it is, already in the process. And so -- and so, you know, we recently had this great investment from Boeing, you know, which
put a bit of money --
GIOKOS: Yes --
WHITESIDES: Into the company, and that closed along with this deal. And we`re going to work with them to think about high speed mobility solutions,
right? How do we get people from one place to another, you know, much faster on the earth`s surface? And so, we don`t know where that journey
will exactly lead in terms of what the exact design will be, but I think it`s an exciting pathway. And it`s like you say --
GIOKOS: Yes --
WHITESIDES: There`s a huge market for it --
GIOKOS: Oh, yes --
WHITESIDES: Right, like hundreds of billions of dollars --
GIOKOS: But it`s got to be at the right cost, right? The right price --
WHITESIDES: Absolutely --
GIOKOS: Point. This must be -- this must be very expensive to pull off, right, Richard, I mean, at the end of the day. So, you`ve got to make sure
that you de-risk the company as much as possible. So how are you planning to do that?
BRANSON: Well, in a sense today, we`ve already done it.
GIOKOS: Yes --
BRANSON: The company is -- we put a billion dollars in. The company is now worth $2.5 billion after we float it. The share price has gone up
about 15 percent in the last two days. So, we know there`s a lot of love and interest for the company. And then it`s just up to our team to deliver
on everything they promised, and I`m absolutely certain they will.
GIOKOS: We all know safety is a big issue, and it`s been at the spotlight for a very long time over the past year or so. The FAA is going to play a
pivotal role in making sure that you get, you know, the stamp of approval and, you know, in terms of the regulatory process as well, done and dusted.
How has that been, and do you feel safe?
WHITESIDES: Well, we`ve had really great relations with the FAA. As you say, the space part of the FAA is our primary regulator. And --
GIOKOS: Yes --
WHITESIDES: You know, we already have our commercial launch license, so that`s really exciting. Now -- and what we`re doing now is sort of the
final steps of that launch licensing process. And so, what we`re going to be doing is submitting data packages, which the FAA will sort of examine
and approve as we go towards commercial launch.
But you know, we were really proud to be sort of the first company under Part 4-31 of the FAA regulations to get our commercial launch license. So,
we are first in this, now we`re first here, and that`s just what we do. It`s just try to keep on --
GIOKOS: Yes --
WHITESIDES: Driving things forward.
GIOKOS: I mean, in terms of operating margins, what are you guys targeting? Are you looking at double-digit margins when you stop by?
[15:45:00]
WHITESIDES: Yes, I mean, I think you know, if you look at some of the materials that we`ve published on the SEC website, you know, you can see
that our contribution margin is up in the 60 to potentially 70 percent range. And so when you look at -- you know, even the database, it`s a
little bit less than that. But I mean, it`s a very profitable business after we`ve spent the sort of billion dollars-plus, virtually, and other
people`s money to develop these technologies. Once we have that, then we have this very successful business at that point.
BRANSON: I think unlike a lot of other companies that have listed on the stock market in the last few years, I mean, we will be profitable the year
after next. So it`s a -- you know, we`re not talking about -- you know, hopefully having profits in 10 or 20 years time. I mean, the profits will
come quite quickly.
(END VIDEO CLIP)
GIOKOS: Amazon says it`s considering its options after the Pentagon`s surprise decision to award a $10 billion cloud computing contract to
Microsoft. Amazon had been considered the frontrunner. The Department of Defense insists the process was conducted fairly. But a new book alleges
that President Trump told his Secretary of Defense to screw Amazon.
Joining me now, we`ve got Daniel Ives; the Managing Director of Equity Research at WedBush Securities. He says Amazon may challenge the Pentagon
decision in court and if it does go to court, who will have the upper hand here?
DANIEL IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: Yes, I would just view it as noise. I mean, even in court, it could delay
it a few months, but ultimately -- I mean, this was the grand prize --
GIOKOS: Yes --
IVES: For Microsoft to win finally.
GIOKOS: Absolutely. OK, so, there`s this concern that, you know, the White House meddled in some way. And when you see this kind of
interventionist talk, even if it`s just allegations, it does raise concerns that you`ve got the government putting a hand in private sector deals,
right?
IVES: Look, I mean, what I could tell you is that, I mean, I followed this deal closely the last few years. I mean, this has been one of the most
vetted deals from a technology perspective that I`ve seen in 20 years covering tax --
GIOKOS: Did this shock you though? Because Amazon was the frontrunner.
IVES: Look, Amazon, if you go back a year ago, 80 percent chance Amazon is going to win this deal --
GIOKOS: Yes --
IVES: So Microsoft really, you know, rolled up their sleeves from a technology perspective, got up to where, you know, Amazon was at least from
a level six clearance. But ultimately, this became a cage street fight in terms of --between Amazon and Microsoft, knowing this was the grand prize.
GIOKOS: Yes --
IVES: For Microsoft to win this, you know, I would characterize this as the biggest cloud deal ever. It`s a major black eye for Bezos and Amazon.
GIOKOS: Yes, I mean, this is an ego thing as well, you know, battle of the billionaires to get this cloud deal. I mean, do you think that that`s kind
of playing out in the background?
IVES: Well, I think, look, I mean, you look at Amazon`s second headquarters, Crystal City, shadows of the Pentagon. I mean, Bezos said
this was going to be the grand prize, really a trophy they put on the pedestal. And instead, they`re going back to the drawing board and right
now, there`s been champagne being popped in Redmond.
And that`s why when you look at it, Microsoft for them -- this really is a paradigm changer in terms of cloud computing in my opinion. Over the next
five, ten years, tilt into a Microsoft.
GIOKOS: Which is crazy to think because Amazon, in fact, is a leader within the cloud space. They want to pump, you know, over a trillion
dollars into this division of the company over the next few years. So the question is, who was the best company to win this deal, and that could
execute something like this for the DOD?
IVES: Look, I think both companies -- if you look at their success within the beltway, both easily in terms of AWS as well as Azure had the platforms
to be successful. But I`ll tell you right now, if you look at Amazon, the last four, five years, shot out of the cannon. I mean, they went really
200 million in federal to 2 billion-plus.
GIOKOS: Yes --
IVES: But Microsoft came down to that Azure platform, what they`ve done in terms of building out throughout the Pentagon. A lot of hand holding. And
in my opinion, really, from the Dell(ph) or in Microsoft, probably one of the biggest achievements as CEO.
GIOKOS: Absolutely, OK. So, we saw what the share prices are doing today, both companies are in the green, but Microsoft is up over 2 percent. The
reality is, this is going to be a good long-term deal for Microsoft. But if this does go to court, what does that mean for both companies? And you
were talking about it being noise. But of course, then it`s going to just create more uncertainty.
IVES: Sure. It could delay the timing a bit, but I could tell you right now, I could think maybe a one to two months in terms of the courts. We
think this has about $10 per share out of Microsoft.
GIOKOS: Wow --
IVES: So, I think this is something where it`s going to put fuel in the engine in terms of cloud. And for Amazon, they`re going to continue being
massively successful as well as Oracle or IBM and others in the cloud. Take a step back, a 100 billion is going to be spent in our estimate in the
federal government over the next decade moving the cloud. But when you look at JEDI, this was the grand prize and Microsoft --
GIOKOS: Are you buying Microsoft stocks on the back of this?
IVES: Yes --
GIOKOS: What are you doing?
IVES: In my opinion, the opportunity here is to own Microsoft on this. And the street is not giving enough credit for JEDI. And I think this is a
name you could see $160, $170 per share.
GIOKOS: Wow, thank you very much, sir, great to have you --
IVES: Thanks for having me --
[15:50:00]
GIOKOS: In the studio, thank you. All right, the days of big acquisitions at AT&T are over. The owner of CNN has struck a deal with the investor who
has been calling for a change of strategy, coming up.
(COMMERCIAL BREAK)
GIOKOS: AT&T is making major changes after coming under pressure from an activist investor. The company which owns CNN has released a three-year
plan. That involves reducing debt, restructuring its board, and not making further acquisitions. CEO Randall Stephenson will stay on until at least
2020.
AT&T shares are up more than 4 percent. Right now, we`ve got Brian Stelter joining us now. Look, those activist shareholders, sometimes they do good,
sometimes they`re just a pain to deal with. But look, you`ve got a fantastic, you know, response from the market today. So, the company is
bringing down its debt, good numbers on the profit fronts, slightly missed on revenue. But overall, it seems the market is liking this news.
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Yes, this was -- this activist investor intrigue was an overhang on the stock for the past couple
of months. Now that this has been resolved, at least for the time being, the stock is up at a 52-week high today, up almost 5 percent. I think what
has happened here is AT&T says they were going to make most of these changes anyway.
In fact, they say most of these plans were already in the works. For example, no more major acquisitions in the foreseeable future. But this
activist fund, Elliott Management, did put a lot of pressure on Randall Stephenson, the CEO, and the new CEO John Stankey in order to make some
promises, make some guarantees.
And that is what`s happened today. I spoke with Stephenson in the form of an interview earlier today, he said to me, this is not something where an
activist has come in and we`re going to start starving the business to buy back stock. This is not that kind of thing.
He said we`re going to invest heavily in "HBO Max"; the new streaming service, and we`re going to invest 20 billion in our core business next
year. So, Stephenson is trying to put a very positive spin on this development today. He is actually out on the Warner Brothers studio a lot
for tomorrow`s big "HBO Max" investor day.
This is key to the future of AT&T, the launch of this new streaming service coming next Spring. So that, it seems, the top priority on the "Warner
Media" side which of course is CNN`s parent.
GIOKOS: Yes, and it`s really fascinating to see that they`ve been able to bring down debt by $12 billion this year. I know that they`re trying to
get rid of debt overall, I think it`s $154 billion --
STELTER: Yes --
GIOKOS: Getting rid of core assets -- a non-core assets and so forth. But how much more room do they have to be able to do this without really, you
know, creating a lot more efficiency from that?
STELTER: Yes, I think that`s the key question. When I say they`re either going to have to raise prices or cut staff, he`s saying no, that`s not what
this is about --
GIOKOS: Yes --
[15:55:00]
STELTER: But I think there`s a lot of skepticism about what is to come, how he`s going to guarantee this profit growth. Look, I think they`ve
resolved one issue by putting out this fire with Elliott Management, but they know that this activist group and others are going to be paying close
attention.
GIOKOS: Are they bating down on the acquisition of "Time Warner" efficiently do you think?
STELTER: Well, they say in three years, all of that debt will have been resolved. Three years from now --
GIOKOS: Wow --
STELTER: They say their three-year plan to get that done. You know, I think there`s a note from Craig Moffitt, one of the top analysts in the
space today, saying this all sounds great, but forgive me, I`m skeptical about how this will actually get done. It is also notable, Stephenson says
he`s staying through the end of 2020.
So, for the first time, he`s putting a timeline on his future. As we know, John Stankey who is the head of "Warner Media" right now, he seems to be in
line to replace Stephenson one day. Notably, the company says two new directors will be joining the board in the next 18 months. So, there are
signs that some of this activist funds demands were met, even though AT&T says they were going to do it anyway --
GIOKOS: Yes --
STELTER: Seems like --
GIOKOS: Would be interesting times --
STELTER: It seems like they`re relieved to have this truce today.
GIOKOS: Thank you very much, Brian --
STELTER: Thanks --
GIOKOS: Good to have you. All right, so they`re just moments left to trade on Wall Street, so we`re within sight of our first record close in
three months. The closing bell is up next, don`t go anywhere.
(COMMERCIAL BREAK)
GIOKOS: Right, we`re moments away from close on Wall Street today. The S&P 500 is hitting a second -- or the first record high in three months and
the Nasdaq is up around 1 percent and just short of its own record high as well. As you can see, we`re sitting up around 0.6 percent, Nasdaq, 1
percent up. And Dow not exactly close to record highs, around 1 percent or so, but we`ve got lots of earnings out this week.
Let`s take a look at the winners and losers in today`s session. Microsoft, you know, a big deal coming through with the Department of Defense, pushing
that stock higher. We`ve got ExxonMobil in the red, so, too, is Chevron. We`re expecting results coming through from both of those companies later
this week.
In fact, 150 companies is what we`re expecting to hear from on the earnings front here in New York. So, lots happening for investors to take on, and
of course, we`re now heading towards the end of the trading day here in New York City. Thanks so much for joining us, and that`s it for QUEST MEANS
BUSINESS, I am Eleni Giokos in New York, "THE LEAD" with Jake Tapper starts now.
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