Return to Transcripts main page
Quest Means Business
U.S. Secretary of State Mike Pompeo Reverses Decades of U.S. Policy on Israeli Settlements; U.S. House Now Investigating if President Trump Lied to Mueller; President Trump Says He will Consider Testifying in Impeachment Inquiry. Aired 3-4p ET
Aired November 18, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:08]
PAULA NEWTON, CNN INTERNATIONAL HOST: So it is the final hour of trade. I have to tell you, these are actually the highs of the day, not much going
on though, although we could still be in record territory.
These are the reasons why. Jay Powell tells President Trump, Fed policy will not be influenced by politics in their first face-to-face meeting in
nine months.
The CEO of FedEx meantime challenges "The New York Times" to a very public debate after the paper revealed his firm paid zero taxes last year.
And President Trump shows a plan to curb vaping after hearing it could anger his supporters.
Live from the world's financial capital, New York City. It's Monday, November 18. I'm Paula Newton, in for Richard Quest. This is QUEST MEANS
BUSINESS.
Okay, tonight, Donald Trump meets with Jay Powell and the conversation goes negative about interest rates. Now, the U.S. President has for months made
his Fed chair a scapegoat, of course for every bad headline about the U.S. economy.
After their face-to-face meeting, though Powell said only that the Fed will remain in his words, nonpolitical. Mr. Trump tweeted meantime that the
meeting was good and cordial. It doesn't quite sound like the President, does it? But he added, everything was discussed, including interest rates,
negative interest, low inflation, easing, dollar strength, and its effect on manufacturing trade with China, E.U. and others, et cetera.
What a mouthful. Clare Sebastian is here to work it all out for us. Yes, I mean, look, it was a bit of a surprise. First time in nine months.
There were two parts to this, right? There was the optics and what it meant substantively, let's go to the optics first.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right. So I think the timing of this is really interesting because it comes at a time when the Feds is
what they call mid cycle adjustment. They've started cutting rates. It is now essentially as they signaled on pause. And of course, we know the
President wants continued easing. He has tweeted talked about this multiple times, including last week at the Economic Club of New York. So
it's interesting that they're meeting now.
It's also interesting that Treasury Secretary Mnuchin was there because he is obviously involved in the trade talks, which is still ongoing, which the
Fed has said is, you know, one of the key risks to the outlook at the moment, which is of course, we know they're waiting for something to change
materially before they move with rates again. So that's interesting.
I think it was interesting how the news came out as well. The Fed was the one who put the statement out first. That is fairly unusual. It wasn't on
the President's schedule before that.
NEWTON: Dueling statements.
SEBASTIAN: Right. Dueling, and then the tweet came half an hour later, but the Fed really not so much talking about it, what they did talk about
is what they didn't talk about saying that he did not discuss his expectations for monetary policy, going on to say that the FOMC's job and
what it does is to make decisions based solely on careful objective and non-political analysis.
So they continue to make that point. They wanted to make sure it was clear that Jerome Powell was on message today.
NEWTON: You know, the question is the President seems to have become a little bit more comfortable with the fact that the Fed is what they say
data dependent. They will be accommodative. They will look at the data try and accommodate as they need to continue, you know, for the economy to
continue growing. Do we have any more indication that this might be good enough for the President now?
SEBASTIAN: I mean, cordial isn't --
NEWTON: It's as good as it is going to get for the President. I get it.
SEBASTIAN: That's as good as we've ever had it. I mean, look, he has continued to make attacks on the Fed as a habit. Last week, you know, at
the Economic Club of New York, he talked about how the U.S. is at a competitive disadvantage because of what the Fed has done.
Interestingly, he never mentioned Powell's name, which is perhaps noteworthy. He said he talks about the Fed and he has specifically
targeted Powell in the past.
I think you'll remember a golfer who can't putt, to the fact that he has horrendous lack of vision, various things ever since they last met in
February, all of the attacks have stepped up. So possibly they're coming down a little bit, but only a notch, Paula.
I think this is now clearly part of the President's messaging is that the problems in the economy are to do with the Fed, not his policies.
NEWTON: I did notice on the floor of the Stock Exchange, though, certainly a lot more comfort level with the relations that these two have even if it
is tense, they do not seem as if they believe that politics will interfere with the Fed. It's an interesting perspective that they've gained through
all of these insults from the President.
SEBASTIAN: Right. Because if you spoke to like, you know, economists, people who are watching this, Fed watchers, a few months ago, they were
worried that this problem was much bigger than Twitter, it was much bigger than the spat between these two men because of course, it can weaken the
perception of the independence of the Fed, and therefore weaken the U.S. economic resilience. And that is a risk of these continued attacks that
perhaps people have just now accepted that this is part of the Twitter discourse and as you say, they are a bit more comfortable with it.
NEWTON: I would have loved to be in the room, Clare, as would you and I know. Thanks, Clare. I appreciate it.
FedEx has challenged "The New York Times" to a very public debate after the company's tax bill was published on the front page of the great, gray lady
According to "The New York Times" after FedEx aggressively lobbied the White House for a corporate tax cut.
The company managed to completely eliminate -- yes, completely eliminate its Federal tax burden. You see it there, right? Zero from $1.5 billion
in 2017.
[15:05:13]
NEWTON: Now, in 2017, before those Trump tax cuts, it didn't mean that on paper, FedEx did, oh $1.5 billion. Now, this garnered a unique response
from CEO, Fred Smith. Now, he challenged "The Times" to a debate, yes, a debate. The focus should be he said, Federal tax policy and the relative
societal benefits of business investments and the enormous intended benefits to the United States economy.
And "New York Times" responds saying, "FedEx's colorful response does not actually challenge a single fact in our story. FedEx's invitation is
clearly a stunt," "The New York Times" says and effort to distract from the findings.
Brian Stelter is here. He is CNN's chief media correspondent. It did two things, right? Maybe it didn't even distract from the facts. It certainly
gave the story a lot more traction. It was already one of the most popular stories, now it's -- a lot of people are taking a look at it.
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: I think you're right.
NEWTON: How do you interpret this from a PR perspective? The pushback was fierce from FedEx.
STELTER: Yes. And I think we see these kind of numbers, Trumpian responses to the media these days, attempts to challenge journalists for
choosing to write about certain topics, but not actually pointing out any inaccuracies. There's nothing clearly factually wrong in "The Times"
story. The taxes are what they are. Anyone can log on and read the filings for FedEx.
I think what FedEx was trying to say is, hey, lots of other companies are in the same position. We are in fact, they said, "The New York Times" is
paying a whole lot less in corporate tax as well, thanks to the Trump tax cuts, but in the heart of "The Times" story is something really important
that needs to be focused on and that is that under President Trump, according to "The Times," and other media outlets, capital investments
growing more slowly now than it was before the tax cuts.
So the idea and the intent, not paying off.
NEWTON: And let's be clear, it's not just according to the newspapers, right? There are economists all over this country that are doing these
kinds of things and warned before the tax cut that this would happen. It's been a great debate.
What does it reveal though? And I think you hit the nail on the head, right? It's a Trumpian response. What does it reveal about what companies
have learned to hit back when these things happen? Because you know the debate that's going on right now, whether it's Elizabeth Warren and the
wealth tax or whatever else.
STELTER: Yes, there is an attempt to make it personal sometimes, right, to say, hey, I challenged the publisher of "The New York Times" to argue with
me on this, by the way, I'm sure you'd love to host that debate. I'm sure a lot of us would love to host that debate if the publisher of The "New
York Times" wanted to have it, but he doesn't. This is his newsroom. He doesn't get involved in coverage of the newsroom.
I think it is useful, though, and it shows the power of "The New York Times" front page to get a conversation going about something about
corporate taxes. The FedEx had to respond. They felt they had to respond and that says something that you can still have an impact on these kinds of
stories.
NEWTON: It's interesting that we didn't get a pushback, though from the President himself. But this is the centerpiece. You know, we're in an age
now where Trump is already talking about tax cut 2.0, right? We're getting that and putting the tax policy aside, do you think he -- Donald Trump is
really boosted by corporations like this fighting back and pretty much defending his policy?
STELTER: Right, I think he appreciates seeing it. I do think he appreciated seeing it. You know, he did claim a couple of weeks ago that
he stopped subscribing to the print "New York Times," I don't believe that.
NEWTON: Yes, I think he is still reading it.
STELTER: I think he still finds a way to read it.
NEWTON: Apparently, he still watches you once in a while, too, Brian.
STELTER: All of us over here, yes.
NEWTON: Brian, thanks so much, really appreciate it. Now, we go to the markets. It has been, as I was saying, a choppy day with the Dow bouncing
between gains and losses. All three major indices managed to hit record highs, yes, record highs. That's despite the ongoing uncertainty around
trade between the U.S. and China.
Now at the stock exchange, Peter Tuchman told me investors are focusing elsewhere.
(BEGIN VIDEO CLIP)
PETER TUCHMAN, NYSE TRADER: We've been doing this for almost two years now. A deal, no deal. So at some point, people have just got to step away
from that trade and either buy on fundamentals or stay out of the market. Okay. So you know, the market is where we're at.
NEWTON: But tell me something, what's priced in right now is that the trade war may not get better, but it's not going to get any worse. Am I
right or am I wrong?
TUCHMAN: Well, you know what? That's such a hard thing to say. I think what's priced in the fact that there's nowhere else in the world to invest
your money that we're coming into the Christmas season. The consumer apparently is in good condition. Economically we're okay. We're lowering
interest rates. We're doing the mirror of what happened last year.
(END VIDEO CLIP)
NEWTON: All right. We will continue to keep an eye on the markets as I say in record territory right now. Now, moving on to some market news T-
Mobile USA Chief Executive, John Legere is in fact stepping down.
He was rumored to be in talks to take over as the CEO of WeWork, we'll talk about that. He has denied those rumors. The company said, Legere, will
for now remain as a Board Member and help with its merger with Sprint. Paul La Monica is here to take this apart. Let's deal first with the fact
that he, you know, he is stepping down. It came as a surprise to some and yet that succession plan is in place. Is it just kind of a basically a
byproduct of this merger?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that that is possibly the reasoning here. He has been CEO of T-Mobile for a pretty long time,
having done a solid job of getting the company with its uncarrier unconventional business model to a position where it's going to be merging
with Sprint to take on both Verizon and our parent company, AT&T.
[15:10:13]
LA MONICA: I think it's really interesting though, Paula, obviously because of the timing here because as he pointed out, and he denied on the
conference call today, with the analyst community, he is not going anywhere. He is going to remain a Board Member is what he says and that he
is not or never was in discussions to take that WeWork CEO job even though there was rampant speculation that he was going to be one of the front
runners to succeed Adam Neumann at that troubled unicorn.
NEWTON: It's interesting, because there must have been some truth -- where did the rumors start? See, he called it awkward on the conference call.
LA MONICA: He did.
NEWTON: Was it really that awkward? Someone might say, it kind of did him a favor in some ways.
LA MONICA: It's possible. I mean, I can understand his point that it was awkward if he was at the time trying to figure out this succession plan at
T-Mobile while also having to deal with the fact that even though Federal regulators have greenlit the Sprint merger, there are a bunch of States
Attorneys General that are planning to fight this, and there's actually going to be a trial in early December about this.
So the merger is not done yet. I can see it being awkward from that standpoint. But you're right. Usually there is a classic case of where
there's smoke, there's fire. Someone must have rumbled, you know his name or whispered his name as a contender, at some point, even if he himself
never was actually seriously considering the job.
NEWTON: And, Paul, before I let you go, you know, he was a guest many times on our program here. He was quite a disrupter in the space. I mean,
in terms of his legacy, what do you think it will be, especially as they move into that merger territory and become a huge conglomerate?
LA MONICA: Yes, I think that the legacy of Legere is that he really has been a thorn in the side for our parent company AT&T which, ironically
enough, AT&T tried to buy T-Mobile a long time ago and that deal got shut down by regulators. He has been a thorn in the side for Verizon and now
the cable companies as well.
You know, Comcast and Charter. He talked about really trying to disrupt them as well and I think he is hoping or has hoped to really make the
wireless experience something that is easier for consumers to understand when they get their bills, not feel like they have as many hidden charges
and that they have lower prices.
NEWTON: Yes. And a recent study showed that in fact the United States is paying a hefty price for a lot of the mobile and with the consolidation,
you know it's normally not a good thing for consumer prices. Paul, thanks so much. I appreciate it.
LA MONICA: Thank you.
NEWTON: U.K. politicians meantime are pitching to business leaders their election promises as Brexit uncertainty, of course, looms large.
And Kylie Jenner just inked a massive deal for her cosmetics company. How she turned the lipstick into a billion, yes, billion with a B, a billion
dollar empire. We'll have more later.
(COMMERCIAL BREAK)
[15:15:30]
NEWTON: To London now where U.K. politicians are pitching their election promises to Brexit fatigued -- you can say that again -- business Leaders.
Conservative, Labour and Liberal Democratic Party leaders all spoke at the Confederation of British Industry Conference Monday. Each presented
radically different plans to resolve the country's split from the E.U. and boost the economy.
Our Anna Stewart got reaction from CBI Director General, Carolyn Fairbairn.
(BEGIN VIDEOTAPE)
CAROLYN FAIRBAIRN, DIRECTOR, CBI: The first thing to say is, you know, we are finally talking about business and the economy in this election. So,
you know, that is good news in and of itself.
There are some big things here, so one of the real problems with business at the moment has been the cumulative burden of cost, and to hear one of
the leaders, Boris Johnson talk about this is a race, and not just we might, you know, do something sometime in the future.
You know, a proper review intended at bringing the burden down, really, really good news.
Similarly, the apprentice levy system is broken. I mean, businesses have been saying that for a long time. They don't -- they are happy to pay the
money, but it needs to be more flexible, and we heard some of that from the Labour leader.
So you know, there were some things here and actually, just to hear more said about the contribution of business as an engine of growth. Yes, it
was a good thing.
ANNA STEWART, CNN REPORTER: But given how business feels about Brexit, would it not be Christmas come early if the election delivered a result
with the Liberal Democrats for instance, that would cancel Brexit altogether?
FAIRBAIRN: Well, you know, CBI has never spent any time calling for a reversal of the referendum. You know, if that emerged, somehow in all of
this sort of fog of uncertainty, we play the cards in front of us. But you know, it's really not where we are.
I mean, what we -- what businesses is far more concerned to do is to talk about at the moment what a good Brexit looks like, really clear. Right
from the beginning, we've been a broken record on this, frictionless trade for our manufacturing industries, regulatory alignment in most sectors, and
a great deal for our fantastic services. Those are the things, whoever is in power, that's what we need to see.
STEWART: Let's talk about BT because that wasn't announced today. This was a huge announcement last week, and I think it's what everyone is still
kind of reeling from today.
FAIRBAIRN: Yes.
STEWART: Labour's plans to nationalize the telecom company, BT.
FAIRBAIRN: Yes.
STEWART: Your take?
FAIRBAIRN: Oh, a complete boat from the blue and it has chilled investment already, so we completely understand again. There have been other
nationalization plans published for five other industries. We understand the question about public services and you know, it is absolutely right
that we need to speed up our broadband rollout.
But there are some terrific investments going in right now. We have a 2025 full fiber broadband plan with, you know, a lot of money from the private
sector going in right now. If this goes ahead, it will put on ice that investment. Actually people will get their broadband slower, they will be
potentially phoning the government when it goes wrong.
I mean, these are plans that just do not deliver good service for customers.
STEWART: And quite out of that sector, what about investment into the country with nationalization?
FAIRBAIRN: Well, we have seen -- we have got a real investment problem in this country has fallen for five out of the last six quarters. Part of
that is Brexit uncertainty. Part of that is concern over the safety of investments.
And I think one of the effects of this BT announcement is you've got firms all over the country in aligned sectors close to this sector saying, am I
next? And that really chills investment. And there are so many choices around the world of where investors can put their money. And at the
moment, they're going to think twice about putting it here until we know that this policy is you know, actually not going to happen.
(END VIDEOTAPE)
NEWTON: You see there what's on the mind of U.K. business associations. Meantime, the CEO of the Society of Motor Manufacturers and Traders says
the threat of a no-deal Brexit is plaguing global industry.
Mike Hawes is calling for an agreement that safeguards free trade. He says a general election won't remove the prospect of a no deal without one. He
joins me now from Los Angeles and I know exactly what you're saying. It's been the same line for three years. Are we any further along, especially
now that new polls say that perhaps Boris Johnson is consolidating his lead? This is not a political question. It's a question of, if Boris
Johnson gets in, do you feel that some kind of a Brexit deal is better than no deal?
[15:20:10]
MIKE HAWES, CEO, SOCIETY OF MOTOR MANUFACTURERS AND TRADERS: Well, first of all, always wary about polls, because we've seen in the past how they
can change. If -- and one of the encouraging things from the last few weeks is an outlined deal did get its first or second reading, approved by
Parliament, which shows there's a willingness to get a deal done. What eventually happens, though, come January and then beyond, the uncertainty
doesn't end, even if we get a withdrawal. This is just the first step. It is how we withdraw from Europe.
The difficult, the long term discussion about the future trading relationship that will still go on well into 2020 and probably beyond.
NEWTON: And again, something that we've heard for quite some time. Just before I leave the issue of the election, what's the worst case scenario as
far as you're concerned? Again, not a political question, but in terms of if it is deadlocked like, there is no one way to get through anything in
Parliament?
HAWES: Well, I think the worst case scenario is, you know, this constant stasis, this intransigence about not being able to get anything done. We
want the election to deliver an outcome where we have a clear road to the future.
What that is, I mean, remains to be seen. You've seen the different party leaders sets out their own approaches to how they would seek to resolve
Brexit. The one thing we need to do is resolve Brexit. Give business the confidence to invest.
And the U.K. has a tremendous reputation traditionally, as a politically stable country, we need to regain that reputation, and the only way to do
that is to put an end to this uncertainty.
NEWTON: And that uncertainty has really been preying obviously, on trade issues. I really want to say to you though, even if we come off the brink
of Brexit, you know, Carolyn a minute ago was talking about frictionless trade. That seems like pie in the sky and on top of things, it seems that
there is a reordering globally as well.
You're fighting those trade wars, of course in every corner and crevice of the world it seems now. What are your concerns going forward in terms of
how Britain remains competitive in that environment?
HAWES: Well, I think you've summed it up. We've got some make sure Britain and British manufacturing, which obviously includes very much the
automotive industry remains competitive. So it is striking a good trade arrangement with Europe. It is our biggest market. We export 80 percent
of what we sell -- of what we make. Half of that goes to the rest of Europe. About 70 to 80 percent comes here to the U.S.
We're seeing rate rising, trade tensions globally. There is still the threat of Section 232 tariffs hanging over the global automotive industry
about you know, exporting goods into America. We need to get towards a situation where some of those trade tensions recede.
The industry is facing other challenges in terms of technology, the shift towards electrification; connected, autonomous vehicles, changes the way we
make big make vehicles. These are the big issues that we need to be focused on. Trade tensions just get in the way of that investment.
NEWTON: Yes, and we will see because a lot is obviously at stake as we can all see from that December 12th election. Mike, thanks so much for being
with us. Appreciate it.
HAWES: A pleasure.
NEWTON: Now, you just heard Mike there, right? He is talking about a whole new revolution in the motor industry. Well, guess what? Ford has
taken the wraps off a Mustang that's unlike any other. The Mach-E is electric and it's called the Mustang, but guess what it is an SUV. Prices
start around $45,000.00.
Ford says the more expensive performance models will go from zero to 60, get this and around the same time as a Porsche 911. Elon Musk tweeted --
this is interesting -- his congratulations, but the Mach-E's price performance and technology are a clear attempt to take on Tesla.
Raise the door and we find the Tesla Model Y. This Tesla's cheapest SUV due to begin production next year. That's right. None of these cars are
made yet. Both Ford and Tesla are sensing an opportunity though which may see behind, door number three.
Consumers are increasingly choosing SUVs overs saloons. We call those though not saloons, we call them sedans. But the high price of electric
SUVs like the Jaguar I-PACE have kept them out of reach for most people on a budget.
Now earlier, I spoke with Joe Hinrichs. He told me that the Mach-E is what he believes to be a natural next step for his company. Listen.
(BEGIN VIDEO CLIP)
JOE HINRICHS, PRESIDENT OF AUTOMOTIVE, FORD: This is an extension of the brand. We're going to keep making the Mustang sports coupe and convertible
and sure everyone knows that, but really an extension of where we're going, that electric vehicles are coming. SUV silhouette is really what people
really want. Half of Americans now are buying SUVs.
So we merge those together with providing the fast, fun and affordable nature of a Mustang, the better electric SUV, we think really makes a lot
of sense. And when you see the vehicle, you see how it comes together with those design cues for a Mustang.
NEWTON: How many can you guys expect to roll out in the production year? I mean if you do get the reaction that you want. Is this going to be a
problem actually getting out there?
HINRICHS: Our production capacity is going to be greater than probably the battery supply. Battery supply is the big global issue here. We have
50,000 for sure locked in for the first year. And hopefully we'll do more than that, we'll work on that.
[15:25:12]
HINRICHS: We're obviously taking orders already online so we can get some feel for the registrations and what reservations are going to be like. But
actually, the battery cells are probably a limiting factor on how many we can build. But we're really excited about it. And so far, the demand has
been really exciting to see.
NEWTON: And in terms of the battery, so you know, this is an issue for a lot of electric car makers. When do you see that changing? Do you see
that tipping point?
HINRICHS: Yes, I think it's going to happen in the next couple of years. We're seeing a lot of capacity come into play even here in the U.S. We're
starting to see battery cell lines going in in a number of states in the country here.
So the next three to five years, I think that will start to rest itself and be okay. But for now, we have to sign up to get those lines of capacity
because there's so much demand for what's happening with a number of our competitors and ourselves increasing amount of battery usage.
NEWTON: And speaking of those competitors, you know, you have them. You know they will be coming after you. What do you think is that selling
feature? Now, I was looking at price and range and I say range. When I say range, I mean, how far this go. I mean from people who may be looking
at this thinking, hey, road tripping, not so much. You're looking at 200 miles, 230, you know about 400 kilometers.
HINRICHS: Yes, so the base model will be a 230-mile range on the U.S. kind of EPA cycle, but we get an extended battery, 300-mile range. Three
hundred miles gets you pretty far. And importantly, we're tapped into the largest charging network in the U.S. over 12,000 locations over 37,000
charging - actual charging stations.
So that's important for consumers to know, but you're right, most -- our research shows over 80 percent of customers who drive electric vehicles,
they do they're charging at night at home. They charge it completely and they drive it during the next day and that's where most of the usage is.
NEWTON: Which is a great option, but if you have to see grandma, you have to see kids at college, what do you do?
HINRICHS: So, in the case of our vehicle, again, get you access to those 12,000 locations. Our FordPass app will show you where do you want to go,
and it'll tell you, can you get there or here's the right charging location to go to?
NEWTON: Right, and how long will it take to recharge it.
HINRICHS: It will plan it -- well, you can get in about -- if you have a fast charging network, you can get about 47 miles in 10 minutes. That
takes pretty much eight hours to sort of charge the entire vehicle from all the way to zero up to 300. But afterwards, most people don't need that.
(END VIDEOTAPE)
NEWTON: Okay, still to come here on QUEST MEANS BUSINESS, President Trump promise not to play politics when it came to cracking down on vaping. Now,
a new report says that's exactly what he is doing.
(COMMERCIAL BREAK)
[15:30:00]
PAULA NEWTON, HOST, QUEST MEANS BUSINESS: Hello, I'm Paula Newton and there's much more QUEST MEANS BUSINESS in a moment. When we'll explain why
Donald Trump's plan to crack down on e-cigarettes went up in smoke, and 22- year-old, 22-year-old Kylie Jenner sells a stake in her makeup empire for $600 million. Before that though, these are the headlines at this hour.
U.S. Secretary of State Mike Pompeo announced moments ago that the U.S. is reversing its decades-long policy on Israeli settlements in the West Bank.
He says the U.S. no longer sees them as violating international law, not unexpectedly Israeli Prime Minister Benjamin Netanyahu is hailing the move,
saying it rights a historical wrong. But the Palestinians are condemning the action as illegal.
U.S. House of Representatives is now investigating whether President Donald Trump lied to Robert Mueller in written testimony he gave to the special
counsel. The House General Counsel told an appeals court he wants to access the grand jury material that Mueller collected in the Russia
investigation.
President Trump says he will consider testifying in the house impeachment inquiry. Now, in a tweet, he called the hearings that quote, "no due
process hoax", but said he liked the idea of testifying in order to get Congress focused again. Public hearings just entered their second week
with eight more key figures set to testify in public in the coming days.
It's early Tuesday right now in Hong Kong and sporadic clashes between protesters and police continue. Now, a weekend of violence has centered
around Hong Kong Polytechnic University where dozens of students remain holed up in a standoff with authorities. Now, earlier, dozens of
protesters managed to sneak out and avoid arrests.
They used ropes to lower themselves onto a road before being whisked away. Nationwide demonstrations are gripping cities mean times, across Iran for
the fourth straight day after the government announced a fuel price increase. A short time ago, U.S. Secretary of State Mike Pompeo said the
U.S. is monitoring the protests closely and is deeply concerned by reports of fatalities.
OK, President Trump had promised a ban on flavored e-cigarettes, but a new report says he has completely reversed course. Here's what the president
said in September.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We can't allow people to get sick, and we can't have our youth be so affected.
(END VIDEO CLIP)
NEWTON: Fast-forward, just two months, and "The New York Times" says the president shelved the ban after hearing it could anger his supporters.
Now, the White House is pushing back on that report, saying the rule-making process is still going on and no decision has been made. Kate Bennett is
following the developments. And Kate, I know that you follow and have followed the first lady for years.
This was --
KATE BENNETT, CNN WHITE HOUSE REPORTER: Right --
NEWTON: An issue near and dear to her heart when he made those comments, she was sitting right there. Tell us kind of what's that issue right now?
BENNETT: Right, so this is an interesting thing that's happened. That September meeting in the Oval Office was certainly prompted according to
Stephanie Grisham, back then, she told me that the first lady was really behind this ban -- this push to ban e-cigarettes, especially flavored ones.
The first lady tweeted about it, it's become part of her Be Best platform, helping children. That Oval Office meeting happened, it seemed like all
systems go, but now it seems with the intervention of politics and perhaps voters who might be anti-vaping ban, the president has pulled back.
He's even hearing from his campaign manager for 2020 that banning vaping could really hurt him and some of his base, this could really become an
issue. And so because of that, he hasn't really moved forward on this -- the vaping ban we heard all about in September. And that could leave the
first lady sort of in a lurch.
Here's this, you know, cause that she's taken on, she rarely dabbles in public policy, she rarely gets involved in changing federal initiatives or
guidelines, and here she is involved with this vaping ban. They of course, have a young son, Barron Trump is 13, vaping here is really becoming an
issue with young people, young teenagers and it's in the schools, it's all over.
The first lady -- I think we won't be surprised to perhaps see her push for anti-vaping ads, discouraging children.
[15:35:00]
There's got to be some give and take here. If the president goes backwards on his promise and his discussion to ban flavored e-cigarettes which are
marketed typically to kids, that means, the first lady is going to have to have some way to counter-balance and bring anti-vaping into her initiative
and make it more of a cause for herself if the president leaves it aside for political reasons.
NEWTON: Yes, and we'll wait to see what the final measures look like, and as you say, how much influence the first lady can have here. Kate, thanks
so much for summing up for us, I appreciate it.
BENNETT: Thank you.
NEWTON: Now, as we told you earlier, FedEx has challenged "The New York Times" to a debate, a public one, after the paper published its $0 tax bill
on the front page. FedEx argues that the lower taxes go, the more money it can invest in the U.S. economy. But as "The Times" points out, much of
FedEx's savings has been spent on stock buy-backs.
While this is great of course for shareholders and those 401(k)s, the promise of the tax cuts was to create jobs, remember? And increase wages.
FedEx says it's not spending more on business investment because of the slowdown in global trade. Austan Goolsbee is in Chicago, he was the chair
of the White House Economic Advisory Council under Barack Obama.
And Professor Goolsbee, this is your opportunity to say, I told you so. I quote you from a few months ago that you weren't surprised that there
wasn't this investment from any company, let alone FedEx. You say there wasn't much pent-up demand for investment after years of low rates
accelerated depreciation, et cetera.
OK, there's a big debate about this in economic departments like the one that you work in. Having said that, we put the investment aside, did the
tax cuts work though when it came to things like pensions and wages? Does FedEx have a point? Did they invest in something?
AUSTAN GOOLSBEE, FORMER CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: Look, I don't know FedEx's --
NEWTON: Look at your face --
GOOLSBEE: Particular case. But no, I don't think there's even much of a debate in economics departments. I think the economists look at the data,
and it's quite clear, it didn't increase investment, it didn't increase the growth rate, it did not lead to big increases in wages. Remember, it was
sold by the Trump administration that it was going to raise average working people's wages by $4,000.
It did not do any of those things. And that's why -- I mean, it's in a way -- it's sad for the CEO of FedEx that people are going to take out their
frustration on him and on that one company. This is a much wider issue where if FedEx's situation is as described in "The New York Times", that's
just absolutely the quintessential thing that happened.
We had a $2 trillion tax cut that they said was going to increase investment, and investment is now literally lower as a share of the economy
than it was before they even passed the tax cut, and the growth rate is currently forecasted to be coming in, in the 1 percent at an annual rate.
So, it's -- there's a reason this is the most unpopular tax cut in the history of American polling, and that reason is because people can see it
cost $2 trillion and they didn't do any of those things.
NEWTON: And this brings us neatly to tax cuts 2.0, which, you know, Kevin Hassett who was a former economic adviser to Donald Trump saying, yes, this
is going to be a reality of the 2020 campaign, and Donald Trump is going to bring in another tax cut at its core, apparently, is going to be another
corporate tax cut.
How -- what do you think this will do basically to -- well, the debt and deficit in the United States, to name one. But how do you think it will
further distort things?
GOOLSBEE: Well, look, how do you -- my first reaction is, wait, what? You know, how do you look at the $2 trillion tax cut we just did where the vast
majority of the money got paid out not in investment and building factories, not in raising the growth rate, not in raising wages, but
instead in share buy-backs too that went to shareholders and executives getting higher pay.
How do you look at that and say, what we need is more of that? I think there won't be a tax cut 2.0 of that same form because I think they're
going to realize this is a great vulnerability, political vulnerability for the president as he runs into his election. You've seen in manufacturing,
we're now in the fourth month of contraction of manufacturing in the U.S.
Not that it's the Trump administration's fault. There's a slowdown in manufacturing going globe-wide. But I think in the face of that slow down,
the argument that the Democrats are clearly going to make is they're going to go to Michigan and Wisconsin and Pennsylvania and Ohio, and a series of
industrial states that are closely fought, and they're going to say, Donald Trump gave $2 trillion to his friends and they did not pass the savings on
to you.
[15:40:00]
And I -- like I say, I think that's going to be a vulnerability. So, I think you're likely to hear less and less about tax cut 2.0.
NEWTON: Yes, understood, to be continued in a conversation you and I will have. You know, those are going to go back into those swing states and
hear a lot about the wealth tax, they're not going to be so keen on that either. But Austan, we'll get back to all of that --
GOOLSBEE: Maybe true.
NEWTON: I appreciate it. Please check out your Twitter feed, I saw it, sir, I will surprise everyone with a crazy dog complaining about Mondays,
but I enjoyed that. Thank you very much, I went there for substantive stuff, Austan and I got this crazy -- it was nice, it was --
GOOLSBEE: That is -- how can you say that's not substantive --
NEWTON: OK, it was. Everybody check out his Twitter feed, thanks so much. Soaring to new heights, Qantas smashes world record with a flight from
London to Sydney, of course Richard is going to talk about this. He speaks with the CEO next.
(COMMERCIAL BREAK)
NEWTON: OK, Qantas just smashed an aviation record with the longest passenger flight ever made by a commercial airline. Now, the journey from
London to Sydney nonstop clocked an incredible 19 hours, 19 minutes, and included a look at a rare double sunrise. Richard, of course, Richard was
on board this flight which Qantas used to test its project Sunrise initiative -- look at him, doesn't he look happy?
I've never seen him so happy. He spoke to CEO Alan Joyce before taking off about what the airline is hoping to accomplish.
(BEGIN VIDEO CLIP)
ALAN JOYCE, CHIEF EXECUTIVE OFFICER, QANTAS: These are test flights to show the regulator and to make sure that Qantas is convinced that we can do
them safely by extending the tour duty of pilots, and making sure we design a system for our passengers so they can feel healthy after coming off ultra
long-haul flights.
RICHARD QUEST, CNN: But there are already flights up in the 18 hours, 18, 18:30 hours. They don't seem to have needed this sort of research. You're
only an hour or so more.
JOYCE: So, couple of things. You need a tour of duty particularly from Sydney to London, that goes to over 21 hours. That cannot be legally done
today. So, we need to show directly that, that's doable. And in addition to that, we want to use these flights to help inform us what we do on
Sydney-Dallas to London today.
And you can't do the type of studying that we're doing on regular flights, pilots got to be wearing headgear, they're going to be testing year-on(ph),
you can't do that on regular flights that you can do on these delivery flights.
[15:45:00]
QUEST: If you get sunrise up and running, and you've not yet committed to a W --
JOYCE: No --
QUEST: Because you know -- I mean, you've got a choice of two aircraft --
JOYCE: Yes --
QUEST: The 350 and the triple 7X. But the triple 7X won't be ready.
JOYCE: So, the triple 7X won't be ready in 2023, but Boeing have for a very compelling option on the table for us, so it is a competition between
both. They're actually very keen to get this. The head of Airbus told me, it's a bit like the space race, and they're very keen to win it, and one of
them is going to win it, and I think we're seeing very competitive offers being brought by both manufacturers.
QUEST: And but you -- you've said if it's not commercially viable, you won't do it.
JOYCE: Yes --
QUEST: That obviously makes from the shareholders some sense, but the definition of commercially viable is a movable feast.
JOYCE: Well, it isn't. We're very clear on it, we have a return on invested capital threshold that we have for business cases. It's a hurdle
rate that we have out there. One of the things that airlines have not been very good at in the past is actually the allocation of capital and making
returns.
The reason why Qantas is one of the best-performing airline groups in the world is because we're very disciplined with allocation of capital. And
this has got to be no different. We're going to have to make sure that this business case works, and if it does work, we'll spend the money on it.
If it doesn't work, there's plenty of other opportunities out there for us.
QUEST: You're going carbon neutral --
JOYCE: Yes --
QUEST: By 2050. And aviation, airlines, you're the whipping boy now in the environmental debate.
JOYCE: Yes --
QUEST: Do you think that's unfair?
JOYCE: Well, you know, I think you can't throw the baby out with the bath water. You know the positives aviation has generated for the world. It
gets people to understand different communities, different cultures. It gets people to visit family and friends, it promotes business, it promotes
economic activity.
And we are conscious that a large part of our communities now are uncomfortable with traveling. We need to fix that, and what airlines have
to do, like we have is commit that we will get to net carbon neutral by 2050, that we give people the ability to offset the carbon emissions, that
we do develop sustainable aviation fuel which is what we're doing. Because you cannot throw the baby out with the bath water.
QUEST: Carbon neutral by 2050, can you not do it sooner?
JOYCE: So, no, I think to get there, you're going to need to develop a sustainable aviation fuel, and to get that to be an economic alternative is
going to take a number of years I think to get there. And it's going to need new technology, We're replacing all the 747s by the end of next year.
But the new technology and new aircraft is going to be key and also helping get there.
QUEST: What are you going to do on tomorrow's flight? I mean, yes, you'll sleep, and yes, sure eat, and you'll probably watch a movie. Will you open
your briefcase?
JOYCE: I will. I'll do a bit of work because we've got a couple of big projects that we're having to sort out by the end of the year. And it's
not briefcase now, it's all on iPads, so we carry less paper which reduces my carbon emissions on the aircraft as well, Richard.
(END VIDEO CLIP)
NEWTON: OK, the Qantas CEO there speaking about his company's carbon pledge. Now, as more passengers take to the skies, one California company
is finding ways to make sustainable aviation take off. Our John Defterios reports.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR (voice-over): With nearly 4.5 billion air passengers last year, more people are flying than ever before.
Aviation is expected to account for a quarter of the global carbon budget by 2050, the industry is under pressure to change.
(on camera): The industry wants to cut CO2 emissions in half from 2005 levels by mid century. Bio-fuels are seen as vital to that process, but
getting scale in the marketplace is a different matter.
(voice-over): Bio-fuels are renewable substitutes for fossil fuels. They will be essential to lowering emissions across transportation according to
the International Energy Association. For air travel especially, the industry is yet to take off. One company navigating this uncharted
territory is World Energy. Made from agricultural and cooking waste, their sustainable alternative jet fuel reduces greenhouse gas emissions by over
60 percent on a life cycle basis.
BRYAN SHERBACOW, CCO, WORLD ENERGY: So, there's a significant amount of waste that's generated from, you know, production of the food essentially.
We found a better higher use of that waste.
DEFTERIOS: World Energy is investing the best part of $1 billion over the next three years to meet this demand, converting their refinery in
Paramount, California just outside Los Angeles to be able to process over 300 million gallons of sustainable jet fuel.
[15:50:00]
SHERBACOW: Overtime, the potential is complete displacement for all of the fuel, quite frankly. So -- and the demand is growing significantly now.
DEFTERIOS: Airlines play a key role in growing the market. The fuel United Airlines purchased from World Energy goes into the general fuel
tanks here at Los Angeles International Airport. Meaning, all flights leaving LAX benefit from a portion of renewable fuel. United hopes greater
policy support in the future will help them use bio-fuel at scale.
(on camera): At this stage of the fuel cycle and development of bio-fuels, is it necessary for the government to subsidize to encourage the creation
of the industry?
LAUREN RILEY, DIRECTOR OF ENVIRONMENTAL SUSTAINABILITY, UNITED AIRLINES: It is. It is absolutely important for the government to step in. We are
seeing some state governments step forward and help incentivize sustainable jet fuel, but without those subsidies, without the government supporting,
it's just not a cost-effective alternative to conventional jet fuel. Our vision is that one day, flying will be sustainable. That, that will become
the norm. That's what we're trying to achieve here.
DEFTERIOS: John Defterios, CNN, Los Angeles.
(END VIDEOTAPE)
NEWTON: OK, listen up people, this year "Forbes" crowned Kylie Jenner the world's youngest self-made billionaire ever. Her latest deal proves the
22-year-old isn't just rich, she's a branding power house.
(COMMERCIAL BREAK)
NEWTON: OK, guys, welcome to my beauty secret, it's Rose, Rose is my beauty secret. This is how we get done up and who's taking advantage of
this right now, someone named Kylie Jenner. Kylie Cosmetics is known for its lip kits and eye-shadows and with the help of her massive, and I mean,
massive social media following, it's become a billion-dollar company.
And she just sold her majority stake for $600 million to Coty, that is from the brand of CoverGirl by the way. Now, the owner of beauty brands like
CoverGirl decided this was a safe bet, Jenner will stay on as creative leader as Coty looks to expand it internationally. Chloe Melas is here
with us in the queue in the salon. We're glad to -- I know you queue in the salon here.
Listen, this is a massive deal, Chloe, and it really caught the attention of many people as she started to build this empire. I want to ask you
about the evaluation, right? The sticker price is it worth it? What has she built here?
CHLOE MELAS, CNN ENTERTAINMENT WRITER: A 100 percent, it's worth it. I mean, first of all, like you said, she is the youngest self-made
billionaire. "Forbes" named her this just this past year. I mean, I think that we've seen just this astronomical like rocket ship that she has been
tied to with her success.
[15:55:00]
You know, she's going to stay on in the company with a creative role and that social role is so important that you mentioned. She has 150 million
followers --
NEWTON: A hundred and fifty --
MELAS: A million --
NEWTON: Instagram --
MELAS: OK, and so she's constantly promoting these lip kits. She has another one that's going to drop her holiday collection tomorrow, and she
uses social media as that tool. She is gearing this collection and all of her collections in Kylie skin towards that millennial audience.
And if you want to ask me why I think that this has been so successful, for years, editors and people like myself in the celebrity space, we have been
telling people, right, how to get that celebrity look. And she was so smart to create this line of makeup because for years everyone has wanted
to know how do the Kardashians get that look, how do they get that glam because they're always showing on social media their makeup artists who are
very famous doing their makeup, but now, it's like you can be like the Kardashians and for just maybe $29, buy one of these lip kits and that's
why they're selling like hot cakes. They get sold out in minutes.
NEWTON: And it's incredible, the branding power and obviously the investment power, the vehicle that CoverGirl will have here, Coty in
investing these billions. You know, I remember when Kim Kardashian was making tens of millions on videos, she had a video game.
MELAS: Right --
NEWTON: This is really the expansion of the Kardashian brand. Do you think though she shattered all records, in the sense that she's really hit
on something that can't be monetized.
MELAS: I mean, she has had more financial success in terms of business than all of her sisters, and they all have kind of gotten in on Kylie
Cosmetics. Kylie has sensed since this first started in 2015, and it basically crashed the site as soon as it launched. I remember, I bought
one of the first lip kits that came out years ago.
All of her sisters now have these co-branded lip kit lines, Khloe Kardashian, Kourtney Kardashian, even her mother Kris Jenner. And think
about the success that all of the sisters have had really due in part to Kris Jenner. She is such a media mogul, and she's so smart --
NEWTON: And this is the mother, of course, their mother --
MELAS: When it comes to --
NEWTON: Yes --
MELAS: Business, and has helped broker these --
NEWTON: Yes --
MELAS: Deals. She has her own office at the Kylie Cosmetics --
NEWTON: Right --
MELAS: Like plant that they have in Los Angeles.
NEWTON: And the moral of this story, always listen to mom, right --
MELAS: I think in fact that's what it is --
NEWTON: Chloe is in --
MELAS: Yes --
NEWTON: With me on that one. All right, thanks so much, really appreciate it --
MELAS: Thank you so much --
NEWTON: And we will be right back with the closing numbers from Wall Street.
(COMMERCIAL BREAK)
NEWTON: All right, a few more moments to go here on Wall Street. It doesn't look like much, but you know what? It's a record! It's been a
choppy day, OK, the Dow has been going between small gains, small losses, up and down like a see-saw all day. We want to have a look at those bottom
markets, so the Dow and the S&P and the Nasdaq all set intra-day records early in the session. Let's see if they can eke out a close that's in
record territory.
(BELL RINGING)
That's it for QUEST MEANS BUSINESS, I'm Paula Newton in New York, the news continues right here on CNN.
END
