Return to Transcripts main page
QUEST MEANS BUSINESS
Boris Johnson's Brexit Hopes Are Fading; Trade Talks Between The U.S. And China Announced; Hurricane Dorian Leaves Devastation In The Bahamas; Slack Shares Sink After First Ever Earnings; R. Kelly Set To Go On Trial In April 2020. Aired 3-4p ET
Aired September 5, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: We are just an hour away from the closing bell. Look at that, 405 points. Not the best of the day, but
frankly, that's where we end. Investors will be pleased and there are all sorts of underlying reasons.
Some are good, some just don't stand up. But there is a strong reaction on the markets today. They're all up over one percent. Those are the markets
and the reasons why.
Sterling is climbing. Boris Johnson's Brexit hopes are fading. Trade talks between the U.S. and China may be back on, gives a healthy, hefty
Wall Street boost. And violence in South Africa, an international business backlash. We'll hear from the South African Central Bank Governor.
We're live tonight from London on Thursday, it is the 5th of September. I'm Richard Quest and of course, I mean business.
Good evening, tonight, Boris Johnson isn't giving up. Even a series of legislative and personal defeat in the last 24 hours hasn't doubted the
Prime Minister. He says an election is the only way out
Boris Johnson's own brother resigned as an MP and the Government Minister. He was only appointed a few weeks ago. And hours only after the House of
Commons passed the bill to stop a no-deal Brexit, shooting down the Prime Minister's motion for a snap election.
Speaking in Wakefield in Yorkshire, Mr. Johnson made one thing clear, he will not delay Brexit.
(BEGIN VIDEO CLIP)
QUESTION: Can you make a promise today to the British public that you will not go back to Brussels and ask for another delay to Brexit?
BORIS JOHNSON, BRITISH PRIME MINISTER: Yes.
QUESTION: And --
JOHNSON: About time.
QUESTION: Sorry. Would you rather --
JOHNSON: I'd rather be dead in a ditch.
QUESTION: So you resign first, Prime Minister rather than going after that delay?
JOHNSON: Look, I just don't -- I really -- it costs a billion pounds a month. It achieves absolutely nothing. What on Earth is the point of
further delay? I think it's totally, totally pointless.
(END VIDEO CLIP)
QUEST: As Boris Johnson's fortunes have tumbled, Sterling rallied. The pound had been down since Boris Johnson became Prime Minister, and it
suffered earlier this week on speculation of a snap election.
It went below $1.20 for the first time in three years. Since then, it's climbed back and the reasons why are Boris Johnson's misfortune. The
government lost its majority.
There's a motion to take control of the House, it has succeeded. The Commons voted to block a no deal. You can follow all of those rights away.
And you'll see the pound recovering throughout. And the Lords agreed to push through the Bill ending fears of a filibuster.
So two people who know more about this than most, Bianca and Anna are with me. Let's start with you first because you're on the politics and then
come to you on the money -- on the politics, Bianca, the speech he gave in Wakefield today. I mean, he says he still wants a general election. Is
the opposition going to give him one?
BIANCA NOBILO, CNN CORRESPONDENT: It will give him an election, the question is just when, because they want to call it at a time that's
advantageous to the Labour Party. Today was touted as a potential first campaign speech for the Boris Johnson reelection campaign. And if that was
the case, it did flop a little bit. It was a shaky start. We were all listening to it.
But what he did underscore is the fact that he is not willing to extend beyond the 31st of October. You see for Johnson, and he said this in
private, he told his backbenchers this, extension means extinction of the Conservative Party.
So he wants to mop up that vote from the Brexit Party. He is now left with an election as his only good move, not even a good move. You play chess,
Richard. Like zugzwang, he has got no good news left. It's the least bad move, he is going to go for it.
QUEST: Actually, I don't.
NOBILO: Don't you?
QUEST: Now, don't look so pleased.
ANNA STEWART, CNN REPORTER: You just shamed him on live television.
QUEST: That's all right.
NOBILO: Well, you won one in the last two nights.
QUEST: Anna, take us into the financials.
STEWART: Well, talking of the least worst elements, Deutsche Bank have said that the idea of a pre October 31 election is the quote, "least worst
of all scenarios this week." And they think that is one of the big reasons the pound is up over $1.23 now, isn't it?
QUEST: Well, because they think he is going to lose?
STEWART: Well, this is the -- there are three outcomes they see. And I would love to know if you would agree with this. Option number one, they
say Remain Coalition Alliance, they think that means it's much more likely you have an orderly Brexit or no Brexit at all.
Second option, a large conservative majority. They see that as a way of Boris Johnson being able to force the E.U. into getting a deal.
Third option, a slender consenting majority, worst option back to where we are now.
NOBILO: Most pollsters would say it is unlikely that you're going to get a clear cut government, so whatever happens, you're going to probably get
conservatives maybe in coalition with somebody else or very slim majority, or you'll get Labour in coalition with the SNP or a grouping.
[15:05:10]
NOBILO: The issue is, yes, there's a Remain Alliance against a no-deal Brexit, but nothing beyond that.
QUEST: Listen to Nigel Evans, Conservative MP who was with me on "Express."
(BEGIN VIDEO CLIP)
NIGEL EVANS, BRITISH MEMBER OF PARLIAMENT, CONSERVATIVE PARTY: And all you're doing is War Gaming the various scenarios that could possibly happen
between now and whenever the next election happens, and you'll be pleased to learn I've whittled it down to about 20.
The fact is that things are moving so fast that not only do I not know where we're going, I barely know where I have just been. And it's almost
an unpredictable now, for parliamentarians to actually -- to predict with any certainty what's going to happen.
QUEST: Okay.
(END VIDEO CLIP)
QUEST: Well, when you got the Conservative MP, who is a senior and well- respected in saying that, but let's just go to your scenario. Let's say he agrees to give a general election and the polls -- but it's so transpires
that it can't be -- or Corbyn won't allow it until after October 19th, time when Jeremy Corbyn -- when the Prime Minister would have to go to Brussels.
NOBILO: And that's very likely because Jeremy Corbyn and the Labour Party --
QUEST: So what does -- so what does the Prime Minister do then? If he is forced into a situation where he has to follow the law because it's been so
injured.
STEWART: And he said he'd rather -- what was it? "Die in ditch" today.
NOBILO: Or in terms of what he does, not much. He is now in this situation, which is unprecedented and frankly unsustainable, where he is
beholden to a massive opposition parties who are all united against a no- deal Brexit. So there is very little he can do.
And they will be definitely doing all that they can to try and ensure that they push the date past the 31st of October, therefore, undermining Boris
Johnson's promise to the people.
QUEST: Okay, let's assume they do push it. I mean, Boris Johnson's embarrassment to one side that he has to go back. He has to do the
opposite of George bush's "Read my lips," and do what he said he wouldn't do. But that's not the end of the world. Unless say, it all goes to
January. What happens between now and then?
I mean, isn't the Prime -- I mean what -- everyone says, they all want certainty.
STEWART: That's the thing for business and today, we had a CBI saying they see a small chink of hope here for business. But more and more uncertainty
and this is a problem.
QUEST: The manufacturing data showed it was one bit of statistics, it is falling out of bed.
STEWART: And business investment as well. And every month, this continues, it just gets worse and worse and worse. So for business, yes.
They don't want a no-deal Brexit. There are immediate concerns there. But a continuing situation like we have is no good for the economy.
QUEST: And the delay? Last word to you, a delay until January, isn't the Prime Minister right? It serves nothing.
NOBILO: It doesn't. We're going to be confronted with the same problem there. A no-deal Brexit could potentially still be possible with a new
mandate for Boris Johnson, let's say in January, all the problems is going to be kicked down the road a little bit.
QUEST: One thought just occurred to me, James Blitz on this program last night, said, "Really this election when it comes, it comes down to the
possibility of a no deal from Johnson or Jeremy Corbyn as Prime Minister."
STEWART: And I have to say currency analysts say that a Jeremy Corbyn government is even worse than a no-deal Brexit.
NOBILO: And polling would back that up.
QUEST: All right. Thank you very much. Do you play chess?
STEWART: No.
QUEST: All right. I am not the only one. Good. I bet Lord Bilimoria plays chess. Well, after the Commons passed the Bill aimed at preventing a
no-deal Brexit in the House of Lords, Lord Bilimoria is an independent Member of the House of Lords, as well as Vice President of the CBI. He
told me the Bill is advancing through his side of Parliament.
(BEGIN VIDEO CLIP)
KARAN BILIMORIA, INDEPENDENT MEMBER, HOUSE OF LORDS: What has happened is we had filibustering yesterday, we didn't finish until 1:30 a.m., early in
the morning, and eventually the government agreed that we could have Bill to prevent no deal, goes through the House of Lords and finish by 5:00 p.m.
on Friday, and that the House of Commons on Monday would then process the Bill so that it could get Royal Assent before Parliament prorogue.
So that is a commitment that the government has given us, and of course, then there's the question of the prorogation that takes place over the next
five weeks until the 14th of October. And if there's going to be an election, the government, it appears would want an early election.
However, the logic goes, I mean, this is just what's being debated at the moment that first, Boris Johnson says he wants a deal, business wants a
deal, the CBI has been polling its members, talking to its members around the country, business does not want a no-deal.
And big business is trying to be as prepared as possible for no deal, but they can't protect themselves. Small businesses and SMEs are not prepared
and really, they are finding it very difficult to prepare for no deal.
So everyone wants a deal where business is concerned. But it is the question of the election of when that election is going to be.
QUEST: If you've got a choice between a further delay and no deal and greater uncertainty, what then?
[15:10:08]
BILIMORIA: The problem is a no-deal actually creates the biggest uncertainty. This is not a question of -- this is not what I call a "Nike
Brexit," the slogan of Nike, "Just do it." If you just do it on the 31st of October, the uncertainty of that with a no deal would be much worse.
So to have this delay until the 31st of January, and then have the time to have an election, which is what the government seems to want, and the
opposition wants to happen. The opposition is saying at the moment, try to get a deal to the government in the European Union meeting in the middle of
October.
If you don't get a deal then, then this act kicks in, and the government has to ask for the extension from the European Union and get the 31st of
January delay, and then an election has to be -- take place probably in November.
(END VIDEO CLIP)
QUEST: Now, that's Lord Bilimoria with one major problem facing the global economy. The other of course, is the U.S.-China trade talks. There is
glimmer of light as you can see from here, the best gains in months coming for the Dow. The two sides, the U.S. and China have agreed to talk, and
the editor of the state-owned tabloid says he believes a breakthrough is possible, up 400 points of the best of the day, but Matt Egan, it looks
like the market is holding on to the gains.
MATT EGAN, CNN BUSINESS LEAD WRITER: That's right, Richard, I think Wall Street is sending President Trump a clear signal -- make a trade deal with
China.
Investors are really celebrating the fact that after weeks and months of exchanging blows in this trade war, the two sides have finally agreed to
hold talks next month in Washington. And so even if the odds of an all-out agreement are low, the fact that they're just talking does open the
possibility for some sort of a breakthrough. And so that's what I think people are betting on.
But Richard, I think the real question is whether or not these talks are coming too late. I mean, the economy is hurting right now. U.S.
manufacturing activity is contracting for the first time in three years, business spending plans are down sharply.
And you know, there's a risk that all of this manufacturing pain spreads to households, which are really the strong part of the economy. Now, the ADP
Jobs Report out this morning suggest that hiring remains strong. But the question is how long that can hold up if the trade war keeps going.
QUEST: We usually say that if they do manage to solve it, there will be a bounce back. The damage -- certainly in recessions, of course after the
recession, you always see quite a strong rebounds, but here, I guess we're not talking about that situation because we're talking investment
decisions, which are months and months out.
EGAN: That's right. You know, it's just so difficult for people to plan for businesses, to plan what they're going to do, because they don't know
which direction the trade war is going. It seemingly has been changing week by week. It's really hard to keep up.
But you know, Richard, I'm really struck by the really conflicting signals that the markets are sending, right, because the bond market is really
flashing red, one of the favorite recession indicators on Wall Street.
The New York Fed has this recession probability, and it's based on the yield curve, it's climbed to 38 percent, that's the highest that we've seen
since the last recession.
Meanwhile, the S&P 500 is now just two percent away from all-time highs. So they're definitely telling different stories. I guess it's worth
remembering, though, that the stock market is usually the last one to get the joke. I mean, the S&P 500 was at all-time highs in late 2007, too,
just before the Great Recession began.
QUEST: What happens next? In the sense that -- in the sense that the markets have been here before. They collapse at the first whiff of
problems, and they rally sharply, the seesawing is epidemic and it's endemic now to the trade talks.
EGAN: Right. That's right. I think that the fact that we're seeing these triple digit moves up and triple digit moves down just shows how uncertain
everyone is, right? I mean, investors just don't know which direction a lot of major things are going to go. The economy, Federal Reserve policy,
Brexit and most importantly, the trade war, and so I think we can expect to see this volatility continue until a lot of these issues are sorted out --
Richard.
QUEST: Matt in New York. Thank you, sir. And it's not just the United States. European markets also rallied on hopes of the U.S.-China trade
talks. In Paris, the CAC 40 was up one percent. Zurich had a good session. The FTSE was down but that was down and then the pound was up --
you get the idea of how it moved. British stocks tend to move in the opposite direction when it comes to the currency.
In the Bahamas, thousands of homes have been destroyed. Complete neighborhoods are underwater after Hurricane Dorian. We have been on the
ground in one of the worse hit islands in the Bahamas. You'll hear those accounts and see those pictures in a moment.
[15:15:18]
QUEST: And the Dow is up, but a stock that `Slacked' its way down, an IPO that's clearly not very impressive at the moment. Yes, that's the name of
it, Slack, after the break.
(COMMERCIAL BREAK)
QUEST: Hurricane Dorian has moved away from the Bahamas and its left chaos and devastation in its wake. The monster storm is believed to have
destroyed around half the homes on Abaco and Grand Bahama Island. The death toll on the island nation has now jumped to 20 and that is expected
to rise as of course more damage is surveyed and people get to understand the full magnitude.
Our Paula Newton was the first broadcaster to visit one of the worst hit islands in Dorian's path. Man-O-War Cay. She spent 24 hours there and
sent this dispatch.
(BEGIN VIDEOTAPE)
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Everywhere you look on Abaco, on these islands, you see destruction everywhere. The terror that
people went through for several days here. They really find themselves speechless to even describe it to us. And yet when you look at the debris,
you can understand what they're talking about.
This is someone's living. They described couches, pieces of their ceiling, their roof, any of their appliances, any of their belongings coming at them
as projectiles. They are talking about the force of winds that was like multiple tornadoes touching down.
And you can see what's happened here. You've got everything -- debris everywhere. This is as people were wondering when the storm was going to
end. Everyone here was fearing for their lives, wondering what would happen next. They were completely cut off from all communication. And now
they're left with this destruction.
People are thankful for their lives, and yet they understand the horror of what they just went through will be with them for a long time to come.
Take a listen.
(BEGIN VIDEO CLIP)
SHERRIE ROBERTS, SURVIVED HURRICANE DORIAN: I am from Tampa. We are Bahamian. I just want to let my family in the States know that we're okay.
NEWTON: I am so sorry.
ROBERTS: We thank God, we're alive. It's not just us, everybody is hurting. We're not any worse than anybody else. Everybody is hurting and
we thank God for life.
(END VIDEO CLIP)
[15:20:07]
NEWTON: Abaco was all about living the island dream, the island paradise and many people here now are wondering if they can ever come back. One
thing they do tell us is that Abaco will never be the same again.
As you can see, their lives are now strewn all over these islands. If they're lucky enough that they're safe and they're healthy, they say they
will try to rebuild, but they already know what a monumental task they have in front of them.
Paula Newton, CNN, Man-O-War on the Abaco Islands.
(END VIDEOTAPE)
QUEST: It's way too early to tell the overall toll in the Bahamas. But the level and depth of the sheer size and scale of destruction is awesome.
Residents and businesses are beginning to see exactly what's involved.
It's a country where tourism accounts for 60 percent of the entire economy. We had the Director General on this program. Fortunately, the storm missed
the country's capital city, Nassau, and it spared Paradise Island where the largest resorts and hotels are located.
The Bahamas Tourism Secretary told me last week that the country still wants visitors to keep coming.
(BEGIN AUDIO CLIP)
JOY JIBRILU, DIRECTOR GENERAL, BAHAMAS MINISTRY OF TOURISM AND AVIATION (via phone): So many people have reached out and asked in which ways that
they can help. And one of the messages is the tourism is so important for the livelihood, for the economy, the wellbeing of this country, and also to
help the future growth, so to continue to visit those islands that are open will be a starting point.
(END AUDIO CLIP)
QUEST: The destructive path has prompted the cruise lines that heavily rely on the ports to step up. Royal Caribbean announced plans this week to
set up a relief operation in the Grand Bahama Shipyard and plans to schedule one of its ships to arrive in Freeport each day with relief food.
Michael Bayley is the President and CEO of Royal Caribbean International. Michael, thank you. I know it is busy times for you. It's difficult
really to overstate the importance of the Bahamas and Nassau, isn't it, for the Caribbean industry, for your ships and your competitors? You all at
some point go to Nassau.
MICHAEL BAYLEY, PRESIDENT AND CEO, ROYAL CARIBBEAN INTERNATIONAL: Thank you, Richard. Yes, that's correct. The Bahamas has always been an
incredibly popular destination and will continue to be very popular. So it's really important for tourism, as you saw in the previous segment.
It's an attractive destination and it means a lot to the economy.
QUEST: Double-edged sword for the Bahamas now because they want you back and they want you back urgently and there's no question about that. The
Tourism Director was talking about that, as you heard, but how do you go about it and at the same time, help the Bahamas? What are you doing?
BAYLEY: Well, I think there's -- first of all, I think it's important to get the perspective. The Bahamas is an incredibly large number of islands
spread all the way from North near Florida way down south to the Turks and Caicos, so it's an extensive chain of islands and I think in the form of
segment that was identified.
But for the cruise for Royal Caribbean, we've been very focused on relief efforts, particularly feeding people in Grand Bahama, evacuating people and
bringing generators.
So today, our first ship to call in Grand Bahama, we provided 10,000 hot meals today. We've been working with NEMA, which is the Bahamian
equivalent of FEMA, and the Bahamian government and the Bahamas Feeding Network.
They've set up a system of churches and community centers where we're able to distribute the food today. And we also delivered over 350 generators,
seven and a half thousand pounds of pet food; 50,000, diapers, and many more supplies, et cetera.
So our intention tomorrow is that we will deliver 20,000 meals and then 20,000 meals every single day for the next several days. And we're also --
we will be evacuating people from Grand Bahama to Nassau today, and hopefully every day will be able to take people who want to get to Nassau.
QUEST: And which ships are you using for this? I mean, the ships, for example, that brought all those badly needed goods. Were they cruise ships
that you have sort of added cargo to? Or are you mandating specific ships?
BAYLEY: Well, we have a large fleet that operates in the Caribbean and a large fleet that operates from the eastern seaboard of the United States.
As you pointed out previously, many of those ships go into and around the Bahamas.
So in many cases, were diverting those ships so that they can call in Grand Bahama, and we're loading those ships with provisions, supplies, et cetera
in many of the Florida ports that we sail from in the eastern seaboard, so it's really a question of diverting our ships so that we can bring
supplies, provisions and then we'll pick up people in Grand Bahama. Then we'll move on to Nassau, which is about seven hours sailing from Grand
Bahama.
[15:25:18]
QUEST: Finally, the way in which the industry responds to this, both from a human level obviously is very important, but also -- this is an important
part of your business, you are an important part of the communities in the Caribbean. So for you and your colleagues, it's part of your life to be
involved now in helping those people who are such an important part of your business.
BAYLEY: Well, our company's name is Royal Caribbean, we started 50 years ago. Our first port of call was the Bahamas. We have over 500 Bahamian
employees who work for Royal Caribbean, and obviously, all of their families.
We very much about part of the Caribbean community and we're neighbors. So we have an awful lot of volunteers, more volunteers than we know what to do
with. Our employees want to help out, and there's a lot of passion and caring from all of the people around us, including other companies that we
do business with have volunteered and offered to help.
Many companies have contributed the supplies and provisions that we're taking to the Bahamas. So it's really is a community effort.
QUEST: Michael, thank you for taking time out tonight to come and talk to us. We do appreciate it. Thank you very much.
BAYLEY: Thank you, Richard.
QUEST: Now, the recent violence in South Africa have left several people dead. It has prompted the country to shut some of its embassies. South
Africa's Central Bank Chief has been speaking to us about the crisis. In a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I am Richard Quest. A lot more QUEST MEANS BUSINESS in just a moment. South Africa's Central Bank Governor tells us he is worried how
a xenophobic violence is affecting his country's economy.
And investors have no time for slack. Shares in the workplace chat room is sinking. We need to understand why.
[15:30:05]
As you and I continue tonight, this is CNN, and on this network, the facts always come first.
All who lives in the Bahamas says it's like an atomic bomb went off in the wake of Hurricane Dorian. The strongest hurricane to ever hit the Bahamas
leveled entire communities, has killed at least 20 people in the Abaco and Grand Bahama Islands.
The number of people who have died is almost certain to rise as search and rescue crews reach more areas. Right now, the hurricane is lashing the
southern United States. It's a powerful Category 2 storm and it's pummeling parts of North and South Carolina as heavy rain, winds and
flooding and tornadoes are being spawn across the region.
Hundreds of thousands of homes and businesses are without power as a result. Italy has a new government, Giuseppe Conte continues as Prime
Minister, now though as head of a new coalition. His five-star movement has formed an alliance with the left-wing Democratic Party after the far
right lead party pulled out of the previous coalition with him.
The singer R. Kelly is set to be on trial next April on sexual misconduct charges. According to the indictment, he's accused of recruiting women for
sex, persuading people to conceal that he had sexual contact with teenagers and spending hundreds of thousands of dollars to buy back tapes of the
encounters. Kelly has consistently denied allegations of sexual misconduct.
Today was Princess Charlotte's first day at school. The 4-year-old daughter of the Duke and Duchess of Cambridge is fourth in line to the
throne. She was dropped off at Thomas' Battersea in London by her parents, the Duke and Duchess of Cambridge.
The princess joins her brother George at the fee-paying school which charges almost $8,000 a term. Here in the United Kingdom, manufacturers
are bracing for a harsh Winter, a trade group is calling the Brexit crisis the perfect storm for an industry already reeling under the chilling
effects of trade wars and slowdown.
The Conservative Party MP David Morris is here and it's worth pointing out before if we begin, thank you, sir, for coming in. You voted with the
government last night. You voted in favor of a general election.
DAVID MORRIS, BRITISH CONSERVATIVE MP: Yes.
QUEST: But you'll agree that we have no idea where this is going now.
MORRIS: No, we don't, it's fluid, it's fluctuating all of the time. We had a discussion, as you know, before about the Conservative Party's
fixation with Europe. You know, this is now the standoff coming on to the shoot-out.
QUEST: Do you support the withdrawing of the whip, of those who voted against the Prime Minister and the government?
MORRIS: Personally, I know these people very well, they're my friends. They were warned before they went through the lobbies what the consequences
were, and the whip was withdrawn. But I do think that it's now time to look at each person individually, case by case and say, look, you know,
don't do this again.
QUEST: I mean, Theresa May didn't withdraw the whip, she had many cases of MPs -- government ministers voting against her.
MORRIS: I totally agree. You know, Theresa May would never have done that, but this is now coming to a point where, you know, the Prime
Minister, he has said, we're coming out on the 31st, do or die, quite famously. And we have to do, we have to bring --
QUEST: OK --
MORRIS: This to an end.
QUEST: He said today, he would rather die in a ditch rather than go back to Brussels and ask for an extension. But if, let's assume as --
MORRIS: Yes --
QUEST: It's likely, the bill is going to become law, the no-deal Brexit or preventing no-deal Brexit will become law. But if he can't do something
before October the 19th, he can't get his election and he's going to have to go to Brussels or break the law.
MORRIS: Again, it is very complicated where at this moment in time. We go back next week, Corbyn said that he wanted royal assent for this particular
piece of legislation. Let's just say that we have a general election, let's just say that we get the election over with before the European
Council. We could go through legislation in one day to turn that around again.
QUEST: How can you do that physically after an election on let's say the 15th? I mean, the logistics of a new parliament swearing in new members,
all that has to take place. Is it realistic, David, to get it done before the council on the 19th?
MORRIS: A lot of people said that what we've seen already realistic. I mean, it all depends on the timetable --
QUEST: Yes --
MORRIS: Where we go for an election -- we don't know. The truth is we do not know this.
QUEST: Your leaders said today that he was -- an election, when it comes, will be between a Prime Minister who is prepared to think about a
countenance, a no deal and Jeremy Corbyn.
[15:35:00]
MORRIS: Yes --
QUEST: Now, since many in this country find Jeremy Corbyn's far-left views an anathema, if not unelectable, you're basically saying to the British
people, no deal or Corbyn.
MORRIS: No, what we are saying to the British people is, we want a deal, we really do, but we don't want to take a no deal off the table. We don't
want to be beholden to Europe, we want to say to them what we want, we want them to listen to us.
And what Corbyn wants to do is present, you know, as the Prime Minister will say, surrender deal. He wants to go forward with a proposition to
them that the Europeans would have the upper hand these whole costs.
QUEST: You surely can accept that there is, you know, the backstop is there, and I think you'd probably agree that the rest of the withdrawal
agreement could be passed the way the backstop was removed. They would probably be passed quite quickly --
MORRIS: Yes --
QUEST: But there is no workable alternative to the backstop that could be put in place in time. It's the old argument, if there was an easy
solution, they'd have found it by now.
MORRIS: Oh, I think the solution already exists. I think we've got -- you've heard of alternate arrangements --
QUEST: Yes --
MORRIS: The great counts, Nicky Morgan --
QUEST: Yes, it doesn't work.
MORRIS: If you look into that, it's working in every other country just outside of the EU. There's no reason why it shouldn't work. The reason
the backstop is so controversial is because it underpins the Good Friday agreement.
It's all the political connotations, but the reality is, you've got the euro in Ireland, you've got the pound in northern Ireland. There's still
commerce going on right now, but the two different economies, it won't make any difference whatsoever. It's just a case of policing those borders to
ensure that we don't have any sort of illicit trade between the two countries.
Because it's not just northern Ireland in the backstop, it's the whole of the U.K. Now, if you bring in free port, I've got a port in (INAUDIBLE),
you know, that is a solution to this particular problem of letting free trade go between, you know, Europe --
QUEST: Right --
MORRIS: And the rest of the U.K.
QUEST: An election before when?
MORRIS: I have no idea. Look, you know, I thought that we would be heading for an election right now --
QUEST: Right --
MORRIS: On this day. But let's see what happens on Monday because you never know, there might be more twists in this course group of
parliamentary procedure than we can ever see.
QUEST: Good to have you with us, David, thank you very much indeed.
MORRIS: Thank you for inviting me --
QUEST: Appreciate you taking time. When there is an election, we might come to -- more come -- see you during election hearing --
MORRIS: You're most welcome --
QUEST: Beautiful parts of the -- absolutely glorious. Thank you.
MORRIS: Thank you.
QUEST: Now, South Africa has temporarily shut its diplomatic missions in Nigeria for fear of retaliatory attacks against its citizens. It follows
outbreaks of violence this week in South Africa, targeting in many cases migrants from other African countries and foreign-owned businesses.
The xenophobic attacks and looting, there are five people dead, nearly 200 people have been arrested. South Africa's Central Bank governor says the
violence in no way resembles the character of its country. He was speaking to us with our Africa business correspondent Eleni Giokos who is in Cape
Town tonight at the World Economic Forum. What did he say?
ELENI GIOKOS, CNN AFRICA BUSINESS CORRESPONDENT: Yes, Richard, I mean, the reality is here that when you see violence scenes of xenophobia and you see
retaliation coming through from other African leaders, it just goes to show the systemic issues that South Africans are facing and other Africans are
facing on the ground here.
It goes to show that it's an economic issue, it's an issue of inequality, and it manifests itself in the likes of violence that we've actually seen
in this country before. And of course, you know and I know that the conversations that occur in the halls of the World Economic Forum between
leaders and of course the likes of CEOs don't really matter much when there's such a huge disconnect in terms of what is going on, on the ground.
And of course, the Central Bank Governor Lesetja Kganyago was telling me that even when you do get some good news on the economic data front, it
impacts confidence, and this comes at a time where South Africa is desperately trying to attract investment. Here's what he had to say.
(BEGIN VIDEO CLIP)
LESETJA KGANYAGO, GOVERNOR, SOUTH AFRICAN RESERVE BANK: An average South African is not xenophobic. These are acts that cannot be seen as being
South African.
GIOKOS: Yes --
KGANYAGO: We are not that kind of a nation. As a central banker, what I worry is what these things does for confidence and that we would -- we
would -- we would be concerned because if confidence is affected, it would affect all the other key indicators.
And actually, when I look at the headline the day after the GDP figures, that was supposed to be the big headline. It ended up not being precisely
because of this set events that actually took place.
GIOKOS: Could we ever go to the IMF for help?
[15:40:00]
KGANYAGO: Is South Africa having -- or heading to a micro-economic crisis? And I would say to you, we do not have a micro-economic crisis as yet. But
if we do not take particular concrete steps to reverse the tide that we had seen over the past few years and make sure that our macro-economic
stabilization program works adequately, then we might end up with a situation where we would need assistance.
But as it stands, we do not need an assistance --
GIOKOS: Trade war. Do you guys have to price that into your models?
KGANYAGO: Well, I think that we need to also underscore that a free and fair trade is good for all of us. There are no winners in a trade war, the
only thing that which happens or come out of this trade war is that the global economy will be troubled.
(END VIDEO CLIP)
GIOKOS: And Richard, I mean, there you have it. You've got clear issues that the Central Bank governor needs to deal with. It's not only issues on
the ground, but it's global. You know, volatility that occurs when conversation happens between China and the U.S.
But the reality is that at a time when they're talking about creating one of the largest --
KGANYAGO: Right --
GIOKOS: Free trade zones in Africa. You've got so many other things you've got to think about. And this optimism that surrounds conversations
that we've been having over the last few days of course are eclipsed by the bad news.
QUEST: And listening to the governor there -- very honest, very blunt. Are we -- should we take --
GIOKOS: Yes --
QUEST: From this that we are now seeing some of the return to transparency, proper governance, independence of the Central Bank. The --
you know, some of the bad old ways of South Africa are now being reversed.
GIOKOS: Absolutely, I mean, I asked him about the independence because that's a conversation that's been raging on and a debate that's been raging
on for a long time. And he says leave the central banks globally to do what they're supposed to do. And of course, that is one of the things that
he's also been talking about, hands off the central bank is what he's been saying for quite some time.
And of course, it comes down to governance, it does come down to transparency as well. But it's really a tough job right now, Richard,
because they've got to clean up and it's something that we've been talking about for some time. You've got to clean up corruption, you've got to get
rid of the people that were involved and you've got to of course, get people behind bars --
QUEST: Right --
GIOKOS: As well. Something that still hasn't happened. How are you truly going to get confidence back when you haven't fixed those problems?
QUEST: Eleni, good to see you in South Africa, thank you for bringing us that interview tonight. As we continue, if you're going to call yourself
Slack, you better be prepared for slacking off on every other pun when your numbers are awful. Your shares sly and slack is a slacker.
(COMMERCIAL BREAK)
[15:45:00]
QUEST: Well, the love affair didn't last long, and the honeymoon seems to be over for Slack. Shares of the office app are down 13 percent pre-market
on the company's first earnings report since going public. They recovered, they're still off some 3 percent. If you look at the messages, you'll see
the details.
Slack filed to go public in April, $400 million in revenue and $139 million in losses. Direct listed on the Stock Exchange in June, $23 billion was
the evaluation. Now, the early outlook is up, slowing growth, service disruptions, investors not pleased, company not profitable.
Paul La Monica joins me from New York. Is there anything in what we heard from the company today, Paul, that wasn't imminently foreseeable?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I don't think so, Richard, I think people should have been able to figure out that Slack, even though it
wasn't a traditional IPO was a direct listing as you pointed out. There was a lot of hype surrounding this company and much like Uber and Lyft
which are obviously not an allegros in the sense that they are ride-sharing companies that focus more on consumers, but are also not profitable.
They were wildly hyped unicorns, and you know, their results, you know, weren't that great either. So, I think it really does show that there is
this zeal for a lot of these hot unicorns going public to try and, you know, live up to the hype. And you know, I think it's one thing to attract
venture capital interest from VCs that are willing to play the longer-term game. You know, investors are a lot more fickle in the public markets.
QUEST: You know, I know that Slack is very popular. I can't say I've used it myself, but I believe it's the backbone for you and many of your
colleagues. I mean --
LA MONICA: I envy you, Richard.
QUEST: Look at the share price, though. I mean, what is it that's the risk here? Is it that a MeToo comes along and steals its clothes? Is it
that it just doesn't catch on? Where's the risk and what is the risk?
LA MONICA: Well, I think there are two. As far as competition, right now, to its credits, Slack really is the predominant app for office
collaboration tools right now. I mean, people do love and use this a lot, and I would say from first-hand experience, it is used pretty extensively
in the CNN Business newsroom.
That being said, there's this little software company in Redmond, Washington, you may have heard of called Microsoft that has something
called Teams that's integrated in Office 365. Microsoft is a much bigger company obviously than Slack is. If Microsoft really wants to get
aggressive and try and out-slack Slack, it's possible that Nadella and co could do that.
So, I think that's a risk. But also as you point out, there are a lot of companies that are paying subscriptions to be honest, but there are also
free trials as well. And you know, I think it's remains to be seen whether or not it's a company that can generate enough revenue growth to make them
profitable. Because revenue growth is already slowing, that's not --
QUEST: Right --
LA MONICA: Something you want to see this early at a stage as an IPO.
QUEST: Absolutely, not in the cycle. If we take a quick look at the market and how it's trading at the moment, Paul, because come on, guru,
does the news we've heard -- oh, we slipped under 400, but does the news we've heard today justify this sort of reaction, not that it matters, we've
got it anyway?
LA MONICA: Yes, I don't know if it necessarily does, but you could argue that some of the recent sell-offs weren't justified either. What's
worrying me now is that we are so headline-driven, all it takes is one rogue Trump tweet, one with --
QUEST: Yes --
LA MONICA: China is coming back to the table and we have these exaggerated moves. I'd like to see an actual meeting take place with some real
progress on a trade deal and not just tweets and headlines.
QUEST: Good point, Paul, always good to have you, thank you, sir.
LA MONICA: Thank you, sir.
QUEST: As we continue, an exclusive trip to a Galaxy of phones. We'll be inside Samsung, next.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: Look at it, Samsung's Galaxy Fold is finally set to hit the market in South Korea in a few hours today when it's Friday. It's going to be the
world's first foldable phone, it will cost nearly $2,000. Samsung spent the last few months refining it after early users reported device problems
which delayed the official launch. It was never actually launched. CNN's Kristie Lu Stout got an exclusive peek inside the company's research and
development camp.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT: It's not easy being Samsung. Now, the company has been hit with declining profits, increasing competition
from China, even that trade spar between South Korea and Japan. And yet, it is shoveling cash into new ideas.
In fact, Samsung is pouring some $22 billion over three years into growth areas like 5G, AI and automotive electronics. We recently got rare access
to the headquarters of Samsung Electronics to see how it's pushing into new markets through innovation.
LU STOUT (voice-over): This is one of the most secure R&D labs in the entire world, the headquarters of Samsung Electronics.
(on camera): Lots of layers of security.
(voice-over): Cameras aren't usually allowed inside, but we got rare access to go behind closed doors to see technology breakthroughs still
under wraps from automotive to health care.
HYUN-SUK KIM, PRESIDENT & CEO, CONSUMER ELECTRONICS DIVISION, SAMSUNG ELECTRONICS: The reason Samsung is successful is that of innovation. We
are making innovative products and to make innovative products, I think we have to understand what the consumer wants.
LU STOUT: Today, many Samsung consumers just want smartphones. But with mobile sales declining, this 50-year-old company is now looking to develop
its next big thing like maybe an app to help the blind see.
UNIDENTIFIED MALE: So, this is kind of senior-letter glasses.
LU STOUT: You need opaque glasses to see how it works. It's very blurry, I can't see anything. Then the VR kit paired with the Samsung phone and
the app -- oh, I see.
(on camera): As soon as I put this headset on top, something that was once just a milky blob has turned into something with definition. I can go from
not seeing to seeing.
(voice-over): Samsung also wants to go big in wearables and not just watches. This is the GEMS or Gate Enhancing Motivation System.
(on camera): Oh, my goodness, sorry, this sounds weird, but there's a tingling sensation.
(voice-over): Those are sensors boosting muscle movement.
(on camera): Oh, goodness, it just kicks up my feet, wow, that's interesting.
UNIDENTIFIED MALE: Yes.
LU STOUT: I'm feeling a lift at my feet even though this is only here.
UNIDENTIFIED MALE: Right.
LU STOUT (voice-over): Samsung sees elderly and disabled customers using this for physical therapy. The company may be racing to innovate, but not
to market. In the wake of failed product launches in the past, analysts say the Korean tech giant has to balance speed and execution.
[15:55:00]
BRYAN MA, VICE PRESIDENT, CLIENT DEVICES RESEARCH, IDC: One thing that Samsung is very good at is they're very aggressive, sometimes a bit overly
aggressive, but in the grand scheme of things, it's good because it keeps them on that leading edge of technology.
LU STOUT (on camera): Seatbelts on.
UNIDENTIFIED MALE: Yes, that's --
LU STOUT (voice-over): Whatever it is, cars, robots or watches, the race is on as Samsung looks to find its next big thing.
(on camera): Samsung Electronics is an established force in smartphones, you know, thanks to 50 years already of endless product turn. But it's not
going to stop the tech giant from investing billions into new ideas, especially when it's under pressure on multiple fronts. Back to you.
(END VIDEOTAPE)
QUEST: Right there, as you can see as we finish in the market, we are off of the top of the day, we're under 400 now, but it's well supported at that
particular level. Final few moments, the Dow's best day in some three months, 1.5 percent, and all the other major indices by the way are
similarly up.
And if you look at the Dow 30, it's a sweep of green, a couple of reds and sort of near the bottom, Coca-Cola, Wal-Mart, all having a bit of problems
of their own. But the biggies are all there, they're good gains, they're solid and the Dow is having its best day in weeks. We will have our
profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. In the program, under the withering gaze of Bianca Nobilo, I had to admit that I don't play chess, but I do
play a mean game of drafts or checkers and I'm pretty nifty at monopoly. And I can tell you that when you look at what's happening in Britain
tonight, a vast game of strategy is under way.
One that's going to affect the lives of 66 million people in this country and hundreds of millions if it takes Europe down into recession. And it
comes to this. Will Jeremy Corbyn grant the Prime Minister an election that can take place in time as far as Boris Johnson is concerned to stop,
to overturn the law so that he can still have a no-deal Brexit by October the 31st?
That's where we are tonight -- and there's one other thing. I've had two MPs on our program today, two MPs, senior MPs, both of whom have looked at
me and said, I have no idea what's going on and no idea what happens next. Now, that's what you call a chess game that even Bianca would find
difficult to play.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. The bell
is ringing, good day on the Dow, best in months, the day is done.
(BELL RINGING)
END
