New Report Indicates Manafort Held Secret Talks with Assange 3 Times; Trump Administration Threatens to Cut GM Subsidies
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: We're an hour away, the last hour of trade on Wall Street, a day that started off dreadfully down 200 odd points has recovered quite remarkably. But essentially for most of the day, we've actually just traded sideways with small losses or little gains. Do you see it on the Dow 30? The best is Verizon up 2%. UT down nearly five. There are valid reasons for that loss. And these are the drivers of the day. The White House says there could be a breakthrough in trade talks with China, and that boosted those stocks that are affected by Chinese-US trade. As GM cuts jobs, Uber's Chief Executive says soon we won't be buying cars at all, we'll be sharing them instead. And economic crisis on both sides of the English channel, I'll be joined - I am going to be joined in the C- suite by Mohamed El-Erian to put all of this into perspective. We are live in the world's financial capital New York City on Tuesday, November the 27th. I am Richard Quest. I mean business. Good evening. There are high stakes trade negotiations that are playing out in Washington and on Wall Street. As President Trump and his top advisers are threatening dire economic consequences, if the US and China fail to find agreement at the G-20 Summit in Argentina later this week. The Trump administration's tone over the last 24 hours has veered from pessimism to optimism. Investors are trying to keep it up, the Dow just broke home the last hour as the President's top economic adviser dangled the possibility of a breakthrough.</s>LARRY KUDLOW, DIRECTOR, US NATIONAL ECONOMIC COUNCIL: In his view, there is a good possibility that a deal can be made and that he is open to that. He is open to that. But having said that, some caveats as always, certain conditions have to be met with respect to fairness and reciprocity as we've said many times.</s>QUEST: And that uncertainty, whether it's reciprocity or what is going to happen is what has been biting the markets for so long. Today, although there was marginally extra information, it didn't get us much further. This is the current situation. Let's just slash through the war of words. When we talk about China and the United States and the issue of tariffs, this is what's actually happened so far. The year started. These are the steel tariffs and washing machines and the like, which were imposed by the United States on China. With those, China immediately responded with $3 billion worth of tariffs on US goods. Now, there are more skirmishes over the course of the year, some on tech, others on US farmers, but it doesn't really matter which way around. Altogether, another $50 billion of goods on each side. And then what was basically skirmishes turns to a full blown trade war. It happened when President Trump hit $200 billion in Chinese goods and China responsively muted, it was just $60 billion on American goods. So this is the situation going into the G-20. Another moment, the tariffs proposed are at 10%. But you need to remember, not all tariffs are equal. This $200 billion, 10% and President Trump said he won't stop them from rising to 25%. Now, if those tariffs go up, well, which companies will be affected? Look no further than Apple. If this gets worse and President Trump's threatening tariffs on another $267 billion in goods at 25%. It effectively accounts for all Chinese goods coming into the United States and Apple gets clobbered hard, down - you see, it's already down just under 1% at $1.47. Apple designs in California, assembles in China, tariffed in Washington, it's not surprising that Apple stock fell after Donald Trump's comments. But, I think this is rather cause of celebration. Today, we've talked about it many times. Mohamed El-Erian is well worth the trumpet roll. Sir. Be seated. And we are in the same city on the same day to talk about the same subjects, which never seem to change. Let's start with China trade and the US first saying it is going to, then saying it is not. What is your understanding?</s>MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER AT ALLIANZ: Posturing ahead of very important discussions in a few days in Argentina. What you saw is first President Trump said he is willing to go all the way in terms of increasing the pain for China and then today, as you pointed out, we've got an opening saying he is also willing to negotiate. So I think this is just posturing ahead of a very important conversation.</s>QUEST: Is this evidence of Trump as a master negotiator?</s>EL-ERIAN: It is evidence of the same negotiation process that led Korea, Mexico, Canada, and now increasing to say you know what, forget this tit for tat, how do we diffuse the tensions? If the US is willing to incur economic cost, which it is from a trade war, other countries lose a lot more. So this is just telling other countries, you know what, I am going to keep on pressing until you make concessions. And I think we are going to get concessions from China.</s>QUEST: Sufficient, because Donald Trump - they already made some concessions on autos, which wasn't sufficient. And how damaging is this trade war, globally?</s>EL-ERIAN: So it's a lot more damaging to the US's trading partner than to the</s>US. QUEST: But are we seeing evidence of that?</s>EL-ERIAN: Oh, look what's happening to the Chinese economy, the Chinese economy is slowing and the Chinese policy makers are having to go back to old tools. They are like cranking up an old engine that is increasingly exhausted because they are now put in a corner.</s>QUEST: Can you directly link the Chinese problems to tariffs? Which have been in about eight or nine months, can you directly make that lineage? Surely it's too soon for them to be having a major --</s>EL-ERIAN: So there are leading indicators. The market being one, the Chinese market has been hit very hard. Another one being sentiment indicators. They show that that is slowing. The third one is foreign investment flows. They are slowing. So there are indicate that suggest that China is feeling the pain. Now the US is also feeling it, look at Apple. But in the US, it is much more company specific, whereas in China, it's economy specific.</s>QUEST: The Fed - let's come back to the US economy. The Fed having said it's going to be data dependent appears to be on a trajectory. Would you agree?</s>EL-ERIAN: So the Fed was on a trajectory. This was a new Fed. The power Fed was different. It says we want to normalize and we are going to do so. Over the last few days, the markets have started to sense that maybe the Fed would soften. Over the next few days, we are going to find out whether this is really a new Fed or old Fed?</s>QUEST: What are you looking for? Comments from Powell? What? Referring once again to data dependent?</s>EL-ERIAN: Yes, and referring to the fact that the Fed is market sensitive. You know, investors --</s>QUEST: Which market?</s>EL-ERIAN: The S&P. No, they are totally US focused, whether it's the economy or the market, they are US focused. They say spillovers --</s>QUEST: No, no, I mean in terms of which markets are they looking at? Are they looking at the bond markets obviously where treasuries having been up. They are over three and on the 10-year, they have now pulled back a little bit. Are they concerned about the dislocation of equities?</s>EL-ERIAN: So I think that they are starting to ask the question, should we be concerned about dislocation? When they look at the US bond market, they look at the spread between short-term bonds and long-term bonds. That is down to about 21 basis points, which is very low. But it's because of Germany. That is being influenced by what's happening in Germany. So they pay I think less attention to that than they normally would.</s>QUEST: We've always - all roads, no matter how much we like to be higher in thinking about economic values and this and that and the other, but all mark - all roads bring us back to the market, don't they?</s>EL-ERIAN: Right.</s>QUEST: And the market had a pretty awful November, followed by a pretty torrid October. Do you see a leveling or bottoming, do you see any form of stability ahead?</s>EL-ERIAN: I think volatility is a new reality. We come in from a period of very low volatility and markets were excessively comforted by Central Banks. You know, when have you an institution with a printing press in the basement and just basically says, "I will print as much money as I need to repress financial volatility," the market does that for you. Now, these Central Banks are stepping back. So investors should expect a lot more volatility.</s>QUEST: So it's not over?</s>EL-ERIAN: Absolutely not. Absolutely not. There's going to be three digit moves. Look at today. Today is a perfect example. You showed two big movements and they reflect investor's wish list for this week. One that the Fed is more dovish and we got a speech from the Vice Chair and two that Trump and President Xi's administration will agree on something. We got better indications for that.</s>QUEST: Don't go too far. We've only touched the surface. There is still Brexit to do over and argue and other things, so we will get a cup or two or a glass of water. Times are hard. So breaking news to CNN, police in Maryland are investigating reports of an active shooting situation at the Walter Reed Medical Center. Eyewitnesses say - inside the building say they have been told to continue to shelter in place. One person said loud speaker announcements have said it's still an active situation. Another person reported hearing lots of sirens. Now, Walter Reed is the US Army's flagship medical center, it's just outside Washington, DC, so it's of strategic importance. We'll bring you more details on that. As we continue tonight, the chief executive of Uber has a radical vision for the future saying, "More than 10 years from now, you won't a car because you won't need to." The ability to think big maybe what got the CEO the job in the first place. He was brought in to repair after a series of scandals.</s>DARA KHOSROWSHAHI, CEO, UBER: Hopefully, you won't own a car, will you essentially come to us and we will give you the choice of whether you want to take regular Uber, you want to pool with someone, but we are also going to show you this is a bus stop that's sent to you and a bus is going to be coming in six minutes from now. You can take the bus today or you can take an electric bike or scooter today as well. We want to give you every single choice.</s>LAURIE SEGALL, SENIOR TECHNOLOGY CORRESPONDENT, CNN: What do you say to the drivers who say, "Dara, I'm afraid that I am going to become irrelevant?"</s>KHOSROWSHAHI: I think first of all, I'd say, I understand the fear. My experience every single time is that machines and humans are the thing that's superior. Self-driving technology for a long time is not going to work in every single use case. If there is an airport drop off and pickups. Like, good luck for a machine to figure out exactly how to get there The promise of autonomous is that it is going to bring the cost per mile per of transportation on Uber, which right now is about double the cost of car ownership per mile to essentially the cost of car ownership. When autonomous brings that cost down, we believe that we can replace car ownership, itself. So this is not a company whose goal is to double in size. This is a company who we think we can grow 20 times bigger, 40 times bigger.</s>QUEST: You can see more of the Dara Khosrowshahi's interview with Laurie Segall at cnnbusiness.com. It is part of Laurie's new series, "The Human Code" speaking to those influential leaders in Silicon Valley about the technology that runs our lives. As we continue tonight after killing hopes of trade truce with China. President Trump turns his attention to Prime Minister May's Brexit deal, in a moment.</s>QUEST: Prime Minister Teresa May says her Brexit deal does leave Britain free to make trade deals, including those with the United States, despite the fact that Donald Trump said it might not. The PM said the talks on a new UK-US deal are already under way. She was speaking in Wales as she began a countrywide charm offensive to work up support for this deal.</s>THERESA MAY, BRITISH PRIME MINISTER: What the political declaration makes clear is we will have an independent trade policy. We will be able to strike trade deals around the rest of the world. We're talking - well, we have a working group that is working with the United States looking at exactly this issue, but also we are talking with others around the rest of the world about the possibility of trade deals there as well.</s>QUEST: James Blitz from "The Financial Times," who watches these matters closely. He's with me tonight. James, what does she hope to achieve? As we have proved on this program last night, the arithmetic is against her. So if she loses in ten days' time, what's all this about?</s>JAMES BLITZ, WHITEHALL EDITOR, THE FINANCIAL TIMES: Well, that's a very good question and there isn't a very good answer to it. As you say, the starting point is that Mrs. May has comes up with a deal. She signed it with the European Union on Sunday. It's a deal which basically leaves us half in and half out of the economic arrangements with the European Union. But the fact is that it is totally being lambasted and attacked in the House of Commons, that happened yesterday. And the likelihood is that when the votes comes on December 11th to the House of Commons, she is going to lose and lose quite badly. What happens then is really unclear. We could have a full blown political crisis in which a whole load of issues might come up. But for starters, her deal looks at this moment to be pretty dead.</s>QUEST: Okay, now, in that situation the Europeans have said not unreasonably, we won't renegotiate. But as you know of old, the ambassadors are tweaking an agreement to get it through a recalcitrant legislature as they have done on different treaties. It will take more than a bit of tinkering to get this one through?</s>BLITZ: Yes, I agree with you. I mean, I think that if she lost by a few votes on December 11th, she could try and go to the European Council later that week and get a little bit of tweaking, too. The very loose political declaration that has been signed, which hasn't gotten any legal status, but it's not going to make much difference to the situation in the House of Commons. The much bigger question that will arise, if she does lose, and effectively is pushed out of power, whether the House of Commons can go down the road of a whole load of other things it could do. Possibly a second referendum or a completely different kind of very close relationship with the European Union as like, for example, being in the European Economic Area, where we would basically be in the single market and customs union. Those are the questions the EU might have to confront.</s>QUEST: And on this question of can the UK do or do not do other deals? As I understand the issue, it only becomes relevant if at the end of the implementation period, you're falling on the backstop and it's only in that situation that the UK would be in a customs union that would prevent long term doing other deals?</s>BLITZ: Yes, that's exactly right. That's what conservative MPs, hard Brexiteer, hard line conservative MPs don't like at all. The bottom line is, Mrs. May's deal basically means we are going to be in a customs union arrangement for a long period of time. That means that we would have to abide by the external tariff that is set by the European Union on all goods and that means we can't do trade deals. That's what President Trump was talking about.</s>QUEST: Right, now, there is another valid point that critics are making surely is that in implementation period, whilst the negotiations are taking place over the political declaration to the long term future, every Prime Minister in Europe and President Macron, on fisheries, the Spanish on Gibraltar, everybody can hold the UK hostage to get a proper trade deal?</s>BLITZ: That's exactly right. And that again is one of the things that hard line conservatives don't like. If there was a trade deal side with the European Union, it has to be signed by unanimity. Everyone of the 27 countries in the EU has to sign it off. What you have seen in the last few days is Macron has been saying we are not going to sign unless we get what we want on fish. The Spanish are saying, we are not going to sign unless we get what they want on Gibraltar. So what a lot of people are saying about Mrs. May's deal is it just ties us down and effectively leaves us in a worse situation than we're in as members of the EU.</s>QUEST: James, I have permission to ask you a small question for a quick answer. How much of a mess is this?</s>BLITZ: Biggest post-war - post-Second War mess in the United Kingdom. Far worse than sewers. Enormous issues on the table. The future of our relationship with Ireland, the future with the union, our place in the world. No clear idea how we are coming out of it. Very serious, indeed.</s>QUEST: Hopefully, you will help us understand it as we go through this process. James, excellent to have you with us tonight. Thank you very much.</s>BLITZ: Thanks, Richard.</s>QUEST: Now, a quick update on the Walter Reed Medical Center, the Department of Defense spokesman has told us that the situation there was only an exercise and there is no active shooter threat so. So we can put that to one side. Let's stay on Europe where across from the UK in France, well, these are the sort of scenes that President Macron has been witnessing, and we have been seeing on the streets. Now, the President has condemned the violent protests. They are known as the yellow vests and this is why. The yellow vests are called so because they are worn - because every French driver has to have a high vis yellow jacket along with a red triangle for if they break down and an emergency. So they're called the yellow vest protests. In a speech earlier today, President Macron said he is standing firm on the fuel tax that started this thing, though, he wants to review it every three months.</s>EMMANUEL MACRON, PRESIDENT OF FRANCE (Through a translator): I'm not muddling up hooligans with fellow citizens who want to send a message. I understand these fellow citizens, but I will not give in to those who seek destruction and disorder because the republic is about public order as well as the freedom to express opinions.</s>QUEST: So, CNN's Mellissa Bell in Paris reports on the background to the yellow jacket protests.</s>MELISSA BELL, CORRESPONDENT, CNN: An explosion of violence transformed the Champs-Elysees on Saturday with paving stones ripped out and thrown, water cannons and tear gas used and for several hours, a police force struggling to contain the anger that had gripped Paris's most famous street. It was the second Saturday gathering of a wider protest, now in its 11th day. It began on November 17th, amid less violence but in greater numbers when the yellow vests kicked off a protest against a hike in the fuel duty that's contributed to a 16% rise in the price of diesel this year. Over the next few day, many of the barricades remained in place, manned by protesters wearing the high visibility jackets that are obligatory for motorists in France. Borne as a call to action on the internet, the movement is in the hands of no single union or political party. Its focus, broader than just the cost of petrol. Its chants and placards aimed at the cost of living in general and the liberalizing policies of the French President, in particular.</s>UNIDENTIFIED MALE (Through a translator): We are very disappointed by Macron. I voted and believed in Macron, but I regret having voted for him. If I had to do it again, I would never vote for him.</s>UNIDENTIFIED FEMALE (Through a translator): We done eat as we'd like to every day. It's not normal. How long will this last? I think it's not normal, so the protesters should continue.</s>BELL: In Brussels over the weekend, Emmanuel Macron whose popularity rating have fallen, tweeted to thank the police and condemned the violence which his Interior Minister laid squarely at the feet of the far right. There are calls on the internet for a third Saturday of action next weekend. With opposition politicians accusing Emmanuel Macron of having failed to hear his people despite last Saturday's considerable dint. Melissa Bell, CNN, Paris.</s>QUEST: Mohamed El-Erian is with me once again to put this into context. Brexit, how serious does it seem from your point of view. James Blitz just there saying this is the biggest post-war political crisis, but economically is it significant?</s>EL-ERIAN: It is serious for the UK in two ways. One, it could disrupt the economy. But two, it has sucked the oxygen away from any other policy issue. For the last two-plus years, Brexit has been the only issue. There has been no discussion about competitiveness, productivity, adjusting to do with realities, so it has both a direct and indirect cost.</s>QUEST: And then you look at what's happening in France. Now, President Macron is making great strides to reform France pensions, workers' rights, and all of those sort of things. And this was the predictable result?</s>EL-ERIAN: Right, and this is the problem with Europe is that they need a policy handoff from cyclical growth, to something that lasts longer, think of structurally strengthening the economy and they simply can't do it because of politics. It's true in Italy, it's try you in France. It's true now in the</s>UK. QUEST: Are you worried about Italy? I mean, the government appears to have capitulated somewhat on the budget. But the underlying tension between Italy and the banking system which is my words not yours, a basket case? El-</s>ERIAN: Okay, so I am worried that they may end up in a confrontation with the EU that's unnecessary. So the EU has to give a little bit because Italy needs some growth. The problem is that the Italian politicians have to use it, the space that they are creating in the deficit for pro-growth policies, not just giving things away; so both sides have to address.</s>QUEST: And then, I mean, I realized it's a smorgasbord of Europe, but these are the situations. You have got Britain with Brexit. Macron with these riots, Italy with budget problems and Germany which should be the center of stability moving to a process of increased instability because Merkel is coming to the end of her time. El-</s>ERIAN: Yes, and I would have said, believe it or not, and most importantly Germany. Because Germany has been the anchor. Germany has been the economy driving growth. Germany has been the one that has been able to get agreements on lots of things to keep the Eurozone going. So focus on the Germany issue, it doesn't capture the headlines, but it's really important.</s>QUEST: So to pull the strands together, on both sides of the Atlantic, condemnation - there are deep economic - we are all growing. We are expecting slower growth next year. What worries you? El-</s>ERIAN: So the key issue is divergence. So, yes, the global economy is growing but the divergence is growing. The US actually is going to continue growing at 3%. The rest of the world is going to slow down, and the big question for 2019 and beyond, does the US pull everybody else up or is the US dragged down by the gravity?</s>QUEST: And Donald Trump has everybody exactly where he wants them on trade, because he's got the fastest growing economy? El-</s>ERIAN: Exactly. That's why he is pushing them so hard.</s>QUEST: Good for you, sir. El-</s>ERIAN: Wonderful. Thank you.</s>QUEST: Please, next time, well, it will probably be another millennium before we are both in the same studio at the same time. Well, we always appreciate you just talking to us from the West Coast. El-</s>ERIAN: My great honor. Thank you.</s>QUEST: Now, as we continue tonight, memories of the holocaust are fading. If you look at the studies, anti-Semitic crimes are on the rise. If you look at the facts, a major CNN investigation uncovers shocking perceptions about the influence of Jews in business and finance. And we will talk about it after the break.