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QUEST MEANS BUSINESS

The Chief Executive Of British Airways Promises Compensation To Customers After A Nasty Hack Of Their Systems; Political Points Presidents Trump And Obama Now Sparring Over Who Deserves Credit For The US Economic Boom; In Syria, People Living In The Last Opposition Stronghold Of Idlib Are Awaiting Attack; In Russia, President Vladimir Putin Has Taken A Spectacular Political Gamble And It Appears To Be Backfiring; Basra Protests Continue; Swedish Voters Prepare to Cast Ballots in Pivotal Election; U.S. Presidents 44 and 45 Slam Each Other Over Economy; Apple Warns of Price Rises if New Tariffs Go Ahead; Chairman of JPMorgan International Says a Trade War Could Upset a U.S. Economy that's Been Stronger for Years; The Oscars Scraps Popular Film Category; AlphaPilot Innovation Challenge Pits Humans Against AI; Lockheed Martin Uses Tax Savings to Fund Drone Challenge. Aired: 4-5p ET

Aired September 7, 2018 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Bells are now ringing on Wall Street. Dow Jones well off the lows of the day, but still down. All the

markets and tech is also off in a funny sort of session. And sir, do the honors. One, two, three. Good robust gavel. Trading is now over, pretty

much around the world on Friday, September the 7th.

Cleaning up their mess, the Chief Executive of British Airways promises compensation to customers after a nasty hack of their systems. Political

points Presidents Trump and Obama now sparring over who deserves credit for the US economic boom, and man versus machine, the race of the drones with

artificial intelligence. I'm Richard Quest live in the world's financial capital, New York City, where of course I mean business.

Good evening. Tonight, the Chief Executive of British Airways tells me customers will be recompensed after their credit card data was stolen from

the BA website and servers. In all, it's believed 380,000 customers have been affected. Their card numbers, expiry dates and even security codes

were all stolen over the course of two weeks.

British Airways says that it will compensate anyone who loses money as a result. Shares in BA's parent company, IAG listed in Madrid and London

finished more than 1% lower, although it had been off as much as 3% at one stage.

On "Quest Express," the Chief Executive of British Airways said an investigation is under way.

(BEGIN VIDEO TAPE)

ALEX CRUZ, CHIEF EXECUTIVE, BRITISH AIRWAYS: The ba.com has been running for more than 20 years and we've never had a data breach of this particular

type. What we do know is we now have teams that are working together with our national crime agency and a great, very large team of actual forensic

experts that are going through to try to understand exactly what happened.

But our focus remains with our passengers. We want to make sure that they feel comfortable, all their concerns are being addressed. As you mentioned

before, if any of them have actually suffered any financial loss as a consequence of this event, we will compensate them.

QUEST: Do you know if anyone has had any loss so far? Has anyone been in touch with you to say, yes, they have actually - there has been identity

theft or dishonest transactions?

CRUZ: We have spoken to a handful of passengers who are trying to understand what some charges in their credit card may be, but at the

moment, we don't have any verified accounts of fraud. But we will continue to work with them. We are interested. We want to be able to be with them

when that happens and again, we will compensate them if they have suffered a financial loss as a consequence of this data theft.

QUEST: The public watching globally will be asking the question, and it is not just you, Alex, it would be to any CEO in your situation in a consumer

facing organization, how does this keep happening? What is it that you are not doing or that maybe law enforcement needs to do? How does this happen?

CRUZ: I think it is difficult for me to comment at this particular time on some really interesting and very wide subject like that. I think I'm

afraid my focus at the moment are my customers. We need to pay attention to whether the particular concerns that they have, we need to help them

through this process. I think there will be time later perhaps to think about what else the industry at large could we be doing.

What I do know is that British Airways has been investing on technology more and more over all the recent years. We're absolutely committed to

hiring the very best technology skills in the marketplace. That is what has allowed us to have a website that has not been breached like it has

been over the last couple weeks. And we - our intent is to continue doing so.

So yes, lots of questions and we expect to hear from the investigation how all of this can be neutralized further.

QUEST: And just to finally confirm, BA undertakes it will compensate passengers for what has happened and for how it has happened?

CRUZ: Yes, we need to make sure that our passengers' concerns are addressed. So if any of our passengers' personal financial data, credit

card data has been used fraudulently, we will compensate for that particular expense. There is absolutely no doubt that we will be with them

throughout this process.

QUEST: And finally, I understand your concentration and focus is on customers, but as the Chief Executive of British Airways, how much of a

reputational risk, how much damage do you think this will cause to BA's reputation?

[16:05:01]

CRUZ: Richard, just two weeks ago, we became 99 years of age. Our absolute objective is to connect Britain to the world and the world to

Britain. We do this with a fantastic team of 45,000 professionals. We've gone through a lot. We will be working very hard with our customers, all

of our customers, to make sure we get through this successfully.

(END VIDEO TAPE)

QUEST: That's Alex Cruz, the Chief Executive of British Airways talking to me earlier. Tesla's stock and turmoil, well, just take a look at the day.

The stock fell 6% on Friday. It is down 30% over the last month. And the main driver, two executives are leaving the company. The Chief Accounting

Officer resigned less than a month after taking the job, and Tesla's HR Chief is reportedly not coming back from a leave of absence. And then if

all that wasn't bad enough, there is simply the bizarre.

(BEGIN VIDEO CLIP)

ELON MUSK, CEO, TESLA: I mean, it is legal, right?

UNIDENTIFIED MALE: Totally legal.

MUSK: Okay.

UNIDENTIFIED MALE: How does that work? Do people get upset if you do certain things? Tobacco and marijuana in there, it's all it is. Because

the combination of tobacco and marijuana is wonderful.

(END VIDEO CLIP)

QUEST: That was Elon Musk on a podcast with Joe Rogen. And it's adding to investor concern about the CEO's behavior. Paul La Monica is following it

all. Paul?

PAUL LA MONICA, CORRESPONDENT, CNN: I think we're just accustomed right now to Elon Musk being Elon Musk and his behavior is erratic to put it

mildly. That clip over there we just showed is not going to help restore investor confidence, I think in Elon Musk.

QUEST: Devil's advocate. What is wrong with it?

LA MONICA: What's wrong with it is that it is just a little too lax. It is a little too loose. I think that he needs to be more serious

considering that he is running a company that has continued to lose money. He pledges that they will one day be profitable. He hasn't done so yet.

As someone who is going to invest Tesla, you're not going to be inspired but again, if that was the only issue that we had with Elon Musk right now,

that he was smoking a joint in a podcast, that would be not that big of a deal. This comes at a time where he has accused one of the rescuers in the

Thai mining rescue of being a pedophile. He has done increasingly erratic things like tweet that he is going to take his company private only to a

few weeks later say, "My bad, we're not going to do that after all." He's had a brain drain with executives and he has no Chief Operating Officer.

There is no Sheryl Sandberg-type person to put him in his place.

QUEST: So the loss of these two people, the Chief Accounting Officer, the HR person not coming back, who knows why, but the Chief Accounting had only

been there a month. That's more serious because that suggests either poor judgment on who they chose, he didn't fit in or they didn't fit in or they

have found something and they didn't like it.

LA MONICA: It could be one of those, if you believe what the Chief Accounting Officer said in the SEC filing that came out, it was just that

he seemed to not really appreciate all of the pressure and scrutiny that would come with being a part of this company and it seemed like a thinly

veiled criticism of maybe Musk's behavior as of late. There was nothing in there about problems with the books or what have you.

QUEST: But for a stock to fall 30% in a month is dramatic and worrying. Particularly when most supply side analyst will tell you that the pressure

is on the down side.

LA MONICA: Yes, Wall Street has grown increasingly skeptical of Tesla, the company as I pointed out has yet to make a profit. You have a lot of

institutional investors that seem to be nervous as well. One of their big money manager holders has already urged him to stop tweeting as much. I

think it would probably be a good idea if Musk maybe took a Twitter vacation so that he didn't have to be as in the public spotlight.

And again, it all comes back to the point of this is a man who almost brags about how busy he is, "I sleep at the factory." But he's got time to go on

a podcast and smoke a joint?

QUEST: I was going to say something, but I don't need to. Thank you. It's Friday. Tesla was one of the factors that drove the markets. There

was the most extraordinary day. If you look at around 1:00, 12:00, you see that sharp fall. It was just after "Quest Express" and it was when Donald

Trump made some comments on Air Force One about being ready for more tariffs, and literally in a second, spot the smidgeon of green just above,

the market was actually up until those comments, and then it turned turtle, it never really recovered, but we were off the lows of the of the day.

So it was a strong jobs report as well. 201,000 new jobs, unemployment stayed low. Wage growth was strongest since 2009.

[16:10:07]

All in all, the American economy is doing undeniably well. And as we see here, unemployment compared to the President's approval on economic issues.

Unemployment is going down, but the approval goes down further. The President's handling of the economy is in purple, generally one rises as

the other falls. This seems to be flat. Remember, in spite of an economy that is at full employment and that is what President Trump is looking at

when he says he doesn't get enough credit.

Mark Preston is CNN's senior political analyst who joins me now. On this issue, I was reading the articles that you and others have written. Is it

fair not to give - or isn't it unfair not to give President Trump more credit for the excellent state of the US economy?

MARK PRESTON, SENIOR POLITICAL ANALYST, CNN: Well, a couple of things. One is, he does a very good job, Richard of giving himself his own credit.

So far be it from me to pile on with the adulation. Look, in many ways, he should get some credit for where the economy is going right now. But just

as everyone who is watching your show right now, just as you know, just as we all know the economy becomes very cyclical.

If you want to go back to the end of George W. Bush's presidential term, Barack Obama inheriting a world financial crisis and it basically took

eight years, right, to climb out of that hole. Who is to benefit for that? Well, of course, we all are. But politically, President Trump is.

QUEST: Okay, so we have this extraordinary day today where President Obama, former President Obama, well, you tell me. He has made veiled

comments in the past. But today was the first time that President Obama came out, he was campaigning, but he also attacked.

PRESTON: He also attacked - it was classic Barack Obama. Somebody we haven't heard very much from since he left office following the tradition

as we have from past presidents to allow their successor some breathing room to be able to work, not only in domestic issues, but in the foreign

policy sphere. What we saw from Barack Obama today was him actually coming out to your point calling out the racism that we have seen, the fostering

of those - of neo-Nazis. And quite frankly, Donald Trump in the actions and words that he has said as the Chief Executive Officer.

Now, Barack Obama is somebody who does speak very plainly and very truthfully. And he put the blame on those in the audience. If you don't

like what President Trump is doing, that's is on you. If you don't like what the Congress is doing, that is on you. If you want to make change,

you need to get out and vote. Now, those are very simple but they are tough words and Barack Obama appears to be back on the campaign trail.

QUEST: But, the fascinating point is, the Democrats frankly do not have a strong voice anywhere in the sense that there is no person that you point

to and say that is the leader, that is the person we're going over the hill behind. Now, does he effectively for the midterms, does he become that

person by default?

PRESTON: He will be and I'm glad that you put in the terms of a timeframe because there is a voice that is needed, a national Democratic voice that

people can rally around. They can rally around issues, they can rally around causes, but it's nice to have that voice. Barack Obama could fill

void.

Once you get past the midterm elections though, you're going to will have about 24 voices, these are all Democrats who think that they should be the

Democratic nominee and run against President Trump in 2020. We get past the midterm elections at the beginning of November, everyone around the

world is going to start learning very quickly who some of these senators are, who some of these mayors are, who some of these congressmen are who

think that they can take on Donald Trump.

QUEST: Mark Preston, thank you. Good to see you, sir. Have a good weekend.

PRESTON: Thank you, sir. You too.

QUEST: As we continue on "Quest Means Business," the chairman of JP Morgan International tells me the US economy hasn't been this strong in

years. And there is a very solitary warning though on trade and tariffs. And we head to Syria, Iran, and Turkey and Russia say there must be a

political solution, but not before one last battle. The latest on the horrific seven-year conflict.

[16:15:16]

Tonight in Syria, people living in the last opposition stronghold of Idlib are awaiting attack. All despite a joint statement by Iran, Russia and

Turkey saying there is no military solution to the conflict; it can only be resolved through political means. The UN estimates around 400,000 people

have died as a result of the war so far.

The World Bank has been counting the economic costs of the seven-year conflict for those remaining in the country. It pales of course in

significance in relation to the loss of life and the suffering, but significant nonetheless because it does paint a picture of desperation for

the region.

So, $226 billion as part of the GDP has been wiped out over 2011 to 2016, four times the country's GDP just a year before. Around 7% of Syrian

housing stock have been lost by the end of last year.

CNN's Fred Pleitgen is in Damascus in Syria with more. Fred, I emphasize firmly that we cannot equate dollars counting dollars with counting the

lost life and the misery and the genocide that seemed to have taken place. But the reality is Syria is a regional player of size and their economy is

significant if for no other reason.

FRED PLEITGEN, CORRESPONDENT, CNN: Yes, I mean, you're absolutely right, Richard. And of course also the rebuilding process that Syria will need

now. And you're absolutely right, it is one that is gigantic. I've traveled to so many places here in Syria. There are so many towns that are

just completely destroyed. The rebuilding process is going to also be very important as far as with stability not just of Syria and the future is

concerned, but really of many other places in this region as well.

So it is a massive issue and certainly also one where the international community is having a huge trouble dealing with all of it and how it wants

to start going about all of this. Now, you've just mentioned of course, one other thing that's going on is that the Civil War is still raging in

Syria even though the Syrian government feels that it has now gained the upper hand and that it might be coming to the end. And the government here

is now looking towards what it can do to rebuild in the future. Here's what we saw.

(BEGIN VIDEO TAPE)

PLEITGEN: Even as air strikes indicate an offensive on the last major rebel held area may be imminent, the Syrian government is inviting

international businesses back to the country. Putting on its largest trade fair since the Civil War started. The organizers say representatives from

almost 50 countries are attending.

BISHR RIAD YAZIGI, SYRIAN TOURISM MINISTER: I think it would be attractive for all people around the world to see Syria, to see the real Syria.

[16:20:07]

PLEITGEN: Many of the companies showing of their products come from nations supporting the Assad government, like Russia, China and Iran.

SHAHRAM ALAVI, SABA BATTERY, IRAN: They are going to have a long term cooperation - this country and businessmen in Syria. Now is a good

opportunity to us.

PLEITGEN: The Syrian army backed by Russia and Iran has been making massive territorial gains. Cornering the rebels in Idlib province in the

north on the brink of defeat.

The Syrian government is trying to send a clear message with this trade fair. The war is coming to an end. Its forces are winning and now, they

are getting ready to move into a new phase of this conflict.

That new phase is reconstruction of the many destroyed towns and cities in the country, but with Bashar Al-assad and his Russia and Iranian allies

accused of war crimes, which they deny, many western countries and companies are reluctant to get involved. From Syrian official, defiance.

FARES SHEHABI, SYRIAN FEDERATION OF INDUSTRY: Things are going ahead and we are very optimistic. We want international companies to come and invest

in this country. It is safe, it is secure.

PLEITGEN: While the Damascus trade fair is a bright spot, for Syria's government, there seems no doubt the road to reconstruction will be long

and difficult for this war-torn country.

(END VIDEO TAPE)

PLEITGEN: And it certainly is long and it will be very difficult, Richard. One of the things that we've seen in and around the country, traveling here

in a lot of these towns that have been destroyed is that many of the places even if the fighting ended there, say four or five years ago, a lot of

those places still very much in ruins. And there are some people who are trying to come back, who are trying to rebuild their houses. There are

some markets that are being rebuilt, but the really large projects, the whole cities, the whole housing blocks, that is something that we really

haven't seen very much of because of course there is a big lack of funding to try to get anything going because of all the political ramifications

around the Syrian crisis, Richard.

QUEST: Fred, thank you. Thank you for staying up late for us tonight and bringing us that report.

In Russia, President Vladimir Putin has taken a spectacular political gamble and it appears to be backfiring. Pension reform is seen as a third

rail of politics in most countries. Try and change a pension scheme as many leaders have found to their cost, and you will end up in deep trouble

with your electorate. And this appears to be the case even for a leader seemingly invincible as President Putin.

Unpopular reforms have sparked outrage and revealed his popularity is not untouchable. CNN's Matthew Chance is in western Russia.

(BEGIN VIDEO TAPE)

MATTHEW CHANCE, CORRESPONDENT, CNN: At 59, these should have been Evgevny Pankov's last few months of work. After a lifetime of back breaking labor

and carrying in the construction industry.

I really feel my age, he complains. And my joints hurt, especially in the morning. But Evgevy's dream of taking it easy has now been shattered. The

Russian government's decision to raise pension ages from 60 to 65 for men means his retirement has to be put back. Particular galling in a country

where average male life expectancy is just 67.

EVGEVNY PANKOV, TRACTOR OPERATOR (Through a translator): I'm not just upset, I'm outraged. Now, I'll be forced to work even longer depriving my

loved ones, my grandchildren of my attention.

CHANCE: Evgevny here is just one of the millions of Russians who have been adversely affected by these controversial pension reforms. In fact, the

issue has united young and old in opposition across the country. Raising concerns in the Kremlin that the plight of ordinary workers could actually

undermine the popularity of the country's president.

Amid nationwide protests and plunging approval ratings, Vladimir Putin made a televised address to soften the reforms, specifically for women. But

also to insist that they must go ahead.

VLADIMIR PUTIN, PRESIDENT OF RUSSIA, (Through a translator): In the long term, If we hesitate now, it could threaten stability in the society and

hence national security.

CHANCE: It is not going down well with those affected most. The government says and Putin says that they have no choice, that they don't

have enough money to pay the pensions unless they reform the system. Do you understand that? Do you believe the government when they tell you

that?

PANKOV (Through a translator): No, I do not believe it. Comparing the incomes of high ranked officials, they have simply unimaginable salaries. I

do not believe that there is no money. It is a lie.

CHANCE: For many Russians, the pension issue has further undermined their trust in the Kremlin and its leader. Matthew Chance, CNN, in Krasnovodsk,

Western Russia.

[16:25:16]

QUEST: So from an economy in trouble to one that is booming, the United State, the question of course whether it belongs to President Trump or

President Obama's economy. Both men are claiming credit. We will find out where the balance should be.

Hello, I'm Richard Quest. There is a lot more "Quest Means Business" to come here in a moment. When Presidents Obama and Trump spar over who gets

credit for today's growing economy, and I'll be joined by our chief US correspondent John King for perspective into it all. It sounds like

science fiction, a race of the drones against humans and computers for that, this is CNN and here on this network, the facts always come first.

President Trump is taking a frantic manhunt in Washington to a whole new level. He wants the Attorney General Jeff Sessions to investigate the

anonymous opinion piece in the "New York Times." The claims of a secret resistance inside the administration. Donald Trump is calling it a matter

of national security.

Meanwhile former US President Barack Obama has ripped into the Republicans and the current President. In a scathing speech on Friday, Mr. Obama

wondered aloud what has happened to the Republican Party telling a college crowd in Illinois that President Trump is capitalizing on resentment that

politicians have been fanning for years.

Protests in Basra continue today. The Iraqi city has seen its water supply contaminated by salt water and are suffering long term power cuts. All of

it during days reaching up to 50 degrees of Centigrade. Protesters also are demonstrating its corruption and unemployment in the city.

Refugees and immigration are major issues taking up to Sunday's national elections in Sweden. Those topics have helped popularize the once obscure,

Sweden Democratic Party.

[16:30:16]

The far-right looks poised to make major gains in the parliament despite its near-Nazi routes. The shift in political landscape has already forced

many liberals and not just parties to adopt more conservative policies.

President Trump frequently boasts on Twitter about his economic success, particularly when it comes to creating jobs. Speaking today, President

Obama has something to say about who deserves credit for the current jobs number.

(BEGIN VIDEO CLIP)

BARACK OBAMA, FORMER PRESIDENT OF THE UNITED STATES: When you hear how great the economy is doing right now, let's just remember when this

recovery started.

(CHEERS)

I'm glad it's continued, but when you hear about this economic miracle that's been going on, when the jobs numbers come out, monthly jobs numbers

and suddenly Republicans are saying it's a miracle! I had to kind of remind them actually those job numbers are the same as they were in 2015 and 2016.

(END VIDEO CLIP)

QUEST: President Trump said he watched the Obama speech but fell asleep, adding that his recovery was a rocket ship compared to the weak years under

Obama. What a week, what an absolute week. Whether it's the anonymous article, whether it's the Supreme Court nominee hearings, and now of

course, President Obama jumping into the frail.

Our chief U.S. correspondent John King is here. And John, we need you here tonight to help us make some sense of it. How significant is it that

President Obama is taking on President Trump pretty much at that.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: It is very significant if you consider the timing of the moment. We are now as of today 60 days from the

midterm elections, 60 days from a vote in America that will decide whether Republicans keep full control of the government in Washington or whether

Democrats can at least pick up the House of Representatives, perhaps the Senate, but the most likely target, the House of Representatives which

would change everything in American politics.

So it would be full stop on the Trump agenda, it would be for certain investigations of the Trump presidency, perhaps the impeachment of the

president. So President Obama, the most popular national figure in the Democratic Party coming off the sidelines, he's been largely missing,

Richard.

As you know, the economic poke there, President Obama is right to a degree, the 95 consecutive months for job growth in the United States, that's a

remarkable record. President Trump has only been in office 19 months. So President Obama, as you know better than I, his administration or it

happened during his administration --

QUEST: Right --

KING: Anyway. The bricks of the growth and the Trump tax cuts, the Trump deregulation, it certainly added steam to the economy. But what the

president was trying to do to the former president is get under the current president's skin because he wants to have a sparring match with him from

now to the election.

President Obama believing that if his whole coalition, young people, African-Americans, Latinos and suburbanites turn out 60 days from now, the

Democrats will at least take the house and put the brakes on Trump.

QUEST: And as for the anonymous, what was interesting though, the anonymous article, President Trump -- sorry, President Obama, he did what

many in Washington are saying is, hang on a second, you know, it's not right that even though he may be doing it in our favor -- or no, against

us, it's not right that somebody is subverting the elected president.

KING: And what was interesting about that is the President Obama, prominent, Democrat, a man whose policies, a man who personally is not

liked by many Republicans, was using that, Richard, to appeal to Republicans, to appeal to some of the people who might have voted to make

Donald Trump president.

The Democrats will win house seats this Fall, how many depends on how many Republican voters, particularly in the suburbs, suburban women, college-

educated men decide I can't take this anymore, I need to put the brakes. So President Obama was saying this is not normal.

You have somebody in the administration running anonymous editorial, saying, we have to come to work every day to stop the president from his

angry impulses, to stop the president from policies that we think are reckless. And then he talked about the -- he said a coddle, using a coddle

to fight --

QUEST: Right --

KING: The Attorney General, essentially trying to say, even if you disagree with Democrats on policy, some Republicans should come out and

vote for Democrats to stop the president because it's pretty remarkable, there's so much happening to the Trump presidency, we don't stop to breathe

sometimes.

The former president of the United States today said that we live in dangerous times. A former president of the United States saying, his

country, that he left office 19 months ago is in a dangerous place. You can agree or disagree --

QUEST: Right --

KING: But the fact that a former president said that is remarkable.

QUEST: And you know, I've asked David Kirk(ph) and on this program numerous occasions, has he ever seen anything like this before? And the

answer is, well, you can imagine what the answer is. And I suspect they're getting the same answer from yourself.

But as the events of this week progressed, you've never seen anything like it before, but how paralyzing is it to the White House from what you're

hearing?

KING: Well, there's no question that this president and his Republican Party controls everything, remember. Controls everything. Yes, they cut

taxes, yes, they're deregulating, but are they getting more done? Consider the power that they have, a unified United States government, we have not

had that since just after Barack Obama was elected, they passed Obamacare, they did some other things, then the Republicans took over.

Yes, the Republicans passed taxes -- passed tax cuts, excuse me, but what other big things are they doing? Because this administration is constantly

in this internal chaos, internal policy fights, internal civil war with its own staff about not only about policy, but --

QUEST: All right --

KING: Have the temperament for the president. And so, it is in some ways, it is stopping the president from getting stuff done and the man most

responsible for it is the president himself, the question is 60 days from now when America votes, the American people say we thought we were going to

get big change with Donald Trump, we want to put the brakes on it or does he get to continue with all Republican Washington?

QUEST: I promise you, I won't hold you to this, come the day after the mid-terms. But what's your gut-feeling for the mood in the nation?

KING: If the election were held today, the Democrats will take back the House, I can't answer the Senate, it's so different, there are state-wide

elections as opposed to district-by-district elections, if the election were held today, I am confident --

QUEST: Right --

KING: The Democrats will take back the house by how much? Probably 10 or 12 seats right now, but it could get bigger than that with the president's

approval rating has started dropping again, and it's a accumulative thing, it's not just Michael Cohen, it's not just Mueller indictment, it's not

just all these, it's the accumulative effect that especially busy American voters, suburban women especially saying I can't take this anymore.

Now, the president has 60 days to turn that around, but if it stays like it is now, Democrats take the house, the Senate remains very closely --

QUEST: And --

KING: Divided either way.

QUEST: And John, finally, when you talk to Republican lawmakers, senior Republican officials, the sort of people in some sense is that President

Obama was talking about today when he said where are you and what are you doing and why aren't you doing something about it.

These are intelligent men and women at the top of the game, they know what's going on in the White House. Why are they not doing more?

KING: Power, in a word power. They are -- they have confirmed one Supreme Court Justice, Richard, they are about to confirm a second unless something

else happens. They have cut taxes, something they couldn't do with the Democratic president.

They have passed on deregulation, they have made it a pro-business environment, they are advancing other Republican priorities and they have

made this Faustian bargain that we're going to try to pretend that White House is not on fire.

We're going to pretend all that chaos doesn't exist, we're going to put on our blinders and get the things done that we've wanted to do for years and

have been unable to do. Right now, with 60 days left, they don't want to publicly fight with this president because if his voters don't come out,

they'll lose even more seats.

So this is about power, and at the moment survival.

QUEST: John King, excellent to have you with us tonight on QUEST MEANS BUSINESS, thank you sir for taking the time and --

KING: Great to see you --

QUEST: Have a good weekend.

KING: I shall try, you too, sir.

QUEST: Now, the market showed us today quickly how they can turn on different parts of Donald Trump's agenda. I talked about it earlier, but

really, you've got to look at that. Now, OK, the day starts down and it's all about jobs, and then the jobs numbers come out and things look a little

bit better.

And then look at the smidgen of green, it's just about half past 11, a third of the way through the graph, and then the Dow drops 100 points after

Donald Trump told reporters they have new tariffs ready to go against China. In the past few minutes, Apple has told U.S. trade representatives

it will have to raise prices if the next round of tariffs come into effect.

Apple shares dropped at the end of the trading day. And that is the way the day looked for the Dow 30. The Chairman of JPMorgan International says

a trade war could upset a U.S. economy that's been stronger for years. Jacob Frenkel told me, there could only be losers in the U.S.-China trade

war.

(BEGIN VIDEO CLIP)

JACOB FRENKEL, CHAIRMAN, JPMORGAN INTERNATIONAL: We are in the midst of an attack on globalization. We are in the midst of dangers of fragmentation.

So many hundreds of millions of people have been elevated out of poverty just because of trade commerce interaction.

And I think that once we have the slippery slope of trade skirmishes -- I will not call it yet trade war -- of trade skirmishes, then one needs to

make sure that one goes back to the negotiating table and find the solution.

But it's a lose-lose proposition if you get into a war.

QUEST: Jacob, you can't see what I am about to show, but I will describe it. Jacob, every look at the market today, the market was higher and then

all of a sudden as the chart shows it, it fell very sharply like it fell off a cliff.

[16:40:00] DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Two hundred billion dollars, we're talking about could take place very soon depending

on what happens with them. And we'll certainly extend it, it's going to be up the chain.

But we've taxed them $50 billion, that's with technology. Now, we've added another $200 billion -- and I hate to say this, but behind that there's

another $267 billion ready to go on short notice if I want.

QUEST: So are you now worried about exactly that, that the U.S. is hell- bent on worsening the tariff situation with China?

FRENKEL: Well, the two major countries today are the United States and China, and therefore, it is so dangerous, the markets and the economies

would not like to see a trade war. Some people say that it is just a negotiating strategy, but I think it is a very dangerous game.

I really believe that the main issue for the United States and for that matter for Europe is to address the issue of Intellectual Property Rights

especially in the area of technology. This has to be addressed and that it should not be done in a bilateral level between the U.S. and China alone --

QUEST: Right --

FRENKEL: And it should not be imposed across the board aluminum, steel, we are hurting our own airlines. The trading chain, the production chain is

so complex that when you think that you are putting a tariff on one element, you are really impacting so many other components.

And therefore --

QUEST: Right --

FRENKEL: Yes, I can see why the markets do not try to see a trade war especially with China, and I really hope that this is a wake-up call. It's

not a healthy situation to have a trade war between the two major countries. There's no question about it in my mind.

And I think the markets are speaking loud and clear. Although, we should also take into account that the situation today of the U.S. economy is

better than it has been for --

QUEST: Right --

FRENKEL: Many years, growth has resumed, labor markets is very good, jobs are being created, the day up to day just underscores it, unemployment is

low, wages, earnings are up, even inflation is --

QUEST: Treasury --

FRENKEL: Now target, therefore the Fed should raise the rates, continue with the normalization, but the background is a strong economy.

(END VIDEO CLIP)

QUEST: Jacob Frenkel from (INAUDIBLE) Conference. Coming up, the Academy Awards announce a new category for most popular film, now it was only last

month, today they postponed or cancelled it. QUEST MEANS "SHOW" BUSINESS, bring on the music right after lights.

[16:45:00] (COMMERCIAL BREAK)

QUEST: Plans to add an Oscars' category for the most popular film have proved to be, well, unpopular. Now the idea has been scrapped or at least

postponed, shelved, whatever you want to call it, put on device.

It was supposed to be one of the blockbusters audiences loved, but they're not artifacts enough and elitist enough to the -- to get the best picture

award. That's my -- that is my comment, that's -- no, it's Chloe's comment, but that's the gist of it, isn't it?

CHLOE MELAS, CNN ENTERTAINMENT REPORTER: I mean, first of all, the fact is the fact, Richard, and nice to see you. Look, last year's Oscar's telecast

was the lowest rated in Oscar's history. That has to tell you something.

So obviously, the Oscars, the Academy, they're thinking what can we do to boost ratings to get more viewership to tune in. Let's have a category for

the biggest blockbusters to compete. Now, there was a lot of backlash, celebrities including Rob Lowe took to social media, blasting the Academy

for this clearly transparent ratings ploy.

Now, they've back-pedaled, which makes I think the Academy look even worse. What a wet noodle to have to go from, OK, we're going to do this, and now

maybe we won't. They haven't even definitively said that they're not going to make a decision.

QUEST: Make a decision, but it shows that they were -- even to come out with the unpopular or the popular cast, the unpopular popular category.

They must be so out of touch with their members and with the acting community, that they didn't realize this was a horrible idea.

MELAS: OK, well, let's also take a look back at even the last few years. The Academy has come under intense criticism and scrutiny -- remember

Oscars is so white, and now they have done their best to try to diversify their voters which have been reportedly predominantly white and male.

Now also, you know, when you look at the last year's slot of movies, they were on what? Indie types of films. There're obviously titanic and there

have been bigger blockbusters in the past that have been nominated in those best picture categories. Usually, the movies that do the best in the Box

Office aren't the ones that are being nominated in these Oscars categories.

QUEST: We don't know what they're going to do next year in terms of trying to get the rating up, the most popular was unpopular in popularity and did

not got -- has Oscars still got it?

MELAS: I don't really think so. I mean, obviously, I enjoy going to the Oscar's parties and to watch. But they do seem very out of touch. And I

think, look, it's the lowest viewership last year in Oscar's history, and I know that a lot of people in my circle didn't tune in to watch.

So I'm not surprised that they're doing this to attempt to get --

QUEST: Right --

MELAS: More ratings, but it's very transparent.

QUEST: Great to have you with us tonight, thank you --

MELAS: Thanks.

QUEST: As we continue tonight, Republican tax cut left U.S. companies with an unexpected cash boost. Some gave it to shareholders or reinvested it.

Lockheed Martin is doing this.

(BEGIN VIDEO CLIP)

(DRONE RACING)

(END VIDEO CLIP)

QUEST: So way cool, I'll speak to Chief Executive about drone-racing league about his tie-up with the aerospace giant.

[16:50:00] (COMMERCIAL BREAK)

QUEST: Look at it all. We live in the age of drones, they fight our wars, they deliver our parcels and they are able to do this.

(BEGIN VIDEO CLIP)

(DRONE RACING)

(END VIDEO CLIP)

QUEST: The drone racing league, these professional pilots navigating three dimensional courses and a million dollars in prize money. The latest

contest and the latest one will pick man against machine, it's called the AlphaPilot Innovation Challenge which has designed the autonomous drones

capable of racing against human-operated vehicles.

The challenge is being funded by the aerospace giant Lockheed Martin, but the money is saved on the 2017 Republican tax cut. Let's talk about this

with the chief executive and the founder of the drone racing league. Good to see you, sir.

NICK HORBACZEWSKI, CHIEF EXECUTIVE OFFICER, DRONE RACING LEAGUE: Me too.

QUEST: Please, this is one of the machines?

HORBACZEWSKI: That's one of the drones, yes --

QUEST: So this is one of the machines, and different Nicolas, how different is this to the drone that I might have at home?

HORBACZEWSKI: Extremely different. So this is a high performance racing craft. So this drone is called the racer 3, we use it in all of our races

--

QUEST: Does it even have to be the same one?

HORBACZEWSKI: Everyone uses the same one, level-playing field. So we see some of the wing, you know that they're the best pilot. And this drone

goes from zero to 80 miles an hour in less than a second. So this is a very high performance three-dimensional race craft.

QUEST: And this is really interesting. This is not a -- so this is not a test of the drone, and like in Formula One, what can you do to the car?

HORBACZEWSKI: Right --

QUEST: This is a test of the pilot and what -- how they fly the machine.

HORBACZEWSKI: Absolutely. So the drone racing league is the global professional circuit for drones, take the best parts in the world, we're

giving these high performance crafts, we put on race --

QUEST: It's heavy --

HORBACZEWSKI: It's all over the globe, yes, they're quite heavy. And really, what we're looking to find is the greatest drone racing on the

planet. So at the end of our season, when someone is crowned the world champion, you know, they truly fly drones better than anyone else on the

planet.

QUEST: How difficult is it? I mean, I'm tricked -- I have to say, I'm pretty used to flying, I'm traveled many times.

HORBACZEWSKI: It's extremely difficult, these pilots demonstrate phenomenal skills. So they're navigating complex dimensional courses at

over 80 miles an hour, they're making not only the decisions of how to fly the drones, but they're making strategic to sourcing how to race when they

pass and how to win.

QUEST: And the decision to go now, man against machine.

HORBACZEWSKI: Yes --

QUEST: So how will he -- it's going to use AI, how will the machine-driven one be flown?

HORBACZEWSKI: So we are going to design a special drone that has a GPU on it that can be prudent in advance. So teams will design an AI framework

with a load onto the drone, and then once the drone is airborne, it has to make all the decisions, how it navigates the course and how it competes in

the races.

QUEST: How far off are you from doing that?

HORBACZEWSKI: So we're watching next season. So starting next year, you'll see --

QUEST: Oh, yes, but I mean, how sophisticated will that drone be in making its decisions and handling its race?

HORBACZEWSKI: So it's very interesting as I think initially those drones will be very slow compared to humans.

QUEST: Right --

HORBACZEWSKI: It'll take them a long time to navigate that. But part of the AlphaPilot Innovation Challenge is meant to accelerate that

development. And we're hoping that by 2020, you'll have drones that are directly competitive or potentially even better than humans at flying these

high-speed races.

QUEST: The competition for viewers -- because it's obviously this advertising behind --

HORBACZEWSKI: Yes --

QUEST: The sponsorship behind it, those television rights and revenues --

HORBACZEWSKI: Yes --

QUEST: Behind it. What are the numbers that show when you go head-to-head against major events like the NFL or other sporting events?

HORBACZEWSKI: So the drone racing league is broadcasting in more than 75 countries --

QUEST: Right --

HORBACZEWSKI: And we've had over 55 million people watch us on TV over the last year. So it's incredibly exciting, and you know, there's a fan base

who deeply engages with these kinds of technology-enabled, exciting futuristic sports.

[16:55:00] And it is, it's different. It's a very different offering from your traditional, your NFL or your --

QUEST: But do you stand up in terms of ratings?

HORBACZEWSKI: Yes, I do --

QUEST: Do you hold your own against the more traditional sports?

HORBACZEWSKI: Absolutely, we're broadcasted on the most premier sports networks around the world, we're on "Espn" here in the states, "Sky Sports"

in the U.K., "Sieben" in Germany, "OSN" in the Middle East. So we're finding audiences --

QUEST: And the pilots, the pilots all seem to be young, they don't seem to be old like me.

HORBACZEWSKI: We have pilots of all ages, our youngest pilot is 18 and our oldest pilot is 40, so it's --

QUEST: Forty is the age, the grand old age of 40.

HORBACZEWSKI: Well, it's a relatively young sport, right?

QUEST: Yes --

HORBACZEWSKI: It's only been around for a few years. But I definitely think we've shown the longevity of people's career in the sport.

QUEST: Finally sir, can you fly these things?

HORBACZEWSKI: I can, nowhere near the level of the pilots really --

QUEST: I mean, is it really tough to?

HORBACZEWSKI: It is challenging to learn. The amazing thing is once you learn, so you wait, you fly the drone --

QUEST: Nice to meet you --

HORBACZEWSKI: First person, you put on a pair of goggles and you see what the drone sees, and it's like flying like a bird, it's one of those

incredible --

(CROSSTALK)

HORBACZEWSKI: No, cover it. And you know, one second --

QUEST: Oh, there we go, there we go --

HORBACZEWSKI: Yes --

QUEST: All right, I can't fly, so I have to fly by hound, there we go, thank you very much sir.

HORBACZEWSKI: Thank you.

QUEST: Very kind, I could say. You're going to leave this behind.

HORBACZEWSKI: Yes --

QUEST: Anyway, we have a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment. From Monday, if you're watching it at this time, you'll have missed this by the best part of an hour. Because

from Monday, QUEST MEANS BUSINESS is an hour earlier, 8 O'clock in the U.K., 9'O'clock in central Europe and 10 O'clock heading towards the Gulf

and the Middle East.

Why are we making this change, you may ask? The reason is very simple. By going an hour before, we take you into the last hour of Wall Street. What

we're seeing in the volatility and all the announcements that happened during that time is essentially the excitement of the market.

And we want you to be part of that, too. We also want you to be part of our decision-making process. We want to know what you think concerning

stories. So I'm not going to give away all the secrets, but starting on Monday, there will be a very adventurous and new way that you can have a

direct say on the issues of the day and help us influence what we're saying.

It's all on Monday, it is at 3 O'clock, New York Time, 8 O'clock London Time, 9 O'clock in Central Europe because that's QUEST MEANS BUSINESS for

tonight, I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable, join me earlier on Monday.

END