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NYSE Prepares to Light Christmas Tree; Trump Cancels Putin Meeting Over Ukraine Situation; Cohen Admits to Lying About Proposed Moscow Trump

November 30, 2018

xfdci QUEST-MEANS-BUSINESS-01

<Show: QUEST MEANS BUSINESS>

<Date: November 29, 2018>

<Time: 16:00:00>

<Tran: 112901cb.k27>

<Type: SHOW>

<Head: NYSE Prepares to Light Christmas Tree; Trump Cancels Putin Meeting

Over Ukraine Situation; Cohen Admits to Lying About Proposed Moscow Trump

Tower; Israeli President: Anti-Semitism “Corrupts Society”; Rappler News

Website Indicted for Tax Evasion; Trump Says He’s Close to Making a Deal

with China; Trump Praises Proceeds of Trade Tariffs; Theresa May: Reopen

Brexit Negotiations and Risk the Unknown; Former ECB President Trichet Says

Brexit Renegotiation is Off the Table; Fed Paves Way for December Rate

Rise; Police Raid Deutsche Bank in Money Laundering Probe; SAP Buys

Qualtrics for $8 Billion, Aims to Combine Data; German Chancellor’s Plane

Diverted Over System Failure. Aired 3-4p ET - Part 2>

<Sect: News; International>

<Byline: Richard Quest>

<Guest: Kurt Campbell, Jean-Claude Trichet, Ryan Smith, Bill McDermoth>

<High: NYSE prepares to light Christmas tree. Trump cancels Putin meeting

over Ukraine situation. Cohen admits to lying about proposed Moscow Trump

Tower. Israeli President says anti-Semitism “corrupts society”. Rappler

news website indicted for tax evasion. Trump says he’s close to making a

deal with China. Trump praises proceeds of trade tariffs. Theresa May

skeptical about reopening Brexit negotiations. Former ECB President Trichet

says Brexit renegotiation is off the table. Fed paves way for December rate

rise. Police raid Deutsche Bank in money laundering probe. SAP buys

Qualtrics for $8 billion. German Chancellor’s plane diverted over system

failure.>

<Spec: NYSE; Christmas; Donald Trump; Vladimir Putin; Michael Cohen;

Reuven Rivlin; Anti-Semitism; Rappler; China; Tariffs; Brexit; Jean-Claude

Trichet; U.S. Federal Reserve; Deutsche Bank; SAP; Qualtrics; Angela

Merkel>

<Time: 15:00>

<End: 16:00>

A Philippines news website “Rappler” is facing tax evasion charges, officials say the company failed to clear almost $3 million in 2015 tax returns from an investment fund. The chief executive has denied the charges.

President Trump gave Melania -- oh, there it was, it was so quick, he might have missed it, a quick peck on the cheek as the two of them left the United States. Well, you’re probably hoping for a warmer reception from the Chinese. Before leaving, he said he was very close to making a deal on trade.

Then again on Twitter, he paints a slightly different picture on Twitter, the president says “tariffs are pouring billions of dollars into U.S. coffers, and there was a long way to go.” U.S. firms with serious exposure to the world’s second largest economy, hoping a deal can be done. According to Market Watch, these firms have the greatest to lose in terms of sales with China.

Obviously, Apple, it manufactures there and returns there, sends -- and of course, it sells there as well. Qualcomm, chips, Boeing, large planes, all waiting nervously to see if China retaliates. Kurt Campbell was behind the Obama administration Give It Asia policy during his days at the State Department.

Now chief executive of the Asia Group, advises companies doing business in China. Good to see you, sir.

KURT CAMPBELL, CHIEF EXECUTIVE, THE ASIA GROUP: Great to be with you.

QUEST: The company QUEST MEANS BUSINESS is planning to do business in China, should we be favorable with their trade or not? What is the outlook?

CAMPBELL: Richard, can you wait a few days? You know, we’ve seen many high stakes, high wire acts between the United States and China. The coming summit between President Xi and President Trump is probably the most important bilateral meeting between these two leaders, between any leaders between the United States and China in decades.

[15:35:00] And I really think there is a chance. These two guys actually get along, the structural impediments right now are all trending towards competition, even confrontation. But I think both of them want to strike a deal. It may be a short-term deal, but I think the president wants to indicate that he can work with President Xi. And so I wouldn’t be surprised if we saw some signs of an easing on the trade front.

QUEST: All right, but are you suggesting it will be a fudge in that sense. That -- you know, I mean, you’re an expert at this, you can -- you can put together anything that looks like a deal, but is actually nothing more than a bit of a wall paper.

CAMPBELL: Yes, look, Richard, it’s exactly right. I think the relationship between the United States and China is trending confrontationally. And I think if I were really making long-term judgment, I would be concerned about the Chinese market. It doesn’t mean that in the short-term, I think the Chinese are going to buy a lot of Boeing jets, a lot of GE engines, a lot of farm and ranching products, I think that’s still on the table.

But ultimately, long-term technology plays, deep-imbedded business decision in the Chinese market, I’d be cautious about that right now.

QUEST: What about this idea that the transactional nature of this presidency -- now, we saw it perhaps never clearer, than with Saudi Arabia over Khashoggi’s murder. How far do you see this president going to make a deal, to get a deal or an agreement done, whatever the price?

CAMPBELL: Look, I think the Asian countries generally at the outset, Richard, thought they had Trump figured out, that he was simply transactional, it’s just finding the right price. But I think what they’ve come to understand is that he is more complicated. There have been a couple of deals, prospective deals that have been floated between the United States and China, which would involve essentially a Chinese-buying mission for American products.

But each time, the president has said that’s not good enough, it’s not enough, we need to see some structural changes inside China, and there are some of it, his advisors that are saying no deal is good enough, and that ultimately China and the United States have to separate a bit.

QUEST: A question, the president’s statement, his tweet about billions and billions of dollars coming in, in tariffs and taxes. Now, that’s transactional, that is looking at tariffs and taxes as a revenue-raising operation, rather than as an operation of trade policy.

CAMPBELL: Yes, you know, if you’re looking for a high grade in the economics class, I think the president would probably disappoint you. He focuses almost exclusively on bilateral trade balances, all economists would say that’s not a very good measure. He also is looking at his tool of choice, which is these sanctions, and tariffs, which I think everyone --

QUEST: Right --

CAMPBELL: Understands ultimately impedes trade and impedes the accumulation of wealth.

QUEST: Kurt, I implore you to come back again please, and help us understand these things as we get more details, not only from G20, but a potential deal.

CAMPBELL: I look forward to it --

QUEST: We’re very grateful --

CAMPBELL: Thank you --

QUEST: Thank you. And now, as we continue tonight, Jean-Claude Trichet; the former head of the ECB, come on in sir, good to see you --

JEAN-CLAUDE TRICHET, FORMER PRESIDENT, EUROPEAN CENTRAL BANK: Good to see you --

QUEST: We have much to talk about, Brexit, borders(ph), banking, economies, have a seat.

[15:40:00] (COMMERCIAL BREAK)

QUEST: Britain’s Prime Minister Theresa May says there can be no extension of next year’s Brexit deadline, the article 50 deadline. She says extending it would make the old deal invalid. She means the deal, she’s just turning right in Brussels. Now, the Prime Minister is pushing back against re-opening the Brexit deal with the EU.

It is quite just about everybody we speak to who agrees that it’s a mess, and it’s a mess that potentially could get worse or probably will. Joining me now in the C-suit, the former ECB President Jean-Claude Trichet, good to see you.

TRICHET: Good to see you.

QUEST: Thank you, do you agree it’s a mess?

TRICHET: Yes, I mean, it was a bad decision, obviously, we have to all organize that, that I’m not surprised that we made it through a very difficult and I would say painful fashion.

QUEST: OK, so, the deal -- if the British parliament doesn’t pass it, then they’re going to be coming back to the Europeans to say, tinker with it, renegotiate it. What would your advice be?

TRICHET: No, I think negotiations seems to me something which is totally out of the table. I would say in that case, we are -- we have probably the choice between the new referendum or new elections, and then we will see what happens. That depends on the Prime Minister, and perhaps also on the labor position and also on the conservative position. I mean everything is a political --

QUEST: But tell me, if you are Europe --

TRICHET: Yes --

QUEST: And you want the U.K. to stay in, now is the chance for you to start to play your own policies, to ensure --

TRICHET: I mean, all the 27 are eager for the U.K. to stay. You remember I said, this is of the U.K., there was not a single other country calling for the U.K. to leave. The U.K. created its own problems which are two- fold. One is simple Brexit with the deal as has been negotiated. The costs for the U.K. is going to be -- is very significant, very substantial.

Perhaps 2.5 percent, 3 percent of the GDP, if there is no deal, it is according to the Treasury, according to the Bank of England, something like 9 percent of the GDP, between 8 and 10. So it’s a gigantic mess, that’s obvious.

I noted with some -- I would say hope that Theresa May said, we have three options, in case it is not adopted, either we have no deal or we have possibly remain. And of course, she mentioned that in any case, the deal had to -- her deal had to be adopted.

QUEST: Yesterday, Jerome Powell spoke and sent the markets roaring like a rocket, today the Fed minutes came out, and they were up to -- and it was all talking about being more flexible. And from what you see of Fed policy at the moment, did it look as if they were on an automatic trajectory rather than data dependent?

TRICHET: No, they always said that they were data dependent --

QUEST: But we all agree, we always have --

TRICHET: But I mean, they had forward guidance which was quite clear, and it seems to me that they have decided to stress the fact that there were data dependent because I said to Chairman Powell, they are close to what would be considered by themselves by the Open Market Committee as neutral rates.

QUEST: So do you think, but --

TRICHET: Well, see, I mean again, what counts are not necessarily on the rhetoric, what counts are the action. And we will see exactly what they will decide.

QUEST: When you --

TRICHET: But I have confidence in the Federal Reserve, they proved that they were very reliable in the past and I have full confidence for the future.

[15:45:00] QUEST: When you were president of the ECB, how aware were you that every word you spoke was interpreted as being, is he going to raise rates --

TRICHET: No, they --

QUEST: Or lower rates?

TRICHET: No, the danger of course is that there is a tendency to over assess, over interpret what you’re saying. It might have been a little bit of the case for Chairman Powell, and the last time he spoke, it was considered very hawkish rhetoric, which I trust was not his own intention.

And this time, it has been considered incredibly dovish, which again, I trust is not necessarily his intention. What counts, again, is the action, the decision.

QUEST: The Deutsche Bank is in the news again for a scandal, Rana Foroohar earlier on the program says that the European Banks have been slower and less efficient at restoring their risk assessments and compliance abilities than the American banks. Would you agree?

TRICHET: Well, first of all, in the U.S., the financing of the economy at the time of the crisis was 25 percent on the -- for the banks and 75 percent on the markets. In Europe, it was exactly the contrary, 75 percent from the banks, 25 percent on the markets.

So you see, we are living on both sides of the Atlantic in a different universe on that standpoint of who finances the economy. Which is -- which are the entities that are advancing the economy.

QUEST: Yes --

TRICHET: And I take it that from that standpoint, it was easier for the U.S. to recapitalize their banks because all things being equal, it was three or four times more easy for the U.S. than for Europe. So we have to take that into account. That being said, a lot of hard work has been done in Europe, even if I agree of course that we still have a lot of hard work to do.

QUEST: The G20, I’ve often wonder -- I mean, truth, in 2008 and 2009, London and then Pittsburgh or Philadelphia, they were in many ways the height of G20. But now, you’ve got Saudi Arabia at loggerheads with Turkey, you’ve got the U.S. and China barely speaking, U.S. and Russia, you’ve got Europe and the U.S.

Is it worth --

TRICHET: I mean --

QUEST: What comes out of the G20?

TRICHET: There is still a global economy, totally inter-connected. We are all interdependent, so that is still there. So the governance of the global economy remains absolutely of the essence. It’s true that there are a lot of tensions here and there.

It is also true that the G20 is very efficient when we are in a full-blown dramatic crisis. And it was the case in London and in Pittsburgh, when you are not in a full-blown crisis, well, you have the feeling that things can go on and so forth. And what I would say, we have to be fully aware of is that the situation is very demanding, very dangerous.

That we have all to be vigilant, and it is more or less what we are saying in the report we presented to the G20.

QUEST: Good to see you sir.

TRICHET: Pleasure.

QUEST: Always good to have you here, sir, thank you.

TRICHET: Pleasure.

QUEST: The dying art of the IPO, SAP and Qualtrics celebrate an $8 billion deal. Now, the chief execs of both companies tell me why keeping it among friends was more attractive than taking projects public. IPO over best friends in a moment.

[15:50:00] (COMMERCIAL BREAK)

QUEST: So they rang the bell at the Stock Exchange, SAP and Qualtricks, well, SAP made Qualtrics an offer it couldn’t refuse. The business software giant waved an $8 billion cash at the starter tech company and they both celebrated the union ringing the closing bell earlier this month.

It came after Qualtrics did an abrupt about-face, cancelling its plan debut on Wall Street. And usually companies pop the cork when they go public, not usually when they cancel the IPO. The Qualtrics CEO Ryan Smith says he felt real peace after the private sale.

So both gentlemen -- anyway, this is the CEO of SAP, Bill McDermott spent months convincing Ryan Smith to ditch the IPO and take the offer. They both join me now from Los Angeles. Ryan, what did he say? What did he say that made it so attractive? Because IPO’s are normally a way you get out and run for the hills.

RYAN SMITH, CHIEF EXECUTIVE OFFICER, QUALTRICS: Well, first, Richard, thanks for having us on. I think this one is less about what Bill would say because I’ve been doing this a long time, I started Qualtrics 16 years ago in my parent’s basement and we have a vision of experienced management to take the experiences of the world and power among the Qualtrics platform.

But it’s more about what SAP does. I mean, they’re the only company in tech that’s end-to-end, whether it’s, you know, the CRM, the HRM space or HIRS and ERP, and we believe that products, customers and --

QUEST: Right --

SMITH: Employees are what really matters, and SAP has the full platform. So when I looked at the opportunity, I started talking with Bill, it became much more about what SAP does as opposed to convincing me that, hey, this is a great sell job --

QUEST: All right --

SMITH: Or there’s a number that’s there, and that’s what I’m most excited about, is the future.

QUEST: So Bill, related to this, you gave -- watched Qualtrics become part of the family. How worried are you at this new call for regulation of the digital economy? Not so much as on privacy grounds, but time and again, people are saying there needs to be more regulation for the digital sector. Do you worry about that?

BILL MCDERMOTT, CHIEF EXECUTIVE OFFICER, SAP: Well, Richard, as you know, from covering SAP for a long time, not only are we the market-leading business software company in the world, but we’re also on the front line of making sure the privacy of every consumer that does business with our customers is fully protected.

The British Standards Institute, for example, acknowledged that SAP was the forerunner in making sure that data privacy and protection was absolutely rock solid.

QUEST: Right --

MCDERMOTT: So we’re with you on that data privacy and protection is essential, and we’re proud to be the first and market-leading company in that department.

QUEST: Ryan, is there a gap developing between, if you like, where public demand is and where politicians are, and where digital companies are, and the two are heading inextricably for conflict at some point?

SMITH: Yes, I think -- I think ultimately, we’re all trying to have the same -- the same goal. I think people are coming about it from different ways in different areas, but look, as Bill said, I mean, before we were even considering SAP, I mean, we just had our fed ramp certification, all right? So 27,000 and one. We’re all trying to have this promise of this global internet and technology to be as powerful as it can, but with the safest, the safest platform that exists.

Now, there’s a lot of unintended consequences that we’re watching in tech - -

QUEST: Right --

SMITH: That what happens when 8 billion people use a platform, I think we’re all understanding that. It’s no different than a telephone, and weird stuff happens.

[15:55:00] But I think what we’ve got from an enterprise technology standpoint is we’re gathering data that is allowing organizations to power their business in a way they’ve never done it before. And our job is to make it as secure and as fast and as actionable as possible, so that the world runs --

QUEST: Right --

SMITH: Better. And between SAP and Qualtrics, that’s what we’re able to do and there is nothing else in the world like it.

QUEST: Bill, you got the last word, more deals to come?

MCDERMOTT: Well, the deals -- you know, this is a big one, obviously, and there won’t be any big ones for a while. But what I can tell you, and I think it’s very important for your viewers, Richard.

SAP has 77 percent of the world’s transactions running through our systems. By far, the market-leading software company in the enterprise. With Qualtrics, we now claim a new category --

QUEST: Right --

MCDERMOTH: Called Experience Management. And this is really important. We need to know, as leaders of companies, how our customers are doing in real-time. What is their sentiment about our products? How are our people in the company completely obsessed with the customers outside the company, and what’s the impact of that relationship to the brand?

Qualtrics completes us.

QUEST: All right --

MCDERMOTH: This was a beautiful move, and Richard, SAP and Qualtrics is an unbeatable combination. Thank you for having us today --

SMITH: Yes, appreciate it, Richard.

QUEST: Gentlemen, thank you. I need to leave it there as I bring some news that we’re getting into Cnn. The German Chancellor Angela Merkel’s plane flying to the G20 in Argentina has been forced to turn around and make an unscheduled landing.

Apparently, there was an electronics systems failure according to our affiliate “Rdl”. Asher(ph), our reporter on board says they were flying over the Netherlands when they were told there had been an electronics systems failure, they turned around and went to London -- Cologne, they’ve now been told their plane is getting a replacement part. We will have a profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight’s profitable moment, all you really need to know is that the gains that followed the losses has now gone, and the market is showing losses once again across all the major indices. But it doesn’t really matter tonight, because they’re lighting the New York Stock Exchange Christmas tree, the 95th lighting ceremony.

And on the Exchange, well, Santa Claus is ringing the bell which is all we need to know because that is 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.

(BELL RINGING)

The bell is ringing, Santa’s doing the bell ringing, the day is done.

END

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