British Student Sentenced to Life for “Spying” in UAE; Jeremy Hunt: U.K. will not Halt Weapons Sales to Saudi Arabia; Theresa May to Return to
<Show: QUEST MEANS BUSINESS>
<Date: November 21, 2018>
<Head: British Student Sentenced to Life for “Spying” in UAE; Jeremy Hunt:
U.K. will not Halt Weapons Sales to Saudi Arabia; Theresa May to Return to
Brussels Ahead of EU Summit; Gibraltar Emerges as Sticking Point in Brexit
Negotiations; Zuckerberg Tells CNN, He is not Stepping Down as Chairman of
Facebook Amid Growing Calls for Him to Step Down; NHK: Nissan May Face
Criminal Charges in Japan; Trump Thanks Saudi Arabia for Falling Oil
Prices; Italy Faces Sanctions After EU Rejects its Budget; Tech Stocks
Rebound as Facebook CEO Goes on Defensive; CNN’s Matt Rivers Takes a Look
Inside China’s “Silicon Valley”; Market Rally Fades in Final Hour of Wall
Street Trade. Aired 4-5p ET - Part 2>
<Sect: News; International>
<Byline: Paula Newton, John Defterios, Laurie Segall, Samuel Burke, Matt
<Guest: Mark Zuckerberg, Mark Grant, Laurence Boone>
<High: British student sentenced to life for “spying” in UAE. Jeremy Hunt
cites the U.K. will not halt weapons sales to Saudi Arabia. Theresa May to
return to Brussels ahead of EU Summit. Gibraltar emerges as sticking point
in Brexit negotiations. Zuckerberg tells CNN that he is not stepping down
as chairman of Facebook amid growing calls for him to step down. NHK
reports Nissan may face criminal charges in Japan. Trump thanks Saudi
Arabia for falling oil prices. Italy faces sanctions after EU rejects its
budget. Tech stocks rebound as Facebook CEO goes on defensive. CNN’s Matt
Rivers takes a look inside China’s “Silicon Valley”. Market rally fades in
final hour of Wall Street trade.>
<Spec: Matthew Hedges; Jeremy Hunt; Saudi Arabia; Theresa May; EU Summit;
Gibraltar; Brexit; Mark Zuckerberg; Nissan; Donald Trump; Oil; Italy; Tech
Stocks; Huaqiangbei; Wall Street>
Britain’s top diplomat is warning the UAE, there will be consequences. British Foreign Secretary Jeremy Hunt says the U.K. will not end arm sales to Saudi Arabia. He says that would mean Britain’s leverage in efforts to end the war in Yemen would be in his words reduced to zero.
Saudi Arabia is a key player in the war supporting Yemen’s government against Houthi rebels. Now, in the past few minutes, British Prime Minister Theresa May said she’ll return to Brussels for more talks Saturday. Her meeting today with European Union President Jean-Claude Juncker didn’t really reach a deal on Britain’s future relationship with the EU.
In addition, a tiny British territory of Gibraltar at the southern tip of Spain has become a sticking point in Brexit negotiations. And Spain is threatening a veto over the issue.
In an exclusive interview with Cnn, Facebook CEO Mark Zuckerberg said he is not planning to step down as chairman and threw his support behind COO Cheryl Sandberg despite recent calls from investors to shake-up management. Shares of Facebook have been down more than 20 percent this year.
Prosecutors in Tokyo are considering bringing criminal charges against Nissan Motors, that’s according to NHK; Japan’s public service broadcaster. Now, the news comes after two days -- two days after the arrest of Nissan Chairman Carlos Ghosn on suspicion of underreporting his earnings and other financial misconduct. Nissan did not comment on the report.
Donald Trump has thanked Saudi Arabia for the recent fall in oil prices after he signaled he was going to keep backing that government despite the killing of Jamal Khashoggi. Now, oil prices are recovering from heavy selling on Tuesday and Brent is now up more than 2 percent.
As you can see there, though, as our current chart shows, it’s essentially flat, never a dull moment on oil commodities. Oil prices are getting -- this is from his tweet, “oil prices are getting lower. Great! A big tax cut for America and the world. Thank you, Saudi Arabia, but let’s go lower!”
Instructions directly from the president. Now earlier, I asked our emerging markets editor John Defterios what might be the president’s end game when it comes to the price of oil.
(BEGIN VIDEO CLIP)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: He’s basically suggesting he’s going to get political cover to Mohammad bin Salman; the Crown Prince of Saudi Arabia, wants to get $450 billion of military contracts overtime, and it wants to lower oil price as the bonus for giving Saudi Arabia blanket coverage here going forward.
Two members of the OPEC community actually sent me that tweet via WhatsAPP with the signals of alarm because this puts undue pressure, Paula, on Halid al-Falih; who is the Minister of Energy of Saudi Arabia. Remember a week ago, Monday, it was here in Abu Dhabi, we had him on a panel and he declared it was necessary to take a million barrels a day off the market.
Half of that was going to come from Saudi Arabia itself. One source told me a u-turn would be absolutely catastrophic here for OPEC and non-OPEC in this alliance they developed two and a half years ago. They even say it’s not even good for the oil and gas patch in the United States.
Before OPEC and non-OPEC players intervened, Paula, between 2015 and ’16, they had the unemployment rate at just over 8 percent. After 2016 going into 2017, the oil patch saw the unemployment rate cut in half to 4 percent. Donald Trump has something completely else in mind and that’s the pump for his base, but nothing else I candidly find quite surprising.
[15:35:00] NEWTON: Yes, the clash of the economics and the politics, so this is extraordinary. You’re teeing up that very contentious OPEC meeting quite well. You know, we’re used to the tweets from Donald Trump, but how else does he disrupt things?
DEFTERIOS: You know, it’s extraordinary here because right now, the momentum is working against the OPEC producers and even Russia because we had so much intervention coming from Donald Trump. First and foremost, one source said to me we had no idea he was going to give eight exemptions to Iran.
So that’s added at least another million to 1.4 million barrels a day and for the next few months, he has a trade dispute with China. And this could dampen growth in 2019. China is a major importer of oil, so we could see the surplus growing when it comes to China.
And we cannot forget, Paula, U.S. shale production is booming. Overall, U.S. output last year climbed by 2 million barrels a day, expectations are in 2019, they’re going to add another 1.5. It’s like adding a UAE or a Kuwait to the market every single year.
So this is going to keep that downward pressure on prices going forward, I think.
(END VIDEO CLIP)
NEWTON: OK, a budget showdown between the EU and Italy, I know what you’re thinking, it’s happened before, not this way. Brussels accuses Rome of breaking the rules. We ask an EU Commissioner if the rules can change.
NEWTON: Italy could face sanctions after the EU officially rejected its budget. Now, Brussels is unhappy with how much the government in Rome wants to spend trying to revive its economy. But the populist who are now in power are digging in, saying a new approach is needed. The Vice President of the EU Commission says that approach breaks the rules.
(BEGIN VIDEO CLIP)
VALDIS DOMBROVSKIS, VICE PRESIDENT, EUROPEAN COMMISSION FOR THE EURO: Let me stress the situation in Italy is of common concern. Euro-area countries are in the same team and should be playing by the same rules. These rules are here to protect us, to provide certainty, stability and mutual trust.
(END VIDEO CLIP)
NEWTON: The rules, we keep hearing about the rules. European Economics Commissioner Pierre Moscovici says he does have sympathy for the Italians, but the budget rules are there for a reason. I asked him if he accepted that people in Italy voted for a very different approach to the economy.
(BEGIN VIDEO CLIP)
[15:40:00] PIERRE MOSCOVICI, EUROPEAN COMMISSIONER FOR ECONOMIC & FINANCIAL AFFAIRS: I do not dispute the legitimacy of this government or the feeling of the Italian people. But I’m there not as bureaucrat, as a political appointee and somebody who is obeying to rule of law, and to make sure that the common discipline that, again, each and every member state has implemented already is respected by all.
Because if everybody acts as a free rider, you’re not any more a union. You’re not any more a group. You don’t have a single currency and, well, of course, I think about the Italian people and I think they will be the victims of some mistakes because if public debt raises again, they will pay the price.
But I’m also responsible for the rest of the Eurozone and, you know, saying that, it’s not the commission versus Italy. It’s also all the member states, all the finance ministers, all the heads of governments who are telling the Italian government, well, OK, we fully understand that you want to fight poverty, we fully understand that you need to invest more in infrastructure.
But you must not do that against the common discipline and with too much increasing of your debt because a public debt in Italy is already 130 percent of GDP which is way too much and this is why --
NEWTON: But some say --
MOSCOVICI: The press attends --
There are two things --
NEWTON: But some say it’s an extraordinary circumstance in Italy, and many people turn to Greece and see the problems that are there as well, saying that Greece is basically doomed, that it will be years after years of absolutely tepid growth.
From listening to you and I know the rules are the rules, but you know that politically, the government can frame this as you wanting to make an example of Italy.
MOSCOVICI: No, it’s not an example because this has been done by -- again, every member state. We are a rules-based system belonging to the Euro area implies that these rules are implemented. And it’s just what takes us together, it’s like the constitution in the United States, which is something which is very sacred, you need to follow it.
And these rules have not been invented by us, the commission, they’ve been adopted by all the parliaments, all the governments in the Europe, the commitments have been taken by all the Italian governments and we do not invent them.
So we need to act with as well the comprehension of what the country needs. And I know the circumstances, I know the needs of the Italian economy, we love Italy, we want Italy to stay at the corridor(ph) of the Eurozone, but also with the general interest of Europe as a whole of the Eurozone as a whole.
And my role here is not to interpret the text, it’s to make sure that they are respected, but again, I do that with a clear spirit of dialogue. We have not taken today any kind of disciplinary decision. We have not opened what we call excess deficit procedure.
We have launched a process which could get there, so the ball is clearly in the camp of the Italian --
NEWTON: So --
MOSCOVICI: And my door is --
NEWTON: So you’re open to more negotiations --
MOSCOVICI: Open to any kind of meetings --
NEWTON: This is not a final --
MOSCOVICI: With them.
NEWTON: So you’re open to more negotiations, and this is not a final declaration --
MOSCOVICI: No --
NEWTON: On a financial measure?
MOSCOVICI: I wouldn’t say negotiations, I would say dialogue because we need to understand each other. Again, I understand the fact that -- I know that there are very many people who are poor in Italy and they need to see something coming from the government.
I welcome the fact that there is a plan for poverty. I don’t know if it’s this one, but it’s necessary. I know that there’s a lack of infrastructure investment, but what I say is that you could do that without damaging your structural deficit, without increasing your public debt.
It’s just a matter of political choices, we’ve done that. We are doing that for our families, we are doing that for national states, we are doing that for our local authorities. We are doing that in our firms, we cannot spend on each and everything we like, so we need to have choices. We made our choices and that’s why we’re here.
(END VIDEO CLIP)
NEWTON: Give us some issue there, as you can see being very politically sensitive knowing that the populist government was elected in Italy. He was also parsing his words, I followed up and asked him about Brexit and whether or not Spain could actually veto this deal.
We’re going to bring you this news because Theresa May as we were telling you earlier, will head back to Brussels on that Brexit deal on Saturday. Spain is still saying, look, the whole issue of Gibraltar remains in dispute. Pierre Moscovici telling me earlier that, look, we are not negotiating with Spain and the U.K. over Gibraltar.
That’s not what this is. We will sit down at the table and really, he says, refine what is in the deal. OK, off to European markets. They closed sharply higher Wednesday with shares in Germany leading that region. Airbus jumped 2 percent as the aerospace giant has named Dominik Asam CFO and Michael Schollhorn, COO in the company’s latest major management shake-up.
[15:45:00] Up next here on QUEST MEANS BUSINESS, we’ll hear from Mark Zuckerberg on his vision for Facebook.
NEWTON: On the day Mark Zuckerberg told Cnn, he is not going anywhere as company chairman, Facebook has been the best performing FANG stocks so far today. You know, it’s still and I think the right home, we were considering this the slide, but the Nasdaq looks at to snap a three-day slide, it’s up better than 1 percent today.
Although, the rally I have to tell you has faded in the last few minutes. Now, combined, the FANG stocks have lost $1 trillion in value during this very volatile market. Amid this turbulence, Laurie Segall asked Mark Zuckerberg whether recent events had made him reflect on his own leadership.
(BEGIN VIDEO CLIP)
LAURIE SEGALL, CNN CORRESPONDENT: Have you as a leader looked at yourself in the last year and reflected and made some hard challenging changes because you look on the outside and there are a lot of people questioning your leadership, questioning this company.
Have you personally changed in any capacity to be able to be better equipped to handle Facebook now rather than the Facebook that you built in your dorm room?
MARK ZUCKERBERG, CHAIRMAN & CHIEF EXECUTIVE OFFICER, FACEBOOK: Absolutely, I mean, I’m always thinking about the stuff, and I think the biggest learning for me, which I’m too slow to, is that when you connect 2.5 billion people, you’re going to see all the good that they’re capable of, and incredible things.
But you’re also going to have all these people who just try to use those tools to subvert the same ideals that we care about. And now, you know, we’re taking that lens towards everything that we’re doing and not only trying to build the good to empower people to give more people a voice, but in everything that we do, we’re working to make sure that those tools can’t be misused.
And I think that’s something that we’re going to come out of this episode - - this series of challenges that we’re dealing with, and this will be baked into the DNA of the company of how we operate.
(END VIDEO CLIP)
NEWTON: Baked into the DNA of the company. Samuel Burke joins us now live from London, he’s going to tell us what that means in a minute. But Samuel, stay right there because we did speak with former U.S. Labor Secretary Robert Reich, he told us that for these giants, obviously including Facebook, data is power.
(BEGIN VIDEO CLIP)
[15:50:00] ROBERT REICH, FORMER SECRETARY OF LABOR, UNITED STATES: What these other high tech companies are doing is they are actually resting their power on their ability to aggregate huge amounts of data, analyze those data in ways that no smaller company can possibly do and also at the same time to develop networks that everybody has to join in order to participate.
And that is a recipe for larger and larger economic and also political power.
(END VIDEO CLIP)
NEWTON: And for many, that’s a recipe for regulation, Samuel, look, it’s an extreme position that the secretary has. He’s saying break-up Facebook and others like them.
But at this point, Europe has already tried to regulate this space. What have we learned and I know that you’ve really taken a hard look at what Europe is trying to do and what it’s already done?
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY CORRESPONDENT: Well, it’s interesting because you could make the argument that Google collects much more data from many more platforms than Facebook does. But I think at the end of the day, you could definitely find an appetite for breaking up Facebook here in Europe.
I was in the European parliament in Brussels the day that Mark Zuckerberg testified, and that was handled so poorly by many people that many of the people walked away there, many of the most important people in Europe, walked away there, saying exactly that, that they would be willing to at least look into breaking up Facebook.
At the end of the day, we can only go by what Europe has done already, and that’s GDPR, that data protection law, that has really set the standard for Europe to have the reins of technology to be the police of technology. So I think they’ve set themselves up very well if they want to go down that route, Paula.
NEWTON: And you know, I want to get to the business case, Facebook in a moment. But I can’t let you go without talking about what you’ve covered the last few days, and this was the sale of this poor child bride in South Sudan. It was an auction that happened on Facebook, it wasn’t taken down for two weeks.
I mean, can regulation stop that, and if it didn’t stop that, would the kind of regulation you may see punish Facebook for not taking it down more quickly?
BURKE: Well, before the regulation punishes them, I think the market is already punishing them. And now, I don’t want to exaggerate and think that this terrible case about the Sudanese girl being sold has actually moved the entire market.
But at the end of the day, what I hear from investors is that they believe if enough of these cases happen, which I think many of them think -- enough have already happened, that Facebook will focus its attention on privacy and regulating itself more than looking at the ads, and that’s really what investors want.
So at the end of the day, the market may push this faster --
NEWTON: OK --
BURKE: Than regulation does.
NEWTON: And in terms of the market pushing this, the business case for Facebook, some people say we’ve reached peak social, that it wasn’t for Instagram, Facebook wouldn’t be doing nearly as well as it’s doing. Samuel, at the end of the day, there still is subscriber growth here, though. I don’t see people abandoning their Facebook accounts?
BURKE: Yes, there’s a little bit of growth though in the United States, we started to see those numbers wane. But I think an important point to look at is some numbers that a lot of analysts have been looking at as well as investors that came up from “Axios” a few days ago.
And basically, what it showed if you ask people -- if you asked them last year, do you think social media helps democracy or hurts democracy and free speech. People overwhelmingly said yes, in 2017, 53 percent said it helped. Those numbers have plummeted now, Paula.
Now 57 percent of people say it hurts, you may be right that people aren’t deleting their Facebook accounts, but if there’s enough of this sentiment that people are checking it much less often, which we are seeing that reflected in the numbers, that is what’s making investors nervous.
There could be this icky feeling that just grows and grows and grows, Facebook isn’t able to stop it and that’s eventually not the deleting of the accounts just not being on it as frequently, not as many eyeballs looking at the ads on Facebook, and that could be what does Facebook in. That’s part of the reason we’re seeing the stock price the way it is in the past few weeks.
NEWTON: Yes, it’s going to be so interesting to see the way that rolls out. Now, I said it before to you, Samuel, my children are not on Facebook, don’t like it, don’t know what it is, don’t have anything on about it --
BURKE: We can barely get you on Facebook.
NEWTON: Just like -- what do you mean barely?
BURKE: That came from you --
NEWTON: I am not on Facebook, we all know this, we’ve been through this. I would say happy -- have a happy Thanksgiving, but you’re here back with us tomorrow, so all that. Now top White House --
BURKE: I’ll be here --
NEWTON: Top White House adviser Larry Kudlow says he anticipates a direct confrontation between the U.S. and China over trade when they meet at next week’s G20 Summit. And a significant asset of that dispute is tech. All this week, we’re looking at how it’s become the new battleground between the two countries with the rise of China’s own Silicon Valley Shenzhen. Cnn’s Matt Rivers brings us more.
MATT RIVERS, CNN CORRESPONDENT (voice-over): They say imitation is the most sincere form of flattery, and in China, it can also be a form of innovation. Take one look around Huaqiangbei and you’ll see what I mean. In a city that produces most of the world’s consumer electronics, this shopping district is its heart.
A wholesale market where vendors sell any and every type of tech component you can imagine.
UNIDENTIFIED MALE: These guys are selling sensors --
RIVERS: Most are parts you and I wouldn’t even begin to recognize, but this man does. Andrew Huang, who goes by the name bunny is a self- described hardware hacker who knows this place inside and out.
[15:55:00] ANDREW HUANG, AUTHOR: It’s like a web market, like you go to a stall to buy pork or you go to --
RIVERS (on camera): Right --
HUANG: A stall to buy vegetable --
RIVERS: Yes --
HUANG: And so each of these will specialize in some particular trade of some particular component.
RIVER (voice-over): Any sort of consumer electronic you can dream of. A tablet, a drone could probably be built here from scratch. Today, bunny is going to start with just one smartphone. He buys parts from a number of stalls. To me, all this is daunting, the domain of the MIT graduate, but to people here, it’s just a Monday.
HUANG: In the west, sort of tech is data-fied(ph), it’s almost like --
RIVERS (on camera): Yes --
HUANG: A priesthood of tech --
RIVERS: Yes --
HUANG: Here, it’s an everyday thing here. It’s not scary to take something apart.
RIVERS (voice-over): That’s another thing people do here, take things apart. Once you do that, you know how it was produced and then you might just say, come up with a better or cheaper way to make that very same thing. Some call that copycatting or at the very least trademark infringement. Here it’s open source innovation.
HUANG: So what happens, you come up with an idea and someone copies it. But usually, they don’t do just a straight copy, they’ll add their little improvement to it. But fair game is fair, you take their improvement and now you can take their improvement and you can improve upon that.
RIVERS (on camera): And figuring out what makes your competition’s product tick, is easy. Bunny shows us that very Chinese concept in the most American of places.
HUANG: Well, some parts and --
RIVERS: Yes --
HUANG: Well, you fuel up and build up.
RIVERS: It takes a bit of trial and error. Snaps together --
HUANG: It snaps together like that, so that’s --
RIVERS: But before too long --
HUANG: Using this coin here --
RIVERS (voice-over): We’ve got a working smartphone, selfies and all. Imitation, innovation, whatever you call it, there is ingenuity here. So come on down to Huaqiangbei market with your next big hardware idea, just don’t expect someone not to copy it. Matt Rivers, Cnn, Shenzhen.
NEWTON: Wall Street may be getting some pre-Thanksgiving cheer. We’ll give you an update after the break.
NEWTON: OK, the last few minutes of trade on Wall Street and while investors do need to be thankful here that there was no big selloff, but look at that. That rally is fading a bit in the last hours of trade. Now all indices are still up as investors took advantage of those markets weaknesses to kind of do bargain hunting.
Tech shares especially had a turnaround after recovering from those selloffs. But the Dow as you can see there, well off its highs of the day. The Nasdaq still up more than 1 percent. U.S. markets, I remind everyone here, will be closed Thursday for the Thanksgiving Day holiday and it’s a half day on Friday.
I will be here tomorrow, I will be here on Friday, this is QUEST MEANS BUSINESS, I am Paula Newton and the closing bell is ringing there on Wall Street, taking us into that Thanksgiving holiday. “THE LEAD” with Jake Tapper is next.
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