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Quest Means Business
Yellen Hearing; US Markets Hit Record Highs; Yellen as Fed Chief; Obama Economy Speech; Philippines Aid Mission; China's Typhoon Aid; Devastation in Tacloban City; Philippines Weather Outlook; Stranded by Typhoon Haiyan; Sony to Release PlayStation 4
Aired November 14, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Ringing in a new record on Wall Street, the Dow has just hit a fresh, all-time high as the woman who would be Fed chief testifies for Congress. It is Thursday, November the 14th.
And she's taking no prisoners. Janet Yellen says she won't be held hostage on tapering.
On economics in Europe, jitters in Germany, France is floundering, the growth in the eurozone barely budging.
And the ultimate fail whale. JPMorgan takes a bruising on Twitter.
I'm Richard Quest, of course I mean business.
So, good evening.
(RINGS BELL)
QUEST: The market closes at an all-time high. We'll have the exact numbers for you in a moment. And one of the forces driving the market today was Janet Yellen, the chairwoman-in-waiting at the US Federal Reserve. She's been facing questions on Capitol Hill.
Yellen, who'll you know is currently second in command, she gave a robust defense of the Fed's bond-buying policy and made it clear that she will not be beholden to the markets when it comes to pulling the trigger on tapering.
(BEGIN VIDEO CLIP)
JANET YELLEN, NOMINEE CHAIRWOMAN, US FEDERAL RESERVE: Overall, we are not a prisoner of the markets. I continue to feel that we're seeing an improvement in the labor market, which was the goal of the program, and we'll continue to evaluate incoming data and to make decisions on the program in that light going forward.
(END VIDEO CLIP)
QUEST: What everybody wanted to know, was Janet Yellen a dove, as people had thought, and many people believed, or is she a hawk when it comes to inflation and beating it out of the system? People scrutinized each sentence today for any clues on Yellen's stance on the bond-buying, printing-money program. And the key question of hawk and dove came back again and again.
On the dovish side, Yellen suggested that the -- when it comes to what to do next, she is wary of tapering too soon.
(BEGIN VIDEO CLIP)
YELLEN: It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy should the economy falter are limited, given the short-term interest rates are at zero. I believe it could be costly to withdraw accommodation or to fail to provide adequate accommodation.
(END VIDEO CLIP)
QUEST: But if we're talking about birds, well, Janet Yellen's a wily one, because on the hawkish side of the equation, she warned that the program could harm financial stability. In other words, keep pumping too much money for too long, and eventually financial stability has risks.
(BEGIN VIDEO CLIP)
YELLEN: I would agree that this program cannot continue forever, that there are costs and risks associated with the program. We're monitoring those very carefully. You noted potential risks to financial stability, and those are risks that we take very seriously.
The committee is focused on a variety of risks and recognizes that the longer this program continues, the more we will need to worry about those risks.
(END VIDEO CLIP)
QUEST: So, look at the hawks and the doves, and now look at how the market actually interpreted what she did. Now, there you have -- this is roughly the point at which she starts testimony. As she makes the -- got to get right in there -- as she makes those comments, up the market goes, and it stays higher -- we have a bit of a tail-off, but it stays higher for the session.
Because clearly, what the market believes, she said it's imperative that stimulus remains, she talked again and again about unemployment being one of the key problems that they have to deal with, and that is why the markets close tonight up 54 points. It is at a record. All the indices are at a record.
So, hawks and doves. Well, Jeffrey Sachs was one of Janet Yellen's students at Harvard. He's an economist, he's the director of the Earth Institute at Columbia University, and I asked him about Yellen's confirmation and did she do what she had to do when she did it today?
(BEGIN VIDEOTAPE)
JEFFREY SACHS, DIRECTOR, THE EARTH INSTITUTE AT COLUMBIA UNIVERSITY: She did it, without question. People see she is so qualified, so highly competent, so able to articulate the issues. Nobody challenged anything about that. Everybody was quite impressed, and I'd say the markets were quite satisfied as well. She's going to be outstanding.
Of course, everybody has a lot to complain about. Nobody can be happy with this situation that we have.
QUEST: The core question, of course, that came around again and again was how dovish is she in terms of maintaining monetary stimulus, the printing of money to keep the US economy. And on that, she said it was imperative that they keep it going, and again and again. So, we're getting a view that she's not going to rush to slow the spending.
SACHS: Clearly when the tapering begins, it's going to be gradual, and clearly, she sees this mandate of getting unemployment down as one of the Fed's responsibilities without question, alongside the other two that she said: price stability and financial market stability. So, I think --
QUEST: But in the juggling of those three, and two of them are in the mandate and the other one, of course, she kept referring to price -- financial stability, too big to fail, all these issues. Where does she stand? What sort of person will she be on these issues?
SACHS: I think the word that was used most frequently is accurate: continuity. She has been the vice chair of the Fed, she has been a major force in the quantitative easing policies. She has been a major force in the question of the timing of the tapering.
And so I don't think there are going to be huge surprises of some massive new stimulus, but I don't think that the stimulus of QE is going to be withdrawn --
QUEST: Right.
SACHS: -- dramatically, either.
QUEST: Liberal Democrat, some would say, and she's been accused of. Perhaps maybe you have some sympathies on those sort of views yourself, Jeffrey. But on the core question of income inequality, she was asked again and again about inequality. The rich have benefited from the printing of money. The poor haven't seen income growth.
SACHS: I think the income and wealth inequality are startling in this country because it's the highest in decades if not in history of the United States, but what Janet Yellen said is also accurate, which is the Fed is not going to be the place to solve that.
Those are deep issues, deep trends, rising inequality everywhere exacerbated in this country, I think, by various public policies on the tax side, on the budget side, but not really an area where the Fed has a decisive role to play.
(END VIDEOTAPE)
QUEST: It has been a busy day in the world of US economics. President Barack Obama admitted that the administration has fumbled his signature Obamacare health policy, and then he went to Cleveland and discussed the health of the American economy.
A few moments ago -- and I mean a few moments ago -- President Obama said the recovery is starting to take hold.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Over the last 44 months, our businesses have created 7.8 million new jobs. Last month, another 200,000 Americans went back to work.
(APPLAUSE)
OBAMA: And a lot of those jobs are in manufacturing.
(APPLAUSE)
OBAMA: So now we've got to do more to get those engines of the economy churning even faster. But because we've been willing to do some hard things, not just kick the can down the road, factories are reopening their doors, businesses are hiring new workers, companies that were shipping jobs overseas, they're starting to talk about bringing those jobs back to America. We're starting to see that.
(END VIDEO CLIP)
QUEST: Good Lord, that phrase, "kicking the can down the road," it's come back to bite us once again.
When we come back after the break, it's taken quite a long time, but help is now arriving in the Philippines. Six days after the monster storm struck, the country's food and water, it's getting desperate, the situation is grim. The details after the break. This is QUEST MEANS BUSINESS, good evening to you.
(COMMERCIAL BREAK)
QUEST: International efforts to rush aid to the Philippines have been ramped up and there's the arrival of a US aircraft carrier, now, to help things along. It's the USS George Washington, and several support ships are now off the coast near storm-devastated Tacloban.
So, if you put it all together, you've got 21 helicopters and 5500 crew members on this that are helping to distribute food, water, and supplies. The situation on the ground in many places, it is truly dire. After all, put it into perspective: it's six days since the typhoon hit the country, the weather is hot, the rains continue to fall, and food and stores are building up.
Aid agencies like Oxfam are racing supplies to the region. The organization's defended the government's response to the disaster.
(BEGIN VIDEO CLIP)
IAN BRAY, OXFAM SPOKESMAN: This is the largest-ever -- greatest-ever typhoon ever to hit land, with wind speeds of over 200 miles an hour. No government -- no poor government, especially -- could deal with that.
So, they've been hit very, very hard, and they're responding magnificently as well, so aid is being distributed by the Philippine government and they are meeting the challenge. But it is a huge challenge and they need a great deal of support.
(END VIDEO CLIP)
QUEST: Yesterday on this program, you will recall, of course, we discussed with Ian Bremmer of the Eurasia Group that the Chinese government had given what seemed to be by many a somewhat paltry amount of money. Well, the Chinese government is now stepping up its aid contribution to the Philippines after coming under fire over that initial donation.
Beijing now says it will provide more than $1.6 million, that goes in money and supplies to the victims, $1.6 million is the donation, now, on the table.
Yesterday, when you and I were talking, China, which is the world's largest economy in GDP terms absolute -- second-largest, forgive me, of course, the US is the largest in GDP nominal terms -- had pledged just $100,000 as an initial response.
That matched the amount the Chinese Red Cross had committed to the catastrophe. As a result of that and what people were saying, widespread criticism China was playing politics with its aid.
In the devastated city of Tacloban, aid is now trickling through. Look at our map, and as you can see, as Nick Paton Walsh reports, the situation on the ground in Tacloban City, well, the only word we can use: grim.
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: To see the evidence on how shattered the community of Tacloban City is, all you have to do is look at the darkness behind me. No lights, very few signs of life in the dark when you drive through. You see flickers of flames and the burnt -- and the skeletons of what's left behind of buildings.
We drove though before dusk. I saw one government truck handing out food to long queues of people. The sheer volume of people looking for that kind of nourishment shows you what the level of frustration must be on the streets. And yet again, we saw lining the sides of the roads dozens of corpses.
The government says these are fresh, brought out every day by locals in a bid to have them cleaned up. We've seen many similar, though, day by day, still left in place. I saw the first truck I've seen, in fact, at all picking these bodies up and taking them away.
That's a key health issue for those who've chosen to stay behind in Tacloban. Many seeking to flee through the airport, getting on buses. Constantly, you'll see people with their suitcases trying to get away because there's very little, really, here to support life.
That aid effort is mounting, it's increasing in pace, but it's a challenge for the Philippine government to get the resources given to them by the international community out to the people fast enough.
The USS George Washington due to arrive imminently has got 5,000 US sailors onboard and dozens of US aircraft. That'll boost the capacity of the Philippine government, but it's not really going to make that transformation of the quality of the aid effort here that those staying behind really need to see. Anger mounting and day by day, the risk of disease picking up in this devastated community.
Nick Paton Walsh, CNN, Tacloban, the Philippines.
(END VIDEOTAPE)
QUEST: Jenny Harrison's at the World Weather Center. Jenny, when the USS George Washington arrives and that -- the aid process continues, what weather will they find?
JENNY HARRISON, CNN METEOROLOGIST: Well, you know, Richard, for the next couple of days, some of the best weather that the Philippines have had for a very, very long time, even, of course, before Haiyan, because typically the Philippines really has a very, very wet climate.
And this is giving you an idea, really of how the rainy months pan out throughout 12 months of the year. It's quite a complicated map to look at, so let's just break it down.
First of all, in the north in Luzon, there is much more of a wet season and a dry season. And then well to the south, in Mindanao, basically it is wet pretty much all of the year. This is where some of the heaviest rainfall comes down, of course, because it's continuous throughout 12 months.
The areas in purple, the systems -- of course, most weather systems coming in from the east pushing towards the west, so this sees the brunt of the weather as it comes in, but all these areas across the central Philippines really are in some cases about to go into some of the wetter months of the year.
And I can probably illustrate it best by showing you Tacloban and showing you, actually, month-by-month and how much rain they expect. So you can see here, November and December, they're really at quite a peak in the amount of rain, the average amount of rain that comes down, so well over 300 millimeters, certainly, as you get into December.
And the number of days that we see rain, November in Tacloban it's 20 days a month that there'll be some rain, and in December, it is more than that, it is about 23 days.
Whereas when you compare this to, example, into Manila, you'll see quite a difference. So we have very much a wet season in the summer months and then it really does peter off as we go into the winter months, November and December, particularly on into the month of March.
So, as I say, it is very rare that we get sort of a stretch of dry days, and we've got a couple to three of these days, of course, coming up. The last few hours, we've seen the rain really push away to the west. You could even see in some of the pictures in that last piece from Nick Paton Walsh that actually the skies looked al to clearer behind.
Now, that isn't to say we might just have the odd passing shower, but there's no big system coming in, there's no sort of prolonged rain, there are no big accumulations they're expecting to see. In fact, look at this: two millimeters. So, barely anything. So, it really will be dry for the next couple of days.
Now, in the sunnier skies, the temperatures are set to rise. Again, that's not a huge difference in temperatures in this region day-by-day and month-by-month, so the low 30s, this is for Friday, and actually on Saturday again, not a huge amount of difference. And in fact, by Sunday, if there's more sunshine, it could actually go up.
So, all of this needs to be considered, of course, Richard. The most urgent need when you've got weather like this is for some shelter from that sunshine and for the rain showers once, of course, they do again return. But a couple of dry days, let's hope they can make the most of that dry weather spell.
QUEST: Jenny, thank you. Jenny Harrison's at the World Weather Center. We'll talk, obviously, more on our diet of normal subjects as things get back to normal, but until then, we will focus on the Philippines. Jenny is at the CNN Center.
When Haiyan first made landfall, it struck a remote town in the Philippines that was called Guiuan. Now, the town has been all but cut off from the outside world ever since. As our correspondent Ivan Watson now reports, it's left, not surprisingly, families separated and most certainly desperate learning about whether their loved ones are still alive.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): After a grueling 22-hour journey by boat, Adel Siguan has finally reached her hometown, and she only has one thing on her mind.
ADEL SIGUAN, TYPHOON SURVIVOR: I bring water for my son.
WATSON: Adel wants to see her eight-year-old boy, who she hasn't even been able to talk to since the storm cut off ties to this remote fishing town nearly a week ago.
WATSON (on camera): Not knowing about your son, how has it felt for you?
SIGUAN: Of course I can't sleep, I can't eat. I can't eat. I can't really -- I don't know what to do because I'm eager to know what's happening to him.
WATSON (voice-over): Adel can't believe how the typhoon devastated her town. The storm crippled the local government.
WATSON (on camera): Any phones?
UNIDENTIFIED MALE: No communication whatsoever outside.
WATSON (voice-over): But local officials are improvising. They set up a service to fly handwritten messages to the outside world.
WATSON (on camera): Incredible. There's a note here for Cesar Montanses (ph), and it's one sentence, like a telegram. "Pedro Valdez and Hermino Badillo (ph) are OK and alive. From Johnny Badoko (ph)."
WATSON (voice-over): The typhoon brought down the roof and facade of this church the Spanish built here more than 400 years ago. But this Catholic priest calls it a blessing in disguise because no one was inside when the roof came tumbling down.
ANDY EGARGO, CATHOLIC PRIEST: The irony of this is people -- people's faith gets stronger every time calamities like this happen.
(CHILDREN LAUGHING)
WATSON: Certainly, Filipinos here have not lost their sense of humor. They joke with a stranger even though their homes are damaged and their stomachs are empty.
WATSON (on camera): But you guys -- you guys are still laughing. You can still laugh.
CHILDREN: Yes!
UNIDENTIFIED MALE: Laughter is the best medicine!
WATSON: The best medicine, yes?
WATSON (voice-over): Across town, Adel Siguan has almost completed her exhausting journey.
(CHILD SHOUTING)
WATSON: After a week of frightening uncertainty, the mother and her eight-year-old son are finally reunited.
WATSON (on camera): How do you feel right now?
SIGUAN: I'm so happy that my son is OK. Yes.
WATSON (voice-over): They are both alive and OK.
Ivan Watson, CNN, Guiuan, in the Philippines.
(END VIDEOTAPE)
QUEST: And we'll be back after the break.
(COMMERCIAL BREAK)
QUEST: I'm starting to feel I must be alone in the world. I have neither an Xbox, a Nintendo, nor a PlayStation. I did a quick survey of the studio here. Everybody's got a PlayStation 1, 2, or 3 or something.
Well, get your wallets out, guys, because here in the US, Sony's new PlayStation 4 releases in just a few hours. It will be midnight Eastern Standard Time.
(RINGS BELL)
QUEST: Gamers in the rest of the world will have to wait a bit longer. The launch comes at a crucial time for the company. Last month, Sony posted worse-than-expected earnings, it lowered its profit forecast for the year, and the videogame industry overall has seen sluggish sales over the past few years.
So, the company's hoping PlayStation 4 bucks that trend and beats out the fierce competition. But if anyone thought that they were going to have the field to themselves, seriously mistaken. Microsoft with the Xbox 1 will be coming out in just a week or two time.
I spoke to Andrew House, the group CEO of Sony Computer Entertainment, Inc. He didn't seem like the sort of man who spent his time playing computer games, so I needed to know, why is everyone excited about the PlayStation 4?
(BEGIN VIDEOTAPE)
ANDREW HOUSE, PRESIDENT, SONY COMPUTER ENTERTAINMENT, INC.: I think there is an enormous amount of pent-up demand for the new consoles that are launching, and particularly for the PlayStation 4. As of August, we had 1 million people between the US and Europe who'd already put their money down and staked a claim in terms of pre-orders, and that's the kind of demand that's unlike anything we've ever seen before.
QUEST: How many PS3s did you sell? Roughly?
HOUSE: Well, we just crossed the 80 million mark in terms of the number of PS3s sold and still going strong. And that's seven years in.
QUEST: Seven years in --
HOUSE: Yes.
QUEST: -- and it's still selling at that sort of level. What's your forecast for PS4?
HOUSE: For PS4, we're planning to sell 5 million units by the end of our financial year, which is the end of March.
QUEST: So, what's different between this and that?
HOUSE: I point out three things. When PlayStation 3 shipped, it was a Blu-ray player and a games machine. This comes fully loaded with a suite of 13 fully-loaded network applications for all kinds of entertainment beyond games.
Over and above that, we've built a gaming network which, like social media, uses your real name, you know what your friends are doing, it's personalized towards you and your content, and also the games themselves show an enormous leap in terms of graphic fidelity, detail, richness, and enjoyment.
QUEST: This idea of taking the gaming console and shoving it firmly into the social media arena, that is new.
HOUSE: I think that there are two things that have happened, is that we're seeing consoles move from being gaming devices to fully multifunctional entertainment devices.
QUEST: What does that mean, multifunctional entertainment devices?
HOUSE: Well, it has music, it has video, it has streaming video services, it has live events that you can watch in addition to all of the games. And I think what that means is that there's a broader family appeal for these devices than every before.
QUEST: But look at this, right on the controller, there's the button. It's not hidden away at the back. And what does that buttons say?
HOUSE: The button says "share." And --
QUEST: "Share."
HOUSE: And I'm glad you pointed it out, because it was a very strong decision of ours that we felt consumers -- we're already seeing this trend happening with people who play games wanting to share their achievements and what they've done, how they've played.
QUEST: I don't think I can remember a time when you've had a PS -- a new PS and a new Xbox both going -- (makes explosion sound) -- exactly the same time.
HOUSE: No, it's been -- a number of years since that's happened. I think it creates an enormous amount of excitement for our category. It gives people a sense of choice and options. But we're very, very confident that the PlayStation 4 delivers great value versus the competition and also a great lineup of experiences.
QUEST: There is a difference, Andrew, now -- a shift between buying the disc and playing it on the disc and downloading the game. Where are you seeing the trend?
HOUSE: I think we're definitely seeing a small but growing trend towards what we call day and date digital downloads. So someone downloading the game the day that it arrives on retail store shelves.
We certainly saw a large increase in that activity around most of the biggest -- one of the biggest releases for "Grand Theft Auto."
QUEST: And to do a billion in a day, a billion in a week, they are sizable numbers that dwarf -- theatrical release for movies.
HOUSE: Absolutely, and I think that we tend to underestimate two things: the size of the audience for these cutting-edge, big digital experiences, but I think we also underestimate the passion and commitment there is for people just in terms of time and how much they want to invest in this form of enjoyment.
QUEST: PlayStation's a seriously important part of the company.
HOUSE: I think it is.
QUEST: At a time when Sony's having great difficulties in many areas of the company.
HOUSE: Certainly. And our CEO, Kazuo Hirai, has made it very clear that the games business is a very strong, core part of our strategy. It's one of the three pillars of turning around the company and getting us back to a greatness and a sense of innovation.
(END VIDEOTAPE)
QUEST: That's a good debate and discussion. The PS4 gets launched in the US. It'll be interesting to see just what the reaction is and how many people queue up.
When we come back later in the program, two European countries, both were in the bailout camp, will be leaving that and have decided not to ask for more money, or at least even have an IOU ready. It's Ireland and Spain, after the break.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in a moment. This is CNN, and on this network the news always comes first.
The U.S. Navy aircraft carrier George Washington has arrived in the Philippines, giving a much-needed boost to recovery efforts. Thousands of people remain in desperate need of aid. The official death toll from the storm is now more than 2,300. That, of course, is expected to rise. President Barack Obama has apologized for the latest problem with his signature healthcare reform program. He's vowed to fix it. The President says many Americans who are losing their current health insurance policies may be able to keep them for another year -- that's following severe technical problems to the so-called Obamacare web site.
Police in Canada say they have arrested nearly 350 people for buying child pornography. The investigation began after a Toronto man was found making nudist films featuring children in Romania and the Ukraine. They say 380 children were rescued from sex abuse during their investigation.
A former mobster has been given two life sentences. James Whitey Bulger has had a hand in killing 19 people in South Boston during the 70s and 80s. And during the sentencing the judge said his crimes were in his words, "All the more heinous because they were all about money." The 84- year-old gangster was arrested with his girlfriend after 16 years on the run.
And the man many cricket fans consider the greatest batsman of all time is approaching his last turn in bat. 'Little Master' as he is known is retiring after 24 years and 200 Tests. Tendulkar played earlier today, giving the field 38 not out, but don't worry, he should get another turn at bat tomorrow.
Eurozone grows in the third quarter. There was only one word to describe it, and this is the Euro's own press release -- glacial at best. It's raised concerns about the recovery momentum in the zone. If you join me, I'm going to bring this with me because it really -- look at the graph. I mean, that's the recession and that's the way things were coming, and frankly things are not looking that much better. I'll show you better over here and you can see much more clearly what's been happening. This is a better chart. This shows how Eurozone GDP has performed. You look down -- when -- that's at the second part of the recession. Then it gets better. Then we forward in Q2 things were actually looking a lot better -- 3 percent -- but now that has just dwindled away to .1 percent.
So, factor into the individual countries of the Eurozone. Let's look at those that actually experienced -- in green -- those countries that had faster growth in the Zone. There we go. Most countries reported faster growth in the Zone in Q3, yet Eurozone practically stalled. And it's the problems in those that stalled that really show where the problems are. So there you have the (battle axe) countries, you had Spain and you had Italy all doing better than expected.
The slower growth countries are the by far the more worrying ones. First of all, you've got Germany. Germany, weaker exports and an inquiry being launched by the European Commission into the current account surplus. Now that of course follows what the United States said in its treasury report when it also blamed Germany for its export-led economy which it said was hindering other countries. Now the E.U. joining in beating up Germany. Germany seems to have enough problems of its own.
And France -- exports down very sharply. It has high unemployment at 11 percent, and third quarter GDP -- third quarter GDP was down, down .1 percent, having just risen by half a percent in the last quarter. So you get an idea, this is the way it looks overall for the Eurozone. These two major countries are dragging things even while these countries that had been in trouble are pulling themselves somewhat out of recession. And Evariste Lefeuvre is the chief economist at Natixis North America joins me now. When you look at those numbers, how concerned are you?
EVARISTE LEFEUVRE, CHIEF ECONOMIST, I'm not really surprised but I will just like to make a little remark. In Italy the growth is declining less than last quarter which was minus one whatsoever. So there was a decline in GDP in Italy as well. So Italy, unfortunately, remains a drag. Spain is positive.
QUEST: Right.
LEFEUVRE: But if you look at Italy, Italy was also a drag.
QUEST: Right -
LEFEUVRE: (Inaudible)
QUEST: -- it is contracting, but -- I'm not defending our graph. Well, I am defending our graph. The reason I'm defending it is -
LEFEUVRE: It's getting better.
QUEST: -- because it's not growing -- it's not falling as fast (inaudible) point. It's gone .9, .6 -
LEFEUVRE: Yes. There has been some improvements over there. That's right, but the improvement much less impressive than those that we've seen in Spain.
QUEST: Right, but, OK -
LEFEUVRE: It's been that much better (inaudible).
QUEST: -- OK, but the fact that Germany has slowed so dramatically -- look at Germany -- .7 to .3. France down negative again. They're the two engines of growth.
LEFEUVRE: Yes, but -
QUEST: And if they're not growing, the rest have to be worrying.
LEFEUVRE: But there's a huge difference because on the German side, it's a positive sign because we all know that the world trade is going down. There is a very slow pace of exports globally, so if Germany is about to change the nature of its growth towards more domestic spending, that's very good news.
(CROSS TALK)
QUEST: That's a hope rather than a -- a hope and a prayer rather than a reality.
LEFEUVRE: No, we don't have the details but if you look at into what has been published from Germany today, it is clearly what we think or that we will see -- (inevitable) -
QUEST: You're -
LEFEUVRE: -- 22nd.
QUEST: -- so you're not suggesting that there has been a fundamental shift -
LEFEUVRE: No, it cannot be --
QUEST: -- on the German economy towards domestic demand growth which is what everybody's been seeking?
LEFEUVRE: Yes, but there is -- what I would say, it's not that dramatic to have (inaudible) you have a different composition of growth in Germany. It cannot come from one point to the other -- that's better. The biggest problem is France.
QUEST: (Inaudible) not much they can do.
LEFEUVRE: Yes.
QUEST: (Inaudible) is virtually down and out in terms of -
LEFEUVRE: Yes.
QUEST: -- this is a popular path.
LEFEUVRE: Exactly, all right.
QUEST: And the popular perception.
LEFEUVRE: Yes.
QUEST: And the taxation policy is a dog's breakfast. And unemployment remains very high.
LEFEUVRE: And growth -- so what do they do next? That's the big question. I mean, if you are to understand that basically the growth pattern has not changed in France which you have strong consumer spending - - public spending -- but the problem is on the investment side. And as long as we don't have investment, we don't have employment, and that's a big problem because France is now the stickman of Europe. This is exactly the position in which was Germany ten years ago.
QUEST: Compared to the U.K. of course where growth is picking up.
LEFEUVRE: Yes, but basically we can't compare because there is -
QUEST: All right -
LEFEUVRE: -- accentuated difference. And let's think of that as what's going on within the Eurozone. And France is in big trouble.
QUEST: But what it all means ultimately is that the Eurozone will not be able to play its proper role in the global economic recovery.
LEFEUVRE: I mean, no, but this is interesting because this global economy (career) as you say is not that much global because it's the first time for decades that we've seen a recovery with a very low level of bill of trade. It's too (inaudible) down. U.S. is doing well because they have domestic spending. It's the same in some emerging countries, and unfortunately in some countries within the Eurozone, we don't have these domestic spending and (inaudible) of growth -- that's where the problem is.
QUEST: Evariste Lefeuvre as always, thank you very much.
LEFEUVRE: Thanks a lot.
QUEST: Let's look at the European stock markets and how they traded. (RINGS BELL). They rose on Thursday in hopes that Janet Yellen will keep stimulus policy in place if confirmed. They were all up -- best gains were in Paris which is somewhat remarkable. No -- best gains were in Germany, but virtually the same when you look at the growth figures in France. So, to two countries that will exit bailout plans and will not be seeking further assistance. Ireland will exit its bailout program without a safety net. The country won't seek a precautionary credit line from the E.U. despite being urged to do so by some international lenders. The prime minister Enda Kenny says Ireland will leave in a strong position and the (inaudible) said his country has a long way to travel. Michael Noonan, the finance minister, backed the decision. It's being called a 'clean break.'
(BEGIN VIDEOCLIP)
MICHAEL NOONAN, IRISH FINANCE MINISTER: As that the time is now right, that's the deciding factor. You have seen how Europe has developed over the last three years, while we were in the program, and it can -- it can get rocky at times and you -- and things that over which one has no control enter in the Eurozone -- that can affect one's decisions. But it's a very good time now because as I say there's a benign window of opportunity which I see stretching out into the new year.
(END VIDEOCLIP)
QUEST: It's not only Ireland that says it doesn't need a safety net or the credit guaranty support. Spain tonight announced it will make a clean exit from its bailout plan next year. Jim Boulden is live for us in London tonight. Good evening, Jim. So, Ireland and Spain, how risky is it for these countries -
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes.
QUEST: -- not to take the bail -- not to need the bailout? That we knew was going to happen, but not to have in place a get-out-of-jail-fee card?
BOULDEN: Sure. Yes, it's a political decision, isn't it, Richard? Because if obviously these countries that have taken bailouts -- you think of Greece as well -- have had to have so many international monitors come into their country, tell these governments what to do, tell the people about the austerity force -- Ireland, Greece, Portugal, Spain -- to make very tough choices. So Ireland is saying, look, we took the money -- 67 billion euros -- and of course they took it first back in November of 2010 was the beginning. So, it's been three years. And they want to -- the market is happy with Ireland so far this year in the bond markets, so Ireland's saying, look, we're -- thank you very much, we're going to come out, we're not going to have a safety net. Yes, a bit risky. Now, we've had cautious positive response from some of the European leaders. Let's listen to a few responses today.
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MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: The Irish (inaudible) should be congratulated. It's been -- the program has been on track four years, the progress has been significant in a variety of areas and we are confident that all the needed actions that need to be taken and decided will be done -- will be taken.
WOLFGANG SCHAEUBLE, GERMAN FINANCE MINISTER, VIA TRANSLATOR: This shows that our policy to stabilize the Euro region was right. The program for Spain will also be ended at the end of the year. Portugal is also on the right track and Greece has made great progress. I think that this is a good day to remind ourselves that we are facing a huge task, but that we are on the right road and we have achieved a lot.
(END VIDEOCLIP)
BOULDEN: Of course Ireland still has more to go, Richard, but they want to do it on their own terms, not on the terms of the ECB, the E.U. and the IMF, Richard.
QUEST: OK, so, it seems as if we are moving into another phase of this -- I won't say crisis, I mean, maybe it's not even a crisis anymore -
BOULDEN: No.
QUEST: -- but is one that is now looking at long-term structural reform -- banking union, the single supervisory mechanism, the correct working of the ability to bail out banks directly.
BOULDEN: Yes, and it seems like it's taking a long time, but it's not a really surprise because we're in uncharted territory, aren't we, creating this banking union, creating the way that the countries would get more money if they need it. Still more details to come. This is where Spain comes in of course. Spain's bailout was not a government bailout, it was a bailout of the banks and it was a very painful decision, but it was only last year for Spain to say thank you very much for the money, we'll pay it back over time, but we think we can go it alone. I think it's more risky than the Irish. The Irish have had three years of tough austerity and have seen -- been seen as the poster child for how to do it and do it right, even though unemployment of course was very high. Spain has even higher unemployment.
QUEST: Right.
BOULDEN: We still don't know, do we, Richard, how bad these banks are. We'll learn more about that next year.
QUEST: Yes, you'll have your work cut out for you as you try and understand the (inaudible). And Jim Boulden, who I'm looking forward to reading those pro -- in great detail and probably in the original languages. Jim, many thanks.
Now the capacity for global oil producers to develop new reserves is being squeezed. That's what the chief executive of Total has told CNN. In a moment.
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(BEGIN VIDEOCLIP)
QUEST: We're in San Francisco on the next CNN "Business Traveller." They're young.
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QUEST: Join me in Silicon Valley learning what millennials like on the road on the next "CNN Business Traveller."
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(END VIDEOCLIP)
QUEST: Oil and Brent crude which is up more than a dollar a barrel increasing the premium over the U.S. Light Sweet crude -- look at the numbers and you'll see how they've traded over the last few. And it's actually quick interesting, this -- if we can just pull this difference. You see this divergence -- this is going up and that's going down and that difference is what is so fascinating in the oil industry at the moment. Although we know that quite often the two different benchmarks will move in opposite directions to see if in this time -- at this point in the recovery -- is somewhat unusual.
Brent is trading at $108 while its counterpart is just shy of $94 a barrel. And the gap between the two is at the seven-month high. That is the seven-month high. The chief exec of Total says it'll take time before Brent crude falls below $100 a barrel, even with the shale revolution. Remember, Brent is or does tend to be the barometer that most people follow. John Defterios sat down with him at the Adipec summit in Abu Dhabi.
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JOHN DEFTERIOS, CNN'S EMERGING MARKETS EDITOR AND ANCHOR OF GLOBAL EXCHANGE: It's an often overlooked but very important point. Oil prices for North Sea Brent have averaged over $100 a barrel for three years running, and it begs the next question, when will shale oil supplies start to bring down that price? It's a question I posed to the CEO of Total, the French oil giant, Christophe de Margerie.
CHRISTOPHE DE MARGERIE, CEO, TOTAL: Today it's still at the level which is above 100. Very simple, (constant) projects, geopolitics, concern about the environment. Because or thanks to this, the capacity we have to develop those new reserves which are (inaudible) exploration on new technology, is taking more time to come on stream. This market is not driven by speculation or by traders. It's a market really linked with offer and demand. There is today only one country, Saudi Arabia, which is not producing at full capacity. So today, the market is just where it is because of offer and demand are finding a balance (inaudible) of price, which is more than 100.
DEFTERIOS: It's interesting, 12 months ago we had this conversation about the Straits of Hormuz perhaps getting blocked by Iran. Now we're at the bargaining table with Iran. Within a year from now -- Total's had experience in Iran -- are we going to be producing in that country again? Do you think the sanctions will be lifted?
DE MARGERIE: You know, I mean I've learned to be cautious on those matters because it's a sensitive project and the sensitive negotiations of the region. Is it good for the region that Iran goes back into what we call the nations? Yes. It will definitely make the zone safer and easier to invest in.
DEFTERIOS: The country, the 150 billion barrels of reserves they suggest -- the largest gas field in the world -- the world could use that energy from Iran but they have to come around and start seeing eye to eye with the IOCs?
DE MARGERIE: The next stage -- the one in which Total will be involved -- is not in geopolitical price, it's not in the negotiation taking place in January, it will be the negotiation which will have to take place in Tehran or wherever to find contractual terms which shall be I would say suitable, acceptable for both sides. And I can tell you with the experience we have with Iran, it has not always been, as we say in French, ("Inaudible").
DEFTERIOS: Fair terms.
DE MARGERIE: Fair terms. Win-win.
DEFTERIOS: Christophe de Margerie of Total sharing his thoughts on the energy outlook and some of the hot issues that we still see here in the Middle East. John Defterios, CNN, Abu Dhabi.
(END VIDEOCLIP)
QUEST: When J.P. Morgan tried to engage followers on Twitter, what the bank got was a bruising social media backlash. We'll have the details after the break.
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QUEST: It seemed like such an innocent hashtag -- #AskJPM.-Ask J.P. Morgan -- the bank which helped Twitter go public -- has suffered a public humiliation at the hands of Twitter users. The bank invited people to send questions using that hashtag. The vice chairman Jimmy Lee was to have been giving the answers. Instead, what did they get? They got answers like this -- "So how much money does it take to stay out of prison? #AskJPM." "Do the cries and screams of the young starving homeless children you've made . . . ever keep you banksters up at night? #AskJPM." "Are you people really that stupid or did you merely forget the entire world loathes you and wishes you in prison? Ask# -- #AskJPM."
After an onslaught of similar messages, J.P. Morgan tweeted (rings bell) "Tomorrow's Q&A canceled. Bad idea. Back to the drawing board." Joining me now is (Matthew), business reporter at BuzzFeed, BuzzFeed. When you wrote about this today, I was fascinated by your view. What did they do wrong?
MATTHEW ZEITLIN, BUSINESS REPORTER, BUZZFEED: I think what they did wrong is they didn't really understand that the audience on Twitter is everyone who has a Twitter account and that a lot of those people, especially kind of the more active and politically active ones, don't really have anything nice to say about J.P. Morgan.
QUEST: But why -- government leaders, presidents, finance ministers, people use Twitter to make public statements now. Companies use it to make results. It's a natural forum for Morgan to actually put it out there.
ZEITLIN: Well, I think the distinction you want to draw here is using Twitter as like a broadcasting platform and then using it as a way of engaging with people.
QUEST: So were you surprised that they got this response?
ZEITLIN: I can't say I was now. I wasn't because when I write about J.P. Morgan, which I do a lot, I look at the comments on my stories and they're usually universally negative about the bank. And that goes with other kind of these large banks that people see as responsible for the financial crisis.
QUEST: Was there any way J.P. Morgan could have done this and got out in one piece, or is it a bad idea from the moment it was conceived?
ZEITLIN: I think it's just, once you have a hashtag like that, the way more motivated people are the ones who want to embarrass than the ones who are kind of earnestly look for career advice.
QUEST: So, what do we learn from this because they obviously thought it was a good idea, they thought it was going to be happy and happy-go- lucky. What do we learn from this as it will be studied by corporations in the future?
ZEITLIN: I think we've learned is that when corporations are looking to kind of engage with people in public, they have to be really careful about what forum they're in, and who can kind of get in that forum and ask questions that they may not want to have to answer.
QUEST: And don't do something as foolish as this if you think you can't get away with it.
ZEITLIN: This is not the first time a company's had a hashtag that's been taken over by people looking to criticize it.
QUEST: Good to talk about it. Thank you very much.
ZEITLIN: Thank you.
QUEST: We thank you, many thanks indeed. Your thoughts on that @ richardquest. Flame away as much as you like. #JP -- AskJP -- or whatever else. What did they do wrong? I'm still not fully sure I understand that a good idea was a bad idea which was a bad idea which could've been a good idea -- doesn't really matter. It all went horribly pear shaped. As for U.S. stocks, (inaudible) I've got used to that now. Fifty-four points on the Dow Jones Industrial, 15,876 -- we could call today the Yellen rally. They were closed at a record high. When we come back, it'll be a "Profitable Moment."
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QUEST: Tonight's "Profitable Moment." You know you know what it must have been like -- it seemed like such a good idea -- some clever wiz -- #AskJPM. Let's get an executive, touchy-feel, we'll make them feel good and we'll answer questions on Twitter. And yes, of course, there'll be a few people who'll write some nasty things. Oh, dear, it all went horribly wrong. Thousands of rude, derogatory, nasty Tweets, all poured in to the hashtag AskJPM. And then we've got to ask, well, I'm not sure that it was entirely wrong of J.P. Morgan to suggest or to do this. They couldn't necessarily have known it was going to go so badly so quickly. And hats off to the bank. They did admit it had gone bad and it was a bad idea and they pulled it, but maybe that's what they shouldn't have done. Maybe they should have had the nerve or whatever else you want to call it and stuck with the idea. As for @ richardquest -- well, there's no corporate speak at Richard Quest, it's just a chance for you and me to have a chat and where possible I will answer the Tweets that you send and we can have a bit of a dialogue. And there's no AskJPM or CNN or anything else on the (inaudible). And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead (RINGS BELL), I do hope it's profitable. I'll see you tomorrow.
END
