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QUEST MEANS BUSINESS
ECB Hints at Action on Low Inflation; Bank of England Holds Rates; Defending the Fed; Housing Market Warning; Philadelphia Fed President on US Economic Growth; Blip on Wall Street Keeps Gains Low; European Markets Up; Terror in Nigeria; Investment in Nigeria; Africa's Economy; Make, Create, Innovate: Self-Cleaning Concrete
Aired May 8, 2014 - 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: The bells, the bells, they are a-ringing. At the end of the trading day on Wall Street, just a smidgeon gain for the Dow Jones. When trading was over, she grabbed the hammer -- ooh, good grief -- and she knocked the bejebus out of it because it is Thursday, the 8th of May.
Tonight, the Fed tells me it's fixing the US economy and fixing forward guidance for those fixated on numbers.
It's a case of infrastructure, infrastructure, and infrastructure. Heineken's chief exec tells me that's the key to African growth.
And I'll be speaking to the head of Nigeria's stock exchange live from the World Economic Forum. You dare not go further.
I'm Richard Quest. I mean business.
Good evening. Tonight, a rare interview with one of the presidents of the US Federal Reserve system. Charles Plosser, one of the Fed's top decision-makers, from Philadelphia has defended the way the central bank has shifted its forward guidance at its recent meeting.
The Philadelphia Fed chief told me that the move from unemployment rate to a wider range of data, so-called quantitative to qualitative, was appropriate as the Fed slows down the printing presses.
Across the board, the issues facing central bankers have rarely been trickier, and they were all in focus today. Just look at what happened. We had all the major Feds doing something.
In Brussels and in Frankfurt, of course it was the ECB. In the case of the ECB, where the inflation is uncomfortably low, after the ECB's regular monthly meeting, the governing council decided, and President Draghi hinted, action is possible in future.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: I would say that the governing council is comfortable with acting next time. But before, we want to see the staff projections that will come out in early June.
(END VIDEO CLIP)
QUEST: So now, of course, he's set the parameters for possibly action by the ECB in June. Be careful what you say, as you'll hear shortly, the market will trade on it.
In London, as expected, the Bank of England holds rate at just half a percentage point. It's done that every month since March, 2009. It also kept quantitative easing unchanged. The, of course, issue at the BOE is the UK is economy is growing faster and therefore questions about what happens next.
And in Washington, Chair Yellen's second day before Congress, she said rates were to stay low until unemployment improves and rejected calls to boost the inflation target.
What does all this show? Yellen also issued a warning on housing, which had been a bright spot in the economic recovery. That comes shortly after US economic growth for the first three months was uncomfortably low, a glacial 0.1 of one percent.
Charles Plosser spoke at the Council on Foreign Relations, and I asked the president of the Philly Fed whether weather was actually the real cause, or whether there were structural issues.
CHARLES PLOSSER, PRESIDENT, PHILADELPHIA FEDERAL RESERVE: I think Q1 had some very significant effects of the bad weather, and we're seeing the data that's coming in in the last several weeks or a month or so, we're seeing a pretty good bounce-back, which reinforces the idea that it really was weather-related.
So, I think the economy is gaining traction again, and I'm still looking for the rest of this year to see about a 3 percent growth during the rest of the year.
QUEST: The relationship at the moment in the US economy between inflation and unemployment, which of course are both sides of the Fed's mandate, is particularly interesting, because inflation is below target and has remained below target for some considerable time. Unemployment has come down much faster than you'd expected.
PLOSSER: Well, that -- than maybe some people expected. It's come down about the pace that I thought it would come down in.
PLOSSER: And the relationship between unemployment and inflation is a tenuous one at best. It is not a very close relationship. And it's not a very stable relationship. So, I think we have to be very careful not to read too much into the relationship between those two. But they are on both sides of our mandate.
QUEST: And not only are they both sides of your mandate, they were both in some way part of the forward guidance --
QUEST: -- that was put forward. And therefore, part of the great experiment.
PLOSSER: The great experiment. Yes, well, central banks have done a lot of experimenting over the last six or seven years, right? So, yes, we've tried -- we've changed our forward guidance, though.
We did use the unemployment rate and the inflation as thresholds. I think they, perhaps, served a purpose, but we've passed those thresholds now, so now we've had to replace that with some other types of forward guidance.
QUEST: When you had 6.5 and a straightforward number target, a numerical target, that was easy. Qualitative versus quantitative is much more difficult for people to understand.
PLOSSER: But it's better. And the reason is, by picking two numbers, 6.5 percent unemployment or 2.5 percent inflation, people become fixated on those numbers. But those numbers tell you nothing about how we'll conduct policy with other pairs of numbers.
So, we got to 6.5 percent, we decided not to take any action. Now what? We have to replace that with something else. And so, communications is a difficult task in this regard, and forward guidance, the form that forward guidance takes, has been a challenge at times.
QUEST: So for you, sir, what's the most important data that you will be looking at?
PLOSSER: Well, I'm going to continue to look at inflation and features of the labor market, and features of the labor market, particularly unemployment rates, if they continue to come down, then we need to think about when the right time is to stop trying to be more accommodative and start reducing accommodation.
QUEST: More from President Plosser later in the program when he talks about the issue of transparency and how the Fed is, along with many other central banks, moving forward, trying to feel its way into the new world.
The markets and how they traded. And well, it was up all day. There was this very weird blip, which I do not understand. Just around about 3:15, when all of a sudden, the market went negative. But then, it quickly recovered. A bit of indigestion. Postprandial indigestion, I'm wanting to say. Alison Kosik is at the New York Stock Exchange. Very odd what happened.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Not so odd when you look at it this way: good news for a good portion of the day ruled the day. You saw investors buy in. Ah, that's until technical levels turned things into the negative. And what I'm talking about is the S&P 500 getting within two points of a new record, giving investors some pause.
So, before that, Fed chief Janet Yellen put the exclamation point on where the Fed stands on interest rates, committing to keep them lower until the economy is on firmer footing. This was day two of her testimony on Capitol Hill. So, that gave some reassurance to the market.
It was more or less an encore of her remarks from yesterday, though, but her soothing words certainly helped keep stocks in the green, rounding out the good mood until, of course, around 3:15, as you said, some upbeat data on China, some upbeat jobs numbers. But in the end, those technical levels spooked investors to end the markets mixed today, Richard.
QUEST: Sometimes, Ms. Kosik, I think we can look at the markets and just have too -- not from you, I'm talking about when you start to break down the markets as we do now. In the old days, you just looked at it over the whole day. Now we break it down hour-by-hour --
KOSIK: We parse it.
QUEST: We -- that's the word, I knew that was the word.
QUEST: We parse it down to the last minute, and I'm not sure, actually, we're much better. But anyway, good to see you, Alison. Many thanks, indeed --
QUEST: -- putting it in context. European markets that were parsed, they rallied and railed on the back of Mario Draghi's comments at the ECB. Barclay's share price climbed almost 8 percent after the bank presented its major new strategy, including slashing thousands of jobs in its investment bank.
Don't forget, of course, we've got some Barclay's shares on this program. We bought them at the low point in the recession. We need to work out how much they're worth.
When we come back, Nigeria's struggling against Boko Haram, and the country's president says he may have the weapon he needs. We'll talk about that in the next moments.
QUEST: The abduction of more than 200 schoolgirls represents the beginning of the end for terror in Nigeria. The message from the Nigerian president, Goodluck Jonathan, at the World Economic Forum today.
The president says the kidnappings, which have sparked global outrage, they could be a catalyst for Boko Haram's undoing. And he says the West is helping him in the fight against terrorist groups.
(BEGIN VIDEO CLIP)
GOODLUCK JONATHAN, PRESIDENT OF NIGERIA: Let me appreciate individually and collectively for your support for us, your sentiments. I'm inspired by your presence here in Nigeria at this time. You have already supported us to win the war against terror.
(END VIDEO CLIP)
QUEST: Securing investment will be crucial for the president as the forum continues. And arguably, of course, it is the rising tide of investment and economic growth that lifts all boats and improves the living standards of all and therefore puts the terrorists on the bad foot.
Nigerian stocks are slowly recovering after suffering their heaviest sell-off in years. If you look at the numbers and you see the way the market -- just look at that, year-to-date, from January right the way through until March, a very sharp fall from 1926 all the way down so dramatically. And a recovery, but still, over here, you can see the weakness that exists.
Oscar Onyema is the chief executive of the Nigerian Stock Exchange. He joins me live from Abuja. Sir, thank you. We look at the way the market has fallen. This year, that was a very precipitous fall in the exchange, predicated on a variety of reasons. But it does show the volatility of your market.
OSCAR ONYEMA, CEO, NIGERIAN STOCK EXCHANGE: It certainly is a market that is developing, as you know. And there is volatility that goes with such markets.
QUEST: What do you want the world to know about the Nigerian stock market, the opportunities that it offers?
ONYEMA: The Nigerian stock market is a market that is growing. There's significant portfolio investments from international markets. It is, indeed, an international market. We have an active local participation.
As you know, Richard, in 2013, the market returned 47 percent, and in 2012, the market returned 35 percent. So, it is a market that gives very significant returns, such that you don't see in developed economies.
QUEST: And yet, of course, with the current security problems -- and we keep coming back to this, and we will keep coming back to this security issue -- how do you think that affects investors' decisions on looking at countries and markets like Nigeria?
ONYEMA: Richard, as you know, investors look at a number of factors before making up their minds to invest in a particular country, including country risks, political risk, currency risk, and other types of risk. And security is something that people look at.
But when you look at it closely, this security problem is really concentrated in a region of the country where most of the companies that are listed on the exchange are not really active in. And then, because of that, what we see driving the sell-off that you've seen is profit-taking. It is currency concerns. It is people rotating out of Nigeria to other frontier markets for frontier funds.
But for Africa funds, they continue to remain here. For global emerging market funds, they continue to view Nigeria as an attractive destination.
QUEST: As a Nigerian, as a chief executive of a major institution in your country, how worried are you now about the reputation of Nigeria as a result, for instance, of the kidnapping of 200 schoolchildren?
ONYEMA: Richard, let me start by saying that our prayers are with those girls. We are praying for them to come back home safely. We obviously are concerned about the reputational consequences that this might have on the country.
But the truth of the matter is that investors continue to find Nigeria very attractive. The growth potential, the opportunities across various sectors. The fact that a demographics support a strong demand base for both foreign direct investments and foreign popular investments.
And that has been shown clearly today with the kind of participation we have seen at the World Economic Forum, where you have over 1,000 delegates from 70 different countries come in here to show support and to show their interest in investing in Nigeria.
QUEST: Sir, thank you for joining us from Abuja tonight. We appreciate it.
Heineken's chief executive is co-chairing the World's Economic Forum on Africa and believes that inclusive growth, not just growth itself -- inclusive growth -- is crucial to improve the living standards on the continent.
I spoke to Jean-Francois van Boxmeer and asked him what issues needed to be addressed immediately to help Africa attract investment.
JEAN-FRANCOIS VAN BOXMEER, CEO, HEINEKEN: If you have to draw a line across Africa, I think that investment in education longterm matters, and health system matters, and infrastructure, infrastructure, infrastructure. That is going to play as an accelerator for the growth in Africa.
And then, obviously, when you make investments, you have to look to the security situation. And again, you have a very patchy track record on the continent. But overall, I would say that if you look back for 20 or 30 years, eventually the situation is improving.
QUEST: It's improving, and there's no question, since the first times I went to Africa, it is considerably better. But you'd have to agree with me, wouldn't you, it's not improving fast enough for the amount of money that needs to be put in to improve the standard of living. So, how can you speed up that improvement without greater risks of corruption and theft and crime?
VAN BOXMEER: It's not the speed-up of the growth which creates, I think, corruption and crime, fundamentally. What is important is when you have growth is that that growth is being enough inclusive.
A lot of emerging markets and fast-growing markets are battling with that issue that there is growth, yes, but that growth is not inclusive enough, and inclusive is about creating enough jobs to sustain the enormous demographic pressure that most of these countries endure.
And that goes, in effect, to better governance and better policies to cater for job creation in every and each single individual country. And some are, frankly, addressing that better than others. But again, we made, I think, a lot of progress over the last 20 years on that agenda, and noticeably on the last decade.
QUEST: It's basically all roads lead back to good governance, and good governance leads back to transparency, and transparency -- it really does end at the top, doesn't it?
VAN BOXMEER: It is. It is. But it's a virtual circle. And the bigger the investments become and the bigger the business community becomes, also the better the pressure will be on the political class to keep on with good governance.
And a country like Nigeria is, I think, a good example. Because over the last 20 years, you saw an enormous development, not only of -- you didn't have that much foreign-directed investments, but you had a fantastic development of a truly Nigerian class of entrepreneurs who went beyond just being wholesalers or importers of something.
VAN BOXMEER: They started to manufacture things, they started to create banks. And that has created real force here in this country, and a force for the good.
QUEST: I need to ask you one other issue, sir. When you talk about countries like Nigeria or Uganda, and you talk about African investment, as a chief executive of a major European company, are you prepared to tell political leaders in Africa that policies and laws like the anti-gay policies and laws are simply not acceptable to your standards and values?
VAN BOXMEER: We have a very simple standard at Heineken, it's that we have submitted to the charter of the human rights, and that is to protect and not discriminate to all minorities, being it religious or gender or sexual preference. So, rest assured, Richard, that we will do our utmost best in every country where we operate to protect our own people the best we can.
QUEST: And that's the chief executive of Heineken International. We've got another story that is interesting on a similar subject later in the program. You'll want to stay around, too, for that.
When we come back after this short break, we've had concrete since Roman times. That's not to say there isn't room for a little improvement. In this week's Make, Create, Innovate, an Italian company is giving it an update, which you really won't want to miss.
QUEST: For fans of modern architecture and environmentalists alike, this is the product that's been made for you.
QUEST: A special construction material that keeps concrete whiter than white and all the while cleaning the surrounding air. It's our Make, Create, and Innovate tonight, and Nick Glass has been to Italy to see the concrete and sniff the air.
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): The Romans invented concrete over 2,000 years ago. The dome of the Pantheon in Rome probably the best-preserved example.
But concrete gets dirty very easily, discolored by pollution and rain, and concrete buildings end up getting grubby before their time. That is, until now.
I'm here at Italcementi, one of the biggest cement producers in the world, and its R&D lab is simply stunning.
GLASS (on camera): But what particularly sets it apart is a special ingredient that went into the concrete.
LUIGI CASSAR, INVENTOR, TX ACTIVE: You have combination of photocatalysis, light, and construction material, like cement, to decompose pollutants.
GLASS: So, it's self-cleaning concrete?
CASSAR: Self-cleaning concrete.
GLASS: Isn't that an amazing thing?
CASSAR: It is an amazing thing.
GLASS (voice-over): TX Active, as it's called, was first patented in 1995. It does for cement what enzymes did for washing powder.
GLASS (on camera): How does the pollution disappear?
CASSAR: The pollutant, which is a dirty material, can be transformed into non-colored material. This doesn't change the fate of the pollutant, but just accelerates the oxidation process.
GLASS (voice-over): It's known as photocatalysis, speeding up a chemical reaction in the presence of light, which can be demonstrated with an artificial pollutant in the lab.
TX Active's first major project in 2003 was Richard Meier's Jubilee Catholic Church in Rome. Eleven years on, still white, brilliant white.
GIAN LUCA GUERRINI, R&D, ITALICEMENTI: We have a perfect maintenance of the color. This is the most relevant result obtained in our first industrial application.
GLASS: But to everyone's surprise, TX Active didn't just clean the surface of the cement, but the surrounding air as well.
CASSAN: If you cover the surface of Milan, 50 percent of the surface with this material, not all, you can reduce the pollution by 50 percent.
GLASS (on camera): That's astonishing.
CASSAN: That's astonishing.
GLASS (voice-over): A huge claim. TX Active is expensive and has not yet been applied on sufficient scale to prove this. But Italcementi has created a model town. The buildings under the bubble coated with the special cement. Polluting gas is pumped in, a UV light mimics the sun. It's all invisible to the eye, but he descending graph shows us how the air is gradually being cleaned.
The company is not stopping at cement. It's already making a paint that both cleans it self and the air around it.
Like any Italian town, Bergamo has its traffic and its dirty buildings. But it does have a brand-new church awaiting consecration this summer, coated with the special cement.
GLASS (on camera): The church likes things whiter than white. As for the rest of us, the way we tackle pollution in our towns and cities remains a huge and ongoing problem.
GLASS (voice-over): But could part of the solution be already available? Be already set, so to speak, in concrete?
QUEST: When we come back, Barclay's, job losses, new strategy. We'll talk more about it.
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
In Ukraine, pro-Russia separatists have decided to go ahead with Sunday's referendum, despite a call from the Russian president Vladimir Putin to postpone the vote. Moscow has added more American and Canadian officials to the list of those barred, now, from entering Russia in tit- for-tat sanctions.
US officials say nearly 300 schoolgirls who were abducted in northern Nigeria may have been separated. It's likely to complicate efforts to rescue the girls, who were taken nearly a month ago by the Islamist group Boko Haram.
South Korean authorities are cracking down on the company which operated the passenger ferry that sank last month. The company's chief executive has been arrested, and the firm's license has been revoked. More than 260 people are dead and dozens are still missing.
In Syria rebels have attacked a hotel in Aleppo which was being used as a military base by the Assad regime. CNN cannot independently verify this video -- this appalling video as you can see -- which supposedly shows the attack. Officers and activists say at least 14 people were killed. The Islamic Front rebel alliance has claimed responsibility.
Barclays abandoned its goal to be a titan on Wall Street on Thursday and announced a major change in strategy. Now, bearing mind this is the bank that bought the Lehman Brothers investment division and completely reformed itself and has this huge building in Time Square for BarCap. Well now the chief executive Anthony Jenkins says the bank will only operate where it has the capability and the competitive advantage. And that puts the investment banking division on the chopping block. So, 7,000 jobs will go in investment banking as it shrinks the division to produce profitability. Overall, 19,000 jobs at Barclays will be cut in three years as it cuts costs. And the bank will create a bad bank division. There'll be $195 billion of risky assets. It's all a sharp turnaround in strategy. Back in 2008 Barclays bought Lehman Brothers and operated -- the U.S. operations --and by do so, it immediately secured a spot as a major Wall Street investment bank.
Now the chief exec - the new chief exec -- or relatively new - of Barclays, Antony Jenkins, says the move positions the bank to succeed.
ANTONY JENKINS, CEO, BARCLAYS: A year and a half ago I announced our goal of becoming the go-to bank for our customers and clients and delivering returns for our shareholders. This is about positioning Barclays to do exactly that. It's about creating a core business with four strong units within it - our corporate and retail business, our credit card business, Africa and our investment bank, and then everything else in Barclays will go into what we're calling the 'non call' (ph) and that will be run off or exit over time. There's one other important thing - the investment bank itself will be no more than 30 percent of the Barclays Group going forward.
QUEST: Now, Jim Boulden joins me from London. Jim, they bought Lehman's U.S. operations, --
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes.
QUEST: -- they are a - tried to be a force. I mean, where does this announcement - what does it mean for that - for that big building in Time Square and the Barclays Investment Bank in the United States?
BOULDEN: And of course visa W (ph) when they bought some of the big other investment banks here in the U.K. and in Germany over the years. Basically, you remember Bob Diamond, of course came from the investment bank side, was CEO for a year, stepped down amidst scandals last year. I think at the end of that era, the idea was that Barclays' British bank was going to try to compete with the American banks and be this huge investment banking, doing what was very risky and very sexy high-risk, high-reward. Well, now it's going to become I would say maybe a mid-size to big, boring bank and getting back to what Barclays was doing all along. So, but still, 30 percent, Richard, that's not insignificant. They still want to have a third or so of the bank to be investment banking.
BOULDEN: They're still going to dabble in it for sure.
QUEST: Right, but is the strategy - has the strategy failed in that sense? Is - I mean - it's a refocusing of the bank -
QUEST: -- but, I mean, I'm trying to understand. Are we right in saying that Barclays no longer wants to be a global player and a Wall Street titan?
BOULDEN: Not a Wall Street titan - you're absolutely right. Those days seem to be over and that's when they exited today but also getting rid of the American CEO Bob Diamond. What they have said is that they're not going to play in every area around the world. They want to focus on what they do well as you said. I think the quote was "What they can do in capabilities, scale and competitive advantage." And so they're going to focus -- like a lot of British banks -- bring themselves back down to what they could do well. They're going to sell branches in Europe as well to try to refocus. So, it's a bit like what we have been seeing from the pharmaceutical firms, isn't it, where they say well actually let's not be all things to all men, let's just focus on what we can do really well. And of course it's going to cost them a lot of money to get rid of the - many of the investment bankers and those 19,000 jobs to boot. So, you are talking about enormous amount of costs that they say in the long run will make Barclays a more sustainable bank, Richard.
QUEST: You're too young to remember, Jim, so British banks do spectacularly badly in the United States. You know, Midland lost a bunch with Crocker on the one - in California. NatWest started up over here and then closed down. HSBC retrenched.
BOULDEN: Yes, Household Finance, yes.
QUEST: Household Finance. Now Barclays -
QUEST: -- again is licking its wounds and going home.
BOULDEN: But when Barclays bought that branch of Lehman Brothers, we all thought that was brilliant. Remember they stepped in and bought that and Barclays didn't take a bailout. And it looked like a really, really smart move when Lehman Brothers fell apart. And so that time it looked brilliant and they were able to do what other banks couldn't do. So it's an amazing climb down from 2009 to 2014. But Antony Jenkins, relatively new CEO, he comes in and pushes out the strategy of the previous CEO. So in that sense, we've been expecting this to come for a long time. He's now done it. We're going to have to see in a few years whether it made sense.
QUEST: Jim Boulden's in London for us tonight. Jim, good to see you as always, sir. Thank you so much. Barclays is amongst five banks accused of fixing the price of gold this week. Now, when I say fixing, they do it legally. It's known as the London gold fix and it happens twice a day. Lawyers in New York are taking further steps against these five banks. They are accused of collusion over the gold fix which is the benchmark for setting gold prices. It's a similar accusation to the ones being made over foreign exchange manipulation. The Randgold produced - Randgold produced - - record amounts of gold in three months to the end of March and it says it can be profitable even if prices fall well below current levels. I asked the chief exec Mark Bristow at Randgold if he was preparing for a drop in gold prices.
MARK BRISTOW, CEO, RANDGOLD: Richard, we've always used a conservative, long-term gold price to allocate capital. That's the nature of any resource business. You know, you can't use spot and that's what got the gold mining industry into trouble, because when it corrected slightly (ph) last year on a percentage basis, it put the whole industry in a tailspin. We've always the last four years used a $1,000 gold price to allocate capital and to do our business plans.
QUEST: Where do you stand on the London gold fixing twice a day? Now of course very controversial with litigation in the United States. Is it time, Mark, to change the London gold fix?
BRISTOW: You know, I think everything has a time for review and, you know, the industry has changed a lot, there's a lot - I mean, the gold industry (rarely/really) is driven by, you know, the voluminous paper market rather than the physical market. That's always been a good reference point. You know, the ETFs have made a big impact on how gold is traded. You know, I think there's a -- certainly an -- investigation going - ongoing - on and, you know, I think can the efficiency of that fixing be reviewed? Will it improve the way we manage in our business? Maybe, maybe not. But I think, you know, at times when changes are required and I think that's what people are saying is, you know, it's a very secretive process and it would be better to be a little more transparent I would suggest.
QUEST: You - so you are in favor of seeing changes to the London gold fix process?
BRISTOW: Yes, I think it's worth investigation and debate, Richard. You know, it's - if you look at the volume of business written against those two fixers, and you know, if there's any suggestion that it might not be, you know, an open and transparent way, then it's worth having a look and seeing if there's a better way to do it and a more transparent way to do it.
QUEST: Mark Bristow looking forward to changes in maybe the London gold fixing. When we come back, gamers say Nintendo is discriminating against gay marriage. Going to talk to one Arizona gamer who's taking his fight for equality all the way to Japan.
QUEST: The videogame maker Nintendo's responding to claims that it is discriminating against gay marriage and arguably the gay community in the virtual world. Tomodachi Life is a handheld game that takes place on a virtual island. Players can design their own avatars called Miis and give them a personality before sending them off to interact with others. And of course the game all involves life, how you play life, who you meet, who you fall in love with and who you marry. A group of complainers says the games does let avatars marry people of the same sex. Their social media campaign has forced Nintendo to respond. (RINGS BELL).
Nintendo says it "never intended to make any form of social commentary with the launch of Tomodachi Life...The relationship options in the game represents a playful alternate world rather than a real-life simulation." Tye Marini set up the campaign for 'Miiquality' and joins me now from Mesa, Arizona. Well, they've got a point haven't they, Ty. I mean, it's a bit of fun, it's a game, why are you getting hot under the collar about it?
TYE MARINI, 'MIIQUALITY' CAMPAIGN: Yes it is a game, however it's a very personal game. You know, the game encourages you to use your Mii characters which are based on, you know, yourself or your friends. These characters are based on real people. And the main - one of the main points of the game is relationships - how Mii interact with each other and, you know, Miis falling in love and dating. There's even exclusive content that comes with dating and marrying Miis. However, it's - the game does not give the option for people who are attracted to the same sex to -
MARINI: -- to, you know, date or marry same-sex Miis.
QUEST: Do you think they just didn't think about it and now have found themselves in a rather uncomfortable and awkward position? They just never thought that people would want to have that option on the game?
MARINI: Well, the culture's a little bit different in Japan, so I kind of understand why, you know, it doesn't - the game doesn't support that, being a Japanese-made game. However, I feel like that's an issue that should've been tackled when Nintendo chose to localize the game in other regions.
QUEST: Right. Now, there was an argument there - I mean, did they sort of say there's a - "The relationship represents a playful alternate world rather than real-life simulation." Are you taking this a bit too seriously?
MARINI: I don't think I'm taking it a little bit too seriously. I mean, by their comment, you know, they're saying 'Sure, you know, it is a playful alternate virtual world,' however it's one in which, you know, same sex relationships don't exist. So, you know, I mean while there are far greater issues out here, you know, the point is they're excluding, you know -
MARINI: -- a whole group of people from enjoying their game.
QUEST: Yes, I mean, we were talking about this in the office, and, I mean, you live in Arizona if I'm not mistaken which of course doesn't enjoy same-sex marriage in your own state. So, there's an argument to say you might be better off going to the state house and protesting there rather than to a corporation in Japan. Or maybe you do both.
MARINI: I mean, that's absolutely a point, however, there's lots and lots of people out there, you know, pushing for gay rights, you know, all over the country, all over the state. However I do feel like, you know, just because this is a videogame means it's not an issue that should be tackled as well at the same time.
QUEST: And you're getting a lot of support for this. Interesting stuff. Thank you so much, sir, for joining us and putting it into perspective. I appreciate your view tonight. Thank you very much. Now, Jenny Harrison is at the World Weather Center. Some very nasty weather in the United States and around the west of the world.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: The rest of the world. I'll get to it in a minute. You're right, Richard, not good at all in fact the tornado sirens are being sounded right this minute in downtown Dallas. We've got some thunderstorms coming through that particular region. You can see to the north we've got some yellow boxes - the strong thunderstorm watches and also this red box - again for a tornado watch. But as I say right now there's actually a tornado that's been spotted in northeastern Texas.
Now when it comes to ground delays, not surprising, down at the ground stop that's actually been in place the last couple of hours. It says until 4 but of course it'll be on that time - oh no, Central time, so yes for another hour. And then Fort Worth the same story. Minneapolis - again, this is where all these thunderstorms are. And then in New York we've got some long delays there as well - ground delays for the most part. This is why.
The next couple of days, again, we're expecting more severe storms across the Central Plains, we've got some very, very warm air in place across the South and it's pushing across into the East. And so, again, it's cooler, in fact the dry air is coming down behind and this is why we're seeing this line of very strong and severe thunderstorms. The warnings are in place. You can see how far they extend, again, all the way from Texas right up almost toward the border with Canada. So, again, large hail, severe winds and there's always that chance of one or two isolated tornados.
So it's a very unsettled picture, particularly at the end of this 48- hour stretch where we actually have rain. It comes in much of the Eastern Seaboard. At that point, still one or two thunderstorms but the really severe thunderstorms hopefully are easing towards the end of that 48 hours. For Friday, 29 in Atlanta and rather cool - 16 Celsius in New York.
Now, the heat is certainly on across parts of Europe. It's also cooled off of course across those northern regions. We've got more rain in the forecast through the first part of the weekend. Quite windy as well. Showers across the southeast and a little bit cooler than it was across the southwest of Europe. And in fact the temperatures will be rising again as we head through the weekend. Very unsettled across the north. Again, some more snow to the mountains up into northern Norway. And again in Europe we've some warnings in place as well. Heavy rain, maybe some large hail, also the chance of tornados that's southeast from that system and across the northwest with that wind and rain coming in together.
So, all of it too much for you, a little bit too bleak. Well it's not that bad. For a lot of Europe there's a lot of nice sunshine around. Maybe you feel like a bit of a beach getaway. Well, Malaga is certainly the spot for it this weekend. Saturday and Sunday - by Sunday 27 Celsius and maybe partly cloudy skies and also quite nice and mild in the overnight hours and very nice weather conditions. If you're thinking of a city break, how about Rome? Look at this - glorious sunshine Saturday and Sunday, temperatures in the mid to low 20s.
HARRISON: Cooling off to quite nice temperatures in the overnight hours. I know, Richard, I can hear you "oohing." Very nice indeed. So certainly for central Spain the temperatures again have been very warm this particular Thursday - 29 in Seville, 13 Cordoba and in fact those temperatures are set to rise again as we head into the weekend. You can see this warmth coming back in as we head into Saturday on into Sunday. Richard.
QUEST: I'm looking forward to a week in Malaga myself in June. Where hopefully -
HARRISON: Oh, well how very pleasant.
QUEST: Yes, absolutely. I'll send you a postcard.
HARRISON: Yes, do please. And send me some pictures and I can use them for our weekend getaway.
QUEST: Absolutely. Wish you were here. Jenny Harrison at the World Weather Center. When central banks speak, the market reacts.
CHARLES PLOSSER, PHILADELPHIA FEDERAL RESERVE PRESIDENT: It is important, it is essential in my view for central banks to be as transparent and clear as they possibly can.
QUEST: President Plosser of Philly managing the taper talk, next. (RINGS BELL).
QUEST: The president of Philadelphia's Fed says central bankers have a duty to be as transparent as possible. His comments come almost a year since the Fed's taper talks sent markets in the world down the tide (ph) tunnel. This was the Dow Jones. Remember that? Look at that. 'Round last February the mere talk of taper sent everything over. Well I asked President Plosser of the Fed if the Fed had got its communication wrong in this instance.
PLOSSER: I think the difficulty communicating about what's going to happen in the future is a difficulty that we faced for a long time. It's not a new difficulty, and markets oftentimes want some precision when precision doesn't really exist. And so how we communicate with the markets on this is a difficult task.
QUEST: Would you agree that the Fed is engaged at the moment, like everybody else, in a learning experience?
PLOSSER: Absolutely. I've said many times communications and transparency which is the - which is what we're trying to do, and that's a noble effort, but it's a journey. And I wouldn't - we're never going to be there in some perfect sense. We are having to learn how to communicate effectively - and what to communicate effectively. And doesn't always work out as we had planned.
QUEST: Within that idea of what to and how to, the whole transparency question, you're not only doing it - which is new for the Fed - but you're doing it in an environment of social media. You're doing it in entirely different world when nobody knows really how this new wave of communication comes along.
PLOSSER: Well, that's - it's - a fear, that doesn't mean you don't do. That doesn't mean you try to be secret and don't tell anybody anything. I think you learn about how to be transparent. It is important, it is essential in my view for central banks to be as transparent and clear as they possibly can.
QUEST: This is the famous (blips/blitz). It's a view on where you think rates should be.
PLOSSER: Right, correct.
QUEST: Now, there's one person who this year thinks rates should go up. I'm guessing that's you.
PLOSSER: That's me.
QUEST: You admit it?
PLOSSER: I admit, sure. Transparency - that's an example of trans -
QUEST: That makes your job more difficult in many ways.
PLOSSER: -- but my job's difficult already.
QUEST: Back to the economy. Why do you think rates should be moving that much faster than many of your colleagues on the fort (ph).
PLOSSER: The way I think about the way rates should move is I pay attention to conducting policy in a systematic way - through rules. And so when I think about the future path of rates, I let guide me what our rules tell us we should be doing - what those rules say. Now, there are different rules, but I look at a number of them and I make a judgment about which of those rules make sense to me, and I use those rules to guide me as to where policy ought to be.
QUEST: And those rules for you put you ahead of others.
QUEST: Have we asked too much of you.
PLOSSER: I think in general my view is that individuals and policymakers and the markets are expecting way too much from central banks. They are asking us to do things that we're not particularly well-equipped to do and to solve all our problems. And I think we need a little more humility about what central banks can deliver for our economies. I do have a quote from Milton Friedman. Milton in 1969 made the following statement which I think is very apt today. I'll get this approximately right. "We're in danger of asking monetary policy to play a role that's larger than it can play, to achieve tasks it cannot achieve, and in doing so, putting at risk the contributions that it's capable of making." That's a wise thing to keep in mind as we move forward.
QUEST: Wise indeed, and we'll have a "Profitable Moment" which may be not quite as wise after the break.
QUEST: Tonight's "Profitable Moment." Our interview with President Plosser of Philadelphia was a fascinating insight. First of all because it raised the whole question of central bankers' secrecy. When I started in this game, central bankers barely even admitted that they existed, let alone let you open the front door and said press conferences. Now we have statements, we have press conferences and we have interviews. But for the central bankers involved, it's a conundrum because they know they're required to give more transparency, but how not to give too much away because their decisions affect literally everything thing you and I do in terms of our interest rates and in terms of our loans. And that's why we are seeing change before our very eyes. And the answer of course from President Plosser is that they'll get it wrong sometimes and get it right others. But they provided they keep trying to let - light in on magic - to let us know what they are up to, well at least then it's a step in the right direction. And that is "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you in Johannesburg on Monday.