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QUEST MEANS BUSINESS

NATO Warns of Escalation in Ukraine; Ukrainian, Russian Currencies Slide; Small Gains for US Stocks, Dow Hits Record High; Alibaba's Singles Day Sales Record; CEO's Billion-Dollar Divorce; Most Expensive Splits; Divorce and Preserving Wealth; Spotify Strikes Back; Garth Brooks Launches Music Site

Aired November 11, 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: Ever so close, but no new record for the Dow. Would you look at that? Nearly made it in the last few moments of trade.

The closing bell is ringing. The gentleman at the Stock Exchange -- hit the gavel!

(GAVEL POUNDS)

QUEST: Yes! It is a record! Look at it! In the last second, it eked out one more point. Eat your heart out, Tom my producer who said it

wouldn't do it. It's today, it's Tuesday, November the 11th.

Tonight, it's serious, it's a cease-fire in the balance, and a currency in crisis. Ukraine's economy is bearing the brunt of the Russian

conflict.

Also we'll tell you Spotify is striking back. It's telling Taylor Swift the times, they are a-changing.

And the oil tycoon, his wife, and a billion-dollar divorce. You couldn't make it up.

I'm Richard Quest. As always, I mean business.

Good evening. Tonight, Ukraine's currency is reeling, and Western leaders are pondering new sanctions on Russia. NATO is warning of a

dangerous escalation of tensions with Russia. And President Barack Obama and the Russian president, Vladimir Putin, despite a brief meeting at the

APEC summit in Beijing, seem no closer.

It comes as a security source is telling CNN that fighting between pro-Russian rebel Ukrainian soldiers has returned to pre-cease-fire levels

in some places. That's the agreement of cease-fire, the so-called Minsk Agreement.

NATO's supreme military commander says the massing of Russian forces in Crimea may signal a new and even more dangerous phase of the conflict.

(BEGIN VIDEO CLIP)

PHILIP BREEDLOVE, GENERAL, NATO SUPREME COMMANDER: We see forces that are capable of being nuclear that are being moved to Crimea. Whether they

are or not, we do not know, but they do have the kind of equipment there that could support that mission, if required.

(END VIDEO CLIP)

QUEST: Now, wherever you look, the situation is now starting to break out, whether it's on the military field or, indeed, in the currency

markets. The worsening position is having an economic effect on both sides of the border, the Ukrainian and the Russian, as well as the European.

Join me at the super screens and I'll show you what I mean.

We need to begin, of course, with Ukraine, where the currency, the hryvnia, has fallen to record lows. Just look and I'll show you exactly

how bad the situation has become. Versus the US dollar, it's gone from back in January at 0.122 all the way down to 0.044. And look at the very

sharp fall in recent days.

The central bank has introduced new measures to defend the currency. So far, the hryvnia has lost 50 percent in 2014. Of course, one of the

very largest losses, of course, following MH17.

Now, on the other side of the border, things are equally difficult when it comes to currencies. We're talking, of course, about Russia, and

here you'll see how the ruble has fallen dramatically. It's fallen once again.

Now, you -- Russia in the last 24 hours has released currency controls, export controls and restrictions, in a move to help the currency

float more freely. The idea, of course, long term is that it would stop these dramatic falls and -- and -- help the Russian Central Bank preserve

its foreign currency which, of course, it's been squandering.

Russia is now seeking east and south trade deals. It's looking to build eight nuclear reactors in Iran, and as part of its new Silk Road

policy, there's this vast, expensive pipeline that will allow Russian gas to flow to China.

But as oil prices have fallen sharply, well, you can see oil being a dollar currency, petrol currency, dollar being that, you can see the sharp

fall.

Factor into all of this, you've got the Ukrainian side, you've got the Europe -- you've got the Russian side. What about the Europeans? Where do

they stand, and how are they being -- faring in all of this?

Move it across and you will see on the European front, leaders are to discuss new sanctions next week. Chancellor Merkel says that no new

sanctions are needed or planned for now.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): With a view to the elections, which we believe were illegal, we recently said that

we would take a look at the list of people were were involved in these illegal elections and whether there was reason to act.

This process is underway. Beyond that, further economic sanctions are not planned at the moment. We are focusing on the winter and the

humanitarian situation there, and how to get a real cease-fire.

(END VIDEO CLIP)

QUEST: So, this is extraordinary, because you have the Ukrainian currency falling because of he dispute, you have the Russian currency

falling because of the dispute, and you have a military conflagration seeming to pick up.

Tim Ash heads the emerging market research at Standard Bank. He joins me now via Skype from Istanbul. Tim, this is quite unusual, isn't it?

TIM ASH, HEAD OF EMERGING MARKETS RESEARCH, STANDARD BANK: Well, it's a very tricky situation for both countries.

We all knew about Ukraine's problem, which was twin deficits, very large external financing requirements, an IMF program that wasn't quite big

enough and not enough to instill confidence on the man in the streets, on the part of the man in the streets in Kiev facing a major security problem,

obviously, in the Donbass. So, the currency weakened initially, central bank tried to manage it --

QUEST: Right.

ASH: -- and slow the weakness. But in the last few days, I think, they've kind of given up again, and the currency's gone to new lows.

QUEST: If we take the Russian side of the equation, the decision by the central bank to release the borders -- release the bans, if you like,

allow the currency to float, reduce the intervention amount. Some say this is capitulation, others say it's just common sense. Which do you say?

ASH: It's a bit of both. Let's face it, the Russians were trying to manage their currency weaker for the last two months. They recognized that

there were long-term drivers for ruble weakness.

No growth, despite the fact that oil prices had been very high in recent years, over $100 a barrel, the Russian economy just wasn't growing,

which reflected very deep structural problems in the economy, a lack of competitiveness.

And then you add that, oil prices that have dropped $20, $25 a barrel, which has a big impact, both on the fiscal numbers of Russia and also the

balance of payments. And the Russians knew they couldn't hold it, so they were trying to manage it weaker using a combination of factors. They hiked

rates, they were intervening, and they blew about $70 billion of reserves.

But despite that, in the last week or so, we saw a vicious cycle developing on the exchange rate. People were getting very nervous about

the one-way bet for the ruble. So -- and it wasn't helped by these exchange rate bans, which in a way --

QUEST: Right.

ASH: -- forced the central bank to use reserves, but really -- and devalue the currency. And it became almost self-fulfilling.

QUEST: Now, I'm looking here at the ruble versus the dollar, and while we look at this, Tim, I need you to tell me, if we take this very

sharp fall from July right the way down to where we are, what would it take if anything to support the ruble and/or give it a lift back up again? Or

frankly, is that a lone, forlorn hope, certainly with more sanctions, perhaps, on the way?

Well, I think there's -- as I said, there's fundamental reasons for ruble weakness: low oil prices, low growth, the conflict with West.

Sanctions are hurting. Many people didn't think sanctions would work. They are inflicting a lot of pain on Russia, and that's reflected in the

lower -- sorry, that's reflected in the weaker ruble.

Something's got to give. Something's got to change to change the direction of the exchange rate. All those kind of fundamental factors

somehow --

QUEST: Right.

ASH: -- has got to change. The oil price has got to reverse. Central bank -- they've been threatening to come in a big size, a big

intervention, talking about tens of billions of dollars of intervention in a series of days, for example --

QUEST: All right.

ASH: -- would temporarily take some of the speculative shots out. But in the end, the long-term trend, I think, for the ruble, unless those

fundamental factors change, is still going to be weaker.

QUEST: Tim, thank you for joining us, putting it into perspective. I appreciate it tonight. Many thanks, indeed.

ASH: My pleasure.

QUEST: Now, in the US, look at this. It started up, it ended down, and right the way through until the end we thought -- in fact, it's such a

small gain and it happened so late the chart can't really even see. There should be a little bit of green there in the last few seconds of trading.

It's now closed at an all-time high, the market is up just one point. That is the new number. Alison Kosik is at the Stock Exchange. We didn't

think it was going to do it in -- because it --

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes.

QUEST: -- it had to gain six points, seven points in 30 seconds.

KOSIK: Yes. Well there you go. Sometimes all it does is take a point here and there to break another record. Interesting day, though.

You look at -- it's Veteran's Day, a holiday. All the people moving money around were off today, so volume was really light.

It's nice to take stock and look at how stocks are doing, look at the Dow. It's up 6 percent for the year already. The S&P 500 is up about 10

percent for the year. Did you know that yesterday, Richard, was the 39th time the S&P 500 closed at a record high this year?

Although it was a quiet day, oil was on the radar, briefly sliding below $77 a barrel, ending a bit higher than that. Richard?

QUEST: Alison, thank you for that. And pointing out those numbers does beautifully bring our financial world together, the sort of things

we've just been talking about. You start to see how the oil price affects the ruble, which of course the oil price then affects the market and the

ruble, and Russian trade affects the US trade imbalance. The whole picture starts to come together, which is what we aim to show you.

Coming up tonight on QUEST MEANS BUSINESS, we're also going to show you what really makes the rich different from those who haven't got much.

D-I-V-O-R-C-E. When the split happens, it's time to get out the big bucks.

(RINGS BELL)

(COMMERCIAL BREAK)

QUEST: Chinese shoppers broke records today. It's a holiday that didn't even exist a few years ago. No, it's true. A few years ago, no one

had ever heard of Singles Day because it hadn't been invented. But then came along Alibaba.

Now, Alibaba said sales on so-called Singles Day, on its various shopping websites, were more than $9 billion, $9.3 billion in a single day.

It's a huge leap from less than $6 billion just a year ago, a more than 50 percent leap.

The annual shopping festival -- it's called, as I say, Single's Day -- it originated as a way to celebrate China's bachelors. And the last few

years, Alibaba's promoted it. It's got massive publicity, it's got discounted prices.

And with the huge amount of heft that Alibaba has in the market, one could arguably ask Samuel Burke, our technology correspondent, whether --

whether, Samuel --

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Welcome back.

QUEST: -- Single's Day -- thank you, sir. Single's Day, it's a fabrication of those like Alibaba, but it's a remarkably successful one.

BURKE: Yes. And most interestingly, it started way back in the 90s - -

QUEST: Yes.

BURKE: -- I was just a few years old then, Richard -- and it's on 11/11. So, I've made a great graphic here, which your viewers might be

able to see. It looks like single people here. Only the best graphics money can buy.

(LAUGHTER)

BURKE: And yes, it's a great feat of Chinese consumerism, much like some of the holidays that we have here, which are great excuses to go

shopping. Just after Thanksgiving, of course, you have Black Friday and then Cyber Monday. But the total of those two days combined, $3 billion

last year. And of course, you showed for Alibaba alone, $9.3 billion.

QUEST: OK. Why? Help us understand why it is so successful. Is it the mercantilist view of the Chinese that they just want to shop? Because

let's face it, the US is the world's greatest shopper. So why?

BURKE: It just started off as something where people would buy things that looked like an object one, churros, for example. But then, Alibaba

around 2009 really came in and just was looking for an opportunity where they could create bargains. And they created such great sales that it

really brought in that Chinese consumer.

QUEST: Nine billion is an enormous amount of money. Is this in a way related -- is it a completely -- it's a completely artificial construct,

but is it related to the holiday? Are people buying holiday season gifts? You're shaking your head.

BURKE: No, we've heard that -- it's not just -- it's supposed to be for singles. We've heard that the sales are so good that nobody can

resist, married people, single people, any type of people, people are going for it.

And of course, not just Alibaba. One of the companies that fascinates me most in China right now is Xiaomi, the number-one smartphone

manufacturer in China. They sold over 1 million phones today, Richard, $254 million in revenue. So, nothing compared to Alibaba, but nothing to

scoff at either.

QUEST: If it's $9.3 billion, the market was looking for $10 billion, which is why the share price took a little bit of a tumble.

BURKE: Yes.

QUEST: What's next year's target?

BURKE: Interestingly, Jack Ma is saying he thinks it's going to go global in the next few years, that people back in your home continent of

Europe will be doing Single's Day, that people here in the good old United States will be doing Single's Day. It's been around since the 90s, and

it's still really only a Chinese phenomenon. I'm sure Jack Ma would love for it to go global, but I don't know if I really see that happening.

QUEST: Well, you're not single, so you won't be taking part in it anyway. Samuel Burke, thank you, don't touch the bell.

When we come back, one of the world's top oil executives is a billion dollar poorer today. We're going to talk about that, now, after the most

expensive divorce settlement in history. Join me at the super screen and you'll see just how some people are seriously rich when it comes to

divorces.

The oil CEO is the majority shareholder of Continental Resources. Forbes says he's worth around $18 billion. Because of the way Oklahoma law

works, the money that the spouse earns while married can be part of a divorce settlement if it's made through skills.

So, Mr. Hamm's lawyer -- this is Mr. Hamm, by the way -- Mr. Hamm's lawyers tried to argue that one of America's richest entrepreneurs had

basically stumbled upon his fortune. Now, this is the divorce, of course. The question is, is it worth a billion dollars?

The case of Hamm versus Hamm isn't the biggest divorce settlement in the world. It's not even the biggest this year. In honor of Single's Day,

just take a look at some very pricey splits.

Now we get to this gentleman. May. He's the Russian oligarch, Dmitry Rybolovlev. He was ordered to hand over half his wealth to his former

wife, $4.5 billion.

Then you have the French businessman and the art dealer Alec Wildenstein, who paid $2.5 billion when he and the former Mrs. Wildenstein,

Jocelyn, they got divorced.

Where would be in great divorces of our time if it wasn't for Rupert. Rupert Murdoch handed $1.7 billion to his ex-wife of many years, it was

Anna Murdoch.

And the Formula 1 president, Bernie Ecclestone, he paid $1.5 billion to his former wife, Slavica. You get the picture.

Back to Continental's chief, Harold Hamm, who told Bloomberg he didn't have a prenup agreement. So, let's consider how the super rich navigate

these torturous waters. Robin Charrot specializes in divorce law and prenuptial arrangements. He joins me now from Manchester in the United

Kingdom.

Robin, one point -- the billion for Mrs. Hamm or the former Mrs. Hamm, you were not surprised at that sum, and you said in some cases it could

have been more.

ROBIN CHARROT, DIVORCE LAWYER, MILLS AND REEVE: Very much so, yes. I think the surprise in the Hamm case was that so little of Harold's fortune

was found to actually be marital assets. But that seemed to be the key for the judge. He found that only $2 billion was marital assets. And so, in

his view, he was dividing the marital assets equally.

QUEST: Right. Because as I read Oklahoma law, not that one spends too much time reading the law in Oklahoma, but as I read that, it's all

about equitable distribution of the marital assets and those sort of things. So, you could -- you're heading towards a 50-50 scenario once

you've determined that they're marital assets, correct?

CHARROT: That's correct, yes.

QUEST: And in that situation -- in that situation, why do you think he found such a small amount as part of the marriage?

CHARROT: I think there were two reasons, basically. I think firstly there was a huge amount of analysis in the judgment about the history of

the company that became Continental Resources, and you can see that Harold Hamm actually started all of that off in 1967, which is a good 21 years

before the marriage.

So, that's one of the things that's going on, you can see a lot of pre-marriage accumulation of wealth, or the starting of a company if it

will become immensely successful.

QUEST: Right.

CHARROT: I think another area where Howard's lawyers did very well --

QUEST: Right.

CHARROT: -- is that they actually played down his role in the success of the company after the marriage. Mrs. Hamm's lawyers really wanted to

play this up and say that had it not been for him, the company would be worth very, very little compared to now. And she really didn't work with

that.

QUEST: All right.

CHARROT: The judge seems to be saying that the company would have done pretty well without Harold Hamm. So, it was really those two factors

that contributed to what Mrs. Hamm, I'm sure, would consider a low award.

QUEST: Finally, briefly, when you negotiate a divorce settlement where there's clearly enough money to go around, a billion here, a billion

there, we're talking -- there's more than enough. Does it become just as difficult, just as vicious, just as nasty?

CHARROT: It does tend to be. You'd be surprised, actually, yes. From an outsider's point of view, you think, well, there's enough to go

around here, and surely this couple can actually get to grips with it and sort it out between themselves to the best -- for the good of their family.

But really, it doesn't matter how much money there is in the case, you always get these difficulties surfacing --

QUEST: Right.

CHARROT: -- you always get people grabbing for what they think is their fair share.

QUEST: Grabbing for what they think is their fair share. A perfect way for us to say thank you, sir, for joining us tonight.

The man who founded Spotify has vented his frustration. What else can you do when you've just been jilted by Taylor Swift?

(COMMERCIAL BREAK)

QUEST: Spotify has hit back at Taylor Swift for pulling her songs after the music streaming site. Taylor Swift is the biggest thing to hit

the music business in many years. A week ago, she said she was taking her hugely popular catalog away from Spotify. She doesn't feel it rewards

artists adequately.

She wrote in "The Wall Street Journal" in June, "Music is art, and art is important and rare. Important, rare things are valuable. Valuable

things should be paid for." Daniel Ek, who runs Spotify, in a statement said, "We use music to get people to pay for music. The more we grow, the

more we'll pay you."

These are the two statements. Taylor Swift says the future of music is a love story, the Spotify Team say $2 billion, a reference to the amount

of money that they paid, $2 billion and counting.

It's paid more than $2 billion to songwriters, singers, and labels. I spoke to Jonathan Prince from Spotify. I asked if the company had been

stung by the Taylor Swift accusation.

(BEGIN VIDEOTAPE)

JONATHAN PRINCE, SPOTIFY: I don't think we were stung by it, in the sense that we were disappointed, because we love Taylor Swift, we think

she's a great artist. We've got tons of her fans on our service. Before she took her catalog down, there was something like 16 million of our users

who listened to her in the month just prior.

At the same time, it continued to spark a conversation -- it's been an ongoing conversation, it's not a new conversation, but it's an important

conversation, which is how does the music industry in the 21st century reshape itself in a way that really works for artists for the first time?

QUEST: Do you think, then, looking at your argument and the points that you made, first of all that nothing's free, so to speak. Secondly,

that Spotify pays, and thirdly, that it doesn't (inaudible). That's your argument. Do you think musicians, artists, are being naive in the new

economy?

PRINCE: I don't want to speak for any artist and say they're being naive. What I do think is we need to do a good job communicating how we

work and help them understand how we work. So, there is all this talk about free, and you get an interesting conflation.

Because most music that is consumed out there is consumed free. Radio, YouTube, piracy. And those services, they don't monetize artists at

all. Now, our free does monetize for artists. Our free brings money back into the system in a couple of ways.

First of all, and most important, free is how we get to subscriptions. That's number one. But number two, our free is ad supported, so every time

someone listens to a song on free or on premium, it generates royalties.

QUEST: The argument being that it doesn't generate enough. That yes, and your point says that Taylor Swift may have got in the $6 million range

and above from Spotify, but the majority don't.

PRINCE: But that argument might hold water if we were just a free service. And it's true that the services that are just free, that have

scaled, like Pandora, don't generate a lot of money. We're the single biggest driver of new revenue in the music industry, Spotify. Single,

number one, right?

So -- and that's because of the genius connection that these guys made when they started the company between free and paid. They understood that

there's this giant free music ecosystem out there, and a generation of folks grew up knowing they could find music for free.

If you wanted to bring those people back into the system, then you needed to find a way to compete with free. And that's why our free service

is a gateway to our subscription service.

QUEST: Right, your free service is advertised -- is advertiser paid for, sponsored, basically.

PRINCE: It is. Of course it is.

QUEST: So, we end up with a situation -- because we can argue backwards and forwards, he said she said, she said he said. But we come to

this fundamental point, you're being painted as the bad guys now by some people.

PRINCE: By some people. Not by the great majority of people. Not by Bono, not by Quincy Jones, not by our 50 million users who love the way our

service works. So, yes, sure, there still continues to be a misunderstanding.

The music industry is in a giant period of change. This is really the biggest change since recorded music. So, we understand that there's

confusion and there's emotion, and that's OK.

QUEST: And isn't that really what this is all about? Revolution, change, it's happening in front of our eyes. It's not pleasant, it's

messy.

PRINCE: Change is always messy and challenging, and it poses communications challenges and it poses educational challenges. And it

upsets people's world in a way -- it rocks the boat. That is what change is about.

But at the same time, this change, more than anything else, is being driven by music fans. Music fans who first were used to free, but even

more than that, are used to finding music wherever they want whenever they want it, and that's what we're trying to provide.

Streaming is here to stay. It's not going anywhere. Our job, really, is to make sure the streaming is delivered in a way that works for artists.

(END VIDEOTAPE)

QUEST: Now, as Spotify battles to convince artists to let their music be streamed, alternatives are emerging. Country music superstar Garth

Brooks has unveiled GhostTunes. It's an online music store, and its chief executive, Randy Bernard, joins us now from Nashville, Tennessee. Sir,

thank you for joining us. The --

RANDY BERNARD, CEO, GHOSTTUNES: Thank you, Richard.

QUEST: It's a mess, isn't it?

(LAUGHTER)

QUEST: I mean, you've got Taylor Swift saying no, Spotify, you heard their justification. You're selling and getting into the market. Why are

you different?

BERNARD: Well, I think what we -- what Garth Brooks set out to do is just offer an alternative. And his alternative is how artists can be in

control of how they package and price their music, as well as the economic model pays up to 80 percent back to the artist or label. Which is very

important. Garth wants to make sure that he is trying to care of the artist as much as he can.

QUEST: Right. But you've got to be careful here, because you're playing against some very big players, here, aren't you? You could get

nut-crackered.

BERNARD: Well, we're not trying to be -- we're not going to any artist saying we want exclusivity. We're going to them and saying this is

an alternative for you and an option. But most artists -- if an artist thinks that he or should be on a subscription streaming or any other type

of downloadable platform, that's fine with us.

Again, this is clearly a way where we can create bundles, put merchandise and ticketing together with your music, or whatever is

important to that artist. If the artist wants to create a 4-song album or a 20-song album, we'll do whatever that artist wants to do.

QUEST: Every -- what I find fascinating about this whole debate, sir, and there's maybe an element of humor in what I say here, but everybody's

taking the high ground.

Spotify is taking the high ground and claiming it's in the best interests of music and consumers. Taylor Swift's claiming the high ground.

You're claiming the high ground. Garth Brooks is claiming the high ground. There's so much high ground, I don't really understand who's at fault.

BERNARD: I'm not sure if there is a wrong. I think the bottom line will be the consumer will decide that. I think, again, this is a very good

economic model and it is -- gives the artist the control and freedom that he wants. So, we believe that music wins with ours, just from the fact

that you have so much control as an artist.

QUEST: That's the chief executive, it's Randy Bernard of Garth Brooks' GhostTunes. The high ground, the low ground, the middle ground,

we've certainly enjoyed having you with us this evening, sir.

BERNARD: Thank you.

QUEST: Thank you very much, indeed. Busy program today. As we continue our nightly conversation on business and economics, the Chinese

president Xi Jinping says the world needs a massive trade deal to spur growth. Now, we'll talk about that and how that could be a problem for his

US counterpart. It's all about trade after the break.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network the news always comes

first.

We're just hearing from the Iraq ministry of defense which says the Iraqi military has retaken the city of Baiji from ISIS. Baiji is home to

Iraq's largest oil refinery and a large electricity plant. The military retook the refinery in July. It has now ousted ISIS forces from the major

part of the city.

A Palestinian man was shot and killed by Israeli forces today. It was during clashes in the West Bank. The Israel Defense Forces said a main

aimed a makeshift weapon at Israeli soldiers. The man's family's rejected that accusation. They say he was simply watching troops that were

confronting Palestinian demonstrators.

A British security source says fighting between pro-Russian separatists and the Ukrainian army is increasing. The source says its back

to the levels seen before the immense (ph) ceasefire was agreed. The same source said Britain estimates Russia has at least 8,000 troops positioned

near the Ukrainian border and has sent reinforcements into Eastern Ukraine.

Hospital officials in India say at least 11 women have died after sterilization surgery at a mobile clinic run by the government. Sixty-two

women are being treated in hospital for injuries. The victims were paid around $23 to undergo the procedures.

In Poland, police arrested more than 200 people after violence in Warsaw which took place on Polish Independence Day. Thousands of people

came onto the streets to celebrate the holiday in the Capital City Center. The clashes broke out when nationalists threw rocks and firecrackers at the

police. They responded with water cannons.

And so all of our trade as leaders at the APEC Summit have agreed to press on with trade talks in a massive trade deal. If you join me at the

Super Screens, you'll see what I mean. It's any new agreement that may spoil President Obama's plan for a deal of his own. This is the so-called

TPP - the Trans-Pacific Partnership. Twelve countries are involved with talks, obviously on the eastern side of the Pacific and the western side of

Central and Southern America. You've got Australia and New Zealand and then parts of Southeast Asia and Japan up in north Asia.

But notice which country is not there - yes, well spot it. China. China's worrying that the U.S. is trying to force its open markets and to

see American trade drift towards TPP partners - which as you can see is there. Now, this is China's solution. It's called the FTAAP. Catchy

title - the Free Trade Area of Asia Pacific. So, you've got the APEC countries still involved - so you've still got North America, you've still

got Southern and Latin America, you've got Australia and New Zealand. But look at the big difference of APEC countries which account for 40 percent

of the world's population and 54 percent of economic output. The Chinese President Xi Jinping says lower tariffs will help lift the sluggish

economy. Not surprisingly, besides these countries, it's also got China and vast parts of - and large Russia as well. So which is preferable?

FTAAP or FTPP or TPP? I.B. is here.

IAN BREMMER, PRESIDENT, EURASIA GROUP: I am indeed. Good to see you, sure.

(CROSS TALK)

QUEST: (Inaudible) talk about this and make sense of it. It's - your view is it's not an either or because TPP is much closer than this thing.

BREMMER: Well, eventually it's going to be both, but TPP is going to get done in 2015 in all likelihood - been working on it for a long time

indeed. All they've agreed to is a two-year study. We - you know - there's no barrier (ph) there yet.

QUEST: So why have they done it?

BREMMER: Well, the Chinese want to announce something. I mean, the fact is when the Trans-Pacific Partnership - the TPP, America's

multilateral trade deal - was first announced - the Chinese response was we don't like it, we don't want it, we hope it's going to fail. It's

competitive. They now understand that it's going to actually happen, and over the long-term, that means the Chinese don't want to be left behind.

These are the most important economies aside from China in the region - the advanced economies - the ones more aligned with the United States.

QUEST: Right. So we have this extraordinary APEC which in many ways is a weird organization that doesn't serve too many purposes.

BREMMER: Well, they dress interestingly.

QUEST: They dress interestingly for the class photo. But, again today, you've got Putin who's there barely talking to Obama, who's down in

Australia. He meets Tony Abbott, the Australian prime minister, who'd said - President Putin - who'd said - Abbott had said he was going to give him a

(inaudible).

BREMMER: He did indeed. It didn't happen. And, look, I think the important things about this APEC Summit is that Chinese leadership looks

fantastic. They're hosting it, they say they want new great power relations with the United States. The Americans are saying we're expecting

you to isolate the Russians. Putin shows up before Obama does, signs billions and billions of dollars of deals with Xi Jinping. This is not

exactly the way you isolate somebody, right? The Russians are able to play the Chinese off and make the Americans look weak. The Chinese government

right beforehand we have the President is supporting a great deal of local opposition to the United States. The U.S. looks a little weak in this

environment.

QUEST: The U.S. looks weak. So we end up with the - I need your help because it gets confusing for - in a way. You're saying basically the

Chinese are winning the day

BREMMER: The Chinese, no. The long-term people coming to them. The Americans would not dare treat the Chinese the way we treat the Russians on

a daily basis. So, you know, the fact that we tell everyone this is the way you have to behave, this is - these are the rules of the road. The

Chinese don't listen to us and what can we do? I mean, on cyber there is a massive fight between these two countries and they're basically escalating

in a moderate way and agreeing to disagree.

QUEST: And in a word - is APEC even worth it or should they all save the money and stay at home?

BREMMER: It's always useful to have these groups get together. I have to say that.

QUEST: (RINGS BELL). Thank you very much.

BREMMER: My pleasure.

QUEST: More "Quest Means Business" in a moment.

(COMMERCIAL BREAK)

QUEST: Nigeria's president Goodluck Jonathan has said he's running for a second term. As part of his plan to modernize Africa's biggest

economy, he's helped Mastercard launch a new I.D. card. Nigerians can also use it as a payment system. CNN's Isa Soares spoke to the company's

international market's president. It's this week's "Future Finance."

(BEGIN VIDEOCLIP)

ISA SOARES, REPORTER AT CNN INTERNATIONAL: And MasterCard is teaming up with the Nigerian authorities to create a dual purpose identity card.

Tell us a bit more about how it will work.

ANN CARNES, PRESIDENT, INTERNATIONAL MARKETS, MASTERCARD They have decided to create something which would reach out to the entire adult

population of the country which is between 100 and 120 million people, and to roll out an identity card which will be fully biometric enabled. That

means fingerprint and so on. And that card will be layered with payment capability.

SOARES: Why Nigeria?

CARNES: Nigeria is Africa's biggest country and it's a country that's largely cash-based and the government there is very forward-thinking, they

want to eliminate cash from the economy and there's all sorts of good reasons to do that because cash costs money to reconcile, to count, to

carry around. And when I say cash costs money, excluding fraud and anything like that, cash costs about up to 1.5 percent of any country's

GDP.

SOARES: Will there ever be a point that we won't have cash in our pockets?

CARNES: I think that it depends on the country that you're in. If you ask that in Sweden, I think (LAUGHTER) the answer would be yes - we're

almost there. When you move out into the emerging markets, it's over 90 percent cash. So, I don't think that we're talking about cashless soon. I

do think that we're talking about cashless in a future that we can see though.

SOARES: Looking to your crystal ball the next five years , Ann, where do you see cashless society?

CARNES: I think countries will develop at very different paces. I think that the emerging markets - places like Africa and India and, you

know, parts of Latin America will leapfrog in this space, and people will be using mobile payments much more than they use them here in the developed

economies. One of the things that makes us slow to use our phones here is that, you know, we're just used to all the card machines working and, you

know, everything working in the environment here. And so we're more lazy about trying out new technology. I think also that cashless payments will

be used to solve some things in the NGO space. And we're already doing it today with the World Food Program where we're actually giving six - at the

moment - 600,000 refugees in the Lebanon the ability to buy food on cards with money loaded by World Food Program. You can see that you could

actually transform the whole aid space - the aid distribution space - with cashless - with a cashless economy.

(END VIDEOCLIP)

QUEST: In just a moment, I'm going to show you one simple invention that changed nearly everyone's lives.

(BEGIN VIDEOCLIP)

EDDIE FEIBUSCH, PRESIDENT, ZIPPERSTOP.COM: It is so easy. It makes life so much easier.

QUEST: Why the humble zip is part of the legacy of the First World War a century on.

(END VIDEOCLIP)

(COMMERCIAL BREAK)

QUEST: In a tradition that dates back to the end of World War I, people in many different countries stood in silence for two minutes today.

They were honoring the sacrifice of those who gave their lives in war.

(BEGIN VIDEOCLIP)

(HORN PLAYER PLAYS "TAPS")

(END VIDEOCLIP)

QUEST: New York Stock Exchange traders observed a moment's silence before the opening bell. When the U.S. entered the war in 1917, Wall

Street raised $23 billion by issuing Liberty Bonds or Liberty Loans. The bond market was closed today.

In our series "War of Invention," we're looking at how the Great War - - a century ago - how the Great War changed the way we live today. And we're doing so in many ways you might not realize. We all use various

things in bags, in clothes and suitcases. The zipper is everywhere. Now, in a moment of course, we're going to show you the largest zipper in the

world. But when World War I broke out, there weren't many people who'd even heard of zips, and the War was the turning point.

(BEGIN VIDEOCLIP)

QUEST: What keeps it together?

E. FEIBUSCH: It's exactly the fact that one 15th of the other one and they can't move out.

QUEST: When a zip is just right, everything comes together in perfect harmony.

E. FEIBUSCH: It is so easy. It makes life so much easier.

QUEST: Eddie Feibusch should know. At 91, he's been selling zips for more than 70 years.

E. FEIBUSCH: Since December 1941, Pearl Harbor day - December 7th on a Sunday morning.

QUEST: Do you think zipper was one of the world's great inventions?

E. FEIBUSCH: It sure is.

QUEST: A great invention with a difficult start in life. In the years leading up to the First World War, several inventors had tried to

market similar products. By 1914, a Swedish engineer, Gideon Sundback was putting the final touches to the modern zipper design. He called it the

separable fastener.

ROBERT FRIEDEL, AUTHOR, "ZIPPER -- AN EXPLORATION IN NOVELTY": World War I gave this brand new product the first chance to come up with some

markets that they can actually depend on. A tailor in New York City came up with the idea for a money belt that he thought he might be able to sell

to soldiers and sailors headed off to war. And that was the first major successful order for the zipper.

QUEST: The growing role of aviation in the Great War created another opportunity.

FRIEDEL: These are open, drafty, cold open-cockpit aircraft, so the need for some kind of warm, secure clothing encourages a few cover people

to come up with a design that would use this new fastener.

QUEST: The First World War finally got the zip industry moving. In the 1920s, B.F. Goodrich, a rubber company, started using them in boots and

galoshes and were the first to coin the name 'zipper.' By the 1930s, function was turning to fashion. From men's suits to women's girdles.

It's all in a day's work for the Feibusch family. Nowadays, Eddie's son Jeff manages the business.

JEFF FEIBUSCH, VICE PRESIDENT, ZIPPERSTOP.COM: We have millions upon millions of different styles and colors of zippers.

QUEST: How many lime green zippers can you reasonably sell?

J. FEIBUSCH: I'd say, on a good day, couple hundred. They all move.

QUEST: And this is the granddaddy zip of them all. It's for a hot air balloon and it measures some six meters in length. Astonishingly, they

sell in the winter five or six of them every day. Did you ever think seventy -

E. FEIBUSCH: Three.

QUEST: -- three years ago - did you ever think that you would be spending your life with zips?

E. FEIBUSCH: I don't know. I can't answer. I didn't have all good years - it wasn't that easy. But I survived the bad times and I lived

through the good times.

QUEST: Just like the zipper itself - slowly and gently. Through the good times and bad. Do you like buttons?

E. FEIBUSCH: (LAUGHTER). That's not fair.

(LAUGHTER)

E. FEIBUSCH: I'm in the zipper business, and I think it's the greatest thing.

(END VIDEOCLIP)

QUEST: Eddie Feibusch is the president of zipperstop.com and he is now with me. You heard him in that report. Eddie, you love zips!

E. FEIBUSCH: It's my business and I enjoy them because it's the best thing around. It's the first invention that a baby - a newborn baby - the

first thing it learns is how to zip a zipper because it is an easy thing.

QUEST: Have you - but when you see there in our report the linkage from the First World War 100 years ago to the zip holding me pants up

today, and to this giant zip - what do you think - ?

E. FEIBUSCH: We take a zipper in the 19th century going into the 20th century. They were not really zippers. They were just new inventions, new

ideas which were not perfected. When you come into the 20s, late 20s/early 30s, they finally managed to make a zipper out of aluminum, made it softer

but able to be used in lady's dresses and so forth. At that time, early in the game, when you - when they sewed a zipper into a dress and nobody

wanted to do it. The problem was they told you before you - when you wash the dress, take the zipper out.

QUEST: How could you take the zipper out?

E. FEIBUSCH: (LAUGHTER). Don't ask me, but that's (inaudible). That's what they advertised - take the zipper out because it will rust, it

will break, the collar will come out and everything else.

QUEST: So, I've had zips break.

E. FEIBUSCH: Oh, naturally.

QUEST: I hate it because you can never - no amount of fiddling with the zip. Once these things, -- you showed me if it comes apart how to get

it back together again -

E. FEIBUSCH: Yes, you can -

QUEST: But I don't believe it ever really works.

E. FEIBUSCH: No well. (LAUGHTER). That will be common, they'll sell you a new one.

QUEST: You'll sell me a new one?

E. FEIBUSCH: And so - and in your case, I'll give you one.

QUEST: You're going to give me one! (RINGS BELL).

E. FEIBUSCH: I promise you. (LAUGHTER).

QUEST: That is worth a bell - a free zip!

E. FEIBUSCH: And I'll ship it to you - no charge shipping.

QUEST: This night is getting better. Now listen, do you - final question. Do you really sell that many lime green zips every day? Are

there that many people out there that want a lime green zip?

E. FEIBUSCH: You expect me to tell - call my son a liar?

QUEST: (LAUGHTER).

E. FEIBUSCH: We sell a lot of zippers.

QUEST: You sell it?

E. FEIBUSCH: You know, colors change, seasons change.

QUEST: What's this year's zip color? The number one color for this year?

E. FEIBUSCH: Right now - right now -- which is blue, navy blue, there's pink.

QUEST: Yes.

E. FEIBUSCH: But, you know, it depends on the neighborhood. You go into certain neighborhoods in New York - the color is black or navy. You

go further south, it's pink and red.

QUEST: Pink and red further south. Black in the north - sounds like a good weather forecast.

E. FEIBUSCH: And don't forget a -- Zipperstop.

QUEST: Zipperstop. We haven't forgotten. And I'm coming for me free zipper. A look at the markets. It was a very -- thank you, Eddie, thank

you. It was a very, very, very late rally in the market. It wasn't even a rally -- it was more of a splutter. It sort of gave a bit of a cough and a

hiccup, and suddenly five down became one up. The market closed just marginally high.

European markets were a little bit all over the place as the trading day moved on. The U.S. earnings helped lift U.S. - European stocks.

Vodafone shares were up 5 percent. The telecom company says its performance in Europe is improving. The German consumer goods maker Henkel

was up 4 and 1/2 percent. Strong growth in emerging markets. You're up- to-date with the markets. We'll have a "Profitable Moment" after the break. (RINGS BELL).

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." Who is right in the great streaming music debate? The online downloading? Who is the hero and who

is the villain? Is Spotify with its $2 billion to artists to be commended or, as Taylor Swift says in her article, maybe these new online streaming

gadgets - they're actually taking money and bread from the mouths of the artists. I don't really know, but I do know you can't put the genie back

in the bottle. You can't turn the clock back. It doesn't matter which cliche you want, the fact is, as you heard on "Quest Means Business,"

people are using Spotify, they're using iTunes, they're using digital downloads. And maybe when all's said and done, if the alternative is

piracy, file sharing and a complete lack of revenue, well maybe this is the devil with whom you have to dance. 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 hope it's profitable. Let's get together

tomorrow.

END