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Mexico Braces for Strongest Hurricane Ever Recorded; China Cuts Interest Rates, Bank Reserve Requirements; China Spends $60 Billion on UK Deals; South Africa Scraps Tuition Hikes After Protests

Aired October 23, 2015 - 16:00   ET



RICHARD QUEST, HOST: Well, it's two days in a row of strong gains by the Dow Jones. Today, it was up more than 163 points after 300 yesterday.

And the man with the gavel --


QUEST: Whoa! That's what you call a gavel on Friday, October the 23rd. He was going to give me five.

"We are ready, but worried." Mexico's tourism minister tells me they're doing all they can to prepare for this Category 5 hurricane that is

making landfall right now.

A is for alphabet and Amazon. And T is for talk, tech stocks soaring.

And a U-turn in South Africa as the president freezes tuition fees.

I'm Richard Quest. It's a Friday, and of course, I mean business.

Good evening. The story tells itself when you look at the satellite and weather picture. Tonight, winds of 325 kilometers an hour, waves of 12

meters, torrential rain up to 50 centimeters, and meteorologists are warning of catastrophic damage as the strongest hurricane ever recorded is

barreling towards Mexico's Pacific coast.

This is what it looks like, Hurricane Patricia, as it is now making landfall just south of Puerto Vallarta. Residents and business owners have

boarded up buildings across the southwest of the country, where Patricia will make landfall in just a few hours anytime now.

The hurricane threatens millions of people in its path. Tourists in hot spots, like Acapulco and Puerto Vallarta, have been evacuated from the


Our correspondent is Rafael Romo. He's in Guadalajara for us tonight and joins us. So, landfall for hurricane is when? And what's the

situation now?

RAFAEL ROMO, CNN SENIOR LATIN AMERICAN AFFAIRS EDITOR: Richard, Mexican officials are saying landfall is going to be anytime between 4:00

PM and 6:00 PM local time, that's in about two hours or so. And it's been raining already for the last several hours. The wind started picking up.

And people are just bracing for this because, as you already said, authorities are saying this will be the biggest, strongest hurricane ever.

Definitely bigger than anything this country has seen. Officials say you would have to go back to 1959 to talk about a hurricane that was similar --

QUEST: Right.

ROMO: -- to what we're going to see in the next few hours. And the concern is not only the coastal areas. Authorities say that most people of

those beach resorts and places like Puerto Vallarta, like you mentioned, Acapulco, have been already evacuated.

But this hurricane has the potential of bringing torrential rains for 11 states throughout Mexico. Those rains can cause a lot of damage for a

lot of people. I mean, we're talking about millions of people who are in the path of Hurricane Patricia.

Earlier, we had an opportunity to talk to some people who were evacuated from Puerto Vallarta. Imagine this, Richard: they were going to

a destination wedding and made the decision overnight --


QUEST: OK -- right --

ROMO: -- to take a shuttle to be brought here to the capital to the state of Jalisco.

QUEST: Right. Now, I'm looking at this -- whilst you were talking, we're just looking here at the map, where we see Puerto Vallarta, in many

ways at the edge of the eye of the storm. But Manzanillo is sort of at the center.

So, I'm wondering, Rafael, how well-prepared are the buildings? What's the structures? What's the infrastructure there? Not just on the

beach, but just a little bit inland that could withstand these sort of ferocious winds?

ROMO: Well, we have a tale of two cities here, Richard. Because on the one hand, you have the beach resorts that are very well-built, very

well-prepared. They have seen this before, and of course, they don't want any tourist to go through anything like this or suffer some sort of


But also you have to remember, there are a lot of shantytowns in the outskirts of these beach resorts. Those people, their buildings, their

homes, are not very well-built, and that's the reason why the Mexican authorities were last night calling on them to leave as soon as possible.

[16:04:54] Now, you have to keep in mind, only 24 hours ago, we were talking about Patricia being a tropical storm. And then, in just a matter

of a few hours, it became a Category 5 hurricane. So, that gave people very little time to prepare. And those people who are still there by now

have absolutely no time to evacuate, Richard.

QUEST: Rafael Romo in Guadalajara. He'll be there for the next few hours covering that. Rafael, thank you.

As he makes clear, the speed and the ferocity and the rate at which it was upgraded from a tropical storm to a hurricane is one of the core issues

of this particular storm. Jennifer Gray is at the CNN World Weather Center with that part of the story.

JENNIFER GRAY, AMS METEOROLOGIST: Richard, this is the strongest hurricane ever. We're talking about stronger than Andrew, stronger than

Katrina, and stronger than Wilma. This is a very, very powerful storm, and it will possibly make landfall as either a strong Category 4 or even

Category 5 later today.

Winds right now 325 kilometers per hour, with gusts up to 400 kilometers per hour. It's moving to the north at 19. This could be the

fastest intensification that we've ever seen in a storm. This storm blew up. Wee hours yesterday morning it was just a tropical storm. Now a major

Category 5.

And as it continues that northern track, it will make landfall right around Manzanillo just to the south of Puerto Vallarta. This could be

devastating for the coastline.

Once it makes landfall, it is going to weaken considerably. It's still going to hold onto that moisture, hold onto the rain, but it's not

going to have the winds like it did once it makes landfall. Once we get to the next 24 to 36 hours, it's going to weaken considerably, a lot of that

due to the terrain of Mexico, a mountainous region. And what that does, it shreds storms.

And so, that's what we'll see as we go forward in time, but we already have those hurricane warnings in place, tropical storm warnings in place on

the outskirts. So now is the time to be prepared, be in that safe spot, and hopefully the people who did not evacuate are in a super sturdy


So, wind forecasts, we're going to see winds well over 100 to 120 kilometer-per-hour winds as the storm moves onshore. And then you can see

how quickly those winds will die out by the time we get later into the weekend. And then the storm will fizzle out as far as in its tropical

nature. However, like we mentioned, it will still hold onto a lot of that moisture and bring rainfall across a lot of Mexico.

Here's the forecast, and look at the showers still in place. And we are looking at lots of rain. We could see anywhere from 500 millimeters of

rain across some of these coastal areas. And then once you get inland, we'll see 100 to 150 millimeters of rain. This is going to be devastating,

not only for the coast. We could see landslides once you get inland. Richard?

QUEST: Jennifer Gray at the World Weather Center. And some of Mexico's crucial infrastructure is in the path of the storm. Look at the

map and it will become clear. You have Lazaro Cardenas, which is Mexico's biggest freight port. That's down to the south. That has been closed.

The freight port and these crucial rail lines through Guadalajara and Mexico City.

So, that's going to have a longer-term economic impact from this. Further up, you've got the rail lines, and then you've got Puerto Vallarta,

the major tourism hot spot, very famous tourism resort. And not only Puerto Vallarta, but also down in the south, you have Acapulco.

Whichever way you look upon this, it's going to have serious effects for the people and for the country and for the economy. And I spoke to the

Mexican secretary of tourism, who joined me on the line, and I asked him what steps he's taking to protect visitors.


ENRIQUE DE LA MADRID, MEXICAN SECRETARY OF TOURISM (via telephone): This is one of the strongest tourist service in Mexico, what we call

Vallarta (inaudible). And we have been since yesterday, we have been moving people out of the hotels.

About 60 percent of the tourists are national, but about 40 percent are foreigners. And at this stage, we believe that around 50 percent of

the people have already gone out of the hotels.

Those that are staying in the hotels, the installations have also been prepared to hold people, to feed people, to protect them. And we are also

paying attention on the events.

So, we anticipate that if people stay where we are suggesting them to stay, we shouldn't be -- having troubles of -- for the security of their

lives. That is, at this point, our main concern.

QUEST: History tells us that once this thing has arrived, been, and gone, you're going to need water, you're going to need supplies, you're

going to need food, extra food, and all those sort of things. So, is the military -- are preparations well-advanced for the aftermath?

[16:09:59] DE LA MADRID: I think they are. We also yesterday, under the instructions of President Pena Nieto, the Ministry of Economy is the

one that is also responsible for guaranteeing that there will be enough water and food and supplies.

So, there are different governmental entities that have different responsibilities. And of course, I am here in the location also to assist

them with information and to the needs that we will have to supply.

QUEST: You believe that you are as prepared as you can be, but history of these events doesn't -- tells us that they can take some very

unpredictable turns, can't they?

DE LA MADRID: Yes, that is a true fact. And that is why at this stage, our main concern is to inform people about the risk, to let them

know that if they are in strong houses, they should stay in their houses. They shouldn't be in the streets.

And again, in those places where they are more vulnerable or more at risk, they should go these settlements that have been put in place to take

the people.


QUEST: Minister of Tourism there talking to me, and he's responsible for that particular area over the next few hours.

Edie Rodriguez is the chief executive of Crystal Cruises and joins me now, live from Los Angeles. Edie, thank you for joining us and for helping

us to understand this.

Now, you don't have ships at risk yourself at the moment in this area, but what -- but as the chief exec of a cruise line, you're well aware of

the issues and the very serious risks and possibilities here. So, what should people now be preparing? What normally goes on at this point?

EDIE RODRIGUEZ, CEO, CRYSTAL CRUISES: Well, first of all, it's my pleasure to be here. And in the cruise industry, we have a mantra: safety

first. Safety for the life of our guests, safety for the life of our crew. And of course, last but not least, safety for our vessels.

So, interestingly enough, you can book a cruise three years out, and obviously, weather and geopolitical situations will change. What we do to

prepare is the fact that our vessels can move. And in fact, we do move them, living up to that mantra of safety first.

So, with all the latest technological advances at hand and monitoring the storms, we divert when necessary. In fact, at Crystal Cruises, we just

had an experience of this a few weeks ago. We were on a Canada-New England itinerary out of New York, and we diverted and missed Bar Harbor to keep

our guests safe. So, we just divert as needed, monitoring every step of the way.

QUEST: The Mexican cruising industry, on the wider issue, because obviously, you try and get your ship away from it as fast as you can, and

if you can't, then of course, you have to do the best you can. How important is Mexico, now, growing as a shipping market?

RODRIGUEZ: Well, I think Mexico is a fabulous destination. Many cruise lines visit there. At Crystal, we visit there periodically as well.

So, it's certainly an important market, and our prayers go out to all of the citizens there.

I lived through Hurricane Andrew, when that occurred in South Florida, and it's not fun, not only from a business perspective, from a personal

perspective. So, always, safety first.

QUEST: And with that in mind, as you're listening to this now, and you're aware of how an industry will respond and how the areas need to be

aware, what are your thoughts?

RODRIGUEZ: Well, I think that people should take cover, and they should obviously remain as safe as possible. But sometimes, as we know,

from recent history, even the safest hurricane-proof buildings don't necessarily render safety. So, they should just take cover, stay put, and

really listen to the local authorities and follow those instructions.

And that's what we do in the cruise industry as well. You know, when the airports are closed and we can't get guests in and out, we just try to

keep everybody as safe as possible.

QUEST: Thank you for joining us and putting this into perspective. I do appreciate it, thank you so much. Thank you.

RODRIGUEZ: My pleasure, thank you.

QUEST: Now, as we move on, it's a multibillion-dollar selfie. Think of it as the leaders of China and the UK, they're smiling on social media

with a football star, and they've done it after sealing some of the world's class deals. China has been shopping in Britain, next.


QUEST: China has made a bold move to prop up the currency and the economy. One-year lending rate has been cut by a quarter of a percentage

point. The rate is 4 and a third, or 4.35. It's the sixth cut this year.

Beijing's also cut the reserve requirement for banks. They say the bank lending has seen the weakest growth since 2009. And you'll remember

official numbers show GDP at 6.9 percent. No one gives that much credence.

And this is the latest in a series of measures all designed to actually boost lending and to give a jolt of stimulus to the economy. The

Harvard economics professor and former IMF chief economist, Ken Rogoff, joins me now from Watertown in Massachusetts.

Ken, right at the beginning of the year when we were looking, you sort of had the globe, and you really identified China as being a serious worry

and problem. Has it turned out worse than you expected or anticipated?

KEN ROGOFF, FORMER CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: Well, I mean they're certainly growing more slowly than people expected.

But we don't know, as you said, how slowly are they growing? I don't know themselves. This is a sign things need to be boosted, that the economy --

they're recognizing that there are problems.

QUEST: But when we look at the sort of measures they're taking, and this latest -- when you've got both the main refi rate and you've got the

main lending rate cut to -- cut, and you've got reserve requirements, is this enough to basically jolt an economy? It's sending a sort of message,

but it's not actually hitting the economy hard.

ROGOFF: Well, I mean, they're doing it for the sixth time this year, so if it was so fantastically effective, it would have been effective

already. They're doing it together with fiscal stimulus.

The thing is, these are conventional policies we think of, it doesn't work in China the same way as here. A lot of lending is directed lending.

The state determines where the money goes.

And I think one of the concerns here is they have a lot of industries with tons of excess capacity. They're trying to move out of it, but this

is going to have the effect of moving more money in.

QUEST: So, if you're right, and I don't doubt that you are, then a structural adjustment is underway, which we know, but the measures being

taken are unlikely to have much effect, because in structural adjustments, the pain -- no pain, no gain.

ROGOFF: Well, there's no pain is the idea here, that they're slowing down the structural adjustment. They were -- thought they were moving to

fast. They're trying to stabilize the economy.

[16:19:56] It's a lot better than what they were doing this summer, where they were trying to prevent the stock market from going down by

arresting people who were giving bad news, or by injecting money in against a huge tide of private money pulling out.

So, these are at least normal policies. I think there'll be more from China. I think it's going to get worse before it gets better.

QUEST: But there's no big bazooka, as I remember, from the financial crisis. There's no TARP. There's no sudden QE that could actually be seen

to be the -- riding to the rescue. Is that what's needed?

ROGOFF: Well, they have a bazooka. They have their $4 trillion in reserves, some of which they can tap into, and that's a lot of anywhere.

It's a lot of money in China. But the thing is, how many more roads do they need? How many more airports do they need?

They're trying to get consumption going and to have dishwasher soap and stuff being produces. And that's just not easy to do in the same

command and control way. I think the economy inevitably is going to slow down around this period, but they're kind of nervous, and that's what we're

seeing here.

QUEST: And we thank you, sir. Have a good weekend. Ken Rogoff joining us --

ROGOFF: Thank you.

QUEST: -- from Massachusetts. It all comes as the Chinese president, Xi Jinping, wraps up the trip that he's spent the last few days in the

United Kingdom. All-in-all, he spent $60 billion in less than a week. Britain's chancellor of the exchequer, George Osborne, says Beijing is

making the most of investment opportunities, especially in the north of England.


GEORGE OSBORNE, UK CHANCELLOR OF THE EXCHEQUER: I think today you see the power being put into the northern powerhouse. You've got billions of

pounds of investment coming into the north.


QUEST: Some of those biggest deals, $200 million was spent on a Chinese cluster scheme that will bring Asian firms to Manchester's airport

city, and you can see some of the names that are going to be involved in that.

Also, China's taking a one third stake in a planned $28 billion nuclear plant at Hinkley Point. That's controversial. The plant itself is

controlled by France's EDF. And $10 billion in liquefied natural gas supply deal, putting BP and China's Huadian power producer. All these

companies all aiming to be part of what you there heard the chancellor saying is the norther powerhouse.

Think of it as a big win for student demonstrators in South Africa after fiery protests had raged had days. Still, many have remained worried

about their futures. It's QUEST MEANS BUSINESS on a Friday.



[16:25:14] QUEST: Student protesters in South Africa have won a major concession from the government. The president, Jacob Zuma, now says

there will be no fee hikes at universities next year.

As the situation was deteriorating before the presidential reversal, David McKenzie now reports the announcement capped off a week of angry

demonstrations that ended in clashes with police.


DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: The situation is calm here in Pretoria, but you can hear the police helicopters overhead.

Because inside the city, there are still pockets of protests. They've burned cars, and they've turned over police vehicles.

Earlier today, thousands of protesters came onto the lawns here to demand the ending of fee increases at universities, 12 universities at

least across the country have been shut down, and it's been more than a week of protest.

Those protests came to a head today in South Africa, when a hardcore group pushed through the barricades and were in running battles with the

police, who were shooting teargas, stun grenades, and later, rubber bullets at the crowds.

South Africa's president, Jacob Zuma, has said that they will put a moratorium on fee increases for the universities next year. That is a key

demand of the students.

But this runs much deeper than that. There's a broad dissatisfaction, and anger, from the protesters I've spoken to about persistent inequality

in this country more than 20 years after democracy.

David McKenzie, CNN, Pretoria, South Africa.


QUEST: As we continue our nightly conversation on business and economics, what's usually a tourist paradise is about to face a storm of

historic proportions. Hurricane Patricia is arriving in the next few hours, and we'll show you the preparations and how people are now getting

ready for the storm of their lives.


[16:30:29] QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when we find out why Microsoft, Amazon and

Alphabet are pleasing investors.

And TalkTalk tells us it received a ransom demand for stolen data. Before all of that, this is CNN and on this network the news always comes


The strongest hurricane ever recorded is bearing down on Mexico's Pacific Coast. Hurricane Patricia is a category 5 storm and expected to

make landfall in the coming hours. We'll have more details on this after the news summary.

Mexico's tourism minister says the police and the military have been deployed to help the storm. Speaking to me on "Quest Means Business,"

Enrique de la Madrid said getting information to those on the ground is the government's biggest priority.


ENRIQUE DE LA MADRID, MEXICAN SECRETARY OF TOURISM: At this stage our main concern is to inform people about the risk and to let them know that

if they are in sprung (ph) houses, they should stay in their houses, they shouldn't be in the streets and, again, in those places where they are more

vulnerable or more at risk, they should go to these settlements that have been put in place to really protect the people.


QUEST: At least 43 people have died in a head-on collision between a passenger bus and a truck in the Southwest of France.

Many of those onboard the bus were pensioners on a day trip. The truck driver and his young son also died in the crash.

South Africa's president has reversed the decision to raise university fees next year.


JACOB ZUMA, SOUTH AFRICAN PRESIDENT: There will be a zero increase of university fees in 2016.


QUEST: Student protests of the rise escalated over the past few days. Clashes erupted outside government offices in Pretoria with students

throwing rocks and police responding with water cannon and teargas.

Russia's foreign minister says the Syrian people must decide the fate of President Bashar al-Assad. He spoke after discussing the Syrian

conflict with his counterparts from Saudi Arabia, Turkey and the United States.

Sergei Lavrov sat down separately with the U.S. Secretary of State John Kerry. They didn't answer or take any questions afterwards.

The satellite picture tells its own story of potential devastation and deep concern. Hurricane Patricia could hit one of Mexico's biggest tourist

spots in just a matter of hours.

Southwest Airlines says it's suspended all operations into the Mexican city of Puerto Vallarta. The airport there is now closed.

Hotels are being evacuated, 300 guests at the Hyatt have been bussed to a nearby Hilton Hotel in Guadalajara for shelter and safety.

They were there due to arrive a few moments ago. Hilton itself has evacuated a hotel in Puerto Vallarta and moved the furniture into storage

as the storm approaches.

Carl Emberson is the general manager of the St. Regis Punta Mita and that's a Starwood resort at Puerto Vallarta, joins me now on the line.

Carl, good to talk to you, sir.

Tell me the status, tell me what you've done in preparation at your hotel.

CARL EMBERSON, GENERAL MANAGER, ST. REGIS PUNTA MITA: Good afternoon, Richard. As Minister Enrique just said that we were, the government did a

great job in getting the information out to the field and we got the information last night and it was recommended - highly recommended - to

evacuate our guests.

And we began the process last night and by 8:30 this morning we had over 176 of our guests on busses on the way to Guadalajara and I'm happy to

say that they are checked in and hopefully enjoying a margarita in Western Guadalajara at the moment.

And I've also sent some of my team up there to join them on the trip on and help them with any securing airline flights and moving on from


And as I stay down here with the rest of the team - a small team - in the bunker, bracing for the storm which promises to be a beauty.

QUEST: Now let's just talk about that, Carl - the storm. You are there with some of your staff. Now obviously safety and security is your

number one priority.

[16:35:03] So you talk about the bunker. You have the necessary facilities and necessary secure areas?

EMBERSON: Indeed, Richard. That's in a way we follow our Starwood security policies and we have everything set up for these cases which thank

God don't happen too often.

I've been here for around five years now and this is my first such an event and that's fortunate. But, you know, we're trying to be in process

and the biggest tranquility, Richard, is to have those 176 guests in Guadalajara now and safe and safe.

And we're safe here, we will - we'll - be here all evening and the next couple of days making sure that everything is in place -

QUEST: Right, but -

EMBERSON: -- and looking after the property that we love so dearly.


QUEST: You see that's really the point of it. Once the guests are safe, now we're really talking about brick, mortar and glass and, you know,

not to minimize it, but that can be repaired.

And I suspect over the next few days you're going to have your work cut out for you, Carl.

EMBERSON: You got it right there, Richard and we're ready for that, Mate. And, you know, these things happen and that's what we're trained

for, that's what we - why we're passionate hoteliers and that's we love doing.

QUEST: Sir, thank you, we wish you well. We'll talk to you over the next few days as the storm barrels in. Now we need to find out exactly

where that storm is going this - Jennifer Gray's at the - what was it? I got my timings a little bit off, Jennifer, because at the start of the

program I sort of said it had made landfall. But I was forgetting of course it's about 4:00 Pacific time that this is going to make land.


QUEST: Which I make in about two and a half from now.

GRAY: Right, a couple of hours away but any minute now we will start to feel some very strong winds right along the coast. The hurricane force

winds extend about 35 miles from the center.

So that's going to cover about a 70-mile swath, but it is going to be making landfall in the next couple of hours and this is the strongest storm

we've ever seen in the Western Hemisphere. Stronger than Andrew, Katrina, Camille - storms that were historic - this is stronger than that - 325

kilometer per hour winds with gusts up to 400 kilometers per hour.

It is moving to the north at 19 kilometers per hour. It intensified so quickly. Yesterday in the wee hours of the morning this was just a

tropical storm -

QUEST: Right.

GRAY: Now it is a strong category 5 and this storm is one of the fastest to intensify that we've ever seen.

QUEST: I'm going to jump in because I've got - I've got - so many questions, so forgive me as I -


QUEST: -- OK. This storm - is the biggest risk from this storm as you see it as the moment from the winds or from the amount of rain and

water that it will dump?

GRAY: The winds are going to be the biggest concern right along the coast, but you - every storm is different. And so right along the coast we

are going to have winds up to 200 miles per hour possibly, we're going to have a wall of water come in, a storm surge. I don't if you remember that

27-foot storm surge that we saw along the Gulf Coast in Katrina.

This one could surpass that and we're also going to have a lot of rain. You have to keep in mind the mountainous terrain as you know,

Richard, in Mexico. And so we're going to have the risk of landslides and mudslides.

So inland, the biggest risk is going to be the flooding, the landslides, and then right along the coast it's going to be the winds and

the storm surge.

QUEST: And we've obviously got these residential areas or these tourist areas - Puerto Vallarta - and you've nicely anticipated my next

question - as to where the areas of concern are -- besides those beach hotels and besides the tourist areas?

GRAY: Well, you basically - it's going to be right where it makes landfall, and the eye is still jogging just a little bit just as these

storms do.

But you have to keep in mind whatever village, whatever town where that eye crosses, there's going to be about a 15 to 20-mile area that's

going to look like damage from a possible F4 or F5 tornado. And we've seen what those do, unfortunately.

And so that's going to be the area that's going to be the most devastated. Still can't pinpoint exactly where that one's going to be but

it's going to be somewhere just to the south of Puerto Vallarta, and it's also going to be north of Manzanillo.

And so that's going to be the main concern there, that one little area that gets the brunt of this storm right around that eye.

QUEST: Jennifer, you've got your work cut out for you for the next few hours and the next few days. Thank you. Thank you for bringing us up

to date. Thank you.

As we continue our nightly conversation, from China to Europe to Silicon Valley - it's an awesome autumn for stocks and it's making the

summer scaries a distant memory. "Quest Means Business."


QUEST: Welcome back. October is historically a wild month for stocks. Now this October has some very interesting definitions and market


The Dow has gained 2 and a half percent. It's the fourth straight week of gains for the big board, and the reasons why of course, helped by

the China rate cut that we saw just today, the ECB announcement that more Q.E. - or at least more measures are ready as and when necessary.

The S&P has had its best week for four years. They're starting to see this. Look at how the market traded. Bearing up (ph) over 300 yesterday,

and today grew up 157 with a gain of 1 percent and a solid - see where a little hiccup or a little bit of gas over at lunchtime, but basically good,

strong gains.

One of the reasons beside the ECB is also earnings helping to move the markets. So we begin with Silicon Valley and with Microsoft.

Take a look at Microsoft, Amazon and Alphabet - three stocks. Microsoft incidentally gained tem percent - ten percent - in Friday's trade

over the last few hours.

It's now changing at the highest level since 2000. Amazon and Alphabet - the old Google, I still can't get used to it - are trading at

all-time highs. And the reason - the very simple reason - it's all about, yes, the Cloud.

It's all about what's going on up there and how they are amassing money, particularly for Microsoft. If you look at revenues from their

latest earnings report, it wasn't giving away Windows tend to it (ph), it was what the extra revenues coming from OneDrive and the Cloud.

Amazon Cloud sales may overtake retail sales. And so from tech on the earnings, let's look at the corporate sector, and you have three big ones -

Caterpillar, Burberry and Nestle.

Very different story to what we saw in tech. These three major corporates - and bearing in mind you've got an apparel, you've got a

consumer and you've got an industrial. All slashed their forecasts, the stocks are all sharply down and they have one common theme as to the reason

why - slowing demand in China.

Whether it's construction or something as simple as a bit of chocolate, all those Christopher Bailey expensive trench coats from

Burberry, doesn't matter. They are in -- the corporates - were in trouble.

[16:45:13] Finally, come join with me, ding-dong, to the airport. And we have results from American and Southwest, both of which beat

expectations. United missed forecasts but still made over $ billion in the quarter.

And there was one reason why they all did, and you know the reason why -- the 50 percent reduction in the price of oil. American doesn't hedge.

These two maybe had a hedging issue which didn't they got the full benefit, but even so, it doesn't matter. They're all saving money on low oil and

some of them of course have problems with demand.

The other side of this, fewer oil workers are taking business trips doesn't seem to matter. The core of the airline industry is that it is


Paul La Monica is with me. Paul, we have tech brilliant, corporate troubled and airlines taking advantage of macroeconomic or at least energy-

related. Start with tech.

PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Tech as you pointed out is just a stunning quarter - great growth for not just the newer

companies like Google - I'm going to call them Google. It's like Muhammad Ali and Cassius Clay. They still are just dominating search and have so

many other businesses they're growing in mobile, YouTube. You've got Amazon -- the Cloud is clearly lifting their profits.

They had a surprise profit. It used to be only a fourth quarter -

QUEST: But you sat here and told me you weren't impressed by Amazon earlier in the week.

LA MONICA: Earlier in the week - what did I say about Amazon? I said I wasn't impressed with what?

QUEST: Yes, the results - when we saw the numbers and you saw what Amazon - I beg your pardon - I'm getting confused (RINGS BELL). My bad!


QUEST: My bad. I was thinking of Yahoo!

LA MONICA: I know, Amazon was just yesterday. I'm like -

QUEST: You're right - ah!

LA MONICA: Yahoo! had the deeper problems. With Amazon what is impressive? It's still a ridiculously overvalued stock. That being said,

Amazon is now consistently profitable for the past few quarters - it's not just during the holidays.

So all those investments, particularly in the Cloud, do seem to be paying off and Jeff Bezos deserves a lot of credit for that.

QUEST: So if you pull together the third-quarter-earning season that we're experiencing, do we give more credence to tech's success or

corporate's woes?

LA MONICA: We're going to have a big test of that next week with Apple because Apple gives you a mix of both. Apple (AUDIO GAP) extremely

well because of the tech annual iPhone sales. But Apple is increasingly reliant on China for sales of iPhone 6's and other models.

So if Apple stumbles, I think we'll then see that China's woes will be trumping the domestic success in technology. So Apple -- key earnings

report on Tuesday - I think that is going to help answer that question.

Rate (ph season is not over yet by a long shot. We have a lot of results next week to go through.

QUEST: And I'll be here.

LA MONICA: I will as well.

QUEST: You better had be. We need you. All right. As we come across, we talk about Alphabet/Google. I'm with Paul - I'm having great

difficulty calling it 'Alphabet' -- it's Google. Well, take a look and you see. Alphabet shares finished almost 8 percent higher.

Alphabet announced a buyback - a big share buyback. And it was no ordinary buyback. Something very geeky, nerdy was going on.

The company Alphabet is secretly setting a hidden mass equation. So, look at this specific number. Alphabet says it's going to buy back

$5,099,019,513 worth - and .59 cents - of stock. Why is that number significant? Because it is the square root of 26. The square root of 26 -

what is the significance of 26 in relation to that number?

Come in here and I will show you - 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26 -- the number of

letters in the alphabet. Somebody at Alphabet who probably has more time on their hands than otherwise, realized that by taking the square root of

26, you get five billion ninety- nine - whatever it is and that's the amount of money Alphabet's doing in its share-back.

When we come back, the credit card and bank details of up to 4 million TalkTalk customers may have been hacked and that information is being held

to ransom.

It's a new twist on an old story. It's after the highlight as you prepare to "Make, Create, Innovate."


QUEST: One of the U.K.'s biggest phone networks says it's received a ransom note from someone who claims they've hacked into the systems of

TalkTalk. With more than 4 million U.K. customers, TalkTalk says there's a chance hackers gained customers' bank and credit card details.

Our tech correspondent Laurie Segall is in London this evening. Laurie, so basically TalkTalk is admitting that they have been hacked?

LAURIE SEGALL, TECHNOLOGY CORRESPONDENT FOR CNN MONEY: They are, but the tough part here is they're saying we've been hacked and here's all the

information that may have been breached. Key words 'may have been breached.'

So you have up to 4 million customers right now who are sitting here scratching their heads and saying, well, was I breached and if I was, was

my credit card information stolen?

So it's certainly not a great situation, and as you mentioned, there was also a ransom notice where the CEO confirmed that she received an email

from people claiming to have information, claiming to say that they were actually going to release more information if they weren't paid, Richard.

And one other thing that we should all take note of - if you look at the website, if you look at the Q&A, they try to alleviate customers'


QUEST: Laurie -

SEGALL: Now one thing they say that we should - yes, go ahead.

QUEST: Well, I'm less concerned about the hacking, I'm more concerned about basically the blackmail. Because this is new. This takes us into a

different area, Laurie.


QUEST: This is - I mean, hacking is criminal but this is real criminality. People go to prison for a long time for this sort of


SEGALL: Yes, we're seeing this more and more. I would like to think that this is almost a new frontier of hacking, right? We heard about this

with Ashley Madison. It was a different kind of ransom, right? The hackers wanted Ashley Madison the site to be taken down, and they said if

you don't take it down, we're going to release all this information.

We're seeing hackers - they used to just take all the information and dump it on the dark web and it got pick up. Now they're going to these

companies and they're saying we have all this information, we're going to release more if you don't pay us in Bitcoin which is this digital currency

that's hard to trace.

And you know what, Richard? I'll tell you this. A lot of companies I've heard on background, so a lot of these companies do pay. They're

terrified of this.

So this is really this new frontier. And what I was saying before that is very important to note, hackers are doing this more and more. But

companies are encrypting their data. That is so important.

One thing that was on this website - on TalkTalk website - they say not all the customer data was encrypted. That means the customers are even

more vulnerable than ever in this particular situation.

[16:55:06] That's something we should take note of and talk to the company about and ask them to answer for, Richard.

QUEST: Laurie Segall who is in London. Thank you. We'll look into that in the future. We'll have a "Profitable Moment" after the break.

"Quest Means Business" on a Friday (ph).


QUEST: Tonight's "Profitable Moment." Extortion and blackmail are the most corrosive of crimes because they go to the psyche and they instill

fear into those to whom they threaten.

Which is why the TalkTalk hacking and the ransom demand puts it into somewhat of a different league.

I want to be sure with the Sony hack there was a demand for actions to be taken. And the Ashley Madison hack had of course a demand for Ashley

Madison to be taken down.

The TalkTalk one is simply venal if they're requesting money - if there's straightforward blackmail. And I said to Laurie Segall, from my

days of training to be a lawyer I remember people go to prison for a very long time when it comes to blackmail.

This is not an Edward Snowden situation or for the public good. When people hack and then extort, there is only one sound you wish to hear --

the key and the clink of the prison door.

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 on Monday.