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Quest Means Business
More Stock Market Volatility; Chinese Official Under Investigation for Corruption; Danes Pass Law Allowing Confiscation of Valuables from Immigrants; Examining French Business Protests. Aired 4-5p ET
Aired January 26, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
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MAGGIE LAKE, HOST: It takes two to tango. Oil and stocks have led investors on a merry dance as we reach the close of trade. It's Tuesday, the 26th of
January.
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LAKE: Tonight, a rally on Wall Street and a slump in Shanghai. Volatility is everywhere and we've still got apple earnings to come this hour.
Burning with rage, France is hit with strikes across the country.
And her weight goes down. The shares go up. Oprah Winfrey tips the scales for weight watchers.
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LAKE: I'm Maggie Lake and this is "Quest Means Business."
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LAKE: Good evening. Tonight, oil jumps and stocks soar.
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LAKE: It is 4:00 o'clock on Wall Street where the Dow has ended the day with a gain of around 282 points. It is the biggest swing that we've seen
in the last five sessions. Stocks got a boost from a rebound in the price of oil. Prices for Brent crude, the global benchmark, are up nearly 4% for
the day.
Here's how they have moved since the beginning of the year. You can see stocks have followed the same trajectory. It is a new condition for markets
which have typically tracked the broader economy or monetary policy.
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LAKE: Tim Anderson is the Managing Director of TJM Investments; he joins us now from the New York Stock Exchange.
Tim, it's great to see you. I'm curious about how you feel about this rally. Does it feel like we are finally forming a bottom or a base here?
TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: Well, that's very potential. We had a very high volume day on the downside yesterday.
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ANDERSON: I mean the down volume was close to 90% of total volume. Today, up volume was close to 90% of total volume. A lot of technicians will look
at that favorably. There's two other things that were very constructive. We separated from China, which was down 6% overnight. Futures were down quite
a bit in the middle of the night, and they rallied to the plus side before the opening.
And even though oil gave up close to half of its gains during the last two hours of the day, stocks closed near their eyes of the day. So if we can
also separate from oil a little bit and not be so dependent on it tick to tick, that would be very positive.
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LAKE: Yes, Tim, I want to ask you, a lot of people are slightly confused about we are -- why we are seeing this tandem move for oil and stocks. It's
not usually the case. Is there something different going on now? Why do you think these two markets seem so linked?
ANDERSON: You know I just think there's a tremendous amount of uncertainty as to -- as to what effect on the global economy a sub-30 dollar oil would
have.
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ANDERSON: Now if we could stabilize, we closed a little bit above 32, that's kind of around where we were at Friday's close. If we could maybe
trade in this 32, 35 range for a week, take away a little bit of the volatility, let stocks maybe kind of trade on their own within that range
of oil, that would be very positive. I think also there's a tremendous amount of algorithm investors that must have oil in their algorithm and it
affects how aggressive they are on the buy side, on the sell side.
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LAKE: Absolutely and that's a discussion that's going to continue. There's a lot of talk about where those high frequency or computer traders are
playing and whether they are distorting commodities and it's not just oil.
Tim I want to ask you, we mentioned in the lead-up that usually stocks pay attention to fundamentals, to - or monetary policy. We've got a lot of
earnings coming out after the close here, including Apple. What's your sense of the earnings period and what we're going to hear from companies?
ANDERSON: Well, I think that certainly it's going to get a tremendous focus. There's going to be some positive reports and there's going to be
some reports that are, you know, maybe just OK or maybe just a little light. We've already seen that a little bit. From, you know -- from IBM on
the downside about a week ago. And from McDonald's on the plus side just yesterday. But we're certainly in a period of some very high-profile
earnings reports. And it will definitely get a lot of attention from investors.
LAKE: All right, we'll see if they can carry the day. Tim Anderson for us, thank you so much, Tim, from the floor of the New York Stock Exchange.
ANDERSON: Thank you.
LAKE: Well as Tim just mentioned in China, it was a day of high drama for the markets.
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LAKE: First, stocks fell more than 6% in Shanghai. Then came the announcement that authorities are investigating possible corruption by one
of China's top economic officials.
Amra Walker has the story.
[16:05:07]
AMRA WALKER, CNN INTERNATIONAL CORRESPONDENT: A surprise announcement from China's Anti-Graft Agency. Wang Baoan, the man in charge of the National
Bureau of Statistics, the organization that sets China's GDP, is under investigation for alleged corruption. The news came just hours after Wang
held a media briefing giving an optimistic outlook on the state of China's economy. This is the latest announcement of a prominent Chinese figure
suspected of graft.
Since President Xi Jinping took office three years ago, he made crackdown on corruption a priority. This latest investigation will likely raise more
questions about the accuracy of Beijing's economic data. One area specifically, the depreciation of China's currency, the renminbi, something
Wang spoke about a week ago.
WANG BAOAN, NATIONAL BUREAU OF STATISTICS: (As translated) The depreciation of the U.S. dollar brings about the depreciation of renminbi.
I think the depreciation of renminbi, and the reduction of foreign exchange reserves won't influence the Chinese economy much or not that obviously
because its impact is quite small on China. A country that has more than 3 trillion U.S. dollars foreign exchange reserves.
WALKER: At the start of the year, China let the yuan depreciation almost 2% against the dollar, sending currency markets into a tailspin. CNN's Richard
Quest spoke with a high-ranking Chinese official at the World Economic Forum last week who said China is moving away from an export-led economy to
a more domestic consumption-led economy. And once that is complete, it will be good for the world, but until that happens, volatility is here to stay.
UNIDENTIFIED MALE: China is such a large economy from investment led to consumption led economy, it's difficult. So the rest of the world has to
get used to volatility coming out of China.
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LAKE: And we'll talk more about China's volatility with Anthony Chan from Chase in just a few moments. We've also got Apple earnings due out in a few
minutes. Stay with us for that.
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LAKE: Denmark has approved one of the most controversial measures yet in order to pay for its refugee program.
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Danish lawmakers approved a so-called Jewelry bill that allows authorities to take valuable belongings from asylum seekers. The Ministry of
Immigration says things like watches, mobile phones and computers can now be confiscated.
Let's cross to our senior international correspondent Arwa Damon, she is in the Danish capital, Copenhagen.
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LAKE: And Arwa, this passed in parliament there but it is a measure that is creating a lot of controversy.
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: It is, Maggie, and it passed their parliament very easily, getting about 75% of the votes.
Controversial not just because of the confiscations that you were mentioning just there.
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DAMON: They are highly likely to be largely symbolic. No one really gets here with that kind of money in their pockets or with anything of value.
It's an even bigger issue within this bill is the fact that it extends the duration a person has to wait before they can even begin to apply for a
family reunification from one year to three years.
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DAMON: Amnesty International especially harsh in its condemnation saying that this bill was mean-spirited. And that it went against everything that
Denmark up until now had been standing for when it came to protecting refugees and the 1951 Refugee Convention.
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DAMON: Now opponents of the bill have said that Denmark cannot just look to find a Danish solution because this is a European problem. But those who
support the bill say that it was the only way to really protect this tiny country. Here's what the government spokesman had to say.
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JACOB ELEMANN-JENSEN, SPOKESMAN DANISH LABOR PARTY: The issue is that our government needs to take care of Denmark. Until we get a European solution.
Until we get a worldwide solution. And Denmark is more attractive than countries around us and we need to balance this so we can accept people in
need of help but so that we also protect our country.
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DAMON: Now, what opposing lawmakers are arguing to that point is what is Denmark's attempts to protect itself, costing those who are most in need?
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DAMON: What is the pain and suffering being inflicted upon a parent that then has to wait for three-plus years to begin to apply for being reunified
with their own children. There's also great concerns this bill could fuel already growing xenophobia and about tensions that exist between the Danish
population and the migrants and asylum seekers that are already here.
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DAMON: This is a bill that is not only causing a lot of debate globally but also within Denmark in and of itself. The conversation about what is Danish
identity, what is Danish identity today and what is it going to be in the future, Maggie.
LAKE: Interesting, Arwa, that the government spokesman there commenting that this is happening in a vacuum of Europe as a whole coming together for
a policy. I mean, this -- you know, maybe the goal is to sort prevent or discourage refugees from coming but in no way addresses the root of the
problem. We have heard again and again from these people, we don't care what your laws are, we're desperate, we have nowhere else to go, we're
coming anyway.
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DAMON: That's right. And look, what we're seeing right now, this whole flood of refugees, the ripple effect, the various different countries that
are basically rebuilding borders where there used to be none between the various nations that these refugees and migrants go through. The fact that
it's not just Denmark but also Switzerland, some southern states in Germany, the Netherlands, that have also begun and are confiscating
valuables all of this a byproduct of bigger global failures.
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DAMON: The ongoing wars in the Middle East, and Afghanistan. The poverty that has racked Africa along with the oppression in these various different
nations. The bigger failures of the United Nations and the European Union and really of the entire international community to address these various
different problems, issues, wars, devastation and bloodshed that is even -- that were the root causes of this mass migration that we're seeing.
But then also not recognizing that it was happening to the degree that it is happening early enough on and then beginning to put measures into place
back then. So in a sense, this is a byproduct of massive failures on multiple levels.
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DAMON: But at the same time, critics will argue when it comes to legislation Denmark has passed, again, it cannot pass these kinds of laws
in a vacuum and think that it is actually going to be able to isolate itself from these various different problems, nor can it forgo, some will
argue, an obligation it has on a humanitarian level to help those in need.
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LAKE: Right, the question, will this spur the international community to finally address those problems they've been ignoring. That's what we're all
watching and wondering. Arwa Damon, for us in Copenhagen tonight.
Well strikes in France have once again interrupted air travel in the skies over Europe.
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Ryan Air says enough is enough and it is asking the European commission to step in.
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[16:15:30]
LAKE: Chinese officials are investigating possible corruption by the head of China's National Bureau of Statistics. The surprise announcement raises
questions about the economic data coming out of Beijing. For years, analysts have questioned some of those numbers.
Joining me now, Anthony Chan, Chief Economist at Chase. You know Anthony, this latest reporter anecdote, if true, it's just the last in a series. A
lot of analysts, and I know a lot of investors have been saying you know really when we're looking at China and the economy it's like a black box,
we just don't know what's going on there.
ANTHONY CHAN, CHIEF ECONOMIST, CHASE: Well, remember that there's a lot of numbers that come out and any statistic is obviously subject to some sort
of an error. So when I look at China, when I look at other countries, I like to look at a broad range of economic statistics.
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CHAN: There's no question that the economy is slowing down. In fact, Xi Jinping told us that China wanted to double the overall real GDP from 2010
to 202. So when they make the announcement in March as to what their targeted growth is for the next five years, it's going to be somewhere
around 6 and a half %. That's a lot slower. The economy is slowing. But the question is not whether it's slowing in some people's mind, is it
collapsing.
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CHAN: And I want to say one last thing, that it is kind of really interesting that whenever there's a number that comes out China that's
weak, people believe it. If it's a strong number, they don't believe it. You've got to take it - you've got to balanced here.
LAKE: That's exactly - you are exactly right. I think that speaks to everyone's fear really more than anyone else. You know we have often --
people have been so bearish and so worried about this, are we overplaying not the importance of China but the ability to transmit weakness? Some
people pointed out, look, this is a state-run economy, government officials that are sitting on a lot of cash that will no matter what it takes, make
sure they manage this transition, if not for their own survival. Are we sort of too worried about China?
CHAN: I think we're a little bit too worried, I don't want to say we should ignore it. It's the second largest economy in the world. And to the extent
that it has huge trading with a lot of other emerging economies, if China really were to collapse it would have an impact on the rest of the emerging
markets. Because obviously wouldn't demand - they wouldn't import as many goods and that would weaken those emerging markets.
And when you look at the impact of those emerging markets on the global economy, it is significant. But let's not lose sight of the fact the
deficit - the budget deficit in China is probably going to be somewhere around 4% this year. And you compare that to something a little bit less
than 2% over the last couple of years. They are trying to stimulate that economy.
Let's not lose sight of the fact they've lowered interest rates six times, they're going to do some more. Things are happening. Is there weakness? And
by the way, when we focus on the weakness in manufacturing, it is justified because they're transitioning from manufacturing to consumer base. So those
numbers are going to be a lot weaker. Look at airline passenger numbers out of China, they're growing at 11%, very, very healthy. But you look at some
manufacturing numbers, they're weak, and in fact those are true, they are weak.
LAKE: It is going to depend on what part of the Chinese economy that you are connected to I think is going to be the issue going forward. Anthony
before we go, I do want to ask you about central banks everywhere else. A lot of attention on the Fed, they are meeting. Everyone thought they were
embarking on a tightening cycle, and a lot of people thinking they're going to have to put the brakes on that and really change their message to the
markets this week to indicate they're more data dependent. What do you think?
CHAN: I have no doubt they're going to change their tune. As you know, the Central Bank wanted to raise rates four times. They made projections in the
so-called dots. And I have no doubt they're not going to raise rates four times this year. I would be surprised if they raise rates one or two times
this year.
So I don't think they're going to lower rates. But I think they're going to pull back the brakes because the economy's slowing. You saw that in the
European Central Bank, Mario Draghi saying they need to do more. You've been hearing rumors out of Japan from (inaudible) that they're trying to do
more. And the Federal Reserve does not live in a vacuum. If all over the world they're trying to do more and they're trying to stimulate their
economies because they're concerned about global economic growth, people's Bank of China included, the Federal Reserve is not going to be able to
ignore that.
LAKE: Right, and I'm sure all of these central bankers would like to get a little help from the fiscal side from some government officials who have
been kicking the can down the road. But that is a conversation for another day. Anthony Chan, thanks so much for joining us.
CHAN: My pleasure.
LAKE: Now markets in Europe managed to close higher.
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LAKE: Frances CAC 40 was the best performer out of the major European indices closing up over 1%.
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LAKE: Two simultaneous strikes on Tuesday caused massive delays on French roads and in French skies.
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LAKE: Taxi drivers and air traffic controllers to end a day of protest throughout France's public sector. They were rallying against slipping
wages, job cuts and the way start-ups have been allowed to compete with traditional industries.
The president of a website "Taxis to France" says protesters won't back down on their demands.
[16:20:15]
IBRAHIMA SYLLA, PRESIDENT "TAXIS TO FRANCE" WEBSITE: (As translated): In two words, what we want is either eradication or compensation, simply.
There's no arguing about it. There's no more negotiation possible We are the ones who are going to command. It's over. We've suffered for the past
three, four years. We've had enough now. We're tired.
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LAKE: Joining me now from Paris is a Julien Theron he's a political scientist from the University of Versailles. Julien, thanks so much for
being with us.
You know I'm curious, when we look at this picture as France is no stranger to strikes but I wonder they're widespread and you heard that
representative just say we're just tired. What is the mood of the country right now?
JULIEN THERON, POLITICAL SCIENTIST, UNIVERSITY OF VERSAILLES: Well, it's a little strange. Because indeed you know that a couple of month ago Paris
was shocked by terror attacks and now there's some demonstrations which are still a little bit limited. But you know that in France it can grow
quickly. And everybody in all preparations have a little bit of (inaudible).
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THERON: The professors are protesting against the reform of the early collage like we say here, the early high school, the taxi drivers against
Uber, and all the civil servants, or part of the civil servants against the (inaudible) power.
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THERON: But the trade unions try to put all the protesting feelings altogether to have some massive demonstration coming in regarding to the
government.
LAKE: Julien when you say (inaudible) Richard spoke to the mayor of Paris last week at the World Economic Forum in Davos. And he asked him if France
was leading, following or standing in the way of disruptive start-ups. Let's take a listen.
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ANNE HIDALGO, PARIS MAYOR: (As translated): We are leading on this front. Paris has become the European capital in terms of digital start-ups. As a
city for more than ten years now, we've been developing a public policy to invest and today its private investment that is here. This year, we are
going to open two of the biggest business incubators in the world. One incubator completely financed by private funds and it will be built in a
beautiful place and will house more than 1,000 start-ups. And in March, we'll have another incubator financed by public funds. So we're really
avant-garde. We're in favor of a shared economy.
RICHARD QUEST, HOST QUEST MEANS BUSINESS: Right, you like these little start-ups, but when one of the big start-ups like an AirBNB, once an AirBNB
or an Uber comes in, suddenly you don't like them.
HIDALGO: (As translated) With AirBNB, we are now in a dialogue. We are speaking to them and we are finding the right regulation. With AirBNB, it's
about an economy based on sharing and it does work if it allows people to find apartments in Paris and for Parisians to get more revenue. But if it
becomes an entire business where you have a whole building which becomes essentially a fake hotel, then it no longer works.
But when we speak to AirBNB, they agree with us on the necessity to have regulation on a local level. But I've also put forth this idea to other
mayors in New York and Madrid and Barcelona so we can work together on this issue.
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LAKE: Julien, in some ways this illustrates the problem, doesn't it, in order to start - to stoke growth and get these economies moving, a lot of
analysts and economists are saying you need to inform, you need to embrace the digital economy, you need to move forward. However, when that happens,
there doesn't seem to be a solution or a way to lift everyone along with it and you get protests like this.
THERON: Yes, absolutely. France is a country difficult to reform because we are very in touch to the public services. For instance, in the public
service, one of our ministers said that they managed to gain some 7 or 8 billion euros from the public service. But then the professors and the
teachers say then they don't have enough purchasing power and that we are lowering the quality of education, meaning that the students will be lower
educated and that might be trouble for after, meaning for precisely research, and start-ups and so on. Which is really troubled. The adaptation
of the French academy to the world. The French power has been elected it's a socialist power, a social democratic power but now they reform in a
liberal way with authority and that kind of protesting is about.
LAKE: Julien, I want to ask you as we hear those sirens behind you, just an average night, I'm sure. But can the government deal with real economic
concerns while at the same time trying to address a very serious security threats that face France, can they do both?
[16:25:00]
THERON: For the moment, they definitely can. And I think that they more or less manage. One of the MPs at the parliament from the Republicans actually
criticized the government to not being able to cope with the strikes today. But I think that more or less now it's okay.
But I think they're worried as well that a lot of demonstrators can gain. Let's remember that in 1995, for example, we had major terror attacks and
major demonstrations and it's a difficult mix. And the government has taken in the meantime tomorrow, we'll have a major debate to reform the
constitution regarding two security threats precisely. And the leads are a little bit divided we're getting to that.
So you're absolutely right, we are in this very special moment, and I think the government is trying to cope with two issues, economics and security.
LAKE: Julien Theron from the University of Versailles for us live from Paris, tonight, thank you so much.
Now France's Civil Aviation Authority asked airlines to cancel 1 in 5 flights ahead of this strike.
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LAKE: Ryan Air now says Europe needs new rules to stop air traffic controllers from causing these massive disruptions. Earlier, I spoke to the
airlines chief marketing officer, Kenny Jacobs via Skype and asked what he wants the European Commission to do.
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KENNY JACOBS, CHIEF MARKETING OFFICER, RYAN AIR: Well we want them to take action. This is the 40th strike in a six-year period and it's really,
really intense. One, they can prevent air traffic controllers in Europe from going on strike. Give them another means to have disputed, give them
mediation, give them binding arbitration, but don't let them to go on strike.
Or the second thing we're saying that they could do is let the air traffic controllers of other nations be it the Italians, the Spanish, the British,
the Irish, control the skies over France if the French air traffic controllers go on strike. Technology allows that - would allow those
countries to do that at this time.
This is a very small group impacting a very, very large group of consumers and this is the, as I said, this is the 40th strike in a six-year period.
LAKE: It sounds like it's easy to blame the workers. Why are we seeing so many strikes? And can management do something to prevent this from
happening?
JACOBS: Well I think it's -- always it's on both sides to get together and figure out why are there constant strikes by French air traffic
controllers? It's a problem that is unique to France.
So I think the French government, management and the unions have to sit down and say, OK, can we work out a better way of having disagreements
without bringing the skies of Europe to a standstill, a couple of times a year.
Ronald Regan had the right idea in the States when he basically took away the right of air traffic controllers to strike over there. And that is one
of the things that we're saying the E.U. can do.
If we get 1 million people to sign up to our petition, we will bring that to Brussels. Brussels then has to look at it. European law dictates that if
you get 1 million people to sign a petition, then Europe has to consider changing the law based on that million people signing up to the petition.
So we would say to consumers, if you've been disrupted, if you think it's unfair, please sign up to keep Europe's skies open.
LAKE: And if there is no change, what's at stake, what does it mean for the airline industry in Europe?
JACOBS: Well, I think 40 strikes in six years means unfortunately we're kind of getting used to this. But I think enough is enough. We you know --
we've got to cancel flights, every airline has to cancel flights, it's great disruption. But as I said, we're kind of used to it with so many
frequent strikes. But enough is enough. We'll work around it but we're saying at a time when Europe is kind of questioning itself, questioning the
amount of bureaucracy, questioning why - you know how can Europe make things better for consumers and operate faster, we think it is a great
opportunity for European parliament and the European Commission to kind of show how quickly they can move and act in a way that would really benefit
lots of consumers.
(END VIDEO CLIP)
LAKE: A make or break moment for Apple investors. We'll bring you the latest quarterly results in just a moment.
[16:31:19] MAGGIE LAKE, CNN INTERNATIONAL BUSINESS ANCHOR AND CORRESPONDENT, FILLING IN FOR RICHARD QUEST: Hello, I'm Maggie Lake.
Coming up in the next half hour of "Quest Means Business," Apple results are about to come out. Has it managed the biggest profit in corporate
history?
And gaining dollars by shedding pounds - Oprah Winfrey has two reasons to celebrate tonight.
Before that, these are the top news headlines we are following for you this hour.
Brazil admits it is losing in the fight against the Zika virus. The health minister says it is failing, quote, "Badly" to stop the mosquitoes that
carry the virus. Zika has been linked to serious birth defects and it's expected to spread across the Americas. A new case of the virus was
discovered Tuesday in the U.S. state of Arkansas.
Lawmakers in Demark have vote in favor of a controversial new law affecting refugees. One would allow refugees' belongings to be confiscated in order
to pay for their expenses. Another prevents them from applying to bring their families to Denmark for three years instead of one. A spokesman for
the country's Liberal Party told CNN the family law was meant to help refugees integrate better into Danish society.
(BEGIN VIDEOCLIP)
JAKOB ELLEMANN-JENSEN, SPOKESMAN, DANISH LIBERAL PARTY: This is not a measure that is put in to deter people from coming here. This is because we
know that the number people who come through or not has an impact on our ability to integrate people into Danish society. And it has an impact on
our ability to continue having a welfare society in Denmark.
Therefore, if every one of the refugees come into Denmark should have family unification at once or after one year, then we would receive three
times as many people as we do today. This would have a serious impact. So we need - in order to treat people decent, we need to limit the number of
people coming to Denmark.
(END VIDEOCLIP)
LAKE: Swedish officials are calling for more security at overcrowded asylum centers. This comes a day after the fatal stabbing of an employee
at a facility for unaccompanied young people. Sweden's prime minister says his country has taken in many migrant children and teens who have had
traumatic experiences.
Pope Francis has met with Iranian President Hassan Rouhani at the Vatican. The two leaders found what the Vatican called common spiritual values.
President Rouhani is on a four-day trip to Europe trying to mend business and trade relations after years of sanctions.
In Syria, ISIS is claiming responsibility for two bombings in the city of Homs. More than a dozen people have been killed. The death toll could go
higher. The Syrian government controls most of the city and a U.K.-based monitoring group says 15 regime soldiers are among those killed.
This just in to CNN, Apple has missed expectations on iPhone sales. This is significant because the company relies on iPhones for two thirds of its
revenues.
CNN Money's Paul La Monica joins me now with more. Paul, investors are not going to be happy about this.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes, at last check -- I mean, granted the numbers have only been out a few minutes - the stock was
down a tiny bit after hours. That may have changed. But Apple did importantly report a small bit of growth in iPhone sales from a year ago.
They were still below forecast but a lot of people were fearing that the number would actually be lower than last year.
I think what's most alarming is the guidance -- the revenue outlook for the next quarter does look really light. Apple does historically low-ball
investors with their guidance.
[16:35:00] They did that, you know, notoriously in Steve Jobs' era and Tim Cook is still doing that. But investors that were hoping for Apple to wow
Wall Street with really strong iPhone sales - that didn't happen.
LAKE: You know, it's amazing about investors. I'm looking at it in free market, and you're right, it' still holding on to modest gains. You and I
were talking - it was not participating in the rally for most of the day today. Maybe investors ae hanging on until they actually wait to hear the
conference call from Apple executives and get a little bit more detail on what's going and maybe why those phones were a little light. Maybe China,
they want to hear about China I guess too.
LA MONICA: Yes, I think they definitely want to hear about China. We know that there are many concerns about the slowdown in China's economy as Apple
becomes a more important player in that market. But even with Apple growing in China, it still faces the concerns of very strong competitors -
WowWay (ph) and Xiaomi are both very, very strong in their home market of China.
And, Maggie, if you want to talk about just like the psychology of Apple and investor sentiment in general, look no further than the closing price
for the stock -- $99.99.
LAKE: (LAUGHTER).
LA MONICA: As if Wall Street couldn't dare make it $100 or higher than $100 out of fear of what might happen after hours if they missed work.
LAKE: Exactly. Everyone tried to play it safe. And that's why we may be seeing a little hesitation until the news comes out. You know, Paul, this
is an important stock - not just really for the professional investors, but this is a very widely-held stock, especially when you're talking about
retail, about funds, about people's retirement. On the conference call, what else is going to matter aside from the iPhone? We have seen Apple,
you know, we always talk about the TV, a lot of people wonder about the watch. They'd been doing some - hired somebody from Virtual Reality. So
there are definitely people really curious about where they are heading in the future.
LA MONICA: Yes, right now for the foreseeable future, this is all about the iPhone. I think there will be questions about the rumored 5SE that may
be coming out in a few months or return to the foreign screen. There may be questions about what the 7 is going to be like even though that's months
away - that wouldn't be until the second half of the year. In terms of newer products, the rumor that really excites people I think the most is
whether or not Apple is really developing its own self-driving car - the Project Titan. Some people think Apple should just go out and buy Tesla.
It certainly has the cash to do so.
LAKE: Yes, and that's one thing we have to remember as you pointed out, they are sitting on a mountain of cash. So we'll have to see how the stock
continues to trade. It does look like it is trending lower in the red right now, but not by very much. All right, Paul, thanks so much.
LA MONICA: Thank you.
LAKE: Paul and the whole Money team going to be watching that in after hours.
Now, bread, one of Oprah Winfrey's favorite things. The media mogul and Weight Watcher's pitch woman wants everyone to know it.
(BEGIN VIDEOCLIP)
OPRAH WINFREY, AMERICAN MEDIA PROPRIETOR: This is the joy for me. I love bread. I love bread. I now just manage it, so I don't deny myself bread -
I have bread every day. I have bread every day. That's the genius of this program. I lost 26 pounds and I have eaten bread every single day.
(END VIDEOCLIP)
LAKE: I want to eat bread every day. Well in case it wasn't clear, that was an ad for Weight Watchers, and investors ate it up. The company's
shares rose as much as 20 percent after Oprah posted that video. That is a gain of five points -- $6 million to Weight Watcher's market value for
every pound Oprah has lost. Her first endorsement in October gave the stock some help back then as well. It has shed some of those gains and faded a
bit.
As for Oprah herself, the carbs haven't hurt. Check it out - on the left, a photo taken just days before Oprah took her stake in Weight Watchers. On
the right, one taken a month and a half later.
Joining me now, Alex Fuhrman, senior research analyst at Craig-Hallum Capital. Thanks so much for being with us. You know, it is amazing - a
lot of people have been watching this drama with Oprah and wondering if her involvement was really going to help out Weight Watchers fundamentally. Is
today's rally proof that it is? How do you see this?
ALEX FUHRMAN, SENIOR RESEARCH ANALYST, CRAIG-HALLUM CAPITAL: Well I think today's rally was a long time coming. Oprah brings a lot to Weight
Watchers. It's an iconic brand that's really struggled historically with the marketing, especially last year. Oprah really comes in and does two
main things right off the get go. You know, her financial contribution really gets them past any liquidity concerns they had about a looming debt
payment that's due in about three months.
But more importantly, she brings a lot to the marketing front. I mean, as you see from that commercial right there, Oprah has a huge following both
here in the United States and globally. And if you just look at even Google search traffic for the Weight Watcher's name, I mean, that has
spiked very quickly ever since Weight Watchers began running those Oprah commercials. So I think she is having a pretty big impact right off the
get go.
LAKE: Alex, it's amazing. There have been a lot of pitch people, you know, a lot of people who struggled with their weight. What is it about
Oprah that has the ability to be such a game changer?
FUHRMAN: Well, I think she's known as someone who wouldn't endorse a product that she doesn't use herself, that she doesn't really believe in.
[16:40:05] You know, you can see that from the commercial that you just aired that she was in that she's obviously had success with the program.
She's trusted by consumers around the world and I think this is a great fit with her and Weight Watchers.
LAKE: Yes, and you can see in the theme now they're going for, it's more of a wellness, about being good to yourself. You can see that through a
larger Oprah message, really permeating some of the marketing they are doing now. What do they need to do to ultimately be successful? They've
clearly got the Oprah effect right now. How do they sort of build that in to the DNA of Weight Watchers and succeed? This is a crowded space, a
crowded area, and especially if you're talking about moving more into wellness and fitness. What does Weight Watchers ultimately need to become
in order to have success for the long term?
FUHRMAN: Well I think getting Oprah onboard was certainly a big part of it. But really I think that the timing of Oprah joining is extraordinary
because this year for diet season 2016, I think Weight Watchers did something that it really needs to do to evolve into the - really the future
of where dieting companies are going. And that was the transition to the beyond the scale program, moving away from points plus and moving toward
the new smart points program, really emphasizing healthier foods.
So, you know, really an emphasis on having more protein, less sugar, lower amounts of saturated fat and more incorporating fitness into the everyday
Weight Watchers programs. I think those changes are really what the consumer is looking for in terms of a more holistic approach to health and
not just the number on the scale. And having Oprah as a spokeswoman at this key juncture in the company's evolution to communicate those changes really
just adds fuel to the fire.
LAKE: Yes, and not only a spokesperson but a partner in the journey I think as she likes to say. It certainly looks like a new chapter for
Oprah, we'll see if it's a new chapter for Weight Watchers. I know you're bullish on the stock. Maybe this is one where we all win from this, Alex.
But thank you so much for coming in and sharing your views with us. Alex Fuhrman for us tonight.
FUHRMAN: Thanks for having me.
LAKE: Well a battle - let's stay on the billionaire streak - a battle of two other billionaires could be on the cards in the U.S. presidential
election. We take a look at the possibility of Michael Bloomberg joining the race.
(COMMERCIAL BREAK)
LAKE: Donald Trump has hit a new high in the race for the U.S. Republican nomination. According to a CNN ORC poll, more than four in ten Republican
voters now say they back the billionaire for U.S. president. He has more than doubled the support of his nearest rival Ted Cruz. Neither of the
remaining candidates managed to gather double-digit support in the polls. Trump has told CNN he is also confident he would beat the former mayor of
New York Michael Bloomberg if he joined the race. Bloomberg is said to be weighing up a run as an independent candidate. Phil Mattingly takes a look
at the potential battle of the tycoons.
(BEGIN VIDEOCLIP)
PHIL MATTINGLY, CNN NEW YORK-BASED CORRESPONDENT: Billionaire businessman, three-term mayor of New York, presidential candidate? Frustrated by the
polarized nature of a race rife with anti-business sentiment, --
BERNIE SANDERS, DEMOCRATIC CANDIDATE FOR U.S. PRESIDENT: Who is going to be prepared to stand up the billionaire class and wage a political
revolution?
(AUDIENCE CHEERS)
MATTINGLY: -- and strongly concerned about a President Trump or Sanders.
DONALD TRUMP, REPUBLICAN CANDIDATE FOR U.S. PRESIDENT: -- where I could stand in the middle of Fifth Avenue and shoot somebody and I wouldn't lose
any voters, OK?
(LAUGHTER)
TRUMP: It's like an incredi-
MATTINGLY: Michael Bloomberg weighing a 2016 run as a third-party candidate. One of his advantages? Having the resources to self-fund his
campaign, reportedly to the tune of $1 billion.
[16:45:06] Polls showing self-financing of independents have been particularly potent messages for Donald Trump.
TRUMP: I would love him to do it actually. I love the competition, I love the competition. I would like for Michael to do it. You know, we used to
be friends. I guess we're not friends anymore, I don't think we are.
(NEW YORK STOCK EXCHANGE OPENING BELL)
MATTINGLY: According to "Forbes," in 2015, Bloomberg was the 8th richest American worth an estimated $37 billion, his wealth coming from a computer
system used by just about everyone who sets foot on a Wall Street trading floor. Trump who says he doesn't believe Bloomberg is worth that much, is
121st on that list, worth $4.5 billion.
A Democrat turned Republican turned independent with a record of working across party lines in New York City and spending tens of millions on causes
like gun control, climate change and immigration, issues that may also be his biggest roadblocks and potentially a major problem for Democrats.
RAND PAUL, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: It's going to be split the Democratic voters (inaudible) control (inaudible) might be good for
Republicans.
MATTINGLY: Bloomberg's path to the White House, if it exists at all, is a tight one, one his advisors say that a strong performance by Hillary
Clinton could close out entirely.
HILLARY CLINTON, DEMOCRATIC CANDIDATE FOR U.S. PRESIDENT: He's a good friend of mine and I'm going to do the best I can to make sure that I get
the nomination and we'll go from there.
MATTINGLY: And the 73-year-old has been here before, weighing runs in 2008 and 2012.
MICHAEL BLOOMBERG, FORMER NEW YORK CITY MAYOR: Number one, I'm not running for president, OK? I couldn't be clearer about that. If I thought I could
win, I would. But you can't win - thank you, I'll be very happy running my company and my foundation.
MATTINGLY: Now Bloomberg has only a few weeks to figure out if that has changed. Phil Mattingly, CNN New York.
(END VIDEOCLIP)
LAKE: Spain held its elections back in December and there is still no sign anyone can form a government. Prime Minister Mariano Rajoy gave up on his
chance to form a government saying he is unlikely to win a confidence vote. New talks with King Felipe are planned for Wednesday. The turmoil comes as
Spain's economy is improving. Richard Quest spoke with Spain's finance minister at the World Economic Forum in Davos. Richard put it to him that
whichever government ends up in power, it won't have staying power.
(BEGIN VIDEOCLIP)
LUIS DE GUINDOS, SPANISH FINANCE MINISTER: Well that depends, no, that depends on the nature of the government. If we are talking about, you
know, a coalition of losers, then it will be much more difficult. But if we are talking about the right coalition, I think that, you know, it will be a
vote-based government with a lot of support from the Parliament.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: How do you win an economy when there is such uncertainty?
Because you still have to make decision.
DE GUINDOS: Well, it's not (inaudible) because the Spanish economy is performing quite well. We are growing quite fast. We are outperforming
the majority of our peers in Europe. But the Spanish economy's vulnerable. We have to issue all of it (ph), we have fairly good market situation at
this, you know, quite dramatic because we have had unemployment rate about 20 percent.
And so uncertainty might have a negative impact. So I think that it's very important to reach a rapid agreement with respect to the new government and
that the agenda of this new government is according to one (ph) because we have to continue making reforms.
QUEST: And on this question of - I mean, the banking system - a lot of money has been spent recapitalizing it, but it wouldn't take much for
another crisis.
DE GUINDOS: No, I think that the situation with the banking industry in Spain is a totally different. We have - it is a lot of clarity, a lot of
transparency. The provisions of the Spanish banking industry are second to none all over Europe. And we have injected a lot of capital and we have
incorporated (inaudible) banks. So this situation is totally different. There are challenges, but of a totally different nature.
QUEST: Mario Draghi and I know that you're going to tell me you do not comment on monetary policy - I am aware of that. But he's getting to the
point where he can't do much more. He says he'll do whatever it takes.
DE GUINDOS: Yes.
QUEST: But everybody accepts now that much more printing of money just is not going to have much of a difference. It really is up to the
governments.
DE GUINDOS: Well, here the point is that the mandate of the European central bank is to have inflation below but close to 2 percent. And now if
you look at the inflation expectations, they are clearly below 2 percent. So in order to fulfill its mandate, he has to inject more money. And to
take - let's say, you know - extraordinary measures. And so the program that of quantitative easing that was started by this city is open-ended.
And this is something that we have to take into consideration.
QUEST: But you as ministers have to do more on the fiscal front.
DE GUINDOS: I fully agree, I fully agree.
QUEST: The problem here is everybody agrees -
DE GUINDOS: No, no.
QUEST: -- I had Mr. Diesel (ph), had yourself, had - you know - everybody agrees, but what happens?
[16:50:00] DE GUINDOS: Well, but see in the case, in the case of Spain, we have delivered quite a lot. There reason why Spain is growing much faster
than the European average is because we have implanted reforms. We restructure of our banks, we overhauled the labor - the labor code, we have
liberalized the services markets and I think that this is having an impact. That's why Spain is growing again.
(END VIDEOCLIP)
LAKE: Lennon-McCartney, Vinny and Buran (ph), you can hear the music just by saying their names. But up next, modern-day songwriting is not the
romantic business it used to be.
(COMMERCIAL BREAK)
LAKE: How much do you think a hit song is worth? I'll give you a hint - it's a lot less than you think.
All this week we are looking at the future of the music industry in this digital age. Claire Sebastian joins some songwriters at a recording
session and found out why their work is going for a song.
(MUSIC PLAYING)
UNIDENTIFIED MALE: This is captured by (inaudible).
CLAIRE SEBASTIAN, CNN PRODUCER: It's lunch time at the Manhattan studios of songwriter/producer team The Eleven -
UM: -- 1:04 p.m.
SEBASTIAN: -- and they're starting on a brand new song. Brothers James and Matt Morales and their partner Dave Rodrigues are collaborating today
with singer/songwriter Ginette Claudette. They start with a chord progression and then the song's core message.
GINETTE CLAUDETTE, SINGER/SONGWRITER: I'm anticipating being with you kind of live.
SEBASTIAN: So we're just half an hour into the process and things are progressing really quickly. This is not the romantic notion of songwriting
that you might think - the thunderbolt of inspiration that just happens. These guys are under intense pressure to keep churning out music as quickly
as possible.
CLAUDETTE: (SINGING) So I could never be (HUMMING).
MORALES BROTHER: There are a lot more songwriters I would say today because the technology allows us to do that.
MORALES BROTHER 2: Technology makes everything so much faster and quicker, we have to expedite the process.
SEBASTIAN: Three hours in and a song is starting to take shape.
CLAUDETTE: (SINGING).
SEBASTIAN: The Eleven got a lucky break four years ago when a friend and music manager spotted one of their tracks. That led to a publishing
contract at one of the world's biggest publishing companies, Sony/ATV and the work started flowing.
MORALES BROTHER (PH): We've had records with Meghan Trainor, Sean Pinkston (ph), Jesse McCartney - we did his entire last album.
SEBASTIAN: Theirs though is a rare success story. Jason Blume, a 20-year veteran of the industry whose written songs for Britney Spears and the
Backstreet Boys says this is the most difficult time he's ever seen for songwriters.
JASON BLUME, SONGWRITER: I personally have had a situation where more than a million airings on YouTube earned me $30. Streaming has not caught up in
terms of the payments and it's almost impossible for songwriters to earn a living. So what do songwriters do? We have to write amazing songs. Good
is not good enough anymore.
CLAUDETTE: (SINGING).
SEBASTIAN: It's a message keenly felt by this group even with the extra money they earn from producing their own music.
JAMES MORALES, SONGWRITER AND PRODUCER: Now, if you write a hit record and you have 5 percent of a smash multi-platinum-selling record, 5 percent may
not sound like a lot, but the music business is a business of nickels and dimes.
[16:55:07] And if you make enough nickels and dimes, then you can make a lot of money.
CLAUDETTE: (SINGING).
SEBASTIAN: After five hours of work, they have the skeleton of a new record.
Is it going to be a hit?
J. MORALES: We hope so. I mean it's hard to say. We don't get to make that call -
(LAUGHTER).
SEBASTIAN: The laughter is nervous. In an industry where profits are spread ever thinner, that next big hit means everything.
CLAUDETTE: (SINGING). I don't want to wait another minute.
SEBASTIAN: Claire Sebastian, CNN New York.
(END VIDEOCLIP)
LAKE: Mark Zuckerberg's life is full of changes. He recently entered fatherhood, and he's constantly adapting as CEO of Facebook. One thing
that's staying the same though, his wardrobe. We'll peek inside Zuckerberg's closet next.
(COMMERCIAL BREAK)
LAKE: Facebook CEO and proud new father, Mark Zuckerberg has returned to work after taking two months of paternity leave. To announce his first
day back in the office, he posted a picture of his closet and asked Facebook followers what he should wear. Predictably it was a row of
heather-gray tee-shirts and dark gray hoodies. At least he has a sense of humor in his sleep-deprived state. Zuckerberg's famous of course for
wearing the same outfit every day. He once said, "I really want to clear my life so that I have to make as few decisions as possible about anything
except how to best serve this community."
LAKE: Zuckerberg is not the only leader who has deliberately limited their wardrobe, most famously Steve Jobs kept his attire to an iconic turtleneck
tucked into blue jeans. Elizabeth Holmes who founded the health tech startup Theranos continues the black turtleneck theme.
And President Obama told "Vanity Fair" he only likes to wear blue and gray suits. He says it leaves him more time for important decision-making.
That's it for "Quest Means Business." I'm Maggie Lake in New York.
END
