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Quest Means Business
Obama Officially Nominates Jack Lew for US Treasury Chief; US Economic Recovery; Tomorrow's Tech; Silicon Alley; Oscar Nominations; Working Title Pictures CEO Eric Fellner
Aired January 10, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Tonight, we are all about nominations. The nomination for the US Treasury Secretary goes to Jack Lew.
The nominations for the Oscars are out. We speak to the producer of "Les Miserables."
(BEGIN VIDEO CLIP)
HUGH JACKMAN AS JEAN VALJEAN, "LES MISERABLES" (singing): My sister's child was close to death --
ERIC FELLNER, CO-CHAIR, WORKING TITLE PICTURES: It is categorically a financial benefit if your film is still in release.
(END VIDEO CLIP)
QUEST: And the nomination to take over from Silicon Valley, it's Silicon Alley here in New York.
I'm Richard Quest at the New York Stock Exchange where I mean business.
Good evening. The president's loss is America's gain. So is the result of the announcement in the last hour that Jack Lew, the White House chief of staff, is to be the nominee for Treasury Secretary, who will be taking over from Timothy Geithner if he is confirmed by the US Senate.
The president made his announcement to the media a few moments ago. Mr. Lew is currently the chief of staff. The president said it would be a loss when he leaves that post.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Although a lot of work remains, especially to rebuild a strong middle class and offer working folks new pathways to rise into the middle class, our economy is better positioned for tomorrow than most of those other countries hit by the financial crisis.
The tough decisions Tim made and carried out deserve a lot of credit for that. So I understand that Tim is ready for a break. Obviously, we're sad to see him go, but I cannot think of a better person to continue Tim's work at Treasury than Jack Lew.
(END VIDEO CLIP)
QUEST: Now, Jack Lew is a consummate Washington professional, a budget director, the White House chief of staff, he knows where everything -- where all the bodies are buried in the US capital, some would say. When he said and when he took the nomination, he said he was very grateful.
(BEGIN VIDEO CLIP)
JACK LEW, US TREASURY SECRETARY NOMINEE: If confirmed, I look forward to joining the Treasury Department, whose people are legendary for their skill and knowledge. It's a team that I've collaborated with closely over many years and have come to respect greatly.
Finally, thank you to Ruth, Shoshi, Danny, Zahava and the kids for your endless tolerance with the demands of a schedule that tests all family patience. And thank you, Mr. President, for your trust, your confidence, and friendship.
(END VIDEO CLIP)
QUEST: Jack Lew, the nominee to be treasury secretary. Here on Wall Street, the Dow is just up 45 points. It hasn't really moved much since we got that announcement. We'll be talking to Ken Polcari in a second or two why that might be the case.
Firstly, let's talk about Jack Lew and the nominee as treasury secretary in the wider picture. Ali Velshi is with me. Good afternoon, Ali. Not a huge surprise, well-leaked, well-forecast. Is it going to be a smooth nomination?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: It probably is. He'll get a few questions. His name's Jacob, you call him Jack, he's 57 years old. He has headed the Office of Management and Budget, which is the administration's budget department, basically, twice: once under Clinton, once under Obama.
He's got an illegible signature, but the bottom line is, this is a guy who, like Geithner four years ago, who was able to hit the ground running because we were in a banking crisis back then, and Geithner had been in those rooms where they had made the decisions to let Lehman Brothers go, to talk to the central bankers, to talk to the head of the banks, Lew has been in those rooms where they've made budgets.
This guy understands budgets and every detail about them. There's some carping from the right about the fact --
QUEST: Why?
VELSHI: -- that he's too tight with President Obama. The guy's the treasury secretary. If you didn't win the election, the guy who did gets to choose who he wants in his midst. So, he's going to get this nomination, he'll get some questions --
QUEST: Hang on!
VELSHI: -- but he's going to get the nomination.
QUEST: Don't -- calm yourself, Mr. Velshi, calm yourself. When we put the nomination, though, into context --
VELSHI: Yes.
QUEST: 2007, 8, and 9 required somebody with deep financial knowledge --
VELSHI: Correct.
QUEST: -- of markets. Are you saying that that is no longer --
VELSHI: Correct.
QUEST: -- the principle requirement as the issues --
VELSHI: Yes.
QUEST: -- become more budgetary and fiscal?
VELSHI: That's right, that's exactly right. Right now, we do have a crisis, and it is a budgetary crisis. Imagine if we had a budget, the United States, which we have not had since April of 2009. We have these so-called "continuing resolutions." Every year they say the budget's just going to be a continuation of last year's budget.
If we actually had a real budget, you wouldn't have a debt ceiling crisis, you wouldn't have a sequestration crisis, you wouldn't have had the fiscal cliff. You would have just had the Bush era tax cuts to deal with.
So the bottom line is, our crisis right now in the United States, the thing standing in the way of strong growth, is budgetary. And Jack Lew understands that.
I'm not saying you have to be on his side and that Republicans have to agree with the way he does things, and many don't. But at least he knows the terms of reference in the way that Tim Geithner understood the terms of reference last time a treasury secretary was appointed.
QUEST: OK. Finally, before we get the new man, let's look at the old. Is there a general feeling -- I know that I certainly think that Tim Geithner did a fairly spectacular job --
VELSHI: Right.
QUEST: -- holding everything together during those crucial years of 08, 09, and 10. He might not have been, perhaps, the most charismatic or lively treasury secretary --
VELSHI: Right.
QUEST: -- we've ever seen, but he certainly held things together.
VELSHI: Yes, absolutely. And Jack Lew is probably also not going to come across as the most charismatic and lively fellow around, but that's not the point at the moment. In fact, his obsession with budgetary matters is even more arcane than Tim Geithner's obsession with financial and central banking matters.
But the point is, you do need a technocrat in that job. You do not need -- so, I want to bring back one example. Think about Baker. Baker -- James Baker, who was Reagan's treasury secretary, there's a guy who had no financial experience, either, but he was both a politician and a technocrat.
Jack Lew has a lot of political experience. He understand you've got to get Congress on side in this country to get budgets done. I think you might actually find this to be a very interesting play.
QUEST: Ali Velshi, who remembers the James Baker treasury, which proves he's older than he actually looks.
(LAUGHTER)
QUEST: Ali, we'll talk more about it.
VELSHI: Very good.
QUEST: Many thanks. Here on the floor of the stock exchange, the Dow's up just 45 points. When we need to bring politics and Wall Street, the financial world, we need to bring it all together, there's one man that we turn to, it's always my good friend, Ken Polcari, who joins me. Good to see you.
KENNY POLCARI, O'NEIL SECURITIES: Hello Richard, nice to see you.
QUEST: You've got a bit of a suntan, you old thing.
POLCARI: Ah, yes, a little bit.
QUEST: A little bit of a suntan. Right. Jack Lew, treasury secretary. You and I have argued and discussed and debated the issues. Will Wall Street applaud this?
POLCARI: Listen, I think he's been out there, that name's been out there, Wall Street's kind of ho-hum to it at the moment. I think what they're going to do is they're going to allow it to go on, we'll see Jack Lew probably confirmed.
And then Wall Street will make its decision once we get into these budget battles, because for sure, he should be confirmed before the end of the month, and then he's going to get thrown right into the budget battles, and Wall Street will make a decision on whether Jack Lew was the right choice or not based on how these battles go --
QUEST: But to --
POLCARI: -- because they are expecting --
QUEST: -- would they have preferred -- but would they have preferred the consummate insider? Somebody from the Street? The CEO of a Goldman or whatever?
POLCARI: I think the Street certainly would have preferred somebody on the inside, but I think we're in a different place. At the time that Timothy Geithner came in, we absolutely needed someone like Timothy Geithner.
The world is a little bit different today, we're in a different place, a safer place. And so it's going to be more about policy and budget and negotiation, and Jack Lew, apparently, brings that to the table. So, I think Wall Street is ready to sit back and see how it goes. The assistant will be a Wall Street guy.
QUEST: Now, we need to talk about wider issues than just this. The markets are doing remarkably well.
POLCARI: Right.
QUEST: Not just today, but if we look, we're virtually at multiyear highs, 2007, 2008 highs. What's driving this?
POLCARI: I think there's a couple of things that's driving it. I think that there's a much-improved sentiment, certainly here in the States, I'll tell you that on a --
QUEST: What does that mean, much improved?
POLCARI: I think people are expecting -- they feel that the US economy in fact has started to stabilize, and they are starting to see better days ahead. Now, is it all -- is it all roses right at the moment? Not yet, but the sense is we're getting there. Certainly, China and Asia are starting to turn around.
QUEST: But yet, there's such a budgetary problem.
POLCARI: Right.
QUEST: If there's such a fiscal cliff, if there's so many debates and disputes still to take place --
POLCARI: Right.
QUEST: -- why are we back to where we were?
POLCARI: Because I think the Street thinks that we will get through those problems. I don't think the Street thinks we're going to come to the brink like we did a year and a half ago with the debt ceiling, or like we just did at the fiscal cliff.
I think the Street is once again giving legislators a pass to do the right thing. And if it doesn't, if it doesn't happen, you'll see the markets sell off very quickly.
QUEST: Sell-off quickly, the Dow. Needless to say, my next question has nothing to do with giving advice as to where you should put a penny of your own money.
(LAUGHTER)
QUEST: No -- no. Where do you stand on this question of risk-on, risk-off bonds to equities in 2013?
POLCARI: I think you're going to see money come out of bonds and come right into equities, because I think the sense here -- you talk to analysts in this country and the story's been told that 2013 is going to be another good years for equities.
Listen, don't forget, don't forget: 2012 was a year that nobody expected anything to happen, and we were up 14 percent at the end of the year.
QUEST: Right.
POLCARI: I think 2013 is going to be a good year for equities.
QUEST: 1961, that was even before I was born.
POLCARI: The year I was born.
QUEST: It wasn't, was it?
POLCARI: Yes it was.
QUEST: You're older than me?
(LAUGHTER)
QUEST: You're looking better.
POLCARI: Better-looking.
QUEST: Yes, that too. Ken Polcari here on Wall Street. When we come back in just a moment, live tonight from the New York Stock Exchange, the question of affordable phones and what's happening in Las Vegas at the Consumer Electronics Show. QUEST MEANS BUSINESS -- foldable phones as well as affordable phones in a moment.
(COMMERCIAL BREAK)
QUEST: The sheer amount of technology here at the New York Stock Exchange -- just look at this. All the computers, all the screens, the high-tech that is crucial to making today's financial markets global and work seamlessly.
It's a very different sort of technology that we're going to talk about now. The Consumer Electronics Show in Las Vegas is winding down with something of a bang. We've seen the evolutionary, we've seen the tweaks to the gadgets, we've seen the new ideas. Now, we're going to look from evolutionary to revolutionary, something completely different.
Have a look at this. It's a gadget, it's a flexible screen prototype from Samsung. It means you could soon end up with a phone or tablet that you can literally roll up and put in your pocket.
Remember, we've already seen roll-up keyboards. Imagine if the screen and the technology was all the same. It's made of bendy plastic instead of glass, and Samsung says the technology is almost unbreakable.
And this was Microsoft's research: IllumiRoom. It uses a special projector that breaks images out of the confines of your TV screen and interactively to fill the room. It uses Microsoft's Connect technology to scan surroundings in 3D so it knows exactly what to display.
Over the last 24 hours, of course, we've told you about how New York is shedding financial services jobs. Many tens of thousands of jobs in the industry have gone over the last few years since the Great Recession.
Instead, the shift from financial services to technology continues apace. As Maggie Lake now reports, with big companies like Google having set up right here in the heart of Manhattan, you could be looking -- indeed, will be looking -- at Silicon Alley.
(BEGIN VIDEOTAPE)
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT (voice-over): New York hotspots like Times Square, Greenwich Village, and Wall Street, are famous the world over. But ask New Yorkers how to get to Silicon Alley?
LAKE (on camera): I don't see it anywhere.
UNIDENTIFIED MALE: Over here?
LAKE: I don't see it anywhere on our map.
UNIDENTIFIED FEMALE: I have no idea.
LAKE (voice-over): To quote Billy Joel --
BILLY JOEL, SINGER (singing): I'm in a New York state of mind.
LAKE: Silicon Alley is more of a state of mind than a neighborhood. More than 450 digital start-ups have opened across the city 2007, with the industry employing more than 120,000 workers. Many are settling here, near the historic Flatiron Building.
Well-known names like blog titan Tumblr, retail site GILT Group, and social media app Foursquare.
LAKE (on camera): This is what people are talking about when they talk about Silicon Alley in New York, places like General Assembly, which was started in 2011. It's a place where members of the tech community can come and take courses and network as they try to build the next big thing.
LAKE (voice-over): In a city filled with world-class industries increasingly relying on tech, General Assembly says entrepreneurs are well- placed to offer expertise.
ADAM PRITZKER, CO-FOUNDER, GENERAL ASSEMBLY: In New York, what's so special about the city is kind of the eclectic nature of all the different industries and things people do, which are being penetrated by digital technology.
LAKE: Mayor Bloomberg himself has made it a top priority to attract tech firms, a plan the city says is already paying off.
SETH PINSKY, NYC ECONOMIC DEVELOPMENT CORPORATION: New York is a center not just for companies that were based here and are growing but is increasingly becoming a center for companies from all over the world who are establishing beach heads here in the city.
LAKE: Investment bucks have followed the flow of entrepreneurs. New York now has a higher number of tech start-ups than Boston. Firms like online publisher BuzzFeed and social TV app GetGlue have all recently attracted millions in venture capital funding.
Still, skeptics say New York's tech boom is more hype than reality.
GREG DAVID, CUNY GRADUATE SCHOOL OF JOURNALISM: We simply are not creating great companies in this part of the tech cycle. We're not creating Facebook and Twitters and companies like that.
I've done a lot of work on this subject, and the gap between Silicon Valley and Silicon Alley is widening in this cycle.
LAKE: New York's tech industry may not be handing out the eye-popping paychecks that were once the domain of Wall Street, but start-ups add jobs in the city at a time when the financial industry is shedding jobs. It may take time --
UNIDETIFIED FEMALE: Silicon Alley?
LAKE (on camera): Alley.
UNIDENTIFIED FEMALE: No.
LAKE (voice-over): But New York hopes that one day, Silicon Alley will be a spot on the map that everyone recognizes. Maggie Lake, CNN, New York.
(END VIDEOTAPE)
QUEST: Maggie Lake reporting there on Silicon Alley. Now, for tonight's Currency Conundrum. Have a look at this lot. The conundrum -- the money, of course.
(RINGS BELL)
QUEST: And the conundrum is, a person featured on some US coins is also the star attraction of a nominated Oscar film. Can you guess who it is? We will have the answer on the Currency Conundrum for you a little later in the program.
Now for the currency rates. These are the rates on the markets at the moment.
TEXT: EUR 1.3253
GBP 1.6150
JPY 88.203
QUEST: Those are the rates, this is the break.
(COMMERCIAL BREAK)
QUEST: The answer to the Currency Conundrum, which is all about the Oscars, of course. Which president is also on the currency and an Oscar- nominated -- well, of course, it's not the quarter. And it is not the note. It is, of course, the penny, and it is President Lincoln. "Lincoln," of course, is the Oscar-nominated movie.
The nominations are out, and Nischelle Turner is in Los Angeles to talk us through some of what's been happening with those nominations, which are the crucial ones? Are there any surprises in the nominations, or is it pretty much as you had feared or thought it was going to be?
NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT: Well, first of all, can I borrow a couple of bucks, because you had some money there on the table. It would be nice.
(LAUGHTER)
QUEST: The price of a movie these days in the US --
(LAUGHTER)
TURNER: Exactly. I don't know if that would cover it, though, Richard. All right, well, you know, we are talking --
QUEST: The nominations, tell me about them.
TURNER: -- Oscar nominations. Oscar nominations this morning, lots of love for "Lincoln." It earned 12 nominations this morning. Plenty of accolades as well for "Life of Pi" and "Silver Linings Playbook," so the people behind those hits definitely have big smiles on their faces.
Let's get right to the biggest category, though. We're talking about Best Picture. Now, the Academy has the choice of nominating between five and ten movies. This year, it was nine. And here they are.
"Lincoln" was nominated, "Life of Pi," "Amour," "Silver Linings Playbook," Zero Dark Thirty," "Argo," "Beasts of the Southern Wild," "Django Unchained," and "Les Miserables."
Now, let's talk about Best Actor. The Best Actor category, this is going to be a good one this year, Richard.
QUEST: Right.
TURNER: Daniel Day Lewis was nominated for "Lincoln," the guy on that penny that you were holding up. Hugh Jackman for "Les Miserables," Denzel Washington was nominated for "Flight," Bradley Cooper for "Silver Linings Playbook" and Joaquin Phoenix in "The Master."
Now, do you have any questions, or would you like for me to move on to the Best Actress category?
QUEST: All I want to know from you, Nischelle, is who is the front- runner in these -- never mind all those nominations. Most of them don't stand a chance. Who's the front-runner?
TURNER: Well, the front-runner, I believe -- if you would've asked me yesterday, I would've said "Lincoln" for Best Picture, but since "Silver Linings Playbook" got such award show love this morning, they were nominated not only for Best Picture, but Best Director, Best Actor, Best Actress, Best Supporting Actor, Best Supporting Actress, Best Person That Cleans Up The Set -- who knows?
They were nominated for it this morning. I would say that "Silver Linings Playbook" is definitely gaining some momentum. And also, "Beasts of the Southern Wild" is a movie that nobody would've thought would've gotten the amount of award show accolades that it did this morning, but it did.
It was the youngest nominee ever, Quvenzhane Wallis, was nominated for Best Actress for this movie. The director, Benh Zeitlin, was nominated. He's 30 years old, just turned 30, it's his very first movie. The movie itself was nominated. So, this could surprise a lot of folks come Oscar Sunday.
QUEST: All right. Nischelle Turner in Los Angeles. Now, the hard work really begins --
TURNER: All right, Richard.
QUEST: -- having got the nominations, they have to convince people to actually get the award. Nischelle, many thanks, indeed.
Eric Kellner -- Fellner is the co-chairman of the UK's Working Title Pictures. Now, they are the producers of "Les Miserables" and "Anna Karenina." After receiving a bundle of Oscar nominations, Jim Boulden sat down and spoke to him and asked the core question, whether making "Les Miserables" was a risk.
(BEGIN VIDEOTAPE)
ERIC FELLNER, CO-CHAIR, WORKING TITLE PICTURES: Musicals for cinema are not really in vogue, so it's quite tough when you look at the financials of a musical going in thinking, well, what are the comparables? What's doing business these days? And you realize that actually, there've only been about four or five in the last decade, and only a couple of them have made any money.
So, yes, it's very risky, but we were lucky in this instance in that we're starting with source material that is much-loved, all the way back to 1850 or whenever Victor Hugo wrote the book.
ANNE HATHAWAY AS FANTINE, "LES MISERABLES": Help me please! I have a child!
HATHAWAY AS FANTINE (singing): So different from this hell I'm living! So different now --
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: When you get this many nominations, how does that translate into people going to see the film?
FELLNER: It is categorically a financial benefit if your film is still in release. When it has that stamp of approval from the industry, both in the UK and in America, the Academy Awards and the BAFTAs, these are brand names.
When a member of the public can see that it's been recognized by those two groups, it makes them go, oh, well, it must be -- you know.
BOULDEN: Yes.
FELLNER: So, it just adds weight to your campaign. I don't think it's the difference on a big film between success and failure. It can definitely be the difference between success and failure on a tiny little film. Where a film doesn't have a marketing budget, it can elevate it to the point where they could never have afforded to do that, and suddenly it becomes a massive hit.
BOULDEN: And it's like free publicity, or do you now spend money to try to win those awards as well?
FELLNER: It becomes part of your marketing campaign. This film is -- it's opened in the US, it's opened in Japan, Korea, Australia, a few other territories in the Far East. But the bulk of Europe it hasn't opened in. So, yes, we will be spending money to advertise the fact that the film's opening and it got this many nominations.
BOULDEN: How would you describe making films in the UK now as compared to maybe making them in Hollywood or cheaper on the continent?
FELLNER: Yes. It's not that the -- the UK government are making it way more attractive to shoot here, they're not giving money away. What they're doing is they're creating a level playing field for Britain's filmmakers. So, the tax credit that exists is -- without the tax credit, the British film industry would be virtually nonexistent.
BOULDEN: And it still matters that it's a British film, doesn't it?
FELLNER: My theory is that if you put two films into theaters in Europe, both of which are really interesting and attractive to an audience, but one is European and one is American, I think people tend to choose the European film.
So, for us we've found that our marketplace internationally, outside of America, has grown exponentially, because when we make a film that is halfway interesting or halfway commercial, people really, really want it. They want to see European filmmakers doing well.
(END VIDEOTAPE)
QUEST: The Oscars and the films that we'll be watching over the next few weeks as we await for the awards ceremony.
When we come back after this short break, one man doesn't believe that the -- Jack Lew is the best man to be US treasury secretary. He will explain why. QUEST MEANS BUSINESS, we're live from the New York Stock Exchange.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first. And these are the headlines.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The death toll from a series of bomb blasts in Quetta in Pakistan has risen to 81. Police say 168 other people were injured in four explosions which wrecked a marketplace and destroyed eight security vehicles.
The first bomb that went off was planted near a security checkpoint which is believed to have been the target.
A fire department official says two people have been shot in a school in the town of Cast in California. One was airlifted to hospital for treatment, while the other victim refused medical care. Police say the accused gunman is in custody. The incident, of course, follows a deadly school shooting in Connecticut in December.
President Barack Obama has nominated his chief of staff, Jack Lew, to be the next Treasury Secretary. The appointment needs to be confirmed by the U.S. Senate. Mr. Lew has been the budget director under both Presidents Obama and former President Bill Clinton.
(MUSIC PLAYING)
(END VIDEO CLIP)
QUEST: It is part of the U.S. Constitution and the process for appointing Cabinet members. In fact, many members of the government, they are appointed; they are nominated by the president and the U.S. Senate has to confirm that nomination. And so that it will be with Jack Lew, the White House chief of staff who stands to be the next U.S. Treasury Secretary.
The only question is how much does Mr. Lew know about the financial industry? After all, in 2010, when he was appointed budget chief, he admitted, "Not that much."
(BEGIN VIDEO CLIP)
JACK LEW, WHITE HOUSE CHIEF OF STAFF: I don't consider myself an expert in some of these aspects of the financial industry. My experience in the financial industry has been as a manager, not as an investment adviser.
(END VIDEO CLIP)
QUEST: (Inaudible) investment adviser. So Jack Lew, bad news, says Andrew Stoltmann, a securities fraud attorney, who joins me from Chicago.
Mr. Stoltmann, come on. Surely it's all about budget these days. It's all about fiscal responsibility. And in that scenario, Jack Lew's the perfect man.
ANDREW STOLTMANN, SECURITIES ATTORNEY, STOLTMANN LAW OFFICES: Well, I don't think there's any question when you're looking at one narrow segment of what he's supposed to do, he is qualified. But unfortunately the role as the Secretary Treasury (sic) is much broader than that. And we all know how bad banks behaved in 2008 and the years leading up to it.
And when you have a Treasury Secretary who basically says, gee, I don't understand this, it's a little bit outside of my area of expertise, he's going to be the primary regulator for banks, that's problematic.
QUEST: This man ran the Budget Office. He's run the White House. He was budget director under two presidents. He may not know the minutiae of all of this at the New York Stock Exchange. But he knows how to pull the levers.
Isn't that what's important, Mr. Stoltmann?
STOLTMANN: Well, you know, there are some people, including our president, who believe that. But there are those of us who are still trying to dig out of the 2008 crisis when our banks almost melted down the global worldwide economy, who say, you know, that his expertise needs to be broader.
He needs to be able to do more and in that area, in terms of being a primary regulator of banks, I think he's woefully inadequate.
QUEST: And to those who would say to you the last thing you want is the fox looking after the chicken coop, the last thing you want is a Wall Street insider looking after Wall Street, what would you say to them?
STOLTMANN: I think that's an excellent argument. And if you think about it, he worked for three years at Citigroup, including the alternative strategies department, where he was the chief operational officer. He literally made millions of dollars on Wall Street and now we're asking, in effect, the leopard to change his spots. And I think that's going to be very, very difficult for him to do.
I know a lot of people who insist that the person who becomes Treasury Secretary must have Wall Street experience, but I think that's a double- edged sword and I think it can really hurt the regulatory aspect of his job.
QUEST: So I'm not sure; you don't necessarily want a Wall Streeter and you don't want somebody who's inexperienced in terms of banking region. Who do you want?
STOLTMANN: How about -- how about somebody like a Sheila Bair, who was the head of the FDIC? She knows Wall Street. She knows how Wall Street operates. She understands the economy.
But yet she also is intimately familiar with what Wall Street did and she's not conflicted because she didn't make millions of dollars on Wall Street during a key crucial time that the banks were really, quite frankly, fleecing the world.
QUEST: All right. Andrew Stoltmann, we'll talk more about this in the future. Thank you for giving us time, talking to us from Chicago. A good robust debate, and I'm sure we'll have many more of those before Jack Lew is finally confirmed.
When we come back, Akbar Al Baker, the chief exec of Qatar Airways, had doubts about the Dreamliner 787. Does he still have those doubts? After the break he'll be joining us.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Now the chief executive of Qatar Airways, Akbar Al Baker, isn't one to pull his punches. And he certainly wasn't when he had his own problems with the -- his new Dreamliner plane. He even went so far as to suggest there was something perhaps systemically wrong in the way the plane was being built.
Now we have these two JAL cases, has Mr. Al Baker changed his opinion? Or has he only strengthened his opinion?
Joining me now at the microphone, Akbar Al Baker, chief exec of Qatar Airways.
Akbar, now we've got the two JAL cases, do you believe there is something flawed in the way Boeing is making this plane?
AKBAR AL BAKER, CEO, QATAR AIRWAYS: No, I don't think at all that there is any flaw. This is (inaudible) problem in a new program. And I think that Boeing will quickly resolve this. The problem with the battery was just maybe a rogue (ph) battery. The battery has been in service -- has flown on airplanes for nearly 900,000 hours up till now, and 400,000 hours on ground tests.
So I think maybe this must be one of the flawed batteries. And I'm sure that this problem will be overcome as soon as the (inaudible) releases the battery to Boeing to find out what (inaudible).
QUEST: But it's fair to say you were, when we last spoke, you were suggesting that Boeing -- I supposed to put it politely -- needs to get its act together, needs to tighten up on certain things because there are these teething problems.
AL BAKER: Yes, because Boeing relied so much on subcontractors for quality assurance. And now I'm happy to learn that with all these problems that they're having, that they are getting the quality control in house. And I'm sure that they will resolve this problem.
When I had the issue, it was reacting to one of the power generators in our aircraft, which failed, which really disappointed me because it was a brand new aircraft. This matter has been resolved and at the same time, I'm sure that other problems that will happen, unless it is something very major, that Boeing will be on top of it.
QUEST: And no doubt, one thing I'm certain, you will remain on top of making sure Boeing fixes whatever is wrong and changes its mechanisms if necessary.
AL BAKER: Yes, Boeing has commitments to its customers and I'm sure that they will take this matter very seriously in order for them to resolve these teething problems. But I don't think that all these trivial issues that are arising with this airplane is a showstopper for the 787 program.
QUEST: Excellent. Akbar, good to talk to you on the program. Thank you for joining us.
Akbar Al Baker joining us, the chief executive of Qatar Airways.
Clear blue skies, the sort of perfect winter day, cold but crisp, Jenny Harrison, it's gorgeous in New York.
JENNY HARRISON, CNN METEOROLOGIST: Yes, you're very lucky, Mr. Quest. You know what they say about the sunshine. But it's (inaudible) cloudy (inaudible) with you. But it will stay mild up there in the northeast of the U.S.
But (inaudible) change though in the weather pattern heading into the beginning of next week across the northwest of the -- of Europe. You can see here again, of course on the satellite, plenty of cloud to be talking about with (inaudible) lots of rain, some snow as well. (Inaudible) pushing across into Germany and also across into France -- there's Germany.
And (inaudible) the snow building up along the line of the Alps. But the rain also working its way across the U.K. But as I say, the change is really coming in the form of the air.
The temperature, we've got this cold air, which will really be spreading out from this area of low pressure. It will bring snow once again across Germany, Poland, up through the Baltics. But it'll filter all the way across the northwest.
Now there's another system coming in with some rain. That will head through in the next day or so and it will stay as mostly rain. It's going to stay far south. But if that temperature which is to go into the weekend but also beginning of the week, will really change. Look at all these blue again, appearing so much of central Europe will see temperatures below average.
And out across the northwest it will also start to feel quite a bit colder. You can see that rain coming in. But as I say, the low is fair south. So it'll keep most of the rain across the south. It will turn to snow, really as soon as it hits that expanding area of cold air and the accumulations of snow, well, pretty notable across the line of the Alps.
And then just generally quite widespread, not really heavy amounts across main areas. But it could cause some delays at the airport, so Munich in the overnight hours Friday, expect maybe up to an hour there because of that snow.
And then we've got windy conditions across Scandinavia and also as quite often is the case, across Marseilles, but also Paris as that front comes through. The temperatures east, west flipped for now, -11 in Kiev and we'll see about 7 degrees apiece in London and Paris. Now across the Middle East, again, it's a clearing picture here.
All that snow that came through really has cleared. But of course, the overnight temperature was extremely low on Thursday. The averages, look at this, 9 degrees below the average in the (inaudible) Turkey, Jerusalem was at -1. So that's 7 degrees below. It looks spectacular, of course. Look at all this snow, very rare event.
This is one of the strongest winter storms since 1992. Here's another image. But as I say, it is clearing and in fact, some pretty good sunny skies. And temperatures next week could actually be above the average. So we'll keep you updated on that, Richard.
QUEST: Thank you very much, Jenny Harrison, doesn't bode well for tomorrow's program, which comes outdoors. But we thank you anyway, Jenny, for the update.
The New York Stock Exchange trading floor continues apace. The next generation perhaps of investors. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
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MAX FOSTER, CNN HOST: From the heart of the French capital, this is MARKETPLACE EUROPE. I'm Max Foster. As we enter another year, the Eurozone is back in recession. Austerity measures are undermining demand and confidence. We're here to talk to companies about their prospects for 2013.
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FOSTER (voice-over): Coming up, a decade after facing financial ruin, the essential oils that are producing a healthy glow for this cosmetics and skin care company and the benefits of being part of a larger group. Isa Soares talks luxury timepieces with the CEO of Jaeger-LeCoultre.
JEROME LAMBERT, CEO, JAEGER-LECOULTRE: After the integration within the respond group, the brand definitely has the opportunity to open itself to the world in a much more effective manner.
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FOSTER: Weak consumer confidence is undermining the economic recovery across Europe, and that's something the European Central Bank believes will continue well into 2013. It's a cold climate for any business hoping to grow, especially in the retail sector. But I've been to Provence in the south of France, where a skin care company seems to have found the right ingredients for global success.
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FOSTER (voice-over): At the foot of the French Alps lie endless rows of lavender, an expanse of purple come summer. And in winter, olive trees, ripe for picking. It's here in the heart of Provence that Olivier Baussan founded L'Occitane using this old copper still to make essential oils for local markets.
OLIVIER BAUSSAN, FOUNDER ,L'OCCITANE (through translator): It makes me happy to see how this old machine was able to generate such a business.
Distillation fulfilled a poetic side in me. I very much felt there was poetry in the chemistry between the fire and the plant to produce the essential oils. I belong to this land and to its traditions (inaudible) to this essential oil.
FOSTER (voice-over): The company now churns out 25 million products a year, selling them in more than 90 countries. But expansion has been an uphill struggle. Twenty years ago, there were just three shops and the business was losing money. The arrival of current CEO Reinold Geiger turned it around.
REINOLD GEIGER, CEO, L'OCCITANE: I think it was a fabulous combination of a man who is a creative, who has a vision and myself, who totally believed in what he was doing. He's very much believe in the product and just to try to develop it and so going one country after the other and we managed to build a very strong, nice team, which is just as important as all the rest of it.
FOSTER (voice-over): It's a team that includes laboratories of scientists, discovering and developing new skin care products.
FOSTER: Well, Jean-Louis, what we've got here is the base cream, isn't it, of your bestselling product, which is.
JEAN-LOUIS PIERRISNARD, DIRECTOR OF RESEARCH, L'OCCITANE: The precious cream.
FOSTER: The precious cream made of these flowers. In English, everlasting flowers, so how do you use them?
PIERRISNARD: We use, yes, I'm sorry, oil from this flower. And it needs one ton of flower to obtain one liter of essential oil.
FOSTER: And it's an anti-aging cream.
PIERRISNARD: And it has an anti-aging effect.
FOSTER (voice-over): The weighing and mixing of these key ingredients has scaled up. The cream heads to the filling line and the product is ready for packaging and export.
FOSTER: From this warehouse, all of L'Occitane's products are shipped around the world. More than half go to Asia. And the biggest market is Japan.
FOSTER (voice-over): Whilst Asia is now a key market, it wasn't easy to get established there.
GEIGER: When we opened the first stores in Hong Kong and in Tokyo, they didn't work at all.
FOSTER: Why not?
GEIGER: Because, I mean, when you come with a new brand, a new country, nobody knows you. Now it happened that the Americans are very curious. And they (inaudible) location they just walk in. But the Asians are really more cautious and you need to be around for some time and (inaudible) brand awareness and (inaudible).
FOSTER (voice-over): The company now sells 11 percent of its products in the United States. Around a quarter in the key European markets and half of all their sales take place in Asia. To keep up with demand, they're building new production facilities, costing 35 million euros.
Looking to increase capacity by 60 percent. Whilst the majority of sales are in Asia, all the production will stay in Provence where the fairy tale began.
GEIGER: I'm very positive for our company because we have gone through difficult times, 2009 was a very, very (inaudible) year financial crisis. We were very worried when it started. And actually, we went through this crisis very well.
We are far from the maximum potential and the continue growing. Yes, I mean, it's like when you -- when you have built the house, I mean, you put one brick after the other and it's very interesting, an adventure.
FOSTER (voice-over): An adventure taking this company into new markets, all wanting a piece of (inaudible) Provence.
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FOSTER: Still to come, Isa Soares finds out how the luxury watch market is ticking along when she meets the chief executive of Jaeger- LeCoultre. That's next.
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FOSTER: Welcome back to MARKETPLACE EUROPE at Place Vendome, home to Parisian chic and elegance. It's the place to come shopping for the finest luxury goods. Here you'll find the Ritz Hotel and a range of boutiques selling jewelry and fashion. They include Jaeger-LeCoultre.
FOSTER (voice-over): For its manufacturing workshops in the Joux Valley in Switzerland, Jaeger-LeCoultre has been making timepieces for 180 years. The company's founder created the world's most accurate measuring instrument. In 1996, Jaeger-LeCoultre became a fully owned subsidiary of the Swiss luxury group, Richemont.
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LAMBERT: (Inaudible) first region (inaudible) we are quite fortunate that activity is well balanced between, I would say, Europe, north Asia and the rest of the world. To develop as a brand abroad, we have been developing, I would say, our collection towards, I would say, more technical, more high-end watches.
ISA SOARES, CNN CORRESPONDENT: What do you focus on to differentiate yourself from other luxury watchmakers?
LAMBERT: Being the most integrated manufacturer, offering a lot of watchmaking content. But also I think the chance to have real icons of fine watchmaking, such as the Reverso collection. I would say one of the five watches existing for more than 50 years and being recognized (inaudible) watch connoisseurs (ph) and finally putting a lot of emphasis on invention, technical invention.
We have been creating certain new movements in the last five years. We have been registrating (ph) on average 15 new patents per year. This sense of invention, this capability to create new (inaudible) in our watches, it was (inaudible) push, I would say, and (inaudible) differentiate us.
SOARES: You've also been able to grow the brand by -- with collaboration, key collaboration. Tell us about the Aston Martin (ph).
LAMBERT: A few years ago, we had a long discussion with (inaudible) about (inaudible) for a driver. And he said, OK. Let's make it different. Let's make the watch doing something for the car. And we say OK. We'll do a watch that can open the car, close the car, switch on the light on the car.
So we (inaudible) the keys off the car and we have miniaturized everything and then we have reinvented all the systems. First it was, I would say, a good way to show how inventive and how far our technical mastery could go.
SOARES: You started back in 1996. How has Jaeger-LeCoultre changed since then?
LAMBERT: Definitely after the integration within the respond (ph) group, the brand definitely had the opportunity to open itself to the world in a much more effective manner.
In 1996, we only had five subsidies and our self activities, in point of context, (inaudible) very limited. We now have more than 50 boutiques and being part of a group (inaudible) very efficient logistic and very efficient system then suddenly we could continue to invest or even more in developing our watches because the rest of its investment was already done by the group for the other facilities.
So it (inaudible) definitely I would say are a tremendous opportunity to develop the activity.
SOARES: Would you say that craftsmanship is, without a doubt, probably more important than growth or it had to go hand in hand?
LAMBERT: If you want to exist on a long-term basis, you have to build your content and that content then is the experience of a watchmaker, that our capability of our engineers and our people in (inaudible) research to enlarge our watches (inaudible) is capable to do.
And everything is one of the oldest craftsmanship in (inaudible) watchmaking. It was what made the Swiss watchmaking (inaudible) in China. The comeback of north Asia, our major interest for (inaudible) watches coming at a high level. You have to reach in, retrain new (inaudible) for that.
So it has been a long journey around during the last 10 years to rebuild this techniques to be capable to do the most amazing miniature. Because of this part of the water, developing and developing itself and bringing back some of our, I would say, traditional expression of fine watchmaking.
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FOSTER: The chief executive of Jaeger-LeCoultre speaking to Isa Soares.
That's it for this edition of MARKETPLACE EUROPE from a wet and wintry Paris. Thank you for watching. Goodbye.
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