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Quest Means Business
US Adds 321,000 Jobs; Dow, S&P Hit Record Highs; Hiring Up in November; Job Report Also Gives Investors Concerns About Inflation; Solid Gains for European Markets; Putin Orders Russian Budget Cut; Russian Firms Deal With Economic Turmoil; Oil Prices Dive to Five-Year Low; Nigeria Hit by Falling Oil Prices; Starbucks New Brew of Coffee House
Aired December 05, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: The market flirted with 18,000, got tantalizingly close, but never could quite do it as the Friday session
traded. The man has hit the gavel, the day is over. It's a gain of a third of a percent on Friday, December the 5th.
Tonight, party like it's 1999. The US jobs report shows the best year in the US in decades.
As Russian stocks tumble, one billionaire tells me it's far from catastrophic in Moscow.
And it's launched, it's landed. Now, Orion has to tighten its belt.
I'm Richard Quest. It may be Friday, but of course, I still mean business.
Good evening. Whichever way you put it, US job growth has taken off. The numbers were released this morning in Washington, and it was
extraordinary. Take off, indeed. Come to the super screen and you'll see what I mean.
It's a classic three, two, one: 321,000 jobs in November. That's 90,000 more, an extraordinarily large number -- more than economists had
expected. This is the sort of number that the administration had been seeking. And especially the gains were widespread, from the shops, to
American factories, to office. It all adds up to the strongest year for jobs this millennium.
Here we go. You're basically talking about job growth, obviously, throughout the course of the year. But you're talking about -- there's the
200,000 mark, and you're talking about 10 months -- oh, sorry -- 10 months of job growth. A little too close for comfort. Well, with these numbers
like that, you have to get a bit excited.
It's well over the level that's needed to be considered healthy. Speaking after the report was released, President Obama said that US jobs
market is the envy of the world.
(BEGIN VIDEOTAPE)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States continues to outpace most of the world. Over the last four years, we put
more people back to work than Europe, Japan, and all other industrialized advanced countries combined. And we're going to keep at it until every
single American who is willing and able to work can find not just any job, but a job that pays a decent wage and allows them to support their
families.
(END VIDEO CLIP)
QUEST: Alison's at the Stock Exchange. I'm looking at the chart of the Dow. It did flirt higher levels during the course of the session.
Gain of a third of a percent. Still under 18,000. Did you think it was going to do 18,000 today?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I really thought it was. I mean, look, it got -- what? -- nine points away. Some trader was even
giving out the hats. The hat was already ready and cued up and ready to go for Dow 18,000, but it doesn't look like that would happen today.
But you know what? There's always Monday. I think that you're going to see the effects of this jobs report leech into next week because that
jump in hiring in November was so strong.
What so some investors, though, were telling me -- some traders were telling me, there is a little worry about that wage growth, although it did
show in November that there was a jump in wage growth in that month, they really want to see if that happens again for a second, and a third, and a
fourth month. Is it a blip or is it a trend? That's what everybody's watching, those wages. Richard?
QUEST: Right, because of course, the wage growth would suggest higher inflation that could be building up in the pipeline. Alison, thank you for
that.
KOSIK: Right.
QUEST: Keep that hat close at hand.
KOSIK: I will.
QUEST: Wear it backwards for the moment. No! No, like that.
KOSIK: Oh.
QUEST: Until we've got that.
KOSIK: There you go. Backwards, until we're ready to turn it around.
QUEST: Absolutely. Alison Kosik.
(LAUGHTER)
QUEST: Have a lovely weekend. Earlier, I spoke to the US labor secretary, Thomas Perez, and I asked the secretary, after 10 months of
straight gains of 200,000-plus, is the US labor market finally out of the woods?
(BEGIN VIDEOTAPE)
THOMAS PEREZ, US LABOR SECRETARY: This is clearly a very good report. As you correctly point out, 10 months in a row over 200,000, 57 months in a
row of private sector job growth, and this is the third-highest month. We're on pace for the best job growth since the late 90s. And so, we keep
moving in the right direction.
And what's very important about this report -- and it's not just this past month, but this is also the trend that we see -- is that it's broad-
based. Manufacturing is doing well, construction is doing well, business and professional services is actually the highest job creator, not simply
last month --
QUEST: Right.
PEREZ: -- but over the last year. And so, these are good, middle- class jobs and beyond. And so, those are the things that give me optimism about the future. And I think about the unfinished business of making sure
we're lifting wages. When you have months like this, 321,000 -- actually, 365,000 if you add in the --
QUEST: Right.
PEREZ: -- upward adjustments from previous months, that sort of pace of job growth is what puts upward pressure on wages.
QUEST: Of course, we can't let you get away with it being all good news, here, because allow me to suggest to you -- and alluded to this in
your first answer. Upward pressure on wages. It will not be long before - - I know it sounds almost perverse to be putting it in these terms now, Mr. Secretary, but we will not be long before we're talking about a tight labor
market and wage inflation.
PEREZ: I want to be dealing with that problem. That's because the unfinished business of this recovery is making sure that the rising tide
lifts all the boats.
QUEST: Right.
PEREZ: That the biggest difference, Richard, between the growth we're seeing now and the growth and prosperity we saw in the late 90s is that the
growth and prosperity in the late 90s was more broadly shared. The rising tide lifted more boats in the late 90s.
Right now, there's too many dinghies that are taking in water and aren't being lifted, and that's how we -- and the issue of wages is a big
part of how we lift more boats now.
QUEST: Obviously, the US at the moment is riven by the stories of whether it's the events in Ferguson or whether it's been the events in New
York concerning justice and racial harmony. Do you worry that a souring in the environment can take effect, particularly for minorities? And this
isn't a question about justice, this is an economic and it's a jobs question --
PEREZ: Sure.
QUEST: -- that they feel they're not involved, and they feel they're not involved in the justice system, and they feel they're not involved and
participating in the employment --
PEREZ: Sure.
QUEST: -- and the economic system. The president referred to this in his speech the other day, didn't he?
PEREZ: Well, I worked at the Department of Justice for over a decade, both as a career civil servant and as a -- more recently as a political
appointee. And I spent a lot of time in communities like Ferguson, dealing with issues such as the shooting and the aftermath. And so, I have spent a
lot of time talking and listening with those communities.
And in addition to the issues surrounding the need for thorough investigations of the particular acts, what we're involved in as an
administration is ensuring that there's access to opportunity in every community across this country. Your fate should never be a function of
your zip code.
And that's why the president has made some very targeted investments in communities that -- for which opportunity has been chronically elusive.
(END VIDEOTAPE)
QUEST: That's the US labor secretary talking to me earlier. Ted Weisberg is the founder and president of Seaport Security, joins me from
the Stock Exchange. Ted, good to see you. Now, look, this is the sort of number that everybody's been looking for when taking in the 10-month trend.
So, you're obviously pleased with that. But what are you worried about when you see this number?
TED WEISBERG, FOUNDER AND PRESIDENT, SEAPORT SECURITIES CORP: Well, this is -- you're always worried that good news is bad news. And the bad
news that looms is what will the Fed do vis-a-vis interest rates?
Nobody knows. There's -- for every person you ask, you get a different opinion. Unfortunately, nobody rings a bell. But clearly as the
economy improves, and if this labor number holds up and we see two or three more of these, it will undoubtedly put pressure on the Fed to perhaps move
quicker in terms of raising interest rates.
And we have enjoyed, Richard, a stock market for the last four years that has, for a large part, been driven by a zero interest rate
environment. So, nobody knows what to expect when that equation changes, but it's probably not a positive thing for the stock market.
QUEST: Right, but this is interesting, because we got in today's number, we got higher wage growth, which of course --
WEISBERG: Right.
QUEST: -- is inflationary, which would suggest raising rates sooner. And the job market's tightening up. Do you now think the Fed's going to go
sooner rather than later?
WEISBERG: I -- I don't know. Honestly, I have not a clue as to when they'll go. But it's going to happen. Whether it's sooner or later, that
remains to be seen.
But the other thing about the economic numbers is for every good number you seem to get sort of a mediocre and even a bad number. So, I'd
suspect the Fed is still dancing on the head of a pin, keeping all of us on the heads of pins, wondering when, what -- when will they do whatever
they're going to do.
But in terms of the stock market, the stock market continues to put on one heck of a performance. It's not a rising tide that's floating all
ships. Clearly in the energy sector, there's been a lot of damage done -- a lot of damage -- and that's heavily weighted in the S&P.
QUEST: OK. I was looking at some numbers. It -- to get to from 16,000 to 17,000 took about six months.
WEISBERG: Right.
QUEST: From 15,000 to 16,000, it was again about six months. But then you had a seven-year gap during the crisis, of course. So, are you
surprised that the six months -- it only takes six months?
WEISBERG: Well, I would say in general I'm surprised. If you said to me in March of 2009 that we'd be sitting here just under 18,000 in the Dow
not all that may years later, I would have said that you're out of your mind. So, I think the whole move, going back to March of 2009 when the Dow
was at about 6500, 6600. And here we are -- it's almost at triple.
Now, we saw that from 82 to 2000 where the Dow went from 1,000 to a Dow -- what was it? -- Dow 11,000 to 12,000.
QUEST: 12,000, yes.
WEISBERG: So, you had a big move.
QUEST: Right.
WEISBERG: That was a dramatic move over 18 years. But that was in an environment, Richard, where interest rates were basically coming down.
We're at the opposite end of that scenario now, and we have a market at all-time record highs in a zero interest rate environment. So logic would
dictate that if interest rates start to move higher --
QUEST: Yes.
WEISBERG: -- it's going to have a negative impact on the Dow. And it could be a prolonged negative impact, because as the economy improves, as
the world's economy improves and you get upward pressure on interest rates --
QUEST: Right.
WEISBERG: -- it could create a real problem for stock markets everywhere.
QUEST: And we'll talk about that in the days, weeks, and months ahead, sir. Thank you very much; 18,000 is just around the corner. Ted
Weisberg joining me from the Exchange.
Later in this program, you've already heard from the labor secretary. Well, we've still to hear from the chairman of President Obama's Economic
Council of Advisors. Jason Furman, he'll be talking about the job numbers, what it means for the US economy, and putting it into the wider issue. Mr.
Furman is later on QUEST MEANS BUSINESS.
Solid gains for all the bourses in Europe. Look at that. The best of the gains was in Germany and Frankfurt -- Germany and Paris, of course.
They are still looking forward to the ECB actually introducing some form of major QE. Italy's long-term credit rating downgraded by S&P, citing debt
and weak. And now, Italy's just above junk status.
As we continue our nightly conversation on business, Russia's president has taken an ax budget amidst slumping oil prices and a weak
ruble. There's a billionaire called Alexander Lebedev. He'll tell us how businesses are feeling the squeeze.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Russia's president has ordered budget cuts as Russia takes a hit from the falling price of oil. Vladimir Putin, who only yesterday, as
you'll remember, had his State of the Nation address, he's now ordered cuts of 5 percent over the next three years. Russia's stock market --
(RINGS BELL)
QUEST: -- fell sharply, the MICEX down three and a third percent as the investors reacted to the plan. Moscow's closed down more than 3
percent over the week. If you take a look on this show, our guests this week have told us there could be more pain ahead for the Russian economy.
(BEGIN VIDEO CLIP)
SERGEI GURIEV, PROFESSOR OF ECONOMICS, SCIENCES PO: And if volatility like this continues, it'll be a major problem for the Russian financial
sector and will probably result in further capital outflow.
GILLIAN TETT, MANAGING EDITOR, "FINANCIAL TIMES": And the question of whether or not businesses are going to start to see these capital outflows
becoming very significant, whether they're going to start feeling the squeeze in the falling ruble and the oil price, and whether that's actually
going to force some active protest is absolutely critical.
ANDREI ILLARIONOV, FORMER CHIEF ECONOMIC ADVISOR TO VLADIMIR PUTIN: Mr. Putin himself prepared -- himself prepared and trying to prepare the
country and he's armed Russia for a long-term confrontation with the West.
(END VIDEO CLIP)
QUEST: So, that's the view of the professor, the journalist, and the economic advisor. Well, what about the business community? In Russia, the
billionaires.
I spoke to the Russian billionaire Alexander Lebedev. He's the owner of the "Independent" newspaper and the "London Evening Standard," amongst
other titles. I asked Mr. Lebedev how difficult conditions are going to be in the Russian economy as seen from the business perspective.
(BEGIN VIDEOTAPE)
ALEXANDER LEBEDEV, RUSSIAN BILLIONAIRE BUSINESSMAN: Well, it's not easy, but it's far from being catastrophic. And in my view, there's always
a good side to the bad one. The GDP -- the rates are pretty low, the exchange rate has fallen like 35, 40 percent in the recent few months.
The Russian economy is affected, clearly, by the falling oil prices. And on top of that you had some sanctions and some in-built deficiencies of
the Russian economy, which actually originate from its model.
QUEST: Having to navigate some very difficult waters where the normal rules of commerce and business and is there a profit to be made no longer
exist. You're walking a tightrope between the West on the one side, the Russian government on the other side, and it's not easy for business
leaders like you.
LEBEDEV: Well --
(LAUGHTER)
LEBEDEV: As the biggest potential producer in Europe, I probably will survive, don't worry. But what I think is that the business class
remaining in this country is probably the most pro-European and pro-Western in the sense of their culture and their views, et cetera.
So, if you isolate Russia and you play more into these sanctions sort of direction, you'll probably only be playing into the hands of certain
reactionary forces, who you might sometimes, looking behind Putin's back, you can feel them there.
So, I don't think it's a very clever thing, really, to isolate Russia and to go further along the mutual recrimination and hostility path.
QUEST: How worried are you on a wider scale at the deteriorating relationship between the West and Russia? Like yourself, a sort of a
student of the Cold War, I've seen it at its worst, I've seen it get better, but we are definitely seeing a serious degradation in relationship.
And I wonder, sir, do you think it's repairable? And if not, how dangerous?
LEBEDEV: It is certainly repairable. It is certainly dangerous. I think we are standing at probably the worst point in the relations between
the -- Europe, the EC, United States, and Russia in probably recent 30 years, something like that. It's not the Caribbean crisis yet, of course.
But it could all come to that one day.
So, I think it's up to the wise politicians to sit down and discuss, or at least for the media to -- and experts to at least find some common
language of talking about solutions. Because I can feel whatever I feel about what Russia has been doing in Crimea and in Eastern Europe, but I
think it's up to all of us to try to find a solution. And mostly up to the politicians.
So, I think cornering -- and trying to corner the Kremlin and then trying to think that this is going to convince somebody here to change
their position, it's a complete wrong strategy, in my view.
(END VIDEOTAPE)
QUEST: That's Alexander Lebedev, talking to me from Moscow. The billionaires' point of view. Oil prices continue to tumble to new record
lows.
(RINGS BELL)
QUEST: Look at this. Brent Crude -- well! Look at how it's gone! Although it did have a little bit of a resurgence. But if you take it
overall, it fell to fresh five-years low. And it was the same for US Light Sweet Crude, which of course was also sharply down.
The Nigerian Central Bank has been forced to intervene to prop up its currency. Nigeria is heavily reliant on oil. We need to discuss the
impact of the plunging oil prices on Nigeria with Uzodinma Iweala, the chief executive and the editor-in-chief of "Ventures Africa" magazine, who
joins me now from London.
Sir, the -- the situation facing Nigeria, regardless of the security situation, we'll just deal with economics at the moment -- it is serious
with every prospect of getting worse.
UZODINMA IWEALA, EDITOR-IN-CHIEF, "VENTURES AFRICA" MAGAZINE: I think it is serious. Oil prices falling is not a good thing for an economy that
is dependent on oil, but I think you also need to look at a number of other factors.
First of all, we are going to have to take a look at the budget in Nigeria, which is, again, heavily dependent on oil. Those figures will
have to be revised down.
But at the same time, I think the numbers that people need to see, which are that while 85 percent of government revenue is dependent on oil,
I think the rest of the economy, oil -- the oil sector really only informs 14 percent. And there are other sectors that are not oil, that are also
doing well. But they will be impacted, and we'll have to look at that.
QUEST: Right. And that's interesting in its own right, because I can make an argument that says, OK, oil's only 14 percent, but you have the
spillover effect of the security situation, which is -- I mean, I think you'd agree is grave in many cases, and you have Ebola, which of course is
having an effect on your neighboring countries and the economies. So, I can't see the silver lining here.
IWEALA: All right. Well, so, with Ebola, I think it's important to note that Nigeria does not have an Ebola problem. On the security
situation, yes. Security is an issue in Nigeria, and I think we've been dealing with it for a while. And I think people -- foreign investors are
aware of that and taking note of that. At the same time, people are still trying to --
QUEST: Right.
IWEALA: -- put money into the country, right? Because there are certain factors, like the huge population, a very young population, growing
consumer population that people are taking note of that in some ways balances out. Now, when you look at the security situation --
(CROSSTALK)
QUEST: Wait, but -- hang on, let me jump in here. Let me jump in here, because what you're saying there is that people are investing or
prepared to put money in despite all these other issues. What I'm suggesting or asking you about is creating an environment that people want
to put money in because of the policies that are in place.
IWEALA: Right. So, you have basically -- the move is toward there. I think people are very interested in the country, and that's what we see,
and that's what we find. There's a lot of excitement about Nigeria.
But there is also a lot of wariness because of the security situation, because some of these other issues, like the falling oil price. And of
course, we've got the elections that are coming up, which there's a lot of uncertainty in the area as well.
So, I think for the time being, you're going to see people sort of dancing around Nigeria and being very wary, but I think afterwards, if some
of these things are brought under control, we'll see things pick up again in Nigeria as well.
QUEST: And we hope you, sir, will come and help us understand exactly how things are moving as, indeed, these various events take place. Thank
you for joining us tonight from --
IWEALA: Thank you for having me.
QUEST: -- London. QUEST MEANS BUSINESS. Starbucks is getting set to open a new brew coffee houses. It's nothing like the Starbucks that dot
our cities and neighborhoods around the world. The chief exec says he wants it to be the global Willy Wonka of coffee. All right.
(COMMERCIAL BREAK)
QUEST: Tall skim latte for Eddie! Shane, with a full mocha whip with -- whatever else that's in there. Starbucks will launch its latest
venture, and the doors open tomorrow. It will allow the earthy aroma coffees of Brezza Blend and all these others, the exotic coffees, to waft
through the streets of Seattle, where of course the company started and which is its headquarters and home.
But this is no ordinary Starbucks. Shane, still waiting for your coffee, capped with skim milk! With the iconic green logo nowhere in sight
and whizzing and whirling tubes carrying beans to and fro, it's all part of the chief exec Howard Schultz's ambitious plans.
He wants to double the company's revenues in five years' time. The problem is, how do you double the company's revenues when you've got a shop
just about on every cover in every city in every part of the world? Poppy Harlow asked him.
(BEGIN VIDEOTAPE)
POPPY HARLOW, CNN CORRESPONDENT: Is this the new Starbucks?
HOWARD SCHULTZ, CEO, STARBUCKS: This is not the new Starbucks, but I would say in our 43-year history, this is as historic a moment as there
possibly could be in opening up this roastery and this majestic place that will take our customers on a magical carpet ride.
HARLOW: You called this the Willy Wonk of coffee.
SCHULTZ: I --
(LAUGHTER)
SCHULTZ: I did. Let me tell you why. Nine and a half years ago, I wrote in a journal, let's create the Willy Wonk of coffee. And what I
wanted to try and do was create this multisensory experience, with theater, romance, drama, and have the coffee moving around and create a real
roasting, manufacturing facility. And we've done it.
You're going to be able to come into this facility, and you can have multiple methods of how you want your coffee brewed. This is a great
thing. So, this is a blend of coffee --
HARLOW: Yes.
SCHULTZ: -- not a single variety of java Guatemala and Colombia called Pantheon, only created for this particular store.
HARLOW: Are you going to make money on these? They're big and fancy, and --
SCHULTZ: Yes.
HARLOW: -- expensive.
SCHULTZ: This is an expensive facility to build, but this is not a vanity place for the company or for me. This is a working roasting
facility, and the coffee bar and the coffee facility will be profitable.
HARLOW: Fair to say this is your answer to those who say, "I don't want Starbucks, they're on every single corner. I want my independent
coffee shops."
SCHULTZ: Well, I think the independents have done a very good job. It's not our answer to that. But it is the demonstration to the entire
world that the quality and the integrity of Starbucks coffee, in my view and in the view of millions of people, is as good as any other coffee
produced anywhere.
HARLOW: The coffee here, about 40 to 50 percent more expensive.
SCHULTZ: That's probably true.
HARLOW: Do Americans want to learn about their coffee? Do they want to sit here and enjoy and take time? Because don't a lot of them just want
to grab it and run?
SCHULTZ: I've talked for a year now about this seismic change --
HARLOW: Yes?
SCHULTZ: -- of consumer behavior changing and going away from bricks- and-mortar traditional retail shopping to e-commerce and mobile. In order to mitigate that, I think it's incumbent up on the responsibility of the
retailers to create these fantastic experiences that's going to sweep them away.
(END VIDEOTAPE)
QUEST: And in doing so, Mr. Schultz has just created a very large, very good tourist attraction in Seattle.
Starbucks is no doubt hoping to benefit from the rocketing economy in Seattle, while in Washington, the future of manned spaceflight is in for
some turbulence.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more Quest Means Business in just a moment. This is CNN, and on this network the news always comes
first.
There were strong winds and heavy rain, and it's all threatening the Philippines once again as another super typhoon approaches. More than
75,000 people are being evacuated from one city ahead of the storm which is expected to make landfall on Saturday night.
Ashton Carter, the nominee for the U.S. defense secretary's promising to give candid, strategic and military advice if he's confirmed. President
Obama announced the nomination on Friday. It'll go to the Senate for a confirmation vote.
The international criminal court has dropped charges against the Kenyan President Uhuru Kenyatta who was accused of organizing violent
attacks after Kenya's disputed 2007 election. More than 1,000 people died. The charges were dropped because of lack of evidence.
(BEGIN VIDEOCLIP)
Narrator: -- three, two, one and lift off at dawn.
(END VIDEOCLIP)
QUEST: The NASA spacecraft Orion has staged a successful test flight above earth. NASA hopes it will one day carry astronauts to mars. This
flight was unmanned. The capsule splashed down in the Pacific Ocean. It orbited the earth for - twice - for four hours.
Well the success of Orion set us thinking on a day when of course there was some excellent economic news which all suggested the economy was
lifting off like a rocket as well. So, it's the first of two major lifts off. We'll talk about NASA in a moment. But lets' have the economic
rocket. The economy's getting a major lift from the strongest job reports in nearly three years. There's the first engine going. So the first is
boosting the economy's chief oil, which is bad news for the shale oil producers on the one hand. But on the other hand, good news for consumers.
Gas prices are below $2 a gallon in two U.S. states. That's the first engine.
The second engine - auto sales combining with improving economy. Consumers are buying more. November auto sales among the best in the last
eight years. And jobs - remember we got today the best since 1999 more jobs putting upward pressure on wages. Of course all these three things
together - 3, 2, 1 and up she goes. The noise as the rocket. Now, let's all listen to the orbit of economics, and I spoke to Jason Furman. He's
the chairman of the President's Council of Economic Advisors. With such blue sky ahead, he told me the signs of growth are everywhere.
(BEGIN VIDEOCLIP)
JASON FURMAN, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: You do see a broad set of data which tell a consistent story. GDP growth for the third
quarter was revised up. Stepping back a little bit, in 2013 and 2014, the economy grew considerably faster than it did in the first three years of
the recovery. You see the latest manufacturing numbers were strong, the latest auto sales were strong and of course today's jobs report, well above
expectations. So across the board, you're seeing an economy that is strengthening.
QUEST: And yet we had to put it into the context of Ferguson and what's happening in New York, and an entire substrata of society, look -
frankly, to put it bluntly - does not feel they are engaged or listened to or that they are enjoying the economic fruits.
FURMAN: There's no doubt that we want to see the job gains translated to even greater wage gains. We got a good wage gain this month. Over the
past year, wages are outpacing inflation. Wages for non-supervisory workers are actually growing a little bit faster than they are for their
supervisors over the last year. But, you know, we need to be doing everything from raising the minimum wage to investing in infrastructure to
improving education to build on that momentum.
QUEST: And what do you think realistically can be done now in a febrile political environment where seemingly Congress will not want to do
much to assist in administration in its last two years. Economically, what can you do?
FURMAN: Richard, I would really hope that where there's common ground, people want to act on it. First is do no harm - no brinkmanship
over the budget, over the debt limit next year. But second, a lot in the other party in Congress and the President have spoken to areas like
investing in infrastructure. We can pay for that by reforming our business tax system. We have the highest rates in the world. Expanding our trade -
we're negotiating an ambitious trade agreement with the Pacific, another one with our partners in Europe. These are all areas where we see common
ground and would love to work together to get them done.
(END VIDEOCLIP)
QUEST: That's Jason Furman. He is the head of the President's Council of Economic Advisers. NASA is calling it a new era for space
exploration. It's the reusable Orion space capsule, and it has completed its maiden flight. The future of the rockets supposed to carry the capsule
is less rosy. A U.S. government report has found the space launch system - this is the SLS - space launch system - it may need an additional $400
million. Now without this extra money, the rocket may well miss its launch deadline in 2017. It's hoping by 2030 to take at least up towards Mars to
go `round it.
The Government Accountability Office here writes, "The program is at risk of making uninformed decisions and pursuing development paths that may
not make the most use of efficient use of limited resources." We need Miles O'Brien, our aviation and space analyst. They said today when Orion
went up, that we have just seen the future of America's manned space flight. Have we just seen the future of America's manned flight
bankruptcy?
MILES O'BRIEN, CNN AVIATION ANALYST: Well, you're right about the space launch system, Richard. That is a very troubled program. If you
look back at the history of the Obama administration, it did not want that rocket. The space launch system is cobbled together parts, surplus shuttle
engines, the booster is designed for the space shuttle, put together. Led by people like Senator Richard Shelby in Alabama who has Huntsville's
Marshall Space Flight Center where the jobs and the contracts are for those very pieces of hardware hoisted upon the Obama administration that didn't
want to build -
QUEST: Right.
O'BRIEN: -- that rocket. So that's the problem. You have a little bit of politics rearing its ugly head. Much more about political science
than rocket science here.
QUEST: Were you excited by Orion today? I was looking at the schedule. I mean, look, you - well, I don't know about you, but I'll
certainly be six foot under by the time it ever gets near to going to Mars. But it's still exciting.
O'BRIEN: It's exciting, but it is - there is that sense of disappointment that we're talking about a program that has funded the space
launch system itself - probably isn't going to launch until 2018 now. It really is a rocket in - with - does not have a destination. It can only
get as far as the moon as it is designed right now. So they're actually going to bring an asteroid into moon orbit in order for it to have some
place to go to in 2021 with astronauts. So, it's a program really lacks an overarching comprehensive strategy, and frankly, the dollars to make it
happen.
QUEST: Which, if you look at India, if you look at the Europeans who haven't got any money to play with anyway, but they're still managing to do
something. And you look at China. Do you worry? Because you've look at this more than most for many years. Do you worry that America - the U.S. -
still has - it has the technology, it has the know-how, it doesn't have the commitment?
O'BRIEN: I do worry about that quite a bit, Richard. I don't see a lot of real understanding in Congress of the value, for example, of seeding
the private sector the likes of Space X and orbital technologies -- building rockets with an entirely different way of contracting. If we
continue with these cost plus contracts, which is what SLS is - it's run just like a Pentagon weapons program. We're never going to get tot the -
anywhere - cheaper. And until we figure out a way to get to the moon and beyond cheaper, I'm afraid we're all going to be waiting, and I'm afraid
neither of us will see it.
QUEST: Miles, thank you , sir. Have a lovely weekend. Appreciate.
O'BRIEN: All right. You're welcome.
QUEST: Thank you very much indeed. It is almost sunrise in Tacloban, and the massive typhoon heading toward the Philippines is less than 24
hours from making landfall. Ivan's at the World Weather Center tracking it. When's your best guess for when it arrives?
IVAN CABRERA, METEOROLOGIST AND WEATHER ANCHOR FOR CNN INTERNATIONAL: It's going to arrive in less than 24 hours now, and in fact it's going to
be a dark sunrise for a lot of folks here across Eastern Philippines. So we're talking at the Saiyas (ph) and into Southern Luzon there, Richard.
There's the eye of the storm there, but look at the outer bands already on top of the region here, and that is going to be bringing some significant
winds. The latest advisory still has it at super typhoon status at 240 kilometers per hour. Where it's going? To the north and west. It is
likely going to skirt the northeastern section of the island of Samar, which is where Tacloban is located, but likely missing Tacloban as far as
the worst effects, and that is excellent use for them. Not so much for the folks further up to the north. Then we tracking it in about 36 hours.
This is where I think the most damage is going to occur if this track verifies and it doesn't move a little further south or north. The reason
for that is because of the bay and the orientation here across this region that we are going to push a lot of water - that's the storm surge into
Legazpi, and that is where we could see some significant damage along with the fact of course that we had at that point 200 kilometer-per-hour winds
and then it continues raking the Archipelago so that by the time we're at 72 hours, it reaches Manila. We'll be here all weekend covering for you.
Richard.
QUEST: You will indeed, and please come back to us the moment there's more to report. We appreciate that. We'll be watching it very closely
with happens with Tacloban and the Philippines. And so that brings us to the end of our week together and Quest Means Business for this Friday. I'm
Richard Quest in New York. As always, whatever you're up to (RINGS BELL) in the hours ahead, I hope it's profitable. And please, let's get together
again on Monday (inaudible).
(END QUEST SHOW)
(COMMERCIAL BREAK)
ISA SOARES, REPORTER AT CNN INTERNATIONAL: Hello and a very warm welcome to "Marketplace Africa." I'm Isa Soares. Now the demand for South
African food is growing in an unlikely place - the United Arab Emirates. It's not just the flavors that are making a splash, but South African
businesses too. This week Jon Jensen takes a look at some South African companies that have expanded their ventures in the Middle East.
(BEGIN VIDEOCLIP)
JON JENSEN, REPORTER AND PRODUCER IN THE MIDDLE EAST: At the Abu Dhabi restaurant, The Meat Co, there's only one specialty -- red meat.
Flame-grilled, triple basted and sometimes even cooked by the owner himself, Johnny Tomazos.
JOHNNY TOMAZOS, OWNER OF THE MEAT CO RESTAURANT: What you making there?
Male 2: Fogonazos (ph).
Male: Fogonazos (ph).
Male 2: Yes.
JENSEN: The 29-year-old Greek South African brought this family chain to the UAE from Johannesburg ten years ago. It was their first venture
overseas. Today business is booming and Tomazos now owns 15 restaurants, mostly here in the Gulf.
TOMAZOS: It's a very exciting region to be in and to showcase your brands. There's a lot of developments going on. There's a lot of growth
for companies such as us who grow in the food sector in the Middle East and there's projects every day that are coming on line. And tourism's growing,
more people are coming to live in the region. All that combined with the economic driver allows for a great market for us.
JENSEN: So much that he's even moved their headquarters to Dubai. Tomazos owns one of a growing number of South African businesses here in
the UAE. There are roughly 200 South African companies here, many in the food and beverage sector. Owners say they come for the tax-free income and
a growing population of young customers, increasingly hungry for Western- style fast food. That's what brought Steers, a popular South African burger chain, to Abu Dhabi. This will be their first outlet in the Middle
East.
MARK OLIVER, GENERAL MANAGER, STEERS: I mean I've got over 100,000 savagars (ph) living in the UAE. I've got 100,000 brand investors living
in the UAE. It's a natural to bring a brand such as our kind as Steers, to the Middle East.
JENSEN: How do you think it's going to do?
OLIVER: Ah, it's going to do exceptionally well.
JENSEN: With the economy shrinking at home, other South African industries are also looking to the UAE from tourism to finance. Bilateral
trade between the two nations now tops $3 billion a year.
MPETJANE KGAOGELO LEKGORO, SOUTH AFRICAN AMBASSADOR TO THE UAE: Our relationship with the UAE is growing with trade growth of about the average
of 22 percent year to year from 2009. And actually in 2015 to 14, look at an increase of 37 percent.
JENSEN: But even with the promise of greater economic opportunities for South African companies here in the UAE, there are still challenges,
especially in the meat industry. In 2011, international authorities imposed a ban on South African red meat exports after an outbreak of foot
and mouth disease there.
Male: Cut us a few pieces there.
JENSEN: That affected South African Dave Jackson who bought this Abu Dhabi butchery in 2009, mostly to sell biltong, a dried beef for the more
than 50,000 South African expats here.
DAVE JACKSON, OWNS BUTCHERY: Because our earlier batches we didn't have enough spicing on our tongue.
Male: Yes.
JACKSON: Now spicy. Well done, well done.
JENSEN: Jackson had to find new sources of meat, and while his sales are up, many of Jackson's customers still want home-grown beef.
JACKSON: The rest of the suppliers from around the world - Australia, New Zealand, America, Brazil - quality products, but still when people come
here they say, `Where's the South African meat? You know?
JENSEN: That could change soon. Earlier this year the ban was lifted and South Africa says exports should start to flow to the UAE soon. Before
the ban, most of the meat companies' steaks were South African too. Tomazos had to source meat from elsewhere. But he says even though the
market here is strong, you still have to adapt to succeed.
TOMAZOS: In this competitive environment, if you're constantly not innovating and not looking at the customer needs, then you don't stand
yourself in good stride. Hello guys.
JENSEN: And for Tomazos, any future expansion of his trademark steaks won't be at home, but here in the Gulf. Jon Jensen for Marketplace Africa,
Abu Dhabi.
(END VIDEOCLIP)
SOARES: From African companies investing internationally to global companies investing within Africa. Coming up, we'll hear from one man who
knows all about investment on the continent. He is the general manager for Coca-Cola in East Africa.
PETER NJONJO, GENERAL MANAGER OF COCA-COLA EAST AFRICA: I think Coca- Cola's business in East Africa is set up in a part of the world that is very, very vibrant. Most of the other markets out there are getting to be
a little bit mature when you look at some of our beverages, but there's still lots of opportunity for growth on the East African market.
SOARES: That interview is just ahead.
(COMMERCIAL BREAK)
SOARES: Welcome back to "Marketplace Africa." Now, East Africa has a multitude of desirable characteristics for international companies to
invest in. So in this week's "Face Time," the Coca-Cola Company's general manager for East Africa, Peter Njonjo, talks about the potential for his
region.
(BEGIN VIDEOCLIP)
Coca-Cola established itself in East Africa in 1948 with the first facility being in Nairobi, Kenya. And since then, it's pretty much
established itself in the rest of the continent, and we in East Africa are part of the larger central East and West Africa business unit which covers
31 markets in sub-Saharan Africa managed out of Nairobi, Kenya.
I think Coca-Cola's business in East Africa is set up in a part of the world that is very, very vibrant. Most of the other markets out there are
getting to be a little bit mature when you look at some of our beverages, but there's still lots of opportunity for growth on the East African market
mainly because there's a very young population.
Sixty percent of the population is below the age of 24. So, that's a very young population, and then you also have a growing middle class also
in East Africa. You have growing urbanization. So when you put all those factors together, it creates an environment that is very, very conducive
for our type of business. It's a frontier of growth for many multi- nationals who are in the fast-moving consumer groups market.
Now if you're to think about Africa having about billion people, 22 percent of those people are in East Africa. So, essentially, if you want
to capture 22 percent of the Africa opportunity, then your best place to be in East Africa and I think for any multi-national with ambitions on the
African continent should be centrally - seriously - look at East Africa.
We've innovated a lot. I look at the business in terms of what it was 4/5 years ago and what it is today, and it has changed quite a bit. If I
look at it from a category perspective, we're now playing in more categories than we were playing previously. A couple of years back, it was
predominantly what I call a sparkling beverage business. Now we're into juice, we're into water, we're into all these other categories.
And when I look at things like juice, that's something that we're very proud of. We actually source our fruits from Kenya which we use to then
manufacture our juice. If I look at innovation on what I'd call the sparkling beverage front, we've launched new packages, we've brought in new
packaging technology like the PET bottles. So it's quite a bit also from that front. So I would say that as a business, we've actually innovated
and invested in a way that makes it more sustainable going forward.
The challenges are varied. I think one of our biggest challenges is that there's a huge rate of urbanization in East Africa. The markets are
about 20/25 percent urbanized and growing at 4 percent every year. The challenge is that the government investment in infrastructure is not
keeping up with this rate of urbanization. So what we're seeing is that it's becoming more and more difficult to move around some of the key cities
in East Africa, especially from a traffic standpoint.
The reason why I say that this is a period of Africa's renaissance is because if I look at maybe by 2040, the biggest workforce in the world will
be on the African continent. I think if you go through the newspapers, you will see that every other day, there's a new discovery for oil, there's a
new discovery for gas. And most of the countries actually remain relatively unexploited. If you're to think about it from an agricultural
standpoint, 60 percent of the world's arable land resides on the African continent and 75 percent of which is not utilized. If you start thinking
about utilization, maybe even use of fertilizers, we use 10 percent of Latin America's per capita consumption of fertilizer and most of our farms
are small holder farms. The average farm size in Latin America is 67 hectors. In Africa, it is 1.67 hectors. For Coca-Cola as a company, we
will invest ahead of demand to ensure that we can make use of that opportunity once it arises.
(END VIDEOCLIP)
SOARES: And that does it for this week's "Marketplace Africa." You can find us online at CNN.com/marketplaceafrica. From me, Isa Soares,
thank you very much for joining us. I'll see you next week. `Bye-bye.
END
