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Quest Means Business
Global Markets Have Major Sell-Off; US Crude Dips Below $50; Deflation and Grexit Fears Hurt Europe; Zuckerberg Launches Facebook Book Club; Finding Time to Read; Netflix Restricts Streaming from Abroad; Hedge Fund Founder Shot Dead in NY Flat; A Look at Global Markets Ahead; Emphasis on Cybersecurity; Marriott to Block Personal Wi-Fi?
Aired January 05, 2015 - 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: Weight Watchers is ringing the closing bell on a day when the Dow has certainly lost quite a bit of weight. The market is off
the best part of 2 percent, down over 300 points.
(GAVEL HITS)
QUEST: And I'm guessing Weight Watchers are ringing it today because, of course, it's the time we make New Year's resolutions to lose a bit of
weight. But whatever the reason, it's Monday, it's January the 5th.
And tonight, a market meltdown is underway. Oil is crashing, the euro is falling, and stocks are selling right across the planet.
Mark Zuckerberg launches a book club. The first tome flies off the shelves. We're going to speak to the lucky author that Zuckerberg says
he's going to read.
And going to war over hotel wifi. Marriott says your mobile hot spot is a security threat.
This is the sort of session you don't want to see on the first day of the year. But regardless, I'm Richard Quest, and I mean business.
Good evening. Tonight, political turmoil in Europe and the volatile price of oil is driving a worldwide sell-off in stocks. Investors are nervous
over Greece's future in the euro ahead of a crucial election, and they're weighing the new drop in the oil prices, which sent the market tumbling.
You've just seen the closing bell, now, as the Dow has ticked over in the last few seconds. It's just managed to hold on to 17,500, but only just.
We're not -- oh, well, I say only just. We're still ticking over. Over 330 points down. This might be the worst of the day. We'll just have to
wait for the final numbers to compute.
All the markets are down in the United States, and there were some serious big losses on the European bourses. If we take a look, you'll see. So,
you've got the Dow up there. The major Europeans, the FTSE down 2, the Xetra DAX down 3, the Paris CAC 40 down 3.33 percent, so the big three are
all heavily down.
Obviously, Athens got absolutely clobbered -- we'll explain why in a moment -- down 5.5 percent. So, you're getting a picture of what is happening.
The markets are sharply down, and the fear is -- and there is real fear, if you look at the CNN Greed and Fear Index, that is well and truly back up
again.
The fear is that the wheels on the global economy, and certainly the European economy, may well and truly be coming off the wagon. So, if this
is our wagon, and it is literally trundling along at the moment, this is global growth.
Well, the first one, of course, is the possibility of the Greek elections and the possibility of a eurozone breakup, or at least Greece, with its
election on the 25th of January. The anti-austerity party is leading in the polls, and if they are elected, although they say they won't take it
out of the euro, they are hoping to negotiate or renegotiate the bailout package.
That's bad enough. You've then got the eurozone. Deflation fears have risen sharply. German inflation came in at just 0.1 percent. It's almost
on the verge of deflation. And with that in mind, and with these two factors, euro touched a nine-year low against the dollar at $1.19.
Oil prices, a full-blown crisis in oil is taking place at the moment as the price has now fallen under $50 a barrel for one of the Brent and $54 for
West Texas Intermediate.
And then, of course, Russia. A crisis for one of the world's most significant economies. The French president, Francois Hollande, says
sanctions could be lifted if there is progress in what's been happening. Put all this together, and --
(CRASHING SOUND)
QUEST: -- that is what happens to your wagon. Oil prices are a key area in this. Look at where they stand now. They fell the best part of $2 and
some a barrel, down to nearly $50 -- just under $50 a barrel. It's the lowest level we've seen since 2009.
And Brent Crude -- this is the NYMEX, but the way -- if you take a look at Brent Crude, that's down at fresh multiyear lows as well. Brent is just a
little bit higher, it traditionally does. Well, traditionally, it used to be lower, but now it's gone the other way around. WTI is lower, so Brent
is at $53 and some change.
Peter Armandio is the president of Chicago Energies. He joins me now from the Merc Theater. So, the gut feeling, everybody I speak to in the
markets, and I need to hear your perspective, basically agrees. The momentum is down for oil.
PETER ARMANDIO, PRESIDENT, CHICAGO ENERGIES: Yes. If you look at weekly and monthly charts, there's still a lot of room to the downside, and I've
said it many times: in 2009, we pulled back to $33 in crude oil when we didn't have the North American shale and we had a lot more demand abroad.
QUEST: So, in this environment -- we're up $50, $54 -- are we looking at testing $45, $46?
ARMANDIO: Absolutely. In my mind, if you'd been in the business 25, 30 years, $50 is still a high price for crude oil. Well, if you looked at it
and had a 3.5 percent growth rate and you were looking at prices in 1997 being $25, that's $50 today.
But then, if you looked at 1992, when we fell into the low teens and you did the same calculation, it gave you somewhere around $20. So it is a
possibility --
QUEST: OK. But here's the --
ARMANDIO: -- that we pull back to $30.
QUEST: Here's the thing I don't quite understand. All day, analysts have been -- economists have been saying the low price of oil is affecting
equities.
Now, look, I understand there are certain key stocks in the Dow that are disproportionately affected -- Exxon Mobile, Texaco, and Shell and the like
-- in global stock portfolios. But falling oil prices is a benefit for economies mainly than a detriment.
ARMANDIO: Yes. I think what you really have to look at is when the Dow falls, what's the breakdown in terms of energy stocks pulling it down? If
it isn't heavily weighted in that area, absolutely it's great for the consumer.
It's great for the consumer, why? Because there's more disposable income if you're paying less for heating oil, less for gasoline. And especially
for the American consumer.
QUEST: So, Ken Rogoff on this program on Friday, the noted economist, he said net it is a winner. But you would agree, surely, Peter, that there is
a level of instability that is created, a level of uncertainty, when you have oil seemingly out of control.
ARMANDIO: Well, there's definitely fear, and the fear seems to be coming from abroad. What do you have going on abroad? You have a lot of
economies, a lot of countries, that their budgets are based on the price of crude oil. And it's based upon a price that's very, very high.
I think it was unrealistic for a lot of countries to base their economy and their budget on $90 crude oil. If you've been in the business a long time,
I think that that seems to be a little crazy.
QUEST: OK, so, I'll let you plead the fifth on this because I'm going to ask you the question you don't want to answer: where is the bottom in oil?
ARMANDIO: I wouldn't doubt it if it's somewhere around $30 --
QUEST: Wow.
ARMANDIO: -- that $30 area at this point. But do remember, at any time, anything can happen geopolitically, something in the Middle East, to get it
to pick its head back up again.
QUEST: Right.
ARMANDIO: But in terms of -- you really need to see a correction on the charts, a correction with demand, a correction with supply. And if you
don't see that, it definitely looks like we're heading south still.
QUEST: All right, Peter, thank you for joining us. Good to see you, sir.
ARMANDIO: You're welcome.
QUEST: I'll hold you to that $30. There's a drink on the other side of it. Thank you very much, indeed, Peter Armandio joining me.
Now, we talked about one crucial aspect, the price of oil that's clearly ratcheting down the market and the fear. But the other two areas that have
led to this are both the euro and the weakness in the euro, and of course the actual possibility of the Greek election, or at least the opposition
winning on that. They are also deeply worrying.
Vicky Pryce is the chief economic advisor at the Center for Economic and Business Research. She's also the author of the book "Greekonomics." Good
to see you, Vicky. Happy New Year to you. Lovely to have you with us.
VICKY PRYCE, AUTHOR, "GREEKONOMICS": Happy New Year to you.
QUEST: So, how far is this worry over the Greek election now transmitting itself into eurozone and European economies?
PRYCE: I think it's quite serious. There is a fear that if the elections go the wrong way, as far as the markets are concerned -- in other words,
that we have an elected government or at least forming a coalition which seems to want to renegotiate everything and talks about spending an awful
lot more money to get the economy moving again -- that the whole thing might transmit itself to the rest of Europe, and we might be beginning to
see the end of the euro project.
QUEST: You see, I've read over the weekend in my weekend reading numerous commentators saying, well, Greece doesn't have the power to derail the
eurozone as it did three years ago. Would you agree with that?
PRYCE: The only reason they're saying that is because it's mainly the countries, the European countries -- in other words, the governments
themselves -- that own quite a lot of the debt that Greece has got at present. Because the private investors have all gone. There was a haircut
a couple of years ago that took, therefore, huge losses.
And now, there are only about 10 percent of holders of Greek debt who are private sector banks and, perhaps, hedge funds and so on. So, in other
words, the loss isn't going to be that great. Somehow or another, the European governments are going to manage that, and therefore, if Greece
leaves, it's all going to be fine.
Of course, it's the opposite, if that's the case. In reality, nobody wants to see their own governments having to bail out the Greeks in that way.
QUEST: So, if the opposition does gain control, or some form of coalition -- and I realize we're now into the if, if, if spectrum -- but if that does
happen, how does it play out? Because there's only so far the rest of Europe will go, or the eurozone will go, to accommodate that.
PRYCE: Well, the Greeks don't necessarily want a huge change to what they've been talking about already, which is basically they want a
restructure of the debt. Already we have seen that the maturities have been lengthening. They'll want to see that happening even more so they
don't have to repay the debt in a hurry.
They've already had a reduction in interest rates generally that they have to pay on that debt. And what they really want is a little bit of leeway
to allow this austerity, which has been killing them, really, with a 25 percent reduction in GDP, to ease a little bit.
And that's what they're after, and that's what the Greek population wants. That should not have been particularly --
QUEST: All right.
PRYCE: -- difficult for the Europeans to give to them just a few days ago, when they actually sent the prime minister back to Greece empty-handed.
QUEST: Now, as I look at my wagon, which is still just about trundling along, we've got Greece, we've got oil, we've got Russia. All these things
are fermenting into the weakness in the euro. I would imagine you'd say the euro has no upside at the moment.
PRYCE: The main reason for the euro weakness, in fact, it's got something to do with Greece, but not an awful lot. It's got to do more with the fact
that the European economy's just not recovering. The eurozone is still in a sort of crisis.
And much more, therefore, to do with the fact that the head of the European Central Bank, Draghi, has already indicated that he's going to be coming
into the market and flooding it with cash, basically by quantitative easing the way that the US has done for quite some time and of course is now
unwinding that particular part of what it dead in the US.
But here in Europe, we haven't seen it. What this means is that interest rates in Europe are going to stay low for a long time to come. And
therefore, if you look at the comparison of what you get from a euro, if you like, and what you get from a dollar --
QUEST: Right.
PRYCE: -- the dollar has recovered quite significantly by comparison to the euro.
QUEST: Good to see you. Happy New Year again. Nice to see you, thank you for joining us this evening, Vicky Pryce.
PRYCE: Thank you.
QUEST: Joining us from London.
By my reckoning, Mark Zuckerberg has to read 22 pages every single day for the next two weeks. That's if he's going to keep his New Year's
resolution. We're going to talk to the author of the book Zuckerberg is reading after the break.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Mark Zuckerberg plans to read a book every two weeks this year, and he wants the rest of us all to join in. Now, Zuckerberg has set up a
social media book club of sorts. It's his New Year's resolution. A page on Facebook called "A Year of Books" is at its very hub. It's got a
virtual thumbs-up from more than 60,000 users in the first 24 hours.
Now, the idea is simple. He's going to read a book every two weeks. And I suspect he is hoping that we'll all join in the discussion of what we think
of the book and if we're enjoying it.
The first book he's chosen is "The End of Power" by Moises Naim, a former editor for foreign policy. The paperback version is literally temporarily
out of stock on Amazon. Never mind the book "The End of Power," we've gone one better than the book. We've got the author. Moises Naim joins me now
from Miami.
Sir, when you realized and when you first heard that Mr. Zuckerberg was basically going to give you a tremendous boost, what did you immediately
think?
MOISES NAIM, AUTHOR, "THE END OF POWER": I was surprised, and I was, of course, thrilled and overwhelmed. I don't know Mr. Zuckerberg, and I
wasn't expecting it. I just learned about it as everyone else. I just woke up in the morning, I looked at my Twitter feed, and there it was.
Then I went into Facebook, and I discovered what it just described. I didn't know anything about it.
QUEST: The books are going to fly off the metaphorical digital shelves, aren't they?
NAIM: They are already, yes. And that's why -- it's going to be very exciting to participate in the conversation, yes.
QUEST: Now, what do you make of this idea about -- the very concept of reading a book every two weeks. By my reckoning, he has to read 22 pages a
day of your book just to stay on track.
NAIM: Well, if the book is interesting and the pages -- the 22 pages are gripping reading, it's going to be very easy.
QUEST: Your book is "The End of Power," which looks at the very structures of power in today's society. It's interesting, some would say ironic, that
Mark Zuckerberg has chosen it, because he is one of those new power structures.
NAIM: Right. And what the book argues is there is no denying that there are very important centers of power in the world, and Facebook may be one,
and Google is another, and President Obama and the big banks and the Vatican and the Pentagon. Those are centers of power that are here.
What I argue in the book is that power is becoming more ephemeral. And those that have power are more constrained in the way they can use it.
They have more limits --
QUEST: Right.
NAIM: -- on what they can do with it.
QUEST: Now, I can see that argument certainly holds great water with a president, a Pentagon, a Vatican. But when you're talking, Moises, about a
new inhabitant of power, such as Zuckerberg, such as Facebook and social media, do you see the same constraints? Have they discovered their
constraints yet?
NAIM: Absolutely, absolutely. Just think about Google and what Google is facing in Europe about all of the initiatives to try to curtail what Google
can do. Take a look also at all kinds of competition. Take a look at, for example, the difficulties they have in penetrating the most interesting
markets for them, which is China.
So, of course, they are powerful, but they can no longer -- they cannot do whatever they want. And there's a growing set of constraints that limit
what they can do.
QUEST: Now, in our program, "Best of Quest" at the weekend, we always ask people what they'll be reading themselves. So, two questions to you, sir.
First of all, what are you reading at the moment? What good book are you reading? And secondly, are you reading it as a book or online or on a
tablet?
NAIM: Well, I'm reading a wonderful book by Frank Fukuyama, who is famous for his "End of History," original statement a decade or more ago. He now
has two books, actually, about what's happening to institution and to the nature of politics and how institutions and the state have evolved to this
day.
QUEST: And do you read online, do you read on a tablet, or do you like the crinkle of the page?
NAIM: I like the page. But I read it online, too. I'm a writer, and writers are readers, as you know. And therefore, I read more than one
book, and that's what I do. So, I read it online and I read it on paper, and that's what I do for a living.
QUEST: Congratulations, you're the first book that Zuckerberg's reading, and everybody else with it. Thank you, sir, for joining us from Miami
tonight. I appreciate it.
NAIM: Thanks for inviting me.
QUEST: Thank you, sir. Now, Mark Zuckerberg has asked that only participants who've read the books and have relevant points to make join in
the conversation.
Well, as I was just saying to Moises, over the past year, we of course have our Reading for Leading. And we've asked the top chief execs and some of
the most influential people in the business world what they are reading. In particular, how they find the time to read.
(BEGIN VIDEOTAPE)
WILLIE WALSH, CEO, INTERNATIONAL AIRLINES GROUP: I don't get an opportunity to read much, but I do have a Kindle and have downloaded books
that I read when I have time.
QUEST: You don't read them. You're like me.
(LAUGHTER)
QUEST: You're like me. I've got a Kindle that's stuffed to the gills with books that don't get read.
WALSH: I have quite a few that I haven't ready, yes. But they're there in case I get time to read them.
ELON MUSK, CEO, TESLA: I find since I'm traveling so much that I often find I'm reading the books on my iPhone, which may sound like, wow, this is
really tiny, but it's always with --
QUEST: Pass me my iPhone.
(LAUGHTER)
QUEST: You're not reading the Howard Hughes book, are you?
MUSK: Yes, I am. Yes.
QUEST: You're reading a Howard Hughes book on something the size of this?
MUSK: Yes.
(LAUGHTER)
MUSK: It's small, but it works.
QUEST: Do you get the opportunity to still read a good book?
MICHELLE BACHELET, PRESIDENT OF CHILE: Only in summertime. Then I read in two weeks 28 books, if it is possible. But on real day, no.
AMEL KARBOUL, TUNISIAN TOURISM MINISTER: I normally read three to four books at the same time on my Kindle.
QUEST: You read three to four at a time?
KARBOUL: Yes. It's kind of -- I need sometimes to change. First of all, I read --
QUEST: And you manage to finish them? This is crucial. Do you manage to finish them?
KARBOUL: Yes, I do. I'm a result-oriented lady.
(LAUGHTER)
CARL DJERASSI, CO-INVENTOR, THE CONTRACEPTIVE PILL: The things that I am reading are things that are connected to my own writing.
QUEST: Right.
DJERASSI: Which is not necessarily what I'd pick for pleasure. You would like to know, of course, what I read for pleasure. When I travel for
pleasure, I unfortunately at my age, read very little for pleasure now because I'm trying to work for the remaining few years of my life.
QUEST: So, are you a fast reader?
SAMUEL PALMISANO, FORMER CEO, IBM: No, I'm not.
QUEST: Then how do you get through all these books?
PALMISANO: Because I have time. I'm retired, Richard.
(END VIDEOTAPE)
QUEST: I think that's the best answer. "I'm retired, I've got time." We'll have Reading for Leading throughout the course of 2015 as we find out
how those people actually manage to do it.
Netflix users living abroad overseas may find themselves with more time to pick up a book. The company is cracking down on viewers who stream
American content outside the US. Watching certain US pictures abroad has always been prohibited. Now customers are reporting that tricks and
software they've used to bypass the restrictions are working no more. Brian Stelter joins me. Happy New Year, sir.
BRIAN STELTER, CNN MEDIA CORRESPONDENT: You, too.
QUEST: Happy New Year.
STELTER: You, too.
QUEST: One of the oldest tricks in the book was, of course, using the company VPN --
STELTER: Right.
QUEST: -- which would go through a different country or whatever. But they're clamping down. Why?
STELTER: They're not saying why, but I think it's probably pretty obvious, which is as they expand into more and more and more countries, they want to
make sure people are paying legally. There are more countries that Netflix continues to either expand into or look to expand into. Even China in the
future.
So, they want to make sure that they have as many legal subscribers as they can. They have to be careful not to disappoint or irritate all of their
partners --
(CROSSTALK)
QUEST: Well, this is a -- no, this is a --
STELTER: -- all of the content companies.
QUEST: This is a marketing thing, though, isn't it? This is a pricing thing. They might be able to charge more. Because if it's the same price
across the world, it shouldn't make any difference where you're logging in.
STELTER: There's something to that as well. I think you're right about that. This is showing Netflix majority. And they're saying there's
nothing new to see here, but users online in different countries are noticing a change. And there's some concern among folks who might be doing
this that maybe this is a prelude to a larger crackdown by Netflix.
QUEST: We've seen this before with iTunes, of course, which has an iTunes store in the UK or in Germany or in France and the US, and it is the
absolute devil own --
STELTER: Yes, companies still trying to enforce these physical --
QUEST: Yes.
STELTER: -- these borders in a virtual world where there aren't borders.
QUEST: Now, they say the regulators require them to do this in many cases. But what we're seeing with Netflix is not that, are we?
STELTER: Well, for Netflix, this is more about their content partnerships. Companies like Time Warner, which own CNN, which own the programs that
Netflix shows. Time Warner or other big media companies, they sell shows in different ways in different countries, so Netflix doesn't have the
license worldwide.
Now, when they make their own shows, or when they have a new show, like "Marco Polo," then the rules are different. Then Netflix in some cases
does have wider control. But even their biggest hit, initially, "House of Cards," is something they didn't own the rights to worldwide. They had to
license it territory by territory, country by country.
QUEST: How far -- on a philosophical question --
STELTER: Right.
QUEST: How far are these media companies -- our own Time Warner the same - - dinosaurs when it comes to dealing with cross-borders? They're trying to use a structure and a way of doing business that, frankly, doesn't exist
anymore.
STELTER: I think every year that becomes a more important question. "Downton Abbey" --
QUEST: Ah!
STELTER: -- was brought up about this recently, because the creator of "Downton Abbey" said why do Americans have to wait four months to watch the
show in the US? The show aired in the UK four months ago in the fall. It just premiered here in the US last night. So, that sort of delay feels
more and more archaic as time goes on and as we can access everything online.
QUEST: Do we know how many people watched it last night?
STELTER: Actually, the ratings have not come in yet. But in the past, it's been the biggest show in PBS history. I think it'll probably do very
well again this season. And that, by the way, is the argument against putting it online and on TV at the same time.
If PBS can make you wait four months and still get a very high rating, then maybe there's a reason to have all these borders, even in a very borderless
world.
QUEST: You don't really want to know what Lady Shackleton was doing last night with the footman. I promise you don't --
STELTER: It's on my DVR.
QUEST: You really don't want to know.
(LAUGHTER)
QUEST: Family viewing. All right. We have much more to bring you. It's QUEST MEANS BUSINESS. It is the start of the week. Now, when we return,
New York police are questioning the son of a hedge fund manager. The manager was found dead from gunshot wounds in his eastside apartment.
We'll bring you the latest. This is QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: The son of a wealthy hedge fund founder is now being questioned by the police after his father was found dead in his Manhattan apartment.
Seventy-year-old Thomas Gilbert, who founded Wainscott Capital Partners, was discovered with a gunshot wound to his head. Alison Kosik joins me.
The facts are few and far between at the moment. What can you tell us?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, right now, there is a press conference going on. New York police are holding a press conference,
and we're hoping to hear more details. But what you said is true, that 70- year-old Tom Gilbert was found dead of a gunshot wound in his upscale Manhattan apartment yesterday.
Now, his son, Thomas Gilbert, Jr., was in the apartment on the day of the shooting. Officers, by the way, found a gun at the scene. Now, what
reports are saying --
QUEST: I'm just going to pause you for one second there, because while you were talking, from that, we now know -- believe that the son -- we now know
the son has been arrested --
KOSIK: OK.
QUEST: -- for homicide in connection with this.
KOSIK: And this goes along with reports that we heard that that Tommy Gilbert -- that's what he goes by, Tommy -- was seen at the apartment, that
he somehow got by the reception desk -- this is what reports say -- of the building on the upper east side, and then left and went back to his own
apartment, where police later that day found him hiding in his apartment, and then was arrested.
QUEST: Do we know how old the younger -- the son is?
KOSIK: Reports are he's 30, in his early 30s. We also learned that he's a Princeton graduate, he looks like he was preparing to follow his father --
in his father's footsteps. His father, of course, founding Wainscott Capital Partners in 2011. We found out that the younger Gilbert filed with
the SEC to raise money for his own hedge fund. Not sure where that's gone.
QUEST: All right. Alison, thank you. It looks like this is going to be one of those tragic cases. The tragic of family issues.
KOSIK: Right.
QUEST: But we'll have some more details. Please, do come back the moment there's more to report on that.
KOSIK: Will do.
QUEST: Thank you much. Now, as we take the first day of the year and we look at how markets traded, well, the Dow was down and all the European
bourses were down. Oil was down. So you may well be wondering, well, it may just be the first day. But what on Earth does it mean for the rest of
the year? Probably nothing, but we'll talk about it next.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESSin just a moment. This is CNN and on this network the news always comes first. In
Germany, anti-Muslim rallies have been held in several cities. Protestors are angry at what they see as increasing Islamization of their country.
Counter-protests are also being held and the iconic Cologne Cathedral turned off its lights to reject the movement.
For the first time, Lebanon's imposing visa restrictions on Syrians. The tiny country's been warning for months that it can no longer handle the
massive influx of Syrian refugees. More than a million Syrians have fled from the war to seek shelter in Lebanon.
The accused Boston Marathon bomber Dzhokhar Tsarnaev is in court today for the start of his trial. A possible plea deal that could have taken the
death penalty out of consideration fell through according to a U.S. official familiar with the negotiations. Jury selection began today.
Opening arguments are scheduled for late January. The trial's expected to last three to four months.
Reuters News Agency reports that the captain of an Indonesian ship says he may have located the tail of AirAsia flight 8501. Now we can't
independently confirm that the tail has been located. The Indonesian Search and Rescue Agency is looking into the captain's claim.
Well, it was one of those days, this first day of the year, for the full week and stocks tumbled across the globe as fears grow over the future of
Europe's economy. The major indices in Europe dropped by more than 2 percent. The euro fell to a nine-year low against the dollar. In New York
the dollar -- the Dow -- was off by more than 300 points.
And some news that we're just receiving. The son of a wealthy hedge fund founder has been arrested by police and accused of homicide after his
father was found dead in his Manhattan apartment. He's 70-year-old Thomas Gilbert who founded Wainscott Capital Partners. He was discovered with a
gunshot wound to his head.
We're just two sessions in and we may already have had the worst trading day of the year that we could see all year. The Dow is off 330 points.
It's lost -- a loss -- of one and -- well, one and three-quarter points and we're just literally holding on to 17,500. The reasons we discussed are of
course we talked about how the markets are nervous. Now Eurasia Group's released its list of top ten risks for 2015. Now the top three -- first of
all of course European politics. There are elections in Greece, the United Kingdom and in Spain. Then of course you've got Russia. Well, Russia's
being treated as a pariah state in their words. And you have a slowdown in China. It may not be a considerable slowdown but a slowdown nonetheless
and that of course is one of the engines of growth. Ian Bremmer is the Eurasia Group president who joins me now, sir.
IAN BREMMER, PRESIDENT, EURASIA GROUP: Richard.
QUEST: Happy New Year.
BREMMER: You too.
QUEST: Well your global risks survey is never a barrel of laughs, is it?
BREMMER: Doesn't tend to be, no.
QUEST: Of those that, you know, -- Europe and Russia seems to be perhaps the most pressing.
BREMMER: Absolutely. And in Europe, the economics in Europe of course are actually getting better. We are returning to growth in Europe although
it's anemic --
QUEST: Relative.
BREMMER: Yes, relative. But we're not where we used to be. Spain just had better employment numbers today than we've seen at any point since the
financial crisis. But the politics in Europe are horrible.
QUEST: You throw Spain's better unemployment numbers at me, I trump you back with Germany's inflation numbers which were just awful today.
BREMMER: There's no question that where the Europeans were two years ago, three years ago when everyone said, `Oh, my God, they're debt is out of
control, the place is going to implode, it's going to cause global economic crisis. Today United States is growing and the oil prices are way down.
You should think Europe looks good. Europe doesn't look good and doesn't look good because the politics in Europe across the board are very, very
challenging.
QUEST: What are those politics? I mean, they -- we -- saw the European at the -- we saw at the European parliament level the resurgence of the right.
BREMMER: Yes.
QUEST: We've seen in the U.K. and we'll probably see more of that --
BREMMER: UKIP?
QUEST: UKIP coming onto the scene.
BREMMER: Yes.
QUEST: When it's the Le Pens in France. Is that a political worry still across the continent?
BREMMER: That's one side of it.
QUEST: Yes.
BREMMER: You also see it on the other side of the spectrum with the rise of Syriza in Greece --
QUEST: Yes.
BREMMER: -- and Podemos in Spain didn't even exist a year ago. Both may well be in office over the course of this year. And that is of course
going to lead to not only more problematic policies in those countries but also between core (ph) and periphery (ph).
QUEST: But can European structures withstand that sort of extremism in its. I mean, traditionally, we've always said yes, you know. Democracy
has taken far worse in its time. But we didn't have the economic underpinning of disaster that we've got at the moment.
BREMMER: And the geopolitical environment globally is really bad for Europe. They weren't dealing with the Russia crisis which is a serious
problem for them. They weren't dealing with the refugees coming in which as you've seen in your headlines, is creating anti-immigration sentiment
that's much more problematic.
QUEST: Where do you -- in your global risks, where do you put Russia?
BREMMER: Russia's number two.
QUEST: Behind Europe which is number one.
BREMMER: Absolutely and Russia feeds into Europe. So, I mean definitely the big geopolitical question mark is that the U.S./Russia relationship is
broken and can't be fixed. Russia has the support from China to ensure that American punishment of the Russians aren't going to bring them to
their knees. Energy prices going lower is hurting Russia. The only thing that's really pushing his popularity up is the nationalism, the
demonization of the United States. That's not a good combination.
QUEST: It isn't. But if we look at China, now, China's slowdown is on the list there, but I wonder a gentle slowdown by China -- why do you consider
that to be such a risk?
BREMMER: Well it's actually good for China. In fact, --
QUEST: Good for China?
BREMMER: I would argue that oil prices being where they are -- the single biggest beneficiary in the world is Xi Jinping because it allows him to
continue with economic transformation without the political blowback in the near term.
QUEST: Or the costs.
BREMMER: Or the costs. That's a very good thing. But if that also means that that transformation is not just a slowdown, it's going to be less
commodities-intensive slowdown so the risk is not China, the risk is Indonesia, Australia, Brazil, Thailand -- all those countries that have
been riding that Chinese wave up and exporting commodities to them. The Chinese economy's changing more quickly than people expect and they're
going to have to bear the brunt of that.
QUEST: Good to see you, sir.
BREMMER: You as well.
QUEST: Happy New Year.
BREMMER: 2015.
QUEST: Jim Thompson joins me from London -- the founder and chairman of Crown Worldwide which is based in Hong Kong. And we talk more about this
and -- if we take your risks, sir, where do you see the greatest risks in the year ahead?
JIM THOMPSON, FOUNDER AND CHAIRMAN, CROWN WORLDWIDE: Well I don't -- I know I'm an optimist and I think that as far as this particular time is
concerned this is the Asian century. And I agree with your last guest that the China situation was growing too fast and that the economy was growing
too fast, they had to slow it down and I think they've done that in quite an orderly way. But --
QUEST: But do you think --
THOMPSON: -- but I live in Hong Kong -- I live in Hong Kong and I have to say the economy there is actually quite good. We have full employment, we
have budget surpluses and we have low taxes and it really works well.
QUEST: Right, but you also have had the potential to instability that we saw with the protest movement which, I mean, we can -- honest men and women
can disagree over the way in which it was brought to an end, but it sent a message that there is something uneasy under these.
THOMPSON: Well I would agree. There is -- there was -- a protest but, you know, I've lived in Hong Kong for 36 years and I've seen so many things
happen over those years -- different types of protests and some natural things like SARS that have taken place and it upset the economy. But I
have to say this particular protest session was quite incredible. It lasted for 75 days, was mainly student-led who they're very idealistic and
they believe very much in what they were doing. But it was pretty clear that China wasn't going to budge on the point they were trying to win. And
it ended very peacefully. You know, they went -- the police went to the courts, they got a court order and they got legitimate reason to remove the
students from the streets.
QUEST: Now when we talk about the wider issue within the region, Asia may have huge economic potential and growth and it may be the best game in
town, but is it your view that the countries involved have the maturity of economics to handle this particular growth? In other words, we're not
going to see another Asian financial crisis? We're not going to see another -- I mean, if you take Indonesia, Vietnam, Cambodia, Myanmar,
Thailand -- all these countries. Can they withstand this growth?
THOMPSON: I think so. I think the major economies of Europe are certainly growing in maturity all the time and I think they can -- they can --
withstand it. The smaller economies like Cambodia and Myanmar are still developing even to a certain degree the Philippines. They're developing
and, you know, they have -- they have -- there's some jeopardy there. But frankly I think the leadership of these countries has gotten better with
each round of elections for the most part. I can't say in every case, but I feel good about Asia. I've been there for 50 years and I've watched this
transition over those years in the various countries, and really the countries have come a long way both politically and economically and I
think they're in a great position now to spring forward.
QUEST: And your 50th years -- your 50 years -- being there - -first of all, congratulations. I mean --
THOMPSON: Thank you.
QUEST: -- in an era where -- you know, in an era when Snapchat gets rid of a text in 30 seconds, anything that lasts more than a minute, let alone 50
years is an achievement.
THOMPSON: (LAUGHTER).
QUEST: So, what's been the biggest single change in that 50 years?
THOMPSON: Well, it's interesting because when I look back and I saw -- if you go back as far as World War II and the Korean Conflict and Vietnam and
the cultural revolution, you saw a lot of instability in Asia up `til about the mid-70s. From that point on when the Mao era ended and China
eventually opened up, I think we have had stability and peace in Asia, and that has brought with it prosperity. And I think that's the thing that has
really brought Asia forward. We've taken the human resource, the economic resource and the area is really growing beautifully now. So I think it is
the Asian century and I think there's a lot, lot more to come as far as development and success in that part of the world.
QUEST: Thank you, sir. Good to see you. Happy New Year. Nice to have you on the program.
THOMPSON: Thank you.
QUEST: Looking forward to the next 50 years. Now, when we come back in just a moment, want to show you this -- we all know that they exist. They
are the biggest talking points at the moment, so the question is -- what on earth is a drone doing at CES and what can we now do with drones that we
couldn't do before?
(COMMERCIAL BREAK)
QUEST: The show must go on. In just a few hours' time, Sony will show off its new products at the Consumer Electronics Show. It's the recent attack
on Sony as well as the hacks of celebrity I(ph) client accounts earlier in the year. It's all shown you and me and all of the companies involved how
vulnerable we all are in this day and age.
CNN's Samuel Burke is in Las Vegas at the conference where cybersecurity is the big theme. Samuel.
SAMUEL BURKE, BUSINESS CORRESPONDENT: People who never would have covered the Sony press conference before, Richard, are racing to get a front seat
covering the Sony phones they never would have covered before because of the Sony hack. Not just of the movie company but also of the PlayStation
and it's all about cybersecurity here. When people talk about their connected devices, the internet or things that were so exciting last year,
now people want to hear about a connected device they say -- but can it keep me safe?
One of the things that's really caught my attention here, Richard, is an app called 1U which is looking to replace the password with a selfie. And
everybody agrees here it's the password that at the root of a lot of our problems. I have Hector Hoyos here who is the president of the company
behind 1U. This free app which replaces your password with a selfie. The first question everybody has is, well, if you could do it with a selfie to
get into your accounts, your e-mail accounts, bank accounts like I've been doing the past few days, can't somebody just steal my picture, steal my
selfie and get into my credit cards then?
HECTOR HOYOS, CREATOR, 1U APP: They can't because you're you and we have life-ness detection technology that detects that you are alive. So we can
actually measure your pupil dilating, we can measure muscle motions in your face so that somebody that would take a photograph or a video would not be
able to supplant you and (inaudible) the system.
BURKE: You have to be alive and breathing. The other thing I want to know is what if you have a twin -- Richard has a twin for example. It's not a
male twin, it's a female twin, but what if two male twins want to take -- one wants to get into the other's account.
HOYOS: Well in male twins or female twins, they have the -- the irises are completely different. So when we -- with our iris technology, it doesn't
have any impact at all whatsoever.
BURKE: And right now when you use this app the way I've been trying it out the past few days, you can use your mobile phone to do it or log on to
something on your computer using your mobile phone, Richard. When I've been using it the past few days, first you have to enter your password
before you can start using your selfie, but you're trying to use your company as a way to eventually replace the password all together that your
selfie, your biometrics would be the way that you enter an account.
HOYOS: That's correct. We've developed all the technology, we're working with some of the largest banks in the United States and in Europe, and we
developed the technology that will replace all user names and passwords in the back end. However, in the mean time we get there and as banks and
other institutions employ this, there has to be a transition. And that transition is by enabling this particular app which acquires your selfie,
extracts your biometrics and then logs you in directly on your mobile device or on your desktop -- which ever you want -- in a way that is
seamless, convenient and secure.
BURKE: Now, I want to transition a bit now, Richard, from selfies and passwords to security in drones. Hector -- he met the head of this drone
company behind me -- DJ1. The first thing he wanted to ask them was, was the connection secure? Because this (Inaudible) live 4K video, Richard.
So immediately there are the heads of these companies talking to each other about are you using encryption? So right now this camera I could take a
selfie. Smile, Richard. They're taking a dronie. And now I have one of the heads of this company. So immediately what they're talking about is,
is the connection from here to the drone -- is it secure? Encrypted? All this type of conversation that we have not heard before the hack at Sony,
Richard.
QUEST: Samuel, ask your guests there one of the things I'm very interested in -- is do your guests and do you from what people are saying there -- do
they believe this is a situation that's going to get worse? In other words, there's no easy, obvious answer to the hack at the moment?
BURKE: Hector, what Richard's interested to know is, is the situation going to get worse? The situation with hacking before it gets better in
your opinion, in your expertise?
HOYOS: It's going to get much worse. I mean, the cat's out of the bag. Last year in 2014 for the first time, hackers started attacking individual
consumers. They're going after consumers' individual computers -- not only on corporate systems. So it will get worse and the only solution is to
completely eradicate the password because you cannot prevent against hacks from occurring. Hacks will always occur. The key is how do you protect
the data that's stolen so that the hackers can't get to it. They can't see what it is when they get it. But it will get worse.
BURKE: How do you -- how do you protect your bank accounts, your work e- mail or even the photos that you're taking with your drone?
QUEST: Frankly, gentlemen, I will be a little more concerned about protecting my head with the drone flying quite so close if things -- if
that pilot does not know what he's doing having flown a few drones me self. (RINGS BELL). Samuel Burke who is there now. Now there's a real ruckus
going on at the moment. It's all about when a hotel is entitled to stop you and me from connecting to our own Wi-Fi -- or rather using a MiFi on
our phones. The Marriott's got itself into very hot water. We'll discuss after the break.
(COMMERCIAL BREAK)
QUEST: Now this is the map of the conference center in San Antonio Center. Just look at it, you've got a massive atrium, you've got conference rooms
right the way up and down here. You've got more conference -- its vast area, and it's this sort of area that Marriott Hotels is now saying it's
trying to prevent people from connecting to their own Wi-Fi.
The company Marriott's in damaged limitation mode after trying to force guests to use the hotel Wi-Fi by saying that they were going to block
people using their own instead. Now if you look here of course, Marriott applied to the FCC to let it block personal Wi-Fi hotspots. Now these
would all be blocked. You wouldn't be blocked in your room, you would only be blocked in the public areas like the atrium and the conference room. It
sparked an uproar on social media. After all, its Wi-Fi for those who are not in their frequent guests say at the higher levels starts at $15 a day.
Marriott's clarified and says it only wants to block access in conference rooms, still free to use in hotel rooms and in lobbies. They're describing
it as a personal Wi-Fi as security threat. It's very odd business, the wrong business if you ask me.
Robert Cole is the founder of RockCheetah Travel Consultancy Group. So Marriott says, yes, use your personal MiFi in the room, in the lobby, but
once you get to the conference center, no go. Do you buy it?
ROBERT COLE, FOUNDER, ROCKCHEETAH: Well, I buy that there is a legitimate security challenge for the hoteliers because what hackers will wind up
doing is they'll wind up even reproducing the exact SS ID -- that's the name that you see when you hook up to Wi-Fi -- the exact same one that
hotel uses. They'll match the splash page, they'll do everything so it looks exactly like the hotel Wi-Fi. So that is a legitimate issue, however
I think that there has been a misstep by Marriott in the communication of limiting it in the conference centers as opposed to the guest rooms and the
lobby because the same issue exists everywhere.
QUEST: Right, and it exists in the rooms as well, but perhaps not to the same extent where you've got several thousand people coming in at once.
The real core is skeptics and cynics, maybe like me, believe it's a revenue-raising venture. Do you believe that are you prepared to give
Marriott the benefit of the doubt?
COLE: It does have to do with revenue also. Because traditionally the hotel industry has had very tight control of the communications -- not only
over conference rooms, but exhibit areas where you may have lots of different vendors doing a lot of different things with digital connections
to internet. And they've always had iron-clad --
QUEST: Right.
COLE: -- control over that. Plus they've also worked with third parties. It isn't always the hotel group. It may be a third party who controls it.
QUEST: And we'll talk more about it. Thank you for your insight, sir, tonight. Appreciate it. Now, when we come back, there'll be a "Profitable
Moment" and it's all about how many books you could read in two weeks.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Mark Zuckerberg says he's going to be reading one book every two weeks. Mr. Zuckerberg, here is three months'
worth of reading for you to get yourself going with. What I found fascinating is the way he described it. He said, `I'm looking forward to
shifting more of my media diet towards reading books.' Shifting media diet. Talk about geek-speak. No, Mr. Zuckerberg, you're not shifting your
media diet, you're reading a good book. And might I suggest instead of some of those tomes that you go for, try something like this -- a Harvard
classic -- "The Best of English Poetry." It'll take you a week or two. And that's QUEST MEANS BUSINESSfor tonight. I'm Richard Quest in New York.
Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.
END
