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Quest Means Business
Swiss Move Shut Down Currency Brokers; Danish Deputy PM Says Denmark's Currency Will Stay Pegged to Euro; US Markets End Week-Long Slump, Rough Week for Banks; Oil Price Spike Boosts European Markets; No Haircut for Greek Creditors; Sales of Google Glass Halted; Xiaomi Looks for Global Domination
Aired January 16, 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)
MAGGIE LAKE, HOST: Take a look at that rally, the losing streak is over. US market finished higher for the first time this week. It's
Friday, January the 16th.
Francs for nothing. Trading firms worldwide are taken down by Switzerland's currency calamity.
United we stand. Barack Obama and David Cameron want online companies to tackle terrorism.
And Google Glass is shattered. The gadget gets taken off the market.
I'm Maggie Lake. This is QUEST MEANS BUSINESS.
Good evening. Tonight, the shockwaves set off by the Swiss central bank are continuing to reverberate around the world. The bank's decision
to unpeg the franc from the euro has shaken investors, bankrupted some brokers, and driven Swiss stocks deep into the red for a second day.
The SMI ended the day down 6 percent. That is on top of an 9 percent drop Thursday. When we back out and look at the performance over the past
three months, it's clear what effect this has.
Some investors lost millions when the Swiss bank made its shock move, and that left several brokers in deep trouble. US-based currency broker
FXCM is desperately trying to patch a $225 million hole.
In the past few moments, it has been confirmed that the company has been thrown a $300 million lifeline by Leucadia. Its shares were suspended
earlier after they fell more than 80 percent in pre-market trade.
No such help for UK currency broker Alpari, which announced it is insolvent. Alpari is a major sponsor of the West Ham football club.
And global brokers New Zealand is closed for business. The firm's director says most customers invested in francs suffered losses greater
than the equity in their accounts.
Joining me now, Bart Chilton is former commissioner of the Commodities Futures Trading Commission. Bart, thanks so much for being with us.
Obviously, this took the markets by surprise, but we're seeing these bankruptcies, insolvencies, last-minute rescues. Surely, there's a better
way for this to happen? What are regulators talking about right now?
BART CHILTON, FORMER COMMISSIONER, COMMODITY FUTURES TRADING COMMISSION: Well, Maggie, they've got to look at the conditions that they
have, the rules and regulations, to ensure that they're appropriate.
For example, in the US, at that, the regulator, when I was there in 2010, we approved regulations to require $20 million just to get in the
game if you're a foreign currency dealer. And so, there was a level to play. And then, an additional 5 percent of every $10 million in the
future.
So, that's one requirement in the US. Unfortunately, there are no such requirements in the European Union. There are some other places in
the world where this company was trading. But there still needs to be work done with regulators.
LAKE: You know, Bart, this FXCM was a retail broker when it comes to currencies. We know how violently things can move, currencies can be very
volatile markets. It always worries me when I see commercials appealing to the retail investor. Thankfully, there does seem to be a last-minute
bailout.
But this is a market that, although you're trying to be increasing the regulations, there aren't some of the insurance policies that are put in
place in other asset classes, are there?
CHILTON: No. You've got it exactly right, Maggie. I wrote a book about this several years ago, "Ponzimonium: How Scam Artists Are Ripping
Off America." And the reason I did was a lot of these foreign currency dealers that were sort of the under-the-radar group, people that wouldn't
have $20 million in capital, were doing a bunch of nefarious things So, those guys are gone, by and large.
But there does need to be an insurance program for when something doesn't work out. And remarkably, in the United States, futures customers
or swaps customers, who may have been involved in something like this, have no recourse if the company goes under.
Thankfully, it looks like something's happened in this regard. But that just need to be changed, and I'm disappointed it hasn't been changed
so far.
LAKE: Bart, do you think that the Swiss central bank made the right decision by shocking the markets in this way?
CHILTON: Well, I don't want to second-guess the central bank, but everybody on business and financial television seems to be trying to guess
what central banks are going to do, and I think this is an example where it shows it's good to keep an eye on what's going on.
I think it also means there's heightened awareness for what the European Central Bank may do next Thursday. So, all eyes need to be
focused on these, because even though in government you don't like to impact markets, certainly these central banks, as we've seen in the last 24
hours, can very much do so.
LAKE: That's right. We all talk about sometimes how ineffective, where we wish their policies had more impact. We have to watch what we
wish for, I guess, because they certainly do --
(LAUGHTER)
CHILTON: Absolutely.
LAKE: -- hold a lot of sway. Bart, thanks so much for joining us. Always a pleasure to see you.
CHILTON: Thank you.
LAKE: Bart Chilton for us.
Well, Denmark's deputy prime minister says his country's currency pegged to the euro is an integral part of its monetary policy. Denmark is
one of several countries, like Switzerland, which have some kind of peg with the euro, along with countries like Serbia, Macedonia, and the Czech
Republic, among others.
As you've seen, Switzerland's decision to abandon its link to the euro has shocked financial markets. I spoke to Denmark's deputy prime minister
and asked him if his country is next.
(BEGIN VIDEOTAPE)
MORTEN OSTERGAARD, DEPUTY PRIME MINISTER OF DENMARK: No. You have to understand that the situation is completely different. The Swiss
introduced the euro peg as an extraordinary and temporary measure a few years back.
We've had a peg towards first the Deutsche mark and then afterwards the euro since 1982. It's an integral part of our economic and monetary
policy to have a peg towards the euro.
And you can say from all practical purposes, we don't have the euro as our currency, we have the krone. But that's about the only thing that
separates us from being a euro country.
LAKE: And we have seen a rapid depreciation in the euro. What is that going to mean for your economy?
OSTERGAARD: Well, that situation can actually help us also, depreciating towards the dollar may help us get a little out of the
situation where we actually feel that, structurally, we are informed to see more growth and more job creation.
But we've seen a sluggish recovery and more sluggish than we've expected and anticipated. And therefore, that may help us along, actually,
with falling oil prices.
LAKE: It has been difficult, but there were some hopeful signs you were coming out of that recession. But what's the outlook for 2015 now?
You have the eurozone economy, people incredibly worried about what's happening. You have Scandinavian neighbors, now, hit by the fall in oil,
also weakening. Can your economy recover when everyone else seems to be struggling so much?
OSTERGAARD: Well, it's no doubt that the recovery has been slower than we expected, but everybody who's looking at the Danish economy at the
moment says that 2014 was slower than expected, 2015 will be better, and 2016 even better.
We've had five quarters in a row where we've seen growth, and we've seen growing employment in the private sector, which is where we are
looking. And therefore, I think that we are actually in good shape.
What we are looking to is a momentum in Europe that we can catch onto and use the fact that we are in good shape to create more growth in
Denmark.
LAKE: And do you think you're going to see that momentum? Everyone expects the ECB to unveil a massive stimulus program next week. Do you
also expect that? What's it going to look like? And do you support those policies?
OSTERGAARD: Well, I think when I meet with my colleagues -- and I'm going to go to Brussels next week and do it again -- we -- this is all we
talk about, how can we politically see if we can assist the recovery. And the European Commission has launched new investment initiative, the ECB has
been very active, and rightly credited for it.
And we'll continue to do so, and we'll do it in a setting where we are also doing structural reforms so that this is not just a question of the
next quarter or the quarter after that. This is a long-term strategy of seeing if we can bring Europe out of a slump so we won't see these low
numbers for years on end.
(END VIDEOTAPE)
LAKE: Goldman Sachs rounds out a rough week for banks, but US stocks have just staged a last-minute rally. A look at Q4 earnings when we
return.
(COMMERCIAL BREAK)
LAKE: It was finally a day of relief for US investors. After five down days, the Dow made a solid gain. Solid, indeed. And a lot of this
coming right at the end. You can see, almost 200 points. A jump in oil prices helped. Energy stocks led the way higher. The broader S&P 500 also
ticked up about 1.25 percent.
Goldman Sachs rounded out a rough week for bank earnings. Over the past few days, we heard that JPMorgan Chase, Bank of America, and CitiGroup
all missed targets for the fourth quarter. Wells Fargo met expectation.
Goldman shares -- shared earnings on Friday. Profit and revenue topped forecasts, but both were down from a year ago. Revenue from
Goldman's bond, currency, and commodity trading unit plunged nearly 30 percent in that period.
Paul La Monica joins me now. And I guess we shouldn't be surprised that trading was a rough spot, given what we have seen day after day. And
the losses not just in stocks, but really, volatility across so many asset classes, Paul.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes, without question. It was interesting, during Goldman Sachs's conference call, one
analyst asked about, is this volatility a bad thing? Because in the third quarter, people were complaining that nothing was going on.
LAKE: Right.
LA MONICA: There's a lack of volatility, and that was going to be a problem for the banks. And now we have too much volatility. So, I guess
we need that Goldilocks-ian just right sort of volatility. We haven't had it yet. So, right now, it's bad news for any of the big banks that have
Wall Street trading exposure.
LAKE: Lloyd Blankfein in the conference call, did he say anything? How did he sound about the futures? Because guidance -- we should remind
all our viewers -- guidance matters just as much, really. Some of these are review-mirror looking. Guidance matters an awful lot about the future.
Did he sound pessimistic?
LA MONICA: He wasn't on the call, it was the CFO. Blankfein in their statement was very bullish. He talked about the momentum in the global
economy and he thought that that would continue in 2015. Does make you wonder what economy he's looking at, because we're hearing all these
concerns about Europe and China.
But the CFO was also, again, pretty upbeat. He talked about Goldman's diversification, and that helps them offset some of the problems. Someone
asked him, notably, about the Swiss franc in particular. And he said that the impact of that would be "immaterial" on their numbers.
So, it looks like Goldman is holding up OK despite all this volatility. Still, their numbers are down --
LAKE: Yes.
LA MONICA: -- but they're in better shape than a lot of their Wall Street rivals.
LAKE: And clearly, I guess, not holding a very large position when it comes to the Swiss franc, which is good for them. What about regulation?
We heard Jamie Dimon really complaining the bank's under assault, regulators are trying to put them out of business -- my words, not his.
But he's clearly unhappy about the environment. Is that a view shared at Goldman?
LA MONICA: Goldman, again, they took a very interesting counterpoint. They -- the CFO did mention specifically that there is more regulation. I
believe the word he used was "unprecedented." But at the same time, he said that it's making the global financial system stronger. So, I think it
certainly is a stark contrast to Dimon, who is just unafraid --
LAKE: Yes.
LA MONICA: -- to say exactly what he feels.
(CROSSTALK)
LAKE: Goldman's just happy that --
LA MONICA: "Under assault."
LAKE: -- they're not under the microscope for a change --
LA MONICA: They were under assault --
LAKE: -- and they're fierce competitors.
LA MONICA: -- for a long time.
LAKE: Yes. Fierce competitors with JPMorgan.
LA MONICA: Seems like the Abacus concerns and Fabulous Fab, that's in the rear view mirror.
LAKE: I'm curious, we ended with a rally today, but we have to remember, it was a really difficult week again. It's been a tough start to
2015. And earnings seem to be a cause for concern. Is that going to change next week? We've got a lot more coming. We're just starting this.
We're going to have a flood coming next week. Is the picture going to look any better?
LA MONICA: Hopefully it will. Next week is going to be a lot more telling. This week was really about the banks. We had a couple of
exceptions with Alcoa and Intel.
But next week, on Tuesday, because we have the Martin Luther King holiday on Monday, no trading, Tuesday you're going to have J&J, you've got
Delta. Delta should report pretty strong results because of lower gas prices. Then you've got after the bell, IBM and Netflix, so you're going
to see some tech earnings.
But I think what everyone's going to be looking at, particularly with a company like J&J and IBM, the strong dollar.
LAKE: Yes.
LA MONICA: Is that having an impact on their international business, and will that offset any strength in the US? That could be a problem.
LAKE: And I'm very curious to hear from all these companies whether they're on the consumer side or even on the tech side, are consumers and
businesses are spending? If this is supposed to be a year of recovery and US is leading the pack in terms of global growth, are you seeing those
interests out there opening up their pocketbooks and spending?
Or are they back concerned because of the headlines we've seen. That's something that's going to be interesting to watch. All right, Paul,
we're going to be busy. Thank you so much.
LA MONICA: Thank you, Maggie.
LAKE: Have a great weekend.
Well, European stocks outside of Switzerland finished solidly higher. A surge in oil prices helped balance out the fallout from the Swiss central
bank. Greek stocks, however, bucked the trend. They fell 1.8 percent.
Greek stocks have been hammered recently as rumors they could leave the eurozone have taken hold. The anti-austerity Syriza Party is in the
running to win the country's presidential election later this month, and it's called on European leaders to restructure Greece's debt. Former EU
economic commissioner, Olli Rehn, told Jim Boulden Syriza is unlikely to get its wish.
(BEGIN VIDEOTAPE)
OLLI REHN, FORMER EUROPEAN ECONOMIC COMMISSIONER: First of all, the political dynamics are such that in the other euro area member states, that
would not be popular at all. Second, that's not the only way of improving the debt sustainability of Greece.
I believe that it is important that as Greece has now achieved a primary fiscal surplus that the eurozone member states will, in line with
their previous decision over November 2012, look into ways and means of improving the debt sustainability of Greece so that the Greek economy will
grow better and Greece will be able to pay back its loans.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: The idea of a Greek exit from the eurozone, so-called Grexit, seems to be back on the table in
some capitals in Europe. Do you think that's even a possibility the way it seemed to have been a possibility back in 2012?
REHN: I don't think it is a real issue, no. There's going to be -- there is now and there's going to be plenty of political theater and
shadowboxing, but I hope that all the European citizens and market participants see through this political theater.
Of course, democratic elections are always a serious matter. And we have to respect democratic principles. But once the elections are over,
then it's time to form a government in Greece without unnecessary delay, and then see how to continue the program.
It's important that Greece is committed to the economic reforms and preferably can intensify the fight against tax fraud and tax evasion. We
see this as a very serious problem in Greece.
BOULDEN: Are you a fan of quantitative easing in the eurozone? In other words, with the ECB buying sovereign debt? And should they buy the
sovereign debt, say, of Greece?
REHN: I'm a fan of economic recovery.
(LAUGHTER)
REHN: And in my view, the European Central Bank can, through quantitative easing, improve the chances of saving the recovery in Europe
and strengthening the economic recover in Europe. It's not the only solution.
We need structural reforms in Italy and France in the labor market, in the business environment. And Germany should use its current account
surplus for domestic investment, also, to boost domestic demand.
With this kind of policy mix, we would have the best chances of ensuring that we are not stuck in a 1 percent economic growth scenario, but
we can improve it to 2 or 3 percent.
(END VIDEOTAPE)
LAKE: Google says it started as a scuba mask attached to a laptop, and now, it's time for Google Glass to head in a new direction. Once the
hottest thing in wearables, its future is now unclear.
(COMMERCIAL BREAK)
LAKE: If you wanted to buy a Google Glass and you have a spare, oh, $1500, you'd better act fast. Google Glass is graduating. It looks like
Monday will be the last day it is available for purchase, at least for the foreseeable future. Our business correspondent Samuel Burke joins me with
more. Samuel, I was saving my pennies. It's going away now. But seriously, what's going on?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Well, I hope you saved a lot of pennies --
(LAUGHTER)
BURKE: It cost $1500, but --
LAKE: Way out of my price range.
BURKE: Simply put, Maggie, a lot of people don't want to wear wearable technology. There's actually an interesting study about out --
out there, not just about Google Glass, but about wearables in general, that one-third of Americans at least give them up after six months.
And I think you have a confluence of factors. They're expensive, as I just demonstrated, $1500. Apps on your smartphone do a lot of what these
other devices do. And you have to charge yet another device. And I think that's a reason that Google is putting them on the shelf, though they say
just for now. Later on the in the year, they might be producing them again.
LAKE: Yes, here's the thing. Having talked to the people at Google on background about this, this was always sort of an open experiment,
right? That's how Google operates. They sort of -- they never -- this was never supposed to be the finished product.
This was the one, they put it out there, kind of open-sourced it, and then see what happens. So, I think there was a misconception that this was
it and only going to stay here.
BURKE: Well, it --
LAKE: So now, they may continue working on it, but it's just going to -- somebody said maybe gear it more towards businesses. They're kind of
looking for the application that makes sense, aren't they?
BURKE: Yes, it could be that it's not for the mass market. But some people --
LAKE: Right.
BURKE: -- do think this could be the next iPhone. It came out in 2013, and while you're probably right, nobody thought that first iteration
of them would be the final one, that would be the one that was a hit, I think by now, people thought it would take off. But yes, maybe it's more
for doctors to use when they're performing surgery.
LAKE: Right.
BURKE: It will apply to more specific professions. And another thing we haven't mentioned about this particular type of wearable is the social
factor. Are people comfortable --
LAKE: Right.
BURKE: -- if I walk -- you and I work in television, we know people are very uncomfortable with cameras.
LAKE: Right.
BURKE: If I walk into a bar and start talking to you, Maggie, and you see kind of a light flickering here, are you really comfortable with the
fact that maybe I'm recording you with my Google Glass?
LAKE: And that was the part that really was the rub, I think. Because you could see it for mapping and directions, and we tested them
out, and I went around New York City, and I could really see the value and it was really interesting.
But we never anticipated what -- how other people would find -- and that is an issue with wearables, isn't it? As we sort of venture into this
field, some people think they need to be more discreet. They need to be more a part of you and not so obtrusive and obvious to others.
BURKE: And I just got back from the Consumer Electronics Show in Las Vegas, and we saw a lot of wearables that look like they could have
success, tucked into parts of your clothing --
LAKE: Yes.
BURKE: -- where you don't see them, for example. So, maybe that's where wearables are going to end up, in less visible places and connected
to your devices.
But at the end of the day, my big problem with wearables, I just have to get back to the battery. It is hard for me to even keep up with my
smartphone, and these have been around for ages, now. But the battery doesn't keep up. So do people really want to be trying to keep multiple
devices charged --
LAKE: Right, when they're not sure what they really need them for. It can't be a novelty. It's got to be solving a problem that we have, I
think, I what we're finding out. All right, stay tuned. We'll see if Google Glass is really dead or not. You'll tell us, Samuel. Thanks so
much. Have a great weekend.
Well, the man who once ran Google's Android unit says China's biggest smartphone company is ready to take on their US rivals. Hugo Barra is now
vice president of Xiaomi, which has just unveiled its new phone. Will Ripley sat down with him and asked him where the company goes next.
(BEGIN VIDEOTAPE)
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: So, what is Xiaomi? A smartphone maker or a smart device manufacturer?
HUGO BARRA, VICE PRESIDENT, XIAOMI: Yes. So, it's both, right? It's a little bit of both. And the way we like to think about it is we want to
grow up with our fans, with our Mi fans.
It's to offer the Xiaomi lifestyle, this sort of automated, seamless lifestyle that increasingly we can be a bigger and more important part of
their lifestyle. It's a pretty geeky lifestyle, and that's by design. But that's exactly the goal.
RIPLEY: And you want to have really loyal customers, almost like a cult following, basically.
BARRA: That's right. And we want that loyalty to fun from repeat purchase of our product, because they enjoy the experience, they fell like
they're part of it, they're finding bugs.
RIPLEY: And that's what's helping build such a strong brand here. We know you're really popular in China, you have a foothold, now, in India.
Where does Xiaomi want to go next?
BARRA: So, we're going to spend a lot of 2015 really focused on the Indian market. It's a very significant market. It's very, very complex,
it's highly competitive. And Indian consumers are probably the most demanding in the world, which I think is something that a lot of people
don't know.
We'll also start paying attention to Brazil and Indonesia, also very competitive markets. So, we want to spend some time in those markets
before we really start thinking beyond that.
RIPLEY: OK, so, five years down the road, where do you see Mi products being sold?
BARRA: Everywhere in the world. Without a doubt.
RIPLEY: Including Europe and the United States?
BARRA: Absolutely. Of course.
RIPLEY: Are you feeling competition from other Chinese tech companies? I think of Huawei, for example. Are you feeling competition to
be the first, to be the biggest on a global scale, to have that global footprint?
BARRA: The amount of competition that's starting in China and that's taking, now, place at a global stage is insane. So, I really, really do
think that the world is going to be very, very different in a couple of years once all of these players, not only Xiaomi, but some of these other
players, have had the chance to really expand globally and translate their product positioning to other markets.
RIPLEY: There have been complaints, allegations from some critics, from Apple, that some of your devices are, essentially, copies of their
devices. And last year when we talked to you, you basically said that that comes from a place of respect, that your company's a big fan of Apple.
But the response that we then got from Jony Ive was -- and I'm reading this quote here -- "I don't see it flattery. I think it's theft and it's
lazy." Your response?
BARRA: Well, I think our response is the new product that we've just launched. So, this is Mi Note, it's a 5.5-inch device that's incredibly
beautifully designed. And I don't think anyone is going to look at this product and say that it looks like anything that's been designed by anybody
else. I think it's pretty much the end of that copycat discussion.
RIPLEY: But you're not shying away from the comparison, being called "China's Apple," and then yesterday, Lei Jun is on stage and there are
graphics comparing the iPhone 6+ and the Mi Note.
BARRA: Yes. It is true. We are a very open, transparent company, we're very engineering-led. We're presenting to a big group of geeks who
will inevitably compare the products that we're just unveiling, Mi Note, to iPhone 6+, which is Apple's largest screen device. People are going to
have strong opinions inevitably, and that's OK. We love being part of the conversation.
(END VIDEOTAPE)
LAKE: The Swiss central bank's decision to unpeg the franc has hurt traders and currency brokers. Holiday-makers hoping for a relaxing ski
trip will need to part with more cash, too. We'll see how much more it'll cost, next.
(COMMERCIAL BREAK)
LAKE: Welcome back, I'm Maggie Lake. In the next half hour, that trip to Davos next week just got a whole lot more expensive. We'll show
the extra costs after the Swiss central bank's shock decision.
And we'll hear from the CEO of Orbitz about how his company will let more and more Americans travel to Cuba.
This is CNN, and on this network, the news always comes first.
Several US officials say the intelligence community has been sharing critical information with Belgium and was aware of the recently uncovered
terrorist plot there. Seventeen people have now been arrested in locations across Europe relating to that threat. US officials say there was, quote,
"a high probability" other attacks were being planned before Thursday's deadly raids.
Police and protesters have clashed in the Pakistani city of Karachi. At least 200 people took part in an anti-"Charlie Hebdo" protest outside
the French consulate. Police used teargas and water cannons to try to break up the crowd. Agence France-Presse says a photographer working for
it was shot and wounded.
The U.S. Supreme Court will decide whether states can legally ban gay marriage. Nine states currently ban the practice outright with five other
states declaring it unconstitutional. Arguments will begin in April over whether same-sex couples have a constitutional right to get married, with a
decision expected in June.
Tropical storm Mekkhala has strengthened into a typhoon and it will be hitting Tacloban as the Pope is scheduled to give mass there in just
matter of hours. Despite the weather, people have filled the streets to greet the Pope as he drives by.
2014 was the earth's warmest year on record - that according to climate scientists in the United States. They say the average temperatures
over land and oceans were greater last year than any year since 1880 when records began.
Investors and currency brokers aren't the only ones feeling the pinch after the Swiss Central Bank's news. Business leaders and holiday makers
heading to the slopes at Davos will need to part with more cash as well. First, there's the equipment. Two weeks ago renting some skis for a week
would have set you back $204. Today it costs $243. It doesn't matter if you stick to the buddy slopes or the double black diamonds, getting on the
slopes will cost more. The price of a seven-day lift ticket in the Davos Klosters region has jumped $70. And if you haven't lost your appetite, you
can indulge with some fondue and beer. That will set you back just over $50 - that's up $8. All of this won't stop CNN though - "Quest Means
Business" will be live from Davos all next week.
Now some of Switzerland's biggest exporters such as food makers, watch makers and pharmaceuticals also face a huge squeeze on their margins.
Thomas Cueni is the secretary general of InterPharma, the trade group for Switzerland's drug companies and he joins us now live from Brussels via
Skype. Thank you so much for being with us today. First of all, this shocked so many people. What are you hearing from executives and from your
members?
THOMAS CUENI, SECRETARY GENERAL, IINTERPHARMA: Of course nobody likes surprises because over the last three years, the peg of the Swiss franc
against euro was stability and predictability and more comfort. But basically normal Swiss reaction to such events is don't panic. We strongly
support independence of the Swiss National Bank. Therefore though people were caught by surprise and shocked and this will not be easy for many
sectors in Swiss economy, the Swiss National Bank enjoys strong support in the Swiss community.
LAKE: Thomas, you know, as you say this is just sinking in now. We've seen such a reaction in the stock market in Switzerland, double-digit
declines in many shares of many companies. What are the underlying fundamentals like? And do you think some of those moods have been
exaggerated -- don't reflect the real fundamentals of Swiss corporate?
CUENI: When I look at my sector, research-based pharmaceutical (ph) companies, the fundamentals haven't changed at all. Actually our sector
which is, the most important, Swiss export industry is probably pretty well positioned to weather this storm and the immediate reaction in the stock
market clearly expresses some over-shooting because one of the elements which one has to take into consideration is global companies are
geographically well diversified. The big Swiss rokchines (ph) such as Novartis and Roche they not only have research labs in Basel in Switzerland
but also major research ops (ph) in Boston, in the Bay area, in Shanghai and also has strong (ph) call centers in the European zone. Therefore they
are present in Japan, in the dollar (ph) area and in Euro area and therefore the impact of Swiss franc which of course does make Switzerland
as a center of pharmaceutical activities more expensive is offset by an improvement because of the decline of the dollar and the decline of the
euro in other areas.
LAKE: They're certainly going to need that diversification since this looks like it is going to be a protracted campaign by the ECB. Thomas
Cueni sharing the view from the corporate side tonight for us. Thank you so much. Well David Cameron is in Washington meeting with Barack Obama.
Security is dominating the discussion. We'll have their strong words and a pledge for renewed cooperation after the break.
(COMMERCIAL BREAK)
LAKE: David Cameron and Barack Obama are calling for greater cooperation in the fight to track violent extremism online. The president
and prime minister held a press conference earlier in Washington. The two leaders were careful to point out they're not advocating going beyond
what's legal to get the information security agencies need.
(BEGIN VIDEOCLIP)
BARACK OBAMA, U.S. PRESIDENT: Social media and the internet is the primary way in which these terrorist organizations are communicating. Now
that's no different than anybody else, but they're good at it and when we have the ability to track that in a way that is legal, conforms with due
process rule of law, and presents oversight, then that's a capability that we have to preserve.
DAVID CAMERON, BRITISH PRIME MINISTER: We're not asking for back doors. We have - we believe in very clear up front doors through legal
processes that should help to keep our countries safe. And my only argument is that as technology develops, as the world moves on, we should
try to avoid the safe havens that can otherwise be created for terrorists to talk to each other - that's the goal.
(END VIDEOCLIP)
LAKE: CNN's senior Whitehouse correspondent Jim Acosta is Washington -- in Washington rather - watching that press conference. Jim, thanks for
being with us.
JIM ACOSTA, CNN SENIOR WHITEHOUSE CORRESPONDENT: Sure.
LAKE: This is a sort of touchy and difficult subject for these leaders, isn't it? Are -
ACOSTA: Yes.
LAKE: -- they on the same page? And they have a lot of breach of trust really to overcome when it comes to getting the private sector to
cooperate with them, don't they?
ACOSTA: Well, I don't think they're on the same page, but in some ways neither are their countries. You'll recall the Edward Snowden fiasco
- the national security contractor-turned-leaker who exposed how the United States was snooping on people - not only in the United States but around
the world including world leaders like German Chancellor Angela Merkel. That caused a reaction in the United States and inside the Obama
Administration, the President himself pledged to sort of bring some of these surveillance programs under control. And that is why you heard the
President say today that, you know what, we don't need to -- even though we had what happened last week in Paris -- need to throw out all of the
safeguards that the United States is starting to put in place.
But what you have at the same time, Maggie, are some of the high-tech giants like Apple and Google and Facebook - they're already moving ahead of
the public sector. The private sector's ahead of the public sector on this one, and they are trying to put these encrypted safeguards in place some
the government can't come in unless they have a very, very good reason.
And you heard David Cameron today sort of articulating the opposite view which is the view of Europe right now. They have a heightened sense
of concern right now and he wants those back doors open, he wants to be able to have access or have intelligence agencies have access to these
companies and their encrypted communications so they can listen in on terrorists and terrorist plots. My sense of it from listening to the
President today is he would like to find some sort of middle ground today although you didn't hear the President pledge to making that happen - not
just yet.
LAKE: Jim, they also talked about having, you know, cyber war game run-throughs - these two countries cooperating. How much is that
increasing? Do we have cooperation among countries? It seems to be something we haven't heard them talk publicly about before anyway.
ACOSTA: Right, no I think this is new territory, and what you heard the British Prime Minister and the President talk about at the onset of
this news conference was that they do want to engage in more cyber cooperation, they do want to set up these `cyber cells' as they're calling
them, on both sides of the Atlantic. These operations are basically going to be put in place to work with big companies, big banks to make sure that
they have those safeguards in place.
So it's sort of the opposite -- they're arguing for the purposes of guarding against cyberattacks like the one against Sony Pictures. And so I
do think we're going to see more of that here in the coming weeks and months, and you know, it was interesting, Maggie, as they were explaining
this to us, they sent out a fact sheet to us - to the reporters - who were waiting on this news conference. At the very bottom of that, it sounds as
if the folks at Cambridge have challenged the people at the - at MIT - to a sort of cyber hacking event, a competition where they might try to hack
into each other and through that competition, develop ways to better protect sensitive information. And so it sounds like both sides are
gearing up, and it might be something we could see spread elsewhere.
LAKE: It's extraordinary -
ACOSTA: It's certainly a big comfort for both countries.
LAKE: -- sounds like - sounds like a Hollywood script really, doesn't it, Jim?
ACOSTA: It does.
LAKE: I want to ask you the - what's likely to be the reaction from companies? We know vocally for a lot of their customers, they've been, you
know, talking very strong talk, and as you said, sort of moving ahead of the government saying they're going to protect their privacy. What do you
think's happening behind closed doors? Obama is traditionally somebody who had pretty good relations with Silicon Valley. Do you think the
administration is going to be able to bridge the gap and find that middle ground you mentioned?
ACOSTA: Well they're going to have the cyber security summit out in Silicon Valley next month, and so a lot of these topics are going to be
addressed there. No question about it, the tech community is very concerned about this effort that the Obama administration is now initiating
to really ramp up cybersecurity in this country, and they are concerned about this issue of how to go after these terrorists' plots and allowing
intelligence agencies to have back doors into these tech companies so they can snoop around. These tech companies don't want that. Why? And I've
talked to several officials inside these companies in the past when the Snowden issue arose. That is - it's bad for business.
LAKE: Yes.
ACOSTA: They don't want their customers thinking that the government can just come in at any time and snoop on people's smartphones and look at
their Facebook accounts and so forth. And so, you know, that is a very big prickly issue that he White House is going to have to deal with and we'll
hear a lot about that at that summit coming up next month, Maggie.
LAKE: We are - interestingly, I was speaking to a security analyst earlier though. He says there has been an awful lot of cooperation when
you look at areas like child trafficking, --
ACOSTA: That's true.
LAKE: -- so there is - there is some room in a recent precedent for them to work together if they can sort of maybe get beyond some of the
issues of the recent past that are dogging them. Jim, always great to catch up with you. Thanks so much. Jim Acosta.
ACOSTA: All right, you bet.
LAKE: It is an historic day for the United States' relations with Cuba. Americans are now able to travel to Cuba without first getting
government clearance. Travel booking website Orbitz expects to soon offer options for customers to get to the island just 90 miles south of the U.S.
border. The company's CEO, Barney Harford joins us now from Chicago. Thank you so much for joining us, Barney. This is something that you have
been lobbying for for some time. You have been in favor of a relaxation. What do you make of the changes? Do you think they go far enough?
BARNEY HARFORD, CEO, ORBITZ: We're very excited to see the new guidelines that the Obama treasury put out today. We think it's an
impressively rapid turn from Treasury in terms of the new guidelines. There's still a few components in there we're still trying to understand
exactly, but we think it's a very strong move from Treasury to simplify and liberalize the opportunities for Americans to travel to Cuba, so we're very
excited.
LAKE: We've already seen several airlines saying that they're going to, you know, put in applications for approval. What do you think demand
is going to be like?
HARFORD: You know, I think the intrigue of Cuba and the country that has been for over 50 years inaccessible to Americans, I think is extremely
high. So I think as soon as we are able to offer travel options to Cuba - and remember, if we look at the hotel groups that we already work with
around the world, they have 50 hotels in Cuba already today. If we look at the airlines, the hundreds of airlines that we offer on our sites around
the world, many of them already offered travel to Cuba.
So we think that once we get through these guidelines and get clarity on exactly what needs to be done in order to sell big travel to Cuba.
We're really excited about being able to open up this as a new destination for Americans and we think it'll be quite attractive.
LAKE: That's right. And of course it isn't for general tourism yet, but there are an awful lot of other ways people could get there. If the
demand is going to be high, I guess the question is, is Cuba ready? What should travelers thinking about it if they fit under these categories be
aware of when they go? This is in a country that has been blocked off/cut off from tourism investment in many ways for a long time, hasn't it?
HARFORD: Well I think the very important thing to remember is while Americans haven't had the ability to travel to Cuba and U.S. companies
haven't been able to facilitate travel to Cuba, the rest of the world has been traveling to Cuba without any hindrance. And so Cuba has got a well-
established tourism infrastructure and I think that when U.S. demand is able to be pointed at that, I think - it's not as if there's not a
readiness to welcome travelers. It will certainly be a change. You know, the U.S. market's a huge market and it's so close to Cuba, they'll have a
dramatic impact. And I think it's going to be a treat for the Cuban economy, for the Cuban people. But, you know, we shouldn't - we shouldn't
- we shouldn't be confused that there's not a tourism infrastructure in place already to receive - to receive travelers.
LAKE: Well it's certainly a time of many exciting changes. Barney, thank you so much for coming on tonight. Appreciate it.
HARFORD: Thank you.
LAKE: As the ties between the United States and Cuba normalize, the increased flow of money to the island should provide, as Barney just said,
a major boost to Cuban businesses. CNN's Karl Penhaul spoke two small businesses owners in Havana, and found two very different ideas about
Cuba's past to economic and social revolution.
(BEGIN VIDEOCLIP)
KARL PENHAUL, JOURNALIST: An economic shakeup is already underway. And now relations with the U.S. may be thawing, Cuba's emerging class of
private businessmen looks set to boom. Alain Rodriguez has been running his own restaurant called Waoo!! for just over two years.
ALAIN RODRIGUEZ, RESTAURANT OWNER, INTERPRETED BY PENHAUL: "The key to success is preserving the taste of Cuba - whether that's the taste of
the drinks and food or our taste for daily life," he says.
PENHAUL: Finding the right ingredients can sometimes be tough. Despite that, Rodriguez favors an orderly move to liberalization, not a
free-for-all.
RODRIGUEZ, INTERPRETED BY PENHAUL: "The rules for doing private business are in place. It's not worth trying to save a few pesos and
earning yourself a huge problem," he says.
PENHAUL: President Obama's proposed a four-fold increase in remittances sent by Cuban Americans to family here. That's partly intended
to bank vault (ph) new small businesses. A dollar influx and a growth in private enterprise will most certainly sharpen Cuba's economic class gap.
But Rodriguez believes economic reforms and better U.S. relations will not undermine Cuba's socialist political system.
RODRIGUEZ, INTERPRETED BY PENHAUL: "If salaries start to rise and more remittances come in, then great. If a family gets a better standard
of living, that's great too," he says.
PENHAUL: Across on the other side of Havana I'm going to bring you to a very different kind of private business. This one's a nail salon.
Indira Yero says she scrimped and saved for years to buy 500 shades of polish. She charges around $5 for high-gloss acrylic manicure. That's an
entire week's wage for a state worker.
INDIRA YERO, NAIL SALON OWNER, INTERPRETED BY PENHAUL: "I'm one of the capitalist generation. I've never worked for the state and I believe
that the capitalist generation is better than the others," she says. Above her, the sign Cuba's socialist dream may be fading - No cash, no nail do
(ph).
YERO, INTERPRETED BY PENHAUL: "All that business of Fidel and the revolution, it's a very pretty story but it's got nothing to do with now.
Young people want to go to good places - a disco, all expenses-paid hotels, and with a state salary, you just can't do that," she says.
PENHAUL: Neither Yero nor her clients really know what to expect from the warming in U.S./Cuba ties.
MIRNA MOLINA, CLIENT, INTERPRETED BY PENHAUL: "Ever since I was born, they've been normalizing one thing or another, but everything stays the
same," this woman says.
YERO, INTERPRETED BY PENHAUL: "Raul and Obama might have talked about a lot of things, but for ordinary people, everything's just the same - one
day good, one day bad," she says.
PENHAUL: But with every day that passes, she's waging a private battle against the system one nail at a time. Karl Penhaul, CNN Havana.
(END VIDEOCLIP)
LAKE: Nigeria's central bank is forced to act as its currency drops to record lows, all of this amid the backdrop of devastating violence from
Boko Haram. We'll have an exclusive report from Nigeria after the break.
(COMMERCIAL BREAK)
LAKE: The Central Bank of Nigeria has been forced to intervene after the nation's currency fell to an all-time low. The naira recovered
slightly after the bank sold off some of its dollars. As low oil prices are putting pressure on the Nigerian economy, the naira has been sent into
a slump against the dollar. Nigeria is also struggling with unspeakable violence from Boko Haram militants in the north. Chad is to send a large
number of troops to Cameroon to help the country fight Boko Haram. The militant group has made a number of incursions into Cameroon from Northern
Nigeria in recent weeks.
Meanwhile, in Nigeria, almost a million people have been displaced and ten million have been affected by Boko Haram violence. These are the areas
where Boko Haram is now in control as well as the areas where there is currently a state of emergency in effect. Our senior international
correspondent Nic Robertson has been speaking to some of the young victims of these attacks. He filed this exclusive report from the city of Jos.
(BEGIN VIDEOCLIP)
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Early morning and it's cold. Boko Haram's latest victims are fending for themselves.
Lydia (ph) lost her parents a month ago when Boko Haram attacked her village.
LYDIA (ph), BOKO HARAM VICTIM: We are running to mountains. They are following us and they are killing us. They got my mother and my father.
Some of them they are saying they killed our mother and our father and we start crying.
ROBERTSON: A hundred and eighty children crowd into this compound -- for now, sanctuary from Boko Haram's daily attacks. Like Lydia (ph), many
are orphans, witness to what no child should ever see.
LYDIA (ph): Killing people, slaughtering people.
ROBERTSON: You could see all this?
LYDIA (ph): Yes, they killed one person in our house.
ROBERTSON: Her new friend Esther (ph) from another village has a similar story.
ESTHER, BOKO HARAM VICTIM: On Sunday in the church -
ROBERTSON: She continues in her own language. -- "they showed up after church service one Sunday last July, opened fire, killing people.
Everyone ran. I don't know what happened to my parents." Esther (ph) is 18 and Lydia 16. They're some of the oldest here, have responsibilities
like cooking for the other children. They don't get government handouts, and there is no international aid agency helping them. Both are struggling
to understand their changed lives.
Lydia (ph) tells me of nightmares, crying, not being able to eat. What is all too clear to them now is they won't be going home any time
soon. She cries -
LYDIA (ph): Because of Boko Haram, they are killing us now. We don't have food to eat, we don't - they are slaughtering people and we run.
ROBERTSON: Only God, they say, can help them now. Nic Robertson CNN, Jos, Nigeria.
(END VIDEOCLIP)
LAKE: And we'll be back with more in just a moment.
(COMMERCIAL BREAK)
LAKE: We've seen tonight how financial firms across the world have been forced into huge losses or even bankruptcy by the Swiss Central Bank's
decision to scrap its cap on the franc on Thursday. In Poland, lawmakers are now calling for urgent action to help borrowers who can no longer pay
off their mortgages. Many people in Poland have taken out loans denominated in Swiss francs. After the franc surged in value, the size of
those loans has in some cases more than doubled overnight. One homeowner explained just how bad the situation had become.
(BEGIN VIDEOCLIP)
Female, VIA INTERPRETER: The property I own is worth 250,000 zloty and the loan I have to pay off for now is worth 550,000. I already paid
back 100,000. I am not able to sell the property and pay off the debt at the same time. This is just impossible unless the government interferes
with the currency exchange.
(END VIDEOCLIP)
LAKE: One Polish lawmaker is now proposing that borrowers can use the old exchange rate to pay off those loans. He described this whole event as
an earthquake for markets. That is it from "Quest Means Business." I'm Maggie Lake in New York. Richard will be back on Monday live from the
World Economic Forum in Davos. Have a great weekend.
END
