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Quest Means Business
Obama Signs Cyber Security Order; Executives Begin to Tackle Cyber Threat; Dow Over 18,000; "No Political Motives" at ECB; European Growth Beats Expectations; Scuffles Over South African Spending Scandal
Aired February 13, 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: Strong session for the Dow. It is now over 18,000, as you can see. Man about to hit the gavel. A slightly wimpy
gavel to bring trading to a close. We like a big hefty gavel, particularly on a Friday when the S&P is at a record on Friday, it's the 13th of
February.
Tonight, Tim Cook and Barack Obama teaming up to fight cyber crime. I'll be talking to the special agent at the secret service.
Also, the vice president of the European Central Bank, the ECB, on this program says we're not trying to put pressure on Greece.
And crisis. What crisis? Well, look at the numbers. Wall Street hits fresh record highs, but what's behind the gains?
It may be Friday, but I'm still Richard Quest, and I still mean business.
Good evening. Tonight, action at the highest level to tackle one of the biggest problems in corporate world, whether it relates to computers or
smartphones or, indeed, BlackBerrys. Yes, I still have one of those. Whatever it involves with, today, President Barack Obama says dealing with
the threat of cyber attacks requires unprecedented cooperation between government and industry.
The US president was speaking at the birthplace of some of the world's biggest tech companies. He was at Stanford, California. And his words
were echoed by Apple's chief executive, who says cyber attacks affect all of us.
(BEGIN VIDEO CLIP)
TIM COOK, CEO, APPLE: The personal impact of these security breaches can be devastating. By clicking on the wrong link or simply using your
credit card, too many people have had their identity stolen, their finances threatened, and their lives turned upside down.
(END VIDEO CLIP)
QUEST: And that is the hallmark of cyber security. The US president finished his speech by signing an executive order which will lead to more
information on cyber attacks being shared between tech companies and the government. That in itself is a controversial issue. Mr. Obama said it
was the only way cyber attacks could be beaten.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There's only one way to defend America from these cyber threats, and that is through government and
industry working together, sharing appropriate information as true partners.
(END VIDEO CLIP)
QUEST: The problem, of course, is just how you go about protecting all this equipment from those who want nefarious means. Well, the order
president signed is meant to get companies talking to each other and to the government. These are some of the major points.
It sets up "hubs" for the parties to share information. The information goes from the companies to the government, and then out through
the hubs, a spoke-and-hub situation, then goes on. The administration insists that the order isn't a substitute for proper legislative,
congressional action. In other words, the US Congress needs to do more.
But what he was at pains to point out, that this is the bridge, the divide between Washington and Silicon Valley. And to repair the damaged
relationships that have been there for so long, particularly following the Snowden leaks, the WikiLeaks, the NSA leaks.
Well, tech execs have been at odds with the White House over government spying. Even though the summit was held in the heart of Silicon
Valley, some tech CEOs were very thin on the ground. The heads of Yahoo!, Facebook, and Google, they were not there. Instead, they sent their top
security personnel.
But the absence of such big names led into question the usefulness of such a meeting. I spoke to Ed Lowery about all of this. He's the Secret
Service special agent in charge of criminal investigations, and he says cooperating with the US government is the best way to tackle cyber crime.
(BEGIN VIDEOTAPE)
ED LOWERY, US SECRET SERVICE: Our operations in criminal law enforcement where we are successfully investigating and apprehending the
highest level of cyber criminals wherever they may be in the world is better informed with collaboration and cooperation of the private sector.
And conversely, the information we derive from those investigations, and when we can give that back to the private sector, they can help us
prepare them and their defensive technologies as they build out the next generation of infrastructure.
QUEST: One of the issues, of course, is going to be this executive order that the president will announce and will sign, and that goes to the
heart of this information sharing between the private sector and the government. How important is this development?
LOWERY: Again, the Secret Service has a long history of working collaboratively with our partners. The method we have historically
utilized has been our electronic crimes task force model. That is based specifically in information sharing.
I was in a meeting yesterday with industry leaders and other government officials, and it was very enlightening, because it actually --
some of the information we were thinking we were providing to the private sector wasn't as usable as we would have liked it to have been.
But having that opportunity to sit down, actually discuss the method and the actual information they need will help us provide them a better
product coming from the government.
QUEST: To the viewer watching tonight who says, yes, heard all this before, safeguards which didn't work in the past, actions which have found
to be unsavory, what would you say? Why should anyone trust government and the private sector to work within a framework?
LOWERY: I believe everyone recognizes that it has to be teamwork. No one entity is going to fix the -- or cure the problems that come from the
illicit use of the Internet to commit crimes or to commit espionage. It has to be a team effort.
And I believe we've reached a point in our evolution of the collaboration where that's actually becoming apparent and is starting to
really take hold.
QUEST: Finally, as I look at this, there's hardly anybody, myself certainly included, who's not either been alerted that their data's been
hacked or that they've been the victim of an attempt or something. Are we -- this is a hard one in many ways, Mr. Lowery, but how -- who's in the
lead at the moment, the bad guys or the good guys?
LOWERY: Well, I believe it depends on who we're actually going to be discussing. I believe there's plenty of cyber criminals that are currently
sitting in prison or in the process of on their way to prison who would tell you that they lost.
Are there other individuals out there that we are still investigating and we will be successful against? Absolutely. But again, it's -- there's
never going to be a 100 percent answer that makes it impossible to commit crimes via the Internet. The responsiveness and the ability for us to
adjust our defenses in a unified manner is going to probably pay off in the long run.
(END VIDEOTAPE)
QUEST: When you hear the US Secret Service talking like that, you know there is a problem that needs to be attacked. And a series of high-
profile hacks over the past year has exposed exactly the risks. Just look at the companies involved.
The targets are individuals, banks, shops, and the virtual infrastructure, and the attacks come from governments, it comes from lone
hackers. It's involved in Target, Sony Pictures, JPMorgan Chase, Anthem, eBay, just a few of the big companies that have been hit. And when you
hear the chief execs of these companies talking about their hacking experience, you know it's time to take it seriously.
(BEGIN VIDEO CLIP)
AMY PASCAL, FORMER CHAIR, SONY PICTURES ENTERTAINMENT: There was this horrible moment where I realized there was absolutely nothing at all that I
could do about whether I had hurt people, whether I'd betrayed people, whether I'd said things that I didn't mean. I couldn't protect anyone.
ANTHONY JENKINS, CEO, BARCLAY'S: There's no perfect defense against hacking, so you have to be better than the other people who might be
targets.
DAVID DEWALT, CEO, FIREEYE: Now really, a new era where we're seeing not just sabotage but really almost a terroristic type of cyber attack in
the form of Sony. And we're starting to see that as a harbinger for the future.
JOHN CHAMBERS, CEO, CISCO: The bad guys, whether it's nation states or organized crime or just people, hackers, that enjoy disrupting things
are ahead of the game. We have to get back ahead of them.
DENNIS NALLY, CHAIRMAN, PRICEWATERHOUSECOOPERS: It's a real issue for businesses, and I think we're just beginning to see the risk associated
with that. The whole issue around risk, how do you manage this risk, the investments that are being made around systems from a security standpoint
is at an all-time high, from our perspective.
(END VIDEO CLIP)
QUEST: When we have issues like this that we need to understand, Shelly Palmer is the man who we turn to, the host of "Digital Living."
Shelly, so, this summit has -- look. We can agree that this is one of the biggest issues for all chief execs and corporations to deal with.
SHELLY PALMER, HOST, "SHELLY PALMER DIGITAL LIVING": For everybody, not just them. Everybody in the whole world.
QUEST: Right.
PALMER: Yes.
QUEST: Reputational, financial --
PALMER: Everything.
QUEST: Everything. But you don't believe this sort of summit does any good.
PALMER: I wouldn't say I don't believe it does any good. Actually, I'm -- I would applaud loudly the government's willingness to try and get
everyone together. The problem they're having is that nobody can actually agree on what should be done.
The frameworks they're proposing are kind of like the same frameworks they've been proposing. The sharing of data is the sharing of data that
they've voluntarily had for a while. So to say I'm going to --
QUEST: But post Snowden and NSA and WikiLeaks, that sharing has become extremely suspicious. And many of the companies -- Verizon, AT&T --
have all litigated to stop sharing information.
PALMER: Correct. And the reason is, there's somewhere we're living between what the actual problem is and what the perceived problem is.
If you wanted to assess risk here appropriately, you have to understand that we on the Internet, all of us, live in a glass house with
no door locks, with the lights off, nobody's home, and all of our possessions are in full view. That's about the amount of security you have
online.
Big corporations have a fiduciary responsibility to safeguard their information. They do their best. The problem we're trying to solve for
right now is how does the government know when we are under attack if a cyber terrorist, or a cyber war starts?
And they go after the biggest corporations or the biggest financial institutions to do the most harm, will those corporations then tell the
Pentagon, hey, we're under attack? And the answer is, if they don't, we don't actually know.
QUEST: Right. But they have to be -- then, the government has to provide some form of --
PALMER: Correct.
QUEST: -- indemnity, some form of release for those companies so that they can basically come clean.
PALMER: This is such a complicated issue, such a non-sound-bite issue because the Pentagon has a mandate, the government has a mandate to protect
us, right? We have a government. We live in a republic, we elect our leaders, and we want protection.
Corporations are the first line of defense in a cyber war. The government's networks are separate from our Internet. The government's
networks are actually much more secure and separate from the public Internet that we're on.
Our Internet is completely open. And so, where these things intersect, there are real issues, and they must be dealt with in a very
subtle and thoughtful way.
QUEST: Subtle and thoughtful, they're not two things that usually go together with government and corporations.
PALMER: No.
QUEST: Final point. As I said to the -- the head of the Secret Service cyber security, the agent in charge, I said to him, is it
inevitable that we're just going to get more and more of these hacks and more and more of release of information?
PALMER: Head of the FBI and a lot of other people have said the following, I will paraphrase. There are only two kinds of companies on
planet Earth, companies that have been hacked, and companies that do not know they have been hacked. That's the story.
It's not going to get better until it gets a lot worse. Richard, we just have to keep trying to fight the good fight and applaud the government
for doing so.
QUEST: OK, finally, have you ever been hacked.
PALMER: Absolutely.
QUEST: Even Shelly Palmer?
PALMER: Even Shelly Palmer.
QUEST: Even Shelly Palmer!
PALMER: Even Shelly Palmer. It happens all the time.
QUEST: Thank you very much, Shelly.
PALMER: All right, we'll see you soon.
QUEST: Thanks very much, indeed. Right.
PALMER: Yes.
QUEST: As Shelly heads off and leaves us, we go to look at the super screen, and you see the Dow Jones is up 46 points, 18,019. It's the second
straight day of gains for stocks. The Dow is back over 18,000.
Over here, you'll see the S&P 500, it's at a record close. That's the one-year limit, so you can already see there, if you look at it over the
last three months, it's been a pretty solid gain for the S&P, the broader market, and all others, too. Even the NASDAQ managed to eke out a gain.
Now, to CNN Money digital correspondent Paul La Monica. Where Shelly Palmer was, Paul now appears.
(LAUGHTER)
QUEST: The magic of it all, sir.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Thank you.
QUEST: Good to see you. What's driving this market higher?
LA MONICA: Hopes that we're not going to have the worst-case scenario in Greece, that's definitely one thing. I think the Ukraine cease-fire is
helping as well. But we've had some pretty decent earnings from tech companies. Cisco a couple of days ago, Apple. And I think people are
optimistic about that.
You talked with Shelly about cyber security, cyber security stocks soared today. They are loving this environment that we're in right now.
(LAUGHTER)
LA MONICA: There's even an ETF that's called "HACK."
QUEST: Really?
LA MONICA: Yes.
QUEST: That's a good one to get in on.
LA MONICA: H-A-C-K, and it's at an all-time high as well. It's only a few months old.
QUEST: All right, so, Cisco on the program the other day, he basically said there is a robustness there in his earnings, and there is a
confidence out there.
LA MONICA: I think you're starting to get this sense that people are a little bit more optimistic about the US. We saw decent jobs growth again
in January, wage growth picking up as well. But the big problem is that no one in their right mind thinks that Europe is solved and that Europe is
saved.
QUEST: That's the problem.
LA MONICA: China growth is slowing as well. And then also, we're now on a seven-year, almost, bull market. The bull -- stocks have never gone
up seven consecutive years. We've had six years in a row, now. So, history's not on the bulls' side right now.
QUEST: Oh, no, you're -- you're starting to sow a seed of doubt --
(CROSSTALK)
LA MONICA: A downer. A downer --
QUEST: A downer on a Friday.
LA MONICA: -- heading into the long weekend, yes.
QUEST: Have a good weekend, sir.
LA MONICA: Thank you, you too.
QUEST: When we come back, there is fighting in the east, a debt crisis in the south, and an economic boom in the middle. European growth
rebalances itself.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: The negotiations between the eurogroup and Greece will continue, and the vice president of the ECB says that the bank has no
political motives behind its conduct towards Greece.
The European Central Bank has offered more emergency funding to Greece banks after previously announcing tighter rules on liquidity. In an
exclusive interview, I asked Vitor Constancio if the ECB's recent actions, whether they are technically correct and in the law, their recent actions
have put more pressure on Greece.
(BEGIN VIDEOTAPE)
VITOR CONSTANCIO, VICE PRESIDENT, EUROPEAN CENTRAL BANK: We have followed our rules that were known long before. If you are referring,
indeed, to the decision that we took to abolish the waiver on the Greek debt. But the conditions to do that were already defined in our public
policy.
And at the same time that we decided that, we also decided to increase the liquidity assistance to the Greek banks so that there were no very
significant effects of the decision that we had to take about the acceptance of Greek sovereign debt for normal monetary operations.
QUEST: How concerned is the ECB that if there is not a political settlement between Greece and the eurozone group that you could be facing a
full-scale run on the banks in Greece?
CONSTANCIO: We are concerned, of course, with the situation, as everyone, I'm sure. But what I can say, and it's important to underline,
is that any fundamental decision that will impinge on the end result of the negotiations that are ongoing will have to be done by the governments of
the euro area, by the eurogroup, and not by the ECB. So, that is to be very clearly understood.
Fundamental decisions that may have consequences for the participation of Greece in the euro area will have to be taken by the proper political
authorities.
QUEST: Does the ECB fundamentally believe that Greece has to stand by its existing obligations and commitments given to the Troika?
CONSTANCIO: Well, that is what is being discussed, of course. And there are always points that can be subject to trade-offs. If this measure
can be substituted by another measure, what is then important is the assessment of the policy on its effects on not only the repair of the Greek
economy, but also on the long-term debt sustainability.
So, it's an assessment that allows some changes that have nevertheless to be appropriate for the fundamental goals that are being pursued for the
future of the Greek economy.
(END VIDEOTAPE)
QUEST: The vice president of the ECB. And on Monday, you'll hear his views on why it took so long for them to decide to start the printing
presses on QE.
Amid the chaos in Ukraine and the controversy in Greece, Europe's economy is growing faster than expected. Join me at the super screen and
you'll see what I mean. GDP rose 0.3 percent in the euro area, according to the latest numbers.
But don't be fooled. The whole euro area may be growing strongly, but the numbers themselves underneath, they lay bare the divisions between the
haves and the have-nots at the moment.
Take Germany's growth. Germany's growth at the moment is much better than expected. It's supported by exports, it's supported by consumer
spending, and in Q4 -- remember, the US does it on an annualized basis, Europe does it on a Q by Q basis -- it grew as fast as the US at 0.7
percent.
And that, of course, is likely to be helped even more by the weaker euro, which increases the ability of the export machine, of which Germany
is prima inter pares.
Now, if you want to look at the other side of this equation, then we look at Greece. This was the number from Greece. Growth there went
negative. It was down 0.2 percent, and it was one of the three countries that contracted.
Now, that may help the Greek government in its argument that austerity isn't working. But whichever way you put it, the two protagonists in this
battle, Greece and Germany, are at absolute opposite extremes in the current debate over growth.
Joining me now, Paul Mortimer-Lee is the chief economist for North America at BNP Paribas. Paul, good evening to you.
PAUL MORTIMER-LEE, CHIEF ECONOMIST FOR NORTH AMERICA, BNP PARIBAS: Good evening, Richard.
QUEST: Well, I mean, there it is in a nutshell, isn't it? Germany storms ahead, Greece is in the doldrums, and the two main protagonists
don't agree. How worried are you that an agreement gets done?
MORTIMER-LEE: No, I think we are going to get an agreement. I think there was clearly progress between the finance ministers. An agreed
statement was blocked was Mr. Tsipras, I think, essentially over the wording of the statement. So the markets feel that we are heading to a
satisfactory conclusion, and I think that's the most likely outcome, certainly.
QUEST: What does that agreement look like? Because the core point is getting beyond February the 28th in this interim period while a whole deal
is fleshed out.
MORTIMER-LEE: Yes, well, I think there were three elements that Greece will get, essentially. One is lower interest rates on the debt they
owe to the Europeans. Secondly, lengthened maturity. And thirdly, a reduced ambition for the target for the budgetary surplus that they must
meet.
So, effectively, less austerity is what will be offered to Greece. It's not as much as they wanted, but I think it's as much as they're going
to get.
QUEST: And if they get that, do any of the others come back? I mean, Ireland is out of its program now, but do any of the others come back and
say, hang on, we was robbed?
MORTIMER-LEE: No, I don't think so. I think there is willingness to be flexible with the Greeks on the part, for example, of the Spanish. And
I think the Spanish will say to the Greeks, look, we took our medicine and our economy grew as fast as Germany in the fourth quarter. If you take
your medicine as well, you can get much better growth.
So, I think the point that you were making earlier that austerity is killing Greece, well, Spain took its medicine, did the structural reform,
and now is growing as fast as Germany, and I think the Europeans will be saying, please, Greece, do the same.
QUEST: Finally, I don't know whether you heard our discussion with the vice president of the ECB, he says there are no political motives
behind their decision to restrict lending our access. Now, obviously he's right and no political motives, but it's not very helpful of the ECB, is
it?
MORTIMER-LEE: Well, I don't think the ECB can say to Greece, look, you can have absolutely unlimited liquidity from the European Central Bank
with no conditionality. They haven't done that with other people, and they haven't done it with Greece.
But the ECB cannot pull the plug on Greece. I think what Mr. Constancio said was really it's way above his pay grade and above Mr.
Draghi's to make essential existential decisions about Greece. That's up to the politicians, to Mr. Tsipras and to Angela Merkel in particular.
QUEST: Sir, have a good weekend. Thank you for your perspective. Thank you.
MORTIMER-LEE: Thank you.
QUEST: There were chaotic scenes in Cape Town. A spending scandal that's created an almighty rumpus in South Africa's parliament.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: In South Africa, several opposition politicians have been forcefully removed from parliament after scuffles erupted on Thursday. It
all happened when a member of parliament demanded answers from the country's president over a spending scandal. CNN's Diana Magnay has the
details.
(BEGIN VIDEOTAPE)
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): With cell phone signals jammed, there was fury in the parliament before proceedings
had even begun.
MMUSI MAIMANE, LEADER, DEMOCRATIC ALLIANCE PARTY: We state your rule, Madam Speaker, that we must proceed with the cloaking device on. We will
challenge that ruling in parliament and, if it needs be, we will take this parliament to court.
(APPLAUSE)
MAGNAY: The signal restored, the president took the podium, but not for long.
BALEKA MBETE, SPEAKER, SOUTH AFRICAN NATIONAL ASSEMBLY: Honorable President, I'm sorry to interrupt your speech. If the president would not
mind just taking his seat so we can listen to this --
GOODRICH GARDEE, ECONOMIC FREEDOM FIGHTERS PARTY: Thank you.
MBETE: -- honorable member's point of order.
MAGNAY: The question the opposition Economic Freedom Fighters Party had promised they'd ask.
GARDEE: May we ask the president as to when he is going to pay the money in terms of what the public protector has paid?
MAGNAY: The money refers to the $20 million spent on so-called security upgrades to Nkandla, the president's private residence.
(SHOUTING)
MAGNAY: With the EFF refusing to back down, everyone of the party's lawmakers was bundled out of the building by plainclothes security.
MBETE: Members of the NCOP, take your seats! Take your seats!
MAGNAY: Parliament feed stayed on the speaker, but other cameras caught the ugly scene.
(SHOUTING)
MAGNAY: Shortly after, members of another opposition party, the Democratic Alliance, left, too, in protest at the use of force inside the
parliament. Those still inside left to bemoan the sorry spectacle of their nation's democracy.
MANGOSUTHU BUTHELEZI, FOUNDER, INKATHA FREEDOM PARTY: I think what we have seen today is disgusting. I think our country is really being torn to
pieces, and I think that this sort of collaboration didn't take place for people to play the fool like this with their country.
(APPLAUSE)
MAGNAY: The president appeared to take it lightly.
JACOB ZUMA, PRESIDENT OF SOUTH AFRICA: Let me start where I was interrupted from.
(LAUGHTER)
(APPLAUSE)
MAGNAY: But outside, battered and bruised, the EFF swore they'd stay a thorn in his side.
JULIUS MALEMA, LEADER, ECONOMIC FREEDOM FIGHTERS PARTY: We are going to continue holding this executive accountable. We are going to be part of
this parliament, we are not going anywhere. We'll continue to raise our issues without fear of anyone.
MAGNAY (on camera): South Africa has serious issues to address, from very high unemployment to a failing electrical power system. Many South
Africans watched their parliament descend into chaos with a degree of resignation that EFF had said that it would kick up a fuss, and that's
exactly what it did.
But there is also a sense of disappointment. This is not the image of democracy which so many in this country fought so hard to build. In the
nation's media, Thursday debacle in parliament was dubbed "this country's shame."
Diana Magnay, CNN, Johannesburg.
(END VIDEOTAPE)
QUEST: Wilbur Ross made billions by betting on failing banks during the European financial crisis. Now, these days his portfolio suggests he's
quite bullish on the Greek economy. How bullish is Wilbur Ross? After the break.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment. When the billionaire investor with a massive stake in grace
will be talking to us - Wilbur Ross on this program. And the chief exec of Hublot Watches tells me how his company's weathering the crisis and the
chaos of the Swiss franc. Before you hear from them, you're going to hear the news because this is CNN and on this network the news always comes
first.
There's been more fighting in Eastern Ukraine before the start of a cease-fire agreed in Minsk on Thursday. Ukraine's defense ministry reports
eight soldiers were killed and nearly three dozen wounded in the past day. The truce is due to start early Sunday morning.
At least 19 people were killed when Pakistani Taliban attacked a mosque in Peshawar. Evening prayers were just coming to an end. The group
blasted their way in with two suicide bombs and then opened fire with guns and grenades. Taliban later described the attackers' retaliation for the
government's execution of a militant commander.
Iraqi security forces foiled an attack against the largest base in Anbar Province. Eight suicide bombers were killed. The attack came after
ISIS fighters seized the nearby town of Al- Baghdadi. A U.S. defense person says there are no plans to evacuate the American personnel from the
base.
Argentina's federal prosecutor wants a judge to authorize an investigation into the country's president. Cristina Fernandez de Kirchner
was accused of covering up Iran's involvement in the bombing of a Jewish community center in 1994. The president denies all the accusations against
her.
Turbulence ruled the week for Greek stocks. And if you look at the ups and the downs - down four, up seven, down four, up six - all the ups
and the downs - by the time the week was over, the Athens composite was up nearly 11 percent and actually touched a two-month high during the final
session.
But what a rollercoaster it was. The week ended without any deal between Greece and its troika of creditors. But the rally that finished
this week off towards this Friday suggests invests are optimistic there will be a compromise. After all, why get an 11 percent gain with so much
uncertainty even from low levels? Wilbur Ross is a man whose investments in failing banks during the crisis made him a seriously rich person. He's
also optimistic about Greece.
He made that clear last summer when he led an investment of $1.8 billion in Eurobank, one of the Greek banks bailed out. Eurobank shares
climbed today. They're down 55 percent since Ross invested last April. Wilbur Ross joins me now from Boynton Beach in Florida.
And, sir, it is - we're honored to have you on the program, sir. Thank you for taking the time.
WILBUR ROSS, CHAIRMAN AND CEO, WL ROSS & CO.: Well I'm glad that you had me on.
QUEST: Mr. Ross, do you think a deal is going to be done and if so, how much more pain are you going to have to suffer before it's done?
ROSS: Well first of all, I'm glad that the week's trading doesn't resemble my EKG, because if it did --
(LAUGHTER)
ROSS: -- I'd be in very serious condition. Now, more seriously, I do think the deal will be done. It may or may not be done by Monday even
though they're working quite feverishly over the weekend to do it prior to the finance ministers' meeting for the E.U. on Monday. Next possible
deadline would be the 18th - that's when the European Central Bank -
QUEST: Right.
ROSS: -- has its next governing council meeting. And it would take a 2/3rds vote of that council to veto the emergency liquidity assistance to
Greece. So that's another benchmark -
QUEST: All right.
ROSS: -- that they'd have to get through.
QUEST: Do you -
ROSS: But I'm convinced -
QUEST: -- go ahead - please, after you, sir.
ROSS: -- but I'm convinced that at least by the 28th, there will be a deal reached. And I think it's fairly clear what the general outlines of
the deal might be. I think there'll be some combination of either rollover of some of the existing official debt which is about 80 percent of Greece's
total -
QUEST: Right.
ROSS: -- or a commitment to lend more money to Greece because Greece has a liquidity problem as a country.
QUEST: Do you -
ROSS: So that'll be one case.
QUEST: -- let me just jump in there, sir, because one of the issues of course is being a large scale investor, I think perhaps you - you're -
reported as saying perhaps larger than you might have wished. Do you regret your significant stake which is now substantially reduced in value?
ROSS: Well first of all, it's a smaller proportion of the portfolio now, so it's less of a problem.
QUEST: (LAUGHTER).
ROSS: But much the same thing happened to us when we went in to Ireland. Within a very few days after we bought into Bank of Ireland at
ten euro cents a share, it went down to 8 cents. So, we're used to there being short-term disappointments when you're in the midst of a massive
turnaround. So that doesn't shock me to any great degree.
I think the difference here is we have a specific event that needs to be resolved, and that is the course of relationship between the troika and
the Greek government going forward.
And I believe one of the things that will happen is you won't hear the word 'troika' anymore. Troika has become a very dirty word in Greece and I
would wager that is part of any deal the Greek government would require that it be called something other than -
QUEST: Right.
ROSS: -- the troika.
QUEST: sir, we thank you for your time this evening. We will - we will talk to you more, longer -
ROSS: All right.
QUEST: -- after the deal is done, if you'll come back, and you may be - your investment's looking a little looking a little more healthy.
ROSS: Well I'm come back either way.
QUEST: Lovely. We're grateful to have you, sir. Thank you very much indeed. Now, for the first time in 2015, the price of Brent oil has
scraped and clawed its way back above $60 a barrel. Come and have a look and you'll see. We were at $104 middle of last year, but look at the way
it's just - has come back up again over $60. It ticked up nearly 4.4 percent since Friday and it's fallen now to $57. It's still a long way
from the highs the oil prices are down from $115 a barrel last summer.
Caterpillar is expecting a tough year ahead. Cheaper quantity prices - particularly things like Brent crude or crude oil means oil producers and
coal miners could spend less on construction equipment. And don't forget, on the other hand, it's a real two-way street because whilst the oil
company may spend less because of this, other companies of course are spending more as low oil prices provide a boost to the U.S. economy as a
whole.
Put this all together and you'll see that the bosses are admitting low oil prices do provide a boost to the economy as Poppy Harlow asked the
chief executive.
(BEGIN VIDEOCLIP)
DOUG OBERHELMAN, CEO, CATERPILLAR: Frankly, I don't have a clue. We've seen forecasts from $20 a barrel next week to $80 a barrel next
month. What we're trying to do at Caterpillar is make sure everything we do inside our four walls can handle $20 or $80 or whatever it is. It's
hard. Fracking is going to come - new fracking is going to come to a screeching halt.
POPPY HARLOW, JOURNALIST FOR CNN: Here's the thing, though. A lot of the building and big construction projects cost less when oil is cheaper.
So you would think that it might be good for you in that respect. Has it been?
OBERHELMAN: Great point, and we will see and we are starting to see in the U.S. anyway, the benefits in some of our sectors with the cheaper
oil price - imagine asphalt prices. The asphalt today is not quite half of what it was a year ago with the big drop in oil price. But imagine a
government - a city government, municipal government, state government, federal government - strapped for cash and all of a sudden they can put -
pave - twice as many streets.
HARLOW: Looking outside of Caterpillar and the business you run, as a U.S. citizen is cheaper oil good or bad for the U.S. economy long-term?
OBERHELMAN: I can't imagine how a 2 percent interest rate and mortgage levels where they are today and $2 to $2.50 gasoline will be bad
for our economy. Now there's going to be a transition - city of Houston, North Dakota, parts of Pennsylvania are going to go through this adjustment
as we always have with ups and downs in oil. But everybody else just had this huge stimulus provided to their - in their lap - that no Federal
Reserve bank has ever been able to do.
HARLOW: When you hear the narrative that China is slowing -- and watch out the Apocalypse is coming - when you see 7.4 percent growth in
2014 - the lowest they've had in many, many years - do you think that's misguided?
OBERHELMAN: I'm hoping for a slowing economic growth rate that's managed through a transition period. Double-digit growth rates were great
for 20 years, but it can't sustain itself for 100 years. So I would say that we see 7 - 5 to 7 percent - for a few years and probably down to 3 to
5 then - 5, 10, 20 years out.
HARLOW: That's extreme.
OBERHELMAN: Not at all. Not at all. We still have a billion two, a billion three people there - they don't want to live like we do. So I
think over time it's going to be a fantastic market, but they are learning to adjust the cycles like the rest of us.
(END VIDEOCLIP)
QUEST: Caterpillar learning to adjust for cycles, but what about if your company suddenly had to face a 25 to 30 percent change in its cost
base? It's the very thing that's hitting Swiss companies as a result of the sharp appreciation in the currency.
And after the break, the chairman of Hublot who makes very expensive watches tells me how it's handling the crisis. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: The chief executive of Hublot says his watch company will have to be more creative and more efficient to deal with the higher costs after
the Swiss National Bank that the franc float freely. Foreign buyers currently have to pay around 22 percent more for the Swiss watches since
the S&P gave up the virtual fixed exchange rate with the euro that happened a month ago - you'll be well familiar with it.
Which is all fair enough, but when your cheapest product is $23,000 and your most expensive is $5 to $10 million, then you've got a real
problem in terms of your clients. I spoke to Hublot chairman Jean-Claude Biver about the currency impact and I wanted to know how he feels about
technology watches taking off. After all, he has a very traditional market.
(BEGIN VIDEOCLIP)
JEAN-CLAUDE BIVER, CHAIRMAN, HUBLOT: You know an expensive watch is usually a piece of art and it's a part of eternity. Because an expensive
watch that is made by hand will be repairable in thousand years. While a technological watch will be obsolete in probably five.
QUEST: Right, but some of your brands - some of them - which ones will you put -
BIVER: TAG Heuer -
QUEST: Right.
BIVER: -- will be the brand that will go into the connected watch.
QUEST: Are you going into this connected watch willingly or are you going in kicking and screaming because you have to?
BIVER: Great question because it's the second. We go into it because we don't really know where this train is going. And we say if we sit into
the train, we know better where we go than when we stay at the railway station.
QUEST: I saw the Galaxy - the Samsung version of the watch and I saw it demonstrated when I was in South Korea last week. There'll be a market
for it. But it's not a watch, is it?
BIVER: Yes -
QUEST: It's not a watch.
BIVER: Yes, it's not a watch. It's an instrument for the wrist. So what? Where is the emotion? Where is the soul? Where is the eternity?
You can wear the watch of your father that he got in the 40s from your mother when he became fiance. That is an emotion, that is eternity. The
connected watch in 20 years nobody will ever wear it.
QUEST: Except I don't wear my father's watch or my grandfather's watch because they're too valuable now. And you don't like to have it on
the wrist -
BIVER: Understand.
QUEST: -- and that's a challenge, isn't it?
BIVER: Yes, it's a challenge but at least you can keep it at home, you can look at it and it works and it's alive.
QUEST: How bad is the rising Swiss franc now hitting you?
BIVER: We have no choice than to have very efficient structure. We have no other choice than to have a fantastic creativity, innovation. We
have no choice than to find how can we -- certain contracts that are made now in Swiss franc - how can they be transformed. Look, we have no choice
other than organization, productivity and creativity.
QUEST: Ultimately though, that difference in foreign exchange either has to be passed on to the customer or you have to eat it yourself. Yes,
which is it?
BIVER: The two. The two. We cannot pass on to the customer 25 percent as you said. We can pass on 8 percent maybe, and then we can save
to our structure another 8 percent and the last eight percent we might lose. All our competitors are Swiss. So we all have to increase the
prices. The Swiss machine industry, the Swiss biotech industry - they have competition from the Germans, they have competition from the Italians. And
they have a big price gap between the machine coming from Italy or Germany and Switzerland.
QUEST: Why are you opening a flagship store in New York other than vanity?
BIVER: It's the vanity of New York, it's the vanity of Paris, it's the vanity of Tokyo, it's the vanity of London. These cities are no more
cities that belong to a country. They are cities of the world and you as a luxury brand - if there is a Bond Street, if there is a Fifth Avenue, you
must be there.
QUEST: Do you expect to actually sell there or is it just to wave the flag and 'look how good we are'?
BIVER: No, unfortunately, we have to sell because we are businessmen.
(LAUGHTER)
BIVER: And we look at numbers. We don't look at images. We have to make it profitable. So the work (inaudible) -
QUEST: Hang on, hang on - we started this interview and you were an artist. Now you're a businessman.
BIVER: The artist always needs a businessman. (LAUGHTER). Never see artist without businessman. The two must come together.
(END VIDEOCLIP)
QUEST: I don't think there's any more to say other than this is "Quest Means Business." (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: All right, it's Valentine's Day tomorrow. And if you haven't reserved that table for Valentine's Day, you may as well forget it by this
point. Now if speed dating is more your street, then Ford's latest marketing stunt could offer some inspiration.
The emphasis here is less on the dating and more on the speed. Jeanne Moos reports.
(BEGIN VIDEOCLIP)
Male: How are you?
PRESTIN PERSSON, STUNT CAR DRIVER: Great --
JEANNE MOOS, CNN NATIONAL NEWS CORRESPONDENT BASED IN NEW YORK: It was billed as speed dating but then they pulled a fast one.
Male: Where are we going?
MOOS: Let's slow down and back up. Folks at Ford wanted to advertise their 2015 Mustang, so they rigged one up with cameras and hired an
attractive blonde professional stunt driver to pretend to go on blind dates.
PERSSON: So you just play piano or -
MOOS: Unsuspecting guys thought they were auditioning for a reality dating show.
TYSON FAIFER, SPEED DATING PARTICIPANT: I'm a ninja.
PERSSON: A what?
FAIFER: I'm a ninja.
MOOS: Once in the car, --
Male: Do you want me to drive it?
PERSSON: No.
MOOS: -- driving school pro Prestin Persson acted as if she barely knew how to drive a stick shift.
DAMIAN TURNER, SPEED DATING PARTICIPANT: Yes, I think you might want to shift that.
PERSSON: Sorry.
Male: Let me drive, I'll show you what this thing can do.
MOOS: Then she showed him.
(RACING THE CAR)
Male: (SCREAMS). Whoa, yes baby!
MOOS: Director of the spot, Chris Gruse, says she hit 80 or 90 miles an hour in the empty lot, then slammed on the brakes.
CHRIS GRUSE, DIRECTOR OF COMMERCIAL: She did ask a couple of guys if they were going to be sick.
MOOS: Online skeptics say 'fake,' 'staged' - 'the guys are in on it.'
GRUSE: This is real.
FAIFER: It was 100 percent not fake.
MOOS: So says our ninja, Tyson Faifer.
Male: (YELLING).
TURNER: Now that's what I'm talking about!
MOOS: What was Damian Turner thinking?
TURNER: I was just like - uhhhhh, this woman might be crazy.
MOOS: And then she revealed all.
TURNER: You just whipped the (bleep) out of this car.
MOOS: I'm a professional stunt driver.
TURNER: (LAUGHTER).
MOOS: Damian is an actor but the only acting he says he was doing here was pretending not to be scared. As for the blind date, --
Male: Probably one of the best dates I've been on. I should have proposed.
TURNER: I'll do a second date, but I need to drive this time.
MOOS: Don't count on Prestin giving up the wheel.
TURNER: If I ever in my life - ever - which I know I wouldn't do this, but - robbed a bank, I was like, I need her to be the driver - stay
in the car, Baby, keep it running.
PERSSON: Stay right here.
MOOS: The Bonnie and Clyde of speed demon dating. Jeanne Moos, CNN.
(LAUGHTER)
TURNER: Deal!
(LAUGHTER)
(END VIDEOCLIP)
QUEST: It's the laugh that gets you. I'll have a "Profitable Moment" after the break. (Inaudible).
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." The White House Summit on Cybersecurity goes to the very heart of the issue that we're all facing at
the moment. But look at the number of companies that you heard from on this program that have been hacked.
And when you or I both think of the sheer number of companies where we've been told that our details have been at risk. For me, it's two
credit cards, my healthcare company, my bank, several stores where I've shopped. And there's a grim reality about it of here we go again -- how
much damage has been done?
Oh to be sure, we're not all Amy Pascal who's had our details spread across the internet or our embarrassing e-mails for all to see. But it
does mean there seems to be an inevitability about cyberhacking and security - which all of course takes us to the fact that it's everyone's
responsibility.
And yet how do you balance it with the privacy of keeping details from government and from companies? It's the biggest issue of our time, and any
CEO who says they're not worried about being hacked is a fool!
And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope
it's profitable. Let's get together on Monday.
END
