Return to Transcripts main page
Quest Means Business
US Unemployment Rate Holds Steady at 5.3 Percent; Jobs Report Could Signal Rate Hike; Republican Hopefuls Try to Topple Trump; US Stock Markets Fall on Jobs Report; Media Stocks Drop; Netflix Launches First Spanish Language Series; European Stocks Dip But Keep Weekly Gains; France Searching for MH370 Debris; Malaysia Claims More Plane Debris
Aired August 07, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Noise and hullabaloo at the New York Stock Exchange today as the closing bell rings. The Dow is off just a smidgen or
two, when all is said and done.
(GAVEL POUNDS)
QUEST: Five gavels for a Friday! We normally only get three. That's what you call cheeky. On Friday, it is August the 8th.
It's a solid jobs report for the United States, and investors' eyes are turning to the Fed.
Malaysia's transport minister insists new debris is from an aircraft. The families onboard those MH370 are still begging for answers.
And Barclay's says kick out the flip-flops. So, what actually do we mean when you're told you can be "business casual"?
I'm Richard Quest. It may be a Friday, but I still mean business.
A very good evening to you. There is good news and not great news tonight from the latest numbers from the United States jobs report.
Unemployment held steady, it's still at the lowest rate in the long recover after the recession, and the world's biggest economy added jobs. Come and
join me at the super screens and you'll see what I'm talking about.
This was the July employment report, and it showed that the US economy added 215,000 jobs. Now, that might not be as good as many had expected,
and sometimes they look towards 270,000 or 300,000, but it is over 200,000, which is a sizable number.
The unemployment rate itself remains unchanged at 5.3 percent. Remember, there is a big -- there is a difference between the way you
calculate the unemployment rate and the number of jobs created, and that's sort of how you get this discrepancy that jobs can be created and
unemployment stays as it is.
Wall Street is dissecting these numbers to see if it gives any clue as to the timing of the Fed's next expected rate hike, the first one for
liftoff. You'll remember that Janet Yellen, the chair of the Fed, has famously used the analogy of looking at a dashboard to guide economic
decisions.
In keeping rates steady last month, the chair said that it could happen anytime after -- and this was the phrase she used -- "some
improvement" or "further improvement" in the labor market. So, she's looking for an improvement in the labor market.
Well, take individually the sort of things she would have on her control board and dashboard. The rate of unemployment. There we are. The
steam on that is just 5.3 percent. It's the lowest --
(COUGHS)
QUEST: -- excuse me -- in seven years, and it's close to what is considered to be full employment. This is the number, the labor force
participation, which held steady at 62.6. Now, over the past 15 years, this has declined, so the very fact that labor force participation remains
steady is a plus sign in terms of strengthening of the economy.
But look at this one, hourly pay. Get the steam ready. There you go. Ooh, whoosh of steam. Hourly pay is up 2.1 percent. And the Fed would
like to see wage growth slightly higher than that, maybe 3, 3.5 percent.
So, by all three barometers, all three barometers, along with this report from July that we saw, you end up with a conclusion, is it ready?
Has enough been done? The question is, is the report for the Fed to raise rates next month? Let's put this to Anthony Chan. Sir, good to see you.
ANTHONY CHAN, CHIEF ECONOMIST, CHASE: Good to see you.
QUEST: You've heard the data, you've seen the improvement needed. Now, give me the analysis.
CHAN: The analysis is that this employment report certainly is strong enough for the Federal Reserve to raise rates, but remember, they said they
were going to be data dependent. They get one more employment report before they have to make a decision in September.
So, the next report is as as strong as this one, then I think they're ready to go in September. If it comes much weaker, we get -- we get wages
a little bit weaker and we don't see --
(CROSSTALK)
QUEST: But we're not --
CHAN: -- employment grow so strong, then they can pause a little bit.
QUEST: But you see, this is what I don't understand. Because the trend is clearly there. If you look back over the past few months on
number of jobs created, it's been 220,000 and -- 215,000 and 270,000, 280,000.
CHAN: Yes, Richard, but remember, they have two goals. They also want to have strong or stable employment, and they want to have inflation.
Right now, if you look at core PCE, which is the inflation rate for all consumption, excluding food and energy, it's up 1.3 percent. The target
for the Fed is 2 percent.
[16:05:02] And by the way, if you look at the last couple of decades, right when the Federal Reserve started raising rates, the median inflation
rate on the core is 2.4 percent. So, we still have low inflation. That's holding them back. But of course, monetary policy has long and variable
lags, which means they have to move before inflation picks up. But so far, inflation is not rearing its ugly head.
QUEST: Now, do you believe -- and this goes to the core of the wider economic debate -- do you believe that the economy will perform as it has
performed in the past? Or have the rules changed as a result of the Great Recession? Because to your point, at 1.3 percent core PCE versus the
normal 2.3 when they raise, they should wait a lot longer.
CHAN: Well, but there are a lot of other special factors out there. Energy is lower, and that's pushing other prices a little bit lower, so
there's a lot of stuff going on.
And there's still some excess supply of labor. You yourself pointed out correctly when you look at that labor force participation rate, it's
still at one of the lowest levels we've seen in decades. Now, much of that is structural, but not all of it is.
QUEST: So, are you a September man?
CHAN: Right now, I think that with this report, it's inching more and more in the direction of September. In fact, the Fed futures market is
forecasting about a 58 percent probability they'd move in September. My suspicion is, I want to see the next employment report, and then I will be
more comfortable in letting you know.
(CROSSTALK)
QUEST: But with that -- but with that next employment report, what are you going to be looking for? Because as I pointed out, there's a
difference in the way the numbers are calculated. The unemployment -- the gross unemployment rate at 5.3, that's not the number you'll be looking at.
CHAN: I will not so much be focused on the unemployment. I'll be looking at average hourly earnings. You're correct. When you look at the
household survey they use to compute the unemployment rate, that's a survey of 60,000 households.
The non-farm payroll number, to get you the other number of 215,000, is a survey of almost a half a million non-farm businesses establishments.
A little big different, that's why you get different numbers. Those numbers are strong enough. We need to see wages picking up. You correctly
pointed out, Janet Yellen wants to see those wages 3 to 4 percent, year over year.
QUEST: OK. So, where -- the problem with the first rate rise, liftoff as it's known, and we all know it's not going to be like a rocket,
it's going to go -- the problem with that first one is we immediately say, when's the next one?
CHAN: Absolutely, because once the process starts, you know it's going to continue. They're not going to reverse course. Yes, they've told
you that they're data dependent, the market is going to perceive any rate hike as the beginning of a series. They don't think it's going to be a
zigzag, that once they raise, they can actually lower, and then raise again.
So, that's why they want to be very careful. But I am very certain that the rate hike will take place this year. I still reserve judgment
about September versus December, but I am pretty certain this year we will see a rate hike.
QUEST: I do like somebody who's certain --
(LAUGHTER)
QUEST: -- on a Friday.
(RINGS BELL)
QUEST: A record 24 million people tuned into Thursday's Republican primary debate in the United States to watch nine other hopefuls attempt to
topple Donald Trump from the top of the polls. Predictably, the property magnet was the star of the show.
One of Trump's tensest exchanges was not with another candidate, it was with, actually, with the Fox News anchor and moderator, Megyn Kelly.
(BEGIN VIDEO CLIP)
MEGYN KELLY, MODERATOR, REPUBLICAN PRIMARY DEBATE: You've called women you don't like "fat pigs," "dogs," "slobs," and "disgusting animals."
(CROWD LAUGHTER)
KELLY: Your Twitter account --
(CROSSTALK)
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: Only Rosie O'Donnell.
(APPLAUSE)
KELLY: No, it wasn't.
(APPLAUSE)
TRUMP: I think the big problem this country has is being politically correct. I've been --
(APPLAUSE)
TRUMP: I've been challenged by so many people, and I don't, frankly, have time for total political correctness. And to be honest with you, this
country doesn't have time, either.
(END VIDEO CLIP)
QUEST: Another business person stood out amongst the lower-polling candidates. The former Hewlett-Packard chief exec Carly Fiorina was the
most Googled candidate during the earlier debate. Now, in that debate, she accused Trump of flip-flopping on key issues.
(BEGIN VIDEO CLIP)
CARLY FIORINA, REPUBLICAN PRESIDENTIAL CANDIDATE: Since he has changed his mind on amnesty, on health care, and on abortion, I would just
ask, what are the principles by which he will govern?
(END VIDEO CLIP)
QUEST: I'm joined now by CNN's chief national correspondent John King, who's in Washington. John, please, help me make sense of it. Did
Donald Trump damage himself or do himself good? What's the verdict today?
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, again, the verdict among the political professionals, Richard, is that Mr. Trump said some
things that are unorthodox, if not extreme over the line.
[16:09:58] Not only did he have that exchange with Megyn Kelly, where he never apologized for calling women on his Twitter feed "fat, disgusting,
animals." Not only did he not apologize, after the debate he retweeted a commentary that called Megyn Kelly a "bimbo."
Not exactly presidential behavior, as you would say. Not exactly leadership behavior, let alone wanting to be the president of the United
States.
And yet, every time those of us who do this for a living say that is the kind of thing voters will find unacceptable, it has helped Donald Trump
so far. Remember, he's running in a 17-man field. In the national polls, he's getting 20 to 24 percent.
That still tells you that 76 to 80 percent of Republicans don't want him. But as long as the field stays so crowded, there's absolutely no
indication that he won't remain at or near the top of the pack. I don't think he helped himself last night. We're not going to know until we see
some polling data if he actually hurt himself.
QUEST: Right. And with that, the other candidate -- we'll come back to Trump in a minute, the material there is just simply too good not have
another bash. With the other candidates, who stood out for you?
KING: It was -- well, it's in some ways who didn't stand out as important. Because the next two candidates in the polling are Jeb Bush,
the former governor of Florida, and Scott Walker, the current governor of Wisconsin, and they had very uneven performances.
They didn't do anything terrible to hurt themselves, but there was an opportunity for them to emerge as the -- when we started this race,
Richard, a few months ago, the question was, who would be the alternative to Jeb Bush?
Now, the defining question is, who emerges as the alternative to Donald Trump? Both of those men had a chance last night. I thought they
were pretty flat.
So, we did have some surprising moves. Out in the big debate, the prime time debate, I thought Governor John Kasich of Ohio, a critical swing
state in American politics, and the young senator from Florida, Marco Rubio, had very strong performances in the prime time debate.
And you mentioned Carly Fiorina. The next debate is 40 days from now, right here on CNN, that's the second Republican debate, and the biggest
question is, is Trump still atop the pack? I think the second-biggest question, does Carly Fiorina, who you just mentioned, does she slingshot
out of that lower tier group and end up in the top 10 by the next one?
QUEST: Just let us pause, Mr. King, and reflect on what you have just said. You have just said the question is, which candidate will come out
from the field and take over the lead from Donald Trump for the Republican nomination. Did you ever think in your career you would use those lines?
KING: No. And I'll be first to confess that I'm among the sinners who early on didn't take him seriously. I still think he has fundamental
problems, but he is -- number one, he's been a stronger politician, stronger performer, than many of us anticipated. Number two, he is proof,
whether you like what he says or not, he is proof that there's something in the water, if you will.
There is deep dissatisfaction across American politics, and particularly in the Republican base electorate where not only do they not
like the Democratic of the United States, Republican voters don't like that they've been through, now, going on seven years of Barack Obama and all of
his policies.
But they also, Richard, they have a Republican House Speaker. They just won a Republican United States Senate. They have 31 governors across
the 50 states of America. And yet, the Republican base is still fomenting with anger and dissatisfaction because they don't like what they're getting
from their own leadership.
So at the moment, Carly Fiorina in that sound you played is exactly right. At the moment, the front-running candidate in the Republican --
that's the conservative party here in the United States of America -- is to the left of Hillary Clinton on health care. He once said a single-payer
system would be great.
QUEST: Right.
KING: Like Bill Clinton, he has supported an assault weapons ban, and in the past, he has said a wide variation of things on immigration. He is
a very unorthodox candidate. He doesn't fit in the party that, at the moment, he would stand as its front-runner.
QUEST: John, excellent to have your analysis for us this evening. Thank you for taking time. Thank you, sir.
KING: Take care, my friend.
QUEST: Media stocks have taken a terrible toll this week. One of the worst weeks that they've had. And stocks prices have been falling under
the threat of cutting the cord. We'll have the cord-cutter himself after the break. Where is he?
(COMMERCIAL BREAK)
[16:15:37] QUEST: US stocks fell for a seventh day. Not often that you see the Dow falling quite like that. The Dow bounced back after a
slide. The drop came after the jobs report that points towards a September interest rate hike. And joining us, Paul La Monica.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Thank you, sir.
QUEST: We need you, sir, to explain what happened. I mean, look, the number of the jobs comes out here, but we get the lowest point of the
session just after lunch.
LA MONICA: I think you already talked with Anthony Chan from Chase about the concerns, probably, that Wall Street has, now, that a September
rate hike is probably much more likely after this jobs report.
And let's be honest, traders can be like petulant children. They know the rate hike is coming. Just like my kids, every night when I put them to
bed, they know bedtime's coming. They're still going to whine and cry about it, even though it's no surprise. That's what Wall Street's doing
right now with this rate hike. The big move at the end of the day, one stock was mainly responsible --
(CROSSTALK)
QUEST: What, this one over here?
LA MONICA: Yes. American Express surged nearly 7 percent by the end of the day --
QUEST: Why?
LA MONICA: There was a report by Bloomberg suggesting that a huge hedge fund, ValueAct, run by Jeff Ubben, widely respected activist
investor, might be taking a stake. That's key and could be a problem for Ken Chenault.
Because ValueAct is the same fund that took a big stake of Microsoft, made a lot of moves to shake things up there, and that ultimately helped
lead to Steve Ballmer getting forced out of Microsoft. So, AmEx might need to be careful now.
QUEST: Well, is the company itself in play, or just -- ?
(CROSSTALK)
LA MONICA: I don't think in play.
QUEST: -- or just -- shenanigans?
LA MONICA: I doubt that it would be looking to sell the company. Typically, Ubben's MO has been to make an investment in a company and then
really urge big changes.
QUEST: Troublemaker.
LA MONICA: He could be considered a troublemaker, like Carl Icahn, who apparently has accepted Donald Trump's offer to be Treasury secretary.
QUEST: Oh, he has?
LA MONICA: Yes. He tweeted that out.
QUEST: Why do I feel I've joined the circus?
(LAUGHTER)
QUEST: Media stocks.
(RINGS BELL)
LA MONICA: Another circus.
QUEST: Another circus. They've had a hard week.
(LAUGHTER)
QUEST: Now, Disney, News Corp, and Time Warner -- parent company of this network -- are all down in part over concerns about --
(SNIPPING SOUNDS)
QUEST: -- cutting the cord. It's the consumer trading their cable television for subscriptions for internet-based media services. Netflix,
for example, where a lot of those cord-cutters go for streaming media, made a weekly gain despite ending the session lower. Paul, what do you make of
it, of these?
LA MONICA: It is a stunning move down. One analyst referred to it earlier this week as "swift and unprecedented." I -- I'm obviously talking
my own book, because as you pointed out, I work for Time Warner, but this does seem like an over-reaction.
When you consider that most of these media companies are not just about their cable operations, many media companies also have Hollywood
studios, which are doing extremely well right now, particularly Disney and Comcast, which isn't on there -- they own NBC Universal -- setting records
at the box office.
QUEST: Right. But for example, last night's debate, my cable box blew up. But I was able to watch the debate online by just logging into
the company. I don't know whether that counts as cord-cutting --
LA MONICA: No, I wouldn't think so, because if you were watching it - - were you watching it online via Fox? Or were you watching it online via someone --
QUEST: Via my cable provider.
LA MONICA: Right. So, depending on what channel you were watching it on, that's good for big media. Netflix obviously is not really in the news
game, per se.
But everyone's worried that because of these bundles that are coming out, it's not just that people are going to streaming media, but that
you'll be able to pay to just get HBO online or streaming, just to get ESPN, and that's not good because these cable networks rely on those huge
affiliate fees they get.
QUEST: Good to see you, sir.
LA MONICA: Thank you.
QUEST: Be nice when you put the children to bed tonight.
LA MONICA: I'm always nice. They just don't want to go to bed.
QUEST: Thank you, sir. We're talking Netflix, and the company's searching for its own El Dorado in the Spanish-speaking world. It has
ambitions to capture a potential audience of 400 million native Spanish speakers.
The streaming service admits it's struggling and struggled to create a brand awareness in Latin America, now hopes to change all of that with its
first original series in Spanish. CNN's Nick Parker with the details.
(BEGIN VIDEOTAPE)
[16:19:58] NICK PARKER, CNN CORRESPONDENT (voice-over): Football, fame, and power. Netflix's first original Spanish-language series, "Club
de Cuervos," has all the makings of a crowd pleaser. And just like football, there is a lot on the line.
GAZ ALAZRAKI, DIRECTOR: Accion!
PARKER: Gaz Alazraki directed Mexico's highest-ever-grossing film, "Nosotros los Nobles," and that led to Netflix approaching him for this
project.
ALAZRAKI: The humor is very raw. It's very dark, and it is very unusual to see that, because network TV doesn't allow for that kind of
tone.
PARKER: The streaming giant is hoping that the story will resonate in a key market.
PARKER (on camera): Netflix admits it was not easy creating brand awareness in Latin America, but they've built about 5 million subscribers,
and they think now is the time to invest in Spanish-language content.
PARKER (voice-over): With an estimated 68 million broadband households in Latin America, the market could offset slowing subscriber
growth in the United States.
ERIK BARMACK, VP INTERNATIONAL CONTENT, NETFLIX: As we become more mature as a business, we're going to have a bigger and bigger audience from
outside the United States, so, I think we want to be thoughtful about global programming and telling stories that are uniquely differentiated
around the world.
PARKER: A marketing push is underway ahead of the release. However, many young consumers we spoke to still need to be won over by Netflix.
"I've never heard of Netflix," says this stylist. "It's very good, but they need a lot more titles," this student says. Netflix won't comment on
marketing or production costs, but it is clear where their priorities lie.
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: Netflix is sacrificing short-term profits in order to grow and grow and grow in these
international markets. It's determined to have a footprint all around the world. And so far, investors are willing to go along for the ride.
PARKER: For Alazraki, the project has brought a sense of pressure. But he's remaining philosophical.
ALAZRAKI: Time-wise, yes, I need to deliver against a date. And that is very stressing. But there's no way to know if you're going to do
something that works or not. So, what you try to do is just do something that you like.
PARKER: A worthy goal for a project that could score big for Netflix.
Nick Parker, CNN, Mexico City.
(END VIDEOTAPE)
QUEST: More like own goal in some cases. European stock markets closed down at the end of the week in the trading. The numbers.
(RINGS BELL)
QUEST: The FTSE fell, but still finished the week slightly ahead overall. Germany's DAX was down on disappointing industrial news. And the
Athens market, which had fallen off 20, 30-odd, 16 percent on the first day back in business, made ground for the second day in a row. That's the way
it ended at the first week of trade after a five-week shutdown.
The index of Greek banks ended the day only marginally lower, just down 1.7 percent. It's been a rough week overall for them. On average,
while taking together collectively, 58 percent in value, even after that rebound on Thursday.
France has intensified the search for Malaysia 370 debris. Investigators say they may have already found some more. Who says they
found what? We're going to try and sort out those problems after the break.
(COMMERCIAL BREAK)
[16:24:57] QUEST: France has announced it is to step up the search for debris from Malaysia Flight MH370. The searchers are now scouring the
island of Reunion by land, air, and sea, and they're looking for possible pieces of the Boeing 777, which disappeared around about 18 months ago.
(BEGIN VIDEO CLIP)
DOMINIQUE SORAIN, REUNION ISLAND PREFECT (through translator): We have put in place search measures in the ocean with aerial means. We have
a CASA military plane in the process of patrolling at the moment, which could be reinforced by a navy helicopter or by navy patrollers if it were
necessary. If the debris were identified, and if it were necessary to collect it and bring it to land.
And at the same time, we have coastal measures with the Gendarmerie with a speedboat, which could be used and patrol means along the coast.
(END VIDEO CLIP)
QUEST: Now, a source close to the investigation says no relevant items have so far been turned into investigators in the past few days.
Seemingly, that contradicts the Malaysian claims that more aircraft debris has been handed over to the French investigators. And making sense of
those two seemingly contradictory points is what we've been all about.
Malaysian investigators claim to have recovered a seat cushion, a window frame, and other aluminum materials. The transportation minister of
Malaysia told CNN's Andrew Stevens he's certain the debris comes form a plane.
(BEGIN VIDEOTAPE)
LIOW TIONG LAI, MALAYSIAN TRANSPORTATION MINISTER: This debris are all aircraft materials, windowpane materials, the cushion materials. So,
once we collect it, immediately we hand over to the military police. Because they are the ones escort them, and they are the ones who are in
charge of the area.
ANDREW STEVENS, CNN ASIA PACIFIC EDITOR: Are you sure this is aircraft-grade material, as you say? How do you know?
LIOW: These are all the experts from the technical side from the Malaysian team, and they're trained in these areas, so they will be able to
identify whether it's aircraft materials or whether it's a cushion aircraft materials. So, we trust in the experts.
And more important thing is to verify whether it belongs to MH370. Definitely we cannot be certain it is from 370, but it is aircraft
materials.
STEVENS: On Thursday morning, the prime minister told the nation that you had conclusively confirmed that the flaperon is part of MH370.
LIOW: Yes
STEVENS: Yet there is much more caution from other investigative teams.
LIOW: Yes.
STEVENS: How are you so sure that this flaperon is actually from 370?
LIOW: We found out that the flaperon maintenance seal is actually a match with the must maintain and record. And this will show. And also,
the color, the tone, and some of the technical specs of the flaperon match the must maintenance record. So, we -- with this, we are very certain that
this flaperon belongs to MH370.
STEVENS: A hundred percent certain?
LIOW: Yes, we are certain. A hundred percent certain it belongs to MH370. But we respect French team to further analyze and further verify.
STEVENS: Given the huge sensitivities surrounding this flaperon, whether or not is linked to 370 and what it means for the families of those
onboard, why didn't you wait until everybody was fully, 100 percent certain rather than go ahead without that full support from other investigators?
LIOW: I must mention that most of the investigators are convinced that it belongs to MH370. And we are all in the same direction, that we
are confirming this MH370.
STEVENS: But other investigators are saying it's a high probability, as opposed to conclusive confirmation.
LIOW: It's a choice of words.
STEVENS: But is it a choice of words, or do they have doubts?
LIOW: Well, they want to, as I have said, if they want to further verify it, they can go ahead, and Malaysia is supporting it. But for
Malaysia, we are very convinced that it's MH370.
(END VIDEOTAPE)
QUEST: That clarified the issues. Andrew Stevens talking to the Malaysia transport minister.
Security threats have become an everyday reality for many of the Fortune 500 chief execs. Billions of dollars riding on the safety of just
one person. Now, corporations are going to extreme lengths to protect the top-level staff. You'll hear more about how and who in a moment.
(RINGS BELL)
[16:29:47] (COMMERCIAL BREAK)
[16:32:04] RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Richard Quest. There's more
"Quest Means Business" in just a moment when the executive protection isn't just for presidents and prime ministers. We're going to look at what goes
into keeping top business leaders safe.
And dress for the job you want, not the vacation you are hoping to take - what not to wear in the office.
But before all of that, this is CNN and on this network the news always comes first. U.S. mass murderer James Holmes will soon know whether he is
to be sentenced to life in prison or death.
The jury has reached its verdict. It's to be announced in around two and a half hours from now. Holmes has been convicted of capital murder for
killing 12 people in a Colorado movie theater three years ago.
Last night Republican presidential debate was the highest rated primary debate in U.S. history. Twenty-four million people watched the Fox News
program. The current frontrunner in the polls is Donald Trump and said he wouldn't rule out running as an independent candidate if he doesn't get the
nomination.
The hunt for debris from the missing flight MH370 enters a new phase as the French authorities are beginning searches around Reunion Island.
The ramped up effort includes air, water and ground controls.
Al-Qaeda's Bangladesh branch has claimed responsibility for the brutal murder of a secular blogger. The killing of the blogger who uses the pen
name Neil O'Neil (ph) is at least the fourth this year. All (inaudible) critics of Islamic extremism.
President Barack Obama is standing by a controversial comparison he made between Iranian hardliners and U.S. Republicans who he said are dead set
against - on - who are dead set on derailing any nuclear deal - I beg your pardon.
The comments were criticized by the Republican Senate Majority Leader Mitch McConnell. Mr. Obama was speaking to CNN's Fareed Zakaria.
(BEGIN VIDEOCLIP)
BARACK OBAMA, U.S. PRESIDENT: What I said was absolutely true factually. The truth of the matter is, inside of Iran, the people most opposed to the
deal are the Revolutionary Guard, the Quds Force, hardliners who are implacably opposed to any cooperation with the international community.
The reason that Mitch McConnell and the rest of the folks in his caucus who oppose this jumped up and opposed it before they even read it, before it
was even posted is reflective of a ideological commitment not to get a deal done. In that sense, they do have a lot in common with hardliners who are
much more satisfied with the status quo.
(END VIDEOCLIP)
QUEST: The Iran nuclear deal is one of the topics covered in Fareed Zakaria's interview with the President and you can watch the global
television exclusive interview. It's 8 p.m. in London, 9 p.m. central European time and of course it's only on CNN.
[16:35:17] QUEST: A company's stock price can rise and fall on the safety of the chief executive whose wellbeing is crucial.
So it is no surprise that the world's most valuable firm spends a small fortune keeping chief execs safe. Now Apple's latest SEC filing reveals it
pays around $700 - well -- $699,133 a year on Tim Cook's security which also includes the private security at his home.
Now even that is cheap by comparison with some of his Fortune 500 peers. $700K for Tim Cook's security. Well look and see what we've got over here.
Next of course is Disney's - there he is - is Disney's Bob Iger which requires $1 million security detail to protect him. He's even barred - Mr.
Iger is even barred - from flying on public airplanes even when he's flying himself. He's always required to take a corporate jet instead.
Besides Mr. Iger, you go from Tim Cook at $600 Bob Iger at a million and then Jeff Bezos of Amazon -- $1.6 million. It tops his security budget.
An extraordinarily large amount of money, but then he does only take a pittance if anything for his salary.
Is it worth paying all these - all this money - for CEOS? Joining me - hello sir - Anthony Roman is the founder and chief exec of security
consulting firm Roman & Associates.
Are you surprised? Tell me why they have to have such security.
ANTHONY ROMAN, FOUNDER AND CEO, ROMAN & ASSOCIATES: Well, the risks for corporate executives have always been high. You had the case of the
international CEO for Exxon being kidnapped in driveway of his home, being shot, put in a box and left in 100 degrees.
(CROSS TALK)
QUEST: I covered that. I covered that story years ago.
ROMAN: Yes, (inaudible). That's right, it was years ago. But it's a wonderful example of how executives are at high risk. We have the new
emerging risk of the terror threat - the simple beheading, as distasteful and disgusting as that is, --
QUEST: Right. But when does security - because I see chief execs, I see them with one or two people - when does security become a perk so that you
start getting the planes, and you start getting the entourage and all the things that go with it?
ROMAN: It is never a perk. The value that a CEO or chairman adds to a company - a successful CEO or chairman - is incalculable. And the small
amount when you consider the pro rata cost - because security is an elemental part of every corporation whether the executive is being
protected or not.
QUEST: So how much of this of course is the insurance company of the company - of the corporation - demanding or the board of directors
demanding?
ROMAN: They are always demanding that there are both key man insurance - essentially life insurance - for the CEO or chairman, but more importantly,
the very secretive kidnap/ransom insurance. That is cloaked in secrecy -- the coverages, the indemnification amounts - everything is kept a closely-
guarded secret.
In fact, one of the disclaimers of the policy is if the CEO or any board members discuss it with anyone out of the inner circle, the policy is null
and void.
QUEST: We'll talk about this - and fascinating. I'm sitting here absolutely fascinated. Now I want to sort of - I want to get your opinion
on another security breach that's happened.
It's a security mystery on the French Riviera which has taken place. The security mystery concerns Jenson Button, a spokesman for the British
Formula 1 driver says that the burglars may have pumped sleeping gas into his villa before making off with jewelry including his wife's engagement
ring is apparently worth a quarter of a million.
A string of similar crimes have reportedly been committed in the area. Anthony Roman, you - this is particularly nasty - whether the gas was used
or not we're not quite sure. Apparently Warner Nista (ph) just said you'd have had to pump a whole truckload of gas in to put anybody out.
ROMAN: Well I'm quite sure gas was not used. It's a very technical and complicated endeavor -
QUEST: Right.
ROMAN: -- to infuse gas through a ventilation system.
QUEST: But were you surprised somebody like an F1 driver like the gentleman wouldn't have 24-hour security or not?
[16:40:04] ROMAN: Yes, I am surprised. He is a celebrity, he demands - his position demands - having executive protection. Anyone who's in the
news including yourself I'm afraid really has to have some sense of awareness and at the very least training with regard to protecting oneself.
We are all targets who are in the media or who are executives.
QUEST: I was feeling pretty good about Friday until you just said that.
ROMAN: Well, I'm afraid it's the truth. We should feel good about having an increased awareness.
QUEST: Right.
ROMAN: As far as the gas is concerned, there would be a rising body count of victims if that was the case because we don't know what the
concentration of the gas is or how much they're going to receive.
QUEST: Good to see you, sir.
ROMAN: Same here.
QUEST: Well you make a very valid point. Anthony was talking about security for all and major companies - and it's the best of the best - to
protect their top level executives. And I got my own hands-on experience of exactly what that means with security challenges they face when I
visited Kiev in Ukraine.
(BEGIN VIDEOCLIP)
QUEST: These men are the frontline at keeping you safe - executive protection - body guards to you and me - are essential.
ALEX KOPYL, DEPUTY DIRECTOR, TOP GUARD SECURITY: Top executives of our big - really big - companies, strongly they badly need this service to access
first all the threats and the risks and to eliminate it before they arise.
It might be both kidnapping their family members, it might be physical pressure, injury, wounding, sometimes even killing.
QUEST: Have your guards ever actually had to physically intervene?
KOPYL: Of course. Of course, you know like once - probably one situation out of - out of - 30, sometimes it's just physical interference (ph),
sometimes it's a weapon.
QUEST: You're putting your life in the hands of these guards, so it's helpful to know how they stay one step ahead. It's compulsory training.
It's twice a week and it keeps their skills and the knives razor sharp.
So, time to protect me.
(GUARDS PRACTICE PROTECTION MANEUVERS)
KOPYL: We all need to be a little bit paranoid in our business. You know, the only fact we have - no one of our clients got killed, and that's the
best statistics for us.
QUEST: Now it gets serious. Protecting the principal on the streets. Alex, you've kept me safe in the hotel, now we're on the street and an
entirely different set of rules apply here.
KOPYL: This part is most complicated for our guys. Those who want to assault you, they were never do it in a fortress. They will always choose
the lightest and the simplest way to attack you.
In the street, it's the simplest and the less predictable way. For our guards it's kind of a nightmare because it's less - it's less predictable
and the less defended place on earth. (ph)
QUEST: I really ought to take a picture of this chap. It's very interesting. Now how are you going to move me along?
KOPYL: We're not going to move you along unless we see some kind of danger. Of course the main objective for the personal security staff is to
evacuate the client as far, as fast as possible.
QUEST: Add in a genuine threat, and all bets are off. You do as you're told.
KOPYL: Run, run, run, run, run!
QUEST: It's not graceful, they're not gentle. Only one thing matters - keeping you alive.
(CAR SPEEDS OFF)
KOPYL: Right now we are moving with two cars - a security car and the client's car.
QUEST: Driving in convoy's a delicate dance between lead and backup. The backup blocks other cars from approaching. It allows the lead to pass by
uninterrupted.
KOPYL: We have to obey and follow all the rules but you can break little rules - let's say at a red light or take the wrong way on the road but in
order to save someone's life.
(END VIDEOCLIP)
QUEST: Fascinating. Absolutely fascinating. In a moment we go -- after all that high (AUDIO GAP) karate -- we go to a thriving tourist spot - the
island of Bermuda. You'll need to relax after all of this.
[16:45:00] Oh, it is magnificent. (Inaudible) seeing visitors' numbers falling from recent years. Well Bermuda's premier is going to tell us
about his efforts to revitalize the tourism industry. (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: It is early evening on the Atlantic island of Bermuda and that is a live webcam picture from the port of Bermuda. We have seen various ocean
liners go off into yonder during the course of the day and now everybody seems to be ready for a picture-perfect sunset in the hours ahead.
Tourism accounts directly and indirectly for around 15 percent of Bermuda's county economic output. Visitor numbers have been declining in recent
years despite the spectacular scenery and beautiful beaches.
I sat down with the premier of Bermuda, Michael Dunkley, and he admits the island's not done a particularly good job lately in enticing people to
visit and more needs to be done.
(BEGIN VIDEOCLIP)
MICHAEL DUNKLEY, PREMIER OF BERMUDA: To some extent, I would have to say that we fell off the radar because the brand Bermuda just wasn't pushed as
much as possible and the world changed.
You know, people could travel anywhere they want, people traveled as much as they could and other people stepped up into the game.
QUEST: It always seems a bit like your grandmother's holiday.
DUNKLEY: In Bermuda?
QUEST: Yes. You know, `I'm going to Bermuda' - doesn't it, I mean - traditionally that's sort of been. So your goal is really to make all this
seem exciting, --
DUNKLEY: Yes.
QUEST: -- vibrant, relevant, --
DUNKLEY: Yes.
QUEST: -- millennial?
DUNKLEY: And I think we have something for everyone in Bermuda - for the young people to the older people.
QUEST: But do you want Bermuda's tourism to look like? Do you want it to be a party island? I suspect not. Do you want it to be a spring breaker?
Do - how do - you want to balance between this huge (AUDIO GAP)-ment area of the United States versus Europe?
DUNKLEY: We're going to market our self as a place where you can have the experience that you want. And there's many different things you can do in
Bermuda.
You can be the grandmother's experience - and I shouldn't say that too loud because I'm 57 now so I'm not too far away from there - or you can be the
young, adventurous, the outdoor experience. I think Bermuda crafts something for everyone.
QUEST: Are you putting your best minister into tourism? One of the other things I've noticed is that `also rans, never rans and shouldn't have rans'
often end up as tourism ministers.
DUNKLEY: The only issue I have with the minister is that he doesn't wear Bermuda shorts, but that's a small disadvantage that he might have.
I don't have them on today either.
(QUEST PEEKING UNDER TABLE)
QUEST: Well I just wondered.
DUNKLEY: You didn't have them on so I didn't want to make you look bad.
(END VIDEOCLIP)
QUEST: How do you know what I've got under there? Bermuda shorts at work - absolutely not. And don't even think about flip-flops either.
When we come back, for workers at the headquarters of one of the major banks, all of this is most definitely now banned.
(COMMERCIAL BREAK)
[16:51:43] QUEST: Brogues or flip-flops. Flip-flops or brogues. Well, it's Friday and some places have a dress-down policy. However, if I was
working at Barclaycard, well I'd be in big trouble because the question of wearing flip-flops is absolutely a no-no.
The interim CEO has written in a memo is that employees at corporate headquarters need to smarten up a tad. What he has said is, "Over the past
couple of years a range of different dress codes have" entered - "have emerged in on One Churchill Place office."
And basically that's not going to do the business.
"To ensure a consistent experience for clients, customers and colleagues, the dress code is now being reviewed and updated." In other words, you
have to be more careful.
We all called around and found in most banks, we looked to see what major banks also ban - flip-flops, some don't allow jeans, others ban short
skirts. They are allowed to wear something `business casual.'
Business casual - what does that actually mean? Sir, joining me now to talk about it is the self-proclaimed image expert, Joe Lupo, the co-founder
of VisualTherapy.com. What does business casual mean?
JOE LUPO, CO-FOUNDER, VISUAL THERAPY.COM That's the question because over the past couple of years, everyone has been trying to define this.
Business casual never means jeans -
QUEST: Right, so we've got a pair of jeans. So business casual, never means jeans.
LUPO: If it is jeans - If you're allowed to wear jeans - they should be a dark denim, nothing with tears, nothing stained, nothing tattered. They
should be fresh and crisp -
QUEST: Right.
LUPO: -- and right on.
QUEST: What about shorts?
LUPO: Absolutely never wear shorts.
QUEST: But these - these are smart.
LUPO: No, unless you're in Bermuda. I know we were just talking about that.
QUEST: We were, yes.
LUPO: You do it there but certainly not here.
QUEST: All right, so we don't want any of those. Now come on, this is a -
LUPO: That might work here at CNN, but it wouldn't work anywhere else. One thing you always want to keep in mind is what the image is of the
company.
And you have to ask yourself when you're getting ready to go to work do I match that image? Is what I'm wearing today really work with that?
You know, it has a collar, it has a collar. If you were going very, very, very casual, I would rather you do that than a tee shirt, yes.
QUEST: Right, but you wouldn't say that's business casual?
LUPO: No. I would say that's casual.
QUEST: All right.
LUPO: Business casual is a shirt without a tie, it can mean a jacket or not a jacket. This is business casual, yes.
QUEST: But hang on. As I under - and this shirt would be business casual?
LUPO: Yes, yes.
QUEST: All right.
LUPO: I mean you can have a little bit more fun with this shirt than the white shirt, sure.
QUEST: All right. So what I'm getting to understand is -
LUPO: Yes.
QUEST: -- basically business casual -
LUPO: Yes.
QUEST: When all is said and done, business casual is really nothing more than that.
LUPO: (LAUGHTER)
QUEST: I mean, that's business casual. Well maybe.
LUPO: Maybe not
(CROSS TALK)
QUEST: Don't get excited. Maybe that
LUPO: Yes, maybe not a pinstripe (inaudible)
QUEST: Maybe that.
LUPO: Exactly, exactly. And definitely not your flip-flops. Flip-flops I don't even think should be worn in the city. If you live in an urban
environment - flip-flops are for the beach or for the country, they're never for the city.
QUEST: OK. This changing dynamic, because if you go back to the 90s in the last decade, everybody wanted to dress down.
LUPO: Right, right.
QUEST: And this is really a rejection of that, isn't it?
[16:55:04] LUPO: Well I see it changing. We work with top executives all over the country and people are they're going away from business casual,
they're going away from casual Fridays because what's happening is the productivity goes down.
When you're not dressing the part, you're not always feeling the part and people may be getting a little bit too relaxed at work. You know, people
think because it's Friday I'm going to wear what I'm going to go out tonight to work.
QUEST: What do you do then when you have to make that transition?
LUPO: Well you simply have to bring things with you. You're not going to wear sky high stilettos to the office and makeup. Yes.
QUEST: Well I tell you the sky high stilettos are always there in the desk.
LUPO: (LAUGHTER). Definitely.
QUEST: That's a lovely suit -
LUPO: Thank you.
QUEST: -- and I would describe that as formal and perfect.
LUPO: Thank you, thank you.
QUEST: Thank you very much indeed. We will have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Dress down Fridays, business casual and it seems to mean all things to all men and women.
The reality is that for an old fogey like me, I'm most comfortable when I'm dressed in a suit. It means you're there to do a job of work. No
distressed jeans, nothing skimpy, nothing ripped.
But that doesn't mean that we have to just be boring about what we do. Maybe a nice little cufflink or perhaps an interesting color of tie.
The truth is of course that today's millennials have a very different view of what somebody like me on the wrong side of 50 believes they should wear
in the workplace.
And that's all right provided everybody turns up for work and knows that there's a job to be done. And what you're wearing down beneath, well
that's between you and anybody else.
And that's "Quest Means Business" for tonight. I'm Richard Quest in flip- flops. Whatever you're up to in the hours ahead (RINGS BELL) I hope it's profitable. Let's get together tomorrow - next week.
END
