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Quest Means Business
Crane Collapse Kills 87, Injures 201 in Mecca; Goldman Sachs Says Oil Could Hit $20; Goldman, IEA Predict Cut in Oil Production; America Remembers 9/11 Victims; US Stocks Rise; Investors Await Fed Rate-Setting Meeting; View From Tehran as Iran Nuclear Deal Moves Forward; Bank of Russia Keeps Rates on Hold; Easy Jet Stops Flying to Moscow; Local Elections in Russia This Weekend; One Anti-Kremlin Candidate Campaigning in Russia. Aired 4-5p ET.
Aired September 11, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Tuesday's Children, a charity working with those affected by 9/11 ringing the closing bell at the New York Stock Exchange on
this historic day, of course.
(GAVEL POUNDS)
QUEST: And a very -- ah!
(GAVEL POUNDS)
QUEST: Three gavels from three different people. We haven't seen that one before, but it is Friday, September the 11th.
Lower for longer. A stark warning for the world's oil producers.
Europeans open their homes to migrants, and companies open their wallets.
And tit for tat, hack for hack. The US and China engage in a cyber war of words.
I'm Richard Quest. It may be a Friday, but of course I still mean business.
Good evening. Our business agenda in just a moment. We begin with the terrifying scenes at the home of Islam's holiest site.
(BEGIN VIDEO CLIP)
(PEOPLE YELLING)
(END VIDEO CLIP)
QUEST: At least 87 people are known to have died, more than 200 people are injured, and we suspect many of those injuries are very serious,
after a crane collapsed at Mecca's Grand Mosque.
Now, the mosque sounds the Kaaba, the shrine that pilgrims visit during the annual Hajj. The weather could well have been a factor in the
deadly accident, although we're not sure exactly how. Senior international correspondent Nick Paton Walsh is following developments from Beirut and
joins us.
The pictures almost immediately that we saw on Twitter and that we're now seeing video, Nick, I mean, leaves one speechless with the horror of
what took place.
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Certainly. And you have to bear in mind, Richard, quite what a sacred site this is to
the Islamic faith and quite what an important time of year we're dealing with as well.
This is the holiest area, the Grand Mosque built to encase the black cube of the Kaaba, which is the central point of Islamic faith to which
Muslims pray five times a day, around which they must walk seven times counter-clockwise to complete part of the Hajj pilgrimage.
So, couldn't be more sacred, and the falling of that crane happens just over a week ahead of 2015's Hajj, to which 850,000 pilgrims have
already made the journey to Mecca.
Now, to the injured, yes, 201 is the latest figure of the injured, 87 dead. Saudi authorities clearer now, they believe -- their civil defense
group on Twitter saying that they think it was severe rain and heavy winds that were behind the crane collapsing.
I'm sure part of the investigation will look into construction safety in general. That site has turned into a morass of cranes, part of a bid to
expand its capability to hold over 2 million pilgrims at one time. That is the level of burden placed up on it by the sheer volume of people who seek
to make the Hajj every year.
But you can see in an amateur video the sheer horror of when the crane collapsed. Our own meteorologists saying yes, there were heavy gusts of
wind, part of sand storms that are sweeping across the Arabian peninsula, felt even here over the past week. They caused the temperature to drop
from 42 degrees Centigrade to 25, that's how strong the wind was.
It clearly toppled that particular crane, according to Saudi officials. You see the devastation on the ground, the horrific sight for
any Muslim to see blood on the floor of that Grand Mosque, and all this happening a matter of days away from when there should have been possibly
millions of people coming to that area. Richard?
QUEST: So, if to some extent -- awful to say, it could have been worse in the sense if it had happened in another two or three weeks at the
height of the Hajj, then obviously the injured and the death toll would have been much greater. But to some extent, Nick, the -- the Hajj and
these vast sites are no stranger to incidents of disaster, are they?
WALSH: Well, in this particular case, yes, we have in the past had issues to deal with the sheer volume of people and the potential to crush
moments like that. But at this key stage, it does appear to be the weather, which Saudi officials are pointing towards, and at this early
stage, it is because we can't point --
QUEST: Right.
WALSH: -- towards anything else at this point. As you can see from the images of the mosque, there, massive construction site there, plenty of
scope, I'm sure, for something to go wrong. But in this particular circumstances, it's just -- I think it's the image that Muslims around the
world will be seeing at this --
[16:05:00] QUEST: Right.
WALSH: -- incredibly scared time, the red metal of the crane falling through that roof that will be quite so jarring and troubling, let alone
those who've lost loved ones in the tragedy, Richard.
QUEST: Now, Nick, is there -- as a result of this, is there any -- and forgive my ignorance of the detail in this regard, so please put me
right -- but is there any likelihood that you delay, you postpone, you make any accommodation to what has happened for the Hajj that will be coming up?
WALSH: I would be extraordinarily surprised. You've seen the damage, yes, but at the same time, you would simply have to moderate the number of
people able to get into that particular area. This is a long-planned event in the lives of many Muslims, you're supposed to do it, frankly, if you're
physically able to, at some point during your lifetime.
So it's hard, I think, to knock it back a week or so simply for the volume of people whose lives will be affected by that who won't be able to
alter their travel plans. So, I imagine at this early stage, it's still something in the back of the minds of Saudi officials, but I would
personally think it unlikely if they were to alter the weeks ahead.
The damage is significant, yes, you can see it. The loss of human life shocking, too. But given the fact we are talking about an active
construction site here, you can imagine, perhaps, Saudi officials will be moving as fast as they can to get things back to as close as normal as they
possibly can, Richard.
QUEST: Nick Paton Walsh, who is in Beirut this evening and watching over the events. A reminder of the numbers involved, 87 people at least
are known to now have died in the mosque when the crane collapsed. There are well over 200 people who have been injured, and we suspect, of course,
many of those injuries are of a serious nature.
QUEST MEANS BUSINESS, we'll be back. We'll have the day's business agenda in just a moment.
(COMMERCIAL BREAK)
QUEST: There were two dire warnings for oil producers. Saudi Arabia's strategy apparently seems to be working in the ability to create a
crunch and a scrunch in the oil market. According to Goldman Sachs, prices are going to remain lower for longer. Goldman in a recent report says
there's an increasing risk that prices could fall to $20 a barrel.
Now this, of course, would be as a result of demand that would fade away as China and emerging markets continue to slowdown, and a feedback
loop is created, which feeds upon itself, thus pushing prices even further as demand drops, prices go down.
As a result, bearing in mind the sheer amount of oil being produced, the supply glut continues, and OPEC, as we know, from what Saudi has said
and what OPEC -- other members have said, will not or most unlikely to back down.
Now, Goldman says the hands of non-OPEC producers will be forced to be cut back as well, and that's a conclusion that is borne out by the IEA, the
International Energy Agency, which agrees. The issue of course is, when you look at OPEC and you look at the other producers, who is bearing the
brunt of OPEC turning on the taps?
Well, OPEC production will continue to rise. These are the OPEC countries, of course, both in the Gulf and out towards the east, and you've
got, of course Ecuador and Venezuela over in the Americas.
[16:10:02] Now, OPEC says it's going to pump even more in 2016. And of course, we have Iranian oil that's coming on tap as well, and OPEC has
made it quite clear, it will fiercely defend market share.
Outside of OPEC, you have the United States, up towards Alaska as well, where OPEC is expected to fall by -- or output is expected to fall by
half a million barrels a day. The reason, that expensive shale fracking oil, which is now too expensive to get out of the ground.
Russia also stands to lose out, possibly the steepest decline in oil production since the fall of the Soviet Union. And this is all because
OPEC's kept pumping, more expensive oil has started to dwindle, Russia is feeling the problem.
Look and see the prices at the moment in the market. Brent and WTO each fell about 2 percent on those two reports after they were announced,
and they both came back. The -- Brent is now $48, West Texas over $40, but just up $44.76, still roughly half what they were 12 months ago.
Pierre Andurand is the founder and managing partner of Andurand Capital, joins me now from London. Good to see you, sir. The fall in
price, we're seeing at the moment $44 to $48 on the two blends. Do you subscribe to the Goldman Sachs view that you could be looking at something
as deep and far as $20?
PIERRE ANDURAND, FOUNDER AND MANAGING PARTNER, ANDURAND CAPITAL: Yes, I totally agree with Goldman's research, and it's not my best case, it's
not Goldman's best case as well. I think most likely we will see $45 oil or a range of $40 to $50 for the next 18 months.
But if demand weakens, demand was weakened because of the emerging market slowdown that could spread to the rest of the world, and supply --
non-OPEC supply doesn't decline as much as the market expects, then we're already at high level of inventory.
(CROSSTALK)
QUEST: Right.
ANDURAND: If we build more inventory, we might breach these constraints, and then we will need producers to cut production very fast.
QUEST: Right.
ANDURAND: And that means much lower prices very fast.
QUEST: But we're already seeing to some extent, although the pumps in operation in the US continuing in the fracking, they're not drilling as
many more to replace that which is dwindling off, are they?
ANDURAND: Yes, exactly. So, we will have declines in US production. We started declining in May, and I think we'll carry on for the next six
months. Production is the next 12 months if prices go lower. But we need the production from the US to go down in order to rebalance the market and
not reach maximum storage capacity.
QUEST: Right. But, so, can we say that the Saudi strategy, introduced some 18 months ago, of we will not cut whatever happens -- in
other words, we will look the frackers in the eye and we'll see them off - - is Saudi working? Is the policy working?
ANDURAND: I think it is working. You start seeing the rebalancing with US production moving -- production gross moving from 1.5 million
barrels a day gross per year to a decline of probably 500,000 barrels of day per year. So, it is working.
And for OPEC, I mean the Saudis have a very long-term view, and they know that they need to cut non-OPEC supply growth in order to have a
balanced market and eventually higher prices in the future. So, they're thinking of their cash flow long term in the next five to ten years, not
the next year only.
QUEST: OK. So, pull the strands together. As we look towards the end of and the rest of this year into the spring of next, where do you
expect prices to settle?
ANDURAND: I don't think they will really settle. I think we'll be in a wide range of potentially $25 to $50. And --
(CROSSTALK)
QUEST: That's a huge range!
ANDURAND: -- maybe in 2016.
QUEST: Whoa, whoa. That's a huge --
ANDURAND: Yes?
QUEST: -- $25 to $50 is a huge range that has enormous implications for every producer from Venezuela to the US to Russia.
ANDURAND: Yes, it has. I don't think the prices will be stable. I think we will reach stability probably late 2016, and then start going back
up. But the next 12 months could be really dangerous, and companies have to make sure that they have a strong balance sheet.
QUEST: Thank you very much, sir, for joining us. We appreciate your time. Have a good weekend, thank you.
Now, investors across the world are watching for next week's Fed meeting. When we come back, Mohamed El-Erian will join me to talk about
the rate hikes, or the potential rate hikes, the volatile market, and just how febrile everything is at the moment. It's QUEST MEANS BUSINESS.
(RINGS BELL)
[16:15:02] (COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
(SILENCE ON TRADING FLOOR OF NEW YORK STOCK EXCHANGE)
(END VIDEO CLIP)
QUEST: An unusual silence at the New York Stock Exchange today, remembering colleagues, friends, and family killed 14 years ago in the
September the 11th attacks. And the World Trade Center, the new building, standing as a sign of rebirth.
(BEGIN VIDEO CLIP)
(SILENCE)
(APPLAUSE)
(NEW YORK STOCK EXCHANGE OPENING BELL)
(END VIDEO CLIP)
QUEST: For the children born 14 years ago who rang the opening bell on Wall Street.
QUEST MEANS BUSINESS, the markets as they traded on this significant day, join me at the super screens and you'll see what happened. The market
opened lower, quite sharply lower, down almost -- well, you can see there, down quite a lot.
Then, as the day moved on, the sentiment changed, because investors are very much looking forward to next week's Fed meeting. The market went
positive. There was a bit of a blip around about lunchtime. And the market closed up 102 points, which is not the best of the session, but
jolly close to it, 16,433. It's another example of the volatility that we've been experiencing.
And the rate hike looked all but certain at the beginning of the summer, and now the Fed is getting decidedly mixed signals about what is
happening. The market volatility -- I mean, these are the various issues and the clouds that are in the horizon.
You had China as yuan devaluations, which sent shockwaves through the global stock markets. You also had the jobs report. Now, the US jobs is
part of the Fed's mandate, it's got a dual mandate, the Fed.
One is inflation, price stability, the other is full employment, and the latest reports show the US employment at 5.1 percent, which his jolly
near the target rate. The job gains in August were short, but still, overall, jobs are holding strong.
And then also pulling the strings on inflation. The inflation, the Fed aims for 2 percent. The Fed's vice chairman, Stanley Fischer, said the
Fed may not wait to hit its targets. Those are the various issues that the Fed is looking at to be pulling to see whether it happens.
Mohamed El-Erian is the chief economic advisor at Allianz. He joins me live from Burbank, California. So, if we take a purely mechanicalistic
view, the Fed should raise rates next week.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: Correct. If you take a purely -- that pure perspective and provided it puts domestic issues
up front, then the Fed has a green light to hike next week.
But it's keeping an eye on the volatility you mentioned, it's keeping an eye on the global economy, and it's saying, you know what? This tug of
war means a massive judgment call, and it's very close, Richard.
QUEST: Right. So, where do you come down on it?
[16:20:01] EL-ERIAN: So, on what they should so --
(CROSSTALK)
QUEST: Ah!
EL-ERIAN: -- they should wait.
QUEST: They -- well, come on!
EL-ERIAN: OK. I --
QUEST: Why wait? What are you waiting for?
EL-ERIAN: So, I've been one who has been trying to encourage them to move for months now, and there was a time when both domestic and
international things were aligned. That is not the case today. So, on what they should do, they should wait.
On what they're likely to do, it is 41 -- it's 49-51, 49 percent that they go forward, 51 they don't. It's going to be a judgment made in that
room, and it will depend enormously on the dynamics of the discussion.
QUEST: If they miss September, then everybody's talking about whether it's October or December. Now, is there a reason why it couldn't be
October, because initially, everybody said September or December. But now October all of a sudden has gone into the frame.
EL-ERIAN: Yes. Initially, people thought December because that's when you have a press conference, that's when the Fed can explain things.
And then Fed officials said the obvious thing is you know what? We can arrange a press conference in October.
Richard, the key issue is why are we even talking about this? Twenty- five basis point, a quarter of one percent --
QUEST: Ah!
EL-ERIAN: -- shouldn't matter. But it does matter for two reasons. One is, markets have become so dependent on the generosity of central banks
that even a 25 basis points matters.
And second, markets can't look beyond the first step. If they look at the journey, if they look at what's coming afterwards, this will be the
loosest tightening. But for some reason, they're obsessed with the first move.
QUEST: Right. Well, it's understandable, because people like me will be asking people like you after the first move, when's the next move?
And as you know, Mohamed, once the tightening process begins -- and by the way, it's 11 years since they actually started a tightening process,
2004 in June. Once that process starts, you hope it's going to be a nice, symmetrical set of stairs. But you don't think it'll be that.
EL-ERIAN: No. In fact, I can't tell you with any certainty whether it's going to be September, October, or December. But I can tell you with
a lot of certainty the following: it is going to be a very shallow path of rate hikes. They're not going to hike at every meeting like they've done
in the past. It'll be stop and go. It will terminate well below the historical averages.
So, we will look back on this journey, and this journey is not going to be as traumatic as the tightening we've had in the past. The problem is
that we are over-dependent as markets on the generosity of the Fed, and that's why we're so concerned. But the journey is going to be, in
historical terms, the loosest tightening in the modern history of the Federal Reserve.
QUEST: Ah, that's a good note upon which to end, the loosest tightening that we've seen. Sir, have a very good weekend. I think we're
going to need all our stamina in the week ahead.
Now, another factor driving volatility, the dramatic and extended fall in oil prices. A key factor that was depressing, it was the likelihood
that Iranian oil will hit the market soon.
An international deal with Tehran cleared another hurdle on Thursday. US senators blocked a measure against it. It was a complicated procedural
thing that you and I really don't need to get into, but the gist of it is the deal's now going to go through the Senate.
The House Republicans tried again to scupper the agreement. Their vote turned out to be largely symbolic. Fred Pleitgen joins me on the line
now from Tehran. Now, Fred, this is fascinating, because as the deal goes through, sanctions will eventually be lifted, and in Tehran where you are,
are they looking forward to a bonanza?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (via telephone): Well, they certainly are, Richard. I mean, the signals that
the Iranians have been sending out ever since the initial deal was agreed upon was that Iran is now once again open for business. And of course, the
major business that they're looking for right now is the hydrocarbon sector.
And I don't think that that's necessarily only drilling for oil or how to sell the oil, but it's everything, really. If you look at the kind of
companies that have been here, the top-level politicians that have been here. The Germans, for instance, came in with the CEO of Siemens, looking
to build up refining capacity, looking at geological survey.
Everything here has been on hold for years, and certainly the Iranians are saying that they are now looking for major investments from companies
from abroad. But of course, they want to benefit from this as well. And again, we've seen top-level politicians here from the United Kingdom, from
Germany, from France. Of course, everybody looking to get in on the action here.
And there certainly is a lot of optimism here among many people since this deal has gone through. We always have to keep in mind, Richard, that
Iran is a --
QUEST: Right.
[16:25:04] PLEITGEN: -- country with a lot of politics and a lot of fractured politics. And while people here are optimistic, they also know
that there's a lot of hardliners --
QUEST: Right.
PLEITGEN: -- who view this deal very skeptically.
QUEST: But when I read that the Supreme Leader Khamenei has basically said forget any more deals with the Great Satan, with the United States, as
he said last week, does that -- is that a common view? He's obviously the boss, so it will follow through. But were there many people in Iran hoping
that this would be a bridgehead to more deals with the US?
(CROSSTALK)
PLEITGEN: No, no, I don't think it's a common view at all. I think that the majority of people here in this country certainly are a lot more
moderate, but we also have to keep in mind the Supreme Leader's main power base is the very conservative end that is still very powerful.
And so, it's the conservatives, the clergy, as well as the Iranian military, and all of them have been very skeptical of the deal to begin
with. The military in particular said that it really didn't get enough out of this deal. They wanted even more restrictions on the military lifted.
And so, the Supreme Leader of course has to throw this constituency a bone. They are his staunchest backers, and he has to remain tough on these
key issues -- on these issues that have always been a fundamental for Iran since the Islamic revolution.
And it really is somewhat interesting to see how he says things like this at a time, for instance, that it's so close to the congressional vote.
And he said -- he said this last week, that all of this, of course, could have potentially endangered the vote. But you do see how the Iranians are
trying --
QUEST: Right.
PLEITGEN: -- to remit, but keep that very strong posture, that very anti-American posture. And of course, those comments that he made about
Israel not existing in the next 25 years is also something that's angered many people abroad, but certainly does play to that core constituency that
the Supreme Leader has and that certainly gives him his power in many ways, Richard.
QUEST: Fred Pleitgen, who's in Tehran and will be watching the results. Fred, thank you.
Low oil is also hurting Russia. The Bank of Russia has left interest rates unchanged after a spate of cuts this year. The central bank held the
key rate at 11 percent, in line with market consensus. In a statement, they cited the declining ruble, which of course is risking fueling imported
and importing inflation.
And another sign of Russia's weakening economy, Easy Jet has canceled flights between Moscow and London, citing a significant drop in demand in
recent months. The company said the decline was driven by what they described as the "macro-political environment, the weakness of the Russian
economy, together with the tightening of visa approval process."
Of course, the Easy Jet flight has only been running a couple of years, and it was started particularly to grow the market.
Throughout Russia's economic troubles, President Putin's popularity has remained high. Pro-Kremlin parties are set to dominate in local
elections across Russia this weekend.
In fact, only one anti-Putin candidate in the entire country has been allowed to run. Matthew Chance checked out this somewhat unusual campaign.
(BEGIN VIDEOTAPE)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): You won't see him on Russian state television, nor on many of the election
posters that festoon Kostroma. But Ilya Yashin is determined to deliver his anti-Kremlin, anti-corruption message, even to the handful of
pensioners who turn up to listen.
ILYA YASHIN, RUSSIAN ANTI-KREMLIN CANDIDATE (through translator): I understand we won't be able to change anything with this election. We
won't be able to change the government, and the government doesn't want to do anything. But that's why you need the opposition, to hold the
government to account and to make officials work.
CHANCE (on camera): Well, very little catches the plight of Russia's beleaguered opposition than this right here, a lone candidate with a strong
anti-government message trying to convince a skeptical Russian public of his cause. And the problems here in Kostroma are repeated for the Russian
opposition across the country.
CHANCE (voice-over): It's been a hard campaign, and a frustrated Yashin accuses us of scaring off his voters. "People aren't used to these
big cameras in their faces in the provinces," he snaps.
The sensitivities are real. Opposition campaigners here say they've been physically attacked and accused of being secretly funded by Russia's
so-called enemies in the West.
[16:29:52] YASHIN (through translator): People are scared of even talking to me because of this propaganda, police harassment, administrative
pressure. I'm cut off from appearing on TV. I'm cut off from the radio. So, my goal is to talk face-to-face with as many voters as possible and to
shake as many hands as possible.
(WOMAN SPEAKING RUSSIAN)
CHANCE: For some, the anti-Kremlin stance is being well-received. There are Russians willing to listen to this opposition message. But with
pro-Kremlin parties fielding tens of thousands of candidates across Russia to this one from the main opposition, it is an absurdly uneven political
battle.
Matthew Chance, CNN, Kostroma in western Russia.
(END VIDEOTAPE)
QUEST: In a moment, we'll be talking to the finance minister from Luxembourg. He tells it's everybody's duty to help sort out the migrant
crisis in Europe and reminds us, Europe sometimes has difficulties reaching consensus. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:30:00] ILYA YASHIN, OPPOSITION CANDIDATE: -- cut off from the radio. So my goal is to talk face to face with as many voters as possible and to
shake as many hands as possible.
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: For some the anti-Kremlin stance is being well received. There are Russians willing to
listen to this opposition man. With pro-Kremlin parties fielding tens of thousands of candidates across Russia to this one for the main opposition.
It is an absurdly uneven political battle.
Matthew Chance, CNN Kostroma in Western Russia.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: In a moment we'll be talking to the finance minister
from Luxembourg. He tells us it's everybody's duty to help sort out the migrant crisis in Europe and reminds us Europe sometimes has difficulties
reaching consensus.
"Quest Means Business" (AUDIO GAP).
(COMMERCIAL)
QUEST: Very good evening to you. I'm Richard Quest and there's more "Quest Means Business" in just a moment when Luxembourg's finance minister
tells me Europe needs unity to tackle the refugee crisis.
And we hear about the power of plain speaking from Donald Trump to the man tipped to lead Britain's Labor Party. Before all of that, this is CNN
and on this network the news always comes first.
We'll start with the breaking news and the deadly collapse of a crane at Mecca's Grand Mosque. A Saudi civil defense official is now blaming
heavy wind and rain for the accident. At least 87 people have been killed and 200 others injured.
Hundreds of thousands of people are arriving in Mecca for the annual Hajj Pilgrimage which is due to begin in ten days' time. Khaled Almaeena
is the editor-at-large for the "Saudi Gazette" and joins me on the line from Jeddah.
Sir, what can you tell me about the current situation? And we know 87 have died, but the seriousness of the injuries of the others?
KHALED ALMAEENA, EDITOR-AT-LARGE, "SAUDI GAZETTE": Well there have been serious cases. I've just received several tweets - hospitals in the
area are asking for blood. We do not know the nationalities of the people injured. There are about 215 plus. They're trying to find out. Rescue
operations are still underway.
But as usually when it happen (ph) released out of exodus (ph) people do succumb to their injuries. So right now even the death toll could
unfortunately go up. But so far, you know, it's all just medical aid and -
QUEST: Right.
ALMAEENA: -- and assistance.
QUEST: I mean, obviously an absolutely horrifying event to have taken place. And one imagines that the Saudi authorities will waste little time
in investigating to get to the bottom of what went wrong.
[16:35:14] ALMAEENA: Yes, it's a nightmare. I mean it's - fortunate enough it happened at 5:10 p.m. between the afternoon prayers and the dusk
prayers so there were not many people down there.
Also it happened a week before the actual pilgrimage which is on the 9th of the Holy Month as so many of victims are in Mecca. There were about
800,000 to 900,000 from abroad.
So there was not filled to capacity at the Holy Mosque -
QUEST: How -
ALMAEENA: -- otherwise there would have been --
QUEST: -- how will they reflect the events that have taken place during the Hajj? I mean, obviously it's such a vast event that you can't
postpone or whatever.
But in some way you do have to reflect what has taken place. So what's your feeling of what they will do?
ALMAEENA: It's a somber mood. I mean, it's a very sad situation. I've been speaking to people that's only 65 kilometers - 45/50 miles - from
here. I think this had to be a tragic Hajj because the people who will be performing also will be remembering the dead and the departed and those
injured.
And as I said, they've come from different countries. The Muslim they, you know, for years they save money to come. So it is not going to
be a happy occasion unfortunately for a lot of people.
QUEST: Khaled Almaeena, kind of you to join us. We know it's a busy time for you as well, sir. Thank you.
India after a nine-year trial, a court has convicted 12 men in connection with a series of deadly train attacks in 2006. One was
acquitted. More than 185 people were killed when bombs ripped through seven commuter trains in Mumbai.
The sentencing will take place probably next week.
A video's emerged in Hungary raises concerns about the treatment of refugees. Just take a look. It shows dozens of people at a registration
center scrambling for food. It's being tossed to them by police wearing hygiene masks. A government spokesman said the police were trying to
prevent a riot.
A massive upset at the U.S. Open -- Serena Williams has been beaten by unseeded Italian Roberta Vinci in the semi-finals. She'd been trying to
win a calendar Grand Slam of titles.
She was beaten in a three-set thriller at Flushing Meadows. The news has sent ticket prices for Saturday's final absolutely plunging.
As European leaders are with the refugee crisis, companies are stepping up and offering resources of their own. Google for instance is
donating more than a $1 million. It'll be used for shelter, food, water and medical care.
Goldman Sachs has said it will give $3 million to the U.N. refugee agency. That's aimed at helping those fleeing.
Uber drivers will collect toys and clothes in around 20 countries whilst Audi has given more than $1 million to local emergency aid programs.
All of this in stark contrast perhaps with (ph) what many countries have been doing. And the seeming rancor, bitterness and disagreement with
which E.U. countries seem set.
The ministers are to meet on Monday where they believe to discuss a plan that would set mandatory refugee quotas. The only problem is some
members don't agree with it, others can't agree what they should agree to and there are still - there are still other states that want nothing to do
with it at all.
I asked Luxembourg's finance minister if Europe's sending a message of disunity.
(BEGIN VIDEOCLIP)
PIERRE GRAMEGNA, LUXEMBOURG FINANCE MINISTER: I think that we are witnessing more and more convergence and we also could see that slowly but
surely there's more consciousness that we have to react in a united manner because facing an issue of hundreds of thousands of refugees is a subject
that you can only tackle if you do it as European Union.
QUEST: The problem though - it's one thing to tackle an economic crisis where you may have days or weeks to negotiate and find that
consensus.
But here you've got the thousands of people arriving every day, but Europe or the E.U. is taking its sweet time to reach that consensus.
[16:40:07] GRAMEGNA: Well I think if you look at the situation on the ground, that these 10,000s of refugees are being received in many countries
in Europe and we have to deal with an emergency situation.
All the countries including mine, Luxembourg, are looking for places to settle people.
We have to basically improvise here. Containers, abandoned building or just counting on the solidarity of the families and individuals.
So I think we are hoping in reality but we have also to get our act together in terms of institutions. Now we know the goal is to have quota
sharing for 160,000 refugees which in the end only corresponds to 0.07 percent of the U.E. - 500 million people.
So let's also face it, it is doable.
QUEST: Are we really looking at here a deficit of leadership? And I don't mean any individual person is not performing their task. But if you
just take it from the European perspective, on the one hand the 28 nation states have the - their - own leaders with their own policies.
But then you've got the Commission president saying what needs to be done. And you've got the Council president. And one's left with this
feeling of here you have a burning crisis on the E.U.'s doorstep and everybody's fiddling about what to do.
GRAMEGNA: Well it is - it is fair to say that the E.U. has an important role to play, but the E.U. alone cannot solve this crisis.
I mean, this is a military conflict and it's also a civil war in an area for more than five years and you need the cooperation here of the E.U.
with all major powers that need to act together.
Europe aloe cannot solve the problem and that's why I say it's a diplomatic issue. And I hope that this flow of refugees which is taking
enormous proportions now will just mobilize all diplomatic efforts from the United States to Russia including European Union so that we find a way to
broker peace. That's what we need.
(END VIDEOCLIP)
QUEST: The finance minister from Luxembourg. Now you call them brash, you can call them controversial, you can also say they're at the top
of the polls.
I'm not talking about Donald Trump. There (ph) the chap on the left - Jeremy Corbyn - whose storming his way to the top of the U.K.'s Labour
Party and whose politics are probably very different from the man on the right. (RINGS BELL).
(COMMERCIAL)
[16:45:08] QUEST: The next 24 hours could see a possible sharp lurch to the left in British politics as the result of the Labour Party
leadership contest becomes known.
And this man who is the dark house has become the frontrunner in the campaign. He's Jeremy Corbyn and he's given rise to the phrase
"Corbynomics." What does this involve?
Well, Jeremy Corbyn has been calling for a public debate on renationalization of major parts of the U.K. economy such as the big six
energy companies which he believes should be back in state control.
He wants to see a crackdown on tax evasion, ending avoidance, evasion and poor tax collection. But then he wants something known as the people's
quantitative easing, creating a national investment bank. A bank indeed that could issue bonds that the Bank of England could buy.
Put it all together and it's a very different view of a social democracy or a left-wing government than either the current Labour Party
espouses to or certainly the right of center the Conservatives believe.
Corbyn is very much the political sensation in Britain. Here in the United States it's Donald Trump who's grabbing the headlines.
And as Max Foster explains, their policies are very different and their politics quite shamefully opposite but the two have a lot in common.
(BEGIN VIDEOCLIP)
MAX FOSTER, CNN ANCHOR AND LONDON CORRESPONDENT: Two countries, two contests, two very different candidates.
The man on the left, Jeremy Corbyn, is an idealist, socialist, strict vegetarian and he wants to become the leader of the U.K.'s Labour Party.
The man on the right, Donald Trump, pragmatist, billionaire, TV personality. He wants to win the Republican nomination for president.
Whilst the might seem miles apart in political terms, they're both maverick, anti-establishment figures. And if you believe the polls, they're
both in the lead.
JEREMY CORBYN, CANDIDATE FOR LABOUR PARTY LEADER: First of all, apologies that not everyone can get in the town hall tonight.
FOSTER: And if you haven't heard of Jeremy Corbyn before, well, neither had many people in Britain before this summer. Now this bearded
66-year-old packs out every venue he speaks out.
CORBYN: People have had enough of the politics of abuse and the politics of control. This is about the politics of democracy.
FOSTER: And he seems to have gained a big following amongst millennials.
Male: A lot of young people have become disengaged with politics and I think he's someone that young people can relate to.
Male 2: It's not the politics of envy, it's not the politics of fear, it's the politics of hope.
FOSTER: In the U.S., Donald Trump's plain-speaking style also has popular appeal.
Male: The main reason why I support Trump is because he is not politically correct I'd say.
Male 2: He's loud, he's boisterous and I want hear somebody with a little depth to say yes.
FOSTER: Observers say both Trump and Corbyn are tapping into the same emotions.
PHILIP STEPHENS, CHIEF POLITICAL COMMENTATOR, "FINANCIAL TIMES": I think what's given these parties and individuals momentum is the austerity
that followed the 2007/2008 financial crash. And the belief that's flowed from that that globalization - international capitalism - is basically
there for the rich, for the 1 percent.
JANET DALEY, COLUMNIST, "SUNDAY TELEGRAPH": The governing class has become a professional club and there is a tendency to think maybe this is
some sort of conspiracy against the people.
CORBYN: With this process of austerity is enriching the richest.
FOSTER: So could these two outsiders go all the way? Will we ever see president Trump both bring (ph) prime minister Corbyn to the White
House?
STEPHENS: I think the idea of Corbyn as prime minister in Britain is preposterous. I also think perhaps I'll be proved wrong, the idea of
Donald Trump as president of the United States is preposterous.
But they can damage, deeply damage the existing establishment parties.
FOSTER: How ever far they get in their campaigns, Donald Trump, Jeremy Corbyn and others like them are putting a passion and a polarization
back into politics. Max Foster, CNN London.
(END VIDEOCLIP)
QUEST: Now of course if those two men do make it all the way to the top, we can guarantee we'll be getting those - that - video out again from
the man who said it was all preposterous.
There's been some angry words from Beijing and China's telling the United States to stop accusing it of hacking. The cybersecurity and the
relationship between Washington and Beijing - and bearing in mind the important visit to the United States from the Chinese leadership coming up.
In a moment, "Quest Means Business." (RINGS BELL).
(COMMERCIAL)
[16:51:40] QUEST: China is fighting back against the United States and the accusations of hacking. Beijing says China is as much a victim as
the U.S.
(BEGIN VIDEOCLIP)
HONG LEI, CHINESE FOREIGN MINISTRY SPOKESMAN VIA INTERPRETER: We hope that the U.S. stops its groundless attacks against China, starts a dialogue
based on a foundation of mutual respect and jointly build a cyberspace that is peaceful, secure, open and cooperative.
(END VIDEOCLIP)
QUEST: Beijing's response came after America's top intelligence official called for more protection against Chinese hackers.
Tensions are rising only weeks before the Chinese president is due to visit the United States. CNN Money's Jose Pagliery is with me.
Now, have the Chinese got a point? Are the U.S. at it?
JOSE PAGLIERY, CNN MONEY WRITER: Oh absolutely. This is an aggressive game and this is spycraft at its best. The U.S. has broken into
Chinese networks and the Chinese have broken into U.S. networks. It goes both ways.
What's interesting here is that President Xi is going to visit the U.S. later this month and the U.S. - the Obama administration - is trying
to figure out should they lay down sanctions on Chinese companies and individuals for hacking before President Xi's visit or after?
QUEST: Well hang on, hang on. If you do it before, you're going to be creating a bit of storm aren't you? Why would you do it before?
PAGLIERY: This is - this is really weird -
QUEST: But why before?
PAGLIERY: This is really weird. The thinking is by some in the Obama administration - I've heard - that if you do it before, you get it out of
the way and then you start on a clean slate when the president gets here.
That sounds ludicrous to me but -
QUEST: That's offensive to the president if you do it before he arrives here.
PAGLIERY: Absolutely.
QUEST: You're effectively kicking him in the - before he's even (inaudible).
PAGLIERY: Before, but imagine if they do it after where they have a really nice trip here. He goes home, they shake hands and then the next
day the U.S. goes, `All right, we're laying down sanctions on Chinese companies for hacking.'
QUEST: OK. Why is the U.S. hacking China? What's it hoping to steal?
PAGLIERY: So, this is - the U.S. is hacking China to get into the networks for national defense purposes. In other words, if both countries
ever go at it, the U.S. will be in the Chinese network to shut things down.
And they also want to track exactly what the Chinese government is doing.
QUEST: So -
PAGLIERY: This is traditional spycraft.
QUEST: -- so it's an aggressive policy by the U.S. I mean, the Chinese are aiming to steal maybe secrets - trade secrets.
PAGLIERY: So the U.S. claims that China hacks U.S. companies and the U.S. government to steal intellectual property so that they can then feed
it to Chinese firms -
QUEST: Right.
PAGLIERY: -- and better compete with the U.S. But the fact is here's the reality about hacking that no one will tell you.
Everyone's hacking everyone. France hacks into its allies, the U.S. hacks into its allies, China hacks into (inaudible). Everyone's hacking
each other to get into their systems.
This is no different than spying during the Cold War. It's just happening on computers.
QUEST: All right, now quick for you on a completely different area. When many business travelers are going to China now, the rule of thumb
Westerners seems to be either take a completely virgin laptop or make sure there's nothing on it that you don't want somebody to steal.
Is that your understanding?
PAGLIERY: Yes. And if you were to send me to China right now, I would take what's called a burner laptop. In other words, a laptop that
when I get back here I plan to just toss it out.
QUEST: Really?
PAGLIERY: Yes. Because China - I mean, look, when I talk to my hacking sources they tell me what the policies are like in countries like
China.
If you bring your laptop into China, expect to get spied on. But it's very much the same way. If you are a Chinese politician and you come to
the U.S., you're going to get spied on. That's the name of the game.
[16:55:06] QUEST: With friends like you --
PAGLIERY: (LAUGHTER).
QUEST: -- who (LAUGHTER) (inaudible).
PAGLIERY: I just know how it works.
QUEST: Cheerful thought which (inaudible). Have a good weekend.
PAGLIERY: Thanks.
QUEST: So bear in mind the rule of thumb seems to be if you're going anywhere (CLOSES LAPTOP), keep it closed. Probably best to leave it at
home.
Stick with me with a pen, with a quill. We'll have a "Profitable Moment" after the break.
(COMMERCIAL)
QUEST: Tonight's "Profitable Moment." Will they? Won't they? Will it be September, October or December? Janet Yellen said that the first
rate rise would happen before the end of the year but the clouds are there over the Fed.
That of volatility, that of the jobs numbers, that of inflation. There really is no consensus on whether it will be this September which
will be next week that the Fed would make that move.
Mohammed Alaryan (ph) says it's only a quarter point. Well he's right. But of course as soon as that quarter point happens, everybody
starts to wonder when does the next rate rise take place? And after that, when does the next and the next.
And it's no use the Fed saying it will be slow and measured and it'll be a long way off and it'll be a different tightening.
Bear in mind the last time the Fed raised rates was in June of 2006. And it was 2004 when the last tightening cycle began. So there's a lot of
people who have no memory of higher interest rates and only know the long, low rates that we've had.
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. Rates next week.
END
