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Quest Means Business
Russia Conducts First Airstrikes in Syria; US Says Airstrike Has "No Strategic Purpose" Against ISIS; Dow Up Wednesday After Worst Quarter Since 2011; Uncertainty Shakes Global Markets in Q3; Emerging Market Stocks Down 20 Percent in Q3; Qatar Fund Loses $12 Billion in Q3; Saudi Arabia's Foreign Reserves Fall; Liberia's Growth Forecast to Rebound in 2016. Aired 4-5p ET
Aired September 30, 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: Start them young. That's the message, start them young at the New York Stock Exchange. Hit the hammer.
(GAVEL POUNDS)
QUEST: Strong hammers, big New York Latin culture, the end of trading on a rousing day, with the Dow Jones very sharply higher on Wednesday,
September the 30th.
Tonight, we've got threats to investors, stocks finish out the worst quarter in four years.
We have threats to the internal combustion engine. Tesla hands over the keys to its all-electric SUV.
And there's threats to Uber. Regulators and rivals are moving in.
The threats are everywhere. I'm Richard Quest, and I threaten business.
Good evening. We begin tonight as the United States is accusing Russia of pouring gasoline on the fire of Syria, carrying out its first
airstrikes inside the war-torn nation. Russia says it's targeting ISIS strongholds. The United States believes Russia's not there to target ISIS
but has other motives.
The US defense secretary Ash Carter believes if Russia is trying to prop up Syrian president Assad, it will only make matters worse.
(BEGIN VIDEO CLIP)
ASHTON CARTER, US DEFENSE SECRETARY: Fighting ISIL without pursuing a parallel political transition only risks escalating the civil war in Syria,
and with it, the very extremism and instability that Moscow claims to be concerned about and aspire to fighting.
(END VIDEO CLIP)
QUEST: Seems remarkably similar to the Cold War and worse. You can see the aftermath of one strike here in the city of Homs. CNN can't
independently confirm these images are, in fact, authentic.
So, the relations between Moscow and Washington are deteriorating, and the locus is Syria, ISIS, and the situation in the Middle East. CNN's
Matthew Chance with our story tonight.
(BEGIN VIDEOTAPE)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This is the aftermath of Russia's first airstrike in Syria and its violent
announcement of involvement in this brutal war.
The Kremlin says it's targeting ISIS forces, but these chaotic images are from the province of Homs, where other rebel groups hold sway. Moscow
draws little distinction, it seems, between the enemies of its Syrian government ally.
It took Russia's parliament less than half an hour to rubber stamp the use of military force, albeit temporary and limited to air power. But
Russian officials justify it as legal under international law and like the airstrikes, they say, carried out by the United States and its allies.
SERGEI IVANOV, RUSSIAN PRESIDENTIAL CHIEF OF STAFF (through translator): And I want to inform you the president of the Syrian Arab
Republic addressed the leadership of our country with a request for military assistance, so we can state that it is necessary to fight
terrorism. International efforts should be united, but complying with the norms of international law is preferable.
CHANCE: But few expected to see Russian military action so soon, despite emerging evidence over the past month of a Russian military build-
up.
CHANCE (on camera): Moscow has good reason to support its Syrian ally, including military and economic interests in Syria and a genuine
concern about the spread of radical Islamic groups like ISIS. But the Kremlin also seems driven by a desire to reassert its power and to show
that Russia remains a global force to be reckoned with.
CHANCE (voice-over): It was a message delivered by Vladimir Putin so forcefully at the UN General Assembly earlier this week. Western policy on
Syria and elsewhere, he said, had failed, leaving chaos in its wake.
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): I'm urged to ask those who created the situation, do you at least realize now what
you've done? But I'm afraid that this question will remain unanswered because they have never abandoned their policy, which is based on
arrogance, exceptionalism, and impunity.
CHANCE: But now it seems Russia is offering its own answers. These are the first official images from the Russian Defense Ministry of its
airstrikes. Military equipment, communication centers, and motor vehicles were among the targets attacked, it says. And this is just day one of what
could be Russia's open-ended Syrian war.
(END VIDEOTAPE)
[16:05:07] QUEST: Matthew Chance reporting from Moscow. Now, America's top diplomat has spoken about the Syrian crisis a short time ago
at the United Nations General Assembly. Our correspondent is Richard Roth, and he joins me now from the UN. First of all, we'll get to the analysis,
but first of all, what did he say?
RICHARD ROTH, CNN SENIOR UNITED NATIONS CORRESPONDENT: Secretary of State John Kerry just met with Russian foreign minister Sergey Lavrov, by
the way, a pre-planned meeting about Syria.
Lavrov chaired a Russian-conducted Security Council meeting on terrorism. Many feel no surprise the timing of this airstrike in Syria,
when Russia was hosting its much-ballyhooed counter-terrorism meeting one day after President Obama's ISIS meeting.
Secretary Kerry indicating before the Security Council the US government has doubts of who the real targets of the Russian airstrikes.
(BEGIN VIDEO CLIP)
JOHN KERRY, US SECRETARY OF STATE: We must not and will not be confused in our fight against ISIL with support for Assad. Moreover, we
have also made clear that we would have grave concerns should Russia strike areas where ISIL and al Qaeda-affiliated targets are now operating -- are
not operating.
(END VIDEO CLIP)
ROTH: And top US officials saying things like at the Pentagon, it's "doomed to failure," the Russian attacks, because there's no coordination,
as the White House says, with any political process, Richard, to go along with this. Back to you.
QUEST: OK, so, this is an exceptionally complicated situation now, because although both Russia and the United States both wish to wage war
against ISIS, the relationship to Syria is now is what will determine how this plays out, Richard.
ROTH: And they have to make sure that they don't strike each other, that there are no conflicts, that word we used yesterday, "de-conflict,"
the US keeps pushing that, a process in which they make sure that the different armies, the different air forces don't connect.
There are dozens of countries, I think, 60 on the US side with this coalition, operating in Syria, and the US is saying they didn't get much
notice. France says when the foreign minister, Fabius, was asked, did you know Russia was going to do this? He said no. That could mean some messy
surprises ahead.
QUEST: Richard Roth at the United Nations. Richard, thank you.
A tough third quarter for investors. Now, the third quarter may be coming to an end, but what caused the turmoil? And the rear-view mirror of
the third quarter gives us a very depressing view of what's ahead in the fourth.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: A very upbeat end to a dismal quarter, the Dow Jones Industrials finishing up 235 points at the close of business. Now, that
looks a very impressive performance, up and green right the way through the session, a gain of 1.5 percent.
But if you look at the quarter overall, it was the worst three months in some four years. In all, $11 trillion was wiped off global equities in
the past three months. And the markets have been shaken by uncertainty. Look at how they've performed in the third quarter.
[16:10:00] The Shanghai Composite, obviously fueled by China's slowing growth and timing of the Fed rate decision, the Shanghai Composite
led everybody down some 28.1 percent. The Shanghai Composite down for the third quarter. It's still up about 30 percent over the last 12 months.
But then into Europe, and you have the Xetra DAX, which is, of course, in Frankfurt, and that is down 13.6 percent for the quarter. So, that is
bear territory. That is correction territory. The Dow Jones Industrials is not in correction territory, down 8.3 percent, 10 percent is considered
to be the correction level.
And then, factoring it all into the whole thing, you've got Brent Crude, which is down 21.7 percent, and that's obviously a major shift
overall. The oils and the metals are down very sharply.
Joining me to take it, to put all these numbers into perspective, Alan Valdes of DME Securities. Alan, when we look at the what happened, well,
what do you make of it?
ALAN VALDES, DIRECTOR OF FLOOR TRADING, DME SECURITIES: I think, unfortunately, this turbulence is going to continue. For us to have a
positive month, the market would have had to have been up 1600 points today, which wasn't going to happen.
But the uncertainty that drove this fluctuation, this volatility, not only here, but like you just said, around the world, whether it's China,
whether it's South America, or Europe, is still with us. There's still so much --
QUEST: Ah!
VALDES: -- uncertainty out there. It hasn't abated.
QUEST: Alan, but we've been talking to you throughout the volatile quarter, where from day one, the day after Greece defaulted to the IMF, and
highly unfair, I'm going to throw your words right back at you.
(LAUGHTER)
(RINGS BELL)
(BEGIN VIDEO CLIP)
QUEST: A gorgeous view of Athens this evening. The markets were up, the Dow gained just under 1 percent.
VALDES: Greece since the 1830s has been in default a total of 90 years. It's just so small, it's the size of Atlanta, economically.
QUEST: Everybody will remember that first 20 minutes or so when the Dow was off 1,000 points.
VALDES: That was incredible, Richard. Never saw anything like that in my 35 years down here.
QUEST: What a market it was, up 400 points at one stage.
VALDES: It was just as hot in here on the market as it was outside, so that's why I'm wearing this linen suit.
(END VIDEO CLIP)
QUEST: And now, Alan --
(LAUGHTER)
QUEST: -- you've got -- you've swapped the linen suit for a rather nice, more sober, darker -- piece of attire, but what happens next?
Because the third quarter, all right, China, commodities, oil. But fourth quarter, corporate earnings have to reflect what we've seen.
VALDES: You know, normally, November, December, January, very strong months for the economy, very strong months for the market. So, we have to
wait and see. But this year's a little different. Like you mentioned, the slide in oil is still with us. I don't see any real rebound coming in oil
anytime soon.
And again, back to the basics is that job number. We're going to probably up 200,000 this Friday, but still, that number's mired in -- is it
real or not?
QUEST: So, in the fourth quarter, we know for a fact oil is not going back up much -- well, I say for a fact. We can assume oil's not going back
up much over the next few months.
VALDES: Correct.
QUEST: We know for a fact -- assume for a fact -- that interest rates in the US will go up, otherwise Yellen and co. look like fools for having
promised us this. And we know for a fact that China doesn't recover as much as perhaps people had thought. So, tell me for a fact what happens to
stocks in the US.
VALDES: Well, I think stocks in the US are going to continue to drift down. I don't see any reason right now for the market to rally. Even at
the end of the year, knowing that we're coming into November, December, January, stronger months, I think we're going to keep volatile, but on the
down side.
QUEST: Right, but do they rally, or do they tread water? Sorry, no, sorry, they don't rally, you just said that. Do they fall, or do they just
tread water? Big difference.
VALDES: Well, people think, OK, you need a big fall in one day. I think we're going to see what we saw this quarter. You're going to see the
market capitulate, 1600, 1700, 2,000 points over the course of those three months. You might not see one big fall, you'll see us down 300, the next
day up 180, something like that. But I think at the end of the quarter, we'll be down.
QUEST: Alan, good to see you, sir. Thank you very much, indeed.
VALDES: Thanks, Richard.
QUEST: Emerging markets have been particularly hard hit by the slowdown in China. The MSCI, Morgan Stanley Chandler Index, emerging
markets down 20 percent -- that is true bear territory -- over the past three months.
[16:15:02] Investors have pulled $40 billion out of developing economies in the third quarter. "The Financial Times" says Qatar's
sovereign wealth fund has lost $12 billion. And you'll be aware,
Saudi Arabia is facing a major cash crunch. The Reserve Bank is believed to have started instructing various brokers to sell and repatriate
money. CNN's emerging markets editor John Defterios has the quarterly report.
(RINGS BELL)
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: The tiny Gulf state of Qatar has been one of the world's most prolific investors as a result of
its gas exporting prowess. High-profile assets include London's Shard Building, Harrods, and fashion house Valentino.
But the investment authority has been a sizable force in the European corporate sector as well, and it's taking its fair share of lumps now.
Let's call it the Quarter to Forget. Its stake in Volkswagen down over $8 billion. Mining giant Glencore losing well over $2 billion. And
Agricultural Bank of China, $650 million.
Other sizable losers this quarter include Royal Dutch Shell and Barclay's Bank. Although Qatar has been a shrewd investor, having taken
its stake during the height of the financial crisis back in October 2008.
Meanwhile, oil producing giant Saudi Arabia continues to see foreign reserves fall with the more than 50 percent correction in energy prices.
That tumble is reportedly forcing the kingdom to liquidate overseas assets to fund domestic spending.
This is what we know to date. In June 2014, it had $746 billion on hand when oil was trading above $100 a barrel. As of July 2015, foreign
reserves stood at $669 billion, having already burned through nearly $70 billion.
Saudi Arabia is expected to post a budget deficit of 20 percent of GDP this year, having kept spending high during this first year in power for
King Salman.
It comes as many continue to ask questions about the handling of two tragic disasters in a span of just two weeks. First, the crane collapsing
at the holy site of Mecca, followed by the horrendous stampede at the Hajj. The relatively new government is facing pressure to respond with greater
transparency and provide much better security.
John Defterios, CNN, Abu Dhabi.
(END VIDEOTAPE)
QUEST: So, not only are there problems in the third quarter, for developing economies, for emerging market economies, some economies are
really in for a very difficult time.
Liberia -- now, the country was supposed to be poised for recovery after last year's devastating Ebola outbreak. Now, the prospect of
economic turmoil because of China, so the Liberian president will tell us how she plans to rebuild her country and how she will account for what's
going to be a very difficult time. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Liberia's president says it will take two years for her country to recover from the Ebola epidemic. There have been no new cases
since July. However, the human and economic scars continue to run deep.
More than 11,000 fatalities in West Africa. Of those, 4800 were in Liberia alone. The country's growth is forecast to rebound to 5 percent
next year, but 5 to 6 percent is not sufficient in an emerging economy or a developing economy that really needs to see faster growth to try and lift
people out of poverty.
[16:20:00] President Ellen Sirleaf Johnson -- Johnson Sirleaf -- joins me now. Madam President, thank you for talking to us. We're looking
at your country, and we're discussing the recovery from Ebola, and you say it'll take two years. Is that realistic, or is that optimistic?
ELLEN JOHNSON SIRLEAF, PRESIDENT OF LIBERIA: It's realistic only in terms of returning to a crude level that we had already experienced before
Ebola hit. I mean, we already had major investments that were in the state of being operationalized. Ebola set us back one year. Now, we're trying
to recover and hope we can get to that.
We know it's going to be a difficult task, but that's our target, and I always say, you set an ambitious target, and then you put all your effort
behind it to ensure that you achieve that target. That's what we're going to do.
QUEST: And I understand, Madam President, you can never put dollars before lives, I understand that, ma'am, completely, but taking that as the
premise as my question, your economy is also going to be badly hurt by this slowdown in China, not only from any aid they may be able to offer, but
also by commodity exports. How will you handle that?
SIRLEAF: Well, let me say, Richard, how right you are. As a matter of fact, our difficulties with the economy started, perhaps, with the 2008
global financial crisis. And right after that, by the time we'd hit the year 2014, although our growth had increased to about 7.8 percent, because
of a fall in commodity prices, that growth dropped down to 5.9 percent.
And so, we were facing difficulties. Ebola, of course, drove the growth rate down to the bottom, down to 0.0. What are we going to do about
it? Well, now we know diversification efforts that we have probably not put enough effort behind, we're going to accelerate it.
We've got other potential areas of growth. Our marine possibility in fishing, our agriculture industry in food processing, our tourism industry
announced that we hope to get roads. We're going to do that.
And let me just say this: we've also been lucky in two ways. Number one, the depressed global environment has made crude oil much cheaper.
That's helpful to us for some of our operation. Secondly, we've been able now to make progress in operations in gold, and we made our first gold
export just a few months ago, and we have another operation coming on.
It's not going to be enough to get us to the 7 percent that we need to fight poverty, but it puts us back on track, and with a lot of effort on
our part, the billions that we amassed between 2006 and 2008 that's never really gone into full operation, because of the depressed global
environment, we hope we can turn that around.
QUEST: So, with that context, and on the basis that trade is much better than aid, and obviously bearing in mind the world trade talks going
nowhere, what is it you now need from the international community? What sort of policies do you now need them to offer you?
SIRLEAF: Well, in the first instance, we'd like to see the commitment post-Ebola to assist us in rebuilding our health systems just so we can
make sure that we have the means to respond to any outbreak, make sure that we can control those diseases that affected us. That's number one.
Number two is that we need to grow the private sector. That's where the employment potential lies. That's where the expansion lies. And so,
we want to encourage investors to look at Liberia's natural endowment, to take advantage of it.
We hope it will improve when we get our infrastructure right. Our multilateral and bilateral partners are helping us on the infrastructure
side. Hey, Richard, we're very lucky, we just got our compact approved with the United States. That's going to give us money to get our hydro
functioning again.
QUEST: Right.
SIRLEAF: So, it's going to be tough. I don't want to underestimate that. Getting the economy moving, getting back to the good level we want,
achieving our agenda for transformation, our Vision 2030 is going to be a tough haul. But we're going to be tough to go after it.
QUEST: Madam President, finally, the -- you've spent the last year or so or more dealing with the matter of real life and death of large numbers
of your people.
[16:25:00] To some extent, how does it now transition for you to deal with economic issues once again? To have to deal with, if you like, the
everyday business of presidency and economics?
SIRLEAF: Well, we have to first be concerned with the effects of Ebola. Not only did people die, but it did leave a lot of trauma, left a
lot of orphans, it left a lot of people without jobs and a livelihood.
And that's why I put the emphasis on health. We've got to put emphasis on education, because our students lost a whole year and more of
school. So, that's got to be our concern. But at the same time, we know that unless we grow the economy, we will not have the means to provide
those services that are so vital to the development of our people.
And so, it's going to be a tough balance. We've got to get the priorities right. That's what we're trying to do, and I hope that our
partners are going to be there with us, that we can get our -- all of our policies straight, we can get our capacity built. It may require --
QUEST: Right.
SIRLEAF: -- technical assistance from our partners, it may require financial support. It may require even some reform in some of our
institutions and some of our laws and policies, but we -- we're committed to plodding ahead, committed to once again getting back on track and trying
to achieve the goals that our people have held us accountable for.
QUEST: Madam President, thank you for joining us on QUEST MEANS BUSINESS. It's always lovely to have you on the program, thank you, ma'am.
SIRLEAF: Thank you, Richard.
QUEST: We continue with our business agenda in a very different direction. Tesla -- now, Tesla has launched its latest model. It's the
Model X, and it brings electric vehicle competition slap, bang, wallop, the SUV market. We'll talk about that after this.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. Of course there's more QUEST MEANS BUSINESS in just a moment, when Tesla tries to kill the internal combustion
engine. How are they going to do it?
And Uber faces roadblocks from regulators and new competitors.
Before all of that, this is CNN, and on this network, the news always comes first.
Russia has carried out multiple airstrikes inside Syria. You can see an aerial view of one of those strikes here. Moscow says it was targeting
ISIS insurgents. US officials say opposition forces may have been the real target.
(BEGIN VIDEO CLIP)
[16:30: 07] CARTER: One of the reasons why the Russian position is contradictory is that -- exactly the potential for them to strike as they
may well have in places where, in fact, ISIL is not present. Others are present. And this is one of the reasons why the result of this kind of
action will inevitably simply be to inflame the civil war in Syria.
(END VIDEOCLIP)
QUEST: The U.S. Secretary of State John Kerry met his Russian counterpart Sergey Lavrov on Wednesday. Both men are taking part in the
U.N. General Assembly in New York.
Mr. Lavrov said he's ready to communicate with the United States in the fight against terror in Syria.
(BEGIN VIDEOCLIP)
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER, VIA INTERPRETER: On the 30th of September in response to a letter by the president of Syria, the
president of Russia asked and received the consents of the Chancellor Federation for the use of the armed forces of the Russian Federation in the
Syrian Arab Republic.
We're referring here exclusively to operation of the Russian Air Force to carry out strikes against ISIL positions in Syria.
We have informed the authorities of the United States and other members of the coalition created by the Americans of this and are ready to
forge standing channels of communication to ensure maximally-effective fight against the terrorist groups.
(END VIDEOCLIP)
QUEST: The United States Supreme Court has denied the stay of execution for the convicted murderer Richard Glossip. Glossip was
convicted of hiring a man to kill a motel owner in 1997.
He's always maintained that he was framed. Glossip will be the first person executed with a controversial sedative since the Supreme Court
approved that drug's use this summer.
The United States Congress is due to vote on a bill that will prevent the government from shutting down. Earlier the Senate voted to keep the
government funded until December.
The bill passed 78 to 20 and now it goes to the House which must act before midnight to prevent a shutdown.
The Palestinian Authority President Mahmoud Abbas has said Palestinians are no longer committed to peace agreements with Israel
because of what it calls repeated Israeli violations.
Mr. Abbas addressed the United Nations General Assembly shortly after the Palestinian flag was raised at the U.N. for the first time in history.
Tesla has rolled out the latest threat to the internal combustion engine. It's called a Model X and it opens up a new front in the battle
between gas and electric in the luxury SUV.
Now here are some of the Model X's features that you'll certainly want to know about. First of all, it has falcon wing doors.
Now these falcon wing doors, they're specially built by the way so that it doesn't always have to go all the way up. They can actually open
up from halfway down or something - well you get the idea.
It has a bio defense mode with an air conditioning system, it has a 400-kilometer range. The chief executive Elon Musk says it shows that any
car can be made electric.
ELON MUSK, CEO, TESLA: It's important to show that any type of car can go electric. We showed that you could make a compelling sports car
with the roadster and that could go electric.
(CHEERS AND APPLAUSE)
MUSK: We showed you could do with a sedan and now we're going to show that you can do it with an SUV.
(CHEERS AND APPLAUSE)
(END VIDEOCLIP)
QUEST: You can do it but should you do it? Shelley Palmer joins me from New York, technology writer, host of "Shelley Palmer Digital Living."
Look, everything Elon Musk touch is - seems to be successful in terms of these cars. The Tesla is exceptionally as popular and very expensive
and one doesn't doubt that the X will also join that genre. Would you doubt it?
SHELLY PALMER, TECHNOLOGY EXPERT AND HOST, "SHELLY PALMER DIGITAL LIVING": No, I think it's a lifestyle choice and the people who can afford
that car are going to flock to it instantly. They're going to sell as many as they can make.
That's not the issue. What I think is fantastic right now, Richard, is look where we're looking. You went to Silicon Valley, you got taken to
this Elon Musk press conference in your Google self-driving car experiment and here you are looking at the future through the eyes of an electric car
that's got all of the luxury and appointments and kind of future-proofing and interesting stuff.
All the innovation and inspiration is coming there. If I live in Detroit, I'm having a hard time even reconciling what I'm doing for a
living.
QUEST: Right. All right, but did that discrepancy, Shelly, is it not matched to some extent by the hybrid nature and the still relatively - and
I use that phrase advisedly - nascent nature of electric vehicles?
[16:35:10] PALMER: If we understand the technology curve that this accelerated pace of change that we're on right now and you look at what the
Model X represents, look, this car is expensive. It's too expensive for most people.
But it is also a tour de force in engineering and it makes everyone who looks at it, kind of go `Wow, that's cool.' And it makes you think
about the future in a way that Detroit just doesn't.
And yes you're right, it's nascent in its early stages and its early days and there's not anything that you should think, `Oh, no I'm sorry.'
If I make Ford F-150s for a living and I compare the Ford F-150 truck over here to what the Tesla truck might look like in a couple of years, I'm
like, wow, that's crazy.
Elon Musk has said you can make anything electric. What will electric pickup trucks look like and how will they work? And will I live in a world
where I don't affect climate change the same way?
The inspiration is what interests and the innovation interests me. And it says a lot about what's happening in America and it talks a lot
about big industry and incumbent industries and new nascent industries and innovative industries. And I think -
QUEST: Right.
PALMER: -- it's pretty clear -
QUEST: I'm going to jump in here because you're talking about new industries. I want to read a quote from your blog or your newsletter this
morning. "Twitter must change the 140-character limit or face death."
Well they did something else today, didn't they? Dorsey now confirmed to be the CEO. Jack Dorsey to be Twitter's CEO. So, he's got more to
worry about surely than changing the 140-character limit.
PALMER: No. Actually what he has to do, Richard, -- and this is I'm as super serious as I can be right now - Twitter's product needs to be
upgraded and improved at a level that they have just not been willing to do up to now.
So as CEO, job one whether it's adding to the 140 characters or just making Twitter easier to use or making a better consumer product, they've
got to get to work on making Twitter something that people care about. Only about 300 million people show up every day and it's been static and
declining. And most of those are bots.
I'm sorry, here's job one. It's change the 140 characters, make it whatever it's supposed to be or death. (Inaudible) death part.
QUEST: OK now, in a sentence, if Dorsey is confirmed to be the chief exec - he's already acting chief exec - and at the same time taking on his
existing job at Square, is that a good move - yes or no?
PALMER: He knows this product, he knows the market, he was there at the beginning, he is a guy who's probably best positioned to do this. It's
a lot of work for any one individual I will grant you that, but these - you know - these are challenging times and they call for desperate measures.
Twitter is in a situation right now where at a certain point people are just going to go `humph' We don't feel it that way in the TV business
because we're constantly advertising for Twitter for free.
QUEST: Shell!
PALMER: The fact is these guys are in serious trouble. So Jack's going to get it done or he isn't. I'm rooting for him. I think he's going
to get it done.
QUEST: I'll take that as a yes. Shelly Palmer, proving to you that I do read your daily newsletter.
PALMER: (LAUGHTER). Thank you. It's free.
QUEST: Once for quite certainly. Well so -- there's lots of things that are free, doesn't mean to say that I read them. Shelley, thank you.
PALMER: You got it.
QUEST: Now, while Tesla is moving on to petroleum turf, petrol- powered cars are going after the diesel market. Now the VW may have put another nail into diesel's coffin as Maggie Lake explains.
(BEGIN VIDEOCLIP)
FEMALE ACTOR IN COMMERCIAL: Why do we have to buckle up? The pickup stinks with diesel.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: This was supposed to be diesel's big moment.
Actors: You've got to be kidding me! (SCREAMS).
LAKE: Add touted diesel as packing a performance punch. U.S. sales were on the rise, representing more than 20 percent of Volkswagen's sales
in 2014.
Now as VW admits to faking emissions tests, its overall sales are slumping and are expected to be down at least 5 percent in September.
And the diesel industry is bracing for the worst.
PETER VALDES-DAPENA, CNN MONEY AUTO CORRESPONDENT: Yes certainly in the U.S. market, this is the scandal that diesel did not need. What this
is doing is putting in headlines right now the idea that diesel is dirty.
I think this is going to tarnish the entire product line of diesel cars from every manufacturer.
LAKE: Clean diesel was supposed to deliver it all -- performance on par with gas-powered cars, superior fuel economy and less pollution than
regular diesel.
But even before the Volkswagen scandal, diesel was facing tough environmental challenges in Europe where it makes up more than half of all
cars sold.
The mayor or Paris wants her city to be diesel car free by 2020 and London Mayor Boris Johnson wants to raise congestion charges on diesel
vehicles.
Another big challenge, improvements in gas-powered cars that have narrowed the performance gap.
MARK WAKEFIELD, MANAGING DIRECTOR ALIXPARTNERS, The diesel cars still are more efficient than the gas cars in their competitive and comparative
segments.
[16:40:01] But the gas cars have closed the gap quite a bit, particularly in the last five years with the advances in the gasoline
engine technologies.
LAKE: Some argue that diesel owners will remain loyal.
LAUREN FIX, "THE CAR COACH": I just spoke with someone at Porsche. They can't keep the Cayenne diesel on the lot.
People that love diesel, and I include myself as one of those people, they love the fact that it's longer distances between fill ups. People
that have them really don't want to sell them and they certainly don't want to sell them back.
LAKE: But potential customers who consider doing their part for the planet by switching to diesel may be lost for good.
VALDES-DAPENA: Right now you've got this scandal that pretty much is tainting the image of diesel as a green technology. And that I think is
going to be to the benefit of hybrids and plug-in hybrids that have a greener image.
LAKE: Diesel is still the go-to fuel for trucks and other larger vehicles. But its big opportunity to gain in the passenger car market may
have stalled. Maggie Lake, CNN New York.
(END VIDEOCLIP)
QUEST: Let us stay with matters on the road and we'll turn our attention to Uber. Uber helped create the car-sharing industry. Now it
has a very firm target on its back.
The competitors and the regulators are taking aim at the biggest on the block. "Quest Means Business."
(COMMERCIAL BREAK)
QUEST: This week, global leaders are shuttling between Washington and New York. Now think about it - you had the Pope on "Shepherd One," his
American Airlines triple 7 going up and down between the two.
You had President Obama on Airforce One, his 747 and you had Xi Jinping of China. They went between New York and Washington by plane.
For most business travelers, the choice comes down to something really less exotic than your own private jet. But it's still the plane or the
train.
Now on this route known as the corridor between Boston, New York and Washington, this is the Northeast Corridor. Amtrak Acela runs along the
corridor throughout the day. It's one of the few high-speed rail network trains in the United States.
It's the only profitable part really of Amtrak's network. Now Amtrak has plans to improve the service in the face of stiff competition, but can
they do it in the Northeast Corridor?
(BEGIN VIDEOCLIP)
QUEST: Locomotives, the classic mode of transport, a symbol of technological prowess that laid the tracks for modern long distance
transport.
Here in the United States, the rail may be less traveled. But it's been steadily gaining traction along the bustling Northeast Corridor.
[16:45:08] MATT HARDISON, EXECUTIVE VICE PRESIDENT/CHIEF MARKETING AND SALES OFFICER, AMTRAK: Well the Northeast Corridor we generally define as
being between Washington, New York and Boston.
We carry about 12 million passengers annually.
QUEST: Amtrak always had a good share of the Corridor market. Then in 2000, the rail company introduced the Acela, a higher speed train. And
that sent Amtrak share flying.
To date, 76 percent of travelers between New York and Washington choose the train over the plane.
HARDISON: We do have the market but we're in a competitive environment. The fact is, every other mode of transportation is competing
with us whether it's air or bus or automobile. And we can't relax and just assume that we own the market.
QUEST: Sir, how fast will we be going?
Male: One thirty five, the max.
QUEST: Two hours and -- ?
Male: Two hour and 50 minutes.
QUEST: Two hours, 50 minutes. Thank you. Acela will get me from Washington to New York in under three hours and the roundtrip business
class ticket costs about $315.
The Northeast Corridor is one of the great business rail journeys. Washington, Baltimore, Wilmington, Philadelphia, New York and then up to
Boston.
That's why they continue to target the business traveler on this crucial route, offering free onboard Wi-Fi and your space for productivity
and soon a revenue-based loyalty program.
The advantage of Acela between Washington and New York is fairly obvious. Speed, time, comfort and convenience. For Amtrak and the
railway, the issue is taking it to the next level.
Amtrak's problem is the aging infrastructure limiting what they can do. There needs to be massive refurbishment, including new rail lines.
HARDISON: We want to make the track smoother, faster and a more reliable system generally.
Male Announcer: Gentlemen, shortly we will be arriving up in station New York City.
(END VIDEOCLIP)
QUEST: Arriving in New York. After they get off the train, many passengers call an Uber to complete their journey. The service is under
fire in all corners of the world.
In Paris, (RINGS BELL) you have two execs facing criminal charges in connection with their business. The case has been delayed until next
February.
Then go to London where Uber says its proposed new rules could destroy the service. They include a five-minute wait period after ordering a car,
a requirement to book cars a week in advance - that certainly knock it off. (RINGS BELL).
And then police raided Uber's offices in Amsterdam on Tuesday where it's accused of violating taxi laws with its lower price UberPop service.
More road blocks in Rio (RINGS BELL) where the mayor of Rio de Janeiro has signed a bill banning ridesharing. His counterparts in San Paolo is
weighing a similar decision.
And to round it off, (RINGS BELL) in Australia dozens of Uber drivers have had their car registrations suspended in a crackdown over illegal
ridesharing.
Paris, London, Amsterdam, Brazil, Australia. Uber's also under pressure from other businesses. The industry it helped create is now being
disrupted by competitors as Isa Soares discovered.
(BEGIN VIDEOCLIP)
ISA SOARES, CNN ANCHOR AND CORRESPONDENT: In London's increasingly overcrowded and ever more competitive taxi market companies need to find
ways to attract customers.
Meet Gett, Israeli-based taxi app. Founded in 52 cities around the world, Gett is connecting new passengers in London to the city's
traditional black cabs.
Remo, talk us through the - your app basically, Gett - and how it works and it competes with other very well-known companies.
REMO GERBER, CEO, GETT U.K.: Look, it's a very simple app. You do one tab and then you can get a London-licensed black cab on its way.
It works like many of the other apps except you can also pre-book your cab and you see it straightaway. It takes about 3 1/2 minutes on average
to - for a cab to come to where you are and gets you wherever you need to go.
SOARES: What makes yours stand out from the likes of Uber from the likes of Hailo.
GERBER: Yes, so there's really a number of different components. One, black cabs are different to many cabs. Black cabs have a lot more
training, they're managed and governed by TFL by the governments there. They're really maintained to a really high degree of standards.
[16:50:03] And then secondly, we're doing a lot of customer service as well. So we're guaranteeing your pre-book, we're making sure that drivers
show up on time and so we're not just letting the ride happen as it stands.
And then probably thirdly different to many other black cab apps, you can now also get fixed prices on longer distances in a black cab, so you
know before you get into the cab how much the fare is going to be.
SOARES: But there are plenty of challenges for Gett, notably from rival Uber. While Gett may not increase prices when demand rises, it is
limited to using authorized cabs.
Uber, which uses private cars and charges more during peak times, can yield (ph) passengers with a promise of a guaranteed ride and low costs at
other times.
Well you've heard from the CEO of Gett, but what does it mean for London cabbies? How does that change their work? I'm joined here by Eddie
-
EDDIE, LONDON TAXI DRIVER: Hello.
SOARES: -- he's been a London cab driver for some time. So how long have you been a London cabbie, sir?
EDDIE: Count to seven and a half years now. You can see what your potential is. You can see the work's there and you can look at your jobs.
You've got future orders where you can pick the jobs which take you to one job and then pick another job and come on, so you can keep working.
I've met the app - it's been running a long time. I've been on it since it more or less started in London, but for four years. Just gives
you have more access to work.
With technology now you've got to move with the times. People like using the app. If they're in a pub or restaurant and it's raining, the
last thing they want to be doing is standing outside waiting in the rain trying to hail a cab. So they can order it on their phone.
SOARES: For Eddie as well as other London cabbies, this could mean two things - greater flexibility and more economic stability. Isa Soares,
CNN London.
(END VIDEOCLIP)
QUEST: "Quest Means Business." We will return in just a moment after a moment of course to think about "Make, Create, Innovate."
(COMMERCIAL BREAK)
QUEST: The U.N. Secretary General Ban Ki-moon held a special meeting today on the migrant crisis where the goal was to agree a global response.
The situation's worsening by the day. I spoke to William Lacy Swing, the director general of the IOM - International Organization for Migration.
(BEGIN VIDEOCLIP)
WILLIAM LACY SWING, INTERNATIONAL ORGANIZATION FOR MIGRATION: I think, Richard, we look upon it not so much as a problem to be solved as a
human reality that has to be managed.
And if we put it in perspective, the 500,000 migrants who've come north - largely refugees - you have to compare it with 700,000 who've been
in Ethiopia for years, 400,000 in Kenya, 200,000 in Sudan and of course with the population of five million, Lebanon is now host to one million
migrants.
QUEST: In all of this, there can be no question surely that the way in which the European Union is handling it, borders on shambolic.
SWING: Well, I think the Commission and the Council are doing their part. I mean, they - but the problem is you have to bring along all 28
member states and that hasn't happened.
So in a way it leads to institutional paralysis and that we need to get around. There's also an enormous psychological adjustment, Richard,
because countries that for centuries have been peopling the world as continents of origin have now sort of in the last couple of decades become
continents of destination - very favored destinations.
And that requires public education and public information to keep the people abreast of what's happening.
[16:55:06] QUEST: But that's a long-term goal, if you like. A long- term ambition, --
SWING: It is.
QUEST: -- a long-term result. You've got a crisis on your doorstep now.
SWING: Right. No, exactly and I think the dialogue we have is very productive with the European Union. We meet regularly. Number one is they
have decided now to do a U-turn and to make saving life the top priority.
Number two, we have to give all these people some form at least of temporary protective status. Number three, we have to put more money into
shaping up these reception centers because right now a lot of them are really not adequate to keep human beings in a good state and a dignified
manner.
(END VIDEOCLIP)
QUEST: We will have a "Profitable Moment" after the break. "Quest Means Business."
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment" or actually not very profitable when it comes to the third quarter of your long-end stocks. The quarter of
course was the worst in the United States for some four years.
And if you look at the losses - 8 percent on the Dow, 13 percent on the DAX, more than 28 percent in Shanghai - you might be tempted to take
fright, particularly since other people suggest that the rest of the year won't be much better.
But the truth is of course we just don't know. There are too many unknowns out there, not least of which what happens with China, when and
how the U.S. raises interest rates - that will happen before the end of the year - and what happens with the price of oil.
Factor it all in, and there's only one thing of which we probably can be certain - if that's not a contradiction in terms - and that is
volatility will be the name of the game between now and the end of the year.
So what do you do? You do very little. That's the way you make money in the long way - in the long run. You sit and wait.
And that's "Quest Means Business" for tonight. I'm Richard Quest at the CNN Center. Whatever you're up to in the hours ahead, (RINGS BELL) I
hope it is profitable!
END
