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Quest Means Business

Last Minute Rally Doesn't Make Up for Selloff on Wall Street; Banking Fears as Deutsche Bank Drops Almost 10 Percent; Significant Risk of Global Recession?; North Korea Looking to Boost Economy; Bloomberg Considering Presidential Race; Promoting Women to Corporate Boards Helps Profitability. Aired 4-5p ET

Aired February 08, 2016 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[16:00:00] RICHARD QUEST, QUEST MEANS BUSINESS HOST: Pretty awful day on Wall Street, very heavy sunning in the middle of the session. All is over

for the day. And look at that, that over there. I think we count now, there's a (inaudible) as trading comes to a close on Monday, it is the 8th

of February.

Tonight, it's the case of too little and too late. That last minute rally, it couldn't make up for a horrible selloff on Wall Street. But the Dow, as

you see, does hold 16,000.

Bank shares are brutalize as Deutsche Bank dropped almost 10 percent. And the former (inaudible) Standard Chartered tells me, why it's time to banish

the big bank notes.

I'm Richard Quest tonight, live in Abu Dhabi. Well, of course, I'm in business.

Good evening, a major selloff hit stock markets around the world. There was a fall in the price of oil and that grease the slide all the way down.

In New York, the Dow fall back somewhat over the last hour of trade. I will look at the numbers and you'll see, and even up as much as 400 points

towards the early afternoon. The technology stocks were particularly badly affected. They did fall back in the last two hours of trade, and the

market to Dow, the main broad market get advantage to hold 16,000.

Lost is even worst in Europe with Frankfurt and Paris down more than 3 percent. And Greek stocks, because of what is not only over the pension

reform, worries over the economy, worries over the refugee crisis. The Greek and the Athens Composite as you can see there absolutely club enough

(ph) over seven percent.

The selling hit all share in all sectors. Amongst those worst affected with the banks stock, Barclays shares were briefly halted in trading, and

only oil side, Chesapeake Energy shares without as much as 50 percent.

Now, Chesapeake said, it was -- has been forced to deny but it is filing a bankruptcy but it has admitted that it is looking at restructuring options.

Now surprisingly, the one that will gain in always misery and mayhem, and it is oil, while investors filed into gold and precious metals, Randgold

and Fresnillo make big gains on the footsie.

Tim Anderson is the Managing Director of TJM Investments who joins us now from the New York stock exchange. So, Tim, the first question is, what

prompted the afternoon heavy selling and that will lead to the second question, what then prompted its reversal?

TIM ANDERSON, MANAGING DIRECTOR OF TJM INVESTMENTS: Well, clearly, we started the week where we ended last week. We were down over 200 on

Friday. It felt like we would have gone lower if the market was open pass 4:00. We started negative after following global market this morning. And

we did get maybe a little bit of a bounce at 2:33.

But I don't think too many people are going to view it as a moral victory. It feels like there's more downside, the communist market. It also was

clear even at the bottom and even with oil ride $30 that were maybe 6 rate oils, stocks that were green.

There's a flight to quality going on within the equity market in even within some sectors. Clearly, those docs were up by those that are viewed

as a survivors long term in the oil patch, and those that are having -- and those that are paying dividends that are probably least likely to get cut.

QUEST: Tim, you -- that the most telling thing which is said, there is that -- there's more to come, how much of this is predicated by

fundamentals and how much by fear?

ANDERSON: Well, it's probably a little of both right now. I think that a lot of the macrodata has been shown the economy to be not nearly as strong

as you would like. Although there were a few pockets of the not from table who unemployment report Friday that we're a little bit encouraging, average

hourly earnings were up.

But it certainly not what you'd like to see if we're going to have robust economy growth somewhere between 1.5 percent and 2 percent, just isn't

going to cut it.

[16:05:05] And there's a lot of fear in the oil sector, some of that has spreading to other sectors. You mentioned Chesapeake, there's a few other

names that were down 15 percent plus.

QUEST: Tim Anderson joining us from Wall Street, and tell you just how widespread this mood of malaise is. Unless the Citi warning markets

tracking what they are calling a death spiral. It's a dooms day scenario, Citi called it oilmageddone.

And the four factors behind it, the first is the strong dollar. The dollar goes up and oil goes down, and that's going to hurt U.S. companies

particularly those exporting. And we'll help the earning season. There's low commodity prices, oil prices are cut in half over the last year, that

also out some part of the economy.

Cheap oil has partially calls a slow down in trade, certainly from emerging markets and that will move further away, because emerging market economies

are slowing. And that's not only partially due to the slow down in China. It's also as result of high interest rates in the United States. We're

just pulling out money.

And there's a risk of significant and synchronize global recession if the size will continues. The only perhaps good part going to Citi is oil

prices are likely near the bottom.

Ken Rogoff served as the Chief Economist at the IMF. He is now professor at Harvard and we need him to understand. This concept, Ken, over death

spiral, do you buy it?

KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: Well, I made that sort of saying that financial markets panic and they go down. And that

makes the firm panic and they hire last. It's possible.

But, I mean, I think if the root, the emerging markets in China are definitely hurting, the vast economy are slow but, you know, recession is

far off. So I think it take a lot of steps to get there. There's a lot of fear out there which I think is stronger than the fundamentals.

QUEST: That fear becomes a self-fulfilling prophecy when you see this like today, Ken, the market opens 200 points and drops 400 points, and it pretty

much ends where it started.

ROGOFF: Well, it's pretty ugly out there and it has been for quite a while, there's no question about that.

But, you know, that again remember. Richard, the markets were sort of dancing up to the sky while the economy wasn't doing that well. They are

not necessarily perfect predictors. They're not necessarily tightly connected. I think here, there is certainly this lingering remembrance of

what happen in 2008, could it happen again.

And people are just getting this uneasy feeling and some of the selloff certainly has to do with that. But I think it's right what the Citi report

said that, of course, and it just keeps going down that will fit into higher ring and will fit into spending, and it could become self-

fulfilling. We're not yet.

QUEST: Right. But, Ken, what breaks that cycle? What policy response and I don't mean long term policy response, a structural reform. That's 5, 3,

5, 7 year a benefit. What immediate policy response gives competence that we're not heading down, we're not having toward to 207-28-209 again?

ROGOFF: Well, that is a tough question. I mean, obviously, if things not bad enough, the fed would pause and even reverse course. The European

Central Bank and the Bank of Japan can do more. We might see more on fiscal policy if things got bad enough.

But, again, I mean, I think people are sort of -- the policy makers are sort of waiting because of the -- if you look at the employment report on

Friday. I mean, 4.9 percent unemployment, 150,000 was a slow down but it's not a terrible number. And by the way, the weather really masses up

interpreting anything. So I think there's sort of waiting and looking.

I will happen if things continue to spiral into this sort of Armageddon. But I don't think it's going to come to that in best guest.

QUEST: China is off for the week. The Chinese New Year, year of the monkey and -- the China is a way. But I'm starting to see more and more

reports, warning against this very high level of toxic debt in the system but nobody really knows the death and gravity off.

ROGOFF: That China is the place where there are problems, and we don't know how much they're going rate it out. And let's face it, Richard,

nobody really knows that the growth rate is in China or exactly what's going on. The numbers are very imperfect, and a lot of debt.

[16:10:02] They have also gone through this phenomenal centralization of power with President Xi and at the same time, they're too decentralized to

a more service consumer-oriented economy. Not clear if that's something that's really consistent.

China has been losing reserves despite running a big trade surplus. Money has been playing in the country. They're definitely concerns about what'll

happen in China and will they have a hard landing. That is very real and the debt problem if the economy slows down. It is going to be ugly.

But, you know, we don't exactly know that's going on. I'm certainly concern there. But even in the worst case scenario, it's not obvious how

far that would rabiate out into a recession in Europe and United States.

Ken Rogoff joining us from Hammond, from Cambridge, Massachusetts. Ken, good to see, sir.

Now, European lenders are gone, from themselves, under pressure. This time it was the banks. Barclays was suspended in trading threshold (ph) period.

And denounced down 10 percent, big reasons for the banks taking and battering, we'll talk about next.

(COMMERCIAL BREAK)

QUEST: Fresh fears to every Europe banking sector has led to steep losses on bank shares on Monday, just giving you the totality of the picture, the

starts of the new week.

But you look at this and you saw that Greek Banks feel around 20 percent with the Athens market now at its lowest level since 1990. Credit Suisse

chief exec has asked the board to cut his bonus for the bank posted a lost of $2.8 billion for 2015.

And investors are making bets that banks could default to the so-called Credit Default Swap, the CDS, that has been a surge in CDS. You remember

there were a lot -- CDS were largely behind much of the subprime crisis after 2009.

But they are barometer of how worry people are, not having an effect on Europe because banks shares in Deutsche Credits, Suisse and Commerzebank

are all down more than 30 percent since the beginning of the year. And although there is a few that banks stops now look undervalued, it is

counted by the view that frankly the worst maybe in front of us.

Vicky Pyrce is the Chief Economic Advisor of the Center for Economics and Business Research, joins me now from London.

Vicky, the banks, I mean, Barclays is suspended for a while, Deutsche are down 10 percent, the total banking index is sharply off. Again, I ask you

the question I ask Ken Rogoff, how much of this is real and how much of it is fear?

VICKY PYRCE, CENTER FOR ECONOMICS AND BUSINESS RESEARCH: I think we've definitely seen the rest of confidence plunge in Europe, and that's been

going on, I think, for a little while. I think everybody had underestimated the slow down in China.

Nobody had forecasted the very sharp drop in oil prices and other commodity prices we have seen. And, of course, there's quit lot of exposure in the

number of the bank to companies that are affected quite directly.

Well, what's happening, first, in the commodities market and second in emerging markets too. And I think stocks have adjusted down with the

results. And I think there was another issue there.

[16:15:00] The rising U.S, interest rate, how small it was seriously unsettled the markets. And that I think is still something that we have to

live through. And now, remember, actually we've been (inaudible) please in someway that Christine Lagarde just before the year, warn that we just

don't know where the impact of those -- of that very increase in the U.S. will be in the world market. And that what we may end up with the

disappointing year in 2017 and here we are already.

QUEST: Yeah. But look at these numbers, Deutsche are off 38 percent for the year, Credit Suisse, 34 percent. And now, we've had numerous stress

test and bank restructuring and bank recapitalization. So there should be any -- there should be too many questions about the veracity of your like

of the banks. Maybe their earnings but there survivability should surely they'll being questioned.

PYRCE: I think this should be fine and, of course, it's a bit of a surprise that's Credit Default Swap have sort of increase there

significantly. But the interesting thing, of course, that a number of the banks have been announcing our results. We're very bat (ph) with 2015, and

people see that, losses Deutsche Banks as well and saying, "Well, here we are 2016. The prospects don't look any better."

So is there a lost again for 2016? What is it actually means in terms of the capital based of those banks? Because of course, the non-performing

loans are going to be increasing very significantly and that's a serious over hang over the markets right now in terms of looking at banks. And

indeed stress may will have to be done, again, even though this would be the intent to do anything this year.

QUEST: Finally, I just want take you to Greece if I may. And the government of Alexis Tsipras now in trouble over its pension reform, lost

of support by the general public. And the market is heavily down. Is it your gut feeling, Vicky, that does in election in before year's end?

PRYCE: This is going to be very difficult for Tsipras to carry on this year. The real question is, who is going to want to step into his shoes?

So what's happening right now is that, the opposition part, is I'm trying not to bring the government down. Because if they do, then they would be

the ones are going to have to face with these problems that Greece has right now. But it is a very tricky situation, I think political unrest

what we going to have in prospect, I think in Greece.

QUEST: Vicky Pryce is joining us from London. We thank you for that.

Now, some news just -- to bring you the Financial Times is reporting this evening Michael Bloomberg has told the paper, he is considering running for

the U.S. president. It is the first time the former Mayor of New York City has said directly that he could enter the race.

And all of this happens, of course, bear in mind to be just enter, it's believe he will enter as an independent, and he'll probably finance it

himself. He's worth many billions of dollars. But all had happens less than 24 hours before the New Hampshire primary. Well, we have extensive

coverage of that in the hours and days ahead.

This is QUEST MEANS BUSINESS live from Abu Dhabi for you tonight. The former head of major international banks says, "Make life hard for

criminals, and you do it by getting rid of a hundred dollar bill." QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[16:20:04] QUEST: The former Chief Executive of Standard Chartered Bank has called for log bank notes to be scrap (inaudible). I'm about the

denominations, not the size.

Peter Sands has getting rid of $100 bill or 500 Euro note and the 50 Pound note, would make it harder for drug gangs and bank robbers to move money

around.

You know, let's face it, if you got 500 Euros or $100 bills, you can get thousands in a cigarette package. Essentially, you have to transport a lot

lower, smaller denominations and that's makes it much more difficult to stay under the radar.

Peter Sands is now a senior fellow at Harvard Kennedy School of Government. He joins us live from Washington.

Now, we've known for a long time that suit cases full of crisp $100 bills have been, you know, the preferred method of the criminal classes. And --

but why now do you think it's getting worse?

PETER SANDS, FORMER CEO, STANDARD CHARTERED: Well, I think a number of things. One is, I think we've become more acutely aware of that cost of

drug trafficking, human trafficking, terrorist finance to society. And secondly, the electronic alternatives are now so well-established cost

effective.

You can use a credit card in so many places, or a debit card, or something. That actually these notes don't play a role in normal life. Very few

people have them, very few people use them. They're largely used by people wanting to do illegal things, so why do we keep producing them?

QUEST: Well, your argument goes of course if you stop producing them. Then, they obviously have to find either denominations or they have to use

the banking system.

SANDS: Yeah. And basically, I'm not arguing that they are going to stop wanting to commit crimes or commit terrorist acts or do corrupt things.

All I'm saying is, we will make life more difficult, and by making life more difficult we will discourage some of that activity. We'll make it

more expensive, we'll increase risk of detection.

They will look for substitutes, but in one or another, the substitutes all are more expensive, more difficult, or have greater risk of being trace. I

-- somebody will work hard what they are doing, and that's the problem with putting for a criminal perspective for putting transactions to the banking

system.

QUEST: All right. Now, of course, I mean, you know, obviously, you have experience of this. The bank that you -- that you led is indeed get

sanction because of money was going through the system, improper money was going through the system.

But this is really comes to the point, Peter, which is more important to deal with if you like, the large scale stuff going through the legitimate

banking system, all the bank notes, or is it not and either all (ph).

SANDS: Well, it's not either all, we need to be tightening up on the transactions surveillance system, an interdiction system through the

banking system. And we also need to be stopping what's going in cash.

But one point I'd make is, the large stuff is going on in case, most of drug trafficking for example which is the single biggest crime in the world

in terms of the dollar flows, most of that stunning cash. It's not actually to the banking system.

Stuff through terrorist finance, it's largely done in cash. Human trafficking and human smuggling, it's largely done in cash. So while it is

really important that we strengthen our defenses through the banking system, and the moment we have those great gaping hole which is high-

denomination notes. That the preferred mechanism of payment and movement of money. And we don't know what's going on there.

QUEST: The banks, the central banks and others, I mean, they have no vested interest in wanting large notes to be use in this way. So if your

answer, or if your solution is unassailable, why don't they do it?

SANDS: Well, it's a little bit of a vested interest, which is I think called seigniorage, which is the interest income on cash outstanding.

Basically, when you hold a dollar bill, it's an interest reloan for government, or at least of the central banks. So they make a bit of money

out of it.

But actually, it's a relatively small amount of money, a more than offset by the gains that would be made from reduce tax evasion, reduce correction

and crime, and so on. I think part of the problem with why we haven't done this is, frankly, just inertia.

But we have taken big notes out before. There used to be $500, $1,000 note. And we also used to have bearer bonds, corporate bonds that didn't

work recorded and were effectively like cash.

[16:25:04] We have discontinued all those things. All I'm arguing is that, now is the time to take the next step, these large denomination notes are

in macronism (ph). They are largely used to the purposes that damage society. We should stop issuing them.

QUEST: Peter, thank you for coming and talking to us, buddy. That is interesting.

SANDS: Thank you.

QUEST: Well, it's a topic of conversation. Thank you very much, Peter.

People in North Korea were treated to a huge fireworks display, the day after the government quoted, "Worldwide condemnation", by launching a

rocket into space.

North Korean leaders are promising they'll go (inaudible) internation opinion and speak praising the rocker test. Government officials said,

"Protest foreign pals would be as effective as a puppy barking at the moon."

Well, law sanctions could soon be on the way as Paula Hancocks now reports, a country is looking at ways of boosting its economy and other methods.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN CORRESPONDENT: It's called the "Pride of Pyongyang", Taedonggang, a beer with soft smooth and fragrant taste. Propaganda from

North Korea is nothing new, commercially motivated adverse are ...

JOHN DELURY, YONSEI UNIVERSITY: I think some of what we're seeing in terms of, you know, by North Korean standards or innovative branding and

marketing of their products is genuinely targeting Chinese consumers and see if they can get into the Chinese market.

HANCOCKS: China was one of the few markets in the world that heavily sanctioned North Korea can access its portal to the rest of the world.

Visiting a cosmetic factory last year, North Korean leader Kim Jong-un called fro the domestic on massive (ph) brands to become internationally

recognized.

Reliable data from North Korea doesn't exist. But South Korea says, last year, trade between the two set a record high, $2.7 billion despite high

tensions over the summer. Trade with China 2014 was $7.6 billion, representing 90 percent of all North Korean trade.

Kim Jong-un has made the economic heart of successive New Year speeches, this year calling for all efforts to be made to build, "An economic giant".

JOONG-HO KIM, KOREA EXIMBANK: Now, we have been witnessing many changes including new restaurants, (inaudible) and cafe (ph) and taxi that are

running on the street.

HANCOCKS: Not to mentioned, the new ski resort and an amusement park, all welcome developments to the elites and those living in Pyongyang. But in

the rural areas, there are still reports of food and security and malnutrition, a (inaudible) economy with the gap in between continuing to

rise.

Farmers now work with incentive led skins (ph) however, allowing them to keep more if they grow more. And the days of the late Kim Jong-il's

disastrous economic decisions are gone.

DELURY: They cannot go back. They have lost the mechanism of a command economy, of a soviet style economy. And what's really remarkable about Kim

Jong-un is, you can see he is not trying to go back.

HANCOCKS: Kim Jong-un says, he's working on a jewel plan to create a robust nuclear program and a strong economy. But while he's pumping

billions of dollars into the former, it is hard to see how he can truly achieve the latter.

Paul Hancocks, CNN, Seoul.

(END VIDEOTAPE)

QUEST: In the case of the bigger they are, the harder they fall, and it's come true for the some darlings of the (inaudible). Thank you all, QUEST

MEANS BUSINESS tonight.

(COMMERCIAL BREAK)

[16:30:57] QUEST: Hello, I'm Richard Quest in Abu Dhabi. There's more QUEST MEANS BUSINESS in just a moment when Chesapeake Energy says it's not

seeking bankruptcy protection after a worrying report sent its stock plummeting by almost half.

And the head of the airline whose plane survived an explosion over Somalia says there are clear security lapses at Mogadishu's airport.

Before we get to all of that, this is CNN and on this network the news always comes first.

QUEST: The "Financial Times" says Michael Bloomberg has told the paper he's considering running for U.S. president.

It's the first time the former mayor of New York City has said directly that he could enter the race.

The latest CNN Poll of Polls shows two clear favorites in New Hampshire on the eve of the presidential primary in that state.

The Democrat Bernie Sanders is leading Hillary Clinton by 14 percent, that's down from 18 percent-point lead than the previous survey.

And the billionaire Donald Trump is leading the Republican race. Speaking to CNN, Mr. Trump lashed out rival Jeb Bush who called him a liar and a

loser.

(BEGIN VIDEOCLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: Hey, Wolf, he's a desperate person. He's a sad and, you know, he's a pathetic person. He doesn't even

use his last name in his ads. He's a sad person who has gone absolutely crazy. I mean this guy is a nervous wreck. I've never seen anything like it.

(END VIDEOCLIP)

QUEST: The Dow staged a late comeback in Monday's trading, spending of the day deep underwater. But that comeback wasn't enough to prevent a loss of

178 points. The markets did manage to just hold 16,000. It had sank 400 points earlier

in the day. In Europe, the markets were all much lower. Stocks in Greece dropped to their lowest point since 1990.

As the battle between Syrian forces and rebels around Aleppo intensifies, Turkey's prime minister says 30,000 Syrian refugees have gathered on the

Syrian side of the border. He says they'll be let into Turkey when necessary and added that his

country should not be expected to shoulder the entire burden of the humanitarian crisis.

The White House is expected to request $1.8 billion from Congress to help fight the Zika virus.

The requested is reportedly including $200 million to develop a vaccine to fight the disease. Doctors at a White House briefing said a vaccine will

take years to produce.

(BEGIN VIDEOCLIP)

DR. ANTHONY FAUCI, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES OFFICIAL: The good news is that Zika is a -- what we call a -- flavivirus,

a certain class of viruses and we have successfully developed vaccines against flaviviruses like yellow finger, like dengue, a vaccine that was

just recently approved in Brazil and Mexico and we're studying that right now.

So we have already started to develop a vaccine in the early stages and we can predict that we likely would be in phase 1 trial just to determine if

it's safe and if it induces a good response, probably by the end of the summer, and get that going by the end of this year.

And if it looks like it's safe we'll go to the next stage. Unlikely to have a vaccine that's widely available for a few years, but we certainly

can get the initial steps.

(END VIDEOCLIP)

QUEST: It took authorities 14 hours to catch a leopard that ran loose in Bangalore in India. The big cat injured at least three people on the

grounds of a school before it was then tranquilized and shipped to a wildlife park.

Leopard sightings in urban areas are rare in India. But they have become more common in recent years.

Technology shares were down on Wall Street and the sell-offs been getting worse by the day.

The NASDAQ, which of course is the home for many technology companies, is off over 7 percent over the last five sessions.

[16:35:04] Year-to-date it's down 14.5 percent. Samuel Burke is in New York. Samuel, it's not perhaps surprising if the broader market is off.

But these shares which have inflated in good times are bearing the brunt.

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Richard, it was tech wreck for most of the day. But just as your show was starting, a few of them managed

to bounce back. It really was all linked to LinkedIn. They had that horrible earnings

report at the end of last week and over the week, and people had some time to mull it over.

Was it about the economy? Or was it about structural problems at LinkedIn? And they decided it was both but LinkedIn up just a bit at the close of the

bell. Netflix -- analysts were saying actually why are they getting punished? They're not a social network and the fundamentals look stronger, it's a

time to buy. And it looks like some people took those analysts' reports and went with it.

And -- but -- the two that interest me the most -- Facebook, they're down 4.15 percent. Why were they down so much?

Well India dealt them a significant blow saying that free internet that Mark Zuckerberg wants to bring there, that's not going to fly because

they're only wanting to do it for certain websites. India said all or nothing, that's why Facebook went down the way it did.

And Twitter -- this is the one that I think you'll be more interested by, Richard. That one down 5.2 percent with Twitter saying that they're going

to make some changes in the timeline, make it a little more Facebook-like and the market freaked out even though Jack Dorsey's been talking about

this for ages, Richard.

QUEST: OK, but hang on. I mean, looking at all those stocks that you're talking about. Now obviously Facebook which rocketed up 24 or 25 percent

over the last week having this reversal, Twitter doesn't seem to have any upward momentum at the moment.

BURKE: Well, it seems like anything Twitter does, it then gets punished for. Jack Dorsey's been saying since the end of 2014 we have to make our

algorithm more Facebook-like. This is what the market wants. Take a listen to what he told me back then, Richard.

(BEGIN VIDEOCLIP)

JACK DORSEY, CEO, TWITTER: There's a lot of work to be done so that when people open up the app or open up the website. They see something that

really speaks to them right away. And we have to figure out what feels good and what works for people.

(END VIDEOCLIP)

BURKE: So even though he signaled this, even though the market has said we want these changes, then all of a sudden Twitter users see a change coming,

they get spooked and that spooks the market. It feels like no matter what Twitter does, they always seem to end up in the red at the end of trading, Richard.

QUEST: Samuel Burke in New York. Chesapeake Energy says it's not planning to file for bankruptcy protection. It's an oil and gas producer, the largest producer of gas in the United

States besides Exxon. And it's dismissing a report that at one point on Monday wiped out half its market value. The stock made a partial rebound and then when all was said

and done, it was off as you can see 33.3 percent. Chesapeake is the second largest natural producer. It operates in six states from Texas to Pennsylvania. It has $11 billion in debt and it has

been canceling drilling projects and cutting its workforce. It's the oil glut, that's the problem. CNN Money's Cristina Alesci joins me know. Cristina, if there was ever a strong evidence of the market

punishing because of this oil crisis. We saw it today and it won't be the last time we see this sort of reaction.

CRISTINA ALESCI, CNNMONEY: Yes, investors are all about shooting first then asking questions later.

If you actually look at Chesapeake's short-term position, they have a $4 billion revolver, and if you look at their shorter-term obligations -- you

mentioned that $11 billion in debt -- but if you look over the next two years or so, their obligations to make payments are much smaller than that

-- probably in the billion to $2 billion range, Richard. But here's the thing, here's what got investors really nervous here in the U.S. We had seen a rash of bankruptcies of smaller exploration and

production companies. What investors are nervous about is exactly what you've said which is the larger guys now getting hit because oil has been so low, probably below the

cost of where it's profitable like below the production costs at this point for a while.

And that is what's hitting the sector so hard. And it is an important part of the U.S. economy. It shed about 100,000 jobs last year alone, and these

are good-paying jobs. If you look at the hourly wages, it's about double every other private

sector on an average basis, that is. So these are good-paying jobs, but in the -- at the -- end of the day, accounts for about 2 percent of GDP.

What people are worried about are the ripple effects -- what happens to the midstream companies --

[16:40:02] QUEST: Right.

ALESCI: -- when E&P goes out of business? What happens to the banks that made loans to these companies? And that's what people are worried about.

QUEST: Let's talk about those banks because we had warnings in the last quarter earnings quarter that -- particularly JPMorgan which has set aside

more than $100 million. So from your information, how badly off are the banks and what is their

sort of exposure to the oil -- the U.S. domestic oil -- industry?

ALESCI: Well, it's not good. With JPM in particular, yes, they did set aside about $124 million last quarter. But if you look over the course of

the year, they're setting aside even more -- about $550 million. Now, JPM would say, look, we've got it under control, it's a small portion of our overall credit exposure. And while that's true, all you need is

panicky investors taking a look broadly of all the exposure that all the banks have and all of them have a similar level of exposure when you're

talking about the big guys. So that is an area of concern for sure, Richard.

QUEST: Cristina Alesci has been watching Chesapeake which had a really -- by any standard of any market, had a pretty dreadful day.

The head of an international airline is telling CNN about his security concerns after one of his planes was hit by an onboard explosion that

investigators say had to be a bomb. You'll hear that after the break.

(COMMERCIAL BREAK)

QUEST: Chief executive of the Somali Airline whose plane survived an explosion in midair says there were already security concerns at the

airport from where the plane took off. His comments all came as authorities released new video and it appears to

show airport workers handling a laptop which may have contained a bomb. Both men highlighted in the video are now under arrest. The one passenger

who was killed when the explosion happened is also considered to be a suspect.

Officials say they are convinced it was a terrorist attack. The chief executive to Daallo Airlines says security will be improved. He spoke to CNN's Jon Jensen here in Abu Dhabi.

(BEGIN VIDEOCLIP)

JON JENSEN, CNN MIDDLE EAST REPORTER/CORRESPONDENT: I want to read to you something your pilot said over the weekend to media regarding security at

Mogadishu Airport. He said, "the security is zero" -- talking about the people on the ground coming in and out of the plane.

He said there are some 20 to 30 people who come to the tarmac. They can enter the plane, and no one knows who is who.

MOHAMED YASSIN, CEO, DAALLO AIRLINES: He is right. You know, there are some lapses otherwise this crash (ph) never happen.

JENSEN: Has he or any of your other crew ever voiced concern to you or to any of your team in the past?

YASSIN: Not actually to that level. Definitely as I told you, you know, the concern was always there. You know the region is of -- you know -- a

region which is under turmoil and, you know, so you can expect such things to happen.

JENSEN: If it's to be expected, sir, then respectfully why were you flying into Mogadishu? Airport?

YASSIN: Everything can be expected. You know, it's happening in all over the world. It's not only happening in Mogadishu. You know, this threat is

all over the place. Now we'll add one more of layer of security now.

[16:45:03] We have employed, you know, a professional security company, you know to do -- you know -- secondary screening.

JENSEN: How can you convince passengers to fly on Daallo Airlines in the future?

YASSIN: Daallo Airlines will continue its work, its services, you know, to Mogadishu. We will not stop. Course, you know, seeing is believing.

So our passengers will see, you know, how much improvement's being done. I'm 100 percent sure, you know, we will keep their confidence.

(END VIDEOCLIP)

QUEST: This just in to CNN -- a senior U.S. defense official says that the satellite that was launched by a North Korean rocket over the weekend is in

their words "tumbling in orbit." Officials say that means the satellite can't function in any useful way. North Korea said the mission was to launch a satellite for peaceful

purposes only. Many observers outside North Korea say they suspect the true reason was to

test long-range missile technology. But whatever it was, it would appear that the satellite -- as a working

satellite -- it has been a failure. A recent study suggests one way for companies to produce profit is to promote more women. We'll have that story from both sides in a moment.

(COMMERCIAL BREAK)

QUEST: Promoting more women to the board of directors can significantly increase businesses' profitability. It's according to a new report that's

examined data from nearly 22,000 companies around the world. Now the data's interesting because it said firms where women occupied at least 30 percent of the top positions typically had better profit margins

by as much as 6 percent. Yet nearly 1/3rd of the companies surveyed had no women in any executive jobs at all.

Marcus Noland is the executive VP of the Peterson Institute which was behind the study. He's in Washington.

Brenda Trendowden is the global chair of the 30 Percent Club and she is in London. The -- I want to start with you, Marcus Noland, the firm says that

in firms where women occupy at least 30 percent typically had better profit margins. But why?

It can't just be because they had more women in executive capacity.

MARCUS NOLAND, EXECUTIVE VICE PRESIDENT, PETERSON INSTITUTE: Well, there's two reasons why you might get that effect.

The first is that there's evidence that women on the boards or women in upper management bring skill diversity to these firms and hence there's

better monitoring of the management and the employees and it contributes positively to performance.

Second reason is sad to say -- discrimination still exists. And if a firm discriminating against women doesn't promote intelligent, hardworking,

talented people and another firm does promote those people, that other firm is going to do better than their peer.

QUEST: Brenda Trenowden -- You've obviously read this and you've obviously agreed with much of its conclusions. But it still doesn't explain to me,

and with all due respect to Marcus, why you think a firm that doesn't promote women to the executive or board level performs badly.

[16:50:02] BRENDA TRENOWDEN, GLOBAL CHAIR, 30% CLUB: Well I would say that what our research has shown that those firms that have more diverse

management groups tend to have better performance. Now we don't claim causality, we claim correlation. But I think any of us

that have studied in business school understand that group think is not a good thing and certainty diversity of thought and diversity of experience

leads to better decision-making and mitigates risks much better.

QUEST: Marcus Noland, what's your preferred solution for this? I mean, assuming that these companies are not going to suddenly just become

enlightened to employing or promoting more women, are you suggesting quotas is the answer?

NOLAND: Well quotas are one possibility, and we examined the quotas that exist today, most prominently in Norway where 40 percent of the board seats

are reserved for women. Our study didn't find any impact of quotas, positive or negative, but it may well be that models are simply too crude to discern any such effects if

they exist. What we did find is there are some very strong correlates with women's success -- girl scores in math, young women taking fields of study at

university associated with management. Things like finance or economics or business administration.

The relative absence of discriminatory attitudes in the public and then finally good childcare systems. So if you're training young women creating

a talented pool, you do something about the interruptions in their careers associated with child birth and you enforce anti-discrimination laws --

QUEST: Right.

NOLAND: -- in the long run that may be more effective and more sustainable than imposing a quota.

QUEST: Brenda, this is -- this really goes to the heart of it, doesn't it? The answer isn't quotas, the answer is obviously longer term and more

enlightened management, but the core of it as you hit it from every different angle.

TRENOWDEN: Yes, absolutely. For us our first campaign was very much focused on the boards and now we launched a new campaign last which is

focused on the pipeline. And we talk about school room to boardroom. And we believe that better balance throughout organizations is incredibly important.

And I think to Marcus' point on the quotas, one statistic that I would leave you with is that when Norway introduced the idea of quotas, they had

about 563 listed companies. By the time they implemented the quotas, they only had 179 listed companies. So I think that speaks for quotas certainly.

QUEST: Brenda and Marcus, thank you for joining us. Now we do have to be a little bit shorter than usual on this discussion because we are getting

some very interesting news in that Michael Bloomberg has told the "Financial Times" that he is considering running for U.S. president.

Michelle Kosinski. We need your help, Michelle, to understand exactly the significance because I seem to recall a couple of weeks ago Mr. Bloomberg

sort of -- that there were rumblings and leakings that he is planning to be an independent --

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Right.

QUEST: But now he says openly he's planning to have a run for it. What do you think?

KOSINSKI: Yes, I mean, he's always rumored as a candidate. Remember he was rumored to be a candidate back in 2008 as well.

But this is the first time he's telling someone, the "Financial Times" to be precise, that he is looking at the options, he is indeed considering an

independent run for president. So that begs the question is this crazy presidential race right now in the United States about to get another shake up.

And listen to what he told the "Financial Times" today. He said, "I find the level of discourse and discussion distressing banal (ph) and an outrage

and an insult to the voters." He said the U.S. public deserved a lot better.

Now this is interesting because this is a guy who was once a Democrat before he started running for public office. When he first ran, he was a

Republican and then a couple -- he won a second term as New York City mayor and then he left the Republican Party.

So now he's an independent and his views kind of span both. He believes in abortion rights, he's for gun control, he opposes the death penalty.

But he was also supportive of a -- of New York City's controversial stop and frisk program which targeted a lot of young men of color that was

highly criticized. But he said it helped make New York City safe.

QUEST: Right.

KOSINSKI: So you kind of look at his views spanning that spectrum, and of course you think well, let's say he jumps in -- and remember, you know,

there was plenty of speculation that the Vice President Joe Biden would jump into the race.

So let's not get ahead of ourselves here -- he never did. But if Bloomberg does, I mean, some are speculating that it would really take voters away

from the Democratic candidates because of his somewhat liberal views in some areas.

[16:55:07] But then again, you know, --

QUEST: (LAUGHTER).

KOSINSKI: -- you look at people who might be increasingly dissatisfied with the way the Republican race has been going, you never know. So if he

does it, it could make things much more interesting, as if they couldn't get any more interesting than they are now.

QUEST: I was -- I was -- I was just about to say -- you took the words out of my mouth. As if they couldn't get more interesting. This is the

story that just keeps giving. Michelle, thank you for coming up so quickly and briefing us on this particular story. We'll have a "Profitable Moment" from Abu Dhabi after

the break.

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." Any day that sees the market go down 400 points has to be taken seriously.

And the mere fact that it then rallies back up again the best part of 200 still means it closes off 200 down and frankly I won't sleep much better as

a result. What is happening of course simply defies real rational explanation. Because if you take today, an average Tuesday in February, there really was

no overriding reason why the market should have fallen so violently and to such a way.

But it did, and that's the new normal and that's what we have to live with. The problem is what's underneath? And with bank problems, with China's and

all other areas, that's when you've got real issues. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Abu

Dhabi. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable.

END