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Quest Means Business
Ceasefire Deal Announced for Syria; E.U. Referendum Campaign Begins in Britain; Deal Reached to End Indian Caste Protests; Bank of England Preparing Brexit Plans; British Pound Falls on Brexit Risk; Oil, Metals Boost European Stocks; Kganyago: There is a Global Currency Realignment; Kganyago: Monetary Policy Can't Fix Everything; Kganyago: We're Concerned About volatile Currency; Boeing Elects CEO as New Chairman; Uber Driver Charged with Six Murders; Winning By Losing in the Race for U.S. President; 2016 Candidates' War Chests Revealed; Paying with a Selfie; Profitable Moment
Aired February 22, 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, HOST: Strong start to the week. The Dow went up right at the beginning and remained higher throughout the course of the trading session,
a gain of over 200 points, #renew. Come on, yes, dear. Ah, I think we call that a firm gavel. On Monday, it's the 22nd of February.
(BEGIN VIDEO CLIP)
QUEST: Tonight, the great British sell-off. Sterling stumbles as Britain kicks off the "brexit" campaign. Markets are described as jittery.
Apple's chief executive rallies his employees in the fight against the FBI. And don't give up the day job; how to make money from losing the
Presidential primaries. There are some extraordinary ways.
(END VIDEO CLIP)
QUEST: I'm Richard Quest. We start a new week together. And I mean business.
Good evening. Good to be back with you in New York. As today the campaign to define Britain's place in the E.U. officially got under way.
(BEGIN VIDEO CLIP)
QUEST: David Cameron fired the starting gun in parliament when he made an impassioned plea to the British people. He insisted the country will be
stronger, safer and better off in a reformed European Union. The decision to stay or leave ultimately falls to the British voters. The referendum's
on June the 23rd. The repercussions of the vote will be felt far beyond Britain's shores.
The agreement Cameron's brokered in Brussels was hotly debated in Westminster. Already, it's created rifts among allies and unusually its
united adversaries.
(END VIDEO CLIP)
QUEST: On both sides of the political divide, people have find allies and enemies. Max Foster has our report.
(BEGIN VIDEO CLIP)
MAX FOSTER, CNN SENIOR INTERNATIONAL CORRESPONDENT: Standing room only as David Cameron made his case to remain inside the European Union.
DAVID CAMERON, BRITISH PRIME MINISTER: We will be out of the parts of Europe that do not work for us. Out of the Euro, out of the Eurozone
bailouts, out of the passport free, no borders Schengen area, and permanently and legally protected from ever being part of an ever closer
union.
FOSTER: He described the deal as the best of both worlds. But he hasn't got the support of both sides of the house, namely from his own party. Boris
Johnson is amongst several high-profile Conservative party members backing a so-called "brexit."
BORIS JOHNSON, MAYOR OF LONDON: Explain to the house and to the country exactly what way this deal returns sovereignty over any field of law
making.
FOSTER: The London Mayor, he's also an MP, has said he'll vote to leave the European Union. A better deal can be negotiated with Brussels that gives
the U.K. more power. The Prime Minister quick to land his first punch.
CAMERON: This process is not an invitation to rejoin. It is a process for leaving. Sadly, Mr. Speaker, I have known a number of couples who have
begun divorce proceedings, but I do not know of any who have begun divorce proceedings in order to renew their marriage vows.
FOSTER: Funnier still, Cameron found more support from the opposition.
JEREMY CORBYN, OPPOSITION PARTY: Now, the Labor party and the Trade Union Movement are overwhelmingly for staying in. Because we believe -- because
we believe that the European Union has brought investment jobs and protection for workers, consumers and environment and we're convinced a
vote to remain is in the e best interest of the people.
FOSTER: The questions, however, kept coming.
UNIDENTIFIED MALE: Can you tell the house in his estimation by how much the welfare changes will reduce immigration for the E.U. in the coming year.
UNIDENTIFIED MALE: When will they first begin to be eligible for some benefits?
UNIDENTIFIED FEMALE: We do not have control without the permission of Brussels.
UNIDENTIFIED MALE: What can we do about these unfairness's if we stay in the European Union.
FOSTER: Cameron's answers resolute insisting he got best deal possible for Britain. Choosing to leap, he says, is choosing the unknown.
CAMERON: I'm not standing for re-election. I have no other agenda. I have no other agenda than what is best for our country.
FOSTER: So David Cameron has made his position very clear. It's now up to the other campaign effectively led now by Boris Johnson to explain why
Britain would be better off by leaving the European Union. We've got four months now of intense "brexit" debate.
Max Foster, CNN, Downing Street, London.
(END VIDEO CLIP)
QUEST: Our London correspondent there. The last time the U.K. had a referendum on membership as it was in those days, the EEC, the European
Economic Community, was 1975. And for those of us that vaguely remember that it was a fairly robust, and aggressive affair and this promises to be
even worse.
[16:05:17]
QUEST: A tug-of-war for votes seems to be under way, with strong disagreement about what's in the best interest for Britain. For those who
want Britain in, it's an appeal to British minds.
(BEGIN VIDEO CLIP)
QUEST: So first of all you have on the "in" side David Cameron, the Prime Minister who believes that British and business workers benefit from the
single market and that Europe cooperates with the U.K. on crime and security matters.
You've got the President of the European Council, Donald Tusk, pulling towards a yes. The face of Europe says it's a case of mutual interest. And
then you've got business leaders. Even though none of the organizations, the British Chamber of Commerce, the IOD, even though none of them are
taking sides, leaders of individual companies will sign letters urging Britain to stay in the E.U. The leave side of course doesn't believe so.
Instead, they are operating on economics. The leave side operates more on the heart strings.
Nigel Farage, the Euro Skeptic in Chief, he's focusing on the issue of immigration and he says it's changing the character and the nature of
Britain. More seriously perhaps Michael Grove, the Education Secretary, and five other cabinet members. Now, between them, those five and six cabinet
members absolutely pulling in the opposite direction. They say it stymies Britain.
And finally of course, just there as you heard in Max's report, Boris Johnson; by far, the most weighty endorsement to date. The E.U. he says is
infiltrating every aspect of public policy and when he spoke in the House of Commons, then the Prime Minister rebutted pretty much every one of those
arguments.
CAMERON: This deal brings back some welfare powers. It brings back some immigration powers. It brings back some bailout powers. But more than that,
because it carves us forever out of an ever closer union it means that the ratchet of the European Court taking power away from this country cannot
happen in future.
(END VIDEO CLIP)
QUEST: The political arguments are intense and will get worse. From Westminster, if you go just down the river, you end up in the City of
London, and of course doctrines and Canary Wharf where there are different sets of concerns. They are of course the financial sector, the financial
division, the financial centers.
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QUEST: Moody's, the rating agency, says it's a risk to their credit rating if the country were to vote to leave. Rating agencies are warning the
dangers of a negative risk. Also, you've got the whole question of credit. Fitch is talking about long-term negative risk. Credit Suisse talks about
significant fall in growth and weaker growth in the medium term. And then you've got Citigroup. Citi has raised the chances of a "brexit" by 10% and
warns the effects would be large and painful on both sides of the channel.
The Institute of Directors represents businesses on all sides of the equation. More than half of its members say they plan to vote to stay. The
IOD's director general told me many of those leaders made up their mind before they saw the agreement.
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
SIMON WALKER, DIRECTOT GENERAL, INSTITUTE OF DIRECTORS: The reality is that many businesses made up their minds before the agreement came back. So they
had a view already. And the result is that 60% of them want Britain to stay in the European Union. Many of our members export, an awful lot of them
export to the continent, the export to France and Germany and Holland because some are just a bit nervous about exporting to China or Brazil. So
it's really important to them what access they're going to have to the European Union. And I would think that's been the decisive factor for many
of them.
QUEST: The effects of this are already being felt. The nerves are only going to get more taut as we get closer to the referendum vote.
WALKER: Well, we all know business doesn't like uncertainty. And for a period at least, if Britain does leave the European Union, there will be
fewer jobs. There will be slower growth. There will be uncertainty about just how much can be exported. And of course, Goldman Sachs are saying the
pound could go down as much as 20%. So it's understandable that there are jitters out there about what it's all going to mean, and that business
would just like to have it behind us.
QUEST: On the question of preparation for whatever may come, you say that four in 10 firms, 40% of firms have not discussed the referendum in the
board room. Now Simon, I venture to suggest it's almost negligent if you are a chairman and a board of directors if you have not -- or at least do
not now consider your plan a, b, c and d on how you're going to run the business, whatever the result.
[16:10:08]
WALKER: We certainly think it's really important that all business in Britain consider what their position's going to be after the E.U.
referendum, if Britain votes to leave. Because a lot of people simply aren't going to know. Many businesses come to me and say, look, I export
linen to Holland. How long's it going to be before I know what my access is going to be? And the answer is I haven't a clue and no one does have a
clue. It could be 5 years. It could be 10.
(BEGIN VIDEO CLIP)
WALKER: That's why the referendum is such an odd one. Because it's choosing between an imperfect model of Europe, a Europe that not everyone likes very
much. In fact, no one's hugely enthusiastic. And complete uncertainty about what the alternative could be. Will it be a Norwegian-type arrangement
where we have to follow all the rules of the European Union or a Swiss type arrangement where we sign up for some aspect of it, or will we be
completely out on our own?
(END VIDEO CLIP)
WALKER: It's that question of an imperfect E.U. versus unknown unknowns that are what's putting the jitters on everybody.
QUEST: And that's the IOD. And just one quick clarification. A moment ago I talked about Michael Gove being the Education Secretary in the U.K. He
was the Education Secretary, he's now the Justice Secretary of course.
As we continue, a very deep spat argument, legal case, whatever you want to call it, between Apple versus the FBI. It goes to the very heart of privacy
in the digital age. We'll talk about that in a moment.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
(COMMERCIAL BREAK)
QUEST: Apple and the FBI are defending their positions as the debate over privacy and security rages on and the heat gets turned up. Apple has
created a web page to explain why it's refusing to help unlock the phone of one of the San Bernardino killers.
(BEGIN VIDEO CLIP)
QUEST: In a letter to employees, Tim cook has written, and I read, "at stake is the data security of hundreds of millions of law abiding people
and setting a dangerous precedent that threatens everyone's civil liberties."
The FBI director James Comey says in an op-ed that his agency motives are about securing justice for victims. And I quote, "maybe the phone holds the
clues to finding more terrorists, maybe it doesn't, but we can't look the survivors in the eye, or ourselves in the mirror, if we don't follow this
lead."
CNN's tech correspondent who's been meeting the coverage is Laurie Segall, joins me now.
(END VIDEO CLIP)
QUEST: Today's development, nothing major happens if you like in this, but the arguments are clear cut. The public opinion seems to be more with Apple
than with the FBI.
LAURIE SEGALL, CNN TECH CORRESPONDENT: Yes, you have even (inaudible) people publicly going out and -- talking about going out to Apple stores
and say publicly, we don't want you to build a back door.
Although I will say, a pew study just came out and they said 51% of people want Apple to unlock that phone. But I think the key point here is unlock
that phone. And that's what Director Comey's saying this is all about, it's all about this one phone. You have Tim Cook firing back in a letter to
employees today saying this is much more than this phone.
QUEST: I don't think anybody thinks -- I mean, what he - no, I mean he doesn't say -- the FBI doesn't say it's just one phone. It's unlock any
phone where we have a court order and a search warrant to do so.
[16:15:08]
SEGALL: Right, and then you have Tim Cook coming out saying look, this is essentially Pandora's Box. You have to put a lot of trust in the government
and they could be sitting on many cases. So if they do this, and what's really different about this case Richard, which I think is important to
note, that it's not just them trying to extract data. Apple has said that they have to build software that would enable them to do that. So that
would set precedent for a case of essentially the government going to a private company and compelling them to build a product that they do not
have in order to comply. And that's where Apple's saying this is a Pandora's Box.
QUEST: OK, but what about the idea that - somebody tweeted - you know why doesn't the government -- why doesn't the government just give the phone to
Apple to do whatever's necessary to get the data?
SEGALL: And look, the government's saying, we will get it to you, we will put it in your labs, you can keep the software just for you. Apple has come
out and said, if you do this, and I mentioned this before, if you do this it opens the door for so many other less compelling requests, right, where
the lines are a little bit more blurry. So it is putting a lot of faith there. And then it's also, you know, Tim Cook says it's a key that unlocks
a million doors. All right.
QUEST: But, and I shall be asking Paul Callan, this in a moment; Apple doesn't get to choose which laws it obeys and which ones it doesn't. The
moment a judge has spoken that's the end of the subject until it goes to an Appeal Court, and further up the judicial chain.
SEGALL: And that is why this case is so important. That is why every single person, every single tech company in Silicon Valley is looking at this case
to see what happens because this case will change precedent. This case will change the way that they have to comply with government orders.
QUEST: Laurie, thank you very much indeed, thank you.
Now, Apple has until Friday to decide on the next course of action. If Apple complies and the FBI gets their way, well it could set a legal
precedent for more phones to be open in the name of justice. That's what Tim Cook means when he says this isn't about one phone and one phone alone.
(BEGIN VIDEO CLIP)
QUEST: So if Apple refuses to fight, what happens? If Apple sort of fights them, then if Apple complies, then it could set a legal precedent, that
much we know. But if Apple refuses and Apple decides to face down the FBI, the fight goes potentially to the U.S. Congress, where they want to be a
hearing of which they are going - there will be a hearing to decide - or maybe even a commission to decide what happens next. If they continue to
appeal then ultimately it could go all the way to the Supreme Court. Along the way, a Judge could hold Apple in contempt. And in theory, executives
are at risk of being put behind bars.
(END VIDEO CLIP)
QUEST: Joining me, Paul Callan, CNN's legal analyst to put this in perspective.
So let's look at this. What's the likelihood of Apple being in contempt of court? And if they were in contempt of court, I mean do you lock them up?
Do you lock Tim Cook up?
TIM CALLAN, CNN LEGAL ANALYST: Well, normally, if a corporation is held in contempt, massive fines are imposed on a daily basis on the corporation.
I mean how do you punish a corporation? With money usually. But if they continue to non-comply, yes, you could lock up the CEO. Cook could be
locked up and given an order that he must comply. So will it come to that? I doubt it right away. Now, they have until Friday to comply with the
order. But they'll go to an Appellate Court and they'll get a stay so this can be further discussed in more detail by a higher court.
QUEST: We really need to get rid of all the lower courts with judges who are just going to muddy the waters and get to an Appeal Court and
ultimately the Supreme Court.
CALLAN: Well, since I appear in Federal Court all the time, I couldn't agree with that, because those lower court judges are very bright of
course. And, no actually in the United States --
QUEST: Well luckily you are in the Federal Court --
CALLAN: Well, and in truth, the Appellate Courts like to see how the lower courts rule on these cases because this is a novel question. This question
of encryption and privacy as opposed to law enforcement needs.
QUEST: But, ultimately again, you know we can befuddle the issue with questions of -- we can befuddle it with questions of privacy and this that
and the other, but there is an element of the rule of law, a judge has given an order. Apple appeals it. Eventually, if it loses, hand over the
data.
CALLAN: But the Rule of Law also says if the judge is wrong and the U.S. Constitution would value privacy over the needs of the FBI in this
particular case, then the law would support Apple. And we don't know ultimately what a higher court says about that.
QUEST: So in terms of precedent at the moment, where you have a battle on the one hand privacy versus law enforcement, what's the test at the moment?
[16:20:07]
CALLAN: Well, the test at the moment would favor the government. And they pick this case because it's a great case for them. The San Bernardino
defendants are dead, OK, in that slaughter that took place in San Bernardino. The phone belonged to the county. So there's nobody with a
privacy interest in this phone. This is just sort of an abstract question about does Apple have to give up the key to the government because there's
a big investigation going on.
QUEST: Finally, do you accept the government's view that they're not asking for a super key in asking Apple to defeat the auto wipe, when other people
say -- when Apple says no, defacto by different language, that's exactly what you're creating?
CALLAN: You know, I think Apple makes a compelling case here. And it's a really interesting case because the FBI's trying to force Apple to design a
code that they've never designed before to override the ten strikes and you're out provision, when it wipes the thing. And then beyond that they of
course say -- Apple says once we've designed this code, millions of people who bought the 5-c, the iPhone 5-c have to be afraid now that that code's
going to fall into the hands of the bad guys who want to hack into your phone, maybe Donald Trump's phone or anybody else who is saying that they
support the FBI in this. So there are big, big privacy issues at stake here.
QUEST: Well, not -- hang on. Except in the previous iterations of the iPhone, Apple had the data anyway, so it's not as if all of a sudden
there's a vast change.
CALLAN: Well, there is a vast change I think as the technology has gotten more sophisticated. As a matter of fact, in the newer iPhones, this
situation doesn't even exist. It's even harder to crack the code. So I think there's an important question here about encrypting and protecting
your information as opposed to the government's right to get it.
QUEST: I'll just have a go at your phone if I may.
CALLAN: That happens to be -- I have no - I have no dog in the race because this is a Nexus Android phone and this, you think it's an iPad, it's an
Amazon Fire HDX 8.9.
QUEST: We found the one person who bought it.
CALLAN: I did. Yes. I have.
QUEST: We knew somebody had bought it, and now we found him.
CALLAN: You got it. But I like my technology and my Apple products as well.
QUEST: Thank you very much Paul, good to see you.
CALLAN: Thank you, take care.
QUEST: There are no straight forward solutions in this story and you can read my op-ed piece on CNN Money's brand-new website, go to
cnnmoney.com/tech where you'll see our interview with the Manhattan District Attorney, Cyrus Vance Junior.
(BEGIN VIDEO CLIP)
QUEST: Good strong day on Wall Street. You don't see this too many days well you'd see the volatility, but look at that, up 228. Oil was also on a
strong ride. We'll have the details of what happens in the market, as "Quest Means Business" continues.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
QUEST: Fitbit shares are falling after hours, they're down some 14%, the earnings beat expectations but the market still thought there could be
better and it's worried about weak guidance slipping market share. So Fitbit down 14% having a bit of an old run for themselves.
The Dow and the NASDAQ all gained more than 1% during the trade. The Dow was at one and a third, a gain of 228 points. It was more than 250 during
the trading session, boosted by the rising price of oil. The Dow is up more than 3% over the past month.
[16:25:13]
QUEST: And those surge in oil prices helped pull the markets higher across. The new IEA report shows oil production is slowing across the world.
Now obviously if oil starts to slow, then the market could find itself in supply/demand rebalancing towards the end of the year. As the market
celebrated the rise in oil, consumers may not have shared in the excitement so far. All this week CNN Money will be looking at individuals affected by
the fall in crude prices.
Clare Sebastian spoke to a small business owner in New Jersey who says the oil rout has drastically changed his life for the better.
CLARE SEBASTIAN, CNN MONEY CORRESPONDENT: In Richfield Park, New Jersey, a small town just outside New York City, Matt Cotty is getting ready for an
event he used to dread. The heating oil delivery.
MATT COTTY, BUSINESSMAN: I always think how was I going to pay for it because it was to a point where $1,800 for a delivery, it's like a mortgage
payment.
SEBASTIAN: Cotty is 48 years old. He's a business man with his own small advertising company. He's married with two young kids. Like 6 1/2 million
other Americans, he relies on heating oil to heat his house. For consumers like Matthew Cotty, heating oil is a gambler's game. This is a 1,000 gallon
tank beneath his house and every time he filled it up, he's locking in the price at that exact moment.
COTTY: We get a little over 31. We always mentioned two years ago, which was when the price was at its peak that I recall, and everybody's you know
incredibly happy about it and they keep asking me how long it was going to stay like that.
SEBASTIAN: Heating oil prices have fallen by more than half in two years and Ariba Oil, the delivery company says despite a warmer winter, many like
Matt Cotty are buying now rather than waiting. Today's price --
COTTY: $1.52.
SEBASTIAN: At the kitchen table, Cotty, shows me the same bill from two years ago.
COTTY: It's $3.45 per gallon. Absolutely crazy. For 250 gallons, it cost almost $1,000.
SEBASTIAN: He estimates the annual savings could be up to $10,000. It's a life changing amount.
COTTY: I could put it into my business and grow and employ people. There's also the fact we can take the kids to Disneyland, right. I'm sure they want
to hear that, right.
SEBASTIAN: Have they heard that before?
COTTY: Yes, they've heard it.
SEBASTIAN: He's looking forward to the future. Not just the surprise trip to Disneyland but a new face in the White House, one he hopes will fight to
keep energy prices low.
Clare Sebastian, CNN, Money, Richfield Park, New Jersey.
(END VIDEO CLIP)
QUEST: "Quest Means Business" as we continue our nightly conversation on business and economics. The vote on a British exit from the European Union.
That vote is four months away.
(BEGIN VIDEO CLIP)
QUEST: The effect on the pound are hitting home right now with sterling having fallen to its lowest level in some seven years.
(COMMERCIAL BREAK)
[16:30:00]
RICHARD QUEST, CNN ANCHOR: Hello, Richard Quest, of course there's more QUEST MEANS BUSINESS in just a moment. As South Africa's Central Bank
Governor he's concerned about the currency volatility.
And the road the road to the White House is not paved with gold. And we'll show you which candidates have the most money in their war chest.
For all of that this is CNN and on this network the news always comes first.
Russia and the United States have announced a ceased fire agreement for Syria. Due to take effect at midnight on Friday. The Russian President,
Vladimir Putin says his government will do whatever is necessary to ensure that Damascus respects the deal.
A short time ago Syrian state media reported that Bashar al-Assad is calling parliamentary elections in April.
David Cameron has urged British lawmakers to keep the U.K. in the European Union. He spoke to parliament on the first day of campaigning ahead of the
referendum on E.U. membership. Senior colleagues of the British Prime Minister say they will campaign for Britain to leave the E.U. Cameron says
it's in Britain's interest to stay put.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: This is bigger. I believe that Britain will be stronger, safer and better off by remaining in a reformed
European Union. Stronger because we can play a leading role in one of the world's largest organizations from within. Helping to make the big
decisions on trade and security that determine our future. Safer because we can work with our European partners to fight cross border crime and
terrorism. And better off, because British business will have full access to the free trade single market bringing jobs, investment and lower prices.
(END VIDEO CLIP)
QUEST: A deal has been reached in India to end protests that have crippled part of the countries water supply. Millions of people are dealing with
water shortages after protesters damaged a canal. Now those protesters say they've reach an agreement with the government.
Markets are already pricing in fears over Britain leaving the European Union. And it's not even just the fear of the fear of the fear. In the
sense of this four month into interregnum is in itself creating a great deal of uncertainty. The pound sterling fell to its lowest point since
2009, whereas it also fell against the euro and is predicting more weakness ahead of the vote.
And when you look and see exactly how -- you have this very sharp fall. And then the sterling does manage to recover somewhat, and that weakness
comes straight back into the market.
Now the Bank of England is already looking for ways to limit the impact of Brexit if the U.K. were to vote that way. I spoke to the Bank of England's
Governor back in October at the IMET. And Mark Carney told me economic stability would take a backseat to other concerns.
(BEGIN VIDEO CLIP)
MARK CARNEY, BANK OF ENGLAND GOVERNOR: Clearly in terms of the issues around Britain's place in Europe, the only thing we will say on that as an
institution is to provide a prospective of the impact of being a member of the European Union. How that affects the achievement of our objectives,
which are monetary and financial stability. Which is quite a narrow but important foundational item, and since you started with the fear, these are
the things that are pretty much backstage, and will be backstage to the bigger debate around that issue.
(END VIDEO CLIP)
QUEST: Thanos Vamvakidis, heads up European foreign strategy at Bank of America, Merrill Lynch, joins me know from London. Thanos, we look at
today a 1.8 percent drop in sterling, the jitteriness that the IOD talked about. How much more of this are you expecting over the next few months?
THANOS VAMVAKIDIS, BANK OF AMERICA MERRILL LYNCH: Clearly Brexit risks are negative for our sterling and we do not believe that all this risk can be
priced in. There are three main reasons. One is uncertainty. Regardless of what happens at the end it will take two years to negotiate the new
regime for the U.K. once the U.K. is out. Second is current account deficit. The U.K. is an economy with a large current account deficit. It
need capital inflows. Less inflow because of the uncertainty means a weaken sterling. And third, the Bank of England is unlikely to hike rates
during all this uncertainty. And actually might reduce them further. All these factors are negative for sterling.
QUEST: Right, but is it also likely that the Bank of England -- the answer you've just given then presupposes a vote to leave. Over the next four
months what happens within markets in the U.K.?
VAMVAKIDIS: We believe that the markets will get more concerned now that we know they have the referendum, and the polls suggest there is
significant risk that the U.K. will exit the E.U.. Of course if at the end the polls prove to be wrong and U.K. stay, the sterling will be supported.
But the reason we believe that the risks are not fully priced in yet, is that we didn't know that they have a referendum. It was too early. So the
market cannot price everything yet.
An example of that is what happened today. After they announced the deal one would have expected positive impact on sterling. But knowing that they
have the referendum and seeing some popular politicians such as Boris Johnson coming out in support of Brexit was clearly very negative for
sterling.
QUEST: You talked about the technical fundamentals pushing sterling lower at the current account deficit, the question of trade flows and the like.
How much of all sterling's weakness is just one of confidence? That if there was of vote to leave the UK economy might not be as robust and
strong.
VAMVAKIDIS: To a large extent is in the shorter months. This uncertainty or how the U.K. will look outside the E.U. Now there are arguments that
the U.K. in the long term might be better off. There are arguments that they will be worse off. But FX markets don't like the uncertainty.
Particularly when we are already in a quite fragile environment, with the Bank of England on hold. A substantial uncertainty in the whole global
economy, the slowing of that we have seen recently including in the U.K.
All this add to the uncertainties, and additional negative shock. So regardless of your views of where in the long term the U.K. will be better
off, or worse off out the E.U., the FX market does not like these uncertainties. This is what we have seen in practice with sterling
reacting negatively to any increase in Brexit risks. And we believe that the worse is ahead of us from this point of view.
QUEST: The worst is ahead of us. Thank you sir, Thanos, thank you. Now the fears over British exit weren't enough to hold back stock. All major
indices were up. They were boosted by the rise in oil and metal prices.
HSBC shares fell as the bank warned of a bumpy outlook for the global economy. But overall as you can see the best gains of the day there were
in Frankfurt.
South Africa's Central Bank Governor, says there is a global realignment taking place when it comes to currencies in emerging markets. CNNs Africa
Correspondent has spoken to the Central Bank Governor in Johannesburg. And he told Eleni Giokos that monetary policy isn't enough to get global growth
back on the right track.
(BEGIN VIDEO TAPE)
LESETJA KGANYAO, RESERVE BANK OF SOUTH AFRICA GOVERNOR: Well, monetary policy is not going to be a solution to global economy problems on its own.
Growth is more than just cyclical policies that you actually wish to deal with the underlying structural constraints to growth. And that is how we
would actually end up lifting the economy.
We are aiming at divergence of monetary policies. The U.S. is important as a source of the capital flows. But in terms of the destination of South
African exports, the Euro area is more important. Of course you have China, which absorbs the commodities. There is a rebalancing that is
taking place in China.
ELENI GIOKOS, CNN SOUTH AFRICAN CORRESPONDENT: Currency volatility. It's an emerging market problem. Where do you think it's going and how many
tools do we have left in the box to try and stop our currency depreciation?
KGANYAO: If there's anyone who can tell us where any currency is going that person would be a genius. And in the case of emerging markets
currencies at the moment there is a global realignment of exchange rates. The attitude of the South African authorities is that the rate must be
allowed find its level in the foreign exchange markets. The lender played the role of a shock absorber. South Africa had experienced a terms of
trade shock as a result of the decline in commodity prices.
[16:45:00]Are we concerned about the volatility of the currency? Of course we are concerned about the volatility of the currency. What is it that we
can do about the volatility of the currency? Consistent implementation of the bank policy.
GIOKOS: South Africa is teetering on junk status. We're facing a downgrade. What can the country do to avert this downgrade?
KGANYAO: We got a strong independent central bank. We've got a treasury that is embarked on a process of fiscal consolidation. That will tend to
deal with the immediate concerns they are facing us. And in the meantime there are the structural issues that we have been alive to.
GIOKOS: Let's talk about the impact that the global growth environment is having on emerging markets like South Africa. Are you concerned about the
growth prognosis for the country?
KGANYAO: Well global is a concern. Let's bear in mind about today actually emerging markets makes the biggest proportion of world GDP. So
when you worry about emerging markets, you necessarily have to worry about the global economy.
(END VIDEO TAPE)
QUEST: South Africa's Central Bank Governor.
Corporate news to bring to your attention today. The Board of Director of Boeing has elected a new chairman. And no great surprise. It's Dennis
Muilenburg who takes over on March 1st. He's already the chief executive. James McNerney stepping down from the board. McNerney was of course the
CEO and then he became the chairman. When Muilenburg took over he remained as chairman and now he's stepping down from that as well.
Michigan police are trying to figure out what led on Uber driver to go on a rampage over the weekend. We'll be live in Kalamazoo to talk about that.
(COMMERCIAL BREAK)
QUEST: An Uber driver in the United States has been charged with six counts of murder after a shooting rampage that left a community in Michigan
in the morning. Jason Dalton has appeared in court just a few hours ago showing no emotion as the charges where read against him. No motives have
emerged for why he went he went on this shooting attack. According to one source he continued to pick up passengers between shooting.
Ryan Young is in Kalamazoo in Michigan. Ryan, I mean I'm not sure which is more, but the whole thing is horrifying from start to finish. But this
idea, this notion that he picked up passengers between the various shooting of various victims. Do we know any more details about it? Is this
confirmed?
RYAN YOUNG, CNN CORRESPONDENT: Well this is definitely confirmed. And look there are a lot of people who are trying to figure out what's going
here. Because you had a man who obviously passed the Uber background check and was doing Uber Share rides. And then you had that gap between the
first shooting and the second shooting. So what they do believe that first shooting around 6:00 that when he shot at a woman who was walking with her
children. Shot her several times and now she is in critical condition. There was that window where he might have gone out and done those Uber
Share rides and had people in the car.
And then he went and had that -- according to police, and he's already said in court that he admitted to this. And that's what the detectives where
talking about. Is that he then shot that man and his son at a car dealership? So that also happened.
[16:45:00] What believe from that point on he did some more Uber Share rides and in fact one of the people who was inside the car asked him, "Are
you the shooter?" Because they heard a description of a similar car. And he answered, "No, I'm just tired, I've been driving for several hours."
QUEST: But Ryan here's the -- I mean we can look at the criminal side of it and how the police are dealing with it but also, is there any reason
that we know of at this point of his background, any reason that Uber should have known, done anything about it or is this just one of those
awful coincidences of life?
RYAN: You know that's the one thing we've been drilling down on, we went to his neighborhood talked his neighbors, talked to people in the
community, one thing they told us, the first they said was, look, this was a father of two. They saw him the yard playing with his kids, cutting his
grass, fixing cars. He was an insurance salesman.
There's no motive been released just yet. We don't even have a precursor to know why this could happen. What was the flashpoint in this? There was
no way law enforcement would have this guy on the radar. He was just a normal guy, a normal father, a person in the community here.
Yes, he did own a gun, but that was legal. So at this point no one has been able to tie all that together. The first glimmer of any kind of extra
information is what we got today, which is the fact that he admitted to the shootings. So obviously a lot of people are still trying to figure out
exactly what happened, what set this man off?
QUEST: And Uber themselves I remember earlier today I had seen a statement saying they were horrified, at this whole matter, and were
offering whatever support they could. Do you know any more about Uber's reaction?
RYAN: Well, I mean they put that out and of course he passed the background check. In fact the sheriff came out and earlier and said, look,
this is not Uber's fault, because he wasn't even on our radar. And if you think about this community having to be in that four to five hour hold,
where they were trying to figure this out. Three different crime scenes, where as they were trying to discover who the shooter was. They knew
through surveillance video and through some calls that they were looking for a Chevy HHR. One of the people who jumped out of that Uber car said
they called police to say, look, he was driving erratically. He sideswiped a car. He drove through someone's lawn. So he had all these things
happening all around the same time. And luckily they were able to track him down and he surrendered. And when we saw him in court today, you
expect to hear him maybe say something, but he didn't say anything, Richard.
QUEST: Sir, thank you for joining us. From Kalamazoo in Michigan we appreciate it.
RYAN: Thank you.
QUEST: Now, how losing in the race for the White House will actually make you the winner financially.
(COMMERCIAL BREAK)
QUEST: As the Republican Presidential field narrows and winnows even more for the remaining candidates their coffers too are also dwindling. New
numbers so how much cash each one has to take them through to the Republican Convention this summer. So if you look you've got Senator Ted
Cruz, he has $13.6 million on hand, Marco Rubio, $5 million, Dr. Ben Carson, $4.1 million. Donald Trump, $1.1 million, but of course he is
funding most of his campaign himself out of his own personal fortune. And John Kasich, the Governor of Ohio has $1.5 million.
So with Bush gone, Cruz has the most, only one candidate can be victorious at the end of the campaign trail, and as CNN Money's business
correspondents, Samuel Burke, now tells us, just because you've lost in the big race does not mean you've lost you've lost out completely.
[16:50:05] (BEGIN VIDEO TAPE)
SAMUEL BURKE: It is so good to see you all. My friends there have been a lot of candidates in the 2016 Presidential Primaries and as with any
election, all but one will end up a loser. But don't feel bad for those people dropping out of the race, no, they may have already won, both
politically and financially, just for being in the mix. The national exposure and loyal following from people like you often translate into
mega-money.
Take my good friend, Mike Huckabee, he is the prime example, he had the good fortune of not losing once, but twice and he turned it into book
deals, a radio program and even a talk show on Fox News. Then there is John Huntsman, a true public servant, former Governor of Utah, former U.S.
Ambassador to China. He was appointed to two corporate boards, Ford and Caterpillar, in a month just after he dropped out of the 2012 Republican
race.
Sarah Palin, she racked up fees for speaking gigs even had her own reality show.
(BEGIN VIDEO CLIP)
SARAH PALIN, FORMER GOVERNOR OF ALASKA: That was a eureka moment, that was cool.
(END VIDEO CLIP)
SAMUEL BURKE: And you can't forget Bob Dole's Viagra ad no matter how hard you try. Or the Pepsi one that spoofed it.
(BEGIN VIDEO CLIP)
BOB DOLE, FORMER KANSAS SENATOR: What is this amazing product, my faithful little blue friend, an ice cold Pepsi Cola.
(END VIDEO CLIP)
SAMUEL BURKE: But friends there are not just financial benefits to losing, there are also political benefits, getting knocked out of the primary can
help you win the nomination the next time around. John McCain, Mitt Romney, or it can help you land a major political appointment, Secretary of
State, Hillary Clinton, Vice President, Joe Biden.
And of course many Presidents have had to lose before getting elected. Just think of John Adams, Thomas Jefferson, Richard Nixon, and even Ronald
Reagan. So when someone like Donald Trump decides to run, do the big bucks of losing factor into the decision? Win and you get stuck with nomination,
lose you get loads of media attention and cash in. Suddenly it sound like a win-win to me. God Bless Capitalism.
(END VIDEO TAPE)
QUEST: And Samuel Burke is with me in London. Now obviously there are greater issues than the money at stake in this, but you are basically
saying that you don't lose out because you've lost out.
SAMUEL: Absolutely, so many people have gone on to make so much money but there are really two different realms let's say, there are the kind of
media stars that people who know how to do those zinger of a sound bite. And then you have the other folks and then you have the other folks who go
kind of the John Huntsman route on the corporate board. So you have people Carly Fiorina who already had her corporate experience and lot of people
expect that after the campaign, now that she's basically out of the race, that she'll go on and maybe serve on more corporate boards.
QUEST: And they still have the money that was left in the accounts from the race which is why they suspend them and they don't end the campaign
because that means they can then use that money for either promoting other causes, political causes.
SAMUEL: Many times it's so that they can keep on paying their campaign staffers though a lot of the times so they can use it for another run. But
a lot of times they go on to support another candidate. Quickly they go on to endorse someone they were just running against and the money goes to
them.
QUEST: And how far does, I mean this election race is going to be they say the most expensive on record, Samuel
SAMUEL: It always is, that's what's so fascinating about American politics, it's just how much money they spend, the next time around it
leaves you even more surprised and it's interesting being here in London, all British people can talk about is how quick their races are and they are
just stunned by us Americans, and how much we spend on it in time and in money, it seems never ending on both fronts.
QUEST: Samuel Burke, in London, thank you.
It is a crucial week for the candidates, and CNN is the only place where you can see all the action as it plays out. On Tuesday night we have the
Democratic Town Hall, that's in the early hours of Wednesday morning in Europe, and to be replayed so you will get a chance to see it. On Thursday
is the final Republican Debate before Super Tuesday, again, don't fret ye not, it will be repeated and replayed the following day. It's all on CNN.
Selfies may no longer be used solely to express your narcissistic tendencies, MasterCard thinks that the selfie could make buying on the
internet a lot safer. Instead of passwords and signatures MasterCard is launching technology for users to take selfies as a way of visual
identification.
[16:55:35] Now if you think about it this could be rolled out by the banks over the next few weeks and months, in the U.S., the U.K. and in Canada and
in some European countries. It will use facial recognition as a way of doing -- get it right in there and you will see what I'm talking about.
Apparently if you buy something you will be able to do it like this and that should enable your purchase to go through. We'll have a profitable
moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. Barely has the U.K.'s referendum race begun and we are seeing effects in the markets and on that effects is FX.
Sterling dropped 1.8 percent with every possibility of much more uncertainty and falls in volatility in the four months as the prospect or
possibility of U.K. leaving the E.U. moves ever closer towards the vote. So what more we've got CITI's warning of market turbulence, we've got
Moody's warning of possible negative outlook, we've got enormous number of different brokerages all saying that the risk is there.
And what's worrying most of course is that this is only day one of a campaign that goes right the way through into June 23rd. And that's Quest
Means Business for tonight, I'm Richard Quest in New York, whatever you're up to in the hours ahead. I hope it's profitable. Let's get together
tomorrow again.
END
