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Quest Means Business
Questions About World Economic Situation; GOP Candidates War of Words; Cruise Ship Sailing from Miami to Cuba; Class Warfare on Airlines?; Energy Crisis Exposes Venezuela's Economic Failure; Leicester Success Offers Management Lessons; Twister Celebrates 50th Anniversary; "Hamilton" Gets Record 16 Tony Nominations; Plans for "Hamilton" to Tour Europe, Australia. Aired 4-5p ET
Aired May 03, 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: Ringing the closing bell. But they are not raising the markets. Oh, a firm gavel. With some wonderful floribunda and vegetables on
the stock exchange, on Tuesday, it's May the 3rd.
(BEGIN VIDEO CLIP)
QUEST: Tonight, Europe loses the spring in its step and markets across the world take a tumble. Venezuelans wait and wait for economic answers in
Caracas. We have exclusive reports from the Venezuelan capital.
And Ted calls Donald a narcissist. Donald calls Ted unhinged. There's only one person to sort out a mess like this, Jerry Springer is on our program
tonight.
(END VIDEO CLIP)
QUEST: I'm Richard Quest. We have a very busy hour. Let's get to it because I mean business.
Good evening. Tonight, stocks are selling off. Europe warns of a substantial uncertainty in risks. And there are fears over the health of
the world economy that have well and truly returned.
If you look at how the market performed in New York, the bell just closed a second or two ago and you can see.
(BEGIN VIDEO CLIP)
QUEST: We're off the lows of the day but it's still off 139 points which is three quarters of 1% so the Dow has suffered its second triple digit loss
over the last 4 sessions. And one of the reasons behind all of the misery of the day is the European Commission which slashed growth forecasts citing
considerable risks.
The market turmoil and abrupt oil price swings all spillovers from emerging market slowdowns. These are some of the risks. The financial market
turmoil, the emerging market slowdown, the uncertainty over "brexit," the U.K. referendum which keeps piling on even more uncertainty. It's Europe's
gloomy outlook. It's a difficult economic environment and there are huge disparities between the fastest growing European countries incidentally
some of them, for example, like Spain, and Romania, and the slowest growing, those that are in still in recession, those like Greece. Put it
altogether and Europe's Economics Commissioner Pierre Moscovici says he hopes Europe can keep growing though the climate is getting worse.
PIERRE MOSCOVICI, EUROPE'S ECONOMIC COMMISSIONER: (As translated) Economic performance is continuing despite the anticipated weakening of factors such
as oil price and the level of the euro which have for some time fostered European growth. And this is continuing despite an international atmosphere
which is deteriorating.
(END VIDEO CLIP)
QUEST: European markets also slid on Tuesday.
(BEGIN VIDEO CLIP)
QUEST: The FTSE is at its lowest level in a month. The losses were worse in Frankfurt, Paris and Zurich. The worst losses of the day as you can see in
the German market dragged down by lower disappointing bank earnings. All of which seems to have come as a bit of a surprise and a bit of a late
movement.
(END VIDEO CLIP)
QUEST: Anthony Chan is the Chief Economist at JP Morgan Chase. Good to see you, sir.
ANTHONY CHAN, CHIEF ECONOMIST, JP MORGAN CHASE: Good do see you.
QUEST: So, let's start with the spring forecast from the Europeans. I mean, there is growth there, a huge difference in the amount of growth. But the
E.U. or the Eurozone, for example, is expected to grow by 1.8% this year versus 2.3% for the United States. Not a huge difference.
CHAN: Not a huge difference. I actually believe the United States will actually grow a little bit less than that. I'm looking for about 1.8% to 2%
growth for the United States this year. I think that Europe has one thing that the United States doesn't have and that is you have a central bank in
Europe that's willing to do even more, push interest rates more, buy more bonds, add more liquidity. The U.S. is on the upswing in the sense that
we're going - we're going to do some Fed tightening this year.
QUEST: Right. But that's a double-edged sword because although the ECB is prepared to do more, the fact it has to do more is symptomatic of a
worsening economic environment.
CHAN: Well, they certainly are behind the United States in terms of their recovery. And given the fact that their economy is a bit more fragile,
you're going to need a little bit more stimulus.
QUEST: Right. But how worried are you? I mean you know beginning of May, forget the old sell in May go away. We are in May, you've got U.S. growth
that was poor in Q1. You've got earnings that were weak, you've got a market that is clearly worried. And you've got a downgrade now of European
growth.
[16:05:02]
CHAN: I'm really not that worried, Richard. And I'll tell you why. First of all I look at the bull to bear ratio that American survey, sentiment
survey out there of all professional investors and that survey is now a 1.4 bull to bear market ratios. And when you look at that survey from the
beginning --
QUEST: Explain. So bull to bear.
CHAN: This is basically looking at the percentage of investors that are bullish.
QUEST: Yes.
CHAN: And you basically subtract or divide by the investors bearish and when you see that, today that survey is at 1.4 and when you see 1.4 12
months later, on average the S&P 500 goes up about 8.8%. That's pretty optimistic. Not as good.
QUEST: But what's driving that optimism, Anthony? When you've got corporate earnings that at best were mediocre and at worst bad.
CHAN: Well, Richard 1.4 is actually telling us there's not that many bullish investors and when you have this number that is very low it tells
you the market does better. The worst-case scenario was in 1990 when you had that bull to bear market ratio at 0.2 and you got more than a 20% rate
of return so you want that number low. It is low. You don't want it high. The highest has been like 11 and then at that point 12 months later the
market goes down 25%.
QUEST: Right, so at 1.4, I mean, you're talking about a .2 and the market roars and 11 it crashes.
CHAN: It crashes.
QUEST: At 1.4 --
CHAN: You had 8.8% 12 months later. That's not bad.
QUEST: We are not seeing evidence of 8.8%.
CHAN: In the next 12 months I think. And I'll tell you why --
QUEST: What's driving it?
CHAN: I'm going to tell you.
QUEST: Same question.
(BEGIN VIDEO CLIP)
CHAN: Same question. First of all what hurt in the first quarter was low energy prices. They're up 61%. Even though today Brent is down about 1.5 to
1.6%. They're still up from the lows of 2788 by 61%.
(END VIDEO CLIP)
CHAN: So you don't have to worry about energy earnings. The dollar has gotten a lot weaker. You don't have to worry about corporate profits held
down. These multinational corporations with the weaker dollar and China is not growing rapidly. You saw the PMI surveys. They grew okay. It grew at
6.7% and they had 60% year over year credit growth. When I look at a total social finance and I look at some of that local bond financing. With all
that credit growth, China will hang in there which will eventually save not only Europe but will also save the United States.
QUEST: The PMI was on the cusp?
CHAN: But it was not below, it was not very weak. And by the way, the PMI is not the only thing we look at, we look at growth, we look at other
things suggesting that China's growing. And the first quarter numbers essentially tell you that.
QUEST: In a word or a sentence, how much could the U.S. Presidential election ruin your rosy scenario?
CHAN: Well, historically, I did another study, Richard. Which is fascinating. Real quickly, in the eighth year of a Presidential cycle, when
the President Democrat or Republican cannot be re-elected, perhaps maybe they don't try as hard. It is the worst year for the equity market during
that eighth year. The S&P 500 on average drops 3.2%. That's the bad news. The good news is the first year of that eight-year presidential cycle,
which is next year, the S&P 500 on average goes up 8.9%.
QUEST: So taking your two theories of the bull to bear ratio, and your -- we're going to see the gains later rather than sooner?
CHAN: 2017, exactly right. Thank you.
QUEST: Good to see you, sir. There we are.
Now, this is why you watch this program. To get that sort of guidance, that sort of not advise but that sort of insight from Anthony Chan at JP Morgan
Chase. You can subscribe to the "Quest Means Business" newsletter. I'm writing tonight about the profitable moment on the issue of European growth
and the discrepancies between those countries growing at the fastest and those growing at the slowest rates. Go to cnnmoney.com/quest and please,
please subscribe.
Ted Cruz has blasted Donald Trump's character in one of his most personal attacks yet. After Mr. Trump spread unconfirmed rumors about Senator Cruz's
father, the Texas Senator, went on the attack about Donald Trump's past.
(BEGIN VIDEO CLIP)
TED CRUZ, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: Listen. Donald Trump is a serial philanderer and he boasts about it. This is not a secret. He's proud
of being a serial philanderer. I want everyone to think about your teenage kids. The President of the United States talks about how great it is to
commit adultery. How proud he is describes his battles with venereal disease as his own personal Vietnam.
(END VIDEO CLIP)
QUEST: Now, Donald Trump responded calling Ted Cruz increasingly unhinged. I mean forgive me for laughing. It would be funny if it wasn't all so
serious and perhaps so tragic. Mr. Trump says if he wins the primary in Indiana tonight the Republican race is over.
(BEGIN VIDEO CLIP)
QUEST: There are 57 delegates at stake and Mr. Trump could have a much clearer path to the 1,237 he needs to get it on the first vote by this
stage tomorrow.
CNN's contributor Ryan Lindesmith joins me from Washington.
(END VIDEO CLIP)
[16:10:00]
QUEST: Ryan, well, venereal diseases, unhinged.
RYAN LINDESMITH, CNN CONTRIBUTOR: Just when you think it can't get any worse.
QUEST: I mean, OK. So, first of all, Indiana, when we what's the latest thinking on what happens tonight for both Democrats and Republicans?
LINDESMITH: Well, the latest thinking is that this is Ted Cruz's last stand and, frankly, those expectations have been set by Ted Cruz himself.
(BEGIN VIDEO CLIP)
LINDESMITH: And if Ted Cruz does not have a victory tonight, if he does not deny Trump the majority of those delegates, we're looking at Donald Trump
being the nominee of the Republican Party. Nothing is going to stop him unless he's stopped tonight in Indiana.
(END VIDEO CLIP)
QUEST: What's driven this? I mean, for those of us who are more skeptical or cynical or at least more realistic, we have pretty said for several
months that he's going to be the nominee.
LINDESMITH: Yes. I think that's right. I think after Cruz won Wisconsin, he won Utah, he won Wisconsin, there was a brief moment there where it looked
like he could deny Trump an absolute majority of those bound delegates.
(BEGIN VIDEO CLIP)
QUEST: But you don't become the nominee by winning Wisconsin and you know? I mean, no disrespect to Wisconsin but you don't -- you know, you need the
big states.
(END VIDEO CLIP)
LINDESMITH: You need to win. You need to actually win voters.
QUEST: Yes.
LINDESMITH: To win the nomination. And so his path was always this kind of, you know, very difficult get into an open convention and then convince the
delegates that is they really want Cruz.
(BEGIN VIDEO CLIP)
LINDESMITH: Not the person who the voters actually chose. I think tonight we'll see the end of that strategy and very likely Trump will get the magic
1,237.
QUEST: It would have been a most awful Democratic electoral fraud if to get that close he is denied when he's had.
(END VIDEO CLIP)
QUEST: When he's had -- no, look. I know the rules say it's possible, Ryan but the fact is he has got millions more votes than the other guy.
LINDESMITH: I think this is a consequence of the parties democratizing their nominating process which frankly is only a new invention right. It
is only since the '72 campaign have the two parties truly democratized their system where primaries decide the delegates. In the old days, you had
candidates who showed up at the convention who had never won a single primary.
(BEGIN VIDEO CLIP)
LINDESMITH: That was seen as undemocratic after the '68 convention in Chicago on the Democratic side. Big "D" democratic side. And now we have
this, you know, small "D" democratic system. Look. I'm someone who believes that parties are private entities, if they want to overthrow the will of
their own voters and nominate someone who is better in a general election, I don't think there's anything wrong with that, necessarily. That's a
little bit of a minority opinion.
On the Democratic side, they have super delegates so if they get into a Donald Trump situation, if they find someone who they think is a terrible
candidate, they're super delegates who make up almost 20% of the convention can actually deny the will of the people. It's sort of a failsafe switch
or, you know, break glass in case of emergency. Republicans don't have that. They're stuck with Trump.
(END VIDEO CLIP)
QUEST: Extraordinary days. The like of which we never thought we would see. Thank you, Ryan we will need more from you in the days ahead to help us
understand it.
LINDESMITH: Thank you, Richard.
QUEST: Ryan Lindesmith joining us there.
Now, I need to show you to give you a real feel for what we have -- what's happening at the moment.
A little word cloud for you to enjoy. Keep in mind this at the moment.
(BEGIN VIDEO CLIP)
This, of course, is the sort of shenanigans that you've seen on television. But let's have a look at a word cloud. Now, you might think we have taken
them from a typical episode of that television program "Jerry Springer." You remember "Jerry Springer"? the sort of program that fisticuffs and foul
language was the norm.
But now serial philanderer. Narcissist. Nasty guy. Choke artist. Unhinged. Pathological liar. Venereal diseases. The sort of thing you'd have thought
you'd hear on "Jerry Springer" but those are the words being used by the campaign trail by the Republican candidates. Many of them uttered by Ted
Cruz.
Earlier, I spoke to Jerry Springer himself and I asked him when he recently described the battle between Trump and Cruz as a school yard fight. I asked
Jerry Springer, the rise of the figure of Donald Trump he believes is inevitable.
JERRY SPRINGER, TALK SHOW HOST: We have in this country raised a generation of Americans to distrust the government, to dislike the government in some
cases to hate the government. To believe that government can do nothing well. To disrespect the President. We've raised a whole generation of
people to hate the American government. Well, knowing that's the case, we shouldn't be surprised that at some point someone would be running for
President who is not part of the government and who espouses all these views about how horrible our government is.
[16:15:08]
SPRINGER: Now, if you're going to run for President, you have to be well- known. So the only two fields where someone could be well-known and run for President and not be part of the government would either be sports or
entertainment. Well, athletes are too young to run for President so we should have known that inevitably or at some point it would be someone from
the entertainment field to run for President. Did we know it would be Donald Trump? No. But that it would be an entertainer? Sure. We should have
seen it coming.
(END VIDEO CLIP)
QUEST: But we shouldn't - but we couldn't have known that there would be such vitriol abuse or indeed that perhaps the argument and certainly seen
perhaps from the Trump side would descend so far into the gutter.
SPRINGER: Well, we are in an age, number one, of social media where people have become very used to rants. People have become very used to the idea of
people saying whatever they want because they think they're protected in the social media. They don't have to show their identity. And so people
have gotten used to saying all these horrible things about each other. So, that perhaps again it was bound to come to pass.
QUEST: But you also believe that it's incumbent upon the candidates to realize that they're not in the circus of a reality T.V. studio.
SPRINGER: Oh, absolutely.
QUEST: And they are expected to act with a certain level of decorum which in many cases they are not.
SPRINGER: Well, exactly right. I mean when I saw the Republican debates, I think I appeared on CNN and I said that, you know, if the Republican Party
-- the Republicans are going to do my show, they ought to pay me.
(BEGIN VIDEO CLIP)
SPRINGER: It's one thing to be crazy on a circus of a television show. It's a lot different to say you want to be leader of the United States of
America and leader of the free world. It's disgraceful the behavior they're showing.
(END VIDEO CLIP)
SPRINGER: I mean I never thought that anyone who was a guest on my show should ever be President of the United States. Therefore I don't think
anybody should be President who behaves like people do on my show.
QUEST: Do you accept in any way, any shape, any form any blame for having lowered the level of public discourse through shows like yours? Because to
a -- you know, to be fair here, Jerry, if you're going to let people rant and rave on television, it's not a leap of faith before they do it in
public life.
SPRINGER: Well, people are doing it in public life, frankly, because as I keep saying, in today's world of the social media, people are passing along
naked pictures of themselves, who they were with last night. I mean, that has clearly become part of the culture. But again, just because you behave
a certain way, let's say, at a football game or at a bar on a Friday night, or at a fraternity party or on a crazy television show no one should
suggest that behavior is therefore appropriate in the White House.
QUEST: When you hear Jerry Springer talking about these issues, it puts it all into perspective. We'll hopefully hear a lot more from Jerry Springer
as we move towards the U.S. Presidential election.
There's a very large cruise ship belonging to Carnival Cruises in the Havana harbor. We told you about its arrival yesterday. It made history.
That's the cruise ship. It's the Adonia and we'll talk to the Chief Exec of Carnival after the break. Arnold Donald joins us.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:21:00]
QUEST: In Cuba, 700 tourists are enjoying the sights and sounds and no doubt the tastes of Havana. It's more than just a vacation.
(BEGIN VIDEO CLIP)
QUEST: In many ways they're the passengers on board the Adonia, which is the first U.S. registered cruise ship to dock in Cuba for some four
decades. Havana is first of three stops, it is a seven-day cruise. And we're delighted that Arnold Donald, the Chief Executive of Carnival
Corporation, joins me now from Havana.
(END VIDEO CLIP)
QUEST: We talked many times, Arnold, about when and how you were going to get one of your ships into Cuba. Come on, Arnold. There's a quiet
satisfaction that you were first.
ARNOLD DONALD, CHIEF EXECUTIVE, CARNVIAL CORPORATION: Good afternoon, Richard. It's great to be with you and to talk to you from here in Havana
where, you know, we have ten world leading cruise line brands sailing 80 million people a year but never have we been more proud and more humbled
than to have our fathom brand and our ship the Adonia here in Havana with 700 guests having the time of their life and making history.
QUEST: So as you look at where Cuba will fit in to your -- your Caribbean cruising strategy, there's going to be huge demand, isn't there?
(BEGIN VIDEO CLIP)
DONALD: Oh, look. There's such a pent-up demand in the U.S. to come to Cuba. And we know it's going to refresh the Caribbean which is already the
largest destination market in the cruise industry in the world today. But clearly, Cuba's just going to add to that and it will actually help all of
the Caribbean over time.
You know, right now we have just the one ship, the Adonia ourselves. Where all of our other brands are applying for berths here for the next couple of
years and as well as of course the other cruise lines are seeking berths, as well. But as Cuba expands, its cruise capacity and takes these ships on
it's going to help all of the Caribbean.
(END VIDEO CLIP)
QUEST: The issue of resources, infrastructure, development, I mean, there are those -- there are only those two berths and wharfs behind you, Arnold,
unless you want to have to -- I don't know whether -- birth your ship out of the harbor which, of course, requires tendering. So, there's a natural
limit to how much Havana can take, isn't there?
(BEGIN VIDEO CLIP)
DONALD: You know, there is today. But not seriously. There's this port, this harbor could take a number of cruise ships. We could add some berths
relatively quickly. Cuba could. But more importantly than that on this cruise we're going to two other San Fuego, and Santiago de Cuba. And there
are other ports in Cuba as well around the islands, it's a large island as you know. Many different places to see, many different types of Cuban
cultural experiences to have and so today there's capacity. We know there's going to be greater capacity in the future.
(END VIDEO CLIP)
QUEST: As we just talk finally about the wider issue, the wider growth in the market, once again, I mean, we're looking at a world of fragile
economic growth and yet the cruise industry continues this double digit growth. China, are you worried, is it going to falter in that growth?
DONALD: No. China has been a fantastic market for us. As you know we increased our capacity there almost 60% this year but it's off a small
base. There's over 135 million Chinese that are outbound tourists today. Fewer than a million are roughly --
QUEST: Oh. Oh. There we are. Arnold Donald who was joining me from Havana until he wasn't. I guess that's what happens. It's still -- the
broadcasting gremlins. It was lovely to see Arnold and we certainly heard the various points about Havana.
[16:25:07]
Now, from ships and things on the sea, to those in the air. Where class warfare is breaking out. Forcing economy passengers to walk past first
class seats or even having first class sections is leading to an increase in air rage incidents according to a new study. First class passengers
apparently first class passengers mind are 12 times more likely to experience for air rage if even boards through the first class door. And
the economy passengers are four times more likely to lose their cool if they're on a plane with a first class section. This is very strange.
Why should the mere existence of first class either encourage or enflame or enrage either sets of passengers? Katherine DeCelles is the professor at
the University of Toronto and the lead author of the study, she joins me from Stamford in California.
When I read this report this morning, Katherine, I mean, explain to me. Why do economy passengers have a propensity or a higher propensity to rage just
because first class is there?
KATHERINE DECELLES, PROFESSOR UNIVERSITY OF TORONTO: Well, thank you for having me. We certainly only know what data we have so we don't have data
on passengers feelings or emotions. But there's lots of theory and lots of evidence across multiple social science disciplines that shows in the
presence of inequality that people who are on either side of the -- they have or have nots have different psychological reactions. And these things
can, in turn, create things like aggression and violence. We know from income inequality is related to violent crime and here we see it in the air
that inequality in airplanes can predict an increased incidents of air rage.
QUEST: But as I watched -- as I read the report, I mean, its things like the smell of cookies baking for first class passengers, the fact they're in
front of the curtain whilst you're getting an old moldy sandwich at the back, the fact they get free drinks. I mean is this -- it's almost Mary
Antoinette let them eat cake idea that you know it breeds a resentment which boils over.
DECELLES: Well, it might build somewhat of a resentment.
(BEGIN VIDEO CLIP)
DECELLES: We don't people's emotions again in our data. I think you may be read some examples of things that could make inequality even more salient
on board airplanes. In this context where inequality exists, making it more salient such as by boarding through the first class cabin or other things,
perhaps, we speculated about in the paper could also increase that reaction.
QUEST: Right. So finally, were you surprised by these results?
(END VIDEO CLIP)
DECELLES: No, I was not, actually. Really. They are decades of research in social science that show many, many negative outcomes of inequality. I was
surprised a bit that we did not find support for leg room as being a trigger of air rage or associated with more air rage given the attention
that that's gotten with the knee defender in the press. But that was pretty much the only surprise that we had.
QUEST: I'll take a first class seat over an economy class seat any day. Thank you very much, Katherine DeCelles, joining us from California.
And now at least you know if there's rage thereafter you can blame it on those rich lot in front of the curtain at the front.
When we come back, it's "Quest Means Business."
(BEGIN VIDEO CLIP)
QUEST: We're in Venezuela where Paula Newton will be reporting on the hunger, the disastrous economic plight affecting the Venezuelan people.
"Quest Means Business."
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:32:08] QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. I'm going to take you to Caracas where patience
is running thin. Politicians who run Venezuela's economy see the misery of the people. And I will be speaking to the Leicester City fan who bet on
them to win the league every year, every year except this one. It cost him 100 grand. Before that this is CNN and on this network the news always
comes first.
Ted Cruz has blasted Donald Trump's character on the day of the crucial Indiana primary. Sen. Cruz called Trump a pathological liar after Trump
brought up unconfirmed reports that Cruz's father had ties to the man who assassinated John F. Kennedy.
(BEGIN VIDEO CLIP)
TED CRUZ, REPUBLICAN PRESIDENTIAL CANDIDATE: I'm going to tell you what I really think of Donald Trump. This man is a pathological liar. He doesn't
know the difference between truth and lies. He lies practically every word that comes out of his mouth. And he had a pattern that I think is straight
out of a psychology textbook. His response is to accuse everybody else of lying.
(END VIDEO CLIP)
QUEST: A ceasefire deal for the Syrian, city of Aleppo may be hours away according to a much informed minister. Missile attacks have killed more
than 50 people in the hospitals in city over the past week. The head of Doctors Without Border implored the United Nations Security Council to make
the violence stop.
(BEGIN VIDEO CLIP)
JOANNE LIU, INTERNATIONAL PRESIDENT, DOCTORS WITHOUT BORDERS: You are charged with protecting peace and security. Yet, four of the five
permanent members of this council have to varying degrees with United States coalition responsible for attacks over the last year.
(END VIDEO CLIP)
QUEST: The Pentagon says an American service member killed in Iraq was a Navy Seal. It happened during an assault by ISIS north of the city of
Mosul. The Americans are advising the Peshmerga forces who are fighting ISIS in northern Iraq. He's the third member of the U. S. armed forces to
die since Washington began deploying more personnel in Iraq in 2014.
The Olympic torch in Brazil is slowly making the way to Rio de Janeiro. It's do to pass through more than 300 towns on the way. Thousands of
runners will carry the torch in relays reaching Rio in time for the start of the games, which is August 5th.
A mother and her three children made a dramatic escape from a burning building in South Korea. You can see the mother, there you see. You can
see the mother holding one child out of the window before dropping them to the people standing below. All three children escaped this way before the
mother herself jumped. The children and the mother were all, thank god, uninjured.
[16:35:14] An actual crisis in Venezuela is accelerating. A man-made economic meltdown. Natural crises, man-made also involved. The Guri bit
dam normally provides three quarters of the country's electricity. But it's not managing anything like that because of a drought, and the water
behind the dam is at a record low. So, as a result of all of this, here's the dam front. The water behind at a record low and power shortages
exposing the failures of Venezuela's economy. The economy's expected to shrink eight percent this year. Now, because of that, the energy crisis,
the government is taking drastic measures. Let's talk about this energy crisis.
You have got rolling blackouts across the country. And a two-day work week for government workers. It's saving energy, but at the expense of people's
living standards. Now, the government blames the weather. Others point to mismanagement and corruption. For years Venezuela has relied on this, oil
revenues from exports. Now, with oil prices plummeting and the government's running out of cash, supermarket shelves have gone bare and
the government's unable to pay for basic food items. So with an energy crisis, an oil economy, what do you end up with? Inflation and the cost of
goods, which is absolutely skyrocketing. The IMF projects inflation to rise 500 percent this year, 1600 percent next year. Whatever way you look
at it, these are, to some view, the mismanagement of the Venezuelan economy. A meltdown has forced a profound change in people's lives.
Shopping for basics, food, means standing in line for hours. Journalists have difficulty getting access to Venezuela. CNN is there. CNN's Paula
Newton has her exclusive report from Caracas, Venezuela.
(BEGIN VIDEOTAPE)
PAULA NEWTON, CNN CORRESPONDENT: La cola, Richard, the line. It's unfathomable people here that they spend so much of their lives lining up
for the basics. I want you to see now how Venezuelans walk the line.
NEWTON: (voice-over) La cola, the line. This is how Venezuelans spend most of their time now. In line not for luxuries but basics. Your next
meal, soap for your next load of laundry. Diapers for your baby's next nappy change.
"I'm with a 2-year-old lining up having to put up with this," she tells me. "We have no milk, we have no diapers, nothing. This is impossible," she
pleads. She says she left her home at 4:00 a.m. like many here. Waiting for government rations that are dwindling ravaged by hyperinflation,
government mismanagement and an oil crisis.
NEWTON (on camera): These types of lines are popping up all over Caracas. People here are looking for flour and pasta. Some were here this morning.
They were told the store had absolutely nothing. And that's the kind of scavenger hunt happening throughout Venezuela, people just trying to find
the basics can't find them.
NEWTON (voice-over): We're not allowed to shoot inside, but outside people tell us they line up for hours and still get nothing. "We are hungry. We
have needs. We have no food. Look at this line. Mothers who are hungry. We need food, medicine. We can't find anything. What's finishing us off?
Hunger," she says.
Police are in control here, herding people and making sure they are shopping on their government allotted two days a week. The only way around
this, buying from a bucanero, black market middleman. We followed one customer on a shopping trip as covert as any drug deal. But he's buying
food.
NEWTON (on camera): And this is what goes on here. Black markets have opened up in so many neighborhoods. People just can't get the essentials.
Salt, sugar, the basics, which they have to try and find on the black market.
NEWTON (voice-over): Products are marked up at more than twice their fair value than on supermarket shelves. It's also illegal. The reasons neither
buyer nor seller wish to be identified. Few can afford it though, so Venezuelans walk the line, spending much of their lives now in the la cola,
the queue. Already one of the most detested and humiliating rituals in this country's history. Richard, and given everything that we saw there,
it's no surprise people are doing what they can to side step the official economy and then the barter system. People trying to trade goods and avoid
the hyperinflation really integral in this economy right now. The problem is they just can't find anything.
[16:40:00] there's one other thing I want to mention to you, Richard. You know, when I've come here in recent years, it's been very difficult
sometimes to get people on camera. Not any longer. From what we see, people are seething with anger and really want people to know when's going
on here, Richard.
(END VIDEOTAPE)
QUEST: Paula Newton, reporting from Caracas. Will have more from Paula as the week goes on.
So imagine every year you have a bet and this year you don't bet on your favorite team. And you lose as a result 100,000 pounds. That's what the
Bloomberg editor did and you will hear John Micklethwait after the break.
(COMMERCIAL BREAK)
QUEST: it is a model for success that's likely to be analyzed in business courses in years to come. Leicester City's improbable road to becoming
champions of the English Football League is rich in lessons of good management. Now, one lesson that John Micklethwait has learned is never
abandon your traditions. Micklethwait is Bloomberg's editor-in-chief. For the last two decades he had a ritual at the start of every season, he
placed a 20-pound bet on Leicester to win the league. It was a quixotic bet. It never went anywhere. It was literally 20 pounds down the toilet.
Except this year. Micklethwait broke with the tradition. He saved his 20 pounds. And the club went on to win the league, 5,000 to 1 odds. He
missed a payout that would've come to $146,730. Sorry, Mr. [16:35:00] Micklethwait. I asked him why he didn't bet on Leicester this season.
(BEGIN VIDEOTAPE)
JOHN MICKELTHWAIT, EDITOR-IN-CHIEF, BLOOMBERG NEWS: I went to a bookmaker almost exactly on my birthday, which is August 11th and the coincided with
beginning of the sport season and the football season. I would go and bet and then as a sort of rite of passage put the betting ticket beside my desk
at the "Economist" where I then worked all the way up until the last season. To the beginning of last season and my colleagues, many of whom
you know, would wander around and ridicule it, often correctly. Because Leicester often didn't win or always didn't win except a couple of times
when they were in the lower divisions.
And I also bet on a man called Emile Heskey, a hero to me, being the top scorer in the world cup. And that was also somewhat sadly berated by these
people. Anyway, last year I moved to Bloomberg based in New York, an I'm not in Britain in August and I missed out on this opportunity, which at the
time I imagine 20 pounds saved and sadly it wasn't. But nothing really takes away from the fact I'm still very happy.
QUEST: As we look at Leicester, your recent article, you dissect the way in which they have won or at least played so well during the season. What
would you say if you had to, say, between luck, good management and skill took them to the top this season?
[16:45:00] MICKELTHWAIT: I think it's probably a sort of third, a third, a third. If one of the big four had really taken off, then maybe Leicester
would have had a much harder time. I think the skill in buying was amazingly important. There's definitely some degree of luck. Leicester
had bought one or two duds along the way, but that element of targeting very precisely things they really need, that was very clever. They brought
in defenders who were very good at defending. Many of them actually on free transfers because they weren't wanted. I think the element of team
work was also there. There was an element of dirty dozen about Leicester, a sort of team of rejects from other places, people who were bought for
very little money, all those sort of things and trying to sort of steel a fortune whilst nobody else is looking. and I think that also played a bit,
but I wouldn't deny -- even I wouldn't deny -- that luck played a role.
QUEST: Finally, have you made plans to put your bet on next year already?
MICKELTHWAIT: Yes. I'm definitely going to do it next year. A couple of people have already sent me e-mails saying you can get it, I think for 40
to 50 to 1 are ready. Because once again, people foolishly discounting Leicester. But I think maybe this time I will definitely do it. And
people will always tease me correctly I think about somebody who missed this opportunity. The one time your lottery ticket comes up and you fail
to get it. Anyway, there you are. For me, it's still -- I was celebrating as hard as anybody. If you follow a football team, you know, all of your
life, then it's amazing particularly a small football team if they pull off something like this.
(END VIDEOTAPE)
QUEST: Right hand blue. We're playing twister when question come back after the break and don't even think of cheating. We've got a left hand
yellow because the creator of the game joining us after the break. Oh, we've got MAKE, CREATE, INNOVATE first.
(COMMERCIAL BREAK)
QUEST: Now you probably don't recognize this gentleman, but he may be responsible for some of your favorite childhood memories. This man is Reyn
Guyer. He developed all sorts of things. For example, this, the nerf ball, which he developed in 1969. And with the nerf billion and the games
that were played, well, I'm sure your parents probably said, don't do this in the living room.
[16:50:00] God, you just -- go on. Just you dare. Yes, there you are, you see? At some point as you battle with nerf toys or you dunked your way to
glory, Guyer also created this -- oh! This game, it is twister. Guyer joins me to celebrate the game's 50th anniversary. Here's one for you,
sir.
All right.
QUEST: Are we ready? We have our contestants. By the way, I have a personal history with Twister.
REYN GUYER, CREATOR, TWISTER: Do you have a story for us?
QUEST: I have a personal -- as this picture shows, in 1984, when I was at Vanderbilt University, in Nashville, Tennessee, I ran then what was the
world's biggest Twister. Long time ago. It was 300 people -- 100. It's been well and truly beaten since then.
GUYER: It has. But that was an early victim.
QUEST: It was an early victory and I looked incredibly young. Henry, here we go, big hair. Here we go. Whilst they play, you're going to tell me
what was the delight, the beauty of Twister? Let's start my team off here. We have got left foot blue.
GUYER: Well, we began it by I came up with the thought that maybe we -- people could be the players on a game board and here we are.
QUEST: And right foot red.
GUYER: And from there we put together a team and developed eight ideas.
QUEST: Right foot green. You do one of these.
GUYER: From there -- right foot green.
QUEST: No, no, no, you spin the dial.
GUYER: Spin the dial. OK. Left hand yellow.
QUEST: There was a certain attraction to this game and I don't know what it is. What is it?
GUYER: Fun.
QUEST: Right hand red.
GUYER: You expected something else I know.
QUEST: Yes.
GUYER: It's fun. Basically fun.
QUEST: Left foot blue.
GUYER: Someone's going down.
QUEST: And when you look at the guns and these other thing that is you created, you give them a spin here to keep them going, what was it about
these that you invent?
GUYER: Well, other inventers invented those. We started with saying there's got to be a lot of games and toys that should be foam.
QUEST: Right.
GUYER: Made of foam and that's where we started. That was the nerf ball and we went from there.
QUEST: Right foot red. Left hand yellow. Left foot green. Right hand blue.
GUYER: One down.
QUEST: Yes, one down. Pretty pathetic, aren't they? How difficult is it to create a game that has longevity like Twister? Careful, dear. You'll
do yourself a mischief.
GUYER: It's how difficult is it?
QUEST: Yes.
GUYER: It's pure luck.
QUEST: What do you mean pure luck?
GUYER: Well, it happens. That people enjoy it. I think one of the reasons is it breaks a rule and continues to break a rule and that is that
people are allowed to be in proximity with the other person in a social setting and they're not dancing.
QUEST: Right. Did you realize that this was going to be successful when you actually did it? I can't even get down there.
GUYER: That's a right hand blue.
QUEST: A right hand blue. Go on.
GUYER: And a left foot green.
QUEST: A left foot green.
GUYER: And a right foot red.
QUEST: Did you realize it --
GUYER: He does.
QUEST: It would be successful?
GUYER: Down.
QUEST: Good the see you, sir.
GUYER: Nice to see you. Remember, read my book, "Right Brain Red."
QUEST: Just bring it on. All right. So dance in the moves of the musical "Hamilton" far more graceful than anything this lot will get up to.
"Hamilton" is the show it's about the first-ever treasury secretary, which is a good enough reason to shoehorn it into QUEST MEANS BUSINESS. This is
Hamilton and this is Matt Freedman, who has got nothing to do with the U. S. Treasury. In fact, he's barely got any money in his wallet. Hamilton
has been nominated for a record 16 tony awards. The musical has become much of a financial juggernaut as its subject matter. Maggie Lake visited
the room.
(BEGIN VIDEOTAPE)
MAGGIE LAKE, CNN CORRESPONDENT: spend a few minutes outside the Richard Rogers Theater --
UNIDENTIFIED FEMALES: In New York you can be a new man.
LAKE (voice-over): And you will soon learn. Fans are obsessed by the musical "Hamilton." Even the littlest fans know the words.
UNIDENTIFIED MALE (singing): Founding father without a father got a lot further.
LAKE (voice-over): "Hamilton" which tells the story of America's first treasury secretary and founding father Alexander Hamilton, [16:55:00] has
played to sold out houses since opening night in August. Despite its sold out status, fans still have a shot, a long shot, at scoring tickets through
a daily online lottery, but most resort to digging deep into their wallets.
UNIDENTIFIED MALE: It's not hopeless to get tickets, but I would say start by mortgaging your home.
LAKE (voice-over): The best seats on ticket reselling site StubHub are going for over $2000.
UNIDENTIFIED FEMALE: I bought it online yesterday. We paid $1200 to be here.
LAKE (voice-over): Even the late night comics are frustrated.
STEPHEN COLBERT, THE LATE SHOW WITH STEPHEN COLBERT: I was on the Grammys last night introducing my good friends in the cast of "Hamilton" which at
the point is the only way to get tickets to "Hamilton."
LAKE (voice-over): Theater goers outside New York will get a chance to see "Hamilton".
FRANK PALLOTTA, CNN MONEY MEDIA REPORTER: It plans to jump across the pond to London in 2017. But it might not be as well received there considering
that King George is actually the villain of the play.
LAKE (voice-over): Productions elsewhere in Europe and Australia are also planned. As well as national tour across the U. S. Those who have seen it
say it will resonate around the world given Hamilton's rich back story.
PALLOTTA: It's about immigrants. It is about people who come from nothing to make themselves of something. And that is something that anyone can
relate to.
LAKE (voice-over): Hamilton has a way to go before it can dethrone "phantom of the opera," Broadway's longest running show. But as the man
says --
UNIDENTIFIED MALE (singing): No there's a million things I haven't done, just you wait
LAKE (voice-over): Just you wait. For "Hamilton" there will be many curtain calls to come.
UNIDENTIFIED FEMALE: For shame.
UNIDENTIFIED FEMALE: For the revolution.
UNIDENTIFIED FEMALE: For shame!
LAKE (voice-over): Maggie Lake, CNN Money, New York.
(END VIDEOTAPE)
QUEST: And we will have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. The best ideas are deliciously simple. Think about it. You have foam bullets, you have paper and
cardboard, and you have plastic with colors. Put it all together and you have games that have lasted decades. That is 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. Will do it all again tomorrow.
END
