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Quest Means Business
Crisis in Kiev; Future of US Federal Reserve; US Stocks Tumble; Chinese Autohome.com IPO; Hilton IPO; Bipartisan Budget Deal in Washington; US Economy; Ireland's Green Farms
Aired December 11, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, CNN INTERNATIONAL HOST: US stocks fall for a second day. It's the closing bell on Wall Street. It's Wednesday, the 11th of December.
A promise from the president. Ukraine says it will abandon the use of force.
Fischer at the Fed. Sources say Israel's former central bank chief will be vice chairman.
And Mexico hopes its energy reform will reenergize its economy.
I'm Maggie Lake. This is QUEST MEANS BUSINESS.
Good evening. Protesters in Ukraine remain undeterred after a crackdown by authorities last night. Thousands of people are still gathered in Kiev. Right now, things are relatively calm, and police forces have retreated after they stormed Independence Square last night.
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LAKE: Hundreds of officers clashed with the protesters using brute force and even chainsaws to break down barriers in the square. Injuries were reported on both sides. Ukraine's government has since tried to calm fears of another clampdown. President Viktor Yanukovych called for all sides to start talking.
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VIKTOR YANUKOVYCH, PRESIDENT OF UKRAINE (through translator): I'm calling on representatives of all political forces, reverend fathers, and civil society representatives to an overall national dialogue. I'm personally ready to take part in such a roundtable.
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LAKE: Diana Magnay has been covering all of this live in Kiev. She joins us now. Diana, what's the situation? What sort of numbers are we looking at, in terms of the protesters?
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Well, if anything, the numbers of protesters who come down here each night have swelled after the events of last night, where the police came in, the riot police, and pulled down the barricades. As you said, it seems to have strengthened the resolve of the people here not to be quashed by this kind of police action.
Earlier, I spoke to the EU's foreign policy chief, Catherine Ashton, about her response to last night's events, especially after extensive talks that she had with Mr. Yanukovych the day before, and here's what she said about the outcome of those talks.
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CATHERINE ASHTON, EU FOREIGN POLICY CHIEF: The important part of this is going back to the conversations with him yesterday. He indicated he still wishes to sign the association agreement with the European Union. From our perspective, we think that's good for this country.
But the present crisis that's happening right now needs to be resolved, and it needs to be resolved because he reaches out and says to the many, many people, civil society as we call the ordinary men and women and children who are out there, look, this is what I'm going to do, this is the direction I want to take the country in.
MAGNAY: You've spoke to opposition leaders also. How much of a setback is this to any kind of negotiated settlement?
ASHTON: Well, in the end, there needs to be conversation. There needs to be a discussion, negotiation, that without question has got to be the way forward.
And the people who've been arrested need to be released. The people who have perpetrated any kind of violence need to be brought to justice. We've talked about the importance of an independent inquiry led, perhaps, by the Council of Europe.
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MAGNAY: So, Maggie, Mr. Yanukovych now saying that he's open to a national public dialogue. I'm joined now by Arseniy Yatsenyuk from the opposition Fatherland party. Thank you for being here. What is your response to this suggestion by the president that now, after last night's action, he is willing to talk?
ARSENIY YATSENYUK, UKRAINIAN OPPOSITION LEADER: Look, frankly speaking, I don't trust this president, because the key factor that he always cheats. He cheated the Ukrainian people when he said Ukraine needs to sign an association agreement. He deceived our European investment partners saying that Ukraine is ready to sign an association agreement and that we are absolutely constructed in the deal.
But what we got, the Ukrainian people are very decided, and the key demand is not just to sign an association agreement. It's not about the social expenditures, it's not about the budget, it's not about the retirement age. This is about the values, pro-European values.
The window of opportunity still exists, and Catherine Ashton, we met just a few hours ago, and she was very clear saying that the European Union has an open door. It depends on the president, whether the president is ready to sign this deal or no. My feeling is that we have a minor chance.
But the key factor is this is not just the domestic issue for the Ukraine. This is more a political one. Because if he goes to the European Union, it means that Russia will lose its influence over Ukraine.
If now President Putin wants to restore the Soviet Union, and it has a new version. It's called Customs Union version 2.0. And the key factor for Russia is to grab Ukraine into the sphere of interest of the Russian federation.
People -- Ukrainian people strongly oppose this idea, and if President Yanukovych thinks that he can not calm down but control the situation with the riot police and security forces, no chances at all.
MAGNAY: And what would it take for you and the other members of the opposition -- the opposition leaders to sit down at the negotiating table with him?
YATSENYUK: In order to save the country, in order to have my country independent and sovereign, we are ready for an open dialogue. But we have a number of preconditions.
The first one is to release those who are innocent. I mean activists of Maidan -- Maidan is -- this is the square, this Independence Square in Ukraine, who were arrested and behind bars right now. We actually achieved some good results. Today, five activists are released on bail.
The second issue is to prosecute those who gave an unconstitutional order to beat peaceful rally and peaceful demonstrators. No reply and no answer from this president.
And the third one -- this is a political one -- this government is to be dismissed with an executive order of the president. But people and folks who are working with President Yanukovych, they are so close to the president that he doesn't want to make this gesture.
And it's not about his destiny. This is about the destiny of the Ukrainian people and this is his political responsibility, to sack the government, and afterwards, we are absolutely ready to start a national dialogue.
MAGNAY: And this talk of a national dialogue, he's actually made it before. He said two days ago, I'm prepared to sit at a roundtable. That roundtable with members of civil society was supposed to happen. No one even turned up.
What overtures have been made to you, to opposition parties, in a serious way to say -- not just him speaking on the television, but we are serious about getting all of you to sit together?
YATSENYUK: There is a key problem. It's quite complicated to have a roundtable in a square prison cell. This is the first issue. The second one, we would like to ask this president to unfold his agenda.
Because our agenda is very clear: to sign an association agreement with the European Union, to resume talks with the International Monetary Fund, to get the financial support from all international institutions in order to stabilize the situation and to fix the political crisis.
A number of people ask for presidential and parliamentary elections, and we have to pave the way in a constitutional manner how to get at this target. So, this is the agenda that the opposition proposes.
My feeling is that this president wants just to buy time as he did with our European partners and American partners, saying some stuff and never executing this. So, it could be another bluff.
But again, in order to show to the entire world that we want our country to succeed, we want to save our country. We don't want Russia to grab Ukraine. We want to be independent. And in order to get this target, we are ready to start an open, national dialogue. But the president has to meet a number of preconditions.
MAGNAY: And the people in the square, you're with them every day, how long do you think --
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MAGNAY: -- you can keep --
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MAGNAY: -- essentially still --
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LAKE: OK, unfortunately, as you can see, we lost the shot with Diana, but tough words coming from the opposition, "sack the government."
Turning now to the United States Federal Reserve, President Obama's pick to take over at the Fed, Janet Yellen, may be about to get a highly- experienced right-hand man. Stanley Fischer is reportedly the leading candidate for next Fed vice chairman. Fischer ran Israel's central bank for eight years and guided the country through the global economic crisis.
The $85 billion question, of course, is when the Fed will begin tapering. Stanley Fischer was a guest on this show in September, and he gave his opinion to Richard quest.
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STANLEY FISCHER, FORMER GOVERNOR, BANK OF ISRAEL: The Fed has made it very clear that it intends to start tapering, which is different than raising interest rates, raising the short-term interest rate, sometime towards the end of this year. There are only two more meetings of the Fed this year, so I think it'll be now or in November.
If things get worse in the economy, it could be delayed, but it's going to be soon, and the Fed will decide. It's a narrow choice. It's a closely- balanced decision they have to make.
RICHARD QUEST, CNN INTERNATIONAL: But if it doesn't happen now, it's a matter of months. It's going to happen sooner rather than later.
FISCHER: Well, the Fed has said that, yes. And central banks need to gain credibility by sticking with what they said they'd do.
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LAKE: Well, Richard is actually in Israel now, and he's been talking to his sources there. He joins us via Skype from Tel Aviv. Richard, as usual, your timing is impeccable. You happened to be on assignment in Israel. You know this man well. He has a very impressive resume. But is he the right guy for this job?
QUEST: Oh, there's absolutely no question. When you talk about governors and you talk about macro economics and you talk about central bankers, Stanley Fischer is way, way up there. Former chief economist at the IMF and the World Bank, ran the Bank of Israel, been in private sector.
Now, ironically, I was with Governor Fischer here in Israel just over the past few days at a conference here. Not a word from the governor -- or the former governor about what his future plans may or may not be.
But tonight, I do understand from sources, Governor Fischer has left Israel. He is now on his way back to the United States. But I do clearly understand from sources here in Tel Aviv that, yes, President Obama has chosen him and a nomination will be made.
LAKE: And that discretion is going to serve him well if he does end up as vice chair of the Fed. Richard, this is an interesting time. They're going to have to exit, it's unprecedented. Janet Yellen, the first woman. Stanley Fischer has a very high profile.
How do you think he's going to mix in with not only a Federal Reserve chairwoman who's going to have assert her authority, but also the Fed, which is a sort of strange institution, which really relies on consensus. A lot of people dismissed Larry Summers because of his high profile.
QUEST: And there is nobody better at bridging that gap between the leadership and consensus than Stan Fischer. Remember, here in Israel, he took the -- he did have the power to raise -- to control interest rates, but he chose to introduce a monetary policy committee that would vote on the subject.
And again, if you look at Stanley Fischer's history, he taught the thesis. He moderated the thesis of Ben Bernanke. He's taught just about every central banker that is out there. So when -- he was at MIT, a professor at MIT.
So, when he sits down at the FOMC, or when he speaks, he's the one man that everybody says -- let's face it. He taught the subject at university, he's put it into practice at the Bank of Israel, he's probably the right man to be number two guiding the Fed as it tries this most impossible task, Maggie.
Maggie, nobody knows what's going to happen with tapering and with the exit from monetary policy that they've got at the moment. It's uncharted territory, and that's why someone like Stan Fischer will be the right man.
LAKE: The one thing we do know, Richard, is that the ripple effects are certainly going to be felt internationally, so that experience, that global experience certainly will serve them well at the Fed when the undertake this.
Richard, great to see you. You'll be back in the seat next week.
QUEST: I will. Thank you.
LAKE: Well, stocks here in the US have tumbled on concerns that the Federal Reserve might begin to scale back its stimulus measures. That is on the back of a budget deal in Washington. We're going to get the details on that shortly.
Let's go out to Zain Asher, who is live for us at the New York Stock Exchange for us. And Zain, it wasn't sort of an immediate sell-off, but it sort of picked up, at least number-wise, some steam as the day went on. What's going on?
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Yes. So, the sell-off certainly picked up steam. We're seeing the Dow end the day down about 129 points. It's interesting, we did get a budget deal, and it was delivered early, but yes, as you mentioned, there is this huge concern weighing over the markets about the Fed beginning to taper. The market certainly does expect a taper.
And if you look throughout this year, we've seen money moving out of bonds. That money isn't all going into equities. Some of it is going into money markets and, on the sidelines of it, is certainly some uncertainty weighing over the markets.
But as you mention, also fairly big news today, Stanley Fischer possibly -- possibly -- a candidate to take over from Janet Yellen as vice chair the Fed. Not necessarily market-moving news per se, but what's interesting is that Fischer has come out and said publicly that he does advocate the Fed being a little bit less open about their decisions regarding tapering --
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ASHER: -- does get the job, just how open he is and what kind of information we get out of those FOMC minutes.
A couple of IPOs to talk to you about today. This morning, Autohome.com, a Chinese IPO, traded publicly for the very first time. They're basically the Chinese equivalent of Kelley Blue Book, Edmunds.com. They sort of allow you to compare car prices. Their share -- their stocks actually rose 75 percent today. I spoke the CEO. He said that they had benefited greatly from China's growing car market. Car sales in China actually rose 16 percent last month. Maggie?
LAKE: All right, Zain Asher, thank you so much. Well, Wall Street is ready and waiting for Hilton. The hotel chain is about to make a return to the market. It's due to price its shares after the close of trading here in the US.
The share sale could be one of the year's biggest initial public offerings, maybe even bigger than Twitter's which is sort of hard to believe. Hilton is hoping to raise $2.4 billion, making it the biggest hotel IPO ever. The stock will begin trading on the NYSE on Thursday under the symbol HLT.
The largest IPO so far this year has come from Huston-based oil pipeline company Plains GP Holdings. It raised $2.8 billion in October.
Meanwhile, the major European markets all closed the day lower, as you can take a look, no doubt influenced at the end by some of the selling that we saw in the US. But the losses nowhere near as steep, just off about a quarter of a percent.
Up next, a bipartisan budget deal. A Republican and a Democrat reach a compromise in Washington. Now all they have to do is convince their colleagues.
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LAKE: The US will avoid another government shutdown in January if Congress signs off on the budget deal that was agreed on Tuesday. Joining us from Washington is Lisa Desjardins. Lisa, we have all been waiting for this. What a change from a couple of months ago --
LISA DESJARDINS, CNN CAPITOL HILL CORRESPONDENT: Yes.
LAKE: -- where everything ground to a halt, and these two never looked like they were going to be able to come together.
DESJARDINS: Well, Maggie, imagine this. The way they got this deal together was the old-fashioned way. It was really just one Republican, one Democrat sitting in a room. They did not share what they were doing with other leaders, they just talked one-on-one.
Both of them said they were tough negotiations, but the way they succeeded was by not leaking them to anyone else, but not undercutting any potential by bringing politics outside the deal in. And imagine it, now we have what may be the very -- very first beginning of America showing that government gridlock will no longer be in the way, will no longer cause these fiscal problems.
Now, I don't want to get folks' hope up too much, Maggie, because of course, the debt ceiling is still unresolved, and that could hit as early as next February.
LAKE: And of course, at play here, the fact that Paul Ryan has presidential aspirations, everyone's poll numbers were destroyed after the American people were so angry at them, and they all face reelection.
DESJARDINS: Right.
LAKE: But also, some talk the Republicans want to clear the way so that they can hammer away at Obamacare and not sort of muddy the waters with that. Where does that leave us? Is this going to get through Congress? There seems to be an assumption it is, even though it's sort of -- there's a lot to pick apart about it.
DESJARDINS: Right.
LAKE: The last time we saw a very small minority of people who really care about this issue, they didn't care about all that other stuff. They stuck to their guns. Are they going to delay things or put up a hurdle again this time? Is that possible to have a repeat?
DESJARDINS: Oh, how things have changed since the government shutdown. Republicans really got bitten by that. They took a large part of the blame. They were seen by the American public as the ones who caused that shutdown, and they don't want to go back there. So, because of that, I think that opened the door for a compromise, which is what we have now.
Now, how much more compromise will there be? That's very unclear, because the truth is, even though this deal is certainly a good sign toward some kind of bipartisan functioning government in America, the truth is, this deal was a small one. It only deals with spending for the next two years, which is more than we've done in a long time.
But it doesn't deal with the bigger issues, like America's big, giant debt kind of boulders that are hanging over it, its health care costs, the Medicare program for America's seniors. Those things have not been dealt with at all, and really, the longterm debt problem remains, unfortunately. There's no clear sign of how that will be resolved.
But you're right about another thing, too, though, Maggie. Republicans want to hammer away at Obamacare. So, they're conceding a little bit of space on these fiscal debates and instead focusing, I guess, all of their punches, all of their swings, on Obamacare.
LAKE: But Washington's a funny place, as is politics. Let's see whether the moderates take this as an opportunity to sort of regain some ground in Washington. A lot of people hoping that's the case. Lisa, thank you so much. Lisa Desjardins.
Well, the budget agreement in Washington will lift the uncertainty, which has been hanging over the US economy, but not for long. There are a couple more dark clouds to consider. Hate to bring it up, but remember the debt ceiling? Lisa just mentioned that.
The government will hit the debt limit on February 7th unless Congress agrees to increase it. Otherwise, the US runs the risk of default. We've been down this road before.
The other big unknown is the Fed. The budget deal could push forward the central bank's taper timing. It may just start scaling back its $85 billion a month stimulus program as early as next week. Jens Nordvig is co-head of global market research for the Americas and head of currency strategy at Nomura. Jens, it's great to see you.
This was really the question that the market was grappling with, the fact that there's a budget deal, that headwind gone, does this push up the timetable for tapering? What do you think?
JENS NORDVIG, GLOBAL HEAD OF CURRENCY STRATEGY, NOMURA: So, as you just said, eliminate some uncertainties, so that's the good aspect of it. It also adds a little bit to GDP because the sequestration is being toned down a little bit.
So I think that means that we can get to a 3 percent growth pace a little bit quicker, and that's obviously good news. And it certainly is good news that we have just a political situation that looks a little bit less uncertain compared to what we had in October.
LAKE: Yes, certainly. And that was unnerving for the markets. But I've been talking to traders who say the market seems divided. Sometimes they worry about the taper and they sell off. That seems to be the case today, although there's probably some profit-taking at work as well.
Other days, as with Friday, a strong economy and a still accommodative Fed seems to be a good scenario. Why are they having such a hard time figuring out what to do here?
NORDVIG: I think it's because we had this turning point in the cycle where the data is picking up, it's good news, but we know it's going to cause the Fed to eventually ease less, or actually tighten at a later point.
So, this is sort of the tipping point that causes this volatility, and I have to say, going into next week, it is a very, very tough call. We previously had January as the main scenario. We thought tapering was going to be at that point in time, but the data is coming out a little bit better. I think next week, it could happen, and it would cause some volatility in the market for sure.
LAKE: And they have a press conference. Incredibly important to communicate, and we've also got the transition of Bernanke, probably his last press conference, I believe, maybe not last meeting, last press conference, Janet Yellen taking over. What do you want to hear from the Federal Reserve?
NORDVIG: Well, I think at this point in time, they want to have a continuation of the message. And then obviously, when Yellen comes in, she will have to decide whether she communicates somewhat differently.
The tricky point about next week is it's not only about tapering. It's also about this forward guidance that they have. They try to really guide short interest rates as low as they can. Are they going to enhance that? I think it's a bit too early for that.
But there's really two sources of volatility, there's the tapering issue, and then there's forward guidance. So, there's a lot of things to think about going into that event.
LAKE: Right. And a lot of people have said, if you want to watch, the place to watch is that ten-year bond, that's going to be so important. If that starts to rise, it's going to be a concern for the Federal Reserve. A lot of pressure on Ben Bernanke. I wouldn't want to be in his shoes. Jens Nordvig from Nomura, great to see you.
Well, the Emerald Isle is going even greener. We take a look at how Ireland's sustainable farms are helping grow the country's economy. That story straight ahead.
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LAKE: It's dubbed the Emerald Isle. Now, Ireland wants to be known for its other green credentials. The government is touting sustainable farming and high-quality produce. Jim Boulden visited a cattle farm in Ballycolla, Ireland to find out more.
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JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): While the Celtic tiger roared, Irish cows got a little left behind. When many people in this country bought and sold property on cheap credit, as prices soared and the young migrated to Dublin and its high-tech factories and call centers, farming seemed to take a back seat.
But Irish farmers and their cattle just got on with it quietly. One of these is Robin Talbot. He used a bit of horse sense during the froth of the previous decade.
ROBERT TALBOT, BEEF FARMER: I just didn't see the sense of going out to do investing in property that I would probably never see or never visit.
BOULDEN: Instead, Talbot invested his time and money in enhancing his family farm's sustainable credentials.
TALBOT: I like to think that our green image, and we look after our animals well and we're very focused on the health of our animals.
BOULDEN: Talbot is part of a government-led strategy to publicize the country's food and drink exports as green, as high-quality. So in turn, of higher value.
PADRAIG BRENNAN, BUSINESS ANALYST, IRISH FOOD BOARD: It's just as the Irish economy was actually struggling, what we started to see was within the agri-food sector, a kind of, if you like, a resilience that has always been there came to the fore, and we started to see growth in export values from 2008 onwards. In the last four years, we've gained 3 billion euro in the value of our food and drink exports.
BOULDEN: Irish food and drink is now around 11 percent of the country's exports, up from 8 percent when the property bubble was about to burst in 2008. And while its traditional market, Europe, suffered during the global economic crisis, Ireland uses what it calls its quality image to increase food and drink exports to faster-growing markets.
BRENNAN: So looking at markets like China, Southeast Asia, Africa and Middle East, North America, all emerging very strongly has been key outlets for our food and drink.
BOULDEN: The Talbot farm produces around 80 tons of meat a year from its limousine cattle, fed mainly on grass and silage grown onsite using the country's abundant rainwater, all sustainable.
TALBOT: If an animal is not performing at its optimum health, well then it can't perform financially for us.
BOULDEN: Ireland is gearing up to use its image of healthy cattle when Europe's milk quota is lifted in April 2015. The quota limited the amount of milk each country could produce. While farmers in other countries support the quota because it protects their profits, Ireland is planning for a huge increase in exports.
BRENNAN: It represents a great opportunity to the Irish dairy sector, because we produce milk that's high quality, it's a safe product, and it's produced in a way that's as sustainable as anywhere else in the world. So it gives us a great opportunity to produce more of that product for an ever-increasing demand globally.
BOULDEN: As a small island nation of 4.5 million people, Irish farmers aren't expected to increase the number of cattle, so the country's betting on the value of farming to increase its importance to the Irish economy and to make sure there are rural jobs for the young.
Jim Boulden, CNN, Ballycolla, Ireland.
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LAKE: Up next, Mexico's senate gives the green late for a tectonic shakeup in the energy sector. It's controversial and still needs the backing of more lawmakers. Our report from Mexico City ahead.
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JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: When it comes to property, people say location is everything. But what if you want to develop an emerging market? How do you (inaudible) the next hot address? And what defines prime real estate? Every week on "One Square Meter," join me as we go into the property business. We'll explore the latest building designs, talk to those driving growth and find out where investors are moving in next.
UNIDENTIFIED MALE: "One Square Meter," Tuesdays in "Global Exchange," only on CNN, in association with Emaar.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL, FILLING IN FOR RICHARD QUEST: Welcome back, I'm Maggie Lake. These are the main headlines. Ukrainian opposition leader Arseniy Yatsenyuk says President Yanukovych cannot control the mass protest in Kiev through force. Speaking to CNN's Diana Magnay on this program, he said the President's call for a national dialog is not to be trusted. Demonstrators remain on the streets despite a crackdown by authorities last night.
Turkey says it has closed its border crossing to Syria. It is a temporary measure after fighting broke out between Syria's opposition groups. The closure comes as the U.S. and U.K. have suspended humanitarian aid to the Syrian opposition.
South Africans are expected to line up again Thursday for one last look at Nelson Mandela. The body of the civil rights icon has been lying in state in Pretoria. Family members and dignitaries were the first to pay their respects today. The viewing continues through Friday.
The Deaf Federation of South Africa says this man seen interpreting during the Nelson Mandela memorial service is a fake and now South Africa's government is investigating. The Association says the man is not a recognized professional and, in fact, his hand signals were meaningless. It says his actions have outraged deaf people around the world. India's Supreme Court has overturned a 2009 ruling by a lower court reinstating a longstanding ban on gay sex. In doing so, the Court said it's up to Parliament to repeal the original law. The gay community is up in arms over the ruling and worries about open discrimination.
Pope Francis is "Time" magazine's person of the year for his efforts to reform the Catholic Church. "Time" cited the Pope for changing perceptions of the church from being an out-of-touch institution to one that is humble and merciful. "Time" is owned by CNN's parent company.
Mexico's senate has thrown open the country's lucrative energy sector to foreign investment. The lawmakers passed a bill which allows private companies to get into the state-run oil and gas industry, breaking a 75- year-old monopoly. The bill still needs the final go-ahead from the country's lower house as Nick Parker reports from Mexico City.
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NICK PARKER, CONTRIBUTOR, CNN.COM INTERNATIONAL: It's a tantalizing prospect. The world's ninth largest oil producer unlocking its true potential. Mexico has an estimated 29 billion barrels of oil here under the deep waters of the Gulf of Mexico and vast amounts of shale gas. But these hard-to-reach reserves are largely untapped.
EMILIO LOZOYA, CEO, PEMEX: Mexico has great potential in the energy landscape. But the reality is that today we're importing a third of the gas that we consume, and we have enormous gas reserves. This is an oxymoron.
PARKER: To attract foreign expertise and capital, Mexico's senate has passed a landmark bill amending the constitution and ending the 75-year-old oil monopoly held by state firm Pemex.
ALONSO CERVERA, CHIEF LATIN AMERICAN ECONOMIST, CREDIT SUISSE: Well I'm very positive and surprised. I think it's a very strong reform bill that they have approved. It really opens up the energy sector for private sector participation.
PARKER: Some of the key points include production and risk-sharing contracts. Foreign companies will now be able to reflect reserves on their financial statements, previously a sticking point. And licenses will be granted in some cases which will give foreign companies an even greater degree of autonomy.
CERVERA: Business licenses will be used mainly for gas and shale gas which is less controversial than oil. For deep water, my expectation would be that they would use a production-sharing contract. This is what the oil majors had been hoping for, for the past several years, and it looks like they got it.
PARKER: The reform is a highly-sensitive issue here in Mexico. Pemex is wrapped in a sense of self-sufficiency and patriotism and opposition to the bill has always been strong. With a steep fall in production since 2004, opinion polls showed a majority of the public wanted reform.
UNIDENTIFIED MALE: It's necessary because it's like the first step to make more investments.
PARKER Investment that is now expected to pour in.
GABRIEL LORENZO, CHIEF MEXICO ECONOMIST, JP MORGAN: (Inaudible) think about the importance of the foreign investors participating in the energy sector which has been really limited in terms of the FPI participation, we would think about $30 billion U.S. dollars per year.
PARKER: Analysts caution the secondary legislation to iron out the contracts will still be vital though Mexico is looking at a future that seemed very unlikely only a few years ago. Nick Parker, CNN Mexico City.
(END VIDEO CLIP)
LAKE: You travel to a country where you don't know the language. What do you do? You might get some tips thanks to Google Glass. Richard Quest hits the streets to test the wearable technology for the business traveler.
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LAKE: Time for today's "Business Traveller" update. U.S. budget deal being considered in Washington will mean a hike in air travel fees for those flying across America. The deal will raise fees applied to airline tickets to pay for airport security. It will double the fee for a one-way flight from $2.50 to $5.00, a roundtrip jumps from $5.00 to $10. Meanwhile, the Canadian airline WestJet has treated 250 of its passengers to an early Christmas as part of a marketing campaign. Before boarding a domestic flight, passengers were invited to tell a virtual Santa their holiday gift wishes. Upon arriving at their destination, they found a luggage carousel loaded with more than just their bags. Take a look.
(VIDEO CLIP WITH VISUAL AND MUSIC ONLY)
LAKE: Now, the company gave gifts as lowly as socks and as grand as TVs and Android tablets. The video has attracted millions of views and is trending across social media. Now that is successful marketing. We won't find Google Glass under any Christmas trees this year but some very special business travelers have already got their hands on the device. Richard Quest took to the streets of San Francisco to test out the wearable technology.
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RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Forget carrying your Smartphone. In future, think of technology as wearable. The benefits to travelers could be huge -- Google Glass. A quick lesson, and out to see the sights. Watching a screen above my right eye and controlling it by my voice and touch, Glass takes photos, videos, googles and will even give me turn-by- turn GPS directions. And by opening up the device to outside app developers like CNN, the potential for groundbreaking innovation is huge.
And Wikipedia - (inaudible) in 1898 and the architect was Arthur Page Brown. OK, Glass, google restaurants in the Ferry Building in San Francisco. Well it's got a map, I can see where I am, and yes, there is the Ferry Building. (Felicia), three and - four stars, one dollar, Ferry Building. (Inaudible).
UNIDENTIFIED MALE: Let's go for there.
QUEST: Millennials. One Dollar, he loves it. View menu and then call.
UNIDENTIFIED MALE: Let's try call.
QUEST: It's dialing. Hello, can you hear me? Hi, do you take reservations? Do you take reservations? It's easy to see why Glass is having a soft opening. Sold to thousands of key testers, getting rid of any kinks before releasing it to the public next year. Oh voice mail.
UNIDENTIFIED MALE: So tap once, end call. So, let's go find out --
QUEST: Let's go find out. What do you like?
UNIDENTIFIED MALE: I think I'm going to go spicy (inaudible) roll. And I can actually take a photo and share with my friends. I'm using it to kind of record and document my life, so rather than it just being verbally, I have photos to go with it. Whereas you, you use it as a means to an end. You want to go from A to B or you know, find the restaurant and get directions to it and you don't necessarily want to document how you got there.
QUEST: How to say good afternoon in Cantonese? (SPEAKING IN FOREIGN LANGUAGE) That's pretty cool.
UNIDENTIFIED MALE: Yes.
QUEST: The video came up in my eyes and I could see it saying (SPEAKING IN FOREIGN LANGUAGE).
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE).
QUEST: (SPEAKING IN FOREIGN LANGUAGE).
UNIDENTIFIED MALE: (SPEAKING IN FOREIGN LANGUAGE)
QUEST: (SPEAKING IN FOREIGN LANGUAGE)
(LAUGHTER)
QUEST: Very clever.
UNIDENTIFIED MALE: Have a great day, guys. Later.
QUEST: Oh. Now we're talking. Now that is something I'll take a picture of. OK, Glass, take a picture. Wait, what I really need is a coffee. OK, Glass, get directions to nearest Starbucks. 170 O'Farrell Street. It's 250 feet. My biggest criticism comes not from Glass itself, rather having to tether it via mobile's data connection that could drop out. The whole thing takes a bit of practice, but as with any new gadget, it's not about today's experience - it's about the potential.
(END VIDEO CLIP)
LAKE: I'm sure it can tell you the weather too, but not nearly in the detail that we are going to get from Jenny Harrison who is at the CNN International Weather Center. What have you got for us tonight, Jenny?
JENNY HARRISON, CNN INTERNATIONAL METEOROLOGIST: Well, I'm going to start talking about Europe, Maggie, and there's a real mix of weather of course across that entire continent as you might expect. We've got some good clear skies, have (inaudible) for the last day or two across the central region (inaudible). Because this high pressure - what it's doing is it's forcing all these other weather systems. Take this very north and westerly track and then you'll notice everything is funneling down across towards the southeast of Europe - just the region across where we don't really need to see such awful, wintery conditions right now. And of course in particular I'm referring to the two million refugees from Syria.
And look at the rain and the snow that's come down in the last few hours. Remember of course it's about the refugee camps. Forty-one millimeters of rain in Beirut, 4 centimeters of snow already in Istanbul. And just to give you an idea what some of these refugee camps look like, just have a look at the scale and the size of this. And then you add in these dreadful weather conditions. Winter started very early indeed. We've had some very heavy amounts of rain as well as the snow. And here's an image of course of the rain. It just makes living even more difficult and unpleasant.
The snow as well of course has been coming down, and you can see the children here just peeking out from inside their tents. And of course there's always some fun to be had, and look at it, I like this picture very much indeed - these two ladies here preparing to have something of a snowball fight, making the best of the situation. But this is unfortunately more of the snow and the rain. It's going to come as it goes certainly through the next couple of days.
As I say, everything is being funneled down across this entire region. Very heavy snow at times and the rain is (inaudible) persistent as well. Just look at it just sort of backing up through the eastern end of the Mediterranean with the snow of course, particularly accumulating in those higher elevations. But some pretty high numbers too in the next 48 hours - 40 millimeters - 40 centimeters, I beg your pardon - 10 centimeters and 33 there up into the north at Turkey as well.
But in particular, where the refugee camps are, very mixed weather conditions and in particular very, very cold conditions. The temperatures as well below the average here. Twelve is the average, -1 Friday and Saturday, just above. Similar story in Amman -- We've got temperatures 10 degrees below the average across there in Northern Jordan, and across in Lebanon as well. In that particular refugee camp, temperatures again a good 13 degrees below the average. The snow of course coming down in some areas where it is quite welcome - looking very, very nice indeed. But the temperatures, Maggie, are something really to consider, particularly with the wind factored in. So no great change here, I'm afraid, over the next few days. Back to you.
LAKE: Jenny, thank you so much. President Obama, Bill Gates and Mark Zuckerberg want more young people to learn how to code. Millions of students have had the opportunity to try it out this week. We'll attempt it ourselves when we return.
(COMMERCIAL BREAK)
LAKE: More than eight million students have learned how to code this week as classrooms around the world participate in a global educational event. It's called "Hour of Code" and it was launched to help the next generation become fluent in the language of computers. Students are using the free learning platform on code.org and some very familiar faces have signed up to teach.
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BILL GATES, CHAIRMAN, MICROSOFT: People make decisions every day, for example, before you go outside you kind of have an 'if' statement that says if it's raining, then I need to get my jacket. And computers are amazing once you decide those kinds of statements that they can reliably execute those things at unbelievable speed. And so, a computer program really is a little bit of math and some 'if' statements where the decision gets made.
(END VIDEO CLIP)
LAKE: Here in the U.S., 90 percent of schools do not offer computer science classes. It may seem like an intimidating subject but my next guest says he's simply teaching kids to think, create and invest in their futures. Pat Yongpradit is the director of education at Code.org and a former high school teacher. He joins me now at the QMB Coding Academy - I think we call it that. So, Pat, what did you come up with try to engage these young students this week because that's it, isn't it? You have to hook them.
PAT YONGPRADIT DIRECTOR OF EDUCATION, CODE.ORG: Yes, and so you already see on this screen that we have Angry Birds artwork. So Angry Birds is one of the most famous and most popular video games of all time. And so we licensed Angry Birds artwork as well as Plants vs. Zombies, and we put it in an environment that's very different than what students normally get introduced to when they're coding. So this is a drag and drop environment in which you drag instructions and create an algorithm and then run it like your traditional program.
LAKE: Yes. Can you show us a little bit how that works? I don't know if you - if you -
YONGPRADIT: Sure -
LAKE: -- what we have here.
YONGPRADIT: I'd do it. So, you know eight and a half million students have done a (narrative) code. We're about to do a couple minutes of code here. So, let's press OK, and let's get this Angry Bird over to this Pig. So we already a move forward block, and it's two blocks away. So let's drag another move forward statement here, and this is a sequential instruction.
LAKE: Yes.
YONGPRADIT: And what we did was create a very simple algorithm. Let's run it. There you go.
LAKE: I mean, it's interesting because I have two young kids and my kids are your target audience - six and seven. And I notice a lot of the math still - forget about computers - is not visual. It's not the games, it's not the things they relate to in their lives. Is that one of the hurdles to try to sort of - to reach them and to say this is the stuff you want to be knowing?
YONGPRADIT: You know, it - computer science is about kids creating.
LAKE: Yes.
YONGPRADIT: And so, what you're not getting a lot in certain math classes and in science classes is just the idea of creating something from scratch. And so, in this environment, and in other - the other tutorials we have, kids are actually creating something technological. So, they're not just using technology, they're learning how to create it.
LAKE: It's tangible, there's a result -
YONGPRADIT: Yes.
LAKE: -- because a lot of it's theoretical. Even at a very young age. I mean, let's be honest, though, because we talk about the need, we all know it's important. Are some people just built for this? I mean, I know you guys - you're out there, you create these companies, you're incredible when I talk to you, and then I think of the rest of us. I mean, are we sort of trying to run on a treadmill that we're never really going to be able to conquer - or is that just a myth?
YONGPRADIT: We believe that anybody can learn how to code a computer, how to write code, how to create algorithms - it's not - you don't need a degree in math to be a computer scientist. And actually, you don't have to be a programmer to be a computer scientist. Computer science is about thinking and problem-solving and decomposing problems. And you can use it in any subject you desire -
LAKE: And I guess you -
YONGPRADIT: -- and your interests.
LAKE: -- don't have to be a super coder, you just have to be familiar.
YONGPRADIT: Yes.
LAKE: That alone will help increase your odds, won't it?
YONGPRADIT: You just have to be persistent, really. That's what it's all about. Everything new is hard. And so a lot of kids when they see this for the first time -
LAKE: Right.
YONGPRADIT: -- and they haven't seen it before, they think oh, my gosh, I can't program a computer - I've only been using a computer. How do I actually take control of it? Well, with this tutorial and with many other tutorials, we're showing kids that, hey, you can actually create the technology that you use.
LAKE: I can't do the assignment but I can play at the computer game until I win for four hours. I've seen that in action too -
YONGPRADIT: Yes.
LAKE: -- so making that connection is probably alike. Pat, thank you so much --
YONGPRADIT: That's right.
LAKE: -- for your good work. I appreciate it.
YONGPRADIT: Thank you.
LAKE: And if coding is for everyone, so is engineering. Goldie Blox is a new toy company which is trying to challenge a few stereotypes by making construction toys for girls. One of its adverts has been getting a lot of attention online. Now originally that ad had a different soundtrack, a parody of the song by the Beastie Boys called "Girls," which attracted a lot of comment. GoldieBlox took it down because the Beastie Boys filed a lawsuit. I spoke with the GoldieBlox founder CEO Debbie Sterling earlier. We talked about whether girls are tracked away from engineering in school or whether they're just not interested in the subject. And I asked her what she's hoping to accomplish with GoldieBlox.
(BEGIN VIDEO CLIP)
DEBBIE STERLING, FOUNDER AND CEO, GOLDIEBLOX: This is not a nature versus nurture thing. Girls are fully capable. The problem is that we need to create the interest, and if you think about little kids growing up, they have Bill Nye the Science Guy, and Handy Manny and Bob the Builder, and the list goes on and on. But where are the women math and science and engineering role models? And that's what I really wanted to do with Goldie was introduce this character. She's got her overalls and her tool belt, and she solves problems by building machines. And so girls can read along her stories and build along with Goldie.
LAKE: Did you get some push back from people who said 'oh, that's not going to sell'?
STERLING: I did actually. When I first started out, I came to New York to the toy fair to meet people in the industry and get advice, and they all sort of whispered this well-known industry secret that construction toys for girls don't sell and you can't fight nature. And so, really by going on to kickstarter and crowdfunding, it enabled me to prove that there actually was market demand for a smart toy for girls that would challenge their brains.
LAKE: This is new for you being executive of a toy company - a founder. We're looking at the commercial right now - it's so fun, it's so engaging. It is an obvious, immediate hit, but it's also created some controversy. As much as the moms are loving the toys, the Beastie Boys aren't very happy with you, are they?
STERLING: You know, we created the video as a way to show how cool engineering is. And we took a song and transformed it into a girl power anthem. And it was amazing to see the reaction, to see girls and boys all over the world going home and building Rube Goldberg machines in their living rooms and back yards. I mean, it works, it showed how cool engineering is. We're trying as hard as we can to peacefully settle with the Beastie Boys, so I'm hoping everything works out.
(END VIDEO CLIP)
LAKE: Next, Russia gets a new icon. Officials unveil the new symbol for the rouble. We'll tell you all about it when we come back.
(COMMERCIAL BREAK)
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LAKE: Russia has chosen an official symbol for its currency. Can you spot it? I'll give you a minute - it is the one right here in the middle. To English readers, I know, it looks like the letter "P," but it is the Russian letter for "R," standing for rouble. Now, Russian Central Bank unveiled the symbol in Moscow today. It's the winning design chosen by the public from a short list of five. This particular icon snatched more than 60 percent of the vote - pretty impressive. Russian officials say the design is meant to suggest the currency is sound and stable.
(BEGIN VIDEO CLIP)
ELVIRA NABIULLINA, RUSSIAN CENTRAL BANK GOVERNOR, VIA TRANSLATOR: Participants in the discussion voted for the graphic sign of the rouble as the letter "R" of the Russian alphabet. But the horizontal bar in its lower part creating an impression of two parallel lines to symbolize the stability of the Russian rouble.
(END VIDEO CLIP)
LAKE: U.S. stock markets tumbled on Wednesday. Investors said that a new U.S. budget deal could push the Feds to start tapering its stimulus program soon. If the deal is passed by the House and Senate, it would prevent another government shutdown in the U.S. That takes away a headwind. The Dow fell almost 130 points. The S&P 500 and the NASDAQ both lost more than 1 percent. Remember, though, still very nice looking gains on the year. Meanwhile, the major European markets also closed the day lower as you can see the DAX and Frankfurts are the worst of the losses of the big four - down around four tenths of one percent - nothing too terrible. The other major indices all finished down by less than half of one percent.
And that is "Quest Means Business." I'm Maggie Lake in New York. We'll see you again tomorrow.
END
