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Quest Means Business
Crisis in Ukraine; Russia Sanctions Threat; Russia's Economy; Roller Coaster Markets; Yahoo! Announces Earnings; Facebook's Spending Spree; Google Glass On Sale
Aired April 15, 2014 - 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)
PAULA NEWTON, HOST: Markets have closed higher after quite a roller coaster session. If anyone wanted to call the stock market rational, they won't after today. It's Tuesday, the 15th of April.
Russia says Ukraine is on the brink of civil war and does not consider its government to be legitimate.
GM's chief executive is about to address the company's recall problems ahead of New York's auto show.
And Cadillac drives the French crazy in a new advert insinuating that they're lazy.
(BEGIN VIDEO CLIP)
UNIDENTIFED MALE: That's the upside of only taking two weeks off in August. N'est ce pas?
(END VIDEO CLIP)
NEWTON: I'm Paula Newton and this is QUEST MEANS BUSINESS.
Good evening. Russia says Ukraine stands on the brink of civil war. Kiev is sending troops into the country's east, where pro-Russian separatists have seized government and police buildings in ten towns and cities.
In today's main developments, a CNN team in the east of the country encounters a Ukrainian military convoy. However, there is no obvious evidence of the large-scale operation that's been promised by Kiev.
Now, this video, posted on social media, allegedly shows a Ukrainian military jet flying above an airfield at Kramatorsk. Gunfire, apparently, was heard, and Russian media are reporting casualties, but CNN's not been able to confirm that.
Now, Ukrainian officials say the airfield is back under its control. Meantime, EU ministers gathered in Luxembourg to talk about the crisis. The NATO chief, also taking part, called on Russia to deescalate the situation. We go right to Nick Paton Walsh right now in Donetsk.
Now, Nick, I know that you were with the Ukrainian military today. What did you witness them doing?
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, we were moving around the farmland part of the west of Slaviansk and Kramatorsk, and during that area, we discovered to the west, essentially, large columns of Ukrainian military armor, one moving around APCs, supply trucks, light artillery as well, about 80 vehicles in total, a helicopter briefly accompanying them as well.
And quite interesting to note, they wouldn't tell us where they were headed. They said, one of them, they were a unit from Dnepropetrovsk. They seemed to be paratroopers, a more elite unit there, and I think that certainly suggests, maybe, that there are unites being put into place that could intervene substantially in this area were Kiev to come up with a more forthright plan.
But they didn't see to be heading, when we left them, directly towards the two main flashpoints of Slaviansk, Kramatorsk.
When we got to Kramatorsk today, there were two key changes. The police station that had been stormed by pro-Russian militants a matter of days ago was now back in the hands of the original police it was taken off.
But they seemed quite relaxed. They were cleaning up the mess that the protesters had made, but saying they were now, quote, "with the people." Wouldn't answer the question about whether they followed the Ukrainian government's order anymore, so some accommodation clearly reached there.
But a key development in Kramatorsk today, the military airport on the outskirts of town, as the Ukrainian interim president Oleksandr Turchynov said, it appears that Ukrainian troops landed there in helicopters. Witnesses reporting that sounds of heavy gunfire shortly after that, potentially when pro-Russian militants went near that particular area.
By the time we got there, the locals, who had gathered in a crowd at a fence nearby, some unhappy at their presence, some just marveling, frankly, at the spectacle in an otherwise formerly very sleepy town there.
One man tried to approach the Ukrainian soldiers to talk to them. Another seemed to be very drunk, staggering towards them, too. Warning shots fired in the air. And I think a sense, really, that perhaps this is the beginning of a Ukrainian troop presence near Kramatorsk.
We're seeing this armor maneuvering around the region. We're seeing suggestions that near Slaviansk there are also Ukrainian armor as well. But quite when that larger operation begins in earnest isn't actually clear at the moment.
No signs over Slaviansk, certainly, when we stood there from a hilltop and looked over the town a few hours ago, that there were large maneuvers in place. Paula?
NEWTON: It's interesting. What you describe there is still a very confusing situation. Do you get a sense, though, that you are seeing a Ukrainian military that is better organized with a clear, defined plan on how to take back all of those cities and towns?
WALSH: We don't know what they're thinking separately, and in some ways, moving into Kramatorsk slowly does make some sense, because you'd be cutting off Slaviansk, now the focus of the pro-Russian movement, from Donetsk and other focus of it, too, by breaching the highway in between the two of them.
But did we see those Ukrainian paratroopers looking like they were gearing up for a fight? No, far from it. No, they seemed to move around the farmland quite relaxed. And we're not seeing, too, that much coordination between the statements out of Kiev and what we're seeing on the ground as well.
When the security service said today there would be a large operation against Slaviansk, we expected to see that. We didn't, and I think the issue, really, here is when these troops land, they often encounter quite genuine grassroots local opposition to their presence there. Often that fermented by some of the information passed to them by pro-Russian sources in this particular part of Ukraine.
But it's a deeply complex situation, because any bloodshed here, any crossfire, anybody actually injured -- and despite those Russian media reports, we didn't hear from eyewitnesses consistent testimony that there had been injured or dead resulting or happening in Kramatorsk. If there is bloodshed, then Russia may well intervene, and they still have 40,000 troops just across the border. Paula?
NEWTON: Nick, Nick Paton Walsh, there, looking for the Ukrainian military's next move. We appreciate the update, thank you.
Now, on Thursday, we'll see the first meeting between foreign ministers from Ukraine, Russia, the EU, and the US since this crisis began. If there's no breakthrough, Germany's economy minister says the EU will begin tightening the screws on Russia.
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SIGMAR GABRIEL, GERMAN ECONOMY MINISTER, VICE CHANCELLOR (through translator): If Russia is not ready to make sure the escalation finally ends, it must expect that Europe and Germany will be ready to start the third phase of sanctions.
(END VIDEO CLIP)
NEWTON: The third phase of sanctions, there. Now, Russia's finance minister, meantime, has been speaking about the damage which the crisis is doing to the country's economy. Anton Siluanov said the sanctions and, quote, "geopolitical uncertainty" are driving away investment. That's no surprise.
He warned that Russia's economy may not grow at all for 2014, and that's a revision on certain estimates. Now, Russia's RTS index was down more than 3 percent on Tuesday alone.
Now, efforts by Russia's central bank to fight back seemed to be working. Ukraine's -- sorry, that was Ukraine's central bank seemed to be working. Ukraine's currency is up nearly 5 percent against the dollar after a surprise interest rate hike late on Monday. Now, that country's currency has lost more than a third of its value against the dollar since the beginning of the year.
Russia isn't the only economy which could suffer because of the situation in Ukraine. Economists have warned that further sanctions against Russia could hurt Germany's economy. Earlier, we asked our emerging markets editor, John Defterios, about he impact of another layer of sanctions and what that could do to Russia's economy.
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JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, I think the statement that we had from the finance minister today, Mr. Siluanov, was very blunt in assessing not growth of, say, 1.3 percent, as the International Monetary Fund was suggesting, but barely into positive territory, Paula. Maybe a half percent or less.
They're suggesting here that the external political forces could undermine foreign direct investment, number one. But number two, in the more immediate future, is the impact on capital flight. They acknowledge $63 billion in the first quarter.
And if the situation intensifies, of course, in Ukraine, it could get even worse. So, I think it's worth dialing back a little bit and say before 2012, this was an economy that was growing 4 percent during the worst global economic crisis we've seen in four years.
But it's been a staircase lower ever since, just over 3 percent in 2012, 1.3 percent in 2013. And at the IMF's spring meetings, they were suggesting 1.3 percent. Now the World Bank suggesting that it could contract by as much as 1.8 percent. So, things are changing rapidly as this progresses into a geopolitical situation.
NEWTON: Yes, and quite a serious one at that. Many analysts are looking at this saying you could have economic reverberations, obviously, well past Russia. When we look at the divide between the United States and Europe, clearly the US would want the harshest sanctions possible.
Obviously, the EU, reliant on Russia the way it is for energy, especially Germany, do you think they're coming around, John? Where do you see all that going?
DEFTERIOS: Well, it's a very in-between period, because you can see the negotiations taking place behind the scenes between the United States and Germany in particular.
In fact, I spoke to the president of Cyprus, who was on a tour of the Middle East, trying to raise funds a year after their own financial crisis. And he's basically suggesting now this support by the European Union initially to break away and go their own way with regards to the previous president in the Ukraine, perhaps was a mistake, not taking into account the economic fallout. Let's take a listen.
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NICOS ANASTASIADES, PRESIDENT OF CYPRUS: The question is the whole handling of the Ukrainian affair. And I don't want to make any comments. I think we have underestimated the results of what decision to encourage the Ukrainians to proceed on.
I thought it was much easier to proceed on with the Russians as it was the plan. And to see how we can develop and better our -- or enhance our obligations with Russia. And then to overcome the problem of Ukraine with another way.
(END VIDEO CLIP)
DEFTERIOS: So, President Anastasiades suggesting we should look at the economic implications here, $300 billion of bilateral trade is a stake. And the reality is, Paula, they are very glued together.
When the European Union announced this list of Russians that would have limitations in terms of the flights and their capital exchange within the European banks, on the same weekend, we saw two major investments into the European Union, the $7 billion deal into a German utility, and Rosneft taking a 13 percent stake in Pirelli.
So, there's a geopolitical equation, of course. There's discussions about what to do next when it comes to sanctions. And then, the business realities that they are, indeed, very dependent on each other going forward.
And the Cypriot president suggested something different right now, also that some of the EU states are going to be asking for compensation if Brussels continues to push a more strict sanctions agenda going forward, Paula.
(END VIDEOTAPE)
NEWTON: That was our John Defterios, there. Now, investors are scrutinizing Yahoo!'s earnings for news about another company altogether. It's not even in the US, it's 7,000 miles away in China.
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NEWTON: It's a bit crazy. Look at that, we've got green, we've got significant red, and then we have green. Alison Kosik is at the New York Stock Exchange, and no, Alison, we are not describing a Christmas tree. I couldn't follow it today. I'm hoping you can make some sense of it.
And I know I'm not the only one, because I've heard some of the analysts come out. What -- we could see the downturn coming, but what about people piling back in and buying on the Dow Industrials today?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: The bottom line with today was the investors, Paula, they just couldn't figure out which way to go. Clearly, in the end, they did, they chose to go toward the positive column.
Stocks were dragged down during the day by disappointing readings on manufacturing and home-building and ongoing worries about the situation in Ukraine as well. But that didn't wind up overshadowing some positive earnings, so it was sort of a tug-of-war between the good and the bad.
We got those good earnings from Johnson & Johnson and Coca-Cola, beating expectations in the first quarter. J&J boosted -- J&J shares were boosted by strength in its pharmaceutical business. Coke certainly kept up the fight against flat sales in the US. It wound up being one of the biggest gainers on the Dow today. So, in the end, I think the good won, Paula.
NEWTON: The good won out. And yet, when we look at the NASDAQ, NASDAQ was flat. Now, many people had been saying they can understand, certainly, the blue chips being buoyant, and especially with some of those blue chips giving back so much money in dividends these days. But the NASDAQ still, even though it was flat today, many talking about a correction. Is that still talk, there?
KOSIK: Yes, well we saw huge swings in the NASDAQ today. It was really pressured during the session, pushed -- pushing the index down as much as 8.5 percent from its peak. So, there was some talk of the NASDAQ entering correction territory. But it did manage to make up those losses by the end of the day.
Now, what's been happening with the NASDAQ is that there's been this ongoing sellout for many days, now, in biotech, in social media stocks. But if you look at the broader picture, Google has actually been the biggest drag in the past few weeks. Its class A shares have fallen 12 percent since March 1st. And remember, its shares are heavily weighted in the NASDAQ.
Other tech shares also getting hit hard -- Cisco, Apple, Yahoo! also falling. Here's the thing. As much as the NASDAQ ended on the plus side today, one analyst said earlier today when we saw the NASDAQ fall quite a bit, this analyst saying it's not a good indicator for things to come.
But as the NASDAQ reaches these new lows, it's more likely that the rest of the market will follow them down, many investors thinking after the run-up last year that these stocks are overvalued, and that's why they're really selling in earnest.
NEWTON: Yes --
KOSIK: But not for today.
NEWTON: Yes, and those valuations do still look incredibly expensive. When you look at that and you look at investors trying to pile in at those levels, still kind of scary. Alison, thank you for that update, appreciate it.
KOSIK: Sure.
NEWTON: Now, Yahoo! earnings were just released. Earnings per share and revenue slightly ahead of expectations. Thankfully, we've got Samuel Burke, here, who's going to tell us exactly what the numbers mean. And Samuel, as you were seeing to me as you walked in here, earnings kind of in line with expectations, but the backstory's much more interesting.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: Yes, basically, revenue is flat, and for the past year, revenue has either been flat or down. At the end of the day, Yahoo! is still depending on their 24 percent stake in Ali Baba, because revenue -- ad revenue for the company is weak.
That's the bottom line. At the core, this company needs strong ad revenue on its blogs, on its apps, on its websites, on its search engines. And that is weak, so still this company is depending on its 24 percent stake in Ali Baba.
NEWTON: And it can't depend on Ali Baba forever, right? It's -- it's coming to an end.
BURKE: That's right, Paula, because Ali Baba's going to go public, and at that time, Yahoo! is going to have to cut its share in the company by about half, which makes it feel like the noose is going tighter and tighter around the neck of Yahoo! They're not going to be able to depend on Ali Baba forever.
They're also dependent on Yahoo! Japan, which is a joint-interest company that they have there in Japan. So, really, we're looking at the core of this company and see -- we're trying to see how is it going to do on its own? And we still don't see that if that ad revenue is down, display revenue down.
NEWTON: Marissa Mayer the head Google -- of Yahoo!, sorry -- is not going to like your analogy about the noose, although I'm sure that she can kind of feel it. Because the point is, what is she going to do next -- and we've seen a lot put out on the table for Yahoo! -- to try and get this company to become the media company she so wants it to be?
BURKE: Last year was the year that she was investing in huge sites like Tumblr.com, which is popular blogging site. So, this is going to be the year that the revenue is going to have to come in from those websites, and it's going to be advertising, because the vast majority of Yahoo! is free for its users. So, we have to see revenue -- ad revenue come in from these websites, and so far, it looks weak, as it usually is.
NEWTON: And we'll continue to watch the stock in the morning and see what it does in the trade. It probably doesn't bode well for the NASDAQ in general, though, either. Thanks, Samuel, appreciate the update.
Now, still to come on QUEST MEANS BUSINESS, we'll go through the looking glass with Google. The new eyewear goes on sale, but for one day only.
(COMMERCIAL BREAK)
NEWTON: Now, Facebook's singular mission to expand has been underscored somewhat by its deal to buy Oculus, the virtual reality company, as well as all that's known that hasn't been the only big deal to go down. To get a sense of where Facebook is heading, Laurie Segall visited a summit of entrepreneurs called Founders to meet the CEO of Oculus.
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(BEGIN VIDEOTAPE)
LAURIE SEGALL, CNN MONEY TECHNOLOGY CORRESPONDENT (voice-over): Facebook's been on a multibillion-dollar buying spree over the last couple of years. First, photo sharing app Instagram for $1 billion. Then, messaging app What's App for $19 billion.
And the latest: $2 billion for the virtual reality developer called Oculus. Its main product, the Oculus Rift headset, a mask that videogame players would wear to see an interactive, high-definition 3D video environment. Think Google Glass on steroids.
The CEO, Brendan Iribe, sat down with me to dish exclusive details behind the deal on how Facebook CEO Mark Zuckerberg geeked out when he saw what Oculus could do.
BRENDAN IRIBE, CEO. OCULUS VR: So, he tries it on, and he takes it off and his first thing is, "So, that was probably one of the coolest things I've ever seen in my life and maybe ever will see. How can I help? I'd really like to just help you guys."
SEGALL (on camera): At that point, did you say, "$2 billion"?
(LAUGHTER)
SEGALL (voice-over): Iribe would quickly find that Zuckerberg doesn't dwell on formality.
IRIBE: We shook hands, and we were like, yes, let's get this done. And he said, "Well, I think we can just get this done right now. We should be able to get it done by Sunday." I would have never thought you could get this size of a deal done that fast, but when you hear Facebook likes to move fast, that's their motto, they move fast.
SEGALL: Three and a half days later, the $2 billion deal was done. Facebook partnered with Oculus, taking on people like Iribe and Palmer Luckey, the 21-year-old whiz kid who built out the tech behind the gaming device. The deal is a bet that virtual reality headsets could be used for more immersive experiences.
IRIBE: You can actually just look around and you can have objects in front of you, you can experience different gaming things, you can have an IMAX theater.
And then to actually experience a shared sense of presence, this where you truly believe you're somewhere, and now you actually believe other people are there with you. And you look at them and if they look at something, you can both look at the same thing together. There's no more window. That's, I think, going to be the magic of virtual reality.
SEGALL: For Facebook, it's the first venture into hardware. Zuckerberg says this is just the start. He thinks virtual reality can enable people to enjoy a courtside seat or study in a classroom with teachers all over the world.
IRIBE: We left at around 5:30 AM the Facebook office to go straight to the airplane, went home and went to sleep. And then woke up and tried to think if what we did was really -- really just happened.
SEGALL: A reality that's anything but virtual.
Laurie Segall, CNN, New York.
(END VIDEOTAPE)
NEWTON: Now, onto another wearable. Google Glass is on sale to the general public for the very first time. Now, the high-tech spectacles cost $1500 plus tax and can be bought only in the United States. Now, if you have your heart set on a pair, you'd better be quick, because as I just said, it's one day only.
Now, buyers can order via Google's website, they can have the option to add prescription lenses, thank goodness, and choose a color. Now, up until today, only those with a special invitation could try out Google Glass.
Kunal Nayyar, who plays Raj on "The Big Bang Theory," he sported a pair at this year's Grammy Awards. I think he was looking pretty good there. Maybe not the hair so much, but he glasses look good.
(LAUGHTER)
NEWTON: And our very own Richard Quest tried out Google Glass for an episode of "Business Traveler." Oh, look at handsome Richard there, look at him go. He used the spectacles to navigate the streets of San Francisco and choose a restaurant. I can tell you, Richard sometimes needs help with that.
The Google Glass experience has not been trouble-free, though, for everyone. This video was taken by a woman wearing Google Glass at a bar in San Francisco. Now, she says that patrons of the bar attacked her and tried to rip the spectacles off of her face.
And some people do also have concerns about the privacy implications of Google Glass, which can discreetly shoot photos or video, meaning you have no idea the kinds of pictures or video that are being taken. Serko Artinian joins me now. He's the co-founder of Google Glass NYC, yes?
SERKO ARTINIAN, CO-FOUNDER, GLASS NYC: Glass NYC.co.
NEWTON: Glass NYC. OK, explain this to me. How long have you had those things on your head, and what does it do for you? How is it improving life?
ARTINIAN: Sure. I've been using Google Glass for a while now, I'd say last fall was when I kind of started using Glass more regularly. It's really exciting. One of the best aspects of being a Google Glass owner and user is the amount of people that are naturally innovative, forward- thinking, of all backgrounds, kind of attracting them and working together and creating a movement.
It's basically -- it's early days, but it's really exciting to see how our personal and professional life can be impacted by Glass.
NEWTON: OK. For someone like me, I'm still having trouble understanding how it enhances anything. Have you taken a picture yet today? You've been able to send it to us? What have you done since you've gotten in here, for example?
ARTINIAN: Sure. I took a photo of the driver. I took a photo of the makeup artist. And I took a photo of the set from the vantage point in the waiting room there.
NEWTON: OK, so we can post it to Twitter. Yay, applause!
(LAUGHTER)
NEWTON: But how does it -- I'm still -- it's 1500 bucks.
ARTINIAN: Sure.
NEWTON: And to me, it just seems like another toy. I can see how my kids would have a great time with it. They have a great time with walkie- talkies and remote control cars, too. But that doesn't mean they're useful.
ARTINIAN: That's true. $1500 is definitely not something that most people can afford. I think today was really interesting to see Google, I think they were really smart to release it kind of open game to anyone that wants to purchase it.
I think it's a natural step in the evolutionary process of Glass. Glass is still early days, and I think today will go a long way towards seeing who is really interested in it. If you're a professional industry or a personal industry.
NEWTON: So, you see yourself as an innovator, then? You're wearing these things and you can see how it might apply to people in the next few years and really just enhance what they do or what they're trying to do in their professions.
ARTINIAN: Yes, we're just getting started, like I said. Any piece of hardware, whether it's a mobile phone or Glass or accessory you wear on your face, is only so good as the software written for it. So, Glass is still early. It's just hardware that we have some really great core services with.
I think that the most important thing right now is to make sure that people are aware of what it can and can't do. The privacy concerns, I think, for the most part, are overblown.
I think the number one thing most people did with cell phones back when SmartPhones were just getting to be big was taking photos. The average photo you take is probably around where your head is.
So people getting used to that versus something that's on your face, I think, are two different things, and I think that, well, it's only a matter of time before this becomes more and more adopted into society. So, exciting times right now.
NEWTON: And in terms of the actual Glass itself, so you tap it and you speak to it. I think people are trying to visualize, there's nothing else that goes with it, or does it kind of then zero in on your other devices?
ARTINIAN: That's a great question. There are multiple ways of interacting and working with Glass. The first is voice-activated. You can either rock your head back and turn it on. Now you can see the screen.
NEWTON: Oh, yes, it just came on. Oh, right.
ARTINIAN: Yes. Or you can actually like a D pad, picture a D pad, like a remote control on video games, you can actually swipe it down, up, forwards, or backwards. So, it's kind of like that. So, there's a pad on the side here, and you can -- it's touch sensitive.
NEWTON: And that's how -- that's the only interface you have with the glasses.
ARTINIAN: Correct.
NEWTON: Definitely not good for me. I can't walk and chew gum at the same time.
(LAUGHTER)
NEWTON: Serko, we'll be looking forward to see kind of what comes out of this, and we'll have you back to see if this is actually something that catches on.
ARTINIAN: Thank you. We're really excited. We have GlassNYC.co, which is our community. We have developers, designers, just everyday folks from all walks of life. They're some of the most innovative and forward- thinking people and individuals I've ever had the chance to work with. So, please check out GlassNYC.co.
NEWTON: Thanks so much, appreciate you being here.
ARTINIAN: You're welcome.
NEWTON: Now, still to come on QUEST MEANS BUSINESS, General Motors CEO is addressing the New York International Auto Show. We'll bring you the latest on her speech. That's up next.
(COMMERCIAL BREAK)
NEWTON: Welcome back, I'm Paula Newton, and these are the top news headlines we're following this hour.
Ukraine has mobilized its military as the government promises a crackdown on pro-Russian separatists. CNN has witnessed convoys moving in the east of the country, however, it's not witnessed any large-scale operation. Now, the Russian prime minister has said Ukraine is on the threshold of a civil war.
Heavily-armed Islamists from Boko Haram have abducted as many as 200 school girls from a boarding school in northeast Nigeria. Officials say dozens of gunmen stormed the school on Monday night. They herded the children into trucks and buses after a lengthy gun battle with soldiers who were on guard.
The prosecution in the Oscar Pistorius murder trial has wrapped after five days of cross-examination. On his last day on the stand, the Olympic sprinter testified he didn't intend to pull the trigger the night he shot Reeva Steenkamp.
Church bells tolled in Boston today as the city marked the one-year anniversary of the marathon bombings.
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NEWTON: Survivors of the attack joined together with dignitaries to honor the three people killed and hundreds wounded, vowing that Boston will never yield to terrorists.
In Liverpool, England, meantime, football fans marked the 25th anniversary of the Hillsborough Stadium disaster. It was on this date in 1989 that 96 Liverpool fans were crushed to death inside the crowded stands in Sheffield. It remains the worst sport-related tragedy in British history.
General Motors CEO is giving her first public speech since appearing before Congress over the company's recalls. We're going to get the latest now from Poppy Harlow who was in the room. Poppy, there was a lot of expectation still on the shoulders of this woman -- how does GM recover? What were her first steps in trying to do that today?
POPPY HARLOW, JOURNALIST FOR CNN: Well, this woman who has only been at the helm of General Motors for a matter of months, Mary Barra, who has been there at the company for 33 years but only in the top job for a few months. You know, Paula right behind me they're holding a forum, part of the New York Auto Show and she gave her third remarks -- only her third public appearance since this recall debacle broke a few months ago. Her remarks were prepared. I think the headline from them is "All of us understand what is at stake here." That is a quote, and also quote, "We know the world is watching and will judge us by our actions." Taking responsibility, spending about half of her time on stage talking about this recall of 2.6 million General Motors vehicles due to a faulty ignition switch that when knocked off can mean that the power steering, the brake, the airbags can fail. As you know, it has been tied to 13 deaths. She took responsibility for it. Right now she is taking questions from the audience. We were just up there, we'll run right back after this to give you the latest. But I can tell you that she also made an announcement that General Motors has created a global product integrity program. Basically that means she hopes to say that this will never happen again. The big issue at stake here as we all know is the fact that not only did General Motors have this ignition switch default that proved to be deadly, they did not tell the public about it or recall cars for a decade. And now she is at the New York Auto Show which most automakers celebrate as a time to unveil their latest and greatest products. All the questions for her here though are about this recall. What is General Motors going to do? So far the only steps they've taken is she has testified in front of Congress a few weeks ago, and they have put two engineers at General Motors on paid leave as they internally investigate what could have gone wrong.
NEWTON: Yes, and you know she's talked a lot about changing the company's culture, but I have to say there are examples of families whose, you know, loved ones they believe have died as a result of accidents and the fact that GM did not recall the vehicles. Some of those families just getting letters in the last few months, mistakenly about these vehicles long ago that involved an accident, still haven't recalled. I mean, is there not a point where she has to put more on the table to say 'Yes, this is what we're doing" -
HARLOW: Right.
NEWTON: -- "and it is significant." It's got to be more than just words.
HARLOW: I think that absolutely, those families want action at everyone, reporters the public wants to see -- want more answers. A lot of the testimony that she gave in front of Congress a few weeks ago was 'We are investigating, we are investigating.' So far, no more answers really than that other than the two unnamed engineers put on paid leave. General Motors is admitting that 13 people died as the result of this. We're going to have a chance to hopefully ask her some questions. I think that is another question -- were there more deaths or do you expect that more deaths will be tied to this? I think what did General Motors have to do now? Their reputation is everything. How do they regain the trust of the public? We know that Mary Barra did meet with families who lost their loved ones in D.C. -- Washington D.C. ahead of the hearings.
But what is it going to take? A lot of those families that I have spoken to have said they want more, they want action. Some of those families and lawmakers, frankly also, Paula, saying that they wanted to see General Motors pull all of these cars off the road and say you can't drive them. Right now GM is telling people these are safe to drive if you take all of the extra stuff off the key and just have the key in the ignition. They are doing repairs right now, but many have wanted to see further action.
There are questions also about some internal e-mails at General Motors that have surfaced because of the congressional investigation, one of them a 2011 e-mail sent to Mary Barra before she was CEO talking about a steering problem in the Cobalt and the Ion. General Motors is saying that is not tied at all to the ignition switch recall, but a lot of people are questioning what does this tell us about how looped in she was even before she was CEO to product issues in the small vehicle program at General Motors. That is something I think a lot of people want more answers on as well.
NEWTON: Yes, definitely. We're going to let you go back in and get some of those answers, Poppy. So appreciate you coming out to give us this quick update. Thanks, Poppy. Now, an ad for Cadillac's ELR plugin hybrid is sparking fury in France and wait 'til you see it, then we'll tell you why.
(BEGIN VIDEOCLIP)
Male: Other countries, they work, they stroll home, they stop by the cafe, they take August off. Off. Why aren't you like that? Why aren't we like that? Because we're crazy, driven, hard-working believers, that's why.
(END VIDEOCLIP)
NEWTON: Crazy, driven, hard-working believers. Now, that message is about as subtle as the Statue of Liberty wrapped in an American Flag, holding some apple pie. Americans can afford nice things like this Cadillac because they don't spend their time on lengthy holidays eating cheese and drinking wine, and I should say staying skinny. Now, the French edition of "Slate" called the ad "lamentable" while "Le Nouvel Observateur" called it "anti-French." It's not the first time an American business has come under fire for suggesting French workers are lazy. You remember the scathing letter American tire executive Maurice Taylor sent to the French Industry Minister Arnaud Montebourg. Taylor was explaining why his company would not consider buying a French factory scheduled for closure. Taylor quote said, "The French workforce gets paid high wages but works only three hours. They get one hour for breaks and lunch and talk and three for work for free." -- sorry, work for free -- it's three. I've not said that properly. Arnaud Montebourg responded -- we'll say -- we'll try that again. Back that up in the prompter, will you? Let's say that again. What did he say? He said, "They get one hour for breaks and lunch, talk for three and work for three." We finally got that right. Montebourg responded with his own letter saying, "I would remind you that your company Titan is 20 times smaller than French tire giant Michelin and 35 times less profitable ." Take that, the World Economic Form ranks France 18 places below the U.S. in terms of competitiveness. Christian Malard is a French journalist and international diplomatic consultant. He's definitely laughing at me right now. I was not very efficient with that read, was I? Not very productive. But you know that this is hitting a nerve. It certainly hits a nerve in France and for good reason. You know, is Cadillac being clever or are they just being crass?
CHRISTIAN MALARD, FRENCH JOURNALIST: No, Paula, you are lucky. I am working, I'm not drinking wine -- I'm working --
NEWTON: I don't know. There could be wine there right now, how do I know?
MALARD: -- right now.
(CROSS TALK)
MALARD: So you should be happy.
(LAUGHTER)
MALARD: No, Paula, I think Cadillac in certain way -- let's be honest and serious. Cadillac say a big part of the truth. At the time I am talking to you, we are in April and last weekend we started a two weeks' vacation period for Easter vacation. A lot of the French people -- workers and other people -- have fet for (ph) vacation. And then in May until the beginning of June, Paula, you not going to believe me -- but we have many Thursdays where people will be off duty. And what happens after Thursday? You have Friday. So you have the weekend, --
NEWTON: (LAUGHTER).
MALARD: -- and all these people are going to leave for 3, 4 days and not working. How do you want French economy to be on the right track when people work so slow and so low? So, in certain way, Cadillac says the truth. The French don't work too much, we have five months -- five weeks, sorry -- per year, five weeks paid holidays when you have in the States I think two weeks. And I don't speak about the Japanese we have one week. So, the comparison is there. You work in America, they work in Japan and in France we work but not that much.
NEWTON: (LAUGHTER). And you still seem to get along just fine. But just let me be devil's advocate for a moment here. I mean, is it really more productive -- is there not going to have to be a happy -- a happy medium -- here? Because if you're an American, in terms of how hard you are working. I mean, Americans are notorious for leaving vacation days on the table. You know, they're the country that doesn't even take the vacation days that are granted to them. Is that really in the end all that efficient? Because you'll -- many people -- will tell you that if you're on a production floor, it means more mistakes, it may even mean more sick leave. It leads to stressed-out employees that maybe aren't producing the best-quality product.
MALARD: Well, you know, the problem here is as I said we don't work enough. For any reason sometimes you have the unions, the unions who ask the employees in big companies not to work after 6 p.m. and answer the e- mail of their manager or whatever. So, you have to work in this country. We are -- France -- is probably right now the worst country in Europe in the worst economic shape. So if the French go on spending their vacation first and said we want to keep our work privileges, then we are a spoiled country, spoiled people with a lot of privileges. We cannot move forward, Paula. You know France -- you have been there -- and you know that it's easy-going people but at the same time, look at where we are today. The country is in very bad economic shape. I am very serious on that.
NEWTON: OK, I have one answer to that. Italy. So, just be glad you're not Italian and then we'll go over from there.
(LAUGHTER)
NEWTON: Thank you. I'm going to have to leave it there though.
MALARD: Thank you, Paula.
NEWTON: The Italians know I'm telling the truth about that as well. Thank you so much for those French insights. Appreciate it. Now, as the Russian prime minister says Ukraine is on the threshold of a civil war, we look at Moscow's possible motives, the outcomes and why this crisis even happened.
(COMMERCIAL BREAK)
NEWTON: Now as the E.U. considers further sanctions against Russia, there've been some dire predictions about the economic outcome for the country. Earlier I asked economist Jeffrey Sachs about Moscow's end -- what -- it's ending -- pardon me -- could be.
(BEGIN VIDEOCLIP)
JEFFREY SACHS, ECONOMIST: It's trying to destabilize Ukraine, perhaps in the short term to head off these elections for a new president at the end of May, and more generally, to prevent Ukraine, from Russia's point of view, falling into the Western camp by joining the European Union or negotiating and finalizing free trade arrangements with Europe. Russia doesn't see Ukraine in that way. Russia sees Ukraine as part of Russia's backyard and the Eurasian economic union that Putin wants to build. And clearly they're ready to take extraordinarily dangerous and provocative actions, already annexing Crimea. But clearly stirring up a lot of violence and the potential for an explosion here, not only lots of conflict in Eastern Ukraine but a dramatic escalation of sanctions and economic warfare between Russia and the West.
NEWTON: And you've been quite clear about the repercussions of that in terms of what we're looking at if we get to that escalation. The impact, not just to Ukraine and Russia -- Russian's economy -- but widely Europe's economy and the world economy.
SACHS: I don't think it gets more dangerous than this. Russia absolutely is not honoring the territorial integrity and sovereignty of Ukraine. One of the commitments that Russia has -- solemn commitment -- made to Ukraine, not least in 1994 when Ukraine handed back nuclear weapons to Russia after the end of the Soviet Union. Russia is trying to hold on and it seems that Putin's ready to play a very dangerous game to do so. The West has made clear it won't get involved in a military defense at least not now. That would be extraordinarily dangerous, but it will escalate sanctions dramatically. And I think we're heading in that direction unfortunately, and I think that's bad -- very bad for Russia, bad for Europe, bad for the world and it seems that Putin's determined right now to head into growing danger.
NEWTON: And where have we gone wrong here? I mean, some people are in the camp saying, look, it didn't matter what we said or did, this was where Vladimir Putin was headed. But is there not a school of thought that says that we dropped the ball. And whether it's Europe or whether the -- it's the -- United States, diplomacy hasn't worked, and also geopolitical strategy involving those threats to the economy that important to Russia -- those haven't been able to be brought into this equation effectively enough.
SACHS: Well, this is a long, complicated story, and one can argue various points of view. My own view is that we failed to effectively bring Russia into a full economic integration with the U.S. and Europe in the early 1990s when there was a real chance -- new country, new democracy -- real hope, we behaved very badly from my point of view, from what I saw as an economic advisor to the first post-Communist government in Russia. The West was not interested in helping. That left a very bad residue, not least in President Putin's mind, who said they absolutely are not on our side and --
NEWTON: We're still rivals.
SACHS: -- we continue this adversarial relationship. A lot in the U.S. and, fewer, but some in Europe felt that same way. So we got off to a very bad start, and both sides play a not-so-good game though clearly right now I think it's without question that President Putin is violating international law in a very dangerous way and the only response from the West will be rising sanctions. Those will hurt the West but they absolutely are going to derail Russia's hopes for a major modernization of the economy. This is the tragedy and not only the risk but tragedy for Russia itself.
(END VIDEOCLIP)
NEWTON: OK, it's time now to go to Jenny Harrison at CNN International Weather Center who is on the hunt for the elusive spring I have yet to see it, Jenny, on this continent. Could you please bring it to me on another?
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Well you see now, Paula, you hit the nail on the head. It's all about which continent and whereabouts you can find because I can tell you there're some parts of Europe that have been seeing some very, very nice wink -- spring weather -- that's what I'm trying to say. You can actually see in the last few hours this sort of empty area of weather. That's where the best weather is because generally it's a fairly unsettled picture. Plenty of rani in the forecast and some very strong winds too that have been coming through in the last 24 hours, and they've been coming in with some pretty strong storms. You can see here the dark, dark skies over Brandenburg in Germany and so not surprising perhaps that to go with those stormy conditions, look at some of these wind gusts that were reported. First of all, look at that -- 105 kilometers an hour and that of course is in Fichtelberg, and Dresden 97 kilometers an hour. Over in Prague in the Czech Republic 90 kilometers there -- kilometers an hour, so some very strong and potentially damaging winds.
Now, the warnings that were coming in with those systems, with those storms, they have since been dropped, but you can see in the next 48 hours, still quite blustery across this particular region of Europe and also the northwest we're seeing some strong winds coming through there with the next system. But, here we go -- look -- spring. I did promise you it has been glorious. Look at those gorgeous blue skies. This is in London just taken this day and of course as soon as you get some nice sunny weather, people are out there enjoying it. But the temperatures have been very nice indeed in the mid to high teens under clear, sunny skies. So really feeling very nice indeed and that's because the high pressure have been quite dominant. However, as this next system works its way eastwards -- these two lows joined by these trailing cold fronts -- we are going to see some rather cooler air ushering in behind that system.
So it's going to clear out in terms of the showers, but you can see here, this is the temperature trend forecast for the next couple of days, Wednesday on into Thursday, so anywhere that blue light (ph), that means the temperatures are going to be below average. But it's fairly short- lived, that cold air pushing back up towards the north. Because as I say the high pressure is coming in and we should get some good, clear sunny skies so we should see plenty of sunshine. But it is fairly unsettled across much of the southeast. That low there particularly not moving very far, and it could even see again some more snow in the forecast at those high elevations. But all of these areas -- central Europe across in to France, the southwest, one or two showers and, again, some passing rain showers in the northwest.
When it comes to the airport delays, have a look at this because Wednesday morning you might face a few delays in Munich because of the snow that might just come down. Bit of a mix -- the sleet and snow -- and then some fairly cloudy conditions elsewhere as you can see. And that will maybe delay you about 15 minutes to half an hour, but these are the temperatures for Wednesday. Another 17 in London, 17 in Paris and a very nice 26 in Madrid. So you see, Paula, there is spring out there, you're just not in the right place.
NEWTON: I was going to say I'm just not in it right now. Thank you, Jenny, we'll keep hoping here. Maybe by June -- you never know.
(LAUGHTER)
NEWTON: Now in a moment on "Quest Means Business," the people of Ealing in London have never seen anything like it. Why one hairdresser's poster didn't quite gel with the North Koreans.
(COMMERCIAL BREAK)
NEWTON: When a hair salon owner put up a poster of North Korean leader Kim Jong Un which jokingly mentioned bad hair days, government officials told him it was disrespectful and demanded its removal. But this isn't Pyongyang, this is Ealing in West London and just two miles away from -- there you have it -- the North Korean Embassy. Now, the owner's son picks up the story from there.
(BEGIN VIDEOCLIP)
KARIM NABBACH, M&M HAIR ACADEMY: They basically said 'Who's the manager?' He says I'm the manager. They said who put this poster up? And he's like hang on, I'm sorry, you know, you haven't introduced yourself, I don't even know who you are. And they said well we're North Korean officials and what you've got is a picture of a North Korean leader. I'm very well aware of who it is. And they -- they weren't -- they were just really unhappy with it and he basically said to them, you know, look, we haven't done anything wrong. We're not making a political statement here, it's literally about tongue in cheek to bring in customers. And they said I want your name, like in those exact words -- "I want your name." And he said to them --
NEWTON: As if -- this statement mistook south London for Pyongyang.
NABBACH: (LAUGHTER) -- pretty much.
NEWTON: We want your name.
NABBACH: He said to them, look, he goes with all due respect, we're not in North Korea anymore, we're in England and that's not the way things go here. I mean, you know, it's a democracy. So, you know, if you want to take this any further, you guys can get your lawyers involved and we'll take it from there. And they basically said we'll see and walked out. And it was like -- oh-kay. Sweet. You know, I mean it was just like a sort of such a stance -- it was in a bit of a threatening way because, you know, to just sort of leave at that as if -- so, you know, we went to the police office just to make a statement, you know, just to cover our backs, you know, just for the next day. But to be completely honest, there's been no backlash since then. But apparently they've been to the police as well in regards to the poster.
NEWTON: They actually went to police believing that somehow their -- the fact that they were offended would trump freedom of speech in Britain? I mean, I'm still incredulous, Karim, I can't even imagine how you guys handled it at the time.
NABBACH: Well, I mean again like for me, I mean I didn't see it as -- because I mean I made the poster. I mean, I -- we -- put it up and I thought literally because it's been all over the news about how in Korea you're only allowed to have one haircut, so it was literally just a bit of tongue in cheek, you know. You having a bad hair day? Come in and get 15 percent off. I mean that was it. There was no -- there was no political sort of you know anything political behind it.
NEWTON: It's a joke, it's a spoof which I'm sure many of your customers you know who were more sophisticated thought 'yes, if you don't want your hair to look like Kim Jong Un -- and let's face it, it's not the most stylish of haircuts, you know. Did you get a lot of reaction from your customers when they heard about this?
NABBACH: Our customers and people walking past -- because it actually turned into a bit of a tourist attraction -- people were just outside taking photos of the poster, having fun with the poster. And we were always getting a little thumbs up from people walking past and stuff. You know, I mean it generated quite -- some good business actually. Like people coming in, they weren't asking for the Un. They didn't want the Kim Jong Un haircut, well not yet anyway but --
NEWTON: (LAUGHTER).
NABBACH: -- yes, I mean they were, you know, everyone was all right to be honest. I mean, they -- like I said -- everyone saw the funny side of it. We've had no one come in and complain or take any offense to it. But, you know, it is what it is.
(END VIDEOCLIP)
NEWTON: Now, he made his millions running Italy and a media empire. Now he's helping out at a retirement home part-time. After the break, Silvio Berlusconi's career takes a new turn.
(COMMERCIAL BREAK)
NEWTON: Now, the former Italian premier and billionaire tycoon Silvio Berlusconi has been ordered to visit a care home for the elderly for a year. It's his punishment for committing tax fraud. Now, the 77-year-old must go to the center in Milan at least once a week and spend a minimum of four hours there. His legal team says he'll start the sentence in the coming days. That will be an interesting sentence that's for sure.
Now, the European markets closed down across the board on Tuesday. Escalating tensions in Ukraine of course held back stocks and a key measure of German investor confidence also fell. SABMiller meantime (ph) shares were down 2.3 percent, the brewer said it is considering selling its stake in the hotel and casino operator Tsogo Sun. Also when we look at our American markets today, an incredible rollercoaster day. I mean, look at that -- starting out with the green, going to red, back to green. Investors really don't know what to make of the latest economic data and whether or not this bull market can still go on. We want to update you though on Google shares which are now rising almost ten percent in after- hours trade. Earnings and sales in fact beat expectations. And that's "Quest Means Business." I'm Paula Newton. Thanks for joining us.
END
