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Quest Means Business
US, Europe Jobs Reports; Unemployment's Best and Worst; US Job Growth Soars; Dow Ends Down; Europe Markets Mostly Down; US, Europe Jobs Discrepancy; US, Germany United on Russia; Deadly Violence in Ukraine; More Proposed Sanctions for Russia; British "Top Gear" TV Presenter Apologizes for Racist Term
Aired May 02, 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)
RICHARD QUEST, HOST: Promising job numbers, a market that started up higher and ended down when all was said and done. Grab the hammer and bring trading to a close. Thank you. It is Friday, it is the 2nd of May.
Jobs, jobs, and more jobs. The US has the strongest month for hiring in two years. We have the details in just a moment.
Also, top gears, low moments. Jeremy Clarkson keeps his job after a racist slip.
And from red tops to revealing tops. Rupert Murdoch shows his romantic side.
I'm Richard Quest. It may be a Friday, but of course, I still mean business.
Good evening. Two very different views of unemployment on opposite sides of the Atlantic. In the United States, there was a spring growth spurt, which took economists by surprise. The economy added 288,000 jobs in April. It's the biggest monthly increase in more than two years. The unemployment rate has now fallen to its lowest level in five and a half years.
Come and join me at the super screens and you'll see what a difference we are now seen. Because euroland also had unemployment numbers, and in Europe, the unemployment rate -- look at the -- it's stuck at 11.8 percent.
Look over the past crisis years. Unemployment goes right the way up. When you get to 2010, they're just about the same. But thereafter, as the US stimulus packages, the TARP, and all the policies start to come into play, the divergence begins.
Meanwhile, Europe goes into the sovereign debt crisis, with Greece at its core. And so we see US unemployment continue to trend way down. Meanwhile, eurozone unemployment goes up and has remained high even as we saw today's numbers at 11.8 percent. What a difference in the two sides of the Atlantic.
And if you look closely, you see even more the difference between the US and Europe and the picture. Take, for example, the worst unemployment is 26.7 percent in Greece. In the United States, the worst is 16 percent lower than that -- more than that -- 8.7 percent. So, 8, 16, 24 -- Greece is 300 percent higher in terms of percentage numbers than the worst in the United States.
And again, looking at the US and Europe as a collection of states, this is the best performance. You have Austria at 4.9 percent and North Dakota at 2.6 percent. North Dakota, by the way, is at 2.6 because of the shale oil industry, the fracking industry.
So, let's consider the United States and how it's done so well. In the US, the headline numbers might look good. Look into the small print, and it's not quite all as rosy. The expected improvements, there were -- if you look overall, there were actually 288,000 jobs created. But the so- called -- and the unemployment rate remained at 6.3 percent, which is down.
But the reason this is down is that the best part of 800,000 people left the workforce. It's the lowest participation rate. The number of people in work, in the US, is the lowest since 1978.
I put all these numbers to the US labor secretary, Tom Perez, earlier, and I asked the secretary if he was concerned about the number of Americans who were actually deciding not to bother looking for jobs.
(BEGIN VIDEOTAPE)
THOMAS PEREZ, US LABOR SECRETARY: It's not down because workers became discouraged. And when you see that, then I'm much more concerned. This time of year, we tend to have some seasonal trends, and people tend to enter the workforce this time of year doing jobs that are seasonal, like at nurseries, in hospitality, camps, things of that nature.
And what we saw last month was they didn't enter when we expected them to enter. We'll be watching that. But at the same time, I'm heartened by the fact that it's not an increase in discouraged workers who are affirmatively leaving the workforce.
QUEST: We now are at a very interesting and crucial point in the US recovery, aren't we? Where actually the Fed has done its work and continues to sort of -- to pull back and plan for the future. The fiscal situation is holding together. So, on the unemployment and on the job creation front, it's now or never, isn't it?
PEREZ: Well, I tell you, a big part of our focus right now is the longterm unemployed. We saw longterm unemployment went down to 2.2 percent last month, but that's still near a historic high. We've got to put money in their pocket.
The failure to extends benefits has already resulted in job loss. And it's pretty simple: people have less money in their pockets, so they can't afford to buy things. And so --
QUEST: You --
PEREZ: -- that's not who we are as a nation. We can do better.
QUEST: We see today, because Europe also had jobless numbers out, and you may not have seen them, but the euro area unemployment level remains elevated well over 11 percent. What are you doing right, do you think, that they're not?
PEREZ: You look at exports in the United States. The president set forth a very ambitious goal of doubling exports by the end of 2014. We're going to meet that goal. I talk to manufacturers all the time who say, "I want to bring business back home."
QUEST: Right.
PEREZ: The Boston consulting group did a study of this more systematically, and it showed that over 50 percent of employers who are doing business in China, they expect to bring some of that business home, for a number of reasons, starting with our human capital, our energy production. The cost of energy here in the United States gives us a global competitive edge.
And our intellectual property laws that protect businesses who are making things and inventing things. I think it really puts us at a competitive advantage.
(END VIDEOTAPE)
QUEST: That's the US labor secretary. But look at the numbers. The market certainly rallied when those numbers came out. And then those gains just evaporated. Alison Kosik's at they New York Stock Exchange today. Alison, simple question: why did the market go into reverse?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You saw those gains evaporate, the market went into reverse, Richard, because concerns about tensions in Ukraine. That really overshadowed all the good parts of the jobs report.
So, investors, they don't want to hold onto stocks this weekend. They don't know what's going to transpire with Ukraine over the weekend. So, it's really uncertainty that ruled the majority of the day. But even without the geopolitical concerns of Ukraine, there is some skepticism about the jobs report as well, Richard.
QUEST: Alison, have a good weekend. Thank you.
KOSIK: You, too.
QUEST: Alison Kosik at the Stock Exchange. Europe markets were more concerned about Ukraine, and they were mainly lower across the board. The crisis in the country worsens. Deutsche Telecom is at 1 percent. That was because Sprint is moving ahead with a bid for T-Mobile. AstraZeneca was flat. It rejected the second Pfizer bid.
Bruce Kasman is JPMorgan's chief economist, joins me now. Bruce, good to see you, sir. Thank you for joining us on a Friday. The discrepancy on jobs, now, between the US and Europe is so noticeable, one's begging to say what's one doing right and the other doing wrong?
BRUCE KASMAN, CHIEF ECONOMIST, JPMORGAN: Well, I think there are a lot of things, but if I can highlight a couple, I would highlight the way the European financial system has performed, the lack of progress in cleaning up the back problems, which is related to the sovereign crisis.
I think also we don't have an ECB policy response which is nearly as aggressive and committed to bringing unemployment down as what the Fed has done over the last few years. And I think that's a real concern going forward, with high unemployment and low inflation in the euro area, definitely posing a vulnerability of deflationary dynamics taking hold there.
QUEST: It's fascinating, isn't it? Because the -- they talk the talk, the ECB, but we're not seeing -- I mean, how many more meetings do we have to have when they say they're watching to see, but actually don't do anything?
KASMAN: Well, we don't think they're going to move next week, and I think June might be an interesting time. But I think, really, the issue is not whether they lower ten basis points on the refi rate, but whether they show us a commitment that they are going to try hard to get unemployment down and get inflation back over a reasonable time frame.
They're not signaling that to us now. I think that's hurting expectations, it's keeping the euro too strong, and it's limiting what is a decent recovery starting to take hold in the euro area. But as you're noting, with the high unemployment rate, clearly insufficient.
QUEST: When they say -- and euro leaders say the best way to get unemployment down is to focus on the ECB's mandate of price stability. It doesn't have a dual mandate. But by focusing on keeping inflation steady, long term, that does create jobs. You don't buy that?
KASMAN: Well, I don't have any problem with a central bank trying to achieve its goals. The ECB should be shooting for 2 percent inflation. Inflation is running 0.7 right now in the euro area, that's woefully too low. And they're not acting to offset it.
You need to have symmetry. When inflation is too low, act aggressively. Obviously, don't get inflation way above your target, either.
QUEST: And if we just pull the strands together, we've got a US economy that is powering ahead, a European economy that has potential to pick up steam. Which do you prefer?
KASMAN: Well, let's be careful here. We just had a GDP report this week which gave us the sum total of a one-tenth of one percent gain --
QUEST: Ah --
KASMAN: -- in US GDP in the first quarter. So, the job numbers are good. The question is, now strong is underlying growth? We think the US is growing at about a 3 percent pace right now. I like that.
What I also think is that even though Europe's got a serious problem of low inflation and high unemployment, it's going to grow at about a 2 percent pace this year. I think, actually, for investors, that's probably going to be a bigger surprise than the 3 percent number we expect in the US in the coming quarters.
QUEST: Brilliant to have you on the program, sir. Thank you so much for making time, and have a good weekend, thank you.
KASMAN: Thank you.
QUEST: Bruce Kasman from JPMorgan. Now, when we come back, Barack Obama and Angela Merkel, they have a message for President Putin: disrupt Ukraine's economic elections coming up and face severe sanctions. We'll have more in a moment.
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(COMMERCIAL BREAK)
QUEST: Russia will face new sanctions that target specific sectors of its economy if Moscow continues on its current course in Ukraine. It's a message from President Barack Obama and the German chancellor, Angela Merkel, who was at the White House today.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If, in fact, we see the disruptions and the destabilization continuing so severely that it impedes elections on May 25th, we will not have a choice but to move forward with additional, more severe sanctions.
(END VIDEO CLIP)
QUEST: The two leaders said the US and Germany are united in determination to penalize Russia for its actions. However, Angela Merkel faces a difficult balancing act. Some of Germany's biggest businesses have strongly opposed broader sanctions against Moscow.
The deadly violence erupted in eastern Ukraine again today. Ukrainian security forces launched an intensive effort to push out pro-Russian separatists. Moscow officials called the military offensive totally unacceptable. That had been reported on both sides.
Sweden's minister of foreign affairs, Carl Bildt, is now with me from Stockholm, joins me now, live. Minister, I do appreciate it. Thank you, sir, for joining us. Would -- that we are slowly the slippery slope towards armed conflict is now well and truly underway in Ukraine, sir.
CARL BILDT, SWEDISH FOREIGN MINISTER: Yes. What we see is a convenient Russian attempt to destabilize Ukraine in order to -- and I think that was indicated by President Obama, as you referred to -- to prevent Ukraine from having the democratic elections.
And if that policy continues from the Russian side, fueling sentiment, fueling fear, to a certain extent, fueling hatred inside Ukraine by the information warfare, then I think you will see both the United States and Europe continuing with increased sanctions of different sorts.
QUEST: Do you believe it's time now to -- I understand you don't want to, pardon the phrase, go nuclear with sanctions all the way. But it's time to ratchet them up in a more determined fashion?
BILDT: I think it's very important to send the signal that was sent today, that if Russia continues with this policy, we are prepared to continue to ratchet up sanctions. But I think you should take it step by step. You should give the opportunity, however theoretical that might be, for President Putin to start to deescalate.
And then, I think we have to recognize that the damage that is done by Mr. Putin himself to the Russian economy is far greater at the moment than anything that we can do with sanctions. Because these uncertainty, unpredictability that is now associated with doing business with Russia, is doing tremendous damage to the country, irrespective of what we are doing.
QUEST: The rail politic of this, though, is that at some point, the EU is going to -- and the US -- is going to have to do something big, something dramatic. There has to -- with the sanctions, there has to be an element of shock and awe.
BILDT: Yes, but I think what is going to happen is that that is going to come inside Russia for other reasons. Just mention one example: we see the ruble coming down quite substantially. That means that import prices are going to go up.
If you look at Russia, it's -- strange enough, it imports an awful amount of foodstuff. What you will see inflation going up quite severely in Russia for basic foodstuff. These things are going to start to hit the Russian economy.
It's not going to be a shock and awe, as you indicate, but it's going to be a very strong effect on the Russian economy. And one would hope that that would lead, over time, Russia to reorient -- reordering its priorities.
QUEST: Can the EU keep the countries together when you do have different views. Everybody expresses the view that they want a solution and sanctions, but you know, sir, well enough that individual business decisions might splinter that cohesion.
BILDT: I'd be surprised. We've had numbers -- I can't remember how many -- extraordinary meetings of the European Union foreign ministers, and we've had a couple extra meetings of all the heads of states and government of the European Union as well.
And for all of the media speculation that is always there about people going off in different directions and there being deep divisions, we've always come out of these meetings with a united and, in my opinion, fairly strong position.
You might argue that we've been united by the actions of Mr. Putin, because he has sort of -- he has over-performed from the worst point of view. And that has meant that those that have been taking a somewhat more lenient view in the beginning --
QUEST: Right.
BILDT: -- they have gradually come to change their minds.
QUEST: Minister, thank you for joining us, sir. Have a good weekend. Carl Bildt, the foreign minister joining us from Stockholm.
Also with me now tonight, Eurasia's Group president, Ian Bremmer, who thinks sanctions against Russia have been weak and ineffectual. He joins me now from Chicago. Did you hear anything from the minister that -- I don't -- I've known you long enough, Ian, that you're not suddenly going to change your mind in a second, but he has a point, the minister. Slow and gradual is the way.
IAN BREMMER, PRESIDENT, EURASIA GROUP: Oh, well, slow and gradual is all we can do. The Europeans made that clear. They've been united in being a few steps behind the United States every step of the way. So, I do think they've had these meetings, and you do see that their sanctions are announced at the same time as the Americans, but they're pretty weak.
And you saw that sanctions came out earlier this week, the Russian markets went up on them. Carl Bildt -- I have enormous respect for Carl, I consider him a friend. He's right that longterm, this will have significant impact on the Russian economy.
But that's not going to help the Ukrainian people, nor will it, as Obama says, change the calculus of President Putin in terms of what he's doing on the ground in Ukraine.
QUEST: Right --
BREMMER: The only question really is whether Ukraine is going to end up joining Russia, southeast Ukraine, the easy way or the hard way. And it increasingly looks like the hard way.
QUEST: So, if you were making the decision on what to do, would it be full-throttle sanctions at the highest level now?
BREMMER: No. No. Actually, what I'd be doing is a lot more -- a lot more carrot for Ukraine, the Ukrainian government, a lot less ineffectual stick against Russia, where we're probably going to lose the Europeans over time, and will push the Russians towards China and other countries that will be doing much more business with them.
We don't have international support. Today in Obama's statement with Merkel, he said that the entire international community is opposed to what the Russians are doing in Ukraine, they think it's illegal. That's just not true. The United States has been unable to get any of the BRICS to support one iota of American policy towards Russia.
QUEST: Right.
BREMMER: But the United States at the same time, we've provided $1 billion of loan guarantees to the Ukrainian government. That's it. We need to make sure as the Ukrainian government's legitimacy gets eroded by what the Russians are doing in southeast Ukraine, that they have the economic wherewithal and the diplomatic wherewithal to stay in power.
Right now, we haven't given enough for them to do that. So, we might not only lose southeast Ukraine, but we might lose the Ukrainian government.
QUEST: Ian Bremmer in Chicago. Good to see you, sir. Thank you very much.
When we come back, Jeremy Clarkson, a bit of a motormouth, is probably now wishing he'd put the brakes on his own mouth for the moment. We'll tell you what it was which has driven the "Top Gear" presenter to issue an apology.
(COMMERCIAL BREAK)
QUEST: In a week dominated by race scandals, the BBC has been forced to act over a row concerning its presenter Jeremy Clarkson. Clarkson has admitted using the N word several years ago whilst he was filming an episode of his "Top Gear" car program.
Now, he is heard uttering the offensive term while comparing two cars, and then he goes on to recite a nursery rhyme. The clip involved was never broadcast. In a tweet, Clarkson initially denied using the N word or the slur. Listen carefully, and you can hear him mumble it.
(BEGIN VIDEO CLIP)
JEREMY CLARKSON, HOST, "TOP GUN": Eeny meeny miney moe, catch a (mumbles) toe, when he squeals, let him go, eeny meeny miney moe.
(END VIDEO CLIP)
QUEST: Clarkson has now apologized and released this video asking for forgiveness.
(BEGIN VIDEO CLIP)
CLARKSON: Please be assured, I did everything in my power to not use that word. And, as I'm sitting here, begging your forgiveness for the fact that, obviously, my efforts weren't quite good enough.
(END VIDEO CLIP)
QUEST: Now, in its 21st season, "Top Gear" has been a wildly successful program for the national broadcaster the BBC. It is shown -- the program is shown in a 170 countries and, on average, gets a viewership every week of around 350 million people. An extraordinarily large number.
It's popular beyond the target demographic of motor heads and car junkies. And that paid off -- has paid off handsomely for the BBC, which is, of course, funded by a tax on televisions in the UK. It brings in roughly $300 million in revenues annually, and "Top Gear" is among its most profitable enterprises.
As for Clarkson himself, he has profited enormously from "Top Gear's" success. He takes home over $1.5 million from a presenter's salary, so he's said, and many millions more due to his stake in the commercial earnings, some believe up to $23 million from the program -- during the program.
Peter Herbert is the chair of the Society of Black Lawyers. He joins me now from CNN London. Good to see you, sir. Thank you for coming in on a Friday evening. Let's put it straight on the table: where do you stand? Should Clarkson go?
PETER HERBERT, CHAIR, SOCIETY OF BLACK LAWYERS: I think he should. But I think primarily there should be a proper investigation under the disciplinary procedure that the BBC has.
You can't in any employment situation, no matter how successful, no matter how lucrative the contracts are for the individual or the BBC, have that type of behavior go unpunished. And at the moment, it looks as if it is being tolerated, and that simply isn't good enough.
QUEST: So, let -- but there are a variety of punishments, from suspending him to fining him to -- there's all sorts of gradients of punishment before you get to the ultimate, we're going to fire you.
HERBERT: Well, that's right. But normally you would suspend somebody. And if -- don't let's beat about the bush -- if you use the N word, and this nursery rhyme, you know what's coming. You know as an adult that that's what it contains and that's where it's going to go, so it's not just the accidental use of a word. He knew exactly what he was doing.
And therefore, you have an investigation. You normally in the workplace suspend somebody. And if they're found guilty --
QUEST: But what if --
HERBERT: -- of that, that would amount to gross misconduct, and there they go.
QUEST: What are you suspending -- or what are you firing him for? An error --
(CROSSTALK)
HERBERT: Well, if you --
QUEST: -- of judgment?
HERBERT: Yes.
QUEST: An error of judgment? Clumsiness? Stupidity? Or -- what is it you're -- this is not Donald Sterling situation.
HERBERT: Well, it may not be, but it's not far off. You have, these days, somebody who has an international reputation, he speaks to people of color in many different countries around the world. And therefore, with that profitability comes responsibility.
And therefore, you know as well as I do, in many employment situations, as an employee of CNN, you go around using the N word, you have better have a very good explanation for doing it --
QUEST: Oh --
HERBERT: -- in order to retain your job.
QUEST: Right.
HERBERT: So, he is no different from that. And the BBC have a problem with taking on presenters, Jimmy Savile, et cetera. And Clarkson himself, it's not the first time he's caused serious offense to people who are viewing.
QUEST: Pulling the strands together, though, if you -- I mean, this was filmed some years ago. It was never released. If you accept that you have made an honest -- not an honest -- a mistake. A mistake in this regard. You're shaking your head even before I've asked the question, sir.
(LAUGHTER)
HERBERT: Well, I'm sorry. I've never heard a white person use the N word by mistake. I've never heard that nursery rhyme uttered by mistake. The mistake is he got caught, and that's his mistake, and that's why the apologies are coming thick and fast.
Because at first he knew exactly what he'd done, and he denied it. So, there should be an investigation. Yes, he should be suspended, and the BBC and certainly not the Secretary of State for Education, Michael Gove, should not seek to defend racism in any shape or form.
QUEST: Right.
HERBERT: It's just simply not good enough.
QUEST: Mr. Herbert, thank you, sir, for coming in on a Friday. Much appreciate your views on this. We'll talk more on this and other issues. Thank you very much. It's been a very busy week on, of course, that issue, whether it's been the Alves case, whether it's been Donald Sterling, now Jeremy Clarkson, all of which we've covered for you here on QUEST MEANS BUSINESS.
When we come back, Pfizer sweetened its bid for AstraZeneca. Some people think the deal is bad for the Brits. Why?
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(COMMERCIAL BREAK)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment. This is CNN and on this network the news always comes first. Let me tell you - several hundred people are feared dead after a series of landslides in a remote part of Afghanistan. Around 300 homes have been hit by the landslide at around noon according to the governor of the Argo region. Another landslide then trapped hundreds of more people who had come to help the survivors. There's been a sharp rise in the number of casualties in Ukraine. They say 31 people have now been killed in Odessa in a fire to trade union building. It's unclear how the fire began, and there are clashes between pro-Kiev and pro-Moscow protesters have been taking place there.
President Barack Obama and Chancellor Angela Merkel say they are ready to impose new sanctions against Russia if Moscow tries to interfere with Ukraine's elections later this month. Speaking to me a few moments ago on this program, the Swedish foreign minister said Russian president Vladimir Putin must be given the opportunity to deescalate the situation.
A judge in Northern Ireland has granted police commissioner to extend the detention Gerry Adams. The Sinn Fein leader is being questioned over a murder case from 1972. Mr. Adams denies any involvement in the death of Jean McConville.
The unemployment rate in the United States has fallen to 6.3 percent, the lowest level since September 2008. Speaking to me on "Quest Means Business," U.S. labor secretary said more can still be done to help the long-term unemployed. The jobless rate in the Eurozone is still close to its all-time high. It stands at 11.8 percent.
AstraZeneca has rejected the U.S. drug maker Pfizer's latest takeover bid saying that Pfizer's increased proposal worth $108 billion is inadequate and substantially undervalues AstraZeneca - it's certainly a lot of money - but do you know what would have been historic? The largest foreign takeover of a British company raised concerns over the impact it might have had on the U.K. science and medical industries. In a detailed letter to the British prime minister David Cameron, Pfizer's chief exec Ian Read offered this pledge. "The industrial logic for a combination between Pfizer and Zeneca (ph) is compelling. We would therefore like to assure the government of our long-term commitment to the U.K. U.K.'s former deputy prime minister Michael Heseltine says the British government should do more to defend the country's interests when it comes to these foreign takeovers. Jim Boulden spoke to Lord Heseltine. Jim joins me now. We'll hear from Lord Heseltine in a second. Why is Pfizer writing to the British prime minister -
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: (LAUGHTER).
QUEST: -- when it's the shareholders of AstraZeneca --
BOULDEN: Yes.
QUEST: -- who will make any decisions, not number ten?
BOULDEN: There's been a lot of people very worried in the U.K. this week, Richard, and of course the interesting thing is the British government can't do anything about this deal. If the shareholders of AstraZeneca say go ahead and take the Pfizer deal, they can do that because Britain doesn't have any input in the takeovers. They love to say here they're open for business even more than they are in the U.S., certainly much more than they are in France. They don't like to interfere in these things. And that's what I was talking to Michael Heseltine with is even though he's from the conservative side of the political spectrum, he says, 'Wait a minute - this is a really important company. Maybe we should have some mechanism that allows the government, allows the authorities in this country to say to someone like Pfizer - what are you going to do with our companies?' Take a listen.
(BEGIN VIDEOCLIP)
MICHAEL HESELTINE, FORMER BRITISH DEPUTY MINISTER: Well as you know, there's a very simple answer. I'd just like Britain to be like everybody else within the country that has no formal mechanism to scrutinize takeover bids. Now, I've got a long track record of being involved in takeovers and working in takeovers. I've got no doctrinal hook ups about it, but I just know that every advanced economy in one way or another looks at takeover bids as a national interest involved and they should just ask some basic questions about a technology transfer, better employment, better investment in the future, where the strategy of the company will change. All the obvious things that shareholders in a private company would ask. But of course the shareholders in these big companies are a very different sort of person to the traditional 18th/19th century family-owned business.
BOULDEN: When in fact many of the shareholders won't even be British, will they?
HESELTINE: I did look at this at the time when another takeover - now the figures may have changed. But of the 100 largest institution investors in this country, I think that under a quarter were British-managed or British institutions.
BOULDEN: Is there something specific about AstraZeneca that concerns you as far as being a strategic company and an important company inside this country? The research and development and its connections with universities.
HESELTINE: In this particular case, the generalizations would obviously focus on investment intentions. I think there's a big plan in Cambridge which it'll be nice to know what the intention would be. There is the whole issue about the headquarters which emerged in the recent context, there's the employment issues that we saw sites are closed down quite a big installation in Kenton not that long ago. I know they have to do these things. This is not for criticism, it's an observation. What I welcome is that the prime minister has appointed two very distinguished officials - one from the treasury and one from the cabinet office - to inform him and to make discussions possible with the management of Pfizer so that never knows what the future holds, where it all goes. Now, that's a very interesting innovation and I'm of course delighted to see the prime minister do it.
BOULDEN: Are you asking for a change in legislation or just some framework that allows discussion with government in these companies?
HESELTINE: My interest, as you would fully understand, is the interest of Britain. So if someone's going to buy a hugely-important , strategically important - technologically important/scientifically important British company - I think there's a set of questions that Britain's entitled to ask.
(END VIDEOCLIP)
BOULDEN: Now part of those questions is what does Pfizer expect to do with AstraZeneca and then that letter to the prime minister - Pfizer says they would keep 20 percent at least of the research and development here in the U.K. for the next five years. But, Richard, we've learned in the past that promises from CEOs and takeovers don't always pan out because things change -
QUEST: Right.
BOULDEN: -- so there is really no way that you could have Pfizer CEO Read say promise things to the U.K. government. But then again the U.K. government can't do anything to stop this. It's a very interesting dilemma here --
QUEST: Right.
BOULDEN: -- this week I have to say.
QUEST: What's fascinating - you're too young to remember, Jim Boulden - listening to Michel Heseltine talking about foreign takeovers, you left the cabinet in 1985, 19 years ago, exactly over the issue of a foreign takeover of Westland Helicopters which of course was a long time ago.
BOULDEN: Yes. And he said, look, I don't have anything against takeovers, it's just the fact that you should have some say. Some even though he's from the, you know, the right side of the political spectrum as I said earlier, he really would like to see this government having more say - not legislation change but more say in where these -
QUEST: Right.
BOULDEN: -- these companies go, especially one with - pharmaceuticals. People may not realize but when you have GSK here, and AstraZeneca is a really, really big part of the economy here. They export a lot of the pharmaceuticals from this country. You know, even Pfizer used to make drugs here. They closed down one of their plants, so it is an important and they want to make sure that can stay in this country.
QUEST: Jim Boulden, thank you, sir. Have a good weekend. Now some breaking news that I must bring to your attention immediately. There's been a loud explosion heard in central Cairo. Egypt's semi-official news agency has potsed the following banner. "Urgent loud explosion heard near Aquederbes (ph) Metro Station in Ramses area." We will have more details when we can get them. Thank you.
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QUEST: It is Friday and time for some romance. Rupert Murdoch has swept the publisher Harlequin into the strong, manly arms of News Corporation. Oh, I tell you, strong stuff. It's forcefully thrusting more than $400 million in cash into the hands of Torstar Corporation -- we need some romantic music - the Canadian newspaper company. Harlequin apparently is perfectly fixed for News Corp. said its rather flushed chief exec Robert Thompson. He added it would provide an immediately lift to earnings. Now if you then take some of Harlequin's newest titles that they've now got in News Corp., it seems to have a spooky connection to current affairs. Join me over here in the boudoir. Let's take "The Tycoon's Lady." It features a hero named Paul Sterling. Reminded us of Don Sterling and that conversation with his lady friend which got him into so much trouble - Sterling. Then you've got the book - their latest one - is called "The Heartbreaker Prince," a tale of royalty, romance and international relations. Oh, that might be a good holiday reading for a newly-single Prince Harry who was just in Miami and broken up with his long-term girlfriend.
And how about this little bodice-ripper - "Destiny's Last Bachelor?" a love story featuring Hollywood star rough and tumble ready likely lance (ph). And that indeed to "Destiny's Last Bachelor?" - bearing in mind of course he is now a bachelor himself, might've embarked to cause Rupert Murdoch - maybe showing his age in that one - to embark on his own new relationship with Harlequin. Maybe not the most flattering picture that we've ever seen of Mr. Murdoch. His many charms include selling four books per second. Four books a second. It publishes 110 titles a month and - a 110! Who reads 110 titles a month? And more than one-third of American women have read a Harlequin book at some point in their lives. Joining me now is the Harlequin author, Nancy Robards Thompson. Her latest novel, "Falling for Fortune" hits the stands today. A 110 books a month! You've got some competition out there.
NANCY ROBARDS THOMPSON, AUTHOR, "FALLING FOR FORTUNE": Oh, it's all good. And believe it or not, I - you might meet some people who do come close to reading 110 books per month.
QUEST: So tell me, what makes a good romantic novel? Give me an idea. I mean, you can't be smutty but you must be risque. So what makes a good romantic novel?
THOMPSON: Well, there's two central components of a romance novel, and one is the central love story. I mean, who doesn't love to fall in love? That's what it's all about. And then the other part is a happy ending. You're always guaranteed a happy ending when you read a romance novel.
QUEST: Right, but putting that into the context of these books, do people still prefer to read them online? Do you think there's a difference with a romantic novel if you read it on a Kindle or if you have the crinkle of the page?
THOMPSON: Well, I would say that the e-book is inevitable but there are also people who are - I think avid readers love the feel of an actual book - you know, a traditional book - in their hands. So I don't know that the traditional book is going away anytime soon.
QUEST: Right, now, I believe in celebration of 110 books and the fact of Harlequin now being sold to News Corp. We've got our own version. You're going to give us a little bit of - a little bit of a taste of how "Quest Means Business" might be in a romantic novel.
THOMPSON: I do, and this is written especially for you, Richard.
QUEST: Oh -
THOMPSON: If there was one thing Richard Quest loves, it was a challenge. His breath quickened as he thought about the heights and ecstasies to which this duty had taken him. He'd never experienced anything like this feeling until now. His entire body tingled with awareness. Driven by an insatiable sense of longing, he leaned in and offered a seductive smile as the camera began to roll.
QUEST: (BLOWS KISS). Thank you very much for joining us this evening. Jenny Harrison is at the World Weather Center and joins us now. Ms. Harrison. Were you tingling ?
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: (LAUGHTER).
QUEST: Were you tingling? Were you feeling the emotion of the moment?
HARRISON: Oh, Richard. I've got all hot - I'm all overcome, I don't know what to do with myself. I was going to come out and talk about the weather by my goodness. Who - yes you are, you're the leading character now in the next (here) in a book, aren't you?
QUEST: What are you fiddling with? You're so over --
HARRISON: It's me necklace - I'm trying to cool myself off. Look, it's just - oh - I'm all overcome.
QUEST: Come over all emotional.
HARRISON: You're tingling all over. And this about the weather - very nice weather for actually getting out there having a bit of romance this weekend. I'm going to start you off in Europe. There's still more rain of course in the forecast, it wouldn't be Europe without it. But we've got another system across Central Med, another one heading towards the northwest. But it has been nice and warm again, and I hope you've been enjoying this warm weather because this is about to change. Twenty-three in Bucharest this Friday -- the average is 21, so just a little bit above, 22 in Budapest. You'll notice there's several (inaudible) - well you'll notice Prague is spelled here incorrectly, so apologies for that, but also you will notice Berlin is no longer on the list, and that's because it's already cooled off in Berlin. That cold air coming down from the north, mostly fine and dry, but the rain is across the south and the southeast. But look at what happened to the temperatures over the next few days. Certainly we can see here this cold air is coming down from the north, and of course taking temperatures actually a little bit below the average. So if you're in Berlin, for example, where it's been well above for the last several weeks, it will feel a little bit chilly it has to be said. Getting down to just ten Celsius this Friday, and staying at that sort of level over the next few days. And you can see similar story in Rome although not as bad, and also London down to13 this Friday. So, that is why Berlin is no longer on that heat table.
More rain, as I say, for the forecast over the weekend, splitting slowly across into the southeast and that new system coming into the northwest. And you will notice as well across northern areas through (inaudible), one or two snow flurries in the mix as well. Temperatures elsewhere - 23 in Madrid, so nice and warm there and 21 Celsius in Athens this Saturday.
Now across the United States, thankfully, finally the really heavy rain, those tornados, the storms - it really is all clearing out of the way. Still quite a bit of rain across so much of Florida, but even one or two showers through the Carolinas and of course one or two showers well further to the north, but overall not a bad day at all. And then you can see here for the Kentucky Derby which is taking place this Saturday, mostly sunny skies, very light winds, maybe a bit blustery, and a very nice temperature of 23 degrees Celsius and I believe, Richard, the winner of this race at 6:24 p.m. picking up well over a million dollars, so it should be a good day, (inaudible).
QUEST: I went once to the Kentucky Derby 20 years ago. I think I've still got the scars. Right, Jenny Harrison who's quite come over all unnecessary.
HARRISON: I can sit down now. I'm going to have to sit down and have a cup of tea.
QUEST: A cup of tea and a barn (ph) cake. Jenny Harrison, many thanks. When we come back, we will continue the romance theme on "Quest Means Business." We've already had the bodice-ripper, not what online dating can teach you about economics, in a moment.
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QUEST: Join me in the library. Well, we've had romance and we've had economics in the course of the program and many of us journalists and economists alike have spent much of the day deciphering the U.S. jobs numbers you heard at that beginning of the program. An economist at Stanford University finds clues about the economy from a very different source. And this is his book. Paul Oyer wrote "Everything I Needed to Know about Economics I Learned from Online Dating. So, for example, some lessons - first, cheap talk. Oyer says in some situations "You have almost no choice but to lie or exaggerate when you're doing online dating because given that other people lie and exaggerate, people are going to discount what you say." In other words, everybody's up to it, so I asked him to explain.
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PAUL OYER, ECONOMIST AND AUTHOR: When I know that a lot of other people on the dating site are lying about their height, their income and what not, I have to then consider my strategic behavior. Do I tell the truth and then everybody assumes that I'm really shorter than I say or make less money, or do I go in on the same equilibrium and go ahead and lie. And people have different costs to themselves of lying, and that's part of what plays out there.
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QUEST: Next, as we put economics with online date together, what he calls the search theory. "When picking a life partner," he says, "I don't get to pick the best one available. I get to pick the best one available who picks me back." Shrewd difference. Paul Oyer explains it's all about settling for something.
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OYER: So you're constantly deciding at each stage of the dating process do I want to keep investing in this particular good, if you will, I mean that's a terrible term - this relationship - or do I want to try to go down a different path? And you know in the early stage it is just do I want to spend more time looking at more profiles or do I want to settle for the person I've had a couple of dates with and then later on it - well, this relationship's going well but could I be doing better or could I not? So, it's very similar to many economic contexts - buying a house. I think though the most clear place where the idea of settling or what we economists refer to a search theory applies where the online dating example is almost exactly parallel to the job market. Where firms and workers are constantly assessing 'Is this job good enough or should I be trying to move on?' And the firm is trying to say 'Is this person good enough or do I - should I - go through the trouble of interviewing ten more people to see if I can do better?'
QUEST: Finally you have the principle of adverse selection. And here he says, "There are some markets where only owners and producers of low- quality goods have an incentive to sell. Those with high-quality goods stay out of the market." In other words, if you've got it, you don't go and flaunt it. I put it to him. This was brutal.
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OYER: We like to think of ourselves more as realists. And, yes, there is a certain side of adverse selection which says, 'Wow, if I go in - I have to be really careful in this market because I know my own issues and so forth, and there's a downside to worrying about that.' Luckily, I think that's less true in the online dating market than it was about ten years ago when the market was new and it was attracting people who didn't have - who couldn't find people the old fashioned way. I think now we're past that stigma.
QUEST: Finally, did it work?
OYER: It did -
QUEST: Did you find someone?
OYER: -- it did. I have a great relationship. My girlfriend is, and the beauty of it is we show - our relationship shows - just how important economics is in this. She works 100 yards away from me at Stanford, but we met on a dating site, and we've now been going out. We just had our second anniversary and things are going very well. And the reason I say it proves sort of the economics works that I like to say in the book you have to go to where the market is thick, where the market is big. And even though we past each other on the street and so forth and we had friends in common, we didn't get to know each other until we went to the market for what we were trying to do. And we met each other online and it's been a - we've been very happy since.
QUEST: "Profitable Moment" next.
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QUEST: Tonight's "Profitable Moment." I was tempted to leave you with a couple of thoughts about online dating and who knows where that would've ended up. And then I thought maybe the Harlequin sale to News Corp., the prospect of a good bodice-ripper and why we still love to read these romantic novels. Well, let's face it, when all is said and done, as she admitted - we know how the ending. It's really just how much pain, misery, misfortune everybody wants to get to before you do have a happy ending. Nobody likes a sad ending. Well, that of course brings us on beautifully to the question of economics and online dating and the very job markets that we've got at the moment. We talk about not wanting a happy or an unhappy ending. The U.S. is heading for a happy ending on the jobs front. The same cannot be said in Europe where frankly things are looking rather unpleasant. It might be time to go back to the bodice-ripper. And that's "Quest Means Business" for this Friday. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you again on Monday.
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