Return to Transcripts main page

Quest Means Business

Dow Soars on GOP Win in US; Obama to Face Republican Congress

Aired November 05, 2014 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

NINA DOS SANTOS, HOST: Good evening, I'm Nina Dos Santos, live from CNN London, and you're watching QUEST MEANS BUSINESS.

Tonight, Wall Street is celebrating a new Republican Congress in Washington. The GOP wins -- win in Washington marks a major shift in the

US government's balance of power, and as you can see, what we've seen is the business community very much cheering this new event, the Dow Jones

Industrial Average soaring to an all-time high on Wednesday.

And as you can see by the close of trade, we can already see that that market is up six-tenths of one percent, hitting another high. I should

also point out that the S&P 500 also closed at a new record for itself as well. Even some disappointing manufacturing data from ISM Index wasn't

enough to take the shine off of that victory for the Republican Party in Washington.

Let's see what it means for the business community. Alison Kosik joins us now, live at CNN New York. So, Alison, everybody's expecting this

to be good for business. Is it?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, that really remains to be seen. The way investors see it, Nina, is President Obama is not good

for business. So, with the Republicans taking the balance of power in the Senate and picking up more seats in the US House of Representatives, the

thinking is that we could see more laws pass in favor of business.

What kinds of laws? Maybe overhauling the corporate tax code. Maybe deciding on the Keystone Pipeline. These are controversial measures,

though, and nobody really believes that they definitely will pass, there's no guarantee. But the hope is greater than what it was, let's say, two

days ago.

One trader put it to me this way, saying the power of Washington DC is out of gridlock and into the checks-and-balances scenario of the presidency

and Congress, and that's an economic positive. So today, what you saw once the opening bell rang were the bulls charging out on that economic positive

of hope that pro-business policies could pass Congress. Nina?

DOS SANTOS: All right, Alison Kosik, thanks so much for that, there, running us through the trading today after, of course, those results came

through.

Well, Barack Obama says that he hears the frustration of voters who handed the Republicans control of the Senate. The president says that he's

ready to hear new ideas no matter which side they come from.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If there are ideas that the Republicans have that I have confidence will make things better for

ordinary Americans, the fact that a Republican is suggesting it as opposed to a Democrat, that'll be irrelevant to me. I want to just see what works.

(END VIDEO CLIP)

DOS SANTOS: Well, President Barack Obama will have to work with a Congress where both sides of the House are controlled by his political

rivals for the next two years to come. CNN's political analyst John Avlon joins us now, live, with his take on how things have panned out.

So, John, as I was just saying before, the business community very much cheering this news to the Republican Party, but let's face it, this is

also an indictment of President Barack Obama rather than a big win for the Republicans.

JOHN AVLON, CNN POLITICAL ANALYST: Well, I think it's a bit of both. Exit polls showed that there was, yes, anger at the president. But

actually, there was even more frustration with Congress. And a low turnout midterm election, voters turn dramatically, in some cases, in the last

minute, to the Republican Party. So, it's a very convincing win.

It's a different kind of election turnout than you see typically in a presidential campaign. But it offers Washington at least a chance for a

reset, for the president's last years of his administration for legacy, and for Republicans to show that they can govern by finding a way to define

some policy common ground and working together.

And I've got to say, the idea that markets are cheering the Republican takeover for Congress makes sense, but the idea that President Obama is bad

for business is absurd. Corporate profits and Wall Street are at all-time highs under this president, even if some of those Wall Street executives

like to call him a socialist.

DOS SANTOS: That's true. And there's also concerns here that having a lame duck administration or a lame suck president for the final two years

of this term isn't necessarily going to be great business for American internationally, is it?

AVLON: Well, no. Traditionally, a great deal has been gotten done with divided government. Historically since the second World War, we've

seen great accomplishments. Where really things have broken down is with this president and the Tea Party-led Republican Congress.

But Mitch McConnell set a very sober tone, talking about opening the Senate, reforming some of the rules, trying to find areas of common ground,

and I think the president tried to moderate his remarks as well. I think they're going to proceed with a degree of good faith.

But there's sort of that trust-but-verify rule. When Republicans are saying they're going to end gridlock, the president has his own incentives

to try to find areas to work, it may be limited to trade, tax simplification, infrastructure investment, comparatively modest items. But

they're important.

But the kind of grand bargains that were achieved in the past with divided government over US history, from the Marshall Plan on down, those

seem probably a bit too much to hope for, even at a time when we'll choose hope over recent experience.

What's this going to mean, John, internationally speaking? Because often in times like this, what we've seen is presidents undertaking big

foreign policy initiatives.

AVLON: Sure. Well, the old adage that partisanship ought to stop at the water's edge applies to foreign policy, and it's largely a domain of

the president. And the president's actions with regards to, say, confronting ISIS, are things that may be done too little too late, to the

eyes of many folks on the Republican side of the aisle and the Foreign Affairs Committee, but there's some overlap.

What really is interesting about the current state of American foreign policy debate is you've got sort of a non-interventionist crowd on both the

far right and the far left that's very skeptical of American engagement in the world after a decade of war.

But the president of the United States, in the way that the office changes the man more than the man changes its office, this president really

has come to recognize the necessity of engaging ISIS, of trying a strategy that at the very least containment, but with military strikes. And that

terrorism is a clear and present danger, not just to the United States, but to global stability.

So, that's an area where there could be bipartisan agreement, at least among leadership, establishment Republicans and this president.

DOS SANTOS: All right, John Avlon, thanks so much for that, there, joining us live, there, the --

AVLON: Thank you.

DOS SANTOS: -- editor in chief of "The Daily Beast" and also CNN's political analyst, too.

Now, tracking Ebola via text, how IBM and the government of Sierra Leone are following the spread of the virus. Do stay with us. QUEST MEANS

BUSINESS will be back after this.

(COMMERCIAL BREAK)

DOS SANTOS: Welcome back, I'm Nina dos Santos. This is CNN, and on this network, the news always comes first.

In his first press conference since U.S. midterm elections wrapped, Obama says that he hears the frustration of voters who handed control of

the Senate to Republicans. The President says he's ready to listen to ideas from anyone in Congress regardless of their party affiliation.

U.S. stock markets hit all-time highs in reaction to those elections. The Dow and the S&P 500 each closed at new record highs. Energy stocks

were among some of the biggest gainers as investors looked at (ph) the new economic policies coming from the Republicans in Congress.

Clashes between Israeli security forces and protestors have been reported in East Jerusalem. All of this comes after a member of Hamas went

on a deadly rampage in a van early on Wednesday. Well that attack killed one police officer and injured 13 others.

And Burkina Faso, the head of the former President's party has been arrested. Security forces say that Assimi Kouanda who leads the Congress

for Democracy and Progress party was arrested after calling for demonstrations. Well that follows the resignation of the president, Blaise

Compaore after last week's violent protests

The Spanish nurse who contracted Ebola has been released from hospital. Teresa Romero Ramos describes her recovery as a miracle and gave

thanks to the hospital staff who cared for her. Ramos was the first person to catch Ebola outside of West Africa during this outbreak.

IBM has joined the fifth against the disease right at the epicenter of the Ebola outbreak. The company is working with Sierra Leone's government

to try and track text messages and cell phone calls. The data illustrates where the disease is spreading and where resources are needed most. Bernie

Meyerson is the chief innovation officer at IBM and he joins us now live from New York. Thank you very much for coming on the show, Bernie

Meyerson. So, explain to me why IBM has decided to get involved with this initiative.

BERNIE MEYERSON, CHIEF INNOVATION OFFICER, IBM: First of all, we've had a presence in Africa for over 70 years. We have a lab with tremendous

facilities in Nairobi, Kenya. And we believe, frankly, that information technology is vital here because essentially you've got to be faster than

the disease to eliminate it. So, by doing this work that we've done jointly with the government, where, for instance, if you call up and you

identify a problem area, that's actually logged by trained operators and passed back as data to our labs. Similarly, if you send a text message,

it's actually anonymized and that's passed back to our lab through the carriers Airtel and a company called EquiMobile (ph) who anonymizes the

data. We then take it and produce the map that you just showed earlier, where to focus your resources because focusing the limited resources you

have is absolutely vital to enabling the health care workers who are incredibly brave and stretched to the max to really put the effort where

it's needed most and be most efficient.

DOS SANTOS: Where is this helping the most the most? Is it in the fact that obviously there aren't enough ambulances to get perhaps to some

of the stricken victims of Ebola or is it also just a question of tracking the epidemiology of this particular disease?

MEYERSON: Actually it's all the above. It's of course incredibly critical we prioritize, so if you have people who've died -- and the bodies

are incredibly contagious, they must be removed immediately - and this helps with that. But similarly, if you have an area where they've run out

of Clorox to literally sterilize areas which are highly infectious, that's equally important. So we really worked across the board, and it's vital

that all that information get to the government and the associated health care workers immediately because that's how you beat this disease. It's

been beaten many times in the past. The challenge now is society is much more mobile and very, very fast-moving. And frankly, we have to be faster

than it is.

DOS SANTOS: Now, correct me if I'm wrong. It does sound slightly interesting to hear a technology company making a difference over there,

when of course we've got so many commodity companies that actually have their own staff out there in countries like Sierra Leone in other West

African countries in the mining industry, also in the agricultural industry - you name it - why is IBM - why is it up to the technology companies to

make a difference here?

MEYERSON: I can't speak for the actions of others, but the bottom line is, we've been involved in this sort of undertaking many, many times

before. We've actually even set up labs to look at the changes that occurred - the mutations of virus - and how we might address them

proactively. I mean, this is nothing new for us. We've been in many, many areas working with just the distribution of malarial - anti-malarial -

drugs. So, it's a tradition with us and it's a responsibility that we've carried out for decades now. And, as I said, I really wouldn't even, you

know, want to guess as to anybody else's actions or inactions. Frankly, I wouldn't know.

DOS SANTOS: Well we wish you the best of luck with this initiative. Thank you very much for coming on the show there.

MEYERSON: My pleasure.

DOS SANTOS: The chief innovation officer of IBM, Bernie Meyerson joining us on "Quest Means Business" today. Now, a free trip around the

world from Toronto to India and back again. Well, that could be use if you meet a very specific set of qualifications. We'll explain with "Quest

Means Business" returns after this.

(COMMERCIAL BREAK)

DOS SANTOS: So for today's "Business Traveller" update. A man in Toronto is offering Canadians a free, around-the-world trip, but there is

just one catch. Your name has to be this - Elizabeth Gallagher. To use his words, Jordan Axani booked, quote, "a fairly wicked trip" earlier this

year with his then-girlfriend, but since then their relationship has expired. Those airline tickets, of course have not. He's been unable to

change them out of his ex-girlfriend's name, so he's decided to go on the search for another Elizabeth Gallagher to take the tickets free of charge.

Here to help us understand why it's just so difficult to change the name on an airline ticket - also pretty expensive. Paul Charles, the former

communications director at Virgin Atlanta. He's in our London studio this evening. Thank you very much for coming on the show. Now, I think all of

us watching this have probably encountered the kind of scenario where there's been a typo, when you've been filing in (ph) your ticket request,

you pay for the ticket and you just roll your eyes because it's going to cost so much money to change the name. Why?

PAUL CHARLES, FOUNDER AND CEO, PEROWNE CHARLES COMMUNICATIONS: It's one of those very nervous moments, isn't it when you book a ticket and you

press the button that you're booking online or you talk to an operator over the phone, and you just get the wrong name or there's a typo or something

like that. But airlines have to put in place a certain fee to act as a deterrent. What they're doing is they're forcing you to really think

through before you click that button or before you agree to the ticket that you've chose the right name as on your passport. And they have to be

exactly as on your passport. And if you don't do that, that's why they say, well I'm sorry but within a 24-hour period, you may be able to cool

off as it's called - the 24-hour cooling-off period, but we will have to charge you after that if you make any changes to the booking.

DOS SANTOS: It's very rare though to hear airlines admit that it's a fee is a deterrent because the average customer is propped up with all sort

of excuses about administration costs. And if can take us one second on a computer to change the spelling of somebody's name, or indeed de-name (ph),

why does it incur such huge administration costs?

CHARLES: Well, there are some eight million people who fly around the world every single day. So you can imagine if only an eighth of that

number made a mistake in their booking name, imagine the administration chaos the airlines would face in having to change those ticket types.

There is a major reason that's not administrative why they charge a fee, which is for fraud reasons. So what in fact they're saying is we're going

to have to charge a fee because we don't want you to pass it on to somebody else. So, Elizabeth Gallagher, if there is another one out there, I

wouldn't suggest you come forward because the airlines will find out and will not let that ticket be valid.

DOS SANTOS: Now that's an interesting aspect. So it does actually have to be the same person - it's not just a question of what's in a name.

But it's very interesting what this man is doing. He's trying to highlight an issue that so many customers of these airlines would like to see

resolved. So where can airlines meet people halfway to try and reduce the costs?

CHARLES: Well I think airlines generally will in the first 24 hours - sometimes it's 48 hours - they'll say there is this cooling-off period. We

are prepared to change it, but they won't change a name very easily. They might change a few letters. So if you've only given them three letters in

your name and it should be five letters, generally they'll allow you to change two or three letters (inaudible). If it's a different person, they

won't let you change at all. And so the fee won't even come into it - you'll have lost that ticket after that cooling-off period and they will

indeed say I'm sorry you're going to have to buy a new ticket. So they'll make even more money out of it.

DOS SANTOS: Ouch. Paul Charles, thank you very much for coming on the show to explain that there. And any Elizabeth Gallaghers out there,

well, according to Paul, you've been warned. Now, numbers coming in to CNN here - Tesla has been reporting that it took in took around about $932

million in the third quarter of the year according to these figures that are just being released. That's up around about 55 percent over the course

of the same period last year. Profits were much better than we expected here. They were helped in particular by record deliveries of its Model S

car which you're seeing over there I believe.

Now, a trip to the kitchen. The ECB's kitchen, that is for (inaudible) taste test after the break. As active interest rate cuts of

food for its promises to buy government bonds, let the mixture sit for a while - well the big question we have this evening is will the finished

dish actually taste as good as promised? We'll have a look after the break.

(COMMERCIAL BREAK)

DOS SANTOS: Hello, welcome back to the show. Well the Council of the ECB is sitting down for dinner ahead of its policy meeting on Thursday, and

there could be some uncomfortable, unpalatable parts of the meal time conversation to consider. According to the Reuters News Agency, Mario

Draghi colleagues are said to be unhappy with his management style, and what's more, that they plan on confronting him about it. For the ECB, this

could be a recipe for disaster. So we went inside the ECB's economic kitchen to take a look at what might be cooking.

(BEGIN VIDEOCLIP)

DOS SANTOS: Three years since taking the helm at the ECB, and two years since vowing to save the single currency.

(BEGIN CLIP)

MARIO DRAGHI, ECB PRESIDENT: The ECB is ready to do whatever it takes to preserve the euro.

(END CLIP)

DOS SANTOS: Mario Draghi is still struggling with his economic cookbook. The E.U. has once more cut its outlook for growth in the

Eurozone to just under 1 percent while unemployment remains stuck at 11.5 percent. And in the meantime, the proliferation of jargon is on the rice.

(BEGIN CLIP)

DRAGHI: The rate on the deposit facility was lowered by ten business points. The governing council decided to start purchasing no financial

private sector assets. We underline assets consisting of claims against the Euro area non-financial private sector.

(END CLIP)

DOS SANTOS: So let's have a look at Mario Draghi's recipe for economic recovery. Well first, take aside the members of the Eurozone that

are being bailed out and separate them from those that haven't. Next, promise to shore up those countries that are struggling with a hefty dose

of something called OMTs. These are Outright Monetary Transactions and Mario Draghi promised them back in 2012. Left to cool in the fridge for a

couple of years, mixed in some hefty general resistance (ph) and concerns about the effects of bond-buying on future inflation. If the policy

refuses to set, add in some LTROs or Long-Term Refinancing Operations to the mix. PLTROs should be added on targeted long-term refinancing

operations.

Don't forget the so-called MROs or Main Refinancing Operations to address any specific holds in the liquidity provisions and then add in a

few interest rate decisions, bringing the cost of (inaudible) the Eurozone record low levels. Recently the ECB tried to win over investors with

promises to by ABS, or Asset-Backed Securities. But some were left dissatisfied, complaining that the portion size wasn't enough.

So, to boost the economy, the ECB has very few options left in its rather bare cupboards. One of them is the LSAP or Large-Scale Asset

Purchase program. This is what the rest of the world already calls quantitative easing or QE. But it may come too little too late to please

the fussiest of traders. To complicate matters further, just as that dish may be ready to serve in Europe, it's just being taken off the menu in the

United States by the Fed.

(END VIDEOCLIP)

DOS SANTOS: Pretty unpalatable stuff there. Well, let's talk about Europe, in particular Greece because its finance minister says that the

country's economic policies will no longer be micromanaged by the International Monetary Fund as the country looks to get out of its bailout

early. The Greek government is hoping for an end to the austerity measures that had been imposed as part of the bailout the past four years. What the

Finance Minister Gikas Hardouvelis says that everyone should be happy.

(BEGIN VIDEOCLIP)

GIKAS HARDOUVELIS, GREEK FINANCE MINISTER: There will be - no longer be - micromanagement of the Greek economy and of the reform process that we

know during the last four years. We will have some benchmarks to accomplish. We want them, they will be consistent with our own growth

model and it's going to be a relationship that can only help. It's going to be a win-win situation I believe.

(END VIDEOCLIP)

DOS SANTOS: Well that is the finance minister of Greece. Now we can talk to Yiannis Maniatis who is Greece's energy minister. He joins us now

live from CNN in New York. Thank you so much for coming on the show, Minister Maniatis. First of all, we will get into the energy policy

issue, but just as a representative of the Greek government, will you explain exactly how it'll help Greece's reputation to try and shy away from

anymore IMF micromanagement, if you like, and to say that Greece is able now to stand economically-speaking on its own two feet without being

lectured by Washington.

YIANNIS MANIATIS, GREEK MINISTER OF ENERGY: Well I think that Greece has passed in a new state now - we have turned the corner. It's the first

time. In 2014 Greece will have positive development rates. And after so many years of sacrifice and austerity, we can pass to the next state. I

think that according to what the minister of finance and our prime minister and deputy prime minister have decided that Greece is ready to pass to the

next step in order to see the capital markets, to support the whole endeavor of our country.

DOS SANTOS: Do you think financially speaking, Greece's reputation has been completely recovered now? Do you think that it'll withstand the

withering pressures of not having support from the IMF going forward? And indeed, perhaps even a slightly more tense relationship with the IMF if

Greece says it doesn't want to be micromanaged?

MANIATIS: I think that the whole discussion, the whole debate among all parties and between the Greek government and our partners, there are -

have started to have a fruitful - some fruitful -- results because now we're a country with concrete reform changes. We have started to implement

more structural measures. We have started to discuss with the open markets, the private sector, the banks, the whole state is changing the

page. So, I think that the reputation of Greece, step by step, is increasing and it is well understood by the markets and by also each one

Greek citizen who has suffered so much -

DOS SANTOS: Yes.

MANIATIS: -- for the last six years. I think that all this sacrifice will stop and now in 2014. And in 2015, Greece will have a positive rate

of development for this year. We anticipate to have more than 0.6 percent and next year more than 2.7 percent. And this is the good news after so

many years of austerity measures.

DOS SANTOS: Greece's energy minister, Yiannis Maniatis. Thank you so much for joining us. We didn't get a chance to talk about energy, but we

will do next time you come on the show. Thanks for joining us from New York. Well, speaking of energy and saving energy, apps that connect you to

your home are the hot topic at the Dublin Web Summit this week and as Jim Boulden now reports. If you're away and you've forgotten to unplug the

toaster, well, never fear.

(BEGIN VIDEOCLIP)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: So let's say you're traveling, you're on the road at something like the Web Summit here in

Dublin, but you want to check your home. You want to see that the doors are locked, the lights are off - you really want to know that things are

safe and secure. Well of course the connected home is a growing industry for the apps, and there are many apps here that allow you to control it

with your fingertips.

JEFF HAGINS, FOUNER AND CTO, SMART THINGS: I actually hate the term `internet of things', right? Because this - it really focuses on

connecting the things and not the value proposition. There are certain areas where maybe you do want them to be connected. You know, across areas

like safety and security, peace of mind, savings, right? and green living. If I - can I save you money by saving energy? Those are all kind of core

use cases.

BOULDEN: Now, you can take this too far. I mean, I can understand the safety and security, but not everything has to be connected, does it?

HAGINS: There is absolutely a balance that we're going to find as an industry. You know, we're in this - we're in this mode I think right now

where people just want to connect everything. But our belief is if you do those core areas correctly, it buys you - it gives you the ability to do

some of the fun stuff.

BOULDEN: Your app is on and your house in Los Angeles, and I can see you have 101 things currently connected - 101 things. I can't think of

five things.

HAGINS: A hundred - well, you know, not surprisingly it can add up pretty quickly. Every light switch in the house is a connected light

switch.

BOULDEN: Oh.

HAGINS: We replaced all the switches in the wall. Some of the outlets in the walls are connected devices as well so that we can control

those.

BOULDEN: Let's do some fun things. Let's wake your wife up right now.

HAGINS: (LAUGHTER).

BOULDEN: You to click on the lights.

HAGINS: Right, and all off right now - nobody's in the kitchen. But if you tap that, they're all going to come on. Yes, go ahead. Whatever.

BOULDEN: The lights are now on in the house in Los Angeles in the kitchen - they're on.

HAGINS: They're on. So, and if my wife is - happens to be wandering down early in the morning, she'll wonder why - why all the lights -

(CROSS TALK)

BOULDEN: Maybe should do her a favor - I'll turn them off. (Inaudible). Thank you.

HAGINS: You're done.

(END VIDEOCLIP)

DOS SANTOS: I feel sorry for his poor wife - being woken up with the lights being turned off there by Jim Boulden - virtually speaking all the

way from Dublin. "Quest Means Business" continues after the break.

(COMMERCIAL BREAK)

DOS SANTOS: Well, welcome back. You're watching "Quest Means Business." So just bringing you some news that's just coming in to our -

to CNN. The Israeli defense forces have been reporting that an attack has taken place at an Israeli military post. And we want to warn you that some

of the videos that we're about to air here is disturbing. As you can see here, an IDF spokesman has said that - this is what occurred here in these

shots we're showing you - a car rammed into a post near Al-Aroub. As you can see there, the car ramming into that post. A source told CNN that the

attack injured three Israeli soldiers, one of them remains in critical condition. As you can see, he plowed literally into those three soldiers

in that rather disturbing video that we're showing you here.

Obviously there have been clashes between Israeli security forces and protestors in East Jerusalem, and that comes after a member of Hamas went

on a deadly rampage as we're showing you here with that van earlier on Wednesday, that attack as I was saying before, killed one police officer

and injured 13 other people. These -- the shots that we're showing you - that separate other attack that had taken place.

And that's "Quest Means Business." I'm Nina dos Santos with CNN, the world's new leader. We will be back same place, same time tomorrow. But

in the meantime, thanks so much for watching.

END