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Quest Means Business
ECB Doesn't Deliver QE; European Markets Down; ECB and Timing of QE; Draghi Disappoints Investors; Wall Street Slips; Vigil for Garner in New York; Putin Fires Back at West; Tracking Putin's Next Move; Make, Create, Innovate: Bloodhound Supersonic Car
Aired December 04, 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: No records on the Dow, just a small loss for the main index as trading comes to a close. It's all about economics and what
central banks are doing, when --
(GAVEL HITS)
QUEST: One, two -- we only got two from him today. It tells you the mood of the market. It is Thursday, it's December the 4th.
Tonight, no QE from the ECB. Ha! Mario Draghi kicks the can down the road.
Unflinching and unapologetic. Vladimir Putin lashes out at the West. His economy is in trouble.
And time to clean out OPEC. T. Boone Pickens tells me why the US can and will survive low oil prices.
I'm Richard Quest, we've got an hour together, and I mean business.
Good evening. Mario Draghi has dashed the hopes of QE for Christmas. The European Central Bank boss says maybe -- big maybe -- in early 2015.
It's a case of watch this space in January for hints that the ECB may launch quantitative easing, the program of buying government bonds to
stimulate the economy. President Draghi says the central bank needs more time to assess the impact of the recent slump in oil prices.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: We discussed broadly all sorts of measures. We certainly discussed various options of QE, and
more work is needed. And certainly we'll keep you informed as this work will proceed.
(END VIDEO CLIP)
QUEST: Now, President Draghi said that the council was unanimous that they would do what was needed, but he also went on to say if they did move
forward with QE, then the vote did not need to be unanimous.
The fact that it's not on the agenda so far -- look at these numbers in the super screen, and you'll see that European stocks sold off very
sharply as he spoke, and they ended the day firmly in the red. We won't worry too much about the FTSE, because that's not eurozone, nor the SMI.
But let's take a look at the Xetra DAX, and you look at the intra-day and how the intra-day traveled. Let's look at the week-long overall, and
you can see how that has had a very sharp fall as it came down throughout the course of the Xetra DAX. And again, year-to-date. That looks more
like the mountains in Germany rather than anything else. Very sharp volatility and the climb back.
The Paris CAC 40, similarly off. Here we get a better example of Draghi speaking. Get right in there and you'll see on the CAC 40, he
speaks about here. No QE -- do, do, do, do. The market falls sharply. Clearly has a little bit of an attempt to recover, and off it goes, down
into the blue yonder. Same months, the sixth month, you see the volatility, but you see it coming down again.
The problem, of course, for all the markets is what the ECB says and what they're going to do. They say they're going to do whatever it takes.
Now, they were very powerful words. "Whatever it takes." Powerful in July -- June of 2012 when Draghi spoke. Back then, he was still fairly new in
the job, the president of the central bank. The hope was high he might kick-start Europe's recovery.
But fast-forward two and a half years and we ask the question, as he kicks this can down the road, what's he waiting for?
(CAN-KICKING SOUND EFFECT)
QUEST: There goes the can. The first thing he's done, he's done everything. Well, in September 2012, we had OMTs, Outright Monetary
Transactions. Now, this is his plan to save the euro, it was unlimited purchases of short-term bonds by struggling members of the eurozone. That
was a plan that he had, but it didn't work, so kick the can down the road - -
(CAN-KICKING SOUND EFFECT)
QUEST: -- and you have negative interest rates this year on the eurozone banking sector. The idea, charge the banks to hold their money,
force them to lend instead. That didn't really work terribly well, either. Kick the can --
(CAN-KICKING SOUND EFFECT)
QUEST: -- once again down the road, and the ECB has started a bond- buying -- covered bond, ABSs to unlock the lending in the zone. Now, the can has been kicked into next year --
(CAN-KICKING SOUND EFFECT)
QUEST: -- because as it gets kicked, we're waiting for January to see if it was going to do it. At today's news conference, President Draghi was
asked how early would he consider -- would he make his assessment.
(BEGIN VIDEO CLIP)
DRAGHI: Early means early. It doesn't mean at the next meeting. It depends very much on how our assessment will go. We'll certainly have a
lot of facts to examine, namely and especially the big movement in the price of oil and what the impact of this is going to be, not only on
economic activity, but also on inflation.
(END VIDEO CLIP)
QUEST: Stephanie Flanders is the managing director and chief market strategist for JPMorgan Asset Management and joins us now from London.
Stephanie, oh Stephanie, help me here. How much further can this can be kicked before he has to do what people like you, I believe, think he's
going to do anyway?
STEPHANIE FLANDERS, MANAGING DIRECTOR, JPMORGAN ASSET MANAGEMENT: Well, I think it was interesting -- wasn't it today? -- that you actually
had, if you'd heard a couple of months ago Mario Draghi giving this kind of forward-looking comments about looking very closely at quantitative easing,
if you'd heard him talk about it at such length a few months ago, I think you would have seen a big positive in the markets.
But you can see how expectations have moved as the forecast for inflation and inflation itself has come lower and lower, as people are now
thinking that it might go into negative territory into falling prices, at least for a few months at the start of next year, yes, we're looking at --
the markets are sort of wanting more.
I guess what worries me or at least I think is a sad reflection of where we are, but investors are still focused on what the European Central
Bank is doing and not on what might be happening in the real economy, where you might have started to see some of the effects of the things that the
ECB was doing in the summer --
QUEST: Right.
FLANDERS: -- actually feeding through into the credit markets and those kind of things.
QUEST: We're not seeing that -- or if we are, they're not focusing on it. But I ask you, what's he waiting for? Because the canary in the mine
analogy, whichever one we want to do, when -- how bad does it have to get before this governing council by majority says we've really got to do
something?
FLANDERS: I think that was one of the things that worried people today, was that you did have this quite forward-leaning language from Mario
Draghi, and you had the statement itself being a bit firmer about looking at quantitative easing at the start of the year.
But we found out that there had been disagreement even around that rather modest change. So, he keeps repeating there's unanimous support for
taking the action needed if the forecast deteriorates. There doesn't seem to be unanimity at all about what would actually necessitate that kind of
action. So, it becomes a bit meaningless.
You remember when he made that famous statement in 2012, "We'll do whatever it takes," and he added with emphasis, "And believe me, it will be
enough." Well someone senior at the ECB said to me the other day, "We're still at the 'believe me' stage."
QUEST: And if we're at the "believe me" -- I ask, because you obviously are in deep contact with those on the opposite side, those who
don't believe there should be bond purchases or QE. Why do they think not? Do they want to wait until the house is literally burning down?
FLANDERS: I think there's a couple of things. There's some who genuinely wonder whether it's the right tool for fixing Europe's problems,
and they point to the structural reforms that are needed in places like Italy that are holding back Italy that have nothing to do with what the ECB
is doing or even what kind of money is being offered by banks.
But there are others -- and I think that's what's always been the suspicion of people outside the ECB, why it's taken so long for them to get
to this point -- there are others who just don't want to seem like they're letting governments off the hook.
And I think that's the worry, that they're being -- the opposition inside the ECB is not just practical, look, this may not work without
governments doing things, there's also a sort of morality to it. We don't want to let governments off the hook, we want them to feel the fire, feel
the crisis a bit more before we act.
QUEST: Right. In a word, are you in the camp that says yes in January they go QE? Or February, or March?
FLANDERS: I think the start of next year, given what we're likely to see on inflation, I think it'll be very hard for them not to do more.
Whether that might -- that might be a first step to that might be buying private bonds.
So quantitative easing, but not the full US kind of buying government bonds. I think we'll see something. But they will want to see a lot more
happening on the government front as well, I think, for that to work.
QUEST: We'll talk more about it. Thank you, as always, for giving us your time and guidance tonight. Stephanie Flanders joining us from London.
Wall Street didn't care -- look at Mario Draghi's, this attitude. Europe didn't like it, the US didn't like it, we have a very sharp fall
here. That's roughly when he's speaking, if you look at the time difference, 10:00, 11:00, 12:00.
It does manage a bit of a boost back up again as the day moves on, but obviously, enthusiasm tails off by the time all was over, and the Dow and
the S&P close. But of course, we had record highs yesterday. Today, nothing of the sort. Look at that, we're at 17,000. I suspect the 18,000
might be a few days away, now.
So, if it wasn't enough to have the ECB and Europe in a bit of turmoil, well, President Putin was resolute. You might even use the word
"defiant." It was, by all accounts, a classic performance from the Russian president as he stared down economic calamity.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: It's late afternoon, early evening on the East Coast of the United States, and a vigil for Eric Garner is due to get underway shortly
in New York. This is a day after the grand jury decided not to indict the white police officer who put Mr. Garner in a choke-hold and then, of
course, Mr. Garner died.
In July, police tried to arrest the 42-year-old unarmed African- American man. They'd accused him of selling cigarettes illegally. He was put in a choke-hold. The video has been, of course, well-watched and well-
seen around the world.
He, of course, is screaming in this situation, "I can't breathe! I can't breathe!" He subsequently died later that day, and the medical
examiner subsequently went on to say, of course, it was unlawful.
So, to get more details on this, Joe Johns is in New York for us tonight. Joe, this vigil, we saw protests yesterday. This vigil promises
the prospect of being something different.
JOE JOHNS, CNN CORRESPONDENT: It certainly does, but I also have to point out to you Richard that there is a demonstration scheduled this
evening here in New York at Foley Square, that's where the courts are in Manhattan, at around 5:30 Eastern Time. So, potential for yet another
demonstration.
As far as last night's demonstrations go, we have been reporting about 83 people taken into custody. Of those, something like 80 were for
disorderly conduct or obstructing vehicles, 3 for resisting arrest.
CROWD (chanting): Hands up! Don't shoot! Hands up! Don't shoot!
JOHNS: I think the takeaway from all of that, Richard, is it's been largely peaceful here, and apparently the mayor of this city as well as the
police department have been able to preserve at least a measure of their goodwill to the extent that nothing bad has happened along the lines of
what we saw in Ferguson, Missouri, Richard.
QUEST: The delicate policing that has to take place. I was out filming at various points in New York today. There's a large police
presence on the streets, but getting that balance right -- because the last thing they now want to be accused of is causing a commotion.
JOHNS: Right. They don't want to be accused of heavy-handedness. And I've spoken to some of the police officers out on the street. It seems
to me they've been very cordial.
I also want to point out, the mayor of this city has been very careful. He's walked quite a line in his public pronouncements. But one
thing he has said is that he is ordering the retraining of virtually all of the members of the police force of how to deal with the public. We're
talking about 21,000, 22,000 police officers, a three-day retraining.
So, that's a pretty big step, given what we saw in that video and the concerns that have now been raised by minorities in the city of New York,
Richard.
QUEST: Joe Johns in Times Square. Joe, at the moment there's more to report on this, please come back to us.
Plunging oil prices and a tumbling ruble, no growth, high inflation. It's the backdrop in which Russia's president Putin gave his annual State
of the Union speech. And one of the president's main messages is that the country must escape the trap of zero growth.
The president laid out the economic challenges. Mr. Putin was also non-apologetic when speaking about sanctions imposed by the West.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): Every time, when someone thinks that Russia has become too strong, independent, these
instruments are switched on immediately. However, there is no point in talking to Russia from a position of strength, even when Russia faces
internal difficulties, as it was in the 1990s and in the beginning of the 2000s.
(END VIDEO CLIP)
QUEST: Part of the challenge is how to overcome the damage to the Russian stock market. In an effort to try to improve the climate, Mr.
Putin has unveiled new economic measures. They include --
(RINGS BELL)
QUEST: -- a four-year freeze on taxes. The idea is to try and stimulate growth. He's going to offer an amnesty on capital that's
returning to Russia, foreign capital, a lot of it from oligarchs that's been sent overseas, now to be brought back.
And there'll be less dependence on foreign goods. But that, of course, only requires there to be a domestic demand and a domestic supply,
and it's questionable whether the Russian domestic market can supply that.
It was a classic performance from a man whose popularity remains rock- solid intact at home. CNN's Matthew Chance is in Moscow.
(BEGIN VIDEOTAPE)
(MAN INTRODUCING PRESIDENT PUTIN IN RUSSIAN)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): His country is under international sanctions, its economy in free-fall.
But Vladimir Putin's speech to Russian lawmakers was defiant, not least on the issue of Crimea, which he invaded and annexed earlier this year. For
Russia, he said, the strategic peninsula was sacred.
PUTIN (through translator): Crimea and Sevastopol have invaluable and even sacred importance for Russia, like the Temple Mount in Jerusalem for
the followers of Islam and Judaism, and this is how we will always consider it.
(CROWD CHANTING)
CHANCE: It was the protests in Kiev that toppled Ukraine's pro- Russian president earlier this year that set Russia on a collision course with the West. Moscow is accused of fueling a separatist conflict in
eastern Ukraine and providing the weapons that downed this Malaysian airliner in July, killing all 298 people onboard.
But President Putin was defiant on this, too, rejecting the allegations against him. There was no way, he said, Russia could support
what he called "an armed coup" in Kiev, and that the West was now trying to contain Russia by imposing sanctions on it.
CHANCE (on camera): And those sanctions are now having a damaging impact. Russia is facing a major economic crisis. Along with a global
price, its currency, the ruble, has plummeted. And many Russians are now looking to Vladimir Putin for a solution.
CHANCE (voice-over): His response was a rallying cry to Russians to pull together for the sake of the country, including a call for those with
cash overseas to bring the money home.
PUTIN (through translator): He will not be asked about the sources of his capital or the way it's been acquired. He will not be prosecuted or
face administrative liability. He will not be questioned by the tax service or by law enforcement agencies. Let's do this now, but only once.
CHANCE: It's a move unlikely to reassure the many other Russians now feeling the consequences of their president's defiance.
Matthew Chance, CNN, Moscow.
(END VIDEOTAPE)
QUEST: Joining me from Washington to discuss President Putin's challenges is Andrei Illarionov, the former chief economic advisor to the
Russian president. Sir, thank you for coming and helping us understand what's happening.
But any definition, the economic situation in Russia is dire, with the prospect of getting worse. Would you agree?
ANDREI ILLARIONOV, FORMER CHIEF ECONOMIC ADVISOR TO VLADIMIR PUTIN: No. The situation is much more complicated, and I would be rather cautious
to give such a dire forecast as the journalist did just a moment ago.
The situation is complicated. On one hand, it's true, there are some sanctions. Even I would say they are pretty efficient. At this moment,
there is a fall in the oil prices that led to a fall in the Russian ruble and in a reduction in government income, it's true.
And also, there are some structural problems with the Russian economy that left the Russian economy in this cycle of stagnation and recession for
the last 16 months, since last July.
But on the other hand, the fall in the exchange rate led to substantial reduction of cost in the Russian economy that made the Russian
economy much more competitive --
(CROSSTALK)
QUEST: Well --
ILLARIONOV: -- both domestically and internationally.
QUEST: All right, but it's all -- we can go backwards and forwards on sort of the economic effects, if you like, of a falling currency, because
you say it will create, of course, a more competitive environment, which is true, but it also imports inflation, and inflation is already high. Russia
at the moment, sir, would you -- pretty much has stagflation. High inflation, no growth.
ILLARIONOV: That is not purely correct, because it's true that inflation picked up from roughly 5.5 percent to 8.5 percent annually. But
at the same time, the last month saw increase in industrial output and increase in investment.
It remains to be seen how strong and how long should be this revival of economy. But I would not underestimate this particular impact of the
low real exchange rate and low costs for the Russian economy.
QUEST: If we look at the measures that the president announced today, certainly, of course, the repatriation of capital will give a boost, the
tax freeze will give a boost. But do you wish he'd gone further? Do you wish he'd done more?
ILLARIONOV: First of all, I don't think those measures that have been mentioned, and others, did impress investors, did impress entrepreneurs.
And under the current macro economic and political and geopolitical situation, I don't think that it will produce a substantial push for
growth.
The micro economics is a different story. Certainly, I would be glad to see more actions, but I think this particular government, this
particular administration, could not deliver something that would be something really that people would trust, these particular people. They
would definitely would wait until some new government, some new authorities will be in Russia.
QUEST: And that, of course, doesn't seem likely anytime soon. So, one's left asking, does Russia muddle through? Certainly with the
sanctions that are in place, with an oil price that is likely to stay down at this level for the next few months at least, the situation becomes more
difficult.
ILLARIONOV: I think Mr. Putin himself prepared -- himself prepared and trying to prepare the country and he's armed Russia for long-term
confrontation with the West over Crimea, over its war against Ukraine and against confrontation with the general West.
And he himself said that those sanctions can be imposed on Russia for ten years or maybe even more. So, that is why we are probably at the very
beginning of a very long-term and very difficult confrontation between Russia and the rest of the world.
QUEST: And we, sir, thank you for joining us this evening, and we look forward to having you on the program again. Please come back more and
help us understand the machinations and directions of the Russian economy. Thank you, sir.
Guaranteed to turn heads if you drive it to your next reunion at school. With 135,000 horsepower -- yes, I said that -- it's a titanium and
carbon fiber contraption, it boasts a jet engine and a rocket engine. It's the supersonic car.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Make, Create, and a little bit of Innovate. If Superman ever feels like driving instead of flying, we have exactly the vehicle for him.
Right now, in the UK, engineers are working on a car that travels faster than a speeding bullet. In this edition of Make, Create, Innovate, Nick
Glass has had a look at the supersonic marvel on the road.
(BEGIN VIDEOTAPE)
UNIDENTIFIED ANNOUNCER: The fastest man on wheels sets a new world record.
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): The glory days of speed, the 1930s through to the 1960s. Record-breaking was the
obsession, pushing men and machines faster and faster. That was then, this is now.
GLASS (on camera): This is the shell of the supersonic car, made of titanium and carbon fiber. And designed just like Superman, to go faster
than a speeding bullet.
ANDY GREEN, DRIVER, BLOODHOUND SSC: The Bloodhound project is about building a car which is part jet fighter, part Formula 1 car, and part
space rocket, to achieve the astonishing speed of 1,000 miles an hour.
GLASS (voice-over): A wing commander in they Royal Air Force, Andy Green has flown jet fighters on combat missions over Iraq, Bosnia, and
Afghanistan. But he also happens to be the fastest man in the world on land. In 1997, Green reached 716 miles an hour in thrust SSC, breaking the
land speed record. Bloodhound will take him even faster.
GREEN: A thousand miles an hour at ground level is faster than any jet fighter has ever traveled in history. So, there are going to be some
major challenges.
GLASS: And the man dealing with these challenges is Mark Chapman, the lead designer at the project's headquarters in Bristol.
MARK CHAPMAN, LEAD DESIGNER, BLOODHOUND SSC: So, all this bit here is about all the power for the car. So, in this section here, we have the car
engine that drives the pump, the rocket. Above here, we have the jet engine. As we go right to the back of the car, underneath, sort of this
panel here, all the way to the back, is where the rocket sits.
GLASS (on camera): Three engines?
CHAPMAN: Three engines, 135,000 equivalent horsepower. On its own, that will take us to 600 miles an hour or thereabouts. But to get a land
speed record at about 350 miles an hour, we slung on a rocket engine as well to take us all the way through to 1,000 miles an hour.
GLASS: So, this is the wheel? No rubber?
CHAPMAN: No rubber. Beyond about 450 miles an hour, they just get flung off. So yes, it's solid aluminum. We've been through a huge
evolution of finding something that would do the job. Because basically, this car goes faster than a speeding bullet, so anything that hits this is
like being shot, shots fired by a bullet from a gun.
GLASS (voice-over): Breaking the thousand-miles-an-hour barrier is just one aim. The Bloodhound team wants to inspire the next generation of
scientists and engineers.
GREEN: We can actually create an engineering adventure for every kid in the country, for every kid in the world to actually get excited about
science and technology. The young people who will build and live in that high-technology, low-carbon world of the future.
GLASS: The record attempt is expected in late 2016 at Hakskeen Pan, a dry lake bed in South Africa. It's been a long road filled with
challenges, but for the fastest man on the planet, the journey will have been worth it.
GREEN: Taking a car to 1,000 miles an hour for the first time is going to be an extraordinary moment in human history. I'm really looking
forward to retiring from this 15 years from now and still seeing it affecting young people.
(END VIDEOTAPE)
QUEST: Make, Create, Innovate with the fastest car on the planet.
Now, with oil prices falling -- I'd hate to think how much it would cost to put the oil in that particular contraption, even at today's lower
prices -- but with oil prices falling, OPEC and the United States are in a battle for survival. Legendary oil tycoon T. Boone Pickens isn't mincing
his words.
(RINGS BELL)
(BEGIN VIDEO CLIP)
T. BOONE PICKENS, FOUNDER AND CHAIRMAN, BP CAPITAL ENERGY: So, you've cut OPEC's sales of crude to the United States in half. Good. I want to
cut OPEC clear out
(END VIDEO CLIP)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more Quest Means Business in just a moment. This is CNN, and on this network the news always comes
first. At least ten police officers have been killed in an attack in the Chechen
capital of Grozny. Armed men shot their way into the heavily-fortified city located in the Russian Republic of Chechnya. Local security force
fought running gun battles with the attackers. Officials say the militants fired on a police checkpoint from their vehicles. Nine militants died in
the subsequent fighting. Vladimir Putin's accused the West of exploiting the Ukraine crisis to
undermine Russia. The Russian president made the remarks in a fiery annual address. He said that Crimea had sacred significance for Russians. Russia
annexed the territory from Ukraine earlier this year. Al-Qaeda's released a video of a U.S. hostage in Yemen pleading for his
life. The group is threatening to kill photo journalist Luke Somers if the U.S. doesn't meet its demands. While U.S. and Yemeni forces conducted a
raid last week that reaped eight hostages, Somers wasn't at that same location.
Authorities in the United Arab Emirates - the UAE - say an Emirati woman's been arrested after the fatal stabbing of an American teacher in a shopping
mall in Abu Dhabi on Monday. They say the suspect is also accused of putting a hand-made bomb in front of an American doctor's house.
The second pilot's walkout this week - that's the Lufthansa German airlines -- is coming to an end -- why part of today's scheduled long-haul flights
didn't depart. A series of strikes has wiped $200 million off the airline's operating profits so far this year.
During his press conference where he cut the European Central Bank's growth forecast for Europe, Mario Draghi called the declining price of oil
unambiguously positive, and as if on cue, oil prices started to slide even lower. It's quite obvious the economic reason why. Although the falling
price hits the producers, for all the other countries in the world, the consumers, the falling price creates more of course money in the pocket for
consumers. So take a look and you'll see exactly how they are trading at the moment.
First of all, you have the two Brent and West Texas intermediate. You get a bit of a wobble here where they go in opposite directions. But this very
sharp fall over six months - Brent is now trading up the main European benchmark crude at $69 a barrel. West Texas Intermediate is slightly
lower. Traditionally in the past it's been high, but that's been over for some time. WTI is now trading at $66. OPEC numbers need oil to trade at
much higher levels if they are going to balance their economic budgets. For instance, Saudi Arabia trades at a $95 a barrel if it's going to
balance its budget -- $95. You keep in mind where we are - we're down in the low 60s at the moment. Saudi needs $95. Low production cost means it
could withstand slightly lower prices. In the United States, Exxon's chief exec says the company can go down to
$40 a barrel. Now, analysts say - believe - that Chevron could probably do the same. You get the idea of the situation. The oil tycoon T. Boone
Pickens believes he wants OPEC out and the Saudis out of the United States market altogether. He's 86, he's a legend in the oil-rich regions of
America. Just look at how they view T. Boone. Here a university student holds up his picture during an American football
game at the Boone Pickens Arena in Oklahoma. I visited T. Boone Pickens last year in Texas. He knew even then the oil market was on the cusp of a
revolution.
(BEGIN VIDEOCLIP)
QUEST: The `wall of fame' some might say.
PICKENS: Well, it's - you know - there's some good ones up there.
QUEST: In the 1980s, T. Boone Pickens made headlines as a corporate raider. Today they're called shareholder activists. These are your
companies - or some of them.
PICKENS: Yes.
QUEST: He now runs the Dallas-based hedge fund BP Capital. He's the author of "The Pickens Plan." Its goal is energy independence for North
America.
PICKENS: You have a North American energy alliance. You bring together Canada, Mexico, United States. We're the market for their oil.
That's the case today. Our biggest supply of oil outside of the United States is Canada. Put them together, we're their market and it's - we're
energy dependent with North America. We don't need anything from any place else. I mean, we control our destiny. It's not left up to somebody in the
Mideast who actually I consider them to be the enemy in most cases. They hate us. And there's no reason to be tied to them in any way.
QUEST: The answer is in your own backyard --
PICKENS: Oh yes.
QUEST: -- in your own production. Is that what you're saying?
PICKENS: Exactly.
QUEST: Ah, these are the cartoons. Even though Pickens has been lampooned in the press over the years, --
PICKENS: This is signed by Ronald Reagan.
QUEST: -- he has always been taken seriously by those in the seats of power. This is what we always think of, isn't it?
PICKENS: Yes.
QUEST: After all, for a man who has made such a fortune out of oil and gas, he knows the value of what comes out of the ground.
(END VIDEOCLIP)
QUEST: As the price of what comes out of the ground falls in the international markets, a year later I've been speaking to T. Boone Pickens,
I asked him between OPEC and the U.S., who's winning at these low oil prices?
(BEGIN VIDEOCLIP)
PICKENS: OPEC is really, I mean, you know, when you look at it, you know, it's kind of blood, guts and feathers. It's - the Saudis are the
swing producer for the world, and there's 92 million barrels produced every day in the world. OPEC produces 30 million barrels and the Saudi's produce
10 million, so they're producing a third of the 30 million. But that is - that makes them the swing producer. The - and so we say winners are losers
in the deal. What happened is that we counted on this year oil being up 1.3 million barrels a day. And it didn't happen. With lower prices,
demand is going to come back. So, it's - this isn't - I don't think it's a, you know, big deal one way or the other. It's a commodity market
reacting to a lower demand and a little bit -
QUEST: Right.
PICKENS: -- of a surplus of oil.
QUEST: But the surplus and the demand question - the big difference is the U.S. is a major player and OPEC wanted to put pressure on U.S. oil
production. They wanted the U.S. to cut back.
PICKENS: Well the U.S. can't cut back, Richard, because you're not a state-owned oil company in the United States who would tell the United
States, a producer. You have hundreds of producers. When you look at Saudi Arabia, you're looking at Saudi Aramco, and that's one producer. So
one producer can decide to cut back hundreds - it's meaningless. There's no way you can do it. So it's - you're - you don't want to, you know, the
two industries - that in the Mideast and in the United States are much different as far as producers are concerned.
QUEST: Anybody who was at OPEC last week at the meeting in Vienna, the view seemed to have been that they wanted to teach the U.S. a lesson.
OPEC wanted to send a message to the U.S. to teach these new shale producers, these upstarts of the industry a lesson.
PICKENS: Well, whatever their analysis or whatever they said, they should look at the United States as a customer of OPEC. We still use 3.2
million barrels a day from OPEC. So we're importing oil in the United States. And what they don't like is three years ago it was 6 and 1/2
million barrels a day. So you've cut OPEC's sales of crude to the United States in half. Good. I want to cut OPEC clear out, because I think
you're paying for both sides of the war by using OPEC crude. But, you know, it's interesting they are very, very I guess selfish in their
attitude about the United States as a market. We're still importing about 8 million barrels of oil a day totally. Most of that comes from Canada and
Mexico and then the 3 million from OPEC. But, you know, we're importing oil, they're exporting oil. So we have two positions that are not
compatible but are compatible. We are buying their oil.
QUEST: When you look at the price, you're quoted as saying you think the price will rebound within the next 12 to 18 months - possibly back to
$100 a barrel. What drives that rebound? Is it the demand side of the equation or eventually does supply slow down?
PICKENS: Well, demand first, supply will slow down because if you're not drilling the wells, you will start to experience declining production
which will bring supply down. So it's three factors - one, the rigs as some of the rigs will be laid down, not drilling, not economic for the
producer and at the same time, the production that you have will decline, and three and the overpowering one, is demand.
QUEST: You have seen, sir, you have seen many oil cycles. You have seen boom, you have seen bust. You've seen prices well over $100 and down
in the teens. So what do you make of this?
PICKENS: Oh wait a minute, wait a minute. Lower, lower than the teens. You won't talk to anybody today who's had more experience in the
business than I've had. I've seen more cycles than anybody. But I win that because I'm the oldest guy out there. But, listen, I've seen oil -
I've seen oil at $3 a barrel. So I've seen it from $3 to $143. And what do I make of it? You're in a cycle right now that will clear itself out
and it'll be 12 to 18 months. I would like to get off OPEC crude and not import any oil from the Mideast.
(END VIDEOCLIP)
QUEST: T. Boone Pickens in his usual forthright, blunt way putting the position on oil. A year after the devastation of Haiyan, the
Philippines is bracing for another super typhoon. And what's most unsettling of all, no one know where this storm will end up. How is this
possible in this day and age that we can't predict the ferocity and destination? We'll talk about it.
(COMMERCIAL BREAK)
QUEST: The Philippines is preparing for the worst as a super typhoon approaches. People in Tacloban, the city that was devastated by the storm
aren't taking any chances. Lining up for supplies, essentials like water and petrol obviously. Tom's at the CNN International Weather Center. This
is - they've had experience, they know what's -
TOM SATER, METEOROLOGIST FOR CNN INTERNATIONAL: Yes.
QUEST: -- coming their way. But do they know when/how fierce? What do we know about the storm? And - and, sir - if we don't, why don't we?
SATER: You know, a lot of great questions, Richard. This is a tough one. In fact, it's been a long, long time since we have seen here in the
CNN World Weather Center such a discrepancy in the computer models that are forecasting an exact landfall area. We just don't have an environment that
is showing steering currents. One year after, they're still building - this picture was taken just a month ago for the anniversary. There are
thousands and thousands of homes that are still under the progress of being built. This was Haiyan's path - the strongest super typhoon to ever make
landfall on any land mass in history - 7,000 fatalities - and now we're believing that of course with this newest super storm, this newest super
typhoon, the strongest this year, and the strongest since Haiyan, may spare Tacloban, but we're not sure yet.
You can see areas - here's Hong Kong. Like Vietnam, it may be late next week. This is some slides through the Philippines. It's losing its eye
right now, Richard, which means it's lost a little bit of its strength. Still equivalent to a category 5 hurricane, but once it redevelops that
eye, it'll get stronger again. We believe there's enough time and space for this to pick up speed. Look at the gusts right now at 325. Haiyan
made landfall in Tacloban with gusts of 380. So this is a powerful beast but the exact landfall placement really matters very little because it's
such a large storm. The Joint Typhoon Warning Center has kept this storm off the coast almost the entire week. Now northern Samar Island. This would mean Tacloban
would be spared the three to four meter storm surge, it would be spared the strongest winds, but there is discrepancy. Every - name the countries -
Beijing has a weather computer model, Japan here in blue take it to the south, Taiwan, South Korea. In white is PAGASA. That is the weather
agency that, you know, takes care of and the umbrella under the Philippines. We believe they're pretty much correct with the Joint Typhoon
Warning Center. Joint Typhoon Warning Center says one in the morning - Sunday morning landfall. We're going to push it up to about 6 p.m. on
Saturday night. But, again, we can see 250/300 millimeters of rainfall with this. So it's
so massive - the models again vary greatly. We believe this may be up toward Manila midday Tuesday. So, again, with that -
QUEST: Tom -
SATER: -- all sorts of problems with landslides as well.
QUEST: Right. And even if - looking at those forecasts - even if, I mean it doesn't really matter which one you pick at some level, because the
size as I can see from this chart behind you -
SATER: Yes.
QUEST: -- the size of the storm, they're all going to get clobbered with ferocious winds and rain of some description.
SATER: Yes, and Richard, if you look at the last few years, Washi here was a tropical storm - 1,200 killed. Bopha killed 1,100 people and
now this one. So in three years we've had thousands of deaths. We've got to watch it closely.
QUEST: We'll watch it closely, you'll watch it closely and you're come back to us the moment there's something more to report.
SATER: Sure.
QUEST: Tom, thank you at the World Weather Center. This is Quest Means Business.
(COMMERCIAL BREAK)
QUEST: The title of the next "Bond" film has been announced. Neil Curry gives us the "Spectre."
(BEGIN VIDEOCLIP)
Male: Double 0 7.
Male2: Bond.
Female: James.
NEIL CURRY, SENIOR PRODUCER, CNN: The world's longest-running film franchise celebrated its half century last time out by taking the box
office action to new heights. "Skyfall" took over a billion dollars world- wide. On Thursday, filmmakers gathered at Pinewood Studios' 007 stage for what's become a must-see moment in the cinematic calendar - the naming of
Bond's latest mission. Of course the count-down clock didn't reach zero, stopping dramatically at the number on everyone's mind. That was the cue
for Bond's 24 to become "Spectre." The acronym of assassins, it stands for Special Executive for Counterintelligence, Terrorism, Robotics and
Extortion. It offers the prospect of Bond renewing an acquaintance with an old enemy. He'll do it with a new set of wheels for the new mission, as
his beloved Aston Martin DB5 perished during "Skyfall." Returning director Sam Mendes unveiled the new Aston Martin DB10, not so much a vehicle as an
extension of Bond's character. And then, there were the human characters to introduce. "Skyfall" marked a
changing of the guard at MI6 for "QM" and Miss Moneypenny. But the absence of the great Dame Judi Dench seemed to haunt the cavernous room.
RALPH FIENNES, ACTOR ("M"): I'm working with Sam to find my own path. But I think still keep true to some of the things that Judi's established -
- the sort of toughness and kind of quality of ruthlessness.
(APPLAUSE)
CURRY: Then came the new villains. Double Oscar-winning Christoph Waltz and wrestler-turned-actor David Bautista.
DAVID BAUTISTA, ACTOR ("MR. HINX"): The first question I asked Sam Mendes when I met with him, I said, "Is Mr. Hinx a bad ass?" And he said,
"Absolutely."
CURRY: Another pillar of "007" movies is the role in less enlightened times referred to as the "Bond Girl."
LEA SEYDOUX, ACTRESS ("MADELAINE SWANN"): But she became more masculine, more virile. And Bond is maybe more feminine now.
MONICA BELLUCCI, ACTRESS ("LUSCIA SCIARRA"): James Bond in Italy but I think all over the world represents the perfect man.
CURRY: After "Skyfall," director Sam Mendes took his time before committing himself to another "007" movie. But the "Spectre" of leaving
Bond behind proved too great.
SAM MENDES, DIRECTOR: When I'd taken the time and sort of, you know, wasn't quite so exhausted as I was at the end of the last movie, I felt
like I wanted to tell the story.
DANIEL CRAIG, ACTOR ("JAMES BOND"): He's the only guy for the job. And, you know, he did such a wonderful job with "Skyfall," and, you know,
it came down to doing the next one, and it seemed to be the obvious choice.
CURRY: Bond's new mission begins next week with filming in London, Rome, Mexico, Morocco and the Austrian Alps to complete before fans get to
see "007" on screen once more in a year's time. Neil Curry, CNN London.
(END VIDEOCLIP)
QUEST: And we'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." Mario Draghi and the ECB say that they will review in the New Year whether they need to do more bond
buying. The only problem is everybody says they need to do it now. It doesn't matter which economist, which brokers were bought, which newspaper,
the consensus is that they haven't done enough and they need to start mass bond buying. The only people who don't seem to understand this or want to
wait a little bit longer are the Germans at the Bundesbank and members of the ECB Governing Council. Which begs the question - what are they waiting
for? By the time the house is on fire, it might be too late to put it out. Well, we'll find out in the New Year. But so far there is general
consensus the ECB hasn't done enough, more needs to be done, they're going to end up doing it, so get on and do it now. And that's "Quest Means
Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) (HUMS "BOND" MUSIC) I hope it's
profitable. I'll see you tomorrow.
END
