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Quest Means Business
Markets Cheer US Q2 Economic Surge; Chinese Stock Markets Rebound; European Markets Rally; Ukraine Secures Crucial Debt Deal; Oil Prices Soar; Oil Companies Adjust Amid Cheap Oil Prices; Gulf Oil Producers Wait for Price Rebound; Fans Flock to Hello Kitty Restaurant
Aired August 27, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Another ebullient session on Wall Street. The Dow Jones is up very sharply at the close, a gain of over 360 points. And
we wait for Genpact -- come along, sir.
(GAVEL POUNDS)
QUEST: Well, we're all grateful that that took place on Thursday, it's August the 27th.
Uncle Sam rides to the rescue. Strong US growth has boosted markets across the globe.
Also back in the black, the black oil is back above 10 percent.
And it's a fresh start on old debts. Ukraine's finance minister tells me growth will return to Kiev soon.
I'm Richard Quest. We have a very busy hour together, and I mean business.
Good evening. Tonight, the world's largest economy is gaining steam, oil prices are surging, and the markets are a jolly sight more cheerful.
Look at how the numbers showed. The Dow up 367, 68 points at the close. The NASDAQ up 2.5 percent, the S&P 500, similarly, gains pretty much over 2
percent.
Oil prices rose 10 percent, and they are now back over $40 a barrel. The best news, though, for the US economy came before the opening bell even
rang.
(RINGS BELL)
QUEST: US GDP in the second quarter was revised sharply higher. It outstripped economists' forecasts, 3.7 percent. Now, not only that, there
were other revisions up, but the important thing here is even the economists had been expecting 3.1, 3.2, so this 3.7 was most definitely a
great movement for the market.
It's important to remember, though, that the look -- the months that we're looking at so far are April, May, and June, and the first quarter was
still remarkably weak.
Cristina Alesci is with me from CNN Money. What do we make of it today? I mean, first of all, let's take this bit by bit. We'll do GDP in
a moment. Overnight, the US was strong, and that seems to have encouraged everybody else.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Yes. And it held. It held the entire day. We had some volatility at the end, and we hit a record,
actually. It was the best two-day gain since 2008. So, we like to talk about records, and that was -- it was a positive sign.
But a lot of this rests on the GDP numbers that came out, as you just mentioned, better than they estimated. But I'm going to be Debbie Downer,
here, for a second. Because buried in that GDP release was another number called GDI, which is gross domestic income.
Now, that should be fairly close to GDP, but it was not. The income actually showed much less. That is, basically, the value -- it's not the
value --
QUEST: Right.
ALESCI: -- of the goods and services, but it's what they -- those goods and services actually turned into in terms of income for companies,
for the government, and that number was materially lower.
QUEST: Which means what?
ALESCI: Now -- which means that there's some weakness in the economy still.
QUEST: Right.
ALESCI: So, if you blend the two together, you get a number of not 3.7 percent, but 2.1 percent, which is a very tricky number for the Fed to
look at, which everyone is paying attention to. What is the Fed going to do in the face of this market volatility? Yesterday we had --
(CROSSTALK)
QUEST: Why the discrepancy between GDI and GDP?
ALESCI: Comes from different sources. So, that's number one. That's -- and they calculate it -- the government calculates those statistics
completely different than one another. But the economists do look at both figures.
QUEST: Right.
ALESCI: They place more importance on the GDP number, but GDI, income, is an important metric as well.
QUEST: When you now look and factor -- because the Fed, into what -- 3.7, then suddenly Dudley's no compelling reason. He's got --
(LAUGHTER)
QUEST: -- a compelling reason again at 3.7 percent.
ALESCI: He does have -- that's what I'm saying. All of this makes it tricky.
(CROSSTALK)
QUEST: So, do you think -- so, from the people you've been speaking to, does -- is September back on the agenda for a Fed rate increase?
ALESCI: Oh, boy. I've gone back and forth on this --
(LAUGHTER)
ALESCI: -- so much, and if I had the answer, I would definitely give it to you. I think that the Fed is in extremely difficult position.
And I think that the only clear messages that I'm getting from my sources is they want more clarity from and they want more communication
from the Fed, not these disparate comments coming out from individual members saying yes, we're going to do it, no we're not going to do it. It
creates a lot of confusion, and maybe lack of clarity. Maybe that's what the Fed is going for.
QUEST: Right.
ALESCI: Who knows?
QUEST: Central bankers do like to keep people -- they're not supposed to take us by surprise --
ALESCI: Right.
QUEST: -- but they do like to keep us on our toes.
ALESCI: Exactly.
QUEST: Excellent. Thank you very much. Good day.
ALESCI: Absolutely.
[16:04:57] QUEST: Strong performance in the markets. What happened yesterday on Wall Street, that very sharp gain, well, that of course
transmitted itself around the world, and the first market to trade after all that -- besides Sydney and Auckland -- in Shanghai, we saw the Shanghai
Composite, the China's main stock market, post its first gain of the week on Thursday. The Composite was up 5.3 percent.
And most of the sessions came late -- or most of the gains, I should say -- came late in the session. Now, that was fascinating, because the
question was raised why all of a sudden should gains be made very late.
It happens in New York. We saw it yesterday, we've seen it today. But in Shanghai, the feeling has been that maybe the government has been
strong-arming people to go into the market late in the session or, indeed, finding ways of putting money into the market late in the session.
A dark cloud is hanging over the Chinese market, which may be lifting for the moment, and the thinking is the Chinese government might be
intervening into the markets directly, straightforward government intervention to stabilize prices through pension funds and the like.
Sources are telling Bloomberg Beijing is selling US treasuries to support the yuan. Remember, they've got several trillion in US treasuries,
but they're spending roughly $40 billion a month just to support the yuan and keep it at these current levels.
On top of that, you always got the question of clouds disappearing, the stimulus measures. The government's been bringing in more stimulus,
cutting interest rates, and giving low interest rate loans to the banks.
And then finally, there's an idea that to clear the skies, possibly Beijing wants to lift stock prices to boost morale before an important
military parade next week commemorating the 70th anniversary of the end of World War II.
Gillian Tett is the US managing editor of "The Financial Times" and joins me now. What do you think is happening? I know you're the US
editor, and we'll come to the US in a moment, but we have to see, put it into context, what do you think is happening in China?
GILLIAN TETT, US MANAGING EDITOR, "FINANCIAL TIMES": Well, who knows is the answer. What we do know for sure is that there's a lot of
speculation, a lot of cynicism about the market structures and about the credibility of the government right now.
And the keen recognition that it's not just a question of where the economy's going that's really buffeting the markets, it's also the issue of
internal politics. Lots of speculation about the future of the prime minister, lots of recognition that if China doesn't find a way to calm this
very volatile situation, there could be a political price to pay.
QUEST: Uncle Sam and the US markets are doing their very -- or is doing their very best to turn the sentiment around. Did so yesterday.
Well, you're questioning -- you're looking dubious about that. Why?
TETT: Well, I'm not sure that Uncle Sam is quite such a cohesive group. But here's the issue. We've seen a dramatic rally, a dramatic
cheering up of the mood in the last day or two. That's partly because of a classic debt cap bounce -- the reaction to the earlier shock force earlier
this week, when we really did see some absolutely crazy price moves.
But also, there's been a lot more optimism out there on the back of New York Fed president Bill Dudley's comments that actually there may not
be a clear case of raising rates. People were thinking, well, actually, if rates aren't going up, then easy money will keep boosting the stock market
further.
QUEST: Now, I'm interested. Do you think that the rally yesterday and today is more dead cat than actually sentiment that the US is -- I
mean, it's volatility, yes, but that the US actually has no justification for the very sharp falls that we saw over the last previous sessions?
TETT: Here's the issue. The US economy isn't doing badly. In fact, we've just seen data out today suggesting it's doing pretty well. But the
question of whether it's doing so fantastically well that you could justify the sky- high valuations we've seen in the last few months.
To my mind, it's a different issue altogether. I personally think that a correction was not surprising at all. The nature of the correction
was extraordinary. The volatility of these shares was just absolutely nuts.
But the big question now, of course, is how are markets going to react if traders actually stop today and reassess their assumption that actually
interest rates aren't going up in September after all?
QUEST: Do you --
TETT: Because the Fed --
(CROSSTALK)
QUEST: Do you --
TETT: Dudley is saying --
QUEST: I'm just going to jump in here, because on that point, what the Fed's been saying, of course, after the last set of minutes, you could
read them any which way and backwards, and Dudley's comments yesterday. But -- but, Gillian -- do you think this 3.7 or this GDP number, whether
you take GDI or GDP, do you think that -- where do you think that plays into it?
TETT: Here's the issue. The Fed governors have been saying almost like a bunch of robots, we are data dependent, data dependent, data
dependent. That's the official mantra.
[16:09:58] The question, though, right now is, which data? Because if you look at the growth figures, they're pretty strong. If you look at
the unemployment figures, they're absolutely where the Fed said it would actually start to act.
If you look at the inflation numbers, though, they're actually pretty low. In fact, below the point where the Fed was when it actually started
quantitative easing. So, the data signals are very mixed.
But the really big question now that people are not sure about is will the Fed actually look at the economic data of the sort we've seen today, or
will it go -- will it actually focus in said on the much more nebulous question of market sentiment and the kind of volatile share price moves --
QUEST: Right.
TETT: -- we've seen in the last few days?
QUEST: Excellent. We'll talk about that more in the future. Thank you so much, Gillian, good to see you, as always.
TETT: Thank you.
QUEST: European stock markets rallied on Thursday. They'd seen what happened in New York. The markets, London, Frankfurt, and Zurich all
closed much higher by more than 3 percent.
Ukraine has a bit more breathing room today. The country has secured a crucial debt deal with its creditors after five long months of talks.
The deal includes a 20 percent writedown on $18 billion worth of bonds. Some if it is simply written off, others is just maturities lengthened and
interest rates reduces.
The IMF's praised the deal, saying it would help restore debt sustainability. Russia, major holder of Ukrainian debt, said it wouldn't
take the new terms, and that's going to be a wrinkle in the whole issue. And the Ukrainian prime minister hit back with a simple message: take it
or leave it.
(BEGIN VIDEO CLIP)
ARSENIY YATSENYUK, PRIME MINISTER OF UKRAINE: (through translator): Under no circumstances will Russia receive better conditions than other
creditors. It is their decision. You either accept our conditions or you will never receive better conditions.
(END VIDEO CLIP)
QUEST: My way or the highway. I spoke to the Ukrainian finance minister, Natalie Jaresko, and she told me the deal is a beginning, not an
end.
(BEGIN VIDEOTAPE)
NATALIE JARESKO, UKRAINIAN FINANCE MINISTER: This agreement basically gives us the debt sustainability, the relief on the balance of payments for
the next four years, and it gives us security in kind of our financing needs going forward.
That basis -- that basis for stability should now give us more room to do everything we need to do to attract additional investment. That's tax
reform, that's continued fiscal austerity and responsibility, that's deregulation, that's privatization.
All of the building blocks that enable business to feel more comfortable, business to commit to more investments in the country, and
that's domestic and foreign. It's not just foreign investment, it's both.
And in the end, staying in the IMF program in and of itself for us. Having met the three IMF targets for this restructuring helps us to keep
the official flows of financing going, which is critical for our economy right now.
QUEST: And to the critics and the cynics they'll be back to write off more debt in the future, what would you say?
JARESKO: I would say that I don't think that's going to be the case. We've gotten this basic window of opportunity right now.
The agreement that we reached with the $18 billion of -- this $18 billion package of debt represents a debt reduction of about $4 billion.
It represents moving out payments of $11.5 billion, so we make no principal payments on this debt during the IMF program for the next four years.
We do it at a coupon, at an interest rate that's quite reasonable and almost very close to the average interest rate on the debt it in the first
place, so there's no additional real budgetary burden. And we have this 4, 5 year period to return to growth.
QUEST: So, you can't, much as many would wish, we can't divorce the security question with Russian and the eastern part of the country with the
economic question and the future for investment, can we?
JARESKO: We need to, in a way, frankly speaking --
QUEST: Right.
JARESKO: -- divorce what is an uncontrollable, the peace or the security, the full implementation of the Minsk agreements, which we so much
desire and which we worked so hard at, which is not fully in our control, with what is in our control, which is the economic reforms, which is the
business environment, and which is attracting investment to, again, most of the country, which is free from that terrorism and which is at peace.
QUEST: When you and I speak next year, this time next year, let's make a date to speak at this time next year, tell me what your economic
situation will be like.
JARESKO: We will be, I hope, and I am confident, in a first year of return growth, 2 percent growth is our target for next year. By this time
next year, we should be seeing the effects of that.
We should be starting to see increased job creation, we should start to see increased consumer purchasing power. We should start to see
increased patterns of foreign direct investment, as well as domestic investment.
So, by this time next year, I think a lot of the reforms, a lot of the very difficult and painful things we've been doing that had to be done,
will be paying off in the stability of the system and the return of confidence in our economy.
(END VIDEOTAPE)
[16:15:07] QUEST: Ukraine's finance minister talking to me earlier.
Now, crude oil prices, which has been so much part of the story of the market turmoil, they've now bounced back, and the commodity firms are
having to adapt to cheap oil. We're going to speak to the executive chairman of PIRA Energy about that in a moment.
(COMMERCIAL BREAK)
QUEST: Oil has broken out of its slide with its biggest single jump in more than six years. I want to show you. Look at the way price of
Brent and West Texas, both going down, and then right at the end -- get in over there -- look at that, a 10 percent rise towards the end of the
session. Very strong has rebounded.
And it was all about diminishing crude supplies, and crude prices are back over $40 a barrel. It's up nearly 11 percent, and that's still close
to a multi-year low. Now, these prices are driving some oil companies to consolidate.
The French oil giant Total is selling its North Sea oil fields. The sale is part of the company's plans to cut costs. The Texas based
Schlumberger bought its rival Cameron International. The deal's worth $12.7 billion.
The core issue, of course, why did prices rise so much today? And this is the gentleman that's going to tell me. Gary Ross, executive
chairman of PIRA Energy in the C Suite. The first question: you don't often see an 11 percent rise in oil in a day. Why?
GARY ROSS, EXECUTIVE CHAIRMAN, PIRA ENERGY: It was overdone to the downside. That's why. So, this is partly short covering. It just
shouldn't have been as low as it was. Now, the surplus is huge, here, something like 350 million barrel commercial surplus over and above what
you need.
And the question is, is that surplus going to get bigger, or is it going to moderate? And a lot depends on what happens in Asia. And the
Asian --
(CROSSTALK)
QUEST: Now, by Asia, you mean by growth or by --
ROSS: Asia demand.
QUEST: -- demand?
ROSS: Asia demand, and it's not looking too hot at the moment. Asia is looking kind of weak. So, that's going to be critical.
QUEST: But if you take Asia ex-China, are there still as many problems, southeast Asia, north Asia?
ROSS: They're weak. We're seeing weak demand. Diesel demand hasn't grown. China's been buying quite a bit of oil. They've been filling up
every nook and cranny that they can --
QUEST: Right.
ROSS: -- with low-priced oil. They've been very smart about it. Because these prices, they can stay here for a while, but long-term, no
way, Richard. No way.
QUEST: You hope.
ROSS: I know. It's not a matter. You'll have shortages in three year's time if you stay at this --
QUEST: Because there's not the -- development and there's not the --
ROSS: Yes.
QUEST: -- price.
ROSS: They're just not going to spend the money. The companies can't afford to spend the money. I mean --
QUEST: OK. So, if we don't factor -- so, demand out of Asia remains weak, as you put it. Then -- but you have got these two other competing
things. First of all, Iran. Iran, we just do not know what's going to happen when they turn on the taps full throttle.
ROSS: Well, we think their production capacities come down from like 3.8 several years ago to probably 3.5, and they're doing about roughly 3.
So, they could do, probably a half a million barrels a day. But the sanctions are not going to be fully removed probably until April or May.
[16:19:58] QUEST: And what about the US frackers, the non- traditional --
ROSS: US frackers, we're already seeing the production decline. So, they're slow, they're moderate. That's because all the drilling in the
second half of 2014 brought forth all that supply in the first half of 2015. There's about a four-to-six-month lag between drilling and seeing
the impact on production.
QUEST: So, they're not turning off the rigs that are already pumping, but they're not going out digging as many more, even to replace that which
is trailing off. Or are they just basically replacing at the moment?
ROSS: Well, I think production has already started to decline, and I think even at 500 rigs today, that rig count at current prices will drop to
350, 300 by the spring of next year. So, it's going to continue. They can't make money at these prices. The balance sheet --
QUEST: They tell me they are. They tell me they are.
ROSS: Well, wait until the banks in October set the new price deck for 2016 and see how much money they're getting from the banks to drill.
They're going to find it very difficult to get money next year.
QUEST: So, taking all that you've -- pull all the strands together, the oil price goes back up, and where does it settle?
ROSS: Well, depends what timeframe. Longer term, we think you're going to need $70 oil, and you'll look out several years' time. But right
now, it can stay extraordinarily low because you have a surplus inventory, and you have to -- it's going to take, really, quite a bit of time to work
that inventory off.
QUEST: Thank you very much, sir.
ROSS: You're welcome.
QUEST: Good to see you. Thank you.
Now, oil prices may have a long way to go before they get to those sorts of levels, and they make any life easier for the producers, for
example, in the Gulf. The markets in those countries are starting to feel the pain as prices stay low. Our emerging markets editor John Defterios
reports.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: The $70 fall in crude prices over 14 months has been a silent killer for stock market investors
based in the energy producing nations. Even with Thursday's oil bounce, the financial markets are close to or well into bear market territory,
defined as a loss of 20 percent or more.
Saudi Arabia is down 30 percent, Dubai 26 percent, and Qatar and Kuwait hovering around 20 percent. It is worse in Russia. Under the
duress of sanctions linked to Ukraine and the lower oil price, the RTS index is down over 35 percent.
This oil bear market hit Middle East markets shortly after they've opened up to global investors. The UAE and Qatar joined the MSCI Emerging
Markets Index in May 2014. Saudi Arabia opened up to international investors just two months ago.
The Gulf State countries have $2.5 trillion of sovereign reserves, so they have a nice cushion. But they are starting to tighten their belts,
recognizing this could be a prolonged slump. Here's their new break even price for crude to balance their budgets: Kuwait at $49 a barrel, Qatar
$60, UAE $73, and Saudi Arabia at $87 a barrel.
All four are underwater, meaning they're not making enough money to cover their current budgets, but remain far better off than other OPEC
members, such as Algeria, Libya, and Venezuela, who are looking at a break- even price of $100 a barrel or more. In those countries, there remain real concerns about social unrest because no one at this stage is calling for a
quick turnaround in oil prices.
John Defterios, CNN, Abu Dhabi.
(END VIDEOTAPE)
QUEST: It's a much-loved brand that's now putting supper on the table. Business is brisk at Hong Kong's new Hello Kitty restaurant.
Hello, Kitty!
(RINGS BELL)
(COMMERCIAL BREAK)
(AUDIO GAP)
[16:25:08] QUEST: -- in China's markets, that much you and I have talked about all week. It hasn't stopped some businesses there from
enjoying a roaring trade. The Hello Kitty brand is everywhere in Asia, and now it's diving into the restaurant business.
The food is not just cute, it's the latest venture for a brand that's worth billions of dollars every year. Hello Kitty, Hello Kitty, and more
Hello Kitty. CNN's Sophia Yan popped in for Hello Kitty.
(BEGIN VIDEOTAPE)
SOPHIA YAN, CNN MONEY CORRESPONDENT (voice-over): She's at baseball games, on planes, even toilet seats, headphones, and pasta. She's all you
see in this maternity ward. In fact, no matter where you go, Hello Kitty is there, be it the Thanksgiving Day Parade in New York, a Kitty Conference
in LA, or even bilateral meetings between heads of state.
YAN (on camera): And this is the latest addition to the global Hello Kitty phenomenon, the world's first Hello Kitty restaurant. Locals and
tourists queue here daily for a taste. For them, it's all about the cuteness. For the company behind her, this is a huge business. Hello
Kitty makes $6.5 billion a year.
YAN (voice-over): It's all thanks to a Hello Kitty revival in recent years, championed by Sanrio, the Japanese company behind her, and now
licenses out the name and, of course, the face. But it still keeps a close eye on the way things work.
MAN KWONG, OWNER, HELLO KITTY RESTAURANT: The requirement is very, very high standard. So, I learned a lot from them. To work with them at
the very beginning, the process is really tough and a long process.
YAN: Every single thing had to be approved by Sanrio, from the tables and chairs to the menus and plates, the light fittings, the mirrors, and
what at first glance appears to be traditional Chinese paintings, but with a Hello Kitty Twist.
And then there's the food. That attention to detail adds another layer of complexity for the chef. Hello Kitty buns are no ordinary buns.
KWONG: There are 17 different additional steps before making this bun. This makes the time of making this bun three times more than normal
buns.
YAN: At over 40, Hello Kitty has been around for the better part of two generations and is showing little sign of aging.
YUKO YAMAGUCHI, HELLO KITTY DESIGNER (through translator): The original group of Hello Kitty fans were children in the 1980s. Now, they
are in their 40s. I try to listen to what they like. I have always wanted Hello Kitty to be a necessity for fans, that they can't live without her.
YAN: So, Sanrio has been appealing to older women, who they are betting will pass their love of Hello Kitty to their daughters. And it's
working.
UNIDENTIFIED FEMALE: I think the cartoon is really cute. My mom bought a book for me on Hello Kitty, because she thought it was really
cute.
YAN (on camera): New fans are getting their first taste of these carefully-crafted bites, and Sanrio hopes that these not-so-humble
dumplings will reel them in for the long run.
Sophia Yan, CNN Money, Hong Kong.
(END VIDEOTAPE)
QUEST: When we come back after the break, it's the issue of Facebook and Twitter. The two companies are being criticized because of the way
they handled the videos of the two journalists who were killed and murdered in Virginia.
We're going to talk about what they should have done and, more importantly, did they do enough to ensure those videos were not sent around
the world. QUEST MEANS BUSINESS.
[16:28:38] (COMMERCIAL BREAK)
[16:30:55] 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 when you're going to hear about McDonald's and Burger King failing to agree on a new burger and that burger
could have secured world peace.
And there's a new survey. It's going to tell you and me where it is acceptable to use our mobile phones.
Before any of that, this is CNN and on this network the news will always come first. The man who shot dead two television journalists in the
U.S. state of Virginia had been threatening his former colleagues at the news station WDBJ.
Vester Flanagan was fired from the job in 2013. Speaking to the media earlier, the station's general manager described Flanagan's reaction after
he learned he had been fired.
(BEGIN VIDEOCLIP)
JEFFREY MARKS, GENERAL MANAGER, WDBJ: He reacted angrily, telling them that they would have to call the police because he was going to make a
stink and it was going to be in the headlines.
The HR rep then called 911. Employees have been notified to give Flanagan space to clean out his desk. Once at his desk, Flanagan attempted
to reach the corporate CEO without success.
At that point the police arrived and escorted him from the building. On the way out, he handed a wooden cross to the news director who was at
that time Dan Dennison and he said, "You'll need this." He also made a derogatory comment to Adam Ward, the news photographer who we lost
yesterday, as he left.
(END VIDEOCLIP)
QUEST: Police in Austria say dozens of migrants have been found dead in the back of a truck close to the border with Hungary.
The vehicle was abandoned at the side of the road near the town of Parndorf. The U.N. High Commissioner for Refugees tells CNN that migrants
from the Middle East and Africa must be given a safe and legal route into Europe.
(BEGIN VIDEOCLIP)
ANTONIO GUTERRES, U.N. HIGH COMMISSIONER FOR REFUGEES: The smugglers and the traffickers that are creating so terrible situations to namely
Syrians that have to put themselves in their hands to escape very difficult situations they find in the Middle East to get safely into Europe.
Those smugglers and traffickers are not only the in the Mediterranean. They are in the highways of Europe and it is absolutely essential, first of
all, to crack down on smuggle and trafficking networks to protect victims, but more important than everything else, to create legal avenues for people
in need of protection to come to Europe.
(END VIDEOCLIP)
QUEST: On the markets, look at the numbers. The Dow, the NASDAQ, the S&P 500 all rallied with the Dow ending 369 points to the good. The U.S.
Commerce Department reported that American economy grew far more than expected in the second quarter and that was also followed by a ten percent
spike in U.S. oil prices on Thursday.
China's accusing 11 officials of negligence for the massive explosions that killed 145 people in Port of Tianjin just two weeks ago.
The prosecutors say the officials failed in their oversight of the company that used a warehouse to store and transport extremely dangerous
chemicals.
Facebook and Twitter are being urged to change their video practices after video showing the murders of two journalists were shown on their
sites. A WDBJ reporter Alison Parker and her cameraman Adam Ward were murdered in Virginia yesterday.
Now of course you're familiar that the gunman posted videos of the killings on social media. Twitter and Facebook quickly suspended the
accounts but due to an autoplay feature, many users unwittingly saw the graphic videos.
Samuel Burke joins me now.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: I was one of the people who saw it without even knowing that I was going to see it. In this role
covering social media at CNN, my first instinct was to go to the person who was being named as the possible killer at that time as this was all
unfolding, Richard.
[16:35:06] I go to his Twitter page and then without even clicking `play' -- because now videos on Twitter and Facebook play automatically -
all of a sudden I was witnessing the murder of a journalist's colleague. Autoplay - didn't even have to click anything.
QUEST: Right, I can understand the outrage. I can understand the horror of that. But I don't know what you do about it. Because, you know,
do you change the entire architecture of Twitter and Facebook and social media because of something like this? Do you?
BURKE: In all fairness, Twitter had the video down within eight minutes we've confirmed. Facebook says they took down the video as soon as
it was flagged. And the answer to your question is there's no way they're going to change the architecture. This is what advertisers want, this is
what social media wants, and quite frankly, the companies and quite frankly this is what the users want. People like this and so they are going to
work as hard as they can to try and get these videos down.
But autoplay is a realty - not just for social media companies but for our own company though I should note CNN.com, even though we have the
autoplay feature, when we were putting up the videos of course, we uploaded them ourselves of the moments before the shooting. There are no ads
around them and autoplay is turned off on our website.
QUEST: OK, all right, so what is the issue here?
BURKE: The issue here is that this is a new technology so it's the first time that this has ever happened. Autoplay has only been around for
a number of months for most people.
QUEST: I know, I mean, on a much less important scale I find autoplay on commercials which I'm only just noticing when I go to a website. And
out of the blue, suddenly the website starts blaring for some commercial. It's just downright annoying. But that's a different matter.
BURKE: Yes. And that's new. And to be quite honest, we can't - we can't point fingers. A murder happened live on television, the medium that
you and I work on, but that's not new. This is the first time that someone's just been scrolling through their feed and without a warning,
they were witnessing a murder on their phones or on their tablets.
QUEST: There's a bigger issue though, Samuel, isn't it? It's a bigger issue than whether it's autoplay or how quickly Twitter and Facebook
manage to take it down. They are reactions to a revolution that is taking place frankly that people don't feel they're - and this is at all levels -
they're not living their lives unless they're living it on social media.
BURKE: Not only on social media, but through the technology that they use to record it and then put it on social media. And quite frankly,
there's been a whole wave of killers and suspected killers using technology.
Now many people thought that this - in this instance - in Virginia that he was using a bodycam, but I've been looking at the footage and it's
vertically shot. So that means that it was likely his cellphone.
But I want to just go through and show you some of the other killings that have happened lately where the people have actually been using many
times GoPros. If you look at the Paris supermarket killer, a U.S. terrorism expert says that he believes that in that 2015 attack in January
that he was actually recording the entire attack on a GoPro strapped to his body. Also the Jewish Museum in Brussels - that suspect- they believe he
had a camera strapped to his chest and in Toulouse in 2012, the French gunman there recorded the entire attack and sent it to Al Jazeera.
So people using technology - things like GoPro and then quickly getting it on social media many times.
QUEST: Samuel, thank you. U.S. President Barack Obama is expected to speak in New Orleans within the next hour. He's there to honor the tenth
anniversary of the devastating Hurricane Katrina. Our senior White House correspondence Jim Acosta is in Washington.
I mean, clearly for the previous administration, it was one of their lowest points. But the allegation is, Jim, that the federal government has
not done its work in full restoration and repair and making compensation.
So what's the president going to tell them?
JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Richard, full restoration no but a lot of strides have been made. And President Obama
will make a reference to the comeback of New Orleans this afternoon - ten years after Hurricane Katrina.
The President will use this opportunity to tout the city's resilience and they've certainly proven that and promise that the work of rebuilding
the Big Easy will continue.
But, Richard, there's more to the speech than that. Mr. Obama will also use this address to talk about climate change which is a major issue
for the White House these days.
The White House will urge cities across the United States to be prepared for the devastating effects of severe weather events triggered by
global warning.
And still though, this is very much a celebration of the strides New Orleans has made over the last decade.
Something he talked about as he toured one neighborhood earlier today with the city's mayor Mitch Landrieu. Here's what the President had to
say.
(BEGIN VIDEOCLIP)
BARACK OBAMA, U.S. PRESIDENT: The fact that we can make this many strides ten years after a terrible epic disaster I think is an indication
of the kind of spirit that we have and it's reflected in our mayor. And we're proud of him.
[16:40:07] MITCH LANDRIEU, MAYOR OF NEW ORLEANS: Thank you, sir.
(END VIDEOCLIP)
ACOSTA: Now the President will also talk about this issue of income inequality in the United States which was laid bare in New Orleans after
Hurricane Katrina.
And as for the subject of climate change, Richard, it's interesting. We're going to be hearing from the President over and over and over again
over the coming months. He's going to - we're going to - hear from him on this issue nest week when he travels to Alaska to see the effects of global
warming firsthand.
He's going to be the first U.S. president to actually visit the Arctic. He'll be marking what he feels to be a major, major issue up there
which is this dramatic, you know, --
QUEST: Right.
ACOSTA: -- retreating of the sea ice up there and so forth. So all of these events really fold into one another on this big climate change
push that's happening here at the White House.
QUEST: It's fascinating, Jim. Tell me - the President obviously feels in the last days of his presidency that he can get something done. I
mean, let's face it, COP31's coming up and we've had the emissions proposals by the administration.
Why does he feel that this is something that he's not going to be stymied by by the Republican opposition in Congress?
ACOSTA: Well he has been stymied by that opposition but, you know, he's talked about this issue, Richard, as you know from the days of 2007
and 2008. So he's been talking about this for a very long time. But he was not able to get cap and trade legislation passed through the Congress
and so what he's had to do is use that proverbial pen and phone through executive actions, sort of chipping away at this problem such as the EPA
guidelines that have caused a lot of controversy.
But they've also done things like raise the fuel efficiency standards -
QUEST: Right.
ACOSTA: -- in cars and trucks. And they feel like by doing this, by chipping away at it one issue at a time, administratively they could make a
difference.
And what he really wants to do when he goes up to Alaska next week is just show how much of the ice has retreated in the Artic and see if can get
people to really start focusing on this and it might be a major issue out on the campaign trail for the Democrats as well.
I think the President wants to spark that discussion as well.
QUEST: We look forward to hearing that, what the President has to say when he does speak and we'll have a CNN special report "Katrina, the Storm
that Never Stopped." Anderson Cooper goes back to New Orleans ten years after the deadly storm and finds the tenacity of the residents who refused
to give up on their city.
It's on Friday. It's at 9 am. in Hong Kong, 2 a.m. in London. And when the President speaks at the top of the hour, you will be able to watch
that speech. Of course it will be here on CNN. We are - we've wound everything up, we've paid the electricity bill and yes, you'll see it right
here on "Quest Means Business." (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: So it all started in The New York Times with an open letter from Burger King to McDonald's when Burger King suggested that they create
a burger called the McWhopper - the two companies coming together all in the name of Peace Day - Peace One Day - on September the 21st. And it
would all take place in Atlanta which is halfway between the two headquarters.
[16:45:11] Well McDonald's gave very short script to that idea. And today, Burger King retweeted the idea of peace, love, and burgers.
So the failure of the original plan to combine McDonald's Big Mac and Burger Kings Whopper - the McWhopper.
(BEGIN VIDEOCLIP)
Male Announcer: Burger King's proposing a burger war ceasefire to join forces with McDonalds on Peace Day and create the McWhopper. That's a
big burger with big ambitions.
(END VIDEOCLIP)
QUEST: Now McDonald's chief executive was quick to close out the idea and he didn't even like - he said basically, "We love the intention but we
think our two brands could do something bigger to make a difference."
And in response to "The New York Times" which must have cost thousands, he says, "P.S. A simple phone call will do next time."
Bruce Turkel of Turkel Brands joins me now from Miami. And, Bruce, you're going to be biased, I know you are. Because Burger King is based in
Miami - conflict of interest!
BRUCE TURKEL, CEO, TURKEL BRANDS: (LAUGHTER). I would be biased if you were serving me food, but you're not, Richard. Listen, the little guy
baiting the big guy is the oldest trick in the book. Fifty years ago Avis said `We're number two, we try harder,' and that's exactly what Burger King
did to McDonald's.
QUEST: OK, but they - ah, but hang on - they did it with a worthy cause. So when I read this story, you know, when I read this story, I
couldn't decide who came off worse - Burger King for trying but McDonald's because (FLIPPING LIPS) they looked a bit mealy-mouthed at turning them
down.
TURKEL: Well of course. That's exactly the trap that McDonald's was in. Burger King said it beautifully - they put it about - as you put it -
a worthy cause so you fell for it too. So that McDonald's has to be careful. If they say no, they sound like the cranky old man you young
whipper snapper!
QUEST: That's what they sounded like!
TURKEL: Well, (LAUGHTER) that's the problem. That's how they got caught. Look, face it, Burger King - one sandwich, one store, one day. It
doesn't make a bit of difference. They're not doing anything good even though they are Miamians much like myself.
They're not doing anything good, it was a scam, it was a trap and McDonald's almost fell into it. I think they handled it pretty well. I
loved the line, `Hey look, next time a phone call will do.'
QUEST: So you - your view is that McDonald's won?
TURKEL: My view is you can't B.S. a B.S.er, and that's exactly what they tried to do here. Look, McDonald's is more than twice the size of
Burger King. So footprint-wise they are the 900-pound canary that sleeps wherever it wants. It's Burger King's job to keep picking and it's
McDonald's job to never allow Burger King to look an equal.
QUEST: Right. So on the wider issue of getting a brand - getting brand notification - or noticed - when you are number two. You mentioned
the Avis. You see it also in the hotel business, you see it in the airline business -
TURKEL: Yes.
QUEST: -- as well. You know - "We try harder," "We will go the extra mile" - we're not big, nasty brand. Does it ever work?
TURKEL: Oh it works all the time. It worked for Burger King. Look, you're talking about it on the international news, they're talking about it
on domestic news. It works all the time. It's a great stunt. That's why it's done over and over again.
But don't kid yourself and believe there was any greater good that was trying to be accomplished here. And by the way, the best thing that
happened was that Burger King was able to put the `Mc' in front of their brand Whopper - the McWhopper. Wow, what a big brand name that is. That's
where they really scored.
QUEST: When you come up to New York I promise you, sir, I'll buy you Kentucky Fried Chicken (RINGS BELL).
TURKEL: (LAUGHTER) I'm looking forward to it.
QUEST: Good to see you, sir, thank you. Now you have to excuse me because how often have you taken a phone call when you shouldn't have done?
In church maybe ? At dinner, in a movie theater, or even you've just checked your messages.
(COMMERCIAL BREAK)
[16:51:08] QUEST: So I said there was no way I was going to do that and then he said, "Well, you're going to have that." You get the idea.
We've all been there. We've been checking our texts, we've been looking at our e-mails, we've been doing things we probably shouldn't be.
And you've all caught me on a few occasions when I've been broadcasting and you've seen me reveal more than I should. Samsung even
has a new phone specifically designed to help you have a peek when you don't want to get caught out.
(BEGIN VIDEOCLIP)
Male Announcer: Just one look - they'll never notice.
Male 2: Cheggers, you can keep failing and trying to sneak a peek. Or you can change the way you check your phone.
Female: It's 3-0 in the first.
Male 3: How'd you do that?
Female: Magic.
(END VIDEOCLIP)
QUEST: OK, it's the dilemma of the smartphone etiquette. Pew Research Center has released a poll that gauges when it's acceptable to use
your phone and when it most certainly is not. Join me in my world.
When's it acceptable? In the movies. Ah! Oh, I like this movie. The problem of course is in the movies where you're supposed to be quiet and
somebody insists either on having a light or the (WHISPERING) the 95 percent say it's not acceptable in the movie theater. Just stick to
popcorn. (END WHISPERING).
Then of course you have in the street. Look at all these people. She's on the phone and he's on the phone. Well the fact is he's also on
the phone. Because the reality is (WHISPERING) 77 percent of people say it's OK to be on the phone in the street. (END WHISPERING).
So now you come to the places where it most definitely is more difficult -- (BELL TOLLING) - places of reverence, your place of worship
whether it's a church, a temple or a mosque. (WHISPERING) In church 96 percent of adults say it is not acceptable to be on the phone or checking
messages. (END WHISPERING).
And so, finally, the bit where we all really have the difficult part - when you're sitting down to dinner with the family. Ah, isn't it nice to
have family dinner? What have we got on the menu tonight? Ah, now, well 88 percent of you say no, you may not be excused, thumbs down. You should
not be on the phone when you're at dinner.
So, put all that together. Something tells me she's not going to be around for much longer. Now, if you can't read on your phone there's
nothing wrong with a good book and we've got quite a few of them here in the "Quest Means Business" library.
The new edition to Stieg Larsson's "Millennium" series is out today although it's not one written by the late Danish author himself. Amara
Walker has the details.
(BEGIN VIDEOCLIP)
AMARA WALKER, ANCHOR FOR CNN INTERNATIONAL: She's back. Lisbeth Salander, the tattooed young hacker from "The Girl With the Dragon Tattoo"
has returned in a new novel with fans in Stockholm lining up to buy "The Girl in the Spider's Web" when it went on sale at the stroke of midnight.
Male: I'm here for the new books and I'm very excited for the story.
WALKER: It's the fourth book featuring the Swedish heroine who became hugely popular in the "Millennium Trilogy," the thriller selling more than
80 million copies in 50 countries and became a Hollywood movie starring Daniel Craig and Rooney Mara.
But there's a twist - original author Stieg Larsson died back in 2004, long before his books became popular. Now a new author picks up where the
story left off.
[16:55:03] DAVID LAGERCRANTZ, AUTHOR, "THE GIRL IN THE SPIDER'S WEB": If have this deepest, deepest respect for Stieg Larsson.
WALKER: David Lagercrantz, a Swedish author and journalist, was picked to pen the new novel. He says the assignment terrified him at first
but he tried to honor Larsson while adding something of himself to the story.
LAGERCRANTZ: If it will be a good book, I had to put my own passion in and my own ideas.
WALKER: One person who says they won't be reading the new novel is Stieg Larsson's long-time partner Eva Gabrielsson. And Larsson left behind
no Will when he died so his multi-million-dollar estate including the rights to his books went to his father and brother.
Gabrielsson has spoken out against the new book, saying it was just written for the money. Lagercrantz says he has the deepest respect for
Gabrielsson, but ultimately it will be readers who have the final say.
Male: I don't see a problem in a new writer.
WALKER: Nearly 3 million copies of the new novel are now available in more than two dozen countries with plans for another movie already in the
works.
It seems Stieg Larsson's story is far from over. Amara Walker, CNN.
(END VIDEOCLIP)
QUEST: And our "Profitable Moment" is after the break. "Quest Means Business." (RINGS BELL).
(COMMERCIAL BREAK)
QUEST: Tonight's very "Profitable Moment." The McWhopper - Good morning, McDonald's we come in peace. I just love it when two big
corporations slug it out for market share and one tries to get on top of the other by needling them with some sort nonsense like the whole McWhopper
idea.
I don't know who won or lost in that one. You and I are talking about it which means I guess they both can call it a draw. The McWhopper - not
coming to a restaurant near you.
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) I hope
it's profitable. We'll do it all again tomorrow.
END
