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Quest Means Business

Dell Buys EMC for $67 Billion; Global Economy Faces Major Transitions; IMF Meetings Roundup; Facebook UK Tax Controversy; How Central Banks Handle Crisis; NYC Ballet Back From Brink

Aired October 12, 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)

ISA SOARES, HOST: Markets edge higher, and the winning streak continues on Wall Street this Monday, the 12th of October.

Tonight, a $67 billion gamble. Dell seals the biggest tech deal in history.

Plus, Christine Lagarde tells us difficult times may be ahead.

And a price for tackling poverty. I'll speak to the winner of the Nobel Prize for Economics 2015.

I'm Isa Soares, and like Richard, I too mean business.

A very good evening to you. Tonight, Dell is getting itself an upgrade. The PC manufacturer has agreed to buy corporate data storage firm EMC. It

is the biggest tech deal of all time, and it's worth $67 billion.

By linking up with EMC, Dell is transforming itself from a PC and server maker to an IT service provider and will get its hands on EMC's 80 percent

stake in VMware. And VMware's software helps companies use their servers, basically, more efficiently. EMC also owns security firm RSA and Pivotal,

which specializes in data analysis and Cloud computing.

Well Dell, it seems, is not alone in refocusing on the enterprise markets. HP, IBM, and Cisco, they've all made similar moves. They're all facing

pressure from Cloud providers, as you well know, like Amazon, Microsoft, and Google, as companies move to the Cloud rather than building their own

data centers.

Well, let's put all of this into perspective. Joining me now is our business correspondent Samuel Burke. And Sam, before we talk about the

significance of this deal, let's talk a bit about EMC. What exactly do they do? Because to be honest, many people have never heard of them.

SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: So many people. All you really need to know about this deal is that a big name came in with some really

big money --

SOARES: Yes.

BURKE: -- and is getting big data. It's all about the big data, and if you just break it up into four different parts, that really shows what EMC

is.

So, on the one hand, you have data storage, Cloud computing, that's what we all call it. So, storing, whether it's emails, files.

Then you have security software, and you know I'm doing reports on hacking almost every day, it feels like. So, security software brings in a lot of

money these days.

Then you have virtualization software. Don't think about virtual reality. It's not that. It's all the things that you used to do in real life, like

meeting with -- face-to-face with people, making that all through conference calls, video conference calls.

And then data analysis. If you're storing all this data, if you're tracking all this data, a company like EMC has to do the analysis of it.

Those are the four major parts that Dell is getting in this gigantic deal.

SOARES: But looking at this, looking at the breakdown, if this deal's approved, Samuel, this looks very different from the Dell that you and I

know, that you and I grew up with. But really, what it shows is Dell has no choice but to move because sales -- computer sales -- they're down,

aren't they?

BURKE: This is going to be a completely different company. Just before we came on set, you and I were looking at the numbers for the market share

when it comes to personal computers. Dell has just over 10 percent. Completely different from how they started.

But let's just go back a little bit so we can figure out how we got here. Back in 1984, Michael Dell founds the Dell company. At that time, he's a

student at the University of Texas at Austin, so he's trying to make a computer that can really compete with the IBMs that are the king of their

time.

Then in 1996, Dell begins selling computers via a website. That was revolutionary for its time. And eventually become very big with

commercials like these.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Getting a Dell is so easy. All you've got to do is call or go online, and the Dell folks will help you build the computer

that's right for you. Yes, a Dell desktop for $799 or Notebook for $1149. Well, don't just sit there. At these prices, you can get a Dell with what

you find -- right here. Dude, you're getting a Dell.

(END VIDEO CLIP)

BURKE: Isa, I remember thinking how cool that guy was, and he could order a computer right from his couch using a computer. I remember for the first

time buying a laptop over a website and you could customize it.

But let's just get back to that timeline. In the year 2000, that's really when Dell peaked. It had a peak share price of $51. But then, you

remember, the tech burst -- the tech bubble burst, and then by 2013, Dell goes private just under $14 a share.

SOARES: What is quite a corporate career, isn't it, right there? I've got a quote, though, from an analyst that really struck me. He says "Dell

wants to become the old IBM corp" -- you mention it there -- "one-stop shop for corporate clients. That model fell apart a couple of decades ago.

Reviving it would be a stunning coup for Dell." I mean, it's a lot of money, so does this make strategic sense here?

[16:05:04] BURKE: Well, it's a huge amount of money, but they paid -- and yes, they paid a premium for the stock, but only 28 percent more than the

market cap last week.

Listen, Michael Dell built a very strong company. He knows the way it is right now, it cannot stay that way. He has to change gears, and so this is

the way he sees to do it, and many other companies are doing it as well.

So, yes, there's a lot of competition, but I don't think there was any other way to go for a company like Dell to stay in the technology industry.

SOARES: Absolutely. It just has to evolve at this stage, doesn't it? Samuel Burke, thanks very much, Samuel.

Now, after meeting with leaders from around the globe in Lima, Christine Lagarde tells Richard her biggest concerns about the global economy.

You'll want to hear them after the break.

(COMMERCIAL BREAK)

SOARES: IMF chief Christine Lagarde says the global economy is undergoing several major transitions. Growth is on the move. China is transforming.

And US interest rates may be about to take off. She warns that all this needs to be handled properly by the world's policymakers.

The IMF managing director sat down with Richard Quest at the Funds meetings in Lima. Richard asked her what she's taking away from the discussions in

Peru. Take a listen.

(BEGIN VIDEOTAPE)

CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: We're seeing growth moving a bit from the emerging market economies to the

advanced economies. We're seeing risks transitioning from the advanced economies to the emerging markets.

We're seeing China transitioning from its traditional growth model to a much more consumption, domestically-based growth model, and to an exchange

rate that is going to be determined probably in a different fashion.

And that implies -- and of course, a transition by the Fed at some stage from nine years of no interest rate rise to interest rate rise. So, those

are the transitions.

The trade-off is what policymakers are going to have to decide. Do the assimilate? Do they have the space to do that? Do they tighten their

monetary policies because inflation is going up? How do they anticipate what's going on in the rest of the world? All of that will be their trade-

off.

RICHARD QUEST, CNN INTERNATIONAL: What worries you about those transitions and how they are managed?

LAGARDE: Well, if they are poorly managed, and if all the risks were to materialize, it could be a very, very difficult. So, difficult challenges,

transitions in the way, and good management and good communication absolutely required.

[16:10:06] If China transitions from an export-driven and infrastructure investment-based model to a consumption and domestically-based model, that

is a massive transition. If it's well-managed, if it's orderly, it's a win-win, for China and for the world. If it is not well-managed, it can be

difficult.

QUEST: The word I hear --

LAGARDE: Yes?

QUEST: "If." If China isn't managed, if the Fed doesn't communicate properly. There are a lot of "ifs" out there.

LAGARDE: Yes. Well, that's life, you know? There are risks, and we have -- the job of the IMF, the job of the finance ministers, is to anticipate

those risks and to prepare for them. So, I'm not surprised that they are all in if-if-if. The real issue is, what do they do? How do they prepare

themselves for the case where risk would materialize?

QUEST: The Fed decided not to move.

LAGARDE: Yet.

QUEST: Yet.

(LAUGHTER)

QUEST: You didn't want them to move yet. When would you like them to move?

LAGARDE: As they said. They said very clearly that they would be data- dependent, that they would want to see actual signs showing employment, participation in the job markets on the one hand, and inflation moving up

on the other hand. When that happens, if it's well-communicated, well- transitioned, it's a good sign the US economy is doing well.

QUEST: Have we been too gloomy this year, here, do you think?

LAGARDE: When you see growth going down from last year, when you see structural changes at play, like the transitions that I've just referred

to, whether it's the emerging market economies in general, China in particular, the Fed, volatility. There are some serious challenges that

need to be addressed.

But at the same time, what makes me much happier is what I perceive as the beginning of a rise of multilateralism. Because when you have agreement on

the sustainable development goals, agreement on the financing of development at the Addis Ababa conference, a move on TPP that is extremely

promising, hopefully some serious commitments at -- in Paris on COP21 to cap the increase of temperatures to 2 percent --

QUEST: Yes.

LAGARDE: -- that is positive, and that is an indication that people understand that they're not just isolated in their courtyard, but they have

to be mindful of what's happening in the rest of the world.

(END VIDEOTAPE)

SOARES: Let's get more on what this all means as comments by IMF chief as well as what we heard from IMF and from many of the meetings there in Lima.

I'm joined by Martin Wolf, he's a chief economics commentator for "Financial Times" and well-known face here on QUEST MEANS BUSINESS.

Martin, you too were in Lima with Richard. What did you take away from those meetings? What stood out to you?

MARTIN WOLF, ECONOMICS COMMENTATOR, "FINANCIAL TIMES": Well, I think the - - what Christine Lagarde said is a reasonably accurate picture. The -- there is a sense that the world economy is losing momentum. This is

particularly and overwhelmingly the case in emerging economies.

Interestingly not, at least from the figures that most people agree to, in China, but in the rest of the emerging world. I've been thinking that we

used to say that when the US sneezed, everyone else catches a cold. And now, it's when China sneezes, everybody catches a cold.

And I think that this is, indeed, just the picture we get of a gloomier view in the emerging world and some real concern about financial risks

associated with that that may come back and haunt the industrial countries as well.

SOARES: Let's stay with China, because I know Christine Lagarde avoided blaming China for what is or has been really lackluster global growth, and

instead, she said the slowdown was, if I remember, the healthy result of a country that needed reforms. Was everyone else that you were talking to,

Martin, were they singing from the same hymn book when it comes to China?

WOLF: No. What is really interesting about the discussion of China -- and I -- this is really extreme -- is that there's such a wide range of views,

not only on what is likely to happen, but even on what is happening right now.

So, the IMF, and the official view, of course, is -- continues to be that China is growing reasonably well despite the kerfuffles we had in the stock

market and the exchange rate, and close to 7 percent a year.

But there are other quite well-informed people who are convinced it's already 4 or 5. And the range of opinions on this and the mistrust of many

people about the official statistics is really quite striking. I mean, I've never seen this for such an important economy before.

[16:15:01] And at the same time, of course, there are wildly diverging views on whether China can manage this transition smoothly. And if it

doesn't manage it smoothly, what will happen.

And I think an important element in this is the -- what happened over the stock market and what happened over the exchange rate sort of -- it lost a

bit of the confidence that people had that however huge the difficulties of China -- and they clearly are huge, the huge challenges -- the Chinese

authorities know what they're doing.

Well, people are not quite so sure about that. So, there's real uncertainty, I think, striking, among the experts about what's actually

happening in China.

SOARES: Very much. Very hard to read those tea leaves, isn't it? Martin Wolf for us there in New York. Thanks very much, Martin. Good to see you.

WOLF: It's a pleasure. Thank you very much.

SOARES: Now, leaders at the IMF meetings endorsed a plan to close loopholes that let major corporations avoid paying a fair share of taxes.

A new report on how much -- or shall I say, how little? -- Facebook pays in taxes here in the UK shows just how much catching up really needs to be

done.

Now, Facebook paid $6,641 in corporation tax last year. Now, if you compare that to the average bonus it pays each of its 362 UK staffers,

that's $147,000. Now, the payouts help Facebook take a huge accounting loss in Britain, lowering its UK tax bill.

Well, earlier, I spoke with Margaret Hodge, a member of the UK parliament with the opposition Labour Party. She said none of this really shocks her

or surprises her. Take a listen.

(BEGIN VIDEOTAPE)

MARGARET HODGE, UK MEMBER OF PARLIAMENT: I'm really cross, but I have to say I'm not surprised. Facebook is acting like many other international,

global companies whereby they set up artificial financial structures which have no other purpose than to avoid tax.

And I think all that politicians like I am asking of these global companies is that they should pay their fair share of tax on the profits they make

here in the UK.

SOARES: We have a statement from Facebook spokesperson who had this to say, Margaret: "We are complying with UK tax law and, in fact, in all

countries where we have operations and offices. We continue to grow our business activities in the UK."

So as we can hear, Facebook is complying with UK law, which clearly shows the problem lies with the UK's complex tax code. So, what more can be

done? Because we've heard this argument before.

HODGE: Well, let me firstly say that it's not just the UK tax code, it's international tax rules. And this is what the OECD is attempting to get

agreement on that people should rewrite those tax laws. That's the first thing to say.

The second thing is, all these tax codes are not black and white, they're not unambiguous. They are always open to interpretation. But what

Facebook is doing is what so many other companies do, which is interpreting the law in a way that parliament never intended.

UK parliament never intended that Facebook should not pay their fair share of tax. Of course we want them to pay their fair share of tax. And I

think my argument is one with Facebook's behavior. I don't think they're acting properly.

I think they have a social responsibility to the societies in which they operate, to the economies in which they make money, and they should

contribute back. They need those public services that their money will help to buy.

And I also think that it's too easy to blame the politicians. I think responsibility rides with the corporations to simply pay a fair share of

tax on the profits they make here in the UK. We're not asking them to pay more than that. What they are doing is paying no tax at all.

SOARES: We know the European Commission is investigating both Google and Amazon. Do you think, Margaret, it's just a question of time before

Facebook ends up on that list as well?

HODGE: Well, Facebook is yet another example of yet another global corporation that is simply arranging a complex web of companies with no

other purpose to avoid tax. So, what we -- what that suggests to you is you've got something systemic that you have to tackle.

That's why writing those international rules are so important. That's why greater transparency is so crucial. And that's why tougher tax authorities

are also so important.

(END VIDEOTAPE)

SOARES: Very strong words, there, from Margaret Hodge. Still to come right here on QUEST MEANS BUSINESS, one of the world's top ballet companies

has been tip-toeing on the brink of disaster. The New York City Ballet was near financial ruin, but a savior danced in to rescue it. We'll report --

we'll have that report ahead.

[16:19:58] (COMMERCIAL BREAK)

SOARES: Seven years on from the global financial crisis, economic growth is still a concern. Some people are even asking if the next recession

could be just around the corner. Max Foster takes a look at how central banks can make a difference.

(BEGIN VIDEOTAPE)

MAX FOSTER, CNN INTERNATIONAL CORRESPONDENT (voice-over): When financial turmoil comes along, central banks go into crisis mode, trying to keep

recessions and depressions at bay with every tool they've got. Turns out, they only have two: cut rates, print money.

That's what happened when America's housing collapse snowballed into a global financial crisis. Starting in 2007, the US Federal Reserve slashed

interest rates 10 times in 15 months. During 2008 and 2009, central banks around the world cut rates 299 times.

But when near-zero interest rates didn't get credit flowing again in the US, the Fed embarked on an historic experiment: creating money out of thin

air. It started buying massive amounts of bonds, eventually ballooning its balance sheet to more than $4 trillion.

Other central banks followed, with the so-called "quantitative easing." But this wasn't the first time. Japan did it from 2002 to 2006, pushing

the BOJ's -- the Bank of Japan's -- balance sheet above 150 trillion yen at its peak.

Economists are split on whether that stimulus really helped Japan's economy, but the tool was out of the bag, and central banks have been using

it ever since.

(END VIDEOTAPE)

SOARES: Now you know we always keep talking about the Fed, will they, won't they, and why that is so important.

Now, the New York City Ballet has bounced back from a crisis of its own. Its dancers are known for their fancy footwork. And now, so is the company

behind them. The city's famous ballet has brought itself back from the brink. CNN's Clare Sebastian took a closer look at a big turnaround.

(BEGIN VIDEOTAPE)

CLARE SEBASTIAN, CNN PRODUCER (voice-over): At the New York City Ballet, they're putting the final touches on Act III of Swan Lake. It's a turning

point in the story, and there's no room for error. The ballet's executive director, Kathy Brown, knows exactly how they feel. Six years ago, she was

hired to rescue a company in crisis.

KATHY BROWN, EXECUTIVE DIRECTOR, NEW YORK CITY BALLET: The deficit had been increasing over the past several years, and it had reached a high

level of $8.5 million, which our size of budget, which was roughly $65 million at the time. That's a lot.

[16:25:09] SEBASTIAN: The US was in recession, and people were cutting back on culture. She cut costs, reducing expensive foreign tours. She

also realized it was time to rethink the marketing strategy.

BROWN: The way that people consume culture now is so dramatically different from what it was in the past. And you just have to accept that

it's not going to go back.

SEBASTIAN: To reach new, younger audiences, she added social media to the repertoire and encouraged dancers to get involved.

By 2013, those efforts had turned the deficit into a small surplus, and there was one more crucial ingredient: star power. Over the last four

years, the ballet's fall gala has brought top fashion designers and choreographers together and raised more than $10 million for the company.

The idea came from one very influential board member.

SARAH JESSICA PARKER, ACTRESS AND NYCB BOARD MEMBER: Ballet has a long history of really important designers designing for productions and new

ballets. And we think that there are people who are coming here tonight for the first time, and I'm willing to bet the farm on the fact that this

will not be the last time they'll be here as an audience.

SEBASTIAN (on camera): Annual ticket sales are now up 26 percent since they started the turnaround plan. Last year, that brought in revenues of

over $31 million. That's 311,000 tickets.

SEBASTIAN (voice-over): So, whether it's perfecting Act III of Swan Lake or running the business of the ballet, the key right now is keeping up the

momentum.

(APPLAUSE)

SEBASTIAN: Clare Sebastian, CNN, New York.

(END VIDEOTAPE)

SOARES: Lovely. Now, next, a warning to commercial airlines: watch out for low-flying missiles. Europe's flight safety agency issues and alert

about flights over Iran and Iraq. Miles O'Brien explains it all for us after this break.

[16:27:10]

(COMMERCIAL BREAK)

[16:30:25] ISA SOARES, CNN ANCHOR AND CORRESPONDENT FILLING IN FOR RICHARD QUEST OF "QUEST MEANS BUSINESS" SHOW: Hello, I'm Isa Soares. Coming up in

the next half hour of "Quest Means Business," Russian strikes on Syria force European airlines to change course.

And I'll speak to the winner of the Nobel Prize for economics Angus Deaton.

Before that, these are the top news headlines we're following for you this hour.

Turkey's prime minister says ISIS are the main subject suspect in Saturday's deadly bombings in Ankara. Turkish authorities say two ISIS

bombers were responsible for the attack on a peace rally which killed at least 97 people.

Prime Minister Ahmet Davutodlu says multiple terror groups are being investigated.

(BEGIN VIDEOCLIP)

AHMET DAVUTODLU, TURKISH PRIME MINISTER, VIA INTERPRETER: These three terrorist organizations are seen as potential suspects for this attack.

But when we look at how the attack happened and the general tendency of the events, Daesh has become the primary suspect.

(END VIDEOCLIP)

SOARES: Iranian state media says "Washington Post" journalist Jason Rezaian has been convicted on espionage charges. He has been jailed for

more than a year. And much of his judicial process has been secretive. It's not yet clear what Rezaian's sentence will be. His legal team has 20

days to appeal the verdict.

Police here in London say officers will no longer be stationed outside the Ecuadorian Embassy where Julian Assange has spent the last three years.

The Metropolitan Police says while it still hopes to arrest Assange, it can't justify being on 24-hour guard anymore. Assange is taking refuge in

the embassy to avoid being extradited to Sweden where he faces allegations of rape.

The American dentist who killed Cecil the Lion will not face any charges. This after Zimbabwe's environment minister said his papers were in order.

Walter Palmer killed the lion with a bow and arrow back in July. It prompted international outrage and protests outside his dental practice in

Minnesota.

Airlines flying over Iran and Iraq have been warned of low-flying missiles. The European Aviation Safety Agency is issuing the alert after Russia fired

missiles from the Caspian Sea into Syria.

Now it says the missiles were launched well below the airspace normally used by commercial aircraft and did not recommend route changes.

However, some airlines are taking no chances and have altered their flight plans.

Miles O'Brian CNN aviation analyst - he's following this story for us. And, Miles, what are you hearing from International Civil Aviation

Organization?

Are carriers indeed changing their routes?

MILES O'BRIEN, CNN AVIATION ANALYST: Well, Isa, by and large the answer is yes. As a matter of fact I checked on one of the online providers of real

time information radar telemetry from airlines.

And if you look at Syria airspace, it's all but vacant. There was only one aircraft that I saw over Syrian airspace. It was a domestic Syrian flight.

You see a huge corridor to the north which goes to Turkey, down to Iran, and then a corridor to the south which goes through Saudi Arabia.

So the airlines are deciding the better part of valor here is to avoid Syrian airspace, obviously thinking, I'm sure, about MH17.

SOARES: And the corridors you're talking about - these are - you know, in the Caspian Sea, Miles, they're very, very busy.

What will be the impact if these routes are indeed curtailed?

O'BRIEN: Well, it's a little more of a challenge for the controllers. It adds a little bit of cost to the airlines as far as the fuel costs because

they can't take direct routes that they would prefer.

But given the potential consequences, you know, in July of 2014 298 people died in the midst of the war going on in Ukraine and when MH17 flew through

that.

So it's important to not take chances clearly.

SOARES: You know, you're talking about fuel burn but also longer flights no doubt if they are curtailed and they have to seek other routes.

You mentioned MH17 because this is interesting that the warning's coming as the Dutch safety investigator preparing to publish this investigation

report in the shooting down of the aircraft.

That's expected tomorrow. What are we expecting to come out of it this, Miles? You've been following this story for us.

O'BRIEN: Well, it is an interesting coincidence, isn't it, Isa, that all this would happen immediately prior to that report coming out?

This is going to be very interesting. This is - there are two investigations - two Dutch investigations. The reason the Dutch are

involved is that there are a huge number of Dutch citizens onboard that aircraft. A

[16:35:07] And they do have a very sophisticated accident investigation capability. This technical report will get into the issue of, you know,

what exactly brought down that aircraft.

We already have some strong indications, if not really concrete proof, that it was struck by shrapnel, caused inflight break up which would lead us to

believe that a surface-to-air missile did in fact strike this aircraft.

I suspect that will buttress all that case. We know with all but great certainty that it was a Russian-made surface-to-air missile installation.

The question is who had control of it and what where the circumstances around it. And was this aircraft MH17 flying near hostiles, if you will in

the midst of a war zone which might have caused some confusion.

Whether the Dutch are going to be able to solve all that is unclear because the data has been slow to come forward.

SOARES: You know, what a memory when 298 people died onboard. Thanks very much, Miles O'Brien there for us.

O'BRIEN: You're welcome, Isa.

SOARES: Now, the situation in Syria will be a major talking part for the first presidential debate for Democratic candidates on Tuesday.

New polls from two crucial primary states show Hillary Clinton with a commanding lead. Now in Nevada where Tuesday's debate takes place, she is

16 points ahead of Bernie Sanders, you can see there.

Clinton has even a greater lead if you look at South Carolina. That's 25 points. Vice President Joe Biden who has yet to announce whether he'll run

comes in second there.

CNN's senior political reporter Nia-Malika Henderson is in Las Vegas. She joins me know. And, Nia-Malika we're less than what - 30 hours or so to go

before this kicks off?

Talks us through the preparations and what you think we may expect in terms of flashpoints in this debate.

NIA-MALIKA HENDERSON, SENIOR POLITICAL REPORTER: Well I think you will see flashpoints, particularly between Hillary Clinton and Bernie Sanders.

In some ways he is nipping at her heels doing much better than a lot of people thought he would coming into this debate with a lot of massive

crowds that he's gotten over these last many weeks.

And so I think they're going to be trying to really draw out the contrast. One would be if you're Bernie Sanders, to talk about Hillary Clinton's vote

on the Iraq War.

That of course was something that doomed her in 2008. He's been talking about that in the days leading up to this debate.

He wants to portray himself as someone who's sort of always been on the right sight, where the Democrats think the party should be and then portray

Hillary Clinton as someone who has just recently converted to some of the points - or places - that the party wants her to be.

So I think that's going to be interesting. For Hillary Clinton's part, she's a very seasoned debater. I think her underlying message is basically

going to be that she can govern and that her plan's - much more moderate and much more practical.

That is her, I think, calling card here - sort of the pragmatist who can also govern.

SOARES: Yes, and we know that she's got the center position within the debate there. She's right in the middle, she's also the frontrunner.

How much do you think the fact Bernie Sanders would go after her, in particular when it comes to the Trans-Pacific Trade Deal which she worked

on with President Barack Obama.

HENDERSON: That's right and she has recently come out to say that she is against that deal - 45 times as she was secretary of state, she talked

about the deal in positive terms -- basically pushed for it. Now she's come out on a different side.

You've heard from Bernie Sanders again, this idea that he was always on the side of unions and always on the side of progressive Democrats and being

against TPP and essentially what took Hillary Clinton so long.

So I think that'll be another flashpoint. But, again, as of now, Hillary Clinton is on the right side. After she came out against TPP, you had

unions come out to support to support her.

So she has changed her position, but in many ways even if people sort of - even if people -- see it as sort of a political maneuvering, it ultimately

benefits here because she's where the party is.

SOARES: Fascinating political television no doubt, Nia-Malika for us there in Los Vegas. Thanks very much, Nia.

Now for viewers in Europe, the debate begins in the early hours of Wednesday morning. It will be replayed, so do not fret on Wednesday night,

starting at 8 p.m. London time. - that is 9 p.m. in Central Europe, only here on CNN.

Now for the candidates flying back and forth the U.S., there's little time to rest. For the business traveler in economy, though, there's a new

option that will let you stretch out and relax. We'll explain after the break.

(COMMERCIAL BREAK)

[16:42:14] SOARES: Now, for the business traveler on a long-haul flight, there are two options really -- bolt upright in economy with your knees

around your ears for hours on end -- might be the case for Richard, I'm not sure, just is no problem for me - or thousands of dollars for a business

class seat.

Now Air New Zealand's adding a third option - the so-called cuddle couch. Richard Quest takes flight and really stretches out.

RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: There have been many developments at the front of the

plane, in the middle of the plane and very few core seat developments at the back.

Why is that, do you think?

CAM WALLACE, CHIEF SALES AND COMMERCIAL OFFICE, AIR NEW ZEALAND: We, you know, you always look at where they extract the yields and their passenger

revenues from, so a lot of time and energy focus has gone into the front end where the business travelers are situated because clearly that's where

we're getting a lot of our returns.

And at the back end of the plane, there's been a lot about efficiencies and how we can get more passengers into the plane and we can become more

economical.

So when we looked at the suites (ph), or what happened, we redefined travel for the economy passenger.

QUEST: This is the sky couch - a row of three coach seats that convert into a space where you can recline. It's wide enough for two people and a

child. It adds a touch of class to the economy cabin

UNIDENTIFIED FEMALE: So we can recline the seat using the special -

QUEST: Yes?

UNIDENTIFIED FEMALE: Yes. And then to get the lid raised up, we push the button, it flips up and then.

QUEST: Ah, so you lock it into position.

UNIDENTIFIED FEMALE: Yes.

QUEST: Right. OK.

The sky couch offers a sought-after fully flat position and only costs a bit more than premium economy.

When you look at your sales for this, does it sell well or is it a hard sell?

WALLACE: No, it's become an easier and easier sell as we have more and more aircraft - the 787, the 77, 200s and 300s - all now have this product.

So, what our aspiration is, to have a very consistent fleet with sky couch right through the fleet.

QUEST: Because what you don't want is everybody having it?

WALLACE: Correct, yes. We're surprised that there hasn't been incremental innovation in the air in economy.

It's been pretty consistent for, you know, 20-odd years now in terms of what you get so that's why we had to disrupt ourselves and challenge

ourselves rather than look at competitors and what they were doing.

UNIDENTIFIED FEMALE: And it's all ready for you, Mr. Quest. Here you go.

QUEST: There is no doubt that the so-called cuddle couch has been the most interesting and exciting development for long-haul economy passengers in

decades.

[16:45:00] Where else do you get effectively the chance to lie out, stretch out and sleep?

(END VIDEOCLIP)

SOARES: I do like the cuddle couch. It looks really, really comfortable. Let me know your thoughts. Tweet me @isacnn, tweet Richard @questcnn -

would you actually pay a bit more to sleep on that cuddle couch?

Now, still to come right here on "Quest Means Business," poverty, inequality and wellbeing. The winner of this year's Nobel Prize for

Economics is an expert on the things which can change lives.

He'll be joining me after the break. First though, a highlight from "Make, Create, Innovate."

(COMMERCIAL BREAK)

SOARES: Welcome back to "Quest Means Business." Now the Nobel Prize for Economics has gone to a leading academic who's known for his work on

hardship and inequality.

Princeton University professor Angus Deaton won the award for his analysis of consumption, poverty and welfare - issues that have been among the most

important in economics this year.

Now, inequality was a key theme at this year's World Economic Forum in Davos back in January. During his U.S. visit, Pope Francis called for

action on poverty and income inequality.

And the migrant crisis is all about inequality. Millions of people leaving their home countries in search of security and better lives.

Well joining us now on the phone from Princeton, New Jersey is Nobel Prize winner Angus Deaton. Professor, thank you very much for taking the time to

speak to us.

First of all, congratulations. Talk us through and take us through the emotions you went through when you got the call. Because many of us will

never come close to winning or let alone being on that list.

ANGUS DEATON, NOBEL PRIZE WINNER IN ECONOMICS: Yes, absolutely. Thank you very much for having me on. It was quite an experience.

I mean, I, of course - like you and many other people I've read what it this was like - but of course it's really, really different. And it's

early in the morning. You know pretty quickly what it must be, which doesn't mean I was expecting it - of course I wasn't expecting it.

There are many, many great economists out there who deserve this honor, and so while I knew I was always a possibility, I didn't expect to get the

call.

And the call was just very nice, very wonderful. They talked about my work in a very informed way. I think they know more about my work than I can

remember -

(LAUGHTER)

DEATON: -- and they were very complimentary, and they were concerned that I might think it was a prank. I don't know if anyone's ever had that prank

played to them, but it wasn't.

[16:50:10]And I know two members of the committee and it was very pleasant to hear their voices.

SOARES: I remember the committee saying that your work had quote, "Enormous influence, particularly in India where the government had

reshaped the measurement of poverty" using your research, using your work.

But, as you know, as India grows and we see imbalance between those who have a lot and those who have nothing - who live in poverty, -- how do you

make sense of this imbalance, Professor?

DEATON: Well, I'm not sure anyone really can make sense of it. It's one of the great puzzles of our time. Some of it I think is just data

inconsistencies, and that's one of the things - I know this is a bit boring to your listeners - but, you know, a lot of the growth in India and the

failure for poverty to go down as fast has to deal with the fact that the data are not consistent with one another and it would be really nice to get

the answer to that.

But, you know, it's a very great paradox, that you've got India which is growing very rapidly and yet it's leaving an enormous number of people

behind.

I think they're not being left behind in that they're catching up, but they're still at a terrible level of destitution.

There are still millions of children who is too short and are not growing as they should grow.

SOARES: Now in your research you argue that the world is a much better place - many people have gained in terms of wellbeing from GDP growth.

But we've also heard last week from the IMF - in fact we heard from IMF today in fact while speaking to Richard Quest who said they expect slower

growth and they had a gloomy outlook.

Do you think, Professor, this is a big threat to our wellbeing?

DEATON: Yes I do, honestly, I really, really do. You know, my view of the world becoming a better place is over a very long time period, though of

course the millions of people who've come out of poverty in India and China have done very well - or got much better in recent years - but I do think

the slowing of growth together with the massive increases in inequality in Western Europe and North America, are very serious threats to our future

wellbeing.

And of course those are not two independent issues - they're linked.

SOARES: Professor Angus Deaton, congratulations on the Nobel Prize winner there for economics and we hope you are celebrating in style tonight.

Thank you very much, Professor.

DEATON: Thank you very much indeed.

SOARES: Now, the power of education to improve people's lives is drawing Chinese students to the United States. However, getting a genuine American

schooling can prove very costly before those young people even step through the door.

Saima Mohsin has the story for us.

(BEGIN VIDEOCLIP)

Female 1: What are you doing?

SAIMA MOHSIN, CORRESPONDENT: Moving abroad can be a culture shock, so these students have made a witty guide on YouTube.

(HANGING LAUNDRY) Female 2: Usually I do it on the balcony, but since we don't have one --

Female 1: Hmph.

MOHSIN: But for thousands of Chinese high schoolers like Brittney, it's precisely the differences that draw her to the U.S.

BRITTNEY CUI, HIGH SCHOOL STUDENT: You have different perspectives from students around the world and you get to - I get to join those different

clubs, extracurricular activities.

But in China the student focus more on their career.

MOHSIN: She's not alone. Her friends want to study in the U.S. too.

Female 1: I want to go to one of the liberal arts colleges because I like their sense of very tight community and diversity.

Female 2: I like the open curriculum that some colleges offer because I will be able to try out so many courses.

Female 3: I like Brown (ph) University because I think it is one of the happiest school in the world.

MOHSIN: Chinese students make up the largest number of foreigners studying in the U.S., going up from just under 70,000 in 2007 to more than 270,000

in the 2013/2014 academic year - more than a quarter of a million.

There's a big push for the next generation to branch out and learn from the West, and then to bring knowledge back home to help narrow the gap between

the world's biggest and second largest economies.

Brittney's interested in politics and wants to be a human rights lawyer, something that may prove difficult when she returns home.

CUI: I am attracted by the level of civil engagement in the U.S. The citizens in this country, they're proud of their own country, there are

delegates to a congress and your words can be heard by the government. It feels pretty good for me.

MOHSIN: Back at home, Brittney's parents didn't take her study time seriously at first, and it's hard for some Chinese parents to let go.

LIU WEI, BRITTNEY'S MOTHER, VIA INTERPRETER: I only have one child, so I wanted her to stay with me, especially when we parents get old.

[16:55:04] MOHSIN: She and her mom made a trip to the U.S. and then both her parents were onboard.

WEI, VIA INTERPRETER: There's definitely no harm to get to know this culture and this country.

MOHSIN: And it's not cheap either. In addition to college fees, the agency the family are using charges $25,000 with no guarantees of

admission.

But Brittney's hard work and determination, her mom says, whether she gets in or not, means she's worth every cent. Saima Mohsin, CNN Beijing.

Now oil prices have been under pressure - severe pressure I should say - this session. We'll get all the numbers when we come back. You stay right

here on "Quest Means Business."

(COMMERCIAL BREAK)

SOARES: Now before I leave you, I want to get a quick check at how markets ended the day on Wall Street. The Dow rose 47 points - just over 47 points

over a quarter of a percentage point.

Trading was thin though due to the Columbus Day holiday in the U.S.

In terms of shares, AB InBev shares sold ever so slightly, and that came of course after the growth (ph) at fresh takeover bid for SABMiller. I think

it's the third already they're putting forward.

And in terms of oil, well a weeklong rally in oil came to an abrupt halt in London and the U.S. Crude prices fell more than 4 percent. You're seeing

that number there.

That came after reports showed OPEC producers boosted output in September. OPEC believes demand for its oil will rise next year as U.S. producers cut

production.

And that does it for us for this hour. Thank you very much for joining me and for watching "Quest Means Business." I'm Isa Soares. The news

continues right here on CNN - the world's news leader.

END