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Quest Means Business
Dow Up 161; Fed Begins Meeting. Aired 4-5p ET
Aired December 15, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
RICHARD QUEST, HOST: Closing bell is ringing on Wall Street. The Dow is up a very strong 161 points as the Fed begins its two-day meeting. And that is
a wimpy gavel to close trading on Tuesday, December the 15th.
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QUEST: Let the Fed fun and games begin. Janet Yellen, kicks off the economic event of the year. With a rate rise on the decks, the markets are
rallying. The Dow's up about 1%.
And we'll tell you how women are gaining ground. The millionaire battle of the sexes.
We've got an hour together, I'm Richard Quest and of course I mean business.
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QUEST: Good evening, we will bring you all the day's business news in just a moment. We must begin, though, with the breaking news on the
unprecedented shutdown in America's second-largest city where the schools have been closed.
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QUEST: All schools, all more than 900 of them in Los Angeles are currently closed over a threat involving backpacks.
Now in the past few moments the California representative, congress representative, Adam Shift says the threat appears to have been a hoax.
There's been some very strange goings on during the course of the day.
Kyung Lah, is with me from Los Angeles.
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QUEST: OK. The latest news from the congressman is that they are now pretty much saying this is a hoax.
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: A preliminary assessment that it's a hoax. We're not hearing that from the LAPD here, we're not hearing
that yet from the Schools Superintendent.
(BEGIN VIDEO CLIP)
LAH: But we are certainly hearing it from Washington. A representative of Washington who represents this particular area, the Burbank area which is
right near - not far from where I'm standing and the assessment is that all of this was a hoax. How did this unravel? How did this happen?
Well according to the Police Chief here, the e-mail came in late last night. The school superintendent speaking with the schools police chief
became very concerned when reading that e-mail, that it was very specific, that it talked about assault rifles, it talked about certain types of
weapons that were going to be left in the schools. It referenced bullying, the person who wrote this saying - it referenced bullying as well as some
international elements.
So because of all of this, the LAPD said that it wanted to close down the schools. You've mentioned the word unprecedented. We can't find another
example of when all 900 schools in the LA unified school district were completely shut down. All the students are out of the schools and the
police are right now walking through every single one of these schools trying to determine if it's going to be safe for kids to return to school
tomorrow.
Already, though, we are hearing from this room at the podium a number of officials beginning to pay defense for this move this morning. Here's what
the L.A. Police Chief said.
CHARLIE BECK, LOS ANGELES POLICE CHIEF: It is very easy in hindsight to criticize the decision based on results that the decider could never have
known. It's also very easy to criticize a decision when you have no responsibility for the outcome of that decision.
The school district safeguards three quarters of a million lives every day. When they make a decision they have to take into account the safety of the
children of Los Angeles. And I think it's irresponsible based on facts that have yet to be determined to criticize that decision at this point.
(END VIDEO CLIP)
LAH: So why is he playing defense already? Because New York, according to sources at CNN, got the exact same e-mail but had a completely different
response, Richard. So a tale of two cities, one e-mail, two very different responses. Richard?
QUEST: The Phrase that I've heard all day Kyung is an abundance of caution. They took this measure to be on the absolute safe side. But then the
opposite is, you know, they must have had some grounds for believing there was a bona fide threat, not some just gratuitous threat by -- that had no
relevance.
LAH: We don't know if they've gotten anything further than this e-mail. All we know is and all that they've been sharing is that they did get the e-
mail. But let's put this into context. San Bernardino happened just about two weeks ago, about a week and a half ago. This is a community that has
had a tough couple of weeks. So that may be at play here as well. New York certainly not having the same couple of weeks that Los Angeles did.
QUEST: Kyung Lah joining us from Los Angeles, Kyung thank you very much.
The developments of the West coast comes as the Republican Presidential candidates prepare to take the stage in Las Vegas for their final debate of
the year.
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[16:05:10]
Donald Trump is aiming to keep his place on the top of the polls. Ted Cruz now poses a major threat to Mr. Trump in the early voting state of Iowa.
And the rest of the candidates are hoping for their breakout moment.
M.J. Lee is in Las Vegas where it seems to be a - jolly site cooler, even though it's in the West, it seems to be quite cool out there compared to
the balmy temperatures we're enjoying in the East here. When we look at this - at this debate tonight, who has to do what?
M.J. LEE, CNN POLITICS CORRESPONDENT: It is very windy here, you're right. And cold, I should add. The candidates have started descending on Las
Vegas. We have seen the Republican candidates go into the Venetian theater to get a walk through to get a sense of what the stage feels like, where
various people will be sitting in the audience and also being talked through the rules of the debate tonight.
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LEE: Donald Trump, of course, will be taking center stage. And you're right, the national security will very much be at the fore front of this
debate tonight, particularly after the Paris terrorist attacks as well as the San Bernardino California mass shooting.
This is an issue that all the Presidential candidates have really struggled to answer and have really been questioned on. Of course Trump really has
stirred up a new controversy by proposing a ban on all Muslims entering the United States, something that all of his rivals have also had to address as
well.
QUEST: So are they going to go for Trump on this question of the ban on Muslims?
(END VIDEO CLIP)
QUEST: I mean, are we expecting -- do you expect -- is the smart money, since it's in Vegas, is the smart money that the rest of them are going to
gang up on Donald Trump, as maybe with the exception of Ted Cruz on the question of banning Muslims?
LEE: Look, it's a bit of a predicament that all of Trump's rivals find themselves in. They have tried it before, they have tried going on the
offence, going after Donald Trump, and no matter what they have done in the past, as you saw in polls this week, Donald Trump is extremely popular
within the Republican base.
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LEE: his new national poll numbers hitting 41% of support with Republicans. That's a new high even for Donald Trump. So even though
folks like Rubio or Jeb Bush have all raised questions about this proposal to ban Muslim's temporarily from entering the country, that has really done
little to sort of help their cause.
So I think it's going to be a balancing act for all of Trump's rivals who also want to be using the time and the debate space to make the case for
their own candidacies as well. This is of course the last debate of the year, so all the more important for them to do that.
(END VIDEO CLIP)
QUEST: M.J. Lee in Las Vegas, reporting for us. And our live coverage of the debates starts in less than two hours from now. It's 11 p.m. in London,
and if that's too late, well you can watch the replay Wednesday evening which is 8p.m. Wednesday in London, 9 o'clock in central Europe. And of
course that is only on CNN.
In 24 hours we will know has the Fed raised interest rates. The first time it would have made a move on rates in the best part of ten years.
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QUEST: We'll talk about that after the break. It's "Quest Means Business."
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QUEST: The market opened up and never really looked back. It wasn't off the best of the day, as you can see the best was over 17,600 but - so it
slightly fell back but it was still a gain of 156 points for the Dow Jones Industrials, a gain of almost 1% triple digit.
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QUEST: Now to understand what's happening in the markets and to understand the Federal Reserve and what they're going to be doing over the next 48
hours.
(BEGIN VIDEO CLIP)
QUEST: We need to look to Kazakhstan. That's where this Soyuz rocket blasted off on Tuesday.
Burning liquid fuel. The rocket successfully carried the British astronaut, Tim Peak to the International Space Station. And it led us to
think about lift offs of rockets to the space station and lift off of course of interest rates in the United States.
(END VIDEO CLIP)
QUEST: Finding the right time for liftoff requires perfect conditions. Economic turmoil over the summer scrubbed earlier attempts to launch
interest rates are now with the meeting under way the launch window is well and truly open.
First of all, data. The rocket has been started. Janet Yellen promised data-driven decisions with the economy reaching full employment, growth
steady, markets having recovered from their biliousness of the summer, the data is all pointing in the right direction.
(BEGIN VIDEO CLIP)
QUEST: There is data consensus. Light another rocket. The Fed is ion broad agreement that action is warranted. In previous meetings one member of the
FOMC has been agitating for an early rise in rates. And now it seems everybody else is on board.
Now light the next rocket. The timing, the rate rise has clearly been telegraphed as (inaudible) said on this program, there'll be great
instability if the Fed does nothing. So they're meeting in Washington and it seems there's no turning back. Because once they have launched this
rocket of rates, no matter what speed they go up, a process will have begun and that process will continue even if it is described by many as gradual.
(END VIDEO CLIP)
QUEST: Well, that's one way of looking at it. Howard Lutnick joins me now in the C-Suite. Howard of course is the Chief Executive of Cantor
Fitzgerald. Good to see you sir.
HOWARD LUTNICK, CEO CANTOR FITZGERALD: Great to see you Richard.
QUEST: Let's start with the easy question. Do you think they will raise rates tomorrow? A yes or a no will do.
LUTNICK: Of coursed yes! Of course yes!
QUEST: They're going to raise rates?
LUTNICK: Of course they're going to raise rates. I mean remember, it's only a quarter of a percent. So if you had a million dollars and you earned a
quarter percent, you know what you could do with that interest rate? You could buy a coffee for your office mates. I mean it's not really a rate.
Come on.
QUEST: Should they have -- do you think it's the right move to do now?
LUTNICK: Absolutely.
QUEST: And it should have maybe even been done a bit sooner?
LUTNICK: Well if they had done it in September, it would have been calming `cause they could have been doing nothing now and it would have been out of
the way.
So now they're going to get it out of the way, we're going to have a quarter percent interest rate, which isn't really an interest rate, and
then at least we'll have the gun to say the economy is reasonably good as far as their concerned. And that's kind of optimistic, that's why the
stock market's up. It's because people think, hey if the Fed's going to raise rates, maybe we've got a little economy here, maybe we're growing.
QUEST: And if we look at next year what are you looking for next year? How many - I mean because we've heard the phrase "gradual." So it's clearly not
going to be the four to six again where we had 17 rises in meetings.
[16:15:11]
LUTNICK: We are a slow, steady growing economy. It's not a bad thing. It's great for interest rates, you know, slow and steady, great for real estate.
Real estate loves that, bond market's kind of boring right, low interest rates, it's kind of boring but real estate loves low interest rates so it's
going to be a slow, steady growing economy. Very few, maybe one more change next year from a quarter to a half. And that's about it. Next year
is going to be slow and steady.
QUEST: In that environment, excuse me - in that environment, what is worrying you. For example, we're seeing some - we're seeing some
disturbances in junk bond markets at the moment, we're seeing some disturbances with certain hedge funds, and we're seeing of course that very
strong dollar still out there, which will only get stronger as rates in the U.S. go up.
LUDNICK. Right. So you've got - you've got QE2 in Europe going one way, and the dollar going - right the interest rates here are going the other,
so the dollar's going to continue to go strong (inaudible) to the Euro, to all-time highs. Probably to 90 cents or better against the Euro. So I
think that's in the - that's in the cards.
I think they'll maybe have one more incremental rate. I think oil - I mean people talk about how oil being below $40 is bad for the stock market. I
mean think about it, you have wholesale gas below a dollar and a quarter, this is going to be a turbo charger to our economy, it's a good think that
energy is cheap.
When did everybody forget that?
QUEST: OK, well hang on a second. Hang on. What about the domestic U.S. energy production, the so-called shale production, the fracking.
LUTNICK: Well somebody -- it's bad for somebody - you know there's always - it's always bad for somebody. You know, so energy companies, obviously it's
not attractive to them. But for you and me, we're going to buy cheaper gas, we're going to heat our houses cheaper -
QUEST: -- What worries you? -- what worries you?
LUTNICK: I think oil being cheap means we're going to be in good shape next year, slow and steady winning the race. The credit markets are lousy.
Right? The world's money managers are getting bigger and the world's banks because of all the Dodd Frank things you're getting tighter, right, the
regulation makes them tighter.
QUEST: What opens up that money, though? What reduces or at least releases the corset that allows credit to start flowing more easily and more
generally.
LUTNICK: It's happening now. So companies like mine, BGC Partners, what we do is someone leaves their job at a big bank - right, because they can be a
market maker but they're crimping their style. And they say you know I know how to make markets but I'm just not getting the capital from my bank I
used to. They get a job with the hedge fund, the hedge fund backs them and they come in and start making markets. You've got to remember the top ten
treasure traders in the world, you've never heard of. The top 10 equity market makers in the world you've never heard of.
They are big hedge funds who back guys who used to work in banks and that's how the business goes. So mark my words, the world of fixed income is
going exactly there. Guys who used to work in banks get jobs with other people backing them, they come in the market, and they break that
(inaudible). I didn't say it won't be painful -
QUEST: It will be very painful.
LUTNICK: Well you know there's always got to be a lot of pain.
QUEST: There'll be volatility.
LUTNICK: Well that's good for our T.V. show isn't it? I get to visit and you get to have people watch.
QUEST: In a word, in a word, if Janet Yellen doesn't raise rates tomorrow, what will you do?
LUTNICK: I think that means the market is much weaker than they think and that market goes down.
QUEST: Good to see you sir.
LUTNICK: Nice to see you.
QUEST: Markets are certainly in a good mood on the Fed decision eve as we've just been talking.
Alison is at the New York Stock Exchange. You just heard us talking here, nobody expects that she's not going to move.
ALISON KOSIK, CNN CORRESPONDENT: Reporter: right.
QUEST: -- And I imagine the market's the same way.
KOSIK: Exactly, you know why because the feeling here is that the Fed has to do it, if not, it's going to risk credibility issues after spending
pretty much all year saying the economy is ready for it.
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KOSIK: You know, the thing is the economy, many feel, was in better shape early this year than now. But here's the way one trader put it to me and --
you may appreciate this, Richard. One trader telling me, if the U.S. economy and the global economy can't handle an interest rate rise of 25
basis points, then we are all screwed. And that was a quote from him.
So seeing what you're going to see is a talk about when the hike is going to happen. That's going to be off the table and it's going to turn to how
many raises. And all bets are actually going to be on four raises. So 1% interest rate by next November, Richard.
(END VIDEO CLIP)
QUEST: I assume that quote you gave about we're all somewhat in trouble. I assume that's a highly technical, financial phrase we'll have to look deep
into the financial pages for a full explanation.
KOSIK: I think it's self-explanatory. Meaning here, I can - I can sort of translate it for you.
QUEST: No! I think we get the gist of it - I think we get the gist of it. Good to see you.
[16:20:03]
QUEST: European markets on Tuesday, they also saw strong gains.
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QUEST: they were boosted by a jump in energy shares. The German Economic Sentiment also improved.
Now global stardom and sporting success, it's a heady mixture and yet there was no money as Jonah Lomu's finances are laid bare, we'll look at the
challenges that top athletes face when it comes to managing their money.
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QUEST: He had an illustrious career in sport but now it's been revealed that Jonah Lomu died almost penniless.
(BEGIN VIDEO CLIP)
QUEST: New Zealand's rugby players have set up a trust fund in support of his two sons. The All Blacks superstar died suddenly at the age of 40 last
month.
Chief Executive of the New Zealand Players Association says Lomu left no money behind because he was very generous and his ongoing illness limited
how much he could earn.
CNN World Sports, Don Riddell joins us from the CNN Center.
(END VIDEO CLIP)
QUEST: Don, tell me -- I mean, tragic to have died in such penury for a man who was obviously so spectacular at his craft and sportsmanship. But why is
this - why is this a story of more than just profligacy?
DON RIDDELL, CNN WORLD SPORTS: Well we hear this so often with star athletes, it's certainly not uncommon that guys could play at the highest
level and earn so much money and end up with nothing.
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RIDDELL: I think Jonah Lomu's case is perhaps slightly different. First of all, you need to consider that for all that he was an absolute megastar. He
played rugby. And when he burst onto the scene in the mid-90s, that sport was only just turning professional. So although he would have been the top
earner back in the day, he wouldn't necessarily have been earning that much money. It's been estimated perhaps about $600,000 a year.
He chose to stay with New Zealand and their regulations at the time meant that he wasn't able to capitalize or cash in on some of the endorsement
deals that perhaps some of the players can now.
And you have to also remember the fact that his career was cut short. And even though he was a big celebrity and very much in demand, the guy was on
dialysis several times a week up until his death just a couple of weeks ago, Richard. And of course that really did hamper his earning power.
And it's absolutely tragic to lose him in these circumstances and then to realize that after everything, he had nothing.
(END VIDEO CLIP)
[16:25:05]
QUEST: And obviously I see that you know everybody has rallied to the cause, if you like. A trust fund has been set up and one imagines that the
children will be looked after.
But Don, with your vast experience of meeting sports superstars who earn very large amounts of money, are they particularly bad at handling their
wealth?
RIDDELL: Well, many of them are and the statistics prove it. I mean a few years ago a survey was done about the NBA in which it was revealed that 60%
of NBA players were broke when they were finished. 78% of the NFL players were in financial difficulty within two years of finishing their playing
careers.
You have to think about these athletes, these individuals, the upbringing that many of them had and then at the age of 18, 19, 20, 21, they are
earning 10s, if not hundreds of millions of dollars. And it's very, very difficult for them to get their heads around it.
They don't really have any guidance or advice or experience. They're surrounded by people who suddenly want to be their best friends, even their
families. We interviewed Charles Barclay, of the MBA recently and he said families are the worst. They've always got their hands out, they're always
wanting you to help them out and pay for their problems. And of course they like to show off with the money. They don't spend it particularly wisely.
They don't necessarily realize that tax is a thing.
If you've got a $7 million a year contract, you've actually only got about three and a half, and before you know it you've spent the whole 7 and
you're $3.5 million in the hole.
So these are the stories we hear over and over again and it really is very, very sad.
QUEST: Fascinating. We must talk more about this. You must help me out with my own tax issues. Don Riddell - you mean there's tax payable on things,
what - whoever heard that, what a novel idea.
RIDDELL: What a ridiculous notion.
QUEST: Yes, whoever came up with that suggestion of tax. Don Riddell thank you.
Now when we come back, forget the tax. Think about the Fed.
Interest rates are going up. And bear in mind, there's an entire generation of youngsters out there, many of them in the market, who have got no idea
what it looks like when interest rates start to rise.
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QUEST: We'll talk about that with two of the best names in the business. It's "Quest Means Business."
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[16:31:47] QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment when Moira Forbes will be with me to talk about
the rise of the female billionaire.
And the star of Amazon's award-winning original series "Transparent" tells us what it's like being a streaming sensation.
Before all of that, this is CNN and on this network the news always comes first.
The U.S. representative for California Adam Schiff (ph) says a terror threat that has closed all schools in Los Angeles appears to have been a
hoax.
The head of L.A.'s schools is being criticized over his decision to close the second biggest school district in the United States.
At a news conference earlier, the L.A. police chief defended the move.
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CHARLIE BECK, LOS ANGELES POLICE CHIEF: It is very easy in hindsight to criticize a decision based on results that the decider could never have
known.
It is also very easy to criticize a decision when you had no responsibility for the outcome of that decision. The school district safeguards three
quarters of a million lives every day.
When they make a decision, they have to take into account the safety of the children of Los Angeles. I think it's irresponsible based on facts that
have yet to be determined to criticize that decision at this point.
(END VIDEOCLIP)
QUEST: U.S. Secretary of State John Kerry's in Moscow for talks on ending the Syrian War. He's been meeting with President Vladimir Putin and also
spoke to the Foreign Minister Sergey Lavrov.
They are looking to narrow the differences on key issues including the future of Syria's president, the crisis in Ukraine and the best strategy
for defeating ISIS.
A European space agency rockets docked with the International Space Station. The British astronaut Tim (Peeks) onboard will be the U.K.'s
first official astronaut.
He'll spend the next six months orbiting the earth with the rest of the Space Station crew. The mission will test new technologies for future
exploration missions.
There are competing theories at work in the search for a Nazi train supposedly packed with gold. A team of so-called treasure hunters says
they believe they've found a train inside a short tunnel.
The legendary train went missing supposedly in 1945, traveling through Nazi Germany.
Now a team of scientists from Cracow University say while there may be a tunnel, radar shows that there is no train.
Ninety minutes from now give or take and the Republican candidates for the U.S. presidency will have their final debate of the year.
The CNN debate in Las Vegas is to be moderated by our own Wolf Blitzer. Questions are likely to focus on national security and the terror threat to
the United States.
And so to our top economic story. It's widely expected as it possibly can be that the U.S. Federal Reserve will raise interest rates on Wednesday.
That would be the first hike in nearly a decade and the economic world is abuzz.
The former Treasury Secretary Larry Summers (RINGS BELL) says a hike is inevitable. He wrote, "Given the strength of the signals that have been
sent, it would be credibility-destroying not to carry through with the rate increase.
Mesirow Financial's Chief Economist Diane Swonk thinks we'll see a hike and then a lull, tweeting, "Think of a hollow craft as opposed to a rocket ship
taking off. The Fed is likely to lift and pause with three hikes in `16" (RINGS BELL).
And the Nobel Prize-winning economist Robert Shiller says there's no saying how markets will react. He says it's increasingly difficult to predict the
short-term directions of major markets even when events seem to be entirely predictable.
With me now is Ken Rogoff, the professor at Harvard University and John Lipsky, the former first managing director at the IMF.
Gentlemen, good to see you both.
JOHN LIPSKY, FORMER FIRST DEPUTY MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Same.
QUEST: Let us begin - start with you, Ken. Do you expect a rate rise tomorrow?
KEN ROGOFF, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY: I'd be pretty darned shocked if there's not. She's telegraphed it, the data support it.
[16:35:06] But, you know, if they didn't it's telling us there's something horrible that we're about to find out in a day - it's going to happen.
LIPSKY: Exactly. This has been the most telegraphed rate rise that I can ever imagine.
QUEST: It will happen and it will be a quarter point and we will be off to the races. But the issue is, I mean, it's slightly maybe academic, John,
should they have raised before now?
LIPSKY: You could make the plausible case that they could've begun quite a bit earlier than they have now.
But there's of course strong arguments on the other side. I'm sure they feel like - comforted - by the notion that there are arguments on both
sides.
QUEST: When this rise happens and the U.S. economy is the cleanest dirty shirt in the laundry --
(LAUGHTER)
QUEST: -- but it's by no means steaming along. So gradual increases and rates means what to you?
ROGOFF: Well, assuming they're gradual, there's an - they're worried about inflation and the thing is we haven't seen inflation in a long time, but
every measure of when they going to predict inflation looks like there's going to be.
And the core inflation's already up to 2 percent, their target. So there's - that's - what they're worried about.
If the U.S. economy isn't doing well but there's full employment, they're just going to say well, you know you've got to have better productivity.
But if they're worried about inflation, they're going to keep raising the rates.
QUEST: This inflation is a false herring (inaudible).
LIPSKY: In what sense? Right now the --
QUEST: Look, there is no inflation. Not only is there no inflation, commodity prices are low, the global economy is slower, and oil prices are
a downward drag on it.
LIPSKY: Indeed but the Fed has said many times very clearly that they look at core inflation not at headline inflation.
And core inflation, their favorite core inflation measure the CPE (ph) deflator, is now at 1.3 percent, the core CPI (ph) is at 2 percent - that's
already within the - their - target range.
ROGOFF: And they're raising interest rates microscopically here. I mean, they're not actually literally at zero. They're about halfway to .25
already. It is a tiny, tiny change.
And frankly, I think if you cast a magic wand over everyone and they had interest rate at 1 percent and no one remembered that it was zero, there'd
be nobody talking about cutting rates.
They have a half a percent as the rate in England and somehow everybody thinks that's zero. They're just getting going here. It's not really near
the time, you know, where there aren't going to be more inflationary (practices).
QUEST: So when rates start to - when rates go up tomorrow as they probably will and we look into 2016, I mean, those of us who are of an age that can
remember previous rate rise cycles, they are fairly abrupt and they are almost mechanistic.
LIPSKY: Well there've been - there have been - various fits and starts if you go back far enough. I can remember vividly in 1994 -
QUEST: Yes.
LIPSKY: Where they started with 25, there was a big upset, they slowed down and by the fall, they raised rates 75 basis points in one go.
But the important point - in the near term with the decline in energy prices, certainly headline inflation is going to be low for a while.
But the Fed's own forecast assumes that growth in the coming year is going to continue somewhat above trend and therefore narrowing the excess
capacity in the economy and justifying further rises.
QUEST: Into this entirely different environment to be raising rates - moderate growth, no inflation or at least no inflation at the headline
level - into this sort of environment, you've got the dollar and the dollar remains strong and is likely to remain so for some time to come.
There's no downward pressure there.
ROGOFF: Yes, but I mean the thing is, is everything's priced in dollars. It doesn't affect our inflation rate that much. Almost all our imports are
priced in dollars --
QUEST: Exports?
ROGOFF: -- also our exports are priced in dollars. You know, it's all priced in dollars and so there's not a big, you know, short-term effect.
It affects profits but it doesn't feed that heavily through to inflation.
LIPSKY: Although Janet Yellen in her speech in September talking about inflation listed as import prices as an important indicator. Near-term
that's likely to fall.
But as Ken says, this is going to be a secondary consideration for the Fed and it's entirely possible to assume since the rate rises have been so
clearly telegraphed, that the dollar may be near a near-term peak.
In other words, it's going to be yesterday's story -- buy the rumors, sell the news.
QUEST: So, into this environment globally you've got China - hard landing, soft landing?
ROGOFF: Could be hard landing. I'm still worried about China over the next two years.
LIPSKY: Moderate landing. I think it's going to be a bit slower than they've been expecting but still manageable.
[16:40:00] They have enough levers on their policies to avoid a really serious downturn.
QUEST: And the ECB and the Eurozone - you and I have talked enough about that over the year. I mean, he says he'll do whatever it takes, he's got
negative rates on reserves, does he have to keep the printing presses going?
He's already added six months to the printing presses. Does he have to do more?
ROGOFF: Well, he's probably going to do more. I don't know if he has to do more but you have the euros are very low, oil prices are very low.
It's a big boost here. They're really not doing that badly at the moment but the underlying structure in (inaudible) still a mess.
LIPSKY: But -
QUEST: But (LAUGHTER) -
LIPSKY: But -
QUEST: But -
LIPSKY: -- the - I'm not so sure that additional quantitative easing in Europe is going to have that big an effect one way or another.
The underlying story is getting better, not wonderful and growth should continue to accel -- to strengthen. I think accelerate is probably too
dramatic.
QUEST: Gentlemen, we will find out this time tomorrow that quarter point. And be prepared to eat your hat if she doesn't -
LIPSKY: (LAUGHTER).
QUEST: -- actually raise it.
ROGOFF: Find a chocolate hat.
QUEST: Yes, find a chocolate hat. We'll find one for each of you. Thank you very much indeed for joining us.
Here you'll be one of the first to know the Fed makes its decision. We won't - we'll be two hours earlier tomorrow night.
We have a live Fed special tomorrow night which means we're on the early time of 7 p.m. in London which is 8 o'clock in Central Europe.
The number of women billionaires is rising fast and many of them are self- made.
We're going to be talking about the money talent - the big money talent - with the publisher of "ForbesWoman" next.
This is "Quest Means Business" from New York.
(COMMERCIAL BREAK)
QUEST: A record number of women have now joined the global Billionaires Club in the past two decades. The number of female billionaires has
increased from 22 in 1995 to 145 now.
And that's a rise of some 560 percent.
Now, in the same period of male billionaires has been growing at a much slower rate.
The total number of billionaires - of course that still remains with men - and you can see 145 was a factor of ten - over 1,000 with men. Ninety
percent male.
Those women at the top would have to work to keep their wealth once the idea of once a billionaire, always a billionaire does not always hold true.
[16:45:02] Because the study says out of those billionaires in 1995, only 40 percent have managed to keep and prevail over the last 20 years.
It seems once you've got the money, holding on to it is quite a task. Moira Forbes is president and publishing of "ForbesWoman" and she's with me
now here in New York.
Good to see you.
MOIRA FORBES, PRESIDENT AND PUBLISHER, "FORBESWOMAN": Good to see you.
QUEST: First of all we'll look at why they have such difficulty holding onto it, but where are they - who are these new women billionaires and
where are they making their money? Are they earning it or are they inheriting it?
FORBES: So the predominant female billionaires are still in the U.S. and Europe but we are seeing numbers around the globe growing.
The majority of those women now have inherited their wealth. But you can't discount that because it still means billions of dollars are being managed
by women and they're not taking that lightly.
They're investing it and putting it into philanthropic endeavors.
But interestingly I think is the fact that the number of female - self-made female billionaires and particularly as entrepreneurs is on the rise.
And this speaks to a much larger trend for women breaking down barriers to excel in business, striking out on their own in industries where very, very
few women existed before.
QUEST: When you've met these billionaires, do they seem to crave the billionaire status that men crave?
FORBES: They actually shy away from it. You know, we did a list of self- made women in the U.S. for example, launched it this year and many women were reluctant to be associated with the amount of money they accumulated.
Whereas we saw it as a metric of economic growth, a metric of economic vitality, when you talk about money and even use the word - the term -
`power,' women bristle.
They're not leading and growing and starting these businesses to become billionaires, they're doing it to have an impact on the world.
QUEST: What - is that a cultural thing? Is that a gender-based thing? Is that a societal thing?
FORBES: I think it's a confluence of a lot of different factors. I think that's one of the reasons why you don't see as many women shoot and aim
high for very large businesses.
QUEST: They have difficulty holding onto their billions - why?
FORBES: Well it's not just women. All billionaires, right, in business and business is a tricky game. You can build a big business, you can have
huge success but now more than harder - now more than ever - it's harder to maintain that success.
In an increasingly global and competitive environment, just because you're a billionaire on paper today, doesn't mean you're a billionaire on paper
tomorrow. Much more fluid.
QUEST: Do the female - do the women - billionaires see more easily to giving it away to charities, to philanthropic work?
I mean, men do it in the end. Do women start from a basis of - this is mass generalization.
FORBES: Well I think what we're seeing now is a much more exciting trend across all billionaires and that's the fact that they're looking at their
legacy not just as an 80-year-old and how do I give back to the world, but how do I use my money now?
How to use my intellectual capital and my resources to give back to the world in a meaningful way? How do I have impact?
And money is one opportunity to do that. But also the intellectual capital that they've created.
QUEST: Have you ever met a female billionaire - or indeed any billionaire - and thought how on earth did you manage it, you're so dumb?
FORBES: Well, you know, I wouldn't put it in that terms, but I think, look, you know, what makes someone successful are a lot of different
qualities.
I think the quality that I see that unites them all is this resilience and this tenacity and the ability to navigate complex situations and aim high.
Yes, I would say some are more intellectually gifted than others -
QUEST: (LAUGHTER).
FORBES: -- and I won't name who, but that's certainly the case and then we've all seen those in business. But I think an exciting trend for women,
self-made, on the rise, particularly in Asia.
QUEST: Good to see you.
FORBES: Good to see you too.
QUEST: Thank you for coming on.
FORBES: Thanks, Richard.
QUEST: As we continue our nightly conversation on business and economics, the star of "Transparent" says he still has a lot to learn about Maura.
We'll speak to Jeffrey Tambor about his Emmy-winning role after you've had a moment to look at the latest in innovation.
(COMMERCIAL BREAK)
[16:52:00] QUEST: As we gear up for the drama of the U.S. Republican debate, there's one more thing that we can expect.
President Underwood will be making a special announcement during the debate. That's Frank Underwood played by Kevin Spacey in "House of Cards."
It's a Netflix original that goes head-to-head with Amazon's own original series "Transparent."
The groundbreaking show's second season has just debuted and Samuel Burke caught up with the lead actor Jeffrey Tambor.
(BEGIN VIDEOCLIP)
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: When "Transparent" first streamed on Amazon in 2014, no one had ever seen anything quite like it.
FEMALE ACTOR: How are your parents?
MALE ACTOR: The usual, you know, Mom's good, Dad's a woman.
BURKE: Before Bruce became Caitlin, Mort became Maura.
FEMALE ACTOR: Do you plan on getting breasts?
JEFFREY TAMBOR, ACTOR, AS MAURA PFEFFERMAN: Shoot, please.
FEMALE ACTOR: Do you plan on undergoing gender reassignment surgery?
TAMBOR: I'm going to have to get back to you on that one.
BURKE: Jeffrey Tambor says there's still so much for Maura to learn about herself in the just-released season two.
The historic Stonewall Inn seemed like the perfect place to speak with Tambor. It was the site of the 1969 riot that catalyzed the LGBT rights
movement.
Last year, Maura came out as transgender -
TAMBOR: Right.
BURKE: So what's left to be done?
TAMBOR: Now Maura has to figure out how to do that. Now that I've - I at 70 years old have made my break for authenticity and made a break for
freedom - how do I manifest that?
Who are my friends? Will I ever be in love? What does that feel like? How do I do that?
BURKE: What's the best and worst part about having your series on Amazon?
TAMBOR: The worst part or the most uncomfortable part of the new part is that so we'll come out on Friday and our show will go out and then on
Monday I'll get these e-mails or tweets - yes, I do Twitter.
They all say, `Well, I binged all ten,' so where's the next season?
BURKE: It's over.
TAMBOR: And that's very, very new for me.
BURKE: How did "Transparent" change Caitlyn Jenner do you think? And how do you think Caitlyn Jenner has changed "Transparent"?
TAMBOR: Imagine an arrow and we were like this arrow being shot into the zytekites (ph) that was already there and it just blew up. Our timing was
ineffable, it was just perfect timing.
BURKE: Do you ever think of Caitlyn Jenner when you're playing Maura?
TAMBOR: No, but I think Maura would think of Caitlyn Jenner as well as she would think of other people.
BURKE: Can a family really be this dysfunctional?
TAMBOR: (LAUGHTER). Yes. What a great question. I have so many people who come up and just say, `That's our Thanksgiving. That's us around the
table.'
You have to understand that the parent have left the building. I love you, but I've got to find Maura Pfefferman.
I think the kids have taken a bit of a hit because they're scared. And people when they're scared do really funny things.
BURKE: You were nominated seven times for an Emmy.
TAMBOR: Yes.
BURKE: You finally got it.
TAMBOR: Yes.
[16:55:03] BURKE: How did that feel?
TAMBOR: You sound like my mother. The way you said, "You were nominated seven times."
I have a whole different thing about awards and all of that right now because I want people to see the show. This will get people on to Amazon.
I mean, there's nothing that replaces, hey, I saw this show the other night.
A man came up to me on the airplane, coming like this - and he went - it's not going to be pretty. And he came up to me and he said, "Thank you.
Thank you for introducing me to an area and a subject I had no idea about."
That's the revolution, that's who I'm after.
(END VIDEOCLIP)
QUEST: We will take a "Profitable Moment" after the break. This is "Quest Means Business."
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment."
T'was the night before the Fed decision
And all around the world
Investors prepared for markets to twirl
Like carolers singing tidings of cheer,
Janet Yellen has signaled a rate hike is here.
It's nearly ten years since we had such a stir,
When financial crises stormed like a blur!
And then Ben Bernanke, that jolly old chap
Put rates near to zero to prevent a collapse.
There they have stayed like indelible ink as the U.S. economy fought back from the brink
And believe we all do - tomorrow's the day
When rates will take off like Santa in his sleigh.
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.
Join me for Fed Day tomorrow.
END
