Return to Transcripts main page
Quest Means Business
Stocks Down Again; Iowa Caucuses Reviewed; Migrant Crisis Complicated by European Economic Issues; Chipotle Problems May Be Over; David Cameron Seeks Reforms to EU. Aired 4-5p ET
Aired February 02, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BELL RINGING)
RICHARD QUEST, HOST: Closing bell is ringing on Wall Street and perhaps not a moment too soon. Absolutely shocking the Dow Jones off more than 300
points. Nearly one and three quarter percent. A church in (inaudible) I think that's what you call a firm rather than a robust gavel which brought
trading to a close.
It is Tuesday, it's February the 2nd.
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
QUEST: Tonight Hillary beats Bernie -- just. Secretary Clinton has won a photo finish in Iowa, but it went all the way to the line. A vicious
selloff on Wall Street. Oil prices are collapsing once again and taking stocks with them. And D-day for Yahoo, crucial earning numbers are out any
minute now. We'll say what they mean perhaps for the chief exec.
(END VIDEO CLIP)
QUEST: I'm Richard Quest. Of course I mean business.
(MUSIC PLAYING)
QUEST: Good evening. A day after the caucuses and by the slimmest of margins, Hillary Clinton has been declared the victor in Iowa.
(BEGIN VIDEO CLIP)
QUEST: It was hours after being too close to call and now the Iowa Democratic Party has released the final results. Just look at that, 49.8%
for Mrs. Clinton, 49.6% for Bernie Sanders. Martin O'Malley the Governor who has gone at 0.6%. I wonder what would have happened if he hadn't even
been in the race. One of those what ifs perhaps, and maybes.
Both candidates - both candidates in the race flew overnight to New Hampshire. Mr. Sanders started his campaigning in the early morning hours
on the back of a flatbed truck. Secretary Clinton was in her New Hampshire push with a rally alongside her husband. She was in Nashua in New
Hampshire.
(END VIDEO CLIP)
QUEST: A short while ago, Mrs. Clinton spoke live to CNN's Wolf Blitzer where she said despite the narrow margin, she's thrilled to have won Iowa.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, DEMOCRATIC PRESIDENTIAL CANDIDATE: I feel really good and very grateful to the team I had on the ground, to the tens of thousands of
Iowans who volunteered, knocked on doors, came out and caucused last night. And I could feel the energy building in the weeks leading up to the caucus.
I was out there making my case about what I want to do and what I think our country must do to get real results, with more jobs, rising incomes, build
on the Affordable Care Act, deal with climate change, clean energy, defend our rights, all the things I feel passionate about. And I could just watch
and in fact in that last week, I had so many people come up to me and say that they had decided to support me and it could not have been better. It
was a great, great night.
WOLF BLITZER, CNN ANCHOR: You said last night you breathed a big sigh of relief, your words - a big sigh of relief. What did you mean by that?
CLINTON: Well, as you recall, my luck was not that good last time around. And it was wonderful to win the caucus and to have that experience and all
the hard work. The grass roots organizing payoff the way it did. Now we're here in New Hampshire and we are going to have a contest of ideas. I'm
looking forward to the forum tomorrow night on CNN and then a debate Thursday night here in New Hampshire. Because I think that Democratic
voters and other Americans want to know what are the principal differences between me and my friend and opponent Senator Sanders.
And I want to get that information out there. I think it's important. People understand that good ideas are one thing, but you have got to know
how to implement, you've got to have a record of getting results. And I'm taking my ideas and my record to the people in New Hampshire this week.
BLITZER: You described yourself in your speech last night as a progressive that gets things done. Are you suggesting Bernie Sanders he may be a
progressive, but he can't get things done?
CLINTON: I'm talking about my record. I'm talking about the Children's Health Insurance program for 8 million kids. I'm talking about getting
health care for National Guard members. I'm talking about helping to push through a treaty to lower nuclear weapons between us and the Russians when
I was Secretary of State. I'm talking about building the coalition against Iran to bring them to the negotiating table. And so many other issues.
I have a very long record of getting results for people. That's what i care about. You know, I'm all for laying out our ideology, talking about our
ideas. I think that's great and it gives you the direction that you want to head. But at the end of the day, what matters is that we move our country
forward, we actually get more jobs with rising incomes, we get equal pay for women. We actually begin to move toward early childhood education and
paid family leave. And we are ready to really go into the rest of the 21st century with the kind of confidence and optimism that I think our condition
should be having.
[16:05:10]
So I'm going to lay out my record, lay out my ideas and Senator Sanders can certainly lay out his own and we'll leave it up to the people of New
Hampshire to decide what they think is the best choice for them and their families and the results they want to see for themselves and our country.
(END VIDEO CLIP)
QUEST: Hillary Clinton talking to Wolf Blitzer. CNN's senior political analyst is David Gergen, he's with me.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Hello, Richard, good to see you.
GERGEN: The (inaudible) of Iowa caucuses.
QUEST: Now you're a student of Iowa caucuses. The (inaudible) even better. So tell us, what do we make of last night?
GERGEN: Well, I think, first of all, Richard, you have to understand how odd American politics are. It's just an unusual system. And Iowa now are
plunging into New Hampshire already. You take those two states together, they make up all together less than one-half of 1% of the American
electorate and yet they have this huge influence on who wins.
(BEGIN VIDEO CLIP)
GERGEN: Usually in American politics, the winner goes to the White House either wins Iowa or wins New Hampshire, sometimes both. But usually you win
one or the other. So there is a winnowing process, it's already started in this tiny state of Iowa.
(END VIDEO CLIP)
QUEST: We'll buy that - well we don't know New Hampshire yet.
GERGEN: We don't know New Hampshire yet.
QUEST: So as we look at -- let's take the two parties, first of all. Let's do the Clinton and Sanders. I mean to some extent does Hillary Clinton now
better off basically ignoring Bernie Sanders? Because even after New Hampshire, doesn't he sort of fade away when you get to the rest of the
country?
GERGEN: I don't think so. It's -- I think once she gets into the south, she doesn't have to worry about him winning so much, but I think she wants to
take him on intellectually.
(BEGIN VIDEO CLIP)
GERGEN: I think she wants to make the case that her policies are not only the best for the country but they're not going to be as far left as Bernie
Sanders.
You know she doesn't -- one of the dangers she's got here is that he has built up a whirlwind, and sort of a lot more enthusiasm in his hall as it
would appear on television last night than on her hall where she was proclaiming victory. And what she doesn't want to do is get pulled left.
Because that - in the general election that will hurt her. What she wants to do is engage him intellectually and the town hall well see on Wednesday
night is one of the first places to do that.
(END VIDEO CLIP)
QUEST: Does it - how relevant are those arguments once you do get to the super Tuesdays, the states out in the west where Bernie Sanders may not be
as well-known, and certainly his views will not carry as strongly? I think - I mean if you get to Nevada and you go to Oregon and to even California.
GERGEN: Well, now, let's be careful about this, this is a big diverse country. I think Bernie Sanders is going to have a really hard time in
Alabama and Tennessee, places like that.
(BEGIN VIDEO CLIP)
GERGEN: He may be very viable in California. You know, California has got a lot of -- it's become a very Democratic state and a lot of his socialism
will go down there better. You know, historically America has been very resistant to socialism, extremely different from Britain or the rest of
Europe.
(END VIDEO CLIP)
QUEST: Let's talk about on the Republican side. What do you make of it? I mean you've got Cruz winning Iowa, Trump ahead in New Hampshire, Rubio is
now firmly the establishment candidate.
GERGEN: Well, we've got a horse race don't we.
(CROSS-TALK)
GERGEN: Yes, well if Trump had won last night, everything would be different today. We'd all be talking about maybe Trump can rub the whole
gamut, maybe he can run the board.
(BEGIN VIDEO CLIP)
GERGEN: But since he lost and he lost in a spectacular fashion because everybody is watching, we're all mesmerized by this, and he unexpectedly,
he's been hurt. What we don't know right now is whether the air will start going out of his balloon. His whole merit, his brand for Americans is I'm
a winner and I'll win for you.
(END VIDEO CLIP)
QUEST: Marco Rubio coming in third will be pleased obviously with that, but when will all the others drop out?
GERGEN: After New Hampshire you know there's going to be --
QUEST: Jeb Bush simply can't stay in any longer.
GERGEN: Well, he will want to. His theory is win or down, win or down, I'll be the last guy standing because he has money, he could go.
(BEGIN VIDEO CLIP)
GERGEN: But I think realistically if he comes in less than 10%, 8%, 7%, he didn't really - he came in like 2 or 3% in Iowa, the pressure is going to
be on him from a lot of funders to get out so we can coalesce behind an anti-Trump candidate, namely Rubio.
(END VIDEO CLIP)
QUEST: Now (inaudible) was this a - finally, was this a good Iowa? I mean the numbers were record - the numbers were up there which is always a good
thing in any electoral process. But was it a good one?
GERGEN: Well, it all depends. No, no you know the answer is always it depends. Listen, it was great in one sense. And that is it kept the race
going so a lot more Americans are going to have a chance to participate. It didn't settle anything. In fact it through things up in the air.
[16:10:05]
But what we have is two parties, both the Republican and the Democratic Party who fractured. They've got a more moderate wing and they've got a
more stream wing. In each case last night the voters went in the Republican case very clearly went for Cruz, they went for their extreme candidate.
And the Democratic race, Sanders got a moral victory out of this.
So you have what the prospect is that this - politics could become even more polarized. But a lot of Europeans will rest easy it's not Trump.
They ought to take a look at Cruz before they breathe too easily.
QUEST: We'll talk more about this in the days ahead. Thank you.
GERGEN: Thank you.
QUEST: With Martin O'Malley dropping out of the race there are only two Democratic candidates left and they will both face voters in a CNN Town
Hall moderated by Anderson Cooper on Wednesday night. That starts at 8:00 p.m. in New Hampshire, and will be replayed on Thursday at noon London
time, 1:00 p.m. central Europe.
Now we've been talking about Iowa. For Clinton and Sanders all the other 2016 candidates, the show now goes on.
We go from Iowa, move the map, and you see we come out from the Midwest where the Trump campaign has moved into damage control. We're moving on to
New Hampshire.
Donald Trump says he was outspent by his rivals in Iowa after a stunning defeat in his first test as the Republican Presidential frontrunner.
(BEGIN VIDEO CLIP)
QUEST: In a speech a clearly deflated Trump said he was honored to finish in second place. It was Ted Cruz who came instead away with the win. The
anti-establishment Cruz held it as a victory for the grass roots. Trump went more than 15 hours without tweeting. His first post claimed he had
nabbed a long shot great finish in Iowa considering he spent very little money there. Trump said it was because he was told he had no chance of
winning.
Our senior political reporter, Stephen Collinson, is in Washington and joins me now.
(END VIDEO CLIP)
QUEST: He said also in one of his tweets that it wasn't worth it, not worth it, that I'll spend more, not worth it. Is he starting to sound sour?
STEPHEN COLLINSON, CNN SENIOR POLITICAL REPORTER: I think he probably is. You mentioned his speech last night in which he was uncharacteristically
humble and gracious. I think a night's sleep has convinced Donald Trump now that it's time to come back out fighting as you might expect. After
all, he's tasting the bitter sting of defeat. As David Gergen said, he's spent his whole campaign telling Americans he's a winner.
But I think there are two questions Richard for Donald Trump that come out of Iowa. The first, is you know, is this an aberration. Was this a state
that it was going to be almost impossible for him to win in the first place, which is packed with social conservatives and evangelicals to which
he he's going to have a tough time appealing.
(BEGIN VIDEO CLIP)
COLLINSON: Or does this defeat reveal some fatal flaws in Donald Trump's campaign. Is his lack of a political organization hurting him. Is basing a
campaign on you know winning media buzz and dominating the airwaves a way to win votes. And perhaps even are Trump's voters just not the kind of
people that come out to vote in the first place.
(END VIDEO CLIP)
QUEST: And on that interesting point, we are still with New Hampshire in the rubric of retail politics here. We have not moved in to wholesale
politics just doing it by television and big events. Now, if he does -- I mean he's showing good in New Hampshire. He's got a double digit lead in
New Hampshire. If Donald Trump takes New Hampshire as he's likely to do so, he's still very much in the game.
COLLINSON: Yes, I think so. And I think he's going to be very strong down south in South Carolina. He's going to be very strong in these big southern
primaries on March 1st where his kind of brand of make America great again rhetoric is going to be very important.
(BEGIN VIDEO CLIP)
COLLINSON: And in those say states, especially on a day when you have five, six, seven states voting at the same time, retail politics isn't as
important. It's much more important that you can get on T.V., you can go across a wide swathe of the country instead of just showing up to a small
event in New Hampshire and shaking a few hands.
(END VIDEO CLIP)
COLLINSON: So I don't think by any means Donald Trump is out of this, but there is one big question that does spring to mind is you know are his poll
leads in New Hampshire and elsewhere as much of a mirage as they turned out to be in Iowa. We just don't know that and I think the next week is going
to be very important for Donald Trump before the primary next Tuesday.
QUEST: Stephen, you'll be here to help us navigate the minutiae in the difficulties of the New Hampshire primary, not a caucus, a primary in New
Hampshire. Thank you Stephen.
COLLINSON: Thank you, Richard.
QUEST: Now, stocks were down across the world and traders are pointing to a single culprit.
(MUSIC PLAYING)
QUEST: We'll be looking at the effect that the price of oil had and why the Dow should fall so sharply.
(MUSIC PLAYING)
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
[16:16:28]
QUEST: Pretty dreadful as investors around the world reached for the sell button and the price of oil tumbled.
(BEGIN VIDEO CLIP)
QUEST: Down 4.6% well that's a barrel of Brent at $32.67 and the net effect of that was to push prices down. Remember we're in topsy-turvy world where
falling oil price which should actually be good for developed economies is actually sending stock markets down.
The Dow Jones industrials, if you take a look, let me take you to the Americas which are trading at the moment. The Dow Jones Industrials down
1.8%, with the NASDAQ and others around 2% lower as well.
And if you look at the Dow as it has traded over the last six months, this gives you a bit of an indication of how difficult things are. But all the
major graphs in the world are showing that same gains towards the end of last year, and a very sharp tail off.
So let's pass the book from the Americas across to Asia in the hours ahead. When trading opens in Asia, Shanghai has been the only index to rise
lately. The Central Bank injected cash into the markets and those markets of course will now have a chance to react to what they have seen in New
York with this very sharp fall.
Push the day on further and the book moves on into Europe where the big talking point will be oil and mining stocks and there'll be a certain
issuance of course about worries over oil companies.
BP shares were down 8.7%. BP says it plans to cut 7,000 jobs by 2017, that's 3,000 more than expected just three weeks ago. It came after a loss
of $5 billion.
At Davos, BP's Chief Executive, Bob Dudley said the job cuts hurt him deeply.
(BEGIN VIDEO CLIP)
BOB DUDLEY, CHIEF EXECUTIVE, BP: That's the most painful part of it, but we've had our own special circumstances. As you know after the accident in
the Gulf of Mexico, we sold $50 billion over the last five years to meet those obligation. I think that would be a difficult thing to do today. Our
balance sheet is strong. We have lots of projects underway. It's like a horse crossing a river, you don't stop those projects when they're half way
through. But we are deferring and cutting down on new investments and we'll weather the storm.
(END VIDEO CLIP)
QUEST: Bob Dudley who was looking extremely serious as he went through all of these issues clearly knowing how these results were going to be.
Exxon the other major oil company is slashing 25% of spending this year. It's avoided a loss, but the profits are down 48 - I beg your pardon, 58%
in the fourth quarter. So that's Exxon. And Chevron has posted its first loss in some 13 years. The stock also coming under pressure and it says its
planning massive spending cuts. Three major oil companies all telling us on the same day. BP, Chevron, Exxon, Paul La Monica, is with me next. Good to
see you sir.
What do we make of it? I mean you know where did they find solace in such misery?
PAUL LA MONICA, CNN DIGITAL MONEY CORRESPONDENT: They don't. It's quite grim right now. I think the hope is that maybe oil prices stabilize even if
they don't go up dramatically, but when you see what has happened in the past few day, we had these hopes of Russia talking to OPEC about production
cut, I don't think that's going to materialize and that's why oil prices have come tumbling down again.
QUEST: So you think today's fall is very much on the back of a failure of say Russia and OPEC to agree some form of cuts. Because the Saudis ain't
going to cut.
[16:20:10]
LA MONICA: No, they're definitely not. No, they certainly aren't and it looks like U.S. oil companies aren't really cutting back that dramatically
either particularly the shale gas companies. So because we have that stalemate and then you throw in China and the possibility of slowing demand
globally, that leads to this dramatic drop in oil prices.
QUEST: With this drop, do -- is the market saying 30 to 35 is a range that they can live with or is the feeling that we will test the low of 26 again?
I mean are we out of woods yet?
LA MONICA: I don't think we're out of woods at all. If we head back below 30 and we got briefly below that today with WTI, and that's why the stock
market selloff accelerated.
(BEGIN VIDEO CLIP)
LA MONICA: That is certainly unnerving investors. Last week when we got back to around 33, we had that nice rally on Friday, the Dow up nearly 400
points, so I think 30 to 35 might be palatable even though it's still very, very low.
(END VIDEO CLIP)
QUEST: The Royal Caribbean had a pretty dreadful day on the markets today. What happened?
LA MONICA: Yes, their guidance Richard, was lower than expected. It might have been a bit of an overreaction though.
(BEGIN VIDEO CLIP)
LA MONICA: The Company still said that lower fuel costs are going to help, demand is still strong.
A couple of reasons why their guidance was below forecast, they all are not terrible. One they are spending more on marketing their new ships, that's
good. They're expanding in China despite the worries about China, you do have still a healthy consumer growing (inaudible).
QUEST: The share price was clobbered.
LA MONICA: You said 17%.
QUEST: And you tweeted during the day that there was absolutely no justification for it. No market justification for such a -- violent --
LA MONICA: I thought it was overdone.
I thought it was way too violent because they're still predicting really solid growth. It's slower than the 40% growth than they've had over the
past few years but still looking at earnings growth around 25%.
Carnival and Norwegian got crushed on this news as well. The other thing that is hurting them is the strong dollar. Surprise, like people didn't
realize the dollar was strong, I mean wake up, that is not a secret to anyone (inaudible).
QUEST: Yes, that's very interesting that because although most of the businesses is U.S. which would be dollar based, if your growth area is
China and that is a huge area of growth and Europe for the ships, then you've got a problem.
LA MONICA: You definitely have a problem and we all know that the devaluation of the Chinese currency is not yet over.
QUEST: Busy day.
LA MONICA: Exactly.
QUEST: Thank you. "Quest Means Business" as we continue with our nightly conversation on business and economics.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Europol says about 10,000 unaccompanied migrant children may be unaccounted for as the refugee crisis continues along the borders of the
E.U.
As Arwa Damon now tells us the economic problems in Europe are only making things a great deal worse.
(BEGIN VIDEO CLIP)
ARWA DAMON: A few of the (inaudible) have just started moving out here, but you can see the crowd around them. These refugees and migrants
incredibly frustrated and angry because they have had to wait here for a few days. Due to a number of factors that are really out of anyone's
control.
There was a ferry strike in Greece that is one of the reasons why this backlog did end up being created. But there is also a taxi strike that is
happening across the border in Macedonia that has caused the Macedonian authorities to clamp down on the numbers that they are allowing through.
[16:25:12]
DAMON: When the buses arrive to the transit area, that is located between the Greece and Macedonia borders, they first have to verify that they are
Iraqi, Afghan or Syrian.
The sifting of nationalities was a measure that was put into place a few months ago in an attempt to control actually who is going to be transiting
through these various different European countries. Now, those that are allowed to cross receive a stamp like this one that basically says
according to his/her statement, his/her destination is Germany.
Those who are not of the three nationalities allowed to go through then wait by buses to get sent back to Athens.
Now among them, we met Ahmed, he's Iranian, and it's either his wife or his fiancee or girlfriend, we had a bit of a language barrier but she's Afghan
and she was allowed to go through. They've been separated because of this and we spoke to her on the phone.
Are you OK?
UNIDENTIFIED FEMALE: (Inaudible)
DAMON: As Europe continues to debate how to handle this migrant and refugee crisis as the viability of the Schengen zone is thrown into
question with the possibility of its borders even being changed.
These are some of the stories of those who are still trying to make that very difficult journey.
Arwa Damon, CNN, on the Greece/Macedonia border.
(END VIDEO CLIP)
QUEST: And as you can see there from Arwa Damon's report, as seemingly as the weather gets better, and perhaps the first of spring starts arriving,
there is little doubt that time is short to find a solution.
We'll have more in a moment.
(MUSIC PLAYING)
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Hello, I'm Richard Quest. There is more "Quest Means Business" in just a moment. The President of the European Council invoked Shakespeare in
his "brexit" deals with David Cameron.
And we're expecting important earnings from Yahoo! and chipotle within the next few moments. We'll bring them to you when we have those details.
For all of that, this is CNN. And on this network, the news always comes first.
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
QUEST: Hillary Clinton has been declared the winner of a narrow victory over Bernie Sanders in the Iowa caucuses. Pools show Sanders in the lead in
the next race in New Hampshire. Speaking to CNN's Wolf Blitzer, Secretary Clinton admitted she has work to do in order to attract younger voters
going forward.
CLINTON: I'm thrilled to see so many young people get into the political process and I was very proud of all the young people who worked for -
[16:30:00] RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: -- in order to attract younger voters going
forward.
(BEGIN VIDEOCLIP)
HILLARY CLINTON, U.S. DEMOCRATIC CANDIDATE FOR PRESIDENT: I'm thrilled to see so many young people get into the political process and I was very
proud of all the young people who worked for me, volunteered for me, supported me.
That's all to the good and it's great for the Democratic Party. But I'm going to have some work to do to reach out to young voters, maybe first-
time voters who have to make a tough decision as they evaluate who should be our president, our commander in chief and I intend to do that.
(END VIDEOCLIP)
QUEST: Meanwhile, the Republican candidate Ted Cruz is back on the campaign trail also now in New Hampshire after a stunning victory over
Donald Trump in Iowa. The Texas senator told supporters that his victory had sent a clear message
to the rest of the United States.
(BEGIN VIDEOCLIP)
TED CRUZ, U.S. REPUBLICAN CANDIDATE FOR PRESIDENT: The men and women of Iowa sent notice 'cross this county that this election is not going to be
decided by the media.
(APPLAUSE)
CRUZ: If this election is not going to be decided by the lobbyists and the Washington Cartel.
(APPLAUSE)
CRUZ: That it's going to be decided by the grassroots.
QUEST: Spain's Socialist Party will get the next chance to form a government two months after the general election failed to produce a clear
winner. King Felipe has asked the Socialist leader Pedro Sanchez to form the
government. The Current Prime Minister Mariano Rajoy of the popular party was unable to put together a successful coalition.
North Korea has told the United Nations it will launch a satellite into space in the next month. This is video from 2012 when the North said it
was firing off a rocket carrying a satellite. Officials in the U.S. say the same type rocket that will put the satellite into orbit the North could also be used on a ballistic missile.
"To be or not to be together." Donald Tusk quoted Hamlet as he unveiled his plan aimed at getting Britain to stay in the European Union.
And critics are already giving it bad reviews. The British Prime Minister David Cameron says he knows a hog from a hacksaw, Act 2 of the appeal to the British people.
The PM insists he got what promised with his four conditions. Meanwhile, the Euro skeptics in Act 3 and his own party doth protest too
much for Cameron's likings. And they could turn on their own leader as the plot moves on to the Final Act.
The Final Act is the vote itself and the British people will decide whether tis nobler in the mind to stay with Europe or to find fortune on their own
with their slings and their arrows. But it is important to note at the end of "Hamlet," everyone dies. Mr. Cameron says Britain can reach a happier ending with a few improvements
to the proposals. CNN's Phil Black explains when you look at the draft, what's there.
(BEGIN VIDEOCLIP)
PHIL BLACK, CNN CORRESPONDENT: June 6, 1975, the last time the British people had their say on whether or not to stay inside the European Union.
Sixty-seven percent of voters were in favor. So Britain has remained part of the growing economic block now made up of 28 nations.
Fast forward 40 years - the U.K. holds an election and returns David Cameron's Conservative Party to power. It allows him to deliver on a key
promise made to satisfy many in his own party. A national vote on the U.K. membership with the E.U. to be held by end of 2017.
DAVID CAMERON, BRITISH PRIME MINISTER: Yes, we will deliver that in-out referendum on our future in Europe.
BLACK: Cameron wants Britain to stay in the E.U. but says he needs a better deal to sway British voters. He's demanding reform in four key
areas.
CAMERON: We want to have a Europe where we're not subsumed into a super state, but we can be proud and independent.
We want a Europe is competitive, we want a Europe that respects our currency and treats us fairly and we want a Europe that takes the pressure
off in terms of migration.
BLACK: Migration is the big contentious one. Cameron believes many Europeans come to Britain because of generous government benefits to low-
paid workers and he initially pushed for a deal that would see migrants go without those benefits for four years.
But the E.U. said no way, that's discrimination. So the suggested compromise is an emergency brake where benefits can be suspended
temporarily if migration rates are causing excessive pressure on the country.
[16:35:06] Cameron says this draft agreement is real progress.
CAMERON: If we can secure what's in this document and finish off the details and improve it still further, we'll be able to show that on balance
Britain is better off, more secure, more prosperous, better chance of success for all our families and all our people inside this reformed
European Union.
BLACK: But critics aren't impressed. One anti-E.U. pressure group called it a "worthless package of so-called reforms."
The E.U. leadership also has a tough sell convincing other member states to embrace compromise. European Council President Donald Tusk reminded the
mistakes are high, tweeting, "To be or not to be together, that is the question."
Now the focus is thrashing out the detail to secure a final agreement at an E.U. summit this month. If successful, the British people could soon learn
when they will get to vote. The earliest possible date would be in June. Phil Black, CNN London.
(END VIDEOCLIP)
QUEST: Courting business leaders has been one of the most important parts of the British prime minister's campaign.
Mr. Cameron spoke at a Siemens Factory on Tuesday and insisted Britain would be better off in the E.U.
He's seen shaking hands there with the chief executive of Siemens U.K. who is Juergan Maier we're delighted having been with the prime minister. Mr.
Maier joins me now from London. You were fortunate that of course the day he's there and you get the deal, have you had a chance to look at this deal - the various component parts as
to whether or not you find it acceptable for British business.
JUERGAN MAIER, CEO, SIEMENS U.K.: Yes sure, I have had a look and obviously I was there today as the Prime Minister was addressing some of
our employees. And as far as I'm concerned, particularly the point of more competitiveness I think is good for business in Britain. I think it's good for business
across the whole of Europe. And the other key thing for me is that we definitely have made progress on these reform points. So I'm looking forward to an opportunity for a
hopeful early referendum because that would be good for business because uncertainty is not -
QUEST: Right.
MAIER: -- good for business and we'd like this behind us and we'd like to unite.
QUEST: And as I read the document today, one of the key areas is this idea that sterling must not be - and acking (ph) out on the other non-Euro
currencies - must not be at a disadvantage to the countries - to those countries who - for whom the Euro is their currency.
Do you think that makes a difference? Or, I mean, I guess the real issue the critics say it's just words, it's verbiage, it's just - it's just
stuff.
MAIER: Well, at the end of the day, what this does is it makes it absolutely clear that there are two types of countries within the EU and
one set of countries are within the Euro, and Britain, like some others, have chosen not to be part of that Euro.
That means that we have all of the other benefits of access to the free market of being able to do joint research projects which is very important
to ta company like ours. But it means we're not part of the common currency which I think is absolutely fine, and to make that more explicit I think is a positive
thing.
QUEST: This - you mentioned a moment ago about the damaging effect of a prolonged debate or a prolonged referendum process.
Not necessarily with Siemans, but from your contacts with other chief execs and other European business leaders, are they deferring or delaying or
procrastinating on investment decisions pending this referendum, do you think?
MAIER: Well I think uncertainty is never good for business. So the answer is, is there might be some businesses that are saying well, you know, at
the end of the day in or out of the E.U. is quite an important factor. And might just hold a decision until I know what the outcome is going to
be. So I - so I do think that in this moment in time, there will be some
finance director's CEOs who might well be holding back on making important decisions so therefore my message is the sooner we can move on, the better
it will certainly be for business.
QUEST: Well of course that will be June the 23rd, of course assuming there's a problem there with the national parliament votes in Scotland and
Wales. Finally, Mr. Maier, I'm just going to chance me luck here - did the Prime Minister give you any indication when that referendum would be? Did he
sort of say ah, Juergan, it'll be March, it'll be June, it'll be - any idea?
[16:40:08] MAIER: No is the answer to that, but I think we were all encouraged by the fact that progress is being made. So we hope as early as
possible. Maybe it is in June, let's see.
QUEST: Good to have you, sir. We'll talk more as this debate goes on. We'll have you back in again to talk us through the business aspects of
this. Nice to see you joining us from London. Now from the question of a single currency to the issue of Israeli
startups. And we'll talk about the economic situation is getting very trick, particularly when it comes to raising money.
"Quest Means Business."
(COMMERCIAL BREAK)
QUEST: Breaking news just in to you (RINGS BELL). Yahoo! will cut 15 percent of its staff and close offices in in five cities.
The beleaguered company's reported it beat revenue expectations for 2015 and the stock is up around 1 percent in after-hours trading.
A year of extraordinary volatility for stock markets and for tech companies and the environment may never have been more challenging for startups.
John Medved is the chief executive of Our Crowds, an Israeli startup. Good to see you, sir.
JON MEDVED, FOUNDER AND CEO - OURCROWD: Great to see you, Richard.
QUEST: So, we see the volatility and I also know that a lot of these VC capital is simply no longer there. VCs - the amount that they are putting
in to startups is dropping quite precipitously. How difficult has it become?
MEDVED: No, it's great. Actually -
QUEST: Oh, come on!
MEDVED: No, no, absolutely. If you look at the numbers for '015, venture investing and angel investing around the world was up dramatically.
Where I come from in Israel, that $5 billion was invested. That's over 100 percent more than just two years earlier in 2013.
The overall worldwide number was $135 billion, and clearly in the last couple of weeks with prices coming down in the stock markets. People are a
little concerned, deals aren't closing as fast, but the difference with venture capital and the stock market is we don't live day to day.
We don't live next week and next month.
QUEST: When I was in Davos two weeks ago they were - some of the VC people I was talking to were saying that if you look at the numbers of the amount
that is now - and you look at the valuations and you look at the second round financings of many companies, those valuations are down.
MEDVED: The valuations are coming down and that's a good thing and that's the time to invest. It turns out that historically great companies have
always been built in downturns. Companies like Microsoft and others. If you look at the problem today, the problem is some of these valuations have gone nuts. I mean, just a couple of weeks ago brokers were calling
their clients offering Uber shares at over $60 billion. The proper response to that was to tell your broker how come you didn't
call me at $60 million? And what's happening is that now the crowd - individual investors - they want to get into this insider's game. These
VCs, with all due respect, they've been a small coterie of esoteric people. They haven't let you and I get into these deals.
QUEST: No, but they never have.
MEDVED: Of course not.
QUEST: You seem surprised!
MEDVED: I'm not surprised, I'm doing something about it. The bottom line today is there's crowd funding which has now become legal in many countries
-
QUEST: But crowd funding never gets to the sort of levels that a VC can get to.
[16:45:01] MEDVED: Absolutely wrong, because what we're doing is we're investing alongside Sequoia and Accel and the best VCs in the world in the
same deals. We just did a deal in Israel called mPrest which is the company that
basically provides the software for the iron dome - that missile system. OK, this company had $25 million in revenues, $7 million in profits. We
invested together with General Electric. Now all of a sudden some money from the crowd - an individual can put $10 grand in, he doesn't have to be Bill Gates, he doesn't have to be Sergey
Brin. He can be John Q. Public and he can get into these great deals.
QUEST: So we talk about the Israeli economy at the moment and the uncertainty following the last election and the political process, are you
seeing any follow through into that - into the (inaudible)?
MEDVED: Not in the tech sector. The tech sector is booming. What' s happening now in Israel - we just last week had in Jerusalem the largest
investor conference in the history of the country. We had 3,000 on a snowy day with Snowmageddon here in New York, OK? And we had -
QUEST: Right.
MEDVED: -- a hundred -
QUEST: I wanted to show you something.
MEDVED: OK.
QUEST: Look at this -
MEDVED: (LAUGHTER).
QUEST: Look at the screen. You can probably see a screen over here. This is Uber's new - that - the one of the left is the old, the one on the right
is the new logo for Uber. I can see by the look on your face -
MEDVED: I think that maybe it bespeaks a new valuation. I don't know (LAUGHTER). It's a little genomic, it's a little - it's interesting, OK?
You know, I love new logos. I think it keeps people busy and keeps them talking and gets them on TV. Is that going to change their business? I'm not sure.
QUEST: You don't need a new logo. CNN's had the same logo for 35 years and we ain't going to change it -
MEDVED: And we love it.
QUEST: -- any time soon. Good to see you, sir, thank you very much. (RINGS BELL). In a moment, the numbers are finally out and we'll tell you
about the layoffs that are planned at Yahoo!. That's all after you've had a moment to for Make, Create, Innovate.
(COMMERCIAL BREAK)
QUEST: It's a very long document and it's just come out. Yahoo! shares are falling in after hours trading after a huge write down in the company's
fourth quarter results, dragging the company into the red by $4.5 billion. I'm just looking here - I mean, once again it's gone all through all of the GAAP and non-GAAP (inaudible).
Income lost from operations in Q4 is $4.5 billion. For the year overall, it ekes out - well, to the four year it ekes a loss of operations of $4.7
billion compared to $14 of $143 million. Yahoo! says it will reduce its workforce by some 15 percent. Claire
Sebastian is with me to talk through these numbers. Tell me what's gone - well we know it's gone wrong, but tell me what these
results are showing us?
CLAIRE SEBASTIAN, CNN PRODUCER: Well, Richard, this quarter was never all about the numbers. This is about the turnaround plan, and that's why
everyone's paying the most attention to Yahoo!'s decision. It was rumored earlier and now they confirm they will cut 15 percent of
their workforce - that's about 1,600 people out of 11,000 and they will close offices in five different cities.
As well as they said - this is particularly interesting - "Yahoo!'s begun to explore divesting non-strategic assets."
Now we heard earlier -
QUEST: Now, hang on, hang on. Those non-strategic assets, are they the - is that the Alibaba stake and the other - the Japan stake or whatever it
is.
SEBASTIAN: Well this news is still trickling in, Richard, but this is as close as we've ever come from Yahoo! to some talk of divesting.
[16:50:00] We know there's been uproar from various shareholders in recent months calling for them to sell the core business - that's the internet,
advertising and search engine business. That's separate from the Yahoo! - from the Alibaba -- stake which is worth about $25 billion and from a stake
in Yahoo! Japan. Now, they wanted to appease these investors. This is what () are saying. These are investors were - one of them in particular Starboard Value was
threatening to mount a proxy battle, essentially trying to replace the management team at Yahoo! now with their own - with their own choices.
So this -- Yahoo! really needs to come out with something very strong in (inaudible).
QUEST: Right, but the CEO Marissa Mayer under threat as a result of that potential proxy battle having to come out with a pretty appalling - I
assume that $4.5 billion is costs against restructuring in some shape or form - and at the same time, come up with a plan to deal with because the
split that she was planning to do or the reverse split hasn't been well received.
What do they do? What's the Street saying?
SEBASTIAN: Well, they have a problem with clarity, Richard, in the last few months. Its clarity and its confidence in the management team.
First they say they're going to spinoff the stake in Alibaba. That idea was then scrapped last year because of tax reasons.
Then in December we get this very complicated idea of a reverse spinoff of the core business, as I said, of the internet search engine and the
advertising revenue. And that now, you know, that's now up in the air. We don't know, I mean, this - there's going to be an event to call it at the top of the next hour we'll get more details on this, but essentially
there's a clarity, there's a messaging - there's a messaging problem here with Yahoo!
QUEST: Well by my reckoning, you've got 8 minutes and 30 seconds to get down to your desk and get on that call to hear what they're going to say.
Claire Sebastian, thank you. In what's been a busy day in the corporate world, we have some more numbers
just released in the last few minutes. Chipotle's profits for the fourth quarter fell by 44 percent on the company's E.coli outbreak.
Now the results show customers have stayed away from its restaurants during the scare. I got a - I got a note here at the - basically saying E.coli -
the restaurant sales dropped 14.6 percent in the last three months of the year.
The CDC recently said the outbreak appears to be over. Cristina Alesci is with me. So, obviously this has been devastating for that company.
CRISTINA ALESCI, CNNMONEY: The worst quarter in the company's history since going public in 2066 just to put a fine point on it.
QUEST: So, 44 percent, 14 percent on restaurant sales -
ALESCI: On comp store sales, yes.
QUEST: -- comp, same store sales, whatever that phrase is they use --
ALESCI: Yes.
QUEST: -- in restaurants. What's the company saying today?
ALESCI: Well look, it's trying to position this as, you know, this is behind us now, the press release has this line in there saying this has
been the most challenging period in our corporate history ever, but now because the CDC has declared these outbreaks over, we can move forward.
But just to be clear, Richard, that is one outbreak. They've had five - or six, depending who's counting - since August. And that's why their shares
have tumbled by about 50 percent since their all-time highs in August. This isn't about one outbreak, this is about food safety problems that they've had for the better part of last year, and people still don't have
the confidence to go eat there.
QUEST: Right. So, what does the company do next? Because there was obviously talk about the chief exec and the position of the chief exec.
ALESCI: There's always those questions raised in these kinds of situations, especially when some food safety experts that I speak to say
these were problems that were probably pretty easily avoided, so what is next?
Cleaning up for one -
QUEST: Literally and figuratively.
ALESCI: -- exactly. Spending millions of dollars upgrading their systems and implementing new technology, paying out any kind of liability from a
legal standpoint. There are hundreds of victims out there. At least 500 people who got sick. One attorney I spoke to says -
QUEST: But none of it's very expensive.
ALESCI: So expensive and what most people don't realize is that there's still a federal grand jury subpoena out related to another outbreak in Simi
Valley, California that is a bit of a cloud over the company. And this is a criminal investigation.
QUEST: Right.
ALESCI: Forget about the civil costs, now we're talking about crimes. Did the executives know something and not report it to the right officials?
QUEST: So, when you and I go out on our date, --
ALESCI: (LAUGHTER). You're not going to take me to Chipotle!
QUEST: That's where we were going.
ALESCI: No, we're going to Four Seasons if you're paying. Sorry. That's the way I roll.
(LAUGHTER)
QUEST: I will expect nothing less from a woman of your stature. Thank you (RINGS BELL).
ALESCI: Thank you. Thanks.
QUEST: Dramatics (ph), look how New York had an absolutely shocking day. We were off 300 points at just off the bottom of the day so far, but 295
points down, a loss of 1.8 percent. The European markets were down as well. [16:55:02] Put it all together, and you really do have this volatility and
this miserableness of investments which is continuing now into February. We'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment" by Shakespeare. Take up the bodies. Such a sight as this. Becomes a field but here shows much amiss. Go, bid
the soldiers shoot. The final words from "Hamlet" from which script and play of course Donald Tusk the president of the European Council today quoted - "To be or not to
be together. That is the question" that now follows the result of Brexit and the deal done between the E.C. and Britain.
But what does that deal offer? Is it just a mess of pottage that can be cobbled together just to provide a fig leaf for David Cameron's electoral
referenda? Or is there real substantive change that lies beneath the waves of this
deal that is now to be put before the great mass of the British people. That is the question. Unfortunately, we don't know when the question's going to be, whether it will be in June or into next year.
But it matters not. Because now this Pandora's Box has been opened and it will be up to the British people to decide the Brexit or not.
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
