Return to Transcripts main page
Quest Means Business
Roller Coaster Day on Wall Street; OPEC to Consider Cutting Oil Production; Seeking an End to the Syrian War; Diversity in the Movie Industry; U.S. Crude Oil Drops To Around $27; Kanye West Debuts Album, Sportswear. Aired 4-5p ET
Aired February 11, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
MAX FOSTER, CNN HOST: The closing bell couldn't come soon enough. A roller coaster day on Wall Street. It is Thursday, February the 11th. Markets
plummet, as oil hits a 13-year low. Now, OPEC rumors, so fresh confusion, even interest rates could go into minus numbers. Janet Yellen says she's
not ruling out anything. And we're not yet in a growth economy. The CEO of Publicis delivers his forecast.
I'm Max Foster in London, you're watching "Quest Means Business."
Good evening. Investors in the U.S. have followed traders around the world by off-loading stocks. We're seeing a global sell-off sparked by a plunge
in oil prices.
(BEGIN VIDEO CLIP)
FOSTER: Take a look at the big board. At one stage, the Dow was down by 410 points. That was when the price of U.S. crude drops to the lowest since May
2003. The S&P 500 and NASDAQ are both in the red as well. There was a partial recovery late in the session over reports OPEC members might get
together to agree a coordinated cut in oil output. More on that in a moment.
It was enough though for the WTI crude rate to bounce off those lows. It's still down but it is now trading above $27 a barrel. Brent Crude is up by
more than $1.
(END VIDEO CLIP)
FOSTER: Tim Anderson is the Managing Director at TJM Investments. He is live from the floor of the New York stock exchange. So what was the
overriding sense down there today?
TIM ANDERSON, MANAGING DIRECTOR TJM INVESTMENTS: Well, clearly it was negative for the - for the majority of the day.
(BEGIN VIDEO CLIP)
ANDERSON: The NASDAQ actually did go green in the last 30 minutes of the day. It has been outperforming a little bit the last couple of days. But
the S&P 500 closed at a near reaction low. Although we did, again, hold that 1812, 1820 support level that's marked by the intraday low from Jan 20
and the intraday low from way back in October of 2014.
So as bad as it was and as much as it was on the down side, despite all the rumors and all the noise thrown at the market, the market continues to be
fairly resilient, just above the 1800 level.
(END VIDEO CLIP)
FOSTER: It's a scary place isn't it when emotions are running things in many ways. And Boeing, another example, a rumor flying around, having a
huge impact on the share price.
(BEGIN VIDEO CLIP)
ANDERSON: Yes, and that's just a situation where a lot of real professional investors, any time there's an SEC investigation or something going on
similar to that, that just creates a huge cloud of uncertainty that they can't model, they just don't want to have anything to do with it. They want
to walk away, certainly not commit new money to the stock and maybe some people blow out of what they have until they feel like they have a handle
on the situation.
(END VIDEO CLIP)
FOSTER: OK, thanks for joining us. Tim Anderson at TJM Investments. We've also got on the line our emerging markets editor, John Defterios. He's
joining us from Abu Dhabi because we're hearing these rumors John, from that region that OPEC is going to make some sort of move to stabilize the
oil prices. We've heard these rumors before but because it's coming from there, it feels like stronger and more rational response.
(BEGIN VIDEO CLIP)
JOHN DEFTERIOS, EMERGING MARKETS EDITOR: Yes, in fact Max, I think the market has read a lot into this quote from Suhail Mazrouei who is the UAE
Minister of Energy. In fact, it was an interview as I digged through on Sky News Arabia, so it was done in Arabic, translated. "The Wall Street
Journal" reported this "that OPEC is ready to cooperate on a cut." But, and here's the big but here, current prices are already forcing non-OPEC
producers to at least cap their output.
Now Mazrouei told me in an interview at a roundtable at Abu Dhabi in July - or January the 12th, that the market was correcting itself. That OPEC
strategy was working and we've seen a reduction in non-OPEC production. In fact there's half a million barrels a year last year. Another 200,000
barrels in the month of January according to the IEA, and probably another half a million barrels by the end of 2016.
So he's not been in the camp of let's cut. Another senior Gulf (inaudible) just told me just over a week ago OPEC is willing to cooperate as well but
they wanted to see other major producers, particularly Russia, some of the central Asian players in Mexico, offer cuts as well. This is the Venezuelan
proposal.
[16:05:00]
So the market got very excited and when we saw "OPEC was ready to cooperate in a cut" but he qualified us by suggesting we're seeing a cap in
production and we want to see cooperation across the board.
So, a lot of excitement, nothing really new from what we've seen in the last two weeks and again speaking to Gulf sources over the last week as
well.
FOSTER: We want to hear from Riyadh, though, don't we, because we hear these rumors from everywhere but Riyadh, and that's where the decision
ultimately will probably lie.
(END VIDEO CLIP)
DEFTERIOS: Yes, in fact I've been speaking to sources in Saudi Arabia for the last two weeks.
(BEGIN VIDEO CLIP)
DEFTERIOS: One of the sources here in the Gulf was suggesting he couldn't go on the record because he said John, there's too much going on behind the
scenes. So what does that tell us Max? That means that Saudi Arabia is kind of talking to other players of OPEC. We know the Venezuelan minister was
there this week and made the rounds to cut tar into Iran as well.
Iran reached out to Saudi Arabia and said we're willing to sit down. But at the same time Iran was cutting the prices today, going against Saudi Arabia
in the market for market share. Igor Sechin, the CEO of the Russian giant, Rosneft, was saying that the market's oversupplied by a million barrels a
day but he didn't say Russia was going to cut. And he was pointing to OPEC's overproduction grabbing about 1.5 million barrels market share over
the last year.
So a lot of shadow boxing, I would describe it right now, Max. The market got excited seeing the quote from Suhail Mazrouei because he's been one in
the camp saying the OPEC strategy is working. He says they're willing to cooperate but that the current prices are already forcing non-OPEC
producers to at least cap their output.
Very clear, if they want a cut, OPEC's willing to sit down but none of the major players so far are cutting. I think that's why the market settled
down again. We're right above that 13 year low by the way, $26 a barrel is that 13-year low and we're just about it right now. So knee jerk reaction
and we've come back down slightly. And none of my sources are suggesting a cut is imminent. We just haven't seen cooperation at the very high level.
(END VIDEO CLIP)
FOSTER: OK, John Defterios in Abu Dhabi, thank you. All this concern that the global economy is facing a crisis is prompting central banks of ways to
give it a lift. We found out this week that the U.S. Fed wouldn't rule out using negative interest rates. Even in her second day of testimony, Janet
Yellen said she wouldn't take that option off the table.
(BEGIN VIDEO CLIP)
JANET YELLEN, CHAIR, U.S. FEDERAL RESERVE: In light of the experience of European countries and others that have gone to negative rates, we're
taking a look at them again because we would want to be prepared in the event that we needed to add accommodation. We haven't finished that
evaluation. We need to consider the U.S. Institutional context and whether they would work well here. It's not automatic.
There are a number of things to consider. We haven't - so, I wouldn't take those off the table, but we would have work to do to judge whether they
would be workable here.
(END VIDEO CLIP)
FOSTER: Well, if the Federal Reserve did push official rates below zero, it would joining a growing club at the moment with central bankers in Japan,
Denmark, Sweden and Switzerland and the Eurozone have already cut certain rates below zero. Currently almost a quarter of the world's GDP is in
countries with negative rates. And Sweden's (inaudible) bank today announced it was going deeper into negative territory.
(BEGIN VIDEO CLIP)
FOSTER: There are fears that negative rates though could hurt the financial sector. Banks fell, bank shares rather fell again on Thursday. In Paris
Societe Generale slumped more than 12%. Credit Suisse lost more than 7% and Bank of America and Citigroup fell more than 6%.
At the same time, we're seeing a flight to safe havens. The price of gold has climbed to its highest level in more than a year.
(END VIDEO CLIP)
FOSTER: Robert Shapiro is the former U.S. Under Secretary of Commerce for Economic Affairs, he's also an IMF adviser and Chairman of the economic
advisory firm Sonecon. He joins us live from Washington. Thanks for joining us.
The concern here, particularly if America is involved, is that we're in the realms of a currency war and no one wins from that, do they?
ROBERT SHAPIRO, FORMER U.S. UNDER SECRETARY OF COMMERCE: No, no one wins from that. We really - well if the United States is not in a currency war.
The United States is seeing its currency pushed up by the fact that yields are much stronger here than anywhere else in the world. The growth is
stronger here than anywhere else in the world, anywhere else in the advance world. And so there is a continuing flight of capital to the United States
and demand for dollars. Even though you wouldn't know that by how the stock market has been behaving recently.
(BEGIN VIDEO CLIP)
SHAPIRO: But the fact is, you know, a currency like the United States or the U.S. dollar or currency like the Euro, even a currency like the yen,
you can try to manage it on the margins in some kind of currency conflict but ultimately the markets are too big. You can only hold off where the
markets will take you.
(END VIDEO CLIP)
[16:10:15]
FOSTER: When Janet Yellen was talking about the idea of negative rates, she was talking, wasn't she, primarily about studying the idea of negative rate
because of their adoption elsewhere. She wasn't necessarily doing it in relation to the U.S.
SHAPIRO: No, the United States is very far from negative rates.
(BEGIN VIDEO CLIP)
SHAPIRO: Remember the United States has produced close to 6 million jobs in the last two years. 2.7 million jobs last year, 2.9 million jobs the year
before.
(END VIDEO CLIP)
SHAPIRO: We have an unemployment rate below 5%. There seems no danger of deflation here at least in the foreseeable future.
Sometimes markets can push you into negative rates simply because the flood of capital is so great. But we haven't seen that yet. I think chairperson
Yellen was being responsible. Frankly, as she always is. And saying, look, I don't - I don't put any possible policy tool off the table, including
negative rates, particularly since the United States has been -- the Fed has been trying to move towards a more normal monetary stance. That was the
purpose of the rate hike from a quarter percent a half percent, in order to give the Fed move to accommodate if the economy deteriorated. The global
markets are not cooperating with that desire to move rates up gradually and so that raises the possibility, should the business cycle turn down, of
possible negative rates.
FOSTER: And just from the international perspective obviously we're very focused on the U.S. election right now. Is that playing into what we're
seeing in the markets at all?
SHAPIRO: I don't think so. I think there's much too much uncertainty. In particular -- on both sides frankly. And look, the markets I think would
have a pretty strong reaction to a number of the candidates. To at least two of the candidates on the Republican side and at least one of the
candidates on the Democratic side.
But at this point, there is so much confusion in the Republican race that no one is ready to bet money in the markets on a candidacy like Trump or
Cruz which I think would disturb the markets. And similarly, no one is prepared to put any money on Bernie Sanders being the Democratic nominee,
which also would roil the markets.
FOSTER: OK, Robert Shapiro, thank you very much indeed for joining us, from Washington.
Now the U.S. and Russia say they both want the same thing, peace in Syria.
(BEGIN VIDEO CLIP)
FOSTER: They've been talking about how to get there. We're expecting to find out how they've been getting on as well with a live conference. We'll
bring you that as we get it.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
[16:15:05]
FOSTER: There's the Dow down 1.6.
(END VIDEO CLIP)
FOSTER: Now, talks happening now in Munich could give a push forwards for the search for peace in Syria.
(BEGIN VIDEO CLIP)
FOSTER: We're expecting to hear from American, Russian and U.N. diplomats within the hour. U.S. Secretary of State John Kerry and his Russian
counterpart, Sergey Lavrov, are both saying they want to find a way to end the war in Syria. Still Moscow and Washington have been sharply at odds
over what their forces are doing there.
That tension is even more apparent as battles continue to rage around the city of Aleppo. CNN's international diplomatic editor Nic Robertson is in
Munich.
(END VIDEO CLIP)
FOSTER: What are you hearing about what we're expecting to hear when they make their official statements?
(BEGIN VIDEO CLIP)
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Max, I think the best indications that we're getting so far and these talks have now gone longer
than originally anticipated and they got going this evening later than originally anticipated as well . This is Sergey Lavrov, U.S. Secretary of
State John Kerry, foreign ministers from 16 countries in total. So foreign representatives from the Arab league and from the European union, Fredricka
Mogarini is in there as well.
So this is a big broad group all those with an interest in Syria. The Saudis are there. The Iranians are there. The Turks are there as well. So
there's a lot of people around the table, there's a lot of different ideas to bring together. But the day kind of started with the Russians giving an
indication that they might be will to talk about a cease-fire, a cease-fire that will begin on the 1st of March.
You've got to pause here and say why did the peace talks stumble a week or so ago in Geneva and that was widely put down to the fact that Russia was
backing the Syrian government's forces with strong air strikes, upping the tempo of the military offensive that really led the U.N. to put those peace
talks on pause. So right now, what we're talking about is getting them resurrected.
So what's being said, what we understand has been said to Russia today is that look if you're serious about a cease-fire, don't wait until the end of
the month, do it now. But we also understand that the humanitarian access on the ground to beleaguered towns and cities and villages inside Syria is
a key issue for the opposition group. So I think we may expect to hear some progress on that. Not a definitive answer on the cease-fire, but a
potential way to deescalate that issue.
But the fact they're still in there talking, the fact that they haven't come out yet, I think that just indicates how difficult it is to get so
many different people all to agree on 1 or 2 key issues, Max.
(END VIDEO CLIP)
FOSTER: A lot of talk is obviously that they need to secure Aleppo before they can reach any sort of cease-fire and that's what they're really aiming
at so until Aleppo is taken, you're not going to get a deal on the table amongst these diplomats.
ROBERTSON: You know, if -- I think the belief here is that if Russia and the Syrian government stuck to that then there's no way that the opposition
could be expected to hang in and wait and go back to peace talks when they're being hammered and their supporters are being hammered on the
ground.
(BEGIN VIDEO CLIP)
ROBERTSON: They just couldn't represent their people if you will if that were the case. So the talks would essentially break down. You cannot in the
eyes of the diplomats here, you cannot have Russia in essence signing up for a U.N. Security Council resolution that calls for cease-fire
humanitarian access prisoner release. All these things not as preconditions for talks as the opposition is now saying they're not setting that as a
precondition, these are just basically international human rights that the people of Syria expect. So I think the pressure would really be here on
Russia to more honor in spirit what it signed up to in the U.S. Security Council resolution that has brought all these countries together, Max.
(END VIDEO CLIP)
ROBERTSON: OK, Nic Robertson in Munich, thank you very much indeed. We'll be back with you when the press conference comes on live.
Now, the battle for the control of the Syrian city of Aleppo is raging on. Fred Pleitgen has been exclusively to that crucial front line and he joins
us now. Fred.
FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, Max, yes, and certainly why the diplomats speak there in Munich, you do see that
especially Russian air power is making a big difference on the ground in Syria.
We were able to speak to Syrian soldiers who told us their morale has never been higher than it is right now and they also said they believe that
Russian air power on the battlefield, especially around Aleppo, was a reason for that. Let's have a look.
(BEGIN VIDEO CLIP)
PLEITGEN: Years of urban combat have laid waste to Aleppo's old town. Syrian army snipers scan the terrain for possible movement on the other
side.
[16:20:00]
PLEITGEN: We're right on the front line in the Syrian government's offense against the opposition and the soldiers tell us they still frequently see
the rebels on the other side but they also say they often pick them off from the sniper's nest.
This soldier tells me morale has never been higher. "Thanks to God, everything here is under control" he says, "our fingers are on the triggers
ready to destroy the rebels."
Bashir Al-Assad forces have made major gains in Aleppo area in recent weeks while the opposition rebels say they're simply being slaughtered. But for
years this battlefield was in a stalemate, the frontline right around Aleppo's ancient Citadel..
As Syrian and Russian warplanes hover overhead the Commander knows who to thank for the newfound momentum.
"It's only a matter of months now until we win," he says, "thanks to the Russian support with their air strikes flown from the Syrian airfield, we
will defeat the rebels once and for all."
Aleppo was Syria's largest and one of its most historic towns. Tourists from all over the world used to flock to the old town before it was
engulfed by Syria's brutal civil war.
The old town of Aleppo is a UNESCO world heritage site. Some buildings are hundreds, if not thousands, of years old. And now, as you can see, most
have been completely destroyed and burned out. But now Assad's troops believe they're on the verge of a decisive victory. The commander warns the
U.S. not to interfere. "We are steadfast," he says, "you cannot defeat the Syrian army because we are determined to win and we're loyal to President
Assad."
Amid this divided and destroyed city, Syrian government forces believe they're dealing a crushing blow to the opposition, one that could end this
five-year civil war that's destroyed so much more than just the landscape.
(END VIDEO CLIP)
ROBERTSON: Yes, it certainly has destroyed a lot more than just the landscape you know. And it was really sad to see also the state of many of
the people there. And not just in rebel controlled areas but government controlled areas as well. Of course Aleppo is the town that really for such
a long period in the civil war was right on the front line, has seen some of the most brutal fighting going on there. Still, even in government
areas, there's almost no electricity, so people there, you can literally see the psychological and the physical effects that this war is having. And
now, of course, as this offensive presses on, for some of these people at least, it looks as though the worst might yet still be to come, Max.
FOSTER: OK, Fred, thank you for joining us from Damascus in Syria. We are following any developments, for everyone watching out of Munich, and if
there is any sort of deal in relation to Syria we're going to bring it to you as soon as that happens. We're expecting it imminently.
(BEGIN VIDEO CLIP)
FOSTER: Now, Stephen Fry knows about making movies of course and winning awards. The host of Sunday night's BAFTA Awards talked to me about the
nature of the diversity in the business. Hear what he had to say next.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
FOSTER: Actress Meryl Streep has defended the all-white jury of the Berlin Film Festival. She happens to be President of the panel and the Oscar
winner says it's important that women are part of the debate over diversity. The issue is raging in the movie industry right now after the
Academy Awards Committee unveiled an all white nominees list for this year's acting Oscars.
(BEGIN VIDEO CLIP)
[16:25:02]
MERYL STREEP, ACTRESS: Well, I'm very committed to equality and inclusion of people of all genders, races, ethnicities, religions. There should be
inclusion. And this jury is evidence that at least women are included and in fact dominate this Jury. And that's an unusual situation in bodies of
people who make decisions. So I think that the Berlinale is ahead of the game.
(END VIDEO CLIP)
FOSTER: Well, actor, author and the host of Sunday's BAFTA Awards here in London, Stephen Fry has been to more of his shares of award shows and he
has also been talking about diversity. I spoke to him earlier and he started by saying a strong mentoring programming encourages diversity.
(BEGIN VIDEO CLIP)
STEPHEN FRY, HOST, BAFTA AWARDS 1016: What BAFTA does brilliantly I think and increasingly over the years is it mentors young talent increasingly and
has very much an eye to making sure that it's diverse. And as it happens, last year, we decided to give the fellowship in this year's ceremony to the
American actor Sydney Poitier, whose long been a beacon for black Americans as this fantastic figure and that was before any of this diversity
controversy.
FOSTER: Do you have sympathy for what the actors are saying - and critics of the Oscars are saying, some of those very well-known actors.
FRY: Yes, I have sympathy in all directions. I mean I have sympathy in that you know if you're a member of the Academy, you vote. You can't help being
whatever your skin color is and if it happens to be white, that it's not your fault. But I don't think white people vote for other white people
specifically out of some racial preference. There may be some weird psychological thing that has to be studied, but gosh, you know, the thing
is what we mustn't do is get into a total sort of panty wetting nonsense about it and be guilty of thinking -- the key is to think clearly. To think
very clearly about what is right and what is proper, what is - what is , you know, what is actually offensive, if you want to use the word, in terms
of its patronizing nonsense, start giving awards to people because they're one color or they're one gender or one fluid gender, nonsense gender,
whatever it is, then we start getting into this total mess and everyone wants to leave, everyone says I'm not interested.
FOSTER: Stephen Fry, speaking to me earlier.
(END VIDEO CLIP)
FOSTER: Now the fall in oil prices is easing but oil firms are still feeling huge pressure.
(BEGIN VIDEO CLIP)
FOSTER: We'll speak to one U.S. company about what's ahead.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
FOSTER: Hello. I'm Max Foster. Here are the latest headlines.
(HEADLINES)
FOSTER: Talks happening now in Munich could give a push forward to the search for peace in Syria. U.S. Secretary of State John Kerry and his
Russian counterpart, Sergey Lavrov, are both saying they want to find a way to end the war in Syria. Still, Moscow and Washington have been sharply at
odds over what their forces are doing there.
Stocks on Wall Street suffered steep losses despite a late rebound. It follows a global stock market routes triggered by falling oil prices,
unconfirmed talk that OPEC members and other oil exporters could agree to cut output from partial recovery near the end of U.S. trading.
A fight between rival gangs inside a prison led to a riot and a fire that killed more than 50 people. That's according to authorities in Mexico. It
happened at the Topo Chico Prison at the northeastern city of Monterrey. The violence just ahead of a visit to Mexico by Pope Francis.
Democratic presidential candidates, Hillary Clinton and Bernie Sanders, face off later on Thursday in the first debate since Sanders big win in New
Hampshire. Cnn will bring you a live simulcast of the PBS debate. It's taking place in Milwaukee, in Wisconsin.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: We have detected gravitational waves. We did it.
(END VIDEO CLIP)
FOSTER: Scientists have announced that gravitational waves first described in the theory by Albert Einstein 100 years ago are a reality.
Researchers say they detected there were pulse in space and time coming from two black holes, which orbited each other, spiraled inwards but then
collided. The waves were the product of the collision of the two black holes, which are 30 times as massive as our sun.
Markets around the world are being rocked by that plunge in the price of U.S. crude, of course. U.S. stocks saw a bounce at the end of the session
on talks of OPEC members getting together to agree to a coordinated cut in oil output.
The price of WTI, West Texas Intermediate, Crude is still down since the start of the year. It has fallen more than 28 percent and is now trading
around the $27.10 mark. That chart is not only sparking fear on Wall Street but also U.S. oil producers.
Chris Faulkner is the president and CEO of Breitling Energy Cooperation. He joins us live from Dallas, in Texas. Thank you very much indeed for
joining us.
What do you make of all these rumors which, you know, they are having an impact on the market, aren't they? But there's so much fear around. What
rumors are you to believe?
CHRIS FAULKNER, PRESIDENT AND CEO, BREITLING ENERGY CORPORATION: Well, you're right, there's a lot of bearish signals in the market now, many more
than bullish signals. OPEC is going to have to cut supply. They've actually increased supply and they're making matters worse.
It's obvious they're targeting Russia. They are targeting Iran and I think the United States is becoming collateral damage. The $27-range or even
$30-range is uneconomical for us to drill in most areas here in the United States.
So supply is going to come offline, but it's going to come offline slowly unless OPEC unilaterally does a supply cut. The market is oversupplied
let's just say a million barrels a day, a million and a half.
That's not that much really when you look at what we're using -- we're producing about 96 million so about a percent and a half. So if we can cut
that number down, the price could rebound back into the 40s relatively quickly.
FOSTER: Some people suggesting that if it tips down to $25, then you're in a new trading range, and it will automatically sink lower than that.
FAULKNER: I was going to mention that. If we get to 25 and test it and close, say, tomorrow, at a $25 number, that would set a new trading range
with the floor now being somewhat in the teens, let's just call it 15, for a round number. Like we saw when we broke through 30.
So yes, we break through 25. We could test 20 and bounce on through. We do have good floor support at 25 so hopefully we can test that and bounce
back.
But it's sad to say that you have $40 oil seems so long ago and now we're dealing with 27. So unless supply comes offline, we don't see demand
increasing by more than a million, a million two this year.
So still that supply overhang. One thing that didn't help us yesterday was that Cushing Oklahoma, which is sort of our benchmark for storage here in
the United States, is at an all-time high, 64 million.
Those tanks are topped out so I think folks are fearful where are we going to put more oil and that's causing the price to plummet down as well.
[16:35:06]FOSTER: And if Saudi Arabia suddenly cut production, how easily can that industry, for example, in the U.S., respond to that, because
they've already been laying off workers and closing down plants, haven't they?
FAULKNER: Yes, we've lost 600,000 jobs in this industry because of these oil price, because of the lack of drilling rigs. We are down to 500
drilling, used to have 1,900 just two years ago. We can respond back. We're an agile industry. We'll make it through.
If you can't turn it on, turn it off like a spigot because you got to find the crew. You got to get the rigs back out there. So we can start back up
in, say, three months, four months.
But by the end of the year or middle part of the year, and we do see supply coming offline. We think 700,000 barrels will come offline again this year
because of the lack of drilling, but that may not be enough to get the numbers back in the 50s.
But certainly, by the end of the year, we think 45 to high 40s is doable. That isn't a great number, but it's a lot better than 27.
FOSTER: OK, Chris Faulkner, thank you very much indeed. Appreciate your time. We'll speak to Paul La Monica now. He is joining us with more about
the broader market panic. We can describe it as that, can't we, Paul, because emotion is driving so much of this.
We're talking there about the rational movements in the oil market because of what's going on with Saudi Arabia and like. If you're an investor and
you're looking at all of these markets, it's so hard to make sense of and it's frightening.
PAUL R. LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: It is very frightening. I think a lot of people are starting to wonder if this is
another 2008 all over again. But the big difference, at least right now, is that in 2008, remember, Max, you woke up every day and something really
scary and tangible was happening that kind of put the fear of God in you.
That's not happening except for the fact of oil prices keep falling and that seems to be the one constant. Oil goes down, the market goes down.
Oil rebounds, stocks rebound. We saw that again today.
So I think we're still waiting for real evidence, not just fear that European banks are in trouble or that there's going to be more pain in the
energy sector, you know, more bankruptcy or what have you.
It really is just fear and, you know, CNN money, we have a fear index on our website and it's been extreme pretty much all year.
FOSTER: When you get fear mode, they often tip into complete panic, don't they, and you end up with a market crash. I hate to bring that phrase up
but people are assessing that, saying how bad can it get. How do you judge that?
LA MONICA: It's a great question. There's no real easy way to call the bottom when you're in the midst of a free fall like this. I think that is
the big problem. The psychology on the market right now is clearly negative.
There are a lot of investors worried, for legitimate reason, about what the plunge in oil prices say, not just about the supply glut, but also
weakening demand, particularly from China and what that might mean, if it spills over to the rest of the developed world.
But it does seem a little irrational that you have some very quality companies that are trading at attractive valuations, paying dividends that
far exceed, their yields far exceed what you get on government bond rates in the U.S. and Europe.
It does seem as if the market is overreacting and fearing the worse and those are usually good buying opportunities. You just have to be brave.
FOSTER: OK, Paul, thank you very much, indeed, we'll monitor the psychology as much as the fundamentals as we move forward.
The head of Germany's largest industrial group says he is surprised by the pace of the global slowdown. Siemens CEO, Joe Kaiser, singled out China,
and says it is vital for Beijing to push forward with reforms.
CNN's John Defterios asked him how concerned he was about recent sell-offs in equities and oil.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: It is slowed down, and actually suppressing because, you know, low oil price should actually have
quite a benefit for the world economy, rather than the other way around.
I think what we really see now is that there is a lot of uncertainty especially in the capital goods investment environment. That's been the
reason why I've been repeatedly mentioning the chief political risks might be the single biggest risks for 2016.
DEFTERIOS: Brazil, Venezuela, Azerbaijan, Kazakhstan, Nigeria, big energy producers, with their currencies plummeting at this stage. This could be
severe dislocation for the next couple of years.
KAISER: It could be a disruption because those countries are so much dependent on commodities that they've got no place to go. And so I really
do think that, you know, they need to communicate and cooperate with the international community so we can see that, you know, we can help reforms,
restructuring and see how we could, you know, help them to develop in the long term.
DEFTERIOS: You're not as worried about China as the markets are right now, the depletion of assets they've had there.
[16:40:03]Can they sustain 6 percent growth or is this a new reality of 5 percent growth and how does it affect Siemens in reality?
KAISER: The fact that China has been slowing down quite a bit for a long period time. China has seen it coming. They talked about the new normal.
I think what's important in China is not that we panic now because there's still real existing business.
You know, the capital markets sometimes are living and dealing and trading expectations or sometimes risk even at the base. So therefore we are less
concerned about the China development than the financial markets are.
Having said that, though, believe it's important for the Chinese government that they continue to push through with reforms.
DEFTERIOS: Does that mean that the fed cannot keep the blinders on and only look within its borders on this interest rate increase cycle that
we're seeing that they have to pay attention to the capital flight out of emerging markets and what we're seeing in China?
KAISER: I don't think that the fed policy, you know, is the trigger for capital leaving China. The trigger is that, you know, the confidence in
China economy growth reforms has been sobering a little bit. So I think China needs to step up again and prove that this is (inaudible) investing,
what they think it is, and then the money will be back.
(END VIDEOTAPE)
FOSTER: Now, the French (inaudible) keeping eye on China. We've been talking to the CEO of publicist (inaudible), one of the world's biggest
alcoholic drink makers, their view on the China slowdown next.
(COMMERCIAL BREAK)
FOSTER: Stocks in Europe sank their lowest level since 2013 on Thursday, part of a wider global sell-off. In Paris, the CAC 40 index had its
biggest one day fall so far this year sinking 4 percent.
Banks were hit hard in Zurich. Credit Suisse fell to a 27-year low. There was also one share on the Paris CAC that rose the session and that was
Publicis after reporting earnings.
The world's third biggest advertising group gained almost 2 percent after better than expected earnings. However, the CEO, Maurice Levy, still says
we are not yet in a growth economy. But he does expect a modest increase in sales and operating profit in 2016.
He tells CNN's Jim Bittermann the company did well to increase its revenue in the latest quarter.
(BEGIN VIDEOTAPE)
MAURICE LEVY, PUBLICIS CEO: We had a great fourth quarter. Beaten by a margin our expectation. We have boasted the best numbers ever with 32
percent up on revenue. Our cash flow generation passed the billion dollar mark with 31 percent increase compared to last year.
We will give a dividend, which is up by 33 percent. When you look at all the numbers, we have a double digit increase. This is due to the
acquisition, at the same time we are ahead by the different (inaudible) available to us.
But on top of this, we have pretty well managed the organization and we are happy with the numbers.
JIM BITTERMANN, CNN SENIOR EUROPEAN CORRESPONDENT: What was the best part of your business in the last year?
[16:45:04]LEVY: The best part is yet to come because we have integrated very well, Sapient, which is a huge acquisition. We are extremely pleased
and proud with that acquisition and we have transformed our organization in order to best fit the future.
And for that, we have made a lot of gains forward and our people have worked extremely hard. I'm personally extremely grateful to our people for
what they have done.
And I believe that 2016 will still be a little bit wonky because we are in a low growth economy with low inflation and clients are still cautious.
They are cutting costs instead of investing.
So we're not yet in a growth economy, but we will do good and we will do well in that economy, and we believe that we will really fire on all our
cylinders as off 2017.
BITTERMANN: On the decision of (inaudible) to pull it support from the International Athletic Federation, is it a good idea for companies to cut
off, disassociate themselves from corrupt organizations?
LEVY: We have some principles and they think that we have to stick to principles. Now a days, there is such an enormous distrust, mistrust, of
companies, people who are questioning government institutions.
So we have to stick to these principles. Even if it is hurting in some areas good feel or some good NGOs, but have been slightly corrupted and we
can come back two or three years after when they have cleaned the operation.
We can't be associated with corrupted organizations, and they think that Nestle (ph) made the right decision.
(END VIDEOTAPE)
FOSTER: Maurice Levy there speaking to Jim. Now the world's second largest spirits company is keeping its annual profits outlook unchanged.
Pernod Ricard which has brands including Absolute Vodka and Jameson's Whiskey says robust demand in the U.S. as its main market lifted first half
operating profit.
Alexandre Ricard is finishing his first year as CEO. He spoke to CNN's Jim Bittermann in Paris to talk results and China.
(BEGIN VIDEO CLIP)
ALEXANDRE RICARD, CEO, PERNOD RICARD: We can qualify our first half of the year by solid sets of results. Our top line or net sales grew organically
by 3 percent, which does translate into a gradual improvement of our top- line growth.
Last year was just 2 percent driven by all regions basically, Asia, rest of the world, up 5 percent. Europe, an improvement in Europe that has modest
growth of plus 1 percent. And the Americas region, that grew as well principally due to dynamic U.S. market for us.
BITTERMANN: Jamison in the U.S.is kind of the locomotive behind what's happening in your sales in the United States.
RICARD: What a great product, what a great brand. Such a beautiful brand, yes. If you look at the Nielsen panels, you see 20 percent growth rates
for Jamison.
BITTERMANN: How do you account for the change in taste between, say, vodka, and spirits, and wines and other things? How do you account for the
way young people in particularly are making up their minds?
RICARD: I think that the new generations, the millennials, don't decide by category, tequila, gin, vodka or whiskey, but by brands. By brands they
engage with and by brands they relate to and experiences around these brands. You were mentioning Jamison. Jamison is one of these brands that
people just love because it's a great brand.
BITTERMANN: One area of difficulty is the Chinese market. What's your analysis of what's happening there?
RICARD: Yes, the macro-economic environment in China is under pressure. There's no doubt about that. But our first half is fully consistent with
the last fiscal year in China. The spirits, imported spirits market in China, is still in decline and Pernod Ricard's underlying sales in China
are anywhere between minus 4 and minus 5 percent.
(END VIDEO CLIP)
FOSTER: The CEO of Pernod Ricard speaking to Jim. Now, it's a concert and a fashion show and a launch party. Kanye West's latest effort to market
his creativity next. All that after some make, create, innovate.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: He has multi-talents. He does fashion very well and he does music very well, which is very rare so I'm very excited to see what he
have in store.
UNIDENTIFIED MALE: It's going to be a little more affordable which is nice because then I can own more than three pieces of it. It should be a good
show.
UNIDENTIFIED FEMALE: And are you more excited for the album or the collection?
UNIDENTIFIED MALE: Both actually. Yesuz wasn't my favorite album. I hope he gets back to some old Kanye stuff. But the clothes are great too,
excited for the footwear.
UNIDENTIFIED MALE: The 750s in all black, very rare, very exclusive, limited quantities.
(END VIDEO CLIP)
FOSTER: That's what fans have to say at least about Kanye West's new album, which is launching right about now at a listening party in New
York's Madison Garden Square. The same event is also the fashion weekday debut of his third sportswear line for Adidas.
The show is screening live at movie theaters around the world and you can watch it on title too, extraordinary event. Kanye West is not the only
artist, though, to try new innovative ways to launch his album.
Mike Fiebach is the founder and CEO of Fame House, (inaudible) marketing agency focused on the music industry. He joins me from Philadelphia. It's
really defining or redefining how artists sell their music, isn't it? They are making the most of all the forms of digital media out there.
MIKE FIEBACH, FOUNDER AND COE, FAME HOUSE: They really are. In this environment, in the digital music industry with were everything has evolved
to with social media and the proliferation of all these online tools for artists to reach fans online, you really have to be innovative and do
things in a way to get people's attention.
That's exactly what you're seeing here with Kanye. This is amazing marketing. He's almost as good of a marketer as he is a musician, I think.
FOSTER: It's the mystery, isn't it, rather than the way he's delivering it.
FIEBACH: Yes, I think he's done an incredible job of building up that mystery and the mystery is continuing and going into this release and what
he's done an incredible job at is utilizing his audience and his fan base as a marketing channel.
And essentially having them be the ones that amplify this message for him and start to talk about what these messages might mean, what does the album
name mean, what does the album cover mean, what do the song names mean?
He's using a really great job of using those main marketing channels. He is using Twitter, but using his audience as a way to amplify that message
to an even wider audience.
He has about 19 million fans or so on Twitter. If you think about how many friends and followers all those people have. If they start talking about
this album, which is exactly what they are doing, you're going to reach a massive amount of people.
FOSTER: I mean, he obviously knows fans. He knows his industry. He knows what to play into. You have to be right. Beyonce, when she released her
album without any fanfare at all did incredibly well, people liked it.
But it must be a nerve-racking moment when you put something out that you haven't tested in a small market somewhere. You're putting it straight
out. It could completely break a career as much as make one.
FIEBACH: Yes, I mean, I think it takes a lot of guts to do something like what Beyonce did, but I do think that she was absolutely priming her
audience for that, right. I mean, she wasn't talking about the record, but she was in the media and she was using social media and she was getting her
fans engaged and herself and her content prior to that big release.
I think that's exactly what Kanye was doing here. He just did it a little bit differently because he started to tease the actual album and to get
people to actually talk about it. We've seen at Fame House, we've seen a lot of success with building a 365 days a year, 7 days a week strategy for
engaging fans on an on-going basis.
[16:55:10]You know, that's what this really comes down to. We're in an age where the industry is evolving to an audience monetization model versus a
recorded music, and just live performance model.
Where you need to engage your fans every day of the year to get them ready for these big moments and that's exactly what Kanye has been doing. You
can see him active on Twitter every day and he's building up to this massive moment and it's exploding as we speak.
FOSTER: OK, Mike, thanks so much for joining us. They're becoming media moguls aren't they as much as music machines. Thank you so much for
joining us. We'll have a final check on the markets for you in just a moment.
(COMMERCIAL BREAK)
FOSTER: Just before we go, we want to remind you how U.S. stocks ended the day because the Dow closed more than 250 points lower. Unconfirmed talk
that OPEC members and other oil exporters could agree to cut that. But prompted a partial recovery near the end of U.S. trading there.
Oil prices also had a brief rebound earlier. WTI is still in the red, though. Brent is trading higher as you can see by 0.5 percent.
Stocks in Europe, their lowest levels since 2013 on Thursday, part of a wider global sell-off. In Paris, the CAC 40 index had its biggest one-day
fall so far this year sinking 4 percent. Banks were hit hard in Zurich and Credit Suisse fell to a 27-year low.
Now, want to show you a calendar showing the triple digit swings for the Dow in 2016. Green days show the sessions it was up by triple digits, red
days, it was down by triple digits. Overall equities have plunged.
That was QUEST MEANS BUSINESS. I'm Max Foster. Join us again, the same time next week. "AMANPOUR" is on next.
END
