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Quest Means Business
U.S. Vice Presidential Debate Just Hours Away; IMF: Weak Growth Fuels Anti-Trade Populism; U.S. Markets Close Down; British Pound Falls to 31-Year Low Against Dollar; Concerns About Impact of Brexit on U.K. Economy; Cuba Bracing for Hurricane Matthew. Aired 4-5p ET
Aired October 04, 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] RICHARD QUEST, CNN ANCHOR: The bell is ringing on Wall Street. The Dow is off the best part of a 100 points. A fascinating sort of
trading session that we'll get to during the course of the day as we look at the economic outlook. And the market has closed. And frankly, sir,
with that wimpy gavel is wasn't worth it.
It is Tuesday. It is October the 4th. Tonight the IMF is warning weak growth is fueling isolationism. Also tonight, fears of a hard Brexit sinks
the pound to a 31 year low. And think of it as pixels and daydreams. Google shows off new hardware. I'm Richard Quest back live in New York.
And of course, I mean business.
Good evening, it was an extremely busy day in the market and the financial world. The IMF brought out their latest forecast which makes somewhat
depressing reading. And there was a sharp fall in the value of the pound as worried investors are worried about what is happening to the U.K.
economy. All of that factors into the global situation. But we start tonight with the two men hoping to be second in command in the United
States. And those two men will share the stage further one and only vice presidential debate tonight.
Now one of these men is the Democrat, Tim Kaine, or the Republican Mike Pence. One of them will be just a heartbeat away from the presidency
starting in January. Voters are split on who they believe will win tonight's debate. 38 percent are backing each, and 24 percent either won't
show who they were or won't show who is likely to be winning it. The new polls show Hillary Clinton is pulling ahead of Donald Trump with five weeks
to go until America votes. Mark Preston is CNN political executive editor. He joins me now from Virginia. Mark, you'll remind me who was it you said,
that the vice presidency isn't worth a bucket full of spit or something like that. There was a vice president who did say that.
MARK PRESTON, CNN POLITICS EXECUTIVE EDITOR How dare you ask me that and put me on the spot, Richard. Gosh, I do forget who said it but it was a
very important --
QUEST: I think was a Johnson. I've got Google. More to the point, more to the point, why is this debate important?
PRESTON: Very important and let's talk about it on a global scale right now. As you said, the two gentleman tonight taking the stage here in
Farmville, Virginia. If they win, if Donald Trump wins, Mike Pence is one heartbeat away from the presidency. If Hillary Clinton wins, Tim Kaine is
one heartbeat away from the presidency. So if you're watching this tonight around the world you're going to be looking at these two gentlemen
wondering could they occupy the oval office? Could they be making the key decisions, whether their economic decisions, whether their military
decisions, whether there U.S. interventionist decisions down the road.
So these two men tonight will be spending their time, not necessarily debating each other about each other's skills, but debating why they're
running mate should be the next president of the United States. There could be some fireworks, but certainly not what we saw, Richard, last week
when Hillary Clinton and Trump really just went right at it. And this is just in there, Richard, Donald Trump is going to be watching, he says.
He's going to be tweeting as it goes along. So it'll be interesting to see what he has to say tonight.
QUEST: On these two men, I mean it's interesting that you say that they are obviously the ultimate surrogate for their principal in that sense.
But will they attack each other? And if they do attack each other, who do you think coming out strongest?
PRESTON: Well, let me tell you what their strategy will be. Mike Pence will attack Tim Kaine about his record as the governor of Virginia. Tim
Kaine was the governor back in 2005 before he became a U.S. senator in 2012. But when he does that, what is really trying to do is to try to
shift the conversation away from Donald Trump. Because most voters here in the U.S. don't care about Tim Kaine's record as governor here in Virginia.
On the flipside, Tim Kaine will be going directly at Mike Pence trying to show the schism between Mike Pence and Donald Trump on some key issues,
some key global issues. You're talking about climate change, they don't agree. You're talking about the ban on Muslims, they don't agree. And get
this, on the issue of taxes, which has really become a focal point in this campaign, Mike Pence has release them. Donald Trump refuses to release his
personal taxes.
QUEST: Mark, thank you. I was completely and utterly wrong. To just put myself in my own place.
[16:05:00] It was John Nance Garner, who said the vice presidency was not worth a quart of warm spit, after two terms of FDR's vice president. Good
to see you, Mark. I look forward to have our analysis tomorrow after this is happened.
CNN's carrying the only debate between the vice presidential candidates. It is Wednesday at 2:00 a.m. in London, which is 9:00 a.m. in Hong Kong.
Tuesday night of course in the United States.
Many people questioned the U.S. Fed's decision not to raise interest rates at the last meeting. The Richmond Fed president, Jeffery Lacker, is one of
them. He's a nonvoting member of the committee, but participates in the discussion. Now Jeffrey Lacker says there is a strong case for a
significant hike to keep inflation under control. The comments were one of the drags on the U.S. markets today. The Dow recovered slightly from a
triple digit loss. Paul La Monica is at the New York Stock Exchange. It's pulled back from where it was off over 90 points when the closing bell
rang. So it's pulled back just a touch. What was the driving force?
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: I think you nailed it, Richard. People are growing increasingly concerned that the Fed is going
to start raising interest rates again. I think people need to take Jeff Lacker's comments with significant amounts of salt, grain of salt. Because
he is not a voting member until 2018. So he has no real influence over what Janet Yellen and other Fed members are going to do at their next
meeting. And they're not going to raise rates in November just before the election even though some people are saying it should be a live meeting. I
think it would be crazy for them to inject themselves into the political debate days before the election. So were talking December a possible rate
hike. And then maybe several in 2017.
QUEST: We're going to be talking in a moment about the IMF's latest world economic forecast, which has the U.S. quite sharply downgraded in growth.
Will that play into a Fed decision or do you think the Fed's already factored in that the U.S. is going to be slower this year.
LA MONICA I think the Fed has factored in that the U.S. will be slower this year. The question obviously becomes 2017, 2018 and are they seeing any
real telltale signs of inflation. If the Fed isn't seen any inflation, they might be able to hold tight for the foreseeable future. Because
that's really what will get them to move. And also even though it's not an official mandate, the Fed is closely watching what's going on in the global
markets and economy. They won't raise rates if there are still problems in Europe and China.
Paul La Monica who is at the New York Stock Exchange. Let's continue to talk about that forecast from the IMF, or the latest at the annual
meetings, which would start later this week. Incidentally, we will be in Washington on Thursday and Friday for the annual meetings with all the
finance ministers and central bankers. But the economy as such could be the key to the U.S. election and the International Monarchy Fund says
things are not looking that great. The IMF has just cut its growth outlook for several advanced economies including the United States. If you take a
look at what their actually saying, between the IMF and the World Bank at the meetings, the outlook for global growth remains unchanged. That's at
3.1 percent. I think it was just down just a smidgen, from 3.2 to 3.1 percent. By in large no change there. And it's expected to pick up next
year. But get into the drivel of the detail and the United States, where growth is down from 2.6 to 1.6 -- 2.6 in 2015 to 1.6 -- and the growth
forecast is weaker than expected this year, the falling business investment in crucial.
Brexit will cause years of uncertainty in Europe. The U.K. used to be the fastest growing amongst the G7 and now growth this year is expected to be
about 1.8 percent and will be even less next year. Next year is when the big drop off happens in the U.K. economic growth.
Growth slowing to 6.6 percent with the warning of a high debt load over in China. That is the scenario of the world economic outlook. Of course,
there are fast growing economies, India being one of them, and others in Southeast Asia that you keep this global level quite high. The IMF's chief
economist has warned that prolonged weak growth could fuel populist sentiments that are against international trade and that will hurt the
global economy. The man is Maurice Obstfeld. He joins me now from Washington. Maurice, excellent to see you, thank you, sir.
MAURICE OBSTFELD, CHIEF ECONOMIST, IMF: Hello, Richard.
QUEST: Thank you for joining us. The reason why U.S. economic growth is slowing down and quite precipitously since the spring forecast just a few
months ago. Why is the U.S. slowing down?
[16:10:03] OBSTFELD: Well, Richard, we've seen to rather disappointing quarters so far this year. We do expect some pick up in the third quarter,
but we've also had some retrospective revisions by the Bureau of Economic Analysis for early 2016, late 2015, which have also clouded the outlook.
We basically see several factors. Surprisingly low productivity growth is one. The low state of business investment, which you just mentioned, is
also a factor. And some lingering drag from the dollar is also in the mix. We see better performance in 2017. A bounce back of about two about 2.2
percent growth.
QUEST: Why should the U.S. be suffering the slowdown, these deaccelerating forces? On business investment. What is causing that to happen? Is it
uncertainty? Is it weakened demand overseas?
OBSTFELD: One factor is definitely low productivity. And you'll probably next ask me why productivity is low. It is somewhat of a mystery, but it
has fallen throughout the world. Uncertainty is likely the factor. And we believe demand is a big factor, low demand, low investment go together.
QUEST: I notice in your comments in the introduction to the WEO, you do elude to this idea of populist tensions as relates to immigration and as
relates to trade. How concerned are you that political factors are now well and truly influencing economic outlooks?
OBSTFELD: Well, I think we do see a political reaction to the extended period of low growth after the crisis, coupled with, you know, a long term
trend toward greater inequality, which has not improved much in many countries. It is a danger that this could lead to international
fragmentation. Negative trade policies, break up in Europe, and we're seeing some of the symptoms in the Brexit vote.
QUEST: The Brexit uncertainty, we have seen just today, Maurice, the fall in the pound, not surprising, but you are concerned aren't you that the
next two years of this process could be very debilitating.
OBSTFELD: Now we know that the British will trigger Article 50 in March, and that will set up a prolonged period of negotiation. The signals from
Prime Minister May are that Britain does want to control its borders with respect to migration. So there will be uncertainty about what the final
settlement in Europe will look like and that is bound to weigh on investment and hiring especially in the U.K.
QUEST: My final question, you can plead the 5fifth on this one. When you did -- you know this is a Trump/Clinton question coming down the road
towards you -- when you did your forecast for next year's U.S. growth, and you have it at 2.2 percent, were your forecasting current trend, Clinton
policies, or Trump policies?
OBSTFELD: We usually go on the basis of expected current policies. What we think is most likely, and I guess I'm just not going to tell you what
those are.
QUEST: It is not every day that the IMF teases us. You not going to tell us whether your policy, whether your forecasts are based on Trump or
Clinton. I don't blame you, Maurice, I look forward to seeing you in Washington and joining you this week. Thank you, sir.
OBSTFELD: See you later.
QUEST: I'm sure you would have your own views on what the IMF did its policies and forecasts on. We will be at the IMF and World Bank this week.
Now you're going to hear from in debate, you're going to hear from Wolfgang Schauble, the German Finance Minister. You're going to hear one of the
first interviews on this network from the U.K. Chancellor, Philip Hammond. Remember, he's just said, they'll be two years of uncertainty and
turbulence in Britain. And he's just abandon pretty much, all his predecessor's austerity targets. And of course Christine Lagarde, the
managing director of the IMF. We'll be wanting to get her take on the United States. Whether or not the IMF still supports higher interest rates
in the U.S. And of course, see if we can tease out from the MD a thought or two on Trump versus Clinton.
[16:15:02] On the other side of the Atlantic the markets had one thing on their mind today. It was brags it and whether it's a hard or soft leave
landing. Whatever way it is, breaking up is never easy.
(COMMERCIAL BREAK)
QUEST: Sterling is being hammered by worries that the Brexit could be a too big a below to bear for the U.K. economy. Having fallen quite
precipitously after the prime minister basically said, that she would be triggering Article 50. And that is the article that says that the U.K. is
going to leave, the official notification by the end of Q1 next year. Now it is falling even more close to 1 percent, at 1.27. This is the lowest
level the pound has been at since 1984, and that was before the big boom of the 1980s, 1985 to be precise. The pound has now fallen 15 percent since
last year and is trading way below the recent high of 1.71, that was just two years ago.
Now this is the perversion in a sense of what is happening in the markets. Because although the pound is being clobbered on geo-political reasons and
strategic reasons, the FTSE went up 1.3 percent. It was up 90 points at over 7,000. The FTSE made gains because it's safe in the knowledge that
that cheaper pound is a great boost for British exporters and manufacturing. And were already seen that in there. So it really is on
the one hand and on the other hand.
In the U.K. itself, there is a huge debate about whether or not Britain should have a hard or soft Brexit when leaving the European Union. You
going to hear again and again this phrase, hard Brexit, soft Brexit. So here is the QUEST MEANS BUSINESS explanation about how the two models
compare.
Let's start with the hard Brexit. Well, the hard Brexit means the U.K. is just out. No agreements, no free trade, no single market, no customs
union, and therefore, when it comes to Europe it has to fall back on the World Trade Organization rules with its former EU partners. WTO rules
means tariffs both ways. That is the hard Brexit.
The soft Brexit -- now that means the U.K. keeps some form of access to the European single market. It can still trade tariff free within the EU. But
of course, the other EU members are saying, absolutely not.
The hard Brexit would see tariffs of up to 10, 15 percent on goods like cars both in and out of the U.K. and the soft Brexit no tariffs.
[16:20:05] They're trading along with the other EU states on an equal footing and tariff free barriers. As for the next hard Brexit, the next
hard Brexit is border control. The U.K. gets full control of its borders. But the other side of that of course is more cost for guards, for borders
between North and South Ireland. What happens, for example, to the English Channel Tunnel and the border along there.
The soft Brexit, Norway, Liechtenstein, Iceland, the so-called European economic area where there's free movement in and out. The hard Brexit and
the soft Brexit. Max Foster is at the Conservative Party conference, the ruling party. Max, there are those people in the Tory Party that is the
best way to go because the soft Brexit will create more problems on freedom of movement. Explain.
MAX FOSTER, CNN CORRESPONDENT: They also say that the hard, soft Brexit idea is a media construct, because they're trying to get away from this
whole idea that there are two extremes to it. Teresa May was saying, she doesn't want a Norway example, she doesn't want a Switzerland example.
There were those actually pointing to Canada and its relationship with the United States as an example. But certainly, there is a big split in the
cabinet. If you go by the way those politicians campaign during the referendum on those that do believe that Britain should come straight out
of the European Union and then renegotiate its way back into those trade agreements and those that want to keep the single European market. So
there is no doubt there is that split. And she won't give away too much of what she actually Plans, Prime Minister May. She says, but doesn't want to
give away her negotiating position with Brussels. But there are those who also think that she just hasn't got the agreement in the cabinet yet to
give away all of her plans. But nevertheless, we have got a situation where everyone woke up here to this tumbling currency value. The pound
falling after a round of interviews this morning by the Prime Minister. But she really dismissed that saying that there will be bumps in the road,
and she predicted them and this is just part of the process of Britain leaving the European Union. But how do businesses feel about this? Well
we asked the head, the acting head to the British Chambers of Commerce, which is one of the leading business groups here.
(BEGIN VIDEOTAPE)
ADAM MARSHALL, ACTING DIRECTOR GENERAL, BRITISH CHAMBERS OF COMMERCE: There is a huge divergence of views amongst chamber members around the U.K.
on what the best trade deal might be. During the referendum campaign, and even after of course, we had businesses saying that this might be the best
for them and the country or worst thing for them and the country, depending on their particular perspective. It still really early to say that
business has a settled view on what sort of trade arrangements it wants. The only thing to know is that all companies would like the best possible
terms of trade with the EU 27 after we leave. But it's going to take us awhile to negotiate that.
(END VIDEOTAPE)
FOSTER: It will be tough, for businesses, of course. But there are some politicians like the leading Brexiteer, Iain Duncan Smith. He things
actually businesses have had it too easy over recent years and they should have been doing more to support the British economy whilst they had access
to the single European market. Here is Iain Duncan Smith. I spoke to him a bit earlier on. He used to be a cabinet minister. He's not anymore.
(BEGIN VIDEOTAPE)
IAIN DUNCAN SMITH, FORMER UK CONSERVATIVE PARTY LEADER: The pound will come and go. I think it was overvalued anyway before the referendum. I
think the level it got to it's going to fluctuate a bit. Of course it will because, you know, the pound has already come down, according to what
people think might or might not happen. But generally I think the low level of the pound has been good for British economy. It has been
certainly good for exporters. We've actually seen some real boom now in some of the business.
It's fascinating that actually at the same the FTSE has gone up by hundred points. And that must tell you something, which is people know that the
speculation will take place on the pound sterling, but the reality for us is, what do people think of British business? And the answer by and large
is they think it's a good place to go. So the fact that there actually buying into the U.K. business and you see the stock market rise. That's
much more substantial and I think that shows, as it has done, this rise is enormous. So I'm sanguine about it. Of course, you want the thing to be
stable, but by and large the lower pound hasn't driven inflation. But it has given a real cost advantage to the exporters.
FOSTER: What about volatility speaks to a bit of insecurity as well, doesn't it? They want the information which is not available to give them
right now. So what should they be looking for from government?
SMITH: I would say that stop second guessing. We're leaving, she was clear about that. We're going to be out within the two years. She was
clear about that. It is absolutely clear that we're not going to be in the single market. So that is very clear. But what we do want is we want to
have a good relationship that is based around free trade. So those are very simple factors. We will control our borders. But more than likely by
a work permit system, which is flexible on high skilled areas, not so flexible down at low skilled areas, and that will be the thing.
[16:25:05] And so my point is that once you add these things together, it's not rocket science to know, OK, so now the balls in the European Union's
court. OK, how prepared are you to be a free trader with the U.K.? And if they are not, well, they're going to suffer for it.
(END VIDEOTAPE)
QUEST: Max, I was in London yesterday, and just looking at the papers and looking at the views, there is a -- people are starting to believe that the
Brexit will be, pardon the phrase, harder rather than softer.
FOSTER: Absolutely. Teresa May effectively saying that she won't negotiate. There is a red line on this issue about immigration that she
cannot -- during the referendum, it was very clear, a lot of the debate was around immigration. Britain wanted -- Brits wanted, people voting in
Britain want to control over borders. She can't negotiate on that, it's a redline. And the European Commission has said they won't negotiate on it
either. If you want access to the single European market you have to allow this free movement of people. So the only interpretation of that is that
Theresa May has to come out of the European Union in order to get back in, and that is the hard Brexit model you were talking about earlier.
QUEST: Max foster who is in Birmingham at the Tory Party conference. Max, thank you, sir.
An extremely dangerous hurricane is now on course for Cuba after making land fall in Haiti earlier in the day. Look at the size of this monstrous
beast that's working its way up the Caribbean towards Cuba the Bahamas and then touching to the southern United States. It is a category four storm.
It's already killed at least three people and the death toll is expected to rise. We got coverage of this, of course. We've got Tom Sater who is at
the CNN World Weather Center to give us that analysis of it. And Patrick Oppmann and Santiago de Cuba who will be talking to us from there. Let's
start with you Tom. The situation, this particular hurricane is fierce, it's large and it's dangerous. Is it going to get worse?
TOM SATER, METEOROLOGIST, CNN INTERNATIONAL: I think we're watching a humanitarian crisis unfold before our eyes. We're still trying to get word
out of Haiti that continues to get battered. This was just a rain cloud off the coast of Africa when it developed into something tropical. You
mentioned three lives, the first was in St. Vincent and then two in Haiti. One a fisherman we know of an a 15-year-old boy just trying to clear out a
sewer drain as a landslide occurred.
Six AM in the morning the first landfall at a category four strength. The Tiburon Peninsula here has mounds about 8,000 or 9,000 feet. So it
enhancing the amount of rainfall, staggering amounts. But Port-au-Prince is blocked by a stronger winds of the surge, but I'm concerned now that the
wraparound winds were seen are going to shove the water in toward Port-au- Prince.
We're getting clarity on whether system in the U.S. How that dictates the track in the days ahead. It takes it right through the Bahamian island
nation and possibly a land fall in the southeastern U.S. The U.S. naval station out of Norfolk, Virginia has deployed a fleet including an aircraft
carrier with helicopters, water and aid to try to get to Haiti. Still it's a category four. But the strong winds coming around are going to be a big
problem. We've got deforestation there, Richard. Back in 2004, 3000 lost their lives from a measly tropical depression. So again, there's a lot
going on.
QUEST: Tom Sater, who is at the World Weather Center for us. Now, if you look at this map over here, Tom was just talking about what was happening
over in Haiti. But over here in Santiago de Cuba, that is where landfall that Tom was talking about, is going to happen any time now. That is where
Patrick Oppmann is. You're in Santiago de Cuba. It's starting to look overcast, this is the classic calm before the storm.
PATRICK OPPMANN, CNN CORRESPONDENT: Absolutely. Behind me the largest mountain range in Cuba that you cannot see now because of these rain bands
that started to move in. We started to finally see some of this weather from this very slow moving but very powerful storm, Richard. And it's just
get worse from here throughout the night. Cuban officials have been telling people here for days to make the preparations they need to make to
put weights down on their sandbags, down on the roofs to keep them from flying off and turning to shrapnel. To leave the mountainous and coastal
areas, because those are just going to become very dangerous places.
And I think at this point if people have not taken shelter is just going to probably be too late. But the Cuban government said, Richard, they
expected 180,000 people to have to evacuate where they lived.
[16:30:00] So just a huge number of people for the small resource starved island nation to have to deal with, but they're trying to keep people from
losing their lives as would happen when hurricane Sandy came here from four years ago. And they are still picking up here and Santiago de Cuba four
years later after hurricane Sandy. So it just goes to show how devastating the storms can be and how for a poor country like Cuba, how long it can
take for them to recover from these storms.
QUEST: Patrick Oppmann, who is in Cuba. Stay safe, I have a feeling you have your work cut out for the next few hours. Let's me just leave you
with a look at exactly where the hurricane has been. It starts over here, moves up to Haiti, Port-au-Prince, heads up toward Santiago and then will
head up to the Bahamian islands.
After the break, we'll be talking the vice presidential debate and will be looking at the record of one of the candidates. How he created jobs in his
home state. It's QUEST MEANS BUSINESS, good evening.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest and there is more QUEST MEANS BUSINESS in just a minute. When we'll be putting Mike Pence's economic record to the
test in his home state. And the U.S. sports teams that are trying something new. It sounds old hat to everybody else, but now sponsorships
on NBA jerseys. For all of that this is CNN and on this network the news always comes first.
Last minute preparations under way for the only vice presidential debate, which takes place in a few hours from now. Tim Kaine is expected to talk
up Hillary Clinton and try to tear down Donald Trump. Mike Pence will likely make the case for Trump while attacking the top of the Democratic
ticket.
Hurricane Matthew is expected to hit Cuba in a matter of hours. The storm has already caused massive flooding in Haiti. The category 4 hurricane has
killed at least three people. The full extent of the damage isn't yet known.
The tennis star, Maria Sharapova, has won an appeal to have her two-year doping ban reduced. The Court of Arbitration for Sport cut the ban to 15
months. She'll be allowed to return to tennis in April. The Russian star was suspended after testing positive for Meldonium at the Australian open
in January. She admitted taking the drug. She said she didn't realize it was added to the banned list.
Pope Francis made a surprise visit to a town in Italy that was devastated by an earthquake. He met the survivors and the first responders at
Amatrice. The Vatican kept the Pope's trip a secret until he arrived. He visited the red zone an area still close to the public for more than a
month after the quake hit.
[16:35:00] And to our top story in the upcoming vice presidential debate in the United States tonight. And a sure topic will be jobs and the creation
of jobs. Donald Trump's running mate is Mike Pence and he says that as governor of Indiana he brought thousands of jobs back to the state after it
was hit by the financial crisis. CNNMoney's Cristina Alesci, now tells us why some people in the state thinks he's taking too much credit.
(END VIDEOTAPE)
MIKE PENCE, U.S. REPUBLICAN VICE PRESIDENTIAL CANDIDATE: Today, there are more Hoosiers going to work than ever before in the 200-year history in the
great state of Indiana.
CRISTINA ALESCI, CNN CORRESPONDENT (voice-over): Donald Trump's running mate, Mike Pence, is taking credit for bringing jobs back to Indiana since
becoming governor in 2013, but Pence's track record on jobs is questionable.
ALESCI (on camera): How much credit should Mike Pence get for the recovery in manufacturing and the additional job that's have been added?
CAROL ROGERS, INDIANA UNIVERSITY KELLEY SCHOOL OF BUSINESS: Certainly he will get credit for being elected to the office at a prime time. During
the beginning of the recovery of the recession.
ALESCI: When Pence took office in 2013 the unemployment rate was 8.4 percent. Today it's 4.5 percent. Good news for Indiana, but the decline
in unemployment is just barely better than the national trend. One company that's been hiring is Cummins. An executive there says the seeds of a
recovery were planted years before Pence took office.
JENNIFER RUMSEY, CHIEF TECHNOLOGY OFFICER, CUMMINS: I think the history is longer than just the last several years, so with the governor before
Governor Pence was Governor Mitch Daniels. We have local leaders that we work with really closely in Indianapolis, and Columbus and in Seymour. You
know, there is a lot of people that are played an important part of that.
ALESCI: In fact, manufacturing jobs started to recover in 2009 and swiftly years before Pence took office. And they've actually plateaued in the last
year and a half. Also drifting with the numbers across the U.S. But many workers are not just concerned about getting a job, they want high paying
ones. From 2013, the year Pence took office, to 2015 median household income rose 4.5 percent in Indiana. That's better than the rest of the
country, but it still doesn't seem like enough for many workers.
Chuck Jones has the local United Steelworkers Union in Indianapolis.
ALESCI (on camera): How do you feel when you see and hear Governor Pence on the trail with Donald Trump saying there are more people working in
Indiana than ever before?
CHUCK JONES, UNITED STEELWORKERS UNION: I do know what jobs we are seeing are lower paying jobs. They pay a little above minimum wage, but a person
can't provide a living for a family on $9, $10 an hour. They're not telling you is one of the qualifications on some of these jobs you're
creating, is you got to be able to say "Do you want French fries with that"?
(END VIDEOTAPE)
That was busy day for Google. The company unveiled a new phone. A virtual reality headset and a great deal more. We'll show you the shiny and the
newest and the most interesting after the break.
(COMMERCIAL BREAK)
[16:40:30] QUEST: Google is flexing its hardware muscles. The tech giant has presented several new products at its event in San Francisco. Now take
a look at them. The flagship announcement was picked up, the first phone with only Google branding with the world's most popular mobile software
Android now is aiming to do something similar with the phone.
Pixel owners will be able to pair it with a Daydream View. A new virtual reality headset for mobile devices, and there is new version of Google
Chromecast called Ultra and it will stream in 4-K quality. If we need to know what this is all about, because those of us over fifty may some
difficulty in understanding half the language I'm talking, and that includes me. Shelly Palmer is here, well under fifty, chief executive of
Palmer Group is with me. Of these devices, what excites you?
SHELLY PALMER, CEO, PALMER GROUP: I think Google Home is the most interesting. That's their competitor to the Amazon's Echo. Amazon uses
Alexa technology. Google is going to use Google technology. It should be a very good fight, Google has all of the data in the world, Amazon has an
extensible platform, this is going to be a good one.
You know, it is interesting today, everything had a G on it, and that is the really the big news. This will be an interesting day in history
because --
QUEST: Are they making money?
PALMER: They will.
QUEST: The Google phone, Pixel phone by Google, why would they want to get into something -- a battle between Huawei, Apple, Samsung --
PALMER: It is a great question you've got -- Apple has got end to end. And they have
a lot of control and they can make the experience pretty spectacular. Google has put Android out there. Every device you pick up that has an
Android operating system works slightly little different. They have similar capabilities but this is going to be a stock android phone and they can go across the board with
an end to end Google experience. I think Microsoft, Apple now Google. There are a lot of companies, Samsung, they're all trying to do end to end.
Samsung doesn't on their operating system but they own absolutely every ounce of the hardware, so --
QUEST: Microsoft found itself with the phone in competition with itself, and with its suppliers and with its clients. And that was most
unsuccessful.
PALMER: Yes, I can't agree with you more. What they did beautifully at Microsoft it's under new management, they make some of the best IOS apps
available for the iPhone and some of the best for your Mac. They had problem with their own phone, hardware is a tough business. Going end to
end is hard, but you ask what is interesting, Chrome Cast is interesting, Google Home is interesting.
QUEST: I'm not using many of these new things, I realize you are. Your home bristles with this sort of stuff.
PALMER: It does in fact.
QUEST: Which one of us is in the majority here?
PALMER: You come into my house and it looks like Tim Cook threw up in there. There is Apple and Google everywhere. In practice, look, these are
all things that are going to impact our life, right? We're going to have Wi-Fi everywhere. We're going to have phones everywhere. Ultimately, it
is going be software and Google is using this hardware to further just this is -- oh my goodness, not again, didn't I tell you should not have that
actually?
QUEST: I just thought I would give you a laugh.
PALMER: This is my iPhone 7, I got it in pink, mostly because I have a girl's name, and I'm in touch with my feminine side, but truly you should
be on an iPhone 7 plus.
QUEST: A pink one.
PALMER: By the way, color is your choice, ultimately I have some issues with the plug at the bottom, but I'm happy with this device. Or a Samsung
Note 7, purchased after the 15th --
QUEST: My Blackberry.
PALMER: It's my Blackberry, it's unbelievable to me.
QUEST: I may not forgive you for that.
Thank you Shelly. Chrome Cast Ultra now has a new competitor in the United States. It is the Chinese company Xiaomi and it is moving into Google and
Apple's carriage. I do like to sit in the living room and enjoy a bit of television.
Make sure my horizontal hold is managing all right. Now Xiaomi has launched a new set top box called a Mi box, it offers a 4k quality picture
for $69. Get in there and have a look at it. The company is best known for their mobile phones, and yet it is officially yet to launch them.
[16:45:03] So, take this, with a television, and who knows what comes next.
The vice president of Xiaomi is Hugo Barra. He says the time is not yet right to break into the mobile market in the U.S. He spoke to Maggie Lake
and Maggie asked why the company was pushing into the U.S. with these devices, but not with phones. Have a watch.
(BEGIN VIDEOTAPE)
HUGO BARRA, VICE PRESIDENT, XIAOMI: We think about what is happening with video today. You will hear a lot of people say, I pretty much don't watch
TV anymore. They are talking about linear TV. Video watching is at an all-time high, and continues to grow at an extraordinary pace.
It is just that people want to be their own programmers, they want to choose what they want to watch when they want to watch, right. I want to
watch "QUEST MEANS BUSINESS" at any time, not necessarily at the scheduled time according to the linear schedule. So this trend is about to break
into the mass market.
Meaning the living room is about to become connected for the average consumer in America. We chose to enter the market because we think there
is a massive opportunity to address this trend that is about to go mass market right as it is happening. So we are coming to disrupt this product
category as it becomes a big consumer site.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: It's very competitive space, Apple is trying to crack TV, a lot of companies have products out already.
Why do you think you can you make traction? Is it price?
BARRA: I think this in the same way we think about all of our products. And it goes back to who we are as a company. So Xiaomi is one of the
largest consumer technology companies in Asia today, one of the fastest growing as well.
We stand behind this one belief which is we want to bring cutting edge innovations to everyone, our mantra. That means bringing high-tech
products to the masses at very affordable prices. That is part of the thinking here behind Mi box.
We're bringing a high-tech product that gives you 4-k, Android TV, this new thing called HDR which are all sort of high end things, down to a price
point of $69. Really the market hasn't seen that at all. Yes, there is competition, there is quite a few products on the market. But there is
nothing that gives all of these high end specifications at price so well below a $100. We think it will be killer for the American market.
LAKE: Are we going to see more push with phones as well. Because it is sort of the holy grail. We know how popular you are in Asia. A lot of
people think that the U.S. market is also ripe for that. What are we expecting there?
BARRA: I get asked that a lot.
LAKE: I imagine you do.
BARRA: Our thinking is to come to America with one disruptive product at a time. We have identified this, that's why we're bringing Mi box to the
U.S. Obviously smart phones are in the future. We're thinking about smart phones, but the preparation time to launch a new smart phone in the U.S. is
very, very long. So we're working on these preparations, but we don't have a set date yet.
(END VIDEOTAPE)
QUEST: So when we come back, here we have a basketball jersey. What is going to
be different about this jersey in the future? Something that's revolutionary. I'll tell you after the break.
(COMMERCIAL BREAK)
[16:50:23] QUEST: There may be no bigger love affair than the romance between professional sports and corporate sponsors. You simply can't go to
a game without heavy exposure to items on the screens, tickets, and seats. One sport has stayed virtually ad free, a sacred spot, and that is the
player's jersey. It has been virgin territory.
Now that's about to change. The NBA will become the first major U.S. sports league to let players wear ads during the 2017 season. They'll come
in the form of little patches, roughly the size of this post-it note, a bit smaller than your average post-it,
And it will be by the athlete's left shoulder, just there. The Brooklyn Nets are currently looking for sponsors.
Brett Yormark is the chief executive of the Brooklyn Sports and Entertainment and oversees the Nets and the Barclay Center. And joins me
now. Good to see you, sir, in London.
I hope you're enjoying the British capital. The first obvious question is why has the jersey been virgin until now? It is such an obvious place to
shove a commercial.
BRETT YORMARK, CHIEF EXECUTIVE, BROOKLYN SPORTS AND ENTERTAINMENT: It certainly is, and I'm excited about the opportunity to, you know, very
tastefully commercialize the jersey a year from now. It's been the holy grail. For the purists it is something that took a while to get
comfortable with, but as you said, the fall of 2017, the game will change as it relates to the jersey, having a brand on the playing field, and it is
an exciting time for the NBA and the Brooklyn Nets.
QUEST: What is interesting about this is having decided to do it you have not gone the traditional soccer and football way, with the name right
across the back or whatever it might be, Barclay's right across. You're going for this little patch or this discreet, relatively discreet patch.
How much debate was there about the mechanism for this commercial?
YORMARK: I don't think there was much of a debate, I think there was just good collaboration between all the key stake holders and I think we landed
in a great place. And this particular opportunity is for three years, and we'll see how it goes. The feedback so far has been very positive from
marketers and advertisers that truly want to align themselves with not only the NBA but with one of the 30 NBA teams. So far the interest in our
particular patch position has been overwhelmingly positive.
QUEST: I wouldn't expect you to tell me how much, unless you would like to tell me how much it would cost to put QUEST MEANS BUSINESS on the left side
of them. But are we talking sizable sums of money in the low, middle, or high millions for the ability to own this real estate?
YORMARK: I think it is fair to say the cost of entry, if you will, is commensurate with the value. All NBA teams today are very global, the game
is distributed all over the world and so the value proposition is enormous. The cost of entry obviously is commensurate to that value.
QUEST: Finally, sir, when we look at this, I'm going to tease you along here a bit, sir, I'm going to tease you, give me a hint of the sort of
people you're talking to.
YORMARK: We're talking to companies that fit our brand, fit our image. Whoever comes on board as our partner will truly be aligned very closely
with brand Brooklyn Nets. And also brand Brooklyn.
And we take that very seriously. We're not going wide in our search, it's more like an invitation to the table, and we're having great dialogue with
four or five major companies, global companies that want the alignment with the Brooklyn Nets, the NBA, and want to position their brands in a global
way. So we're very excited about the companies that we're having dialogue with and our goal is to hopefully in the next couple months secure a
partner for next year.
QUEST: Sir, good to talk to you, I look forward to the announcement when it's there, if you have a few jerseys, the QUEST MEANS BUSINESS logo goes
very nicely right just on the left side. Thank you, sir.
YORMARK: Thank you, Richard.
[16:55:09] QUEST: Now, the newsletter, on tonight's newsletter, I have been writing about the latest IMF world economic outlook report. And now
the downgrade for U.S. growth this year, the IMF is now worried about the United States. The downgrade is from 2.2 percent in the spring meeting to
1.6 percent now. Now a serious revision down.
A look at the markets and how they traded if you are just joining us, before we leave you with a profitable moment, down 85 on the Dow, 18,168.
We'll have a profitable moment, not many profits in that particular market, you get the idea, a profitable moment after the break. QUEST MEANS
BUSINESS, good evening.
(COMMERCIAL BREAK)
QUEST: The rum goings on in the financial markets in Britain. The pound falls sharply
As a result of the Brexit decision to announce when the article 50 will be invoked. But as the pound is going down, the FTSE is going up and it's two
sides of exactly the same coin The pound is going down on uncertainty, but as that pound goes down, so British exports become more competitive and
exporters are having a boom at the moment in the U.K. But it won't all last, eventually of course, uncertainty will triumph.
And that's QUEST MEANS BUSINESS for tonight, I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable. We'll
do it again tomorrow.
END
