BUSINESS-01
Says Europe Failing to Tackle Terrorism; EgyptAir Hijacker Charged in Court
and Confesses; Assad Has Accused Turkey, U.K., France and Saudi Arabia of
Directly Supporting Terror Groups in His Country and Iraq; Microsoft Starts
Shipping Hololens; China Keeps an Eye on North Korea Over Sanctions;
Livestreaming App Faces New Competition; Social Livestreaming Takes Off;
DOW and S&P 500 now at their highest level for the year. - Part 1>
Ramos>
a real product. It's call a Hololens and is still in its early stages.
Artificial intelligence and machine learning with conversation as a
platform, has the potential to put every customer service rep out of a job.
China's trade with North Korea has changed since the sanctions levied
against North Korea's nuclear program. The North Koreans have to buy a lot
of goods from China and because of sanctions, the black market had filled
in the gaps. Social livestreaming is the latest thing in social media.
The real breakthrough will be with celebrity livestreaming, and if Kim
Kardashian announced she was doing a livestream it would have 10 to 20
million viewers.>
Entertainment; Electronics; Aviation; Brazil>
[16:00:00]
RICHARD QUEST: The markets coming to a close, the American Society for the Prevention of Cruelty to Animals ringing the closing bell. Lord knows what the dog makes of it all. But come on; yes, a robust gavel, from the ASPCA celebrating 150 years as we bring trading to a close on Wednesday it's March the 30th.
(BEGIN VIDEO CLIP)
QUEST: Tonight, Brazil's President fights back against her rivals denouncing a so-called coo. Thousands of jobs on the line as the industry lurches into crisis. And the future is right before our eyes. Microsoft shows off its new HoloLens.
(END VIDEO CLIP)
QUEST: I'm Richard Quest, we've got an hour together and I mean business.
Good evening, tonight, Brazil's President says efforts to impeach her amount to a coup as Dilma Roussef fights for her political life there are new warnings for the Brazilian economy.
(BEGIN VIDEO CLIP)
QUEST: And at this hour, Brazil's Supreme Court is deciding whether or not to approve the appointment of this man, President Lula da Silva, the former President to serve as her Chief of Staff. Protests are likely regardless of the outcome. It's all the latest development in this crisis that frankly is almost a tipping point.
DILMA ROUSSEFF, BRAZILIAN PRESIDENT: (As translated) Impeachment without proof of a crime of responsibility is what? It is a coup. The is the issue, there is no point pretending that we are discussing a hypothetical impeachment. We are discussing a very concrete impeachment without the crime of responsibility.
(END VIDEO CLIP)
QUEST: The very real responsibility and possibility of impeachment which has been on the burner for so many months and now seems to be coming to the boil.
Protests and instability come at a time of serious strain for Brazil. Let's put all of this together. You have political instability. The impeachment committee, let's look and see exactly what the process of impeachment actually is.
(BEGIN VIDEO CLIP)
QUEST: Once the process begins you have the impeachment committee, which then goes to the lower house of the Brazilian congress. And then a third of the votes are needed for it to proceed, two thirds of the vote and that could happen at this stage as early as mid-April.
Once it's finished in the lower house it goes to the senate. And there you only need a simple majority. That could happen as soon as May. If all of this takes place then you get to a trial. And the President is suspended for 180 days during the trial. So you've got the committee, the house, the senate, the trial. But if that goes ahead then impeachment is under way.
As to the economy itself, well, you see why this is quite so significant. Take a look at these factors, the federacy budget deficit is twice as big as expected. The tax revenue was down, benefit payments are up. The country is in the worst recession for a quarter of a century and the fiscal deficit as you can see is some $6.3 billion.
Into this maelstrom add in the biggest event in the sporting calendar anywhere in the world and it's the Olympics. And the turmoil is likely to happen if there would be an impeachment in the middle of the Olympics. Think about those dates I was talking about, April, May, June, July. It could well go on towards August and then you're well and truly into the Olympics.
However, the International Olympics Committee says "Brazil will offer excellent Olympic games from which the whole country can be proud."
Now, the U.N. struck a more ominous tone when it comes to Brazil.
BAN KI-MOON, U.N. SECRETARY GENERAL: (Inaudible) I'm asking - Brazilian, the political leaders -- for a solution in this. I know it's a challenge but I think they can address it.
(END VIDEO CLIP)
CNN's Shasta Darlington is in Rio for us tonight. We've talked so many times, Shasta, about the possibility of impeachment. Now are we talking about the probability of it?
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Absolutely, Richard, you know, as you know the -- Brazil's biggest party the PMDB pulled out of the governing coalition, it took them a whole three minutes to decide to do so after standing by the government for 13 years, and that means it's looking very likely that the lower house of congress will muster those two thirds votes needed.
(BEGIN VIDEO CLIP)
[16:05:10]
DARLINGTON: But part of why this is getting so politicized, and I think we need to raise this quickly Richard is what this impeachment is about.
You know left and right politicians are being implicated in a massive bribery and corruption scandal. But this impeachment isn't about that. The President herself hasn't been implicated, so what they're trying to impeach her on in some ways is kind of a technicality. What they're talking about are allegedly breaking budgetary laws. They're saying that she tried to make the budget deficit look better.
QUEST: But, but, but -
DARLINGTON: Go ahead Richard.
(END VIDEO CLIP)
QUEST: -- the technicality of the budget deficit impeachment is really just that. It's a fig leaf, isn't it, for a view? Because obviously her predecessor was around at the time of the corruption scandal that this government and its predecessors were simply bad, is the argument.
DARLINGTON: Well, the argument is on the one hand her supporters say first of all, you have to prove that she broke any budgetary laws, but even if she did with all of this bad stuff going on is this really -- is this really justification for an impeachment? And yet they still have to go down that path of proving that she even broke a law. So this is the big issue here.
On the other hand, her opponents say listen she is incredibly unpopular. This government is not functioning. This country will not be governable until she is out of the way. The worker's party is out of the way and we can begin to turn around this recession. So maybe these aren't the best grounds for the impeachment but it's good for the country Richard, and that's their real argument.
QUEST: And in a word, the deadline I was just talking about, April, May, is that sort of the time schedule you're looking at?
DARLINGTON: That's right, just as you said to really -- if again it's approved by the lower house and then the senate that trial would begin and that could last a full six months. But what it also means is we don't really know for sure who's going to be President when the Olympic games kick off.
Dilma Roussef herself has said that she is not going to resign, she is not going to give up. So we could really see this battle being extended through the games if she is temporarily replaced by the vice president in order to defend herself in these impeachment proceedings. Richard.
QUEST: Shasta is in Rio and Shasta you have your work cut out for you in your duties in the weeks and months ahead.
Now many traders believe the economy can't recover until Dilma Rousseff is gone and if you look at the stock markets and how they've surged as the impeachment has become ever more likely.
(BEGIN VIDEO CLIP)
The (inaudible) rose as much as 2% more on Wednesday then fell back (inaudible).
Joining me now, Alberto Ramos, Senior Latin America Economist at Goldman Sachs. And I'll make it quite clear before we begin our discussion we are not here to talk about the politics of the issues facing Dilma Roussef, rather the economics of Brazil. This issue that the country is facing the worst recession in a quarter of a century, how bad and how deep is it?
ALBERTO RAMOS, SENIOR LATIN AMERICA ECONOMIST, GOLDMAN SACHS: It's pretty bad, it's pretty deep, we're facing one of the longest economic recessions in modern Brazil and economic history. This is leading to a very significant and rapid deterioration of the labor market. The unemployment rate is projected to reach double digits just in a couple of months. In the meantime despite the brutal recession we're dealing with very significant inflationary pressures. The inflationary pressures remain quite generalized throughout the economy. We have a very large budget deficit, the budget deficit is running at an amazing 10.8% of GDP, we have a very rapid deterioration or the public debt dynamics. Public debt is about to reach 70% of GDP in a few months and is also projected to reach 80% of GDP in a couple of years. So a very, very complex, very difficult, very challenging economic picture in front of us.
QUEST: Right, but of that picture, I mean there are many countries, Chile, Peru that all are facing the commodity led crisis as a result of oil prices and the falling commodity prices. How much of Brazil and Russia and China and whatever else you want to throw in the pot, how much of Brazil's issues are related to that and how much are home-grown mismanagement of the economy do you think it?
RAMOS: I think it's mostly self-inflicted pain is part of the policy idiosyncrasies over the last few years as a lot less to do with an unfavorable external environment I think. You know more open economies like Chile, Peru, and some others that you mentioned can claim there is an adverse external environment that led to a very significant deterioration of the market performance. Unfortunately what we are seeing is a reflection of a certain way of conducting economic policy that left behind very, very large imbalances that need to be sorted out.
[16:10:05]
QUEST: Now, are -- is the market - is the investor community and again, this is not a political point more than an economic point. Is the investor community looking to an Argentina Macri type situation where they would hope whatever follows on is more orthodox?
RAMOS: Certainly, we're looking for leadership, we're looking for a set of more orthodox, more conventional micro policies that address (inaudible) some of these imbalances, the very large fiscal deficit, the very significant inflationary pressures and economy that continues to contract. We need to stabilize sentiment, we need to stabilize the economy so that we would see the end of this recession.
QUEST: Good to see you, Sir, we'll talk. I have no doubt that as this plays out one way or the other politically you and I will be talking economic policies in Brazil, thank you very much for joining us, we appreciate it.
RAMOS: Thank you.
QUEST: In the United States, investors should be thanking, could be thanking, probably are thinking Janet Yellen for strong gains.
(BEGIN VIDEO CLIP)
QUEST: The Dow and the big board are now at the highest levels of the year. And remember what we saw yesterday where we had had half the day in the red, half the day in the green. Well toward, it's straightforward into the green at the get go. Good afternoon rally, a bit of a tail off towards the end, but a gain of 83 points, the highest point that we are seeing in 2016.
(END VIDEO CLIP)
QUEST: Cristina Alesci is here to understand it. Can we put this all down to Janet Yellen?
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: I think we can, actually, to a certain extent. It's quite a dramatic turnaround from February when we were down 10% and yes, for the most part it is Yellen. But let's not forget that oil has rebounded from mid-February. I mean we didn't have a great day today but oil has rebounded. And investor fears over a global economic growth including China have seemed to be settling just a little bit.
QUEST: Nothing's really changed. I mean -- I mean, you know, you talk about China. Well, so far nothing has really changed. Oil has gone up which perversely should be bad -
ALESCI: Exactly.
QUEST: -- for the entire situation. But in this topsy turvy world oil goes up and the market seems to like it. I can't explain it.
ALESCI: You're right - you're right. And investors are confronted with a few confusing signals. You remember just last week a few Fed governors came out and said we could see a rate increase in April, and then Yellen effectively takes that off the table yesterday.
QUEST: That was extraordinary what she said yesterday, it's only with hindsight overnight that I realize that she basically was saying you know forget it, guys. Those governors, don't even think about it. I'm in charge.
ALESCI: I'm the boss, exactly.
QUEST: I'm the boss.
ALESCI: That was a pretty clear signal there. But also in her comments she is saying look, the United States seems to be buffered a little bit, or the fallout from slower economic growth globally will be somewhat mitigated because the United States has all of these things going for it. But at the same time we started out the year thinking that we were going to get four increases in interest rates. And here we are today talking about two for the year. And there are some investors who think that we're only going to just see this one. So it's going to be a wild ride for investors throughout the year although historically April has been a good year for stocks. We're starting to see it already. Thanks a lot.
QUEST: As always, thank you.
Donald Trump has sparked extraordinary controversy after saying that women should be punished in some way for having abortions if the practice were illegal. A short time ago on the American news network MSNBC, the Republican frontrunner was asked about his views on abortion specifically if women who have had the procedure should be punished.
(BEGIN VIDEO CLIP)
CHRIS MATTHEWS, MSNBC HOST: Should a woman be punished for having an abortion?
DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: Look.
MATTHEWS: And this is not something you can dodge.
TRUMP: No, no -
MATTHEWS: If you say that abortion is a crime or abortion is murder, you have to deal with it under the law. Should abortion be punished?
TRUMP: Well, people in certain parts of the Republican Party and conservative Republicans would say yes they should be punished.
MATTHEWS: How about you?
TRUMP: I would say that it's a very serious problem, and it's a problem that we have to decide on. It's very --
MATTHEWS: You're for banning it?
TRUMP: I mean are you going to say - well wait, are you going to say put them in jail? Is that what the punishment you're talking about?
MATTHEWS: Well, no, I'm asking you because you say you want to ban it. What does that mean?
TRUMP: I would - I am against - I am pro-life yes.
MATTHEWS: What does ban - how do you ban abortion? How do you actually do it?
TRUMP: Well you know you'll go back to a position like they had where people will perhaps go to illegal places.
MATTHEWS: Yes.
TRUMP: But you have to ban it.
MATTHEWS: If you ban it and they go to somebody who flunked out of medical school.
TRUMP: Are you catholic?
MATTHEWS: Yes I think -
TRUMP: -- and how do you feel about the catholic churches position?
MATTHEWS: Well I accept the teaching authority of my church on moral issues.
TRUMP: But do you know their position on abortion?
MATTHEWS: Yes I do.
TRUMP: And do you concur with that position?
MATTHEWS: I concur with their moral position but legally - and I get to the question - here's my problem with it -
TRUMP: No, no, but let me ask you. But what do you say about -
MATTHEWS: It's not funny.
TRUMP: -- your church, yes, it's really not a funny thing. What do you say about your church they're very, very -
[16:15:02]
MATTHEWS: They're allowed to - but the churches make their moral decisions but you're running for President of the United States will be chief executor of the United States, do you believe in punishment -
TRUMP: No, but, but -
MATTHEWS: Do you believe in punishment for abortion, yes or no? as a principle?
TRUMP: The answer is that there has to be some form of punishment.
MATTHEWS: For the woman?
TRUMP: Yes. There has to be some form.
MATTHEWS: Ten years?
(CROSS-TALK)
TRUMP: I don't know, that I don't know, that I don't know.
MATTHEWS: Why not?
TRUMP: I don't know because it's not -
MATTHEWS: You take positions on everything else.
TRUMP: I frankly I do take positions on everything else it's a very complicated position.
(END VIDEO CLIP)
QUEST: CNN's M.J. Lee joins me now. Factor in for me, please, what we've just heard and how it plays out.
M.J. LEE, CNN CORRESPONDENT: Yes, we've been shocked by Donald Trump many times throughout the cycle. But I think this is an answer that has left many people frankly just speechless not sure of how to even respond.
(BEGIN VIDEO CLIP)
LEE: The fact that he is saying one, that abortion should be illegal and that if that were to become the case women should be punished and then not actually saying what sort of punishment he is talking about I think is very confusing.
(END VIDEO CLIP)
QUEST: Right. But of course technically, he is right in that - and bail me out before everybody jumps on this. Technically he is right, in that if he was able to ban abortion there would have to be some sort of sanction for those who have it, I mean just by virtue of the law.
LEE: Yes, but keep for mind that there are many, many people out there who already believe that Donald Trump is terrible when it comes to women's issues. So I think to hear him say the words yes, there should be some sort of punishment is frankly shocking for a lot of people to hear.
QUEST: Ok, those again, just the politics of it, those women who were pro- choice, pro-abortion, they weren't going to vote for him anyway. Those women who are pro-life may well still vote for him.
LEE: And I think the point here is that, I mean remember, he has won lots of primary contests even after having made comments about Carly Fiorina, Megyn Kelly, that were considered inflammatory by many. However this is the general election that we're talking about that may be problematic. You look at the polls and he, you know when you're polling the country ahead of the general election, about half of Republican female primary voters say that they could not consider voting for Trump ever.
QUEST: Hillary Clinton has tweeted "just when you thought it could not get worse, horrific and telling." And Bernie Sanders, says "your Republican frontrunner, ladies and gentlemen, shameful."
LEE: Right, and this is very tricky for the Republican party. Remember, this is a party that wants to become more inclusive, not just with Hispanics, African Americans, minority groups, but women, as well.
QUEST: Right, I'm just going to push you on this if I may. If Ted Cruz who is strongly pro-life, was asked the same question, should there be punishment by dint of his views he surely would have to answer the same answer.
LEE: I don't know if that's correct.
QUEST: Then you need to find out.
LEE: Yes, I don't know if Ted Cruz asked the same question should there were punishment for women who get abortions, I do not believe that - yes, even in that case I do not believe that Cruz would say yes, women should be punished.
QUEST: We'll talk more about it, we'll hear much more about it. Thank you. This is - this arguably is a game-changer in the Donald Trump -
LEE: We'll see.
QUEST: -- Primary, but he has survived many of these sort of issues before. Thank you.
Plummeting steel prices look to have claimed another victim as Tata Steel plans to put its U.K. operations up for sale.
(BEGIN VIDEO CLIP)
QUEST: We'll discuss that back to our business agenda after the break.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:20:30]
QUEST: 15,000 jobs and the fate of the British steel industry are in serious jeopardy tonight following the announcement by India's Tata Steel that it's exploring the sale of its entire business in Britain. The firm is blaming falling prices and increased competition from China and says it makes it impossible to turn a profit.
CNN money's Europe editor, Nina dos Santos has the details of the story.
(BEGIN VIDEO CLIP)
NINA DOS SANTOS, CNN MONEYS EUROPE EDITOR: The steel price is just half of what they were some 18 months ago. The sector had been struggling to stay profitable for some time. But few expected such a drastic move as Tata announcing the closure of its entire U.K. business.
KATIE JAUNCEY, ENGINEER: Well I don't know whether I was very naive but as far as I was concerned it was a meeting to discuss saving money in a number of areas particularly employment costs. But what actually appears to have happened is we're now in a position where the whole of the U.K. business is up for sale.
SANTOS: Tata expanded heavily into the U.K. in 2007 with its acquisition of the Anglo Dutch giant, Corus. But despite pouring some $4 billion into its European operations it's 14 plants across Great Britain lost two thirds of that value over just the last five years. The move to sell them leaves 15,000 jobs on the line.
As Britain's biggest steel mill, Port Talbot in Wales will be the worst affected as highlighted in this video by the Steelworkers Union community.
UNIDENTIFIED MALE: It's given us jobs.
UNIDENTIFIED MALE: It's given us homes.
UNIDENTIFIED FEMALE: It's built our lives and our communities.
SANTOS: With daily losses of over $1.5 million finding a buyer will be difficult. And although Tata has managed to off load some assets, government intervention may be the only option as long as the furnaces stay on.
TERRY SCUCLER, CEO EFF: Let us hope that Tata Steel will continue to invest on an interim basis on these plants, let us hope that they will work with government and we will find a sustainable, viable purchaser to keep these plants going for the future.
SANTOS: Over-supply, high manufacturing costs and the abundance of cheap steel from China has led to a crisis for the industry. Although prices have recovered somewhat recently, Tata's move to abandon this once vital market will shake U.K. manufacturing right to its very core.
Nina dos Santos, CNN Money, London.
(END VIDEO CLIP)
QUEST: As Nina reported, the plant in Port Talbot is Britain's biggest steelworks and it has the most to lose in a potential sale. But it's the factors that go well beyond the little welsh town. So connect the dots and you see the issues facing it.
(BEGIN VIDEO CLIP)
QUEST: Tata itself of course is based in Mumbai and that's where the steel review took place, where they held the meeting looking at the entire European steel operations. But global demand, especially in Europe remains muted since the financial crisis. There are some still big requirements for Port Talbot, for example, British Railways but they are limited.
Now adding to that extraordinary growth in Chinese steel you've got cheap Chinese steel with production up almost 800% in the last 20 years. And much of that steel has been sent to Europe and dumped within the European Union. Beijing has been accused of dumping cheap steel for years.
In January, the E.U. did impose tariffs on Chinese steel but it was seen as too little and too late. So what do you do about this situation?
(END VIDEO CLIP)
QUEST: Now, the British government has already said that it is not looking to nationalize the British steel industry or those plants that may be closed. But they are committed they said to finding a solution.
Harish Patel is the national officer from Steel for the U.K. union Unite. He told me the members are calling for some form of re-nationalization.
(BEGIN VIDEO CLIP)
HARISH PATEL, NATIONAL STEEL OFFICER, UNITE: I think it came as a shock, because initially what we thought that the plan we had worked out with local management was a positive one and all it needed was breathing space and support from the government to ensure that we had a level playing field and it was quite successful as far as the way we saw it.
QUEST: The word is that the U.K. operations are losing a million dollars or a million pounds a day, by some measures. That is clearly unsustainable for whatever or whoever solution is put forward.
[16:25:00]
PATEL: In terms of the losses its sustained, quite clearly in terms that part of it is as a result of the unfair energy costs we have got in Britain. And the other part of it is that lack of investment by Tata Steel in modernizing the facility. And the third point was that the unfair business rates which the U.K. government charges to investment on plant and machinery which is part of the causation. And coupled with that fact is the cheap imports which are being allowed into the U.K.
And if you look at the United States in terms of the actions it has taken to protect its steel industry unfortunately the U.K. administration is blaming Europe, they do not - opposing some of the tariffs which are being proposed by the European Commission. Which is totally what our members are looking for, is a fair playing field in terms of a competitive nature of the steel industry where we're living in the moment.
QUEST: The business secretary speaking in Sydney, the U.K. business Secretary says that nationalization is not the answer. He says he's looking for some kind of government support but I don't think that nationalization is going to be the solution. So if it's not nationalization which seems to be off the table at least as far as the government is concerned, what are you now looking for from the U.K. government?
PATEL: We're certainly looking for state intervention in one shape or another. Whether your terminology, in terms of the terminology whether its nationalization or protection, whatever the terminology they want, we want the state to intervene to support the steel industry for the long term future and for the younger generation. And particularly for manufacturing in the U.K.
So our position is if you say that nationalization is not an acceptable word, then you need to come up with a positive word in terms of how we can support the steel industry in the U.K. for the long term future.
QUEST: To viewers watching around the world and I preface this question obviously that you're talking to a global audience here they may - they may well say well it's all very good listening to this but if those U.K. steel workers can't compete there and Tata's making losses then it seems entirely reasonable that Tata pulls out and that's just a hard lesson of the global economy. What would you say?
PATEL: I would disagree with that view for the simple reason is that we are talking about people's lives, their families and the community and the devastation it will have on the community in the U.K. So this is a long term damage for a short term gain.
What we are saying is that we need to look at the foundation industry very, very carefully and the government needs to intervene to protect this treasure which we've got in the U.K. in terms of assets and look at how we support the steel industry in the long term. And more importantly it's about bringing a level playing field for the U.K. workers so they can compete in the global market.
(END VIDEO CLIP)
QUEST: That's the issue of the unions and the issue of job losses both at British Steel and Tata, and at Boing which we will talk about later in the program.
That's the subject that I've been writing about in the newsletter, the Quest Means Business newsletter and the issue of how workers at the moment are seemingly getting the worst side of every deal while companies are making profits they're seeing their jobs go.
