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QUEST MEANS BUSINESS
Royal Wedding; U.S. Economy Slows in First Quarter
Aired April 28, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Indeed, Fionnuala, a busy evening. We have economies with recovery on the rocks.
The U.S. economy slows in the first quarter as Japan slashes its growth forecast.
A stain on the oracle, Warren Buffet's company slams a former heir apparent.
And dust off the hats. Practice your courtesies, and curtsies as well. We will show you how to be on your best behavior at the Royal Wedding.
Yep, I'm up here, because I'm Richard Quest and from Buckingham Palace, I mean business.
Tonight two major economies, the U.S. and Japan, both suffering major hiccups in their recoveries. We'll have all the day's business stories in just a moment. But we do, of course, begin-they're getting married in the morning. Or so the song goes for William and Kate.
And tonight, there is a picture of Kate Middleton, as she arrived a short while ago. At the Goring Hotel. It is about, less than a quarter of a mile, a couple of 100 yards from where I am. The Middleton family at their personal choice and request took over several suites at the hotel. There will be a private family dinner there tonight. And it is from there that Catherine Middleton will leave tomorrow morning. She will leave a single woman for Westminster Abbey and leave the abbey, well, probably Princess Catherine, or Catherine, the princess, in some shape or form.
Enjoying every moment of what has to be a mammoth spectacle for her. The people sleeping a short distance away from here, on the morrow, have one more night to go before the royal revelry begins. You don't need to camp out to get a front row seat. We have a feast of coverage ahead and you are royally invited, because there is always room for one more.
Unless, of course, you are this man; the man who no longer on the guest list. He is the Syrian ambassador to the U.K. And we have the story of his last-minute dis-invitation. We will also bring you how to behave on such an occasion. If you do manage to get through the front door and you are not thrown out. Our etiquette experts will take you through the do's and don'ts. And the challenges that might be faced by any marrying couple. We'll take a look at the wedding industry. How much Friday's spectacular is going to cost and how to get a slice of the profits.
If you are here on the spot, frankly, you never know who you might see. Take this afternoon, for instance. The moment when I came face-to- face with Camilla, Duchess of Cornwall, Prince William's step mother. She left Clarence House to meet the campers along the procession route.
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QUEST: Yes, I assure you, she did just say, "Yes, I am ready for tomorrow." But then it all got a bit too much, pushing and shoving, a couple of elderly ladies when flying. And before you could say Clarence House, she was off back inside.
Max Foster is outside Westminster Abbey for us this evening. The ceremony begins in less than 15 hours from now.
Max, I sometimes wonder, you know, we came into this profession to shout questions like, Are you ready for tomorrow?
MAX FOSTER, CNN INTERNATIONAL CORRESPONDENT: It is hilarious. I love you heckling. One of the most senior royals in the British Royal Family, I don't think you can quite hear it, but there has been a lovely serene atmosphere here. Because there is choir practice in the abbey, and they are pumping it out on the speakers here. A little taste of tomorrow. We also got the official program today. A proper version will be sold to people along the processional routes. Tomorrow and it does give a sense of what we are going to expect in the Abbey tomorrow. It is a very traditional set up, generally, you have lots of classical music, classical hymns.
One difference, though, from some other Royal Weddings, not Diana's though. Kate will not be promising to obey William. She will love and honor him, but she won't be obeying him. So that was really the highlight of this. But very traditional actually, Richard, what would you say?
QUEST: I would say having looked at the list of the way it all goes the tradition on one hand, but they are fighting, in a way to get the modern bits in as well. I think it is going to run very smoothly tomorrow. I just hope it doesn't rain. What do we hear on that? And if so, what about the carriages?
FOSTER: The official Met office forecast, we go with them because that is what the palace is going with. It has now taken rain out of the forecast. It might be a not entirely clear day, but there is not going to be any rain. So that is very good news, particularly for people watching of course, because it means that the carriage will be open, that they leave in. It won't be covered. So we expect them to be in the 1902 Landau when they do leave.
One complication always with these things is, of course, young children. If you have young children following you down the aisle, young pages and bridesmaids, there is always a risk they may play out. But Kate was here, earlier this morning, for a rehearsal specifically for the bridesmaids and page boys. Harry was here as well, because they are going to be-and "Pippa", as well, obviously, to-they are going to be looking after the pages and bridesmaids.
So that seemed to go well today. How much preparation can they do? Kate is at the hotel. It is pretty much over now, isn't it?
QUEST: Pretty much. It is all over but the shouting. Max Foster, who will be there with us tomorrow and we'll have much more on this Royal Wedding in the hour. But we turn our attention to today's main business news.
The economies of the U.S. and Japan are slowing to a crawl. The latest numbers we have for GDP show a dramatic slowdown in the rate of expansion. Signaling these major economies are stumbling along the road to recovery.
In the United States GDP grew at an annual rate of 1.8 percent in Q1. That is far behind what some people were predicting just a few months ago. And down several gears from previous quarters. High oil prices, accelerating inflation are choking growth. The housing market remains sluggish.
Ben Bernanke, yesterday, gave us a warning that the numbers were going to be weak. He said this period in the doldrums won't last.
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BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE: Most of the factors that account for the slower growth in the first quarter, appear to us to be transitory. They include things like, for example, lower defense spending than was anticipated, which will presumably be made up in a later quarter. Weaker exports, given growth in the global economy; we expect to see that pick up again, and other factors like weather, and so on.
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QUEST: Ben Bernanke.
In Japan, exporting was of course much on the agenda. The disaster that hit Japan in March could wipe a percentage point off annual growth. The Bank of Japan expects the economy to expand by 0.6 percent this year. Before the earthquake, tsunami and nuclear crisis it forecasted 1.6 percent. The disaster hit this exporting nation hard. Factories fell silent and some areas suffered blackouts. Industrial production in March was down more than 15 percent from the previous month. The biggest drop ever recorded.
Seijiro Takeshita, in London, is the U.S. economist who joins us now.
Seijiro, let's begin with you, first of all, to talk about the number we knew was going to be bad, but are you surprised at how bad it is? And can we put it down as a temporary blip?
SEIJIRO TAKESHITA, DIRECTOR, MIZUHO INTERNATIONAL: In spite of these bad numbers, Richard, the fact of the matter is the market actually went up. And the reason for this is that people are looking at April, May, June. They know March figures were going to be bad. And actually, you saw a plus in these figures, meaning that we are going to claw ourselves back. And that is one of the reasons that people looking at things, on a positive perspective, that things will come back (UNINTELLIGIBLE). Now, this is where I think the grave mistake and misunderstanding persists. Because it is not going to be like a V-shaped recovery, it is going to be like a U- shaped recovery because of truncation of channeling, of distribution and also shortages-a possible shortage of energy during the summertime.
QUEST: OK, so that is the environment in which Japan is at the moment. Can you see any way that it improves?
QUEST: I mean, there is obviously the V effect that we know about. But at some point there will have to be a fundamental.
QUEST: Not just bounce back improvement. Is that foreseeable?
TAKESHITA: Yes, probably around autumn time, when the equilibrium of supply and demand situation, when the energy actually actualizes. And also all the damage assessment has been done. As you just reported, as you just mentioned, the comeback stages would be very fast (UNINTELLIGIBLE) once all the damage assessment has been done. But unfortunately, unlike the case at Kobe, this time it is going to take a lot longer. Possibly, around autumn time to see the comeback stages to be (UNINTELLIGIBLE), so it is not going to be a V shape, but more like a U-shape recovery.
QUEST: All right. Now, the debt, we know, is more than 200 percent of GDP. We know we have already seen, one, we have already seen one refinancing, or one, if you like, stimulus package, rescue package, not backed by debt.
QUEST: But eventually, for the big bucks, or big yen, do they borrow? Do they tax? What is the preferred way for the serious reconstruction debt?
TAKESHITA: Well, eventually I think it is going to have to be the mixture of two. But I think it is very dangerous to put this argument all in context, as I think the rejuvenation process has to be separated from the normal Diet session, or the deficit positions that we have. But eventually, yes, taxation is certainly one of them because our consumption tax is only 5 percent. So we have a lot of buffer room there. And at the same time rejuvenation process has to be done. Although, we will find a change (ph) in the type of recovery in northeast Japan, and there will be spending on capital formation, but I think the government really has to start focusing on issues with a much higher multiplier, to be utilized in those areas.
QUEST: Seijiro, good to see you. I'm not sure where you will be celebrating, or watching the Royal Wedding, but I'm sure you will. And you will raise a glass of something appropriate, too, to the couple. Always good to have you with us to talk economics (ph).
TAKESHITA: Thank you, Richard.
QUEST: When we come back in just a moment, QUEST MEANS BUSINESS, coming to you from the delights and the beauties of Buckingham Palace.
Berkshire Hathaway is turnings its back on its former golden boy. Warren Buffet's company is accusing David Sokol of misleading the oracle of Omaha. And this is serious business, in a moment.
QUEST: Delightful. The Victoria Memorial as sunset arrives in London. The last night, of course, before the Royal Wedding; it is almost amazing to think-well, it is actually here. It is amongst us.
Warren Buffet's Berkshire Hathaway has turned against one of its former heir apparent. An audit committee report is accusing is accusing David Sokol of misleading the business. Sokol resigned from Berkshire Hathaway in March. He has left the company, a finger in a lot of pies. It owns stakes in everything from Coca-Cola to American Express. It's net earnings were nearly $13 billion last year. Up 60 percent from '09.
The Chairman and Chief Exec Warren Buffet is called the oracle of Omaha, for his business foresight. And he has recently said he is opting out of the current gold rush. Only making money by going long on fear is what happens when you buy on gold.
From New York, CNNMoney's Poppy Harlow explains why Berkshire Hathaway says Sokol has broken the rules.
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Richard, this news just ahead of Berkshire Hathaway's annual shareholder meeting. Berkshire's audit committee coming out late on Wednesday releasing a report saying that former executive David Sokol violated company policies, and mislead CEO Warren Buffet regarding his purchase of roughly $10 million in shares of Lubrizol that was Sokol's personal purchase. Lubrizol also, the chemical company that Berkshire bought earlier this year from more than $9 billion.
Now Berkshire had asked Sokol to look for companies that it might want to acquire. Sokol then met with investment bankers at Citi, who presented him with Lubrizol. Sokol then bought shares in Lubrizol, for himself, presented the idea of buying the company to Buffet. Initially Buffet was not impressed with the idea. Sokol then met with Lubrizol's CEO and after that meeting Buffet's interest in Lubrizol increased and Buffet decided to buy the company.
About a month ago, Buffet issued a press release announcing that Sokol was resigning. That press release said, quote, "neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me they were not a factor in his decision to resign."
Now, Sokol said was resigning to invest his family's resources and work on his philanthropic endeavors. Berkshire's audit committee released a report late Wednesday. And I want to read you what it says.
It says that Sokol's "purchases of Lubrizol share while serving as a representative of Berkshire Hathaway in connection with a possible business combination with Lubrizol violated company policies, including Berkshire Hathaway's code of business conduct and ethics, and its insider trader policies and procedures."
So, a complete about face here, from Berkshire Hathaway. The release from the audit committee when on to say that Sokol violated the duty of candor that he owed the company. Now we don't know whether or not the FCC is looking into this matter, Richard. But the bottom line is Berkshire is saying here that David Sokol, their former executive, may have followed the letter of the law, but not the spirit of the law, within Berkshire Hathaway.
What the audit committee goes on to say, Richard, is they will cooperate with the government if there is an investigation. They also said they are considering any possible legal action against Sokol.
I reached out to David Sokol; have not heard back from him yet on the matter. But, bottom line, Richard, this is really going to cast a cloud over that Berkshire Hathaway annual meeting in Omaha this weekend. This will be the focus of a number of questions that Warren Buffett will have to field there. We'll talk to him in an interview on Saturday and bring you the latest, Richard.
QUEST: That is Poppy Harlow, who is in New York. CNNMoney's Poppy Harlow. And you will want to watch that interview with Warren Buffet.
When we come back in just a moment, it is time for a spot of "Q&A". There is only one issue that we would really want a "Q&A" about this week. And that, of course, is what is going on out there.
David Cameron was having a walk around, the British prime minister; we'll put it to the test. Who knows the most, on "Q&A".
QUEST: Good evening from London, from outside Buckingham Palace. They actually call this area Canada Gate. There are the preparations, the last-minute preparations, for the Royal Wedding. But we need to concern ourselves with matters relating to who knows the most? Who can justify the best reason for monarchy? Well, Ali Velshi and myself, you know, only too well, go head to head with "Q&A". And this time there was only one subject for discussion.
ALI VELSHI, CNN ANCHOR: QUEST MEANS BUSINESS and so I. We are here together in the CNN NEWSROOM, around the world.
Well, hello, Richard.
QUEST: Ali Velshi, welcome to London. "Q&A" where, frankly, most weeks, any subject is up for grabs. Nothing is off limits as we get to battle with the issues that are important. But, Ali, this week there is only one issue that we need to grapple with.
VELSHI: And that is why you are in front of Buckingham Palace, Richard. I can't wait for the wedding day. You know, I'll be up really early to see it. But all this hubbub has made me wonder what is the real value of the Royal Wedding, Richard? And since it is in your backyard, I'm going to let you go first, Richard. You have 60 seconds at the sound of the bell.
QUEST: What is the value of the Royal Wedding? The monarchy? The institution? This is the value. The fact that hundreds of thousands of people will come to London and spend possibly more than $150 million helping the U.K. economy. The value of monarchy to Britain cannot be overstated, whether it is economic, the tourists, the infrastructure that it brings, or simply whether it is because it gives stability. The queen and her family have been on the throne for 1,000 years, 1066, was when the last one was William the Conqueror.
If you look at monarchy and the role it has played in the life of this country you start to see that it is crucial, important, and yes, it is a cornerstone of the way this country operates. Could it change? Does it wane? Does it become unpopular? Absolutely, a bit like your U.S. dollar, of course, sometimes it goes out of favor. But just like anything-
-that lasts for sometime, eventually the tide turns, the value of monarchy? It is all around us.
VELSHI: Wow! Wow, Richard, you have certainly gotten caught up in this whole wedding thing. And as a result you may have missed something very important that is going on. So, give me 60 seconds now.
This wedding that Richard has so carried on about is coming in the midst of severe cuts in spending designed to cut the U.K.'s debt. And the early results of that Britain-that austerity in Britain, Richard, are not altogether smashing, as you would say. The U.K. economy shrank by 0.5 a percent in the last three months of 2010. And grew by 0.5 a percent in the first three months of this year, so basically, Richard, one of the world's largest and most important economies is flat lining. Now the Brits are feeling the pain. You know it. And in the middle of all of this you have got this lavish and expensive spectacle.
Now, perhaps the real value of the Royal Wedding is this juxtaposition of these two realities, Richard. Admit it. It gives us pause to ask which economic road should we go down? Spend or cut? As you know, Richard, conservatives and Tea Partiers, here in the U.S., are calling for your U.K. style austerity measures, but if Britain's belt tightening unhinges it economic recovery and plunges you all back into recession, it is going to serve as a powerful warning, to the United States. We have got to deal with debt.
But not at the expense of growth, Richard. Maybe we should all just have a big party, like you are.
QUEST: Ah, Ali, Ali, Ali, you-oy, oy, you are wounding me here! You- The Voice, come and rescue us!
UNIDENTIFIED MALE: Well, cheery-o, chaps. Let's get on with our quiz today, shall we?
VELSHI: Let's do it.
UNIDENTIFIED MALE: Queen Elizabeth II is the official head of the Commonwealth. There are currently 54 member countries but what was the last country to withdraw from the Commonwealth? Is it A., Bangladesh; B., Zimbabwe; C., Ghana, D., Pakistan?
UNIDENTIFIED MALE: Ali?
UNIDENTIFIED MALE: Correct!
UNIDENTIFIED MALE: Zimbabwe withdrew in 2003.
On to the next one?
The U.K. is a constitutional monarchy. How many countries are considered absolute monarchies? Is it A., 0; B., 4; C., 8; D., 12?
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UNIDENTIFIED MALE: Quest?
QUEST: This is a straightforward guess. I would say, eight.
UNIDENTIFIED MALE: Incorrect.
UNIDENTIFIED MALE: Ali?
VELSHI: I'm going to say 12.
UNIDENTIFIED MALE: Incorrect, again.
(DESK BELL CHIMES)
UNIDENTIFIED MALE: Richard?
(DESK BELL CHIMES)
UNIDENTIFIED MALE: Four is the correct answer.
UNIDENTIFIED MALE: Brunei, Oman, Qatar and Swaziland.
VELSHI: Huh, Swaziland is the one that would have caught me.
UNIDENTIFIED MALE: On to the final question. Now for something a little lighter. The Royal Wedding, we have seen the mugs and the tea towels, so which if these is not adorned with the royal couple, as wedding souvenirs? Is it A., Sick Bags; B., Condoms; C., Dog Food; D., Vuvuzelas?
UNIDENTIFIED MALE: Ali?
VELSHI: Vuvuzelas, obviously.
UNIDENTIFIED MALE: Ho-ho, you are correct.
The others are souvenirs but not officially sanctioned Royal Wedding souvenirs. So, Ali, I guess you care a lot more about this wedding than you would like to lead on. You're the winner.
VELSHI: Apparently so. Richard has got me interested.
Richard, I have to tell you, it is a little embarrassing for you to won on your own turf, but you are welcome back next week.
QUEST: Hey, I'm blaming the fact I can barely hear a word you are saying, which, frankly, Ali is the best way to listen to most of what you say.
VELSHI: Richard, we look forward to watching all of your coverage of the Royal Wedding.
(DESK BELL CHIMES)
Hey, we'll be back next week at the same time and in the CNN NEWSROOM, 2:00 p.m. Eastern. Keep your topics coming to our blogs, CNN.com/QMB and CNN.com/Ali. Tell us each week what you want to talk about. See you next week.
QUEST: Ali Velshi and myself on our "Q&A", which you will be able to join in. And we'll be asking, of course, for your suggestions on the subjects that you want to hear us debate and talk about.
Now, think about it. You have the invitation, you have the outfit, there is lots of Royal Wedding dilemmas. What on Earth do you mean? And what are you meant to say? Our next guest will help us understand, after the break. The do's and don'ts, which you can also take into the corporate world when it is all over.
QUEST MEANS BUSINESS, we are at the Palace, next.
QUEST: The flag is there, the Royal Standard flying above Buckingham Palace, on this Thursday evening. The night before the Royal Wedding. It tells us Her Majesty Queen Elizabeth II is in the residence at the Palace, the night before her grandson gets married.
Hello, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN and whatever maybe happening with Royal Wedding-wise, on this network, the news always comes first.
QUEST: Never mind the bride or groom, I'm sure some guests have pre- wedding jitters now. Not surprising it is night before the big day. On an occasion like this, of course, demands all kinds of etiquette and protocols to be observed. Well, the guest list to start with. A bit of a diplomatic minefield. Embarrassing relatives are let out, being selective is in. You can't be seen to invite one person and not the other, less they kick up a fuss. You also can't risk political fallout, which is why Syria's ambassador to the U.K. lost his invite.
There are the wedding gifts; what do you get a couple who already have a kingdom waiting for them? Many guests will be donating charitable gifts, 500,000 pounds has been given. The Prime Minister of Britain David Cameron is giving them a book of photographs of Anglesey in Wales, where William is based with the Royal Air Force. And, of course, it is a wedding. You need to behave appropriately, especially with dignitaries-or dignitaries involved. Dignitaries and dignitaries-Prince Harry is putting on a survivors' breakfast at 6:00 in the morning for those who make it to the next day.
It is not every wedding when you have to curtsey to the groom's mother-grandmother, then again, this isn't just any old wedding. Tamiko Zablith, an etiquette expert and the director of the Minding Manners Agency, is with me.
Tamiko, if you were going tomorrow.
TAMIKO ZABLITH, DIRECTOR, MINDING MANNERS AGENCY: Yes.
QUEST: What would be your biggest concern?
ZABLITH: Dear, my biggest concern would be to be close enough to take a captured photograph of the couple.
QUEST: Right. Within that rules and regulations, what is the overriding etiquette? Because there are 1,900 people there, many of whom will not be familiar with etiquette at these sort of events.
ZABLITH: Uh-huh? So, I would perhaps stand around and, perhaps, one of the things I do whenever I go anywhere is to, in my mind, pretend I am the hostess. And by doing so, if I get to meet other people I make sure I acquaint them with one another to put them at their ease.
QUEST: But you wouldn't go up to the queen and do that?
ZABLITH: Absolutely no. Speak when spoken to.
QUEST: Right. Now so many rules about the queen are slightly old fashioned, now, aren't they? You know, speak when spoken to. Ma'am, not spam. All that sort of thing. Do those rules still apply do you think?
ZABLITH: I firmly believe they still do.
QUEST: But she is a very modern woman, in many ways.
ZABLITH: Yes, she is. But we have to think etiquette, often, it comes from conventions, which are set in place by tradition. And you can't just erase hundreds of years of tradition.
QUEST: With the cross-cultures that are taking place, because you are an expert in this cross-culture environment. We have a lot of diplomats who know the rules. We have a lot of people here who may not. So, talk me through cross-cultural aspects when you are in high-profile situations.
ZABLITH: The first thing to recognize is knowing a bit about the other culture's history will help you know. You need to know a bit about their religion as well. Do we shake hands? Do men and women? Do the genders cross? Do we give kisses on the cheeks? Do we respond, fine, thank you, to how do you do, versus how are you? Lots of little codes that underlie.
QUEST: In the business environment, when we talk etiquette, do you think not most people-I mean, there is Kate Middleton, just shaking hands now. Surely in this day and age most people are used to Western business methods, or not? You are looking at me-I can see the look.
ZABLITH: They may be used to it, but they may not be comfortable with it.
ZABLITH: If you can imagine finding yourself in a country you do a "Namaste". And suddenly this intrusive hand comes into your space. It could make you feel quite uncomfortable.
QUEST: Now, this is an awful question.
QUEST: I'm never sure, when shaking hands?
QUEST: Now, I always like a good firm handshake.
QUEST: Unless it is with the Queen, of course.
ZABLITH: Yes, of course, quite right.
QUEST: In which case, she would be like-but normally, when men shake hands with women?
QUEST: Are you supposed to go for it like that? Or is it more in polite company you are supposed to go more like that?
ZABLITH: Now, it depends if it is a social handshake or a business handshake. Business handshake, you make sure your web connects. It doesn't have to be strong, but a nice connection.
QUEST: So, connection of webs?
QUEST: All right, connection of webs. And social?
ZABLITH: And social would be a bit more, here. Depending on the level of the person. Diplomatically, it is a bit more here. Social and a contemporary environment, still put some confidence in it.
QUEST: All right. And if you are on the receiving end, of an etiquette faux pas?
QUEST: Famously, Queen Victoria picked up a piece of cake once, off the carpet to put a guest at ease. If you are at the receiving end of an etiquette faux pas, what should you do? How do you do it? You don't want to point out that somebody has just dropped jam on your best tablecloth.
ZABLITH: Well, if someone drops jam on your best tablecloth you just let it be. In fact, there was a wonderful story of a lady, who had also dropped another bit of jam on her tablecloth. That is what a gracious hostess will do.
QUEST: And finally, the age old problem; I want to introduce you to him over there. But I can't remember your name to save my life.
ZABLITH: Yes. You will remember that you met me at a minding manners cocktail party and at the bare minimum be able to say where you last saw the person, so they don't feel completely forgotten.
QUEST: I met her at a party, and now-and I can't remember her name. How's that? That won't do at all?
ZABLITH: You are very welcome.
QUEST: Thank you very much indeed.
ZABLITH: Excellent handshake.
QUEST: Nice firm handshake. Many thanks, indeed.
Now over the past few weeks we have been asking to see the photos from your big day, for richer and poorer, and we wanted to know how you spent your money. Here are newlyweds Simon Brown and Angon Flongpudsa (ph). They were married in January this year in Pruket (ph). Yes.
Now, how about this one? Onuawuchi Ejezie sent this photo of his parents wedding in 1960, in Kanu, Nigeria, just after the country's independence. He is proud to say they are still together. That is a nice thought as we celebrate a wedding.
And not to be outdone, one of the QUEST MEANS BUSINESS team has caught the wedding bug. This is our producer, Essa, who recently got engaged to her fiance, Danny. How did Essa slip this picture in without me realizing? Why isn't she back there doing some work? Essa will be looking for inspiration from tomorrow's ceremony. Danny, be warned. If it is not 1,900 guests, two receptions and a glass coach, you are in trouble.
Keep the photos coming to us. It is at Quest@CNN.com. The Twitter address where you can follow what we are talking about, is @RichardQuest.
This is QUEST MEANS BUSINESS, we are at Buckingham Palace on the night before a rather special wedding.
QUEST: OK, this is where hundreds will spend the night; thousands will spend the night. Not just in that one tent, but it gives you and idea. They are down there. Up in media village, we are here, covering the event. London, as you can see-ah, now somebody is leaving the palace.
Wait a minute. We are going to stay with this a minute. Somebody is leaving the Buckingham Palace at the moment. Who is it? And which way are they going? Well, it is a big Rolls Royce car. And it is going in the absolute opposite direction to the way we are looking at. They are going up there. Apologies, for me turning my back on you, while we were doing that, but this is live television and it is the night before the Royal Wedding.
Let me update you on some earnings news that will help, maybe, pay for all of this. Earnings reports caused big movements in the European stock markets on Thursday. The DAX, the CAC, gained almost 1 percent. Deutsche Bank got 4.75 percent, profits beat expectations. So (ph) it was 4 percent in Paris, profits rose 29 percent. The FTSE was flat. I'm not surprised. Barely anybody at work in the United Kingdom.
The software maker SAP was one of the biggest drags on the DAX. Its shares lost almost 6 percent after quarterly earnings missed expectations. Net profit climbed 4 percent to $596 million. Bill McDermott is co-CEO of SAP. Bill joins me now, live, from CNN New York.
Bill, we'll talk other matters in a moment. First, though, what on earth? Why would the market clobber you 6 percent? What were they really worried about?
BILL MCDERMOTT, CO-CEO, SAP: Thank you, Richard, for the question. First of all, I think it is important our revenues were up 26 percent in the quarter. And that follows the biggest quarter in the history of SAP. So, the company is doing extremely well.
On a non-IFRS basis, meaning if you exclude acquisition charges, and employee based, stock compensation, our operating profit was also up 26 percent. And we improved our margins 1 point, year over year.
I think the question really is, did the market expect a little bit more? Because we actually did exactly what we said we were going to do. We said we would guide on 10 to 14 percent. We said we would improve our margins a certain amount, and we did exactly that. But keep in mind, Richard, we were up 20 percent on the DAX so far this year. And we were the top performing DAX stock. So maybe there was a little profit taking.
QUEST: Let's talk on the general business environment that companies like yourselves are seeing, at the moment. Ben Bernanke talked about moderate growth. We know what is happening in Europe. Germany, perhaps, the best performer in the European Union. Your betwixt and between these different economies, with a strong China and Asia, emphasis as well. Is balancing this growth proving to be a little bit tricky?
MCDERMOTT: It is actually really exciting. What is great about having a global company like SAP is when one theater is a little off, another one will pick up the slack. If you look at this quarter, Europe was in double digits, Americas was in double digits and so too, was Asia Pacific. And Japan, where there was a huge crisis, we grew 92 percent. So, the reason our business is growing so well, and we are doing so good is because companies have to grow no matter where they are located. And they have to go through a-
QUEST: Uhm-Sorry, Bill forgive me. We have-there is a terrible delay between me in the palace and you in New York. I didn't mean to be rude, to interrupt. But I do need to ask you, finally: It you choose between the NYSE going with Nasdaq or Deutsche Boerse. Do you have a view, either as a corporate or personal, on who should buy the New York Stock Exchange?
MCDERMOTT: Well, I think the main reason that SAP benefits from whatever decision takes place, is when companies come together they are going to need a stable platform to run their operations. They are also going to have huge data challenges because you have got to put this massive amount of data into a system. And then manage that. And analytically understand what that data is telling you, so you can respond to market dynamics.
Also, on either side of the pond, there are different offerings for the clients. And that needs to be rationalized in a system like SAP. So, we really benefit from M&A activity, no matter how it turns out.
QUEST: Bill McDermott, joining me from New York. We thank you, for that.
Now, one event I forgot to mention, of course, that is happening tonight, at Buckingham Palace, which is why we may be seeing quite a lot of activity. If you look, you can see now, sort of the cars are now moving around. And I forgot to mention that one of the things that is happening is that there is a major dinner tonight, at the palace. Of course, the members of European royalty. For some reason they are-so that is one of the things that will be happening tonight at the palace. And there is a lot of movement of royal families who will be attending the palace tonight, and the wedding tomorrow. That is what is taking place. Why we are seeing a lot of motorcades moving around.
Guillermo is at the World Weather Center for us this evening.
It is your last chance to get this right.
QUEST: You know the old saying? Something old, something new, something borrowed, something blue? It is going to be an umbrella that will be borrowed. But you can't have a proper wedding without cakes. And this particular wedding will have more than a few. In a moment.
QUEST: Look at them. That is the way to spend the last night before the Royal Wedding. The tents that are on The Mall and there has been a hubbub around The Mall, for all day, in fact plenty of campers are settling in for a long night on the streets. Especially with showers forecast tonight, one can only wonder how unpleasant it is likely to be.
Now, earlier in the day, the sun was shining. So, I went out to meet some of the hardcore fans that are down there, at the moment. Some-and one lady, in particular, had come a particularly long way.
QUEST: Hello, Princess Deborah from Australia.
UNIDENTIFIED FEMALE: Oh, how are you?
QUEST: I'm well, thank you. All right. Why-please tell me, Princess Deborah, from Australia, that you didn't come all the way to sleep on the streets for the Royal Wedding?
UNIDENTIFIED FEMALE: I did.
QUEST: You came from-tell me where?
UNIDENTIFIED FEMALE: I-they announced the wedding, say at 6:00 o'clock in the morning. I got up. By 10: a.m. I had my hotel booked, and my flight. And I've been counting the days down, until today-well, I got here a week ago to get-so I could get a good spot. So, I got here, picked my spot, and it is here. Arrived this morning, I've got it. And I'm so excited.
QUEST: Why did you pick this spot out of the route?
UNIDENTIFIED FEMALE: We can see the kids on the balcony. We can see the procession. And you get the both.
QUEST: And this is your?
UNIDENTIFIED FEMALE: I brought my own cart and my own palace, because they've got theirs and I've got mine. I don't have as much room as them.
QUEST: Are you going to sleep in that tonight?
UNIDENTIFIED FEMALE: You are looking at me like I won't fit?
QUEST: Oh, no, no!
UNIDENTIFIED FEMALE: That's OK. That's OK.
QUEST: Boy, I'm in trouble here.
UNIDENTIFIED FEMALE: No, no. If it rains I'll be in my tent-my palace, sorry. My palace.
QUEST: The word barking and mad might be used in the same sentence?
UNIDENTIFIED FEMALE: Darling, that's OK. I'm an Aussie.
QUEST: You were determined not to miss this, weren't you?
UNIDENTIFIED FEMALE: I was determined.
QUEST: Why do you think this is has hit home?
UNIDENTIFIED FEMALE: So special?
QUEST: Why has it hit home do you think?
UNIDENTIFIED FEMALE: It is a marriage based on love. They love each other. I met Kate Middleton two years ago and she is a natural-born princess. And I tell you-William was there. They were at a pub in Bache (ph). And he loves her. He'll protect her. And she was just beautiful.
QUEST: Now the really difficult question. Will he ever be king of Australia?
UNIDENTIFIED FEMALE: Will he be my king? If there is a republic I'm moving to England.
QUEST: You are very welcome. We have a nice spot just here.
UNIDENTIFIED FEMALE: Thank you very much.
QUEST: I'll come and see you in the morning. Oh, God, the hands are cold already.
UNIDENTIFIED FEMALE: I know. I know.
QUEST: They're cold already!
UNIDENTIFIED FEMALE: But I have gloves. I have gloves.
QUEST: But a warm heart. Nice to have met you.
UNIDENTIFIED FEMALE: Bye.
QUEST: Ah, now we spared no expense today. I'm sure many of those camped out could do with a nice cup of tea. I've certainly got one of those. And I'm dunking this nice cup with a very humble looking digestive biscuit. It is one of those biscuits that goes very funny when you go inside and will drop and fall all apart. Now, there is a reason, though, why I've got a digestive, with a cup of tea. The guests have a couple of cakes to choose from in tomorrow's wedding. And if you want to sneak preview of them, well, you only need look as far as these biscuits. You might even have some in your kitchen cupboard.
The Royal Family asked the biscuit maker McVities to make a special cake using William's favorite Rich Tea Biscuits; 1,700 of them are going into the mix. That is 1,700 of the biscuits. Not 1,700 of the guests. Anyway, they will be making the prince's request. They'll be covered in chocolate. It is a secret royal recipe, will they go for the Fiona canned cake with flowers, or the cake with the McVities digestives.
Weddings, of course, are an industry in themselves all year around. So that means an awful lot more cakes, which is why Mich Turner's "World of Work" is so significant. She is the head baker at the Little Venice Cakes. She even counts the Queen as one of her customers. We went to see what was cooking in her, "World @ Work".
UNIDENTIFIED FEMALE: These are darker.
MICH TURNER, DIRECTOR, FOUNDER, LITTLE VENICE CAKE COMPANY: Dark chocolate, chocolate, chocolate brown color.
Hello, my name is Mich Turner. And I'm director of London's Little Venice Cake Company. I came into the cake industry, very much when I was studying my A levels, and one of my lecturers asked me decorate her wedding cake. And so I enrolled in a four-day course to learn the basics. Duly decorated her wedding cake, and really very much that was the start of it.
This is just regular chocolate sugar paste. Roll it into a sausage, cut the end off. Then you are going to cut six discs. Use the base of your thumb, just to start the flattening process. This curls up on itself to create what will be the center of the rose. And then we use the knife, to slice the back off. Display them. Do the glazer (ph) onto the chocolate. It is that lovely, encrusted, sort of glam rock texture on there.
What I love is the opportunity to really be totally intricate, hand craftsmanship. And create something either of exquisite breathtaking beauty, or a cake that will have such a majestic wow factor that they absolutely, literally take people's breath away. I have a very steady hand. And if I wasn't going to be a cake decorator I would have been a forensic scientist. Because I love that absolute attention to detail, really steady hand, of insuring that everything is precision applied.
I'm going to add a little orange glitter heart to finish that off.
One of our cakes that we covered with 24 karat gold. There are over 600 pounds worth of 24 karat gold, on that four-tier cake, to ensure that we get the desired result. There could be over 2,000 pearls on our Peruvian Pearl cake to ensure that they are flawlessly decorated. You know, the hand pipe detail on this had to be colored exactly to match the ribbon, to match the bridesmaids, to match the bridesmaids' shoes. And it is that kind of degree that we go to, to ensure that it is seamless on the day.
And we use the best quality ingredients, lots of nature friendly flowers, raw brown sugars, real golden castor sugars, to create the most totally indulgent recipes. So things like chocolate pecan, chocolate orange, a Madagascan vanilla cake, carrot cake with walnuts, sultanas and coconut.
First a wedding cake for a high-profile client was for Madonna. So they don't come much higher than that. So that was a huge accolade. But I have also been fortunate enough to create cakes for her Majesty the Queen. I designed a cake inspired by her Diamond Wedding Anniversary, which she accepted as a gift, which we sent to Buckingham Palace.
People who have very good handwriting tend to sort of be quite good at this. If you are good at being able to draw in straight lines, or write in straight lines.
We always eat cake.
I love everything about my job. I have been doing this now for neigh on 15 years. And I've never had a day where I haven't woken up and can't wait to get started. I love everything from meeting the clients to executing the cakes, to actually then setting them up at receptions and for brides and grooms, or for clients afterwards to report back that it was literally the cake of their dreams.
QUEST: Sweet tooth indeed, "World @ Work".
Earlier tonight, David Cameron, the British prime minister, was out and about. There is a picture taken by one of our producers. That is Mr. Cameron, right in the middle. And you can see he has got something coming out of his head. Anyway, you get the idea, he was saying hello to the crowds, as well, tonight.
And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest, in London.
Whatever you are up to in the hours ahead-
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I hope it is profitable. "PIERS MORGAN TONIGHT", is after your headlines.