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QUEST MEANS BUSINESS
WTO's Lamy On Russia's Membership, Global Economic Conditions; Boeing CEO and Southwest Airlines on History Making Order; U.S. Fed Meeting; Interview with Doug Oberhelman; Prokhorov for President; Emerging Luxury
Aired December 13, 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, CNN INTERNATIONAL ANCHOR: It's a case of pushing the club. The World Trade Organization on Russia's impending membership.
It's a Boeing bonus. I'll be speaking to the chief executive Jim Albaugh on its record jet order.
And the CEO of Caterpillar, tonight, on why China is key to its evolution.
I'm Richard Quest. I mean business.
As the week rumbles on so the fall out continues from the Eurozone mess. The president of the European Commission has joined a chorus of voices that is criticizing the U.K. Jose Manuel Barroso says that it is unfortunate that Prime Minister David Cameron chose not to back the deal reached at the EU summit last week.
Mr. Cameron says the fiscal compact was a threat to the U.K.'s financial sector. Mr. Barroso says the prime minister's demands for a targeted opt out on financial services made compromise impossible. He is, though, hopeful negotiations can continue.
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: Emotions are what they are, but I think as some of you have mentioned, it is important to see how we can get out of a situation that was indeed unfortunate.
I welcome the statement yesterday by Prime Minister Cameron that he intends to continue to pursue a positive policy of engagement in the European Union on a whole range of issues, including growth and economic reform, smart regulation, fighting climate change, and development agenda. I sincerely believe that we have a joint interest to agree and not to agree among all of us.
(END VIDEO CLIP)
QUEST: Now that is President Barroso. The markets and everybody is watching to see if the restructuring of the EFSF and the ESM has actually done the trick. And this is how the numbers were in Europe. Banking shares did slump because there are fears of what this will all mean. The recap of banks, Barclays down 1.5 percent; Commerze down 4.5, which of course, is what took the Xetra DAX down, but you get an idea of the volatility and turmoil. Two down and two up, as you see across the euro bourses.
(DESK BELL CHIMES)
So, to the New York market which is now up a 108 points. This is after a fall on the previous session. A gain of just less than -- or just more than 0.75 of 1 percent. Holding at 12,1028. It gives you a scenario of what is happening in markets that remain extremely fragile, as the game plays out.
There is another factor into all of this. Russia, which will be joining the World Trade Organization, the WTO, sooner rather than later. Nearly two decades since talks began. It is becoming a member of the WTO probably this week. As 2011 comes to an end growth in world trade has been faltering. Look at what the WTO says about the way in which it was -- the WTO has cuts its forecast for the year. Russia will be exceed -- it will be joining, it will be the WTO's 154th member.
But if you look at the World Trade Organization's forecast, that is just up 5.8 percent; 2011 growth forecast on world trade. Forward a bit further and you start to see what is happening with China which, of course, 10 years ago this very week has made significant improvement in its share of world trade. The value of Chinese exports has increased from $510 billion to $3 trillion. In a report to U.S. Congress today, the U.S. trade representative said China still isn't playing by the rules. Its trade reforms are slipping by the wayside.
You get an idea of the total scenario. Joining me now, from -- is Pascal Lamy, from the World Trade Organization in Geneva at the WTO.
Mr. Lamy, as always, it is good to see you. Before we get to grips with the Russia question, and the wider question, are you concerned -- because obviously as a former commissioner -- are you concerned that the deal struck last week, in Europe, with the Eurozone, could create more uncertainly and ultimately harm European trade?
PASCAL LAMY, DIRECTOR GENERAL, WORLD TRADE ORGANIZATION: Well, as you can understand it is difficult for me to comment on EU internal affairs. But what I think, is that the sooner the Europeans get their act together, the sooner they exit this institutional crisis they entered into, the better this will be for the European economy, which as we know is not in good shape.
And if that is good for the European economy it has to be good for the rest of the planet. So, my recommendation from where I am now is, please get your act together quickly. The rest of the world needs that.
Now, let's turn to the WTO and Russia. Russia's accession is likely to happen this week. It has been a long time coming. Are you confident that once Russia is in the club it will enjoy the similar benefits and maybe have some of the problems that China had?
LAMY: Well, as you know, Richard, the Russian economy and the Chinese economy are very different. The Chinese economy is extremely diversified if you compare it to the Russian economy, which is still very much in exporting energy. Now, that being said, Russia joining the WTO is good news. And we don't have that many good news, for the moment. It is good news for Russia who will benefit from the protection for its imports for the WTO rules.
LAMY: And it is good news for Russia's trade partners who also know from the moment they joined the organization that Russia will play by the rules, will be a more transparent marketplace. So all in all, Russia wins a sort of security for its trade, and Russian trade partners need more open trade with Russia.
LAMY: And of course, as usual, the future we will see, as we do it with all our members, and we regularly scrutinize, check this, if they all play by our rules.
QUEST: We do need to look at the Doha round, because it is the 10th anniversary of China's accession, 10th anniversary of Doha. And when are you and your members going to either do a smaller deal, a limited deal, or kill it off? One or the other, it is time to put this to bed?
LAMY: I know your view on that, Richard. You have been waiting for good news for too long not to be a bit disappointed.
LAMY: But please understand that the international system is not the -- things do not happen overnight.
Now, you are right, for the moment we are -- the round is deadlocked. But deadlocked is not dead. There is a series of issues which have, for the moment, which have prevented the conclusion of the round. And what ministers will be gathering from tomorrow on, in Geneva, for our biannual ministerial conference, we'll try and check between themselves, is whether trying to address these issues, piecemeal, one by one. And try and get done what can be done, instead of looking at the whole package.
LAMY: That is what, probably, they will try to do. That doesn't mean they do (UNINTELLIGIBLE). It means a quicker Doha result for some of the topics in the negotiation.
QUEST: Mr. Lamy, you and I will talk more about this when I hope to see you in Davos, if you are there in the cold of the snow -- I know you are going to be there, so we can talk face to face, and --
LAMY: I'll have the pleasure of being there.
QUEST: Lovely, then we'll make an arrangement. Pascal Lamy, head of the WTO joining me from Geneva.
Proving that we have the decision makers that you need to make your business decisions. After the break, the chief executive of Boeing Commercial and the chief operating office of Southwest Airlines, both live on the program.
One has been buying a lot of planes, the other is making a lot of money. In a moment.
QUEST: These days people don't buy one or two planes, they buy them in the dozens and the hundreds. It is the largest order book in Boeing history. The American airline, Southwest Airlines, the original Southwest, the absolute granddaddy of low-cost carriers, all of the rest of them are based on Southwest's model, has ordered and commissioned 208 new planes worth around $19 billion at list prices.
The fleet will be all 737s and will be delivered from 2017. It includes 150 -- 150?! That is a lot of planes! Of the 737 Max, Boeing's new airplane, designed to be more economical with fuel, it is a bold move for Southwest as the industry struggles with soaring fuel costs, natural disasters.
This is the plane. It is a beautiful looking aircraft, the 737 Max, that will take advantage of the feathered engines. Listen, when you get me started on planes, we could be here all day. So, let's bring in our guests instead. Jim Albaugh is the chief executive of Boeing Commercial. Mike Van De Van is the Southwest CEO. They join me from Dallas.
Jim, this extraordinarily large order, the biggest in Boeing's history, from a long-standing customer; were you giving him away the planes. Did you give him them free?
JIM ALBAUGH, CEO, BOEING COMMERCIAL: Richard, we don't give our planes away. But as a great customer, we've been selling airplanes to Southwest for 40 years. This the biggest order we have ever done in terms of number of planes, and also total revenue. Everybody back in Seattle is just tickled.
QUEST: Mike, Southwest is a single airline, a single carrier fleet, 737, did you look at the 320 Neo? Did you take a competitive bid from the opposition?
MIKE VAN DE VEN, COO, SOUTHWEST AIRLINES: Yes, well, Richard, you can't make a decision of this magnitude without doing some due diligence. And we did. We looked at the Neo product, we looked at the Max, we compared them side-by-side. And for us, ultimately, as you mentioned, fleet commonality is very important at Southwest Airlines. That, and then the economic performance of the 800, and it gave us a little bit more mission flexibility in some of the airports we flew. It is just a clear choice for Southwest Airlines.
QUEST: And what are you going to do with these new planes? Obviously, a large element of them will be to retire older, less efficient aircraft. But this is a lot o planes. You are still integrating Air Tran into the fleet. You are bringing things together. So, where is the expansion?
VAN DE VEN: Well, certainly, Richard, it is a significant investment, but we are making that investment for our customers. We want to make sure that when customers come to Southwest Airlines they are getting on new airplanes. That there are efficient airplanes, that they are reliable, there are tons of customer comfort. And we can fly them to a variety of locations.
So, we have a really good domestic network, and we hope to expand that with the Air Tran acquisition, through the near and international markets in the future.
QUEST: All right. Now, Jim, the Max is scheduled for 2017. Obviously, you know, nobody comes to this party without scars and wounds from previous launches. You believe that you have put in place, sufficient time -- I mean, it is a re-engine rather than new aircraft. But you believe this is sufficient time?
ALBAUGH: Yes, we do, Richard. Obviously we learned a lot from the 787 program and the 747-8 program. We have a schedule that is in place that we know we can deliver on. You know, I want to under promise and over deliver. I'm very confident we can deliver to Mike and Southwest, the airplanes on time and give them the capability that they need.
QUEST: And how many orders? Because I've been trying to find online, I mean, a number of 600, it is probably now over 700, with Mike's orders for the plane. How many orders are you prepared to confirm to me that you have for the Max?
ALBAUGH: Yes, right now in terms of commitments and firm orders, it is 948. And it is the 150 firm orders from Southwest and the rest are commitments and we hope to sign those customers up to firm commitments, firm orders, sometime after the first of the year.
QUEST: Mike, Jim will never tell me what he sells his planes for. I've been trying for years. We-we -- you know, so I'm going to ask you, are you going to tell me what you paid for the planes?
VAN DE VEN: Well, what I will tell you, Richard, is we did ask him to give them to us for free and he said no.
QUEST: Jim, do you wish you'd launched the Max earlier?
ALBAUGH: You know, we took our time we made sure we made the right decision. You know, we think we are in the right place with the Max. We think we can maintain parity with Airbus, with the Max airplane. And with the money we didn't spend doing a new small airplane, we can make sure that we have the money available to do a 787-10 derivative. And also do to an upgrade on the 777X. So, I'm very comfortable with where we are.
Certainly, Airbus had a lot of Neo orders this year. I think next year is the year of the Max. We'll sign up a lot of customers.
QUEST: And finally, Jim, are you hopeful for any more orders for the 747-8 Intercon?
ALBAUGH: We have about five or six different campaigns we are working on right now. I doubt if any of those will come to a contract this year. But next you should see some more orders, yes.
QUEST: Guys, I've got to leave it there. But you'll want to hear this news that I am about to give.
The U.S. Fed FOMC has just announced it is to keep rates ultra low amid moderate economic expansion. That is the latest news from the Fed.
That is Mike from Southwest, Jim Albaugh, our good friend from Boeing, joining us from Dallas.
And a quick reminder of the two different planes, our own, of course, plane there. And there you have the Max. Jim Albaugh telling us that comes into operation in 2017. And Jim saying that they have 900 orders and commitments. And then you have the Airbus, and the Neo. And here we have 2015, and 1,000 firm orders for -- it's 2016, I think it probably is, is 2016, is that.
In a moment, reaching the top brings difficult choices. We will have "The Boss", because our boss, Sarah Curran, is facing the hardest choice of her career.
(BEGIN VIDEO CLIP)
SARAH CURRAN, CEO, MY-WARDROBE.COM: I absolutely know, hands down, that I do not have the skill set to take this business internationally. Because it requires a completely different approach.
(END VIDEO CLIP)
QUEST: A tough call for Sarah Curran, it's "The Boss".
QUEST: Today around 30,000 people will log on to My-Wardrobe.com. It was the web site that we have been following and you know about the boss, Sarah Curran. Each customer, when they buy, spends around $400.
It is five years since Sarah sold her house to start the venture. Her idea was a fashion Web site more up-markets than the High Street stores. It hadn't really been done before. It was more expensive than the high street, but yet less pricy than the boutiques. The gamble paid off. My-Wardrobe has almost a million visitors every month and sales have doubled with expansion.
Sarah knows the company has to take it to the next level. So, for instance, My-Wardrobe is expanding in Germany. It is moving across into France. And it is even going to have a division in Australia and the Middle East. So a global expansion of sorts, well, not of sorts, in reality; in fact, sales have more than doubled in the first half of this year, up 141 percent.
For some this expansion, and managing the expansion, could be seen as an opportunity. But for Sarah Curran it is a problem. Because Sarah doesn't think she is the right person to lead the company and she is stepping down. Tonight is the first interview since she announced she will no longer be, "The Boss".
SARAH CURRAN, CEO, MY-WARDROBE.COM: This is your first time here, isn't it?
UNIDENTIFIED FEMALE: Yeah.
CURRAN: Welcome to Camden.
UNIDENTIFIED MALE: From the day our cameras started rolling back in September of 2010, Sarah Curran was a boss on a mission.
CURRAN: We're looking to re-launch, reposition the brand My- Wardrobe, for women's wear, in February 2011. And then at that point we'll start the process again for men's wear.
UNIDENTIFIED MALE: From the get go the CEO and founder of online fashion e-tailer, My-Wardrobe.com knew what she wanted for her brand. And she wasn't prepared to settle for anything else.
CURRAN: I kind of like it. I'm not sure about the boots.
Don't think there is any point where we are going to look and say, yes, the site is good to go. It is finished, you know, we can all pack up. Because it is about always changing and always pushing the boundary; always finding a new way to browse.
I would change it to the U.K.'s most stylish.
UNIDENTIFIED MALE: Now, five years since it first launched, Sarah has decided to step down as chief executive of My-Wardrobe.com.
CURRAN: You want to give it more of a global spin.
UNIDENTIFIED MALE: A decision she hasn't taken lightly, but one she feels is right.
CURRAN: I know my skill sets have taken the business to where it is today. But I absolutely know, hands down, that I do not have the skill sets to take this business internationally because it requires a completely different approach.
UNIDENTIFIED MALE: Sarah won't be abandoning her company completely. She still remain at My-Wardrobe but will take a back step from her busy role as chief executive. A step this micro manager my find hard to accept.
CURRAN: I mean, I wouldn't even ask the service, I would just do it. If I am going to make this appointment of the global CEO I have to completely respect and be prepared to hand over quite a lot, the majority of responsibilities, and ultimate decisions over to this person. My role will be on all the emotional touch points. Being the face of the brand, being the founder, ultimately. And I'm sure a lot of people will question will I be able to do that. But trust me, I know, I am completely ready for this.
UNIDENTIFIED MALE: Sarah has good reason to feel this way. After all, she has dedicated her life to her business. Over the past five years she has re-branded and re-launched My-Wardrobe.
CURRAN: Today marks the new direction for My-Wardrobe.com.
UNIDENTIFIED MALE: She's taken on men's wear.
CURRAN: I think with men the photography has to be even more detailed.
UNIDENTIFIED MALE: Expanded her executive team with three new additions.
UNIDENTIFIED MALE: Yes, thanks a lot.
UNIDENTIFIED MALE: And has been recognized, internationally.
UNIDENTIFIED MALE: And the winner is, My-Wardrobe.
UNIDENTIFIED MALE: Along the way she has catapulted her company to new levels. Launching in Australia and the Middle East. With more than 900,000 shoppers visiting the site each month.
Numbers that make her decision that much easier.
CURRAN: There was a bit of a sense of relief. There were definitely moments when I just said what does that mean? There were the insecurities of well, what does that mean about me? Is it a sign of a failure? Am I going to loose respect? Is anyone going to care about my opinion in the business? I did have all those, sort of, natural -- they were the natural sort of things that were going on I my mind, even though it had been my decision.
UNIDENTIFIED MALE: Throughout her time on "The Boss" Sarah has always spoken openly about the difficulties of being a mother and a female chief executive. The sacrifices she's made and the frustrations she's felt.
CURRAN: Over the last six years it has been a managing of guilt, one way or another. I either feel guilty if I'm not spending enough time that I'm not spending enough time with Jake, or I feel guilty that I'm not, you know, spending all -- or I'm not doing enough for work.
UNIDENTIFIED MALE: This realization it seems has made her decision to step that bit easier. For Sarah this is as much about growing her brand as it is about living her life. And for a boss who loves the thrill --
UNIDENTIFIED MALE: The success.
CURRAN: See, I told you I'd come and get it next year.
UNIDENTIFIED MALE: And the constant challenges.
CURRAN: It is going to be a problem on a man's page. That's too feminine.
UNIDENTIFIED MALE: That is perhaps the hardest decision of all.
CURRAN: My biggest commitment and the thing I have always put first was work and My-Wardrobe. And I haven't got a problem with that. But now is the time, I'm approaching 40. Gosh, you know, I'm like a cliche; 40, divorced, single-mom, you know, I think it is not unreasonable to say that I'm not bailing, but I want to start having a relationship, like, you know, with my son and with my friends and family.
UNIDENTIFIED MALE: Next week on "The Boss".
In New York, and following in Sarah's footsteps, Steve Hindy tells us why he, too, is ready for a change.
STEVE HINDY, CEO, FOUNDER, BROOKLYN BREWERY: I'm very confident I can step away from this and it is going to continue to grow.
UNIDENTIFIED MALE: And Macao, Francis Lui is staying put and living his life in the fast lane.
QUEST: My word, now, My-Wardrobe is not the only company hoping to expand. When we come back we continue to bring you the chief executives that matter. Caterpillar's CEO, why he is looking to create jobs in China -- QUEST MEANS BUSINESS!
And there is no better way to mark your birthday than a good old fashioned monetary policy meeting. Ben Bernanke was telling himself that today, what did they decide? The latest FOMC in a moment.
QUEST: Hello, I'm Richard Quest.
More QUEST MEANS BUSINESS in a moment.
This is CNN. And on this network, the news always comes first.
Four people have been killed in an attack in the market center of the Belgian city of Liege. Police say the lone gunman, Nordine Amrani, is among the dead. Seventy-five people were wounded. Authorities don't know yet why Amrani threw grenades and fired guns on the square that was filled with Christmas shoppers.
This room in a Pakistani religious school is where police say 68 men and boys were bound together in chains and held captive. Officers rescued them and arrested three people during -- including the caretaker, who they say had the keys to the chains' padlocks. The school includes a drug rehabilitation facility and some captives may have been recovering addicts.
Excited scientists in Switzerland are showing new discoveries about the so-called God particle. They say they've found signs of it and could have it pinpointed by next year. The elusive subatomic particle is believed to be the basic building block of all matter and of the universe itself.
The president of the European Commission has joined the chorus of voices to criticize the United Kingdom. Jose Manuel Barroso says it's unfortunate that the U.K. prime minister, David Cameron, chose not to back a deal reached at the EU summit last week. Mr. Cameron said his veto was in Britain's national interests.
The U.S. Federal Reserve says the U.S. economy is expanding moderately and as expected, it's keeping interest rates at ultra low levels. The Fed is getting together for the last time this year.
Maggie Lake is in New York -- Maggie, now, well, Beige Book also have designed this phrase, "moderate expansion" earlier in -- in the month. So no surprise on that. And no surprise at all at the low levels.
Were there any surprises?
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: There -- there weren't, Richard. It was -- it was a total yawn. But guess what, steady as she goes. And no surprises is not such a bad thing in this market environment right now.
The one thing that we didn't see is any sort of hint on this change in communication or targets or anything like that. We thought we'd started to get a little bit of a hint on direction on that. But instead, they pretty much stuck to the script they've been saying. You mentioned "moderate expansion." It's not great, but it's sort of moving in the right direction.
The problem is, though, for the future, there's still downside risk coming from this global uncertainty. It's really a wild card for them. They're clearly very concerned about it, they're watching it. They mentioned that as the -- as the greatest down side risk facing -- facing the economy, the U.S. economy. And they said they're on hold, going to keep rates near zero until 2013.
That calendar day, 2013, is what has some Fed officials bothered. They feel like it's a bit random tying it to the calendar. They'd like to link it to either inflation or unemployment. They didn't do it this time, but we do expect to hear something about that in January.
QUEST: Right. But they have said, haven't they, that if you lead -- read the minutes, they're very wary, Maggie, of changing the language or the interpretation or the reference point in the middle of a crisis, for what that might suggest.
LAKE: Absolutely, Richard. And I think this is the problem. I think that they are keen to sort of move forward and start to -- to change the target, get more transparency, more information. And, in fact, they'd probably like to sort of pull back on some of what they've been doing, shelved quantitative easing once and for all and sort of get back to normal operations.
But they can't because we are in this situation where they have no control over the European situation. They're clearly worried about the potential for a liquidity crisis. So their hands are tied. They're not going to do anything that's going to upset or put more uncertainty out there for investors --
LAKE: -- who are already struggling with the outlook for 2012.
QUEST: And I don't want to be trite in these matters, didn't they have a birthday cake, do you know, for Ben Bernanke?
And, also, what year was he born?
I'm looking on the wires and I see some say it was 1953. And some people say it's only -- it's not confirmed it's 1953.
Do we know anything about his birthday celebrations?
LAKE: We don't, Richard. And, you know, the -- the Fed group, a bit of a serious bunch. I'm not sure that they had any cake or popped any champagne in there. I think they're too stressed out and worried.
I have to say, he's holding up pretty well. I think he's 58, by the way. He's holding up pretty well considering the strain and stress. You'll remember, from almost the minute he took over, it's been an absolute unprecedented crisis.
So I'd say he's not doing too -- too badly. Certainly U.S. presidents seem to age more than Ben Bernanke --
LAKE: But he does have the weight of the world on his shoulders, that's for sure.
QUEST: Hey, he didn't have a full head of hair when he started, did he?
LAKE: That's right. Not much way to go, right?
QUEST: All right. Serious stuff. But we thank you there.
Maggie Lake, who is in New York for us.
Caterpillar, the giant -- manufacturer of giant earthmoving equipment, is tapping into China's growing appetite for construction. Now, Caterpillar is the world's largest construction and mining equipment maker. And we always look at it as a strong barometer of what's happening in economies worldwide.
The company posted a 44 percent jump in profit in Q3. It clawed back market share, all of which is an encouragement.
Doug Oberhelman is the Caterpillar chief executive.
At the company's headquarters in Illinois, he told our own Poppy Harlow he's been building up business abroad.
DOUG OBERHELMAN, CEO, CATERPILLAR, INC: Seventy percent, or so, of our sales are non-US.
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Seventy percent?
OBERHELMAN: Seventy percent.
HARLOW: How much has that changed since you came to this company?
OBERHELMAN: When I got here, it was 50-50 and it was 50-50 for years and years and years and years.
HARLOW: Until when?
OBERHELMAN: Until the big U.S. slowdown in 2001 and the explosion in emerging markets.
HARLOW: If 70 percent of your revenue, then, is coming from overseas, is this the trajectory that -- that the world is on for -- for the near term, at least?
OBERHELMAN: Yes. And probably the -- the medium-term, as well.
OBERHELMAN: We need China as much as they need us, if not more so. Think about it this way. We're a country of 300 million people, a relatively slow growth economy, relatively slow growth in population, a mature economy, a wonderful society.
China, 1.2, 1.3 billion people, high growth, lots of people going into middle class. Lots of people progressing and developing.
And guess what they want to do?
They want to turn the lights on. They want to drive on roads. They want all the modern conveniences that we have. They want to live like us.
And we at Caterpillar supply a lot of the infrastructure that makes that happen.
Why wouldn't we want that marketplace opened to us and do all we can to -- to really lead and be a winner in China, also?
HARLOW: Why -- why not more jobs here in America?
Why not put all the Cat jobs in this country?
OBERHELMAN: Well, in our business, we just can't do that. These machines are huge. We ship them all over the world. And what we want to do is assemb -- manufacture and assemble the majority of products where they're sold to avoid shipping, develop local suppliers, and, most importantly, really recognize the local market. And if we're shipping those from the U.S. to the middle of Russia or to South America, sometimes we do that, certainly. But for the volume -- the high volume machines, we've got to be there. And -- and that's just the way we do it. And that's important for us. And it's good for America. It's good for Caterpillar.
Why is it good for America --
OBERHELMAN: A lot --
HARLOW: -- to be creating things over there?
OBERHELMAN: A lot of that engineering, a lot of those components, most of the intellectual property all come from the United States, because this is where we were born and raised. This company has been here 85 years.
So every time we export one of these motor graders in the background here to anywhere it goes, there is a lot of roots right here in the United States.
And I think that's good for all of us.
QUEST: The view as seen from the CEO of Caterpillar.
Smart, successful and 6'9" and a billionaire -- the man who wants to be Russia's next president, after the break.
QUEST: Even being the third richest man in Russia may not be enough to win the presidency of the country. So is the estimate of analysts about Mikhail Prokhorov's campaign against Vladimir Putin. The Russian businessman has owned and run major companies and, indeed, a basketball team.
He's running for the top job.
As Matthew Chance reports, he's already an imposing candidate.
(BEGIN VIDEO TAPE)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): He's best known around the world as the billionaire who loves basketball, famously buying the New Jersey Nets, vowing to make them winners.
But now, Mikhail Prokhorov, one of Russia's richest tycoons, has his sights on even loftier goals -- to run in Kremlin elections next year and become Russian president.
MIKHAIL PROKHOROV, PRESIDENTIAL CANDIDATE: I am planning an open and transparent presidential campaign, which will create conditions for building a good political party from the bottom up. It needs to be from the bottom up and it will be a long-term thing.
CHANCE: As Russia's third richest man, with a playboy image and inside knowledge of the Russian elite, Prokhorov certainly cuts a presidential figure when you met him face-to-face. He's also seen as super smart, a businessman who predicted the international financial turmoil in 2007, selling his metals empire acquired in the chaotic 1990s just before the crisis.
(on-camera): This decision you took to -- to sell these assets at that time, before the financial crisis really hit Russia, it's given you this reputation, this aura as something of a -- a financial guru.
PROKHOROV: I think it's like a journalist's slogan. Like in -- in business, you need to have luck. Sometimes you have a great strategy, but something has gone wrong, because you can't cover all the risk in your life.
CHANCE (voice-over): But in politics, he's less of a slam dunk. Although his presidential bid comes on the heels of the biggest street protests in Russia for 20 years, billionaires are not popular among demonstrating Russians angry at the corruption and cronyism in their country. Many see him as a Kremlin man, running merely to create the illusion of a genuine presidential contest with Vladimir Putin, the favorite to win.
JAMES NIXEY, CHATHAM HOUSE: He stands no chance whatsoever of winning. That -- that much is for certain. The whole election is set up, of course, purely in order to give Putin the most credible and largest win possible.
CHANCE: For his part, Prokhorov says his decision to stand for election was the most serious of his life, even if for those trying to manage Russia's democracy, his candidacy may be little more than a game.
Matthew Chance, CNN, London.
(END VIDEO TAPE)
QUEST: Tweets from the Top.
These are the big thoughts from the big names in 140 characters or less.
Jeff Joerres is the chief executive of Manpower, often on this program. And says: "There are positive signs in U.S., Japan, India and China. Slows year on year in part due to declining demand from Europe, its biggest export market," on the jobs question.
Mark Cuban, the owner of the basketball team and cable network, disagrees with the conservatives on their views in America on taxes. He says: "Other business owners agree taxes are not on the list of to 20 considerations when making hiring decisions." That's a reference, of course, to the battle over whether payroll taxes should be raised, lowered and whether that's an impediment to actually increased employment.
And finally, Nouriel Roubini: "Consumers slowing down, retail spending at a modest Q3 binge. Once properly corrected for discretionary service spending, consumption is weak."
Three views on what's happening on the U.S. economy and how it's likely to factor into a presidential election.
You can follow me on Twitter, as always. It is @richardquest. That's where we can have our dialogue and we can discuss the world of economics.
It's not every day that Cleopatra's tiara goes up for grabs. And there's more where that came from -- jewels of Hollywood legends, in a moment.
QUEST: Now we all like a bit of Hollywood glamour, and particularly at Christmas. Unfortunately, if you want this sort of glamour, and I don't mean the late Dame Elizabeth Taylor. I'm talking about the jewels that were so much, then you're going to have to get out your credit card and it will cost you a bauble or three.
Christie's is selling off jewelry and costumes that once belonged to silver screen royalty. It is, of course, to Elizabeth Taylor.
And the auction is expected to bring in at least $30 million. Much of it will go to charity.
These are some of the trinkets that are going under the hammer.
Now, Elizabeth Taylor once said big girls need big diamonds. Well, there we have some of the very large diamonds that she had. The tiara is littered with them. She wore it to the 1957 Academy Awards. That's expected to go fetch $80,000.
The totality of the jewels is quite extraordinary. Just look at the depth and the breadth and the range of the earrings, the bangles, the necklaces and so forth. Obviously, those diamonds could keep us all happily for a year or two.
And as for this ring, the original Material Girl has said it's not the having, it's the getting. This ring was given to her by Richard Burton, one of her seven husbands and no doubt, of course -- well, you don't need me to tell you about Elizabeth Taylor. She married Richard Burton twice. The 33 carat ring could be in your stocking if you've got that. The reserve on that is $3 million.
And if you want just some clothing, some vintage clothing, how about bidding on some of these items from the film star's old props?
The auction starts in New York tonight and it will last for four days.
The extraordinary amount that people will spend for the jewels of the rich and famous.
In fact, these days, even in bad times, the glamorous theme continues. Gucci, Yves Saint Laurent are just some of the most luxurious brands in the world. And they're all expecting to do well this Christmas. Behind them is the world's biggest luxury conglomerate, PPR.
Monita Rajpal spoke to the company's chief executive about lucrative emerging markets.
FRANCOIS-HENRI PINAULT, CEO, PPR: Now, on -- on big cities, like Shanghai or Beijing, people are already changing and going to more discrete luxury.
MONITA RAJPAL, CNN CORRESPONDENT: What do you think are the important markets to -- to really focus on in this time?
PINAULT: Of course, emerging markets like Asia, particularly China, India, the eastern countries of Europe, Latin America, all those new markets are very important.
To give you a few years last year, for a brand like Gucci, those emerging markets were representing 40 percent of our turnover.
And then if you take -- and it is a geographical approach, but if you take those people from those countries traveling and buying in New York or buying in -- in Paris or London, it's even more, probably around 50 percent.
So it's very important to be, of course, our origins are in the mature markets. We are spreading in -- in new emerging markets. But you need to be global. You cannot stay with (INAUDIBLE). It's very important.
So it's -- those countries are important, but not only. You need to be very careful when you're -- when you're in America, when you're in Western Europe, because this is where you have your basis, your origins.
RAJPAL: In terms of acquisitions, what does a company like PPR look for?
What attracts you to a brand that you don't have in your stable yet?
PINAULT: Well, we have very strict criteria on building our stable of luxury brands. I don't want to deal with a competitive situation, because I think you destroy value by doing this and it's complicating to manage. We try to build a portfolio of luxury brands where each brand has a -- a very specific mission in terms of product range, in terms of market segment, in terms of geography, it could be, also.
When we acquire a brand, I want to acquire a brand that is directly competing with Gucci, that is directly competing with Balenciaga, for instance. This brand has to bring something new to the group, to the portfolio of our -- of our luxury brands. So it's -- it's really -- we are very strict on that.
(END VIDEO TAPE)
QUEST: A bevy of CEOs on tonight's program. And that's the latest from PPR on the luxury market.
Now, wherever you happen to be in Europe, there's a lot of wind, there's a fair dose of rain, and I suppose to those who are going skiing, the snow is finally arriving.
Guillermo is at the World Weather Center.
And does that just about sum up a really nasty, miserable December day?
GUILLERMO ARDUINO, ATS METEOROLOGIST: We need three or four more adjectives to that sentence, I think, Richard.
But it is actually quite clear. The -- the jet stream, it's this highway where all of the storms like this low pressure center sit. And they bring the instability, the inclement weather conditions. That has been happening for such a long time that that's why it's remarkable, because usually we are expecting conditions like this, but not for that long. So violent storms. Then we have the cold air that is slipping in. And those who are happy are the ones skiing, not these people in the U.K. or in Ireland, especially in the northern parts of Ireland is where we have very, very intense wind.
Snow in Scotland, though it's coming to an end in the last hours. The unstable weather conditions will prevail. I'm talking to you, the traveler who is moving around Europe right now, or anywhere from the world going into Europe, the bad weather will not go. It -- it's here to stay.
Perhaps the winds are not going to see, like we saw the other day, 260 kilometers per hour. No.
But look at this indication. London, 35 kilometers per hour when the low pressure center is far away from it, where the weather is not as nasty as in Scotland or not -- or other sections.
But if you are going to any of these airports, especially the icons that are in red, Brussels, Amsterdam, Paris, on Wednesday, you need to come up with enus -- enough patience to face up delays if they happen. They will be, eventually, weather-induced. So that has a ripple effect. And the backlog then starts. And the winds go down all the way to Barcelona. The advancing of this system that brought these winds and now we have a new system that is coming along with rain in some spots, snow in Finland.
We have, actually, I was checking out the Meteoalarm, the European Union organization that talks about severe weather. In Switzerland, in Austria, especially in Oberosterreich and in Niederosterreich, that's in the northern sections of Austria, is where we have significant snowfall accumulations; also in Western Switzerland is where we are going to see that. And that's where we have the mountains. That's where we have the ski resorts. So that's welcome, of course.
The good thing is that those in the Mediterranean Sea are going to continue to see double digits, so it's going to be fine. Russia is much colder. But remember, we are not adding the wind effect in here so it's going to feel much colder than six degrees.
Come to the United States. The weather is not very nice. I took off from Los Angeles yesterday with rain and I arrived here in Atlanta, dry, colder. New York also nice, for the time being, the East Coast is fine. Great for shopping, by the way. Eight in New York. Canada, we're seeing a lot of snow, Richard, as well -- back to you.
QUEST: Do I gather you've been on holiday again?
ARDUINO: Yes, I was.
QUEST: Oh. Quelle suprise!, as they might say in certain places.
All right, Guillermo, many thanks, indeed.
ARDUINO: Thank you.
QUEST: Please come back in a moment. There's more to do. Obviously, if you're traveling around the continent of Europe, there will be some serious delays at major airports. We'll keep you informed about that.
When we come back at the moment, they always used to say they looked forward to a sexful -- a successful conclusion of the Doha Rounds. Maybe it's time to kill it off.
A Profitable Moment next.
QUEST: Tonight's Profitable Moment.
For as long as I can remember, international gatherings have always finished with the phrase, "the leaders commit themselves to a successful conclusion of the Doha Round of world trade talks."
They haven't succeeded. Haskel Lamar-Lami (ph), on this program tonight, said that they are deadlocked, not dead. But no one really expects that they will be completed. And even Doha Light is starting to seem to be just about unforeseeable.
It's time to put us out of our misery. Do a deal or kill it off. There's very little room in between.
And that is QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
I'll see you tomorrow.