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QUEST MEANS BUSINESS
Violence in Egypt; Egypt in Crisis; Asiana Crash Investigation; Crash Landings; Greek Bailout; German Exports Fall; European Markets Up, Bond Yields Down; Investment Opportunities; Dollar Losing Ground
Aired July 8, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: From deadly clashes to a war of words. Tonight, divisions deepen in Egypt.
A case of too slow to land. US safety officials give the first details of Flight 214. You'll hear more in this hour.
And tragedy in Canada. Questions now about the safest way to transport oil.
I'm Richard Quest. The start of a new week, and of course I mean business.
Good evening. Tonight, dozens lie dead after clashes at a Cairo military compound, and supporters and opponents of Egypt's new regime have very different explanations of what happened.
The Health Ministry says 51 people were killed outside the Republican Guard headquarters in the early hours of Monday. That's where the former president, Mohamed Morsy, is reportedly currently being held.
Witnesses say troops opened fire on Morsy supporters while they observed dawn prayers. The Muslim Brotherhood is calling it a massacre. The army says the troops were trying to stop an armed assault on the building.
(BEGIN VIDEO CLIP)
AHMED MOHAMMED ALI, EGYPTIAN ARMY SPOKESMAN (through translator): The Egyptian armed forces killed only its enemies. It will never kill its own children. And everything that has been said today, it comes within the framework of the lying and rumors, visions in the psychological warfare that has been used against the armed forces today.
(END VIDEO CLIP)
QUEST: The army has pointed to this video from the state-run broadcaster Al Masriya as evidence it was holding off an armed attack. Now, it appears to show a protester firing some kind of weapon at the police. It also shows another protester looking like what appears to be a gun, although the context is hard to tell in isolation.
CNN's Karl Penhaul arrived at the scene a little more than an hour after the clashes. He witnessed the chaotic aftermath and followed an ambulance crew as they picked up some of the hundreds of people who were injured. He sent us this report.
(BEGIN VIDEO CLIP)
(SHOUTING IN ARABIC)
KARL PENHAUL, CNN INTERNATIONAL CORRESPONDENT: We've arrived in back of the mosque now. This is probably the closest position we can get to a vehicle, and we're told there's a makeshift field hospital, and we're trying to get there now.
(EMERGENCY VEHICLE SIRENS)
(MAN SPEAKING IN ARABIC OVER LOUDSPEAKERS)
(CROWDS SHOUTING IN ARABIC AND ENGLISH)
PENHAUL: Difficult to tell what the scale of that man's injuries were, but again, we saw his right leg heavily bandaged. It's chaotic scenes right now.
UNIDENTIFIED MALE: Got his hands in victory signs.
(SHOUTING IN ARABIC AND ENGLISH)
(END VIDEO CLIP)
QUEST: As you can tell, the situation on the streets, at times, it seems to be deteriorating. The violence is deteriorating as, indeed, the political situation seems to be deteriorating, and so, in fact, is the economic situation facing Egypt at the same time.
On the stock market, which had seen such a strong rally after the takeover and the deposing of Mohamed Morsy, now we're seeing a reversal of that. Having seen gains of maybe 6 or 7, 8 percent up to 12 percent on Monday, the stock market there closed down 3.5 percent. Markets initially rallied, of course, as we were declared last week.
The governor of Egypt's central bank, fearing a complete evacuation and escalation in the economic situation, has flown to Abu Dhabi to seek financial help from the states in the Gulf. Money is now flowing out of Egypt. The balance of payments and the reserves are getting dangerously low. Earlier, I asked John Defterios if the country was now between a rock and a hard place economically.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: They have about a three month window here with the reserves they have in hand, but I think a good comparison is, what is $15 billion mean for this government? If you stack it up against Turkey, which is a similar size in terms of population, Turkey holds about $150 billion of reserves right now, and Egypt only $15 billion.
So it is a crisis. The central bank governor came into Abu Dhabi over the weekend, stayed below the radar, wouldn't even say whether they were going to be having financial talks or not. We do know that a very senior delegation from the United Arab Emirates is going to go to Cairo later this week.
There is a political twist here, of course. As you know the Saudis, Saudi Arabia and the UAE, didn't like what the Muslim Brotherhood was doing. So, of course, if there's two countries that want to kind of intervene on behalf of Egypt right now and try to ensure that this transition does get completed within nine months, it is Saudi Arabia and the UAE.
They're both wealthy nations, but they want to support a smooth transition and not have the so-called heart of the Middle East and North Africa, Egypt, heading southward here, going forward Richard.
QUEST: Is it possible or likely -- and I realize that there are greater issues on the street and in the violence and in the political sphere -- but is it likely that Egypt's now about to go bankrupt?
DEFTERIOS: Bankrupt, I wouldn't think any government within this region, particularly those with large sovereign funds and ample reserves, would let happen. I don't think it's in the interest of the International Monetary Fund as well.
But they can't throw good money after bad. After all, of that $12 billion that we talked about, Qatar put up $7 billion and then saw this government implode. So, this is a very delicate window in the next 60 to 90 days. It's going to be interesting to see what transpires over the next week or two in terms of the violence.
But if they can stabilize the situation, get a prime minister that's a technocrat in place, get a vice president like Mohamed ElBaradei, and then start the talks with the Middle Eastern neighbors and the International Monetary Fund, they can get through the crisis. But it seems like a very steep hill as we speak tonight.
QUEST: John Defterios talking to me from Abu Dhabi earlier.
The authorities are still looking into what caused the crash landing in San Francisco over the weekend. We'll bring you the latest in the investigation and we'll speak to the pilot who's pulled off his very own public emergency landing and, of course, can talk us through what's happened here.
QUEST: US investigators have interviewed all four pilots aboard the Asiana Airlines flight that crash-landed at the San Francisco airport on Saturday. Two people died in the accident, and there are reports one of those may actually have been run over by an emergency vehicle attending the crisis.
Transport safety officials are still trying to understand why the Boeing 777 clipped the runway seawall before slamming into the displaced runway. They revealed what was going on in the cockpit a frantic few moments before the plane impacted.
(BEGIN VIDEO CLIP)
DEBORAH HERSMAN, NTSB CHAIRWOMAN: We know that seven seconds before impact, the crew acknowledged in the cockpit to each other that they were slow. They had a target airspeed of 137 knots, and they're acknowledging that they're below that.
At four seconds, they got a stick shaker activation basically telling them that the airplane was about to stall if they didn't take other action. And about a second a half before impact, they are calling out to each other for a go-around to abort the landing and go around.
(END VIDEO CLIP)
QUEST: Shares in the South Korean carrier have fallen more than 5 percent in the session. The chief executive denied that the pilot was inexperienced.
We now know that this was the pilot's first flight on a 777 into San Francisco, his ninth on type equipment, although he was an experienced pilot with 10,000 hours under his belt. But the airline is denying that his inexperience on the 777 was the cause of the accident.
(BEGIN VIDEO CLIP)
YOON YONG-DOO, CEO, ASIANA AIRLINES (through translator): A senior pilot was in charge of the flight, so I cannot tolerate speculation. I would appreciated it if you would understand that it is not true.
(END VIDEO CLIP)
QUEST: As you'll be aware, CNN's exclusively obtained this amateur video of the incident. The aircraft enthusiast Fred Hayes recorded the moment when the accident took place.
(BEGIN VIDEO CLIP)
FRED HAYES, WITNESS: Oh, my God!
(END VIDEO CLIP)
QUEST: He was on a walk with his wife along the San Francisco Bay. He noticed something strange and Hayes described the thunder-like sound --
(BEGIN VIDEO CLIP)
HAYES: Oh, my God!
(END VIDEO CLIP)
QUEST: -- erupted across the bay when it slammed into the ground.
One man who knows all too well the pressure of an emergency landing is Chesley Sullenberger. He's the pilot who -- the captain who successfully landed a plane on the Hudson River in New York in 2009. All passengers were saved on that occasion. And, indeed, Sully was, of course, widely praised for the way in which he handled this.
Captain Sullenberger, very good to have you on the program. I do thank you for making time to talk to us. It's much appreciated.
We -- I will preface before we go any further that the NTSB report will be many weeks, months down the road and it will be detailed and will look into the final causes and what happened. But from what we know so far, are you surprised, for example, the pilot's inexperience level? What has happened as a result?
CHESLEY SULLENBERGER, CBS NEWS AVIATION AND SAFETY CONSULTANT: Well, good evening, Richard, it's good to be with you. First, you're right. This is going to require at least 12 months, possibly more. The final report on Flight 1549, the Hudson River landing flight, took 18 months to make public.
You have to realize that the investigators are going to essentially write a non-fiction detective story that may be a 900-page book, and right now, we're beginning page one.
So, what has to happen is we have to find out not only what happened, not only how it happened, but why it happened.
SULLENBERGER: And right now, we're still gathering details. We're gathering bits and pieces of information. We don't even know what the entire puzzle might consist of --
SULLENBERGER: -- yet before we begin putting all the pieces in place. So, it's very early on. And I should also say, besides it being very early, there are always surprises. So many times in major investigations, the early theories just turn out to be --
QUEST: OK --
SULLENBERGER: -- quite frankly incomplete or wrong.
SULLENBERGER: But from what we do know, and we're getting new information very quickly because we have so many advantages in this crash. First of all, the wreckage is not on the bottom of the South Atlantic. It's on an airport where it's easily accessible. All the pieces appear to be right there.
The flight recorder and the cockpit voice recorder were found and have been read out at least initially already. So, we're learning a lot. The crew survived --
QUEST: Right, can I --
SULLENBERGER: -- so they are able to be interviewed in this case.
QUEST: -- let me just interrupt you, if I may, Sully, for one second. You also -- you rightly point out that one of the important things -- never mind how and why -- but one of the really important things that comes out of this crash is for the passengers to pay attention so they can help themselves get off the plane, and we heard this from the first responders just now. Are you surprised people will taking personal belongings off the aircraft?
SULLENBERGER: I'm not surprised. But they shouldn't. And let me tell you that what happened on Flight 1549 after our Hudson River landing is some passengers, I was told, began to take a few of their personal items outside the airplane onto the wing with them. Other passengers notices that and said, no, don't do that, and threw it in the river.
So, paradoxically, four months later, when the rest of us received big boxes on our front steps from the reclamation company having retrieved and dried and packaged and inventoried and sent our luggage and all our items back to us, the only people who didn't receive their belongings back were those who tried to take it outside the airplane.
So, it's not surprising, but it's terribly bad form. It's dangerous for people to try to take their luggage with them when, in a time where seconds count, taking their luggage might delay someone else and might cost them their life.
So, you're absolutely right. There currently is a misperception among the general public about how dangerous flying is and how likely one is to survive an aircraft accident, and that's because public perception hasn't kept up with the 30-plus years of improvements we've made in the --
SULLENBERGER: -- in the airplanes and in our procedures. And so now, it's very likely that even in a crash like this, many or most or sometimes all the passengers survive, as we saw with the Air France runway overrun in Toronto a few years ago. So, you're right.
Those who have said in the past that it doesn't matter, I shouldn't pay attention, I shouldn't worry because I'll either survive or I won't were wrong. You can take control of your future.
QUEST: All right.
SULLENBERGER: The flight attendants will assist and guide you, but it's your responsibility to read the briefing card, to know where the exits are, how they work, and to learn how to save your own life.
QUEST: Finally and briefly, when you look at the video of what happened, it is, particularly that last -- not only the impact, but that last part of this incident where the plan suddenly rears itself up again, where the nose rears up before slamming back down onto the runway, that to me tells -- it is an extraordinary that there wasn't a much greater loss of life or serious injury. Not to diminish that which has happened, but that it wasn't greater.
SULLENBERGER: Yes. It's a testament to how strongly the airplanes are built, how much better the materials are, how much stronger the passenger seats are. They are now tested to 16 Gs to protect the passengers better and prevent them from detaching from the floor and bunching up and causing more injury.
QUEST: Captain Sullenberger, good to see you and thank you for joining us and putting it into perspective. Now, we are expecting that we will hear more from the NTSB, National Transportation Safety Board, in this hour. We'll bring you the update.
It'll probably be Deborah Hersman, who's the chairman of the board. She gave the invest -- she gave the summary yesterday, she gave the press conference. And I'm pretty certain that this question of the pilot flying experience on the 777 will be way up there as one of the issues we will be looking and listening to hear from.
Coming up next, a green light for Greece. The country's government takes a crucial step towards the bailout money it badly needs. This is QUEST MEANS BUSINESS on a Monday.
QUEST: Greece looks ready to get its next installment of bailout money. It's managed to convince the Troika that its economic reforms are on track. The IMF, the ECB, the Commission, had reached a deal with Greece on a set of controversial cuts and reforms, now paves the way for eurozone finance ministers to approve the next payment of around $10.4 billion.
The Troika did warn that Greece was behind in some areas and the economic outlook was uncertain. The situation is so fraught that the mayor of Athens was assaulted on Sunday outside a meeting where cuts were being discussed. Elinda Labropoulou is in the Greek capital and joins us this evening.
Elinda, well, here we go again. The Greek -- their government gets their money, the Troika has probably turned a blind eye to things that maybe they shouldn't have done, but the fact is, nobody is going to say whether or not this is well and truly off track or not.
ELINDA LABROPOULOU, CNN INTERNATIONAL CORRESPONDENT: Well, you're absolutely right about that. This is a situation that we have seen a number of times before. But it seems that right now is not the time to upset these balances. We've seen a lot of instability in the overall region. We've seen also a lot of instability in the neighboring Portugal.
So, in that sense, it seems that the Troika really now wants to keep tones much lower. It wants to help Greece, if you like, to try and push these reforms through. But they're very difficult reforms to push through simply because it's something that Greece has done on a number of occasions and things are just getting tougher and tougher all the time.
The unions are back on the streets, people are mobilizing, and what the Greek government hasn't managed to do until now -- for years, effectively, until now -- the cuts in the civil sector are once again coming up in the agenda.
So, what Greece is going to try and do, it's looking at very tough reforms in a very short space of time ahead of it. Most of it is to do with mobility, putting people on labor reserve and effectively having to fire thousands of people in the civil sector.
It's looking at privatizations that have still not been completed. A number of these deals have fallen through. It's also looking at cuts in the health sector. So, very difficult times ahead for Greece.
QUEST: Elinda Labropoulou, thank you very much for joining us.
Slowing demand in countries like Greece is hurting European giants like Germany. If you look at the numbers -- this is worrying -- from the German economy, export numbers came in worse than expected, down nearly 5 percent compared to last year. Exports for eurozone countries also fell by close to 10 percent. So Germany, which of course is the big exporter.
And yet, at the same time, look at the German market, completely unfazed by that. Strong gains encouraged by a Greek aid agreement, the DAX up some 2 percent, FTSE up just over 1 percent.
And bond yields have been falling in Southern Europe, too. The ten- year edged down. We're now over -- under just about 7 percent. Forget that being the pain threshold for Portugal, because Portugal is funded for this year through its agreement with the Troika.
Spain at 4.6, Italy at 4.4, Greece at 11.2. Again, it's not really completely relevant for those two, because they are funded, as I say, and so don't really need to go back to the market.
Bob Parker says stocks appear to be priced fairly right now. He's the senior advisor at Credit Suisse, and he told me earlier that the heavy losses of last month, well, they've created an investment opportunity.
BOB PARKER, SENIOR ADVISOR, CREDIT SUISSE: We go back to the beginning of May. Valuations in a whole series of markets were looking stretched, and I think the interesting point is that now we've had that correction, the valuations are now looking very reasonable, indeed.
Plus, I think one needs to emphasize, there's some very good economic data coming out of economies like the United States and Japan.
QUEST: Let's talk about the United States, because that's all said -- the one where we had the correction and -- made valuations look more acceptable.
QUEST: What do you now believe in terms of economic growth for the US for this year?
PARKER: Well, if you actually look at all the economic data coming out of the States, whether it be the consumer, whether it be investment spending, whether it be production, all the numbers have turned positive.
So therefore, I think it is reasonable to forecast annualized growth in the second half of this year of 2.5 percent, and I think if we go into the first quarter of 2014, we may even see growth higher than that.
Now, we're not going back to the 4, 4.5 percent growth that we saw some years ago, but the growth outlook is significantly better than anytime over the last two years.
QUEST: In Europe, we cannot stay -- we cannot stay the same. We will be lucky to break out of recession.
PARKER: We've now had seven quarters of recession in Europe. We are seeing some evidence -- and it's very patchy -- of Europe starting to come out of recession.
QUEST: But it's --
PARKER: Some --
QUEST: -- a 2 percent growth forecast for Europe is not in the short even in the medium term outlook.
PARKER: The medium term, let's define that. Probably in three to four years' time. And no, if one looks at the eurozone, I think we will come out of recession probably in October this year.
QUEST: So, my traditional question to you, where do you put your money?
PARKER: Well, first of all, after this equity correction, I think risk reward is favorable for global equity markets. In global equity markets, I think the US, with those -- that better growth data. Japan with also Abenomics working and better growth data.
In Europe, I think one has to be very selective and only look at global European companies and probably those based in Northern Europe.
QUEST: And finally, did you hear anything last week from Draghi with his -- never mind however much it takes, but also for as long as it lasts - -
QUEST: And Carney, with his I'm thinking about it for the -- anything that changed the rules of the game?
PARKER: The answer is slightly, and I emphasize the word "slightly," because historically, the European Central Bank have never given any guidance on the future path of monetary policy.
And the European Central Bank and the Bank of England, for that matter, now think that they will encourage economic activity and that they will support markets if they give guidance that interest rates will stay low for a long period of time.
Now, one has to ask the question, how long is that period of time? And I think it's reasonable to say that ECB policy and Bank of England policy will be on hold for at least another year.
QUEST: Bob Parker joining me earlier to put in perspective why and what. Of course, nothing that we say should be taken as investment advice. You make your own mind up on where you put your money.
Tonight's Currency Conundrum: at the Wimbledon tennis championship, a coin is tossed before each match to decide which player serves first. How is the coin selected? It's always the same 50 pence piece? It's whatever the chair umpire has in his pocket? The highest-seeded player chooses the coin?
The dollar's losing ground against the pound, the euro, and the yen. Those are the rates --
QUEST: -- this is the break.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.
The U.S. is urging Egypt's military to use maximum restraint in its response to protesters.
(BEGIN VIDEO CLIP)
QUEST (voice-over): It comes after at least 51 people were killed in clashes near the Republican Guard headquarters in Cairo. This CNN video shows the chaotic aftermath of a makeshift hospital.
One of the two people killed on board Flight 214, the Asiana flight in San Francisco, may have been run over by an emergency vehicle at San Francisco Airport. The Asiana Airlines flight from Shanghai crash landed in San Francisco on Saturday.
U.S. National Transportation Safety Board is about to hold a news conference to give an update on its investigation. When that happens, we will, of course, bring it to you.
The Cuban President Raul Castro says he supports the rights of Latin American countries to grant asylum to Edward Snowden. Venezuela, Bolivia, Nicaragua have all said they would at least consider taking in the man who leaked details of alleged U.S. spying programs.
The jury in the George Zimmerman trial has been hearing from his closest friends. Defense attorneys claim Zimmerman was acting in self- defense when he shot and killed an unarmed teenager last year. On Friday, the mother of both Zimmerman and the victim, Trayvon Martin, testified at the hearing taking place in Florida.
Search efforts have resumed today for as many as 40 people missing after a train carrying crude oil exploded in a Canadian town over the weekend. At least five bodies have been recovered so far in the downtown area of Lac-Megantic, in Quebec. Firefighters are still trying to put out the hot spots to allow crews to move in closer.
(END VIDEO CLIP)
QUEST: So more on the recovery efforts and the investigation into the devastating railway explosion. Paula Newton is on the ground in Quebec and joins me now.
Paula, two issues: we'll get to the second in a second about the larger issue of transportation of oil.
But let's focus first of all on what they believe happened here and the devastating effects obviously that we now know about.
PAULA NEWTON, CNN CORRESPONDENT: What they believe happened is that there was a crew change about 10 kilometers from here up a hill. The crew member, the conductor, left the train and said the air brakes were on. He left to go to a hotel. That train of 72 crude oil tankers was supposed to remain parked.
Somehow those air brakes failed; it went careening at speeds not seen from a train like that, especially in this kind of a place, careening into this town and basically devastated the downtown core.
Richard, unfortunately, the inferno that followed burned for 36 hours, officials calling it a crematorium there, really, with 40 people still missing and five confirmed dead. That is what happened and still people utterly shocked that this could ever happen here, Richard.
QUEST: And whilst obviously we wait for further details on the fate of those 40 people, the wider issue, the transportation of oil, which, of course, has become even more significant with the growth of shale or fracking, as it's known.
And now there will have to be -- I mean, we, you know, I suppose the question, Paula, transporting a hazardous material by rail has been around for decades. Is this an isolated incident? Or does something need to change?
NEWTON: It has been around for decades; the truth is, as you say, since that oil boom and you can track it to about 2008, and the lack of pipelines, Richard. You and I've discussed this on the show before, the lack of pipelines; they've been increasing the transport over rail.
How much? Some estimates, four to five times the amount of crude running on this continent right now between Canada and the U.S. that has -- that ran even in 2007, incredible flow. With that comes more accidents.
Richard, I saw myself echoing, though, what the industry, the aviation industry tells me; it's the same thing the rail industry has been telling me today: 99.7 percent of that oil arrives on time, arrives safely.
Normally, there aren't any spills. This was catastrophic and, yes, they are reviewing all those regulations and saying, look, with this increase, the transport of crude oil and other petroleum products must they review the safety standards.
QUEST: Paula Newton, who is in Quebec.
Before we talk more about this issue with Maggie Lake in New York, let's go to San Francisco, where the press conference is underway, Deborah Hersman. We'll just listen in for a second or two.
DEBORAH HERSMAN, NTSB CHAIR: The parties to our investigation are the Federal Aviation Administration, Boeing, Pratt & Whitney; and we are also supported by the Korean Aviation and Rail Accident Investigation Board. They are our counterparts from Korea. And they are supported by their technical advisers, Asiana Airlines.
The NTSB employs a party system to help us in our investigations. We rely on our parties to provide us information to assist us and particularly to provide technical expertise.
So, for example --
QUEST (voice-over): That's Deborah Hersman. And we're not going to stay -- the way that the chairwoman does these briefings, it's actually quite a long process. She'll give an opening statement and that will -- and then she'll go into quite a lot of detail of what happened and then she'll take questions.
So what we're going to do is we're going to continue whilst we monitor what Deborah Hersman is saying and of course, we will report back to you when we know the new salient points, if you like, sifting through what is being said at the San Francisco and the San Francisco press conference.
That deadly train disaster that we were just talking about with Paula Newton, the increased scrutiny on transporting crude oil by rail, it's the continent's surge in oil that's seen such a dramatic rise in the number of crude shipments.
Maggie Lake is in New York for this side of the story.
Paula was saying, and has this very large number, but I mean, anytime a runaway train runs away in such a fashion it's going to be a fairly deadly matter. So this aspect of crude oil, the element of that, Maggie Lake, make sense of it.
MAGGIE LAKE, CNN CORRESPONDENT: Yes, that's right, Richard. Of course, you're going to have a problem.
But when you're facing a peek at the future, that's what environmentalists fear, that now we have this crude oil boon, this is the reality that we're going to have to figure out a way to get all of this crude around the country and through local communities and through backyards, and what are the safety procedures?
Can the regulators keep up with that surge?
Paula mentioned those big numbers. It's up some twentyfold in just the last four years; oil shipments by train, by rail, and if you don't have any more pipelines laid down, people estimate, experts estimate that that increase will be another 40 percent by 2017.
So this is a huge amount of hazardous material that is going to be moved around the country. And interestingly, it is playing into that conversation of pipeline versus rail, whether the pipeline, especially that Keystone pipeline that's been so controversial, should be approved.
I actually talked to the Canadian energy minister about this, about the safety issues when I caught up with him a couple of months ago. Have a listen.
(BEGIN VIDEO CLIP)
JOE OLIVER, CANADIAN MINISTER OF NATURAL RESOURCES: The United States is not going to stop building pipelines because there are only two alternatives to that. You transport the oil by less safe means.
LAKE: Which are?
OLIVER: -- which are trains and --
LAKE: (Inaudible) less safe than pipelines?
OLIVER: Yes, they are, yes. There's quite a significant difference there -- or trucks or you stop transporting energy completely. And that would have dire economic consequences.
(END VIDEO CLIP)
LAKE: So we've got to figure out how to do this. To be clear, by the way, Joe Oliver wasn't saying we shouldn't use trains. He was just saying according to the data he's seen the pipelines are safer. I'm sure you get people on the other side who say that that's not true.
But listen, it doesn't matter how safe. You heard Paula say the rail association says 99.9 percent safe. Everyone wants to know what are you going to do with that fraction of a percent (inaudible) saw, how can you protect against that?
QUEST: Maggie, Maggie, a rock and hard place here. You know, you talking about building a pipeline. The environmentalists get up in arms. There's a lot of land has to be cut up, whatever. It's going to carry oil as opposed to this railway, which can carry other goods as well. You talk about the rail, I mean, this is the -- this is the -- this is the awful part about the dilemma facing them.
LAKE: Yes, it's the reality. It's happening. People want to figure -- I think with the concern for some is, Richard, the speed in which it's happening. And our -- all of the sort of safety measures and sort of investigations put in place in order, in that short period of time, I think that's what the concern is.
People kind of know it's happening, but are they jumping through all the hoops? Or are they putting profits first, rushing this stuff to get that system in place in order to profit off this boom? I think that's where the question is.
QUEST: Maggie's in New York for us this evening. We thank you for that. As we take a break, the authorities in the U.S. are giving an update on the investigation into the weekend's crash in San Francisco. We'll let you know what they're talking about and any new details. It's QUEST MEANS BUSINESS at the start of the week.
QUEST: To return to the crash of Asiana Air Flight 214, the NTSB's still holding its second media briefing. Chairwoman Deborah Hersman, let's just join her for a second and see what more she's up to.
HERSMAN: The number one engine was found liberated from the aircraft and it exhibits severe rotational damage. We also took fuel samples from the aircraft for testing.
QUEST: Yes, we -- she's going through the very, very detailed elements of the investigation, sort of the housekeeping, what they've looked out, what they're still looking at, all that sort of thing.
Mary Schiavo's with us. She's a former inspector general of the U.S. Department of Transportation. She joins me from New York.
Mary, we're going to leave Deborah Hersman, because, as you know, these briefings are extremely detailed and actually it's a long way down before we get to the interesting parts of it.
And one interesting thing is this question now that the pilot flying had only had -- he had nine flights on type, 43 hours in total on type and this was his first on type into San Francisco, although he had been into San Francisco on previous equipment and was experienced.
Now we've all got to do it, something for the first time. But -- dot, dot, dot -- continue that sentence.
MARY SCHIAVO, FORMER U.S. INSPECTOR GENERAL, DOT: But not at a major airport and not without an instrument landing system and particularly, for example, with so few hours. We don't know how all those hours were accumulated. We don't know if the prior flight hours were all with autopilot. Some of them might have been sim time.
Some of them were undoubtedly while he was being evaluated for his captain's certification. And to do that on San Francisco, you know, it's a great airport but it can be very tricky, as pilots know, particularly coming in on water, on a hot day, you have a sink rate. Your plane's going to descend faster.
QUEST: And that is exactly what we're now seeing from the profile of this -- look, it's too soon for anyone to say pilot error and NTSB will determine all this because we -- as you were saying to me a moment ago, we don't know if their air reference data, the (inaudible) was all -- was operational, whether there was a malfunction in it. So we don't know the information that they were getting.
But it all feels a bit odd.
SCHIAVO: It does. And you know, the air data transducers, that's what will give the pilot the correct reading of the air speed and the altitude and the various things that you do rely on even when you're doing a visual approach, now those were made by Honeywell, and I just noticed that in the lineup of the parties to the investigation, Honeywell's not there.
They have already downloaded the 1,400-paramilitary air flight data recorder from this 777. That's a lot of data. I think they probably have a pretty good idea what was and was not working and it sounds like most everything was working or they would have additional parties, in my opinion.
So I think the equipment was working. By the way, on U.S. carriers, he couldn't have -- he wouldn't have been allowed to make that approach. He wouldn't have been the pilot doing the flying. You have to have -- I think it's 100 hours before you could do an airport.
QUEST: And ultimately he wasn't the -- he wasn't the senior person; he was the first officer in the right seat. Whichever way this transpires, the person in the left, who had a lot of experience, who had time on type, he ultimately should have, at some point, either spotted or taken over.
SCHIAVO: Exactly. And we have so many recent tragic crashes of a perfectly good plane, where the pilots have lost situational awareness, which is what this is called, the Air France flight from Rio to Paris, the Colgan flight into Buffalo, New York, this one.
I mean, and it's so tragic, but you know, it's kind of a basic sweep, when you're trained to fly, you do a sweep of the instruments and you keep your eyes moving around and around those instruments so you don't lose sight of the most important thing: airspeed and altitude. Those are the pilot's friends.
And so I say, I mean, you want to look for a malfunction just because it looks like such an obvious mistake and maybe there is a malfunction.
But to wait until seven seconds before either one of the pilots commented on the airspeed deterioration is just tragic. And then at four seconds, when the stick shaker activated, there was nothing more they can do, at four seconds the flight was lost, four seconds before impact.
QUEST: Mary, I could talk a lot more about this obviously. You and I could go for a lot longer talking about this but unfortunately, we are -- we have to move on. But I do know that we'll be talking more about this in the days and weeks ahead, Mary Schiavo, always good to hear on the program.
In a moment, this is the picture from Wall Street, hours before the start of the earnings season gets underway. We have a preview -- oh, look at that. What a nice strong rally, up 94 points 15,230.
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QUEST (voice-over): We asked you how does Wimbledon choose the coin for the prematch tossup? And the answer is whatever the chair umpire has in his pocket.
At ladies' singles final, the chief coin flipper was a 14-year-old (inaudible) who's representing a children's hospice, the charity nominated by its patron, Catherine, Duchess of Cambridge.
(END VIDEO CLIP)
QUEST: Traders in the U.S. are pinning their hopes on a positive earnings season. The results are due out, the first results after the bell. Alison Kosik is at the New York Stock Exchange.
Well, far from sell in May, go away, which of course has always been the mantra of the old days, the buyers seem to be out in force, at least waiting for the earnings season.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, I mean, well, you're - - what we're seeing, Richard, is sort of the residual effect from the strong jobs report that came Friday.
They're not so sure these kinds of gains are going to continue while in second quarter earnings season gets underway, and that's after the bell today, when Al Coe (ph) reports, because the -- here's the reality. This is a big worry.
Those preannouncements of second quarter earnings season, they've been pretty negative. You look at Reuters reporting that the ratio of negative to positive company comments is more than 6:1. So what they're going to see this happen this time around, investors are going to be watching very closely for any signs of improvement in these earnings reports.
And since the Fed has hinted it could pull back on that QE toward the end of the year, what that essentially does is it makes it that company guidance much more important, Richard, because the whole point of the Fed's QE was to keep interest rates low to encourage consumers and businesses to borrow money and for businesses to take out loans and expand and hire, but with the possibility of tapering coming comes the worry of higher interest rates as well and worries that the economy here may not charge ahead if the Fed starts to pull back a little, Richard.
QUEST: Have you been to the beach, Ms. Kosik?
KOSIK: I have. I went out to the Hamptons, had a great time.
QUEST: Yes. Well, we were here doing duty. You were off sunning yourself in the Hamptons. Well done, too.
KOSIK: I was.
QUEST: You -- I prefer to think -- I prefer to think of it as checking on the local economy and ensuring that --
KOSIK: There you go. And I think -- and I think that economy out there is doing quite well.
QUEST: Alison Kosik, we'll get regular reports from that throughout the course of the summer.
Tom Sater's at the World Weather Center, I'm guessing that Ms. Kosik had some very pleasant weather. And look, the only thing I need to know from you, Tom Sater, is that this glorious weather that we are enjoying is going to continue.
Please do not disappoint me.
TOM SATER, AMS METEOROLOGIST: It's a little give-and-take. You get the warmth, of course, some of the warmest temperatures so far this season, Richard. But I'm going to give you the sunshine for at least another seven, possibly 10 days. A lot of warm temperatures, a lot of tropical activity.
This, of course, here in the Pacific, just south of Guam, making its way quickly westward, rapidly developing, (inaudible) anywhere between Taiwan and Shanghai. We're going to watch that for developing to typhoon strength. That's just one system we've been watching.
As far as the heat is concerned, rain staying to the north of Japan, they saw their warmest temperatures over the weekend, 35 degrees now two days in a row, from Sunday and for Monday, even Osaka 34, well above average.
The U.S. had heat advisories, excessive heat warnings over the weekend for the warmest temperatures from the Big Apple all the way up to Boston as you see, numbers there were in the 30s.
Now there was quite a bit of rainfall in the southeast, a lot of flooding. However, starting to taper off, but we head down into the Caribbean and we have our first tropical storm that is east of the Lesser Antilles islands. This only happens once every 13 years before the middle of July.
We're going to be watching this one closely because development could take rainfall very quickly, just south of Puerto Rico, maybe heavy rainfall in Haiti over the mountains with its eyes in Bermuda. The heat still in Pacific -- or, excuse me, the southwestern part of the U.S., yes, its temperatures still around 50 degrees in Death Valley. That's 122 degrees Fahrenheit.
South of there, Richard, we have problems for some tourist spots, another tropical storm, Erick, brushing through Cabo San Lucas, makes its way nicely out into open waters and starts to lose some strength.
Into Europe we go, where, look at the sunshine. We do have a flow of moisture across the Adriatic, lifting that moisture into the Alps for some thunderstorm activity, aided by the heat of the day, 26 degrees currently in Paris.
But Madrid 37 degrees. That's what we find a lot of the extreme heat, temperatures still in the 40s, many locations and parts of Portugal and into Spain; Cordoba's been in the low 40s for almost a week now.
But as we take a look at Tuesday, Paris is flirting with 30 degrees, which, by the way, the warmest temperature in London so far this season was yesterday for Wimbledon, 30 degrees, actually 29.9 at Heathrow, warmest Wimbledon since of course, '76.
Isolated thunderstorms will be sporadic, nothing heavy. They'll stay away from the northern part of Paris, where we have the 10th stage of the Tour de France after a much dated -- needed day of rest on Monday, temperatures around 24 for the cyclists by the end of the day, Richard. Enjoy the weather. It will continue.
QUEST: That's good news, and we're in Paris tomorrow, so we appreciate you bringing us up to date with the 29 degrees that we will broadcasting with tomorrow night from the Champs-Elysees.
We'll have a "Profitable Moment" after the break. QUEST MEANS BUSINESS.
QUEST: Tonight's "Profitable Moment": it's a part of flying as inevitable as passport control and lines at security. Wherever you're flying, whatever seat you're in, before you've even left the ground, you listen to the safety announcements. And however many times you've heard it before, I promise you, they are saying something that's very much worth those two minutes of your time.
Now look: I travel as much as most. There are hardened business travelers out there who approach the preflight experience, the safety briefing, with an air of arrogance and/or nonchalance.
And yet I once heard a flight attendant say, "The gossip you're listening to from the seat next to you won't help you leave the aircraft. This briefing might."
The terrible events in San Francisco showed the importance of a swift and orderly exit from the plane, even if you know exactly what to do. So this is why listening to the safety briefing's important, not because you haven't heard it before. Of course you've heard it before. And not because you're not aware of the safety board or the doors, but because it brings your mind to the moment.
And for that moment that you're listening to the briefing, you're not paying attention to (inaudible) -- you're not thinking about your newspaper or your gossip, you are thinking about where's your emergency exit. So pay attention.
As we learned in San Francisco, your life depends on it.
And that's QUEST MEANS BUSINESS for this Monday. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
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QUEST (voice-over): The headlines at the top of the hour: the United States is urging Egypt's military to use maximum restraint in its response to protesters. It comes after at least 51 people were killed in clashes near the Republican Guard headquarters in Cairo. This CNN video shows the chaotic aftermath at a makeshift hospital.
U.S. transport safety officials say there was no abnormally steep descent in the crash landing at San Francisco. Officials have just been updating the media on its investigation. Investigators have already said the Boeing 777 was well below the target airspeed. Two people died in the accident.
Search efforts resume today for as many as 40 people missing after the train carrying crude oil exploded in a Canadian town this weekend. At least five bodies have been recovered so far in the downtown area. Firefighters are still trying to put out hot spots to allow crews to move in closer.
In the last few moments, Eurozone finance officials have given the go- ahead for Greece to get its next installment of bailout money. Greece will receive nearly $4 billion in two separate payments after the government satisfied lenders it was on track with economic reforms.
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QUEST: You are up to date. Now to New York, "AMANPOUR" is live.